Dignos v.

CA
G.R. No. L-59266; 29 February 1988

CONTRACT OF SALE, CONCEPTS | Contract of Sale v. Contract to Sell

FACTS:
In July 1965, herein petitioners Silvestre T. Dignos and Isabela Lumungsod de Dignos
(spouses Dignos) sold their parcel of land in Opon, Lapu–Lapu to herein private respondent
Antonio Jabil for the sum of P28,000 payable for two installments, with an assumption of
indebtedness with the First Insular Bank of Cebu in the sum of P12,000 and the next
installment of P4,000 to be paid in September 1965. In November 1965, the spouses
Dignos sold the same parcel of land for P35,000 to defendants Luciano Cabigas and Jovita
L. de Cabigas (spouses Cabigas) who were then US citizens, and executed in their favor an
Absolute Deed of Sale duly registered in the Office of the Register of Deeds.

Upon discovery of the 2nd sale of the subject land, Jabil filed the case at bar in the CFI of
Cebu which rendered its Decision in August 1975 declaring the 2nd sale to the spouses
Cabigas null and void ab initio and the 1st sale to Jabil not rescinded. The CFI of Cebu also
ordered Jabil to pay the remaining P16,000 to the spouses Dignos and to reimburse the
spouses Cabigas a reasonable amount corresponding the expenses in the construction of
hollow block fences in the said parcel of land. The spouses Dignos were also ordered to
return the P35,000 to the spouses Cabigas.

Both Jabil and the spouses Dignos appealed to the Court of Appeals, which affirmed in July
1981 the CFI of Cebu’s Decision except for the part of Jabil paying the expenses of the
spouses Cabigas for building a fence. The spouses Dignos contested that the contract
between them and Jabil was merely a contract to sell and not a deed of sale.

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.

LINGATONG | SALES 2B | SY 2020-2021

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.

HULST v PR BUILDERS, INC

G.R. No. 156364, September 3, 2007

FACTS:
Jacobus Bernhard Hulst (petitioner) and his spouse Ida Johanna Hulst-Van Ijzeren (Ida),
Dutch nationals, entered into a Contract to Sell with PR Builders, Inc. (respondent), for the
purchase of a 210-sq m residential unit in respondent's townhouse project in Batangas.

When respondent failed to comply with its verbal promise to complete the project on their
agreed period, the spouses filed before the Housing and Land Use Regulatory Board
(HLURB) a complaint for rescission of contract with interest, damages and attorney's fees.
HLURB rendered a Decision in favor of spouses, thus rescinding the Contract to Sell. The
HLURB Arbiter issued a Writ of Execution addressed to the Ex-Officio Sheriff of the
Regional Trial Court of Tanauan, Batangas directing the latter to execute its judgment. The
Ex-Officio Sheriff proceeded to implement the Writ of Execution. However, upon complaint
of respondent with the CA on a Petition for Certiorari and Prohibition, the levy made by the
Sheriff was set aside, requiring the Sheriff to levy first on respondent's personal properties.

The HLURB Arbiter issued an Alias Writ of Execution and the Sheriff levied on respondent's
15 parcels of land covered by 13 Transfer Certificates of Title (TCT) and set the public
auction of the levied properties. Two days before the scheduled public auction, respondent
filed an Urgent Motion to Quash Writ of Levy with the HLURB on the ground that the Sheriff
made an over levy. During the day of the auction, respondent's counsel objected to the
conduct of the public auction on the ground that respondent's Urgent Motion to Quash Writ
of Levy was pending resolution. Absent any restraining order from the HLURB, the Sheriff
proceeded to sell the 15 parcels of land. The sum of was turned over to the petitioner in
satisfaction of the judgment award after deducting the legal fees. Same day after the
auction, the Sheriff received the Order dated April 28, 2000 issued by the HLURB Arbiter to
suspend the proceedings on the matter.

Four months later, the HLURB Arbiter and HLURB Director issued an Order setting aside
the sheriff's levy on respondent's real properties and rendered that the levy on the subject

LINGATONG | SALES 2B | SY 2020-2021

properties made by the Ex-Officio Sheriff of the RTC is set aside and the said Sheriff is
hereby directed to levy instead Respondent's real properties that are reasonably sufficient
to enforce its final and executory judgment, this time, taking into consideration not only the
value of the properties as indicated in their respective tax declarations, but also all the other
determinants at arriving at a fair market value, namely: the cost of acquisition, the current
value of like properties, its actual or potential uses, and in the particular case of lands, their
size, shape or location, and the tax declarations thereon.

A motion for reconsideration being a prohibited pleading under Section 1(h), Rule IV of the
1996 HLURB Rules and Procedure, petitioner filed a Petition for Certiorari and Prohibition
with the CA who then dismissed the petition. Without filing a motion for reconsideration,
petitioner filed Petition for Review on Certiorari. Hence this petition.

ISSUE:
1. Whether or not the spouses, being a foreign national, can acquire property in the
Philippines.
2. Whether or not Court of Appeals have gravely erred in affirming the arbiter’s order setting
aside the levy made by the sheriff on the subject properties.

RATIO:
1. The 1987 Constitution reserved the right to participate in the disposition, exploitation,
development and utilization of lands of the public domain for Filipino citizens or corporations
at least 60 percent of the capital of which is owned by Filipinos. Aliens, whether individuals
or corporations, have been disqualified from acquiring public lands; hence, they have also
been disqualified from acquiring private lands. Since petitioner and his wife, being Dutch
nationals, are proscribed under the Constitution from acquiring and owning real property, it
is unequivocal that the Contract to sell entered into by petitioner together with his wife and
respondent should be considered void.

This rule, however is subject to exceptions that permit the return of that which may have
been given under a void contract to the party repudiating the void contract before the illegal
purpose is accomplished or before damage is caused to a third person and if public interest
is sub served by allowing recovery. Petitioner is therefore entitled to recover what he has
paid, although the basis of his claim for rescission, which was granted by the HLURB, was
not the fact that he is not allowed to acquire private land under the Philippine Constitution.
But petitioner is entitled to the recovery only of the amount of P3,187,500.00, representing
the purchase price paid to respondent. No damages may be recovered on the basis of a
void contract; being nonexistent, the agreement produces no juridical tie between the
parties involved.

LINGATONG | SALES 2B | SY 2020-2021

Further, petitioner is not entitled to actual as well as interests thereon, moral and exemplary
damages and attorney's fees. Since the contract involved here is a Contract to Sell,
ownership has not yet transferred to the petitioner when he filed the suit for rescission.
While the intent to circumvent the constitutional proscription on aliens owning real property
was evident by virtue of the execution of the Contract to Sell, such violation of the law did
not materialize because petitioner caused the rescission of the contract before the
execution of the final deed transferring ownership.

2. In the present case, the HLURB Arbiter and Director gravely abused their discretion in
setting aside the levy conducted by the Sheriff for the reason that the auction sale
conducted by the sheriff rendered moot and academic the motion to quash the levy.

The HLURB Arbiter lost jurisdiction to act on the motion to quash the levy by virtue of the
consummation of the auction sale. Absent any order from the HLURB suspending the
auction sale, the sheriff rightfully proceeded with the auction sale. The winning bidder had
already paid the winning bid. The legal fees had already been remitted to the HLURB. The
judgment award had already been turned over to the judgment creditor.

In the present case, the Sheriff complied with the mandate of Section 9, Rule 39 of the
Revised Rules of Court, to "sell only a sufficient portion" of the levied properties "as is
sufficient to satisfy the judgment and the lawful fees." Each of the 15 levied properties was
successively bidded upon and sold, one after the other until the judgment debt and the
lawful fees were fully satisfied. Holly Properties Realty Corporation successively bidded
upon and bought each of the levied properties for the total amount of P5,450,653.33 in full
satisfaction of the judgment award and legal fees. The HLURB Arbiter and Director had no
sufficient factual basis to determine the value of the levied property. Respondent only
submitted an Appraisal Report, based merely on surmises. The Report was based on the
projected value of the townhouse project after it shall have been fully developed, that is, on
the assumption that the residential units appraised had already been built. The Appraiser in
fact made this qualification in its Appraisal Report: "[t]he property subject of this appraisal
has not been constructed. The basis of the appraiser is on the existing model units." Since it
is undisputed that the townhouse project did not push through, the projected value did not
become a reality.
Thus, the appraisal value cannot be equated with the fair market value. The Appraisal
Report is not the best proof to accurately show the value of the levied properties as it is
clearly self-serving.

RULING:
WHEREFORE, the instant petition is GRANTED. The Decision dated October 30, 2002 of
the Court of Appeals in CA-G.R. SP No. 60981 is REVERSED and SET ASIDE. The Order

LINGATONG | SALES 2B | SY 2020-2021

dated August 28, 2000 of HLURB Arbiter Ma. Perpetua Y. Aquino and Director Belen G.
Ceniza in HLRB Case No. IV6-071196-0618 is declared NULL and VOID.

HLURB Arbiter Aquino and Director Ceniza are directed to issue the corresponding
certificates of sale in favor of the winning bidder, Holly Properties Realty Corporation.
Petitioner is ordered to return to respondent the amount of P2,125,540.00, without interest,
in excess of the proceeds of the auction sale delivered to petitioner. After the finality of
herein judgment, the amount of P2,125,540.00 shall earn 6% interest until fully paid.

Toyota Shaw Inc. vs. Court of Appeals, and Sosa

G.R. No. 116650, May 23, 1995

FACTS:
Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota Lite Ace from the
Toyota office at Shaw Boulevard, Pasig (petitioner Toyota) on June 14, 1989 where they
met Popong Bernardo who was a sales representative of said branch. Sosa emphasized
that he needed the car not later than June 17, 1989 because he, his family, and a
balikbayan guest would be using it on June 18 to go home to Marinduque where he will
celebrate his birthday on June 19. Bernardo assured Sosa that a unit would be ready for
pick up on June 17 at 10:00 in the morning, and signed the "Agreements Between Mr. Sosa
& Popong Bernardo of Toyota Shaw, Inc.,” a document which did not mention anything
about the full purchase price and the manner the installments were to be paid. Sosa and
Gilbert delivered the down payment of P100,000.00 on June 15, 1989 and Bernardo
accomplished a printed Vehicle Sales Proposal (VSP) No. 928 which showed Sosa’s full
name and home address, that payment is by "installment," to be financed by "B.A.," and that
the "BALANCE TO BE FINANCED" is "P274,137.00", but the spaces provided for "Delivery
Terms" were not filled-up.

When June 17 came, however, petitioner Toyota did not deliver the Lite Ace. Hence, Sosa
asked that his down payment be refunded and petitioner Toyota issued also on June 17 a
Far East Bank check for the full amount of P100,000.00, the receipt of which was shown by
a check voucher of Toyota, which Sosa signed with the reservation, "without prejudice to
our future claims for damages." Petitioner Toyota contended that the B.A. Finance
disapproved Sosa’s the credit financing application and further alleged that a particular unit
had already been reserved and earmarked for Sosa but could not be released due to the
uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the
option to purchase the unit by paying the full purchase price in cash but Sosa refused.

LINGATONG | SALES 2B | SY 2020-2021

The trial court found that there was a valid perfected contract of sale between Sosa and
Toyota which bound the latter to deliver the vehicle and that Toyota acted in bad faith in
selling to another the unit already reserved for Sosa, and the Court of Appeals affirmed the
said decision.

ISSUE:
Was there a perfected contract of sale between respondent Sosa and petitioner Toyota?

RULING:
The Supreme Court granted Toyota’s petition and dismissed Sosa’s complaint for damages
because the document entitled “Agreements Between Mr. Sosa & Popong Bernardo of
Toyota Shaw, Inc.,” was not a perfected contract of sale, but merely an agreement between
Mr. Sosa and Bernardo as private individuals and not between Mr. Sosa and Toyota as
parties to a contract.

There was no indication in the said document of any obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and neither was there a correlative
obligation on the part of the latter to pay therefor a price certain. The provision on the
downpayment of P100,000.00 made no specific reference to a sale of a vehicle. If it was
intended for a contract of sale, it could only refer to a sale on installment basis, as VSP
No.928 executed on June 15, 1989 confirmed. The VSP also created no demandable right
in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any
legally indemnifiable injury.

EDRADA V RAMOS
G.R. No. 154413, August 31, 2005

FACTS:
Respondent spouses Eduardo and Carmencita Ramos (respondents) are the owners of two
(2) fishing vessels, the Lady Lalaine and the Lady Theresa. On 1 April 1996, respondents
and petitioners executed an untitled handwritten document pertaining to the sale of the said
vessels. Upon the signing of the document, petitioners delivered to respondents four (4)
postdated Far East Bank and Trust Company (FEBTC) checks payable to cash drawn by
petitioner Rosella Edrada, in various amounts totaling One Hundred Forty Thousand Pesos
(P140,000.00). On 3 June 1996, respondents filed an action against petitioners for specific
performance with damages before the RTC, praying that petitioners be obliged to execute
the necessary deed of sale of the two fishing vessels and to pay the balance of the
purchase price. In their Complaint, respondents alleged that petitioners contracted to buy

LINGATONG | SALES 2B | SY 2020-2021

the two fishing vessels for the agreed purchase price of Nine Hundred Thousand Pesos
(P900,000.00), which according to them evinced a contract to buy. However, despite
delivery of said vessels and repeated oral demands, petitioners failed to pay the balance, so
respondents further averred. On the other hand, petitioners averred that the document sued
upon merely embodies an agreement brought about by the loans they extended to
respondents. According to petitioners, respondents allowed them to manage or administer
the fishing vessels as a business on the understanding that should they find the business
profitable, the vessels would be sold to them for Nine Hundred Thousand Pesos
(P900,000.00). But petitioners decided to call it quits after spending a hefty sum for the
repair and maintenance of the vessels which were already in dilapidated condition. After
trial, the RTC ruled in favor of the respondents. Both parties appealed the RTC Decision.
However, finding no reversible error in the appealed decision, the Court of Appeals, in its
Decision, affirmed the same and dismissed both appeals. Only petitioners elevated the
controversy to this Court. Hence this petition for reversal.

ISSUE:
Whether or not there’s perfected contract of sale between the petitioners and respondents.

RATIO:
The SC disagreed with the RTC and the Court of Appeals that the document is a perfected
contract of sale.

A contract of sale is defined as an agreement whereby one of the contracting parties

obligates himself to transfer the ownership of and to deliver a determinate thing, and the
other to pay therefore a price certain in money or its equivalent. It must evince the consent
on the part of the seller to transfer and deliver and on the part of the buyer to pay. An
examination of the document reveals that there is no perfected contract of sale. The
agreement may confirm the receipt by respondents of the two vessels and their purchase
price.

However, there is no equivocal agreement to transfer ownership of the vessel, but a mere
commitment that documents pertaining to the sale and agreement of payments to follow.
Evidently, the document or documents which would formalize the transfer of ownership and
contain the terms of payment of the purchase price, or the period when such would become
due and demandable, have yet to be executed. But no such document was executed and
no such terms were stipulated upon.

A contract is perfected when there is concurrence of the wills of the contracting parties with
respect to the object and the cause of the contract. In this case, the agreement merely
acknowledges that a purchase price had been agreed on by the parties. There was no

LINGATONG | SALES 2B | SY 2020-2021

mutual promise to buy on the part of petitioners and to sell on the part of respondents. The
agreement in question does not create any obligatory force either for the transfer of title of
the vessels, or the rendition of payments as part of the purchase price.

Lloyd’s Enterprises & Credit Corp v. Dolleton

Facts:
Respondents were the registered owners of a parcel of land situated in Barangay Putatan,
Muntinlupa City and covered by TCT No. 153554. Erected on the 166- sq m property is a
four-door apartment building being leased by respondents to various tenants. Respondents
mortgaged the property to a certain Joseph Patrick Santos to secure a loan in the amount of
P100,000.00. Upon payment of the loan, Santos executed a release and cancellation of the
mortgage. The same was annotated on the TCT.

TCT No. 153554 in the name of respondents was cancelled and a new TCT No. 197220
was issued in the name of Gagan on the basis of a Deed of Absolute Sale whereby
respondents purportedly sold to Gagan the subject property for the sum of P120,000.00.
Petitioner lent to Gagan and her live-in partner, Guevarra, the sum of P391,512.00. The
loan was secured by a real estate mortgage on the subject property. After payment of the
loan, petitioner executed a Cancellation of Mortgage. Petitioner granted another loan to
Gagan and Guevarra for a bigger sum of P542,928.00. A new real estate mortgage was
constituted over the property. This undated mortgage deed appears to have been notarized
in 1995. The second real estate mortgage was likewise annotated.

Gagan and Guevarra failed to pay the second loan upon its maturity. Thus, petitioner
instituted extrajudicial foreclosure proceedings on the subject property.
Petitioner sent notices to the apartment tenants informing them about the transfer of the
property to petitioner and allowing them the option either to vacate the apartment or to pay a
monthly rental of P2,000.00. Thus, the apartment tenants did not remit the rentals to
respondents anymore, prompting the latter to cause the annotation of an adverse claim on
TCT No.

Respondents filed a complaint, praying among others for the nullification of the Deed of
Absolute Sale, the two real estate mortgage contracts and the extrajudicial foreclosure
proceedings; the cancellation of TCT Nos. 197220 and 210363; and the restoration of TCT
No. 153554 in the name of respondents.

LINGATONG | SALES 2B | SY 2020-2021

Respondents denied having executed the Deed of Absolute Sale and alleged that they had
merely offered to sell to defendant Gagan the subject property for P900,000.00 on
installment basis so that they could pay their loan obligation to Santos.

The summons on defendants Gagan and Guevarra were returned unserved as their
whereabouts were unknown. Upon motion by respondents, the RTC directed the issuance
and service of alias summons by publication. Subsequently, defendants Gagan and
Guevarra were declared in default for failure to file their responsive pleading to the
complaint that was published in a newspaper of general circulation.

In its answer with counterclaim, petitioner raised the defense of lack of cause of action,
asserting that it exercised due diligence in verifying the status of the subject property and
that it would not have accepted the same as security for the loan if the title were not clean. It
also claimed that respondents were guilty of estoppel by laches as they failed to take the
necessary measures to protect their rights and interest.

RTC rendered judgment declaring the Deed of Absolute Sale dated 5 August 1994 as
spurious.

Issues:
I. Whether or not CA committed a reversible error in law when it failed to declare petitioner
as mortgagee in good faith as the latter took the necessary steps which an ordinary and
prudent man would have taken before buying the property in question;

II. Whether or not CA erred when it ruled that the petitioner is liable for damages when the
respondent is not entirely without fault;

III. Whether or not CA erred when it failed to rule on the liability of the Gagans in this case;

IV. Whether or not the amount of damages awarded by the honorable court of appeals is
consistent with the existing jurisprudence and norms of morality.

Held:
RTC and the Court of Appeals concur that petitioner did not exercise due diligence in
ascertaining the true ownership of the subject property, notwithstanding the existence of
circumstances which should have impelled it to investigate further. Well-settled is the rule
that factual findings of the RTC, when affirmed by the Court of Appeals, are accorded great
weight and respect by the Court.

LINGATONG | SALES 2B | SY 2020-2021

The Court cannot sustain petitioners claim that it should not be required to look beyond the
certificate of title for flaws in the ownership of the property in view of the presumption that a
Torrens title is regularly issued and that the burden is on respondents to rebut the
presumption of good faith.

Petitioner is engaged in the business of extending credit to the public and is, thus, expected
to exercise due diligence in dealing with properties offered as security.

The Court explicitly declared that when the purchaser or mortgagee is a financing institution,
the general rule that a purchaser or mortgagee of land is not required to look further than
what appears on the face of the title does not apply.

Applying the principle in Adriano, petitioner must bear the loss of the property because of its
failure to ascertain the true ownership of the subject property, notwithstanding the fact that it
is engaged in the business of offering real estate loans to the public and is, therefore,
required to exercise a higher degree of diligence in investigating the status and condition of
the properties offered as securities.

Petitioner, however, is not without relief even at this juncture. It correctly filed a cross-claim
against defendants Gagan and Guevarra for the purchase price of the foreclosed property in
the amount of P645,000.00 plus other expenses of transfer and litigation, the actual
damages it incurred at the foreclosure sale, and all other expenses for which petitioner may
be held liable. Although the RTC and the Court of Appeals failed to resolve the cross-claim,
to avoid further delay, this Court can very well adjudicate upon the liabilities of defendants
Gagan and Guevara to petitioner. Petitioner submitted in evidence a copy of the sheriff’s
certificate of sale, evincing that petitioner paid the amount of P645,000.00 at the foreclosure
sale of the subject property. However, as to other alleged actual expenses incurred by
petitioner as a result of the filing of the case, no evidence was offered to prove the same.
Defendants Gagan and Guevara should ultimately bear the damages incurred by petitioner
at the foreclosure sale, considering that no evidence was presented to prove petitioner’s
complicity in the forgery of the Deed of Absolute Sale and that the instant controversy arose
because of the acts of defendants Gagan and Guevara.

Except for the modified award of moral and exemplary damages due the respondents, the
Court of Appeals decision affirmed, albeit impliedly, the RTC decision in all other respects
including the award of actual litigation expenses and attorney’s fees.

WHEREFORE, the instant petition for review on certiorari is PARTIALLY GRANTED and
the Decision of the Court of Appeals in CA-G.R. CV No. 82017 is AFFIRMED IN ALL
RESPECTS with the following MODIFICATIONS: (1) the other monetary awards granted by

LINGATONG | SALES 2B | SY 2020-2021

the Regional Trial Court, Branch 276, Muntinlupa City are RESTORED and petitioner is
accordingly ORDERED to pay respondents moral damages of P300,000.00, exemplary
damages of P300,000.00, actual litigation expenses of P50,000.00 and attorneys fees of
P100,000.00; and (2) defendants Blesilda Gagan and Feliciano Fajardo Guevarra are
ORDERED to pay jointly and severally petitioner Lloyds Enterprises and Credit Corporation
on its cross-claim the amount.

Sanchez v. Rigos
G.R. No. L-25494, 14 June 1972

FACTS:
In an instrument entitled "Option to Purchase," executed on April 3, 1961, defendant-
appellant Severina Rigos "agreed, promised and committed ... to sell" to plaintiff-appellee
Nicolas Sanchez for the sum of P1,510.00 within two (2) years from said date, a parcel of
land situated in the barrios of Abar and Sibot, San Jose, Nueva Ecija. It was agreed that
said option shall be deemed "terminated and elapsed," if “Sanchez shall fail to exercise his
right to buy the property" within the stipulated period. On March 12, 1963, Sanchez
deposited the sum of Pl,510.00 with the CFI of Nueva Ecija and filed an action for specific
performance and damages against Rigos for the latter’s refusal to accept several tenders of
payment that Sanchez made to purchase the subject land.

Defendant Rigos contended that the contract between them was only “a unilateral promise
to sell, and the same being unsupported by any valuable consideration, by force of the New
Civil Code, is null and void." Plaintiff Sanchez, on the other hand, alleged in his compliant
that, by virtue of the option under consideration, "defendant agreed and committed to sell"
and "the plaintiff agreed and committed to buy" the land described in the option. The lower
court rendered judgment in favor of Sanchez and ordered Rigos to accept the sum Sanchez
judicially consigned, and to execute in his favor the requisite deed of conveyance. The
Court of Appeals certified the case at bar to the Supreme Court for it involves a question
purely of law.

ISSUE:
Was there a contract to buy and sell between the parties or only a unilateral promise to sell?

RULING:
The Supreme Court affirmed the lower court’s decision. The instrument executed in 1961 is
not a "contract to buy and sell," but merely granted plaintiff an "option" to buy, as indicated
by its own title "Option to Purchase." The option did not impose upon plaintiff Sanchez the

LINGATONG | SALES 2B | SY 2020-2021

obligation to purchase defendant Rigos' property. Rigos "agreed, promised and committed"
herself to sell the land to Sanchez for P1,510.00, but there is nothing in the contract to
indicate that her aforementioned agreement, promise and undertaking is supported by a
consideration "distinct from the price" stipulated for the sale of the land. The lower court
relied upon Article 1354 of the Civil Code when it presumed the existence of said
consideration, but the said Article only applies to contracts in general.

However, it is not Article 1354 but the Article 1479 of the same Code which is controlling in
the case at bar because the latter’s 2nd paragraph refers to "sales" in particular, and, more
specifically, to "an accepted unilateral promise to buy or to sell." Since there may be no
valid contract without a cause or consideration, the promisor is not bound by his promise
and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise
partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected
contract of sale. Upon mature deliberation, the Court reiterates the doctrine laid down in the
Atkins case and deemed abandoned or modified the view adhered to in the Southwestern
Company case.

Riviera Filipina Inc. vs. CA

G.R. No. 117355, April 5, 2002

Facts:
Respondent Reyes executed a ten year renewable Contract of Lease with Riviera involving
a 1,018 square meter parcel of land which was a subject of a Real Estate Mortgage
executed by Reyes in favor of Prudential Bank. But the loan with Prudential Bank remained
unpaid upon maturity so the bank foreclosed the mortgage thereon and emerged as the
highest bidder at the public auction sale. Reyes decided to sell the property offered it to
Reviera. After seven months, Riviera offered to buy the property but Reyes denied it and
increased the price of the property. Reyes’ counsel informed Riviera that he is selling the
property for P6,000 per square meter and to confirm their conversation, Riviera sent a letter
stating his interest in buying the property for the fixed and final price of P5,000 per square
meters but Reyes did not accede to said price.

Then Reyes confided to Traballo and the latter expressed interest in buying the said
property for P5,300 per square meter but he did not have enough amount so he looked for a
partner. Despite of the impending expiration of the redemption period of the foreclosed
mortgaged property and the deal between Reyes and Traballo was not yet formally
concluded, Reyes decided to approach Riviera and requested Atty. Alinea to approach
Angeles and find out if the latter was still interested in buying the subject property and ask

LINGATONG | SALES 2B | SY 2020-2021

him to raise his offer for the purchase of the said property a little higher but Riviera said that
his offer is P5,000 per square meter so Reyes did not agree.

Cypress and Trading Corporation, were able to come up with the amount sufficient to cover
the redemption money, with which Reyes paid to the Prudential Bank to redeem the subject
property and Reyes executed a Deed of Absolute Sale covering the subject property.
Cypress and Cornhill mortgaged the subject property to Urban Development Bank. Riviera
sought from Reyes, Cypress and Cornhill a resale of the subject property to it claiming that
its right of first refusal under the lease contract was violated but his attempts were
unsuccessful. Riviera filed the suit to compel Reyes, Cypress, Cornhill and Urban
Development Bank to transfer the disputed title to the land in favor of Riviera upon its
payment of the price paid by Cypress and Cornhill.

Issue:
Whether or not petitioner can still exercise his “right of first refusal”.

Held:
No. The held that in order to have full compliance with the contractual right granting
petitioner the first option to purchase, the sale of the properties for the price for which they
were finally sold to a third person should have likewise been first offered to the former.
Further, there should be identity of terms and conditions to be offered to the buyer holding a
right of first refusal if such right is not to be rendered illusory. Lastly, the basis of the right of
first refusal must be the current offer to sell of the seller or offer to purchase of any
prospective buyer. Thus, the prevailing doctrine is that a right of first refusal means identity
of terms and conditions to be offered to the lessee and all other prospective buyers and a
contract of sale entered into in violation of a right of first refusal of another person, while
valid, is rescissible.

PARAÑAQUE KINGS V. CA
G.R. NO. 111538; FEBRUARY 26, 1997

FACTS:
Defendant Catalina Santos is the owner of 8 parcels of land located in Parañaque.
Frederick Chua leased the property of defendant and assigned all rights and interest and
participation in the leased property to Lee Ching Bing by deed of assignment. Lee Ching
Bing also assigned all his rights and interest in the leased property to Parañaque Kings
Enterprises, Inc. All of these contracts/deeds were registered.

LINGATONG | SALES 2B | SY 2020-2021

Paragraph 9 of the assigned leased (sic) contract provides among others that:
9. That in case the properties subject of the lease agreement are sold or
encumbered, Lessors shall impose as a condition that the buyer or mortgagee
thereof shall recognize and be bound by all the terms and conditions of this lease
agreement and shall respect this Contract of Lease as if they are the LESSORS
thereof and in case of sale, LESSEE shall have the first option or priority to buy the
properties subject of the lease;

Defendant Santos sold the eight parcels of land subject of the lease to Defendant David
Raymundo, for a consideration of P5Million, in contravention of the contract of lease, for the
first option or priority to buy was not offered by defendant Santos to the plaintiff. Santos,
realizing the error, she had it reconveyed to her for the same consideration of P5Million and
subsequently the property was offered for sale to plaintiff for the sum of P15Million, however
the period of 10 days to make good of the offer expired. Another deed of sale was executed
by Santos in favor of Raymundo for consideration of P9Million. Hence, the petitioner filed a
complaint before the RTC.

RTC dismissed the complaint for lack of a valid cause of action. It ratiocinated that Santos
complied with the lease agreement by offering the properties for sale to the plaintiff and
there was a definite refusal on the part of the plaintiff to accept the offer.

CA affirmed in toto the ruling of RTC.

ISSUE: Whether or not there is valid cause of action.

RULING:
Yes.

The principal legal question, as stated earlier, is whether the complaint filed by herein
petitioner in the lower court states a valid cause of action. Since such question assumes the
facts alleged in the complaint as true, it follows that the determination thereof is one of law,
and not of facts. There is a question of law in a given case when the doubt or difference
arises as to what the law is on a certain state of facts, and there is a question of fact when
the doubt or difference arises as to the truth or the falsehood of alleged facts.

A cause of action exists if the following elements are present: (1) a right in favor of the
plaintiff by whatever means and under whatever law it arises or is created; (2) an obligation
on the part of the named defendant to respect or not to violate such right, and (3) an act or
omission on the part of such defendant violative of the right of plaintiff or constituting a

LINGATONG | SALES 2B | SY 2020-2021

breach of the obligation of defendant to the plaintiff for which the latter may maintain an
action for recovery of damages.

A careful examination of the complaint reveals that it sufficiently alleges an actionable

contractual breach on the part of private respondents. Under paragraph 9 of the contract of
lease between respondent Santos and petitioner, the latter was granted the first option or
priority to purchase the leased properties in case Santos decided to sell. If Santos never
decided to sell at all, there can never be a breach, much less an enforcement of such right.
But on September 21, 1988, Santos sold said properties to Respondent Raymundo without
first offering these to petitioner. Santos indeed realized her error, since she repurchased the
properties after petitioner complained. Thereafter, she offered to sell the properties to
petitioner for P15 million, which petitioner, however, rejected because of the ridiculous price.
But Santos again appeared to have violated the same provision of the lease contract when
she finally resold the properties to respondent Raymundo for only P9 million without first
offering them to petitioner at such price. Whether there was actual breach which entitled
petitioner to damages and/or other just or equitable relief, is a question which can better be
resolved after trial on the merits where each party can present evidence to prove their
respective allegations and defenses.

The decision of the RTC and CA are reversed and set aside. The case is remanded to the
RTC for further proceedings.

Lao vs Genato
G.R. No. L-56451, June 19, 1985

FACTS:
Spouses Juan and Candelaria Lao were promisees in a Mutual Agreement of Promise to
Sell executed between them and Sotero Dionisio III, the son of the heir and administrator of
the intestate estate of deceased Rosenda Abuton, Sotero Dionisio Jr. The Laos were
promised by Dionisio III a commercial property belonging to such estate. On June 25,1980,
Dionisio Jr. filed with the Probate Court a Motion for Authority to Sell which the said court
granted. Thereafter, he sold to his son Dionisio III the subject property for P75,000. The
latter then sold the same property in favor of acertain William Go for P80,000.
Subsequently, the title was transferred to Go.

On August 27, 1980, Florida Nuqui (another heir of the estate), filed a motion for Annulment
of the Deeds of Absolute Sale on the ground that the sale and subsequent transfer of title of

LINGATONG | SALES 2B | SY 2020-2021

the property were grossly inadequate. According to Nuqui, the market value of the property
is P400,000.

On February 6, 1981, the Laos filed a Manifestation wherein they alleged that Dionisio Jr.,
without revealing that the property had already been sold to Go, entered into a Mutual
Agreement of Promise to Sell to the former for P220,000 (the Laos even offered to pay for
the property for P300,000). They further alleged that they paid the earnest money with a
check worth P70,000 in favor of Dionisio III. Moreover, the Laos contended that the
agreement regarding the balance will only be paid upon the production of the TCT and the
execution of the final Deed of Sale.

Because of the conflict, all the parties, except the Lao spouses and Dionisio III, entered an
Amicable Settlement. The Lao spouses filed an opposition but despite such opposition,
respondent Judge Genato approved the Amicable Settlement.

ISSUE: W/N the sale between the administrator and his son valid.

HELD:
NO. A sale made by an administrator of decedent’s property, which is fictitious and illegal,
cannot be made lawful by the assent thereto of the heirs and approval by the trial court of
the compromise settlement, being prejudicial to creditors and to government.

The price was grossly low. Dionisio III had no income whatsoever. On top of that, not a
single centavo of the P75,000 was ever accounted for nor reported to the Probate Court.
Dionisio Jr. was only compelled to admit that the actual consideration for the sale made by
him was P200,000 and not for P80,000 (This happened in the amicable settlement).

In addition, the offer by the Laos of P300,000 for the purchase of the property is more
beneficial and advantageous. No satisfactory and convincing reason appeared given the
rejection and nonacceptance of said offer, thus giving rise to a well-grounded
suspicion that a collusion of some sort exists between the administrator and the heirs to
defraud the creditors and the government.

LINGATONG | SALES 2B | SY 2020-2021

 Fronilda vs RTC
G.R. No. 72306, October 5, 1988

FACTS:
Julio Catolos (deceased) formerly owned 6 parcels of Land in Rizal. His estate was subject
of a settlement where the legal heirs including Alfonso Fornilda were represented by Atty.
Sergio Amonoy. A Project of Partition was filed in the Intestate Court whereby the
cotroverted parcels were adjudicated to Fornilda and a certain Asuncion Pasamba. The
Court approved the Project of Partition. Thereafter, the estate was declared closed and
terminated after estate and inheritance taxes had been paid, the claims against the estate
settled, and all the parties adjudicated.

Fornilda and Pasamba then executed a contract of mortgage wherein they mortgaged the
controverted parcels to Atty. Amonoy as security for payment of his Attorney’s fees in the
aforementioned proceedings in the amount of P27,600. In 1969, both Fornilda and
Pasamba died. Petitioners are some of Fornilda’s heirs. Since the mortgage indebtedness
was not paid, Atty. Amonoy instituted foreclosure proceedings. In 1973, the controverted
parcels were foreclosed. An auction sale was then held where Amonoy was the only bidder
for P23,760. The trial court confirmed the sale.
To satisfy the deficiency, another sale was conducted, again, Amonoy was the only bidder
for P12,137.50. A year after, an action for annulment was filed. The trial court dismissed the
action.

ISSUE:
W/N the contract of contingent fee as basis of the interest of Atty. Fernandez is prohibited
under Art. 1491.

HELD:
NO. Under Art. 1491. A lawyer is prohibited from acquiring either by purchase or
assignment of the property or rights involved which are object of the litigation in which they
intervene by virtue of their profession. The rationale advanced for the prohibition is that
public policy disallows the transactions in view of the fiduciary relationship involved.
The fact that the properties were first mortgaged and only subsequently acquired in an
auction sale will not remove it from the scope of prohibition.

LINGATONG | SALES 2B | SY 2020-2021

 Godinez vs. Fong Pak Luen
G.R. No. L-36731, January 27, 1983

FACTS:
The plaintiffs filed a case to recover a parcel of land sold by their father Jose Godinez to
defendant Fong Pak Luen. Said defendant executed a power of attorney in favor of his
codefendant Kwan Pun Ming, who conveyed and sold the above described parcel of land to
co-defendant Trinidad S. Navata.

The latter is aware of and with full knowledge that Fong Pak Luen is a Chinese citizen as
well as Kwan Pun Ming, who under the law are prohibited and disqualified to acquire real
property; that Fong Pak Luen has not acquired any title or interest in said parcel of land as
purported contract of sale executed by Jose Godinez alone was contrary to law and
considered non-existent. The defendant filed her answer that the complaint does not state
a cause of action since it appears from the allegation that the property is registered in the
name of Jose Godinez so that as his sole property he may dispose of the same; that the
cause of action has been barred by the statute of limitations as the alleged document of
sale executed by Jose Godinez on November 27, 1941, conveyed the property to defendant
Fong Pak Luen as a result of which a title was issued to said defendant; that under Article
1144(1) of the Civil Code, an action based upon a written contract must be brought within
10 years from the time the right of action accrues; that the right of action accrued on
November 27, 1941 but the complaint was filed only on September 30, 1966, beyond the
10-year period provided by law.

The trial court issued an order dismissing the complaint. A motion for reconsideration was
filed by plaintiffs but was denied.

ISSUE:
W/N the sale was null and void ab initio since it violates applicable provisions of the
Constitution and the Civil Code.

HELD:
NO. Prescription may never be invoked to defend that which the Constitution prohibits.
However, we see no necessity from the facts of this case to pass upon the nature of the
contract of sale executed by Jose Godinez and Fong Pak Luen whether void ab initio, illegal
per se, or merely prohibited. It is enough to stress that insofar as the vendee is concerned,
prescription is unavailing. But neither can the vendor or his heirs rely on an argument
based on imprescriptibility because the land sold in 1941 is now in the hands of a Filipino
citizen against whom the constitutional prescription was never intended to apply.

LINGATONG | SALES 2B | SY 2020-2021

As earlier mentioned, Fong Pak Luen, the disqualified alien vendee later sold the same
property to Navata, a Filipino citizen qualified to acquire real property. Navata, as a
naturalized citizen, was constitutionally qualified to own the subject property.

Bernard vs. PR Builders

G.R. 156364, September 25, 2008

FACTS:
Petitioner contends that the Contract to Sell between petitioner and respondent involved a
condominium unit and did not violate the Constitutional proscription against ownership of
land by aliens. He argues that the contract to sell will not transfer to the buyer ownership of
the land on which the unit is situated; thus, the buyer will not get a transfer certificate of title
but merely a Condominium Certificate of Title as evidence of ownership; a perusal of the
contract will show that what the buyer acquires is the seller's title and rights to and interests
in the unit and the common areas.

Under Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act, foreign
nationals can own Philippine real estate through the purchase of condominium units or
townhouses constituted under the Condominium principle with Condominium Certificates of
Title.

ISSUE:
W/N the purchase of a condo unit by an alien falls under the express prohibition of land
ownership by aliens

HELD:
No. Considering that the rights and liabilities of the parties under the Contract to Sell is
covered by the Condominium Act wherein petitioner as unit owner was simply a member of
the Condominium Corporation and the land remained owned by respondent, then the
constitutional proscription against aliens owning real property does not apply to the present
case.

There being no circumvention of the constitutional prohibition, the Court's pronouncements

on the invalidity of the Contract of Sale should be set aside.

LINGATONG | SALES 2B | SY 2020-2021

 ALCANTARA-DAUS v. SPOUSES DE LEON
G.R. No. 149750 June 16, 2003

FACTS:
Spouses De Leon are the owners of a parcel of land situated in the Municipality of San
Manuel, Pangasinan with an area of Four Thousand Two Hundred Twelve square meters
more or less. Respondent Hermoso De Leon inherited the said lot from his father Marcelino
De Leon by virtue of a Deed of Extra-Judicial Partition. Said lot is covered by Original
Certificate of Title No. 22134 of the Land Records of Pangasinan.

Sometime 1960s, Spouses De Leon engaged the services of the late Atty. Florencio Juan to
take care of the documents of their properties. They were asked to sign voluminous
documents by the latter. After the death of Atty. Juan, some documents surfaced and most
revealed that their properties had been conveyed by sale or quitclaim to Hermoso’s brothers
and sisters, to Atty. Juan and his sisters, when in truth and in fact, no such conveyances
were ever intended by them. Furthermore, respondent found out that his signature in the
Deed of Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon was forged.
They discovered that the land in question was sold by Rodolfo de Leon to Aurora Alcantara

Spouses De Leon demanded the annulment of the document and re-conveyance but
defendants refused. Petitioner, Aurora Alcantara-Daus averred that she bought the land in
question in good faith and for value on December 1975 and that she has been in
continuous, public, peaceful, open possession over the same and has been appropriating
the produce thereof without objection from anyone.

The RTC of Urdaneta, Pangasinan rendered its Decision in favor of herein petitioner. It
ruled that respondents’ claim was barred by laches, because more than 18 years had
passed since the land was sold. It further ruled that since it was a notarial document, the
Deed of Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic.

ISSUES:
Whether or not the Deed of Absolute executed by Rodolfo De Leon over the land in
question in favor of petitioner was perfected and binding upon the parties therein?

Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with Quitclaim,
executed by respondent Hermoso de Leon, Perlita de Leon and Carlota de Leon in favor of
Rodolfo de Leon was overcome by more than a preponderance of evidence of
respondents?

LINGATONG | SALES 2B | SY 2020-2021

HELD:

First Issue:
NO. It is during the delivery that the law requires the seller to have the right to transfer
ownership of the thing sold. In general, a perfected contract of sale cannot be challenged on
the ground of the seller’s non-ownership of the thing sold at the time of the perfection of the
contract.
Further, even after the contract of sale has been perfected between the parties, its
consummation by delivery is yet another matter. It is through tradition or delivery that the
buyer acquires the real right of ownership over the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not the owner of the
land he delivered to petitioner. Thus, the consummation of the contract and the consequent
transfer of ownership would depend on whether he subsequently acquired ownership of the
land in accordance with Article 1434 of the Civil Code. Therefore, we need to resolve the
issue of the authenticity and the due execution of the Extrajudicial Partition and Quitclaim in
his favor.

Second Issue:
NO. As a general rule, the due execution and authenticity of a document must be
reasonably established before it may be admitted in evidence. Notarial documents,
however, may be presented in evidence without further proof of their authenticity, since the
certificate of acknowledgment is prima facie evidence of the execution of the instrument or
document involved. To contradict facts in a notarial document and the presumption of
regularity in its favor, the evidence must be clear, convincing and more than merely
preponderant.

The CA ruled that the signature of Hermoso De Leon on the Extrajudicial Partition and
Quitclaim was forged. However, this factual finding is in conflict with that of the RTC. While
normally this Court does not review factual issues, this rule does not apply when there is a
conflict between the holdings of the CA and those of the trial court, as in the present case.

After poring over the records, the SC finds no reason to reverse the factual finding of the
appellate court. A comparison of the genuine signatures of Hermoso De Leon with his
purported signature on the Deed of Extrajudicial Partition with Quitclaim will readily reveal
that the latter is a forgery. As aptly held by the CA, such variance cannot be attributed to
the age or the mechanical acts of the person signing.

LINGATONG | SALES 2B | SY 2020-2021

 Sampaguita Pictures Inc. v. Jalwindor Manufacturers, Inc.
G.R. No. L-43059, October 11, 1979

FACTS:
Both the plaintiff-appellant Sampaguita Pictures Inc. (Sampaguita) and defendant-appellee
Jalwindor Manufacturers Inc. (Jalwindor) were domestic corporations duly organized under
the Philippine laws. Sampaguita leased to Capitol “300” Inc. (Capitol) the roof deck of its
building with the agreement that all permanent improvements Capitol will make on said
property shall belong to Sampaguita without any part on the latter to reimburse Capitol for
the expenses of said improvements. Shortly, Capitol purchased on credit from Jalwindor
glass and wooden jalousies, which the latter itself delivered and installed in the leased
premises, replacing the existing windows.

On June 1, 1964, Jalwindor filed with the CFI of Rizal, Quezon City an action for collection
of a sum of money with a petition for preliminary attachment against Capitol for its failure to
pay its purchases. Later, Jalwindor and Capitol submitted to the trial court a Compromised
Agreement wherein Capitol acknowledged its indebtedness of P9,531.09, payable in
monthly installments of at least P300.00 a month beginning December 15,1964 and that all
the materials that Capitol purchased will be considered as security for such undertaking.
Meanwhile, Sampaguita filed a complaint for ejectment and for collection of a sum of money
against Capitol for the latter’s failure to pay rentals from March 1964 to April 1965, and the
City Court of Quezon City ordered Capitol on June 8, 1965 to vacate the premises and to
pay Sampaguita.

On the other hand, Capitol likewise failed to comply with the terms of the Compromise
Agreement, and on July 31, 1966, the Sheriff of Quezon City made levy on the glass and
wooden jalousies. Sampaguita filed a third-party claim alleging that it is the owner of said
materials and not Capitol, but Jalwindor filed an idemnity bond in favor of the Sheriff and the
items were sold at public auction on August 30, 1966, with Jalwindor as the highest bidder
for P6,000.00. Sampaguita filed with the CFI of Rizal, Quezon City an action to nullify the
Sheriff's sale and for an injunction to prevent Jalwindor from detaching the glass and
wooden jalousies. Jalwindor was ordered to maintain the status quo pending final
determination of the case, and on October 20, 1967, the lower court dismissed the
complaint and ordered Sampaguita to pay Jalwindor the amount of P500.00 as attorney's
fees.

ISSUE:
Was there a delivery made and, therefore, a transfer of ownership of the thing sold?

LINGATONG | SALES 2B | SY 2020-2021

RULING:
The Supreme Court reversed the decision of the lower court declaring Sampaguita as
declared the lawful owner of the disputed glass and wooden jalousies, permanently
enjoining Jalwindor from detaching said items from the roof deck of the Sampaguita
Pictures Building, and ordered Jalwindor to pay Sampaguita the sum of P1,000.00 for and
as attorney's fees.

When a property levied upon by the sheriff pursuant to a writ of execution is claimed by a
third person in a sworn statement of ownership thereof, as prescribed by the rules, an
entirely different matter calling for a new adjudication arises. The items in question were
illegally levied upon since they do not belong to the judgment debtor. The power of the
Court in execution of judgment extends only to properties unquestionably belonging to the
judgment debtor. The fact that Capitol failed to pay Jalwindor the purchase price of the
items levied upon did not prevent the transfer of ownership to Capitol and, later, to
Sampaguita by virtue of the agreement in their lease contract. Therefore, the complaint of
Sampaguita to nullify the Sheriff's sale is well founded, and should prosper.

NORKIS DISTRIBUTORS, INC., petitioner, vs. THE COURT OF APPEALS & ALBERTO
NEPALES, respondents.
G.R. No. 91029. February 7, 1991.

FACTS:
On September 20, 1979, private respondent Alberto Nepales bought from the Norkis
Distributors, Inc. (Norkis) in its Bacolod branch a brand new Yamaha Wonderbike
motorcycle Model YL2DX with Engine No.L2-329401K Frame No.NL2-0329401, color
maroon, which was then on display in the Norkis showroom. The Branch Manager Avelino
Labajo agreed to accept the P7,500.00 price payable by means of a Letter of Guaranty from
the Development Bank of the Philippines (DBP), Kabankalan. Hence, credit was extended
to Nepales, and as security for the loan, he executed a chattel mortgage on the motorcycle
in favor of DBP. Labajo issued the Norkis Sales Invoice No. 0120 perfecting the contract of
sale, and Nepales signed the same to conform to the terms of the sale, while the unit
remained in Norkis' possession. On November 6, 1979, it was registered under Alberto
Nepales’ name in the Land Transportation Commission.

On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who was
allegedly the agent of Alberto Nepales but the latter denies it. The record shows, however,
that Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator Ernesto
Arriesta at the DBP offices in Kabankalan, Negros Occidental Branch. On February 3, 1980,

LINGATONG | SALES 2B | SY 2020-2021

the motorcycle met an accident at Binalbagan, Negros Occidental while being driven by a
certain Zacarias Payba. The unit was a total wreck, was returned, and stored inside Norkis'
warehouse.

On March 20, 1980, DBP released the proceeds of private respondent's motorcycle loan to
Norkis in the total sum of P7,500. As the price of the motorcycle later increased to P7,828 in
March, 1980, Nepales paid the difference of P328 and demanded the delivery of the
motorcycle. Norkis failed to deliver the unit, and Nepales filed an action for specific
performance with damages in the RTC of Himamaylan, Negros Occidental. Norkis
answered that the motorcycle had already been delivered to private respondent before the
accident, hence, he should bear the risk of loss or damage as owner of the unit. The lower
court ruled in favor of Nepales, and the Court of Appeals affirmed the decision but deleted
the award of damages "in the amount of P50.00 a day from February 3, 1980 until payment
of the present value of the damaged vehicle." Norkis concedes that there was no "actual"
delivery of the vehicle, but insists that there was constructive delivery of the unit upon the
issuance of the sales invoice, upon the registration of the unit in Nepales’ name, and upon
the issuance of the official receipt.

ISSUE: Who should bear the risk of loss?

RULING:
Affirming the decision of the Court of Appeals, the Supreme Court reiterated that Article
1496 of the Civil Code which provides that "in the absence of an express assumption of risk
by the buyer, the things sold remain at seller's risk until the ownership thereof is transferred
to the buyer," is applicable in the case at bar for there was neither an actual nor constructive
delivery of the thing sold.

The Court of Appeals correctly ruled that the purpose of the execution of the sales invoice
dated September 20, 1979 and the registration of the vehicle in the name of Alberto
Nepales with the Land Registration Commission was not to transfer the ownership and
dominion over the motorcycle to him, but only to comply with the requirements of the DBP
for processing private respondent's motorcycle loan. The circumstances in the case itself
more than amply rebut the disputable presumption of delivery upon which Norkis anchors its
defense to Nepales' action.

LINGATONG | SALES 2B | SY 2020-2021