G.R. No. L-10414- MANILA SURETY and FIDELITY CO., INC.

, plaintiff-appellee,
vs.
TEODULO M. CRUZ, defendant-appellant.

Facts: On October 20, 1950, the Price Stabilization Corporation as legal successor of the National Rice
and Corn Corporation, filed Civil Case No. 12379 in the Court of First Instance of Manila seeking to make
the Manila Surety and Fidelity Co., Inc., liable on the bond it has posted on behalf of Felicisima Policarpio
in the sum of P2,472.75. Subsequently, or on November 8, 1950, the Price Stabilization Corporation filed
also Civil Case No. 12510 of the same court seeking to make the same company liable on the bond it has
posted on behalf of Herminia Cruz for P2,472.75. Before Cruz could be served with summons, the latter
case was dismissed without prejudice to its reinstatement.
On May 23, 1952, the personal properties mortaged to plaintiff were levied on by virtue of a writ of
execution issued in Civil Case No. 846 of the Court of First Instance of Rizal,
On May 31, 1952, defendant bound himself to settle Civil Case No. 12379 with the Naric authorities on
or before June 9, 1952 with the express, stipulation that plaintiff may take possesion of the mortgaged
properties should he fail to effect the settlement. However, defendant failed to effect such settlement
and merely obtained a postponement of the trial. On June 11, 1952, plaintiff requested the sheriff to
effect the delivery to it of the properties covered by the mortgage. But despite the rights asserted by
plaintiff under the letter agreement approved by defendant and as a third party claimant and chattel
mortgaged, the defendant refused to deliver the properties.

ISSUE: WON Appellant's main assignment of error is predicated on the fact that action instituted against
him by appellee is premature because the principal debtors for whom appellee had posted a bond have
not yet been made actually liable for any obligation to the Naric as in fact its claim is still being disputed
in Civil Case No. 12379 of the court of First Instance of Manila. 

HE;LD: NO. there is no merit in this contention. In the indemnity agreements executed by appellant in
favor of appellee, the appears the following clause: "Said indemnity shall be paid to the COMPANY as
soon as it has become liable for the payment any amount, under the above mentioned bond, whether or
not it shall have paid such sum or sums of money, or any part thereof."

Payongayong v. CA

FACTS:
Eduardo Mendoza was the registered owner of a parcel of land situated in Barrio San Bartolome,
Caloocan. He mortgaged the land to Meralco Employees Savings and Loan Association (MESALA) to
secure a loan of ₱81,700.00. Mendoza executed a Deed of Absolute Sale with Assumption of  Mortgage
in favor of Spouses Isabelo and Erlinda Payongayong and bound themselves to pay the mortgage
indebtedness and consideration of ₱50,000.00. Without knowledge of petitioners, the same property
was mortgaged for a 2nd time to secure a loan of ₱758,000.00. Meanwhile, the subject property was
sold to Spouses Clemente and Rosalinda Salvador. Thus, complaint for annulment of deed of absolute
sale was filed by Spouses Payongayong. They contend that Spouses Mendoza meticulously sold to
respondents the property which was priorly sold to them and that respondents acted in bad faith in
acquiring it, having absolute knowledge of the Deed of Absolute Sale with Assumption of Mortgage
between petitioners and Mendoza. Further, the deed of sale was simulated and therefore, null and void.
Respondents claim that they are entitled to the protection accorded to purchasers in good faith for they
did not rely upon Mendoza’s title. Rosalia personally inspected the property and verified with Registry of
Deeds of Quezon City if Mendoza was indeed the registered owner.
ISSUE:
Was the sale between Mendoza and Spouses Salvador simulated?
HELD:
No. Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately made
by the agreement of the parties, in order to produce, for the purpose of deception, the appearance of a
juridical act which does not exist or is different from that which is executed. Its requisites are: a) an
outward declaration of will different from the will of the parties; b) the false appearance must have
been by mutual agreement; and c) the purpose is to deceive third persons. The claim of simulation does
not lie. The cancellation of Mendoza’s certificate of title over the property and procurement of one in its
stead in the name of respondents, which acts were directed towards the fulfillment of the purpose of
the contract unmistakably show the parties intention to give effect to their agreement. However, the
Court cannot come to petitioners’ succor at the expense of respondents who are innocent purchasers in
good faith.

MAPALO VS MAPALO
Facts:
The spouses Miguel Mapalo and Candida Quiba were the registered owners of a residential land located
in Pangasinan. The spouses donated the eastern half of the land to Miguel’s brother – Maximo Mapalo
who was about to get married. However, they were deceived into signing, on October 15, 1936, a deed
of absolute sale over the entire land in Maximo’s favor. Their signatures were procured by fraud
because they were made to believe by Maximo and the lawyer who acted as notary public who
“translated” the document, that the same was a deed of donation in Maximo’s favor covering one-half
of their land. (It must be noted that the spouses are illiterate farmers).Although the document of sale
stated a consideration of Five Hundred (P500.00) Pesos, the aforesaid spouses did not receive anything
of value for the land.
In 1938, Maximo Mapalo, without the consent of the spouse, registered the sale in his favor. After
thirteen years (1951), he sold the land to the Narcisos, who thereafter registered the sale and obtained
a title in their favor. In 1952, the Narcisos filed a complaint with the CFI to be declared owners of the
entire land, for possession of its western portion; for damages; and for rentals. The Mapalo spouses filed
a counterclaim seeking cancellation of the the Narcisos’ titles as to the western half of the land. They
said that their signatures to the deed of sale of 1936 was procured by fraud and that the Narcisos were
buyers in bad faith.They also filed another complaint wherein they asked the court to declare deeds of
sale of 1936 and of 1951 over the land in question be declared null and void as to the western half of
said land.
CFI ruled in favor of the Mapalo spouses. Upon appeal filed by Narcisos, CA reversed the lower court’s
ruling solely on the ground that the consent of the Mapalo spouses to the deed of sale of 1936 having
been obtained by fraud, the same was voidable, not void ab initio, and, therefore, the action to annul
the same, within four years from notice of the fraud, had long prescribed. (From March 15, 1938).
Hence, this appeal.
Issues:
1. Whether the deed of absolute sale executed in 1936 was null and void.
2. Whether Narcisos were purchasers in good faith.
Held:
1st issue: YES, the sale was void.
The Civil Code governs the transaction because it was executed in 1936
Accordingly, since the deed of sale of 1936 is governed by the Old Civil Code, it should be asked whether
its case is one wherein there is no consideration, or one with a statement of a false consideration. If the
former, it is void and inexistent; if the latter, only voidable, under the Old Civil Code. There is lack of
consideration
As observed earlier, the deed of sale of 1936 stated that it had for its consideration Five Hundred
(P500.00) Pesos. In fact, however, said consideration was totally absent. The problem, therefore, is
whether a deed which states a consideration that in fact did not exist, is a contract without
consideration, and therefore void ab initio, or a contract with a false consideration, and therefore, at
least under the Old Civil Code, voidable.
When there is no consideration, the contract is null and void.
According to Manresa, what is meant by a contract that states a false consideration is one that has in
fact a real consideration but the same is not the one stated in the document.   A contract of purchase
and sale is null and void and produces no effect whatsoever where the same is without cause or
consideration in that the purchase price which appears thereon as paid has in fact never been paid by
the purchaser to the vendor.
2nd issue: No, they were no purchasers in good faith.
Narcisos were not buyers in good faith. Aside from the fact that all the parties in these cases are
neighbors, except Maximo Mapalo the foregoing facts are explicit enough and sufficiently reveal that
the Narcisos were aware of the nature and extent of the interest of Maximo Mapalo their vendor, over
the above-described land before and at the time the deed of sale in their favor was executed.

CONSUELO VDA. DE QUIRINO, petitioner,

vs.
JOSE PALARCA, respondent.

FACTS: On October 4, 1947, said petitioner — hereinafter referred to as the lessor — and respondent
Jose Palarca — hereinafter referred to as the lessee — entered into a lease contract whereby the former
leased to the latter a parcel of land known as Lot 30 of block 84 of the Sulucan Subdivision, located at
Sampaloc, Manila, with an area of about 150 square meters, and more particularly described in TCT No.
59442 of the Office of the Register of Deeds of Manila
In their written contract of lease it was stipulated, inter alia, that the term thereof would be ten (10)
years, from November 1, 1947 to November 1, 1957; that the monthly rental would be P250, payable in
advance; that the lessee could demolish the lessor's old building on the leased premises and construct
thereon any building and/or improvements suitable for school purposes, which new building and/or
improvements shall belong to the lessee; that within one (1) year after the expiration of the lease, the
lessee would have "the right and option to buy the leased premises" for P12,000; that, should the lessee
fail to exercise this option, said (new) building and/or improvements shall be evaluated by a committee
organized therefor, as set forth in the contract; that, after such "valuation," the lessor shall "have the
option to buy" said "building and/or improvements within ... one (1) year, after the expiration of the
contract"; and that, should neither of the parties exercise their respective options, both "shall be free to
look for a buyer for his or her respective property."
ISSUES:
WON lessee's option to purchase the leased premises was null and void for want of consideration; (
WON lessee should have been sentenced to pay rentals, during the pendency of this case; and
WON lessee should have been sentenced, also, to pay damages, attorney's fees and the costs of the
suit.

HELD:
NO. it is based upon the premise that the option of the lessee is devoid of consideration, which is false.
Indeed, in reciprocal contracts, like the one in question, the obligation or promise of each party is the
consideration for that of the other. 1 In the language of Article 1350 of our Civil Code, "(i)n onerous
contracts the cause is understood to be, for each contracting party, the prestation or promise of a thing
or service by the other ... ." As a consequence, "(t)he power to rescind obligations is implied in reciprocal
ones, in case one of the obligors should not comply with what is incumbent upon him.
YES. As regards the rentals during the pendency of this case, suffice it to note that, had the lessor readily
complied with her obligation to execute the corresponding deed of conveyance to the lessee, upon
payment by him of the agreed price of P12,000, which he tendered in October, 1958, the premises in
question would have become his property on or before November 1, 1958, and since then he would
have had no obligation to pay rentals. As a consequence, it is neither just nor fair to impose such
obligation upon him by reason of the lessor's illegal breach of their contract. Otherwise, she would be
rewarded therefor and we would jeopardize the sanctity of contractual obligations.
NO. The last point raised by the lessor is a mere corollary to those already disposed of. Hence, it needs
no further discussion

Adelfa Properties v. CA
G.R. No, 111238, 25 January 1995
FACTS:
Respondents and their brothers Jose and Dominador were the registered CO-OWNERS of a parcel of
land.
Jose and Dominador sold their share (eastern portion of the land) to Adelfa.a
Adelfa expressed interest in buying the western portion of the property from private respondents.
An exclusive “Option to Purchase” was executed between Adelfa and respondents; an option money of
P50,000 was given to the latter.
A new owner’s copy of the certificate of title was issued but was kept by Adelfa’s counsel, Atty.
Bernardo.
Before Adelfa could make payments, it received summons; a case was filed against Jose and Dominador
and Adelfa by the nephews and nieces of private respondents.
Adelfa, through a letter, informed the private respondents that it would hold payment of the full
purchase price and suggested that they settle the case with their said nephews and nieces; Salud did not
heed the suggestion.
Respondents informed Atty. Bernardo that they are canceling the transaction. RTC Makati dismissed the
civil case.
Atty. Bernardo wrote private respondents informing them that, in view of the dismissal of the case,
Adelfa is willing to pay the purchase price and requested that the corresponding Deed of Absolute Sale
be executed; respondents igonored.
Respondents sent a letter to Adelfa enclosing therein a check representing the refund of half the option
money paid under the exclusive option to purchase and requested Adelfa to return the owner’s
duplicate copy of Salud. Adelfa failed to surrender the certificate of title.
ISSUE:
WON the agreement between Adelfa and respondents was strictly an option contract
RULING:
The agreement between the parties is a contract tosell; not an option contract nor a contract of sale.
Contract to SELL
–     by agreement, the ownership is reserved in the vendor and is not to pass until full payment of the
price
Contract of SALE
–     the title passes to the vendee upon the delivery of the thing sold
–     the vendor has lost and cannot recover ownership until and unless the contract is resolved or
rescinded

EQUATORIAL REALTY V. MAYFAIR (November 21, 1996)

FACTS:
Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-storey building to respondent
Mayfair Theater Inc.
They entered a contract which provides that if the LESSOR should desire to sell the leased premises, the
LESSEE shall be given 30-days exclusive option to purchase the same.

Carmelo informed Mayfair that it will sell the property to Equatorial. Mayfair made known its interest to
buy the property but only to the extent of the leased premises.
Notwithstanding Mayfair’s intention, Carmelo sold the property to Equatorial.

ISSUE:
WON the sale of the property to Equatorial is valid.

HELD:
The sale of the property should be rescinded because Mayfair has the right of first refusal. Both
Equatorial and Carmelo are in bad faith because they knew of the stipulation in the contract regarding
the right of first refusal.

The stipulation is a not an option contract but a right of first refusal and as such the requirement of a
separate consideration for the option, has no applicability in the instant case. The consideration is built
in the reciprocal obligation of the parties.

In reciprocal contract, the obligation or promise of each party is the consideration for that of the other.
(Promise to lease in return of the right to first refusal)

With regard to the impossibility of performance, only Carmelo can be blamed for not including the
entire property in the right of first refusal. Court held that Mayfair may not have the option to buy the
property. Not only the leased area but the entire property

Limson v. Court of Appeals

GR No. 135929, April 20, 2001
FACTS:
Petitioner Lourdes Ong Limson and respondent spouses Lorenzo de Vera and Asuncion Santos-de Vera
agreed that petitioner would buy a parcel of land owned by respondents. On 31 July 1978, petitioner
paid P20,000 as "earnest money"; respondents signed a receipt and gave her a 10-day option period to
purchase the property.
The parties agreed to meet on August 5 and August 11, but failed to consummate the sale because the
respondent spouses did not appear. Petitioner soon learned that subject propery was also under
negotiation with respondent spouses and with Sunvar Realty Development Corporation (SUNVAR). On
15 September 1978, Limson filed an affidavit of Adverse Claim with the Office of the Registry of Deeds
and informed SUNVAR. TCT N0. S-72377 was issued on 26 September 1978 in favor of SUNVAR with
the adverse Claim of petitioner annotated thereon.
Petitioner claimed that the Deed of Sale should be annuled, that TCT No. S-72377 be canceled and
ownership be restored to respondent spouses, and that a Deed of Sale be executed in favor of her.
The Regional Trial Court rendered its Decision in favor of petitioner. On appeal, the Court of Appeals
completely reversed the decision of the trial court. Petitioner timely filed a Motion for Reconsideration
which was denied by the Court of Appeals on 19 October 1998. Hence, this petition.
ISSUES:
(1) Whether or not there was a perfected contract to sell between petitioner and respondent spouses.
(2) Whether or not the P20,000 paid by Limson represented "earnest money".
RULING:
(1) No, there was no perfected contract to sell. A scrutiny of the facts as well as the evidence of the
parties overwhelmingly leads to the conclusion that the agreement between the parties was a contract
of option and not a contract to sell.
An option, as used in the law of sales, is a continuing offer or contract by which the owner sitpulates
with another that the latter shall have the right to buy the property at a fixed price within a time certain,
or under, or in compliance with, certain terms and conditions, or which gives to the owner of the
property the right to sell or demand a sale. It is also sometimes called an "unaccepted offer." An option
is not itself a purchase, but merely secures the privilege to buy.8 It is not a sale of property but a sale of
right to purchase.9 It is simply a contract by which the owner of property agrees with another person
that he shall have the right to buy his property at a fixed price within a certain time. He does not sell his
land; he does not then agree to sell it; but he does not sell something, i.e., the right or privilege to buy at
the election or option of the other party.10 Its distinguishing characteristic is that it imposes no binding
obligation on the person holding the option, aside from the consideration for the offer.  Until
acceptance, it is not, properly speaking, a contract, and does not vest, transfer, or agree to transfer, any
title to, or any interest or right in the subject matter, but is merely a contract by which the owner of the
property gives the optionee the right or privilege of accepting the offer and buying the property on
certain terms.11
On the other hand, a contract, like a contract to sell, involves the meeting of minds between two
persons whereby one binds himself, with respect to the other, to give something or to render some
service.12 Contracts, in general, are perfected by mere consent,13 which is manifested by the meeting
of the offer and the acceptance upon the thing and the cause which are to constitute the contract. The
offer must be certain and the acceptance absolute.1
(2) No, the money paid by petitioner was not earnest money but option money. "Earnest money" and
"option money" are not the same but distinguished thus; (a) earnest money is part of the purchase
price, while option money is the money given as a distinct consideration for an option contract; (b)
earnest money given only where there is already a sale, while option money applies to a sale not yet
perfected; and, (c) when earnest money is given, the buyer is bound to pay the balance, while when the
would-be buyer gives option money, he is not required to buy,18 but may even forfeit it depending on
the terms of the option.
There is nothing in the Receipt which indicates that the P20,000.00 was part of the purchase price.
Moreover, it was not shown that there was a perfected sale between the parties where earnest money
was given. Finally, when petitioner gave the "earnest money" the Receipt did not reveal that she was
bound to pay the balance of the purchase price. In fact, she could even forfeit the money given if the
terms of the option were not met. Thus, the P20,000.00 could only be money given as consideration for
the option contract. Finally, the Receipt provided for a period within which the option to buy was to be
exercised, i.e., "within ten (10) days" from 31 July 1978.
On or before 10 August 1978, the last day of the option period, no affirmative or clear manifestation was
made by petitioner to accept the offer. Certainly, there was no concurrence of private respondent
spouses’ offer and petitioner’s acceptance thereof within the option period. Consequently, there was no
perfected contract to sell between the parties.
On 11 August 1978 the option period expired and the exclusive right of petitioner to buy the property of
respondent spouses ceased.WHEREFORE, the petition is DENIED. The decision of the Court of Appeals
ordering the Register of Deeds of Makati City to lift the adverse claim and such other encumbrances
petitioners Lourdes Ong Limson may have filed or caused to be annotated on TCT No. S-75377
is AFFIRMED, with the MODIFICATION that the award of nominal and exemplary damages as well as
attorney’s fees is DELETED.

Mercado and Mercado v. Espiritu

G.R. No. L-11872, 1 December 1917
FACTS:
The case was about the contract made by Luis Espiritu (father of Jose Espiritu, the defendant) and the
heirs of his sister Margarita Mercado; Domingo and Josepha Mercado, who pretended to be of legal age
to give their consent into the contract of sale of the land they inherited from their deceased mother
Margarita Mercado (sister of Luis Mercado). The siblings Domingo et. al., sought for the annulment of
contract asserting that Domingo and Josepha were minors during the perfection of contract.
ISSUE:
Whether or not the deed of sale is valid, when the minors presented themselves of legal age, at the time
of the perfection of the contract.
RULING:
The court declared that the contract of sale was VALID, even if it were made and entered into by minors,
who pretended to be of legal age.
Whenever a party has, by its own declaration, act or omission, intentionally and deliberately led another
party to believe a particular thing to be true, and to act upon such belief, he cannot, in any litigation
arising out of such declaration, cannot be permitted to falsify it. Furthermore, the sale of real estate
made by a minor who pretend to be of legal age, when in fact he is not, is VALID, and he will not be
permitted to excuse himself from the fulfillment of the obligations contracted by him or to have it
annulled. The judgment that holds such sale to be valid and absolves the purchaser from the complaint
filed against him does not violate the laws relative to the sale of minor’s property, nor the judicial rules
established in consonance therewith.
In the given case, annulment of the sale cannot be invoked on the ground of minority, since at the time
of the perfection of the contract; Domingo and Josefa presented themselves to be of legal age.

Ching v. Goyanko, Jr.

G.R. No. 165879, 10 November 2006
 Respondents Joseph Goyanko et al. filed with the Regional Trial Court of Cebu City a complaint for
recovery of property and damages against Maria Ching, praying for the nullification of the deed of sale
and of transfer certificate and the issuance of a new one. Goyanko et al. aver that they are the real
owners of the property involved. They further contend that it was after their father‘s death that they
found out that a contract of sale involving the same property has been executed by their father and
common-law wife Ching. However, Ching claimed that she is the actual owner of the property as it was
she who provided its purchase price. The RTC dismissed the complaint against Ching, declaring that
there is no valid and sufficient ground to declare the sale as null and void, fictitious and simulated.
On appeal, the Court of Appeals reversed the decision of the trial court and declared null and void the
questioned deed of sale and TCT No. 138405.
ISSUE:
Whether or not the contract of sale was null and void for being contrary to morals and public policy.
RULING:
Yes, the Court ruled that the contract of sale was null and void for being contrary to morals and public
policy. The sale was made by a husband in favor of a concubine after he had abandoned his family and
left the conjugal home where his wife and children lived and from whence they derived their support.
The sale was subversive of the stability of the family, a basic social institution which public policy
cherishes and protects.
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purposes is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from the
very beginning.
In the case at bar, the subject property having been acquired during the existence of a valid marriage
between Joseph Sr. and Epifania dela Cruz-Goyanko, is presumed to belong to the conjugal partnership.
Moreover, while this presumption in favor of conjugality is rebuttable with clear and convincing proof to
the contrary, the court finds no evidence on record to conclude otherwise. The record shows that while
Joseph Sr. and his wife Epifania have been estranged for years and that he and defendant-appellant
Maria Ching, have in fact been living together as common-law husband and wife, there has never been a
judicial decree declaring the dissolution of his marriage to Epifania nor their conjugal partnership. It is
therefore undeniable that the property located at Cebu City belongs to the conjugal partnership.
Assuming that the subject property was not conjugal, still the court cannot sustain the validity of the
sale of the property by Joseph, Sr. to defendant-appellant Maria Ching, there being overwhelming
evidence on records that they have been living together as common-law husband and wife.
Additionally, the law emphatically prohibits the spouses from selling property to each other subject to
certain exceptions. Similarly, donations between spouses during marriage are prohibited. And this is so
because if transfers or conveyances between spouses were allowed during marriage, that would destroy
the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the
exercise of undue influence by one spouse over the other, as well as to protect the institution of
marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband
and wife without benefit of marriage, otherwise, the condition of those who incurred guilt would turn
out to be better than those in legal union. Those provisions are dictated by public interest and their
criterion must be imposed upon the will of the parties.
Rubias v. Batiller

Facts:
Before the war with Japan, Francisco Militante filed an application for registration of the parcel of land
in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the land to
petitioner, his son-in-law. Plaintiff filed an action for forcible entry against respondent. Defendant claims
the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and
his predecessors-in-interest have always been in actual, open and continuous possession since time
immemorial under claim of ownership of the portions of the lot in question.
Issue:
Whether or not the contract of sale between appellant and his father-in-law was void because it was
made when plaintiff was counsel of his father-in-law in a land registration case involving the property in
dispute
Held:
The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and
justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question
was predicated on the sale thereof made by his father-in- law in his favor, at a time when Militante's
application for registration thereof had already been dismissed by the Iloilo land registration court and
was pending appeal in the Court of Appeals.
Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs
certain persons, by reason of the relation of trust or their peculiar control over the property, from
acquiring such property in their trust or control either directly or indirectly and "even at a public or
judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and
employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially
disqualified by law.
Fundamental consideration of public policy render void and inexistent such expressly prohibited
purchase (e.g. by public officers and employees of government property intrusted to them and by
justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by
them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of
our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the
beginning."
Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by
ratification. The public interest and public policy remain paramount and do not permit of compromise or
ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers
grounded on public policy differs from the first three cases of guardians, agents and administrators
(Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by
means of and in "the form of a new contact, in which cases its validity shall be determined only by the
circumstances at the time the execution of such new contract. The causes of nullity which have ceased
to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of
the first contract, may have already become lawful at the time of the ratification or second contract; or
the service which was impossible may have become possible; or the intention which could not be
ascertained may have been clarified by the parties. The ratification or second contract would then
be valid from its execution; however, it does not retroact to the date of the first contract."

DAVID P. FORNILDA, JUAN P. FORNILDA, EMILIA P. FORNILDA OLILI, LEOCADIA P. FORNILDA LABAYEN
and ANGELA P. FORNILDA GUTIERREZ, petitioners,
vs.
THE BRANCH 164, REGIONAL TRIAL COURT IVTH JUDICIAL REGION, PASIG, JOAQUIN C. ANTONIO
Deputy Sheriff, RTC, 4JR Tanay, Rizal and ATTY. SERGIO I. AMONOY respondents.
G.R. No. 72306 October 6, 1988

FACTS:
The Controverted Parcels were part of the estate of the late Julio M. Catolos subject of intestate estate
proceedings, wherein Respondent Amonoy acted as counsel for some of the heirs from 1959 until 1968
by his own admission.
These properties were adjudicated to Alfonso Fornilda and Asuncion M. Pasamba in the Project of
Partition approved by the Court on 12 January 1965
On 20 January 1965, or only eight (8) days thereafter, and while he was still intervening in the case as
counsel, these properties were mortgaged by petitioners' predecessor-in-interest to Respondent
Amonoy to secure payment of the latter's attorney's fees in the amount of P27,600.00
Since the mortgage indebtedness was not paid, Respondent Amonoy instituted an action for judicial
foreclosure of mortgage on 21 January 1970
The mortgage was subsequently ordered foreclosed and auction sale followed where Respondent
Amonoy was the sole bidder for P23,600.00
Being short of the mortgage indebtedness, he applied for and further obtained a deficiency judgment.

ISSUE: Whether or not the mortgage constituted on the Controverted Parcels in favor of Respondent
Amonoy comes within the scope of the prohibition in Article 1491 of the Civil Code.

HELD: YES
The pertinent portions of the said Articles read:
Art. 1491. The following persons cannot acquire by purchase even at a public or judicial or auction,
either in person or through the mediation of another:
xxx xxx xxx
(5) Justices, judges, prosecuting attorneys, ... the property and rights in litigation or levied upon on
execution before the court within whose junction or territory they exercise their respective functions;
this prohibition includes the act of acquitting by assignment and shall apply to lawyers with respect to
the property and rights which may be the object of any litigation in which they may take part by virtue
of their profession. (Emphasis supplied)
Under the aforequoted provision, a lawyer is prohibited from acquiring either by purchase or
assignment the property or rights involved which are the object of the litigation in which they intervene
by virtue of their profession. The prohibition on purchase is all embracing to include not only sales to
private individuals but also public or judicial sales
At the time the mortgage was executed, therefore, the relationship of lawyer and client still existed, the
very relation of trust and confidence sought to be protected by the prohibition, when a lawyer occupies
a vantage position to press upon or dictate terms to a harassed client. From the time of the execution of
the mortgage in his favor, Respondent Amonoy had already asserted a title adverse to his clients'
interests at a time when the relationship of lawyer and client had not yet been severed.

Considering that the mortgage contract, entered into in contravention of Article 1491 of the Civil Code is
expressly prohibited by law, the same must be held inexistent and void ab initio.

FEDERICO N. RAMOS VS PATRICIO A. NGASEO

FACTS:

Ramos went to Atty. Ngaseo to engage his services as counsel in a case involving a piece of land. After
the Court of Appeals rendered a favorable judgment ordering the land to be returned to Ramos and his
siblings (such decision having been final and executor), Atty. Ngaseo sent a demand letter to Ramos
asking for the delivery of a piece of land which the complainant allegedly promised as payment for
respondent’s appearance fee.

As a result, Ramos filed before the IBP a complaint charging Atty. Ngaseo of violation of the CPR for
demanding the delivery of a parcel of land, which was the subject of litigation. The IBP found Atty.
Ngaseo guilty. Atty. Ngaseo argues that he did not violate Article 1491 CC because when he demanded
the delivery of the piece of land, the case has been terminated, when the appellate court ordered the
return of the land to the family of Ramos.

ISSUE:
Whether or not Atty. Ngaseo violated Art. 1491 CC.

HELD: NO.

Under Par. (5), Art. 1491 of the Civil Code, lawyers are prohibited from acquiring either by
purchase or assignment the property or rights involved which are the object of litigation in which they
intervene by virtue of their public/judicial sales. The article provides:

Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either
in person or through the mediation of another: xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object of any litigation in which they may take part
by virtue of their profession.

The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is
the subject of litigation to the persons disqualified therein. WE have already ruled that "... for the
prohibition to operate, the sale or assignment of the property must take place during the pendency of
the litigation involving the property."

Since such prohibition applies only if the sale or assignment of the property takes place during the
pendency of the litigation involving the client’s property. Consequently, where the property is acquired
after the termination of the case, as in the instant case, no violation of paragraph 5, article 1491 of Civil
Code attatches.

In the instant case, there was no actual acquisition of the property in litigation since the
respondent only made a written demand for its delivery, which the complainant refused to comply.
Mere demand for delivery of the litigated property does not cause the transfer of ownership, hence, not
a prohibited transaction within the contemplation of Article 1491.

Note: (Rationale for prohibition: Public policy disallows the transactions in view of the fiduciary
relationship involved)

BERNARDITA R. MACARIOLA vs. HONORABLE ELIAS B. ASUNCION,

FACTS:

Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition filed by Sinforosa
R. Bales, Luz R. Bakunawa, Anacorita Reyes, Ruperto Reyes, Adela Reyes, and Priscilla Reyes, plaintiffs,
against Bernardita R. Macariola, defendant, concerning the properties left by the deceased Francisco
Reyes, the common father of the plaintiff and defendant.
On June 8, 1963, a decision was rendered by respondent Judge Asuncion in Civil Case 3010 which
became final for lack of an appeal, and on October 16, 1963, a project of partition was submitted to
Judge Asuncion.

One of the properties mentioned in the project of partition was Lot 1184 and when the project of
partition was approved by the trial court the adjudicatees caused Lot 1184 to be subdivided into five lots
denominated as Lot 1184-A to 1184-E. Lot 1184-E was sold on July 31, 1964 to Dr. Arcadio Galapon. On
March 6, 1965, Dr. Arcadio Galapon and his wife Sold a portion of Lot 1184-E to Judge Asuncion and his
wife, Victoria S. Asuncion. On August 31, 1966, spouses Asuncion and spouses Galapon conveyed their
respective shares and interest in Lot 1184-E to "The Traders Manufacturing and Fishing Industries Inc."
with Judge Asuncion as the President and Mrs. Asuncion as the secretary.

Macariola filed on August 9, 1968 the instant complaint dated August 6, 1968 alleging that respondent
Judge Asuncion violated Article 1491, paragraph 5, of the New Civil Code in acquiring by purchase a
portion of Lot No. 1184-E which was one of those properties involved in Civil Case No. 3010 decided by
him.

ISSUE:

Whether or not the actuation of Judge Asuncion in acquiring by purchase a portion of property in a Civil
Case previously handled by him violated the prohibition under the Civil Code?

HELD: NO.

There is no merit in the contention of Macariola that respondent Judge Elias B. Asuncion violated Article
1491, paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E which was
one of those properties involved in Civil Case No. 3010. 'That Article provides:

Article 1491. The following persons cannot acquire by purchase, even at a public or judicial action, either
in person or through the mediation of another: xxx xxx xxx

(5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and
employees connected with the administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory they exercise their respective
functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyers, with
respect to the property and rights which may be the object of any litigation in which they may take part
by virtue of their profession.

The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is
the subject of litigation to the persons disqualified therein. WE have already ruled that "... for the
prohibition to operate, the sale or assignment of the property must take place during the pendency of
the litigation involving the property."

In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E, the
decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because none of the
parties therein filed an appeal within the reglementary period; hence, the lot in question was no longer
subject of the litigation. Moreover, at the time of the sale on March 6, 1965, respondent's order dated
October 23, 1963 and the amended order dated November 11, 1963 approving the October 16, 1963
project of partition made pursuant to the June 8, 1963 decision, had long become final for there was no
appeal from said orders.

Furthermore, respondent Judge did not buy the lot in question on

March 6, 1965 directly from the plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who
earlier purchased on July 31, 1964 Lot 1184-E from three of the plaintiffs, namely, Priscilla Reyes, Adela
Reyes, and Luz R. Bakunawa after the finality of the decision in Civil Case No. 3010. It may be recalled
that Lot 1184 or more specifically one-half thereof was adjudicated in equal shares to Priscilla Reyes,

Adela Reyes, Luz Bakunawa, Ruperto Reyes and Anacorita Reyes in the project of partition, and the same
was subdivided into five lots denominated as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was sold
on July 31, 1964 to Dr. Galapon for which he was issued TCT No. 2338 by the Register of Deeds of
Tacloban City, and on March 6, 1965 he sold a portion of said lot to respondent Judge and his wife who
declared the same for taxation purposes only. The subsequent sale on August 31, 1966 by spouses
Asuncion and spouses Galapon of their respective shares and interest in said Lot 1184-E to the Traders
Manufacturing and Fishing Industries, Inc., in which respondent was the president and his wife was the
secretary, took place long after thefinality of the decision in Civil Case No. 3010 and of the subsequent
two aforesaid orders therein approving the project of partition.

The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from Dr.
Arcadio Galapon; hence, after the finality of the decision which he rendered on June 8, 1963 in Civil Case
No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963. Therefore, the
property was no longer subject of litigation.

Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one year
after the finality of the decision in Civil Case No. 3010 as well as the two orders approving the project of
partition, and not during the pendency of the litigation, there was no violation of paragraph 5, Article
1491 of the New Civil Code.

Finally, while it is true that respondent Judge did not violate paragraph 5, Article 1491 of the New Civil
Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it was,
however, improper for him to have acquired the same.

In conclusion, while respondent Judge Asuncion, now Associate Justice of the Court of Appeals, did not
violate any law in acquiring by purchase a parcel of land which was in litigation in his court and in
engaging in business by joining a private corporation during his incumbency as judge of the Court of First
Instance of Leyte, he should be reminded to be more discreet in his private and business activities,
because his conduct as a member of the Judiciary must not only be characterized with propriety but
must always be above suspicion.

GAN TINGCO vs PABINGUIT

FACTS: Candida Acabo was the owner of six parcels of land, all situated in the municipality of Jimalalud,
Oriental Negros. These lands were sold on June 12, 1911 by Candida Acabo, to one Gan Tingco. But the
purchaser Gan Tingco was unable to take possession of the six parcels of land sold him by Acabo, for
they were in the possession of Silvino Pabinguit, who alleges certain rights therein. He claims to have
purchased them from Faustino Abad. Abad had become the owner through purchase from Henry
Gardner.

Prior to the purchase made by Garnder, a judgment has been rendered against Ancabo as a result of the
complaint filed by Silvestre Basaltos. Because of Ancabo‘s failure to comply, her fixtures and other
chattels were levied upon the order of Gardner being the justice of peace.

Public auction sale was executed and Gardner appeared to be the highest bidder and was the purchaser
of Candida Acabo's lands and carabaos sold at public auction held in the barrio of Martelo, Municipality
of Tayasan on March 20, 1907.

As Gardner subsequently learned that he was forbidden to purchase, he sold what he had purchased to
Faustino Abad, Candida Acabo's son.

On June 19, 1907, Faustino Abad, for the sum of P375 sold to Silvino Pabinguit six parcels of land.

The Court of First Instance of Oriental NEgros rendered judgment in behalf of the plaintiff, Gan Tingco,
declaring him the owner of the lands described in the complaint, and ordered the defendant, Silvino
Pabinguit, to restore the plaintiff to their possession.

The defendant appealed, with the right to a review of the evidence.

The appeal was heard by this court, it having been brought it by bill of exceptions.

The appellant alleges that the trial court erred in holding that, notwithstanding the sale of the lands in
question at public auction, Candida Acabo did not cease to be the owner of these properties, because
there were certain irregularities and defects in the said auction.

ISSUE: WON Candida Acabo did not cease to be the owner of the properties despite certain irregularities
and defects in the said auction.

HELD: The trial court was impressed by the circumstance that in the public auction the purchaser was
the justice of the peace himself. This, in the judge's opinion, was unauthorized, because article 1459, No.
5, of the Civil Code, prohibits judges from acquring by purchase, even at pub;ic or judicial sale, either in
person or by an agent, any property or rights litigated in the court in the jurisdiction or territory within
which they exercise their respective duties; this prohibition includes taking of property by assignment.

The appellant alleges that the property purchased by justice of the peace Gardner was not the subject of
litigation in the justice court; that the action was to recover a certain sum of money, and that he had
ordered the property sold on execution.

This raises, therefore, a question as to the true meaning of paragraph 5 of article 1459 of the Civil Code.
law library

The Ley de Bases, in accordance with which the Civil Code was enacted, provides as follows, in Base No.
26:
The forms, requirements and conditions of each particular contract shall be determined and defined
subject to the general list of obligations and their effects, with the understanding that the legislation in
force and the legal principles evolved therefrom by judicial decisions, etc., etc., shall serve as basis.

One of the bodies of law which conastitute the legislation now in force in the Novisima Recopilacion. In
Law 4, Title 14, Book 5 of the same is found the following provision: "We order that in public auctions
held by direction of our alcaldes, neither the latter nor any person whomsoever in their name shall bid in
anything sold at such public auctions." The word alcaldes means judges. The caption of Title 14 is "
Alcaldes or Provincial Judges," and the entire title deals with the exercise of judicial jurisdiction. Prior to
the enactment of the Civil Code, the Penal Code was also in force. Article 400 of the latter prohibits,
under penalty, any judge from taking part, either directly, or indirectly, in any operation of exchange,
trade or porfit with respect to things not the product of his own property, within the territory over
which he exercises jurisdiction. Judging from the legal precedents on which the Civil Code is based, it
would not seem too much to conclude that the said article of the Civil Code does not make any
distinction between property in litigation. In effect, it appears to be as delicate a matter for a judge to
take part in the sale of property that had been the subject of ligitgation in his court, as to intervene in
auction of property which, though not directly litigated in his court, is nevertheless levied upon and sold
as the result of a writ of execution issued by him. What the law intends to avoid is the improper
interference with an interest of a judge in a thing levied upon and sold by his order.

If under the law Gardner was prohibited from acquiring the ownership of Acabo's lands, then he could
not have transmitted to Faustino Abad the right of ownership that he did not possess; nor could Abad,
to whom this alleged ownership had not been transmitte, have conveyed the same to Pabinguit. What
Gardner should have done in view of the fact that the sale, as he finally acknowledged, was void, was to
claim the price that had been deposited in court, and the justice of the peace of Guijulngan should have
declared the auction void and haveordered a new sale to be held, besides correcting the errors that had
been committed in the proceedings. To the reasons already stated, there is to be added the additional
one, with respect to the sale made by Faustino Abad to Silvino Pabinguit, that Abad was a minor at the
time - a circumstance that deprived him of capacity to sell (Civil Code,art. 1263). Abad had no ownership
to transmit to anyone and, besides, he had no personality to enable him to contract by himself, on
account of his lack of legal age.This court finds no reason whatever why it should not affirm the
judgment appealed from.

LEON SIBAL , plaintiff-appellant,vs.EMILIANO J. VALDEZ ET AL., defendants. VS.

EMILIANO J. VALDEZ, appellee.

Facts: As a first cause of action the plaintiff alleged that the defendant Vitaliano Mamawal, deputy
sheriff of the Province of Tarlac, by virtue of a writ of execution issued by the Court of First Instance of
Pampanga, attached and sold to the defendant Emiliano J. Valdez the sugar cane planted by the plaintiff
and his tenants on seven parcels of land described in the complaint in the third paragraph of the first
cause of action; that within one year from the date of the attachment and sale the plaintiff offered to
redeem said sugar cane and tendered to the defendant Valdez the amount sufficient to cover the price
paid by the latter, the interest thereon and any assessments or taxes which he may have paid thereon
after the purchase, and the interest corresponding thereto and that Valdez refused to accept the money
and to return the sugar cane to the plaintiff.

Plaintiff prayed that a writ of preliminary injunction be issued against the defendant Emiliano J. Valdez
his attorneys and agents.The preliminary injunction was granted The defendant Emiliano J. Valdez, in his
amended answer, denied generally and specifically each and every allegation of the complaint and step
up the following defenses:

(a) That the sugar cane in question had the nature of

personal property and was not, therefore, subject to

redemption; The defendant Emiliano J. Valdez filed a counter-claim.

Issue: Whether or not the sugar cane in question had the nature of personal property.

HELD: The sugar cane in question had the nature of personal property.

CIVIL CODE, JURISPRUDENCE

The first question raised by the appeal is, whether the sugar cane in question is personal or real
property. It is contended that sugar cane comes under the classification of real property as "ungathered
products" in paragraph 2 of article 334 of the Civil Code. Said paragraph 2 of article 334 enumerates as
real property the following: Trees, plants, and ungathered products, while they are
annexed to the land or form an integral part of any immovable property." That article, however, has
received in recent years an interpretation by the Tribunal Supremo de España, which holds that, under
certain conditions, growing crops may be considered as personal property. (Decision of March 18, 1904,
vol. 97, Civil Jurisprudence of Spain.)

However, from the discussion of Manresa it appears (1) that, under Spanish authorities, pending fruits
and ungathered products may be sold and transferred as personal property; (2) that the Supreme Court
of Spain, in a case of ejectment of a lessee of an agricultural land, held that the lessee was entitled to
gather the products corresponding to the agricultural year, because said fruits did not go with the land
but belonged separately to the lessee; and (3) that under the Spanish Mortgage Law of 1909, as
amended, the mortgage of a piece of land does not include the fruits and products existing thereon,
unless the contract expressly provides otherwise.

An examination of the decisions of the Supreme Court of

Louisiana may give us some light on the question which we are discussing. Article 465 of the Civil Code
of Louisiana, which corresponds to paragraph 2 of article 334 of our Civil Code, provides:

"Standing crops and the fruits of trees not gathered, and trees before they are cut down, are likewise
immovable, and are considered as part of the land to which they are attached."

The Supreme Court of Louisiana having occasion to interpret that provision, held that in some cases
"standing crops" may be considered

and dealt with as personal property. In the case of Lumber Co. vs. Sheriff and Tax Collector (106 La., 418)
the Supreme Court said:

"True, by article 465 of the Civil Code it is provided that 'standing crops and the fruits of trees not
gathered and trees before they are cut down . . . are considered as part of the land to which they are
attached, but the immovability provided for is only one in abstracto and without reference to rights on
or to the crop acquired by others than the owners of the property to which the crop is attached. . . .
The existence of a right on the growing crop is a mobilization by anticipation, a gathering as it were in
advance, rendering the crop movable quoad the right acquired therein. Our jurisprudence recognizes
the possible mobilization of the growing crop."

From an examination of the reports and codes of the

State of California and other states we find that the settle doctrine followed in said states in connection
with the attachment of property and execution of judgment is, that growing crops raised by yearly labor
and cultivation are considered personal property.

Mr. Mechem says that a valid sale may be made of a thing, which though not yet actually in existence, is
reasonably certain to come into existence as the natural increment or usual incident of something
already in existence, and then belonging to the vendor, and then title will vest in the buyer the moment
the thing comes into existence.

Things of this nature are said to have a potential existence. A man may sell property of which he is
potentially and not actually possessed. He may make a valid sale of the wine that a vineyard is expected
to produce; or the gain a field may grow in a given time; or the milk a cow may yield during the coming
year; or the wool that shall thereafter grow upon sheep; or what may be taken at the next cast of a
fisherman's net; or fruits to grow; or young animals not yet in existence; or the good will of a trade and
the like. The thing sold, however, must be specific and identified. They must be also owned at the time
by the vendor. (Hull vs. Hull, 48 Conn., 250

It is contended on the part of the appellee that paragraph 2 of article 334 of the Civil Code has been
modified by section 450 of the Code of Civil Procedure as well as by Act No. 1508, the Chattel Mortgage
Law.

Said section 450 enumerates the property of a judgment debtor which may be subjected to execution.
The pertinent portion of said section reads as follows: "All goods, chattels, moneys, and other property,
both real and personal, * * * shall be liable to execution. Said section 450 and most of the other sections
of the Code of Civil Procedure relating to the execution of judgment were taken from the Code of

Civil Procedure of California. The Supreme Court of California, under section 688 of the Code of Civil
Procedure of that state (Pomeroy, p. 424) has held, without variation, that growing crops were personal
property and subject to execution.

CHATTEL MORTGAGE

Act No. 1508, the Chattel Mortgage Law, fully recognized that growing crops are personal property.
Section 2 of said Act provides: "All personal property shall be subject to mortgage, agreeably to the
provisions of this Act, and a mortgage executed in pursuance thereof shall be termed a chattel
mortgage." Section 7 in part provides: "If growing crops be mortgaged the mortgage may contain an
agreement stipulating that the mortgagor binds himself properly to tend, care for and protect the crop
while growing.
It is clear from the foregoing provisions that Act No. 1508 was enacted on the assumption that "growing
crops" are personal property. This consideration tends to support the conclusion hereinbefore stated,
that paragraph 2 of article 334 of the Civil Code has been modified by section 450 of Act No. 190 and by
Act No. 1508 in the sense that

"ungathered products" as mentioned in said article of the Civil Code have the nature of personal
property. In other words, the phrase "personal property" should be understood to include "ungathered
products.”

We may, therefore, conclude that paragraph 2 of article 334 of the Civil Code has been modified by
section 450 of the Code of Civil Procedure and by Act No. 1508, in the sense that, for the purpose of
attachment and execution, and for the purposes of the Chattel Mortgage Law, "ungathered products"
have the nature of personal
property. The lower court, therefore, committed no error in holding that the sugar cane in question was
personal property and, as such, was not subject to redemption.

NOTA BENE: In Sibal v. Valdez,10 the Court held that pending crops which have potential existence may
be the valid subject matter of sale,and may be dealt with separately from the land on which they grow.

Southern Motors Inc vs. Moscoso

2 SCRA 168
May 1961

FACTS:

In June 1957, plaintiff-appellee, Southern Motors, Inc. (Southern Motors) sold to defendant-appellant
Angel Moscoso one Chevrolet truck, on installment basis, for P6,445.00. Upon making a down payment,
the defendant executed a promisory note for the sum of P4,915,00, representing the unpaid balance of
the purchase price to secure the payment of which, a chattel mortgage was constituted on the truck in
favor of Southern Motors. Of the P4,915,00, defendant was only able to pay a total of P550.00, which
P110.00 was applied to the interest up to August 15, and P400.00 to the principal, thus leaving an
unpaid balance of P4,475.00. The defendant failed to pay 3 more installments on the balance of the
purchase price.

In November 1957, the Southern Motors filed a complaint against the Moscoso to recover the unpaid
balance of the promissory note, and the lower court issued a writ of attachment on Moscoso’s
properties. The Sheriff of San Jose, Antique, attach the Chevrolet truck, as well as a house and lot
belonging to Moscoso, and said truck was brought to the Southern Motors’ compound in Iloilo City for
safe keeping. The Provincial Sheriff of Iloilo sold the said truck on January 2, 1958 at a public auction in
which Southern Motors itself was the only bidder for P1,000.00. In March 1958, the trial court
condemned the defendant Moscoso to pay the plaintiff Southern Motors the unpaid balance of
P4,475.00 with interest at the rate of 12% per annum from August 16, 1957, until fully paid. While
Southern Motors claims that in filing the complaint, demanding payment of the unpaid balance of the
purchase price, it has availed of the first remedy provided in Article 1484 of the new Civil Code i.e. to
exact fulfillment of the obligation (specific performance), Mosocoso, on the other hand, contends that
Southern Motors had availed itself of the third remedy viz, the foreclosure of the chattel mortgage on
the truck.
ISSUE:

Which remedy under the Civil Code did the vendor Southern Motors avail?

COURT RULING:

The Supreme Court, in affirming the decision of the lower court, found that there is nothing unlawful or
irregular in appellee Southern Motors's act of attaching the mortgaged truck itself.

Since it has chosen to exact the fulfillment of the appellant Moscoso's obligation, Southern Motors may
enforce execution of the judgment that may be favorable to it, on all personal and real properties of the
latter not exempt from execution sufficient to satisfy such judgment. No one can successfully contest
that the attachment of a house and lot at San Jose, Antique was merelly an incident to all ordinary civil
action. (Sections 1 & 11, Rule 59; sec. 16 Rule 39.) The mortgage creditor may recover judgment on the
mortgage debt and cause an execution on the mortgaged property and may cause an attachment to be
issued and levied on such property, upon beginning his civil action.

Daroy vs Abecia Case Digest

Regalado Daroy vs. Esteban Abecia 

Facts: Daroy was plaintiff in a forcible entry case. He hired Abecia as his lawyer and won. To satisfy the
award for damages, a parcel of land of the defendant was sold to Daroy at an execution sale. The land
was then sold to Daroy’s relative, who then sold it to Abecia’s wife. He now claims that these sales are
void because Abecia forged his signature on the deeds of sale. IBP disbarred Abecia. 

Held: Reversed. The evidence shows that Daroy was a party to the sale at the time ot was made and did
not “discover” it 9 years later as he claimed. He was not defrauded <real issueà the parties thought that
because the land had been acquired at a public sale to satisfy a judgment in a case in which respondent
was complainant’s counsel, the latter could not acquire the land. The parties made this arrangement to
circumvent Art. 1491 of the Civil Code which prevents lawyers from acquiring property and rights that
may be the object of any litigation in which they may take by virtue of their profession. The prohibition
in Art. 1491 does not apply to the sale of a parcel of land acquired by a client to satisfy a judgment in his
favor, to his attorney was not the subject of the litigation. While judges, prosecuting attorneys, and
others connected with the administration of justice are prohibited from acquiring “property or rights in
litigation or levied upon in execution” the prohibition with respect to attorneys in the case extends only
to “property and rights that may be the object of any litigation in which they may take part by virtue of
their profession.”