SUN BROTHERS & CO. [SBC] v.

JOSE VELASCO & CO KANG CHIU

1958 / Angeles / Appeal from CFI judgment [Note that this is a CA, not SC, decision.]
FACTS
SBC delivered to Francisco Lopez an Admiral refrigerator. The stipulated price was
P1,700, but only the downpayment of P500 was paid. Their contract stipulated the
following:

Lopez shall not remove the ref nor part possession without the express written
consent of SBC.
In the event of a violation of the agreement, SBC may rescind the contract of sale
and recover possession of the ref. In addition, any amount previously paid shall be
forfeited as liquidated damages, and the ref remains as SBCs absolute property
until Lopez is able to pay the full purchase price.

Without SBCs knowledge, Lopez (who misrepresented himself as Jose Lim) sold it to JV
Trading (owned by Jose Velasco) for P850, and Lopez executed a document that stated
that he is the absolute owner of the ref. Without SBCs knowledge, after displaying the ref
at his store, JV Trading sold the ref to Co Kang Chiu for P985, and it was delivered to the
latters house.
SBC filed a complaint for replevin against Lopez and Co Kang Chiu (later, JV Trading /
Jose Velasco was included), and asked for a preliminary writ of replevin for the recovery of
the possession of the ref, and it was issued. However, on Co Kang Chius request and
having filed a counter-bond, the ref was not taken out of his residence.
CFI decided in favor of SBC, declaring it as the absolute owner. Co Kang Chiu should
return ref, or else, Lopez shall pay full amount of P1,700 to SBC, and JV Trading should
reimburse Co Kang Chiu the amount of P985.
CFI ERRED; CO KANG CHIU IS THE ABSOLUTE OWNER; LOPEZ MUST PAY SBC
P1,700
ALSO, NCC 1505 PARAGRAPH 3 (ON MERCHANT STORE) SHOULD BE APPLIED
The lower court erred in applying the first paragraph of NCC 1505. It is true that Lopez
never had title since it would only be vested on him upon full payment of the purchase
price. As regards JV Trading, it did not acquire any better right than what Lopez had. The
Court also found that he was not a purchaser in good faith. Since he was purchasing a ref
from a private person who is not engaged in such business, he should have inquired WON
Lopez has paid for the ref in full.
Paragraph 3 should be applied since Co Kang Chiu purchased the ref from JV Trading,
which is a merchant store. Co Kang Chiu should be declared to have acquired a valid title,
although his predecessors-in-interest did not have any right of ownership thereto. Here is a
case where an imperfect or void title ripens into a valid one, because of some intervening
causes.
The rights and interests of an innocent buyer for value should be protected when it
comes into clash with the rights and interests of a vendor. This is embodied in NCC

1505 (3) to facilitate commercial sales of movables and to give stability to business
transactions.
SBCs recourse should be a claim for indemnity against Lopez, and not recovery
upon reimbursement, since SBC did not lose ref nor was the company unlawfully
deprived of it.

EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, vs. THE SPOUSES LEONOR
and GERARDO SANTOS, doing business under the name and style of "SANTOS
BOOKSTORE," and THE COURT OF APPEALS, respondents.
184 SCRA 614 / G.R. No. 80298, April 26, 19901st Division
FACTS:
A person identifying himself as Professor Jose Cruz placed an order by telephone with the
petitioner company for 406 books, payable on delivery. Herein petitioner prepared and
delivered the same together with an invoice. In turn Cruz issued a personal check covering
the purchase price of P8,995.65.
Payment check bounced for lack of funds.
Cruz then sold 120 of the books to private respondent Leonor Santos who, after verifying
the seller's ownership from the invoice he showed her, paid him P1,700.00.
Petitioner made an inquiry with the De la Salle College where Cruz had claimed to be a
dean. Petitioner was informed that there was no such person in its employ. It was found
out that Cruz had no more account or deposit with the Philippine Amanah Bank, against
which he had drawn the payment check. With the aid of policemen Cruz was trapped. His
real name is Tomas de la Pea. It was found out that 120 of the books he had ordered
from EDCA were sold to the private respondents. Petitioner and the police went to Santos
store and seized the subject books.
The private respondents sued for recovery of the books after demand for their return was
rejected by EDCA. The Municipal Trial Court ruled in favour of private respondents, which
was sustained by the Regional Trial Court. The Court of Appeals affirmed the same.
Hence, this petition.
The petitioner argues that it was, because the impostor acquired no title to the books that
he could have validly transferred to the private respondents. Its reason is that as the
payment check bounced for lack of funds, there was a failure of consideration that nullified
the contract of sale between it and Cruz.
ISSUE:
Whether or not petitioner has been unlawfully deprived of the books because the check
issued by dela Pena in payment therefor which was dishonored.
HELD:
The contract of sale is consensual and is perfected once agreement is reached between
the parties on the subject matter and the consideration.
According to the Civil Code:
ART. 1475. The contract of sale is perfected at the moment there is a
meeting of 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.
ART. 1477. The ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.
ART. 1478. The parties may stipulate that ownership in the thing shall not
pass to the purchaser until he has fully paid the price.
It is clear that ownership in the thing sold shall not pass to the buyer until full payment of
the purchase price only if there is a stipulation to that effect. Otherwise, the rule is that
such ownership shall pass from the vendor to the vendee upon the actual or constructive
delivery of the thing sold even if the purchase price has not yet been paid.
Non-payment only creates a right to demand payment or to rescind the contract, or to
criminal prosecution in the case of bouncing checks. But absent the stipulation above
noted, delivery of the thing sold will effectively transfer ownership to the buyer who can in
turn transfer it to another.
Actual delivery of the books having been made, Cruz acquired ownership over the books
which he could then validly transfer to the private respondents. The fact that he had not yet
paid for them to EDCA was a matter between him and EDCA and did not impair the title
acquired by the private respondents to the books.
Article 559 provides that "the possession of movable property acquired in good faith is
equivalent to a title," thus dispensing with further proof. Leonor Santos took care to
ascertain first that the books belonged to Cruz before she agreed to purchase them. The
private respondent did not have to go beyond that invoice to satisfy herself that the books
being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz was
presumed under Article 559 by his mere possession of the books, these being movable
property, Leonor Santos nevertheless demanded more proof before deciding to buy them.
Petition is denied.

Smith, Bell & Co. v Sotelo Matti (1992)

FACTS
Plaintiff Smith, Bell & Co and the defendant Mr. Vicente Sotel entered into a contract.
Plaintiff has to deliver (1) two steel tanks shipped from New York to Manila within three or
four months, (2) two expellers shipped from SanFrancisco in the month of September
1918 or as soon as possible, and (3) two electric motors with approximate delivery
within ninety days. This is not guaranteed.
The tanks arrived at Manila on 27 April 1919; the expellers on 26 October 1918; and the
motors on 27 February 1919. Upon notification from plaintiff, defendant refused to receive
any of the goods or to pay for their price. Plaintiff alleged that the expellers and motors
were in good condition.
Plaintiff filed a complaint against the defendant. The defendant, Mr Sotelo and intervenor,
Manila Oil Refining and By-Products Co., Inc., denied the plaintiffs allegations. They
allege that due to plaintiffs delay in the delivery of goods, the intervenor suffered damages
The lower court absolved the defendants from the complaint insofar as the tanks and the
electric motors were concerned, but rendered judgment against them ordering them to
receive expellers and pay the sum of P50,000, with legal interest and cost.
Both parties appealed to the Court.
ISSUE
What period was fixed for the delivery of the goods? Did the plaintiff incur delay in
the delivery of goods?
HELD
In all these contracts, there is a final clause as follows:
The sellers are not responsible for delays cause by fires, riots on land or on the
sea, strikes or other causes known as force majeure entirely beyond the control of
the sellers or their representatives.
Under these stipulations, it cannot be said that any definite date was fixed for the delivery
of the goods. xxx. From the record it appears that the contracts were executed at the time
of the world war when there existed rigid restrictions on the export from the united States
xxx; hence clauses were inserted in the contracts, regarding Government regulations,
railroading embargoes, lack of vessel space, the exigencies of the requirements of the
United States Government xxx. At the time of the execution of the contracts, the parties
were not unmindful of the contingency of the United States Government not allowing the
export of the goods xxx.
We cannot but conclude that the term which parties attempted to fix is so uncertain that
once cannot tell just whether, as a matter of fact, those articles could be brought to manila
or not.
The obligation must be regarded as conditional. The delivery was subject to a
condition the fulfillment of which depended not only upon the effort of the plaintiff, but upon
the will of third persons who could in no way be compelled to fulfill the condition.

It is sufficiently proven in the record that the plaintiff has made all the efforts it could
possibly be expected to make under the circumstances, to bring the goods in question to
Manila, as soon as possible. Xxx it is obvious that the plaintiff has complied with its
obligation.
When the time of delivery is not fixed in the contract, time is regarded unessential. In such
cases, the delivery must be made within a reasonable time. Xxx Reasonable time for the
delivery of the goods by the seller is to be determined by circumstances attending the
particular transactions. Whether of not the delivery of the machinery in litigation was
offered to the defendant within a reasonable time, is a question to be determined by
the court. Xxx The plaintiff has not been guilty of any delay in the fulfillment of its
obligation.


SOLER V CHESLEY
43 PHIL 529 ROMUALDEZ; June 20, 1922

NATURE
Appeal

FACTS

- Soler had agreed with Wm. H. Anderson and Co., for the purchase of certain machinery
agreement.
- Terms and conditions of their agreement:
The foregoing machinery is to be invoiced at manufacturers' price, plus all charges such as freight,
insurance, interest and exchange, arrastre, landing charges, delivery, internal revenue, etc., plus a
buying commission of 5 per cent.
- Their terms of payment:50% deposit to be made upon arrival of the machinery, and the balance 90 days after delivery of the
machinery.
- And in the event that Soler shall fail to live up to the terms of this agreement, such failure by him
will be sufficient cause to terminate the contract, and any payments made by him under and by
virtue of the contract shall be and remain the exclusive property of Wm. H. Anderson and Co.
- The title of the machinery in question is to remain in the name of Wm. H. Anderson and Co. until
payment in full has been made, at which time transfer of all right and title to the above mentioned
machinery will be made to the Soler.
- Their agreement is contingent upon strikes, fire, accidents, extraordinary shipping and other
conditions imposed on account of war and other causes unavoidable or beyond the control of the
party of the first part.
- It is strictly understood that the quotations made to Mr. Andres Soler under date of February 27,
1919, were approximated and were subject to change without notice TF there is no guarantee as to
prices and delivery, it being understood that prices charged will be those shown on the invoices of
the manufacturers, and shipment will be made by first possible opportunity.
- Nov 16, 1918: Soler sold to the Chesley all his rights and interest in a contract of sale.
- At that time, a part of the aforesaid machinery was on the way, the other part being already in the
city of Manila, the price of which has not as yet been paid by Mr. Soler to Messrs. Wm.
H.Anderson and Co.
- It was said too in the contract that Chesley made Mr. Soler a proposition whereby the latter should
transfer it(the machineries) to him, and he would assume the obligation to pay Messrs. Wm.H.
Anderson and Co. the amount of the invoices thereof, and that Mr. Soler was to be relieved from his
contract with Messrs. Wm. H.Anderson and Co. (and that the Co. has actual knowledge of this sale

of the machinery, as well as of Mr. Chesley being subrogated to the rights and obligations created
by the agreement)
- Also, it was stated that Mr. Chesley shall pay Mr. Soler the difference which may be found to
exist between the amount of the invoices of the machinery and the sum of 100l php immediately
upon the arrival of said machinery at this city of Manila; provided that if any part of the machinery
not affecting the expellers is found lacking, a proportional deduction shall be made from the amount
which Mr. Soler may have received from Mr. Chesley.
- Of the parts of the machinery covered by these contracts, only the "filter press," the "cooker" and
the chains" were in Manila on November 16, 1918, but the most important parts, such as the
oil expellers" and the "grinding mills" were not then yet in this city.
- These oil expellers" were shipped for Manila on the 12th of December, 1918, the motors on the
8th of January, 1919, the machinery on the 16th of January 1919 and the grinding mills onthe 21st
of February, 1919, all of which arrived at Manila on February 13, March 8, April 27, and August 23,
1919, respectively.
-These effects were received and paid for by Chesley under protest, on account of the fact that they
were not delivered within the period stipulates in the contract.
- Soler was then advised by Chesleyslawyer that their contract to was rescinded, it appearing that
the parts of the machinery,which the Soler asserted in said contract were on the way, were not at the
time and it was only several days later that they were shipped for Manila.
- Soler commenced this action asking that Chesley be sentenced to pay him the sum of P30,546.03
with interest thereon, which sum was the difference between the P100,000, the consideration of the
contract, and the price of the aforesaid machinery which had been paid by the Chesley, plus the
incidental expenses, as stipulated in the said contract.
- The defendant answered, denying generally and specifically the allegations of the complaint and
setting up a special defense and a counterclaim.
- In his special defense, Chesley alleges that he had accepted and signed the contract on the
assertion therein contained that of the machinery, which was the subject matter of the said contract,
apart was already in Manila, and the other part on the way, and also on the promises, assertions, and
contemporary and previous acts of the plaintiff to the same effect, by means of which the latter
succeeded in inducing the defendant to make and sign the aforesaid contract; that the parts of the
machinery which, on the date of the contract, were said to be on the way, were not in fact in, and
did not arrive at, Manila but long thereafter; that if he signed the contract, it was because he was
desirous of having the machinery, and the defendant assured him that it would be delivered to him,
immediately or within a short time
- TC sentenced Chesley to pay the Soler P30,546.03, with legalinterest thereon from October 16,
1919, and the costs, and absolved the plaintiff from the set-off and the counterclaim.
ISSUES

1. WON TC erred in not holding that time was an essential element of the contract
2. WON TC erred in giving judgment in favor of the plaintiff
3. WON TC erred in dismissing the counterclaim of the defendant

HELD

1. YES
- The arrival of the machinery within a reasonable time was an essential element of the contract,
such time to be determined by taking into account the fact that is was then on the way toManila.
- It appears sufficiently established in the record that if the Soler gave his consent to this contract, it
was because he expected that said machinery would arrive within a short time,the time
reasonably necessary for such machinery to reach Manila from America,as the plaintiff asserted
in the document itself that said machinery was then on the way.
The act of the defendant in insisting that this guaranty as to the arrival of the machinery be stated in
the contract, his repeated complaints and protests when he afterwards made payments as the parts
arrived, and his letter of April 25, 1919, leave no room for doubt that the arrival of said machinery
within a reasonably short time was one of the determining elements of his consent.
- These acts of the defendant disclose the fact that he intented the arrival of the machinery to be
an essential element of the contract (art. 1282, Civil Code).
- The fact that the plaintiff had no control of the prompt transportation of the said machinery to
Manila, does not relieve the plaintiff from making good the guaranty inserted in the contract that
said machinery was already on the way to Manila.
- The plaintiff elected to bind himself in that way, although he knew, as he ought to have known
that, had his rights not been transferred to the defendant, he could not have charged
Messrs.Anderson and Co. so much, who in the (first) contract did not guarantee the delivery nor the
amount of the price.
- The plaintiff having bound himself in favor of the defendant for more than what Messrs. Anderson
and Co. had bound themselves for in favor, we entertain no doubt that he acted ing ood faith,
encouraged by the information of Messrs. Anderson and Co. (although the most that the
expellers, only the expellers,had been sent out by the factory), but it was he, not Messrs.
Anderson and Co., who contracted the obligation,and, therefore, he is the only one to be responsible
for the obligation arising from the contract. He who contracts and assumes an obligation is
presumed to know the circumstances under which said obligation can be complied with (Ferrer vs.
Ignacio, 39 Phil., 446).
- True, the plaintiff id not specify the date or time of the arrival of said mechanical devices; but he
did assert that they were on the way on the date of the contract. But it did not happen asasserted
2. YES
- The plaintiff has failed to carry out his obligation incurred under the contract and has, therefore,
no right to compel the defendant to comply with his obligation to pay the plaintiff the sum claimed
in the complaint (art. 1124, Civil Code).
3. NO
-It appears from the record that he sold the aforesaid machinery to a third person, the Philippine
Refining Co. In cases like this, the rescission of the contract does not lie (art. 1295,Civil Code).

- As to the damages claimed by the defendant: Evidence adducedi s insufficient to fix the true
amount thereof.
Disposition

Judgment Reversed, and the defendant absolved from the complaint, and the plaintiff from the
counterclaim and other claims of the defendant

REPUBLIC V LITTON
94 Phil 52PARAS; November 28, 1953
Facts
On December 22, 1945, the defendants Litton & Co. and George Litton (vendor),
managing partner or agent of the defendant partnership, entered into a contract
with the plaintiff (vendee) to supply and deliver to the latter on or before March 1,
1946, 96,000 padlocks at P1.87 each and certain quantities of indelible pencils,
lead pencils, bottles of ink, pen points, chalks, clips, etc., with a total value of
P25,979.55 in accordance with the specifications and under the terms and
conditions set forth in the said contract; that to guarantee and secure the faithful
performance of their obligation, the co-defendant Central Surety Co., Inc. executed
on January 3, 1946, a surety bond in favor of the plaintiff.
The defendant Litton & Co. delivered on or about April 8, 1946, 34,200 padlocks
only, which is much less than the quantity called for in the contract, and failed to
deliver the balance of 61,800 padlocks which were to be used during the elections
of April 23, 1946. Also, the defendant failed to deliver the stationary and office
supplies.
For such failure of the defendant Litton & Co., the plaintiff was compelled to make
open market purchases of 25,613 padlocks, thereby incurring losses and damages
in the amount of P176,243.41, representing the difference between the price
actually paid for said open market purchases and the price which the government
would have paid to Litton & Co. in accordance with the contracts. Also, due to the
default in the delivery of the stationary and office supplies the government was
compelled to make open market purchases of said articles, thereby having suffered
damages and losses in the sum of P20,164.17, representing the difference
between the price of said articles purchased in the open market and the price
stipulated in the contract.
Defendants theory: The purchases of padlocks by the plaintiff in the open market
were made at exorbitant prices, much in excess of their ceiling prices which should
not be more than 70 per cent over the landed costs; that the defendants are not
liable for the alleged losses and damages resulting from said purchases, as their
delay or failure to deliver the padlocks was due to plaintiff's fault (allegedly that it
was a condition that the plaintiff would timely obtain the corresponding export
license and shipping priority) and to circumstances beyond their control. Litton's
defense is therefore that he is excused by the plaintiff's failure to obtain in due time
the export license and shipping priority.
TC: for the government.
Issue: Whether the defendant obligates to deliver the materials unconditionally.1
Held: The bonds, prepared by the surety company on the basis of data furnished by Litton,
made express reference to and guaranteed the fulfillment of the contracts entered into on
December 22 and 26, 1945, and under said bonds delivery was to be made on or before
March 1, 1946.

The issue presented in the case was factual more than legal. Now for the relevance with the topic, I am at a loss as to how can they
be related. Maybe, it is related with article 1169, and that this case was an example of time is of the essence considering it will be used
for election. Or maybe that part where the SC mitigated the amount of damages considering that the Government accepted some
deliveries after the election but did not pay it. The SC did not however, made an in-depth elaboration on that note.

This negatives the contention that the delivery of the padlocks and stationery was subject
to any contingency, much less to plaintiff's ability to secure export license and shipping
priority.
It is true that the Philippine Government exerted some efforts with a view to the granting by
the United States authorities of the necessary export license and shipping space, but the
same do not prove that it was plaintiff's obligation to do so or that Litton's duty to deliver
the articles on or before March 11, 1946 was conditional. Rather it should be treated only
as friendly accommodations.
Under the contract, the plaintiff was authorized to make open market purchases as a result
of Litton's default, and in view of the attending urgency the plaintiff was compelled to pay
higher prices; and Litton's criticisms against said purchases is therefore not well taken. At
any rate, Litton had not taken any steps to protect himself or minimize his damages by
buying in the open market at lower prices than those paid by the plaintiff for the articles
needed in the elections which Litton failed to deliver on time.
Dispositive: The total price of the padlocks delivered to the plaintiff computed at P1.87
each, is P17,009.52, and the total price of the stationery delivered to the plaintiff after the
elections, is P9,806.94, and these amounts have not been paid by the plaintiff which
claims that they should be deducted from the damages due from Litton. While Litton was
not excused from performing his obligation, on purely equitable considerations we hereby
reduce the damages awarded by the trial court by the sum of P90,000. This roughly
represents the difference between the stipulated unit price of P1.87 under Litton's contract
and the price paid in the open market by the plaintiff for the quantity of padlocks delivered
by Litton to and accepted by the plaintiff after the elections, which articles were loaded in
the SS. Adrastus which arrived in Manila on April 1, butwas able to berth only on May 5.

La Fuerza v. CA
FACTS: Associated constructed a conveyor system for La Fuerzas wine factory. When the
construction was finished, to La Fuerzas dismay, the conveyor system did not met its expectation
because: several bottles collided with each other, some bottles jumped off the conveyor belt and
were broken, causing considerable damage and the flow of the system was so sluggish. La Fuerza
refused to pay the balance of the conveyor systems purchase price.
HELD: La Fuerzas action for rescission has already prescribed. Action for rescission based in
hidden faults or defects must be filed within 6 months after delivery. La Fuerzas action was filed
after 10 months.
DOCTRINE: Pursuant to A1566 and A 1567, if the thing sold has hidden faults or defects the
vendor shall be responsible and the vendee may elect between withdrawing from the contract and
demanding a proportional reduction of the price, with damages in either case." but the action
therefor in the language of Art. 1571 "shall be barred after six months, from the delivery of
the thing sold." The period of four (4) years, provided in Art. 1389 of said Code, for "the action to
claim rescission," applies to contracts, in general, and must yields, in the instant case, to said Art.
1571, which refers to sales in particular.

Azarraga v Gay
1928
Villamor, J.
Facts:
By a public document, Azarraga sold two parcels of lands to Gay for the lump sum
of P47,000, payable in installments. The conditions of the payment were:
1. P5,000 at the time of signing the contract
2. P20,000 upon delivery by the vendor to the purchaser of the Torrens title to
the first parcel described in the deed of sale,
3. P10,000 upon delivery by the vendor to the purchaser of Torrens title to the
second parcel; and
4. lastly the sum of P12,000 one year after the delivery of the Torrens title to
the second parcel.
st
1 condition: The vendee paid P5,000 to the vendor when the contract was signed.
2nd condition: The vendor delivered the Torrens title to the first parcel to the vendee
who, pursuant to the agreement, paid him P20,000.
3rd condition: In the month of March 1921, Torrens title to the second parcel was
issued and forthwith delivered by the vendor to the vendee who, however, failed
to pay the P10,000 as agreed,
4th condition: Neither did the vendee pay the remaining P12,000 one year after
having received the Torrens title to the second parcel.
Vendee, in her defense, contends:
1. That the vendor knowing that the second parcels of land he sold had an
area of 60 hectares, by misrepresentation lead the vendee to believe that
said second parcel contained 98 hectares, and thus made it appear in
the deed of sale and induced the vendee to bind herself to pay the price of
P47,000 for the two parcels of land, which he represented contained an
area of no less than 200 hectares, to which price the defendant would not
have bound herself had she known that the real area of the second parcel
was 60 hectares, and, consequently, she is entitled to a reduction in the
price of the two parcels in proportion to the area lacking, that is, that the
price be reduced to P38,000
2. That the vendee, in addition to the amounts acknowledged by the venndor,
had paid other sums amounting to P4,000; and
3. That the vendee never refused to pay the justly reduced price, but the
vendor refused to receive the just amount of the debt
Vendor
contends that the contract of sale in question was made only for the lump

sum of P47,000, and not at the rate of so much per hectare.

TC: ordered the vendor to pay the remaining balance of P19,300 with legal interest; No
fraud re: area of the land
Held/Ratio:
Re: Alleged fraud on the calculations as to the area of the two parcels
The vendee went over the vendors land and made her own calculations as to the area
of said two parcels. Moreover, there was a delivery of the documents covering the land
he was trying to sell. The vendee had document deed, in which document it appears that
the area of the second parcel is about 70 hectares. It is to be presumed that both the

vendee and the lawyer who drew the deed of sale between Azarraga (vendor) and Gay
(vendee), had read the contents of the document Exhibit 4 (original deed between vendor
and original owner containing the area of the land).
Furthermore, there is no evidence of record that the vendor made representation to the
defendant as to the area of said second parcel, and even if he did make such false
representations as are now imputed to him by the vendee, the latter accepted such
representations at her own risk and she is the only one responsible for the consequences
of her inexcusable credulousness.
Moreover, the record contains several of the vendee's letters to the vendor in the years
1921 to 1925, in which the vendee acknowledges her debt, and confining herself to
petitioning for extentions of time within which to make payment for the reasons given
therein. But in none of these letters is there any allusion to such lack of area, nor did
she complain of the supposed deceit of which she believes she is a victim.
Re: Reduction of price and delivery
Said two parcels are defined by means of the boundaries given in the instrument.
Therefore, the case falls within the provision of article 1471 of the Civil Code, which reads
as follows:
ART. 1471. In case of the sale of real estate for a lump sum and not at the rate of a
specified price for each unit of measure, there shall be no increase or decrease of
the price even if the area be found to be more or less than that stated in the
contract.
The same rule shall apply when two or more estates are sold for a single price; but, if in
addition to a statement of the boundaries, which is indispensable in every conveyance of
real estate, the area of the estate should be designated in the contract, the vendor shall
be obliged to deliver all that is included with such boundaries, even should it
exceed the area specified in the contract; and, should he not be able to do so, he shall
suffer a reduction of the price in proportion to what is lacking of the area, unless the
contract be annulled by reason of the vendee's refusal to accept anything other than that
which was stipulated.
As Manresa puts it,
It follows that the provisions of article 1471 concerning the delivery of determinate
objects had to be materially different from those governing the delivery of things sold a
price per unit of measure or number.
The first paragraph and the first clause of the second paragraph of article 1471 deal with
the first of said cases; that is where everything included within the boundaries as set
forth in the contract has been delivered.
The second possible case in the delivery of determinate objects is that in which, on
account or circumstances of diverse possible origins, everything included within the
boundaries is not delivered.
1st rule: Whether or not the object of sale be one realty for a lump sum, or two or more for
a single price also a lump sum, and, consequently, not for so much per unit of measure or

number, there shall be no increase or decrease in the price even if the area be found to be
more or less than that stated in the contract.
2nd rule: Whether or not the object of the sale be one realty for a lump sum, or two or more
for a single price also a lump sum, and, consequently not at the rate of a specified price for
each unit of measuring or number, the vendor shall be bound to deliver everything that is
included within the boundaries stated, although it may exceed the area or number
expressed in the contract; in case he cannot deliver it, the purchaser shall have the right
either to reduce the price proportionately to what is lacking of the area or number, or to
rescind the contract at his option.
In the case at bar, the rule formulated for the second paragraph or article 1471 is
INAPPLICABLE inasmuch as all the land included within the boundaries of the two
parcels sold has been delivered in its entirety to the vendee. There is no division of the
land enclosed within the boundaries of the properties sold; the determinate object which is
the subject matter of the contract has been delivered by the vendor in its entirety as he
obligate himself to do. Therefore, there is no right to complain either on the part of the
vendor, even if there be a greater area than that stated in the deed, or on the part of the
vendee, though the area of the second parcel be really much smaller.
Thus, there was an obligation on the part of the vendee, Gay, to accept the delivery of the
property though the area of the second parcel be really much smaller than that stated in
the deed.

FELICIANO ESGUERRA, et al. v. VIRGINIA TRINIDAD, et al.

518 SCRA 186 (2007)
What really defines a piece of ground is not the area, calculated with more or less
certainty, mentioned in its description, but the boundaries therein laid down, as
enclosing the land and indicating its limits.
Felipe Esguerra and Praxedes de Vera (Esguerra spouses) owned several parcels of land
half of which they sold to their grandchildren Feliciano, Canuto, Justa, Angel, Fidela,
Clara and Pedro, all surnamed Esguerra. The spouses sold half the remaining land were
sold their other grandchildren, the brothers Eulalio and Julian Trinidad.. Subsequentlly,
the Esguerra spouses executed the necessary Deeds of Sale before a notary public. They
also executed a deed of partitioning of the lots , all were about 5,000 square meters
each.
Eulalio Trinidad (Trinidad) later sold his share of the land to his daughters. During a
cadastral survey conducted in the late 1960s, it was discovered that the 5,000-square
meter portion of Esguerras parcel of land sold to Trinidad actually measured 6,268
square meters.
Feliciano Esguerra (Feliciano), who inhabits the lot bordering Trinidad, subsequently
filed a motion for nullification of sale between the Esguerra spouses and Trinidad on the
ground that they were procured through fraud or misrepresentation. Feliciano
contended that the stipulations in the deed of sale was that Trinidad was sold a 5,000
square meter lot. The boundaries stipulated in the contract of sale which extend the lots
area
Both cases were consolidated and tried before the RTC which, after trial, dismissed the
cases. On appeal, the appellate court also dismissed the cases; and subsequently, the
motion for reconsideration was also denied.
ISSUES:
Whether or not the Appellate Court erred in holding that the description and boundaries
of the lot override the stated area of the lot in the deed of sale
HELD:
Where both the area and the boundaries of the immovable are declared, the area
covered within the boundaries of the immovable prevails over the stated area. In
cases of conflict between areas and boundaries, it is the latter which should prevail.
What really defines a piece of ground is not the area, calculated with more or less
certainty, mentioned in its description, but the boundaries therein laid down, as enclosing
the land and indicating its limits. In a contract of sale of land in a mass, it is
well established that the specific boundaries stated in the contract must control over any
statement with respect to the area contained within its boundaries. It is not of vital
consequence that a deed or contract of sale of land should disclose the area with
mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient
precision to enable one to identify it. An error as to the superficial area is immaterial.
Thus, the obligation of the vendor is to deliver everything within the boundaries,

inasmuch as it is the entirety thereof that distinguishes the determinate object.

Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively
carries a strong presumption that the provisions of the law governing the registration of
land which led to its issuance have been duly followed. Fraud being a serious charge, it
must be supported by clear and convincing proof. Petitioners failed to discharge the
burden of proof, however.
The same rule shall be applied when two or more immovables are sold for a single price;
but if, besides mentioning the boundaries, which is indispensable in every conveyance of
real estate, its area or number should be designated in the contract, the vendor shall be
bound to deliver all that is included within said boundaries, even when it exceeds the
area or number specified in the contract; and, should he not be able to do so, he shall
suffer a reduction in the price, in proportion to what is lacking in the area or number,
unless the contract is rescinded because the vendee does not accede to the failure to
deliver what has been stipulated.
In fine, under Article 1542, what is controlling is the entire land included within the
boundaries, regardless of whether the real area should be greater or smaller than that
recited in the deed. This is particularly true since the area of the land in OCT No. 0-6498
was described in the deed as humigit kumulang, that is, more or less.
A caveat is in order, however. The use of more or less or similar words in designating
quantity covers only a reasonable excess or deficiency. A vendee of land sold in gross or
with the description more or less with reference to its area does not thereby ipso facto
take all risk of quantity in the land

ALFREDO v BORRAS
FACTS: Godofredo & Carmen mortgaged their land to DBP for P7,000. To pay their debt,
they sold the land to Armando & Adelia for P15,000. The latter also assumed to pay the
loan. Carmen issued Armando & Adelia a receipt for the sale. They also delivered to
Armando & Adelia the Original Certificate of Title, tax declarations, and tax receipts.
They also introduced Armando & Adelia to the Natanawans, the tenants of the said
property as the new lessors. They thereafter took possession of the said land. Later, they
found out that Godofredo & Carmen sold the land again to other buyers by securing
duplicate copies of the OCTs upon petition with the court. Thus, they filed for specific
performance. Godofredo & Carmen claimed that the sale, not being in writing, is
unenforceable under the Statute of Frauds.
ISSUE: W/N the contract of sale is unenforceable under the Statute of Frauds.
HELD: NO. The Statute of Frauds is applicable only to executory contracts, not those
that have already been partially or completely consummated. In this case, the sale of
the land to Armando & Adelia had already been consummated. The ownership of the
land was also transferred to Armando & Adelia when they were introduced to the
Natanawans and took possession thereof. Therefore, when Godofredo & Carmen sold the
land to other buyers, it was no longer theirs to sell.
The Statute of Frauds provides that a contract for the sale of real property
shall be unenforceable unless the contract or some note or memorandum of
the sale is in writing and subscribed by the party charged or his agent. The
existence of the receipt dated 11 March 1970, which is a memorandum of
the sale, removes the transaction from the provisions of the Statute of
Frauds.
The Statute of Frauds applies only to executory contracts and not to
contracts either partially or totally performed. Thus, where one party has
performed ones obligation, oral evidence will be admitted to prove the
agreement. In the instant case, the parties have consummated the sale of the
Subject Land, with both sellers and buyers performing their respective
obligations under the contract of sale. In addition, a contract that violates
the Statute of Frauds is ratified by the acceptance of benefits under the
contract.

Alfredo spouses benefited from the contract because they paid

their DBP loan and secured the cancellation of their mortgage using the
money given by Borras. Alfredo also accepted payment of the balance of the
purchase price.
Alfredo spouses cannot invoke the Statute of Frauds to deny the existence of
the verbal contract of sale because they have performed their obligations,
and have accepted benefits, under the verbal contract. Borras spouses have
also performed their obligations under the verbal contract. Clearly, both the
sellers and the buyers have consummated the verbal contract of sale of the
Subject Land. The Statute of Frauds was enacted to prevent fraud.

This law cannot be used to advance the very evil the law seeks to prevent.

Sarmiento v. Lesaca
SANTOS v SANTOS
FACTS: Jesus and Rosalia owned a lot with a 4-door apartment. They sold through a
public instrument the said property to their children, Salvador and Rosawho sold her
share to Salvador as well. Nonetheless, in spite of the sale, Rosalia remained in
possession and control over the property. Jesus, Rosalia and Salvador died. Zenaida,
claiming to be Salvadors heir, demanded rent from the tenants. The other children of
Jesus and Rosalia filed a case for reconveyance averring that the sale to Salvador was
fictitious and done merely to accommodate him.
ISSUE: W/N the sale to Salvador was fictitious
HELD: YES. While it is true that sale through a public instrument is equivalent to delivery
of the things sold which has the effect of transferring ownership, the delivery can be
rebutted by clear and convincing evidence. The vendors continuous possession makes
the sale dubious. Salvador never took possession of the property. He surrendered the
titles to his mother after having registered the lots in his name, he never collected
rentals, neither has he paid the taxes thereon. Thus, there was no real transfer of
ownership. That being the case, the action for reconveyance was imprescriptible.

BOARD OF LIQUIDATORS v. EXEQUIEL FLORO

FACTS: Melecio Malabanan entered into an agreement with the Board of Liquidators for
the salvage of surplus properties sunk in territorial waters off the provinces of Mindoro, La
Union, and Batangas. Malabanan submitted a recovery report dated July 26, 1954,
wherein it is stated that he had recovered a total of 13,107 pieces of steel mattings from
the opreations. Four months previously, Malabanan had entered into an agreement with
Exequiel Floro, agreeing that Floro would advance to Malabanan certain sums of money,
not to exceed P25,000.00, repayment, thereof being secured by quantities of steel
mattings which Malabanan would consign to Floro. Pursuant thereto, Floro claims to have
made total advances to the sum of P24,224.50. It appears that as Malabanan was not able
to repay Floro's advances, the latter, sold 11,047 pieces of steel mattings to Eulalio
Legaspi for the sum of P24,803.40. Seventeen days later, on August 21, 1954, Malabanan
filed in the Court of First Instance of Manila a petition for voluntary insolvency, attaching
thereto a Schedule of Accounts, in which the Board was listed as one of the creditors for
P10,874.46, and Exequiel Floro for P24,220.50. The controversy of the case arose when
Malabanan listed the steel mattings as its properties, which was opposed by the Board
claiming ownership over the steel mattings recovered from the salvaging operations.
ISSUE: WON Malabanan has title to the steel mattings.
HELD: YES. Malabanan has title to the steel mattings. The Court held that the contract
between Malabanan and the Board had effect of vesting Malabanan with title to, or
ownership of the steel mattings in question as soon as they were brought up from the
bottom of the sea. This was shown from the agreement between the parties wherein it is
said that ownership of the goods passed to Malabanan as soon as they were recovered
or salvaged and not only after payment of the stipulated price. The contention that there
was no delivery is incorrect. While there was no physical tradition, there was one by
agreement (traditio longa manu) in conformity with Article 1499 of the Civil Code. Art. 1499
The delivery of movable property may likewise be made by the mere consent or
agreement of the contracting parties, if the thing sold cannot be transferred to the
possession of the vendee at the time of the sale. As observed earlier, there is nothing in
the terms of the public instrument in question from which an intent to withhold delivery or
transfer of title may be inferred.

PERPETUA ABUAN, ET AL. v. EUSTAQUIO S. GARCIA, ET AL.

On August 7, 1953, petitioners Perpetua Abuan et al. sold a parcel of rice land to defendants
Eustaquio Garcia et al. through a Deed of Absolute Sale. A TCT was issued to defendants.

Later, petitioners filed an action to recover the land, alleging the sale was tainted with fraud and
was without consideration. Reaching an amicable settlement, the parties entered into an
"Agreement" dated February 28, 1955, under which defendants paid P500 as partial payment of
the purchase price of the land, and promised to pay the balance of P1,500 on or before April 30,
1955, with a grace period of 30 days. The Agreement also stated that it "shall supersede all
previous agreements or contracts heretofore entered into..."

Plaintiffs instituted the present action on March 4, 1960. Defendants moved to dismiss, on the
ground that plaintiffs' right of action was already barred, because the five-year redemption
period had already expired. Section 119 of the Public Land Law

provides:
o
Every conveyance of land acquired under the free patient or homestead provisions,
when proper, shall be subject to re-purchase by the applicant, his widow, or legal heirs,
for a period of five years from the date of conveyance
.

Plaintiffs argue that the period should be counted from the date of full payment (May 1965)
since it was on this date that the contract was consummated.

CFI Nueva Vizcaya dismissed the complaint, fixing the starting date as February 28, 1955,
when the Agreement was entered into. CA certified the case to SC.

SC: "Conveyance" means transfer of ownership; it means the date when the title to the land is
transferred from one person to another. The 5-year period should, therefore, be reckoned with
from the date that defendants acquired ownership.
When did defendants legally acquire ownership of the land?
Upon execution of the Deed of Absolute Sale (August 7, 1953). Dismissal affirmed.
Under Art. 1498, When the sale is made through a public instrument, as in this case, the
execution thereof shall be equivalent to the delivery of the thing which is the object of the contract,
if from the deed the contrary does not appear or cannot be clearly inferred. This manner of delivery
is common to personal as well as real property. It is clear, therefore, that defendants acquired
ownership to the land in question upon the execution of the Deed of Absolute on August 7, 1953.
The Agreement of February 28, 1955, only superseded the deed as to
the terms and conditions of payment. TheAgreement did not operate to revest the ownership of the
land in the plaintiffs.
Assuming arguendo that the Deed is null and void as petitioners allege, we can consider the
date of the Agreement at the latest, as the time within which ownership is vested in the defendants.
While it is a private instrument the execution of which could not be construed as constructive
delivery under Art. 1498, Art.1496 explicitly provides that ownership of the thing sold is acquired
by the vendee from the moment it is delivered to him "in any other manner signifying an agreement
that the possession is transferred from the vendor to the vendee." The intention to give
possession (and ownership) is manifest in the Agreement, especially considering the following
circumstances: (1) the payment of part of the purchase price, there being no stipulation in the
agreement that ownership will not vest in the vendees until full payment of the price; and (2) the

fact that the agreement was entered into in consideration of plaintiffs' desistance, as in fact they
did desist, in prosecuting their reivindicatory action, thereby leaving the property in the hands
of the then and now defendants as owners thereof, necessarily. This was delivery
brevi manu permissible under Articles 1499 and 1501 of the New Civil Code.
In the absence of an express stipulation to the contrary, the payment of the price is not a condition
precedent to the transfer of ownership, which passes by delivery of the thing to the buyer.

THE HEIRS OF PEDRO ESCANLAR ET AL V. CA 281 SCRA 176 (1997)

FACTS: Spouses Guillermo Nombre and Victoriana Cari-an died without issue in 1924 and
1938, respectively. Nombres heirs include his nephews and grandnephews. Victoriana
was succeeded by her late brother's son, Gregorio Cari-an.
1. After Gregorios death in 1971, his wife, Generosa Martinez and children (Rodolfo,
Carmen, Leonardo and Fredisminda) were adjudged as heirs by representation to
Victorianas estate. Leonardo passed away, leaving his widow, Nelly Chua vda. de Cari-an
and minor Leonell as his heirs
2. 2 parcels of land, denominated by Lot 1616 and 1617, formed part of the estate of
Guillermo Nombre and Victoriana Cari-an.
3. In 1978, Gregorios heirs executed a deed of sale of rights, interests and participation
in favor of Pedro Escanlar and Francisco Holgado over the undivided share of
Victoriana for P275,000 to be paid to the heirs, except the share of the minor Leonell Carian which shall be deposited to the Municipal Treasurer. Said contract of sale will be
effective only upon approval of CFI
4. Escanlar and Holgado, the vendees, were concurrently the lessees of the subject
property. In a deed of agreement executed by both parties confirming and affirming the
contract of sale, they stipulated the following:
a. That the balance of the purchase price (P225,000) shall be paid on or before May
1979
b. Pending complete payment thereof, the vendees shall not assign, sell, lease or
mortgage the rights, interests and participation thereof
c. In the event of nonpayment of the balance of said purchase price, the sum of P50,000
(down payment) shall be deemed as damages
5. Escanlar and Holgado were unable to pay the individual shares of the Cari-an heirs,
amounting to P55,000 each, on the due date. However, said heirs received at least 12
installment payments from Escanlar and Holgado after May 1979. Rodolfo was fully paid
by June 1979, Generosa Martinez, Carmen and Fredisminda were likewise fully
compensated for their individual shares. The minors share was deposited with the RTC in
September 1982.
6. Being former lessees, Escanlar and Holgado continued in possession of Lots 1616
and Lots 1617. Interestingly, they continued to pay rent based on their lease contract.
7. Subsequently, Escanlar and Holgado sought to intervene in the probate proceedings
of Guillermo and Victoriana as buyers of Victorianas share. In 1982, the probate court
approved the motion filed by the heirs of Guillermo and Victoriana to sell their respective
shares in the estate. Thereafter, the Cari-ans, sold their shares in 8 parcels of land
including lots 1616 and 1617 to spouses Chua for P1.85 million.

8. The Cari-ans instituted a case for cancellation of sale against Escanlar and Holgado
alleging the latters failure to pay the balance of the purchase price on the stipulated date
and that they only received a total of P132,551 in cash and goods.
9. Escanlar and Holgado averred that the Cari-ans, having been paid, had no right to
resell the subject lots and that the spouses Chua were purchasers in bad faith.
10. The trial court held in favor of the heirs of Cari-an citing that the sale between
the Cari-ans and Escanlar is void as it was not approved by the probate court which
was required in the deed of sale.
11. CA affirmed the same and cited that the questioned deed of sale of rights is a contract
to sell because it shall become effective only upon approval by the probate court and upon
full payment of the purchase price.

ISSUE: WON the non-happening of a condition affects the validity of the contract itself

HELD: No, the non-happening of a condition only affects the effectivity and not the validity
of the contract.

Under Art 1318 Civil Code, the essential requisites of a contract are: consent of the
contracting parties; object certain which is the subject matter of the contract and
cause of the obligation which is established. Absent one of the above, no contract
can arise. Conversely, where all are present, the result is a valid contract. However,
some parties introduce various kinds of restrictions or modalities, the lack of which
will not, however, affect the validity of the contract.
In the instant case, the Deed of Sale, complying as it does with the essential
requisites, is a valid one. However, it did not bear the stamp of approval of the
court. The contracts validity was not affected for in the words of the stipulation, this
Contract of Sale of rights, interests and participations shall become effective only upon the
approval by the Honorable Court In other words, only the effectivity and not the
validity of the contract is affected.

CONTRACT TO SELL VS. CONTRACT TO SALE

In contracts to sell, ownership is retained by the seller and is not to pass until the full
payment of the price. Such payment is a positive suspensive condition, the failure of which
is not a breach of contract but simply an event that prevented the obligation of the vendor
to convey title from acquiring binding force. To illustrate, although a deed of conditional
sale is denominated as such, absent a proviso that title to the property sold is reserved in
the vendor until full payment of the purchase price nor a stipulation giving the vendor the

right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed
period, by its nature, it shall be declared a deed of absolute sale.

In a contract of sale, the non-payment of the price is a resolutory condition which

extinguishes the transaction that, for a time, existed and discharges the obligations
created thereunder. The remedy of an unpaid seller in a contract of sale is to seek either
specific performance or rescission.

In the case at bar, the sale of rights, interests and participation as to portion pro
indiviso of the 2 subject lots is a contract of sale for the reasons that (1) the sellers
did not reserve unto themselves the ownership of the property until full payment of
the unpaid balanceof P225,000.00; (2) there is no stipulation giving the sellers the
right to unilaterally rescind the contract the moment the buyer fails to pay within the
fixed period.

NEED OF PROBATE COURTS APPROVAL EXISTS WHERE SPECIFIC PROPERTIES

OF THE ESTATE ARE SOLD AND NOT WHEN IDEAL AND INDIVISIBLE SHARES OF
AN HEIR ARE DISPOSED OF
The need for approval by the probate court exists only where specific properties of the
estate are sold and not when only ideal and indivisible shares of an heir are disposed of.
In Dillena v. Court of Appeals, the Court declared that it is within the jurisdiction of the
probate court to approve the sale of properties of a deceased person by his prospective
heirs before final adjudication. The probate courts approval is necessary for the validity of
any disposition of the decedents estate. However, reference to judicial approval cannot
adversely affect the substantive rights of the heirs to dispose of their ideal share in the coheirship and/or co-ownership among the heirs. It must be recalled that during the period of
indivision of a decedents estate, each heir, being a co-owner, has full ownership of his
part and may therefore alienate it. But the effect of the alienation with respect to the coowners shall be limited to the portion which may be allotted to him in the division upon the
termination of the co-ownership.

CONTRACTUAL STIPULATIONS CONSIDERED LAW BETWEEN PARTIES;

EXCEPTION: CONTEMPORANEOUS ACTS OF PARTIES
As a general rule, the pertinent contractual stipulation (requiring court approval) should be
considered as the law between the parties. However, the presence of two factors militates
against this conclusion: (1) the evident intention of the parties appears to be contrary
to the mandatory character of said stipulation. Whoever crafted the document of
conveyance, must have been of the belief that the controversial stipulation was a
legal requirement for the validity of the sale. But the contemporaneous and subsequent

acts of the parties reveal that the original objective of the parties was to give effect to the
deed of sale even without court approval.

Receipt and acceptance of the numerous installments on the balance of the purchase
price by the Cari-ans, although the period to pay the balance of the purchase price expired
in May 1979, and leaving Escanlar and Holgado in possession of Lots 1616 and 1617
reveal their intention to effect the mutual transmission of rights and obligations. The Carians did not seek judicial relief until late 1982 or three years later; (2) the requisite
approval was virtually rendered impossible by the Cari-ans because they opposed
the motion for approval of the sale filed by Escanlar and Holgado, and sued the
latter for the cancellation of that sale. Having provided the obstacle and the justification
for the stipulated approval not to be granted, the Cari-ans should not be allowed to cancel
their first transaction with Escanlar and Holgado because of lack of approval by the
probate court, the lack of which is of their own making.

AMIGO VS. TEVES

G.R. No. L-6389

November 29, 1954

FACTS
On August 11, 1937, Macario Amigo and Anacleto Cagalitan executed in favor of their son,
Marcelino Amigo, a power of attorney granting to the latter, among others, the power "to
lease, let, bargain, transfer, convey and sell, remise, release, mortgage and hypothecate,
part or any of the properties . . . upon such terms and conditions, and under such
covenants as he shall think fit."
On October 30, 1938, Marcelino Amigo, in his capacity as attorney-in-fact, executed a
deed of sale of a parcel of land for a price of P3,000 in favor of Serafin Teves stipulating
therein that the vendors could repurchase the land within a period of 18 months from the
date of the sale. In the same document, it was also stipulated that vendors would remain in
possession of the land as lessees for a period of 18 months subject to the following terms
and conditions: (a) the lessees shall pay P180 as rent every six months from the date of
the agreement; (b) the period of the lease shall terminate on April 30, 1940; (c) in case of
litigation, the lessees shall pay P100 as attorney's fees; and (d) in case of failure to pay
any rental as agreed upon, the lease shall automatically terminate and the right of
ownership of vendee shall become absolute.
On July 20, 1939, the spouses Macario Amigo and Anacleta Cagalitan donated to their
sons Justino Amigo and Pastor Amigo several parcels of land including their right to
repurchase the land in litigation. The deed of donation was made in a public instrument,
was duly accepted by the donees, and was registered in the Office of the Register of
Deeds.
The vendors-lessees paid the rental corresponding to the first six months, but not the
rental for the subsequent semester, and so on January 8, 1940, Serafin Teves, the
vendee-lessor, executed an "Affidavit of Consolidation of Title" in view of the failure of the
lessees to pay the rentals as agreed upon, and registered said affidavit in the Office of the
Register of Deeds who issued to Serafin Teves the corresponding transfer of title over the
land in question.
On March 9, 1940, Justino Amigo and Pastor Amigo, as donees of the right to repurchase
the land in question, offered to repurchase the land from Serafin Teves by tendering to him
the payment of the redemption price but the latter refused on the ground that the
ownership had already been consolidated in him as purchaser a retro.
ISSUES
Whether or not the lease covenant contained in the deed of sale with pacto de
retroexecuted by Marcelino Amigo as attorney-in-fact in favor of Serafin Teves is not
germane to, nor within the purview of, the powers granted to said attorney-in-fact and,
therefore, is ultra vires and null and void
DECISION
No. The lease covenant contained in the deed of sale with pacto de retroexecuted by
Marcelino Amigo as attorney-in-fact in favor of Serafin Teves is not germane to, nor within

the purview of, the powers granted to said attorney-in-fact and, therefore, is not ultra
vires and is valid.
RATIO
The power granted to the agent is so broad that it practically covers the celebration of any
contract and the conclusion of any covenant or stipulation. Among the powers granted are:
to bargain, contract, agree for, purchase, receive, and keep lands, tenements,
hereditaments, and accept the seizing and possessing of all lands," or "to lease, let,
bargain, transfer, convey and sell, remise, release, mortgage and hypothecate . . . upon
such terms and conditions, and under such covenants as he shall think fit." When the
power of attorney says that the agent can enter into any contract concerning the land, or
can sell the land under any term or condition and covenant he may think fit, means that he
can act in the same manner and with the same breath and latitude as the principal could
concerning the property. The fact that the agent has acted in accordance with the wish of
his principals can be inferred from their attitude in donating to the herein petitioners the
right to redeem the land under the terms and conditions appearing in the deed of sale
executed by their agent.
The lease covenant embodied in the deed of sale is common in contracts involving sales
of land with pacto de retro. The lease that a vendor executes on the property may be
considered as a means of delivery or tradition by constitutum possessorium. Where the
vendor a retro continues to occupy the land as lessee, by fiction of law, the possession is
deemed to be constituted in the vendee by virtue of this mode of tradition. It can be said
that the covenant regarding the lease of the land sold is germane to the contract of sale
with pacto de retro.