Professional Documents
Culture Documents
SALES Case Digests PDF
SALES Case Digests PDF
1.
GAITE v FONACIER
2.
3.
BUENAVENTURA v CA
4.
SALES|DEANCLV|2D2012
5.
QUIROGA v PARSONS
6.
7.
SALES|DEANCLV|2D2012
2.
3.
RUBIAS v BATILLER
CALIMLIM-CANULLAS v FORTUN
4.
SALES|DEANCLV|2D2012
5.
FABILLO v IAC
POLYTECHNIC UNIVERSITY v CA
2.
ATILANO v ATILANO
SALES|DEANCLV|2D2012
3.
4.
5.
NGA v IAC
SALES|DEANCLV|2D2012
6.
7.
NOOL v CA
SALES|DEANCLV|2D2012
to the goods than the seller had, unless the owner of the
goods is by his conduct precluded from denying the
sellers authority to sell. In the present case, there is
no allegation at all that petitioners were authorized by
DBP to sell the property to the private respondents.
Further, the contract of repurchase that the parties
entered into presupposes that petitioners could
repurchase the property that they sold to private
respondents. As petitioners sold nothing, it follows
that they can also repurchase nothing. In this light,
the contract of repurchase is also inoperative and by the
same analogy, void.
MAPALO v MAPALO
2.
RONGAVILLA v CA
3.
MATE v CA
SALES|DEANCLV|2D2012
4.
YU BUN GUAN v CA
FACTS: Yu Bun Guan and Ong are married since 1961 and
lived together until she and her children were
abandoned by him in 1992, because of his incurable
promiscuity, volcanic temper, and other vicious vices.
In 1968, out of her personal funds, Ong purchased a
parcel of land (Rizal Property) from Aurora Seneris.
Also, during their marriage, they purchased a house and
lot out of their conjugal funds.
Before their separation in 1992, she reluctantly agreed
to execute a Deed of Sale of the Rizal Property on the
promise that Yu Bun Guan would construct a commerical
building for the benefit of the children. He suggested
that the property should be in his name alone so that
she would not be involved in any obligation. The
consideration for the sale was the execution of a Deed
of Absolute Sale in favor their children and the payment
of the loan he obtained from Allied Bank.
However, when the Deed of Sale was executed in
favor of Yu Bun Guan, he did not pay the consideration
of P200K, supposedly the "ostensible" valuable
consideration. Because of this, the new TCT issued in his
name was not delivered to him by Ong.
Yu Bun Guan then filed for a Petition for Replacement
of the TCT, with an Affidavit of Loss attached. Ong, on
the other hand, executed an Affidavit of Adverse Claim
and asked that the sale be declared null and void .
RTC ruled in favor of Ong. CA affirmed.
ISSUE: W/N there was a valid contract of sale
HELD: NO. It is clear from the findings of the lower
courts that the Deed of Sale was completely simulated
and thus, VOID without effect. No portion of the
P200,000 consideration stated in the Deed was ever
paid. And, from the facts of the case, it is clear that
neither party had any intention whatsoever to pay that
amount. Instead, the Deed of Sale was executed merely
to facilitate the transfer of the property to petitioner
pursuant to an agreement between them to enable him
to construct a commercial building and to sell the Juno
property to their children. Being merely a subterfuge,
that agreement cannot be taken as a consideration for
the sale.
5.
ONG v ONG
6.
BAGNAS v CA
7.
SALES|DEANCLV|2D2012
8.
Directors. Pending such approval, Manila Metal cannot
legally claim that PNB is already bound by any contract
of sale with it.
2.
CARCELLER v CA
3.
4.
VILLAMOR v CA
TAYAG v LACSON
5.
SANCHEZ v RIGOS
a valid contract of sale arises. In this case, even though
there was no option contract, there was nevertheless an
offer and acceptance enough to constitute a valid
contract of sale.
6.
VASQUEZ v CA
7.
NIETES v CA
8.
ANG YU ASUNCION v CA
9.
EQUATORIAL REALTY
THEATER INC.
DEV.
INC.
MAYFAIR
Carmelo alleges that the right, being an option contract,
is void for lack of consideration.
ISSUE: W/N the right to repurchase is an option contract
and void for lack of consideration
HELD: NO. The clause in the lease agreement was NOT
an option contract, but a RIGHT OF FIRST REFUSAL. It
was premised on Carmelos decision to sell the said
property. It also did not contain a stipulation as to the
price of said property. The requirement of separate
consideration does not apply to a right of 1st refusal
because consideration is already an integral part of the
lease. Carmelo violated such right by not affording
Mayfair a fair chance to negotiate. It abandoned the
negotiations arbitrarily.
Equatorial was likewise in bad faith; it was well aware
of the right conferred upon Mayfair because its lawyers
had ample time to review the contract. That being the
case, the contract between Carmelo and Equatorial is
rescissible. Mayfair should be allowed to purchase the
entire property for the price offered by Equatorial.
Rights of First Refusal are also governed by the law on
contracts, not the amorphous principles on human
relations.
Reyes, Cypress, and Cornhill. On appeal, CA affirmed
the decision of the RTC.
ISSUE: W/N Riviera Filipina lost its right of first refusal
HELD: YES. As clearly shown by the records and
transcripts of the case, the actions of the parties to the
contract of lease, Reyes and Riviera, shaped their
understanding and interpretation of the lease provision
"right of first refusal" to mean simply that should the
lessor Reyes decide to sell the leased property during
the term of the lease, such sale should first be offered
to the lessee Riviera. And that is what exactly ensued
between Reyes and Riviera, a series of negotiations on
the price per square meter of the subject property with
neither party, especially Riviera, unwilling to budge
from his offer, as evidenced by the exchange of letters
between the two contenders.
It can clearly be discerned from Rivieras letters that
Riviera was so intractable in its position and took
obvious advantage of the knowledge of the time
element in its negotiations with Reyes as the
redemption period of the subject foreclosed property
drew near. Riviera strongly exhibited a "take-it or leaveit" attitude in its negotiations with Reyes. It quoted its
"fixed and final" price as Five Thousand Pesos
(P5,000.00) and not any peso more. It voiced out that it
had other properties to consider so Reyes should decide
and make known its decision "within fifteen days."
Riviera even downgraded its offer when Reyes offered
anew the property to it, such that whatever amount
Reyes initially receives from Riviera would absolutely be
insufficient to pay off the redemption price of the
subject property. Naturally, Reyes had to disagree with
Rivieras highly disadvantageous offer.
Nary a howl of protest or shout of defiance spewed
forth from Rivieras lips, as it were, but a seemingly
whimper of acceptance when the counsel of Reyes
strongly expressed in a letter dated December 5, 1989
that Riviera had lost its right of first refusal. Riviera
cannot now be heard that had it been informed of the
offer of Five Thousand Three Hundred Pesos (P5,300.00)
of Cypress and Cornhill it would have matched said
price. Its stubborn approach in its negotiations with
Reyes showed crystal-clear that there was never any
need to disclose such information and doing so would be
just a futile effort on the part of Reyes. Reyes was
under no obligation to disclose the same. Pursuant to
Article 1339 of the New Civil Code, silence or
concealment, by itself, does not constitute fraud, unless
there is a special duty to disclose certain facts, or unless
according to good faith and the usages of commerce the
communication should be made. The general rule is
applicable in the case at bar since Riviera failed to
convincingly show that either of the exceptions are
relevant to the case at bar.
negotiations with Villonco for sale of the Buendia
property. Cervantes made a written offer of P400/sqm
with a downpayment of P100,000 to serve as earnest
money. The offer also made the consummation of the
sale dependent upon the acquisition by Bormaheco of a
Sta. Ana property. Villonco made a counter-offer stating
that the earnest money was to earn 10% interest p.a.
The check was enclosed with the reply letter. Cervantes
accepted and cashed the check. The Sta. Ana Property
was awarded to Bormaheco; the transfer was also duly
approved. However, Cervantes sent the check back to
Villonco with the interest thereonstating that he was
no longer interested in selling the property. He also
claims that no contract was perfected; Villonco sues for
specific performance.
ISSUE: W/N there was a perfected contract of sale
HELD: YES. There was a perfected contract of sale. The
alleged changes made in the counter-offer are
immaterial and are mere clarifications. The changes of
the words Sta. Ana property to another property as
well as the insertion of the number 12 in the date,
and the words per annum in the interest are trivial.
There is no incompatibility in the offer and counteroffer. Cervantes assented to the interest and he, in
fact, paid the same. Also, earnest money constitutes
prood of the perfection of the contract of sale and
forms part of the consideration. The condition regarding
the acquisition of the Sta. Ana property was likewise
fulfilled; there is thus no ground for the refusal of
Cervantes to consummate the sale.
signatories
HELD: NO. It is true that the signatures of the 5 siblings
did not confer authority on Ernesto as agent to sell their
respective shares in the properties, because such
authority to sell an immovable is required to be in
writing. However, those signatures signify their act of
directly (not through an agent) selling their personal
shares to Paraiso Dev. Corp.
In the case at bar, the Contract to Sell was perfected
when the petitioners consented to the sale to the
respondent of their shares in the subject parcels of land
by affixing their signatures on the said contract. Such
signatures show their acceptance of what has been
stipulated in the Contract to Sell and such acceptance
was made known to respondent corporation when the
duplicate copy of the Contract to Sell was returned to
the latter bearing petitioners signatures.
As to petitioner Enriquetas claim that she merely
signed as a witness to the said contract, the contract
itself does not say so. There was no single indication in
the said contract that she signed the same merely as a
witness. The fact that her signature appears on the
right-hand margin of the Contract to Sell is
insignificant. The contract indisputably referred to the
Heirs of Bibiano and Encarnacion Oesmer, and since
there is no showing that Enriqueta signed the document
in some other capacity, it can be safely assumed that
she did so as one of the parties to the sale.
In the instant case, the consideration of P100,000.00
paid by respondent to petitioners was referred to as
option money. However, a careful examination of the
words used in the contract indicates that the money is
not option money but earnest money. Earnest money
and option money are not the same but distinguished
thus: (a) earnest money is part of the purchase price,
while option money is the money given as a distinct
consideration for an option contract; (b) earnest money
is given only where there is already a sale, while option
money applies to a sale not yet perfected; and, (c)
when earnest money is given, the buyer is bound to pay
the balance, while when the would-be buyer gives
option money, he is not required to buy, but may even
forfeit it depending on the terms of the option.
16. FULE v CA
FACTS: Fule, a banker and a jeweler, acquired a 10hectare property in Rizal (Tanay Property), which used
to be under the name of Fr. Antonio Jacobe, who
mortgaged it to Rural Bank of Alaminos to secure a loan
of P10,000. However, the mortgage was foreclosed.
In 1984, Fule asked Dichoso and Mendoza to look for a
buyer of the Tanay property. They found one in the
person of Cruz, who owns a pair of diamond earrings.
Fule was interested to buy these earrings, but Cruz
refused to sell them to him for the price he offered.
Subsequently, negotiations for the barter between the
earrings and the property ensued. But it turned out that
the redemption period for the property has not yet
expired. Thus, Fule executed a deed of redemption on
behalf of Fr. Jacobe in the amount of P16,000, and on
even date, Fr. Jacobe sold the property to Fule for
14
P75,000. The Deed of Sale was notarized ahead of the
Deed of Redemption.
Subsequently, a Deed of Sale over the earrings was
executed and when it was delivered, Fule contends that
the earrings were fake, even using a tester to prove
such allegation. Thereafter, they decided to Dimayuga,
a jeweler, to have the earrings tested. After a glance,
Dimayuga declared them fake.
Fule filed a complaint with the RTC against Cruz and
her lawyer, Belarmino, praying that the contract of sale
over the Tanay property be declared null and void on
the ground of fraud and deceit. RTC ruled in favor of
Cruz and Belarmino.
ISSUE: W/N the Deed of Sale over the Tanay Property is
valid
HELD: YES. It is evident from the facts of the case that
there was a meeting of the minds between petitioner
and Dr. Cruz. As such, they are bound by the contract
unless there are reasons or circumstances that warrant
its nullification. The records, however, are bare of any
evidence manifesting that private respondents employed
such insidious words or machinations to entice
petitioner into entering the contract of barter. Neither
is there any evidence showing that Dr. Cruz induced
petitioner to sell his Tanay property or that she cajoled
him to take the earrings in exchange for said property.
On the contrary, Dr. Cruz did not initially accede to
petitioner's proposal to buy the said jewelry. Rather, it
appears that it was petitioner, through his agents, who
led Dr. Cruz to believe that the Tanay property was
worth exchanging for her jewelry as he represented that
its value was P400,000.00 or more than double that of
the jewelry which was valued only at P160,000.00. If
indeed petitioner's property was truly worth that much,
it was certainly contrary to the nature of a businessmanbanker like him to have parted with his real estate for
half its price. In short, it was in fact petitioner who
resorted to machinations to convince Dr. Cruz to
exchange her jewelry for the Tanay property.
Furthermore, petitioner was afforded the reasonable
opportunity required in Article 1584 of the Civil Code
within which to examine the jewelry as he in fact
accepted them when asked by Dr. Cruz if he was
satisfied with the same. By taking the jewelry outside
the bank, petitioner executed an act which was more
consistent with his exercise of ownership over it. This
gains credence when it is borne in mind that he himself
had earlier delivered the Tanay property to Dr. Cruz by
affixing his signature to the contract of sale. That after
two hours he later claimed that the jewelry was not the
one he intended in exchange for his Tanay property,
could not sever the juridical tie that now bound him and
Dr. Cruz. The nature and value of the thing he had taken
preclude its return after that supervening period within
which anything could have happened, not excluding the
alteration of the jewelry or its being switched with an
inferior kind.
17. DAILON v CA
FACTS: Sabesaje sues to recover ownership of a parcel
of land based on a private document of absolute sale
executed by Dailon. Dailon denies the fact of the sale
alleging that the same being embodied in a private
instrument, the same cannot convey title under Art.
1358 of the Civil Code which requires that contracts
which have for their object the creation, transmission,
modification, or extinction of real rights over immovable
property must appear in a public instrument.
ISSUE: W/N there was a valid/perfected contract of sale
HELD: YES. The necessity of a public instrument is only
for conveniencenot for validity and enforceability.
Such is not a requirement for the validity of a contract
of sale, which is perfected by mere consent. Dailon
should thus be compelled to execute the corresponding
deed of conveyance in a public instrument in favor of
Sabesaje. If the sale is made through a public
instrument, it amounts to constructive delivery.
and consummating the transaction, Yao King Ong and
other occupants found variance between the terms of
payment stipulated in the document and what they had
in mind. Thus, it was returned unsigned. Thus, the
action for specific performance.
ISSUE: W/N the claim for specific performance of Yao
King Ong is enforceable under the Statute of Frauds
HELD: YES. It is nowhere alleged in the complaint that
there is any writing or memorandum, much less a duly
signed agreement to the effect, that the price of
P6,500,000 fixed by petitioners for the real property
herein involved was agreed to be paid not in cash but in
installments as alleged by Yao King Ong. The only
documented indication of the non-wholly-cash payment
extant in the record is the deeds already signed by
Yuvienco and taken to Tacloban by Atty. Gamboa for the
signatures of the respondents. In other words, the 90day term for the balance of P4.5 M insisted upon by
respondents choices not appear in any note, writing or
memorandum signed by either the petitioners or any of
them, not even by Atty. Gamboa. Hence, looking at the
pose of respondents that there was a perfected
agreement of purchase and sale between them and
petitioners under which they would pay in installments
of P2 M down and P4.5 M within ninety 90) days
afterwards it is evident that such oral contract involving
the "sale of real property" comes squarely under the
Statute of Frauds (Article 1403, No. 2(e), Civil Code.)
In any sale of real property on installments, the
Statute of Frauds read together with the perfection
requirements of Article 1475 of the Civil Code must be
understood and applied in the sense that the idea of
payment on installments must be in the requisite of a
note or memorandum therein contemplated. While such
note or memorandum need not be in one single
document or writing and it can be in just sufficiently
implicit tenor, imperatively the separate notes must,
when put together', contain all the requisites of a
perfected contract of sale. To put it the other way,
under the Statute of Frauds, the contents of the note or
memorandum, whether in one writing or in separate
ones merely indicative for an adequate understanding of
all the essential elements of the entire agreement, may
be said to be the contract itself, except as to the form.
16
There was a concurrence of offer and acceptance, on
the object, and on the cause thereof.
22. CLAUDEL v CA
answer for the balance of the purchase price, did not
approve Sosas application. Toyota also returned the
downpayment. Thus, Sosa sued for damages amounting
to P1.2M due to his humiliation, hurt feelings, sleepless
nights, and so on.
ISSUE: W/N there was a perfected contract of sale
HELD: NO. Toyota Shaw should NOT be held liable for
damages because there was no perfected contract of
sale in the first place. There was no agreement as to the
price and the manner of paymentwhich are both
CONSUMMATION/PERFECTION OF CONTRACT
1.
SANTOS v SANTOS
3.
ADDISON v FELIX
2.
DY JR v CA
18
4.
DANGUILAN v IAC
6.
7.
5.
CHUA v CA
PASAGUI v VILLABLANCA
19
ISSUE:
1.
2.
8.
9.
surplus/deficiency shall be paid on the basis of
the delivered weight.
b. Price: CIF New York.
c. Payment: Buyers to open an Irrevocable Letter of
Credit for 95% of invoice value based on shipping
weight.
d. Balance of the price was to be ascertained on the
basis of outturn weights and quality of the cargo
at the port of discharge.
e. Weights: Net landed weights.
In the Philippines, the net cargo was weighed at 1054
tons, the alleged weight delivered by NACOCO. NACOCO
then withdrew 95% (or $136,000) of the amount in the
Letter of Credit in favor of NACOCO.
In New York, the net cargo was reweighed and found
to weigh only 898 short tons. General Foods demanded
the refund of the amount of $24000.
NACOCOs officers-in-charge acknowledged in a letter
liability the deficiency and promised payment as soon as
funds were available.
However, NACOCO was abolished and went into
liquidation. The Board of Liquidators refused to pay the
claim of General Foods.
General Foods then filed to recover $24,000 and 17%
exchange tax plus attorneys fees and costs.
General Foods alleges that although the sale quoted
CIF New York, the agreement contemplated the
payment of the price according to the weight and
quality of the cargo upon arrival in New York (port of
destination). Therefore, the risk of shipment was upon
the seller.
NACOCO alleges that the contract is an ordinary CIF,
which means that delivery to the carrier is delivery to
the buyer. Therefore, the shipment having been
delivered to the buyer and the buyer having paid the
price, the sale was consummated.
ISSUES:
1. Whether the weight in New York should be the basis
upon payment of the price of copra should be made.
Yes. The weight in New York should be the basis.
2. Whether what is to be ascertained based upon the
outturn weights and quality at port of discharge was
only the balance due to be paid. No. The balance due
to be paid is not the only basis.
HELD:
Under an ordinary CIF agreement, delivery to the
buyer is complete upon delivery of the goods to the
carrier and tender of the shipping and other documents
required by the contract and the insurance policy are
taken in the buyers behalf. However, the parties may,
by express stipulation, modify a CIF contract and throw
the risk upon the seller until the arrival in the port of
destinations.
In this case, the terms of the contract indicate and
intention that the precise amount to be paid by the
buyer depended upon the ascertainment of the exact
net weight of the cargo at the point of destination:
a. Net landed weights were to govern.
b. The balance of the price was to be ascertained on
the basis of outturn weights and quality of the
cargo at the port of discharge.
c. The seller could deliver 5% more or less than the
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
the account of the seller.
14. NAVAL v CA
FACTS: In 1969, Ildefonso Naval sold a parcel of land to
Gregorio; the sale was recorded under Act 3344. Also in
1969, Gregorio sold portions thereof to Balilla, Camalla
and the Moya Spouses, who thereafter took possession of
their
respective
portions.
Juanita,
a
great
granddaughter of Ildefonso, surfaced and claimed that
the land was sold to her by the latter in the year 1972;
she also presented an OCT as evidence. It must be noted
that the property was not yet registered under the
Torrens System when it was sold to Juanita and
Gregorio.
ISSUE: W/N Juanita has a better title (since it is
registered) than Balilla, Camalla and Moya spouses
HELD: NO. Art. 1544 is not applicable because the land
was unregistered under the Torrens System at the time
of the 1st sale. The applicable law is Act 3344. Under
said law, registration by the 1st buyer is constructive
notice to the 2nd buyerand as such, the latter cannot
be deemed to be in good faith. Applying the principle of
priority in time, priority in rights, Juanita cannot claim
to have a better right. The fact that Juanita was able to
secure a title in her name does not operate to vest
ownership. The Torrens System cannot be used as a
means to protect usurpers.
15. CARILLO v CA
13. NAAWAN COMMUNITY RURAL BANK INC v CA
FACTS: Comayas offered to sell to the Lumo Spouses a
house and lot. The property was already registered
under the Torrens System that time and they made
appropriate inquiries with the RD; they found out that it
was mortgaged for P8,000, paid Comayas to settle the
mortgage, and the release of the adverse claim was
annotated in the title. Thereafter, they executed an
Absolute Deed of Sale over the subject property and
registered the same. However, it turns out that it was
already previously sold to Naawan Community Rural
Bank; it was then unregistered. The Bank foreclosed on
the property, purchased the same, and registered it
under Act 3344. Thus, the Bank sought to eject the
spouses. However, the latter countered with an action
for quieting of title.
ISSUE: Who has a better title, Naawan or Lumo spouses?
HELD: LUMO SPOUSES. Where a person claims to have
superior property rights by virtue of a sheriffs sale, the
benefit of Art. 1544 applies favorably only if the
property is registered under the Torrens Systemnot
under Act 3344. Registration under the Torrens System
is the operative act that gives validity to the transfer
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
are two-fold: acquisition in good faith and registration
in good faith. Based on the foregoing, the case is
remanded to the lower court for further proceeding.
16. CARBONELL v CA
FACTS: Poncio, a Batanes native, owned a parcel of
land, which he offered to sell to Carbonell and Infante.
The land was mortgaged to Republic Bank. Poncio and
Carbonell agreed to the sale of the land, and the latter
assumed to pay the mortgage in favor of the bank.
Poncio and Carbonell executed an instrument where the
latter allowed the former to remain in the premises in
spite of the sale for a period of 1 year. Later on, when
the Formal Deed of Sale was to be executed, Poncio told
Carbonell that he could no longer proceed with the sale
as he had already sold the same to Infante for a better
price. Carbonell immediately sought to register adverse
claim; 4 days later, Infante registered the sale with the
adverse claim annotated thereto. Infante thereafter
introduced significant improvements on the property.
They now dispute ownership over the said land.
19. ADALIN v CA
FACTS: Elena Kado and her siblings owned a lot with a 5door commercial building fronting Imperial Hotel. The
units were leased. Elena contracted the services of
Bautista, who brought Yu and Lim to her for the purpose
of buying the premises. During the meeting, it was
agreed that the Yu and Lim would buy the said units
except for the 5th which is to be bought by Adalin. They
entered into a Conditional Sale where Elena was
obligated to evict the tenants before the full payment
of the purchase price. Elena offered the same for sale to
the lessees but they refused claiming that they could
not afford; thus, she filed a case for ejectment against
them. Thereafter, the lessees decided to exercise their
right to buy the unitsKalaw ruled that since the sale to
Yu and Lim was conditional, the subsequent sale to the
lessees must be preferred.
ISSUE: Who has a better title, Yu and Lim or the lessees?
HELD: YU AND LIM. While it is true that the Deed was for
Conditional Sale, examination of the contents thereof
would show that it was one for the actual sale. During
the meeting, the property was already sold; the only
conditions were that Elena would evict the lessees
before the full payment of the price. The choice of to
whom to sell the property had already been decided.
That being the case, since the sale in favor of Yu and
Lim was the prior sale, it must be preferred.
Besides, Elena was guilty of double-dealing, which
cannot be sanctioned in law. It was, after all, her
obligation to evict the lessees. The lessees were in bad
faith as well for having knowledge of the supposed sale
in favor of Yu and Lim. Their subsequent registration of
the sale cannot shield them in their fraud.
23
20. CHENG v GENATO
FACTS: Genato owned 2 parcels of land in Paradise
Farms. He agreed with the Da Jose spouses to enter into
a contract to sell over the said parcels; it was embodied
in a public instrument annotated to the certificates of
title. They asked for and were granted an extension for
the payment of the purchase price. Unknown to them,
Genato dealt with Cheng regarding the lot, executed an
Affidavit to annul the Contract to Sell, appraised the
latter of his decision to rescind the sale, and received a
down payment from Cheng upon the guarantee that the
said contract to sell will be annulled. By chance, Genato
and the spouses met at the RD, where he again agreed
to continue the contract with them. He advised Cheng
of his decision; the latter countered that the sale had
already been perfected. Cheng executed an Affidavit of
Adverse Claim and had it annotated to the TCTs and
sued for specific performance.
ISSUE: Who has a better title, Cheng or the Da Jose
spouses?
HELD: DA JOSE SPOUSES. Both agreements involve a
contract to sell, which makes Art. 1544 inapplicable
since neither a transfer of ownership nor a sales
transaction took place. A contract to sell is premised
upon a suspensive conditionthe full payment of the
purchase price. That being the case, the elementary
principle of first in time, priority in right should apply.
As such, the contract in favor of the Da Jose spouses
must prevail considering that the same had not been
validly rescinded. Besides, Cheng cannot be considered
to have acted in good faith as he had knowledge of the
prior transaction in favor of the spouses.
24
23. ABRIGO v DE VERA
FACTS: By virtue of a compromise agreement judicially
approved, Villafania sold to Rosenda and Rosita a house
and lot. Unknown to them, Villafania obtained a free
patent over the said land and sold it to De Vera. On the
other hand, Rosenda and Rosita sold the property to the
spouses Abrigo. Now De Vera and Abrigo dispute
ownership over the propertythe former filing an
ejectment suit against the latter.
ISSUE: Who has a better title, Abrigo or De Vera?
HELD: DE VERA. Abrigo registered the property under
Act 3344, while De Vera registered the same under the
Torrens System. Naturally, De Veras right prevails.
Registration must be done in the proper registry to bind
the land. It was also proven that De Vera acted in good
faith considering that there was nothing in the
certificate of title or the circumstances, which would
have aroused suspicion and mandated her to make an
inquiry. Registration under Act 3344 does not suffice to
constitute constructive notice in order to negate the
good faith of the registrant under the Torrens System.
De Veras right must be upheld.
25. CARUMBA v CA
FACTS: Canuto sold a parcel of land to Carumba by
virtue of a Deed of Sale of Unregistered Land. The sale
was never registered. Thereafter, Canuto was sued for
collection of money, and the said land was levied upon
and sold to Balbuena, who registered it.
ISSUE: Who has a better right, Carumba or Balbuena?
HELD: CARUMBA. Art. 1544 does not apply in this case.
Instead, the Rules of Court are applicable. Balbuena,
the later vendee, merely steps into the shoes of the
judgment debtor and acquires all the rights and
interests of the latter. By the time the lot was sold
through the foreclosure proceedings, it was no longer
owned by Canuto by virtue of a prior sale to Carumba
who has a better right.
25
SALE BY NON-OWNER/BY ONE HAVING VOIDABLE TITLE:
LIFE OF A CONTRACT OF SALE
1.
PAULMITAN v CA
2.
3.
BUCTON v GABAR
MINDANAO v YAP
4.
dealer or intermediary between the field office and the
customers. Thus, it is not liable for the said taxes.
5.
7.
8.
6.
TAGATAC v JIMENEZ
AZNAR v YAPDIANGCO
coupled with intent. That being the case, Teodoro has
the right to claim the car not only from the thief, but
also from 3rd persons who may have acquired it in good
faith. The buyer would only be entitled to
reimbursement if he purchased the same in good faith
from a public sale.
9.
CRUZ v PAHATI
28
LOSS, DETERIORATION, FRUITS AND OTHER BENEFITS
1.
ROMAN v GRIMALT
2.
LEVY v GERVACIO
Delta
availed
of
was
3.
2.
remedy
installments. Thus, Southern Motors sued him on the PN.
The sheriff levied upon the properties of Tajanlangit
(same machineries) and sold them at a public auction to
satisfy the debt. Southern Motors now prayed for
execution. Tajanlangit sought to annul the writ of
executionclaiming that since Southern Motors
repossessed the machineries (mortgaged), he was
therefore relieved from liability on the balance of the
purchase price.
ISSUE: W/N Tajanlangit is relieved from his obligation to
pay
HELD: NO. While it is true that the foreclosure on the
chattel mortgage on the thing sold bars further action
for the recovery of the balance of the purchase price,
this does not apply in this case since Southern did not
foreclose on the mortgage but insteas sued based on the
PNs exclusively. That being the case, it is not limited to
the proceeds of the sale on execution of the mortgaged
goods and may claim the balance from Tajanlangit.
4.
NONATO v IAC
5.
6.
7.
FACTS:
Respondent Casiano Sapinoso purchased from
petitioner Northern Motors an Opel Kadett car for
P12,171 making a downpayment and executing a
promissory note for the balance of P10,540 payable in
installments
To secure the payment of the note, Sapinoso executed
in favor of Northern Motors a chattel mortgage on the
car; the mortgage provided among others that upon
Sapinosos default in payment of any part of the
principal or interest, Northern Motors may elect any of
the ff. remedies (a) sale of the car by Northern (b)
cancellation of the sale to Sapinoso (c) extrajudicial
foreclosure (d) ordinary civil action for fulfillment of the
mortgage contract; additionally, whichever remedy is
chosen, Sapinoso waives his right to reimbursement of
any and all amounts on the principal and interest
already paid
Sapinoso failed to pay the first 5 installments due from
August-November 1965; he made payments though on
November and December and on April the next year but
failed to make subsequent payments
30
Northern Motors filed a complaint stating that it was
availing of the option of extrajudically foreclosing the
mortgage and prayed that (a) a writ of replevin be
issued upon its filing of a bond (b) it be declared to have
the rightful possession of the car (c) in default of
delivery, Sapinoso be ordered to pay the balance with
interest
Subsequent to the commencement of the action but
before filing of his answer, Sapinoso made 2 payments
amounting to P1,250 on the promissory note; in the
meantime, a writ of replevin was issued and the car was
turned over to Northern Motors
Sapinoso claimed that he withheld payments because
the car was defective and Northern Motors failed to fix
it despite his repeated demands
TRIAL COURT RULING
Northern Motors had the right to foreclose the chattel
mortgage with Sapinoso failing to pay more than 2
installments
However, the foreclosure and the recovery of unpaid
balance are alternative remedies which may not be
pursued conjunctively; Northern Motors thereby
renounced whatever claim it had on the promissory note
Ordered Northern Motors to return of the P1,250 which
it had received from Sapinoso after filing the case and
electing to foreclose
ISSUE: W/N as under Article 1484 of the Civil Code,21
plaintiff Northern Motors is barred from recovering
unpaid balance of the debt having elected to foreclose
on the chattel mortgage. NO.
HELD:
In issuing the writ of replevin and upholding after trial
the right to possession of the car by Northern Motors,
the court below correctly considered the action as one
of replevin to secure possession of the car as preliminary
step to a foreclosure sale
The court below however erred in concluding that the
legal effect of the action was to bar Northern Motors
from accepting further payments on the promissory note
It is the fact of foreclosure and actual sale of the
mortgaged chattel that bars further recovery by the
vendor of any balance on the vendees outstanding
obligation not satisfied by the sale
In the present case, there is no occasion to apply the
restrictive provision of Article 1484 as there has not yet
been a foreclosure sale resulting in a deficiency
A mortgage creditor before the actual foreclosure sale
is not precluded from recovering the unpaid balance
although he has filed for replevin for the purpose of
extrajudicial foreclosure
Also, a mortgage creditor who has elected to foreclose
but subsequently desists from proceeding with the
auction sale without gaining any advantage and without
causing any disadvantage to the mortgagor is not barred
from suing on the unpaid account
And as applicable here, a mortgage creditor is not
barred from accepting before a foreclosure sale
payments voluntarily tendered by the debtor-mortgagor
who admits indebtedness.
8.
9.
include attorneys fees and costs of suit. Were it the
intention of legislature to limit its meaning to the
unpaid balance of the principal, it would have so
stated. In other words, the mortgagee is limited to the
property mortgaged and is not entitled to attys fees and
costs of suit.
Such doctrine prevents the circumvention of the Recto
Law. Prior to its enactment, sellers unjustly enriched
themselves at the expense of their buyers; by recovering
the goods sold upon default of installment payers, by
retaining the amounts already paid, and by claiming for
damages. Looking at the doctrine of Macondray, it
appears that in no instance may the mortgagee recover
any sum from the mortgagor after the foreclosure of the
mortgage.
But although the court agrees with the above stated
doctrine, it seems that the mortgagees are not
protected against perverse mortgagors. Examples of
perverse mortgagors are those who deceitfully hide their
mortgaged movables, or upon default of payment,
refuse to give up its possession for foreclosure. When
the mortgagor does these acts, the mortgagee has no
choice but to institute a suit for replevin to recover
possession of the chattel and enforce his rights over
such. It logically follows that the necessary expenses
incurred by the mortgagee to regain possession of what
he had a right to possess should be borne by the
mortgagor. Such recoverable expenses include attys
fees, and expenses incurred in seizing the chattel. In
this case, the court found that the amounts awarded by
the lower court were reasonable.
The ruling in this case, in so far as it conflicts with
previously established doctrines, is pro tanto qualified.
complaint. The CA eventually reversed this.
The CA ordered Legarda Hermanos to deliver to
Saldana one of the two lots, at his option. Furthermore,
Hermanos was told to execute the deed of conveyance.
ISSUE: Should the claim of Hermanos Legarda be upheld?
He claims that the payment should be considered as
rent and that the sale should be cancelled? No.
HELD: The SC applied the principles of equity and
justice, as correctly held by the CA. considering that
Saldana had already paid the total sum of P3,582.06
including interests, which is even more than the value of
the two lots.
And even if the sum applied to the principal alone
were to be considered, which was of the total of
P1,682.28, the same was already more than the value of
one lot, which is P1,500.00. The only balance due on
both lots was P1,317.72, which was even less than the
value of one lot. By this, the court ruled that Saldana
had already paid for at least one lot. And he is given the
choice as to which one.
Even considering that Saldana as having defaulted
after February 1956, when he suspended payments after
the 95th installment, he had as of the already paid by
way of principal (P1,682.28) more than the full value of
one lot (P1,500.00). Furthermore, regardless of the
propriety of applying Article 1592 thereto, Legarda
Hermanos was not denied substantial justice. According
to ART. 1234, If the obligation has been substantially
performed in good faith, the obligor may recover as
though there had been a strict and complete fulfillment,
less damages suffered by the obligee, and that in the
interest of justice and equity, the decision appealed
from may be upheld upon the authority of ART. 1234.
15. MCLAUGHLIN v CA
14. JESTRA DEV AND MANAGEMENT CORP v PACIFICO
FACTS: Daniel Pacifico signed a Reservation application
with Fil-Estate Marketing Assn for the purchase of a
house nad lot and paid the reservation fee. The
Reservation application contained the amounts to be
paid in installments with interests. Unable to comply
with the schedule of payments, Pacifico requested
Jestra to allow him to make periodic payments which
the latter granted. They later on executed a contract to
sell when the remaining balance was only P260K.
Pacifico requested twice for a restructuring of his
unsettled obligation which Jestra granted subject to
certain conditions of additional penalties et al. As
compliance to the condition, Pacifico issued 12 postdated checks however he is unable to pay so he
requested that he be allowed to dispose the property to
recover his interest and he could recover the 12 post
dated checks, which was this time was denied by Jestra.
Jestra then sent a notarial notice of cancellation that
they are giving him until a certain date to pay or else
the contract will be automatically cancelled.
Pacifico then filed a complaint before the HLURB
claiming that despite his full payment of the
downpayment, Jestra failed to deliver to him the
property and instead sold it to another buyer. HRLURB
Arbiter decided in Pacificos favor finding Jestra liable.
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
full balance.
On November 7, petitioner filed a motion for writ of
execution alleging that Flores failed to pay the
installment due on June 1980 and also failed to pay the
monthly rentals from that date. She prayed that the
deed of conditional sale be rescinded with forfeiture of
all payments and payment of the monthly rentals and
eviction of Flores. The trial court granted the motion.
On November 17, Flores filed a motion for
reconsideration tendering at the same time a certified
managers check payable to petitioner and covering the
entire obligation including the December 1980
installment. The trial court denied the motion.
On appeal, the CA ruled in favor of Flores holding that
the delay in payment was not a violation of an essential
condition which would warrant a rescission since On
November 17 or just 17 days from the October 31
deadline set by petitioner, Flores tendered the certified
managers check and that it was inequitable for Flores
to forfeit all the payments made (P101,550).
ISSUE: WHETHER it is inequitable to cancel the contract
and to have the amount paid by Flores be forfeited to
petitioner particularly after Flores had tendered the
certified managers check in full payment of the
obligation. YES.
HELD: There is already substantial compliance by Flores
with the compromise agreement. More importantly, the
Maceda law recognizes the vendors right to cancel the
contract to sell upon the breach and nonpayment of the
stipulated installments but requires a grace period after
intervention. RTC ruled in favor of the Jimenezes and
CA affirmed.
ISSUE: W/N the contract between the Jimenezes and
Adelfa Properties is an option contract
HELD: NO. The alleged option contract is a contract to
sell, rather than a contract of sale. The distinction
between the two is important for in contract of sale,
the title passes to the vendee upon the delivery of the
thing sold; whereas in a contract to sell, by agreement
the ownership is reserved in the vendor and is not to
pass until the full payment of the price. In a contract of
sale, the vendor has lost and cannot recover ownership
until and unless the contract is resolved or rescinded;
whereas in a contract to sell, title is retained by the
vendor until the full payment of the price, such
payment being a positive suspensive condition and
failure of which is not a breach but an event that
prevents the obligation of the vendor to convey title
from becoming effective. Thus, a deed of sale is
considered absolute in nature where there is neither a
stipulation in the deed that title to the property sold is
reserved in the seller until the full payment of the
price, nor one giving the vendor the right to unilaterally
resolve the contract the moment the buyer fails to pay
within a fixed period.
The parties never intended to transfer ownership to
Adelfa Properties to completion of payment of the
purchase price, this is inferred by the fact that the
exclusive option to purchase, although it provided for
automatic rescission of the contract and partial
forfeiture of the amount already paid in case of default,
does not mention that Adelfa Properties is obliged to
return possession or ownership of the property as a
consequence of non-payment. There is no stipulation
anent reversion or reconveyance of the property in the
event that petitioner does not comply with its
obligation. With the absence of such a stipulation, it
may legally be inferred that there was an implied
agreement that ownership shall not pass to the
purchaser until he had fully paid the price. Article 1478
of the Civil Code does not require that such a stipulation
be expressly made. Consequently, an implied stipulation
to that effect is considered valid and binding and
enforceable between the parties. A contract which
contains this kind of stipulation is considered a contract
to sell. Moreover, that the parties really intended to
execute a contract to sell is bolstered by the fact that
the deed of absolute sale would have been issued only
upon the payment of the balance of the purchase price,
as may be gleaned from Adelfa Properties letter dated
16 April 1990 wherein it informed the vendors that it is
now ready and willing to pay you simultaneously with
the execution of the corresponding deed of absolute
sale.
2.
CORONEL v CA
3.
PNB v CA
FACTS:
PNB owned a parcel of land which Lapaz Kaw Ngo
offered to buy. Events under the first letter-agreement
PNB accepted Lapazs offer subject to certain
stipulations. The important ones are the following:
1. The selling price shall be P5.4million. Lapaz had
already paid P100,000 as deposit.
36
2. Upon failure to pay the additional deposit worth
P970,000, the P100,000 shall be forfeited and PNB shall
be authorized to sell the property to another.
3. The property shall be cleared of its present tenants at
the expense of Lapaz.
4. Sale was subject to other terms and conditions to be
imposed.
Lapaz agreed, so she proceeded to clear the lot of its
tenants at her own expense.
However, due to difficulties in money, she requested
for adjustment of payment proposals, which the bank
denied. PNB also reminded her that she had not yet sent
her letter of conformity to the agreement reached and
told her to pay the full price of P5.4million. If not, the
lot will be sold to other parties.
Lapaz requested for a reduction of the price as the
size of the land was substantially reduced. PNB agreed.
PNB still did not receive payment from Lapaz, and
gave the latter the last chance to pay the balance of the
down payment. If she failed to pay, the sale shall be
cancelled and the P100,000 payment shall be forfeited.
Lapaz failed to pay, so P100,000 was forfeited and the
sale never materialized. PNB leased the premises to a
certain Rivera.
Lapaz requested for a refund of her deposit in the
total amount of P660,000 and asked that the forfeited
P100,000 be reduced to P30,000. PNB agreed. Events
under the second letter-agreement
Lapaz requested for a revival of the previously
approved offer to PNB. PNB approved.
All conditions as in the first agreement were the same,
except for the purchase price and deposit. The price
was P5.1million, the deposit was P200,000.
Lapaz refused, however, to conform to the condition
of vacating the premises at her expense as she had
already done so under the first agreement. (She
apparently considered this second letter-agreement as a
continuation of the first so she said that she was no
longer required to evict the tenants as she had already
done so.) Besides, according to her, the occupants of
the property were tenants of PNB. PNB refused this
offer.
To prevent the forfeiture of her P200,000 deposit, she
signed the letter-agreement. She told PNB that she was
willing to pay the remaining deposit of P800K as long as
it was PNB who would clear the property. PNB refused,
and forfeited the P200,000 of Lapaz.
PNB informed Lapaz that they had already decided to
sell the property for not less than P7M.
ISSUES:
1. Whether or not there was a perfected contract of
sale. No. There was no perfected contract of sale.
2. Whether or not the P100,000 or the P200,000 was
earnest money. No. They were not earnest money.
HELD:
It is important to note that the first letter-agreement
was cancelled and thereafter no longer existed. The
second letter-agreement is not a contract of sale but a
contract to sell whose conditions were not fulfilled,
which prevented the obligations therein from obtaining
obligatory force.
A contract to sell is one where the obligatory force of
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
4.
BABASA v CA
improvements thereon. On 18 May 1981 Tabangao
leased the lots to Shell Gas Philippines, Inc. (SHELL),
which immediately started the construction thereon of a
Liquefied Petroleum Gas Terminal Project, an approved
zone export enterprise of the Export Processing Zone.
Tabangao is the real estate arm of SHELL. The parties
substantially complied with the terms of the contract.
Tabangao paid the first installment of P300,000.00 to
the Babasas while the latter delivered actual possession
of the lots to the former. In addition, Tabangao paid
P379,625.00 to the tenants of the lots as disturbance
compensation and as payment for existing crops as well
as P334,700.00 to the owners of the houses standing
thereon in addition to granting them residential lots
with the total area of 2,800 square meters. Tabangao
likewise paid the stipulated monthly interest for the 20month period amounting to P408,580.80. Meanwhile, the
Babasas filed Civil Case 519 and Petition 373 for the
transfer of titles of the lots in their name. However, 2
days prior to the expiration of the 20-month period,
specifically on 31 December 1982, the Babasas asked
Tabangao for an indefinite extension within which to
deliver clean titles over the lots. They asked that
Tabangao continue paying the monthly interest of
P20,648.43 starting January 1983 on the ground that
Civil Case 519 and Petition 373 had not yet been
resolved with finality in their favor. Tabangao refused
the request. In retaliation the Babasas executed a
notarized unilateral rescission dated 28 February 1983
to which Tabangao responded by reminding the Babasas
that they were the ones who did not comply with their
contractual obligation to deliver clean titles within the
stipulated 20-month period, hence, had no right to
rescind their contract. The Babasas insisted on the
unilateral rescission and demanded that SHELL vacate
the lots.
On 19 July 1983 Tabangao instituted an action for
specific performance with damages in the RTC Batangas
City to compel the spouses to comply with their
obligation to deliver clean titles over the properties.
The Babasas moved to dismiss the complaint on the
ground that their contract with Tabangao became null
and void with the expiration of the 20-month period
given them within which to deliver clean certificates of
title. SHELL entered the dispute as intervenor praying
that its lease over the premises be respected by the
Babasas. RTC ruled in favor of Tabangao and Shell. CA
affirmed.
ISSUE: W/N there was a contract of absolute sale
between the Babasa and Tabagao
HELD: YES. Although denominated Conditional Sale of
Registered Lands, the contract between the spouses
and Tabangao is one of absolute sale. Aside from the
terms and stipulations used therein indicating such kind
of sale, there is absolutely no proviso reserving title in
the Babasas until full payment of the purchase price,
nor any stipulation giving them the right to unilaterally
rescind the contract in case of non-payment. A deed of
sale is absolute in nature although denominated a
conditional sale absent such stipulations. In such cases,
ownership of the thing sold passes to the vendee upon
the constructive or actual delivery thereof. In the
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
5.
VALDEZ v CA
contract must be inferred from the express terms and
agreement and from the contemporaneous and
subsequent acts of the parties thereto. When Josefina,
through her son acting a an attorney-in-fact, executed a
deed of absolute sale in favor of Lagon, she did not
reserve the ownership of the property, subject to the
completion of payment of the consideration. However,
Carlos Jr. exceeded his authority when he entered into a
different agreement with Lagon, making the contract
unenforceable, unless ratified. In this case, it was
ratified when Josefina accepted the downpayment of
P20,000 and issued a receipt as a consequence of
ratifying the contract. It must be noted, however, that
an affidavit was signed by Lagon as part of the
consideration, to transfer the Rural Bank of Isulan as
well as constructing a commercial bank beside the bank,
both failed to perform by Lagon, making the deed of
absolute sale null and void. It cannot be considered as
an afterthought contrived by Carlos Jr. since Lagon
admitted in court the authenticity of the affidavit, and
its binding effect against him. There was no need to
rescind the contract because it was clearly stipulated
that failure to comply with such obligation makes the
deed null and void, though petitioners are obliged to
refund the respondent's partial payment of the subject
property.
6.
DIGNOS v CA
FACTS: Dignos is the owner of a parcel of land in LapuLapu City, which they sold to Jabil for P28,000, payable
in 2 installments and with an assumption of
indebtedness with First Insular Bank of Cebu for
P12,000. However, Dignos also sold the same land in
favor of Cabigas, who were US citizens, for P35,000. A
Deed of Absolute Sale was executed in favor of the
Cabigas spouses.
Jabil filed a suit against Dignos with CFI of Cebu. RTC
ruled in favor of Jabil and declared the sale to Cabigas
null and void. On appeal, CA affirmed RTC decision with
modification.
ISSUE: W/N the contract between Dignos and Jabil is a
contract of sale (as opposed to a contract to sale)
HELD: YES. A deed of sale is absolute in nature although
denominated as a Deed of Conditional Sale where
nowhere in the contract in question is a proviso or
stipulation to the effect that title to the property sold is
reserved in the vendor until full payment of the
purchase price, nor is there a stipulation giving the
vendor the right to unilaterally rescind the contract the
moment the vendee fails to pay within a fixed period. In
the present case, there is no stipulation reserving the
title of the property on the vendors nor does it give
them the right to unilaterally rescind the contract upon
non-payment of the balance thereof within a fixed
period.
While there was no constructive delivery of the land
sold in the present case, as subject Deed of Sale is a
private instrument, it is beyond question that there was
actual delivery thereof. As found by the trial court, the
Dignos spouses delivered the possession of the land in
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
7.
FACTS:
UP was given a land grant which shall be developed to
obtain additional income for its support.
UP and ALUMCO entered into a logging agreement
where ALUMCO was granted the exclusive authority for
an extendible period of 5 years (by mutual agreement),
to cut and remove timber from the land grant
inconsideration of royalties and fees to be paid to UP.
ALUMCO incurred an unpaid amount of P219,363. UP
demanded payment but it failed to pay. ALUMCO
received a letter that UP would rescind or terminate
their logging agreement. They executed an instrument
Acknowledgement of Debt & Proposed Manner of
Payment which the UP President approved. ALUMCO
agreed to give their creditor (UP) the right to consider
the logging agreement as rescinded without necessity of
any judicial suit and creditor will be entitled to P50,000
for liquidated damages.
ALUMCO continued logging but still incurred unpaid
accounts. UP then informed them that as of that date,
they considered rescinded the agreement and of no
further legal effect. UP then filed for collection of the
unpaid accounts and the trial court gave them
preliminary injunction to prevent ALUMCO from
continuing their logging.
Through a public bidding, the concession was awarded
to Sta. Clara Lumber Company and a new agreement
was entered into between them and UP.
ALUMCO tried to enjoin the bidding but the contract
was already concluded and Sta. Clara started its
operation.
Upon motion by ALUMCO, UP was declared in
contempt of court for violating the writ of injunction
against them.
ALUMCOs contentions are the following:
a. It blamed its former general manager for their
failure to pay their account.
b. Logs cut were rotten; thus, they were unable to
sell them.
c. UPs unilateral rescission was invalid without a
court order.
ISSUE: W/N UP can validly rescind its agreement with
ALUMCO even without court order. Yes. UP can
unilaterally rescind the agreement.
HELD:
UP and ALUMCO expressly stipulated in their
Acknowledgement of Debt that upon default of
payment, creditor UP has the right and power to rescind
their Logging Agreement without the necessity of a
judicial suit.
There is nothing in the law that prohibits the parties
from entering into agreements that violation of terms of
39
the contract would cause its cancellation even without
court intervention.
Act of a party in treating a contract as cancelled on
account of any infraction by the other party must be
made known to the other and is always provisional,
being subject to scrutiny and review by the proper
court.
If the other party deems the rescission unjustified, he
free to resort to judicial action. The court shall, after
due hearing, decide if the rescission was proper, in
which case it will be affirmed and if not proper, the
responsible party will be liable for damages.
A party who deems the contract violated may consider
it rescinded and act accordingly, even without court
action but it proceeds at its own risk. Only the final
judgment of the court will conclusively settle whether
the action taken was proper or not. But the law does not
prohibit the parties from exercising due diligence to
minimize their own damages.
UP was able to show a prima facie case of breach of
contract and default in payment by ALUMCO. Excuses by
ALUMCO are not proper for them to suspend their
payments.
Thus, the Supreme Court lifted the injunction.
8.
9.
LIM v CA
the consideration was a positive suspensive condition,
title to the property never passed to the private
respondents.
Thus,
the
property
was
legally
unencumbered and still belonged to PBC when it was
sold to Lim.
On RESCISSION: Although a contract to sell imposes
reciprocal obligations and cannot be terminated
unilaterally by either party, judicial rescission is
required under Art. 1911 of the CC. However, this rule is
not absolute. Jurisprudence has shown that a party may
take it upon itself to consider the contract rescinded
and act accordingly albeit subject to judicial
confirmation, which may or may not be given. It is true
that the rescinding party takes a risk that its action may
not be approved by the court. The Orlinos obligated
themselves to deliver to PBC P160K and their share on
the property in Caloocan City. However, the Orlinos did
not act on their obligations. PBC could not be required
to wait for them forever. Thus, PBC had the right to
consider the contract to sell between them terminated
for non-payment of the stipulated consideration.
LA FORTEZA v MACHUCA
FACTS:
* The disputed property in this case consists of a house
and lot located at Marcelo Green Village, Paranaque,
which is registered in the name of the late Francisco
Laforteza, although it is conjugal in nature
* Lea Zulueta-Laforteza executed a Special Power of
Attorney in favor of Robert and Gonzalo Laforteza,
appointing both as her attorney-in-fact authorizing them
jointly to sell the subject property and sign any
document for the settlement of the estate of the late
Francisco Laforteza
* Michael Laforteza also executed a Special Power of
Attorney in favor of Robert and Gonzalo Laforteza
granting them the same authority. Both agency
instruments contained a provision that in any document
or paper to exercise authority granted, the signature of
both attorneys-in-fact must be affixed
* Dennis Laforteza executed an SPA in favor of Robert L.
for the purpose of selling the subject property. A year
later, he executed another SPA in favor of Robert and
Gonzalo L. naming both attorneys-in-fact for the
purpose of selling the subject property and signing any
document for the settlement of the estate of the late
Francisco LAforteza. Both agency instruments contained
same provisions as that mentioned above.
* In the exercise of the above authority, the heirs of the
late Franciso L. represented by Robert and Gonzalo L
entered into a Memorandum of Agreement (Contract to
Sell) with Machuca over the subject property for the
sum of 630,000 payable as follows:
minds upon the thing which is the object of the contract
and upon the price. From that moment the parties may
reciprocally demand performance subject to the
provisions of the law governing the form of contracts.
In this case, there was a perfected agreement
between the petitioners and respondent whereby
Lafortezas obligated themselves to transfer the
ownership of and deliver the house and lot and Machuca
to pay the price amounting to 630k.
All the elements of a contract of sale were thus
present. However, the balance of the purchase price
was to be paid only upon the issuance of the new
certificate of title in lieu of the one in the name of the
late Francisco Laforteza and upon the execution of an
extrajudicial settlement of his estate.
Prior to the issuance of the reconstituted title,
Machuca was already placed in possession of the house
and lot as lessee thereof for 6 months at a monthly rate
of 3,500k. It was stipulated that should the issuance of
the new title and execution of the extrajudicial
settlement be completed prior to expiration of 6month
period, Machuca would be liable only for the rentals
pertaining to the period commencing from the date of
the execution of the agreement up to the executon of
the extrajudicial settlement.
It was also expressly stipulated that if after the
expiration of the 6 month period, the lost title was not
yet replaced and the extrajudicial partition was not yet
executed, Machuca would no longer be required to pay
rentals and would continue to occupy and use the
premises until the subject condition was complied with
by Lafortezas.
The 6-month period during which Machuca would be in
possession of the property as lessee, was clearly not a
period within which to exercise such option. An option is
a contract granting a privilege to buy or sell within an
agreed time and at a determined price.
In this case, the 6-month period merely delayed the
demandability of the contract of sale and did not
determine perfection for after the expiration of the 6
month period, there was a absolute obligation on the
part of Lafortezas and Machuca to comply with the
terms of the sale.
The fact that after the expiration of the 6-month
period, Machuca would retain possession of the house
and lot without need of paying rentals for the use
therefore, clearly indicated that the parties
contemplated that ownership over the property would
already be transferred by that time.
What further indicated that this was a contract of sale
was the payment of earnest money. Earnest money is
something of value to show that buyer was really in
earnest, and given to the seller to bind the bargain.
Whenever earnest money is given in a contract of sale,
it is considered as part of the purchase price and proof
of the perfection of the contract.
2.
3.
4.
GUINHAWA v PEOPLE
FACTS:
* Jaime Guinhawa was engaged in the business of selling
brand new motor vehicles, including Mitsubishi vans,
under the business name of Guinrox Motor Sales. His
office and display room for cars were located along
Panganiban Avenue, Naga City. He employed Gil Azotea
as his sales manager.
42
* Guinhawa purchased a brand new Mitsubishi L-300
Versa Van from the Union Motors Corporation (UMC) in
Paco, Manila.
* The van bore Plate no. DLK 406. Guinhawas driver,
Olayan, drove the van from Manila to Naga City.
* However, while the van was traveling along the
highway in Daet, Camarines Norte, Olayan suffered a
heart attack. The van went out of control, traversed the
highway onto the opposite lane, and was ditched into
the canal parallel to the highway. The van was
damaged, and the left front tire had to be replaced.
* The van was repaired and later offered for sale in
Guinhawas showroom.
* Spouses Ralph and Josephine Silo wanted to buy a new
van for their garment business; they purchased items in
Manila and sold them in Naga City.
* Unaware that the van had been damaged and repaired
on account of the accident in Daet, the couple decided
to purchase the van for 591k. Azotea, sales manager,
suggested that the couple make a downpayment of
118,200, and pay the balance of the purchase price by
installments via a loan from the United Coconut Planters
Bank (UCPB), with the van as collateral.
* Azotea offered to make the necessary arrangements
with UCPB for the consummation of the loan transaction
wherein the couple agreed.
* The spouses executed a Promissory Note for the
amount of 692,676 as payment of the balance on the
purchase price, and as evidence of the chattel mortgage
over the van in favor of UCPB.
* The couple arrived in Guinhawas office to take
delivery of the van. The latter executed the deed of
sale, and the couple paid the 161,470 downpayment, for
they were issued a receipt. They were furnished a
Service Manual which contained the warranty terms and
conditions.
* Azotea instructed the couple on how to start the van
and to operate its radio. Ralph Silo no longer conducted
a test drive; he and his wife assumed that there were no
defects in the van as it was brand new.
* Josephine Silo, accompanied by Glenda Pingol, went to
Manila on board the van, with Glendas husband as the
driver. On their return trip to Naga from Manila, the
driver heard a squeaking sound, which seemed to be
coming from underneath the van. The squeaking sound
persisted and upon examination at the Shell gasoline
station, it was found out that some parts underneath
the van had been welded.
* Guinhawa insisted that the defects were mere factory
defects. As the defects persisted, the spouses requested
that Guinhawa replace the van with 2 Charade-Daihatsu
vehicles within a week or two, with the additional costs
to be taken from their downpayment.
* The spouses brought the car to Rx Auto Clinic for
examination wherein the mechanic discovered that it
was the left front stabilizer that was producing the
annoying sound, and that it had been repaired.
* Josephine Silo filed for rescission of the sale and
refund of their money.
* They instituted also a criminal complaint for other
deceits made by Guinhawa by making fraudulent
representations about the car being brand new and that
it never encountered an accident.
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
ISSUE:
W/N
THERE
WERE
FRAUDULENT
REPRESENTATIONS MADE BY THE SELLER, GUINHAWA BY
VIRTUE OF THE CONTRACT OF SALE EXECUTED BETWEEN
HIM AND THE COUPLE
RULING: YES
Article 1389 of NCC provides that failure to disclose
facts when there is a duty to reveal them constitutes
fraud. In a contract of sale, a buyer and seller do not
deal from equal bargaining positions when the latter has
knowledge, a material fact which, if communicated to
the buyer, would render the grouns unacceptable or, at
least, substantially less desirable.
If, in a contract of sale, the vendor knowingly allowed
the vendee to be deceived as to the thing sold in a
material matter by failing to disclose an intrinsic
circumstance that it vital to the contract, knowing that
the vendee is acting upon the presumption that no such
fact exists, deceit is accomplished by the suppression of
the truth.
In this case, Guinhawa and Azotea knew that the van
had figured in an accident, was damaged and had to be
repaired. Nevertheless, the van was placed in the
showroom, thus making it appear to the public that it
was a brand new unit. Guinhawa was mandated to
reveal the foregoing facts to Silos but they even
obdurately declared when they testified that the court
did not figure in an accident, nor had it been repaired.
Even when Guinhawa was apprised that Silos had
discovered the vans defects, the former agreed to
replace the van, but changed his mind and insisted that
it must be first sold.
Guinhawa is not relieved of his criminal liability for
deceitful concealment of material facts, even if Silos
made a visual inspection of the vans interior and
exterior before she agreed to buy and failed to inspects
its under chassis.
5.
ANG v CA
FACTS:
* Under a car-swapping scheme, Bruno Soledad sold his
Mitsubishi GSR sedan 1982 model to Jaime Ang by a
Deed of Absolute Sale
* For his part, Ang conveyed to Soledad his Mitsubishi
Lancer model 1988 also by a Deed of Absolute Sale
* As Angs car was of a later model, Soledad paid him an
additional 55,000
* Ang, a buyer and seller of used vehicles, later offered
the Mitsubishi GSR for sale through Far Eastern Motors, a
second hand auto display center. The car was even sold
to a certain Paul Bugash for 225k.
* Before the Deed could be registered in Bugashs name,
however, the vehicle was seized by virtue of a writ of
replevin on account of the alleged failure of Ronaldo
Panes, the owner of the car prior to Soledad, to pay the
mortgage debt constituted thereon.
* To secure the release of the vehicle, Ang paid BA
Finance the amount of 62,038.47. Soledad refused to
reimburse the said amount, despite repeated demands,
drawing Ang to charge him for estafa with abuse of
confidence.
43
ISSUE: W/N THE COMPLAINT HAD PRESCRIBED HINGES ON
A DETERMINATION OF WHAT KIND OF WARRANTY IS
PROVIDED IN THE DEED OF ABSOLUTE SALE
RULING: YES
A warranty is a statement or representation made by
the seller of goods, contemporaneously and as part of
the contract of sale, having reference to the character,
quality or title of the goods, and by which he promises
or undertakes to insure that certain facts are or shall be
as he then represents them.
Warranties by the seller may be express or implied.
In declaring that Soledad owned and had clean title to
the vehicle at the time of the deed of absolute sale was
forged, he gave an implied warranty of title. In pledging
that he will defend the same from all claims or any
claim whatsoever and will save the vendee from any suit
by the government of the Republic of the Phils, Soledad
gave a warranty against eviction.
Given Angs business of buying and selling used
vehicles, he could not have merely relied on Soledads
affirmation that the car was free from liens and
encumbrances. He was expected to have thoroughly
verified the cars registration and related documents.
Since what Soledad, as seller, gave was an implied
warranty, the prescriptive period to file a breach
thereof is 6 months after the delivery of the vehicle,
following Art. 1571. But even if the date of filing of the
damages. Various expert witnesses were presented
during the trial.
ISSUE: W/N Nutrimix should be held liable for the death
of the livestock
HELD: NO. In alleging that there was a violation of
warranty against hidden defects, the spouses assumed
the burden of proof. However, this they failed to
overcome. Under the law, the defect must exist at the
time the sale was made and at the time the product left
the hands of the seller, which the spouses failed to
prove. The feeds were belatedly tested3 months after
the death of the broilers and hogs. This means that at
6.
EXTINGUISHMENT OF SALE
1.
ROBERTS v PAPIO
FACTS:
* The Spouses Papio were the owners of a 274 sqm
residential lot located in Makati. In order to secure a
59k loan from the Amparo Investments Corp, they
executed a real estate mortgage on the property. Upon
Papios failure to pay the loan, the corporation filed a
petition for the extrajudicial foreclosure of the
mortgage.
* Since the couple needed money to redeem the
property and to prevent the foreclosure of the real
estate mortgage, they executed a Deed of Absolute Sale
over the property in favor of Martin Papios cousin,
Amelia Roberts.
* Of the 95k purchase price, 59k was paid to the Amparo
Investments Corp, while the 26k difference was retained
by the spouses. As soon as the spouses had settled their
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
days from receipt of the letter in case he failed to settle
the amount.
* A. Roberts filed a complaint for unlawful detainer and
damages against Martin Papio
ISSUE: W/N THE DEED OF ABSOLUTE SALE AND
CONTRACT OF LEASE EXECUTED BY THE PARTIES IS AN
EQUITABLE MORTGAGE OVER THE PROPERTY
RULING: NO
An equitable mortgage is one that, although lacking in
some formality, form or words, or other requisites
demanded by a statute, nevertheless reveals the
intention of the parties to charge a real property as
security for a debt and contain nothing impossible or
contrary to law. A contract between the parties is an
equitable mortgage if the following requisites are
present: a. the parties entered into a contract
denominated as a contract of sale and b. the intention
was to secure an existing debt by way of mortgage. The
decisive factor is the intention of the parties.
In an equitable mortgage, the mortgagor retains
ownership over the property but subject to foreclosure
and sale at public auction upon failure of the mortgagor
to pay his obligation.
In contrast, in a pacto de retro sale, ownership of the
property sold is immediately transferred to the vendee a
retro subject only to the right of the vendor a retro to
repurchase the property upon compliance with legal
requirements for the repurchase. The failure of the
vendor a retro to exercise the right to repurchase within
the agreed time vests upon the vendee a retro, by
operation of law, absolute title over the property.
One repurchases only what one has previously sold.
The right to repurchase presupposes a valid contract of
sale between same parties. By insisting that he had
repurchased the property, Papio thereby admitted that
the deed of absolute sale executed by him and Roberts
was in fact and in law a deed of absolute sale and not an
equitable mortgage; he had acquired ownership over the
property based on said deed.
Respondent, is thus estopped from asserting that the
contract under the deed of absolute sale is an equitable
mortgage unless there is an allegation and evidence of
palpable mistake on the part of respondent, or a fraud
on the part of Roberts.
2.
3.
FACTS:
* Solid Homes executed in favor of State Financing
Center a Real Estate Mortgage on its properties
embraced in the TCT, in order to secure the payment of
a loan of 10M which the former obtained from the
latter.
* A year later, Solid Homes applied for and was
granted an additional loan of 1, 511,270.03 by State
Financing, and to secure its payment, Solid executed an
amendment to real estate mortgage whereby the credits
secured by the first mortgage on the abovementioned
properties were increased from 10M to 11,511,270.03.
* Solid homes obtained additional credits and
financing facilities from State Financing in the sum of
1,499,811.97 and to secure its payment, the former
executed the amendment to real estate mortgage
whereby the mortgage executed on its properties was
again amended so that the loans or credits secured
thereby were further increased from 11,511, 270.03 to
13,011,082.00
* When the obligations became due and payable, State
Financing made repeated demands upon Solid homes for
the payment thereof, but the latter failed to do so.
* State Financing filed a petition for extrajudicial
foreclosure of the mortgages who in pursuance of the
petition, issued a notice of sheriffs sale whereby the
mortgaged properties of Solid homes and the
improvements existing thereon, including the V.V.
Soliven Towers II Building were set for public auction
sale in order to satisfy the full amount of Solid homes
mortgage indebtedness, the interest thereon, and the
fees and expenses incidental to the foreclosure
proceedings.
* Before the scheduled public auction sale, the
mortgagor Solid homes made representations and
induced State Financing to forego with the foreclosure
of the real estate mortgage. By reason thereof, State
Financing agreed to suspend the foreclosure of
mortgaged properties, subject to the terms and
conditions they agreed upon, and in pursuance of the
said agreement, they executed a document entitled
MEMORANDUM OF AGREEMENT/DACION EN PAGO.
ISSUE:
1.
2.
RIGHT OF REPURCHASE IN THE CONSOLIDATED
TITLES
RULING: 1. YES | 2. NO
The Memorandum of Agreement/Dacion En Pago was
valid and binding, and that the registration of said
instrument in the Register of Deeds was in accordance
with law and the agreement of the parties.
Solid homes utterly failed to prove that respondent
corporation had maliciously and in bad faith caused the
non-annotation of petitioners right of repurchase so as
to prevent the latter from exercising such right.
On the contrary, it is admitted by both parties that
State Financing informed Solid homes of the registration
with the register of deeds of their memorandum of
agreement/dacion en pago and the issuance of the new
certificates of title in the name of State Financing.
Clearly, petitioner was not prejudiced by the nonannotation of such right in the certificates of title issued
in the name of State Financing. Also, it was not the
function of the corporation to cause said annotation. It
was equally the responsibility of petitioner to protect its
own rights by making sure that its right of repurchase
was indeed annotated in the consolidated titles of State
Financing.
The only legal transgression of State was its failure to
observe the proper procedure in effecting the
consolidation of the titles in its name. But this does not
automatically entitle the petitioner to damages absent
convincing proof of malice and bad faith on the part of
private respondent-corporation
4.
A. FRANCISCO REALTY v CA
5.
ABILLA v GOBONSENG
ISSUE:
1.
2.
RULING: Even though the case was filed less than one
year after the demand to vacate, making it an action of
unlawful detainer, there were other issues to be
considered such as: a) the validity of the transfer of
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA
6.
FRANCISCO v BOISER
FACTS:
Petitioner Adalia Francisco and three of her sisters,
Ester, Elizabeth, and Adeluisa, were co-owners of four
parcels of registered land in Caloocan City
On August 1979, they sold 1/5 of their undivided share
to their mother, Adela Blas, for PhP10,000, making her a
co-owner of the real property to that extent
46
7 years later, in 1986, however, Adela sold her 1/5
share for PhP10,000 to respondent Zenaida Boiser,
another sister of petitioner
In 1992 or 6 years after the sale, Adalia received
summons with a copy of a complaint by Zenaida
demanding her share in the rentals being collected from
the tenants of the Ten Commandments Building, which
stands on the co-owned property
Adalia then informs Zenaida that she was exercising
her right of redemption as co-owner of the subject
property, depositing for that purpose PhP10,000 with
the Clerk of Court
The case was however dismissed after Zenaida was
declared non-suited, and Adalias counterclaim was thus
dismissed as well
3 years after, Adalia institutes a complaint demanding
the redemption of the property, contending that the 30day period for redemption under Art. 1623 had not
begun to run against her or any of the other co-owners,
since the vendor Adela did not inform them about the
sale, which fact they only came to know of when Adalia
received the summons in 1992
Zenaida on the other hand contends that Adalia
already knew of the sale even before she received the
summons since Zenaida had informed Adalia by letter of
the sale with a demand for her share of the rentals
three months before filing suit, attaching to it a copy of
the deed of sale
Adalias receipt of the said letter is proven by the fact
that within a week, she advised the tenants of the
building to disregard Zenaidas letter-demand
The trial court dismissed the complaint for legal
redemption, holding that Art. 1623 does not prescribe
any particular form of notifying co-owners on appeal,
the CA affirmed
ISSUE: Whether the letter-demand by Zenaida to Adalia,
to which the deed of sale was attached, can be
considered as sufficient compliance with the notice
requirement of Art. 1623 for the purpose of legal
redemption
HELD:
The petitioner points out that the case does not
concern the particular form in which such notice must
be given, but rather the sufficiency of notice given by a
vendee in lieu of the required notice to be given by the
vendor or prospective vendor
The text of Art. 1623 clearly and expressly prescribes
that the 30 days for making the redemption shall be
counted from notice in writing by the vendor it makes
sense to require that notice be given by the vendor and
nobody else, since the vendor of an undivided interest is
in the best position to know who are his co-owners, who
7.
SORIANO v BAUTISTA
47
ASSIGNMENT
1.
2.
LICAROS v GATMAITAN
2.
ground that there was no privity of contract
between them, or assuming applicability of the
Bulk Sales Law, no liability attached to Union
Glass.
MTC denied the motions to dismiss filed by Union
Glass and DBP and ruled in favor of Yu. RTC affirmed
MTC's decision.
ISSUE: W/N the Bulk Sales Law covers the conveyance in
question (its violation would make DBP, Union Glass, and
Pioneer Glass liable to Yu)
HELD: NO. Under the Bulk Sales Law, the terms "goods"
and "merchandise," having acquired a fixed meaning,
refer to things and articles, which are kept for sale by a
merchant. Likewise, the term "fixtures" has been
interpreted to mean the chattels, which the merchants
usually possess and annex to the premises occupied by
KING v HERNAEZ
2.
3.
4.
informing Yu, Pioneer Glass transferred all its assets to
DBP in a "deed of cession of property in payment of
obligation" or dacion en pago. In turn, DBP sold these
assets to Union Glass that same year.
In 1983, Yu instituted an action against Pioneer Glass,
DBP, and Union Glass, asserting that the transfer of the
assets to DBP was void by reason of fraud.
Pioneer Glass: denied liability to Yu on the ground that
by virtue of the dacion en pago in favor of DBP, the
bank assumed liability to its creditors including Yu under
a payment scheme, which is under pending
implementation
DBP: denied liability to Yu on the ground that there
being no proof that the unpaid merchandise purchased
by Pioneer Glass were among those transferred to it
Union Glass: denied liability to Yu on the ground that
there was no privity of contract between them, or
50