certificate of title be issued in her name.
In the petition, Del Prado alleged that the sle was for a lump sum, in which case, the
Sps. Tongson v. Emergency Pawnshop G.R. No. 167874, 15 January 2010
FACTS:Napala offered to purchase the land of Spouses Tongson for P3,000,000. The petitioners find the offer acceptable
executed with Napala a Memorandum of Agreement. Upon signing of the Deed of Absolute Sale Napala paid P200,000 in cash
to petitioners and issued a postdated PNB check for the payment of the remaining amount. However, the check bounces because
of insufficient fund, despite the petitioners repeated demand that it be paid in full or return the land, Napala failed to do both now
the petitioners filed an action against Napala.
ISSUE: Whether or not the contract of sale can be annulled based on the fraud employed by Napala.
RULING: A valid contract requires the concurrence of the following essential elements: (1) consent or meeting of the minds,
that is, consent to transfer ownership in exchange for the price; (2) determinate subject matter; and (3) price certain in money or
its equivalent.
In the case, there is no dispute as regards the presence of the two requisites for a valid sales contract, namely, (1) a determinate
subject matter and (2) a price certain in money. The problem now lie with the existence of the remaining element, which is
consent of the contracting parties, specifically, the consent of the Spouses Tongson to sell the property to Napala.
The Supreme Court found no causal fraud in this case to justify the annulment of the contract of sale between the parties. It is
clear from the records that the Spouses Tongson agreed to sell their property to Napala who offered to pay ₱3,000,000 as
purchase price therefor. Contrary to the Spouses Tongson’s belief that the fraud employed by Napala was “already operational at
the time of the perfection of the contract of sale,” the misrepresentation by Napala that the postdated PNB check would bounce
on its maturity hardly equates to dolo causante. Napala’s assurance that the check he issued was fully funded was not the
principal inducement for the Spouses Tongson to sign the Deed of Absolute Sale. Even before Napala issued the check, the
parties had already consented and agreed to the sale transaction. The Spouses Tongson were never tricked into selling their
property to Napala. On the contrary, they willingly accepted Napala’s offer to purchase the property at ₱3,000,000. In short,
there was a meeting of the minds as to the object of the sale as well as the consideration therefor.
Instances where there is an existence of causal fraud include: (1) when the seller, who had no intention to part with her property,
was “tricked into believing”; (2) when the signature of the authorized corporate officer was forged; or (3) when the seller was
seriously ill, and died a week after signing the deed of sale raising doubts on whether the seller could have read, or fully
understood, the contents of the documents he signed or of the consequences of his act. Suffice it to state that nothing analogous
to these badges of causal fraud exists in this case.
However, while no causal fraud attended the execution of the sales contract, the fraud surfaced when Napala issued the worthless
check to the Spouses Tongson, which is definitely not during the negotiation and perfection stages of the sale. Rather, the fraud
existed in the consummation stage of the sale when the parties are in the process of performing their respective obligations under
the perfected contract of sale.
Del Prado vs. Caballero
In a judgment rendered on February 1, 1985 in a cadastral case, Judge Reyes of the RTC of Cebu adjudicated in favor of the
spouses Caballero seveal parcels of land in Cebu, including Cadastral Lot No. 11909. Antonio Caballero moved for the final
decree of registration for the lots. The same court, through Judge Ducadao, ordered the National Land, Titles, and Deeds
Registration Administration to issue the decree of registration and the corresponding titles of the lots in favor of the spouses. On
June 11, 1990, the spouses sold to Carmen Del Prado Lot No. 11909 on the basis of tax declaration covering the property. The
Original Certificate of Title covering lot no. 11909 was issued only on Novemeber 15, 1990 and entered in the registration book
of the city of Cebu on December 19, 1990. Therein, the technical description of lot no. 11909 is about 14, 457 sq.m. On March
20, 1991, Del Prado filed in the same cadastral proceedings a Petition for Registation of Document under PD 1529 in order that a
vendor was bound to deliver all that was included witin said boundaries even when it exceeded the area specified in the contract.
Respondents opposed, saying only 4,000 sq.m. was sold. The Regional Trial Court ruled that Del Prado established a clear and
positive right over the lot, the sale was for a lump sum, and the subject matter of the sale was the parcel of land and not only a
portion thereof. The court of appeals reversed and set aside the ruling of RTC, the petition for registration of document is not one
of the remedies provided for under PD 1529 after the original registration has been effected.
Issue: WON the sale of the land is for a lump sum
Ruling: Not really a lump sum. The deed of sale is not one of a unit price contract because the parties agreed for the price.
Petitioner id not entitled to have the certificate of transfer covering the whole lot no. 11909, which was originally issued in the
name of respondents, transferred to her name. Respondents only intended to seel 4,000 sq.m. Del Prado's petitionis improper.
Since the certificate of transfer was issued in favor of the spouses, and their names appear therein, they have the title to the land
in question, serves a evidence of an indefeasible and incontrovertible title, and since the one year period already prescribed, the
title became incontrovertible it can no longer be contested.
Celestino Co vs CIR (G.R. No. L-8506)
Subject: Sales
Doctrine: Contract for Piece-of-work
Facts: Celestino Co & Company is a duly registered general co-partnership doing business under the trade name of “Oriental
Sash Factory”. From 1946 to 1951 it paid percentage taxes of 7% on the gross receipts of its sash, door and window factory, in
accordance with sec. 186 of the National Internal Revenue Code which is a tax on the original sales of articles by manufacturer,
producer or importer. However, in 1952 it began to claim only 3% tax under Sec. 191, which is a tax on sales of services.
Petitioner claims that it does not manufacture ready-made doors, sash and windows for the public, but only upon special orders
from the customers, hence, it is not engaged in manufacturing under sec 186, but only in sales of services covered by sec 191.
Having failed to convince BIR, petitioner went to the Court of Tax Appeal where it also failed. CTA, in its decision, holds that
the “petitioner has chosen for its tradename and has offered itself to the public as a “Factory”, which means it is out to do
business, in its chosen lines on a big scale. As a general rule, sash factories receive orders for doors and windows of special
design only in particular cases but the bulk of their sales is derived from a ready-made doors and windows of standard sizes for
the average home.. Even if we were to believe petitioner’s claim that it does not manufacture ready-made sash, doors and
windows for the public and that it makes these articles only special order of its customers, that does not make it a contractor
within the purview of section 191 of the national Internal Revenue Code… there are no less than fifty occupations enumerated in
the aforesaid section…and after reading carefully each and every one of them, we cannot find under which the business of
manufacturing sash, doors and windows upon special order of customers fall under the category” mentioned under Sec 191.
Issue: Whether the petitioner company provides special services or is engaged in manufacturing.
Held: The important thing to remember is that Celestino Co & Company habitually makes sash, windows and doors, as it has
represented in its stationery and advertisements to the public. That it “manufactures” the same is practically admitted by
appellant itself. The fact that windows and doors are made by it only when customers place their orders, does not alter the nature
of the establishment, for it is obvious that it only accepted such orders as called for the employment of such material-moulding,
frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture. The Oriental Sash Factory does
nothing more than sell the goods that it mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to
such sizes and combining them in such forms as its customers may desire.
Appellant invokes Article 1467 of the New Civil Code to bolster its contention that in filing orders for windows and doors
according to specifications, it did not sell, but merely contracted for particular pieces of work or “merely sold its services”. In
our opinion when this Factory accepts a job that requires the use of extraordinary or additional equipment, or involves services
not generally performed by it-it thereby contracts for a piece of work — filing special orders within the meaning of Article 1467.
The orders herein exhibited were not shown to be special. They were merely orders for work — nothing is shown to call them
special requiring extraordinary service of the factory. The thought occurs to us that if, as alleged-all the work of appellant is only
to fill orders previously made, such orders should not be called special work, but regular work. The Supreme Court affirms the
assailed decision by the CTA.
CIR vs Mitsubishi, GR No L-54908, January 22, 1990
Atlas Consolidated Mining and Dev Corp (Atlas) entered into a loan and sales contract with Mitsubishi, a Japanese corp licenses
to engage in business in the Phils., for purposes of the projected expansion of the productive capacity of Atlas.

Mitsubishi agreed to extend a loan to Atlas for the installation of a new concentrator for copper production and Atlas to sell to
Mitsubishi all the copper concentrates produced for 15 years.
Mitsubishi applied for a loan with Export-Import Bank of Japan (Eximbank) for purpose of its obligation under said
contract. Pursuant to the contract between Atlas and Mitsubishi, interest payments were made by Atlas to Mitsubishi for the
years 1974-75.  The corresponding 15% tax thereon in the amount of P1,971,595.01 was withheld pursuant to sec. 24(b)(1) and
sec. 53 (b)(2) of NIRC, as amended by PD 131, and duly remitted to the government.
Private respondent filed a claim for the tax credit requesting the sum of P1,971,595.01 be applied against their existing and
future tax liabilities. It was later noted by respondent CTA that Mitsubishi executed a waiver and disclaimer of its interest in the
claim for tax credit in favor of Atlas.
Mitsubishi filed a petition for review with respondent court on the ground that Mitsubishi was a mere agent of Eximbank, which
is a financing institution owned, controlled and financed by the Japanese Government.  Such government status of Eximbank, if
it may be so called, is the basis for private respondents claim for exemption from paying the tax on the interest payment on the
loan. It was further claimed that the interest payments on the loan from the consortium of Japanese banks were likewise exempt
because loan supposedly came from or were fniancé by Eximbank.  Relying on the provision of sec. 29(b)(7)(A) NIRC.
mentioned in ¶4, that said spouses have agreed to sell the herein mentioned property to Alilano B. Jabil and condition in ¶5, in
which the spouses agreed to sign a final deed of absolute sale upon payment of the remaining balance of P4,000.00.
ISSUE: Is the contract between the parties a contract of sale or a contract to sell?
HELD: The contract between the parties is a contract of sale. It has been held that a deed of sale is absolute in nature although
dominated as a “Deed of Conditional Sale” where nowhere in the contract in question is a proviso or stipulation to the effect that
title to the property sold is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the
vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. All the elements of
a valid contract of sale are present in the document and that Spouses Dignos never notified Jabil by notarial act that they were
rescinding the contract, and neither did they file a suit in court to rescind the sale. There is no showing that Jabil properly
authorized a certain Cipriano Amistad to tell petitioners that he was already waiving his rights to the land in question.
Romulo A. Coronel, et al vs. The Court of Appeals, et al

CTA promulgated its decision ordering petitioner to grant a tax credit in favor of Atlas and the court declared that all papers and
documents pertaining to the loan obtained by Mitsubishi from Eximbank shows that this was the same amount given to Atlas. It
also observed that the money for the loan from the consortium of private Japanese banks originated from Eximbank.   From
these, respondent court concluded that the ultimate creditor of Atlas was Eximbank.   Mitsubishi was acting as a mere “arranger
or conduit through which the loan flowed from the creditor Eximbank to the debtor Atlas.
ISSUE: 1) WON the interest income from the loan extended to Atlas by Mitsubishi is excludible from gross income taxation
pursuant to sec. 29(b)(7)(A), NIRC and therefore, exempt from withholding tax.
            2) WON Mitsubishi is a mere conduit of Eximbank which will then be considered as the creditor whose investment in the
Phils. On loans are exempt from taxes.
G.R. No. 103577 (October 7, 1996)
FACTS:Coronel et al. consummated the sale of his property located in Quezon City to respondent Alcaraz. Since the title of the
property was still in the name of the deceased father of the Coronels, they agreed to transfer its title to their name upon payment
of the down payment and thereafter an absolute deed of sale will be executed.
Alcaraz’s mother paid the down payment in behalf of her daughter and as such, Coronel made the transfer of title to their name.
Notwithstanding this fact, Coronel sold the property to petitioner Mabanag and rescinded its prior contract with Alcaraz.

HELD:
1)    NO, The signatories on the loans and sales contract were Mitsubishi and Atlas, nowhere in the contract can it be inferred that
Mitsubishi acted for and behalf of Eximbank of Japan nor of any entity, private or public, for that matter.   When Mitsubishi
obtained the loan of USD 20M from Eximbank of Japan said amount ceased to be the property of the bank and become property
of Mitsubishi.  RULING:No. The agreement could not have been a contract to sell because the sellers herein made no express reservation of
Mitsubishi and not Eximbank is the sole creditor of Atlas, the former being the owner of the USD 20M upon completion of its
loan contract with Eximbank of Japan.  The interest income of the loan paid by Atlas to Mitsubishi is therefore entirely different
from the interest income paid by Mitsubishi to Eximbank of Japan.  What was the subject of the 15% withholding tax is not the
interest income paid by Mitsubishi to Eximbank, but the interest income earned by Mitsubishi from the loan to Atlas.
2)    NO, When Mitsubishi secured the loan, it was in its own independent capacity as a private entity and not as a conduit of the
consortium of Japanese banks or the Eximbank of Japan.  While loans were secured by Mitsubishi primarily “as a loan to and in
consideration for importing copper concentrates from Atlas, the fact remains that it was a loan by Eximbank of Japan to
Mitsubishi and not to Atlas.
ISSUE:Whether or not the contract between the petitioner and the respondent was a contract to sell subject to a suspensive
condition.
ownership or title to the subject parcel of land. Unlike in a contract to sell, petitioners in the case at bar did not merely promise to
sell the property to private respondent upon the fulfillment of the suspensive condition. On the contrary, having already agreed to
sell the subject property, they undertook to have the certificate of title change to their names and immediately thereafter, to
execute the written deed of absolute sale.
Article 1475, in correlation with Article 1181, both of the Civil Code, plainly applies to the case.
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price.

From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of
Dignos vs CA 158 scra 375 CONTRACT OF SALE, CONCEPTS | Contract of Sale v. Contract to Sell
contracts.

FACTS: Spouses Silvestre Dignos and Isabela Lumungsod de Dignos sold their parcel of land in Opon, Lapu-Lapu to private
Art. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired,
respondent Antonio Jabil for the sum of P28,000.00 payable for 2 installments, with an assumption of indebtedness with the First
shall depend upon the happening of the event which constitutes the condition.
Insular Bank of Cebu in the sum of P12,000.00 as was acknowledged by vendors in the Deed of Absolute Sale (Exh. C), and the
next installment to be paid 3 months after. But the same land was also sold by Spouses Dignos (Exh. J) which was registered in
the Registry of Deeds. This prompted Jabil to file a civil suit against Spouses Dignos for the 2nd sale to Spouses Luciano
Cabigas and Jovita de Cabigas, who were then US citizens. CFI of Cebu rendered the 2nd sale to Spouses Cabigas null and void,
directing Spouses Dignos to return the P35,000.00 to Spouses Cabigas and ordered Jabil to pay the remaining balance. Spouses
Dignos contend that Exh. C is a contract to sell and as such, anchored their contention on the very terms of the contract as
What is clearly established by the plain language of the subject document is that when the said Receipt of Down Payment was FACTS:
prepared and signed by petitioners, the parties had agreed to a conditional contract of sale, consummation of which is subject
only to the successful transfer of the certificate of title from the name of petitioners father to their names. In fact, the Court On July 10, 1990, Domingo Carabeo (petitioner) entered into a contract denominated as “Kasunduan sa Bilihan ng Karapatan sa
significantly notes that this suspensive condition was fulfilled. Thus, the conditional contract of sale between petitioners and
Lupa” (kasunduan) with Spouses Norberto and Susan Dingco (respondents) whereby petitioner agreed to sell his rights over a
private respondent became obligatory, the only act required for the consummation thereof being the delivery of the property by
means of the execution of the deed of absolute sale in a public instrument. 648 square meter parcel of unregistered land situated in Purok III, Tugatog, Orani, Bataan to respondents for P38,000.

What may be perceived from the respective undertakings of the parties to the contract is that petitioners had already agreed to
sell the house and lot they inherited from their father, completely willing to transfer ownership of the subject house and lot to the
buyer if the documents were then in order. It just so happened, however, that the transfer certificate of title was then still in the
name of their father.
Upon the signing of the contract, the respondents paid an initial amount of P10,000 and the remaining balance would be paid on
September 1990. However, when the respondents were about to pay the balance, the petitioner refused to accept the amount due
to an on-going dispute over the land. Nevertheless, the respondents occasionally gave the petitioner small sums of money which
totaled P9,100. These amounts were allegedly given due to the request of the petitioner.

Despite the respondents insistence of paying the remaining balance of P19,800, the petitioner remained firm in his refusal. He
CASE DIGEST: LUZON DEVELOPMENT BANK v. ANGELES CATHERINE ENRIQUEZ. CONSOLIDATED
reasoned that he would register the land first. However, when the dispute was finally settled and the registration of the land was
WITH: G.R. No. 168666.
made, the petitioner still declined to accept the payment. Thus, forcing the respondents to file a complaint before the Katarungan
Pambarangay. Nevertheless, the parties were not able to reach a settlement. Hence, the filing of a complaint for specific
FACTS: Delta Development and Management Services (Delta) entered into a loan with Luzon Development Bank (Bank),
performance before the RTC.
secured by a Real Estate Mortgage. The REM was amended to include a bigger sum loaned from the bank. The proceeds of the
loan were applied to Delta project of developing a subdivision. It subsequently entered into a contract to sell with Angeles
In the petitioner’s answer in the complaint, he alleged that the sale was void for lack of object certain. The kasunduannot having
Enriquez (Enriquez) over one of the subdivision lots. Enriquez was able to pay around half of the value of the property.
specified the metes and bounds of the land. In addition to that, he alleged that assuming that the validity of the kasunduan is
Subsequently, Delta was unable to pay for the loan it took with the bank, but instead of letting the bank foreclose on the
upheld, the respondent failed to comply with their reciprocal obligation in paying the balance of the P28,000 on September 1900.
mortgaged properties, it entered into a dacionen pago (dation in payment) where it turned over property to the bank.
Thus, forcing him to accept the installment payments.

The property subject to the contract to sell with Enriquez was included in the dation. Enriquez protested the transaction through
After the case was submitted for decision, the petitioner passed away. However, the records do not show that petitioner’s counsel
the regional office of the HLURB. She is asking for a refund of the purchase price pointing out that, the agreed upon amount
informed the lower court of his death and that proper substitution was effected. The RTC ruled in favor of the respondents
exceeded the limit prescribed by PD 957, or The Subdivision and Condominium Buyer Protective Decree, and that the mortgage
ordering them to sell their rights over the land and to pay the costs of suit. The CA affirmed the decision of the lower court.
Delta entered into was invalid per PD 957. The HLURB ruled in favor of Enriquez, but did not approve a refund. Instead, it
reduced the balance due for the property. Delta appealed the ruling, and was able to get a better ruling from the commissioner.
ISSUES:

The Office of the President affirmed the ruling. However, when Enriquez appealed to the Court of Appeals, the CA invalidated
Whether or not the elements of a valid contract are present in this case.
the dation, saying that Delta lost ownership over the property of Enriquez and could not have validly conveyed the same. Delta
Whether or not there is a valid contract despite the absence of spousal consent
and the Bank come before the Supreme Court to question the ruling. The Bank is also asking for the liability of Delta if it loses
Whether or not the death of the petitioner causes dismissal of the action filed by the respondents.
one of the properties to Enriquez.
HELD:

ISSUES: Was the dacion en pago valid?

Petition is denied
Is Delta liable to the Bank should Enriquez gain ownership of the property?
CIVIL LAW : Contracts
HELD: The mortgage entered into by Delta and the Bank is void for violation of PD 957. However, this does not, in any way,
invalidate the dacion en pago. The CA erred when it ruled that Delta lost ownership over the property subject of the contract to
FIRST ISSUE : The elements of a valid contract are present in this case.
sell. The very nature of a contract to sell is that the ownership vests upon full payment of the purchase price. Hence there was no
impediment in the dacion. Delta cannot be held liable should Enriquez gain ownership over the land. The effect of the dacion is
Even though the kasunduan did not specify the technical boundaries of the property, it does not render the sale a nullity. The
that the Bank becomes a party in the contract to sell with Enriquez, replacing Delta. Enriquez now owes the Bank the balance of
requirement that a sale must have for its object a determinate thing is satisfied as long as, at the time the contract is entered into,
the purchase price of the property. It is the intention of the dacion to extinguish the obligation of Delta in exchange for
the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the
properties. There are no other conditions. Also, as a financial institution, the Bank should have exercised greater diligence. It
parties.
cannot claim to be a transferee in good faith. However, Enriquez is liable for the amount agreed upon. The agreement was done
in good faith, and Enriquez agreed to the contract price. It cannot be challenged anymore.
REMEDIAL LAW : Appeal
G.R. No. 190823 : April 4, 2011
SECOND ISSUE: An issue raised only on appeal will not be considered by the courts.
DOMINGO CARABEO, Petitioner, v. SPOUSES NORBERTO and SUSAN DINGCO, Respondents.
The issue as to whether or not there is a valid contract despite the absence of spousal consent was raised only on appeal, hence,
will not be considered, in the present case, in the interest of fair play, justice and due process.
CARPIO MORALES, J.:
REMEDIAL LAW: Cause of Action
THIRD ISSUE: When the wrong complained of affects property rights, the death of the petitioner does not cause the
dismissal of the case
The death of the petitioner would not cause the dismissal of the action. In Bonilla v. Barcena, it was held that,
The question as to whether an action survives or not depends on the nature of the action and the damage sued for. In the causes
of action which survive, the wrong complained [of] affects primarily and principally property and property rights, the injuries to
the person being merely incidental, while in the causes of action which do not survive, the injury complained of is to the person,
the property and rights of property affected being incidental. (emphasis and underscoring supplied)
Thus, in the present case, the respondents are pursuing a property right arising from the kasunduan, whereas petitioner is
invoking nullity of the kasunduan to protect his proprietary interest. Since the action involves property rights, it survives.
Assuming arguendo, however, that the kasunduan is deemed void, there is a corollary obligation of petitioner to return the
money paid by respondents.
It bears noting that trial on the merits was already concluded before petitioner died. Since the trial court was not informed of
petitioner’s death, it may not be faulted for proceeding to render judgment without ordering his substitution. Its judgment is thus
valid and binding upon petitioner’s legal representatives or successors-in-interest, insofar as his interest in the property subject of
the action is concerned.
Therefore, the petition is denied.
National Grains Authority vs IAC
Facts:
On August 23, 1979, private respondent Leon Soriano offered to sell palay grains to NFA through William Cabal, the provincial
manager in Tuguegarao. The documents submitted were processed, and he was given a quota of 2,640 cavans, which is the
maximum number of cavans he may sell to NFA. On the same day and on the following day, Soriano delivered 630 cavans,
which were no rebagged, classified and weighed. When he demanded payment, he was told that payment will be held in
abeyance since Mr. Cabal was still investigating on an information received that Soriano was not a bona fide farmer. Instead of
withdrawing the palay, Soriano insisted that the palay grains be delivered and paid. He filed a complaint for specific
performance. Petitioners contend that the delivery was merely made for the purpose of offering it for sale because until the
grains were rebagged, classified and weighed, they are not considered sold.
Issue:
Whether there was a perfected sale
Held:
Soriano initially offered to sell palay grains produced in his farmland to NFA. When the latter accepted the offer by noting in
Soriano's Farmer's Information Sheet a quota of 2,640 cavans, there was already a meeting of the minds between the parties. The
object of the contract, being the palay grains produced in Soriano's farmland and the NFA was to pay the same depending upon
its quality. The fact that the exact number of cavans of palay to be delivered has not been determined does not affect the
perfection of the contract. Article 1349 of the New Civil Code provides: ". . .. The fact that the quantity is not determinate shall
not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a new
contract between the parties." In this case, there was no need for NFA and Soriano to enter into a new contract to determine the
exact number of cavans of palay to be sold. Soriano can deliver so much of his produce as long as it does not exceed 2,640
cavans. From the moment the contract of sale is perfected, it is incumbent upon the parties to comply with their mutual
obligations or "the parties may reciprocally demand performance" thereof.
Servicewide Specialist vs Intermediate Appellate Court
The rule is settled that the chattel mortgagor continues to be the owner of the property, and therefore, has the power to
alienate the same; however, he is obliged under pain of penal liability, to secure the written consent of the mortgagee. Thus,
the instruments of mortgage are binding, while they subsist, not only upon the parties executing them but also upon those
who later, by purchase or otherwise, acquire the properties referred to therein
Facts: Galicano Siton purchased from Car Traders Philippines, Inc. a vehicle and paid a downpayment of the price. The
remaining balance includes not only the remaining principal obligation but also advance interests and premiums for motor
vehicle insurance policies. Siton executed a promissory note in favor of Car Traders Philippines, Inc. expressly stipulating that
the face value of the note shall “be payable, without need of notice of demand, in instalments. There are additional stipulations in
the Promissory Note consisting of, among others, that if default is made in the payment of any of the installments or interest
thereon, the total principal sum then remaining unpaid, together with accrued interest thereon shall at once become due and
demandable.  As further security, Siton executed a Chattel Mortgage over the subject motor vehicle in favor of Car Traders
Philippines, Inc. The credit covered by the promissory note and chattel mortgage executed by respondent Galicano Siton was
first assigned by Car Traders Philippines, Inc. in favor of Filinvest Credit Corporation.
Subsequently, Filinvest Credit Corporation likewise reassigned said credit in favor of petitioner Servicewide Specialists, Inc.
Siton was advised of this second assignment. When Siton failed to pay, Servicewide Specialists filed this action against Galicano
Siton and “John Doe.” After the service of summons, Justiniano de Dumo, identifying himself as the “John Doe” in the
Complaint, inasmuch as he is in possession of the subject vehicle, filed his Answer with Counterclaim and with Opposition to
the prayer for a Writ of Replevin.
Siton alleged the fact that he has bought the motor vehicle from Galicano Siton; that de Dumo and Siton testified that, before the
projected sale, they went to a certain. Atty. Villa of Filinvest Credit Corporation advising the latter of the intended sale and
transfer. Siton and de Dumo were accordingly advised that the verbal information given to the corporation would suffice, and
that it would be tedious and impractical to effect a change of transfer of ownership as that would require a new credit
investigation as to the capacity and worthiness of Atty. De Dumo, being the new debtor. The further suggestion given by Atty.
Villa is that the account should be maintained in the name of Galicano Siton.; that as such successor, he stepped into the rights
and obligations of the seller; that he has religiously paid the installments as stipulated upon in the promissory note. He also
manifested that the Answer he has filed in his behalf should likewise serve as a responsive pleading for his co-defendant
Galicano Siton.
Issue: Whether or not the mortgagee is bound by the deed of sale by the mortgagor in favour of a third person, as neither the
mortgagee nor its predecessors has given written or verbal consent thereto pursuant to the deed of Chattel Mortgage.
Held: The absence of the written consent of the mortgagee to the sale of the mortgaged property in favor of a third person,
therefore, affects not the validity of the sale but only the penal liability of the mortgagor under the Revised Penal Code and the
binding effect of such sale on the mortgagee under the Deed of Chattel Mortgage. The rule is settled that the chattel mortgagor
continues to be the owner of the property, and therefore, has the power to alienate the same; however, he is obliged under pain of
penal liability, to secure the written consent of the mortgagee. Thus, the instruments of mortgage are binding, while they subsist,
not only upon the parties executing them but also upon those who later, by purchase or otherwise, acquire the properties referred
to therein
There is no dispute that the Deed of Chattel Mortgage executed between Siton and the petitioner requires the written consent of
the latter as mortgagee in the sale or transfer of the mortgaged vehicle. We cannot ignore the findings, however, that before the
sale, prompt inquiries were made by private respondents with Filinvest Credit Corporation regarding any possible future sale of
the mortgaged property; and that it was upon the advice of the company’s credit lawyer that such a verbal notice is sufficient and
that it would be convenient if the account would remain in the name of the mortgagor Siton.
Even the personal checks of de Dumo were accepted by petitioner as payment of some of the installments under the promissory
note. If it is true that petitioner has not acquiesced in the sale, then, it should have inquired as to why de Dumo’s checks were
being used to pay Siton’s obligations. 
Makati Sports Club, Inc. vs. Cheng 621 SCRA 103 , June 16, 2010
Facts: corporation , his ownership of the share represented thereby. It is not in law, the equivalent of such ownership. It expresses the
On October 20, 1994, Makati Sports Club (MSCI) through its BOD adopted a resolution authorizing the sale of 19 unissued contract between the corporation and the stockholder, but is not essential to the existence of a share of stock or the nature of the
shares of Class A and Class B. Defendant Cheng was the Corporate treasurer and Director. relation of the shareholder tot he corporation.
On July 7, 1995, Hodreal expressed his interest to buy a share and requested that his name be included in the waiting list.
Sometime in November 1995, McFoods Inc. expressed its interest in acquiring a share. McFood was able to buy the Class A
Therefore, McFoods properly complied with the requirement of Sec30(e) of the Amended By-Laws on MSCI’s pre-emptive
shares from petitioner in the amount P1,800,000. Payment for the share was made on November 28, 1995. The Deed of Absolute
right. Petitioner failed to purchase the share within 30 days from receipt of notice. It was only on January 29,1996 or 32 days
Sale was executed on December 15, 1995 and the stock certificate was issued on January 5, 1996.
after December 28, 1994 when McFoods and Hodreal executed the Deed of Absolute Sale. Registration of McFoods as owner is
By December 27, 1995, McFood sent a notice to petitioner that it was offering to resell the stock for P 2,800,000.
not essential as it is only a ministerial upon the buyer’s acquisition of ownership. The corporation cannot create restrictions in
It appear that while the sale between petitioner and McFood was under negotiation, there was also an ongoing negotiation
stock transfers.
between McFoods and Hodreal. On November 24, 1995, Hondreal paid McFoods P1,400,000 and another payment in the
amount of P1,400,00 was made on December 27, 1995.On January 29, 1996, McFoods and Hodreal executed a Deed of Sale for
the same share of stock.
Petitioner’s allegation of Cheng’s fraudulent act was not supported by evidence. The mere fact of receiving payment from
Only on February 7, 1996 was petitioner was advised of the sale between McFoods and Hodreal. A new certificate of stock was Hodreal in behalf of McFoods or claiming the certificate do not show badges of fraud.
issued upon request.

However, Cheng had been accused of profiteering from the said transaction upon an investigation conducted. Petitioner alleged
that Cheng and McFoods confabulated with one another at the expense of MSCI.
Thus, petitioner filed against Cheng and demanded to pay P1,000,000 as amount allegedly defrauded with damages.
RTC: dismissed the complaint
CA: affrmed RTC decision

Petiitoner: Cheng in collaboration with McFoods committed fraud in transacting the transfers involving Stock Certificate No. A
2243. Cheng is alleged to provide insiders information as to the status of the shares and facilitated the transfer by doctoring the
books to give a semblance of regularity to the transfer. McFoods never intended to become a legitimate holder of Class A shares
but did so for the purpose of realising a profit in the amount of P1,000,000 at the expense of the petitioner.

Issue: Whether McFoods can validly sold his MSCI share prior to the issuance of the certificate of sale

Held: Yes
Assuming the intention of McFoods was to speculate on the price of the share of stock when it tendered payment on November
28, 1995, it had all the right to negotiate and transact, at least on the anticipated and expected ownership of the share, with
Hodreal.

There is nothing wrong with the fact that the first payment/installment made by Hodreal to McFoods preceded or came earlier
than the payment made McFoods to MSCI for the same share of stocks because eventually McFoods became the owner of Class
A share covered in Certificate A2243.

Upon the payment by McFoods of P1,800,000 to MSCI and the execution of the Deed of Absolute Sale on December 15, 1995,
McFoods then had the right to demand the delivery of stock certificate in his name. The right of a transferee to have the stocks
transferred to its name is an inherent right flowing from its ownership.

Petitioner’s stance that McFoods violated its By-Laws on its pre-emptive right is not correct as McFoods offered to sell the
shares to MSCI on December 27, 1995 for the latter to exercise his right of first refusal. It had legally have the right to do so by
virtue of the payment made by McFoods and the execution of the Deed of Absolute Sale even if the certificate was issued on
January 1996. The certificate of stock is the paper representative or tangible evidence of the stock itself and of the various
interests therein. The certificate is not a stock in the corporation but is merely evidence of the holder’s interest and stars in the