FilOil Marketing v.

IAC

Facts: On December 22, 1971, Josefina Alberto de Pabalan sold a parcel of land to Villa Rey
Transit. On the day of the sale, TCT was delivered to Jose M. Villarama, President of Villa
Rey Transit, who caused its cancellation and the issuance under his own name. There are
no conditions stated in the new certificate of title and the transfer appeared to have been
made by virtue of an absolute deed of sale.

On the same date, Villarama mortgaged the land on behalf of Villa Rey Transit to the
petitioner as security for a loan. Filoil Marketing Corporation was at the time already
occupying the land by a contract of lease entered with Pabalan. In the deed of mortgage. On
January 25, 1974, the mortgagor having defaulted in the payment of the debt, the mortgage
was extrajudicially foreclosed and the land was sold at public auction.

Filoil was the highest bidder. The certificate of sale was annotated on the certificate of
title. However, before the FilOil could consolidate its ownership over the property, Pabalan,
filed a complaint against Villa Rey Transit, Villarama and Filoil. She alleged that her
contract of sale with Villa Rey Transit was conditional and did not transfer title to the latter
pending full payment to her of the purchase price.

The trial court held in favor of the complainant. Villa Rey Transit and Filoil appealed to the
Intermediate Appellate Court, which affirmed the decision of the trial court.

Issue: Whether or not the contract of sale was conditional

Ruling: The instrument is not a contract to sell as contended by Pabalan. It is a deed of sale
in which the title was transferred to the vendee as of the date of the transaction
notwithstanding that the purchase price had not been fully paid at that time. it is
recognized that the vendee may sell the property prior to full payment of all the amount.

Villarama acted in bad faith when he secured the cancellation of vendor’s title and replaced
it in his own name. Pabalan left the drafting of the deed of sale to Villarama whom she
trusted. This circumstance alone imposed to Villarama the moral if not the legal
responsibility to explain the meaning and consequence of the contract she was signing.

FilOil also acted in bad faith in accepting the property as security to the loan without
exercising more vigilance in inquiring with Pabalan, as lessor, into the antecedent of the
transfer of title to Villarama. The deed of mortgage and the foreclosure sale in its favor over
the subject land are declared valid.
State investment house vs. CA

Facts: Private respondent Nora B. Moulic issued two post-dated checks to Corazon
Victoriano, as security for pieces of jewelry to be sold on commission. Victoriano negotiated
the checks to petitioner State Investment House. Inc.

Moulic failed to sell the pieces of jewelry, so she returned them to the payee before
maturity of the checks. The checks, however, could no longer be retrieved as they had
already been negotiated. Before their maturity dates, Moulic withdrew her funds from the
drawee bank.

Upon presentment for payment, the checks were dishonored for insufficiency of funds. On
20 December 1979, State allegedly notified moulic of the dishonor of the checks and
requested that it be paid in cash instead, although Moulic avers that no such notice was
given her.

On 6 October 1983, State sued to recover the value of the checks plus attorney's fees and
expenses of litigation. On 26 May 1988, the trial court dismissed the complaint as well as
the third-party complaint.

State elevated the order of dismissal to the Court of Appeals, but the appellate court
affirmed the trial court.

Issue:

1. Whether or not State Investment House is a holder in due course.

2. Whether or not Moulic can set up against the petitioner the defense that there was
failure or absence of consideration

Ruling:

Yes, State Investment House is a holder in due course. The evidence shows that the
State Investment House Inc. bought the checks from Victoriano before the due dates, it was
taken in good faith and for value, and they are unaware that the checks were issued as
security and not for value. A prima facie presumption exists that a holder of a negotiable
instrument is a holder in due course.
No, Moulic can only invoke this defense against the petitioner if it was a privy to the
purpose for which they were issued and therefore is not a holder in due course. She failed
to get back the possession of the checks, intentional cancellation of instrument is
impossible. The acts which will discharge a simple contract of payment of money will
discharge the instrument. Correlating Article 1231 of the Civil Code which enumerates the
modes of extinguishing obligation, none of those modes outlined is applicable in this case.
Moulic may not unilaterally discharge herself from her liability by mere expediency of
withdrawing her funds from the drawee bank. she has no legal basis to excuse herself from
liability on her check to a holder in due course. Moreover, the fact that the petitioner failed
to give notice of dishonor is not immaterial. The need for such notice is not absolute.

Labagala v. Santiago

Facts: Jose T. Santiago owned a parcel of land in Rizal Avenue Extension, Sta. Cruz, Manila.
His sisters Nicolasa and Amanda alleged that he had fraudulently registered the said parcel
under his name alone. They sued him for recovery of 2/3 share of the property. On April
20, 1981, the trial court decided in favor of the sisters, recognizing their right of ownership
over portions of the property. The Register of Deeds of Manila was required to include the
names of Nicolasa and Amanda in the certificate of title to said property.

Jose died intestate on February 6, 1984. On August 5, 1987, His sisters filed a complaint for
recovery of title, ownership, and possession against the petitioner, Ida C. Labagala to
recover from her the 1/3 portion of said property that Jose owned. Respondents alleged
that Jose's share in the property belongs to them because they are the only legal heirs of
their brother, who died intestate and without issue. They claimed that the purported sale of
the property made by their brother to petitioner sometime in March 1979 was executed
through petitioner's machinations and with malicious intent, to enable her to secure the
corresponding transfer certificate of title in petitioner's name alone. Petitioner claimed to
be Jose’s daughter and entitled to his share in the subject property.

On October 17, 1990, the trial court ruled in favor of petitioner. According to the trial court,
while there was indeed no consideration for the deed of sale executed by Jose in favor of
petitioner, the deed constitutes a valid donation. Even if it were not, petitioner would still
be entitled to Jose's 1/3 portion of the property as Jose's daughter. Respondents appealed
to the Court of Appeals, which reversed the decision of the trial court because the name of
Ida’s parents is different in her birth certificate.

Issue: Whether or not petitioner is entitled to Jose's 1/3 portion of the property he co-
owned with respondents, through succession, sale, or donation.

Ruling: No, the petitioner is not entitled to Jose’s 1/3 portion of the property he co-owned
with respondents.

The Court ruled that there is no valid sale in this case. Jose did not have the right to
transfer ownership of the entire property to petitioner since 2/3 of it belonged to his
sisters. Petitioner cannot give her consent that time because she was still a minor. Consent
of the contracting parties is the essential requisites of a contract, there can be no valid
contract if there is no consent. Moreover, petitioner admittedly did not pay any centavo for
the property, which makes the sale void.

According to Art. 1471. “If the price is simulated, the sale is void, but the act may be shown
to have been in reality a donation, or some other act or contract.” Neither may the
purported deed of sale be a valid deed of donation. Even assuming that the deed is genuine,
it cannot be a valid donation. It lacks the acceptance of the donee required by Art. 725 of
the Civil Code. Being a minor in 1979, the acceptance of the donation should have been
made by her father, Leon Labagala or her mother Cornelia Cabrigas or her legal
representative pursuant to Art. 741 of the same Code. No one of those mentioned in the law
in fact no one at all accepted the donation for Ida.