HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA, petitione !, "!. VICENTE RODRIGUEZ, e!pondent. G.R.

No. 135634 Facts: Juan andres was the owner of the ot s!tuated !n !"oton, na#a c!ty. $he sa e was e%!denced "y a deed of sa e. &'on the death of (uan andres, ra)on san andres was a''o!nted as ad)!n!strator of the estate, and h!red #eodet!c en#!neer. Jose 'anero 're'ared a conso !dated ' an of the estate and a so 're'ared a s*etch ' an of the ot so d to res'ondent. +t was found out that res'ondent had en ar#ed the area wh!ch he 'urchased fro) (uan. $he ad)!n!strator sent a etter to the res'o!ndent to %acate the sa!d 'ort!on !n wh!ch the atter refused to do. Res'ondent a e#ed that a'art fro) the or!#!na ot, wh!ch had "een so d to h!), the atter !*ew!se so d to h!) the fo ow!n# day the re)a!n!n# 'ort!on of the ot. ,e a e#ed that the 'ay)ent for such wou d "e affected !n 5 years fro) the eecut!on of the for)a deed of sa e after a sur%ey !s conducted. ,e a so a e#ed that under the consent of (uan, he too* 'ossess!on of the sa)e and !ntroduced !)'ro%e)ents thereon. Res'ondent de'os!ted !n court the "a ance of the 'urchase 'r!ce a)ount!n# to -.,035.00 for the aforesa!d 50/0s1uare )eter ot. 2n 3e'te)"er 20, 1//4, the tr!a court rendered (ud#)ent !n fa%or of 'et!t!oner. +t ru ed that there was no contract of sa e to s'ea* of for ac* of a %a !d o"(ect "ecause there was no suff!c!ent !nd!cat!on to !dent!fy the 'ro'erty su"(ect of the sa e, hence, the need to e4ecute a new contract. Res'ondent a''ea ed to the 5ourt of 6''ea s, wh!ch on 6'r! 21, 1//7 rendered a dec!s!on re%ers!n# the dec!s!on of the tr!a court. $he a''e ate court he d that the o"(ect of the contract was deter)!na" e, and that there was a cond!t!ona sa e w!th the "a ance of the 'urchase 'r!ce 'aya" e w!th!n f!%e years fro) the e4ecut!on of the deed of sa e. +ssue: whether or not there was a %a !d sa e.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

,e d: 5!%! 5ode 'ro%!des that 8y the contract of sa e one of the contract!n# 'art!es o" !#ates h!)se f to transfer the ownersh!' of and to de !%er a deter)!nate th!n#, and the other to 'ay therefor a 'r!ce certa!n !n )oney or !ts e1u!%a ent. 6 contract cond!t!ona . of sa e )ay "e a"so ute or

May 31, 2000

6s thus def!ned, the essent!a e e)ents of sa e are the fo ow!n#: a9 5onsent or )eet!n# of the )!nds, that !s, consent to transfer ownersh!' !n e4chan#e for the 'r!ce: "9 ;eter)!nate su"(ect )atter: and, c9 -r!ce certa!n !n )oney or !ts e1u!%a ent. 12 6s shown !n the rece!'t, dated 3e'te)"er 2/, 1/64, the ate Juan 3an 6ndres rece!%ed -500.00 fro) res'ondent as <ad%ance 'ay)ent for the res!dent!a ot ad(o!n!n# h!s 're%!ous y 'a!d ot on three s!des e4ce't!n# on the fronta#e: the a#reed 'urchase 'r!ce was -15.00 'er s1uare )eter: and the fu a)ount of the 'urchase 'r!ce was to "e "ased on the resu ts of a sur%ey and wou d "e due and 'aya" e !n f!%e =59 years fro) the e4ecut!on of a deed of sa e. -et!t!oner>s content!on !s w!thout )er!t. $here !s no d!s'ute that res'ondent 'urchased a 'ort!on of ?ot 1/140802 cons!st!n# of 345 s1uare )eters. $h!s 'ort!on !s ocated !n the )!dd e of ?ot 1/140802, wh!ch has a tota area of 754 s1uare )eters, and !s c ear y what was referred to !n the rece!'t as the <'re%!ous y 'a!d ot.< 3!nce the ot su"se1uent y so d to res'ondent !s sa!d to ad(o!n the <'re%!ous y 'a!d ot< on three s!des thereof, the su"(ect ot !s ca'a" e of "e!n# deter)!ned w!thout the need of any new contract. $he fact that the e4act area of these ad(o!n!n# res!dent!a ots !s su"(ect to the resu t of a sur%ey does not detract fro) the fact that they are deter)!nate or deter)!na" e. 6s the 5ourt of 6''ea s e4' a!ned: 15 5onco)!tant y, the o"(ect of the sa e !s certa!n and deter)!nate. &nder 6rt!c e 1460 of the New 5!%! 5ode, a th!n# so d !s deter)!nate !f at the t!)e the contract !s entered !nto, the th!n# !s
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ca'a" e of "e!n# deter)!nate w!thout necess!ty of a new or further a#ree)ent "etween the 'art!es. ,ere, th!s def!n!t!on f!nds rea !@at!on. $hus, a of the essent!a e e)ents of a contract of sa e are 'resent, !.e., that there was a )eet!n# of the )!nds "etween the 'art!es, "y %!rtue of wh!ch the ate Juan 3an 6ndres undertoo* to transfer ownersh!' of and to de !%er a deter)!nate th!n# for a 'r!ce certa!n !n )oney. 6s 6rt. 14.5 of the 5!%! 5ode 'ro%!des: $he contract of sa e !s 'erfected at the )o)ent there !s a )eet!n# of )!nds u'on the th!n# wh!ch !s the o"(ect of the contract and u'on the 'r!ce. . . .$hat the contract of sa e !s 'erfected was conf!r)ed "y the for)er ad)!n!strator of the estates, Ra)on 3an 6ndres, who wrote a etter to res'ondent on March 30, 1/66 as*!n# for -300.00 as 'art!a 'ay)ent for the su"(ect ot. 6s the 5ourt of 6''ea s o"ser%ed: A!thout any dou"t, the rece!'t 'rofound y s'ea*s of a )eet!n# of the )!nd "etween 3an 6ndres and Rodr!#ue@ for the sa e. B%!dent y, th!s !s a 'erfected contract of sa e on a deferred 'ay)ent of the 'urchase 'r!ce. 6 the 're0 re1u!s!te e e)ents for a %a !d 'urchase transact!on are 'resent. $here !s a need, howe%er, to c ar!fy what the 5ourt of 6''ea s sa!d !s a cond!t!ona contract of sa e. 6''arent y, the a''e ate court cons!dered as a <cond!t!on< the st!'u at!on of the 'art!es that the fu cons!derat!on, "ased on a sur%ey of the ot, wou d "e due and 'aya" e w!th!n f!%e =59 years fro) the e4ecut!on of a for)a deed of sa e. +t !s e%!dent fro) the st!'u at!ons !n the rece!'t that the %endor Juan 3an 6ndres so d the res!dent!a ot !n 1uest!on to res'ondent and undertoo* to transfer the ownersh!' thereof to res'ondent w!thout any 1ua !f!cat!on, reser%at!on or cond!t!on. 6 deed of sa e !s cons!dered a"so ute !n nature where there !s ne!ther a st!'u at!on !n the deed that t!t e to the 'ro'erty so d !s reser%ed !n the se er unt! fu 'ay)ent of the 'r!ce, nor one #!%!n# the %endor the r!#ht to un! atera y reso %e the contract the )o)ent the "uyer fa! s to 'ay w!th!n a f!4ed 'er!od. 6'' y!n# these 'r!nc!' es to th!s case, !t cannot "e #a!nsa!d that the contract of sa e "etween the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

'art!es !s a"so ute, not cond!t!ona . $here !s no reser%at!on of ownersh!' nor a st!'u at!on 'ro%!d!n# for a un! atera resc!ss!on "y e!ther 'arty. +n fact, the sa e was consu))ated u'on the de !%ery of the ot to res'ondent. 20 $hus, 6rt. 14.. 'ro%!des that the ownersh!' of the th!n# so d sha "e transferred to the %endee u'on the actua or construct!%e de !%ery thereof. $he st!'u at!on that the <'ay)ent of the fu cons!derat!on "ased on a sur%ey sha "e due and 'aya" e !n f!%e =59 years fro) the e4ecut!on of a for)a deed of sa e< !s not a cond!t!on wh!ch affects the eff!cacy of the contract of sa e. +t )ere y 'ro%!des the )anner "y wh!ch the fu cons!derat!on !s to "e co)'uted and the t!)e w!th!n wh!ch the sa)e !s to "e 'a!d. 8ut !t does not affect !n any )anner the effect!%!ty of the contract. 5onse1uent y, the content!on that the a"sence of a for)a deed of sa e st!'u ated !n the rece!'t 're%ents the ha''en!n# of a sa e has no )er!t. $he c a!) of 'et!t!oners that the 'r!ce of -.,035.00 !s !n!1u!tous !s untena" e. $he a)ount !s "ased on the a#ree)ent of the 'art!es as e%!denced "y the rece!'t =B4h. 29. $!)e and a#a!n, we ha%e stressed the ru e that a contract !s the aw "etween the 'art!es, and courts ha%e no cho!ce "ut to enforce such contract so on# as they are not contrary to aw, )ora s, #ood custo)s or 'u" !c 'o !cy. 2therw!se, court wou d "e !nterfer!n# w!th the freedo) of contract of the 'art!es. 3!)' y 'ut, courts cannot st!'u ate for the 'art!es nor a)end the atter>s a#ree)ent, for to do so wou d "e to a ter the rea !ntent!ons of the contract!n# 'art!es when the contrary funct!on of courts !s to #!%e force and effect to the !ntent!ons of the 'art!es. $he dec!s!on of the 5ourt of 6''ea s !s 6FF+RMB; w!th the )od!f!cat!on that res'ondent !s 2R;BRB; to re!)"urse 'et!t!oners for the e4'enses of the sur%ey.

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He nando R. #ena$o!a "!. Se"e ino Santo! G.R. No. %&&'() Facts: 3e%er!no so d h!s 'ro'erty to henry. ,enry a'' !ed for a oan w!th 'h! a) !fe. 6s +t was a ready a''ro%ed 'end!n# the su")!ss!on of certa!n docu)ents such as the owners du' !cate of transfer cert!f!cate of t!t e wh!ch !s !n 'ossess!on of se%er!no. ,enry a ready too* 'ossess!on of the 'ro'erty !n 1uest!on after e(ect)ent of the essees. ,e a so 'a!d an ernest )oney of 300,000 under the 're)!se that !t sha "e forfe!ted !n fa%or of se%er!no !n case of non'ay)ent. 3e%er!no now c a!)s ownersh!' o%er the 'ro'erty c a!)!n# that henry d!d not 'ay for the 'ro'erty, therefore there was no sa e to s'ea* of. +ssue: whether or not there !s a contract of sa e 'erfected !n th!s case. ,e d: there was a 'erfected contract of sa e due to the second deed of sa e. $he "as!c character!st!c of an a"so ute y s!)u ated or f!ct!t!ous contract !s that the a''arent contract !s not rea y des!red or !ntended to 'roduce e#a effects or a ter the (ur!d!ca s!tuat!on of the 'art!es !n any way. 30 ,owe%er, !n th!s case, the 'art!es a ready undertoo* certa!n acts wh!ch were d!rected towards fu f! )ent of the!r res'ect!%e co%enants under the second deed, !nd!cat!n# that they !ntended to #!%e effect to the!r a#ree)ent. Further, the fact that 3e%er!no e4ecuted the two deeds !n 1uest!on, 'r!)ar! y so that 'et!t!oner cou d e(ect the tenant and enter !nto a oanC)ort#a#e contract w!th -h! a) ?!fe, !s to our )!nd, a stron# !nd!cat!on that he !ntended to transfer ownersh!' of the 'ro'erty to 'et!t!oner. For why e se wou d he author!@e the atter to sue the tenant for e(ect)ent under a c a!) of ownersh!', !f he tru y d!d not !ntend to se the 'ro'erty to 'et!t!oner !n the f!rst ' aceD Need ess to state, !t does not )a*e sense for 3e%er!no to a ow 'et!t!oner to 'ursue the e(ect)ent case, !n 'et!t!oner>s own na)e, w!th 'et!t!oner ar#u!n#
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

A*+*!t ,&, ,--%

that he had "ou#ht the 'ro'erty fro) 3e%er!no and thus ent!t ed to 'ossess!on thereof, !f 'et!t!oner d!d not ha%e any r!#ht to the 'ro'erty. 6 so worth not!n# !s the fact that !n the case f! ed "y 3e%er!no>s tenant a#a!nst 3e%er!no and 'et!t!oner !n 1/7/, assa! !n# the %a !d!ty of the sa e )ade to 'et!t!oner, 3e%er!no e4' !c!t y asserted !n h!s sworn answer to the co)' a!nt that the sa e was a e#!t!)ate transact!on. ,e further a e#ed that the e(ect)ent case f! ed "y 'et!t!oner a#a!nst the tenant was a e#!t!)ate act!on "y an owner a#a!nst one who refuses to turn o%er 'ossess!on of h!s 'ro'erty. +t shou d "e e)'has!@ed that the non0 a''earance of the 'art!es "efore the notary 'u" !c who notar!@ed the deed does not necessar! y nu !fy nor render the 'art!es> transact!on %o!d a" !n!t!o. Ae ha%e he d 're%!ous y that the 'ro%!s!on of 6rt!c e 1357 of the New 5!%! 5ode on the necess!ty of a 'u" !c docu)ent !s on y for con%en!ence, not for %a !d!ty or enforcea"! !ty. Fa! ure to fo ow the 'ro'er for) does not !n%a !date a contract. Ahere a contract !s not !n the for) 'rescr!"ed "y aw, the 'art!es can )ere y co)'e each other to o"ser%e that for), once the contract has "een 'erfected.35 $h!s !s cons!stent w!th the "as!c 'r!nc!' e that contracts are o" !#atory !n whate%er for) they )ay ha%e "een entered !nto, 'ro%!ded a essent!a re1u!s!tes are 'resent.3 $he e e)ents of a %a !d contract of sa e under 6rt. 1457 of the 5!%! 5ode are: =19 consent or )eet!n# of the )!nds: =29 deter)!nate su"(ect )atter: and =39 'r!ce certa!n !n )oney or !ts e1u!%a ent.3. +n the !nstant case, the second deed ref ects the 'resence of a these e e)ents and as such, there !s a ready a 'erfected contract of sa e. $he non0'ay)ent of the contract 'r!ce )ere y resu ts !n a "reach of contract for non0 'erfor)ance and warrants an act!on for resc!ss!on or s'ec!f!c 'erfor)ance under 6rt!c e 11/1 of the 5!%! 5ode. 8e that as !t )ay, we a#ree w!th 'et!t!oner that a thou#h the aw a ows resc!ss!on as a re)edy for "reach of contract, the sa)e )ay not "e a%a! ed of "y res'ondents !n th!s case. $o "e#!n w!th, !t was 3e%er!no who 're%ented fu 'ay)ent of the st!'u ated 'r!ce when he refused to de !%er the owner>s or!#!na du' !cate t!t e to
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-h! a) ?!fe. ,!s refusa to coo'erate was un(ust!f!ed, "ecause as 3e%er!no h!)se f ad)!tted, he s!#ned the deed 'rec!se y to ena" e 'et!t!oner to ac1u!re the oan. ,e a so *new that the 'ro'erty was to "e #!%en as secur!ty therefor. $hus, !t cannot "e sa!d that 'et!t!oner "reached h!s o" !#at!on towards 3e%er!no s!nce the for)er has a ways "een w! !n# to and cou d co)' y w!th what was !ncu)"ent u'on h!). +n su), the on y conc us!on wh!ch can "e deduced fro) the aforesa!d c!rcu)stances !s that ownersh!' of the 'ro'erty has "een transferred to 'et!t!oner. A,BRBF2RB, the 'et!t!on !s GR6N$B;.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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+ssue: #EO#LE OF THE #HILI##INES ". ELIZA.ETH GANGUSO G.R. No. 115430 DAVIDE, JR., J./ Facts: Ma(or Ju%en! e 3u a'as, 2ff!cer0!n0 char#e, ;an#erous ;ru#s Bnforce)ent 3ect!on, -asay 5!ty -o !ce 3tat!on, rece!%ed a conf!dent!a re'ort fro) an !nfor)ant a"out the ra)'ant traff!c*!n# of dru#s "y B !@a"eth Gan#uso y ;ecena a.*.a. <8eth $o)"oy<. 6 "uy0"ust o'erat!on was ' anned w!th ;enn!s Eer)u# act!n# as 'oseur0"uyer, "ac*ed0 u' "y 3-21 ?u)a'at, 3-21 Ga"ut!n, -23s Mendo@a and Garc!a w!th 3-23 Fucanan as tea) eader. $he o'erat!on was carr!ed out and they were successfu !n arrest!n# 8eth for the %!o at!on of ;an#erous ;ru#s 6ct of 1/.2. 6t the sa)e t!)e, they were a" e to reco%er a .37 ca !"er -a t!* re%o %er fro) the sus'ect. 3e%era docu)entary e4h!"!ts were 'resented as e%!dence to the cr!)e. 8eth )ade state)ents !n her test!)ony d!fferent to that of the 'o !ceFs: 'o !ce)en "ar#ed !nto her house, searched the 're)!ses and her 'erson w!thout a warrant and: den!ed the re%o %er reco%ered fro) her. 6t the tr!a , defense 'resented two w!tnesses who a so c a!)ed that no "uy "ust o'erat!on too* ' ace and no re%o %er was !n the 'ossess!on of the sus'ect. Ne%erthe ess, the Re#!ona $r!a 5ourt of -asay con%!cted her of "oth char#es. 3he was sentenced to suffer the 'ena ty of !fe !)'r!son)ent and to 'ay a f!ne ' us costs for the cr!)e !n%o %!n# dru#s. 3he was a so sentenced to an !ndeter)!nate 'ena ty of ten years and one day of prision mayor, as )!n!)u), to twe %e years and one day, as )a4!)u), w!th f!ne and costs for the cr!)e of ! e#a 'ossess!on of f!rear)s. ,ence, 8eth a''ea ed.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

No%e)"er 23, 1//5

Ahether the tr!a court erred !n f!nd!n# that the 'rosecut!on has fu y )et the test of )ora certa!nty as to the #u! t of the accused on "oth char#es of %!o at!on of sect!on 15, 6rt!c e +++ of the ;an#erous ;ru#s 6ct of 1/.2 and of ! e#a 'ossess!on of f!rear)s. ;ec!s!on: $he !nstant a''ea !s 'art y #ranted, and the cha en#ed dec!s!on of the Re#!ona $r!a 5ourt of -asay 5!ty !s )od!f!ed. 6s )od!f!ed, accused0a''e ant 8eth !s ac1u!tted for the char#e of ! e#a 'ossess!on of f!rear)s on #round of reasona" e dou"t. $he 'ena ty !)'osed on her for the %!o at!on of sect!on 15, 6rt!c e +++ of the ;an#erous ;ru#s 6ct of 1/.2 !s reduced to an !ndeter)!nate sentence of three )onths of arresto mayor, as )!n!)u), to three years of prision correccional, as )a4!)u). Rat!o ;ec!dend!: S*p e0e Co* t 1e$d t1at t1e e$e0ent! o2 a 3ont a3t o2 !a$e 4e e p e!ent. .et1 i! p e!*0ed to 1a"e +i"en 1e 3on!ent 56 not in7*i in+ a! to t1e 0eanin+ o2 8S9 41en t1e o22i3e po!ed to 5*6 8#1p :-4o t1 o2 S9. T1e e2o e, t1e e 4a! a 0eetin+ o2 0ind! *pon a de2inite o5;e3t and *pon t1e p i3e. T1o*+1 !1e 4a! not in po!!e!!ion o2 t1e o5;e3t o2 !a$e, A ti3$e %(:) 0e e$6 e7*i e! t1at t1e "endo 0*!t 1a"e t1e i+1t to t an!2e o4ne !1ip o2 t1e o5;e3t !o$d at t1e ti0e o2 de$i"e 6. In t1e 3a!e at 5a , t1o*+1 .et1 i! not t1e o4ne , !1e 1ad t1e i+1t to di!po!e o2 t1e p o1i5ited d *+. O4ne !1ip 4a! t1e ea2te a37*i ed *pon 1e de$i"e 6 to t1e 0en in t1e a$$e6 a2te 1e pa60ent o2 t1e p i3e. 3u're)e 5ourt a so he d that fa! ure to conduct 'r!or sur%e! ance and a"sence of )ar*ed )oney does not affect the e%!dence of the 'rosecut!on. +t !s suff!c!ent that the )e)"ers of the o'erat!on were acco)'an!ed "y the !nfor)ant to the scene: the sa e was ade1uate y 'ro%en and: the dru# su"(ect was 'resented "efore the court. 6s re#ards the 'ena ty !)'osed, s!nce the sha"u on y we!#hs 0.1/54 #ra)s, 'ena ty
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shou d "e 'r!s!on correcc!ona to rec us!on te)'ora de'end!n# u'on the 1uant!ty. 6'' y!n# R.6. No. .65/, +3?6A, and the dec!s!on !n the case of -eo' e %. 3!)on, 'ro'er 'ena ty shou d "e w!th!n the ran#e of arresto )ayor to 'r!s!on correcc!ona . R.6. No. .65/, a)end!n# R.6. No. 6425, too* effect on 31 ;ece)"er 1//3. 8e!n# 'atent y fa%ora" e to the a''e ant, that a)endatory aw shou d "e a'' !ed retroact!%e y. +3?6A: +f an offense under the R-5 !s a so 'un!sha" e "y another aw, the court sha sentence the accused to an !ndeter)!nate sentence, the )a4!)u) ter) of wh!ch sha not e4ceed the )a4!)u) f!4ed "y sa!d aw and the )!n!)u) sha not "e ess than the )!n!)u) ter) 'rescr!"ed "y the sa)e.

F!na y, there was no 'roof that 8eth !s #u! ty "eyond reasona" e dou"t for the 'ossess!on of f!rear)s. ,ence, 'resu)'t!on of !nnocence stands for fa! ure of the 'rosecut!on to esta" !sh such #u! t.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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HEIRS OF A<#ARO AURORA SANTOS G.R. No. ?0467/2 GUERRERO, J./ Facts:

DEL

ROSARIO

".

3e'te)"er 30, 1/71

and con%ey to ' a!nt!ff the 20,000 s1. ). of and to "e ta*en e!ther fro) ?ot 4 or fro) ?ot 506 of 5ustod!oFs ots, wh!ch defendants own G !nterest thereof. 6##r!e%ed "y the aforesa!d dec!s!on, the defendants f! ed an a''ea w!th the 5ourt of 6''ea s wh!ch cert!f!ed the records of the case to the 3u're)e 5ourt for f!na deter)!nat!on. +ssue: =A! 2a a! it 3on3e n! Sa$e!9 Ahether the sa e !s %a !d as to the cause or o"(ect of the contract. ;ec!s!on: $he (ud#)ent a''ea ed fro) !s here"y aff!r)ed !n toto, w!th costs a#a!nst the a''e ants. Rat!o ;ec!dend!: 3u're)e 5ourt he d that the e4ecut!on of the deed of sa e !s %a !d notw!thstand!n# the ac* of any t!t e to the ot "y a''e ants at the t!)e of e4ecut!on f the deed of sa e !n fa%or of a''e ee as there can "e a sa e of an e4'ected th!n# !n accordance w!th 6rt!c e 1461 of the New 5!%! 5ode: Art. 1461. Things having a potential existence may be the object of the contract of sale. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence. The sale of a vain expectancy is void. hope or

6)'aro ;e Rosar!o entered !nto a contract w!th 6ttorney 6ndres 3antos and h!s w!fe 6urora 3antos where"y the atter so d to the for)er a 20,000 s1. ). of and wh!ch !s to "e se#re#ated fro) ?ot 1. 3a!d ot for)s 'art of the se%era ots "e on#!n# to a certa!n $eof! o 5ustod!o, of wh!ch ots, 6ttorney 3antos, "y a#ree)ent w!th the atter, as h!s attorneyFs fees, owns G !nterest thereof. -art!es a#reed that s'ouses 6ndres sha thereafter e4ecute a ;eed of 5onf!r)at!on of 3a e !n fa%or of ;e Rosar!o as soon as the t!t e has "een re eased and the su"d!%!s!on ' an of sa!d ?ot 1 has "een a''ro%ed "y the ?and Re#!strat!on 5o))!ss!oner. ;ue to the fa! ure of s'ouses 6ndres to e4ecute the deed after the fu f! )ent of the cond!t!on, ;e Rosar!o c a!)s )a !c!ous "reach of a ;eed of 3a e. ;efendant thereafter f! ed a )ot!on to d!s)!ss sett!n# u' the defenses of ac* of (ur!sd!ct!on of the court o%er the su"(ect of the act!on and ac* of cause of act!on as we as the defense of 'rescr!'t!on. $hey further a e#ed that the deed of sa e was on y an acco))odat!on #rac!ous y e4tended, out of c ose fr!endsh!' "etween the defendants and the ' a!nt!ff, hence, tanta)ount to wa!%er, a"andon)ent or otherw!se e4t!n#u!sh)ent of the de)and set forth !n the co)' a!nt. F!na y, defendants a e#ed that the c a!) on wh!ch the act!on or su!t !s founded !s unenforcea" e under the statute of frauds and that t1e 3a*!e o o5;e3t o2 t1e 3ont a3t did not e=i!t at t1e ti0e o2 t1e t an!a3tion. $he ower court reso %ed to deny the )ot!on to d!s)!ss. 6fter act!ons "y res'ect!%e 'art!es, the ower court ordered the defendants to e4ecute
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

$he case at "ar !s not a case of a %a!n ho'e or e4'ectancy wh!ch !s %o!d under the aw. $he e4'ectant r!#ht ca)e !nto e4!stence or )ater!a !@ed for the a''e ants actua y der!%ed t!t es fro) ?ot + wh!ch su"se1uent y "eca)e the o"(ect of su"d!%!s!on.

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JOSE <. JAVIER and ESTRELLA F. JAVIER "!. COURT OF A##EALS and LEONARDO TIRO GR No. 471/4 March 15, 1//0 Re#a ado, J.: F65$3: ?eonardo $!ro e4ecuted a ;eed of ass!#n)ent concern!n# h!s shares of stoc* !n $!)"erwea th 5or'orat!on on Fe". 15, 1/66 !n fa%or of s'ouses Jose and Bstre a Ja%!er and for the a)ount of - 120,000. 3'ouses 'a!d 20,000 as !n!t!a 'ay)ent and the "a ance to "e 'a!d !n !nsta )ents as a#reed. $he 'art!es entered !nto another deed on Fe". 27, 1/66 for the addtF forest concess!on, su"(ect of a 'end!n# a'' !cat!on, ad(o!n!n# the area co%ered !n the f!rst deed. 6s a#reed, the 'ay)ent therefor of - 30,000 sha "e 'a!d as soon as the a'' !cat!on !s a''ro%ed. 2n No%. 17, 1/66, the ;!r. of Forestry d!rected a conso !dat!on for the renewa of the concess!on. 8y %!rtue of the deed, s'ouses Ja%!er conso !dated w!th the other ad(o!n!n# concess!ona!res.2n Ju y 16, 1/67, $!ro f! ed a co)' a!nt for fa! ure of the s'ouses to 'ay the re)a!n!n# "a ance.3'ouses f! ed the!r answer ar#u!n# there!n the nu !ty of the deeds and the return of the 'ay)ents )ade "y the). +t a''eared !n record that the $!)"erwea th 5or'orat!on was a non0e4!stent or#an!@at!on.$he tr!a court d!s)!ssed the co)' a!nt hence, $!ro a''ea ed to 56. 56 re%ersed the (ud#)ent. -et!t!on to re%!ew f! ed w!th 35. +33&B: ACN $,B $A2 ;BB;3 6RB N&?? 6N; E2+;, $,B F2RMBR F2R $2$6? 683BN5B 2F 52N3+;BR6$+2N 6N; $,B ?6$$BR F2R N2N0F&?F+??MBN$ 2F 52N;+$+2N3.

stated !n the deed !tse f. 3!nce sa!d cor'orat!on ne%er ca)e !nto e4!stence, no share of stoc*s was e%er transferred to the), hence the sa!d deed !s nu and %o!d for ac* of cause or cons!derat!on. $he true cause or cons!derat!on of sa!d deed was the transfer of the forest concess!on of 'r!%ate res'ondent to 'et!t!oners for -120,000.00. $h!s f!nd!n# !s su''orted "y the conte)'oraneous and su"se1uent acts of 'et!t!oners and 'r!%ate res'ondent. +t !s sett ed that the 're%!ous and s!)u taneous and su"se1uent acts of the 'art!es are 'ro'er y co#n!@a" e !nd!c!a of the!r true !ntent!on. $he!r acts re%ea that the cause stated !n the 1uest!oned deed of ass!#n)ent !s fa se. $he deed of ass!#n)ent of Fe"ruary 15, 1/66 !s a re at!%e y s!)u ated contract wh!ch states a fa se cause or cons!derat!on, or one where the 'art!es concea the!r true a#ree)ent. 6 contract w!th a fa se cons!derat!on !s not nu and %o!d 'er se. &nder 6rt!c e 1346 of the 5!%! 5ode, a re at!%e y s!)u ated contract, when !t does not 're(ud!ce a th!rd 'erson and !s not !ntended for any 'ur'ose contrary to aw, )ora s, #ood custo)s, 'u" !c order or 'u" !c 'o !cy "!nds the 'art!es to the!r rea a#ree)ent. 6s to the nu !ty for the non0fu f! )ent of the cond!t!ons, 35 a#rees. $he eff!cacy of sa!d deed of ass!#n)ent !s su"(ect to the cond!t!on that the a'' !cat!on of 'r!%ate res'ondent for an add!t!ona area for forest concess!on "e a''ro%ed "y the 8ureau of Forestry. 3!nce 'r!%ate res'ondent d!d not o"ta!n that a''ro%a , sa!d deed 'roduces no effect. Ahen a contract !s su"(ect to a sus'ens!%e cond!t!on, !ts "!rth or effect!%!ty can ta*e ' ace on y !f and when the e%ent wh!ch const!tutes the cond!t!on ha''ens or !s fu f! ed. Moreo%er, under the second 'ara#ra'h of 6rt!c e 1461 of the 5!%! 5ode, the eff!cacy of the sa e of a )ere ho'e or e4'ectancy !s dee)ed su"(ect to the cond!t!on that the th!n# w! co)e !nto e4!stence. +n th!s case, s!nce 'r!%ate res'ondent ne%er ac1u!red any r!#ht o%er the add!t!ona area for fa! ure to secure the a''ro%a of the 8ureau of Forestry, the a#ree)ent e4ecuted therefor, wh!ch had for !ts o"(ect the transfer of sa!d r!#ht to 'et!t!oners, ne%er "eca)e effect!%e or enforcea" e.

R&?+NG: ;ec!s!on Mod!f!ed.

-et!t!oners contend that the deed of ass!#n)ent con%eyed to the) the shares of stoc*s of 'r!%ate res'ondent !n $!)"erwea th 5or'orat!on, as
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page $

ONA#AL #HILS. CO<<ODITIES, INC. "!. THE COURT OF A##EALS and SUSAN CHUA Fe"ruary 1, 1//3 5a)'os, Jr., J.: F65$3: 2N6-6? -h! s. 5o))od!t!es, +nc. !s a co))!ss!on )erchantC"ro*er !censed "y 3B5, en#a#ed !n co))od!ty futures trad!n#. Futures 5o))!ss!on MerchantC8ro*er refers to a cor'orat!on or 'artnersh!', wh!ch )ust "e re#!stered and !censed as a Futures 5o))!ss!on MerchantC8ro*er and !s en#a#ed !n so !c!t!n# or !n acce't!n# orders for the 'urchase or sa e of any co))od!ty for future de !%ery on or su"(ect to the ru es of the contract )ar*et and that, !n connect!on w!th such so !c!tat!on or acce'tance of orders, acce'ts any )oney, secur!t!es or 'ro'erty =or e4tends cred!t !n !eu thereof9 to )ar#!n, #uarantee or secure any trade or contract that resu ts or )ay resu t therefro). +ts 6ccount B4ecut!%e B !@a"eth ;!a@ !n%!ted 3usan 5hua to !n%est !n co))od!ty futures trad!n# and they su"se1uent y entered !nto a co))od!ty futures contract w!thout e4' anat!on to 3usan as to the r!s*s !n%o %ed. 6 co))od!ty futures contract refers to an a#ree)ent to "uy or se a s'ec!f!ed 1uant!ty and #rade of a co))od!ty at a future date at a 'r!ce esta" !shed at the f oor of the e4chan#e. 6s st!'u ated !n the trad!n# contract, 3usan )ay w!thdraw anyt!)e and she d!d. Fro) - 700,000 3usan !n%ested, she was a" e to #et on y 4.0,000. ,ence, co)' a!nt was f! ed w!th the tr!a court. $he tr!a court found and rendered the trad!n# contract a s'ec!e of #a)" !n# and therefore nu and %o!d. 56 u'he d the (ud#)ent. ,ence, 'et!t!on for cert!orar! w!th 35. GR No. /0.0.

"y the 'art!es, !s a contract for the sa e of 'roducts for future de !%ery, !n wh!ch e!ther se er or "uyer )ay e ect to )a*e or de)and de !%ery of #oods a#reed to "e "ou#ht and so d, "ut where no such de !%ery !s actua y )ade. 8y de !%ery !s )eant the act "y wh!ch the res or su"(ect !s ' aced !n the actua or construct!%e 'ossess!on or contro of another. 2N6-6? rece!%ed the custo)er>s orders and 'r!%ate res'ondent>s )oney. 6s 'er ter)s of the trad!n# contract, custo)er>s orders sha "e d!rect y trans)!tted "y the 'et!t!oner as "ro*er to !ts 'r!nc!'a , Fran*we Bnter'r!ses ?td. of ,on#*on# , wh!ch !n turn )ust ' ace the custo)er>s orders w!th the $o*yo B4chan#e. $here !s no e%!dence that the orders and )oney were trans)!tted to !ts 'r!nc!'a Fran*we Bnter'r!ses ?td. !n ,on#*on# nor were the orders forwarded to the $o*yo B4chan#e. Ae draw the conc us!on that no actua de !%ery of #oods and co))od!ty was !ntended and e%er )ade "y the 'art!es. +n the rea !t!es of the transact!on, the 'art!es )ere y s'ecu ated on the r!se and fa !n the 'r!ce of the #oodsCco))od!ty su"(ect )atter of the transact!on. +f 'r!%ate res'ondent>s s'ecu at!on was correct, she wou d "e the w!nner and the 'et!t!oner, the oser, so 'et!t!oner wou d ha%e to 'ay 'r!%ate res'ondent the <)ar#!n<. 8ut !f 'r!%ate res'ondent was wron# !n her s'ecu at!on then she wou d e)er#e as the oser and the 'et!t!oner, the w!nner. $he 'et!t!oner wou d *ee' the )oney or co ect the d!fference fro) the 'r!%ate res'ondent. $h!s !s c ear y a for) of #a)" !n# 'ro%!ded for w!th un)!sta*ea" e certa!nty under 6rt!c e 2017 +f a contract wh!ch 'ur'orts to "e for the de !%ery of #oods, secur!t!es or shares of stoc* !s entered !nto w!th the !ntent!on that the d!fference "etween the 'r!ce st!'u ated and the e4chan#e or )ar*et 'r!ce at the t!)e of the 'retended de !%ery sha "e 'a!d "y the oser to the w!nner, the transact!on !s nu and %o!d. $he oser )ay reco%er what he has 'a!d.

+33&B: ACN $,B $R6;+NG 52N$R65$ +3 N&?? 6N; E2+; 63 +$ 6--B6R3 $2 8B 6 3-B5+B 2F G6M8?+NG

R&?+NG: -et!t!on ;!s)!ssed. $he trad!n# contract s!#ned

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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Sp!. .e na do .*ena"ent* a and Con!o$a3ion Joa7*in "!. Co* t o2 Appea$! No%e)"er 20, 2003 F!rst ;!%!s!on -onente: 5ar'!o, J. GR No. 1263.6

Facts: ;efendant s'ouses ?eonardo Joa1u!n and Fe !c!ana ?andr!to are the 'arents of ' a!nt!ffs 5onso ac!on, Nora, B))a and Nat!%!dad as we as of defendants F!de , $o)as, 6rte)!o, 5 ar!ta, Fe !c!tas, Fe, and Ga%!no, a surna)ed Joa1u!n. ?eonardo and Fe !c!ana e4ecuted se%era deeds of sa e !n fa%our of the!r co0defendant ch! dren. -et!t!oners then f! ed an act!on the Re#!ona $r!a 5ourt =R$59 of Ma*at! see*!n# to dec are as nu and %o!d ab initio the deeds of sa e e4ecuted "y ?eonardo and Fe !c!ana c a!)!n# that: =19 here was no actua %a !d cons!derat!on for the deeds of sa e, =29 assu)!n# that there was cons!derat!on !n the su)s ref ected !n the 1uest!oned deeds, the 'ro'ert!es are )ore than three0fo d t!)es )ore %a ua" e than the )eas y su)s a''ear!n# there!n, and =39 the deeds of sa e do not ref ect and e4'ress the true !ntent of the 'art!es ;efendants, on the other hand a%er =19 that the sa es were w!th suff!c!ent cons!derat!ons and )ade "y defendants 'arents %o untar! y, !n #ood fa!th, and w!th fu *now ed#e of the conse1uences of the!r deeds of sa e: and =29 that the cert!f!cates of t!t e were !ssued w!th suff!c!ent factua and e#a "as!s. $he R$5 d!s)!ssed the case, dec ar!n# that the deeds of sa e were a e4ecuted for %a ua" e cons!derat!on. 2n a''ea , the 5ourt of 6''ea s aff!r)ed the dec!s!on of the R$5. +ssues: =19 Ahether there the deeds of sa e are %o!d for ac* of cons!derat!on =29 Ahether the deeds of sa e are %o!d for #ross !nade1uacy of 'r!ce ,e d: $he 'et!t!on !s w!thout )er!t. =19 6 contract of sa e !s not a rea contract, "ut a consensua contract. 6s a consensua contract, a contract of sa e "eco)es a "!nd!n# and %a !d contract u'on the )eet!n# of the )!nds as to
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

'r!ce. +f there !s a )eet!n# of the )!nds of the 'art!es as to the 'r!ce, the contract of sa e !s %a !d, des'!te the )anner of 'ay)ent, or e%en the "reach of that )anner of 'ay)ent. +f the rea 'r!ce !s not stated !n the contract, then the contract of sa e !s %a !d "ut su"(ect to refor)at!on. +f there !s no )eet!n# of the )!nds of the 'art!es as to the 'r!ce, "ecause the 'r!ce st!'u ated !n the contract !s s!)u ated, then the contract !s %o!d. 6rt!c e 14.1 of the 5!%! 5ode states that !f the 'r!ce !n a contract of sa e !s s!)u ated, the sa e !s %o!d. +t !s not the act of 'ay)ent of 'r!ce that deter)!nes the %a !d!ty of a contract of sa e. -ay)ent of the 'r!ce has noth!n# to do w!th the 'erfect!on of the contract. -ay)ent of the 'r!ce #oes !nto the 'erfor)ance of the contract. Fa! ure to 'ay the cons!derat!on !s d!fferent fro) ac* of cons!derat!on. $he for)er resu ts !n a r!#ht to de)and the fu f! )ent or cance at!on of the o" !#at!on under an e4!st!n# %a !d contract wh! e the atter 're%ents the e4!stence of a %a !d contract. -et!t!oners fa! ed to show that the 'r!ces !n the ;eeds of 3a e were a"so ute y s!)u ated. $o 'ro%e s!)u at!on, 'et!t!oners 'resented B))a Joa1u!n Ea do@s test!)ony stat!n# that the!r father, res'ondent ?eonardo Joa1u!n, to d her that he wou d transfer a ot to her throu#h a deed of sa e w!thout need for her 'ay)ent of the 'urchase 'r!ce. $he tr!a court d!d not f!nd the a e#at!on of a"so ute s!)u at!on of 'r!ce cred!" e. -et!t!oners fa! ure to 'ro%e a"so ute s!)u at!on of 'r!ce !s )a#n!f!ed "y the!r ac* of *now ed#e of the!r res'ondent s!" !n#s f!nanc!a ca'ac!ty to "uy the 1uest!oned ots. 2n the other hand, the ;eeds of 3a e wh!ch 'et!t!oners 'resented as e%!dence ' a!n y showed the cost of each ot so d. Not on y d!d res'ondentsF )!nds )eet as to the 'urchase 'r!ce, "ut the rea 'r!ce was a so stated !n the ;eeds of 3a e. 6s of the f! !n# of the co)' a!nt, res'ondent s!" !n#s ha%e a so fu y 'a!d the 'r!ce to the!r res'ondent father. =29 6rt!c es 1355 of the 5!%! 5ode states: 6rt. 1355. B4ce't !n cases s'ec!f!ed "y aw, $e!ion o inade7*a36 o2 3a*!e !1a$$ not in"a$idate a 3ont a3t, un ess there has "een fraud, )!sta*e or undue !nf uence. 6rt!c e 14.0 of the 5!%! 5ode further 'ro%!des: 6rt. 14.0. G o!! inade7*a36 o2 p i3e doe! not a22e3t a 3ont a3t o2 !a$e, e4ce't as )ay
Page 10

!nd!cate a defect !n the consent, or that the 'art!es rea y !ntended a donat!on or so)e other act or contract. -et!t!oners fa! ed to 'ro%e any of the !nstances )ent!oned !n 6rt!c es 1355 and 14.0 of the 5!%! 5ode wh!ch wou d !n%a !date, or e%en affect, the ;eeds of 3a e. +ndeed, there !s no re1u!re)ent that the 'r!ce "e e1ua to the e4act %a ue of the su"(ect )atter of sa e. 6 the res'ondents "e !e%ed that they rece!%ed the co))utat!%e %a ue of what they #a%e.

La5a+a$a "!. Santia+o

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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;ece)"er 4, 2001 3econd ;!%!s!on -onente: Hu!su)"!n#, J.

GR No. 132305

5ode 'ro%!des: +f the 'r!ce !s s!)u ated, the sa e !s %o!d, "ut the act )ay "e shown to ha%e "een !n rea !ty a donat!on, or so)e other act or contract.

Facts: Jose $. 3ant!a#o owned a 'arce of and. 6 e#!n# that Jose had fraudu ent y re#!stered !t !n h!s na)e a one, h!s s!sters N!co asa and 6)anda 3ant!a#o =res'ondents9, sued Jose for reco%ery of 2C3 share of the 'ro'erty. 2n 6'r! 20, 1/71, the tr!a court !n that case dec!ded !n fa%or of the s!sters, reco#n!@!n# the!r r!#ht of ownersh!' o%er 'ort!ons of the 'ro'erty. Jose d!ed !ntestate. $hereafter, the res'ondents f! ed an act!on "efore the Re#!ona $r!a 5ourt of Man! a see*!n# to reco%er JoseFs 1C3 share o%er the 'ro'erty. Res'ondents c a!) that JoseFs share !n the 'ro'erty ipso jure "e on#s to the) "ecause they are the on y e#a he!rs of the!r "rother, who d!ed !ntestate and w!thout !ssue. $hey a e#e that !t !s h!#h y !)'ro"a" e for 'et!t!oner to ha%e 'a!d the su''osed cons!derat!on of -150,000 for the sa e of the su"(ect 'ro'erty "ecause 'et!t!oner was une)' oyed and w!thout any %!s!" e )eans of !%e !hood at the t!)e of the a e#ed sa e. -et!t!oner ?a"a#a a, on the other hand, c a!)s that she !s the dau#hter of Jose and ar#ued that the 'ur'orted sa e of the 'ro'erty was !n fact a donat!on to her. $he R$5 he d that wh! e there was !ndeed no cons!derat!on for the deed of sa e e4ecuted "y Jose !n fa%or of 'et!t!oner, "ut sa!d deed const!tutes a %a !d donat!on. 2n a''ea , the 5ourt of 6''ea s re%ersed the dec!s!on of the R$5 +ssue: Ahether the 'ur'orted deed of sa e was %a !d ,e d: $here !s no %a !d sa e. 5 ear y, there !s no %a !d sa e !n th!s case. Jose d!d not ha%e the r!#ht to transfer ownersh!' of the ent!re 'ro'erty to 'et!t!oner s!nce 2C3 thereof "e on#ed to h!s s!sters. -et!t!oner cou d not ha%e #!%en her consent to the contract, "e!n# a )!nor at the t!)e. 5onsent of the contract!n# 'art!es !s a)on# the essent!a re1u!s!tes of a contract, !nc ud!n# one of sa e, a"sent wh!ch there can "e no %a !d contract. Moreo%er, 'et!t!oner ad)!tted y d!d not 'ay any centa%o for the 'ro'erty, wh!ch )a*es the sa e %o!d. 6rt!c e 14.1 of the 5!%!
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Di>on "!. Co* t o2 Appea$! G.R. No. 122544 302 35R6 277
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F+R3$ ;+E+3+2N -onente: Mart!ne@, J Fa3t!/ 2n 1/.4, -r!%ate res'ondent 2%er and B4'ress ?!nes, +nc = essee9 entered !nto a 5ontract of ?ease w!th 2't!on to 8uy w!th 'et!t!oners = essors9 !n%o %!n# a and s!tuated at Hue@on 5!ty for one =19 year. ;ur!n# that 'er!od the res'ondent was #ranted an o't!on to 'urchase the and. 1/.6, for fa! ure of essee to 'ay the renta s the 'et!t!oners f! ed an act!on for e(ect)ent. $he 5!ty 5ourt rendered (ud#)ent order!n# essee to %acate the eased 're)!ses and to 'ay the renta s !n arrears and da)a#es w!th !nterests. ?essee f! ed a 'et!t!on en(o!n!n# the enforce)ent of sa!d (ud#)ent and d!s)!ssa of the case for ac* of (ur!sd!ct!on. 3uch 'et!t!on was den!ed. $hereafter, essee f! ed for an act!on for s'ec!f!c 'erfor)ance to co)'e the e4ecut!on of a deed of sa e 'ursuant to the o't!on to 'urchase and the rece!'t of the 'art!a cons!derat!on #!%en to 6 !ce ;!@on and for the f!4!n# of 'er!od to 'ay the "a ance. Res'ondent 5ourt of 6''ea s rendered a dec!s!on u'ho d!n# the (ur!sd!ct!on of 5!ty 5ourt and conc ud!n# that there was a 'erfected contract of sa e "etween the 'art!es due to the sa!d 'art!a 'ay)ent. -et!t!onerFs )ot!on for recons!derat!on was den!ed "y the res'ondent 5ourt. ,$-. I!!*e!/ Ahether the Hue@on 5!ty court has (ur!sd!ct!on o%er the e(ect)ent caseD Ahether the )oney #!%en const!tutes 'art!a cons!derat!on to the o't!on to 'urchase the andD Ahether or not there !s a 'erfected contract of sa eD R*$in+/ 1. $he 'et!t!oneres had a cause of act!on to !nst!tute an e(ect)ent su!t a#a!nst the essee w!th the 5!ty 5ourt thus the c!ty court =now M$59 has (ur!sd!ct!on o%er !t. $he f! !n# of essor of a su!t w!th the R$5 d!d not d!%est the 5!ty 5ourt of !ts (ur!sd!ct!on to ta*e co#n!@ance o%er the e(ect)ent case.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

2. $he ter) st!'u ated !n the contract of ease w!th o't!on to "uy !s (ust one =19 year. ,a%!n# fa! ed to e4erc!se the o't!on w!th!n that 'er!od, the essee cannot enforce !ts o't!on to 'urchase any)ore. B%en assu)!n# that such o't!on st! su"s!sts, when the essee tendered the a)ount on 1/.5, the su!t for s'ec!f!c 'erfor)ance to enforce the o't!on to 'urchase was f! ed on y on 1/75 ore )ore than ten =109 years after accrua of the cause of act!on. 3!nce the essee d!d not 'urchase w!th!n the st!'u ated one =19 year and afterwh!ch st! *e't 'ossess!on thereof, there was an !)' !c!t renewa of the contract re%!%!n# a the ter)s !n the or!#!na contract wh!ch are on y #er)ane to the esseeFs r!#hts of cont!nued en(oy)ent of the 'ro'erty eased. $he o't!on to 'urchase !s not dee)ed !ncor'orated. 3. $here was no 'erfected contract of sa e "etween the 'art!es. +n here!n case, the essee #a%e the )oney to 6 !ce ;!@on !n an atte)'t to resurrect the a'sed o't!on.$he "as!s for a#ency !s re'resentat!on and a 'erson dea !n# w!th an a#ent !s 'ut u'on !n1u!ry and )ust d!sco%er u'on h!s 'er! the author!ty of the a#ent. ,ere, there was no show!n# that 'et!t!oners consented to the act of 6 !ce ;!@on nor author!@ed her to act on the!r "eha f w!th re#ard to her transact!on w!th the essee. $herefore, one of the essent!a e e)ents for a contract of sa e to "e 'erfected !s ac*!n#: consent.

Hei ! o2 San J*an And e! "!. Rod i+*e> G.R. 135634 332 35R6 .6/ 3B52N; ;+E+3+2N
Page 13

-onente: Mendo@a, J Facts: Juan 3an 6ndres so d a 'ort!on of h!s and to res'ondent E!cente Rodr!#ue@ e%!denced "y a ;eed of 3a e. &'on the death of Juan, Ra)on 3an 6ndres was a''o!nted (ud!c!a ad)!n!strator of h!s estate. Ra)on en#a#ed the ser%!ced of #eodet!c en#!neers to sur%ey the ot. Fro) such sur%ey, thtey d!sco%ered that the res'ondent had en ar#ed the area wh!ch he 'urchased fro) the ate Juan. Ra)on then send a etter de)and!n# the res'ondent to %acate the 'ort!on a e#ed y encroached "y h!). ,owe%er, res'ondent refused to do so c a!)!n# that he 'urchased the sa)e fro) the ate Juan w!th "oth 'art!es treat!n# the two ots as one who 'arce of and. Res'ondent further a e#ed that the fu 'ay)ent of the add!t!ona ot wou d "e effected w!th!n f!%e =59 years fro) the e4ecut!on of the deed of sa e after a sur%ey !s conducted o%er sa!d 'ro'erty. Res'ondent attached to h!s answer a rece!'t s!#ned "y the ate Juan as 'roof of the 'urchase. Res'ondent thereafter de'os!ted !n the court the "a ance of the 'urchase 'r!ce. Ah! e the case !s 'end!n#, Ra)on d!ed and was re' aced "y son R!cardo. E!cente a so d!ed and was su"st!tuted "y h!s he!rs. $he tr!a court rendered (ud#e)ent !n fao%r of the 'et!t!oner and ru ed that there was no contract of sa e "ecause there !s no %a !d o"(ect "ecause there !s no suff!c!ent !nd!cat!on. Res'ondent 5ourt of 6''ea s re%ersed the dec!s!on rendered "y the $r!a 5ourt. I!!*e!/ Ahether the 5ourt erred !n ho d!n# that there !s a %a !d contract of sa eD Ahether the 5ourt erred !n ho d!n# that the cons!#nat!on !s %a !dD Ahether the untena" eD a)ount of cons!#nat!on !s

3!nce the ot su"se1uent y so d to res'ondent !s sa!d to ad(o!n the I're%!ous y 'a!d otJ on three s!des thereof, the su"(ect ot !s ca'a" e of "e!n# deter)!ned w!thout the need of any new contract. $he contract of 3a e can "e #a!nsa!d to "e a"so ute "ecause there !s no reser%at!on of ownersh!'. $he st!'u at!on I'ay)ent of fu cons!derat!on "ased on a sur%ey sha "e due and 'aya" e !n f!%e =59 years fro) the e4ecut!on of deed of sa eJ !s not a cond!t!on wh!ch affects the eff!cacy of the contract. +t )ere y 'ro%!des for the )anner of co)'utat!on of 'ay)ent.. 2. 5ons!#nat!on !s 'ro'er on y !n cases where an e4!st!n# o" !#at!on !s due. +n here!n case s!nce there !s no deed of sa e yet thus the 'er!od when the 'urchase 'r!ce shou d "e 'a!d has not co))enced yet wh!ch )a*es !t not yet due and de)anda" e. $he court !s not erroneous "ecause !t thereafter ordered the e4ecut!on of deed and the acce'tance of the de'os!t. 3. $he a)ount !s "ased on the a#ree)ent wh!ch !s the aw "etween the 'art!es. $hus, !t !s "!nd!n# and the court can on y #!%e force and effect to the !ntent!ons of the 'art!es. 4. 3!nce there was no ;eed of 3a e yet and the res'ondent wants to 'ay the 'urchase 'r!ce, he dee)ed !t 'ro'er to de'os!t !t !n the 5ourt. $hus, -rescr!'t!on does not a'' y.

Ahether the res'ondent !s "arred "y 'rescr!'t!on and aches fro) enforc!n# the contractD Ru !n#s: 1. $here !s a %a !d 5ontract of 3a e "ecause a the essent!a e e)ents are 'resent. +n here!n case, 'et!t!onerFs content!on that there !s no deter)!nate o"(ect !s w!thout )er!t. $he rece!'t descr!"ed the ot as I're%!ous y 'a!d otJ.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

LAGRI<AS A. .O?, 'et!t!oner, %s. COURT OF A##EALS, ISAGANI #. RA<OS

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and ERLINDA res'ondents.

GASINGAN

RA<OS,

Ap i$ %(, ,--( G.R. No. %,:-@@ F+R3$ ;+E+3+2N AZCUNA, J./ Fa3t!/ 2n 3e'te)"er 24, 1//3, s'ouses +sa#an! -. Ra)os and Br !nda Gas!n#an Ra)os, f! ed an act!on for e(ect)ent a#a!nst ?a#r!)as 6. 8oy =?a#r!)as9, w!th the Metro'o !tan $r!a 5ourt of Man! a. +n the!r 5o)' a!nt, the s'ouses a e#ed that they are the owners of a 'arce of and and the house e4!st!n# thereon at 1151 F orent!no $orres 3t., 3!n#a on#, Man! a. $hey ac1u!red the sa!d 'ro'ert!es fro) ?a#r!)as who so d the sa)e to the) "y %!rtue of a ;eed of 6"so ute 3a e, wh!ch was e4ecuted on June 4, 1/76. ,owe%er, ?a#r!)as re1uested for t!)e to %acate the 're)!ses, and they a#reed thereto, "ecause they were not !n !))ed!ate need of the 're)!ses. $!)e ca)e when they needed the sa!d house as they were on y rent!n# the!r own res!dence. $hey then de)anded that ?a#r!)as %acate the su"(ect 're)!ses, "ut she refused to do so. ,ence, they !n!t!ated th!s act!on for e(ect)ent a#a!nst ?a#r!)as. 3o)et!)e !n May 1/77, Br !nda Ra)os and ?a#r!)as e4ecuted an a#ree)ent =Kasunduan9 ac*now ed#!n# that the su"(ect 'arce of and, to#ether w!th the u''er 'ort!on of the house thereon, had "een so d "y ?a#r!)as to the s'ouses Ra)os for -31,000: that of the sa!d 'r!ce, the su) of -22,500 =re'resent!n# -15,000 cash oan ' us -.,500 as !nterest fro) 3e'te)"er 1/74 to May 1/779 had "een 'a!d: that the "a ance of -7,500 wou d "e 'a!d on the ast wee* of 6u#ust 1/77: and that 'ossess!on of the 'ro'erty wou d "e transferred to the s'ouses Ra)os on y u'on fu 'ay)ent of the 'urchase 'r!ce. I!!*e/ A,B$,BR 2R N2$ $,B 52&R$ 2F 6--B?3 GR6EB?K BRRB; 6N; 68&3B; +$3 ;+35RB$+2N +N N2$ +N$BR-RB$+NG $,6$ $,B <L63&N;&6N< BMB5&$B; 8K 6N;
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

8B$ABBN -B$+$+2NBR =;BFBN;6N$9 6N; -R+E6$B RB3-2N;BN$ =-?6+N$+FF9 3&-BR3B;B3 $,B ;BB; 2F 36?B A,+5, ,63 N2$ 8BBN 52N3&MM6$B;. NO. R*$in+/ $he 5ourt of 6''ea s d!d not #!%e credence to the state)ent !n the Kasunduan that 'r!%ate res'ondents 'a!d on y -22,500 to 'et!t!oner s!nce her !nde"tedness a ready reached -26,200. 56 #a%e we!#ht to the ar#u)ent of 'r!%ate res'ondents that Br !nda Ra)os was )ere y tr!c*ed !nto s!#n!n# the Kasunduan. +t has "een esta" !shed that 'et!t!oner so d the su"(ect 'ro'erty to 'r!%ate res'ondents for the 'r!ce of -31,000, as e%!denced "y the ;eed of 6"so ute 3a e, the due e4ecut!on of wh!ch was not contro%erted "y 'et!t!oner. $he contract !s a"so ute !n nature, w!thout any 'ro%!s!on that t!t e to the 'ro'erty !s reser%ed !n the %endor unt! fu 'ay)ent of the 'urchase 'r!ce. 8y the contract of sa e, 'et!t!oner =as %endor9, o" !#ated herse f to transfer the ownersh!' of, and to de !%er, the su"(ect 'ro'erty to 'r!%ate res'ondents =as %endees9 after they 'a!d the 'r!ce of -31,000. &nder 6rt!c e 14.. of the 5!%! 5ode, the ownersh!' of the th!n# so d sha "e transferred to the %endee u'on the actua or construct!%e de !%ery thereof. +n add!t!on, 6rt!c e 14/7 of the 5!%! 5ode 'ro%!des that when the sa e !s )ade throu#h a 'u" !c !nstru)ent, as !n th!s case, the e4ecut!on thereof sha "e e1u!%a ent to the de !%ery of the th!n# wh!ch !s the o"(ect of the contract, !f fro) the deed the contrary does not a''ear or cannot c ear y "e !nferred. +n th!s case, the ;eed of 6"so ute 3a e does not conta!n any st!'u at!on a#a!nst the construct!%e de !%ery of the 'ro'erty to 'r!%ate res'ondents. +n the a"sence of st!'u at!on to the contrary, the ownersh!' of the 'ro'erty so d 'asses to the %endee u'on the actua or construct!%e de !%ery thereof. $he ;eed of 6"so ute 3a e, therefore, su''orts 'r!%ate res'ondentsF r!#ht of )ater!a 'ossess!on o%er the su"(ect 'ro'erty.

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S#S. HENR? CO AND ELIZA.ETH CO AND <ELOD? CO, 'et!t!oners, %s.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page 1"

COURT OF A##EALS AND <RS. ADORACION CUSTODIO, ep e!ented 56 1e Atto ne6AinA2a3t, TRINIDAD BALAGA?AN, res'ondents. A*+*!t %', %))) G.R. No. %%,&&$,+R; ;+E+3+2N GONZAGAARE?ES, J. Fa3t!/ . . . so)et!)e on 2cto"er /, 1/74, ' a!nt!ff entered !nto a %er"a contract w!th defendant for her 'urchase of the atter>s house and ot ocated at 316 8eata 3t., New 6 a"an# E! a#e, Munt!n u'a, Metro Man! a, for and !n cons!derat!on of the su) of N100,000.00. 2ne wee* thereafter, ' a!nt!ff 'a!d to the defendants the a)ounts of N1,000.00 and -40,000.00 as earnest )oney, !n order that the sa)e )ay "e reser%ed for her 'urchase, sa!d earnest )oney to "e deducted fro) the tota 'urchase 'r!ce. $he 'urchase 'r!ce of N100,000.00 !s 'aya" e !n two 'ay)ents N40,000.00 on ;ece)"er 4, 1/74 and the "a ance of N60,000.00 on January 5, 1/75. 2n January 25, 1/75, a thou#h the 'er!od of 'ay)ent had a ready e4'!red, ' a!nt!ff 'a!d to the defendant Me ody 5o !n the &n!ted 3tates, the su) of N30,000.00, as 'art!a 'ay)ent of the 'urchase 'r!ce. ;efendant>s counse , 6tty. ?eo'o do 5otaco, wrote a etter to the ' a!nt!ff dated March 15, 1/75, de)and!n# that she 'ay the "a ance of N.0,000.00 and not rece!%!n# any res'onse thereto, sa!d awyer wrote another etter to ' a!nt!ff dated 6u#ust 7, 1/76, !nfor)!n# her that she has ost her <o't!on to 'urchase< the 'ro'erty su"(ect of th!s case and offered to se her another 'ro'erty. I!!*e/ Ahether or not the 5ourt of 6''ea s erred !n order!n# the s'ouses 5o =5239 to return the N30,000.00 'a!d "y 5&3$2;+2 'ursuant to the <o't!on< #ranted to her o%er the 8eata 'ro'ertyD NO.

$he March 15, 1/75 etter sent "y the 523 throu#h the!r awyer to the 5&3$2;+2 re%ea s that the 'art!es entered !nto a 'erfected contract of sa e and not an o't!on contract. 6 contract of sa e !s a consensua contract and !s 'erfected at the )o)ent there !s a )eet!n# of the )!nds u'on the th!n# wh!ch !s the o"(ect of the contract and u'on the 'r!ce. Fro) that )o)ent the 'art!es )ay rec!'roca y de)and 'erfor)ance su"(ect to the 'ro%!s!ons of the aw #o%ern!n# the for) of contracts. $he e e)ents of a %a !d contract of sa e under 6rt!c e 1457 of the 5!%! 5ode are =19 consent or )eet!n# of the )!nds: =29 deter)!nate su"(ect )atter: and =39 'r!ce certa!n !n )oney or !ts e1u!%a ent. 6s e%!denced "y the March 15, 1/75 etter, a three e e)ents of a contract of sa e are 'resent !n the transact!on "etween the 'et!t!oners and res'ondent. 5ustod!o>s offer to 'urchase the 8eata 'ro'erty, su"(ect of the sa e at a 'r!ce of N100,000.00 was acce'ted "y the 523. B%en the )anner of 'ay)ent of the 'r!ce was set forth !n the etter. Barnest )oney !n the a)ounts of &3N1,000.00 and -40,000.00 was a ready rece!%ed "y the 523. &nder 6rt!c e 1472 of the 5!%! 5ode, earnest )oney #!%en !n a sa e transact!on !s cons!dered 'art of the 'urchase 'r!ce and 'roof of the 'erfect!on of the sa e. . $he 523 were of the )!sta*en "e !ef that 5&3$2;+2 had ost her <o't!on< o%er the 8eata 'ro'erty when she fa! ed to 'ay the re)a!n!n# "a ance of N.0,000.00 'ursuant to the!r 6u#ust 7, 1/76 etter. 6ccord!n# y, 5&3$2;+2 acted we w!th!n her r!#hts when she atte)'ted to 'ay the re)a!n!n# "a ance of N.0,000.00 to co)' ete the su) owed of N100,000.00 as the contract was st! su"s!st!n# at that t!)e. Ahen the 523 refused to acce't sa!d 'ay)ent and to de !%er the 8eata 'ro'erty, 5&3$2;+2 !))ed!ate y sued for the resc!ss!on of the contract of sa e and 'rayed for the return of the N30,000.00 she had !n!t!a y 'a!d. &nder 6rt!c e 137517 of the 5!%! 5ode, resc!ss!on creates the o" !#at!on to return the th!n#s wh!ch were the o"(ect of the contract "ut such resc!ss!on can on y "e carr!ed out when the one who de)ands resc!ss!on can return whate%er he )ay "e o" !#ed to restore. $he 'ro'erty !n%o %ed has not "een
Page 1#

R*$in+/
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

de !%ered to the a''e ee. 3he has therefore noth!n# to return to the a''e ants. $he 'r!ce rece!%ed "y the a''e ants has to "e returned to the a''e ee as a't y ru ed "y the ower court, for such !s a conse1uence of resc!ss!on, wh!ch !s to restore the 'art!es !n the!r for)er s!tuat!ons.

SAN <IGUEL #RO#ERTIES #HILI##INES, INC., #ETITIONER, VS. S#OUSES ALFREDO HUANG AND GRACE HUANG, RES#ONDENTS.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 1$

OGRN 13.2/0 Ju y 31, 2000P F!rst ;!%!s!on Fa3t!/ -et!t!oner 3an M!#ue -ro'ert!es -h! !''!nes, +nc. !s a do)est!c cor'orat!on en#a#ed !n the 'urchase and sa e of rea 'ro'ert!es. -arts of !ts !n%entory are two 'arce s of and tota !n# to 1, .37 s1uare )eters at the corner of Mera co 6%enue and Gen. 5a'!n'!n 3t., 8arr!o 2ran"o, -as!# 5!ty. 2n Fe"ruary 21, 1//4, the 'ro'ert!es were offered for sa e for %52,140,000 !n cash. $he offer was )ade to 6tty. ,e ena ;au@ who was act!n# for res'ondent s'ouses as und!sc osed 'r!nc!'a s. +n a etter dated March 24, 1//4, 6tty. ;au@ s!#n!f!ed her c !entsF !nterest !n 'urchas!n# the 'ro'ert!es for the a)ount for wh!ch they were offered "y 'et!t!oner, under the fo ow!n# ter)s: the su) of %500,000 wou d "e #!%en as earnest )oney and the "a ance wou d "e 'a!d !n 7 e1ua )onth y !nsta )ents fro) May to ;ece)"er 1//4. ,owe%er, 'et!t!oner refused the counter0offer. 6tty. ;au@ thus wrote 3an M!#ue e4'ress!n# the !nterest of res'ondent s'ouses, su"(ect to the fo ow!n# cond!t!ons: I1. Ae w! "e #!%en the e4c us!%e o't!on to 'urchase the 'ro'erty w!th!n 30 days fro) date of your acce'tance of th!s offer: 2. ;ur!n# sa!d 'er!od, we w! ne#ot!ate on the ter)s and cond!t!ons of the 'urchase: 3M--+ w! secure the necessary )ana#e)ent and "oard a''ro%a s: and we !n!t!ate the docu)entat!on !f there !s )utua a#ree)ent "etween us: 3. +n the e%ent that we do not co)e to an a#ree)ent on th!s transact!on, the sa!d a)ount of %1,000,000 sha "e refunda" e to us !n fu u'on de)and.J 2n Ju y ., 1//4, 3an M!#ue , throu#h !ts 'res!dent, Feder!co Gon@a es, wrote 6tty. ;au@ !nfor)!n# her that "ecause the 'art!es fa! ed to a#ree on the ter)s and cond!t!ons of the sa e des'!te the e4tens!on #ranted "y 3an M!#ue , !t !s a ready return!n# the a)ount of %1 M! !on #!%en as Iearnest0de'os!tJ. Res'ondent s'ouses, throu#h the!r

counse , de)anded the e4ecut!on of the ;eed of 3a e and atte)'ted to return the earnest0de'os!t "ut 3M--+ refused to acce't !t on the #round that the o't!on to 'urchase had a ready e4'!red. $hus on 6u#ust 16, 1//4, res'ondent s'ouses f! ed a co)' a!nt for s'ec!f!c 'erfor)ance a#a!nst 3M--+ "ut the atter )o%ed to d!s)!ss sa!d co)' a!nt a e#!n# that: 1. the a e#ed Ie4c us!%e o't!onJ of res'ondent s'ouses ac*ed a cons!derat!on se'arate and d!st!nct fro) the 'urchase 'r!ce and was thus unenforcea" e: and 2. the co)' a!nt d!d not a e#e a cause of act!on "ecause there was no )eet!n# of the )!nds "etween the 'art!es and therefore, no 'erfected contract of sa e. $h!s )ot!on was o''osed "y res'ondent s'ouses. R$5 #ranted the )ot!on to d!s)!ss "ut the 56 re%ersed !t on a''ea and he d that a the re1u!s!tes of a 'erfected contract of sa e had "een co)' !ed w!th as the offer )ade !n connect!on w!th wh!ch the earnest )oney !n the a)ount of %1 M! !on was tendered "y res'ondent s'ouses had a ready "een acce'ted "y 3M--+. $he court c!ted 6rt. 1472 of the 5!%! 5ode wh!ch 'ro%!des that Iwhene%er earnest )oney !s #!%en !n a contract of sa e, !t sha "e cons!dered as 'art of the 'r!ce and 'roof of the 'erfect!on of the contract.J

I!!*e/ Ahether or not the contract of sa e was 'erfected.

R*$in+/ $he contract of sa e was not 'erfected. +n ho d!n# that there !s 'erfected contract of sa e, the 56 re !ed on the fo ow!n# f!nd!n#s: =19 earnest )oney was a e#ed y #!%en "y res'ondents and acce'ted "y 3M--+ throu#h !ts %!ce0'res!dent and o'erat!ons )ana#er, +s!dro 3o"recarey: and =29 the docu)entary e%!dence !n the records show that there was 'erfected contract of sa e. A!th re#ard to the a e#ed 'ay)ent and acce'tance of the earnest )oney, the 35 ho ds that res'ondents d!d not #!%e the %1 M! !on as earnest )oney as conte)' ated !n 6rt. 1472. Res'ondents 'resented the a)ount )ere y as de'os!t of what wou d e%entua y "eco)e earnest )oney or down 'ay)ent shou d a
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Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

contract of sa e "e )ade "y the). $he a)ount was thus #!%en not as 'art of the 'urchase 'r!ce and 'roof of the 'erfect!on of the contract of sa e "ut on y as #uarantee that res'ondents wou d not "ac* out of the sa e. $hey e%en descr!"ed !t as Iearnest0de'os!tJ. 6 that res'ondents had o't!on to "uy the 'ro'ert!es wh!ch not e4erc!sed "y the) "ecause fa! ure to a#ree on the ter)s of contract of sa e )ay thus "e res'ondents. was (ust an 'r!%! e#e was there was a 'ay)ent. No enforced "y

S#OUSES ONNIE SERRANO AND A<#ARO HERRERA, #ETITIONERS, VS. GODOFREDO CAGUIAT, RES#ONDENT. OGRN 13/1.3 Fe"ruary 27, 200.PF!rst ;!%!s!on Fa3t!/
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 20

-et!t!oners are re#!stered owners of a ot ocated !n ?as -!Qas. 2n March 23, 1/00, res'ondent offered to "uy the ot and 'et!t!oners a#reed to se !t at %1,500 'er s1uare )eter. Res'ondent then #a%e %100,000 as 'art!a 'ay)ent. 6 few days after, res'ondent, throu#h h!s counse , wrote 'et!t!oners !nfor)!n# the) of h!s read!ness to 'ay the "a ance of the contract 'r!ce and re1uest!n# the) to 're'are the ;eed of 3a e. -et!t!oners, throu#h counse , !nfor)ed res'ondent !n a etter that 6)'aro ,errera wou d "e ea%!n# for a"road on or "efore 6'r! 15, 1//0 and they are cance !n# the transact!on and that res'ondent )ay reco%er the earnest )oney =%100,0009 anyt!)e. -et!t!oners a so wrote h!) stat!n# that they a ready de !%ered a )ana#erFs chec* to h!s counse !n sa!d a)ount. Res'ondent thus f! ed a co)' a!nt for s'ec!f!c 'erfor)ance and da)a#es w!th the R$5 of Ma*at!. $he tr!a court ru ed that there was a ready a 'erfected contract of sa e "etween the 'art!es and ordered the 'et!t!oners to e4ecute a f!na deed of sa e !n fa%or of res'ondent. $he 5ourt of a''ea s aff!r)ed sa!d dec!s!on. I!!*e/ Ahether or not there was a contract of sa e. R*$in+/ $he transact!on was a contract to se .

;BB; 2F 36?B 2N $,+3 ;6$B.J there can "e no other !nter'retat!on than that they a#reed to a cond!t!ona contract of sa e, consu))at!on of wh!ch !s su"(ect on y to the fu 'ay)ent of the 'urchase 'r!ce. I6 contract to se !s a*!n to a cond!t!ona sa e where the eff!cacy or o" !#atory force of the %endorFs o" !#at!on to transfer t!t e !s su"ord!nated to the ha''en!n# of a future and uncerta!n e%ent, so that !f the sus'ens!%e cond!t!on does not ta*e ' ace, the 'art!es wou d stand as !f the cond!t!ona o" !#at!on had ne%er e4!sted. $he sus'ens!%e cond!t!on !s co))on y fu 'ay)ent of the 'urchase 'r!ce. I+n th!s case, the IRece!'t for -art!a -ay)entJ shows that the true a#ree)ent "etween the 'art!es !s a contract to se . IF!rst, ownersh!' o%er the 'ro'erty was reta!ned "y 'et!t!oners and was not to 'ass to res'ondent unt! fu 'ay)ent of the 'urchase 'r!ce. 3econd, the a#ree)ent "etween the 'art!es was not e)"od!ed !n a deed of sa e. $he a"sence of a for)a deed of con%eyance !s a stron# !nd!cat!on that the 'art!es d!d not !ntend !))ed!ate transfer of ownersh!', "ut on y a transfer after fu 'ay)ent of the 'urchase 'r!ce. $h!rd, 'et!t!oners reta!ned 'ossess!on of the cert!f!cate of t!t e of the ot. I+t !s true that 6rt!c e 1472 'ro%!des that whene%er earnest )oney !s #!%en !n a contract of sa e, !t sha "e cons!dered as 'art of the 'r!ce and 'roof of the 'erfect!on of the contract. ,owe%er, th!s art!c e s'ea*s of earnest )oney #!%en !n a contract of sa e. +n th!s case, the earnest )oney was #!%en !n a contract to se . $he earnest )oney for)s 'art of the cons!derat!on on y !f the sa e !s consu))ated u'on fu 'ay)ent of the 'urchase 'r!ce. I5 ear y, res'ondent cannot co)'e 'et!t!oners to transfer ownersh!' of the 'ro'erty to h!).J #CI Lea!in+ and Finan3e In3. V!. Gi a22eA C C eati"e I0a+in+, In3. J*$6 %,, ,--' GR %(,D%@ Fi !t Di"i!ion !arcia" J Fa3t!/ 02n ;ece)"er 4, 1//6, 'et!t!oner -5+ ?B63+NG and res'ondent G+R6FFB entered !nto a Lease Agreement, where"y the for)er
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IAhen 'et!t!oners dec ared !n IRece!'t for -art!a -ay)entJ that they R

the

IRB5B+EB; FR2M MR. G2;2FRB;2 56G&+6$ $,B 6M2&N$ 2F 2NB ,&N;RB; $,2&36N; -B323 63 #ARTIAL #A?<ENT 2F 2&R ?2$ 3+$&6$B; +N ?63 -+S63T MR. 56G&+6$ -R2M+3B; $2 -6K $,B 86?6N5B 2F $,B -&R5,63B -R+5B 2N 2R 8BF2RB M6R5, 23, 1//0, 6N; $,6$ AB A+?? BMB5&$B 6N; 3+GN $,B F+N6?
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

eased out to the atter one =19 set of Silicon High Impact Graphics and accessor!es worth -3,/00,00.00 and one =19 un!t of O berry !inescan "#$$%&$ worth -6,500,000.00. 0 6 year !nto the !fe of the ?ease 6#ree)ent, G+R6FFB defau ted !n !ts )onth y renta 0 'ay)ent o" !#at!ons. 6nd fo ow!n# a three0 )onth defau t, -5+ ?B63+NG addressed a for)a 'ay0or0surrender0e1u!')ent ty'e of de)and etter dated Fe"ruary 24, 1//7 to G+R6FFB. 0 $he de)and went unheeded. 0 -5+ ?eas!n# !nst!tuted a case a#a!nst G+R6FFB. -5+ 'rayed for the !ssuance of a wr!t of re' e%!n for the reco%ery of the eased 'ro'erty 0 &'on -5+ ?B63+NGFs 'ost!n# of a re' e%!n "ond, the tr!a court !ssued a wr!t of re' e%!n, 'a%!n# the way for -5+ ?B63+NG to secure the se!@ure and de !%ery of the e1u!')ent co%ered "y the "as!c ease a#ree)ent. 0 +nstead of an answer, G+R6FFB f! ed a 'otion to (ismiss,ar#u!n# that the se!@ure of the two =29 eased e1u!')ent str!''ed -5+ ?B63+NG of !ts cause of act!on. 0G+R6FFB ar#ues that, 'ursuant to 6rt!c e 1474 of the 5!%! 5ode on !nsta )ent sa es of 'ersona 'ro'erty, -5+ ?B63+NG !s "arred fro) further 'ursu!n# any c a!) ar!s!n# fro) the ease a#ree)ent and the co)'an!on contract docu)ents, add!n# that the a#ree)ent "etween the 'art!es !s !n rea !ty a ease of )o%a" es w!th o't!on to "uy. 0G+R6FFB asserts !n !ts Mot!on to ;!s)!ss that the c!%! co)' a!nt f! ed "y -5+ ?B63+NG !s 'roscr!"ed "y the a'' !cat!on to the case of 6rt!c es 1474 and 1475, supra, of the 5!%! 5ode. 0 -5+ ?eas!n# on the other hand )a!nta!ns that !ts contract w!th G+R6FFB !s a straight lease )ithout an option to buy. 0 'et!t!oner contends that the f!nanc!a eas!n# arran#e)ent !t conc uded w!th the res'ondent re'resents a stra!#ht ease co%ered "y R.6. No. 5/70, the *inancing !ompany Act, as ast a)ended "y R.6. No. 7556, otherw!se *nown as *inancing !ompany Act o+ &,,-, and !s outs!de the a'' !cat!on and co%era#e of the .ecto La). $o the 'et!t!oner, R.6. No. 5/70 def!nes and author!@es !ts e4!stence and "us!ness. 0the tr!a court #ranted G+R6FFBFs )ot!on to d!s)!ss 0 )ot!on for recons!derat!on was den!ed, hence th!s 'et!t!on for re%!ew. I!!*e/
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Ahether the a#ree)ent "etween -5+ ?eas!n# and G+R6FFB !s #o%erned "y 6rt!c es 1474 and 1475 of the 5!%! 5odeD He$d/ -et!t!on den!ed. $r!a 5ourtFs dec!s!on aff!r)ed Ratio/ 0$he -5+ ?B63+NG0 G+R6FFB ease a#ree)ent !s !n rea !ty a ease w!th an o't!on to 'urchase the e1u!')ent. $h!s has "een )ade )an!fest "y the act!ons of the 'et!t!oner !tse f, fore)ost of wh!ch !s the dec arat!ons )ade !n !ts de)and etter to the res'ondent. $here cou d "e no other e4' anat!on than that !f the res'ondent 'a!d the "a ance, then !t cou d *ee' the e1u!')ent for !ts own: !f not, then !t shou d return the). $h!s !s c ear y an o't!on to 'urchase #!%en to the res'ondent. 8e!n# so, 6rt!c e 1475 of the 5!%! 5ode shou d a'' y. 0 $he 'resent case ref ects a s!tuat!on where the f!nanc!n# co)'any can w!thho d and concea 0 up to the last moment 0 !ts !ntent!on to se the 'ro'erty su"(ect of the f!nance ease, !n order that the 'ro%!s!ons of the .ecto La) )ay "e c!rcu)%ented. +t )ay "e, as 'et!t!oner 'o!nted out, that the "as!c I ease a#ree)entJ does not conta!n a I'urchase o't!onJ c ause. $he a"sence, howe%er, does not necessar! y ar#ue a#a!nst the !dea that what the 'art!es are !nto !s not a stra!#ht ease, "ut a ease w!th o't!on to 'urchase. $h!s 5ourt has, to "e sure, on# "een aware of the 'ract!ce of %endors of 'ersona 'ro'erty of deno)!nat!n# a contract of sa e on !nsta )ent as one of ease to 're%ent the ownersh!' of the o"(ect of the sa e fro) 'ass!n# to the %endee unt! and un ess the 'r!ce !s fu y 'a!d. 08e!n# eases of 'ersona 'ro'erty w!th o't!on to 'urchase as conte)' ated !n the a"o%e art!c e, the contracts !n 1uest!on are su"(ect to the 'ro%!s!on that when the essor !n such case Ihas chosen to de'r!%e the essee of the en(oy)ent of such 'ersona 'ro'erty,J Ihe sha ha%e no further act!onJ a#a!nst the essee Ifor the reco%ery of any un'a!d "a anceJ ow!n# "y the atter, Ia#ree)ent to the contrary "e!n# nu and %o!d.J 0+n choos!n#, throu#h re' e%!n, to de'r!%e the res'ondent of 'ossess!on of the eased e1u!')ent, the 'et!t!oner wa!%ed !ts r!#ht to "r!n# an act!on to reco%er un'a!d renta s on the sa!d eased !te)s. -ara#ra'h =39, 6rt!c e 1474 !n re at!on to 6rt!c e 1475 of the 5!%! 5ode, wh!ch we are hereunder re0re'roduc!n#, cannot "e any
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c earer. 6R$. 1474. +n a contract of sa e of 'ersona 'ro'erty the 'r!ce of wh!ch !s 'aya" e !n !nsta )ents, the %endor )ay e4erc!se any of the fo ow!n# re)ed!es: 444 444 444

=39 Forec ose the chatte )ort#a#e on the th!n# so d, !f one has "een const!tuted, shou d the %endee>s fa! ure to 'ay co%er two or )ore !nsta )ents. +n th!s case, he sha ha%e no further act!on a#a!nst the 'urchaser to reco%er any un'a!d "a ance of the 'r!ce. 6ny a#ree)ent to the contrary sha "e %o!d. 6R$. 1475. $he 'reced!n# art!c e sha "e a'' !ed to contracts 'ur'ort!n# to "e eases of 'ersona 'ro'erty w!th o't!on to "uy, when the essor has de'r!%ed the essee of the 'ossess!on or en(oy)ent of the th!n#. 06s we art!cu ated !n /lisco 0ool 'anu+acturing !orp. 1. !ourt o+ Appeals, the re)ed!es 'ro%!ded for !n 6rt!c e 1474 of the 5!%! 5ode are a ternat!%e, not cu)u at!%e. $he e4erc!se of one "ars the e4erc!se of the others. $h!s !)!tat!on a'' !es to contracts 'ur'ort!n# to "e eases of 'ersona 'ro'erty w!th o't!on to "uy "y %!rtue of the sa)e 6rt!c e 1475. $he cond!t!on that the essor has de'r!%ed the essee of 'ossess!on or en(oy)ent of the th!n# for the 'ur'ose of a'' y!n# 6rt!c e 1475 was fu f! ed !n th!s case "y the f! !n# "y 'et!t!oner of the co)' a!nt for a su) of )oney w!th 'rayer for re' e%!n to reco%er 'ossess!on of the off!ce e1u!')ent. 8y %!rtue of the wr!t of se!@ure !ssued "y the tr!a court, the 'et!t!oner has effect!%e y de'r!%ed res'ondent of the!r use, a s!tuat!on wh!ch, "y force of the .ecto La), !n turn 'rec udes the for)er fro) )a!nta!n!n# an act!on for reco%ery of Iaccrued renta sJ or the reco%ery of the "a ance of the 'urchase 'r!ce ' us !nterest. $he !)'erat!%es of honest dea !n#s #!%en 'ro)!nence !n the 5!%! 5ode under the head!n#: Human .elations, 'ro%!de another reason why we )ust ho d the 'et!t!oner to !ts word as e)"od!ed !n !ts de)and etter. B se, we wou d w!tness a s!tuat!on where e%en !f the res'ondent surrendered the e1u!')ent %o untar! y, the 'et!t!oner can st! sue u'on !ts c a!). $h!s wou d "e )ost unfa!r for the res'ondent. Ae cannot a ow the 'et!t!oner to
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

rene#e on !ts word. Ket )ore than that, the %ery word IorJ as used !n the etter con%eys distinctly !ts !ntent!on not to c a!) "oth the un'a!d "a ance and the e1u!')ent. +t !s not d!ff!cu t to d!scern why: !f we add u' the a)ounts 'a!d "y the res'ondent, the res!dua %a ue of the 'ro'erty reco%ered, and the a)ount c a!)ed "y the 'et!t!oner as sued u'on here!n =for a tota of -21,../,02/.4.9, then !t wou d end u' )a*!n# an !nstant *! !n# out of the transact!on at the e4'ense of !ts c !ent, the res'ondent. $he .ecto La) was 'rec!se y enacted to 're%ent th!s *!nd of a"errat!on. Moreo%er, due to cons!derat!ons of e1u!ty, 'u" !c 'o !cy and (ust!ce, we cannot a ow th!s to ha''en. Not on y to the res'ondent, "ut those s!)! ar y s!tuated who )ay fa 'rey to a s!)! ar sche)e.

E$i!3o Too$ <an*2a3t* in+ Co p. V!. Co* t o2 Appea$! et. a$. <a6 &%, %))) GR %-))DD Se3ond Di"i!ion #endo$a J. Fa3t!/ 0-r!%ate res'ondent Ro ando ?antan was e)' oyed at the B !sco $oo Manufactur!n# 5or'orat!on as head of !ts cash de'art)ent. 2n
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January /, 1/70, he entered !nto an a#ree)ent w!th the co)'any wh!ch 'ro%!ded as fo ows: 0 that, B !sco $oo Manufactur!n# 5or' !s the owner of a car wh!ch for and !n cons!derat!on of a )onth y renta of - 1010.65 w! "e eased to Ro ando ?antan for 5 years 0 $hat, Ro ando ?antan sha 'ay the ease thru sa ary deduct!on fro) h!s )onth y re)unerat!on !n the a)ount as a"o%e s'ec!f!ed for a 'er!od of F+EB =59 years: 0 $hat, he sha for the durat!on of the ease contract, shou der a e4'enses and costs of re#!strat!on, !nsurance, re'a!r and )a!ntenance, #aso !ne, o! , 'art re' ace)ent !nc us!%e of a e4'enses necessary to )a!nta!n the %eh!c e !n to' cond!t!on 0$hat, at the end of F+EB =59 year 'er!od or u'on 'ay)ent of the 60th )onth y renta , ?antan )ay e4erc!se the o't!on to 'urchase the )otor %eh!c e fro) B !sco and a )onth y renta s sha "e a'' !ed to the 'ay)ent of the fu 'urchase 'r!ce of the car and further, shou d ?antan des!re to e4erc!se th!s o't!on "efore the 50year 'er!od a'se, he )ay do so u'on 'ay)ent of the re)a!n!n# "a ance on the f!%e year renta unto B !sco, !t "e!n# understood howe%er that the o't!on !s !)!ted to the BM-?2KBB: 0$hat, !n case of defau t !n 'ay)ent $,RBB =39 accu)u ated )onth y renta s, B !sco sha ha%e the fu r!#ht to ease the %eh!c e to another BM-?2KBB: 0$hat, !n the e%ent of res!#nat!on and or d!s)!ssa fro) the ser%!ce, ?antan sha return the su"(ect )otor %eh!c e to the BM-?2KBR !n #ood wor*!n# and "ody cond!t!on. 02n the sa)e day, January /, 1/70, 'r!%ate res'ondent e4ecuted a 'ro)!ssory note wh!ch states h!s 'ro)!se to 'ay - 1,010.65 w!thout the necess!ty of not!ce or de)and !n accordance w!th the schedu e of 'ay)ent 0 6fter ta*!n# 'ossess!on of the car, ?antan !nsta ed accessor!es worth -15,000.00 0+n 1/71, B !sco $oo ceased o'erat!ons, as a resu t of wh!ch 'r!%ate res'ondent Ro ando ?antan was a!d off. Nonethe ess, as of ;ece)"er 4, 1/74, 'r!%ate res'ondent was a" e to )a*e 'ay)ents for the car !n the tota a)ount of -61,0.0./4. 02n June 6, 1/76, 'et!t!oner f! ed a co)' a!nt, ent!t ed Ire' e%!n ' us su) of )oney,J a#a!nst 'r!%ate res'ondent Ro ando ?antan, h!s w!fe R!na, and two other 'ersons, !dent!f!ed on y as John and 3usan ;oe, "efore the Re#!ona $r!a 5ourt of -as!#, Metro Man! a. 0-et!t!oner a e#ed that 'r!%ate res'ondents fa! ed to 'ay the )onth y renta s that des'!te
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

de)ands, 'r!%ate res'ondents fa! ed to sett e the!r o" !#at!on there"y ent!t !n# 'et!t!oner to the 'ossess!on of the car: that 'et!t!oner was ready to 'ost a "ond !n an a)ount dou" e the %a ue of the car, wh!ch was -60,000: and that !n case 'r!%ate res'ondents cou d not return the car, they shou d "e he d !a" e for the a)ount of -60,000 ' us the accrued )onth y renta s thereof, w!th !nterest at the rate of 14U 'er annu), unt! fu y 'a!d. 0 &'on the 'ost!n# of the "ond, the sher!ff too* 'ossess!on of the car and after 5 days turned !t o%er to the 'et!t!oner 0 'r!%ate res'ondents c a!) that the!r a#ree)ent was to "uy and se and not ease w!th o't!on to "uy the car 0 !n !ts re' y, 'et!t!oner )a!nta!ned that the contract was one of ease w!th o't!on to 'urchase and that the 'ro)!ssory note was )ere y a Ino)!na secur!tyJ for the a#ree)ent. 0 tr!a court rendered !ts dec!s!on !n fa%or of the 'r!%ate res'ondent 0 'et!t!oner a''ea ed to 56, 'et!t!oner f! ed )ot!on for e4ecut!on 'end!n# a''ea 0 56 aff!r)ed !n toto the dec!s!on of the tr!a court, hence the 'et!t!on for re%!ew on cert!orar! I!!*eE!/ Ahether the 5ourt of 6''ea s erred =a9 !n d!sre#ard!n# the ad)!ss!on !n the ' ead!n#s as to what docu)ents conta!n the ter)s of the 'art!esF a#ree)ent. ="9 !n ho d!n# that the !nterest st!'u at!on !n res'ondentsF -ro)!ssory Note was not %a !d and "!nd!n#. =c9 !n ho d!n# that res'ondents had fu y 'a!d the!r o" !#at!ons. He$d/ $he dec!s!on of the 5ourt of 6''ea s !s 6FF+RMB; w!th costs a#a!nst 'et!t!oner. Ratio/ *irst. -et!t!oner does not deny that 'r!%ate res'ondent Ro ando ?antan ac1u!red the %eh!c e !n 1uest!on under a car ' an for e4ecut!%es of the B !@a de #rou' of co)'an!es. &nder a ty'!ca car ' an, the co)'any ad%ances the 'urchase 'r!ce of a car to "e 'a!d "ac* "y the e)' oyee throu#h )onth y deduct!ons fro) h!s sa ary. $he co)'any reta!ns ownersh!' of the )otor %eh!c e unt! !t sha ha%e "een fu y 'a!d for. ,owe%er, retent!on of re#!strat!on of the car !n the co)'anyFs na)e !s on y a for) of a !en on the %eh!c e !n the e%ent that the e)' oyee wou d a"scond "efore he has fu y 'a!d for !t. $here are a so st!'u at!ons !n car ' an a#ree)ents to
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the effect that shou d the e)' oy)ent of the e)' oyee concerned "e ter)!nated "efore a !nsta )ents are fu y 'a!d, the %eh!c e w! "e ta*en "y the e)' oyer and a !nsta )ents 'a!d sha "e cons!dered renta s 'er a#ree)ent. $h!s 5ourt has on# "een aware of the 'ract!ce of %endors of 'ersona 'ro'erty of deno)!nat!n# a contract of sa e on !nsta )ent as one of ease to 're%ent the ownersh!' of the o"(ect of the sa e fro) 'ass!n# to the %endee unt! and un ess the 'r!ce !s fu y 'a!d. 6s th!s 5ourt noted !n 2da. de Jose 1. 3arrueco4 3e ers des!rous of )a*!n# cond!t!ona sa es of the!r #oods, "ut who do not w!sh o'en y to )a*e a "ar#a!n !n that for), for one reason or another, ha%e fre1uent y resorted to the de%!ce of )a*!n# contracts !n the for) of eases e!ther w!th o't!ons to the "uyer to 'urchase for a s)a cons!derat!on at the end of ter), 'ro%!ded the so0ca ed rent has "een du y 'a!d, or w!th st!'u at!ons that !f the rent throu#hout the ter) !s 'a!d, t!t e sha thereu'on %est !n the essee. +t !s o"%!ous that such transact!ons are eases on y !n na)e. $he so0ca ed rent )ust necessar! y "e re#arded as 'ay)ent of the 'r!ce !n !nsta )ents s!nce the due 'ay)ent of the a#reed a)ount resu ts, "y the ter)s of the "ar#a!n, !n the transfer of t!t e to the essee. Second. $he contract "e!n# one of sa e on !nsta )ent, the 5ourt of 6''ea s correct y a'' !ed to !t the fo ow!n# 'ro%!s!ons of the 5!%! 5ode: $he re)ed!es 'ro%!ded for !n 6rt. 1474 are a ternat!%e, not cu)u at!%e. $he e4erc!se of one "ars the e4erc!se of the others. $h!s !)!tat!on a'' !es to contracts 'ur'ort!n# to "e eases of 'ersona 'ro'erty w!th o't!on to "uy "y %!rtue of 6rt. 1475. $he cond!t!on that the essor has de'r!%ed the essee of 'ossess!on or en(oy)ent of the th!n# for the 'ur'ose of a'' y!n# 6rt. 1475 was fu f! ed !n th!s case "y the f! !n# "y 'et!t!oner of the co)' a!nt for re' e%!n to reco%er 'ossess!on of )o%a" e 'ro'erty. 8y %!rtue of the wr!t of se!@ure !ssued "y the tr!a court, the de'uty sher!ff se!@ed the %eh!c e on 6u#ust 6, 1/76 and there"y de'r!%ed 'r!%ate res'ondents of !ts use. $he car was not returned to 'r!%ate res'ondent unt! 6'r! 16, 1/7/, after two =29 years and e!#ht =79 )onths, u'on !ssuance "y the 5ourt of 6''ea s of a wr!t of e4ecut!on. -et!t!oner 'rayed that 'r!%ate res'ondents "e )ade to 'ay the su) of -3/,054.76, the a)ount that they were su''osed to 'ay as of May 1/76, ' us !nterest at the e#a rate. 6t the sa)e t!)e, !t 'rayed for the !ssuance of a wr!t of re' e%!n or
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

the de !%ery to !t of the )otor %eh!c e Ico)' ete w!th accessor!es and e1u!')ent.J +n the e%ent the car cou d not "e de !%ered to 'et!t!oner, !t was 'rayed that 'r!%ate res'ondent Ro ando ?antan "e )ade to 'ay 'et!t!oner the a)ount of -60,000.00, the Iest!)ated actua %a ueJ of the car, I' us accrued )onth y renta s thereof w!th !nterests at the rate of fourteen 'ercent =14U9 'er annu) unt! fu y 'a!d.J $h!s 'rayer of course cannot "e #ranted, e%en assu)!n# that 'r!%ate res'ondents ha%e defau ted !n the 'ay)ent of the!r o" !#at!on. $h!s ed the tr!a court to say that 'et!t!oner wanted to eat !ts ca*e and ha%e !t too. 8oth the tr!a court and the 5ourt of 6''ea s correct y ru ed that 'r!%ate res'ondents cou d no on#er "e he d !a" e for the a)ounts of -3/,054.76 or -60,000.00 "ecause 'r!%ate res'ondents had fu f! ed the!r 'art of the o" !#at!on. $he a#ree)ent does not 'ro%!de for the 'ay)ent of !nterest on un'a!d )onth y Irenta sJ or !nsta )ents "ecause !t was entered !nto !n 'ursuance of a car ' an ado'ted "y the co)'any for the "enef!t of !ts deser%!n# e)' oyees. 6s the tr!a court correct y noted, the car ' an was !ntended to #!%e add!t!ona "enef!ts to e4ecut!%es of the B !@a de #rou' of co)'an!es. 0hird. -r!%ate res'ondents 'resented e%!dence that they Ife t "ad, were worr!ed, e)"arrassed and )enta y torturedJ "y the re'ossess!on of the car. $h!s has not "een re"utted "y 'et!t!oner. $here !s thus a factua "as!s for the award of )ora da)a#es. +n add!t!on, 'et!t!oner acted !n a wanton, fraudu ent, rec* ess and o''ress!%e )anner !n f! !n# the !nstant case, hence, the award of e4e)' ary da)a#es !s (ust!f!ed. $he award of attorneyFs fees !s !*ew!se 'ro'er cons!der!n# that 'r!%ate res'ondents were co)'e ed to !ncur e4'enses to 'rotect the!r r!#hts

#EO#LEFS INDUSTRIAL AND CO<<ERCIAL COR#ORATION, petitione , "!. COURT OF A##EALS and <ARAICB INVEST<ENT COR#ORATION, e!pondent!. G.R. No. %%,'&& ,@% SCRA ,-D #onente/ RO<ERO, J. (THIRD DIVISION)
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O3to5e ,(, %))'

Fa3t!/ -r!%ate res'ondent Mar0!c* +n%est)ent 5or'orat!on !s the e4c us!%e and re#!stered owner of Mar0!c* 3u"d!%!s!on !n 8arr!o 8u !, 5a!nta, R!@a . 2n May 2/, 1/61, 'r!%ate res'ondent entered !nto 6 a#ree)ents w!th 'et!t!oner -eo' e>s +ndustr!a and 5o))erc!a 5or'orat!on where"y !t a#reed to se to 'et!t!oner 6 su"d!%!s!on ots. F!%e of the a#ree)ents st!'u ate that the 'et!t!oner a#reed to 'ay 'r!%ate res'ondent for each ot, the a)ount of -.,333.20 w!th a down 'ay)ent of -470.00. $he "a ance of -6,753.20 sha "e 'aya" e !n 120 e1ua )onth y !nsta )ents of -5..11 e%ery 30th of the )onth, for a 'er!od of ten years. A!th res'ect to another ot, the 'art!es a#reed to the 'urchase 'r!ce of -.,.30.00 w!th a down 'ay)ent of -506.00 and e1ua )onth y !nsta )ents of -60.20. 6fter the a'se of ten years, 'et!t!oner st! had not fu y 'a!d for the s!4 ots. +t had 'a!d on y the down 'ay)ent and 7 !nsta )ents. 6fter a ser!es of ne#ot!at!ons "etween the 'art!es, they a#reed to enter !nto a new contract to se on 2cto"er 11, 1/73. $he contract st!'u ates that the 're%!ous contracts ha%e "een cance ed due to the fa! ure of the 'urchaser to 'ay the st!'u ated !nsta )ents. Ne!ther of the 'art!es s!#ned the new contract. 3!at!anu) !ssued chec*s !n the tota a)ount of -3.,642..2 to 'r!%ate res'ondent. -r!%ate res'ondent rece!%ed "ut d!d not encash the chec*s. +nstead, !t f! ed !n the Re#!ona $r!a 5ourt of 6nt!'o o, R!@a , a co)' a!nt for acc!on 'u" !c!ana de 'oses!on a#a!nst 'et!t!oner and $o)as 3!at!anu), as 'res!dent and )a(or!ty stoc*ho der of 'et!t!oner. +t 'rayed that 'et!t!oner surrender 'ossess!on of the ots of Mar0!c* 3u"d!%!s!on, and that 'et!t!oner and $o)as 3!at!anu) "e ordered to 'ay reasona" e renta s for the use of the ots. +n the a ternat!%e, the co)' a!nt 'rayed that shou d the a#ree)ents "e dee)ed not auto)at!ca y cance ed, the sa)e a#ree)ents shou d "e dec ared nu and %o!d. ?ower court rendered a dec!s!on f!nd!n# that the or!#!na a#ree)ents of the 'art!es were %a !d y cance ed. $he 'art!es d!d not enter !nto a new contract !n accordance w!th 6rt. 1403 =29 of the 5!%! 5ode as the 'art!es d!d not s!#n the draft contract. Rece!'t "y 'r!%ate res'ondent of the f!%e chec*s cou d not a)ount to 'erfect!on of
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

the contract "ecause 'r!%ate res'ondent ne%er encashed and "enef!ted fro) those chec*s. $here was no )eet!n# of the )!nds "etween the 'art!es "ecause 6rt. 4.5 of the 5!%! 5ode shou d "e read w!th the 3tatute of Frauds that re1u!res the e)"od!)ent of the contract !n a note or )e)orandu). Ahat was c ear y 'ro%en was that "oth 'art!es ne#ot!ated a new contract after the ter)!nat!on of the f!rst. $hus, the fact that the 'art!es tr!ed to ne#ot!ate a new contract !nd!cated that they cons!dered the f!rst contract as a ready cance ed. -et!t!oner e e%ated the case to the 5ourt of 6''ea s wh!ch aff!r)ed !n toto the ower court>s dec!s!on.

I!!*e/ Ahether or not there was a 'erfected and enforcea" e contract of sa e on 2cto"er 11, 1/73 wh!ch )od!f!ed the ear !er contracts to se wh!ch had not "een %a !d y resc!nded. R*$in+/ $he contracts to se of 1/61 were cance ed to wh!ch the 'art!es %o untar! y "ound the)se %es. Ahen 'et!t!oner fa! ed to a"!de "y !ts o" !#at!on to 'ay the !nsta )ents 'ro%!s!on No. / of the contract auto)at!ca y too* effect wh!ch states that Ishou d the 'urchaser fa! to )a*e the 'ay)ent of any of the )onth y !nsta )ents as a#reed here!n, th!s contract sha , "y the )ere fact of non'ay)ent, e4'!re "y !tse f and "eco)e nu and %o!d.J $he 1/61 a#ree)ents are contracts to se and not contracts of sa e. $he d!st!nct!on "etween these contracts !s de'!cted !n 6de fa -ro'ert!es, +nc. %. 5ourt of 6''ea s wh!ch states that Ithe d!st!nct!on "etween the two !s !)'ortant for !n a contract of sa e, the t!t e 'asses to the %endee u'on the de !%ery of the th!n# so d: whereas !n a contract to se , "y a#ree)ent the ownersh!' !s reser%ed !n the %endor and !s not to 'ass unt! the fu 'ay)ent of the 'r!ce. +n a contract of sa e, the %endor has ost and cannot reco%er ownersh!' unt! and un ess the contract !s reso %ed or resc!nded: whereas, !n a contract to se , t!t e !s reta!ned "y the %endor unt! the fu 'ay)ent of the 'r!ce, such 'ay)ent "e!n# a 'os!t!%e sus'ens!%e cond!t!on and fa! ure of wh!ch !s not a "reach "ut an e%ent that 're%ents the o" !#at!on of the %endor to con%ey t!t e fro) "eco)!n# effect!%e. $hus, a deed of sa e !s cons!dered a"so ute !n nature where there !s ne!ther a st!'u at!on !n the deed that t!t e to the
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'ro'erty so d !s reser%ed !n the se er unt! the fu 'ay)ent of the 'r!ce, nor one #!%!n# the %endor the r!#ht to un! atera y reso %e the contract the )o)ent the "uyer fa! s to 'ay w!th!n a f!4ed 'er!od.J 8e!n# contracts to se , 6rt!c e 15/2 of the 5!%! 5ode wh!ch re1u!res resc!ss!on e!ther "y (ud!c!a act!on or notar!a act !s not a'' !ca" e. -et!t!oner a e#es that there was a new 'erfected and enforcea" e contract of sa e "etween the 'art!es !n 2cto"er 1/73. -r!%ate res'ondent>s co)'any awyer %o unteered that after the cance at!on of the 1/61 a#ree)ents, the 'art!es shou d ne#ot!ate and enter !nto a new a#ree)ent. ,owe%er, after he had drafted the contract and sent !t to 'et!t!oner, the atter de'os!ted a chec* for down'ay)ent "ut !ts re'resentat!%e refused to s!#n the 're'ared contract. +n the a"sence of 'roof to the contrary, th!s draft contract )ay "e dee)ed to e)"ody the a#ree)ent of the 'art!es. -r!%ate res'ondent d!d not and has not den!ed the e4!stence of that contract. &nder these facts, therefore, the 'art!es )ay !dea y "e cons!dered as ha%!n# 'erfected the contract of 2cto"er 1/73. Just!ce and e1u!ty, howe%er, w! not "e ser%ed "y a 'os!t!%e ru !n# on the 'erfect!on and 'erfor)ance of the contract to se . $here are facts on record 'ro%!n# that the 'art!es had not arr!%ed at a def!n!te a#ree)ent. 8y 6tty. E! a)ayor>s ad)!ss!on, the chec*s were not encashed "ecause $o)as 3!at!anun d!d not s!#n the draft contract that he had 're'ared. 2n h!s 'art, $o)as 3!at!anun e4' a!ned that he d!d not s!#n the contract "ecause !t co%ered . ots wh! e the!r a#ree)ent was on y for 6 ots. $he nu)"er of ots to "e so d !s a )ater!a co)'onent of the contract to se . A!thout an a#ree)ent on the )atter, the 'art!es )ay not !n any way "e cons!dered as ha%!n# arr!%ed at a contract under the aw. Moreo%er, !nsta )ents 'a!d "y the 'et!t!oner on the and shou d "e dee)ed renta s. 6rt!c e 1476 of the 5!%! 5ode 'ro%!des that a st!'u at!on that the !nsta )ents or rents 'a!d sha not "e returned to the %endee or essee sha "e %a !d !nsofar as the sa)e )ay not "e unconsc!ona" e under the c!rcu)stances. A,BRBF2RB, the !nstant 'et!t!on for re%!ew on cert!orar! !s here"y den!ed and the 1uest!oned ;ec!s!on of the 5ourt of 6''ea s !s 6FF+RMB;.

REGALADO DARO?, 3o0p$ainant, vs. ATT?. ESTE.AN A.ECIA, e!pondent. A.C. No. &-(D O3to5e ,D, %))@

#onente/ <ENDOZA, J. (SECOND DIVISION)

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 2#

Fa3t!/ $h!s refers to the co)' a!nt for )a 'ract!ce f! ed "y Re#a ado ;aroy a#a!nst Bste"an 6"ec!a, a )e)"er of the 8ar. Res'ondent 6"ec!a was counse of co)' a!nant ;aroy !n a case for forc!" e entry "efore the Mun!c!'a $r!a 5ourt of 2'o , M!sa)!s 2r!enta . Jud#)ent was rendered !n fa%or of co)' a!nant. $o sat!sfy the (ud#)ent, the sher!ff so d at 'u" !c auct!on a 'arce of and "e on#!n# to one of the defendants to co)' a!nant ;aroy as h!#hest "!dder. &'on fa! ure of the defendants to redee) the and, !ts ownersh!' was conso !dated !n co)' a!nant ;aroy. 5o)' a!nant ;aroy c a!)ed that res'ondent 6"ec!a for#ed h!s s!#nature !n a deed of a"so ute sa e transferr!n# the 'arce of and to Jose Gan#ay and that !n a f!ct!t!ous deed of a"so ute sa e !t was )ade to a''ear that Gan#ay !n turn con%eyed the and to Nena 6"ec!a, w!fe of res'ondent 6"ec!a. ;aroy a e#ed that he entrusted the t!t e to the and to 6"ec!a as h!s counse and a owed h!) to ta*e 'ossess!on of the and u'on the atterFs re1uest. 8y )eans of the for#ed deed of sa e, 6"ec!a was a" e to o"ta!n new transfer cert!f!cates of t!t e, f!rst !n the na)e of Gan#ay and then !n that of Mrs. 6"ec!a, fro) the Re#!stry of ;eeds of M!sa)!s 2r!enta . ;aroy c a!)ed he d!sco%ered the fraud on y !n 1/74. 2n Ju y 15, 1//3, 5o))!ss!oner - ar!de Jose ru ed that res'ondent 6"ec!a !s #u! ty of )a 'ract!ce and reco))ended h!s d!s"ar)ent. $he +nte#rated 8ar of the -h! !''!nes a''ro%ed the re'ort "ut reduced the 'ena ty to !ndef!n!te sus'ens!on. Res'ondent 6"ec!a f! ed a Mot!on for Recons!derat!on andCor 6''ea . I!!*e!/ Ahether or not the 5o))!ss!on on 8ar ;!sc!' !ne erred when !t he d that co)' a!nant had no *now ed#e of the e4ecut!on of the ;eed of 6"so ute 3a e. Ahether or not res'ondent 6tty. Bste"an 6"ec!a !s 'roh!"!ted fro) ac1u!r!n# the 'arce of and. R*$in+/ Res'ondentFs )ot!on !s we ta*en. 6s a ready stated, the and !n 1uest!on was 'urchased "y co)' a!nant at the sher!ffFs sa e. ;e'uty 3her!ff stated that when he f!na y transferred the and to the "uyer, he ' aced !n
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

'ossess!on of the and not on y the "uyer, Re#a ado ;aroy, "ut a so the atterFs ass!#nee, Nena 6"ec!a, !n whose na)e the t!t e to the and had !n fact "een transferred. +t wou d a''ear, therefore, that ;aroy a ready *new that t!t e to the and had a ready "een transferred !n the na)e of the res'ondentFs w!fe. +ndeed, what a''ears to ha%e ha''ened !n th!s case !s that the 'art!es thou#ht that "ecause the and had "een ac1u!red "y co)' a!nant at a 'u" !c sa e he d !n order to sat!sfy a (ud#)ent !n h!s fa%or !n a case !n wh!ch res'ondent was co)' a!nantFs counse , the atter cou d not ac1u!re the and. $he 'art!es a''arent y had !n )!nd 6rt. 14/1 of the 5!%! 5ode wh!ch 'ro%!des: 6R$. 14/1. $he fo ow!n# 'ersons cannot ac1u!re "y 'urchase, e%en at a 'u" !c or (ud!c!a auct!on, e!ther !n 'erson or throu#h the )ed!at!on of another: 59 Just!ces, (ud#es, 'rosecut!n# attorneys, c er*s of su'er!or and !nfer!or courts, and other off!cers and e)' oyees connected w!th the ad)!n!strat!on of (ust!ce, the 'ro'erty and r!#hts !n !t!#at!on or e%!ed u'on an e4ecut!on "efore the court w!th!n whose (ur!sd!ct!on or terr!tory they e4erc!se the!r res'ect!%e funct!ons: th!s 'roh!"!t!on !nc udes the act of ac1u!r!n# "y ass!#n)ent and sha a'' y to awyers, w!th res'ect to the 'ro'erty and r!#hts wh!ch )ay "e the o"(ect of any !t!#at!on !n wh!ch they )ay ta*e 'art "y %!rtue of the!r 'rofess!on. +n Gue%ara %. 5a a an#, we he d that the 'roh!"!t!on !n 6rt. 14/1 does not a'' y to the sa e of a 'arce of and, ac1u!red "y a c !ent to sat!sfy a (ud#)ent !n h!s fa%or, to h!s attorney as on# as the 'ro'erty was not the su"(ect of the !t!#at!on. Ah! e (ud#es, 'rosecut!n# attorneys, and others connected w!th the ad)!n!strat!on of (ust!ce are 'roh!"!ted fro) ac1u!r!n# 'ro'erty or r!#hts !n !t!#at!on or e%!ed u'on !n e4ecut!on, the 'roh!"!t!on w!th res'ect to attorneys !n the case e4tends on y to 'ro'erty and r!#hts wh!ch )ay "e the o"(ect of any !t!#at!on !n wh!ch they )ay ta*e 'art "y %!rtue of the!r 'rofess!on. A,BRBF2RB, the reso ut!on of the +88oard of Go%ernors !s RB52N3+;BRB; and the co)' a!nt a#a!nst res'ondent Bste"an 6"ec!a !s ;+3M+33B;.

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In Re/ S*!pen!ion 2 o0 t1e # a3ti3e o2 La4 in t1e te ito 6 o2 G*a0 o2 Att6. Leon G. <a7*e a, (&: SCRA (%', Tin+a, ..<. ')& FACTS/ 6tty. ?eon G. M61uera, !n a dec!s!on rendered "y the 3u'er!or 5ourt of Gua), was sus'ended fro) the 'ract!ce of aw !n Gua) for
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

J*$6 &-, ,--(.

Page 29

two years. $he dec!s!on was "ased on Ma1ueraFs )!sconduct, as he ac1u!red h!s c !entFs 'ro'erty as 'ay)ent for h!s e#a ser%!ces, then so d !t and as a conse1uence o"ta!ned an unreasona" e h!#h fee for hand !n# h!s c !entFs case. 5astro, h!s c !ent, and h!s cred!tor was !n a c!%! case where 5astroFs 'ro'erty, a 'arce of and, was a su"(ect. $he dec!s!on was rendered !n a#a!nst 5astro and ordered the auct!on sa e of the and. +t was 'urchased "y the cred!tor "ut 5astro reta!ned h!s r!#ht of rede)'t!on wh!ch was ater on ass!#ned to Ma1uera as 'ay)ent for h!s ser%!ces. Ma1uera e4erc!sed th!s r!#ht and he was a" e to o"ta!n the 'ro'erty. ,e then so d !t to 5.3 5han# and 5.5. 5han# wh!ch #a%e h!) a hu#e 'rof!t. $hw sus'ens!on of Ma1uere was referred here !n the -h! !''!nes throu#h the +nte#rated 8ar of the -h! !''!nes. ,owe%er, !t conc uded that thereFs no e%!dence to esta" !sh that he a so co))!tted a "reach of eth!cs !n the -h! !''!nes.

ISSUE/ Ahether 6tty. Ma1ueraFs acts const!tute #rounds for h!s sus'ens!on or d!s"ar)ent !n the -h! !''!ne Jur!sd!ct!on.

RULING/ 6tty. Ma1uera !s sus'ended for one year for the )eant!)e or unt! he sha ha%e 'a!d h!s )e)"ersh!' dues, wh!che%er ca)e ater. -ara#ra'h 5 of 6rt!c e 14/1 of the New 5!%! 5ode 'roh!"!ts awyerFs ac1u!s!t!on "y ass!#n)ent of the c !entFs 'ro'erty wh!ch !s the su"(ect of the !t!#at!on hand ed "y the awyer. &nder 6rt!c e 14/2, the 'roh!"!t!on e4tends to sa es !n e#a rede)'t!on. Ma1ueraFs acts !n Gua) wh!ch resu ted !n h!s two0year sus'ens!on fro) the 'ract!ce of aw !n that (ur!sd!ct!on are a so %a !d #rounds for h!s sus'ens!on fro) the 'ract!ce of aw !n the -h! !''!nes. 3uch acts are %!o at!%e of awyerFs sworn duty to act w!th f!de !ty toward h!s c !ents. +t !s a so %!o at!%e of 5anon 1. wh!ch states, Ia awyer owes f!de !ty to the cause of h!s c !ent and sha "e )!ndfu of the trust and conf!dence re'osed !n h!).J
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

C1*a ". Co* t o2 Appea$! and Va$de!AC1o6, (-% SCRA :(, Ap i$ ), ,--& Ca pio, G.R. No. %%),::

FACTS/ Bncarnac!on Ea des05hoy ad%ert!sed for sa e her 'ara'herna house and ot !n Ma*at! 5!ty wh!ch 5hua res'onded to. $hey "oth a#reed on a 'urchased 'r!ce of -100,000.00 'aya" e !n cash.
Page 30

5hua #a%e -100,000.00 to Ea des05hoy as an earnest )oney and another -475,000.00 for the 'ay)ent of ca'!ta #a!ns ta4 s!nce Ea des05hoy was not a" e to 'ay the sa!d ta4. ,owe%er, 5hua d!d not 'ay the re)a!n!n# "a ance of -10,215,000.00 "ut de)anded that the 'ro'erty "e f!rst re#!stered under h!s na)e. 2n the other hand, Ea des0 5hoy wanted that the re)a!n!n# 'urchase "a ance "e de'os!ted !n her account "efore she cou d transfer the t!t e of her 'ro'erty to h!). 5hua f! ed a co)' a!nt for a s'ec!f!c 'erfor)ance a#a!nst her wh!ch the tr!a court he d !n fa%or of 5hua. ,owe%er, the 5ourt of 6''ea s re%ersed the sa!d dec!s!on.

ISSUE/ Ahether there !s a 'erfected contract of sa e of !))o%a" e 'ro'erty.

RULING/ -et!t!on !s d!s)!ssed. $here !s no 'erfected contract of sa e. $he a#ree)ent that the 'art!es entered !nto !s a contract to se and not a contract of sa e. +n a contract of sa e, the t!t e of the 'ro'erty 'asses to the %endee u'on the de !%ery of the th!n# so d and the %endor oses ownersh!' o%er the 'ro'erty and cannot reco%er !t unt! and un ess the contract !s reso %ed or resc!nded. +n a contract to se , ownersh!' !s, "y a#ree)ent, reser%ed !n the %endor and !s not to 'ass to the %endee unt! fu 'ay)ent of the 'urchase 'r!ce and the t!t e !s reta!ned "y the %endor unt! fu 'ay)ent of the 'r!ce. 6 so !n the contract to se , 'ay)ent of the 'r!ce !s a 'os!t!%e sus'ens!%e cond!t!on, fa! ure of wh!ch !s not a "reach "ut an e%ent that 're%ents the o" !#at!on of the %endor to con%ey t!t e fro) "eco)!n# effect!%e. $he rece!'t )ade "y "oth of the) shows that the true a#ree)ent "etween the 'art!es was a contract to se . 2wnersh!' o%er the 'ro'erty was reta!ned "y Ea des05hoy and was not to 'ass to 5hua unt! fu 'ay)ent of the 'urchase 'r!ce.

VISA?AN SAG<ILL CO<#AN?, INC., and ANG TA?, petitione !, "!. THE HONORA.LE COURT OF A##EALS and RJH TRADING, ep e!ented 56 RA<ON J. HI.IONADA, p op ieto , e!pondent!. G.R. No. @&@:% DAVIDE, JR. Fa3t!/ Ra)on J. ,!"!onada and E!sayan 3aw)! 5o)'any =E+36K6N 36AM+??9 entered !nto a sa e !n%o %!n# scra' !ron su"(ect to the cond!t!on that ' a!nt!ff0a''e ee w! o'en a etter of cred!t
Page 31

<a 31 &, %))&

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

!n the a)ount of -250,000.00 !n fa%or of defendant0a''e ant cor'orat!on on or "efore May 15, 1/73. Ra)on J. ,!"!onada throu#h h!s )an, started to d!# and #ather and scra' !ron at the E+36K6N 36AM+??>s 're)!ses, 'roceed!n# w!th such endea%or unt! May 30 when E+36K6N 36AM+?? a e#ed y d!rected ,!"!onadaVs )en to des!st fro) 'ursu!n# the wor* !n %!ew of an a e#ed case f! ed a#a!nst ,!"!onada "y a certa!n 6 "erto -ursue o. $h!s, howe%er, !s den!ed "y E+36K6N 36AM+?? who a e#e that on May 23, 1/73, they sent a te e#ra) to ,!"!onada cance !n# the contract of sa e "ecause of fa! ure of the atter to co)' y w!th the cond!t!ons thereof. 2n May 26, 1/73, E+36K6N 36AM+?? rece!%ed a etter ad%!ce fro) the ;u)a#uete 5!ty 8ranch of the 8an* of the -h! !''!ne +s ands dated May 26, 1/73. ,!"!onada sent a ser!es of te e#ra)s stat!n# that the case f! ed a#a!nst h!) "y -ursue o had "een d!s)!ssed and de)and!n# that E+36K6N 36AM+?? co)' y w!th the deed of sa e, otherw!se a case w! "e f! ed a#a!nst the). +n re' y, E+36K6N 36AM+?? !s unw! !n# to cont!nue w!th the sa e due to ,!"!onada>s fa! ure to co)' y w!th essent!a 'recond!t!ons of the contract. ,!"!onada f! ed the co)' a!nt "e ow w!th a 'et!t!on for 're !)!nary attach)ent and 'rayed for (ud#)ent order!n# the E+36K6N 36AM+?? to co)' y w!th the contract "y de !%er!n# to h!) the scra' !ron su"(ect thereof +n the!r 6nswer w!th 5ounterc a!), E+36K6N 36AM+?? !ns!sted that the cance at!on of the contract was (ust!f!ed "ecause of ,!"!onadaFs non0co)' !ance w!th essent!a 'recond!t!ons, a)on# wh!ch !s the o'en!n# of an !rre%oca" e and uncond!t!ona etter of cred!t not ater than 15 May 1/73. I!!*e/ +s there a contract of sa eD +s the o"(ect of sa e de !%eredD He$d/ $he nature of the transact!on "etween the 'et!t!oner cor'orat!on and the 'r!%ate res'ondent !s a )ere contract to sell or promise to sell, and
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

not a contract o+ sale. $he se er "ound and 'ro)!sed !tse f to se the scra' !ron u'on the fu f! )ent "y the 'r!%ate res'ondent of h!s o" !#at!on to )a*e or !ndorse an !rre%oca" e and uncond!t!ona etter of cred!t !n 'ay)ent of the 'urchase 'r!ce. $he E+36K6N 36AM+??>s o" !#at!on to se !s une1u!%oca y su"(ect to a 'os!t!%e sus'ens!%e cond!t!on, i.e., the 'r!%ate res'ondent>s o'en!n#, )a*!n# or !ndors!n# of an !rre%oca" e and uncond!t!ona etter of cred!t. $he for)er a#reed to de !%er the scra' !ron on y u'on 'ay)ent of the 'urchase 'r!ce "y )eans of an !rre%oca" e and uncond!t!ona etter of cred!t. 2therw!se stated, the contract !s not one of sa e where the "uyer ac1u!red ownersh!' o%er the 'ro'erty su"(ect to the reso utory cond!t!on that the 'urchase 'r!ce wou d "e 'a!d after de !%ery. $hus, there was to "e no actua sa e unt! the o'en!n#, )a*!n# or !ndors!n# of the !rre%oca" e and uncond!t!ona etter of cred!t. 3!nce what o"ta!ns !n the case at "ar !s a )ere 'ro)!se to se , the fa! ure of the 'r!%ate res'ondent to co)' y w!th the 'os!t!%e sus'ens!%e cond!t!on cannot e%en "e cons!dered a "reach W casua or ser!ous W "ut s!)' y an e%ent that 're%ented the o" !#at!on of 'et!t!oner cor'orat!on to con%ey t!t e fro) ac1u!r!n# "!nd!n# force. 5onse1uent y, the o" !#at!on of the 'et!t!oner cor'orat!on to se d!d not ar!se: !t therefore cannot "e co)'e ed "y s'ec!f!c 'erfor)ance to co)' y w!th !ts 'restat!on. +n short, 6rt!c e 11/1 of the 5!%! 5ode does not a'' y: on the contrary, 'ursuant to 6rt!c e 15/. of the 5!%! 5ode, the 'et!t!oner cor'orat!on )ay tota y resc!nd. $he tr!a court ru ed, howe%er, and the 'u" !c res'ondent was !n a#ree)ent, that there had "een an implied de !%ery !n th!s case of the su"(ect scra' !ron "ecause on 1. May 1/73, 'r!%ate res'ondent>s )en started d!##!n# u' and #ather!n# scra' !ron w!th!n the 'et!t!oner>s 're)!ses. $he entry of these )en was u'on the 'r!%ate res'ondent>s re1uest. $h!s 'er)!ss!on or consent can, "y no stretch of the !)a#!nat!on, "e construed as de !%ery of the scra' !ron !n the sense that, as he d "y the 'u" !c res'ondent, c!t!n# 6rt!c e 14/. of the 5!%! 5ode, 'et!t!oners ' aced the 'r!%ate res'ondent !n contro and 'ossess!on thereof. +n the f!rst ' ace, sa!d 6rt!c e 14/1 fa s under the 5ha'ter
Page 32

%:

Obligations o+ the 2endor, wh!ch !s found !n $!t e E+ =3a es9, 8oo* +E of the 5!%! 5ode. 6s such, therefore, the o" !#at!on !)'osed there!n !s 're)!sed on an e4!st!n# o" !#at!on to de !%er the su"(ect of the contract. +n the !nstant case, !n %!ew of the 'r!%ate res'ondent>s fa! ure to co)' y w!th!n the 'os!t!%e sus'ens!%e cond!t!on ear !er d!scussed, such an o" !#at!on had not yet ar!sen. +n the second ' ace, !t was a )ere acco))odat!on to e4'ed!te the we!#h!n# and hau !n# of the !ron !n the e%ent that the sa e wou d )ater!a !@e. $he 'r!%ate res'ondent was not there"y ' aced !n 'ossess!on of and contro o%er the scra' !ron. $h!rd y, the con%ers!on of the !n!t!a contract or 'ro)!se to se !nto a contract of sa e "y the 'et!t!oner cor'orat!on>s a e#ed !)' !ed de !%ery of the scra' !ron "ecause !ts act!on and conduct !n the 're)!ses do not su''ort th!s conc us!on. +ndeed, 'et!t!oners de)anded the fu f! )ent of the sus'ens!%e cond!t!on and e%entua y cance ed the contract.

<UNICI#ALIT? OF VICTORIAS, 'et!t!oner, %s. THE COURT OF A##EALS, NOR<A LEUEN.ERGER and FRANCISCO SOLIVA, res'ondents. G.R. No. LA&%%@) <a 31 &%, %)@'

#ARAS, J. Fa3t!/ Nor)a ?euen"er#er !nher!ted the who e of ?ot No. 140 fro) her #rand)other, 3!)eona J. Eda.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page 33

de ;!tch!n#. +n 1/52, she donated a 'ort!on of ?ot No. 140, a"out 3 ha., to the )un!c!'a !ty for the #round of a certa!n h!#h schoo and had 4 ha. con%erted !nto a su"d!%!s!on. +n 1/63, she had the re)a!n!n# 21 ha. or 207.15. s1. ). re ocated "y a sur%eyor u'on re1uest of essee Ra)on Jo%er who co)' a!ned of "e!n# 'roh!"!ted "y )un!c!'a off!c!a s fro) cu t!%at!n# the and. +t was then that she d!sco%ered that the 'arce of and, )ore or ess 4 ha. or 33,.4. s1.). used "y -et!t!oner Mun!c!'a !ty of E!ctor!as, as a ce)etery fro) 1/34, !s w!th!n her 'ro'erty. Nor)a ?euen"er#er wrote the Mayor of E!ctor!as re#ard!n# her d!sco%ery, de)and!n# 'ay)ent of 'ast renta s and re1uest!n# de !%ery of the area a e#ed y ! e#a y occu'!ed "y Mun!c!'a !ty of E!ctor!as. Ahen the Mayor re' !ed that -et!t!oner "ou#ht the and she as*ed to "e shown the 'a'ers concern!n# the sa e "ut was referred "y the Mayor to the )un!c!'a treasurer who refused to show the sa)e. Nor)a ?euen"er#er f! ed a co)' a!nt for reco%ery of 'ossess!on of the 'arce of and occu'!ed "y the )un!c!'a ce)etery. +n !ts answer, 'et!t!oner Mun!c!'a !ty, "y way of s'ec!a defense, a e#ed ownersh!' of the ot, su"(ect of the co)' a!nt, ha%!n# "ou#ht !t fro) 3!)eona J!n#co Eda. de ;!tch!n# so)et!)e !n 1/34. $he ower court dec!ded !n fa%or of the Mun!c!'a !ty. 2n a''ea Res'ondent a''e ate 5ourt set as!de the dec!s!on of the ower court hence, th!s 'et!t!on for re%!ew on cert!orar!. He$d/ +t !s e4'ress y 'ro%!ded "y aw that the th!n# so d sha "e understood as de !%ered, when !t !s ' aced !n the contro and 'ossess!on of the %endee. Ahere there !s no e4'ress 'ro%!s!on that t!t e sha not 'ass unt! 'ay)ent of the 'r!ce, and the th!n# #o d has "een de !%ered, t!t e 'asses fro) the )o)ent the th!n# so d !s ' aced !n the 'ossess!on and contro of the "uyer. ;e !%ery 'roduces !ts natura effects !n aw, the 'r!nc!'a and )ost !)'ortant of wh!ch "e!n# the con%eyance of ownersh!', w!thout 're(ud!ce to the r!#ht of the %endor to 'ay)ent of the 'r!ce. Ahen the sa e !s )ade throu#h a 'u" !c !nstru)ent, the e4ecut!on thereof sha "e e1u!%a ent to the de !%ery of the th!n# wh!ch !s the o"(ect of the contract, !f fro) the deed, the contrary does not a''ear or cannot "e c ear y !nferred. $he e4ecut!on of the 'u" !c !nstru)ent o'erates as a for)a or sy)"o !c de !%ery of the 'ro'erty so d and author!@es the "uyer to use the docu)ent as 'roof of ownersh!'.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Res'ondent Nor)a ?euen"er#er ad)!tted that she !nher!ted the and co%ered "y $ransfer 5ert!f!cate of $!t e No. $034036 fro) her #rand)other, who had a ready so d the and to the 'et!t!oner !n 1/34: hence, she )ere y ste''ed !nto the shoes of her #rand)other and she cannot c a!) a "etter r!#ht than her 'redecessor0!n0!nterest.

S#OUSES CA<ILO L. SA.IO, and <A. <ARLENE A. LEDONIOASA.IO, petitione !, "!. THE INTERNATIONAL COR#ORATE .ANB, INC. (no4 UNION .ANB OF THE #HILI##INES), GOLDENROD, INC., #AL E<#LO?EES SAVINGS AND LOAN ASSOCIATION, INC., A?ALA COR#ORATION, LAS #INAS VENTURES, INC., FILI#INAS LIFE ASSURANCE CO<#AN?(no4 A?ALA LIFE ASSURANCE, INC.), A?ALA #RO#ERT? VENTURES COR#ORATION, and A?ALA LAND, INC., e!pondent!. G.R. No. 132.0/. 3e'te)"er 4, 2001.

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KN6RB3036N$+6G2, J.: Facts: $he o"(ect of the contro%ersy !s a 'ort!on of a %ast tract of and ocated at $!nd!# na Man#a, 6 )an@a, ?as -!nas 5!ty. $he s'ouses Gerardo and B))a ?edon!o, ass!#ned to the s'ouses 5a)! o and Ma. Mar ene 3a"!o =here!n 'et!t!oners9 a the!r r!#hts, !nterests, t!t e and 'art!c!'at!on o%er a cont!#uous 'ort!on of the su"(ect 'ro'erty )easur!n# 11/,42/ s1uare )eters. 3!)! ar y, wh! e the su"(ect 'ro'erty was st! the o"(ect of se%era 'end!n# cases, the +nternat!ona 5or'orate 8an*, +nc. =or +nter"an*9 ac1u!red fro) the $rans0Resource Mana#e)ent and ;e%e o')ent 5or'orat!on a of the atterFs r!#hts to the su"(ect 'ro'erty "y %!rtue of a deed of ass!#n)ent e4ecuted "etween the). 3o)et!)e thereafter, the 3a"!os and +nter"an* sett ed the!r o''os!n# c a!)s "y enter!n# !nto a Me)orandu) of 6#ree)ent =or M269 where"y the 3a"!os ass!#ned, con%eyed and transferred a the!r r!#hts o%er the 'arce ass!#ned to the) to +nter"an*, w!th the e4'ress e4ce't!on of of 57,000 s1uare )eter cont!#uous 'ort!on of sa!d ot. $hereafter, a d!s'ute arose concern!n# the 57,000 s1uare )eter cont!#uous 'ort!on su"(ect of the M26, 'et!t!oners c a!)!n# that res'ondent +nter"an* was o" !#ated to co)' ete and 'erfect !ts ownersh!' and t!t e to the 'arce s of and so that +nter"an* cou d transfer to 'et!t!oners the a"so ute ownersh!' and t!t e o%er the cont!#uous 'ort!on. +ssue: Ahether or not res'ondents fa! ed to Ico)' ete and 'erfect ownersh!' and t!t eJ to the su"(ect 'ro'erty s!nce !t was ne%er !n actua occu'at!on, 'ossess!on, contro and en(oy)ent of sa!d 'ro'erty. Ahether or not sy)"o !c de !%ery "y )ere e4ecut!on of the deed of con%eyance !s suff!c!ent s!nce actua 'ossess!on, contro and en(oy)ent !s a )a!n attr!"ute to ownersh!'. ,e d: &nder 6rt!c e 14/7 of the 5!%! 5ode, Iwhen the sa e !s )ade throu#h a 'u" !c !nstru)ent, the e4ecut!on thereof sha "e e1u!%a ent to the de !%ery of the o"(ect of the contract , !f fro) the deed the contrary does not a''ear or cannot "e !nferred.J -ossess!on !s
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

a so transferred, a on# w!th ownersh!' thereof, to the 'et!t!oners "y %!rtue of the deed of con%eyance. -et!t!onerFs content!on that res'ondents Ine%er ac1u!red ownersh!' o%er the su"(ect 'ro'erty s!nce the atter was ne%er !n 'ossess!on of the su"(ect 'ro'erty nor was the 'ro'erty e%er de !%eredJ !s tota y w!thout )er!t. $he )ere e4ecut!on of the deed of con%eyance !n a 'u" !c docu)ent !s e1u!%a ent to the de !%ery of the 'ro'erty. 3!nce the e4ecut!on of the deed of con%eyance !s dee)ed e1u!%a ent to de !%ery, 'r!or 'hys!ca de !%ery or 'ossess!on !s not e#a y re1u!red. $he deed o'erates as a for)a or sy)"o !c de !%ery of the 'ro'erty so d and author!@es the "uyer or transferee to use the docu)ent as 'roof of ownersh!'. Noth!n# )ore !s re1u!red.

LEO#OLDO C. LEONARDO, ep e!ented 56 1i! da*+1te E<ERCIANA LEONARDO, petitione , "!. VIRGINIA TORRES <ARAVILLA and LEONOR C. NADAL, a! Ad0ini!t at i3e! o2 t1e E!tate o2 <ARIANO TORRES, a! !*5!tit*ted 56 FE NADAL, e!pondent!. G.R. No. 14336/. No%e)"er 2., 2002.

KN6RB3036N$+6G2, J.: Facts: $he !nstant contro%ersy ste))ed fro) a d!s'ute o%er a ot ocated !n -asay 5!ty and
Page 3!

re#!stered !n the na)e of Mar!ano $orres y 5ha%arr!a, the 'redecessor0!n0!nterest of res'ondents. -et!t!oner c a!)s that he !s the awfu owner of the d!s'uted ot, ha%!n# 'urchased !t fro) a certa!n Buse"!o ?eonardo Ro4as who !n turn ac1u!red the sa)e ot "y 'urchase fro) Mar!ano $orres. -et!t!oner f! ed a co)' a!nt for I;e !%ery of -ossess!on of -ro'erty, 2wnerFs ;u' !cate 5ert!f!cate of $!t e, Renta s and ;a)a#esJ. Res'ondents, !n the!r answer, countered that s!nce 1/37 u' to the 'resent, the ot !n 1uest!on has "een re#!stered !n the na)e of the ate Mar!ano $orres y 5ha%arr!a, the!r 'redecessors0!n0!nterest and that they ha%e "een !n )ater!a 'ossess!on thereof !n the conce't of owners. Res'ondents )a!nta!n that they ha%e "een !n o'en and 'eacefu 'ossess!on of the sa!d 'ro'erty and that !t was on y !n 1//3 when they ca)e to *now of the a e#ed c a!) of 'et!t!oners o%er the sa)e 'ro'erty. $he tr!a court !ssued an order d!s)!ss!n# 'et!t!onerFs co)' a!nt on the #round of 'rescr!'t!on and aches. $he 5ourt of 6''ea s !*ew!se ru ed that s!nce 'et!t!onerFs cause of act!on !s founded on the the deed of sa e dated 3e'te)"er 2/, 1/.2, "e!n# an act!on "ased on wr!tten contracts, 'et!t!onerFs co)' a!nt fa s under 6rt. 1144 of the 5!%! 5ode wh!ch 'ro%!des that an act!on u'on a wr!tten contract sha 'rescr!"e !n 10 years fro) the t!)e the r!#ht of act!on accrued. 3!nce 'et!t!oner "rou#ht the !nstant case on y on 3e'te)"er 6, 1//3 or 21 years fro) the t!)e h!s su''osed r!#ht of act!on accrued on 3e'te)"er 2/, 1/.2, !.e., the date of e4ecut!on of the contract con%ey!n# h!) the 1uest!oned ot, h!s act!on was c ear y "arred "y statute of !)!tat!ons. -et!t!oner, on the other hand, contends that the a'' !ca" e 'ro%!s!on !s 6rt. 1141 and not 6rt.1144 of the 5!%! 5ode "ecause h!s act!on !s one for reco%ery of 'ossess!on of rea 'ro'erty wh!ch 'rescr!"es !n 30 years. +ssue: Ahether or not 'et!t!onerFs act!on !s "arred "y 'rescr!'t!on and aches ,e d: $he act!on "y 'et!t!oner !s a ready "arred "y 'rescr!'t!on and aches.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

-et!t!onerFs content!on !s w!thout )er!t, for 'et!t!onerFs act!on !s actua y an act!on for s'ec!f!c 'erfor)ance, !.e., to enforce the deed of a"so ute sa e a e#ed y e4ecuted !n h!s fa%or and not an act!on for reco%ery of 'ossess!on. +t !s a funda)enta 'r!nc!' e that ownersh!' does not 'ass "y )ere st!'u at!on "ut "y de !%ery. $he de !%ery of the th!n# const!tutes a necessary and !nd!s'ensa" e re1u!s!te for the 'ur'ose of ac1u!r!n# the ownersh!' of the sa)e "y %!rtue of a contract. &nder 6rt. 14/7 of the 5!%! 5ode, when the sa e !s )ade throu#h a 'u" !c !nstru)ent, e4ecut!on thereof sha "e e1u!%a ent to the de !%ery of the th!n# wh!ch !s the o"(ect of the contract, !f fro) the deed the contrary does not a''ear or cannot "e c ear y !nferred. $hus, the e4ecut!on of the contract !s on y a 'resu)'t!%e, not conc us!%e de !%ery wh!ch can "e re"utted "y e%!dence to the contrary, as when there !s fa! ure on the 'art of the %endee to ta*e )ater!a 'ossess!on of the and su"(ect of the sa e !n the conce't of a 'urchaser0owner. +n the case at "ar, !t !s not d!s'uted that the ot !n 1uest!on was ne%er de !%ered to 'et!t!oner notw!thstand!n# the a e#ed e4ecut!on of a deed of a"so ute sa e. -et!t!oner ne!ther had, nor de)anded, )ater!a 'ossess!on of the d!s'uted ot. +t was the res'ondents who ha%e "een !n contro and 'ossess!on thereof !n the conce't of owners s!nce 1/73 u' to the 'resent. +t fo ows that ownersh!' of the ot was ne%er transferred to 'et!t!oner. ,ence, he cannot c a!) that the !nstant case !s an act!on to reco%er ownersh!' and fu 'ossess!on of the 'ro'erty wh!ch, !n the f!rst ' ace, ne%er ca)e !nto h!s 'ossess!on for ac* of re1u!s!te de !%ery. 5 ear y, the case f! ed "y 'et!t!oner was an act!on for s'ec!f!c 'erfor)ance of a wr!tten contract of sa e wh!ch, 'ursuant to 6rt. 1144 of the 5!%! 5ode, 'rescr!"es !n 10 years fro) the accrua of the r!#ht of act!on. +n the sa)e %e!n, sa!d act!on !s "arred "y aches ha%!n# a owed 21 years to a'se "efore enforc!n# h!s a e#ed r!#ht.

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#e 2e3to D6 , J . "!. Co* t o2 Appea$! Ju y 7, 1//1 $h!rd ;!%!s!on Just!ce Gut!erre@, Jr. Fa3t!/ -erfecto ;y and A! fredo ;y are "rothers. A! fredo ;y 'urchased a truc* and a far) tractor throu#h f!nanc!n# e4tended "y ?!"ra F!nance and +n%est)ent 5or'orat!on. 8oth truc* and tractor were )ort#a#ed to ?!"ra as a secur!ty for the oan. $he 'et!t!oner, -erfecto ;y, wanted to "uy the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page 3#

tractor fro) h!s "rother, therefore he wrote a etter to ?!"ra re1uest!n# that he "e a owed to 'urchase fro) A! fredo ;y the sa!d tractor and assu)e the )ort#a#e de"t fro) the atter. ?!"ra, thru !ts )ana#er, a''ro%ed the 'et!t!onerFs re1uest. A! fredo e4ecuted a deed of a"so ute sa e !n fa%or of -erfecto. 6 -N8 chec* was !ssued !n fa%or of ?!"ra, thus the !nde"tedness of A! fredo w!th the f!nanc!n# f!r) has "ee sett ed. ?!"ra !ns!sted, howe%er that !t "e c eared f!rst "efore ?!"ra cou d re ease the tractor !n 1uest!on. Meanwh! e a c!%! case ent!t ed VJGe ac $rad!n#, +nc %. A! fredo ;y was 'end!n# !n another court !n 5e"u re#ard!n# a co ect!on case to reco%er a su). $hrou#h an a !as wr!t of e4ecut!on, the sher!ff was a" e to se!@e and e%y on the tractor wh!ch was !n the 're)!ses of ?!"ra !n 5ar)en, 5e"u. $he tractor was su"se1uent y so d at 'u" !c auct!on. $he 'ro'erty was so d to 6nton!o Gon@a es. +t was on y when the chec* was c eared that -erfecto earned a"out Ge ac ha%!n# a ready ta*en custody of the su"(ect tractor. -erfecto ;y f! ed and act!on to reco%er the su"(ect tractor a#a!nst IGe ac $rad!n# I w!th the R$5 !n 5e"u 5!ty. R$5 rendered (ud#)ent !n fa%or of -erfecto, 'ronounc!n# that -erfecto !s the owner of the tractor and d!rect!n# Ge ac $rad!n# 5or'orat!on and 6nton!o Gon@a es to return the sa)e to -erfecto. 2n a''ea , the 5ourt of 6''ea s re%ersed the dec!s!on of the R$5 and d!s)!ssed the co)' a!nt. +t he d that the tractor !n 1uest!on st! "e on#ed to A! fredo ;y when !t was se!@ed and e%!ed "y the sher!ff "y %!rtue of the a !as wr!t of e4ecut!on. I!!*e/ Ahether or not the 'ro'erty=tractor9 !n 1uest!on "e on#s to the )ort#a#or u'on the e4ecut!on of the chatte )ort#a#e. R*$in+/ -et!t!on #ranted. $he dec!s!on of the 5ourt of 6''ea s was set as!de. $he dec!s!on of the tr!a court was re!nstated. Ratio/ =;y, Jr. %s. 5ourt of 6''ea s9 $he )ort#a#or who #a%e the 'ro'erty as secur!ty under a chatte )ort#a#e d!d not 'art w!th the ownersh!' o%er the sa)e. ,e had the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

r!#ht to se !t a thou#h he was under o" !#at!on to secure the wr!tten contract of the )ort#a#ee. 6nd e%en !f no consent was o"ta!ned fro) the )ort#a#ee, the %a !d!ty of the sa e wou d st! not "e affected. 6rt!c e 14/6 of the c!%! code states that the ownersh!' of the th!n# so d !s ac1u!red "y the %endee fro) the )o)ent !t !s de !%ered to h!) !n any of the ways s'ec!f!ed !n 6rt!c es 14/. to 1501 or !n any )anner s!#n!fy!n# an a#ree)ent that the 'ossess!on !s transferred fro) the %endor to the %endee. $he sa e of the o"(ect tractor was consu))ated u'on the e4ecut!on of the 'u" !c !nstru)ent. 6t th!s t!)e construct!%e de !%ery was a ready effected. ,ence, the su"(ect tractor was no on#er owned "y A! fredo ;y when !t was e%!ed u'on "y the sher!ff=;y, Jr. %s. 5ourt of 6''ea s9.

Ind*!t ia$ Te=ti$e <an*2a3t* in+ Co0pan6 o2 t1e #1i$ippine!, In3. ". L#J Ente p i!e!, In3. January 21, 1//3 $h!rd ;!%!s!on Just!ce Me o Fa3t!/ $he res'ondent ?-J Bnter'r!ses, +nc. had a contract to su'' y 300,000 "a#s of ce)ent 'er year to 6t as 5onso !dated M!n!n# ;e%e o')ent 5or'orat!on. 5esar 5a)'os, a E!ce0-res!dent of 'et!t!oner +ndustr!a $e4t! e Manufactur!n# 5o)'any of the -h! !''!nes=or +te)co'9, as*ed
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?auro -an#an!"an, Jr., 'res!dent of res'ondent cor'orat!on, !f he wou d !*e to coo'erate !n an e4'er!)ent to de%e o' a ' ast!c ce)ent "a#s. $he 'et!t!oner a#reed to the offer. $he e4'er!)ent,howe%er, was unsuccessfu . 5e)ent dust oo@ed out under 'ressure throu#h the s)a ho es of the wo%en ' ast!c "a#s and the oad!n# and the oad!n# ' atfor) was f! ed w!th dust. $he second "atch o ' ast!c "a#s su"(ected to tr!a was !*ew!se a fa! ure. 6 thou#h the wea%!n# of the ' ast!c "a#s was a ready t!#htened, ce)ent dust st! s'! ed throu#h the #a's. -et!toner de !%ered the orders consecut!%e y "ut the res'ondent on y re)!tted a 'art of the tota a)ount ea%!n# a "a ance of -74, 123.70 $hus, the e#a de'art)ent of the 'et!t!oner sent de)and etters to res'ondent cor'orat!on 2n the tr!a , the res'ondent ad)!tted !ts !a"! !ty co%ered "y the f!rst 'urchase. A!th res'ect to the second, th!rd, fourth 'urchase orders, res'ondent, howe%er, den!ed fu res'ons!"! !ty. Res'ondent sa!d that !t w! 'ay for, on y the ' ast!c "a#s actua y used !n 'ac*!n# ce)ent. $he tr!a court rendered a dec!s!on sentenc!n# the defendant to 'ay the su) of -74, 123 w!th corres'ond!n# !nterest. $he res'ondent cor'orat!onFs a''ea was u'he d "y the a''e ate court when !t re%ersed the tr!a courtFs dec!s!on and d!s)!ssed the case w!th costs a#a!nst 'et!t!oner. I!!*e/ Ahether or not res'ondent )ay "e he d !a" e for the ' ast!c "a#s wh!ch were not actua y used for 'ac*a#!n# ce)ent as or!#!na y !ntended. R*$in+/ $he dec!s!on a''ea ed fro) !s 3B$ 63+;B and the dec!s!on of the tr!a court RB+N3$6$B;. Ratio/ =+ndustr!a $e4t! e Manufactur!n# 5o)'any of the -h! s. %. ?-J Bnter'r!ses, +nc, '' 326032.9 $he 'ro%!s!on !n the &n!for) 3a es 6ct and the &n!for) 5o))erc!a 5ode fro) wh!ch 6rt!c e 1502 was ta*en, c ear y re1u!res an e4'ress wr!tten a#ree)ent to )a*e a sa es contract e!ther a Isa e of returnJ or a Isa e on a''ro%a J. -aro or e4tr!ns!c test!)ony cou d not "e ad)!tted for the 'ur'ose of show!n# that an
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

!n%o!ce or "! of sa e that was co)' ete !n e%ery as'ect and 'ur'ort!n# to e)"ody a sa e w!thout cond!t!on or restr!ct!on const!tuted a contract of sa e or return. +f the 'urchase des!red to !ncor'orate a st!'u at!on secur!n# to h!) the r!#ht of return , he shou d ha%e done so at the t!)e the contract was )ade. 2n the other hand, the "uyer cannoy acce't 'art and re(ect the rest of the #oods s!nce th!s fa s outs!de the nor)a !ntent of the 'art!es !n the Ion a''ro%a J s!tuat!on. $herefore, we ho d that the transact!on "etween the res'ondent and 'et!t!oner const!tuted an a"so ute sa e. 6ccord!n# y, res'ondent !s !a" e for the ' ast!c "a#s de !%ered to !t "y 'et!t!oner=+ndustr!a $e4t! e Manufactur!n# 5o)'any of the -h! s. %. ?-J Bnter'r!ses, +nc, '' 326032.9.

Ae o!pa3e C1e0i3a$ Ind*!t ie!, In3 "!. Co* t o2 Appea$, #1i$ippine #1o!p1ate Fe ti$i>e Co po ation. G.R. No. 10712/. 3e'te)"er 23, 1///. 56IS6'3I7G, J.4 FACTS/ -et!t!oner 6eros'ace +ndustr!es 'urchased f!%e hundred =5009 )etr!c tons of su fur!c ac!d fro) 'r!%ate res'ondent -h! !''!ne -hos'hate Fert! !@er 5or'orat!on =-h! 'hos9.$he a#ree)ent 'ro%!ded that the "uyer sha 'ay !ts 'urchases !n -h! !''!ne 5urrency f!%e days "efore the sh!')ent date. -et!t!oner as "uyer co))!tted to secure the )eans of trans'ort to
Page 39

'!c*0u' the 'urchases fro) 'r!%ate res'ondents oad 'orts. -er a#ree)ent, 100 )etr!c tons of su fur!c ac!d shou d "e ta*en fro) 8asay Ne#ros 2r!enta stora#e tan*, wh! e the re)a!n!n# 400 )etr!c tons shou d "e retr!e%e fro) 3an#!, 5e"u. 2n 6u#ust 6, 1/76, 'r!%ate res'ondent -h! 'hos sent an ad%!sory etter to 'et!t!oner to w!thdraw the su fur!c ac!d 'urchased at 8asay "ecause 'r!%ate res'ondent has "een !ncurr!n# !ncre)enta e4'enses of 2,000 for each de ay !n sh!')ent.2n 2cto"er 3, 1/76, 'et!t!oner 'a!d -h' 553,270 for 500 )etr!c tons of su fur!c ac!d. -et!t!oner charted the MC$ 3u tan Layu)an##! to carry out the a#reed %o u)es of fre!#ht for) des!#nated oad!n# areas. $he chartered %esse on y w!thdrew .0 )etr!c tons of su fur!c ac!d fro) 8asay "ecause sa!d %esse hea%! y t! ted on !ts 'ort s!de. 8ecause of th!s, the %esse underwent re'a!rs. -r!%ate res'ondents as*ed 'et!t!oners to retr!e%e the re)a!n!n# su 'hur !n 8asay tan*s so that sa!d tan*s are e)'t!ed "efore ;ece)"er 15, 1/76.-r!%ate res'ondent sa!d that !f 'et!t!oner w! not co)' y 'et!t!oner w! "e char#e stora#e and conse1uent!a costs. -et!t!oner chartered another %esse after se%era de)and of the 'r!%ate res'ondent. ,ernande@, act!n# for the 'et!t!oner, addressed a etter to 'r!%ate res'ondent, co))enc!n# add!t!ona orders to re' ace !ts sun*en 'urchases. -et!t!oner 5ounse , 6tty 3antos, sent a de)and etter to 'r!%ate res'ondent for the de !%ery of the 2.2.4/ M$ of su fur!c ac!d or return the 'urchase 'r!ce of -h' 30., 530.+n re' y, 'r!%ate res'ondent !nstructed 'et!t!oner to !ft re)a!n!n# 30 M$ of su fur!c ac!d fro) 8asay or 'ay )a!ntenance and stora#e e4'enses. ;es'!te se%era de)ands to de !%er re)a!n!n# su fur!c ac!ds and other counter de)ands a so of 'r!%ate res'ondents, 'et!t!oner f! ed a co)' a!nt for s'ec!f!c 'erfor)ance andCor da)a#es "efore the R$5. -r!%ate res'ondent contends that !t was the 'et!t!oner who was re)!ss !n the 'erfor)ance of !ts o" !#at!on. $he R$5 ru ed !n fa%or of the 'et!t!oner. &'on a''ea , 5ourt of 6''ea s re%ersed the dec!s!on of R$5, ru !n# !n fa%or of the 'r!%ate res'ondent. ,ence, th!s 'et!t!on ISSUES: Ahether or not res'ondent 5ourt of 6''ea s erred !n ho d!n# that the 'et!t!oner co))!tted "reach of contract due to the de ay !n
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

the 'erfor)ance of !ts o" !#at!onD ;!d 'r!%ate res'ondent err !n award!n# da)a#es to 'r!%ate res'ondentD RULING/ 3u're)e 5ourt ru ed !n susta!n!n# the dec!s!on of the 5ourt of 6''ea s f!nd!n# !n fa%or of 'r!%ate res'ondent. 35 he d that 'et!t!oner %!o ated the su"(ect contract of sa e su''orted "y 're'onderant e%!dence. $he content!on that 'et!t!onerFs de ay was caused "y a stor) or force )a(eure !s untena" e. $he re'ort re%ea ed that the %esse chartered "y 'et!t!oner !s unsta" e and !nca'a" e of carry!n# fu oad. ;es'!te of se%era re'a!rs of the %esse , the %esse st! fa! ed to carry the who e )etr!c tons of su fur!c ac!d. +ts unfortunate s!n*!n# was not due to force )a(eure. ,ence, the 'ro4!)ate cause of the de ay of the 'et!t!oner cannot "e attr!"uted due to force )a(eure "ut "ecause of the chartered %esse contracted "y 'et!t!oner to carry out the su fur!c ac!d. ;es'!te de)ands to !))ed!ate re' ace MC$ 3u tan Layu)an##!, 'et!t!oner d!d not co)' y. Moreo%er, "ecause of 'et!t!oner de ay !n co)' y!n# w!th !ts o" !#at!on to re' ace !))ed!ate y the defect!%e chartered %esse des'!te se%era de)and etters sent "y 'r!%ate res'ondent to !t, the award!n# of da)a#es a#a!nst the 'et!t!oner !s (ust!f!ed .-et!t!oner !n th!s case !s #u! ty of de ay. 3!nce 'et!t!oner fa! ed to co)' y w!th !ts o" !#at!on under the contract !t "eca)e !a" e for !ts shortco)!n#s.

Con31ita Noo$ and Ga*den3io A$0o;e a "!. Co* t o2 Appea$!, Ana3$eto Noo$ and E0i$ia Ne5 e. G.R. No.%%DD&:. J*$6 ,(, %))' 8A7GA7I3A7, J.4 FACTS/ $wo 'arce s of and are the su"(ect of d!s'ute !n th!s case. $he f!rst area was for)er y owned "y E!ctor!no Noo and the other 'arce of and 're%!ous y owned "y Franc!sco Noo . 8oth 'arce s of and ocated !n 3an Manue , +sa"e a. -et!t!oner s'ouses 5onch!ta and Gaudenc!o see* reco%ery of the 'arce of and fro)
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defendant, 6nac eto Noo , youn#er "rother of 5onch!ta and B)! !a, res'ondents !n th!s case -et!t!oners contend that they are the owners of su"(ect of and and that !t "ou#ht the sa)e fro) 5onch!taFs "rothers, Franc!sco and E!ctor!no. 8ecause they are !n need of )oney, they a'' !ed and were #ranted of a oan "y ;8-, secured "y rea estate )ort#a#e on the sa!d 'arce s of and. $he t!t e of the ands then was st! !n the na)es of the 're%!ous owners. 3!nce the 'et!t!oners defau ted !n 'ay!n# the oan the )ort#a#ed ands were forec osed. $he ownersh!' of the ands was con%eyed w!th ;8for "e!n# the h!#hest "!dder !n the auct!on sa e. 6s re1uested "y 5onch!ta, 6nac eto, "rother of 5onch!ta redee)ed the forec osed 'ro'erty w!th ;8-: as a resu t, the t!t es of two 'arce s of were transferred to 6nac eto. $hat as 'art of the!r a#ree)ent =5onch!ta and 6nac eto9, 6nac eto a#reed to "uy fro) the 'et!t!oners the 'arce s of and for 100,000, 30,000 of wh!ch 'r!ce !s 'a!d to 5onch!ta and u'on 'ay)ent of 14, 000 'et!t!oners were to re#a!n 'ossess!on of the two 'arce of and. wh!ch defendants fa! ed to 'ay. 8ecause of th!s another a#ree)ent was entered !nto "y the 'art!es, where"y res'ondents a#reed to return the 'arce s of and at anyt!)e when the 'et!t!oners ha%e the necessary a)ount, Ahen 'etr!t!oners as*ed to return the 'arce s of and, res'ondents refused to return the sa)e. ,ence, 'et!t!oners f! ed th!s co)' a!nt to see* reco%ery of the d!s'uted and. ?ower court ru ed !n fa%or of the res'ondents. 5ourt of 6''ea s aff!r)ed ?ower 5ourt ;ec!s!on. ,ence th!s 'et!t!on ISSUES/ Ahether or not the a#ree)ent entered !nto "y the 'art!es =-et!t!oners and res'ondents9 w!th res'ect to the sa e and 'er!od of rede)'t!on of the 'arce s of and %a !d and enforcea" eD Ahether or not the Res'ondent !s esto''ed !n !)'u#n!n# the %a !d!ty of the a#ree)ent w!th the 'et!t!onerD RULING: 3u're)e 5ourt ru ed aff!r)!n# the dec!s!on of the 5ourt of 6''ea s and the ?ower 5ourt. $he 35 he d that the se ers ='et!t!oners9 no on#er had any t!t e to the 'arce s of and at the t!)e of sa e. 6nd s!nce de !%ery !s not 'oss!" e !n th!s case w!thout transferr!n# ownersh!' of such 'arce s of and, the contract of sa e "etween 'et!t!oners and res'ondent !s %o!d. Further s!nce the r!#ht to redee) the 'ro'erty !s de'endent u'on the %a !d!ty of the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

sa e of the 'arce s of and, such r!#ht to redee) !s a so %o!d. $he 'et!t!oners !n th!s case cannot assert the r!#ht to re'urchase the 'ro'erty w!th the res'ondents, s!nce res'ondent 6nac eto redee)ed the 'ro'erty after the 'er!od of rede)'t!on #!%en to the 'et!t!oners. $hus, the ownersh!' of the 'arce s of and was transferred a ready to ;8- and then con%eyed to Res'ondent u'on "uy!n# the sa!d 'ro'erty to ;8-. Moreo%er, res'ondent cannot "e esto''ed fro) ra!s!n# the defense of nu !ty of contract, s!nce they acted !n #ood fa!th, "e !e%!n# that 'et!t!oners are st! the owners of the 'arce s of and. 6rt!c e 1410 of the 5!%! 5ode 'ro%!des that the act!on or defense for the dec arat!on of the !ne4!stence of a contract does not 'rescr!"e. $hus, res'ondent 6nac eto can !)'u#n the nu !ty of the a#ree)ent at anyt!)e.

Se0i a "!. Co* t o2 Appea$! March 2, 1//4 F!rst ;!%!s!on 8e os! o, J. Facts: G.R. No. .6031

Juana Gu!t!erre@ so d a 'arce of and, ot 4221,

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to 8uena%entura 6n "y a deed of sa e. $h are stated !n the deed was an est!)ated area of 722.5 s1uare )eters and the "oundar!es of the ot. 3u"se1uent y, 8uena%entura 6n so d the sa!d ot to h!s ne'hew who !n turn so d the ot to 'et!t!oner w!th the %ery sa)e "oundar!es )ent!oned !n the deed of sa e e4ecuted !n h!s fa%or "y h!s unc e 8uena%entura 6n.

-et!t!oner c a!)s that he owns the ent!re 2,200 s1uare )eters s!nce !t !s the s!@e of ?ot 4221 fo ow!n# !ts esta" !shed "oundar!es. 2n the other hand, 'r!%ate res'ondent !ns!sts that he on y so d 722.5 s1uare )eters, hence, h!s ne'hew cou d not ha%e transferred a "!##er area to 'et!t!oner.

wh!ch thereafter "eca)e a su"(ect of a su!t for annu )ent of docu)ents. $he R$5 rendered (ud#)ent a''ro%!n# the 5o)'ro)!se 6#ree)ent su")!tted "y the 'art!es. G or!a E! afan!a was #!%en one year to "uy "ac* the house and ot wh!ch she fa! ed to do so. ,owe%er, un*nown to Rosenda and Ros!ta, G or!a has a crt!f!cate t!t e of the ot. 4 years after the 1st sa e, G or!a a#a!n so d the sa!d ot to Ro)anda de Eera and a $5$ was !ssued to her. Ros!ta and Rosenda then f! ed for the annu )ent of the docu)ents and da)a#es. +ssue: Aho "etween the 'et!t!oner and res'ondent has a "etter r!#ht to the 'ro'ertyD Ru !n#: ;en!ed. $he aw 'ro%!des that a dou" e sa e of !))o%a" es transfers ownersh!' to =19 the f!rst re#!strant !n #ood fa!th: =29 then, the f!rst 'ossessor !n #ood fa!th: and =39 f!na y, the "uyer who !n #ood fa!th 'resents the o dest t!t e. 3ect!on 51 of -; 152/ 'ro%!des that no deed, )ort#a#e, ease or other %o untary !nstru)ent 00 e4ce't a w! 00 'ur'ort!n# to con%ey or affect re#!stered and sha ta*e effect as a con%eyance or "!nd the and unt! !ts re#!strat!on.

+ssue: +s the sa e of ?ot 4221 !nc udes the who e 1, 3.. s1uare )eters or the est!)ated 722.5 s1uare )etersD

Ru !n#: Re%ersed and set as!de. Re!nstat!n# the dec!s!on of M5$5 dated May 4, 1/73.

Ahere and !s so d for a u)' su) and not so )uch 'er un!t of )easure or nu)"er, the "oundar!es of the and stated !n the contract deter)!ne the effects and sco'e of the sa e, not the area thereof. $he %endors are o" !#ated to de !%er a the and !nc uded w!th!n the "oundar!es, re#ard ess of whether the rea area shou d "e #reater or s)a er than that rec!ted !n the deed. $h!s !s 'art!cu ar y true where the area !s descr!"ed as <hu)!#!t *u)u an#,< that !s, )ore or ess. $h!s !s 'art!cu ar y true where the area !s descr!"ed as <hu)!#!t *u)u an#,< that !s, )ore or ess. A5 i+o "!. De Ve a June 21, 2004 15440/F!rst ;!%!s!on -an#an!"an ,J. Facts: G or!a E! afan!a so d a house and ot to Rosenda $!#no03a a@ar and Ros!ta 5a%e0Go
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Lnow ed#e #a!ned "y the f!rst "uyer of the second sa e cannot defeat the f!rst "uyerFs r!#hts e4ce't where the second "uyer re#!sters !n #ood fa!th the second sa e ahead of the f!rst, as 'ro%!ded "y the 5!%! 5ode. 6 'erson dea !n# w!th re#!stered and !s not re1u!red to #o "eh!nd the re#!stry to deter)!ne the cond!t!on of the 'ro'erty, s!nce such cond!t!on !s noted on the face of the re#!ster or cert!f!cate of t!t e.O36P Fo ow!n# th!s 'r!nc!' e, th!s 5ourt has cons!stent y he d as re#ards re#!stered and that a 'urchaser !n #ood fa!th ac1u!res a #ood t!t e as a#a!nst a the transferees thereof whose r!#hts are not recorded !n the Re#!stry of ;eeds at the t!)e of the sa e. S#OUSES TO<AS OCCEHA and SILVINA OCCEHA "!. L?DIA <ORALES O.SIANA ES#ONILLA J*ne (, ,--( Se3ond Di"i!ion #UNO, J. Facts:
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G.R. No.

G.R. No. %:D)'&

3'ouses N!co as and +rene $ordes! as owned a '!ece of and wh!ch the!r ch! dren ,arod, 6n#e a and Rosar!o, and #randch! dren 6rno d and ?! !a de a F or !nher!ted. $he he!rs so d a 'art of the and to 6 "erta Mora es. Mora es 'ossessed the ot as owner, constructed a house on !t and a''o!nted a careta*er to o%ersee her 'ro'erty. 6rno d "orrowed the 2r!#!na 5ert!f!cate of $!t e =25$9 fro) 6 "erta co%er!n# the ot. $hen, he e4ecuted an 6ff!da%!t ac*now ed#!n# rece!'t of the 25$ !n trust and undertoo* to return sa!d t!t e free fro) chan#es, )od!f!cat!ons or cance at!ons. ,owe%er, 6rno d used the 25$ he "orrowed fro) the %endee 6 "erta Mora es, su"d!%!ded the ent!re ot !nto three su" ots, and re#!stered the) a under h!s na)e. 6rno d d!d not return the 25$ "e on#!n# to 6 "erta des'!te re'eated re1uests. 6rno d su"se1uent y so d the and to s'ouses $o)as and 3y %!na 2cceQa. Ahen the res'ondent he!rs of 6 "erta earned of the sa e, they f! ed a case for annu )ent of sa e and cance at!on of t!t es, w!th da)a#es, a#a!nst the 2cceQa s'ouses, a e#!n# "ad fa!th s!nce the 2cceQas conducted ocu ar !ns'ect!on of the area "efore the 'urchase and the!r careta*er warned the) that 6rno d !s no on#er the owner of the ot "e!n# so d. 2n the other hand, the 2cceQa s'ouses a e#ed that they were "uyers !n #ood fa!th as the t!t es to the su"(ect ots were free fro) !ens or encu)"rances when they 'urchased the), that they %er!f!ed w!th the 6nt!1ue Re#!stry of ;eeds that 6rno dFs $5$s were c ean and unencu)"ered. ?ower court dec ared the 2cceQa s'ouses as "uyers !n #ood fa!th and ru ed that the act!on of the he!rs was t!)e0"arred. 5ourt of 6''ea s re%ersed the dec!s!on of the tr!a court. ,ence the 'et!t!on.

there "e no !nscr!'t!on, the ownersh!' sha 'erta!n to the 'erson who !n #ood fa!th was f!rst !n 'ossess!on: and, =39 !n the a"sence thereof, to the 'erson who 'resents the o dest t!t e, 'ro%!ded there !s #ood fa!th. +n a cases, #ood fa!th !s essent!a . +t !s the "as!c 're)!se of the 'referent!a r!#hts #ranted to the one c a!)!n# ownersh!' o%er an !))o%a" e. Ahat !s )ater!a !s whether the second "uyer f!rst re#!sters the second sa e !n #ood fa!th, i.e., w!thout *now ed#e of any defect !n the t!t e of the 'ro'erty so d. $he defense of !ndefeas!"! !ty of a $orrens t!t e does not e4tend to a transferee who ta*es the cert!f!cate of t!t e !n "ad fa!th, w!th not!ce of a f aw. +ndeed, the #enera ru e !s that one who dea s w!th 'ro'erty re#!stered under the $orrens syste) need not #o "eyond the sa)e, "ut on y has to re y on the t!t e. ,e !s char#ed w!th not!ce on y of such "urdens and c a!)s as are annotated on the t!t e. ,owe%er, th!s 'r!nc!' e does not a'' y when the 'arty has actua *now ed#e of facts and c!rcu)stances that wou d !)'e a reasona" y caut!ous )an to )a*e such !n1u!ry or when the 'urchaser has *now ed#e of a defect or the ac* of t!t e !n h!s %endor or of suff!c!ent facts to !nduce a reasona" y 'rudent )an to !n1u!re !nto the status of the t!t e of the 'ro'erty !n !t!#at!on. 2ne who fa s w!th!n the e4ce't!on can ne!ther "e deno)!nated an !nnocent 'urchaser for %a ue nor a 'urchaser !n #ood fa!th.

+ssue: Ahether or not a 'urchaser of a re#!stered and !s o" !#ed to )a*e !n1u!r!es of any 'oss!" e defect or ad%erse c a!) wh!ch does not a''ear on the 5ert!f!cate of $!t e S#OUSES ISA.ELO and ERLINDA #A?ONGA?ONG, %s. HON. COURT OF A##EALS,

Ru !n#: -et!t!on d!s)!ssed. $he 'et!t!on at "ar 'resents a case of dou" e sa e of an !))o%a" e 'ro'erty. 6rt!c e 1544 of the New 5!%! 5ode 'ro%!des that !n case an !))o%a" e 'ro'erty !s so d to d!fferent %endees, the ownersh!' sha "e on#: =19 to the 'erson ac1u!r!n# !t who !n #ood fa!th f!rst recorded !t !n the Re#!stry of -ro'erty: =29 shou d
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

<a6 ,@, ,--( T1i d Di"i!ion

G.R. No. %((:'D

Page 3

CAR#IO <ORALES, J.

Facts: Bduardo Mendo@ !s the re#!stered owner of a 'arce of and !n 5a oocan. ,e )ort#a#ed the and to the Mera co B)' oyees 3a%!n#s and ?oan 6ssoc!at!on =MB36?69 to secure a oan. $he )ort#a#e was du y annotated on the t!t e. 6fter 2 years, Mendo@a e4ecuted a ;eed of 3a e w!th 6ssu)'t!on of Mort#a#e o%er the 'arce of and !n fa%or of s'ouses -ayon#ayon#. +t !s stated !n the deed that 'et!t!oners "ound the)se %es to assu)e 'ay)ent of the "a ance of the )ort#a#e !nde"tedness of Mendo@a to MB36?6. Mendo@a, w!thout the *now ed#e of 'et!t!oners, )ort#a#ed the sa)e 'ro'erty to MB36?6, a#a!n to secure another oan. 3econd )ort#a#e was annotated !n Mendo@aFs t!t e. Mendo@a e4ecuted a ;eed of 6"so ute 3a e o%er st! the sa)e 'ro'erty !n fa%or of res'ondent s'ouses 5 e)ente and Rosa !a 3a %ador. 3'ouses 3a %ador had the ot re#!stered !n the!r na)e after ocu ar !ns'ect!on and %er!f!cat!on fro) the Re#!ster of ;eeds. Gett!n# w!nd of the sa e of the 'ro'erty to res'ondents, -ayon#ayon# f! ed for annu )ent sa e w!th da)a#es a#a!nst Mendo@a and s'ouses 3a %ador. $r!a 5ourt ru ed !n fa%or of Mendo@a and 3a %ador. 56 aff!r)ed. ,ence the 'et!t!on.

Re#!stry of ;eeds of Hue@on 5!ty !f Mendo@a was !ndeed the re#!stered owner. G!%en th!s factua "ac*dro', res'ondents d!d !ndeed 'urchase the 'ro'erty !n #ood fa!th and accord!n# y ac1u!red %a !d and !ndefeas!" e t!t e thereto. $he aw !s thus !n res'ondentsF fa%or. 6rt!c e 1544 of the 5!%! 5ode so 'ro%!des: 6rt. 1544. +f the sa)e th!n# shou d ha%e "een so d to d!fferent %endees, the ownersh!' sha "e transferred to the 'erson who )ay ha%e f!rst ta*en 'ossess!on thereof !n #ood fa!th, !f !t shou d "e )o%a" e 'ro'erty. 3hou d !t "e !))o%a" e 'ro'erty, the ownersh!' sha "e on# to the 'erson ac1u!r!n# !t who !n #ood fa!th f!rst recorded !t !n the Re#!stry of -ro'erty. 3hou d there "e no !nscr!'t!on, the ownersh!' sha 'erta!n to the 'erson who !n #ood fa!th was f!rst !n the 'ossess!on: and, !n the a"sence thereof, to the 'erson who 'resents the o dest t!t e, 'ro%!ded there !s #ood fa!th. $here "e!n# dou" e sa e of an !))o%a" e 'ro'erty, as the a"o%e01uoted 'ro%!s!on !nstructs, ownersh!' sha "e transferred =19 to the 'erson ac1u!r!n# !t who !n #ood fa!th f!rst recorded !t !n the Re#!stry of -ro'erty: =29 !n defau t thereof, to the 'erson who !n #ood fa!th was f!rst !n 'ossess!on: and =39 !n defau t thereof, to the 'erson who 'resents the o dest t!t e, 'ro%!ded there !s #ood fa!th.

+ssue: Ahether or not s'ouses 3a %ador are !nnocent 'urchasers for %a ue

,e d: -et!t!on den!ed.

Ahere !nnocent th!rd 'ersons re y u'on the correctness of a cert!f!cate of t!t e and ac1u!re r!#hts o%er the 'ro'erty, the court cannot (ust d!sre#ard such r!#hts. 2therw!se, 'u" !c conf!dence !n the cert!f!cate of t!t e, and u t!)ate y, the $orrens syste), wou d "e !)'a!red, for e%eryone dea !n# w!th re#!stered 'ro'erty wou d st! ha%e to !n1u!re at e%ery !nstance whether the t!t e has "een re#u ar y or !rre#u ar y !ssued.27 +n res'ondentsF case, they d!d not on y re y u'on Mendo@aFs t!t e. Rosa !a 'ersona y !ns'ected the 'ro'erty and %er!f!ed w!th the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

I!a5e$a Co$$e+e!, In3. "!. Hei ! o2 Nie"e! To$entinoIRi"e a 2cto"er 20, 2000 3econd ;!%!s!on -onente: Just!ce Mendo@a G.R. No.1326..

Fa3t!: $he ate N!e%es $o ent!no0R!%era and her hus"and, -a" o R!%era, were )arr!ed !n 1/21. N!e%es, st! us!n# her )a!den na)e, f! ed an
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a'' !cat!on for a sa es 'atent o%er a 13.526.0 hectare and !n 5auayan, +sa"e a. ,er a'' !cat!on was a''ro%ed and a sa es 'atent was !ssued !n the na)e of IN!e%es $o ent!no, )arr!ed to -a" o R!%eraJ. $he a"o%e sa!d s'ouses so d to 'et!t!oner +sa"e a four hectares of the!r and, wh!ch was thereafter !))ed!ate y occu'!ed "y the 'et!t!oner and used the sa)e as !ts new ca)'us. 3!nce 1/50, the +sa"e a 5o e#es dec ared the and for ta4 'ur'oses, "ut !t d!d not !))ed!ate y secure a se'arate t!t e to the 'ro'erty. +t was on y on January 13, 1/.0 when !t secured a t!t e to the and. +n ;ece)"er 1/.6, the 2ff!ce of the Re#!ster of ;eeds of +sa"e a was "urned. 6)on# the t!t es destroyed was that of the +sa"e a 5o e#es wh!ch was howe%er ad)!n!strat!%e y reconst!tuted !n 1/.7. +n January 1/77, certa!n 'eo' e entered the 'ro'erty of +sa"e a 5o e#es, 'ro)'t!n# the atter to "r!n# an act!on for forc!" e entry. $he Mun!c!'a $r!a 5ourt of 5auayan, +sa" e a rendered a dec!s!on order!n# the !ntruders to %acate the and !n 1uest!on. +n 1//1, N!e%es "rou#ht the 'resent su!t a#a!nst the +sa"e a 5o e#es for INu !ty of $!t es, ;eeds of 3a e, Reco%ery of 2wnersh!' and -ossess!on, 5ance at!on of $!t es, ;a)a#es w!th -re !)!nary +n(unct!on.J +n !ts 6nswer, the +sa"e a 5o e#es asserted that the 'ro'erty !n 1uest!on had "een so d to !t w!th the *now ed#e and consent of N!e%es who !n fact s!#ned the deed of sa e. Moreo%er, here!n 'et!t!oner contends that the co)' a!nt was "arred "y 'rescr!'t!on andCor aches. $wo co)' a!nts0!n0!nter%ent!on were a owed "y the tr!a court. $he !nter%enors, who were the 'art!es !n the e(ect)ent su!t, c a!)ed to "e "uyers !n #ood fa!th or essees of N!e%es as to certa!n 'ort!ons of the su"(ect and. ;ur!n# the 'endency of th!s case N!e%es d!ed and her he!rs su"st!tuted her. 2n 3e'te)"er 30, 1//4, the tr!a court rendered !ts dec!s!on, ru !n# !n fa%or of +sa"e a 5o e#es. 2n 6''ea , !ts dec!s!on was re%ersed. ,ence, th!s 'et!t!on. I!!*e: Ahether the 5ourt of 6''ea s erred !n ru !n# that: 1.9 the su"(ect 'ro'erty !s 'ara'herna des'!te N!e%esF ad)!ss!on that !t was 'urchased fro)
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

the #o%ern)ent dur!n# her )arr!a#e w!th -a" o R!%era out of con(u#a funds: 2.9 N!e%esF s!#nature !n the 1uest!oned deed of sa e !s for#ed: 3.9 aches cannot defeat that c a!) of a re#!stered 'ro'erty owner des'!te the on# de ay of 41 years. R*$in+: Aherefore the dec!s!on of the 5ourt of 6''ea s !s RBEBR3B;. +ssue 1: 8oth the ac1u!s!t!on of the 130hectare and and the sa e of a 'ort!on thereof to 'et!t!oner !n 1/4/ too* ' ace when the 3'an!sh 5!%! 5ode was st! !n effect. &nder 6rt!c e 140. of that code, the 'ro'erty of the s'ouses are dee)ed con(u#a 'artnersh!' 'ro'erty !n the a"sence of 'roof that !t "e on#s e4c us!%e y to one or the other s'ouse. $h!s 'resu)'t!on ar!ses w!th res'ect to 'ro'erty ac1u!red dur!n# the )arr!a#e. +t !s not necessary to 'ro%e that the 'ro'erty was ac1u!red w!th con(u#a funds. +ndeed, other than !ts f!nd!n# that N!e%es was a ready !n 'ossess!on of the and and a'' !ed for a sa es 'atent "efore she )arr!ed -a" o R!%era, the 5ourt of 6''ea s c!ted no other e%!dence to 'ro%e that the and was her 'ara'herna 'ro'erty. 2n the contrary, the e%!dence c ear y shows that the and was ac1u!res dur!n# her )arr!a#e w!th -a" o R!%era. +ssue 2: $he fact that N!e%es $o ent!noFs s!#nature !n the deed of sa es !s a for#ery does not, howe%er, render the deed of sa e %o!d. $he and was con(u#a 'ro'erty and under the 3'an!sh 5!%! 5ode, the w!feFs consent to the sa e !s not re1u!red. $herefore, that her s!#nature !s a for#ery !s deter)!nat!%e on y of N!e%esF ac* of consent "ut not of the %a !d!ty of the sa e. 6s the hus"and )ay %a !d y se or d!s'ose of con(u#a 'ro'erty e%en w!thout the w!feFs consent, the a"sence of the w!feFs consent a one does not )a*e the sa e I!n fraudJ of her. +ssue 3: Nonethe ess wh! e !t !s true that a $orrens t!t e !s !ndefeas!" e and !)'rescr!'t!" e, the re#!stered owner )ay ose h!s r!#ht to reco%er 'ossess!on of h!s re#!stered 'ro'erty "y reason of aches. ?aches )eans the fa! ure or ne# ect for an unreasona" e and une4' a!ned en#th of t!)e to do that wh!ch, "y o"ser%ance of due d! !#ence, cou d or shou d ha%e "een done ear !er. +t !s
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ne# !#ence or o)!ss!on to assert a r!#ht w!th!n a reasona" e t!)e, warrant!n# the 'resu)'t!on that the 'arty ent!t ed to assert h!s r!#ht e!ther has a"andoned or dec !ned to assert !t. 3o !t !s !n the 'resent case where the co)' a!nt 1uest!on!n# the %a !d!ty of the sa e to 'et!t!oner +sa"e a 5o e#es was f! ed on y after 42 years had a'sed. Res'ondents cou d not fe!#n !#norance of the sa e "ecause 'et!t!oner had "een !n o'en, 'u" !c, and cont!nuous 'ossess!on of the and, wh!ch !t had used as !ts schoo ca)'us s!nce 1/4/.

.a6o3a "!. No+a$e! 3e'te)"er 12, 2000 G.R.No.137201 $h!rd ;!%!s!on -onente: Just!ce Gon@a#a0Reyes Fa3t!/ Gaud!oso No#a es ac1u!red ownersh!' o%er the su"(ect 'ro'erty on the "as!s of the !ompromise Agreement and the (eed o+ Absolute Sale e4ecuted "y Ju !a ;eocare@a who had ac1u!red of sa!d 'ro'erty fro) the 5an!no
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page "

"rothers and s!sters. ,owe%er, -rec!osa 5an!no su"se1uent y so d at d!fferent t!)es 'ort!ons of the su"(ect 'ro'erty to here!n 'et!!toners, Franc!sco 8ayoca, Non!to ;!choso, Brw!n 8ayoca, and s'ouses -!o and ;o ores ;!choso. $he 6''e ee, f! ed co)' a!nt a#a!nst the 6''e ants for IAccion .ein1indicatoria )ith (amages.9 ,e a e#ed !n h!s co)' a!nt, that he 'urchased the sa!d 'ro'erty fro) Ju !a ;ecare@a and thus ac1u!red ownersh!' thereof and that the 6''e ants res'ect!%e y 'urchased 'ort!ons of sa!d 'ro'erty !n "ad fa!th and throu#h fraud. $he 6''e ants, !n the!r 6nswer to the co)' a!nt, a e#ed that -rec!osa 5an!no and her s!" !n#s ac1u!red (ust t!t e o%er the 'ro'erty when they e4ecuted the!r :(eed o+ 8artition o+ .eal 8roperty9 and con%eyed t!t es to the %endees, the 6''e ants !n the 'resent recourse, as "uyers !n #oof fa!th. $he Re#!ona $r!a 5ourt ru ed !n fa%or of No#a es and dec ared that the sa es of 'ort!ons of sa!d 'ro'erty "y -rec!osa 5an!no were nu and %o!d. $he tr!a court further dec ared further that 'et!t!oners were 'urchasers !n "ad fa!th. 2n a''ea , the court of 6''ea s aff!r)ed the R$5 ru !n#. ,ence th!s 'et!t!on. I!!*e/ Aho has the su'er!or r!#ht to the 'arce of and so d to d!fferent "uyers at d!fferent t!)es "y !ts for)er ownersD R*$in+: -et!t!on !s here"y ;BN+B; and the assa! ed ;B5+3+2N of the 5ourt of 6''ea s !s 6FF+RMB;. $here !s no 1uest!on fro) the records that res'ondent No#a es was the f!rst to "uy the su"(ect 'ro'erty fro) Ju !a, who !n turn "ou#ht the sa)e fro) the 5an!no "rothers and s!sters. -et!t!oners, howe%er, re y on the fact that they were the f!rst to re#!ster the sa es of the d!fferent 'ort!ons of the 'ro'erty resu t!n# !n the !ssuance of new t!t es !n the!r na)es. 6rt!c e 1544 of the 5!%! 5ode #o%erns the 'referent!a r!#hts of %endees !n cases of )u t!' e sa es, as fo ows: I6rt. 1544. +f the sa)e th!n# shou d ha%e "een so d to d!fferent %endees, the ownersh!' sha "e transferred to the 'erson who )ay ha%e f!rst ta*en 'ossess!on thereof !n #ood fa!th, !f !t shou d "e )o%a" e 'ro'erty.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

3hou d !t "e !))o%a" e 'ro'erty, the ownersh!' sha "e on# to the 'erson ac1u!r!n# !t who !n #ood fa!th f!rst recorded !t !n the Re#!stry of -ro'erty. 3hou d there "e no !nscr!'t!on, the ownersh!' sha 'erta!n to the 'erson who !n #ood fa!th was f!rst !n 'ossess!on: and !n the a"sence thereof, to the 'erson who 'resents the o dest t!t e, 'ro%!ded there !s #ood fa!th.J 8ased on the fore#o!n#, to )er!t the 'rotect!on under 6rt!c e 1544, second 'ara#ra'h, the second "uyer )ust act !n #ood fa!th !n re#!ster!n# the deed. $hus, +t has "een he d that !n cases of dou" e sa e of !))o%a" es, what f!nds re e%ance and )ater!a !ty !s not whether or not the second "uyer was a "uyer !n #ood fa!th "ut whether or not sa!d second "uyer re#!sters such second sa e !n #ood fa!th, that !s, w!thout *now ed#e of any defect !n the t!t e of the 'ro'erty. 2n account of the und!s'uted fact of re#!strat!on "y res'ondent No#a es as the f!rst "uyer, necessar! y, there !s a"sent #ood fa!th !n the re#!strat!on of the sa e "y the 'et!t!oners Brw!n 8ayoca and the s'ouses -!o and ?ourdes ;!choso for wh!ch they had "een !ssued cert!f!cates of t!t e !n the!r na)es. 6s for the 'et!t!oners Franc!sco 8ayoca and Non!to ;!choso, they fa! ed to re#!ster the 'ort!ons of the 'ro'erty so d to the), and )ere y re y on the fact that they dec ared the sa)e !n the!r na)e for ta4at!on 'ur'oses. 3uff!ce !t to state, that such fact, does not, "y !tse f, const!tute e%!dence of ownersh!' and cannot !*ew!se 're%a! o%er the t!t e of res'ondent No#ra es.

S#OUSES FLORENDO DAUZ and HELEN DAUZ, et al. ". S#OUSES ELIGIO and LORENZA ECHAVEZ and t1e COURT OF A##EALS G.R. No. %:,(-', ,% Septe05e ,--', SANDOVALAGUTIERREZ, J.

3'ouses 6 "ert 2#u!s, 3r. and F orenc!a

Page #

Refuer@o 2#u!s so d a 'ort!on of the and to res'ondents s'ouses B !#!o and ?oren@a Bcha%e@. 2n 6'r! 1, 1/72, they had the sa e re#!stered !n the Re#!stry of ;eeds of 8en#uet. 3'ouses 2#u!s ater on so d the re)a!n!n# 'ort!on of the and to the sa)e res'ondents, "ut the and was not re#!stered.

HELD/ #etition DENIED. RATIO/ A ti3$e %:(( o2 t1e Ci"i$ Code i! e$e"ant, t1*!/

6 "ert 2#u!s, 3r. and h!s two ch! dren 6 "ert 2#u!s, Jr. and ,e en 2#u!s Ea er!o, e4ecuted a ;eed of B4tra(ud!c!a 3ett e)ent of Bstate. 2n the sa)e date, they so d to s'ouses F orendo and ,e en ;au@, 'et!t!oners, a 'ort!on of the and as shown "y a ;eed of 6"so ute 3a e. 6 "ert 2#u!s, 3r. !nfor)ed 'et!t!oners that he had so d on y a 'ort!on to res'ondents.

6rt!c e 1544. +f the sa)e th!n# shou d ha%e "een so d to d!fferent %endees, the ownersh!' sha "e transferred to the 'erson who )ay ha%e f!rst ta*en 'ossess!on thereof !n #ood fa!th, !f !t shou d "e )o%a" e 'ro'erty.

-et!t!oners then f! ed w!th the Re#!ona $r!a 5ourt =R$59 of 8a#u!o and 8en#uet a -et!t!on for the +ssuance of a New ;u' !cate 5o'y of $5$ No. $013.27.

3hou d !t "e !))o%a" e 'ro'erty, the ownersh!' sha "e on# to the 'erson a37*i in+ it 41o in +ood 2ait1 2i !t e3o ded it in t1e Re+i!t 6 o2 # ope t6.

Res'ondents had the sa e to the) of the re)a!n!n# .,616 s1uare )eters 'ort!on of the and re#!stered !n the sa)e Re#!stry of ;eeds. 5onse1uent y, the t!t e !n the na)es of s'ouses 2#u!s was cance ed and !n !eu thereof, a new t!t e was !ssued !n res'ondentsF na)es. $he new t!t e co%ers the ent!re 'ro'erty 're%!ous y owned "y s'ouses 2#u!s.

3hou d there "e no !nscr!'t!on, the ownersh!' sha 'erta!n to the 'erson who !n #ood fa!th was f!rst !n 'ossess!on: and, !n the a"sence thereof, to the 'erson who 'resents the o dest t!t e, 'ro%!ded there !s #ood fa!th.

Meanwh! e, 'et!t!oners so d to s'ouses +#nac!o and Franc!sca Rea)"onan@a, a so 'et!t!oners, a 'ort!on so d to the) "y 6 "ert 2#u!s, 3r. and h!s two ch! dren. -et!t!oners, then f! ed w!th the R$5, a co)' a!nt for dec arat!on of ownersh!'. $he tr!a court d!s)!ssed the 'et!t!on. $he 5ourt of 6''ea s aff!r)ed R$5Fs dec!s!on.

ISSUE/ A,B$,BR $,BRB A63 86; F6+$, 2N $,B RBG+3$R6$+2N 2F $,B ?6N; 8K $,B RB3-2N;BN$3

+n 6'r! 1/72, res'ondents caused the re#!strat!on of the sa e of the 1,2/50s1uare )eter 'ort!on of the and: and on January 25, 1/7/, the sa e of the re)a!n!n# .,616 s1uare )eters !n the Re#!stry of the ;eeds. -et!t!oners =s'ouses ;au@9, on the other hand, fa! ed to cause the re#!strat!on of the sa e to the) !n the Re#!stry of ;eeds. Ahere "oth 'art!es c a!) to ha%e 'urchased the sa)e 'ro'erty, as !n th!s case, 6rt!c e 1544 c!ted a"o%e 'ro%!des that as "etween two 'urchasers, the one who re#!stered the sa e !n h!s fa%or has a 'referred r!#ht o%er the other who has not re#!stered h!s t!t e, e%en !f the atter !s !n actua 'ossess!on of the !))o%a" e 'ro'erty

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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Nonethe ess, we st! 'erused the records and found that there !s no e%!dence show!n# that res'ondents acted !n "ad fa!th. +n !hina Airlines, Ltd. 1. !ourt o+ Appeals, we he d that "ad fa!th does not s!)' y connote "ad (ud#)ent or ne# !#ence. +t !)'orts a d!shonest 'ur'ose or so)e )ora o" !1u!ty and consc!ous do!n# of a wron#. +t )eans "reach of a *nown duty throu#h so)e )ot!%e, !nterest or ! w! that 'arta*es of the nature of fraud. $hese !nc!dents or c!rcu)stances are not 'resent here. Res'ondents d!d not !))ed!ate y re#!ster the sa e "ecause they wa!ted for s'ouses 2#u!s to re'urchase the 'ro'erty. +n fact, !t was 6 "ert 2#u!s, 3r. h!)se f who re1uested the) not to cause the re#!strat!on of the sa e.

CHINA AIRLINES, LTD. ". COURT OF A##EALS, ANTONIO S. SALVADOR and ROLANDO C. LAO G.R. No. %,))@@, %( J*$6 ,--&, CAR#IO, J.

-r!%ate res'ondents ' anned to tra%e to ?os 6n#e es, 5a !forn!a. $hey !n!t!a y en#a#ed
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page 9

the ser%!ces of More !a $ra%e 6#ency =More !a9, wh!ch "oo*ed the) w!th 'et!t!oner 5h!na 6!r !nes ?td =56?9. ,owe%er, 'r!%ate res'ondents dec!ded to dro' the ser%!ces of More !a, as the 6)er!can B4'ress $ra%e 3er%!ce -h! !''!nes =6)e4co9 offers chea'er rates, and en#a#e the ser%!ces of the atter. ?ao then ca ed 6)e4co and #a%e the t!re record ocator nu)"er !f "oo*!n# reference that 56? had 're%!ous y !ssued to More !a when More !a "oo*ed the reser%at!ons of the 'r!%ate res'ondents. +n the afternoon of the sa)e day, 6)e4co ca ed u' 56? to f!na !@e 'r!%ate res'ondents> reser%at!on for 56?>s 13 June 1//0 f !#ht. 6)e4co used the record ocator nu)"er #!%en "y ?ao !n conf!r)!n# the reser%at!ons of 'r!%ate res'ondents. 56? conf!r)ed the "oo*!n#. 6)e4co then !ssued to 'r!%ate res'ondents the conf!r)ed t!c*ets for the 13 June 1//0 f !#ht of 56?. 2n the sa)e day, 56? ca ed u' More !a to reconf!r) the reser%at!ons of 'r!%ate res'ondents. More !a cance ed the reser%at!ons of 'r!%ate res'ondents. 2n the day of the f !#ht, the 'r!%ate res'ondents were not a" e to "oard the ' ane s!nce the!r na)es were not on the 'assen#ersF !st. 56? cance ed the reser%at!ons when More !a re%o*ed the "oo*!n# !t had )ade for the 'r!%ate res'ondents. ,ence th!s 'et!t!on. ISSUE/ Ahether the 'et!t!oner !s !a" e des'!te the fact that such acts co)' a!ned of were acts done "y !ts e)' oyees

dest!nat!on, and =29 a contract to trans'ort 'assen#ers to the!r dest!nat!on. +n th!s case, when 56? conf!r)ed the reser%at!ons, !t "ound !tse f to trans'ort 'r!%ate res'ondents on !ts f !#ht on 13 June 1//0. $he a!r !ne "us!ness !s !ntended to ser%e the tra%e !n# 'u" !c 'r!)ar! y and !s thus !)"ued w!th 'u" !c !nterest. $he aw #o%ern!n# co))on carr!ers conse1uent y !)'oses an e4act!n# standard. $hus, !n an act!on "ased on a "reach of contract of carr!a#e, the a##r!e%ed 'arty does not ha%e to 'ro%e that the co))on carr!er was at fau t or was ne# !#ent. 6 that he has to 'ro%e !s the e4!stence of the contract and the fact of !ts non0'erfor)ance "y the carr!er. 56? does not deny !ts conf!r)at!on of the reser%at!ons )ade "y 6)e4co. $he conf!r)ed t!c*ets !ssued "y 6)e4co to 'r!%ate res'ondents u'on 56?>s conf!r)at!on of the reser%at!ons are unden!a" e 'roof of the contract of carr!a#e "etween 56? and 'r!%ate res'ondents. +n Alitalia Air)ays 1. !A, et al., we he d that when an a!r !ne !ssues a t!c*et to a 'assen#er conf!r)ed for a 'art!cu ar f !#ht on a certa!n date, a contract of carr!a#e ar!ses. $he 'assen#er then has e%ery r!#ht to e4'ect that he wou d f y on that f !#ht and on that date. +f he does not, then the carr!er o'ens !tse f to a su!t for "reach of contract of carr!a#e. 56? d!d not a ow 'r!%ate res'ondents, who were then !n 'ossess!on of the conf!r)ed t!c*ets, fro) "oard!n# !ts a!r' ane "ecause the!r na)es were not !n the 'assen#ers> )an!fest. 5 ear y, 56? "reached !ts contract of carr!a#e w!th 'r!%ate res'ondents. Ae, howe%er, ru e out "ad fa!th "y 56?.

HELD/ S#OUSES SALERA "! S#OUSES RODAJE G.R. No. 135/00 RATIO/ 1. 6u#ust 200.

#etition DENIED.

#onente/ Just!ce 3ando%a R Gut!erre@, F!rst ;!%!s!on Fa3t!: 3'ouses 3a era f! ed an act!on for 1u!et!n# of t!t e re#ard!n# a 'arce of and !n 8r#y. 8asud, 3an +s!dro, ?eyte. $he and was "ou#ht fro) the he!rs of 8r!#!do $onac!o as
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$he nature of an a!r !ne>s contract of carr!a#e 'arta*es of two ty'es, na)e y: =19 a contract to de !%er a car#o or )erchand!se to !ts
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

e%!denced "y the ;eed of 6"so ute 3a e e4ecuted on June 23, 1/76. $hey a e#e that they ha%e "een !n 'ossess!on of the 'ro'erty and the house they "u! t thereon "ecause they had 'a!d the 'urchase 'r!ce e%en "efore the e4ecut!on of the deed of sa e. Ahen they as*ed the -ro%!nc!a 6ssessor to dec are the 'ro'erty under the!r na)es for ta4at!on 'ur'oses, they found that $a4 ;ec arat!on No. 2//4 =R059 !n the na)e of 8r!#!do was a ready cance ed and another one, $a4 ;ec arat!on No. 2407, was !ssued !n the na)es of 3'ouses Roda(e. 3'ouses Roda(e c a!)ed that they "ou#ht the and fro) 5ata !no $onac!o, father of 8r!#!do on June 6, 1/76 and that the sa e was re#!stered w!th the Re#!ster of ;eeds and the $a4 ;ec arat!on No. 2407 was !ssued !n the!r na)e. $hey a so c a!)ed that they had a %er"a contract w!th 5ata !no e%en "efore the e4ecut!on of the sa e s!nce January 1/74. $hey 'a!d a down'ay)ent of -1,000 and 'a!d the "a ance of -4,000 when the sa e was e4ecuted. $hey a e#e that they "een !n e4erc!s!n# the!r r!#ht of ownersh!' o%er the 'ro'erty and the "u! d!n# constructed thereon 'eacefu y, 'u" !c y, ad%erse y and cont!nuous y. 6'art fro) "e!n# the f!rst re#!strants, they are "uyers !n #ood fa!th. R$5 of 5a u"!an, ?eyte dec ared 3'ouses 3a era as the r!#htfu and e#a owners wh! e dec ar!n# nu and %o!d the ;eed of 6"so ute 3a e "etween 5ata !no and here!n res'ondents and order!n# the cance at!on of $a4 ;ec arat!on No. 2407 !ssued. $he court c!ted that the rea owners of the and, "y o'erat!on of the aw on success!on wou d "e the he!rs of 8r!#!do and not h!s father. 5ata !no had no e#a 'ersona !ty to se the 'arce of and. $he 5ourt of 6''ea s re%ersed and set as!de the dec!s!on of the R$5. +t "ased !ts dec!s!on on the 5!%! 5ode 'ro%!s!on on dou" e sa e. I!!*e/ Ah!ch of the two contracts of sa e !s %a !dD He$d/ 3a e )ade "y the he!rs of 8r!#!do $onacao to the s'ouses 3a era !s %a !d. 3a e )ade "y 5ata !no to s'ouses Roda(e !s !n%a !d. $he 5ourt of 6''ea s !s wron#. 6rt!c e 1544 of the 5!%! 5ode conte)' ates a case of dou" e sa e or )u t!' e sa es "y a !in+$e "endo . More s'ec!f!ca y, !t co%ers a s!tuat!on where a
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

s!n# e %endor so d one and the sa)e !))o%a" e 'ro'erty to two or )ore "uyers. 6rt. 1544 does not a'' y !n th!s case s!nce the sa e was )ade "y 5ata !no and the he!rs of 8r!#!do. 8ad fa!th was esta" !shed !n the R$5. $he e%!dence su")!tted to the court, esta" !shed that 3'ouses Roda(e *new "eforehand that the 'ro'erty was dec ared !n the na)e of 8r!#!do $onacao for ta4at!on 'ur'oses. 6ny ot "uyer !s e4'ected to "e %!#! ant, e4erc!s!n# ut)ost care !n deter)!n!n# whether the se er !s the true owner of the 'ro'erty and whether there are other c a!)ants. $here !s no !nd!cat!on fro) the record that Roda(e f!rst deter)!ned the status of the ot. Ah! e ta4 dec arat!ons are not conc us!%e 'roofs of ownersh!', howe%er, they are #ood !nd!c!a of 'ossess!on !n the conce't of owner, for no one !n h!s r!#ht )!nd wou d "e 'ay!n# ta4es for a 'ro'erty that !s not !n h!s actua or at east construct!%e 'ossess!on. ,ence, 5ata !no, not "e!n# the owner or 'ossessor, cou d not %a !d y se the ot to res'ondents. $he cert!f!cat!on 'resented "y res'ondents c ear y shows that the house !s owned "y 6!da 3a era and that res'ondents started 'ay!n# the e ectr!c "! s =!n the na)e of 6!da 3a era9 on y !n 1/76. $he res'ondents 'roof of 'ay)ent of rea ty ta4 fro) the 'er!od of 1/.4 to 1/74 was 'a!d !n u)' su). =-et!t!on !s GRANTED. $he assa! ed ;ec!s!on of the 5ourt of 6''ea s !s REVERSED and the ;ec!s!on of the tr!a court !s REINSTATED.9

URACA, et a$. "! CA and VELEZ, JR., et a$. G.R. No. 115157 1//. #onente/ Just!ce -an#an!"an, $h!rd ;!%!s!on Fa3t!/ $he Ee e@es were the owners of the ot and co))erc!a "u! d!n# !n 1uest!on ocated at -ro#reso and M.5. 8r!ones 3treets !n 5e"u 5!ty. $he 'et!t!oners were !ts essees.
Page !1

3e'te)"er 5,

2n Ju y 7, 1/75, the Ee e@es throu#h 5ar)en Ee e@ $!n# wrote a etter to 'et!t!oners offer!n# to se the su"(ect 'ro'erty for -1,050,000.00 and to re' y w!th!n three days. -et!t!oners, throu#h counse , acce'ted the offer. Ahen &raca went to $!n#, $!n# to d her that there was a )!sta*e !n the 'r!ce. +t shou d ha%e "een -1.4M, &raca a#reed to the new 'r!ce to "e 'aya" e !n !nsta )ents w!th a down 'ay)ent of -1M and the "a ance of -400,000 to "e 'a!d !n 30 days. 5ar)en Ee e@ $!n# d!d not acce't the sa!d counter0offer of B)! !a &raca a thou#h th!s fact !s d!s'uted "y &raca. No 'ay)ent was )ade "y to the Ee e@es on Ju y 12 and 13, 1/75. 2n Ju y 13, 1/75, the Ee e@es so d 'ro'erty to 6%enue Merchand!s!n# +nc. for -1,050,000.00. $he cert!f!cate of t!t e of the sa!d 'ro'erty was c ean and free of any annotat!on of ad%erse c a!)s or lis pendens. 2n Ju y 31, 1/75, 'et!t!oners f! ed the !nstant co)' a!nt a#a!nst the Ee e@es. 2n 6u#ust 1, 1/75, they a so re#!stered a not!ce of lis pendens o%er the 'ro'erty !n 1uest!on w!th the 2ff!ce of the Re#!ster of ;eeds. 2n 2cto"er 30, 1/75, the 6%enue Grou' f! ed an e(ect)ent case a#a!nst 'et!t!oners order!n# the atter to %acate the co))erc!a "u! d!n# stand!n# on the ot !n 1uest!on. -et!toners f! ed an a)ended co)' a!nt !)' ead!n# the 6%enue Grou' as new defendants after a"out 4 years after the f! !n# of the or!#!na co)' a!nt. R$5 found two 'erfected contracts of sa e "etween the Ee e@es and the 'et!t!oners !n%o %!n# the rea 'ro'erty !n 1uest!on. $he f!rst sa e was for -1,050,000.00 and the second was for -1,400,000.00. +n res'ect to the f!rst sa e, the tr!a court he d that <OdPue to the un1ua !f!ed acce'tance "y the ' a!nt!ffs w!th!n the 'er!od set "y the Ee e@es, there conse1uent y ca)e a"out a )eet!n# of the )!nds of the 'art!es not on y as to the o"(ect certa!n "ut a so as to the def!n!te cons!derat!on or cause of the contract. $he second sa e )ere y const!tuted a )ere )od!f!catory no%at!on wh!ch d!d not e4t!n#u!sh the f!rst sa e. +t a so he d that the 6%enue Grou' were "uyers !n "ad fa!th. $he 5ourt of 6''ea s he d that there was a
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

'erfected contract of sa e of the 'ro'erty for -1,050,000.00 "etween the Ee e@es and here!n 'et!t!oners. +t added, howe%er, that such 'erfected contract of sa e was su"se1uent y no%ated. ,owe%er, !t was )utua y w!thdrawn, cance ed and resc!nded "y no%at!on, and was therefore a"andoned "y the 'art!es when 5ar)en Ee e@ $!n# ra!sed the cons!derat!on of the contract "y -350,000.00, thus )a*!n# the 'r!ce -1.4M !nstead of the or!#!na 'r!ce of -1,050,000.00. 3!nce there was no a#ree)ent as to the >second> 'r!ce offered, there was no )eet!n# of )!nds "etween the 'art!es, hence, no contract of sa e was 'erfected. 56 added that, e%en !f there was a#ree)ent as to the 'r!ce and a second contract was 'erfected, the ater contract wou d "e unenforcea" e under the 3tatute of Frauds. +t further he d that such second a#ree)ent, !f there was one, const!tuted a )ere 'ro)!se to se wh!ch was not "!nd!n# for ac* of acce'tance or a se'arate cons!derat!on. I!!*e!/ 1.9 Aas there no%at!on of the f!rst contractD 2.9 Aas there a dou" e sa e of the rea 'ro'erty !n%o %edD He$d/ On 7o1ation No%at!on !s ne%er 'resu)ed: !t )ust "e suff!c!ent y esta" !shed that a %a !d new a#ree)ent or o" !#at!on has e4t!n#u!shed or chan#ed an e4!st!n# one. $he re#!strat!on of a ater sa e )ust "e done !n #ood fa!th to ent!t e the re#!strant to 'r!or!ty !n ownersh!' o%er the %endee !n an ear !er sa e. 6rt!c e 1600 of the 5!%! 5ode 'ro%!des that <=s9a es are e4t!n#u!shed "y the sa)e causes as a other o" !#at!ons, . . . .< 6rt!c e 1231 of the sa)e 5ode states that no%at!on !s one of the ways to w!'e out an o" !#at!on. B4t!nct!%e no%at!on re1u!res: =19 the e4!stence of a 're%!ous %a !d o" !#at!on: =29 the a#ree)ent of a the 'art!es to the new contract: =39 the e4t!n#u!sh)ent of the o d o" !#at!on or contract: and =49 the %a !d!ty of the new one. No%at!on !s effected on y when a new contract has e4t!n#u!shed an ear !er contract "etween the sa)e 'art!es. +t )ust "e 'ro%en as a fact e!ther

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"y e4'ress st!'u at!on of the 'art!es or "y !)' !cat!on der!%ed fro) an !rreconc! a" e !nco)'at!"! !ty "etween o d and new o" !#at!ons or contracts. $he 'et!t!oners and the Ee e@es c ear y d!d not 'erfect a new contract "ecause the essent!a re1u!s!te of consent was a"sent, the 'art!es ha%!n# fa! ed to a#ree on the ter)s of the 'ay)ent. 3!nce the 'art!es fa! ed to enter !nto a new contract that cou d ha%e e4t!n#u!shed the!r 're%!ous y 'erfected contract of sa e, there can "e no no%at!on of the atter. 5onse1uent y, the f!rst sa e of the 'ro'erty !n contro%ersy, "y the Ee e@es to 'et!t!oners for -1,050,000.00, re)a!ned %a !d and e4!st!n#. On (ouble Sale -r!or re#!strat!on of the d!s'uted 'ro'erty "y the second "uyer does not "y !tse f confer ownersh!' or a "etter r!#ht o%er the 'ro'erty. 6rt!c e 1544 re1u!res that such re#!strat!on )ust "e cou' ed w!th #ood fa!th. Lnow ed#e #a!ned "y the f!rst "uyer of the second sa e cannot defeat the f!rst "uyer>s r!#hts e4ce't where the second "uyer re#!sters !n good +aith the second sa e ahead of the f!rst, as 'ro%!ded "y the 5!%! 5ode. Lnow ed#e #a!ned "y the second "uyer of the f!rst sa e defeats h!s r!#hts e%en !f he !s f!rst to re#!ster the second sa e, s!nce such *now ed#e ta!nts h!s 'r!or re#!strat!on w!th "ad fa!th =6rt. 15449. $he 6%enue Grou' was a "uyer and re#!strants !n "ad fa!th. $hey had actua *now ed#e of the Ee e@es> 'r!or sa e of the sa)e 'ro'erty to the 'et!t!oners. ,ence, the th!rd and not the second 'ara#ra'h of 6rt!c e 1544 shou d "e a'' !ed to th!s case. &nder th!s 'ro%!s!on, 'et!t!oners are ent!t ed to the ownersh!' of the 'ro'erty "ecause they were f!rst !n actua 'ossess!on, ha%!n# "een the 'ro'erty>s essees and 'ossessors for decades 'r!or to the sa e. =$he 'et!t!on !s GR6N$B;. $he assa! ed ;ec!s!on of the 5ourt of 6''ea s !s here"y 3B$ 63+;B and the d!s'os!t!%e 'ort!on of the tr!a court>s dec!s!on dated 2cto"er 1/, 1//0 !s RBE+EB; w!th the fo ow!n# M2;+F+56$+2N W
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

the cons!derat!on to "e 'a!d under 'ar. 2 of the d!s'os!t!on !s -1,050,000.00 and not -1,400,000.00.9

.INAL.AGAN TECH., INC. "!. COURT OF A##EALS G.R. No. 1005/4 =21/35R6...9 $h!rd ;!%!s!on MB?2, J.4 March 10, 1//3

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*acts: 2n May 11, 1/6., 'r!%ate res'ondents, throu#h 6n#e !na -. Bchaus, !n her ca'ac!ty as Jud!c!a 6d)!n!strator of the !ntestate estate of ?u!s 8. -uente%e a, e4ecuted a 5ontract to 3e and a ;eed of 3a e of 42 su"d!%!s!on ots w!th!n the -h!"0Lh!* 3u"d!%!s!on of the -uente%e a fa)! y, con%ey!n# and transferr!n# sa!d ots to 'et!t!oner 8!na "a#an $ech., +nc. +n turn 8!na "a#an, throu#h !ts 'res!dent, 'et!t!oner ,er)! o J. Na%a, e4ecuted an 6c*now ed#)ent of ;e"t w!th Mort#a#e 6#ree)ent, )ort#a#!n# sa!d ots !n fa%or of the estate of -uente%e a. &'on the transfer to 8!na "a#an of t!t es to the 42 su"d!%!s!on ots, sa!d 'et!t!oner too* 'ossess!on of the ots and the "u! d!n# and !)'ro%e)ents thereon. 8!na "a#an started o'erat!n# a schoo on the 'ro'erty fro) 1/6. when the t!t es and 'ossess!on of the ots were transferred to !t. $here was a 'end!n# case !n%o %!n# the sa!d 'ro'erty. $he !ntestate estate of the ate ?u!s 8. -uente%e a so d sa!d ots to Rau Ja%e ana w!th the cond!t!on that the %endee0 'ro)!see wou d not transfer h!s r!#hts to sa!d ots w!thout the e4'ress consent of -uente%e a and that !n case of the cance at!on of the contract "y reason of the %!o at!on of any of the ter)s thereof, a 'ay)ents therefore )ade and a !)'ro%e)ents !ntroduced on the 'ro'erty sha 'erta!n to the 'ro)!ssor and sha "e cons!dered as renta s for the use and occu'at!on thereof. Ja%e ana ha%!n# fa! ed to 'ay the !nsta )ents for a 'er!od of f!%e years, the case was f! ed "y defendant -uente%e a a#a!nst h!). Jud#)ent was rendered !n fa%or of -uente%e a. - a!nt!ffs !n the !nstant case on a''ea f! ed the!r $h!rd0 -arty 5 a!) "ased on an a e#ed ;eed of 3a e e4ecuted !n the!r fa%or "y s'ouses Jose and ?o !ta ?o'e@, thus -uente%e a was constra!ned to assert 'hys!ca 'ossess!on of the 're)!ses to counteract the f!ct!t!ous and unenforcea" e c a!) of here!n ' a!nt!ffs. 56 !ssued a wr!t of 're !)!nary !n(unct!on, thus, defendant -uente%e a was restored to the 'ossess!on of the ots and "u! d!n#s su"(ect of th!s case. - a!nt!ffs f! ed a 'et!t!on for re%!ew w!th the 3u're)e 5ourt wh!ch !ssued a restra!n!n# order a#a!nst the sa e of the 'ro'ert!es c a!)ed "y the s'ouses0' a!nt!ffs O!n 6"!erra %s. 5ourt of 6''ea s, 45 35R6 314P.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Ahen the 3u're)e 5ourt d!sso %ed the aforesa!d !n(unct!on !ssued "y the 5ourt of 6''ea s, 'ossess!on of the "u! d!n# and other 'ro'erty was ta*en fro) 'et!t!oner 8!na "a#an and #!%en to the th!rd0'arty c a!)ants, the de a 5ru@ s'ouses. -et!t!oner 8!na "a#an transferred !ts schoo to another ocat!on. 6fter 'et!t!oner 8!na "a#an was a#a!n ' aced !n 'ossess!on of the su"d!%!s!on ots, 'r!%ate res'ondent 6n#e !na Bchaus de)anded 'ay)ent fro) 'et!t!oner 8!na "a#an for the su"d!%!s!on ots, enc os!n# !n the etter of de)and a state)ent of account as of 3e'te)"er 1/72 show!n# a tota a)ount due of -36.,50/./3, re'resent!n# the 'r!ce of the and and accrued !nterest as of that date. 6s 'et!t!oner 8!na "a#an fa! ed to effect 'ay)ent, Bchaus f! ed on 2cto"er 7, 1/72 5!%! 5ase No. 1354 w!th the R$5 !n ,!)a)ay an, Ne#ros 2cc!denta a#a!nst 'et!t!oners for reco%ery of t!t e and da)a#es. Bchaus f! ed an a)ended co)' a!nt "y !nc ud!n# her )other, "rothers, and s!sters as co0' a!nt!ffs. $he tr!a court rendered a dec!s!on !n fa%or of the defendants. -r!%ate res'ondents a''ea ed to the 56 wh!ch re%ersed and set as!de the a''ea ed dec!s!on. $hus, th!s 'et!t!on for re%!ew on certiorari where!n 'et!t!oners ass!#n the fo ow!n# a e#ed errors of the 5ourt of 6''ea s:

Issue4 Ahether 'r!%ate res'ondents> cause of act!on !n 5!%! 5ase No. 1354 !s "arred "y 'rescr!'t!on.

.uling4 -et!t!on !s ;BN+B; and the dec!s!on of the 5ourt of 6''ea s !n 560G.R. 5E No. 24635 !s 6FF+RMB;. 6 'arty to a contract cannot de)and 'erfor)ance of the other 'arty>s o" !#at!ons un ess he !s !n a 'os!t!on to co)' y w!th h!s own o" !#at!ons. 3!)! ar y, the r!#ht to resc!nd a contract can "e de)anded on y !f a 'arty thereto !s ready, w! !n# and a" e to co)' y w!th h!s own o" !#at!ons thereunder =6rt. 11/1, !i1il !ode: 3e%a %s. 8erw!n, 47 -h! . 571 O1/26P: -aras,
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5!%! 5ode of the -h! !''!nes, 12th ed. Eo . +E, '. 2009. +n a contract of sa e, the %endor !s "ound to transfer the ownersh!' of and de !%er, as we as warrant, the th!n# wh!ch !s the o"(ect of the sa e =6rt. 14/5, !i1il !ode9: he warrants that the "uyer sha , fro) the t!)e ownersh!' !s 'assed, ha%e and en(oy the e#a and 'eacefu 'ossess!on of the th!n# 0 6rt. 154.. +n a contract of sa e, un ess a contrary !ntent!on a''ears, there !s: =19 6n !)' !ed warranty on the 'art of the se er that he has a r!#ht to se the th!n# at the t!)e when the ownersh!' !s to 'ass, and that the "uyer sha fro) that t!)e ha%e and en(oy the e#a and 'eacefu 'ossess!on of the th!n#. $he 'er!od of 'rescr!'t!on was !nterru'ted, "ecause fro) 1/.4 u' to 1/72, the a''e ants the)se %es cou d not ha%e restored unto the a''e ees the 'ossess!on of the 42 su"d!%!s!on ots 'rec!se y "ecause of the 're !)!nary !n(unct!on )ent!oned e sewhere. 5onse1uent y, the a''e ants cou d not ha%e 'ros'ered !n any su!t to co)'e 'erfor)ance or 'ay)ent fro) the a''e ees0"uyers, "ecause the a''e ants the)se %es were !n no 'os!t!on to 'erfor) the!r own corres'ond!n# o" !#at!on to de !%er to and )a!nta!n sa!d "uyers !n 'ossess!on of the ots su"(ect )atter of the sa e.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page !!

RO.ERTO Z. <ACHUCA

LAFORTEZA

"!.

ALONZO

G.R. No. 13.552. June 16, 2000 =33335R66439 $h!rd ;!%!s!on G2NX6G6YRBKB3, J.

2n 2cto"er 17, 1/7/, ' a!nt!ff sent the defendant he!rs a etter re1uest!n# for an e4tens!on of the 30 ;6K3. 2n No%e)"er 15, 1/7/, ' a!nt!ff !nfor)ed the defendant he!rs, throu#h defendant Ro"erto X. ?aforte@a, that he a ready had the "a ance -600,000.00 co%ered "y &n!ted 5oconut - anters 8an* Mana#ers 5hec*. ,owe%er, the defendants, refused to acce't the "a ance ;efendant Ro"erto X. ?aforte@a had to d h!) that the su"(ect 'ro'erty was no on#er for sa e. 2n No%e)"er 20, 1//7, defendants !nfor)ed the ' a!nt!ff that they were cance !n# the M26 !n %!ew of the ' a!nt!ffs fa! ure to co)' y w!th h!s contractua o" !#at!ons. $hereafter, ' a!nt!ff re!terated h!s re1uest to tender 'ay)ent of the "a ance. ;efendants, howe%er, !ns!sted on the resc!ss!on of the M26. - a!nt!ff f! ed the !nstant act!on for s'ec!f!c 'erfor)ance. $he ower court rendered (ud#)ent !n fa%or of the ' a!nt!ff. -et!t!oners a''ea ed to the 5ourt of 6''ea s, wh!ch aff!r)ed w!th )od!f!cat!on the dec!s!on of the ower court. Mot!on for Recons!derat!on was den!ed "ut the ;ec!s!on was )od!f!ed so as to a"so %e Gon@a o X. ?aforte@a, Jr. fro) !a"! !ty for the 'ay)ent of )ora da)a#es. ,ence th!s 'et!t!on.

*acts4 2n 6u#ust 2, 1/77, defendants ?ea Xu ueta0?aforte@a and M!chae X. ?aforte@a "oth e4ecuted a 3'ec!a -ower of 6ttorney =3-69 !n fa%or of defendants Ro"erto and Gon@a o X. ?aforte@a, Jr., a''o!nt!n# "oth as her 6ttorney0 !n0fact author!@!n# the) (o!nt y to se the su"(ect 'ro'erty and s!#n any docu)ent for the sett e)ent of the estate of the ate Franc!sco H. ?aforte@a. 8oth a#ency !nstru)ents conta!ned a 'ro%!s!on that !n any docu)ent or 'a'er to e4erc!se author!ty #ranted, the s!#nature of "oth attorneys0!n0fact )ust "e aff!4ed. 2n 2cto"er 2., 1/77, defendant ;enn!s X. ?aforte@a e4ecuted an 3-6 !n fa%or of defendant Ro"erto X. ?aforte@a for the 'ur'ose of se !n# the su"(ect 'ro'erty. 6 year ater, ;enn!s X. ?aforte@a e4ecuted another 3-6 !n fa%or of defendants Ro"erto and Gon@a o ?aforte@a, Jr. na)!n# "oth attorneys0!n0fact for the 'ur'ose of se !n# the su"(ect 'ro'erty and s!#n!n# any docu)ent for the sett e)ent of the estate of the ate Franc!sco H. ?aforte@a. 2n January 20, 1/7/, the he!rs of the ate Franc!sco H. ?aforte@a re'resented "y Ro"erto X. ?aforte@a and Gon@a o X. ?aforte@a, Jr. entered !nto a Me)orandu) of 6#ree)ent =M26O5ontract to 3e P9 w!th the ' a!nt!ff o%er the su"(ect 'ro'erty for the su) of -630,000.00. 2n January 20, 1/7/, ' a!nt!ff 'a!d the earnest )oney of -30,000.00, ' us renta s for the su"(ect 'ro'erty. 2n 3e'te)"er 17, 1//7 , defendant he!rs, throu#h the!r counse wrote a etter to the ' a!nt!ff furn!sh!n# the atter a co'y of the reconst!tuted t!t e to the su"(ect 'ro'erty, ad%!s!n# h!) that he had 30 days to 'roduce the "a ance of -600,000.00 under the Me)orandu) of 6#ree)ent wh!ch ' a!nt!ff rece!%ed on the sa)e date.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Issues4 A the Me)orandu) of 6#ree)ent !s a )ere contract to se , as !nd!cated !n !ts t!t e.

.uling4 56 dec!s!on !s 6FF+RMB; and the !nstant 'et!t!on !s here"y ;BN+B;.

6 'erusa of the M26 shows that the transact!on "etween the 'et!t!oners and the res'ondent was one of sa e and ease. 6 contract of sa e !s a consensua contract and !s 'erfected at the )o)ent there !s a )eet!n# of the )!nds u'on the th!n# wh!ch !s the o"(ect of the contract and u'on the 'r!ce. Fro) that )o)ent the 'art!es )ay rec!'roca y de)and 'erfor)ance su"(ect to the 'ro%!s!ons of the aw
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#o%ern!n# the for) of contracts. $he e e)ents of a %a !d contract of sa e under 6rt!c e 1457 of the 5!%! 5ode are =19 consent or )eet!n# of the )!nds: =29 deter)!nate su"(ect )atter and =39 'r!ce certa!n !n )oney or !ts e1u!%a ent. +n the case at "ench, there was a 'erfected a#ree)ent "etween the 'et!t!oners and the res'ondent where"y the 'et!t!oners o" !#ated the)se %es to transfer the ownersh!' of and de !%er the house and ot and the res'ondent to 'ay the 'r!ce a)ount!n# to -600,000.00. 6 the e e)ents of a contract of sa e were thus 'resent. ,owe%er, the "a ance of the 'urchase 'r!ce was to "e 'a!d on y u'on the !ssuance of the new cert!f!cate of t!t e !n !eu of the one !n the na)e of the ate Franc!sco ?aforte@a and u'on the e4ecut!on of an e4tra(ud!c!a sett e)ent of h!s estate. -r!or to the !ssuance of the <reconst!tuted< t!t e, the res'ondent was a ready ' aced !n 'ossess!on of the house and ot as essee thereof for s!4 )onths at a )onth y rate of -3,500.00. $he s!40)onth 'er!od dur!n# wh!ch the res'ondent wou d "e !n 'ossess!on of the 'ro'erty as essee, was c ear y not a 'er!od w!th!n wh!ch to e4erc!se an o't!on. 6n o't!on !s a contract #rant!n# a 'r!%! e#e to "uy or se w!th!n an a#reed t!)e and at a deter)!ned 'r!ce. 6n o't!on contract !s a se'arate and d!st!nct contract fro) that wh!ch the 'art!es )ay enter !nto u'on the consu))at!on of the o't!on. 6n o't!on )ust "e su''orted "y cons!derat!on. 6n o't!on contract !s #o%erned "y the second 'ara#ra'h of 6rt!c e 14./ of the 5!%! 5ode. I6n acce'ted un! atera 'ro)!se to "uy or to se a deter)!nate th!n# for a 'r!ce certa!n !s "!nd!n# u'on the 'ro)!ssor !f the 'ro)!se !s su''orted "y a cons!derat!on d!st!nct fro) the 'r!ce.< +n the 'resent case, the s!40)onth 'er!od )ere y de ayed the de)anda"! !ty of the contract of sa e and d!d not deter)!ne !ts 'erfect!on for after the e4'!rat!on of the s!40)onth 'er!od, there was an a"so ute o" !#at!on on the 'art of the 'et!t!oners and the res'ondent to co)' y w!th the ter)s of the sa e.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page !#

Jon and <a i!!a De ?!a!i "!. A t* o and E!te$a A 3eo G.R. No. 136576 No%e)"er 22, 2001 Mendo@a, J. 3econd ;!%!s!on

+ssue: A2N there was an !)' !ed wa!%er of re'a!rs !nc ud!n# re'a!rs for h!dden and un*nown defects "y the essee.

Facts: 2n 2cto"er 1, 1/77, s'ouses Jon and Mar!ssa de Ksas! eased fro) s'ouses 6rturo and Bste a 6rceo, the atter>s 're)!ses !n order to carry on the!r "us!ness of hand 'a!nt!n# and f!n!sh!n# ser%!ces. -et!t!oners 'a!d -5,000.00 as #oodw! )oney and -15,000.00 as de'os!t for three )onths. +t a''ears that due to hea%y ra!ns, the roof of the "u! d!n# ea*ed and the 're)!ses were f ooded, as a resu t of wh!ch the schedu e of the de !%ery of hand 'a!nted )o d!n#s to 'et!t!oners> custo)ers was d!sru'ted. 6 thou#h 'et!t!oners as*ed res'ondents to )a*e the necessary re'a!rs, the atter re'a!red on y a 'ort!on of the eased 're)!ses. 5onse1uent y, 'et!t!oners sto''ed 'ay!n# rent as we as the!r share of the e ectr!c, water, and te e'hone "! s fro) ;ece)"er 1/77 u' to the t!)e they %acated the eased 're)!ses !n June 1/7/. Res'ondents !n turn f! ed an e(ect)ent su!t a#a!nst 'et!t!oners !n the Metro'o !tan $r!a 5ourt. +n !ts dec!s!on, the Me$5, wh! e ru !n# that 'et!t!oners were (ust!f!ed !n sus'end!n# the 'ay)ent of rent, ordered the de'os!ts )ade "y the) to "e a'' !ed to the 'ay)ent of renta s u' to June 1/7/ and d!rected the) to 'ay the) e ectr!c and water "! s. 2n a''ea to the Re#!ona $r!a 5ourt, the dec!s!on was )od!f!ed !nas)uch as 'et!t!oners were ordered to 'ay -20,000.00 as "a ance of the!r renta s u' to the t!)e they %acated the 're)!ses. -et!t!oners then f! ed a co)' a!nt !n the Re#!ona $r!a 5ourt, for s'ec!f!c 'erfor)ance or resc!ss!on of contract w!th da)a#es, wh!ch they su"se1uent y chan#ed to a c a!) for da)a#es !n %!ew of the e4'!rat!on of the ease contract. $he tr!a court, howe%er, d!s)!ssed the co)' a!nt and ordered 'et!t!oners to 'ay res'ondents the su)s of -5,000.00 as attorney>s fees and -20,000.00 as "ac* renta s, w!th !nterest at the e#a rate. 2n a''ea to the 5ourt of 6''ea s, the dec!s!on was aff!r)ed. -et!t!oners> )ot!on for recons!derat!on was su"se1uent y den!ed.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Ru !n#: ;ec!s!on of 5ourt of 6''ea s aff!r)ed w!th )od!f!cat!on that the order for 'ay)ent of un'a!d renta s w!th !nterest to res'ondents !s de eted.

Rat!o: -et!t!oners anchor the!r co)' a!nt for da)a#es on res'ondents> fa! ure, as essors, to )a*e the necessary re'a!rs on the eased 're)!ses as 'ro%!ded !n 6rt. 1654=29 of the 5!%! 5ode. $he 5ourt of 6''ea s he d that under the contract of ease of the 'art!es, there was an !)' !ed wa!%er of r!#ht to de)and re'a!rs to "e )ade "y the essee. $he records show that res'ondent Mrs. 6rceo caused certa!n re'a!rs to "e done on the eased 're)!ses at the re1uest of 'et!t!oners, a thou#h the atter a e#ed that the re'a!rs )ade were !nade1uate. $h!s fact !nd!cates that there was no !)' !ed wa!%er of re'a!rs on the 'art of the essee. For 6rt. 13.1 of the 5!%! 5ode 'ro%!des that I+n order to (ud#e the !ntent!on of the contract!n# 'art!es, the!r conte)'oraneous and su"se1uent acts shou d "e 'r!nc!'a y cons!dered.J

&nder 6rts. 1561 and 1653 of the 5!%! 5ode, the essor !s res'ons!" e for warranty a#a!nst h!dden defects, "ut he !s not answera" e for 'atent defects or those, wh!ch are %!s!" e. -et!t!oner Jon de Ksas! ad)!tted on cross0e4a)!nat!on that he !ns'ected the 're)!ses three or four t!)es "efore s!#n!n# the ease contract. ;ur!n# h!s !ns'ect!on, he not!ced the rotten ' ywood on the ce! !n#, wh!ch !n h!s o'!n!on was caused "y ea*!n# water or ter)!tes. Ket, he dec!ded to #o throu#h w!th the ease a#ree)ent. ,ence, res'ondents cannot "e he d !a" e for the a e#ed warranty a#a!nst h!dden defects.

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Co3aACo$a .ott$e ! #1i$ippine!, In3. "!. T1e Hono a5$e Co* t o2 Appea$! and <!. L6dia Ge oni0o G.R. No. 1102/5 2cto"er 17, 1//3 ;a%!de, Jr., J, F!rst ;!%!s!on

defects of or encu)"rances u'on the th!n# so d are not !)!ted to those 'rescr!"ed !n 6rt!c e 156. of the 5!%! 5ode wh!ch 'ro%!des: 6rt. 156.. +n the case of 6rt!c es 1561, 1562, 1564, 1565 and 1566, the %endee )ay e ect "etween w!thdraw!n# fro) the contract and de)and!n# a 'ro'ort!onate reduct!on of the 'r!ce, w!th da)a#es e!thercase. $he %endee )ay a so as* for the annu )ent of the contract u'on 'roof of error or fraud, !n wh!ch case the ord!nary ru e on o" !#at!ons sha "e a'' !ca" e. &nder the aw on o" !#at!ons, res'ons!"! !ty ar!s!n# fro) fraud !s de)anda" e !n a o" !#at!ons and any wa!%er of an act!on for future fraud !s %o!d. Res'ons!"! !ty ar!s!n# fro) ne# !#ence !s a so de)anda" e !n any o" !#at!on, "ut such !a"! !ty )ay "e re#u ated "y the courts, accord!n# to the c!rcu)stances. $hose #u! ty of fraud, ne# !#ence, or de ay !n the 'erfor)ance of the!r o" !#at!ons and those who !n any )anner contra%ene the tenor thereof are !a" e for da)a#es. $he %endor cou d !*ew!se "e !a" e for ;uasi% delict under 6rt!c e 21.6 of the 5!%! 5ode, and an act!on "ased thereon )ay "e "rou#ht "y the %endee. Ah! e !t )ay "e true that the 're0 e4!st!n# contract "etween the 'art!es )ay, as a #enera ru e, "ar the a'' !ca"! !ty of the aw on ;uasi%delict, the !a"! !ty )ay !tse f "e dee)ed to ar!se fro) ;uasi%delict, !.e., the acts wh!ch "rea*s the contract )ay a so "e a ;uasi%delict.

Facts: ?yd!a ?. Geron!)o was the 'ro'r!etress of L!nder#arten Aonder and 5anteen !n ;a#u'an 5!ty, an enter'r!se en#a#ed !n the sa e of soft dr!n*s =!nc ud!n# 5o*e and 3'r!te9 and other #oods to the students of L!nder#arten Aonder and and to the 'u" !c. 2n or a"out 6u#ust 12 1/7/, so)e 'arents of the students co)' a!ned to her that the 5o*e and 3'r!te soft dr!n*s so d "y her conta!ned f!"er0 !*e )atter and other fore!#n su"stances or 'art!c es. 3he then went o%er her stoc* of softdr!n*s and d!sco%ered the 'resence of so)e f!"er0 !*e su"stances !n the contents of so)e uno'ened 5o*e "ott es and a ' ast!c )atter !n the contents of an uno'ened 3'r!te "ott e. 3he "rou#ht the sa!d "ott es to the Re#!ona ,ea th 2ff!ce of the ;e'art)ent of ,ea th at 3an Fernando, ?a &n!on, for e4a)!nat!on. 3he rece!%ed a etter fro) the ;e'art)ent of ,ea th !nfor)!n# her that the sa)' es she su")!tted <are adu terated:< as a conse1uence of the d!sco%ery of the fore!#n su"stances !n the "e%era#es, her sa es of soft dr!n*s se%ere y ' u))eted fro) the usua 10 cases 'er day to as ow as 2 to 3 cases 'er day resu t!n# !n osses of fro) -200.00 to -300.00 'er day, and not on# after that she had to ose sho' on ;ece)"er 12 1/7/, she "eca)e (o" ess and dest!tute. 3he de)anded fro) the 'et!t!oner the 'ay)ent of da)a#es "ut was re"uffed "y !t.

+ssue: A2N the su"se1uent act!on for da)a#es "y the 'ro'r!etress a#a!nst the soft dr!n*s )anufacturer shou d "e treated as one for "reach of !)' !ed warranty a#a!nst h!dden defects or )erchanta"! !ty.

Ru !n#: -et!ton den!ed.

Rat!o: $he %endee>s re)ed!es a#a!nst a %endor w!th res'ect to the warrant!es a#a!nst h!dden
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page !9

Ino3en3io ?* Dino "!. Co* t o2 Appea$! June 20, 2001 35/ 35R6 /1 Ahether the contract "etween the contract!n# 'art!es !s a contract of sa e or a contract for a '!ece of wor* G.R. No. 113564 +33&B:

F!rst ;!%!s!on -uno, J.: F65$3: -et!t!oners s'ouses ;!noare en#a#ed !n the "us!ness of )anufactur!n# and se !n# sh!rts.1 Res'ondent 3!o !s 'art owner and #enera )ana#er of a )anufactur!n# cor'orat!on do!n# "us!ness under the trade na)e <&n!%ersa $oy Master Manufactur!n#.< -et!t!oners and res'ondent 3!o entered !nto a contract where"y the atter wou d )anufacture for the 'et!t!oners 20,000 '!eces of %!ny fro#s and 20,000 '!eces of %!ny )ooseheads at -..00 'er '!ece !n accordance w!th the sa)' e a''ro%ed "y the 'et!t!oners. $hese fro#s and )ooseheads were to "e attached to the sh!rts 'et!t!oners wou d )anufacture and se . Res'ondent 3!o de !%ered !n se%era !nsta )ents the 40,000 '!eces of fro#s and )ooseheads. -et!t!oner fu y 'a!d the a#reed 'r!ce. 3u"se1uent y, 'et!t!oners returned to res'ondent 2/,..2 '!eces of fro#s and )ooseheads for fa! !n# to co)' y w!th the a''ro%ed sa)' e. -et!t!oners then de)anded fro) the res'ondent a refund of the 'urchase 'r!ce of the returned #oods !n the a)ount of -207,404.00. 6s res'ondent 3!o refused to 'ay. -et!t!oners f! ed act!on for co ect!on of a su) of )oney. R$5 ru ed !n fa%or of the 'et!oners. Res'ondent 3!o sou#ht recourse !n the 5ourt of 6''ea s. $he a''e ate court aff!r)ed the tr!a court dec!s!on. Res'ondent then f! ed a Mot!on for Recons!derat!on and a 3u'' e)enta Mot!on for Recons!derat!on a e#!n# there!n that the 'et!t!oners> act!on for co ect!on of su) of )oney "ased on a "reach of warranty had a ready 'rescr!"ed. 2n January 24, 1//4, the res'ondent court re%ersed !ts dec!s!on and d!s)!ssed 'et!t!oners> 5o)' a!nt for ha%!n# "een f! ed "eyond the 'rescr!'t!%e 'er!od. ,ence, th!s 'et!t!on.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Ahether the res'ondent !s res'ons!" e for the warranty a#a!nst h!dden defects R&?+NG: -et!t!on !s ;BN+B;. $he contract "etween the 'et!t!oners and res'ondent st!'u ated that res'ondent wou d )anufacture u'on order of the 'et!t!oners 20,000 '!eces of %!ny fro#s and 20,000 '!eces of %!ny )ooseheads accord!n# to the sa)' es s'ec!f!ed and a''ro%ed "y the 'et!t!oners. Res'ondent 3!o d!d not ord!nar! y )anufacture these 'roducts, "ut on y u'on order of the 'et!t!oners and at the 'r!ce a#reed u'on. 5 ear y, the contract e4ecuted "y and "etween the 'et!t!oners and the res'ondent was a contract for a '!ece of wor*. 6t any rate, whether the a#ree)ent "etween the 'art!es was one of a contract of sa e or a '!ece of wor*, the 'ro%!s!ons on warranty of t!t e a#a!nst h!dden defects !n a contract of sa e a'' y to the case at "ar. 6 h!dden defect !s one wh!ch !s un*nown or cou d not ha%e "een *nown to the %endee.

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D.< Gen3e!$ao and A!!o3iate!, In3. V!. Read6 Cont adin+ and Con!t *3tion Co p. June 2/, 2004 G.R. No. 154106 3econd ;!%!s!on H&+3&M8+NG, J.:

F65$3: ABN5B3?62 had a contract w!th the -u" !c Bstates 6uthor!ty =-B69 for the !)'ro%e)ent of the )a!n e4'ressway !n the R01 $o -ro(ect a on# the 5oasta Road !n -araQa1ue 5!ty. $o fu f! !ts o" !#at!ons to the -B6, ABN5B3?62 entered !nto a contract w!th RB6;K52N. RB6;K52N a#reed to se to ABN5B3?62 as'ha t )ater!a s %a ued at -1,1.7,307..5. &nder the contract, ABN5B3?62 was "ound to 'ay res'ondent a twenty 'ercent =20U9 down'ay)ent, or -235,661..5, u'on de !%ery of the )ater!a s contracted for. $he "a ance of the contract 'r!ce, a)ount!n# to -/42,64., was to "e 'a!d w!th!n f!fteen =159 days thereof. +t was further st!'u ated "y the 'art!es that res'ondent was to furn!sh, de !%er, ay, ro the as'ha t, and !f necessary, )a*e the needed correct!ons on a 're'ared "ase at the (o"s!te. F!fteen =159 days after 'erfor)ance of sa!d wor*, RB6;K52N de)anded that ABN5B3?62 'ay the "a ance of the contract 'r!ce. ABN5B3?62, howe%er, !#nored sa!d de)and.2n May 30, 1//1, the counse for RB6;K52N wrote a de)and etter to ABN5B3?62 as*!n# that !t )a*e #ood on the "a ance !t owed. 6#a!n, ABN5B3?62 fa! ed to heed the de)and. +t d!d not e%en "other to re' y to the de)and etter. RB6;K52N f! ed a co)' a!nt w!th the R$5 of -as!# 5!ty for co ect!on of a su) of )oney and da)a#es, w!th 'rayer for wr!t of 're !)!nary attach)ent a#a!nst ;.M. Aences ao andCor ;o)!nador ;ayr!t. +n the 'roceed!n#s "e ow, ABN5B3?62 ad)!tted that !t owed RB6;K52N -1,014,110.45 !ndeed. ,owe%er, !t a e#ed that the!r contract was not )ere y one of sa e "ut a so of ser%!ce, na)e y, that res'ondent sha ay the as'ha t !n accordance w!th the s'ec!f!cat!ons and standards !)'osed "y and acce'ta" e to the #o%ern)ent. ABN5B3?62 a so a e#ed that s!nce the contract d!d not !nd!cate th!s cond!t!on w!th res'ect to the 'er!od w!th!n wh!ch the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

"a ance )ust "e 'a!d, the contract fa! ed to ref ect the true !ntent!on of the 'art!es.12 +t a e#ed RB6;K52N a#reed that the "a ance !n the 'ay)ents wou d "e sett ed on y after the #o%ern)ent had acce'ted RB6;K52NFs wor* as to !ts 1ua !ty !n ay!n# the as'ha t. 8y way of counterc a!), ABN5B3?62 'rayed for the 'ay)ent of da)a#es caused "y the f! !n# of RB6;K52NFs co)' a!nt and the !ssuance of the wr!t of attach)ent des'!te ac* of cause. R$5 ru ed !n fa%or of the 'et!t!oner. 56 aff!r)ed. ,ence th!s 'et!t!on.

+33&B: Aas the o" !#at!on of ABN5B3?62 to 'ay RB6;K52N a ready due and de)anda" e as of May 30, 1//1.

R&?+NG: -et!t!on ;en!ed. &nder 6rt!c e 1572 of the 5!%! 5ode, the "uyer !s o" !#ed to 'ay the 'r!ce of the th!n# so d at the t!)e st!'u ated !n the contract. 8oth the R$5 and the a''e ate court found that the 'art!esF contract stated that the "uyer sha 'ay the )anufacturer the a)ount of -1,1.7,307..5. Fo ow!n# the ru e on !nter'retat!on of contracts, no other e%!dence sha "e ad)!ss!" e other than the or!#!na docu)ent !tse f,26 e4ce't when a 'arty 'uts !n !ssue !n h!s ' ead!n# the fa! ure of the wr!tten a#ree)ent to e4'ress the true !ntent of the 'art!es. ,owe%er, to ru e on whether the wr!tten a#ree)ent fa! ed to e4'ress the true !ntent of the 'art!es wou d enta! ha%!n# th!s 5ourt ree4a)!ne the facts. $he f!nd!n#s of the tr!a court as aff!r)ed "y the a''e ate court on th!s !ssue, howe%er, "!nd us now. For !n a 'et!t!on for cert!orar! under Ru e 45 of the 1//. Ru es of 5!%! -rocedure, th!s 5ourt )ay not re%!ew the f!nd!n#s of fact a o%er a#a!n. 3uff!ce !t to say, howe%er, that the f!nd!n#s "y the R$5, then aff!r)ed "y the 56, that the e4tra cond!t!on "e!n# !ns!sted u'on "y the 'et!t!oners !s not found !n the sa es contract "etween the 'art!es. ,ence !t cannot "e used to 1ua !fy the rec*on!n# of the 'er!od for 'ay)ent. 8es!des, te !n#
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a#a!nst 'et!t!oner ABN5B3?62 !s !ts fa! ure st! to 'ay the un'a!d account, des'!te the fact of the wor*Fs acce'tance "y the #o%ern)ent a ready

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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.INTEGRATED %s.

#ACBAGING

COR#.,

COURT OF A##EALS and FILAANCHOR #A#ER CO., INC., JG.R. No. %%:%%'K J*ne @, ,---K Se3ond Di"i!ionL MUISU<.ING, J. FACTS +nte#rated -ac*a#!n# 5or' ='et!t!oner9 and F! 0 6nchor -a'er 5o. +nc. =res'ondent9 e4ecuted on May 5, 1/.7, an order a#ree)ent where"y res'ondent "ound !tse f to de !%er to 'et!t!oner 3,450 rea)s of 'r!nt!n# 'a'er. $he )ater!a s were to "e 'a!d w!th!n a )!n!)u) of th!rty days and )a4!)u) of n!nety days fro) de !%ery. Res'ondent f! ed w!th the Re#!ona $r!a 5ourt =R$59 a co ect!on su!t a#a!nst 'et!t!oner for the su) of -.66,101..0, re'resent!n# the un'a!d 'urchase 'r!ce of 'r!nt!n# 'a'er "ou#ht "y 'et!t!oner on cred!t. +n !ts counterc a!), the 'et!t!oner den!ed the )ater!a a e#at!ons of the co)' a!nt. +t a e#ed that res'ondent de !%ered on y 1,0/. rea)s of 'r!nt!n# 'a'er wh!ch was short of 2,7.5 rea)s, !n tota d!sre#ard of the!r a#ree)ent and a so fa! ed to de !%er the "a ance of the 'r!nt!n# 'a'er des'!te de)and therefor, hence, 'et!t!oner suffered actua da)a#es and fa! ed to rea !@e e4'ected 'rof!ts.

not for the fa! ure or de ay of res'ondent to de !%er 'r!nt!n# 'a'er, 'et!t!oner cou d ha%e so d "oo*s to -h! acor and rea !@ed 'rof!t of -./0,324.30 fro) the sa e. 3+nce that 'et!t!oner suffered a d!s ocat!on of "us!ness on account of oss of contracts and #oodw! as a resu t of res'ondent>s %!o at!on of !ts o" !#at!on, the for)er !s ent!t ed to )ora da)a#es. $he 5ourt of 6''ea s =569 re%erse and set as!de the (u#d#)ent. +t de eted the award of -./0,324.30 as co)'ensatory da)a#es as we as the award of )ora da)a#es and attorney>s fees, for ac* of factua and e#a "as!s. ,ence th!s 'et!t!on. ISSUE Ahether or not the res'ondent %!o ated the order a#ree)ent RULING -B$+$+2N ;BN+B;. $he res'ondent d!d not %!o ate the order a#ree)ent when the atter fa! ed to de !%er the "a ance of the 'r!nt!n# 'a'er on the dates a#reed u'on. $he transact!on "etween the 'art!es !s a contract of sa e where"y res'ondent =se er9 o" !#ates !tse f to de !%er 'r!nt!n# 'a'er to 'et!t!oner ="uyer9 wh!ch, !n turn, "!nds !tse f to 'ay therefor a su) of )oney or !ts e1u!%a ent ='r!ce9. 8oth 'art!es concede that the order a#ree)ent #!%es r!se to a rec!'roca o" !#at!ons such that the o" !#at!on of one !s de'endent u'on the o" !#at!on of the other. Rec!'roca o" !#at!ons are to "e 'erfor)ed s!)u taneous y, so that the 'erfor)ance of one !s cond!t!oned u'on the s!)u taneous fu f! )ent of the other. $hus, res'ondent underta*es to de !%er 'r!nt!n# 'a'er of %ar!ous 1uant!t!es su"(ect to 'et!t!oner>s corres'ond!n# o" !#at!on to 'ay, on a )a4!)u) /00day cred!t, for these )ater!a s. +n the contract, 'et!t!oner !s not e%en re1u!red to )a*e any de'os!t, down 'ay)ent or ad%ance 'ay)ent, hence, the underta*!n# of res'ondent to de !%er the )ater!a s !s cond!t!ona u'on 'ay)ent "y 'et!t!oner w!th!n the 'rescr!"ed 'er!od. 5 ear y, 'et!t!oner d!d not fu f! !ts s!de of the contract as !ts ast 'ay)ent !n 6u#ust 1/71 cou d co%er on y )ater!a s co%ered "y de !%ery !n%o!ces dated 3e'te)"er and 2cto"er 1/70.

+n !ts re' y res'ondent a e#ed that su"se1uent to the enu)erated 'urchase !n%o!ces !n the or!#!na co)' a!nt, 'et!t!oner )ade add!t!ona 'urchases of 'r!nt!n# 'a'er on cred!t a)ount!n# to -/4,200.00 and that 'et!t!oner refused to 'ay !ts outstand!n# o" !#at!on a thou#h !t )ade 'art!a 'ay)ents a)ount!n# to -/.,200.00 wh!ch was a'' !ed to "ac* accounts, thus, reduc!n# 'et!t!oner>s !nde"tedness to -.63,101..0. R$5 ru ed that 'et!t!oner shou d 'ay -.63,101..0 re'resent!n# the %a ue of 'r!nt!n# 'a'er de !%ered "y res'ondent fro) June 5, 1/70 to Ju y 23, 1/71. ,owe%er !t a so found 'et!t!oner>s counterc a!) )er!tor!ous "ecause !f
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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$he a#ree)ent 'ro%!des for the de !%ery of 'r!nt!n# 'a'er on d!fferent dates and a se'arate 'r!ce has "een a#reed u'on for each de !%ery. +t !s a so ad)!tted that !t !s the standard 'ract!ce of the 'art!es that the )ater!a s "e 'a!d w!th!n a )!n!)u) 'er!od of th!rty =309 days and a )a4!)u) of n!nety =/09 days fro) each de !%ery. 6ccord!n# y, the res'ondent>s sus'ens!on of !ts de !%er!es to 'et!t!oner whene%er the atter fa! ed to 'ay on t!)e, as !n th!s case, !s e#a y (ust!f!ed under the second 'ara#ra'h of 6rt!c e 1573 of the 5!%! 5ode wh!ch 'ro%!des that: Ahen there !s a contract of sa e of #oods to "e de !%ered "y stated !nsta )ents, wh!ch are to "e se'arate y 'a!d for, and the se er )a*es defect!%e de !%er!es !n res'ect of one or )ore !nsta )ents, or the buyer neglects or re+uses )ithout just cause to ta*e de !%ery of or pay +or one or more installments, !t de'ends !n each case on the ter)s of the contract and the c!rcu)stances of the case, whether the "reach of contract !s so )ater!a as to justi+y the injured party in re+using to proceed +urther and su!n# for da)a#es for "reach of the ent!re contract, or whether the "reach !s se%era" e, #!%!n# r!se to a c a!) for co)'ensat!on "ut not to a r!#ht to treat the who e contract as "ro*en. ,ere, 'et!t!oner>s e%!dence fa! ed to esta" !sh that !t had 'a!d for the 'r!nt!n# 'a'er co%ered "y the de !%ery !n%o!ces on t!)e. 5onse1uent y, res'ondent has the r!#ht to cease )a*!n# further de !%ery, hence the res'ondent d!d not %!o ate the order a#ree)ent. 2n the contrary, !t was 'et!t!oner wh!ch "reached the a#ree)ent as !t fa! ed to 'ay on t!)e the )ater!a s de !%ered "y res'ondent. Res'ondent a''e ate court correct y ru ed that res'ondent d!d not %!o ate the order a#ree)ent.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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GREGORIO FULE, %s COURT OF A##EALS, NINEVETCH CRUZ and JUAN .ELAR<INO JG.R. No. %%,,%, <a 31 ,, %))@K T1i d Di"i!ionL RO<ERO, J. %A&T' Gre#or!o Fu e ='et!t!oner9, a "an*er "y 'rofess!on and a (ewe er at the sa)e t!)e, ac1u!red a 100hectare 'ro'erty !n $anay, R!@a =$anay 'ro'erty9. -et!t!oner, as cor'orate secretary of the "an*, as*ed Re)e !a ;!choso and 2 !%a Mendo@a to oo* for a "uyer who )!#ht "e !nterested !n the $anay 'ro'erty. $he two found ;r. N!ne%etch 5ru@ ='r!%ate res'ondent9.

a#reed that the "a ance of -40,000.00 wou d (ust "e 'a!d ater !n cash.

$hereafter the 'et!t!oner headed for the "an*, arr!%!n# there at 'ast 5:00 '.). ;r. 5ru@ =who arr!%ed ater9 and the cash!er then o'ened the safety de'os!t "o4, the for)er retr!e%!n# a ce o'hane "a# w!th the (ewe ry !ns!de and hand!n# o%er the sa)e to 'et!t!oner. $he atter too* the (ewe ry fro) the "a#, went near the e ectr!c !#ht at the "an*>s o""y, he d the (ewe ry a#a!nst the !#ht and e4a)!ned !t for ten to f!fteen )!nutes. 6fter a wh! e, ;r. 5ru@ as*ed, <O<ay na ba iyan=< -et!t!oner e4'ressed h!s sat!sfact!on "y nodd!n# h!s head.

+t so ha''ens that at that t!)e 'et!t!oner had shown !nterest !n "uy!n# a 'a!r of e)era d0cut d!a)ond earr!n#s owned "y ;r. 5ru@ wh!ch he had seen when h!s )other e4a)!ned and a''ra!sed the) as #enu!ne. -et!t!oner then )ade a "!d to "uy the) "ut ;r. 5ru@ dec !ned the offer. 6t that 'o!nt for)er !ns'ected sa!d (ewe ry at the o""y of the -rudent!a 8an* "ranch !n 3an -a" o 5!ty and then )ade a s*etch thereof. ,a%!n# s*etched the (ewe ry then #a%e the) "ac* to ;r. 5ru@. 3u"se1uent y, ne#ot!at!ons for the "arter of the (ewe ry and the $anay 'ro'erty ensued. Ahen ;r. 5ru@ had ater a#reed to the 'ro'osa , 'et!t!oner went to -rudent!a 8an* once a#a!n to ta*e a oo* at the (ewe ry. +n the afternoon of 2cto"er 23, 1/74, 'et!t!oner )et 6tty. 8e ar)!no =;r. 5ru@Fs awyer9 at the atter>s res!dence to 're'are the docu)ents of sa e. $he 6ttorney accord!n# y caused the 're'arat!on of a deed of a"so ute sa e wh! e 'et!t!oner and ;r. 5ru@ attended to the safe*ee'!n# of the (ewe ry. $he fo ow!n# day, 'et!t!oner, to#ether w!th ;!choso and Mendo@a, arr!%ed at the res!dence of 6tty. 8e ar)!no to f!na y e4ecute a deed of a"so ute sa e. -et!t!oner s!#ned the deed. 3!nce the (ewe ry was a''ra!sed on y at -160,000.00, the 'art!es
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

?ater, at a"out 7:00 o>c oc* !n the e%en!n# of the sa)e day, 'et!t!oner arr!%ed at the res!dence of 6tty. 8e ar)!no co)' a!n!n# that the (ewe ry #!%en to h!) was fa*e. ,e then used a tester to 'ro%e the a e#ed fa*ery.

2n 2cto"er 26, 1/74, 'et!t!oner f! ed a co)' a!nt "efore the Re#!ona $r!a 5ourt =R$59 a#a!nst 'r!%ate res'ondents 'ray!n#, a)on# other th!n#s, that the contract of sa e o%er the $anay 'ro'erty "e dec ared nu and %o!d on the #round of fraud and dece!t. R$5, as aff!r)ed "y the 5ourt of 6''ea s, he d the earr!n#s uses as cons!derat!on for the sa e was de !%ered "y ;r. 5ru@ to the 'et!t!oner as #enu!ne. ,ence th!s 'et!t!on. ISSUE Ahether or not the deed of sa e of the $anay 'ro'erty !s nu and %o!d. RULING

-B$+$+2N ;BN+B;. $he contract of "arter or sa e !s %a !d. $he 5!%! 5ode 'ro%!des that contracts are
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'erfected "y )ere consent. Fro) th!s )o)ent, the 'art!es are "ound not on y to the fu f! )ent of what has "een e4'ress y st!'u ated "ut a so to a the conse1uences wh!ch, accord!n# to the!r nature, )ay "e !n *ee'!n# w!th #ood fa!th, usa#e and aw. 6 contract of sa e !s 'erfected at the )o)ent there !s a )eet!n# of the )!nds u'on the th!n# wh!ch !s the o"(ect of the contract and u'on the 'r!ce. 8e!n# consensua , a contract of sa e has the force of aw "etween the contract!n# 'art!es and they are e4'ected to a"!de !n #ood fa!th "y the!r res'ect!%e contractua co))!t)ents. 6rt!c e 1357 of the 5!%! 5ode wh!ch re1u!res the e)"od!)ent of certa!n contracts !n a 'u" !c !nstru)ent, !s on y for con%en!ence, and re#!strat!on of the !nstru)ent on y ad%erse y affects th!rd 'art!es. For)a re1u!re)ents are, therefore, for the "enef!t of th!rd 'art!es. Non0co)' !ance therew!th does not ad%erse y affect the %a !d!ty of the contract nor the contractua r!#hts and o" !#at!ons of the 'art!es thereunder. +t !s e%!dent fro) the facts of the case that there was a )eet!n# of the )!nds "etween 'et!t!oner and ;r. 5ru@. 6s such, they are "ound "y the contract un ess there are reasons or c!rcu)stances that warrant !ts nu !f!cat!on. ,ence, the 'ro" e) that shou d "e addressed !n th!s case !s whether or not under the facts du y esta" !shed here!n, the contract can "e %o!ded !n accordance w!th aw so as to co)'e the 'art!es to restore to each other the th!n#s that ha%e "een the su"(ect of the contract w!th the!r fru!ts, and the 'r!ce w!th !nterest. 5ontracts that are %o!da" e or annu a" e, e%en thou#h there )ay ha%e "een no da)a#e to the contract!n# 'art!es are: =19 those where one of the 'art!es !s !nca'a" e of #!%!n# consent to a contract: and =29 those where the consent !s %!t!ated "y )!sta*e, %!o ence, !nt!)!dat!on, undue !nf uence or fraud. 6ccord!n# y, 'et!t!oner now stresses "efore th!s 5ourt that he entered !nto the contract !n the "e !ef that the 'a!r of e)era d0 cut d!a)ond earr!n#s was #enu!ne. 2n the 'rete4t that those '!eces of (ewe ry turned out to "e counterfe!t, howe%er, 'et!t!oner su"se1uent y sou#ht the nu !f!cat!on of sa!d contract on the #round that !t was, !n fact, <ta!nted w!th fraud< such that h!s consent was %!t!ated. $here !s fraud when, throu#h the !ns!d!ous words or )ach!nat!ons of one of the contract!n# 'art!es, the other !s !nduced to enter !nto a
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

contract wh!ch, w!thout the), he wou d not ha%e a#reed to. $he records, howe%er, are "are of any e%!dence )an!fest!n# that 'r!%ate res'ondents e)' oyed such !ns!d!ous words or )ach!nat!ons to ent!ce 'et!t!oner !nto enter!n# the contract of "arter. Ne!ther !s there any e%!dence show!n# that ;r. 5ru@ !nduced 'et!t!oner to se h!s $anay 'ro'erty or that she ca(o ed h!) to ta*e the earr!n#s !n e4chan#e for sa!d 'ro'erty. 2n the contrary, ;r. 5ru@ d!d not !n!t!a y accede to 'et!t!oner>s 'ro'osa to "uy the sa!d (ewe ry. Rather, !t a''ears that !t was 'et!t!oner, throu#h h!s a#ents, who ed ;r. 5ru@ to "e !e%e that the $anay 'ro'erty was worth e4chan#!n# for her (ewe ry as he re'resented that !ts %a ue was -400,000.00 or )ore than dou" e that of the (ewe ry wh!ch was %a ued on y at -160,000.00. +f !ndeed 'et!t!oner>s 'ro'erty was tru y worth that )uch, !t was certa!n y contrary to the nature of a "us!ness)an0"an*er !*e h!) to ha%e 'arted w!th h!s rea estate for ha f !ts 'r!ce. +n short, !t was !n fact 'et!t!oner who resorted to )ach!nat!ons to con%!nce ;r. 5ru@ to e4chan#e her (ewe ry for the $anay 'ro'erty. Moreo%er, 'et!t!oner d!d not c ear y a e#e )!sta*e as a #round for nu !f!cat!on of the contract of sa e. B%en assu)!n# that he d!d, 'et!t!oner cannot successfu y !n%o*e the sa)e. $o !n%a !date a contract, )!sta*e )ust <refer to the su"stance of the th!n# that !s the o"(ect of the contract, or to those cond!t!ons wh!ch ha%e 'r!nc!'a y )o%ed one or "oth 'art!es to enter !nto the contract.< 6n e4a)' e of )!sta*e as to the o"(ect of the contract !s the su"st!tut!on of a s'ec!f!c th!n# conte)' ated "y the 'art!es w!th another. +n h!s a e#at!ons !n the co)' a!nt, 'et!t!oner !ns!nuated that an !nfer!or one or one that had on y Russ!an d!a)onds was su"st!tuted for the (ewe ry he wanted to e4chan#e w!th h!s 100hectare and. ,e, howe%er, fa! ed to 'ro%e the fact that 'r!or to the de !%ery of the (ewe ry to h!), 'r!%ate res'ondents endea%ored to )a*e such su"st!tut!on. ?!*ew!se, the facts as 'ro%en do not su''ort the a e#at!on that 'et!t!oner h!)se f cou d "e e4cused for the <)!sta*e.< 2n account of h!s wor* as a "an*er0(ewe er, !t can "e r!#htfu y assu)ed that he was an e4'ert on )atters re#ard!n# #e)s. ,e had the !nte ectua ca'ac!ty and the "us!ness acu)en as a "an*er to ta*e 'recaut!onary )easures to a%ert such a )!sta*e, cons!der!n# the %a ue of "oth the (ewe ry and h!s

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and. $he fact that he had seen the (ewe ry "efore 2cto"er 24, 1/74 shou d not ha%e 'rec uded h!) fro) ha%!n# !ts #enu!neness tested !n the 'resence of ;r. 5ru@. ,ad he done so, he cou d ha%e a%o!ded the 'resent s!tuat!on that he h!)se f "rou#ht a"out. +ndeed, the f!n#er of sus'!c!on of sw!tch!n# the #enu!ne (ewe ry for a fa*e !ne%!ta" y 'o!nts to h!). 3uch a )!sta*e caused "y )an!fest ne# !#ence cannot !n%a !date a (ur!d!ca act. 6s the 5!%! 5ode 'ro%!des, <=t9here !s no )!sta*e !f the 'arty a e#!n# !t *new the dou"t, cont!n#ency or r!s* affect!n# the o"(ect of the contract.< Further)ore, 'et!t!oner was afforded the reasona" e o''ortun!ty re1u!red !n 6rt!c e 1574 of the 5!%! 5ode w!th!n wh!ch to e4a)!ne the (ewe ry as he !n fact acce'ted the) when as*ed "y ;r. 5ru@ !f he was sat!sf!ed w!th the sa)e. ,) 8y ta*!n# the (ewe ry outs!de the "an*, 'et!t!oner e4ecuted an act wh!ch was )ore cons!stent w!th h!s e4erc!se of ownersh!' o%er !t. $h!s #a!ns credence when !t !s "orne !n )!nd that he h!)se f had ear !er de !%ered the $anay 'ro'erty to ;r. 5ru@ "y aff!4!n# h!s s!#nature to the contract of sa e. $hat after two hours he ater c a!)ed that the (ewe ry was not the one he !ntended !n e4chan#e for h!s $anay 'ro'erty, cou d not se%er the (ur!d!ca t!e that now "ound h!) and ;r. 5ru@. $he nature and %a ue of the th!n# he had ta*en 'rec ude !ts return after that su'er%en!n# 'er!od w!th!n wh!ch anyth!n# cou d ha%e ha''ened, not e4c ud!n# the a terat!on of the (ewe ry or !ts "e!n# sw!tched w!th an !nfer!or *!nd. 8oth the tr!a and a''e ate courts, therefore, correct y ru ed that there were no e#a "ases for the nu !f!cat!on of the contract of sa e. 2wnersh!' o%er the 'arce of and and the 'a!r of e)era d0cut d!a)ond earr!n#s had "een transferred to ;r. 5ru@ and 'et!t!oner, res'ect!%e y, u'on the actua and construct!%e de !%ery thereof. 3a!d contract of sa e "e!n# a"so ute !n nature, t!t e 'assed to the %endee u'on de !%ery of the th!n# so d s!nce there was no st!'u at!on !n the contract that t!t e to the 'ro'erty so d has "een reser%ed !n the se er unt! fu 'ay)ent of the 'r!ce or that the %endor has the r!#ht to un! atera y reso %e the contract the )o)ent the "uyer fa! s to 'ay w!th!n a f!4ed 'er!od. 3uch st!'u at!ons are not )an!fest !n the contract of sa e. Ah! e !t !s true that the a)ount of -40,000.00
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

for)!n# 'art of the cons!derat!on was st! 'aya" e to 'et!t!oner, !ts non'ay)ent "y ;r. 5ru@ !s not a suff!c!ent cause to !n%a !date the contract or "ar the transfer of ownersh!' and 'ossess!on of the th!n#s e4chan#ed cons!der!n# the fact that the!r contract !s s! ent as to when !t "eco)es due and de)anda" e. Ne!ther )ay such fa! ure to 'ay the "a ance of the 'urchase 'r!ce resu t !n the 'ay)ent of !nterest thereon. 6rt!c e 157/ of the 5!%! 5ode 'rescr!"es the 'ay)ent of !nterest "y the %endee <for the 'er!od "etween the de !%ery of the th!n# and the 'ay)ent of the 'r!ce< !n the fo ow!n# cases: =19 3hou d !t ha%e "een so st!'u ated: =29 3hou d the th!n# so d and de !%ered 'roduce fru!ts or !nco)e: =39 3hou d he "e !n defau t, fro) the t!)e of (ud!c!a or e4tra(ud!c!a de)and for the 'ay)ent of the 'r!ce. Not one of these cases o"ta!ns here. $here !s no st!'u at!on for the 'ay)ent of !nterest !n the contract of sa e nor 'roof that the $anay 'ro'erty 'roduced fru!ts or !nco)e. Ne!ther d!d 'et!t!oner de)and 'ay)ent of the 'r!ce as !n fact he f! ed an act!on to nu !fy the contract of sa e.

CENTRAL .ANB OF THE #HILI##INES %s.

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S#OUSES .ICHARA

ALFONSO

and

ANACLETA

G.R. No. %&%-'( <a 31 ,', ,--Se3ond Di"i!ion DE LEON, JR., J. Fa3t!/ Res'ondent so d a 'arce of and ocated !n ?e#as'! 5!ty to -et!t!oner at the a)ount of 500 'esos 'er s1uare )eter or a tota a)ount of 405 thousand 'esos. $he deed of sa e conta!ned that the 'ay)ent !s to "e effected on y after the ;eed of 3a e sha ha%e "een du y re#!stered and a c ean t!t e !ssued !n the na)e of EBN;BB. 6 so, the EBN;2R3 w! underta*e at the!r e4'ense to f! the 'arce s of and w!th an esco)"ro free fro) waste )ater!a s co)'acted to the street e%e u'on s!#n!n# of the ;eed of 3a e to su!t the #round for the construct!on of the re#!ona off!ce of the 5entra 8an* of the -h! !''!nes thereat. ;es'!te the !ssuance of the t!t e, 'et!t!oner fa! ed to 'ay res'ondent. 2n !ts 'art, res'ondents d!d not f! u' the ot w!th esco)"ro des'!te se%era de)ands )ade "y 'et!t!oner. -et!t!oner was thus constra!ned to underta*e the f! !n# u' of the sa!d ots, "y contract!n# the ser%!ces of 8GE 5onstruct!on. $he f! !n# u' of the ots cost 'et!t!oner -45,000.00. -et!t!oner deducted the sa!d a)ount fro) the 'urchase 'r!ce 'aya" e to res'ondents. -et!t!oner, howe%er, st! d!d not 'ay the res'ondents. 5onse1uent y, res'ondents co))enced an act!on for resc!ss!on or s'ec!f!c 'erfor)ance w!th da)a#es, a#a!nst 'et!t!oner "efore the Re#!ona $r!a 5ourt of ?e#a@'! 5!ty. Res'ondents a e#ed that 'et!t!oner fa! ed to 'ay the 'urchase 'r!ce des'!te de)and. $hey 'rayed for the resc!ss!on of the contract of sa e and the return of the 'ro'ert!es, or !n the a ternat!%e that 'et!t!oner "e co)'e ed to 'ay the 'urchase 'r!ce ' us !nterest at the rate of 12U 'er annu) fro) Ju y 1/, 1/73, unt! fu y 'a!d, and to 'ay the ca'!ta #a!ns and docu)entary sta)' ta4es w!th the 8ureau of +nterna Re%enue and re#!strat!on fees w!th the Re#!ster of ;eeds. -et!t!oner tendered 'ay)ent to res'ondents !n the a)ount of -360,500.00. Res'ondents refused the tender, howe%er, !n %!ew of the!r
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

co)' a!nt for resc!ss!on. 6fter rece!'t of su))ons, 'et!t!oner f! ed !ts answer a%err!n# that !t was (ust!f!ed !n de ay!n# 'ay)ent of the 'urchase 'r!ce !n %!ew of res'ondents> "reach of se%era cond!t!ons !n the contract. F!rst, 'et!t!oner a e#ed that res'ondents fa! ed to de !%er to the for)er free and e#a 'ossess!on of the two 'ro'ert!es, !n %!ew of the encu)"rances noted !n the t!t e, !n add!t!on to the 'resence of s1uatters who were not e%!cted "y res'ondents. 3econd, !t c a!)ed that res'ondents d!d not f! u' the ots w!th esco)"ro free fro) waste )ater!a s, as a#reed $r!a court ordered s'ec!f!c 'erfor)ance of 5entra 8an* to 'ay for the 'ro'erty ' us !nterest. 5ourt of 6''ea s on the other hand ordered the resc!ss!on of the contract of sa e hence th!s 'et!t!on.

I!!*e!: +ssue 1: Ahether res'ondents are ent!t ed to the re)edy of resc!ss!on des'!te of the!r non0 co)' !ance to the!r o" !#at!ons to 5entra 8an*. +ssue 2: Ahether 5entra 8an* !s (ust!f!ed !n w!thho d!n# the 'ay)ent of the 'urchase 'r!ce. He$d/ Issue &4 Res'ondents shou d not "e a owed to resc!nd the contract where they the)se %es d!d not 'erfor) the!r essent!a o" !#at!on thereunder wh!ch !s to f! u' the 'arce s of and w!th esco)"ro. +t shou d "e e)'has!@ed that a contract of sa e !n%o %es rec!'roc!ty "etween the 'art!es. 3!nce res'ondents were !n "ad fa!th, they )ay not see* the resc!ss!on of the a#ree)ent they the)se %es "reached. +ssue 2: 6s!de fro) the !nstances )ent!oned under 6rt!c e 15/0 of the c!%! code, the %endee !s !*ew!se ent!t ed to w!thho d 'ay)ent of the 'urchase 'r!ce !f the %endor fa! s to 'erfor) any essent!a o" !#at!on of the contract. 3uch r!#ht !s 're)!sed not on the afore1uoted art!c e, "ut on #enera 'r!nc!' es of rec!'roca o" !#at!ons. 3!nce res'ondents fa! ed to co)' y w!th the!r o" !#at!on, 5entra 8an* !s (ust!f!ed !n w!thho d!n# !ts 'ay)ent of the 'urchase 'r!ce.

AL.ERT

R.

#ADILLA

"!.

S#OUSES
Page "$

FLORESCO #AREDES and ADELINA #AREDES, and THE HONORA.LE COURT OF A##EALS G.R. No. %,(@'( Se3ond Di"i!ion MUISU<.ING, J./ Fa3t!/ 6 "ert R. -ad! a and F oresco and 6de !na -aredes entered !nto a contract to se !n%o %!n# a 'arce of and !n 3an Juan, ?a &n!on. 6t that t!)e, the and was unt!t ed a thou#h 'r!%ate res'ondents were 'ay!n# ta4es thereon. &nder the contract, 'et!t!oner undertoo* to secure t!t e to the 'ro'erty !n 'r!%ate res'ondents> na)es. 2f the -312,740.00 'urchase 'r!ce, 'et!t!oner was to 'ay a down'ay)ent of -50,000.00 u'on s!#n!n# of the contract, and the "a ance was to "e 'a!d w!th!n ten days fro) the !ssuance of a court order d!rect!n# !ssuance of a decree of re#!strat!on for the 'ro'erty. 8ut 'et!t!oner )ade se%era 'ay)ents to 'r!%ate res'ondents, so)e e%en "efore the court !ssued an order for the !ssuance of a decree of re#!strat!on. 6fter the court ordered the !ssuance of a decree of and re#!strat!on for the su"(ect 'ro'erty, res'ondents then de)anded 'ay)ent of the "a ance of the 'urchase 'r!ce. 8ut the 'et!t!oner was not a" e to 'ay the "a ance !n fu . +n a etter, 'r!%ate res'ondents, throu#h counse , de)anded 'ay)ent of the re)a!n!n# "a ance, w!th !nterest and attorney>s fees, w!th!n f!%e days fro) rece!'t of the etter. 2therw!se, 'r!%ate res'ondents stated they wou d cons!der the contract resc!nded. -et!t!oner d!d not acce't 'r!%ate res'ondents> 'ro'osa . +nstead, he offered to 'ay the "a ance !n fu for the ent!re 'ro'erty, ' us !nterest and attorney>s fees. -r!%ate res'ondents refused the offer. -et!t!oner !nst!tuted an act!on for s'ec!f!c 'erfor)ance a#a!nst 'r!%ate res'ondents, a e#!n# that he had a ready su"stant!a y co)' !ed w!th h!s o" !#at!on under the contract to se . ,e c a!)ed that the se%era 'art!a 'ay)ents he had ear !er )ade, u'on 'r!%ate res'ondents> re1uest, had !)' !ed y )od!f!ed the contract. ,e a so a%erred that he had a ready s'ent -1/0,000.00 !n o"ta!n!n# t!t e to the 'ro'erty, su"d!%!d!n# !t, and !)'ro%!n# !ts r!#ht0 of0way. -r!%ate res'ondents on the other hand c a!)ed
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"efore the ower court that 'et!t!oner )a !c!ous y de ayed 'ay)ent of the "a ance of the 'urchase 'r!ce, des'!te re'eated de)and. 6ccord!n# to 'r!%ate res'ondents, the!r acce'tance of 'art!a 'ay)ents d!d not at a )od!fy the ter)s of the!r a#ree)ent, such that the fa! ure of 'et!t!oner to fu y 'ay at the t!)e st!'u ated was a %!o at!on of the contract. 6 so, they a%er that th!s %!o at!on ed to the resc!ss!on of the contract, of wh!ch 'et!t!oner was for)a y !nfor)ed. $he ower court ru ed !n fa%or of 'et!t!oner, say!n# that e%en !f 'et!t!oner !ndeed "reached the contract to se , !t was on y a casua and s !#ht "reach that d!d not warrant resc!ss!on of the contract. $he tr!a court 'o!nted out that 'r!%ate res'ondents the)se %es "reached the contract when they re1uested and acce'ted !nsta )ent 'ay)ents fro) 'et!t!oner, e%en "efore the and re#!strat!on court ordered !ssuance of a decree of re#!strat!on for the 'ro'erty. 6ccord!n# to the tr!a court, th!s const!tuted )od!f!cat!on of the contract, thou#h not reduced !nto wr!t!n# as re1u!red "y the contract !tse f. $he 'ay)ents, howe%er, were e%!denced "y rece!'ts du y s!#ned "y 'r!%ate res'ondents. 6cce'tance of de ayed 'ay)ents esto''ed 'r!%ate res'ondents fro) e4erc!s!n# the!r r!#ht of resc!ss!on, !f any e4!sted. $he 5ourt of 6''ea s, howe%er, re%ersed the ru !n# of the tr!a court and conf!r)ed 'r!%ate res'ondents> resc!ss!on of the contract to se . 6ccord!n# to the 5ourt of 6''ea s, the !ssue of whether or not the "reach of contract co))!tted !s s !#ht or casua !s !rre e%ant !n the case of a contract to se , where t!t e re)a!ns !n the %endor !f the %endee fa! s to <co)' y w!th the cond!t!on 'recedent of )a*!n# 'ay)ent at the t!)e s'ec!f!ed !n the contract.< Moreo%er 5ourt of 6''ea s re(ected 'et!t!oner>s c a!) that there had "een a no%at!on of the contract when he tendered 'art!a 'ay)ents for the 'ro'erty e%en "efore 'ay)ent was due. $he contract !tse f 'ro%!des that no ter)s and cond!t!ons there!n sha "e )od!f!ed un ess such )od!f!cat!on !s !n wr!t!n# and du y s!#ned "y the 'art!es. $he )od!f!cat!on a e#ed "y 'et!t!oner !s not !n wr!t!n#, )uch ess s!#ned "y the 'art!es. Moreo%er, 'r!%ate res'ondents )ade a t!)e y o"(ect!on to 'et!t!oner>s 'art!a 'ay)ents when they offered to se to 'et!t!oner on y one0ha f of the 'ro'erty for such 'art!a 'ay)ents. -r!%ate res'ondents therefore are ent!t ed to resc!ss!on under 6rt!c e 11/1 of the 5!%! 5ode, "ut w!th the o" !#at!on to return to 'et!t!oner the 'ay)ents
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the atter had )ade, !nc ud!n# e4'enses !ncurred !n secur!n# t!t e to the 'ro'erty and !n su"d!%!d!n# and !)'ro%!n# !t r!#ht of way, hence th!s 'et!t!on. I!!*e!/ Ahether the a''e ants are ent!t ed to resc!ss!on under 6rt!c e 11/1 of the 5!%! 5ode. He$d/ -ert!nent 'ro%!s!ons of the contract s!#n!fy that t!t e to the 'ro'erty re)a!ns !n the %endors unt! the %endee shou d ha%e fu y 'a!d the 'urchase 'r!ce, the contract entered !nto "y the 'art!es thus !s a contract to se . 3!nce 'et!t!oner fa! ed to co)' y w!th h!s o" !#at!on to 'ay the fu 'urchase 'r!ce w!th!n the st!'u ated 'er!od, the contract therefore )ay "e resc!nded "ut the reason for th!s !s not that 'r!%ate res'ondents ha%e the 'ower to resc!nd such contract, "ut "ecause the!r o" !#at!on thereunder d!d not ar!se. 6rt. 11/1 cannot "e a'' !ed. +t s'ea*s of o" !#at!ons a ready e4!st!n#, wh!ch )ay "e resc!nded !n case one of the o" !#ors fa! s to co)' y w!th what !s !ncu)"ent u'on h!). ,owe%er, !n the 'resent case, there !s st! no o" !#at!on to con%ey t!t e of the and on the 'art of 'r!%ate res'ondents. $here can "e no resc!ss!on of an o" !#at!on that !s non0e4!stent, cons!der!n# that the sus'ens!%e cond!t!on has not yet ha''ened.

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A$2on!o I in+an "!. Co* t o2 Appea$! G.R. No. 12/10. 3e'te)"er 26, 2001 Hu!su)"!n#

'arty ent!t ed to resc!nd shou d a'' y to the court for a decree of resc!ss!on. $he o'erat!%e act wh!ch 'roduces the reso ut!on of contract !s decree of court not the )ere act of %endor. $he etter wr!tten "y the 'r!%ate res'ondent dec ar!n# h! !ntent!on to resc!nd d!d not o'erate %a !d y, $he f! !n# "y -a ao of Jud!c!a 5onf!r)at!on of Resc!ss!on of 5ontract and ;a)a#es sat!sf!es the re1u!re)ent of the aw. 2. $he 'et!t!oner *new res'ondentFs reason for se !n#. -et!t!oner refused to for)a y e4ecute an !nstru)ent show!n# the!r )utua a#ree)ent to resc!nd the contract of sa e. ,e a so d!d not su"stant!ate 'roof that he was ready and w! !n# to 'ay. ,ence, the award!n# for da)a#es !s 'ro'er. -et!t!on den!ed.

*acts4 -r!%ate res'ondent -a ao so d to 'et!t!oner +r!n#an an und!%!ded 'ort!on of and to "e 'a!d !n !nsta )ents. ;ue to 'et!t!onerFs fa! ure to 'ay the fu a)ount on the second !nsta )ent, 'r!%ate res'ondent cons!dered the contract resc!nded. $he 'et!t!oner on the other hand, on !ts re' y, d!d not o''ose the re%ocat!on of the contract "ut on y as*ed for the re!)"urse)ent of the !n!t!a 'ay)ent )ade. -r!%ate res'ondent sa!d that they are not a)ena" e re#ard!n# to the re!)"urse)ents c a!)ed. 3!)' y 'ut, no a#ree)ent "etween the 'art!es was )ade. -a ao f! ed a co)' a!nt for Jud!c!a 5onf!r)at!on of Resc!ss!on of 5ontract and ;a)a#es a#a!nst +r!n#an and h!s w!fe. 2n h!s answer, he ar#ued that the contract !s a ready consu))ated: hence, the re)edy shou d "e for the co ect!on of the "a ance of the 'urchase 'r!ce and not resc!ss!on. R$5 aff!r)ed the resc!ss!on and ordered for the 'ay)ent for da)a#es to -a ao. $h!s was "rou#ht to the 5ourt of 6''ea s "ut the atter a so aff!r)ed the dec!s!on. ,ence, th!s 'et!t!on.

Issues4 1. Ahether or not the contract of sa e !s %a !d y resc!nded. 2. Ahether or not the award of )ora and e4e)' ary da)a#es !s 'ro'er. Held4 1. 6rt!c e 15/2 re1u!res the resc!nd!n# 'arty to ser%e (ud!c!a or notar!a not!ce of h!s !ntent to reso %e the contract. $he
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!n #ood fa!th. #e $a Gi$ "!. CA G.R. No. 12.206 3e'te)"er 12, 2003 5a e(o 3r. Issue4 Ahether or not the 'ro'erty was %a !d y so d to + u)!nada and 6#a'!to -acetes. Held4 *acts4 5once'c!on G! and s!ster N!e%es G! are co0owners of a 'arce of and. N!e%es and hus"and constructed a two storey "u! d!n# on the sa!d and. 5once'c!on then f! ed a co)' a!nt a#a!nst her s!ster. $he 5ourt rendered (ud#)ent !n fa%or of 5once'c!on. N!e%es a''ea ed to the 5ourt of 6''ea s "ut the atter a so aff!r)ed the assa! ed dec!s!on. $he 5ourt !ssued a wr!t of e4ecut!on "ut N!e%es refused to e4ecute the re1u!red deed. $he 3her!ff was then ordered to e4ecute "ut !nstead, he d!%!ded the 'ro'erty !nto 4 ots and #a%e two to 5once'c!on. ?ot 5/ 51, one of the two ots #!%en to 5once'c!on was then so d "y the atter to 6#a'!to and + u)!nada -acetes. $h!s contract was howe%er su"(ect to the cond!t!on that a de'os!t sha "e #!%en at the t!)e of the e4ecut!on of the contract and the re)a!n!n# a)ount sha "e 'a!d u'on the de !%ery of the cert!f!cate of t!t e to the %endee. $he 'ro'erty was then so d to one 5onstanc!o Ma# ana and was a#a!n so d to the 'resent 'ossessor B)! !o Ma#tu ac who !s construct!n# a "u! d!n# on sa!d ot. 3u"se1uent y, 5once'c!on d!ed and now re'resented "y her successors as the 'et!t!oners !n th!s !nstant case. -et!t!oners are contend!n# that 5once'c!onFs sa e of the d!s'uted 'ro'erty to + u)!nada and 6#a'!to -acetes !s )ere y a contract to se "ecause the fu 'r!ce was not 'a!d "y the atter to the for)er. $hey a so ar#ue that the cons!#nat!on )ade "y + u)!nada d!d not 'roduce e#a effect. $herefore, su"se1uent "uyers are not 'urchasers
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$he 5ourt ru ed that the sa e "etween 5once'c!on and + u)!nada !s a consu))ated contract of sa e. $he contract s'ec!f!es 'ay)ent 'ro%!s!on where!n a de'os!t w! "e )ade at a t!)e of the e4ecut!on of the !nstru)ent. $he %endor w!th!n 120 days sha "e de !%ered the cert!f!cate of t!t e to the %endee. $hen, %endee w! 'ay the re)a!n!n# a)ount. $he cert!f!cate of t!t e was not de !%ered. 6s a conse1uence of the death of 5once'c!on, !t !s the he!rs who ha%e the duty to de !%er such. 6''arent y, they were not a" e to de !%er the cert!f!cate a so. + u)!nadaFs act of 'ay!n# the re)a!n!n# a)ount on y after so )any years !s st! %a !d "ecause after a she has no duty to 'ay unt! t! e has "een de !%ered to her.

-et!t!on den!ed for ac* of )er!t.

Se"e ino .a i3*at o, J ., "!. Co* t o2 Appea$!, Tent1 Di"i!ion, <a iano .. Ne0enio and Fe$i!a V. Ne0enio, Con!tantino <. Ga$eo! and E*+enio V. A0o e!

ISSUE/

1. Ahether the sa e )ade to 6)ores "y Ga eos !s %a !dD 2. Ahether the Ne)en!o s'ouses are 'urchasers !n #ood fa!thD

Fe"ruary /, 2000

G.R. No. 105/02

8uena, J.:

RULING/

FACTS/

+ssue 1

8ar!cuatro "ou#ht two ots, 'art of the E!ctor!a E! a#e, on !nsta )ents "as!s fro) Ga eos on 2cto"er 16, 1/67.

$wo )onths fro) the date of the 're%!ous sa e, Ga eos so d the ent!re su"d!%!s!on, !nc ud!n# the two ots, to 6)ores. 8ar!cuatro was !nfor)ed "y Ga eos a"out the sa e and was ad%!sed to 'ay the "a ance of the 'urchase 'r!ce of the two ots d!rect y to 6)ores.

6)ores was !n #ood fa!th when he "ou#ht the su"d!%!s!on, howe%er, when he re#!stered h!s t!t e he a ready had *now ed#e of the 're%!ous sa e. 3uch *now ed#e ta!nted h!s re#!strat!on w!th "ad fa!th. +n add!t!on, the a#ree)ent to co ect the "a ance of the 'urchase 'r!ce of the d!s'uted ots fro) 8ar!cuatro wh!ch 'resu''oses *now ed#e of the 're%!ous sa e "y 6)ores.

6)ores too* 'ossess!on of the su"d!%!s!on and de%e o'ed the sa)e for res!dent!a 'ur'oses. ,e secured the transfer of the t!t e to the sa)e !n h!s na)e. 6fterwards, he so d the two ots of the s'ouses Mar!ano and Fe !sa Ne)en!o. -r!or to the sa e, 8ar!cuatro was !nfor)ed throu#h a etter "y 6)ores a"out the !)'end!n# sa e of the two ots "ut the for)er fa! ed to res'ond. Ne)en!o s'ouses de)anded fro) 8ar!cuatro to %acate the sa!d ots "ut the atter refused to do so.

&nder 6rt. 1544, the ownersh!' of an !))o%a" e 'ro'erty sha "e on# to the 'urchaser who !n +ood 2ait1 re#!sters !t f!rst !n the re#!stry of 'ro'erty.

=&raca %s 5a9 I$he second "uyer )ust show cont!nu!n# #ood fa!th and !nnocence or ac* of *now ed#e of the f!rst sa e unt! h!s contract r!'ens !nto fu ownersh!' throu#h 'r!or re#!strat!on as 'ro%!ded "y aw.J $h!s )eans that the #ood fa!th of the 'urchaser shou d "e fro) the t!)e of the 'erfect!on of the sa e unt! u' to the t!)e that he "e dec ared the so e and true owner of the 'ro'erty.

$r!a court rendered a dec!s!on, dec ar!n# Ne)en!o s'ouses as the owners of the d!s'uted ot. 5ourt of 6''ea s aff!r)ed !n toto the (ud#)ent of the tr!a court.

+ssue 2

Ne)en!o s'ouses on y %!s!ted the ots ten )onths after the sa e wh!ch was e%!denced
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dur!n# the tr!a of the case. 6nd so, they cannot c a!) to "e 'urchasers !n #ood fa!th when they re#!stered the t!t e. $he re#!strat!on )ade "y the s'ouses were done !n "ad fa!th, hence, !t a)ounted to no !nscr!'t!on at a .

;ec!s!on of 56 !s RBEBR3B;.

Ce3i$ia A0odia Vda. De <e$en3ion, Vene anda A0odia, Fe$ipe A0odia, E*ti7*io A0odia and Go Bi0 C1*an
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"!. Hono a5$e Co* t o2 Appea$! and A>na . ot1e ! Rea$t6 Co0pan6.

ISSUE/

June 23, 2001

G.R. No. 147746

1. Aho "etween Go L!) 5huan and 6@nar has the "etter r!#ht o%er the su"(ect 'ro'ertyD

Nachura, J.:

RULING/

FACTS/

6rt. 1544 'ro%!des:

6 'ro'erty !n the na)e of Go L!) 5huan was or!#!na y owned "y the 6)od!as and was "rou#ht under the o'erat!on of the $orrens 3yste). ,owe%er, the t!t e was ost dur!n# the 3econd Aor d Aar.

3hou d !t "e !))o%a" e 'ro'erty, the ownersh!' sha "e on# to the 'erson ac1u!r!n# !t who !n #ood fa!th f!rst recorded !t !n the Re#!stry of -ro'erty.

+n 1/64, the 6)od!as a e#ed y con%eyed the 'ro'erty to 6@nar and was re#!stered under 6ct 344 as there was no t!t e.

+f the and !s re#!stered under $orrens $!t e, and !t !s so d and the sa e !s re#!stered no under the ?and Re#!strat!on 6ct "ut under 6ct 3344, such sa e !s not cons!dered re#!stered.

+n 1/7/, the 6)od!as con%ey!n# the 'ro'erty !n fa%or of Go L!) 5huan and was reconst!tuted 'ursuant to R6 No. 26. $hereafter, Go L!) 5huan e4erc!sed contro and do)!n!on o%er the su"(ect 'ro'erty !n an ad%erse and cont!nuous )anner !n the conce't of an owner.

6@nar re#!stered !ts t!t e under 6ct 3344 wh! e Go L!) 5huan re#!stered !t under 6ct No. 4/6, and so the atter !s dee)ed to "e the owner of the 'ro'erty.

R$5Fs dec!s!on: Go L!) 5huan as the rea owner of the 'ro'erty. $he s!#natures of the 6)od!as were for#ed, thus, the sa!d deed d!d not con%ey anyth!n# !n fa%or of 6@nar. 6nd 6@nar, fa! ed to show that Go L!) 5huan ac1u!red the 'ro'erty !n "ad fa!th.

-et!t!on for re%!ew !s GR6N$B;.

56Fs dec!s!on: 6@nar re#!stered ahead !n fa%or of Go L!) 5huan, thus, 'ursuant to 6rt 1544, the for)er deed shou d "e #!%en 'reference o%er the atter.

So$i"a "!. T1e Inte!tate E!tate o2 <a 3e$o <. Vi$$a$5a

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;ate: ;ece)"er 7, 2003 ;!%!s!on: F!rst ;!%!s!on

G.R. No.15401.

-onente: Just!ce -an#an!"an

FACTS: -et!t!oner, 3o !%a, f! ed a co)' a!nt for reco%ery of ownersh!' a#a!nst res'ondent, E! a "a, o%er a 'arce of and s!tuated !n M!sa)!s 2r!enta . 3he contended that the res'ondent fa! ed to #!%e fu cons!derat!on for the house and ot 'urchased "y the atter.

For the resc!ss!on of !))o%a" es, 6rt 15/2 'ro%!des that e%en thou#h !t )ay ha%e "een st!'u ated that u'on fa! ure to 'ay the 'r!ce at the t!)e a#reed u'on, the rec!ss!on of the contract sha of r!#ht ta*e ' ace, the %endee )ay 'ay, e%en after the e4'!rat!on of the 'er!od as on# as no de)and for resc!ss!on has "een )ade u'on h!). 6fter the de)and, the court )ay not #rant h!) a new ter).

$he 'et!t!oner, here!n, d!d not e4erc!se her r!#ht to de)and for resc!ss!on or s'ec!f!c 'erfor)ance. ,ence, she was a ready "arred fro) reco%er!n# the 'ro'erty due to aches and 'rescr!'t!on.

2n the other hand, res'ondent ar#ued that the house and ot were so d to h!) on !nsta )ent "as!s: and that 'art!a 'ay)ent thereof was #!%en. ,e a so ar#ued that no de)ands were )ade on h!) to %acate the 'ro'erty for a on# a 'er!od of t!)e. -rescr!'t!on, therefore, "arred 'et!t!onerFs c a!) of ownersh!'.

$r!a 5ourt ru ed !n fa%or of the res'ondent on the #round of aches. 5ourt of 6''ea s aff!r)ed th!s ru !n#.

,ence, th!s 'et!t!on.

ISSUE: Ahether or not the res'ondentFs non'ay)ent of the fu cons!derat!on wou d !n%a !date the contract of sa e.

RULING: 35 aff!r)ed 56F s and ru ed !n fa%or of res'ondent, stress!n# that contrary to 'et!t!onerFs su")!ss!on, the non'ay)ent of the fu cons!derat!on d!d not !n%a !date the contract of sa e. &nder the sett ed doctr!ne, non'ay)ent !s a reso utory cond!t!on that e4t!n#u!shes the transact!on e4!st!n# for a t!)e and d!schar#es the o" !#at!ons created thereunder. $he re)edy of the un'a!d se er !s to sue for co ect!on or resc!nd the contract.

Vi!a6an Sa40i$$ Co0pan6, In3. "!. Co* t o2 Appea$!

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,ence, the 'et!t!on. ;ate: March 3, 1//3 ;!%!s!on: Bn "anc -onente: Just!ce ;a%!de G.R. No. 73751 ISSUE: Ahether or not ower court erred !n ru !n# that auto)at!c resc!ss!on cou d not "e a'' !ed !n the !nstant case.

FACTS: -et!t!oner0cor'orat!on entered !nto a sa e !n%o %!n# scra' !ron w!th 'r!%ate res'ondent, su"(ect to the cond!t!on that the atter shou d o'en a etter of cred!t !n fa%or of the for)er on or "efore May 15, 1/73. -r!%ate res'ondent then started to d!# and #ather scra' !ron. 3u"se1uent y, howe%er, 'et!t!oner0cor'orat!on sent a etter to the 'r!%ate res'ondent con%ey!n# !ts !ntent!on to d!scont!nue w!th the sa e due to the atterFs fa! ure to co)' y w!th the essent!a 'recond!t!ons of the!r con tract.

RULING: 35 found )er!t on the 'et!t!on stress!n# that the ower court erred !n the a''rec!at!on of the nature of the transact!on "etween 'et!t!oner0cor'orat!on and 'r!%ate res'ondent. 6ccord!n# y, what trans'!red "etween the 'art!es was a contract or 'ro)!se to se and not a contract of sa e. -et!t!oner0 cor'orat!onFs o" !#at!on to se !s su"(ect to a sus'ens!%e cond!t!on, wh!ch was 'r!%ate res'ondentFs o'en!n# of an !rre%oca" e and uncond!t!ona etter of cred!t. ,owe%er, th!s cond!t!on was not fu f! ed.

-r!%ate res'ondent 'rayed for (ud#)ent order!n# the 'et!t!oner0cor'orat!on to co)' y w!th the contract "y de !%er!n# to h!) the scra' !ron su"(ect thereof.

+n !ne w!th the fore#o!n#, the non0 fu f! )ent cou d not e%en "e cons!dered a "reach, "ut s!)' y an e%ent that 're%ented the o" !#at!on of the 'et!t!oner cor'orat!on to con%ey t!t e fro) ac1u!r!n# "!nd!n# force.

2n the other hand, 'et!t!oner0 cor'orat!on !ns!sted that the cance at!on of the contract was (ust!f!ed "ecause of 'r!%ate res'ondentFs non0co)' !ance w!th essent!a 're0 cond!t!ons, a)on# wh!ch was the o'en!n# of an !rre%oca" e and uncond!t!ona etter of cred!t not ater than May 15, 1/73.

$r!a 5ourt ru ed !n fa%or of the 'r!%ate res'ondent f!nd!n# that 6rt 15/3 of the 5!%! 5ode, wh!ch 'ro%!des for auto)at!c resc!ss!on u'on fa! ure to de !%er or fa! ure to 'ay )o%a" e 'ro'ert!es, cou d not "e a'' !ed "ecause !)' !ed de !%ery was a ready )ade !n the case at "ar. $h!s !)' !ed de !%ery was )an!fested "y the fact that the 'et!t!oner0cor'orat!on a owed the 'r!%ate res'ondent to d!# and #ather scra' !ron fro) !ts 're)!ses.

5ourt of 6''ea s aff!r)ed the ru !n#.

Con31ita Noo$, et a$. "!. Co* t o2 Appea$!, et a$.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page ##

G.R. No. %%DD&:, J*$6 ,(, %))' T1i d Di"i!ion None.

#ANGANI.AN, J/

FACTS/

$wo 'arce s of and are !n d!s'ute and !t!#ated wh!ch was for)er y owned "y E!ctor!no Noo and Franc!sco Noo . - a!nt!ff s'ouses 5onch!ta Noo see* reco%ery of the afore)ent!oned 'arce s of and fro) defendants 6nac eto Noo , youn#er "rother of 5onch!ta. - a!nt!ffs a e#ed that they are the owners of su"(ect 'arce s of and and they "ou#ht the sa)e fro) 5onch!taFs other "rother, E!ctor!no and Franc!sco. Ahen they were !n d!re of )oney, they o"ta!ned a oan fro) ;e%e o')ent 8an* of the -h! !''!nes =;8-9 secured "y a rea estate )ort#a#e on sa!d and wh!ch was st! re#!stered !n the na)es of E!ctor!no and Franc!sco. For the!r fa! ure to 'ay sa!d oan, the )ort#a#e was forec osed. $hat w!th!n the 'er!od of rede)'t!on, ' a!nt!ff contacted defendant 6nac eto to redee) !t fro) ;8- wh!ch the atter d!d. 8ecause of th!s, t!t es of two 'arce s were transferred to 6nac eto. 6nac eto a#reed to "uy the and for -100,000.00, -30,000.00 of wh!ch was 'a!d to 5onch!ta and u'on 'ay)ent of the "a ance -14,000.00, ' a!nt!ffs were to re#a!n 'ossess!on wh!ch a)ounts defendant fa! ed to 'ay. 6nother a#ree)ent was entered where "y defendants a#reed to return to ' a!nt!ffs the and at anyt!)e the atter ha%e the necessary a)ount. - a!nt!ffs as*ed the defendants to return the sa)e "ut defendant refused, !)'e !n# the) to co)e to court for re !ef.

6 contract of re'urchase ar!s!n# out of a sa e where the se er d!d not ha%e any t!t e to the 'ro'erty Iso dJ !s not %a !d. 3!nce noth!n# was so d, then there !s a so noth!n# to re'urchase. +t !s c ear that 5onch!ta no on#er had any t!t e to the 'arce s of and at the t!)e of sa e "ecause when the )ort#a#ed 'arce s of and were forec osed due to the!r non0'ay)ent of sa!d oan, ownersh!' of the )ort#a#ed ands was conso !dated to ;8-. ;8- #a%e the )ort#a#ors one year rede)'t!on 'er!od "ut th!s was not e4erc!sed "y the). $hereafter 6nac eto succeeded !n "uy!n# the sa)e, so that ;8-Fs t!t es were cance ed and new cert!f!cates of t!t e were !ssued to h!). 3!nce, the a e#ed contract of re'urchase was de'endent on the %a !d!ty of the contract of sa e, !t !s !tse f %o!d. 6 %o!d contract cannot #!%e r!se to a %a !d one. +t !s !*ew!se c ear that 5onch!ta can no on#er de !%er the o"(ect of the sa e to the 6nac eto "ecause he has a ready ac1u!red t!t e and de !%ery thereof fro) the r!#htfu owner, the ;8-. $hus, the contract )ay "e dee)ed to "e !no'erat!%e. $he r!#ht to re'urchase 'resu''oses a %a !d contract of sa e "etween the sa)e 'art!es. &nd!s'uted y, 6nac eto ac1u!red t!t e to the 'ro'erty fro) ;8- and not fro) the 'et!t!oners. -et!t!on den!ed.

ISSUE/

Ahether or not ' a!nt!ffs s'ouses has the r!#ht to re'urchase the 'arce s of and to 6nac eto.

RULING/
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Sp!. Ca $o! and E*$a$ia Ra60*ndo, et a$. "!.

Page #$

Sp!. Do0inado and Ro!a$ia .and*n+ G.R. No. %'%,:-, J*$6 -(, ,--' T1i d Di"i!ion 1. Ahether or not the transact!on entered !nto "y the 'art!es was a contract of sa e. 2. Ahether or not Joce yn !s a "uyer !n Good Fa!th. RULING/ Bu a !a was en#a#ed !n the "us!ness of "uy!n# and se !n# ar#e catt e. For th!s 'ur'ose, she e)' oyed :biyaheros9 whose 'r!)ary tas* !n%o %ed the 'rocur!n# of ar#e catt e w!th the f!nanc!a ca'!ta 'ro%!ded "y Bu a !a and de !%er!n# the 'rocured catt e to her for further d!'osa . $o secure the f!nanc!a ca'!ta she ad%anced for the :biyaheros9 Bu a !a re1u!red the) to surrender the $ransfer 5ert!f!cates of $!t e of the!r 'ro'ert!es and to e4ecute the corres'ond!n# ;eeds of 3a e !n her fa%our. ;o)!nador had "een wor*!n# for Bu a !a as one of her :biyaheros9 for three decades so she no on#er re1u!red h!) to 'ost any secur!ty !n the 'erfor)ance of h!s dut!es. ,owe%er, Bu a !a found that he !ncurred shorta#e !n h!s catt e 'rocure)ent o'erat!on so ;o)!nador and h!s w!fe Rosa !a 8andon# e4ecuted a ;eed of 3a e !n fa%our of Bu a !a. $he su"(ect 'ro'erty was thereafter so d "y Bu a !a and her s'ouse 5ar os Ray)undo to Bu a !aFs #randn!ece Joce yn wh!ch was ater re#!stered !n the na)e of Joce yn and her hus"and 6n#e !to 8uenao"ra. 3'ouses 8uenao"ra !nst!tuted "efore the Me$5 an act!on for e(ect)ent a#a!nst 3ouses 8andon# wh!ch they o''osed on the #round that they are the r!#htfu owners. 3'ouses 8andon# !nst!tuted an act!on for annu )ent of sa e "efore R$5 a#a!nst Bu a !a and Joce yn on the #round that the!r consent to the sa e of the su"(ect 'ro'erty was %!t!ated "y Bu a !a after they were ser%ed "y Joce ynFs counse to %acate. $hey a e#ed that there was no sa e !ntended "ut on y e1u!ta" e )ort#a#e for the 'ur'ose of secur!n# the shorta#e !ncurred "y ;o)!nador wh! e e)' oyed as Ibiyahero9. Joce yn )a!nta!ned that she was a "uyer !n #ood fa!th and for %a ue. $he court of a''ea s re%ersed the R$5 ;ec!s!on and found that the transact!on entered !nto "y ;o)!nador and Bu a !a was not one of sa e "ut an e1u!ta" e )ort#a#e. ,ence th!s 'et!t!on.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

ISSUE/

CHICOANAZARIO, J./

FACTS/

1. No. +n e4ecut!n# the sa!d ;eed of 3a e, ;o)!nador and Bu a !a ne%er !ntended the transfer of ownersh!' of the su"(ect 'ro'erty "ut to "urden the sa)e w!th an encu)"rance to secure the !nde"tedness !ncurred "y ;o)!nador on the occas!on of h!s e)' oy)ent w!th Bu a !a. 8y Bu a !aFs own ad)!ss!on !t was her custo)ary "us!ness 'ract!ce to re1u!re her :biyaheros9 to de !%er to her the t!t es to the!r rea 'ro'ert!es and to e4ecute !n her fa%our the corres'ond!n# deeds of sa e o%er the sa!d 'ro'ert!es as secur!ty for the )oney she 'ro%!ded. ,ence, sa!d transact!on !s an e1u!ta" e )ort#a#e, so that Bu a !a has no r!#ht to su"se1uent y transfer ownersh!' of the su"(ect 'ro'erty, !n consonance that no"ody can d!s'ose of what he does not ha%e. $he!r re at!onsh!' !s )ere y )ort#a#or and )ort#a#ee rather than se er and "uyer. $he content!on of 'et!t!oner that ;o)!nador ceded h!s 'ro'erty to Bu a !a as 'ay)ent for h!s o" !#at!on for !t !s contrary to hu)an e4'er!ence "ecause he wou d f!rst oo* for )eans to sett e h!s o" !#at!on and the se !n# of a 'ro'erty on wh!ch h!s house that she ters the) stand wou d "e h!s ast resort.

2. No. Joce yn !s a #randn!ece of Bu a !a wh!ch res!des !n the sa)e oca !ty where the atter !%es and conducts her 'r!nc!'a "us!ness. $herefore !t !s !)'oss!" e for her not to
Page #9

ac1u!re *now ed#e of her #rand auntFs "us!ness 'ract!ce of re1u!r!n# her :biyaheros9 to surrender the t!t es to the!r 'ro'ert!es as secur!ty. $h!s shou d 'ut her on #uard for any 'oss!" e a"uses that Bu a !a )ay co))!t w!th the t!t es. ?!*ew!se she ad)!tted that she was aware that ;o)!nador and ?ourdes were !n 'ossess!on of the 'ro'erty. 6 "uyer of rea 'ro'erty that !s !n 'ossess!on of a 'erson other than the se er )ust "e wary. 6 "uyer who does not !n%est!#ate the r!#hts of one !n 'ossess!on can hard y "e re#arded as a "uyer !n #ood fa!th. -et!t!on !s den!ed.

ERLINDA SAN #EDRO "!. RU.EN LEE and LILIAN SISON G.R. No. 156522
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

May 27, 2004

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F+R3$ ;+E+3+2N

'et!t!oner. 2n a''ea , the 5ourt of 6''ea s re%ersed the tr!a court, and rendered a dec!s!on !n fa%or of res'ondents, the d!s'os!t!%e 'ort!on of wh!ch reads:

KN6RB3036N$+6G2, J.: I!!*e/ Fa3t!/ Ahether the contract !n 1uest!on !s an e1u!ta" e )ort#a#e or a deed of a"so ute sa e.

$he 'art!es !n th!s case e4ecuted the <Lasu atan n# Gana' na 8! !han n# ?u'a<, wh!ch states that the 'et!t!oner !s the true owner of a 'arce of and ocated !n 8u acan, wh!ch !s se !n# to the res'ondents for the a)ount of -150,000.

R*$in+/

$he docu)ent a''ears on !ts face to "e a contract of sa e, and conta!ns the fo ow!n# c ause:

$he docu)ent "ears two s!#natures a"o%e the ty'ewr!tten words <BR?+N;6 36N -B;R2, Na#"!"! !<. +t conta!ns the s!#natures of two w!tnesses.

-et!t!oner c a!)s that she a''roached one -h! !' de a $orre, who !ntroduced her to res'ondent. Fro) ?ee and h!s w!fe ?! !an 3!son, -et!t!oner was a" e to secure a oan !n the a)ount of -105,000.00, w!th !nterest of -45,000.00, or a tota !nde"tedness of -150,000.00.6 6s secur!ty for th!s oan, she a#reed to )ort#a#e a 'arce of a#r!cu tura and ocated !n 8u acan,

-et!t!oner c a!)s that 6tty. Ro4as and ?ee coerced her to s!#n the <Lasu atan< and that the docu)ent was e4ecuted )ere y as wr!tten e%!dence of the oan and )ort#a#e. Res'ondents, on the other hand c a!) that the sa e of the 'ro'erty !n 1uest!on was "ro*ered "y the!r )utua ac1ua!ntance and "ro*er, -h! !' de a $orre. $hey thus ne#ot!ated for the 'urchase of the 'ro'erty, wh!ch had an !n!t!a as*!n# 'r!ce of -200,000.00,21 and offered to 'ay -150,000.00 therefor. 3an -edro acce'ted the!r offer and a#reed to se the and.

Na dah! at a an#0a an# sa ha a#an# +36NG ;66N 6$ ?+M6M-&NG ?+82NG -+32 =-150,000.009, 3a a'!n# -! !'!no, na n#ayon# araw na !to ay !"!nayad sa a*!n at t!nan##a' *o na)an n# "uon# *as!yahan#0 oo" "! an# husto at #ana' na *a"ayaran n! R&8+N $. ?BB, )ay sa'at na #u an#, -! !'!no, *asa *ay ?! !an 3!son at nan!n!rahan sa 230 Mac6rthur ,!#hway, Laruhatan, Ea en@ue a, Metro Man! a, a*!n# +-+N6G8+8+?+, +3+N636?+N at +N+?+?+-6$ n# #ana' at 'atu uyan at wa an# anu)an# 'asusu"a ! o 'anana#utan, an# ahat at "oo Os!cP *on# *ara'atan at 'a#)a)ay0ar! at 'a)u)usesyon sa na"an##!t na a#ay n# u'a at )#a *aun aran o )e(oras na d!to ay )a*!*!ta o na*at!r!* o )atata#'uan sa nasa"!n# R&8+N $. ?BB at sa *anyan# )#a ta#a'a)ana o *aha ! !.

$he tr!a court rendered a dec!s!on !n fa%or of

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

+t !s we 0sett ed that the 'resence of e%en one of the fore#o!n# c!rcu)stances !s suff!c!ent to dec are a contract as an e1u!ta" e )ort#a#e, !n consonance w!th the ru e that the aw fa%ors the east trans)!ss!on of 'ro'erty r!#hts.For the 'resu)'t!on of an e1u!ta" e )ort#a#e to ar!se under 6rt!c e 1602, two re1u!s!tes )ust concur: =19 that the 'art!es entered !nto a contract deno)!nated as a sa e: and =29 that the!r !ntent!on was to secure an e4!st!n# de"t "y way

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of a )ort#a#e.

A,BRBF2RB, 're)!ses cons!dered, the dec!s!on of the 5ourt of 6''ea s dated No%e)"er 20, 2002, wh!ch d!s)!ssed the co)' a!nt f! ed "y 'et!t!oner for ac* of )er!t, !s 6FF+RMB;

Spo*!e! A*!t ia and Leoni!a Hi$a io "!. Spo*!e! Gon>a$e> G.R. No. %('&,% Jan*a 6 ,%, ,--( Se3ond Di"i!ion MUISU<.ING, J.,
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page $2

FACTS/ 3'ouses ,! ar!o f! ed an act!on for ;ec arat!on of Nu !ty a#a!nst 3'ouses Gon@a es !n%o %!n# 3 'arce s of ands wh!ch were the su"(ect of 2 ;eeds of 3a e e4ecuted ?eon!sa ,! ar!o !n fa%or of the atter s'ouses. 2ne ot was 'r!ced at -50, 000 and the other at -240,000. 3'ouses ,! ar!o c a!)ed that the contract "etween the) and 3'ouses Gon@a e@ were not of sa e "ut oans for -260,000. ,owe%er, !t turned out that 3'ouses Gon@a e@ re#!stered the d!s'uted ots !n the!r na)es throu#h the use of fraud, )!sre'resentat!on and fa s!f!cat!on, us!n# the f!ct!t!ous contracts of sa e. 3'ouses on the other hand contend that they "ou#ht the sa!d ots fro) 3'ouses ,! ar!o )ere y out of '!ty for the) and that the ;eed of 6"so ute 3a e was notar!@ed. R$5: ru ed !n fa%or of 3'ouses ,! ar!o. 56: RBEBR3B;. ISSUE/ Ahether the transact!on !s an a"so ute sa e or e1u!ta" e )ort#a#e of rea 'ro'erty. HELD/ AFFIR<ED. $he transact!on !s an a"so ute sa e. $he 'resu)'t!on of e1u!ta" e )ort#a#e when there !s !nade1uacy of the se !n# 'r!ce: 'ossess!on !n the 're)!ses: and 'ay)ent of rea ty ta4es !s not conc us!%e. +t )ay "e re"utted "y co)'etent and sat!sfactory 'roof to the contrary. ,ere, 3'ouses ,! ar!o fa! ed to 'resent any 'roof whatsoe%er that the fa!r )ar*et %a ues of the rea 'ro'erty !n the area at the t!)e of the transact!on were )uch h!#her than the se !n# 'r!ce of the 'arce s !n 1uest!on. 6s to the a e#at!on that 'et!t!oners were !n 'ossess!on of the 'ro'ert!es e%en after the sa e, !t !s o"%!ated "y the fact that they e4ecuted an underta*!n# 'ro)!s!n# to %acate the 're)!ses. Moreo%er, they fa! ed to re"ut the test!)ony of the Notary -u" !c who test!f!ed !n court that the 'et!t!oners as %endors of the 'ro'ert!es 'ersona y a''eared and ac*now ed#ed the sa e docu)ents "efore h!). ?ast y, ?eon!sa ,! ar!o sent a note to Mrs. Gon@a es re1uest!n# the) to e4ecute another antedated deed of sa e, 'ro%!d!n# for a decreased se !n# 'r!ce, so as to reduce 'et!t!oners> ta4es, e.g. ca'!ta #a!ns ta4. $he
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

e4!stence and #enu!neness of the etter was ne%er re"utted. Note that !n sa!d etter ?eon!sa used the ter) >Kasulatan ng 3ilihan> =;eed of 3a e9. 3he !*ew!se )ade )ent!on a"out ca'!ta #a!ns ta4 and re#!strat!on fees, wh!ch can on y f!nd re e%ance and necess!ty !n a contract of sa e and not !n a contract of )ort#a#e. -et!t!oners cannot fe!#n !#norance and ! !teracy as to !ts contents. 3a!d etter !s wr!tten not !n Bn# !sh "ut !n F! !'!no !n wh!ch 'et!t!oners are con%ersant. $hus, the true !ntent of the 'art!es !n%o %es a contract of sa e. +t !s not )ere y a oan, )uch ess an e1u!ta" e )ort#a#e

O!3a Fe nande> "!. Spo*!e! Ca $o! and Na 3i!a Ta *n G.R. No. %(&@D@ No"e05e %(, ,--, T1i d Di"i!ion

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#ANGANI.AN, J./ FACTS/ 6 f!sh'ond ocated !n 6re ano08an! ;a#u'an 5!ty !s co0owned "y "rothers 6nton!o, 3ant!a#o, ;e)etr!a and 6n#e Fernande@, to#ether w!th the!r unc e 6r)ando. 6nton!o and ;e)etr!a so d the!r res'ect!%e shares to 3'ouses $arun. $hese sa es were re#!stered and annotated !n the 25$. ?ater, the sa!d co0 owners e4ecuted a ;eed of B4tra(ud!c!a -art!t!on of two 'arce s of re#!stered and w!th e4chan#e of shares. $h!s !n%o %ed the f!sh'ond =1st9 that was co0owned and another f!sh'ond =2nd9. +t was a so st!'u ated !n the deed that the 'art!es reco#n!@e and res'ect the sa e ear !er )ade. 6n#e 8. Fernande@ e4chan#ed h!s share !n the 2nd f!sh'ond to the shares of h!s co0owners on the re)a!n!n# 'ort!on of the 1st f!sh'ond. Fro) that t!)e on, they had "een 'ay!n# the rea ty ta4es thereon. ,owe%er, !t was 6n#e 8. Fernande@ and ater on h!s he!rs, O'et!t!onersP, who re)a!ned !n 'ossess!on of the ent!re f!sh'ond. $he 3'ouses $arun sou#ht the 'art!t!on of the 'ro'erty "ut 6n#e Fernande@ refused. Ahen he d!ed, 3'ouses $arun a#a!n sou#ht the 'art!t!on of the 'ro'erty "ut 6n#e Fernande@Fs he!rs O'et!t!onerP a#a!n refused. ,ence, th!s act!on for 'art!t!on. R$5: !n fa%or of 'et!t!oners. $hey are ent!t ed to redee) the 'ro'erty. 56: RBEBR3B;. ISSUE/ Ahether or not the transact!on !s one of a"so ute sa e or e1u!ta" e )ort#a#e. HELD/ AFFIR<ED. $he transact!on !s an a"so ute sa e. 2n !ts face, a docu)ent !s cons!dered a contract of e1u!ta" e )ort#a#e when the c!rcu)stances enu)erated !n 6rt!c e 1602 of the 5!%! 5ode are )an!fest, as fo ows: =a9 when the 'r!ce of the sa e w!th the r!#ht to re'urchase !s unusua y !nade1uate, and ="9 when the %endor re)a!ns !n 'ossess!on as essee or otherw!se. 6 thou#h !t !s und!s'uted that 6n#e Fernande@ was !n actua 'ossess!on of the 'ro'erty, !t !s !)'ortant to note that he d!d not se !t to res'ondents. $he se ers were h!s co0owners 00 6nton!o and ;e)etr!a Fernande@ 00 who, howe%er, are not c a!)!n# that the sa e "etween the) was an e1u!ta" e )ort#a#e. For the 'resu)'t!on of an e1u!ta" e )ort#a#e to ar!se, one )ust f!rst sat!sfy the re1u!re)ent that the 'art!es entered !nto a
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

contract deno)!nated as a contract of sa e, and that the!r !ntent!on was to secure an e4!st!n# de"t "y way of )ort#a#e. Further)ore, )ere a e#ed !nade1uacy of the 'r!ce does not necessar! y %o!d a contract of sa e, a thou#h the !nade1uacy )ay !nd!cate that there was a defect !n the consent, or that the 'art!es rea y !ntended a donat!on, )ort#a#e, or so)e other act or contract. F!na y, un ess the 'r!ce !s #ross y !nade1uate or shoc*!n# to the consc!ence, a sa e !s not set as!de. +n th!s case, 'et!t!oners fa! ed to esta" !sh the fa!r )ar*et %a ue of the 'ro'erty when !t was so d !n 1/6.. ,ence, there !s no "as!s to conc ude that the 'r!ce was #ross y !nade1uate or shoc*!n# to the consc!ence.

To$entino and RoNo "!. CA, De G*>0an, #on+3o and .ad* ia

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G.R. No. %,@':) A*+*!t %, ,--, Se3ond Di"i!ion M*i!*05in+, J/

I!!*e!/ 1.9 Ahether 6rt. 1602 ='resu)'t!on of e1u!ta" e )ort#a#e9 !s !na'' !ca" e to the !nstant case. 2.9 Ahether the act!on for dec arat!on of nu !ty of the ;eed of 6"so ute 3a e !s the 'ro'er re)edy or cause of act!on. R*$in+/ 1.9 -et!t!oners ar#ue that 6rt. 1602 of the 5!%! 5ode a'' !es on y when there !s no e4'ress a#ree)ent or st!'u at!on "etween the 'art!es. 8ut !n the !nstant case, there was an e4'ress a#ree)ent, therefore !na'' !ca" e.

Fa3t!/ 3's. -edro and Josef!na ;e Gu@)an were the re#!stered owners of a 'arce of and co%ered "y $5$ No. 20247 $0105 of the Re#!ster of ;eeds of Hue@on 5!ty =R; of H59. $hey o"ta!ned a oan fro) the Reha"! !tat!on F!nance 5or'orat!on =RF59, now ;e%e o')ent 8an* of the -h! !''!nes =;8-9, and e4ecuted a )ort#a#e secur!ty therefor. $hey fa! ed to 'ay the o" !#at!on: hence, the )ort#a#e was forec osed.

8ut "efore the e4'!ry of the rede)'t!on 'er!od, 3's. ;e Gu@)an o"ta!ned another oan of -17,000 fro) Ray)undo $o ent!no and ?oren@a RoQo ='et!t!oners9. $he oan to RF5 was 'a!d and the )ort#a#e was cance ed. -et!t!oners then re1uested 3's. ;e Gu@)an to s!#n a (eed o+ 8romise to Sell as secur!ty for the oan. 6fterwards, they as*ed a#a!n 3's. ;e Gu@)an to s!#n a (eed o+ Absolute Sale. 6r)ed w!th the ;eed of 6"so ute 3a e, 'et!t!oners secured the cance at!on of $5$ No. 20247 $0105 and $5$ No. 6/164 was !ssued !n the!r na)e.

35 sa!d wron#. $here !s noth!n# !n 6rt. 1602 that !nd!cates !t a'' !es on y !n the a"sence of e4'ress a#ree)ent "etween the 'art!es. $he tr!a court !n render!n# the dec!s!on cons!dered fore)ost the rea 'art!esF !ntent !n enter!n# !nto the transact!ons. +t o"ser%ed that the transact!ons !nd!cated that 'et!t!oners d!d not !ntend to ho d the 'ro'erty as owner, "ut as secur!ty for the oan e4tended to the res'ondents. Further)ore, the res'ondents re)a!ned !n 'ossess!on of the 'ro'erty and cont!nued to 'ay rea estate ta4es e%en after the e4ecut!on of the ;eed of 6"so ute 3a e. $hese are "ad#es of e1u!ta" e )ort#a#e. $he tr!a court, !n%o*!n# 6rt. 1602 and 6rt. 1604 of the 5!%! 5ode, ru ed that these were suff!c!ent to ra!se the 'resu)'t!on that the contract was an e1u!ta" e )ort#a#e.

&'on the death of -edro de Gu@)an !n 1/.1, res'ondents tr!ed to sett e the re)a!n!n# "a ance of the oan. -et!t!oners a#reed to recon%ey the 'ro'erty on the cond!t!on that res'ondents 'ay the actua )ar*et %a ue o"ta!n!n# !n 1/.1. &'on %er!f!cat!on w!th the R; of H5, the ;e Gu@)ans found that the t!t e was a ready !n the na)e of the 'et!t!oners. 5onse1uent y, res'ondents f! ed a co)' a!nt for dec arat!on of sa e as e;uitable mortgage and recon%eyance of 'ro'erty w!th da)a#es. 8oth the tr!a court and 56 ru ed !n fa%or of res'ondents. ,ence, th!s !nstant 'et!t!on.

2.9 35 he d that we entrenched !s the ru e that !t!#ants cannot ra!se an !ssue for the f!rst t!)e on a''ea as th!s contra%enes the "as!c ru es of fa!r ' ay and (ust!ce. Moreo%er, there !s noth!n# !n 6rt. 1605 that 'roh!"!ts the !nst!tut!on of an act!on d!fferent fro) the one 'ro%!ded there!n. +t uses the word I)ayJ and denotes d!scret!on and cannot "e construed as )andatory. $hus, !t !s not o" !#atory for res'ondent to f! e an act!on for refor)at!on of !nstru)ents.

8etition ()*+)(.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page $!

??????????????????????????????????????? 6rt. 1602. $he contract sha "e 'resu)ed to "e an e1u!ta" e )ort#a#e, !n any of the fo ow!n# cases: =19 Ahen the 'r!ce of a sa e w!th r!#ht to re'urchase !s unusua y !nade1uate: =29 Ahen the %endor re)a!ns !n 'ossess!on as a essee or otherw!se: =39 Ahen u'on or after the e4'!rat!on of the r!#ht to re'urchase another !nstru)ent e4tend!n# the 'er!od of rede)'t!on or #rant!n# a new 'er!od !s e4ecuted: =49 Ahen the 'urchaser reta!ns for h!)se f a 'art of the 'urchase 'r!ce: =59 Ahen the %endor "!nds h!)se f to 'ay the ta4es on the th!n# so d: =69 +n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on. +n any of the fore#o!n# cases, any )oney, fru!ts, or other "enef!t to "e rece!%ed "y the %endee as rent or otherw!se sha "e cons!dered as !nterest wh!ch sha "e su"(ect to the usury aws. 6rt. 1604. $he 'ro%!s!ons of art!c e 1602 sha a so a'' y to a contract 'ur'ort!n# to "e an a"so ute sa e.

Geo +ina Hi$ado "!. Hei ! o2 Ra2ae$ <eda$$a

G.R. No. %((,,' Fe5 *a 6 %:, ,--,

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Se3ond Di"i!ion <endo>a, J/ ,owe%er, the 56 re%ersed the tr!a courtFs dec!s!on for the reason that the assessed %a ue of ?ot No. 1031 !s -145,460 and the cons!derat!on was on y for -50,000. 6s such, !t can on y conc ude that !t was #ross y !nade1uate.

Fa3t!/ Gor#on!o Maca!nan was the owner of se%era 'ro'ert!es !n 8aco od 5!ty. &'on h!s death !n 1/66, h!s estate was d!%!ded a)on# h!s he!rs, !nc ud!n# 8er"on!a who had 'redeceased h!). +n turn, her ch! dren Rafae , ?ourdes and $eres!ta, surna)ed Meda a succeeded to her !nher!tance. Rafae Meda aFs share cons!sted of f!%e hectares !n ?ot No. 1031 and 1,1/. s1.). !n the ?o'e@ Jaena 'ro'erty.

-et!t!oner now see*s a re%ersa of the sa!d dec!s!on.

I!!*e!/ 1.9 Ahether 6rt. 1602 of the 5!%! 5ode !s 'resent !n the !nstant case. 2.9 Ahether the contract of deed of a"so ute sa e e4ecuted !s the aw "etween the 'art!es. R*$in+/ 1.9 &nder 6rt. 1602 !n re at!on to 6rt. 1604 of the 5!%! 5ode, a contract 'ur'ort!n# to "e an a"so ute sa e !s 'resu)ed to "e an e1u!ta" e )ort#a#e R

+n 1/./ and 1/71, Rafae e4ecuted a ;eed of 6"so ute 3a e, 'ur'ort!n# to se h!s share to Geor#!na ,! ado ='et!t!oner9. $he f!rst deed was for ?ot No. 1031 for -50,000 wh! e the second was for the ?o'e@ Jaena 'ro'erty for -25,000.

2%er the ne4t two years, ,! ado and Meda a e4ecuted three )ore contracts concern!n# ?ot No. 1031 and the ?o'e@ Jaena 'ro'erty.

=19 when the 'r!ce of a sa e . . . !s unusua y !nade1uate: +n 1/74, 8er"on!aFs s!ster, 6n!ta Maca!nan "rou#ht a su!t a#a!nst ,! ado and Meda a for e#a rede)'t!on. Meda a f! ed a cross0c a!) a#a!nst ,! ado, a e#!n# that the ;eed of 3a e !n 1/./ was an e1u!ta" e )ort#a#e to secure a oan for -50,000 wh!ch he had rece!%ed fro) ,! ado. Ne%erthe ess, ,! ado c a!)s !t was a deed of sa e and not a oan a#ree)ent. =29 when the %endor re)a!ns 'ossess!on as essee or otherw!se: !n

=69 !n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on

$he tr!a court d!s)!ssed 6n!taFs co)' a!nt and ru ed !n fa%or of 'et!t!oner, stat!n# that Meda a as a th!rd year aw 'ro'er when the deed was e4ecuted had fu *now ed#e of the conse1uences when he aff!4ed h!s s!#nature. ,ence, the court was con%!nced that the !ntent!on was rea y to se "ecause a the for)a !t!es re1u!red for a %a !d and enforcea" e contract ha%e "een fu y sat!sf!ed.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

$he 'resence of these c!rcu)stances !s suff!c!ent for a contract to "e 'resu)ed as an e1u!ta" e )ort#a#e.

+n the !nstant case, there was e%!dence show!n# that the 'r!ce 'a!d "y 'et!t!oner was unusua y !nade1uate as co)'ared to the )ar*et %a ue of the ands !n the ne!#h"orhood.
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6 so, Meda a re)a!ned !n 'ossess!on of the ot as corro"orated "y h!s tenant Ra)on Ness!a and a so "y 6n!ta Maca!nan.

Moreo%er, the ser!es of transact!ons e4ecuted after the 1/./ ;eed of 6"so ute 3a e !nd!cated 1u!te c ear y that the rea !ntent!on of the 'art!es was to secure the oans of Meda a. +n fact the 56 he d that :It is 1ery unli<ely +or one person )ho had ac;uired a property +or a certain price to sell the same property to the same person +i1e years a+ter +or the same price rate, considering that they are unrelated, unless, there has been an understanding bet)een them that the same property )ill be resold to 'edalla a+ter the +ul+illment o+ a resolutory condition.9

2.9 $he 35 he d that !n %!ew of the conc us!ons reached, !t w! suff!ce to say that e%en !f a docu)ent a''ears on !ts face to "e a sa e, the owner of the 'ro'erty )ay 'ro%e that the contract !s rea y a oan w!th )ort#a#e and that the docu)ent does not e4'ress the true !ntent and a#ree)ent of the 'art!es.

8etition ()*+)(.

S#OUSES JA?<E C. U? and EVEL?N U?, 'et!t!oners, %s. THE HONORA.LE COURT OF A##EALS and S#S. NICANOR G. DE GUZ<AN and ESTER DE GUZ<AN, res'ondents. G.R. No. %-)%)' J*ne ,%, ,--%

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<ELO, J. -r!%ate res'ondents N!canor de Gu@)an, Jr. and Bster de Gu@)an were the owners of three ots ocated !n Greenh! s 3u"d!%!s!on, 3an Juan, Metro Man! a. +n 1/.1, they constructed, at a cost of -3 )! !on, a 1,200 s1uare )eter res!dent!a house on two of the ots. +n 1/7., the )ar*et %a ue of the ots a ready ran#ed fro) -4,000 to -5,000 'er s1uare )eter wh! e the house was worth a"out -10 )! !on. 3o)et!)e !n 1/7., N!canor de Gu@)an, Jr. dec!ded to run for the 'os!t!on of Re'resentat!%e of the Fourth ;!str!ct of Nue%a Bc!(a. 3o)et!)e !n 6'r! 1/7., howe%er, de Gu@)anFs ca)'a!#n fund "e#an to run dry and he was co)'e ed to "orrow -2.5 M! !on fro) Mar!o 3!och!. $he de Gu@)an s'ouses were re1u!red to s!#n, as a sort of co atera , a deed of sa e dated 6'r! 10, 1/7. where"y they 'ur'orted y so d 2 of the 3 ots a on# w!th the !)'ro%e)ents thereon, to 3!och!. ;e Gu@)an was a" e to o"ta!n two )ore oans of -500,000.00 each fro) 3!och!. No add!t!ona co atera was re1u!red, the <deed of sa e< "e!n# )ore than suff!c!ent to co%er the or!#!na -2.5 )! !on oan and the add!t!ona -1 )! !on oan. ;es'!te the <deed of sa e,< howe%er, the de Gu@)ans re)a!ned !n 'ossess!on of the 'ro'erty. 6s!de fro) these oans, de Gu@)an a so owed 3!och! se%era de"ts, to re'ay these other oans, the de Gu@)ans a#reed w!th 3!och! to ha%e the!r 1,411 s1uare )eter %acant ot, wh!ch had a ready "een <so d< to 3!och! under the 6'r! 10, 1/7. deed of sa e, so d. $he sa e of the sa)e a)ounted to -4.7 M! !on, the 'roceeds of wh!ch were a reta!ned "y 3!och!. +n the )eant!)e and w!thout the *now ed#e of the de Gu@)an s'ouses, 3!och! had the s'ouses $5$ cance ed on the "as!s of the deed of sa e e4ecuted "y the s'ouses on 6'r! 10, 1/7., and had new $orrens t!t es !ssued !n h!s na)e. 2n June 20, 1/7., 3!och! so d the two ots and the !)'ro%e)ents thereon for -2..5 M! !on to here!n 'et!t!oners Jay)e and B%e yn &y. $hereafter, 'et!t!oners had 3!och!Fs t!t es o%er the ots cance ed and had new t!t es !ssued o%er the 'ro'erty. 2n Ju y 1, 1/77, 'et!t!oners entered !nto a contract of ease w!th o't!on to "uy w!th Ro"erto 3a a'antan. 3a a'antan was, howe%er, una" e to o"ta!n 'ossess!on of the ots s!nce the 're)!ses were occu'!ed "y the de Gu@)an s'ouses. 5onse1uent y, 3a a'antan
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

f! ed a co)' a!nt for e(ect)ent on 6u#ust 1, 1/77 a#a!nst the de Gu@)an s'ouses w!th the Metro'o !tan $r!a 5ourt of 3an Juan, Metro Man! a. 2n 3e'te)"er 16, 1/77, the de Gu@)ans f! ed a co)' a!nt w!th the Re#!ona $r!a 5ourt of -as!# a#a!nst 3!och!, 3a a'antan, and here!n 'et!t!oners, see*!n# the refor)at!on of the 6'r! 10, 1/7. ;eed of 6"so ute 3a e to the end that the true !ntent!on of the 'art!es there!n "e e4'ressed. 2n ;ece)"er 27, 1//0, the tr!a court rendered !ts dec!s!on !n fa%or of the de Gu@)ans. 6##r!e%ed, 'et!t!oners !nter'osed an a''ea w!th the 5ourt of 6''ea s, the atter aff!r)ed the dec!s!on of the tr!a court ho d!n# that the sa e d!s'uted "y the de Gu@)ans to 3!och! was an e1u!ta" e )ort#a#e. +33&B : Ahether or not the sa e )ade "y here!n 'r!%ate res'ondents was !ndeed an e1u!ta" e )ort#a#e as he d "y "oth the tr!a court and the a''e ate court

,B?;: KB3, the sa e !s an e1u!ta" e )ort#a#e. 6rt. 1602 of the New 5!%! 5ode 'ro%!des: $he contract sha "e 'resu)ed to "e an e1u!ta" e )ort#a#e, !n any of the fo ow!n# cases: =19 Ahen the 'r!ce of a sa e w!th r!#ht to re'urchase !s unusua y !nade1uate:=29 Ahen the %endor re)a!ns !n 'ossess!on as essee or otherw!se:=39 Ahen u'on or after the e4'!rat!on of the r!#ht to re'urchase another !nstru)ent e4tend!n# the 'er!od of rede)'t!on or #rant!n# a new 'er!od !s e4ecuted:=49 Ahen the 'urchaser reta!ns for h!)se f a 'art of the 'urchase 'r!ce: =59 Ahen the %endor "!nds h!)se f to 'ay the ta4es on the th!n# so d:=69 +n any other case where !t )ay fa!r y "e !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on. $he court was con%!nced and found that the 1uest!oned deed of sa e !s !n rea !ty a )ere e1u!ta" e )ort#a#e and not an a"so ute sa e !n %!ew of the fo ow!n# c!rcu)stances: F!rst, the cons!derat!on of the sa e of -2.5 M! !on !s #ross y and unusua y !nade1uate.3econd, des'!te the a e#ed deed of sa e, ' a!nt!ffs ha%e

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re)a!ned !n actua and 'hys!ca 'ossess!on of the !t!#ated 'ro'erty u' to the 'resent t!)e.$h!rd, the uncontrad!cted e%!dence !s that ' a!nt!ffs were dr!%en to o"ta!n the e)er#ency oan due to ur#ent necess!ty of o"ta!n!n# funds and they s!#ned the deed of sa e *now!n# that !t d!d not e4'ress the!r rea !ntent!on. +n fact, add!t!ona oans !n the tota su) of -1 )! !on were e4tended to ' a!nt!ffs "y 3!och! e%en after the e4ecut!on of sa!d sa e w!thout 3!och! de)and!n# for any add!t!ona secur!ty.?ast y, 3!och! had reta!ned for the)se %es the ent!re 'roceeds of -4.7 )! !on der!%ed fro) the sa e of ' a!nt!ffsF %acant ot. +n the fo ow!n# c!rcu)stances, !t !ndu"!ta" y shows that the a e#ed sa e was !ndeed an e1u!ta" e )ort#a#e. 6s found "y "oth the tr!a court and a''e ate court, the 6'r! 10, 1/7. deed of sa e e4ecuted "y the de Gu@)ans and 3!och! was an e1u!ta" e )ort#a#e, hence, the t!t es to the house and ots wh!ch were so d "y 3!och! to 'et!t!oners actua y re)a!ned w!th the )ort#a#ors, the de Gu@)ans. $he c!rcu)stance that the or!#!na transact!on was su"se1uent y dec ared to "e an e1u!ta" e )ort#a#e )ust )ean that the t!t e to the su"(ect and wh!ch had "een transferred to 'r!%ate res'ondents actua y re)a!ned or !s transferred "ac* to 'et!t!oners here!n as owners0 )ort#a#ors, confor)a" y w!th the we 0 esta" !shed doctr!ne that the )ort#a#ee does not "eco)e the owner of the )ort#a#ed 'ro'erty "ecause the ownersh!' re)a!ns w!th the )ort#a#or. $he !ssuance of a cert!f!cate of t!t e !n 3!och!Fs fa%or d!d not %est u'on h!) ownersh!' of the 'ro'erty. Ne!ther d!d !t %a !date the sa e )ade "y 3!och! to 'et!t!oners, wh!ch !s nu and %o!d. 6rt!c e 2077 of the 5!%! 5ode 'ro%!des that the <the cred!tor cannot a''ro'r!ate the th!n#s #!%en "y way of ' ed#e or )ort#a#e, or d!s'ose of the).< 8e!n# nu and %o!d, the sa e "y 3!och! of the 1uest!oned 'ro'erty to 'et!t!oners, who are not !nnocent 'urchasers, 'roduced no e#a effects whatsoe%er. S#OUSES OCTAVIO and E#IFANIA LOR.ES, 'et!t!oners, %s. COURT OF A##EALS, RICARDO DELOS RE?ES and JOSEFINA CRUZ, res'ondents. G.R. No. %&)@@( Fe5 *a 6 %:, ,--%

GONZAGAARE?ES, J./
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-et!t!oners were the re#!stered owners of a 2250s1uare )eter 'arce of and ocated !n 6nt!'o o, R!@a co%ered "y $ransfer 5ert!f!cate of $!t e No. 16500/. 3o)et!)e !n 6u#ust 1//1, 'et!t!oners )ort#a#ed th!s 'ro'erty to F orenc!o and Nestor 5ar os !n the a)ount of -150,000.00. 6"out a year ater, the )ort#a#e o" !#at!on had !ncreased to -500,000.00 and fear!n# forec osure of the 'ro'erty, 'et!t!oners as*ed the!r son0!n0 aw, here!n 'r!%ate res'ondent R!cardo de os Reyes, for he ' !n redee)!n# the!r 'ro'erty. -r!%ate res'ondent de os Reyes a#reed to redee) the 'ro'erty "ut "ecause he a e#ed y had no )oney then for the 'ur'ose he so !c!ted the ass!stance of 'r!%ate res'ondent Josef!na 5ru@, a fa)! y fr!end of the de os Reyeses and an e)' oyee of the ?and 8an* of the -h! !''!nes. +t was a#reed that 'et!t!oners w! s!#n a deed of sa e con%ey!n# the )ort#a#ed 'ro'erty !n fa%or of 'r!%ate res'ondent 5ru@ and thereafter, 5ru@ w! a'' y for a hous!n# oan w!th ?and 8an*, us!n# the su"(ect 'ro'erty as co atera . +t was further a#reed that out of the 'roceeds of the oan, -500,000.00 w! "e 'a!d to the 5ar oses as )ort#a#ees, and an such "a ance w! "e a'' !ed "y 'et!t!oners for ca'!ta #a!ns ta4, e4'enses for the cance at!on of the )ort#a#e to the 5ar oses, transfer of t!t e to Josef!na 5ru@, and re#!strat!on of a )ort#a#e !n fa%or of ?and 8an*. Moreo%er, the )onth y a)ort!@at!on on the hous!n# oan wh!ch was su''osed to "e deducted fro) the sa ary of 'r!%ate res'ondent 5ru@ w! "e re!)"ursed "y 'r!%ate res'ondent de os Reyes. 2n 3e'te)"er 2/, 1//2, the ?and 8an* !ssued a etter of #uarantee !n fa%or of the 5ar oses, !nfor)!n# the) that 5ru@Fs oan had "een a''ro%ed. 2n 2cto"er 22, 1//2, $ransfer 5ert!f!cate of $!t e No. 16500/ was cance ed and $ransfer 5ert!f!cate of $!t e No. 22/7/1 !n the na)e of Josef!na 5ru@ was !ssued !n !eu thereof.2 2n No%e)"er 25, 1//2, the )ort#a#e was d!schar#ed. 3o)et!)e !n 1//3, 'et!t!oners not!f!ed 'r!%ate res'ondent de os Reyes that they were ready to redee) the 'ro'erty "ut the offer was refused. 6##r!e%ed, 'et!t!oners f! ed on Ju y 22, 1//4 a co)' a!nt for refor)at!on of !nstru)ent and da)a#es w!th the R$5 of 6nt!'o o, R!@a ,
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

doc*eted as 5!%! 5ase No. /4032/6. +n the co)' a!nt, 'et!t!oners c a!)ed that the deed was )ere y a for)a !ty to )eet the re1u!re)ents of the "an* for the hous!n# oan, and that the rea !ntent!on of the 'art!es !n secur!n# the oan was to a'' y the 'roceeds thereof for the 'ay)ent of the )ort#a#e o" !#at!on. $hey a e#ed that the deed of sa e d!d not ref ect the true !ntent!on of the 'art!es, and that the transact!on was not an a"so ute sa e "ut an e1u!ta" e )ort#a#e, cons!der!n# that the 'r!ce of the sa e was !nade1uate cons!der!n# the )ar*et %a ue of the su"(ect 'ro'erty and "ecause they cont!nued 'ay!n# the rea estate ta4es thereto e%en after the e4ecut!on of the sa!d deed of sa e. 2n June 20, 1//5, the tr!a court rendered (ud#)ent !n fa%or of 'et!t!oners, u'on f!nd!n# that: =19 the ;eed of 6"so ute 3a e dated 2cto"er 21, 1//2 d!d not ref ect the true !ntent!on of the 'art!es, and =29 the transact!on entered !nto "etween 'et!t!oners and 5ru@ was not an a"so ute sa e "ut an e1u!ta" e )ort#a#e, cons!der!n# that the 'r!ce stated !n the ;eed of 6"so ute 3a e was !nsuff!c!ent co)'ared to the %a ue of the 'ro'erty, 'et!t!oners are st! !n 'ossess!on of the 'ro'erty, and 'et!t!oners had cont!nued to 'ay the rea estate ta4es thereon after the e4ecut!on of the sa!d deed of sa e. $he 5ourt of 6''ea s re%ersed the a"o%e dec!s!on, f!nd!n# that the transact!on "etween 'et!t!oners and 5ru@ was one of a"so ute sa e, not of e1u!ta" e )ort#a#e. $o the 5ourt of 6''ea s, the transact!on was un)!sta*a" y a contract of sa e, as e%!denced "y the nu)erous su''ort!n# docu)ents thereto, such as the 5ontract to 3e dated June 1//2, 6ff!da%!t of Aa!%erC6ss!#n)ent dated 6u#ust 14, 1//2, Rece!'t of -art!a 6d%ance -ay)ent dated 3e'te)"er /, 1//2, and $ransfer 5ert!f!cate of $!t e No. 22/7/1 !ssued !n the na)e of 'r!%ate res'ondent 5ru@. +33&B: Ahether or not the a e#ed sa e was an e1u!ta" e )ort#a#e ,B?;: KB3, the sa e was !ndeed an e1u!ta" e )ort#a#e. $he 3u're)e 5ourt he d that the cond!t!ons wh!ch #!%e way to a 'resu)'t!on of e1u!ta" e )ort#a#e, as set out !n 6rt!c e 1602 of the 5!%! 5ode, a'' y w!th e1ua force to a contract 'ur'ort!n# to "e one of a"so ute sa e. Moreo%er, the 'resence of e%en one of the c!rcu)stances a!d out !n 6rt!c e 1602, and not a
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concurrence of the c!rcu)stances there!n enu)erated, suff!ces to construe a contract of sa e to "e one of e1u!ta" e )ort#a#e. $h!s !s s!)' y !n consonance w!th the ru e that the aw fa%ors the east trans)!ss!on of 'ro'erty r!#hts. $hus, under 6rt!c e 1602 of the 5!%! 5ode, a contract sha "e 'resu)ed to "e an e1u!ta" e )ort#a#e when 000 =a9 the 'r!ce of a sa e w!th r!#ht to re'urchase !s unusua y !nade1uate: ="9 the %endor re)a!ns !n 'ossess!on as essee or otherw!se: =c9 u'on or after the e4'!rat!on of the r!#ht of re'urchase another !nstru)ent e4tend!n# the 'er!od of rede)'t!on or #rant!n# a new 'er!od !s e4ecuted: =d9 the 'urchaser reta!ns for h!)se f a 'art of the 'urchase 'r!ce: =e9 the %endor "!nds h!)se f to 'ay the ta4es on the th!n# so d: and, =f9 !n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on. 6'' y!n# the fore#o!n# cons!derat!ons to the !nstant case, the 5ourt found that the true !ntent!on "etween the 'art!es for e4ecut!n# the ;eed of 6"so ute 3a e was not to con%ey ownersh!' of the 'ro'erty !n 1uest!on "ut )ere y to secure the hous!n# oan of 5ru@, !n wh!ch 'et!t!oners had a d!rect !nterest s!nce the 'roceeds thereof were to "e !))ed!ate y a'' !ed to the!r outstand!n# )ort#a#e o" !#at!on to the 5ar oses. &nderstanda" y, the ;eed of 6"so ute 3a e and !ts su''ort!n# docu)ents do not ref ect the true arran#e)ent "etween the 'art!es as to how the oan 'roceeds are to "e actua y a'' !ed "ecause !t was not the !ntent!on of the 'art!es for these docu)ents to do so. $he so e 'ur'ose for 're'ar!n# these docu)ents was to sat!sfy ?and 8an* that the re1u!re)ent of co atera re at!%e to 5ru@Fs a'' !cat!on for a hous!n# oan was )et. $he facts further "ear out that 'et!t!oners re)a!ned !n 'ossess!on of the d!s'uted 'ro'erty after the e4ecut!on of the ;eed of 6"so ute 3a e and the transfer of re#!stered t!t e to 5ru@ !n 2cto"er 1//2. 5ru@ )ade no de)and on 'et!t!oners to %acate the su"(ect 're)!ses unt! March 1/, 1//4: !nterest!n# y, th!s was two days after 'et!t!oners s!#n!f!ed the!r !ntent!on to redee) the 'ro'erty "y 'ay!n# the fu a)ount of -600,000.00. 2n th!s "as!s, the f!nd!n# of res'ondent court that 'et!t!oners re)a!ned !n 'ossess!on of the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

'ro'erty on y "ecause they refused to %acate on 5ru@Fs de)and !s not accurate "ecause the records ref ect that no such de)and was )ade unt! )ore than a year s!nce the 'ur'orted sa e of the 'ro'erty. Fro) the a"o%e, the 5ourt !s sat!sf!ed that enou#h of the c!rcu)stances set out !n 6rt!c e 1602 of the 5!%! 5ode are attendant !n the !nstant case, as to show that the true arran#e)ent "etween 'et!t!oners and 'r!%ate res'ondent 5ru@ was an e1u!ta" e )ort#a#e.

TO<AS SEE TUAZON "!. COURT A##EALS and JOHN SI? LI< G.R. No. %%)')( O3to5e &, ,--T1i d Di"i!ion #onente/ #URISI<A, J./

OF

F65$3: $he case or!#!nated fro) a contract of )ort#a#e const!tuted on the su"(ect ot. $o)as 3ee $ua@on, who was then the -res!dent and Genera Mana#er of &n!%ersa Ru""er -roducts, +nc., to#ether w!th the s'ouses, 3ee $!on#

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5hen# and Bn# $an# Go 3ee, )ort#a#ed, to#ether w!th other 'ro'ert!es, su"(ect ot to the -h! !''!ne 8an* of 5o))erce =-85o)9, to secure a oan of 4,730,265./0 -esos. Ahen the )ort#a#ors fa! ed to 'ay the )ort#a#e de"t, the )ort#a#ed 'ro'erty was forec osed and so d at 'u" !c auct!on, w!th -85o) !tse f as the h!#hest "!dder. 2n Ju y 15, 1/7., s'ouses $o)as 3. $ua@on and Nat!%!dad 3. $ua@on so d to John 3!y ?!) =?!)9 a 650 s1uare )eter con(u#a ot a on# 6. de Mundo 3treet, .th 6%enue, La oocan 5!ty, w!th a two0storey "u! d!n# and 6'art)ent &n!ts Nos. 161 and 163 e4!st!n# thereon. 6tty. 5r!sosto)o, awyer of the $ua@ons, drafted the 6"so ute ;eed of 3a e, wh!ch was du y re#!stered. 8y %!rtue of the sa!d deed, $5$ !n the na)e of the $ua@ons was cance ed and !n !eu thereof, a $5$ was !ssued !n the na)e of John 3!y F. ?!). $he $ua@ons "rou#ht a 5o)' a!nt for Refor)at!on of 5ontract, Hu!et!n# of $!t e w!th ;a)a#es a#a!nst John 3!y F. ?!) theor!@!n# that the rea !ntent!on of the 'art!es was to enter !nto a oan acco))odat!on that the!r dau#hter 8ern!ce to d that her f!ancZ, the res'ondent was w! !n# to he ' the) redee) the su"(ect 'ro'erty "y acco))odat!n# the) w!th 1M! !on -esos. 6''e ee 'ro'osed that: 60U of the -1 M! !on, or -600,000 wou d "e a &R-+ oan where )ach!ner!es worth -3 M! !on, "y way of chatte )ort#a#e, wou d secure !t, and 40U of the -1 M! !on wou d "e a''e ants 'ersona oan. $he "an* a#reed to reduce the rede)'t!on 'r!ce to 2ne M! !on =-1,000,000.009 -esos su"(ect to the cond!t!on that 'et!t!oner surrendered !n fa%or of -85o) h!s ='et!t!oner9 -roducer>s 8an* stoc* cert!f!cates "y way of dacion en pago. $o *ee' the cred!tors, su'' !ers and a"orers of &R-+ fro) e%y!n# on su"(ect 'ro'erty, 'et!t!oner dec!ded to transfer the t!t e thereof to ?!). $he new t!t e was to ser%e as secur!ty for the oan. ?!) f! ed h! s answer, theor!@!n# that the ;eed of 6"so ute 3a e e4'ressed the true !ntent!on of the 'art!es. -et!t!oner $ua@on and h!s dau#hter 'ersuaded h!) to redee) for h!)se f the e4tra(ud!c!a y forec osed 'ro'erty fro) -85o) "ecause $ua@on was f!nanc!a y !nca'a" e. $r!a court dec!ded for the res'ondent. 8oth 'art!es f! ed an MR. $r!a court rendered a dec!s!on dec ar!n# that the deed of a"so ute sa e was an e1u!ta" e )ort#a#e. 56 dec!ded !n fa%our of res'ondent. $he $ua@on fa)! y re)a!ned !n the 're)!ses so d to ?!). 8ut
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

not !n the conce't of owner. $he f!rst year of $ua@ons cont!nued occu'ancy of 6't. No. 163 was at ?!)s #rac!ousness w!th the understand!n# that after one year, the $ua@ons w! 'ay the a''ro'r!ate renta s for the cont!nued use and occu'at!on of the 'ro'erty. +n the e4erc!se of h!s r!#ht as owner of the 'ro'erty, ?!) eased 6'art)ent No. 161 to a A! !a) 3@e where ?!) s!#ned the contract of ease as the essor +33&B: Ahether or not the deed of a"so ute sa e !s !n fact an e1u!ta" e )ort#a#e R&?+NG: -et!t!on !s den!ed. Ru !n# of 56 !s aff!r)ed. 6rt!c e 1602 of the 5!%! 5ode 'ro%!des that a contact sha "e 'resu)ed to "e an e1u!ta" e )ort#a#e "y the 'resence of any of the fo ow!n#: =19 Ahen the 'r!ce of a sa e w!th r!#ht to re'urchase !s unusua y !nade1uate: =29 Ahen the %endor re)a!ns !n 'ossess!on as essee or otherw!se: =39 Ahen u'on or after the e4'!rat!on of the r!#ht to re'urchase another !nstru)ent e4tend!n# the 'er!od of rede)'t!on or #rant!n# a new 'er!od !s e4ecuted: =49 Ahen the 'urchaser reta!ns for h!)se f a 'art of the 'urchase 'r!ce: =59 Ahen the %endor "!nds h!)se f to 'ay the ta4es on the th!n# so d: =69 +n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on. &nder 6rt!c e 1604 of the New 5!%! 5ode, the 'ro%!s!ons of 6rt!c e 1602 sha a so a'' y to a contract 'ur'ort!n# to "e an a"so ute sa e. 6nd for these 'ro%!s!ons of aw to a'' y, two re1u!s!tes )ust concur: that the 'art!es entered !nto a contract deno)!nated as a contract of sa e and that the!r !ntent!on was to secure an e4!st!n# de"t "y way of )ort#a#e. For an act!on for refor)at!on of an !nstru)ent as 'ro%!ded for !n 6rt!c e 135/ to 'ros'er, the fo ow!n# re1u!s!tes )ust concur, to w!t: =19 there )ust ha%e "een a )eet!n# of the )!nds of the 'art!es to the contract: =29 the !nstru)ent does not e4'ress the true !ntent!on of the 'art!es: and =39 the fa! ure of the !nstru)ent to e4'ress the true !ntent!on of the 'art!es !s due to )!sta*e, fraud, !ne1u!ta" e conduct or acc!dent. ,ere, 'et!t!oner has not shown or esta" !shed the 'resence of the aforestated re1u!re)ents for the
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refor)at!on of the deed !n 1uest!on. -re'ared "y the awyer of the here!n 'et!t!oner, $o)as 3ee $ua@on, su"(ect ;eed of 6"so ute 3a e e4ecuted on Ju y 15, 1/7. !s couched !n c ear ter)s and cond!t!ons. John 3!y ?!) had no hand !n !ts 're'arat!on. 8es!des, the %o untary, wr!tten and uncond!t!ona acce'tance of contractua co))!t)ents ne#ate the theory of e1u!ta" e )ort#a#e.

S#OUSES <ARIO RE?ES VS. COURT OF A##EALS G.R. No. %&(%DD A*+*!t ,:, ,--Se3ond Di"i!ion #onente/ .e$$o!i$$o,J./ F65$3: $wo se'arate act!ons for s'ec!f!c 'erfor)ance was f! ed "y 3'ouses Ra)os a#a!ns 3'ouses Reyes and 3'ouses E!cta to co)'e the) to se#re#ate a tota of 3000 s1uare )eters of ot fro) each of the!r res'ect!%e shares !n the estate of the F?orent!no ;o)!n#ue@, the!r father.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page 9

$he Ra)oses contended that 5once't!on Reyes and 6race ! E!ta so d 1,.00 and 1,300 s1uare )eters of ot to the). Bar y 1//1 ?ot No. 4.05 was f!na y su"d!%!ded !nto se%era s)a er ots and 'art!t!oned e4tra(ud!c!a y a)on# the f!%e =59 he!rs of F orent!no ;o)!n#ue@ a thou#h the records on y d!sc osed three =39 na)es, 5once'c!on ;o)!n#ue@0Reyes, 6race ! ;o)!n#ue@0E!cta and Fortunata ;o)!n#ue@. 5once'c!on ac1u!red a 2,4400s1uare )eter ot wh! e 6race ! too* 'ossess!on of two =29 ots w!th a co)"!ned area of 2,340 s1uare )eters. &'on earn!n# of the 'art!t!on, the Ra)oses de)anded that the 'et!t!oners )a*e #ood the!r underta*!n#s under the deed of sa e e4ecuted "eforehand "ut the atter refused, !ns!st!n# that the deeds d!d not ref ect the true !ntent!on of the 'art!es as the!r rea !ntent!on was s!)' e oans of )oney the 'ay)ent of wh!ch was to "e secured "y )ort#a#es. 5once'c!on ;. Reyes and 6race ! ;. E!cta a%erred that "etween 1/70 to 1/75 they o"ta!ned !nd!%!dua y %ar!ous oans fro) N! da Ra)os wh!ch were co%ered "y handwr!tten rece!'ts 're'ared e!ther "y her or "y her dau#hter ;!nah Ra)os and s!#ned "y 5once'c!on and 6race !. 3o)et!)es they were furn!shed "y N! da Ra)os w!th du' !cate co'!es of the corres'ond!n# rece!'ts a thou#h !n )ost !nstances on y one =19 co'y was 're'ared wh!ch N! da reta!ned. $he oans were re eased "y N! da to 5once'c!on and 6race ! on a '!ece)ea "as!s, and e%ery t!)e the oans reached an a##re#ate a)ount of -10,000.00 to -20,000.00 N! da wou d 're'are a (eed o+ Absolute Sale and 0rans+er wh!ch 'ur'orted to con%ey !n her fa%or a 'ort!on of the und!%!ded shares of 5once'c!on and 6race ! !n ?ot No. 4.05. $o ent!ce the) to s!#n the deeds, N! da re'resented to the) that the !nstru)ents were )ere y for 'ur'oses of co)' y!n# w!th the for)a !t!es re1u!red "y 6RE+ F!nance 5or'orat!on, wh!ch she owned, and where the a)ounts oaned to the) 'resu)a" y ca)e fro). N! da Ra)os further assured 5once'c!on and 6race ! that the deeds wou d not "e notar!@ed nor wou d they "e enforced a#a!nst the). $hat howe%er out of a tota of e!#hteen =179 deeds of sa e s!#ned "y 5once'c!on and 6race !, !t a''eared that three =39 were actua y notar!@ed. F!na y, 5once'c!on and 6race ! offered to sett e the!r !nde"tedness "ut N! da refused to acce't 'ay)ent. $r!a court rendered a dec!s!on !n fa%or of the Reyes and E!cta s'ouses ho d!n# that <the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

a e#ed sa es were not rea y sa es "ut rece!'ts of su)s of )oney "y way of oans.< $he 5ourt of 6''ea s howe%er d!sa#reed and re%ersed the ru !n# of the tr!a court on a''ea . 56: Ae ha%e e4a)!ned the !nstru)ents e%!denc!n# the transact!ons under cons!derat!on and found the an#ua#e of each c ear y and w!thout a)"!#u!ty to "e sett!n# forth a contract of sa e and 'urchase. 6nd the authent!c!ty and due e4ecut!on of these deeds, !t )ust "e e)'has!@ed, are not d!s'uted. $hey are !n fact ad)!tted 4 4 4 4 +n the )!nd of th!s court, a''e ants ha%e con%!nc!n# y 'ro%en the rea !ty of the sa e of the 'arce s of and su"(ect hereof 4 4 4 these '!eces of e%!dence are not )ere drafts of contracts s!nce e%eryth!n# for the e4!stence of a 'erfect contract of 'urchase and sa e are 'resent. Ne!ther can they 'oss!" y "e )!sta*en for rece!'ts !nas)uch as e%en the!r t!t e R ty'ewr!tten !n ca'!ta etters and under !ned R 'roc a!)s what each of the docu)ents !s a a"out 4 4 4 4 Ahen contract!n# )!nds ha%e reduced the!r a#ree)ent !nto wr!t!n#, the contents of the wr!t!n# const!tute the so e re'os!tory of the ter)s of the contract "etween the 'art!es 4 4 4 4 +33&B: $he '!%ota !ssue then !s whether the 'art!es !ntended the contested ;eed=s9 of 6"so ute 3a e and $ransfer to "e "ona f!de a"so ute con%eyances of 'arce s of and, or )ere y e1u!ta" e )ort#a#es R&?+NG: 56 dec!s!on !s !ncons!stent w!th aw and e1u!ty. $r!a court dec!s!on !s re!nstated and aff!r)ed. 6rt. 1602 of the 5!%! 5ode enu)erates the !nstances when a contract, re#ard ess of !ts no)enc ature, )ay "e 'resu)ed to "e an e1u!ta" e )ort#a#e: =a9 when the 'r!ce of a sa e w!th r!#ht to re'urchase !s unusua y !nade1uate: ="9 when the %endor re)a!ns !n 'ossess!on as essee or otherw!se: =c9 when u'on or after the e4'!rat!on of the r!#ht to re'urchase another !nstru)ent e4tend!n# the 'er!od of rede)'t!on or #rant!n# a new 'er!od !s e4ecuted: =d9 when the 'urchaser reta!ns for h!)se f a 'art of the 'urchase 'r!ce: =e9 when the %endor "!nds h!)se f to 'ay the ta4es on the th!n# so d: and, =f9 !n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on. For the 'resu)'t!on of an e1u!ta" e )ort#a#e to ar!se under 6rt. 1602, two =29
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re1u!s!tes )ust concur: =a9 that the 'art!es entered !nto a contract deno)!nated as a contract of sa e, and ="9 that the!r !ntent!on was to secure an e4!st!n# de"t "y way of a )ort#a#e. $he e4!stence of any one of the c!rcu)stances def!ned !n the fore#o!n# 'ro%!s!on, not the concurrence nor an o%erwhe )!n# nu)"er of such c!rcu)stances, !s suff!c!ent for a contract of sa e to "e 'resu)ed an e1u!ta" e )ort#a#e. $he 'ro%!s!on a so applies e1en to a contract purporting to be an absolute sale, as !n th!s case, !f !ndeed the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on. $he facts and e%!dence dec!ded y show that the true !ntent!on of the 'art!es was to secure the 'ay)ent of the oans and not to con%ey ownersh!' o%er the 'ro'erty !n 1uest!on. $he transact!ons were re' ete w!th %er!ta" e "ad#es of e1u!ta" e )ort#a#e.

A+*i e "!. CA and T*pa! G.R. No. 131520 January 27, 2000

Fa3t!/ +n 6'r! 30, 1/.2, 'et!t!oner Bste !ta 6#u!rre and 'r!%ate res'ondent $eof!sta 3. $u'as entered !nto a ;eed of 6"so ute 3a e co%er!n# a 3,230 s1uare )eter 'arce of and ocated !n 8a a"a#,
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Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Ma ay, 6* an, !n what !s )ore 'o'u ar y *nown as 8oracay +s and.

as fo ows: V6rt. 1602. $he contract sha "e 'resu)ed to "e an e1u!ta" e )ort#a#e, !n any of the fo ow!n# cases: =19.......Ahen the 'r!ce of a sa e w!th r!#ht to re'urchase !s unusua y !nade1uate: =29.......Ahen the %endor re)a!ns !n 'ossess!on as essee or otherw!se: =39.......Ahen u'on or after the e4'!rat!on of the r!#ht to re'urchase another !nstru)ent e4tend!n# the 'er!od of rede)'t!on or #rant!n# a new 'er!od !s e4ecuted: =49.......Ahen the 'urchaser reta!ns for h!)se f a 'art of the 'urchase 'r!ce: =59.......Ahen the %endor "!nds h!)se f to 'ay the ta4es on the th!n# so d: =69.......+n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on. +n any of the fore#o!n# cases, any )oney, fru!ts or other "enef!t to "e rece!%ed "y the %endee as rent or otherw!se sha "e cons!dered as !nterest wh!ch sha "e su"(ect to the usury aws.F ?e4( ur!s 8y the ter)s of 6rt. 1604, the fore#o!n# 'ro%!s!ons Vsha a so a'' y to a contract 'ur'ort!n# to "e an a"so ute sa e.F 4 4 4.<

+))ed!ate y thereafter, 'et!t!oner too* 'ossess!on and occu'!ed the sa!d 'arce of and. 2n 6u#ust 15, 1/74, howe%er, c a!)!n# to ha%e "een d!stur"ed !n the 'ossess!on of the su"(ect and, 'et!t!oner f! ed a 5o)' a!nt for Hu!et!n# of $!t e andCor Reco%ery of -ossess!on w!th ;a)a#es "e!n# co0 owners w!th the!r s!ster, $eof!sta 3. $u'as, of the su"(ect and. 2n 6u#ust 21, 1//1, the Re#!ona $r!a 5ourt of La !"o, 6* an rendered (ud#)ent d!s)!ss!n# the 5o)' a!nt for ac* of )er!t. +t found that the contract "etween the 'art!es was one of e1u!ta" e )ort#a#e and not of sa e.

I!!*e/ Ahether or not the transact!on "etween the 'art!es was not a sa e "ut an e1u!ta" e )ort#a#eD R*$in+/ -et!t!on ;en!ed +n deter)!n!n# the nature of a contract, courts are not "ound "y the t!t e or na)e #!%en "y the 'art!es. $he dec!s!%e factor !n e%a uat!n# such a#ree)ent !s the !ntent!on of the 'art!es, as shown not necessar! y "y the ter)!no o#y used !n the contract "ut "y the!r conduct, words, act!ons and deeds 'r!or to, dur!n# and !))ed!ate y after e4ecut!n# the a#ree)ent. 6s such therefore, docu)entary and 'aro e%!dence )ay "e su")!tted and ad)!tted to 'ro%e such !ntent!o.a#a!nst the s'ouses -r!%ado $u'as and $eof!sta 3. $u'as. $he other 'r!%ate res'ondents then ca)e !n as !nter%enors, 6rt. 1602 of the 5!%! 5ode enu)erates the !nstances when a contract, re#ard ess of !ts no)enc ature, )ay "e 'resu)ed to "e an e1u!ta" e )ort#a#e,

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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6s a ready stated a"o%e, 6rt!c e 1604 of the 5!%! 5ode 'ro%!des that the 'ro%!s!ons of 6rt!c e 1602 sha a so a'' y to a contract 'ur'ort!n# to "e an a"so ute sa e. $he 'resence of e%en one of the c!rcu)stances !n 6rt!c e 1602 !s suff!c!ent "as!s to dec are a contract as one of e1u!ta" e )ort#a#e.

Ne!ther was rent e%er co ected fro) the) for the!r occu'ancy of the and. 5o)!n# now to the te)'orary 'ossess!on of the su"(ect and "y 'et!t!oner, the court f!nd cred!"! !ty !n 'r!%ate res'ondentsF c a!) that the s'ouses $u'as #a%e 'et!t!oner a ten =109 year 'er!od to occu'y the su"(ect and as 'art of the!r )ort#a#e a#ree)ent. $hat 'er!od of t!)e )ay we "e dee)ed as the t!)e a otted to the s'ouses $u'as, as )ort#a#ors, to 'ay the!r !nde"tedness to 'et!t!oner. $hat 'et!t!oner %acated the su"(ect and after ha%!n# occu'!ed the sa)e on y underscores the fact that no sa e too* ' ace "etween the 'art!es. 2therw!se, why wou d she, as r!#htfu owner, a"andon the 'ro'erty she a ready was !n 'ossess!on of, on y to ea%e 'ossess!on of the sa)e to her %endorD +t !s a so of record that 'r!%ate res'ondents had cont!nued 'ay!n# ta4 on the su"(ect and e%en after the sa)e had "een su''osed y <so d< to 'et!t!oner. 2n the other hand, wh! e 'et!t!oner 'resented ta4 dec arat!ons !n her fa%or, the sa)e wou d show that the ta4es for the years 1/.401/70 were on y )ade "y 'et!t!oner on June 4, 1/75,a )ost a year after she had a ready f! ed the su!t "e ow. +n ar#u!n# that the transact!on was one of sa e, 'et!t!oner 'o!nts out that 'r!%ate res'ondent $eof!sta $u'as was not a de"tor at any t!)e 'r!or to the sa e: hence, !t cannot "e he d that the su"(ect and was "e!n# used as secur!ty for a de"t. ,owe%er, !t )ay "e that the de"t was #!%en at the %ery )o)ent of the )ort#a#e transact!on.

$he e4' !c!t 'ro%!s!on of 6rt!c e 1602 that any of those c!rcu)stances wou d suff!ce to construe a contract of sa e to "e one of e1u!ta" e )ort#a#e !s !n consonance w!th the ru e that the aw fa%ors the east trans)!ss!on of 'ro'erty r!#hts. $o stress, the e4!stence of any one of the cond!t!ons under 6rt!c e 1602, not a concurrence, or an o%erwhe )!n# nu)"er of such c!rcu)stances, suff!ces to #!%e r!se to the 'resu)'t!on that the contract !s an e1u!ta" e )ort#a#e 6rt!c e 1602=69, !n re at!on to 6rt!c e 1604 'ro%!des that a contract of sa e !s 'resu)ed to "e an e1u!ta" e )ort#a#e !n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on. 6fter a carefu re%!ew of the records of the case, we are con%!nced that !t 1ua !f!es as an e1u!ta" e )ort#a#e under 6rt!c e 1602=69. $h!s )ay "e # eaned fro) the fo ow!n# c!rcu)stances surround!n# the transact!on F!rst, !t !s not d!s'uted that 'r!%ate res'ondents s'ouses $u'as "u! t two cotta#es on the su"(ect and as we as o'erated a sar!0sar! store and #rew "anana ' ants on the sa)e, such that, 'er 'et!t!onerFs own account, a )ost G ha f of the area had "een occu'!ed "y the).;es'!te th!s "o d 'ossess!on, 'et!t!oner ad)!ts that no de)and to %acate the and was e%er )ade u'on the s'ouses $u'as. $he!r 'ossess!on re)a!ned und!stur"ed for years, unt! the act!on "e ow was f! ed !n 1/74.

L*0a6a+ ". Co* t o2 Appea$! G.R. No. 162112 Ju y 3, 200. Facts: ;ur!n# the!r !fet!)e, the s'ouses Jac!nto Ne)eQo and ;a )ac!a ;ayan#co0Ne)eQo, 'redecessors0!n0 !nterest of the here!n res'ondent he!rs, owned two =29 'arce s of coconut and

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 9$

ocated !n Manaca, 2@a)!@ 5!ty. $he 'arce s are: ?ot No. 404/, w!th an area of f!%e =59 hectares and co%ered "y 2r!#!na 5ert!f!cate of $!t e =25$9 No. 00 1.43 and ?ot No. 4035 504, cons!st!n# of 4,420 s1uare )eters and co%ered "y $a4 ;ec arat!on No. 13.50 +n 1/./, ;a )ac!a d!ed sur%!%ed "y her hus"and, Jac!nto, and the!r s!4 =69 ch! dren, to w!t: Me !ton, B euter!a, $!)oteo, Justo, 3aturn!no =now deceased9 and Fe !'a. 2n Fe"ruary 25, 1/75, Jac!nto, (o!ned "y h!s f!%e =59 ch! dren, na)e y, Me !ton, B euter!a, $!)oteo, Justo and 3aturn!no, con%eyed to h!s dau#hter Fe !'a and the atterFs hus"and ;o)!n#o ?u)aya# the afore)ent!oned ?ot. $he !nstru)ent of con%eyance !s deno)!nated as (eed o+ Sale )ith 8acto (e .etro $hereunder, !t was st!'u ated that the cons!derat!on for the a e#ed sa e of the two =29 afore)ent!oned ots was $wenty $housand -esos =-20,000.009 and that the %endors a retro ha%e the r!#ht to re'urchase the sa)e ots w!th!n f!%e =59 years fro) the date of the e4ecut!on of the !nstru)ent on Fe"ruary 25, 1/75. +t was !*ew!se a#reed thereunder that !n the e%ent no 'urchase !s effected w!th!n the sa!d st!'u ated 'er!od of f!%e =59 years :con1eyance shall become absolute and irre1ocable )ithout the necessity o+ dra)ing up a ne) absolute deed o+ sale, subject to the re;uirements o+ la) regarding consolidation o+ o)nership o+ real property.9 More than a decade ater, or on 6u#ust 27, 1//6, the s'ouses ;o)!n#o ?u)aya# and Fe !'a Ne)eQo0?u)aya# f! ed w!th the R$5 of 2@a)!@ 5!ty a 'et!t!on for the reconst!tut!on of the ownerFs du' !cate co'y of one of the two ots su"(ect of the ear !er (eed o+ Sale )ith 8acto (e .etro. +n that 'et!t!on, the ?u)aya#s a e#ed that sa!d ownerFs du' !cate co'y of was !n ;o)!n#oFs 'ossess!on "ut the sa)e

was ost when a ty'hoon h!t and destroyed the cou' eFs house !n $a !say, 5e"u. $he 'et!t!on was o''osed "y the other he!rs of Jac!nto and ;a )ac!a who c a!)ed that the ownerFs du' !cate co'y of the sa)e 25$ was actua y !n the 'ossess!on and custody of the!r "rother Me !ton Ne)eQo, the ad)!n!strator of the 'ro'erty, when !t was "urned !n a f!re on May 22, 1//2. +n an order dated ;ece)"er 20, 1//6, the R$5 reso %ed sa!d 'et!t!on "y order!n# the !ssuance of a new ownerFs du' !cate co'y and !ts de !%ery to the he!rs of Jac!nto and ;a )ac!a. $he he!rs of Jac!nto and ;a )ac!a, na)e y, the!r ch! dren Me !ton, B euter!a, $!)oteo and Justo and #randch! dren R!c*y and ;a!sy who are the he!rs of 3aturn!no, =here!nafter co ect!%e y referred to as the res'ondent he!rs9 f! ed a#a!nst the s'ouses ;o)!n#o ?u)aya# and Fe !'a N. ?u)aya# a co)' a!nt for (eclaration o+ !ontract as /;uitable 'ortgage, Accounting and .edemption )ith (amages. Bssent!a y, the co)' a!nt a e#ed that the su"(ect (eed o+ Sale )ith 8acto (e .etro was e4ecuted on y for the 'ur'ose of secur!n# the 'ay)ent of a oan of -20,000.00 o"ta!ned fro) the defendant s'ouses !n connect!on w!th the )ed!cat!on and hos'!ta !@at!on of the then a! !n# Jac!nto Ne)eQo. $o su''ort the!r c a!) that the contract !n 1uest!on was an e1u!ta" e )ort#a#e, the ' a!nt!ff he!rs )ater!a y 'o!nted out the fo ow!n#: =19 the #ross y !nade1uate 'r!ce of the su"(ect ots cons!der!n# that ?ot No. 404/ w!th an area of 5 hectares has a )ar*et %a ue of -40,.60.00 and an assessed %a ue of -15,230.00, as shown "y $a4 ;ec arat!on No. /40 0.33506, wh! e ?ot No. 4035 504 w!th an area of 4,420 s1uare )eters has a )ar*et %a ue of -4,120.00 and an assessed %a ue of -1,460.00, 'er $a4 ;ec arat!on No. /400.35506K =29 the!r =' a!nt!ffsF9 cont!nued 'ay)ent of rea ty ta4es: =39 the and t!t e and ta4 dec arat!on re)a!ned !n the na)es of Jac!nto Ne)eQo and ;a )ac!a
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Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

;ayan#co0Ne)eQo: =49 the!r 'ossess!on, 'art!cu ar y Justo Ne)eQoFs, of the su"(ect ots w!th the 'et!t!oner s'ouses on y #!%en two0th!rds share of the har%est therefro): and =59 the pactum commissorium st!'u at!on !n the su"(ect contract. B%entua y, !n a dec!s!on dated Fe"ruary 3, 1///, the tr!a court ad(ud#ed the su"(ect (eed o+ Sale )ith 8acto (e .etro as an e1u!ta" e )ort#a#e and ordered the defendant s'ouses to recon%ey the ot to the ' a!nt!ff he!rs for -20,000.00 ;!ssat!sf!ed, "oth 'art!es a''ea ed to the 56. &nfortunate y, for fa! ure of the ' a!nt!ff he!rs to su")!t the!r a''ea "r!ef, the!r a''ea was d!s)!ssed, ea%!n# that of the defendant s'ouses 6s stated at the thresho d hereof, the a''e ate court, aff!r)ed that of the tr!a court "ut w!th the )od!f!cat!on that the )ort#a#ed 'ro'ert!es are su"(ect to forec osure shou d the res'ondents fa! to redee) the sa)e w!th!n th!rty =309 days fro) f!na !ty of the dec!s!on. ,ence th!s a''ea ...

,ere, there !s no !ssue as re#ards the fact that the su"(ect (eed o+ Sale )ith 8acto (e .etro 'ro%!ded for a 50year rede)'t!on 'er!od wh!ch e4'!red on Fe"ruary 25, 1//0. B%!dent y, then, the fa! ure of the res'ondent he!rs to redee) the 'ro'ert!es w!th!n the st!'u ated 'er!od !ndu"!ta" y %ested the a"so ute t!t e to and ownersh!' thereof to the 'et!t!oners. .*t !*31 3on!e7*en3e 4o*$d on$6 5e t *e i2 t1e 3ont a3t t1at 4a! e=e3*ted 5et4een t1e pa tie! 4a! indeed a pacto de retro !a$e and not an e7*ita5$e 0o t+a+e. $he two =29 courts "e ow unan!)ous y found that the su"(ect (eed o+ Sale )ith 8acto (e .etro, wh! e 'ur'ort!n# to "e a sa e, !s !n truth and !n fact an e1u!ta" e )ort#a#e. 3uch factua f!nd!n#, )ore so when su''orted "y the e%!dence, as here co))ands !s "!nd!n# u'on the court. 6n e1u!ta" e )ort#a#e has "een def!ned Ias one wh!ch a thou#h ac*!n# !n so)e for)a !ty, or for) or words, or other re1u!s!tes de)anded "y a statute, ne%erthe ess re%ea s the !ntent!on of the 'art!es to char#e rea 'ro'erty as secur!ty for a de"t, and conta!ns noth!n# !)'oss!" e or contrary to aw.J 6rt!c e 1604 of the 5!%! 5ode 'ro%!des that the 'ro%!s!ons of 6rt!c e 1602 sha a so a'' y to a contract 'ur'ort!n# to "e an a"so ute sa e, and, !n case of dou"t, a contract 'ur'ort!n# to "e a sa e w!th r!#ht to re'urchase sha "e construed as an e1u!ta" e )ort#a#e. $he aw re1u!res the 'resence of any one and not the concurrence of a of the c!rcu)stances enu)erated under 6rt!c e 1602, to conc ude that the transact!on !s one of e1u!ta" e )ort#a#e. ,ere, the 56 correct y found the 'resence of not )ere y one "ut four =49 c!rcu)stances !nd!cat!%e of the true nature of the su"(ect transact!on as an e1u!ta" e )ort#a#e, to w!t: =a9 #ross !nade1uacy of the contract 'r!ce of
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+ssue: Ahether or not the transact!on "etween the 'art!es was not a sa e "ut an e1u!ta" e )ort#a#eD

Ru !n#: -et!t!on den!ed. &nder a pacto de retro sa e, t!t e to and ownersh!' of 'ro'erty are !))ed!ate y %ested !n the %endee a retro, su"(ect on y to the reso utory cond!t!on that the %endor re'urchases !t w!th!n the st!'u ated 'er!od. $he fa! ure of the %endor a retro to re'urchase the 'ro'erty %ests u'on the %endee a retro "y o'erat!on of aw the a"so ute t!t e and ownersh!' o%er the 'ro'erty so d.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

-20,000.00 for two =29 'arce s of and, the tota area of wh!ch !s a )ost 5.5 hectares: ="9 res'ondent he!rs re)a!ned !n 'ossess!on of the su"(ect 'ro'erty e%en after the e4ecut!on of the su''osed y (eed o+ Sale )ith 8acto de .etro: =c9 sa!d res'ondentsF 'ay)ent of rea ty ta4es: and =d9 the 'ro%!s!on on pactum commissorium Ah! e the 3u're)e 5ourt are not !n fu accord w!th the 56 !n !ts o"ser%at!on that the cons!derat!on of the sa e w!th r!#ht to re'urchase !s #ross y !nade1uate s!nce the )ar*et %a ue and assessed %a ue of the two ots were not )ade on or "efore the date the su"(ect contract was e4ecuted on Fe"ruary 25, 1/75 "ut on y on June 7, 1//4, st! , there are other c!rcu)stances con%!nc!n# enou#h to su''ort a conc us!on that the transact!on !n 1uest!on !s rea y an e1u!ta" e )ort#a#e. B%!dence !s e4tant on record that the res'ondent he!rs, as %endors a retro, re)a!ned !n 'ossess!on of the su"(ect ots after the e4ecut!on of the deed of sa e w!th r!#ht to re'urchase. +n star* contrast, e%!dence !s want!n# that 'et!t!oners e%er en(oyed 'ossess!on thereof. +f the transact!on was rea y a sa e w!th r!#ht to re'urchase, as c a!)ed "y the 'et!t!oners, then the atter shou d ha%e asserted the!r r!#hts for the !))ed!ate de !%ery of the ots to the) !nstead of a ow!n# so)e of the res'ondents to free y stay !n the 're)!ses. Ae 0sett ed to the 'o!nt of "e!n# e e)entary !s the doctr!ne that where the %endor re)a!ns !n 'hys!ca 'ossess!on of the and as essee or otherw!se, the contract shou d "e treated as an e1u!ta" e )ort#a#e 6s we , that the 'art!es !ntended to enter !nto an e1u!ta" e )ort#a#e !s further accentuated "y res'ondentsF cont!nued 'ay)ent of the rea 'ro'erty ta4es su"se1uent to the a e#ed sa e. -ay)ent of those ta4es !s a usua "urden attached to ownersh!' and when, as here, such 'ay)ent !s cou' ed w!th cont!nuous 'ossess!on of the 'ro'erty, !t const!tutes e%!dence of #reat we!#ht that a 'erson under whose na)e

the rea ty ta4es were dec ared has a %a !d and r!#htfu c a!) o%er the and. ?ast y, the st!'u at!on !n the su"(ect deed read!n#: :i+ )e +ail to e ercise our rights to repurchase as herein granted )ithin the period stipulated, then this con1eyance shall become absolute and irre1ocable )ithout the necessity o+ dra)ing a ne) absolute (eed o+ Sale, subject to the re;uirements o+ la) regarding consolidation o+ o)nership o+ real property,9 0 !s cons!dered a pactum commissorium. $h!s st!'u at!on !s contrary to the nature of a true pacto de retro sa e s!nce !n such sa e, ownersh!' of the 'ro'erty so d !s !))ed!ate y transferred to the %endee a retro u'on e4ecut!on of the sa e, su"(ect on y to the re'urchase of a %endor a retro w!th!n the st!'u ated 'er!od. &ndou"ted y, the afore)ent!oned st!'u at!on !s a pactum commissorium "ecause !t ena" es the )ort#a#ee to ac1u!re ownersh!' of the )ort#a#ed 'ro'ert!es w!thout need of any forec osure 'roceed!n#s wh!ch !s a nu !ty "e!n# contrary to the 'ro%!s!ons of 6rt!c e 2077 of the 5!%! 5ode. +ndeed, the !nc us!on of such st!'u at!on !n the deed shows the !ntent!on to )ort#a#e rather than to se .

A<ELIA S. RO.ERTS, 'et!t!oner, %s. <ARTIN .. #A#IO, res'ondent.

Fe"ruary /, 200. G.R.No.166.14

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 101

$,+R; ;+E+3+2N

8onente4 56??BJ2, 3R.

FACTS/ 3'ouses Mart!n and ?uc!na -a'!o )ort#a#e the!r res!dent!a ot !n Ma*at! !n order to secure -5/,000.00 oan fro) 6)'aro +n%est)ents 5or'orat!on. &'on -a'!oFs fa! ure to 'ay, the 5or'. f! ed a 'et!t!on for e4tra(ud!c!a forec osure of the )ort#a#e. $o 're%ent forec osure, they e4ecuted a ;eed of 6"so ute 3a e o%er the 'ro'erty !n fa%or of 6)e !a Ro"erts =h!s cous!n9 for -75,000.00 'urchase 'r!ce. $ransfer 5ert!f!cate of $!t e !s now !n the na)e of 6)e !a Ro"erts.

a)ount of -150,000.00 as 'art!a 'ay)ent and another -100,000.00 and were e%!denced "y rece!'ts s!#ned "y Eentura. ,owe%er, Eentura )!sa''ro'r!ated -3/,000.00 out of -250,000.00 wh!ch !s the reason why Ro"erts refused to e4ecute the ;eed of 6"so ute 3a e !n fa%or of -a'!o !f Eentura wou d not 'ay the a)ount she )!sa''ro'r!ated.

Ro"erts and -a'!o e4ecuted a 20yr. contract of ease su"(ect to renewa at the o't!on of the essor. 6fter 2yrs -a'!o fa! ed to 'ay the )onth y renta s "ut he and h!s fa)! y re)a!ned !n the 'ossess!on of the 'ro'erty for a )ost 13yrs. Ro"erts de)anded -a'!o to %acate the 'ro'erty !n case he fa! ed to sett e h!s "ac* renta s a)ount!n# to -410,000.00. -a'!o refused to 'ay and ea%e the 're)!ses.

Metro'o !tan $r!a 5ourt ru ed !n fa%or of Ro"erts. -a'!o a''ea ed to R$5, and !n !ts dec!s!on !t aff!r)ed the f!nd!n#s of Me$5. -a'!o f! e a 'et!ton for re%!ew !n 56. 56 ru ed !n fa%or of -a'!o stat!n# that what trans'!red !s not a contract of a"so ute sa e "ut an e1u!ta" e )ort#a#e and that -a'!o !s ent!t ed to 'ossess!on of the 'ro'erty. Ro"erts f! ed a 'et!t!on for re%!ew ass!#n!n# as error that 'et!t!oner d!d not a e#ed !n h!s 6nswer the defense of e1u!ta" e )ort#a#e: hence the 5a shou d not ha%e d!scussed the sa)e.

ISSUE/ whether the transact!on entered !nto "y the 'art!es under the ;eed of 6"so ute 3a e and 5ontract of ?ease !s an e1u!ta" e )ort#a#e.

Ro"erts now f! ed a co)' a!nt for un awfu deta!ner and da)a#es a#a!nst -a'!o "efore Metro'o !tan $r!a 5ourt.

+n h!s 6nswer, -a'!o a e#ed that when the 5or'. f! ed a 'et!t!on for e4tra(ud!c!a forec osure, h!s cous!n Ro"erts offered to redee) the 'ro'erty. 8e !e%!n# that she had )ade the offer for the 'ur'ose of reta!n!n# h!s ownersh!' o%er the 'ro'erty, he acce'ted. ,owe%er, he was a ar)ed when Ro"erts had a ;eed of 6"so ute 3a e o%er the 'ro'erty 're'ared. ,e then "e !e%ed that !f he s!#ned the deed, Ro"erts wou d ac1u!re ownersh!' o%er the 'ro'erty. ,e as*ed her to a ow h!) to redee) the 'ro'erty anyt!)e for a reasona" e a)ount. Ro"erts a#reed so he s!#ned the ;eed of 6"so ute 3a e. -ursuant to the r!#ht to redee) #!%en h!), -a'!o 'urchased the 'ro'erty for -250,000.00. 3!nce Ro"erts was a ready !n &36, he re)!tted to her author!@ed re'resentat!%e -er !ta Eentura the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

RULING/ 56 erred !n f!nd!n# that the transact!on !s an e1u!ta" e )ort#a#e. 6n /56I0A3L/ 'O.0GAG/ !s one that a thou#h ac*!n# !n so)e for)a !ty, for) or words, or other re1u!s!tes de)anded "y a statute, ne%erthe ess re%ea s the !ntent!on of the 'art!es to chan#e a rea 'ro'erty as secur!ty for a de"t and conta!n noth!n# !)'oss!" e or contrary to aw. $he dec!s!%e factor !s the intention o+ the parties.

+n -a'!oFs 6nswer he stated that he was #!%en the r!#ht of rede)'t!on at any t!)e: that he had re'urchased the 'ro'erty and conse1uent y he o" !#ed Ro"erts to e4ecute a deed of a"so ute sa e !n h!s fa%or. A!th th!s c a!)s, !t !s ant!thet!ca to an e1u!ta" e )ort#a#e.

+n 8A!0O (/ ./0.O SAL/, ownersh!' of the 'ro'erty so d !s !))ed!ate y transferred to the %endee a retro su"(ect on y to the r!#ht of the %endor a retro to re'urchase the 'ro'erty u'on
Page 102

co)' !ance w!th e#a re1u!re)ents for re'urchase. Fa! ure of the %endor a retro to e4erc!se the r!#ht to re'urchase w!th!n the a#reed t!)e %ests u'on the %endee a retro, "y o'erat!on of aw, a"so ute t!t e o%er the 'ro'erty.

2ne who re'urchase a 'ro'erty )eans that the 'ro'erty was 're%!ous y so d. $he r!#ht of re'urchase 'resu''oses a %a !d contract of sa e "etween the 'art!es. -a'!o !ns!sted that he re'urchased the 'ro'erty there"y ad)!tt!n# that a deed of a"so ute sa e was e4ecuted "y h!) and 'et!t!oner and not an e1u!ta" e )ort#a#e. -a'!o !s "arred fro) c a!)!n# otherw!se.

$he r!#ht of re'urchase !s not a r!#ht #ranted the %endor "y the %endee, "ut a r!#ht reser%ed "y the %endor !n the sa)e !nstru)ent of the sa e as one of the st!'u at!ons of the contract. Ahen the sa e !s )ade w!thout such a#ree)ent, the 'urchaser ac1u!res the th!n# so d a"so ute y.

Ahen the an#ua#e of the contract !s e4' !c!t, ea%!n# no dou"t as to the !ntent!on of the drafters, the courts )ay not read !nto !t any other !ntent!on that wou d contrad!ct !ts ' a!n !)'ort.

DIONISIA DORADO VDA. DE DELFIN, 'et!t!oner %s. SALVADOR DELLOTA, res'ondent.

January 27, 2007 G.R. No.1436/.

F+R3$ ;+E+3+2N

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 103

8onente4 36N;2E6?0G&$+BRRBX

FACTS/ ;!on!s!a ;orado ;e f!n !s the re#!stered owner of ?ot !n 5a'!@ w!th an area of 143,/35 s1uare )eters. ;!on!s!a e4ecuted an /scritura (e 2enta !on 8acto de .etro o%er 50,000 s1uare )eters !n fa%or of + defonso ;e ota and -atr!c!a ;e f!n.

ra)!f!cat!ons of her s!#n!n# the ;eed of 3a e w!th R!#ht of Rede)'t!on. Nor !s there any show!n# that she was threatened, forced or defrauded !nto aff!4!n# her s!#nature on the sa!d contract. +f the ter)s of the 'acto de retro sa e were unfa%ora" e to ;!on!s!a, th!s 5ourt has no "us!ness e4tr!cat!n# her fro) that "ad "ar#a!n. 5ourts are not #uard!ans of 'ersons who are not e#a y !nco)'etent.

;!on!s!a so d another 'ort!on to Gu)ers!nda ;e eQa as e%!denced "y a notar!@ed I;eed of 3a e w!th R!#ht of Rede)'t!onJ thus, ea%!n# an unso d area of )ore than 43,000 s1uare )eters. ;!on!s!a ne%er redee)ed th!s 50,000 s1uare )eter 'ort!on fro) Gu)ers!ndo.

;!ones!aFs he!rs now contend that the ;eed of 3a e w!th R!#ht of rede)'t!on entered !nto "y ;!on!s!a and Gu)ers!ndo !s an e1u!ta" e )ort#a#e. $hey !ns!st that the 'r!ce of -5,3000.00 for 5 hectare 'ort!on !s #ross y !nade1uate.

ISSUE/ whether the transact!on entered !nto "y ;!on!s!a !s an e1u!ta" e )ort#a#e.

RULING/ 6n /56I0A3L/ 'O.0GAG/ !s one that a thou#h ac*!n# !n so)e for)a !ty, for) or words, or other re1u!s!tes de)anded "y a statute, ne%erthe ess re%ea s the !ntent!on of the 'art!es to chan#e a rea 'ro'erty as secur!ty for a de"t and conta!n noth!n# !)'oss!" e or contrary to aw. $he dec!s!%e factor !s the intention o+ the parties.

.a*ti!ta "!. Unan+!t G.R. No. 1.3002: Ju y 04, 2007

$h!rd ;!%!s!on $here !s #ross !nade1uacy !n 'r!ce !f a reasona" e )an w! not a#ree to d!s'ose of h!s 'ro'erty. $he court f!nds no co#ent reason to conc ude that the 1/4/ 'r!ce of -5,300.00 as a#reed u'on "y the 'art!es was unreasona" e. Reyes, R.$., J.:

F65$3: ,a)! ton 3a a* and 3h!r ey G. &nan#st were arrested on Fe"ruary 02, 1//. for estafa and carna''!n# for the for)erFs fa! ure to return
Page 10

$here !s no e%!dence here!n whatsoe%er to show that ;!on!s!a d!d not understand the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

a car he rented fro) 8en(a)!n 8aut!sta. 8aut!sta de)anded fro) 3a a* the su) of -h' 232, 3.2.00 as 'ay)ent for car renta fees, other fees and !nc!denta e4'enses !n the retr!e%a of the car. 3a a* and the res'ondent 'ro'osed to se to the 'et!t!oner a house [ ot under the &nan#stFs na)e to a)!ca" y sett e the cases f! ed a#a!nst the) and the!r accounts w!th the sa)e, wh!ch the 'et!t!oner we co)ed. Further)ore, 'et!t!oner a#rees to 'ay the )ort#a#e oan o%er the su"(ect 'ro'erty to a certa!n Jo(o ?ee =as the 'ro'erty was then set to "e 'u" !c y auct!oned9. $hey e4ecuted a deed of sa e w!th r!#ht to re'urchase w!th!n 30 days, and that the res'ondents sha 'ay the ta4es and ut! !ty "! s re ated to the su"(ect 'ro'erty. &'on the fa! ure of the res'ondent to re'urchase, 'et!t!oner f! ed a co)' a!nt for s'ec!f!c 'erfor)ance or reco%ery of 'ossess!on, for su) of )oney, for conso !dat!on of ownersh!', and da)a#es a#a!nst the res'ondent. 6fter the R$5 dec!d!n# !n fa%or of the 'et!t!oner, res'ondent now ar#ues "efore the 56 to annu the deed, ar#u!n# that res'ondent &nan#stFs consent to the deed was 'rocured under duress and assu)!n# ar#uendo that the sa)e was free y #!%en the sa)e 'arta*es the nature of an e1u!ta" e )ort#a#e and not of sa e. $he 56 ru ed !n fa%or of the res'ondent: hence th!s 'et!t!on for re%!ew on cert!orar!. $he 'et!t!oner ar#ues that the deed was c ear and une1u!%oca , er#o: such )ust "e construed !n !ts !tera sense.

R6$+2 ;B5+;BN;+: $he ;eed of 3a e w!th r!#ht to re'urchase 1ua !f!es as an e1u!ta" e )ort#a#e under 6rt!c e 1602, for res'ondent )ere y secured the 'ay)ent of the un'a!d car renta s and the a)ount ad%anced "y 'et!oner to Jo(o ?ee. -ro%!ded for are the cases to 'resu)e a contract to "e an e1u!ta" e )ort#a#e under 6rt!c e 1602 =N559: =1.9 =2.9 =3.9 Ahen the 'r!ce of the sa e w!th r!#ht to re'urchase !s unusua y !nade1uate: Ahen the %endor re)a!ns !n 'ossess!on as ease or otherw!se: Ahen u'on or after the e4'!rat!on of the r!#ht to re'urchase another !nstru)ent e4tend!n# the 'er!od of rede)'t!on or #rant!n# a new 'er!od !s e4ecuted: Ahen the 'urchaser reta!ns for h!)se f a 'art of the 'urchase 'r!ce: Ahen the %endor "!nds h!)se f to 'ay the ta4es on the th!n# so d: +n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t of the 'erfor)ance of any other o" !#at!on

=4.9 =5.9 =6.9

+n the case at "ar, f!rst, the consent was ta*en !n duress s!nce !t was s!#ned "y the res'ondent to "e freed fro) 'o !ce custody. Fo ow!n# the 'r!nc!' e, INe consensu! ta) contrar!u) est 1ua) %!s ata1u! )tusJ =Necess!tous )en are not, tru y s'ea*!n#, free )en: "ut to answer a 'resent e)er#ency w! su")!t to any ter)s that the crafty )ay !)'ose u'on the)9. 3econd, 'et!t!oner a owed res'ondent 3a a* to reta!n the 'ossess!on of the 'ro'erty des'!te the e4ecut!on of the deed s!nce the atter !s not e%en "ound to de !%er the 'ossess!on of the 'ro'erty to the for)er !f they wou d 'ay h!) the a)ount he de)anded. +n th!s case !t sha "e 'resu)ed that !t !s an e1u!ta" e )ort#a#e, for !f otherw!se, the e#a t!t e to the 'ro'erty )ust "e !))ed!ate y transferred to the %endee, su"(ect to the %endorFs r!#ht to redee). Br#o, retent!on "y the %endor of the 'ossess!on !s !ncons!stent w!th the %endeeFs ac1u!s!t!on of the r!#ht of ownersh!' under a true sa e. +t
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+33&B: Ahether the su"(ect contract !s that of sa e or an e1u!ta" e )ort#a#eD

,B?;: $he ;eed of 3a e w!th r!#ht to re'urchase !s that of an e1u!ta" e )ort#a#e. $he 'et!t!on !s den!ed for ac* of )er!t.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

d!sc oses, !n the a e#ed %endee, a ac* of !nterest !n the 'ro'erty that "e !es the truthfu ness of the sa e a retro. $h!rd, the deed was e4ecuted "y reason of: =01.9 the a e#ed !nde"tedness of 3a a* to 'et!t!oner, that !s, car renta 'ay)ents: and =02.9 res'ondentFs own o" !#at!on to 'et!t!oner, that !s, re!)"urse)ent of what 'et!t!oner 'a!d to the )ort#a#ee, Jo(o ?ee. Fact !s, the 'urchase 'r!ce stated !n the deed was the a)ount of the !nde"tedness of "oth res'ondent and 3a a* to 'et!t!oner. 6''arent y, the deed 'ur'orts to "e a sa e a retro, on the other hand, s!nce the sa)e was e4ecuted !n cons!derat!on of the aforesa!d oans andCor !nde"tedness, sa!d contract !s f!r) y sett ed that whene%er !t !s c ear y shown that a deed of sa e w!th 'acto de retro, re#u ar on !ts face, !s #!%en as secur!ty for a oan, !t )ust "e re#arded as an e1u!ta" e )ort#a#e. Moreo%er, !t !s 'ro%!ded for !n 6rt!c e 1603 =N559 that: I!n case of dou"t, a contract 'ur'ort!n# to "e a sa e w!th r!#ht to re'urchase sha "e construed as an e1u!ta" e )ort#a#e.J

Lo 5e! "!. Co* t o2 Appea$! G.R. No. 13/774: Fe"ruary 15, 2001

2cta%!o and ?or"es ='et!t!oners9 )ort#a#ed the!r 'arce of and !n 6nt!'o o, R!@a to F orenc!o and Nestor 5ar os for -h' 150, 000.00 that su"se1uent y !ncreased to -h' 500, 000.00 !n a year. +n fear of forec osure, 'et!t!oner as*ed the!r son0!n0 aw, de os Reyes =here!n res'ondent9, for he ' !n redee)!n# the su"(ect 'ro'erty. 3!nce the atter has no )oney for that 'ur'ose, he so !c!ted the he ' of h!s fr!end Josef!na 5ru@, a ?and 8an* of the -h! !''!nes =?8-9 e)' oyee. +t was a#reed u'on "y the 'art!es that:
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page 10"

=1.9 =2.9 =3.9

=4.9 =5.9 =6.9

they wou d s!#n a deed of sa e con%ey!n# the )ort#a#ed 'ro'erty !n fa%or of 'r!%ate res'ondent 5ru@: and thereafter 5ru@ w! a'' y for a hous!n# oan w!th ?and 8an*, us!n# the su"(ect 'ro'erty as co atera : !t was further a#reed that out of the 'roceeds of the oan, -500,000.00 w! "e 'a!d to the 5ar oses as )ort#a#ees, and any such "a ance w! "e a'' !ed "y 'et!t!oners for ca'!ta #a!ns ta4, e4'enses for the cance at!on of the )ort#a#e to the 5ar oses: transfer of t!t e to Josef!na 5ru@: and re#!strat!on of a )ort#a#e !n fa%or of ?and 8an*: and the )onth y a)ort!@at!on on the hous!n# oan wh!ch was su''osed to "e deducted fro) the sa ary of 'r!%ate res'ondent 5ru@ w! "e re!)"ursed "y 'r!%ate res'ondent de os Reyes.

$he 'r!%ate res'ondent =de os Reyes9 was dec ared !n defau t and the case 'roceeded !n e4 'arte. $he ower court ru ed !n fa%or of the 'et!t!oners, s!nce the sa e was e4ecuted !n order to secure a oan fro) ?8- to sa%e the 'ro'erty fro) the dan#er of forec osure and to use !t as co atera thereof for "an* oan 'ur'oses and that the sa)e does not ref ect the rea !ntent!on of the 'art!es !n e4ecut!n# the sa!d ;eed of 3a e. Further)ore, the 'et!t!oners are st! !n 'ossess!on of the su"(ect 'ro'erty and had "een 'ay!n# the rea ty ta4es thereon e%en after the e4ecut!on of the deed, and that the 'et!t!oners were )ere y forced to enter !nto the sa!d transact!on out of the #ra%e necess!ty of redee)!n# the su"(ect 'ro'erty at that t!)e. $he 56 re%ersed the dec!s!on of the ower court: hence th!s 'et!t!on for re%!ew on cert!orar!.

+33&B3: 6fter wh!ch, ?8- !ssued a etter of #uarantee !n fa%or of the 5ar oses, !nfor)!n# the) that 5ru@F oan has "een a''ro%ed, and su"se1uent y a new t!t e !n the na)e of 5ru@ was !ssued !n !eu thereof: thus, the )ort#a#e was d!schar#ed. +n 1//3, the 'et!t!oners not!f!ed de os Reyes that they are now ca'a" e of redee)!n# the su"(ect 'ro'erty, "ut the atter refused. $h!s ed the for)er to f! e an act!on for refor)at!on of !nstru)ent ' us da)a#es. $he 'et!t!oners ar#ue that: =1.9 the deed was )ere y a for)a !ty to )eet the re1u!re)ents of the "an* for the hous!n# oan, and that the rea !ntent!on of the 'art!es !n secur!n# the oan was to a'' y the 'roceeds thereof for the 'ay)ent of the )ort#a#e o" !#at!on: that the deed of sa e d!d not ref ect the true !ntent!on of the 'art!es, and that the transact!on was not an a"so ute sa e "ut an e1u!ta" e )ort#a#e, cons!der!n# that the 'r!ce of the sa e was !nade1uate cons!der!n# the )ar*et %a ue of the su"(ect 'ro'erty and "ecause they cont!nued 'ay!n# the rea estate ta4es thereto e%en after the e4ecut!on of the sa!d deed of sa e ,B?;: $he ;eed of 6"so ute 3a e !s an e1u!ta" e )ort#a#e. $he 56 dec!s!on !s re%ersed and the R$5 dec!s!on !s re!nstated. Ahether the ;eed of 6"so ute 3a e entered !nto "y the 'art!es was an e1u!ta" e )ort#a#eD

R6$+2 ;B5+;BN;+: $here !s no conc us!%e test to deter)!ne whether a deed of a"so ute sa e on !ts face !s rea y a s!)' e oan acco))odat!on secured "y a )ort#a#e, er#o: Ithe dec!s!%e dec!s!%e factor !n e%a uat!n# such a#ree)ent !s the !ntent!on of the 'art!es, as shown not necessar! y "y the ter)!no o#y used !n the contract "ut "y a the surround!n# c!rcu)stances, such as the re at!%e s!tuat!on of the 'art!es at that t!)e, the att!tude, acts, conduct, dec arat!ons of the 'art!es, the ne#ot!at!ons "etween the) ead!n# to the deed,

=2.9

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 10#

and #enera y, a 'ert!nent facts ha%!n# a tendency to f!4 and deter)!ne the rea nature of the!r des!#n and understand!n#. 6s such, docu)entary and 'aro e%!dence )ay "e su")!tted and ad)!tted to 'ro%e the !ntent!on of the 'art!es.J -ro%!ded for are the cases to 'resu)e a contract to "e an e1u!ta" e )ort#a#e under 6rt!c e 1602 =N559: =1.9 =2.9 =3.9 Ahen the 'r!ce of the sa e w!th r!#ht to re'urchase !s unusua y !nade1uate: Ahen the %endor re)a!ns !n 'ossess!on as ease or otherw!se: Ahen u'on or after the e4'!rat!on of the r!#ht to re'urchase another !nstru)ent e4tend!n# the 'er!od of rede)'t!on or #rant!n# a new 'er!od !s e4ecuted: Ahen the 'urchaser reta!ns for h!)se f a 'art of the 'urchase 'r!ce: Ahen the %endor "!nds h!)se f to 'ay the ta4es on the th!n# so d: +n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t of the 'erfor)ance of any other o" !#at!on.

e)er#ency, w! su")!t to any ter)s that the crafty )ay !)'ose u'on the),J s!nce the transact!on was "orne out of the !)'end!n# forec osure of the su"(ect 'ro'erty. ?ast y, the 'et!t!oners re)a!ned !n 'ossess!on of the su"(ect 'ro'erty after the e4ecut!on of the deed: and 5ru@ )ade no de)and to the for)er to %acate the 're)!ses.

=4.9 =5.9 =6.9

6nd that the cond!t!ons here!n set forth "y the aw wh!ch #!%e way for the 'resu)'t!on of e1u!ta" e )ort#a#e a'' y w!th e1ua force to a contract 'ur'ort!n# to "e one of a"so ute sa e. $he 'resence of e%en one of these c!rcu)stances, and not the concurrence of these c!rcu)stances, suff!ces to construe a contract of sa e to "e one of e1u!ta" e )ort#a#e. $he 35 f!nds that the true !ntent!on "etween the 'art!es for e4ecut!n# the ;eed of 3a e was not to con%ey ownersh!' of the su"(ect 'ro'erty "ut )ere y to secure the hous!n# oan of 5ru@, !n the 'et!t!oners had d!rect !nterest s!nce the 'roceeds thereof was to "e !))ed!ate y a'' !ed to the!r outstand!n# )ort#a#e o" !#at!on to the 5ar oses. 6 thou#h th!s !s not shown !n the su''ort!n# docu)ents of the 'r!nc!'a transact!on "etween the 'art!es, the so e 'ur'ose of these docu)ents was to sat!sfy ?8-. 3econd, the consent #!%en "y the 'et!t!oners where !n duress fo ow!n# the 'r!nc!' e, INecess!tous )en are not, tru y s'ea*!n#, free )en: "ut to answer a 'resent
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 10$

e4ecuted a 3'ec!a -ower of 6ttorney !n fa%or of -aran#an to secure an a#r!cu tura oan fro) 'r!%ate res'ondent -h! !''!ne Nat!ona 8an* =-N89 w!th the aforesa!d ot as co atera . 2n Fe"ruary 17, 1/.2, a second 3'ec!a -ower of 6ttorney was e4ecuted "y 'et!t!oner, "y %!rtue of wh!ch, -aran#an was a" e to secure four =49 add!t!ona oans. $he ast three oans were w!thout the *now ed#e of here!n 'et!t!oner and a the 'roceeds therefro) were used "y -aran#an for h!s own "enef!t. $hese encu)"rances were du y annotated on the cert!f!cate of t!t e. 2n 6'r! 16, 1/.3, 'et!t!oner s!#ned a ;eed of -acto de Retro 3a e !n fa%or of -aran#an wh!ch was su'erseded "y the ;eed of ;ef!n!te 3a e dated May 4, 1/./ wh!ch 'et!t!oner s!#ned u'on -aran#an>s re'resentat!on that the sa)e )ere y e%!dences the oans e4tended "y h!) unto the for)er.

ADORACION LUSTAN, petitione , "!. COURT OF A##EALS, NICOLAS #ARANGAN and SOLEDAD #ARANGAN, #HILI##INE NATIONAL .ANB, e!pondent!.

OG.R. No. 111/24. January 2., 1//.P

For fear that her 'ro'erty )!#ht "e 're(ud!ced "y the cont!nued "orrow!n# of -aran#an, 'et!t!oner de)anded the return of her cert!f!cate of t!t e. +nstead of co)' y!n# w!th the re1uest, -aran#an asserted h!s r!#hts o%er the 'ro'erty wh!ch a e#ed y had "eco)e h!s "y %!rtue of the afore)ent!oned ;eed of ;ef!n!te 3a e. &nder sa!d docu)ent, 'et!t!oner con%eyed the su"(ect 'ro'erty and a the !)'ro%e)ents thereon unto -aran#an a"so ute y for and !n cons!derat!on of the su) of 3e%enty F!%e $housand -esos.

$,+R; ;+E+3+2N

FR6N5+352, J.:

F65$3

-et!t!oner 6dorac!on ?ustan !s the re#!stered owner of a 'arce of and. 2n Fe"ruary 25, 1/6/, 'et!t!oner eased the and to 'r!%ate res'ondent N!co as -aran#an for a ter) of ten =109 years and an annua rent of 2ne $housand =-1,000.009 -esos. ;ur!n# the 'er!od of ease, -aran#an was re#u ar y e4tend!n# oans !n s)a a)ounts to 'et!t!oner to defray her da! y e4'enses and to f!nance her dau#hter>s educat!on. 2n Ju y 2/, 1/.0, 'et!t!oner
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

6##r!e%ed, 'et!t!oner f! ed an act!on for cance at!on of !ens, 1u!et!n# of t!t e, reco%ery of 'ossess!on and da)a#es a#a!nst -aran#an and -N8 !n the Re#!ona $r!a 5ourt of + o! o 5!ty. $he R$5 ordered the cance at!on "y the Re#!ster of ;eeds of the -ro%!nce of o! o, of the unauthor!@ed oans, the !ens and encu)"rances a''ear!n# !n the $ransfer 5ert!f!cate of the and. ;ec ar!n# the ;eed of -acto de Retro 3a e dated 6'r! 25, 1/.7 and the ;eed of ;ef!n!te 3a e dated May 6, 1/./, "oth docu)ents e4ecuted "y 6dorac!on ?ustan !n fa%or of N!co as -aran#an o%er ?ot 706/ !n $5$ No. $0 561 of the Re#!ster of ;eeds of o! o, as nu and %o!d, dec ar!n# the sa)e to "e ;eeds of B1u!ta" e Mort#a#e. +t a so ordered defendant N!co as -aran#an to 'ay a the oans he
Page 109

secured fro) defendant -N8 us!n# thereto as secur!ty $5$ No. $0561 of ' a!nt!ff and defendant -N8 to return $5$ No. $0561 to ' a!nt!ff. 6 so, 2rder!n# defendant N!co as -aran#an to return 'ossess!on of the and !n 1uest!on to the ' a!nt!ff u'on 'ay)ent of the su) of -.5,000.00 "y ' a!nt!ff to defendant -aran#an wh!ch 'ay)ent "y ' a!nt!ff )ust "e )ade w!th!n n!nety =/09 days fro) rece!'t of th!s dec!s!on: otherw!se, sa e of the and w! "e ordered "y the court to sat!sfy 'ay)ent of the a)ount:

as an !ssue the fact that the docu)ent does not e4'ress the true !ntent of the 'art!es. +n th!s case, 'aro e%!dence then "eco)es co)'etent and ad)!ss!" e to 'ro%e that the !nstru)ent was !n truth and !n fact #!%en )ere y as a secur!ty for the re'ay)ent of a oan. 6nd u'on 'roof of the truth of such a e#at!ons, the court w! enforce the a#ree)ent or understand!n# !n consonance w!th the true !ntent of the 'art!es at the t!)e of the e4ecut!on of the contract.

&'on a''ea to the 5ourt of 6''ea s =569, res'ondent court re%ersed the tr!a court>s dec!s!on.

<6rt. 1604. $he 'ro%!s!ons of 6rt!c e 1602 sha a so a'' y to a contract 'ur'ort!n# to "e an a"so ute sa e.<

+33&B

Ahether or not the ;eed of ;ef!n!te 3a e !s !n rea !ty an e1u!ta" e )ort#a#e.

R&?+NG

$he ;eed of ;ef!n!te 3a e !s !n rea !ty an e1u!ta" e )ort#a#e as !t was shown "eyond dou"t that the !ntent!on of the 'art!es was one of a oan secured "y 'et!t!oner>s and. 6 contract !s 'erfected "y )ere consent. More 'art!cu ar y, a contract of sa e !s 'erfected at the )o)ent there !s a )eet!n# of )!nds u'on the th!n# wh!ch !s the o"(ect of the contract and u'on the 'r!ce. $h!s )eet!n# of the )!nds s'ea*s of the !ntent of the 'art!es !n enter!n# !nto the contract res'ect!n# the su"(ect )atter and the cons!derat!on thereof. +f the words of the contract a''ear to "e contrary to the e%!dent !ntent!on of the 'art!es, the atter sha 're%a! o%er the for)er. +n the case at "ench, the e%!dence !s suff!c!ent to warrant a f!nd!n# that 'et!t!oner and -aran#an )ere y !ntended to conso !date the for)er>s !nde"tedness to the atter !n a s!n# e !nstru)ent and to secure the sa)e w!th the su"(ect 'ro'erty. B%en when a docu)ent a''ears on !ts face to "e a sa e, the owner of the 'ro'erty )ay 'ro%e that the contract !s rea y a oan w!th )ort#a#e "y ra!s!n#
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

For a 'resu)'t!on of an e1u!ta" e )ort#a#e to ar!se, we )ust f!rst sat!sfy two re1u!s!tes na)e y: that the 'art!es entered !nto a contract deno)!nated as a contract of sa e and that the!r !ntent!on was to secure an e4!st!n# de"t "y way of )ort#a#e. &nder 6rt. 1604 of the 5!%! 5ode, a contract 'ur'ort!n# to "e an a"so ute sa e sha "e 'resu)ed to "e an e1u!ta" e )ort#a#e shou d any of the cond!t!ons !n 6rt. 1602 "e 'resent. $he e4!stence of any of the c!rcu)stances there!n, not a concurrence nor an o%erwhe )!n# nu)"er of such c!rcu)stances, suff!ces to #!%e r!se to the 'resu)'t!on that the contract !s an e1u!ta" e )ort#a#e.

6rt. 1602, =69, !n re at!on to 6rt 1604 'ro%!des that a contract of sa e !s 'resu)ed to "e an e1u!ta" e )ort#a#e !n any other case where !t )ay "e fa!r y !nferred that the rea !ntent!on of the 'art!es !s that the transact!on sha secure the 'ay)ent of a de"t or the 'erfor)ance of any other o" !#at!on.

$hat the case c ear y fa s under th!s cate#ory can "e !nferred fro) the c!rcu)stances surround!n# the transact!on as here!n set forth:

-et!t!oner had no *now ed#e that the contract she s!#ned !s a deed of sa e. $he contents of the sa)e were not read nor e4' a!ned to her so that she )ay !nte !#!" y for)u ate !n her )!nd the conse1uences of her conduct and the nature
Page 110

of the r!#hts she was ced!n# !n fa%or of -aran#an. -et!t!oner !s ! !terate and her cond!t!on constra!ned her to )ere y re y on -aran#an>s assurance that the contract on y e%!dences her !nde"tedness to the atter. Ahen one of the contract!n# 'art!es !s una" e to read, or !f the contract !s !n a an#ua#e not understood "y h!), and )!sta*e or fraud !s a e#ed, the 'erson enforc!n# the contract )ust show that the ter)s thereof ha%e "een fu y e4' a!ned to the for)er. 3ett ed !s the ru e that where a 'arty to a contract !s ! !terate or cannot read or cannot understand the an#ua#e !n wh!ch the contract !s wr!tten, the "urden !s on the 'arty !nterested !n enforc!n# the contract to 'ro%e that the ter)s thereof are fu y e4' a!ned to the for)er !n a an#ua#e understood "y h!). $o our )!nd, th!s "urden has not "een sat!sfactor! y d!schar#ed.

Ae do not f!nd the test!)ony of -aran#an and ;e !a 5a"!a that the contract was du y read and e4' a!ned to 'et!t!oner worthy of cred!t. $he assess)ent "y the tr!a court of the cred!"! !ty of w!tnesses !s ent!t ed to #reat res'ect and we!#ht for ha%!n# had the o''ortun!ty of o"ser%!n# the conduct and de)eanor of the w!tnesses wh! e test!fy!n#.

$he 'resu)'t!on of e1u!ta" e )ort#a#e 're%a! s. $he contract of def!n!te sa e, where 'et!t!oner 'ur'orted y ceded a her r!#hts to the su"(ect ot !n fa%or of -aran#an, d!d not e)"ody the true !ntent!on of the 'art!es. $he e%!dence s'ea*s c ear y of the nature of the a#ree)ent W !t was one e4ecuted to secure so)e oans. S#OUSES CRIS#IN AUSTRIA and LEONISA HILARIO, petitione !, "!. S#OUSES DANILO GONZALES, JR., and VERONICA GONZALES, e!pondent!.

OG.R. No. 14.321. January 21, 2004 P

3B52N; ;+E+3+2N

H&+3&M8+NG, J.:

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 111

F65$3

2n 3e'te)"er 4, 1//1 , 'et!t!oners 5r!s'!n 6ustr!a and ?eon!sa ,! ar!o f! ed a c!%! act!on for ;ec arat!on of Nu !ty of ;ocu)ent and Recon%eyance "efore the R$5 of Ma o os, 8u acan, a#a!nst here!n res'ondents ;an! o Gon@a es, Jr., and Eeron!ca Gon@a es. +n the!r 5o)' a!nt, 'et!t!oners a e#ed that they are the owners and 'ossessors of three =39 'arce s of and, a !n the na)e of 'et!t!oner ?eon!sa ,! ar!o. 3a!d 'arce s "eca)e the su"(ect of two =29 ;eeds of 6"so ute 3a e, one dated Ju y 21, 1/./ , 'r!ced at -50,000 and the other dated 2cto"er 23, 1/71 'r!ced at -240,000. 8oth deeds were e4ecuted "y 'et!t!oner ?eon!sa ,! ar!o !n fa%or of res'ondents. 8ut 'et!t!oners c a!)ed that the transact!ons entered "etween 'et!t!oners and res'ondents were not actua y sa es, "ut )ere y oans !n the a)ount of -260,000. 6ccord!n# to 'et!t!oners, they used th!s a)ount to redee) so)e )ort#a#ed 'ro'ert!es fro) the Rura 8an* of -and!, 8u acan. $o secure the oan, howe%er, res'ondents re1u!red 'et!t!oners to furn!sh the) w!th ten =109 $5$s. $hree of these cert!f!cates co%ered the 'et!t!oners> 'ro'ert!es su"(ect of the 'resent case, wh! e .the other se%en "e on#ed to the!r re at!%es. -et!t!oners ad)!tted that the!r de"ts to res'ondent s'ouses re)a!ned un'a!d due to "us!ness re%erses.

,! ar!o so d to the) the three ots !n 1uest!on. Res'ondent Eeron!ca Gon@a es a#reed to "uy the sa)e out of '!ty for 'et!t!oners, whose se%era 'ro'ert!es had ear !er "een forec osed "y the "an*. $he transact!on was e)"od!ed !n a ;eed of 6"so ute 3a e and notar!@ed "efore Notary -u" !c -rotac!o 5orte@, Jr. $he or!#!na a)ount !n the ;eed of 6"so ute 3a e was -240,000. ,owe%er, "efore the 'ro'ert!es were re#!stered, 'et!t!oner ?eon!sa ,! ar!o !n a etter dated Ju y 20, 1/73 , re1uested for the e4ecut!on of another ;eed of 6"so ute 3a e !nd!cat!n# a 'r!ce of -50,000, 'ur'orted y to essen the ta4es and fees that they w! "e 'ay!n# as the %endors.

6ccord!n# to res'ondents, a new ;eed of 6"so ute 3a e !nd!cat!n# a se !n# 'r!ce of -50,000 for the 3 ots was e4ecuted and notar!@ed "efore Notary -u" !c Jose Ra)os. 3hort y afterwards, accord!n# to res'ondents, the t!t es of sa!d ots were transferred to the).

6ccord!n# to 'et!t!oners, res'ondents thereafter re#!stered the d!s'uted 'ro'ert!es !n the!r own na)es throu#h the use of fraud, )!sre'resentat!on and fa s!f!cat!on, us!n# the f!ct!t!ous contracts of sa e. -et!t!oners a e#ed that they ca)e to *now of sa!d acts of res'ondents on y when they were ser%ed w!th a not!ce dated May 22, 1//1 , fro) res'ondents> counse to %acate sa!d ots. $hus, 'et!t!oners sou#ht the recon%eyance of the three 'arce s fro) res'ondents, w!th )ora da)a#es and attorney>s fees.

6fter res'ondents wrote 'et!t!oners on June 20, 1/73, as*!n# the) to %acate the d!s'uted 'ro'ert!es, 'et!t!oners sent res'ondents on Ju y 27, 1/73, an &N;BR$6L+NG5 'ro)!s!n# to %acate and surrender 'ossess!on of the 'ro'ert!es on or a"out ;ece)"er 15, 1/73, w!thout further e4tens!on. 8ut then 'et!t!oners fa! ed to %acate as 'ro)!sed on sa!d date. $he!r fa! ure to %acate and turn o%er the 'urchased ots 'ro)'ted res'ondents to send a f!na de)and etter as*!n# 'et!t!oners to %acate the 're)!ses "ut 'et!t!oners st! refused. 6s a resu t, sa!d res'ondents were forced to f! e an e(ect)ent su!t "efore the Mun!c!'a $r!a 5ourt of -and!, 8u acan,6 a#a!nst 'et!t!oners. $hat su!t was dec!ded "y the )un!c!'a court !n res'ondents> fa%or.

,ence the 'et!t!oners e e%ated the!r case to the Re#!ona $r!a 5ourt of Ma o os.

For the!r 'art, res'ondents !ns!sted !n the!r 6nswer that on 2cto"er 1/71, 'et!t!oner ?eon!sa
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

2n 6u#ust 11, 1//5 , after tr!a on the )er!ts, the R$5 of Ma o os dec!ded 5!%! 5ase No. 5520 M0/1 a#a!nst res'ondents and !n fa%or of here!n 'et!t!oners.

Page 112

6'' y!n# 6rt!c e 1604 of the 5!%! 5ode !n re at!on to 6rt!c e 1602,the R$5 o"ser%ed that: =a9 'et!t!oners as the %endor re)a!ned !n 'hys!ca 'ossess!on of the ots e%en after the e4ecut!on of the deed of sa e: ="9 'et!t!oners 'a!d the rea ty ta4es for the years 1/72 and 1/73: and =c9 the 'urchase 'r!ce of -50,000.00 was unusua y !nade1uate "y any standard for rea t!es.

Res'ondents seasona" y a''ea ed the dec!s!on to the 5ourt of 6''ea s. +t re%ersed the tr!a court>s dec!s!on.

)ort#a#e !s not conc us!%e. +t )ay "e re"utted "y co)'etent and sat!sfactory 'roof to the contrary. +n the !nstant case, 'et!t!oners> c a!) that the se !n# 'r!ce of the ots !n 1uest!on was !nade1uate needs c oser scrut!ny. -et!t!oners> a e#at!on that the !nsuff!c!ency of the se !n# 'r!ce creates the 'resu)'t!on that the transact!on !s an e1u!ta" e )ort#a#e !s unsu''orted "y the e%!dence on record. -et!t!oners fa! ed to 'resent any 'roof whatsoe%er that the fa!r )ar*et %a ues of the rea 'ro'erty !n the area at the t!)e of the transact!on were )uch h!#her than the se !n# 'r!ce of the 'arce s !n 1uest!on. Mere a e#at!on that the 'r!ce 'a!d "y res'ondents was !nade1uate, w!thout )ore, does not )a*e a case fa%ora" e to 'et!t!oners.

+33&B

A,B$,BR 2R N2$ $,B 52&R$ 2F 6--B6?3 +3 52RRB5$ +N ,2?;+NG $,6$ $,B 52N$R65$ 8B$ABBN -B$+$+2NBR3 6N; RB3-2N;BN$3 A63 6 36?B 6N; N2$ 6N BH&+$68?B M2R$G6GB 2F RB6? -R2-BR$K

R&?+NG ;ec!s!%e for the 'ro'er deter)!nat!on of the true nature of the transact!on "etween the 'art!es !s the !ntent of the 'art!es. $here !s no conc us!%e test to deter)!ne whether a deed a"so ute on !ts face !s rea y a s!)' e oan acco))odat!on secured "y a )ort#a#e.

6s to the a e#at!on that 'et!t!oners were !n 'ossess!on of the 'ro'ert!es e%en after the sa e, !t !s o"%!ated "y the fact that they e4ecuted an underta*!n# 'ro)!s!n# to %acate the 're)!ses. 8ut they re'eated y de ayed honor!n# !t. $he records a so show that they d!d not o"(ect when !)'ro%e)ents were )ade on the 're)!ses "y res'ondents. $he atter !ntroduced 'er)anent !)'ro%e)ents thereon and had !n fact con%erted the '!#'ens, wh!ch used to "e on# to ' a!nt!ff 6ustr!a , !nto a f!sh'ond. Ahen a these !)'ro%e)ents were "e!n# underta*en, ' a!nt!ffs were aware thereof "ut d!d not o"(ect to any of the wor* done on the su"(ect 're)!ses. 3uch !nact!on !s contrary to the!r c a!) of ownersh!' o%er the su"(ect 'ro'ert!es, cons!der!n# that the owner of a th!n# has the r!#ht to e4c ude any 'erson fro) the en(oy)ent and d!s'osa thereof and )ay, for th!s 'ur'ose, use such force as )ay "e reasona" y necessary to re'e or 're%ent an actua or threatened un awfu 'hys!ca !n%as!on or usur'at!on of h!s 'ro'erty. =6rt!c e 42/, 5!%! 5ode9.

-et!t!oners 'o!nt out that the re1u!re)ents of an e1u!ta" e )ort#a#e ha%e "een sat!sf!ed "y the fo ow!n# c!rcu)stances, to w!t: =19 !nade1uacy of the se !n# 'r!ce: =29 'ossess!on !n the 're)!ses, and =39 'ay)ent of rea ty ta4es. ,owe%er, such 'resu)'t!on of e1u!ta" e
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

-et!t!oners !ns!st that they entered !nto a contract on y to o"ta!n a oan w!th res'ondents and noth!n# )ore. -et!t!oners fa! ed, howe%er, to 'resent a co'y of sa!d contract !n the 'roceed!n#s "efore the R$5, nor cou d they test!fy as to !ts deta! s. -et!t!oners sure y cannot now 'retend to "e !#norant of the rea nature of
Page 113

the!r transact!on w!th res'ondents. For th!s was not the f!rst t!)e they dea t w!th each other. M2RB2EBR, he fa! ed to re"ut the test!)ony of the Notary -u" !c who test!f!ed !n court that the 'et!t!oners as %endors of the 'ro'ert!es 'ersona y a''eared and ac*now ed#ed the sa e docu)ents "efore h!).

$hus, we are constra!ned to f!nd that !ndeed the true !ntent of the 'art!es !n%o %es a contract of sa e. +t !s not )ere y a oan, )uch ess an e1u!ta" e )ort#a#e. A,BRBF2RB, the 'et!t!on !s ;BN+B;, and the dec!s!on of the 5ourt of 6''ea s dated Fe"ruary 23, 1/// as we as !ts reso ut!on dated Fe"ruary 27, 2001 , !s 6FF+RMB;.

RONALDO #. A.ILLA "!. CARLOS ANG GO.ONSENG, JR. 6u#ust 6, 2002 G.R. No. 146651 Res'ondent =Go"onsen#9 contracted a oan fro) 'et!t!oner !n the su) of -550*, secured "y a rea estate )ort#a#e o%er two 'arce s of and, co%ered "y $5$ Nos. 1360. and 13535. Res'ondent defau ted !n the 'ay)ent of the oan, wh!ch had reached the a)ount of -.00*. ,e sou#ht a renewa of the oan and !ssued 2 'ostdated chec*s, one for -10* and the other for -6/0*, re'resent!n# the fu a)ount of h!s o" !#at!on.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 11

$he second chec* was d!shonoured 444. Res'ondent 'ro)!sed to 'ay 'et!t!oner the su) of -6/0* u'on a''ro%a of h!s 'end!n# oan a'' !cat!on w!th the 3tate +n%est)ent ,ouse, +nc. ,owe%er, the sa!d end!n# !nst!tut!on re1u!red a co atera for wh!ch reason res'ondent "orrowed fro) 'et!t!oner the two t!t es so he can )ort#a#e the sa)e. $hus, 'et!t!oner cance ed the )ort#a#e !n h!s fa%or and de !%ered the two t!t es to res'ondent. ;es'!te a''ro%a of the oan, res'ondent fa! ed to )a*e #ood on h!s 'ro)!se to 'ay h!s outstand!n# o" !#at!on to 'et!t!oner. ,ence, the atter threatened to sue h!) for Bstafa. Res'ondent thus e4ecuted a deed of a"so ute sa e o%er h!s1. ots !n ;u)a#uete !n fa%or of 'et!t!oner. 2n the sa)e day, the 'art!es e4ecuted an 2't!on to 8uy where"y res'ondent was a owed to re'urchase the ots w!th!n a 'er!od of 6 )onths. Res'ondent fa! ed to re'urchase the ots w!th!n the st!'u ated 'er!od. 5onse1uent y, 'et!t!oners !nst!tuted an act!on for s'ec!f!c 'erfor)ance 444 'ursuant to the deed of a"so ute sa e. +n h!s answer, res'ondent !nter'osed the defense that the transact!on was !n rea !ty an e1u!ta" e )ort#a#e. R$5 of ;u)a#uete rendered (ud#)ent !n fa%or of 'et!t!oner and ru ed that the 2't!on to 8uy was rendered nu and %o!d "y res'ondent>s fa! ure to e4erc!se the o't!on w!th!n the 'er!od of s!4 )onths. 2n a''ea , the 5ourt of 6''ea s aff!r)ed the dec!s!on of the tr!a court, "ut further dec ared that <the deed of sa e and o't!on to "uy actua y const!tute a pacto de retro sa e.< Ga"onsen#Fs MR was den!ed. ,!s 'et!t!on f! ed w!th 35 was a so. ,ence, the dec!s!on "eca)e f!na on Fe"ruary 7, 1///.. 2n Fe"ruary 2., 1///, res'ondent f! ed w!th the court of or!#!n a )ot!on to re'urchase the ots w!th tender of 'ay)ent, wh!ch was den!ed. 3u"se1uent y, the tr!a court !ssued an 2rder #rant!n# res'ondent>s )ot!on for recons!derat!on and a ow!n# h!) to re'urchase the ots w!th!n th!rty days fro) f!na !ty thereof. $hus, 'et!t!oner 6"! a !nstant 'et!t!on for re%!ew. "rou#ht the

+33&B: Ahether or not the contract "etween the 'art!es was an a"so ute sa e w!th 'acto de retro. ,B?;: N2.=!t was e1u!ta" e )ort#a#e9 he d as a )ere

2n January 1., 2002, we rendered the assa! ed ;ec!s!on re%ers!n# the 2rder of the R$5, !n effect deny!n# res'ondent the r!#ht to re'urchase the su"(ect ots. Res'ondent>s c a!) of the r!#ht to re'urchase the ots !s anchored on the th!rd 'ara#ra'h of 6rt!c e 1606 of the 5!%! 5ode, wh!ch states: Ho)e1er, the 1endor may still e ercise the right to repurchase )ithin thirty days +rom the time +inal judgment )as rendered in a ci1il action on the basis that the contract )as a true sale )ith right to repurchase. +n our ;ec!s!on, we ru ed that 6rt!c e 1606 of the 5!%! 5ode does not a'' y to the case at "ar "ecause the transact!on "etween the 'art!es was a pacto de retro sa e, c!t!n# the case of 2da. de 'acoy 1. !A. ,owe%er, u'on a care+ul re1ie) and analysis of the antecedent facts, we are con%!nced that the r!#ht #ranted under the th!rd 'ara#ra'h of 6rt!c e 1606 )ay "e !n%o*ed "y res'ondent. +n 2da. de 'acoy, c!t!n# the ear !er ru !n# !n *elicen, Sr. 1. Orias, we he d: $he a'' !cat!on of the th!rd 'ara#ra'h of 6rt!c e 1606 !s 'red!cated u'on the bona +ides of the %endor a retro. +t )ust a''ear that there was a "e !ef on h!s 'art, founded on facts attendant u'on the e4ecut!on of the sa e w!th pacto de retro, honest y and s!ncere y enterta!ned, that the a#ree)ent was !n rea !ty a )ort#a#e, one not !ntended to affect the t!t e to the 'ro'erty ostens!" y so d, "ut )ere y to #!%e !t as secur!ty for a oan or other o" !#at!on. +n that e%ent, !f the )atter of the rea nature of the contract !s su")!tted for (ud!c!a reso ut!on, the a'' !cat!on of the ru e !s )eet and 'ro'er: that the %endor a retro
Page 11!

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

"e a owed to re'urchase the 'ro'erty so d w!th!n 30 days fro) rend!t!on of f!na (ud#)ent dec ar!n# the contract to "e a true sa e w!th r!#ht to re'urchase. 5on%erse y, !f !t shou d a''ear that the 'art!es> a#ree)ent was rea y one of sa e W transferr!n# ownersh!' to the %endee, "ut acco)'an!ed "y a reser%at!on to the %endor of the r!#ht to re'urchase the 'ro'erty W and there are no c!rcu)stances that )ay reasona" y "e acce'ted as #enerat!n# so)e honest dou"t as to the 'art!es> !ntent!on, the 'ro%!so !s !na'' !ca" e. $he reason !s 1u!te o"%!ous. +f the ru e were otherw!se, !t wou d "e w!th!n the 'ower of e%ery %endor a retro to set at nau#ht a pacto de retro, or resurrect an e4'!red r!#ht of re'urchase, "y s!)' y !nst!tut!n# an act!on to refor) the contract W *nown to h!) to "e !n truth a sa e w!th pacto de retro W !nto an e1u!ta" e )ort#a#e. 444 444 444. $herefore, the a'' !ca"! !ty of 6rt!c e 1606 rests on the bona +ide !ntent of the %endor a retro, i.e., Ga"onsen# !n th!s case. +f he honest y "e !e%ed that the transact!on was an e1u!ta" e )ort#a#e, the sa!d art!c e a'' !es and he can st! re'urchase the 'ro'erty w!th!n th!rty days fro) f!na !ty of the (ud#)ent dec ar!n# the transact!on as a sa e w!th pacto de retro. -arenthet!ca y, !t )atters not what the %endee !ntended the transact!on to "e. Ahen 'et!t!oner ent the two t!t es to res'ondent, the oan he e4tended to res'ondent "eca)e unsecured. Natura y, there was a need to secure res'ondent>s o" !#at!on after he rene#ed on h!s 'ro)!se to 'ay the sa)e out of the oan 'roceeds fro) 3tate +n%est)ent ,ouse. $hus, !t )ay we "e that the deed of sa e, to#ether w!th the o't!on to "uy e4ecuted on the sa)e day, was )eant to ser%e as secur!ty for the !nde"tedness of res'ondent wh!ch had "eco)e on# o%erdue. 3a!d o" !#at!on wou d ha%e "een sat!sf!ed had res'ondent e4erc!sed the o't!on to "uy w!th!n the st!'u ated 'er!od. $hese c!rcu)stances, 'ecu !ar to the case at "ar, )a*e th!s case fa s1uare y w!th!n the s!tuat!on conte)' ated !n the a"o%e01uoted doctr!ne R that there was a "e !ef on the 'art of the %endor a retro, founded on facts attendant u'on the e4ecut!on of the sa e w!th pacto de
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

retro, honest y and s!ncere y enterta!ned, that the a#ree)ent was !n rea !ty a )ort#a#e, one not !ntended to affect the t!t e to the 'ro'erty ostens!" y so d, "ut )ere y to #!%e !t as secur!ty for a oan or other o" !#at!on. 5ons!stent y therew!th, res'ondent has )a!nta!ned throu#hout the 'roceed!n#s that transact!on "etween h!) and 'et!t!oner was rea y an e1u!ta" e )ort#a#e. 6s such, res'ondent )ay a%a! of the th!rd 'ara#ra'h of 6rt!c e 1606 of the 5!%! 5ode and re'urchase the ots affected "y the deed of a"so ute sa e and o't!on to "uy.

#HILADEL#HIA AGAN "!. HEIRS OF S#S. ANDRES NUEVA and DIOSDADO NUEVA

;ece)"er 11, 2003 G.R. No. 155017

F65$3: 2n 6'r! 13, 1/77, ;!osdada Nue%a, w!th )ar!ta consent, so d under a 'acto de retro, a 'arce of and =2,033 s1.).9 s!tuated !n 5a#ayan de 2ro 5!ty to 6#an for -21*.$he 'ro'erty !s co%ered "y $5$ No. 253.0 and re#!stered !n the na)e of 3'ouses 6ndres and ;!osdada Nue%a.
Page 11"

$he a#ree)ent !s e%!denced "y a 'u" !c !nstru)ent ent!t ed I;eed of 3a e under a -acto de RetroJ e4ecuted and du y s!#ned "y the ate ;!osdada and -h! ade 'h!a. $he 'art!es a#reed that the Nue%as are #ranted the r!#ht to re'urchase the 'ro'erty so d, w!th!n s!4 =69 )onths for the sa)e cons!derat!on. -et!t!oners fa! ed to re'urchase the 'ro'erty w!th!n the st!'u ated 'er!od. 2n Ju y 5, 1//1, u'on the death of ;!osdada Nue%a, the 'ro'erty was e4tra(ud!c!a y 'art!t!oned where 6ndres so d h!s !nterest !n the and !n 1uest!on to h!s dau#hter 6nn and son ?ou. 3!nce the t!t e to the 'ro'erty was a e#ed y ost dur!n# the f!re that ra@ed the 'ro'erty on March 1/, 1//0 where ;!osdada d!ed, t!t e was reconst!tuted and su"se1uent y transferred and re#!stered !n the na)e of 6nn and ?ou Nue%a. 2n June 1/, 1//2, -h! ade 'h!a f! ed a 'et!t!on for conso !dat!on of ownersh!' a#a!nst 3'ouses Nue%as w!th R$5 of 5a#ayan de 2ro 5!ty 444 +n the!r answer f! ed on the Nue%as a e#ed that the 'acto de retro sa e was actua y an e1u!ta" e )ort#a#e, the cons!derat!on for the sa e "e!n# on y -21* as a#a!nst !ts Fa!r Mar*et Ea ue of -71* 'ursuant to $a4 ;ec arat!on. 2n 6u#ust 3, 2000, the (ud#)ent conso !dat!n# ownersh!' o%er the d!s'uted 'ro'erty !n fa%or of -h! ade 'h!a was rendered "y R$5. ,owe%er, the second 'ara#ra'h of the d!s'os!t!%e 'ort!on #a%e the %endors a 'er!od of 30 days fro) rece!'t of the dec!s!on w!th!n wh!ch to redee) the 'ro'erty. $he d!s'os!t!%e 'ort!on of the dec!s!on reads: IA,BRBF2RB, "ased on the e%!dence 'resented, the ownersh!' !n the %endee !s here"y conso !dated "y %!rtue of the fa! ure of the %endors to redee) the 'ro'erty descr!"ed !n the ;eed of 3a e under -acto de Retro 444 cons!st!n# of an area of 2,033 s1uare )eters, )ore or ess. ,owe%er, the %endors can st! e4erc!se the r!#ht to re'urchase sa!d 'ro'erty w!th!n th!rty =309 days fro) rece!'t of th!s dec!s!on 'ursuant to 6rt!c e 1606 and 160. of the New 5!%! 5ode. OIP32 2R;BRB;.J 8ecause of the refusa of 6#an to acce't the a)ount of -52,070.00 as rede)'t!on 'r!ce, the Nue%as were constra!ned to cons!#n the a)ount
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

w!th the court. 2n 3e'te)"er 12, 2000, -h! ade 'h!a f! ed a 'et!t!on for re !ef fro) the 6u#ust 3, 2000 dec!s!on. 3he ar#ued that she d!d not f!nd !t necessary to f! e an a''ea fro) the sa!d dec!s!on cons!der!n# that the #rant of the th!rd0 day 'er!od to redee) the 'ro'erty !s a )ere sur' usa#e and hence, unenforcea" e and ! e#a !n %!ew of the courtFs order conso !dat!n# ownersh!' of the 'ro'erty !n her fa%or. Res'ondent 6#an 'rayed for the court to de ete the sa!d 'ort!on of the dec!s!on. 2n 2cto"er /, 2000, the tr!a court rendered !ts 1uest!oned 2rder, thus: IA,BRBF2RB, the dec!s!on of 6u#ust 4, 2000 !s here"y a)ended "y de et!n# the second 'ara#ra'h of the d!s'os!t!on thereof. OIP32 2R;BRB;.J Nue%asF MR was den!ed "y the court. Res'ondent he!rs f! ed a 'et!t!on for cert!orar! "efore the 56, contend!n# that the R$5 #ra%e y a"used !ts d!scret!on !n #rant!n# the 'et!t!on for re !ef. +n !ts ;ec!s!on, the 56 re%ersed the 2rder of the R$5 and rendered (ud#)ent !n fa%or of res'ondent he!rs. $he 56 he d that: Further, Ae do not a#ree w!th the content!on of the 'r!%ate res'ondent that 6rt!c e 1606 of the 5!%! 5ode does not a'' y !n the !nstant case. +n the!r answer to the 'et!t!on for conso !dat!on f! ed on 2cto"er 22, 1//7, 'et!t!oners ra!sed the defense that the transact!on "etween the 'art!es was actua y an e1u!ta" e )ort#a#e, cons!der!n# that they re)a!ned !n 'ossess!on of the su"(ect 'ro'erty and cont!nued to 'ay the rea ta4es thereon. $he ower court, !n !ts 6u#ust 3, 2000 dec!s!on, ru ed that the transact!on !s one of sa e under a 'acto de retro, hence !t acted w!th!n !ts author!ty under 6rt!c e 1606 of the 5!%! 5ode !n #!%!n# the 'et!t!oners th!rty days as rede)'t!on 'er!od.

,ence, 'et!t!oner f! ed th!s 'resentact!on w!th the 35.

Page 11#

+33&B: Ahether the transact!on "etween the 'art!es !n the case at "ar was an e1u!ta" e )ort#a#e.

,B?;: KB3. $here !s no a)"!#u!ty at a !n the dec!s!on that wou d warrant c ar!f!cat!on. +f at a , the a)"!#u!ty !s )ere y ostens!" e. 6t f!rst " ush, the d!s'os!t!%e 'ort!on of the R$5 ;ec!s!on dec ar!n# the conso !dat!on of ownersh!' of the 'ro'erty !n 'et!t!oner, on one hand, and #rant!n# res'ondents th!rty =309 days to re'urchase the 'ro'erty, on the other, a''ears !ncons!stent. $he d!s'os!t!%e 'ort!on, howe%er, a so )a*es reference to the th!rd 'ara#ra'h of 6rt!c e 1606 of the New 5!%! 5ode. $a*en to#ether, !t "eco)es o"%!ous that the conso !dat!on of the 'ro'erty !n 'et!t!oner !s su"(ect to the sus'ens!%e cond!t!on of res'ondentsF fa! ure to re'urchase w!th!n the th!rty0day 'er!od. 6t any rate, the #rant of the r!#ht to re'urchase to res'ondents !s !n accordance w!th the th!rd 'ara#ra'h of 6rt!c e 1606, a 'ro%!s!on not found !n the o d 5!%! 5ode. $he e#!s at!%e !ntent "eh!nd th!s 6rt!c e, a on# w!th 6rt!c es 160201605 and 160. of the sa)e 5ode, !s Ito accord the %endor a retro the )a4!)u) safe#uards for the 'rotect!on of h!s e#a r!#hts under the true a#ree)ent of the 'art!es. B4'er!ence has de)onstrated too often that )any sa es w!th r!#ht to re'urchase ha%e "een de%!sed on y to c!rcu)%ent or !#nore our usury aws and for th!s reason, the aw oo*s u'on then w!th d!sfa%or.J 6rt!c e 1606 !s !ntended to co%er su!ts where the se er c a!)s that the rea !ntent!on was a oan w!th e1u!ta" e )ort#a#e "ut dec!des otherw!se. $he se er, howe%er, )ust enterta!n a #ood fa!th "e !ef that the contract !s an e1u!ta" e )ort#a#e. $he R$5 !n th!s case )ade no f!nd!n# !n !ts ;ec!s!on that res'ondentsF defense that the 'acto de retro sa e was an e1u!ta" e )ort#a#e was not )ade !n #ood fa!th. +ndeed, !t does not a''ear that 'et!t!oner e%en atte)'ted to 'ro%e "ad fa!th on the 'art of res'ondents dur!n# the tr!a , wh!ch accounts for the R$5 ;ec!s!onFs utter s! ence on the )atter. Moreo%er, res'ondents a e#ed !n the!r answer that the cons!derat!on for the a e#ed sa e, wh!ch was -21* was !nade1uate, cons!der!n# that the
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

fa!r )ar*et %a ue of the 'ro'erty was -71*. Res'ondents a so a%erred that they re)a!ned !n 'ossess!on of the su"(ect 'ro'erty and 'a!d the rea ta4es thereon, and that the!r 'redecessor cont!nued to 'ay the oan under wh!ch the )ort#a#e was const!tuted. Res'ondents e%en reconst!tuted the!r t!t e o%er the 'ro'erty, and 'art!t!oned the 'ro'erty w!th the other he!rs, after wh!ch res'ondents 'urchased the atterFs share and caused the !ssuance of a $5$ !n the!r na)e. 3uch t!t e, howe%er, was su"se1uent y annu ed. $he aw 'resu)es #ood fa!th and, !n the a"sence of a contrary f!nd!n# "y the R$5 !n !ts ;ec!s!on, res'ondents are ent!t ed to the r!#ht to redee) the 'ro'erty 'ursuant to the th!rd 'ara#ra'h of 6rt!c e 1606 of the New 5!%! 5ode. $he 5ourt a so notes that the R$5 erred !n a ow!n# 'et!t!oners the r!#ht to re'urchase sa!d 'ro'erty w!th!n th!rty =309 days fro) rece!'t of the R$5 ;ec!s!on. 8y e4'ress 'ro%!s!on, 6rt!c e 1606 #rants the %endor a retro th!rty =309 days Ifro) the t!)e f!na (ud#)ent was rendered,J not fro) the defendantFs rece!'t of the (ud#)ent. $he 5ourt has construed If!na (ud#)entJ to )ean one that has "eco)e f!na and e4ecutory.

Spo*!e! ALECANDER CRUZ and ADELAIDA CRUZ, petitione !, "!. ELEUTERIO LEIS, RA?<UNDO LEIS, ANASTACIO L. LAGDANO, LORETA L. CA?ONDA and t1e HONORA.LE COURT OF A##EALS, e!pondent!. G.R. No. 125233 March /, 2000 Facts: 6dr!ano and Gertrudes were )arr!ed. Gertrudes ac1u!red fro) the then ;e'art)ent of 6#r!cu ture and Natura Resources =;6NR9 a 'arce of and. $he ;eed of 3a e descr!"ed Gertrudes as a w!dow. $5$ No. 43100 was !ssued !n the na)e of <Gertrudes +s!dro,< who was a so referred to there!n as a <w!dow.<
Page 11$

Ahen 6dr!ano d!ed +t d!d not a''ear that he e4ecuted a w! "efore h!s death. Gertrudes then o"ta!ned a oan fro) 'et!t!oners, the s'ouses 6 e4ander and 6de a!da 5ru@, !n the a)ount of -15,000.00 at 5U !nterest, 'aya" e on or "efore 5 Fe"ruary 1/76. $he oan was secured "y a )ort#a#e o%er the 'ro'erty co%ered "y $5$ No. 43100. Gertrudes, howe%er, fa! ed to 'ay the oan on the due date. &na" e to 'ay her outstand!n# o" !#at!on, Gertrudes e4ecuted two contracts !n fa%or of 'et!t!oner 6 e4ander 5ru@. $he f!rst !s deno)!nated as <Lasunduan< wh!ch the 'art!es concede !s a 'acto de retro sa e, #rant!n# Gertrudes one year w!th!n wh!ch to re'urchase the 'ro'erty. $he second !s a <Lasunduan n# $uw!ran# 8! !han,< a ;eed of 6"so ute 3a e co%er!n# the sa)e 'ro'erty for the 'r!ce of -3/,073.00, the sa)e a)ount st!'u ated !n the <Lasunduan.< For fa! ure of Gertrudes to re'urchase the 'ro'erty, ownersh!' thereof was conso !dated !n the na)e of 6 e4ander 5ru@. Ahen Gertrudes +s!dro d!ed, her he!rs, here!n 'r!%ate res'ondents, rece!%ed de)ands to %acate the 're)!ses fro) 'et!t!oners, the new owners of the 'ro'erty. -r!%ate res'ondents res'onded "y f! !n# a co)' a!nt. 2n the "as!s of the fore#o!n# facts, the R$5 rendered a dec!s!on !n fa%or of 'r!%ate res'ondents. $he R$5 he d that the and was con(u#a 'ro'erty s!nce the e%!dence 'resented "y 'r!%ate res'ondents d!sc osed that the sa)e was ac1u!red dur!n# the )arr!a#e of the s'ouses and that 6dr!ano contr!"uted )oney for the 'urchase of the 'ro'erty. $hus, the court conc uded, Gertrudes cou d on y se to 'et!t!oner s'ouses her one0ha f share !n the 'ro'erty. -et!t!oners a''ea ed to the 5ourt of 6''ea s !n %a!n. $he 5ourt of 6''ea s aff!r)ed the dec!s!on of the Re#!ona $r!a 5ourt, ho d!n# that s!nce the 'ro'erty was ac1u!red dur!n# the )arr!a#e of Gertrudes to 6dr!ano, the sa)e was 'resu)ed to "e con(u#a 'ro'erty under 6rt!c e 160 of the 5!%! 5ode. $he a''e ate court, !*e the tr!a court, a so noted that 'et!t!oner d!d not co)' y w!th the 'ro%!s!ons of 6rt!c e 160. of the 5!%! 5ode.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

-et!t!oners are now "efore th!s 5ourt see*!n# the re%ersa of the dec!s!on of the 5ourt of 6''ea s. +ssue: whether or not a co0owner )ay ac1u!re e4c us!%e ownersh!' o%er the 'ro'erty he d !n co))onD ,e d: Bssent!a y, !t !s the 'et!t!oner>s content!on that the 'ro'erty su"(ect of d!s'ute de%o %ed u'on h!) u'on the fa! ure of h!s co0he!rs to (o!n h!) !n !ts rede)'t!on w!th!n the 'er!od re1u!red "y aw. ,e re !es on the 'ro%!s!ons of 6rt!c e 1515 of the o d 5!%! 5ode, 6rt!c e 1613 of the 'resent 5ode, #!%!n# the %endee a retro the r!#ht to de)and rede)'t!on of the ent!re 'ro'erty. $here !s no )er!t !n th!s 'et!t!on. $he r!#ht of re'urchase )ay "e e4erc!sed "y a co0owner w!th res'ect to h!s share a one =5+E? 52;B, art. 1612: 5+E+? 52;B =177/9, art. 1514.9. Ah! e the records show that 'et!t!oner redee)ed the 'ro'erty !n !ts ent!rety, shou der!n# the e4'enses therefor, that d!d not )a*e h!) the owner of a of !t. +n other words, !t d!d not 'ut to end the e4!st!n# state of co0 ownersh!' =3u'ra, 6rt. 47/9. $here !s no dou"t that rede)'t!on of 'ro'erty enta! s a necessary e4'ense. $he resu t !s that the 'ro'erty re)a!ns to "e !n a cond!t!on of co0ownersh!'. Ah! e a %endee a retro, under 6rt!c e 1613 of the 5ode, <)ay not "e co)'e ed to consent to a 'art!a rede)'t!on,< the rede)'t!on "y one co0he!r or co0owner of the 'ro'erty !n !ts tota !ty does not %est !n h!) ownersh!' o%er !t. Fa! ure on the 'art of a the co0owners to redee) !t ent!t es the %endee a retro to reta!n the 'ro'erty and conso !date t!t e thereto !n h!s na)e =3u'ra, art. 160.9. 8ut the 'ro%!s!on does not #!%e to the redee)!n# co0owner the r!#ht to the ent!re 'ro'erty. +t does not 'ro%!de for a )ode of ter)!nat!n# a co0ownersh!'. +t !s conceded that, as a ru e, a co0owner such as Gertrudes cou d on y d!s'ose of her share !n the 'ro'erty owned !n co))on. &nfortunate y for 'r!%ate res'ondents, howe%er, the 'ro'erty was re#!stered !n $5$ No. 43100 so e y !n the na)e of <Gertrudes +s!dro, w!dow.< Ahere a 'arce of and, for)!n# 'ast of the

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und!str!"uted 'ro'ert!es of the d!sso %ed con(u#a 'artnersh!' of #a!ns, !s so d "y a w!dow to a 'urchaser who )ere y re !ed on the face of the cert!f!cate of t!t e thereto, !ssued so e y !n the na)e of the w!dow, the 'urchaser ac1u!res a %a !d t!t e to the and e%en as a#a!nst the he!rs of the deceased s'ouse. $he rat!ona e for th!s ru e !s that <a 'erson dea !n# w!th re#!stered and !s not re1u!red to #o "eh!nd the re#!ster to deter)!ne the cond!t!on of the 'ro'erty. ,e !s on y char#ed w!th not!ce of the "urdens on the 'ro'erty wh!ch are noted on the face of the re#!ster or the cert!f!cate of t!t e. $o re1u!re h!) to do )ore !s to defeat one of the 'r!)ary o"(ects of the $orrens syste).< / 6s # eaned fro) the fore#o!n# d!scuss!on, des'!te the 5ourt of 6''ea s> f!nd!n# and conc us!on that Gertrudes as we as 'r!%ate res'ondents fa! ed to re'urchase the 'ro'erty w!th!n the 'er!od st!'u ated and has ost a the!r r!#hts to !t, !t st! ru ed a#a!nst 'et!t!oners "y aff!r)!n# the Re#!ona $r!a 5ourt>s dec!s!on on the 're)!se that there was no co)' !ance w!th 6rt!c e 160. of the 5!%! 5ode re1u!r!n# a (ud!c!a hear!n# "efore re#!strat!on of the 'ro'erty !n the na)e of 'et!t!oners. $h!s 'ro%!s!on states: 6rt. 160.. +n case of rea 'ro'erty, the conso !dat!on of ownersh!' !n the %endee "y %!rtue of the fa! ure of the %endor to co)' y w!th the 'ro%!s!ons of art!c e 1616 sha not "e recorded !n the Re#!stry of -ro'erty w!thout a (ud!c!a order, after the %endor has "een du y heard. $he afore1uoted art!c e !s !ntended to )!n!)!@e the e%! s wh!ch the 'acto de retro sa e has caused !n the hands of usurers. 6 (ud!c!a order !s necessary !n order to deter)!ne the true nature of the transact!on and to 're%ent the !nter'os!t!on of "uyers !n #ood fa!th wh! e the deter)!nat!on !s "e!n# )ade. 10 A,BRBF2RB, the dec!s!on of the 5ourt of 6''ea s !s M2;+F+B; !n that the 'et!t!oners are dee)ed owners of the 'ro'erty "y reason of the fa! ure of the %endor, Gertrudes +s!dro, to re'urchase the sa)e w!th!n the 'er!od st!'u ated. ,owe%er, $ransfer 5ert!f!cate of $!t e No. 130574, !n the na)e of 6 e4ander M. 5ru@, wh!ch was !ssued w!thout (ud!c!a order, !s here"y ordered 56N5B??B;, and $ransfer 5ert!f!cate of $!t e No. 43100 !n the na)e of Gertrudes +s!dro !s ordered RB+N3$6$B;,
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

w!thout 're(ud!ce to co)' !ance "y 'et!t!oners w!th the 'ro%!s!ons of 6rt!c e 160. of the 5!%! 5ode

.#I FA<IL? SAVINGS .ANB, INC. ". S#S. JANUARIO ANTONIO VELOSO AND NATIVIDAD VELOSO G.R. No. 141/.4 CORONA, J./ Facts: Res'ondent s'ouses Januar!o 6nton!o Ee oso and Nat!%!dad Ee oso o"ta!ned a oan of -1,300,000 fro) Fa)! y 8an* and $rust 5o)'any. $he oan was secured "y a deed of )ort#a#e o%er three 'arce s of ands owned "y the s'ouses. 6u#ust /, 2004

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Ahen the res'ondents defau ted !n the )onth y !nsta )ents due on the!r oan, Fa)! y 8an* !nst!tuted an e4tra0(ud!c!a forec osure 'roceed!n# on the res'ondentsF )ort#a#ed 'ro'ert!es and was so d at 'u" !c auct!on w!th Fa)! y 8an* as the h!#hest "!dder for -2,.72,554.66.

,ence, the !nstant 'et!t!on.

+ssue:

3u"se1uent y, Fa)! y 8an* ass!#ned a !ts r!#hts and !nterests !n the forec osed 'ro'ert!es to 8-+ Fa)! y 8an*, +nc, here!n 'et!t!oner.

1. Ahether the e4tra0(ud!c!a forec osure conf!r)ed "y "oth the tr!a court and the court of a''ea s !s %a !d. 2. Ahether the res'ondent s'ouses co)' !ed w!th a the re1u!re)ents for the rede)'t!on of the su"(ect 'ro'ert!es. ;ec!s!on:

Res'ondents, wrote to 'et!t!oners offer!n# to redee) the forec osed 'ro'ert!es for -1,7.2,/35 "ut were howe%er re(ected "y the atter.

8e!n# so, they f! ed w!th the R$5 of Hue@on 5!ty, a co)' a!nt for annu )ent of forec osure and thereafter were ordered "y the atter to de'os!t w!th the c er* of court the su) of -1,500,000 re'resent!n# the rede)'t!on 'r!ce.

$he a''ea ed dec!s!on of the 5ourt of 6''ea s !s here"y RBEBR3B; and 3B$ 63+;B. $he co)' a!nt f! ed "y res'ondent s'ouses !s here"y d!s)!ssed.

Rat!o ;ec!dend!: ;es'!te the o''os!t!on of 'et!t!oner, the tr!a court ordered the re ease to the res'ondents of -1,400,000 of the cons!#ned a)ount. $he "a ance of -100,000 !s to ta*e the ' ace of the !n(unct!on "ond to answer for whate%er da)a#es 'et!t!oner )!#ht suffer "ecause of the !ssuance of the 're !)!nary !n(unct!on 're%!ous y !ssued "y a d!fferent "ranch of R$5 and then ater !fted.

$he 3u're)e 5ourt found no reason to 1uest!on the %a !d!ty of the e4tra0(ud!c!a forec osure. +n a rea estate )ort#a#e, when the 'r!nc!'a o" !#at!on !s not 'a!d when due, the )ort#a#ee has the r!#ht to forec ose on the )ort#a#e and ha%e the 'ro'erty se!@ed and so d to a'' y the 'roceeds to the o" !#at!on. $herefore, due to the defau t of the res'ondents to 'ay the!r o" !#at!on, forec osure was 'ro'er.

$he tr!a court rendered a dec!s!on dec ar!n# the %a !d!ty of the e4tra0(ud!c!a forec osure of the )ort#a#ed 'ro'ert!es of res'ondents "ut a owed the rede)'t!on of the sa)e at a rede)'t!on 'r!ce of -2,140,000.

&'on a''ea "y the 'et!t!oner, the 5ourt of 6''ea s aff!r)ed the tr!a courtFs dec!s!on su"(ect to the )od!f!cat!on dec ar!n# -2,6.7,63/.70 as the rede)'t!on 'r!ce.

6s re#ards the second !ssue, the #enera ru e on rede)'t!on !s that the state)ent of !ntent!on to e4erc!se the r!#ht to re'urchase )ust "e acco)'an!ed "y an actua and s!)u taneous tender of 'ay)ent, otherw!se, the offer to redee) !s !neffectua . 6 bona +ide rede)'t!on necessar! y !)' !es a reasona" e and %a !d tender of the entire re'urchase 'r!ce, otherw!se the ru e on the rede)'t!on 'er!od f!4ed "y aw can eas! y "e c!rcu)%ented.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 121

$he 3u're)e 5ourt he d !n the case of 8od!on#an %s. 5ourt of 6''ea s that !n order to effect a rede)'t!on, the (ud#)ent de"tor )ust 'ay the 'urchaser the rede)'t!on 'r!ce co)'osed of the fo ow!n#: =19 the 'r!ce wh!ch the 'urchaser 'a!d for the 'ro'erty: =29 !nterest of 1U 'er )onth on the 'urchase 'r!ce: =39 the a)ount of any assess)ents or ta4es wh!ch the 'urchaser )ay ha%e 'a!d on the 'ro'erty after the 'urchase: and =49 !nterest of 1U 'er )onth on such assess)ents and ta4es.

+n the !nstant case, the offer was not a e#a and effect!%e e4erc!se of the r!#ht of rede)'t!on conte)' ated under the aw, hence, refusa of the offer "y 'et!t!oner was co)' ete y (ust!f!ed. $he aw on e1u!ty as defense, a'' !es on y !n the a"sence of, and ne%er a#a!nst, statutory aw or (ud!c!a ru es of 'rocedure.

F* t1e 0o e, A ti3$e %D%D o2 t1e Ci"i$ Code p o"ide! t1at t1e "endo 3annot a"ai$ 1i0!e$2 o2 t1e i+1t to ep* 31a!e 4it1o*t et* nin+ to t1e "endee t1e p i3e o2 t1e !a$e.

In t1e 3a!e at 5a , t1e o22e 56 e!pondent! to edee0 t1e 2o e3$o!ed p ope tie! 2o #%,@',,)&: and t1e !*5!e7*ent 3on!i+nation in 3o* t o2 #%,:--,--- 41i$e 0ade 4it1in t1e ede0ption pe iod 4a! ine22e3ti"e 5e3a*!e t1e a0o*nt o22e ed and a3t*a$$6 3on!i+ned not on$6 e=3$*ded t1e inte e!t 5*t 4a! $o4e t1an t1e #,,'@,,::(.DD paid 56 t1e 1i+1e!t 5idde Ep* 31a!e o2 t1e p ope tie! d* in+ t1e a*3tion !a$e.

Moreo%er, the -1,400,000 cons!#ned "y res'ondents and then su"se1uent y w!thdrawn "y the), ea%!n# on y -100,000 as !n(unct!on "ond, wou d ha%e "een e1u!%a ent to re1u!r!n# 'et!t!oner to acce't 'ay)ent "y !nsta )ents )a*!n# !t necessary to !ndef!n!te y e4tend the rede)'t!on 'er!od wh!ch !s contrary to the 'o !cy of the aw.

LEE CHU? REALT? COR#ORATION "!. COURT OF A##EALS and <ARC REALT? AND DEVELO#<ENT COR#ORATION ;ece)"er 4, 1//5 3ellosillo, J.4 GR No. 104114

$he aw #rants the r!#ht of rede)'t!on. 8ut !n so #rant!n#, the aw !ntended that the offer to redee) "e %a !d and effect!%e, acco)'an!ed "y an actua tender of the rede)'t!on 'r!ce. $he f!4!n# of a def!n!te ter) w!th!n wh!ch the 'ro'erty shou d "e redee)ed !s )eant to a%o!d 'ro on#ed econo)!c uncerta!nty o%er the ownersh!' of the th!n# so d.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

F65$3: 6 '!ece of and !s d!s'uted "y ?ee 5huy 5or'. and Marc Rea ty. 2r!#!na y the 'ro'erty was co0 owned "y Ru"en Jac!nto to the e4tent of one0 s!4th and the 8ascaraFs and Brnesto Jac!nto who co ect!%e y owned the re)a!n!n# f!%e0s!4ths. 2n 6'r! 30, 1/71, sa e "et. Ru"en Jac!nto, of

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h!s one0s!4th pro%indi1iso share, and ?ee 5huy was du y re#!stered. $he 8ascaraFs and B. Jac!nto so d the!rs to Marc Rea ty. $he sa)e was re#!stered on 2ct. 16, 1/7/. ?ee 5huy c a!)s !t was ne%er !nfor)ed of the other sa e. Marc Rea ty c a!)s !t was %er"a y !nfor)ed and was #!%en a co'y of the deed of sa e. 2n 13 No%e)"er 1/7/ ?BB 5,&K RB6?$K f! ed a co)' a!nt for e#a rede)'t!on a#a!nst M6R5 RB6?$K and cons!#ned !n court a )ana#er>s chec* for 614,400. +n !ts Amended Ans)er )ith !ounterclaim )ith 'otion to (ismiss, M6R5 RB6?$K !ns!sted that the co)' a!nt "e d!s)!ssed for fa! ure to state a cause of act!on there "e!n# no a e#at!on of 'r!or %a !d tender of 'ay)ent nor a 'r!or %a !d not!ce of cons!#nat!on. $he tr!a court ru ed !n fa%our of ?ee 5huy and decreed that ne!ther a se'arate offer to redee) nor a for)a not!ce of cons!#nat!on are necessary for the reason that the f! !n# of the act!on !tse f, w!th!n the 'er!od of rede)'t!on, !s e1u!%a ent to a for)a offer to redee). +n res'ondents a''ea to 56, 56 re%ersed tr!a courtFs (ud#)ent and decreed !n contrary that a 'r!or tender or offer of rede)'t!on !s a 'rere1u!s!te or 'recond!t!on to the f! !n# of an act!on for e#a rede)'t!on. ,ence, the 'et!t!on. +33&B: ACN $,B F+?+NG 2F $,B 65$+2N +$3B?F +3 BH&+E6?BN$ $2 6 F2RM6? 2FFBR $2 RB;BBM R&?+NG: -et!t!on Granted. 35 susta!ns ?BB 5,&K RB6?$K. 6rts. 1620 and 1623 of the 5!%! 5ode on e#a rede)'t!on 'ro%!de: 6rt. 1620. 6 co0owner of a th!n# )ay e4erc!se the r!#ht of rede)'t!on !n case the shares of a the other co0 owners or of any of the) are so d to a th!rd 'erson. +f the 'r!ce of the a !enat!on !s #ross y e4cess!%e, the rede)'t!oner sha 'ay on y a reasona" e one.

6rt. 1623. $he r!#ht of e#a 're0 e)'t!on or rede)'t!on sha not "e e4erc!sed e4ce't w!th!n th!rty days fro) the not!ce !n wr!t!n# "y the 'ros'ect!%e %endor, or "y the %endor, as the case )ay "e. $he deed of sa e sha not "e recorded !n the Re#!stry of -ro'erty un ess acco)'an!ed "y an aff!da%!t of the %endor that he has #!%en wr!tten not!ce thereof to a 'oss!" e rede)'t!oners. $here !s actua y no 'rescr!"ed for) for an offer to redee) to "e 'ro'er y effected. ,ence, !t can e!ther "e throu#h a for)a tender w!th cons!#nat!on, or "y f! !n# a co)' a!nt !n court cou' ed w!th cons!#nat!on of the rede)'t!on 'r!ce w!th!n the 'rescr!"ed 'er!od. 6 co0owner des!rous of e4erc!s!n# h!s r!#ht of e#a rede)'t!on !s #!%en a 'er!od of th!rty =309 days fro) not!ce of the sa e w!th!n wh!ch to a%a! of the r!#ht to redee). &nder the free 'atent or ho)estead 'ro%!s!ons of the -u" !c ?and 6ct a 'er!od of f!%e =59 years fro) the date of con%eyance !s 'ro%!ded, the f!%e0year 'er!od to "e rec*oned fro) the date of the sa e and not fro) the date of re#!strat!on !n the off!ce of the Re#!ster of ;eeds.$he rede)'t!on of e4tra(ud!c!a y forec osed 'ro'ert!es, on the other hand, !s e4erc!sa" e w!th!n one =19 year fro) the date of the auct!on sa e as 'ro%!ded for !n 6ct No. 3135.

# i0a 6 St *3t* e! Co p. "!. Sp!. Ant1on6 and S*!an T. Va$en3ia

6u#ust 1/, 2003 F!rst ;!%!s!on -onente: E!tu#, J.

GR No.150060

Facts: -et!t!oner !s a 'r!%ate cor'orat!on "ased !n 5e"u 5!ty and the re#!stered owner of ?ot 4523 s!tuated !n ?! oan, 5e"u, w!th an area of
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Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

22,214 s1uare )eters. 6d(acent to the ot of 'et!t!oner are 'arce s of and, !dent!f!ed to "e ?ot 452., ?ot 4527, and ?ot 452/ w!th a tota co)"!ned area of 3,.51 s1uare )eters. $he three ots, aforenu)"ered, ha%e "een so d "y ,er)o#enes Mendo@a to res'ondent s'ouses so)et!)e !n ;ece)"er 1//4. -et!t!oner earned of the sa e of the ots on y !n January, 1//6, when ,er)o#enes Mendo@a so d to 'et!t!oner ?ot No. 4720, a 'arce a so ad(acent to ?ot 4523 "e on#!n# to the atter. Forthw!th, !t sent a etter to res'ondents, on 30 January 1//6, s!#n!fy!n# !ts !ntent!on to redee) the three ots. 2n 30 May 1//6, 'et!t!oner sent another etter to res'ondents tender!n# 'ay)ent of the 'r!ce 'a!d to Mendo@a "y res'ondents for the ots. Res'ondents, !n res'onse, !nfor)ed 'et!t!oner that they had no !ntent!on of se !n# the 'arce s. $hereu'on, !n%o*!n# the 'ro%!s!ons of 6rt!c es 1621 and 1623, 'et!t!oner f! ed an act!on a#a!nst res'ondents to co)'e the atter to a ow the e#a rede)'t!on. -et!t!oner c a!)ed that ne!ther Mendo@a, the 're%!ous owner, nor res'ondents #a%e for)a or e%en (ust a %er"a not!ce of the sa e of the ots as so re1u!red "y 6rt!c e 1623 of the 5!%! 5ode.

one hectare, !s a !enated un ess the #rantee does not own any rura and.

$h!s r!#ht !s not a'' !ca" e to ad(acent ands wh!ch are se'arated "y "roo*s, dra!ns, ra%!nes, roads and other a''arent ser%!tudes for the "enef!t of other estates.

+f two or )ore ad(o!n!n# owners des!re to e4erc!se the r!#ht of rede)'t!on at the sa)e t!)e, the owner of the ad(o!n!n# and of s)a er area sha "e 'referred: and shou d "oth ands ha%e the sa)e area, the one who f!rst re1uested the rede)'t!on.

6fter tr!a , the Re#!ona $r!a 5ourt of 5e"u d!s)!ssed 'et!t!oners co)' a!nt and res'ondents> counterc a!): "oth 'art!es a''ea ed the dec!s!on of the tr!a court to the 5ourt of 6''ea s. $he a''e ate court aff!r)ed the assa! ed dec!s!on.

6R$. 1623. $he r!#ht of e#a 're0e)'t!on or rede)'t!on sha not "e e4erc!sed e4ce't w!th!n th!rty days fro) the not!ce !n wr!t!n# "y the 'ros'ect!%e %endor, or "y the %endor, as the case )ay "e. $he deed of sa e sha not "e recorded !n the Re#!stry of -ro'erty, un ess acco)'an!ed "y an aff!da%!t of the %endor that he has #!%en wr!tten not!ce thereof to a 'oss!" e rede)'t!oners.

$he r!#ht of rede)'t!on of co0owners e4c udes that of ad(o!n!n# owners.

+ssue: +nter'retat!on of 6rt!c es 1621 and 1623 of the 5!%! 5ode

6rt!c e 1621 of the 5!%! 5ode e4'resses that the r!#ht of rede)'t!on !t #rants to an ad(o!n!n# owner of the 'ro'erty con%eyed )ay "e defeated !f !t can "e shown that the "uyer or #rantee does not own any other rura and.

,e d: -et!t!on Granted 6rt!c e 1623 of the 5!%! 5ode 'ro%!des that the r!#ht of e#a 're0e)'t!on or rede)'t!on sha not "e e4erc!sed e4ce't w!th!n th!rty days fro) not!ce !n wr!t!n# "y the 'ros'ect!%e %endor, or "y the %endor, as the case )ay "e. +n stress!n# the )andatory character of the re1u!re)ent, the aw states that the deed of sa e sha not "e recorded !n the Re#!stry of -ro'erty un ess the sa)e !s acco)'an!ed "y an aff!da%!t of the %endor that he has #!%en not!ce thereof to a 'oss!" e rede)'t!oners.

6rt!c e 1621 and 6rt!c e 1623 of the 5!%! 5ode, wh!ch read:

6R$. 1621. $he owners of ad(o!n!n# ands sha a so ha%e the r!#ht of rede)'t!on when a '!ece of rura and, the area of wh!ch does not e4ceed

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 12

$he 5ourt of 6''ea s has e1uated the state)ent !n the deed of sa e to the effect that the %endors ha%e co)' !ed w!th the 'ro%!s!ons of 6rt!c e 1623 of the 5!%! 5ode, as "e!n# the wr!tten aff!r)at!on under oath, as we as the e%!dence, that the re1u!red wr!tten not!ce to 'et!t!oner under 6rt!c e 1623 has "een )et. Res'ondents, !*e the a''e ate court, o%er oo* the fact that 'et!t!oner !s not a 'arty to the deed of sa e "etween res'ondents and Mendo@a and has had no hand !n the 're'arat!on and e4ecut!on of the deed of sa e. +t cou d not thus "e cons!dered a "!nd!n# e1u!%a ent of the o" !#atory wr!tten not!ce 'rescr!"ed "y the 5ode.

$he wr!tten not!ce of sa e !s )andatory. $h!s 5ourt has on# esta" !shed the ru e that notw!thstand!n# actua *now ed#e of a co0owner, the atter !s st! ent!t ed to a wr!tten not!ce fro) the se !n# co0owner !n order to re)o%e a uncerta!nt!es a"out the sa e, !ts ter)s and cond!t!ons, as we as !ts eff!cacy and status.

Sen #o EO <a Oetin+ Co p. "!. <a tine> G.R. No. 13411. 325 35R6 210 3B52N; ;+E+3+2N -onente: ;e ?eon, Jr. Fa3t!/ 3of!a -. Mart!ne@ was the re#!stered owner of two =29 'arce s of and !n $ac o"an 5!ty. 2n 1/61, she eased the ots to Ku 3!on#, father of 'et!t!oner for a 'er!od of ten =109 years. $he contract re1u!red the essee to construct a co))erc!a "u! d!n# on the 'ro'erty wh!ch sha "eco)e the 'ro'erty of 3of!a u'oon e4'!rat!on of the ease. 2n 1/.3, the contract was renewed w!th e4' !c!t st!'u at!on that the new owner of the "u! d!n# !s 3of!a. 3of!a then so d the ot and
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010 Page 12!

"u! d!n# to her dau#hter, 'r!%ate res'ondent $eodora -. Mart!ne@. 6fter the new ease contract e4'!red, !t was no on#er renewed "y the 'arty. -et!t!oner cont!nued 'osess!on and re#u ary 'a!d )onth y renta s to 3of!a unt! her death. 6fter her death the renta s were 'a!d to $eodora. 2n 1/7/, 'r!%ate res'ondent sent a etter to 'et!t!oner !nfor)!n# h!) of her !ntent!on to se the 're)!ses to one Mrs. -et! a wh!ch the 'et!t!oner on y rece!%ed a )onth after. $he 'et!t!oner sou#ht to 'urchase the 'ro'erty. -et!t!oner f! ed a %er!f!ed co)' a!nt a#a!nst $eodora for the annu )ent of the ;eed of 3a e "y her )other !n her fa%or stat!n# that they ha%e 'referent!a r!#ht o%er the and. ,owe%er, $eodora so d the 'ro'erty to res'ondent $!u &y'!n#. -et!t!oner 'rays for the nu !ty of the second sa e. $r!a court rendered dec!s!on !n fa%or of the 'et!t!oner. 5ourt of 6''ea s rendered a dec!s!on re%ers!n# the tr!a court. ,$-. I!!*e!/ Ahether the 56 erred !n dec ar!n# the sa e "etween 3of!a and $eodora %a !dD Ahether -et!t!oner has the r!#ht of f!rst refusa to assert a#a!nst the 'r!%ate res'ondentD R*$in+!/ 1. $eodora Mart!ne@ had the r!#ht, as awfu owner of the eased 're)!ses, to se the sa)e to 'r!%ate res'ondent $!u &y'!n "rothers. ,owe%er, the sa e "etween her and her )other was %o!d for "e!n# f!ct!t!ous. $h!s was esta" !shed "y se%era "ad#es of s!)u at!on 'ro%!n# that the sa e was not !ntended to ha%e any e#a effect "etween the). 3o)e e%!dence of s!)u at!on !s the ate notar!@at!on and $eodoraFs s!#nature not as an owner "ut )ere y as an !nstru)enta w!tness. 6 so, 3of!a cont!nued to rece!%e the renta s unt! her death. Futher)ore, $eodora ne%er asserted her a e#ed r!#ht of ownersh!' o%er the eased 're)!ses. Nonethe ess, the sa e "etween $eodora and the $!u &y'!n# !s %a !d. 3!nce $eodora !s one of the co0he!rs she can on y her und!%!ded 'ort!on s!nce her co0 he!rs d!d not #!%e her author!ty. ,owe%er, the sa e can "e su"(ect to rat!f!cat!on. +n th!s case, the other he!rs
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

of 3of!a e4ecuted a I5onf!r)at!on of 3a e of ?and and +)'ro%e)entsJ. $hus, the sa e !s cons!dered %a !d and "!nd!n#. 2. $he -et!t!oner does not ha%e a r!#ht of f!rst refusa to assert a#a!nst the 'r!%ate res'ondents. Ne!ther any aw nor any contract #rants !t 'reference !n the 'urchase of eased 're)!ses. 3uch #rant of r!#ht of f!rst refusa )ust "e c ear y e)"od!ed !n a wr!tten contract, "ut there !s none !n the 'resent case.

Ne$!on Ca5a$e! and Rito Ca5a$e! ". Co* t o2 Appea$!, Je!*! Fe$iano and An*n3iano Fe$iano A*+*!t &%, ,--' GR No. %D,(,% Fi !t Di"i!ion ,uno &.J. Fa3t!/ 0 Ruf!no 5a"a es d!ed on Ju y 4, 1/66 and eft a 5, .14 s1uare )eter 'arce of and to h!s w!fe and ch! dren 0 2n Ju y 26, 1/.1, "rothers and co owners so d the 'ro'erty to ;r. 5orro)'!do for - 2,000 w!th r!#ht to re'urchase w!th!n e!#ht years. $he s!" !n#s d!%!ded the 'roceeds of the sa e a)on# the). 00$he fo ow!n# )onth or on 6u#ust 17, 1/.1,
Page 12"

6 "erto secured a note =I%a eJ9 fro) ;r. 5orro)'!do !n the a)ount of -300.00. +n 1/.2, 6 "erto d!ed ea%!n# h!s w!fe and son, 'et!t!oner Ne son. 2n ;ece)"er 17, 1/.5, w!th!n the e!#ht0year rede)'t!on 'er!od, 8on!fac!o and 6 "!no tendered the!r 'ay)ent of -666.66 each to ;r. 5orro)'!do. 8ut ;r. 5orro)'!do on y re eased the docu)ent of sa e w!th pacto de retro after 3aturn!na 'a!d for the share of her deceased son, 6 "erto, !nc ud!n# h!s I%a eJ of -300.00. 2n e%en date, 3aturn!na and her four =49 ch! dren 8on!fac!o, 6 "!no, Franc!sco and ?eonora so d the su"(ect 'arce of and to res'ondents0s'ouses Jesus and 6nunc!ac!on Fe !ano for -7,000.00. $he ;eed of 3a e 'ro%!ded !n !ts ast 'ara#ra'h, thus: +t !s here"y dec ared and understood that the a)ount of $A2 $,2&36N; $A2 ,&N;RB; B+G,$K 3+M -B323 =-2,276.009 corres'ond!n# and "e on#!n# to the ,e!rs of 6 "erto 5a"a es and to R!to 5a"a es who are st! )!nors u'on the e4ecut!on of th!s !nstru)ent are he d !n trust "y the EBN;BB and to "e 'a!d and de !%ered on y to the) u'on reach!n# the a#e of 21. 0 2n ;ece)"er 1., 1/75, the Re#!ster of ;eeds of 3outhern ?eyte !ssued 2r!#!na 5ert!f!cate of $!t e No. 1.035 o%er the 'urchased and !n the na)es of res'ondents0s'ouses. 02n ;ece)"er 30, 1/75, 3aturn!na and her four =49 ch! dren e4ecuted an aff!da%!t to the effect that 'et!t!oner Ne son wou d on y rece!%e the a)ount of -1.6.34 fro) res'ondents0s'ouses when he reaches the a#e of 21 cons!der!n# that 3aturn!na 'a!d ;r. 5orro)'!do -/66.66 for the o" !#at!on of 'et!t!oner Ne sonFs ate father 6 "erto, i.e., -666.66 for h!s share !n the rede)'t!on of the sa e w!th pacto de retro as we as h!s I%a eJ of -300.00. 0 2n Ju y 24, 1/76, 240year o d 'et!t!oner R!to 5a"a es ac*now ed#ed rece!'t of the su) of -1,143.00 fro) res'ondent Jesus Fe !ano, re'resent!n# the for)erFs share !n the 'roceeds of the sa e of su"(ect 'ro'erty. 0+n 1/77, 3aturn!na d!ed.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

then res!d!n# !n Man! a, went "ac* to h!s fatherFs ho)etown !n 3outhern ?eyte. $hat sa)e year, he earned fro) h!s unc e, 'et!t!oner R!to, of the sa e of su"(ect 'ro'erty. +n 1//3, he s!#n!f!ed h!s !ntent!on to redee) the su"(ect and dur!n# a barangay conc! !at!on 'rocess that he !n!t!ated. 02n January 12, 1//5, contend!n# that they cou d not ha%e so d the!r res'ect!%e shares !n su"(ect 'ro'erty when they were )!nors, 'et!t!oners f! ed "efore the Re#!ona $r!a 5ourt of Maas!n, 3outhern ?eyte, a co)' a!nt for rede)'t!on of the su"(ect and ' us da)a#es. 0!n the!r answer, res'ondents0s'ouses )a!nta!ned that 'et!t!oners were esto''ed fro) c a!)!n# any r!#ht o%er su"(ect 'ro'erty cons!der!n# that =19 'et!t!oner R!to had a ready rece!%ed the a)ount corres'ond!n# to h!s share of the 'roceeds of the sa e of su"(ect 'ro'erty, and =29 that 'et!t!oner Ne son fa! ed to cons!#n to the court the tota a)ount of the rede)'t!on 'r!ce necessary for e#a rede)'t!on. $hey 'rayed for the d!s)!ssa of the case on the #rounds of aches and 'rescr!'t!on. No a)!ca" e sett e)ent was reached at 're0 tr!a . $r!a ensued and on 6u#ust 11, 2000, the tr!a court ru ed a#a!nst 'et!t!oners 2n a''ea , 56 )od!f!ed tha dec!s!on of the tr!a court I!!*e/ Ahether 56 erred !n =19 reco#n!@!n# 'et!t!oner Ne son 5a"a es as co0owner of su"(ect and "ut den!ed h!) the r!#ht of e#a rede)'t!on, and =29 not reco#n!@!n# 'et!t!oner R!to 5a"a es as co0owner of su"(ect and w!th s!)! ar r!#ht of e#a rede)'t!on. He$d/ -et!t!on den!ed, 56 dec!s!on aff!r)ed w!th )od!f!cat!on. Ratio/ 0Ahen Ruf!no 5a"a es d!ed !ntestate, h!s w!fe 3aturn!na and h!s s!4 =69 ch! dren sur%!%ed and succeeded h!). 6rt!c e //6 of the New 5!%! 5ode 'ro%!des that IO!Pf a w!dow or w!dower and e#!t!)ate ch! dren or descendants are eft, the sur%!%!n# s'ouse has !n the success!on the sa)e share as that of each of the ch! dren.J 0Eer! y, the se%en =.9 he!rs !nher!ted e1ua y on su"(ect 'ro'erty. -et!t!oner R!to and 6 "erto,
Page 12#

-et!t!oner Ne son,

'et!t!oner Ne sonFs father, !nher!ted !n the!r own r!#hts and w!th e1ua shares as the others. 08ut "efore 'art!t!on of su"(ect and was effected, 6 "erto d!ed. 8y o'erat!on of aw, h!s r!#hts and o" !#at!ons to one0se%enth of su"(ect and were transferred to h!s e#a he!rs R h!s w!fe and h!s son 'et!t!oner Ne son. 0$he f!rst sa e w!th pacto de retro to ;r. 5orro)'!do "y the "rothers and co0owners 8on!fac!o, 6 "!no and 6 "erto was %a !d "ut on y as to the!r pro%indi1iso shares to the and. Ahen 6 "erto d!ed 'r!or to re'urchas!n# h!s share, h!s r!#hts and o" !#at!ons were transferred to and assu)ed "y h!s he!rs, na)e y h!s w!fe and h!s son, 'et!t!oner Ne son. 8ut the records show that !t was 3aturn!na, 6 "ertoFs )other, and not h!s he!rs, who re'urchased for h!). 6s correct y ru ed "y the 5ourt of 6''ea s, 3aturn!na was not su"ro#ated to 6 "ertoFs or h!s he!rsF r!#hts to the 'ro'erty when she re'urchased the share. 0&'on rede)'t!on fro) ;r. 5orro)'!do, the su"(ect 'ro'erty was reso d to res'ondents0 s'ouses "y the co0owners. -et!t!oners R!to and Ne son were then )!nors and as !nd!cated !n the ;eed of 3a e, the!r shares !n the 'roceeds were he d !n trust "y res'ondents0s'ouses to "e 'a!d and de !%ered to the) u'on reach!n# the a#e of )a(or!ty. 0the father, or, !n h!s a"sence, the )other, !s cons!dered e#a ad)!n!strator of the 'ro'erty 'erta!n!n# to the ch! d under h!s or her 'arenta author!ty w!thout need of #!%!n# a "ond !n case the a)ount of the 'ro'erty of the ch! d does not e4ceed two thousand 'esos. 5oro ary to th!s, Ru e /3, 3ect!on . of the Re%!sed Ru es of 5ourt of 1/64, a'' !ca" e to th!s case, auto)at!ca y des!#nates the 'arent as e#a #uard!an of the ch! d w!thout need of any (ud!c!a a''o!nt)ent !n case the atterFs 'ro'erty does not e4ceed two thousand 'esos 3aturn!na was c ear y 'et!t!oner R!toFs e#a #uard!an w!thout necess!ty of court a''o!nt)ent cons!der!n# that the a)ount of h!s 'ro'erty or one0se%enth of su"(ect 'ro'erty was -1,143.00, wh!ch !s ess than two thousand 'esos. ,owe%er, Ru e /6, 3ec. 1 'ro%!des that: 3ect!on 1. $o what #uard!ansh!' sha e4tend. R 6 #uard!an a''o!nted sha ha%e the care and custody of the 'erson of h!s ward, and the )ana#e)ent of h!s estate, or the )ana#e)ent of the estate
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

on y, as the case )ay "e. $he #uard!an of the estate of a nonres!dent sha ha%e the )ana#e)ent of a the estate of the ward w!th!n the -h! !''!nes, and no court other than that !n wh!ch such #uard!an was a''o!nted sha ha%e (ur!sd!ct!on o%er the #uard!ansh!' +ndeed, the e#a #uard!an on y has the ' enary 'ower of ad)!n!strat!on of the )!norFs 'ro'erty. +t does not !nc ude the 'ower of a !enat!on wh!ch needs (ud!c!a author!ty. $hus, when 3aturn!na, as e#a #uard!an of 'et!t!oner R!to, so d the atterFs pro%indi1iso share !n su"(ect and, she d!d not ha%e the e#a author!ty to do so. 6ccord!n# y, the contract of sa e as to the pro% indi1iso share of 'et!t!oner R!to was unenforcea" e. ,owe%er, when he ac*now ed#ed rece!'t of the 'roceeds of the sa e on Ju y 24, 1/76, 'et!t!oner R!to effect!%e y rat!f!ed !t. $h!s act of rat!f!cat!on rendered the sa e %a !d and "!nd!n# as to h!). A!th res'ect to 'et!t!oner Ne son, on the other hand, the contract of sa e was %o!d. ,e was a )!nor at the t!)e of the sa e. 3aturn!na or any and a the other co0owners were not h!s e#a #uard!ans w!th (ud!c!a author!ty to a !enate or encu)"er h!s 'ro'erty. +t was h!s )other who was h!s e#a #uard!an and, !f du y author!@ed "y the courts, cou d %a !d y se h!s und!%!ded share to the 'ro'erty. 3he d!d not. Necessar! y, when 3aturn!na and the others so d the su"(ect 'ro'erty !n !ts ent!rety to res'ondents0s'ouses, they on y so d and transferred t!t e to the!r pro% indi1iso shares and not that 'art wh!ch 'erta!ned to 'et!t!oner Ne son and h!s )other. 5onse1uent y, 'et!t!oner Ne son and h!s )other reta!ned ownersh!' o%er the!r und!%!ded share of su"(ect 'ro'erty. 06s to whether the 'et!t!oners can redee) the and fro) res'ondent s'ouses, !t !s c ear that e#a rede)'t!on )ay on y "e e4erc!sed "y the co0owner or co0owners who d!d not 'art w!th h!s or the!r pro%indi1iso share !n the 'ro'erty he d !n co))on. 6s de)onstrated, the sa e as to the und!%!ded share of 'et!t!oner R!to "eca)e %a !d and "!nd!n# u'on h!s rat!f!cat!on on Ju y 24, 1/76. 6s a resu t, he ost h!s r!#ht to redee) su"(ect 'ro'erty. 0+n the face of the esta" !shed facts, 'et!t!oner

Page 12$

Ne son cannot fe!#n !#norance of the sa e of su"(ect 'ro'erty !n 1/.7. $o re1u!re str!ct 'roof of wr!tten not!ce of the sa e wou d "e to countenance an o"%!ous fa se c a!) of ac* of *now ed#e thereof, thus co))end!n# the etter of the aw o%er !ts 'ur'ose, i.e., the not!f!cat!on of rede)'t!oners.

G.R. No. %:--D-

A*+*!t %), ,--&

#RI<AR? STRUCTURES COR#. ep e!ented 1e ein 56 it! # e!ident ENGR. GILLIA< C. LIU, petitione , vs. S#S. ANTHON? S. VALENCIA and SUSAN T. VALENCIA, e!pondent!. (-) SCRA &'% #onente/ VITUG, J. (FIRST DIVISION)

Fa3t!/ -et!t!oner !s a 'r!%ate cor'orat!on !n

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Page 129

5e"u 5!ty and the re#!stered owner of ?ot s!tuated !n ?! oan, 5e"u. 6d(acent to the ot of 'et!t!oner are 3 'arce s of and. $he 3 ots ha%e "een so d "y ,er)o#enes Mendo@a to res'ondent s'ouses. -et!t!oner earned of the sa e of the ots then !t sent a etter to res'ondents s!#n!fy!n# !ts !ntent!on to redee) the three ots. -et!t!oner sent another etter to res'ondents tender!n# 'ay)ent of the 'r!ce 'a!d to Mendo@a "y res'ondents for the ots. Res'ondents, !n res'onse, !nfor)ed 'et!t!oner that they had no !ntent!on of se !n# the 'arce s. +n%o*!n# the 'ro%!s!ons of 6rt!c es 1621 and 1623, 'et!t!oner f! ed an act!on a#a!nst res'ondents to co)'e the atter to a ow the e#a rede)'t!on. -et!t!oner c a!)ed that ne!ther Mendo@a, the 're%!ous owner, nor res'ondents #a%e for)a or e%en (ust a %er"a not!ce of the sa e of the ots as so re1u!red "y 6rt!c e 1623 of the 5!%! 5ode. Re#!ona $r!a 5ourt of 5e"u d!s)!ssed 'et!t!onerFs co)' a!nt and res'ondents> counterc a!). 8oth 'art!es a''ea ed the dec!s!on of the tr!a court to the 5ourt of 6''ea s. $he a''e ate court aff!r)ed the assa! ed dec!s!on. I!!*e/ Ahether or not 'et!t!oner -r!)ary 3tructures 5or'orat!on has the r!#ht of rede)'t!on o%er the three 'arce s of and. R*$in+/ 6rt!c e 1621 of the 5!%! 5ode e4'resses that the r!#ht of rede)'t!on !t #rants to an ad(o!n!n# owner of the 'ro'erty con%eyed )ay "e defeated !f !t can "e shown that the "uyer does not own any other rura and. $he a''e ate court, susta!n!n# the tr!a court, has sa!d that there has "een no e%!dence to show that res'ondents are not the)se %es owners of rura ands for the e4c us!onary c ause of the aw to a'' y. 6rt!c e 1623 of the 5!%! 5ode 'ro%!des that the r!#ht of e#a 're0e)'t!on or rede)'t!on sha not "e e4erc!sed e4ce't w!th!n th!rty days fro) not!ce !n wr!t!n# "y the 'ros'ect!%e %endor, or "y the %endor, as the case )ay "e. +n stress!n# the )andatory character of the re1u!re)ent, the aw states that the deed of sa e sha not "e recorded !n the Re#!stry of -ro'erty un ess !t !s acco)'an!ed "y an aff!da%!t of the %endor that he has #!%en not!ce to a 'oss!" e rede)'t!oners.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

$he 5ourt of 6''ea s has e1uated the state)ent !n the deed of sa e to the effect that the %endors ha%e co)' !ed w!th the 'ro%!s!ons of 6rt!c e 1623 of the 5!%! 5ode, as "e!n# the wr!tten aff!r)at!on under oath, as we as the e%!dence that the re1u!red wr!tten not!ce to 'et!t!oner under 6rt!c e 1623 has "een )et. Res'ondents o%er oo* the fact that 'et!t!oner !s not a 'arty to the deed of sa e "etween res'ondents and Mendo@a and has had no hand !n the 're'arat!on and e4ecut!on of the deed of sa e. +t cou d not thus "e cons!dered a "!nd!n# e1u!%a ent of the o" !#atory wr!tten not!ce 'rescr!"ed "y the 5ode. $he wr!tten not!ce of sa e !s )andatory. $h!s 5ourt has on# esta" !shed the ru e that notw!thstand!n# actua *now ed#e of a co0owner, the atter !s st! ent!t ed to a wr!tten not!ce fro) the se !n# co0owner !n order to re)o%e a uncerta!nt!es a"out the sa e, !ts ter)s and cond!t!ons, as we as !ts eff!cacy and status. A,BRBF2RB, the !nstant 'et!t!on !s GR6N$B;, and the assa! ed dec!s!on of the 5ourt of 6''ea s !s RBEBR3B; and 3B$ 63+;B. -et!t!oner !s here"y #!%en a 'er!od of th!rty days fro) f!na !ty of th!s dec!s!on w!th!n wh!ch to e4erc!se !ts r!#ht of e#a rede)'t!on.

Ledonio ". Capito$ De"e$op0ent Co po ation C1i3oANa>a io, G.R. No. %()-(J*$6 (, ,--'

Fa3t!/ Bd#ar ?edon!o o"ta!ned fro) -atroc!n!o 3. -!cache two oans w!th the a)ount of -60,000.00, and co%ered "y 'ro)!ssory notes du y s!#ned "y h!). ?ater on, -!cache transferred h!s due

Page 130

fro) ?edon!o 5or'orat!on .

to

5a'!to

;e%e o')ent

,owe%er, ?edon!o fa! ed to 'ay any of the oans co%ered "y the 'ro)!ssory notes when they "eca)e due. $he cor'orat!on de)anded 'ay)ent fro) h!) "ut refused to do so. ,e den!ed that he )ade such 'ro)!ssory notes !n fa%or of -!cache and he further a e#ed that he on y s!#ned the 'ro)!ssory notes as a resu t of !nt!)!dat!on and fraud. ,e a e#ed that when he )ade the 'ro)!ssory notes, they were on y used "y -!cache "y ta*!n# ad%anta#e of h!s s!#nature. -r!or to the case, ?edon!o was en#a#ed !n a #ar)ent "us!ness where he eased a rea 'ro'erty fro) M!ss!on Rea ty and Mana#e)ent 5or'orat!on. 6n !nc!dent ha''ened where a #rou' of Mera co e)' oyees cut0off the 'ower su'' y of the ' ant of ?edon!o due to non0 'ay)ent of e ectr!c "! s. $h!s )ade fore!#n !n%estors to des!st transact!n# w!th h!). ,e " a)ed the MRM5 for not not!fy!n# h!) w!th the un'a!d "! s "ut he fa! ed to o"ta!n any of h!s c a!)s. $he R$5 ru ed !n fa%or of the res'ondent cor'orat!on f!nd!n# !ts %ers!on of the facts )ore cred!" e. $he 5ourt of 6''ea s aff!r)ed the sa)e.

$he aw does not re1u!re any for)a not!ce to "!nd the de"tor to the ass!#nee, a that the aw re1u!res !s *now ed#e of the ass!#n)ent. B%en !f the de"tor had not "een not!f!ed, "ut ca)e to *now of the ass!#n)ent "y whate%er )eans, the de"tor !s "ound "y !t.

ISSUE/ whether the ass!#n)ent of de"t "y -!cache, the cred!tor, to another 'arty such as the 5;5, re1u!res h!s consent "e!n# the de"tor.

RULING/ -et!t!on !s den!ed for ac* of )er!t. $he transact!on "etween -!cache and 5;5 was an ass!#n)ent of cred!t and does not re1u!re 'et!t!onerFs consent as de"tor for !ts %a !d!ty and enforcea"! !ty. 6n ass!#n)ent of cred!t has "een def!ned as an a#ree)ent "y %!rtue of wh!ch the owner of a cred!t *nown as the ass!#nor, "y a e#a cause 0 such as sa e, dat!on !n 'ay)ent or e4chan#e or donat!on R and w!thout need of the de"torFs consent, transfers that cred!t and !ts accessory r!#hts to another who !s the ass!#nee, who ac1u!res the 'ower to enforce !t, to the sa)e e4tent as the ass!#nor cou d ha%e enforced !t a#a!nst the de"tor.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

G.R. No. )'':& A*+*!t %-, %)), CALTEC (#HILI##INES), INC., 'et!t!oner, %s. COURT OF A##EALS and SECURIT? .ANB AND TRUST CO<#AN?, res'ondents. REGALADO, J. Fa3t!/ 2n %ar!ous dates, defendant 3ecur!ty 8an* and $rust 5o)'any !ssued 270 cert!f!cates of t!)e de'os!t !n fa%or of 6n#e de a 5ru@ who de'os!ted of t!)e de'os!t there!n the a##re#ate
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a)ount of -1,120,000.00. 6n#e de a 5ru@ de !%ered sa!d cert!f!cate of t!)e de'os!t to ' a!nt!ff0'et!t!oner 5a te4 !n connect!on w!th h!s 'urchase of fue 'roducts fro) the atter. $hereafter, de a 5ru@ !nfor)ed defendant 8an* that he ost a the cert!f!cates of de'os!t and as* for the re' ace)ent of sa!d ast 5$- where !t was #ranted "y the "an*. 3oon after sa!d #rants, de a 5ru@ ne#ot!ated and o"ta!ned a oan fro) defendant "an* !n the a)ount of B!#ht ,undred 3e%enty0F!%e $housand -esos =-7.5,000.009. 2n the sa)e date, sa!d de'os!tor e4ecuted a notar!@ed ;eed of 6ss!#n)ent of $!)e ;e'os!t wh!ch stated, a)on# others, that he surrendered to defendant "an* Ifu contro of the !nd!cated t!)e de'os!ts fro) and after dateJ of the ass!#n)ent and further author!@es sa!d "an* to 'reter)!nate, set0off and Ia'' y the sa!d t!)e de'os!t to the 'ay)ent of whate%er a)ounts )ay "e dueJ on the oan u'on !t )atur!ty. the oan of 6n#e de a 5ru@ w!th the defendant "an* )atured and fe due and on 6u#ust 5, 1/73, the atter set0off and a'' !ed the t!)e de'os!ts !n 1uest!on to the 'ay)ent of the )atured oan. - a!nt!ff f! ed the !nstant co)' a!nt, 'ray!n# that defendant "an* "e ordered to 'ay !t the a##re#ate %a ue of the cert!f!cates of t!)e de'os!t of -1,120,000.00 ' us accrued !nterest and co)'ounded !nterest there!n at 16U per annum I!!*e/ whether or not 5a te4 -h! !''!nes has a "etter r!#ht o%er the 5ert!f!cate of t!)e de'os!tsD He$d/ 3ecur!ty 8an* has a "etter r!#ht "ecause the ass!#n)ent of the 5$;s )ade "y 6n#e de a 5ru@ !n fa%or of res'ondent "an* was e)"od!ed !n a 'u" !c !nstru)ent. 6rt. 1625. 6n ass!#n)ent of cred!t, r!#ht or act!on sha 'roduce no effect as a#a!nst th!rd 'ersons, un ess !t a''ears !n a 'u" !c !nstru)ent, or the !nstru)ent !s recorded !n the Re#!stry of -ro'erty !n case the ass!#n)ent !n%o %es rea 'ro'erty. Res'ondent "an* du y co)' !ed w!th th!s statutory re1u!re)ent. 5ontrar! y, 'et!t!oner, whether as 'urchaser, ass!#nee or !en ho der of the 5$;s, ne!ther 'ro%ed the a)ount of !ts cred!t or the e4tent of !ts !en nor the e4ecut!on of any 'u" !c !nstru)ent wh!ch cou d affect or "!nd 'r!%ate res'ondent. Necessar! y, therefore, as "etween 'et!t!oner and res'ondent "an*, the atter has def!n!te y the "etter r!#ht o%er the 5$;s !n 1uest!on.
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

Lo "!. BJS E3oAFo 04o O S6!te0 #1i$., In3. 2cto"er 7, 2003 F!rst ;!%!s!on Just!ce Knares03ant!a#o Fa3t!/ Res'ondent LJ3 B52YF2RMA2RL 3yste) -h! ., +nc. !s a cor'orat!on en#a#ed !n the sa e of stee scaffo d!n#s. 3onny ?o, on the other hand !s a "u! d!n# contractor. $he 'et!t!oner ordered scaffo d!n# e1u!')ents worth -540, 425.70 fro) res'ondent and 'a!d a down'ay)ent of -150,000. $he "a ance was
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)ade 'aya" e !n ten )onth y !nsta )ents. $he res'ondent de !%ered the e1u!')ents to 'et!t!oner "ut 3onny ?o was on y a" e to 'ay the f!rst two )onth y !nsta )ents "ecause h!s "us!ness encountered f!nanc!a d!ff!cu t!es. ;es'!te the s!tuat!on, the 'et!t!oner and res'ondent e4ecuted a ;eed of 6ss!#n)ent where"y the 'et!t!oner ass!#ned to res'ondent h!s rece!%a" es !n the a)ount of -335, 462.70 fro) Jo)ero Rea ty 5or'orat!on. Ahen the res'ondent tr!ed to co ect the sa!d cred!t fro) the cor'orat!on. Jo)ero Rea ty 5or'orat!on refused to honor the ;eed of 6ss!#n)ent "ecause !t c a!)ed that 'et!t!oner was a so !nde"ted to !t. $he res'ondent f! ed an act!on for reco%ery of a su) of )oney "efore the R$5 of Ma*at!.$he tr!a court d!s)!ssed the co)' a!nt on the #round that the ass!#n)ent of cred!t e4t!n#u!shed the o" !#at!on when they e4ecuted the ;eed of 6ss!#n)ent. $he res'ondent a''ea ed the dec!s!on to the 5ourt of 6''ea s and the sa!d court re%erses the a''ea ed dec!s!on. I!!*e/ Ahether or not the ;eed of 6ss!#n)ent that was e4ecuted e4t!n#u!shed the o" !#at!on of the 'et!t!oner. R*$in+/ $he dec!s!on of the 5ourt of 6''ea s order!n# 'et!t!oner to 'ay the res'ondent the su) of -335, 462.14 !s 6FF+RMB; w!th M2;+F+56$+2N. Ratio/ =?o %s. LJ3 Bco0For)wor* 3yste) -h! ., +nc., '' 17601779 6n 6ss!#n)ent of 5red!t !s an a#ree)ent "y %!rtue of wh!ch the owner of a cred!t, *nown as the ass!#nor, "y a e#a cause, such as sa e, dac!on en 'a#o, e4chan#e or donat!on, and w!thout the consent of the de"tor , transfers h!s cred!t and accessory r!#hts to another, *nown as the ass!#nee, who ac1u!res the 'ower to enforce !t to the sa)e e4tent as the ass!#nor cou d enforce !t a#a!nst the de"tor. +n dac!on en -a#o, as a s'ec!a )ode of
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

'ay)ent, the de"tor offers another th!n# to the cred!tor who acce'ts !t as e1u!%a ent of 'ay)ent of an outstand!n# de"t. ,ence, !t )ay "e we sett ed that the ass!#n)ent of cred!t, wh!ch !s !n the nature of a sa e of 'ersona 'ro'erty, 'roduced the effects of a dat!on !n 'ay)ent wh!ch )ay e4t!n#u!sh the o" !#at!on. ,owe%er, as !n any other contract of sa e, t1e "endo i! 5o*nd 56 3e tain 4a antie!. Fro) the 'ro%!s!on of the c!%! code=6rt!c e 16279, 'et!t!oner, as %endor or ass!#nor, !s "ound to warrant the e4!stence and e#a !ty of the cred!t at the t!)e of the sa e or ass!#n)ent. Ahen Jo)ero c a!)ed that !t was no on#er !nde"ted to 'et!t!oner s!nce the atter a so had an un'a!d o" !#at!on to !t, !t essent!a y )eant that !ts o" !#at!on to 'et!t!oner has "een e4t!n#u!shed "y co)'ensat!on. +n other words, res'ondent a e#ed the non0e4!stence of the cred!t and asserted !ts c a!) to 'et!t!onerFs warranty under ass!#n)ent. $herefore, !t "ehoo%ed on 'et!t!oner to )a*e #ood !ts warranty and 'a!d the o" !#at!on. +ndeed "y warrant!n# the e4!stence of the cred!t, 'et!t!oner shou d "e dee)ed to ha%e ensured the 'erfor)ance thereof !n case the sa)e !s ater found to "e !ne4!stent. ,e shou d "e he d !a" e to 'ay to res'ondent the a)ount of h!s !nde"tedness=?o %s. LJ3 Bco0For)wor* 3yste) -h! ., +nc., '' 17601779.

ATOB FINANCE COR#ORATION, petitione "!. COURT OF A##EALS, SAN?U CHE<ICAL COR#ORATION, DANILO E. ARRIETA, NENITA .. ARRIETA, #A.LITO .ER<UNDO and LEO#OLDO HALILI, e!pondent!. G.R. No. @--'@ <a6 %@, %))& */LI!IA7O, J.4 FACTS: -r!%ate res'ondents 3anyu 5he)!ca cor'orat!on =<3anyu 5he)!ca <9 as 'r!nc!'a and
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3anyu $rad!n# 5or'orat!on =<3anyu $rad!n#<9 a on# w!th !nd!%!dua 'r!%ate stoc*ho ders of 3anyu 5he)!ca , na)e y, 'r!%ate res'ondent s'ouses ;an! o B. ,a ! ! and -a" !co 8er)undo as suret!es, e4ecuted !n the cont!nu!n# 3uretysh!' 6#ree)ent !n fa%or of 6to* F!nance as cred!tor. &nder th!s 6#ree)ent, 3anyu $rad!n# and the !nd!%!dua 'r!%ate res'ondents who were off!cers and stoc*ho ders of 3anyu 5he)!ca d!d (o!nt y and se%era y uncond!t!ona y #uarantee to 6$2L F+N6N5B 52R-2R6$+2N the +ull, +aith+ul and prompt payment and discharge o+ any and all indebtedness o+ pri1ate respondent to the !reditor Ato<. $he word >!nde"tedness< !s used here!n in its most comprehensi1e sense and includes any and all ad1ances, debts, obligations and liabilities of -r!nc!'a or any one or )ore of the). 2n 2. No%e)"er 1/71, 3anyu 5he)!ca ass!#ned !ts trade rece!%a" es outstand!n# as of 2. No%e)"er 1/71 w!th a tota face %a ue of -125, 7.1.00, to 6to* F!nance !n cons!derat!on of rece!'t fro) 6to* F!nance of the a)ount of -105, 000.00. $he ass!#ned rece!%a" es carr!ed a standard ter) of th!rty =309 days: !t a''eared, howe%er, that the standard co))erc!a 'ract!ce was to #rant an e4tens!on u' to one hundred twenty =1209 days w!thout 'ena t!es. ?ater, add!t!ona trade rece!%a" es were ass!#ned "y 3anyu 5he)!ca to 6to* F!nance w!th a tota face %a ue of -100, 3.7.45. 2n 13 January 1/74, 6to* F!nance co))enced act!on a#a!nst 3anyu 5he)!ca , the 6rr!eta s'ouses, -a" !to 8er)undo and ?eo'o do ,a ! ! "efore the Re#!ona $r!a 5ourt of Man! a to co ect the su) of -120, 240.00 ' us 'ena ty char#es a)ount!n# to -0.03 for e%ery 'eso due and 'aya" e for each )onth start!n# fro) 1 3e'te)"er 1/73. 6to* F!nance a e#ed that 3anyu 5he)!ca had fa! ed to co ect and re)!t the a)ount due under the trade rece!%a" es. $he 'r!%ate res'ondents on the other hand see* for the d!s)!ssa of the co)' a!nt for ac* of cause of act!on and contended that the 5ont!nu!n# 3uretysh!' 6#ree)ent, "e!n# an accessory contract, was nu and %o!d s!nce, at the t!)e of !ts e4ecut!on, 3anyu 5he)!ca had no 're0e4!st!n# o" !#at!on due to 6to* F!nance. $he tr!a court rendered a dec!s!on !n fa%or of 6to* F!nance.&'on a''ea : 5ourt of 6''ea s
Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

re%ersed the dec!s!on of the tr!a court, ru !n# !n fa%or of the 'r!%ate res'ondents.,ence, th!s 'et!t!on. ISSUES/ Ahether the !nd!%!dua 'r!%ate res'ondents )ay "e he d so !dar! y !a" e w!th 3anyu 5he)!ca under the 'ro%!s!ons of the 5ont!nu!n# 3uretysh!' 6#ree)entD Ahether or not the cont!nu!n# suretysh!' a#ree)ent )ust "e he d nu and %o!d as ha%!n# "een e4ecuted w!thout cons!derat!on and w!thout a 're0e4!st!n# 'r!nc!'a o" !#at!on to susta!n !t. RULING/ $he 3u're)e 5ourt #ranted the 'et!t!on of -et!t!oner 6to* F!nance and susta!ns the dec!s!on of tr!a court f!nd!n# !n fa%or of 'et!t!oner 6to* F!nance. $he content!on of 'r!%ate a''e ants that the suretysh!' a#ree)ent !s nu and %o!d "ecause !t !s not !n consonance w!th the aws on #uaranty and secur!ty on the #round that the a#ree)ent was entered !nto "y the 'art!es two years "efore the ;eed of 6ss!#n)ent was e4ecuted. $hus, contest!n# that !t ran counter to the 'ro%!s!on that #uaranty cannot e4!st !nde'endent y "ecause "y nature !t !s )ere y an accessory contract. $he 35 he d that 5ourt of 6''ea s here was !n ser!ous error. +t !s true that a ser!ous #uaranty or a suretysh!' a#ree)ent !s an accessory contract !n the sense that !t !s entered !nto for the 'ur'ose of secur!n# the 'erfor)ance of another o" !#at!on wh!ch !s deno)!nated as the 'r!nc!'a o" !#at!on. +t !s a so true that 6rt!c e 2052 of the 5!%! 5ode states that <a #uarantee cannot e4!st w!thout a %a !d o" !#at!on.< ,owe%er, the 35 ru ed that such e#a 'ro'os!t!on !s not, !*e )ost e#a 'r!nc!' es, to "e read !n an a"so ute and !tera )anner and carr!ed to the !)!t of !ts o#!c. $h!s !s c ear fro) 6rt!c e 2052 of the 5!%! 5ode !tse f. 6 surety !s not "ound under any 'art!cu ar 'r!nc!'a o" !#at!on unt! that 'r!nc!'a o" !#at!on !s "orn. 8ut there !s no theoret!ca or doctr!na d!ff!cu ty !nherent !n say!n# that the suretysh!' a#ree)ent !tse f !s %a !d and "!nd!n# e%en "efore the 'r!nc!'a o" !#at!on !ntended to "e secured there"y !s "orn, any )ore that there wou d "e !n say!n# that o" !#at!ons wh!ch are su"(ect to a cond!t!on 'recedent are %a !d and "!nd!n# "efore the occurrence of the cond!t!on 'recedent. 8y e4ecut!n# such an a#ree)ent, the 'r!nc!'a ' aces !tse f !n a 'os!t!on to enter !nto the 'ro(ected ser!es of transact!ons w!th !ts cred!tor: w!th such surety a#ree)ent, there wou d "e no need to e4ecute a se'arate surety contract or

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"ond for each f!nanc!n# or cred!t acco))odat!on e4tended to the 'r!nc!'a de"tor. A!th res'ect to the second !ssue, that !s, whether 'r!%ate res'ondents are !a" e under the ;eed of 6ss!#n)ent wh!ch they, a on# w!th the 'r!nc!'a de"tor 3anyu 5he)!ca , e4ecuted !n fa%or of 'et!t!oner, on the rece!%a" es there"y ass!#ned, 35 he d that 'r!%ate res'ondents are !a" e w!th res'ect to the deed they e4ecuted !n fa%or of cred!tor 6to* F!nance. $he ;eed of 6ss!#n)ent was %a !d and "!nd!n# u'on 3anyu 5he)!ca . +t !s an act!%!ty or o'erat!on that 'er)!ts the ass!#nee to )onet!@e or rea !@e the %a ue of the rece!%a" es "efore the )atur!ty thereof. +n other words, 3anyu 5he)!ca rece!%ed fro) 6to* F!nance the %a ue of !ts trade rece!%a" es !t had ass!#ned: 3anyu 5he)!ca o"%!ous y "enef!tted fro) the ass!#n)ent. $he !a"! !ty of 3anyu 5he)!ca to 6to* F!nance rest on the "reach of e4 contractu =contractua o" !#at!on9. &nder the ;eed of 6ss!#n)ent, the effect of non0'ay)ent "y the or!#!na trade de"tors was "reach of warranty of so %ency "y 3anyu 5he)!ca , resu t!n# !n turn !n the assu)'t!on of so !dary !a"! !ty "y the ass!#nor under the rece!%a" es ass!#ned. +n other words, the ass!#nor 3anyu 5he)!ca "eco)es a so !dary de"tor under the ter)s of the rece!%a" es co%ered and transferred "y %!rtue of the ;eed of 6ss!#n)ent. 6nd "ecause ass!#nor 3anyu 5he)!ca "eca)e, under the ter)s of the ;eed of 6ss!#n)ent, so !dary o" !#or under each of the ass!#ned rece!%a" es, the other 'r!%ate res'ondents =the 6rr!eta s'ouses, -a" !to 8er)undo and ?eo'o do ,a ! !9, "eca)e so !dar! y !a" e for that o" !#at!on of 3anyu 5he)!ca , "y %!rtue of the o'erat!on of the 5ont!nu!n# 3uretysh!' 6#ree)ent.

Sales Case Digests UST Faculty of Civil Law 2A SY 2009-2010

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