Tingkahan, Rizal Daujr U.

Law114 – A
G.R NO. 141323 JUNE 8 2005
David Pelayo sold two parcels of agricultural land located in Panabo to Melki Perez on January 1988 and
the sale is evidenced by a deed of Absolute Sale and Loreza Pelayo, wife of David and another one whose
signature is illegible witnessed the execution of the deed. Mrs. Pelayo signed only the third space in the
space provided for the witness, Perez asked Loreza to sign on the first and second pages but the latter
refused as a result, Mr Perez instituted an action for specific performance and Perez countered that the
lots were given to him by defendant Pelayo in consideration of his services as his attorney-in fact to
make the necessary representation and negotiation with the illegal occupants-defendants in the ejectment
case. Defendant Pelayo said that the deed was without the consent of Mrs. Perez and invoked Art 166 of
the Civil Code to support his argument.
Did Mrs Pelayo expressed his consent in the deed of Sale executed by Mrs Pelayo?
The consent need not be expressed. It can be implied. In the present case, although it appears on the face
of the deed of sale that Lorenza signed only as an instrumental witness, circumstances leading to the
execution of said document point to the fact that Lorenza was fully aware of the sale of their conjugal
property and consented to the sale. The petition of Mr. and Mrs. Pelayo was denied.

G.R. No. 155043 September 30 2004
Spouses Arturo and Esther Abalos are the registered owners of a parcel of land with improvements.
Arturo made a Receipt and Memorandum of Agreement in favor of Macatangay, binding himself to sell to
latter the subject property and not to offer the same to any other party within 30 days from date. Full
payment would also be effected as soon as possession of the property shall have been turned over to
Macatangay. Macatangay gave an earnest money amounting to P5,000.00 to be deducted from the
purchase price of P1,300,000.00 in favor of the spouses.

Subsequently, Arturo and Esther had a marital squabble brewing at that time and Macatangay, to protect
his interest, made an annotation in the title of the property. He then sent a letter informing them of his
readiness to pay the full amount of the purchase price. Esther, through her SPA, executed in favor of
Macatangay, a Contract to sell the property to the extent of her conjugal interest for the sum of P650,000
less the sum already received by her and Arturo. She agreed to surrender the property to Macatangay

within 20 days along with the deed of absolute sale upon full payment, while he promised to pay the
balance of the purchase price for P1, 290,000.00 after being placed in possession of the property.
Macatangay informed them that he was ready to pay the amount in full. The couple failed to deliver the
property so he sued the spouses.

RTC dismissed the complaint, because the SPA could not have authorized Arturo to sell the property to
Macatangay as it was falsified. CA reversed the decision, ruling the SPA in favor of Arturo, assuming it
was void, cannot affect the transaction between Esther and Macatangay. On the other hand, the CA
considered the RMOA executed by Arturo valid to effect the sale of his conjugal share in the property.

Whether or not the sale of property is valid.

No. Arturo and Esther appear to have been married before the effectivity of the Family Code. There
being no indication that they have adopted a different property regime, their property relations would
automatically be governed by the regime of conjugal partnership of gains. The subject land which had
been admittedly acquired during the marriage of the spouses forms part of their conjugal partnership.

Under the Civil Code, the husband is the administrator of the conjugal partnership. This right is clearly
granted to him by law. More, the husband is the sole administrator. The wife is not entitled as of right to
joint administration.

The husband, even if he is statutorily designated as administrator of the conjugal partnership, cannot
validly alienate or encumber any real property of the conjugal partnership without the wife’s consent.
Similarly, the wife cannot dispose of any property belonging to the conjugal partnership without the
conformity of the husband. The law is explicit that the wife cannot bind the conjugal partnership without
the husband’s consent, except in cases provided by law.

More significantly, it has been held that prior to the liquidation of the conjugal partnership, the interest of
each spouse in the conjugal assets is inchoate, a mere expectancy, which constitutes neither a legal nor an
equitable estate, and does not ripen into title until it appears that there are assets in the community as a
result of the liquidation and settlement. The interest of each spouse is limited to the net remainder or
“remanente liquido” (haber ganancial) resulting from the liquidation of the affairs of the partnership after
its dissolution. Thus, the right of the husband or wife to one-half of the conjugal assets does not vest until
the dissolution and liquidation of the conjugal partnership, or after dissolution of the marriage, when it is
finally determined that, after settlement of conjugal obligations, there are net assets left which can be
divided between the spouses or their respective heirs.

The Family Code has introduced some changes particularly on the aspect of the administration of the
conjugal partnership. The new law provides that the administration of the conjugal partnership is now a
joint undertaking of the husband and the wife. In the event that one spouse is incapacitated or otherwise
unable to participate in the administration of the conjugal partnership, the other spouse may assume sole
powers of administration. However, the power of administration does not include the power to dispose or
encumber property belonging to the conjugal partnership. In all instances, the present law specifically
requires the written consent of the other spouse, or authority of the court for the disposition or
encumbrance of conjugal partnership property without which, the disposition or encumbrance shall be

Inescapably, herein Arturo’s action for specific performance must fail. Even on the supposition that the
parties only disposed of their respective shares in the property, the sale, assuming that it exists, is still
void for as previously stated, the right of the husband or the wife to one-half of the conjugal assets does
not vest until the liquidation of the conjugal partnership. Nemo dat qui non habet. No one can give what
he has not.

Equatorial Realty Development, Inc. v. Mayfair Theater, Inc.
G.R. No. 136221, May 12, 2000,
Carmelo and Bauermann, Inc. use to own a parcel of land, together with two2-storey buildings
constructed thereon. Carmelo entered into a Contract of Lease with Mayfair Theater Inc. for a period of
20 years. The lease covered a portion a portion of the second floor and mezzanine of a 2-storey building
which respondent used as a movie house known as Maxim Theater. Two years later, Mayfair entered into
a second Contract of Lease with of Carmelo for the lease of another portion of the latter’s property –
namely, part of the second floor of the 2-storey building and two store spaces on the ground floor and the
mezzanine, on which Mayfair put up another movie house known as Miramar Theater. The contract was
likewise for a period of 20 years. Both leases contained a provision granting Mayfair a right of first
refusal to purchase the subject properties. However, the subject properties were sold by Carmelo to
Equatorial Realty Development, Inc. without offering it first to Mayfair. Mayfair filed a Complaint before
the RTC of Manila for the annulment of the Deed of Absolute Sale between Carmelo and Equatorial.
The RTC rendered its decision in favour of Carmelo and Equatorial. The Court of Appeals completely
reversed and set aside the judgment of the lower court. The Supreme Court denied the petition for review
and rescinded the contract of sale between Carmelo and Equatorial and ordered Carmelo to allow Mayfair
to buy the lots. However, Carmelo could no longer be located. Thus, following the order of execution
of the trial court, Mayfair deposited with the clerk of court a quo its payment to Carmelo. The lower court
issued a Deed of Reconveyance in favour of Carmelo and a Deed of Sale in favor of Mayfair. Later,
Equatorial filed with the trial court an action for the collection of the sum of money against Mayfair,
claiming payment of rentals or reasonable compensation for the defendant’s use of subject premises after
its lease contract had expired.
Whether or not Equatorial should be entitled to back rentals.

No. Rescission creates the obligation to return the things which were the object of the contract, together
with their fruits, and the price with its interest. It is clear the Equatorial never took actual control and
possession of the property sold, in view of Mayfair’s timely objection to the sale and continued actual
possession of the property. Furthermore, the fact that Mayfair paid rentals to Equatorial during the
litigation should not be interpreted to mean actual delivery and recognition of Equatorial’s title. They
were made merely to avoid imminent eviction and should not be construed as recognition of Equatorial as
new owner.

Sps. Litonjua vs. L & R, Corp.
G.R. No. 130722. March 27, 2000
For resolution is petitioners Motion for Partial Reconsideration of our December 9, 1999 Decision on the
following grounds:
Where it was the first time that paragraph 9 (on the right of first refusal of respondent Corporation) raised
the issue of its invalidity. While respondent Corporation has consistently invoked the provisions thereof,
petitioners have remained silent insofar as this provision is concerned, concentrating mostly towards their
pleadings on the invalidity of paragraph 8 alone. Even if we were to entertain petitioners’ objections, the
same will still be held as without merit. To be sure, paragraphs 8 and 9 are separate provisions of the
subject contract and the invalidity of one does not automatically render the other invalid. Indeed, Article
1420 of the New Civil Code holds that "In case of a divisible contract, if the illegal terms can be separated
from the legal ones, the latter may be enforced." Contrary to the suppositions of petitioners, the invalid
stipulation is independent from the rest of the terms of the agreement and can easily be separated
therefrom without doing violence to the manifest intention of the parties. This being so, the legal terms of
the contract, including paragraph 9, can be enforced.
Whether or not the petitioners’ Motion for Partial Reconsideration on the grounds stated are to be

In the instant case, as we have already stated in our Decision sought to be reconsidered, the consideration
for the loan-mortgage includes the consideration for the right of first refusal. Again, contrary to
petitioners charge that this conclusion enjoys no basis, we have merely taken our cue from the Equatorial
case, aforequoted. The court also went on to rule in the Ayala case (supra), that since the stipulations in
the subject Deed of Restrictions are plain and unambiguous, which leave no room for interpretation, there
was no cause for applying the rule on stringent treatment towards contracts of adhesion. Indeed, while
ambiguities in a contract of adhesion are to be construed against the party that prepared the same, this rule
applies only if the stipulations in such contract are obscure or ambiguous. If the terms thereof are clear
and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations
control. In the latter case, there would be no need for construction. Coming now to the case at bar,
considering that the contract provision in question (paragraph 9) is likewise plain and unambiguous, we
also find no occasion to apply the aforesaid treatment called for by petitioners. Petitioners Motion for
Partial Reconsideration is hereby DENIED for lack of merit.

JESTRA Development and Management Corp. vs. Daniel Ponce Pacifico
G.R. No. 167452, January 30 2007
Daniel Ponce Pacifico (Pacifico) signed a Reservation Application with Fil-Estate Marketing Association
for the purchase of a house and lot. Under the Reservation Application, the total purchase price of the
property was P2,500,000, and the down payment equivalent to 30% of the purchase price. Based on the
application, upon the fulfilment of the 30% down payment by pacific, he will sign a contract to sell with
the owner and developer of the property which is the JESTRA Development and Management
Corporation. Pacifico run out funds to pay for the property and he requested to JESTRA to suspend the
payment in which the latter denied his request. Pacifico filed a complaint before the HLURB against
JESTRA claiming that despite the full payment of his down payment, JESTRA failed to deliver to him the
property within 90 days as provided in the contract to sell and instead JESTRA sold the property to
another buyer.
Whether or not the act of JESTRA in cancelling the contract to sell with Pacifico is valid.
Yes. RA No. 6552 was enacted to protect buyers of real estate on installment against onerous and
oppressive conditions. While the seller has under the Act the option to cancel the contract due to nonpayment of installments, he must afford the buyer a grace period to pay them and, if at least two years
installments have already been paid, to refund the cash surrender value of the payments. Thus Section of
the Act provides:
SECTION 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding industrial
lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight
hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the buyer is entitled to the following
rights in case he defaults in the payment of succeeding installments:(a) To pay, without additional

interest, the unpaid installments due within the total grace period earned by him which is hereby
fixed at the rate of one month grace period for every one year of installment payments made:
Provided, That this right shall be exercised by the buyer only once in every five years of the life
of the contract and its extensions, if any.(b) If the contract is cancelled, the seller shall refund to
the buyer the cash surrender value of the payments on the property equivalent to fifty per cent of
the total payments made, and, after five years of installments, an additional five per cent every
year but not to exceed ninety per cent of the total payments made: Provided, That the actual
cancellation of the contract shall take place after thirty days from receipt by the buyer of the
notice of cancellation or the demand for rescission of the contract by a notarial act and upon full
payment of the cash surrender value to the buyer. Down payments, deposits or options on the
contract shall be included in the computation of the total number of installment payments
made. As respondent failed to pay at least two years of installments, he is not, under abovequoted Section 3 of RA No. 6552, entitled to a refund of the cash surrender value of his
payments. What applies to the case instead is Section 4 of the same law, viz:
SECTION 4. In case where less than two years of installments were paid, the seller shall give the
buyer a grace period of not less than sixty days from the date the instalment became due. If the
buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel
the contract after thirty days from receipt by the buyer of the notice of cancellation or the demand
for rescission of the contract by a notarial act.