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SALES Case Digests PDF
SALES Case Digests PDF
2. BUENAVENTURA v CA
4. COMMISSIONER OF INTERNAL REVENUE v
FACTS: Joaquin spouses sold 6 subdivision lots to some ENGINEERING EQUIPMENT & SUPPLY CO.
of their 9 children evidenced by corresponding Deeds of
Sale. The other children, interested in protecting their FACTS: Engineering Equipment & Supply (EES) was
inheritance, sought to have the deeds of sale declared engaged in the business of designing and installing
null and void for prejudicing their legitimes, lack of central air-conditioning systems. It was assessed by the
consideration, and gross inadequacy of price. CIR for 30% advanced sales tax, among other penalties
pursuant to an anonymous complaint filed before the
ISSUE: W/N the contract of sale is valid BIR. EES vehemently objected and argued that they are
contractors and not manufacturers, and thus, should
HELD: YES. At the onset, their rights to the legitimes are only be liable for the 3% tax on sales of services or
merely inchoate and vest only upon the death of their pieces of work.
parents; thus they have no legal interest thereof.
Payment of the price has nothing to do with the ISSUE: W/N EES is a contractor (piece of work)
perfection of the contract of sale; it was perfected by
mere consent. Failure to pay consideration cannot be HELD: YES. EES was NOT a manufacturer of air-
equated with
existence of a lack
validofcontract.
consideration, whichonly
The former prevents
resultsthe
in conditioning units. While it imported such items, they
were NOT for sale to the general public and were used
the right to demand payment or rescission. There was as mere components for the design of the centralized
already a meeting of the minds as to the price which air-conditioning system, wherein its designs and
was reflected in the Deed of Sale—and that was specifications are different for every client. Various
sufficient. In fact, evidence suggests that the purchase technical factors must be considered and it can be
process have indeed been paid. The sales are thus valid. argued that no 2 plants are the same; all are engineered
separately and distinctly. Each project requires careful Three years later, Arco discovered that the prices
planning and meticulous layout. Such central air- quoted to them by GPS with regard to their first 2 orders
conditioning systems and their designs would not have mentioned were not the net prices, but rather the list
existed were it not for the special order of the party price, and that it had obtained a discount from Starr
desiring to acquire it. Thus, EES is not liable for the Piano. Moreover, Arco alleged that the equipment were
sales tax of 30%. overpriced. Thus, being its agent, GPS had to reimburse
the excess amount it received from Arco.
5. QUIROGA v PARSONS ISSUE: W/N there was a contract of agency, not of sale
FACTS: Quiroga and Parsons Hardware entered into a HELD: NO. The letters containing Arco's acceptance of
contract where the former granted the latter the the prices for the equipment are clear in their terms
exclusive right to sell Quiroga Beds in the Visayas. It and admit no other interpretation that the prices are
provided for a discount of 25% as commission for the fixed and determinate. While the letters state that GPS
FACTS: Mercedes and Fernando were married and had 5 4. PHIL. TRUST CO. v ROLDAN
children. Fernando inherited the land upon which their
house was built. Fernando left his family to live with FACTS: Mariano Bernardo, a minor, inherited among
his concubine Corazon. He then sold the said lot with others 17 parcels of land from his deceased father.
the house in favor of Corazon for P2,000. Corazon, Soccoro Roldan was appointed as his guardian. Soccoro
unable to take possession of the house and lot, filed a sought and was granted authority to sell the lots to her
complaint for quieting of title. Mercedes objected brother-in-law Ramos for P14,700. Very shortly after,
alleging that the properties pertained to their conjugal Ramos sold back to Soccoro the same properties for
partnership. P15,000. She then sold 4 parcels to Emilio Cruz. Phil.
Trust Co. replaced Soccoro as guardian and sought to
ISSUE: W/N the sale to Corazon was valid annul all the aforesaid sales.
HELD: NO. The properties pertained to the conjugal ISSUE: W/N the sale to Ramos was valid
partnership of Mercedes and Fernando, thus the sale is
null and void for lack of Mercedes’ consent and for HELD: NO. Guardianship is the trust of the highest order.
being contrary to morals and public policy. The law In this case, for all intents and purposes, it was as if
generally prohibits spouses from selling or donating
Soccoro herself purchased the properties of her ward. This falls within the prohibition under Art. 1459 of the
Civil Code. She indirectly sold the properties to herself. the house—allowing Atty. Murillo the option to occupy or
The same applies even though there was no actual lease 40% of the said house and lot. A compromise
malice or collusion proven. Since the sale to Soccoro agreement was entered into where Florencio acquired
was null and void, it only follows that the sales made by both properties. Atty. Murillo installed a tenant in the
Soccoro to Cruz were likewise void. One cannot sell Pugahanay Property; later on, Florencio claimed
what is not his property. exclusive rights over the properties invoking Art. 1491 of
Soccoro tried to correct the problem by allowing the CC. Florencio and Atty. Murillo both died and were
Mariano to re-purchase the said properties for P15,000. succeeded by their respective heirs.
However, the child would still be at a losing end
because it would not entitle him to the fruits of the ISSUE: W/N contingent fees agreed upon are valid
property during the time when he was not in possession
thereof. The SC annulled the sale. HELD: YES. Contingent fees are not contemplated by the
prohibition in Art. 1491 disallowing lawyers to purchase
ISSUE: W/N an exchange of the properties was proper HELD: NO. The subject matter was not yet determinate.
The sugar agreed upon has yet to be segregated from all
HELD: NO. What took place was a simple mistake in other articles. That being the case, there was merely an
drafting the instrument evidencing the agreement executory agreement—a promise of sale, and not a
between the brothers. One sells or buys property as he contract of sale itself.
sees it in actual setting and not by the mere lot number Moreover, there was no stipulation that the sugar was
in the certificate of title. The brothers remained in to be derived from his crop; he was at liberty to get it
possession of their respective portions throughout their from whatever source he could find. The obligation he
lives unaware of the mistake in the designation of the incurred was for the delivery of the generic thing. Thus,
lots. In this case, the instrument simply failed to reflect he cannot invoke force majeure under the maxim genus
the true intention of the parties; thus, an exchange of never perishes. His obligation to deliver the sugar is not
the properties is unnecessary. All the heirs should do is extinguished.
to execute mutual deeds of conveyance. Yu Tek is thus entitled to rescind the contract and
recover the money in addition to the stipulated P1,200
as
DD:indemnity
This rulefor
no losses.
longer holds true. Generic things may
3. MELLIZA v CITY OF ILOILO
now be the subject matter of a contract of sale provided
FACTS: Meliza owned Lot 1214, 9,000 sqm of which she that they have the quality of being DETERMINABLE at
donated to the Mun. of Iloilo for the use of the site of the perfection of the contract.
the Mun. Hall. However, the donation was revoked
because it was inadequate to meet the requirements of
the “Arellano Plan.” Lot 1214 was later divided into 4 5. NGA v IAC
lots. Meliza then sold Lots C and D to the Municipality;
Lot B was not mentioned in the sale. However, the FACTS: National Grains Authority (now National Food
contract stipulated that the area to be sold to the Authority, NFA) is a government agency created under
Municipality would include such areas needed for the PD 4. One of its incidental functions is the buying of
construction of the City Hall according the Arellano palay grains from qualified farmers. In 1979, Leon
Plan. She then sold the remaining portions of the lots to Soriano offered to sell palay grains to the NFA, through
Villanueva, who then sold the same to Pio. The sale was its Provincial Manager, William Cabal. He submitted the
for such lots not included in the sale to the Mun. of documents required by the NFA for pre-qualifying as a
Iloilo. The City of Iloilo, assuming that Lot B has been seller, which were processed and accordingly, he was
sold in its favor pursuant to the Arellano Plan, then given a quota of 2,640 cavans of palay. The quota noted
donated Lot B to UP. Pio objected and sought to recover in the Farmer’s Information Sheet represented the
the lots stating that Lot B was not included in the initial maximum number of cavans of palay that Soriano may
sale made by Meliza to the Municipality—and that the sell to the NFA. On 23 and 24 August 1979, Soriano
subject matter of sale should be a determinate thing. delivered 630 cavans
not rebagged, of palay.
classified and The palay delivered
weighed. were
When Soriano
ISSUE: W/N there was a determinate/determinable demanded payment of the 630 cavans of palay, he was
subject matter informed that its payment will be held in abeyance since
Mr. Cabal was still investigating on an information he
HELD: YES. The requirement for the subject matter to received that Soriano was not a bona fide farmer and
be determinate is satisfied in this case. Simple the palay delivered by him was not produced from his
reference to the “Arellano Plan” would indicate that it farmland but was taken from the warehouse of a rice
could determine what portions of the contiguous land trader, Ben de Guzman. On 28 August 1979, Cabal wrote
(lot B) were needed for the construction of the City Soriano advising him to withdraw from the NFA
Hall. There was no need for a further agreement to warehouse the 630 cavans stating that NFA cannot
establish the lots covered by the sale; thus, the sale is legally accept the said delivery on the basis of the
valid. Besides, the portions of Lot B covered by the sale subsequent certification of the BAEX technician
were practically at the heart of the City Hall site. (Napoleon Callangan) that Soriano is not a bona fide
farmer.
Instead of withdrawing the 630 cavans of palay,
4. YU TEK & CO. v GONZALES Soriano insisted that the palay grains delivered be paid.
He then filed a complaint for specific performance
FACTS: Gonzales received P3,000 from Yu Tek and and/or collection of money with damages against the
obligated himself in favor of the latter to deliver 600 NFA and William Cabal. Meanwhile, by agreement of the
piculs of sugar of the 1st and 2nd grade within 3 months. parties and upon order of the trial court, the 630 cavans
of palay in question were withdrawn from the
He failed to deliver
money—thus Yu Tek the sugar
sued him.and refused in
Gonzales, to seeking
return the
to warehouse of NFA. In 1982, RTC ruled in favor of Soriano
evade liability, invokes fortuitous event, alleging the and in 1986, CA affirmed decision of RTC.
total failure of his crop.
ISSUE: W/N there was a perfected contract of sale
ISSUE: W/N there was perfected contract of sale
HELD: YES. In the present case, Soriano initially offered
the
Civilperfection of thethat
Code provides contract. Article
“the fact that1349
the of the New
quantity is the said loan,the
P56,000.00, including interest
mortgage was and surcharges,
foreclosed; thattotaling
within
not determinate shall not be an obstacle to the the period of redemption, the plaintiffs contacted
existence of the contract, provided it is possible to Anacleto Nool for the latter to redeem the foreclosed
determine the same, without the need of a new properties from DBP, which the latter did; and as a
contract between the parties.” In the present case, result, the titles of the 2 parcels of land in question
there was no need for NFA and Soriano to enter into a were transferred to Anacleto; that as part of their
new contract to determine the exact number of cavans arrangement or understanding, Anacleto agreed to buy
of palay to be sold. Soriano can deliver so much of his from Conchita the 2 parcels of land under controversy,
produce as long as it does not exceed 2,640 cavans. for a total price of P100,000.00, P30,000.00 of which
price was paid to Conchita, and upon payment of the
balance of P14,000.00, the plaintiffs were to regain
6. JOHANNES SCHUBACK & SONS PHIL. TRADING possession of the 2 hectares of land, which amounts
CORP. v CA spouses Anacleto Nool and Emilia Nebre (defendants)
failed to pay, and the same day the said arrangement
FACTS: SJ Industrial, through Ramon San Jose, was made; another covenant was entered into by the
approached Schuback & Sons Phil. Trading (SSPT) to parties, whereby the defendants agreed to return to
purchase bus spare parts. He submitted the list of parts plaintiffs the lands in question, at anytime the latter
he wanted and SSPT coordinated with its Germany have the necessary amount; that latter asked the
Office to quote the prices, and forwarded its formal defendants to return the same but despite the
offer to SJ Industrial, containing the prices, item intervention of the Barangay Captain of their place,
defendants refused to return the said parcels of land to
numbers, descriptions,
desire to purchase such etc.
itemsSJand
informed
promisedSSPT of his
to submit plaintiffs; thereby impelling the plaintiffs to come to
the quantity per unit. SJ then submitted such quantities court for relief. On the other hand, defendants
needed to SSPT’s GM, Mr. Reichert. San Jose indicated theorized that they acquired the lands in question from
the same in the Purchase Order with the inscription the DBP, through negotiated sale, and were misled by
“this will serve as our initial purchase order. PO will plaintiffs when defendant Anacleto Nool signed the
include 3% discount.” SSPT immediately ordered the private writing, agreeing to return subject lands when
products from Germany to avail of the old prices— plaintiffs have the money to redeem the same;
partial deliveries of which were made. Then, for his defendant Anacleto having been made to believe, then,
failure to secure letters of credit, SJ failed to purchase that his sister, Conchita, still had the right to redeem
the same and alleged that there was no perfected the said properties.
contract of sale. Thus, SSPT sought damages. It should be stressed that Manuel S. Mallorca,
authorized officer of DBP, certified that the 1-year
ISSUE: W/N there was a perfected contract of sale redemption period and that the mortgagors’ right of
redemption was not exercised within this period. Hence,
HELD: YES. Quantity is immaterial in the perfection of a DBP became the absolute owner of said parcels of land
contract of sale. What is important is the meeting of the for which it was issued new certificates of title. About 2
minds as to the object and cause of the sale. There was years thereafter, DBP entered into a Deed of Conditional
already a meeting of the minds in this case from the Sale involving the same parcels of land with Anacleto
moment SJ manifested that he will order the parts, Nool as vendee. Subsequently, the latter was issued new
although he will communicate quantities later on. In certificates of title in 1988.
fact, he indeed communicated such needed quantities— RTC ruled in favor of Anacleto Nool. CA affirmed.
this goes to the execution of the contract of sale
already. By ordering the parts, SJ acceded to the prices ISSUE: W/N there was a valid contract of sale between
offered by SSPT. On the other hand, SSPT acceded to Anacleto and Conchita
SJ’s request for discount by immediately ordering the
parts. SJ Industrial is thus liable for damages HELD: NO. Article 1459 of the Civil Code provides that
“the vendor must have a right to transfer the ownership
thereof [object of the sale] at the time it is delivered.” to the goods than the seller had, unless the owner of the
Here, delivery of ownership is no longer possible. The goods is by his conduct precluded from denying the
sellers can no longer deliver the object of the sale to seller’s authority to sell.” In the present case, there is
the buyers, as the buyers themselves have already no allegation at all that petitioners were authorized by
acquired title and delivery thereof from the rightful DBP to sell the property to the private respondents.
owner, the DBP. Thus, such contract may be deemed to Further, the contract of repurchase that the parties
be inoperative and may thus fall, by analogy, under item entered into presupposes that petitioners could
5 of Article 1409 of the Civil Code: “Those which repurchase the property that they “sold” to private
contemplate an impossible service.” respondents. As petitioners “sold” nothing, it follows
Article 1505 of the Civil Code provides that “where that they can also “repurchase” nothing. In this light,
goods are sold by a person who is not the owner thereof, the contract of repurchase is also inoperative and by the
and who does not sell them under authority or with same analogy, void.
consent of the owner, the buyer acquires no better title
HELD: Consideration was totally absent; the P5,000 FACTS: Josefina approached Fernando asking for help.
price stipulated was never received/delivered to the Her family was to be sued by Tan for issuing rubber
spouses. Thus, the sale to the Narcisos was VOID ab checks; thus she asked him to cede his 3 lots to Tan and
initio for want of consideration. The inexistence of the it will be Josefina who will repurchase them for him. He
contract is permanent and cannot be the subject of initially rejected her offer. Then, Josefina issued him 2
prescription. The Narcisos are also in bad faith—they checks, one for P1.4M, pertaining to the value of the
had knowledge of the true nature and extent of lot, and another for P420,000 corresponding to 6
Maximo’s right over the land. months’ interests. He agreed, drafted the instrument
himself, and ceded his properties to Tan. Later, both
checks bounced; he sued Tan for annulment of the sale
2. RONGAVILLA v CA for lack of consideration since he never received
anything. He also sued Josefina criminally, but
FACTS: Both spinsters and unschooled in English, absconded.
Mercedes and Florencia dela Cruz are the aunts of
Rongavilla. Dela Cruz co-owned a parcel of land (1/2 ISSUE: W/N there was a valid contract of sale
pro-indiviso) in Las Pinas with another niece named
Juanita Jimenez (elder sister of Rongavilla), who kept HELD: YES. There was consideration in the form of the
the OCT, as well as the TCT after it was subdivided. check for P420,000. It was his fee for executing the
forIn the
1976, Dela of
repair Cruz borrowed
their P2,000
dilapidated from Rongavilla
rooftop. A month sale.
his It was not
property, onlyalso
it was kindness that impelled
his interest him to cede
for profit.
later, Rongavilla and Jimenez visited their aunts' home That he never received money is of no moment; a sale
and brought with them a document for the signature of is a consensual contract. He also tacitly admitted to the
their aunts. While the document was in English and upon sale when he filed criminal charges against Josefina.
inquiry by Dela Cruz what it was about, Rongavilla Fernando, being a lawyer, has no one else to blame but
answered that it was merely evidencing the P2,000
to intervene—its goods paid out without authority being mortgage over another set of properties of RRRC.
under dispute in this case. Likewise, it defaulted and the properties were
foreclosed. However, RRRC was able to negotiate with
the Bank for the redemption of the properties by was of
8. NAVARRA v PLANTERS DEV. BANK a concession whereby the Bank allowed RRRC to refer to
it would-be buyers of the properties who would remit
FACTS: Navarra spouses are the owners of 5 parcels of their payments directly to the Bank, which would then
land in BF Homes, Paranque. In 1982, they obtained a be considered as redemption price for RRRC. Eventually,
loan of P1.2M from Planters Bank, secured by a these were sold and payments made directly to the Bank
mortgage over these parcels of land. Unfortunately, were in excess by P300K for the redemption price.
they defaulted to pay their obligation and thus, Planters In the meantime, Jorge Navarra requested that they
Bank foreclosed the property. They were not able to repurchase their house and lot for P300K, which the
redeem the property as well. Bank agreed. Accordingly, Jorge Navarra requested
On the other hand, RRRC Dev. Corp. is a real estate further that the excess payment of RRRC be applied as
company owned by the parents of Carmelita Navarra. It down payment for their repurchase. For his failure to
obtained a loan from Planters Bank secured by a
submit a board resolution from RRRC authorizing such, this fact cannot lead to the conclusion that a contract of
the Bank refused to apply the excess to his repurchase. sale had been perfected. Before a valid and binding
In 1988, a portion of the lots was sold to Gatchalian contract of sale can exist, the manner of payment of the
Realty. Navarra spouses filed for specific performance purchase price must first be established since the
against Planters Bank, alleging that there was a agreement on the manner of the payment goes into the
perfected contract of sale (P1.8M, with P300K price such that a disagreement on the manner of
downpayment). payment is tantamount to a failure to agree on the
RTC ruled in favor of Navarra spouses. CA reversed. price.
Moreover, the letter/offer failed to specify a definite
ISSUE: W/N there was a valid contract of sale (consider amount of the purchase price for the sale/repurchase of
the repurchase as a sale) the properties. It merely stated that it will be based on
the redemption value plus accrued interest at the
HELD: NO. While the letters indicate the amount of prevailing rate up to the date of the sales contract.
P300K as downpayment, they are completely silent as to Clearly, the lack of a definite offer on the part of the
how the succeeding installment payment shall be made. Navarra spouses could not possibly serve as the basis of
At most, the letters merely acknowledge that the their claim that the sale was perfected.
downpayment was agreed upon by the parties. However,
HELD: YES. Even if Carceller failed to purchase the ISSUE: W/N the option contract is void for lack of
property within the said period, still equity must consideration
intervene. He had introduced substantial improvements
thereon; to rule against him would cause damage to HELD: NO. The Option Contract is supported by a
him—and SIHI does not stand to gain much therefrom. consideration—that being the difference of the agreed
SIHI clearly intended to sell the lot to him considering price and the market price of the other half of the land,
that it was under financial distress, that is constantly which was sold to the Villamors. Thus, it is valid and
reminded him of the option and the impending deadline. may be enforced by the Villamors. The consideration
The delay of 18 days is not substantial. Carceller’s letter may consist of anything of value.
to SIHI expressing his intent to purchase the lot is fair The option was, in fact, the only reason why they
notice of intent to exercise the option despite the purchased the other half for an expensive price. Since
request for extension. Carceller should thus be allowed the Villamors exercised their option, this is tantamount
to buy the lots. to an acceptance of the offer—a valid and obligatory
contract of sale was thus perfected.
3. TAYAG v LACSON
5. SANCHEZ v RIGOS
FACTS: Angelica Lacson and her children were registered
owners of agricultural lands. Tiamzon and others were FACTS: Sanchez and Rigos executed an Option to
their farmer-tenants. The tenants executed a Deed of Purchase where Rigos agreed, promised, and committed
Assignment in favor of Tayag—assigning to the latter to sell to Sanchez a parcel of land in Nueva Ecija for
their rights to purchase the lands as tenant-tillers of the P1,510. In spite of the repeated tenders made by
landholdings possessed by them at P50.00 per sqm. This Sanchez, Rigos refused to sell the same. Thus, Sanchez
was subject to the conditions that (1) Lacson, the consigned the amounts and filed a case for specific
landowner, would agree to sell the same parels and (2) performance. Rigos alleged that the contract between
that there are no more legal impediments to the them was a unilateral promise to sell, which is not
assignment. Tayag invited the tenants to a meeting to supported by any consideration, hence, it is not binding.
discuss the agreement, but the latter did not attend and
wrote Tayag that they have decided to sell their rights ISSUE: W/N there was a valid option contract
to the Lacsons instead because he allegedly betrayed
their trust by filing a certain lawsuit. Tayag thus filed a HELD: NO. The promisee (Sanchez) cannot compel the
Complaint before the RTC asking that the court fix the promissor (Rigos) to comply with the promise unless the
period for the payment; he also asked for a Writ of former can establish that the promise was for a
Preliminary Injunction against Lacson and the tenants to consideration. The burden of proof to establish the
enjoin them from accepting any offers for sale made by existence of the consideration lies with Sanchez.
the tenants. Therefore, there was no valid option contract in this
case. However, an option without consideration is a
ISSUE: W/N the assignment was in the form of an option mere offer, which is not binding until accepted. But
contract from the moment it is accepted before it is withdrawn,
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 10
a valid contract of sale arises. In this case, even though exercise of the option need not be coupled with actual
there was no option contract, there was nevertheless an payment so long as such payment is made upon the
offer and acceptance enough to constitute a valid fulfillment of the owner’s undertaking to deliver the
contract of sale. property. This is based on the principle that such option
contracts involve reciprocal obligations—and one does
not incur delay if the other party fails or refuses to
6. VASQUEZ v CA comply with his respective obligation. That being the
case, there was no need for Nietes to deposit the said
FACTS: The Vallejera spouses sought to recover from amounts—and his withdrawal thereof does not affect his
Vasquez an agricultural lot, which they previously sold right.
to him. Along with the previous execution of a Deed of
Sale, the parties also executed a Right of Repurchase
allowing Vallejera to repurchase the said estate. 8. ANG YU ASUNCION v CA
Vasquez resisted the redemption arguing that the option
to buy was not supported by any consideration—and thus FACTS: The Unijeng spouses owned certain residential
not binding upon him. and commercial spaces leased by Ang Yu. They offered
to sell the said units to Ang Yu on several occasions and
ISSUE: W/N there was a valid option contract for P6M. Ang Yu made a counter offer for P5M. The
Unijeng spouses asked Ang Yu to specify his terms in
HELD: NO. It is apparent that the Right to Repurchase writing but the latter failed to do so. They failed to
was not supported by any consideration. Thus, in order arrive at any definite agreement. When Ang Yu
for the doctrine under Sanchez v Rigos to apply, giving discovered that the spouses were planning to sell the
rise to a valid contract of sale, it must be shown that property to others, he sued them for specific
the promissee (Vallejera) accepted the right of performance. While the case was pending, the spouses
repurchase before it was withdrawn by Vasquez. In this sold the units to Buen Realty for P15M.
case, no such acceptance was made. The vendor a retro
(Vallejera) must make actual and simultaneous tender ISSUE: W/N there was a perfected contract of sale
of payment and consignation. Mere expressions of between Unijeng and Ang Yu
readiness and willingness to repurchase are insufficient.
Their ineffectual acceptance allowed Vasquez to HELD: NO. There was no perfected contract of sale yet
withdraw the offer through his refusal to sell the lot. since there was yet any meeting of the minds. Thus,
Vasquez thus cannot be compelled to sell the lot. there is no ground for specific performance. During the
negotiation stage, any party may withdraw the offer
made—especially if it was not supported by any
7. NIETES v CA consideration.
An Option Contract of a Right of First Refusal is
FACTS: Nietes leased from Dr. Garcia the Angeles separate and distinct from the actual contract of sale—
Educational Institute; the contract contained an Option which is the basis for specific performance. The remedy
to Buy the land and school buildings within the period of available to Any Yu, in case the withdrawal was made
the lease. It also stipulated that the unused payment capriciously and arbitrarily, would be to sue on the basis
will be applied to the purchase price of the school. of abuse of right. In case there was an option contract,
Nietes paid Garcia certain sums in excess of the rent, timely acceptance would create an obligation to sell on
which Garcia acknowledged as forming partial payment the part of the vendor; but no such circumstance
of the purchase price of the property. Later on, Garcia, attends in this case.
through counsel, wrote Nietes informing him of his
decision to rescind the contract due to certain violations
of the contract—such as poor maintenance, lack of 9. EQUATORIAL REALTY DEV. INC. v MAYFAIR
inventory of school equipment, and the use of another THEATER INC.
name for the said school. Nietes replied by informing
Garcia that he decided to exercise his Option to Buy, FACTS: For its theaters, Mayfair was leasing a portion of
but Garcia refused to sell. Nietes thereafter deposited the property in CM Recto, which Carmelo owns. Under
the balance of the price to Agro-Industrial Bank, but he the lease agreement, “if Carmelo should decide to sell
later withdrew the said amounts. CA ruled in favor of the leased premises, Mayfair shall be given 30 days
Garcia stating that the full purchase price must be paid exclusive option to purchase the same.” Carmelo,
before the Option to Buy may be exercised. Thus, Nietes through Henry Yang, informed the president of Mayfair
brought the matter to the SC. that the former is interested in selling the whole CM
Recto property—and that Araneta offered to purchase
ISSUE: W/N actual payment is needed before one may the same for $1.2M. Mayfair twice replied through a
exercise the option to buy letter of its intention to exercise its right to
repurchase—but Carmelo never replied. Thereafter,
HELD: NO. There is nothing in the contract that required Carmelo sold the entire property to Equatorial Realty
Nietes to pay the full price before he could exercise the for some P11M. Thus, Mayfair instituted an action for
option. It was sufficient that he informed Garcia of his specific performance and annulment of the sale.
choice and that he was at that time ready to pay. The
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 11
Carmelo alleges that the right, being an option contract, the MOA, Ayala was to undertake the development of
is void for lack of consideration. the lands except the “retained area.” Under Par. 5.15 of
the MOA, “Ayala agreed to give Vasquez a first option to
ISSUE: W/N the right to repurchase is an option contract purchase the 4 adjacent lots to the retained area at the
and void for lack of consideration prevailing market price at the time of the purchase.” A
case was filed by one of the former sub-contractors of
HELD: NO. The clause in the lease agreement was NOT Conduit against Ayala causing a 6-year delay in the
an option contract, but a RIGHT OF FIRST REFUSAL. It development of the project. Now, Vasquez comes
was premised on Carmelo’s decision to sell the said forward invoking Par. 5.15 claiming that it was a valid
property. It also did not contain a stipulation as to the option contract, and that Ayala should sell to him the
price of said property. The requirement of separate said property at the 1984 prevailing price. Ayala offered
consideration does not apply to a right of 1 st refusal to sell the said properties to Vasquez at the prevailing
because consideration is already an integral part of the prices (1990); but the latter refused to accept. Ayala
lease. Carmelo violated such right by not affording discounted the price from P6,500/sqm to P5,000/sqm,
Mayfair a fair chance to negotiate. It abandoned the but still, Vasquez refused.
negotiations
Equatorial arbitrarily.
was likewise in bad faith; it was well aware ISSUE: W/N there was a valid option contract given to
of the right conferred upon Mayfair because its lawyers Vasquez
had ample time to review the contract. That being the
case, the contract between Carmelo and Equatorial is HELD: NO. Par. 5.15 was NOT an option contract, but a
rescissible. Mayfair should be allowed to purchase the RIGHT OF FIRST REFUSAL. It was predicated upon
entire property for the price offered by Equatorial. Ayala’s decision to sell the said properties. The price
Rights of First Refusal are also governed by the law on was also not specified. It was also not supported by any
contracts, not the amorphous principles on human independent consideration. By twice refusing to accept
relations. Ayala’s offers, Vasquez lost his right to repurchase.
Ayala did not breach its obligation.
Absolute for
Cornhill Sale was Cypress
P5.4M. executedand
in Cornhill
favor ofmortgaged
Cypress and
the
11. VASQUEZ v AYALA CORP.
property in favor of Urban Dev. Bank for P3M.
FACTS: In 1984, Ayala Corp. entered into a Memorandum Riviera Filipina filed a suit against Reyes, Cypress and
of Agreement with Dr. Vasquez buying the latter’s Cornhill on the ground that they violated its right of first
shares with Conduit Development—which constitute refusal under the lease contract. RTC ruled in favor of
some 50 hectares of the land in Ayala Alabang. Under
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 12
Reyes, Cypress, and Cornhill. On appeal, CA affirmed Dela Vida took possession of it and promptly built an
the decision of the RTC. edifice worth P800,000. However, on the said date, the
sale did not materialize. Consequently, Macion filed a
ISSUE: W/N Riviera Filipina lost its right of first refusal complaint for unlawful detainer against Dela Vida, while
Dela Vida countered with a complaint for reformation of
HELD: YES. As clearly shown by the records and the contract to sell. These differences were eventually
transcripts of the case, the actions of the parties to the settled.
contract of lease, Reyes and Riviera, shaped their In 1992, both parties entered into a compromise
understanding and interpretation of the lease provision agreement where Macion will give Dela Vida 5 months to
"right of first refusal" to mean simply that should the raise P2.06M and in case of failure to do so, Dela Vida
lessor Reyes decide to sell the leased property during would vacate the premises. After 2 months, Dela Vida
the term of the lease, such sale should first be offered alleged that they had negotiated a loan from BPI and
to the lessee Riviera. And that is what exactly ensued requested Macion to execute the contract to sell in its
between Reyes and Riviera, a series of negotiations on favor. However, Macion refused, which prompted Dela
the price per square meter of the subject property with Vida to file an urgent motion for an order to direct
neither
from his party, especially
offer, as evidencedRiviera,
by the unwilling
exchange ofto letters
budge Macion
filed a to execute
motion for the contractoftojudgment
execution sell. In return, Macion
alleging that
between the two contenders. after 5 months, Dela Vida was not able to settle their
It can clearly be discerned from Riviera’s letters that obligations with Macion. RTC ruled in favor of Dela Vida.
Riviera was so intractable in its position and took
obvious advantage of the knowledge of the time ISSUE: W/N it was proper to execute a contract to sell in
element in its negotiations with Reyes as the favor of Dela Vida
redemption period of the subject foreclosed property
drew near. Riviera strongly exhibited a "take-it or leave- HELD: YES. Although the compromise agreement (par. 7)
it" attitude in its negotiations with Reyes. It quoted its does NOT give Dela Vida the right to demand from
"fixed and final" price as Five Thousand Pesos Macion the execution of the contract to sell in its favor.
(P5,000.00) and not any peso more. It voiced out that it From this paragraph, it is clear that Macion is obliged to
had other properties to consider so Reyes should decide execute a Deed of Sale and not a Contract to Sell upon
and make known its decision "within fifteen days." payment of the full price of P2.06M. Thereafter, Macion
Riviera even downgraded its offer when Reyes offered will turn over to Dela Vida the TCT.
anew the property to it, such that whatever amount HOWEVER, a review of the facts reveals that even
Reyes initially receives from Riviera would absolutely be prior to the signing of the compromise agreement, both
insufficient to pay off the redemption price of the parties had entered into a contract to sell, which was
subject property. Naturally, Reyes had to disagree with superseded by a compromise agreement. This
Riviera’s highly disadvantageous offer. compromise agreement must be interpreted as
Nary a howl of protest or shout of defiance spewed bestowing upon Dela Vida the power to demand a
forth
whimperfromofRiviera’s lips, when
acceptance as it were, but a seemingly
the counsel of Reyes contract
execute toa sell
deedfrom
of Macion. Where
absolute saleMacion
upon promised to
completing
strongly expressed in a letter dated December 5, 1989 payment of the price, it is a contract to sell. In the case
that Riviera had lost its right of first refusal. Riviera at bar, the sale is still in the executory stage since the
cannot now be heard that had it been informed of the passing of title is subject to a suspensive condition--that
offer of Five Thousand Three Hundred Pesos (P5,300.00) if Dela Vida is able to secure the needed funds to
of Cypress and Cornhill it would have matched said purchase the properties from Macion. A mere executory
price. Its stubborn approach in its negotiations with sale, one where the sellers merely promise to transfer
Reyes showed crystal-clear that there was never any the property at some future date, or where some
need to disclose such information and doing so would be conditions have to be fulfilled before the contract is
just a futile effort on the part of Reyes. Reyes was converted from an executory to an executed one, does
under no obligation to disclose the same. Pursuant to not pass ownership over the real estate being sold. It
Article 1339 of the New Civil Code, silence or cannot be denied that the compromise agreement,
concealment, by itself, does not constitute fraud, unless having been signed by both parties, is tantamount to a
there is a special duty to disclose certain facts, or unless bilateral promise to buy and sell a certain thing for a
according to good faith and the usages of commerce the price certain. Hence, this gives the contracting parties
communication should be made. The general rule is rights in personam , such that each has the right to
applicable in the case at bar since Riviera failed to demand from the other the fulfillment of their
convincingly show that either of the exceptions are respective undertakings. Demandability may be
relevant to the case at bar. exercised at any time after the execution of the Deed.
FACTS: Macion and Dela Vida Institute entered into a FACTS: Cervantes and his wife owned 3 parcels of land
contract to sell, where the latter assured the former along Buendia where he buildings of Bormaheco Inc
that it will buy the 2 parcels of land in Cotabato City on were situated. Beside their property were lots owned by
or before July 31, 1991 at P1.75M. In the meantime, Villonco Realty. Cervantes entered into several
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 13
negotiations with Villonco for sale of the Buendia signatories
property. Cervantes made a written offer of P400/sqm
with a downpayment of P100,000 to serve as earnest HELD: NO. It is true that the signatures of the 5 siblings
money. The offer also made the consummation of the did not confer authority on Ernesto as agent to sell their
sale dependent upon the acquisition by Bormaheco of a respective shares in the properties, because such
Sta. Ana property. Villonco made a counter-offer stating authority to sell an immovable is required to be in
that the earnest money was to earn 10% interest p.a. writing. However, those signatures signify their act of
The check was enclosed with the reply letter. Cervantes directly (not through an agent) selling their personal
accepted and cashed the check. The Sta. Ana Property shares to Paraiso Dev. Corp.
was awarded to Bormaheco; the transfer was also duly In the case at bar, the Contract to Sell was perfected
approved. However, Cervantes sent the check back to when the petitioners consented to the sale to the
Villonco with the interest thereon—stating that he was respondent of their shares in the subject parcels of land
no longer interested in selling the property. He also by affixing their signatures on the said contract. Such
claims that no contract was perfected; Villonco sues for signatures show their acceptance of what has been
specific performance. stipulated in the Contract to Sell and such acceptance
filed a complaint
Contract to Sell withforthedeclaration
RTC, whichofruled
nullity of the
in favor of refused to sellnegotiations
Subsequently, them to him forfor
thethe pricebetween
barter he offered.
the
Paraiso Dev. Corp. On appeal, CA modified by declaring earrings and the property ensued. But it turned out that
that the Contract to Sell is valid and binding as to the the redemption period for the property has not yet
undivided shares of the six signatories of the document. expired. Thus, Fule executed a deed of redemption on
behalf of Fr. Jacobe in the amount of P16,000, and on
ISSUE: W/N the Contract to Sell is valid as to all even date, Fr. Jacobe sold the property to Fule for
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 14
P75,000. The Deed of Sale was notarized ahead of the 17. DAILON v CA
Deed of Redemption.
Subsequently, a Deed of Sale over the earrings was FACTS: Sabesaje sues to recover ownership of a parcel
executed and when it was delivered, Fule contends that of land based on a private document of absolute sale
the earrings were fake, even using a tester to prove executed by Dailon. Dailon denies the fact of the sale
such allegation. Thereafter, they decided to Dimayuga, alleging that the same being embodied in a private
a jeweler, to have the earrings tested. After a glance, instrument, the same cannot convey title under Art.
Dimayuga declared them fake. 1358 of the Civil Code which requires that contracts
Fule filed a complaint with the RTC against Cruz and which have for their object the creation, transmission,
her lawyer, Belarmino, praying that the contract of sale modification, or extinction of real rights over immovable
over the Tanay property be declared null and void on property must appear in a public instrument.
the ground of fraud and deceit. RTC ruled in favor of
Cruz and Belarmino. ISSUE: W/N there was a valid/perfected contract of sale
ISSUE: W/N the Deed of Sale over the Tanay Property is HELD: YES. The necessity of a public instrument is only
valid for
Suchconvenience—not for for
is not a requirement validity and enforceability.
the validity of a contract
HELD: YES. It is evident from the facts of the case that of sale, which is perfected by mere consent. Dailon
there was a meeting of the minds between petitioner should thus be compelled to execute the corresponding
and Dr. Cruz. As such, they are bound by the contract deed of conveyance in a public instrument in favor of
unless there are reasons or circumstances that warrant Sabesaje. If the sale is made through a public
its nullification. The records, however, are bare of any instrument, it amounts to constructive delivery.
evidence manifesting that private respondents employed
such insidious words or machinations to entice
petitioner into entering the contract of barter. Neither 18. SECUYA v VDA DE SELMA
is there any evidence showing that Dr. Cruz induced
petitioner to sell his Tanay property or that she cajoled FACTS: Caballero owned certain friar lands. She entered
him to take the earrings in exchange for said property. into an Agreement of Partition where she parted with
On the contrary, Dr. Cruz did not initially accede to 1/3 of the said property in favor of Sabellona. Sabellona
petitioner's proposal to buy the said jewelry. Rather, it took possession thereof and sold a portion to Dalmacio
appears that it was petitioner, through his agents, who Secuya through a private instrument that is already lost.
led Dr. Cruz to believe that the Tanay property was Secuya, along with his many relatives took possession of
worth exchanging for her jewelry as he represented that the said land. Later on, Selma bought a portion of the
its value was P400,000.00 or more than double that of said land, including that occupied by Secuya; she bought
the jewelry which was valued only at P160,000.00. If it from Caesaria Caballero. She presented a Deed of
indeed petitioner's property was truly worth that much, Absolute Sale and a TCT. Secuya filed a case for quieting
it was certainly
banker like him contrary
to have to the nature
parted of areal
with his businessman-
estate for of title. CA upheld Selma’s title considering that she had
a TCT and a Deed of Sale.
half its price. In short, it was in fact petitioner who
resorted to machinations to convince Dr. Cruz to ISSUE: Who has a better right, Secuya or Selma?
exchange her jewelry for the Tanay property.
Furthermore, petitioner was afforded the reasonable HELD: The Secuyas have nothing to support their
opportunity required in Article 1584 of the Civil Code supposed ownership over the parcel of land. The best
within which to examine the jewelry as he in fact evidence they could have had was the private
accepted them when asked by Dr. Cruz if he was instrument indicating the sale to their predecessor-in-
satisfied with the same. By taking the jewelry outside interest. But the instrument is lost. Even so, it is only
the bank, petitioner executed an act which was more binding as between the parties and cannot prejudice 3rd
consistent with his exercise of ownership over it. This persons since it is not embodied in the public document.
gains credence when it is borne in mind that he himself Selma, on the other hand, has all the supporting
had earlier delivered the Tanay property to Dr. Cruz by documents necessary; she also acted in good faith and
affixing his signature to the contract of sale. That after thought that the Secuyas were merely tenants. They did
two hours he later claimed that the jewelry was not the not even pay realty taxes and did not have their claim
one he intended in exchange for his Tanay property, annotated to the certificate of sale.
could not sever the juridical tie that now bound him and
Dr. Cruz. The nature and value of the thing he had taken
preclude its return after that supervening period within
19. YUVIENGCO v DACUYCUY
which anything could have happened, not excluding the
alteration of the jewelry or its being switched with an
inferior kind. FACTS: Yuvienco entered into a contract with Yao King
Ong and the other occupants, wherein the former will
sell to the latter the Sotto property in Tacloban City for
P6.5M provided that the latter made known their
decision to buy it or not later than July 31, 1978. When
Yuvienco's representative went to Cebu with a prepared
and duly signed contract for the purpose of perfecting
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 15
and consummating the transaction, Yao King Ong and asked if it was possible to pay on terms. The bank
other occupants found variance between the terms of officials stated that there was no harm in trying to ask
payment stipulated in the document and what they had for payment on terms because in previous transactions,
in mind. Thus, it was returned unsigned. Thus, the the same had been allowed. It was the understanding,
action for specific performance. however, that should the term payment be disapproved,
then the price shall be paid in cash. It was Albano who
ISSUE: W/N the claim for specific performance of Yao dictated the terms under which the installment payment
King Ong is enforceable under the Statute of Frauds may be approved, and acting thereon, Alfonso Lim
wrote BPI through Merlin Albano embodying the
HELD: YES. It is nowhere alleged in the complaint that payment initially of 10% and the remaining 90% within a
there is any writing or memorandum, much less a duly period of 90 days. 2 or 3 days later, LSM learned that its
signed agreement to the effect, that the price of offer to pay on terms had been frozen. Alfonso Lim went
P6,500,000 fixed by petitioners for the real property to BPI and tendered the full payment of P33,056,000.00
herein involved was agreed to be paid not in cash but in to Albano. The payment was refused because Albano
installments as alleged by Yao King Ong. The only stated that the authority to sell that particular piece of
documented
extant in theindication
record isof the
the deeds
non-wholly-cash payment
already signed by property
same checkin Pasig had been to
was tendered withdrawn from his unit.
BPI Vice-President The
Nelson
Yuvienco and taken to Tacloban by Atty. Gamboa for the Bona who also refused to receive payment.
signatures of the respondents. In other words, the 90- LSM filed an action for specific performance with
day term for the balance of P4.5 M insisted upon by damages against BPI. In the course of the trial, BPI
respondents choices not appear in any note, writing or informed the trial court that it had sold the property
memorandum signed by either the petitioners or any of under litigation to National Book Store (NBS) in 1989.
them, not even by Atty. Gamboa. Hence, looking at the The complaint was thus amended to include NBS. RTC
pose of respondents that there was a perfected ruled in favor of LSM, holding that there was a perfected
agreement of purchase and sale between them and contract of sale between LSM and BPI. CA reversed,
petitioners under which they would pay in installments holding that no contract of sale was perfected because
of P2 M down and P4.5 M within ninety 90) days there was no concurrence of the three requisites
afterwards it is evident that such oral contract involving enumerated in Article 1318 of the Civil Code.
the "sale of real property" comes squarely under the
Statute of Frauds (Article 1403, No. 2(e), Civil Code.) ISSUE: W/N there was a valid contract of sale
In any sale of real property on installments, the
Statute of Frauds read together with the perfection HELD: YES. There was a meeting of the minds between
requirements of Article 1475 of the Civil Code must be the buyer and the bank in respect to the price of
understood and applied in the sense that the idea of P1,000/sqm. The requirements in the payment of the
payment on installments must be in the requisite of a purchase price on terms instead of cash were suggested
note or memorandum therein contemplated. While such by BPI Vice-President Albano. Since the authority given
note or memorandum
document or writing andneed
it cannot
be be in one
in just single
sufficiently to broker on
of paying Revilla
termsspecified cash payment,
was referred theCommittee
to the Trust possibility
implicit tenor, imperatively the separate notes must, but with the mutual agreement that “if the proposed
when put together', contain all the requisites of a payment on terms will not be approved by our Trust
perfected contract of sale. To put it the other way, Committee, Limketkai should pay in cash, the amount
under the Statute of Frauds, the contents of the note or was no longer subject to the approval or disapproval of
memorandum, whether in one writing or in separate the Committee, it is only on the terms.” The record
ones merely indicative for an adequate understanding of shows that if payment was in cash, either broker Revilla
all the essential elements of the entire agreement, may or Aromin had full authority. But because LSM took
be said to be the contract itself, except as to the form. advantage of the suggestion of Vice-President Albano,
the matter was sent to higher officials. Immediately
upon learning that payment on terms was frozen and/or
20. LIMKETKAI SONS MILLING INC v CA denied, Limketkai exercised his right within the period
given to him and tendered payment in full, thus
FACTS: In 1976, Philippine Remnants Co., Inc. complying with their agreement.
constituted the Bank of the Philippine Islands (BPI) as its The negotiation or preparation stage started with the
trustee to manage, administer, and sell its real estate authority given by Philippine Remnants to BPI to sell the
property, one of which was the disputed lot in Pasig. In lot, followed by the authority given by BPI and
1988, Pedro Revilla, Jr., a licensed real estate broker, confirmed by Philippine Remnants to broker Revilla to
was given formal authority by BPI to sell the lot for sell the property, the offer to sell to Limketkai, the
P1,000/sqm. Broker Revilla contacted Alfonso Lim of inspection of the property and the negotiations with
Aromin and Albano at the BPI offices. The perfection of
Limketkai
LSM asked Sons
that Milling (LSM)
the price of who agreed tobe
P1,000/sqm. buy the land.
reduced to the contract took place when Aromin and Albano, acting
P900.00 while Albano stated the price is to be for BPI, agreed to sell and Alfonso Lim with Albino
P1,100.00. The parties finally agreed that the lot would Limketkai, acting for LSM, agreed to buy the disputed
be sold at P1,000/sqm. to be paid in cash. lot at P1,000/sqm. Aside from this there was the earlier
Notwithstanding the final agreement to pay agreement between LSM and the authorized broker.
P1,000/sqm. on a cash basis, Alfonso Lim (LSM official)
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 16
There was a concurrence of offer and acceptance, on partial performance, which takes the verbal agreement
the object, and on the cause thereof. out of the operation of the Statute of Frauds.
FACTS: Ortega occupied a parcel of land. After the FACTS: Cecilio Claudel acquired a lot from the Bureau of
liberation, the government assigned the lot to the Rural Lands. He occupied the same, declared it in his name
Progress Admin. She asserted her right thereto; but was and dutifully paid his taxes. After his death, his heirs
disputed by Leonardo. Ortega and Leonardo agreed to a and siblings contested each other claiming ownership
compromise. The agreement was for Ortega to desist thereof. It was his heirs who were in possession of the
from pressing her claim, and Leonardo, upon getting the property. They partitioned it amongst themselves,
lot, would sell to her a portion thereof provided she registered each portion under the Torrens System, and
paid for the surveying of the lot. If he acquired title, she each paid their respective taxes. The siblings filed a
could stay as tenant. Ortega thus desisted from her case for cancellation of titles and reconveyance arguing
claim, paid for the surveying of the lot and the that there was a verbal sale between Cecilio and their
preparation of the plan, and regularly paid him a parents over the lot. As evidence, they presented a
monthly rental. When she remodeled her son’s house subdivision plan. CA ordered the cancellation of the
beside the lot, it extended over the subject lot. When TCTs in favor of the heirs.
Leonardo acquired title, he refused to sell the portion
agreed upon. He claims that the contract is ISSUE: W/N there was a valid sale between Cecilio and
unenforceable based on the Statute of Frauds. his siblings
ISSUE: W/N the contract is unenforceable HELD: NO. As a rule, a sale of land is valid regardless of
the form it may have been entered into. However, in
HELD: NO. The contract is enforceable because there the event that a 3rd party disputes the ownership, there
was partial performance. Ortega made substantial is no such proof in support of the ownership. As such, it
improvements on the lot, desisted from her claim, cannot prejudice 3rd persons—such as the heirs in this
continued possession, and paid for the surveying, and case. Also, the heirs had a right to rely upon their
also paid the rentals. All these put together amount to Torrens titles, which, as opposed to the subdivision
plans, are definitely more credible.
Further, the subsequent buyers were in bad faith
because Armando & Adelia registered their adverse
23. ALFREDO v BORRAS claim—this amounts to constructive notice, which
negates good faith.
FACTS: Godofredo & Carmen mortgaged their land to The Statute of Frauds likewise does not apply
DBP for P7,000. To pay their debt, they sold the land to considering that Godofredo & Carmen had already
Armando & Adelia for P15,000. The latter also assumed derived the benefits from the sale—such as the money to
to pay the loan. Carmen issued Armando & Adelia a pay for the loan. The receipt also suffices to constitute
receipt for the sale. They also delivered to Armando & the memorandum required by the Statute of Frauds.
Adelia the Original Certificate of Title, tax declarations, Assuming that the sale was voidable because it was
and tax receipts. They also introduced Armando & conjugal property, the same was ratified by Godofredo
Adelia to the Natanawans, the tenants of the said by introducing Armando & Adelia to the Natanawans as
property as the new lessors. They thereafter took the new lessors. Also, even though titled as Specific
possession of the said land. Later, they found out that Performance, the complaint was one for reconveyance—
Godofredo & Carmen sold the land again to other buyers and prescription does not lie of one who is in actual
by securing duplicate copies of the OCTs upon petition possession of the property.
with the court. Thus, they filed for specific
performance. Godofredo & Carmen claimed that the
sale, not being in writing, is unenforceable under the 23. TOYOTA SHAW INC v CA
Statute of Frauds.
FACTS: Luna Sosa wanted to buy a Toyota Lite Ace. He
ISSUE: W/N the contract of sale is unenforceable under went to Toyota Shaw where he met Popong Bernardo, a
the Statute of Frauds. sales rep. Sosa explained that he needed the Lite Ace by
June 17, otherwise, he would become a laughing stock.
HELD: NO. The Statute of Frauds is applicable only to Bernardo guaranteed that the vehicle would be
executory contracts, not those that have already been delivered. They executed a document entitled
partially or completely consummated. In this case, the Agreements between Sosa & Popong Bernardo of Toyota
sale of the land to Armando & Adelia had already been Shaw” where a P100K downpayment was stipulated and
consummated. The ownership of the land was also that the Lite Ace would be available at a given date.
transferred to Armando & Adelia when they were When the day of reckoning arrived, the Lite Ace was
introduced to the Natanawans and took possession unavailable—the explanation of Bernardo being “nasulot
thereof. Therefore, when Godofredo & Carmen sold the ng ibang malakas.” However, according to Toyota, the
land to other buyers, it was no longer theirs to sell. true reason was that BA Finance, which was supposed to
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 17
answer for the balance of the purchase price, did not essential to the perfection of the sale. It was also clear
approve Sosa’s application. Toyota also returned the that Bernardo signed the document in his personal
downpayment. Thus, Sosa sued for damages amounting capacity and it was up to Sosa to inquire as to the
to P1.2M due to his humiliation, hurt feelings, sleepless extent of the former’s capacity. Sosa did not even sign
nights, and so on. it. It was nothing but a mere proposal, which did not
mature into a perfected contract of sale in lieu of the
ISSUE: W/N there was a perfected contract of sale subsequent events. In fact, it made no specific
reference to the sale of a vehicle. No obligations could
HELD: NO. Toyota Shaw should NOT be held liable for thus arise therefrom. Sosa has no one else to blame but
damages because there was no perfected contract of himself for his humiliation for bragging about something
sale in the first place. There was no agreement as to the he does not own yet.
price and the manner of payment—which are both
CONSUMMATION/PERFECTION OF CONTRACT
1. SANTOS v SANTOS ISSUE: W/N Wilfredo, as mortgagor, can sell the tractor
subject of a mortgage
FACTS: Jesus and Rosalia owned a lot with a 4-door
apartment. They sold through a public instrument the HELD: YES. The mortgagor (Wilfredo) had every right to
said property to their children, Salvador and Rosa—who sell the property subject to mortgage—even without the
sold her share to Salvador as well. Nonetheless, in spite consent of the mortgagee as long as the purchaser
of the sale, Rosalia remained in possession and control assumes the liability of the mortgagor.
over the property. Jesus, Rosalia and Salvador died. In this case, there was constructive delivery already
Zenaida, claiming to be Salvador’s heir, demanded rent upon the execution of the public instrument—even if the
from the tenants. The other children of Jesus and tractor could not yet be delivered. Execution of the
Rosalia filed a case for reconveyance averring that the public instrument and mutual consent of the parties was
sale to Salvador was fictitious and done merely to equivalent to constructive delivery. Therefore, at the
accommodate him. time when the sheriff levied upon the tractor, it was no
longer the property of Wilfredo. Also the clearing of the
ISSUE: W/N the sale to Salvador was fictitious check was not a condition for the consummation of the
sale but only upon the extinguishment of the mortgage.
HELD: YES. While it is true that sale through a public
instrument is equivalent to delivery of the things sold
which has the effect of transferring ownership, the 3. ADDISON v FELIX
delivery
evidence. can be rebutted
The vendor’s by clear
continuous and convincing
possession makes the FACTS: Addison owned 4 parcels of land, which he sold
sale dubious. Salvador never took possession of the to Felix, through public instrument. The down payment
property. He surrendered the titles to his mother after was made; the final installment to be paid after the
having registered the lots in his name, he never issuance of the certificate of title. Addison sued Felix to
collected rentals, neither has he paid the taxes thereon. compel the latter to pay the last installment—but Felix
Thus, there was no real transfer of ownership. That refused and sought to rescind the contract due to the
being the case, the action for reconveyance was absolute failure of Addison to deliver the thing sold.
imprescriptible.
ISSUE: W/N there was delivery
purpose,
case theWilfredo
against chattels filed
can by
be Gelac
released. However,
Trading, in a
the sheriff reality—noto
therefore delivery
rescindwas
theever made. Felix
contract. Had had every
there beenright
an
seized the tractor on levy and sold the same on public agreement that Felix would have to undertake to evict
auction, with Gelac as the highest bidder. Perfecto thus the Villafuertes, the result may have been different, but
sought to recover the truck from Gelac. there is no such agreement.
FACTS: Domingo owned 2 lots, which he donated FACTS: Power Commercial Corp. entered into a contract
through a private instrument to Danguilan for the of sale with the Quiambao spouses. It agreed to assume
consideration that the latter must take care of him for the mortgages thereon. A Deed of Absolute Sale with
the remainder of his life and manage his burial. Assumption of Mortgage was executed. Power
Domingo’s daughter, Apolonia, laid claim to the land, Commercial failed to settle the mortgage debt
presenting a public document allegedly executed in her contracted by the spouses, thus it could not undertake
favor, the purchase price being paid for by her mother. the proper action to evict the lessees on the lot. Power
She however failed to take possession of the said Commercial thereafter sought to rescind the contract of
property after the execution of the deed. In fact, she the sale alleging that it failed to take actual and
moved out of the farm when Danguilan started to physical possession of the lot—which allegedly negated
cultivate the same for as long as she was given a share constructive delivery.
from the harvests. She decided to file a case only after
the deliveries of farm produce have ceased. ISSUE: W/N there was delivery
ISSUE: Who has a better title over the land, Danguilan or HELD: YES. First, such a condition that the Quiambao
Apolonia? spouses would evict the lessees therein was not
stipulated in the contract. In fact, Power Commercial
HELD: DANGUILAN. At the onset, the donation in favor was well aware of the presence of the tenants therein.
of Danguilan was valid even though embodied in a Also in this case, Power Commercial was given control
private instrument, because it was an onerous donation. over the said lot and it endeavored to terminate the
The deed of sale presented by Apolonia was also occupation of the actual tenants.
suspicious. It was only 3 years old and the consideration Control cannot be equated with actual possession.
was paid for by her mother. Assuming that it was valid, Power Commercial, as purchaser, agreed voluntarily to
still the presumptive delivery is overcome by the fact assume the risks involved. The public instrument
that she failed to take possession of the property. executed amounted to symbolic delivery of the property
Ownership, after all, is not transferred by mere sold and authorized the buyer to use the document as
stipulation butby actual and adverse possession. She proof of ownership. Power Commercial was deprived of
even transferred the same to Danguilan possession of ownership only after it failed to remit the
the same. She cannot have a better right in this case amortizations, but not due to failure of delivery.
than Danguilan.
7. CHUA v CA
5. PASAGUI v VILLABLANCA
FACTS: Valdes-Choy is the owner of the subject matter,
FACTS: Pasagui purchased a parcel of land form the when she advertised the property for sale. Chua
Bocar Spouses for P2,800, which was embodied in a responded to the advertisement, and met up with
public instrument. They failed to take possession of the Valdes-Choy. They agreed for the purchase price of
property because the Villablancas illegally took P10,800,000, to be paid on July 15, 1989. This was
possession of the property and harvested the coconuts evidenced by an earnest money for P100,000, which was
therein. Thus, Pasagui filed a case for ejectment before put on a receipt, stating that the money will be
the CFI. The Bocar spouses were likewise impleaded. forfeited upon failure to pay on the dat stipulated. On
The latter contested that the case should be dismissed July 13, Valdes-Choy executed two deeds of absolute
because the CFI did not have jurisdiction over forcible sale, first, pertaining to the house and lot, valued at
entry cases. P8,000,000, and second, pertaining to the movable
properties therein. The next day, Chua issued a check
ISSUE: W/N this is a case of forcible entry worth P485,000 for the purpose paying the capital gains
tax. The value was deducted from the balance, with an
HELD: NO. The case was not for forcible entry because outstanding value of P10,295,000 (additional P80,000 for
there was no allegation that Pasagui was in prior the documentary stamp tax). Chua also showed a check
physical possession of the land and that the worth P10,215,00 to Valdes-Choy, however, he
Villablancas, through force, stealth, or threat, deprived demanded that the TCT should first be transferred to his
them thereof. While the sale was made through a public name before paying the check. Out of anger, Valdes-
document is equivalent to delivery, this presumption Choy tore the deed of absolute sale. On the reckoning
only holds true if there is no impediment to the date, Valdes-Choy tried to make a compromise with
possession of the purchaser. Such is not the case here. Chua, but she did not get any response. Two days later,
Since
of the Pasagui had
land, the notwas
case yetnot
acquired
one forphysical
forciblepossession
entry and Chua court
trial filed an action forAspecific
dismissed. performance,
week later, he filedwhich the
another
the CFI (not municipal courts) has jurisdiction. action for specific performance, where the court ruled
in favor of him. On appeal, CA reversed.
sale) are
action forresponsible to pay the tax.
specific performance Genuino
against VELI, Ice filed an
contending FACTS:
• General Foods is a foreign corporation licensed to do
that VELI failed to transfer title to and in the name of business in the Philippines.
Genuino Ice, to cause the eviction of the occupants, and • National Coconut Corporation (NACOCO) sold to
to pay the tax and other dues to effectuate the transfer General Foods 1500 tons of long copra under the terms:
of the title of the property. RTC ruled in favor of a. Quantity: Seller could deliver 5% more or less than
Genuino Ice, CA affirmed. the contracted quantity, and the
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 20
surplus/deficiency shall be paid on the basis of contracted quantity, and the surplus/deficiency
the delivered weight. shall be paid on the basis of the delivered
b. Price: CIF New York. weight.
c. Payment: Buyers to open an Irrevocable Letter of • While the risk of loss was apparently placed on
Credit for 95% of invoice value based on shipping General Foods after the delivery of the cargo to the
weight. carrier, it was agreed that the payment of the price was
d. Balance of the price was to be ascertained on the to be according to the “net landed weight” which is 898
basis of outturn weights and quality of the cargo (weighed in New York) and not 1054 (weighed in the
at the port of discharge. Philippines).
e. Weights: Net landed weights. • NACOCO had the burden to prove that the shortage
• In the Philippines, the net cargo was weighed at 1054 was due to risks of voyage and not the natural drying up
tons, the alleged weight delivered by NACOCO. NACOCO of copra. In other words, if the weight deficiency was
then withdrew 95% (or $136,000) of the amount in the due to the risks of the voyage, General Food would not
Letter of Credit in favor of NACOCO. have been entitled to any claim in the deficiency.
• In New York, the net cargo was reweighed and found • The provision on the “balance of the price was to be
to
theweigh
refundonly 898amount
of the short tons. General Foods demanded
of $24000. ascertained
of the cargoonatthethebasis
portofofoutturn weights
discharge” and not
should quality
be
• NACOCO’s officer’s-in-charge acknowledged in a letter construed separately from the provision that the “net
liability the deficiency and promised payment as soon as landed weight” was to control.
funds were available. • The manifest intention of the parties was for the total
• However, NACOCO was abolished and went into price to be finally ascertained only upon determining
liquidation. The Board of Liquidators refused to pay the the net weight and quality of the goods upon arrival in
claim of General Foods. New York, most likely because the nature of copra is
• General Foods then filed to recover $24,000 and 17% that it dries up and diminishes weight during the
exchange tax plus attorney’s fees and costs. voyage.
• General Foods alleges that although the sale quoted • In fact, this intention was shown by the letter of the
CIF New York, the agreement contemplated the officer-in-charge of NACOCO acknowledging NACOCO’s
payment of the price according to the weight and liability to General Foods. Though this letter of
quality of the cargo upon arrival in New York (port of acknowledgement should not be construed as an
destination). Therefore, the risk of shipment was upon admission of liability of NACOCO, it is nevertheless
the seller. competent evidence of NACOCO’s intention to be bound
• NACOCO alleges that the contract is an ordinary CIF, by the net landed weight or outturn weight of the copra
which means that delivery to the carrier is delivery to at the port of discharge.
the buyer. Therefore, the shipment having been
delivered to the buyer and the buyer having paid the
price, the sale was consummated. 11. PACIFIC VEGETABLE OIL CORP v SINGZON
ISSUES: FACTS:
1. Whether the weight in New York should be the basis • Petitioner and respondent entered into a contract in
upon payment of the price of copra should be made. – the US whereby Singzon agreed to ship 500 tons of
Yes. The weight in New York should be the basis. copra, with the agreement CIF, Pacific Coast
2. Whether what is to be ascertained based upon the • Singzon failed to deliver, but the parties entered into
outturn weights and quality at port of discharge was a settlement, whereby Singzon would deliver 300 tons at
only the balance due to be paid. – No. The balance due the same terms the contract provided that should
to be paid is not the only basis. Singzon again default, he would pay $10,000 for
damages and the srcinal contract would be revived
HELD: • Singzon again failed to ship the copra, and he did not
• Under an ordinary CIF agreement, delivery to the pay the fine or ship the 500 tons as srcinally agreed
buyer is complete upon delivery of the goods to the • Pacific filed an action to recover damages
carrier and tender of the shipping and other documents • Singzon claims that Pacific had no legal personality to
required by the contract and the insurance policy are sue because it is a foreign corporation
taken in the buyer’s behalf. However, the parties may,
by express stipulation, modify a CIF contract and throw HELD:
the risk upon the seller until the arrival in the port of • The contract was perfected in the US by a broker and
destinations. representatives of the parties payment was made to a
• In this case, the terms of the contract indicate and bank in California and delivery undertaken through CIF,
intention that the precise amount to be paid by the Pacific Coast
buyer depended upon the ascertainment of the exact
net weight of the cargo at the point of destination: • Under
the costthat arrangement,
of goods, but alsothethe
vendor is to
freight payinsurance
and not only
a. Net landed weights were to govern. expenses, and this is taken to indicate that the delivery
b. The balance of the price was to be ascertained on is to be made at the port of destination
the basis of outturn weights and quality of the • Since CIF includes both insurance and freight expenses
cargo at the port of discharge. to be paid by the seller, ordinarily, before the vessel
c. The seller could deliver 5% more or less than the arrives at the point of destination the risk of loss be for
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 21
the account of the seller. and creates lien upon the land. The spouses acquired
their titles under the Torrens System and they acted in
good faith by exercising due diligence; thus, they have a
12. RUDOLF LIETZ INC v CA better right to the said property.
ISSUE: Whether the sale between Buriol and Rudolf Lietz HELD: NO. Art. 1544 is not applicable because the land
Inc is a lump sum or unit price sale was unregistered under the Torrens System at the time
of the 1st sale. The applicable law is Act 3344. Under
HELD: LUMP SUM SALE. The Deed of Absolute Sale shows said law, registration by the 1 st buyer is constructive
that the parties agreed on the purchase price on a notice to the 2nd buyer—and as such, the latter cannot
predetermined area of 5 hectares within the specified be deemed to be in good faith. Applying the principle of
boundaries and not based on a particular rate per area. priority in time, priority in rights, Juanita cannot claim
In accordance with Art. 1542, there shall be no to have a better right. The fact that Juanita was able to
reduction in the purchase price even if the area secure a title in her name does not operate to vest
delivered to Rudolf Lietz Inc is less than that states in ownership. The Torrens System cannot be used as a
the contract. In the instant case, the area within the means to protect usurpers.
boundaries as stated in the contract shall control over
the area agreed upon in the contract.
15. CARILLO v CA
13. NAAWAN COMMUNITY RURAL BANK INC v CA FACTS: Gonzales purchased from Priscilla, acting as
agent of Aristotle, the latter’s land. For failure to
FACTS: Comayas offered to sell to the Lumo Spouses a execute the Deed of Sale, she filed a case for specific
house and lot. The property was already registered performance and impleaded Priscilla (not Aristotle). The
under the Torrens System that time and they made latter defaulted and judgment was rendered against her
appropriate inquiries with the RD; they found out that it ordering the nullification of the OCT of Aristotle and the
was mortgaged for P8,000, paid Comayas to settle the issuance of a new certificate of title in favor of
mortgage, and the release of the adverse claim was Gonzales. The Dabons thereafter surfaced and sought to
annotated in the title. Thereafter, they executed an annul the judgment of the trial court averring that they
Absolute Deed of Sale over the subject property and purchased the property from Aristotle himself and they
registered the same. However, it turns out that it was were not impleaded as the real parties in interest.
already previously sold to Naawan Community Rural
Bank; it was then unregistered. The Bank foreclosed on ISSUE: Who has better title, Gonzales or Dabon?
the property, purchased the same, and registered it
under Act 3344. Thus, the Bank sought to eject the HELD: DABON. The decision of the lower court in favor
spouses. However, the latter countered with an action of Gonzales was void due to extrinsic fraud. The Dabons
for quieting of title. were deprived of their day in court and through
questionable means at that—such as the failure to give
ISSUE: Who has a better title, Naawan or Lumo spouses? them appropriate notice of the proceedings, and not
having them impleaded even though they are the parties
HELD: LUMO SPOUSES. Where a person claims to have to be adversely affected. Instead, it was the agent who
superior property rights by virtue of a sheriff’s sale, the was impleaded—not the principal or the subsequent
benefit of Art. 1544 applies favorably only if the purchasers. The court never acquired jurisdiction.
property is registered under the Torrens System—not It must be noted that the property was sold to
under Act 3344. Registration under the Torrens System Gonzales in 1988, while the same was sold to the Dabons
is the operative act that gives validity to the transfer in 1989; nonetheless, the requirements of double-sale
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 22
are two-fold: acquisition in good faith and registration
in good faith. Based on the foregoing, the case is
remanded to the lower court for further proceeding. 18. MENDOZA v KALAW
FACTS: By virtue of a compromise agreement judicially FACTS: Canuto sold a parcel of land to Carumba by
approved, Villafania sold to Rosenda and Rosita a house virtue of a Deed of Sale of Unregistered Land. The sale
and lot. Unknown to them, Villafania obtained a free was never registered. Thereafter, Canuto was sued for
patent over the said land and sold it to De Vera. On the collection of money, and the said land was levied upon
other hand, Rosenda and Rosita sold the property to the and sold to Balbuena, who registered it.
spouses Abrigo. Now De Vera and Abrigo dispute
ownership over the property—the former filing an ISSUE: Who has a better right, Carumba or Balbuena?
ejectment suit against the latter.
HELD: CARUMBA. Art. 1544 does not apply in this case.
ISSUE: Who has a better title, Abrigo or De Vera? Instead, the Rules of Court are applicable. Balbuena,
the later vendee, merely steps into the shoes of the
HELD: DE VERA. Abrigo registered the property under judgment debtor and acquires all the rights and
Act 3344, while De Vera registered the same under the interests of the latter. By the time the lot was sold
Torrens System.
Registration Naturally,
must be De proper
done in the Vera’s registry
right prevails.
to bind through
owned bythe foreclosure
Canuto proceedings,
by virtue it was
of a prior sale no longer
to Carumba—
the land. It was also proven that De Vera acted in good who has a better right.
faith considering that there was nothing in the
certificate of title or the circumstances, which would
have aroused suspicion and mandated her to make an 26. ACABAL v ACABAL
inquiry. Registration under Act 3344 does not suffice to
constitute constructive notice in order to negate the FACTS: Sps. Acabal sold their lot to their son Villaner
good faith of the registrant under the Torrens System. Acabal who in turn transferred it to his godson-nephew
De Vera’s right must be upheld. Leonardo Acabal. This was later on sold to Leonardo and
Ramon Nicolas hence a complaint was filed by Villaner
against them and his nephew arguing that what he
24. DAGUPAN TRADING CO v MACAM signed was a Lease contract and not a sales contract.
The RTC ruled in favor of Nicolas which was reversed by
FACTS: Sammy Maron and his 7 brothers were co-owners the CA thus the case at bar.
of a parcel of land for which they applied for
registration. Pending the proceedings, they sold the ISSUE: W/N there was a valid sale
same to Macam, who thereafter introduced substantial
improvements thereon. Later on, the property was HELD: YES
levied upon and sold in favor of Dagupan Trading, which It is valid only insofar as 5/9 of the land is concerned.
thereafter registered the Sheriff’s Final Certificate of This is so because the property in question was bought
Sale during the pendency of the marriage of Villaner
therefore it is presumed to belong to the conjugal
ISSUE: Who has a better right, Macam or Dagupan? partnership. Leonarda failed to prove otherwise.
Nevertheless, when Justiniana (wife) died, her share
HELD: MACAM. In this case, the sale in favor of Macam vested on her 8 children, and her husband vesting him
was executed before the land was registered, while the with 5/9 share on the property. Since it is not yet
sale in favor of Dagupan was made after the partitioned, he cannot yet claim title to any definite
registration. In such a case, the Rules of Court will apply portion of the property but only to his ideal, abstract or
such that the delivery of the Sheriff’s Final Certificate spiritual share. He may still dispose of the same for
of Sale in favor of Dagupan merely substitutes the latter every co-owner has absolute ownership over his
into the shoes of the seller Maron and acquires all undivided interest in the co-owned property. However,
rights, interests, and claims of the latter. Considering he cannot dispose of the shares of his co-owners based
that at the time of the levy, Maron was no longer the on nemo dat qui non habet . Since he sold it without the
owner of the land, then no title can thereafter pass in consent of the other co-owners, the sale is still valid
favor of Dagupan. Macam’s title is thus sustained. only insofar as his shares are concerned.
And the finding that both Leonardo and Villaner were
in pari delicto, the same is irrelevant because the
property concerned is unregistered.
FACTS: Rosenda and Sotero were among co-owners of 3 4. CITY OF MANILA v BUGSUK LUMBER
parcels of land, which they sold to Ildefonso Yap for
some P100K without the consent of the other co-owners. FACTS: Bugsuk Lumber had an office in Manila. The City
They included in the sale certain buildings and Treasurer assessed it for license fees and mayor’s
laboratory and other educational equipment within the permit—alleging that Bugsuk sold at wholesale and retail
said properties, which were actually owned by Mindanao to different lumber dealers in Manila. Bugsuk refused to
Academy. Mindanao Academy and the other co-owners pay alleging that the lumber it produced were delivered
assailed the validity of the sale. The trial court declared directly from the shipper to the buyer, that they paid
the sale null and void. Yap contends that Erlinda, one of the appropriate Timber License Fees and that their
the co-owners owning 5/12 share of the co-ownership, Manila Office only received orders and accepted
does not have the standing to challenge the sale for payments. Bugsuk alleges that it is not a dealer and its
being in bad faith. office is not a store to warrant the imposition of the
additional taxes.
ISSUE: W/N the sale is null and void as to its entirety
ISSUE: W/N Bugsuk is liable for the additional taxes
HELD: YES. Although the general rule is that if a co-
owner alienates the entire property without the consent HELD: NO. A dealer buys to sell again; Bugsuk produced
of the other co-owners, the sale will affect only his its own lumber from Palawan. Thus, it is not a dealer.
share, such rule does not apply if the property cannot Its Manila office is not a store as well. A store is a place
be partitioned/subdivided. In this case, aside from the where goods are kept for sale—whether for retail or
fact that Rosenda and Sotero cannot sell the entire wholesale. The Manila office only processed the orders
property including the school equipment, they cannot and payments; it did not keep goods therein or act as a
ISSUE: W/N Sun Brothers may recover the thing FACTS: EDCA sold books to Tomas dela Pena who
fraudulently represented himself to be Prof. Jose Cruz,
HELD: NO. It is true that where a person who is not the a Dean of DLSU. EDCA delivered him the books, the
owner of a thing sells the same, the buyer acquires no check Tomas issued was dishonored because he did not
better title than the seller has. In this case. Lopez have an account at all. Tomas thereafter sold the books
obviously had no title to the goods for having failed to at a discount to Leonor Santos. EDCA, with the aid of
pay the full price. It only follows that JV Trading had no the police, stormed the Santos Bookstore to retrieve the
title thereto as Velasco was not in good faith. He should books.
have inquired if Lopez had good title to it—the same not
being engaged in the business of selling appliances. ISSUE: W/N EDCA may retrieve the books from Santos
HOWEVER, when the refrigerator passed to Co Kang
Chiu, the latter acquired valid title thereto. The HELD: NO. Ownership of the books passed to Tomas
exception to the foregoing rule is the purchase in good upon the delivery thereof. He had the right to transfer
faith in a merchant store or a fair or a market. This rule the same to Santos. The fact that he did not pay for the
fosters stability to commerce and business transactions. books only warrants rescission or an action for payment.
Co Kang Chiu purchased the refrigerator in a merchant EDCA cannot be considered to have been unlawfully
store—and for value and in good faith. Thus, he is deprived under the CC as to warrant recovery of the
protected by the law. Sun Brothers would not be books from Santos. Possession of movable property
entitled to recover the refrigerator—not even if they pay acquired in good faith is equivalent to title. Santos was
its value—since they were not deprived of the same a buyer in good faith, thus he is protected by the law.
unlawfully. Lopez is the one who should be liable to Sun
Brothers for the full purchase price of the ref.
8. AZNAR v YAPDIANGCO
6. TAGATAC v JIMENEZ FACTS: Teodoro advertised for sale his Ford Fairlane
car. De Dios approached them purporting to be a
FACTS: Tagatac bought a car abroad and brought it to nephew of Marella. Teodoro transacted with Marella
the Philippines. Warner Feist deceived her into believing who agreed to buy the car, agreeing to pay the same
that he was very rich and purchased her car. She only after the car has been registered in his name. The
delivered possession thereof. Levy (another name of Deed was registered in his name, but Marella has yet to
Feist) issued her a postdated check, which was pay so the documents were not delivered to him, he
dishonored. Feist then disappeared with the car. Feist pleaded with Ireneo, Teodoro’s son, that they proceed
was able to register the car in his name and eventually to Marella’s sister to secure the shortage of cash. Ireneo
sold the car to Sanchez, who then sold the same to agreed. They proceeded thereto, Ireneo was
Jimenez. Jimenez even labored to verify the car’s accompanied by De Dios and an anonymous person. De
records with Motor Vehicle Office. Jimenez then Dios was able to induce Ireneo to hand over the
delivered the car to California Car Exchange for display. documents under the pretext that he will show them to
Tagatac, upon finding out, sought to recover the car, his lawyer, Ireneo agreed. De Dios made Ireneo wait and
but Jimenez refused. thereafter escaped with the car and the deed. Marella
was then able to sell the car to Aznar. The police
ISSUE: W/N Jimenez may refuse to give the car back thereafter seized the car in Aznar’s possession. Aznar
countered with a complaint for Replevin.
HELD: YES. Jimenez was a buyer in good faith of the
car—he had no knowledge of any defect in the title of ISSUE: W/N Teodoro may recover the car from Aznar
the seller. It is true that one who has lost any movable
or has been unlawfully deprived thereof may recover HELD: YES. Teodoro was clearly unlawfully deprived of
the same from the possessor. However, in this case, the car. There was no valid delivery to Marella, hence
the latter acquired no title to the car. Delivery must be
FACTS: Jose Cruz delivered his car to Belizo for the HELD: NO
latter to sell the same. Belizo forged the letter of Cruz It reiterated the ruling in de Garcia v. CA, that the
to the Motor Section of the Bureau of Public Works and controlling provision is Art. 559 of the CC which states
converted the same into a Deed of Sale. Using the that the possession ofmovable property acquired in
forged deed, he had the car registered in his name. good faith is equivalent to a title. Nevertheless, one
Thereafter, Belizo sold the car to Bulahan, who in turn who has lost any movable or has been unlawfully
sold the same to Pahati. However, the car was deprived thereof may recover it from the person in
impounded by the police, and the sale to Pahati was possession of the same. If the possessor of a movable
cancelled. Bulahan now contends that between 2 lost of which the owner has been unlawfully deprived,
innocent parties (Bulahan and Cruz), the person who has acquired it in good faith at a public sale, the owner
made possible the injury must bear the loss—in this cannot obtain its return without reimbursing the price
case, supposedly Cruz. paid therefor .
Lourdes, being unlawfully deprived of her ring thus
ISSUE: W/N Cruz may recover the car from Bulahan she has a right to recover it from the current possessor.
Dizon is engaged in a business where presumably
HELD: YES. It is true that both Bulahan and Cruz acted in ordinary prudence would require him to inquire whether
good faith. One who has lost a movable or had been or not an individual who is offering the jewelry by
deprived of the same may recover it from the possessor. pledge is entitled to do so. The principle of estoppel
This rule applies squarely to this case. Thus, since Cruz cannot help him at all. Since there was no precaution
was unlawfully deprived by Belizo through the latter’s availed of, perhaps because of the difficulty of resisting
artifice, he is entitled to recover the same even against opportunity for profit, he only has himself to blame and
a subsequent purchaser in good faith. The only should be the last to complain if the right of the true
exception to this rule is if the purchaser acquired the owner of the jewelry should be recognized.
same from a public sale—in which case, reimbursement
is in order. It was, in fact, Bulahan who acted Other issues raised:
negligently in failing to detect the forged Deed of Sale. 1. Principle of estoppel = has its roots in equity, moral
right
" and estoppel
For natural justice.
to exist, there must be a
declaration, act or omission by the party who is
10. DIZON v SUNTAY
sought to be bound.
" A party should not be permitted to go against his
FACTS: Lourdes Suntay is the owner of a 3-carat
own acts to the prejudice of another.
diamond ring valued at P5,500. She and Clarita Sison
entered into a transaction wherein the ring would be
Concurring opinion by J. Teehankee:
sold on commission. Clarita received the ring and issued
" Interpretation of the “unlawfully deprived” in Art. 559
a receipt. After some time, Lourdes made demands for
of the CC. It is understood to include all cases where
the return of the ring but the latter refused to comply.
there has been no valid transmission of ownership. If
When Lourdes insisted on the return, Clarita gave her
our legislature intended interpretation to be that of
the pawnshop ticket which is the receipt of the pledge
the French Code, it certainly would have adopted and
and she found out that 3 days after the ring was
used a narrower term than the broad language of Art.
received by Clarita, it was pledged by Melia Sison, the
559 (formerly 464) and the accepted meaning in
niece of Clarita’s husband in connivance with Clarita
accordance with our jurisprudence.
with the pawnshop of Dominador Dizon for P2,600.
Lourdes then filed an estafa case. She then asked
FACTS: Grimalt transacted with Roman for the purchase FACTS: Tabora purchased volumes of AmJur from
of a “schooner” called the Santa Marina. The sale was Lawyers Coop. The agreement was for ownership to
predicted upon the condition that it was seaworthy and remain with Lawyers Coop until payment of the full
that Roman would perfect his title thereto—the same price. “Loss or damage to the goods after delivery to
being registered to Paulina Giron. Only of the said the buyer is for the account of the latter.” The books
conditions were complied with will Grimalt purchase the were delivered to his office; that same night, his office
same. The terms of payment were likewise agreed upon. was razed by fire. Tabora failed to pay the full purchase
Roman did nothing to perfect his title; then due to a price. Now Lawyers Coop sues him for the balance.
severe storm, the vessel sank. Roman now sues Grimalt Tabora invokes force majeure.
for the purchase price of the vessel.
ISSUE: Who bears the loss?
ISSUE: W/N Grimalt is liable for the loss
HELD: TABORA. While it is true that generally, loss is for
HELD: NO. There was yet to be a perfected contract the account of the owner, the same does not apply here
between them for the failure of Roman to perfect his because the parties themselves have expressly
title. That being the case, the loss is for the account of stipulated that loss, after delivery to the buyer, are for
Roman as the owner thereof. the account of the latter. Besides, the stipulation
retaining ownership to the seller is intended merely to
secure payment by the buyer. Likewise, the obligation
of Tabora consists of the delivery not a determinate
thing, but a generic thing—money. Thus, he is not
absolved from liability.
2. DELTA MOTOR SALES CORP. v NIU KIM DUAN FACTS: Tajanlangit bought 2 tractors and a thresher
from Southern Motors. They executed a promissory note
FACTS: Niu Kim Duan purchased from Delta Motors 3 air in payment thereof; it contained an acceleration clause.
conditioning units. Niu paid the downpayment, the Tajanlangit failed to pay any of the stipulated
ISSUE: W/N Tajanlangit is relieved from his obligation to 6. ZAYAS v LUNETA MOTORS
pay
FACTS: Zayas purchased a Ford Thames Freighter from
HELD: NO. While it is true that the foreclosure on the Escano Enterprises, the dealer of Luneta Motor Co. The
chattel mortgage on the thing sold bars further action unit was delivered and Zayas issued a PN payable in 26
for
this the
doesrecovery of in
not apply thethis
balance of theSouthern
case since purchasedidprice,
not installments secured by a chattel mortgage over the
subject motor vehicle. Zayas failed to pay, thus Luneta
foreclose on the mortgage but insteas sued based on the extra-judicially foreclosed on the mortgage and was the
PNs exclusively. That being the case, it is not limited to highest bidder. However, considering that the proceeds
the proceeds of the sale on execution of the mortgaged of the sale was insufficient to cover the debt, Luneta
goods and may claim the balance from Tajanlangit. filed a case for the recovery of the balance of the
purchase price. Zayas refused to pay.
4. NONATO v IAC ISSUE: W/N Luneta may still recover the balance
FACTS: Nonato spouses purchased from People’s Car a HELD: NO. When the unpaid seller forecloses on the
Volkwagen car. They issued a PN with chattel mortgage. mortgage, the law precludes him from bringing further
People’s Car thereafter assigned its rights to the note to actions against the vendee for whatever balance, which
Investors Finance. The Nonatos defaulted, thus Investors was not satisfied from the foreclosure. Luneta contends
Finance repossessed the car and demanded the payment that Escano Enterprises is a different and distinct entity
of the balance of the purchase price. and maintains that its contract with Zayas was a loan.
This is unsubstantiated as the agency relationship
ISSUE: W/N Investors Finance may still demand for the between Luneta and Escano is clear.
payment of the balance when it repossessed the car Nevertheless, assuming that they were distinct
entities, the nature of the transaction remains the
HELD: NO. The remedies contemplated under Art. 1484 same. If Escano assigned its right to Luneta, the latter
are ALTERNATIVE—not cumulative. Investors Finance in merely acquires the rights of the formers—hence, Art.
effect cancelled the sale and it cannot now claim the 1484 of the CC would likewise be inapplicable.
balance of the purchase price. When it took possession
of the car, it gave the spouses 15 days to redeem the
car. This could mean that their failure to do so would 7. NORTHERN MOTORS v SAPINOSO
constrain the company to retain the permanent
possession of the car. There was no attempt at all the FACTS:
return the car—thus, it is untrue that the same was • Respondent Casiano Sapinoso purchased from
retained merely for appraisal. petitioner Northern Motors an Opel Kadett car for
P12,171 making a downpayment and executing a
promissory note for the balance of P10,540 payable in
5. RIDAD v FILIPINAS INVESTMENT (Filinvest) installments
• To secure the payment of the note, Sapinoso executed
FACTS: Ridad purchased from Supreme Sales 2 Ford in favor of Northern Motors a chattel mortgage on the
Consul Sedans, payable in 24 installments, for which he car; the mortgage provided among others that upon
executed a PN with chattel mortgage over the said Sapinoso’s default in payment of any part of the
property. Another chattel mortgage was executed this principal or interest, Northern Motors may elect any of
time upon a separate Chevy car, and another one upon the ff. remedies (a) sale of the car by Northern (b)
the franchise to operate taxi cabs. Supreme Sales cancellation of the sale to Sapinoso (c) extrajudicial
thereafter assigned its rights under the PN to Filinvest. foreclosure (d) ordinary civil action for fulfillment of the
Ridad defaulted and Filinvest foreclosed on the mortgage contract; additionally, whichever remedy is
mortgage. It was the highest bidder for the foreclosure chosen, Sapinoso waives his right to reimbursement of
sale of the sedans. But unable to fully satisfy the debt, any and all amounts on the principal and interest
it also foreclosed the Chevy and the franchise. already paid
• Sapinoso failed to pay the first 5 installments due from
ISSUE: W/N Filinvest may still foreclose the Chevy and August-November 1965; he made payments though on
the franchise to fully satisfy the debt November and December and on April the next year but
failed to make subsequent payments
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 30
• Northern Motors filed a complaint stating that it was 8. CRUZ v FILIPINAS INVESTMENT & FINANCE CORP.
availing of the option of extrajudically foreclosing the
mortgage and prayed that (a) a writ of replevin be FACTS: Ruperto Cruz bought a bus from Far East Motor
issued upon its filing of a bond (b) it be declared to have Corp which was payable on installments of
the rightful possession of the car (c) in default of P1,487.20/month for 30 months with 12% interest. Cruz
delivery, Sapinoso be ordered to pay the balance with executed a PN in the sum of the purchase price. To
interest secure the paypent of the PN, Cruz executed a chattel
• Subsequent to the commencement of the action but mortgage on the bus. Since no downpayment was made,
before filing of his answer, Sapinoso made 2 payments Far East required Cruz to execute another security and
amounting to P1,250 on the promissory note; in the for the a REM was executed on the land and building of
meantime, a writ of replevin was issued and the car was Mrs. Reyes which at that time was mortgaged to DBP.
turned over to Northern Motors Far East then assigned all its rights and indorsed the
• Sapinoso claimed that he withheld payments because PN to Filipinas Investment and Financing Corp. Cruz
the car was defective and Northern Motors failed to fix defaulted in payment of the PN with only P500 being
it despite his repeated demands ever paid. Filipinas had the chattel mortgage foreclosed
FACTS: Eustaquio bought a De Soto car from Macondray fees and costs of suit.
for which he executed a PN, payable in installments,
FILIPINAS’ CONTENTIONS:
with a stipulation of attorney’s fees, expenses for
• They are entitled to an award for atty’s fees and costs
collection, and other costs. It was secured by a chattel
of suit by virtue of the unjustifiable failure and refusal
mortgage over the said car. As usual Eustaquio failed to
of the Ridad Spouses to comply with their obligations.
pay, and Macondray foreclosed on the mortgage.
• What 1484 prohibit is the recovery of the unpaid
However, there remained a balance of some P340 for
balance by means of another replevin suit.
which Macondray sues Eustaquio. Macondray also
contends that at least the stipulated interests and
ISSUE: Whether under Art 1484 (the Recto Law) Fiipinas
attorney’s fees must be claimable.
is entitled to the award for attorneys fees and expenses
incurred due to the seizure of the car. – Yes, but with
ISSUE: W/N Macondray may still claim the interests and
certain qualifications.
attorney’s fees stipulated
HELD: Art 1484 is called the Recto Law, and was created
HELD: NO. If the seller avails of his right to foreclose on
to protect mortgagors from mortgagees who wanted to
the mortgage, he can no longer bring an action against
unjustly enrich themselves. No. 3 of Art 1484, discussing
the buyer for the unpaid balance—this includes all the
the right to foreclose, means that if the vendor opts for
obligations such as attorney’s fees, stipulated interests,
this remedy he shall have no further action to recover
expenses of collection and other costs.
any unpaid balance of the same.
The decided case of Macondray & Co. v Estaquio has
almost the exact facts and deals with the same issue of
11. FILIPINAS INVESTMENT & FINANCE CORP v RIDAD this case. In Macondray, it was ruled that “the words
‘unpaid balance’ in no. 3 of art 1848 refer to the
FACTS: deficiency judgement which the mortgagee may be
• The RIDAD SPOUSES purchased a Ford Consul Sedan entitled to, when after the public auction of the
from Supreme Sales and Dev’t. Corp. Supreme Sales was mortgaged chattel, the proceeds are insufficient to
the assignor-in-interest of FILIPINAS Investment and cover the full amount of the secured obligation, which
Finance, appellees herein.
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 32
include… attorneys fees and costs of suit. Were it the and turn around to lease it to a client who gets, in
intention of legislature to limit its meaning to the addition, an option to purchase the property at the
unpaid balance of the principal, it would have so expiry of the lease period.
stated.” In other words, the mortgagee is limited to the In the case at bar, PCI acquired the office equipments
property mortgaged and is not entitled to attys fees and for their subsequent lease to Giraffe, with the latter
costs of suit. undertaking to pay a monthly fixed rental for the whole
Such doctrine prevents the circumvention of the Recto 36 months. Giraffe made a guaranty deposit. Their
Law. Prior to its enactment, sellers unjustly enriched agreement was that in case Giraffe fails to pay any
themselves at the expense of their buyers; by recovering rental due, PCI will have cumulative remedies, such as,
the goods sold upon default of installment payers, by to recover all rentals for the remaining term of the
retaining the amounts already paid, and by claiming for lease and recover all amounts advanced for Giraffe’s
damages. Looking at the doctrine of Macondray, it account.
appears that in no instance may the mortgagee recover When PCI demanded for payment of the balance, it
any sum from the mortgagor after the foreclosure of the made a demand for either of the choices. Either to pay
mortgage. the balance hence Giraffe can keep the equipment or
But although
doctrine, the court
it seems thatagrees
the with the above
mortgagees arestated
not surrender them
rentals were if he
in fact cannot.
monthly The so-called
amortizations monthly
of the price
protected against perverse mortgagors. Examples of of the leased office equipment.
perverse mortgagors are those who deceitfully hide their The imperatives of equity, the contractual stipulations
mortgaged movables, or upon default of payment, and the actuations of the parties, the SC has treated a
refuse to give up its possession for foreclosure. When purported financial lease as actually a sale of movable
the mortgagor does these acts, the mortgagee has no property on installments and prevented recovery. The
choice but to institute a suit for replevin to recover Lease Agreement is in reality a lease with an option to
possession of the chattel and enforce his rights over purchase the equipment. This has been made manifest
such. It logically follows that the necessary expenses by the actions of PCI itself.
incurred by the mortgagee to regain possession of what In choosing replevin, PCI waived its right to bring an
he had a right to possess should be borne by the action to recover unpaid rentals.
mortgagor. Such recoverable expenses include attys
fees, and expenses incurred in seizing the chattel. In
this case, the court found that the amounts awarded by 13. LEGARDA v SALDANA
the lower court were reasonable.
The ruling in this case, in so far as it conflicts with FACTS: Saldana entered into a contract with Legarda
previously established doctrines, is pro tanto qualified. Hermanos. Legarda agreed to sell 2 equal lots for P1,500
each, payable in 120 equal installments over a period of
10 years at 10% per annum. Saldana paid 95 of the 120
12. PCI LEASING AND FINANCE INC v GIRAFFE-X installments over 8 years, which was recorded in his
CREATIVE IMAGING INC account with Legarda,
lots the payments werebut without
made. stating
The said as to stated
account which
FACTS: PCI Leasing and Giraffe entered into a Lease that Saldana still owed 1,311.72 for the 2 lots, although
Agreement whereby PCI Leasing leased several he had already pain more the P1,500, the value of one
machineries for a rent of P116, 878. 21/month for 36 lot.
months and P181, 362/month for 36 months for a total After 5 years, Saldana contacted Legardo Hermanos
of P10, 736, 647.56. Giraffe paid the amount of P3, 120, stating that he was interested in building a house on the
000 as guaranty deposit. However, after 1 year, Giraffe lots, however, he was prevented from doing such
defaulted in its monthly-rental payment obligations. because Hermanos failed to introduce the stipulated
After a 3-month default, PCI demanded a formal pay-or- improvements on the subdivision (roads to his lots). He
surrender-equipment type but the demand went further indicated his intentions to continue his
unheeded thus PCI instituted the instant case and payments.
prayed for the issuance for the writ of replevin. The In his reply, Legarda Hermanos said that since Saldana
trial court issued a writ of replevin. Giraffe filed a failed to complete the 120 payments in time, as they
motion to dismiss arguing that PCI was barred from have previously stipulated, all the amounts paid,
pursuing any other claim since the seizure of the 2 together with the improvements on the premises have
leased equipments because the contract was in reality a been considered as rents paid and as payment for
lease with option to buy. The RTC granted the motion to damages. Furthermore, the sale was cancelled.
dismiss ruling that it was akin to a contract covered by Saldana then filed an action demanding the delivery of
art. 1485 hence can no longer pursue its claim. Hence the 2 lots and for the execution of the corresponding
the case at bar. deed of conveyance after payment of the outstanding
ISSUE: W/N the contract was covered by Art. 1485 and balance.
Subsequently, Legarda Hermanos partitioned the
1484 hence barred PCI from recovering subdivision among the brothers and sisters, and the two
lots were among those allotted to Jose Legarda (co-
HELD: YES respondent).
A financial lease is one where a financing company The lower court sustained Legarda Hermanos’
would, in effect, initially purchase a mobile equipment cancellation of the contracts and dismissed Saldana’s
14. JESTRA DEV AND MANAGEMENT CORP v PACIFICO FACTS: Petitioner Luisa McLaughlin (seller) and private
respondent Ramon Flores (buyer) entered into a
FACTS: Daniel Pacifico signed a Reservation application contract of conditional sale of real property. The total
with Fil-Estate Marketing Assn for the purchase of a purchase price is P140,000. P26,550 should be paid upon
house nad lot and paid the reservation fee. The execution of the deed and the balance not later than
Reservation application contained the amounts to be May 31, 1977 with an interest of 1% per month until fully
paid in installments with interests. Unable to comply paid.
with the schedule of payments, Pacifico requested Flores failed to pay and hence petitioner filed a
Jestra to allow him to make periodic payments which complaint for the rescission of the deed of conditional
the latter granted. They later on executed a contract to sale. Eventually, the parties entered into a compromise
sell when the remaining balance was only P260K. agreement, which was accepted by the court.
Pacifico requested twice for a restructuring of his The parties agreed that Flores shall pay P50,000 upon
unsettled obligation which Jestra granted subject to signing of the agreement and the balance in 2 equal
certain conditions of additional penalties et al. As installments payable on June 30, 1980 and December
compliance to the condition, Pacifico issued 12 post- 31, 1980. Flores also agreed to pay P1,000 monthly
dated checks however he is unable to pay so he rental until the obligation is fully paid for the use of the
requested that he be allowed to dispose the property to subject matter of the deed of conditional sale. They
recover his interest and he could recover the 12 post also agreed that in the event Flores fails to comply with
dated checks, which was this time was denied by Jestra. his obligations, the petitioner will be entitled to the
Jestra then sent a notarial notice of cancellation that issuance of a writ of execution rescinding the deed of
theycontract
the are giving
willhim until a certaincancelled.
be automatically date to pay or else conditional
forfeited sale of
in favor andtheallplaintiff.
the payments made will be
Pacifico then filed a complaint before the HLURB On October 15, 1980, petitioner wrote to Flores
claiming that despite his full payment of the demanding payment of the balance on or before October
downpayment, Jestra failed to deliver to him the 31. This demand included the installment due on June
property and instead sold it to another buyer. HRLURB 30 and December 31, 1980. On October 30, Flores sent a
Arbiter decided in Pacifico’s favor finding Jestra liable. letter signifying his willingness and intention to pay the
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 34
full balance. at least 2 years of regular installment payments.
On November 7, petitioner filed a motion for writ of But in cases where less than 2 years of installments
execution alleging that Flores failed to pay the were paid, the seller shall give the buyer a grace period
installment due on June 1980 and also failed to pay the of not less than 60 days from the date the installment
monthly rentals from that date. She prayed that the became due. If the buyer fails to pay the installments
deed of conditional sale be rescinded with forfeiture of due at the expiration of the grace period, the seller may
all payments and payment of the monthly rentals and cancel the contract after thirty days from the receipt by
eviction of Flores. The trial court granted the motion. the buyer of the notice of the cancellation or the
On November 17, Flores filed a motion for demand for rescission of the contract by a notarial act.
reconsideration tendering at the same time a certified Assuming that under the terms of agreement the
manager’s check payable to petitioner and covering the December 31 installment was due when on October 15
entire obligation including the December 1980 petitioner demanded payment of the balance on or
installment. The trial court denied the motion. before October 31, petitioner could cancel the contract
On appeal, the CA ruled in favor of Flores holding that after 30 days from the receipt by Flores of the notice of
the delay in payment was not a violation of an essential cancellation.
condition
November which
17 or would warrant
just 17 a rescission
days from since On
the October 31 Considering
November 7 aspetitioner’s
a notice of motion for execution
cancellation, filed
petitioner on
could
deadline set by petitioner, Flores tendered the certified cancel the contract after 30 days from the receipt by
manager’s check and that it was inequitable for Flores Flores of said motion.
to forfeit all the payments made (P101,550). Flores’ tender of payment together with his motion
for reconsideration on November 17 was well within the
ISSUE: WHETHER it is inequitable to cancel the contract 30 day period granted by law.
and to have the amount paid by Flores be forfeited to The tender made by Flores of a certified bank
petitioner particularly after Flores had tendered the manager’s check was a valid tender of payment. It
certified manager’s check in full payment of the covered the full amount of the obligation. However,
obligation. – YES. although he had made a valid tender of payment which
preserved his rights as a vendee, he did not follow it
HELD: There is already substantial compliance by Flores with consignation or deposit of the sum due with the
with the compromise agreement. More importantly, the court. Hence he remains liable for the payment of his
Maceda law recognizes the vendor’s right to cancel the obligation because of his failure to deposit the amount
contract to sell upon the breach and nonpayment of the due with the court.
stipulated installments but requires a grace period after
anent
event reversion or reconveyance
that petitioner does not of the property
comply in the
with its their names
written and of
deed immediately
absolute thereafter,
sale. Whatto execute the
is clearly
obligation. With the absence of such a stipulation, it established by the plain language of the subject
may legally be inferred that there was an implied document is that when the said “Receipt of Down
agreement that ownership shall not pass to the Payment” was prepared and signed by petitioners, the
purchaser until he had fully paid the price. Article 1478 parties had agreed to a conditional contract of sale,
of the Civil Code does not require that such a stipulation consummation of which is subject only to the successful
be expressly made. Consequently, an implied stipulation transfer of the certificate of title from the name of
to that effect is considered valid and binding and petitioners’ father to their names. The suspensive
enforceable between the parties. A contract which condition was fulfilled on 6 February 1985 and thus, the
contains this kind of stipulation is considered a contract conditional contract of sale between the parties became
to sell. Moreover, that the parties really intended to obligatory, the only act required for the consummation
execute a contract to sell is bolstered by the fact that thereof being the delivery of the property by means of
the deed of absolute sale would have been issued only the execution of the deed of absolute sale in a public
upon the payment of the balance of the purchase price, instrument, which petitioners unequivocally committed
as may be gleaned from Adelfa Properties’ letter dated themselves to do as evidenced by the “Receipt of Down
16 April 1990 wherein it informed the vendors that it “is Payment.”
now ready and willing to pay you simultaneously with
the execution of the corresponding deed of absolute
sale.” 3. PNB v CA
2. CORONEL v CA FACTS:
• PNB owned a parcel of land which Lapaz Kaw Ngo
offered to buy. Events under the first letter-agreement
FACTS: In 1985, Coronel executed a document entitled • PNB accepted Lapaz’s offer subject to certain
"Receipt of Down Payment" in favor of Alcaraz for stipulations. The important ones are the following:
P50,000 dp of P1.24M as purchase price for an inherited 1. The selling price shall be P5.4million. Lapaz had
house and lot promising to execute a deed of absolute already paid P100,000 as deposit.
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 36
2. Upon failure to pay the additional deposit worth the vendor’s obligation to transfer title is subordinated
P970,000, the P100,000 shall be forfeited and PNB shall to a happening of a future and uncertain event. So that
be authorized to sell the property to another. if the suspensive condition does not take place, the
3. The property shall be cleared of its present tenants at parties would stand as if the conditional obligation
the expense of Lapaz. never existed.
4. Sale was subject to other terms and conditions to be • In the instant case, the second letter-agreement was
imposed. replete with conditions that Lapaz had to fulfill before
• Lapaz agreed, so she proceeded to clear the lot of its the sale could be executed. The sale was dependent
tenants at her own expense. upon Lapaz’s compliance with certain conditions (i.e.,
• However, due to difficulties in money, she requested payment, eviction of occupants). It was stipulated in
for adjustment of payment proposals, which the bank the contract that her failure to pay the additional
denied. PNB also reminded her that she had not yet sent deposit would allow PNB to forfeit the price and allow
her letter of conformity to the agreement reached and them to sell the property to other parties.
told her to pay the full price of P5.4million. If not, the • This stipulation took the nature of a reservation of
lot will be sold to other parties. title in the vendor until full payment of the purchase
• Lapaz
size requested
of the land was for a reduction
substantially of thePNB
reduced. price as the
agreed. price,
rescind or
thegiving the the
contract vendor the the
moment right to fails
buyer unilaterally
to pay
• PNB still did not receive payment from Lapaz, and within the fixed period.
gave the latter the last chance to pay the balance of the • In addition, Lapaz’s refusal to evict the occupants on
down payment. If she failed to pay, the sale shall be the ground that she had already done so under the first
cancelled and the P100,000 payment shall be forfeited. agreement was not justified as the two letter-
• Lapaz failed to pay, so P100,000 was forfeited and the agreements were different transactions all together.
sale never materialized. PNB leased the premises to a Her fulfillment of the conditions in the first one did not
certain Rivera. carry over to the second one despite the identity of the
• Lapaz requested for a refund of her deposit in the stipulation.
total amount of P660,000 and asked that the forfeited •The P100,000 and the P200,000 were not also earnest
P100,000 be reduced to P30,000. PNB agreed. Events money. Article 1482, which defines earnest money,
under the second letter-agreement gives only a disputable presumption that prevails in the
• Lapaz requested for a revival of the previously absence of rebuttal evidence. In the instant case, the
approved offer to PNB. PNB approved. letter-agreements themselves were the evidence that
• All conditions as in the first agreement were the same, proved the intention of the parties to enter into
except for the purchase price and deposit. The price negotiations leading to a contract of sale mutually
was P5.1million, the deposit was P200,000. acceptable to both as to absolutely bind them. The
• Lapaz refused, however, to conform to the condition P100,000 and the P200,000 could not have been proof of
of vacating the premises at her expense as she had the perfection of the sale as the letter-agreements were
already done so under the first agreement. (She full of condition precedents before the sale could be
apparently
continuationconsidered this so
of the first second letter-agreement
she said that she wasasno
a executed.
part of theThe money thus of
consideration given could
PNB’s be considered
promise as
to reserve
longer required to evict the tenants as she had already the property for Lapaz.
done so.) Besides, according to her, the occupants of
the property were tenants of PNB. PNB refused this
offer. 4. BABASA v CA
•To prevent the forfeiture of her P200,000 deposit, she
signed the letter-agreement. She told PNB that she was FACTS: In 1981, a contract of “Conditional Sale of
willing to pay the remaining deposit of P800K as long as Registered Lands” was executed between the spouses
it was PNB who would clear the property. PNB refused, Vivencio and Elena Babasa as vendors and Tabangao
and forfeited the P200,000 of Lapaz. Realty Inc. (Tabangao) as vendee over 3 parcels of land
• PNB informed Lapaz that they had already decided to in Batangas. Since the certificates of title over the lots
sell the property for not less than P7M. were in the name of third persons who had already
executed deeds of reconveyance and disclaimer in favor
ISSUES: of the Babasas, it was agreed that the total purchase
1. Whether or not there was a perfected contract of price of P2,121,920.00 would be paid in the following
sale. – No. There was no perfected contract of sale. manner: P300,000.00 upon signing of the contract, and
2. Whether or not the P100,000 or the P200,000 was P1,821,920.00 upon presentation by the Babasas of
earnest money. – No. They were not earnest money. transfer certificates of titles in their name, free from all
liens and encumbrances, and delivery of registerable
HELD: documents of sale in favor of Tabangao within 20
• It is important to note that the first letter-agreement
was cancelled and thereafter no longer existed. The months from
meantime, the the signing
retained of the
balance contract.
of the purchaseIn price
the
second letter-agreement is not a contract of sale but a would earn interest at 17% per annum or P20,648.43
contract to sell whose conditions were not fulfilled, monthly payable to the Babasas until 31 December 1982.
which prevented the obligations therein from obtaining It was expressly stipulated that Tabangao would have
obligatory force. the absolute and unconditional right to take immediate
• A contract to sell is one where the obligatory force of possession of the lots as well as introduce any
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 37
improvements thereon. On 18 May 1981 Tabangao instant case, ownership over Lots 17827-A, 17827-B and
leased the lots to Shell Gas Philippines, Inc. (SHELL), 17827-C passed to Tabangao both by constructive and
which immediately started the construction thereon of a actual delivery. Constructive delivery was accomplished
Liquefied Petroleum Gas Terminal Project, an approved upon the execution of the contract of 11 April 1981
zone export enterprise of the Export Processing Zone. without any reservation of title on the part of the
Tabangao is the real estate arm of SHELL. The parties Babasas while actual delivery was made when Tabangao
substantially complied with the terms of the contract. took unconditional possession of the lots and leased
Tabangao paid the first installment of P300,000.00 to them to its associate company SHELL which constructed
the Babasas while the latter delivered actual possession its multi-million peso LPG Project thereon.
of the lots to the former. In addition, Tabangao paid In Romero v. Court of Appeals and Lim v. Court of
P379,625.00 to the tenants of the lots as disturbance Appeals, the Court distinguished between a condition
compensation and as payment for existing crops as well imposed on the perfection of a contract and a condition
as P334,700.00 to the owners of the houses standing imposed merely on the performance of an obligation.
thereon in addition to granting them residential lots While failure to comply with the first condition results in
with the total area of 2,800 square meters. Tabangao the failure of a contract, failure to comply with the
likewise paid the
month period stipulated
amounting monthly interest
to P408,580.80. for the the
Meanwhile, 20- second
refuse merely gives the
to proceed withother
the party
sale the
or option to either
to waive the
Babasas filed Civil Case 519 and Petition 373 for the condition. In the present case, the spouses’ contract
transfer of titles of the lots in their name. However, 2 with Tabangao did not lose its efficacy when the 20-
days prior to the expiration of the 20-month period, month period stipulated therein expired without the
specifically on 31 December 1982, the Babasas asked spouses being able to deliver clean certificates of title
Tabangao for an indefinite extension within which to such that Tabangao may no longer demand performance
deliver clean titles over the lots. They asked that of their obligation.
Tabangao continue paying the monthly interest of
P20,648.43 starting January 1983 on the ground that
Civil Case 519 and Petition 373 had not yet been 5. VALDEZ v CA
resolved with finality in their favor. Tabangao refused
the request. In retaliation the Babasas executed a FACTS: Carlos Valdez Sr. and Josefina Valdez were
notarized unilateral rescission dated 28 February 1983 owners of a parcel of land. When Carlos Sr. died,
to which Tabangao responded by reminding the Babasas Josefina subdivided the property into eight lots. On May
that they were the ones who did not comply with their 1, 1979, she executed a special power attorney,
contractual obligation to deliver clean titles within the authorizing her son Carlos Jr, who was a practicing
stipulated 20-month period, hence, had no right to lawyer, to sell a portion thereof (lots 3-C and 3-D) to
rescind their contract. The Babasas insisted on the Jose Lagon for P80,000. Part of consideration was also
unilateral rescission and demanded that SHELL vacate for Lagon to transfer the Rural Bank of Isulan to the
the lots. subject property, and to construct a commercial
On 19 performance
specific July 1983 Tabangao instituted
with damages in the an
RTCaction for
Batangas building beside the bank. Without knowledge of
Josefina, Carlos Jr. entered into a different agreement,
City to compel the spouses to comply with their selling the property for P40/square meter, and it was
obligation to deliver clean titles over the properties. indicated in the deed that the P80,000 had already been
The Babasas moved to dismiss the complaint on the paid in cash. A downpayment of P20,000 was paid by the
ground that their contract with Tabangao became null wife of Lagon, to which Josefina issued a receipt. Carlos
and void with the expiration of the 20-month period Jr. prepared an affidavit, signed by Lagon, the transfer
given them within which to deliver clean certificates of of the bank and the construction of commercial building
title. SHELL entered the dispute as intervenor praying as part of the condition, else the deed of absolute sale
that its lease over the premises be respected by the shall be null and void without need of demand. Lagon
Babasas. RTC ruled in favor of Tabangao and Shell. CA failed to comply with the considerations stated in the
affirmed. deed, to which the Valdez refused to deliver the torrens
title. Lagon had Lot 3-C to be subdivided into three
ISSUE: W/N there was a contract of absolute sale separate lots, to which he paid the professional
between the Babasa and Tabagao services. Josefina used the subdivision survey, and sold
Lot 3-C-2 to PCIB, evidenced by a deed of absolute sale,
HELD: YES. Although denominated “Conditional Sale of exectued a real mortgage over Lot 3-C-3 to DBP, and
Registered Lands,” the contract between the spouses executed a deed of absolute sale in favor of Carlos Jr.
and Tabangao is one of absolute sale. Aside from the over Lot 3-C-1. She also sold lot 3-D to Engr. Rodolfo
terms and stipulations used therein indicating such kind Delfin. Lagon filed a complaint against Josefina and
of sale, there is absolutely no proviso reserving title in Carlos Jr for specific performance and damages. Trial
the Babasas until full payment of the purchase price,
nor any stipulation giving them the right to unilaterally Court ruled
itself, rulingininfavor
favorof
orLagon.
Lagon. CA reversed, but reversed
rescind the contract in case of non-payment. A deed of
sale is absolute in nature although denominated a ISSUE: Whether the agreement was a contract of sale or
conditional sale” absent such stipulations. In such cases, contract to sell / Whether the contract was ratified
ownership of the thing sold passes to the vendee upon
the constructive or actual delivery thereof. In the RULING: It is a contract of sale. The nature of the
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 38
contract must be inferred from the express terms and question to Jabil as early as 27 March 1965 so that the
agreement and from the contemporaneous and latter constructed thereon Sally’s Beach Resort also
subsequent acts of the parties thereto. When Josefina, known as Jabil’s Beach Resort in March, 1965; Mactan
through her son acting a an attorney-in-fact, executed a White Beach Resort on 15 January 1966 and Bevirlyn’s
deed of absolute sale in favor of Lagon, she did not Beach Resort on 1 September 1965. Such facts were
reserve the ownership of the property, subject to the admitted by the Dignos spouses.
completion of payment of the consideration. However,
Carlos Jr. exceeded his authority when he entered into a
different agreement with Lagon, making the contract 7. UNIVERSITY OF THE PHILIPPINES v DELOS ANGELES
unenforceable, unless ratified. In this case, it was
ratified when Josefina accepted the downpayment of FACTS:
P20,000 and issued a receipt as a consequence of • UP was given a land grant which shall be developed to
ratifying the contract. It must be noted, however, that obtain additional income for its support.
an affidavit was signed by Lagon as part of the • UP and ALUMCO entered into a logging agreement
consideration, to transfer the Rural Bank of Isulan as where ALUMCO was granted the exclusive authority for
well
both as constructing
failed a commercial
to perform by Lagon,bank beside
making thethe bank,
deed of an extendible period of 5 years (by mutual agreement),
to cut and remove timber from the land grant
absolute sale null and void. It cannot be considered as inconsideration of royalties and fees to be paid to UP.
an afterthought contrived by Carlos Jr. since Lagon • ALUMCO incurred an unpaid amount of P219,363. UP
admitted in court the authenticity of the affidavit, and demanded payment but it failed to pay. ALUMCO
its binding effect against him. There was no need to received a letter that UP would rescind or terminate
rescind the contract because it was clearly stipulated their logging agreement. They executed an instrument
that failure to comply with such obligation makes the “Acknowledgement of Debt & Proposed Manner of
deed null and void, though petitioners are obliged to Payment” which the UP President approved. ALUMCO
refund the respondent's partial payment of the subject agreed to give their creditor (UP) the right to consider
property. the logging agreement as rescinded without necessity of
any judicial suit and creditor will be entitled to P50,000
for liquidated damages.
6. DIGNOS v CA • ALUMCO continued logging but still incurred unpaid
accounts. UP then informed them that as of that date,
FACTS: Dignos is the owner of a parcel of land in Lapu- they considered rescinded the agreement and of no
Lapu City, which they sold to Jabil for P28,000, payable further legal effect. UP then filed for collection of the
in 2 installments and with an assumption of unpaid accounts and the trial court gave them
indebtedness with First Insular Bank of Cebu for preliminary injunction to prevent ALUMCO from
P12,000. However, Dignos also sold the same land in continuing their logging.
favor of Cabigas, who were US citizens, for P35,000. A • Through a public bidding, the concession was awarded
Deed of Absolute Sale was executed in favor of the to Sta. Clara Lumber Company and a new agreement
Cabigas spouses. was entered into between them and UP.
Jabil filed a suit against Dignos with CFI of Cebu. RTC • ALUMCO tried to enjoin the bidding but the contract
ruled in favor of Jabil and declared the sale to Cabigas was already concluded and Sta. Clara started its
null and void. On appeal, CA affirmed RTC decision with operation.
modification. • Upon motion by ALUMCO, UP was declared in
contempt of court for violating the writ of injunction
ISSUE: W/N the contract between Dignos and Jabil is a against them.
contract of sale (as opposed to a contract to sale) • ALUMCO’s contentions are the following:
a. It blamed its former general manager for their
HELD: YES. A deed of sale is absolute in nature although failure to pay their account.
denominated as a “Deed of Conditional Sale” where b. Logs cut were rotten; thus, they were unable to
nowhere in the contract in question is a proviso or sell them.
stipulation to the effect that title to the property sold is c. UP’s unilateral rescission was invalid without a
reserved in the vendor until full payment of the court order.
purchase price, nor is there a stipulation giving the
vendor the right to unilaterally rescind the contract the ISSUE: W/N UP can validly rescind its agreement with
moment the vendee fails to pay within a fixed period. In ALUMCO even without court order. –Yes. UP can
the present case, there is no stipulation reserving the unilaterally rescind the agreement.
title of the property on the vendors nor does it give
them the right to unilaterally rescind the contract upon HELD:
happened
was if there had
never registered andbeen a was
there sale.noThe
newsupposed sale
TCT in favor
FACTS: In 1965, Orlinos (3 co-owners) mortgaged a
parcel of land in Diliman, QC to Progressive Commercial of the Orlinos. They also acknowledged that the title to
Bank as security for a P100K loan. They failed to pay the the property would remain with the bank until their
loan and the mortgage was foreclosed, where the bank transaction shall be finalized. Moreover, the
acquired the property as the highest bidder at the consideration agreed upon was never paid to convert
auction sale. The bank transferred all its assets, the agreement into a contract of sale. As payment of
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 40
the consideration was a positive suspensive condition, SC's decision reversing the CA's decision and ordering the
title to the property never passed to the private RD to cancel the notice of lis pendens on the titles
respondents. Thus, the property was legally issued to AFPMBAI, declaring it as buyer in good faith
unencumbered and still belonged to PBC when it was and for value.
sold to Lim. Investco Inc and Solid Homes Inc entered into a
On RESCISSION: Although a contract to sell imposes contract to sell. During this time, the titles to the
reciprocal obligations and cannot be terminated Quezon City and Marikina properties had not been
unilaterally by either party, judicial rescission is transferred in the name of Investco Inc as asignee of the
required under Art. 1911 of the CC. However, this rule is owners, Angela Perez Staley and Antonio Perez. Thus,
not absolute. Jurisprudence has shown that a party may Investco Inc merely agreed to sell and Solid Homes to
take it upon itself to consider the contract rescinded buy the former's rights and interest in the properties.
and act accordingly albeit subject to judicial However, Solid Homes Inc. reneged or defaulted on its
confirmation, which may or may not be given. It is true obligation. Thus, Investco Inc rescinded extra-judicially
that the rescinding party takes a risk that its action may such contract to sell. After such event, AFPMBAI and
not be approved by the court. The Orlinos obligated Investco Inc entered into a contract of absolute sale,
themselves
the propertytoindeliver to PBC
Caloocan City.P160K and the
However, their share did
Orlinos on wherein thename.
titles in its former paid in full, causing the transfer of
not act on their obligations. PBC could not be required
to wait for them forever. Thus, PBC had the right to ISSUE: W/N Investco Inc properly rescinded its contract
consider the contract to sell between them terminated to sell and buy with Solid Homes Inc
for non-payment of the stipulated consideration.
HELD: YES. Upon Solid Homes Inc's failure to comply
with its obligation under the contract, there was no
10. AFP MUTUAL BENEFIT ASSN INC v CA need to judicially rescind the contract. Failure by one of
the parties to abide by the conditions in a contract to
FACTS: This case involved Solid Homes Inc's MR of the sell resulted in the rescission of the contract.
*and
Azotea instructed
to operate the couple
its radio. on how
Ralph Silo to start
no longer the van
conducted its under chassis.
a test drive; he and his wife assumed that there were no
defects in the van as it was brand new. 5. ANG v CA
* Josephine Silo, accompanied by Glenda Pingol, went to
Manila on board the van, with Glenda’s husband as the FACTS:
driver. On their return trip to Naga from Manila, the * Under a car-swapping scheme, Bruno Soledad sold his
driver heard a squeaking sound, which seemed to be Mitsubishi GSR sedan 1982 model to Jaime Ang by a
coming from underneath the van. The squeaking sound Deed of Absolute Sale
persisted and upon examination at the Shell gasoline * For his part, Ang conveyed to Soledad his Mitsubishi
station, it was found out that some parts underneath Lancer model 1988 also by a Deed of Absolute Sale
the van had been welded. * As Ang’s car was of a later model, Soledad paid him an
* Guinhawa insisted that the defects were mere factory additional 55,000
defects. As the defects persisted, the spouses requested * Ang, a buyer and seller of used vehicles, later offered
that Guinhawa replace the van with 2 Charade-Daihatsu the Mitsubishi GSR for sale through Far Eastern Motors, a
vehicles within a week or two, with the additional costs second hand auto display center. The car was even sold
to be taken from their downpayment. to a certain Paul Bugash for 225k.
* The spouses brought the car to Rx Auto Clinic for * Before the Deed could be registered in Bugash’s name,
examination wherein the mechanic discovered that it however, the vehicle was seized by virtue of a writ of
was the left front stabilizer that was producing the replevin on account of the alleged failure of Ronaldo
annoying sound, and that it had been repaired. Panes, the owner of the car prior to Soledad, to pay the
* Josephine Silo filed for rescission of the sale and
refund of their money. *mortgage debtthe
To secure constituted thereon.
release of the vehicle, Ang paid BA
* They instituted also a criminal complaint for other Finance the amount of 62,038.47. Soledad refused to
deceits made by Guinhawa by making fraudulent reimburse the said amount, despite repeated demands,
representations about the car being brand new and that drawing Ang to charge him for estafa with abuse of
it never encountered an accident. confidence.
the burdenUnder
overcome. of proof. However,
the law, thismust
the defect theyexist
failed to
at the The remedies
defects are eitherof withdrawal
breach of warranty
from the against
contracthidden
or to
time the sale was made and at the time the product left demand a proportionate reduction of the price plus
the hands of the seller, which the spouses failed to damages in either case. In this case, though the spouses
prove. The feeds were belatedly tested—3 months after failed to make out their case, hence they should be
the death of the broilers and hogs. This means that at liable for their debt.
EXTINGUISHMENT OF SALE
1. ROBERTS v PAPIO obligation, the corporation returned the owner’s
duplicate TCT which was then delivered to Amelia
FACTS: Roberts.
* The Spouses Papio were the owners of a 274 sqm * The parties (A. Roberts as lessor and Martin Papio as
residential lot located in Makati. In order to secure a lessee) executed a 2-year contract of lease. The
59k loan from the Amparo Investments Corp, they contract was subject to renewal or extension for a like
executed a real estate mortgage on the property. Upon period at the option of the lessor, the lessee waiving
Papio’s failure to pay the loan, the corporation filed a thereby the benefits of an implied new lease. The lessee
petition for the extrajudicial foreclosure of the was obliged to pay monthly rentals of 800 to be
mortgage. deposited in the lessor’s account.
* Since the couple needed money to redeem the * A new TCT was issued in the name of Amelia Roberts
property
estate and to they
mortgage, prevent the foreclosure
executed of the Sale
a Deed of Absolute real as owner.
for anotherMartin
year. Papio paid
He then the rentals
failed and thereafter
to pay rentals, but he
over the property in favor of Martin Papio’s cousin, and his family nevertheless remained in possession of
Amelia Roberts. the property for almost 13 years.
* Of the 95k purchase price, 59k was paid to the Amparo * A. Roberts reminded Papio that he failed to pay
Investments Corp, while the 26k difference was retained monthly rentals amounting to a total liability of 410k.
by the spouses. As soon as the spouses had settled their She demanded that Papio vacate the property within 15
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 44
days from receipt of the letter in case he failed to settle HELD: NO. Their right has already prescribed.
the amount. Considering that no period for redemption was agreed
* A. Roberts filed a complaint for unlawful detainer and upon, the law imposes a 4-year limitation. This means
damages against Martin Papio that from the time the school was merged to Cebu State
College, they had 4 years, or until June 1987 to redeem
ISSUE: W/N THE DEED OF ABSOLUTE SALE AND the property. However, they failed to do so within the
CONTRACT OF LEASE EXECUTED BY THE PARTIES IS AN period. Failure to redeem automatically consolidates
EQUITABLE MORTGAGE OVER THE PROPERTY ownership in favor of the vendee. The fact that the right
to redeem was annotated does not make it
RULING: NO imprescriptible, it only serves to notify third persons.
An equitable mortgage is one that, although lacking in
some formality, form or words, or other requisites
demanded by a statute, nevertheless reveals the 3. SOLID HOMES INC v CA
intention of the parties to charge a real property as
security for a debt and contain nothing impossible or FACTS:
contrary
equitabletomortgage
law. A contract
if the between
followingtherequisites
parties is are
an * Solid Homes executed in favor of State Financing
Center a Real Estate Mortgage on its properties
present: a. the parties entered into a contract embraced in the TCT, in order to secure the payment of
denominated as a contract of sale and b. the intention a loan of 10M which the former obtained from the
was to secure an existing debt by way of mortgage. The latter.
decisive factor is the intention of the parties. * A year later, Solid Homes applied for and was
In an equitable mortgage, the mortgagor retains granted an additional loan of 1, 511,270.03 by State
ownership over the property but subject to foreclosure Financing, and to secure its payment, Solid executed an
and sale at public auction upon failure of the mortgagor amendment to real estate mortgage whereby the credits
to pay his obligation. secured by the first mortgage on the abovementioned
In contrast, in a pacto de retro sale, ownership of the properties were increased from 10M to 11,511,270.03.
property sold is immediately transferred to the vendee a * Solid homes obtained additional credits and
retro subject only to the right of the vendor a retro to financing facilities from State Financing in the sum of
repurchase the property upon compliance with legal 1,499,811.97 and to secure its payment, the former
requirements for the repurchase. The failure of the executed the amendment to real estate mortgage
vendor a retro to exercise the right to repurchase within whereby the mortgage executed on its properties was
the agreed time vests upon the vendee a retro, by again amended so that the loans or credits secured
operation of law, absolute title over the property. thereby were further increased from 11,511, 270.03 to
One repurchases only what one has previously sold. 13,011,082.00
The right to repurchase presupposes a valid contract of * When the obligations became due and payable, State
sale between same parties. By insisting that he had Financing made repeated demands upon Solid homes for
repurchased the property,
the deed of absolute Papio thereby
sale executed by himadmitted that
and Roberts the payment thereof, but the latter failed to do so.
* State Financing filed a petition for extrajudicial
was in fact and in law a deed of absolute sale and not an foreclosure of the mortgages who in pursuance of the
equitable mortgage; he had acquired ownership over the petition, issued a notice of sheriff’s sale whereby the
property based on said deed. mortgaged properties of Solid homes and the
Respondent, is thus estopped from asserting that the improvements existing thereon, including the V.V.
contract under the deed of absolute sale is an equitable Soliven Towers II Building were set for public auction
mortgage unless there is an allegation and evidence of sale in order to satisfy the full amount of Solid homes’
palpable mistake on the part of respondent, or a fraud mortgage indebtedness, the interest thereon, and the
on the part of Roberts. fees and expenses incidental to the foreclosure
proceedings.
* Before the scheduled public auction sale, the
2. MISTERIO v CEBU STATE COLLEGE OF SCIENCE AND mortgagor Solid homes made representations and
TECHNOLOGY induced State Financing to forego with the foreclosure
of the real estate mortgage. By reason thereof, State
FACTS: Asuncion sold to Sudlon Agricultural High School Financing agreed to suspend the foreclosure of
(SAHS) a parcel of land, reserving the right to mortgaged properties, subject to the terms and
repurchase the same in case (1) the school ceases to conditions they agreed upon, and in pursuance of the
exist, or (2) the school transfers location. She had her said agreement, they executed a document entitled
right annotated. She died. By virtue of BP 412, SAHS was MEMORANDUM OF AGREEMENT/DACION EN PAGO.
merged with the Cebu State College, effective June
1983.right
their In 1990, the heirs
to redeem, of Asuncion
claiming sought
that school hastoceased
exercise
to ISSUE:
exist. 1. W/N THE MEMORANDUM OF AGREEMENT/
DACION EN PAGO EXECUTED BY THE PARTIES IS
ISSUE: W/N the heirs of Asuncion may still exercise their VALID AND BINDING
right to redeem the property 2. W/N SOLID HOMES CAN CLAIM DAMAGES
ARISING FROM THE NON-ANNOTATION OF ITS
1. Whether the RTC had jurisdiction over the case 6. FRANCISCO v BOISER
(property issue)
2. Whether mortgage
equitable the sale was considered as an FACTS:
• Petitioner Adalia Francisco and three of her sisters,
Ester, Elizabeth, and Adeluisa, were co-owners of four
RULING: Even though the case was filed less than one parcels of registered land in Caloocan City
year after the demand to vacate, making it an action of • On August 1979, they sold 1/5 of their undivided share
unlawful detainer, there were other issues to be to their mother, Adela Blas, for PhP10,000, making her a
considered such as: a) the validity of the transfer of co-owner of the real property to that extent
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 46
• 7 years later, in 1986, however, Adela sold her 1/5 under the law must be notified of the sale
share for PhP10,000 to respondent Zenaida Boiser, • Notice by the co-owner likewise removes all doubt as
another sister of petitioner to the fact of the sale, its perfection, and its validity by
• In 1992 or 6 years after the sale, Adalia received not immediately notifying, or not notifying at all, a co-
summons with a copy of a complaint by Zenaida owner, the vendor can delay or even effectively prevent
demanding her share in the rentals being collected from the meaningful exercise of the right of redemption
the tenants of the Ten Commandments Building, which • However, it would be unjust in the case at bar to
stands on the co-owned property require the vendor Adela to serve notice of the sale,
• Adalia then informs Zenaida that she was exercising when the fact has already been established in both
her right of redemption as co-owner of the subject lower courts Adalia has effectively exercised her right
property, depositing for that purpose PhP10,000 with when she deposited the PhP10,000 redemption price 7
the Clerk of Court days after receiving the summons
• The case was however dismissed after Zenaida was
declared non-suited, and Adalia’s counterclaim was thus Fallo
dismissed as well • Petition granted, decision of the CA reversed
• 3 years
the after, of
redemption Adalia institutes contending
the property, a complaintthat
demanding
the 30- • The
one in decision
Butte v. in Etcuban
Manuel v. CA
Uy and is abandoned,
Sons, and the
Inc., as affirmed in
day period for redemption under Art. 1623 had not Salatandol v. Retes, upheld
begun to run against her or any of the other co-owners,
since the vendor Adela did not inform them about the NOTE
sale, which fact they only came to know of when Adalia • The Court failed to negate or possibly appreciate the
received the summons in 1992 fact of Adalia’s knowledge of the sale prior to the
• Zenaida on the other hand contends that Adalia summons, as proven her letter-advise to the tenants of
already knew of the sale even before she received the the building
summons since Zenaida had informed Adalia by letter of • The period given by the Court to Adalia was 30 days
the sale with a demand for her share of the rentals after the receipt of the summons on 5 August 1992,
three months before filing suit, attaching to it a copy of which is 4 September 1992
the deed of sale
• Adalia’s receipt of the said letter is proven by the fact
that within a week, she advised the tenants of the 7. SORIANO v BAUTISTA
building to disregard Zenaida’s letter-demand
• The trial court dismissed the complaint for legal FACTS: Bautista spouses mortgaged their lot to Soriano,
redemption, holding that Art. 1623 does not prescribe who took possession thereof and cultivated the same.
any particular form of notifying co-owners on appeal, Pursuant to Par. 5 of their agreement, Soriano decided
the CA affirmed to buy the lot. Bautista refused to sell claiming that
being mortgagors, they cannot be deprived of their right
ISSUE: Whether
to which the the
deedletter-demand
of sale wasby attached,
Zenaida to can
Adalia,
be to redeem the property.
considered as sufficient compliance with the notice ISSUE: W/N Soriano may buy the mortgaged property of
requirement of Art. 1623 for the purpose of legal Bautista
redemption
HELD: YES. True that the transaction is a mortgage,
HELD: which carried with it a customary right of redemption.
• The petitioner points out that the case does not However, the mortgagor’s right to redeem was rendered
concern the particular form in which such notice must defeasible at the election of the mortgagees by virtue of
be given, but rather the sufficiency of notice given by a Par. 5, allowing them the option to purchase the said
vendee in lieu of the required notice to be given by the lot. There is nothing immoral or illegal about such
vendor or prospective vendor stipulation. It was supported by the same consideration
• The text of Art. 1623 clearly and expressly prescribes as the mortgage contract and constituted an irrevocable
that the 30 days for making the redemption shall be continuing offer within the time stipulated. That being
counted from notice in writing by the vendor it makes the case, Bautista spouses must be compelled to honor
sense to require that notice be given by the vendor and the sale.
nobody else, since the vendor of an undivided interest is
in the best position to know who are his co-owners, who
HELD: YES. The assignor (NYCO) warrants both the RULING: It is a conventional subrogation. An assignment
existence and legality of the credit, as well as the of credit has been defined as the process of transferring
solvency of the debtor. If there is a breach of any of the the right of the assignor to the assignee who would then
2 warranties, the assignor is liable to the assignee. That have a right to proceed against the debtor. Consent of
being the case, NYCO cannot evade liability. So long as the debtor is not required is not necessary to product its
the credit remains unpaid, the assignor remains liable legal effects, since notice of the assignment would be
notwithstanding failure to give notice of dishonor that is enough. On the other hand, subrogation of credit has
because the liability of NYCO stems form the been defined as the transfer of all the rights of the
assignment, not on the checks alone. creditor to a third person, who substitutes him in all his
rights. It requires that all the related parties thereto,
the srcinal creditor, the new creditor and the debtor,
2. LICAROS v GATMAITAN enter into a new agreement, requiring the consent of
the debtor of such transfer of rights. In the case at
FACTS: Abelardo Licaros invested his money worth hand, it was clearly stipulated by the parties in the
$150,000 with Anglo-Asean Bank, a money market memorandum of agreement that the express conformity
placement by way of deposit, based in the Republic of of the third party (debtor) is needed. The memorandum
Venatu. Unexpectedly, he had a hard time getting back contains a space for the signature of the Anglo-Asean
his investments as well as the interest earned. He then Bank written therein "with our conforme". Without such
sought the counsel of Antonio Gatmaitan, a reputable signature, there was no transfer of rights. The usage of
banker and investor. They entered into an agreement, the word "Assignment" was used as a general term, since
where a non-negotiable promissory note was to be Gatmaitan was not a lawyer, and therefore was not
executed in favor of Licaros worth $150,000, and that well-versed with the language of the law.
Gatmaitan would take over the value of the investment