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TOPIC CASE TITLE DIGEST

I. INTRODUCTION DIZON V CA FACTS: Overland entered into a contract if lease with option to buy with Dizon. Dizon wanted to cancel the contract for non-
payment but Overland insists it has already made a partial payment for the option to buy with Alice Dizon.
HELD: There was no valid payment because Alice Dizon was not authorized by the seller to accept any payment.

DOCTRINE: Sale us a consensual contract and he who alleges it must show its existence by competent proof. The elements of a
contract of sale are consent, object and price in money or its equivalent. The absence of any of these essential elements negates
the existence of a perfected contract.
FULE V V CA FACTS: There was a barter between Fule(owner of land) and Dr. Cruz(owner of emerald-cut diamond earrings). Fule was given
time to inspect the jewelry, being a jeweller himself. When asked if the jewelry was okay, he said yes. He later complained that
the earrings were fake and wants his land back.
HELD: there can be no return of properties because the contract had already been perfected.

DOCTRINE: A contract of sale is perfected at the moment there is a meeting of the minds upon the thing to which is the object of
the contract and upon the price.
CELESTINO V FACTS: Celestino, maker of sash, doors and windows, claim that it should only be assessed 3% contractor’s tax because its work
COLLECTOR is based on special order, not the 7% tax for on sale of manufactured articles.
HELD: Celestino cannot avail of the 3% tax because it does not only serve special customers only since any builder may order
from them.

DOCTRINE: A factory which habitually makes sash, windows and doors, and sells the goods to the public is a MANUFACTURER.
The fact that the windows and doors are made by it only when customers place their orders and according to such form or
combination as suit the fancy of the purchaser does not alter the nature of the establishment.
COMMISSIONER V FACTS: Eng’g is engaged in the design installation of central air conditioning system, pumping plants and steel fabrications.
ENGINEERING HELD: Eng’g is not a manufacturer but a contractor so it should not be assessed tax for manufactured goods.

DOCTRINE:The distinction between a contract of sale and a contract for furnishing services, labor and materials is tested by the
inquiry whether the thing transferred is one not in existence and which would never have existed but for the order of the party
desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the
order had not been given. S
QUIROGA V FACTS: There was a contract between Quiroga and Parsons so Parsons can sell Quiroga beds in Visayas. Quiroga claims that
PARSONS Parsons had violated certain obligations implied in agency.
HELD: the contract was of purchase and sale and not a contract of agency. Parsons’ obligation was to pay the price for the beds
whether are sold or not.

DOCTRINE: In a contract of agency, the agent receives the thing to sell it and does not pay for the prince but delivers to the
principal the price he obtains from the sale of a thing to a third person. If he does not succeed, then he returns the thing to the
principal.
PUYAT V ARCO FACTS: Puyat was the agent in Manila of Star Piano. Arco contracted with Puyat to purchase sound reproducing equipment.
Arco later learned that Puyat has a 25% discount with Star Piano and wants Puyat to return the equivalent amount of the
discount to them.
HELD: Arco is not entitled to the discount that Puyat enjoyed because Puyat was not an agent of Arco.

DOCTRINE: It is well-known that local dealers acting as agents of foreign manufacturers, aside from obtaining discount from
principal, also adds to the price for local purchasers. If a purchaser later discovers that it is at the short end, he alone must bear
the blame and contract cannot be rescinded.
DAO HENG BANK V FACTS: Laigo obtained loan of 11M from Dao Heng Bank, Inc and pledged 3 mortgages as security. Laigo failed to settle the
LAIGO obligation and verbally offered to cede to Dao Heng one of the two mortgaged lots by way of dacion en pago. Dao Heng
demanded payment and filed an application to foreclose all 3 mortgages.
HELD: There was no dacion en pago because Dao Heng had not consented.

DOCTRINE: Dacion en pago as a mode of extinguishing an existing obligation partakes of the nature of sale whereby property is
alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the obligation, hence, common consent
of the parties is required in order to extinguish the obligation.
LUZON FACTS:Myers and Maritime entered into a contract of Conditional Sale (Contract to Sell). Myers reserved the right to cancel
BROKERAGE V contract in case of Maritime’s failure to pay installments. Maritime failed to pay, hence, Myers cancelled the contract.
MARITIME HELD: (as previously proven) contract to sell, not of sale. When payment was not made, contract of sale was not perfected.

DOCTRINE: The distinction between contracts of sale and contract to sell with reserved title has been recognized by this Court
in repeated decisions upholding the power of promisors under contracts to sell in case of failure of the other party to complete
payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the sums or installments already
received, where such rights are expressly provided for, as in this case.
DIGNOS V CA FACTS: Dignos sold their land to Jabil payable in 2 instalment, w/ assumption of indebtedness. Jabil paid and it was
acknowledge by the spouses in a deed. Later, Dignos spouses also sold the same land to Cabigas, a deed of absolute sale was
executed.
HELD: The property belongs to Jabil since when Dignos sold the land to Cabigas, the could not validly do so since they no longer
were the owners.

DOCTRINE: Difference between contract to sell and contract of sale: sell – reserves ownership subject to fulfilment of condition
i.e. full payment, and ownership does not pass to the buyer despite delivery of the thing until said condition is fulfilled; sale –
does not reserve ownership over the thing sold and ownership is transferred immediately upon actual or constructive delivery
of the thing.
II. PARTIES TO A CALIMLIM- FACTS:Fernando Canullas and Mercedes Calimlim-Canullas were married and begot 5 children. Fernando abandoned his family
CONTRACT OF CANULLAS V and lived with his concubine. Fernando sold the land as well as the house where his wife and children resided to Daguines for
SALE FORTUN P2,000. Daguines initiated a complaint for quieting of title against Mercedes.

DOCTRINE: The sale was contrary to law morals and public policy, and thus is null and void. The sale was subversive to the
stability of the family, a basic social institution which public policy cherishes and protects. The prohibition of donations and sale
between spouses apply to common-law relationships, otherwise, “the condition of those who incurred guilt would turn out to be
better than those is legal union”.
CRUZ V CA FACTS:Gloria Cruz and Romeo Suzara lived together as husband and wife without the benefit of marriage. Out of love and
affection, Cruz executed a deed of absolute sale over her lot in favour of Suzara without any monetary consideration. Suzara
subsequently mortgaged it and was it was foreclosed because he however failed to pay. Cruz paid the bank partially to
restructure the loan in order to extend redemption period. Suzara redeemed the property and sold it to a 3 rd person

DOCTRINE: While Art. 1490, which prohibits the husband and wife from selling property to each other, was extended to
common-law relationships, Cruz can no longer seek reconveyance of the property when it has already been acquired by 3 rd
person in good faith and for value.
The real purpose of the Torrens system of registration is to quiet title to land and to put to a stop to any question of legality of
the title except claims which have been recorded in the certificate of title at the time of registration or which may arise
subsequent thereto.
A purchaser is not required to explore further what the Torrens title on its face indicates in quest for hidden defect or inchoate
right that may subsequently defeat his right thereto.

PHILIPPINE FACTS: When father died, Mariano, inherited 17 parcels of land from him. His stepmom Roldan, was appointed his guardian
TRUST CO V through guardianship proceedings. Roldan sold the land to her brother-in-law Ramos allegedly to invest the money in a house in
ROLDAN Manila. The next day, Ramos executed in favor of Roldan a deed of conveyance covering the same 17 parcels.
DOCTRINE:Roldan purchased her ward’s property through her brother-in-law. She planned to get them for herself, evident
from the amount of time that lapsed between the two sales (8d). Only ONE DAY had passed from the time the guardianship
court judicially confirmed the sale.
From both legal and equitable standpoints, the sales cannot be sustained. The sales from Mariano, by Roldan, to Ramos, and then
from Ramos to Mariano, are void for violation of 1459.

RUBIAS V FACTS: Francisco Militante claimed ownership over land to which he filed an application for registration of title. The
BATILLER application was opposed by the Director of Lands. Pending litigation, Militante sold the land to Domingo Rubias, his son-in-law
and a lawyer by profession. Rubias declared the land for taxation purposes under various tax declarations and land taxes.

DOCTRINE:Aside from acquiring nothing from Francisco Militante, since his application for registration was denied by the land
registration court – as affirmed with finality by the CA. Assuming in arguendo that Militante had anything to sell, the deed of
sale executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly his counsel of record in the
land registration case involving the very land in dispute was void.
The purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491, paragraph (5) of
the Civil Code

MACARIOLA V FACTS:Judge Asuncion purchased a property from Dr. Galapon, who acquired the said property from the parties in a partition
ASUNCION case previously handled by Judge Asuncion.
DOCTRINE:The prohibition in the NCC on acquisition of properties by judges covers only acquisitions taking place during the
pendency of the litigation involving those properties. The case handled by Judge Asuncion had long been final. He didn’t buy the
lot directly from the plaintiffs either. However, his acts invited suspicion of impropriety & distrust thus he was reminded to be
discreet in his private/business affairs.
III. SUBJECT MARTINEZ V CA FACTS: A parcel of land, ownership of w/c changed hands until it landed to spouses Martinez, was being contested by the
MATTER municipality as a river and thus form part of public domain. The dispute was referred to the Committee of Rivers and Streams
which conducted an investigation. The report submitted stated that Parcel No. 2 was not a public river but a private fishpond
owned by the spouses. The municipal officials of Lubao refused to recognize the Subcommittee’s decision.

DOCTRINE:Parcel No. 2 is a river of the public domain as evidenced by its technical description which states that it is bounded
on all sides by rivers. Said parcel is a branch of the main river that has been covered with water since time immemorial and thus
part of the public domain. It is incapable of private appropriation or acquisition by prescription. The spouses’ title does not
include the river. Simple possession of a certificate of title under the Torrens system does not necessarily make the possessor a
true owner of all the property described therein. The incontestable and indefeasible character of a Torrens certificate of title
does not operate when the land covered is not capable of registration.
MELLIZA V CITY FACTS:Melliza sold under a deed several tracts of land to the then Municipality of Iloilo, including lots 1214-C and 1214-D. The
OF ILOILO instrument of sale did not mention lot 1214-B, although it was contiguous to the other two lots, but stipulated that the area
being sold shall include the area “needed for the construction of the city hall site, avenues and parks according to the Arellano
plan.” The Arellano plan had long been in existence before the execution of the deed.

DOCTRINE:The requirement that a sale must have for its object a determinate thing is fulfilled as long as, at the time the
contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further
agreement between the parties. The requirement was deemed fulfilled under the contract of sale because it specifically referred
to such other portions of the lots required by the “Arellano plan,” which had long been in existence and it specifically provided
for the land areas needed for the city hall site. Therefore, at the time of the perfection of the contract, the exact area of the land
needed, which was the subject matter of the sale, could be determined by simply referring to the Arellano plan, without the
parties needing to draw-up a new contract, nor even to clarify matters or explain their intentions.
ATILANO V FACTS:Eulogio Atilano II brought parcel of land from his brother Eulogio Atilano I. Heirs of E. Atilano II claim that upon
ATILANO resurvey of the subject land, it was discovered that the land sold to them designated as Lot No. 535-E was in fact Lot No. 535-A
which was the one presently occupied by heirs of Atilano I. SO, Atilano II bought 535-E but is now occupying 535-A (1,808
square-meter) and Atilano II retained 535-A but is now occupying 535-E (2,612 square meters). Atilano II of course wants to get
the other bigger parcel.

DOCTRINE:When one sells or buys real property - a piece of land, for example - one sells or buys the property as he sees it, in its
actual setting and by its physical metes and bounds, and not by the mere lot number assigned to it in the certificate of title. The
real issue here is not adverse possession, but the real intention of the parties to that sale. The object of sale, as intended and
understood by the parties, was that specific portion where the vendee was then already residing, where he reconstructed his
house where his heirs continued to reside. : namely, lot No. 535-A; and that its designation as lot No. 535-E in the deed of sale
was a simple mistake in the drafting of the document.
PICHEL V ALONZO FACTS:Alonzo was awarded a parcel of land by the Government as homestead, of course w/ prohibition from encumbrance.
Alonzo sold to Pichel through a “deed of sale” all the fruits of the coconut trees which may be harvested in the land for the
period 15 September 1968 to 1 January 1976, in consideration of P4,200.Alonzo filed an action for the annulment of a “Deed of
Sale” because the contract actually is, for all legal intents and purposes, a contract of lease of the land itself; an encumbrance
prohibited under RA 477.

DOCTRINE:The document in question expresses a valid contract of sale. It has the essential elements of a contract of sale as
defined under Article 1485 of the New Civil Code. The subject matter of the contract of sale in question are the fruits of the
coconut trees on the land during the years from September 15, 1968 up to January 1, 1976, which subject matter is a
determinate thing. Under Article 1461 of the New Civil Code, things having a potential existence may be the object of the
contract of sale. Pending crops which have potential existence may be the subject matter of the sale.

YU TEK V FACTS:A written contract was executed between Basilio Gonzalez and Yu Tek & Co for Gonzalez to provide Yu Tek with 600
GONZALES piculs of sugar of the first and the second grade according to the result of the polarization within three months for a
consideration of P3000. Yu Tek paid Gonzalez P3000 but the latter was not able to deliver the sugar because of the almost total
failure of his crop. The contract of sale being valid, the loss of the thing must be borne by the buyer.

DOCTRINE:A contract of sale is not perfected until the parties have agreed upon the price and the thing sold.
There is a perfected sale with regard to the “thing” being sold when it had already been physically segregated from all other
articles. In the case at bar, what was designated was the generic name “sugar”. There was no “appropriation” of any particular
lot of sugar. Thus, the contract between Gonzalez and Yu Tek was merely an executory agreement; a promise of sale and not a
sale. As there was no perfected sale, it is clear that articles 1452, 1096 and 1182 are not applicable.
IV. OBLIGATION HERNAEZ V FACTS:Domingo Hernaez’s parents died. He sold his interests to the undivided estate of both parents to his son, Vicente.
OF SELLER TO HERNAEZ Notwithstanding that fact, and in connivance with Vicente, he executed a document of sale all his interest to his father’s estate
TRANSFER and 1/18of his mother’s to Alejandro Montelibano. He also executed a document of sale, on the same day, to Jose Montelibano
OWNERSHIP Uy-Cana, selling 4/18 of his interest in his mother’s estate. Jose Montelibano Uy-Cana then sold his interest to Alejandro. After
that, Vicente sold his interest to his uncle Rosendo.

DOCTRINE:Vicente is estopped from asserting his title as against either Montelibano or Uy-Cana, even though he had actually
purchased all of his father’s interest. Where the true owner of property, for however short a time, holds out another, or, with
knowledge of his own right, allows another to appear as the owner of or as having full power of disposition over the property,
the same being in the latter’s actual possession, and innocent third parties are thus led into dealing with such apparent owner,
they will be protected.
SIY CONG BIENG V FACTS:Ranft was given quedans as document of his title to bales of hemp he had purchased. However, without paying for the
HSBC hemp yet, he offered the quedans as security for his preexisting debts to HSBC. He died without paying Siy for the hemp. Siy
wanted to get the quedans from HSBC as these were not yet paid for.

DOCTRINE:Siy is estopped from denying that the bank had a valid title to the quedans for the reason that Siy itself had
voluntarily clothed Ranft with all the attributes of ownership. The bank, without knowing of the arrangement between the
parties, relied upon the apparent ownership in good faith
JALBUENA V FACTS:Salvador Lizarraga, as judgment creditor, caused the sheriff to levy upon an old sugar-mill as the property of Ildefonso
LIZARRAGA Doronila, the judgment debtor and husband of Jalbuena. At the time of the levy Doronila stated to the sheriff that the mill
belonged to him.

DOCTRINE: Jalbuena is estopped. Where the true owner of property, for however short a time, holds out another, or, with
knowledge of his own right, allows another to appear, as the owner of or as having full power of disposition over the property,
the same being in the latter's actual possession, and innocent third parties are thus led into dealing with some [such] apparent
owner, they will be protected.
SUN BROS. V FACTS: Sun Bros delivered to Francisco Lopez an Admiral refrigerator. Lopez paid only the down payment of P500. Lopez sold
VELASCO the ref to Velasco. The following day, Velasco sold the ref to Co Kang Chiu, after displaying the ref at his store. Co Kang Chiu paid
P985 in cash. The ref was delivered to Co Kang Chiu. Sun Bros filed a complaint for replevin.

DOCTRINE:This is a case of an imperfect or void title ripening into a valid one, as a result of some intervening causes. The policy
of the law from w/c we do not feel justified to deviate, has always been that where the rights & interests of a vendor comes into
clash w/ that of an innocent buyer for value, the latter must be protected. Ruling this way would facilitate commercials on
movable & give stability to business transactions. This rule is necessary in a country such as ours where free enterprise prevails,
for buyers can’t be reasonably expected to look behind the title of every article when he buys at a store. The doctrine of caveat
emptor is now rarely applied, and if it is mentioned it is more of an XPN that the GR

MASICLAT V FACTS:
CENTENO
DOCTRINE:
TAGATAC V FACTS:Tagatac was induced by fraud(pretending he had lots of money) to sell and deliver his car to Feist for which she was
JIMENEZ given a post-dated check. The check was dishonored and the car was subsequently sold from one person to another until it was
displayed in a car exchange where it was discovered by the plaintiff. She brought an action to recover the car.

DOCTRINE:Accdg to A559 CC, although possession of movable property acquired in good faith is equivalent to a title, one who
has lost any movable or has been unlawfully deprived thereof, may nevertheless recover it from the person in possession of it.
There was a valid transmission of ownership from Tagatac to Feist by virtue of the sale and delivery of the car to the swindler.
The fraud and deceit practiced on her earmarked the sale as a voidable contract. As long as no action was taken for annulment,
the contract remained binding. As the car was again sold to another, the title acquired by the subsequent purchaser was an
indefeasible one, even as against the original owner.
DE GARCIA V CA FACTS:A diamond ring was stolen from Guevara’s house. While she was talking to Garcia, an owner of a restaurant, she
recognized the ring on the latter’s finger and asked how she acquired the same. Garcia averred that she bought it from her
comadre. It was ascertained the ring was indeed Guevarra’s but despite written demands, Garcia refused to return the ring.

DOCTRINE:The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost
any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the
possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the
owner cannot obtain its return without reimbursing the price paid therefor.The title of the possessor is not that of
ownership, but is merely a presumptive title sufficient to serve as a basis of acquisitive prescription.
EDCA PUBLISHING FACTS:An impostor(alias Jose Cruz) buys books from EDCA through telephone. EDCA delivers the books, is paid through
V SANTOS personal check, and issues a sales invoice. Impostor sells books to Santos who buys in good faith. The check to EDCA bounces,
EDCA discovers the fraud of the impostor, and seeks to recover ownership of the books from Santos.

DOCTRINE: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.There was a perfected contract of sale. De La Pena acquired ownership over the books
which he could then validly transfer to the Leonor Santos. First sentence of Art 559 CC “the possession of movable property
acquired in good faith is equivalent to a title”. Santos acquired possession of the movables (the books) in good faith, thus she has
title to them as owner.

AZNAR V FACTS:To get purchase price for car, Marella said they had to go to his sister’s house to borrow money. Marella also requested
YAPDIANGCO the registration papers and copy of deed from Irineo, Santos’ son, on the pretext that he would show it to his lawyer. Irineo
handed the documents to Marella. They alighted while an unidentified companion of De Dios stayed behind in the car. Once
inside the house, Irineo was asked to wait in the sala while De Dios went inside a room. De Dios did not come out of the room.
The car was also not there outside anymore. He inquired from a woman he saw for L. De Dios and he was told that no such
name lived or was even known there.

DOCTRINE:Article 559 of the Civil Code applies in this case, for under it, the rule is to the effect that if the owner has lost a thing,
or if he has been unlawfully deprived of it, he has a right to recover it, not only from the finder, thief or robber, but also from
third persons who may have acquired it in good faith from such finder, thief or robber. It establishes two exceptions to the
general rule of irrevindicability, to wit, when the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In
these cases, the possessor cannot retain the thing as against the owner, who may recover it without paying any indemnity,
except when the possessor acquired it in a public sale.
V. PRICE MAPALO V FACTS:Illiterate spouses were tricked into signing a deed of donation of the eastern portion of the land to Maximo, the brother
MAPALO of the owner of the land. The document signed by the spouses was actually a deed of sale conveying the WHOLE property to
Maximo. Maximo sold the whole lot to the Narcisos.

DOCTRINE:A contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause
or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the
vendor. The deed of sale is governed by the Old Civil Code. If it is w/o consideration, it is inexistent. If it is only w/ a false
consideration, it is voidable. In this case, the consideration of P500 was totally absent. The inexistence of a contract is
permanent and incurable and cannot be the subject of prescription.
ONG V ONG FACTS: Ong executed a quitclaim deed in favour of Maruzo(minor) transferring, releasing, assigning and forever quitclaimed ½
of parcel of land for a consideration of “1 peso and other valuable consideration”.
HELD: The quitclaim was valid because the consideration was no one person alone but also other valuable considerations.
DOCTRINE: Apparent inadequacy in price is of no moment since it is the usual practice in deeds of conveyance to place a
nominal amount although there is a more valuable consideration.
BAGNAS V CA FACTS:Hilario Mateum died without ascendants or descendants, and survived only by 2 sets of collateral relatives. 1 set claims
that the lands were sold to them as depicted in a deed for the consideration of P1.00 and “services rendered, being rendered,
and to be rendered for my benefit.

DOCTRINE:Sale of land is VOID AB INITIO for having false and fictitious consideration (P1 in the deed compared to P10,500 as
valued in the tax declaration), since no other true and lawful cause was shown. Upon the consideration alone that the apparent
gross, not to say enormous, disproportion between:
 STIPULATED PRICE: P1.00 (in each deed) plus unspecified and unquantified services
 VALUE: At least P10,500.00 (based on assessments for tax purposes)
MORALES V CA FACTS:Montinola sold his lot to Reyes using a second owner’s duplicate of the TCT for only P1.00. Reyes, in turn, sold the lot to
the Abellas again for P1.00. The Abellas subsequently sold it to the Deseo. Apparently, the first owner’s duplicate copy was not
lost or was either found by Montinola, was used by him to sell the lot again to Morales Development. Morales claims to have a
better right over the property because of the suspicious price paid for the sales.

DOCTRINE:Where the contract of sale states that the consideration is P1.00, the consideration may have been much more, as
the assignor’s liberality may be a sufficient cause for a valid contract. It is not unusual in deeds of conveyance adhering to the
Anglo-Saxon practice of stating that the consideration given is the sum of P1.00 although the actual consideration may have
much more.
REPUBLIC V PHIL FACTS: The Republic of the Philippines, in representation of the Bureau of Prisons, instituted against Macario Apostol a civil
RESOURCES complaint. PDRC moved to intervene. The complaint says that sometime prior to Apostol’s transactions the corporation had
some goods deposited in a warehouse. Apostol, then the president of PDRC, but without the knowledge or consent of the
stockholders thereof, disposed of said goods by delivering the same to the Bureau of Prisons in an attempt to settle his personal
debts.

DOCTRINE: PRDC has legal interest in the case because A1458 provides that the purchaser may pay “a price certain in money or
its equivalent,” which means payment of the price need not be in money. Whether the goods claimed by PRDC belong to it and
delivered to the Bureau of Prisons by Apostol in payment of his account is sufficient payment therefore, is for the court to pass
upon and decide after hearing all the parties in the case.

***VILLANUEVA NOTES
This case is not at all authority to say that under A1458, as it defines a contract of sale, the term “equivalent” of price can cover
other than money or other media of exchange, since this case covers not the perfection stage of a contract of sale, but rather the
consummation stage where the price agreed upon can be paid under the mutual arrangements agreed upon by the parties to the
contract of sale, even by dation in payment, as is the case herein.
TOYOTA SHAW V FACTS: Luna wanted to buy Toyota Lite Ace, met w/ a sales rep ad emphasized that he needed the Lite Ace not later than June
CA 17, 1989 because he, his family and a balikbayan guest would use it on June 18 to go to his home province where he would
celebrate his birthday. He also intimated that if he does not arrive in his hometown with a new car, he would become a laughing
stock. Sales rep informed them that the vehicle was being readied for delivery but after about 1 hour, Bernardo told them that
the car could not be delivered since “nasulot ang unit ng ibang malakas”.

DOCTRINE: No obligation on Toyota’s part to transfer ownership of a determinate thing to Sosa and no correlative obligation on
Sosa’s part to pay a price certain appears therein. Nothing was mentioned about the full purchase price and the manner the
instalments were to be paid. A definite agreement on the manner of payment of the price is an essential element in the
formation of a binding and enforceable contract of sale. A disagreement on the manner of payment is tantamount to a failure to
agree on the price.
VELASCO V CA FACTS: Velasco and Magdalena Estate entered into a contract of sale of a parcel of land. Stipulation in the contract says: “the
balance of P70,000 shall be paid by the plaintiff to the defendant in 10 years from November 29, 1962. Xxx That the time within
which the full down payment of the P30,000 was to be completed was not specified by the parties”.

DOCTRINE: A definite agreement on the manner of payment of the purchase price is an essential element in the formation of a
binding and enforceable contract of sale. Velascos admit that they and Magdalena still had to meet and agree on how and when
the down payment and the installment payments were to be paid. No definite agreement on the manner of payment so no
perfected contract since the terms of payment – still had to be mutually covenanted.
LIMSON V CA FACTS: Agreeement between Limson and seller de Vera to buy parcel of land. Limson gave the sum of P20,000 to de Vera as
"earnest money;" and de Vera signed a receipt giving her a 10-day option period to purchase the property. She agreed to pay the
balance of purchase price so mortgage may be released. They were not able to do so bec of failure of de Vera to appear on
meeting places. Limson later found out that de Vera sold to Sunvar the property.

DOCTRINE: Earnest money and option money


 "Earnest money" and "option money" are not the same but distinguished thus;
o Earnest money is part of the purchase price, while option money is the money given as a distinct consideration
for an option contract;
o Earnest money given only where there is already a sale, while option money applies to a sale not yet perfected;
and,
o When earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gives
option money, he is not required to buy, but may even forfeit it depending on the terms of the option.
Not Earnest Money!!
Nothing in the Receipt which indicates that the P20,000 was part of the purchase price. It was not shown that there was a
perfected sale between the parties where earnest money was given. Finally, when Limson gave the "earnest money" the Receipt
did not reveal that she was bound to pay the balance of the purchase price.
SAN MIGUEL V FACTS: SMPPI was selling several lots in Pasig for P52M. Huang offered to buy the property, enclosing P1M representing
HUANG “earnest-deposit money” subject to the conditions. They met several times to negotiate the payment terms but could not come to
an agreement. SMPPI returned the P1M given as "earnest-deposit". Huang demanded that SMPPI execute a deed of sale covering
the properties.

DOCTRINE: Huang did not give the P1M as "earnest money" as provided by Art. 1482 of the Civil Code. They presented the
amount merely as a deposit of what would eventually become the earnest money or down-payment should a contract of sale be
made by them. The amount was thus given not as a part of the purchase price and as proof of the perfection of the contract of
sale but only as a guarantee that respondents would not back out of the sale. At the time when SMPPI accepted, their contract
had not yet been perfected.
VI. FORMATION VILLONCO V FACTS: Sale of property was made subject to condition that Bormaheco will acquire the property in Sta. Ana. There was a series
OF CONTRACT OF BORMAHECO of negotiations between the parties. In the counter-offer of buyer Villonco, seller Bormaheco made certain changes – 1. Crossed
SALE out the word NASSCO and 2. Inserted the words “per annum” instead of p.a.

DOCTRINE: An acceptance with contains changes in the offer but does not ESSENTIALLY change the terms of the offer does not
constitute a counter-offer. So long as it is clear that the meaning of acceptance is positively and unequivocally to accept the offer.
Changes made were so trivial, there being no incompatibility before and after the changes were made.
TRADERS ROYAL FACTS: Cuison Lumber obtained loans w/ Traders Bank and offered a payment arrangement. The bank replied through a letter
BANK V CUISON of its resolution to grant to grant repurchase to the foreclosed property. Cuison Lumber did not make an express acceptance.
LUMBER DOCTRINE: A contract is perfected from the moment there is a meeting of the offer and acceptance upon the thing and the cause
that constitute the contract. The offer must be certain and the acceptance absolute and unqualified. The ascertainment whether
there is a meeting of minds depends on the circumstances surrounding the case. In this case, the contract was perfected as
evince by subsequent acts of the parties: Cuison Lumber paid continuously and even asked for extensions.
XYST CORP V DMC FACTS: DMC was sold 18th floor by Citibank because it built the Citibank Tower, but sale was subject to conformity. DMC
URBAN decided to sell the unit to XYST Corp but consent of Citibank must be obtained. Citibank gave pro-forma contract and XYST
PROPERTIES proposed amendments.

DOCTRINE: A contract is perfected by mere consent. The essence of consent is the conformity of the parties on the terms of the
contract that is, the acceptance by one of the offer made by the other. Acceptance must be absolute otherwise the same
constitutes a counter-offer and has the effect of rejecting the offer. By introducing amendments, XYST introduced counter-offer
w/c DMC did not agree.
ZAYCO V SERRA FACTS: Zayco and Serra executed a contract for an option to buy Palma Central for 1M but no stipulation was made as to how
much the first payment would be and when it should be paid. Zayco wrote to Serra accepting the contract tendering P100,000 as
his first payment before the option period expired. Zayco later learned that Serra had already sold the property to Whitaker and
Concepcion.

DOCTRINE: In order for an acceptance to have the effect of converting an offer to sell into a perfect contract, it must be plain
and unconditional. It will not be so if it involves any new proposition for in that case, it will not be the acceptant’s conformity
with the offer w/c is what gives rise to the birth of the contract. In this case, there was no concurrence of offer and acceptance.
Serra’s offer did not state the amount of first payment. When Zayco accepted the offer, tendering the sum of P100,000 as first
payment, his acceptance involved a proposal, not contained in the offer, that this precisely, and not any other, should be the
amount of the first payment.
DE LA CAVADA V FACTS: Antonio Diaz granted an option to Antonio Enriquez de la Cavada to purchase his hacienda at Pitogo. On the same day,
DIAZ De la Cavada accepted the offer, on condition that the property shall be surveyed and registered under the Torrens system, and
that he would pay the price after the title has been approved. The counter-offer was accepted by Diaz.
DOCTRINE: An OPTIONAL CONTRACT is a privilege existing in one person, for which he had paid a consideration, which gives
him the right to buy, for example, certain merchandise of certain specified property, from another person, if he chooses, at any
time within the agreed period, at a fixed price. The contract of option is a separate and distinct contract from the contract which
the parties may enter into upon the consummation of the option. A consideration for an optional contract is just as important as
the consideration for any other kind of contract.
SORIANO V FACTS: Bautista mortgage land to Soriano with an option for Soriano to purchase the land within the 2-year period of the
BAUTISTA mortgage. Within 2 years, Soriano informed Bautista of intent to purchase the land. Bautista refused to sell the land.

DOCTRINE: Mortgagor's(Bautista’s) promise to sell is supported by the same consideration as that of the mortgage itself, which
is distinct from that which would support the sale, an additional amount having been agreed upon to make up the entire price of
P3, 900.00, should the option be exercised. The mortgagors' promise was in the nature of a continuing offer, non-withdrawable
during a period of two years, which upon acceptance by the mortgagees gave rise to a perfected contract of purchase and sale.
CARCELLAR V CA FACTS: Carceller and SIHI entered into a lease contract with option to purchase two parcels of land. 3 weeks before expiration
of lease contract, SIHI notified Carcellar. Carcellar requested for six-month extension of the lease contract, alleging that he needs
ample time to raise sufficient funds in order to exercise the option. SIHI replied that thes request was disapproved. Carceller
notified SIHI of his decision to exercise the option to purchase the property.

DOCTRINE: An option may be exercised validly even though in a way not in accord with that stated in the contract, if it would be
consistent with the primary intent of the parties. The letter of Carceller to SIHI is fair notice of the intent to exercise the
option, despite the request for the extension of the lease contract.
VILLAMOR V CA FACTS: Reyes sold half of her land to Villamor. She also executed a “Deed of Option” in favor of Villamor for the remaining
portion of the lot. Later however, Reyes offered to repurchase the lot in but it was refused by Villamor, who instead expressed
their desire to purchase the remaining portion of the lot but the Reyeses ignored them.

DOCTRINE: The option offered by Reyes had been accepted by the Villamor, the promises, in the same document. The
acceptance of an offer to sell for a price certain created a bilateral contract to sell and buy and upon acceptance, the offeree, ipso
facto assumes obligations of a vendee. Demandability may be exercised at any time after the execution of the deed.
SANCHEZ V RIGOS FACTS: Rigos gave Sanchez an option to purchase her property within 2 years and said option shall be deemed "terminated and
elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. Several tenders of payment
were made by Sanchez within said period, but they were rejected by Mrs. Rigos. Rigos’ defense was that the contract between
the parties "is a unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New
Civil Code, is null and void".
DOCTRINE: SC harmonized articles 14791 and 13242 of the Civil Code to rule that if a promise to sell or is unsupported by a
distinct consideration, the promisor is not bound by his promise and may, accordingly, withdraw it; but, pending notice of the
withdrawal of his offer, his promise partakes of the nature of an offer to sell which, if accepted, results in a perfected contract of
sale.

EQUITORIAL FACTS: Carmelo leased its property to Mayfair whereby Mayfair constructed thereon the Maxim & Miramar Theatres. Par8 of
REALTY V the lease contract provided that the Mayfair will be given 30 days exclusive option to purchase the property should Carmelo
MAYFAIR desire to sell it. Mayfair’s negotiations w/ Carmelo didn’t ripen into a sale. Carmelo sold the properties to Equatorial.

DOCTRINE: Par. 8 is not an option clause or option contract but a contract of a right of first refusal by virtue of Art. 1479. The
right of first refusal is an integral part of the contracts of lease. The consideration is built into the reciprocal obligations of the
parties. The Ang Yu decision may apply if the contract is limited to the buying and selling of the real property. However, the
obligation of Carmelo to first offer the property to Mayfair is embodied in a contract. It should be enforced according to the law
on contracts instead of the panoramic and indefinite rule on human relations. The sale of the subject real property by
Carmelo to Equatorial must be rescinded since Mayfair was prejudiced by the sale to Equatorial w/o Carmelo
conferring to Mayfair every opportunity to negotiate within the 30-day stipulated period.

Vitug, dissenting: a right of first refusal as a simple juridical relation. It lacks the force of law sufficient to compel compliance
per se or to establish a creditor-debtor or obligee-obligor relation between the parties. If a right of first refusal cannot even be
properly classed as an offer or as an option, certainly, and with much greater reason, it cannot be the equivalent of, nor be given
the same legal effect as, a duly perfected contract. No rescission!
PARANAQUE FACTS: Santos and Paranaque Kings entered into a lease contract. Contract says “ in case of sale, LESSEE shall have the first
KINGS V CA option or priority to buy the properties subject of the lease”. Santos sold the lots to Raymundo for 5M. It was also offered to
Paranaque for P15M and given ten days to make good the offer which it rejected, calling the price ridiculous. Paranaque offered
to buy the property for 5M.

DOCTRINE: The basis of the right of refusal must be the current offer to sell of the seller or offer to purchase of any prospective
buyer and only when the optionee fails to exercise his right can the same be sold to third persons under the same terms as
offered the optionee. Paranaque has right of first refusal to the same price offered to Raymundo.

Sales Lady says: There was bad faith in Raymundo’s part. The remedy is specific performance because all the elements of a
valid contract of sale between Paranaque and Santos are already present – the price was already determined to be 5K. The right
of first refusal has already ripen into a contract
ANG YU ASUNCION FACTS: Tenants of residential and commercial spaces owned by Cu Unjieng were granted priority to acquire the properties they

1 A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or sell a determinate thing for a
price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price
2 When the offerer has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal,

except when the option is founded upon consideration, as something paid or promised
V CA were renting. During the negotiations, Cu Unjieng offered a price of P6-million while tenants made a counter offer of P5-
million. They asked the Cu Unjiengs to put their offer in writing. The latter failed to specify the terms and conditions of the offer
and the tenants also received information that Cu Unjieng was about to sell the properties.

DOCTRINE: Even if a party is aggrieved by the failure to honor the right of first refusal, its breach cannot justify
correspondingly an issuance of a writ of execution, nor would it sanction an action for specific performance without
thereby negating the indispensable element of consensuality in the perfection of contracts. (HINDI TALAGA DAPAT
SPECIFIC PERFORMANCE!!!) The remedy is an action for damages for abuse of rights.
Right of First Refusal
 an innovative juridical relation
 WHAT IT IS NOT:
o NOT perfected contract of sale under Article 1458.
o NOT option under the second paragraph of Article 1479
o NOT an offer under Article 1319
 In RoFR, the object might be made determinate, the exercise of the right, however, would be dependent not only on
the grantor’s eventual intention to enter into a binding juridical relation with another but also on terms, including the
price, that obviously are yet to be later firmed up.
 Prior thereto, it can at best be so described as merely belonging to a class of preparatory juridical relations governed
not by contracts but by, among other laws of general application, the pertinent scattered provisions of the Civil Code on
human conduct (e.g. A19).
ROSENCOR V FACTS: The lessees were given a right of first refusal by the owner, but it was made orally and not in writing. The representative
INQUING of the owner sent them an offer to buy the property for 2M. They counter-offered 1M. Later, they found out that the property
had already been sold by the owner to Rosencor. They wanted the contract of sale to be annulled in order for them to exercise
their right of first refusal.

DOCTRINE: A contract of sale entered into in violation of a right of first refusal of another person, while valid, is rescissible.
However, in order for the doctrine to apply, it must be shown that the vendees acted in bad faith as they were aware or should
have been aware of the right of first refusal granted to another person by the vendors therein. Yet, in this case, the right was
given orally. A right of first refusal need not be written to be enforceable and may be proven by oral evidence. However,
it makes it difficult to prove that the buyer was aware of such right. Constructive notice cannot apply since even the lease
contract was oral. There must be clear and convincing proof that Rosencor was made aware of the said right of first refusal
before they can be guilty of bad faith.
∞ Remedy of the lessees for the violation of RoFR: action for damages for the unjustified disregard of their right.
FORMALITIES OF DALION V CA FACTS: A private document of absolute sale was executed between Sabesaje and Dalion. Sabesaje denied the fact of the sale
THE CONTRACT contending that the document sued upon is fictitious since his signature there was forged.

DOCTRINE: Article 13583 provision on the necessity of a public document is only for convenience, not for validity or
enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public
instrument. A contract of sale is a consensual contract. No particular form is required for its validity.
SECUYA V VDA. DE FACTS: The original owner of a 10,750sqm lot bound herself to transfer 1/3 of it to Sabellona thru an Agreement of Partition.
SELMA Sabellona then sold 3,000sqm of the 1/3 portion to the Secuyas in a private document. The 1/3 lot, however, was never actually
transferred. Instead, parts of the original 10,750 lot, including the portion bought by the Secuyas, was sold to Selma.
HELD: There was no property to partition. Thus, the Agreement of Partition is actually an express trust. However, it was
repudiated when the land was sold to another. (as a result, Sabellona could not validly sell the property). Even if the trust
subsists, the Secuyas cannot prove their claim over it. The private document through which they acquired the 3,000 sqm lot was
lost.

DOCTRINE: While a sale of a piece of land appearing in a private deed is binding between the parties, it cannot be considered
binding on third persons, if it is not embodied in a public instrument and recorded in the Registry of Property.
PAREDES V FACTS: Espino and Paredes agreed about the sale of a lot, the evidence of which is letters only without any written contract. It
ESPINO was agreed that only upon Espino’s arrival at Puerto Princesa will the price be paid and the deed of sale executed. But Espino
refused to execute the deed upon his arrival despite Paredes’ demand and willingness to pay. Paredes sought specific
performance.
HELD: The SC ruled that the contract between the two does not fall under the Statute of Frauds by virtue of the existence of the
letters, which constitute sufficient memorandum, embodying the essential terms of the contract.

DOCTRINE: Statute of Frauds does not require the contract itself to be in writing. Article 1403, par. (2) is clear that a written
note or memorandum, embodying the essentials of the contract and signed by party charged, or his agent, suffices to make the

3 The following must appear in a public document:


(1) Acts and contracts which have for their object the creation, transmission, modification or extinguishment of real rights over immovable property; sales of
real property or of an interest therein are governed by articles 1403, No. 2, and 1405;
(2) The cession, repudiation or renunciation of hereditary rights or of those of the conjugal partnership of gains;
(3) The power to administer property, or any other power which has for its object an act appearing or which should appear in a public document, or should
prejudice a third person;
(4) The cession of actions or rights proceeding from an act appearing in a public document.
All other contracts where the amount involved exceeds five hundred pesos must appear in writing, even a private one. But sales of goods, chattels or things in
action are governed by articles, 1403, No. 2 and 1405. (1280a)
verbal agreement enforceable, taking it out of the operation of the statute.
BARETTO V FACTS: Barretto allegedly had an oral contract w/ Manila Railroad whereby the company would buy his house. Barretto made a
MANILA deed of sale, but when he delivered and presented it to the company, the latter refused to buy. Barretto brings specific
performance suit.
HELD: The contract of sale is unenforceable because delivery of a deed of sale w/o intent to part w/ the title until paid is not
constructive delivery or performance. The contract is not partially performed to take it out of the context of the Statute of
Frauds. By Manila Railroad’s objection to the introduction of parol evidence to prove the oral contract of sale, said contract
cannot be proven or enforced.

DOCTRINE: If a contract is not partially performed, it is still within the context of the Stature of Frauds. Partial performance
must be coupled with intent to perform.
INIGO V ESTATE FACTS: Inigo (Buyer) & Maloto(seller) had a verbal contract of sale of a property for w/c buyer paid the purchase price. The
OF MALOTO contract & the receipt of the purchase price were not reduced into writing. Upon death of seller, her heirs inherited the
property. Buyer demands the execution of a deed of sale.
HELD: The Statute of Frauds doesn’t bar the sale of real property in the case at bar because it has been partially performed
(executed already, not executory).

DOCTRINE: Under Art. 1403(2)(e), a verbal contract for the sale of real property is unenforceable, unless ratified as it offends
the Statute of Frauds. However, this only applies to executory contracts & not to those either totally or partially performed. Oral
evidence of the alleged consummated sale is not forbidden by the Statute of Frauds.
CITY LITE V CA F.P. Holdings(owner) offered for sale to the general public its land thru its broker Meldin Roy of Metro Drug. Roy sent a sales
brochure to Atty. Gelacio Mamaril, a practicing lawyer and registered real estate broker who in turn passed on these documents
to City-Lite Realty Corporation. City-Lite conveyed its interest to buy in a letter to Metro Drug after and all correspondence to
Metro Drug. When they met in person, City-Lite and Roy reached an agreement. For some reason or another and despite
demand, F.P Holdings refused to execute the corresponding deed of sale in favor of City-Lite.
HELD: There was NO perfected contract of sale between City-Lite and F.P. Holdings because the broker had no authority to sell
the property because authorization was only to find buyers.

DOCTRINE: Article 1874 of the CC provides: “When the sale of a piece of land or any interest therein is through an agent, the
authority of the latter shall be in writing; otherwise, the sale shall be void.” For lack of written authority to sell, sale should be as
it is declared null and void.
VII. TRANSFER OF KUENZLE V FACTS:
OWNERSHIP MACKE HELD:

DOCTRINE:
LUZON FACTS:Myers and Maritime entered into a contract of Conditional Sale (Contract to Sell). Myers reserved the right to cancel
BROKERAGE V contract in case of Maritime’s failure to pay installments. Maritime failed to pay, hence, Myers cancelled the contract.
MARITIME HELD: (as previously proven) contract to sell, not of sale. When payment was not made, contract of sale was not perfected.
DOCTRINE: A contract to sell, payment is only a positive suspensive condition, the failure of which is not a breach, casual or
serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. To
argue that there was only a casual breach is to proceed from the assumption that the contract is one of absolute sale, where non-
payment is a resolutory condition, which is not the case. There is power of promisors under contracts to sell in case of failure of
the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the
sums or installments already received, where such rights are expressly provided for.
BEAN V FACTS: Where the goods were ready for delivery at the time and place agreed upon, the mere fact that the buyer, by reason of
CADWALLADER the improper equipment of the vessel, was unable to take the goods aboard the vessel, cannot relieve the latter for responsibility
under the contract.

George Case and BW Cadwallader had a contract for the sale of certain types of logs. Case bound himself to deliver said pieces of
wood to the BW Cadwallader alongside the latter's ship at Basilan. Case was able to deliver the logs on time in the port of Basilan.
However, despite repeated attempts to load the logs, they were not loaded. CAdwallader wants the contract rescinded.
HELD: Case had already complied with his obligation to deliver the logs since he had already delivered the logs alongside the
vessel.

Actual manual delivery of an article sold is not essential to the passing of the title thereto (art 1450, Civil Code) unless made so
by the terms of the contract or by an understanding of the parties. The parties to the contract may agree when and on what
conditions the property in the subject of the contract was passed to the prospective owner.
OCEJO V FACTS:
INTERNATIONAL HELD:
BANK
DOCTRINE:
CEBU WINLAND V FACTS: Ong Siao Hua bought a condo unit from Cebu Winland. No written document was executed for the sale.When
ONG SIAO HUA construction finished, Winland turned possession of the properties over to Ong. Ong noticed that in the Deeds, the stated floor
area of his units were smaller than what he bought. He conducted a verification survey and it was found that the total area of the
units was actually much smaller. He demanded a refund of the total value corresponding to the lacking floor area.
HELD: Ong Siao has already acquired ownership of the condo unit.

DOCTRINE: Delivery has been described as a composite act, a thing in which both parties must join and the minds of both
parties concur. It is an act by which one party parts with the title to and the possession of the property, and the other acquires
the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property
or title; it means transfer of possession. In the Law on Sales, delivery may be either actual or constructive, but both form sof
delivery contemplate ‘the absolute giving up of the control and custody of the property on the part of the vendor, and the
assumption of the same by the vendee.
AVILES V ARCEGA FACTS:
HELD:

DOCTRINE:
PHIL SUBURBAN V FACTS:
AUDITOR HELD:
GENERAL
DOCTRINE:
SARMIENTO V FACTS:
LESACA HELD:

DOCTRINE:
FLORENDO V FOZ FACTS: Foz executed a contract, retified by notary, selling his property to Florendo. Florendo already made a partial payment,
the remaining balance was agreed to be paid when they see each other in Vugan during thye next month. When Florendo
tendered payment for remaining balance, Foz refused to receive and repudiated the contract.
HELD: Foz can be compelled to deliver the property to Florendo.

DOCTRINE: When a sale is made by means of a public document, the execution of it shall b equivalent to delivery of the thing –
formal delivery de jure.
MASALLO V CESAR FACTS:
HELD:

DOCTRINE:
ASSET FACTS: APT had certain premises (where machinery & equipment were stored) leased to Creative Lines. APT sold some of the
PRIVATIZATION V machinery & equipment therein to TJ Enterprises. TJ wasn’t able to haul the machinery & equipment from the premises because
TJ ENTERPRISES of APT’s refusal.
HELD: There was no constructive delivery upon the execution of the deed or issuance of the gate pass because it was not APT
that had actual possession of the property. The phrase as-is where-is basis pertains solely to the physical condition of the thing
sold, not to its legal situation. Creative Lines’ refusal to haul the machinery isn’t a fortuitous event.

DOCTRINE: As a general rule, execution of a deed of sale is equivalent to the delivery of the object if from the deed the contrary
doesn’t appear or can’t clearly be inferred. For movables, delivery may consist in delivery of the keys of the place or depository
where it is stored or kept. The thing must be place in control of the object in order for execution of a deed to effect tradition (but
it’s only a presumption) except when the delivery isn’t effected because of a legal impediment.
BOARD OF BAVIERA CITATION
LIQUIDATORS V In a contract for the salvage of surplus property, the employer assigned all its rights and title to all surplus property salvaged by
FLORO the contractor at a price of P90 per long ton, payment to be made monthly, on the basis of recovery reports of sunken surplus
property salvaged during the preceding month, the Court held that it was a case of tradition longa manu and ownership passed
as soon as the property was salvaged.
ABUAN V GARCIA FACTS: Abuan acquired homestead which passed on to his legal heirs upon his death. August 7, 1953 - Legal heirs sold land to
Garcia by a Deed of Absolute Sale (public instrument). Legal heirs filed action to recover land due to fraud and contract being
executed without consideration – which was eventually settled amicably on February 28, 1955. Garcia paid P500 on that day
and promised to pay P1500 more (on or before April 30, 1955).
HELD: The period to repurchase has already prescribed.

DOCTRINE: There was DELIVERY BREVI MANU or TRADITIO BREVI MANU permissible under A1499 and A1501.
Intention to give possession and ownership was gleaned from the fact that in the 2nd deed (which was a private deed NOT
construed as constructive delivery):
 There is no stipulation reserving ownership
 The fact that the agreement was entered into in consideration of plaintiff’s/ legal heir’s desistence, as in fact they
desisted, from prosecuting their reivindicatory action, LEAVING PROPERTY IN THE HANDS OF GARCIA, as owner
thereof.
BAUTISTA V FACTS:
SIOSON HELD:

DOCTRINE:
BEHN MEYER V FACTS:
YANGCO HELD:

DOCTRINE:
GENERAL FOOD V FACTS:
NACOCO HELD:

DOCTRINE:
DOUBLE SALES CARBONELL V CA FACTS: 2 buyers offered to buy the seller’s land w/ assumption of mortgage The price proposal of Buyer 1 was accepted and
memorandum was made allowing the seller to occupy the land for 1 year and to lease it thereafter. When Buyer 1 went to the
Seller w/ the deed, Seller told him that he already gave the lot to Buyer 2.
Buyer 2 presented a memorandum wherein the Seller obligated himself to sell the lot to him, as well as a deed of sale. Buyer 2
had the sale registered 4 days after the 1st sale was registered.
HELD: Buyer 1 was in good faith – at the time of their negotiations & the perfection of the sale, there was no 2nd sale yet to speak
of. The circumstances show that Buyer 2 was in bad faith. The 1st sale was properly perfected & consummated; Seller retained
possession of her house as a lessee. Although the memorandum between Buyer 1 & Seller wasn’t in the form required by the
Statute of Frauds, it was still proof of a partially performed sale. The assumption of the mortgage & the lease of the house
formed part of the consideration of the sale. Other issues involve BPS.

DOCTRINE: Court reiterated Art. 1544 on Double Sales4. Good faith of the buyer of the realty is essential in registering his deed

4 “If the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken possession thereof in good
faith, if it should be movable property. Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith first recorded it in the
Registry of Property. Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the possession; and, in the absence thereof,
to the person who presents the oldest title, provided there is good faith.”
of sale (a.k.a. anterior registration) to merit the protection in Art. 1544, per 2nd par. of the said article.5 If there’s no inscription
(registration), what is decisive is prior possession in good faith.
CHENG V FACTS:
GONZALES HELD:

DOCTRINE:
LEUNG YEE V FL Compania executed two mortgages on the same building. Both were foreclosed. 1 st buyer bought the lot through a deed of sale
MACHINERY (public instrument but not registered) and was I possession of the building ever since. 2 nd buyer/ mortgagee had the sale to him
(by a public auction) registered despite his knowledge of the 1st sale and the 1st buyer’s possession.

Court said first buyer should be declared the owner because the 2 nd buyer made the inscription in bad faith. 1st buyer was in
possession first in good faith

DOCTRINE: GOOD FAITH:


Test: Good faith, or the lack of it, is in its last analysis a question of intention; but in ascertaining the intention by which one is
actuated on a given occasion, the Court is necessarily controlled by the evidence as to the conduct and outward acts by which
alone the inward motive may, with safety, be determined.
It is:
 "the honesty of intention," "the honest lawful intent," which constitutes good faith implies a "freedom from knowledge
and circumstances which ought to put a person on inquiry,"
 "Good faith, or the want of it, is not a visible, tangible fact that can be seen or touched, but rather a state or condition of
mind which can only be judged of by actual or fancied tokens or signs." (Wilder v Gilman)
BAD FAITH:

 One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired
title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must be
applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor.
RIVERA V ONG FACTS: Lichauco Brothers offered for sale certain old machinery and boilers which were deposited in a yard. Rivera allegedly
CHE purchased some of the materials through an agent, but failed to take possession of the property. Ong Che bought the property
from Lichauco brothers and immediately took possession. Rivera sued Ong Che in order to recover the articles.
HELD: Ong Che has a better right of ownership. He was a purchaser in food faith who immediately took possession of the
property. Under article 1473(now 1544) of the Civil Code, Ong Che has a better title than the first purchaser, who has never had
possession at all.

DOCTRINE: Two different agents of the same owner successively negotiated sales to two different purchasers, and under 1473
of the Civil Code, the second purchaser having acquired possession first must be declared the true owner. Ong Che, was a

5 DBP vs. Mangawang, et al., 11 SCRA 405; Soriano, et al. vs. Magale, et al., 8 SCRA 489
purchaser of these articles in good faith. He acquired possession by virtue of his purchase. He, undoubtedly has, under article
1473 of the Civil Code, a better title than the first purchaser, who has never had possession at all.
CARUMBA V CA FACTS:
HELD:

DOCTRINE:
HANOPOL V FACTS: Hanopol claims ownership of the land through a seies of purchases in a private document and a CFI decision in a
PILAPIL reivindicatory case. Pilapil asserts his title to the property through a duly notarized deed of sale executed in his favour.
HELD: PILAPIL wns the land.

DOCTRINE: Better right is much more than the mere prior deed of sale in favor of the 1 st vendee. It is the prescriptive right
that had supervened or other facts and circumstances exist which, in addition to his deed of sale, the 1 st vendee can be
said to have better right than the 2nd purchaser.
DAGUPAN V FACTS: A parcel of unregistered land was sold to Macam. He did not register the sale. After this, the certificate of title was issued
MACAM over the land. Then, the original owner was made a judgment creditor in a separate case. The sheriff levied upon the land and
was sold in a public sale. The buyer was able to consolidate ownership and register the sale. On the issue of who has a better
right to the land, it was
HELD: The first buyer is the owner. The rules on registered and unregistered land cannot be applied because the situation
obtaining here does not fall strictly within the ambit of any of the two rules. Instead, we apply ROC – the buyer in a public sale
steps into the shoes of the judgment debtor. Since the judgment debtor had previously sold the land to Macam, the buyer in the
public sale had nothing to step into.

DOCTRINE: In case of conveyance of registered real estate, the registration of the deed of sale is the operative act that gives
validity to the transfer. Sec 35, Rule 39 of the ROC, to the effect that upon the execution and delivery of the final certificate of
sale in favor of the purchaser of land sold in an execution sale, such purchaser “shall be substituted to and acquire all
the right, title, interest and claim of the judgment debtor to the property as of the time of the levy”.
QUIMSON V FACTS:
ROSETE HELD:

DOCTRINE:
SANCHEZ V FACTS:
RAMOS HELD:

DOCTRINE:
VIII. RISK OF LOSS ROMAN V FACTS: Roman (owner) and Grimalt (buyer) verbally agreed upon the sale of the schooner Santa Marina. Grimalt agreed to buy
GRIMALT it at 3 equal installments provided the title papers were in proper form. However, the title of the vessel was not in Roman’s
name. Roman promised to perfect his title to the vessel but failed. The vessel sank in the Manila harbor during a storm – this was
before Roman was able to produce the proper papers showing ownership of the vessel. Grimalt refused to pay upon Roman’s
demand.
HELD: Roman should bear the risk of loss because there was no sale yet. If no contract of sale was executed by the parties, the
loss must be borne by its owner & not by a party who only intended to purchase it and who was unable to do so due to the
failure by the owner to show proper title to it and thus enable them to draw up the contract of sale. Grimalt was not obliged to
pay the price of the vessel, the purchase of which had not been concluded. The conversations bet the parties did not establish a
contract sufficient in itself to create reciprocal rights bet the parties.

DOCTRINE: Ownership is not considered transmitted until the property is actually delivered and the purchaser has taken
possession of the value and paid the price agreed upon, in which case the sale is considered perfected. Art 1452 6 of the old Civil
Code re injury or benefit of the thing sold after a perfect contract, and Arts 10967 and 11828 re obligation to deliver a specific
thing & extinction of such obligation due to loss or destruction do not apply if no contract was perfected in the first place.
NORKIS V CA FACTS: Nepales bought from Norkis a Yamaha Wonderbike, but Norkis retained possession. Norkis issued a Sales Invoice
showing that the contract of sale had been perfected signed by Nepales. The motorcycle was registered in the Land
Transportation Commission in the name of Alberto Nepales.Norkis delivered the bike to Julian Nepales(3 rd person) without
authority from buyer Napales. The bike was completely destroyed in an accident.
HELD: Ownership was not transferred to Nepales since there was no delivery. The invoice is nothing more than a detailed
statement of the nature, quantity and cost of the thing sold not necessarily coupled with the intention of the delivery of the
thing. Registration was only to facilitate the execution of a chattel mortgage in favor of DBP for the release of the motorcycle
loan.

HELD: Article 1496 provides “in the absence of an express assumption of risk by the buyer, the things sold remain at seller’s risk
until the ownership thereof is transferred to the buyer.” Norkis was still the owner and possessor of the motorcycle when it was
wrecked. This is in accordance with the well-known doctrine of res perit domino.
SUN BROS. PEREZ FACTS: Sun Bros and Perez entered into a conditional sale agreement involving an Admiral Air Conditioner. The agreement
specifically states that Perez assumes responsibility for any loss. Aircon was delivered to Perez, notwithstanding non-payment
of price, and was totally destroyed by fire.
HELD: Perez bears the risk of loss. Sun Bros can recover payment.

6Now Art. 1480


Any injury to or benefit from the thing sold, after the contract has been perfected, from the moment of perfection of the contract to the time of delivery, shall be governed
by (Arts 1163 to 1165 and 1262)

7 Now Arts. 1165


When what is to be delivered is a determinate thing, the creditor, in addition to the right granted him by Article 1170, may compel the debtor to make the delivery.
If the thing is indeterminate or generic, he may ask that the obligation be complied with at the expense of the debtor.
If the obligor delays, or has promised to deliver the same thing to two or more persons who do not have the same interest, he shall be responsible for any fortuitous
event until he has effected the delivery.

8 Now Art 1262


An obligation w/c consists in the delivery of a determinate thing shall be extinguished if it should be lost or destroyed w/o the fault of the debtor, and before he has
incurred in delay (par. 1)
DOCTRINE: An agreement making the buyer responsible for any loss whatsoever, fortuitous or otherwise, even if the title to the
property remains in the vendor, is neither contrary to law, nor to morals or public policy.
LAWYER’S COOP V FACTS: Atty. Tabora bought from the Lawyers Cooperative Publishing Company one complete set of American Jurisprudence.
TABORA Tabora made a partial payment of the purchase price. The books were duly delivered and received. In the midnight of that same
day, a big fire broke at the law office and library of Tabora The books were burned.
HELD: although Lawyers’ agreed that the ownership of the books shall remain with it until the purchase price shall have been
fully paid, but such stipulation cannot make it liable in case of loss not only because such was agreed merely to secure the
performance by the buyer of his obligation. In the very contract it was expressly agreed that the "loss or damage to the books
after delivery to the buyer shall be borne by the buyer."

DOCTRINE: Any such stipulation that any damage shall be borne by buyer after delivery is sanctioned by Article 1504 of the
Civil Code, which in part provides: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the
buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery.
SONG FO V ORIA FACTS:Song Fo sold a launch to Oria. The launch was delivered to Oria in Manila, but was shipwrecked and became a total loss
while en route to Oria's place of business in Samar. No part of the purchase price has ever been paid.
HELD: Oria, who had exclusive control of the operation of the vessel, sent the launcgh from Manila to Samar, well knowing that
it had not yet been insured: and that Song Fo & Co. had no power to interfere, or to keep her in port pending their application for
insurance.

DOCTRINE: Party who has exclusive control of property bears the risk of loss.

IX. DOCUMENTS SIY CONG BIEN V Supra of Quedans(warehouse receipts


OF TITLE HSBC
DOCTRINE: The quedans were issued in the name of Siy Cong Bien duly endorsed in blank, and thus negotiable in form. It
follows that on the delivery of the quedans to HSBC they were no longer the property of the endorser unless he liquidated his
debt with the bank. It is a representation that the one to whom the possession of the receipt has been so intrusted has the title to
the goods. If the owner of the goods permits another to have the possession or custody of negotiable warehouse receipts
running to the order of the latter, or to /bearer, it is a representation of title upon which bona fide purchasers for value are
entitled to rely, despite breaches of trust or violations of agreement on the part of the apparent owner.
XI. PERFORMANCE SMITH BELL V FACTS: Smith Bell and Sotelo entered into contracts whereby Smith, Bell & Co. obligated itself to sell, and Sotelo to purchase: 2
OF CONTRACT MATTI steel tanks for Php. 21,000, to be shipped from New York and delivered at Manila within 4 months; 2 expellers at Php. 25,000
each, to be shipped from San Francisco in the month of September, 1918 or asap; and 2 electric motors Php. 2,000 each.
Stipulaiton as to delivery is as follows--”Approximate delivery within 90 days. This is not guaranteed”. All the equipment
arrived later than the date specified.
HELD: the obligation was complied with in time since the obligation was conditional, subject to contingencies – the rigid
measures imposed after World War 1.
ISSUES/ HELD:
Should the vendor be paid? - Was the obligation complied with in time? YES

DOCTRINE: when the time of delivery is not fixed in the contract, time is regarded as unessential. In such cases, the delivery
must be made within a reasonable time. The question as to what is a reasonable time for the delivery of the goods by the seller
is to be determined by the circumstances attending the particular transaction. Reasonable time does not mean immediately or
that the seller must stop all his other work and devote himself to that particular order. But the seller must nevertheless act with
all reasonable diligence or without unreasonable delay.
SOLER V CHESKY FACTS: Soler entered into a contract of sale with Wm. H. Anderson and Co. for the purchase of certain oil machinery subject to contingencies. Soler
sold to Chelsey all his rights without any condition and even guaranteed that the equipment was “on its way”. The shipment was delayed so Chelsey
wanted the contract rescinded.
HELD: Soler was in delay since time was an essential element of the contract. Chelsey gave his consent to the contract because he expected the
machinery to arrive within a short time- the time reasonably necessary for such machinery to reach Manila from America.

DOCTRINE: He who contracts and assumes an obligation is presumed to know the circumstances under which said obligation can be complied with.
Although there was no specific time specified for the arrival of the machinery, the guaranty was tantamount to saying that under normal condition
they would arrive in a short period of time (like 3 mos in the case of the expellers).

REPUBLIC V FACTS: RP Gov’t enters into contracts of sale w/ Litton for padlocks and other goods to be used for the April 23, 1946 elections. The
LITTON agreements stipulated that delivery was to be made on or before March 1, 1946. Goods were to be shipped from US to RP. Only a
small part of the goods arrived before or on schedule. The rest were either delivered after.
HELD: Facts show that contract was not conditioned on any RP Gov’t obligation to procure export license and shipping priority from
US Gov’t. It was expressly made clear that delivery was to be made on or before March 1, as it was also made clear that the goods
were to be used for the April 23 elections. It is preposterous to suppose that delivery after the elections would ever be contemplated.

DOCTRINE: If a party assumes liability in all eventuality, it cannot invoke force majeure as a defense.
AZARRAGA V GAY FACTS: Azarraga sold two parcels of land to Gay for the lump sum of P47,000 to be paid as provided in the contract. They agreed
upon the sale of 2 parcels of land, the first containing 102 hectares, 67 ares, and 32 centares, and the second, 98 hectares, more
or less, for the lump sum of P47,000 payable, partly in cash and partly in installments. Said 2 parcels are defined by means of the
boundaries given in the contract. Gay refused to pay the full price, alleging that the 2 nd parcel with an area of 98 hectares
according to the deed of sale, had only 70 hectares, and therefore asked for a reduction of the price. Azarraga refused to grant
the request, and brought suit against the Buyer to recover the whole price agreed upon.
HELD: price cannot be reduced bec all land contained within boundaries were delivered to Gay.

DOCTRINE: Interpretation of 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. “

1st par of 1471: deals w/ the situation (a) wherein everything included w/in the boundaries has been delivered. Rule: WON the
object of sale be 1 realty for a lump sum, or 2+ for a single price also a lump sum, and, consequently, not for X price 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. Why? Because the consideration in the contract is the determinate object & not the number of units that it
contains. It is determinate because it is dealt w/ as a single realty so long as they are sold for a single price constituting a lump
sum and not for X price per unit.

2nd par of 1471: WON the object of the sale be 1 realty for a lump sum, or 2+ for a single price also a lump sum, and,
consequently not at X price per each unit of measuring or number, the seller 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 buyer 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. If everything w/in the stipulated boundaries isn’t delivered, the determinate object w/c was
the consideration is not delivered, thus the power to nullify it. But it may be said that although he hasn’t received the object
accdg to the stipulated terms, it is in his power to carry the contract into effect w/ the just decrease in price.
CEBU WINLAND V FACTS: Ong Siao Hua bought a condo unit from Cebu Winland. No written document was executed for the sale.When
ONG SIAO HUA construction finished, Winland turned possession of the properties over to Ong. Ong noticed that in the Deeds, the stated floor
area of his units were smaller that what he bought. He conducted a verification survey and it was found that the total area of the
units was actually much smaller. He demanded a refund of the total value corresponding to the lacking floor area.
HELD: Refund because the sale not lump sum but made at the rate of a certain price for a square area.

DOCTRINE: In Article 1539, if the area actually delivered is less than the stipulated, the buyer can either choose to oblige the
seller to deliver the remaining area or demand for the proportionate reduction of the purchase price if delivery is not possible.
He (and he alone) may also rescind the contract if the inferior value exceeds one-tenth. If the buyer would not have bought the
property had he known of its smaller or inferior quality however, he may rescind (regardless of the one-tenth rule).
LA FUERZA V CA FACTS: Associated constructed a conveyor system for La Fuerza’s wine factory. When the construction was finished, to La
Fuerza’s 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 system’s purchase price.
HELD: La Fuerza’s action for rescission has already prescribed. Action for rescission based in hidden faults or defects must be
filed within 6 months after delivery. La Fuerza’s 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.
DELA CRUZ V FACTS: de la Cruz purchased from Legaspi a parcel of land. However, de la Cruz was not able to pay the purchase price of P450.
LEGASPI Legaspi claims that the contract was null and void for lack of consideration.
HELD: contract was valid because there was consideration –P450. Non-payment does not void contract.

DOCTRINE: Subsequent non-payment of the price at the time agreed upon did not convert the contract into one without cause
or consideration: a nudum pactum. In the sale of real property, even though it may have been stipulated that in default of the
price within the time agreed upon, the resolution of the contract shall take place ipso facto, the vendee may pay even after the
expiration of the period, at any time before demand has been made upon him either by suit or by notarial act. After such demand
has been made the judge cannot grant him further time. (Art. 1504 Civil Code.).
BARENG V CA FACTS: Bareng purchased from Alegria cinematographic equipment installed at the Pioneer Theater. Ruiz informed Bareng that
he was a co-owner of the equipment and told him to suspend payments because he was not agreeable to the sale. Alegria and
Ruiz subsequently reached a compromise in the case. Alegria then sued Bareng for the unpaid balance.
HELD; the suspension of payment was justified only at the time before the compromise between Alegria and Ruiz. From the
time Alegria and Ruiz reached this settlement, there was no longer any danger of threat to Bareng's ownership and full
enjoyment of the equipment.

DOCTRINE: When the disturbance feared of had already ceased, the buyer who suspended payment should immediately
resume payment. Otherwise, the buyer would incur delay and would become liable for interest.
LAFORTEZA V FACTS: Laforteza sold to Machuca a parcel of land. The Memorandum of Agreement stated that Machuca would pay the price
MACHUCA within 30 days from the reconstruction of the title. Machuca asked for an extension but was denied by Laforteza. Machuca
informed the Lafortezas that he already has the balance but Laforteza refused to accept it.
HELD: failure to pay the balance within the period allowed does not void the MOA. The contract had already been perfected.
Subsequent non-payment will not void it.

DOCTRINE: Failure to comply with a condition imposed upon the perfection of the contract results in the failure of a
contract. Failure to comply with a condition imposed on the performance of the obligation only gives the other party the
option either to refuse to proceed with the sale or to waive the condition. In addition, the heirs were not ready with the
reconstituted title within the specified period. In reciprocal obligations, neither party incurs delays both are not ready to
comply.
LUZON FACTS:Myers and Maritime entered into a contract of Conditional Sale (Contract to Sell). Myers reserved the right to cancel
BROKERAGE V contract in case of Maritime’s failure to pay installments. Maritime failed to pay, hence, Myers cancelled the contract.
MARITIME HELD: (as previously proven) contract to sell, not of sale. When payment was not made, contract of sale was not perfected.

DOCTRINE: A contract to sell, payment is only a positive suspensive condition, the failure of which is not a breach, casual or
serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force. To
argue that there was only a casual breach is to proceed from the assumption that the contract is one of absolute sale, where non-
payment is a resolutory condition, which is not the case. There is power of promisors under contracts to sell in case of failure of
the other party to complete payment, to extrajudicially terminate the operation of the contract, refuse conveyance and retain the
sums or installments already received, where such rights are expressly provided for.
VALARAO V CA FACTS: Under a deed of conditional sale, between Valarao and Arellano, Valarao may automatically rescind the contract if
Seller pays to pay 3 successive monthly installments or 1 year lump sum payment. Arellano wasn’t able to pay for 2 months so
she tendered payment of the 2 months together w/ the payment for the 3rd month. Valarao refused to accept the payment per
order of the Sellers. Buyer filed a consignation case but Seller made a “rescission letter”.
HELD:The contract cannot be rescinded. Valarao was not justified in refusing Arellano’s tender of payment.

DOCTRINE: Article 1592 applies only to contracts of sale, and not to contracts to sell or conditional sales where title passes to
the vendee only upon full payment of the purchase price. Furthermore, in order to enforce the automatic forfeiture clause in a
deed of conditional sale, the vendors have the burden of proving a contractual breach on the part of the vendee.
Relevant  In any case, rescission and forfeiture of payments can’t be effected because under the Maceda Law, a Buyer has a 1-
month grace period for every year of installments paid. (In this case, Arellano had 3 months from Dec 31, 1990)
ACTIVE REALTY V FACTS: In a contract to sell, Daroya, a contract worker in the Middle East, agreed to buy from Active Realty a lot in its
DAROYA subdivision. Daroya for 3 months amortizations prompting the Corp to sent a notice of cancellation of their contract to take
effect 30 days from receipt of the letter. Active cancelled the contract and forfeited all previous payments. Daroya filed a
complaint for specific performances and damages.
HELD: There was no valid rescission because there was no compliance to the Maceda Law of notarized notice of cancellation
and refund of cash surrender value.

DOCTRINE: twin requirements for a valid and effective cancellation under the law – a notarized notice of cancellation and cash
surrender value refund. The Maceda law seeks to redress the acute house problem in the country that has prompted thousands
of middle and lower class buyers of houses, lots and condominium units to enter into all sorts of contracts with private housing
developers involving installment schemes.
XII. WARRANTIES SONGCO V FACTS: Sellner bought Songco’s sugar cane as so he can use the right of way. Songco estimated to him that the field would
SELLNER produce 3,000 piculs of the sugar. Sellner requested Songco to guarantee the quantity but Songco did not. The crop turned out to
be only 2,017 piculs.
HELD: Songco’s representation can only be considered matter of opinion as the cane was still standing in the field, and the
quantity of the sugar it would produce could not be known with certainty until it should be harvested and milled. Sellner could
judge with his own eyes as to the character of the cane, and it is shown that he measured the fields and ascertained that they
contained 96 1/2 hectares.

DOCTRINE: A misinterpretation upon a mere matter of opinion is not an actionable deceit, nor is it a sufficient ground for
avoiding a contract as fraudulent. The law allows considerable latitude to seller's statements, or dealer's talk; and experience
teaches that it is exceedingly risky to accept it at its face value. The refusal of the seller to warrant his estimate should have
admonished the purchaser that that estimate was put forth as a mere opinion. A man who relies upon such an affirmation made
by a person whose interest might so readily prompt him to exaggerate the value of his property does so at his peril 9, and must
take the consequences of his own imprudence.
GOCHANGCO V FACTS: Gochangco and Dean agreed to exchange their properties, Gochangco exchanging his Pasay Estate land w/ Dean
DEAN exchanging his Masbate land. Dean declared that the Masbate land had more than 6K coconut trees growing on it but it turned
out the trees were less than 6k.
HELD: The allegation of false & fraudulent representations as to the existence of the 6K coconut trees wasn’t proven. It doesn’t
appear that Dean deliberately violated the truth in stating his belief that there were such a number of coconut trees on said
lands. It was shown that Gochangco viewed the lands and himself estimated that there were more than 6,000 coconut trees
thereon.

DOCTRINE: If seller does not appear to have violated the truth when he stated a belief, then there is no fraud. Also, if he is given
a chance to inspect the property, then there is no false representation.
PMC V GOJUCO FACTS: Go Jocco sold 500 tons of coconut oil PMMC . Go Jocco guaranteed jthat the oil was 5& f.f.a. PMC was able to examine the
oild’s quality. They then sold the oil to Portsmouth. The contract had an express warranty, not only regarding 5% ffa but also
against impurities. When Portsmouth received it, the oil had impurities.
Held: Go Jocco is not liable to PMC because their contract did not contain an express warranty against impurities aside
from the stipulation that not more than 5 per cent of free fatty acid would be allowed. There was also no implied warranty since
PMC was able to fully examine the oils.

DOCTRINE: An intention to deceive or mislead the purchaser of merchandise to his prejudice is an essential element of fraud.
ANG V CA FACTS: Soledad and Ang entered a “car-swapping scheme”. Ang, being engaged in buy and sell of cars, sold the Mitsubishi GSR to
Bugash and before it was registered under his name a writ of replevin was issued on the Mitsubishi GSR. Ang paid the
mortgagee the balance amount and sought to recover from Soledad but failed. MTCC dismissed the case on prescription. RTC
affirmed but granted Ang recovery based on equity. CA reversed.
HELD: action has already prescribed.

DOCTRINE: In declaring that he owned and had clean title to the vehicle, Soledad gave an implied warranty of title. In pledging
that he "will defend the same from all claims or any claim whatsoever [and] will save the vendee from any suit by the
government of the Republic of the Philippines," Soledad gave a warranty against eviction. Action prescribed. The prescriptive
period to file a breach thereof is six months after the delivery of the vehicle, following Art. 1571.
XIII. BREACH OF LEVY HERMANOS FACTS: Levy Hermanos, Inc., sold to Lazaro Blas Gervacio, a Packard car. Gervacio made an initial payment and executed a
CONTYRACT V GERVACIO promissory note for the balance of P2,400 and mortgage the car to secure the payment of the note. Gervacio failed to pay the
note at its maturity, and Levy Hermanos foreclosed the mortgage. The car was sold at public auction, at which Levy Hermanos
was the highest bidder for P800. Thus, there was still a remaining balance of P1,600. Levy Hermanos filed a complaint for the
HELD: Gervacio should still pay because Recto law does not apply there being only one payment.

DOCTRINE: Article 1454-A applies only to contracts of sale of personal property in installment where there is failure to pay 2 or

9 Caveat Emptor – buyer beware


more installments. If sale is not one on installments, but on straight term, in which the balance, after payment of the initial sum,
should be paid in its totality at the time specified in the promissory note, 1454-A does not apply.
Rationale for 1454-A: possible miscalculation of ability to pay
 Aim of the law are sales where the price is payable in several installments, for it is in these cases that partial payments
consist in relatively small amounts, constituting thus a great temptation for improvident purchasers to buy beyond their
means.
 There is no such temptation where the price is to be paid in cash, or partly in cash and partly in one term since partial
payments are not so small as to place purchasers off their guard and delude them to a miscalculation of their ability to
pay.
BORBON V FACTS: Borbons bought an Isuzu Crew Cab from Pangasinan Auto Mart under a promissory note. Pangasinan Auto Mart
SERVICEWIDE assigned the note & chattel mortgage to Filinvest Credit Corporation, then to Servicewide. The Borbons failed to comply with
their obligation to pay the installment . An action for replevin was instituted to foreclose the vehicle, which the TC granted along
with liquidated damages and attorney’s fees.
HELD: The award of liquidated damages is not proper bec “all unpaid balance” pertains to ALL other claims on the promissory
note.

DOCTRINE: The remedies under A1484 are not cumulative but alternative and exclusive. The argument is aptly made. The
phrase "any unpaid balance" can only mean the deficiency judgment to which the mortgagee may be entitled to when the
proceeds from the auction sale are insufficient to cover the "full amount of the secured obligations which . . . include interest on
the principal, attorney's fees, expenses of collection, and the costs." The legislative intent is not to merely limit the proscription
of any further action to the "unpaid balance of the principal" but to all other claims that may be likewise be called in for in the
accompanying promissory note against the buyer-mortgagor or his guarantor, including costs and attorney's fees.
MANILA TRADING FACTS: E.M. Reyes executed a chattel mortgage on an automobile as security for the payment of P400 in favor of Manila Trading.
V REYES Reyes failed to pay some of the instalments. This failure prompted Manila Trading to proceed with the foreclosure of its chattel
mortgage. The automobile was sold for P200 at a public auction and Reyes still had an unpaid balance. Manila Trading instituted
an action for the recovery of it and questions constitutionality of Art 4122(Recto Law).
HELD: Recto law is constitutional.

DOCTRINE: The controlling purpose of Act No. 4122 is revealed to be to close the door to abuses committed in connection with
the foreclosure of chattel mortgages when sales were payable in installments. The Legislature may change judicial methods and
remedies for the enforcement of contracts, as it has done by the enactment of Act No. 4122, without unduly interfering with the
obligation of the contracts, without sanctioning class legislation, and without a denial of the equal protection of the laws.
CRUZ V FILIPINAS FACTS: Cruz bought 1 unit Isuzu Diesel Bus from Filipinas and executed a promissory note. A chattel mortgage was also
executed over the bus to secure the indebtedness. Since no down payment was made by Cruz, Filipinas required, and Cruz
agreed to give, an additional security – a Second Mortgage over a parcel of land. Cruz defaulted on his payments. Filipinas then
foreclosed the chattel mortgage on the bus. However, the proceeds of the sale were not enough so they wanted to foreclose on
the second security.
HELD: Filipinas cannot foreclose the 2nd security because it is barred by 1484.
DOCTRINE: Should the vendee or purchaser of a personal property default in the payment of two or more of the agreed
installments, the vendor or seller has the option to avail of any one of these three remedies – either to exact fulfillment by the
purchaser of the obligation, or to cancel the sale, or to foreclose the mortgage on the purchased personal property, if one was
constituted. These remedies have been recognized as alternative, not cumulative, that the exercise of one would bar the exercise
of the others. It has also been established that the foreclosure and actual sale of a mortgaged chattel bars further recovery by the
vendor of any balance on the purchaser’s outstanding obligation.

To sustain Far East’s argument about proceeding against a third person is to overlook the fact that if the guarantor should be
compelled to pay the balance of the purchase price, the guarantor will in turn be entitled to recover what she has paid from the
debtor. Ultimately, it will be the debtor-vendee who will be made to bear the payment of the balance of the price, despite the
earlier foreclosure of the chattel mortgage against him. The protection given by Art 1484 would be indirectly subverted.
TAJANLANGIT V FACTS: Tajanlangit bought goods, which were subjected to a chattel mortgage, from Souther Motors. They paid thru promissory
SOUTHERN notes, promising to pay in installment. They defaulted. Sheriff levied, pursuant to an earlier court decision for collection for the
MOTORS unpaid notes. The proceeds were insufficient to cover the purchase price so another writ of execution was obtained.
Tajanlangits seek to annul the writ saying its obligation was already satisfied by the first execution.
HELD: The first execution was for the collection of the unpaid obligation under the promissory notes, and not under a
foreclosure under the chatter mortgage, Southern Motors can still levy Tajanlangits’ other properties.

DOCTRINE: The vendor had a right to select among the three remedies established in Article 1484. In choosing to sue on the
note, it was not thereby limited to the proceeds of the sale, on execution, of the mortgaged good. The vendor can still collect
because the option chosen was not to foreclosure.
NONATO V IAC FACTS: Spouses Nonato bought a car on instalment, secured by promissory note and chattel mortgage over said car in favour of
vendor. For their failure to pay two or more instalments, the car was repossessed by vendor’s assignee (IFC). Despite
repossession, IFC demanded payment of the balance of the price of the car.
HELD: Art 1484 CC is applicable in this case (sale of goods on instalment). The remedies there, (1) performance, (2)
cancellation, (3) foreclosure of chattel mortgage if any, are alternative, not cumulative; the exercise of one would bar the
exercise of the others.

DOCTRINE: Should the vendee or purchaser of a personal property default in the payment of two or more of the agreed
installments, the vendor or seller has the option to avail of any of these three remedies-either to exact fulfillment by the
purchaser of the obligation, or to cancel the sale, or to foreclose the mortgage on the purchased personal property, if one was
constituted. These remedies are alternative, not cumulative; the exercise of one would bar the exercise of the others. YOU
CANNOT HAVE YOUR CAKE AND EAT IT TOO!
DELTA MOTOR V FACTS: Niu Kim Duan and Chan Fue Eng purchased from Delta Motor 3 units of ‘DAIKIN’ air-conditioner all valued at
NUI KIM P19,350.00. Buyers executed a promissory note and failed to pay at least 2 monthly installments. Delta Motors prayed for the
issuance of a writ of replevin, which the Court granted after Delta Motors posted the requisite bond. Delta is claiming for the
remaining balance.
HELD: Delta is not entitled to the balance of the aircons that it successfully repossessed. It sought judicial declaration that it had
validly rescinded the Deed of Conditional Sale and thus chose the 2nd remedy of Article 1484 in seeking enforcement of its
contract with Buyers

DOCTRINE: The seller in a sale of personal property payable in installments may exercise one of 3 remedies, namely, (1) exact
fulfillment of obligation if Buyer fails to pay; (2) cancel sale upon Buyer’s failure to pay 2+ instalments 3) foreclose the chattel
mortgage, if any, upon the Buyer’s failure to pay 2+ instalments. The 3 remedies are alternative and NOT cumulative. “It cannot
have its cake and eat it too.”
NORTHERN FACTS: Sapinoso bought from Northern Motors an Opel Kadett car and to secure payment thereof, he executed a chattel
MOTORS V mortgage over the same car. He failed to pay some instalments but several payments were made. Northern filed a case against
SAPINOSO Sapisono, claiming it was availing of its option of extrajudicial foreclosure and prayed for the issuance of a writ of replevin,
which is the first step toward foreclosure, upon its filing of the bond. After the commencement of the action but before filing his
answer, Sapisono made 2 payments.
HELD: Northern need not give back the 2 payments of Sapisano. It is true that replevin is the first step towards foreclosure.
However, since there was no foreclosure yet, then Northern has not yet chosen a relief.

DOCTRINE: There is no reason why a mortgagee should be barred from receiving payments before the actual foreclosure,
tendered voluntarily by the debtor-mortgagor who admits his indebtedness.
LEGARDA V FACTS: Saldaña bought 2 lots from Hermanos and Legarda’s subdivision. After 8 years (95 out of 120 monthly installments) of
SALDANA faithful compliance on due payments, Saldaña stopped payments leaving a balance from the purchase price. Saldaña wrote
Hermanos saying he can’t build on the lot because of Hermanos’ failure to introduce improvements such as roads. Hermanos
cancelled the contract, arguing that it is a contract to sell, since Saldaña failed to pay remaining installments.
HELD: Since the payment was already more than the price of one lot, deliver that lot of Saldañaand Hermanos retain the other
lot., another to be retained by Hermanos. Interest payments forfeited in favor of Hermanos.

DOCTRINE: A1234 of CC: 'If the obligation has been substantially performed in good faith, the obligor may recover as though
there had been a strict and complete fulfillment, less damages suffered by the obligee,'" and in the interest of justice and
equity.
CASA FILIPINA V FACTS: Dennis and Rebecca Sevilla agreed to purchase from Casa Filipina Realty Corporation (CFRC) a parcel of land in CFRC’s
OP subdivision. The Sevilla spouses failed to pay the amortizations on time. They then wrote a letter to CFRC regarding the absence
of any improvement in the subdivision, the claim of a bank against the lot and requested a refund of all installment payments
made on account of the contract.
HELD: Sevillas are entitled to a refund pursuant to Sec 23 of PD 957 becase notice was already given notice regarding, among
other things, the nondevelopment of the subdivision, and demanded for refund. Section 23 does not require that a notice be
given first before a demand for refund can be made. The notice and the demand can be made in the same letter or
communication.

DOCTRINE: P.D. 957 was issued in the wake of numerous reports that many real estate subdivision developers and/or sellers
"have reneged on their representations and obligations to provide and maintain properly subdivisions" for the health and safety
of home and lot buyer's. It was designed to stem the tide of "fraudulent manipulations perpetrated by unscrupulous subdivision
and condominium sellers and operators, such as failure to deliver titles to buyers or titles free from liens and encumbrances."
Should the notice requirement provided for in Sec. 23 be construed as required to be given before a buyer desists from further
paying amortizations, the intent of the law to protect subdivision lot buyers will tend to be defeated.
MCLAUGHLIN V CA FACTS: Mclaughlin and Flores entered into a contract of conditional sale of real property with the stipulated purchase price
payable on installments. Flores defaulted in the payment of the installments, so Mclaughlin filed a complaint for the rescission of
the deed of conditional sale. However, the suit was eventually compromised, with Flores agreeing on a scheduled payment of
the balance of the purchase price. Such compromise agreement also provided that in case of failure of the buyer to comply with
the terms of payment, all payments previously made shall be forfeited in favor of the Mclaughlin as liquidated damages. Flores
still failed to pay on the dates provided in the compromise agreement, so Mclaughlin refused to accept further payment and
eventually filed a motion for the writ of execution for the rescission of the contract.
HELD: McLaughlin cannot rescind the contract and forfeit all the installments since Mclaughlin could cancel the contract only 30
days after the notice of cancellation. Since the tender of payment of the balance of the purchase price was made within the 30
day period, this prevented the cancellation of the contract.

DOCTRINE: (from Villanueva)


McLaughlin provides two basic doctrines applicable said law:
1. The law seems to require rescission and cancellation to be both by notarial act, McLaughlin would hold notarial act as
merely applicable to rescission, whereas “notice of cancellation” need not be by notarial act.
2. McLaughlin would hold that even after the expiration of the grace period provided by the Law, the buyer still can
prevent rescission or cancellation of the contract w/in the 30-day pd when rescission or cancellation is to take effect.
McLaughlin thus provides for two grace periods:
1. The one provided for expressly by the Law, which is a min of 60 days
2. The period before the rescission or cancellation actually takes effect.