Dignos v. CA, G.R. No. L-59266.

Doctrine:
February 29, 1988 A deed of sale is absolute in nature although denominated as a "Deed of
Conditional Sale" where nowhere in the contract in question is a 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.

Facts:
The Dignos spouses sold the said parcel of land to respondent Jabil for the sum
of P28, 000, payable in two installments, with an assumption of indebtedness
with the Bank in the sum of P12,000, which was paid and acknowledged by the
vendors in the deed of, and the next installment in the sum of P4,000.00 to be
paid on or before September 15, 1965. On November 25, 1965, the Dignos
spouses sold the same land in favor of defendants spouses, Cabigas, for the price
of P35,000. A deed of absolute sale was executed in favor of the Cabigas
spouses, and which was registered in the Office of the Register of Deeds. As the
Dignos spouses refused to accept the balance of the purchase price of the land
from Jabil, and upon discovery of the second sale, Jabil brought the present
suit."

Issue:
Whether or not subject contract is a deed of absolute sale or a contract to sell.

Held:
It is a deed of absolute sale. A deed of sale is absolute in nature although
denominated as a "Deed of Conditional Sale" where nowhere in the contract in

Hulst v. PR Builders, G.R. No.
156364, September 3, 2007
Toyota Shaw, Inc. v. CA GR No.
L-116650, May 23, 1995
question is a 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. There was actual
delivery of the land sold as when the Dignos spouses delivered the possession of
the land in question to Jabil as early as March 27, 1965 so that the latter
constructed thereon 3 beach resorts. It is evident that when petitioners sold said
land to the Cabigas spouses, they were no longer owners of the same and the
sale is null and void.
Doctrine:
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.
Doctrine:
Article 1458 of the Civil Code defines a contract of sale and Article 1475
specifically provides when it is deemed perfected. It is not a contract of sale. No
obligation on the part of Toyota to transfer ownership of a determinate thing to
Sosa and no correlative obligation on the part of the latter to pay therefor a price
certain appears therein. 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 the VSP executed the
following day confirmed. But nothing was mentioned about the full purchase
price and the manner the installments were to be paid. This Court had already
ruled that a definite agreement on the manner of payment of the price is an
essential element in the formation of a binding and enforceable contract of sale.
This is so because the agreement as to the manner of payment goes into the price
such that a disagreement on the manner of payment is tantamount to a failure to
agree on the price. Definiteness as to the price is an essential element of a
binding agreement to sell personal property.

Facts:
Luna L. Sosa entered into a contract with the Toyota Shaw Inc. through its sales
representative Popong Bernardo to purchase a Toyota Lite Ace. Sosa
emphasized that he needed it not later than June 17, 1989 because his family and
a balikbayan guest need it to go to Marinduque. On June 15, 1989, Sosa
delivered the down payment of P100,000 and signed a Vehicle Sales Proposal
stating that the balance of the purchase price would be paid by credit financing
through B.A. Finance with conditions that 1. This sale is subject to availability
of unit.2. Stated Price is subject to change without prior notice, Price prevailing
and in effect at time of selling will apply. The vehicle was not delivered on the
said date because of the disapproval by B.A. Finance of the credit financing
application of Sosa. Toyota then gave Sosa the option to purchase the unit by
paying the full purchase price in cash but Sosa refused. Sosa asked that his down
payment be refunded. Toyota did so on the very same day by issuing 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." Toyota alleged that no sale was
entered into between it and Sosa, that Bernardo had no authority to sign Exhibit
"A" for and in its behalf.

Issue:
whether or not the standard vehicles sales proposal was the true and documented
understanding of the parties which would have led to the ultimate contract of
sale.

Held:
No. The VSP was a mere proposal which was aborted in lieu of subsequent
events. It follows that the VSP 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.
A definite agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of sale. This is so
because the agreement as to the manner of payment goes into the price such that
a disagreement on the manner of payment is tantamount to a failure to agree on
the price. The VSP doesn’t mention about the full purchase price and the manner
the installments were to be paid.
Exhibit "A" shows the absence of a meeting of minds between Toyota and Sosa.
For one thing, Sosa did not even sign it. For another, Sosa was well aware from
its title, written in bold letters, viz., AGREEMENTS BETWEEN MR. SOSA &
POPONG BERNARDO OF TOYOTA SHAW, INC. that he was not dealing
with Toyota but with Popong Bernardo and that the latter did not misrepresent
that he had the authority to sell any Toyota vehicle. He knew that Bernardo was
only a sales representative of Toyota and hence a mere agent of the latter. It was
incumbent upon Sosa to act with ordinary prudence and reasonable diligence to

Sps. Edrada v. Sps. Ramos, G.R.
No. 154413, August 31, 2005)
Lloyd’s Enterprises and Credit
Corp. vs. Dolleton 555 SCRA 143
know the extent of Bernardo's authority as an agent.
Doctrine:
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 mutual promise to buy on the part of petitioners and to sell
on the part of respondents. Again, the aforestated proviso in the agreement that
documents pertaining to the sale and agreement of payments between the parties
will follow clearly manifests lack of agreement between the parties as to the
terms of the contract to sell, particularly the object and cause of the contract.
Doctrine:
The circumstance that the certificate of title covering the property offered as
security was newly issued should have put petitioner on guard and prompted it to
conduct an investigation surrounding the transfer of the property to defendant
Gagan. Had it inquired further, petitioner would have discovered that the
property was sold for an unconscionably low consideration of only P120,000.00
when it could have fetched as high as P900,000.00. A purchaser cannot close his
eyes to facts which should put a reasonable man on his guard and claim that he
acted in good faith under the belief that there was no defect in the title of the
vendor. His mere refusal to believe that such defect exists or the willful closing
of his eyes to the possibility of the existence of a defect in his vendor's title, will
not make him an innocent purchaser for value if it afterwards develops that the
title was in fact defective, and it appears that he had such notice of the defect as
would have led to its discovery had he acted with that measure of precaution
which may reasonably be required of a prudent man in a like situation.

Facts:
Respondents spouses Dolleton were the registered owners of a parcel of land
situated in Barangay Putatan, Muntinlupa City. Erected on the 166-sq m
property is a four-door apartment building being leased by respondents to
various tenants. On 9 August 1990, respondents mortgaged the property to a
certain 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. Thereafter,
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 Lloyd's Enterprises and Credit Corporation lent to
Gagan and her live-in partner 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. On even date, petitioner granted
another loan to Gagan and Guevarra for a bigger sum of P542,928.00, as
evidenced by a promissory note dated August 1995. A new real estate mortgage
was constituted over the property. Gagan and Guevarra failed to pay the second
loan upon its maturity. Thus, petitioner instituted extrajudicial foreclosure
proceedings on the subject property. The property was not redeemed within the
one-year period, hence, ownership was consolidated in favor of petitioner. TCT
in the name of Gagan was cancelled and TCT No. 210363 was issued in the
name of petitioner. 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.
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. In
the said complaint, 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. They averred that after defendant Gagan had
initially paid P200,000.00, they entrusted the owner's copy of TCT No. 153554
to defendant Gagan who however undertoon to effect the cancellation of the
mortgage in favor of Santos and to prepare the contract of sale on installment
basis. Respondents further alleged that except for the additional amount
of P185,000.00, defendant Gagan was unable to pay the balance of the purchase
price. They also accused Gagan of having caused the fraudulent cancellation of
TCT No. 153554 and the issuance of TCT No. 197220 in her name, and of
eventually using TCT No. 197220 to secure the loans obtained from petitioner.
Respondents also faulted petitioner for failing to make adequate inquiries on the
true ownership of the property considering the suspicious circumstances
surrounding Gagan's and Guevarra's request for loan immediately after the
issuance of the new certificate of title.

Issue:

WON the Deed of Absolute Sale contracted by the parties is not spurious.
Held:

No. The Deed of Absolute Sale was spurious. It upheld the finding that the Deed
of Absolute Sale was a forgery and that petitioner was grossly negligent in
accepting the mortgage as security for the loan. The 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. Moreover,
the circumstance that the certificate of title covering the property offered as
security was newly issued should have put petitioner on guard and prompted it to
conduct an investigation surrounding the transfer of the property to defendant
Gagan. Had it inquired further, petitioner would have discovered that the
property was sold for an unconscionably low consideration of only P120,000.00
when it could have fetched as high as P900,000.00. A purchaser cannot close his
eyes to facts which should put a reasonable man on his guard and claim that he
acted in good faith under the belief that there was no defect in the title of the
vendor. His mere refusal to believe that such defect exists or the willful closing
of his eyes to the possibility of the existence of a defect in his vendor's title, will
not make him an innocent purchaser for value if it afterwards develops that the
title was in fact defective, and it appears that he had such notice of the defect as
would have led to its discovery had he acted with that measure of precaution
which may reasonably be required of a prudent man in a like situation. We
cannot sustain petitioner's 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

Sanchez vs. Rigos, G.R. No. L-
25494, June 14, 1972
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. Respondent, being a
financial institution, cannot claim good faith considering that neither it nor the
alleged mortgagee bank was in possession of the lots prior and after the
foreclosure sale. Had respondent conducted an ocular inspection of the premises,
this being the standard practice in the real estate industry, it would have
discovered that the land is occupied by petitioner. The failure of respondent to
take such precautionary steps is considered negligence on its part and would
thereby preclude the defense of good faith.
Doctrine:
Where both parties indicated in the instrument in the caption, as an "Option to
Purchase," and under the provisions thereof, the defendant "agreed, promised
and committed" herself to sell the land therein described to the plaintiff 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, it is not
a "contract to buy and sell." It merely granted plaintiff an "option" to buy.
Facts:
Plaintiff Sanchez and defendant Rigos executed an instrument entitled "Option
to Purchase," whereby Mrs. Rigos "agreed, promised and committed ... to sell"
to Sanchez the sum of P1,510.00, a parcel of land situated in the barrios of Abar
and Sibot, municipality of San Jose, province of Nueva Ecija within two (2)
years from said date with the understanding 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. Inasmuch as several tenders of payment
of the sum of Pl,510.00, made by Sanchez within said period, were rejected by
Mrs. Rigos, the former deposited said amount with the Court of First Instance of
Nueva Ecija and commenced against the latter the present action, for specific
performance and damages. After the filing of defendant's answer - as special
defense, that the contract between the parties "is 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" The lower court rendered judgment for Sanchez,
ordering Mrs. Rigos to accept the sum judicially consigned by him and to
execute, in his favor, the requisite deed of conveyance. Plaintiff alleges 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. Hence, plaintiff maintains that the promise contained in the contract is
"reciprocally demandable," pursuant to the first paragraph of said Article 1479.
Although defendant had really "agreed, promised and committed" herself to sell
the land to the plaintiff, it is not true that the latter had, in turn, "agreed and
committed himself " to buy said property.

Issue:
WON the contract entered into by the parties was a contract to buy and sell.

Held:
No. The option did not impose upon plaintiff the obligation to
purchase defendant's property. Annex A is not a "contract to buy and sell." It
merely granted plaintiff an "option" to buy. And both parties so understood it, as

Riviera Filipina, Inc. v. CA et. al.,
GR No. 117355, April 5, 2002
indicated by the caption, "Option to Purchase," given by them to said instrument.
Under the provisions thereof, the defendant "agreed, promised and committed"
herself to sell the land therein described to the plaintiff 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. Where both parties indicated in the instrument
in the caption, as an "Option to Purchase," and under the provisions thereof, the
defendant "agreed, promised and committed" herself to sell the land therein
described to the plaintiff 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, it is not a "contract to buy and sell." It merely granted plaintiff an
"option" to buy.
In order that a unilateral promise may be "binding" upon the promisor, Article
1479 requires the concurrence of a condition namely, that the promise be
"supported by a consideration distinct from the price." Accordingly, the
promisee can not compel the promisor to comply with the promise, unless the
former establishes the existence of said distinct consideration. In other words,
the promisee has the burden of proving such consideration.
Doctrine:
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.
Facts:
This civil case is a suit instituted by Riviera Filipina, Inc. to compel the
defendants Reyes, now deceased, et al to transfer the title of a parcel of land for
alleged violation of Riviera’s right of first refusal. Respondent Reyes executed a
Contract of Lease with Riviera for a ten-year (10) renewable lease. The said land
was subject of a Real Estate Mortgage in favor of Prudential Bank which
extrajudicially foreclosed the mortgage thereon. The mortgagee bank emerged as
the highest bidder. Realizing that he could not possibly raise in time the money
needed to redeem the subject property, Reyes decided to sell the same. Since
paragraph 11 of the lease contract provide for a right of first refusal, Reyes
offered to sell the subject property to Riviera, for P5,000.00 per square meter but
Rievera always bargain for a smaller price.

Issue:
Whether or not Rievera’s right of first refusal was violated.

Held:
No. A contract of sale entered into in violation of a right of first refusal of
another person, while valid, is rescissible. Reyes and Riviera, understood the
lease provision "right of first refusal" to mean simply that should the lessor
Reyes decide to sell the leased property during the term of the lease, such sale
should first be offered to the lessee Riviera. And that is what exactly ensued
between Reyes and Riviera, a series of negotiations on the price per square
meter of the subject property with neither party, especially Riviera, unwilling to
budge from his offer, as evidenced by the exchange of letters between the two
contender.
 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.

Paranaque Kings Enterprises, Inc. Doctrine:

v. CA 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. Only after the optionee fails to
exercise its right of first priority under the same terms and within the period
contemplated, could the owner validly offer to sell the property to a third person,
again, under the same terms as offered to the optionee.

Facts:
Defendant Santos is the owner of eight (8) parcels of land located at Parañaque,
Metro Manila. A certain Chua leased the above-described property from
defendant Santos, the said lease was registered in the Register of Deeds. Chua
assigned all his rights and interest and participation in the leased property to Lee
Ching Bing, by virtue of a deed of assignment and with the conformity of
defendant Santos. Lee Ching Bing also assigned all his rights and interest in the
leased property to Parañaque Kings Enterprises, Incorporated by virtue of a deed
of assignment and with the conformity of defendant Santos. Defendant Santos
sold the eight parcels of land subject of the lease to defendant David Raymundo
for a consideration of FIVE MILLION (P5,000,000.00) PESOS. The said sale
was in contravention of the contract of lease, for the first option or priority to
buy was not offered by defendant Santos to the plaintiff. Defendant Santos wrote
a letter to the plaintiff informing the same of the sale of the properties to
defendant Raymundo. Upon learning of this fact plaintiff's representative wrote a
letter to defendant Santos, requesting her to rectify the error and consequently
realizing the error, she had it reconveyed to her for the same consideration of
FIVE MILLION (P5,000,000.00) PESOS. Subsequently the property was
offered for sale to plaintiff by the defendant for the sum of FIFTEEN MILLION
(P15,000,000.00) PESOS. Plaintiff was given ten (10) days to make good of the
offer, but therefore the said period expired another letter came from the counsel
of defendant Santos, containing the same tenor of the former letter. Before the
period given in the letter offering the properties for sale expired, plaintiff's
counsel wrote counsel of defendant Santos offering to buy the properties for
FIVE MILLION (P5,000,000.00) PESOS. Defendant Santos violated again
paragraph 9 of the contract of lease by executing a second deed of sale to
defendant Raymundo for 9 Million Pesos. It was only two days after she sold her
properties that defendant Santos replied to the letter of the plaintiff's offer to
buy. In her reply she stated among others that the period has lapsed and the
plaintiff is not a privy to the contract. Plaintiff alleges that the sale was simulated
and that there was a collusion between the defendants in the sales of the leased
properties, on the ground that when plaintiff wrote a letter to defendant Santos to
rectify the error, she immediately have the property reconveyed it to her in a
matter of twelve (12) days.

Issue:
Whether or not the Plaintiff’s right of first refusal was violated.

Held:
Yes. 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.

In order to have full compliance with the contractual right granting petitioner the
first option to purchase, the sale of the properties for the amount of P9 million,
the price for which they were finally sold to respondent Raymundo, should have
likewise been first offered to petitioner. 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. Only after the optionee fails to exercise its right of first
priority under the same terms and within the period contemplated, could the
owner validly offer to sell the property to a third person, again, under the same
terms as offered to the optionee.
Lao vs. Genato, G.R. No. L-56451,
June 19, 1985
Doctrine:
Sotero Dionisio, Jr. is the Administrator of the estate of his deceased mother
Rosenda Abutan. As such Administrator, he occupies a position of the highest
trust and confidence. He is required to exercise reasonable diligence and act in
entire good faith in the performance of that trust. Although he is not a guarantor
or insurer of the safety of the estate nor is he expected to be infallible, yet the
same degree of prudence, care and judgment which a person of a fair average
capacity and ability exercises in similar transactions of his own, serves as the
standard by which his conduct is to be judged.
Facts:
Petitioner spouses were promisees in a Mutual Agreement of Promise to Sell
executed between them and private respondent Sotero B. Dionisio III, son of
respondent Sotero A. Dionisio, Jr., heir and administrator of the intestate estate
of the deceased, whereby the promisor bound himself to sell the subject property
to petitioners. Private respondents, except Sotero Dionisio III and William Go,
are the children and only compulsory heirs of the deceased, Rosenda Abuton.
Respondent administrator Sotero Dionisio, Jr., with due notice to all his co-heirs,
filed with the Probate Court in Special Proceedings No. 842 a Motion for
Authority to Sell certain properties of the deceased to settle the outstanding
obligations of the estate. Respondent-administrator pursuant to said
authorization, sold to his son, Sotero Dionisio III, the subject property for
P75,000,00 per deed of sale acknowledged before Notary Public Triumfo R.
Velez. On the same date, Sotero Dionisio III executed a deed of sale of the same
property in favor of respondent William Go for a consideration of P80,000.00.
On August 18, 1980, title was transferred to respondent Go. Respondent-heir
Florida Nuqui, filed a Motion for Annulment/Revocation of the Deeds of
Absolute Sale for the reasons that the sale and subsequent transfer of title of the
property were made in violation of the court's order of July 8, 1980 and that the
consideration of the two sales were grossly inadequate as in fact many are
willing to buy the property for P400,000.00 since it is located along the corner of
two main streets in the commercial center of Oroquieta City. 

Petitioner spouses filed a "Manifestation In Intervention of Interest to Purchase

Property Authorized by the Court to be Sold", wherein they alleged that
respondent-administrator, without revealing that the property had already been
sold to William Go, entered into a Mutual Agreement of Promise to Sell to
herein petitioners, for the amount of P270,000 which was reduced to
P220,000.00; that immediately upon the execution of the agreement, petitioners
paid the earnest money in the amount of P70,000.00; that it was agreed upon that
the balance of P150,000.00 shall immediately be paid upon the production of the
Transfer Certificate of Title and the execution of the final Deed of Sale; that
although the agreement was executed in the name of Sotero Dionisio III, the
latter was merely a nominal party, for technically according to the administrator,
he executed a Deed of Absolute Sale in favor of his son, but the negotiations and
transactions were directly and personally entered into between the administrator
and petitioners; that the contract of sale has been perfected considering that the
earnest money was already paid; that despite repeated demands, the
administrator refused to execute a final Deed of Sale in favor of petitioners, who
later on found out that the subject property was sold to William Go; that both
contracts of sale were made to defraud the estate and the other heirs; that
assuming the consideration of P200,000.00 was supplied by William Go to
Sotero Dionisio III who was not gainfully employed, then the contract of sale to
Go would be without consideration, hence, it would become fictitious and
simulated and there is no other recourse left to the court but to declare the sale
null and void. Petitioners also manifested that in the event that the court should
finally declare the sale null and void, they are still interested to purchase the
property for the same amount of P220,000.00 as previously agreed upon.

Issue:
WON the 2 deeds of sale in question is void.

Held:
Yes. The sale was made. But of all people, to his very son Sotero Dionisio III
and for the grossly low price of only P75,000.00. That sale was indubitably
shown to be fictitious, it clearly appearing that Dionisio III has no income
whatsoever. In fact, he is still a dependent of his father, administrator Dionisio,
Jr. On top of that, not a single centavo of the P75,000.00 stated consideration
was ever accounted for nor reported by Dionisio, Jr. to the probate court. Neither
did he submit said transaction as mandated by the order authorizing him to sell,
to the probate court for its approval and just so its validity and fairness may be
passed upon and resolved. It was only upon the filing by one of the heirs, Florida
A. Nuqui, of the "Motion for Annulment/Revocation of Deeds of Absolute
Sale" questioning the genuineness and validity of the transactions, that Dionisio,
Jr. was compelled to admit that the actual consideration for the sale made by him
was P200,000.00. This sale is one of the illegal and irregular transactions that
was confirmed and legalized by His HONOR's approval of the assailed
Amicable Settlement. No doubt, respondent Judge's questioned approval violates

Fronilda vs. RTC, G.R. No. 72306,
5 October 1988
Article 1409 of the New Civil Code and cannot work to confirm nor serve to
ratify a fictitious contract which is non-existent and void from the very
beginning. The fact that practically all the heirs are parties-signatories to the said
Compromise Agreement is of no moment. Their assent to such an illegal scheme
does not legalize the same nor does it impose any obligation upon respondent
Judge to approve the same to the prejudice not only of the creditors of the estate,
and the government by the non-payment of the correct amount of taxes legally
due from the estate.
Doctrine:
A lawyer is prohibited from acquiring either by purchase or assignment the
property or rights involved which are the object of the litigation in which they
intervene by virtue of their profession (Padilla, Vol. II Civil Law, 1974 Ed., p.
230 citing Hernandez vs. Villanueva, 40 Phil. 773 and Rubias vs. Batiller; 51
SCRA 130). The prohibition on purchase is all embracing to include not only
sales to private individuals but also public or judicial sales (ibid., p. 221). The
rationale advanced for the prohibition is that public policy disallows the
transactions in view of the fiduciary relationship involved i.e., the relation of
trust and confidence and the peculiar control exercised by these persons (Paras,
Civil Code, Vol. V, 1973., p. 70.)
Facts:
The Petition entitled "Petisiyung Makapagpasuri Taglay ang Pagpapapigil ng
Utos", translated as one for Certiorari with Preliminary Injunction, was filed by
three (3) petitioners, namely David P. Fornilda, Emilia P. Fornilda-Olili, and
Angela P. Fornilda-Gutierrez. They seek the reversal of the Order of respondent
Trial Court granting a Writ of Possession, as well as its Orders directing and
authorizing respondent Sheriff to demolish the houses of petitioners.

The facts disclose that the deceased, Julio M. Catolos, formerly owned six (6)
parcels of land located in Tanay, Rizal, which are the controverted properties in
the present litigation. His estate was the subject of settlement in Special
Proceedings No. 3103 of the then Court of First Instance of Rizal, at Pasig,
Branch I. Francisca Catolos, Agues Catolos, Alfonso I. Fornilda and Asuncion
M. Pasamba were some of the legal heirs and were represented in the case by
Atty. Sergio Amonoy (hereinafter referred to as Respondent Amonoy). A Project
of Partition was filed in the Intestate Court whereby the Controverted Parcels
were adjudicated to Alfonso I. Fornilda and Asuncion M. Pasamba. Alfonso I.
Fornilda and Asuncion M. Pasamba executed a Contract of Mortgage wherein
they mortgaged the Controverted Parcels to Respondent Amonoy as security for
the payment of his attorney's fees for services rendered in the aforementioned
intestate proceedings, in the amount of P27,600.00. Since the mortgage
indebtedness was not paid, Respondent Amonoy instituted foreclosure
proceedings before the Court of First Instance of Rizal, at Pasig, Branch VIII,
entitled "Sergio I. Amonoy vs. Heirs of Asuncion M. Pasamba and Heirs of
Alfonso I. Fornilda" [Civil Case No. 12726] (Annex "B", ibid.). Petitioners, as
defendants therein, alleged that the amount agreed upon as attorney's fees was
only P11,695.92 and that the sum of P27,600.00 was unconscionable and
unreasonable. Appearing as signatory counsel for Respondent Amonoy was
Atty. Jose S. Balajadia. The Trial Court rendered judgment in the Foreclosure
Case ordering the Pasamba and Fornilda heirs to pay Respondent Amonoy,
within ninety (90) days from receipt of the decision, the sums of P27,600.00
representing the attorney's fees secured by the mortgage; P11,880.00 as the value
of the harvest from two (2) parcels of land; and 25% of the total of the two
amounts, or P9,645.00, as attorney's fees, failing which the Controverted Parcels
would be sold at public auction (Annex "C", ibid.) Controverted Parcels were
foreclosed and an auction sale was held with Respondent Amonoy as the sole
bidder for P23,760.00 (Annex "D", ibid.). Said sale was confirmed by the Trial
Court (Annex "E", ibid.). To satisfy the deficiency, another execution sale was
conducted with Respondent Amonoy as the sole bidder for P12,137.50.

A year after the judgment in the Foreclosure Case, an action for Annulment of
Judgment was filed. Squarely put in issue were the propriety of the mortgage,
the validity of the judgment in the Foreclosure Case, and the tenability of the
acquisitions by Respondent Amonoy at the Sheriff's sale. Of particular relevance
to the instant Petition is the contention that the mortgage and the Sheriff's sales
were null and void as contrary to the positive statutory injunction in Article 1491
(5) of the Civil Code, which prohibits attorneys from purchasing, even at a
public or judicial auction, properties and rights in litigation, and that the Trial
Court, in the Foreclosure Case, had never acquired jurisdiction over the subject
matter of the action, i.e., the Controverted Parcels.

Issue:
WON the Foreclosure Sale were null and void as contrary to Art. 1491 (5) of the
Civil Code.

Held:
Yes. In the instant case, it is undisputed that the Controverted Parcels were part
of the estate of the late Julio M. Catolos, subject of intestate estate proceedings,
wherein Respondent Amonoy acted as counsel for some of the heirs from 1959
until 1968 by his own admission (Comment, p. 145, Rollo); that these properties
were adjudicated to Alfonso Fornilda and Asuncion M. Pasamba in the Project
of Partition approved by the Court; that only eight (8) days thereafter, and while
he was still intervening in the case as counsel, these properties were mortgaged
by petitioners' predecessor-in-interest to Respondent Amonoy to secure payment
of the latter's attorney's fees in the amount of P27,600.00; that since the
mortgage indebtedness was not paid, Respondent Amonoy instituted an action
for judicial foreclosure of mortgage; that the mortgage was subsequently ordered
foreclosed and auction sale followed where Respondent Amonoy was the sole
bidder for P23,600.00; and that being short of the mortgage indebtedness, he
applied for and further obtained a deficiency judgment. The transaction involved
falls squarely within the prohibition against any acquisition by a lawyer of
properties belonging to parties they represent which are still in suit. For, while
the Project of Partition was approved on 12 January 1965, it was not until 6
August 1969 that the estate was declared closed and terminated (Record on
Appeal, Civil Case No. 3103, p. 44). At the time the mortgage was executed,
therefore, the relationship of lawyer and client still existed, the very relation of
trust and confidence sought to be protected by the prohibition, when a lawyer
occupies a vantage position to press upon or dictate terms to an harassed client.
What is more, the mortgage was executed only eight (8) days after approval of
the Project of Partition thereby evincing a clear intention on Respondent
Amonoy's part to protect his own interests and ride roughshod over that of his
clients. The fact that the properties were first mortgaged and only subsequently
acquired in an auction sale long after the termination of the intestate proceedings
will not remove it from the scope of the prohibition. To rule otherwise would be

Vicente Godinez vs. Fong Pak
Luen, G.R. No. L-36731, 27
January 1983
to countenance indirectly what cannot be done directly. Considering that the
mortgage contract, entered into in contravention of Article 1491 of the Civil
Code is expressly prohibited by law, the same must be held inexistent and
void ab initio (Director of Lands vs. Abagat, 53 Phil. 147). Being a void
contract, the action or defense for the declaration of its inexistence is
imprescriptible (Article 1410, Civil Code). The defect of a void or inexistent
contract is permanent. Mere lapse of time cannot give it efficacy. Neither can the
right to set up the defense of illegality be waived (Article 1409, Civil Code).
Doctrine:
Prescription may never be invoked to defend that which
the Constitution prohibits. Insofar as the vendee is concerned, prescription is
unavailing but neither can the vendor or his heirs rely on an argument base 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.
From the fact that prescription may not be used to defend a contract which
the Constitution prohibits, it does not necessarily follow that the appellants may
be allowed to recover the property sold to an alien, in line with the ruling of this
Court in Vasquez v. Li Seng Giap and Li Seng Giap & Sons (96 Phil. 447) and
reiterated in Herrera v. Luy Kim Guan (1 SCRA 406) and Sarsosa vda. de
Barsobia v. Cuenco (113 SCRA 547). Neither can appellants find solace from
Philippine Banking Corporation v. Lui She (21 SCRA 52) which relaxed the pari
delicto doctrine to allow the heirs or successors-in-interest, in appropriate cases
to recover that which their predecessors sold to aliens.
Facts:
On September 30, 1966, the plaintiffs filed a complaint in the Court of First
Instance of Sulu alleging among others that they are the heirs of Jose Godinez
who was married to Martina Alvarez Godinez sometime in 1910; that during the
marriage of their parents the said parents acquired a parcel of land lot No. 94 of
Jolo townsite with an area of 3,665 square meters as evidenced by Original
Certificate of Title No. 179 (D - 155) in the name of Jose Godinez; that their
mother died sometime in 1938 leaving the plaintiffs as their sole surviving heirs;
that on November 27, 1941, without the knowledge of the plaintiffs, the said
Jose Godinez, for valuable consideration sold the aforesaid parcel of land to the
defendant Fong Pak Luen, a Chinese citizen, which transaction is contrary to law
and in violation of the Civil Code because the latter being an alien who is
inhibited by law to purchase real property; that Transfer Certificate Title No. 884
was then issued by the Register of Deeds to the said defendant, which is null and
void ab initio since the transaction constituted a non-existent contract; that on
January 11, 1963, said defendant Fong Pak Luen executed a power of attorney in
favor of his co-defendant Kwan Pun Ming, also an alien, who conveyed and sold
the above described parcel of land to co-defendant Trinidad S. Navata, who 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 in this jurisdiction; that defendant Fong Pak Luen has not
acquired any title or interest in said parcel of land as the purported contract of
sale executed by Jose Godinez alone was contrary to law and considered non-
existent, so much so that the alleged attorney-in-fact, defendant Kwan Pun Ming
had not conveyed any title or interest over said property and defendant Navata
had not acquired anything from said grantor and as a consequence Transfer
Certificate of Title No. 1322, which was issued by the Register of Deeds in favor
of the latter is null and void ab initio; that since one-half of the said property is
conjugal property inherited by the plaintiffs from their mother, Jose Godinez
could not have legally conveyed the entire property; that notwithstanding
repeated demands on said defendant to surrender to plaintiffs the said property
she refused and still refuses to do so to the great damage and prejudice of the
plaintiffs; and that they were constrained to engage the services of counsel in the
sum of P2,000.00. Defendant Navata filed her answer with the affirmative
defenses and counterclaim alleging among others 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 has sole property he may
dispose of the same.

Issue:
WON the heirs of a person who sold a parcel of land to an alien in violation of a
constitutional prohibition may recover the property if it had, in the meantime,
been conveyed to a Filipino citizen qualified to own and possess it.

Held:
No. Prescription may never be invoked to defend that which
the Constitution prohibits. Insofar as the vendee is concerned, prescription is
unavailing but neither can the vendor or his heirs rely on an argument base 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.
From the fact that prescription may not be used to defend a contract which
the Constitution prohibits, it does not necessarily follow that the appellants may
be allowed to recover the property sold to an alien, in line with the ruling of this
Court in Vasquez v. Li Seng Giap and Li Seng Giap & Sons (96 Phil. 447) and
 reiterated in Herrera v. Luy Kim Guan (1 SCRA 406) and Sarsosa vda. de
Barsobia v. Cuenco (113 SCRA 547). Neither can appellants find solace from
Philippine Banking Corporation v. Lui She (21 SCRA 52) which relaxed the pari
delicto doctrine to allow the heirs or successors-in-interest, in appropriate cases
to recover that which their predecessors sold to aliens.

Jacobus Bernhard vs. PR Doctrine:

Builders, Inc., G.R. No. 156364, Under Republic Act (R.A.) No. 4726, otherwise known as the Condominium
25 September 2008 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.

Facts:
Petitioner 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.

Issue:
WON 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.

Held:
Yes. Where the common areas in a condominium project are held by a

Daus v. Sps. De Leon, GR No.
149750, June 16, 2003
corporation, no transfer or conveyance of a unit shall be valid if the concomitant
transfer of the appurtenant membership or stockholding in the corporation will
cause the alien interest in such corporation to exceed the limits imposed by
existing laws. The law provides that no condominium unit can be sold without at
the same time selling the corresponding amount of rights, shares or other
interests in the condominium management body, the Condominium Corporation;
and no one can buy shares in a Condominium Corporation without at the same
time buying a condominium unit. It expressly allows foreigners to acquire
condominium units and shares in condominium corporations up to not more than
40% of the total and outstanding capital stock of a Filipino-owned or controlled
corporation. Under this set up, the ownership of the land is legally separated
from the unit itself. The land is owned by a Condominium Corporation and the
unit owner is simply a member in this Condominium Corporation. As long as
60% of the members of this Condominium Corporation are Filipino, the
remaining members can be foreigners. 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.
Doctrine:
A contract of sale is consensual. It is perfected by mere consent, upon a meeting
of the minds on the offer and the acceptance thereof based on subject matter,
price and terms of payment. At this stage, the seller's ownership of the thing sold
is not an element in the perfection of the contract of sale. The contract, however,
creates an obligation on the part of the seller to transfer ownership and to deliver
the subject matter of the contract. 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.

Facts:
Respondent Hermoso de Leon inherited from his father Marcelino de Leon the
subject parcel of land by virtue of a Deed of Extra-judicial Partition. Sometime
in the early 1960s, respondents engaged the services of a certain Atty. Florencio
Juan to take care of the documents of the properties of his parents. Atty. Juan let
them sign voluminous documents. After the death of Atty. Juan, some
documents surfaced and most revealed that their properties had been conveyed
by sale or quitclaim to respondent Hermoso's brothers and sisters, and to Atty.
Juan and his sisters, when in truth and in fact, no such conveyances were ever
intended by them. Respondent's signature in the Deed of Extra-judicial Partition
with Quitclaim made in favor of Rodolfo de Leon was forged and later
discovered that the land in question was sold by Rodolfo to petitioner Aurora
Alcantara. The trial court ruled in favor of petitioner, holding that respondent's
claim was barred by laches, because more than 18 years had passed since the
land was sold. In reversing the RTC, the Court of Appeals held that laches did
not bar respondents from pursuing their claim. Hence, the present petition.

Sampaguita Pictures, Inc. v.
Jalwindor Manufacturers, Inc.,
Issue:
WON the contract of sale entered into by Rodolfo de Leon to petitioner was
consummated.
Held:
No. According to the Court, a contract of sale is consensual. It is perfected by
mere consent, upon a meeting of the minds on the offer and the acceptance
thereof based on subject matter, price and terms of payment. 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. It is undisputed 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.The Court was not
also persuaded by petitioner's claim that her possession of the land is in good
faith and consequently acquired by virtue of prescription. It is well-settled that
no title to registered land in derogation of that of the registered owner shall be
acquired by prescription or adverse possession. Neither can prescription be
allowed against the hereditary successors of the registered owner, because they
merely step into the shoes of the decedent and are merely the continuation of the
personality of their predecessor in interest. Consequently, since a certificate of
registration covers it, the disputed land cannot be acquired by prescription
regardless of petitioner's good faith.
Doctrine:
Ownership is not transferred by perfection of the contract but by delivery, either
GR No. L-43059, October 11,
1979
actual or constructive. This is true even if the purchase has been made on credit,
as in the case at bar. Payment of the purchase price is not essential to the transfer
of ownership as long as the property sold has been delivered. Ownership is
acquired from the moment the thing sold was delivered to vendee, as when it is
placed in his control and possession.
Facts:
Plaintiff-appellant Sampaguita Pictures, Inc. leased the roofdeck of their
Sampaguita Pictures Building to Capitol 300 Inc. and agreed that the premises
shall be used for social purposes exclusively for the club’s members and guests;
that all permanent improvements made by lessee on the premises shall belong to
the lessor without any obligation to reimburse; that these be considered as part of
the consideration of the monthly rental; and any remodeling, alteration and or
addition be at the expense of lessee. Glass and wooden jalousies were then
purchased by Capitol from defendant-appellee Jalwindor Manufacturers Inc.
which were delivered and installed in the premises. Capitol failed to pay the
purchases prompting defendant-appellee to file an action for the collection of a
sum of money with petition for preliminary attachment. The parties submitted a
Compromise Agreement to the trial court wherein Capitol acknowledged its
indebtedness and pending liquidation, the materials purchased will be considered
as security. Thereafter, Capitol not only failed to comply with the Compromise
Agreement but also failed to pay rentals to plaintiff-appellant, causing their
ejectment with damages paid to the latter. When the Sheriff of Quezon City
levied upon the materials, plaintiff-appelant filed a third-party claim alleging
that it is the owner of the same however, defendant-appellee filed an indemnity
bond in favor of the Sheriff and the public auction pushed through with the latter
as the highest bidder. Plaintiff-appellant sought to nullify the sale in an action
filed with the Court of First Instance and for the issuance of a writ of preliminary
injuction against defendant-appellee from detaching the materials. Based on the
Stipulation of Facts submitted, the lower court dismissed the complaint. The
subsequent motion for reconsideration was likewise denied hence the instant
petition.
Issue:
WON the lower court erred in holding that there was no legal transfer of
ownership of the glass and wooden jalousies from Capitol 300 Inc. to plaintiff-
appellant?

Held:
Court held in the affirmative. When the glass and wooden jalousies in question
were delivered and installed in the leased premises, Capitol became the owner
thereof. Ownership is not transferred by perfection of the contract but by
delivery, either actual or constructive. This is true even if the purchase has been
made on credit, as in the case at bar. Payment of the purchase price is not
essential to the transfer of ownership as long as the property sold has been
delivered. Ownership is acquired from the moment the thing sold was delivered
to vendee, as when it is placed in his control and possession.

Capitol entered into a lease contract with Sampaguita in 1964, and the latter
became the owner of the items in question by virtue of the agreement in said
contract. When levy or said items was made on July 31, 1965, Capitol, the
judgment debtor, was no longer the owner thereof.

The items in question were illegally levied upon since they do not belong to the

Norkis Distributor, Inc. v. CA, G.R. FACTS:
No. 91029, February 7, 1991
judgment debtor. The power of the Court in execution of judgment extends only
to properties unquestionably belonging to the judgment debtor. Execution sales
affect the rights of judgment debtor only, and the purchaser in the auction sale
acquires only the right as the debtor has at the time of sale. Since the items
already belong to Sampaguita and not to Capitol, the judgment debtor, the levy
and auction sale are, accordingly, null and void. Decision reversed.
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, 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?

HELD:
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

Ten Forty Realty v. Cruz, G.R. No.
151212, September 10, 2003
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.
Doctrine:
Supreme Court applied Article 1544 of the Civil Code. In case of double sale of
immovable property, the law gives preferential right to the buyer who in good
faith first recorded it in the registry of property. In the absence of the required
inscription, the person who in good faith was first in possession has the better
right to own the realty. Petitioner in this case admitted that its Deed of Sale had
not been recorded in the Registry of Deeds. Subject property had also not been
delivered to petitioner, hence, as between the two buyers, respondent was first in
actual possession of the property.
Facts:
Galino allegedly sold the property in question to petitioner in 1996, then sold the
same property to respondent in, 1998. Petitioner argued that being the first
buyer, it has a better right to own the realty.
Issue:
WON petitioner, being the first buyer, has the better right to own the realty.

Held:
No. In a contract of sale, the buyer acquires the thing sold only upon its delivery
"in any of the ways specified in Articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from the vendor to the
vendee." With respect to incorporeal property, Article 1498 lays down the
general rule: the execution of a public instrument shall be equivalent to the
delivery of the thing that is the object of the contract if, from the deed, the
contrary does not appear or cannot be clearly inferred. However, ownership is
transferred not by contract but by tradition or delivery. Nowhere in the Civil
Code is it provided that the execution of a Deed of Sale is
a conclusive presumption of delivery of possession of a piece of real estate. This
Court has held that the execution of a public instrument gives rise only to a
prima facie presumption of delivery. Such presumption is destroyed when the
delivery is not effected because of a legal impediment. . . In the case at bar it is
undisputed that petitioner did not occupy the property from the time it was
allegedly sold to it on December 5, 1996 or at any time thereafter.

The ownership of immovable property sold to two different buyers at different

times is governed by Article 1544 of the Civil Code. . . Galino allegedly sold the
property in question to petitioner on December 5, 1996 and, subsequently, to
respondent on April 24, 1998. Petitioner thus argues that being the first buyer, it
has a better right to own the realty. However, it has not been able to establish

Rudolph Leits, Inc. vs. CA, 478
SCRA 451
that its Deed of Sale was recorded in the Registry of Deeds of Olongapo City. Its
claim of an unattested and unverified notation on its Deed of Absolute Sale is
not equivalent to registration. It admits that, indeed, the sale has not been
recorded in the Registry of Deeds. In the absence of the required inscription, the
law gives preferential right to the buyer who in good faith is first in possession.
Earlier, we ruled that the subject property had not been delivered to petitioner;
hence, it did not acquire possession either materially or symbolically. As
between the two buyers, therefore, respondent was first in actual possession of
the property.
Doctrine:
The sale between petitioner and respondent Buriol involving the latter's property
is one made for a lump sum. The Deed of Absolute Sale shows that the parties
agreed on the purchase price on a predetermined area of five hectares within the
specified boundaries and not based on a particular rate per area. In accordance
with Article 1542, there shall be no reduction in the purchase price even if the
area delivered to petitioner is less than that stated in the contract. In the instant
case, the area within the boundaries as stated in the contract shall control over
the area agreed upon in the contract.
Facts:
Buriol previously owned a parcel of unregistered land in Palawan. In 1986, he
entered into a lease agreement with Flaviano and Tiziana Turatello and Sani
(Italians) involving a hectare of his property. This agreement was for a period of
25 years, renewable for another 25 years. After the paying P10,000
downpayment, Turatello and Sani took possession of the land. However, this
agreement was only reduced into writing in 1987.

Raymundo De Leon vs. Ong, G.R.
No. 170405, 2 February 2010
After 11 months, Buriol sold the same parcel of land (5 hec) to Rudolf Lietz Inc
for P30,000. Later on, Rudolf Lietz Inc discovered that Buriol owned only 4
hectares with one hectare covered by the lease; thus, only 3 hectares were
delivered to it. Rudolf Lietz Inc instituted a complaint for the annulment of the
lease against Buriol, Sani and the Turatellos before the RTC. RTC and CA ruled
in favor of Buriol, Sani and Turatellos.
ISSUE:
Whether the sale between Buriol and Rudolf Lietz Inc is a lump sum or unit
price sale
HELD:
LUMP SUM SALE. The Deed of Absolute Sale shows that the parties agreed
on the purchase price on a predetermined area of 5 hectares within the specified
boundaries and not based on a particular rate per area. In accordance with Art.
1542, there shall be no reduction in the purchase price even if the area delivered
to Rudolf Lietz Inc is less than that states in the contract. In the instant case, the
area within the boundaries as stated in the contract shall control over the area
agreed upon in the contract.
Doctrine:
Facts:
De Leon sold 3 parcels of land to Ong. The properties were mortgaged to Real
Savings and Loan Association. The parties executed a notarized deed of absolute
sale with assumption of mortgage. The deed of Assumption of mortgage shall be
executed in favor of Ong after the payment of 415K. Ong complied with it. De
Leon handed the keys to Ong and informed the loan company that the mortgage
has been assumed by Ong. Ong made some improvements in the property. After
sometime, Ong learned that the properties were sold to Viloria and changed the
locks to it. Ong went to the mortgage company and learned that the mortgage
was already paid and the titles were given to Viloria. Ong filed a complaint for
the nullity of second sale and damages. De Leon contended that Ong does not
have a cause of action against him because the sale was subject to a condition
which requires the approval of the loan company and that he and Ong only
entered a contract to sell.

Issue:
Whether or not the parties entered into a contract of sale

Held:
Yes, the parties entered into a contract of sale. In a contract of sale, the seller
conveys ownership of the property to the buyer upon the perfection of the
contract. The non-payment of the price is a negative resolutory condition.
Contract to sell is subject to a positive suspensive condition. The buyer does not
acquire ownership of the property until he fully pays the purchase price. In the
present case, the deed executed by the parties did not show that the owner
intends to reserve ownership of the properties. The terms and conditions affected
only the manner of  payment and not the immediate transfer of ownership. It was
clear that the owner intended a sale because he unqualifiedly delivered and
transferred ownership of the properties to the respondent.
Asset Privatization Trust vs. TJ
Enterprises, G.R. No. 167195, 8
May 2009
Industrial Textile Manufacturing
Company vs. LPJ Enterprises, Inc.,
G.R. No. 66140, 21 January 1993
Gabriel v. Mabanta, GR No.
142403, March 26, 2003
Sigaya v. Mayuga, G.R. No.
https://www.scribd.com/document/83200375/Asset-Privatization-Trust-vs-
T-J-Enterprises
Doctrine:
The provision in the Uniform Sales Act and the Uniform Commercial Code from
which Article 1502 was taken, clearly requires an express written agreement to
make a sales contract either a "sale or return" or a "sale on approval." Parol or
extrinsic testimony could not be admitted for the purpose of showing that an
invoice or bill of sale that was complete in every aspect and purporting to
embody a sale without condition or restriction constituted a contract of sale or
return. If the purchaser desired to incorporate a stipulation securing to him the
right of return, he should have done so at the time the contract was made. On the
other hand, the buyer cannot accept part and reject the rest of the goods since
this falls outside the normal intent of the parties in the "on approval" situation.
Doctrine:
We have consistently held that "in cases of double sale of immovables, what
finds relevance and materiality is not whether or not the second buyer was a
buyer in good faith but whether or not said second buyer registers such second
sale in good faith, that is, without knowledge of any defect in the title of the
property sold." Mere registration of title is not enough, good faith must concur
with the registration. To be entitled to priority, the second purchaser must not
only establish prior recording of his deed, but must have acted in good faith,
without knowledge of the existence of another alienation by the vendor to the
other.
Doctrine:
A purchaser cannot simply close his eyes to facts which should put a reasonable
143254, August 18, 2005
Leoncio and Barrera vs. CA, et al.,
G.R. No. 123935, 14 December
2001
man on his guard and then claim that he acted in good faith under the belief that
there was no defect in the title of his vendor. His mere refusal to believe that
such defect exists or his willful closing of his eyes to the possibility of the
existence of a defect in his vendor's title will not make him an innocent
purchaser for value if it later develops that the title was in fact defective, and it
appears that he would have notice of the defect had he acted with that measure
of precaution which may reasonably be required of a prudent man in a similar
situation.
Doctrine:
DOUBLE SALE; NOT ESTABLISHED SINCE THE CONDITION ON THE
FIRST TRANSACTION DID NOT MATERIALIZE. — Anent the question of
whether this case is one of double sale, suffice it to say that there is no sufficient
proof on the sale between Salome and petitioners. There is no double sale that
would warrant the application of Article 1544 of the Civil Code.As mentioned at
the outset, the evidence petitioners adduced to prove the sale was the notarized
deed executed on March 31, 1966. However, a perusal of the deed would show
that the sale is conditioned on the payment by the petitioners of Salome's
obligation with the Country Bankers Insurance and Surety Company under the
contract of mortgage. Petitioners submitted no evidence to show that they
complied with the condition given. Hence, there was no consummation of the
contract which would transfer ownership of the property to the petitioners. All
that they presented was the self-serving testimony of petitioner Leoncio Barrera
to the effect that the obligations were paid by them. Notable is Cenon Mateo's`
testimony that he has no knowledge of any transaction entered into by Salome
on March 31, 1966. Likewise, there is no sufficient evidence to show that the
earlier transaction in 1962 ever materialized. The testimony of Salome in Civil

Bricktown Dev’t. Corp. v. Amor
Tierra Dev’t. Corp., G.R. No.
December 12, 1994).
Case No. 14009 confirming the existence of this transaction is inadmissible for
lack of cross-examination. Likewise, the Deed of Absolute Sale with
Assumption of Real Estate Mortgage not having been notarized, its genuineness
and due execution will have to be proven. . . . The only sale that materialized in
this case was the sale by Salome to respondent Palabasan that was evidenced by
a deed of absolute sale that enabled respondent Palabasan to redeem the property
from Country Bankers Insurance and Surety Company and consequently to
secure Transfer Certificate of Title No. 167387 in his favor over the same
property.
Doctrine:
A grace period is a right, not an obligation, of the debtor. When unconditionally
conferred, such as in this case, the grace period is effective without further need
of demand either calling for the payment of the obligation or for honoring the
right. The grace period must not be likened to an obligation, the non-payment of
which, under Article 1169 of the Civil Code, would generally still require
judicial or extrajudicial demand before "default" can be said to arise.
Facts:
Bricktown Development Corporation (herein petitioner corporation), executed
two Contracts to Sell in favor of Amor Tierra Development Corporation
covering a total of 96 residential lots, situated at the Multinational Village
Subdivision, La Huerta, Parañaque, Metro Manila. The total price of
P21,639,875.00 was stipulated to be paid by private respondent in such amounts
and maturity dates and the balance of P11,500,000.00 to be paid by means of an
assumption by private respondent of petitioner corporation's mortgage liability
to the Philippine Savings Bank or, alternately, to be made payable in cash.
Private respondent was only able to pay petitioner corporation the sum of
P1,334,443.21. Finally, petitioner corporation, through its legal counsel, sent
private respondent a "Notice of Cancellation of Contract" on account of the
latter's continued failure to pay the installment and the interest on the unpaid
balance of the stipulated initial payment. Petitioner corporation advised private
respondent, however, that it (private respondent) still had the right to pay its
arrearages within 30 days from receipt of the notice "otherwise the actual
cancellation of the contract (would) take place.

Respondent’s action: Several months later, private respondent, through

counsel, demanded the refund of private respondent's various payments to
petitioner corporation, with interest within fifteen days from receipt of said
letter, or, in lieu of a cash payment, to assign to private respondent an equivalent
number of unencumbered lots at the same price fixed in the contracts. The
demand, not having been heeded, private respondent commenced its action with
the court a quo.

Paragraph 15 of the Contracts to Sell provided thusly:

"15. Should the PURCHASER fail to pay when due any of the installments
mentioned in stipulation No. 1 above, the OWNER shall grant the purchaser of
sixty (60)-day grace period within which to pay the amount/s due, and should
the PURCHASER still fail to pay the due amount/s within the 60-day grace
period, the PURCHASER shall have the right to ex-parte cancel or rescind this
contract, provided, however, that the actual cancellation or rescission shall take
effect only after the lapse of thirty (30) days from the date of receipt by the
PURCHASER of the notice of cancellation of this contract or the demand for its
rescission by a notarial act, and thereafter, the OWNER shall have the right to
resell the lot/s subject hereof to another buyer and all payments made, together
with all improvements introduced on the aforementioned lot/s shall be forfeited
in favor of the OWNER as liquidated damages, and in this connection, the
PURCHASER obligates itself to peacefully vacate the aforesaid lot/s without
necessity of notice or demand by the OWNER."

The Trial Court ruled against petitioner. Petitioners contend that the Court of
Appeals has erred in ruling that by petitioners' acts, conduct and representation,
they themselves delayed or prevented the performance of the contracts to sell
and the supplemental agreement and were thus estopped from cancelling the
same; Petitioners were no justified in resolving the contracts to sell and the
supplemental agreement.

Issue:

Whether or not the contracts to sell were validly rescinded or cancelled by

petitioner corporation.

Held:
Yes. A contract, once perfected, has the force of law between the parties with
which they are bound to comply in good faith and from which neither one may
renege without the consent of the other. The autonomy of contracts allows the
parties to establish such stipulations, clauses, terms and conditions as they may
deem appropriate provided only that they are not contrary to law, morals, good
customs, public order or public policy. The standard norm in the performance of
their respective covenants in the contract, as well as in the exercise of their rights
thereunder, is expressed in the cardinal principle that the parties on that juridical
relation must act with justice, honesty and good faith.

Admittedly, the terms of payment agreed upon by the parties were not met by
private respondent. of a total selling price of P21,639,875.00, private respondent
was only able to remit the sum of P1,334,443.21 which was even short of the
stipulated initial payment of P2,200,000.00. No additional payments, it would
seem, were made. A notice of cancellation was ultimately made months after the
lapse of the contracted grace period.

A grace period is a right, not an obligation, of the debtor. When unconditionally

conferred, such as in this case, the grace period is effective without further need
of demand either calling for the payment of the obligation or for honoring the
right. The grace period must not be likened to an obligation, the non-payment of
which, under Article 1169 of the Civil Code, would generally still require
judicial or extrajudicial demand before "default" can be said to arise.

Verily, in the case at bench, the sixty-day grace period under the terms of the
contracts to sell became ipso facto operative from the moment the due payments
were not met at their stated maturities. On this score, the provisions of Article
1169 of the Civil Code would find no relevance whatsoever.

The cancellation of the contracts to sell by petitioner corporation with the

contractual covenants of the parties, and such cancellation must be respected. It
may be noteworthy to add that in a contract to sell, the non-payment of the
purchase price (which is normally the condition for the final sale) can prevent
the obligation to convey title from acquiring any obligatory force.