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G.R. No.


September 20, 2004

ARRA REALTY CORPORATION vs. GUARANTEE DEVELOPMENT CORPORATION AND INSURANCE AGENCY and ENGR. ERLINDA EALOZA, Arra Realty Corporation was the owner of a parcel of land, located in Alvarado Street, Legaspi Village, Makati City. Through its president, Architect Carlos D. Arguelles, the ARC decided to construct a five-story building on its property and engaged the services of Engineer Erlinda Pealoza as project and structural engineer. Pealoza and the ARC, agreed that Pealoza would share the purchase price of one floor of the building for the price of P3,105,838 Sometime in May 1983, Pealoza took possession of the one-half portion of the second floor where she put up her office and a school. Unknown to her, ARC had executed a real estate mortgage over the lot and the entire building in favor of the China Banking Corporation. Pealoza was able to pay P1,175,124.59 for the portion of the second floor of the building she had purchased from the ARC. Then she learned that the property had been mortgaged to the China Banking Corporation sometime. When the ARC failed to pay its loan to China Banking Corporation, the subject property was foreclosed extrajudicially, and, thereafter, sold at public auction to China Banking Corporation. Pealoza filed a complaint for "specific performance or damages" with a prayer for a writ of preliminary injunction against the petitioners. Issue: wheter or not there has been a perfected contract of sale? Held: The petitioner ARC, as vendor, and respondent Pealoza, as vendee, entered into a contract of sale over a portion of the second floor of the building yet to be constructed for a price payable in installments. As soon as the second floor was constructed within five (5) months, respondent Pealoza would take possession of the property, and title thereto would be transferred to her name. The parties had agreed on the three elements of subject matter, price, and terms of payment. Hence, the contract of sale was perfected, it being consensual in nature, perfected by mere consent, which, in turn, was manifested the moment there was a meeting of the minds as to the offer and the acceptance thereof. The perfection of the sale is not negated by the fact that the property subject of the sale was not yet in existence. This is so because the ownership by the seller of the thing sold at the time of the perfection of the contract of sale is not an element of its perfection. A perfected contract of sale cannot be challenged on the ground of non-ownership on the part of the seller at the time of its perfection. What the law requires is that the seller has the right to transfer ownership at the time the thing is delivered. Perfection per se does not transfer ownership which occurs upon the actual or constructive delivery of the thing sold. Pealoza took possession of a portion of the second floor of the building the moment she put up her office and operated the school. Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. Admittedly, respondent Pealoza failed to pay the downpayment on time. But then, the petitioner ARC accepted, without any objections, the delayed payments of the respondent; hence, as provided in Article 1235 of the New Civil Code, the obligation of the respondent is deemed complied with. G.R. No. 166190 September 20, 2006


Venancio Bajenting was a holder of a free patent over a parcel of land in Davao Cadastre, located in Langub, Davao City. When Venancio died intestate, Felisa and the other heirs executed an Extrajudicial Settlement. In the same deed, a portion of the property was sold to the spouses Sonia Luz Alfafara, and another to Engr. Romeo F. Baez. In the meantime, the Sangguniang Panglunsod approved City Ordinance No. 263, Series of 1982 and Resolution No. 10254 declaring the properties in Langub as a low density residential zone. Later on, the Heirs, including Felisa, tried to repurchase the property as provided under Section 119 of Commonwealth Act No. 141, but Respondents refused. The Heirs filed a complaint for Quieting of Title, Repurchase of Property, Recovery of Title plus Damages with the Regional Trial Court. The RTC rendered judgment in favor of the Heirs However on appeal the CA reversed the decision. CA ruled, basing on the pleadings and the evidence on record, that the Heirs sought to repurchase the property only for the purpose of reselling the same contrary to the purpose of the law of securing the family home to foster families as the factors of society, and thus promote public welfare. Issue: Whether or the Heirs are entitled to repurchase the land under Commonwealth Act No. 141 and whether or not there was a perfected contract of sale? Held: That petitioners had no intention of retaining the property for their and their families' use. They intend to sell same for P10,000,000.00 and in the process, amass a net profit amounting to P9,650,000.00 from the original price of 350,000.00. We agree with respondents' contention that petitioners are obliged to execute a notarized deed of absolute sale over the property upon payment of the balance of the purchase price of the property. A contract of sale is a consensual contract. Upon the perfection of the contract, the parties may reciprocally demand performance. The vendee may compel transfer of ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold. G.R. No. 134712 August 13, 2004

MARIA CABOTAJE, AGUSTIN CABOTAJE, AMELIA TOMAS and DANIEL PUGAYAN, petitioners, vs. SPOUSES SOTERO PUDUNAN and MARIA RIVERA Bonifacia Lang-ew was the owner of two parcels of land located in Lamut, Indiana, Bambang, Nueva Vizcaya. Langew died intestate on November 23, 1965. Due to dire need of money, Maria Cabotaje and Daniel Pugayan (grandchildren and heirs of Lang-ew) borrowed P1,000 from the Spouses Sotero Pudunan and Maria Rivera. They signed a private document prepared by Juan Anungos, which stated that the payment of the said amount was secured by a mortgage over one of the Lots of Lang-ew redeemable within one year, extendible for another. The owners duplicate copy was then delivered to the mortgagees by the mortgagors. On the same day, the Heirs affixed their signatures over a deed entitled "Confirmatory Deed of Sale," in which they undertook to sell the second lot to the Spouses Pudunan for the price of P2,000.00. The document was notarized by Judge Tomas P. Maddela. However, the deed was not filed with the Registry of Deeds of Nueva Vizcaya. Subsequently, it was made to appear in the original copy of the said deed that

both Lots 1 and 2, consisting of 6,382 square meters and 9,951 square meters, respectively, were sold to the Spouses Pudunan. Such altered original copy was filed on July 18, 1966 with the Office of the Register of Deeds of Nueva Vizcaya and a TCT issued by the Register of Deeds in favor of the Spouses Pudunan. After nineteen years, petitioners Maria Cabotaje, Agustin Cabotaje, Amelia Tomas and Daniel Pugayan sought for the recovery of ownership and possession of Lots 1 and 2. Issue: Whether of not there has been a perfected contract of sale? Held: The SC Ruled in favor of the Petitioners First. Respondent Maria Rivera admitted in court that the alteration occurred after the execution of the 25 Confirmatory Deed of Sale. Second. The petitioners did not authenticate the alterations in the assailed deed by affixing their initials or signatures thereon. Third. Neither did Ex-Officio Notary Public, Judge Tomas Maddela authenticate the said alterations when he notarized the Confirmatory Deed of Sale Fourth. In the assailed deed, the petitioners purportedly also sold Lot 1 to the respondents, but the purchase price thereof remained unchanged. Thus, under the assailed deed, the respondents paid P2,000.00 for the two lots. The respondents failed to give a satisfactory explanation why the price of the property remained at P2,000.00. We find and so hold that the petitioners did not consent to the sale of Lot 1 to the respondents. One of the essential requirements of a valid contract, including a contract of sale, is the consent of the owner of the 31 32 property. Absent such consent, the contract is null and void ab initio. A void contract is absolutely wanting in 33 civil effects; it is equivalent to nothing. It produces no effects whatsoever either against or in favor of anyone; 34 hence, it does not create, modify, or extinguish the judicial relation to which it refers. In fine, the petitioners, not the respondents, are the rightful owners of Lot 1.

G.R. No. 126376

November 20, 2003

SPOUSES BERNARDO BUENAVENTURA vs. COURT OF APPEALS Defendant spouses Leonardo Joaquin and Feliciana Landrito are the parents of plaintiffs Consolacion, Nora, Emma and Natividad as well as of defendants Fidel, Tomas, Artemio, Clarita, Felicitas, Fe, and Gavino, all surnamed JOAQUIN. They sought to be declared null and void ab initio are certain deeds of sale of real property executed by defendant parents Leonardo Joaquin and Feliciana Landrito in favor of their co-defendant children because a) Firstly, there was no actual valid consideration for the deeds of sale xxx over the properties in litis;

b) Secondly, assuming that there was consideration in the sums reflected in the questioned deeds, the properties are more than three-fold times more valuable than the measly sums appearing therein; c) Thirdly, the deeds of sale do not reflect and express the true intent of the parties (vendors and vendees); and d) Fourthly, the purported sale of the properties in litis was the result of a deliberate conspiracy designed to unjustly deprive the rest of the compulsory heirs (plaintiffs herein) of their legitime. Issue: Whether or not the sale is valid? Held;: We find the petition without merit. Petitioners do not have any legal interest over the properties subject of the Deeds of Sale. The right to their parents properties is merely inchoate and vests only upon their parents death. While still living, the parents of petitioners are free to dispose of their properties. On the other hand, the petitioners assails the validity of the contact being one without consideration. However, It is not the act of payment of price that determines the validity of a contract of sale. Payment of the price has nothing to do with the perfection of the contract. Payment of the price goes into the performance of the contract. Failure to pay the consideration is different from lack of consideration. The former results in a right to demand the fulfillment or cancellation of the obligation under an existing valid contract while the latter prevents the existence of a valid contract. Petitioners ask that assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of Sale. Nonetheless the Civil Code states: Art. 1355. Except in cases specified by law, lesion or inadequacy of cause shall not invalidate a contract, unless there has been fraud, mistake or undue influence. (Emphasis supplied) It is also further provided that: Art. 1470. Gross inadequacy of price does not affect a contract of sale, except as may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract. (Emphasis supplied) In the instant case, the trial court found that the lots were sold for a valid consideration, and that the defendant children actually paid the purchase price stipulated in their respective Deeds of Sale. Actual payment of the purchase price by the buyer to the seller is a factual finding that is now conclusive upon the court.

G.R. No. 124242

January 21, 2005


On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo Babasanta. After several payments totaling two hundred thousand pesos, Babasanta demand the execution of a final deed of sale in his favor so that he could effect full payment of the purchase price. However Babasanta received an information that the spouses sold the same property to another without his knowledge and consent. In response, Pacita Lu reminded Babasanta that he previously backed out of the sale due to non agreement in price. Babasanta, as plaintiff, filed before the Regional Trial Court a Complaint for Specific Performance and Damages1 against his co-respondents herein, the Spouses Lu. San Lorenzo Development Corporation (SLDC) filed a Motion for Intervention6 before the trial court. SLDC alleged that it had legal interest in the subject matter under litigation because the two parcels of land involved had been sold to it in a Deed of Absolute Sale with Mortgage.7 It alleged that it was a buyer in good faith and for value and therefore it had a better right over the property in litigation. RTC Applying Article 1544 of the Civil Code, the trial court ruled in favor of SLDC who first acquired possession of the property, On Appel, the Court of Appeals set aside the judgment of the trial court. It declared that the sale between Babasanta and the Spouses Lu was valid and subsisting. Issue: Who between SLDC and Babasanta has a better right over the two parcels of land? Held: The agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale. The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos from Babasanta as partial payment of 3.6 hectares of farm lot situated in Sta. Rosa, Laguna. While there is no stipulation that the seller reserves the ownership of the property until full payment of the price which is a distinguishing feature of a contract to sell, the subsequent acts of the parties convince us that the Spouses Lu never intended to transfer ownership to Babasanta except upon full payment of the purchase price. The distinction between a contract to sell and a contract of sale is quite germane. In a contract of sale, 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. 22 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.23 The perfected contract to sell imposed upon Babasanta the obligation to pay the balance of the purchase price. There being an obligation to pay the price, Babasanta should have made the proper tender of payment and consignation of the price in court as required by law. Mere sending of a letter by the vendee expressing the intention to pay without the accompanying payment is not considered a valid tender of payment. G.R. No. 75198 October 18, 1988 SCHMID & OBERLY, INC., petitioner, vs. RJL MARTINEZ FISHING CORPORATION, respondent. .

RJL MARTINEZ is engaged in the business of deep-sea fishing. SCHMIID sold electric generators of different brands. The parties had two separate transactions over "Nagata"-brand generators. The first transaction was the sale of three (3) generators. The company supplied the generators from its stockroom. The second transaction, which gave rise to the present controversy, involves twelve (12) "Nagata"-brand generators which is to be bought durectly from NAGATA CO. For its efforts, SCHMID received from NAGATA CO. a commission . However All fifteen (15) generators subject of the two transactions burned out after continuous use. SCHMID replaced the three (3) generators subject of the first sale with generators of a different brand. As for the twelve (12) generators, three (3) generators were repaired by NAGATA CO. itself and thereafter returned to RJL MARTINEZ; the remaining nine (9) were neither repaired nor replaced. NAGATA CO.. RJL MARTINEZ formally demanded that it be refunded the cost of the (9) generators and paid damages. SCHMID in its reply maintained that it was not the seller of the twelve (12) generators and thus refused to refund the purchase price therefor. Hence, RJL MARTINEZ brought suit against SCHMID, as such vendor, was liable under its warranty against hidden defects. Both the trial court and the Court of Appeals upheld the contention of RJL MARTINEZ that SCHMID was the vendor in the second transaction and was liable under its warranty. Accordingly, the courts a quo rendered judgment in favor of RJL MARTINEZ. Hence, the instant recourse to this Court. Issue: Whether or not SCHMID is the vendor of the 12 generators, hence liable for warranty against hidden defects? Held: Art. 1466. In construing a contract containing provisions characteristic of both the contract of sale and of the contract of agency to sell, the essential clauses of the whole instrument shall be considered. (n) An indentor is a middlemen in the same class as commercial brokers and commission merchants.The chief feature of a commercial broker and a commercial merchant is that in effecting a sale, they are merely intermediaries or middle-men, and act in a certain sense as the agent of both parties to the transaction. In case at bar, the admissions of the parties and the facts appearing on record more than suffice to warrant the conclusion that SCHMID was merely acting as an indentor in the purchase and sale of the twelve (12) generators subject of the second transaction. Not being the vendor, SCHMID cannot be held liable for the implied warranty for hidden defects under the Civil Code G. R. No. 136773 June 25, 2003

MILAGROS MANONGSONG, joined by her husband, CARLITO MANONGSONG, Petitioners, vs. FELOMENA JUMAQUIO ESTIMO, EMILIANA JUMAQUIO, NARCISO ORTIZ, CELESTINO ORTIZ, RODOLFO ORTIZ, ERLINDA O. OCAMPO, PASTOR ORTIZ, JR., ROMEO ORTIZ BENJAMIN DELA CRUZ, SR., BENJAMIN DELA CRUZ, JR., AURORA NICOLAS, GLORIA RACADIO, ROBERTO DELA CRUZ, JOSELITO DELA CRUZ and LEONCIA S. LOPEZ, Respondents. The contested property is a parcel of land on San Jose Street, Manuyo Uno, Las Pias, Metro Manila. Milagros and Carlito Manongsong (petitioners) alleged that upon Guevarras (Original owner) death, her children inherited the Property. There were only five children left as heirs of Guevarra. Each of the five children, including

Vicente Lopez, the father of Manongsong, was entitled to a fifth of the Property. As Vicente Lopez sole surviving heir, Manongsong claims her fathers 1/5 share in the Property by right of representation. Most respondents, entered into a compromise agreement with petitioners. They agreed that each group of heirs would receive an equal share in the Property and those who have exceeded said one-fifth (1/5) must be reduced so that those who have less and those who have none shall get the correct and proper portion. However the Jumaquio sisters and Leoncia Lopez who each occupy 50 square meter portions of the Property opposed petitioners claim. The Jumaquio sisters contended that Justina Navarro ("Navarro"), supposedly the mother of Guevarra, sold the Property to Guevarras daughter Enriqueta Lopez Jumaquio. Issue: Whether the Court of Appeals erred in affirming the validity of the Kasulatan sa Bilihan ng Lupa? Held:. The Kasulatan, being a document acknowledged before a notary public, is a public document and prima facie evidence of its authenticity and due execution. Even if the Kasulatan was not notarized, it would be deemed an ancient document and thus still presumed to be authentic. The Kasulatan is: (1) more than 30 years old, (2) found in the proper custody, and (3) unblemished by any alteration or by any circumstance of suspicion. It appears, on its face, to be genuine.27 We find no basis for the trial courts declaration that the sale embodied in the Kasulatan deprived the compulsory heirs of Guevarra of their legitimes. As opposed to a disposition inter vivos by lucrative or gratuitous title, a valid sale for valuable consideration does not diminish the estate of the seller. When the disposition is for valuable consideration, there is no diminution of the estate but merely a substitution of values, 30 that is, the property sold is replaced by the equivalent monetary consideration. Under Article 1458 of the Civil Code, the elements of a valid contract of sale are: (1) consent or meeting of the minds; (2) determinate subject matter and (3) price certain in money or its equivalent. 31 The presence of these elements is apparent on the face of the Kasulatan itself. The Property was sold in 1957 for P250.00.32