EN BANC

[G.R. No. 34727. March 9, 1932.]

PACIFIC COMMERCIAL COMPANY, plaintiff-appellee, vs. ERMITA MARKET & COLD STORES,
INC., defendant-appellant.
Jose Perez Cardenas and Guevara, Francisco & Recto, for appellant.
Jose Yulo, for appellee.
SYLLABUS
1.A!E" RE#R$GERA%$NG MAC&$NE. ' (la)nt)ff contracted to *ell to defendant an a+to,at)c refr)-erat)n-
,ach)ne a* per de*cr)pt)on *tated )n the *ale* contract. %he ,ach)ne .a* del)/ered and 01 ,+t+al a-ree,ent the /endor
)n*talled the ,ach)ne. %he ,ach)ne d)d not -)/e the re*+lt* e2pected fro, )t, and the defendant ref+*ed to pa1 the 0alance of
)t* p+rcha*e pr)ce and the co*t of the )n*tallat)on of the ,ach)ne. %here+pon pla)nt)ff 0ro+-ht th)* act)on. Held: %he fact that the
defendant co+ld not +*e the ,ach)ne *at)*factor)l1 )n the three cold *tore* d)/)*)on* cannot 0e attr)0+ted to pla)nt)ff3* fa+lt" the
,ach)ne .a* *tr)ctl1 )n accordance .)th the .r)tten contract 0et.een the part)e*, and the defendant can hardl1 hone*tl1 *a1
that there .a* an1 decept)on 01 the pla)nt)ff. 4See art)cle 327, Code of Co,,erce" (alanca vs. #red 5)l*on 6 Co., 37 (h)l.,
789.
D E C I S I O N
OSTRAND, J p:
%h)* )* an appeal fro, a ;+d-,ent of the Co+rt of #)r*t $n*tance of Man)la, order)n- defendant to pa1 pla)nt)ff the *+,
of (1,748 .)th )ntere*t thereon at the rate of 18 per cent per ann+, fro, <an+ar1 1, 192=, to date of pa1,ent" l)>e.)*e, to pa1
pla)nt)ff (174 for attorne1*3 fee* and co*t* of collect)on" and to pa1 (278.97 .)th le-al )ntere*t fro, date of f)l)n- of co,pla)nt to
date of pa1,ent for .or>, la0or, and *er/)ce* rendered and for ,ater)al* +*ed )n the )n*tallat)on of a refr)-erat)n- ,ach)ne for
the defendant, and pa1 the co*t*.
$t appear* that on epte,0er 14, 1927, the (ac)f)c Co,,erc)al Co., the pla)nt)ff here)n, *old to
the Er,)ta Mar>et 6 Cold tore*, $nc., the defendant here)n, an a+to,at)c refr)-erat)n- ,ach)ne of the follo.)n- de*cr)pt)on:
?@na ,aA+)na refr)-eradora a+to,at)ca Yor t1le BC29 capac)dad Do* tonelada* de refr)-erac)on
con*)*tente en: Co,pre*or de a,on)aco Yor, de Do0le C)l)ndro, Conden*ador, Rec)0)dor, eparador de
ace)te, <+e-o de ,ano,etro*, Eal/+la*, Eal/+la re-+ladora de a-+a, Control a+to,at)co, Aparato de
*e-+r)dad, Motor Electr)co GCE de c)nco ca0allo* de f+erFa 228 volts ' Corr)ente alterna, de @na #a*e,
,ontada* toda* en +na 0a*e de h)erro, a*) co,o ta,0)en )ncl+1e +na 0o,0a centr)f+-a para c)rc+lac)on de
a-+a 1 correa*.?
%he part)e* *)-ned the +*+al pr)nted *ale*Ccontract for, of the pla)nt)ff co,pan1, the p+rcha*e pr)ce 0e)n- (2,778,
pa1a0le 01 )n*tal,ent* on date* and )n a,o+nt* *tated )n the *ale* contract. %he del)/er1 of the ,ach)ne .a* ,ade on
Dece,0er 7, 1927, and 01 ,+t+al a-ree,ent 0et.een the /endor and the /endee, the for,er )n*talled the ,ach)ne .h)ch .a*
co,pleted on Dece,0er 2=, 1927. %he )n*tallat)on, )ncl+d)n- ,ater)al* +*ed, a,o+nted to (278.97, to 0e pa)d 01
the Er,)ta Mar>et 6 Cold tore*, $nc., to the (ac)f)c Co,,erc)al Co,pan1. Co,pl1)n- .)th the ter,* of the *ale* contract, the
defendant pa)d the pla)nt)ff the a,o+nt of (=18 a-a)n*t the p+rcha*e pr)ce of the ,ach)ne, lea/)n- a 0alance of (1,748.
A fe. da1* after the )n*tallat)on of the a+to,at)c refr)-erat)n- ,ach)ne, the Er,)ta Mar>et 6 Cold tore* ad/)*ed
the (ac)f)c Co,,erc)al Co,pan1 that the ,ach)ne .a* not *er/)n- the p+rpo*e for .h)ch )t .a* *old to defendant and that )t
.a* lac>)n- a,,on)a rece)/er and o)l *eparator. %he pla)nt)ff co,pan1 )n t+rn ad/)*ed the defendant that the ,ach)ne )n*talled
.a* co,plete, ha/)n- all the acce**or)e* a* *tated )n the contract. &o.e/er, +pon the )n*)*tence of the defendant, the pla)nt)ff,
;+*t to plea*e the pre*)dent of the defendant co,pan1, del)/ered and )n*talled on the ,ach)ne an add)t)onal o)l *eparator
.)tho+t char-e. %he ,ach)ne d)d not -)/e the re*+lt* e2pected fro, )t, and the defendant ref+*ed to pa1 the 0alance of )t*
p+rcha*e pr)ce and the co*t of the )n*tallat)on of the ,ach)ne. %he (ac)f)c Co,,erc)al Co,pan1 there+pon 0ro+-ht th)* act)on.
$n )t* an*.er, the defendant -enerall1 and *pec)f)call1 den)ed the alle-at)on* conta)ned )n pla)nt)ff3* co,pla)nt, and 01
.a1 of *pec)al defen*e alle-ed *+0*tant)all1 that the ,ach)ne del)/ered to the defendant 01 the pla)nt)ff .a* not the ,ach)ne
de*cr)0ed )n the contract of *ale )na*,+ch a* the *a)d ,ach)ne .a* not a+to,at)c and a* )t .a* lac>)n- a,,on)a rece)/er, o)l
*eparator, and the ),ple,ent* nece**ar1 to ,a>e the *a)d ,ach)ne a+to,at)c.
B1 .a1 of cro**Cco,pla)nt, the defendant f+rther alle-e* that )t 0o+-ht the ,ach)ne )n A+e*t)on fro, the pla)nt)ff for
the p+rpo*e of r+nn)n- the 0+*)ne** ofcold *tora-e" that the te,perat+re )n the refr)-erat)n- roo,* d)d not reach, and had
ne/er reached, the nece**ar1 te,perat+re for the pre*er/at)on of ,eat, f)*h, /e-eta0le*, and fr+)t*" that o.)n- to the
ne-l)-ence of the pla)nt)ff )n not repa)r)n- or p+tt)n- )n -ood .or>)n- cond)t)on the *a)d refr)-erat)n- ,ach)ne, the defendant had
0een forced to clo*e )t* e*ta0l)*h,ent and for .h)ch rea*on the defendant cla),ed da,a-e* a-a)n*t the pla)nt)ff a* follo.*:
?(7,888 for e2pen*e* )n ad/ert)*)n- and propa-anda"
?(17,888 a* the /al+e of f)*h, por>, ,eat, /e-eta0le* and fr+)t* alle-ed to ha/e deter)orated )n the
refr)-erat)n- roo,*"
?(38,888 for the lo** of )t* cl)entele and decrea*e )n )t* *ale*"
?(28,888 for the lo** of the .hole 0+*)ne**" and
?(3,988 for rental* of the pre,)*e*, *alar)e* of the ,ana-er, -+ard and .areho+*e,an, fro, Ma1
18, 192=, +p to Gcto0er of the *a,e 1ear, at the rate of (988 a ,onth, 0eca+*e of the ref+*al of the pla)nt)ff
to .)thdra. the refr)-erat)n- ,ach)ne )n A+e*t)on fro, the pre,)*e* .here )t .a* )n*talled. $n other .ord*,
the defendant a*>* for da,a-e* )n the total *+, of (73,988.?
Repl1)n- to the defendant3* cro**Cco,pla)nt, the pla)nt)ff den)ed -enerall1 and *pec)f)call1 each and e/er1 alle-at)on
)n the *a)d cro**Cco,pla)nt and 01 .a1 of *pec)al defen*e, alle-ed that .hate/er defect* or def)c)enc1 there ,)-ht ha/e 0een
)n the te,perat+re )n the refr)-erat)n- roo,* of defendant3* e*ta0l)*h,ent, or )n the f+nct)on)n- of the ,ach)ne, the*e .ere d+e
to the defect* and ),perfect)on* of the co)l* .h)ch .ere *+ppl)ed and )n*talled 01 the defendant )t*elf, a* .ell a* to the
)nco,petenc1 and )neff)c)enc1 of the defendant3* per*onnel to operate the ,ach)ne.
After tr)al, the co+rt 0elo. rendered the ;+d-,ent a0o/e ,ent)oned, and, a* here)n0efore *tated, the defendant
appealed to th)* co+rt.
After a caref+l e2a,)nat)on of the record, .e ha/e not the lea*t do+0t that the pla)nt)ff del)/ered the ,ach)ne a*
de*cr)0ed )n the *ale* contract, and the fact that the defendant co+ld not +*e )t *at)*factor)l1 )n the three cold *tore* d)/)*)on*
cannot 0e attr)0+ted to pla)nt)ff3* fa+lt" a* far a* .e can *ee, the ,ach)ne .a* *tr)ctl1 )n accordance .)th the .r)tten contract
0et.een the part)e*, and the defendant can hardl1 hone*tl1 *a1 that there .a* an1 decept)on 01 the pla)nt)ff. 4See art)cle 327,
Code of Co,,erce" (alanca vs. #red 5)l*on 6 Co., 37 (h)l., 789.H
B+t )t )* clear that the defendant co,pan1 d)d not f+ll1 +nder*tand the +*e of the ,otor. $f co,pla)n* that the
,ach)ne .o+ld not properl1 refr)-erate the refr)-erat)n- roo,*, 0+t )t )* e/)dent that the ,ach)ne co+ld not operate
a+to,at)call1 .hen the defendant had three refr)-erat)n- roo,* .h)ch )t e2pected to ,a)nta)n at three d)fferent te,perat+re*.
%he defendant al*o co,pla)ned that the ,ach)ne .a* not eA+)pped .)th a ther,o*tat and that the lac> of )t
o0*tr+cted the .or> of the refr)-erat)n-. $n the f)r*t place, the ther,o*tat .a* not )ncl+ded )n the *ale* contract and )n the
*econd place )t .o+ld not ha/e 0een of an1 *er/)ce to defendant 0eca+*e )t co+ld not po**)0l1 operate a+to,at)call1 at three
d)fferent te,perat+re* .)th the defendant3* )n*+ff)c)ent eA+)p,ent.
%he defendant3* co,pla)nt that the ,ach)ne d)d not conta)n an o)l *eparator )* not tr+e" the o)l *eparator )* co,0)ned
.)th the rece)/er and conden*er )n a *)n-le co,0)ned p)ece )n the ,ach)ne.
%he e/)dence )n th)* ca*e )* clear to +*, and .e cannot f)nd an1 error* co,,)tted 01 the co+rt 0elo.. $t ,a1 0e that
the ,ach)ne co+ld ha/e -)/en *at)*fact)on to the defendant )f the co)l* had 0een )n*talled properl1 and the ,ach)ne had 0een
operated 01 co,petent per*on*. An1 def)c)enc1 )n th)* re-ard co+ld not 0e the pla)nt)ff3* fa+lt" the co)l* .ere *+ppl)ed and
)n*talled 01 *o,eone other than the pla)nt)ff, and the ,ach)ne .a* 0e)n- operated 01 the defendant )t*elf.
%he ;+d-,ent appealed fro, )* therefore aff)r,ed )n )t* ent)ret1, .)th co*t* a-a)n*t appellant. o ordered.
!vance"a, C.J., Jo#nson, Street, $alcol%, &illa%or, Ro%ualdez, &illa-Real and '%perial, JJ., conc+r.
EN BANC
[G.R. No. 42419. Apr)l 9, 1937.]
MACONDRAY & CO., INC., plaintiff-appellant, vs. PRAXEDES R. DE SANTOS, defendant-appellee.
Jose !()ulos for appellant.
Pedro $a(salin for appellee.
SYLLABUS
1.CGN%RAC%" A!E G# (ERGNA! (RG(ER%B (ABAB!E $N $N%A!!MEN%" AR%$C!E 1474CA G# %&E C$E$!
CGDE. ' %he defendant a* the onl1 -ro+nd of her de,+rrer, alle-e* that +nder the pro/)*)on* of Act No. 4122, art)cle 1474CA
of the C)/)l Code, there )* no ca+*e of act)on a-a)n*t her. Grant)n- that there .a* a contract 0et.een the part)e* for the *ale of
per*onal propert1 pa1a0le )n )n*tall,ent*, .h)ch doe* not clearl1 appear )n the record 0efore th)* co+rt, the co,pla)nt doe* not
alle-e nor doe* )t appear )n the record that there .a* a fa)l+re to pa1 t.o or ,ore )n*tall,ent*. $n order to appl1 the pro/)*)on*
of art)cle 1474CA of the C)/)l Code )t ,+*t appear that there .a* a contract for the *ale of per*onal pa1a0le )n )n*tall,ent* and
that there ha* 0een a fa)l+re to pa1 t.o or ,ore )n*tall,ent*.
D E C I S I O N
GODDARD, J p:
$n th)* ca*e the defendant de,+rred to the co,pla)nt, the tr)al co+rt *+*ta)ned the de,+rrer and -a/e the pla)nt)ff f)/e
da1* .)th)n .h)ch to a,end, )f )t *o de*)red. 5)th)n the t),e de*)-nated the pla)nt)ff e2cepted to the order *+*ta)n)n- the
de,+rrer and -a/e not)ce that )t elected to *tand +pon )t* co,pla)nt and there+pon the lo.er co+rt, +pon ,ot)on of the
defendant, d)*,)**ed the co,pla)nt .)th co*t* a-a)n*t the pla)nt)ff. $n d+e t),e the pla)nt)ff e2cepted to the order d)*,)**)n- the
co,pla)nt and ,o/ed for a ne. tr)al. @pon the den)al of th)* ,ot)on the pla)nt)ff e2cepted and +pon appeal to th)* co+rt alle-e*
that the tr)al co+rt erred:
?$.$n *+*ta)n)n- the de,+rrer of the defendant to the pla)nt)ff3* co,pla)nt"
?$$.$n d)*,)**)n- the ca*e"
?$$$.$n not render)n- ;+d-,ent )n accordance .)th the pra1er of the pla)nt)ff3* co,pla)nt"
?$E.Conced)n-, 0+t not ad,)tt)n-, that the ca*e fall* +nder the pro/)*)on* of Act No. 4122, the lo.er
co+rt erred )n not f)nd)n- that the *a)d la. )* +ncon*t)t+t)onal )n that )t conf)*cate* propert1 .)tho+t d+e
proce** of la. and den)e* the eA+al protect)on of the la.* to the pla)nt)ff.
?E.$n not -rant)n- the pla)nt)ff3* ,ot)on for ne. tr)al.?
%he co,pla)nt alle-e*, for a f)r*t ca+*e of act)on, that on <an+ar1 11, 1934, the defendant e2ec+ted and del)/ered to
the pla)nt)ff a pro,)**or1 note for the *+, of (1,888, .)th )ntere*t thereon at the rate of 12 per cent per ann+,, pa1a0le )n
)n*tall,ent* a* *et forth )n *a)d pro,)**or1 note and )n ca*e of defa+lt )n the pa1,ent of the pr)nc)pal or )ntere*t an add)t)onal
*+, eA+al to 28 per cent of the total a,o+nt d+e .a* to 0e pa)d a* attorne13* fee*" that to -+arantee the pa1,ent of th)* note
the defendant e2ec+ted a d+l1 re-)*tered chattel ,ort-a-e on a *illis ++, edan, a+to,o0)le" that one of the cond)t)on* of *a)d
,ort-a-e )* that )f the ,ort-a-ed propert1 0e lo*t, de*tro1ed or da,a-ed, for an1 ca+*e .hat*oe/er, the ,ort-a-ee .o+ld
),,ed)atel1 ha/e the r)-ht to foreclo*e and declare the .hole a,o+nt of the pr)nc)pal and )ntere*t, *ec+red 01 *a)d ,ort-a-e,
d+e and pa1a0le" that on <an+ar1 21, 1934, the ,ort-a-ed a+to,o0)le, .h)le )n po**e**)on and control of the defendant, ,et
.)th an acc)dent re*+lt)n- )n )t* total .rec> and lo**" that 01 rea*on of the fa)l+re of the defendant to replace or to re*tore the
a+to,o0)le to )t* for,er cond)t)on or to pa1 the /al+e thereof pla)nt)ff foreclo*ed )t* ,ort-a-e and .hat re,a)ned of the
.rec>ed a+to,o0)le .a* *old at p+0l)c a+ct)on for the *+, of (78" that after appl1)n- th)* a,o+nt to the acco+nt of defendant
there .a* an +npa)d 0alance of (9=8.39 pl+* )ntere*t at 12 per cent per ann+, fro, March 24, 1934, +nt)l pa)d, and 28 per
cent of the a,o+nt d+e a* attorne13* fee*, .h)ch defendant ref+*ed to pa1 )n *p)te of de,and therefor.
A* a *econd and alternat)/e ca+*e of act)on, the pla)nt)ff reprod+ce* the alle-at)on* conta)ned )n the f)r*t ca+*e of
act)on and alle-e* that another cond)t)on of the a0o/e,ent)oned chattel ,ort-a-e )* that the defendant a-reed to +*e
e2traord)nar1 care and d)l)-ence )n the pre*er/at)on and ,a)ntenance of the ,ort-a-ed propert1 and f+rther en-a-ed to pa1
an1 and all da,a-e* for deter)orat)on, rea*ona0le .ear and tear e2cepted, re*+lt)n- d)rectl1 or )nd)rectl1 fro, carele**ne** or
ne-lect of an1 >)nd on the part of the ,ort-a-or and alle-e* f+rther that thro+-h the carele**ne**, ne-lect or rec>le**
),pr+dence of the defendant and or her a-ent* .h)le the a+to,o0)le .a* )n her po**e**)on or +nder her control the *a,e .a*
totall1 .rec>ed 01 rea*on of .h)ch the pla)nt)ff .a* da,a-ed )n the *+,* ,ent)oned )n the f)r*t ca+*e of act)on and therefore
the pla)nt)ff pra1* that defendant 0e *entenced to pa1 the pla)nt)ff the a0o/eC,ent)oned *+, of (9=8.39 .)th )ntere*t at the rate
of 12 per cent per ann+, fro, March 24, 1934, +nt)l pa)d, and 28 per cent of *a)d *+, a* attorne13* fee* and the co*t* of th)*
ca*e.
%he defendant, a* the onl1 -ro+nd of her de,+rrer, alle-e* that +nder the pro/)*)on* of Act No. 4122, art)cle 1474CA
of the C)/)l Code, there )* no ca+*e of act)on a-a)n*t her. %hat art)cle of the C)/)l Code read* a* follo.*:.
?AR%. 1474CA.$n a contract for the *ale of per*onal propert1 pa1a0le )n )n*tall,ent*, fa)l+re to pa1
t.o or ,ore )n*tall,ent* *hall confer +pon the /endor the r)-ht to cancel the *ale or foreclo*e the ,ort-a-e )f
one ha* 0een -)/en on the propert1, .)tho+t re),0+r*e,ent to the p+rcha*er of the )n*tall,ent* alread1 pa)d,
)f there 0e an a-ree,ent to th)* effect.
?&o.e/er, )f the /endor ha* cho*en to foreclo*e the ,ort-a-e he *hall ha/e no f+rther act)on
a-a)n*t the p+rcha*er for the reco/er1 of an1 +npa)d 0alance o.)n- 01 the *a,e, and an1 a-ree,ent to the
contrar1 *hall 0e n+ll and /o)d.?
Grant)n- that there .a* a contract 0et.een the part)e* for the *ale of per*onal propert1 pa1a0le )n )n*tall,ent*,
.h)ch doe* not clearl1 appear )n the record 0efore th)* co+rt, the co,pla)nt doe* not alle-e nor doe* )t appear )n the record that
there .a* a fa)l+re to pa1 t.o or ,ore )n*tall,ent*. Gn the contrar1 the pro,)**or1 note, cop)ed )n the co,pla)nt, .a*
e2ec+ted <an+ar1 11, 1934, and, accord)n- to the co,pla)nt, on or a0o+t <an+ar1 21, 1934, the a+to,o0)le, .h)le )n the
po**e**)on of the defendant, .a* .rec>ed and 01 rea*on of the fa)l+re of the defendant to replace *a)d a+to,o0)le or to pa1
the /al+e thereof the pla)nt)ff foreclo*ed the ,ort-a-e on .hat re,a)ned of the .rec>ed a+to,o0)le and 0ro+-ht th)* *+)t to
reco/er the 0alance d+e on the pro,)**or1 note e2ec+ted )n )t* fa/or.
$n order to appl1 the pro/)*)on* of art)cle 1474CA of the C)/)l Code )t ,+*t appear that there .a* a contract for the
*ale of per*onal propert1 pa1a0le )n )n*tall,ent* and that there ha* 0een a fa)l+re to pa1 t.o or ,ore )n*tall,ent*.
$n /)e. of the a0o/e, the tr)al co+rt erred )n *+*ta)n)n- the de,+rrer. %he appellant3* f)r*t, *econd, th)rd and f)fth
a**)-n,ent* of error are *+*ta)ned. 5herefore )t )* not nece**ar1 to pa** +pon the fo+rth a**)-n,ent of error.
%he order of the tr)al co+rt d)*,)**)n- the co,pla)nt )* here01 *et a*)de and th)* ca*e .)ll 0e re,anded to the tr)al
co+rt for f+rther proceed)n-* )n accordance .)th la., .)th the co*t* of th)* appeal a-a)n*t the defendantCappellee.
$alcol%, !)ad Santos, Hull, &icers, ,utte and -iaz, JJ., conc+r.
EN BANC
[G.R. No. 49389. Gcto0er 27, 1939.]
LEVY HERMANOS, INC., plaintiff-appellant, vs. LAZARO BLAS GERVACIO, defendant-appellee.
#el)pe Can)0la* for appellant.
!)reu, .ic#auco & Picazo for appellee.
SYLLABUS
1.$N%A!!MEN% A!E" AR%$C!E 1474CA G# %&E C$E$! CGDE 4AC% No. 4122H. ' $n Macondra1 6 Co. vs. De
anto* 433 Gff. GaF., 2178H, .e held that ?)n order to appl1 the pro/)*)on* of art)cle 1474CA of the C)/)l Code )t ,+*t appear that
there .a* a contract for the *ale of per*onal propert1 pa1a0le )n )n*tall,ent* and that there ha* 0een a fa)l+re to pa1 t.o or
,ore )n*tall,ent*.? %he contract, )n the )n*tant ca*e, .h)le a *ale of per*onal propert1, )* not, ho.e/er, one on )n*tall,ent*,
0+t on *tra)-ht ter,, )n .h)ch the 0alance, after pa1,ent of the )n)t)al *+,, *ho+ld 0e pa)d )n )t* total)t1 at the t),e *pec)f)ed )n
the pro,)**or1 note. %he tran*act)on )* not, therefore, the one conte,plated )n Act No. 4122 and accord)n-l1 the ,ort-a-ee )*
not 0o+nd 01 the proh)0)t)on there)n conta)ned a* to )t* r)-ht to the reco/er1 of the +npa)d 0alance.
2.$D." $D. ' @ndo+0tedl1, the la. )* a),ed at tho*e *ale* .here the pr)ce )* pa1a0le )n *e/eral )n*tall,ent*, for,
-enerall1, )t )* )n the*e ca*e* that part)al pa1,ent* con*)*t )n relat)/el1 *,all a,o+nt*, con*t)t+t)n- th+* a -reat te,ptat)on for
),pro/)dent p+rcha*er* to 0+1 0e1ond the)r ,ean*. %here )* no *+ch te,ptat)on .here the pr)ce )* to 0e pa)d )n ca*h, or, a* )n
the )n*tant ca*e, part1 )n ca*h and partl1 )n one ter,, for, )n the latter ca*e, the part)al pa1,ent* are not *o *,all a* to place
p+rcha*er* off the)r -+ard and del+de the, to a ,)*calc+lat)on of the)r a0)l)t1 to pa1. %heoret)call1, perhap*, there )* no
d)fference 0et.een pa1)n- the pr)ce )n t.o )n*tall,ent* and pa1)n- the *a,e partl1 )n ca*h and partl1 )n one )n*tall,ent, )n *o
far a* the *)Fe of each part)al pa1,ent )* concerned" 0+t )n act+al pract)ce the d)fference e2)*t*, for, accord)n- to the re-+lar
co+r*e of 0+*)ne**, )n contract* pro/)d)n- for pa1,ent of the pr)ce )n t.o )n*tall,ent*, there )* -enerall1 a pro/)*)on for )n)t)al
pa1,ent. B+t all the*e con*)derat)on* are ),,ater)al, the lan-+a-e of the la. 0e)n- *o clear a* to reA+)re no con*tr+ct)on at all.
D E C I S I O N
MORAN, J p:
Gn #e0r+ar1 24, 193=, pla)nt)ff f)led a co,pla)nt )n the Co+rt of #)r*t $n*tance of Man)la, .h)ch *+0*tant)all1 rec)te*
the follo.)n- fact*:
Gn March 17, 1937, pla)nt)ff !e/1 &er,ano*, $nc., *old to defendant !aFaro Bla* Ger/ac)o, a (ac>ard car.
Defendant, after ,a>)n- the )n)t)al pa1,ent, e2ec+ted a pro,)**or1 note for the 0alance of (2,488, pa1a0le on or 0efore <+ne
17, 1937, .)th )ntere*t at 12 per cent per ann+,, and to *ec+re the pa1,ent of the note, he ,ort-a-ed the car to the pla)nt)ff.
Defendant fa)led to pa1 the note at )t* ,at+r)t1" .herefore, pla)nt)ff foreclo*ed the ,ort-a-e and the car .a* *old at p+0l)c
a+ct)on, at .h)ch pla)nt)ff .a* the h)-he*t 0)dder for (=88. %he pre*ent act)on )* for the collect)on of the 0alance of (1,988 and
)ntere*t.
Defendant ad,)tted the alle-at)on* of the co,pla)nt, and .)th th)* ad,)**)on, the part)e* *+0,)tted the ca*e for
dec)*)on. %he lo.er co+rt appl)ed the pro/)*)on* of Act No. 4122, )n*erted a* art)cle* 1474CA of the C)/)l Code, and rendered
;+d-,ent )n fa/or of the defendant. (la)nt)ff appealed.
Art)cle 1474CA of the C)/)l Code read* a* follo.*:
?$n a contract for the *ale of per*onal propert1 pa1a0le )n )n*tall,ent*, fa)l+re to pa1 t.o or ,ore
)n*tall,ent* *hall confer +pon the /endor the r)-ht to cancel the *ale or foreclo*e the ,ort-a-e )f one ha*
0een -)/en on the propert1, .)tho+t re),0+r*e,ent to the p+rcha*er of the )n*tall,ent* alread1 pa)d, )f there
0e an a-ree,ent to th)* effect.
?&o.e/er, )f the /endor ha* cho*en to foreclo*e the ,ort-a-e he *hall ha/e no f+rther act)on
a-a)n*t the p+rcha*er for the reco/er1 of an1 +npa)d 0alance o.)n- 01 the *a,e, and an1 a-ree,ent to the
contrar1 *hall 0e n+ll and /o)d.?
$n Macondra1 6 Co. /*. De anto* 433 Gff. GaF., 2178H, .e held that ?)n order to appl1 the pro/)*)on* of art)cle 1474C
A of the C)/)l Code )t ,+*t appear that there .a* a contract for the *ale of per*onal propert1 pa1a0le )n )n*tall,ent* and that
there ha* 0een a fa)l+re to pa1 t.o or ,ore )n*tall,ent*.? %he contract, )n the )n*tant ca*e, .h)le a *ale of per*onal propert1, )*
not, ho.e/er, one on )n*tall,ent*, 0+t on *tra)-ht ter,, )n .h)ch the 0alance, after pa1,ent of the )n)t)al *+,, *ho+ld 0e pa)d )n
)t* total)t1 at the t),e *pec)f)ed )n the pro,)**or1 note. %he tran*act)on )* not, therefore, the one conte,plated )n Act No. 4122
and accord)n-l1 the ,ort-a-ee )* not 0o+nd 01 the proh)0)t)on there)n conta)ned a* to )t* r)-ht to the reco/er1 of the +npa)d
0alance.
@ndo+0tedl1, the la. )* a),ed at tho*e *ale* .here the pr)ce )* pa1a0le )n *e/eral )n*tall,ent*, for, -enerall1, )t )* )n
the*e ca*e* that part)al pa1,ent* con*)*t )n relat)/el1 *,all a,o+nt*, con*t)t+t)n- th+* a -reat te,ptat)on for ),pro/)dent
p+rcha*er* to 0+1 0e1ond the)r ,ean*. %here )* no *+ch te,ptat)on .here the pr)ce )* to 0e pa)d )n ca*h, or, a* )n the )n*tant
ca*e, partl1 )n ca*h and partl1 )n one ter,, for, )n the latter ca*e, the part)al pa1,ent* are not *o *,all a* to place p+rcha*er*
off the)r -+ard and del+de the, to a ,)*calc+lat)on of the)r a0)l)t1 to pa1. %heoret)call1, perhap*, there )* no d)fference 0et.een
pa1)n- the pr)ce )n t.o )n*tall,ent* and pa1)n- the *a,e partl1 )n ca*h and partl1 )n one )n*tall,ent, )n *o far a* the *)Fe of
each part)al pa1,ent )* concerned" 0+t )n act+al pract)ce the d)fference e2)*t*, for, accord)n- to the re-+lar co+r*e of 0+*)ne**,
)n contract* pro/)d)n- for pa1,ent of the pr)ce )n t.o )n*tall,ent*, there )* -enerall1 a pro/)*)on for )n)t)al pa1,ent. B+t all the*e
con*)derat)on* are ),,ater)al, the lan-+a-e of the la. 0e)n- *o clear a* to reA+)re no con*tr+ct)on at all.
%he *+--e*t)on that the ca*h pa1,ent ,ade )n th)* ca*e *ho+ld 0e con*)dered a* an )n*tall,ent )n order to 0r)n- the
contract *+ed +pon +nder the operat)on of the la., )* co,pletel1 +ntena0le. A ca*h pa1,ent cannot 0e con*)dered a* a
pa1,ent 01 )n*tall,ent, and e/en )f )t can 0e *o con*)dered, *t)ll the la. doe* not appl1, for )t reA+)re* nonCpa1,ent of t.o or
,ore )n*tall,ent* )n order that )t* pro/)*)on* ,a1 0e )n/o>ed. &ere, onl1 one )n*tall,ent .a* +npa)d.
<+d-,ent )* re/er*ed, and defendantCappellee )* here01 *entenced to pa1 pla)nt)ffCappellant the *+, of (1,988
)ntere*t at the rate of 12 per cent per ann+, fro, <+ne 17, 1937, and the *+, of (72.8= .)th )ntere*t at the rate of 9 per cent
fro, the date of the f)l)n- of the co,pla)nt, .)th co*t* )n 0oth )n*tance* a-a)n*t the appellee.
!vance"a, C.J., &illa-Real, '%perial, -iaz and Concepcion, JJ., conc+r.
ECGND D$E$$GN
[G.R. No. 17=937. Dece,0er 9, 2887.]
MAGNA FINANCIAL SERVICES GROUP, INC., petitioner, vs. ELIAS COLARINA, respondent.
D E C I S I O N
CHICO-NAZARIO, J p:
%he +nd)*p+ted fact* of th)* ca*e *ho. that on 11 <+ne 1997, El)a* Colar)na 0o+-ht on )n*tall,ent
fro, Ma-na #)nanc)al er/)ce* Gro+p, $nc., one 41H +n)t of +F+>) M+lt)ca0, ,ore part)c+larl1 de*cr)0ed a* follo.*:
MAIEC @J@I$ M@!%$CAB
MGDE!C ER &%
ENG$NE NG.C =34993
#RAME NG.C !%GC897==9CRG7CC
CG!GRC 5&$%E 1
After ,a>)n- a do.n pa1,ent, Colar)na e2ec+ted a pro,)**or1 note for the 0alance of (229,2=4.88 pa1a0le )n th)rt1C*)2 439H eA+al
,onthl1 )n*tall,ent* at (9,399.88 ,onthl1, 0e-)nn)n- 1= <+l1 1997. %o *ec+re pa1,ent thereof, Colar)na e2ec+ted an )nte-rated
pro,)**or1 note and deed of chattel ,ort-a-e o/er the ,otor /eh)cle.
Colar)na fa)led to pa1 the ,onthl1 a,ort)Fat)on 0e-)nn)n- <an+ar1 1999, acc+,+lat)n- an +npa)d 0alance of (131,987.88. De*p)te
repeated de,and*, he fa)led to ,a>e the nece**ar1 pa1,ent. Gn 31 Gcto0er 2888 Ma-na #)nanc)al er/)ce* Gro+p, $nc. f)led a
Co,pla)nt for #oreclo*+re of Chattel Mort-a-e .)th Reple/)n 2 0efore the M+n)c)pal %r)al Co+rt )n C)t)e* 4M%CCH, Branch 2, !e-a*p)
C)t1, doc>eted a* C)/)l Ca*e No. 4=22. 3 @pon the f)l)n- of a Reple/)n Bond, a 5r)t of Reple/)n .a* )**+ed 01 the M%CC. Gn 27
Dece,0er 2888, *+,,on*, to-ether .)th a cop1 of the 5r)t of Reple/)n, .a* *er/ed on Colar)na .ho /ol+ntar)l1 *+rrendered
ph1*)cal po**e**)on of the /eh)cle to the her)ff, Mr. Anton)o !oFano. Gn 82 <an+ar1 2881, the afore*a)d ,otor /eh)cle .a* t+rned
o/er 01 the *her)ff to Ma-na #)nanc)al er/)ce* Gro+p, $nc. Gn 12 <+l1 2881, Colar)na .a* declared )n defa+lt for ha/)n- f)led h)*
an*.er after ,ore than *)2 49H ,onth* fro, the *er/)ce of *+,,on* +pon h),. %here+pon, the tr)al co+rt rendered ;+d-,ent 0a*ed
on the fact* alle-ed )n the Co,pla)nt. $n a dec)*)on dated 23 <+l1 2881, )t held: !
5&ERE#GRE, ;+d-,ent )* here01 rendered )n fa/or of pla)nt)ff Ma-na #)nanc)al er/)ce* Gro+p, $nc. and
a-a)n*t the defendant El)a* Colar)na, order)n- the latter:
aHto pa1 pla)nt)ff the pr)nc)pal *+, of one h+ndred th)rt1 one tho+*and *)2 h+ndred *e/en
4(131,987.88H pe*o* pl+* penalt1 char-e* at 4.7K per ,onth co,p+ted fro, <an+ar1,
1999 +nt)l f+ll1 pa)d"
0Hto pa1 pla)nt)ff (18,888.88 for attorne13* fee*" and
cHto pa1 the co*t*.
%he fore-o)n- ,one1 ;+d-,ent *hall 0e pa)d .)th)n n)net1 498H da1* fro, the entr1 of ;+d-,ent. $n ca*e of
defa+lt )n *+ch pa1,ent, the one 41H +n)t of +F+>) M+lt)ca0, *+0;ect of the .r)t of reple/)n and chattel
,ort-a-e, *hall 0e *old at p+0l)c a+ct)on to *at)*f1 the *a)d ;+d-,ent. "
Colar)na appealed to the Re-)onal %r)al Co+rt 4R%CH of !e-aFp) C)t1, Branch 4, .here the ca*e .a* doc>eted a* C)/)l Ca*e No.
18813. D+r)n- the pendenc1 of h)* appeal 0efore the R%C, Colar)na d)ed and .a* *+0*t)t+ted )n the ca*e 01 h)* he)r*. # $n a
dec)*)on dated 38 <an+ar1 2882, the R%C aff)r,ed in toto the dec)*)on of the M%CC. $
Colar)na f)led a (et)t)on for Re/)e. 0efore the Co+rt of Appeal*, doc>eted a* CACG.R. ( No. 994=1. Gn 21 <an+ar1 2883, the
Co+rt of Appeal* rendered )t* dec)*)on %hold)n-:
. . . 5e f)nd ,er)t )n pet)t)oner*3 a**ert)on that the M%C and the R%C erred )n order)n- the defendant to pa1
the +npa)d 0alance of the p+rcha*e pr)ce of the *+0;ect /eh)cle )rre*pect)/e of the fact that the )n*tant
co,pla)nt .a* for the foreclo*+re of )t* chattel ,ort-a-e. %he pr)nc)pal error co,,)tted 01 the *a)d co+rt*
.a* the)r ),,ed)ate -rant, ho.e/er erroneo+*, of rel)ef )n fa/or of the re*pondent for the pa1,ent of the
+npa)d 0alance .)tho+t con*)der)n- the fact that the /er1 pra1er )t had *o+-ht .a* )ncon*)*tent .)th )t*
alle-at)on )n the co,pla)nt. C%DAaE
Eer)l1, )t )* 0e1ond ca/)l that the co,pla)nt *ee>* the ;+d)c)al foreclo*+re of the chattel ,ort-a-e. %he fact that
the re*pondent had +ncon*c)ona0l1 *o+-ht the pa1,ent of the +npa)d 0alance re-ardle** of )t* co,pla)nt for
the foreclo*+re of the *a)d ,ort-a-e )* -lar)n- proof that )t )ntent)onall1 de/)*ed the *a,e to depr)/e the
defendant of h)* r)-ht*. A ;+d-,ent )n )t* fa/or .)ll )n effect allo. )t to reta)n the po**e**)on and o.ner*h)p of
the *+0;ect /eh)cle and at the *a,e t),e cla), a-a)n*t the defendant for the +npa)d 0alance of )t* p+rcha*e
pr)ce. $n *+ch a ca*e, the re*pondent .o+ld l+c>)l1 ha/e )t* ca>e and eat )t too. @nfort+natel1 for the
defendant, the lo.er co+rt* had read)l1, pro0a0l1 +n.)tt)n-l1, ,ade the,*el/e* a0ettor* to re*pondent3*
de/)*e to the detr),ent of the defendant.
222 222 222
5&ERE#GRE, f)nd)n- error )n the a**a)led dec)*)on, the )n*tant pet)t)on )* here01 GRAN%ED and the
a**a)led dec)*)on )* here01 REEERED AND E% A$DE. !et the record* 0e re,anded to the co+rt of
or)-)n. Accord)n-l1, the foreclo*+re of the chattel ,ort-a-e o/er the *+0;ect /eh)cle a* pra1ed for 01 the
re*pondent )n )t* co,pla)nt .)tho+t an1 r)-ht to *ee> the pa1,ent of the +npa)d 0alance of the p+rcha*e pr)ce
or an1 def)c)enc1 ;+d-,ent a-a)n*t the pet)t)oner* p+r*+ant to Art)cle 14=4 of the C)/)l Code of the
(h)l)pp)ne*, )* here01 GRDERED. 1&
A Mot)on for Recon*)derat)on dated 11 #e0r+ar1 2883 11 f)led 01 Ma-na #)nanc)al er/)ce* Gro+p, $nc., .a* den)ed 01 the Co+rt of
Appeal* )n a re*ol+t)on dated 22 Ma1 2883. 12 &ence, th)* (et)t)on for Re/)e. on Certiorari 0a*ed on the *ole )**+e:
5&A% $ %&E %R@E NA%@RE G# A #GREC!G@RE G# C&A%%E! MGR%GAGE, EL%RA<@D$C$A! GR
<@D$C$A!, A AN ELERC$E G# %&E 3RD G(%$GN @NDER AR%$C!E 14=4, (ARAGRA(& 3 G# %&E
C$E$! CGDE.
$n )t* Me,orand+,, pet)t)oner a**a)l* the dec)*)on of the Co+rt of Appeal* and a**ert* that a ,ort-a-e )* onl1 an acce**or1
o0l)-at)on, the pr)nc)pal one 0e)n- the +nderta>)n- to pa1 the a,o+nt* *ched+led )n the pro,)**or1 note. %o *ec+re the pa1,ent of
the note, a chattel ,ort-a-e )* con*t)t+ted on the th)n- *old. $t ar-+e* that an act)on for foreclo*+re of ,ort-a-e )* act+all1 )n the
nat+re of an act)on for *+, of ,one1 )n*t)t+ted to enforce the pa1,ent of the pro,)**or1 note, .)th e2ec+t)on of the *ec+r)t1. $n ca*e
of an e2tra;+d)c)al foreclo*+re of chattel ,ort-a-e, the pet)t)on ,+*t *tate the a,o+nt d+e on the o0l)-at)on and the *her)ff, after the
*ale, *hall appl1 the proceed* to the +npa)d de0t. %h)*, accord)n- to pet)t)oner, )* the tr+e nat+re of a foreclo*+re proceed)n- a*
pro/)ded +nder R+le 9=, ect)on 2 of the R+le* of Co+rt. 13
Gn the other hand, re*pondent co+ntered that the Co+rt of Appeal* correctl1 *et a*)de the tr)al co+rt3* dec)*)on d+e to the
)ncon*)*tenc1 of the re,ed)e* or rel)ef* *o+-ht 01 the pet)t)oner )n )t* Co,pla)nt .here )t pra1ed for the c+*tod1 of the chattel
,ort-a-e and at the *a,e t),e a*>ed for the pa1,ent of the +npa)d 0alance on the ,otor /eh)cle. 1
Art)cle 14=4 of the C)/)l Code e2pl)c)tl1 pro/)de*:
AR%. 14=4.$n a contract of *ale of per*onal propert1 the pr)ce of .h)ch )* pa1a0le )n )n*tall,ent*, the /endor
,a1 e2erc)*e an1 of the follo.)n- re,ed)e*:
41HE2act f+lf)ll,ent of the o0l)-at)on, *ho+ld the /endee fa)l to pa1"
42HCancel the *ale, *ho+ld the /endee3* fa)l+re to pa1 co/er t.o or ,ore )n*tall,ent*"
43H#oreclo*e the chattel ,ort-a-e or the th)n- *old, )f one ha* 0een con*t)t+ted, *ho+ld the /endee3* fa)l+re
to pa1 co/er t.o or ,ore )n*tall,ent*. $n th)* ca*e, he *hall ha/e no f+rther act)on a-a)n*t the p+rcha*er to
reco/er an1 +npa)d 0alance of the pr)ce. An1 a-ree,ent to the contrar1 *hall 0e /o)d.
G+r +pre,e Co+rt in ,ac#rac# $otor Co., 'nc. v. $illan 1! held: ?@ndo+0tedl1 the pr)nc)pal o0;ect of the a0o/e a,end,ent
4referr)n- to Act 4122 a,end)n- Art. 1474, C)/)l Code of 1==9H .a* to re,ed1 the a0+*e* co,,)tted )n connect)on .)th the
foreclo*+re of chattel ,ort-a-e*. %h)* a,end,ent pre/ent* ,ort-a-ee* fro, *e)F)n- the ,ort-a-ed propert1, 0+1)n- )t at
foreclo*+re *ale for a lo. pr)ce and then 0r)n-)n- the *+)t a-a)n*t the ,ort-a-or for a def)c)enc1 ;+d-,ent. %he al,o*t )n/ar)a0le
re*+lt of th)* proced+re .a* that the ,ort-a-or fo+nd h),*elf ,)n+* the propert1 and *t)ll o.)n- pract)call1 the f+ll a,o+nt of h)*
or)-)nal )nde0tedne**.? $CcDaA
$n )t* Co,pla)nt, Ma-na #)nanc)al er/)ce* Gro+p, $nc. ,ade the follo.)n- pra1er:
5&ERE#GRE, )t )* re*pectf+ll1 pra1ed that ;+d-,ent render order)n- defendant:
1.%o pa1 the pr)nc)pal *+, of (131,987.88 .)th penalt1 char-e* at 4.7K per ,onth fro, <an+ar1 1999 +nt)l
pa)d pl+* l)A+)dated da,a-e*.
2.Grder)n- defendant to re),0+r*e the pla)nt)ff for attorne13* fee at 27K of the a,o+nt d+e pl+* e2pen*e* of
l)t)-at)on at not le** than (18,888.88.
3.Grder)n- defendant to *+rrender to the pla)nt)ff the po**e**)on of the M+lt)ca0 de*cr)0ed )n para-raph 2 of
the co,pla)nt.
4.(la)nt)ff pra1* for other rel)ef* ;+*t and eA+)ta0le )n the pre,)*e*.
$t )* f+rther pra1ed that pendent lite, an Grder of Reple/)n )**+e co,,and)n- the (ro/)nc)al her)ff at !e-aFp)
C)t1 or an1 of h)* dep+t)e* to ta>e *+ch ,+lt)ca0 )nto h)* c+*tod1 and, after ;+d-,ent, +pon defa+lt )n the
pa1,ent of the a,o+nt ad;+d-ed d+e to the pla)nt)ff, to *ell *a)d chattel at p+0l)c a+ct)on )n accordance .)th
the chattel ,ort-a-e la.. 1"
$n )t* Me,orand+, 0efore +*, pet)t)oner re*ol+tel1 declared that )t ha* opted for the re,ed1 pro/)ded +nder Art)cle 14=443H of the
C)/)l Code, 1# that )*, to foreclosethe chattel ,ort-a-e.
$t )*, ho.e/er, +n,)*ta>a0le fro, the Co,pla)nt that pet)t)oner preferred to a/a)l )t*elf of the f)r*t and th)rd re,ed)e* +nder Art)cle
14=4, at the *a,e t),e *+)n- for reple/)n. #or th)* rea*on, the Co+rt of Appeal* ;+*t)f)a0l1 *et a*)de the dec)*)on of the R%C.
(er+*)n- the Co,pla)nt, the pet)t)oner, +nder )t* pra1er n+,0er 1, *o+-ht for the pa1,ent of the +npa)d a,ort)Fat)on* .h)ch )* a
re,ed1 that )* pro/)ded +nder Art)cle 14=441H of the C)/)l Code, allo.)n- an +npa)d /endee to e2act f+lf)ll,ent of the o0l)-at)on. At
the *a,e t),e, pet)t)oner pra1ed that Colar)na 0e ordered to *+rrender po**e**)on of the /eh)cle *o that )t ,a1 +lt),atel1 0e *old at
p+0l)c a+ct)on, .h)ch re,ed1 )* conta)ned +nder Art)cle 14=443H. +ch a *che,e )* not onl1 )rre-+lar 0+t )* a fla-rant c)rc+,/ent)on
of the proh)0)t)on of the la.. B1 pra1)n- for the foreclo*+re of the chattel, Ma-na #)nanc)al er/)ce* Gro+p, $nc. reno+nced .hate/er
cla), )t ,a1 ha/e +nder the pro,)**or1 note. 1$

Art)cle 14=4, para-raph 3, pro/)de* that )f the /endor ha* a/a)led h),*elf of the r)-ht to foreclo*e the chattel ,ort-a-e, ?he *hall
ha/e no f+rther act)on a-a)n*t the p+rcha*er to reco/er an1 +npa)d 0alance of the p+rcha*e pr)ce. An1 a-ree,ent to the contrar1
*hall 0e /o)d.? $n other .ord*, )n all proceed)n-* for the foreclo*+re of chattel ,ort-a-e* e2ec+ted on chattel* .h)ch ha/e 0een *old
on the )n*tall,ent plan, the ,ort-a-ee )* l),)ted to the propert1 )ncl+ded )n the ,ort-a-e. 1%
Contrar1 to pet)t)oner3* cla),, a contract of chattel ,ort-a-e, .h)ch )* the tran*act)on )n/ol/ed )n the pre*ent ca*e, )* )n the nat+re of
a cond)t)onal *ale of per*onal propert1 -)/en a* a *ec+r)t1 for the pa1,ent of a de0t, or the perfor,ance of *o,e other o0l)-at)on
*pec)f)ed there)n, the cond)t)on 0e)n- that the *ale *hall 0e /o)d +pon the *eller pa1)n- to the p+rcha*er a *+, of ,one1 or do)n-
*o,e other act na,ed. 2& $f the cond)t)on )* perfor,ed accord)n- to )t* ter,*, the ,ort-a-e and *ale ),,ed)atel1 0eco,e /o)d, and
the ,ort-a-ee )* there01 d)/e*ted of h)* t)tle. 21 Gn the other hand, )n ca*e of non pa1,ent, foreclo*+re )* one of the re,ed)e*
a/a)la0le to a ,ort-a-ee 01 .h)ch he *+0;ect* the ,ort-a-ed propert1 to the *at)*fact)on of the o0l)-at)on to *ec+re that for .h)ch
the ,ort-a-e .a* -)/en. #oreclo*+re ,a1 0e effected e)ther ;+d)c)all1 or e2tra;+d)c)all1, that )*, 01 ord)nar1 act)on or 01 foreclo*+re
+nder po.er of *ale conta)ned )n the ,ort-a-e. $t ,a1 0e effected 01 the +*+al ,ethod*, )ncl+d)n- *ale of -ood* at p+0l)c
a+ct)on. 22 E2tra;+d)c)al foreclo*+re, a* cho*en 01 the pet)t)oner, )* atta)ned 01 ca+*)n- the ,ort-a-ed propert1 to 0e *e)Fed 01 the
*her)ff, a* a-ent of the ,ort-a-ee, and ha/e )t *old at p+0l)c a+ct)on )n the ,anner pre*cr)0ed 01 ect)on 14 of Act No. 178=, or the
Chattel Mort-a-e !a.. 23 %h)* r+le -o/ern* e2tra;+d)c)al foreclo*+re of chattel ,ort-a-e. aCEcA
$n *+,, *)nce the pet)t)oner ha* +nden)a0l1 elected a re,ed1 of foreclo*+re +nder Art)cle 14=443H of the C)/)l Code, )t )* 0o+nd 01 )t*
elect)on and th+* ,a1 not 0e allo.ed to chan-e .hat )t ha* opted for nor to a*> for ,ore. Gn th)* po)nt, the Co+rt of Appeal*
correctl1 *et a*)de the tr)al co+rt3* dec)*)on and )n*tead rendered a ;+d-,ent of foreclo*+re a* pra1ed for 01 the pet)t)oner.
%he ne2t )**+e of con*eA+ence )* .hether or not there ha* 0een an act+al foreclo*+re of the *+0;ect /eh)cle.
$n the ca*e at 0ar, there )* no d)*p+te that the *+0;ect /eh)cle )* alread1 )n the po**e**)on of the
pet)t)oner, Ma-na #)nanc)al er/)ce* Gro+p, $nc. &o.e/er, act+al foreclo*+re ha* not 0een p+r*+ed, co,,enced or concl+ded 01 )t.
5here the ,ort-a-ee elect* a re,ed1 of foreclo*+re, the la. reA+)re* the act+al foreclo*+re of the ,ort-a-ed chattel. %h+*,
)n $anila $otor Co. v. Fernandez, 2 o+r +pre,e Co+rt *a)d that )t )* act+al *ale of the ,ort-a-ed chattel )n accordance .)th ec.
14 of Act No. 178= that .o+ld 0ar the cred)tor 4.ho choo*e* to foreclo*eH fro, reco/er)n- an1 +npa)d 0alance. 2! And )t )* dee,ed
that there ha* 0een foreclo*+re of the ,ort-a-e .hen all the proceed)n-* of the foreclo*+re, )ncl+d)n- the *ale of the propert1 at
p+0l)c a+ct)on, ha/e 0een acco,pl)*hed. 2"
%hat there *ho+ld 0e act+al foreclo*+re of the ,ort-a-ed /eh)cle .a* re)terated )n the ca*e of -e la Cruz v. !sian Consu%er and
'ndustrial Finance Corporation: 2#
$t )* th+* clear that .h)le A$AN e/ent+all1 *+cceeded )n ta>)n- po**e**)on of the ,ort-a-ed /eh)cle, )t d)d
not p+r*+e the foreclo*+re of the ,ort-a-e a* *ho.n 01 the fact that no a+ct)on *ale of the /eh)cle .a* e/er
cond+cted. A* .e r+led )n Filinvest Credit Corp. v. P#il. !cet/lene Co., 'nc. 4G.R. No. 78449, 38 <an+ar1
19=2, 111 CRA 421H '
@nder the la., the del)/er1 of po**e**)on of the ,ort-a-ed propert1 to the ,ort-a-ee, the here)n appellee,
can onl1 operate to e2t)n-+)*h appellant3* l)a0)l)t1 )f the appellee had act+all1 ca+*ed the foreclo*+re *ale of
the ,ort-a-ed propert1 .hen )t reco/ered po**e**)on thereof 40ort#ern $otors, 'nc. v. Sapinoso, 33 CRA
379 [1978]" 1niversal $otors Corp. v. -/ Hian 2at, 2= CRA 191 [1999]" $anila $otors Co., 'nc. v.
Fernandez, 99 (h)l. 7=2 [1979]H.
Be that a* )t ,a1, altho+-h no act+al foreclo*+re a* conte,plated +nder the la. ha* ta>en place )n th)* ca*e, *)nce the /eh)cle )*
alread1 )n the po**e**)on of Ma-na#)nanc)al er/)ce* Gro+p, $nc. and )t ha* per*)*tentl1 and con*)*tentl1 a/o.ed that )t elect* the
re,ed1 of foreclo*+re, the Co+rt of Appeal*, th+*, r+led correctl1 )n d)rect)n- the foreclo*+re of the *a)d /eh)cle .)tho+t ,ore.
5&ERE#GRE, pre,)*e* con*)dered, the )n*tant pet)t)on )* DEN$ED for lac> of ,er)t and the dec)*)on of the Co+rt of Appeal* dated
21 <an+ar1 2883 )* A##$RMED. Co*t* a-a)n*t pet)t)oner.
G GRDERED.
Puno, !ustria-$artinez, Calle3o, Sr. and 2in(a, JJ., conc+r.
F''()'(*+
1.Rollo, p. 78.
2.Anne2 A, CA Rollo, p. 23.
3.Anne2 $, Rollo, p. 78.
4.CA Rollo, p. 39.
7.CA Rollo, pp. 48C41.
9.CA Rollo, p. 41.
7.CA Rollo, p. 17.
=.Anne2 &, CA Rollo, pp. 43C47.
9.(enned 01 A**oc)ate <+*t)ce <o*ef)na G+e/araCalon-a .)th A**oc)ate <+*t)ce* Mar)na !. B+Fon and Dan)lo B. ()ne,
conc+rr)n-" CA Rollo, pp. 99C73.
18.CA Rollo, pp. 71C73.
11.Rollo, pp. 27C38.
12.Rollo, p. 39.
13.Me,orand+, for the (et)t)oner, p. 3" Rollo, p. =7.
R+le 9=, ect)on 2 of the Re/)*ed R+le* of Co+rt on #oreclo*+re of Real E*tate Mort-a-e pro/)de*:
EC. 2. Jud(%ent on foreclosure for pa/%ent or sale. ' $f +pon the tr)al )n *+ch act)on the co+rt *hall f)nd the fact* *et forth )n
the co,pla)nt to 0e tr+e, )t *hall a*certa)n the a,o+nt d+e to the pla)nt)ff +pon the ,ort-a-e de0t or o0l)-at)on, )ncl+d)n-
)ntere*t and other char-e* a* appro/ed 01 the co+rt, and co*t*, and *hall render ;+d-,ent for the *+, *o fo+nd d+e
and order that the *a,e 0e pa)d to the co+rt or to the ;+d-,ent o0l)-ee .)th)n a per)od of not le** than n)net1 498H da1*
nor ,ore than one h+ndred t.ent1 4128H da1* fro, the entr1 of ;+d-,ent, and that )n defa+lt of *+ch pa1,ent the
propert1 *hall 0e *old at p+0l)c a+ct)on to *at)*f1 the ;+d-,ent.
14.Re;o)nder, Rollo, p. 97.
17.91 (h)l. 489, 417 41937H.
19.CA Rollo, pp. 24C27.
17.Rollo, p. ==.
1=..uneta $otor Co. v. -i%a(i)a, 113 (h)l. =94 41991H.
19.$acondra/ and Co., 'nc. v. ,enito, et al., 92 (h)l. 137, 142 41937H.
28.Act No. 178= ' An Act pro/)d)n- for the Mort-a-)n- of per*onal propert1 and for the re-)*trat)on of the ,ort-a-e* *o
e2ec+ted.
ect)on 3. A chattel ,ort-a-e )* a cond)t)onal *ale of per*onal propert1 a* *ec+r)t1 for the pa1,ent of a de0t, or the perfor,ance
of *o,e other o0l)-at)on *pec)f)ed there)n, the cond)t)on 0e)n- that the *ale *hall 0e /o)d +pon the *eller3* pa1)n- to the
p+rcha*er a *+, of ,one1 or do)n- *o,e other act na,ed. $f the cond)t)on )* perfor,ed accord)n- to )t* ter,* the
,ort-a-e and *ale ),,ed)atel1 0eco,e /o)d, and the ,ort-a-ee )* there01 d)/e*ted of h)* t)tle.
21.,ac#rac# $otor Co. v. Su%%ers, 42 (h)l. 3 41921H.
22.79 C.<.. 4=2 c)ted )n De !eon Cred)t %ran*act)on, 1997 Ed., p. 3=4.
23.,ataan Hard4ood Corporation v. -/ Pac and Co., G.R. No. !C 29492, 29 #e0r+ar1 1972, 43 CRA 478.
ect)on 14, Act No. 178= of the Chattel Mort-a-e !a. pro/)de*:
EC. 14 %he ,ort-a-ee, h)* e2ec+tor, ad,)n)*trator, or a**)-n, ,a1, after th)rt1 da1* fro, the t),e of cond)t)on 0ro>en, ca+*e the
,ort-a-ed propert1, or an1 part thereof, to 0e *old at p+0l)c a+ct)on 01 a p+0l)c off)cer at a p+0l)c place )n the
,+n)c)pal)t1 .here the ,ort-a-or re*)de*, or .here the propert1 )* *)t+ated, pro/)ded at lea*t ten da1* not)ce of the
t),e, place, and p+rpo*e of *+ch *ale ha* 0een po*ted at t.o or ,ore p+0l)c place* )n *+ch ,+n)c)pal)t1, and the
,ort-a-ee, h)* e2ec+tor, ad,)n)*trator, or a**)-n, *hall not)f1 the ,ort-a-or or per*on hold)n- +nder h), and the
per*on* hold)n- *+0*eA+ent ,ort-a-e* of the t),e and place of *ale, e)ther 01 not)ce )n .r)t)n- d)rected to h), or left at
h)* a0ode, )f .)th)n the ,+n)c)pal)t1, or *ent 01 ,a)l )f he doe* not re*)de )n *+ch ,+n)c)pal)t1, at lea*t ten da1* pre/)o+*
to the *ale.
24.99 (h)l. 7=2, 7=9 41979H.
27.Pacific Co%%ercial Co. v. -e la Ra%a, 72 (h)l. 3=8 41941H.
29.$acondra/ & Co., 'nc. v. 2an, 3= G.G. 2989" *ee al*o Radio4ealt#, 'nc. v. .avin, !C1=793, 27 Apr)l 1993, 7 CRA =84" &da.
-e 5uia%)ao, et al. v. $anila $otor Co., 'nc., G.R. No. !C17334, 31 Gcto0er 1991, 3 CRA 444, 44=C449.
27.G.R. No. 94=2=, 1= epte,0er 1992, 214 CRA 183, 187.
ECGND D$E$$GN
[G.R. No. 189999. Ma1 31, 1999.]
ELISCO TOOL MANUFACTURING CORPORATION, petitioner, vs. COURT OF APPEALS, ROLANDO
LANTAN, ,)- RINA LANTAN,respondents.
S/cip, Salazar, Hernandez and Gat%aitan for pet)t)oner.
Ga)riel P. -e Jesus for pr)/ate re*pondent.
SYNOPSIS
Rolando .a* the head of the ca*h depart,ent of El)*co %ool Man+fact+r)n- Corporat)on .hen he entered )nto a car plan a-ree,ent
.)th the latter. %he contract entered )nto on <an+ar1 9, 19=8 pro/)de* that the lea*e rental .a* for (1,818.97 a ,onth for f)/e 1ear*
pa1a0le thr+ *alar1 ded+ct)on, .)th opt)on to p+rcha*e at the end of the 7C1ear per)od or +pon pa1,ent of the 98th ,onthl1 rental
.here all ,onthl1 rental* pa)d *hall 0e appl)ed to the f+ll p+rcha*e pr)ce. $n 19=1, ho.e/er,El)*co %ool cea*ed operat)on* and
Rolando .a* la)d off. Nonethele**, a* of Dece,0er 4, 19=4, Rolando .a* a0le to ,a>e pa1,ent* for the car )n the total a,o+nt of
(91,878.94. %h+*, .hen El)*eo %ool f)led a co,pla)nt a-a)n*t Rolando alle-)n- fa)l+re to pa1 ,onthl1 rental*, the tr)al co+rt held that
Rolando had f+ll1 pa)d the pr)ce of the car. Gn appeal to the Co+rt of Appeal*, the dec)*)on of the tr)al co+rt .a* aff)r,ed in toto.
&ence, th)* pet)t)on for re/)e.. cdasia
Rolando acA+)red the car to A+e*t)on +nder a t1p)cal car plan for e2ec+t)/e* of the El)Falde -ro+p of co,pan)e*, .here the
tran*act)on )* a lea*e )n na,e onl1. %he *oCcalled ,onthl1 rental are )n tr+th ,onthl1 a,ort)Fat)on* on the pr)ce of the car. Rolando3*
defa+lt )n pa1)n- the )n*tall,ent* .a* d+e to the ce**at)on of operat)on* of El)Falde teel Corporat)on, and the latter3* acceptance of
pa1,ent* thro+-h ca*h and chec>* fro, Rolando co+ld ha/e 0een ),pelled *olel1 01 pet)t)oner3* )na0)l)t1 to ded+ct the
a,ort)Fat)on* fro, Rolando 0eca+*e of the ter,)nat)on. &ence, .hen pet)t)oner accepted e/en late pa1,ent* fro, Rolando ,ore
than 2 1ear* after the latter3* e,plo1,ent had 0een ter,)nated, the *a,e con*t)t+ted a .a)/er of pet)t)oner3* r)-ht to collect )ntere*t
+pon the dela1ed pa1,ent*. Con*eA+entl1, the (91,878.94 alread1 pa)d to pet)t)oner .o+ld 0e con*)dered pa1,ent of the f+ll
p+rcha*e pr)ce of the car or the total )n*tall,ent* pa)d. %h+*, )t .a* correctl1 r+led that Rolando had alread1 f+lf)lled h)* part of the
o0l)-at)on.
SYLLABUS
1.C$E$! !A5" CGN%RAC%" %B($CA! CGM(ANB CAR (!AN" E!@C$DA%ED.' Rolando !antan acA+)red the /eh)cle )n A+e*t)on
+nder a car plan for e2ec+t)/e* of the El)Falde -ro+p of co,pan)e*. @nder a t1p)cal car plan, the co,pan1 ad/ance* the p+rcha*e
pr)ce of a car to 0e pa)d 0ac> 01 the e,plo1ee thro+-h ,onthl1 ded+ct)on* fro, h)* *alar1. %he co,pan1 reta)n* o.ner*h)p of the
,otor /eh)cle +nt)l )t *hall ha/e 0een f+ll1 pa)d for. &o.e/er, retent)on of re-)*trat)on of the car )n the co,pan13* na,e )* onl1 a for,
of a l)en on the /eh)cle )n the e/ent that the e,plo1ee .o+ld a0*cond 0efore he ha* f+ll1 pa)d for )t. %here are al*o *t)p+lat)on* )n car
plan a-ree,ent* to the effect that *ho+ld the e,plo1,ent of the e,plo1ee concerned 0e ter,)nated 0efore all )n*tall,ent* are f+ll1
pa)d, the /eh)cle .)ll 0e ta>en 01 the e,plo1er and all )n*tall,ent* pa)d *hall 0e con*)dered rental* per a-ree,ent. cdasia
2.$D." $D." CGN%RAC% G# A!E GN $N%A!!MEN% DENGM$NA%ED A CGN%RAC% G# !EAE, ACING5!EDGED"
REMED$E G# EENDGR" CAE A% BAR. ' %h)* Co+rt ha* lon- 0een a.are of the pract)ce of /endor* of per*onal propert1 of
deno,)nat)n- a contract of *ale on )n*tall,ent a* one of lea*e to pre/ent the o.ner*h)p of the o0;ect of the *ale fro, pa**)n- to the
/endee +nt)l and +nle** the pr)ce )* f+ll1 pa)d, l)>e th)* ca*e. &ence, the contract 0e)n- one of *ale on )n*tall,ent, the Co+rt of
Appeal* correctl1 appl)ed Art. 14=4 and 14=7 of the C)/)l Code .h)ch pro/)de* re,ed)e* the /endor ,a1 e2erc)*e. %he re,ed)e*
pro/)ded for )n Art. 14=4 are alternat)/e, not c+,+lat)/e. %he e2erc)*e of one 0ar* the e2erc)*e of the other*. %h)* l),)tat)on appl)e*
to contract* p+rport)n- to 0e lea*e* of per*onal propert1 .)th opt)on to 0+1 01 /)rt+e of Art. 14=7. %he cond)t)on that the le**or ha*
depr)/ed the le**ee of po**e**)on or en;o1,ent of the th)n- for the p+rpo*e of appl1)n- Art. 14=7 .a* f+lf)lled )n th)* ca*e 01 the
f)l)n- 01 pet)t)oner of the co,pla)nt for reple/)n to reco/er po**e**)on of ,o/a0le propert1. B1 /)rt+e of the .r)t of *e)F+re )**+ed 01
the tr)al co+rt, the dep+t1 *her)ff *e)Fed the /eh)cle on A+-+*t 9, 19=9 and there01 depr)/ed pr)/ate re*pondent* of )t* +*e. %he car
.a* not ret+rned to pr)/ate re*pondent +nt)l Apr)l 19, 19=9, after t.o 42H 1ear* and e)-ht 4=H ,onth*, +pon )**+ance 01 the Co+rt of
Appeal* of a .r)t of e2ec+t)on.
3.$D." $D." $D." $D." (EC$#$C (ER#GRMANCE" A!READB A%$#$ED $N CAE A% BAR. ' %h)* ca*e *ho+ld 0e con*)dered a*
one for *pec)f)c perfor,ance, p+r*+ant to Art. 14=441H, con*)*tent .)th )t* pra1er .)th re*pect to the +npa)d )n*tall,ent*. %he pra1er
for the )**+ance of a .r)t of reple/)n )* onl1 for the p+rpo*e of )n*+r)n- *pec)f)c perfor,ance 01 pr)/ate re*pondent*. &o.e/er,
pr)/ate re*pondent* co+ld no lon-er 0e held l)a0le for the pa1,ent of )ntere*t on +npa)d ,onthl1 ?rental*? or )n*tall,ent* 0eca+*e )t
.a* entered )nto )n p+r*+ance of a car plan adopted 01 the co,pan1 for the 0enef)t of )t* de*er/)n- e,plo1ee*. $ndeed, pr)/ate
re*pondent3* defa+lt )n pa1)n- )n*tall,ent* .a* d+e to the ce**at)on of operat)on* of El)Falde teel Corporat)on, pet)t)oner3* *)*ter
co,pan1. (et)t)oner3* acceptance of pa1,ent* ,ade 01 pr)/ate re*pondent* thro+-h ca*h and chec>* co+ld ha/e 0een ),pelled
*olel1 01 pet)t)oner3* )na0)l)t1 to ded+ct the a,ort)Fat)on* fro, pr)/ate re*pondent Rolando !antan3* *alar1 .h)ch he *topped
rece)/)n- .hen h)* e,plo1,ent .a* ter,)nated )n epte,0er 19=2. Apparentl1, to ,)n),)Fe the ad/er*e con*eA+ence* of the
ter,)nat)on of pr)/ate re*pondent3* e,plo1,ent, pet)t)oner accepted e/en late pa1,ent*. %hat pet)t)oner accepted pa1,ent* fro,
pr)/ate re*pondent Rolando !antan ,ore than t.o 42H 1ear* after the latter3* e,plo1,ent had 0een ter,)nated con*t)t+te* a .a)/er
of pet)t)oner3* r)-ht to collect )ntere*t +pon the dela1ed pa1,ent*. %he 2K *+rchar-e )* not pro/)ded for )n the a-ree,ent. $t*
collect)on 01 the co,pan1 .o+ld )n fact r+n co+nter to the p+rpo*e of pro/)d)n- ?added e,ol+,ent*? to )t* de*er/)n- e,plo1ee*.
Con*eA+entl1, the total a,o+nt of (91,878.94 alread1 pa)d to pet)t)oner *ho+ld 0e con*)dered pa1,ent of the f+ll p+rcha*e pr)ce of
the car or the total )n*tall,ent* pa)d.
4.$D." DAMAGE" CAE A% BAR. ' (r)/ate re*pondent* pre*ented e/)dence that the1 ?felt 0ad, .ere .orr)ed, e,0arra**ed and
,entall1 tort+red? 01 the repo**e**)on of the car. %h)* ha* not 0een re0+tted 01 pet)t)oner. %here )* th+* a fact+al 0a*)* for the
a.ard of ,oral da,a-e*. $n add)t)on, pet)t)oner acted )n a .anton, fra+d+lent, rec>le** and oppre**)/e ,anner )n f)l)n- the )n*tant
ca*e, hence, the a.ard of e2e,plar1 da,a-e* )* ;+*t)f)ed. %he a.ard of attorne13* fee* )* l)>e.)*e proper con*)der)n- that pr)/ate
re*pondent* .ere co,pelled to )nc+r e2pen*e* to protect the)r r)-ht*. C&DAa
D E C I S I O N
MENDOZA, J p:
%h)* )* a pet)t)on for re/)e. of the dec)*)on 1 of the Co+rt of Appeal* .h)ch aff)r,ed in toto the dec)*)on of the
Re-)onal %r)al Co+rt of (a*)-, Branch 71, declar)n- re*pondent *po+*e* Rolando !antan and R)na !antan o.ner* of a 1979
,odel 2Cdoor Colt !ancer car .h)ch the1 had acA+)red +nder a car plan for top e,plo1ee* of the El)Falde -ro+p of
co,pan)e*. cdta)
%he fact* are a* follo.*:
(r)/ate re*pondent Rolando !antan .a* e,plo1ed at the El)*co %ool Man+fact+r)n- Corporat)on a* head of )t* ca*h
depart,ent. Gn <an+ar1 9, 19=8, he entered )nto an a-ree,ent .)th the co,pan1 .h)ch pro/)ded a* follo.*: 2
%hat, EM(!GBER )* the o.ner of a car Colt !ancer 2Cdoor, Model 1979, .)th er)al No. 3483
+nder !%C Re-)*trat)on Cert)f)cate No. 872977="
%hat, for and )n con*)derat)on of a ,onthl1 rental of GNE %&G@AND %EN 6 97M188 GN!B
4(1,818.97H (h)l)pp)ne C+rrenc1, EM(!GBER de*)re to lea*e and EM(!GBEE accept )n lea*e the ,otor
/eh)cle afore,ent)oned for a per)od of #$EE 47H 1ear*"
%hat, the EM(!GBEE a-ree a* he here01 a-reed to pa1 the lea*e rental thr+ *alar1 ded+ct)on
fro, h)* ,onthl1 re,+nerat)on )n the a,o+nt a* a0o/e *pec)f)ed for a per)od of #$EE 47H 1ear*"
%hat, for the d+rat)on of the lea*e contract, all e2pen*e* and co*t* of re-)*trat)on, )n*+rance, repa)r
and ,a)ntenance, -a*ol)ne, o)l, part replace,ent )ncl+*)/e of all e2pen*e* nece**ar1 to ,a)nta)n the /eh)cle
)n top cond)t)on *hall 0e for the acco+nt of the EM(!GBEE"
%hat, at the end of #$EE 47H 1ear per)od or +pon pa1,ent of the 98th ,onthl1 rental, EM(!GBEE
,a1 e2erc)*e the opt)on to p+rcha*e the ,otor /eh)cle fro, the EM(!GBER and all ,onthl1 rental* *hall 0e
appl)ed to the pa1,ent of the f+ll p+rcha*e pr)ce of the car and f+rther, *ho+ld EM(!GBEE de*)re to e2erc)*e
th)* opt)on 0efore the 7C1ear per)od lap*e, he ,a1 do *o +pon pa1,ent of the re,a)n)n- 0alance on the f)/eC
1ear rental +nto the EM(!GBER, )t 0e)n- +nder*tood ho.e/er that the opt)on )* l),)ted to the EM(!GBEE"
%hat, +pon fa)l+re of the EM(!GBEE to pa1 %&REE 43H acc+,+lated ,onthl1 rental* .)ll /e*t +pon
the EM(!GBER the f+ll r)-ht to lea*e the /eh)cle to another EM(!GBEE"
%hat, )n the e/ent of re*)-nat)on and or d)*,)**al fro, the *er/)ce, the EM(!GBEE *hall ret+rn the
*+0;ect ,otor /eh)cle to the EM(!GBER )n )t* co,po+nd at Iala.aan +r, (a*)-, Metro Man)la )n -ood
.or>)n- and 0od1 cond)t)on.
Gn the *a,e da1, <an+ar1 9, 19=8, pr)/ate re*pondent e2ec+ted a pro,)**or1 note read)n- a* follo.*: 3
PR6$'SS6RY 0627
P89,8:;.99
#GR EA!@E RECE$EED, .e pro,)*e to pa1 [to] the order of E!$CG %GG! M#G. CGR(. '
(EC$A! (RG<EC%, at )t* off)ce at Nap)ndan, %a-+)-, Metro Man)la, (h)l)pp)ne*, the *+, of GNE
%&G@AND %EN 6 97M188 (EG 4(1,818.97H, (h)l)pp)ne C+rrenc1, 0e-)nn)n- <an+ar1 9, 19=8, .)tho+t the
nece**)t1 of not)ce or de,and )n accordance .)th the *ched+le of pa1,ent hereto attached a* an )nte-ral
part hereof.
$n ca*e of defa+lt )n the pa1,ent of an1 )n*tall,ent on the *t)p+lated d+e date, .e a-ree to pa1 a*
l)A+)dated da,a-e* 2K of the a,o+nt d+e and +npa)d for e/er1 th)rt1 438H da1* of defa+lt or fract)on thereof.
5here the defa+lt co/er* t.o *+cce**)/e )n*tall,ent*, the ent)re +npa)d 0alance *hall a+to,at)call1 0eco,e
d+e and pa1a0le.

$t )* f+rther a-reed that )f +pon *+ch defa+lt attorne13* *er/)ce* are a/a)led of, an add)t)onal *+,
eA+al to %5EN%B 428KH percent of the total a,o+nt d+e thereon, 0+t )n no ca*e 0e le** than (1,888.88
*hall 0e pa)d to holder4*H hereof a* attorne13* fee* )n add)t)on to the le-al co*t* pro/)ded for 01 la.. 5e a-ree
to *+0,)t to the ;+r)*d)ct)on of the proper co+rt* of Ma>at), Metro Man)la or the (ro/)nce of R)Fal, at the opt)on
of the holder4*H .a)/)n- for th)* p+rpo*e an1 other /en+e.
$n ca*e e2traord)nar1 )nflat)on or deflat)on of the c+rrenc1 *t)p+lated *ho+ld occ+r 0efore th)*
o0l)-at)on )* pa)d )n f+ll, the /al+e of the c+rrenc1 at the t),e of the e*ta0l)*h,ent of the o0l)-at)on .)ll 0e the
0a*)* of pa1,ent.
&older4*H ,a1 accept part)al pa1,ent re*er/)n- h)* r)-ht of reco+r*e a-a)n*t each and all
endor*er* .ho here01 .a)/e DEMAND (REEN%MEN% and NG%$CE.
Acceptance 01 the holder4*H of pa1,ent or an1 part thereof after d+e date *hall not 0e con*)dered
a* e2tend)n- the t),e for the pa1,ent of the afore*a)d o0l)-at)on or a* a ,od)f)cat)on of an1 of the cond)t)on
hereof.
After ta>)n- po**e**)on of the car, pr)/ate re*pondent )n*talled acce**or)e* there)n .orth (17,888.88.
$n 19=1, El)*co %ool cea*ed operat)on*, a* a re*+lt of .h)ch pr)/ate re*pondent Rolando !antan .a* la)d off.
Nonethele**, a* of Dece,0er 4, 19=4, pr)/ate re*pondent .a* a0le to ,a>e pa1,ent* for the car )n the total a,o+nt of
(91,878.94.
Gn <+ne 9, 19=9, pet)t)oner f)led a co,pla)nt, ent)tled ?reple/)n pl+* *+, of ,one1,? a-a)n*t pr)/ate re*pondent
Rolando !antan, h)* .)fe R)na, and t.o other per*on*, )dent)f)ed onl1 a* <ohn and +*an Doe, 0efore the Re-)onal %r)al Co+rt
of (a*)-, Metro Man)la. (et)t)oner alle-ed that pr)/ate re*pondent* fa)led to pa1 the ,onthl1 rental* .h)ch, a* of Ma1 19=9,
totalled (39,874.=9" that de*p)te de,and*, pr)/ate re*pondent* fa)led to *ettle the)r o0l)-at)on there01 ent)tl)n- pet)t)oner to the
po**e**)on of the car" that pet)t)oner .a* read1 to po*t a 0ond )n an a,o+nt do+0le the /al+e of the car, .h)ch .a* (98,888"
and that )n ca*e pr)/ate re*pondent* co+ld not ret+rn the car, the1 *ho+ld 0e held l)a0le for the a,o+nt of (98,888 pl+* the
accr+ed ,onthl1 rental* thereof, .)th )ntere*t at the rate of 14Kper ann+,, +nt)l f+ll1 pa)d. (et)t)oner3* co,pla)nt conta)ned the
follo.)n- pra1er:
5&ERE#GRE, pla)nt)ff* pra1* that ;+d-,ent 0e rendered a* follo.*:
60 2H7 F'RS2 C!1S7 6F !C2'60
Grder)n- defendant Rolando !antan to pa1 the pla)nt)ff the *+, of (39,874.=9 pl+* le-al )ntere*t
fro, the date of de,and +nt)l the .hole o0l)-at)on )* f+ll1 pa)d"
60 2H7 S7C60- C!1S7 6F !C2'60
%o forth.)th )**+e a 5r)t of Reple/)n order)n- the *e)F+re of the ,otor /eh)cle ,ore part)c+larl1
de*cr)0ed )n para-raph 3 of the Co,pla)nt, fro, defendant Rolando !antan andMor defendant* R)na !antan,
<ohn Doe, +*an Doe and other per*on or per*on* )n .ho*e po**e**)on the *a)d ,otor /eh)cle ,a1 0e
fo+nd, co,plete .)th acce**or)e* and eA+)p,ent, and d)rect del)/er thereof to pla)nt)ff )n accordance .)th la.,
and after d+e hear)n- to conf)r, *a)d *e)F+re and pla)nt)ff3* po**e**)on o/er the *a,e"
60 2H7 !.27R0!2'&7 C!1S7 6F !C2'60
$n the e/ent that ,an+al del)/er1 of the *+0;ect ,otor /eh)cle cannot 0e effected for an1 rea*on, to
render ;+d-,ent )n fa/or of pla)nt)ff and a-a)n*t defendant Roland !antan order)n- the latter to pa1 the *+,
of $L%B %&G@AND (EG 4(98,888.88H .h)ch )* the e*t),ated act+al /al+e of the a0o/eCde*cr)0ed
,otor /eh)cle, pl+* the accr+ed ,onthl1 rental* thereof .)th )ntere*t* at the rate of fo+rteen percent
414KH per ann+, +nt)l f+ll1 pa)d"
PR!Y7R C6$$60 26 !.. C!1S7S 6F !C2'60
1.Grder)n- the defendant Rolando !antan to pa1 the pla)nt)ff an a,o+nt eA+)/alent to t.ent1Cf)/e
percent 427KH of h)* o+t*tand)n- o0l)-at)on, for and a* attorne13* fee*"
2.Grder)n- defendant* to pa1 the co*t or e2pen*e* of collect)on, repo**e**)on, 0ond)n- fee* and
other )nc)dental e2pen*e* to 0e pro/ed d+r)n- the tr)al" and
3.Grder)n- defendant* to pa1 the co*t* of *+)t.
(la)nt)ff al*o pra1* for *+ch f+rther rel)ef* a* th)* &onora0le Co+rt ,a1 dee, ;+*t and eA+)ta0le
+nder the pre,)*e*.
@pon pet)t)oner3* po*t)n- a 0ond )n the a,o+nt of (128,888, the *her)ff too> po**e**)on of the car )n A+e*t)on and
after f)/e 47H da1* t+rned )t o/er to pet)t)oner.
$n d+e t),e, pr)/ate re*pondent* f)led the)r an*.er. %he1 cla),ed that the a-ree,ent on .h)ch the co,pla)nt .a*
0a*ed had not 0een *)-ned 01 pet)t)oner3* repre*entat)/e, <o*e Ma. . del Galle-o, altho+-h )t had 0een *)-ned 01 pr)/ate
re*pondent Rolando !antan" that the)r tr+e a-ree,ent .a* ?to 0+1 and *ell and not lea*e .)th opt)on to 0+1? the car )n A+e*t)on
at a ,onthl1 a,ort)Fat)on of (1,888" and that pet)t)oner accepted the )n*tall,ent pa1,ent* ,ade 01 the, and, )n <an+ar1
19=9, a-reed that the 0alance of the p+rcha*e pr)ce .o+ld 0e pa)d on or 0efore Dece,0er 31, 19=9. (r)/ate re*pondent* c)ted
the pro/)*)on of the a-ree,ent ,a>)n- re*pondent Rolando !antan l)a0le for the e2pen*e* for re-)*trat)on, )n*+rance, repa)r
and ,a)ntenance, -a*ol)ne, o)l and part replace,ent*, )ncl+*)/e of all nece**ar1 e2pen*e*, a* e/)dence that the tran*act)on
.a* one of *ale. (r)/ate re*pondent* f+rther alle-ed that, )n an1 e/ent, pet)t)oner had .a)/ed )t* r)-ht* +nder the a-ree,ent
0eca+*e of the follo.)n- c)rc+,*tance*: 4aH .h)le the part)e* a-reed that pa1,ent .a* to 0e ,ade thro+-h *alar1 ded+ct)on,
pet)t)oner accepted pa1,ent* )n ca*h or chec>*" 40H altho+-h the1 a-reed that +pon the e,plo1ee3* re*)-nat)on, the car *ho+ld
0e ret+rned to the e,plo1er, pr)/ate re*pondent Rolando !antan .a* not reA+)red to do *o .hen he re*)-ned )n epte,0er
19=2" 4cH pet)t)oner d)d not lea*e the /eh)cle to another e,plo1ee after pr)/ate re*pondent Rolando !antan had alle-edl1 fa)led
to pa1 three ,onthl1 ?rental*?" and 4dH pet)t)oner fa)led to enforce the ,anner of pa1,ent +nder the a-ree,ent 01 )t*
acceptance of pa1,ent* )n /ar)o+* a,o+nt* and on d)fferent date*. cda*)a
$n )t* repl1, pet)t)oner ,a)nta)ned that the contract 0et.een the part)e* .a* one of lea*e .)th opt)on to p+rcha*e and
that the pro,)**or1 note .a* ,erel1 a ?no,)nal *ec+r)t1? for the a-ree,ent. $t contended that the ,ere acceptance of the
a,o+nt* pa)d 01 pr)/ate re*pondent* and for )ndef)n)te per)od* of t),e .a* not e/)dence that the part)e*3 a-ree,ent .a* one of
p+rcha*e and *ale. Ne)ther .a* )t -+)lt1 of lache* 0eca+*e, +nder the la., an act)on 0a*ed on a .r)tten contract can 0e 0ro+-ht
.)th)n ten 418H 1ear* fro, the t),e the act)on accr+e*. Gn A+-+*t 31, 19=7, the tr)al co+rt ! rendered )t* dec)*)on.
%he tr)al co+rt *+*ta)ned pr)/ate re*pondent*3 cla), that the a-ree,ent )n A+e*t)on .a* one of *ale and held that the
latter had f+ll1 pa)d the pr)ce of the car ha/)n- pa)d the total a,o+nt of (91,878.94 a*)de fro, )n*tall)n- acce**or)e* )n the car
.orth (17,888.88. a)d the tr)al co+rt:
(la)nt)ff no. co,e* cla),)n- o.ner*h)p of the car )n A+e*t)on and ha* *+cceeded )n repo**e**)n-
the *a,e 01 /)rt+e of the .r)t of *e)F+re )**+ed )n th)* ca*e on <+l1 29, 19=9. Not content .)th reco/er)n-
po**e**)on of the *a)d car, pla)nt)ff *t)ll a*>* that defendant* *ho+ld pa1 )t the *+, of (39,874.=9, alle-edl1
repre*ent)n- the rental* d+e on the car fro, the t),e of the la*t pa1,ent ,ade 01 defendant* to )t*
repo**e**)on thereof. %h)* )* )ndeed a cla**)c ca*e of one ha/)n- h)* ca>e and eat)n- )t tooN @nder the Recto
la. 4Art*. 14=4 6 14=7, C)/)l CodeH, the /endor .ho repo**e**e* the -ood* *old on )n*tall,ent*, ha* no r)-ht
to *+e the /endee for the +npa)d 0alance thereof.
%he Co+rt can ta>e ;+d)c)al not)ce of the pract)ce .here)n e2ec+t)/e* en;o1 car plan* )n pro-re**)/e
co,pan)e*. %he a-ree,ent of <an+ar1 9, 19=8 0et.een the part)e* )* one *+ch car plan. $f defendant
Rolando !antan fa)led to >eep +p .)th h)* a,ort)Fat)on* on the car )n A+e*t)on, )t .a* not 0eca+*e of h)* o.n
l)>)n- 0+t rather he .a* p+*hed to )t 01 c)rc+,*tance* .hen h)* e,plo1er folded +p and *ent h), to the
*treet*. %hat pla)nt)ff .a* -)/)n- all the chance to defendant* to pa1 the /al+e of the car and acA+)re f+ll
o.ner*h)p thereof )* *ho.n 01 the dela1 )n )n*t)t+t)n- the )n*tant ca*e. . . .
%he co+rt l)>e.)*e fo+nd that the a,o+nt of (91,878.94 )ncl+ded a 2K penalt1 for the late pa1,ent* for .h)ch there
.a* no *t)p+lat)on )n the a-ree,ent:
. . . %he a-ree,ent and defendant Roland !antan3* pro,)**or1 note of <an+ar1 9, 19=8 do not
pro/)de e/en for )ntere*t on the re,a)n)n- 0alance of the p+rcha*e pr)ce of the car. %h)* pr)/)le-e e2tended
01 corporat)on* to the)r top e2ec+t)/e* )* con*)dered add)t)onal e,ol+,ent to the,. And *o the rea*on for the
lac> of pro/)*)on for )ntere*t, ,+ch le** penalt1 char-e*. %herefore, all pa1,ent* ,ade 01 defendant *ho+ld
0e appl)ed to the pr)nc)pal acco+nt. )nce the pr)nc)pal .a* onl1 (98,939.88, the defendant* ha/e ,ade an
o/erpa1,ent of (431.94 .h)ch *ho+ld 0e ret+rned to defendant 01 pla)nt)ff.
#or th)* rea*on, )t ordered pet)t)oner to pa1 pr)/ate re*pondent* the a,o+nt of (431.94 a* e2ce** pa1,ent, a* .ell a* rental*
at the rate of (1,888 a ,onth for depr)/)n- pr)/ate re*pondent* of the +*e of the)r car, and ,oral da,a-e* for the .orr1,
e,0arra**,ent, and ,ental tort+re *+ffered 01 the, on acco+nt of the repo**e**)on of the car.
%he d)*po*)t)/e port)on of the tr)al co+rt3* dec)*)on read* a* follo.*:
5&ERE#GRE, ;+d-,ent )* here01 rendered )n fa/or of defendant* and a-a)n*t pla)nt)ff, d)*,)**)n-
pla)nt)ff3* co,pla)nt" declar)n- defendant* the la.f+l o.ner* of that Colt !ancer 2Cdoor, Model 1979 .)th
er)al No. 3483 +nder Re-)*trat)on Cert)f)cate No. 872977=" order)n- pla)nt)ff to del)/er to defendant* the
afore*a)d ,otor /eh)cle co,plete .)th all the acce**or)e* )n*talled there)n 01 defendant*" *ho+ld for an1
rea*on pla)nt)ff )* +na0le to del)/er the *a)d car to defendant*, pla)nt)ff )* ordered to pa1 to defendant* the
/al+e of *a)d car )n the *+, of (98,939.88 pl+* (17,888.88, the /al+e of the acce**or)e*, pl+* )ntere*t of
12K on the *a)d *+,* fro, A+-+*t 9, 19=9" and *entenc)n- pla)nt)ff to pa1 defendant* the follo.)n- *+,*:

aH(12,431.94 a* act+al da,a-e* 0ro>en do.n a* follo.*:
1H(431.94 o/erpa1,ent ,ade 01 defendant* to pla)nt)ff" and
2H(12,888.88 rental on the car )n A+e*t)on fro, A+-+*t 9, 19=9 to A+-+*t 7, 19=7, pl+*
the *+, of (1,888.88 a ,onth 0e-)nn)n- A+-+*t 9, 19=7 +nt)l the car )*
ret+rned 01 pla)nt)ff to, and )* rece)/ed 01, defendant"
0Hthe *+, of (28,888.88 a* ,oral da,a-e*"
cHthe *+, of (7,888.88 a* e2e,plar1 da,a-e*" and
dHthe *+, of (7,888.88 a* attorne13* fee*.
Co*t* a-a)n*t the pla)nt)ff.
G GRDERED.
(et)t)oner appealed to the Co+rt of Appeal*. Gn the other hand, pr)/ate re*pondent* f)led a ,ot)on for e2ec+t)on
pend)n- appeal. $n )t* re*ol+t)on of March 9, 19=9, the Co+rt of Appeal* -ranted pr)/ate re*pondent*3 ,ot)on and, +pon the
f)l)n- of a 0ond, )n the a,o+nt of (78,888.88, )t )**+ed a .r)t of e2ec+t)on, p+r*+ant to .h)ch the car .a* del)/ered to pr)/ate
re*pondent* on Apr)l 19, 19=9. "
Gn A+-+*t 29, 1992, the Co+rt of Appeal* rendered )t* dec)*)on, aff)r,)n- in toto the dec)*)on of the tr)al co+rt.
&ence, the )n*tant pet)t)on for re/)e. oncertiorari.
(et)t)oner contend* that the Co+rt of Appeal* erred '
4aH)n d)*re-ard)n- the ad,)**)on )n the plead)n-* a* to .hat doc+,ent* conta)n the ter,* of the part)e*3
a-ree,ent.
40H)n hold)n- that the )ntere*t *t)p+lat)on )n re*pondent*3 (ro,)**or1 Note .a* not /al)d and 0)nd)n-.
4cH)n hold)n- that re*pondent* had f+ll1 pa)d the)r o0l)-at)on*.
$t f+rther ar-+e* that '
Gn the a**+,pt)on that the !ea*e A-ree,ent .)th opt)on to 0+1 )n th)* ca*e ,a1 0e treated a* a *ale on
)n*tall,ent*, the re*pondent Co+rt of Appeal* nonethele** erred )n not f)nd)n- that the part)e* ha/e /al)dl1
a-reed that the pet)t)oner a* *eller ,a1 [)] cancel the contract +pon the re*pondent3* defa+lt on three or ,ore
)n*tall,ent*, [))] reta>e po**e**)on of the per*onal)t1, and [)))] >eep the rent* alread1 pa)d.
First. (et)t)oner doe* not den1 that pr)/ate re*pondent Rolando !antan acA+)red the /eh)cle )n A+e*t)on +nder a car
plan for e2ec+t)/e* of the El)Falde -ro+p of co,pan)e*. @nder a t1p)cal car plan, the co,pan1 ad/ance* the p+rcha*e pr)ce of
a car to 0e pa)d 0ac> 01 the e,plo1ee thro+-h ,onthl1 ded+ct)on* fro, h)* *alar1. %he co,pan1 reta)n* o.ner*h)p of the
,otor /eh)cle +nt)l )t *hall ha/e 0een f+ll1 pa)d for. # &o.e/er, retent)on of re-)*trat)on of the car )n the co,pan13* na,e )* onl1
a for, of a l)en on the /eh)cle )n the e/ent that the e,plo1ee .o+ld a0*cond 0efore he ha* f+ll1 pa)d for )t. %here are al*o
*t)p+lat)on* )n car plan a-ree,ent* to the effect that *ho+ld the e,plo1,ent of the e,plo1ee concerned 0e ter,)nated 0efore
all )n*tall,ent* are f+ll1 pa)d, the /eh)cle .)ll 0e ta>en 01 the e,plo1er and all )n*tall,ent* pa)d *hall 0e con*)dered rental* per
a-ree,ent. $
%h)* Co+rt ha* lon- 0een a.are of the pract)ce of /endor* of per*onal propert1 of deno,)nat)n- a contract of *ale on
)n*tall,ent a* one of lea*e to pre/ent the o.ner*h)p of the o0;ect of the *ale fro, pa**)n- to the /endee +nt)l and +nle** the
pr)ce )* f+ll1 pa)d. A* th)* Co+rt noted )n &da. de Jose v. ,arrueco: %
eller* de*)ro+* of ,a>)n- cond)t)onal *ale* of the)r -ood*, 0+t .ho do not .)*h openl1 to ,a>e a
0ar-a)n )n that for,, for one rea*on or another, ha/e freA+entl1 re*orted to the de/)ce of ,a>)n- contract* )n
the for, of lea*e* e)ther .)th opt)on* to the 0+1er to p+rcha*e for a *,all con*)derat)on at the end of ter,,
pro/)ded the *oCcalled rent ha* 0een d+l1 pa)d, or .)th *t)p+lat)on* that )f the rent thro+-ho+t the ter, )* pa)d,
t)tle *hall there+pon /e*t )n the le**ee. $t )* o0/)o+* that *+ch tran*act)on* are lea*e* onl1 )n na,e. %he *oC
called rent ,+*t nece**ar)l1 0e re-arded a* pa1,ent of the pr)ce )n )n*tall,ent* *)nce the d+e pa1,ent of
the a-reed a,o+nt re*+lt*, 01 the ter,* of the 0ar-a)n, )n the tran*fer of t)tle to the le**ee. ca*)a
$n an earl)er ca*e, $anila Gas Corporation v. Calupitan, 1& .h)ch )n/ol/ed a lea*e a-ree,ent of a *to/e and a .ater
heater, the Co+rt *a)d:
. . . [5]e are of the op)n)on, and *o hold, that .hen )n a *oCcalled contract of lea*e of per*onal
propert1 )t )* *t)p+lated that the alle-ed le**ee *hall pa1 a certa)n a,o+nt +pon *)-n)n- the contract, and on
or 0efore the 7th of e/er1 ,onth, another *pec)f)c a,o+nt, 01 .a1 of rental, -)/)n- the alle-ed le**ee the
r)-ht of opt)on to 0+1 the *a)d per*onal propert1 0efore the e2p)rat)on of the per)od of lea*e, .h)ch )* the
per)od nece**ar1 for the pa1,ent of the *a)d a,o+nt at the rate of *o ,+ch a ,onth, ded+ct)n- the
pa1,ent* ,ade 01 .a1 of ad/ance and alle-ed ,onthl1 rental*, and the *a)d alle-ed le**ee ,a>e* the
ad/ance pa1,ent and other ,onthl1 )n*tall,ent*, not)n- )n h)* acco+nt and )n the rece)pt* )**+ed to h), that
*a)d pa1,ent* are on acco+nt of the pr)ce of the per*onal propert1 alle-edl1 lea*ed, *a)d contract )* one of
*ale on )n*tall,ent and not of lea*e. 11
$n 1.S. Co%%ercial v. Halili, 12 a lea*e a-ree,ent .a* declared to 0e )n fact a *ale of per*onal propert1 01
)n*tall,ent. a)d the Co+rt: 13
. . . %here can hardl1 0e an1 A+e*t)on that the *oCcalled contract* of lea*e on .h)ch the pre*ent
act)on )* 0a*ed .ere /er)ta0le lea*e* of per*onal propert1 .)th opt)on to p+rcha*e, and a* *+ch co,e .)th)n
the p+r/)e. of the a0o/e art)cle [Art. 1474CA of the old C)/)l Code on *ale of per*onal propert1 01 )n*tall,ent].
$n fact the )n*tr+,ent* 4E2h)0)t* 3A3 and 3B3H e,0od1)n- the contract* 0ear the head)n- or t)tle 3!ea*eCale
4!ea*eCale of %ran*portat)on andMor Mechan)cal EA+)p,entH.3 %he contract* f)2 the /al+e of the /eh)cle*
con/e1ed to the le**ee and e2pre**l1 refer to the re,a)nder of *a)d /al+e after ded+ct)on of the do.n
pa1,ent ,ade 01 the le**ee a* 3the +npa)d 0alance of the purc#ase price of the lea*ed eA+)p,ent.3 %he
contract* al*o pro/)de that +pon the f+ll /al+e 4pl+* *t)p+lated )ntere*tH 0e)n- pa)d, the lea*e .o+ld ter,)nate
and t)tle to the lea*ed propert1 .o+ld 0e tran*ferred to the le**ee. $ndeed, a* the defendantCappellant po)nt*
o+t, the )ncl+*)on of a cla+*e .a)/)n- 0enef)t of Art)cle 1474CA of the old C)/)l Code )* concl+*)/e proof of the
part)e*3 +nder*tand)n- that the1 .ere enter)n- )nto a lea*e contract .)th opt)on to p+rcha*e .h)ch co,e
.)th)n the p+r/)e. of *a)d art)cle.
Be)n- lea*e* of per*onal propert1 .)th opt)on to p+rcha*e a* conte,plated )n the a0o/e art)cle, the
contract* )n A+e*t)on are *+0;ect to the pro/)*)on that .hen the le**or )n *+ch ca*e ?ha* cho*en to depr)/e
the le**ee of the en;o1,ent of *+ch per*onal propert1,? ?he *hall ha/e no f+rther act)on? a-a)n*t the le**ee
?for the reco/er1 of an1 +npa)d 0alance? o.)n- 01 the latter, ?a-ree,ent to the contrar1 0e)n- n+ll and /o)d.?
$t .a* held that )n choo*)n- to depr)/e the defendant of po**e**)on of the lea*ed /eh)cle*, the pla)nt)ff .a)/ed )t* r)-ht to 0r)n-
an act)on to reco/er +npa)d rental* on the *a)d /eh)cle*.
$n the ca*e at 0ar, altho+-h the a-ree,ent pro/)de* for the pa1,ent 01 pr)/ate re*pondent* of ?,onthl1 rental*,? the
f)fth para-raph thereof -)/e* the, the opt)on to p+rcha*e the ,otor /eh)cle at the end of the 7th 1ear or +pon pa1,ent of the
98th ,onthl1 rental .hen ?all ,onthl1 rental* *hall 0e appl)ed to the pa1,ent of the full purc#ase price of t#e car.? $t )* clear
that the tran*act)on )n th)* ca*e )* a lea*e )n na,e onl1. %he *oCcalled ,onthl1 rental* are )n tr+th ,onthl1 a,ort)Fat)on* on the
pr)ce of the car.
Second. %he contract 0e)n- one of *ale on )n*tall,ent, the Co+rt of Appeal* correctl1 appl)ed to )t the follo.)n-
pro/)*)on* of the C)/)l Code:
AR%. 14=4.$n a contract of *ale of per*onal propert1 the pr)ce of .h)ch )* pa1a0le )n )n*tall,ent*,
the /endor ,a1 e2erc)*e an1 of the follo.)n- re,ed)e*:
41HE2act f+lf)ll,ent of the o0l)-at)on, *ho+ld the /endee fa)l to pa1"
42HCancel the *ale, *ho+ld the /endee3* fa)l+re to pa1 co/er t.o or ,ore )n*tall,ent*"
43H#oreclo*e the chattel ,ort-a-e on the th)n- *old, )f one ha* 0een con*t)t+ted, *ho+ld the
/endee3* fa)l+re to pa1 co/er t.o or ,ore )n*tall,ent*. $n th)* ca*e, he *hall ha/e no
f+rther act)on a-a)n*t the p+rcha*er to reco/er an1 +npa)d 0alance of the pr)ce. An1
a-ree,ent to the contrar1 *hall 0e /o)d.
AR%. 14=7.%he preced)n- art)cle *hall 0e appl)ed to contract* p+rport)n- to 0e lea*e* of per*onal
propert1 .)th opt)on to 0+1, .hen the le**or ha* depr)/ed the le**ee of the po**e**)on or en;o1,ent of the
th)n-.
%he re,ed)e* pro/)ded for )n Art. 14=4 are alternat)/e, not c+,+lat)/e. %he e2erc)*e of one 0ar* the e2erc)*e of the
other*. 1 %h)* l),)tat)on appl)e* to contract* p+rport)n- to 0e lea*e* of per*onal propert1 .)th opt)on to 0+1 01 /)rt+e of Art.
14=7. 1! %he cond)t)on that the le**or ha* depr)/ed the le**ee of po**e**)on or en;o1,ent of the th)n- for the p+rpo*e of
appl1)n- Art. 14=7 .a* f+lf)lled )n th)* ca*e 01 the f)l)n- 01 pet)t)oner of the co,pla)nt for reple/)n to reco/er po**e**)on of
,o/a0le propert1. B1 /)rt+e of the .r)t of *e)F+re )**+ed 01 the tr)al co+rt, the dep+t1 *her)ff *e)Fed the /eh)cle on A+-+*t 9,
19=9 and there01 depr)/ed pr)/ate re*pondent* of )t* +*e. 1" %he car .a* not ret+rned to pr)/ate re*pondent +nt)l Apr)l 19,
19=9, after t.o 42H 1ear* and e)-ht 4=H ,onth*, +pon )**+ance 01 the Co+rt of Appeal* of a .r)t of e2ec+t)on. 1#
(et)t)oner pra1ed that pr)/ate re*pondent* 0e ,ade to pa1 the *+, of (39,874.=9, the a,o+nt that the1 .ere
*+ppo*ed to pa1 a* of Ma1 19=9, pl+* )ntere*t at the le-al rate. 1$ At the *a,e t),e, )t pra1ed for the )**+ance of a .r)t of
reple/)n or the del)/er1 to )t of the ,otor /eh)cle ?co,plete .)th acce**or)e* and eA+)p,ent.? 1% $n the e/ent the car co+ld not
0e del)/ered to pet)t)oner, )t .a* pra1ed that pr)/ate re*pondent Rolando !antan 0e ,ade to pa1 pet)t)oner the a,o+nt of
(98,888.88, the ?e*t),ated act+al /al+e? of the car, ?pl+* accr+ed ,onthl1 rental* thereof .)th )ntere*t* at the rate of fo+rteen
percent 414KH per ann+, +nt)l f+ll1 pa)d.? 2& %h)* pra1er of co+r*e cannot 0e -ranted, e/en a**+,)n- that pr)/ate re*pondent*
ha/e defa+lted )n the pa1,ent of the)r o0l)-at)on. %h)* led the tr)al co+rt to *a1 that pet)t)oner .anted to eat )t* ca>e and ha/e )t
too.

Not.)th*tand)n- th)* ),po**)0)l)t1 )n pet)t)oner3* cho)ce of re,ed1, th)* ca*e *ho+ld 0e con*)dered a* one for *pec)f)c
perfor,ance, p+r*+ant to Art. 14=441H, con*)*tent .)th )t* pra1er .)th re*pect to the +npa)d )n*tall,ent* a* of Ma1 19=9. $n th)*
/)e., the pra1er for the )**+ance of a .r)t of reple/)n )* onl1 for the p+rpo*e of )n*+r)n- *pec)f)c perfor,ance 01 pr)/ate
re*pondent*.
Both the tr)al co+rt and the Co+rt of Appeal* correctl1 r+led that pr)/ate re*pondent* co+ld no lon-er 0e held l)a0le
for the a,o+nt* of (39,874.=9 or (98,888.88 0eca+*e pr)/ate re*pondent* had f+lf)lled the)r part of the o0l)-at)on. %he
a-ree,ent doe* not pro/)de for the pa1,ent of )ntere*t on +npa)d ,onthl1 ?rental*? or )n*tall,ent* 0eca+*e )t .a* entered )nto
)n p+r*+ance of a car plan adopted 01 the co,pan1 for the 0enef)t of )t* de*er/)n- e,plo1ee*. A* the tr)al co+rt correctl1 noted,
the car plan .a* )ntended to -)/e add)t)onal 0enef)t* to e2ec+t)/e* of the El)Falde -ro+p of co,pan)e*.
(et)t)oner contend* that the pro,)**or1 note pro/)de* for *+ch )ntere*t pa1,ent. &o.e/er, a* the Co+rt of Appeal*
held:
%he pro,)**or1 note )n .h)ch the 2K ,onthl1 )ntere*t on dela1ed pa1,ent* appear* doe* not for,
part of the contract. %here )* no con*)derat)on for the pro,)**or1 note. %here )* noth)n- to *ho. that pla)nt)ff
ad/anced the p+rcha*e pr)ce of the /eh)cle for !antan *o a* to ,a>e the latter )nde0ted to the for,er for the
a,o+nt *tated )n the pro,)**or1 note. %h+*, a* *tated )n the co,pla)nt: ?%hat *o,et),e )n <an+ar1, 19=8,
defendant Rolando !antan entered )nto an a-ree,ent .)th the pla)nt)ff for the lea*e of a ,otor /eh)cle
*+ppl)ed 01 the latter, .)th the opt)on to p+rcha*e at the end of the per)od of lea*e . . .? $n other .ord*,
pla)nt)ff d)d not 0+1 the /eh)cle for Rolando !antan, ad/anc)n- the p+rcha*e pr)ce for that p+rpo*e. %here )*
noth)n- )n the co,pla)nt or )n the e/)dence to *ho. *+ch arran-e,ent. %herefore, there .a* no )nde0tedne**
*ec+red 01 a pro,)**or1 note to *pea> of. %here 0e)n- no con*)derat)on for the pro,)**or1 note, the *a,e,
)ncl+d)n- the penalt1 cla+*e conta)ned thereon, ha* no 0)nd)n- effect. 21
%here )* no e/)dence that pr)/ate re*pondent* rece)/ed the a,o+nt of (98,939.88 )nd)cated )n the pro,)**or1 note
a* )t* /al+e. 5hat .a* pro/en 0elo. )* the fact that pr)/ate re*pondent* rece)/ed fro, pet)t)oner the 2Cdoor Colt !ancer car
.h)ch .a* /al+ed at (98,888 and for .h)ch pr)/ate re*pondent Rolando !antan pa)d ,onthl1 a,ort)Fat)on* of (1,818.97
thro+-h *alar1 ded+ct)on*.
$ndeed, a* alread1 *tated, pr)/ate re*pondent*3 defa+lt )n pa1)n- )n*tall,ent* .a* d+e to the ce**at)on of operat)on*
of El)Falde teel Corporat)on, pet)t)oner3* *)*ter co,pan1. (et)t)oner3* acceptance of pa1,ent* ,ade 01 pr)/ate re*pondent*
thro+-h ca*h and chec>* co+ld ha/e 0een ),pelled *olel1 01 pet)t)oner3* )na0)l)t1 to ded+ct the a,ort)Fat)on* fro, pr)/ate
re*pondent Rolando !antan3* *alar1 .h)ch he *topped rece)/)n- .hen h)* e,plo1,ent .a* ter,)nated )n epte,0er 19=2.
Apparentl1, to ,)n),)Fe the ad/er*e con*eA+ence* of the ter,)nat)on of pr)/ate re*pondent3* e,plo1,ent, pet)t)oner accepted
e/en late pa1,ent*. %hat pet)t)oner accepted pa1,ent* fro, pr)/ate re*pondent Rolando !antan ,ore than t.o 42H 1ear* after
the latter3* e,plo1,ent had 0een ter,)nated con*t)t+te* a .a)/er of pet)t)oner3* r)-ht to collect )ntere*t +pon the dela1ed
pa1,ent*. %he 2K *+rchar-e )* not pro/)ded for )n the a-ree,ent. $t* collect)on 01 the co,pan1 .o+ld )n fact r+n co+nter to
the p+rpo*e of pro/)d)n- ?added e,ol+,ent*? to )t* de*er/)n- e,plo1ee*. Con*eA+entl1, the total a,o+nt of (91,878.94
alread1 pa)d to pet)t)oner *ho+ld 0e con*)dered pa1,ent of the f+ll p+rcha*e pr)ce of the car or the total )n*tall,ent* pa)d.
cdle2
2#ird. (r)/ate re*pondent* pre*ented e/)dence that the1 ?felt 0ad, .ere .orr)ed, e,0arra**ed and ,entall1 tort+red?
01 the repo**e**)on of the car. 22 %h)* ha* not 0een re0+tted 01 pet)t)oner. %here )* th+* a fact+al 0a*)* for the a.ard of ,oral
da,a-e*. $n add)t)on, pet)t)oner acted )n a .anton, fra+d+lent, rec>le** and oppre**)/e ,anner )n f)l)n- the )n*tant ca*e,
hence, the a.ard of e2e,plar1 da,a-e* )* ;+*t)f)ed. 23 %he a.ard of attorne13* fee* )* l)>e.)*e proper con*)der)n- that pr)/ate
re*pondent* .ere co,pelled to )nc+r e2pen*e* to protect the)r r)-ht*. 2
5&ERE#GRE, the dec)*)on of the Co+rt of Appeal* )* A##$RMED .)th co*t* a-a)n*t pet)t)oner. a)*adc
G GRDERED.
,ellosillo, Puno, 5uisu%)in(, and ,uena, JJ., conc+r.
F''()'(*+
1.(er Act)n- (re*)d)n- <+*t)ce ant)a-o M. Iap+nan and conc+rred )n 01 A**oc)ate <+*t)ce* G*car M. &errera and eraf)n E.C.
G+)n-ona.
2.E2h. A, Record, pp. 93C94.
3.E2h. B, Record, p. 97.
4.Record, pp. 37C37.
7.(re*)ded 01 <+d-e E+trop)o M)-r)Oo.
9.CA Rollo, pp. 43C44.
7.0estle P#ilippines, 'nc. v. 0.RC, 197 CRA 348 41991H.
=.2esorero v. $at#a/, 1=7 CRA 124, 132 41998H.
9.97 (h)l. 191, 197 41939H.
18.99 (h)l. 747, 772 4193=H.
11.'d., at 772.
12.93 (h)l. 271 41973H.
13.'d., at 273C274.
14.-elta $otor Sales Corporation v. 0iu <u% -uan, G.R. No. 91843, epte,0er 2, 1992, 213 CRA 279, 294 41992H.
17.7 Art+ro M. %olent)no, Civil Code of t#e P#ilippines 33 41992H, c)t)n- Filinvest Credit Corporation v. Court of !ppeals, 17=
CRA 1== 419=9H.
19.Record, pp. 39C37.
17.CA Rollo, pp. 43C44.
1=.Record, pp. 2 6 4.
19.'d., p. 7.
28.')id.
21.Dec)*)on, pp. 11C12" Rollo, pp. 41C42.
22.R%C Dec)*)on, pp. 4C7.
23.C)/)l Code, Art*. 2232 and 2234.
24.Su%%a 'nsurance Corporation v. Court of !ppeals, 323 (h)l. 214 41999H.
#$R% D$E$$GN
[G.R. No. 14291=. <+l1 12, 2887.]
PCI LEASING AND FINANCE, INC., petitioner, vs. GIRAFFE-X CREATIVE IMAGING, INC., respondent.
D E C I S I O N
GARCIA, J p:
Gn a p+re A+e*t)on of la. )n/ol/)n- the appl)cat)on of Rep+0l)c Act 4R.A.H No. 79=8, a* a,ended 01 R.A. No. =779, )n relat)on to
Art)cle* 14=4 and 14=7 of the C)/)l Code, pet)t)oner (C$ !ea*)n- and #)nance, $nc. 4(C$ !EA$NG, for *hortH ha* d)rectl1 co,e to
th)* Co+rt via th)* pet)t)on for re/)e. +nder R+le 47 of the R+le* of Co+rt to n+ll)f1 and *et a*)de the Dec)*)on and Re*ol+t)on dated
Dece,0er 2=, 199= and #e0r+ar1 17, 2888, re*pect)/el1, of the Re-)onal %r)al Co+rt 4R%CH of P+eFon C)t1, Branch 227, )n )t* Civil
Case 0o. 5-;=-:>?88, a *+)t for a *+, of ,one1 andMor per*onal propert1 .)th pra1er for a .r)t of reple/)n, thereat )n*t)t+ted 01 the
pet)t)oner a-a)n*t the here)n re*pondent, G)raffeCL Creat)/e $,a-)n-, $nc. 4G$RA##E, for 0re/)t1H.
%he fact*:
Gn Dece,0er 4, 1999, pet)t)oner (C$ !EA$NG and re*pondent G$RA##E entered )nto a .ease !(ree%ent, 1 .here01 the for,er
lea*ed o+t to the latter one 41H *et ofSilicon Hi(# '%pact Grap#ics and acce**or)e* .orth (3,988,888.88 and one 41H +n)t of 6@)err/
Cinescan 8>99-A9 .orth (9,788,888.88. $n connect)on .)th th)* a-ree,ent, the part)e* *+0*eA+entl1 *)-ned t.o 42H *eparate
doc+,ent*, each deno,)nated a* .ease Sc#edule. 2 !)>e.)*e for,)n- part* of the 0a*)c lea*e a-ree,ent .ere t.o 42H *eparate
doc+,ent* deno,)nated -isclosure State%ents of .oanBCredit 2ransaction CSin(le Pa/%ent or 'nstall%ent
PlanD 3 that G$RA##Eal*o e2ec+ted for each of the lea*ed eA+)p,ent. %he*e d)*clo*+re *tate,ent* inter
alia de*cr)0ed G$RA##E, vis-E-vis the t.o afore,ent)oned eA+)p,ent, a* the ?)orro4er? .ho ac>no.led-ed the ?net proceeds of
t#e loan,? the ?net a%ount to )e financed,? the Ffinancial c#ar(es,F the ?total install%ent pa/%ents? that )t ,+*t pa1 ,onthl1 for th)rt1C
*)2 439H ,onth*, e2cl+*)/e of the 39K per annu% ?late pa/%ent c#ar(es.? %h+*, for the Silicon Hi(# '%pact
Grap#ics, G$RA##E a-reed to pa1 (119,=7=.21 ,onthl1, and for 6@)err/ Cinescan, (1=1,392.88 ,onthl1. &ence, the total
a,o+nt G$RA##E ha* to pa1 (C$ !EA$NG for 39 ,onth* of the lea*e, e2cl+*)/e of ,onetar1 penalt)e* ),po*a0le, )f proper, )* a*
)nd)cated 0elo.: cda*)a;+r
(119,=7=.21 Q ,onth 4for the Silicon Hi(#
'%pact Grap#icsH 2 39 ,onth*R(4,287,917.79
' (!@ '
(1=1,392.88 Q ,onth 4for the 6@)err/
CinescanH 2 39 ,onth*R(9,729,832.88
''''''
%otal A,o+nt to 0e pa)d 01 G$RA##E
4or the 072 C602R!C2 !$6102 H(18,739,947.79
RRRRRRRRRRR
B1 the ter,*, too, of the .ease !(ree%ent, G$RA##E +ndertoo> to re,)t the a,o+nt of (3,128,888.88 01 .a1 of ?(uarant/ deposit,?
a *ort of perfor,ance and co,pl)ance 0ond for the t.o eA+)p,ent. #+rther,ore, the *a,e a-ree,ent e,0od)ed a *tandard
accelerat)on cla+*e, operat)/e )n the e/ent G$RA##E fa)l* to pa1 an1 rental andMor other acco+nt* d+e.
A 1ear )nto the l)fe of the !ea*e A-ree,ent, G$RA##E defa+lted )n )t* ,onthl1 rentalCpa1,ent o0l)-at)on*. And follo.)n- a threeC
,onth defa+lt, (C$ !EA$NG, thro+-h one Att1. #lorec)ta R. GonFale*, addre**ed a for,al pa1CorC*+rrenderCeA+)p,ent t1pe of
de,and letter dated #e0r+ar1 24, 199= to G$RA##E.
%he de,and .ent +nheeded.
&ence, on Ma1 4, 199=, )n the R%C of P+eFon C)t1, (C$ !EA$NG )n*t)t+ted the )n*tant ca*e a-a)n*t G$RA##E. $n )t*
co,pla)nt, ! doc>eted )n *a)d co+rt a* Civil Case 0o. ;=-:>?88 and raffled to Branch 227 9 thereof, (C$ !EA$NG pra1ed for the
)**+ance of a .r)t of reple/)n for the reco/er1 of the lea*ed propert1, )n add)t)on to the follo.)n- rel)ef:
2.After tr)al, ;+d-,ent 0e rendered )n fa/or of pla)nt)ff [(C$ !EA$NG] and a-a)n*t the defendant [G$RA##E],
a* follo.*:
a.Declar)n- the pla)nt)ff ent)tled to the po**e**)on of the *+0;ect propert)e*"
0.Grder)n- the defendant to pa1 the 0alance of rentalMo0l)-at)on )n the total a,o+nt of
(=,24=,977.47 )ncl+*)/e of )ntere*t and char-e* thereon"
c.Grder)n- defendant to pa1 pla)nt)ff the e2pen*e* of l)t)-at)on and co*t of *+)t. . . . 45ord* )n
0rac>et added.H E$D%Aa
@pon (C$ !EA$NG3* po*t)n- of a reple/)n 0ond, the tr)al co+rt )**+ed a .r)t of reple/)n, pa/)n- the .a1 for (C$ !EA$NG to *ec+re
the *e)F+re and del)/er1 of the eA+)p,ent co/ered 01 the 0a*)c lea*e a-ree,ent.
$n*tead of an an*.er, G$RA##E, a* defendant a Guo, f)led a $otion to -is%iss, there)n ar-+)n- that the *e)F+re of the t.o 42H lea*ed
eA+)p,ent *tr)pped (C$!EA$NG of )t* ca+*e of act)on. E2po+nd)n- on the po)nt, G$RA##E ar-+e* that, p+r*+ant to Art)cle 14=4 of
the C)/)l Code on )n*tall,ent *ale* of per*onal propert1,(C$ !EA$NG )* 0arred fro, f+rther p+r*+)n- an1 cla), ar)*)n- fro, the
lea*e a-ree,ent and the co,pan)on contract doc+,ent*, add)n- that the a-ree,ent 0et.een the part)e* )* )n real)t1 a lea*e of
,o/a0le* .)th opt)on to 0+1. %he -)/en *)t+at)on, G$RA##E cont)n+e*, *A+arel1 0r)n-* )nto appl)ca0le pla1 Art)cle* 14=4 and 14=7 of
the C)/)l Code, co,,onl1 referred to a* the Recto .a4. %he c)ted art)cle* re*pect)/el1 pro/)de:
AR%. 14=4.$n a contract of *ale of per*onal propert1 the pr)ce of .h)ch )* pa1a0le )n )n*tall,ent*, the /endor
,a1 e2erc)*e an1 of the follo.)n- re,ed)e*:
41HE2act f+lf)ll,ent of the o0l)-at)on, *ho+ld the /endee fa)l to pa1"
42HCancel the *ale, *ho+ld the /endee3* fa)l+re to pa1 co/er t.o or ,ore )n*tall,ent*"
43HF'.*/0'+* (1* /1,((*0 2'.(3,3* ') (1* (14)3 +'0-, 45 ')* 1,+ 6**) /')+(4(7(*-, *ho+ld the /endee3*
fa)l+re to pa1 co/er t.o or ,ore )n*tall,ent*. $n th)* ca*e, he *hall ha/e )' 57.(1*. ,/(4') ,3,4)+( (1*
87./1,+*. (' .*/'9*. ,): 7)8,4- 6,0,)/* '5 (1* 8.4/*. An1 a-ree,ent to the contrar1 *hall 0e /o)d.
4E,pha*)* added.H
AR%. 14=7.%he preced)n- art)cle *hall 0e appl)ed to contract* p+rport)n- to 0e lea*e* of per*onal propert1
.)th opt)on to 0+1, .hen the le**or ha* depr)/ed the le**ee of the po**e**)on or en;o1,ent of the
th)n-. Ea$DC
$t )* th+* G$RA##E3* po*t+re that the aforeA+oted Art)cle 14=4 of the C)/)l Code appl)e* to )t* contract+al relat)on
.)th (C$ !EA$NG 0eca+*e the lea*e a-ree,ent )n A+e*t)on, a* *+pple,ented 01 the *ched+le* doc+,ent*, )* reall1 a 0*,+* ;4(1
'8(4') (' 67: +nder the co,pan)on art)cle, Art)cle 14=7. Con*eA+entl1, *o G$RA##Ear-+e*, +pon the *e)F+re of the lea*ed
eA+)p,ent p+r*+ant to the .r)t of reple/)n, .h)ch *e)F+re )* eA+)/alent to foreclo*+re, (C$ !EA$NG ha* no f+rther reco+r*e a-a)n*t
)t. $n 0r)ef, G$RA##E a**ert* )n )t* Mot)on to D)*,)** that the c)/)l co,pla)nt f)led 01 (C$ !EA$NG )* pro*cr)0ed 01 the appl)cat)on to
the ca*e of Art)cle* 14=4 and 14=7, supra, of the C)/)l Code.
$n )t* 6pposition to the ,ot)on to d)*,)**, (C$ !EA$NG ,a)nta)n* that )t* contract .)th G$RA##E )* a strai(#t lease 4it#out an
option to )u/. (re*c)nd)n- therefro,,(C$ !EA$NG re;ect* the appl)ca0)l)t1 to the *+)t of Art)cle 14=4 )n relat)on to Art)cle 14=7 of the
C)/)l Code, cla),)n- that, +nder the ter,* and cond)t)on* of the 0a*)c a-ree,ent, the relat)on*h)p 0et.een the part)e* )* one
0et.een an ord)nar1 le**or and an ord)nar1 le**ee.
$n a dec)*)on # dated Dece,0er 2=, 199=, the tr)al co+rt -ranted G$RA##E3* ,ot)on to d)*,)** ,a)nl1 on the )nterpla1 of the
follo.)n- pre,)*e*: 1H the lea*e a-ree,ent pac>a-e, a* ,e,or)al)Fed )n the contract doc+,ent*, )* a>)n to the contract
conte,plated )n Art)cle 14=7 of the C)/)l Code, and 2H G$RA##E3* lo** of po**e**)on of the lea*ed eA+)p,ent con*eA+ent to the
enforce,ent of the .r)t of reple/)n )* ?a>)n to foreclo*+re, . . . the cond)t)on precedent for appl)cat)on of Art)cle* 14=4 and 14=7 [of
the C)/)l Code].? Accord)n-l1, the tr)al co+rt d)*,)**ed C)/)l Ca*e No. PC9=C34299, d)*po*)n- a* follo.*:
5&ERE#GRE, pre,)*e* con*)dered, the defendant [G$RA##E] ha/)n- rel)nA+)*hed an1 cla), to the
per*onal propert)e* *+0;ect of reple/)n .h)ch are no. )n the po**e**)on of the pla)nt)ff [(C$ !EA$NG],
pla)nt)ff )* DEEMED f+ll1 *at)*f)ed p+r*+ant to the pro/)*)on* of Art)cle* 14=4 and 14=7 of the Ne. C)/)l Code.
B1 /)rt+e of *a)d pro/)*)on*, pla)nt)ff )* DEEMED e*topped fro, f+rther act)on a-a)n*t the defendant, the
pla)nt)ff ha/)n- reco/ered thr+ 4reple/)nH the per*onal propert1 *o+-ht to 0e pa1a0leMlea*ed on )n*tall,ent*,
defendant* 0e)n- +nder protect)on of *a)d REC%G !A5. $n /)e. thereof, th)* ca*e )* here01
D$M$ED.c$ADaC
5)th )t* ,ot)on for recon*)derat)on ha/)n- 0een den)ed 01 the tr)al co+rt )n )t* re*ol+t)on of #e0r+ar1 17, 2888, $ pet)t)oner ha*
d)rectl1 co,e to th)* Co+rt via th)* pet)t)on for re/)e. ra)*)n- the *ole le-al )**+e of .hether or not the +nderl1)n- !ea*e A-ree,ent,
!ea*e ched+le* and the D)*clo*+re tate,ent* that e,0od1 the f)nanc)al lea*)n- arran-e,ent 0et.een the part)e* are co/ered 01
and *+0;ect to the con*eA+ence* of Art)cle* 14=4 and 14=7 of the Ne. C)/)l Code.
A* )n the co+rt 0elo., pet)t)oner contend* that the f)nanc)al lea*)n- arran-e,ent )t concl+ded .)th the re*pondent repre*ent* a
*tra)-ht lea*e co/ered 01 R.A. No. 79=8, the Financin( Co%pan/ !ct, a* la*t a,ended 01 R.A. No. =779, other.)*e >no.n
a* Financin( Co%pan/ !ct of A;;=, and )* o+t*)de the appl)cat)on and co/era-e of the Recto .a4. %o the pet)t)oner, R.A. No. 79=8
def)ne* and a+thor)Fe* )t* e2)*tence and 0+*)ne**.
%he reco+r*e )* .)tho+t ,er)t.
R.A. No. 79=8, )n )t* or)-)nal *hape and a* a,ended, parta>e* of a *+per/)*or1 or re-+lator1 le-)*lat)on, ,erel1 pro/)d)n- a
re-+lator1 fra,e.or> for the or-an)Fat)on, re-)*trat)on, and re-+lat)on of the operat)on* of f)nanc)n- co,pan)e*. A* co+ched, )t doe*
not *pec)f)call1 def)ne the r)-ht* and o0l)-at)on* of part)e* to a f)nanc)allea*)n- arran-e,ent. $n fact, )t doe* not -o 0e1ond def)n)n-
co,,erc)al or tran*act)onal f)nanc)al lea*)n- and other f)nanc)al lea*)n- concept*. %h+*, the rele/anc1 of Art)cle 1= of the C)/)l Code
.h)ch read*:
Art)cle 1=.$n ,atter* .h)ch are -o/erned 01 . . . *pec)al la.*, the)r def)c)enc1 *hall 0e *+ppl)ed 01 the
pro/)*)on* of th)* [C)/)l] Code.
(et)t)oner fo)*t* the ar-+,ent that the Recto .a4, i.e., the C)/)l Code pro/)*)on* on )n*tall,ent *ale* of ,o/a0le propert1, doe* not
appl1 to a f)nanc)al lea*)n-a-ree,ent 0eca+*e *+ch a-ree,ent, 01 def)n)t)on, doe* not confer on the le**ee the opt)on to 0+1 the
propert1 *+0;ect of the f)nanc)al lea*e. %o the pet)t)oner, the a0*ence of an opt)onCtoC0+1 *t)p+lat)on )n a f)nanc)al lea*)n- a-ree,ent,
a* +nder*tood +nder R.A. No. =779, pre/ent* the appl)cat)on thereto of Art)cle* 14=4 and 14=7 of the C)/)l Code. cD%&$E

5e are not per*+aded.
%he Co+rt can allo. that the +nderl1)n- lea*e a-ree,ent ha* the ear,ar>* or ,ade to appear a* afinancial leasin(, 9 a ter,
def)ned )n ect)on 3 4dH of R.A. No. =779 a* '
a ,ode of e2tend)n- cred)t thro+-h a nonCcancela0le lea*e contract +nder .h)ch the le**or p+rcha*e* or
acA+)re*, at the )n*tance of the le**ee, ,ach)ner1, eA+)p,ent, . . . off)ce ,ach)ne*, and other ,o/a0le or
),,o/a0le propert1 )n con*)derat)on of the per)od)c pa1,ent 01 the le**ee of a f)2ed a,o+nt of ,one1
*+ff)c)ent to a,ort)Fe at lea*t *e/ent1 478KH of the p+rcha*e pr)ce or acA+)*)t)on co*t, )ncl+d)n- an1 )nc)dental
e2pen*e* and a ,ar-)n of prof)t o/er an o0l)-ator1 per)od of not le** than t.o 42H 1ear* d+r)n- .h)ch the
le**ee ha* the r)-ht to hold and +*e the lea*ed propert1 . . . 0+t .)th no o0l)-at)on or opt)on on h)* part to
p+rcha*e the lea*ed propert1 fro, the o.nerCle**or at the end of the lea*e contract.
$n )t* pre/)o+* hold)n-*, ho.e/er, the Co+rt, ta>)n- )nto acco+nt the follo.)n- ,)2: the ),perat)/e* of eA+)t1, the contract+al
*t)p+lat)on* )n A+e*t)on and the act+at)on* of part)e* /)*CSC/)* the)r contract, treated d)*-+)*ed tran*act)on* techn)call1 ta--ed a*
f)nanc)n- lea*e, l)>e here, a* creat)n- a d)fferent contract+al relat)on*h)p. Nota0le a,on- the Co+rt3* dec)*)on* 0eca+*e of )t*
parallel)*, .)th th)* ca*e )* ,! Finance Corporation v. Court of !ppeals 1& .h)ch )n/ol/ed a ,otor /eh)cle. %hereat, the Co+rt ha*
treated a p+rported f)nanc)al lea*e a* act+all1 a *ale of a ,o/a0le propert1 on )n*tall,ent* and pre/ented reco/er1 0e1ond the
0+1er3* arreara-e*. 5rote the Co+rt )n ,! Finance:
T1* (.,)+,/(4') )n/ol/ed . . . 4+ one of , <54),)/4,0 0*,+*< or <54),)/4,0 0*,+4)3,< ;1*.* , 54),)/4)3
/'28,): ;'70-, 4) *55*/(, 4)4(4,00: 87./1,+* , 2'640* *=7482*)( ,)- (7.) ,.'7)- (' 0*,+* 4( (' , /04*)(
;1' 3*(+, 4) ,--4(4'), ,) '8(4') (' 87./1,+* (1* 8.'8*.(: ,( (1* *>84.: '5 (1* 0*,+* 8*.4'-. . . . .
222 222 222
%he pert)nent pro/)*)on* of [RA] 79=8, th+* ),ple,ented, read:
?3#)nanc)n- co,pan)e*,3 . . . are pr),ar)l1 or-an)Fed for the p+rpo*e of e2tend)n- cred)t fac)l)t)e* to
con*+,er* . . . e)ther 01 . . . lea*)n- of ,otor /eh)cle*, . . . and off)ce ,ach)ne* and eA+)p,ent, . . .
and other ,o/a0le propert1.?
?3Cred)t3 *hall ,ean an1 loan, . . . an1 contract to *ell, or *ale or contract of *ale of propert1 or
*er/)ce, . . . +nder .h)ch part or all of the pr)ce )* pa1a0le *+0*eA+ent to the ,a>)n- of *+ch *ale or
contract" an1 rentalCp+rcha*e contract" . . . ."? %&$Da
%he fore-o)n- pro/)*)on* )nd)cate no le** than a ,ere f)nanc)n- *che,e e2tended 01 a f)nanc)n- co,pan1 to
a cl)ent )n acA+)r)n- a ,otor /eh)cle and allo.)n- the latter to o0ta)n the ),,ed)ate po**e**)on and +*e
thereof pend)n- f+ll pa1,ent of the f)nanc)al acco,,odat)on that )* -)/en.
$n the ca*e at 0ench, . . . . ?T@1* (*.2 '5 (1* /')(.,/( [o/er a ,otor /eh)cle] .a* for th)rt1 *)2 439H ,onth* at
a ?,onthl1 rental? . . . 4(1,9=9.48H, or for a total a,o+nt of (98,=21.2=. %he contract al*o conta)ned [a]
cla+*e [reA+)r)n- the !e**ee to -)/e a -+arant1 depo*)t )n the a,o+nt of (28,=88.88] . . .
After the pr)/ate re*pondent had pa)d the *+, of (41,978.79, e2cl+d)n- the -+arant1 depo*)t of (28,=88.88,
he *topped f+rther pa1,ent*. (+tt)n- the t.o *+,* to-ether, the f)nanc)n- co,pan1 had )n )t* hand* the
a,o+nt of (92,478.79 a* a-a)n*t the total a-reed ?rental*? of (98,=21.2= or an e2ce** of (1,949.31.
%he re*pondent appellate co+rt con*)dered )t onl1 ;+*t and eA+)ta0le for the -+arant1 depo*)t ,ade 01 the
pr)/ate re*pondent to 0e appl)ed to h)* arreara-e* and thereafter to hold the contract ter,)nated. Adopt)n-
the rat)oc)nat)on of the co+rt a Guo, the appellate co+rt *a)d:
. . . 'n vie4 t#ereof, t#e (uarant/ deposit of P?9,=99.99 %ade )/ t#e defendant s#ould and %ust
)e credited )n h)* fa/or, )n the )ntere*t of fa)rne**, ;+*t)ce and eA+)t1. T1* 80,4)(455 +1'70- )'( 6*
,00';*- (' 7)-70: *).4/1 4(+*05 ,( (1* *>8*)+* '5 (1* -*5*)-,)(. . . . T14+ 4+ *9*) 2'.*
/'28*004)3 4) (14+ /,+* ;1*.* ,0(1'731 (1* (.,)+,/(4'), ') 4(+ 5,/*, ,88*,. '+(*)+460:, (' 6*
, /')(.,/( '5 0*,+*, 4( 4+ ,/(7,00: , 54),)/4)3 ,3.**2*)(, ;4(1 (1* 80,4)(455 54),)/4)3 (1*
87./1,+* '5 -*5*)-,)(A+ ,7('2'640* . . . . %he Co+rt )* con*tra)ned, )n the )ntere*t of tr+th and
;+*t)ce, to -o )nto th)* a*pect of the tran*act)on 0et.een the pla)nt)ff and the defendant . . . . .)th all
the 5,/(+ ,)- /4./72+(,)/*+ *>4+(4)3 4) (14+ /,+*, and .h)ch the co+rt ,+*t con*)der )n
dec)d)n- the ca*e, )f )t )* to dec)de the ca*e accord)n- to all the fact*. . . . . %ACD$
222 222 222
Con*)der)n- the fact+al f)nd)n-* of 0oth the co+rt a Guo and the appellate co+rt, (1* ')0: 0'34/,0 /')/07+4')
4+ (1,( (1* 8.49,(* .*+8')-*)( -4- '8(, ,+ 1* 1,+ /0,42*-, (' ,/=74.* (1* 2'('. 9*14/0*, B7+(45:4)3 (1*)
(1* ,8804/,(4') '5 (1* 37,.,)(** -*8'+4( (' (1* 6,0,)/* +(400 -7* ,)- '6043,(4)3 (1* 8*(4(4')*. ('
.*/'3)4C* 4( ,+ ,) *>*./4+* '5 (1* '8(4') 6: (1* 8.49,(* .*+8')-*)(. T1* .*+70( ;'70- (1*.*6: *)(4(0*
+,4- .*+8')-*)( (' (1* ';)*.+148 ,)- 8'++*++4') '5 (1* 9*14/0* ,+ (1* 67:*. (1*.*'5. 5e, therefore,
*ee no re/er*)0le error )n the +lt),ate ;+d-,ent of the appellate co+rt. 11 4$tal)c* )n the or)-)nal" +nder*cor)n-
*+ppl)ed and .ord* )n 0rac>et added.H
$n Ce)u Contractors Consortiu% Co. v. Court of !ppeals, 12 the Co+rt /)e.ed and th+* declared a f)nanc)al lea*e a-ree,ent a*
ha/)n- 0een *),+lated to d)*-+)*e a *),ple loan .)th *ec+r)t1, )t appear)n- that the f)nanc)n- co,pan1 p+rcha*ed eA+)p,ent alread1
o.ned 01 a cap)talC*trapped cl)ent, .)th the )ntent)on of lea*)n- )t 0ac> to the latter.
$n the pre*ent ca*e, pet)t)oner acA+)red the off)ce eA+)p,ent )n A+e*t)on for the)r *+0*eA+ent lea*e to the re*pondent, .)th the latter
+nderta>)n- to pa1 a ,onthl1 f)2ed rental therefor )n the total a,o+nt of (292,731.88, or a total of (18,731,119.88 for the .hole 39
,onth*. A* a ,ea*+re of -ood fa)th, re*pondent ,ade an +pCfront -+arantee depo*)t )n the a,o+nt of (3,128,888.88. %he 0a*)c
a-ree,ent pro/)de* that )n the e/ent the re*pondent fa)l* to pa1 an1 rental d+e or )* )n a defa+lt *)t+at)on, then the pet)t)oner *hall
ha/e cu%ulative re,ed)e*, *+ch a*, 0+t not l),)ted to, the follo.)n-: 13
1.G0ta)n po**e**)on of the propert1MeA+)p,ent"
2.Reta)n all a,o+nt* pa)d to )t. $n add)t)on, the -+arant1 depo*)t ,a1 0e appl)ed to.ard* the pa1,ent of
?l)A+)dated da,a-e*?"
3.Reco/er all accr+ed and +npa)d rental*"
4.R*/'9*. ,00 .*)(,0+ 5'. (1* .*2,4)4)3 (*.2 '5 (1* 0*,+* 1,- 4( )'( 6**) /,)/*00*-, ,+ ,--4(4'),0
8*),0(:D
7.R*/'9*.: '5 ,): ,)- ,00 ,2'7)(+ ,-9,)/*- 6: PCI LEASING 5'. GIRAFFEA+ ,//'7)( . . ."
9.Reco/er all e2pen*e* )nc+rred )n repo**e**)n-, re,o/)n-, repa)r)n- and *tor)n- the propert1" and,
7.Reco/er all da,a-e* *+ffered 01 (C$ !EA$NG 01 rea*on of the defa+lt. AE$&C
$n add)t)on, ec. 9.1 of the !ea*e A-ree,ent *tate* that the -+arant1 depo*)t *hall 0e forfe)ted )n the e/ent the re*pondent, for an1
rea*on, ret+rn* the eA+)p,ent 0efore the e2p)rat)on of the lea*e.
At 0otto,, re*pondent had pa)d the eA+)/alent of a0o+t a 1ear3* lea*e rental*, or a total of P3,!1&,3#2.&&, ,ore or le**. %hro. )n
the guaranty depositEP3,12&,&&&.&&F and the re*pondent had ,ade a total ca*h o+tla1 of P","3&,3#2.&& )n fa/or of the pet)t)oner.
%he reple/)nC*e)Fed lea*ed eA+)p,ent had, a* alle-ed )n the co,pla)nt, an e*t),ated residual value of P",%&&,&&&.&& at the t),e
C)/)l Ca*e No. PC9=C34299 .a* )n*t)t+ted on Ma1 4, 199=. Add)n- all ca*h ad/ance* th+* ,ade to the re*)d+al /al+e of the
eA+)p,ent, the total value .h)ch the pet)t)oner had act+all1 o0ta)ned 01 /)rt+e of )t* lea*e a-ree,ent .)th the re*pondent a,o+nt*
to P13,!3&,3#2.&& 4(3,718,372.88 T (3,128,888.88 T (9,988,888.88 R (13,738,372.88H.
%he acquisition cost for 0oth the )l)con &)-h $,pact Graph)c* eA+)p,ent and the G20err1 C)ne*can .a*, a* *tated )n no le** than
the pet)t)oner3* letter to the re*pondent dated No/e,0er 11, 1999 1 appro/)n- )n the latter3* fa/or a lea*e fac)l)t1,
.a* P$,1&&,&&&.&&. +0tract)n- the acA+)*)t)on co*t of (=,188,888.88 fro, the total a,o+nt, i.e., (13,738,372.88, cred)ta0le to the
re*pondent, )t .o+ld clearl1 appear that pet)t)oner real)Fed a gross income of P!,3&,3#2.&& fro, )t* lea*e tran*act)on .)th the
re*pondent. %he a,o+nt of (7,438,372.88 )* not 1et a f)nal f)-+re a* )t doe* not )ncl+de the rental* )n arrear*, penalt)e* thereon,
andinterest earned 01 the -+arant1 depo*)t.
A* ,a1 0e noted, pet)t)oner3* de,and letter 1! f)2ed the a,o+nt of (=,24=,977.47 a* repre*ent)n- the re*pondent3* ?rental? 0alance
.h)ch 0eca,e d+e and de,anda0le con*eA+ent to the appl)cat)on of the accelerat)on and other cla+*e* of the lea*e a-ree,ent.
A**+,)n-, then, that the re*pondent ,a1 0e co,pelled to pa1 (=,24=,977.47, then )t .o+ld end +p pa1)n- a total
of P21,##%,&2%.# 4(13,738,372.88 T (=,24=,977.47 R (21,779,829.47H for )t* +*e ' for a 1ear and t.o ,onth* at the ,o*t ' of
the eA+)p,ent. All )n all, for an )n/e*t,ent of (=,188,888.88, the pet)t)oner *tand* to ,a>e )n a 1ear3* t),e, o+t of the tran*act)on, a
total of (21,779,829.47, or a net of P13,"#%,&2%.#, )f .e are to 0el)e/e )t* o+tland)*h le-al *+0,)**)on that the (C$ !EA$NGC
G$RA##E .ease !(ree%ent .a* an hone*tCtoC-oodne** *tra)-ht lea*e. %E&$aD
A f)nanc)n- arran-e,ent ha* a p+rpo*e .h)ch )* at once pract)cal and *al+tar1. R.A. No. =779 .a*, )n fact, prec)*el1 enacted to
re-+late f)nanc)n- co,pan)e*3 operat)on* .)th the end )n /)e. of *tren-then)n- the)r cr)t)cal role )n pro/)d)n- cred)t and *er/)ce* to
*,all and ,ed)+, enterpr)*e* and to c+rta)l act* and pract)ce* pre;+d)c)al to the p+0l)c )ntere*t, )n -eneral, and to the)r cl)entele*, )n
part)c+lar. 1" A* a re-+lated act)/)t1, f)nanc)n- arran-e,ent* are not ,eant to A+ench onl1 the th)r*t for prof)t. %he1 *er/e a h)-her
p+rpo*e, and R.A. No. =779 ha* ,ade that a0+ndantl1 clear.
5e *tre**, ho.e/er, that there )* noth)n- )n R.A. No. =779 .h)ch def)ne* the r)-ht* and o0l)-at)on*, a* 0et.een each other, of the
f)nanc)al le**or and the le**ee. $n deter,)n)n- the re*pect)/e re*pon*)0)l)t)e* of the part)e* to the a-ree,ent, co+rt*, therefore, ,+*t
tra)n a >een e1e on the attendant fact* and c)rc+,*tance* of the ca*e )n order to a*certa)n the )ntent)on of the part)e*, )n relat)on to
the la. and the .r)tten a-ree,ent. !)>e.)*e, the p+0l)c )ntere*t and pol)c1 )n/ol/ed *ho+ld 0e con*)dered. $t ,a1 not 0e a,)** to
*tate that, nor,all1, f)nanc)n- contract* co,e )n a *tandard prepared for,, +n)laterall1 tho+-ht +p and .r)tten 01 the f)nanc)n-
co,pan)e* reA+)r)n- onl1 the per*onal c)rc+,*tance* and *)-nat+re of the 0orro.er or le**ee" the rate* and other ),portant
co/enant* )n the*e a-ree,ent* are *t)ll lar-el1 ),po*ed +n)laterall1 01 the f)nanc)n- co,pan)e*. $n other .ord*, the*e a-ree,ent*
are +*+all1 oneC*)ded )n fa/or of *+ch co,pan)e*. A per+*al of the lea*e a-ree,ent )n A+e*t)on e2po*e* the ,an1 re,ed)e*
a/a)la0le to the pet)t)oner, .h)le there are onl1 the *tandard contract+al proh)0)t)on* a-a)n*t the re*pondent. %h)* )* character)*t)c of
*tandard pr)nted for, contract*.

%here )* ,ore. $n the ad/erted #e0r+ar1 24, 199= de,and letter 1# *ent to the re*pondent, pet)t)oner fa*h)oned )t* cla), in t#e
alternative: pa/%ent of the f+ll a,o+nt of (=,24=,977.47, repre*ent)n- the +npa)d 0alance for the ent)re 39C,onth lea*e
per)od '. the surrender of the f)nanced a**et +nder pa)n of le-al act)on. %o A+ote the letter:
De,and )* here01 ,ade +pon 1o+ to pa1 )n f+ll 1o+r o+t*tand)n- 0alance )n the a,o+nt of (=,24=,977.47 on
or 0efore March 84, 199= OR to *+rrender to +* the one 41H *et )l)con &)-h $,pact Graph)c* and one 41H +n)t
G20err1 C)ne*can 9488C18 . . .
5e tr+*t 1o+ .)ll -)/e th)* ,atter 1o+r *er)o+* and preferent)al attent)on. 4E,pha*)* addedH. AacD&E
E/)dentl1, the letter d)d not ,a>e a de,and for the pa1,ent of the (=,24=,977.47 AND the ret+rn of the eA+)p,ent" onl1 e)ther one
of the t.o .a* reA+)red. %he de,and letter .a* prepared and *)-ned 01 Att1. #lorec)ta R. GonFale*, pre*+,a0l1 pet)t)oner3*
co+n*el. A* *+ch, the +*e of ?'.? )n*tead of ?,)-? )n the letter co+ld hardl1 0e treated a* a *),ple t1po-raph)cal error, 0ear)n- )n
,)nd the nat+re of the de,and, the a,o+nt )n/ol/ed, and the fact that )t .a* ,ade 01 a la.1er. Certa)nl1 Att1. GonFale* .o+ld ha/e
>no.n that a .orld of d)fference e2)*t* 0et.een ?and? and ?or? )n the ,anner that the .ord .a* e,plo1ed )n the letter.
A r+le )n *tat+tor1 con*tr+ct)on )* that the .ord ?or? )* a d)*;+nct)/e ter, *)-n)f1)n- d)**oc)at)on and
)ndependence of one th)n- fro, other th)n-* en+,erated +nle** the conte2t reA+)re* a d)fferent
)nterpretat)on. 1$
$n )t* ele,entar1 *en*e, ?or?, a* +*ed )n a *tat+te, )* a d)*;+nct)/e art)cle )nd)cat)n- an alternat)/e. $t often
connect* a *er)e* of .ord* or propo*)t)on* )nd)cat)n- a cho)ce of e)ther. 5hen ?or? )* +*ed, the /ar)o+*
,e,0er* of the en+,erat)on are to 0e ta>en *eparatel1. 1%
%he .ord ?or? )* a d)*;+nct)/e ter, *)-n)f1)n- d)*a**oc)at)on and )ndependence of one th)n- fro, each of the
other th)n-* en+,erated. 2&
%he de,and co+ld onl1 0e that the re*pondent need not ret+rn the eA+)p,ent )f )t pa)d the (=,24=,977.47 o+t*tand)n- 0alance,
)nel+cta0l1 *+--e*t)n- that the re*pondent can >eep po**e**)on of the eA+)p,ent )f )t e2erc)*e* )t* opt)on to acA+)re the *a,e 01
pa1)n- the +npa)d 0alance of the p+rcha*e pr)ce. tated other.)*e, )f the re*pondent .a* not ,)nded to e2erc)*e )t* opt)on of
acA+)r)n- the eA+)p,ent 01 ret+rn)n- the,, then )t need not pa1 the o+t*tand)n- 0alance. %h)* )* the lo-)cal ),port of the letter: that
the tran*act)on )n th)* ca*e )* a lea*e )n na,e onl1. %he *oCcalled ,onthl1 rental* are )n tr+th ,onthl1 a,ort)Fat)on* of the pr)ce of
the lea*ed off)ce eA+)p,ent.
Gn the .hole, then, .e r+le, a* d)d the tr)al co+rt, that the (C$ !EA$NGCG$RA##E lea*e a-ree,ent )* )n real)t1 a lea*e .)th an
opt)on to p+rcha*e the eA+)p,ent. %h)* ha* 0een ,ade ,an)fe*t 01 the act)on* of the pet)t)oner )t*elf, fore,o*t of .h)ch )* the
declarat)on* ,ade )n )t* de,and letter to the re*pondent. %here co+ld 0e no other e2planat)on than that )f the re*pondent pa)d the
0alance, then )t co+ld >eep the eA+)p,ent for )t* o.n" )f not, then )t *ho+ld ret+rn the,. %h)* )* clearl1 an opt)on to p+rcha*e -)/en to
the re*pondent. Be)n- *o, Art)cle 14=7 of the C)/)l Code *ho+ld appl1.
%he pre*ent ca*e reflect* a *)t+at)on .here the f)nanc)n- co,pan1 can .)thhold and conceal ' up to the last moment )t*
)ntent)on to *ell the propert1 *+0;ect of the f)nance lea*e, )n order that the pro/)*)on* of the Recto .a4 ,a1 0e c)rc+,/ented. $t ,a1
0e, a* pet)t)oner po)nted o+t, that the 0a*)c ?lea*e a-ree,ent? doe* not conta)n a ?p+rcha*e opt)on? cla+*e. %he a0*ence, ho.e/er,
doe* not nece**ar)l1 ar-+e a-a)n*t the )dea that .hat the part)e* are )nto )* not a *tra)-ht lea*e, 0+t a lea*e .)th opt)on to p+rcha*e.
%h)* Co+rt ha*, to 0e *+re, lon- 0een a.are of the pract)ce of /endor* of per*onal propert1 of deno,)nat)n- a contract of *ale on
)n*tall,ent a* one of lea*e to pre/ent the o.ner*h)p of the o0;ect of the *ale fro, pa**)n- to the /endee +nt)l and +nle** the pr)ce )*
f+ll1 pa)d. A* th)* Co+rt noted )n&da. de Jose v. ,arrueco: 21
eller* de*)ro+* of ,a>)n- cond)t)onal *ale* of the)r -ood*, 0+t .ho do not .)*h openl1 to ,a>e a 0ar-a)n )n
that for,, for one rea*on or another, ha/e freA+entl1 re*orted to the -*94/* '5 2,G4)3 /')(.,/(+ 4) (1*
5'.2 '5 0*,+*+ *4(1*. ;4(1 '8(4')+ (' (1* 67:*. (' 87./1,+* 5'. , +2,00 /')+4-*.,(4') ,( (1* *)- '5
(*.2, 8.'94-*- (1* +'-/,00*- .*)( 1,+ 6**) -70: 8,4-, '. ;4(1 +(4870,(4')+ (1,( 45 (1* .*)( (1.'731'7(
(1* (*.2 4+ 8,4-, (4(0* +1,00 (1*.*78') 9*+( 4) (1* 0*++**. I( 4+ '694'7+ (1,( +7/1 (.,)+,/(4')+ ,.*
0*,+*+ ')0: 4) ),2*. %he *oCcalled rent ,+*t nece**ar)l1 0e re-arded a* pa1,ent of the pr)ce )n
)n*tall,ent* *)nce the d+e pa1,ent of the a-reed a,o+nt re*+lt*, 01 the ter,* of the 0ar-a)n, )n the tran*fer
of t)tle to the le**ee. &EA$%
$n another old 0+t *t)ll rele/ant ca*e of 1.S. Co%%ercial v. Halili, 22 a lea*e a-ree,ent .a* declared to 0e )n fact a *ale of per*onal
propert1 01 )n*tall,ent*. a)d the Co+rt:
. . . %here can hardl1 0e an1 A+e*t)on that the *oCcalled contract* of lea*e on .h)ch the pre*ent act)on )*
0a*ed .ere /er)ta0le lea*e* of per*onal propert1 .)th opt)on to p+rcha*e, and a* *+ch co,e .)th)n the
p+r/)e. of the a0o/e art)cle [Art. 1474CA of the old C)/)l Code on *ale of per*onal propert1 01 )n*tall,ent]. . . .
Be)n- lea*e* of per*onal propert1 .)th opt)on to p+rcha*e a* conte,plated )n the a0o/e art)cle, the contract*
)n A+e*t)on are *+0;ect to the pro/)*)on that .hen the le**or )n *+ch ca*e ?ha* cho*en to depr)/e the le**ee
of the en;o1,ent of *+ch per*onal propert1,? ?he *hall ha/e no f+rther act)on? a-a)n*t the le**ee ?for the
reco/er1 of an1 +npa)d 0alance? o.)n- 01 the latter, ?a-ree,ent to the contrar1 0e)n- n+ll and /o)d.?
$n choo*)n-, thro+-h reple/)n, to depr)/e the re*pondent of po**e**)on of the lea*ed eA+)p,ent, the pet)t)oner .a)/ed )t* r)-ht to
0r)n- an act)on to reco/er +npa)d rental* on the *a)d lea*ed )te,*. (ara-raph 43H, Art)cle 14=4 )n relat)on to Art)cle 14=7 of the C)/)l
Code, .h)ch .e are here+nder reCreprod+c)n-, cannot 0e an1 clearer.
AR%. 14=4.$n a contract of *ale of per*onal propert1 the pr)ce of .h)ch )* pa1a0le )n )n*tall,ent*, the /endor
,a1 e2erc)*e an1 of the follo.)n- re,ed)e*:
222 222 222
43H#oreclo*e the chattel ,ort-a-e on the th)n- *old, )f one ha* 0een con*t)t+ted, *ho+ld the /endee3* fa)l+re
to pa1 co/er t.o or ,ore )n*tall,ent*. $n th)* ca*e, he *hall ha/e no f+rther act)on a-a)n*t the p+rcha*er to
reco/er an1 +npa)d 0alance of the pr)ce. An1 a-ree,ent to the contrar1 *hall 0e /o)d. D$Ec&a
AR%. 14=7.%he preced)n- art)cle *hall 0e appl)ed to contract* p+rport)n- to 0e lea*e* of per*onal propert1
.)th opt)on to 0+1, .hen the le**or ha* depr)/ed the le**ee of the po**e**)on or en;o1,ent of the th)n-.
A* .e art)c+lated )n 7lisco 2ool $anufacturin( Corp. v. Court of !ppeals, 23 the re,ed)e* pro/)ded for )n Art)cle 14=4 of the C)/)l
Code are alternat)/e, not c+,+lat)/e. %he e2erc)*e of one 0ar* the e2erc)*e of the other*. %h)* l),)tat)on appl)e* to contract*
p+rport)n- to 0e lea*e* of per*onal propert1 .)th opt)on to 0+1 01 /)rt+e of the *a,e Art)cle 14=7. %he cond)t)on that the le**or ha*
depr)/ed the le**ee of po**e**)on or en;o1,ent of the th)n- for the p+rpo*e of appl1)n- Art)cle 14=7 .a* f+lf)lled )n th)* ca*e 01 the
f)l)n- 01 pet)t)oner of the co,pla)nt for a *+, of ,one1 .)th pra1er for reple/)n to reco/er po**e**)on of the off)ce eA+)p,ent. 2 B1
/)rt+e of the .r)t of *e)F+re )**+ed 01 the tr)al co+rt, the pet)t)oner ha* effect)/el1 depr)/ed re*pondent of the)r +*e, a *)t+at)on .h)ch,
01 force of the Recto .a4, )n t+rn precl+de* the for,er fro, ,a)nta)n)n- an act)on for reco/er1 of ?accr+ed rental*? or the reco/er1
of the 0alance of the p+rcha*e pr)ce pl+* )ntere*t. 27
%he ),perat)/e* of hone*t deal)n-* -)/en pro,)nence )n the C)/)l Code +nder the head)n-: Hu%an Relations, pro/)de another
rea*on .h1 .e ,+*t hold the pet)t)oner to )t* .ord a* e,0od)ed )n )t* de,and letter. El*e, .e .o+ld .)tne** a *)t+at)on .here e/en
)f the re*pondent *+rrendered the eA+)p,ent /ol+ntar)l1, the pet)t)oner can *t)ll *+e +pon )t* cla),. %h)* .o+ld 0e ,o*t +nfa)r for the
re*pondent. 5e cannot allo. the pet)t)oner to rene-e on )t* .ord. Bet ,ore than that, the /er1 .ord ?or? a* +*ed )n the letter
con/e1* distinctl/ )t* )ntent)on not to cla), 0oth the +npa)d 0alance and the eA+)p,ent. $t )* not d)ff)c+lt to d)*cern .h1: )f .e add +p
the a,o+nt* pa)d 01 the re*pondent, the re*)d+al /al+e of the propert1 reco/ered, and the a,o+nt cla),ed 01 the pet)t)oner a* *+ed
+pon here)n 4for a total ofP21,##%,&2%.#H, then )t .o+ld end +p ,a>)n- an )n*tant >)ll)n- o+t of the tran*act)on at the e2pen*e of )t*
cl)ent, the re*pondent. %he Recto .a4 .a* prec)*el1 enacted to pre/ent th)* >)nd of a0errat)on. Moreo/er, d+e to con*)derat)on* of
eA+)t1, p+0l)c pol)c1 and ;+*t)ce, .e cannot allo. th)* to happen. Not onl1 to the re*pondent, 0+t tho*e *),)larl1 *)t+ated .ho ,a1 fall
pre1 to a *),)lar *che,e. E%DAaC
5&ERE#GRE, the )n*tant pet)t)on )* DEN$ED and the tr)al co+rt3* dec)*)on )* A##$RMED.
Co*t* a-a)n*t pet)t)oner.
G GRDERED.
Puno, C.J., Corona and !zcuna, JJ., conc+r.
Sandoval-Gutierrez, J., )* on lea/e.
F''()'(*+
1.Anne2 ?C?, (et)t)on" rollo, pp. 38C31.
2.Anne2e* ?D? and ?E?, (et)t)on" id.at 32C33.
3.Anne2e* ?#? and ?G?, (et)t)on" id. at 37C39.
4.R%C Record*, p. 14.
7.Rollo, pp. 37C41.
9.%hen pre*)ded 01 <+d-e 4no. Co+rt of Appeal* A**oc)ate <+*t)ceH E)cente Ro2a*.
7.Rollo, pp. 24C27.
=.'d. at 29.
9.@*ed )nterchan-ea0l1 .)th the ter,* Ffinancin( leaseF and Ffinancial lease.?
18.G.R. No. 187198, Dece,0er 19, 1993, 22= CRA 738.
11.,! Finance Corporation v. Court of !ppeals, G.R. No. 187198, Dece,0er 19, 1993, 22= CRA 738. caC%&$
12.G.R. No. 187199, <+l1 22, 2883, 487 CRA 174.
13.ec*. 19.2 and 28.1 of the .ease !(ree%ent.

14.Rollo, p. =2.
17.Supra note 4.
19.ec. 2, R.A. No. =779.
17.Supra note 4.
1=.Pi%entel v. C6$7.7C, G.R. No. 129394, Apr)l 24, 199=, 2=9 CRA 7=9, 797.
19.Centeno v. &illalon-Pornillos, G.R. No. 113892, epte,0er 1, 1994, 239 CRA 197, 289.
28.Castillo-Co v. ,ar)ers, G.R. No. 129972, <+ne 19, 199=, 298 CRA 717, 723.
21.97 (h)l. 191 41939H c)ted )n 7lisco 2ool $anufacturin( Corp. v. C!, G.R. No. 189999, Ma1 31, 1999, 387 CRA 731.
22.93 (h)l. 271 41973H.
23.G.R. No. 189999, Ma1 31, 1999, 387 CRA 731.
24.')id.
27.')id.
#$R% D$E$$GN
[G.R. No. 147997. epte,0er 13, 2887.]
MANUEL C. PAGTALUNAN, petitioner, vs. RUFINA DELA CRUZ VDA. DE MANZANO, respondent.
D E C I S I O N
AZCUNA, J p:
%h)* )* a pet)t)on for re/)e. on certiorari +nder R+le 47 of the R+le* of Co+rt of the Co+rt of Appeal*3 4CAH Dec)*)on pro,+l-ated on
Gcto0er 38, 2888 and )t* Re*ol+t)on dated March 23, 2881 den1)n- pet)t)oner3* ,ot)on for recon*)derat)on. %he Dec)*)on of the CA
aff)r,ed the Dec)*)on of the Re-)onal %r)al Co+rt 4R%CH of Malolo*, B+lacan, dated <+ne 27, 1999 d)*,)**)n- the ca*e of +nla.f+l
deta)ner for lac> of ,er)t.
%he fact* are a* follo.*: %DCaE
Gn <+l1 19, 1974, (atr)c)o (a-tal+nan 4(atr)c)oH, pet)t)oner3* *tepfather and predece**orC)nC)ntere*t, entered )nto a Contract to ell
.)th re*pondent, .)fe of (atr)c)o3* for,er ,echan)c, %eodoro ManFano, .here01 the for,er a-reed to *ell, and the latter to 0+1, a
ho+*e and lot .h)ch for,ed half of a parcel of land, co/ered 01 %ran*fer Cert)f)cate of %)tle 4%C%H No. %C18829 4no. %C% No.
R%79929 [%C274773]H, .)th an area of 239 *A+are ,eter*. %he con*)derat)on of (17,=88 .a* a-reed to 0e pa)d )n the follo.)n-
,anner: (1,788 a* do.npa1,ent +pon e2ec+t)on of the Contract to ell, and the 0alance to 0e pa)d )n eA+al ,onthl1 )n*tall,ent* of
(178 on or 0efore the la*t da1 of each ,onth +nt)l f+ll1 pa)d.
$t .a* al*o *t)p+lated )n the contract that re*pondent co+ld ),,ed)atel1 occ+p1 the ho+*e and lot" that )n ca*e of defa+lt )n the
pa1,ent of an1 of the )n*tall,ent* for 98 da1* after )t* d+e date, the contract .o+ld 0e a+to,at)call1 re*c)nded .)tho+t need of
;+d)c)al declarat)on, and that all pa1,ent* ,ade and all ),pro/e,ent* done on the pre,)*e* 01 re*pondent .o+ld 0e con*)dered a*
rental* for the +*e and occ+pat)on of the propert1 or pa1,ent for da,a-e* *+ffered, and re*pondent .a* o0l)-ed to peacef+ll1
/acate the pre,)*e* and del)/er the po**e**)on thereof to the /endor. $c%EaC
(et)t)oner cla),ed that re*pondent pa)d onl1 (12,978. he alle-edl1 *topped pa1)n- after Dece,0er 1979 .)tho+t an1 ;+*t)f)cat)on or
e2planat)on. Moreo/er, )n a ?<asunduan? 1 dated No/e,0er 1=, 1979, re*pondent 0orro.ed (3,888 fro, (atr)c)o pa1a0le )n one
1ear e)ther )n one l+,p *+, pa1,ent or 01 )n*tall,ent*, fa)l)n- .h)ch the 0alance of the loan .o+ld 0e added to the pr)nc)pal *+0;ect
of the ,onthl1 a,ort)Fat)on* on the land.
!a*tl1, pet)t)oner a**erted that .hen re*pondent cea*ed pa1)n- her )n*tall,ent*, her *tat+* of 0+1er .a* a+to,at)call1 tran*for,ed
to that of a le**ee. %herefore, *he cont)n+ed to po**e** the propert1 01 ,ere tolerance of (atr)c)o and, *+0*eA+entl1, of
pet)t)oner. a$c%C
Gn the other hand, re*pondent alle-ed that *he pa)d her ,onthl1 )n*tall,ent* rel)-)o+*l1, +nt)l *o,et),e )n 19=8 .hen (atr)c)o
chan-ed h)* ,)nd and offered to ref+nd all her pa1,ent* pro/)ded *he .o+ld *+rrender the ho+*e. he ref+*ed. (atr)c)o then
*tarted hara**)n- her and 0e-an de,ol)*h)n- the ho+*e port)on 01 port)on. Re*pondent ad,)tted that *he fa)led to pa1 *o,e
)n*tall,ent* after Dece,0er 1979, 0+t that *he re*+,ed pa1)n- )n 19=8 +nt)l her 0alance d.)ndled to (7,978. he cla),ed that
de*p)te *e/eral ,onth* of dela1 )n pa1,ent, (atr)c)o ne/er *+ed for e;ect,ent and e/en accepted her late pa1,ent*.
Re*pondent al*o a/erred that on epte,0er 14, 19=1, *he and (atr)c)o *)-ned an a-ree,ent 4E2h. 2H .here01 he con*ented to the
*+*pen*)on of re*pondent3* ,onthl1 pa1,ent* +nt)l Dece,0er 19=1. &o.e/er, e/en 0efore the lap*e of *a)d per)od, (atr)c)o
re*+,ed de,ol)*h)n- re*pondent3* ho+*e, pro,pt)n- her to lod-e a co,pla)nt .)th the ,aran(a/ Capta)n .ho ad/)*ed her that *he
co+ld cont)n+e *+*pend)n- pa1,ent e/en 0e1ond Dece,0er 31, 19=1 +nt)l (atr)c)o ret+rned all the ,ater)al* he too> fro, her
ho+*e. %h)* (atr)c)o fa)led to do +nt)l h)* death. $&CE%
Re*pondent d)d not den1 that *he *t)ll o.ed (atr)c)o (7,978, 0+t cla),ed that *he d)d not re*+,e pa1)n- her ,onthl1 )n*tall,ent
0eca+*e of the +nla.f+l act* co,,)tted 01 (atr)c)o, a* .ell a* the f)l)n- of the e;ect,ent ca*e a-a)n*t her. he den)ed ha/)n- an1
>no.led-e of the <asunduan of No/e,0er 1=, 1979.
(atr)c)o and h)* .)fe d)ed on epte,0er 17, 1992 and on Gcto0er 17, 1994, re*pect)/el1. (et)t)oner 0eca,e the)r *ole *+cce**orC)nC
)ntere*t p+r*+ant to a .a)/er 01 the other he)r*. Gn March 7, 1997, re*pondent rece)/ed a letter fro, pet)t)oner3* co+n*el dated
#e0r+ar1 24, 1997 de,and)n- that *he /acate the pre,)*e* .)th)n f)/e da1* on the -ro+nd that her po**e**)on had 0eco,e
+nla.f+l. Re*pondent )-nored the de,and. %he Punon( ,aran(a/ fa)led to *ettle the d)*p+te a,)ca0l1. D%$Ec
Gn Apr)l =, 1997, pet)t)oner f)led a Co,pla)nt for +nla.f+l deta)ner a-a)n*t re*pondent .)th the M+n)c)pal %r)al Co+rt 4M%CH of
G+)-+)nto, B+lacan pra1)n- that, after hear)n-, ;+d-,ent 0e rendered order)n- re*pondent to ),,ed)atel1 /acate the *+0;ect
propert1 and *+rrender )t to pet)t)oner" forfe)t)n- the a,o+nt of (12,978 )n fa/or of pet)t)oner a* rental*" order)n- re*pondent to pa1
pet)t)oner the a,o+nt of (3,888 +nder the <asunduan and the a,o+nt of (788 per ,onth fro, <an+ar1 19=8 +nt)l *he /acate* the
propert1, and to pa1 pet)t)oner attorne13* fee* and the co*t*.
Gn Dece,0er 22, 199=, the M%C rendered a dec)*)on )n fa/or of pet)t)oner. $t *tated that altho+-h the Contract to ell pro/)de* for a
re*c)**)on of the a-ree,ent +pon fa)l+re of the /endee to pa1 an1 )n*tall,ent, .hat the contract act+all1 allo.* )* properl1 ter,ed a
re*ol+t)on +nder Art. 1191 of the C)/)l Code. EcA&D%
%he M%C held that re*pondent3* fa)l+re to pa1 not a fe. )n*tall,ent* ca+*ed the re*ol+t)on or ter,)nat)on of the Contract to ell.
%he la*t pa1,ent ,ade 01 re*pondent .a* on <an+ar1 9, 19=8 4E2h. 71H. %hereafter, re*pondent3* r)-ht of po**e**)on ipso
facto cea*ed to 0e a le-al r)-ht, and 0eca,e po**e**)on 01 ,ere tolerance of (atr)c)o and h)* *+cce**or*C)nC)ntere*t. a)d tolerance
cea*ed +pon de,and on re*pondent to /acate the propert1.
%he d)*po*)t)/e port)on of the M%C Dec)*)on read*: A&ac$
5herefore, all the fore-o)n- con*)dered, ;+d-,ent )* here01 rendered, order)n- the defendant:
a.to /acate the propert1 co/ered 01 %ran*fer Cert)f)cate of %)tle No. %C18829 of the Re-)*ter of Deed* of
B+lacan 4no. %C% No. R%C79929 of the Re-)*ter of Deed* of B+lacanH, and to *+rrender
po**e**)on thereof to the pla)nt)ff" E&%cC
0.to pa1 the pla)nt)ff the a,o+nt of (113,788 repre*ent)n- rental* fro, <an+ar1 19=8 to the pre*ent"
c.to pa1 the pla)nt)ff *+ch a,o+nt of rental*, at (788M,onth, that ,a1 0eco,e d+e after the date of ;+d-,ent,
+nt)l *he f)nall1 /acate* the *+0;ect propert1" $cCA%D
d.to pa1 to the pla)nt)ff the a,o+nt of (27,888 a* attorne13* fee*.
G GRDERED. 2 Ca&cE%
Gn appeal, the R%C of Malolo*, B+lacan, )n a Dec)*)on dated <+ne 27, 1999, re/er*ed the dec)*)on of the M%C and d)*,)**ed the
ca*e for lac> of ,er)t. Accord)n- to the R%C, the a-ree,ent co+ld not 0e a+to,at)call1 re*c)nded *)nce there .a* del)/er1 to the
0+1er. A ;+d)c)al deter,)nat)on of re*c)**)on ,+*t 0e *ec+red 01 pet)t)oner a* a cond)t)on precedent to con/ert the
po**e**)on de facto of re*pondent fro, la.f+l to +nla.f+l.
%he d)*po*)t)/e port)on of the R%C Dec)*)on *tate*: cDEC$A
5&ERE#GRE, ;+d-,ent )* here01 rendered re/er*)n- the dec)*)on of the M+n)c)pal %r)al Co+rt of G+)-+)nto,
B+lacan and the e;ect,ent ca*e )n*tead 0e d)*,)**ed for lac> of ,er)t. 3
%he ,ot)on for recon*)derat)on and ,ot)on for e2ec+t)on f)led 01 pet)t)oner .ere den)ed 01 the R%C for lac> of ,er)t )n an Grder
dated A+-+*t 18, 1999. aE%A$
%hereafter, pet)t)oner f)led a pet)t)on for re/)e. .)th the CA.
$n a Dec)*)on pro,+l-ated on Gcto0er 38, 2888, the CA den)ed the pet)t)on and aff)r,ed the Dec)*)on of the R%C. %he d)*po*)t)/e
port)on of the Dec)*)on read*: Ea$cA
5&ERE#GRE, the pet)t)on for re/)e. on certiorari )* Den)ed. %he a**a)led Dec)*)on of the Re-)onal %r)al
Co+rt of Malolo*, B+lacan dated 27 <+ne 1999 and )t* Grder dated 18 A+-+*t 1999 are here01 A##$RMED.
G GRDERED. CcA$%a
%he CA fo+nd that the part)e*, a* .ell a* the M%C and R%C fa)led to ad/ert to and to appl1 Rep+0l)c Act 4R.A.H No. 9772, ,ore
co,,onl1 referred to a* the Maceda !a., .h)ch )* a *pec)al la. enacted )n 1972 to protect 0+1er* of real e*tate on )n*tall,ent
pa1,ent* a-a)n*t onero+* and oppre**)/e cond)t)on*.
%he CA held that the Contract to ell .a* not /al)dl1 cancelled or re*c)nded +nder ec. 3 40H of R.A. No. 9772, and reco-n)Fed
re*pondent3* r)-ht to cont)n+e occ+p1)n- +n,ole*ted the propert1 *+0;ect of the contract to *ell. %&aAEC
%he CA den)ed pet)t)oner3* ,ot)on for recon*)derat)on )n a Re*ol+t)on dated March 23, 2881.
&ence, th)* pet)t)on for re/)e. on certiorari. A&CE%a
(et)t)oner contend* that:
A.Re*pondent Dela Cr+F ,+*t 0ear the con*eA+ence* of her del)0erate .)thhold)n- of, and ref+*al to pa1,
the ,onthl1 pa1,ent. %he Co+rt of Appeal* erred )n allo.)n- Dela Cr+F .ho acted )n 0ad fa)th fro,
0enef)t)n- +nder the Maceda !a.. &C%AEc
B.%he Co+rt of Appeal* erred )n re*ol/)n- the )**+e on the appl)ca0)l)t1 of the Maceda !a., .h)ch )**+e .a*
not ra)*ed )n the proceed)n-* a Guo.
C.A**+,)n- ar(uendo that the R%C .a* correct )n r+l)n- that the M%C ha* no ;+r)*d)ct)on o/er a re*c)**)on
ca*e, the Co+rt of Appeal* erred )n not re,and)n- the ca*e to the R%C for tr)al. ! &$AEaC
(et)t)oner *+0,)t* that the Maceda !a. *+pport* and reco-n)Fe* the r)-ht of /endor* of real e*tate to cancel the *ale o+t*)de of
co+rt, .)tho+t need for a ;+d)c)al declarat)on of re*c)**)on, c)t)n- .uzon ,roera(e Co., 'nc., v. $ariti%e ,uildin( Co., 'nc. "
(et)t)oner contend* that re*pondent al*o had ,ore than the -race per)od* pro/)ded +nder the Maceda !a. .)th)n .h)ch to pa1.
@nder ec. 3 # of the *a)d la., a 0+1er .ho ha* pa)d at lea*t t.o 1ear* of )n*tall,ent* ha* a -race per)od of one ,onth for e/er1
1ear of )n*tall,ent pa)d. Ba*ed on the a,o+nt of (12,978 .h)ch re*pondent had alread1 pa)d, *he )* ent)tled to a -race per)od of *)2
,onth* .)th)n .h)ch to pa1 her +npa)d )n*tall,ent* after Dece,0er, 1979. Re*pondent .a* -)/en ,ore than *)2 ,onth* fro,
<an+ar1 19=8 .)th)n .h)ch to *ettle her +npa)d )n*tall,ent*, 0+t *he fa)led to do *o. (et)t)oner3* de,and to /acate .a* *ent to
re*pondent )n #e0r+ar1 1997. %AcC&

%here )* noth)n- )n the Maceda !a., pet)t)oner a**ert*, .h)ch -)/e* the 0+1er a r)-ht to pa1 arreara-e* after the -race per)od* ha/e
lap*ed, )n the e/ent of an )n/al)d de,and for re*c)**)on. %he Maceda !a. onl1 pro/)de* that act+al cancellat)on *hall ta>e place
after 38 da1* fro, rece)pt of the not)ce of cancellat)on or de,and for re*c)**)on and +pon f+ll pa1,ent of the ca*h *+rrender /al+e
to the 0+1er.
(et)t)oner contend* that h)* de,and letter dated #e0r+ar1 24, 1997 *ho+ld 0e con*)dered the not)ce of cancellat)on *)nce the
de,and letter )nfor,ed re*pondent that *he had ?lon- cea*ed to ha/e an1 r)-ht to po**e** the pre,)*e* )n A+e*t)on d+e to [her]
fa)l+re to pa1 .)tho+t ;+*t)f)a0le ca+*e.? $n *+pport of h)* content)on, he c)ted.a/u( v. 'nter%ediate !ppellate Court $ .h)ch held that
?the add)t)onal for,al)t1 of a de,and on [the *eller3*] part for re*c)**)on 01 notar)al act .o+ld appear, )n the pre,)*e*, to 0e ,erel1
c)rc+)to+* and con*eA+entl1 *+perfl+o+*.? &e *tated that )n .a/u(, the *eller alread1 ,ade a .r)tten de,and +pon the
0+1er. Ac&CD
$n add)t)on, pet)t)oner a**ert* that .hate/er ca*h *+rrender /al+e re*pondent )* ent)tled to ha/e 0een appl)ed and ,+*t 0e appl)ed to
rental* for her +*e of the ho+*e and lot after Dece,0er, 1979 or after *he *topped pa1,ent of her )n*tall,ent*.
(et)t)oner ar-+e* that a**+,)n- (atr)c)o accepted re*pondent3* dela1ed )n*tall,ent* )n 19=1, *+ch act cannot pre/ent the
cancellat)on of the Contract to ell. $n*tall,ent* after 19=1 .ere *t)ll +npa)d and the appl)ca0le -race per)od* +nder the Maceda !a.
on the +npa)d )n*tall,ent* ha/e lon- lap*ed. Re*pondent cannot 0e allo.ed to h)de 0eh)nd the Maceda !a.. he acted .)th 0ad
fa)th and ,+*t 0ear the con*eA+ence* of her del)0erate .)thhold)n- of and ref+*al to ,a>e the ,onthl1 pa1,ent*. ADaE&
(et)t)oner al*o contend* that the appl)ca0)l)t1 of the Maceda !a. .a* ne/er ra)*ed )n the proceed)n-* 0elo." hence, )t *ho+ld not
ha/e 0een appl)ed 01 the CA )n re*ol/)n- the ca*e.
%he Co+rt )* not per*+aded. %aE&D
%he CA correctl1 r+led that R.A No. 9772, .h)ch -o/ern* *ale* of real e*tate on )n*tall,ent, )* appl)ca0le )n the re*ol+t)on of th)*
ca*e.
%h)* ca*e or)-)nated a* an act)on for +nla.f+l deta)ner. Re*pondent )* alle-ed to 0e )lle-all1 .)thhold)n- po**e**)on of the *+0;ect
propert1 after the ter,)nat)on of the Contract to ell 0et.een (atr)c)o and re*pondent. $t )*, therefore, )nc+,0ent +pon pet)t)oner to
pro/e that the Contract to ell had 0een cancelled )n accordance .)th R.A. No. 9772. %&acE
%he pert)nent pro/)*)on of R.A. No. 9772 read*:
ec. 3.$n all tran*act)on* or contract* )n/ol/)n- the *ale or f)nanc)n- of real e*tate on )n*tall,ent pa1,ent*,
)ncl+d)n- re*)dent)al condo,)n)+, apart,ent* 0+t e2cl+d)n- )nd+*tr)al lot*, co,,erc)al 0+)ld)n-* and *ale* to
tenant* +nder Rep+0l)c Act N+,0ered %h)rt1Ce)-ht h+ndred fort1Cfo+r a* a,ended 01 Rep+0l)c Act
N+,0ered )2t1Cthree h+ndred e)-ht1Cn)ne, .here the 0+1er ha* pa)d at lea*t t.o 1ear* of )n*tall,ent*, the
0+1er )* ent)tled to the follo.)n- r)-ht* )n ca*e he defa+lt* )n the pa1,ent of *+cceed)n- )n*tall,ent*:
4aH%o pa1, .)tho+t add)t)onal )ntere*t, the +npa)d )n*tall,ent* d+e .)th)n the total -race per)od earned 01 h),,
.h)ch )* here01 f)2ed at the rate of one ,onth -race per)od for e/er1 one 1ear of )n*tall,ent
pa1,ent* ,ade: (ro/)ded, %hat th)* r)-ht *hall 0e e2erc)*ed 01 the 0+1er onl1 once )n e/er1 f)/e
1ear* of the l)fe of the contract and )t* e2ten*)on*, )f an1. c&A%$
40HI5 (1* /')(.,/( 4+ /,)/*00*-, (1* +*00*. +1,00 .*57)- (' (1* 67:*. (1* /,+1 +7..*)-*. 9,07* '5 (1*
8,:2*)(+ ') (1* 8.'8*.(: eA+)/alent to f)ft1 percent of the total pa1,ent* ,ade and, after f)/e
1ear* of )n*tall,ent*, an add)t)onal f)/e percent e/er1 1ear 0+t not to e2ceed n)net1 percent of the
total pa1,ent* ,ade: Provided, T1,( (1* ,/(7,0 /,)/*00,(4') '5 (1* /')(.,/( +1,00 (,G* 80,/*
,5(*. (14.(: -,:+ 5.'2 .*/*48( 6: (1* 67:*. '5 (1* )'(4/* '5 /,)/*00,(4') '. (1* -*2,)- 5'.
.*+/4++4') '5 (1* /')(.,/( 6: , )'(,.4,0 ,/( ,)- 78') 5700 8,:2*)( '5 (1* /,+1 +7..*)-*.
9,07* (' (1* 67:*.. %
R.A. No. 9772, other.)*e >no.n a* the ?Realt1 $n*tall,ent B+1er (rotect)on Act,? reco-n)Fe* )n cond)t)onal *ale* of all >)nd* of real
e*tate 4)nd+*tr)al, co,,erc)al, re*)dent)alH the r)-ht of the *eller to cancel the contract +pon nonCpa1,ent of an )n*tall,ent 01 the
0+1er, .h)ch )* *),pl1 an e/ent that pre/ent* the o0l)-at)on of the /endor to con/e1 t)tle fro, acA+)r)n- 0)nd)n- force. 1& %he Co+rt
a-ree* .)th pet)t)oner that the cancellat)on of the Contract to ell ,a1 0e done o+t*)de the co+rt part)c+larl1 .hen the 0+1er a-ree*
to *+ch cancellat)on. Dc&Ea
&o.e/er, the cancellat)on of the contract 01 the *eller ,+*t 0e )n accordance .)th ec. 3 40H of R.A. No. 9772, .h)ch reA+)re* a
notar)al act of re*c)**)on and the ref+nd to the 0+1er of the f+ll pa1,ent of the ca*h *+rrender /al+e of the pa1,ent* on the
propert1. Act+al cancellat)on of the contract ta>e* place after 38 da1* fro, rece)pt 01 the 0+1er of the not)ce of cancellat)on or the
de,and for re*c)**)on of the contract 01 a notar)al act and +pon f+ll pa1,ent of the ca*h *+rrender /al+e to the 0+1er.
Ba*ed on the record* of the ca*e, the Contract to ell .a* not /al)dl1 cancelled or re*c)nded +nder ec. 3 40H of R.A. No.
9772. ca$D&
#)r*t, (atr)c)o, the /endor )n the Contract to ell, d)ed on epte,0er 17, 1992 .)tho+t cancel)n- the Contract to ell. EDc$A
econd, pet)t)oner al*o fa)led to cancel the Contract to ell )n accordance .)th la.. a&A$%
(et)t)oner contend* that he ha* co,pl)ed .)th the reA+)re,ent* of cancellat)on +nder ec. 3 40H of R.A. No. 9772. &e a**ert* that
h)* de,and letter dated #e0r+ar1 24, 1997 *ho+ld 0e con*)dered a* the not)ce of cancellat)on or de,and for re*c)**)on 01 notar)al
act and that the ca*h *+rrender /al+e of the pa1,ent* on the propert1 ha* 0een appl)ed to rental* for the +*e of the ho+*e and lot
after re*pondent *topped pa1,ent after <an+ar1 19=8.
%he Co+rt, ho.e/er, f)nd* that the letter 11 dated #e0r+ar1 24, 1997, .h)ch .a* .r)tten 01 pet)t)oner3* co+n*el, ,erel1 ,ade for,al
de,and +pon re*pondent to /acate the pre,)*e* )n A+e*t)on .)th)n f)/e da1* fro, rece)pt thereof *)nce *he had ?lon- cea*ed to
ha/e an1 r)-ht to po**e** the pre,)*e* . . . d+e to [her] fa)l+re to pa1 .)tho+t ;+*t)f)a0le ca+*e the )n*tall,ent
pa1,ent* . . . .? D&C%a
Clearl1, the de,and letter )* not the *a,e a* the not)ce of cancellat)on or de,and for re*c)**)on 6: , )'(,.4,0 act reA+)red 01 R.A
No. 9772. (et)t)oner cannot rel1 on .a/u( v. 'nter%ediate !ppellate Court 12 to *+pport h)* content)on that the de,and letter .a*
*+ff)c)ent co,pl)ance. .a/u( held that ?the add)t)onal for,al)t1 of a de,and on [the *eller3*] part for re*c)**)on 01 notar)al act .o+ld
appear, )n the pre,)*e*, to 0e ,erel1 c)rc+)to+* and con*eA+entl1 *+perfl+o+*? *)nce the *eller there)n f)led an act)on for ,))702*)(
'5 /')(.,/(, .h)ch )* a >)ndred concept of re*c)**)on 01 notar)al act. 13 E/)dentl1, the ca*e of +nla.f+l deta)ner f)led 01 pet)t)oner
doe* not e2e,pt h), fro, co,pl1)n- .)th the *a)d reA+)re,ent.
$n add)t)on, ec. 3 40H of R.A. No. 9772 reA+)re* ref+nd of the ca*h *+rrender /al+e of the pa1,ent* on the propert1 to the 0+1er
0efore cancellat)on of the contract. %he pro/)*)on doe* not pro/)de a d)fferent reA+)re,ent for contract* to *ell .h)ch allo.
po**e**)on of the propert1 01 the 0+1er +pon e2ec+t)on of the contract l)>e the )n*tant ca*e. &ence, pet)t)oner cannot )n*)*t on
co,pl)ance .)th the reA+)re,ent 01 a**+,)n- that the ca*h *+rrender /al+e pa1a0le to the 0+1er had 0een appl)ed to rental* of the
propert1 after re*pondent fa)led to pa1 the )n*tall,ent* d+e. $cCEDA
%here 0e)n- no /al)d cancellat)on of the Contract to ell, the CA correctl1 reco-n)Fed re*pondent3* r)-ht to cont)n+e occ+p1)n- the
propert1 *+0;ect of the Contract to ell and aff)r,ed the d)*,)**al of the +nla.f+l deta)ner ca*e 01 the R%C.
%he Co+rt note* that th)* ca*e ha* 0een pend)n- for ,ore than ten 1ear*. Both part)e* pra1ed for other rel)ef* that are ;+*t and
eA+)ta0le +nder the pre,)*e*. &ence, the r)-ht* of the part)e* o/er the *+0;ect propert1 *hall 0e re*ol/ed to f)nall1 d)*po*e of that
)**+e )n th)* ca*e. cAaDCE
Con*)der)n- that the Contract to ell .a* not cancelled 01 the /endor, (atr)c)o, d+r)n- h)* l)fet),e or 01 pet)t)oner )n accordance .)th
R.A. No. 9772 .hen pet)t)oner f)led th)* ca*e of +nla.f+l deta)ner after 22 1ear* of cont)n+o+* po**e**)on of the propert1 01
re*pondent .ho ha* pa)d the *+0*tant)al a,o+nt of (12,388 o+t of the p+rcha*e pr)ce of (17,=88, the Co+rt a-ree* .)th the CA that
)t )* onl1 r)-ht and ;+*t to allo. re*pondent to pa1 her arrear* and *ettle the 0alance of the p+rcha*e pr)ce.
#or re*pondent3* dela1 )n the pa1,ent of the )n*tall,ent*, the Co+rt, )n )t* d)*cret)on, and appl1)n- Art)cle 2289 1 of the C)/)l Code,
,a1 a.ard )ntere*t at the rate of 9K per ann+, 1! on the +npa)d 0alance con*)der)n- that there )* no *t)p+lat)on )n the Contract to
ell for *+ch )ntere*t. #or p+rpo*e* of co,p+t)n- the le-al )ntere*t, the rec>on)n- per)od *ho+ld 0e the f)l)n- of the co,pla)nt for
+nla.f+l deta)ner on Apr)l =, 1997. DE&aA
Ba*ed on re*pondent3* e/)dence 1" of pa1,ent* ,ade, the M%C fo+nd that re*pondent pa)d a total of (12,388 o+t of the p+rcha*e
pr)ce of (17,=88. &ence, re*pondent *t)ll ha* a 0alance of (7,788, pl+* le-al )ntere*t at the rate of 9K per ann+, on the +npa)d
0alance *tart)n- Apr)l =, 1997.
%he th)rd )**+e )* d)*re-arded *)nce pet)t)oner a**a)l* an )ne2)*tent r+l)n- of the R%C on the lac> of ;+r)*d)ct)on of the M%C o/er a
re*c)**)on ca*e .hen the )n*tant ca*e he f)led )* for +nla.f+l deta)ner. A&E$c
5&ERE#GRE, the Dec)*)on of the Co+rt of Appeal* dated Gcto0er 38, 2888 *+*ta)n)n- the d)*,)**al of the +nla.f+l deta)ner ca*e
01 the R%C )* A##$RMED .)th the follo.)n- MGD$#$CA%$GN:
1.Re*pondent R+f)na Dela Cr+F Eda. de ManFano *hall pa1 pet)t)oner Man+el C. (a-tal+nan the 0alance of
the p+rcha*e pr)ce )n the a,o+nt of #)/e %ho+*and #)/e &+ndred (e*o* 4(7,788H pl+* )ntere*t at
9K per ann+, fro, Apr)l =, 1997 +p to the f)nal)t1 of th)* ;+d-,ent, and thereafter, at the rate of
12K per ann+," EDA%C

2.@pon pa1,ent, pet)t)oner Man+el C. (a-tal+nan *hall e2ec+te a Deed of A0*ol+te ale of the *+0;ect
propert1 and del)/er the cert)f)cate of t)tle )n fa/or of re*pondent R+f)na Dela Cr+F
Eda. de ManFano" and
3.$n ca*e of fa)l+re to pa1 .)th)n 98 da1* fro, f)nal)t1 of th)* Dec)*)on, re*pondent R+f)na Dela Cr+F
Eda. de ManFano *hall ),,ed)atel1 /acate the pre,)*e* .)tho+t need of f+rther de,and, and the
do.npa1,ent and )n*tall,ent pa1,ent* of (12,388 pa)d 01 her *hall con*t)t+te rental for the
*+0;ect propert1. Dc$%&E
No co*t*.
G GRDERED.
Puno, C.J., Sandoval-Gutierrez, Corona and Garcia, JJ., conc+r.
F''()'(*+
1.%he M%C Dec)*)on *tated that pla)nt)ff 4pet)t)onerH ne/er *+0,)tted a cop1 of the <asunduan )n e/)dence.
2.Rollo, p. 122.
3.'d. at 147.
4.'d. at 37.
7.'d. at =.
9.No. !C27==7, No/e,0er 19, 197=, =9 CRA 387, 327.
7.R.A. No. 9772, ec. 3. $n all tran*act)on* or contract* )n/ol/)n- the *ale or f)nanc)n- of real e*tate on )n*tall,ent pa1,ent*,
)ncl+d)n- re*)dent)al condo,)n)+, apart,ent* 0+t e2cl+d)n- )nd+*tr)al lot*, co,,erc)al 0+)ld)n-* and *ale* to tenant*
+nder [R.A No. 3=44], a* a,ended 01 [R.A No. 93=9], .here the 0+1er ha* pa)d at lea*t t.o 1ear* of )n*tall,ent*, the
0+1er )* ent)tled to the follo.)n- r)-ht* )n ca*e he defa+lt* )n the pa1,ent of *+cceed)n- )n*tall,ent*:
4aH%o pa1, .)tho+t add)t)onal )ntere*t, the +npa)d )n*tall,ent* d+e .)th)n the total -race per)od earned 01 h),, .h)ch )* here01
f)2ed at the rate of one ,onth -race per)od for e/er1 one 1ear of )n*tall,ent pa1,ent* ,ade: Provided, %hat th)* r)-ht
*hall 0e e2erc)*ed 01 the 0+1er onl1 once )n e/er1 f)/e 1ear* of the l)fe of the contract and )t* e2ten*)on*, )f an1.
=.No. !C77394, No/e,0er 23, 19==, 197 CRA 927, 937.
9.E,pha*)* *+ppl)ed.
18..ea"o v. Court of !ppeals, G.R. No. 12981=, No/e,0er 17, 2881, 399 CRA 39, 47.
11.Rollo, p. 4=.
12.Supra, note =.
13.6l/%pia Housin(, 'nc. v. Panasiatic 2ravel Corporation, G.R. No. 14849=, <an+ar1 19, 2883, 397 CRA 29=.
14.Art. 2289. $f the o0l)-at)on con*)*t* )n the pa1,ent of a *+, of ,one1, and the de0tor )nc+r* )n dela1, the )nde,n)t1 for
da,a-e*, there 0e)n- no *t)p+lat)on to the contrar1, *hall 0e the pa1,ent of the )ntere*t a-reed +pon, and )n the
a0*ence of *t)p+lat)on, the le-al )ntere*t .h)ch )* *)2 percent per ann+,.
17.Ra%os v. Heruela, G.R. No. 147338, Gcto0er 14, 2887, 473 CRA 79.
19.E2h)0)t* 9 to 71, Record*, pp. 141C282.
#$R% D$E$$GN
[G.R. No. 141287. Ma1 9, 2882.]
ACTIVE REALTY & DEVELOPMENT CORPORATION, petitioner, vs. NECITA G. DAROYA, .*8.*+*)(*-
6: A(('.)*:-I)-F,/( S14.0*: D,.':,-H74)')*+, respondents.
<ati()a -i%aili( !nosan and !ssociates for pet)t)oner.
&iola and Guadiz for pr)/ate re*pondent.
SYNOPSIS
(et)t)oner entered )nto a Contract to ell .)th re*pondent, .here01 the latter a-reed to 0+1 a lot )n pet)t)oner3* *+0d)/)*)on.
+0*eA+entl1, pet)t)oner *ent re*pondent a not)ce of cancellat)on of the)r contract to *ell a* a re*+lt of re*pondent3* defa+lt to pa1
three 43H ,onthl1 a,ort)Fat)on*. Re*pondent f)led a co,pla)nt a-a)n*t pet)t)oner 0efore the Ar0)trat)on Branch of the &o+*)n- and
!and @*e Re-+lator1 Board 4&!@RBH to co,pel the pet)t)oner to e2ec+te a f)nal Deed of A0*ol+te ale )n re*pondent3* fa/or after
*he pa1 an1 0alance that ,a1 *t)ll 0e d+e fro, her. %he &!@RB Ar0)ter fo+nd for the re*pondent. Gn appeal, the &!@RB Board of
Co,,)**)oner* *et a*)de the Ar0)ter3* dec)*)on and ordered pet)t)oner to ref+nd to re*pondent one half of the total a,o+nt *he had
pa)d. Re*pondent appealed to the Gff)ce of the (re*)dent .h)ch ,od)f)ed the dec)*)on of the &!@RB a* )t .a* not )n accord .)th the
pro/)*)on* of the Maceda !a.. (et)t)oner appealed the dec)*)on to the Co+rt of Appeal* .h)ch .a* den)ed d+e co+r*e for
)n*+ff)c)enc1 )n for, and *+0*tance. &ence, th)* pet)t)on.
%he +pre,e Co+rt r+led that )n den1)n- d+e co+r*e to the pet)t)on, the appellate co+rt -a/e pre,)+, to for, and fa)led to con*)der
the ),portant r)-ht* of the part)e* )n the ca*e at 0ar. At the /er1 lea*t, pet)t)oner *+0*tant)all1 co,pl)ed .)th the proced+ral
reA+)re,ent* for appeal, hence, )t )* 0e*t to -)/e d+e co+r*e to the pet)t)on at 0ar to clar)f1 the r)-ht* and d+t)e* of a 0+1er )n
contract* to *ell real e*tate on )n*tall,ent 0a*)*.
%he +pre,e Co+rt aff)r,ed the dec)*)on of the Gff)ce of the (re*)dent. %he contract to *ell )n the ca*e at 0ar )* -o/erned 01
Rep+0l)c Act No. 9772 ' ?%he Realt1$n*tall,ent B+1er (rotect)on Act,? or ,ore pop+larl1 >no.n a* the Maceda !a.. %he record*
clearl1 *ho.ed that the pet)t)oner fa)led to co,pl1 .)th the ,andator1 t.)n reA+)re,ent* for a /al)d and effect)/e cancellat)on +nder
the la., i.e., he fa)led to *end a notar)Fed not)ce of cancellat)on and ca*h *+rrender /al+e. %h+*, for fa)l+re to cancel the contract )n
accordance .)th the proced+re pro/)ded 01 la., the Co+rt held that the contract to *ell 0et.een the part)e* re,a)ned /al)d and
*+0*)*t)n-. #ollo.)n- ect)on 34aH of R.A. No. 9772, re*pondent ha* the r)-ht to offer to pa1 for the 0alance of the p+rcha*e pr)ce,
.)tho+t )ntere*t, .h)ch *he d)d )n th)* ca*e. Grd)nar)l1, pet)t)oner .o+ld ha/e no other reco+r*e 0+t to accept pa1,ent. &o.e/er,
re*pondent can no lon-er e2erc)*e th)* r)-ht a* the *+0;ect lot .a* alread1 *old 01 pet)t)oner to another 0+1er. A* re*pondent lo*t
her chance to pa1 for the 0alance, )t )* onl1 eA+)ta0le that the pet)t)oner 0e ordered to ref+nd to re*pondent the act+al /al+e of the
lot re*old or to del)/er a *+0*t)t+te lot at the opt)on of the re*pondent.
SYLLABUS
1.C$E$! !A5" A!E" RE(@B!$C AC% NG. 9772 4%&E REA!%B $N%A!!MEN% B@BER (RG%EC%$GN AC%H" (RG%EC%
B@BER G# REA! E%A%E GN $N%A!!MEN% BA$ AGA$N% GNERG@ AND G((RE$EE CGND$%$GN. ' %he contract
to *ell )n the ca*e at 0ar )* -o/erned 01 Rep+0l)c Act No. 9772 ' ?%heRealt1 $n*tall,ent B+1er (rotect)on Act,? or ,ore pop+larl1
>no.n a* the Maceda !a. ' .h)ch ca,e )nto effect )n epte,0er 1972. $t* declared p+0l)c pol)c1 )* to protect 0+1er* of real e*tate
on )n*tall,ent 0a*)* a-a)n*t onero+* and oppre**)/e cond)t)on*.. %he la. *ee>* to addre** the ac+te ho+*)n- *horta-e pro0le, )n
o+r co+ntr1 that ha* pro,pted tho+*and* of ,)ddle and lo.er cla** 0+1er* of ho+*e*, lot* and condo,)n)+, +n)t* to enter )nto all
*ort* of contract* .)th pr)/ate ho+*)n- de/eloper* )n/ol/)n- )n*tall,ent *che,e*. . . . %o help e*pec)all1 the lo. )nco,e lot 0+1er*,
the le-)*lat+re enacted R.A. No. 9772 del)neat)n- the r)-ht* and re,ed)e* of lot 0+1er* and protect the, fro, oneC*)ded and
pern)c)o+* contract *t)p+lat)on*.
2.$D." $D." $D." MANDA%GRB %5$N REP@$REMEN% #GR EA!$D AND E##EC%$EE CANCE!!A%$GN G# CGN%RAC% @NDER
%&E !A5" NG% (REEN% $N CAE A% BAR. ' (et)t)oner ref+*ed to accept re*pondent3* *+0*eA+ent tender of pa1,ent of the
o+t*tand)n- 0alance alle-)n- that )t ha* alread1 cancelled the contract and *old the *+0;ect lot to another 0+1er. &o.e/er, the
record* clearl1 *ho. that the pet)t)oner fa)led to co,pl1 .)th the %andator/ t4in reGuire%ents for a /al)d and effect)/e cancellat)on
+nder the la., i.e., he fa)led to *end a notar)Fed not)ce of cancellat)on and ref+nd the ca*h *+rrender /al+e. At no t),e, fro, the
date )t -a/e a not)ce of cancellat)on +p to the t),e ),,ed)atel1 0efore the re*pondent f)led the ca*e a-a)n*t pet)t)oner, d)d the latter
e2ert effort to pa1 the ca*h *+rrender /al+e.
D E C I S I O N
PUNO, J p:
%h)* )* a pet)t)on for re/)e. on certiorari +nder R+le 47 of the Re/)*ed R+le* of Co+rt .h)ch *ee>* to re/er*e and *et a*)de the
Re*ol+t)on of the Co+rt of Appeal*, dated A+-+*t 3, 1999, den1)n- d+e co+r*e to pet)t)oner3* appeal for )n*+ff)c)enc1 of for, and
*+0*tance.
(et)t)oner AC%$EE REA!%B 6 DEEE!G(MEN% CGR(GRA%$GN )* the o.ner and de/eloper of %o.n 6 Co+ntr1 &)ll* E2ec+t)/e
E)lla-e )n Ant)polo, R)Fal. Gn <an+ar1 2, 19=7, )t entered )nto a Contract to ell 1 .)th re*pondent NEC$%A DARGBA, a contract
.or>er )n the M)ddle Ea*t, .here01 the latter a-reed to 0+1 a 717 *A. ,. lot for (224,827.88 )n pet)t)oner3* *+0d)/)*)on. $CaDA
%he contract to *ell *t)p+lated that the re*pondent *hall pa1 the )n)t)al a,o+nt of (73,799.88 +pon e2ec+t)on of the contract and the
0alance of (178,279.88 )n *)2t1 498H ,onthl1 )n*tall,ent* of (4,=93.37. Add)n- the do.n pa1,ent and )n*tall,ent pa1,ent*, )t
.o+ld appear that the total a,o+nt )* P:>8,:8+.99, a f)-+re h)-her than that *tated a* the contract pr)ce.
Gn Ma1 7, 19=9, pet)t)oner accepted re*pondent3* a,ort)Fat)on )n the a,o+nt of (48,888.88. B1 A+-+*t =, 19=9, re*pondent .a* in
default of PAH,?=?.=H representin( t#ree C:D %ont#l/ a%ortizations. Petitioner sent respondent a notice of cancellation 2 of t#eir
contract to sell, to ta>e effect th)rt1 438H da1* fro, rece)pt of the letter. $t doe* not appear fro, the record*, ho.e/er, .hen
re*pondent rece)/ed the letter. Nonethele**, .hen re*pondent offered to pa1 for the 0alance of the contract pr)ce, pet)t)oner ref+*ed
a* )t ha* alle-edl1 *old the lot to another 0+1er.
Gn A+-+*t 29, 1991, re*pondent f)led a co,pla)nt for *pec)f)c perfor,ance and da,a-e* 3 a-a)n*t pet)t)oner 0efore the Ar0)trat)on
Branch of the &o+*)n- and !and @*e Re-+lator1 Board 4&!@RBH. $t *o+-ht to co,pel the pet)t)oner to e2ec+te a f)nal Deed of
A0*ol+te ale )n re*pondent3* fa/or after *he pa1* an1 0alance that ,a1 *t)ll 0e d+e fro, her. Re*pondent cla),ed that *he )*
ent)tled to the f)nal deed of *ale after *he offered to pa1 the 0alance of (24,84=.47, con*)der)n- that s#e #as alread/ paid t#e total
su% of P:A>,=A8.+8, 4#ic# a%ount is P;9,=:H.+8 %ore t#an t#e total contract price of P??>,9?H.99.
Gn <+ne 14, 1993, &!@RB Ar0)ter Alfredo M. %an $$ fo+nd for the re*pondent. &e r+led that the cancellat)on of the contract to *ell
.a* /o)d a* pet)t)oner fa)led to pa1 the ca*h *+rrender /al+e to re*pondent a* ,andated 01 la.. &o.e/er, a* the *+0;ect lot .a*
alread1 *old to a th)rd part1 and the re*pondent had a-reed to a f+ll ref+nd of her )n*tall,ent pa1,ent*, pet)t)oner .a* ordered
to refund to respondent all #er pa/%ents in t#e a%ount of P:A>,=A8.+9, 4it# A?I interest per annu% fro% !u(ust ?8, A;;A Ct#e
date of t#e filin( of t#e co%plaintD until full/ paid and to pa/ PA9,999.99 as attorne/Js fees.
Gn appeal, the &!@RB ,oard of Co%%issioners *et a*)de the Ar0)ter3* Dec)*)on. %he Board ref+*ed to appl1 the re,ed)e* pro/)ded
+nder the Maceda !a. and )n*tead dee,ed )t f)t to for,+late an ?eA+)ta0le? *ol+t)on to the ca*e. $t r+led that, a* 0oth part)e* .ere at
fa+lt, i.e., re*pondent )nc+rred )n dela1 )n her )n*tall,ent pa1,ent* and re*pondent fa)led to *end a notar)Fed not)ce of
cancellat)on, petitioner 4as ordered to refund to t#e respondent one #alf of t#e total a%ount s#e #as paid or PAH+,>9=.:H, .h)ch
.a* alle-edl1 a>)n to the re,ed1 pro/)ded +nder the Maceda !a.. !
Respondent appealed to t#e 6ffice of t#e President. Gn <+ne 2, 199=, then Ch)ef (re*)dent)al Co+n*el Renato C. Corona, act)n- 01
a+thor)t1 of the (re*)dent, %odified t#e -ecision of t#e H.1R, a* he fo+nd that )t .a* not )n accord .)th the pro/)*)on* of the
Maceda !a.. &e held that a* pet)t)oner d)d not co,pl1 .)th the le-al reA+)*)te* for a /al)d cancellat)on of the contract, the contract to
*ell 0et.een the part)e* *+0*)*ted and concl+ded that re*pondent .a* ent)tled to the lot after pa1,ent of her o+t*tand)n- 0alance.
&o.e/er, a* the pet)t)oner d)*clo*ed that the lot .a* alread1 *old to another per*on and that the act+al /al+e of the lot a* of the date
of the contract .a* (1,788.88 per *A+are ,eter, petitioner 4as ordered to refund to t#e respondent t#e a%ount of P=+H,999.99, t#e
true and actual value of t#e lot as of t#e date of t#e contract, 4it# interest at A?I per annu% co%puted fro% !u(ust ?8, A;;A until
full/ paid, or to deliver a su)stitute lot at t#e c#oice of respondent. "
@pon den)al of )t* ,ot)on for recon*)derat)on, pet)t)oner a**a)led the Dec)*)on )n the Co+rt of Appeal*. &o.e/er, )t* pet)t)on for
re/)e. # .a* den)ed d+e co+r*e for )n*+ff)c)enc1 )n for, and *+0*tance, $ 0eca+*e: 1H no aff)da/)t of *er/)ce .a* attached to the
pet)t)on" 2H e2cept for cert)f)ed tr+e cop)e* of the dec)*)on and re*ol+t)on of the Gff)ce of the (re*)dent, no other ,ater)al port)on* of
the record, a* .o+ld *+pport the alle-at)on* )n the pet)t)on, .ere attached" and, 3H the cert)f)cat)on of for+,C*hopp)n- .a* *)-ned 01
the head co+n*el and /)ceCpre*)dent of the pet)t)oner corporat)on .ho .a* not a+thor)Fed 01 a Board Re*ol+t)on to repre*ent
pet)t)oner.

(et)t)oner ,o/ed for recon*)derat)on. %he Co+rt of Appeal* den)ed )t on an ent)rel1 ne. -ro+nd, i.e., for +nt),el1 f)l)n- of the pet)t)on
for re/)e.. %
(et)t)oner no. ),p+-n* the dec)*)on of the Co+rt of Appeal* and ra)*e* the follo.)n- proced+ral )**+e*:
$
%&E &GNGRAB!E CG@R% G# A((EA! GRG!B ERRED $N RE!B$NG %GG M@C& GN #GRM
RA%&ER %&AN GN %&E MER$% G# %&E (E%$%$GN %&EREBB DENB$NG (E%$%$GNER G# $% R$G&%
%G D@E (RGCE.
$$
%&E &GNGRAB!E CG@R% G# A((EA! ANC&GRED %&E DEN$A! G# (E%$%$GNER3 MG%$GN #GR
RECGN$DERA%$GN GN $NCGN$%EN% AND CGN#!$C%$NG R@!$NG NG% BGRNE BB %&E #AC%
AND %&E RECGRD G# %&E CAE.
Gn the proced+ral po)nt* ra)*ed, .e f)nd for the pet)t)oner.
G+r per+*al of the record re/eal* that pet)t)oner *+0*tant)all1 co,pl)ed .)th the for,al reA+)re,ent* of R+le 43 of the R+le* of
Co+rt. 1& First, a* to the non-attac#%ent of t#e affidavit of service, the record* 0ear that the pet)t)on .a* acco,pan)ed 01 the
or)-)nal re-)*tr1 rece)pt* )**+ed 01 the po*t off)ce, *ho.)n- that the pet)t)on and )t* anne2e* .ere *er/ed +pon the part)e*. Moreo/er,
re*pondent3* co+n*el of record, Att1. er-)o G+ad)F, act+all1 rece)/ed a cop1 of the pet)t)on. 11Second, pet)t)oner l)>e.)*e co,pl)ed
.)th ect)on 9 4cH of R+le 43 reA+)r)n- the *+0,)**)on of cop)e* of the a.ard, ;+d-,ent, f)nal order and re*ol+t)on appealed fro,. $t*
pet)t)on .a* acco,pan)ed 01 the d+pl)cate or)-)nal of the appealed Dec)*)on of the Ch)ef (re*)dent)al !e-al Co+n*el and h)*
Re*ol+t)on den1)n- pet)t)oner3* ,ot)on for recon*)derat)on, the Dec)*)on of the &!@RB Board of Co,,)**)oner* and that of the
&!@RB ar0)ter. A per+*al of the*e doc+,ent* .)ll re/eal that the1 conta)ned all the rele/ant fact* of the ca*e fro, .h)ch the
appellate 0od1 can for, )t* o.n dec)*)on. $t* fa)l+re to *+0,)t the other doc+,ent*, l)>e the Co,pla)nt, An*.er, (o*)t)on (aper* and
Appeal Me,oranda of the part)e* 0efore the &!@RB, .a* d+e to the ref+*al of the Gff)ce of the (re*)dent to -)/e the, a cert)f)ed
tr+e cop1 of the*e doc+,ent* .h)ch .ere *+0,)tted .)th *a)d Gff)ce. 2#ird, a* to the lac> of Board Re*ol+t)on 01
pet)t)oner corporat)on a+thor)F)n- Att1. Rene Iat)-0a>, )t* Ch)ef !e-al Co+n*el and E)ceC(re*)dent for !e-al Affa)r*, to repre*ent )t )n
the f)l)n- of the appeal, pet)t)oner ad,)t* that th)* .a* d+e to )t* hone*t 0el)ef that *+ch a+thor)t1 )* not reA+)red a* )t .a* not
,ent)oned )n ect)on 94cH of R+le 43. 12 %o ,a>e +p for *+ch o,)**)on, pet)t)oner *+0,)tted a ecretar13* Cert)f)cate 13conf)r,)n-
and rat)f1)n- the a+thor)t1 of Att1. Iat)-0a> to repre*ent pet)t)oner. Finall/, .e f)nd that the Co+rt of Appeal* erred )n den1)n-
pet)t)oner3* ,ot)on for recon*)derat)on d+e to +nt),el1 f)l)n- a* the record* clearl1 *ho. that )t .a* f)led on <+ne 27, 1999, a da1
0efore the e2p)rat)on of the per)od to appeal -ranted 01 the Co+rt of Appeal*. 1
$n den1)n- d+e co+r*e to the pet)t)on, the appellate co+rt -a/e pre,)+, to for, and fa)led to con*)der the ),portant r)-ht* of the
part)e* )n the ca*e at 0ar. 1! At the /er1 lea*t, pet)t)oner su)stantiall/ co%plied .)th the proced+ral reA+)re,ent* for appeal, hence,
)t )* 0e*t to -)/e d+e co+r*e to the pet)t)on at 0ar to clar)f1 the r)-ht* and d+t)e* of a 0+1er )n contract* to *ell real e*tate on
)n*tall,ent 0a*)*.
%he )**+e to 0e re*ol/ed )* .hether or not the pet)t)oner can 0e co,pelled to ref+nd to the re*pondent the /al+e of the lot or to
del)/er a *+0*t)t+te lot at re*pondent3* opt)on.
5e f)nd for the re*pondent and r+le )n the aff)r,at)/e.
%he contract to *ell )n the ca*e at 0ar )* -o/erned 01 Rep+0l)c Act No. 9772 ' ?%he Realt1 $n*tall,ent B+1er (rotect)on Act,? or
,ore pop+larl1 >no.n a* the Maceda !a. ' .h)ch ca,e )nto effect )n epte,0er 1972. $t* declared p+0l)c pol)c1 )* to protect
0+1er* of real e*tate on )n*tall,ent 0a*)* a-a)n*t onero+* and oppre**)/e cond)t)on*. 1" %he la. *ee>* to addre** the ac+te
ho+*)n- *horta-e pro0le, )n o+r co+ntr1 that ha* pro,pted tho+*and* of ,)ddle and lo.er cla** 0+1er* of ho+*e*, lot* and
condo,)n)+, +n)t* to enter )nto all *ort* of contract* .)th pr)/ate ho+*)n- de/eloper* )n/ol/)n- )n*tall,ent *che,e*. !ot 0+1er*,
,o*tl1 lo. )nco,e earner* ea-er to acA+)re a lot +pon .h)ch to 0+)ld the)r ho,e*, read)l1 aff)2 the)r *)-nat+re* on the*e contract*,
.)tho+t an opport+n)t1 to A+e*t)on the onero+* pro/)*)on* there)n a* the contract )* offered to the, on a ?ta>e )t or lea/e )t?
0a*)*. 1# Mo*t of the*e contract* of adhe*)on, dra.n e2cl+*)/el1 01 the de/eloper*, entrap )nnocent 0+1er* 01 reA+)r)n- ca*h
depo*)t* for re*er/at)on a-ree,ent* .h)ch oftent),e* )ncl+de, )n f)ne pr)nt, onero+* defa+lt cla+*e* .here all the )n*tall,ent
pa1,ent* ,ade .)ll 0e forfe)ted +pon fa)l+re to pa1 an1 )n*tall,ent d+e e/en )f the 0+1er* had ,ade pa1,ent* for *e/eral
1ear*. 1$ Real e*tate de/eloper* th+* en;o1 an +nnece**ar1 ad/anta-e o/er lot 0+1er* .ho the1 often e2plo)t .)th )n)A+)to+*
re*+lt*. %he1 -et to forfe)t all the )n*tall,ent pa1,ent* of defa+lt)n- 0+1er* and re*ell the *a,e lot to another 0+1er .)th the *a,e
e2)-ent cond)t)on*. %o help e*pec)all1 the lo. )nco,e lot 0+1er*, the le-)*lat+re enacted R.A. No. 9772 del)neat)n- the r)-ht* and
re,ed)e* of lot 0+1er* and protect the, fro, oneC*)ded and pern)c)o+* contract *t)p+lat)on*.
More *pec)f)call1, ect)on 3 of R.A. No. 9772 pro/)ded for the r)-ht* of the 0+1er )n ca*e of defa+lt )n the pa1,ent of *+cceed)n-
)n*tall,ent*, .here he ha* alread1 pa)d at lea*t t.o 42H 1ear* of )n*tall,ent*, th+*:
?4aH2o pa/, 4it#out additional interest, t#e unpaid install%ents due .)th)n the total -race per)od earned 01
h),, .h)ch )* here01 f)2ed at the rate of one ,onth -race per)od for e/er1 one 1ear of )n*tall,ent
pa1,ent* ,ade" . . .
40H$f the contract )* cancelled, the *eller *hall ref+nd to the 0+1er the ca*h *+rrender /al+e of the pa1,ent*
on the propert1 eA+)/alent to f)ft1 per cent of the total pa1,ent* ,ade" pro/)ded, that the
act+al cancellation of t#e contract s#all tae place after th)rt1 da1* fro, rece)pt 01 the 0+1er of
the notice of cancellation or t#e de%and for rescission of t#e contract )/ a notarial act and upon
full pa/%ent of t#e cas# surrender value to t#e )u/er.? Ca%Ac
$n th)* ca*e, respondent #as alread/ paid in four C>D /ears a total of P:A>,=89.+8 or P;9,=:H.+8 %ore t#an t#e contract price of
P??>,9:H.99. $n Apr)l 19=9, pet)t)oner dec)ded to cancel the contract .hen the re*pondent )nc+rred )n dela/ in t#e pa/%ent of
PAH,?=?.=H, representin( t#ree C:D %ont#l/ a%ortizations. (et)t)oner ref+*ed to accept re*pondent3* *+0*eA+ent tender of pa1,ent
of the o+t*tand)n- 0alance alle-)n- that )t ha* alread1 cancelled the contract and *old the *+0;ect lot to another 0+1er. &o.e/er, the
record* clearl1 *ho. that the pet)t)oner fa)led to co,pl1 .)th the %andator/ t4in reGuire%ents for a /al)d and effect)/e cancellat)on
+nder the la., 1% i.e., he fa)led to *end a notar)Fed not)ce of cancellat)on and ref+nd the ca*h *+rrender /al+e. At no t),e, fro, the
date )t -a/e a not)ce of cancellat)on +p to the t),e ),,ed)atel1 0efore the re*pondent f)led the ca*e a-a)n*t pet)t)oner, d)d the latter
e2ert effort to pa1 the ca*h *+rrender /al+e. $n fact, the record* d)*clo*e that )t .a* onl1 d+r)n- the prel),)nar1 hear)n- of the ca*e
0efore the &!@RB ar0)ter .hen pet)t)oner offered to pa1 the ca*h *+rrender /al+e. (et)t)oner ;+*t)f)e* )t* )nact)on on the -ro+nd that
the re*pondent .a* al.a1* o+t of the co+ntr1. E/en then, the record* are 0ereft of e/)dence to *ho. that pet)t)oner atte,pted to pa1
the ca*h *+rrender /al+e to re*pondent thro+-h her la*t >no.n addre**. %he o,)**)on )* *+rpr)*)n- con*)der)n- that e/en d+r)n- the
t),e* re*pondent .a* o+t of the co+ntr1, pet)t)oner ha* 0een *end)n- her .r)tten not)ce* to re,)nd her to pa1 her )n*tall,ent arrear*
thro+-h her la*t >no.n addre**. Clearl1, had re*pondent not f)led a ca*e de,and)n- a f)nal deed of *ale )n her fa/or, pet)t)oner
.o+ld not ha/e l)fted a f)n-er to -)/e re*pondent .hat .a* d+e her ' act+al pa1,ent of the ca*h *+rrender /al+e, a,on- other*. $n
d)*re-ard of 0a*)c eA+)ta0le pr)nc)ple*, pet)t)oner3* *tance .o+ld ena0le )t to re*ell the propert1, >eep re*pondent3* )n*tall,ent
pa1,ent*, not to ,ent)on the ca*h *+rrender /al+e .h)ch )t .a* o0l)-ated to ret+rn. %he .a/u( 2& ca*e c)ted 01 pet)t)oner )*
)napropo*. $n.a/u(, the lot 0+1er d)d not pa1 for the o+t*tand)n- 0alance of h)* acco+nt and the Co+rt fo+nd that notar)al re*c)**)on
or cancellat)on .a* no lon-er nece**ar1 a* the *eller ha* alread1 f)led )n co+rt a ca*e for re*c)**)on of the contract to *ell. $n the
ca*e at 0ar, re*pondent offered to pa1 for her o+t*tand)n- 0alance of the contract pr)ce 0+t re*pondent ref+*ed to accept )t. Ne)ther
d)d pet)t)oner add+ce proof that the re*pondent3* offer to pa1 .a* ,ade after the effect)/)t1 date *tated )n )t* not)ce of cancellat)on.
Moreo/er, there .a* no for,al not)ce of cancellat)on or co+rt act)on to re*c)nd the contract. G)/en the c)rc+,*tance*, .e f)nd )t
)lle-al and )n)A+)to+* that pet)t)oner, .)tho+t co,pl1)n- .)th the ,andator1 le-al reA+)re,ent* for cancel)n- the contract, forfe)ted
0oth re*pondent3* land and hardCearned ,one1 after *he ha* pa)d for, not ;+*t the contract pr)ce, 0+t %ore t#an t#e consideration
stated in t#e contract to sell.
2#us, for failure to cancel t#e contract in accordance 4it# t#e procedure provided )/ la4, 4e #old t#at t#e contract to sell )et4een
t#e parties re%ains valid and su)sistin(. Follo4in( Section :CaD of R.!. 0o. 8HH?, respondent #as t#e ri(#t to offer to pa/ for t#e
)alance of t#e purc#ase price, 4it#out interest, 4#ic# s#e did in t#is case. Grd)nar)l1, pet)t)oner .o+ld ha/e had no other reco+r*e
0+t to accept pa1,ent. &o.e/er, re*pondent can no lon-er e2erc)*e th)* r)-ht a* the *+0;ect lot .a* alread1 *old 01 the pet)t)oner to
another 0+1er .h)ch lot, a* ad,)tted 01 the pet)t)oner, .a* /al+ed at (1,788.88 per *A+are ,eter. A* re*pondent lo*t her chance to
pa1 for the 0alance of the (=77,888.88 lot, )t )* onl1 ;+*t and eA+)ta0le that the pet)t)oner 0e ordered to ref+nd to re*pondent the
act+al /al+e of the lot re*old, i.e., (=77,888.88, .)th 12K )ntere*t per ann+, co,p+ted fro, A+-+*t 29, 1991 +nt)l f+ll1 pa)d or to
del)/er a *+0*t)t+te lot at the opt)on of the re*pondent.

Gn a f)nal note, )t .o+ld not 0e a,)** to *tre** that the &!@RB Board Dec)*)on order)n- pet)t)oner to ref+nd to re*pondent one half
of her total pa1,ent* )* not an eA+)ta0le *ol+t)on a* )t p+n)*hed the re*pondent for her del)nA+ent pa1,ent* 0+t totall1 d)*re-arded
pet)t)oner3* fa)l+re to co,pl1 .)th the %andator/ reGuisites for a valid cancellation of the contract to *ell. %he Board fa)led to con*)der
that the Maceda la. .a* enacted to re%ed/ t#e pli(#t of lo. and ,)ddleC)nco,e lot )u/ers, *a/e the, fro, the e2act)n- defa+lt
cla+*e* )n real e*tate *ale* and a**+re the, of a ho,e the1 can call the)r o.n. Ne)ther .o+ld the Dec)*)on of the &!@RB Ar0)ter
order)n- a f+ll ref+nd of the )n*tall,ent pa1,ent* of re*pondent )n the a,o+nt of (314,=19.78 0e ;+*t)f)ed a*, +nder the la.,
re*pondent )* ent)tled to the lot *he p+rcha*ed after pa1,ent of her o+t*tand)n- 0alance .h)ch *he .a* read1 and .)ll)n- to do.
%h+*, to penal)Fe the pet)t)oner for fa)l)n- )n )t* o0l)-at)on to del)/er the *+0;ect lot and to -)/e the re*pondent .hat )* r)-htl1 her*, the
pet)t)oner .a* correctl1 ordered to ref+nd to the re*pondent the act+al /al+e of the land 4(=77,888.88H *he lo*t to another 0+1er,
pl+* )ntere*t at the rate of 12K per ann+, fro, A+-+*t 29, 1991 +nt)l f+ll1 pa)d or to del)/er a *+0*t)t+te lot at the cho)ce of the
re*pondent.
$N E$E5 5&EREG#, the Dec)*)on of then Ch)ef (re*)dent)al !e-al A**)*tant Renato Corona, Gff)ce of the (re*)dent, dated <+ne 2,
199=, )* A##$RMED in toto. Co*t* a-a)n*t pet)t)oner.
G GRDERED.
-avide, Jr., C.J., <apunan, Ynares-Santia(o and !ustria-$artinez, JJ., conc+r.
F''()'(*+
1.Rollo, pp. 2=C31.
2.')id., p. 32.
3.')id., pp. 33C3=.
4.ee Dec)*)on, Rollo, pp. 39C42.
7.Dec)*)on, dated A+-+*t 18, 1994, penned 01 Co,,)**)oner and Ch)ef E2ec+t)/e Gff)cer Erne*to C. Mend)ola and conc+rred )n
01 D(5& A**t. ecretar1 <o*e !. Altea and Co,,)**)oner !+)* %. %+n-palan" Rollo, pp. 44C4=.
9.Dec)*)on, dated <+ne 2, 199=" Rollo, pp. 49C79.
7.Rollo, pp. 92C73.
=.Re*ol+t)on, dated A+-+*t 3, 1999" Rollo, 79C98.
9.Rollo, p. 91.
18.Appeal* fro, A+a*)C;+d)c)al a-enc)e* to the Co+rt of Appeal*.
11.Cert)f)cat)on of (o*t,a*ter C)pr)ano (a-ad+an" Rollo, p. 79.
12.?EC. 9.Contents of t#e petition. ' %he pet)t)on for re/)e. *hall 4aH *tate the f+ll na,e* of the part)e* to the ca*e, .)tho+t
),plead)n- the co+rt or a-enc)e* e)ther a* pet)t)oner* or re*pondent*" 40H conta)n a conc)*e *tate,ent of the fact* and
)**+e* )n/ol/ed and the -ro+nd* rel)ed +pon for the re/)e." 4cH 0e acco,pan)ed 01 a clearl1 le-)0le d+pl)cate or)-)nal or
a cert)f)ed tr+e cop1 of the a.ard, ;+d-,ent, f)nal order or re*ol+t)on appealed fro,, to-ether .)th cert)f)ed tr+e cop)e*
of *+ch ,ater)al port)on* of the record referred to there)n and other *+pport)n- paper*" and 4dH conta)n a *.orn
cert)f)cat)on a-a)n*t for+, *hopp)n- a* pro/)ded )n the la*t para-raph of *ect)on 2, R+le 42. %he pet)t)on *hall *tate the
*pec)f)c ,ater)al date* *ho.)n- that )t .a* f)led .)th)n the per)od f)2ed here)n.?
13.Rollo, p. 7=.
14.ee Anne2 ?N?, Re*ol+t)on of the Co+rt of Appeal* e2tend)n- the t),e to f)le )t* pet)t)on for re/)e." Rollo, pp. 79C=8.
17.Yao vs. Court of !ppeals, 344 CRA 282 42888H.
19.ect)on 3, R.A. 9772.
17.!n(eles vs. Calsanz, 137 CRA 323 419=7H.
1=.Realt/ 7@c#an(e &enture Corporation vs. Sendino, 233 CRA 997, 99= 41994H.
19.ect)on 3 40H, R.A. 9772" Sisa -evelop%ent Corporation vs. 6ffice of t#e President of t#e P#ilippines, 231 CRA 974
41994H" Jison vs. Court of !ppeals, 194 CRA 339, 347 419==H.
28.197 CRA 227 419==H. cCE%A
#$R% D$E$$GN
[G.R. No. 147994. <an+ar1 28, 2884.]
FAR EAST BANK & TRUST CO., petitioner, vs. ARTURO L. MARHUEZ, respondent.
D E C I S I O N
PANGANIBAN, J p:
@nder (D 977, the ,ort-a-e of a *+0d)/)*)on lot or a condo,)n)+, +n)t )* /o)d, )f e2ec+ted 01 a propert1 de/eloper .)tho+t the pr)or
.r)tten appro/al of the &o+*)n- and !and @*e Re-+lator1 Board 4&!@RBH. %hat an enc+,0rance ha* 0een con*t)t+ted o/er an
ent)re propert1, of .h)ch the *+0;ect lot or +n)t )* ,erel1 a part, doe* not affect the )n/al)d)t1 of the l)en o/er the *pec)f)c port)on at
)**+e.
2#e Case
Before +* )* a (et)t)on for Re/)e. 1 +nder R+le 47 of the R+le* of Co+rt, a**a)l)n- the Apr)l 27, 2881 Dec)*)on 2 of the Co+rt of
Appeal* 4CAH )n CACGR ( No. 79=13. %he decretal port)on of the Dec)*)on read* a* follo.*:
?5&ERE#GRE, the pet)t)on for re/)e. )* DEN$ED, for lac> of ,er)t.? 3
2#e Facts
%he +nd)*p+ted fact* of the ca*e are *+,,ar)Fed )n the CA Dec)*)on a* follo.*:
?1.Gn 13 March 19=9, re*pondent [Art+ro] MarA+eF entered )nto a Contract to ell .)th %ran*a,er)can ale*
and E2po*)t)on 43%E3H, thro+-h the latter3* G.nerMGeneral Mana-er En-r. <e*+* Garc)a, )n/ol/)n- a 72.7 *A.
,. lot )n D)l),an, P+eFon C)t1 .)th a threeC*tore1 to.nho+*e +n)t deno,)nated a* @n)t No. 18 to 0e
con*tr+cted thereon for a total con*)derat)on of (=88,888.88. %he parcel of land )n A+e*t)on )* a port)on of
that propert1 co/ered 01 %C% No. 179274 4no. %C% No. 3=3997H.
?2.Gn 22 Ma1 19=9, %E o0ta)ned a loan fro, pet)t)oner #EB%C )n the a,o+nt of (7,978,888.88 and
,ort-a-ed the propert1 co/ered 01 %C% No. 179274.
?3.#or fa)l+re of %E to pa1 )t* o0l)-at)on, pet)t)oner #EB%C e2tra;+d)c)all1 foreclo*ed the real e*tate
,ort-a-e and 0eca,e the h)-he*t 0)dder 4(17.7 ,)ll)onH )n the a+ct)on *ale cond+cted for the p+rpo*e.
?4.Re*pondent had alread1 pa)d a total of (988,888.88 .hen he *topped pa1,ent 0eca+*e the con*tr+ct)on
of h)* to.nho+*e +n)t *lac>ened. &e d)*co/ered later on that th)* .a* d+e to the foreclo*+re.
?7.Con*eA+entl1, [re*pondent] )n*t)t+ted a ca*e .)th the Gff)ce of Appeal*, Ad;+d)cat)on and !e-al Affa)r*
43GAA!A3H of the &o+*)n- and !and @*e Re-+lator1 Board 43&!@RB3H on 29 <an+ar1 1991 ent)tled
3!rturo $arGuez vs. 2ransa%erican Sales, et al.3 doc>eted a* &!@RB Ca*e No. REMC812991C4712 to
co,pel %E to co,plete the con*tr+ct)on of the to.nho+*e and to pre/ent the enforcea0)l)t1 of the e2traC
;+d)c)al foreclo*+re ,ade 01 pet)t)oner #EB%C and to ha/e the ,ort-a-e 0et.een %E and pet)t)oner #EB%C
declared )n/al)d, *a)d ,ort-a-e ha/)n- 0een entered )nto 01 the part)e* )n /)olat)on of *ect)on 1= of (.D. 977.
?9.%he GAA!A r+led )n fa/or of the re*pondent /)a a Dec)*)on dated 11 No/e,0er 1991, the decretal port)on
of .h)ch read* a* follo.*:
35&ERE#GRE, pre,)*e* con*)dered, ;+d-,ent )* here01 rendered a* follo.*:
1.Declar)n- the ,ort-a-e e2ec+ted 01 and 0et.een . . . En-r. <e*+*
Garc)aM%ran*a,er)can ale* and E2po*)t)on and #ar Ea*t Ban>and %r+*t Co,pan1 to
0e +nenforcea0le a-a)n*t [re*pondent]"
2.Grder)n- the . . . #ar Ea*t Ban> and %r+*t Co,pan1 to co,p+te andMor
deter,)ne the loan /al+e of the [re*pondent] .ho .a* not a0le to co,plete or ,a>e f+ll
pa1,ent and accept pa1,ent andMor rece)/e the a,ort)Fat)on fro, the [re*pondent] and
+pon f+ll pa1,ent to del)/er the t)tle corre*pond)n- to @n)t No. 18 of that %o.nho+*e
(ro;ect located at No. 18 (ana1 A/e., P+eFon C)t1"
3.Grder)n- the Re-)*ter of Deed* of P+eFon C)t1 to cancel the annotat)on* of
the ,ort-a-e )nde0tedne** 0et.een . . . En-r. <e*+* Garc)a
and #ar Ea*t Ban> and %r+*t Co,pan1"
4.Grder)n-, l)>e.)*e, the Re-)*ter of Deed* of P+eFon C)t1 to cancel the
annotat)on of the Cert)f)cate of ale )n fa/or of the #ar Ea*tBan> and %r+*t Co,pan1 on
%ran*fer Cert)f)cate of %)tle No. 179274 to .h)ch the lot *+0;ect of th)* ca*e )* a part
thereof, .)tho+t pre;+d)ce to )t* r)-ht to reA+)re . . . En-r. <e*+* Garc)aM%ran*a,er)can
ale* and E2po*)t)on to con*t)t+te ne. collateral )n l)e+ of *a)d t)tle *+ff)c)ent )n /al+e to
co/er the ,ort-a-e o0l)-at)on.3
222 222 2223
?7.(et)t)oner #EB%C )nterpo*ed a (et)t)on for Re/)e. fro, the dec)*)on )**+ed 01 the GAA!A .)th
the Board of Co,,)**)oner* of the &!@RB, doc>eted a* &!RB Ca*e No. REMCAC1129, .h)ch )n a
Dec)*)on dated 1= <+l1 1994 aff)r,ed )n toto the GAA!A dec)*)on.
?=.&ence, pet)t)oner #EB%C appealed the Dec)*)on dated 1= <+l1 1994 to the Gff)ce of the
(re*)dent . . .
222 222 2223
?9.%he Gff)ce of the (re*)dent d)*,)**ed the appeal and aff)r,ed the Dec)*)on dated 1= <+l1 1994 .
. .? 4C)tat)on* o,)ttedH
(et)t)oner then ele/ated the ca*e to the CA thro+-h a (et)t)on for re/)e. +nder R+le 43.
Rulin( of t#e Court of !ppeals
%he CA fo+nd that pet)t)oner had >no.n that a ?*+0d)/)*)on .a* forthco,)n- )na*,+ch a* the loan .a* o0ta)ned 01 %E to part)all1
f)nance the con*tr+ct)on of a 28C+n)t to.nho+*e pro;ect, a* *tated )n the 35herea*3 cla+*e )n the ,ort-a-e contract.? ! %h+*, the CA
r+led that ?pet)t)oner *ho+ld not ha/e ,erel1 rel)ed on the repre*entat)on of %E that )t had o0ta)ned the appro/al and a+thor)Fat)on
of the proper -o/ern,ent a-enc)e* 0+t *ho+ld ha/e reA+)red the *+0,)**)on of *a)d doc+,ent*.? "
#+rther, the appellate co+rt fo+nd that the Cert)f)cat)on a-a)n*t for+, *hopp)n- attached to the (et)t)on 0efore )t had not 0een ,ade
+nder oath, )n /)olat)on of the R+le* of Co+rt.
&ence, th)* (et)t)on. #
2#e 'ssues
(et)t)oner ra)*e* the follo.)n- )**+e* for o+r con*)derat)on:
?5hether or not the ,ort-a-e contract /)olated ect)on 1= of (.D. 977, hence, /o)d )n*ofar a* th)rd per*on*
are concerned.
?A**+,)n- ar(uendo that the ,ort-a-e contract /)olated ect)on 1= of (.D. 977, .hether or not the re,ed1
-ranted and ),po*ed 01 the &!@RB, a* *+*ta)ned 01 the Gff)ce of the (re*)dent and the Co+rt of Appeal*, )*
proper.
?5hether or not the )nad/ertent fa)l+re of the notar1 p+0l)c to aff)2 h)* *)-nat+re on the Cert)f)cat)on a-a)n*t
for+, *hopp)n- e2ec+ted 01 pet)t)oner #EB%C )n connect)on .)th the (et)t)on for Re/)e. )t f)led .)th the Co+rt
of Appeal* pro/)ded a *+ff)c)ent 0a*)* for the d)*,)**al of the appeal.? $
2#e CourtJs Rulin(
%he (et)t)on )* partl1 ,er)tor)o+*.
#)r*t $**+e:
&iolation of Section A= of P- ;H+
ect)on 1= of (D 977 % pro/)de* a* follo.*:
?EC. 1=.$ort(a(es. ' No ,ort-a-e on an1 +n)t or lot *hall 0e ,ade 01 the o.ner or de/eloper .)tho+t
pr)or .r)tten appro/al of the A+thor)t1. +ch appro/al *hall not 0e -ranted +nle** )t )* *ho.n that the
proceed* of the ,ort-a-e loan *hall 0e +*ed for the de/elop,ent of the condo,)n)+, or *+0d)/)*)on pro;ect
and effect)/e ,ea*+re* ha/e 0een pro/)ded to en*+re *+ch +t)l)Fat)on. %he loan /al+e of each lot or +n)t
co/ered 01 the ,ort-a-e *hall 0e deter,)ned and the 0+1er thereof, )f an1, *hall 0e not)f)ed 0efore the
relea*e of the loan. %he 0+1er ,a1, at h)* opt)on, pa1 h)* )n*tall,ent for the lot or +n)t d)rectl1 to the
,ort-a-ee .ho *hall appl1 the pa1,ent* to the corre*pond)n- ,ort-a-e )nde0tedne** *ec+red 01 the
part)c+lar lot or +n)t 0e)n- pa)d for, .)th a /)e. to ena0l)n- *a)d 0+1er to o0ta)n t)tle o/er the lot or +n)t
pro,ptl1 after f+ll pa1,ent thereof.?
(et)t)oner contend* that the a0o/eCA+oted pro/)*)on doe* not appl1 to th)* ca*e, 0eca+*e the land ,ort-a-ed to )t .a* one .hole
parcel, not of a ?*+0d)/)*)on lot,? 0+t of an +n*+0d)/)ded one. $t )n*)*t* that the .r)tten appro/al of the Nat)onal &o+*)n- A+thor)t1
4no. the &o+*)n- and !and @*e Re-+lator1 BoardH .a* not a reA+)re,ent for the con*t)t+t)on of a ,ort-a-e on the propert1.
5e are not per*+aded. $t )* +nd)*p+ted that the *+0;ect 72.7C*A+areC,eter lot .)th a threeC*tore1 to.n ho+*e +n)t deno,)nated a*
@n)t No. 18 4the ?lot?H )* part of the propert1 ,ort-a-ed to pet)t)oner and )* co/ered 01 %C% No. 179274. %he lot .a* techn)call1
de*cr)0ed and *e-re-ated )n a Contract to ell that had 0een entered )nto 0efore the ,ort-a-e loan .a* contracted. %he fact that
the lot had no *eparate %C% d)d not ,a>e )t le** of a ?*+0d)/)*)on lot? ent)tled to the protect)on of (D 977.
%hat the *+0;ect of the ,ort-a-e loan .a* the ent)re land, not the )nd)/)d+al *+0d)/)ded lot*, doe* not ta>e the loan 0e1ond the
co/era-e of ect)on 1= of (D 977. @nden)a0l1, the lot .a* al*o ,ort-a-ed .hen the ent)re parcel of land, of .h)ch )t .a* a part,
.a* enc+,0ered.
(et)t)oner al*o contend* that ect)on 1= of (D 977 )* ,erel1 a d)rector1 pro/)*)on, nonco,pl)ance .)th .h)ch doe* not render the
,ort-a-e tran*act)on /o)d.
$n deter,)n)n- .hether a la. )* ,andator1, )t )* nece**ar1 to a*certa)n the le-)*lat)/e )ntent, a* *tated 01 en. Art+ro M. %olent)no,
an a+thor)t1 on c)/)l la.:
?%here )* no .ellCdef)ned r+le 01 .h)ch a ,andator1 or proh)0)tor1 la. ,a1, )n all c)rc+,*tance*, 0e
d)*t)n-+)*hed fro, one .h)ch )* d)rector1, *+ppletor1, or per,)**)/e. $n the deter,)nat)on of th)* A+e*t)on, the
pr),e o0;ect )* to a*certa)n the le-)*lat)/e )ntent)on. Generall1 *pea>)n-, tho*e pro/)*)on* .h)ch are ,ere
,atter of for,, or .h)ch are not ,ater)al, do not affect an1 *+0*tant)al r)-ht, and do not relate to the e**ence
of the th)n- to 0e done, *o that co,pl)ance )* a ,atter of con/en)ence rather that *+0*tance, are con*)dered
to 0e d)rector1. Gn the other hand, *tat+tor1 pro/)*)on* .h)ch relate to ,atter* of *+0*tance, affect
*+0*tant)al r)-ht* and are the /er1 e**ence of the th)n- reA+)red to 0e done, are re-arded a* ,andator1.? 1&
$n P#ilippine 0ational ,an v. 6ffice of t#e President, 11 .e had occa*)on to ,+ll o/er the )ntent of (D 977 th+*:
?. . . [%]he +n,)*ta>a0le )ntent of the la. [)*] to protect )nnocent lot 0+1er* fro, *che,)n- *+0d)/)*)on
de/eloper*. A* 0et.een the*e *,all lot 0+1er* and the -)-ant)c f)nanc)al )n*t)t+t)on* .h)ch the de/eloper*
deal .)th, )t )* o0/)o+* that the la. ' a* an )n*tr+,ent of *oc)al ;+*t)ce ' ,+*t fa/or the .ea>. $ndeed, the
pet)t)oner Ban> had at )t* d)*po*al /a*t re*o+rce* .)th .h)ch )t co+ld adeA+atel1 protect )t* loan act)/)t)e*, and
therefore )* pre*+,ed to ha/e cond+cted the +*+al 3d+e d)l)-ence3 chec>)n- and a*certa)n)n- 4.hether thr+
oc+lar )n*pect)on or other ,ode* of )n/e*t)-at)onH the act+al *tat+*, cond)t)on, +t)l)Fat)on and occ+panc1 of
the propert1 offered a* collateral. . . . Gn the other hand, pr)/ate re*pondent* o0/)o+*l1 .ere po.erle** to
d)*co/er the atte,pt of the land de/eloper to h1pothecate the propert1 0e)n- *old to the,. $t .a* prec)*el1 )n
order to deal .)th th)* >)nd of *)t+at)on that (.D. 977 .a* enacted, )t* /er1 e**ence and )ntend,ent 0e)n- to
pro/)de a protect)/e ,antle o/er helple** c)t)Fen* .ho ,a1 fall pre1 to the raFF,ataFF of .hat (.D. 977
ter,ed 3+n*cr+p+lo+* *+0d)/)*)on and condo,)n)+, *eller*.?3 12

Concededl1, (D 977 a),* to protect )nnocent lot 0+1er*. ect)on 1= of the decree d)rectl1 addre**e* the pro0le, of fra+d
co,,)tted a-a)n*t 0+1er* .hen the lot the1 ha/e contracted to p+rcha*e, and .h)ch the1 ha/e rel)-)o+*l1 pa)d for, )* ,ort-a-ed
.)tho+t the)r >no.led-e. %he a/o.ed p+rpo*e of (D 977 co,pel* the read)n- of ect)on 1= a* proh)0)tor1 ' act* co,,)tted
contrar1 to )t are /o)d. 13 +ch con*tr+al en*+re* the atta)n,ent of the p+rpo*e of the la.: to protect lot 0+1er*, *o that the1 do not
end +p *t)ll ho,ele** de*p)te ha/)n- f+ll1 pa)d for the)r ho,e lot* .)th the)r hardCearned ca*h.
(et)t)oner ar-+e* that )t )* an )nnocent ,ort-a-ee .ho*e l)en ,+*t 0e re*pected and protected, *)nce the t)tle offered a* *ec+r)t1
.a* clean of an1 enc+,0rance or l)en. 5e do not a-ree.
?. . . . A* a -eneral r+le, .here there )* noth)n- on the cert)f)cate of t)tle to )nd)cate an1 clo+d or /)ce )n the
o.ner*h)p of the propert1, or an1 enc+,0rance thereon, the p+rcha*er )* not reA+)red to e2plore f+rther than
.hat the %orren* %)tle +pon )t* face )nd)cate* )n A+e*t for an1 h)dden defect or )nchoate r)-ht that ,a1
*+0*eA+entl1 defeat h)* r)-ht thereto. %h)* r+le, ho.e/er, ad,)t* of an e2cept)on a* .here the p+rcha*er or
,ort-a-ee ha* >no.led-e of a defect or lac> of t)tle )n the /endor, or that he .a* a.are of *+ff)c)ent fact* to
)nd+ce a rea*ona0l1 pr+dent ,an to )nA+)re )nto the *tat+* of the propert1 )n l)t)-at)on.? 1
(et)t)oner 0an> *ho+ld ha/e con*)dered that )t .a* deal)n- .)th a to.n ho+*e pro;ect that .a* alread1 )n pro-re**. A rea*ona0le
per*on *ho+ld ha/e 0een a.are that, to f)nance the pro;ect, *o+rce* of f+nd* co+ld ha/e 0een +*ed other than the loan, .h)ch .a*
)ntended to *er/e the p+rpo*e onl1 part)all1. &ence, there .a* need to /er)f1 .hether an1 part of the propert1 .a* alread1 the
*+0;ect of an1 other contract )n/ol/)n- 0+1er* or potent)al 0+1er*. $n -rant)n- the loan, pet)t)oner0an> *ho+ld not ha/e 0een content
,erel1 .)th a clean t)tle, con*)der)n- the pre*ence of c)rc+,*tance* )nd)cat)n- the need for a thoro+-h )n/e*t)-at)on of the e2)*tence
of 0+1er* l)>e re*pondent. &a/)n- 0een .ant)n- )n care and pr+dence, the latter cannot 0e dee,ed to 0e an )nnocent ,ort-a-ee.
(et)t)oner cannot cla), to 0e a ,ort-a-ee )n -ood fa)th. $ndeed )t .a* ne-l)-ent, a* fo+nd 01 the Gff)ce of the (re*)dent and 01 the
CA. (et)t)oner *ho+ld not ha/e rel)ed onl1 on the repre*entat)on of the ,ort-a-or that the latter had *ec+red all reA+)*)te per,)t* and
l)cen*e* fro, the -o/ern,ent a-enc)e* concerned. %he for,er *ho+ld ha/e reA+)red the *+0,)**)on of cert)f)ed tr+e cop)e* of tho*e
doc+,ent* and /er)f)ed the)r a+thent)c)t1 thro+-h )t* o.n )ndependent effort.
&a/)n- 0een ne-l)-ent )n f)nd)n- o+t .hat re*pondent3* r)-ht* .ere o/er the lot, pet)t)oner ,+*t 0e dee,ed to po**e** con*tr+ct)/e
>no.led-e of tho*e r)-ht*. 1!
econd $**+e:
Re%ed/ Granted
%o reta)n po**e**)on of the lot, pet)t)oner cla),* that )t* r)-ht* a* the 0+1er )n the foreclo*+re *ale are *+per)or to tho*e of
re*pondent.
5e are not per*+aded. A*)de fro, 0e)n- a 0+1er of the lot, pet)t)oner .a* al*o the ,ort-a-ee, .h)ch, a* pre/)o+*l1 d)*c+**ed, .a*
pre*+,ed to >no. the r)-ht* of re*pondent o/er that lot. %he con/er*)on of the *tat+* of the for,er fro, ,ort-a-ee to 0+1erCo.ner
.)ll not le**en the ),portance of *+ch >no.led-e. Ne)ther .)ll the con/er*)on *et a*)de the con*eA+ence* of )t* ne-l)-ence a* a
,ort-a-ee.
%he lot .a* ,ort-a-ed )n /)olat)on of ect)on 1= of (D 977. Re*pondent, .ho .a* the 0+1er of the propert1, .a* not not)f)ed of the
,ort-a-e 0efore the relea*e of the loan proceed* 01 pet)t)oner. Act* e2ec+ted a-a)n*t the pro/)*)on* of ,andator1 or proh)0)tor1
la.* *hall 0e /o)d. 1" &ence, the ,ort-a-e o/er the lot )* n+ll and /o)d )n*ofar a* pr)/ate re*pondent )* concerned. 1#
%he re,ed1 -ranted 01 the &!@RB and *+*ta)ned 01 the Gff)ce of the (re*)dent )* proper onl1 )n*ofar a* )t refer* to the lot of
re*pondent. $n *hort, the ,ort-a-e contract )* /o)d a* a-a)n*t h),. )nce there )* no la. *tat)n- the *pec)f)c* of .hat *ho+ld 0e done
+nder the c)rc+,*tance*, that .h)ch )* )n accord .)th eA+)t1 *ho+ld 0e ordered. %he re,ed1 -ranted 01 the &!@RB )n the f)r*t and
the *econd para-raph* of the d)*po*)t)/e port)on of )t* Dec)*)on )n*ofar a* )t referred to re*pondent3* lot )* )n accord .)th eA+)t1.
%he &!@RB, ho.e/er, .ent o/er0oard )n )t* d)*po*)t)on )n para-raph* 3 and 4, .h)ch perta)ned not onl1 to the lot 0+t to the ent)re
parcel of land ,ort-a-ed. +ch r+l)n- .a* ),proper. %he *+0;ect of th)* l)t)-at)on )* l),)ted onl1 to the lot that re*pondent )* 0+1)n-,
not to the ent)re parcel of land. &e ha* no per*onal)t1 or *tand)n- to 0r)n- *+)t on the .hole propert1, a* he ha* act)ona0le )ntere*t
o/er the *+0;ect lot onl1.
%h)rd $**+e:
Certification !(ainst Foru% S#oppin(
5e f)nd no co-ent rea*on to alter the r+l)n- of the CA re-ard)n- the Cert)f)cat)on a-a)n*t for+, *hopp)n- that d)d not 0ear the notar1
p+0l)c3* *)-nat+re. $t )* .orth e,pha*)F)n- that de*p)te pet)t)oner3* nonco,pl)ance .)th the techn)cal reA+)re,ent* re-ard)n- the
Cert)f)cat)on, the CA *t)ll r+led on the ,er)t* of the ca*e. 1$ $n fact, there )* no ,ore need to pa** +pon th)* )**+e )na*,+ch a*, on
the ,er)t*, .e ha/e alread1 t+rned do.n pet)t)oner3* plea a-a)n*t re*pondent.
5&ERE#GRE, the (et)t)on )* (AR%!B GRAN%ED. %he Dec)*)on of the &!@RB )* A##$RMED, 0+t )t *hall 0e appl)ca0le onl1 to the
72.7C*A+areC,eter lot .)th a threeC*tore1 to.n ho+*e +n)t deno,)nated a* @n)t No. 18. No co*t*. cdll
G GRDERED.
-avide, Jr., C.J., Ynares-Santia(o, Carpio and !zcuna, JJ., conc+r.
F''()'(*+
1.Rollo, pp. =C32.
2.'d., pp. 37C49. )2th D)/)*)on. (enned 01 <+*t)ce Mar)na !. B+Fon, .)th the conc+rrence of <+*t)ce* E+0+lo G. EerFola 4D)/)*)on
cha)r,anH and B)en/en)do !. Re1e* 4,e,0erH.
3.CA Dec)*)on, p. 12" rollo, p. 47.
4.'d., pp. 1C7 6 37C39.
7.'d., pp. 12 6 47.
9.')id.
7.%h)* ca*e .a* dee,ed *+0,)tted for re*ol+t)on on Gcto0er 17, 2882, +pon rece)pt 01 the Co+rt of pet)t)oner3* Me,orand+,
*)-ned 01 Att1*. Ar,ando M. Marcelo, #ranc)*co <. R)/era and <o*eph B. a-ando1 <r. Re*pondent3* Me,orand+,,
*)-ned 01 Att1. 5endell E. Coronel, .a* f)led .)th the Co+rt on epte,0er 2, 2882.
=.(et)t)oner3* Me,orand+,, p. 7" rollo, p. 287. Gr)-)nal )n +pper ca*e.
9.Ent)tled ?Re-+lat)n- the ale of +0d)/)*)on !ot* and Condo,)n)+,*, (ro/)d)n- (enalt)e* for E)olat)on* %hereof.?
18.%olent)no, Co%%entaries and Jurisprudence on t#e Civil Code of t#e P#ilippines, Eol. $ 41998 ed.H, p. 29.
11.322 (h)l. 9, <an+ar1 1=, 1999.
12.'d., p. 13, per (an-an)0an, J.
13.Art)cle 7 of the C)/)l Code *tate*:
?Art. 7. Act* e2ec+ted a-a)n*t the pro/)*)on* of ,andator1 or proh)0)tor1 la.* *hall 0e /o)d, e2cept .hen the la. )t*elf a+thor)Fe*
the)r /al)d)t1.?
14.Col. -e la $erced v. Govern%ent Service 'nsurance S/ste%, 417 (h)l. 324, 33=, epte,0er 11, 2881, per Bnare*C
ant)a-o, J." c)t)n- State 'nvest%ent House, 'nc. v. Court of !ppeals, 274 CRA 39=, March 7, 1999.
17.')id.
19.Art. 7 of the C)/)l Code.
17.P0, v. 6ffice of t#e President, supra.
1=.See CA Dec)*)on, pp. 7C12" rollo, pp. 41C47.
%&$RD D$E$$GN
[G.R. No. 194139. <an+ar1 27, 2889.]
CARLOS R. TAMAYO, petitioner, vs. MILAGROS HUANG, IOSEFINO HUANG, HUANG SUI SIN,
MIGUEL HUANG ,)- IAP TONG HA,respondents.
Caria(a .a4 6ffice for pet)t)oner.
2an 2an Salutan & &e(a for re*pondent*.
SYLLABUS
1.C$E$! !A5" !AND %$%!E" (.D. 977 4@BD$E$$GN AND CGNDGM$N$@M B@BER3 (RG%EC%$EE DECREEH" #A$!@RE G#
G5NER AND DEEE!G(ER %G (RGE$DE NECEARB #GRM G# DEEE!G(MEN%" E##EC%. ' %he @BD$E$$GN AND
CGNDGM$N$@M B@BER3 (RG%EC%$EE DECREE d)rect* e/er1 o.ner and de/eloper of real propert1 to pro/)de the nece**ar1
fac)l)t)e*, ),pro/e,ent*, )nfra*tr+ct+re* and other for,* of de/elop,ent, fa)l+re to carr1 o+t .h)ch )* *+ff)c)ent ca+*e for the 0+1er to
*+*pend pa1,ent, and an1 *+,* of ,one1 alread1 pa)d *hall not 0e forfe)ted. 4c)t)n- ect)on* 28 and 23 of (.D. 977H
2.$D." $D." $D." $D." B@BER3 G(%$GN %&ERE@NDER. ' $n ca*e the de/eloper of a *+0d)/)*)on or condo,)n)+, fa)l* )n )t*
o0l)-at)on +nder ect)on 28, ect)on 23 -)/e* the 0+1er the opt)on to de,and re),0+r*e,ent of the total a,o+nt pa)d, or to .a)t for
f+rther de/elop,ent of the *+0d)/)*)on, and .hen the 0+1er opt* for the latter alternat)/e, he ,a1 *+*pend pa1,ent of )n*tall,ent*
+nt)l *+ch t),e that the o.ner or de/eloper had f+lf)lled )t* o0l)-at)on to h),.
3.$D." $D." $D." $D." B@BER3 G(%$GN ELERC$ED BB (E%$%$GNER $N CAE A% BAR. ' #ro, pet)t)oner3* earl)erC,ent)oned
letter of Dece,0er 24, 19=9, he ,ade clear h)* )ntent)on not to *ee> re),0+r*e,ent of the total a,o+nt he had alread1 pa)d 0+t to
co,pl1 .)th h)* o0l)-at)on to pa1 the 0alance )n f+ll +pon co,plet)on of the de/elop,ent of the *+0d)/)*)on. . . . %he cla),Cad/)ce of
pet)t)oner not.)th*tand)n-, re*pondent* .ere ,+, a0o+t )t. +ch *)lence *+--e*t* an ad,)**)on of the /erac)t1 and /al)d)t1 of
pet)t)oner3* cla),. Re*pondent* ne/erthele** cla), that the contract .a* ?dee,ed re*c)nded? f)/e 1ear* after )t* e2ec+t)on on Apr)l
38, 19=1. Re*pondent*3 de,and for pa1,ent of the +npa)d 0alance *o,et),e 0et.een the per)od of Apr)l 38, 19=9 to Dece,0er 24,
19=9 0etra1* *+ch cla),, ho.e/er. $n an1 e/ent, )t p+t* the, )n e*toppel. . . . A* noted earl)er, pet)t)oner, 01 letter of Dece,0er 24,
19=9, )nfor,ed re*pondent* that he de*)*ted fro, f+rther pa1)n- ,onthl1 )n*tall,ent* and that he .o+ld re*+,e pa1,ent )f the
de/elop,ent of the *+0d)/)*)on had 0een co,pleted. Bet re*pondent* *ent no notar)Fed not)ce or an1 not)ce of cancellat)on at all. $n
fact, )t .a* onl1 after pet)t)oner f)led on <+l1 24, 1997 the co,pla)nt 0efore the &G@$NG AND !AND @E REG@!A%GRB BGARD
4&!@RBH that re*pondent* offered to re),0+r*e pet)t)oner of the total a,o+nt he had alread1 pa)d. %he contract not ha/)n- 0een
cancelled )n accordance .)th la., )t ha* re,a)ned /al)d and *+0*)*t)n-. $t .a*, therefore, .)th)n pet)t)oner3* r)-ht to ,a)nta)n h)*
opt)on to a.a)t the co,plet)on of the de/elop,ent of and )ntrod+ct)on of ),pro/e,ent* )n the *+0d)/)*)on and thereafter, +pon f+ll
pa1,ent of the p+rcha*e pr)ce, .)tho+t )ntere*t, co,pel re*pondent* to e2ec+te a deed of a0*ol+te *ale.
4.$D." $D." $D." $D." (.D. 977 EC. 23, %&E CGN%RG!!$NG !A5, GN!B REP@$RE D@E NG%$CE %G G5NER A DEEE!G(ER
%G @(END (ABMEN%. ' A* for re*pondent*3 po*)t)on that 0efore pet)t)oner co+ld la.f+ll1 .)thhold h)* ,onthl1 pa1,ent*, he
needed to *ec+re pre/)o+* clearance fro, the &!@RB follo.)n- ect)on 23 of R+le E$ of the R+le* ),ple,ent)n- the @BD$E$$GN
AND CGNDGM$N$@M B@BER3 (RG%EC%$EE DECREE, la. and ;+r)*pr+dence are not on the)r *)de. ect)on 23 of (D 977 ' the
la. +pon .h)ch the $,ple,ent)n- R+le c)ted .a* 0a*ed ' reA+)re* onl1 d+e not)ce to the o.ner or de/eloper for *topp)n- f+rther
pa1,ent* 01 rea*on of the latter3* fa)l+re to de/elop the *+0d)/)*)on accord)n- to the appro/ed plan* and .)th)n the t),e l),)t. . . . %o
0e /al)d, an ad,)n)*trat)/e r+le or re-+lat)on ,+*t confor,, not contrad)ct, the pro/)*)on* of the ena0l)n- la.. An ),ple,ent)n- r+le
or re-+lat)on cannot ,od)f1, e2pand, or *+0tract fro, the la. )t )* )ntended to ),ple,ent. An1 r+le that )* not con*)*tent .)th the
*tat+te )t*elf )* n+ll and /o)d. . . . ect)on 23 of R+le E$ of the $,ple,ent)n- R+le* cannot r)*e h)-her than ect)on 23 of (D 977,
.h)ch )* the *o+rce of )t* a+thor)t1. #or that ,atter, (D 977 .o+ld ha/e e2pre**l1 reA+)red the .r)tten appro/al of the &!@RB 0efore
an1 *toppa-e of a,ort)Fat)on pa1,ent* )f )t *o )ntended, )n the *a,e ,anner that the decree *pec)f)call1 ,andate* .r)tten con*ent
or appro/al 01 the N&A 4no. the &!@RBH )n ect)on 1=. . . . Apropo*, to reA+)re clearance fro, the &!@RB 0efore *topp)n-
pa1,ent .o+ld not 0e )n >eep)n- .)th the )ntent of the la. to protect )nnocent 0+1er* of lot* or ho,e* fro, *che,)n- *+0d)/)*)on
de/eloper*. %o -)/e f+ll effect to *+ch )ntent, )t .o+ld 0e f)tt)n- to treat the r)-ht to *top pa1,ent to 0e ),,ed)atel1 effect)/e +pon
-)/)n- d+e not)ce to the o.ner or de/eloper or +pon f)l)n- a co,pla)nt 0efore the &!@RB a-a)n*t the err)n- de/eloper. +ch co+r*e
of act)on .o+ld 0e .)tho+t pre;+d)ce to the *+0*eA+ent deter,)nat)on of )t* propr)et1 and con*eA+ence*, *ho+ld the *+*pen*)on of
pa1,ent *+0*eA+entl1 0e fo+nd ),proper.
7.$D." $D." REA!%B $N%A!!MEN% AC%" B@BER3 GRACE (ER$GD @(GN DE#A@!% G# (ABMEN%. ' ect)on 4 of %&E
REA!%B $N%A!!MEN% AC% d)rect* a* follo.* )n ca*e a 0+1er defa+lt* )n the pa1,ent of *+cceed)n- )n*tall,ent* .here he ha*
pa)d le** than t.o 1ear* of )n*tall,ent*, a* )n pet)t)oner3* ca*e: EC%$GN 4. $n ca*e .here le** than t.o 1ear* of )n*tall,ent* .ere
pa)d, the *eller *hall -)/e the 0+1er a -race per)od of not le** than *)2t1 da1* fro, the date the )n*tall,ent 0eca,e d+e. $f the 0+1er
fa)l* to pa1 the )n*tall,ent* d+e at the e2p)rat)on of the -race per)od, the *eller ,a1 cancel the contract after th)rt1 da1* fro, rece)pt
01 the 0+1er of the not)ce of cancellat)on or the de,and for re*c)**)on of the contract 01 a notar)al act.
9.$D." $D." R$G&% G# B@BER $N GGGD #A$%& AND #GR EA!@E" NG% A((!$CAB!E %G CAE A% BAR. ' %he dec)*)on of the
G(, ho.e/er, .h)ch pa**ed +pon the *ale of the lot to A0);ar .ho, )t fo+nd to 0e a 0+1er )n -ood fa)th and for /al+e ' 0a*)* of )t*
r+l)n- that pet)t)oner can no lon-er e2erc)*e a0o/eC*a)d r)-ht, .h)ch dec)*)on .a* dee,ed aff)r,ed too 01 the appellate co+rt, doe*
not l)e. #or, the *+0*eA+ent *ale .a* 0ro+-ht to l)-ht 01 re*pondent* onl1 .h)le the)r appeal .a* pend)n- 0efore the Gff)ce of the
(re*)dent 4G(H, and a* correctl1 ar-+ed 01 pet)t)oner, A0);ar .a* not a part1 to the ca*e. (arenthet)call1, the record* of the ca*e do
not 0ear .hether the deed of a0*ol+te *ale )n fa/or of A0);ar .a* )n fact re-)*tered, and %C% No. %C747=2 )n the na,e of
re*pondent* .a* )ndeed cancelled and %C% No. %C292279 )n the na,e of A0);ar .a* )**+ed )n )t* *tead. A* pet)t)oner po)nt* o+t,
.hat .a* appended to the record* of the G( .a* a pla)n +ncert)f)ed photocop1 of %C% No. %C292279. %he dec)*)on of the G( .h)ch
.a* dee,ed aff)r,ed 01 the appellate co+rt order)n- a f+ll ref+nd of the )n*tall,ent pa1,ent* of pet)t)oner )n the a,o+nt of
(79,789.88 and the relea*e to pet)t)oner of the a,o+nt of (278,737.88 he had con*)-ned doe* not l)e too, for +nder the la.,
pet)t)oner )* ent)tled to the lot he contracted to p+rcha*e after pa1,ent of the o+t*tand)n- 0alance .h)ch he .a* read1 and .)ll)n- to
do.
7.$D." $D." $D." R$G&% G# B@BER. ' $f the *ale of the lot to A0);ar )* e/ent+all1 declared /al)d, re*pondent* *ho+ld ref+nd
pet)t)oner )t* act+al /al+e a* re*old to A0);ar, to 0ear 12K )ntere*t per ann+, co,p+ted fro, the date of *+ch *ale +nt)l f+ll1 pa)d or
del)/er a *+0*t)t+te lot at the opt)on of pet)t)oner.
D E C I S I O N
CARPIO MORALES, J p:
Gn A+-+*t 14, 197=, re*pondent* &+an- +) )n, <o*ef)no &+an-, M)-+el &+an- and M)la-ro* &+an-, fo+r of f)/e re-)*tered
o.ner* of fo+r parcel* of land located )n Baran-a1 Mat)na, Da/ao C)t1 and co/ered 01 %ran*fer Cert)f)cate* of %)tle No*. %C28994, %C
28784, %C28717 and a port)on of %C% No. %C28729, e2ec+ted a contract of ?$ndent+re? .)th EA( De/elop,ent Corporat)on 4EA(H
+nder .h)ch EA( +ndertoo> to ,ana-e and de/elop *a)d parcel* of land )nto a f)r*t cla** *+0d)/)*)on and *ell the lot* there)n )n
con*)derat)on for .h)ch EA( .o+ld reta)n 77K percent of the *ale* proceed*. 1 %he parcel* of land .ere later >no.n a* DoOa !+)*a
E)lla-e 4the *+0d)/)*)onH.
Gn or a0o+t Apr)l 38, 19=1, Carlo* R. %a,a1o 4pet)t)onerH entered )nto a contract to *ell 2 4the contractH .)th re*pondent* thro+-h
the)r Attorne1C)nC#act and Mana-er, EA(, for the p+rcha*e of !ot No. 17, Bloc> No. 11 4the lotH of the *+0d)/)*)on, co/ered 01 %C%
No. %C747=2 4a tran*fer fro, %C%C28717H .)th an area of 1,424 *A+are ,eter* at (178.88 per *A+are ,eter or for the total pr)ce of
(242,8=8.88.
@nder the contract, pet)t)oner .a* to pa1 +pon e2ec+t)on (37,749.98 and the 0alance, )ncl+d)n- )ntere*t at the rate of 14K per
ann+,, )n 98 ,onthl1 )n*tall,ent* of (4,791.48, .)tho+t nece**)t1 of de,and" and )f pet)t)oner fa)led to pa1 the )n*tall,ent*,
re*pondent* .ere -)/en the r)-ht to de,and )ntere*t thereon at the rate of 14K per ann+,, to 0e co,p+ted on the *a,e da1 of the
,onth the )n*tall,ent* 0eca,e d+e.
(et)t)oner d)d ,a>e the do.n pa1,ent alr)-ht and pa)d ,onthl1 )n*tall,ent* +p to <+ne 19=2 after .h)ch he *topped pa1)n-. At that
t),e, pet)t)oner had pa)d a total of (79,789.98.
$n the ,eant),e, a* EA( had a0andoned the de/elop,ent of the *+0d)/)*)on, re*pondent* f)led on <+ne 27, 19=7 a co,pla)nt
a-a)n*t EA( for re*c)**)on of the)r ?$ndent+re? contract 0efore the Re-)onal %r)al Co+rt 4R%CH of Da/ao, doc>eted a* C)/)l Ca*e No.
17927. 3
More than f)/e 1ear* after the part)e* e2ec+ted the contract on Apr)l 38, 19=1, re*pondent* appear to ha/e *ent pet)t)oner a letter
de,and)n- pa1,ent of the lot, for )n a letter ! dated Dece,0er 24, 19=9 addre**ed to re*pondent*, pet)t)oner *tated that he
)ntent)onall1 de*)*ted fro, pa1)n- f+rther ,onthl1 )n*tall,ent* d+e to nonCde/elop,ent of the *+0d)/)*)on a* a-reed +pon )n the
contract.
Noth)n- had 0een heard fro, the part)e* +nt)l <an+ar1 2, 1991 .hen, after not)n- that the de/elop,ent of the *+0d)/)*)on .a* )n
pro-re**, pet)t)oner )**+ed (r+dent)al Ban> Chec> No. 823814 " dated <an+ar1 2, 1991 )n the a,o+nt of (278,727.88 p+rportedl1
repre*ent)n- f+ll pa1,ent of the p+rcha*e pr)ce of the lot, for .h)ch he .a* )**+ed a rece)pt. #
Re*pondent* ),,ed)atel1 ret+rned the chec> to pet)t)oner, ho.e/er, 01 letter of <an+ar1 9, 1991, the1 cla),)n- that the)r e,plo1ee
had co,,)tted a ,)*ta>e )n rece)/)n- )t. Re*pondent*3 letter 0ear)n- the chec> .a* ret+rned +nopened, dra.)n- re*pondent* to
ret+rn )t a-a)n, 01 letter $ dated #e0r+ar1 2=, 1991 addre**ed to and rece)/ed 01 pet)t)oner3* *on.
(et)t)oner later f)led a co,pla)nt % on <+l1 24, 1997 a-a)n*t re*pondent*, for *pec)f)c perfor,ance and del)/er1 of t)tle .)th da,a-e*,
0efore the &o+*)n- and !and @*e Re-+lator1 Board 4&!@RBH, Re-)on L$, Da/ao C)t1, the *+0;ect of the pet)t)on at 0ar, anchor)n-
h)* r)-ht* +nder (re*)dent)al Decree No. 977 4%&E @BD$E$$GN AND CGNDGM$N$@M B@BER3 (RG%EC%$EE DECREEH.
$n h)* co,pla)nt 0efore the &!@RB, pet)t)oner po*)ted that fro, the e2ec+t)on of the contract +p to the t),e he *ent h)* a0o/eC*a)d
letter dated Dece,0er 24, 19=9, re*pondent* fa)led to de/elop the *+0d)/)*)on, )n *+pport of .h)ch he *+0,)tted the <an+ar1 31,
1998 dec)*)on 1& of Branch 14 of the R%C Da/ao C)t1 )n C)/)l Ca*e No. 17927 re*c)nd)n- the ?$ndent+re? for-ed 01 re*pondent* and
EA( for the latter3* fa)l+re to de/elop the *+0d)/)*)on. (et)t)oner al*o *+0,)tted a Cert)f)cat)on 11 dated No/e,0er 24, 1997 of the
(re*)dent of &o,eo.ner* A**oc)at)on of the *+0d)/)*)on that the entrance road of the *+0d)/)*)on connect)n- to the P+),po
Bo+le/ard .a* concreted onl1 a0o+t t.o 1ear* earl)er, and that a* of *a)d date, the dra)na-e *1*te, .a* not co,pleted and *o,e
of the road* .ere not 1et concreted.
$n the)r An*.er to the co,pla)nt, 12 re*pondent* a/erred that the EA( *topped the de/elop,ent of the *+0d)/)*)on onl1 01 the end
of 19=3" pet)t)oner had no fact+al or le-al 0a*)* for not pa1)n- h)* ,onthl1 )n*tall,ent 0e-)nn)n- <+l1 19=2 *)nce the de/elop,ent of
the *+0d)/)*)on .a* then )n pro-re**" the contract .a* dee,ed re*c)nded on Apr)l 38, 19=9 f)/e 47H 1ear* after )t* e2ec+t)on, and )f
pet)t)oner .anted to -o on .)th the p+rcha*e of the lot, )t .o+ld 0e +nder ter,* d)fferent fro, tho*e e2ec+ted )n the contract"
pet)t)oner .a* not ent)tled to the pro/)*)on* of Rep+0l)c Act No. 9772 4%&E REA!%B $N%A!!MEN% B@BER AC%H a* the there)n
pre*cr)0ed cond)t)on of t.oC1ear cont)n+o+* pa1,ent of ,onthl1 )n*tall,ent* for ent)tle,ent to r)-ht* there+nder .a* not co,pl)ed
.)th" and )f pet)t)oner had an1 r)-ht at all, )t .a* onl1 to a ref+nd of .hat he had alread1 pa)d.
$n the )nter),, pet)t)oner con*)-ned on epte,0er 4, 1997 .)th the &!@RB t.o chec>*, one dated A+-+*t 29, 1997, and the other
dated epte,0er 2, 1997, )n the a,o+nt* of (278,888.88 and (727.88, re*pect)/el1. 13
B1 a Co+nterCMan)fe*tat)on, 1 re*pondent* )nfor,ed that the1 .ere ref+*)n- to accept pet)t)oner3* chec>* a* the*e .ere )**+ed
and con*)-ned lon- after the e2p)rat)on of the contract on Apr)l 38, 19=9.
B1 Dec)*)on 1! of #e0r+ar1 19, 199=, &!@RB Ar0)ter Att1. <o*el)to #. Melchor d)*,)**ed pet)t)oner3* co,pla)nt, hold)n- that
pa1,ent 01 tender and con*)-nat)on .a* not le-all1 effected, the chec> dated <an+ar1 9, 1991 ha/)n- 0een *ent 0ac> to pet)t)oner3*
*on, and the con*)-nat)on of the t.o chec>* dated 1997 ha/)n- fa)led to ,eet the reA+)re,ent* *et forth 01 la. for a /al)d
con*)-nat)on.
And *o the &!@RB dec)*)on d)*po*ed:
5&ERE#GRE, (REM$E CGN$DERED, ;+d-,ent )* here01 rendered order)n-:
1.%he D$M$A! of the )n*tant ca*e for lac> of ,er)t.
2.%he co,pla)nant to ),,ed)atel1 pa1 )n f+ll h)* acco+nt .)th the pa1,ent of corre*pond)n-
)ntere*t and penalt1 +nder the ter,* and cond)t)on* of h)* contract .)th the re*pondent*. $n the
e/ent cancellat)on proced+re* of the contract 0et.een the part)e* ha/e alread1 0een effected 01
re*pondent* )n accordance .)th RA 9772, the re*pondent *hall -)/e the co,pla)nant a -race
per)od of not le** than *)2t1 da1* fro, f)nal)t1 of th)* ;+d-,ent to pa1 h)* +npa)d o0l)-at)on* a*
*tated a0o/e. #a)l+re on the part of the co,pla)nant to pa1 *a)d +npa)d o0l)-at)on* at the e2p)rat)on
of the -race per)od, the re*pondent* ,a1 cancel the contract after th)rt1 da1* fro, rece)pt 01 the
co,pla)nant of the not)ce of cancellat)on or de,and for re*c)**)on of the contract 01 notar)al act"
3.%he co,pla)nant to pa1 re*pondent* the a,o+nt of (188,888.88 a* da,a-e* 0eca+*e of
for,er3* 0reach of o0l)-at)on and (78,888.88 a*attorne13* fee" and
4.%he co,pla)nant to pa1 the co*t of l)t)-at)on.
G GRDERED. 1" 4@nder*cor)n- *+ppl)edH
(et)t)oner there+pon f)led a pet)t)on for re/)e. 0efore the &!@RB Board of Co,,)**)oner* A+e*t)on)n- the a.ard of da,a-e* and
attorne13* fee to re*pondent*, and pra1)n- that re*pondent* 0e ordered to rece)/e the a,o+nt of (278,727.88 con*)-ned .)th the
&!@RB Da/ao C)t1 and e2ec+te the f)nal deed of *ale and del)/er the t)tle.
B1 Dec)*)on of A+-+*t 27, 199=, the &!@RB Board of Co,,)**)oner* aff)r,ed the Ar0)ter3* dec)*)on, 0+t deleted the a.ard to
re*pondent* of da,a-e* and co*t*. D%A&$
Re*pondent* appealed the &!@RB Board of Co,,)**)oner*3 dec)*)on to the Gff)ce of the (re*)dent 4G(H.
D+r)n- the pendenc1 of the appeal 0efore the G(, re*pondent* f)led on Gcto0er 13, 2888 a ?Man)fe*tat)on and
Mot)on,? 1# a/err)n- for the f)r*t t),e that on Apr)l 1997, the1 *old the d)*p+ted lot to one Nene A0);ar )n .ho*e fa/or a ?Deed of
A0*ol+te ale? .a* e2ec+ted on No/e,0er 2, 1997, and to .ho, .a* )**+ed on No/e,0er 11, 1997 %C% No. %C292279 1$ .h)ch
cancelled re*pondent*3 %C% No. %C747=2. 1% %he record* d)*clo*e that on epte,0er 3, 2881, A0);ar oddl1 f)led an An*.er .)th
Co+nterCcla), a-a)n*t pet)t)oner and Cro**Ccla), a-a)n*t re*pondent* )n &!@RB REMCAC9=8319C8842 0efore the &!@RB Da/ao
after the *a)d ca*e had 0een re*ol/ed 01 the &!@RB Da/ao and .h)le )t .a* on appeal 0efore the G(. 2&
B1 Dec)*)on of Dece,0er 12, 2881, the G( +pheld the &!@RB f)nd)n- that there .a* no effect)/e cancellat)on of the contract, 0+t
ne/erthele** r+led that A0);ar3* r)-ht a* an )nnocent p+rcha*er for /al+e ,+*t 0e accorded preference o/er that of pet)t)oner, .)tho+t
pre;+d)ce to the r)-ht of pet)t)oner to reco/er .hat he had pa)d +nder the contract. 21 %h+* the G( held:
. . . M[*]. A0);ar, three 43H ,onth* 0efore the appellee[Chere)n pet)t)oner] )n*t)t+ted the pre*ent act)on, 0o+-ht
the propert1 fro, the appellant*[Chere)n re*pondent*] apparentl1 .)tho+t not)ce that *o,e other per*on ha* a
r)-ht to, or ha* )ntere*t o/er the *a,e. #act )*, M[*]. A0);ar .a* a0le to re-)*ter t)tle to the propert1 +nder h[er]
na,e, and there appear* noth)n- )n h[er] t)tle .h)ch )nd)cate* an1 enc+,0rance, l)en or )nchoate r)-ht .h)ch
,a1 *+0*eA+entl1 defeat h[er] r)-ht thereto. A per*on deal)n- .)th a re-)*tered land )* not, a* a r+le, reA+)red
to -o 0eh)nd the re-)*ter to deter,)ne the cond)t)on of the propert1, and )* onl1 char-ed .)th not)ce of the
0+rden* on the propert1 .h)ch are noted on the face of the re-)*ter or cert)f)cate of t)tle [Radio4ealt# Finance
Co%pan/ v. $anuelito S. Palileo, A;+ SCR! ?>H]. $t th+* *tr)>e* +* a* rather +ncon*c)ona0le, )f not le-all1
),po**)0le, to ta>e the l)teral appl)cat)on of RA 9772. Gther.)*e, .e *hall 0e a*>)n- the appellant* to
*+rrender the *+0;ect propert1 to the appellee after )t* *ale to, and re-)*trat)on +nder the na,e of, M[*].
A0);ar. $f that .o+ld 0e the ca*e, then o+r ;+d-,ent .o+ld r+n co+nter to the doctr)ne on the eff)cac1 and
concl+*)/ene** of the cert)f)cate of t)tle .h)ch the %orren* *1*te, *ee>* to en*+re and
protect. 22 4@nder*cor)n- *+ppl)edH

%he G( th+* re/er*ed the dec)*)on of the &!@RB Board of Co,,)**)oner*, the d)*po*)t)/e port)on of .h)ch read*:
5&ERE#GRE, pre,)*e* con*)dered ;+d-,ent )* here01 MGD$#$ED to .)t:
1HGrder)n- appellant*[Chere)n re*pondent*] to ref+nd to appellee the a,o+nt of (79,789.88, the *+, total of
the a,ort)Fat)on* pa)d 01 the appellee, .)th le-al )ntere*t fro, the date of con/e1ance 01 appellant* of the
*+0;ect parcel of land to Mr. Nene A0);ar"
2HGrder)n- the relea*e to appellee Carlo* R. %a,a1o of the a,o+nt of (278,737.88 .h)ch he con*)-ned to
the &!@RB" and
3HGrder)n- the appellant*[Chere)n re*pondent*] to pa1 to &!@RB the a,o+nt of (28,888 a* ad,)n)*trat)/e
f)ne.
G GRDERED. 4@nder*cor)n- *+ppl)edH
&)* ,ot)on for recon*)derat)on ha/)n- 0een den)ed 01 Grder 23 of <+ne 17, 2883, pet)t)oner f)led a pet)t)on for re/)e. .)th the
appellate co+rt 0efore .h)ch he ar-+ed,inter alia, that the G( erred )n appl1)n- eA+)t1 )n fa/or of A0);ar .ho .a* not a part1 to the
ca*e.
B1 dec)*)on 2 rendered on <an+ar1 23, 2884, the appellate co+rt d)*,)**ed the pet)t)on for lac> of ,er)t. (et)t)oner3* ,ot)on for
recon*)derat)on ha/)n- 0een den)ed 01 re*ol+t)on of <+ne 29, 2884, he f)led the pre*ent pet)t)on.
$t )* not d)*p+ted that EA(, act)n- a* the Attorne1C)nC#act and Mana-er of re*pondent*, totall1 a0andoned the de/elop,ent of the
*+0d)/)*)on )n 19=3, 2! th+* pro,pt)n- re*pondent* to cont)n+e de/elop,ent thereof on Ma1 22, 19=7 2" and to e/en f)le a
co,pla)nt to re*c)nd )t* contract of ?$ndent+re? .)th EA( .h)ch the R%C Da/ao -ranted.
(ara-raph = of the contract 0et.een pet)t)oner and re*pondent* thro+-h EA( pro/)de*:
E)-ht. ' @BD$E$$GN $M(RGEEMEN%: ' %o )n*+re the 0ea+t1 of the *+0d)/)*)on )n l)ne .)th the ,odern
trend of +r0an de/elop,ent, EA( De/elop,ent Corporat)on here01 o0l)-ate* )t*elf to pro/)de the *+0d)/)*)on
.)th:
4aHConcrete (a/ed road or a*phalt .hen pr)ce of ce,ent 0eco,e* proh)0)t)/e
40HConcrete c+r0* and -+tter*
4cH@nder-ro+nd dra)na-e *1*te,
4dH5ater d)*tr)0+t)on *1*te,
4eHElectr)cal l)-ht)n- *1*te,
4fH24 ho+r ec+r)t1 G+ard er/)ce
222 222 222 4@nder*cor)n- *+ppl)edH
%he @BD$E$$GN AND CGNDGM$N$@M B@BER3 (RG%EC%$EE DECREE d)rect* e/er1 o.ner and de/eloper of real propert1 to
pro/)de the nece**ar1 fac)l)t)e*, ),pro/e,ent*, )nfra*tr+ct+re* and other for,* of de/elop,ent, fa)l+re to carr1 o+t .h)ch )* *+ff)c)ent
ca+*e for the 0+1er to *+*pend pa1,ent, and an1 *+,* of ,one1 alread1 pa)d *hall not 0e forfe)ted.
ect)on* 28 and 23 of (.D. 977 of the *a,e decree f+rther d)rect a* follo.*:
ec. 28.2i%e of Co%pletion. ' E/er1 o.ner or de/eloper *hall con*tr+ct and pro/)de the fac)l)t)e*,
),pro/e,ent*, )nfra*tr+ct+re* and other for,* of de/elop,ent, )ncl+d)n- .ater *+ppl1 and l)-ht)n- fac)l)t)e*,
.h)ch are offered and )nd)cated )n the appro/ed *+0d)/)*)on or condo,)n)+, plan*, 0roch+re*, pro*pect+*,
pr)nted ,atter*, letter* or )n an1 for, of ad/ert)*e,ent, .)th)n one 1ear fro, the date of the )**+ance of the
l)cen*e for the *+0d)/)*)on or condo,)n)+, pro;ect or *+ch other per)od of t),e a* ,a1 0e f)2ed 01 the
A+thor)t1. 4@nder*cor)n- *+ppl)edH
ec. 23.0on-Forfeiture of Pa/%ents. ' No )n*tall,ent pa1,ent ,ade 01 a 0+1er )n a *+0d)/)*)on or
condo,)n)+, pro;ect for the lot or +n)t he contracted to 0+1 *hall 0e forfe)ted )n fa/or of the o.ner or
de/eloper .hen the 0+1er, after d+e not)ce to the o.ner or de/eloper, de*)*t* fro, f+rther pa1,ent d+e to
the fa)l+re of the o.ner or de/eloper to de/elop the *+0d)/)*)on or condo,)n)+, pro;ect accord)n- to the
appro/ed plan* and .)th)n the t),e l),)t for co,pl1)n- .)th the *a,e. +ch 0+1er ,a1, at h)* opt)on, 0e
re),0+r*ed the total a,o+nt pa)d )ncl+d)n- a,ort)Fat)on )ntere*t 0+t e2cl+d)n- del)nA+enc1 )ntere*t*, .)th
)ntere*t thereon at the le-al rate. 4@nder*cor)n- *+ppl)edH cADC%
$n ca*e the de/eloper of a *+0d)/)*)on or condo,)n)+, fa)l* )n )t* o0l)-at)on +nder ect)on 28, ect)on 23 -)/e* the 0+1er the opt)on
to de,and re),0+r*e,ent of the total a,o+nt pa)d, or to .a)t for f+rther de/elop,ent of the *+0d)/)*)on, 2# and .hen the 0+1er
opt* for the latter alternat)/e, he ,a1 *+*pend pa1,ent of )n*tall,ent* +nt)l *+ch t),e that the o.ner or de/eloper had f+lf)lled )t*
o0l)-at)on to h),. 2$
#ro, pet)t)oner3* earl)erC,ent)oned letter of Dece,0er 24, 19=9, he ,ade clear h)* )ntent)on not to *ee> re),0+r*e,ent of the total
a,o+nt he had alread1 pa)d 0+t to co,pl1 .)th h)* o0l)-at)on to pa1 the 0alance )n f+ll +pon co,plet)on of the de/elop,ent of the
*+0d)/)*)on.
222 222 222
(lea*e 0e )nfor,ed that $ )nt[en]t)onall1 *topped pa1)n- ,1 ,onthl1 )n*tall,ent 0eca+*e $ co+ld not *ee an1
de/elop,ent )n 1o+r *+0d)/)*)on, l)>e concrete road, electr)cal fac)l)t)e*, dra)na-e and .ater a,on- other* a*
*t)p+lated )n o+r contract. @nder e2)*t)n- la.*, $ +nder*tand $ can *+*pend ,1 pa1,ent pend)n- 1o+r
co,plet)on of the *+0d)/)*)on fac)l)t)e* a* a-reed )n o+r contract. $3ll onl1 re*+,e pa1,ent )f 1o+ co,plete the
de/elop,ent of the *+0d)/)*)on.
222 222 222 4@nder*cor)n- *+ppl)edH
%he cla),Cad/)ce of pet)t)oner not.)th*tand)n-, re*pondent* .ere ,+, a0o+t )t. +ch *)lence *+--e*t* an ad,)**)on of the /erac)t1
and /al)d)t1 of pet)t)oner3* cla),.2%
Re*pondent* ne/erthele** cla), that the contract .a* ?dee,ed re*c)nded? f)/e 1ear* after )t* e2ec+t)on on Apr)l 38, 19=1.
Re*pondent*3 de,and for pa1,ent of the +npa)d 0alance *o,et),e 0et.een the per)od of Apr)l 38, 19=9 to Dece,0er 24, 19=9
0etra1* *+ch cla),, ho.e/er. $n an1 e/ent, )t p+t* the, )n e*toppel.
A* for re*pondent*3 po*)t)on that 0efore pet)t)oner co+ld la.f+ll1 .)thhold h)* ,onthl1 pa1,ent*, he needed to *ec+re pre/)o+*
clearance fro, the &!@RB follo.)n- ect)on 23 of R+le E$ of the R+le* ),ple,ent)n- the @BD$E$$GN AND CGNDGM$N$@M
B@BER3 (RG%EC%$EE DECREE, la. and ;+r)*pr+dence are not on the)r *)de.
ect)on 23 of (D 977 ' the la. +pon .h)ch the $,ple,ent)n- R+le c)ted .a* 0a*ed ' reA+)re* onl/ d+e
not)ce to the o.ner or de/eloper for *topp)n- f+rther pa1,ent* 01 rea*on of the latter3* fa)l+re to de/elop the
*+0d)/)*)on accord)n- to the appro/ed plan* and .)th)n the t),e l),)t. . . .
%o 0e /al)d, an ad,)n)*trat)/e r+le or re-+lat)on ,+*t confor,, not contrad)ct, the pro/)*)on* of the ena0l)n-
la.. An ),ple,ent)n- r+le or re-+lat)on cannot ,od)f1, e2pand, or *+0tract fro, the la. )t )* )ntended to
),ple,ent. An1 r+le that )* not con*)*tent .)th the *tat+te )t*elf )* n+ll and /o)d. . . .
ect)on 23 of R+le E$ of the $,ple,ent)n- R+le* cannot r)*e h)-her than ect)on 23 of (D 977, .h)ch )* the
*o+rce of )t* a+thor)t1. #or that ,atter, (D 977 .o+ld ha/e e2pre**l1 reA+)red the .r)tten appro/al of the
&!@RB 0efore an1 *toppa-e of a,ort)Fat)on pa1,ent* )f )t *o )ntended, )n the *a,e ,anner that the decree
*pec)f)call1 ,andate* .r)tten con*ent or appro/al 01 the N&A 4no. the &!@RBH )n ect)on 1=.
222 222 222
Apropo*, to reA+)re clearance fro, the &!@RB 0efore *topp)n- pa1,ent .o+ld not 0e )n >eep)n- .)th the
)ntent of the la. to protect )nnocent 0+1er* of lot* or ho,e* fro, *che,)n- *+0d)/)*)on de/eloper*. %o -)/e
f+ll effect to *+ch )ntent, )t .o+ld 0e f)tt)n- to treat the r)-ht to *top pa1,ent to 0e ),,ed)atel1 effect)/e +pon
-)/)n- d+e not)ce to the o.ner or de/eloper or +pon f)l)n- a co,pla)nt 0efore the &!@RB a-a)n*t the err)n-
de/eloper. +ch co+r*e of act)on .o+ld 0e .)tho+t pre;+d)ce to the *+0*eA+ent deter,)nat)on of )t* propr)et1
and con*eA+ence*, *ho+ld the *+*pen*)on of pa1,ent *+0*eA+entl1 0e fo+nd ),proper. 3& 4$tal)c* *+ppl)edH
ect)on 4 of %&E REA!%B $N%A!!MEN% AC% d)rect* a* follo.* )n ca*e a 0+1er defa+lt* )n the pa1,ent of *+cceed)n-
)n*tall,ent* .here he ha* pa)d le** than t.o 1ear* of )n*tall,ent*, a* )n pet)t)oner3* ca*e:
EC%$GN 4. $n ca*e .here le** than t.o 1ear* of )n*tall,ent* .ere pa)d, the *eller *hall -)/e the 0+1er a
-race per)od of not le** than *)2t1 da1* fro, the date the )n*tall,ent 0eca,e d+e.
$f the 0+1er fa)l* to pa1 the )n*tall,ent* d+e at the e2p)rat)on of the -race per)od, the *eller ,a1 cancel the
contract after th)rt1 da1* fro, rece)pt 01 the 0+1er of the not)ce of cancellat)on or the de,and for re*c)**)on
of the contract 01 a notar)al act. 4@nder*cor)n- *+ppl)edH
A* noted earl)er, pet)t)oner, 01 letter of Dece,0er 24, 19=9, )nfor,ed re*pondent* that he de*)*ted fro, f+rther pa1)n- ,onthl1
)n*tall,ent* and that he .o+ld re*+,e pa1,ent )f the de/elop,ent of the *+0d)/)*)on had 0een co,pleted. Bet re*pondent* *ent no
notar)Fed not)ce or an1 not)ce of cancellat)on at all. $n fact, )t .a* onl1 after pet)t)oner f)led on <+l1 24, 1997 the co,pla)nt 0efore the
&!@RB that re*pondent* offered to re),0+r*e pet)t)oner of the total a,o+nt he had alread1 pa)d.
%he contract not ha/)n- 0een cancelled )n accordance .)th la., )t ha* re,a)ned /al)d and *+0*)*t)n-. $t .a*, therefore, .)th)n
pet)t)oner3* r)-ht to ,a)nta)n h)* opt)on to a.a)t the co,plet)on of the de/elop,ent of and )ntrod+ct)on of ),pro/e,ent* )n the
*+0d)/)*)on and thereafter, +pon f+ll pa1,ent of the p+rcha*e pr)ce, .)tho+t )ntere*t, co,pel re*pondent* to e2ec+te a deed of
a0*ol+te *ale.
%he dec)*)on of the G(, ho.e/er, .h)ch pa**ed +pon the *ale of the lot to A0);ar .ho, )t fo+nd to 0e a 0+1er )n -ood fa)th and for
/al+e ' 0a*)* of )t* r+l)n- that pet)t)oner can no lon-er e2erc)*e a0o/eC*a)d r)-ht, .h)ch dec)*)on .a* dee,ed aff)r,ed too 01 the
appellate co+rt, doe* not l)e. #or, the *+0*eA+ent *ale .a* 0ro+-ht to l)-ht 01 re*pondent* onl1 .h)le the)r appeal .a* pend)n-
0efore the G(, and a* correctl1 ar-+ed 01 pet)t)oner, A0);ar .a* not a part1 to the ca*e. (arenthet)call1, the record* of the ca*e do
not 0ear .hether the deed of a0*ol+te *ale )n fa/or of A0);ar .a* )n fact re-)*tered, and %C% No. %C747=2 )n the na,e of
re*pondent* .a* )ndeed cancelled and %C% No. %C292279 )n the na,e of A0);ar .a* )**+ed )n )t* *tead. A* pet)t)oner po)nt* o+t,
.hat .a* appended to the record* of the G( .a* a pla)n +ncert)f)ed photocop1 of %C% No. %C292279.

%he dec)*)on of the G( .h)ch .a* dee,ed aff)r,ed 01 the appellate co+rt order)n- a f+ll ref+nd of the )n*tall,ent pa1,ent* of
pet)t)oner )n the a,o+nt of (79,789.88 and the relea*e to pet)t)oner of the a,o+nt of (278,737.88 he had con*)-ned doe* not l)e
too, for +nder the la., pet)t)oner )* ent)tled to the lot he contracted to p+rcha*e after pa1,ent of the o+t*tand)n- 0alance .h)ch he
.a* read1 and .)ll)n- to do. 31
$f the *ale of the lot to A0);ar )* e/ent+all1 declared /al)d, re*pondent* *ho+ld ref+nd pet)t)oner )t* act+al /al+e a* re*old to A0);ar, to
0ear 12K )ntere*t per ann+, co,p+ted fro, the date of *+ch *ale +nt)l f+ll1 pa)d or del)/er a *+0*t)t+te lot at the opt)on of pet)t)oner.
o th)* Co+rt )n*tr+ct* )n !ctive Realt/ and -evelop%ent Corporation v. -aro/a: 32
$n the ca*e at 0ar, re*pondent offered to pa1 for her o+t*tand)n- 0alance of the contract pr)ce 0+t re*pondent
ref+*ed to accept )t. Ne)ther d)d pet)t)oner add+ce proof that the re*pondent3* offer to pa1 .a* ,ade after the
effect)/)t1 date *tated )n )t* not)ce of cancellat)on. Moreo/er, there .a* no for,al not)ce of cancellat)on or
co+rt act)on to re*c)nd the contract. G)/en the c)rc+,*tance*, .e f)nd )t )lle-al and )n)A+)to+* that pet)t)oner,
.)tho+t co,pl1)n- .)th the ,andator1 le-al reA+)re,ent* for cancel)n- the contract, forfe)ted 0oth
re*pondent3* land and hardCearned ,one1 after *he ha* pa)d for, not ;+*t the contract pr)ce, )ut %ore t#an
t#e consideration stated in t#e contract to sell.
%h+*, for fa)l+re to cancel the contract )n accordance .)th the proced+re pro/)ded 01 la., .e hold that the
contract to *ell 0et.een the part)e* re,a)n* /al)d and *+0*)*t)n-. #ollo.)n- ect)on 34aH of R.A. No. 9772,
re*pondent ha* the r)-ht to offer to pa1 for the 0alance of the p+rcha*e pr)ce, .)tho+t )ntere*t, .h)ch *he d)d
)n th)* ca*e. Grd)nar)l1, pet)t)oner .o+ld ha/e had no other reco+r*e 0+t to accept pa1,ent.
&o.e/er, re*pondent can no lon-er e2erc)*e th)* r)-ht a* the *+0;ect lot .a* alread1 *old 01 the pet)t)oner to
another 0+1er .h)ch lot, a* ad,)tted 01 the pet)t)oner, .a* /al+ed at (1,788.88 per *A+are ,eter. A*
re*pondent lo*t her chance to pa1 for the 0alance of the (=77,888.88 lot, )t )* onl1 ;+*t and eA+)ta0le that the
pet)t)oner 0e ordered to ref+nd to re*pondent the act+al /al+e of the lot re*old, ).e., (=77,888.88, .)th 12K
)ntere*t per ann+, co,p+ted fro, A+-+*t 29, 1991 +nt)l f+ll1 pa)d or to del)/er a *+0*t)t+te lot at the opt)on of
the re*pondent. 4$tal)c* )n the or)-)nal" +nder*cor)n- *+ppl)edH
%h)* Co+rt, not 0e)n- a tr)er of fact*, th+* re*ol/e* to re,and the ca*e to the &!@RB for a proper deter,)nat)on of the re*pect)/e
r)-ht* of the part)e* vis a vis the alle-ed *ale of the lot to A0);ar )n accordance .)th the fore-o)n- d)*c+**)on*.
5&ERE#GRE, the dec)*)on of the Co+rt of Appeal* )* REEERED and E% A$DE. %he ca*e )* REMANDED to the &o+*)n- and
!and @*e Re-+lator1 Board of Da/ao C)t1 for f+rther proceed)n-* )n accordance .)th the d)rect)/e )n the ),,ed)atel1 preced)n-
para-raph.
G GRDERED.
5uisu%)in(, Carpio and 2in(a, JJ., conc+r.
F''()'(*+
1.Anne2 ?A?, &o+*)n- and !and @*e Re-+lator1 Board 4&!@RBH Record*, p. 91.
2.Anne2 ?B?, &!@RB Record* at 4C3. %he record* are pa-)nated fro, 191C1.
3.'d. at 93.
4.'d. at 131.
7.'d. at 2.
9.'d. at 13.
7.'d. at 1.
=.'d. at 13.
9.'d. at 11C9.
18.'d. at 93C7=.
11.'d. at 77.
12.'d. at 21C17.
13.'d. at 27.
14.'d. at 27C24.
17.'d. at ==C7=
19.'d. at 7=C79.
17.Gff)ce of the (re*)dent 4G(H Ca*e #older.
1=.Rollo, p. 178.
19.&!@RB Record*, p. 7.
28.Rollo, pp. 19=C287.
21.Dec)*)on of the Gff)ce of the (re*)dent, G( Ca*e #older.
22.')id.
23.CA rollo, p. 41.
24.'d. at 1=9C193.
27.&!@RB Record*, p. 21.
29.'d. at 98.
27.Relucio v. ,rillante-Garfin, G.R. No. 7971=, <+l1 13, 1998, 1=7 CRA 487, 411.
2=.!ntipolo Realt/ Corporation v. 0ational Housin( !ut#orit/, G.R. No. !C78444, A+-+*t 31, 19=7, 173 CRA 399, 489.
29.!delfa Properties, 'nc. v. Court of !ppeals, 318 (h)l. 923, 971 41997H.
38.Francel Realt/ Corporation v. S/cip, G.R. No. 1749=4, epte,0er =, 2887.
31.!ctive Realt/ and -evelop%ent Corporation v. -aro/a, 431 (h)l. 773, 793 42882H.
32.'d. at 792C793.
ECGND D$E$$GN
[G.R. No. 171399. Ma1 =, 2889.]
VICENTA CANTEMPRATE, ZENAIDA DELFIN, ELVIRA MILLAN, FEVITO G. OBIDOS, MACARIO YAP,
CARMEN YAP, LILIA CAMACHO, LILIA MEIIA, EMILIA DIMAS, ESTRELLA EUGENIO, MILAGROS L.
CRUZ, LEONARDO ECAT, NORA MASANGKAY, IESUS AYSON, NILO SAMIA ,)- CARMENCITA
LORNA RAMIREZ, petitioners, vs. CRS REALTY DEVELOPMENT CORPORATION, CRISANTA
SALVADOR, CESAR CASAL, BENNIE CUASON ,)- CALEB ANG, respondents.
D E C I S I O N
TINGA, J p:
%h)* )* a pet)t)on for re/)e. on certiorari 1 +nder R+le 47 of the 1997 R+le* of C)/)l (roced+re a**a)l)n- the dec)*)on 2 and
re*ol+t)on 3 of the Co+rt of Appeal* )n CACG.R. ( No. =1=79. %he Co+rt of Appeal* dec)*)on aff)r,ed the dec)*)on of the Gff)ce of
the (re*)dent, .h)ch adopted the dec)*)on ! of the &o+*)n- !and @*e and Re-+lator1 Board 4&!@RBH d)*,)**)n- pet)t)oner*3
co,pla)nt for lac> of ;+r)*d)ct)on, .h)le the re*ol+t)on den)ed pet)t)oner*3 ,ot)on for recon*)derat)on. CE&aD
%he follo.)n- fact+al antecedent* are ,atter* of record.
&ere)n pet)t)oner* E)centa Cante,prate, Jena)da Delf)n, El/)ra M)llan, #e/)to G. G0)do*, Macar)o Bap, Car,en Bap, !)l)a Ca,acho,
!)l)a Me;)a, E,)l)a D),a*, E*trella E+-en)o, M)la-ro* !. Cr+F, !eonardo Ecat, Nora Ma*an->a1, <e*+* A1*on, N)lo a,)a,
Car,enc)ta Morale* and !orna Ra,)reF J .ere a,on- tho*e .ho f)led 0efore the &!@RB a co,pla)nt " for the del)/er1 of
cert)f)cate* of t)tle a-a)n*t re*pondent* CR Realt1 De/elop,ent Corporat)on 4CR Realt1H, Cr)*anta al/ador and Ce*ar Ca*al. #
%he co,pla)nt alle-ed that re*pondent Ca*al .a* the o.ner of a parcel of land *)t+ated )n General Mar)ano Al/areF, Ca/)te >no.n
a* the CR #ar, E*tate .h)le re*pondent al/ador .a* the pre*)dent of re*pondent CR Realt1, the de/eloper of CR #ar,
E*tate. (et)t)oner* a/erred that the1 had 0o+-ht on an )n*tall,ent 0a*)* *+0d)/)*)on lot* fro, re*pondent CR Realt1 and had pa)d
)n f+ll the a-reed p+rcha*e pr)ce*" 0+t not.)th*tand)n- the f+ll pa1,ent and de*p)te de,and*, re*pondent* fa)led and ref+*ed to
del)/er the corre*pond)n- cert)f)cate* of t)tle to pet)t)oner*. %he co,pla)nt pra1ed that re*pondent* 0e ordered to del)/er the
cert)f)cate* of t)tle corre*pond)n- to the lot* pet)t)oner* had p+rcha*ed and pa)d )n f+ll and to pa1 pet)t)oner* da,a-e*. $
An a,ended co,pla)nt % .a* *+0*eA+entl1 f)led ),plead)n- other re*pondent*, a,on- the,, the &e)r* of E)tal)ano and Enr)A+e
!a+d)Fa, .ho .ere the predece**or*C)nC)ntere*t of re*pondent Ca*al, here)n re*pondent* Benn)e C+a*on and Cale0 An-, to .ho,
re*pondent Ca*al p+rportedl1 tran*ferred the *+0d)/)*)on lot* and one !et)c)a !)-on. %he a,ended co,pla)nt alle-ed that 01 /)rt+e
of the deed of a0*ol+te *ale e2ec+ted 0et.een re*pondent Ca*al and re*pondent* An- and C+a*on, %ran*fer Cert)f)cate of %)tle
4%C%H No. 999732 co/er)n- the *+0d)/)ded propert1 .a* )**+ed )n the na,e* of re*pondent* An- and C+a*on a* re-)*tered o.ner*
thereof. 1&
%he a,ended co,pla)nt pra1ed for add)t)onal rel)ef*, na,el1: 41H that pet)t)oner* 0e declared the la.f+l o.ner* of the *+0d)/)*)on
lot*" 42H that the deed of a0*ol+te *ale e2ec+ted 0et.een re*pondent Ca*al and re*pondent* C+a*on and An- and %C% No. 999732
0e n+ll)f)ed" and 43H that re*pondent* C+a*on and An- 0e ordered to recon/e1 the *+0d)/)*)on lot* to pet)t)oner*. 11 %cCED
$n h)* an*.er, 12 re*pondent Ca*al a/erred that de*p)te h)* .)ll)n-ne** to del)/er the,, pet)t)oner* ref+*ed to accept the cert)f)cate*
of t)tle .)th not)ce of lis pendensco/er)n- the *+0d)/)*)on lot*. %he not)ce of lis pendens perta)ned to C)/)l Ca*e No. BCEC98C14,
ent)tled FHeirs of &italiano and 7nriGue .audiza, represented )/ t#eir !ttorne/-'n-Fact Rosa $edina, Plaintiffs, v. Cesar 7. Casal,
CRS Realt/ and -evelop%ent Corporation and t#e Re(ister of -eeds of Cavite, -efendantsF, .h)ch .a* pend)n- 0efore the
Re-)onal %r)al Co+rt 4R%CH, Branch 19, Bacoor, Ca/)te. !et)c)a !)-on .a* *a)d to ha/e )nter/ened )n the *a)d c)/)l ca*e. 13
B1 .a1 of *pec)al and aff)r,at)/e defen*e*, re*pondent Ca*al f+rther a/erred that the o0l)-at)on to del)/er the cert)f)cate of t)tle*
.)tho+t enc+,0rance fell on re*pondent CR Realt1 on the follo.)n- -ro+nd*: 41H a* *t)p+lated )n the *+0d)/)*)on de/elop,ent
a-ree,ent 0et.een re*pondent* Ca*al and CR Realt1 e2ec+ted on 89 epte,0er 19==, the cert)f)cate* of t)tle of the *+0d)/)*)on
lot* .o+ld 0e tran*ferred to the de/eloper or 0+1er* thereof onl1 +pon f+ll pa1,ent of the p+rcha*e pr)ce of each lot" 42H the
contract* to *ell .ere e2ec+ted 0et.een pet)t)oner* and re*pondent CR Realt1" and 43H the ,onthl1 a,ort)Fat)on* .ere pa)d to
re*pondent CR Realt1 and not to re*pondent Ca*al. 1
Re*pondent Ca*al al*o alle-ed that he *+0*eA+entl1 entered )nto a p+rcha*e a-ree,ent o/er the +n*old port)on* of the *+0d)/)*)on
.)th re*pondent* An-, C+a*on and one #lor)nda E*trada .ho a**+,ed the o0l)-at)on to re),0+r*e the a,ort)Fat)on* alread1 pa)d
01 pet)t)oner*. 1!
$n her an*.er, re*pondent al/ador alle-ed that the fa)l+re 01 re*pondent Ca*al to co,pl1 .)th h)* o0l)-at)on +nder the f)r*t
a-ree,ent to del)/er to CR or the 0+1er* the cert)f)cate* of t)tle .a* ca+*ed 01 the annotat)on of the not)ce of lis pendens on the
cert)f)cate of t)tle co/er)n- the *+0d)/)*)on propert1. Re*pondent al/ador f+rther a/erred that the pr)or a-ree,ent* dated 9
epte,0er 19== and 8= A+-+*t 19=9 0et.een re*pondent* Ca*al and CR Realt1 .ere *+per*eded 01 an a-ree,ent dated 38
A+-+*t 1999 0et.een re*pondent* Ca*al and al/ador. $n the *+0*eA+ent a-ree,ent, re*pondent Ca*al p+rportedl1 a**+,ed f+ll
re*pon*)0)l)t1 for the cla),* of the *+0d)/)*)on lot 0+1er* .h)le re*pondent al/ador *old her *hare )n CR Realt1 and rel)nA+)*hed
her part)c)pat)on )n the 0+*)ne**.
Re*pondent* An- and C+a*on cla),ed )n the)r an*.er .)th co+ntercla), 1" that re*pondent Ca*al re,a)ned the re-)*tered o.ner
of the *+0d)/)ded lot* .hen the1 .ere tran*ferred to the, and that the fa)l+re 01 pet)t)oner* to annotate the)r cla),* on the t)tle
)nd)cated that the1 .ere +nfo+nded. Re*pondent CR Realt1 and the &e)r* of !a+d)Fa .ere declared )n defa+lt for fa)l+re to f)le the)r
re*pect)/e an*.er*. 1# aEAc&$
Gn 1= Dece,0er 199=, &!@RB Ar0)ter Ma. (erpet+a B. AA+)no rendered a dec)*)on 1$ pr),ar)l1 r+l)n- that the re-+lar co+rt* and
not the &!@RB had ;+r)*d)ct)on o/er pet)t)oner*3 co,pla)nt, th+*, the co,pla)nt for A+)et)n- of t)tle co+ld not 0e -)/en d+e co+r*e.
%he &e)r* of !a+d)Fa and !)-on .ere dropped a* part)e* on the -ro+nd of lac> of ca+*e of act)on. &o.e/er, *he fo+nd re*pondent*
CR Realt1, Ca*al and al/ador l)a0le on the)r o0l)-at)on to del)/er the cert)f)cate* of t)tle of the *+0d)/)*)on lot* to pet)t)oner* .ho
had pa)d )n f+ll the p+rcha*e pr)ce of the propert)e*. he al*o fo+nd a* fra+d+lent and con*eA+entl1 n+ll)f)ed the *+0*eA+ent tran*fer
of a port)on of the *+0d)/)*)on to re*pondent* An- and C+a*on.
%he d)*po*)t)/e port)on of the dec)*)on read*:
5&ERE#GRE, )n /)e. of the fore-o)n-, ;+d-e,ent [sic] )* here01 rendered a* follo.*:
1H#or re*pondent* CR Realt1 and De/elop,ent Corp., Cr)*anta al/ador, and Ce*ar Ca*al to, ;o)ntl1 and
*e/erall1:
aHca+*e the del)/er1 or to del)/er the )nd)/)d+al t)tle*, .)th)n th)rt1 438H da1* fro, the f)nal)t1 of the
dec)*)on, to the follo.)n- co,pla)nant* .ho ha/e f+ll1 pa)d the p+rcha*e pr)ce of the)r lot*, and to
.ho, Deed* of ale .ere )**+ed, to .)t:
1. E)centa Cante,prate R !ot* 1 to = Bloc> 2
!ot* 7 6 9 Bloc> 13
2. !eonardoM#el)c)dad Ecat R !ot* 21, 23 6 27 Bloc> 11
3. <e*+* A1*on R !ot 2 Bloc> 9
4. !)l)a Ca,acho R !ot 4 Bloc> 11
7. Jena)da Delf)n R !ot 2 Bloc> 3
9. Nat)/)dad Garc)a R !ot = Bloc> 11
7. Nora Ma*an->a1 R !ot 7 Bloc> 13
=. El/)ra M)llan R !ot 18 Bloc> 13
9. #e/)to G0)do* R !ot 1 Bloc> 3
18. <o*ef)na P+)n)a R !ot 1 6 2 Bloc> 12
11. N)lo a,)a R !ot 1 Bloc> 9
12. Ro*el Eedar R !ot 18 Bloc> 4
13. Macar)oMCar,en Bap R !ot 14 Bloc> 4
14. E*trellaMDan)lo E+-er)o R !ot 18 Bloc> 7
17. Ner)**a Ca0ana- R !ot 7 Bloc> 4
19. M)la-ro* Cr+F R !ot* 11 6 13 to 19 Bloc> 3
17. Erl)nda Delle/a R !ot 9 Bloc> 4
1=. !)l)a Me;)a R !ot 2 6 3 Bloc> 4
19. Car,en BapM&. Cap+l*o R !ot 13 Bloc> 11
28. Mercede* Montano R !ot 4 Bloc> 4
21. %ere*)ta Man+el R !ot 11 Bloc> 7 E$a&%
22. A,al)a a,0)le R !ot 3 Bloc> 3
23. Car,enc)ta !orna Ra,)reF R !ot 13 Bloc> 13
24. E,)l)a D),a* R !ot 19 Bloc> 13
27. Ro*)ta %orre* R !ot 2 Bloc> 13
29. Allad)n A0+0a>ar R !ot 9 Bloc> 9
27. Man+el Anda1a R !ot 7 6 9 Bloc> 11
2=. Re,)-)o Ara1a R !ot 11 Bloc> 4
29. <. A1*onMR. ElA+)ero R !ot 7 Bloc> 3
38. !. BernalMD. Morada R !ot 19 Bloc> 11
31. Ro*a Nel1 B+na R !ot 9 Bloc> 7
32. Ne*tor Calderon R !ot 9 Bloc> 3
33. Erne*to Cap+l*o R !ot 17 Bloc> 11
34. <or-e Ch)+co R !ot* 12, 13 6 17 to 17 Bloc> 4
37. Carol)na Cr+F R !ot 4 Bloc> 14
39. Erna Dan)el R !ot 9 Bloc> 7
37. Jena)da De G+F,an R !ot* 19, 28 6 21 Bloc> 18
3=. <o*el)to De !ara R !ot 1 Bloc> 11
39. <. De !araMN. G+*) R !ot 11, Bloc> 11
48. E)r-)n)a De !a (aF R !ot 22, Bloc> 11
41. Ana*tac)a De !eon R !ot 18, Bloc> 11
42. al/ador De !eon R !ot 7 6 = Bloc> 4
43. <o*ef)na De Eera R !ot 28 Bloc> 11 CacE$D
44. <+l)eta DanFon R !ot 4 Bloc> 13
47. Con*tanc)a D)e*tro R !ot 17 Bloc> 13
49. CoraFon D+c+*)n R !ot* 14, 19 6 1= Bloc> 11
47. <+an)ta #lore* R !ot* 2 6 4 Bloc> 7
4=. Re,ed)o* Gal,an R !ot 12 Bloc> 11
49. M)la Gala,a1 R !ot 12 Bloc> 7
78. Grace Bapt)*t Ch+rch R !ot 24 Bloc> 11
71. R)Fal)na G+errero R !ot 29 Bloc> 18
72. Ne,a $da R !ot 9 Bloc> 4
73. M)la-ro* <a,)r R !ot = Bloc> 13
74. E)oleta <o*ef R !ot* 3 6 7 Bloc> 7
77. Mar)/)c !ad)ne* R !ot 3 Bloc> 13
79. E+lo-)o !e-ac)on R !ot* = 6 9 Bloc> 3
77. E,er)ta Ma+r) R !ot 12 Bloc> 3
7=. M)na Mar1 6 Co. R !ot 1 Bloc> 4
79. Ba01ro*e Na/arro R !ot 22 Bloc> 18
98. !a+retto NaFarro R !ot* 14 to 1= Bloc> 18
91. A,el)a No,+ra R !ot* 4 6 7 Bloc> 9
92. E)r-)l)o Gca,po R !ot 7 Bloc> 12
93. Nor,a (a-+a-an R !ot = Bloc> 12
94. N)co*trato (ela1o R !ot* 7 6 9 Bloc> 11
97. Glor)a Racho R !ot 1 Bloc> 7 %Aa$D&
99. (ep)to Ra,o* R !ot 9 Bloc> 13
97. (edro Re0+*t)llo R !ot = Bloc> 7
9=. . RecatoMA. Re0+llar R !ot 11 Bloc> 13
99. !a+ra Re-)dor R !ot 4 Bloc> 3
78. Jena)da anto* R !ot 7 Bloc> 7
71. R. ar,)entoM&. E+-en)o R !ot 1 Bloc> 13
72. !o+rde* %eran R !ot 17 Bloc> 9
73. R. EaldeFM#. Corre R !ot 3 Bloc> 9
74. %eodoro Eela*co R !ot 17 Bloc> 11
77. Ed-ardo E)llan+e/a R !ot* 1 to 7 Bloc> 1
79. Gre-or)o Bao R !ot* 2 6 3 Bloc> 11
77. 5)ll)e At)enFa R !ot 3 Bloc> 12
7=. J. Jacar)a*MA. G+e/arra R !ot 9 Bloc> 12
%hat a* concern[ed] co,pla)nant !EGNARDGM#E!$C$DAD ECA%, .ho*e total lo*t area )* def)c)ent
01 27= *A+are ,eter* fro, the 2,7=7 *A+are ,eter* pro/)ded for )n the Contract to ell and that
co/ered 01 the Deed of ale .h)ch )* 2,389 *A+are ,eter*, for re*pondent* to del)/er the
def)c)enc1 01 the e2ec+t)on of the Deed of ale on the *a)d port)on and the del)/er1 of the t)tle* on
the)r three 43H lot*.
0H*+0,)t to the Re-)*ter of Deed* of %rece Mart)re* C)t1, Ca/)te a cert)f)ed tr+e cop1 of the
appro/ed *+0d)/)*)on plan of CR #ar, E*tate, a* .ell a* photocop)e* of the techn)cal de*cr)pt)on
of co,pla)nant*3 )nd)/)d+al lot*, 0l+e pr)nt* and trac)n- cloth: $n the e/ent that *a)d re*pondent*
cannot *+rrender *a)d doc+,ent*, co,pla)nant* are here01 ordered to *ec+re *a)d doc+,ent* and
0e the one* to *+0,)t the, to the Re-)*ter of Deed*"
cHto ref+nd to co,pla)nant* the e2pen*e* the13/e )nc+rred )n re-)*ter)n- the)r )nd)/)d+al Deed* of
ale .)th the Re-)*ter of Deed* of %rece Mart)re* C)t1, Ca/)te"
dHpa1 each of the co,pla)nant* the *+, of (18,888.88[,] a* act+al da,a-e*" the *+, of
(17,888.88[,] a* ,oral da,a-e*" and the *+, of (28,888.88[,] a* e2e,plar1 da,a-e*"
eHpa1 co,pla)nant* the *+, of (38,888.88 a* and 01 .a1 of attorne13* fee*" $%cCA
fHpa1 to the Board the *+, of (28,888.88 a* ad,)n)*trat)/e f)ne for /)olat)on of *ect)on 27 of (.D.
No. 977 )n relat)on to *ect)on* 3= and 39 of the *a,e decree.
2.H%he *ale of the *+0;ect propert1 )n .hole to re*pondent* Cale0 An- and Benn)e C+a*on )* here01
declared ann+lled and of no effect e*pec)all1 that .h)ch perta)n* to the port)on of the *+0d)/)*)on .h)ch ha/e
alread1 0een pre/)o+*l1 *old 01 the re*pondent CR Realt1 to here)n co,pla)nant*, pr)or to the *ale ,ade 01
re*pondent Ce*ar Ca*al to Cale0 An- and Benn)e C+a*on. A* a con*eA+ence thereof, re*pondent* An- and
C+a*on are here01 ordered to *+rrender to the Re-)*ter of Deed* of %rece Mart)re* C)t1, Ca/)te, the o.ner3*
d+pl)cate cop1 of %C% No. 999732 )n order for the *a)d Re-)*ter of Deed* to )**+e the corre*pond)n-
cert)f)cate* of t)tle to all co,pla)nant* na,ed here)n"
3.H%he Re-)*ter of Deed* of %rece Mart)re* C)t1, Ca/)te )* here01 ordered to cancel %C% No. 999732 and
re)n*tate %C% No. %C2788 )n the na,e of Ce*ar Ca*al, fro, .h)ch the )nd)/)d+al t)tle* of here)n co,pla)nant*
.o+ld 0e )**+ed, .)th all the annotat)on* of enc+,0rance* )n*cr)0ed at the 0ac> of %C% No. 999732 carr)ed
o/er to the *a)d re)n*tated t)tle.
All other cla),* and co+ntercla),* are here01 d)*,)**ed.
G GRDERED. 1%
#ro, the dec)*)on of the &!@RB Ar0)ter, re*pondent* Ca*al, C+a*on and An-, a* .ell a* !et)c)a !)-on, f)led *eparate pet)t)on* for
re/)e. 0efore the Board of Co,,)**)oner* 4BoardH.
Gn 22 No/e,0er 1999, the Board rendered a dec)*)on, 2& aff)r,)n- the &!@RB Ar0)ter3* r+l)n- that the &!@RB had no ;+r)*d)ct)on
o/er an act)on for the A+)et)n- of t)tle, the n+ll)f)cat)on of a cert)f)cate of t)tle or the recon/e1ance of a propert1. Nota0l1, the Board
referred to an earl)er ca*e, &!@RB Ca*e No. REMCAC8749, )n/ol/)n- re*pondent Ca*al and the &e)r* of !a+d)Fa, .here the Board
deferred the )**+ance of a l)cen*e to *ell )n fa/or of CR #ar, E*tate +nt)l the )**+e of o.ner*h)p thereof .o+ld 0e re*ol/ed )n C)/)l
Ca*e No. BCEC98C14 pend)n- 0efore the R%C of Bacoor, Ca/)te.
#+rther,ore, the Board r+led that to allo. pet)t)oner* to proceed .)th the p+rcha*e* of the *+0d)/)*)on lot* .o+ld 0e pree,pt)n- the
proceed)n-* 0efore the R%C of Bacoor, Ca/)te and co,po+nd)n- the pre;+d)ce ca+*ed to pet)t)oner*. %h+*, the Board d)*,)**ed the
co,pla)nt for A+)et)n- of t)tle 0+t ordered the ref+nd of the a,o+nt* pa)d 01 pet)t)oner* and other 0+1er* to CR Realt1, to
.)t: $DaEA
5&ERE#GRE, pre,)*e* con*)dered, ;+d-,ent )* here01 rendered, MGD$#B$NG the Dec)*)on dated
Dece,0er 1=, 199= 01 the Gff)ce 0elo., to .)t:
1.%he co,pla)nt for A+)et)n- of t)tle a-a)n*t Ce*ar Ca*al, Benn)e C+a*on, Cale0 An-, &e)r* of E)tal)ano and
Enr)A+e !a+d)Fa, and !et)c)a !)-on )* D$M$ED for lac> of ;+r)*d)ct)on.
2.Grder)n- CR Realt1 andMor an1 of the Gff)cer* to ref+nd to co,pla)nant* for all pa1,ent* ,ade pl+* 12K
fro, the t),e the contract to *ell )* e2ec+ted +nt)l f+ll1 pa)d.
3.All other cla),* and co+ntercla),* are here01 D$M$ED.
4.D)rect)n- CR to pa1 (18,888.88 a* ad,)n)*trat)/e f)ne for each and e/er1 *ale .)tho+t l)cen*e.
!et ca*e 0e referred to the !e-al er/)ce* Gro+p 4!GH for po**)0le cr),)nal pro*ec+t)on a-a)n*t the Gff)cer*
of CR Realt1 and Ca*al.
G GRDERED. 21
!)-on, re*pondent Ca*al and here)n pet)t)oner* f)led *eparate ,ot)on* for recon*)derat)on. Gn 2= No/e,0er 2888, the Board )**+ed
a re*ol+t)on, 22 ,od)f1)n- )t* Dec)*)on dated 22 No/e,0er 2889 01 ),po*)n- the pa1,ent of da,a-e* )n fa/or of pet)t)oner*, th+*:
5&ERE#GRE, 0a*ed on the fore-o)n-:
1.%he dec)*)on of th)* Board dated No/e,0er 22, 1999 )* here01 MGD$#$ED to read a* follo.*:
5&ERE#GRE, pre,)*e* con*)dered, ;+d-,ent )* here01 rendered, MGD$#B$NG the Dec)*)on
dated Dece,0er 1=, 199= 01 the Gff)ce 0elo., th+*:
1.%he co,pla)nt for A+)et)n- of t)tle a-a)n*t Ce*ar Ca*al, Benn)e C+a*on, Cale0 An-, &e)r* of
E)tal)ano and Enr)A+e !a+d)Fa and !et)c)a !)-on )* D$M$ED for lac> of ;+r)*d)ct)on"
2.CR Realt1 andMor an1 of the off)cer* ;o)ntl1 and *e/erall1 )*Mare ordered to ref+nd to
co,pla)nant*, at the co,pla)nant3* opt)on, all pa1,ent* ,ade for the p+rcha*e of the lot* pl+* 12K
)ntere*t fro, the t),e the contract to *ell )* e2ec+ted +nt)l f+ll1 pa)d and co*t of ),pro/e,ent, )f
an1" A&CaED
3.CR Realt1 andMor an1 of )t* off)cer* ;o)ntl1 and *e/erall1 )*Mare ordered [to] pa1 each of the
co,pla)nant* the *+, of (38,888.88 a* and 01 .a1 [of] ,oral da,a-e*, (38,888.88 a* and 01
.a1 of e2e,plar1 da,a-e*, and (28,888.88 a* attorne13* fee*"
4.CR Realt1 andMor an1 of )t* off)cer* )*Mare here01 ordered to pa1 th)* Board (18,888.88 a*
ad,)n)*trat)/e f)ne for each and e/er1 *ale e2ec+ted .)tho+t l)cen*e"
7.All other cla),* and co+ntercla),* are here01 D$M$ED.
!et the ca*e 0e referred to the !e-al er/)ce* Gro+p 4!GH for po**)0le cr),)nal pro*ec+t)on
a-a)n*t the off)cer* of CR Realt1 and Ca*al.
2.Co,pla)nant*3 Mot)on for Recon*)derat)on, *a/e )n *o far a* .e ha/e a0o/e -)/en d+e co+r*e, )* here01
D$M$ED.
3.!)>e.)*e re*pondent*3 Mot)on for Recon*)derat)on are here01 D$M$ED for lac> of ,er)t.
4.Re*pondent Benn)e C+a*on3* Mot)on to Cancel .is Pendens )* here01 DEN$ED, the *a,e 0e)n-
pre,at+re.
!et the record* 0e ele/ated to the Gff)ce of the (re*)dent )n /)e. of the appeal earl)er f)led 01 co,pla)nant*.
G GRDERED. 23
@pon appeal, the Gff)ce of the (re*)dent 4G(H on 83 Dece,0er 2883 aff)r,ed in toto 0oth the dec)*)on and re*ol+t)on of the
Board. 2 A--r)e/ed, pet)t)oner* ele/ated the ,atter to the Co+rt of Appeal* /)a a R+le 43 pet)t)on for re/)e..
Before the Co+rt of Appeal*, pet)t)oner* ar-+ed that the G( erred )n render)n- a dec)*)on .h)ch adopted 01 ,ere reference the
dec)*)on of the &!@RB and that the &!@RB erred )n r+l)n- that )t had no ;+r)*d)ct)on o/er pet)t)oner*3 co,pla)nt, )n not n+ll)f1)n- the
deed of a0*ol+te *ale e2ec+ted 0et.een re*pondent Ca*al and re*pondent* C+a*on and An- and )n order)n- the ref+nd of the
a,o+nt* pa)d 01 pet)t)oner* for the *+0d)/)*)on lot*. 2! Ec$%C
Gn 21 <+ne 2887, the Co+rt of Appeal* rendered the a**a)led dec)*)on, 2" aff)r,)n- the G( Dec)*)on dated 83 Dece,0er 2883. Gn
83 #e0r+ar1 2889, the appellate co+rt den)ed pet)t)oner*3 ,ot)on for recon*)derat)on for lac> of ,er)t. 2#
&ence, the )n*tant pet)t)on, e**ent)all1 pra1)n- for ;+d-,ent order)n- the cancellat)on of the deed of a0*ol+te *ale entered 0et.een
re*pondent Ca*al, on the one hand, and re*pondent* An- and C+a*on, on the other, the del)/er1 of the cert)f)cate* of t)tle of the
*+0d)/)*)on lot*, and the pa1,ent of da,a-e* to pet)t)oner*.
(et)t)oner* ha/e ra)*ed the follo.)n- )**+e*: 41H .hether or not the a0*ence of a l)cen*e to *ell ha* rendered the *ale* /o)d" 42H
.hether or not the *+0*eA+ent *ale to re*pondent C+a*on and An- con*t)t+te* do+0le *ale" 43H .hether or not the &!@RB ha*
;+r)*d)ct)on o/er pet)t)oner*3 co,pla)nt" and 44H .hether a ,)n+te dec)*)on confor,* to the reA+)re,ent of ect)on 14, Art)cle E$$$ of
the Con*t)t+t)on. 2$
5e *hall re*ol/e the )**+e* in seriati%.
(et)t)oner* a**a)l the Co+rt of Appeal*3 r+l)n- that the lac> of the reA+)*)te l)cen*e to *ell on the part of re*pondent CR Realt1
rendered the *ale* /o)d" hence, ne)ther part1 co+ld co,pel perfor,ance of each other3* contract+al o0l)-at)on*.
%he onl1 reA+)*)te for a contract of *ale or contract to *ell to e2)*t )n la. )* the ,eet)n- of ,)nd* +pon the th)n- .h)ch )* the o0;ect of
the contract and the pr)ce, )ncl+d)n- the ,anner the pr)ce )* to 0e pa)d 01 the /endee. @nder Art)cle 147= of the Ne. C)/)l Code, )n a
contract of *ale, .hether a0*ol+te or cond)t)onal, one of the contract)n- part)e* o0l)-e* h),*elf to tran*fer the o.ner*h)p of and
del)/er a deter,)nate th)n-, and the other to pa1 therefor a pr)ce certa)n )n ,one1 or )t* eA+)/alent. 2%
$n the )n*tant ca*e, the fa)l+re 01 re*pondent CR Realt1 to o0ta)n a l)cen*e to *ell the *+0d)/)*)on lot* doe* not render the *ale*
/o)d on that -ro+nd alone e*pec)all1 that the part)e* ha/e ),pl)edl1 ad,)tted that there .a* alread1 a ,eet)n- of the ,)nd* a* to the
*+0;ect of the *ale and pr)ce of the contract. %he a0*ence of the l)cen*e to *ell onl1 *+0;ect* re*pondent CR Realt1 and )t* off)cer*
c)/)ll1 and cr),)nall1 l)a0le for the *a)d /)olat)on +nder (re*)dent)al Decree 4(.D.H No. 977 3& and related r+le* and re-+lat)on*. %he
a0*ence of the l)cen*e to *ell doe* not affect the /al)d)t1 of the alread1 perfected contract of *ale 0et.een pet)t)oner* and
re*pondent CR Realt1. Aa$%C

$n Co C#ien v. Sta. .ucia Realt/ and -evelop%ent, 'nc., 31 the Co+rt r+led that the reA+)*)te re-)*trat)on and l)cen*e to *ell +nder
(.D. No. 977 do not affect the /al)d)t1 of the contract 0et.een a *+0d)/)*)on *eller and 0+1er. %he Co+rt e2pla)ned, th+*:
A re/)e. of the rele/ant pro/)*)on* of (.D. [No.] 977 re/eal* that .h)le the la. penal)Fe* the *ell)n-
*+0d)/)*)on lot* and condo,)n)+, +n)t* .)tho+t pr)or )**+ance of a Cert)f)cate of Re-)*trat)on and !)cen*e to
*ell 01 the &!@RB, )t doe* not pro/)de that the a0*ence thereof .)ll a+to,at)call1 render a contract,
other.)*e /al)dl1 entered, /o)d. . . .
A* fo+nd 01 the Co+rt of Appeal*, )n the ca*e at 0ar, the reA+)re,ent* of ect)on* 4 and 7 of (.D. [No.] 977
do not -o )nto the /al)d)t1 of the contract, *+ch that the a0*ence thereof .o+ld a+to,at)call1 render the
contract n+ll and /o)d. $t )* rather ,ore of an ad,)n)*trat)/e con/en)ence )n order to allo. a ,ore effect)/e
re-+lat)on of the )nd+*tr1. . . . 32
%he *econd and th)rd )**+e* are )nterrelated a* the1 perta)n to .hether the &!@RB ha* ;+r)*d)ct)on o/er pet)t)oner*3 co,pla)nt for
the del)/er1 of cert)f)cate* of t)tle* and for A+)et)n- of t)tle.
(et)t)oner* are partl1 correct )n a**ert)n- that +nder ect)on 1 of (.D. No. 1344, 33 an act)on for *pec)f)c perfor,ance to co,pel
re*pondent* to co,pl1 .)th the)r o0l)-at)on* +nder the /ar)o+* contract* for the p+rcha*e of lot* located )n the *+0d)/)*)on o.ned,
de/eloped andMor *old 01 re*pondent* CR Realt1, Ca*al and al/ador )* .)th)n the pro/)nce of the &!@RB.
%he &!@RB ha* e2cl+*)/e ;+r)*d)ct)on o/er the co,pla)nt for *pec)f)c perfor,ance to co,pel re*pondent* CR Realt1, Ca*al and
al/ador a* *+0d)/)*)on o.ner* and de/eloper* to del)/er to pet)t)oner* the cert)f)cate* of t)tle after f+ll pa1,ent of the *+0d)/)*)on
lot*. Gn th)* *core, the Co+rt aff)r,* the f)nd)n-* of &!@RB Ar0)ter AA+)no .)th re*pect to the o0l)-at)on of re*pondent* Ca*al,
al/ador and CR Realt1 to del)/er the cert)f)cate* of t)tle of the *+0d)/)*)on to pet)t)oner* p+r*+ant to the)r re*pect)/e contract* to
*ell.
$ndeed, +nder ect)on 27 of (.D. No. 977, a,on- the o0l)-at)on* of a *+0d)/)*)on o.ner or de/eloper )* the del)/er1 of the
*+0d)/)*)on lot to the 0+1er 01 ca+*)n- the tran*fer of the corre*pond)n- cert)f)cate of t)tle o/er the *+0;ect lot. 3 %he pro/)*)on
*tate*:
ec. 27.'ssuance of 2itle. ' %he o.ner or de/eloper *hall del)/er the t)tle of the lot or +n)t to the 0+1er +pon
f+ll pa1,ent of the lot or +n)t. No fee, e2cept tho*e reA+)red for the re-)*trat)on of the deed of *ale )n the
Re-)*tr1 of Deed*, *hall 0e collected for the )**+ance of *+ch t)tle. $n the e/ent a ,ort-a-e o/er the lot or +n)t
)* o+t*tand)n- at the t),e of the )**+ance of the t)tle to the 0+1er, the o.ner or de/eloper *hall redee, the
,ort-a-e or the corre*pond)n- port)on thereof .)th)n *)2 ,onth* fro, *+ch )**+ance )n order that the t)tle
o/er an1 f+ll1 pa)d lot or +n)t ,a1 0e *ec+red and del)/ered to the 0+1er )n accordance here.)th. Ec$%C
$n the )n*tant ca*e, the contract to *ell )t*elf e2pre**l1 o0l)-e* the /endor to ca+*e the )**+ance of the corre*pond)n- cert)f)cate of
t)tle +pon f+ll pa1,ent of the p+rcha*e pr)ce, to .)t:
3.%)tle to *a)d parcel of land *hall re,a)n )n the na,e of the EENDGR +nt)l co,plete pa1,ent of the a-reed
pr)ce 01 the EENDEE and all o0l)-at)on* here)n *t)p+lated, at .h)ch t),e the EENDGR a-ree* to ca+*e the
)**+ance of a cert)f)cate of t)tle )n the !and Re-)*trat)on Act and the re*tr)ct)on* a* ,a1 0e pro/)ded )n th)*
Contract. 3!
#ro, the fore-o)n- )t )* clear that +pon f+ll pa1,ent, the *eller )* d+t1C0o+nd to del)/er the t)tle of the +n)t to the 0+1er. %h+*, for
)n*tance, e/en .)th a /al)d ,ort-a-e o/er the lot, the *eller )* *t)ll 0o+nd to redee, *a)d ,ort-a-e .)tho+t an1 co*t to the 0+1er
apart fro, the 0alance of the p+rcha*e pr)ce and re-)*trat)on fee*. 3"
%here )* no A+e*t)on that re*pondent* Ca*al, al/ador and CR Realt1 0reached the)r o0l)-at)on* to pet)t)oner* +nder the contract*
to *ell. $t )* *ettled that a 0reach of contract )* a ca+*e of act)on e)ther for *pec)f)c perfor,ance or re*c)**)on of
contract*. 3# Re*pondent* Ca*al, al/ador and CR Realt1 ha/e the o0l)-at)on to del)/er the corre*pond)n- clean cert)f)cate* of
t)tle of the *+0d)/)*)on lot*, the p+rcha*e pr)ce of .h)ch ha/e 0een pa)d )n f+ll 01 pet)t)oner*. %hat the *+0;ect *+0d)/)*)on propert1 )*
)n/ol/ed )n a pend)n- l)t)-at)on 0et.een re*pondent Ca*al and per*on* not part)e* to the )n*tant ca*e ,+*t not pre;+d)ce pet)t)oner*.
Re*pondent*3 o0l)-at)on to del)/er the corre*pond)n- cert)f)cate* of t)tle )* *),+ltaneo+* and rec)procal. @pon the f+ll pa1,ent of the
p+rcha*e pr)ce of the *+0d)/)*)on lot*, re*pondent*3 o0l)-at)on to del)/er the cert)f)cate* of t)tle 0eco,e* e2tant. Re*pondent* ,+*t
ca+*e the del)/er1 of the cert)f)cate* of t)tle to pet)t)oner* free of an1 enc+,0rance. B+t *)nce the lot* are )n/ol/ed )n l)t)-at)on and
there )* a not)ce of lis pendens at the 0ac> of the t)tle* )n/ol/ed, re*pondent* ha/e to 0e -)/en a rea*ona0le per)od of t),e to .or>
on the ad/er*e cla),* and del)/er clean t)tle* to pet)t)oner*. %he Co+rt 0el)e/e* that *)2 49H ,onth* )* a rea*ona0le per)od for the
p+rpo*e.
ho+ld re*pondent* fa)l to del)/er *+ch clean t)tle* at the end of the per)od, the1 o+-ht to pa1 pet)t)oner* act+al or co,pen*ator1
da,a-e*. Art)cle 1191 of the C)/)l Code *anct)on* the r)-ht to re*c)nd the o0l)-at)on )n the e/ent that *pec)f)c perfor,ance 0eco,e*
),po**)0le, to .)t:
Art. 1191.%he po.er to re*c)nd o0l)-at)on* )* ),pl)ed )n rec)procal one*, )n ca*e one of the o0l)-or* *ho+ld
not co,pl1 .)th .hat )* )nc+,0ent +pon h),.
T1* 4)B7.*- 8,.(: 2,: /1''+* 6*(;**) (1* 57054002*)( ,)- (1* .*+/4++4') '5 (1* '6043,(4'), ;4(1 (1*
8,:2*)( '5 -,2,3*+ 4) *4(1*. /,+*. H* 2,: ,0+' +**G .*+/4++4'), *9*) ,5(*. 1* 1,+ /1'+*)
57054002*)(, 45 (1* 0,((*. +1'70- 6*/'2* 428'++460*. ACIESH
T1* /'7.( +1,00 -*/.** (1* .*+/4++4') /0,42*-, 7)0*++ (1*.* 6* B7+( /,7+* ,7(1'.4C4)3 (1* 54>4)3 '5 ,
8*.4'-.
%h)* )* +nder*tood to 0e .)tho+t pre;+d)ce to the r)-ht* of th)rd per*on* .ho ha/e acA+)red the th)n-, )n
accordance .)th Art)cle* 13=7 and 13== and the Mort-a-e !a.. 3$
Re*c)**)on create* the o0l)-at)on to ret+rn the o0;ect of the contract. $t can 0e carr)ed o+t onl1 .hen the one .ho de,and*
re*c)**)on can ret+rn .hate/er he ,a1 0e o0l)-ed to re*tore. Re*c)**)on a0ro-ate* the contract fro, )t* )ncept)on and reA+)re* a
,+t+al re*t)t+t)on of the 0enef)t* rece)/ed. 3% %h+*, re*pondent* Ca*al, al/ador and CR Realt1 ,+*t ret+rn the 0enef)t* rece)/ed
fro, the contract to *ell )f the1 cannot co,pl1 .)th the)r o0l)-at)on to del)/er the corre*pond)n- cert)f)cate* of t)tle to pet)t)oner*.
@nder Art)cle 2199 of the C)/)l Code, act+al or co,pen*ator1 da,a-e* are tho*e a.arded )n *at)*fact)on of, or )n reco,pen*e for,
lo** or )n;+r1 *+*ta)ned. %he1 proceed fro, a *en*e of nat+ral ;+*t)ce and are de*)-ned to repa)r the .ron- that ha* 0een done, to
co,pen*ate for the )n;+r1 )nfl)cted and not to ),po*e a penalt1.& Al*o, +nder Art)cle 2288, )nde,n)f)cat)on for da,a-e* *hall
co,prehend not onl1 the /al+e of the lo** *+ffered, 0+t al*o that of the prof)t* .h)ch the o0l)-ee fa)led to o0ta)n. %h+*, there are t.o
>)nd* of act+al or co,pen*ator1 da,a-e*: one )* the lo** of .hat a per*on alread1 po**e**e*, and the other )* the fa)l+re to rece)/e
a* a 0enef)t that .h)ch .o+ld ha/e perta)ned to h),. 1
$n the e/ent that re*pondent* Ca*al, al/ador and CR Realt1 cannot del)/er clean cert)f)cate* of t)tle to pet)t)oner*, the latter ,+*t
0e re),0+r*ed not onl1 of the p+rcha*e pr)ce of the *+0d)/)*)on lot* *old to the, 0+t al*o of the )ncre,ental /al+e ar)*)n- fro, the
apprec)at)on of the lot*. %h+*, pet)t)oner* are ent)tled to act+al da,a-e* eA+)/alent to the c+rrent ,ar>et /al+e of the *+0d)/)*)on
lot*.
$n Solid Ho%es, 'nc. v. Spouses 2an, 2 the Co+rt ordered )n*tead the pa1,ent of the c+rrent ,ar>et /al+e of the *+0d)/)*)on lot
after )t .a* e*ta0l)*hed that the *+0d)/)*)on o.ner co+ld no lon-er co,pl1 .)th )t* o0l)-at)on to de/elop the *+0d)/)*)on propert1 )n
accordance .)th the appro/ed plan* and ad/ert)*e,ent*.
Gn th)* *core, )n )t* Dec)*)on dated 2= No/e,0er 2888 .h)ch .a* aff)r,ed 01 the G( and the Co+rt of Appeal*, the Board fo+nd
re*pondent CR Realt1 and )t* off)cer* *ol)dar)l1 l)a0le to ref+nd the co,pla)nant* or here)n pet)t)oner* the )n*tall,ent* pa)d 01 the,
)ncl+d)n- )ntere*t, to pa1 the, ,oral and e2e,plar1 da,a-e* and attorne13* fee* and to pa1 the corre*pond)n- f)ne to the Board.
%he dec)*)on, ho.e/er, fa)led to na,e the re*pon*)0le off)cer* of re*pondent CR Realt1 .ho *ho+ld 0e *ol)dar)l1 l)a0le
pet)t)oner*. &D%C$
%he 1= Dece,0er 199= Dec)*)on of the &!@RB Ar0)ter )* A+)te )n*tr+ct)/e on th)* ,atter, th+*:
G0/)o+*l1, re*pondent* CR Realt1 De/elop,ent Corporat)on, Cr)*anta R. al/ador and Ce*ar E. Ca*al,
a/o)ded re*pon*)0)l)t1 and l)a0)l)t1 for the)r fa)l+re to co,pl1 .)th the)r contract+al and *tat+tor1 o0l)-at)on to
del)/er the t)tle* to the )nd)/)d+al lot* of co,pla)nant*, 01 ?pa**)n- the 0+c>? to each other. %he Board[,]
ho.e/er, )* not o0l)/)o+* to the /ar)o+* *che,e* .)llf+ll1 e,plo1ed 01 de/eloper* and o.ner* of *+0d)/)*)on
pro;ect* to *+0tl1 *+0/ert the la., and e/ade the)r o0l)-at)on* to lot 0+1er*, a* )t f)nd* the ;+*t)f)cat)on*
ad/anced 01 re*pondent* CR Realt1 De/elop,ent Corp., Cr)*anta R. al/ador, and Ce*ar E. Ca*al -ro**l1
+ntena0le. %he fa)l+re )n the ),ple,entat)on of the a-ree,ent dated 89 epte,0er 199= entered )nto 01
re*pondent CR, al/ador and Ca*al )n/ol/)n- the *+0;ect propert1 *ho+ld not operate and .or> to pre;+d)ce
co,pla)nant*, .ho are lot 0+1er* )n -ood fa)th and .ho ha/e co,pl)ed .)th the)r o0l)-at)on* 01 pa1)n- )n f+ll
the pr)ce of the)r re*pect)/e lot* )n accordance .)th the ter,* and cond)t)on* of the)r contract to *ell.
Re*pondent Ca*al )* not .)tho+t reco+r*e a-a)n*t re*pondent* CR Realt1 or al/ador for the /)olat)on of
the)r a-ree,ent and a* *+ch, the *a,e rea*on co+ld not 0e ,ade and +t)l)Fed a* a con/en)ent e2c+*e to
e/ade the)r o0l)-at)on and re*pon*)0)l)t1 to del)/er t)tle* to co,pla)nant*.

@nder the *o called ?doctr)ne of e*toppel?, .here one of t.o )nnocent per*on*, a* re*pondent* CR
De/elop,ent Corp.MCr)*anta R. al/ador and Ce*ar E. Ca*al cla),ed the,*el/e* to 0e, ,+*t *+ffer, he
.ho*e act* occa*)oned the lo** ,+*t 0ear )t. $n the here)n ca*e, )t )* re*pondent*3 CR Realt1 De/elop,ent
Corp.MCr)*anta al/ador and Ce*ar E. Ca*al .ho ,+*t 0ear the lo**. . . . 3
$n den1)n- an1 l)a0)l)t1, re*pondent al/ador ar-+e* that e/en 0efore the f)l)n- of the ca*e 0efore the &!@RB, the a-ree,ent*
0et.een her and re*pondent Ca*al )n/ol/)n- the de/elop,ent and *ale of the *+0d)/)*)on lot* .ere *+per*eded 01 an a-ree,ent
dated 38 A+-+*t 1999, .here01 re*pondent Ca*al p+rportedl1 a**+,ed f+ll re*pon*)0)l)t1 o/er the cla),* of the *+0d)/)*)on lot
0+1er* .h)le re*pondent al/ador *old her *hare )n CR Realt1 and rel)nA+)*hed her part)c)pat)on )n the 0+*)ne**.
%he *+0*eA+ent a-ree,ent .h)ch p+rportedl1 re*c)nded the *+0d)/)*)on de/elop,ent a-ree,ent 0et.een re*pondent* Ca*al and
al/ador co+ld not affect th)rd per*on* l)>e here)n pet)t)oner* 0eca+*e of the 0a*)c c)/)l la. pr)nc)ple of relat)/)t1 of contract* .h)ch
pro/)de* that contract* can onl1 0)nd the part)e* .ho entered )nto )t, and )t cannot fa/or or pre;+d)ce a th)rd per*on, e/en )f he )*
a.are of *+ch contract and ha* acted .)th >no.led-e thereof. %he fact re,a)n* that the contract* to *ell )n/ol/)n- the *+0d)/)*)on
lot* .ere entered )nto 01 and 0et.een pet)t)oner*, a* /endee*, and re*pondent al/ador, on 0ehalf of re*pondent CR Realt1 a*
/endor. A* one of the re*pon*)0le off)cer* of re*pondent CR Realt1, re*pondent al/ador )* al*o l)a0le to pet)t)oner* for the fa)l+re
of CR Realt1 to perfor, )t* o0l)-at)on* +nder the *a)d contract* and (.D. No. 977, not.)th*tand)n- that re*pondent al/ador had
*+0*eA+entl1 d)/e*ted her*elf of her )ntere*t )n the CR Realt1. $DEcC
Gne of the p+rpo*e* of (.D. No. 977 )* to d)*co+ra-e and pre/ent +n*cr+p+lo+* o.ner*, de/eloper*, a-ent* and *eller* fro,
rene-)n- on the)r o0l)-at)on* and repre*entat)on* to the detr),ent of )nnocent p+rcha*er*. ! %he Co+rt cannot co+ntenance a
patent /)olat)on on the part of the *a)d re*pondent* that .)ll ca+*e -reat pre;+d)ce to pet)t)oner*. %he Co+rt ,+*t 0e /)-)lant and
*ho+ld p+n)*h, to the f+lle*t e2tent of the la., tho*e .ho pre1 +pon the de*perate .)th e,pt1 pro,)*e* of 0etter l)/e*, onl1 to feed
on the)r a*p)rat)on*. "
A* re-ard* pet)t)oner*3 pra1er to declare the, the a0*ol+te o.ner* of the *+0d)/)*)on lot*, the &!@RB correctl1 r+led that )t had no
;+r)*d)ct)on o/er the *a,e. (et)t)oner*3 a,ended co,pla)nt # )ncl+ded a ca+*e of act)on for recon/e1ance of the *+0d)/)*)on lot* to
pet)t)oner* andMor the A+)et)n- of pet)t)oner*3 t)tle thereto and ),pleaded a d)fferent *et of defendant*, na,el1, the &e)r* of !a+d)Fa
and re*pondent* An- and C+a*on, .ho alle-edl1 0o+-ht the *+0d)/)*)on lot* pre/)o+*l1 *old to pet)t)oner*.
$n Spouses Sunta/ v. Gocola/, $ the Co+rt held that the &!@RB ha* no ;+r)*d)ct)on o/er the )**+e of o.ner*h)p, po**e**)on or
)ntere*t )n the condo,)n)+, +n)t *+0;ect of the d)*p+te there)n 0eca+*e +nder ect)on 19 of Bata* (a,0an*a 4B.(.H Bl-. 129, % the
Re-)onal %r)al Co+rt* *hall e2erc)*e e2cl+*)/e or)-)nal ;+r)*d)ct)on )n all c)/)l act)on* .h)ch )n/ol/e the t)tle to, or po**e**)on of, real
propert1, or an1 )ntere*t there)n.
$n /)e. of the aforeA+oted del)neat)on of ;+r)*d)ct)on 0et.een the &!@RB and the R%C*, the &!@RB ha* no ;+r)*d)ct)on to declare
pet)t)oner* a* a0*ol+te o.ner* of the *+0d)/)*)on lot* a* a-a)n*t the &e)r* of !a+d)Fa .ho f)led an act)on for recon/e1ance a-a)n*t
re*pondent Ca*al, .h)ch )* *t)ll pend)n- 0efore the R%C.
&o.e/er, noth)n- pre/ent* the &!@RB fro, ad;+d)cat)n- on the )**+e of .hether the alle-ed *+0*eA+ent *ale of the *+0d)/)*)on lot*
to re*pondent* An- and C+a*on con*t)t+ted a do+0le *ale 0eca+*e the )**+e )* )nt),atel1 related to pet)t)oner*3 co,pla)nt to co,pel
re*pondent* CR Realt1, Ca*al and al/ador to perfor, the)r o0l)-at)on +nder the contract* to *ell. Con*)der)n- that the alle-ed
*+0*eA+ent *ale to re*pondent* An- and C+a*on apparentl1 .o+ld con*t)t+te a 0reach of re*pondent*3 o0l)-at)on to )**+e the
cert)f)cate of t)tle to pet)t)oner*, )f not an +n*o+nd 0+*)ne** pract)ce p+n)*ha0le +nder ect)on 1 of (.D. No. 1344, !& the &!@RB
cannot *h)r> fro, )t* ,andate to enforce the la.* for the protect)on of *+0d)/)*)on 0+1er*. D&%EC
$n 1nion ,an of t#e P#ilippines v. Housin( and .and 1se Re(ulator/ ,oard, !1 the Co+rt +pheld &!@RB3* ;+r)*d)ct)on o/er a
condo,)n)+, +n)t 0+1er3* co,pla)nt to ann+l the cert)f)cate of t)tle o/er the +n)t )**+ed to the h)-he*t 0)dder )n the foreclo*+re of the
,ort-a-e con*t)t+ted on the +n)t 01 the condo,)n)+, de/eloper .)tho+t the con*ent of the 0+1er.
%he re,and of the )n*tant ca*e to the &!@RB )* )n order *o that the &!@RB ,a1 deter,)ne )f the alle-ed *+0*eA+ent *ale to
re*pondent* An- and C+a*on of tho*e lot* )n)t)all1 *old to pet)t)oner* con*t)t+ted a do+0le *ale and .a* ta)nted .)th fra+d a*
oppo*ed to the re*pondent*3 cla), that onl1 the +n*old port)on* of the *+0d)/)*)on propert1 .ere *old to the,.
Gne f)nal note. Contrar1 to pet)t)oner*3 content)on, the dec)*)on of the G( doe* not /)olate the ,andate of ect)on 14, Art)cle E$$$ of
the Con*t)t+t)on, .h)ch pro/)de* that ?No dec)*)on *hall 0e rendered 01 an1 co+rt .)tho+t e2pre**)n- there)n clearl1 and d)*t)nctl1 the
fact* and the la. on .h)ch )t )* 0a*ed?.
%he G( dec)*)on r+led that ?the f)nd)n-* of fact and concl+*)on* of la. of the off)ce a Guo are a,pl1 *+pported 01 *+0*tant)al
e/)dence? and that )t )* ?0o+nd 01 *a)d f)nd)n-* of fact* and concl+*)on* of la. and here01 adopt4*H the a**a)led re*ol+t)on 01
reference?.
%he Co+rt f)nd* the*e le-al 0a*e* )n confor,)t1 .)th the reA+)re,ent* of the Con*t)t+t)on. %he Co+rt ha* *anct)oned the +*e of
,e,orand+, dec)*)on*, a *pec)e* of *+cc)nctl1 .r)tten dec)*)on* 01 appellate co+rt* )n accordance .)th the pro/)*)on* of ect)on
48, B.(. Bl-. 129 on the -ro+nd* of e2ped)enc1, pract)cal)t1, con/en)ence and doc>et *tat+* of o+r co+rt*. %he Co+rt ha* declared
that ,e,orand+, dec)*)on* co,pl1 .)th the con*t)t+t)onal ,andate. !2
A* alread1 d)*c+**ed, the Co+rt aff)r,* the r+l)n- of the &!@RB Ar0)ter )n*ofar a* )t ordered re*pondent* Ca*al, al/ador and CR
Realt1, ;o)ntl1 and *e/erall1, to ca+*e the del)/er1 of clean cert)f)cate* of t)tle to pet)t)oner* at no co*t to the latter. a)d re*pondent*
ha/e *)2 ,onth* fro, the f)nal)t1 of th)* dec)*)on to co,pl1 .)th th)* d)rect)/e, fa)l)n- .h)ch the1 *hall pa1 pet)t)oner* act+al da,a-e*
eA+)/alent to the c+rrent ,ar>et /al+e of the *+0d)/)*)on lot* *old to the,, a* deter,)ned 01 the &!@RB.
&o.e/er, the Co+rt f)nd* )n order and accord)n-l1 aff)r,* the Board3* a.ard of ,oral and e2e,plar1 da,a-e* and attorne13* fee* )n
fa/or of each pet)t)oner, a* .ell a* the ),po*)t)on of ad,)n)*trat)/e f)ne, a-a)n*t re*pondent* Ca*al, al/ador and CR
Realt1. A$&%Ea
KHEREFORE, the )n*tant pet)t)on for re/)e. on certiorari )* PARTLY GRANTED. %he dec)*)on and re*ol+t)on of the Co+rt of
Appeal* )n CACG.R. ( No. =1=79, .h)ch +pheld the dec)*)on* of the Gff)ce of the (re*)dent and the &o+*)n- and !and @*e
Re-+lator1 Board, are AFFIRMED )n all re*pect* e2cept for the follo.)n-MODIFICATIONS, to .)t:
41HRe*pondent* CR Realt1, Ce*ar E. Ca*al and Cr)*anta R. al/ador are ORDERED to *ec+re and del)/er to each of pet)t)oner*
the corre*pond)n- cert)f)cate* of t)tle*, free of an1 enc+,0rance, )n th)* na,e* for the lot* the1 re*pect)/el1 p+rcha*ed and f+ll1 pa)d
for, .)th)n *)2 49H ,onth* fro, the f)nal)t1 of th)* Dec)*)on and, )n ca*e of defa+lt, ;o)ntl1 and *e/erall1 to pa1 pet)t)oner* the pre/a)l)n-
or c+rrent fa)r ,ar>et /al+e of the lot* a* deter,)ned 01 the &o+*)n- and !and @*e Re-+lator1 Board" and
42H5)tho+t pre;+d)ce to the ),ple,entat)on of the other rel)ef* -ranted )n th)* Dec)*)on, )ncl+d)n- the rel)ef* a.arded 01 the &!@RB
.h)ch are aff)r,ed )n th)* Dec)*)on, th)* ca*e )* REMANDED to the &!@RB for the p+rpo*e of deter,)n)n- 4aH the pre/a)l)n- or
c+rrent fa)r ,ar>et /al+e of the lot* and 40H the /al)d)t1 of the *+0*eA+ent *ale of the lot* to re*pondent* Benn)e C+a*on and Cale0
An- 01 a*certa)n)n- .hether or not the *ale .a* attended .)th fra+d and e2ec+ted )n 0ad fa)th. No co*t*.
G GRDERED.
Carpio $orales, J Eela*co, <r., !eonardoCde Ca*tro JJ and ,rion, JJ., conc+r.
F''()'(*+
1.Rollo, pp. 9C78. CaDAE
2.Dated 21 <+ne 2887 and penned 01 <+*t)ce &a>), . A0d+l.ah)d and conc+rred )n 01 <+*t)ce* Re,ed)o* A. alaFarC
#ernando, Act)n- Cha)rper*on of the pec)al #or,er D)/)*)on, and E)cente .E. Eelo*o" id. at 993C789.
3.'d. at 737C73=.
4.'d. at 479C498.
7.'d. at 179C171.
9.'d. at 71C7=.
7.'d. at 71.
=.'d. at 72C73.
9.'d. at 93C99.
18.'d. at 99.
11.'d. at 9=C99.
12.'d. at 78C77.
13.'d. at 71.
14.'d. at 997.
17.'d. at 73.
19.'d. at 79C=2.
17.Supra note 13.
1=.'d. at 111C122. cDC$&%
19.'d. at 117C122.
28.Supra note 4.
21.'d. at 178C171.
22.'d. at 191C19=.
23.'d. at 197C19=.
24.Supra note 3.
27.'d. at 784C787.
29.Supra note 1.
27.'d. at 24.
2=.'d. at 24.
29.,oston ,an of t#e P#ilippines v. $analo, G.R. No. 17=149, 89 #e0r+ar1 2889, 4=2 CRA 18=, 129.
38.EN%$%!ED, ?REG@!A%$NG %&E A!E G# @BD$E$$GN !G% AND CGNDGM$N$@M, (RGE$D$NG (ENA!%$E #GR
E$G!A%$GN %&EREG#?.
31.G.R. No. 192898, 31 <an+ar1 2887, 713 CRA 778.
32.Co C#ien v. Sta. .ucia Realt/ and -evelop%ent, 'nc., supra note 29 at 71=C719.
33.(.D. No. 1344, ec. 1. $n the e2erc)*e of )t* f+nct)on to re-+late the real e*tate trade and 0+*)ne** and )n add)t)on to )t* po.er*
pro/)ded for )n (re*)dent)al Decree No. 977, the Nat)onal &o+*)n- A+thor)t1 *hall ha/e e2cl+*)/e ;+r)*d)ct)on to hear and
dec)de the ca*e* of the follo.)n- nat+re:
a.@n*o+nd real e*tate 0+*)ne** pract)ce*" Aa$DC
0.Cla),* )n/ol/)n- ref+nd and an1 other cla),* f)led 01 *+0d)/)*)on lot or condo,)n)+, +n)t 0+1er a-a)n*t the pro;ect o.ner,
de/eloper, dealer, 0ro>er or *ale*,an" and

c.Ca*e* )n/ol/)n- *pec)f)c perfor,ance of contract+al and *tat+tor1 o0l)-at)on* f)led 01 0+1er* of *+0d)/)*)on lot or condo,)n)+,
+n)t a-a)n*t the o.ner, de/eloper, dealer, 0ro>er or *ale*,an.
34.(RE$DEN%$A! DECREE NG. 977 41979H, ec. 27.
37.Rollo, p. 277.
39.-e &era, Jr. v. Court of !ppeals, 419 (h)l. =28, =33 42881H.
37.Radio Co%%unications of t#e P#ilippines, 'nc. v. Court of !ppeals, 437 (h)l. 92, 9= 42882H.
3=.E,pha*)* *+ppl)ed.
39.Supercars $ana(e%ent and -evelop%ent Corporation v. File%on Flores, 4=7 (h)l. 279, 299 42884H.
48.P06C S#ippin( and 2ransport Corporation v. Court of !ppeals, 37= (h)l. 3=, 72 4199=H.
41.Producers ,ans of t#e P#ilippines v. Court of !ppeals, 417 (h)l. 949, 97=C979 42881H.
42.G.R. No. 147179C77, 29 <+l1 2887, 497 CRA 137.
43.Rollo, p. 114.
44.'nte(rated Paca(in( Corporation v. Court of !ppeals, 3== (h)l. =37, =47 42888H.
47.Co C#ien v. Sta. .ucia Realt/ and -evelop%ent, 'nc., supra note 29 at 7=8.
49.People v. 6rtiz-$i/ae, 344 (h)l. 79=, 917 41997H. c%AC$a
47.Rollo, pp. 99C9=" %he e**ent)al a/er,ent* )n the a,ended co,pla)nt read:
7.Eer1 recentl1, Co,pla)nant* learned that the *+0d)/)ded lot* .h)ch the1 re*pect)/el1 p+rcha*ed fro, re*pondent* Ce*ar Ca*al,
CR Realt1 De/elop,ent Corporat)on andMor Cr)*anta al/ador, for .h)ch the1 ha/e f+ll1 pa)d after 1ear* of rel)-)o+*l1
pa1)n- the ,onthl1 a,ort)Fat)on*, .ere *old 01 re*pondent Ce*ar Ca*al .)th the con*ent of h)* .)fe ()lar (a+lar Ca*al
to Re*pondent* Benn)e C+a*on and Cale0 An- a* e/)denced 01 a Deed of A0*ol+te ale, a cop1 of .h)ch )* hereto
attached and ,ade an )nte-ral part hereof a* Anne2 ?E?.
=.B1 rea*on of *a)d *ale, the Re-)*ter of Deed* for Ca/)te )**+ed %ran*fer Cert)f)cate of %)tle No. 999732 )n the na,e of Benn)e
C+a*on and Cale0 An-. A cop1 of the t)tle )* hereto attached and ,ade an )nte-ral part hereof a* Anne2 ?#?.
9.%he afore*a)d *ale 01 Ca*al to C+a*on and An- )* part of the -rand *che,e of Re*pondent* to depr)/e Co,pla)nant* of the)r
r)-ht*, o.ner*h)p, t)tle and po**e**)on o/er the *+0d)/)ded lot* .h)ch the1 re*pect)/el1 p+rcha*ed fro, Re*pondent*
Ce*ar Ca*al, CR Realt1 De/elop,ent Corporat)on andMor Cr)*t)na al/ador and for .h)ch the1 ha/e pa)d )n f+ll.
18.Re*pondent* Benn)e C+a*on and Cale0 An- .ere f+ll1 a.are that the land .h)ch the1 p+rcha*ed fro, Ce*ar Ca*al .a*
alread1 *old to here)n Co,pla)nant* and, therefore, the1 are p+rcha*er* )n 0ad fa)th. . . .
11.%here )*, therefore, a le-al need to ann+l and declare .)tho+t an1 force and effect the Deed of A0*ol+te ale 4Anne2 EH and
the %ran*fer Cert)f)cate of %)tle No. 999732 4Anne2 ?#?H and to recon/e1 the propert1 de*cr)0ed there)n to
Co,pla)nant*.
12.At the t),e Co,pla)nant* and Re*pondent* Ce*ar Ca*al andMor CR Realt1 De/elop,ent Corporat)on andMor Cr)*anta
al/ador *)-ned the)r re*pect)/e Contract* to ell, and d+r)n- all the t),e the Co,pla)nant* .ere pa1)n- the)r ,onthl1
a,ort)Fat)on* +p to the t),e the corre*pond)n- Deed* of A0*ol+te ale .ere e2ec+ted )n fa/or of Co,pla)nant*, the
latter .ere a**+red 01 *a)d Re*pondent* that the lot* the1 p+rcha*ed .ere free fro, an1 l)en or
enc+,0rance*. Ca$%A
13.o,et),e after Re*pondent Ce*ar Ca*al andMor CR Realt1 De/elop,ent Corporat)on andMor Cr)*t)na al/ador e2ec+ted the
corre*pond)n- Deed* of A0*ol+te ale of the *+0d)/)ded lot* )n fa/or of Co,pla)nant*, the latter learned that the ?&e)r*
of !a+d)Fa? and re*pondent !et)c)a !)-on, )n /)olat)on of (.D. No. 977 and a* part of all re*pondent* -rand de*)-n to
defra+d Co,pla)nant* to depr)/e the, of the r)-ht*, o.ner*h)p t)tle and po**e**)on of the *+0d)/)*)on lot* the1
re*pect)/el1 p+rcha*ed had *tarted a**ert)n- the)r p+rported cla),* of o.ner*h)p a-a)n*t Ca*al and here)n
Co,pla)nant* )n/ol/)n- the *a,e *+0d)/)ded parcel* of land there01 ca*t)n- a clo+d on the le-al)t1 and /al)d)t1 of the)r
t)tle*, o.ner*h)p and r)-ht thereto.
14.%here )*, therefore, a need to once and for all re,o/e the clo+d on and A+)et t)tle to the *+0d)/)ded lot* p+rcha*ed 01
co,pla)nant*, 01 declar)n- the latter to 0e the la.f+l and /al)d o.ner* of the propert1 the1 re*pect)/el1 p+rcha*ed fro,
CR Realt1 De/elop,ent Corporat)on andMor Ce*ar Ca*al andMor Cr)*anta al/ador +nder (.D. No. 977 to the
e2cl+*)on of the ent)re .orld, )ncl+d)n- all the here)n re*pondent*.
4=.G.R. No. 144=92, 23 epte,0er 2887, 478 CRA 927.
49.EC. 19. Jurisdiction in Civil Cases. ' Re-)onal %r)al Co+rt* *hall e2erc)*e e2cl+*)/e or)-)nal ;+r)*d)ct)on:
41H. . .
42H$n all c)/)l act)on* .h)ch )n/ol/e the t)tle to, or po**e**)on of, real propert1, or an1 )ntere*t there)n, e2cept act)on* for forc)0le
entr1 )nto and +nla.f+l deta)ner of 1ard* U or 0+)ld)n-*, or)-)nal ;+r)*d)ct)on o/er .h)ch )* conferred +pon Metropol)tan
%r)al Co+rt*, M+n)c)pal %r)al Co+rt*, and M+n)c)pal C)rc+)t %r)al Co+rt*.
78.EC. 1. $n the e2erc)*e of )t* f+nct)on* to re-+late the real e*tate trade and 0+*)ne** and )n add)t)on to )t* po.er* pro/)ded for
)n (re*)dent)al Decree No. 977, the Nat)onal &o+*)n- A+thor)t1 *hall ha/e e@clusive 3urisdiction to hear and dec)de
ca*e* of the follo.)n- nat+re:
a.@n*o+nd real e*tate 0+*)ne** pract)ce*"
0.Cla),* )n/ol/)n- ref+nd of an1 other cla),* f)led 01 *+0d)/)*)on lot or condo,)n)+, 0+1er a-a)n*t the pro;ect o.ner, de/eloper,
dealer, 0ro>er, or *ale*,an" and
c.Ca*e* )n/ol/)n- *pec)f)c perfor,ance of contract+al and *tat+tor1 o0l)-at)on* f)led 01 0+1er* of *+0d)/)*)on* lot or condo,)n)+,
+n)t a-a)n*t the o.ner, de/eloper, dealer, 0ro>er, or *ale*,an.
71.G.R. No. 97394, 29 <+ne 1992, 218 CRA 77=.
72.Yao v. Court of !ppeals, 39= (h)l. =9, 182C183 42888H. D$EaC
UAct)n- Cha)rper*on )n l)e+ of en)or A**oc)ate <+*t)ce !eonardo A. P+)*+,0)n-, .ho )* on off)c)al lea/e, per pec)al Grder No.
91=.
UUAdd)t)onal ,e,0er of the econd D)/)*)on per pec)al Grder No. 919.
#$R% D$E$$GN
[G.R. No. 49=78. <+ne 28, 1948.]
UY SIU PIN ,)- CHUA HUE, petitioners, vs. CASIMIRA CANTOLLAS, ET AL., respondents.
2rinidad & 7nriGuez and Su%ulon(, .avidez & Su%ulon( for pet)t)oner*.
!zada, &eluz & -e .una for re*pondent*.
SYLLABUS
1.(@RC&AE AND A!E" N@!!$%B" AR%$C!E 147= G# %&E C$E$! CGDE. ' %he *ale fro, @. . (. to h)* .)fe C.
&. )* n+ll and /o)d not onl1 0eca+*e the for,er had no r)-ht to d)*po*e of the land )n contro/er*1 )n /)e. of the e2)*tence of the
contract E2h)0)t A, 0+t 0eca+*e *+ch *ale co,e* .)th)n the proh)0)t)on of art)cle 147= of the C)/)l Code.
D E C I S I O N
LAUREL, J p:
$n the 1ear 1929 or therea0o+t the *po+*e* (edro Eele-aOo and Ca*),)ra Cantolla* .ere )nde0ted to El &o-ar
#)l)p)no )n the *+, of (2,888 *ec+red 01 a ,ort-a-e on certa)n land co/ered 01 or)-)nal cert)f)cate of t)tle No. 1817. @pon the
death of (edro Eele-aOo )n the *a,e 1ear, there re,a)ned an +npa)d 0alance of (1,388. Gn Apr)l 2, 1932 Ca*),)ra Cantolla*
and her *on Bla* Eele-aOo, .ho *+cceeded to the ,ort-a-ed land, entered )nto a contract .)th @1 )+ ()n 01 .h)ch Ca*),)ra
and Bla* a-reed to del)/er *a)d land to @1 )+ ()n .)th f+ll r)-ht on the part of the latter to po**e** and en;o1 the *a,e .)th )t*
),pro/e,ent* d+r)n- the per)od of f)fteen 1ear* fro, Apr)l 2, 1932, on cond)t)on that @1 )+ ()n .o+ld pa1 to 7l Ho(ar
Filipino the +npa)d 0alance of the )nde0tedne** of Ca*),)ra and Bla*, to-ether .)th all other e2pen*e* )ncl+d)n- realt1 ta2e*. $t
.a* f+rther co/enanted that after the lap*e of f)fteen 1ear*, @1 )+ ()n .o+ld ret+rn the land to Ca*),)ra Cantolla* and Bla*
Eele-aOo .)tho+t an1 o0l)-at)on on the part of the latter to pa1 an1th)n- to @1 )+ ()n, 0+t that, )f after the e2p)rat)on of f)/e
1ear* fro, Apr)l 2, 1932, Ca*),)ra and Bla* .o+ld 0e )n a po*)t)on to do *o, the1 had the r)-ht to redee, *a)d land 01 pa1)n- to
@1 )+ ()n or h)* *+cce**or* )n )ntere*t the *+, of (1,778. $n p+r*+ance of th)* a-ree,ent, @1 )+ ()n, on Apr)l 2, 1932, too>
po**e**)on of the land and proceeded to ,a>e pa1,ent* to 7l Ho(ar Filipino +pon acco+nt of the )nde0tedne** of Ca*),)ra
Cantolla* and Bla* Eele-aOo. %he pa1,ent* th+* ,ade a,o+nted to (988 +p to <+l1, 1933, .hen @1 )+ ()n cea*ed to ,a>e
f+rther pa1,ent* to 7l Ho(ar Filipino, a* a re*+lt of .h)ch the latter foreclo*ed the ,ort-a-e .h)ch )t held on the land )n
A+e*t)on .h)ch .a* then )n the po**e**)on of @1 )+ ()n 01 rea*on of the a-ree,ent 0et.een h), and Ca*),)ra and Bla*
alread1 a0o/e referred to. $n the foreclo*+re *ale, the land .a* 0o+-ht 01 7l Ho(ar Filipino for (1,892.99. %he ,ort-a-e
de0tor*, Ca*),)ra and Bla*, ha/)n- fa)led to redee, the land .)th)n the *tat+tor1 per)od, a f)nal deed of *ale .a* )**+ed )n fa/or
of 7l Ho(ar Filipino on Dece,0er 24, 1934. Gn Dece,0er 29, 1934 the latter *old the afore*a)d land to @1 )+ ()n for
(1,19=.17. Gn Dece,0er 2=, 1934 @1 )+ ()n )n t+rn *old the land to h)* .)fe Ch+a &+e )n con*)derat)on of (4,888. %ran*fer
cert)f)cate of t)tle No. =449 .a* )**+ed )n fa/or of @1 )+ ()n 0+t )t .a* later cancelled 01 a ne. tran*fer cert)f)cate of t)tle, No.
=447, )**+ed )n the na,e of Ch+a &+e.
Gn Dece,0er 18, 1937, Ca*),)ra Cantolla* and Bla* Eele-aOo f)led )n the Co+rt of #)r*t $n*tance of %a1a0a* a
co,pla)nt a-a)n*t @1 )+ ()n and Ch+a &+e )n .h)ch, a* *+0*eA+entl1 a,ended, )t .a* pra1ed that the *ale )n fa/or of Ch+a
&+e and tran*fer cert)f)cate of t)tle No. =447 )n her na,e 0e cancelled" that the a-ree,ent entered )nto 0et.een @1 )+ ()n and
Ca*),)ra and Bla* on Apr)l 2, 1932, and attached to the co,pla)nt a* E2h)0)t A, 0e noted on the tran*fer cert)f)cate of t)tle
)**+ed )n fa/or of @1 )+ ()n, and that the defendant* 0e ordered to pa1 to the pla)nt)ff* the *+, of (3=8 01 .a1 of da,a-e*
and the *+, of (7,788 a* the /al+e of the land )n A+e*t)on. Gn Dece,0er 11, 1937 a not)ce of lis pendens .a* )n*cr)0ed )n the
off)ce of the re-)*ter of deed* of %a1a0a* and noted on the 0ac> of tran*fer cert)f)cate of t)tle No. =447. %he defendant @1 )+
()n and Ch+a &+e f)led an an*.er conta)n)n- a -eneral den)al and the *pec)al defen*e* that @1 )+ ()n entered )nto the
contract E2h)0)t A thro+-h fra+d on the part of the pla)nt)ff* Ca*),)ra and Bla*, that the latter fa)led to perfor, the)r part of the
contract )n that the1 fa)led to del)/er to @1 )+ ()n the po**e**)on of the land )n A+e*t)on, and that @1 )+ ()n, after acA+)r)n-
*a)d land fro, 7l Ho(ar Filipino )ndependentl1 of the contract E2h)0)t A, *old the *a,e to h)* codefendant Ch+a &+e. <+an
Ma-0a;o*, )nter/en)n- )n the act)on, pra1ed that he 0e declared the o.ner of the land )n/ol/ed there)n 01 /)rt+e of the *ale
e2ec+ted )n h)* fa/or 01 Ch+a &+e on Dece,0er 31, 1937. After tr)al, the Co+rt of #)r*t $n*tance of %a1a0a* rendered
;+d-,ent *ett)n- a*)de the *ale e2ec+ted 01 @1 )+ ()n )n fa/or of Ch+a &+e a* .ell a* the *ale e2ec+ted 01 the latter )n fa/or
of <+an Ma-0a;o*, order)n- the re-)*ter of deed* of %a1a0a* to cancel tran*fer cert)f)cate of t)tle No. =447 )**+ed )n the na,e
of Ch+a &+e and to note the a-ree,ent E2h)0)t A on tran*fer cert)f)cate of t)tle No. =449 )**+ed )n the na,e of @1 )+ ()n, and
*entenc)n- the latter to pa1 to the pla)nt)ff* a* da,a-e* the *+, of (3=8 pl+* the co*t* of the act)on. @pon appeal fro, th)*
;+d-,ent 01 the defendant* and the )nter/enor, the Co+rt of Appeal*, on <+l1 1=, 1939, aff)r,ed the *a,e .)th the *ole
,od)f)cat)on that the a.ard of da,a-e* )n the *+, of (3=8 .a* el),)nated therefro,.
%he pre*ent pet)t)on for cert)orar) ha* 0een pre*ented 01 @1 )+ ()n and Ch+a &+e .)th a /)e. to o0ta)n)n- a
fa/ora0le ;+d-,ent )n the)r fa/or, the pet)t)oner* contend)n- that: $. %he Co+rt of Appeal* erred )n declar)n- that +nder the
a-ree,ent E2h)0)t A, the pet)t)oner @1 )+ ()n rece)/ed the land )n A+e*t)on fro, the re*pondent* Ca*),)ra Cantolla* and Bla*
Eele-aOo a* ,ere tr+*tee .)th r)-ht of +*+fr+ct" $$. %he Co+rt of Appeal* erred )n declar)n- that the pet)t)oner @1 )+ ()n
acA+)red the land )n A+e*t)on fro, 7l Ho(ar Filipino, not )n h)* o.n r)-ht 0+t a* tr+*tee of the re*pondent* Ca*),)ra Cantolla*
and Bla* Eele-aOo" $$$. %he Co+rt of Appeal* erred )n hold)n- that the o0l)-at)on a**+,ed 01 pet)t)oner @1 )+ ()n +nder
E2h)0)t A ha* not 0een /al)dl1 e2t)n-+)*hed" $E. %he Co+rt of Appeal* erred )n declar)n- n+ll and /o)d the *ale of the land )n
A+e*t)on )n fa/or of the pet)t)oner Ch+a &+e" E. %he Co+rt of Appeal* erred )n den1)n- pet)t)oner3* ,ot)on for recon*)derat)on.
Co+n*el for the pet)t)oner* *tre** the ar-+,ent that E2h)0)t A .a* not a contract creat)n- a tr+*t relat)on a* held 01
the Co+rt of Appeal*, 0+t .a* one of ant)chre*)*. 5e f)nd )t +nnece**ar1 to ,a>e an1 prono+nce,ent on th)* po)nt, 0eca+*e
.hate/er ,a1 0e )t* deno,)nat)on, the pet)t)oner @1 )+ ()n )* 0o+nd to co,pl1 there.)th, )t 0e)n- *t)ll )n f+ll force and effect a*
fo+nd 01 the Co+rt of Appeal*. %he re*pondent* Ca*),)ra Cantolla* and Bla* Eele-aOo perfor,ed the)r part of the contract
.hen the1 del)/ered on Apr)l 2, 1932 the land )n/ol/ed here)n to the pet)t)oner @1 )+ ()n. %hereafter )t .a* )nc+,0ent +pon the
latter to f+lf)ll h)* o0l)-at)on to pa1 the de0t o.)n- 01 *a)d re*pondent* to 7l Ho(ar Filipino and to ret+rn *a)d land to the,, after
the per)od of f)fteen 1ear*. $t cannot 0e contended .)th fa)rne** that @1 )+ ()n acA+)red the land )n h)* o.n r)-ht fro, 7l Ho(ar
Filipino after the latter had foreclo*ed the ,ort-a-e thereon, 0eca+*e the foreclo*+re .a* 0ro+-ht a0o+t 01 h)* o.n fa)l+re to
pa1, a* *t)p+lated )n the contract E2h)0)t A, the )nde0tedne** of Ca*),)ra and Bla*. Ne)ther co+ld the latter 0e 0la,ed for the)r
fa)l+re to redee, the land fro, 7l Ho(ar Filipino after the foreclo*+re *ale, for the rea*on that the1 had the perfect r)-ht to rel1
on the)r contract .)th @1 )+ ()n. $n an1 e/ent, .hether .e con*)der @1 )+ ()n a* ha/)n- p+rcha*ed the land fro, 7l Ho(ar
Filipino )n h)* o.n r)-ht, and not on 0ehalf of Ca*),)ra Cantolla* and Bla* Eele-aOo, he )* *t)ll 0o+nd, +nder the c)rc+,*tance*
of th)* ca*e, to recon/e1 the *a,e to Ca*),)ra and Bla* after the e2p)rat)on of the per)od *t)p+lated )n the e2)*t)n- contract
E2h)0)t A. $t )* pretended, ho.e/er, that the o0l)-at)on* a**+,ed 01 @1 )+ ()n +nder E2h)0)t A ha/e 0een /al)dl1 e2t)n-+)*hed
.hen ?he ret+rned the po**e**)on of the propert1 )n A+e*t)on to the de0tor* Ca*),)ra Cantolla* and Bla* Eele-aOo.? A-a)n*t
th)* preten*)on there )* the f)nd)n- of fact of the Co+rt of Appeal*, not capa0le of re/)e. 01 +* )n the pre*ent proceed)n-*, that
@1 )+ ()n ha* re,a)ned )n po**e**)on of the land *)nce Apr)l 2, 1932.
%he *ale fro, @1 )+ ()n to h)* .)fe Ch+a &+e )* n+ll and /o)d not onl1 0eca+*e the for,er had no r)-ht to d)*po*e of
the land )n contro/er*1 )n /)e. of the e2)*tence of the contract E2h)0)t A, 0+t 0eca+*e *+ch *ale co,e .)th)n the proh)0)t)on of
art)cle 147= of the C)/)l Code. $t )* not nece**ar1 to d.ell +pon the *ale fro, Ch+a &+e to the )nter/enor <+an Ma-0a;o*, a*
the latter ha* not appealed fro, the dec)*)on co,pla)ned of 01 the pet)t)oner*.
%he pet)t)on for cert)orar) .)ll therefore 0e d)*,)**ed and the appealed dec)*)on aff)r,ed, .)th co*t* a-a)n*t the
pet)t)oner*. o ordered.
!vance"a, C.J., '%perial, -iaz, and $oran,, JJ., conc+r.
%&$RD D$E$$GN
[G.R. No. 197=79. No/e,0er 18, 2889.]
MARIA B. CHING, petitioner, vs. IOSEPH C. GOYANKO, IR., EVELYN GOYANKO, IERRY GOYANKO,
IMELDA GOYANKO, IULIUS GOYANKO, MARY ELLEN GOYANKO AND IESS
GOYANKO, respondents.
D E C I S I O N
CARPIO MORALES, J p:
Gn Dece,0er 38, 1947, <o*eph Go1an>o 4Go1an>oH and Ep)fan)a dela Cr+F 4Ep)fan)aH .ere ,arr)ed. 1 G+t of the +n)on .ere 0orn
re*pondent* <o*eph, <r., E/el1n, <err1, $,elda, <+l)+*, Mar1 Ellen and <e**, all *+rna,ed Go1an>o.
Re*pondent* cla), that )n 1991, the)r parent* acA+)red a 991 *A+are ,eter propert1 located at 29 #. Ca0ah+- t., Ce0+ C)t1 0+t
that a* the1 4the parent*H .ere Ch)ne*e c)t)Fen* at the t),e, the propert1 .a* re-)*tered )n the na,e of the)r a+nt, +lp)c)a Eent+ra
4+lp)c)aH.
Gn Ma1 1, 1993, +lp)c)a e2ec+ted a deed of *ale 2 o/er the propert1 )n fa/or of re*pondent*3 father Go1an>o. $n t+rn, Go1an>o
e2ec+ted on Gcto0er 12, 1993 a deed of *ale 3 o/er the propert1 )n fa/or of h)* co,,onCla.C.)feChere)n pet)t)oner Mar)a B. Ch)n-.
%ran*fer Cert)f)cate of %)tle 4%C%H No. 13=487 .a* th+* )**+ed )n pet)t)oner3* na,e.
After Go1an>o3* death on March 11, 1999, re*pondent* d)*co/ered that o.ner*h)p of the propert1 had alread1 0een tran*ferred )n
the na,e of pet)t)oner. Re*pondent* there+pon had the p+rported *)-nat+re of the)r father )n the deed of *ale /er)f)ed 01 the
(h)l)pp)ne Nat)onal (ol)ce Cr),e !a0orator1 .h)ch fo+nd the *a,e to 0e a for-er1.
Re*pondent* th+* f)led .)th the Re-)onal %r)al Co+rt of Ce0+ C)t1 a co,pla)nt for reco/er1 of propert1 and da,a-e* a-a)n*t
pet)t)oner, pra1)n- for the n+ll)f)cat)on of the deed of *ale and of %C% No. 13=487 and the )**+ance of a ne. one )n fa/or of the)r
father Go1an>o.
$n defen*e, pet)t)oner cla),ed that *he )* the act+al o.ner of the propert1 a* )t .a* *he .ho pro/)ded )t* p+rcha*e pr)ce. %o d)*pro/e
that Go1an>o3* *)-nat+re )n the A+e*t)oned deed of *ale )* a for-er1, *he pre*ented a* .)tne** the notar1 p+0l)c .ho te*t)f)ed that
Go1an>o appeared and *)-ned the doc+,ent )n h)* pre*ence. %CEaD$
B1 Dec)*)on of Gcto0er 19, 199=, ! the tr)al co+rt d)*,)**ed the co,pla)nt a-a)n*t pet)t)oner, the pert)nent port)on* of .h)ch dec)*)on
read:
%here )* no /al)d and *+ff)c)ent -ro+nd to declare the *ale a* n+ll and /o)d, f)ct)t)o+* and *),+lated. %he
*)-nat+re on the A+e*t)oned Deed of ale )* -en+)ne. %he te*t),on1 of Att1. al/ador Barra,eda .ho
declared )n co+rt that <o*eph Go1an>o, r. and Mar)a Ch)n- to-ether .)th the)r .)tne**e* appeared 0efore
h), for notar)Fat)on of Deed of ale )n A+e*t)on )* ,ore rel)a0le than the confl)ct)n- te*t),on)e* of the t.o
doc+,ent e2a,)ner*. Defendant Mar)a Ch)n- a**erted that the Deed of ale e2ec+ted 01 <o*eph Go1an>o,
r. )n her fa/or )* /al)d and -en+)ne. %he *)-nat+re of <o*eph Go1an>o, r. )n the A+e*t)oned Deed of
A0*ol+te ale )* -en+)ne a* )t .a* d+l1 e2ec+ted and *)-ned 01 <o*eph Go1an>o, r. h),*elf.
%he parcel of land* >no.n a* !ot No. 9 .h)ch )* *o+-ht to 0e reco/ered )n th)* ca*e co+ld ne/er 0e
con*)dered a* the con;+-al propert1 of the or)-)nal po+*e* <o*eph C. Go1an>o and Ep)fan)a dela Cr+F or
the e2cl+*)/e cap)tal propert1 of the h+*0and. %he acA+)*)t)on of the *a)d propert1 01 defendant Mar)a Ch)n-
)* .ellCel)c)ted fro, the afore,ent)oned te*t),on)al and doc+,entar1 e/)dence pre*ented 01 the defendant.
Altho+-h for a t),e 0e)n- the propert1 pa**ed thro+-h <o*eph Go1an>o, r. a* a 0+1er 1et h)* o.ner*h)p
.a* onl1 te,porar1 and tran*)tor1 for the rea*on that )t .a* *+0*eA+entl1 *old to here)n defendant Mar)a
Ch)n-. Mar)a Ch)n- cla),ed that )t .a* e/en her ,one1 .h)ch .a* +*ed 01 <o*eph Go1an>o, r. )n the
p+rcha*e of the land and *o )t .a* e/ent+all1 *old to her. $n her te*t),on1, defendant Ch)n- ;+*t)f)ed her
f)nanc)al capa0)l)t1 to 0+1 the land for her*elf. %he tran*act)on +nderta>en .a* fro, the or)-)nal o.ner
+lp)c)a Eent+ra to <o*eph Go1an>o, r. and then fro, <oe*ph Go1an>o, r. to here)n defendant Mar)a
Ch)n-.
%he land *+0;ect of the l)t)-at)on )* alread1 re-)*tered )n the na,e of defendant Mar)a Ch)n- +nder %C% No.
13=487. B1 /)rt+e of the Deed of ale e2ec+ted )n fa/or of Mar)a Ch)n-, %ran*fer Cert)f)cate of %)tle No.
13=487 .a* )**+ed )n her fa/or. $n reco-n)t)on of the pro/er0)al /)rt+al)t1 of a %orren* t)tle, )t ha* 0een
repeatedl1 held that, +nle** 0ad fa)th can 0e e*ta0l)*hed on the part of the per*on appear)n- a* o.ner on the
cert)f)cate of t)tle, there )* no other o.ner than that )n .ho*e fa/or )t ha* 0een )**+ed. A %orren* t)tle )* not
*+0;ect to collateral attac>. $t )* a .ellC>no.n doctr)ne that a %orren* t)tle, a* a r+le, )* )rre/oca0le and
)ndefea*)0le, and the d+t1 of the co+rt )* to *ee to )t that th)* t)tle )* ,a)nta)ned and re*pected +nle**
challen-ed )n a d)rect proceed)n-* [sic]. " 4C)tat)on* o,)tted" +nder*cor)n- *+ppl)edH
Before the Co+rt of Appeal* .here re*pondent* appealed, the1 ar-+ed that the tr)al co+rt erred:
1.. . . .hen )t d)*,)**ed the co,pla)nt a A+o . . ., )n effect, *+*ta)n)n- the *ale of the *+0;ect propert1 0et.een
<o*eph, r. and the defendantCappellee, de*p)te the prol)ferat)on )n the record* and ad,)**)on* 01
0oth part)e* that defendantCappellee .a* the ?,)*tre**? or ?co,,onCla. .)fe? of <o*eph, r..
2.. . . .hen )t d)*,)**ed the co,pla)nt a A+o . . ., )n effect, *+*ta)n)n- the *ale of the *+0;ect propert1 0et.een
<o*eph, r. and the defendantCappellee, de*p)te the fact that the ,arr)a-e of <o*eph, r. and
Ep)fan)a .a* then *t)ll *+0*)*t)n- there01 render)n- the *+0;ect propert1 a* con;+-al propert1 of
<o*eph, r. and Ep)fan)a.
3.. . . )n d)*,)**)n- the co,pla)nt a A+o . . ., )n effect, *+*ta)n)n- the /al)d)t1 of the *ale of the *+0;ect propert1
0et.een <o*eph, r. and the defendantCappellee, de*p)te the clear f)nd)n-* of for-er1 and the nonC
cred)0le te*t),on1 of notar1 p+0l)c. #
B1 Dec)*)on dated Gcto0er 21, 2883, $ the appellate co+rt re/er*ed that of the tr)al co+rt and declared n+ll and /o)d the A+e*t)oned
deed of *ale and %C% No. 13=487. &eld the appellate co+rt:
. . . %he *+0;ect propert1 ha/)n- 0een acA+)red d+r)n- the e2)*tence of a /al)d ,arr)a-e 0et.een <o*eph r.
and Ep)fan)a dela Cr+FCGo1an>o, )* pre*+,ed to 0elon- to the con;+-al partner*h)p. Moreo/er, .h)le th)*
pre*+,pt)on )n fa/or of con;+-al)t1 )* re0+tta0le .)th clear and con/)nc)n- proof to the contrar1, .e f)nd no
e/)dence on record to concl+de other.)*e. %he record *ho.* that .h)le <o*eph r. and h)* .)fe Ep)fan)a
ha/e 0een e*tran-ed for 1ear* and that he and defendantCappellant Mar)a Ch)n-, ha/e )n fact 0een l)/)n-
to-ether a* co,,onCla. h+*0and and .)fe, there ha* ne/er 0een a ;+d)c)al decree declar)n- the d)**ol+t)on
of h)* ,arr)a-e to Ep)fan)a nor the)r con;+-al partner*h)p. $t )* therefore +nden)a0le that the 991C*A+are ,eter
propert1 located at No. 29 #. Ca0ah+- treet, Ce0+ C)t1 0elon-* to the con;+-al partner*h)p. C%A$&c
E/en )f .e .ere to a**+,e that the *+0;ect propert1 .a* not con;+-al, *t)ll .e cannot *+*ta)n the /al)d)t1 of
the *ale of the propert1 01 <o*eph, r. to defendantCappellant Mar)a Ch)n-, there 0e)n- o/er.hel,)n-
e/)dence on record* that the1 ha/e 0een l)/)n- to-ether a* co,,onCla. h+*0and and .)fe. Gn th)* *core,
Art. 1372 of the C)/)l Code pro/)de*:
?Art. 1372.Contract* .)tho+t ca+*e, or .)th +nla.f+l ca+*e, prod+ce no effect .hat*oe/er. %he
ca+*e )* +nla.f+l )f )t )* contrar1 to la., ,oral*, -ood c+*to,*, p+0l)c order or p+0l)c pol)c1.?
5e therefore f)nd that the contract of *ale )n fa/or of the defendantCappellant Mar)a Ch)n- .a* n+ll and
/o)d for 0e)n- contrar1 to ,oral* and p+0l)c pol)c1. %he p+rported *ale, ha/)n- 0een ,ade 01 <o*eph r. )n
fa/or of h)* conc+0)ne, +nder,)ne* the *ta0)l)t1 of the fa,)l1, a 0a*)c *oc)al )n*t)t+t)on .h)ch p+0l)c pol)c1
/)-)lantl1 protect*. #+rther,ore, the la. e,phat)call1 proh)0)t* *po+*e* fro, *ell)n- propert1 to each other,
*+0;ect to certa)n e2cept)on*. And th)* )* *o 0eca+*e tran*fer* or con/e1ance* 0et.een *po+*e*, )f allo.ed
d+r)n- the ,arr)a-e .o+ld de*tro1 the *1*te, of con;+-al partner*h)p, a 0a*)c pol)c1 )n c)/)l la.. %he
proh)0)t)on .a* de*)-ned to pre/ent the e2erc)*e of +nd+e )nfl+ence 01 one *po+*e o/er the other and )*
l)>e.)*e appl)ca0le e/en to co,,onCla. relat)on*h)p* other.)*e, ?the cond)t)on of tho*e .ho )nc+rred -+)lt
.o+ld t+rn o+t to 0e 0etter than tho*e )n le-al +n)on. % 4@nder*cor)n- *+ppl)edH
&ence, the pre*ent pet)t)on, pet)t)oner* ar-+)n- that the appellate co+rt -ra/el1 erred )n:
$.
. . . A((!B$NG %&E %A%E (G!$CB GN (RG&$B$%$GN AGA$N% CGNEEBANCE AND %RAN#ER G#
(RG(ER%$E BE%5EEN !EG$%$MA%E AND CGMMGN !A5 (G@E GN %&E @B<EC% (RG(ER%B,
%&E AME BE$NG #G@ND BB %&E CG@R% A P@G, A %&E ELC!@$EE (RG(ER%B G# (E%$%$GNER,
AND %&A% %&E AME 5A NEEER (AR% G# %&E CGN<@GA! (RG(ER%B G# %&E MARR$AGE
BE%5EEN RE(GNDEN%3 MG%&ER E($#AN$A GGBANIG AND (E%$%$GNER3 CGMMGN !A5
&@BAND, <GE(& GGBANIG, R., NGR %&E ELC!@$EE GR CA($%A! (RG(ER%B G# %&E !A%%ER
A% ANB%$ME BE#GRE %&E AME 5A EA!$D!B ACP@$RED BB (E%$%$GNER.
$$.
. . . NG% #$ND$NG %&A% A <@R$D$CA! RE!A%$GN G# %R@% A (RGE$DED #GR @NDER AR%$C!E
144= AND 1478 G# %&E NE5 C$E$! CGDE CAN EA!$D!B EL$% BE%5EEN CGMMGN !A5 (G@E.
$$$.
. . . NG% #$ND$NG %&A% A CGNEEBANCE GEER A (RG(ER%B MADE BB A %R@%EE, 5&G BECAME
A @C& $N CGN%EM(!A%$GN G# !A5, AND 5&G &A((EN %G BE A CGMMGN !A5 &@BAND G#
%&E BENE#$C$ARB, $ NG% A E$G!A%$GN G# A %A%E (G!$CB GN (RG&$B$%$GN AGA$N%
CGNEEBANCE AND %RAN#ER G# (RG(ER%$E BE%5EEN !EG$%$MA%E AND CGMMGN !A5
(G@E.
$E.
. . . A!!G5$NG RE(GNDEN% %G ABANDGN %&E$R GR$G$NA! %&EGRB G# %&E$R CAE D@R$NG
A((EA!. 1&
%he pert)nent pro/)*)on* of the C)/)l Code .h)ch appl1 to the pre*ent ca*e read:
AR%. 1372.Contract* .)tho+t ca+*e, or .)th +nla.f+l ca+*e, prod+ce no effect .hate/er. %he ca+*e )*
+nla.f+l )f )t )* contrar1 to la., ,oral*, -ood c+*to,*, p+0l)c order or p+0l)c pol)c1. Eac&%
AR%. 1489.%he follo.)n- contract* are )ne2)*tent and /o)d fro, the 0e-)nn)n-:
41H%ho*e .ho*e ca+*e, o0;ect or p+rpo*e )* contrar1 to la., ,oral*, -ood c+*to,*, p+0l)c order or p+0l)c
pol)c1"

42H%ho*e .h)ch are a0*ol+tel1 *),+lated or f)ct)t)o+*"
43H%ho*e .ho*e ca+*e or o0;ect d)d not e2)*t at the t),e of the tran*act)on"
44H%ho*e .ho*e o0;ect )* o+t*)de the co,,erce of ,en"
47H%ho*e .h)ch conte,plate an ),po**)0le *er/)ce"
49H%ho*e .here the )ntent)on of the part)e* relat)/e to the pr)nc)pal o0;ect of the contract cannot 0e
a*certa)ned"
47H%ho*e e2pre**l1 proh)0)ted or declared /o)d 01 la..
%he*e contract* cannot 0e rat)f)ed. Ne)ther can the r)-ht to *et +p the defen*e of )lle-al)t1 0e .a)/ed.
AR%$C!E 1498.%he h+*0and and .)fe cannot *ell propert1 to each other, e2cept:
41H5hen a *eparat)on of propert1 .a* a-reed +pon )n the ,arr)a-e *ettle,ent*" or
42H5hen there ha* 0een a ;+d)c)al *eparat)on of propert1 +nder Art)cle 191. 4@nder*cor)n-
*+ppl)edH
%he pro*cr)pt)on a-a)n*t *ale of propert1 0et.een *po+*e* appl)e* e/en to co,,on la. relat)on*h)p*. o th)* Co+rt r+led
)n Cali%li%-Canullas v. Hon. Fortun, etc., et al.: 11
Anent the *econd )**+e, .e f)nd that the contract of *ale .a* n+ll and /o)d for 0e)n- contrar1 to ,oral* and
p+0l)c pol)c1. T1* +,0* ;,+ 2,-* 6: , 17+6,)- 4) 5,9'. '5 , /')/764)* ,5(*. 1* 1,- ,6,)-')*- 14+
5,240: ,)- 0*5( (1* /')B73,0 1'2* ;1*.* 14+ ;45* ,)- /140-.*) 049*- ,)- 5.'2 ;1*)/* (1*: -*.49*-
(1*4. +788'.(. T1* +,0* ;,+ +769*.+49* '5 (1* +(,6404(: '5 (1* 5,240:, , 6,+4/ +'/4,0 4)+(4(7(4') ;14/1
87604/ 8'04/: /1*.4+1*+ ,)- 8.'(*/(+.
Art)cle 1489 of the C)/)l Code *tate* inter alia that: contract* .ho*e ca+*e, o0;ect, or p+rpo*e* )* contrar1 to
la., ,oral*, -ood c+*to,*, p+0l)c order, or p+0l)c pol)c1 are void and ine@istent fro, the /er1 0e-)nn)n-.
Art)cle 1372 al*o pro/)de* that: ?Contract* .)tho+t ca+*e, or .)th unla4ful cause, produce no effect
4#atsoever. %he ca+*e )* +nla.f+l )f )t )* contrar1 to la., ,oral*, -ood c+*to,*, p+0l)c order, or p+0l)c
pol)c1.?
A--4(4'),00:, (1* 0,; *281,(4/,00: 8.'1464(+ (1* +8'7+*+ 5.'2 +*004)3 8.'8*.(: (' *,/1 '(1*. +76B*/(
(' /*.(,4) *>/*8(4')+. S4240,.0:, -'),(4')+ 6*(;**) +8'7+*+ -7.4)3 2,..4,3* ,.* 8.'1464(*-. And th)*
)* *o 0eca+*e )f tran*fer* or con/e1ance* 0et.een *po+*e* .ere allo.ed d+r)n- ,arr)a-e, that .o+ld
de*tro1 the *1*te, of con;+-al partner*h)p, a 0a*)c pol)c1 )n c)/)l la.. $t .a* al*o de*)-ned to pre/ent the
e2erc)*e of +nd+e )nfl+ence 01 one *po+*e o/er the other, a* .ell a* to protect the )n*t)t+t)on of ,arr)a-e,
.h)ch )* the corner*tone of fa,)l1 la.. T1* 8.'1464(4')+ ,880: (' , /'780* 0494)3 ,+ 17+6,)- ,)- ;45*
;4(1'7( 6*)*54( '5 2,..4,3*, '(1*.;4+*, <(1* /')-4(4') '5 (1'+* ;1' 4)/7..*- 3740( ;'70- (7.) '7( (' 6*
6*((*. (1,) (1'+* 4) 0*3,0 7)4').< %ho*e pro/)*)on* are d)ctated 01 p+0l)c )ntere*t and the)r cr)ter)on ,+*t
0e ),po*ed +pon the .)ll of the part)e*. . . . 12 4$tal)c* )n the or)-)nal" e,pha*)* and +nder*cor)n- *+ppl)edH
A* the con/e1ance )n A+e*t)on .a* ,ade 01 Go1an->o )n fa/or of h)* co,,onCla.C.)feChere)n pet)t)oner, )t .a* n+ll and
/o)d. cD$aA
(et)t)oner3* ar-+,ent that a tr+*t relat)on*h)p .a* created 0et.een Go1an>o a* tr+*tee and her a* 0enef)c)ar1 a* pro/)ded )n
Art)cle* 144= and 1478 of the C)/)l Code .h)ch read:
AR%$C!E 144=.%here )* an ),pl)ed tr+*t .hen propert1 )* *old, and the le-al e*tate )* -ranted to one part1
0+t the pr)ce )* pa)d 01 another for the p+rpo*e of ha/)n- the 0enef)c)al )ntere*t of the propert1. %he for,er )*
the tr+*tee, .h)le the latter )* the 0enef)c)ar1. &o.e/er, )f the per*on to .ho, the t)tle )* con/e1ed )* a ch)ld,
le-)t),ate or )lle-)t),ate, of the one pa1)n- the pr)ce of the *ale, no tr+*t )* ),pl)ed 01 la., )t 0e)n- d)*p+ta0l1
pre*+,ed that there )* a -)ft )n fa/or of the ch)ld.
AR%$C!E 1478.$f the pr)ce of a *ale of propert1 )* loaned or pa)d 01 one per*on for the 0enef)t of another and
the con/e1ance )* ,ade to the lender or pa1or to *ec+re the pa1,ent of the de0t, a tr+*t ar)*e* 01 operat)on
of la. )n fa/or of the per*on to .ho, the ,one1 )* loaned or for .ho, )t )* pa)d. %he latter ,a1 redee, the
propert1 and co,pel a con/e1ance thereof to h),.
doe* not per*+ade.
#or pet)t)oner3* te*t),on1 that )t .a* *he .ho pro/)ded the p+rcha*e pr)ce )* +ncorro0orated. %hat *he ,a1 ha/e 0een con*)dered
the 0read.)nner of the fa,)l1 and that there .a* proof that *he earned a l)/)n- do not concl+*)/el1 cl)nch her cla),.
A* to the chan-e of theor1 01 re*pondent* fro, for-er1 of the)r father3* *)-nat+re )n the deed of *ale to *ale contrar1 to p+0l)c pol)c1,
)t too doe* not per*+ade. Generall1, a part1 )n a l)t)-at)on )* not per,)tted to freel1 and *+0*tant)all1 chan-e the theor1 of h)* ca*e *o
a* not to p+t the other part1 to +nd+e d)*ad/anta-e 01 not acc+ratel1 and t),el1 appr)*)n- h), of .hat he )* +p a-a)n*t, 13 and to
en*+re that the latter )* -)/en the opport+n)t1 d+r)n- tr)al to ref+te all alle-at)on* a-a)n*t h), 01 pre*ent)n- e/)dence to the contrar1.
$n the pre*ent ca*e, pet)t)oner cannot 0e *a)d to ha/e 0een p+t to +nd+e d)*ad/anta-e and to ha/e 0een den)ed the chance to
ref+te all the alle-at)on* a-a)n*t her. #or the n+ll)f)cat)on of the *ale )* anchored on )t* )lle-al)t1 per se, )t 0e)n- /)olat)/e of the a0o/eC
c)ted Art)cle* 1372, 1489 and 1498 of the C)/)l Code.
5&ERE#GRE, the pet)t)on )* DEN$ED for lac> of ,er)t.
Co*t* a-a)n*t pet)t)oner.
G GRDERED
5uisu%)in(, Carpio and &elasco, Jr., JJ., conc+r.
2in(a, J., )* on lea/e.
F''()'(*+
1.Record*, p. 119.
2.'d. at 122.
3.'d. at 48.
4.'d. at 42.
7.'d. at 331C349.
9.'d. at 347C349.
7.CA rollo, p. 1=.
=.(enned 01 <+*t)ce Del)lah E)dallonCMa-tol)* .)th the conc+rrence of <+*t)ce* <o*e !. a0)o, <r. and &a>), . A0d+l.ah)d, id. at
342C349.
9.'d. at 347C349.
18.Rollo, pp. 37C39.
11.214 (h)l. 793 419=4H.
12.'d. at 79=C799.
13.6l/%pia Housin(, 'nc. v. Panasiatic 2ravel Corp., 443 (h)l. 3=7, 399C488 42883H.
ECGND D$E$$GN
[G.R. No. 141323. <+ne =, 2887.]
DAVID V. PELAYO ,)- LORENZA J B. (E!ABG, petitioner, vs. MELKI E. PEREZ, respondent.
D E C I S I O N
AUSTRIA-MARTINEZ, J p:
%h)* re*ol/e* the pet)t)on for re/)e. on certiorari *ee>)n- the re/er*al of the Dec)*)on 1 of the Co+rt of Appeal* 4CAH pro,+l-ated on
Apr)l 28, 1999 .h)ch re/er*ed the Dec)*)on of the Re-)onal %r)al Co+rt 4R%CH of (ana0o, Da/ao, Branch 34, )n C)/)l Ca*e No. 91C49"
and the CA Re*ol+t)on dated Dece,0er 17, 1999 den1)n- pet)t)oner*3 ,ot)on for recon*)derat)on.
%he antecedent fact* a* aptl1 narrated 01 the CA are a* follo.*:
Da/)d (ela1o 4(ela1oH, 01 a Deed of A0*ol+te ale e2ec+ted on <an+ar1 11, 19==, con/e1ed to Mel>) (ereF
4(ereFH t.o parcel* of a-r)c+lt+ral land 4the lot*H *)t+ated )n (ana0o, Da/ao .h)ch are port)on* of !ot 4192,
Cad. 279 co/ered 01 GC% (C19=73.
!oreFa (ela1o 4!oreFaH, .)fe of (ela1o, and another one .ho*e *)-nat+re )* )lle-)0le .)tne**ed the e2ec+t)on
of the deed.
!oreFa, ho.e/er, *)-ned onl1 on the th)rd pa-e )n the *pace pro/)ded for .)tne**e* on acco+nt of .h)ch
(ereF3 appl)cat)on for re-)*trat)on of the deed .)th the Gff)ce of the Re-)*ter of Deed* )n %a-+,, Da/ao .a*
den)ed.
(ereF there+pon a*>ed !oreFa to *)-n on the f)r*t and *econd pa-e* of the deed 0+t *he ref+*ed, hence, he
)n*t)t+ted on A+-+*t =, 1991 the )n*tant co,pla)nt for *pec)f)c perfor,ance a-a)n*t her and her h+*0and
(ela1o 4defendant*H. CcAD&$
%he defendant* ,o/ed to d)*,)** the co,pla)nt on the -ro+nd that )t *tated no ca+*e of act)on, c)t)n- ect)on
9 of RA 9979 other.)*e >no.n a* the Co,prehen*)/e A-rar)an Refor, !a. .h)ch too> effect on <+ne 18,
19== and .h)ch pro/)de* that contract* e2ec+ted pr)or thereto *hall ?0e /al)d onl1 .hen re-)*tered .)th the
Re-)*ter of Deed* .)th)n a per)od of three 43H ,onth* after the effect)/)t1 of th)* Act.?
%he A+e*t)oned deed ha/)n- 0een e2ec+ted on <an+ar1 18, 19==, the defendant* cla),ed that (ereF had at
lea*t +p to epte,0er 18, 19== .)th)n .h)ch to re-)*ter the *a,e, 0+t a* the1 fa)led to, )t )* not /al)d and,
therefore, +nenforcea0le.
%he tr)al co+rt th+* d)*,)**ed the co,pla)nt. Gn appeal to th)* Co+rt, the d)*,)**al .a* *et a*)de and the
ca*e .a* re,anded to the lo.er co+rt for f+rther proceed)n-*.
$n the)r An*.er, the defendant* cla),ed that a* the lot* .ere occ+p)ed )lle-all1 01 *o,e per*on* a-a)n*t
.ho, the1 f)led an e;ect,ent ca*e, the1 and (ereF .ho )* the)r fr)end and >no.n at the t),e a* an
act)/)*tMleft)*t, hence feared 01 ,an1, ;+*t ,ade )t appear )n the deed that the lot* .ere *old to h), )n order to
fr)-hten *a)d )lle-al occ+pant*, .)th the )ntent)onal o,)**)on of !oreFa3* *)-nat+re *o that the deed co+ld not
0e re-)*tered" and that the deed 0e)n- *),+lated and 0ereft of con*)derat)on )* /o)dM)ne2)*tent.
(ereF co+ntered that the lot* .ere -)/en to h), 01 defendant (ela1o )n con*)derat)on of h)* *er/)ce* a* h)*
attorne1C)nCfact to ,a>e the nece**ar1 repre*entat)on and ne-ot)at)on .)th the )lle-al occ+pant*Cdefendant*
)n the e;ect,ent *+)t" and that after h)* relat)on*h)p .)th defendant (ela1o 0eca,e *o+r, the latter *ent a
letter to the Re-)*ter of Deed* of %a-+, reA+e*t)n- h), not to enterta)n an1 tran*act)on concern)n- the lot*
t)tle to .h)ch .a* entr+*ted to (ereF .ho ,)*placed and co+ld [not] locate )t.
Defendant (ela1o cla),ed )n an1 e/ent, )n h)* (reCtr)al 0r)ef f)led on March 19, 1999, that the deed .a*
.)tho+t h)* .)fe !oreFa3* con*ent, hence, )n l)-ht of Art. 199 of the C)/)l Code .h)ch pro/)de*:
Art)cle 199.@nle** the .)fe ha* 0een declared a non co,po* ,ent)* or a *pendthr)ft, or )* +nder
c)/)l )nterd)ct)on or )* conf)ned )n a lepro*ar)+,, the h+*0and cannot al)enate or enc+,0er an1 real
propert1 of the con;+-al partner*h)p .)tho+t the .)fe3* con*ent . . .
)t )* n+ll and /o)d. &%A$cD
%he tr)al co+rt, f)nd)n-, a,on- other*, that (ereF d)d not po**e**, nor pa1 the ta2e* on the lot*, that
defendant (ela1o .a* )nde0ted to (ereF for *er/)ce* rendered and, therefore, the deed co+ld onl1 0e
con*)dered a* e/)dence of de0t, and that )n an1 e/ent, there .a* no ,ar)tal con*ent to nor act+al
con*)derat)on for the deed, held that the deed .a* n+ll and /o)d and accord)n-l1 rendered ;+d-,ent the
d)*po*)t)/e port)on of .h)ch read*:
5&ERE#GRE, ;+d-,ent )* here01 rendered order)n- and d)rect)n- the defendant* to pa1 pla)nt)ff
Mel>) (ereF the *+, of %EN %&G@AND 4(18,888.88H (e*o* a* pr)nc)pal .)th 12K )ntere*t per
ann+, *tart)n- fro, the date of f)l)n- of the co,pla)nt on A+-+*t 1, 1991 +nt)l pla)nt)ff )* f+ll1 pa)d.
%he defendant* *hall l)>e.)*e pa1 to pla)nt)ff the *+, of %&REE %&G@AND 4(3,888.88H a*
attorne13* fee*.
%he co+rt f+rther order* that the Deed of A0*ol+te ale, 4Anne2 3A3H of the co,pla)nt and 4Anne2
3C3H of the pla)nt)ff3* Mot)on for +,,ar1 <+d-,ent )* declared n+ll and /o)d and .)tho+t force and
)t )* l)>e.)*e re,o/ed a* a clo+d o/er defendant*3 t)tle and propert1 )n *+)t. . . .? 2
%he R%C Dec)*)on .a* appealed 01 here)n re*pondent (ereF to the CA. (et)t)oner* fa)led to f)le the)r appellee*3 0r)ef. %he CA then
pro,+l-ated )t* Dec)*)on on Apr)l 28, 1999 .here01 )t r+led that 01 !orenFa3* *)-n)n- a* .)tne** to the e2ec+t)on of the deed, *he
had >no.led-e of the tran*act)on and )* dee,ed to ha/e -)/en her con*ent to the *a,e" that here)n pet)t)oner* fa)led to add+ce
*+ff)c)ent proof to o/erthro. the pre*+,pt)on that there .a* con*)derat)on for the deed, and that pet)t)oner Da/)d (ela1o, 0e)n- a
la.1er, )* pre*+,ed to ha/e acted .)th d+e care and to ha/e *)-ned the deed .)th f+ll >no.led-e of )t* content* and ),port. %he CA
re/er*ed and *et a*)de the R%C Dec)*)on, declar)n- a* /al)d and enforcea0le the A+e*t)oned deed of *ale and order)n- here)n
pet)t)oner !orenFa (ela1o to aff)2 her *)-nat+re on all pa-e* of *a)d doc+,ent.
(et)t)oner* ,o/ed for recon*)derat)on of the dec)*)on 0+t the *a,e .a* den)ed per Re*ol+t)on dated Dece,0er 17, 1999. %he CA
fo+nd *a)d ,ot)on to ha/e 0een f)led o+t of t),e and r+led that e/en p+tt)n- a*)de techn)cal)t1, pet)t)oner* fa)led to pre*ent an1
-ro+nd 0ear)n- on the ,er)t* of the ca*e to ;+*t)f1 a re/er*al or *ett)n- a*)de of the dec)*)on.
&ence, th)* pet)t)on for re/)e. on certiorari on the follo.)n- -ro+nd*:
1.%he CA erred )n )-nor)n- the *pec)f)c pro/)*)on of ect)on 9, )n relat)on to ect)on 4 of R.A. No. 9977 other.)*e >no.n a* the
Co,prehen*)/e A-rar)an Refor, !a. of 19== .h)ch too> effect on <+ne 17, 19== and .h)ch pro/)de* that contract* e2ec+ted pr)or
thereto *hall ?0e /al)d onl1 .hen re-)*tered .)th the Re-)*ter of Deed* .)th)n a per)od of three 43H ,onth* after the effect)/)t1 of th)*
Act.?
2.%he CA erred )n hold)n- that the deed of *ale .a* /al)d and con*)der)n- the (18,888.88 ad;+d-ed 01 the tr)al co+rt a* (ereF3*
re,+nerat)on a* the con*)derat)on for the deed of *ale, )n*tead of declar)n- the *a,e a* n+ll and /o)d for 0e)n- f)ct)t)o+* or
*),+lated and on the 0a*)* of Art. 491, (ar. 2 of the Ne. C)/)l Code .h)ch proh)0)t* a-ent* fro, acA+)r)n- 01 p+rcha*e propert)e*
fro, h)* pr)nc)pal +nder h)* char-e.
3.%he CA ,ade a no/el r+l)n- that there .a* ),pl)ed ,ar)tal con*ent of the .)fe of pet)t)oner Da/)d (ela1o.
4.(et)t)oner* *ho+ld ha/e 0een allo.ed to f)le the)r appellee*3 0r)ef to /ent)late the)r *)de, con*)der)n- the e2)*tence of pec+l)ar
c)rc+,*tance* .h)ch pre/ented pet)t)oner* fro, f)l)n- *a)d 0r)ef. c%$ED
Gn the other hand, re*pondent po)nt* o+t that the CA, )n re*ol/)n- the f)r*t appeal doc>eted a* CACG.R. ( No. 3=788 3 0ro+-ht 01
re*pondent a**a)l)n- the R%C Grder -rant)n- here)n pet)t)oner*3 ,ot)on to d)*,)**, alread1 r+led that +nder R.A. No. 9977, the *ale
or tran*fer of pr)/ate a-r)c+lt+ral land )* allo.ed onl1 .hen the area of the land 0e)n- con/e1ed con*t)t+te* or )* a part of, the
lando.nerC*eller reta)ned area and .hen the total landhold)n- of the p+rcha*erCtran*feree, )ncl+d)n- the propert1 *old, doe* not
e2ceed f)/e 47H hectare*" that )n th)* ca*e, the land )n d)*p+te )* onl1 1.3 hectare* and there )* no proof that the tran*feree3* 4here)n
re*pondentH total landhold)n- )ncl+*)/e of the *+0;ect land .)ll e2ceed 7 hectare*, the landhold)n- ce)l)n- pre*cr)0ed 01 R.A. No.
9977" that the fa)l+re of re*pondent to re-)*ter the )n*tr+,ent .a* not d+e to h)* fa+lt or ne-l)-ence 0+t can 0e attr)0+ted to
!orenFa3* +n;+*t)f)ed ref+*al to *)-n t.o pa-e* of the deed de*p)te *e/eral reA+e*t* of re*pondent" and that therefore, the CA r+led
that the deed of *ale *+0;ect of th)* ca*e )* /al)d +nder R.A. No. 9977.
Re*pondent f+rther ,a)nta)n* that the CA correctl1 held )n )t* a**a)led Dec)*)on that there .a* con*)derat)on for the contract and
that !orenFa )* dee,ed to ha/e -)/en her con*ent to the deed of *ale.
Re*pondent l)>e.)*e op)ne* that the CA .a* r)-ht )n den1)n- pet)t)oner*3 ,ot)on for recon*)derat)on .here the1 pra1ed that the1 0e
allo.ed to f)le the)r appellee*3 0r)ef a* the)r co+n*el fa)led to f)le the *a,e on acco+nt of *a)d co+n*el3* fa)l)n- health d+e to cancer of
the l)/er. Re*pondent e,pha*)Fed that )n pet)t)oner*3 ,ot)on for recon*)derat)on, the1 d)d not e/en c)te an1 error* ,ade 01 the CA )n
)t* Dec)*)on.
%he )**+e* 0o)l do.n to the A+e*t)on of .hether or not the deed of *ale .a* n+ll and /o)d on the follo.)n- -ro+nd*: 4aH for not
co,pl1)n- .)th the pro/)*)on )n R.A. No. 9977 that *+ch doc+,ent ,+*t 0e re-)*tered .)th the Re-)*ter of Deed* .)th)n three
,onth* after the effect)/)t1 of *a)d la." 40H for lac> of ,ar)tal con*ent" 4cH for 0e)n- proh)0)ted +nder Art)cle 1491 42H of the C)/)l Code"
and 4dH for lac> of con*)derat)on.
5e r+le a-a)n*t pet)t)oner*.
%he )**+e of .hether or not the deed of *ale )* n+ll and /o)d +nder R.A. No. 9977, for re*pondent3* fa)l+re to re-)*ter *a)d doc+,ent
.)th the Re-)*ter of Deed* .)th)n three ,onth* after the effect)/)t1 of R.A. No. 9977, had 0een re*ol/ed .)th f)nal)t1 01 the CA )n )t*
Dec)*)on dated No/e,0er 24, 1994 )n CACG.R. ( No. 3=788. &ere)n pet)t)oner* no lon-er ele/ated *a)d CA Dec)*)on to th)* Co+rt
and the *a,e 0eca,e f)nal and e2ec+tor1 on <an+ar1 7, 1997. !

$n *a)d dec)*)on, the CA )nterpreted ect)on 4, )n relat)on to ect)on 78 of R.A. No. 9977, to ,ean th+*:
. . . the proper )nterpretat)on of 0oth *ect)on* )* that +nder R.A. No. 9977, the *ale or tran*fer of a pr)/ate
a-r)c+lt+ral land )* allo.ed onl1 .hen *a)d land area con*t)t+te* or )* a part of the lando.nerC*eller reta)ned
area and onl1 .hen the total landhold)n-* of the p+rcha*erCtran*feree, )ncl+d)n- the propert1 *old doe* not
e2ceed f)/e 47H hectare*.
A*)de fro, declar)n- that the fa)l+re of re*pondent to re-)*ter the deed .a* not of h)* o.n fa+lt or ne-l)-ence, the CA r+led that
re*pondent3* fa)l+re to re-)*ter the deed of *ale .)th)n three ,onth* after effect)/)t1 of %he Co,prehen*)/e A-rar)an Refor,
!a. d)d not )n/al)date the deed of *ale a* ?the tran*act)on o/er *a)d propert1 )* not pro*cr)0ed 01 R.A. No. 9977.? ACaD%&
%h+*, +nder the pr)nc)ple of la. of the ca*e, *a)d r+l)n- of the CA )* no. 0)nd)n- on pet)t)oner*. +ch pr)nc)ple .a* el+c)dated
)n Cucueco vs. Court of !ppeals, " to .)t:
!a. of the ca*e ha* 0een def)ned a* the op)n)on del)/ered on a for,er appeal. $t )* a ter, appl)ed to an
e*ta0l)*hed r+le that .hen an appellate co+rt pa**e* on a A+e*t)on and re,and* the ca*e to the lo.er co+rt
for f+rther proceed)n-*, the A+e*t)on there *ettled 0eco,e* the la. of the ca*e +pon *+0*eA+ent appeal. $t
,ean* that .hate/er )* once )rre/oca0l1 e*ta0l)*hed a* the controll)n- le-al r+le or dec)*)on 0et.een the
*a,e part)e* )n the *a,e ca*e cont)n+e* to 0e the la. of the ca*e, 4#et#er correct on (eneral principles or
not, *o lon- a* the fact* on .h)ch *+ch dec)*)on .a* pred)cated cont)n+e to 0e the fact* of the ca*e 0efore
the co+rt.
(et)t)oner* not ha/)n- A+e*t)oned the Dec)*)on of the CA dated No/e,0er 24, 1994 .h)ch then atta)ned f)nal)t1, the r+l)n- that
the deed of *ale *+0;ect of th)* ca*e )* not a,on- the tran*act)on* dee,ed a* )n/al)d +nder R.A. No. 9977, )* no. ),,+ta0le.
5e a-ree .)th the CA r+l)n- that pet)t)oner !orenFa, 01 aff)2)n- her *)-nat+re to the Deed of ale on the *pace pro/)ded for
.)tne**e*, )* dee,ed to ha/e -)/en her ),pl)ed con*ent to the contract of *ale.
ale )* a con*en*+al contract that )* perfected 01 ,ere con*ent, .h)ch ,a1 e)ther 0e e2pre** or ),pl)ed. # A .)fe3* con*ent to the
h+*0and3* d)*po*)t)on of con;+-al propert1 doe* not al.a1* ha/e to 0e e2pl)c)t or *et forth )n an1 part)c+lar doc+,ent, *o lon- a* )t )*
*ho.n 01 act* of the .)fe that *+ch con*ent or appro/al .a* )ndeed -)/en. $ $n the pre*ent ca*e, altho+-h )t appear* on the face of
the deed of *ale that !orenFa *)-ned onl1 a* an )n*tr+,ental .)tne**, c)rc+,*tance* lead)n- to the e2ec+t)on of *a)d doc+,ent po)nt
to the fact that !orenFa .a* f+ll1 a.are of the *ale of the)r con;+-al propert1 and con*ented to the *ale.
$n the)r (reC%r)al Br)ef, % pet)t)oner* ad,)tted that e/en pr)or to 19==, the1 ha/e 0een ha/)n- *er)o+* pro0le,*, )ncl+d)n- threat* to
the l)fe of pet)t)oner Da/)d (ela1o, d+e to confl)ct* .)th the )lle-al occ+pant* of the propert1 )n A+e*t)on, *o that re*pondent, .ho,
,an1 feared for 0e)n- a left)*tMact)/)*t, offered h)* help )n dr)/)n- o+t *a)d )lle-al occ+pant*.
&+,an e2per)ence tell* +* that a .)fe .o+ld *+rel1 0e a.are of *er)o+* pro0le,* *+ch a* threat* to her h+*0and3* l)fe and the
rea*on* for *+ch threat*. A* the1 the,*el/e* *tated, pet)t)oner*3 pro0le,* o/er the *+0;ect propert1 had 0een -o)n- on for A+)te
*o,e t),e, *o )t )* h)-hl1 ),pro0a0le for !orenFa not to 0e a.are of .hat her h+*0and .a* do)n- to re,ed1 *+ch pro0le,*.
(et)t)oner* do not den1 that !orenFa (ela1o .a* pre*ent d+r)n- the e2ec+t)on of the deed of *ale a* her *)-nat+re appear* thereon.
Ne)ther do the1 cla), that !orenFa (ela1o had no >no.led-e .hat*oe/er a0o+t the content* of the *+0;ect doc+,ent. %h+*, )t )*
A+)te certa)n that *he >ne. of the *ale of the)r con;+-al propert1 0et.een her h+*0and and re*pondent.
@nder the r+le* of e/)dence, )t )* pre*+,ed that a per*on ta>e* ord)nar1 care of h)* concern*. 1& (et)t)oner* d)d not e/en atte,pt to
o/erco,e the afore,ent)oned pre*+,pt)on a* no e/)dence .a* e/er pre*ented to *ho. that !orenFa .a* )n an1 .a1 lac>)n- )n her
,ental fac+lt)e* and, hence, co+ld not ha/e f+ll1 +nder*tood the ra,)f)cat)on* of *)-n)n- the deed of *ale. Ne)ther d)d pet)t)oner*
pre*ent an1 e/)dence that !orenFa had 0een defra+ded, forced, )nt),)dated or threatened e)ther 01 her o.n h+*0and or 01
re*pondent )nto aff)2)n- her *)-nat+re on the *+0;ect doc+,ent. $f !orenFa had an1 o0;ect)on* o/er the con/e1ance of the d)*p+ted
propert1, *he co+ld ha/e totall1 refra)ned fro, ha/)n- an1 part )n the e2ec+t)on of the deed of *ale. $n*tead, !orenFa e/en aff)2ed
her *)-nat+re thereto. A&CaED
Moreo/er, +nder Art)cle 173, )n relat)on to Art)cle 199, 0oth of the Ne. C)/)l Code, .h)ch .a* *t)ll )n effect on <an+ar1 11, 19== .hen
the deed )n A+e*t)on .a* e2ec+ted, the lac> of ,ar)tal con*ent to the d)*po*)t)on of con;+-al propert1 doe* not ,a>e the contract
/o)d a) initio 0+t ,erel1 /o)da0le. a)d pro/)*)on* of la. pro/)de:
Art. 199.@nle** the .)fe ha* 0een declared a non co%pos %entis or a *pendthr)ft, or )* +nder c)/)l )nterd)ct)on
or )* conf)ned )n a lepro*ar)+,, the h+*0and cannot al)enate or enc+,0er an1 real propert1 of the con;+-al
propert1 .)tho+t the .)fe3* con*ent. $f *he ref+*e* +nrea*ona0l1 to -)/e her con*ent, the co+rt ,a1 co,pel
her to -rant the *a,e.
222 222 222
Art. 173.%he .)fe ,a1, d+r)n- the ,arr)a-e, and .)th)n ten 1ear* fro, the tran*act)on A+e*t)oned, a*> the
co+rt* for the ann+l,ent of an1 contract of the h+*0and entered )nto .)tho+t her con*ent, .hen *+ch con*ent
)* reA+)red, or an1 act or contract of the h+*0and .h)ch tend* to defra+d her or ),pa)r her )ntere*t )n the
con;+-al partner*h)p propert1. ho+ld the .)fe fa)l to e2erc)*e th)* r)-ht, *he or her he)r*, after the d)**ol+t)on
of the ,arr)a-e, ,a1 de,and the /al+e of propert1 fra+d+lentl1 al)enated 01 the h+*0and.
&ence, )t ha* 0een held that the contract )* /al)d +nt)l the co+rt ann+l* the *a,e and onl1 +pon an act)on 0ro+-ht 01 the .)fe .ho*e
con*ent .a* not o0ta)ned. 11 $n the pre*ent ca*e, de*p)te re*pondent3* repeated de,and* for !orenFa to aff)2 her *)-nat+re on all
the pa-e* of the deed of *ale, *ho.)n- re*pondent3* )n*)*tence on enforc)n- *a)d contract, !orenFa *t)ll d)d not f)le a ca*e for
ann+l,ent of the deed of *ale. $t .a* onl1 .hen re*pondent f)led a co,pla)nt for *pec)f)c perfor,ance on A+-+*t =, 1991 .hen
pet)t)oner* 0ro+-ht +p !orenFa3* alle-ed lac> of con*ent a* an aff)r,at)/e defen*e. %h+*, )f the tran*act)on .a* )ndeed entered )nto
.)tho+t !orenFa3* con*ent, .e f)nd )t A+)te p+FFl)n- .h1 for ,ore than three and a half 1ear*, !orenFa d)d a0*ol+tel1 noth)n- to *ee>
the n+ll)f)cat)on of the a**a)led contract.
%he fore-o)n- c)rc+,*tance* lead the Co+rt to 0el)e/e that !orenFa >ne. of the f+ll ),port of the tran*act)on 0et.een re*pondent
and her h+*0and" and, 01 aff)2)n- her *)-nat+re on the deed of *ale, *he, )n effect, *)-n)f)ed her con*ent to the d)*po*)t)on of the)r
con;+-al propert1.
5)th re-ard to pet)t)oner*3 a**e/erat)on that the deed of *ale )* )n/al)d +nder Art)cle 1491, para-raph 2 of the Ne. C)/)l Code, .e
f)nd *+ch ar-+,ent +n,er)tor)o+*. Art)cle 1491 42H pro/)de*:
Art. 1491.%he follo.)n- per*on* cannot acA+)re 01 p+rcha*e, e/en at a p+0l)c or ;+d)c)al a+ct)on, e)ther )n
per*on or thro+-h the ,ed)at)on of another:
222 222 222
42HA-ent*, the propert1 .ho*e ad,)n)*trat)on or *ale ,a1 ha/e 0een entr+*ted to the,, +nle** the con*ent
of the pr)nc)pal ha* 0een -)/en" %AacCE
222 222 222
$n -ista3o vs. Court of !ppeals, 12 a lando.ner, $l+,)nada A0)erta*, de*)-nated one of her *on* a* the ad,)n)*trator of *e/eral
parcel* of her land. %he lando.ner *+0*eA+entl1 e2ec+ted a Deed of Cert)f)cat)on of ale of @nre-)*tered !and, con/e1)n- *o,e of
*a)d land to her *onMad,)n)*trator. %here)n, .e held that:
@nder para-raph 42H of the a0o/e art)cle, the proh)0)t)on a-a)n*t a-ent* p+rcha*)n- propert1 )n the)r hand* for
*ale or ,ana-e,ent )* not a0*ol+te. $t doe* not appl1 )f the pr)nc)pal con*ent* to the *ale of the propert1 )n
the hand* of the a-ent or ad,)n)*trator. $n th)* ca*e, the deed* of *ale *)-ned 01 $l+,)nada A0)erta* *ho.*
that *he -a/e con*ent to the *ale of the propert)e* )n fa/or of her *on, R+fo, .ho .a* the ad,)n)*trator of the
propert)e*. %h+*, the con*ent of the pr)nc)pal $l+,)nada A0)erta* re,o/e* the tran*act)on o+t of the
proh)0)t)on conta)ned )n Art)cle 149142H. 13
%he a0o/eCA+oted r+l)n- )* e2actl1 )n po)nt .)th th)* ca*e 0efore +*. (et)t)oner*, 01 *)-n)n- the Deed of ale )n fa/or of re*pondent,
are al*o dee,ed to ha/e -)/en the)r con*ent to the *ale of the *+0;ect propert1 )n fa/or of re*pondent, there01 ,a>)n- the
tran*act)on an e2cept)on to the -eneral r+le that a-ent* are proh)0)ted fro, p+rcha*)n- the propert1 of the)r pr)nc)pal*.
(et)t)oner* al*o ar-+e that the CA erred )n r+l)n- that there .a* con*)derat)on for the *ale. 5e f)nd no error )n *a)d appellate co+rt3*
r+l)n-. %he ele,ent of con*)derat)on for the *ale )* )ndeed pre*ent. (et)t)oner*, )n adopt)n- the tr)al co+rt3* narrat)on of antecedent
fact* )n the)r pet)t)on, 1 there01 ad,)tted that the1 a+thor)Fed re*pondent to repre*ent the, )n ne-ot)at)on* .)th the ?*A+atter*?
occ+p1)n- the d)*p+ted propert1 and, )n con*)derat)on of re*pondent3* *er/)ce*, the1 e2ec+ted the *+0;ect deed of *ale. A*)de fro,
*+ch *er/)ce* rendered 01 re*pondent, pet)t)oner* al*o ac>no.led-ed )n the deed of *ale that the1 rece)/ed )n f+ll the a,o+nt of
%en %ho+*and (e*o*. E/)dentl1, the con*)derat)on for the *ale )* re*pondent3* *er/)ce* pl+* the afore,ent)oned ca*h ,one1.
(et)t)oner* contend that the con*)derat)on *tated )n the deed of *ale )* e2ce**)/el1 )nadeA+ate, )nd)cat)n- that the deed of *ale .a*
,erel1 *),+lated. 5e are not per*+aded. G+r r+l)n- )n ,uenaventura vs. Court of !ppeals 1! )* pert)nent, to .)t:

. . . $ndeed, there )* no reA+)re,ent that the pr)ce 0e eA+al to the e2act /al+e of the *+0;ect ,atter of
*ale. . . . A* .e *tated )n &ales vs. &illa:
Co+rt* cannot follo. one e/er1 *tep of h)* l)fe and e2tr)cate h), fro, 0ad 0ar-a)n*, protect h),
fro, +n.)*e )n/e*t,ent*, rel)e/e h), fro, oneC*)ded contract*, or ann+l the effect* of fool)*h act*.
Co+rt* cannot con*t)t+te the,*el/e* -+ard)an* of per*on* .ho are not le-all1 )nco,petent. Co+rt*
operate not 0eca+*e one per*on ha* 0een defeated or o/erco,e 01 another, 0+t 0eca+*e he ha*
0een defeated or o/erco,e ille(all/. Men ,a1 do fool)*h th)n-*, ,a>e r)d)c+lo+* contract*, +*e
,)*era0le ;+d-,ent, and lo*e ,one1 01 the, ' )ndeed, all the1 ha/e )n the .orld" 0+t not for that
alone can the la. )nter/ene and re*tore. %here ,+*t 0e, )n add)t)on, a violation of the la., the
co,,)**)on of .hat the la. >no.* a* an actiona)le .ron-, 0efore the co+rt* are a+thor)Fed to la1
hold of the *)t+at)on and re,ed1 )t. 1"
Eer)l1, )n the pre*ent ca*e, pet)t)oner* ha/e not pre*ented proof that there ha* 0een fra+d, ,)*ta>e or +nd+e )nfl+ence
e2erc)*ed +pon the, 01 re*pondent. $t )* h)-hl1 +nl)>el1 and contrar1 to h+,an e2per)ence that a la1,an l)>e re*pondent .o+ld
0e a0le to defra+d, e2ert +nd+e )nfl+ence, or )n an1 .a1 /)t)ate the con*ent of a la.1er l)>e pet)t)oner Da/)d (ela1o .ho )*
e2pected to 0e ,ore >no.led-ea0le )n the .a1* of draft)n- contract* and other le-al tran*act)on*. &DaAC$
#+rther,ore, )n the)r Repl1 to Re*pondent3* Me,orand+,, 1# pet)t)oner* adopted the CA3* narrat)on of fact that pet)t)oner* *tated )n
a letter the1 *ent to the Re-)*ter of Deed* of %a-+, that the1 ha/e entr+*ted the t)tle* o/er *+0;ect lot* to here)n re*pondent. +ch
act )* a clear )nd)cat)on that the1 )ntended to con/e1 the *+0;ect propert1 to here)n re*pondent and the deed of *ale .a* not ,erel1
*),+lated or f)ct)t)o+*.
!a*tl1, pet)t)oner* cla), that the1 .ere not a0le to f+ll1 /ent)late the)r defen*e 0efore the CA a* the)r la.1er, .ho .a* then *+ffer)n-
fro, cancer of the l)/er, fa)led to f)le the)r appellee*3 0r)ef. %h+*, )n the)r ,ot)on for recon*)derat)on of the CA Dec)*)on, the1 pra1ed
that the1 0e allo.ed to *+0,)t *+ch appellee*3 0r)ef. %he CA, )n )t* Re*ol+t)on dated Dece,0er 17, 1999, *tated th+*:
B1 ,o/antCdefendantCappellee3* o.n )nfor,at)on, h)* co+n*el rece)/ed a cop1 of the dec)*)on on Ma1 7,
1999. &e, therefore, had f)fteen 417H da1* fro, *a)d date or +p to Ma1 28, 1999 to f)le the ,ot)on. %he
,ot)on, ho.e/er, .a* *ent thro+-h a pr)/ate co+r)er and, therefore, con*)dered to ha/e 0een f)led on the
date of act+al rece)pt on <+ne 17, 1999 01 the addre**ee ' Co+rt of Appeal*, .a* f)led 0e1ond the
re-le,entar1 per)od.
%echn)cal)t1 a*)de, ,o/ant ha* not proffered an1 -ro+nd 0ear)n- on the ,er)t* of the ca*e .h1 the dec)*)on
*ho+ld 0e *et a*)de.
(et)t)oner* ne/er den)ed the CA f)nd)n- that the)r ,ot)on for recon*)derat)on .a* f)led 0e1ond the f)fteenCda1 re-le,entar1 per)od.
Gn that po)nt alone, the CA )* correct )n den1)n- d+e co+r*e to *a)d ,ot)on. %he ,ot)on ha/)n- 0een 0elatedl1 f)led, the CA Dec)*)on
had then atta)ned f)nal)t1. %h+*, )n !)alos vs. P#ile@ $inin( Corporation, 1$ .e held that:
. . . Noth)n- )* ,ore *ettled )n la. than that once a ;+d-,ent atta)n* f)nal)t1 )t there01 0eco,e* ),,+ta0le
and +naltera0le. $t ,a1 no lon-er 0e ,od)f)ed )n an1 re*pect, e/en )f the ,od)f)cat)on )* ,eant to correct .hat
)* perce)/ed to 0e an erroneo+* concl+*)on of fact or la., and re-ardle** of .hether the ,od)f)cat)on )*
atte,pted to 0e ,ade 01 the co+rt render)n- )t or 01 the h)-he*t co+rt of the land.
Moreo/er, )t )* po)nted o+t 01 the CA that *a)d ,ot)on d)d not pre*ent an1 defen*e or ar-+,ent on the ,er)t* of the ca*e that co+ld
ha/e con/)nced the CA to re/er*e or ,od)f1 )t* Dec)*)on.
5e ha/e con*)*tentl1 held that a pet)t)oner3* r)-ht to d+e proce** )* not /)olated .here he .a* a0le to ,o/e for recon*)derat)on of
the order or dec)*)on )n A+e*t)on.1% $n th)* ca*e, pet)t)oner* had the opport+n)t1 to f+ll1 e2po+nd on the)r defen*e* thro+-h a ,ot)on
for recon*)derat)on. (et)t)oner* d)d f)le *+ch ,ot)on 0+t the1 .a*ted *+ch opport+n)t1 01 fa)l)n- to pre*ent there)n .hate/er error*
the1 0el)e/ed the CA had co,,)tted )n )t* Dec)*)on. Def)n)tel1, therefore, the den)al of pet)t)oner*3 ,ot)on for recon*)derat)on,
pra1)n- that the1 0e allo.ed to f)le appellee*3 0r)ef, d)d not )nfr)n-e pet)t)oner*3 r)-ht to d+e proce** a* an1 )**+e that pet)t)oner*
.anted to ra)*e co+ld and *ho+ld ha/e 0een conta)ned )n *a)d ,ot)on for recon*)derat)on. CaD&E
$N E$E5 G# %&E #GREGG$NG, the pet)t)on )* DEN$ED and the Dec)*)on of the Co+rt of Appeal* dated Apr)l 28, 1999 and )t*
Re*ol+t)on dated Dece,0er 17, 1999 are here01 A##$RMED.
G GRDERED.
Calle3o, Sr., 2in(a and C#ico-0azario, JJ., conc+r.
Puno, J., )* on off)c)al lea/e.
F''()'(*+
U?!oreFa? )n CA rollo and or)-)nal record*.
1.(enned 01 A**oc)ate <+*t)ce Conch)ta Carp)o Morale* 4no. A**oc)ate <+*t)ce of the +pre,e Co+rtH, .)th A**oc)ate <+*t)ce
<a)nal D. Ra*+l 4ret)redH and A**oc)ate <+*t)ce Bernardo (. A0e*a,)* 4ret)redH, conc+rr)n-.
2.CA Rollo, pp. 79C92.
3.Ent)tled ?$eli Perez, Plaintiff-!ppellant, vs. Spouses -avid and .oreza Pela/o, -efendants-!ppellees,? Record*, pp. 38C39.
4.')id.
7.ee Dec)*)on and Entr1 of <+d-,ent, Record, pp. 38C37.
9.G.R. No. 13927=, Gcto0er 27, 2884.
7.%olent)no, Civil Code of t#e P#ilippines, Co%%entaries and Jurisprudence, Eol. $E, 7th Ed., pp. 448, 447.
=.%olent)no, Civil Code of t#e P#ilippines, Co%%entaries and Jurisprudence, Eol. $, 7th Ed., p. 44=.
9.Record*, pp. 79C92.
18.ect)on 3 4dH, R+le 131, R+le* of Co+rt.
11.!lfredo vs. ,orras, G.R. No. 144227, <+ne 17, 2883, 484 CRA 147" Heirs of C#ristina !/uste vs. Court of !ppeals, G.R. No.
11=7=4, epte,0er 2, 1999, 313 CRA 493.
12.G.R. NG. 112974, A+-+*t 27, 2888, 339 CRA 72.
13.'d., p. 77.
14.Rollo, pp. 12C13.
17.G.R. No. 129379, No/e,0er 28, 2883, 419 CRA 293.
19.'d., p. 272.
17.Rollo, p. 148.
1=.G.R. No. 148374, No/e,0er 27, 2882, 441 (h)l. 3=9.
19.,aton()aal vs. Kafra, G.R. No. 141=89, <an+ar1 17, 2887" 2o# vs. Court of !ppeals, G.R. No. 148274, No/e,0er 17, 2888,
344 CRA =31" ,ernardo vs. Court of !ppeals, G.R. No. 189173, <+l1 14, 1997, 341 (h)l. 413.
EN BANC
[G.R. No. !C=477. Ma1 31, 1979.]
THE PHILIPPINE TRUST COMPANY, ,+ G7,.-4,) '5 (1* P.'8*.(: '5 (1* 24)'., MARIANO L.
BERNARDO, petitioner, vs. SOCORROROLDAN, FRANCISCO HERMOSO, FIDEL C. RAMOS ,)-
EMILIO CRUZ, respondents.
Cesar P. Canonizado and 7nriGue !. Santos for pet)t)oner.
0icode%us .. -asi( for re*pondent*.
SYLLABUS
1.BB G@ARD$AN GR %&RG@G& $N%ERMED$ARB. ' A* G+ard)an*h)p )* a tr+*t of the h)-he*t order, the tr+*tee
cannot 0e allo.ed to ha/e an1 )nd+ce,ent to ne-lect h)* .ard3* )ntere*t" and .hene/er the -+ard)an acA+)re* the .ard3*
propert1 thro+-h an )nter,ed)ar1, he /)olate* the pro/)*)on of Art)cle 1479 of the C)/)l Code and *+ch tran*act)on and
*+0*eA+ent one* e,anat)n- therefro, *hall 0e ann+lled.
D E C I S I O N
BENGZON, J p:
A* -+ard)an of the propert1 of the ,)nor Mar)ano !. Bernardo, the (h)l)pp)ne %r+*t Co,pan1 f)led )n the Man)la co+rt
of f)r*t )n*tance a co,pla)nt to ann+l t.o contract* re-ard)n- 17 parcel* of land: 4aH *ale thereof 01 ocorro Roldan, a*
-+ard)an of *a)d ,)nor, to #)del C. Ra,o*" and 4)H *ale thereof 01 #)del C. Ra,o* to ocorro Roldan per*onall1. %he co,pla)nt
l)>e.)*e *o+-ht to ann+l a con/e1ance of fo+r o+t of the *a)d *e/enteen parcel* 01 ocorro Roldan to E,)l)o Cr+F.
%he act)on re*t* on the propo*)t)on that the f)r*t t.o *ale* .ere )n real)t1 a *ale 01 the -+ard)an to her*elf '
therefore, n+ll and /o)d +nder Art)cle 1479 of the C)/)l Code. A* to the th)rd con/e1ance, )t )* al*o )neffect)/e, 0eca+*e
ocorro Roldan had acA+)red no /al)d t)tle to con/e1 to Cr+F.
%he ,ater)al fact* of the ca*e are not co,pl)cated. %he*e 17 parcel* located )n G+)-+)nto, B+lacan, .ere part of the
propert)e* )nher)ted 01 Mar)ano !. Bernardo fro, h)* father, Marcelo Bernardo, decea*ed. $n /)e. of h)* ,)nor)t1, -+ard)an*h)p
proceed)n-* .ere )n*t)t+ted, .here)n ocorro Roldan .a* appo)nted h)* -+ard)an. he .a* the *+r/)/)n- *po+*e of Marcelo
Bernardo, and the *tep,other of *a)d Mar)ano !. Bernardo.
Gn <+l1 27, 1947, ocorro Roldan f)led )n *a)d -+ard)an*h)p proceed)n-* 4pec)al (roceed)n- 24=7, Man)laH, a
,ot)on a*>)n- for a+thor)t1 to *ell a* -+ard)an the 17 parcel* for the *+, of (14,788 to Dr. #)del C. Ra,o*, the p+rpo*e of the
*ale 0e)n- alle-edl1 to )n/e*t the ,one1 )n a re*)dent)al ho+*e, .h)ch the ,)nor de*)red to ha/e on %)ndalo treet, Man)la. %he
,ot)on .a* -ranted.
Gn A+-+*t 7, 1947 ocorro Roldan, a* -+ard)an, e2ec+ted the proper deed of *ale )n fa/or of her 0rotherC)nCla. Dr.
#)del C. Ra,o* 4E2h)0)t AC1H, and on A+-+*t 12, 1947 *he a*>ed for, and o0ta)ned, ;+d)c)al conf)r,at)on of the *ale. Gn A+-+*t
13, 1947, Dr. #)del C. Ra,o* e2ec+ted )n fa/or of ocorro Roldan, per*onall1, a deed of con/e1ance co/er)n- the *a,e
*e/enteen parcel*, for the *+, of (17,888 4E2h)0)t AC2H. And on Gcto0er 21, 1947 ocorro Roldan *old fo+r parcel* o+t of the
*e/enteen to E,)l)o Cr+F for (3,888, re*er/)n- to her*elf the r)-ht to rep+rcha*e 4E2h)0)t AC3H.
%he (h)l)pp)ne %r+*t Co,pan1 replaced ocorro Roldan a* -+ard)an, on A+-+*t 18, 194=. And th)* l)t)-at)on, *tarted
t.o ,onth* later, *ee>* to +ndo .hat the pre/)o+* -+ard)an had done. %he *tepC,other )n effect, *old to her*elf, the propert)e*
of her .ard, contend* the pla)nt)ff, and the *ale *ho+ld 0e ann+lled 0eca+*e )t /)olate* Art)cle 1479 of the C)/)l Code proh)0)t)n-
the -+ard)an fro, p+rcha*)n- ?e)ther )n per*on or thro+-h the ,ed)at)on of another? the propert1 of her .ard.
%he co+rt of f)r*t )n*tance, follo.)n- o+r dec)*)on )n Rodr)-+eF vs. Mactal, 98 (h)l. 13 held the art)cle .a* not
controll)n-, 0eca+*e there .a* no proof that #)del C. Ra,o* .a* a ,ere )nter,ed)ar1 or that the latter had pre/)o+*l1 a-reed
.)th ocorro Roldan to 0+1 the parcel* for her 0enef)t.
&o.e/er, ta>)n- the for,er -+ard)an at her .ord C *he *.ore *he had rep+rcha*ed the land* fro, Dr. #)del C.
Ra,o* to pre*er/e )t and to -)/e her prote-e opport+n)t1 to redee, ' the co+rt rendered ;+d-,ent +phold)n- the contract* 0+t
allo.)n- the ,)nor to rep+rcha*e all the parcel* 01 pa1)n- (17,888, .)th)n one 1ear.
%he Co+rt of Appeal* aff)r,ed the ;+d-,ent, add)n- that the ,)nor >ne. the part)c+lar* of, and appro/ed the
tran*act)on, and that ?onl1 clear and po*)t)/e e/)dence of fra+d or 0ad fa)th, and not ,ere )n*)n+at)on* and )nference* .)ll
o/erco,e the pre*+,pt)on* that a *ale .a* concl+ded )n all -ood fa)th for /al+e?.
At f)r*t -lance the re*ol+t)on* of 0oth co+rt* acco,pl)*hed *+0*tant)al ;+*t)ce: the ,)nor reco/er* h)* propert)e*. B+t )f
the con/e1ance* are ann+lled a* pra1ed for, the ,)nor .)ll o0ta)n a 0etter deal: he rece)/e* all the fr+)t* of the land* fro, the
1ear 1947 4Art)cle 1383 C)/)l CodeH and .)ll ret+rn (14,788, not (17,888.
%o o+r ,)nd* the f)r*t t.o tran*act)on* here)n de*cr)0ed co+ldn3t 0e )n a 0etter ;+r)d)cal *)t+at)on than )f th)* -+ard)an
had p+rcha*ed the *e/enteen parcel* on the da1 follo.)n- the *ale to Dr. Ra,o*. No., )f *he .a* .)ll)n- to pa1 (17,888 .h1
d)d *he *ell the parcel* for le**V $n one da1 4or act+all1 one .ee>H the pr)ce co+ld not ha/e r)*en *o *+ddenl1. G0/)o+*l1 .hen,
*ee>)n- appro/al of the *ale *he repre*ented the pr)ce to 0e the 0e*t o0ta)na0le )n the ,ar>et, *he .a* not ent)rel1 tr+thf+l.
%h)* )* one pha*e to con*)der.
A-a)n, *+ppo*)n- *he >ne. the parcel* .ere act+all1 .orth (17,888" then *he a-reed to *ell the, to Dr. Ra,o* at
(14,788" and >no.)n- the realt13* /al+e *he offered h), the ne2t da1 (17,888 or (17,788, and -ot )t. 5)ll there 0e an1 do+0t
that *he .a* recreant to her -+ard)an*h)p, and that her acA+)*)t)on *ho+ld 0e n+ll)f)edV E/en .)tho+t proof that *he had
conn)/ed .)th Dr. Ra,o*. Re,e,0er)n- the -eneral doctr)ne that -+ard)an*h)p )* a tr+*t of the h)-he*t order, and the tr+*tee
cannot 0e allo.ed to ha/e an1 )nd+ce,ent to ne-lect h)* .ard3* )ntere*t and )n l)ne .)th the co+rt3* *+*p)c)on .hene/er the
-+ard)an acA+)re* the .ard3* propert1 1 .e ha/e no he*)tat)on to declare that )n th)* ca*e, )n the e1e* of the la.,
ocorro Roldan too> 01 p+rcha*e her .ard3* parcel* thr+ Dr. Ra,o*, and that Art)cle 1479 of the C)/)l Code appl)e*.
he acted )t ,a1 0e tr+e .)tho+t ,al)ce" there ,a1 ha/e 0een no pre/)o+* a-ree,ent 0et.een her and Dr. Ra,o*
to the effect that the latter .o+ld 0+1 the land* for her. B+t the *t+00orn fact re,a)n* that *he acA+)red her prote-e3*
propert)e*, thro+-h her 0rotherC)nCla.. %hat *he planned to -et the, for her*elf at the t),e of *ell)n- the, to Dr. Ra,o*, ,a1
0e ded+ced fro, the /er1 *hort t),e 0et.een the t.o *ale* 4one .ee>H. %he te,ptat)on .h)ch nat+rall1 0e*et* a -+ard)an *o
c)rc+,*tanced, nece**)tate* the ann+l,ent of the tran*act)on, e/en )f no act+al coll+*)on )* pro/ed 4*o hard to pro/eH 0et.een
*+ch -+ard)an and the )nter,ed)ate p+rcha*er. %h)* .o+ld +phold a *o+nd pr)nc)ple of eA+)t1 and ;+*t)ce. 2
5e are a.are of co+r*e that )n Rodr)-+eF vs. Mactal, 98 (h)l. p. 13 .here)n the -+ard)an Mactal *old )n <an+ar1
1929 the propert1 of her .ard to )l/er)o Ch)oco, and )n March 192= *he 0o+-ht )t fro, Ch)oco, th)* Co+rt *a)d:
?$n order to 0r)n- the *ale )n th)* ca*e .)th)n the part of Art)cle 1479, A+oted a0o/e, it is essential
t#at t#e proof su)%itted esta)lis# so%e a(ree%ent )et4een Silverio C#ioco and 2rinidad $actal to t#e effect
t#at C#ioco s#ould )u/ t#e propert/ for t#e )enefit of $actal. $f there .a* no *+ch a-ree,ent, eit#er e@press
or i%plied, then the *ale cannot 0e *et a*)de. . . . 4(a-e 19" $tal)c* *+ppl)ed.H?
&o.e/er, the +nderl)ned port)on .a* not )ntended to e*ta0l)*h a -eneral principle of la4 appl)ca0le to all *+0*eA+ent
l)t)-at)on*. $t ,erel1 ,eant that the *+0*eA+ent p+rcha*e 01 Mactal co+ld not 0e ann+lled in t#at particular case 0eca+*e there
.a* no proof of a pre/)o+* a-ree,ent 0et.een Ch)oco and her. %he co+rt then con*)dered *+ch proof nece**ar1 to e*ta0l)*h
that the t4o sales .ere act+all1 part of one sc#e%e ' -+ard)an -ett)n- the .ard3* propert1 thro+-h another per*on
' )ecause t4o /ears #ad elapsed 0et.een the *ale*. +ch per)od of t),e .a* *+ff)c)ent to d)*pel the nat+ral *+*p)c)on of the
-+ard)an3* ,ot)/e* or act)on*. $n the ca*e at 0ar, ho.e/er, onl1 one .ee> had elap*ed. And )f .e .ere techn)cal, .e co+ld *a1,
onl1 one da/ had elap*ed fro, the ;+d)c)al approval of the *ale 4A+-+*t 12H, to the p+rcha*e 01 the -+ard)an 4A+-. 13H.
Atte,pt)n- to pro/e that the tran*act)on .a* 0enef)c)al to the ,)nor, appellee3* attorne1 alle-e* that the ,one1
4(14,788H )n/e*ted )n the ho+*e on %)ndalo treet prod+ced for h), rental* of (2,488 1earl1" .herea* the parcel* of land
1)elded to h)* *tepC,other onl1 an a/era-e of (1,722 per 1ear. 3 %he ar-+,ent .o+ld carr1 *o,e .e)-ht )f that ho+*e had
0een 0+)lt o+t of the p+rcha*e pr)ce of (14,788 onl/. Gne th)n- )* certa)n: the calc+lat)on doe* not )ncl+de the pr)ce of t#e
loton .h)ch the ho+*e .a* erected. E*t),at)n- *+ch lot at (14,788 onl1, 4ord)nar)l1 the c)t1 lot )* ,ore /al+a0le than the
0+)ld)n-H the re*+lt )* that the pr)ce pa)d for the *e/enteen parcel* -a/e the ,)nor an )nco,e of onl1 (1,288 a 1ear, .herea*
the har/e*t fro, the *e/enteen parcel* netted h)* *tepC,other a 1earl1 prof)t of (1,722.88. %he ,)nor .a* th+* on the lo*)n-
end.
&ence, fro, 0oth the le-al and eA+)ta0le *tandpo)nt* the*e three *ale* *ho+ld not 0e *+*ta)ned: the f)r*t t.o for
/)olat)on of art)cle 1479 of the C)/)l Code" and the th)rd 0eca+*e ocorro Roldan co+ld pa** no t)tle to E,)l)o Cr+F. %he
ann+l,ent carr)e* .)th )* 4Art)cle 1383 C)/)l CodeH the o0l)-at)on of ocorro Roldan to ret+rn the 17 parcel* to-ether 4it# t#eir
fruits and the d+t1 of the ,)nor, thro+-h h)* -+ard)an to repa1 (14,788 4it# le(al interest.
<+d-,ent )* therefore rendered:
a.Ann+ll)n- the three contract* of *ale )n A+e*t)on" ). declar)n- the ,)nor a* the o.ner of the *e/enteen parcel* of
land, .)th the o0l)-at)on to ret+rn to ocorro Roldan the pr)ce of (14,788 .)th le-al )ntere*t fro, A+-+*t 12, 1947" c. Grder)n-
ocorro Roldan and E,)l)o Cr+F to del)/er *a)d parcel* of land to the ,)nor" d. ReA+)r)n- ocorro Roldan to pa1 h), 0e-)nn)n-
.)th 1947 the fr+)t*, .h)ch her attorne1 ad,)t*, a,o+nted to (1,722 a 1ear" e. A+thor)F)n- the ,)nor to del)/er d)rectl1 to E,)l)o
Cr+F, o+t of the pr)ce of (14,788 a0o/e ,ent)oned, the *+, of (3,888" and f. char-)n- appellee* .)th the co*t*. o ordered.

Paras, C.J., Padilla, $onte%a/or, Re/es, !., ,autista !n(elo, Concepcion, Re/es, J.,..., and 7ndencia,
JJ., conc+r.
F''()'(*+
1.27 A,. <+r. pp. 12=, 138" Dan)el vs. %olon, 73 G>la. 999, 4 A. !. R. 784.
2.cf. a/er)no vs. e/er)no, 44 (h)l. 343. ?No fra+d )n fact need 0e *ho.n?.
3.Appellee3* 0r)ef, p. 28.
4.%he contract .)th the 0+)lder called for (19,788.88" and Roldan *a)d )t* total co*t a,o+nted to (1=,728.88.
#$R% D$E$$GN
[G.R. No. 144328. Apr)l 29, 2889.]
NATIVIDAD ARIAGA VDA. DE GURREA, CARLOS GURREA, IULIETA GURREA, TERESA GURREA-
RODRIGUEZ, RICARDO GURREA, I.., MA. VICTORIA GURREA-CANDEL, ,)- RAMONA GURREA-
MONTINOLA, petitioners, vs. ENRIHUE SUPLICO, respondent.
D E C I S I O N
AUSTRIA-MARTINEZ, J p:
Before +* )* a pet)t)on for re/)e. on certiorari +nder R+le 47 of the R+le* of Co+rt a**a)l)n- the Dec)*)on 1 of the Co+rt of Appeal*
4CAH dated #e0r+ar1 24, 2888 )n CACG.R. CE No. 79218, .h)ch aff)r,ed in toto the Dec)*)on 2 dated <+l1 7, 1999 of the Re-)onal
%r)al Co+rt 4R%CH of (a*)- C)t1, Branch 29=, )n C)/)l Ca*e No. 47743" and the CA Re*ol+t)on 3 dated A+-+*t 7, 2888 .h)ch den)ed
pet)t)oner*3 ,ot)on for recon*)derat)on.
%he pre*ent pet)t)on aro*e fro, a co,pla)nt for ann+l,ent of t)tle .)th pra1er for prel),)nar1 )n;+nct)on f)led .)th the Co+rt of #)r*t
$n*tance 4C#$H of R)Fal, doc>eted a* C)/)l Ca*e No. 47743, 01 Ro*al)na G+rrea 4pla)nt)ffH )n her capac)t1 a* attorne1C)nCfact of the
he)r* of R)cardo G+rrea 4R)cardoH, na,el1: Nat)/)dad, Carlo*, <+l)et and R)cardo, <r., all *+rna,ed G+rrea, and %ere*a G+rrea
Cole,enare*. %he co,pla)nt .a* f)led a-a)n*t Att1. Enr)A+e +pl)co 4defendantH, Gen. Ga+denc)o %o0)a*, )n h)* capac)t1 a*
General Mana-er of the Nat)onal &o+*)n- A+thor)t1, and <o*eph E*trada, )n h)* capac)t1 a* M+n)c)pal Ma1or of an <+an, R)Fal. !
%he CA adopted the fact* of the ca*e a* *+,,ar)Fed 01 the R%C, to .)t:
%he lot )n A+e*t)on *)t+ated at 247 Marne treet, an <+an, Metro Man)la .a* or)-)nall1 o.ned 01 one of
here)n pla)nt)ff*3 Attorne1C)nC#act, Ro*al)na G+rrea, a* e/)dence 4*)cH 01 %C% No. 49797 4E2h)0)t ?A?H. %hat
*o,et),e )n 197=, Ro*al)na G+rrea tran*ferred the o.ner*h)p of *a)d lot to Adel)na G+rrea, .ho*e o.ner*h)p
.a* e/)denced 01 %C% No. 7=273 4E2h)0)t ?B?H. %hat Adel)na G+rrea cont)n+ed to 0e the o.ner of the lot +nt)l
her death. %hereafter, pec)al (roceed)n-* No. 71=7 .a* )n*t)t+ted to ha/e the .)ll *he e2ec+ted d+r)n- her
l)fet),e pro0ated and to *ettle her e*tate. @nder the *a)d .)ll, the an <+an lot .a* 0eA+eathed to ()lar and
!+)* G+rrea, .h)le 788,888 pe*eta*, 1M4 of the lot )n Ba-+)o C)t1 and a oneChectare p)ece of land )n
(onte/edra, Ne-ro* Gcc)dental .ere -)/en to R)cardo G+rrea.
R)cardo G+rrea, repre*ented 01 and thro+-h h)* co+n*el Att1. Enr)A+e +pl)co 4the defendantH, f)led an
Gppo*)t)on )n pec)al (roc. No. 71=7. $n con*)derat)on of *a)d repre*entat)on, R)cardo G+rrea a-reed to pa1
Att1. +pl)co ?a cont)n-ent fee of t.ent1 428KH of .hate/er )* d+e ,e, e)ther real or per*onal propert1?
4E2h)0)t ?7?H. D+r)n- the pendenc1 of the proceed)n-* and +pon the oral )n*tr+ct)on* of R)cardo G+rrea, Att1.
+pl)co ne-ot)ated .)th the other he)r* of Adel)na G+rrea re-ard)n- the tran*fer of the p)*o 4apart,ent
0+)ld)n-H )n pa)n to R)cardo G+rrea3* da+-hter, <+l)et G+rrea de Melendre*. R)cardo G+rrea f+rther
)n*tr+cted Att1. +pl)co not to enter )nto an1 *ettle,ent .)th the he)r* +nle** the p)*o )* tran*ferred to h)*
da+-hter. #)nall1, the tran*fer of the p)*o .orth (94,888.88 .a* e2ec+ted and the he)r* arr)/ed at an
a,)ca0le *ettle,ent re-ard)n- the e*tate of Adel)na G+rrea. &ence, R)cardo G+rrea .)thdre. h)* Gppo*)t)on
and the he)r* then dre. +p a pro;ect of part)t)on .h)ch .a* e/ent+all1 appro/ed 01 the pro0ate co+rt.
(+r*+ant to the pro;ect of part)t)on, the follo.)n- propert)e* .ere ad;+d)cated to R)cardo G+rrea: 41H the .hole
of the Ba-+)o lot 4.)th a**e**ed /al+e of (29,378.88H" 42H the .hole of the an <+an lot 4.)th a**e**ed /al+e
of (9,938.88H" and 43H a parcel of land )n (onte/edra, Ne-ro* Gcc)dental 4.)th a**e**ed /al+e of (388.88H.
4E2h)0)t ?R? for pla)nt)ff and e2h)0)t ?19? for defendantH.
A* pa1,ent of h)* attorne13* fee*, R)cardo G+rrea offered the an <+an lot to Att1. +pl)co .ho .a* )n)t)all1
he*)tant to accept the *a,e a* the propert1 )* occ+p)ed 01 *A+atter*. &o.e/er, )n order not to anta-on)Fe h)*
cl)ent, Att1. +pl)co a-reed to R)cardo G+rrea3* propo*al .)th the f+rther +nder*tand)n- that he .)ll rece)/e an
add)t)onal co,,)**)on of 7K )f he *ell* the Ba-+)o propert1. %hereafter, the deed of %ran*fer of R)-ht* and
$ntere*t .a* drafted. %he *a)d deed .a* pre*ented to R)cardo G+rrea for h)* *)-nat+re. %hat 0efore *)-n)n-
the *a,e, the content* of the deed .ere f)r*t e2pla)ned to R)cardo G+rrea 01 Att1. +pl)co and Att1. Man+el
(a,a, the notar1 p+0l)c. Gn A+-+*t 28, 1977, the deed .a* f)nall1 *)-ned 01 R)cardo G+rrea at the off)ce of
Att1. (a,a, )n the pre*ence of the latter, Att1. +pl)co, E)ctor %+pa* and another per*on, the la*t t.o act)n-
a* .)tne**e*. !ater, on Gcto0er 7, 19=8, Att1. +pl)co re-)*tered the deed and o0ta)ned a t)tleM%C% to the
an <+an propert1 +nder h)* na,e. R)cardo G+rrea d)ed on Gcto0er 22, 19=8. After h)* death, h)* he)r*
)n*t)t+ted pec)al (ro. No. 2722 for the *ettle,ent of R)cardo G+rrea3* e*tate. $n the *a)d proceed)n-*, Att1.
+pl)co f)led *e/eral cla),* for +npa)d attorne13* fee* 4no cla), .a* f)led relat)/e to pec)al (roc. No. 71=7H"
ho.e/er, all .ere d)*,)**ed .)th f)nal)t1 4E2h)0)t* ?$? and ?<?H. Al*o )n the *a,e ca*e, the e*tate3*
ad,)n)*trator, Carlo* G+rrea, f)led an $n/entor1 of (ropert)e* left 01 the decedent, .h)ch d)d not )n)t)all1
)ncl+de the propert1 *+0;ect of th)* ca*e. %he *a)d lot .a* )ncl+ded onl1 *+0*eA+entl1 )n the A,ended
$n/entor1 4E2h)0)t ?G?H. "
Gn <+l1 11, 19=7, the R%C )**+ed an Grder d)*,)**)n- the co,pla)nt on the -ro+nd that )t doe* not *tate a ca+*e of act)on 0eca+*e
the pla)nt)ff )* not the real part1C)nC)ntere*t. # %he co,pla)ntC)nC)nter/ent)on .a* l)>e.)*e d)*,)**ed. (la)nt)ff f)led an appeal .)th the
CA A+e*t)on)n- the <+l1 11, 19=7 Grder of the R%C. $ %he ca*e .a* doc>eted a* CACG.R. CE No. 14798.
%hereafter, defendant f)led a Mot)on for $**+ance of 5r)t of E2ec+t)on (end)n- Appeal. % $n )t* Grder dated Ma1 28, 19=9, the R%C
-ranted defendant3* ,ot)on. 1&(la)nt)ff then f)led a pet)t)on for certiorari, proh)0)t)on and %anda%us .)th the CA *ee>)n- to ann+l the
tr)al co+rt3* Grder of Ma1 28, 19=9. %he ca*e .a* doc>eted a* CACG.R. ( No. 89394.
+0*eA+entl1, CACG.R. CE No. 14798 and CACG.R. ( No. 89394 .ere con*ol)dated.
Gn No/e,0er 21, 19=9, the CA pro,+l-ated )t* Dec)*)on )n the con*ol)dated ca*e*, the d)*po*)t)/e port)on of .h)ch read* a*
follo.*:
5&ERE#GRE, ;+d-,ent )* here01 rendered, a* follo.*:
41HREEER$NG the order appealed fro, )n CACG.R. CE No. 14798 and GRAN%$NG the appellant Ro*al)na
G+rrea a per)od of *)2t1 498H da1* fro, f)nal)t1 of th)* dec)*)on .)th)n .h)ch to ),plead )n C)/)l Ca*e No.
47743 the real part)e*C)nC)ntere*t" after co,pl)ance here.)th 01 the appellant, the tr)al co+rt *hall proceed to
hear and dec)de the ca*e accord)n-l1" and
42HGRAN%$NG the pet)t)on for certiorari and proh)0)t)on )n CACG.R. ( No. 89394, here01 ANN@!!$NG and
E%%$NG A$DE the re*pondent Co+rt3* order dated Ma1 28, 19=9, -rant)n- the re*pondent Enr)A+e
+pl)co3* ,ot)on for e2ec+t)on pend)n- appeal 4Anne2 C, pet)t)onH, and the .r)t )**+ed p+r*+ant thereto
4Anne2 D, pet)t)onH.
Co*t* a-a)n*t the appellee and re*pondent Enr)A+e +pl)co )n 0oth ca*e*.
G GRDERED. 11
Accord)n-l1, an A,ended Co,pla)nt .a* f)led )n the R%C ),plead)n- the he)r* of R)cardo a* add)t)onal pla)nt)ff*, to .)t: Nat)/)dad
Ar)a-a Eda. de G+rrea, Carlo* G+rrea, <+l)eta G+rrea, %ere*a G+rreaCRodr)-+eF, R)cardo G+rrea, <r., Ma. E)ctor)a G+rrea Candel
and Ra,ona G+rreaCMont)nola. 12 %hereafter, tr)al en*+ed.
$n the co+r*e of the tr)al, Gen. Ga+denc)o %o0)a* of the N&A and then Ma1or <o*eph E*trada of an <+an, .ere dropped a*
defendant* +pon ,ot)on of pla)nt)ff* and .)tho+t the o0;ect)on of defendant.
After tr)al, the R%C rendered ;+d-,ent the d)*po*)t)/e port)on of .h)ch read*:
5&ERE#GRE, ta>)n- all the fore-o)n- )nto con*)derat)on, the Co+rt f)nd* that the preponderance of e/)dence
)* )n fa/or of the defendant and a-a)n*t the pla)nt)ff*, hence, order* the D$M$A! of the a0o/e ent)tled
ca*e. No prono+nce,ent a* to da,a-e*, co*t* and attorne13* fee*.
G GRDERED. 13
(la)nt)ff* and defendant appealed the ca*e to the CA.
(la)nt)ff*Cappellant* contended that the R%C erred: )n +phold)n- the /al)d)t1 of the *+ppo*ed contract of attorne13* fee* 0et.een
R)cardo and defendantCappellant .h)ch pro/)ded for the pa1,ent of attorne13* fee* )n the for, of real propert1 0eca+*e *+ch an
a-ree,ent )* proh)0)ted 01 Art)cle 1491 of the C)/)l Code" )n l),)t)n- )t* e/al+at)on of the tran*fer of r)-ht* and )ntere*t* )n defendantC
appelant3* fa/or onl1 on the 0a*)* of .hether the deed e/)denc)n- *a)d tran*fer of r)-ht* and )ntere*t* .a* for-ed, .)tho+t re-ard to
the fact* and c)rc+,*tance* *+rro+nd)n- )t* e2ec+t)on" )n not f)nd)n- that defendantCappellant ha* 0een f+ll1 pa)d for all the *er/)ce*
he had rendered for R)cardo" )n not declar)n- the pa1,ent of the *+0;ect lot a* attorne13* fee* to 0e +ncon*c)ona0le 0a*ed on the
-+)del)ne* for deter,)n)n- attorne13* fee*.
Gn the other hand, defendantCappellant a**erted that the R%C erred )n ref+*)n- to d)*,)** the co,pla)nt for lac> of ca+*e of act)on"
and )n ref+*)n- to a.ard co+ntercla), )n h)* fa/or. c&$Da
Gn #e0r+ar1 24, 2888, the CA rendered )t* Dec)*)on aff)r,)n-, in toto, the ;+d-,ent of the R%C. %he CA ,a)nta)ned the lo.er
co+rt3* r+l)n- that the pla)nt)ff*Cappellant* fa)led to pre*ent clear and con/)nc)n- e/)dence that defendantCappellant defra+ded and
e2erted +nd+e )nfl+ence on R)cardo )n the latter3* e2ec+t)on of the deed of %ran*fer of R)-ht* and $ntere*t and )n con*eA+entl1
tran*ferr)n- h)* o.ner*h)p of the an <+an lot )n h)* 4defendantCappellant3*H fa/or" and that 0a*ed on the e/)dence, the an <+an lot
,a1 0e con*)dered a* rea*ona0le attorne13* fee* for defendantCappellant.
&o.e/er, the CA d)d not d)*c+** the )**+e of .hether the contract of attorne13* fee* 0et.een the late R)cardo and defendantC
appellant and the con*eA+ent tran*fer of r)-ht* and )ntere*t )n fa/or of the latter )* )n/al)d for 0e)n- /)olat)/e of Art)cle 1491 of the
C)/)l Code.

(la)nt)ff*Cappellant* 4here)nafter pet)t)oner*H, .)th the e2cept)on of pla)nt)ffCappellant Ro*al)na G+rrea, .ho d)ed on <+ne 2, 1999,
f)led a Mot)on for Recon*)derat)on, 0+t the CA den)ed the *a,e )n a Re*ol+t)on )**+ed on A+-+*t 7, 2888.
&ence, the pre*ent pet)t)on ra)*)n- the follo.)n- )**+e*:
1.5&E%&ER GR NG%, A@M$NG 5$%&G@% ADM$%%$NG, %&A% %&E 3%RAN#ER G# R$G&% AND
$N%ERE%3 4EL&$B$% E" 1H 5A D@!B ELEC@%ED BB R$CARDG G@RREA, %&E AME
E$G!A%E AR%$C!E 1491 G# %&E NE5 C$E$! CGDE AND, %&ERE#GRE, N@!! AND EG$D.
2.5&E%&ER GR NG% %&E @((GED CGN%RAC% #GR A%%GRNEB3 #EE $N %&E #GRM G# %&E
3MAN$#E%A%$GN3 DA%ED <@NE 24, 1972 4EL&$B$% 7H (RGE$D$NG #GR %&E (ABMEN% G#
A%%GRNEB3 #EE G@% G# %&E (RG(ER%$E $N !$%$GA%$GN, $ EA!$D"
3.5&E%&ER GR NG%, A@M$NG %&A% %&E 3MAN$#E%A%$GN3 AND 3%RAN#ER G# R$G&% AND
$N%ERE%3 ARE EA!$D, AND #@R%&ER A@M$NG %&A% RE(GNDEN%CA%%GRNEB &A
NG% BE% BEEN (A$D &$ A%%GRNEB3 #EE $N (EC$A! (RGCEED$NG NG. 71=7, %&E
(ABMEN% G# A$D #EE BB 5AB G# %&E 5&G!E (RG(ER%B @B<EC% MA%%ER G# %&E
$N%AN% CAE $ @NCGNC$GNAB!E GR @NREAGNAB!E CGN$DER$NG %&E
G@$DE!$NE #GR #$L$NG A%%GRNEB3 #EE"
4.5&E%&ER GR NG% (E%$%$GNER ARE EN%$%!ED %G %&E CANCE!!A%$GN G# RE(GNDEN%
A%%GRNEB3 %$%!E GEER %&E @B<EC% (RG(ER%B AND %&E RECGNEEBANCE %&EREG#
%G %&E &ERE$N (E%$%$GNER GR %G %&E E%A%E G# %&E !A%E R$CARDG G@RREA.
7.5&E%&ER GR NG% (E%$%$GNER ARE EN%$%!ED %G %&E DAMAGE C!A$MED $N %&E AC%$GN
@B%AN%$A%ED BB %&E$R EE$DENCE. 1
A* to the f)r*t )**+e, pet)t)oner* ar-+e on the pre,)*e that, +nder the la., e*tate proceed)n-* *hall 0e dee,ed clo*ed and
ter,)nated .hen the co+rt declare* )t to 0e *o and onl1 after del)/er1 of the re,a)n)n- e*tate to the he)r* ent)tled to rece)/e the
*a,e. (et)t)oner* contend that no e/)dence .a* pre*ented to *ho. that the pro0ate co+rt )**+ed an order declar)n- pec)al
(roceed)n-* No. 71=7 clo*ed and ter,)nated. $n add)t)on, .hen the %ran*fer of R)-ht* and $ntere*t )n fa/or of re*pondent .a*
notar)Fed on A+-+*t 28, 1977, the t)tle o/er the *+0;ect lot .a* *t)ll )n the na,e of Adel)na G+rrea and that *a)d t)tle .a* tran*ferred
onl1 )n the na,e of R)cardo on Gcto0er 7, 19=8. Gn the*e 0a*e*, pet)t)oner* concl+de that at the t),e the %ran*fer of R)-ht* and
$ntere*t .a* notar)Fed, there )* no d)*p+te that the *+0;ect propert1 *t)ll for,ed part of the e*tate of Adel)na G+rrea and .a*,
therefore, *t)ll the *+0;ect of l)t)-at)on. &ence, the tran*fer of r)-ht* and )ntere*t o/er the *+0;ect propert1 )n fa/or of Att1. +pl)co
4re*pondentH )* n+ll and /o)d.
Anent the *econd )**+e, pet)t)oner* contend that the Man)fe*tat)on dated <+ne 24, 1972 e2ec+ted 01 R)cardo pro/)d)n- for the
pa1,ent )n fa/or of re*pondent of a cont)n-ent fee of t.ent1 percent 428KH of .hate/er )* d+e to R)cardo, e)ther real or per*onal
propert1 )* )n/al)d 0eca+*e 0a*ed on ;+r)*pr+dence, attorne13* fee*, 0a*ed on a cont)n-ent fee contract, ,a1 0e pa)d onl1 o+t of a
certa)n percenta-e of the /al+e of the real propert1 )n l)t)-at)on" and that the real propert1 )t*elf ,a1 not 0e -)/en a* pa1,ent of
attorne13* fee*.
A* to the th)rd )**+e, pet)t)oner* a**ert that e/en a**+,)n- that the a0o/eC,ent)oned Man)fe*tat)on and %ran*fer of R)-ht* and
$ntere*t are /al)d and that re*pondent had not 1et 0een pa)d h)* attorne13* fee*, the *+0;ect propert1 )* an +nrea*ona0le and
+ncon*c)ona0le pa1,ent for the act+al *er/)ce* that re*pondent had rendered for R)cardo, ta>)n- )nto con*)derat)on the -+)del)ne*
for f)2)n- attorne13* fee*.
(et)t)oner* d)d not ela0orate on the fo+rth )**+e .h)le, )n the f)fth )**+e, the1 *+0,)tted to the d)*cret)on of the Co+rt the)r ent)tle,ent
to da,a-e* and attorne13* fee*, a* cla),ed 0efore the tr)al co+rt.
Gn h)* part, re*pondent contend* that the )**+e a* to .hether pec)al (roceed)n-* No. 71=7 .a* alread1 clo*ed and ter,)nated at
the t),e of e2ec+t)on of the deed of %ran*fer of R)-ht* and $ntere*t, )n/ol/e* the deter,)nat)on of fact+al ,atter* and apprec)at)on of
p)ece* of e/)dence .h)ch cannot 0e ra)*ed )n a pet)t)on for re/)e. on certiorari 0efore th)* Co+rt. E/en a**+,)n- that pet)t)oner* ,a1
properl1 ra)*e a fact+al )**+e )n the pre*ent pet)t)on, re*pondent *+0,)t* that there )* *+ff)c)ent e/)dent)ar1 0a*)* for the tr)al co+rt3*
concl+*)on that the %ran*fer of R)-ht* and $ntere*t .a* e2ec+ted and entered )nto after the ter,)nat)on of pec)al (roceed)n-* No.
71=7. Re*pondent al*o contend* that 0a*ed on ;+r)*pr+dence, the Co+rt ha* +pheld the /al)d)t1 of cont)n-enc1 fee contract*
pro/)d)n- for the pa1,ent of attorne13* fee* o+t of a port)on or part of the propert1 *+0;ect of l)t)-at)on" that the *+0;ect propert1 )*
;+*t, rea*ona0le and eA+)ta0le pa1,ent for the *er/)ce* he rendered for the late R)cardo, con*)*t)n- of the *)-n)n- of the (ro;ect of
(art)t)on, f)l)n- of an Gppo*)t)on d+r)n- the e*tate proceed)n-*, and ne-ot)at)n- .)th the other he)r* .h)ch re*+lted )n R)cardo3*
reco/er1 of three parcel* of land.
%he Co+rt f)nd* the pet)t)on ,er)tor)o+*.
$t )* a f+nda,ental r+le that the +pre,e Co+rt3* ;+r)*d)ct)on )n a pet)t)on for re/)e. on certiorari a* a ,ode of appeal +nder R+le 47
of the R+le* of Co+rt, a* a,ended, *+ch a* the one at 0ar, )* l),)ted to re/)e.)n- onl1 error* of la., not of fact. 1! %he rat)onale of
th)* r+le )* fo+nded on the fact that the Co+rt )* not a tr)er of fact* and doe* not nor,all1 +nderta>e the reCe2a,)nat)on of the
e/)dence pre*ented 01 the contend)n- part)e* d+r)n- the tr)al of the ca*e con*)der)n- that the f)nd)n-* of fact* of the CA are
concl+*)/e and 0)nd)n- on the Co+rt. 1"
&o.e/er, there are reco-n)Fed e2cept)on* to th)* r+le, to .)t:
41H.hen the f)nd)n-* are -ro+nded ent)rel1 on *pec+lat)on, *+r,)*e* or con;ect+re*" 42H .hen the )nference
,ade )* ,an)fe*tl1 ,)*ta>en, a0*+rd or ),po**)0le" 43H .hen there )* -ra/e a0+*e of d)*cret)on" 44H .hen the
;+d-,ent )* 0a*ed on a ,)*apprehen*)on of fact*" 47H .hen the f)nd)n-* of fact* are confl)ct)n-" 49H .hen )n
,a>)n- )t* f)nd)n-* the CA .ent 0e1ond the )**+e* of the ca*e, or )t* f)nd)n-* are contrar1 to the ad,)**)on*
of 0oth the appellant and the appellee" 47H .hen the f)nd)n-* are contrar1 to the tr)al co+rt" 4=H .hen the
f)nd)n-* are concl+*)on* .)tho+t c)tat)on of *pec)f)c e/)dence on .h)ch the1 are 0a*ed" 49H .hen the fact* *et
forth )n the pet)t)on a* .ell a* )n the pet)t)oner3* ,a)n and repl1 0r)ef* are not d)*p+ted 01 the re*pondent" 418H
.hen the f)nd)n-* of fact are pre,)*ed on the *+ppo*ed a0*ence of e/)dence and contrad)cted 01 the
e/)dence on record" and 411H .hen the CA ,an)fe*tl1 o/erloo>ed certa)n rele/ant fact* not d)*p+ted 01 the
part)e*, .h)ch, )f properl1 con*)dered, co+ld ;+*t)f1 a d)fferent concl+*)on. 1#
%he Co+rt f)nd* the pre*ent ca*e fall)n- +nder the *econd e2cept)on for rea*on* d)*c+**ed here+nder.
At the o+t*et, )t *ho+ld 0e *tre**ed that the A+e*t)on a* to .hether the deed of %ran*fer of R)-ht* and $ntere*t .a* for-ed .a*
re*ol/ed 01 the CA .hen )t aff)r,ed the r+l)n- of the R%C that here)n pet)t)oner* fa)led to pre*ent clear, con/)nc)n- and *at)*factor1
e/)dence that re*pondent defra+ded R)cardo. %he CA al*o r+led that there )* no e/)dence on record to *ho. that the *)-nat+re of the
late R)cardo on the A+e*t)oned deed )* *),+lated or fal*e. %h)* ,atter )* not a**a)led )n the pre*ent pet)t)on.
&o.e/er, de*p)te ha/)n- 0een *pec)f)call1 a**)-ned a* an error 01 pet)t)oner* )n the)r appellant3* 0r)ef f)led .)th the CA, the
appellate co+rt fa)led to r+le on the A+e*t)on of .hether the *+0;ect %ran*fer of R)-ht* and $ntere*t .a* e2ec+ted e/en 0efore the
e*tate proceed)n-* .ere clo*ed and ter,)nated.
Anent the f)r*t )**+e, )t )* nece**ar1 to re*ol/e .hether the *+0;ect propert1 .a* *t)ll the o0;ect of l)t)-at)on at the t),e the deed of
%ran*fer of R)-ht* and $ntere*t )n fa/or of re*pondent .a* e2ec+ted" and )f *o, .hether the *a,e *ho+ld 0e con*)dered n+ll and /o)d
for 0e)n- /)olat)/e of the pro/)*)on* of Art)cle 1491 of the C)/)l Code.
Art)cle 149147H of the C)/)l Code pro/)de*:
1491. %he follo.)n- per*on* cannot acA+)re 01 p+rcha*e, e/en at a p+0l)c or ;+d)c)al a+ct)on, e)ther )n per*on
or thro+-h the ,ed)at)on of another:
222 222 222
47H<+*t)ce*, ;+d-e*, pro*ec+t)n- attorne1*, cler>* of *+per)or and )nfer)or co+rt*, and other off)cer* and
e,plo1ee* connected .)th the ad,)n)*trat)on of ;+*t)ce, the propert1 and r)-ht* )n l)t)-at)on or le/)ed +pon an
e2ec+t)on 0efore the co+rt .)th)n .ho*e ;+r)*d)ct)on or terr)tor1 the1 e2erc)*e the)r re*pect)/e f+nct)on*" (14+
8.'1464(4') 4)/07-*+ (1* ,/( '5 ,/=74.4)3 6: ,++43)2*)( ,)- +1,00 ,880: (' 0,;:*.+, ;4(1 .*+8*/( ('
(1* 8.'8*.(: ,)- .431(+ ;14/1 2,: 6* (1* '6B*/( '5 ,): 04(43,(4') 4) ;14/1 (1*: 2,: (,G* 8,.( 6: 94.(7*
'5 (1*4. 8.'5*++4').
222 222 222 4e,pha*)* *+ppl)edH
$n )t* Dec)*)on, the R%C ,ade the follo.)n- d)*A+)*)t)on:
[A]ccord)n- to the e/)dence for the defendant, a Mot)on for %er,)nat)on of (roceed)n- and D)*char-e of the
E2ec+tor and Bond dated <+ne 28, 1977 .a* f)led )n the ca*e, alle-)n- )n para-raph* 3 and 7 thereof, that
the e2ec+tor An-el E. GrdoOeF ha* alread1 t+rned o/er to the re*pect)/e he)r* and de/)*ee* all the)r
re*pect)/e *hare* )n accordance .)th the (ro;ect of (art)t)on d+l1 appro/ed 01 the Co+rt. %hereafter, ,ore
than one ,onth fro, the f)l)n- thereof, the %ran*fer of R)-ht* and $ntere*t .a* e2ec+ted on A+-+*t 28,
1977. H*)/*, ,( (1* (42* '5 (1* *>*/7(4') '5 (1* =7*+(4')*- -'/72*)(, 4( 2,: 6* /')/07-*- (1,(
S8*/4,0 P.'/**-4)3+ N'. #1$! 1,- 6**) (*.24),(*-. %he propert1 )n an <+an )* no lon-er the *+0;ect of
a l)t)-at)on and ,a1 0e al)enated 01 the cl)ent to h)* la.1er a* pa1,ent of attorne13* fee* rendered.
4e,pha*)* *+ppl)edH
$t )* clear fro, the a0o/eCA+oted r+l)n- of the tr)al co+rt that )t* *ole 0a*)* )n concl+d)n- that pec)al (roceed)n-* No. 71=7 had
0een ter,)nated and that the *+0;ect propert1 )* no lon-er the o0;ect of l)t)-at)on at the t),e the deed of %ran*fer of R)-ht* and
$ntere*t .a* e2ec+ted on A+-+*t 28, 1977 )* the alle-at)on of the e2ec+tor, An-el E. GrdoOeF, )n h)* Mot)on 1$ for %er,)nat)on
of (roceed)n- and D)*char-e of the E2ec+tor and Bond dated <+ne 28, 1977, that he had alread1 t+rned o/er to the re*pect)/e
he)r* and de/)*ee* all the)r re*pect)/e *hare* )n accordance .)th the pro;ect of part)t)on d+l1 appro/ed 01 the pro0ate co+rt.

%he Co+rt f)nd* the tr)al co+rt3* )nference to 0e .)tho+t *+ff)c)ent 0a*)*. &o. can the tr)al co+rt concl+de that pec)al (roceed)n-*
No. 71=7 had 0een ter,)nated and the *+0;ect propert1 no lon-er the o0;ect of l)t)-at)on .hen no e/)dence .a* pre*ented to *ho.
that .hen the %ran*fer of R)-ht* and $ntere*t .a* e2ec+ted, the pro0ate co+rt had alread1 )**+ed an order declar)n- the e*tate
proceed)n-* clo*ed and ter,)natedV A th)n- )* *a)d to 0e )n l)t)-at)on not onl1 )f there )* *o,e conte*t or l)t)-at)on o/er )t )n co+rt, 0+t
al*o fro, the ,o,ent that )t 0eco,e* *+0;ect to the ;+d)c)al act)on of the ;+d-e. 1% $n the pre*ent ca*e, there )* no proof to *ho.
that at the t),e the deed of %ran*fer of R)-ht* and $ntere*t .a* e2ec+ted, the pro0ate co+rt had )**+ed an order -rant)n- the Mot)on
for %er,)nat)on of (roceed)n- and D)*char-e of the E2ec+tor and Bond. )nce the ;+d-e ha* 1et to act on the a0o/eC,ent)oned
,ot)on, )t follo.* that the *+0;ect propert1 .h)ch )* the *+0;ect ,atter of the deed of %ran*fer of R)-ht* and $ntere*t, )* *t)ll the o0;ect
of l)t)-at)on, that )* pec)al (roceed)n-* No. 71=7.
#+rther,ore, .e a-ree .)th the pet)t)oner*3 +nd)*p+ted content)on that .hen the deed of %ran*fer of R)-ht* and $ntere*t .a*
e2ec+ted, the t)tle o/er the *+0;ect lot .a* *t)ll )n the na,e of Adel)na G+rrea and that )t .a* onl1 on Gcto0er 7, 19=8 that the t)tle
.a* tran*ferred )n the na,e of R)cardo. %he r+le )* that a* lon- a* the order for the d)*tr)0+t)on of the e*tate ha* not 0een co,pl)ed
.)th, the pro0ate proceed)n-* cannot 0e dee,ed clo*ed and ter,)nated. 2& %he pro0ate co+rt lo*e* ;+r)*d)ct)on of an e*tate +nder
ad,)n)*trat)on onl1 after the pa1,ent of all the de0t* and the re,a)n)n- e*tate del)/ered to the he)r* ent)tled to rece)/e the
*a,e. 21$n the pre*ent ca*e, .h)le the *+0;ect lot .a* a**)-ned a* R)cardo3* *hare )n the pro;ect of part)t)on e2ec+ted 01 the he)r*
of Adel)na G+rrea, the t)tle o/er the *+0;ect lot .a* *t)ll )n the na,e of the latter and .a* not 1et con/e1ed to R)cardo .hen the
%ran*fer of R)-ht* and $ntere*t .a* e2ec+ted. A* correctl1 c)ted 01 pet)t)oner*, the Co+rt held )n .ucero v. ,a"a(a 22 that:
[t]he ter, ?del)/er1? or trad)t)on ha* t.o a*pect*: 41H the de 3ure del)/er1 or the e2ec+t)on of deed* of
con/e1ance and 42H the del)/er1 of the ,ater)al po**e**)on 4Florendo vs. Foz, 28 (h)l. 3==, 393H. %he +*+al
pract)ce )* that, )f the land to 0e del)/ered )* )n the na,e of the decedent, the ad,)n)*trator e2ec+te* a deed,
con/e1)n- the land to the d)*tr)0+tee. %hat deed, to-ether .)th the pro;ect of part)t)on, the order appro/)n- )t,
the letter* of ad,)n)*trat)on and the cert)f)cat)on a* to the pa1,ent of the e*tate, )nher)tance and realt1 ta2e*,
)* re-)*tered )n the corre*pond)n- Re-)*tr1 of Deed*. %)tle .o+ld then 0e )**+ed to the d)*tr)0+tee. %hereafter,
the ad,)n)*trator or e2ec+tor place* h), )n ,ater)al po**e**)on of the land )f the *a,e )* )n the c+*tod1 of the
for,er. 23
$t follo.* that, *)nce at the t),e of e2ec+t)on of the deed of %ran*fer of R)-ht* and $ntere*t, the *+0;ect propert1 *t)ll for,ed part
of the e*tate of Adel)na, and there 0e)n- no e/)dence to *ho. that ,ater)al po**e**)on of the propert1 .a* -)/en to R)cardo,
the pro0ate proceed)n-* concern)n- Adel)na3* e*tate cannot 0e dee,ed to ha/e 0een clo*ed and ter,)nated and the *+0;ect
propert1 *t)ll the o0;ect of l)t)-at)on. C&A%Ea
&a/)n- 0een e*ta0l)*hed that the *+0;ect propert1 .a* *t)ll the o0;ect of l)t)-at)on at the t),e the *+0;ect deed of %ran*fer of R)-ht*
and $ntere*t .a* e2ec+ted, the a**)-n,ent of r)-ht* and )ntere*t o/er the *+0;ect propert1 )n fa/or of re*pondent )* n+ll and /o)d for
0e)n- /)olat)/e of the pro/)*)on* of Art)cle 1491 of the C)/)l Code .h)ch e2pre**l1 proh)0)t* la.1er* fro, acA+)r)n- propert1 or r)-ht*
.h)ch ,a1 0e the o0;ect of an1 l)t)-at)on )n .h)ch the1 ,a1 ta>e part 01 /)rt+e of the)r profe**)on.
Art)cle 1489 of the *a,e Code pro/)de*, a,on- other*, that contract* .h)ch are e2pre**l1 proh)0)ted or declared /o)d 01 la. are
con*)dered )ne2)*tent and /o)d fro, the 0e-)nn)n-.
Anent the *econd )**+e, the Co+rt ha* alread1 held that the *a)d propert1 )* *t)ll the o0;ect of l)t)-at)on at the t),e the *+0;ect
Man)fe*tat)on and %ran*fer of R)-ht* and $ntere*t .ere e2ec+ted and, th+*, ,a1 not 0e acA+)red 01 re*pondent p+r*+ant to the
pro/)*)on* of Art)cle 1491 of the C)/)l Code.
Con*)der)n- that the *+0;ect %ran*fer of R)-ht* and $ntere*t )* n+ll and /o)d, the Co+rt no lon-er f)nd* )t nece**ar1 to re*ol/e the
th)rd )**+e.
A* to the fo+rth )**+e, )t follo.* that re*pondent3* t)tle o/er the *+0;ect propert1 *ho+ld 0e cancelled and the propert1 recon/e1ed to
the e*tate of R)cardo, the *a,e to 0e d)*tr)0+ted to the latter3* he)r*. %h)* )* .)tho+t pre;+d)ce, ho.e/er, to re*pondent3* r)-ht to
cla), h)* attorne13* fee* fro, the e*tate of R)cardo, )t 0e)n- +nd)*p+ted that he rendered le-al *er/)ce* for the latter.
Anent the la*t )**+e, the Co+rt )* not per*+aded 01 pet)t)oner*3 pra1er for the -rant of attorne13* fee* )n an a,o+nt a* the Co+rt ,a1
deter,)ne. %he -eneral r+le )* that attorne13* fee* cannot 0e reco/ered a* part of da,a-e* 0eca+*e no pre,)+, *ho+ld 0e placed
on the r)-ht to l)t)-ate. 2 Art)cle 228= of the C)/)l Code pro/)de* that )n the a0*ence of *t)p+lat)on, attorne13* fee* and e2pen*e* of
l)t)-at)on, other than ;+d)c)al co*t*, cannot 0e reco/ered, e2cept:
41H5hen e2e,plar1 da,a-e* are a.arded"
42H5hen the defendant3* act or o,)**)on ha* co,pelled the pla)nt)ff to l)t)-ate .)th th)rd per*on* or to )nc+r
e2pen*e* to protect h)* )ntere*t"
43H$n cr),)nal ca*e* of ,al)c)o+* pro*ec+t)on a-a)n*t the pla)nt)ff"
44H$n ca*e of a clearl1 +nfo+nded c)/)l act)on or proceed)n- a-a)n*t the pla)nt)ff"
47H5here the defendant acted )n -ro** and e/)dent 0ad fa)th )n ref+*)n- to *at)*f1 the pla)nt)ff3* pla)nl1 /al)d,
;+*t and de,anda0le cla),"
49H$n act)on* for le-al *+pport"
47H$n act)on* for the reco/er1 of .a-e* of ho+*ehold helper*, la0orer* and *>)lled .or>er*"
4=H$n act)on* for )nde,n)t1 +nder .or>,en3* co,pen*at)on and e,plo1er3* l)a0)l)t1 la.*"
49H$n a *eparate c)/)l act)on to reco/er c)/)l l)a0)l)t1 ar)*)n- fro, a cr),e"
418H5hen at lea*t do+0le ;+d)c)al co*t* are a.arded"
411H$n an1 other ca*e .here the co+rt dee,* )t ;+*t and eA+)ta0le that attorne13* fee* and e2pen*e* of
l)t)-at)on *ho+ld 0e reco/ered.
%he Co+rt f)nd* that the pre*ent ca*e doe* not fall +nder an1 of the en+,erated e2cept)on*. $t )* *ettled that e/en )f a cla),ant
)* co,pelled to l)t)-ate .)th th)rd per*on* or to )nc+r e2pen*e* to protect )t* r)-ht*, *t)ll attorne13* fee* ,a1 not 0e a.arded
.here no *+ff)c)ent *ho.)n- of 0ad fa)th co+ld 0e reflected )n a part13* per*)*tence )n a ca*e other than an erroneo+* con/)ct)on
of the r)-hteo+*ne** of h)* ca+*e. 2! $n the pre*ent ca*e, e/en -rant)n- that pet)t)oner* .ere co,pelled to l)t)-ate and )nc+r
e2pen*e* to protect the)r )ntere*t*, attorne13* fee* ,a1 not 0e a.arded )n the)r fa/or 0eca+*e there )* no *+ff)c)ent *ho.)n-
that re*pondent acted )n -ro** and e/)dent 0ad fa)th )n ref+*)n- to *at)*f1 the)r cla),, )n /)e. of h)* erroneo+* 0el)ef and
;+d-,ent that he ha* la.f+ll1 acA+)red the *+0;ect propert1.
A* to pet)t)oner*3 ent)tle,ent to other for,* of da,a-e*, .h)le the co,pla)nt f)led 01 here)n pet)t)oner* .)th the tr)al co+rt conta)n* a
-eneral pra1er for the -rant of other rel)ef*, the r+le )* that e/)dence *ho+ld 0e ta>en of the da,a-e* cla),ed and the co+rt *ho+ld
deter,)ne .ho are the per*on* ent)tled to *+ch )nde,n)t1. 2" %he po.er of the co+rt* to -rant da,a-e* and attorne13* fee*
de,and* fact+al, le-al and eA+)ta0le ;+*t)f)cat)on" )t* 0a*)* cannot 0e left to *pec+lat)on or con;ect+re. 2#$n the pre*ent ca*e, no
alle-at)on, ,+ch le**, e/)dence .a* pre*ented 01 pet)t)oner* to pro/e that the1 are ent)tled to da,a-e*.
5&ERE#GRE, the a**a)led Dec)*)on and Re*ol+t)on of the Co+rt of Appeal* )n CACG.R. No. CE No. 79218 to-ether .)th the
Dec)*)on dated <+l1 7, 1999 of the Re-)onal %r)al Co+rt of (a*)- C)t1, Branch 29= )n C)/)l Ca*e No. 47743 are REEERED and E%
A$DE. A ne. ;+d-,ent )* rendered cancel)n- %ran*fer Cert)f)cate of %)tle No. 24474 )n the na,e of re*pondent Enr)A+e (. +pl)co
and re)n*tat)n- %ran*fer Cert)f)cate of %)tle No. 24473 )n the na,e of R)cardo G+rrea.
No prono+nce,ent a* to co*t*.
G GRDERED.
Ynares-Santia(o and Calle3o, Sr., JJ., conc+r.
Pan(ani)an, C.J., too> no part. #or,er partner of a part13* co+n*el.
C#ico-0azario, J., )* on off)c)al lea/e.
F''()'(*+
1.(enned 01 A**oc)ate <+*t)ce Corona $0a1Co,era 4no. ret)redH and conc+rred )n 01 A**oc)ate <+*t)ce* (ort)a Al)OoC
&or,ach+elo* and El/) <ohn A*+nc)on.
2.(enned 01 <+d-e A,el)a Cotan-coCManala*ta*.
3.(enned 01 A**oc)ate <+*t)ce (ort)a Al)OoC&or,ach+elo* and conc+rred )n 01 A**oc)ate <+*t)ce* B+ena/ent+ra <. G+errero
4no. ret)redH and El/) <ohn . A*+nc)on.
4.Gr)-)nal Record*, Eol. $, p. 1.
7.'d.
9.CA Rollo, pp. 194C197.
7.'d. at 381.
=.'d. at 311.
9.'d. at 31=.
18.'d. at 322.
11.'d. at 34=.
12.'d. at 371.
13.GR, Eol. $$$, p. 1117.
14.Rollo, pp. 27C29.
17.Siccuan v. People, G.R. No. 133789, Apr)l 2=, 2887, 4773 CRA 47=, 493.
19.$anila 7lectric Co%pan/ v. ,ena%ira, G.R. No. 147271, <+l1 14, 2887, 493 CRA 331, 347.
17.Rivera v. Ro%an, G.R. No. 142482, epte,0er 28, 2887, 478 CRA 279, 2=7.
1=.%he plead)n- )* properl1 deno,)nated a* a (et)t)on for %er,)nat)on of (roceed)n- and D)*char-e of the E2ec+tor and Bond,
Defendant3* #or,al Gffer of E2h)0)t*, E2h)0)t ?7CD?, p. 74.
19.&alencia v. Ca)antin(, A.C. No*. 1382, 1391 and 1743, Apr)l 29, 1991, 199 CRA 382, 387.
28.Portu(al v. Portu(al-,eltran, G.R. No. 177777, A+-+*t 19, 2887, 497 CRA 1=4, 197.
21.Guilas v. Jud(e of t#e Court of First 'nstance of Pa%pan(a, et al., 178 (h)l. 13=, 144C147.
22.17= (h)l. 48= 41974H.
23.'d. at p. 414.
24.Spouses Francisco v. Court of !ppeals, 449 (h)l. 932, 972 42883H.
27.S%it# <line ,ec%an Corporation v. Court of !ppeals, 479 (h)l. 213, 229 42883H.

29.C#ua v. Court of !ppeals, G.R. No. 178793, No/. 19, 2884, 443 CRA 279, 273.
27.Ranola v. Court of !ppeals, 379 (h)l. 1, 13 42888H.

ECGND D$E$$GN
[G.R. No. 1277=7. <+ne =, 2887.]
HEIRS OF EDUARDO MANLAPAT, .*8.*+*)(*- 6: GLORIA MANLAPAT-BANAAG ,)- LEON M.
BANAAG, IR., petitioners, vs. HON. COURT OF APPEALS, RURAL BANK OF SAN PASCUAL, INC., ,)-
IOSE B. SALAZAR, CONSUELO CRUZ ,)- ROSALINA CRUZ-BAUTISTA, ,)- (1* REGISTER OF
DEEDS '5 M*:/,7,:,), B70,/,), respondents.
D E C I S I O N
TINGA, J p:
Before th)* Co+rt )* a R+le 47 pet)t)on a**a)l)n- the -ecision 1 dated 29 epte,0er 1994 of the Co+rt of Appeal* that re/er*ed
the -ecision 2 dated 38 Apr)l 1991 of the Re-)onal %r)al Co+rt 4R%CH of B+lacan, Branch 9, Malolo*. %he tr)al co+rt declared
%ran*fer Cert)f)cate* of %)tle 4%C%*H No. %C9329C(4MH and No. %C9327C(4MH a* /o)d a) initio and ordered the re*torat)on of Gr)-)nal
Cert)f)cate of %)tle 4GC%H No. (C1734MH )n the na,e of Ed+ardo Manlapat 4Ed+ardoH, pet)t)oner*3 predece**orC)nC)ntere*t.
%he contro/er*1 )n/ol/e* !ot No. 2284, a parcel of land .)th an area of 1,87= *A+are ,eter*, located at (an-h+lo, G0ando,
B+lacan. %he propert1 had 0een or)-)nall1 )n the po**e**)on of <o*e Al/areF, Ed+ardo3* -randfather, +nt)l h)* de,)*e )n 1919. $t
re,a)ned +nre-)*tered +nt)l = Gcto0er 1979 .hen GC% No. (C1734MH .a* )**+ed )n the na,e of Ed+ardo p+r*+ant to a free patent
)**+ed )n Ed+ardo3* na,e 3 that .a* entered )n the Re-)*tr1 of Deed* of Me1ca+a1an, B+lacan. %he *+0;ect lot )* ad;acent to a
f)*hpond o.ned 01 one R)cardo Cr+F 4R)cardoH, predece**orC)nC)ntere*t of re*pondent* Con*+elo Cr+F and Ro*al)na Cr+FCBa+t)*ta
4Cr+Fe*H. !
Gn 19 Dece,0er 1974, 0efore the *+0;ect lot .a* t)tled, Ed+ardo *old a port)on thereof .)th an area of 773 *A+are ,eter* to
R)cardo. %he *ale )* e/)denced 01 a deed of *ale ent)tled ?<asulatan n( ,ili#an( 2ulu/an n( .upan( *alan( 2itulo
C<asulatanD? " .h)ch .a* *)-ned 01 Ed+ardo h),*elf a* /endor and h)* .)fe En-rac)a An)ceto .)th a certa)n ant)a-o Enr)A+eF
*)-n)n- a* .)tne**. %he deed .a* notar)Fed 01 Notar1 (+0l)c Manolo Cr+F. # Gn 4 Apr)l 1993, the <asulatan .a* re-)*tered .)th the
Re-)*ter of Deed* of B+lacan. $
Gn 1= March 19=1, another -eed of Sale % con/e1)n- another port)on of the *+0;ect lot con*)*t)n- of 78 *A+are ,eter* a* r)-ht of
.a1 .a* e2ec+ted 01 Ed+ardo )n fa/or of R)cardo )n order to reach the port)on co/ered 01 the f)r*t *ale e2ec+ted )n 1974 and to
ha/e acce** to h)* f)*hpond fro, the pro/)nc)al road. 1& %he deed .a* *)-ned 01 Ed+ardo h),*elf and h)* .)fe En-rac)a An)ceto,
to-ether .)th Ed+ardo Manlapat, <r. and (atr)c)o Manlapat. %he *a,e .a* al*o d+l1 notar)Fed on 1= <+l1 19=1 01 Notar1 (+0l)c
Ar*en)o G+e/arra. 11
$n Dece,0er 19=1, !eon Banaa-, <r. 4Banaa-H, a* attorne1C)nCfact of h)* fatherC)nCla. Ed+ardo, e2ec+ted a ,ort-a-e .)th the R+ral
Ban> of an (a*c+al, G0ando Branch 4RB(H, for (188,888.88 .)th the *+0;ect lot a* collateral. Banaa- depo*)ted the o.ner3*
d+pl)cate cert)f)cate of GC% No. (C1734MH .)th the 0an>. ADCEa
Gn 31 A+-+*t 19=9, R)cardo d)ed .)tho+t learn)n- of the pr)or )**+ance of GC% No. (C1734MH )n the na,e of Ed+ardo. 12 &)* he)r*,
the Cr+Fe*, .ere not ),,ed)atel1 a.are of the con*+,,ated *ale 0et.een Ed+ardo and R)cardo.
Ed+ardo h),*elf d)ed on 4 Apr)l 19=7. &e .a* *+r/)/ed 01 h)* he)r*, En-rac)a An)ceto, h)* *po+*e" and ch)ldren, (atr)c)o, Bon)fac)o,
Ed+ardo, CoraFon, An*el,o, %ere*)ta and Glor)a, all *+rna,ed Manlapat. 13 Ne)ther d)d the he)r* of Ed+ardo 4pet)t)oner*H )nfor,
the Cr+Fe* of the pr)or *ale )n fa/or of the)r predece**orC)nC)ntere*t, R)cardo. Bet *+0*eA+entl1, the Cr+Fe* ca,e to learn a0o+t the
*ale and the )**+ance of the GC% )n the na,e of Ed+ardo.
@pon learn)n- of the)r r)-ht to the *+0;ect lot, the Cr+Fe* ),,ed)atel1 tr)ed to confront pet)t)oner* on the ,ort-a-e and o0ta)n the
*+rrender of the GC%. %he Cr+Fe*, ho.e/er, .ere th.arted )n the)r 0)d to *ee the he)r*. Gn the ad/)ce of the B+rea+ of !and*, NCR
Gff)ce, the1 0ro+-ht the ,atter to the )aran(a/ capta)n of ,aran(a/(an-h+lo, G0ando, B+lacan. D+r)n- the hear)n-, pet)t)oner*
.ere )nfor,ed that the Cr+Fe* had a le-al r)-ht to the propert1 co/ered 01 GC% and needed the GC% for the p+rpo*e of *ec+r)n- a
*eparate t)tle to co/er the )ntere*t of R)cardo. (et)t)oner*, ho.e/er, .ere +n.)ll)n- to *+rrender the GC%. 1
&a/)n- fa)led to ph1*)call1 o0ta)n the t)tle fro, pet)t)oner*, )n <+l1 19=9, the Cr+Fe* )n*tead .ent to RB( .h)ch had c+*tod1 of the
o.ner3* d+pl)cate cert)f)cate of the GC%, earl)er *+rrendered a* a con*eA+ence of the ,ort-a-e. %ran*act)n- .)th RB(3* ,ana-er,
<o*e alaFar 4alaFarH, the Cr+Fe* *o+-ht to 0orro. the o.ner3* d+pl)cate cert)f)cate for the p+rpo*e of photocop1)n- the *a,e and
thereafter *ho.)n- a cop1 thereof to the Re-)*ter of Deed*. alaFar allo.ed the Cr+Fe* to 0r)n- the o.ner3* d+pl)cate cert)f)cate
o+t*)de the 0an> pre,)*e* .hen the latter *ho.ed the Ia*+latan. 1! %he Cr+Fe* ret+rned the o.ner3* d+pl)cate cert)f)cate on the
*a,e da1 after ha/)n- cop)ed the *a,e. %he1 then 0ro+-ht the cop1 of the GC% to Re-)*ter of Deed* <o*e #lore* 4#lore*H of
Me1ca+a1an and *ho.ed the *a,e to h), to *ec+re h)* le-al op)n)on a* to ho. the Cr+Fe* co+ld le-all1 protect the)r )ntere*t )n the
propert1 and re-)*ter the *a,e. 1" #lore* *+--e*ted the preparat)on of a *+0d)/)*)on plan to 0e a0le to *e-re-ate the area
p+rcha*ed 01 R)cardo fro, Ed+ardo and ha/e the *a,e co/ered 01 a *eparate t)tle. 1#
%hereafter, the Cr+Fe* *ol)c)ted the op)n)on of R)cardo Arand)lla 4Arand)llaH, !and Re-)*trat)on Gff)cer, D)rector $$$, !e-al Affa)r*
Depart,ent, !and Re-)*trat)on A+thor)t1 at P+eFon C)t1, .ho a-reed .)th the ad/)ce -)/en 01 #lore*. 1$ Rel1)n- on the *+--e*t)on*
of #lore* and Arand)lla, the Cr+Fe* h)red t.o -eodet)c en-)neer* to prepare the corre*pond)n- *+0d)/)*)on plan. %he *+0d)/)*)on
plan .a* pre*ented to the !and Mana-e,ent B+rea+, Re-)on $$$, and there )t .a* appro/ed 01 a certa)n Mr. (a,0)d of *a)d off)ce
on 21 <+l1 19=9.
After *ec+r)n- the appro/al of the *+0d)/)*)on plan, the Cr+Fe* .ent 0ac> to RB( and a-a)n a*>ed for the o.ner3* d+pl)cate
cert)f)cate fro, alaFar. %he Cr+Fe* )nfor,ed h), that the pre*entat)on of the o.ner3* d+pl)cate cert)f)cate .a* nece**ar1, per
ad/)*e of the Re-)*ter of Deed*, for the cancellat)on of the GC% and the )**+ance )n l)e+ thereof of t.o *eparate t)tle* )n the na,e*
of R)cardo and Ed+ardo )n accordance .)th the appro/ed *+0d)/)*)on plan. 1% Before -)/)n- the o.ner3* d+pl)cate cert)f)cate,
alaFar reA+)red the Cr+Fe* to *ee Att1. Renato ant)a-o 4Att1. ant)a-oH, le-al co+n*el of RB(, to *ec+re fro, the latter a
clearance to 0orro. the t)tle. Att1. ant)a-o .o+ld -)/e the clearance on the cond)t)on that onl1 Cr+Fe* p+t +p a *+0*t)t+te collateral,
.h)ch the1 d)d. 2& A* a re*+lt, the Cr+Fe* -ot hold a-a)n of the o.ner3* d+pl)cate cert)f)cate.
After the Cr+Fe* pre*ented the o.ner3* d+pl)cate cert)f)cate, alon- .)th the deed* of *ale and the *+0d)/)*)on plan, the Re-)*ter of
Deed* cancelled the GC% and )**+ed )n l)e+ thereof %C% No. %C9329C(4MH co/er)n- 983 *A+are ,eter* of !ot No. 2284 )n the na,e
of R)cardo and %C% No. %C9327C(4MH co/er)n- the re,a)n)n- 477 *A+are ,eter* )n the na,e of Ed+ardo. 21
Gn 9 A+-+*t 19=9, the Cr+Fe* .ent 0ac> to the 0an> and *+rrendered to alaFar %C% No. 9327C(4MH )n the na,e of Ed+ardo and
retr)e/ed the t)tle the1 had earl)er -)/en a* *+0*t)t+te collateral. After *ec+r)n- the ne. *eparate t)tle*, the Cr+Fe* f+rn)*hed
pet)t)oner* .)th a cop1 of %C% No. 9327C(4MH thro+-h the )aran(a/ capta)n and pa)d the real propert1 ta2 for 19=9. 22
%he Cr+Fe* al*o *ent a for,al letter to G+)ller,o Re1e*, <r., D)rector, +per/)*)on ector, Depart,ent $$$ of the Central Ban> of the
(h)l)pp)ne*, )nA+)r)n- .hether the1 co,,)tted an1 /)olat)on of e2)*t)n- 0an> la.* +nder the c)rc+,*tance*. A certa)n Jo*),o
%opac)o, <r. of the +per/)*)on ector *ent a repl1 letter ad/)*)n- the Cr+Fe*, *)nce the ,atter )* 0et.een the, and the 0an>, to -et
)n to+ch .)th the 0an> for the f)nal *ettle,ent of the ca*e. 23
$n Gcto0er of 19=9, Banaa- .ent to RB(, )ntend)n- to tender f+ll pa1,ent of the ,ort-a-e o0l)-at)on. $t .a* onl1 then that he
learned of the deal)n-* of the Cr+Fe* .)th the 0an> .h)ch e/ent+all1 led to the *+0d)/)*)on of the *+0;ect lot and the )**+ance of t.o
*eparate t)tle* thereon. $n e2chan-e for the f+ll pa1,ent of the loan, RB( tr)ed to per*+ade pet)t)oner* to accept %C% No. %C9327C
(4MH )n the na,e of Ed+ardo. 2
A* a re*+lt, three 43H ca*e* .ere lod-ed, later con*ol)dated, .)th the tr)al co+rt, all )n/ol/)n- the )**+ance of the %C%*, to .)t:
41HC)/)l Ca*e No. 978CMC=9, for recon/e1ance .)th da,a-e* f)led 01 the he)r* of Ed+ardo Manlapat a-a)n*t
Con*+elo Cr+F, Ro*al)na Cr+FCBa+t)*ta, R+ral Ban> of an (a*c+al, <o*e alaFar and <o*e #lore*, )n h)*
capac)t1 a* Dep+t1 Re-)*trar, Me1ca+a1an Branch of the Re-)*tr1 of Deed* of B+lacan" &cDA$
42HC)/)l Ca*e No. 141CMC98 for da,a-e* f)led 01 <o*e alaFar a-a)n*t Con*+elo Cr+F, et. [*)c] al." and
43HC)/)l Ca*e No. 944CMC=9, for declarat)on of n+ll)t1 of t)tle .)th da,a-e* f)led 01 R+ral Ban> of an (a*c+al,
$nc. a-a)n*t the *po+*e* R)cardo Cr+F and Con*+elo Cr+F, et al. 2!
After tr)al of the con*ol)dated ca*e*, the R%C of Malolo* rendered a dec)*)on )n fa/or of the he)r* of Ed+ardo, the d)*po*)t)/e port)on
of .h)ch read*:
5&ERE#GRE, pre,)*ed fro, the fore-o)n-, ;+d-,ent )* here01 rendered:
1.Declar)n- %ran*fer Cert)f)cate* of %)tle No*. %C9329C(4MH and %C9327C(4MH a* /o)d a) initio and
order)n- the Re-)*ter of Deed*, Me1ca+a1an Branch to cancel *a)d t)tle* and to re*tore Gr)-)nal
Cert)f)cate of %)tle No. (C1734MH )n the na,e of pla)nt)ff*3 predece**orC)nC)ntere*t Ed+ardo
Manlapat"
2.Grder)n- the defendant* R+ral Ban> of an (a*c+al, <o*e alaFar, Con*+elo Cr+F and Ro*al)na
Cr+FCBa+t)*ta, to pa1 the pla)nt)ff* &e)r* of Ed+ardo Manlapat, ;o)ntl1 and *e/erall1, the follo.)n-:
aH(288,888.88 a* ,oral da,a-e*"

0H(78,888.88 a* e2e,plar1 da,a-e*"
cH(28,888.88 a* attorne13* fee*" and
dHthe co*t* of the *+)t.
3.D)*,)**)n- the co+ntercla),*.
G GRDERED.? 2"
%he tr)al co+rt fo+nd that pet)t)oner* .ere ent)tled to the rel)ef* of recon/e1ance and da,a-e*. Gn th)* ,atter, )t r+led that
pet)t)oner* .ere )ona fide ,ort-a-or* of an +nclo+ded t)tle 0ear)n- no annotat)on of an1 l)en andMor enc+,0rance. %h)* fact,
accord)n- to the tr)al co+rt, .a* conf)r,ed 01 the 0an> .hen )t accepted the ,ort-a-e +ncond)t)onall1 on 27 No/e,0er 19=1. $t
fo+nd that pet)t)oner* .ere co,placent and +npert+r0ed, 0el)e/)n- that the t)tle to the)r propert1, .h)le *er/)n- a* *ec+r)t1 for a loan,
.a* *afel1 /a+lted )n the ),per,ea0le conf)ne* of RB(. %o the)r *+rpr)*e and pre;+d)ce, *a)d t)tle .a* *+0d)/)ded )nto t.o port)on*,
lea/)n- the, a port)on of 477 *A+are ,eter* fro, the or)-)nal total area of 1,87= *A+are ,eter*, all 0eca+*e of the fra+d+lent and
ne-l)-ent act* of re*pondent* and RB(. %he tr)al co+rt rat)oc)nated that e/en a**+,)n- that a port)on of the *+0;ect lot .a* *old 01
Ed+ardo to R)cardo, pet)t)oner* .ere *t)ll not pr)/1 to the tran*act)on 0et.een the 0an> and the Cr+Fe* .h)ch e/ent+all1 led to the
*+0d)/)*)on of the GC% )nto %C%* No. %C9329C(4MH and No. %C9327C(4MH, clearl1 to the da,a-e and pre;+d)ce of pet)t)oner*. 2#
Concern)n- the cla),* for da,a-e*, the tr)al co+rt fo+nd the *a,e to 0e 0ereft of ,er)t. $t r+led that altho+-h the act of the Cr+Fe*
co+ld 0e dee,ed fra+d+lent, *t)ll )t .o+ld not con*t)t+te )ntr)n*)c fra+d. alaFar, nonethele**, .a* clearl1 -+)lt1 of ne-l)-ence )n
lett)n- the Cr+Fe* 0orro. the o.ner3* d+pl)cate cert)f)cate of the GC%. Ne)ther the 0an> nor )t* ,ana-er had 0+*)ne** entr+*t)n- to
*tran-er* t)tle* ,ort-a-ed to )t 01 other per*on* for .hate/er rea*on. $t .a* a clear /)olat)on of the ,ort-a-e and 0an>)n- la.*, the
tr)al co+rt concl+ded.
%he tr)al co+rt al*o r+led that altho+-h alaFar .a* per*onall1 re*pon*)0le for allo.)n- the t)tle to 0e 0orro.ed, the 0an> co+ld not
e*cape l)a0)l)t1 for )t .a* -+)lt1 of contr)0+tor1 ne-l)-ence. %he e/)dence *ho.ed that RB(3* le-al co+n*el .a* *o+-ht for ad/)ce
re-ard)n- re*pondent*3 reA+e*t. %h)* co+ld onl1 ,ean that RB( thro+-h )t* la.1er )f not thro+-h )t* ,ana-er had >no.n )n
ad/ance of the Cr+Fe*3 )ntent)on and *t)ll )t d)d noth)n- to pre/ent the e/ent+al)t1. alaFar .a* not e/en *+,,ar)l1 d)*,)**ed 01 the
0an> )f he .a* )ndeed the *ole per*on to 0la,e. &ence, the 0an>3* cla), for da,a-e* ,+*t nece**ar)l1 fa)l. 2$
%he tr)al co+rt -ranted the pra1er for the ann+l,ent of the %C%* a* a nece**ar1 con*eA+ence of )t* declarat)on that recon/e1ance
.a* )n order. A* to #lore*, h)* .or> 0e)n- ,)n)*ter)al a* Dep+t1 Re-)*ter of the B+lacan Re-)*tr1 of Deed*, the tr)al co+rt a0*ol/ed
h), of an1 l)a0)l)t1 .)th a *tern .arn)n- that he *ho+ld deal .)th h)* f+t+re tran*act)on* ,ore caref+ll1 and )n the *tr)cte*t *en*e a* a
re*pon*)0le -o/ern,ent off)c)al. 2%
A--r)e/ed 01 the dec)*)on of the tr)al co+rt, RB(, alaFar and the Cr+Fe* appealed to the Co+rt of Appeal*. %he appellate co+rt,
ho.e/er, re/er*ed the dec)*)on of the R%C. %he decretal te2t of the dec)*)on read*:
%&E #GREGG$NG CGN$DERED, the appealed dec)*)on )* here01 re/er*ed and *et a*)de, .)th co*t*
a-a)n*t the appellee*.
G GRDERED. 3&
%he appellate co+rt r+led that pet)t)oner* .ere not )ona fide ,ort-a-or* *)nce a* earl1 a* 1974 or 0efore the 19=1 ,ort-a-e,
Ed+ardo alread1 *old to R)cardo a port)on of the *+0;ect lot .)th an area of 773 *A+are ,eter*. %h)* fact, the Co+rt of Appeal*
noted, )* e/en *+pported 01 a doc+,ent of *ale *)-ned 01 Ed+ardo <r. and En-rac)a An)ceto, the *+r/)/)n- *po+*e of Ed+ardo, and
re-)*tered .)th the Re-)*ter of Deed* of B+lacan. %he appellate co+rt al*o fo+nd that on 1= March 19=1, for the *econd t),e,
Ed+ardo *old to R)cardo a *eparate area conta)n)n- 78 *A+are ,eter*, a* a road r)-htCofC.a1. 31 Clearl1, the GC% .a* )**+ed onl1
after the f)r*t *ale. $t al*o noted that the t)tle .a* -)/en to the Cr+Fe* 01 RB( /ol+ntar)l1, .)th >no.led-e e/en of the 0an>3*
co+n*el. 32 &ence, the ),po*)t)on of da,a-e* cannot 0e ;+*t)f)ed, the Cr+Fe* the,*el/e* 0e)n- the o.ner* of the propert1.
Certa)nl1, Ed+ardo ,)*led the 0an> )nto accept)n- the ent)re area a* a collateral *)nce the 983C*A+are ,eter port)on d)d not an1,ore
0elon- to h),. %he appellate co+rt, ho.e/er, concl+ded that there .a* no con*p)rac1 0et.een the 0an> and alaFar. 33
&ence, th)* pet)t)on for re/)e. on certiorari. c$D&E
(et)t)oner* a*cr)0e error* to the appellate co+rt 01 a*>)n- the follo.)n- A+e*t)on*, to .)t: 4aH can a ,ort-a-or 0e co,pelled to
rece)/e fro, the ,ort-a-ee a *,aller port)on of the or)-)nall1 enc+,0ered t)tle part)t)oned d+r)n- the *+0*)*tence of the ,ort-a-e,
.)tho+t the >no.led-e of, or a+thor)t1 der)/ed fro,, the re-)*tered o.ner" 40H can the ,ort-a-ee A+e*t)on the /erac)t1 of the
re-)*tered t)tle of the ,ort-a-or, a* noted )n the o.ner3* d+pl)cate cert)f)cate, and th+*, del)/er the cert)f)cate to *+ch th)rd per*on*,
)n/o>)n- an ad/er*e, pr)or, and +nre-)*tered cla), a-a)n*t the re-)*tered t)tle of the ,ort-a-or" 4cH can an ad/er*e pr)or cla),
a-a)n*t a re-)*tered t)tle 0e noted, re-)*tered and entered .)tho+t a co,petent co+rt order" and 4dH can 0el)ef of o.ner*h)p ;+*t)f1 the
ta>)n- of propert1 .)tho+t d+e proce** of la.V 3
%he >ernel of the contro/er*1 0o)l* do.n to the )**+e of .hether the cancellat)on of the GC% )n the na,e of the pet)t)oner*3
predece**orC)nC)ntere*t and )t* *pl)tt)n- )nto t.o *eparate t)tle*, one for the pet)t)oner* and the other for the Cr+Fe*, ,a1 0e
accorded le-al reco-n)t)on -)/en the pec+l)ar fact+al 0ac>drop of the ca*e. 5e r+le )n the aff)r,at)/e.
Private respondents CCruzesD o4n
t#e portion titled in t#eir na%es
Con*onant .)th la. and ;+*t)ce, the +lt),ate deno+e,ent of the propert1 d)*p+te l)e* )n the deter,)nat)on of the re*pect)/e 0a*e* of
the .arr)n- cla),*. &ere, a* )n other le-al d)*p+te*, .hat )* .r)tten -enerall1 de*er/e* credence.
A caref+l per+*al of the e/)dence on record re/eal* that the Cr+Fe* ha/e *+ff)c)entl1 pro/en the)r cla), of o.ner*h)p o/er the port)on
of !ot No. 2284 .)th an area of 773 *A+are ,eter*. %he d+l1 notar)Fed )n*tr+,ent of con/e1ance .a* e2ec+ted )n 1974 to .h)ch no
le** than Ed+ardo .a* a *)-nator1. %he e2ec+t)on of the deed of *ale .a* rendered 0e1ond do+0t 01 Ed+ardo3* ad,)**)on )n
h)* Sinu%paan( Sala/sa/ dated 24 Apr)l 1993. 3! %he*e doc+,ent* ,a>e the aff)r,ance of the r)-ht of the Cr+Fe* )nel+cta0le. %he
apparent )rre-+lar)t1, ho.e/er, )n the o0tent)on of the o.ner3* d+pl)cate cert)f)cate fro, the 0an>, later to 0e pre*ented to the
Re-)*ter of Deed* to *ec+re the )**+ance of t.o ne. %C%* )n place of the GC%, )* another ,atter.
(et)t)oner* ar-+e that the 1974 deed of *ale .a* not annotated on the GC% .h)ch .a* )**+ed )n 1979 )n fa/or of Ed+ardo" th+*, the
Cr+Fe*3 cla), of o.ner*h)p 0a*ed on the *ale .o+ld not hold .ater. %he Co+rt )* not per*+aded.
Re-)*trat)on )* not a reA+)re,ent for /al)d)t1 of the contract a* 0et.een the part)e*, for the effect of re-)*trat)on *er/e* ch)efl1 to 0)nd
th)rd per*on*. 3" %he pr)nc)pal p+rpo*e of re-)*trat)on )* ,erel1 to not)f1 other per*on* not part)e* to a contract that a tran*act)on
)n/ol/)n- the propert1 had 0een entered )nto. 5here the part1 ha* >no.led-e of a pr)or e2)*t)n- )ntere*t .h)ch )* +nre-)*tered at the
t),e he acA+)red a r)-ht to the *a,e land, h)* >no.led-e of that pr)or +nre-)*tered )ntere*t ha* the effect of re-)*trat)on a* to h),. 3#
#+rther, the he)r* of Ed+ardo cannot 0e con*)dered th)rd per*on* for p+rpo*e* of appl1)n- the r+le. %he con/e1ance *hall not 0e
/al)d a-a)n*t an1 per*on +nle** re-)*tered, e2cept 41H the -rantor, 42H h)* he)r* and de/)*ee*, and 43H th)rd per*on* ha/)n- act+al
not)ce or >no.led-e thereof. 3$ Not onl1 are pet)t)oner* the he)r* of Ed+ardo, *o,e of the, .ere act+all1 part)e* to
the <asulatan e2ec+ted )n fa/or of R)cardo. %h+*, the annotat)on of the ad/er*e cla), of the Cr+Fe* on the GC% )* no lon-er
reA+)red to 0)nd the he)r* of Ed+ardo, pet)t)oner* here)n.
Petitioners #ad no ri(#t to constitute
%ort(a(e over disputed portion
%he reA+)re,ent* of a /al)d ,ort-a-e are clearl1 la)d do.n )n Art)cle 28=7 of the Ne. C)/)l Code, viz:
AR%. 28=7.%he follo.)n- reA+)*)te* are e**ent)al to the contract* of pled-e and ,ort-a-e:
41H%hat the1 0e con*t)t+ted to *ec+re the f+lf)ll,ent of a pr)nc)pal o0l)-at)on" a$c%C
42H%hat the pled-or or ,ort-a-or 0e the a)solute o4ner of the th)n- pled-ed or ,ort-a-ed"
43H%hat the per*on* con*t)t+t)n- the pled-e or ,ort-a-e ha/e the free disposal of t#eir propert/,
and in t#e a)sence t#ereof, t#at t#e/ )e le(all/ aut#orized for t#e purpose.
%h)rd per*on* .ho are not part)e* to the pr)nc)pal o0l)-at)on ,a1 *ec+re the latter 01 pled-)n- or ,ort-a-)n-
the)r o.n propert1. 4e,pha*)* *+ppl)edH
#or a per*on to /al)dl1 con*t)t+te a /al)d ,ort-a-e on real e*tate, he ,+*t 0e the a0*ol+te o.ner thereof a* reA+)red 01 Art)cle 28=7
of the Ne. C)/)l Code. 3% %he ,ort-a-or ,+*t 0e the o.ner, other.)*e the ,ort-a-e )* /o)d. & $n a contract of ,ort-a-e, the
,ort-a-or re,a)n* to 0e the o.ner of the propert1 altho+-h the propert1 )* *+0;ected to a l)en. 1 A ,ort-a-e )* re-arded a*
noth)n- ,ore than a ,ere l)en, enc+,0rance, or *ec+r)t1 for a de0t, and pa**e* no t)tle or e*tate to the ,ort-a-ee and -)/e* h), no
r)-ht or cla), to the po**e**)on of the propert1. 2 $n th)* >)nd of contract, the propert1 ,ort-a-ed )* ,erel1 del)/ered to the
,ort-a-ee to *ec+re the f+lf)ll,ent of the pr)nc)pal o0l)-at)on. 3 +ch del)/er1 doe* not e,po.er the ,ort-a-ee to con/e1 an1
port)on thereof )n fa/or of another per*on a* the r)-ht to d)*po*e )* an attr)0+te of o.ner*h)p. %he r)-ht to d)*po*e )ncl+de* the
r)-ht to donate, to *ell, to pled-e or ,ort-a-e. %h+*, the ,ort-a-ee, not 0e)n- the o.ner of the propert1, cannot d)*po*e of the
.hole or part thereof nor ca+*e the ),pa)r,ent of the *ec+r)t1 )n an1 ,anner .)tho+t /)olat)n- the fore-o)n- r+le. ! %he ,ort-a-ee
onl1 o.n* the ,ort-a-e cred)t, not the propert1 )t*elf. "

(et)t)oner* *+0,)t a* an )**+e .hether a ,ort-a-or ,a1 0e co,pelled to rece)/e fro, the ,ort-a-ee a *,aller port)on of the lot
co/ered 01 the or)-)nall1 enc+,0ered t)tle, .h)ch lot .a* part)t)oned d+r)n- the *+0*)*tence of the ,ort-a-e .)tho+t the >no.led-e
or a+thor)t1 of the ,ort-a-or a* re-)*tered o.ner. %h)* for,+lat)on )* d)*)n-en+o+*, 0a*ele**l1 a**+,)n-, a* )t doe*, a* an ad,)tted
fact that the ,ort-a-or )* the o.ner of the ,ort-a-ed propert1 )n )t* ent)ret1. $ndeed, )t ha* not 0eco,e a *al)ent )**+e )n th)* ca*e
*)nce the ,ort-a-or .a* not the o.ner of the ent)re ,ort-a-ed propert1 )n the f)r*t place.
'ssuance of 6C2 0o. P-AH:C$D, i%proper
$t )* a -lar)n- fact that GC% No. (C1734MH co/er)n- the propert1 ,ort-a-ed .a* )n the na,e of Ed+ardo, .)tho+t an1 annotat)on of
an1 pr)or d)*po*)t)on or enc+,0rance. &o.e/er, the propert1 .a* *+ff)c)entl1 *ho.n to 0e not ent)rel1 o.ned 01 Ed+ardo a*
e/)denced 01 the <asulatan. Read)l1 apparent +pon per+*al of the record* )* that the GC% .a* )**+ed )n 1979, lon- after
the <asulatan .a* e2ec+ted .a1 0ac> )n 1974. %h+*, a port)on of the propert1 re-)*tered )n Ed+ardo3* na,e ar)*)n- fro, the -rant
of free patent d)d not act+all1 0elon- to h),. %he +t)l)Fat)on of the %orren* *1*te, to perpetrate fra+d cannot 0e accorded ;+d)c)al
*anct)on.
%),e and a-a)n, th)* Co+rt ha* r+led that the pr)nc)ple of )ndefea*)0)l)t1 of a %orren* t)tle doe* not appl1 .here fra+d attended the
)**+ance of the t)tle, a* .a* concl+*)/el1 e*ta0l)*hed )n th)* ca*e. %he %orren* t)tle doe* not f+rn)*h a *h)ed for
fra+d. # Re-)*trat)on doe* not /e*t t)tle. $t )* not a ,ode of acA+)r)n- o.ner*h)p 0+t )* ,erel1 e/)dence of *+ch t)tle o/er a part)c+lar
propert1. $t doe* not -)/e the holder an1 0etter r)-ht than .hat he act+all1 ha*, e*pec)all1 )f the re-)*trat)on .a* done )n 0ad fa)th.
%he effect )* that )t )* a* )f no re-)*trat)on .a* ,ade at all. $ $n fact, th)* Co+rt ha* r+led that a decree of re-)*trat)on c+t off or
e2t)n-+)*hed a r)-ht acA+)red 01 a per*on .hen *+ch r)-ht refer* to a l)en or enc+,0rance on the land ' not to the r)-ht of
o.ner*h)p thereof ' .h)ch .a* not annotated on the cert)f)cate of t)tle )**+ed thereon. %
'ssuance of 2C2 0os. 2-;:?8-PC$D
and 2-;:?+-PC$D, &alid
%he /al)d)t1 of the )**+ance of t.o %C%*, one for the port)on *old to the predece**orC)nC)ntere*t of the Cr+Fe* and the other for the
port)on reta)ned 01 pet)t)oner*, )* read)l1 apparent fro, ect)on 73 of the (re*)dent)al Decree 4(.D.H No. 1729 or the Propert/
Re(istration -ecree. $t pro/)de*:
EC 73.Presentation of o4nerJs duplicate upon entr/ of ne4 certificate. ' No /ol+ntar1 )n*tr+,ent *hall 0e
re-)*tered 01 the Re-)*ter of Deed*, +nle** the o.ner3* d+pl)cate cert)f)cate )* pre*ented .)th *+ch
)n*tr+,ent, e2cept )n ca*e* e2pre**l1 pro/)ded for )n th)* Decree or +pon order of the co+rt, for ca+*e
*ho.n. $DCcEa
2#e production of t#e o4nerJs duplicate certificate, 4#enever an/ voluntar/ instru%ent is presented for
re(istration, s#all )e conclusive aut#orit/ fro% t#e re(istered o4ner to t#e Re(ister of -eeds to enter a ne4
certificate or to %ae a %e%orandu% of re(istration in accordance 4it# suc# instru%ent, and the ne.
cert)f)cate or ,e,orand+, *hall 0e 0)nd)n- +pon the re-)*tered o.ner and +pon all per*on* cla),)n- +nder
h),, )n fa/or of e/er1 p+rcha*er for /al+e and )n -ood fa)th.
$n all ca*e* of re-)*trat)on proc+red 01 fra+d, the o.ner ,a1 p+r*+e all h)* le-al and eA+)ta0le re,ed)e*
a-a)n*t the part)e* to *+ch fra+d .)tho+t pre;+d)ce, ho.e/er, to the r)-ht* of an1 )nnocent holder of the
decree of re-)*trat)on on the or)-)nal pet)t)on or appl)cat)on, an1 *+0*eA+ent re-)*trat)on proc+red 01 the
pre*entat)on of a for-ed d+pl)cate cert)f)cate of t)tle, or a for-ed deed or )n*tr+,ent, *hall 0e n+ll and /o)d.
4e,pha*)* *+ppl)edH
(et)t)oner* ar-+e that the )**+ance of the %C%* /)olated the th)rd para-raph of ect)on 73 of (.D. No. 1729. %he ar-+,ent )*
0a*ele**. $t ,+*t 0e noted that the pro/)*)on *pea>* of for(ed duplicate certificate of title and for(ed deed or instru%ent. Ne)ther
)n*tance o0ta)n* )n th)* ca*e. 5hat the Cr+Fe* pre*ented 0efore the Re-)*ter of Deed* .a* the /er1 -en+)ne o.ner3* d+pl)cate
cert)f)cate earl)er depo*)ted 01 Banaa-, Ed+ardo3* attorne1C)nCfact, .)th RB(. !)>e.)*e, the )n*tr+,ent* of con/e1ance are
a+thent)c, not for-ed. ect)on 73 ha* ne/er 0een clearer on the po)nt that a* lon- a* the o.ner3* d+pl)cate cert)f)cate )* pre*ented to
the Re-)*ter of Deed* to-ether .)th the )n*tr+,ent of con/e1ance, *+ch pre*entat)on *er/e* a* concl+*)/e a+thor)t1 to the Re-)*ter
of Deed* to )**+e a tran*fer cert)f)cate or ,a>e a ,e,orand+, of re-)*trat)on )n accordance .)th the )n*tr+,ent.
%he record* of the ca*e *ho. that de*p)te the effort* ,ade 01 the Cr+Fe* )n per*+ad)n- the he)r* of Ed+ardo to allo. the, to
*ec+re a *eparate %C% on the cla),ed port)on, the)r o.ner*h)p 0e)n- a,pl1 e/)denced 01 the <asulatan and Sinu%paan(
Sala/sa/ .here Ed+ardo h),*elf ac>no.led-ed the *ale* )n fa/or of R)cardo, the he)r* ada,antl1 re;ected the not)on of *eparate
t)tl)n-. %h)* pro,pted the Cr+Fe* to approach the 0an> ,ana-er of RB( for the p+rpo*e of protect)n- the)r propert1 r)-ht. %he1
*+cceeded )n per*+ad)n- the latter to lend the o.ner3* d+pl)cate cert)f)cate. De*p)te the apparent )rre-+lar)t1 )n allo.)n- the Cr+Fe*
to -et hold of the o.ner3* d+pl)cate cert)f)cate, the 0an> off)cer* con*ented to the Cr+Fe*3 plan to re-)*ter the deed* of *ale and
*ec+re t.o ne. *eparate t)tle*, .)tho+t not)f1)n- the he)r* of Ed+ardo a0o+t )t.
#+rther, the la. on the ,atter, *pec)f)call1 (.D. No. 1729, ha* no e2pl)c)t reA+)re,ent a* to the ,anner of acA+)r)n- the o.ner3*
d+pl)cate for p+rpo*e* of )**+)n- a %C%. %h)* led the Re-)*ter of Deed* of Me1ca+a1an a* .ell a* the Central Ban> off)cer, )n
render)n- an op)n)on on the le-al fea*)0)l)t1 of the proce** re*orted to 01 the Cr+Fe*. ect)on 73 of (.D. No. 1729 *),pl1 reA+)re*
the prod+ct)on of the o.ner3* d+pl)cate cert)f)cate, .hene/er an1 /ol+ntar1 )n*tr+,ent )* pre*ented for re-)*trat)on, and the *a,e
*hall 0e concl+*)/e a+thor)t1 fro, the re-)*tered o.ner to the Re-)*ter of Deed* to enter a ne. cert)f)cate or to ,a>e a
,e,orand+, of re-)*trat)on )n accordance .)th *+ch )n*tr+,ent, and the ne. cert)f)cate or ,e,orand+, *hall 0e 0)nd)n- +pon the
re-)*tered o.ner and +pon all per*on* cla),)n- +nder h),, )n fa/or of e/er1 p+rcha*er for /al+e and )n -ood fa)th.
P+)te )ntere*t)n-, ho.e/er, )* the content)on of the he)r* of Ed+ardo that the *+rrept)t)o+* lend)n- of the o.ner3* d+pl)cate cert)f)cate
con*t)t+te* fra+d .)th)n the a,0)t of the th)rd para-raph of ect)on 73 .h)ch co+ld n+ll)f1 the e/ent+al )**+ance of the %C%*. Bet .e
cannot *+0*cr)0e to the)r po*)t)on.
$,pelled 01 the )nact)on of the he)r* of Ed+ardo a* to the)r cla),, the Cr+Fe* .ent to the 0an> .here the propert1 .a* ,ort-a-ed.
%hro+-h )t* ,ana-er and le-al off)cer, the1 .ere a**+red of reco/er1 of the cla),ed parcel of land *)nce the1 are the *+cce**or*C)nC
)ntere*t of the real o.ner thereof. Rel1)n- on the 0an> off)cer*3 op)n)on a* to the le-al)t1 of the ,ean* *o+-ht to 0e e,plo1ed 01
the, and the *+--e*t)on of the Central Ban> off)cer that the ,atter co+ld 0e 0e*t *ettled 0et.een the, and the 0an>, the Cr+Fe*
p+r*+ed the t)tl)n- of the cla),ed port)on )n the na,e of R)cardo. %he Re-)*ter of Deed* e/ent+all1 )**+ed the d)*p+ted %C%*.
%he Cr+Fe* re*orted to *+ch ,ean* to protect the)r )ntere*t )n the propert1 that r)-htf+ll1 0elon-* to the, onl1 0eca+*e of the 0an>
off)cer*3 acA+)e*cence thereto. %he Cr+Fe* co+ld not ha/e *ec+red a *eparate %C% )n the na,e of R)cardo .)tho+t the 0an>3*
appro/al. Ban>*, the)r 0+*)ne** 0e)n- ),pre**ed .)th p+0l)c )ntere*t, are e2pected to e2erc)*e ,ore care and pr+dence than pr)/ate
)nd)/)d+al* )n the)r deal)n-*, e/en tho*e )n/ol/)n- re-)*tered land*. !& %he #i(#est de-ree of d)l)-ence )* e2pected, and h)-h
*tandard* of )nte-r)t1 and perfor,ance are e/en reA+)red of )t. !1
$ndeed, pet)t)oner* contend that the ,ort-a-ee cannot A+e*t)on the /erac)t1 of the re-)*tered t)tle of the ,ort-a-or a* noted )n the
o.ner3* d+pl)cate cert)f)cate, and, th+*, he cannot del)/er the cert)f)cate to *+ch th)rd per*on* )n/o>)n- an ad/er*e, pr)or, and
+nre-)*tered cla), a-a)n*t the re-)*tered t)tle of the ,ort-a-or. %he *tren-th of th)* ar-+,ent )* d)l+ted 01 the pec+l)ar fact+al ,)l)e+
of the ca*e. &ca%$
A ,ort-a-ee can rel1 on .hat appear* on the cert)f)cate of t)tle pre*ented 01 the ,ort-a-or and an )nnocent ,ort-a-ee )* not
e2pected to cond+ct an e2ha+*t)/e )n/e*t)-at)on on the h)*tor1 of the ,ort-a-or3* t)tle. %h)* r+le )* *tr)ctl1 appl)ed to 0an>)n-
)n*t)t+t)on*. A ,ort-a-eeC0an> ,+*t e2erc)*e d+e d)l)-ence 0efore enter)n- )nto *a)d contract. <+d)c)al not)ce )* ta>en of the *tandard
pract)ce for 0an>*, 0efore appro/)n- a loan, to *end repre*entat)/e* to the pre,)*e* of the land offered a* collateral and to
)n/e*t)-ate .ho the real o.ner* thereof are. !2
Ban>*, )ndeed, *ho+ld e2erc)*e ,ore care and pr+dence )n deal)n- e/en .)th re-)*tered land*, than pr)/ate )nd)/)d+al*, a* the)r
0+*)ne** )* one affected .)th p+0l)c )ntere*t. Ban>* >eep )n tr+*t ,one1 0elon-)n- to the)r depo*)tor*, .h)ch the1 *ho+ld -+ard
a-a)n*t lo** 01 not co,,)tt)n- an1 act of ne-l)-ence that a,o+nt* to lac> of -ood fa)th. A0*ent -ood fa)th, 0an>* .o+ld 0e den)ed
the protect)/e ,antle of the land re-)*trat)on *tat+te, Act 499, .h)ch e2tend* onl1 to p+rcha*er* for /al+e and -ood fa)th, a* .ell a*
to ,ort-a-ee* of the *a,e character and de*cr)pt)on. !3 %h+*, th)* Co+rt clar)f)ed that the r+le that per*on* deal)n- .)th re-)*tered
land* can rel1 *olel1 on the cert)f)cate of t)tle doe* not appl1 to 0an>*. !
,an .ia)le for 0o%inal -a%a(es
Gf deep concern to th)* Co+rt, ho.e/er, )* the fact that the 0an> lent the o.ner3* d+pl)cate of the GC% to the Cr+Fe* .hen the latter
pre*ented the )n*tr+,ent* of con/e1ance a* 0a*)* of the)r cla), of o.ner*h)p o/er a port)on of land co/ered 01 the t)tle. ),ple
rat)onal)Fat)on .o+ld d)ctate that a ,ort-a-eeC0an> ha* no r)-ht to del)/er to an1 *tran-er an1 propert1 entr+*ted to )t other than to
tho*e contract+all1 and le-all1 ent)tled to )t* po**e**)on. Altho+-h .e cannot d)*,)** the 0an>3* ac>no.led-,ent of the Cr+Fe*3
cla), a* le-)t),)Fed 01 )n*tr+,ent* of con/e1ance )n the)r po**e**)on, .e nonethele** cannot *anct)on ho. the 0an> .a* )n/e)-led
to do the 0)dd)n- of /)rt+al *tran-er*. @ndo+0tedl1, the 0an>3* cooperat)/e *tance fac)l)tated the )**+ance of the %C%*. %o ,a>e
,atter* .or*e, the 0an> d)d not e/en not)f1 the he)r* of Ed+ardo. %he cond+ct of the 0an> )* a* dan-ero+* a* )t )* +nth)n>a0l1
ne-l)-ent. &o.e/er, the a*pect doe* not ),pa)r the r)-ht of the Cr+Fe* to 0e reco-n)Fed a* le-)t),ate o.ner* of the)r port)on of the
propert1.

@ndo+0tedl1, )n the a0*ence of the 0an>3* part)c)pat)on, the Re-)*ter of Deed* co+ld not ha/e )**+ed the d)*p+ted %C%*. 5e cannot
f)nd fa+lt on the part of the Re-)*ter of Deed* )n )**+)n- the %C%* a* h)* a+thor)t1 to )**+e the *a,e )* clearl1 *anct)oned 01 la.. $t )*
th+* ,)n)*ter)al on the part of the Re-)*ter of Deed* to )**+e %C% )f the deed of con/e1ance and the or)-)nal o.ner3* d+pl)cate are
pre*ented to h), a* there appear* on the face of the )n*tr+,ent* no 0ad-e of )rre-+lar)t1 or n+ll)t1. !! $f there )* *o,eone to 0la,e
for the *hortc+t re*orted to 01 the Cr+Fe*, )t .o+ld 0e the 0an> )t*elf .ho*e ,ana-er and le-al off)cer helped the Cr+Fe* to fac)l)tate
the )**+ance of the %C%*.
%he 0an> *ho+ld not ha/e allo.ed co,plete *tran-er* to ta>e po**e**)on of the o.ner3* d+pl)cate cert)f)cate e/en )f the p+rpo*e )*
,erel1 for photocop1)n- for a dan-er of lo*)n- the *a,e )* ,ore than ),,)nent. %he1 *ho+ld 0e a.are of the concl+*)/e
pre*+,pt)on )n ect)on 73. +ch act con*t)t+te* ,an)fe*t ne-l)-ence on the part of the 0an> .h)ch .o+ld nece**ar)l1 hold )t l)a0le
for da,a-e* +nder Art)cle 1178 and other rele/ant pro/)*)on* of the C)/)l Code. !"
$n the a0*ence of e/)dence, the da,a-e* that ,a1 0e a.arded ,a1 0e )n the for, of no,)nal da,a-e*. No,)nal da,a-e* are
ad;+d)cated )n order that a r)-ht of the pla)nt)ff, .h)ch ha* 0een /)olated or )n/aded 01 the defendant, ,a1 0e /)nd)cated or
reco-n)Fed, and not for the p+rpo*e of )nde,n)f1)n- the pla)nt)ff for an1 lo** *+ffered 01 h),. !# %h)* a.ard re*t* on the ,ort-a-or3*
r)-ht to rel1 on the 0an>3* o0*er/ance of the h)-he*t d)l)-ence )n the cond+ct of )t* 0+*)ne**. %he act of RB( of entr+*t)n- to
re*pondent* the o.ner3* d+pl)cate cert)f)cate entr+*ted to )t 01 the ,ort-a-or .)tho+t e/en not)f1)n- the ,ort-a-or and a0*ent an1
pr)or )n/e*t)-at)on on the /erac)t1 of re*pondent*3 cla), and character )* a patent fa)l+re to fore*ee the r)*> created 01 the act )n /)e.
of the pro/)*)on* of ect)on 73 of (.D. No. 1729. %h)* act r+n* afo+l of e/er1 0an>3* ,andate to o0*er/e the h)-he*t de-ree of
d)l)-ence )n deal)n- .)th )t* cl)ent*. Moreo/er, a ,ort-a-or ha* al*o the r)-ht to 0e afforded d+e proce** 0efore depr)/at)on or
d),)n+t)on of h)* propert1 )* effected a* the GC% .a* *t)ll )n the na,e of Ed+ardo. Not)ce and hear)n- are )nd)*pen*a0le ele,ent* of
th)* r)-ht .h)ch the 0an> ,)*era0l1 )-nored. $cEDA
@nder the c)rc+,*tance*, the Co+rt 0el)e/e* the a.ard of (78,888.88 a* no,)nal da,a-e* )* appropr)ate.
Five-Year Pro#i)ition a(ainst alienation
or encu%)rance under t#e Pu)lic .and !ct
Gne /)tal po)nt. Apparentl1 -lo**ed o/er 01 the co+rt* 0elo. and the part)e* )* an a*pect .h)ch )* e**ent)al, *pread a* )t )* all o/er
the record and )ntert.)ned .)th the cr+2 of the contro/er*1, relat)n- a* )t doe* to the /al)d)t1 of the d)*po*)t)on* of the *+0;ect
propert1 and the ,ort-a-e thereon. Ed+ardo .a* )**+ed a t)tle )n 1979 on the 0a*)* of h)* free patent appl)cat)on. +ch appl)cat)on
),pl)e* the reco-n)t)on of the p+0l)c do,)n)on character of the land and, hence, the f)/e 47HC1ear proh)0)t)on ),po*ed 01 the (+0l)c
!and Act a-a)n*t al)enat)on or enc+,0rance of the land co/ered 01 a free patent or ho,e*tead !$ *ho+ld ha/e 0een con*)dered.
%he deed of *ale co/er)n- the f)ft1 478HC*A+are ,eter r)-ht of .a1 e2ec+ted 01 Ed+ardo on 1= March 19=1 )* o0/)o+*l1 co/ered 01
the pro*cr)pt)on, the free patent ha/)n- 0een )**+ed on = Gcto0er 1979. &o.e/er, pet)t)oner* ,a1 reco/er the port)on *old *)nce the
proh)0)t)on .a* ),po*ed )n fa/or of the free patent holder. $nP#ilippine 0ational ,an v. -e los Re/es, !% th)* Co+rt r+led *A+arel1
on the po)nt, th+*:
5h)le the la. 0ar* reco/er1 )n a ca*e .here the o0;ect of the contract )* contrar1 to la. and one or 0oth
part)e* acted )n 0ad fa)th, .e cannot here appl1 the doctr)ne of in pari delicto .h)ch ad,)t* of an e2cept)on,
na,el1, that .hen the contract )* ,erel1 proh)0)ted 01 la., not )lle-al per se, and the proh)0)t)on )* de*)-ned
for the protect)on of the part1 *ee>)n- to reco/er, he )* ent)tled to the rel)ef pra1ed for .hene/er p+0l)c pol)c1
)* enhanced there01. @nder the (+0l)c !and Act, the proh)0)t)on to al)enate )* pred)cated on the f+nda,ental
pol)c1 of the tate to pre*er/e and >eep )n the fa,)l1 of the ho,e*teader that port)on of p+0l)c land .h)ch the
tate ha* -rat+)to+*l1 -)/en to h),, and reco/er1 )* allo.ed e/en .here the land acA+)red +nder the (+0l)c
!and Act .a* *old and not ,erel1 enc+,0ered, .)th)n the proh)0)ted per)od. "&
%he *ale of the 773 *A+are ,eter port)on )* a d)fferent *tor1. $t .a* e2ec+ted )n 1974, t.ent1Ct.o 422H 1ear* 0efore the )**+ance of
the patent )n 1979. Apparentl1, Ed+ardo d)*po*ed of the port)on e/en 0efore he tho+-ht of appl1)n- for a free patent. 5here the *ale
or tran*fer too> place 0efore the f)l)n- of the free patent appl)cat)on, .hether 01 the /endor or the /endee, the proh)0)t)on *ho+ld not
0e appl)ed. $n *+ch *)t+at)on, ne)ther the proh)0)t)on nor the rat)onale therefor .h)ch )* to >eep )n the fa,)l1 of the patentee that
port)on of the p+0l)c land .h)ch the -o/ern,ent ha* -rat+)to+*l1 -)/en h),, 01 *h)eld)n- h), fro, the te,ptat)on to d)*po*e of h)*
landhold)n-, co+ld 0e rele/ant. (rec)*el1, he had d)*po*ed of h)* r)-ht* to the lot e/en 0efore the -o/ern,ent co+ld -)/e the t)tle to
h),.
%he ,ort-a-e e2ec+ted )n fa/or of RB( )* al*o 0e1ond the pale of the proh)0)t)on, a* )t .a* for-ed )n Dece,0er 19=1 a fe.
,onth* pa*t the per)od of proh)0)t)on.
5&ERE#GRE, the Dec)*)on of the Co+rt of Appeal* )* A##$RMED, *+0;ect to the ,od)f)cat)on* here)n. Re*pondent R+ral Ban> of
an (a*c+al )* here01 GRDERED to (AB pet)t)oner* #)ft1 %ho+*and (e*o* 4(78,888.88H 01 .a1 of no,)nal da,a-e*.
Re*pondent* Con*+elo Cr+F and Ro*al)na Cr+FCBa+t)*ta are here01 D$EE%ED of t)tle to, and re*pondent Re-)*ter of Deed* of
Me1ca+a1an, B+lacan )* accord)n-l1 GRDERED to *e-re-ate, the port)on of f)ft1 478H *A+are ,eter* of the *+0;ect !ot No. 2284, a*
dep)cted )n the appro/ed plan co/er)n- the lot, ,ar>ed a* E2h)0)t ?A?, and to )**+e a ne. t)tle co/er)n- the *a)d port)on )n the na,e
of the pet)t)oner* at the e2pen*e of the pet)t)oner*. No co*t*. $cDCa
G GRDERED.
!ustria-$artinez, Calle3o, Sr. and C#ico-0azario, JJ., conc+r.
Puno, J., )* on off)c)al lea/e.
F''()'(*+
1.Rollo, pp. 71C97. Dec)*)on penned 01 A**oc)ate <+*t)ce Bernardo !l. ala* and conc+rred )n 01 <+*t)ce* <or-e . $,per)al and
&ector !. &of)leOa.
2.'d. at 42C4=. Dec)*)on penned 01 <+d-e (a0lo . E)llan+e/a.
3.%he Sinu%paan( Sala/sa/ *)-ned 01 Ed+ardo on 24 Apr)l 1993 *ho.* that he )* the onl1 he)r of h)* -randfather <o*e Al/areF
.ho d)ed )n 1919. Ed+ardo3* ,other, da+-hter of Al/areF, predecea*ed her father. %he *.orn *tate,ent al*o *ho.*
that the *+0;ect lot .a* )n the po**e**)on of h)* -randfather at the t),e of h)* death.See al*o E2h)0)t 2CE, p. 4.
4.%he B+rea+ of !and* )**+ed #ree (atent No. 111C9 )n the na,e of Ed+ardo .h)ch 0eca,e the 0a*)* for the )**+ance of GC%
No. (C1734MH 01 the Re-)*ter of Deed* dated Gcto0er =, 1979.
7.Rollo. p. 2=.
9.E2h)0)t*, p. 3.
7.Record*, p. 38. See al*o Rollo, p. 213. %he deed .a* entered )n the notar)al 0oo> of the notar1 p+0l)c a* Doc+,ent No. 29,
(a-e 9, Boo> No. $, er)e* of 1974.
=.Rollo, p. 213. %he deed .a* recorded a* $n*cr)pt)on No. 19787, (a-e No. 277, Eol+,e =9, #)le No. 21=19.
9.Record*, p. 18. Anne2 A.
18.Rollo, p. 97.
11.Record*, p. 11. See al*o Rollo, p. 97. %he deed .a* entered )n the notar)al 0oo> of the notar1 p+0l)c a* Doc+,ent No. 291,
(a-e 74, Boo> L$$$, er)e* of 19=1.
12.Rollo, p. 9=.
13.Record*, p. 4.
14.Rollo, p. 99. See al*o E2h)0)t, p. 21. %he Sinu%paan( Sala/sa/ of Baran-a1 Capta)n Bon)fac)o Enr)A+eF of (an-h+lo,
G0ando, B+lacan atte*ted to the fact that on <+l1 19=9 the Cr+Fe* lod-ed a co,pla)nt .)th h)* off)ce re-ard)n- a lot
.)th an area of 1,87= *A+are ,eter*, 773 *A+are ,eter* of .h)ch .a* *old to R)cardo on 19 Dece,0er 1974. %h)* *ale
.a* conf)r,ed 01 Ed+ardo thro+-h a Sinu%paan( Sala/sa/ dated 24 Apr)l 1993.
17.'d. at 72 and 188.
19.'d. at 188.
17.')id.
1=.'d. at 181.
19.')id.
28.'d. at 182.
21.'d. at 2=C29.
22.'d. at 183C184.
23.E2h)0)t, p. 1=.
24.Rollo, p. 29.
27.Supra note* 1 and 2.
29.Rollo, p. 4=.
27.'d. at 49.
2=.'d. at 47C4=.
29.'d. at 4=.
38.'d. at 97.
31.'d. at 79.
32.'d. at 77.
33.'d. at 97.
34.'d. at 31C32.
37.E2h)0)t No. 4.
39.Sa%anilla v. Ca3uco%, et al., 187 (h)l. 432 41998H.
37..a(andaon v. Court of !ppeals, G.R. No*. 182729C31, 21 Ma1 199=, 298 CRA 338.
3=.(EWA, REG$%RA%$GN G# !AND %$%!E AND DEED, 1994 ed., p. 2=.
39..a(rosa v. Court of !ppeals, 371 (h)l. 227 41999H.
48.0ational ,an v. Pal%a Gil, 77 (h)l. 939 41938C1931H" Contreras v. C#ina ,anin( Corporation, 79 (h)l. 789 41949H.
An a-ent cannot therefore ,ort-a-e )n h)* o.n na,e the propert1 of the pr)nc)pal, other.)*e the contract )* /o)d. B+t the a-ent
can do *o, )n the na,e of the pr)nc)pal, for here the ,ort-a-or )* the pr)nc)pal. &ence, )f the a-ent )* properl1
a+thor)Fed, the contract )* /al)d. See !renas v. Ra/%undo, 19 (h)l. 49 41911H.
41.C#in( Sen ,en v. Court of !ppeals, 373 (h)l. 744 41999H.
42..a(rosa v. Court of !ppeals, supra note 39, citin( !dla4an v. 2orres, 233 CRA 947.
%hat )* .h1 Art)cle 2138 of the Ne. C)/)l Code pro/)de* that a *t)p+lat)on for0)dd)n- the o.ner fro, al)enat)n- the ),,o/a0le
,ort-a-ed *hall 0e /o)d.
43.?G.ner*h)p )* reta)ned 01 the ,ort-a-or *)nce the latter ,erel1 *+0;ect* )t to a l)en. $n ca*e of nonpa1,ent of de0t *ec+red 01
a ,ort-a-e, the ,ort-a-ee ha* the r)-ht to foreclo*e the ,ort-a-ed propert1 and ha/e )t *old to *at)*f1 the o+t*tand)n-
)nde0tedne** to enforce h)* r)-ht and con*ol)dat)on of o.ner*h)p )* not an appropr)ate re,ed1. Gnl1 +pon the lap*e of
the rede,pt)on per)od and the ;+d-,ent de0tor fa)led to e2erc)*e h)* r)-ht of rede,pt)on, o.ner*h)p .)ll /e*t or 0e
con*ol)dated )n the p+rcha*er.? 4Dr. $-,)d)o C+e/a* !at, !A5 GN MGR%GAGE, 2881 ed., p. 1H
44.Art)cle 42= of the C)/)l Code of the (h)l)pp)ne* pro/)de*:

AR%. 42=. %he o.ner ha* the r)-ht to en;o1 and d)*po*e of a th)n-, .)tho+t other l),)tat)on* than tho*e e*ta0l)*hed 01 la..
%he o.ner ha* al*o a r)-ht of act)on a-a)n*t the holder and po**e**or of the th)n- )n order to reco/er )t.
47.Art)cle 28== of the C)/)l Code of the (h)l)pp)ne* pro/)de*:
AR%. 28==. %he cred)tor cannot appropr)ate the th)n-* -)/en 01 .a1 of pled-e or ,ort-a-e, or d)*po*e of the,. An1 *t)p+lat)on to
the contrar1 )* n+ll and /o)d.
49.Art)cle 212= of the C)/)l Code of the (h)l)pp)ne* pro/)de*:
AR%. 212=. %he ,ort-a-e cred)t ,a1 0e al)enated or a**)-ned to a th)rd per*on, )n .hole or )n part, .)th the for,al)t)e* reA+)red
01 la..
47.Sacdalan v. Court of !ppeals, G.R. No. 12=997, 28 Ma1 2884, 42= CRA 7=9" Repu)lic v. Court of !ppeals, G.R. No. 98199,
23 March 1998, 1=3 CRA 928" !dille v. Court of !ppeals, G.R. No. 44749, 29 <an+ar1 19==, 177 CRA 477" !%erol
v. ,a(u%)aran, G.R. No. 33291, 38 epte,0er 19=7, 174 CRA 399.
4=.!vila v. 2apucar, G.R. No. 47947, 27 A+-+*t 1991, 281 CRA 14=" $iranda v. Court of !ppeals, G.R. No. 49894, 7
epte,0er 19=9, 177 CRA 383, citin( -e Guz%an v. Court of !ppeals, 179 CRA 781.
49.-evelop%ent ,an of t#e P#ilippines v. Court of !ppeals, 3=7 (h)l. 2=3 42888H.
78.-evelop%ent ,an of t#e P#ilippines v. Court of !ppeals, 3=7 (h)l. 2=3 42888H, citin( Cavite -evelop%ent ,an v. .i%, G.R.
No. 13199, 1 #e0r+ar1 2888, 324 CRA 349, citin( 2o%as v. 2o%as, 9= CRA 2=8 419=8H.
71.,an of t#e P#ilippine 'slands v. Casa $ontessori 'nternationale, et al, G.R. No. 149474 and Casa $ontessori 'nternationale
v. ,an of t#e P#ilippine 'slands, G.R. No. 149787, 2= Ma1 2884, 438 CRA 291.
72.2o%as v. 2o%as, No. !C39=97, 27 <+ne 19=8, 9= CRA 2=8.
73.Govern%ent Service 'nsurance S/ste% v. Court of !ppeals, G.R. No. 12=471, 9 March 199=, 2=7 CRA 284, 289, citin(
2o%as v. 2o%as, supra note 78.
74.'d. at 218, citin( Rural ,an of Co%postela v. Court of !ppeals, et al, G.R. No. 122=81, = Apr)l 1997.
77.See (EWA, REG$%RA%$GN G# !AND %$%!E AND DEED, 1994 ed., p. 719 citin( 2inatan v. Serilla, 74 G.G. 23,
epte,0er 17, 197=, Co+rt of Appeal*" Gonzales v. ,asa, Jr., 73 (h)l. 784 41942H.
79.%he follo.)n- C)/)l Code pro/)*)on* are pert)nent:
Art)cle 1178. %ho*e .ho )n the perfor,ance of the)r o0l)-at)on* are -+)lt1 of fra+d, ne-l)-ence, or dela1, and tho*e .ho )n an1
,anner contra/ene the tenor thereof, are l)a0le for da,a-e*.
Art)cle 1172. Re*pon*)0)l)t1 ar)*)n- fro, ne-l)-ence )n the perfor,ance of e/er1 >)nd of o0l)-at)on )* al*o de,anda0le, 0+t *+ch
l)a0)l)t1 ,a1 0e re-+lated 01 the co+rt*, accord)n- to the c)rc+,*tance*.
Art)cle 19. E/er1 per*on ,+*t, )n the e2erc)*e of h)* r)-ht* and )n the perfor,ance of h)* d+t)e*, act .)th ;+*t)ce, -)/e e/er1one h)*
d+e, and o0*er/e hone*t1 and -ood fa)th.
Art)cle 28. E/er1 per*on .ho, contrar1 to la., .)llf+ll1 or ne-l)-entl1 ca+*e* da,a-e to another, *hall )nde,n)f1 the latter for the
*a,e.
Art)cle 21. An1 per*on .ho .)llf+ll1 ca+*e* lo** or )n;+r1 to another )n a ,anner that )* contrar1 to ,oral*, -ood c+*to,* or p+0l)c
pol)c1 *hall co,pen*ate the latter for the da,a-e.
Art)cle 1973. . . . %he depo*)tar1 )* re*pon*)0le for the ne-l)-ence of h)* e,plo1ee*.
77.Art)cle 2221 of the C)/)l Code.
See al*o ,1 eparate Gp)n)on )n the ca*e of !(a)on v. 0.RC, G.R. No. 17=993, No/e,0er 17, 2884: ?No,)nal da,a-e* are
ad;+d)cated )n order that a r)-ht of a pla)nt)ff .h)ch ha* 0een /)olated or )n/aded 01 another ,a1 0e /)nd)cated or
reco-n)Fed .)tho+t ha/)n- to )nde,n)f1 the pla)nt)ff for an1 lo** *+ffered 01 h),. No,)nal da,a-e* ,a1 l)>e.)*e 0e
a.arded )n e/er1 o0l)-at)on ar)*)n- fro, la., contract*, A+a*)Ccontract*, act* or o,)**)on* p+n)*hed 01 la. and A+a*)C
del)ct*, or .here an1 propert1 r)-ht ha* 0een )n/aded.
. . . [$]t *ho+ld 0e reco-n)Fed that no,)nal da,a-e* are not ,eant to 0e co,pen*ator1, and *ho+ld not 0e co,p+ted thro+-h a
for,+la 0a*ed on act+al lo**e*. Con*eA+entl1, no,)nal da,a-e* are +*+all1 l),)ted )n pec+n)ar1 /al+e. %h)* fact
*ho+ld 0e ),pre**ed +pon the pro*pect)/e cla),ant, e*pec)all1 one .ho )* conte,plat)n- *ee>)n- act+alMco,pen*ator1
da,a-e*.?
7=.EC%$GN 11=. E2cept )n fa/or of the Go/ern,ent or an1 of )t* 0ranche*, +n)t*, or )n*t)t+t)on*, land* acA+)red +nder free
patent or ho,e*tead pro/)*)on* *hall not 0e *+0;ect to enc+,0rance or al)enat)on fro, the date of the appro/al of the
appl)cat)on and for a ter, of f)/e 1ear* fro, and after the date of )**+ance of the patent or -rant, nor *hall the1 0eco,e
l)a0le to the *at)*fact)on of an1 de0t contracted pr)or to the e2p)rat)on of *a)d per)od, 0+t the ),pro/e,ent* or crop* on
the land ,a1 0e ,ort-a-ed or pled-ed to A+al)f)ed per*on*, a**oc)at)on*, or corporat)on*.
No al)enat)on, tran*fer, or con/e1ance of an1 ho,e*tead after f)/e 1ear* and 0efore t.ent1Cf)/e 1ear* after )**+ance of t)tle *hall
0e /al)d .)tho+t the appro/al of the ecretar1 of A-r)c+lt+re and Co,,erce, .h)ch appro/al *hall not 0e den)ed e2cept
on con*t)t+t)onal and le-al -ro+nd*.
79.G.R. No*. 49=9=C99, 2= No/e,0er 19=9, 179 CRA 919.
98.'d. at 92=C929, citin( Pascua v. 2alens, =8 (h)l. 792 41949H" -elos Santos v. Ro%an Cat#olic C#urc# of $idsa/ap, et al., 94
(h)l. 487 41974H" Ras v. Sua, et al., 27 CRA 173 4199=H.
#$R% D$E$$GN
[G.R. No. 147=39. <+ne =, 2889.]
GAISANO CAGAYAN, INC., petitioner, vs. INSURANCE COMPANY OF NORTH AMERICA, respondent.
D E C I S I O N
AUSTRIA-MARTINEZ, J p:
Before the Co+rt )* a pet)t)on for re/)e. on certiorari of the Dec)*)on 1 dated Gcto0er 11, 2888 of the Co+rt of Appeal* 4CAH )n CAC
G.R. CE No. 91=4= .h)ch *et a*)de the Dec)*)on dated A+-+*t 31, 199= of the Re-)onal %r)al Co+rt, Branch 13=, Ma>at) 4R%CH )n
C)/)l Ca*e No. 92C322 and +pheld the ca+*e* of act)on for da,a-e* of $n*+rance Co,pan1 of North A,er)ca 4re*pondentH a-a)n*t
Ga)*ano Ca-a1an, $nc. 4pet)t)onerH" and the CA Re*ol+t)on dated Apr)l 11, 2881 .h)ch den)ed pet)t)oner3* ,ot)on for recon*)derat)on.
%he fact+al 0ac>-ro+nd of the ca*e )* a* follo.*:
$ntercap)tol Mar>et)n- Corporat)on 4$MCH )* the ,a>er of 5ran-ler Bl+e <ean*. !e/) tra+** 4(h)l*.H $nc. 4!($H )* the local d)*tr)0+tor
of prod+ct* 0ear)n- trade,ar>* o.ned 01 !e/) tra+** 6 Co.. $MC and !($ *eparatel1 o0ta)ned fro, re*pondent f)re )n*+rance
pol)c)e* .)th 0oo> de0t endor*e,ent*. %he )n*+rance pol)c)e* pro/)de for co/era-e on ?0oo> de0t* )n connect)on .)th read1C,ade
cloth)n- ,ater)al* .h)ch ha/e 0een *old or del)/ered to /ar)o+* c+*to,er* and dealer* of the $n*+red an1.here )n the
(h)l)pp)ne*.? 2 %he pol)c)e* def)ned 0oo> de0t* a* the ?+npa)d acco+nt *t)ll appear)n- )n the Boo> of Acco+nt of the $n*+red 47 da1*
after the t),e of the lo** co/ered +nder th)* (ol)c1.? 3 %he pol)c)e* al*o pro/)de for the follo.)n- cond)t)on*:
1.5arranted that the Co,pan1 *hall not 0e l)a0le for an1 +npa)d acco+nt )n re*pect of the ,erchand)*e *old
and del)/ered 01 the $n*+red .h)ch are o+t*tand)n- at the date of lo** for a per)od )n e2ce** of *)2
49H ,onth* fro, the date of the co/er)n- )n/o)ce or act+al del)/er1 of the ,erchand)*e .h)che/er
*hall f)r*t occ+r.
2.5arranted that the $n*+red *hall *+0,)t to the Co,pan1 .)th)n t.el/e 412H da1* after the clo*e of e/er1
calendar ,onth all a,o+nt *ho.n )n the)r 0oo>* of acco+nt* a* +npa)d and th+* 0eco,e
rece)/a0le )te, fro, the)r c+*to,er* and dealer*. . . .
222 222 222
(et)t)oner )* a c+*to,er and dealer of the prod+ct* of $MC and !($. Gn #e0r+ar1 27, 1991, the Ga)*ano +per*tore Co,ple2 )n
Ca-a1an de Gro C)t1, o.ned 01 pet)t)oner, .a* con*+,ed 01 f)re. $ncl+ded )n the )te,* lo*t or de*tro1ed )n the f)re .ere *toc>* of
read1C,ade cloth)n- ,ater)al* *old and del)/ered 01 $MC and !($.
Gn #e0r+ar1 4, 1992, re*pondent f)led a co,pla)nt for da,a-e* a-a)n*t pet)t)oner. $t alle-e* that $MC and !($ f)led .)th re*pondent
the)r cla),* +nder the)r re*pect)/e f)re )n*+rance pol)c)e* .)th 0oo> de0t endor*e,ent*" that a* of #e0r+ar1 27, 1991, the +npa)d
acco+nt* of pet)t)oner on the *ale and del)/er1 of read1C,ade cloth)n- ,ater)al* .)th $MC .a* (2,119,287.88 .h)le .)th !($ )t .a*
(737,913.88" that re*pondent pa)d the cla),* of $MC and !($ and, 01 /)rt+e thereof, re*pondent .a* *+0ro-ated to the)r r)-ht*
a-a)n*t pet)t)oner" that re*pondent ,ade *e/eral de,and* for pa1,ent +pon pet)t)oner 0+t the*e .ent +nheeded. !
$n )t* An*.er .)th Co+nter Cla), dated <+l1 4, 1997, pet)t)oner contend* that )t co+ld not 0e held l)a0le 0eca+*e the propert1
co/ered 01 the )n*+rance pol)c)e* .ere de*tro1ed d+e to fort+)t)e* e/ent or force %a3eure" that re*pondent3* r)-ht of *+0ro-at)on ha*
no 0a*)* )na*,+ch a* there .a* no 0reach of contract co,,)tted 01 )t *)nce the lo** .a* d+e to f)re .h)ch )t co+ld not pre/ent or
fore*ee" that $MC and !($ ne/er co,,+n)cated to )t that the1 )n*+red the)r propert)e*" that )t ne/er con*ented to pa1)n- the cla),
of the )n*+red. "
At the preCtr)al conference the part)e* fa)led to arr)/e at an a,)ca0le *ettle,ent. # %h+*, tr)al on the ,er)t* en*+ed. %ADaC&
Gn A+-+*t 31, 199=, the R%C rendered )t* dec)*)on d)*,)**)n- re*pondent3* co,pla)nt. $ $t held that the f)re .a* p+rel1 acc)dental"
that the ca+*e of the f)re .a* not attr)0+ta0le to the ne-l)-ence of the pet)t)oner" that )t ha* not 0een e*ta0l)*hed that pet)t)oner )* the
de0tor of $MC and !($" that *)nce the *ale* )n/o)ce* *tate that ?)t )* f+rther a-reed that ,erel1 for p+rpo*e of *ec+r)n- the pa1,ent
of p+rcha*e pr)ce, the a0o/eCde*cr)0ed ,erchand)*e re,a)n* the propert1 of the /endor +nt)l the p+rcha*e pr)ce )* f+ll1 pa)d?, $MC
and !($ reta)ned o.ner*h)p of the del)/ered -ood* and ,+*t 0ear the lo**.
D)**at)*f)ed, pet)t)oner appealed to the CA. % Gn Gcto0er 11, 2888, the CA rendered )t* dec)*)on *ett)n- a*)de the dec)*)on of the
R%C. %he d)*po*)t)/e port)on of the dec)*)on read*:
5&ERE#GRE, )n /)e. of the fore-o)n-, the appealed dec)*)on )* REEERED and E% A$DE and a ne.
one )* entered order)n- defendantCappellee Ga)*ano Ca-a1an, $nc. to pa1:
1.the a,o+nt of (2,119,287.98 repre*ent)n- the a,o+nt pa)d 01 the pla)nt)ffCappellant to the )n*+red $nter
Cap)tol Mar>et)n- Corporat)on, pl+* le-al )ntere*t fro, the t),e of de,and +nt)l f+ll1 pa)d"
2.the a,o+nt of (737,913.88 repre*ent)n- the a,o+nt pa)d 01 the pla)nt)ffCappellant to the )n*+red !e/)
tra+** (h)l., $nc., pl+* le-al )ntere*t fro, the t),e of de,and +nt)l f+ll1 pa)d.
5)th co*t* a-a)n*t the defendantCappellee.
G GRDERED. 1&
%he CA held that the *ale* )n/o)ce* are proof* of *ale, 0e)n- deta)led *tate,ent* of the nat+re, A+ant)t1 and co*t of the th)n- *old"
that lo** of the -ood* )n the f)re ,+*t 0e 0orne 01 pet)t)oner *)nce the proviso conta)ned )n the *ale* )n/o)ce* )* an e2cept)on +nder
Art)cle 1784 41H of the C)/)l Code, to the -eneral r+le that )f the th)n- )* lo*t 01 a fort+)to+* e/ent, the r)*> )* 0orne 01 the o.ner of the
th)n- at the t),e the lo** +nder the pr)nc)ple of res perit do%ino" that pet)t)oner3* o0l)-at)on to $MC and !($ )* not the del)/er1 of the
lo*t -ood* 0+t the pa1,ent of )t* +npa)d acco+nt and a* *+ch the o0l)-at)on to pa1 )* not e2t)n-+)*hed, e/en )f the f)re )* con*)dered
a fort+)to+* e/ent" that 01 *+0ro-at)on, the )n*+rer ha* the r)-ht to -o a-a)n*t pet)t)oner" that, 0e)n- a f)re )n*+rance .)th 0oo> de0t
endor*e,ent*, .hat .a* )n*+red .a* the /endor3* )ntere*t a* a cred)tor. 11
(et)t)oner f)led a ,ot)on for recon*)derat)on 12 0+t )t .a* den)ed 01 the CA )n )t* Re*ol+t)on dated Apr)l 11, 2881. 13
&ence, the pre*ent pet)t)on for re/)e. on certiorari anchored on the follo.)n- A**)-n,ent of Error*:
%&E CG@R% G# A((EA! ERRED $N &G!D$NG %&A% %&E $N@RANCE $N %&E $N%AN% CAE 5A
GNE GEER CRED$%.
%&E CG@R% G# A((EA! ERRED $N &G!D$NG %&A% A!! R$I GEER %&E @B<EC% GGGD $N %&E
$N%AN% CAE &AD %RAN#ERRED %G (E%$%$GNER @(GN DE!$EERB %&EREG#.
%&E CG@R% G# A((EA! ERRED $N &G!D$NG %&A% %&ERE 5A A@%GMA%$C @BRGGA%$GN
@NDER AR%. 2287 G# %&E C$E$! CGDE $N #AEGR G# RE(GNDEN%. 1
Anent the f)r*t error, pet)t)oner contend* that the )n*+rance )n the pre*ent ca*e cannot 0e dee,ed to 0e o/er cred)t *)nce an
)n*+rance ?on cred)t? 0el)e* not onl1 the nat+re of f)re )n*+rance 0+t the e2pre** ter,* of the pol)c)e*" that )t .a* not cred)t that .a*
)n*+red *)nce re*pondent pa)d on the occa*)on of the lo** of the )n*+red -ood* to f)re and not 0eca+*e of the nonCpa1,ent 01
pet)t)oner of an1 o0l)-at)on" that, e/en )f the )n*+rance )* dee,ed a* one o/er cred)t, there .a* no lo** a* the acco+nt* .ere not 1et
d+e *)nce no pr)or de,and* .ere ,ade 01 $MC and !($ a-a)n*t pet)t)oner for pa1,ent of the de0t and *+ch de,and* ca,e fro,
re*pondent onl1 after )t had alread1 pa)d $MC and !($ +nder the f)re )n*+rance pol)c)e*. 1!
A* to the *econd error, pet)t)oner a/er* that de*p)te del)/er1 of the -ood*, pet)t)onerC0+1er $MC and !($ a**+,ed the r)*> of lo**
.hen the1 *ec+red f)re )n*+rance pol)c)e* o/er the -ood*.
Concern)n- the th)rd -ro+nd, pet)t)oner *+0,)t* that there )* no *+0ro-at)on )n fa/or of re*pondent a* no /al)d )n*+rance co+ld 0e
,a)nta)ned thereon 01 $MC and !($ *)nce all r)*> had tran*ferred to pet)t)oner +pon del)/er1 of the -ood*" that pet)t)oner .a* not
pr)/1 to the )n*+rance contract or the pa1,ent 0et.een re*pondent and )t* )n*+red nor .a* )t* con*ent or appro/al e/er *ec+red"
that th)* lac> of pr)/)t1 foreclo*e* an1 real )ntere*t on the part of re*pondent )n the o0l)-at)on to pa1, l),)t)n- )t* )ntere*t to >eep)n-
the )n*+red -ood* *afe fro, f)re.
#or )t* part, re*pondent co+nter* that .h)le o.ner*h)p o/er the read1C,ade cloth)n- ,ater)al* .a* tran*ferred +pon del)/er1 to
pet)t)oner, $MC and !($ ha/e )n*+ra0le )ntere*t o/er *a)d -ood* a* cred)tor* .ho *tand to *+ffer d)rect pec+n)ar1 lo** fro, )t*
de*tr+ct)on 01 f)re" that pet)t)oner )* l)a0le for lo** of the read1C,ade cloth)n- ,ater)al* *)nce )t fa)led to o/erco,e the pre*+,pt)on of
l)a0)l)t1 +nder Art)cle 1297 1" of the C)/)l Code" that the f)re .a* ca+*ed thro+-h pet)t)oner3* ne-l)-ence )n fa)l)n- to pro/)de *tr)n-ent
,ea*+re* of ca+t)on, care and ,a)ntenance on )t* propert1 0eca+*e electr)c .)re* do not +*+all1 *hort c)rc+)t +nle** there are
defect* )n the)r )n*tallat)on or .hen there )* lac> of proper ,a)ntenance and *+per/)*)on of the propert1" that pet)t)oner )* -+)lt1 of
-ro** and e/)dent 0ad fa)th )n ref+*)n- to pa1 re*pondent3* /al)d cla), and *ho+ld 0e l)a0le to re*pondent for contracted la.1er3*
fee*, l)t)-at)on e2pen*e* and co*t of *+)t. 1#
A* a -eneral r+le, )n pet)t)on* for re/)e., the ;+r)*d)ct)on of th)* Co+rt )n ca*e* 0ro+-ht 0efore )t fro, the CA )* l),)ted to re/)e.)n-
A+e*t)on* of la. .h)ch )n/ol/e* no e2a,)nat)on of the pro0at)/e /al+e of the e/)dence pre*ented 01 the l)t)-ant* or an1 of
the,. 1$ %he +pre,e Co+rt )* not a tr)er of fact*" )t )* not )t* f+nct)on to anal1Fe or .e)-h e/)dence all o/er a-a)n. 1% Accord)n-l1,
f)nd)n-* of fact of the appellate co+rt are -enerall1 concl+*)/e on the +pre,e Co+rt. 2&
Ne/erthele**, ;+r)*pr+dence ha* reco-n)Fed *e/eral e2cept)on* )n .h)ch fact+al )**+e* ,a1 0e re*ol/ed 01 th)* Co+rt, *+ch a*: 41H
.hen the f)nd)n-* are -ro+nded ent)rel1 on *pec+lat)on, *+r,)*e* or con;ect+re*" 42H .hen the )nference ,ade )* ,an)fe*tl1
,)*ta>en, a0*+rd or ),po**)0le" 43H .hen there )* -ra/e a0+*e of d)*cret)on" EF ;1*) (1* B7-32*)( 4+ 6,+*- ') ,
24+,88.*1*)+4') '5 5,/(+D E!F ;1*) (1* 54)-4)3+ '5 5,/(+ ,.* /')504/(4)3" 49H .hen )n ,a>)n- )t* f)nd)n-* the CA .ent 0e1ond
the )**+e* of the ca*e, or )t* f)nd)n-* are contrar1 to the ad,)**)on* of 0oth the appellant and the appellee" E#F ;1*) (1* 54)-4)3+
,.* /')(.,.: (' (1* (.4,0 /'7.(" 4=H .hen the f)nd)n-* are concl+*)on* .)tho+t c)tat)on of *pec)f)c e/)dence on .h)ch the1 are 0a*ed"
49H .hen the fact* *et forth )n the pet)t)on a* .ell a* )n the pet)t)oner3* ,a)n and repl1 0r)ef* are not d)*p+ted 01 the re*pondent" 418H
.hen the f)nd)n-* of fact are pre,)*ed on the *+ppo*ed a0*ence of e/)dence and contrad)cted 01 the e/)dence on record" and E11F
;1*) (1* CA 2,)45*+(0: '9*.0''G*- /*.(,4) .*0*9,)( 5,/(+ )'( -4+87(*- 6: (1* 8,.(4*+, ;14/1, 45 8.'8*.0: /')+4-*.*-, ;'70-
B7+(45: , -455*.*)( /')/07+4'). 21 E2cept)on* 44H, 47H, 47H, and 411H appl1 to the pre*ent pet)t)on. cA%D$&

At )**+e )* the proper )nterpretat)on of the A+e*t)oned )n*+rance pol)c1. (et)t)oner cla),* that the CA erred )n con*tr+)n- a f)re
)n*+rance pol)c1 on 0oo> de0t* a* one co/er)n- the +npa)d acco+nt* of $MC and !($ *)nce *+ch )n*+rance appl)e* to lo** of the
read1C,ade cloth)n- ,ater)al* *old and del)/ered to pet)t)oner.
%he Co+rt d)*a-ree* .)th pet)t)oner3* *tand.
$t )* .ellC*ettled that .hen the .ord* of a contract are pla)n and read)l1 +nder*tood, there )* no roo, for con*tr+ct)on. 22 $n th)*
ca*e, the A+e*t)oned )n*+rance pol)c)e* pro/)de co/era-e for ?0oo> de0t* )n connect)on .)th read1C,ade cloth)n- ,ater)al* .h)ch
ha/e 0een *old or del)/ered to /ar)o+* c+*to,er* and dealer* of the $n*+red an1.here )n the (h)l)pp)ne*.? 23 " and def)ned 0oo>
de0t* a* the ?+npa)d acco+nt *t)ll appear)n- )n the Boo> of Acco+nt of the $n*+red 47 da1* after the t),e of the lo** co/ered +nder
th)* (ol)c1.? 2 No.here )* )t pro/)ded )n the A+e*t)oned )n*+rance pol)c)e* that the *+0;ect of the )n*+rance )* the -ood* *old and
del)/ered to the c+*to,er* and dealer* of the )n*+red.
$ndeed, .hen the ter,* of the a-ree,ent are clear and e2pl)c)t that the1 do not ;+*t)f1 an atte,pt to read )nto )t an1 alle-ed )ntent)on
of the part)e*, the ter,* are to 0e +nder*tood l)terall1 ;+*t a* the1 appear on the face of the contract. 2! %h+*, .hat .ere )n*+red
a-a)n*t .ere the acco+nt* of $MC and !($ .)th pet)t)oner .h)ch re,a)ned +npa)d 47 da1* after the lo** thro+-h f)re, and not the
lo** or de*tr+ct)on of the -ood* del)/ered.
(et)t)oner ar-+e* that $MC 0ear* the r)*> of lo** 0eca+*e )t e2pre**l1 re*er/ed o.ner*h)p of the -ood* 01 *t)p+lat)n- )n the *ale*
)n/o)ce* that ?[)]t )* f+rther a-reed that ,erel1 for p+rpo*e of *ec+r)n- the pa1,ent of the p+rcha*e pr)ce the a0o/e de*cr)0ed
,erchand)*e re,a)n* the propert1 of the /endor +nt)l the p+rcha*e pr)ce thereof )* f+ll1 pa)d.? 2"
%he Co+rt )* not per*+aded.
%he pre*ent ca*e clearl1 fall* +nder para-raph 41H, Art)cle 1784 of the C)/)l Code:
AR%. 1784.@nle** other.)*e a-reed, the -ood* re,a)n at the *eller3* r)*> +nt)l the o.ner*h)p there)n )*
tran*ferred to the 0+1er, 0+t .hen the o.ner*h)p there)n )* tran*ferred to the 0+1er the -ood* are at the
0+1er3* r)*> .hether act+al del)/er1 ha* 0een ,ade or not, e2cept that:
41H5here del)/er1 of the -ood* ha* 0een ,ade to the 0+1er or to a 0a)lee for the 0+1er, )n p+r*+ance of the
contract and the ';)*.+148 4) (1* 3''-+ 1,+ 6**) .*(,4)*- 6: (1* +*00*. 2*.*0: (' +*/7.* 8*.5'.2,)/*
6: (1* 67:*. '5 14+ '6043,(4')+ 7)-*. (1* /')(.,/(, (1* 3''-+ ,.* ,( (1* 67:*.A+ .4+G 5.'2 (1* (42* '5
+7/1 -*049*.:" 4E,pha*)* *+ppl)edH
222 222 222
%h+*, .hen the *eller reta)n* o.ner*h)p onl1 to )n*+re that the 0+1er .)ll pa1 )t* de0t, the r)*> of lo** )* 0orne 01 the
0+1er. 2# Accord)n-l1, pet)t)oner 0ear* the r)*> of lo** of the -ood* del)/ered.
$MC and !($ d)d not lo*e co,plete )ntere*t o/er the -ood*. %he1 ha/e an )n*+ra0le )ntere*t +nt)l f+ll pa1,ent of the /al+e of the
del)/ered -ood*. @nl)>e the c)/)l la. concept of res perit do%ino, .here o.ner*h)p )* the 0a*)* for con*)derat)on of .ho 0ear* the
r)*> of lo**, )n propert1 )n*+rance, one3* )ntere*t )* not deter,)ned 01 concept of t)tle, 0+t .hether )n*+red ha* *+0*tant)al econo,)c
)ntere*t )n the propert1. 2$
ect)on 13 of o+r $n*+rance Code def)ne* )n*+ra0le )ntere*t a* ?e/er1 )ntere*t )n propert1, .hether real or per*onal, or an1 relat)on
thereto, or l)a0)l)t1 )n re*pect thereof, of *+ch nat+re that a conte,plated per)l ,)-ht d)rectl1 da,n)f1 the )n*+red.? (arenthet)call1,
+nder ect)on 14 of the *a,e Code, an )n*+ra0le )ntere*t )n propert1 ,a1 con*)*t )n: 4aH an e2)*t)n- )ntere*t" 40H an )nchoate )ntere*t
fo+nded on e2)*t)n- )ntere*t" or 4cH an e2pectanc1, co+pled .)th an e2)*t)n- )ntere*t )n that o+t of .h)ch the e2pectanc1 ar)*e*.
%herefore, an )n*+ra0le )ntere*t )n propert1 doe* not nece**ar)l1 ),pl1 a propert1 )ntere*t )n, or a l)en +pon, or po**e**)on of, the
*+0;ect ,atter of the )n*+rance, and ne)ther the t)tle nor a 0enef)c)al )ntere*t )* reA+)*)te to the e2)*tence of *+ch an )ntere*t, )t )*
*+ff)c)ent that the )n*+red )* *o *)t+ated .)th reference to the propert1 that he .o+ld 0e l)a0le to lo** *ho+ld )t 0e )n;+red or de*tro1ed
01 the per)l a-a)n*t .h)ch )t )* )n*+red. 2% An1one ha* an )n*+ra0le )ntere*t )n propert1 .ho der)/e* a 0enef)t fro, )t* e2)*tence or
.o+ld *+ffer lo** fro, )t* de*tr+ct)on. 3& $ndeed, a /endor or *eller reta)n* an )n*+ra0le )ntere*t )n the propert1 *old *o lon- a* he
ha* an1 )ntere*t there)n, )n other .ord*, *o lon- a* he .o+ld *+ffer 01 )t* de*tr+ct)on, a* .here he ha* a /endor3* l)en. 31 $n th)*
ca*e, the )n*+ra0le )ntere*t of $MC and !($ perta)n to the +npa)d acco+nt* appear)n- )n the)r Boo>* of Acco+nt 47 da1* after the
t),e of the lo** co/ered 01 the pol)c)e*.
%he ne2t A+e*t)on )*: $* pet)t)oner l)a0le for the +npa)d acco+nt*V
(et)t)oner3* ar-+,ent that )t )* not l)a0le 0eca+*e the f)re )* a fort+)to+* e/ent +nder Art)cle 1174 32 of the C)/)l Code )* ,)*placed.
A* held earl)er, pet)t)oner 0ear* the lo** +nder Art)cle 1784 41H of the C)/)l Code.
Moreo/er, )t ,+*t 0e *tre**ed that the )n*+rance )n th)* ca*e )* not for lo** of -ood* 01 f)re 0+t for pet)t)oner3* acco+nt* .)th $MC
and !($ that re,a)ned +npa)d 47 da1* after the f)re. Accord)n-l1, pet)t)oner3* o0l)-at)on )* for the pa1,ent of ,one1. A* correctl1
*tated 01 the CA, .here the o0l)-at)on con*)*t* )n the pa1,ent of ,one1, the fa)l+re of the de0tor to ,a>e the pa1,ent e/en 01
rea*on of a fort+)to+* e/ent *hall not rel)e/e h), of h)* l)a0)l)t1. 33 %he rat)onale for th)* )* that the r+le that an o0l)-or *ho+ld 0e held
e2e,pt fro, l)a0)l)t1 .hen the lo** occ+r* thr+ a fort+)to+* e/ent onl1 hold* tr+e .hen the o0l)-at)on con*)*t* )n the del)/er1 of a
deter,)nate th)n- and there )* no *t)p+lat)on hold)n- h), l)a0le e/en )n ca*e of fort+)to+* e/ent. $t doe* not appl1 .hen the o0l)-at)on
)* pec+n)ar1 )n nat+re. 3
@nder Art)cle 1293 of the C)/)l Code, ?[)]n an o0l)-at)on to del)/er a -ener)c th)n-, the lo** or de*tr+ct)on of an1th)n- of the *a,e >)nd
doe* not e2t)n-+)*h the o0l)-at)on.? $f the o0l)-at)on )* -ener)c )n the *en*e that the o0;ect thereof )* de*)-nated ,erel1 01 )t* cla**
or -en+* .)tho+t an1 part)c+lar de*)-nat)on or ph1*)cal *e-re-at)on fro, all other* of the *a,e cla**, the lo** or de*tr+ct)on of
an1th)n- of the *a,e >)nd e/en .)tho+t the de0tor3* fa+lt and 0efore he ha* )nc+rred )n dela1 .)ll not ha/e the effect of e2t)n-+)*h)n-
the o0l)-at)on. 3! %h)* r+le )* 0a*ed on the pr)nc)ple that the -en+* of a th)n- can ne/er per)*h. Genus nunGuan perit. 3" An
o0l)-at)on to pa1 ,one1 )* -ener)c" therefore, )t )* not e2c+*ed 01 fort+)to+* lo** of an1 *pec)f)c propert1 of the de0tor. 3#
%h+*, .hether f)re )* a fort+)to+* e/ent or pet)t)oner .a* ne-l)-ent are ,atter* ),,ater)al to th)* ca*e. 5hat )* rele/ant here )*
.hether )t ha* 0een e*ta0l)*hed that pet)t)oner ha* o+t*tand)n- acco+nt* .)th $MC and !($. &cE%$
5)th re*pect to $MC, the re*pondent ha* adeA+atel1 e*ta0l)*hed )t* cla),. E2h)0)t* ?C? to ?CC22? 3$ *ho. that pet)t)oner ha* an
o+t*tand)n- acco+nt .)th $MC )n the a,o+nt of (2,119,287.88. E2h)0)t ?E? 3% )* the chec> /o+cher e/)denc)n- pa1,ent to $MC.
E2h)0)t ?#? & )* the *+0ro-at)on rece)pt e2ec+ted 01 $MC )n fa/or of re*pondent +pon rece)pt of the )n*+rance proceed*. All the*e
doc+,ent* ha/e 0een properl1 )dent)f)ed, pre*ented and ,ar>ed a* e2h)0)t* )n co+rt. %he *+0ro-at)on rece)pt, 01 )t*elf, )* *+ff)c)ent
to e*ta0l)*h not onl1 the relat)on*h)p of re*pondent a* )n*+rer and $MC a* the )n*+red, 0+t al*o the a,o+nt pa)d to *ettle the
)n*+rance cla),. %he r)-ht of *+0ro-at)on accr+e* *),pl1 +pon pa1,ent 01 the )n*+rance co,pan1 of the )n*+rance
cla),. 1 Re*pondent3* act)on a-a)n*t pet)t)oner )* *A+arel1 *anct)oned 01 Art)cle 2287 of the C)/)l Code .h)ch pro/)de*:
Art. 2287.$f the pla)nt)ff3* propert1 ha* 0een )n*+red, and he ha* rece)/ed )nde,n)t1 fro, the )n*+rance
co,pan1 for the )n;+r1 or lo** ar)*)n- o+t of the .ron- or 0reach of contract co,pla)ned of, the )n*+rance
co,pan1 *hall 0e *+0ro-ated to the r)-ht* of the )n*+red a-a)n*t the .ron-doer or the per*on .ho ha*
/)olated the contract. . . .
(et)t)oner fa)led to ref+te re*pondent3* e/)dence.
A* to !($, re*pondent fa)led to pre*ent *+ff)c)ent e/)dence to pro/e )t* ca+*e of act)on. No e/)dent)ar1 .e)-ht can 0e -)/en to
E2h)0)t ?# !e/) tra+**?, 2 a letter dated Apr)l 23, 1991 fro, pet)t)oner3* General Mana-er, tephen . Ga)*ano, <r., *)nce )t )* not
an ad,)**)on of pet)t)oner3* +npa)d acco+nt .)th !($. $t onl1 conf)r,* the lo** of !e/)3* prod+ct* )n the a,o+nt of (737,913.88 )n
the f)re that raFed pet)t)oner3* 0+)ld)n- on #e0r+ar1 27, 1991.
Moreo/er, there )* no proof of f+ll *ettle,ent of the )n*+rance cla), of !($" no *+0ro-at)on rece)pt .a* offered )n e/)dence. %h+*,
there )* no e/)dence that re*pondent ha* 0een *+0ro-ated to an1 r)-ht .h)ch !($ ,a1 ha/e a-a)n*t pet)t)oner. #a)l+re to
*+0*tant)ate the cla), of *+0ro-at)on )* fatal to pet)t)oner3* ca*e for reco/er1 of the a,o+nt of (737,913.88.
5&ERE#GRE, the pet)t)on )* partl1 GRAN%ED. %he a**a)led Dec)*)on dated Gcto0er 11, 2888 and Re*ol+t)on dated Apr)l 11, 2881
of the Co+rt of Appeal* )n CACG.R. CE No. 91=4= are A##$RMED .)th the MGD$#$CA%$GN that the order to pa1 the a,o+nt of
(737,913.88 to re*pondent )* DE!E%ED for lac> of fact+al 0a*)*.
No prono+nce,ent a* to co*t*.
G GRDERED.
Pan(ani)an, C.J., Calle3o, Sr. and C#ico-0azario, JJ., conc+r.
Ynares-Santia(o, J., )* on lea/e.
F''()'(*+
1.(enned 01 A**oc)ate <+*t)ce (ort)a Al)OoC&or,ach+elo* and conc+rred )n 01 A**oc)ate <+*t)ce* An-el)na ando/alCG+t)erreF
4no. A**oc)ate <+*t)ce of th)* Co+rtH and El/) <ohn . A*+nc)on.
2.Record*, pp. 149, 198.
3.'d. at pp. 149 and 288" E2h)0)t* ?AC3Ca? and ?EC2Ca !e/) tra+**?.
4.'d., E2h)0)t* ?AC3? and ?EC2 !e/) tra+**?.

7.'d. at 1.
9.'d. at 93.
7.'d. at 93.
=.'d. at 748.
9.CA rollo, p. 1=.
18.'d. at 181C182.
11.'d. at 9=C188.
12.'d. at 187.
13.'d. at 137.
14.Rollo, p. 39.
17.'d. at 2= 4(et)t)onH, 132 4Me,orand+,H.
19.Art. 1297. 5hene/er the th)n- )* lo*t )n the po**e**)on of the de0tor, )t *hall 0e pre*+,ed that the lo** .a* d+e to h)* fa+lt,
+nle** there )* proof to the contrar1, and .)tho+t pre;+d)ce to the pro/)*)on* of Art)cle 1197. %h)* pre*+,pt)on doe* not
appl1 )n ca*e of earthA+a>e, flood, *tor,, or other nat+ral cala,)t1.
17.Rollo, pp. 187 4Co,,entH, 173 4Me,orand+,H.
1=.Spouses Hanopol v. S#oe%art, 'ncorporated, 439 (h)l. 299, 277 42882H" St. $ic#aelJs 'nstitute v. Santos, 422 (h)l. 723, 737
42881H.
19.Go v. Court of !ppeals, G.R. No. 17=922, Ma1 2=, 2884, 438 CRA 37=, 394" Spouses Hanopol v. S#oe%art, 'ncorporated,
supra.
28.Custodio v. Corrado, G.R. No. 1498=2, <+l1 38, 2884, 437 CRA 788, 711" Spouses Hanopol v. S#oe%art, 'ncorporated,
supra.
21.2#e 'nsular .ife !ssurance Co%pan/, .td. v. Court of !ppeals, G.R. No. 129=78, Apr)l 2=, 2884, 42= CRA 79, =9" !(uirre v.
Court of !ppeals, G.R. No. 122249, <an+ar1 29, 2884, 421 CRA 318, 319.
22.-e $esa v. Court of !ppeals, 377 (h)l. 432, 443 41999H.
23.Record*, pp. 149, 198.
24.'d.
27.First Fil-Sin .endin( Corporation v. Padillo, G.R. No. 198733, <an+ar1 12, 2887, 44= CRA 71, 79" !zarra(a v. Rodri(uez, 9
(h)l. 937 4198=H.
29.Record*, at the 0ac> of pp. 171C173" E2h)0)t* ?C? to ?CC22?.
27.ee .a4/ers Cooperative Pu)lis#in( Co. v. 2a)ora, 121 (h)l. 737, 741 41997H.
2=.!etna 'ns. Co. v. <in(, 297 o 2d 719, c)ted )n 43 A, <+r 2d X943.
29.43 A, <+r 2d X943.
38.'d.
31.43 A, <+r 2d X992.
32.Art. 1174. E2cept )n ca*e* e2pre**l1 *pec)f)ed 01 the la., or .hen )t )* other.)*e declared 01 *t)p+lat)on, or .hen the nat+re of
the o0l)-at)on reA+)re* the a**+,pt)on of r)*>, no per*on *hall 0e re*pon*)0le for tho*e e/ent* .h)ch co+ld not 0e
fore*een, or .h)ch, tho+-h fore*een .ere )ne/)ta0le.
33.CA Dec)*)on, p. 11" CA rollo, p. 188.
34..a4/ers Cooperative Pu)lis#in( v. 2a)ora, supra note 27, at 741.
37.<+rado, Co,,ent* and <+r)*pr+dence on G0l)-at)on* and Contract* 41993H, pp. 2=9C298. ee al*o Repu)lic of t#e P#ilippines
v. Gri3aldo, 122 (h)l. 1898, 1899 41997H" -e .eon v. Soriano, =7 (h)l. 193, 199 41978H.
39.,un(e Corp. and 1niversal Co%%. !(encies v. 7lena Ca%enforte & Co%pan/, 91 (h)l. =91, =97 41972H. ee al*o Repu)lic of
t#e P#ilippines v. Gri3aldo, supra" -e .eon v. Soriano, supra.
37.Ra%irez v. Court of !ppeals, 9= (h)l. 227, 22= 41979H.
3=.Record*, pp. 171C173.
39.'d. at 1=2.
48.'d. at 1=3.
41.-elsan 2ransport .ines, 'nc. v. Court of !ppeals, 428 (h)l. =24, =34 42881H" P#ilippine !%erican General 'nsurance Co%pan/,
'nc. v. Court of !ppeals, 339 (h)l. 477, 499 41997H.
42.Record*, p. 281.