Law On Sales Digested Cases

HEIRS OF JUAN SAN ANDRES (VICTOR S.
ZIGA) and SALVACION S. TRIA, petitione!,

"!. VICENTE RODRIGUEZ, e!pondent.
G.R. No. 135634 May 31, 2000
Facts:
Juan andres was the owner of the ot
s!tuated !n !"oton, na#a c!ty. $he sae was
e%!denced "y a deed of sae. &'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 aso
're'ared a s*etch 'an of the ot sod to
res'ondent. +t was found out that res'ondent
had enar#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 ae#ed that a'art fro) the or!#!na
ot, wh!ch had "een sod to h!), the atter
!*ew!se sod to h!) the foow!n# day the
re)a!n!n# 'ort!on of the ot. ,e ae#ed that the
'ay)ent for such woud "e affected !n 5 years
fro) the eecut!on of the for)a deed of sae after
a sur%ey !s conducted. ,e aso ae#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 "aance 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 rued that there
was no contract of sae 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
sae, hence, the need to e4ecute a new contract.
Res'ondent a''eaed to the 5ourt of 6''eas,
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''eate court hed that the o"(ect of the
contract was deter)!na"e, and that there was a
cond!t!ona sae w!th the "aance of the 'urchase
'r!ce 'aya"e w!th!n f!%e years fro) the
e4ecut!on of the deed of sae.
+ssue: whether or not there was a %a!d sae.
,ed:
5!%! 5ode 'ro%!des that 8y the contract of sae
one of the contract!n# 'art!es o"!#ates h!)sef
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!%aent.
6 contract of sae )ay "e a"soute or
cond!t!ona.
6s thus def!ned, the essent!a ee)ents of sae
are the foow!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!%aent.
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%!ousy
'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 resuts of
a sur%ey and woud "e due and 'aya"e !n f!%e
=59 years fro) the e4ecut!on of a deed of sae.
-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 )!dde of
?ot 1/140802, wh!ch has a tota area of 754
s1uare )eters, and !s ceary what was referred
to !n the rece!'t as the <'re%!ousy 'a!d ot.<
3!nce the ot su"se1uenty sod to res'ondent !s
sa!d to ad(o!n the <'re%!ousy '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 resut
of a sur%ey does not detract fro) the fact that
they are deter)!nate or deter)!na"e. 6s the
5ourt of 6''eas e4'a!ned:
15
5onco)!tanty, the o"(ect of the sae !s certa!n
and deter)!nate. &nder 6rt!ce 1460 of the New
5!%! 5ode, a th!n# sod !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 ee)ents of a contract
of sae 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:
$he contract of sae !s 'erfected at the )o)ent
there !s a )eet!n# of )!nds u'on the th!n# wh!ch
!s the o"(ect of the contract and u'on the 'r!ce. .
. .$hat the contract of sae !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''eas o"ser%ed:
A!thout any dou"t, the rece!'t 'rofoundy
s'ea*s of a )eet!n# of the )!nd "etween 3an
6ndres and Rodr!#ue@ for the sae. B%!denty,
th!s !s a 'erfected contract of sae on a deferred
'ay)ent of the 'urchase 'r!ce. 6 the 're0
re1u!s!te ee)ents for a %a!d 'urchase
transact!on are 'resent.
$here !s a need, howe%er, to car!fy what the
5ourt of 6''eas sa!d !s a cond!t!ona contract of
sae. 6''arenty, the a''eate court cons!dered
as a <cond!t!on< the st!'uat!on of the 'art!es that
the fu cons!derat!on, "ased on a sur%ey of the
ot, woud "e due and 'aya"e w!th!n f!%e =59
years fro) the e4ecut!on of a for)a deed of
sae. +t !s e%!dent fro) the st!'uat!ons !n the
rece!'t that the %endor Juan 3an 6ndres sod
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 sae !s cons!dered a"soute !n nature
where there !s ne!ther a st!'uat!on !n the deed
that t!te to the 'ro'erty sod !s reser%ed !n the
seer unt! fu 'ay)ent of the 'r!ce, nor one
#!%!n# the %endor the r!#ht to un!ateray 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 sae "etween the
'art!es !s a"soute, not cond!t!ona. $here !s no
reser%at!on of ownersh!' nor a st!'uat!on
'ro%!d!n# for a un!atera resc!ss!on "y e!ther
'arty. +n fact, the sae 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#
sod sha "e transferred to the %endee u'on the
actua or construct!%e de!%ery thereof.
$he st!'uat!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 sae< !s not a cond!t!on wh!ch
affects the eff!cacy of the contract of sae. +t
)erey '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. 5onse1uenty, the content!on that the
a"sence of a for)a deed of sae st!'uated !n
the rece!'t 're%ents the ha''en!n# of a sae has
no )er!t.
$he ca!) 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 rue 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, )oras, #ood
custo)s or 'u"!c 'o!cy. 2therw!se, court woud
"e !nterfer!n# w!th the freedo) of contract of the
'art!es. 3!)'y 'ut, courts cannot st!'uate for
the 'art!es nor a)end the atter>s a#ree)ent, for
to do so woud "e to ater 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.
$he dec!s!on of the 5ourt of 6''eas !s
6FF+RMB; w!th the )od!f!cat!on that
res'ondent !s 2R;BRB; to re!)"urse
'et!t!oners for the e4'enses of the sur%ey.
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Henando R. #ena$o!a "!. Se"eino Santo!
G.R. No. %&&'() A*+*!t ,&, ,--%
Facts:
3e%er!no sod h!s 'ro'erty to henry. ,enry
a''!ed for a oan w!th 'h!a) !fe. 6s +t was
aready 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!te wh!ch !s !n
'ossess!on of se%er!no.
,enry aready too* 'ossess!on of the 'ro'erty !n
1uest!on after e(ect)ent of the essees. ,e aso
'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 ca!)s ownersh!' o%er the
'ro'erty ca!)!n# that henry d!d not 'ay for the
'ro'erty, therefore there was no sae to s'ea*
of.
+ssue: whether or not there !s a contract of sae
'erfected !n th!s case.
,ed: there was a 'erfected contract of sae due
to the second deed of sae.
$he "as!c character!st!c of an a"soutey
s!)uated or f!ct!t!ous contract !s that the
a''arent contract !s not reay des!red or
!ntended to 'roduce e#a effects or ater the
(ur!d!ca s!tuat!on of the 'art!es !n any way.
30
,owe%er, !n th!s case, the 'art!es aready
undertoo* certa!n acts wh!ch were d!rected
towards fuf!)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
coud 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 ese woud he author!@e the atter to sue
the tenant for e(ect)ent under a ca!) of
ownersh!', !f he truy d!d not !ntend to se the
'ro'erty to 'et!t!oner !n the f!rst 'aceD Needess
to state, !t does not )a*e sense for 3e%er!no to
aow '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#
that he had "ou#ht the 'ro'erty fro) 3e%er!no
and thus ent!ted to 'ossess!on thereof, !f
'et!t!oner d!d not ha%e any r!#ht to the 'ro'erty.
6so 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
sae )ade to 'et!t!oner, 3e%er!no e4'!c!ty
asserted !n h!s sworn answer to the co)'a!nt
that the sae was a e#!t!)ate transact!on. ,e
further ae#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 shoud "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 hed
're%!ousy that the 'ro%!s!on of 6rt!ce 1357 of
the New 5!%! 5ode on the necess!ty of a 'u"!c
docu)ent !s ony for con%en!ence, not for %a!d!ty
or enforcea"!!ty. Fa!ure to foow 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 )erey 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 ee)ents of a %a!d contract of sae 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!%aent.
3.
+n the !nstant case, the second
deed refects the 'resence of a these ee)ents
and as such, there !s aready a 'erfected
contract of sae.
$he non0'ay)ent of the contract 'r!ce )erey
resuts !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!ce
11/1 of the 5!%! 5ode.
8e that as !t )ay, we a#ree w!th 'et!t!oner that
athou#h the aw aows 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!'uated 'r!ce when he refused
to de!%er the owner>s or!#!na du'!cate t!te to
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-h!a) ?!fe. ,!s refusa to coo'erate was
un(ust!f!ed, "ecause as 3e%er!no h!)sef
ad)!tted, he s!#ned the deed 'rec!sey to ena"e
'et!t!oner to ac1u!re the oan. ,e aso *new that
the 'ro'erty was to "e #!%en as secur!ty
therefor. $hus, !t cannot "e sa!d that 'et!t!oner
"reached h!s o"!#at!on towards 3e%er!no s!nce
the for)er has aways "een w!!n# to and coud
co)'y w!th what was !ncu)"ent u'on h!).
+n su), the ony concus!on wh!ch can "e
deduced fro) the aforesa!d c!rcu)stances !s
that ownersh!' of the 'ro'erty has "een
transferred to 'et!t!oner.
A,BRBF2RB, the 'et!t!on !s GR6N$B;.
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#EO#LE OF THE #HILI##INES ". ELIZA.ETH
GANGUSO
G.R. No. 115430 No%e)"er 23, 1//5
DAVIDE, JR., J./
Facts:
Ma(or Ju%en!e 3ua'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
%!oat!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 -at!* 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 aso ca!)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%ertheess, the Re#!ona $r!a 5ourt
of -asay con%!cted her of "oth char#es. 3he
was sentenced to suffer the 'enaty of !fe
!)'r!son)ent and to 'ay a f!ne 'us costs for the
cr!)e !n%o%!n# dru#s. 3he was aso sentenced
to an !ndeter)!nate 'enaty 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''eaed.
+ssue:
Ahether the tr!a court erred !n f!nd!n#
that the 'rosecut!on has fuy )et the test of
)ora certa!nty as to the #u!t of the accused on
"oth char#es of %!oat!on of sect!on 15, 6rt!ce +++
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 'arty #ranted, and
the chaen#ed dec!s!on of the Re#!ona $r!a
5ourt of -asay 5!ty !s )od!f!ed. 6s )od!f!ed,
accused0a''eant 8eth !s ac1u!tted for the
char#e of !e#a 'ossess!on of f!rear)s on
#round of reasona"e dou"t. $he 'enaty
!)'osed on her for the %!oat!on of sect!on 15,
6rt!ce +++ of the ;an#erous ;ru#s 6ct of 1/.2 !s
reduced to an !ndeter)!nate sentence of three
)onths of arresto mayor, as )!n!)u), to three
years of prision correccional, as )a4!)u).
Rat!o ;ec!dend!:
S*pe0e Co*t 1e$d t1at t1e
e$e0ent! o2 a 3onta3t o2 !a$e 4ee pe!ent.
.et1 i! pe!*0ed to 1a"e +i"en 1e 3on!ent
56 not in7*iin+ a! to t1e 0eanin+ o2 8S9
41en t1e o22i3e po!ed to 5*6 8#1p :--
4ot1 o2 S9. T1ee2oe, t1ee 4a! a 0eetin+
o2 0ind! *pon a de2inite o5;e3t and *pon t1e
pi3e.
T1o*+1 !1e 4a! not in po!!e!!ion o2
t1e o5;e3t o2 !a$e, Ati3$e %(:) 0ee$6
e7*ie! t1at t1e "endo 0*!t 1a"e t1e i+1t
to tan!2e o4ne!1ip o2 t1e o5;e3t !o$d at
t1e ti0e o2 de$i"e6. In t1e 3a!e at 5a,
t1o*+1 .et1 i! not t1e o4ne, !1e 1ad t1e
i+1t to di!po!e o2 t1e po1i5ited d*+.
O4ne!1ip 4a! t1eea2te a37*ied *pon 1e
de$i"e6 to t1e 0en in t1e a$$e6 a2te 1e
pa60ent o2 t1e pi3e.
3u're)e 5ourt aso hed 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 sae was ade1uatey
'ro%en and: the dru# su"(ect was 'resented
"efore the court.
6s re#ards the 'enaty !)'osed, s!nce
the sha"u ony we!#hs 0.1/54 #ra)s, 'enaty
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shoud "e 'r!s!on correcc!ona to recus!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 'enaty shoud
"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# 'atenty fa%ora"e to the
a''eant, that a)endatory aw shoud
"e a''!ed retroact!%ey.
+3?6A: +f an offense under the R-5 !s
aso '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!nay, 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.
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HEIRS OF A<#ARO DEL ROSARIO ".
AURORA SANTOS
G.R. No. ?0467/2 3e'te)"er 30, 1/71
GUERRERO, J./
Facts:
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 sod 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 "eon#!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 3ae !n fa%or of ;e Rosar!o as soon as the
t!te has "een reeased 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 fuf!)ent of the
cond!t!on, ;e Rosar!o ca!)s )a!c!ous "reach
of a ;eed of 3ae.
;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 ae#ed that the deed of
sae was ony an acco))odat!on #rac!ousy
e4tended, out of cose 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!nay, defendants ae#ed that the
ca!) 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 3onta3t did
not e=i!t at t1e ti0e o2 t1e tan!a3tion.
$he ower court reso%ed to deny the
)ot!on to d!s)!ss.
6fter act!ons "y res'ect!%e 'art!es, the
ower court ordered the defendants to e4ecute
and con%ey to 'a!nt!ff the 20,000 s1. ). of and
to "e ta*en e!ther fro) ?ot 4 or fro) ?ot 506 of
5ustod!oFs ots, wh!ch defendants own G
!nterest thereof.
6##r!e%ed "y the aforesa!d dec!s!on, the
defendants f!ed an a''ea w!th the 5ourt of
6''eas wh!ch cert!f!ed the records of the case
to the 3u're)e 5ourt for f!na deter)!nat!on.
+ssue:
=A! 2a a! it 3on3en! Sa$e!9
Ahether the sae !s %a!d as to the cause
or o"(ect of the contract.
;ec!s!on:
$he (ud#)ent a''eaed fro) !s here"y
aff!r)ed !n toto, w!th costs a#a!nst the
a''eants.
Rat!o ;ec!dend!:
3u're)e 5ourt hed that the e4ecut!on
of the deed of sae !s %a!d notw!thstand!n# the
ac* of any t!te to the ot "y a''eants at the
t!)e of e4ecut!on f the deed of sae !n fa%or of
a''eee as there can "e a sae of an e4'ected
th!n# !n accordance w!th 6rt!ce 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 hope or
expectancy is void.
$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''eants actuay der!%ed
t!tes fro) ?ot + wh!ch su"se1uenty "eca)e the
o"(ect of su"d!%!s!on.
Sales Case Digests
UST Faculty of Civil Law Page #
2A SY 2009-2010
JOSE <. JAVIER and ESTRELLA F. JAVIER
"!. COURT OF A##EALS and LEONARDO
TIRO
GR No. 471/4 March 15, 1//0
Re#aado, J.:
F65$3:
?eonardo $!ro e4ecuted a ;eed of
ass!#n)ent concern!n# h!s shares of stoc* !n
$!)"erweath 5or'orat!on on Fe". 15, 1/66 !n
fa%or of s'ouses Jose and Bstrea Ja%!er and
for the a)ount of - 120,000. 3'ouses 'a!d -
20,000 as !n!t!a 'ay)ent and the "aance 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 Juy 16, 1/67, $!ro f!ed a
co)'a!nt for fa!ure of the s'ouses to 'ay the
re)a!n!n# "aance.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 $!)"erweath
5or'orat!on was a non0e4!stent or#an!@at!on.$he
tr!a court d!s)!ssed the co)'a!nt hence, $!ro
a''eaed 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.
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 $!)"erweath 5or'orat!on, as
stated !n the deed !tsef. 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 setted
that the 're%!ous and s!)utaneous and
su"se1uent acts of the 'art!es are 'ro'ery
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 fase.
$he deed of ass!#n)ent of Fe"ruary 15, 1/66 !s
a reat!%ey s!)uated contract wh!ch states a
fase cause or cons!derat!on, or one where the
'art!es concea the!r true a#ree)ent. 6 contract
w!th a fase cons!derat!on !s not nu and %o!d 'er
se. &nder 6rt!ce 1346 of the 5!%! 5ode, a
reat!%ey s!)uated contract, when !t does not
're(ud!ce a th!rd 'erson and !s not !ntended for
any 'ur'ose contrary to aw, )oras, #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 non0fuf!)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 ony !f and when the
e%ent wh!ch const!tutes the cond!t!on ha''ens or
!s fuf!ed.
Moreo%er, under the second 'ara#ra'h of 6rt!ce
1461 of the 5!%! 5ode, the eff!cacy of the sae 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.
Sales Case Digests
UST Faculty of Civil Law Page $
2A SY 2009-2010
ONA#AL #HILS. CO<<ODITIES, INC. "!.
THE COURT OF A##EALS and SUSAN CHUA
Fe"ruary 1, 1//3 GR No. /0.0.
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 sae of any co))od!ty for future de!%ery on
or su"(ect to the rues 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 resuts or )ay resut
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"se1uenty 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 foor of the e4chan#e.
6s st!'uated !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 ony -
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'hed the (ud#)ent.
,ence, 'et!t!on for cert!orar! w!th 35.
+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
"y the 'art!es, !s a contract for the sae of
'roducts for future de!%ery, !n wh!ch e!ther seer
or "uyer )ay eect to )a*e or de)and de!%ery
of #oods a#reed to "e "ou#ht and sod, "ut
where no such de!%ery !s actuay )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!recty
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 concus!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 )erey s'ecuated 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'ecuat!on was correct, she woud
"e the w!nner and the 'et!t!oner, the oser, so
'et!t!oner woud ha%e to 'ay 'r!%ate res'ondent
the <)ar#!n<. 8ut !f 'r!%ate res'ondent was
wron# !n her s'ecuat!on then she woud e)er#e
as the oser and the 'et!t!oner, the w!nner. $he
'et!t!oner woud *ee' the )oney or coect the
d!fference fro) the 'r!%ate res'ondent. $h!s !s
ceary a for) of #a)"!n# 'ro%!ded for w!th
un)!sta*ea"e certa!nty under 6rt!ce 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!'uated 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.
Sales Case Digests
2A SY 2009-2010
Sp!. .enado .*ena"ent*a and
Con!o$a3ion Joa7*in "!. Co*t o2 Appea$!
No%e)"er 20, 2003 GR No. 1263.6
F!rst ;!%!s!on
-onente: 5ar'!o, J.
Facts: ;efendant s'ouses ?eonardo Joa1u!n
and Fe!c!ana ?andr!to are the 'arents of
'a!nt!ffs 5onsoac!on, Nora, B))a and
Nat!%!dad as we as of defendants F!de, $o)as,
6rte)!o, 5ar!ta, Fe!c!tas, Fe, and Ga%!no, a
surna)ed Joa1u!n. ?eonardo and Fe!c!ana
e4ecuted se%era deeds of sae !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 decare as nu
and %o!d ab initio the deeds of sae e4ecuted "y
?eonardo and Fe!c!ana ca!)!n# that: =19 here
was no actua %a!d cons!derat!on for the deeds
of sae, =29 assu)!n# that there was
cons!derat!on !n the su)s refected !n the
1uest!oned deeds, the 'ro'ert!es are )ore than
three0fod t!)es )ore %aua"e than the )easy
su)s a''ear!n# there!n, and =39 the deeds of
sae do not refect and e4'ress the true !ntent of
the 'art!es
;efendants, on the other hand a%er =19 that the
saes were w!th suff!c!ent cons!derat!ons and
)ade "y defendants 'arents %ountar!y, !n #ood
fa!th, and w!th fu *nowed#e of the
conse1uences of the!r deeds of sae: and =29
that the cert!f!cates of t!te were !ssued w!th
suff!c!ent factua and e#a "as!s.
$he R$5 d!s)!ssed the case, decar!n# that the
deeds of sae were a e4ecuted for %aua"e
cons!derat!on.
2n a''ea, the 5ourt of 6''eas aff!r)ed the
dec!s!on of the R$5.
+ssues:
=19 Ahether there the deeds of sae are
%o!d for ac* of cons!derat!on
=29 Ahether the deeds of sae are %o!d for
#ross !nade1uacy of 'r!ce
,ed: $he 'et!t!on !s w!thout )er!t.
=19 6 contract of sae !s not a rea contract, "ut a
consensua contract. 6s a consensua contract,
a contract of sae "eco)es a "!nd!n# and %a!d
contract u'on the )eet!n# of the )!nds as to
'r!ce. +f there !s a )eet!n# of the )!nds of the
'art!es as to the 'r!ce, the contract of sae !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 sae !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!'uated !n the contract !s s!)uated, then the
contract !s %o!d. 6rt!ce 14.1 of the 5!%! 5ode
states that !f the 'r!ce !n a contract of sae !s
s!)uated, the sae !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 sae.
-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 resuts !n a
r!#ht to de)and the fuf!)ent or canceat!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 3ae were a"soutey s!)uated. $o
'ro%e s!)uat!on, 'et!t!oners 'resented B))a
Joa1u!n Eado@s test!)ony stat!n# that the!r
father, res'ondent ?eonardo Joa1u!n, tod her
that he woud transfer a ot to her throu#h a
deed of sae w!thout need for her 'ay)ent of the
'urchase 'r!ce. $he tr!a court d!d not f!nd the
ae#at!on of a"soute s!)uat!on of 'r!ce
cred!"e. -et!t!oners fa!ure to 'ro%e a"soute
s!)uat!on of 'r!ce !s )a#n!f!ed "y the!r ac* of
*nowed#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 3ae wh!ch 'et!t!oners
'resented as e%!dence 'a!ny showed the cost
of each ot sod. Not ony d!d res'ondentsF )!nds
)eet as to the 'urchase 'r!ce, "ut the rea 'r!ce
was aso stated !n the ;eeds of 3ae. 6s of the
f!!n# of the co)'a!nt, res'ondent s!"!n#s ha%e
aso fuy 'a!d the 'r!ce to the!r res'ondent
father.
=29 6rt!ces 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$idate a 3onta3t, uness there has "een
fraud, )!sta*e or undue !nfuence.
6rt!ce 14.0 of the 5!%! 5ode further 'ro%!des:
6rt. 14.0. Go!! inade7*a36 o2 pi3e doe!
not a22e3t a 3onta3t o2 !a$e, e4ce't as )ay
Sales Case Digests
2A SY 2009-2010
!nd!cate a defect !n the consent, or that the
'art!es reay !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!ces 1355 and 14.0 of the 5!%!
5ode wh!ch woud !n%a!date, or e%en affect, the
;eeds of 3ae. +ndeed, there !s no re1u!re)ent
that the 'r!ce "e e1ua to the e4act %aue of the
su"(ect )atter of sae. 6 the res'ondents
"e!e%ed that they rece!%ed the co))utat!%e
%aue of what they #a%e.
La5a+a$a "!. Santia+o
Sales Case Digests
2A SY 2009-2010
;ece)"er 4, 2001 GR No. 132305
3econd ;!%!s!on
-onente: Hu!su)"!n#, J.
Facts: Jose $. 3ant!a#o owned a 'arce of and.
6e#!n# that Jose had frauduenty re#!stered !t
!n h!s na)e aone, h!s s!sters N!coasa 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 ca!) that JoseFs share !n the
'ro'erty ipso jure "eon#s to the) "ecause they
are the ony e#a he!rs of the!r "rother, who d!ed
!ntestate and w!thout !ssue. $hey ae#e that !t !s
h!#hy !)'ro"a"e for 'et!t!oner to ha%e 'a!d the
su''osed cons!derat!on of -150,000 for the sae
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 ae#ed sae.
-et!t!oner ?a"a#aa, on the other hand, ca!)s
that she !s the dau#hter of Jose and ar#ued that
the 'ur'orted sae of the 'ro'erty was !n fact a
donat!on to her.
$he R$5 hed that wh!e there was !ndeed no
cons!derat!on for the deed of sae 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''eas re%ersed the
dec!s!on of the R$5
+ssue: Ahether the 'ur'orted deed of sae was
%a!d
,ed: $here !s no %a!d sae.
5eary, there !s no %a!d sae !n th!s case. Jose
d!d not ha%e the r!#ht to transfer ownersh!' of
the ent!re 'ro'erty to 'et!t!oner s!nce 2C3 thereof
"eon#ed to h!s s!sters. -et!t!oner coud not ha%e
#!%en her consent to the contract, "e!n# a )!nor
at the t!)e. 5onsent of the contract!n# 'art!es !s
a)on# the essent!a re1u!s!tes of a contract,
!ncud!n# one of sae, a"sent wh!ch there can "e
no %a!d contract. Moreo%er, 'et!t!oner ad)!ttedy
d!d not 'ay any centa%o for the 'ro'erty, wh!ch
)a*es the sae %o!d. 6rt!ce 14.1 of the 5!%!
5ode 'ro%!des:
+f the 'r!ce !s s!)uated, the sae !s %o!d, "ut the
act )ay "e shown to ha%e "een !n rea!ty a
donat!on, or so)e other act or contract.
Di>on "!. Co*t o2 Appea$!
G.R. No. 122544 302 35R6 277
Sales Case Digests
2A SY 2009-2010
F+R3$ ;+E+3+2N
-onente: Mart!ne@, J
Fa3t!/
2n 1/.4, -r!%ate res'ondent 2%erand 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
rentas 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 rentas !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. $hereafter, essee f!ed for an act!on
for s'ec!f!c 'erfor)ance to co)'e the e4ecut!on
of a deed of sae 'ursuant to the o't!on to
'urchase and the rece!'t of the 'art!a
cons!derat!on #!%en to 6!ce ;!@on and for the
f!4!n# of 'er!od to 'ay the "aance. Res'ondent
5ourt of 6''eas rendered a dec!s!on u'hod!n#
the (ur!sd!ct!on of 5!ty 5ourt and concud!n# that
there was a 'erfected contract of sae "etween
the 'art!es due to the sa!d 'art!a 'ay)ent.
-et!t!onerFs )ot!on for recons!derat!on was
den!ed "y the res'ondent 5ourt.
,$-.
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
saeD
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.
2. $he ter) st!'uated !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 ony 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!'uated 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
ony #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. $here was no 'erfected contract of sae
"etween the 'art!es. +n here!n case, the
essee #a%e the )oney to 6!ce ;!@on !n an
atte)'t to resurrect the a'sed o't!on.$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 "ehaf w!th re#ard to her transact!on
w!th the essee. $herefore, one of the
essent!a ee)ents for a contract of sae to
"e 'erfected !s ac*!n#: consent.
Hei! o2 San J*an Ande! "!. Rodi+*e>
G.R. 135634 332 35R6 .6/
3B52N; ;+E+3+2N
Sales Case Digests
2A SY 2009-2010
-onente: Mendo@a, J
Facts:
Juan 3an 6ndres sod a 'ort!on of h!s and to
res'ondent E!cente Rodr!#ue@ e%!denced "y a
;eed of 3ae. &'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 enar#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
ae#edy encroached "y h!). ,owe%er,
res'ondent refused to do so ca!)!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 ae#ed that
the fu 'ay)ent of the add!t!ona ot woud "e
effected w!th!n f!%e =59 years fro) the e4ecut!on
of the deed of sae 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 "aance 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 aso 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 rued that there was
no contract of sae "ecause there !s no %a!d
o"(ect "ecause there !s no suff!c!ent !nd!cat!on.
Res'ondent 5ourt of 6''eas re%ersed the
dec!s!on rendered "y the $r!a 5ourt.
I!!*e!/
Ahether the 5ourt erred !n hod!n# that there !s
a %a!d contract of saeD
Ahether the 5ourt erred !n hod!n# that the
cons!#nat!on !s %a!dD
Ahether the a)ount of cons!#nat!on !s
untena"eD
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 3ae
"ecause a the essent!a ee)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%!ousy 'a!d otJ.
3!nce the ot su"se1uenty sod to
res'ondent !s sa!d to ad(o!n the
I're%!ousy '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 3ae
can "e #a!nsa!d to "e a"soute "ecause
there !s no reser%at!on of ownersh!'.
$he st!'uat!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 saeJ !s
not a cond!t!on wh!ch affects the eff!cacy
of the contract. +t )erey 'ro%!des for the
)anner of co)'utat!on of 'ay)ent..
2. 5ons!#nat!on !s 'ro'er ony !n cases
where an e4!st!n# o"!#at!on !s due. +n
here!n case s!nce there !s no deed of
sae yet thus the 'er!od when the
'urchase 'r!ce shoud "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 ony
#!%e force and effect to the !ntent!ons of
the 'art!es.
4. 3!nce there was no ;eed of 3ae 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. $hus,
-rescr!'t!on does not a''y.
LAGRI<AS A. .O?, 'et!t!oner,
%s.
COURT OF A##EALS, ISAGANI #. RA<OS
Sales Case Digests
2A SY 2009-2010
and ERLINDA GASINGAN RA<OS,
res'ondents.
Api$ %(, ,--( 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
ae#ed that they are the owners of a 'arce of
and and the house e4!st!n# thereon at 1151
Forent!no $orres 3t., 3!n#aon#, Man!a. $hey
ac1u!red the sa!d 'ro'ert!es fro) ?a#r!)as who
sod the sa)e to the) "y %!rtue of a ;eed of
6"soute 3ae,

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 ony rent!n# the!r own
res!dence. $hey then de)anded that ?a#r!)as
%acate the su"(ect 're)!ses, "ut she refused to
do so. ,ence, they !n!t!ated th!s act!on for
e(ect)ent a#a!nst ?a#r!)as.
3o)et!)e !n May 1/77, Br!nda Ra)os
and ?a#r!)as e4ecuted an a#ree)ent
=Kasunduan9 ac*nowed#!n# that the su"(ect
'arce of and, to#ether w!th the u''er 'ort!on of
the house thereon, had "een sod "y ?a#r!)as
to the s'ouses Ra)os for -31,000: that of the
sa!d 'r!ce, the su) of -22,500 =re'resent!n#
-15,000 cash oan 'us -.,500 as !nterest fro)
3e'te)"er 1/74 to May 1/779 had "een 'a!d:
that the "aance of -7,500 woud "e 'a!d on the
ast wee* of 6u#ust 1/77: and that 'ossess!on
of the 'ro'erty woud "e transferred to the
s'ouses Ra)os ony u'on fu 'ay)ent of the
'urchase 'r!ce.
I!!*e/
A,B$,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;
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''eas d!d not #!%e
credence to the state)ent !n the Kasunduan that
'r!%ate res'ondents 'a!d ony -22,500 to
'et!t!oner s!nce her !nde"tedness aready
reached -26,200. 56 #a%e we!#ht to the
ar#u)ent of 'r!%ate res'ondents that Br!nda
Ra)os was )erey tr!c*ed !nto s!#n!n# the
Kasunduan.
+t has "een esta"!shed that 'et!t!oner
sod 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"soute 3ae, the due e4ecut!on of
wh!ch was not contro%erted "y 'et!t!oner. $he
contract !s a"soute !n nature, w!thout any
'ro%!s!on that t!te to the 'ro'erty !s reser%ed !n
the %endor unt! fu 'ay)ent of the 'urchase
'r!ce.
8y the contract of sae,

'et!t!oner =as
%endor9, o"!#ated hersef 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!ce 14.. of
the 5!%! 5ode, the ownersh!' of the th!n# sod
sha "e transferred to the %endee u'on the
actua or construct!%e de!%ery thereof.
+n add!t!on, 6rt!ce 14/7 of the 5!%!
5ode 'ro%!des that when the sae !s )ade
throu#h a 'u"!c !nstru)ent, as !n th!s case, the
e4ecut!on thereof sha "e e1u!%aent 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 ceary "e !nferred. +n th!s
case, the ;eed of 6"soute 3ae does not
conta!n any st!'uat!on a#a!nst the construct!%e
de!%ery of the 'ro'erty to 'r!%ate res'ondents.
+n the a"sence of st!'uat!on to the contrary, the
ownersh!' of the 'ro'erty sod 'asses to the
%endee u'on the actua or construct!%e de!%ery
thereof. $he ;eed of 6"soute 3ae, therefore,
su''orts 'r!%ate res'ondentsF r!#ht of )ater!a
'ossess!on o%er the su"(ect 'ro'erty.
Sales Case Digests
UST Faculty of Civil Law Page 1!
2A SY 2009-2010
S#S. HENR? CO AND ELIZA.ETH CO AND
<ELOD? CO, 'et!t!oners,
%s.
Sales Case Digests
UST Faculty of Civil Law Page 1"
2A SY 2009-2010
COURT OF A##EALS AND <RS.
ADORACION CUSTODIO, epe!ented 56 1e
Attone6AinA2a3t, 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 6a"an# E!a#e,
Munt!nu'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 "aance of N60,000.00 on January 5,
1/75. 2n January 25, 1/75, athou#h the 'er!od
of 'ay)ent had aready e4'!red, 'a!nt!ff 'a!d to
the defendant Meody 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'odo 5otaco, wrote a etter to the 'a!nt!ff
dated March 15, 1/75, de)and!n# that she 'ay
the "aance 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''eas erred !n
order!n# the s'ouses 5o =5239 to return the
N30,000.00 'a!d "y 5&3$2;+2 'ursuant to the
<o't!on< #ranted to her o%er the 8eata 'ro'ertyD
NO.
R*$in+/
$he March 15, 1/75 etter sent "y the
523 throu#h the!r awyer to the 5&3$2;+2
re%eas that the 'art!es entered !nto a 'erfected
contract of sae and not an o't!on contract.
6 contract of sae !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!'rocay
de)and 'erfor)ance su"(ect to the 'ro%!s!ons
of the aw #o%ern!n# the for) of contracts.

$he ee)ents of a %a!d contract of sae
under 6rt!ce 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!%aent. 6s e%!denced "y the March 15,
1/75 etter, a three ee)ents of a contract of
sae 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 sae
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
aready rece!%ed "y the 523. &nder 6rt!ce
1472 of the 5!%! 5ode, earnest )oney #!%en !n a
sae transact!on !s cons!dered 'art of the
'urchase 'r!ce and 'roof of the 'erfect!on of the
sae.
. $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# "aance 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# "aance 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!atey sued for the resc!ss!on
of the contract of sae and 'rayed for the return
of the N30,000.00 she had !n!t!ay 'a!d.
&nder 6rt!ce 1375
17
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 ony "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
Sales Case Digests
UST Faculty of Civil Law Page 1#
2A SY 2009-2010
de!%ered to the a''eee. 3he has therefore
noth!n# to return to the a''eants. $he 'r!ce
rece!%ed "y the a''eants has to "e returned to
the a''eee as a'ty rued "y the ower court, for
such !s a conse1uence of resc!ss!on, wh!ch !s to
restore the 'art!es !n the!r for)er s!tuat!ons.
SAN <IGUEL #RO#ERTIES #HILI##INES,
INC., #ETITIONER, VS. S#OUSES ALFREDO
HUANG AND GRACE HUANG,
RES#ONDENTS.
Sales Case Digests
UST Faculty of Civil Law Page 1$
2A SY 2009-2010
OGRN 13.2/0 Juy 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 sae of rea 'ro'ert!es. -arts of !ts
!n%entory are two 'arces of and tota!n# to 1,
.37 s1uare )eters at the corner of Meraco
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 sae for 52,140,000 !n cash. %
$he offer was )ade to 6tty. ,eena ;au@ who
was act!n# for res'ondent s'ouses as
und!scosed 'r!nc!'as. +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 foow!n# ter)s: the su) of
500,000 woud "e #!%en as earnest )oney and %
the "aance woud "e 'a!d !n 7 e1ua )onthy
!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 foow!n# cond!t!ons:
I1. Ae w! "e #!%en the e4cus!%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%as: 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 Juy ., 1//4, 3an M!#ue, throu#h !ts
'res!dent, Feder!co Gon@aes, 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 sae
des'!te the e4tens!on #ranted "y 3an M!#ue, !t
!s aready 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
3ae 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 aready 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 ae#!n# that: 1.
the ae#ed Ie4cus!%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
ae#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 sae. $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 hed that a
the re1u!s!tes of a 'erfected contract of sae 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 aready "een acce'ted
"y 3M--+. $he court c!ted 6rt. 1472 of the 5!%!
5ode wh!ch 'ro%!des that Iwhene%er earnest
)oney !s #!%en !n a contract of sae, !t sha "e
cons!dered as 'art of the 'r!ce and 'roof of the
'erfect!on of the contract.J
I!!*e/ Ahether or not the contract of sae was
'erfected.
R*$in+/
$he contract of sae was not 'erfected. +n
hod!n# that there !s 'erfected contract of sae,
the 56 re!ed on the foow!n# f!nd!n#s: =19
earnest )oney was ae#edy #!%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 sae.
A!th re#ard to the ae#ed 'ay)ent and
acce'tance of the earnest )oney, the 35 hods
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 )erey as
de'os!t of what woud e%entuay "eco)e
earnest )oney or down 'ay)ent shoud a
Sales Case Digests
2A SY 2009-2010
contract of sae "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 sae
"ut ony as #uarantee that res'ondents woud
not "ac* out of the sae. $hey e%en descr!"ed !t
as Iearnest0de'os!tJ.
6 that res'ondents had was (ust an
o't!on to "uy the 'ro'ert!es wh!ch 'r!%!e#e was
not e4erc!sed "y the) "ecause there was a
fa!ure to a#ree on the ter)s of 'ay)ent. No
contract of sae )ay thus "e enforced "y
res'ondents.
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
2A SY 2009-2010
-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 "aance of the contract
'r!ce and re1uest!n# the) to 're'are the ;eed
of 3ae.
-et!t!oners, throu#h counse, !nfor)ed
res'ondent !n a etter that 6)'aro ,errera
woud "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 aso %
wrote h!) stat!n# that they aready 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 rued that there was
aready a 'erfected contract of sae "etween the
'art!es and ordered the 'et!t!oners to e4ecute a
f!na deed of sae !n fa%or of res'ondent.
$he 5ourt of a''eas aff!r)ed sa!d
dec!s!on.
I!!*e/ Ahether or not there was a contract of
sae.
R*$in+/
$he transact!on was a contract to se.
IAhen 'et!t!oners decared !n the
IRece!'t for -art!a -ay)entJ that they R
IRB5B+EB; FR2M MR. G2;2FRB;2
56G&+6$ $,B 6M2&N$ 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?
;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 sae, consu))at!on of
wh!ch !s su"(ect ony to the fu 'ay)ent of the
'urchase 'r!ce.
I6 contract to se !s a*!n to a cond!t!ona
sae where the eff!cacy or o"!#atory force of the
%endorFs o"!#at!on to transfer t!te !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 woud
stand as !f the cond!t!ona o"!#at!on had ne%er
e4!sted. $he sus'ens!%e cond!t!on !s co))ony
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 sae. $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 ony 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!te of the ot.
I+t !s true that 6rt!ce 1472 'ro%!des that
whene%er earnest )oney !s #!%en !n a contract
of sae, !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!ce s'ea*s of earnest )oney
#!%en !n a contract of sae. +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 ony !f the sae !s consu))ated
u'on fu 'ay)ent of the 'urchase 'r!ce.
I5eary, 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!. Gia22eA C
Ceati"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
Sales Case Digests
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 Oberry
!inescan "#$$%&$ worth -6,500,000.00.
0 6 year !nto the !fe of the ?ease 6#ree)ent,
G+R6FFB defauted !n !ts )onthy renta0
'ay)ent o"!#at!ons. 6nd foow!n# a three0
)onth defaut, -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!ce 1474
of the 5!%! 5ode on !nsta)ent saes of
'ersona 'ro'erty, -5+ ?B63+NG !s "arred fro)
further 'ursu!n# any ca!) 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!ces 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 concuded 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).
$o the 'et!t!oner, R.6. No. 5/70 def!nes and
author!@es !ts e4!stence and "us!ness.
0the tr!a court #ranted G+R6FFBFs )ot!on to
d!s)!ss
0 )ot!on for recons!derat!on was den!ed, hence
th!s 'et!t!on for re%!ew.
I!!*e/
Ahether the a#ree)ent "etween -5+ ?eas!n#
and G+R6FFB !s #o%erned "y 6rt!ces 1474 and
1475 of the 5!%! 5odeD
He$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 !tsef, fore)ost of
wh!ch !s the decarat!ons )ade !n !ts de)and
etter to the res'ondent. $here coud "e no other
e4'anat!on than that !f the res'ondent 'a!d the
"aance, then !t coud *ee' the e1u!')ent for !ts
own: !f not, then !t shoud return the). $h!s !s
ceary an o't!on to 'urchase #!%en to the
res'ondent. 8e!n# so, 6rt!ce 1475 of the 5!%!
5ode shoud a''y.
0 $he 'resent case refects a s!tuat!on where the
f!nanc!n# co)'any can w!thhod 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 Iease a#ree)entJ does not
conta!n a I'urchase o't!onJ cause. $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 sae on
!nsta)ent as one of ease to 're%ent the
ownersh!' of the o"(ect of the sae fro) 'ass!n#
to the %endee unt! and uness the 'r!ce !s fuy
'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!ce,
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 "aanceJ 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 rentas on the sa!d
eased !te)s. -ara#ra'h =39, 6rt!ce 1474 !n
reat!on to 6rt!ce 1475 of the 5!%! 5ode, wh!ch
we are hereunder re0re'roduc!n#, cannot "e any
Sales Case Digests
2A SY 2009-2010
cearer.

6R$. 1474. +n a contract of sae of 'ersona
'ro'erty the 'r!ce of wh!ch !s 'aya"e !n
!nsta)ents, the %endor )ay e4erc!se any of the
foow!n# re)ed!es:

444 444 444

=39 Forecose the chatte )ort#a#e on the
th!n# sod, !f one has "een const!tuted, shoud
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 "aance of the 'r!ce. 6ny a#ree)ent
to the contrary sha "e %o!d.
6R$. 1475. $he 'reced!n# art!ce 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!cuated !n /lisco 0ool 'anu+acturing
!orp. 1. !ourt o+ Appeals, the re)ed!es
'ro%!ded for !n 6rt!ce 1474 of the 5!%! 5ode are
aternat!%e, not cu)uat!%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!ce 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!ce 1475 was fuf!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!%ey de'r!%ed res'ondent of
the!r use, a s!tuat!on wh!ch, "y force of the
.ecto La), !n turn 'recudes the for)er fro)
)a!nta!n!n# an act!on for reco%ery of Iaccrued
rentasJ or the reco%ery of the "aance 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 hod the 'et!t!oner to !ts word as
e)"od!ed !n !ts de)and etter. Bse, we woud
w!tness a s!tuat!on where e%en !f the
res'ondent surrendered the e1u!')ent
%ountar!y, the 'et!t!oner can st! sue u'on !ts
ca!). $h!s woud "e )ost unfa!r for the
res'ondent. Ae cannot aow the 'et!t!oner to
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 ca!) "oth the un'a!d "aance
and the e1u!')ent. +t !s not d!ff!cut to d!scern
why: !f we add u' the a)ounts 'a!d "y the
res'ondent, the res!dua %aue of the 'ro'erty
reco%ered, and the a)ount ca!)ed "y the
'et!t!oner as sued u'on here!n =for a tota of
-21,../,02/.4.9, then !t woud end u' )a*!n#
an !nstant *!!n# out of the transact!on at the
e4'ense of !ts c!ent, the res'ondent. $he .ecto
La) was 'rec!sey enacted to 're%ent th!s *!nd
of a"errat!on. Moreo%er, due to cons!derat!ons
of e1u!ty, 'u"!c 'o!cy and (ust!ce, we cannot
aow th!s to ha''en. Not ony to the res'ondent,
"ut those s!)!ary s!tuated who )ay fa 'rey to
a s!)!ar sche)e.
E$i!3o Too$ <an*2a3t*in+ Cop. V!. Co*t o2
Appea$! et. a$.
<a6 &%, %))) GR %-))DD
Se3ond Di"i!ion
#endo$a J.
Fa3t!/
0-r!%ate res'ondent Roando ?antan was
e)'oyed at the B!sco $oo Manufactur!n#
5or'orat!on as head of !ts cash de'art)ent. 2n
Sales Case Digests
2A SY 2009-2010
January /, 1/70, he entered !nto an a#ree)ent
w!th the co)'any wh!ch 'ro%!ded as foows:
0 that, B!sco $oo Manufactur!n# 5or' !s the
owner of a car wh!ch for and !n cons!derat!on of
a )onthy renta of - 1010.65 w! "e eased to
Roando ?antan for 5 years
0 $hat, Roando ?antan sha 'ay the ease thru
saary deduct!on fro) h!s )onthy 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 $hat, he sha for the durat!on of the ease
contract, shouder a e4'enses and costs of
re#!strat!on, !nsurance, re'a!r and )a!ntenance,
#aso!ne, o!, 'art re'ace)ent !ncus!%e of a
e4'enses necessary to )a!nta!n the %eh!ce !n
to' cond!t!on
0$hat, at the end of F+EB =59 year 'er!od or u'on
'ay)ent of the 60
th
)onthy renta, ?antan )ay
e4erc!se the o't!on to 'urchase the )otor
%eh!ce fro) B!sco and a )onthy rentas sha
"e a''!ed to the 'ay)ent of the fu 'urchase
'r!ce of the car and further, shoud ?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# "aance 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 defaut !n 'ay)ent $,RBB =39
accu)uated )onthy rentas, B!sco sha ha%e
the fu r!#ht to ease the %eh!ce to another
BM-?2KBB:
0$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!ce 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 schedue of 'ay)ent
0 6fter ta*!n# 'ossess!on of the car, ?antan
!nstaed accessor!es worth -15,000.00
0+n 1/71, B!sco $oo ceased o'erat!ons, as a
resut of wh!ch 'r!%ate res'ondent Roando
?antan was a!d off. Nonetheess, 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!ted Ire'e%!n 'us su) of )oney,J a#a!nst
'r!%ate res'ondent Roando ?antan, h!s w!fe
R!na, and two other 'ersons, !dent!f!ed ony as
John and 3usan ;oe, "efore the Re#!ona $r!a
5ourt of -as!#, Metro Man!a.
0-et!t!oner ae#ed that 'r!%ate res'ondents
fa!ed to 'ay the )onthy rentas that des'!te
de)ands, 'r!%ate res'ondents fa!ed to sette
the!r o"!#at!on there"y ent!t!n# 'et!t!oner to the
'ossess!on of the car: that 'et!t!oner was ready
to 'ost a "ond !n an a)ount dou"e the %aue of
the car, wh!ch was -60,000: and that !n case
'r!%ate res'ondents coud not return the car,
they shoud "e hed !a"e for the a)ount of
-60,000 'us the accrued )onthy rentas
thereof, w!th !nterest at the rate of 14U 'er
annu), unt! fuy 'a!d.
0 &'on the 'ost!n# of the "ond, the sher!ff too*
'ossess!on of the car and after 5 days turned !t
o%er to the 'et!t!oner
0 'r!%ate res'ondents ca!) that the!r a#ree)ent
was to "uy and se and not ease w!th o't!on to
"uy the car
0 !n !ts re'y, 'et!t!oner )a!nta!ned that the
contract was one of ease w!th o't!on to
'urchase and that the 'ro)!ssory note was
)erey a Ino)!na secur!tyJ for the a#ree)ent.
0 tr!a court rendered !ts dec!s!on !n fa%or of the
'r!%ate res'ondent
0 'et!t!oner a''eaed to 56, 'et!t!oner f!ed
)ot!on for e4ecut!on 'end!n# a''ea
0 56 aff!r)ed !n toto the dec!s!on of the tr!a
court, hence the 'et!t!on for re%!ew on cert!orar!
I!!*eE!/
Ahether the 5ourt of 6''eas erred
=a9 !n d!sre#ard!n# the ad)!ss!on !n the
'ead!n#s as to what docu)ents conta!n the
ter)s of the 'art!esF a#ree)ent.
="9 !n hod!n# that the !nterest st!'uat!on !n
res'ondentsF -ro)!ssory Note was not %a!d and
"!nd!n#.
=c9 !n hod!n# that res'ondents had fuy 'a!d
the!r o"!#at!ons.
He$d/
$he dec!s!on of the 5ourt of 6''eas !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 Roando ?antan ac1u!red the %eh!ce
!n 1uest!on under a car 'an for e4ecut!%es of the
B!@ade #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 )onthy deduct!ons fro) h!s saary.
$he co)'any reta!ns ownersh!' of the )otor
%eh!ce unt! !t sha ha%e "een fuy 'a!d for.
,owe%er, retent!on of re#!strat!on of the car !n
the co)'anyFs na)e !s ony a for) of a !en on
the %eh!ce !n the e%ent that the e)'oyee woud
a"scond "efore he has fuy 'a!d for !t. $here
are aso st!'uat!ons !n car 'an a#ree)ents to
Sales Case Digests
2A SY 2009-2010
the effect that shoud the e)'oy)ent of the
e)'oyee concerned "e ter)!nated "efore a
!nsta)ents are fuy 'a!d, the %eh!ce w! "e
ta*en "y the e)'oyer and a !nsta)ents 'a!d
sha "e cons!dered rentas '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 sae on !nsta)ent as one of ease
to 're%ent the ownersh!' of the o"(ect of the sae
fro) 'ass!n# to the %endee unt! and uness the
'r!ce !s fuy 'a!d. 6s th!s 5ourt noted !n 2da.
de Jose 1. 3arrueco4
3eers des!rous of )a*!n# cond!t!ona saes of
the!r #oods, "ut who do not w!sh o'eny to )a*e
a "ar#a!n !n that for), for one reason or another,
ha%e fre1uenty 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
so0caed rent has "een duy 'a!d, or w!th
st!'uat!ons that !f the rent throu#hout the ter) !s
'a!d, t!te sha thereu'on %est !n the essee. +t !s
o"%!ous that such transact!ons are eases ony !n
na)e. $he so0caed 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
resuts, "y the ter)s of the "ar#a!n, !n the
transfer of t!te to the essee.
Second. $he contract "e!n# one of sae on
!nsta)ent, the 5ourt of 6''eas correcty
a''!ed to !t the foow!n# 'ro%!s!ons of the 5!%!
5ode:
$he re)ed!es 'ro%!ded for !n 6rt. 1474 are
aternat!%e, not cu)uat!%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 fuf!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!ce 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''eas 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
the de!%ery to !t of the )otor %eh!ce Ico)'ete
w!th accessor!es and e1u!')ent.J +n the e%ent
the car coud not "e de!%ered to 'et!t!oner, !t
was 'rayed that 'r!%ate res'ondent Roando
?antan "e )ade to 'ay 'et!t!oner the a)ount of
-60,000.00, the Iest!)ated actua %aueJ of the
car, I'us accrued )onthy rentas thereof w!th
!nterests at the rate of fourteen 'ercent =14U9
'er annu) unt! fuy 'a!d.J $h!s 'rayer of
course cannot "e #ranted, e%en assu)!n# that
'r!%ate res'ondents ha%e defauted !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''eas
correcty rued that 'r!%ate res'ondents coud no
on#er "e hed !a"e for the a)ounts of
-3/,054.76 or -60,000.00 "ecause 'r!%ate
res'ondents had fuf!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 )onthy
IrentasJ 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 correcty noted,
the car 'an was !ntended to #!%e add!t!ona
"enef!ts to e4ecut!%es of the B!@ade #rou' of
co)'an!es.
0hird. -r!%ate res'ondents 'resented e%!dence
that they Ifet "ad, were worr!ed, e)"arrassed
and )entay 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, frauduent, 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)'eed 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. %%,'&& O3to5e ,(, %))'
,@% SCRA ,-D
#onente/ RO<ERO, J. (THIRD DIVISION)
Sales Case Digests
2A SY 2009-2010
Fa3t!/
-r!%ate res'ondent Mar0!c* +n%est)ent
5or'orat!on !s the e4cus!%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!'uate 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 "aance of -6,753.20
sha "e 'aya"e !n 120 e1ua )onthy
!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 )onthy !nsta)ents of -60.20. 6fter
the a'se of ten years, 'et!t!oner st! had not
fuy 'a!d for the s!4 ots. +t had 'a!d ony 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!'uates that the 're%!ous contracts
ha%e "een canceed due to the fa!ure of the
'urchaser to 'ay the st!'uated !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!'oo, 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*hoder 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 rentas for the use of the ots. +n
the aternat!%e, the co)'a!nt 'rayed that shoud
the a#ree)ents "e dee)ed not auto)at!cay
canceed, the sa)e a#ree)ents shoud "e
decared 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!dy canceed. $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 coud not a)ount to 'erfect!on of
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
shoud "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 ceary 'ro%en
was that "oth 'art!es ne#ot!ated a new contract
after the ter)!nat!on of the f!rst. $hus, the fact
that the 'art!es tr!ed to ne#ot!ate a new contract
!nd!cated that they cons!dered the f!rst contract
as aready canceed.
-et!t!oner ee%ated the case to the 5ourt
of 6''eas wh!ch aff!r)ed !n toto the ower
court>s dec!s!on.
I!!*e/
Ahether or not there was a 'erfected
and enforcea"e contract of sae on 2cto"er 11,
1/73 wh!ch )od!f!ed the ear!er contracts to se
wh!ch had not "een %a!dy resc!nded.
R*$in+/
$he contracts to se of 1/61 were
canceed to wh!ch the 'art!es %ountar!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!cay too* effect
wh!ch states that Ishoud the 'urchaser fa! to
)a*e the 'ay)ent of any of the )onthy
!nsta)ents as a#reed here!n, th!s contract
sha, "y the )ere fact of non'ay)ent, e4'!re "y
!tsef and "eco)e nu and %o!d.J
$he 1/61 a#ree)ents are contracts to
se and not contracts of sae. $he d!st!nct!on
"etween these contracts !s de'!cted !n 6defa
-ro'ert!es, +nc. %. 5ourt of 6''eas wh!ch states
that Ithe d!st!nct!on "etween the two !s !)'ortant
for !n a contract of sae, the t!te 'asses to the
%endee u'on the de!%ery of the th!n# sod:
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 sae, the %endor has ost and cannot
reco%er ownersh!' unt! and uness the contract
!s reso%ed or resc!nded: whereas, !n a contract
to se, t!te !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!te fro)
"eco)!n# effect!%e. $hus, a deed of sae !s
cons!dered a"soute !n nature where there !s
ne!ther a st!'uat!on !n the deed that t!te to the
Sales Case Digests
2A SY 2009-2010
'ro'erty sod !s reser%ed !n the seer unt! the
fu 'ay)ent of the 'r!ce, nor one #!%!n# the
%endor the r!#ht to un!ateray 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!ce
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 ae#es that there was a new
'erfected and enforcea"e contract of sae
"etween the 'art!es !n 2cto"er 1/73. -r!%ate
res'ondent>s co)'any awyer %ounteered that
after the canceat!on of the 1/61 a#ree)ents,
the 'art!es shoud 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 !deay "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 ony for 6 ots.
$he nu)"er of ots to "e sod !s a )ater!a
co)'onent of the contract to se. A!thout an
a#ree)ent on the )atter, the 'art!es )ay not !n
any way "e cons!dered as ha%!n# arr!%ed at a
contract under the aw. Moreo%er, !nsta)ents
'a!d "y the 'et!t!oner on the and shoud "e
dee)ed rentas. 6rt!ce 1476 of the 5!%! 5ode
'ro%!des that a st!'uat!on that the !nsta)ents
or rents 'a!d sha not "e returned to the %endee
or essee sha "e %a!d !nsofar as the sa)e )ay
not "e unconsc!ona"e under the c!rcu)stances.
A,BRBF2RB, the !nstant 'et!t!on for
re%!ew on cert!orar! !s here"y den!ed and the
1uest!oned ;ec!s!on of the 5ourt of 6''eas !s
6FF+RMB;.
REGALADO DARO?, 3o0p$ainant, vs. ATT?.
ESTE.AN A.ECIA, e!pondent.
A.C. No. &-(D O3to5e ,D, %))@
#onente/ <ENDOZA, J. (SECOND DIVISION)
Sales Case Digests
2A SY 2009-2010
Fa3t!/
$h!s refers to the co)'a!nt for
)a'ract!ce f!ed "y Re#aado ;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 sod at 'u"!c auct!on a 'arce of and
"eon#!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 ca!)ed that
res'ondent 6"ec!a for#ed h!s s!#nature !n a
deed of a"soute sae transferr!n# the 'arce of
and to Jose Gan#ay and that !n a f!ct!t!ous deed
of a"soute sae !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
ae#ed that he entrusted the t!te to the and to
6"ec!a as h!s counse and aowed h!) to ta*e
'ossess!on of the and u'on the atterFs re1uest.
8y )eans of the for#ed deed of sae, 6"ec!a
was a"e to o"ta!n new transfer cert!f!cates of
t!te, 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 ca!)ed he d!sco%ered
the fraud ony !n 1/74.
2n Juy 15, 1//3,
5o))!ss!oner -ar!de Jose rued that
res'ondent 6"ec!a !s #u!ty of )a'ract!ce and
reco))ended h!s d!s"ar)ent. $he +nte#rated
8ar of the -h!!''!nes a''ro%ed the re'ort "ut
reduced the 'enaty to !ndef!n!te sus'ens!on.
Res'ondent 6"ec!a f!ed a Mot!on for
Recons!derat!on andCor 6''ea.
I!!*e!/
Ahether or not the 5o))!ss!on on 8ar
;!sc!'!ne erred when !t hed that co)'a!nant
had no *nowed#e of the e4ecut!on of the ;eed
of 6"soute 3ae.
Ahether or not res'ondent 6tty.
Bste"an 6"ec!a !s 'roh!"!ted fro) ac1u!r!n# the
'arce of and.
R*$in+/
Res'ondentFs )ot!on !s we ta*en.
6s aready stated, the and !n 1uest!on
was 'urchased "y co)'a!nant at the sher!ffFs
sae. ;e'uty 3her!ff stated that when he f!nay
transferred the and to the "uyer, he 'aced !n
'ossess!on of the and not ony the "uyer,
Re#aado ;aroy, "ut aso the atterFs ass!#nee,
Nena 6"ec!a, !n whose na)e the t!te to the and
had !n fact "een transferred. +t woud a''ear,
therefore, that ;aroy aready *new that t!te to
the and had aready "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 sae hed !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 coud not ac1u!re the and. $he 'art!es
a''arenty had !n )!nd 6rt. 14/1 of the 5!%!
5ode wh!ch 'ro%!des:
6R$. 14/1. $he foow!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, cer*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
!ncudes 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 %. 5aaan#, we hed that the
'roh!"!t!on !n 6rt. 14/1 does not a''y to the
sae 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 ony 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 resout!on of the +8-
8oard of Go%ernors !s RB52N3+;BRB; and
the co)'a!nt a#a!nst res'ondent Bste"an
6"ec!a !s ;+3M+33B;.
Sales Case Digests
2A SY 2009-2010

In Re/ S*!pen!ion 2o0 t1e #a3ti3e o2 La4
in t1e teito6 o2 G*a0 o2 Att6. Leon G.
<a7*ea,
(&: SCRA (%', J*$6 &-, ,--(.
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
2A SY 2009-2010
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 sod !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 sae 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
sod !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
concuded that thereFs no e%!dence to esta"!sh
that he aso 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!ce 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 handed "y the awyer.
&nder 6rt!ce 14/2, the 'roh!"!t!on
e4tends to saes !n e#a rede)'t!on.
Ma1ueraFs acts !n Gua) wh!ch resuted
!n h!s two0year sus'ens!on fro) the 'ract!ce of
aw !n that (ur!sd!ct!on are aso %a!d #rounds for
h!s sus'ens!on fro) the 'ract!ce of aw !n the
-h!!''!nes. 3uch acts are %!oat!%e of awyerFs
sworn duty to act w!th f!de!ty toward h!s c!ents.
+t !s aso %!oat!%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

C1*a ". Co*t o2 Appea$! and Va$de!AC1o6,
(-% SCRA :(, Api$ ), ,--&
Capio, G.R. No. %%),::
FACTS/
Bncarnac!on Eades05hoy ad%ert!sed for
sae 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.
Sales Case Digests
2A SY 2009-2010
5hua #a%e -100,000.00 to Eades05hoy
as an earnest )oney and another -475,000.00
for the 'ay)ent of ca'!ta #a!ns ta4 s!nce
Eades05hoy was not a"e to 'ay the sa!d ta4.
,owe%er, 5hua d!d not 'ay the
re)a!n!n# "aance 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, Eades0
5hoy wanted that the re)a!n!n# 'urchase
"aance "e de'os!ted !n her account "efore she
coud transfer the t!te 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
hed !n fa%or of 5hua. ,owe%er, the 5ourt of
6''eas re%ersed the sa!d dec!s!on.
ISSUE/ Ahether there !s a 'erfected contract of
sae of !))o%a"e 'ro'erty.
RULING/ -et!t!on !s d!s)!ssed. $here !s no
'erfected contract of sae.
$he a#ree)ent that the 'art!es entered
!nto !s a contract to se and not a contract of
sae.
+n a contract of sae, the t!te of the
'ro'erty 'asses to the %endee u'on the de!%ery
of the th!n# sod and the %endor oses ownersh!'
o%er the 'ro'erty and cannot reco%er !t unt! and
uness 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!te !s reta!ned "y the %endor unt! fu
'ay)ent of the 'r!ce. 6so !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!te 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 Eades05hoy 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, epe!ented 56 RA<ON J.
HI.IONADA, popieto, e!pondent!.
G.R. No. @&@:% <a31 &, %))&
DAVIDE, JR.
Fa3t!/
Ra)on J. ,!"!onada and E!sayan 3aw)!
5o)'any =E+36K6N 36AM+??9 entered !nto a
sae !n%o%!n# scra' !ron su"(ect to the cond!t!on
that 'a!nt!ff0a''eee w! o'en a etter of cred!t
Sales Case Digests
2A SY 2009-2010
!n the a)ount of -250,000.00 !n fa%or of
defendant0a''eant 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+?? ae#edy d!rected ,!"!onadaVs )en to
des!st fro) 'ursu!n# the wor* !n %!ew of an
ae#ed case f!ed a#a!nst ,!"!onada "y a certa!n
6"erto -ursueo. $h!s, howe%er, !s den!ed "y
E+36K6N 36AM+?? who ae#e that on May 23,
1/73, they sent a tee#ra) to ,!"!onada
cance!n# the contract of sae "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 +sands dated May
26, 1/73.
,!"!onada sent a ser!es of tee#ra)s stat!n# that
the case f!ed a#a!nst h!) "y -ursueo had "een
d!s)!ssed and de)and!n# that E+36K6N
36AM+?? co)'y w!th the deed of sae,
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 sae 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 "eow 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 5ounterca!),

E+36K6N
36AM+?? !ns!sted that the canceat!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 saeD
+s the o"(ect of sae 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
not a contract o+ sale.
$he seer "ound and 'ro)!sed !tsef to se the
scra' !ron u'on the fuf!)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!%ocay 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 ony 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 sae where the
"uyer ac1u!red ownersh!' o%er the 'ro'erty
su"(ect to the resoutory cond!t!on that the
'urchase 'r!ce woud "e 'a!d after de!%ery.
$hus, there was to "e no actua sae 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!te fro) ac1u!r!n# "!nd!n# force.
5onse1uenty, the o"!#at!on of the 'et!t!oner
cor'orat!on to se d!d not ar!se: !t therefore
cannot "e co)'eed "y s'ec!f!c 'erfor)ance to
co)'y w!th !ts 'restat!on. +n short, 6rt!ce 11/1
of the 5!%! 5ode does not a''y: on the
contrary, 'ursuant to 6rt!ce 15/. of the 5!%!
5ode, the 'et!t!oner cor'orat!on )ay totay
resc!nd.
$he tr!a court rued, 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 hed "y the
'u"!c res'ondent, c!t!n# 6rt!ce 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!ce 14/1 fas under the 5ha'ter
Sales Case Digests
2A SY 2009-2010
%:
Obligations o+ the 2endor, wh!ch !s found !n
$!te E+ =3aes9, 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 sae
woud )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!rdy, the con%ers!on of
the !n!t!a contract or 'ro)!se to se !nto a
contract of sae "y the 'et!t!oner cor'orat!on>s
ae#ed !)'!ed de!%ery of the scra' !ron
"ecause !ts act!on and conduct !n the 're)!ses
do not su''ort th!s concus!on. +ndeed,
'et!t!oners de)anded the fuf!)ent of the
sus'ens!%e cond!t!on and e%entuay canceed
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&%%@) <a31 &%, %)@'
#ARAS, J.
Fa3t!/
Nor)a ?euen"er#er !nher!ted the whoe of ?ot
No. 140 fro) her #rand)other, 3!)eona J. Eda.
Sales Case Digests
2A SY 2009-2010
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. ).
reocated "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!as fro) cut!%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 rentas and re1uest!n# de!%ery
of the area ae#edy !e#ay 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 sae "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, ae#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. $he
ower court dec!ded !n fa%or of the Mun!c!'a!ty.
2n a''ea Res'ondent a''eate 5ourt set
as!de the dec!s!on of the ower court hence, th!s
'et!t!on for re%!ew on cert!orar!.
He$d/
+t !s e4'ressy 'ro%!ded "y aw that the th!n# sod
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!te sha not 'ass unt! 'ay)ent of the
'r!ce, and the th!n# #od has "een de!%ered, t!te
'asses fro) the )o)ent the th!n# sod !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 sae !s )ade throu#h a 'u"!c
!nstru)ent, the e4ecut!on thereof sha "e
e1u!%aent 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 ceary
!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 sod and author!@es the "uyer to use
the docu)ent as 'roof of ownersh!'.
Res'ondent Nor)a ?euen"er#er ad)!tted that
she !nher!ted the and co%ered "y $ransfer
5ert!f!cate of $!te No. $034036 fro) her
#rand)other, who had aready sod the and to
the 'et!t!oner !n 1/34: hence, she )erey
ste''ed !nto the shoes of her #rand)other and
she cannot ca!) a "etter r!#ht than her
'redecessor0!n0!nterest.
S#OUSES CA<ILO L. SA.IO, and <A.
<ARLENE A. LEDONIOASA.IO, petitione!,
"!. THE INTERNATIONAL COR#ORATE
.ANB, INC. (no4 UNION .ANB OF THE
#HILI##INES), GOLDENROD, INC., #AL
E<#LO?EES SAVINGS AND LOAN
ASSOCIATION, INC., A?ALA COR#ORATION,
LAS #INAS VENTURES, INC., FILI#INAS LIFE
ASSURANCE CO<#AN?(no4 A?ALA LIFE
ASSURANCE, INC.), A?ALA #RO#ERT?
VENTURES COR#ORATION, and A?ALA
LAND, INC., e!pondent!.
G.R. No. 132.0/. 3e'te)"er 4, 2001.
Sales Case Digests
2A SY 2009-2010
KN6RB3036N$+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. Marene 3a"!o
=here!n 'et!t!oners9 a the!r r!#hts, !nterests, t!te
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!)!ary, 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%eo')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* setted the!r o''os!n# ca!)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 ca!)!n#
that res'ondent +nter"an* was o"!#ated to
co)'ete and 'erfect !ts ownersh!' and t!te to
the 'arces of and so that +nter"an* coud
transfer to 'et!t!oners the a"soute ownersh!'
and t!te o%er the cont!#uous 'ort!on.
+ssue:
Ahether or not res'ondents fa!ed to
Ico)'ete and 'erfect ownersh!' and t!teJ 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!'.
,ed:
&nder 6rt!ce 14/7 of the 5!%! 5ode,
Iwhen the sae !s )ade throu#h a 'u"!c
!nstru)ent, the e4ecut!on thereof sha "e
e1u!%aent 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
aso transferred, aon# 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 totay w!thout )er!t.
$he )ere e4ecut!on of the deed of con%eyance
!n a 'u"!c docu)ent !s e1u!%aent to the de!%ery
of the 'ro'erty. 3!nce the e4ecut!on of the deed
of con%eyance !s dee)ed e1u!%aent to de!%ery,
'r!or 'hys!ca de!%ery or 'ossess!on !s not
e#ay re1u!red. $he deed o'erates as a for)a
or sy)"o!c de!%ery of the 'ro'erty sod and
author!@es the "uyer or transferee to use the
docu)ent as 'roof of ownersh!'. Noth!n# )ore
!s re1u!red.
LEO#OLDO C. LEONARDO, epe!ented 56
1i! da*+1te E<ERCIANA LEONARDO,
petitione, "!. VIRGINIA TORRES
<ARAVILLA and LEONOR C. NADAL, a!
Ad0ini!tati3e! o2 t1e E!tate o2 <ARIANO
TORRES, a! !*5!tit*ted 56 FE NADAL,
e!pondent!.
G.R. No. 14336/. No%e)"er 2., 2002.
KN6RB3036N$+6G2, J.:
Facts:
$he !nstant contro%ersy ste))ed fro) a
d!s'ute o%er a ot ocated !n -asay 5!ty and
Sales Case Digests
2A SY 2009-2010
re#!stered !n the na)e of Mar!ano $orres y
5ha%arr!a, the 'redecessor0!n0!nterest of
res'ondents. -et!t!oner ca!)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 $!te,
Rentas 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
ony !n 1//3 when they ca)e to *now of the
ae#ed ca!) 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''eas
!*ew!se rued that s!nce 'et!t!onerFs cause of
act!on !s founded on the the deed of sae dated
3e'te)"er 2/, 1/.2, "e!n# an act!on "ased on
wr!tten contracts, 'et!t!onerFs co)'a!nt fas
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 ony 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 ceary "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
,ed:
$he act!on "y 'et!t!oner !s aready
"arred "y 'rescr!'t!on and aches.
-et!t!onerFs content!on !s w!thout )er!t,
for 'et!t!onerFs act!on !s actuay an act!on for
s'ec!f!c 'erfor)ance, !.e., to enforce the deed of
a"soute sae ae#edy 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!'uat!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 sae !s )ade throu#h a 'u"!c
!nstru)ent, e4ecut!on thereof sha "e e1u!%aent
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 ceary !nferred. $hus,
the e4ecut!on of the contract !s ony a
'resu)'t!%e, not concus!%e de!%ery wh!ch can
"e re"utted "y e%!dence to the contrary, as
when there !s fa!ure on the 'art of the %endee to
ta*e )ater!a 'ossess!on of the and su"(ect of
the sae !n the conce't of a 'urchaser0owner.
+n the case at "ar, !t !s not d!s'uted that
the ot !n 1uest!on was ne%er de!%ered to
'et!t!oner notw!thstand!n# the ae#ed e4ecut!on
of a deed of a"soute sae. -et!t!oner ne!ther
had, nor de)anded, )ater!a 'ossess!on of the
d!s'uted ot. +t was the res'ondents who ha%e
"een !n contro and 'ossess!on thereof !n the
conce't of owners s!nce 1/73 u' to the 'resent.
+t foows that ownersh!' of the ot was ne%er
transferred to 'et!t!oner. ,ence, he cannot ca!)
that the !nstant case !s an act!on to reco%er
ownersh!' and fu 'ossess!on of the 'ro'erty
wh!ch, !n the f!rst 'ace, ne%er ca)e !nto h!s
'ossess!on for ac* of re1u!s!te de!%ery. 5eary,
the case f!ed "y 'et!t!oner was an act!on for
s'ec!f!c 'erfor)ance of a wr!tten contract of sae
wh!ch, 'ursuant to 6rt. 1144 of the 5!%! 5ode,
'rescr!"es !n 10 years fro) the accrua of the
r!#ht of act!on. +n the sa)e %e!n, sa!d act!on !s
"arred "y aches ha%!n# aowed 21 years to
a'se "efore enforc!n# h!s ae#ed r!#ht.
Sales Case Digests
2A SY 2009-2010
#e2e3to D6 , J. "!. Co*t o2 Appea$!
Juy 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
2A SY 2009-2010
tractor fro) h!s "rother, therefore he wrote a
etter to ?!"ra re1uest!n# that he "e aowed 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"soute
sae !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 setted. ?!"ra !ns!sted, howe%er that
!t "e ceared f!rst "efore ?!"ra coud reease the
tractor !n 1uest!on.
Meanwh!e a c!%! case ent!ted VJGeac $rad!n#,
+nc %. A!fredo ;y was 'end!n# !n another court
!n 5e"u re#ard!n# a coect!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"se1uenty sod at
'u"!c auct!on. $he 'ro'erty was sod to 6nton!o
Gon@aes. +t was ony when the chec* was
ceared that -erfecto earned a"out Geac
ha%!n# aready 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 IGeac $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# Geac
$rad!n# 5or'orat!on and 6nton!o Gon@aes to
return the sa)e to -erfecto.
2n a''ea, the 5ourt of 6''eas re%ersed the
dec!s!on of the R$5 and d!s)!ssed the
co)'a!nt. +t hed that the tractor !n 1uest!on st!
"eon#ed to A!fredo ;y when !t was se!@ed and
e%!ed "y the sher!ff "y %!rtue of the a!as wr!t of
e4ecut!on.
I!!*e/
Ahether or not the 'ro'erty=tractor9 !n 1uest!on
"eon#s to the )ort#a#or u'on the e4ecut!on of
the chatte )ort#a#e.
R*$in+/
-et!t!on #ranted. $he dec!s!on of the 5ourt of
6''eas was set as!de. $he dec!s!on of the tr!a
court was re!nstated.
Ratio/ =;y, Jr. %s. 5ourt of 6''eas9
$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
r!#ht to se !t athou#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 sae woud st! not
"e affected.
6rt!ce 14/6 of the c!%! code states that the
ownersh!' of the th!n# sod !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!ces 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.
$he sae of the o"(ect tractor was consu))ated
u'on the e4ecut!on of the 'u"!c !nstru)ent. 6t
th!s t!)e construct!%e de!%ery was aready
effected. ,ence, the su"(ect tractor was no
on#er owned "y A!fredo ;y when !t was e%!ed
u'on "y the sher!ff=;y, Jr. %s. 5ourt of 6''eas9.
Ind*!tia$ Te=ti$e <an*2a3t*in+ Co0pan6 o2
t1e #1i$ippine!, In3. ". L#J Entepi!e!, In3.
January 21, 1//3
$h!rd ;!%!s!on
Just!ce Meo
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 6tas 5onso!dated M!n!n# ;e%eo')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
Sales Case Digests
2A SY 2009-2010
?auro -an#an!"an, Jr., 'res!dent of res'ondent
cor'orat!on, !f he woud !*e to coo'erate !n an
e4'er!)ent to de%eo' 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
hoes 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. 6thou#h the wea%!n#
of the 'ast!c "a#s was aready t!#htened,
ce)ent dust st! s'!ed throu#h the #a's.
-et!toner de!%ered the orders consecut!%ey "ut
the res'ondent ony re)!tted a 'art of the tota
a)ount ea%!n# a "aance 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, ony the
'ast!c "a#s actuay 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.
$he res'ondent cor'orat!onFs a''ea was
u'hed "y the a''eate court when !t re%ersed
the tr!a courtFs dec!s!on and d!s)!ssed the case
w!th costs a#a!nst 'et!t!oner.
I!!*e/
Ahether or not res'ondent )ay "e hed !a"e
for the 'ast!c "a#s wh!ch were not actuay
used for 'ac*a#!n# ce)ent as or!#!nay
!ntended.
R*$in+/
$he dec!s!on a''eaed fro) !s 3B$ 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) 3aes 6ct and the
&n!for) 5o))erc!a 5ode fro) wh!ch 6rt!ce
1502 was ta*en, ceary re1u!res an e4'ress
wr!tten a#ree)ent to )a*e a saes contract
e!ther a Isae of returnJ or a Isae on a''ro%aJ.
-aro or e4tr!ns!c test!)ony coud not "e
ad)!tted for the 'ur'ose of show!n# that an
!n%o!ce or "! of sae that was co)'ete !n e%ery
as'ect and 'ur'ort!n# to e)"ody a sae w!thout
cond!t!on or restr!ct!on const!tuted a contract of
sae or return. +f the 'urchase des!red to
!ncor'orate a st!'uat!on secur!n# to h!) the r!#ht
of return , he shoud 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 fas outs!de the nor)a
!ntent of the 'art!es !n the Ion a''ro%aJ
s!tuat!on.
$herefore, we hod that the transact!on "etween
the res'ondent and 'et!t!oner const!tuted an
a"soute sae. 6ccord!n#y, res'ondent !s !a"e
for the 'ast!c "a#s de!%ered to !t "y
'et!t!oner=+ndustr!a $e4t!e Manufactur!n#
5o)'any of the -h!s. %. ?-J Bnter'r!ses, +nc,
'' 326032.9.
Aeo!pa3e C1e0i3a$ Ind*!tie!, In3 "!. Co*t
o2 Appea$, #1i$ippine #1o!p1ate Feti$i>e
Copoation.
G.R. No. 10712/. 3e'te)"er 23, 1///.
56IS6'3I7G, J.4
FACTS/ -et!t!oner 6eros'ace +ndustr!es
'urchased f!%e hundred =5009 )etr!c tons of
sufur!c ac!d fro) 'r!%ate res'ondent -h!!''!ne
-hos'hate Fert!!@er 5or'orat!on =-h!'hos9.$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
Sales Case Digests
2A SY 2009-2010
'!c*0u' the 'urchases fro) 'r!%ate res'ondents
oad 'orts. -er a#ree)ent, 100 )etr!c tons of
sufur!c ac!d shoud "e ta*en fro) 8asay Ne#ros
2r!enta stora#e tan*, wh!e the re)a!n!n# 400
)etr!c tons shoud "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 sufur!c ac!d 'urchased at 8asay "ecause
'r!%ate res'ondent has "een !ncurr!n#
!ncre)enta e4'enses of 2,000 for each deay !n
sh!')ent.2n 2cto"er 3, 1/76, 'et!t!oner 'a!d
-h' 553,270 for 500 )etr!c tons of sufur!c ac!d.
-et!t!oner charted the MC$ 3utan Layu)an##! to
carry out the a#reed %ou)es of fre!#ht for)
des!#nated oad!n# areas. $he chartered %esse
ony w!thdrew .0 )etr!c tons of sufur!c ac!d fro)
8asay "ecause sa!d %esse hea%!y t!ted on !ts
'ort s!de. 8ecause of th!s, the %esse underwent
re'a!rs.
-r!%ate res'ondents as*ed 'et!t!oners to retr!e%e
the re)a!n!n# su'hur !n 8asay tan*s so that
sa!d tan*s are e)'t!ed "efore ;ece)"er 15,
1/76.-r!%ate res'ondent sa!d that !f 'et!t!oner
w! not co)'y 'et!t!oner w! "e char#e stora#e
and conse1uent!a costs. -et!t!oner chartered
another %esse after se%era de)and of the
'r!%ate res'ondent. ,ernande@, act!n# for the
'et!t!oner, addressed a etter to 'r!%ate
res'ondent, co))enc!n# add!t!ona orders to
re'ace !ts sun*en 'urchases. -et!t!oner
5ounse, 6tty 3antos, sent a de)and etter to
'r!%ate res'ondent for the de!%ery of the 2.2.4/
M$ of sufur!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
sufur!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# sufur!c ac!ds and
other counter de)ands aso 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 rued !n fa%or of the 'et!t!oner. &'on
a''ea, 5ourt of 6''eas 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''eas erred !n hod!n# that the 'et!t!oner
co))!tted "reach of contract due to the deay !n
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 rued !n susta!n!n# the
dec!s!on of the 5ourt of 6''eas f!nd!n# !n fa%or
of 'r!%ate res'ondent. 35 hed that 'et!t!oner
%!oated the su"(ect contract of sae su''orted
"y 're'onderant e%!dence. $he content!on that
'et!t!onerFs deay was caused "y a stor) or
force )a(eure !s untena"e. $he re'ort re%eaed
that the %esse chartered "y 'et!t!oner !s
unsta"e and !nca'a"e of carry!n# fu oad.
;es'!te of se%era re'a!rs of the %esse, the
%esse st! fa!ed to carry the whoe )etr!c tons
of sufur!c ac!d. +ts unfortunate s!n*!n# was not
due to force )a(eure. ,ence, the 'ro4!)ate
cause of the deay of the 'et!t!oner cannot "e
attr!"uted due to force )a(eure "ut "ecause of
the chartered %esse contracted "y 'et!t!oner to
carry out the sufur!c ac!d. ;es'!te de)ands to
!))ed!ate re'ace MC$ 3utan Layu)an##!,
'et!t!oner d!d not co)'y.
Moreo%er, "ecause of 'et!t!oner deay !n
co)'y!n# w!th !ts o"!#at!on to re'ace
!))ed!atey 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 deay. 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$0o;ea "!.
Co*t o2 Appea$!, Ana3$eto Noo$ and E0i$ia
Ne5e.
G.R. No.%%DD&:. J*$6 ,(, %))'
8A7GA7I3A7, J.4
FACTS/ $wo 'arces of and are the su"(ect of
d!s'ute !n th!s case. $he f!rst area was for)ery
owned "y E!ctor!no Noo and the other 'arce of
and 're%!ousy owned "y Franc!sco Noo. 8oth
'arces of and ocated !n 3an Manue, +sa"ea.
-et!t!oner s'ouses 5onch!ta and Gaudenc!o
see* reco%ery of the 'arce of and fro)
Sales Case Digests
2A SY 2009-2010
defendant, 6naceto 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
'arces of and. $he t!te of the ands then was
st! !n the na)es of the 're%!ous owners. 3!nce
the 'et!t!oners defauted !n 'ay!n# the oan the
)ort#a#ed ands were forecosed. $he
ownersh!' of the ands was con%eyed w!th ;8-
for "e!n# the h!#hest "!dder !n the auct!on sae.
6s re1uested "y 5onch!ta, 6naceto, "rother of
5onch!ta redee)ed the forecosed 'ro'erty w!th
;8-: as a resut, the t!tes of two 'arces of were
transferred to 6naceto. $hat as 'art of the!r
a#ree)ent =5onch!ta and 6naceto9, 6naceto
a#reed to "uy fro) the 'et!t!oners the 'arces 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 'arces 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 'arces 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 rued !n fa%or of the res'ondents.
5ourt of 6''eas 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 sae and 'er!od of
rede)'t!on of the 'arces 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 rued aff!r)!n# the
dec!s!on of the 5ourt of 6''eas and the ?ower
5ourt. $he 35 hed that the seers ='et!t!oners9
no on#er had any t!te to the 'arces of and at
the t!)e of sae. 6nd s!nce de!%ery !s not
'oss!"e !n th!s case w!thout transferr!n#
ownersh!' of such 'arces of and, the contract
of sae "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
sae of the 'arces of and, such r!#ht to redee)
!s aso %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 6naceto
redee)ed the 'ro'erty after the 'er!od of
rede)'t!on #!%en to the 'et!t!oners. $hus, the
ownersh!' of the 'arces of and was transferred
aready 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 'arces of
and. 6rt!ce 1410 of the 5!%! 5ode 'ro%!des that
the act!on or defense for the decarat!on of the
!ne4!stence of a contract does not 'rescr!"e.
$hus, res'ondent 6naceto can !)'u#n the
nu!ty of the a#ree)ent at anyt!)e.
Se0ia "!. Co*t o2 Appea$!
March 2, 1//4 G.R. No. .6031
F!rst ;!%!s!on
8eos!o, J.
Facts:
Juana Gu!t!erre@ sod a 'arce of and, ot 4221,
Sales Case Digests
2A SY 2009-2010
to 8uena%entura 6n "y a deed of sae. $h are
stated !n the deed was an est!)ated area of
722.5 s1uare )eters and the "oundar!es of the
ot. 3u"se1uenty, 8uena%entura 6n sod the
sa!d ot to h!s ne'hew who !n turn sod the ot to
'et!t!oner w!th the %ery sa)e "oundar!es
)ent!oned !n the deed of sae e4ecuted !n h!s
fa%or "y h!s unce 8uena%entura 6n.
-et!t!oner ca!)s that he owns the ent!re 2,200
s1uare )eters s!nce !t !s the s!@e of ?ot 4221
foow!n# !ts esta"!shed "oundar!es. 2n the
other hand, 'r!%ate res'ondent !ns!sts that he
ony sod 722.5 s1uare )eters, hence, h!s
ne'hew coud not ha%e transferred a "!##er area
to 'et!t!oner.
+ssue: +s the sae of ?ot 4221 !ncudes the whoe
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 sod 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 sae, not
the area thereof. $he %endors are o"!#ated to
de!%er a the and !ncuded w!th!n the
"oundar!es, re#ardess of whether the rea area
shoud "e #reater or s)aer than that rec!ted !n
the deed. $h!s !s 'art!cuary true where the area
!s descr!"ed as <hu)!#!t *u)uan#,< that !s, )ore
or ess. $h!s !s 'art!cuary true where the area !s
descr!"ed as <hu)!#!t *u)uan#,< that !s, )ore
or ess.
A5i+o "!. De Vea
June 21, 2004 G.R. No.
15440/F!rst ;!%!s!on
-an#an!"an ,J.
Facts:
Gor!a E!afan!a sod a house and ot to
Rosenda $!#no03aa@ar and Ros!ta 5a%e0Go
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. Gor!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, Gor!a has a crt!f!cate t!te
of the ot. 4 years after the 1
st
sae, Gor!a a#a!n
sod 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 sae 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!nay, the "uyer
who !n #ood fa!th 'resents the odest t!te.
3ect!on 51 of -; 152/ 'ro%!des that no deed,
)ort#a#e, ease or other %ountary !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.
Lnowed#e #a!ned "y the f!rst "uyer of the
second sae cannot defeat the f!rst "uyerFs r!#hts
e4ce't where the second "uyer re#!sters !n #ood
fa!th the second sae 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!te.O36P
Foow!n# th!s 'r!nc!'e, th!s 5ourt has
cons!stenty hed as re#ards re#!stered and that
a 'urchaser !n #ood fa!th ac1u!res a #ood t!te 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 sae.
S#OUSES TO<AS OCCEHA and SILVINA
OCCEHA "!. L?DIA <ORALES O.SIANA
ES#ONILLA
J*ne (, ,--( G.R. No. %:D)'&
Se3ond Di"i!ion
#UNO, J.
Facts:
Sales Case Digests
2A SY 2009-2010
3'ouses N!coas and +rene $ordes!as owned a
'!ece of and wh!ch the!r ch!dren ,arod, 6n#ea
and Rosar!o, and #randch!dren 6rnod and ?!!a
de a For !nher!ted. $he he!rs sod a 'art of the
and to 6"erta Moraes. Moraes 'ossessed the
ot as owner, constructed a house on !t and
a''o!nted a careta*er to o%ersee her 'ro'erty.
6rnod "orrowed the 2r!#!na 5ert!f!cate of $!te
=25$9 fro) 6"erta co%er!n# the ot. $hen, he
e4ecuted an 6ff!da%!t

ac*nowed#!n# rece!'t of
the 25$ !n trust and undertoo* to return sa!d
t!te free fro) chan#es, )od!f!cat!ons or
canceat!ons. ,owe%er, 6rnod used the 25$
he "orrowed fro) the %endee 6"erta Moraes,
su"d!%!ded the ent!re ot !nto three su"ots, and
re#!stered the) a under h!s na)e. 6rnod d!d
not return the 25$ "eon#!n# to 6"erta des'!te
re'eated re1uests. 6rnod su"se1uenty sod the
and to s'ouses $o)as and 3y%!na 2cceQa.
Ahen the res'ondent he!rs of 6"erta earned of
the sae, they f!ed a case

for annu)ent of sae
and canceat!on of t!tes, w!th da)a#es, a#a!nst
the 2cceQa s'ouses, ae#!n# "ad fa!th s!nce the
2cceQas conducted ocuar !ns'ect!on of the
area "efore the 'urchase and the!r careta*er
warned the) that 6rnod !s no on#er the owner
of the ot "e!n# sod. 2n the other hand, the
2cceQa s'ouses ae#ed that they were "uyers
!n #ood fa!th as the t!tes 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 6rnodFs $5$s
were cean and unencu)"ered. ?ower court
decared the 2cceQa s'ouses as "uyers !n #ood
fa!th and rued that the act!on of the he!rs was
t!)e0"arred. 5ourt of 6''eas re%ersed the
dec!s!on of the tr!a court. ,ence the 'et!t!on.
+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 ca!) wh!ch does
not a''ear on the 5ert!f!cate of $!te
Ru!n#: -et!t!on d!s)!ssed.
$he 'et!t!on at "ar 'resents a case of
dou"e sae of an !))o%a"e 'ro'erty. 6rt!ce
1544 of the New 5!%! 5ode 'ro%!des that !n case
an !))o%a"e 'ro'erty !s sod to d!fferent
%endees, the ownersh!' sha "eon#: =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 shoud
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 odest t!te,
'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 ca!)!n# ownersh!' o%er an
!))o%a"e.

Ahat !s )ater!a !s whether the
second "uyer f!rst re#!sters the second sae !n
#ood fa!th, i.e., w!thout *nowed#e of any defect
!n the t!te of the 'ro'erty sod. $he defense of
!ndefeas!"!!ty of a $orrens t!te does not e4tend
to a transferee who ta*es the cert!f!cate of t!te !n
"ad fa!th, w!th not!ce of a faw.

+ndeed, the #enera rue !s that one who
deas w!th 'ro'erty re#!stered under the $orrens
syste) need not #o "eyond the sa)e, "ut ony
has to rey on the t!te. ,e !s char#ed w!th not!ce
ony of such "urdens and ca!)s as are
annotated on the t!te. ,owe%er, th!s 'r!nc!'e
does not a''y when the 'arty has actua
*nowed#e of facts and c!rcu)stances that
woud !)'e a reasona"y caut!ous )an to )a*e
such !n1u!ry or when the 'urchaser has
*nowed#e of a defect or the ac* of t!te !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!te of the 'ro'erty !n !t!#at!on. 2ne
who fas w!th!n the e4ce't!on can ne!ther "e
deno)!nated an !nnocent 'urchaser for %aue
nor a 'urchaser !n #ood fa!th.
S#OUSES ISA.ELO and ERLINDA
#A?ONGA?ONG, %s.
HON. COURT OF A##EALS,
<a6 ,@, ,--( G.R. No. %((:'D
T1id Di"i!ion
Sales Case Digests
2A SY 2009-2010
CAR#IO <ORALES, J.
Facts: Bduardo Mendo@ !s the re#!stered owner
of a 'arce of and !n 5aoocan. ,e )ort#a#ed
the and to the Meraco B)'oyees 3a%!n#s and
?oan 6ssoc!at!on =MB36?69 to secure a oan.
$he )ort#a#e was duy annotated on the t!te.
6fter 2 years, Mendo@a e4ecuted a ;eed of 3ae
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 "aance
of the )ort#a#e !nde"tedness of Mendo@a to
MB36?6. Mendo@a, w!thout the *nowed#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!te.
Mendo@a e4ecuted a ;eed of 6"soute 3ae
o%er st! the sa)e 'ro'erty !n fa%or of
res'ondent s'ouses 5e)ente and Rosa!a
3a%ador. 3'ouses 3a%ador had the ot
re#!stered !n the!r na)e after ocuar !ns'ect!on
and %er!f!cat!on fro) the Re#!ster of ;eeds.
Gett!n# w!nd of the sae of the 'ro'erty to
res'ondents, -ayon#ayon# f!ed for annu)ent
sae w!th da)a#es a#a!nst Mendo@a and
s'ouses 3a%ador. $r!a 5ourt rued !n fa%or of
Mendo@a and 3a%ador. 56 aff!r)ed. ,ence the
'et!t!on.
+ssue: Ahether or not s'ouses 3a%ador are
!nnocent 'urchasers for %aue
,ed: -et!t!on den!ed.
Ahere !nnocent th!rd 'ersons rey u'on
the correctness of a cert!f!cate of t!te 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!te, and
ut!)atey, the $orrens syste), woud "e
!)'a!red, for e%eryone dea!n# w!th re#!stered
'ro'erty woud st! ha%e to !n1u!re at e%ery
!nstance whether the t!te has "een re#uary or
!rre#uary !ssued.
27
+n res'ondentsF case, they d!d not ony
rey u'on Mendo@aFs t!te. Rosa!a 'ersonay
!ns'ected the 'ro'erty and %er!f!ed w!th the
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!te
thereto.
$he aw !s thus !n res'ondentsF fa%or. 6rt!ce
1544 of the 5!%! 5ode so 'ro%!des:
6rt. 1544. +f the sa)e th!n# shoud ha%e
"een sod 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
shoud "e )o%a"e 'ro'erty.
3houd !t "e !))o%a"e 'ro'erty, the
ownersh!' sha "eon# to the 'erson
ac1u!r!n# !t who !n #ood fa!th f!rst
recorded !t !n the Re#!stry of -ro'erty.
3houd 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 odest
t!te, 'ro%!ded there !s #ood fa!th.
$here "e!n# dou"e sae of an
!))o%a"e 'ro'erty, as the a"o%e01uoted
'ro%!s!on !nstructs, ownersh!' sha "e
transferred =19 to the 'erson ac1u!r!n# !t who !n
#ood fa!th f!rst recorded !t !n the Re#!stry of
-ro'erty: =29 !n defaut thereof, to the 'erson
who !n #ood fa!th was f!rst !n 'ossess!on: and =39
!n defaut thereof, to the 'erson who 'resents
the odest t!te, 'ro%!ded there !s #ood fa!th.
I!a5e$a Co$$e+e!, In3. "!. Hei! o2 Nie"e!
To$entinoIRi"ea
2cto"er 20, 2000 G.R. No.1326..
3econd ;!%!s!on
-onente: Just!ce Mendo@a
Fa3t!: $he ate N!e%es $oent!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
Sales Case Digests
UST Faculty of Civil Law Page
2A SY 2009-2010
a''!cat!on for a saes 'atent o%er a 13.526.0
hectare and !n 5auayan, +sa"ea. ,er
a''!cat!on was a''ro%ed and a saes 'atent
was !ssued !n the na)e of IN!e%es $oent!no,
)arr!ed to -a"o R!%eraJ.
$he a"o%e sa!d s'ouses sod to 'et!t!oner
+sa"ea four hectares of the!r and, wh!ch was
thereafter !))ed!atey occu'!ed "y the 'et!t!oner
and used the sa)e as !ts new ca)'us. 3!nce
1/50, the +sa"ea 5oe#es decared the and for
ta4 'ur'oses, "ut !t d!d not !))ed!atey secure a
se'arate t!te to the 'ro'erty. +t was ony on
January 13, 1/.0 when !t secured a t!te to the
and.
+n ;ece)"er 1/.6, the 2ff!ce of the Re#!ster of
;eeds of +sa"ea was "urned. 6)on# the t!tes
destroyed was that of the +sa"ea 5oe#es
wh!ch was howe%er ad)!n!strat!%ey
reconst!tuted !n 1/.7.
+n January 1/77, certa!n 'eo'e entered the
'ro'erty of +sa"ea 5oe#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"ea
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"ea 5oe#es for INu!ty of $!tes, ;eeds
of 3ae, Reco%ery of 2wnersh!' and
-ossess!on, 5anceat!on of $!tes, ;a)a#es
w!th -re!)!nary +n(unct!on.J +n !ts 6nswer, the
+sa"ea 5oe#es asserted that the 'ro'erty !n
1uest!on had "een sod to !t w!th the *nowed#e
and consent of N!e%es who !n fact s!#ned the
deed of sae. 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 aowed "y
the tr!a court. $he !nter%enors, who were the
'art!es !n the e(ect)ent su!t, ca!)ed to "e
"uyers !n #ood fa!th or essees of N!e%es as to
certa!n 'ort!ons of the su"(ect and.
;ur!n# the 'endency of th!s case N!e%es d!ed
and her he!rs su"st!tuted her. 2n 3e'te)"er 30,
1//4, the tr!a court rendered !ts dec!s!on, ru!n#
!n fa%or of +sa"ea 5oe#es. 2n 6''ea, !ts
dec!s!on was re%ersed. ,ence, th!s 'et!t!on.
I!!*e: Ahether the 5ourt of 6''eas erred !n
ru!n# that:
1.9 the su"(ect 'ro'erty !s 'ara'herna des'!te
N!e%esF ad)!ss!on that !t was 'urchased fro)
the #o%ern)ent dur!n# her )arr!a#e w!th -a"o
R!%era out of con(u#a funds:
2.9 N!e%esF s!#nature !n the 1uest!oned deed of
sae !s for#ed:
3.9 aches cannot defeat that ca!) of a
re#!stered 'ro'erty owner des'!te the on# deay
of 41 years.
R*$in+: Aherefore the dec!s!on of the 5ourt of
6''eas !s RBEBR3B;.
+ssue 1: 8oth the ac1u!s!t!on of the 130hectare
and and the sae 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!ce 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 "eon#s e4cus!%ey 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
aready !n 'ossess!on of the and and a''!ed for
a saes 'atent "efore she )arr!ed -a"o R!%era,
the 5ourt of 6''eas c!ted no other e%!dence to
'ro%e that the and was her 'ara'herna
'ro'erty. 2n the contrary, the e%!dence ceary
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 $oent!noFs
s!#nature !n the deed of saes !s a for#ery does
not, howe%er, render the deed of sae %o!d. $he
and was con(u#a 'ro'erty and under the
3'an!sh 5!%! 5ode, the w!feFs consent to the
sae !s not re1u!red. $herefore, that her
s!#nature !s a for#ery !s deter)!nat!%e ony of
N!e%esF ac* of consent "ut not of the %a!d!ty of
the sae.
6s the hus"and )ay %a!dy 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 aone
does not )a*e the sae I!n fraudJ of her.
+ssue 3: Nonetheess wh!e !t !s true that a
$orrens t!te !s !ndefeas!"e and !)'rescr!'t!"e,
the re#!stered owner )ay ose h!s r!#ht to
reco%er 'ossess!on of h!s re#!stered 'ro'erty "y
reason of aches.
?aches )eans the fa!ure or ne#ect for an
unreasona"e and une4'a!ned en#th of t!)e to
do that wh!ch, "y o"ser%ance of due d!!#ence,
coud or shoud ha%e "een done ear!er. +t !s
Sales Case Digests
2A SY 2009-2010
ne#!#ence or o)!ss!on to assert a r!#ht w!th!n a
reasona"e t!)e, warrant!n# the 'resu)'t!on
that the 'arty ent!ted to assert h!s r!#ht e!ther
has a"andoned or dec!ned to assert !t.
3o !t !s !n the 'resent case where the co)'a!nt
1uest!on!n# the %a!d!ty of the sae to 'et!t!oner
+sa"ea 5oe#es was f!ed ony after 42 years
had a'sed. Res'ondents coud not fe!#n
!#norance of the sae "ecause 'et!t!oner had
"een !n o'en, 'u"!c, and cont!nuous 'ossess!on
of the and, wh!ch !t had used as !ts schoo
ca)'us s!nce 1/4/.
.a6o3a "!. No+a$e!
3e'te)"er 12, 2000 G.R.No.137201
$h!rd ;!%!s!on
-onente: Just!ce Gon@a#a0Reyes
Fa3t!/ Gaud!oso No#aes 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
2A SY 2009-2010
"rothers and s!sters. ,owe%er, -rec!osa 5an!no
su"se1uenty sod 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 ;oores ;!choso.
$he 6''eee, f!ed co)'a!nt a#a!nst the
6''eants for IAccion .ein1indicatoria )ith
(amages.9 ,e ae#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''eants res'ect!%ey 'urchased 'ort!ons
of sa!d 'ro'erty !n "ad fa!th and throu#h fraud.
$he 6''eants, !n the!r 6nswer to the co)'a!nt,
ae#ed that -rec!osa 5an!no and her s!"!n#s
ac1u!red (ust t!te o%er the 'ro'erty when they
e4ecuted the!r :(eed o+ 8artition o+ .eal
8roperty9 and con%eyed t!tes to the %endees,
the 6''eants !n the 'resent recourse, as
"uyers !n #oof fa!th.
$he Re#!ona $r!a 5ourt rued !n fa%or of
No#aes and decared that the saes of 'ort!ons
of sa!d 'ro'erty "y -rec!osa 5an!no were nu
and %o!d. $he tr!a court further decared further
that 'et!t!oners were 'urchasers !n "ad fa!th.
2n a''ea, the court of 6''eas aff!r)ed the
R$5 ru!n#. ,ence th!s 'et!t!on.
I!!*e/ Aho has the su'er!or r!#ht to the 'arce
of and sod to d!fferent "uyers at d!fferent t!)es
"y !ts for)er ownersD
R*$in+: -et!t!on !s here"y ;BN+B; and the
assa!ed ;B5+3+2N of the 5ourt of 6''eas !s
6FF+RMB;.
$here !s no 1uest!on fro) the records that
res'ondent No#aes 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, rey on the fact that they
were the f!rst to re#!ster the saes of the d!fferent
'ort!ons of the 'ro'erty resut!n# !n the !ssuance
of new t!tes !n the!r na)es.
6rt!ce 1544 of the 5!%! 5ode #o%erns the
'referent!a r!#hts of %endees !n cases of
)ut!'e saes, as foows:
I6rt. 1544. +f the sa)e th!n# shoud ha%e "een
sod 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
shoud "e )o%a"e 'ro'erty.
ownersh!' sha "eon# to the 'erson ac1u!r!n# !t
who !n #ood fa!th f!rst recorded !t !n the Re#!stry
of -ro'erty.
3houd 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
odest t!te, 'ro%!ded there !s #ood fa!th.J
8ased on the fore#o!n#, to )er!t the 'rotect!on
under 6rt!ce 1544, second 'ara#ra'h, the
second "uyer )ust act !n #ood fa!th !n
re#!ster!n# the deed. $hus, +t has "een hed that
!n cases of dou"e sae of !))o%a"es, what
f!nds ree%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 sae !n #ood fa!th, that !s, w!thout
*nowed#e of any defect !n the t!te of the
'ro'erty.
2n account of the und!s'uted fact of re#!strat!on
"y res'ondent No#aes as the f!rst "uyer,
necessar!y, there !s a"sent #ood fa!th !n the
re#!strat!on of the sae "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!te !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 sod to the), and )erey rey on the
fact that they decared the sa)e !n the!r na)e
for ta4at!on 'ur'oses. 3uff!ce !t to state, that
such fact, does not, "y !tsef, const!tute e%!dence
of ownersh!' and cannot !*ew!se 're%a! o%er
the t!te of res'ondent No#raes.
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 Forenc!a
Sales Case Digests
2A SY 2009-2010
Refuer@o 2#u!s sod 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 sae
re#!stered !n the Re#!stry of ;eeds of 8en#uet.
3'ouses 2#u!s ater on sod the re)a!n!n#
'ort!on of the and to the sa)e res'ondents, "ut
the and was not re#!stered.
6"ert 2#u!s, 3r. and h!s two ch!dren
6"ert 2#u!s, Jr. and ,een 2#u!s Eaer!o,
e4ecuted a ;eed of B4tra(ud!c!a 3ette)ent of
Bstate. 2n the sa)e date, they sod to s'ouses
Forendo and ,een ;au@, 'et!t!oners, a 'ort!on
of the and as shown "y a ;eed of 6"soute
3ae. 6"ert 2#u!s, 3r. !nfor)ed 'et!t!oners that
he had sod ony a 'ort!on to res'ondents.
-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.
Res'ondents had the sae 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. 5onse1uenty, the t!te !n the na)es of
s'ouses 2#u!s was canceed and !n !eu
thereof, a new t!te was !ssued !n res'ondentsF
na)es. $he new t!te co%ers the ent!re 'ro'erty
're%!ousy owned "y s'ouses 2#u!s.
Meanwh!e, 'et!t!oners sod to s'ouses
+#nac!o and Franc!sca Rea)"onan@a, aso
'et!t!oners, a 'ort!on sod 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
decarat!on of ownersh!'. $he tr!a court
d!s)!ssed the 'et!t!on. $he 5ourt of 6''eas
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$3
HELD/
#etition DENIED.
RATIO/
Ati3$e %:(( o2 t1e Ci"i$ Code i!
e$e"ant, t1*!/
6rt!ce 1544. +f the sa)e th!n#
shoud ha%e "een sod 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 shoud "e )o%a"e
'ro'erty.
3houd !t "e !))o%a"e
'ro'erty, the ownersh!' sha "eon#
to the 'erson a37*iin+ it 41o in
+ood 2ait1 2i!t e3oded it in t1e
Re+i!t6 o2 #opet6.
3houd 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 odest t!te, 'ro%!ded there !s #ood
fa!th.
+n 6'r! 1/72, res'ondents caused the
re#!strat!on of the sae of the 1,2/50s1uare
)eter 'ort!on of the and: and on January 25,
1/7/, the sae 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 sae to the) !n the
Re#!stry of ;eeds. Ahere "oth 'art!es ca!) to
ha%e 'urchased the sa)e 'ro'erty, as !n th!s
case, 6rt!ce 1544 c!ted a"o%e 'ro%!des that as
"etween two 'urchasers, the one who re#!stered
the sae !n h!s fa%or has a 'referred r!#ht o%er
the other who has not re#!stered h!s t!te, e%en !f
the atter !s !n actua 'ossess!on of the
!))o%a"e 'ro'erty
Sales Case Digests
2A SY 2009-2010
Nonetheess, 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 hed
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!atey re#!ster the
sae "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!)sef who re1uested the) not to
cause the re#!strat!on of the sae.
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#ees, 5a!forn!a. $hey !n!t!ay en#a#ed
Sales Case Digests
2A SY 2009-2010
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 caed 6)e4co and #a%e the
t!re record ocator nu)"er !f "oo*!n# reference
that 56? had 're%!ousy !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 caed 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? caed u' More!a to reconf!r) the
reser%at!ons of 'r!%ate res'ondents. More!a
canceed 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? canceed 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
HELD/
#etition DENIED.
RATIO/
$he nature of an a!r!ne>s contract of
carr!a#e 'arta*es of two ty'es, na)ey: =19 a
contract to de!%er a car#o or )erchand!se to !ts
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
!tsef 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 conse1uenty !)'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 faut 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
hed that when an a!r!ne !ssues a t!c*et to a
'assen#er conf!r)ed for a 'art!cuar 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
woud fy on that f!#ht and on that date. +f he
does not, then the carr!er o'ens !tsef to a su!t
for "reach of contract of carr!a#e.
56? d!d not aow '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.
5eary, 56? "reached !ts contract of carr!a#e
w!th 'r!%ate res'ondents. Ae, howe%er, rue out
"ad fa!th "y 56?.

S#OUSES SALERA "! S#OUSES RODAJE
G.R. No. 135/00 1. 6u#ust 200.
#onente/ Just!ce 3ando%a R Gut!erre@, F!rst
;!%!s!on
Fa3t!: 3'ouses 3aera f!ed an act!on for
1u!et!n# of t!te 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
Sales Case Digests
UST Faculty of Civil Law Page !0
2A SY 2009-2010
e%!denced "y the ;eed of 6"soute 3ae
e4ecuted on June 23, 1/76. $hey ae#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 sae. Ahen they as*ed
the -ro%!nc!a 6ssessor to decare the 'ro'erty
under the!r na)es for ta4at!on 'ur'oses, they
found that $a4 ;ecarat!on No. 2//4 =R059 !n
the na)e of 8r!#!do was aready canceed and
another one, $a4 ;ecarat!on No. 2407, was
!ssued !n the na)es of 3'ouses Roda(e.
3'ouses Roda(e ca!)ed that they "ou#ht the
and fro) 5ata!no $onac!o, father of 8r!#!do on
June 6, 1/76 and that the sae was re#!stered
w!th the Re#!ster of ;eeds and the $a4
;ecarat!on No. 2407 was !ssued !n the!r na)e.
$hey aso ca!)ed that they had a %er"a
contract w!th 5ata!no e%en "efore the e4ecut!on
of the sae s!nce January 1/74. $hey 'a!d a
down'ay)ent of -1,000 and 'a!d the "aance of
-4,000 when the sae was e4ecuted. $hey
ae#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 'eacefuy, 'u"!cy,
ad%ersey and cont!nuousy. 6'art fro) "e!n#
the f!rst re#!strants, they are "uyers !n #ood
fa!th.

R$5 of 5au"!an, ?eyte decared 3'ouses
3aera as the r!#htfu and e#a owners wh!e
decar!n# nu and %o!d the ;eed of 6"soute
3ae "etween 5ata!no and here!n res'ondents
and order!n# the canceat!on of $a4 ;ecarat!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 woud "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''eas re%ersed and set as!de the
dec!s!on of the R$5. +t "ased !ts dec!s!on on the
5!%! 5ode 'ro%!s!on on dou"e sae.
I!!*e/ Ah!ch of the two contracts of sae !s
%a!dD
He$d/ 3ae )ade "y the he!rs of 8r!#!do
$onacao to the s'ouses 3aera !s %a!d. 3ae
)ade "y 5ata!no to s'ouses Roda(e !s !n%a!d.
$he 5ourt of 6''eas !s wron#. 6rt!ce 1544 of
the 5!%! 5ode conte)'ates a case of dou"e
sae or )ut!'e saes "y a !in+$e "endo.
More s'ec!f!cay, !t co%ers a s!tuat!on where a
s!n#e %endor sod 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 sae 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 decared !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 seer !s the true owner
of the 'ro'erty and whether there are other
ca!)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 decarat!ons are not concus!%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 woud "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, coud not %a!dy
se the ot to res'ondents.
$he cert!f!cat!on 'resented "y res'ondents
ceary shows that the house !s owned "y 6!da
3aera and that res'ondents started 'ay!n# the
eectr!c "!s =!n the na)e of 6!da 3aera9 ony !n
1/76. $he res'ondents 'roof of 'ay)ent of
reaty ta4 fro) the 'er!od of 1/.4 to 1/74 was
'a!d !n u)' su).
=-et!t!on !s GRANTED. $he assa!ed ;ec!s!on
of the 5ourt of 6''eas !s REVERSED and the
;ec!s!on of the tr!a court !s REINSTATED.9
URACA, et a$. "! CA and VELEZ, JR., et a$.
G.R. No. 115157 3e'te)"er 5,
1//.
#onente/ Just!ce -an#an!"an, $h!rd ;!%!s!on
Fa3t!/ $he Eee@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.
Sales Case Digests
2A SY 2009-2010
2n Juy 7, 1/75, the Eee@es throu#h 5ar)en
Eee@ $!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# tod her that
there was a )!sta*e !n the 'r!ce. +t shoud 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 "aance of -400,000 to "e 'a!d
!n 30 days. 5ar)en Eee@ $!n# d!d not acce't
the sa!d counter0offer of B)!!a &raca athou#h
th!s fact !s d!s'uted "y &raca.
No 'ay)ent was )ade "y to the Eee@es on
Juy 12 and 13, 1/75. 2n Juy 13, 1/75, the
Eee@es sod 'ro'erty to 6%enue Merchand!s!n#
+nc. for -1,050,000.00. $he cert!f!cate of t!te of
the sa!d 'ro'erty was cean and free of any
annotat!on of ad%erse ca!)s or lis pendens.
2n Juy 31, 1/75, 'et!t!oners f!ed the !nstant
co)'a!nt a#a!nst the Eee@es. 2n 6u#ust 1,
1/75, they aso 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 sae
"etween the Eee@es and the 'et!t!oners
!n%o%!n# the rea 'ro'erty !n 1uest!on. $he f!rst
sae was for -1,050,000.00 and the second was
for -1,400,000.00. +n res'ect to the f!rst sae,
the tr!a court hed that <OdPue to the un1ua!f!ed
acce'tance "y the 'a!nt!ffs w!th!n the 'er!od set
"y the Eee@es, there conse1uenty ca)e a"out
a )eet!n# of the )!nds of the 'art!es not ony as
to the o"(ect certa!n "ut aso as to the def!n!te
cons!derat!on or cause of the contract. $he
second sae )erey const!tuted a )ere
)od!f!catory no%at!on wh!ch d!d not e4t!n#u!sh
the f!rst sae. +t aso hed that the 6%enue Grou'
were "uyers !n "ad fa!th.
$he 5ourt of 6''eas hed that there was a
'erfected contract of sae of the 'ro'erty for
-1,050,000.00 "etween the Eee@es and here!n
'et!t!oners. +t added, howe%er, that such
'erfected contract of sae was su"se1uenty
no%ated. ,owe%er, !t was )utuay w!thdrawn,
canceed and resc!nded "y no%at!on, and was
therefore a"andoned "y the 'art!es when
5ar)en Eee@ $!n# ra!sed the cons!derat!on of
the contract "y -350,000.00, thus )a*!n# the
'r!ce -1.4M !nstead of the or!#!na 'r!ce of
-1,050,000.00. 3!nce there was no a#ree)ent
as to the >second> 'r!ce offered, there was no
)eet!n# of )!nds "etween the 'art!es, hence, no
contract of sae was 'erfected.
56 added that, e%en !f there was a#ree)ent as
to the 'r!ce and a second contract was
'erfected, the ater contract woud "e
unenforcea"e under the 3tatute of Frauds. +t
further hed that such second a#ree)ent, !f there
was one, const!tuted a )ere 'ro)!se to se
wh!ch was not "!nd!n# for ac* of acce'tance or
a se'arate cons!derat!on.
I!!*e!/
1.9 Aas there no%at!on of the f!rst contractD
2.9 Aas there a dou"e sae of the rea
'ro'erty !n%o%edD
He$d/
On 7o1ation
No%at!on !s ne%er 'resu)ed: !t )ust "e
suff!c!enty 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 sae )ust "e done !n #ood fa!th to ent!te
the re#!strant to 'r!or!ty !n ownersh!' o%er the
%endee !n an ear!er sae.
6rt!ce 1600 of the 5!%! 5ode 'ro%!des that
<=s9aes are e4t!n#u!shed "y the sa)e causes as
a other o"!#at!ons, . . . .< 6rt!ce 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 od o"!#at!on or contract:
and =49 the %a!d!ty of the new one.
No%at!on !s effected ony 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
Sales Case Digests
2A SY 2009-2010
"y e4'ress st!'uat!on of the 'art!es or "y
!)'!cat!on der!%ed fro) an !rreconc!a"e
!nco)'at!"!!ty "etween od and new o"!#at!ons
or contracts.
$he 'et!t!oners and the Eee@es ceary 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 coud ha%e e4t!n#u!shed the!r
're%!ousy 'erfected contract of sae, there can
"e no no%at!on of the atter. 5onse1uenty, the
f!rst sae of the 'ro'erty !n contro%ersy, "y the
Eee@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 !tsef confer
ownersh!' or a "etter r!#ht o%er the 'ro'erty.
6rt!ce 1544 re1u!res that such re#!strat!on )ust
"e cou'ed w!th #ood fa!th.
Lnowed#e #a!ned "y the f!rst "uyer of the
second sae cannot defeat the f!rst "uyer>s r!#hts
e4ce't where the second "uyer re#!sters !n
good +aith the second sae ahead of the f!rst, as
'ro%!ded "y the 5!%! 5ode.
Lnowed#e #a!ned "y the second "uyer of the
f!rst sae defeats h!s r!#hts e%en !f he !s f!rst to
re#!ster the second sae, s!nce such *nowed#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. $hey had actua *nowed#e of the
Eee@es> 'r!or sae of the sa)e 'ro'erty to the
'et!t!oners.
,ence, the th!rd and not the second 'ara#ra'h
of 6rt!ce 1544 shoud "e a''!ed to th!s case.
&nder th!s 'ro%!s!on, 'et!t!oners are ent!ted to
the ownersh!' of the 'ro'erty "ecause they
were f!rst !n actua 'ossess!on, ha%!n# "een the
'ro'erty>s essees and 'ossessors for decades
'r!or to the sae.
=$he 'et!t!on !s GR6N$B;. $he assa!ed
;ec!s!on of the 5ourt of 6''eas !s here"y 3B$
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 foow!n# M2;+F+56$+2N W
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 March 10, 1//3
=21/35R6...9
$h!rd ;!%!s!on
MB?2, J.4
Sales Case Digests
2A SY 2009-2010
*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%ea, e4ecuted a 5ontract to 3e
and a ;eed of 3ae of 42 su"d!%!s!on ots w!th!n
the -h!"0Lh!* 3u"d!%!s!on of the -uente%ea
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*nowed#)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%ea.
&'on the transfer to 8!na"a#an of t!tes
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!tes 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%ea sod sa!d ots to Rau
Ja%eana w!th the cond!t!on that the %endee0
'ro)!see woud not transfer h!s r!#hts to
sa!d ots w!thout the e4'ress consent of
-uente%ea and that !n case of the
canceat!on of the contract "y reason of the
%!oat!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 rentas for the use and
occu'at!on thereof. Ja%eana 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%ea a#a!nst h!). Jud#)ent was
rendered !n fa%or of -uente%ea. -a!nt!ffs !n
the !nstant case on a''ea f!ed the!r $h!rd0
-arty 5a!) "ased on an ae#ed ;eed of
3ae e4ecuted !n the!r fa%or "y s'ouses
Jose and ?o!ta ?o'e@, thus -uente%ea was
constra!ned to assert 'hys!ca 'ossess!on of
the 're)!ses to counteract the f!ct!t!ous and
unenforcea"e ca!) of here!n 'a!nt!ffs.
56 !ssued a wr!t of 're!)!nary !n(unct!on, thus,
defendant -uente%ea 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 sae of the 'ro'ert!es ca!)ed
"y the s'ouses0'a!nt!ffs O!n 6"!erra %s. 5ourt of
6''eas, 45 35R6 314P.
Ahen the 3u're)e 5ourt d!sso%ed the
aforesa!d !n(unct!on !ssued "y the 5ourt of
6''eas, '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 ca!)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, encos!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)ayan,
Ne#ros 2cc!denta a#a!nst 'et!t!oners for
reco%ery of t!te and da)a#es. Bchaus f!ed an
a)ended co)'a!nt "y !ncud!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''eaed to the 56
wh!ch re%ersed and set as!de the a''eaed
dec!s!on.
$hus, th!s 'et!t!on for re%!ew on
certiorari where!n 'et!t!oners ass!#n the foow!n#
ae#ed errors of the 5ourt of 6''eas:
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''eas !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
uness he !s !n a 'os!t!on to co)'y w!th h!s own
o"!#at!ons. 3!)!ary, the r!#ht to resc!nd a
contract can "e de)anded ony !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,
Sales Case Digests
2A SY 2009-2010
5!%! 5ode of the -h!!''!nes, 12th ed. Eo. +E, '.
2009. +n a contract of sae, 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
sae =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 sae, uness a
contrary !ntent!on a''ears, there !s:
=19 6n !)'!ed warranty on the 'art of the seer
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''eants the)se%es coud not ha%e restored
unto the a''eees the 'ossess!on of the 42
su"d!%!s!on ots 'rec!sey "ecause of the
're!)!nary !n(unct!on )ent!oned esewhere.
5onse1uenty, the a''eants coud not ha%e
'ros'ered !n any su!t to co)'e 'erfor)ance or
'ay)ent fro) the a''eees0"uyers, "ecause
the a''eants 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 sae.
Sales Case Digests
UST Faculty of Civil Law Page !!
2A SY 2009-2010
RO.ERTO Z. LAFORTEZA "!. ALONZO
<ACHUCA
G.R. No. 13.552. June 16, 2000 =33335R66439
$h!rd ;!%!s!on
G2NX6G6YRBKB3, J.
*acts4 2n 6u#ust 2, 1/77, defendants ?ea
Xuueta0?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@ao X.
?aforte@a, Jr., a''o!nt!n# "oth as her 6ttorney0
!n0fact author!@!n# the) (o!nty to se the su"(ect
'ro'erty and s!#n any docu)ent for the
sette)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@ao ?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 sette)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@ao X. ?aforte@a, Jr.
entered !nto a Me)orandu) of 6#ree)ent
=M26O5ontract to 3eP9 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 rentas 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!te to the su"(ect 'ro'erty,
ad%!s!n# h!) that he had 30 days to 'roduce the
"aance of -600,000.00 under the Me)orandu)
of 6#ree)ent wh!ch 'a!nt!ff rece!%ed on the
sa)e date.
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 aready had the "aance
-600,000.00 co%ered "y &n!ted 5oconut
-anters 8an* Mana#ers 5hec*. ,owe%er, the
defendants, refused to acce't the "aance
;efendant Ro"erto X. ?aforte@a had tod h!)
that the su"(ect 'ro'erty was no on#er for sae.
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 "aance. ;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''eaed to the 5ourt of 6''eas,
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@ao
X. ?aforte@a, Jr. fro) !a"!!ty for the 'ay)ent of
)ora da)a#es. ,ence th!s 'et!t!on.
Issues4
A the Me)orandu) of 6#ree)ent !s a )ere
contract to se, as !nd!cated !n !ts t!te.
.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 sae and ease.
6 contract of sae !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!'rocay de)and
'erfor)ance su"(ect to the 'ro%!s!ons of the aw
Sales Case Digests
UST Faculty of Civil Law Page !"
2A SY 2009-2010
#o%ern!n# the for) of contracts. $he ee)ents of
a %a!d contract of sae under 6rt!ce 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!%aent.
+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
ee)ents of a contract of sae were thus 'resent.
,owe%er, the "aance of the 'urchase 'r!ce was
to "e 'a!d ony u'on the !ssuance of the new
cert!f!cate of t!te !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 sette)ent of h!s
estate. -r!or to the !ssuance of the
<reconst!tuted< t!te, the res'ondent was aready
'aced !n 'ossess!on of the house and ot as
essee thereof for s!4 )onths at a )onthy rate
of -3,500.00.
$he s!40)onth 'er!od dur!n# wh!ch the
res'ondent woud "e !n 'ossess!on of the
'ro'erty as essee, was ceary not a 'er!od
w!th!n wh!ch to e4erc!se an o't!on. 6n o't!on !s a
contract #rant!n# a 'r!%!e#e to "uy or se w!th!n
an a#reed t!)e and at a deter)!ned 'r!ce. 6n
o't!on contract !s a se'arate and d!st!nct
contract fro) that wh!ch the 'art!es )ay enter
!nto u'on the consu))at!on of the o't!on. 6n
o't!on )ust "e su''orted "y cons!derat!on. 6n
o't!on contract !s #o%erned "y the second
'ara#ra'h of 6rt!ce 14./ of the 5!%! 5ode.
I6n acce'ted un!atera 'ro)!se to "uy or to se
a deter)!nate th!n# for a 'r!ce certa!n !s "!nd!n#
u'on the 'ro)!ssor !f the 'ro)!se !s su''orted
"y a cons!derat!on d!st!nct fro) the 'r!ce.<
+n the 'resent case, the s!40)onth 'er!od )erey
deayed the de)anda"!!ty of the contract of sae
and d!d not deter)!ne !ts 'erfect!on for after the
e4'!rat!on of the s!40)onth 'er!od, there was an
a"soute o"!#at!on on the 'art of the 'et!t!oners
and the res'ondent to co)'y w!th the ter)s of
the sae.
Sales Case Digests
UST Faculty of Civil Law Page !#
2A SY 2009-2010
Jon and <ai!!a De ?!a!i "!. At*o and
E!te$a A3eo
G.R. No. 136576 No%e)"er 22, 2001
Mendo@a, J. 3econd ;!%!s!on
Facts: 2n 2cto"er 1, 1/77, s'ouses Jon and
Mar!ssa de Ksas! eased fro) s'ouses 6rturo
and Bstea 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 fooded,
as a resut of wh!ch the schedue of the de!%ery
of hand 'a!nted )od!n#s to 'et!t!oners>
custo)ers was d!sru'ted. 6thou#h 'et!t!oners
as*ed res'ondents to )a*e the necessary
re'a!rs, the atter re'a!red ony a 'ort!on of the
eased 're)!ses. 5onse1uenty, 'et!t!oners
sto''ed 'ay!n# rent as we as the!r share of the
eectr!c, water, and tee'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 rentas u'
to June 1/7/ and d!rected the) to 'ay the)
eectr!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 "aance of the!r rentas 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"se1uenty chan#ed to a ca!) 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* rentas, w!th !nterest at the
e#a rate. 2n a''ea to the 5ourt of 6''eas,
the dec!s!on was aff!r)ed. -et!t!oners> )ot!on for
recons!derat!on was su"se1uenty den!ed.
+ssue: A2N there was an !)'!ed wa!%er of
re'a!rs !ncud!n# re'a!rs for h!dden and un*nown
defects "y the essee.
Ru!n#: ;ec!s!on of 5ourt of 6''eas aff!r)ed
w!th )od!f!cat!on that the order for 'ay)ent of
un'a!d rentas w!th !nterest to res'ondents !s
deeted.
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''eas hed 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, athou#h
the atter ae#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 shoud "e 'r!nc!'ay
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 hed !a"e for the ae#ed
warranty a#a!nst h!dden defects.
Sales Case Digests
UST Faculty of Civil Law Page !$
2A SY 2009-2010
Co3aACo$a .ott$e! #1i$ippine!, In3. "!. T1e
Honoa5$e Co*t o2 Appea$! and <!. L6dia
Geoni0o
G.R. No. 1102/5 2cto"er 17, 1//3
;a%!de, Jr., J, F!rst ;!%!s!on
Facts: ?yd!a ?. Geron!)o was the 'ro'r!etress of
L!nder#arten Aonderand 5anteen !n ;a#u'an
5!ty, an enter'r!se en#a#ed !n the sae of soft
dr!n*s =!ncud!n# 5o*e and 3'r!te9 and other
#oods to the students of L!nder#arten
Aonderand 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 sod "y her conta!ned f!"er0!*e )atter and
other fore!#n su"stances or 'art!ces. 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 "ottes
and a 'ast!c )atter !n the contents of an
uno'ened 3'r!te "otte. 3he "rou#ht the sa!d
"ottes to the Re#!ona ,eath 2ff!ce of the
;e'art)ent of ,eath at 3an Fernando, ?a
&n!on, for e4a)!nat!on. 3he rece!%ed a etter
fro) the ;e'art)ent of ,eath !nfor)!n# her that
the sa)'es she su")!tted <are aduterated:< as
a conse1uence of the d!sco%ery of the fore!#n
su"stances !n the "e%era#es, her saes of soft
dr!n*s se%erey 'u))eted fro) the usua 10
cases 'er day to as ow as 2 to 3 cases 'er day
resut!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 shoud "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
defects of or encu)"rances u'on the th!n# sod
are not !)!ted to those 'rescr!"ed !n 6rt!ce
156. of the 5!%! 5ode wh!ch 'ro%!des:
6rt. 156.. +n the case of 6rt!ces 1561, 1562,
1564, 1565 and 1566, the %endee )ay eect
"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 aso as* for the annu)ent of
the contract u'on 'roof of error or fraud, !n
wh!ch case the ord!nary rue 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 aso de)anda"e !n any o"!#at!on,
"ut such !a"!!ty )ay "e re#uated "y the courts,
accord!n# to the c!rcu)stances. $hose #u!ty of
fraud, ne#!#ence, or deay !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.
$he %endor coud !*ew!se "e !a"e for ;uasi%
delict under 6rt!ce 21.6 of the 5!%! 5ode, and
an act!on "ased thereon )ay "e "rou#ht "y the
%endee. Ah!e !t )ay "e true that the 're0
e4!st!n# contract "etween the 'art!es )ay, as a
#enera rue, "ar the a''!ca"!!ty of the aw on
;uasi%delict, the !a"!!ty )ay !tsef "e dee)ed to
ar!se fro) ;uasi%delict, !.e., the acts wh!ch
"rea*s the contract )ay aso "e a ;uasi%delict.
Sales Case Digests
2A SY 2009-2010
Ino3en3io ?* Dino "!. Co*t o2 Appea$!
June 20, 2001 G.R. No. 113564
35/ 35R6 /1
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 woud )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 woud )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 fuy 'a!d the a#reed 'r!ce.
3u"se1uenty, '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 coect!on of a su) of
)oney.
R$5 rued !n fa%or of the 'et!oners. Res'ondent
3!o sou#ht recourse !n the 5ourt of 6''eas.
$he a''eate 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 ae#!n# there!n that the
'et!t!oners> act!on for coect!on of su) of )oney
"ased on a "reach of warranty had aready
'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.
+33&B:
Ahether the contract "etween the contract!n#
'art!es !s a contract of sae or a contract for a
'!ece of wor*
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;.
$he contract "etween the 'et!t!oners and
res'ondent st!'uated that res'ondent woud
)anufacture u'on order of the 'et!t!oners
20,000 '!eces of %!ny fro#s and 20,000 '!eces
of %!ny )ooseheads accord!n# to the sa)'es
s'ec!f!ed and a''ro%ed "y the 'et!t!oners.
Res'ondent 3!o d!d not ord!nar!y )anufacture
these 'roducts, "ut ony u'on order of the
'et!t!oners and at the 'r!ce a#reed u'on.
5eary, the contract e4ecuted "y and "etween
the 'et!t!oners and the res'ondent was a
contract for a '!ece of wor*. 6t any rate, whether
the a#ree)ent "etween the 'art!es was one of a
contract of sae or a '!ece of wor*, the
'ro%!s!ons on warranty of t!te a#a!nst h!dden
defects !n a contract of sae a''y to the case at
"ar.
6 h!dden defect !s one wh!ch !s un*nown or
coud not ha%e "een *nown to the %endee.
Sales Case Digests
UST Faculty of Civil Law Page "0
2A SY 2009-2010
D.< Gen3e!$ao and A!!o3iate!, In3. V!.
Read6 Contadin+ and Con!t*3tion Cop.
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
aon# the 5oasta Road !n -araQa1ue 5!ty. $o
fuf! !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'hat )ater!as %aued 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!as contracted for. $he "aance 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!'uated "y the 'art!es that res'ondent
was to furn!sh, de!%er, ay, ro the as'hat, 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 "aance 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 "aance !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 coect!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. Aencesao andCor
;o)!nador ;ayr!t.
+n the 'roceed!n#s "eow, ABN5B3?62
ad)!tted that !t owed RB6;K52N
-1,014,110.45 !ndeed. ,owe%er, !t ae#ed that
the!r contract was not )erey one of sae "ut
aso of ser%!ce, na)ey, that res'ondent sha ay
the as'hat !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 aso ae#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
"aance )ust "e 'a!d, the contract fa!ed to
refect the true !ntent!on of the 'art!es.12 +t
ae#ed RB6;K52N a#reed that the "aance !n
the 'ay)ents woud "e setted ony after the
#o%ern)ent had acce'ted RB6;K52NFs wor*
as to !ts 1ua!ty !n ay!n# the as'hat. 8y way of
counterca!), 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 rued !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 aready due and de)anda"e as of
May 30, 1//1.
R&?+NG:
-et!t!on ;en!ed.
&nder 6rt!ce 1572 of the 5!%! 5ode, the "uyer
!s o"!#ed to 'ay the 'r!ce of the th!n# sod at the
t!)e st!'uated !n the contract. 8oth the R$5 and
the a''eate court found that the 'art!esF
contract stated that the "uyer sha 'ay the
)anufacturer the a)ount of -1,1.7,307..5.
Foow!n# the rue on !nter'retat!on of contracts,
no other e%!dence sha "e ad)!ss!"e other than
the or!#!na docu)ent !tsef,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 rue on whether the wr!tten
a#ree)ent fa!ed to e4'ress the true !ntent of the
'art!es woud 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''eate court on th!s !ssue,
howe%er, "!nd us now. For !n a 'et!t!on for
cert!orar! under Rue 45 of the 1//. Rues 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 saes 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#
Sales Case Digests
2A SY 2009-2010
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 aready
Sales Case Digests
2A SY 2009-2010
.INTEGRATED #ACBAGING COR#.,
%s.
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 !tsef to de!%er to 'et!t!oner
3,450 rea)s of 'r!nt!n# 'a'er. $he )ater!as
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 coect!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 counterca!), the 'et!t!oner den!ed the
)ater!a ae#at!ons of the co)'a!nt. +t ae#ed
that res'ondent de!%ered ony 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 aso
fa!ed to de!%er the "aance 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.
+n !ts re'y res'ondent ae#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 athou#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 rued that 'et!t!oner shoud 'ay
-.63,101..0 re'resent!n# the %aue of 'r!nt!n#
'a'er de!%ered "y res'ondent fro) June 5,
1/70 to Juy 23, 1/71. ,owe%er !t aso found
'et!t!oner>s counterca!) )er!tor!ous "ecause !f
not for the fa!ure or deay of res'ondent to
de!%er 'r!nt!n# 'a'er, 'et!t!oner coud ha%e sod
"oo*s to -h!acor and rea!@ed 'rof!t of
-./0,324.30 fro) the sae. 3+nce that 'et!t!oner
suffered a d!socat!on of "us!ness on account of
oss of contracts and #oodw! as a resut of
res'ondent>s %!oat!on of !ts o"!#at!on, the
for)er !s ent!ted to )ora da)a#es.
$he 5ourt of 6''eas =569 re%erse and set
as!de the (u#d#)ent. +t deeted the award of
-./0,324.30 as co)'ensatory da)a#es as we
as the award of )ora da)a#es and attorney>s
fees, for ac* of factua and e#a "as!s.
ISSUE
Ahether or not the res'ondent %!oated the order
a#ree)ent
RULING
-B$+$+2N ;BN+B;. $he res'ondent d!d not
%!oate the order a#ree)ent when the atter
fa!ed to de!%er the "aance 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 sae where"y res'ondent =seer9 o"!#ates
!tsef to de!%er 'r!nt!n# 'a'er to 'et!t!oner
="uyer9 wh!ch, !n turn, "!nds !tsef to 'ay therefor
a su) of )oney or !ts e1u!%aent ='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!)utaneousy, so that the
'erfor)ance of one !s cond!t!oned u'on the
s!)utaneous fuf!)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!as. +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!as !s cond!t!ona u'on
'ay)ent "y 'et!t!oner w!th!n the 'rescr!"ed
'er!od. 5eary, 'et!t!oner d!d not fuf! !ts s!de of
the contract as !ts ast 'ay)ent !n 6u#ust 1/71
coud co%er ony )ater!as co%ered "y de!%ery
!n%o!ces dated 3e'te)"er and 2cto"er 1/70.
Sales Case Digests
2A SY 2009-2010
$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 aso ad)!tted that !t !s the standard 'ract!ce of
the 'art!es that the )ater!as "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#ay (ust!f!ed
under the second 'ara#ra'h of 6rt!ce 1573 of
the 5!%! 5ode wh!ch 'ro%!des that:
Ahen there !s a contract of sae of #oods
to "e de!%ered "y stated !nsta)ents,
wh!ch are to "e se'aratey 'a!d for, and
the seer )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
ca!) for co)'ensat!on "ut not to a r!#ht to
treat the whoe 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. 5onse1uenty,
res'ondent has the r!#ht to cease )a*!n# further
de!%ery, hence the res'ondent d!d not %!oate
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!as de!%ered "y
res'ondent. Res'ondent a''eate court
correcty rued that res'ondent d!d not %!oate
the order a#ree)ent.
Sales Case Digests
2A SY 2009-2010
GREGORIO FULE,
%s
COURT OF A##EALS, NINEVETCH CRUZ
and JUAN .ELAR<INO
JG.R. No. %%,,%, <a31 ,, %))@K T1id
Di"i!ionL
RO<ERO, J.
%A&T'
Gre#or!o Fue ='et!t!oner9, a "an*er "y
'rofess!on and a (eweer 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.
+t so ha''ens that at that t!)e 'et!t!oner had
shown !nterest !n "uy!n# a 'a!r of e)erad0cut
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
(ewery 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 (ewery then
#a%e the) "ac* to ;r. 5ru@.
3u"se1uenty, ne#ot!at!ons for the "arter of the
(ewery 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 (ewery.
+n the afternoon of 2cto"er 23, 1/74, 'et!t!oner
)et 6tty. 8ear)!no =;r. 5ru@Fs awyer9 at the
atter>s res!dence to 're'are the docu)ents of
sae.

$he 6ttorney accord!n#y caused the
're'arat!on of a deed of a"soute sae wh!e
'et!t!oner and ;r. 5ru@ attended to the
safe*ee'!n# of the (ewery.
$he foow!n# day, 'et!t!oner, to#ether w!th
;!choso and Mendo@a, arr!%ed at the res!dence
of 6tty. 8ear)!no to f!nay e4ecute a deed of
a"soute sae.
-et!t!oner s!#ned the deed. 3!nce the (ewery
was a''ra!sed ony at -160,000.00, the 'art!es
a#reed that the "aance of -40,000.00 woud
(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
ceo'hane "a# w!th the (ewery !ns!de and
hand!n# o%er the sa)e to 'et!t!oner. $he atter
too* the (ewery fro) the "a#, went near the
eectr!c !#ht at the "an*>s o""y, hed the (ewery
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.
?ater, at a"out 7:00 o>coc* !n the e%en!n# of the
sa)e day, 'et!t!oner arr!%ed at the res!dence of
6tty. 8ear)!no co)'a!n!n# that the (ewery
#!%en to h!) was fa*e. ,e then used a tester to
'ro%e the ae#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 sae o%er the $anay
'ro'erty "e decared nu and %o!d on the #round
of fraud and dece!t.
R$5, as aff!r)ed "y the 5ourt of 6''eas, hed
the earr!n#s uses as cons!derat!on for the sae
was de!%ered "y ;r. 5ru@ to the 'et!t!oner as
#enu!ne.
ISSUE
Ahether or not the deed of sae of the $anay
'ro'erty !s nu and %o!d.
RULING
-B$+$+2N ;BN+B;. $he contract of "arter or
sae !s %a!d.
$he 5!%! 5ode 'ro%!des that contracts are
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UST Faculty of Civil Law Page "!
2A SY 2009-2010
'erfected "y )ere consent. Fro) th!s )o)ent,
the 'art!es are "ound not ony to the fuf!)ent
of what has "een e4'ressy st!'uated "ut aso 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 sae !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
sae 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!ce 1357 of the
5!%! 5ode wh!ch re1u!res the e)"od!)ent of
certa!n contracts !n a 'u"!c !nstru)ent, !s ony
for con%en!ence, and re#!strat!on of the
!nstru)ent ony ad%ersey 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%ersey 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 uness there are reasons or
c!rcu)stances that warrant !ts nu!f!cat!on.
,ence, the 'ro"e) that shoud "e addressed !n
th!s case !s whether or not under the facts duy
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 annua"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, %!oence, !nt!)!dat!on, undue
!nfuence 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)erad0
cut d!a)ond earr!n#s was #enu!ne. 2n the
'rete4t that those '!eces of (ewery turned out to
"e counterfe!t, howe%er, 'et!t!oner su"se1uenty
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
contract wh!ch, w!thout the), he woud 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(oed 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!ay accede to 'et!t!oner>s 'ro'osa to "uy the
sa!d (ewery. 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 (ewery as he re'resented
that !ts %aue was -400,000.00 or )ore than
dou"e that of the (ewery wh!ch was %aued ony
at -160,000.00. +f !ndeed 'et!t!oner>s 'ro'erty
was truy worth that )uch, !t was certa!ny
contrary to the nature of a "us!ness)an0"an*er
!*e h!) to ha%e 'arted w!th h!s rea estate for
haf !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 (ewery for the $anay
'ro'erty.
Moreo%er, 'et!t!oner d!d not ceary ae#e
)!sta*e as a #round for nu!f!cat!on of the
contract of sae. B%en assu)!n# that he d!d,
'et!t!oner cannot successfuy !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!'ay )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 ae#at!ons !n the co)'a!nt,
'et!t!oner !ns!nuated that an !nfer!or one or one
that had ony Russ!an d!a)onds was su"st!tuted
for the (ewery 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 (ewery 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
ae#at!on that 'et!t!oner h!)sef coud "e
e4cused for the <)!sta*e.< 2n account of h!s
wor* as a "an*er0(eweer, !t can "e r!#htfuy
assu)ed that he was an e4'ert on )atters
re#ard!n# #e)s. ,e had the !nteectua 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 %aue of "oth the (ewery and h!s
Sales Case Digests
UST Faculty of Civil Law Page ""
2A SY 2009-2010
and. $he fact that he had seen the (ewery
"efore 2cto"er 24, 1/74 shoud not ha%e
'recuded h!) fro) ha%!n# !ts #enu!neness
tested !n the 'resence of ;r. 5ru@. ,ad he done
so, he coud ha%e a%o!ded the 'resent s!tuat!on
that he h!)sef "rou#ht a"out. +ndeed, the f!n#er
of sus'!c!on of sw!tch!n# the #enu!ne (ewery 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 ae#!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!ce 1574
of the 5!%! 5ode w!th!n wh!ch to e4a)!ne the
(ewery 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 (ewery 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!)sef had ear!er de!%ered the $anay 'ro'erty
to ;r. 5ru@ "y aff!4!n# h!s s!#nature to the
contract of sae. $hat after two hours he ater
ca!)ed that the (ewery was not the one he
!ntended !n e4chan#e for h!s $anay 'ro'erty,
coud not se%er the (ur!d!ca t!e that now "ound
h!) and ;r. 5ru@. $he nature and %aue of the
th!n# he had ta*en 'recude !ts return after that
su'er%en!n# 'er!od w!th!n wh!ch anyth!n# coud
ha%e ha''ened, not e4cud!n# the aterat!on of
the (ewery or !ts "e!n# sw!tched w!th an !nfer!or
*!nd.
8oth the tr!a and a''eate courts, therefore,
correcty rued that there were no e#a "ases for
the nu!f!cat!on of the contract of sae.
2wnersh!' o%er the 'arce of and and the 'a!r
of e)erad0cut d!a)ond earr!n#s had "een
transferred to ;r. 5ru@ and 'et!t!oner,
res'ect!%ey, u'on the actua and construct!%e
de!%ery thereof. 3a!d contract of sae "e!n#
a"soute !n nature, t!te 'assed to the %endee
u'on de!%ery of the th!n# sod s!nce there was
no st!'uat!on !n the contract that t!te to the
'ro'erty sod has "een reser%ed !n the seer
unt! fu 'ay)ent of the 'r!ce or that the %endor
has the r!#ht to un!ateray reso%e the contract
the )o)ent the "uyer fa!s to 'ay w!th!n a f!4ed
'er!od. 3uch st!'uat!ons are not )an!fest !n the
contract of sae.
Ah!e !t !s true that the a)ount of -40,000.00
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 "aance of
the 'urchase 'r!ce resut !n the 'ay)ent of
!nterest thereon. 6rt!ce 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
foow!n# cases:
=19 3houd !t ha%e "een so st!'uated:
=29 3houd the th!n# sod and de!%ered
'roduce fru!ts or !nco)e:
=39 3houd he "e !n defaut, 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!'uat!on for the 'ay)ent of !nterest !n the
contract of sae 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
sae.
CENTRAL .ANB OF THE #HILI##INES %s.
Sales Case Digests
UST Faculty of Civil Law Page "#
2A SY 2009-2010
S#OUSES ALFONSO and ANACLETA
.ICHARA
G.R. No. %&%-'( <a31 ,', ,---
Se3ond Di"i!ion
DE LEON, JR., J.
Fa3t!/ Res'ondent sod 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 sae
conta!ned that the 'ay)ent !s to "e effected ony
after the ;eed of 3ae sha ha%e "een duy
re#!stered and a cean t!te !ssued !n the na)e of
EBN;BB. 6so, the EBN;2R3 w! underta*e at
the!r e4'ense to f! the 'arces of and w!th an
esco)"ro free fro) waste )ater!as co)'acted
to the street e%e u'on s!#n!n# of the ;eed of
3ae 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!te, '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. 5onse1uenty, 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 ae#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 sae
and the return of the 'ro'ert!es, or !n the
aternat!%e that 'et!t!oner "e co)'eed to 'ay
the 'urchase 'r!ce 'us !nterest at the rate of
12U 'er annu) fro) Juy 1/, 1/73, unt! fuy
'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
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 deay!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 ae#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!te, !n add!t!on to
the 'resence of s1uatters who were not e%!cted
"y res'ondents. 3econd, !t ca!)ed that
res'ondents d!d not f! u' the ots w!th
esco)"ro free fro) waste )ater!as, as a#reed
$r!a court ordered s'ec!f!c 'erfor)ance of
5entra 8an* to 'ay for the 'ro'erty 'us
!nterest. 5ourt of 6''eas on the other hand
ordered the resc!ss!on of the contract of sae
hence th!s 'et!t!on.
I!!*e!:
+ssue 1: Ahether res'ondents are ent!ted to the
re)edy of resc!ss!on des'!te of the!r non0
co)'!ance to the!r o"!#at!ons to 5entra 8an*.
+ssue 2: Ahether 5entra 8an* !s (ust!f!ed !n
w!thhod!n# the 'ay)ent of the 'urchase 'r!ce.
He$d/
Issue &4 Res'ondents shoud not "e aowed 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 'arces of and w!th
esco)"ro. +t shoud "e e)'has!@ed that a
contract of sae !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!ce 15/0 of the c!%! code, the %endee
!s !*ew!se ent!ted to w!thhod '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!ce, "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!thhod!n# !ts 'ay)ent of the 'urchase 'r!ce.
AL.ERT R. #ADILLA "!. S#OUSES
Sales Case Digests
UST Faculty of Civil Law Page "$
2A SY 2009-2010
FLORESCO #AREDES and ADELINA
#AREDES, and THE HONORA.LE COURT
OF A##EALS
G.R. No. %,(@'( <a31 %', ,---
Se3ond Di"i!ion
MUISU<.ING, J./
Fa3t!/ 6"ert R. -ad!a and Foresco 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!ted athou#h
'r!%ate res'ondents were 'ay!n# ta4es thereon.
&nder the contract, 'et!t!oner undertoo* to
secure t!te 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 "aance 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
"aance of the 'urchase 'r!ce. 8ut the 'et!t!oner
was not a"e to 'ay the "aance !n fu. +n a
etter, 'r!%ate res'ondents, throu#h counse,
de)anded 'ay)ent of the re)a!n!n# "aance,
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 woud 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 "aance !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,
ae#!n# that he had aready su"stant!ay
co)'!ed w!th h!s o"!#at!on under the contract
to se. ,e ca!)ed that the se%era 'art!a
'ay)ents he had ear!er )ade, u'on 'r!%ate
res'ondents> re1uest, had !)'!edy )od!f!ed the
contract. ,e aso a%erred that he had aready
s'ent -1/0,000.00 !n o"ta!n!n# t!te to the
'ro'erty, su"d!%!d!n# !t, and !)'ro%!n# !ts r!#ht0
of0way.
-r!%ate res'ondents on the other hand ca!)ed
"efore the ower court that 'et!t!oner )a!c!ousy
deayed 'ay)ent of the "aance 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
fuy 'ay at the t!)e st!'uated was a %!oat!on of
the contract. 6so, they a%er that th!s %!oat!on
ed to the resc!ss!on of the contract, of wh!ch
'et!t!oner was for)ay !nfor)ed.
$he ower court rued !n fa%or of 'et!t!oner,
say!n# that e%en !f 'et!t!oner !ndeed "reached
the contract to se, !t was ony 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 !tsef. $he 'ay)ents, howe%er, were
e%!denced "y rece!'ts duy s!#ned "y 'r!%ate
res'ondents. 6cce'tance of deayed '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''eas, 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''eas, the !ssue of
whether or not the "reach of contract co))!tted
!s s!#ht or casua !s !rree%ant !n the case of a
contract to se, where t!te 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''eas re(ected 'et!t!oner>s ca!) 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 !tsef
'ro%!des that no ter)s and cond!t!ons there!n
sha "e )od!f!ed uness such )od!f!cat!on !s !n
wr!t!n# and duy s!#ned "y the 'art!es. $he
)od!f!cat!on ae#ed "y 'et!t!oner !s not !n
wr!t!n#, )uch ess s!#ned "y the 'art!es.
Moreo%er, 'r!%ate res'ondents )ade a t!)ey
o"(ect!on to 'et!t!oner>s 'art!a 'ay)ents when
they offered to se to 'et!t!oner ony one0haf of
the 'ro'erty for such 'art!a 'ay)ents. -r!%ate
res'ondents therefore are ent!ted to resc!ss!on
under 6rt!ce 11/1 of the 5!%! 5ode, "ut w!th the
o"!#at!on to return to 'et!t!oner the 'ay)ents
Sales Case Digests
2A SY 2009-2010
the atter had )ade, !ncud!n# e4'enses !ncurred
!n secur!n# t!te to the 'ro'erty and !n
su"d!%!d!n# and !)'ro%!n# !t r!#ht of way, hence
th!s 'et!t!on.
I!!*e!/
Ahether the a''eants are ent!ted to resc!ss!on
under 6rt!ce 11/1 of the 5!%! 5ode.
He$d/ -ert!nent 'ro%!s!ons of the contract s!#n!fy
that t!te to the 'ro'erty re)a!ns !n the %endors
unt! the %endee shoud ha%e fuy '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!'uated '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 aready 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!te 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.
Sales Case Digests
UST Faculty of Civil Law Page #0
2A SY 2009-2010
A$2on!o Iin+an "!. Co*t o2 Appea$!
G.R. No. 12/10.
3e'te)"er 26, 2001
Hu!su)"!n#
*acts4
-r!%ate res'ondent -aao sod 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 ony
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
ca!)ed. 3!)'y 'ut, no a#ree)ent "etween the
'art!es was )ade.
-aao 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
aready consu))ated: hence, the re)edy
shoud "e for the coect!on of the "aance 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 -aao.
$h!s was "rou#ht to the 5ourt of 6''eas "ut the
atter aso aff!r)ed the dec!s!on. ,ence, th!s
'et!t!on.
Issues4
1. Ahether or not the contract of sae !s
%a!dy resc!nded.
2. Ahether or not the award of )ora and
e4e)'ary da)a#es !s 'ro'er.
Held4
1. 6rt!ce 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
'arty ent!ted to resc!nd shoud a''y to
the court for a decree of resc!ss!on. $he
o'erat!%e act wh!ch 'roduces the
resout!on of contract !s decree of court
not the )ere act of %endor.
$he etter wr!tten "y the 'r!%ate
res'ondent decar!n# h! !ntent!on to
resc!nd d!d not o'erate %a!dy,
$he f!!n# "y -aao 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. $he 'et!t!oner *new res'ondentFs
reason for se!n#. -et!t!oner refused to
for)ay e4ecute an !nstru)ent show!n#
the!r )utua a#ree)ent to resc!nd the
contract of sae. ,e aso d!d not
su"stant!ate 'roof that he was ready
and w!!n# to 'ay. ,ence, the award!n#
for da)a#es !s 'ro'er.
-et!t!on den!ed.
Sales Case Digests
2A SY 2009-2010
#e$a Gi$ "!. CA
G.R. No. 12.206
3e'te)"er 12, 2003
5ae(o 3r.
*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''eaed to the
5ourt of 6''eas "ut the atter aso
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 sod "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!te
to the %endee. $he 'ro'erty was then
sod to one 5onstanc!o Ma#ana and
was a#a!n sod to the 'resent 'ossessor
B)!!o Ma#tuac who !s construct!n# a
"u!d!n# on sa!d ot. 3u"se1uenty,
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 sae of the d!s'uted
'ro'erty to +u)!nada and 6#a'!to
-acetes !s )erey a contract to se
"ecause the fu 'r!ce was not 'a!d "y
the atter to the for)er. $hey aso 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
!n #ood fa!th.
Issue4
Ahether or not the 'ro'erty was %a!dy
sod to +u)!nada and 6#a'!to -acetes.
Held4
$he 5ourt rued that the sae "etween
5once'c!on and +u)!nada !s a
consu))ated contract of sae. $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!te to the
%endee. $hen, %endee w! 'ay the
re)a!n!n# a)ount.
$he cert!f!cate of t!te was not de!%ered.
6s a conse1uence of the death of
5once'c!on, !t !s the he!rs who ha%e the
duty to de!%er such. 6''arenty, they
were not a"e to de!%er the cert!f!cate
aso. +u)!nadaFs act of 'ay!n# the
re)a!n!n# a)ount ony after so )any
years !s st! %a!d "ecause after a she
has no duty to 'ay unt! t!e has "een
de!%ered to her.
-et!t!on den!ed for ac* of )er!t.
Sales Case Digests
2A SY 2009-2010
Se"eino .ai3*ato, J.,
"!.
Co*t o2 Appea$!, Tent1 Di"i!ion, <aiano ..
Ne0enio and Fe$i!a V. Ne0enio, Con!tantino
<. Ga$eo! and E*+enio V. A0oe!
Fe"ruary /, 2000 G.R. No. 105/02
8uena, J.:
FACTS/
8ar!cuatro "ou#ht two ots, 'art of the E!ctor!a
E!a#e, on !nsta)ents "as!s fro) Gaeos on
2cto"er 16, 1/67.
$wo )onths fro) the date of the 're%!ous sae,
Gaeos sod the ent!re su"d!%!s!on, !ncud!n# the
two ots, to 6)ores. 8ar!cuatro was !nfor)ed "y
Gaeos a"out the sae and was ad%!sed to 'ay
the "aance of the 'urchase 'r!ce of the two ots
d!recty to 6)ores.
6)ores too* 'ossess!on of the su"d!%!s!on and
de%eo'ed the sa)e for res!dent!a 'ur'oses. ,e
secured the transfer of the t!te to the sa)e !n
h!s na)e. 6fterwards, he sod the two ots of the
s'ouses Mar!ano and Fe!sa Ne)en!o. -r!or to
the sae, 8ar!cuatro was !nfor)ed throu#h a
etter "y 6)ores a"out the !)'end!n# sae 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.
$r!a court rendered a dec!s!on, decar!n#
Ne)en!o s'ouses as the owners of the d!s'uted
ot. 5ourt of 6''eas aff!r)ed !n toto the
(ud#)ent of the tr!a court.
ISSUE/
1. Ahether the sae )ade to 6)ores "y
Gaeos !s %a!dD
2. Ahether the Ne)en!o s'ouses are
'urchasers !n #ood fa!thD
RULING/
+ssue 1
6)ores was !n #ood fa!th when he "ou#ht the
su"d!%!s!on, howe%er, when he re#!stered h!s
t!te he aready had *nowed#e of the 're%!ous
sae. 3uch *nowed#e ta!nted h!s re#!strat!on
w!th "ad fa!th. +n add!t!on, the a#ree)ent to
coect the "aance of the 'urchase 'r!ce of the
d!s'uted ots fro) 8ar!cuatro wh!ch 'resu''oses
*nowed#e of the 're%!ous sae "y 6)ores.
&nder 6rt. 1544, the ownersh!' of an !))o%a"e
'ro'erty sha "eon# to the 'urchaser who !n
+ood 2ait1 re#!sters !t f!rst !n the re#!stry of
'ro'erty.
=&raca %s 5a9 I$he second "uyer )ust show
cont!nu!n# #ood fa!th and !nnocence or ac* of
*nowed#e of the f!rst sae 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 shoud "e fro)
the t!)e of the 'erfect!on of the sae unt! u' to
the t!)e that he "e decared the soe and true
owner of the 'ro'erty.
+ssue 2
Ne)en!o s'ouses ony %!s!ted the ots ten
)onths after the sae wh!ch was e%!denced
Sales Case Digests
2A SY 2009-2010
dur!n# the tr!a of the case. 6nd so, they cannot
ca!) to "e 'urchasers !n #ood fa!th when they
re#!stered the t!te. $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,
Veneanda A0odia, Fe$ipe A0odia, E*ti7*io
A0odia and Go Bi0 C1*an
Sales Case Digests
2A SY 2009-2010
"!.
Honoa5$e Co*t o2 Appea$! and A>na
.ot1e! Rea$t6 Co0pan6.
June 23, 2001 G.R. No. 147746
Nachura, J.:
FACTS/
6 'ro'erty !n the na)e of Go L!) 5huan was
or!#!nay owned "y the 6)od!as and was
"rou#ht under the o'erat!on of the $orrens
3yste). ,owe%er, the t!te was ost dur!n# the
3econd Aord Aar.
+n 1/64, the 6)od!as ae#edy con%eyed the
'ro'erty to 6@nar and was re#!stered under 6ct
344 as there was no t!te.
+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.
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.
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 shoud "e #!%en 'reference
o%er the atter.
ISSUE/
1. Aho "etween Go L!) 5huan and 6@nar
has the "etter r!#ht o%er the su"(ect
'ro'ertyD
RULING/
6rt. 1544 'ro%!des:
ownersh!' sha "eon# to the 'erson ac1u!r!n# !t
who !n #ood fa!th f!rst recorded !t !n the Re#!stry
of -ro'erty.
+f the and !s re#!stered under $orrens $!te, and
!t !s sod and the sae !s re#!stered no under the
?and Re#!strat!on 6ct "ut under 6ct 3344, such
sae !s not cons!dered re#!stered.
6@nar re#!stered !ts t!te under 6ct 3344 wh!e
Go L!) 5huan re#!stered !t under 6ct No. 4/6,
and so the atter !s dee)ed to "e the owner of
the 'ro'erty.
-et!t!on for re%!ew !s GR6N$B;.
So$i"a "!. T1e Inte!tate E!tate o2 <a3e$o <.
Vi$$a$5a
Sales Case Digests
UST Faculty of Civil Law Page #!
2A SY 2009-2010
;ate: ;ece)"er 7, 2003 G.R. No.15401.
;!%!s!on: F!rst ;!%!s!on
-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.
2n the other hand, res'ondent ar#ued
that the house and ot were sod to h!) on
!nsta)ent "as!s: and that 'art!a 'ay)ent
thereof was #!%en. ,e aso 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 ca!) of ownersh!'.
$r!a 5ourt rued !n fa%or of the
res'ondent on the #round of aches. 5ourt of
6''eas 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 woud
!n%a!date the contract of sae.
RULING: 35 aff!r)ed 56F s and rued !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 sae. &nder the setted doctr!ne, non'ay)ent
!s a resoutory 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 seer !s to sue for coect!on or
resc!nd the contract.

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!'uated 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 aready "arred
fro) reco%er!n# the 'ro'erty due to aches and
'rescr!'t!on.
Vi!a6an Sa40i$$ Co0pan6, In3. "!. Co*t o2
Appea$!
Sales Case Digests
UST Faculty of Civil Law Page #"
2A SY 2009-2010
;ate: March 3, 1//3 G.R. No. 73751
;!%!s!on: Bn "anc
-onente: Just!ce ;a%!de
FACTS: -et!t!oner0cor'orat!on entered !nto a
sae !n%o%!n# scra' !ron w!th 'r!%ate res'ondent,
su"(ect to the cond!t!on that the atter shoud
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"se1uenty, 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 sae due to
the atterFs fa!ure to co)'y w!th the essent!a
'recond!t!ons of the!r con tract.
-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.
2n the other hand, 'et!t!oner0
cor'orat!on !ns!sted that the canceat!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 rued !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, coud not "e a''!ed "ecause !)'!ed
de!%ery was aready )ade !n the case at "ar.
$h!s !)'!ed de!%ery was )an!fested "y the fact
that the 'et!t!oner0cor'orat!on aowed the
'r!%ate res'ondent to d!# and #ather scra' !ron
fro) !ts 're)!ses.
5ourt of 6''eas aff!r)ed the ru!n#.
,ence, the 'et!t!on.
ISSUE: Ahether or not ower court erred !n
ru!n# that auto)at!c resc!ss!on coud not "e
a''!ed !n the !nstant case.
RULING: 35 found )er!t on the 'et!t!on
stress!n# that the ower court erred !n the
a''rec!at!on of the nature of the transact!on
"etween 'et!t!oner0cor'orat!on and 'r!%ate
res'ondent. 6ccord!n#y, what trans'!red
"etween the 'art!es was a contract or 'ro)!se to
se and not a contract of sae. -et!t!oner0
cor'orat!onFs o"!#at!on to se !s su"(ect to a
sus'ens!%e cond!t!on, wh!ch was 'r!%ate
res'ondentFs o'en!n# of an !rre%oca"e and
uncond!t!ona etter of cred!t. ,owe%er, th!s
cond!t!on was not fuf!ed.
+n !ne w!th the fore#o!n#, the non0
fuf!)ent coud not e%en "e cons!dered a
"reach, "ut s!)'y an e%ent that 're%ented the
o"!#at!on of the 'et!t!oner cor'orat!on to con%ey
t!te fro) ac1u!r!n# "!nd!n# force.
Con31ita Noo$, et a$. "!. Co*t o2 Appea$!, et
a$.
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2A SY 2009-2010
G.R. No. %%DD&:, J*$6 ,(, %))'
T1id Di"i!ion
#ANGANI.AN, J/
FACTS/
$wo 'arces of and are !n d!s'ute and !t!#ated
wh!ch was for)ery 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 'arces of
and fro) defendants 6naceto Noo, youn#er
"rother of 5onch!ta. -a!nt!ffs ae#ed that they
are the owners of su"(ect 'arces 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%eo')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 forecosed. $hat
w!th!n the 'er!od of rede)'t!on, 'a!nt!ff
contacted defendant 6naceto to redee) !t fro)
;8- wh!ch the atter d!d. 8ecause of th!s, t!tes
of two 'arces were transferred to 6naceto.
6naceto 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 "aance
-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.
ISSUE/
Ahether or not 'a!nt!ffs s'ouses has the r!#ht to
re'urchase the 'arces of and to 6naceto.
RULING/
None.
6 contract of re'urchase ar!s!n# out of a sae
where the seer d!d not ha%e any t!te to the
'ro'erty IsodJ !s not %a!d. 3!nce noth!n# was
sod, then there !s aso noth!n# to re'urchase. +t
!s cear that 5onch!ta no on#er had any t!te to
the 'arces of and at the t!)e of sae "ecause
when the )ort#a#ed 'arces of and were
forecosed 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 6naceto
succeeded !n "uy!n# the sa)e, so that ;8-Fs
t!tes were canceed and new cert!f!cates of t!te
were !ssued to h!). 3!nce, the ae#ed contract
of re'urchase was de'endent on the %a!d!ty of
the contract of sae, !t !s !tsef %o!d. 6 %o!d
contract cannot #!%e r!se to a %a!d one. +t !s
!*ew!se cear that 5onch!ta can no on#er
de!%er the o"(ect of the sae to the 6naceto
"ecause he has aready ac1u!red t!te and
de!%ery thereof fro) the r!#htfu owner, the
;8-. $hus, the contract )ay "e dee)ed to "e
!no'erat!%e. $he r!#ht to re'urchase
'resu''oses a %a!d contract of sae "etween
the sa)e 'art!es. &nd!s'utedy, 6naceto
ac1u!red t!te to the 'ro'erty fro) ;8- and not
fro) the 'et!t!oners. -et!t!on den!ed.
Sp!. Ca$o! and E*$a$ia Ra60*ndo, et a$. "!.
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Sp!. Do0inado and Ro!a$ia .and*n+
G.R. No. %'%,:-, J*$6 -(, ,--'
T1id Di"i!ion
CHICOANAZARIO, J./
FACTS/
Bua!a was en#a#ed !n the "us!ness of "uy!n#
and se!n# ar#e catte. For th!s 'ur'ose, she
e)'oyed :biyaheros9 whose 'r!)ary tas*
!n%o%ed the 'rocur!n# of ar#e catte w!th the
f!nanc!a ca'!ta 'ro%!ded "y Bua!a and
de!%er!n# the 'rocured catte to her for further
d!'osa. $o secure the f!nanc!a ca'!ta she
ad%anced for the :biyaheros9 Bua!a re1u!red
the) to surrender the $ransfer 5ert!f!cates of
$!te of the!r 'ro'ert!es and to e4ecute the
corres'ond!n# ;eeds of 3ae !n her fa%our.
;o)!nador had "een wor*!n# for Bua!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, Bua!a
found that he !ncurred shorta#e !n h!s catte
'rocure)ent o'erat!on so ;o)!nador and h!s
w!fe Rosa!a 8andon# e4ecuted a ;eed of 3ae
!n fa%our of Bua!a. $he su"(ect 'ro'erty was
thereafter sod "y Bua!a and her s'ouse 5aros
Ray)undo to Bua!aFs #randn!ece Joceyn
wh!ch was ater re#!stered !n the na)e of
Joceyn 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 sae "efore R$5
a#a!nst Bua!a and Joceyn on the #round that
the!r consent to the sae of the su"(ect 'ro'erty
was %!t!ated "y Bua!a after they were ser%ed "y
JoceynFs counse to %acate. $hey ae#ed that
there was no sae !ntended "ut ony 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. Joceyn )a!nta!ned that she was
a "uyer !n #ood fa!th and for %aue. $he court of
a''eas re%ersed the R$5 ;ec!s!on and found
that the transact!on entered !nto "y ;o)!nador
and Bua!a was not one of sae "ut an e1u!ta"e
)ort#a#e. ,ence th!s 'et!t!on.
ISSUE/
1. Ahether or not the transact!on entered
!nto "y the 'art!es was a contract of
sae.
2. Ahether or not Joceyn !s a "uyer !n
Good Fa!th.
RULING/
1. No.
+n e4ecut!n# the sa!d ;eed of
3ae, ;o)!nador and Bua!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
Bua!a. 8y Bua!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!tes to the!r rea 'ro'ert!es and to
e4ecute !n her fa%our the corres'ond!n#
deeds of sae 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 Bua!a has no r!#ht to
su"se1uenty 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 reat!onsh!' !s )erey
)ort#a#or and )ort#a#ee rather than
seer and "uyer. $he content!on of
'et!t!oner that ;o)!nador ceded h!s
'ro'erty to Bua!a as 'ay)ent for h!s
o"!#at!on for !t !s contrary to hu)an
e4'er!ence "ecause he woud f!rst oo*
for )eans to sette h!s o"!#at!on and the
se!n# of a 'ro'erty on wh!ch h!s house
that sheters the) stand woud "e h!s
ast resort.
2. No.
Joceyn !s a #randn!ece of
Bua!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
Sales Case Digests
2A SY 2009-2010
ac1u!re *nowed#e of her #rand auntFs
"us!ness 'ract!ce of re1u!r!n# her
:biyaheros9 to surrender the t!tes to
the!r 'ro'ert!es as secur!ty. $h!s shoud
'ut her on #uard for any 'oss!"e
a"uses that Bua!a )ay co))!t w!th the
t!tes. ?!*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
seer )ust "e wary. 6 "uyer who does
not !n%est!#ate the r!#hts of one !n
'ossess!on can hardy "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 May 27, 2004
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UST Faculty of Civil Law Page $0
2A SY 2009-2010
F+R3$ ;+E+3+2N
KN6RB3036N$+6G2, J.:
Fa3t!/
$he 'art!es !n th!s case e4ecuted the
<Lasuatan 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 8uacan, wh!ch !s
se!n# to the res'ondents for the a)ount of
-150,000.
$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 ca!)s that she a''roached one -h!!'
dea $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!cutura and ocated !n 8uacan,
-et!t!oner ca!)s that 6tty. Ro4as and ?ee
coerced her to s!#n the <Lasuatan< and that the
docu)ent was e4ecuted )erey as wr!tten
e%!dence of the oan and )ort#a#e.
Res'ondents, on the other hand ca!)
that the sae of the 'ro'erty !n 1uest!on was
"ro*ered "y the!r )utua ac1ua!ntance and
"ro*er, -h!!' dea $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.
$he tr!a court rendered a dec!s!on !n fa%or of
'et!t!oner. 2n a''ea, the 5ourt of 6''eas
re%ersed the tr!a court, and rendered a dec!s!on
!n fa%or of res'ondents, the d!s'os!t!%e 'ort!on of
wh!ch reads:
I!!*e/
Ahether the contract !n 1uest!on !s an e1u!ta"e
)ort#a#e or a deed of a"soute sae.
R*$in+/
$he docu)ent a''ears on !ts face to "e a
contract of sae, and conta!ns the foow!n#
cause:
Na dah! at aan#0aan# sa haa#an# +36NG
;66N 6$ ?+M6M-&NG ?+82NG -+32
=-150,000.009, 3aa'!n# -!!'!no, na n#ayon#
araw na !to ay !"!nayad sa a*!n at t!nan##a' *o
na)an n# "uon# *as!yahan#0oo" "!an# husto
at #ana' na *a"ayaran n! R&8+N $. ?BB, )ay
sa'at na #uan#, -!!'!no, *asa *ay ?!!an 3!son
at nan!n!rahan sa 230 Mac6rthur ,!#hway,
Laruhatan, Eaen@uea, Metro Man!a, a*!n#
+-+N6G8+8+?+, +3+N636?+N at +N+?+?+-6$ n#
#ana' at 'atuuyan at waan# 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 *aunaran o )e(oras na d!to ay )a*!*!ta
o na*at!r!* o )atata#'uan sa nasa"!n# R&8+N
$. ?BB at sa *anyan# )#a ta#a'a)ana o
*aha!!.
+t !s we0setted that the 'resence of e%en one of
the fore#o!n# c!rcu)stances !s suff!c!ent to
decare a contract as an e1u!ta"e )ort#a#e, !n
consonance w!th the rue that the aw fa%ors the
east trans)!ss!on of 'ro'erty r!#hts.For the
'resu)'t!on of an e1u!ta"e )ort#a#e to ar!se
under 6rt!ce 1602, two re1u!s!tes )ust concur:
=19 that the 'art!es entered !nto a contract
deno)!nated as a sae: and =29 that the!r
!ntent!on was to secure an e4!st!n# de"t "y way
Sales Case Digests
2A SY 2009-2010
of a )ort#a#e.
A,BRBF2RB, 're)!ses cons!dered, the
dec!s!on of the 5ourt of 6''eas dated
No%e)"er 20, 2002, wh!ch d!s)!ssed the
co)'a!nt f!ed "y 'et!t!oner for ac* of )er!t, !s
6FF+RMB;
Spo*!e! A*!tia and Leoni!a Hi$aio "!.
Spo*!e! Gon>a$e> G.R. No. %('&,%
Jan*a6 ,%, ,--( Se3ond Di"i!ion
MUISU<.ING, J.,
Sales Case Digests
2A SY 2009-2010
FACTS/ 3'ouses ,!ar!o f!ed an act!on for
;ecarat!on of Nu!ty a#a!nst 3'ouses Gon@aes
!n%o%!n# 3 'arces of ands wh!ch were the
su"(ect of 2 ;eeds of 3ae 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 ca!)ed that the contract
"etween the) and 3'ouses Gon@ae@ were not
of sae "ut oans for -260,000. ,owe%er, !t
turned out that 3'ouses Gon@ae@ re#!stered the
d!s'uted ots !n the!r na)es throu#h the use of
fraud, )!sre'resentat!on and fas!f!cat!on, us!n#
the f!ct!t!ous contracts of sae.
3'ouses on the other hand contend that they
"ou#ht the sa!d ots fro) 3'ouses ,!ar!o )erey
out of '!ty for the) and that the ;eed of
6"soute 3ae was notar!@ed.
R$5: rued !n fa%or of 3'ouses ,!ar!o.
56: RBEBR3B;.
ISSUE/ Ahether the transact!on !s an a"soute
sae or e1u!ta"e )ort#a#e of rea 'ro'erty.
HELD/ AFFIR<ED.
$he transact!on !s an a"soute sae.
$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
reaty ta4es !s not concus!%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 %aues
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 'arces !n 1uest!on. 6s to the
ae#at!on that 'et!t!oners were !n 'ossess!on of
the 'ro'ert!es e%en after the sae, !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
'ersonay a''eared and ac*nowed#ed the sae
docu)ents "efore h!).
?asty, ?eon!sa ,!ar!o sent a note to Mrs.
Gon@aes re1uest!n# the) to e4ecute another
antedated deed of sae, '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
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
3ae9. 3he !*ew!se )ade )ent!on a"out ca'!ta
#a!ns ta4 and re#!strat!on fees, wh!ch can ony
f!nd ree%ance and necess!ty !n a contract of sae
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.
$hus, the true !ntent of the 'art!es !n%o%es a
contract of sae. +t !s not )erey a oan, )uch
ess an e1u!ta"e )ort#a#e
O!3a Fenande> "!. Spo*!e! Ca$o! and
Na3i!a Ta*n G.R. No. %(&@D@
No"e05e %(, ,--, T1id Di"i!ion
Sales Case Digests
2A SY 2009-2010
#ANGANI.AN, J./
FACTS/ 6 f!sh'ond ocated !n 6reano08an!
;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 unce 6r)ando. 6nton!o and
;e)etr!a sod the!r res'ect!%e shares to
3'ouses $arun. $hese saes were re#!stered
and annotated !n the 25$. ?ater, the sa!d co0
owners e4ecuted a ;eed of B4tra(ud!c!a
-art!t!on of two 'arces of re#!stered and w!th
e4chan#e of shares. $h!s !n%o%ed the f!sh'ond
=1
st
9 that was co0owned and another f!sh'ond
=2
nd
9. +t was aso st!'uated !n the deed that the
'art!es reco#n!@e and res'ect the sae ear!er
)ade. 6n#e 8. Fernande@ e4chan#ed h!s share
!n the 2
nd
f!sh'ond to the shares of h!s co0owners
on the re)a!n!n# 'ort!on of the 1
st
f!sh'ond.
Fro) that t!)e on, they had "een 'ay!n# the
reaty 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!ted to
redee) the 'ro'erty.
56: RBEBR3B;.
ISSUE/ Ahether or not the transact!on !s one of
a"soute sae or e1u!ta"e )ort#a#e.
HELD/ AFFIR<ED.
$he transact!on !s an a"soute sae.
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!ce 1602 of the 5!%! 5ode are
)an!fest, as foows: =a9 when the 'r!ce of the
sae w!th the r!#ht to re'urchase !s unusuay
!nade1uate, and ="9 when the %endor re)a!ns !n
'ossess!on as essee or otherw!se. 6thou#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. $he seers
were h!s co0owners 00 6nton!o and ;e)etr!a
Fernande@ 00 who, howe%er, are not ca!)!n#
that the sae "etween the) was an e1u!ta"e
)ort#a#e. For the 'resu)'t!on of an e1u!ta"e
)ort#a#e to ar!se, one )ust f!rst sat!sfy the
re1u!re)ent that the 'art!es entered !nto a
contract deno)!nated as a contract of sae, and
that the!r !ntent!on was to secure an e4!st!n#
de"t "y way of )ort#a#e.
Further)ore, )ere ae#ed !nade1uacy of the
'r!ce does not necessar!y %o!d a contract of
sae, athou#h the !nade1uacy )ay !nd!cate that
there was a defect !n the consent, or that the
'art!es reay !ntended a donat!on, )ort#a#e, or
so)e other act or contract. F!nay, uness the
'r!ce !s #rossy !nade1uate or shoc*!n# to the
consc!ence, a sae !s not set as!de. +n th!s case,
'et!t!oners fa!ed to esta"!sh the fa!r )ar*et
%aue of the 'ro'erty when !t was sod !n 1/6..
,ence, there !s no "as!s to concude that the
'r!ce was #rossy !nade1uate or shoc*!n# to the
consc!ence.
To$entino and RoNo "!. CA, De G*>0an,
#on+3o and .ad*ia
Sales Case Digests
2A SY 2009-2010
G.R. No. %,@':)
A*+*!t %, ,--,
Se3ond Di"i!ion
M*i!*05in+, J/
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%eo')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
forecosed.

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 $oent!no and
?oren@a RoQo ='et!t!oners9. $he oan to RF5
was 'a!d and the )ort#a#e was canceed.
-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"soute 3ae,
'et!t!oners secured the canceat!on of $5$ No.
20247 $0105 and $5$ No. 6/164 was !ssued !n
the!r na)e.
&'on the death of -edro de Gu@)an !n
1/.1, res'ondents tr!ed to sette the re)a!n!n#
"aance 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 %aue
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!te was
aready !n the na)e of the 'et!t!oners.
5onse1uenty, res'ondents f!ed a co)'a!nt for
decarat!on of sae as e;uitable mortgage and
recon%eyance of 'ro'erty w!th da)a#es. 8oth
the tr!a court and 56 rued !n fa%or of
res'ondents. ,ence, th!s !nstant 'et!t!on.
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 decarat!on of
nu!ty of the ;eed of 6"soute 3ae
!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 ony when there !s no
e4'ress a#ree)ent or st!'uat!on "etween the
'art!es. 8ut !n the !nstant case, there was an
e4'ress a#ree)ent, therefore !na''!ca"e.
35 sa!d wron#. $here !s noth!n# !n 6rt.
1602 that !nd!cates !t a''!es ony !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 hod 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"soute 3ae. $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, rued that these were suff!c!ent to
ra!se the 'resu)'t!on that the contract was an
e1u!ta"e )ort#a#e.
2.9 35 hed that we entrenched !s the
rue 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 rues 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 Page $!
2A SY 2009-2010
???????????????????????????????????????
6rt. 1602. $he contract sha "e 'resu)ed to "e
an e1u!ta"e )ort#a#e, !n any of the foow!n#
cases:
=19 Ahen the 'r!ce of a sae w!th r!#ht to
re'urchase !s unusuay !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!)sef a
'art of the 'urchase 'r!ce:
=59 Ahen the %endor "!nds h!)sef to 'ay
the ta4es on the th!n# sod:
=69 +n any other case where !t )ay "e fa!ry
!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. $he 'ro%!s!ons of art!ce 1602 sha
aso a''y to a contract 'ur'ort!n# to "e an
a"soute sae.
Geo+ina Hi$ado "!. Hei! o2 Ra2ae$ <eda$$a
G.R. No. %((,,'
Fe5*a6 %:, ,--,
Sales Case Digests
UST Faculty of Civil Law Page $"
2A SY 2009-2010
Se3ond Di"i!ion
<endo>a, J/
Fa3t!/
Gor#on!o Maca!nan was the owner of
se%era 'ro'ert!es !n 8acood 5!ty. &'on h!s
death !n 1/66, h!s estate was d!%!ded a)on# h!s
he!rs, !ncud!n# 8er"on!a who had 'redeceased
h!). +n turn, her ch!dren Rafae, ?ourdes and
$eres!ta, surna)ed Medaa succeeded to her
!nher!tance. Rafae MedaaFs share cons!sted of
f!%e hectares !n ?ot No. 1031 and 1,1/. s1.). !n
the ?o'e@ Jaena 'ro'erty.
+n 1/./ and 1/71, Rafae e4ecuted a
;eed of 6"soute 3ae, '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
Medaa e4ecuted three )ore contracts
concern!n# ?ot No. 1031 and the ?o'e@ Jaena
'ro'erty.
+n 1/74, 8er"on!aFs s!ster, 6n!ta
Maca!nan "rou#ht a su!t a#a!nst ,!ado and
Medaa for e#a rede)'t!on. Medaa f!ed a
cross0ca!) a#a!nst ,!ado, ae#!n# that the
;eed of 3ae !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%ertheess, ,!ado
ca!)s !t was a deed of sae and not a oan
a#ree)ent.
$he tr!a court d!s)!ssed 6n!taFs
co)'a!nt and rued !n fa%or of 'et!t!oner, stat!n#
that Medaa as a th!rd year aw 'ro'er when the
deed was e4ecuted had fu *nowed#e of the
conse1uences when he aff!4ed h!s s!#nature.
,ence, the court was con%!nced that the
!ntent!on was reay to se "ecause a the
for)a!t!es re1u!red for a %a!d and enforcea"e
contract ha%e "een fuy sat!sf!ed.
,owe%er, the 56 re%ersed the tr!a
courtFs dec!s!on for the reason that the assessed
%aue of ?ot No. 1031 !s -145,460 and the
cons!derat!on was ony for -50,000. 6s such, !t
can ony concude that !t was #rossy
!nade1uate.
-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"soute sae e4ecuted !s the aw
"etween the 'art!es.
R*$in+/
1.9 &nder 6rt. 1602 !n reat!on to 6rt.
1604 of the 5!%! 5ode, a contract 'ur'ort!n# to
"e an a"soute sae !s 'resu)ed to "e an
e1u!ta"e )ort#a#e R
=19 when the 'r!ce of a sae . . . !s unusuay
!nade1uate:
=29 when the %endor re)a!ns !n
'ossess!on as essee or otherw!se:
=69 !n any other case where !t )ay "e fa!ry
'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 '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
unusuay !nade1uate as co)'ared to the
)ar*et %aue of the ands !n the ne!#h"orhood.
Sales Case Digests
UST Faculty of Civil Law Page $#
2A SY 2009-2010
6so, Medaa re)a!ned !n 'ossess!on of
the ot as corro"orated "y h!s tenant Ra)on
Ness!a and aso "y 6n!ta Maca!nan.
Moreo%er, the ser!es of transact!ons
e4ecuted after the 1/./ ;eed of 6"soute 3ae
!nd!cated 1u!te ceary that the rea !ntent!on of
the 'art!es was to secure the oans of Medaa.
+n fact the 56 hed 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 hed that !n %!ew of the
concus!ons reached, !t w! suff!ce to say that
e%en !f a docu)ent a''ears on !ts face to "e a
sae, the owner of the 'ro'erty )ay 'ro%e that
the contract !s reay 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 ,%, ,--%
Sales Case Digests
UST Faculty of Civil Law Page $$
2A SY 2009-2010
<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 %aue of the ots aready
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)'eed 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 coatera, a deed of
sae dated 6'r! 10, 1/7. where"y they
'ur'ortedy sod 2 of the 3 ots aon# 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
coatera was re1u!red, the <deed of sae< "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 sae,< howe%er, the de
Gu@)ans re)a!ned !n 'ossess!on of the
'ro'erty. 6s!de fro) these oans, de Gu@)an
aso 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 aready "een <sod< to 3!och! under
the 6'r! 10, 1/7. deed of sae, sod. $he sae 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 *nowed#e of the
de Gu@)an s'ouses, 3!och! had the s'ouses
$5$ canceed on the "as!s of the deed of sae
e4ecuted "y the s'ouses on 6'r! 10, 1/7., and
had new $orrens t!tes !ssued !n h!s na)e.
2n June 20, 1/7., 3!och! sod the two
ots and the !)'ro%e)ents thereon for -2..5
M!!on to here!n 'et!t!oners Jay)e and B%eyn
&y. $hereafter, 'et!t!oners had 3!och!Fs t!tes
o%er the ots canceed and had new t!tes !ssued
o%er the 'ro'erty. 2n Juy 1, 1/77, 'et!t!oners
entered !nto a contract of ease w!th o't!on to
"uy w!th Ro"erto 3aa'antan. 3aa'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. 5onse1uenty, 3aa'antan
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!, 3aa'antan,
and here!n 'et!t!oners, see*!n# the refor)at!on
of the 6'r! 10, 1/7. ;eed of 6"soute 3ae 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''eas,
the atter aff!r)ed the dec!s!on of the tr!a court
hod!n# that the sae 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 sae )ade "y here!n
'r!%ate res'ondents was !ndeed an e1u!ta"e
)ort#a#e as hed "y "oth the tr!a court and the
a''eate court
,B?;: KB3, the sae !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 foow!n#
cases:
re'urchase !s unusuay !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!)sef a 'art of the 'urchase 'r!ce:
=59 Ahen the %endor "!nds h!)sef to 'ay the
ta4es on the th!n# sod:=69 +n any other case
where !t )ay fa!ry "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.
$he court was con%!nced and found that the
1uest!oned deed of sae !s !n rea!ty a )ere
e1u!ta"e )ort#a#e and not an a"soute sae !n
%!ew of the foow!n# c!rcu)stances:
F!rst, the cons!derat!on of the sae of -2.5 M!!on
!s #rossy and unusuay !nade1uate.3econd,
des'!te the ae#ed deed of sae, 'a!nt!ffs ha%e
Sales Case Digests
2A SY 2009-2010
re)a!ned !n actua and 'hys!ca 'ossess!on of
the !t!#ated 'ro'erty u' to the 'resent
t!)e.$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 sae *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 sae w!thout 3!och!
de)and!n# for any add!t!ona secur!ty.?asty,
3!och! had reta!ned for the)se%es the ent!re
'roceeds of -4.7 )!!on der!%ed fro) the sae of
'a!nt!ffsF %acant ot. +n the foow!n#
c!rcu)stances, !t !ndu"!ta"y shows that the
ae#ed sae was !ndeed an e1u!ta"e )ort#a#e.
6s found "y "oth the tr!a court and a''eate
court, the 6'r! 10, 1/7. deed of sae e4ecuted
"y the de Gu@)ans and 3!och! was an e1u!ta"e
)ort#a#e, hence, the t!tes to the house and ots
wh!ch were sod "y 3!och! to 'et!t!oners actuay
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"se1uenty decared to "e an e1u!ta"e
)ort#a#e )ust )ean that the t!te to the su"(ect
and wh!ch had "een transferred to 'r!%ate
res'ondents actuay re)a!ned or !s transferred
"ac* to 'et!t!oners here!n as owners0
)ort#a#ors, confor)a"y w!th the we0
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!te !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 sae )ade "y 3!och! to 'et!t!oners, wh!ch !s
nu and %o!d. 6rt!ce 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 sae "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*a6 %:, ,--%
GONZAGAARE?ES, J./
Sales Case Digests
2A SY 2009-2010
-et!t!oners were the re#!stered owners
of a 2250s1uare )eter 'arce of and ocated !n
6nt!'oo, R!@a co%ered "y $ransfer 5ert!f!cate of
$!te No. 16500/. 3o)et!)e !n 6u#ust 1//1,
'et!t!oners )ort#a#ed th!s 'ro'erty to Forenc!o
and Nestor 5aros !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# forecosure of the 'ro'erty, 'et!t!oners
as*ed the!r son0!n0aw, here!n 'r!%ate
res'ondent R!cardo deos Reyes, for he' !n
redee)!n# the!r 'ro'erty. -r!%ate res'ondent
deos Reyes a#reed to redee) the 'ro'erty "ut
"ecause he ae#edy 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
deos 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 sae 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
coatera. +t was further a#reed that out of the
'roceeds of the oan, -500,000.00 w! "e 'a!d
to the 5aroses as )ort#a#ees, and an such
"aance w! "e a''!ed "y 'et!t!oners for ca'!ta
#a!ns ta4, e4'enses for the canceat!on of the
)ort#a#e to the 5aroses, transfer of t!te to
Josef!na 5ru@, and re#!strat!on of a )ort#a#e !n
fa%or of ?and 8an*. Moreo%er, the )onthy
a)ort!@at!on on the hous!n# oan wh!ch was
su''osed to "e deducted fro) the saary of
'r!%ate res'ondent 5ru@ w! "e re!)"ursed "y
'r!%ate res'ondent deos Reyes.
2n 3e'te)"er 2/, 1//2, the ?and 8an*
!ssued a etter of #uarantee !n fa%or of the
5aroses, !nfor)!n# the) that 5ru@Fs oan had
"een a''ro%ed. 2n 2cto"er 22, 1//2, $ransfer
5ert!f!cate of $!te No. 16500/ was canceed
and $ransfer 5ert!f!cate of $!te 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 deos 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 Juy 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!'oo, R!@a,
doc*eted as 5!%! 5ase No. /4032/6.
+n the co)'a!nt, 'et!t!oners ca!)ed that
the deed was )erey 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 ae#ed that the deed of sae d!d
not refect the true !ntent!on of the 'art!es, and
that the transact!on was not an a"soute sae "ut
an e1u!ta"e )ort#a#e, cons!der!n# that the
'r!ce of the sae was !nade1uate cons!der!n# the
)ar*et %aue 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 sae.
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"soute 3ae dated
2cto"er 21, 1//2 d!d not refect 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"soute sae "ut an e1u!ta"e )ort#a#e,
cons!der!n# that the 'r!ce stated !n the ;eed of
6"soute 3ae was !nsuff!c!ent co)'ared to the
%aue 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 sae. $he
5ourt of 6''eas 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"soute sae, not of
e1u!ta"e )ort#a#e. $o the 5ourt of 6''eas,
the transact!on was un)!sta*a"y a contract of
sae, 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 $!te No. 22/7/1
!ssued !n the na)e of 'r!%ate res'ondent 5ru@.
+33&B: Ahether or not the ae#ed sae was an
e1u!ta"e )ort#a#e
,B?;: KB3, the sae was !ndeed an e1u!ta"e
)ort#a#e. $he 3u're)e 5ourt hed 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!ce 1602 of
the 5!%! 5ode, a''y w!th e1ua force to a
contract 'ur'ort!n# to "e one of a"soute sae.
Moreo%er, the 'resence of e%en one of the
c!rcu)stances a!d out !n 6rt!ce 1602, and not a
Sales Case Digests
2A SY 2009-2010
concurrence of the c!rcu)stances there!n
enu)erated, suff!ces to construe a contract of
sae to "e one of e1u!ta"e )ort#a#e. $h!s !s
s!)'y !n consonance w!th the rue that the aw
fa%ors the east trans)!ss!on of 'ro'erty r!#hts.
$hus, under 6rt!ce 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 sae w!th
r!#ht to re'urchase !s unusuay !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!)sef a 'art of the 'urchase 'r!ce: =e9 the
%endor "!nds h!)sef to 'ay the ta4es on the
th!n# sod: and, =f9 !n any other case where !t
)ay "e fa!ry !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"soute 3ae was not to con%ey
ownersh!' of the 'ro'erty !n 1uest!on "ut )erey
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!atey a''!ed
to the!r outstand!n# )ort#a#e o"!#at!on to the
5aroses.
&nderstanda"y, the ;eed of 6"soute
3ae and !ts su''ort!n# docu)ents do not refect
the true arran#e)ent "etween the 'art!es as to
how the oan 'roceeds are to "e actuay a''!ed
"ecause !t was not the !ntent!on of the 'art!es for
these docu)ents to do so. $he soe 'ur'ose for
're'ar!n# these docu)ents was to sat!sfy ?and
8an* that the re1u!re)ent of coatera reat!%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"soute 3ae and the transfer of
re#!stered t!te 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
'ro'erty ony "ecause they refused to %acate on
5ru@Fs de)and !s not accurate "ecause the
records refect that no such de)and was )ade
unt! )ore than a year s!nce the 'ur'orted sae
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!ce
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 OF
A##EALS and JOHN SI? LI<
G.R. No. %%)')( O3to5e &, ,---
T1id Di"i!ion
#onente/ #URISI<A, J./
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#
Sales Case Digests
2A SY 2009-2010
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 forecosed and sod at
'u"!c auct!on, w!th -85o) !tsef as the h!#hest
"!dder.
2n Juy 15, 1/7., s'ouses $o)as 3.
$ua@on and Nat!%!dad 3. $ua@on sod to John
3!y ?!) =?!)9 a 650 s1uare )eter con(u#a ot
aon# 6. de Mundo 3treet, .
th
6%enue, Laoocan
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"soute ;eed of 3ae, wh!ch was
duy re#!stered. 8y %!rtue of the sa!d deed, $5$
!n the na)e of the $ua@ons was canceed 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 $!te 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 tod 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''eee 'ro'osed that: 60U of the -1 M!!on,
or -600,000 woud "e a &R-+ oan where
)ach!ner!es worth -3 M!!on, "y way of chatte
)ort#a#e, woud secure !t, and 40U of the -1
M!!on woud "e a''eants '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!te thereof to ?!). $he
new t!te was to ser%e as secur!ty for the oan.
?!) f!ed h! s answer, theor!@!n# that the
;eed of 6"soute 3ae 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!)sef the e4tra(ud!c!ay forecosed 'ro'erty
fro) -85o) "ecause $ua@on was f!nanc!ay
!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 decar!n# that the
deed of a"soute sae 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 sod to ?!). 8ut
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 rentas 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"soute
sae !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!ce 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 foow!n#:
=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!)sef a 'art
of the 'urchase 'r!ce:
=59 Ahen the %endor "!nds h!)sef to 'ay the
ta4es on the th!n# sod:
=69 +n any other case where !t )ay "e fa!ry
!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!ce 1604 of the New 5!%!
5ode, the 'ro%!s!ons of 6rt!ce 1602 sha aso
a''y to a contract 'ur'ort!n# to "e an a"soute
sae. 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 sae 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!ce 135/ to 'ros'er, the
foow!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
Sales Case Digests
2A SY 2009-2010
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"soute 3ae e4ecuted on Juy 15, 1/7. !s
couched !n cear ter)s and cond!t!ons. John 3!y
?!) had no hand !n !ts 're'arat!on. 8es!des, the
%ountary, 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
2A SY 2009-2010
$he Ra)oses contended that
5once't!on Reyes and 6race! E!ta sod 1,.00
and 1,300 s1uare )eters of ot to the).
Bary 1//1 ?ot No. 4.05 was f!nay
su"d!%!ded !nto se%era s)aer ots and
'art!t!oned e4tra(ud!c!ay a)on# the f!%e =59
he!rs of Forent!no ;o)!n#ue@ athou#h the
records ony d!scosed 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 sae
e4ecuted "eforehand "ut the atter refused,
!ns!st!n# that the deeds d!d not refect 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!%!duay %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 athou#h !n )ost
!nstances ony one =19 co'y was 're'ared wh!ch
N!da reta!ned.
$he oans were reeased "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
woud '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 )erey 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 woud
not "e notar!@ed nor woud they "e enforced
a#a!nst the). $hat howe%er out of a tota of
e!#hteen =179 deeds of sae s!#ned "y
5once'c!on and 6race!, !t a''eared that three
=39 were actuay notar!@ed. F!nay, 5once'c!on
and 6race! offered to sette 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 hod!n# that <the
ae#ed saes were not reay saes "ut rece!'ts
of su)s of )oney "y way of oans.<
$he 5ourt of 6''eas 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
ceary and w!thout a)"!#u!ty to "e sett!n# forth
a contract of sae 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''eants ha%e con%!nc!n#y 'ro%en the
rea!ty of the sae of the 'arces 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
sae are 'resent. Ne!ther can they 'oss!"y "e
)!sta*en for rece!'ts !nas)uch as e%en the!r
t!te R ty'ewr!tten !n ca'!ta etters and
under!ned R 'roca!)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
soe 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"soute 3ae and $ransfer to "e "ona f!de
a"soute con%eyances of 'arces of and, or
)erey 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#ardess of !ts
no)encature, )ay "e 'resu)ed to "e an
e1u!ta"e )ort#a#e: =a9 when the 'r!ce of a sae
w!th r!#ht to re'urchase !s unusuay !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!)sef a 'art of the
'urchase 'r!ce: =e9 when the %endor "!nds
h!)sef to 'ay the ta4es on the th!n# sod: and,
=f9 !n any other case where !t )ay "e fa!ry
!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
Sales Case Digests
2A SY 2009-2010
re1u!s!tes )ust concur: =a9 that the 'art!es
entered !nto a contract deno)!nated as a
contract of sae, 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 sae to "e 'resu)ed
an e1u!ta"e )ort#a#e. $he 'ro%!s!on aso
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
$he facts and e%!dence dec!dedy 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+*ie "!. 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"soute 3ae co%er!n# a 3,230 s1uare
)eter 'arce of and ocated !n 8aa"a#,
Sales Case Digests
2A SY 2009-2010
Maay, 6*an, !n what !s )ore 'o'uary
*nown as 8oracay +sand.
+))ed!atey thereafter, 'et!t!oner too*
'ossess!on and occu'!ed the sa!d
'arce of and. 2n 6u#ust 15, 1/74,
howe%er, ca!)!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 $!te 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 $r!a
5ourt of La!"o, 6*an rendered
(ud#)ent d!s)!ss!n# the 5o)'a!nt for
ac* of )er!t. +t found that the contract
"etween the 'art!es was one of
e1u!ta"e )ort#a#e and not of sae.
I!!*e/
Ahether or not the transact!on "etween the
'art!es was not a sae "ut an e1u!ta"e
)ort#a#eD
R*$in+/
-et!t!on ;en!ed
+n deter)!n!n# the nature of a contract,
courts are not "ound "y the t!te or na)e
#!%en "y the 'art!es. $he dec!s!%e factor
!n e%auat!n# such a#ree)ent !s the
!ntent!on of the 'art!es, as shown not
necessar!y "y the ter)!noo#y used !n
the contract "ut "y the!r conduct, words,
act!ons and deeds 'r!or to, dur!n# and
!))ed!atey 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#ardess of !ts no)encature, )ay "e
'resu)ed to "e an e1u!ta"e )ort#a#e,
as foows:
V6rt. 1602. $he contract sha "e
'resu)ed to "e an e1u!ta"e
)ort#a#e, !n any of the foow!n#
cases:
=19.......Ahen the 'r!ce of a sae
w!th r!#ht to re'urchase !s
unusuay !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!)sef a 'art of the
'urchase 'r!ce:
=59.......Ahen the %endor "!nds
h!)sef to 'ay the ta4es on the
th!n# sod:
=69.......+n any other case where
!t )ay "e fa!ry !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 aso
a''y to a contract 'ur'ort!n# to
"e an a"soute sae.F 4 4 4.<
Sales Case Digests
2A SY 2009-2010
6s aready stated a"o%e, 6rt!ce 1604 of
the 5!%! 5ode 'ro%!des that the
'ro%!s!ons of 6rt!ce 1602 sha aso
a''y to a contract 'ur'ort!n# to "e an
a"soute sae. $he 'resence of e%en
one of the c!rcu)stances !n 6rt!ce 1602
!s suff!c!ent "as!s to decare a contract
as one of e1u!ta"e )ort#a#e.
$he e4'!c!t 'ro%!s!on of 6rt!ce 1602 that
any of those c!rcu)stances woud
suff!ce to construe a contract of sae to
"e one of e1u!ta"e )ort#a#e !s !n
consonance w!th the rue 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!ce 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!ce 1602=69, !n reat!on to 6rt!ce
1604 'ro%!des that a contract of sae !s
'resu)ed to "e an e1u!ta"e )ort#a#e
!n any other case where !t )ay "e fa!ry
secure the 'ay)ent of a de"t or the
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!ce 1602=69. $h!s )ay "e
#eaned fro) the foow!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
haf of the area had "een occu'!ed "y
the).;es'!te th!s "od '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 "eow was f!ed !n 1/74.
Ne!ther was rent e%er coected 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 ca!) 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 aotted 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 ony
underscores the fact that no sae too*
'ace "etween the 'art!es. 2therw!se,
why woud she, as r!#htfu owner,
a"andon the 'ro'erty she aready was
!n 'ossess!on of, ony to ea%e
'ossess!on of the sa)e to her %endorD
+t !s aso 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''osedy <sod< to
'et!t!oner. 2n the other hand, wh!e
'et!t!oner 'resented ta4 decarat!ons !n
her fa%or, the sa)e woud show that the
ta4es for the years 1/.401/70 were ony
)ade "y 'et!t!oner on June 4,
1/75,a)ost a year after she had
aready f!ed the su!t "eow.
+n ar#u!n# that the transact!on was one
of sae, 'et!t!oner 'o!nts out that 'r!%ate
res'ondent $eof!sta $u'as was not a
de"tor at any t!)e 'r!or to the sae:
hence, !t cannot "e hed that the su"(ect
and was "e!n# used as secur!ty for a
de"t. ,owe%er, !t )ay "e that the de"t
was #!%en at the %ery )o)ent of the
)ort#a#e transact!on.
L*0a6a+ ". Co*t o2 Appea$!
G.R. No. 162112 Juy 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 'arces of coconut and
Sales Case Digests
2A SY 2009-2010
ocated !n Manaca, 2@a)!@ 5!ty. $he
'arces are: ?ot No. 404/, w!th an area
of f!%e =59 hectares and co%ered "y
2r!#!na 5ert!f!cate of $!te =25$9 No. 00
1.43 and ?ot No. 4035 504, cons!st!n#
of 4,420 s1uare )eters and co%ered "y
$a4 ;ecarat!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, Beuter!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)ey, Me!ton,
Beuter!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!'uated that the
cons!derat!on for the ae#ed sae 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!'uated '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 ae#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. $he 'et!t!on was o''osed "y the
other he!rs of Jac!nto and ;a)ac!a who
ca!)ed that the ownerFs du'!cate co'y
of the sa)e 25$ was actuay !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)ey, the!r ch!dren Me!ton, Beuter!a,
$!)oteo and Justo and #randch!dren
R!c*y and ;a!sy who are the he!rs of
3aturn!no, =here!nafter coect!%ey
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!ay, the co)'a!nt ae#ed that
the su"(ect (eed o+ Sale )ith 8acto (e
.etro was e4ecuted ony 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 ca!) that the contract
!n 1uest!on was an e1u!ta"e )ort#a#e,
the 'a!nt!ff he!rs )ater!ay 'o!nted out
the foow!n#: =19 the #rossy !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 %aue of -40,.60.00 and
an assessed %aue of -15,230.00, as
shown "y $a4 ;ecarat!on No. /40
0.33506, wh!e ?ot No. 4035 504 w!th an
area of 4,420 s1uare )eters has a
)ar*et %aue of -4,120.00 and an
assessed %aue of -1,460.00, 'er $a4
;ecarat!on No. /400.35506K =29 the!r
='a!nt!ffsF9 cont!nued 'ay)ent of reaty
ta4es: =39 the and t!te and ta4
decarat!on re)a!ned !n the na)es of
Jac!nto Ne)eQo and ;a)ac!a
Sales Case Digests
2A SY 2009-2010
;ayan#co0Ne)eQo: =49 the!r
'ossess!on, 'art!cuary Justo
Ne)eQoFs, of the su"(ect ots w!th the
'et!t!oner s'ouses ony #!%en two0th!rds
share of the har%est therefro): and =59
the pactum commissorium st!'uat!on !n
the su"(ect contract.
B%entuay, !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''eaed to
the 56. &nfortunatey, 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 threshod hereof, the
a''eate 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
forecosure shoud 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...
+ssue:
Ahether or not the transact!on "etween the
'art!es was not a sae "ut an e1u!ta"e
)ort#a#eD
Ru!n#:
-et!t!on den!ed.
&nder a pacto de retro sae, t!te to and
ownersh!' of 'ro'erty are !))ed!atey
%ested !n the %endee a retro, su"(ect
ony to the resoutory cond!t!on that the
%endor re'urchases !t w!th!n the
st!'uated 'er!od. $he fa!ure of the
%endor a retro to re'urchase the
'ro'erty %ests u'on the %endee a retro
"y o'erat!on of aw the a"soute t!te and
ownersh!' o%er the 'ro'erty sod.
,ere, there !s no !ssue as re#ards the
fact that the su"(ect (eed o+ Sale )ith
8acto (e .etro 'ro%!ded for a 50year
rede)'t!on 'er!od wh!ch e4'!red on
Fe"ruary 25, 1//0. B%!denty, then, the
fa!ure of the res'ondent he!rs to
redee) the 'ro'ert!es w!th!n the
st!'uated 'er!od !ndu"!ta"y %ested the
a"soute t!te to and ownersh!' thereof
to the 'et!t!oners. .*t !*31
3on!e7*en3e 4o*$d on$6 5e t*e i2
t1e 3onta3t t1at 4a! e=e3*ted
5et4een t1e patie! 4a! indeed a
pacto de retro !a$e and not an
e7*ita5$e 0ot+a+e.
$he two =29 courts "eow unan!)ousy
found that the su"(ect (eed o+ Sale )ith
8acto (e .etro, wh!e 'ur'ort!n# to "e a
sae, !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 athou#h ac*!n#
!n so)e for)a!ty, or for) or words, or
other re1u!s!tes de)anded "y a statute,
ne%ertheess re%eas 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
that the 'ro%!s!ons of 6rt!ce 1602 sha
aso a''y to a contract 'ur'ort!n# to "e
an a"soute sae, and, !n case of dou"t,
a contract 'ur'ort!n# to "e a sae 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!ce
1602, to concude that the transact!on !s
one of e1u!ta"e )ort#a#e.
,ere, the 56 correcty found the
'resence of not )erey 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
Sales Case Digests
2A SY 2009-2010
-20,000.00 for two =29 'arces 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''osedy (eed o+ Sale )ith 8acto de
.etro: =c9 sa!d res'ondentsF 'ay)ent of
reaty 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 sae w!th
r!#ht to re'urchase !s #rossy
!nade1uate s!nce the )ar*et %aue and
assessed %aue 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 ony on June 7, 1//4, st!,
there are other c!rcu)stances
con%!nc!n# enou#h to su''ort a
concus!on that the transact!on !n
1uest!on !s reay 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
sae 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 reay a
sae w!th r!#ht to re'urchase, as ca!)ed
"y the 'et!t!oners, then the atter shoud
ha%e asserted the!r r!#hts for the
!))ed!ate de!%ery of the ots to the)
!nstead of aow!n# so)e of the
res'ondents to freey stay !n the
're)!ses. Ae0setted to the 'o!nt of
"e!n# ee)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 shoud "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 ae#ed sae.
-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 reaty ta4es were decared has a
%a!d and r!#htfu ca!) o%er the and.
?asty, the st!'uat!on !n the su"(ect
deed read!n#: :i+ )e +ail to eercise 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!'uat!on !s
contrary to the nature of a true pacto de
retro sae s!nce !n such sae, ownersh!'
of the 'ro'erty sod !s !))ed!atey
transferred to the %endee a retro u'on
e4ecut!on of the sae, su"(ect ony to the
re'urchase of a %endor a retro w!th!n the
st!'uated 'er!od.
&ndou"tedy, the afore)ent!oned
st!'uat!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
forecosure 'roceed!n#s wh!ch !s a
nu!ty "e!n# contrary to the 'ro%!s!ons of
6rt!ce 2077 of the 5!%! 5ode. +ndeed,
the !ncus!on of such st!'uat!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
2A SY 2009-2010
$,+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
forecosure of the )ort#a#e. $o 're%ent
forecosure, they e4ecuted a ;eed of 6"soute
3ae 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 $!te !s now !n the
na)e of 6)e!a Ro"erts.
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 )onthy
rentas "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 sette h!s "ac* rentas
a)ount!n# to -410,000.00. -a'!o refused to 'ay
and ea%e the 're)!ses.
Ro"erts now f!ed a co)'a!nt for unawfu
deta!ner and da)a#es a#a!nst -a'!o "efore
Metro'o!tan $r!a 5ourt.
+n h!s 6nswer, -a'!o ae#ed that when the
5or'. f!ed a 'et!t!on for e4tra(ud!c!a forecosure,
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
aar)ed when Ro"erts had a ;eed of 6"soute
3ae o%er the 'ro'erty 're'ared. ,e then
"e!e%ed that !f he s!#ned the deed, Ro"erts
woud ac1u!re ownersh!' o%er the 'ro'erty. ,e
as*ed her to aow 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"soute 3ae.
-ursuant to the r!#ht to redee) #!%en h!), -a'!o
'urchased the 'ro'erty for -250,000.00. 3!nce
Ro"erts was aready !n &36, he re)!tted to her
author!@ed re'resentat!%e -er!ta Eentura the
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"soute 3ae !n fa%or of
-a'!o !f Eentura woud not 'ay the a)ount she
)!sa''ro'r!ated.
Metro'o!tan $r!a 5ourt rued !n fa%or of
Ro"erts. -a'!o a''eaed 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 rued !n fa%or
of -a'!o stat!n# that what trans'!red !s not a
contract of a"soute sae "ut an e1u!ta"e
)ort#a#e and that -a'!o !s ent!ted 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 ae#ed !n h!s 6nswer the
defense of e1u!ta"e )ort#a#e: hence the 5a
shoud not ha%e d!scussed the sa)e.
ISSUE/ whether the transact!on entered !nto "y
the 'art!es under the ;eed of 6"soute 3ae and
5ontract of ?ease !s an e1u!ta"e )ort#a#e.
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 athou#h ac*!n# !n
so)e for)a!ty, for) or words, or other
re1u!s!tes de)anded "y a statute, ne%ertheess
re%eas 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 conse1uenty he
o"!#ed Ro"erts to e4ecute a deed of a"soute
sae !n h!s fa%or. A!th th!s ca!)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 sod !s !))ed!atey transferred to the
%endee a retro su"(ect ony to the r!#ht of the
%endor a retro to re'urchase the 'ro'erty u'on
Sales Case Digests
2A SY 2009-2010
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"soute t!te o%er the 'ro'erty.
2ne who re'urchase a 'ro'erty )eans that the
'ro'erty was 're%!ousy sod. $he r!#ht of
re'urchase 'resu''oses a %a!d contract of sae
"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"soute sae was e4ecuted "y h!)
and 'et!t!oner and not an e1u!ta"e )ort#a#e.
-a'!o !s "arred fro) ca!)!n# otherw!se.
$he r!#ht of re'urchase !s not a r!#ht #ranted the
%endor "y the %endee, "ut a r!#ht reser%ed "y
the %endor !n the sa)e !nstru)ent of the sae as
one of the st!'uat!ons of the contract. Ahen the
sae !s )ade w!thout such a#ree)ent, the
'urchaser ac1u!res the th!n# sod a"soutey.
Ahen the an#ua#e of the contract !s e4'!c!t,
ea%!n# no dou"t as to the !ntent!on of the
drafters, the courts )ay not read !nto !t any other
!ntent!on that woud contrad!ct !ts 'a!n !)'ort.
DIONISIA DORADO VDA. DE DELFIN,
'et!t!oner %s. SALVADOR DELLOTA,
res'ondent.
January 27, 2007 G.R. No.1436/.
F+R3$ ;+E+3+2N
Sales Case Digests
2A SY 2009-2010
8onente4 36N;2E6?0G&$+BRRBX
FACTS/ ;!on!s!a ;orado ;ef!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 ;eota and
-atr!c!a ;ef!n.
;!on!s!a sod another 'ort!on to Gu)ers!nda
;eeQa as e%!denced "y a notar!@ed I;eed of
3ae w!th R!#ht of Rede)'t!onJ thus, ea%!n# an
unsod 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
3ae 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 #rossy
!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 athou#h ac*!n# !n so)e for)a!ty, for) or
words, or other re1u!s!tes de)anded "y a
statute, ne%ertheess re%eas 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.
$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
concude that the 1/4/ 'r!ce of -5,300.00 as
a#reed u'on "y the 'art!es was unreasona"e.
$here !s no e%!dence here!n whatsoe%er to show
that ;!on!s!a d!d not understand the
ra)!f!cat!ons of her s!#n!n# the ;eed of 3ae
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 sae 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#ay !nco)'etent.
.a*ti!ta "!. Unan+!t
G.R. No. 1.3002: Juy 04, 2007
$h!rd ;!%!s!on
Reyes, R.$., J.:
F65$3:
,a)!ton 3aa* and 3h!rey G. &nan#st
were arrested on Fe"ruary 02, 1//. for estafa
and carna''!n# for the for)erFs fa!ure to return
Sales Case Digests
2A SY 2009-2010
a car he rented fro) 8en(a)!n 8aut!sta.
8aut!sta de)anded fro) 3aa* 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.
3aa* 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 sette the cases
f!ed a#a!nst the) and the!r accounts w!th the
sa)e, wh!ch the 'et!t!oner weco)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"!cy auct!oned9.
$hey e4ecuted a deed of sae 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
reated 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 freey #!%en the sa)e 'arta*es the
nature of an e1u!ta"e )ort#a#e and not of sae.
$he 56 rued !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
cear and une1u!%oca, er#o: such )ust "e
construed !n !ts !tera sense.
+33&B:
Ahether the su"(ect contract !s that of
sae or an e1u!ta"e )ort#a#eD
,B?;:
$he ;eed of 3ae w!th r!#ht to
re'urchase !s that of an e1u!ta"e )ort#a#e.
$he 'et!t!on !s den!ed for ac* of )er!t.
R6$+2 ;B5+;BN;+:
$he ;eed of 3ae w!th r!#ht to
re'urchase 1ua!f!es as an e1u!ta"e )ort#a#e
under 6rt!ce 1602, for res'ondent )erey
secured the 'ay)ent of the un'a!d car rentas
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!ce 1602 =N559:
=1.9 Ahen the 'r!ce of the sae w!th r!#ht to
=2.9 Ahen the %endor re)a!ns !n 'ossess!on
as ease or otherw!se:
=3.9 Ahen u'on or after the e4'!rat!on of the
=4.9 Ahen the 'urchaser reta!ns for h!)sef a
'art of the 'urchase 'r!ce:
=5.9 Ahen the %endor "!nds h!)sef to 'ay the
ta4es on the th!n# sod:
=6.9 +n any other case where !t )ay "e fa!ry
'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
+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.
Foow!n# the 'r!nc!'e, INe consensu! ta)
contrar!u) est 1ua) %!s ata1u! )tusJ
=Necess!tous )en are not, truy 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 aowed res'ondent
3aa* 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 woud '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!te to the 'ro'erty )ust
"e !))ed!atey 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 sae. +t
Sales Case Digests
2A SY 2009-2010
d!scoses, !n the ae#ed %endee, a ac* of
!nterest !n the 'ro'erty that "e!es the
truthfuness of the sae a retro.
$h!rd, the deed was e4ecuted "y reason
of: =01.9 the ae#ed !nde"tedness of 3aa* to
'et!t!oner, that !s, car renta 'ay)ents: and =02.9
res'ondentFs own o"!#at!on to 'et!t!oner, that !s,
re!)"urse)ent of what 'et!t!oner 'a!d to the
)ort#a#ee, Jo(o ?ee. Fact !s, the 'urchase
'r!ce stated !n the deed was the a)ount of the
!nde"tedness of "oth res'ondent and 3aa* to
'et!t!oner.
6''arenty, the deed 'ur'orts to "e a
sae a retro, on the other hand, s!nce the sa)e
was e4ecuted !n cons!derat!on of the aforesa!d
oans andCor !nde"tedness, sa!d contract !s
f!r)y setted that whene%er !t !s ceary shown
that a deed of sae w!th 'acto de retro, re#uar
on !ts face, !s #!%en as secur!ty for a oan, !t )ust
"e re#arded as an e1u!ta"e )ort#a#e.
Moreo%er, !t !s 'ro%!ded for !n 6rt!ce
1603 =N559 that: I!n case of dou"t, a contract
'ur'ort!n# to "e a sae w!th r!#ht to re'urchase
sha "e construed as an e1u!ta"e )ort#a#e.J
Lo5e! "!. Co*t o2 Appea$!
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!'oo, R!@a
to Forenc!o and Nestor 5aros for -h' 150,
000.00 that su"se1uenty !ncreased to -h' 500,
000.00 !n a year. +n fear of forecosure,
'et!t!oner as*ed the!r son0!n0aw, deos 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
2A SY 2009-2010
=1.9 they woud s!#n a deed of sae con%ey!n#
the )ort#a#ed 'ro'erty !n fa%or of 'r!%ate
res'ondent 5ru@: and thereafter
=2.9 5ru@ w! a''y for a hous!n# oan w!th
?and 8an*, us!n# the su"(ect 'ro'erty as
coatera:
=3.9 !t was further a#reed that out of the
'roceeds of the oan, -500,000.00 w! "e
'a!d to the 5aroses as )ort#a#ees, and
any such "aance w! "e a''!ed "y
'et!t!oners for ca'!ta #a!ns ta4, e4'enses
for the canceat!on of the )ort#a#e to the
5aroses:
=4.9 transfer of t!te to Josef!na 5ru@:
=5.9 and re#!strat!on of a )ort#a#e !n fa%or of
?and 8an*: and
=6.9 the )onthy a)ort!@at!on on the hous!n#
oan wh!ch was su''osed to "e deducted
fro) the saary of 'r!%ate res'ondent 5ru@
w! "e re!)"ursed "y 'r!%ate res'ondent
deos Reyes.
6fter wh!ch, ?8- !ssued a etter of
#uarantee !n fa%or of the 5aroses, !nfor)!n#
the) that 5ru@F oan has "een a''ro%ed, and
su"se1uenty a new t!te !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 deos
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 )erey 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:
=2.9 that the deed of sae d!d not refect the
true !ntent!on of the 'art!es, and that the
transact!on was not an a"soute sae "ut
an e1u!ta"e )ort#a#e, cons!der!n# that
the 'r!ce of the sae was !nade1uate
cons!der!n# the )ar*et %aue 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 sae
$he 'r!%ate res'ondent =deos Reyes9 was
decared !n defaut and the case 'roceeded !n e4
'arte. $he ower court rued !n fa%or of the
'et!t!oners, s!nce the sae was e4ecuted !n order
to secure a oan fro) ?8- to sa%e the 'ro'erty
fro) the dan#er of forecosure and to use !t as
coatera thereof for "an* oan 'ur'oses and
that the sa)e does not refect the rea !ntent!on
of the 'art!es !n e4ecut!n# the sa!d ;eed of 3ae.
Further)ore, the 'et!t!oners are st! !n
'ossess!on of the su"(ect 'ro'erty and had "een
'ay!n# the reaty ta4es thereon e%en after the
e4ecut!on of the deed, and that the 'et!t!oners
were )erey 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:
Ahether the ;eed of 6"soute 3ae
entered !nto "y the 'art!es was an e1u!ta"e
)ort#a#eD
,B?;:
$he ;eed of 6"soute 3ae !s an
e1u!ta"e )ort#a#e. $he 56 dec!s!on !s
re%ersed and the R$5 dec!s!on !s re!nstated.
R6$+2 ;B5+;BN;+:
$here !s no concus!%e test to deter)!ne
whether a deed of a"soute sae on !ts face !s
reay 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%auat!n# such a#ree)ent !s the !ntent!on of the
'art!es, as shown not necessar!y "y the
ter)!noo#y used !n the contract "ut "y a the
surround!n# c!rcu)stances, such as the reat!%e
s!tuat!on of the 'art!es at that t!)e, the att!tude,
acts, conduct, decarat!ons of the 'art!es, the
ne#ot!at!ons "etween the) ead!n# to the deed,
Sales Case Digests
2A SY 2009-2010
and #eneray, 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!ce 1602 =N559:
=1.9 Ahen the 'r!ce of the sae w!th r!#ht to
=2.9 Ahen the %endor re)a!ns !n 'ossess!on
as ease or otherw!se:
=3.9 Ahen u'on or after the e4'!rat!on of the
=4.9 Ahen the 'urchaser reta!ns for h!)sef
a 'art of the 'urchase 'r!ce:
=5.9 Ahen the %endor "!nds h!)sef to 'ay
the ta4es on the th!n# sod:
=6.9 +n any other case where !t )ay "e fa!ry
secure the 'ay)ent of a de"t of the
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"soute sae.
$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
sae 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
3ae was not to con%ey ownersh!' of the su"(ect
'ro'erty "ut )erey 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!atey a''!ed to the!r outstand!n#
)ort#a#e o"!#at!on to the 5aroses. 6thou#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
soe 'ur'ose of these docu)ents was to sat!sfy
?8-.
3econd, the consent #!%en "y the
'et!t!oners where !n duress foow!n# the
'r!nc!'e, INecess!tous )en are not, truy
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),J s!nce the
transact!on was "orne out of the !)'end!n#
forecosure of the su"(ect 'ro'erty.
?asty, 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.
Sales Case Digests
2A SY 2009-2010
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
$,+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!coas -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#uary 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 Juy 2/, 1/.0, 'et!t!oner
e4ecuted a 3'ec!a -ower of 6ttorney !n fa%or of
-aran#an to secure an a#r!cutura oan fro)
'r!%ate res'ondent -h!!''!ne Nat!ona 8an*
=-N89 w!th the aforesa!d ot as coatera. 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 *nowed#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 duy annotated on the
cert!f!cate of t!te. 2n 6'r! 16, 1/.3, 'et!t!oner
s!#ned a ;eed of -acto de Retro 3ae !n fa%or of
-aran#an wh!ch was su'erseded "y the ;eed of
;ef!n!te 3ae dated May 4, 1/./ wh!ch 'et!t!oner
s!#ned u'on -aran#an>s re'resentat!on that the
sa)e )erey e%!dences the oans e4tended "y
h!) unto the for)er.
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!te.
+nstead of co)'y!n# w!th the re1uest, -aran#an
asserted h!s r!#hts o%er the 'ro'erty wh!ch
ae#edy had "eco)e h!s "y %!rtue of the
afore)ent!oned ;eed of ;ef!n!te 3ae. &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"soutey for and !n cons!derat!on of
the su) of 3e%enty F!%e $housand -esos.

6##r!e%ed, 'et!t!oner f!ed an act!on for
canceat!on of !ens, 1u!et!n# of t!te, 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 canceat!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.
;ecar!n# the ;eed of -acto de Retro 3ae
dated 6'r! 25, 1/.7 and the ;eed of ;ef!n!te
3ae dated May 6, 1/./, "oth docu)ents
e4ecuted "y 6dorac!on ?ustan !n fa%or of
N!coas -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, decar!n# the sa)e to "e ;eeds of
B1u!ta"e Mort#a#e. +t aso ordered defendant
N!coas -aran#an to 'ay a the oans he
Sales Case Digests
2A SY 2009-2010
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. 6so, 2rder!n# defendant N!coas
-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, sae of the and w! "e ordered "y the
court to sat!sfy 'ay)ent of the a)ount:
&'on a''ea to the 5ourt of 6''eas =569,
res'ondent court re%ersed the tr!a court>s
dec!s!on.
+33&B
Ahether or not the ;eed of ;ef!n!te 3ae !s !n
rea!ty an e1u!ta"e )ort#a#e.
R&?+NG
$he ;eed of ;ef!n!te 3ae !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!cuary, a contract of sae !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 )erey !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 sae, the
owner of the 'ro'erty )ay 'ro%e that the
contract !s reay a oan w!th )ort#a#e "y ra!s!n#
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 )erey as a secur!ty for
the re'ay)ent of a oan. 6nd u'on 'roof of the
truth of such ae#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.
<6rt. 1604. $he 'ro%!s!ons of 6rt!ce 1602 sha
aso a''y to a contract 'ur'ort!n# to "e an
a"soute sae.<
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)ey: that the 'art!es entered !nto a contract
deno)!nated as a contract of sae 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"soute sae sha
"e 'resu)ed to "e an e1u!ta"e )ort#a#e
shoud 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 reat!on to 6rt 1604 'ro%!des
that a contract of sae !s 'resu)ed to "e an
e1u!ta"e )ort#a#e !n any other case where !t
)ay "e fa!ry !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 ceary fas 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 *nowed#e that the contract
she s!#ned !s a deed of sae. $he contents of
the sa)e were not read nor e4'a!ned to her so
that she )ay !nte!#!"y for)uate !n her )!nd
the conse1uences of her conduct and the nature
Sales Case Digests
2A SY 2009-2010
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 )erey rey on
-aran#an>s assurance that the contract ony
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 ae#ed, the
'erson enforc!n# the contract )ust show that
the ter)s thereof ha%e "een fuy e4'a!ned to
the for)er. 3etted !s the rue 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 fuy 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 duy 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!ted 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 sae, where 'et!t!oner
'ur'ortedy 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
ceary 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
2A SY 2009-2010
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
;ecarat!on of Nu!ty of ;ocu)ent and
Recon%eyance "efore the R$5 of Maoos,
8uacan, a#a!nst here!n res'ondents ;an!o
Gon@aes, Jr., and Eeron!ca Gon@aes. +n the!r
5o)'a!nt, 'et!t!oners ae#ed that they are the
owners and 'ossessors of three =39 'arces of
and, a !n the na)e of 'et!t!oner ?eon!sa
,!ar!o.
3a!d 'arces "eca)e the su"(ect of two =29
;eeds of 6"soute 3ae, one dated Juy 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
ca!)ed that the transact!ons entered "etween
'et!t!oners and res'ondents were not actuay
saes, "ut )erey 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!,
8uacan. $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 "eon#ed to
the!r reat!%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.
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 fas!f!cat!on, us!n# the
f!ct!t!ous contracts of sae. -et!t!oners ae#ed
that they ca)e to *now of sa!d acts of
res'ondents ony 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 'arces
fro) res'ondents, w!th )ora da)a#es and
attorney>s fees.
For the!r 'art, res'ondents !ns!sted !n the!r
6nswer that on 2cto"er 1/71, 'et!t!oner ?eon!sa
,!ar!o sod to the) the three ots !n 1uest!on.
Res'ondent Eeron!ca Gon@aes a#reed to "uy
the sa)e out of '!ty for 'et!t!oners, whose
se%era 'ro'ert!es had ear!er "een forecosed
"y the "an*. $he transact!on was e)"od!ed !n a
;eed of 6"soute 3ae and notar!@ed "efore
Notary -u"!c -rotac!o 5orte@, Jr. $he or!#!na
a)ount !n the ;eed of 6"soute 3ae was
-240,000. ,owe%er, "efore the 'ro'ert!es were
re#!stered, 'et!t!oner ?eon!sa ,!ar!o !n a etter
dated Juy 20, 1/73 , re1uested for the
e4ecut!on of another ;eed of 6"soute 3ae
!nd!cat!n# a 'r!ce of -50,000, 'ur'ortedy 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"soute 3ae !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.
3horty afterwards, accord!n# to res'ondents,
the t!tes of sa!d ots were transferred to the).
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 Juy
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 resut,
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!, 8uacan,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 ee%ated the!r case to the
Re#!ona $r!a 5ourt of Maoos.
2n 6u#ust 11, 1//5 , after tr!a on the )er!ts,
the R$5 of Maoos dec!ded 5!%! 5ase No. 5520
M0/1 a#a!nst res'ondents and !n fa%or of here!n
'et!t!oners.
Sales Case Digests
2A SY 2009-2010
6''y!n# 6rt!ce 1604 of the 5!%! 5ode !n
reat!on to 6rt!ce 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 sae: ="9 'et!t!oners
'a!d the reaty ta4es for the years 1/72 and
1/73: and =c9 the 'urchase 'r!ce of -50,000.00
was unusuay !nade1uate "y any standard for
reat!es.
Res'ondents seasona"y a''eaed the dec!s!on
to the 5ourt of 6''eas. +t re%ersed the tr!a
court>s dec!s!on.

+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 concus!%e
test to deter)!ne whether a deed a"soute on !ts
face !s reay a s!)'e oan acco))odat!on
secured "y a )ort#a#e.
-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
foow!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 reaty ta4es.
,owe%er, such 'resu)'t!on of e1u!ta"e
)ort#a#e !s not concus!%e. +t )ay "e re"utted
"y co)'etent and sat!sfactory 'roof to the
contrary. +n the !nstant case, 'et!t!oners> ca!)
that the se!n# 'r!ce of the ots !n 1uest!on was
!nade1uate needs coser scrut!ny. -et!t!oners>
ae#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 %aues 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 'arces !n 1uest!on. Mere ae#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.

6s to the ae#at!on that 'et!t!oners were !n
'ossess!on of the 'ro'ert!es e%en after the sae,
!t !s o"%!ated "y the fact that they e4ecuted an
underta*!n# 'ro)!s!n# to %acate the 're)!ses.
8ut they re'eatedy deayed honor!n# !t. $he
records aso 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 "eon# 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 ca!) 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 e4cude 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 unawfu
'hys!ca !n%as!on or usur'at!on of h!s 'ro'erty.
=6rt!ce 42/, 5!%! 5ode9.
-et!t!oners !ns!st that they entered !nto a
contract ony 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 coud they
test!fy as to !ts deta!s. -et!t!oners surey cannot
now 'retend to "e !#norant of the rea nature of
Sales Case Digests
2A SY 2009-2010
the!r transact!on w!th res'ondents. For th!s was
not the f!rst t!)e they deat 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
'ersonay a''eared and ac*nowed#ed the sae
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
sae. +t !s not )erey 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''eas dated Fe"ruary 23, 1/// as we as !ts
resout!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
'arces of and, co%ered "y $5$ Nos. 1360. and
13535. Res'ondent defauted !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
2A SY 2009-2010
$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 coatera for wh!ch reason
res'ondent "orrowed fro) 'et!t!oner the two
t!tes so he can )ort#a#e the sa)e. $hus,
'et!t!oner canceed the )ort#a#e !n h!s fa%or
and de!%ered the two t!tes 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"soute sae 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 aowed 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!'uated 'er!od. 5onse1uenty,
'et!t!oners !nst!tuted an act!on for s'ec!f!c
'erfor)ance 444 'ursuant to the deed of
a"soute sae. +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 rued 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''eas
aff!r)ed the dec!s!on of the tr!a court, "ut further
decared that <the deed of sae and o't!on to "uy
actuay const!tute a pacto de retro sae.<
Ga"onsen#Fs MR was den!ed. ,!s
'et!t!on f!ed w!th 35 was aso. ,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"se1uenty, the tr!a court !ssued an
2rder #rant!n# res'ondent>s )ot!on for
recons!derat!on and aow!n# h!) to re'urchase
the ots w!th!n th!rty days fro) f!na!ty thereof.
$hus, 'et!t!oner 6"!a "rou#ht the
!nstant 'et!t!on for re%!ew.
+33&B:
Ahether or not the contract "etween the
'art!es was an a"soute sae w!th 'acto de retro.
,B?;: N2.=!t was hed as a )ere
e1u!ta"e )ort#a#e9
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 ca!) of the r!#ht to
re'urchase the ots !s anchored on the th!rd
'ara#ra'h of 6rt!ce 1606 of the 5!%! 5ode,
wh!ch states:
Ho)e1er, the 1endor may still eercise
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 rued that 6rt!ce
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 sae, 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!ce 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 hed:
$he a''!cat!on of the th!rd 'ara#ra'h of
6rt!ce 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 sae w!th pacto de
retro, honesty and s!ncerey
enterta!ned, that the a#ree)ent was !n
rea!ty a )ort#a#e, one not !ntended to
affect the t!te to the 'ro'erty ostens!"y
sod, "ut )erey 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
resout!on, the a''!cat!on of the rue !s
)eet and 'ro'er: that the %endor a retro
Sales Case Digests
2A SY 2009-2010
"e aowed to re'urchase the 'ro'erty
sod w!th!n 30 days fro) rend!t!on of
f!na (ud#)ent decar!n# the contract to
"e a true sae w!th r!#ht to re'urchase.
5on%ersey, !f !t shoud a''ear that the
'art!es> a#ree)ent was reay one of
sae 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 rue
were otherw!se, !t woud "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
sae w!th pacto de retro W !nto an
e1u!ta"e )ort#a#e. 444 444 444.
$herefore, the a''!ca"!!ty of 6rt!ce
1606 rests on the bona +ide !ntent of the %endor
a retro, i.e., Ga"onsen# !n th!s case. +f he
honesty "e!e%ed that the transact!on was an
e1u!ta"e )ort#a#e, the sa!d art!ce 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 decar!n# the
transact!on as a sae w!th pacto de retro.
-arenthet!cay, !t )atters not what the %endee
!ntended the transact!on to "e.
Ahen 'et!t!oner ent the two t!tes to
res'ondent, the oan he e4tended to res'ondent
"eca)e unsecured. Naturay, 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 sae,
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 woud
ha%e "een sat!sf!ed had res'ondent e4erc!sed
the o't!on to "uy w!th!n the st!'uated 'er!od.
$hese c!rcu)stances, 'ecu!ar to the
case at "ar, )a*e th!s case fa s1uarey 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 sae w!th pacto de
retro, honesty and s!ncerey enterta!ned, that
the a#ree)ent was !n rea!ty a )ort#a#e, one
not !ntended to affect the t!te to the 'ro'erty
ostens!"y sod, "ut )erey to #!%e !t as secur!ty
for a oan or other o"!#at!on. 5ons!stenty
therew!th, res'ondent has )a!nta!ned
throu#hout the 'roceed!n#s that transact!on
"etween h!) and 'et!t!oner was reay an
e1u!ta"e )ort#a#e. 6s such, res'ondent )ay
a%a! of the th!rd 'ara#ra'h of 6rt!ce 1606 of the
5!%! 5ode and re'urchase the ots affected "y
the deed of a"soute sae 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$3:
2n 6'r! 13, 1/77, ;!osdada Nue%a, w!th )ar!ta
consent, sod under a 'acto de retro, a 'arce of
and =2,033 s1.).9 s!tuated !n 5a#ayan de 2ro
5!ty to 6#an for -21*.$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.
Sales Case Digests
2A SY 2009-2010
$he a#ree)ent !s e%!denced "y a 'u"!c
!nstru)ent ent!ted I;eed of 3ae under a -acto
de RetroJ e4ecuted and duy 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 sod, 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!'uated 'er!od.
2n Juy 5, 1//1, u'on the death of ;!osdada
Nue%a, the 'ro'erty was e4tra(ud!c!ay
'art!t!oned where 6ndres sod h!s !nterest !n the
and !n 1uest!on to h!s dau#hter 6nn and son
?ou. 3!nce the t!te to the 'ro'erty was ae#edy
ost dur!n# the f!re that ra@ed the 'ro'erty on
March 1/, 1//0 where ;!osdada d!ed, t!te was
reconst!tuted and su"se1uenty 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 ae#ed that the
'acto de retro sae was actuay an e1u!ta"e
)ort#a#e, the cons!derat!on for the sae "e!n#
ony -21* as a#a!nst !ts Fa!r Mar*et Eaue of
-71* 'ursuant to $a4 ;ecarat!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 3ae 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!ce 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
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 deete
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 deet!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%ey
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 hed that:
Further, Ae do not a#ree w!th the content!on of
the 'r!%ate res'ondent that 6rt!ce 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 actuay 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, rued that the transact!on !s one of sae
under a 'acto de retro, hence !t acted w!th!n !ts
author!ty under 6rt!ce 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.
Sales Case Digests
2A SY 2009-2010
+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 woud warrant car!f!cat!on. +f at a,
the a)"!#u!ty !s )erey ostens!"e. 6t f!rst
"ush, the d!s'os!t!%e 'ort!on of the R$5
;ec!s!on decar!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, aso )a*es reference to the th!rd
'ara#ra'h of 6rt!ce 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!ce 1606, a 'ro%!s!on not found
!n the od 5!%! 5ode. $he e#!sat!%e !ntent
"eh!nd th!s 6rt!ce, aon# w!th 6rt!ces 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 saes w!th
r!#ht to re'urchase ha%e "een de%!sed ony 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!ce 1606 !s !ntended to co%er su!ts where the
seer ca!)s that the rea !ntent!on was a oan
w!th e1u!ta"e )ort#a#e "ut dec!des otherw!se.
$he seer, 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 sae 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 ae#ed !n the!r answer
that the cons!derat!on for the ae#ed sae, wh!ch
was -21* was !nade1uate, cons!der!n# that the
fa!r )ar*et %aue of the 'ro'erty was -71*.
Res'ondents aso 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!te 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!te, howe%er, was su"se1uenty annued.
$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!ted to the r!#ht to
redee) the 'ro'erty 'ursuant to the th!rd
'ara#ra'h of 6rt!ce 1606 of the New 5!%! 5ode.
$he 5ourt aso notes that the R$5 erred !n
aow!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!ce
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!cuture and Natura Resources =;6NR9 a
'arce of and. $he ;eed of 3ae descr!"ed
Gertrudes as a w!dow. $5$ No. 43100 was
!ssued !n the na)e of <Gertrudes +s!dro,< who
was aso referred to there!n as a <w!dow.<
Sales Case Digests
2A SY 2009-2010
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 6e4ander and 6dea!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 6e4ander 5ru@. $he f!rst !s
deno)!nated as <Lasunduan< wh!ch the 'art!es
concede !s a 'acto de retro sae, #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"soute 3ae
co%er!n# the sa)e 'ro'erty for the 'r!ce of
-3/,073.00, the sa)e a)ount st!'uated !n the
<Lasunduan.< For fa!ure of Gertrudes to
re'urchase the 'ro'erty, ownersh!' thereof was
conso!dated !n the na)e of 6e4ander 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 hed that the and was con(u#a
'ro'erty s!nce the e%!dence 'resented "y 'r!%ate
res'ondents d!scosed 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 concuded,
Gertrudes coud ony se to 'et!t!oner s'ouses
her one0haf share !n the 'ro'erty.
-et!t!oners a''eaed to the 5ourt of 6''eas !n
%a!n. $he 5ourt of 6''eas aff!r)ed the dec!s!on
of the Re#!ona $r!a 5ourt, hod!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!ce 160 of the
5!%! 5ode. $he a''eate court, !*e the tr!a
court, aso noted that 'et!t!oner d!d not co)'y
w!th the 'ro%!s!ons of 6rt!ce 160. of the 5!%!
5ode.
-et!t!oners are now "efore th!s 5ourt see*!n#
the re%ersa of the dec!s!on of the 5ourt of
6''eas.
+ssue: whether or not a co0owner )ay ac1u!re
e4cus!%e ownersh!' o%er the 'ro'erty hed !n
co))onD
,ed: Bssent!ay, !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!ce
1515 of the od 5!%! 5ode, 6rt!ce 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 aone =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,
shouder!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 resut !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!ce 1613 of the 5ode, <)ay not
"e co)'eed 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!tes the
%endee a retro to reta!n the 'ro'erty and
conso!date t!te 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 rue, a co0owner such
as Gertrudes coud ony d!s'ose of her share !n
the 'ro'erty owned !n co))on.
&nfortunatey for 'r!%ate res'ondents, howe%er,
the 'ro'erty was re#!stered !n $5$ No. 43100
soey !n the na)e of <Gertrudes +s!dro, w!dow.<
Ahere a 'arce of and, for)!n# 'ast of the
Sales Case Digests
2A SY 2009-2010
und!str!"uted 'ro'ert!es of the d!sso%ed
con(u#a 'artnersh!' of #a!ns, !s sod "y a w!dow
to a 'urchaser who )erey re!ed on the face of
the cert!f!cate of t!te thereto, !ssued soey !n the
na)e of the w!dow, the 'urchaser ac1u!res a
%a!d t!te to the and e%en as a#a!nst the he!rs of
the deceased s'ouse. $he rat!onae for th!s rue
!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
ony 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!te. $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''eas> f!nd!n# and
concus!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!'uated and has ost a the!r
r!#hts to !t, !t st! rued 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!ce 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!ce 1616 sha not "e
recorded !n the Re#!stry of -ro'erty w!thout a
(ud!c!a order, after the %endor has "een duy
heard.
$he afore1uoted art!ce !s !ntended to )!n!)!@e
the e%!s wh!ch the 'acto de retro sae 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''eas !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!'uated. ,owe%er, $ransfer 5ert!f!cate of $!te
No. 130574, !n the na)e of 6e4ander M. 5ru@,
wh!ch was !ssued w!thout (ud!c!a order, !s
here"y ordered 56N5B??B;, and $ransfer
5ert!f!cate of $!te No. 43100 !n the na)e of
Gertrudes +s!dro !s ordered RB+N3$6$B;,
w!thout 're(ud!ce to co)'!ance "y 'et!t!oners
w!th the 'ro%!s!ons of 6rt!ce 160. of the 5!%!
5ode
.#I FA<IL? SAVINGS .ANB, INC. ".
S#S. JANUARIO ANTONIO VELOSO AND
NATIVIDAD VELOSO
G.R. No. 141/.4 6u#ust /, 2004
CORONA, J./
Facts:
Res'ondent s'ouses Januar!o 6nton!o
Eeoso and Nat!%!dad Eeoso 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 'arces of ands owned "y
the s'ouses.
Sales Case Digests
2A SY 2009-2010
Ahen the res'ondents defauted !n the
)onthy !nsta)ents due on the!r oan, Fa)!y
8an* !nst!tuted an e4tra0(ud!c!a forecosure
'roceed!n# on the res'ondentsF )ort#a#ed
'ro'ert!es and was sod at 'u"!c auct!on w!th
Fa)!y 8an* as the h!#hest "!dder for
-2,.72,554.66.
3u"se1uenty, Fa)!y 8an* ass!#ned a
!ts r!#hts and !nterests !n the forecosed
'ro'ert!es to 8-+ Fa)!y 8an*, +nc, here!n
'et!t!oner.
Res'ondents, wrote to 'et!t!oners
offer!n# to redee) the forecosed '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
forecosure and thereafter were ordered "y the
atter to de'os!t w!th the cer* of court the su) of
-1,500,000 re'resent!n# the rede)'t!on 'r!ce.
;es'!te the o''os!t!on of 'et!t!oner, the
tr!a court ordered the reease to the
res'ondents of -1,400,000 of the cons!#ned
a)ount. $he "aance 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%!ousy !ssued "y a d!fferent "ranch
of R$5 and then ater !fted.
$he tr!a court rendered a dec!s!on
decar!n# the %a!d!ty of the e4tra0(ud!c!a
forecosure of the )ort#a#ed 'ro'ert!es of
res'ondents "ut aowed 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''eas aff!r)ed the tr!a courtFs dec!s!on
su"(ect to the )od!f!cat!on decar!n#
-2,6.7,63/.70 as the rede)'t!on 'r!ce.
,ence, the !nstant 'et!t!on.
+ssue:
1. Ahether the e4tra0(ud!c!a forecosure
conf!r)ed "y "oth the tr!a court and the
court of a''eas !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:
$he a''eaed dec!s!on of the 5ourt of
6''eas !s here"y RBEBR3B; and 3B$ 63+;B.
$he co)'a!nt f!ed "y res'ondent s'ouses !s
here"y d!s)!ssed.
Rat!o ;ec!dend!:
$he 3u're)e 5ourt found no reason to
1uest!on the %a!d!ty of the e4tra0(ud!c!a
forecosure. +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 forecose on the
)ort#a#e and ha%e the 'ro'erty se!@ed and sod
to a''y the 'roceeds to the o"!#at!on.
$herefore, due to the defaut of the res'ondents
to 'ay the!r o"!#at!on, forecosure was 'ro'er.
6s re#ards the second !ssue, the
#enera rue 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!)utaneous 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 rue on the rede)'t!on 'er!od
f!4ed "y aw can eas!y "e c!rcu)%ented.
Sales Case Digests
2A SY 2009-2010
$he 3u're)e 5ourt hed !n the case of
8od!on#an %s. 5ourt of 6''eas that !n order to
effect a rede)'t!on, the (ud#)ent de"tor )ust
'ay the 'urchaser the rede)'t!on 'r!ce
co)'osed of the foow!n#: =19 the 'r!ce wh!ch
the 'urchaser 'a!d for the 'ro'erty: =29 !nterest
of 1U 'er )onth on the 'urchase 'r!ce: =39 the
a)ount of any assess)ents or ta4es wh!ch the
'urchaser )ay ha%e 'a!d on the 'ro'erty after
the 'urchase: and =49 !nterest of 1U 'er )onth
on such assess)ents and ta4es.
F*t1e0oe, Ati3$e %D%D o2 t1e Ci"i$
Code po"ide! t1at t1e "endo 3annot a"ai$
1i0!e$2 o2 t1e i+1t to ep*31a!e 4it1o*t
et*nin+ to t1e "endee t1e pi3e o2 t1e !a$e.
In t1e 3a!e at 5a, t1e o22e 56
e!pondent! to edee0 t1e 2oe3$o!ed
popetie! 2o #%,@',,)&: and t1e
!*5!e7*ent 3on!i+nation in 3o*t o2
#%,:--,--- 41i$e 0ade 4it1in t1e ede0ption
peiod 4a! ine22e3ti"e 5e3a*!e t1e a0o*nt
o22eed and a3t*a$$6 3on!i+ned not on$6
e=3$*ded t1e intee!t 5*t 4a! $o4e t1an t1e
#,,'@,,::(.DD paid 56 t1e 1i+1e!t
5iddeEp*31a!e o2 t1e popetie! d*in+ t1e
a*3tion !a$e.
Moreo%er, the -1,400,000 cons!#ned "y
res'ondents and then su"se1uenty w!thdrawn
"y the), ea%!n# ony -100,000 as !n(unct!on
"ond, woud ha%e "een e1u!%aent to re1u!r!n#
'et!t!oner to acce't 'ay)ent "y !nsta)ents
)a*!n# !t necessary to !ndef!n!tey e4tend the
rede)'t!on 'er!od wh!ch !s contrary to the 'o!cy
of the aw.
$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
shoud "e redee)ed !s )eant to a%o!d
'roon#ed econo)!c uncerta!nty o%er the
ownersh!' of the th!n# sod.
+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)'etey
(ust!f!ed. $he aw on e1u!ty as defense, a''!es
ony !n the a"sence of, and ne%er a#a!nst,
statutory aw or (ud!c!a rues of 'rocedure.
LEE CHU? REALT? COR#ORATION "!.
COURT OF A##EALS and <ARC REALT?
AND DEVELO#<ENT COR#ORATION
;ece)"er 4, 1//5 GR No. 104114
3ellosillo, J.4
F65$3:
6 '!ece of and !s d!s'uted "y ?ee 5huy 5or'.
and Marc Reaty. 2r!#!nay 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
coect!%ey owned the re)a!n!n# f!%e0s!4ths.
2n 6'r! 30, 1/71, sae "et. Ru"en Jac!nto, of
Sales Case Digests
2A SY 2009-2010
h!s one0s!4th pro%indi1iso share, and ?ee 5huy
was duy re#!stered. $he 8ascaraFs and B.
Jac!nto sod the!rs to Marc Reaty. $he sa)e
was re#!stered on 2ct. 16, 1/7/.
?ee 5huy ca!)s !t was ne%er !nfor)ed of the
other sae. Marc Reaty ca!)s !t was %er"ay
!nfor)ed and was #!%en a co'y of the deed of
sae.
2n 13 No%e)"er 1/7/ ?BB 5,&K RB6?$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 ae#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 rued !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 !tsef, w!th!n the 'er!od of rede)'t!on, !s
e1u!%aent 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 sod to a
th!rd 'erson. +f the 'r!ce of the
a!enat!on !s #rossy e4cess!%e, the
rede)'t!oner sha 'ay ony 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 sae
sha not "e recorded !n the Re#!stry of
-ro'erty uness 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.
$here !s actuay no 'rescr!"ed for) for an
offer to redee) to "e 'ro'ery effected.
,ence, !t can e!ther "e throu#h a for)a
tender w!th cons!#nat!on, or "y f!!n# a
co)'a!nt !n court cou'ed w!th
cons!#nat!on of the rede)'t!on 'r!ce w!th!n
the 'rescr!"ed 'er!od.
6 co0owner des!rous of e4erc!s!n# h!s r!#ht
of e#a rede)'t!on !s #!%en a 'er!od of
th!rty =309 days fro) not!ce of the sae
w!th!n wh!ch to a%a! of the r!#ht to redee).
&nder the free 'atent or ho)estead
'ro%!s!ons of the -u"!c ?and 6ct a 'er!od
of f!%e =59 years fro) the date of
con%eyance !s 'ro%!ded, the f!%e0year
'er!od to "e rec*oned fro) the date of the
sae and not fro) the date of re#!strat!on !n
the off!ce of the Re#!ster of ;eeds.$he
rede)'t!on of e4tra(ud!c!ay forecosed
'ro'ert!es, on the other hand, !s
e4erc!sa"e w!th!n one =19 year fro) the
date of the auct!on sae as 'ro%!ded for !n
6ct No. 3135.
#i0a6 St*3t*e! Cop. "!. Sp!. Ant1on6
and S*!an T. Va$en3ia
6u#ust 1/, 2003 GR No.150060
F!rst ;!%!s!on
-onente: E!tu#, J.
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
Sales Case Digests
2A SY 2009-2010
22,214 s1uare )eters. 6d(acent to the ot of
'et!t!oner are 'arces 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 sod "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 sae of the ots ony !n January, 1//6,
when ,er)o#enes Mendo@a sod to 'et!t!oner
?ot No. 4720, a 'arce aso ad(acent to ?ot 4523
"eon#!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 'arces.
$hereu'on, !n%o*!n# the 'ro%!s!ons of 6rt!ces
1621 and 1623, 'et!t!oner f!ed an act!on a#a!nst
res'ondents to co)'e the atter to aow the
e#a rede)'t!on. -et!t!oner ca!)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
sae of the ots as so re1u!red "y 6rt!ce 1623 of
the 5!%! 5ode.
6fter tr!a, the Re#!ona $r!a 5ourt of 5e"u
d!s)!ssed 'et!t!oners co)'a!nt and
res'ondents> counterca!): "oth 'art!es
a''eaed the dec!s!on of the tr!a court to the
5ourt of 6''eas. $he a''eate court aff!r)ed
the assa!ed dec!s!on.
+ssue: +nter'retat!on of 6rt!ces 1621 and 1623 of
the 5!%! 5ode
,ed: -et!t!on Granted
6rt!ce 1621 and 6rt!ce 1623 of the 5!%! 5ode,
wh!ch read:

6R$. 1621. $he owners of ad(o!n!n# ands sha
aso ha%e the r!#ht of rede)'t!on when a '!ece
of rura and, the area of wh!ch does not e4ceed
one hectare, !s a!enated uness the #rantee
does not own any rura and.
$h!s r!#ht !s not a''!ca"e to ad(acent ands
wh!ch are se'arated "y "roo*s, dra!ns, ra%!nes,
roads and other a''arent ser%!tudes for the
"enef!t of other estates.
+f two or )ore ad(o!n!n# owners des!re to
e4erc!se the r!#ht of rede)'t!on at the sa)e
t!)e, the owner of the ad(o!n!n# and of s)aer
area sha "e 'referred: and shoud "oth ands
ha%e the sa)e area, the one who f!rst re1uested
the rede)'t!on.
6R$. 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 sae sha not "e
recorded !n the Re#!stry of -ro'erty, uness
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 e4cudes
that of ad(o!n!n# owners.
6rt!ce 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.
6rt!ce 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 sae sha not "e
recorded !n the Re#!stry of -ro'erty uness 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.
Sales Case Digests
2A SY 2009-2010
$he 5ourt of 6''eas has e1uated the state)ent
!n the deed of sae to the effect that the %endors
ha%e co)'!ed w!th the 'ro%!s!ons of 6rt!ce
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!ce 1623 has "een )et. Res'ondents,
!*e the a''eate court, o%eroo* the fact that
'et!t!oner !s not a 'arty to the deed of sae
"etween res'ondents and Mendo@a and has
had no hand !n the 're'arat!on and e4ecut!on of
the deed of sae. +t coud not thus "e cons!dered
a "!nd!n# e1u!%aent of the o"!#atory wr!tten
not!ce 'rescr!"ed "y the 5ode.
$he wr!tten not!ce of sae !s )andatory. $h!s
5ourt has on# esta"!shed the rue that
notw!thstand!n# actua *nowed#e of a co0owner,
the atter !s st! ent!ted to a wr!tten not!ce fro)
the se!n# co0owner !n order to re)o%e a
uncerta!nt!es a"out the sae, !ts ter)s and
cond!t!ons, as we as !ts eff!cacy and status.
Sen #o EO <aOetin+ Cop. "!. <atine>
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 'arces of and !n $aco"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!'uat!on that the new owner of the
"u!d!n# !s 3of!a. 3of!a then sod the ot and
Sales Case Digests
2A SY 2009-2010
"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#uary 'a!d )onthy rentas to 3of!a unt! her
death. 6fter her death the rentas 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 ony 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 3ae
"y her )other !n her fa%or stat!n# that they ha%e
'referent!a r!#ht o%er the and. ,owe%er,
$eodora sod the 'ro'erty to res'ondent $!u
&y'!n#. -et!t!oner 'rays for the nu!ty of the
second sae. $r!a court rendered dec!s!on !n
fa%or of the 'et!t!oner. 5ourt of 6''eas
rendered a dec!s!on re%ers!n# the tr!a court.
,$-.
I!!*e!/
Ahether the 56 erred !n decar!n# the sae
"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 sae
"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!)uat!on 'ro%!n#
that the sae was not !ntended to ha%e
any e#a effect "etween the). 3o)e
e%!dence of s!)uat!on !s the ate
notar!@at!on and $eodoraFs s!#nature not
as an owner "ut )erey as an
!nstru)enta w!tness. 6so, 3of!a
cont!nued to rece!%e the rentas unt! her
death. Futher)ore, $eodora ne%er
asserted her ae#ed r!#ht of ownersh!'
o%er the eased 're)!ses.
Nonetheess, the sae "etween $eodora
and the $!u &y'!n# !s %a!d. 3!nce
$eodora !s one of the co0he!rs she can
ony her und!%!ded 'ort!on s!nce her co0
he!rs d!d not #!%e her author!ty.
,owe%er, the sae can "e su"(ect to
rat!f!cat!on. +n th!s case, the other he!rs
of 3of!a e4ecuted a I5onf!r)at!on of
3ae of ?and and +)'ro%e)entsJ. $hus,
the sae !s cons!dered %a!d and "!nd!n#.
2. $he -et!t!oner does not ha%e a r!#ht of
f!rst refusa to assert a#a!nst the 'r!%ate
res'ondents. Ne!ther any aw nor any
contract #rants !t 'reference !n the
'urchase of eased 're)!ses.
3uch #rant of r!#ht of f!rst refusa )ust
"e ceary e)"od!ed !n a wr!tten
contract, "ut there !s none !n the 'resent
case.
Ne$!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"aes d!ed on Juy 4, 1/66 and eft a
5, .14 s1uare )eter 'arce of and to h!s w!fe
and ch!dren
0 2n Juy 26, 1/.1, "rothers and co owners sod
the 'ro'erty to ;r. 5orro)'!do for - 2,000 w!th
r!#ht to re'urchase w!th!n e!#ht years. $he
s!"!n#s d!%!ded the 'roceeds of the sae a)on#
the).
00$he foow!n# )onth or on 6u#ust 17, 1/.1,
Sales Case Digests
2A SY 2009-2010
6"erto secured a note =I%aeJ9 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 Neson.
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 ony reeased
the docu)ent of sae w!th pacto de retro after
3aturn!na 'a!d for the share of her deceased
son, 6"erto, !ncud!n# h!s I%aeJ of -300.00.
2n e%en date, 3aturn!na and her four =49
ch!dren 8on!fac!o, 6"!no, Franc!sco and
?eonora sod the su"(ect 'arce of and to
res'ondents0s'ouses Jesus and 6nunc!ac!on
Fe!ano for -7,000.00. $he ;eed of 3ae
'ro%!ded !n !ts ast 'ara#ra'h, thus:
+t !s here"y decared 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
"eon#!n# to the ,e!rs of 6"erto
5a"aes and to R!to 5a"aes who
are st! )!nors u'on the e4ecut!on
of th!s !nstru)ent are hed !n trust
"y the EBN;BB and to "e 'a!d
and de!%ered ony 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
$!te 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 Neson woud ony 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 NesonFs ate father
6"erto, i.e., -666.66 for h!s share !n the
rede)'t!on of the sae w!th pacto de retro as
we as h!s I%aeJ of -300.00.
0 2n Juy 24, 1/76, 240year od 'et!t!oner R!to
5a"aes ac*nowed#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 sae of su"(ect 'ro'erty.
0+n 1/77, 3aturn!na d!ed. -et!t!oner Neson,
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 unce, 'et!t!oner R!to, of the
sae 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
coud not ha%e sod 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)
ca!)!n# any r!#ht o%er su"(ect 'ro'erty
cons!der!n# that =19 'et!t!oner R!to had aready
rece!%ed the a)ount corres'ond!n# to h!s share
of the 'roceeds of the sae of su"(ect 'ro'erty,
and =29 that 'et!t!oner Neson 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 sette)ent was reached at 're0
tr!a. $r!a ensued and on 6u#ust 11, 2000, the
tr!a court rued a#a!nst 'et!t!oners
2n a''ea, 56 )od!f!ed tha dec!s!on of the tr!a
court
I!!*e/
Ahether 56 erred !n
=19 reco#n!@!n# 'et!t!oner Neson 5a"aes
as co0owner of su"(ect and "ut den!ed
h!) the r!#ht of e#a rede)'t!on, and
=29 not reco#n!@!n# 'et!t!oner R!to 5a"aes
as co0owner of su"(ect and w!th s!)!ar
r!#ht of e#a rede)'t!on.
He$d/
-et!t!on den!ed, 56 dec!s!on aff!r)ed w!th
)od!f!cat!on.
Ratio/
0Ahen Ruf!no 5a"aes d!ed !ntestate, h!s w!fe
3aturn!na and h!s s!4 =69 ch!dren sur%!%ed and
succeeded h!). 6rt!ce //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 e1uay on
su"(ect 'ro'erty. -et!t!oner R!to and 6"erto,
Sales Case Digests
2A SY 2009-2010
'et!t!oner NesonFs 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 Neson.
0$he f!rst sae 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 ony
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)ey h!s w!fe and h!s
son, 'et!t!oner Neson. 8ut the records show
that !t was 3aturn!na, 6"ertoFs )other, and not
h!s he!rs, who re'urchased for h!). 6s correcty
rued "y the 5ourt of 6''eas, 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 resod to res'ondents0
s'ouses "y the co0owners. -et!t!oners R!to and
Neson were then )!nors and as !nd!cated !n the
;eed of 3ae, the!r shares !n the 'roceeds were
hed !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. 5oroary to th!s,
Rue /3, 3ect!on . of the Re%!sed Rues of 5ourt
of 1/64, a''!ca"e to th!s case, auto)at!cay
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 ceary '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, Rue /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
ony, 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 ony has the 'enary
'ower of ad)!n!strat!on of the )!norFs 'ro'erty.
+t does not !ncude 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, sod 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 sae as to the pro%
indi1iso share of 'et!t!oner R!to was
unenforcea"e. ,owe%er, when he
ac*nowed#ed rece!'t of the 'roceeds of the
sae on Juy 24, 1/76, 'et!t!oner R!to effect!%ey
rat!f!ed !t. $h!s act of rat!f!cat!on rendered the
sae %a!d and "!nd!n# as to h!).
A!th res'ect to 'et!t!oner Neson, on the other
hand, the contract of sae was %o!d. ,e was a
)!nor at the t!)e of the sae. 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 duy author!@ed "y
the courts, coud %a!dy se h!s und!%!ded share
to the 'ro'erty. 3he d!d not. Necessar!y, when
3aturn!na and the others sod the su"(ect
'ro'erty !n !ts ent!rety to res'ondents0s'ouses,
they ony sod and transferred t!te to the!r pro%
indi1iso shares and not that 'art wh!ch 'erta!ned
to 'et!t!oner Neson and h!s )other.
5onse1uenty, 'et!t!oner Neson 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 cear that
e#a rede)'t!on )ay ony "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 hed !n
co))on. 6s de)onstrated, the sae 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 Juy 24,
1/76. 6s a resut, he ost h!s r!#ht to redee)
su"(ect 'ro'erty.
0+n the face of the esta"!shed facts, 'et!t!oner
Sales Case Digests
2A SY 2009-2010
Neson cannot fe!#n !#norance of the sae of
su"(ect 'ro'erty !n 1/.7. $o re1u!re str!ct 'roof
of wr!tten not!ce of the sae woud "e to
countenance an o"%!ous fase ca!) of ac* of
*nowed#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#. epe!ented
1eein 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
2A SY 2009-2010
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 'arces of and. $he 3 ots ha%e
"een sod "y ,er)o#enes Mendo@a to
res'ondent s'ouses.
-et!t!oner earned of the sae 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
'arces.
+n%o*!n# the 'ro%!s!ons of
6rt!ces 1621 and 1623, 'et!t!oner f!ed an act!on
a#a!nst res'ondents to co)'e the atter to aow
the e#a rede)'t!on. -et!t!oner ca!)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 sae of the ots as so re1u!red "y
6rt!ce 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> counterca!). 8oth 'art!es
a''eaed the dec!s!on of the tr!a court to the
5ourt of 6''eas. $he a''eate court aff!r)ed
the assa!ed dec!s!on.
I!!*e/
Ahether or not 'et!t!oner -r!)ary
3tructures 5or'orat!on has the r!#ht of
rede)'t!on o%er the three 'arces of and.
R*$in+/
6rt!ce 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''eate
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 e4cus!onary cause of the aw to
a''y.
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 sae
sha not "e recorded !n the Re#!stry of -ro'erty
uness !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.
$he 5ourt of 6''eas has e1uated the
state)ent !n the deed of sae to the effect that
the %endors ha%e co)'!ed w!th the 'ro%!s!ons of
6rt!ce 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!ce 1623 has "een )et.
Res'ondents o%eroo* the fact that 'et!t!oner !s
not a 'arty to the deed of sae "etween
res'ondents and Mendo@a and has had no hand
!n the 're'arat!on and e4ecut!on of the deed of
sae. +t coud not thus "e cons!dered a "!nd!n#
e1u!%aent of the o"!#atory wr!tten not!ce
'rescr!"ed "y the 5ode.
$he wr!tten not!ce of sae !s )andatory.
$h!s 5ourt has on# esta"!shed the rue that
notw!thstand!n# actua *nowed#e of a co0owner,
the atter !s st! ent!ted to a wr!tten not!ce fro)
the se!n# co0owner !n order to re)o%e a
uncerta!nt!es a"out the sae, !ts ter)s and
cond!t!ons, as we as !ts eff!cacy and status.
A,BRBF2RB, the !nstant 'et!t!on !s
GR6N$B;, and the assa!ed dec!s!on of the
5ourt of 6''eas !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 Copoation
C1i3oANa>aio,
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
duy s!#ned "y h!).
?ater on, -!cache transferred h!s due
Sales Case Digests
2A SY 2009-2010
fro) ?edon!o to 5a'!to ;e%eo')ent
5or'orat!on .
,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 ae#ed that he
ony s!#ned the 'ro)!ssory notes as a resut of
!nt!)!dat!on and fraud. ,e ae#ed that when he
)ade the 'ro)!ssory notes, they were ony 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 Reaty and Mana#e)ent
5or'orat!on. 6n !nc!dent ha''ened where a
#rou' of Meraco e)'oyees cut0off the 'ower
su''y of the 'ant of ?edon!o due to non0
'ay)ent of eectr!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
ca!)s.
$he R$5 rued !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''eas
aff!r)ed the sa)e.
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 sae, 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 coud ha%e
enforced !t a#a!nst the de"tor.
$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 *nowed#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.
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 dea 5ru@ who
de'os!ted of t!)e de'os!t there!n the a##re#ate
Sales Case Digests
2A SY 2009-2010
a)ount of -1,120,000.00. 6n#e dea 5ru@
de!%ered sa!d cert!f!cate of t!)e de'os!t to
'a!nt!ff0'et!t!oner 5ate4 !n connect!on w!th h!s
'urchase of fue 'roducts fro) the atter.
$hereafter, dea 5ru@ !nfor)ed defendant 8an*
that he ost a the cert!f!cates of de'os!t and as*
for the re'ace)ent of sa!d ast 5$- where !t
was #ranted "y the "an*. 3oon after sa!d #rants,
dea 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 $!)e ;e'os!t
wh!ch stated, a)on# others, that he surrendered
to defendant "an* Ifu contro of the !nd!cated
t!)e de'os!ts fro) and after dateJ of the
ass!#n)ent and further author!@es sa!d "an* to
'reter)!nate, set0off and Ia''y the sa!d t!)e
de'os!t to the 'ay)ent of whate%er a)ounts
)ay "e dueJ on the oan u'on !t )atur!ty. the
oan of 6n#e dea 5ru@ w!th the defendant "an*
)atured and fe due and on 6u#ust 5, 1/73, the
atter set0off and a''!ed the t!)e de'os!ts !n
1uest!on to the 'ay)ent of the )atured oan.
-a!nt!ff f!ed the !nstant co)'a!nt, 'ray!n# that
defendant "an* "e ordered to 'ay !t the
a##re#ate %aue of the cert!f!cates of t!)e
de'os!t of -1,120,000.00 'us accrued !nterest
and co)'ounded !nterest there!n at 16U per
annum
I!!*e/
whether or not 5ate4 -h!!''!nes has a "etter
r!#ht o%er the 5ert!f!cate of t!)e de'os!tsD
He$d/
3ecur!ty 8an* has a "etter r!#ht "ecause the
ass!#n)ent of the 5$;s )ade "y 6n#e de a
5ru@ !n fa%or of res'ondent "an* was e)"od!ed
!n a 'u"!c !nstru)ent. 6rt. 1625. 6n ass!#n)ent
of cred!t, r!#ht or act!on sha 'roduce no effect
as a#a!nst th!rd 'ersons, uness !t a''ears !n a
'u"!c !nstru)ent, or the !nstru)ent !s recorded
!n the Re#!stry of -ro'erty !n case the
ass!#n)ent !n%o%es rea 'ro'erty.
Res'ondent "an* duy co)'!ed w!th th!s
statutory re1u!re)ent. 5ontrar!y, 'et!t!oner,
whether as 'urchaser, ass!#nee or !en hoder of
the 5$;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 coud affect or "!nd
'r!%ate res'ondent. Necessar!y, therefore, as
"etween 'et!t!oner and res'ondent "an*, the
atter has def!n!tey the "etter r!#ht o%er the
5$;s !n 1uest!on.
Lo "!. BJS E3oAFo04oO S6!te0 #1i$., 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 sae of
stee scaffod!n#s. 3onny ?o, on the other hand
!s a "u!d!n# contractor.
$he 'et!t!oner ordered scaffod!n# e1u!')ents
worth -540, 425.70 fro) res'ondent and 'a!d a
down'ay)ent of -150,000. $he "aance was
Sales Case Digests
2A SY 2009-2010
)ade 'aya"e !n ten )onthy !nsta)ents.
$he res'ondent de!%ered the e1u!')ents to
'et!t!oner "ut 3onny ?o was ony a"e to 'ay the
f!rst two )onthy !nsta)ents "ecause h!s
"us!ness encountered f!nanc!a d!ff!cut!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 Reaty 5or'orat!on.
Ahen the res'ondent tr!ed to coect the sa!d
cred!t fro) the cor'orat!on. Jo)ero Reaty
5or'orat!on refused to honor the ;eed of
6ss!#n)ent "ecause !t ca!)ed that 'et!t!oner
was aso !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.
$he res'ondent a''eaed the dec!s!on to the
5ourt of 6''eas and the sa!d court re%erses the
a''eaed dec!s!on.
I!!*e/
Ahether or not the ;eed of 6ss!#n)ent that was
e4ecuted e4t!n#u!shed the o"!#at!on of the
'et!t!oner.
R*$in+/
$he dec!s!on of the 5ourt of 6''eas order!n#
'et!t!oner to 'ay the res'ondent the su) of
-335, 462.14 !s 6FF+RMB; w!th
M2;+F+56$+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 sae,
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 coud
enforce !t a#a!nst the de"tor.
+n dac!on en -a#o, as a s'ec!a )ode of
'ay)ent, the de"tor offers another th!n# to the
cred!tor who acce'ts !t as e1u!%aent of 'ay)ent
of an outstand!n# de"t.
,ence, !t )ay "e we setted that the
ass!#n)ent of cred!t, wh!ch !s !n the nature of a
sae 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
sae, t1e "endo i! 5o*nd 56 3etain
4aantie!.
Fro) the 'ro%!s!on of the c!%! code=6rt!ce
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 sae or ass!#n)ent.
Ahen Jo)ero ca!)ed that !t was no on#er
!nde"ted to 'et!t!oner s!nce the atter aso had
an un'a!d o"!#at!on to !t, !t essent!ay )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 ae#ed the non0e4!stence of the
cred!t and asserted !ts ca!) 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 shoud "e dee)ed to ha%e ensured
the 'erfor)ance thereof !n case the sa)e !s
ater found to "e !ne4!stent. ,e shoud "e hed
!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
Sales Case Digests
2A SY 2009-2010
3anyu $rad!n# 5or'orat!on =<3anyu $rad!n#<9
aon# w!th !nd!%!dua 'r!%ate stoc*hoders of
3anyu 5he)!ca, na)ey, '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*hoders of 3anyu
5he)!ca d!d (o!nty and se%eray
uncond!t!onay #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 %aue 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 'enat!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 %aue 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'odo ,a!!
"efore the Re#!ona $r!a 5ourt of Man!a to
coect the su) of -120, 240.00 'us 'enaty
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 ae#ed that
3anyu 5he)!ca had fa!ed to coect 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''eas
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 hed 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 hed 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''eants 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'endenty "ecause "y nature !t !s )erey an
accessory contract. $he 35 hed that 5ourt of
6''eas 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 aso
true that 6rt!ce 2052 of the 5!%! 5ode states
that <a #uarantee cannot e4!st w!thout a %a!d
o"!#at!on.< ,owe%er, the 35 rued that such
e#a 'ro'os!t!on !s not, !*e )ost e#a
'r!nc!'es, to "e read !n an a"soute and !tera
)anner and carr!ed to the !)!t of !ts o#!c. $h!s
!s cear fro) 6rt!ce 2052 of the 5!%! 5ode !tsef.
6 surety !s not "ound under any 'art!cuar
'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!cuty !nherent !n say!n# that the suretysh!'
a#ree)ent !tsef !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 woud "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 !tsef !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 woud "e no
need to e4ecute a se'arate surety contract or
Sales Case Digests
2A SY 2009-2010
"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, aon# 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 hed 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
%aue of the rece!%a"es "efore the )atur!ty
thereof. +n other words, 3anyu 5he)!ca
rece!%ed fro) 6to* F!nance the %aue of !ts trade
rece!%a"es !t had ass!#ned: 3anyu 5he)!ca
o"%!ousy "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, resut!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'odo ,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
2A SY 2009-2010

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HEIRS OF JUAN SAN ANDRES (VICTOR S.

ZIGA) and SALVACION S. TRIA, petitione!,

6s we, that the 'art!es !ntended to

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