You are on page 1of 12

Dignos vs.

Court of Appeals, and Jabil

158 SCRA 378
February 1988
In July 1965, herein petitioners Silvestre T.
Dignos and Isabela Lumungsod de Dignos
(spouses Dignos) sold their parcel of land in
Opon, LapuLapu to herein private respondent
Antonio Jabil for the sum of P28,000 payable
for two installments, with an assumption of
indebtedness with the First Insular Bank of
Cebu in the sum of P12,000 and the next
installment of P4,000 to be paid in September
1965. In November 1965, the spouses Dignos
sold the same parcel of land for P35,000 to
defendants Luciano Cabigas and Jovita L. de
Cabigas (spouses Cabigas) who were then US
citizens, and executed in their favor an
Absolute Deed of Sale duly registered in the
Office of the Register of Deeds.
Upon discovery of the 2nd sale of the subject
land, Jabil filed the case at bar in the CFI of
Cebu which rendered its Decision in August
1975 declaring the 2nd sale to the spouses
Cabigas null and void ab initio and the 1st sale
to Jabil not rescinded. The CFI of Cebu also
ordered Jabil to pay the remaining P16,000 to
the spouses Dignos and to reimburse the
spouses Cabigas a reasonable amount
corresponding the expenses in the construction
of hollow block fences in the said parcel of
land. The spouses Dignos were also ordered to
return the P35,000 to the spouses Cabigas.
Both Jabil and the spouses Dignos appealed to
the Court of Appeals, which affirmed in July
1981 the CFI of Cebus Decision except for the
part of Jabil paying the expenses of the spouses
Cabigas for building a fence. The spouses
Dignos contested that the contract between
them and Jabil was merely a contract to sell
and not a deed of sale.
Is the contract between the parties a contract
of sale or a contract to sell?
The Supreme Court affirmed the Decision of
the Court of Appeals saying stated that all the

elements of a valid contract of sale are present

in the document and that the spouses Dignos
had no right to sell the land in question
because an actual delivery of its possession has
already been made in favor of Jabil as early as
March 1965. It was also found that the spouses
Dignos never notified Jabil by notarial act that
they were rescinding the contract, and neither
did they file a suit in court to rescind the sale.
There is no showing that Jabil properly
authorized a certain Cipriano Amistad to tell
petitioners that he was already waiving his
rights to the land in question.
INC. (G.R. No. 156364)
The Petitioner and his spouse, both Dutch
Nationals, entered into a Contract to Sell with
PR Builders, Inc. to purchase a 210-sq m
residential unit in the respondent's townhouse
project in Batanagas. When PR Builder's failed
to comply with their verbal promise to
complete the project, the spouses Hulst filed a
complaint for recession of contract with
interest, damages and attorney's fees before
the Housing and Land Regulatory Board
(HLURB), which then was granted. A Writ of
Execution was then addressed to the Ex-Officio
Sheriff of the RTC of Tanauan, Batangas, but
upon the complaint of the respondent, the levy
was set aside, leaving only the respondent's
personal properties to be levied first. The
Sheriff set a public auction of the said levied
properties, however, the respondent filed a
motion to quash Writ of levy on the ground that
the sheriff made an over levy since the
aggregate appraised value of the properties at
P6,500 per sq m is P83,616,000. Instead of
resolving the objection of the respondent's
regarding the auction, the Sheriff proceeded
with the auction since there was no restraining
order from the HLURB. The 15 parcels of land
was then awarded to Holly Properties Realty at
a bid of P5,450,653. On the same day, the
Sheriff remitted the legal fees and submitted
to contracts of sale to HLURB, however, he
then received orders to suspend proceedings on
the auction for the reason that the market
value of the properties was not fair. There was
disparity between the appraised value and the
value made by the petitioner and the Sheriff,
which should've been looked into by the Sheriff
before making the sale. While an inadequacy in

price is not a ground to annul such sale, the

court is justified to such intervention where
the price shocks the conscience.
1. Whether or not the Sheriff erred in the value
that was attached to the properties during the
auction and as well as disregarding the
objection made by the respondent's?
2. Whether or not the market value of the said
property was inadequate?
2. Whether or not the spouses Hulst's request
for damages is actionable?
1. No. According to the Rules of Court, the
value of the property levied is not required to
be exactly the same as the judgment debt. In
the levy of property, the Sheriff does not
determine the exact valuation of the levied
property. The Sheriff is left to his own
judgment. He should be allowed a reasonable
margin between the value of the property
levied upon and the amount of the execution;
the fact that the Sheriff levies upon a little
more than is necessary to satisfy the execution
does not render his actions improper.
In the absence of a restraining order, no
error can be imputed to the Sheriff in
proceeding with the auction sale despite the
pending motion to quash the levy filed by the
respondents with the HLURB. Sheriffs, as
officers charged with the task of the
judgments, must act with considerable dispatch
so as not to unduly delay the administration of
justice. It is not within the jurisdiction of the
Sheriff to consider and resolve respondent's
objection to the continuation of the conduct of
the auction sale. The Sheriff has no authority,
on his own, to suspend the auction sale. His
duty being ministerial, he has no discretion to
postpone the conduct of the auction sale.
2. No. The HLURB Arbiter and Director had no
sufficient factual basis to determine the value
of the levied property. The Appraisal report,
that was submitted, was based on the
projected value of the townhouse project after
it shall have been fully developed, that is, on
the assumption that the residential units
appraised had already been built. Since it is
undisputed that the townhouse project did not
push through, the projected value did not

become a reality. Thus, the appraisal value

cannot be equated with the fair market value.
3. No. Under Article 12, Sec.7 of the 1987
Constitution, foreign nationals, the spouses
Hulst, are disqualified form owning real
property. However, under article 1414 of the
Civil Code, one who repudiates the agreement
and demands his money before the illegal act
has taken place is entitled to recover.
Petitioner is therefore entitled to recover what
he has paid, although the basis of his claim for
rescission, which was granted by the HLURB,
was not the fact that he is not allowed to
acquire private land under the Philippine
Constitution. But petitioner is entitled to the
recovery only of the amount of P3,187,500.00,
representing the purchase price paid to
respondent. No damages may be recovered on
the basis of a void contract; being nonexistent,
the agreement produces no juridical tie
between the parties involved. Further,
petitioner is not entitled to actual as well as
interests thereon, moral and exemplary
damages and attorney's fees.

Toyota Shaw Inc. vs. Court of Appeals, and Sosa

244 SCRA 320
May 1995
Luna L. Sosa and his son, Gilbert, went to
purchase a yellow Toyota Lite Ace from the
Toyota office at Shaw Boulevard, Pasig
(petitioner Toyota) on June 14, 1989 where
they met Popong Bernardo who was a sales
representative of said branch. Sosa emphasized
that he needed the car not later than June 17,
1989 because he, his family, and a balikbayan
guest would be using it on June 18 to go home
to Marinduque where he will celebrate his
birthday on June 19. Bernardo assured Sosa
that a unit would be ready for pick up on June
17 at 10:00 in the morning, and signed the
"Agreements Between Mr. Sosa &Popong
Bernardo of Toyota Shaw, Inc., a document
which did not mention anything about the full
purchase price and the manner the installments
were to be paid. Sosa and Gilbert delivered the
down payment of P100,000.00 on June 15, 1989
and Bernardo accomplished a printed Vehicle

Sales Proposal (VSP) No. 928 which showed

Sosas full name and home address, that
payment is by "installment," to be financed by
"B.A.," and that the "BALANCE TO BE FINANCED"
is "P274,137.00", but the spaces provided for
"Delivery Terms" were not filled-up.
When June 17 came, however, petitioner
Toyota did not deliver the Lite Ace. Hence,
Sosa asked that his down payment be refunded
and petitioner Toyota issued also on June 17 a
Far East Bank check for the full amount of
P100,000.00, the receipt of which was shown
by a check voucher of Toyota, which Sosa
signed with the reservation, "without prejudice
to our future claims for damages." Petitioner
Toyota contended that the B.A. Finance
disapproved Sosas the credit financing
application and further alleged that a
particular unit had already been reserved and
earmarked for Sosa but could not be released
due to the uncertainty of payment of the
balance of the purchase price. Toyota then
gave Sosa the option to purchase the unit by
paying the full purchase price in cash but Sosa
The trial court found that there was a valid
perfected contract of sale between Sosa and
Toyota which bound the latter to deliver the
vehicle and that Toyota acted in bad faith in
selling to another the unit already reserved for
Sosa, and the Court of Appeals affirmed the
said decision.
Was there a perfected contract of sale between
respondent Sosa and petitioner Toyota?
The Supreme Court granted Toyotas petition
and dismissed Sosas complaint for damages
because the document entitled Agreements
Between Mr. Sosa &Popong Bernardo of Toyota
Shaw, Inc., was not a perfected contract of
sale, but merely an agreement between Mr.
Sosa and Bernardo as private individuals and
not between Mr. Sosa and Toyota as parties to
a contract.
There was no indication in the said document
of any obligation on the part of Toyota to
transfer ownership of a determinate thing to

Sosa and neither was there a correlative

obligation on the part of the latter to pay
therefor a price certain. The provision on the
downpayment of P100,000.00 made no specific
reference to a sale of a vehicle. If it was
intended for a contract of sale, it could only
refer to a sale on installment basis, as VSP
No.928 executed on June 15, 1989 confirmed.
The VSP also created no demandable right in
favor of Sosa for the delivery of the vehicle to
him, and its non-delivery did not cause any
legally indemnifiable injury.
Facts: Respondent spouses Eduardo and
Carmencita Ramos (respondents) are the
owners of two (2) fishing vessels, the "Lady
Lalaine" and the "Lady Theresa." On 1 April
1996, respondents and petitioners executed an
untitled handwritten document which lies at
the center of the present controversy.Upon the
signing of the document, petitioners delivered
to respondents four (4) postdated Far East Bank
and Trust Company (FEBTC) checks payable to
cash drawn by petitioner Rosella Edrada, in
various amounts totaling One Hundred Forty
Thousand Pesos (P140,000.00). The first three
(3) checks were honored upon presentment to
the drawee bank while the fourth check for
One Hundred Thousand Pesos (P100,000.00)
was dishonored because of a "stop payment"
order.On 3 June 1996, respondents filed an
performance with damages before the RTC,
praying that petitioners be obliged to execute
the necessary deed of sale of the two fishing
vessels and to pay the balance of the purchase
price. In their Complaint,7 respondents alleged
that petitioners contracted to buy the two
fishing vessels for the agreed purchase price of
Nine Hundred Thousand Pesos (P900,000.00), as
evidenced by the above-quoted document,
which according to them evinced a contract to
buy. However, despite delivery of said vessels
and repeated oral demands, petitioners failed
to pay the balance, so respondents further
averred. Belying the allegations of respondents,
in their Answer with Counterclaim,8petitioners
averred that the document sued upon merely
embodies an agreement brought about by the
loans they extended to respondents. According

to petitioners, respondents allowed them to

manage or administer the fishing vessels as a
business on the understanding that should they
find the business profitable, the vessels would
be sold to them for Nine Hundred Thousand
Pesos (P900,000.00). But petitioners "decided
to call it quits" after spending a hefty sum for
the repair and maintenance of the vessels
which were already in dilapidated condition.

Doctrine: Before a valid and binding contract of

sale can exist, the manner of payment of the
purchase price must first be established, as
such stands as essential to the validity of the
sale. After all, such agreement on the terms of
payment is integral to the element of a price
certain, such that a disagreement on the
manner of payment is tantamount to a failure
to agree on the price.

Issue: Whether or not there is a perfected

contract of sale.

[G.R. No. 171373, June 18, 2008] LLOYD'S


Held: An examination of the document reveals

that there is no perfected contract of sale. The
agreement may confirm the receipt by
respondents of the two vessels and their
purchase price. However, there is no equivocal
agreement to transfer ownership of the vessel,
but a mere commitment that "documents
pertaining to the sale and agreement of
payments[are] to follow." Evidently, the
document or documents which would formalize
the transfer of ownership and contain the
terms of payment of the purchase price, or the
period when such would become due and
demandable, have yet to be executed. But no
such document was executed and no such
terms were stipulated upon. The fact that
there is a stated total purchase price should
not lead to the conclusion that a contract of
sale had been perfected. A contract is
perfected when there is concurrence of the
wills of the contracting parties with respect to
the object and the cause of the contract. In
this case, the agreement merely acknowledges
that a purchase price had been agreed on by
the parties. There was no mutual promise to
buy on the part of petitioners and to sell on the
part of respondents. Again, the aforestated
proviso in the agreement that documents
pertaining to the sale and agreement of
payments between the parties will follow
clearly manifests lack of agreement between
the parties as to the terms of the contract to
sell, particularly the object and cause of the
The agreement in question does not create any
obligatory force either for the transfer of title
of the vessels, or the rendition of payments as
part of the purchase price. At most, this
agreement bares only their intention to enter
into either a contract to sell or a contract of

Respondents spouses Dolleton, were the
registered owners of a parcel of land covered
by TCT No. 153554 with a four-door apartment
building being leased to various tenants.
Respondents mortgaged the property to a
certain Santos to secure a loan in the amount
of P100,000.00. Upon payment of the loan on
15 August 1994, Santos executed a release and
cancellation of the mortgage. The same was
annotated on the TCT.
On 15 September 1994, TCT No. 153554 in the
name of respondents was cancelled and a new
TCT No. 197220 was issued in the name of
Gagan on the basis of a Deed of Absolute Sale
dated 5 August 1994 whereby respondents
purportedly sold to Gagan the subject property
for the sum of P120,000.00.
On 19 September 1994, Gagan and Gueverra
mortgaged said property with TCT No. 197220
to petitioner LECC for second loan of
P542,928.00 and was annotated on said Title.
However, Gagan and Guevarra failed to pay the
loan upon maturity. Thus, petitioner foreclosed
mortgaged property being the highest bidder
and was not redeemed within the one-year
period. Hence, ownership was consolidated in
favor of petitioner and was issue a new TCT
No. 210363 cancelling TCT No. 197220.
Petitioner then sent notices to the apartment
tenants on the transfer of ownership and
rentals were not remitted to respondents
anymore, prompting the latter to cause the
annotation of an adverse claim on TCT No.

Respondents prayed among others for the

restoration of TCT No. 153554 and nullification
of the Deed of Absolute Sale, and the
extrajudicial foreclosure proceedings. They
denied having executed the Deed of Absolute
Sale and alleged that they had merely offered
to sell to Gagan the subject property for
P900,000.00 on installment basis so that they
could pay their loan obligation to Santos. After
Gagan had initially paid P200,000.00, they
entrusted the owner's copy of TCT No. 153554
to him. Gagan was unable to pay the balance of
the purchase price, rather she caused the
fraudulent cancellation of TCT No. 153554 and
the issuance of TCT No. 197220 in her name,
and of eventually using TCT No. 197220 to
secure the loans obtained from petitioner.
Respondents also faulted petitioner for failing
to make adequate inquiries on the true
ownership of the property considering the
suspicious circumstances surrounding Gagan's
and Guevarra's request for loan immediately
after the issuance of the new certificate of
The RTC declared the Deed of Absolute Sale
between Gagan and Dolleton as spurious and
directed the reconveyance of the property to
the true and genuine owners, the spouses
Dolleton. CA affirmed RTCs decision.
WON Petitioner is a Mortgagee and Buyer in
Good Faith
The Court affirmed the reconveyance of the
property to respondents Dolleton as petitioner
is not a mortgagee in good faith, hence,
foreclosure was not valid. Petitioner failed to
verify the actual condition of the property,
particularly as to who is in actual possession
and if the premises are leased to third persons,
who is receiving the rental payments therefore.
Appellant LECC merely submitted in evidence
forms for credit investigation on the borrower's
capacity to pay, there is no showing that they
actually inspected the property offered as
collateral. Had precautionary measure been
taken, the lending company's representatives
would have easily discovered that the four (4)-

door apartment in the premises being

mortgaged is rented by tenants and they could
have been provided with information that
plaintiffs-appellees are still the present
lessors/owners thereof.
Moreover, the circumstance that the certificate
of title covering the property offered as
security was newly issued should have put
petitioner on guard and prompted it to conduct
an investigation surrounding the transfer of the
property to defendant Gagan. Had it inquired
further, petitioner would have discovered that
the property was sold for an unconscionably
low consideration of only P120,000.00 when it
could have fetched as high as P900,000.00. A
purchaser cannot close his eyes to facts which
should put a reasonable man on his guard and
claim that he acted in good faith under the
belief that there was no defect in the title of
the vendor. Petitioner is engaged in the
business of extending credit to the public and
is, thus, expected to exercise due diligence in
dealing with properties offered as security. The
failure of respondent to take such
precautionary steps is considered negligence on
its part and would thereby preclude the
defense of good faith.
G.R. No. L-25494 June 14, 1972
Nicolas Sanchez and SeverinaRigos executed an
instrument entitled "Option to Purchase,"
whereby Mrs. Rigos agreed, promised and
committed to sell to Sanchez a parcel of land
within two (2) years from said date with the
understanding that said option shall be deemed
terminated and elapsed if Sanchez shall fail to
exercise his right to buy the property within
the stipulated period. Inasmuch as several
tenders of payment made by Sanchez within
said period, were rejected by Mrs. Rigos, on
March 12, 1963, the former deposited said
amount with the Court of First Instance of
Nueva Ecija and commenced against the latter
the present action, for specific performance
and damages.
Rigos contended that the contract between
them was only aunilateral promise to sell,
and the same being unsupported by any

valuable consideration, by force of the New

Civil Code, is null and void.
Sanchez alleged in his compliant that, by virtue
of the option under consideration, "defendant
agreed and committed to sell" and "the plaintiff
agreed and committed to buy" the land
described in the option.
The lower court rendered judgment in favor of
Sanchez and ordered Rigos to accept the sum
Sanchez judicially consigned, and to execute in
his favor the requisite deed of conveyance.
Whether there was a contract to buy and sell
between the parties or only a unilateral
promise to sell.
The Supreme Court affirmed the lower courts
The instrument executed in 1961 is not a
"contract to buy and sell," but merely granted
SANCHEZ an option to buy, as indicated by its
own title "Option to Purchase." The option did
not impose upon Sanchez the obligation to
purchase Rigos' property. Rigos "agreed,
promised and committed" herself to sell the
land to Sanchez, but there is nothing in the
contract to indicate that her aforementioned
agreement, promise and undertaking is
supported by a consideration "distinct from the
price" stipulated for the sale of the land.
Article 1479 refers to "an accepted unilateral
promise to buy or to sell." Since there may be
no valid contract without a cause or
consideration, the promisor is not bound by his
promise and may, accordingly, withdraw it.
Pending notice of its withdrawal, his accepted
promise partakes, however, of the nature of an
offer to sell which, if accepted, results in a
perfected contract of sale.
Respondents Raoul and Christopher Bonnievie
were lessees of a parcel of land with two
buildings constructed thereon belonging to the
intestate estate of Jose Reynoo. The contact of
lease contained the ff stipulation: in case the
lessor desires or decides to sell the leased
property, the lessees shall be given a first
priority to purchase the same, all things and
considerations being equal. On Nov 1976,
administratix Afria Valdez de Reynoso notified

respondents by registered mail that she is

selling the premises for 600k less a mortgage of
100k, giving them 30 days from receipt to
exercise their right of first priority, otherwise,
they should vacate the property not later than
March 1977. On Jan 1977, she sent another
letter to respondents notifying them that she
already sold the property since respondents
failed to buy the same. Upon receipt of this
letter, respondents informed Reynoso that
neither of them received her letter dated Nov
1976; that they had advised her agent to
inform them officially should she decide to sell
the property so negotiations could be initiated;
and that they were constrained to refuse (her)
request for the termination of the lease. On
March 1977, the property was formally sold to
petitioner Guzman, Bocaling&Corp for 400k
with 137,500 paid as downpayment and the
balance to be paid when respondents vacate
the premises. Administratix Reynoso filed a
complaint for ejectment against respondents
when the latter refused to vacate the premises
after the formers demand. A Compromise
Agreement was made which provided that
respondents will voluntarily leave the premises
not later than 1979. However, respondents
failed to comply with the agreement. A motion
for execution of the judgment by compromise
was granted. Respondents filed a motion to set
aside said decision but it was denied. While the
ejectment case was pending in the City court,
respondents filed an action for annulment of
sale between Reynoso and petitioner GBC and
the cancellation of the transfer of certificate of
title. They also required Reynoso to sell the
property to them under the same terms and
conditions agreed upon in the Contract of Sale.
The City Court ruled that the respondents must
vacate the premises and deliver possession of
the property to the petitioner as well as pay
the rent due to them. Upon appeal to the CFI
Manila, it affirmed the said ejection case with
modification and granted respondents petition
to cancel the Deed of Sale executed between
Africa and the petitioner and ordered her to
sell the property to respondent. CA affirmed
the said decision.
WON CA erred in ruling that the grant of first
priority to purchase the subject properties by
the Reynoso needed no authority from the
probate court; holding that the Contract of
Sale was not voidable but rescissible; and in
considering petitioner as buyer in bad faith

ordering Reynoso to execute the deed of sale in

favor of respondents.
The Court held that respondent court was
correct that it was not necessary to secure the
approval by the probate court of the Contract
of Lease because it did not involve an
alienation of real property of the estate nor did
the term of the lease exceed one year so as to
make it fall underArticle 1878(8) of the Civil
The Court also agreed with the respondent
court that the Contract of Sale was not
voidable but rescissible. Under Article 1380 to
1381 (3) of the Civil Code, a contract otherwise
valid may nonetheless be subsequently
rescinded by reason of injury to third persons,
like creditors. The status of creditors could be
validly accorded the Bonnevies for they had
substantial interests that were prejudiced by
the sale of the subject property to the
petitioner without recognizing their right of
first priority under the Contract of Lease.
Rescission is a remedy granted by law to the
contracting parties and even to third persons,
to secure reparation for damages caused to
them by a contract, even if this should be
valid, by means of the restoration of things to
their condition at the moment prior to the
celebration of said contract. Petitioner is not
considered a third party in relation to the
Contract of Sale. Petitioner was not a buyer in
good faith because it was aware of the lease in
favor of the Bonnevies, as it had notice of the
lease of the property by the Bonnevies.
FACTS: In 1982, Reyes executed a 10-year
(renewable)Contract of Lease with Riivera
Filipina over a parcel ofland in EDSA. Under
such contract, the lessee is given aright of first
refusal should the lessor decide to sell
theproperty during the terms of the lease.Such
property was subject of a mortgage executed
byReyes in favor of Prudential Bank. Since
Reyes failed topay the loan with the bank, it
foreclosed the mortgageand it emerged as the
highest bidder in the auction sale.Realizing
that he could not redeem the property,
Reyesdecided to sell it and offered it to Riviera
Filipina forP5,000/sqm. However, it bargained

for P3,500/sqm.Reyes rejected such offer.

After 7 months, it againbargained for
P4,000/sqm, which again was rejected byReyes
who asked for P6,000/sqm price. After 2
months,it again bargained for P5,000/sqm, but
since Reyesinsisted on P6,000/sqm price, he
rejected Riviera'soffer.Nearing the expiry of
the redemption period, Reyesand Traballo (his
friend) agreed that the latter wouldbuy the
same for P5,300. But such deal was not
yetformally concluded and negotiations with
Riviera Filipinaonce again transpired but to no
avail.In 1989, Cypress and Cornhill Trading
were able tocome up with the amount
sufficient to cover theredemption money, with
which Reyes paid to PrudentialBank to redeem
the property. Subsequently, a Deed ofAbsolute
Sale was executed in favor of Cypress
andCornhill for P5.4M. Cypress and Cornhill
mortgaged theproperty in favor of Urban Dev.
Bank for P3M.Riviera Filipina filed a suit against
Reyes, Cypress andCornhill on the ground that
they violated its right of firstrefusal under the
lease contract. RTC ruled in favor of Reyes,
Cypress, and Cornhill. On appeal, CA
affirmedthe decision of the RTC.
ISSUE: W/N Riviera Filipina lost its right of first
HELD: YES. As clearly shown by the records
andtranscripts of the case, the actions of the
parties to thecontract of lease, Reyes and
interpretation of the lease provision"right of
first refusal" to mean simply that should
thelessor Reyes decide to sell the leased
property duringthe term of the lease, such sale
should first be offeredto the lessee Riviera. And
that is what exactly ensuedbetween Reyes and
Riviera, a series of negotiations onthe price per
square meter of the subject property
withneither party, especially Riviera, unwilling
to budgefrom his offer, as evidenced by the
contenders.It can clearly be discerned from
Rivieras letters thatRiviera was so intractable
in its position and tookobvious advantage of the
knowledge of the timeelement in its
negotiations with Reyes as theredemption
period of the subject foreclosed propertydrew
near. Riviera strongly exhibited a "take-it or
leave-it" 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 ithad other properties

to consider so Reyes should decideand make
known its decision "within fifteen days."Riviera
even downgraded its offer when Reyes
offeredanew the property to it, such that
whatever amountReyes initially receives from
Riviera would absolutely beinsufficient to pay
off the redemption price of thesubject
property. Naturally, Reyes had to disagree
withRivieras highly disadvantageous offer.Nary
a howl of protest or shout of defiance
spewedforth from Rivieras lips, as it were, but
a seeminglywhimper of acceptance when the
counsel of Reyesstrongly expressed in a letter
dated December 5, 1989that Riviera had lost its
right of first refusal. Rivieracannot now be
heard that had it been informed of theoffer of
(P5,300.00)of Cypress and Cornhill it would
have matched saidprice. Its stubborn approach
in its negotiations withReyes showed crystalclear that there was never anyneed to disclose
such information and doing so would bejust a
futile effort on the part of Reyes. Reyes
wasunder no obligation to disclose the same.
Pursuant toArticle 1339 of the New Civil Code,
silence orconcealment, by itself, does not
constitute fraud, unlessthere is a special duty
to disclose certain facts, or unlessaccording to
good faith and the usages of commerce
thecommunication should be made. The
general rule isapplicable in the case at bar
since Riviera failed toconvincingly show that
either of the exceptions arerelevant to the
case at bar
FACTS: Catalina owned 8 parcels of land leased
to Chua,who assigned its rights thereto to Lee
Ching Bing, who,in turn, assigned said rights to
Paranaque KingEnterprises, which introduced
significant improvementson the premises.
Under the lease agreement, in case ofsale,
the lessee shall have the option or priority to
buythe said properties. Catalina, in violation
of the saidstipulation, sold the lot to Raymundo
for P5M.Paranaque King notified her of the said
breach, and sheimmediately had the lots
reconveyed. She then offeredthe lot to
Paranaque King for P15M; but the latterrefused
claiming that the offer was
ridiculous.Catalina thereafter sold it again to
Raymundo for P9M.

ISSUE: W/N there was compliance with the

Right of FirstRefusal assigned to Paranaque
HELD: NO. In a Right of First Refusal, the seller
cannotoffer the property to another for a lower
price or underterms more favorable. It must be
offered under thesame terms & conditions to
Paranaque King; otherwise,the right of first
refusal becomes illusory. Only ifParanaque King
fails to meet the offer may the propertybe
offered for sale to another buyerand under
thesame terms and conditions as well. The
Right of FirstRefusal may also be validly
transferred or assignedas inthis case


No. L-56451
June 19, 1985
Ponente: Cuevas, J.
Spouses Juan and Candelaria Lao were
promisees in a Mutual Agreement of Promise to
Sell executed between them and Sotero
Dionisio III, the son of the heir and
administrator of the intestate estate of
deceased Rosenda Abuton, Sotero Dionisio Jr.
The Laos were promised by Dionisio III a
commercial property belonging to such estate.
On June 25,1980, Dionisio Jr. filed with
the Probate Court a Motion for Authority to Sell
which the said court granted. Thereafter, he
sold to his son Dionisio III the subject property
for P75,000. The latter then sold the same
property in favor of a certain William Go for
P80,000. Subsequently, the title was
transferred to Go. On August 27, 1980, Florida
Nuqui (another heir of the estate), filed a
motion for Annulment of the Deeds of Absolute
Sale on the ground that the sale and
subsequent transfer of title of the property
were grossly inadequate. According to Nuqui,
the market value of the property is P400,000.
On February 6, 1981, the Laos filed a
Manifestation wherein they alleged that
Dionisio Jr., without revealing that the
property had already been sold to Go, entered
into a Mutual Agreement of Promise to Sell to
the former for P220,000 (the Laos even offered
to pay for the property for P300,000). They
further alleged that they paid the earnest
money with a check worth P70,000 in favor of

Dionisio III. Moreover, the Laos contended that

the agreement regarding the balance will only
be paid upon the production of the TCT and the
execution of the final Deed of Sale.
Because of the conflict, all the parties,
except the Lao spouses and Dionisio III, entered
an Amicable Settlement. The Lao spouses filed
an opposition but despite such opposition,
respondent Judge Genato approved the
Amicable Settlement.
Whether or not the sale between the
administrator and his son valid.
NO. A sale made by an administrator of
decedents property which is fictitious and
illegal cannot be made lawful by the assent
thereto of the heirs and approval by the trial
court of the compromise settlement, being
prejudicial to creditors and to government.
The price was grossly low. Dionisio III
had no income whatsoever. On top of that, not
a single centavo of the P75,000 was ever
accounted for nor reported to the Probate
Court. Dionisio Jr. was only compelled to admit
that the actual consideration for the sale made
by him was P200,000 and not for P80,000 (This
happened in the amicable settlement).
In addition, the offer by the Laos of
P300,000 for the purchase of the property is
more beneficial and advantageous. No
satisfactory and convincing reason appeared
given the rejection and non-acceptance of said
offer, thus giving rise to a well-grounded
suspicion that a collusion of some sort exists
between the administrator and the heirs to
defraud the creditors and the government.
No. L-72306
October 5, 1988
Ponente: Melencio-Herrera

Pasamba. The Court approved the Project of

Partition. Thereafter, the estate was declared
closed and terminated after estate and
inheritance taxes had been paid, the claims
against the estate settled, and all the parties
Fornilda and Pasamba then executed a
contract of mortgage wherein they mortgaged
the controverted parcels to Atty. Amonoy as
security for payment of his Attorneys fees in
the aforementioned proceedings in the amount
of P27,600. In 1969, both Fornilda and Pasamba
died. Petitioners are some of Fornildas heirs
Since the mortgage indebtedness was
not paid, Atty. Amonoy instituted foreclosure
proceedings. In 1973, the controverted parcels
were foreclosed. An auction sale was then held
where Amonoy was the only bidder for P23,760.
The sale was confirmed by the trial court. To
satisfy the deficiency, another sale was
conducted, again, Amonoy was the only bidder
for P12,137.50. A year after, an action for
annulment was filed. The trial court dismissed
the action.
Whether or not the acquisition of Atty.
Amonoy of the controverted parcels of land
from petitioners valid.
NO. Under Art. 1491. A lawyer is
prohibited from acquiring either by purchase or
assignment of the property or rights involved
which are object of the litigation in which they
intervene by virtue of their profession. The
rationale advanced for the prohibition is that
public policy disallows the transactions in view
of the fiduciary relationship involved.
The fact that the properties were first
mortgaged and only subsequently acquired in
an auction sale will not remove it from the
scope of prohibition.


Director of Lands v. Ababa

February 27, 1979

Julio Catolos (deceased) formerly

owned 6 parcels of Land in Rizal. His estate
was subject of a settlement where the legal
heirs including Alfonso Fornilda were
represented by Atty. Sergio Amonoy. A Project
of Partition was filed in the Intestate Court
whereby the cotroverted parcels were
adjudicated to Fornilda and a certain Asuncion

FACTS: The adverse claimant Atty. Alberto

Fernandez was retained as counsel of Maximo
Abarquez in a case for annulment of contract of
sale with right of repurchase and for the
recovery of land subject matter of this case.
Being a pauper, Abarquez executed a document
agreeing to pay a contingent fee of of

whatever he might recover as compensation for

his lawyer. When the original case has been
resolved, Abarquez was unable to comply with
his obligation to deliver with Fernandez
portion of said parcels of land. The latter took
steps to protect his claim by filing a motion to
annotate his attorneys lien and by notifying
prospective buyers of his claim. The motion
was granted. Petitioners now argue that a
contract of contingent fee violates Article 1491
of the Civil Code.
ISSUE: WON the contract of contingent fee as
basis of the interest of Atty. Fernandez is
prohibited under Art. 1491.
HELD: NO. The contention is unmeritorious.
Article 1491 prohibits only the sale of or
assignment between lawyer and his client of
property which is the subject of litigation. For
the prohibition to operate, the sale or
assignment must take place during the
pendency of the litigation involving the
property. Further, a contract of contingent fee
is not covered by Art. 1491 because transfer or
assignment of property in litigation takes effect
only after the finality of favorable judgment.
Here, the attorneys fee is contingent upon the
success of the appeal.

Victoriano T. Cuenco (respondent herein), a

naturalized Filipino, for the sum of P5,000.00.
On March 6, 1962, Epifania "usurped" the
controverted property, and on July 26, 1962,
Epifania (through her only daughter and child,
Emeteria Barsobia), sold a one-half (1/2)
portion of the land in question to Pacita W.
Vallar, the other petitioner herein .On
September 19, 1962, respondent filed a
Forcible Entry case against Epifania before the
Municipal Court of Sagay, Camiguin. The case
was dismissed for lack of jurisdiction since, as
the laws then stood, the question of possession
could not be properly determined without first
settling that of ownership. On December 27,
1966, respondent instituted before the Court of
First Instance of Misamis Oriental a Complaint
for recovery of possession and ownership of the
litigated land, against Epifania and Pacita
ISSUE: Whether or not Victoriano Cuenco, a
naturalized Filipino is the rightful owner of the
land after buying it from Ong King Po, a
HELD: YES. The SC declared that the sale by
Epifania to Ong King Po was void as it is against
public policy under the 1935 Constitution and
that Cuenco was the rightful owner as Epifania
is also barred by laches.


April 16, 1982



FACTS: For review is the decision of CA

declaring Victoriano T. Cuenco (now the
respondent) as the absolute owner of a coconut
land in question. The lot in controversy is a
one-half portion (on the northern side) of two
adjoining parcels of coconut land located at
Barrio Mancapagao, Sagay, Camiguin, Misamis
Oriental (now Camiguin province), with an area
of 29,150 square meters, more or less. The
entire land was owned previously by a certain
Leocadia Balisado, who had sold it to the
spouses Patricio Barsobia (now deceased) and
Sarsosa, Filipino
citizens. On
September 5, 1936, Epifania Sarsosa then a
widow, sold the land in controversy to a
Chinese, Ong King Po, for the sum of P1,050.00
.Ong King Po took actual possession and
enjoyed the fruits thereof. On August 5, 1961,
Ong King Po sold the litigated property to

Herein plaintiff is the legitimate heir of Luis
Herrera. Luis Herrera, now deceased, owned
three parcels of land. Before leaving for China
in 1931 or early part of 1932, Luis Herrera
executed a deed of General Power of Attorney
which authorized defendant Luy Kim Guan to
administer and sell the aforementioned parcels
of land. He died on an unknown date.
On the dates of July 23, 1937, August 4, 1937,
and September 11, 1939, the three parcels of
land were respectfully sold to different
individuals through the attorney-in-fact of Luis
Herrera Luy Kim Guan. Herein plaintiff assails
the assumption that Luis Herrera died on 1936
and so herein defendant Luy Kim Guan had no
right to sell the parcels of land because Luis
Herrera had died prior to the transactions thus
extinguishing their agent-principal relationship.

Thus according to the plaintiff, the transactions

should be null and void.
Whether or not the transactions should be null
and void since they were made without any
The Court held that even granting argument
that Luis Herrera did die in 1936, plaintiffs
presented no proof and there is no indication in
the record, that the age Luy Kim Guan was
aware of the death of his prince at the time he
sold the property. The death of the principal
does not render the act of an agent
unenforceable, where the latter had no
knowledge of such extinguishment the agency.
The plaintiffs filed a case to recover a parcel of
land sold by their father Jose Godinez to
defendant Fong Pak Luen. Said defendant
executed a power of attorney in favour of his
co-defendant Kwan Pun Ming, who conveyed
and sold the above described parcel of land to
co-defendant Trinidad S. Navata. The latter is
aware of and with full knowledge that Fong Pak
Luen is a Chinese citizen as well as Kwan Pun
Ming, who under the law are prohibited and
disqualified to acquire real property; that Fong
Pak Luen has not acquired any title or interest
in said parcel of land as purported contract of
sale executed by Jose Godinez alone was
contrary to law and considered non-existent.
The defendant filed her answer that the
complaint does not state a cause of action
since it appears from the allegation that the
property is registered in the name of Jose
Godinez so that as his sole property he may
dispose of the same; that the cause of action
has been barred by the statute of limitations as
the alleged document of sale executed by Jose
Godinez on November 27, 1941, conveyed the
property to defendant Fong Pak Luen as a
result of which a title was issued to said
defendant; that under Article 1144(1) of the
Civil Code, an action based upon a written
contract must be brought within 10 years from
the time the right of action accrues; that the
right of action accrued on November 27, 1941
but the complaint was filed only on September

30, 1966, beyond the 10-year period provided

by law.
The trial court issued an order dismissing the
complaint. A motion for reconsideration was
filed by plaintiffs but was denied.
Whether or not the sale was null and void ab
initio since it violates applicable provisions of
the Constitution and the Civil Code.
Prescription may never be invoked to defend
that which the Constitution prohibits. However,
we see no necessity from the facts of this case
to pass upon the nature of the contract of sale
executed by Jose Godinez and Fong Pak Luen
whether void ab initio, illegal per se, or merely
prohibited. It is enough to stress that insofar as
the vendee is concerned, prescription is
unavailing. But neither can the vendor or his
heirs rely on an argument based on
imprescriptibility because the land sold in 1941
is now in the hands of a Filipino citizen against
whom the constitutional prescription was never
intended to apply.
As earlier mentioned, Fong Pak Luen, the
disqualified alien vendee later sold the same
property to Navata, a Filipino citizen qualified
to acquire real property. Navata, as a
naturalized citizen, was constitutionally
qualified to own the subject property.
Jacobus Bernhard vs PR Builders Inc
25 September 2008
Facts: Petitioner contends that the Contract to
Sell between petitioner and respondent
involved a condominium unit and did not
violate the Constitutional proscription against
ownership of land by aliens. He argues that the
contract to sell will not transfer to the buyer
ownership of the land on which the unit is
situated; thus, the buyer will not get a transfer
certificate of title but merely a Condominium
Certificate of Title as evidence of ownership; a
perusal of the contract will show that what the
buyer acquires is the seller's title and rights to
and interests in the unit and the common
The Contract to Sell between petitioner and
respondent provides as follows:

Upon full payment by the BUYER of the

purchase price stipulated in Section 2 hereof, x
x x, the SELLER shall deliver to the BUYER the
Deed of Absolute Sale conveying its rights,
interests and title to the UNIT and to the
common areas appurtenant to such UNIT, and
the corresponding Condominium Certificate of
Title in the SELLER's name; x x x
The Seller shall register with the proper
Registry of Deeds, the Master Deed with the
Declaration of Restrictions and other
documents and shall immediately comply with
all requirements of Republic Act No. 4726 (The
Condominium Act) and Presidential Decree No.
957 (Regulating the Sale of Subdivision Lots and
Condominiums, Providing Penalties for
Violations Thereof). It is hereby understood
that all title, rights and interest so conveyed
shall be subject to the provisions of the
Condominium Act, the Master Deed with
Declaration of Restrictions, the Articles of
Incorporation and By-Laws and the Rules and
Regulations of the Condominium Corporation,
zoning regulations and such other restrictions
on the use of the property as annotated on the
title or may be imposed by any government
agency or instrumentality having jurisdiction
thereon.[4] (Emphasis supplied)
Under Republic Act (R.A.) No. 4726, otherwise
known as the Condominium Act, foreign
nationals can own Philippine real estate
through the purchase of condominium units or
townhouses constituted under the
Condominium principle with Condominium
Certificates of Title.
Issue: w/n the purchase of a condo unit by an
alien falls under the express prohibition of land
ownership by aliens
Ruling: No. Considering that the rights and
liabilities of the parties under the Contract to
Sell is covered by the Condominium Act
wherein petitioner as unit owner was simply a
member of the Condominium Corporation and
the land remained owned by respondent, then
the constitutional proscription against aliens
owning real property does not apply to the
present case. There being no circumvention of
the constitutional prohibition, the Court's
pronouncements on the invalidity of the
Contract of Sale should be set aside.