12-22

Dignos v CA

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

Ponente: Bidin, J.

Facts:

In July 1965, spouses Dignos sold their parcel of land in Opon, Lapu–Lapu to 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 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spouses Cabigas null and void ab initio and the 1st sale to Jabil not rescinded.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.

Spouses Dignos contend that Exh. C is a contract to sell and as such, anchored their
contention on the very terms of the contract as mentioned in Paragraph 4, that said
spouses have agreed to sell the herein mentioned property to Alilano B. Jabil and
condition in Paragraph 5, in which the spouses agreed to sign a final deed of absolute
sale upon payment of the remaining balance of P4,000.00.

Issue:

Is the contract between the parties a contract of sale or a contract to sell?

Held:

The contract between the parties is a contract of sale. It has been held that a deed
of sale is absolute in nature although dominated as a “Deed of Conditional Sale”
where nowhere in the contract in question is a proviso or stipulation to the effect that
title to the property sold is reserved in the vendor until full payment of the purchase
price, nor is there a stipulation giving the vendor the right to unilaterally rescind the
contract the moment the vendee fails to pay within a fixed period. All the elements
of a valid contract of sale are present in the document.
Engineering Machinery Corp. v CA

G.R No. 52267 January 24, 1996

Ponente: Panganiban, J.

Facts:

Pursuant to a contract, petitioner undertook to install air conditioning system in

private respondent’s building. The building was later sold to the National Investment
and Development Corporation which took possession of it. Upon NIDC’s failure to
comply with certain conditions, the sale was rescinded. NIDC reported to respondent
that there were certain defects in the air conditioning system. Respondent filed a
complaint against petitioner for non-compliance with the agreed plans and
specifications. Petitioner moved to dismiss the complaint on the ground of the 6-
month prescription of warranty against hidden defects. Private respondent averred
that the contract was not of sale but for a piece of work, the action for damages of
which prescribes after 10 years.

Issue:

Is a contract for the fabrication and installation of a central air-conditioning system

in a building, one of "sale" or "for a piece of work"?

Held:

A contract for a piece of work, labor and materials may be distinguished from a
contract of sale by the inquiry as to whether the thing transferred is one not in
existence and which would never have existed but for the order, of the person
desiring it. In such case, the contract is one for a piece of work, not a sale. On the
other hand, if the thing subject of the contract would have existed and been the
subject of a sale to some other person even if the order had not been given, then the
contract is one of sale.

The contract in question is one for a piece of work. It is not petitioner's line of business
to manufacture air-conditioning systems to be sold "off-the-shelf." Its business and
particular field of expertise is the fabrication and installation of such systems as
ordered by customers and in accordance with the particular plans and specifications
provided by the customers.
Schmid and Oberly Inc v RJL

G.R No. 75198 October 18, 1988

Ponente: Cortes, J.

Facts:

RJL Martinez Fishing Corporation is engaged in deep-sea fishing. In the course of its
business, it needed electrical generators for the operation of its business. Schmid
and Oberly sells electrical generators with the brand of “Nagata”, a Japanese product.
D. Nagata Co. Ltd. of Japan was Schmid’s supplier. Schmid advertised the 12 Nagata
generators for sale and RJL purchased 12 brand new generators. Through an
irrevocable line of credit, Nagata shipped to the Schmid the generators and RJL paid
the amount of the purchase price. Later, the generators were found to be factory
defective. RJL informed the Schmid that it shall return the 12 generators. 3 were
returned. Schmid replaced the 3 generators subject of the first sale with generators
of a different brand.

As to the second sale, 3 were shipped to Japan and the remaining 9 were not
replaced. RJL sued the defendant on the warranty, asking for rescission of the
contract and that Schmid be ordered to accept the generators and be ordered to
pay back the purchase money as well as be liable for damages.

Schmid opposes such liability averring that it was merely the indentor in the sale
between Nagata Co., the exporter and RJL Martinez, the importer. As mere indentor,
it avers that is not liable for the seller’s implied warranty against hidden
defects, Schmid not having personally assumed any such warranty.

Issue:

Was the transaction between the parties a sale or an indent transaction?

Ruling:

It is an indent transaction. An indentor is a middlemen in the same class as

commercial brokers and commission merchants. A broker is generally defined as one
who is engaged, for others, on a commission, negotiating contracts relative to
property with the custody of which he has no concern; the negotiator between other
parties, never acting in his own name but in the name of those who employed him;
he is strictly a middleman and for some purpose the agent of both parties.
Commisioner of Internal Revenue v Arnoldus Carpentry

G.R. No. 71122 March 25, 1988

Ponente: Cortes, J.

Facts:

Arnoldus Carpentry Shop is a domestic corporation whose second purpose is the

“preparing, processing, buying, selling, exporting, importing, manufacturing, trading
and dealing in cabinet shop products, wood and metal home and office furniture,
cabinets, doors, windows, etc., including their component parts and materials.” Thus,
furniture, cabinets, and other woodwork were sold locally and exported abroad.
Examiners of the Commissioner of Internal Revenue conducted an investigation of
the business tax liabilities of Arnoldus Carpentry.

Based on such examination, a report was made to the Commissioner classifying such
as an “other independent contractor” under Section 205 (16) [now Section 169 (9)]
of the Tax Code. The corporation renders service in the course of an independent
occupation representing the will of his employer only as to the result of his work, and
not as to the means by which it is accomplished. Hence, it is recommended that 3%
contractor’s tax be imposed. A protest letter was made maintaining that the carpentry
shop is a manufacturer and thus entitled to 7% tax exemption on export sales.

Issue:

Is Arnoldus Carpentry a manufacturer?

Held:

Yes. “Manufacturer” includes every person who by physical or chemical process alters
the exterior texture or form or inner substance of any raw material or manufactured
or partially manufactured product in such manner as to prepare it for a special use.
Based on Article 1467, what determines whether the contract is one of work or sale
is whether the thing has been manufactured specially for the customer and “upon his
special order.” Thus, if the thing is specially done at the order of another, this is a
contract for a piece of work. If, on the other hand, the thing is manufactured or
procured for the general market in the ordinary course of one’s business, it is a
contract of sale. The one who has ready for the sale to the general public finished
furniture is a manufacturer, and the mere fact that he did not have on hand a
particular piece or pieces of furniture ordered does not make him a contractor only.
The facts show that the company had a ready stock of its shop products for sale to
its foreign and local buyers.

Baluran v Navarro

G.R. No. L-44428 September 30, 1977

Ponente: Muñoz Palma, J.

Facts:

Baluran and Paraiso (ancestor of Obedencio) entered into a contract which they called
barter, but in fact stipulated that they would only transfer the material possession of
their respective properties to each other. Thus, Baluran will be allowed to construct
a residential house on the land of Paraiso while Paraiso is entitled to reap the fruits
of the riceland of Baluran. The contract prohibited them from alienating the properties
of the other and contained a stipulation that should the heirs of Paraiso desire to re-
possess the residential lot, Baluran is obliged to return the lot. Indeed, years after,
Obedencio (grandchild of Paraiso) acquired the ownership of the residential lot from
his mother and demanded that Baluran, who was in possession, vacate. Baluran now
counters that the barter already transferred ownership.

Issue:

Whether or not the contract was a barter or usufruct

Held:

The contract is a usufruct. First, the contract is what the law defines it to be and not
what the parties call it. It is very clear that what the parties exchanged was not
ownership, but merely material possession or the right to enjoy the thing. Now,
because it is usufruct, the law allows the parties to stipulate the conditions including
the manner of its extinguishment. In this case, it was subject to a resolutory condition
which is in case the heir of Paraiso (a third party) desires to repossess the property.
Upon the happening of the condition, the contract is extinguished.
Ker and Co. v Lingad

G.R. No. L-20871 April 30, 1971

Ponente: Fernando, J.

Facts:

The then Commissioner of Internal Revenue assessed the petitioner to pay Php 20,
272 as commercial broker’s percentage tax. The percentage requested for its
cancellation but was denied and deemed liable as an agent of United States Rubber
Int’l. Petitioner was the distributor of US Rubber. Their contact provides that
petitioner, as the distributor, cannot dispose of the products for shipment elsewhere
than the designated places. But the crucial stipulations state that: 1) the consignment
remains property of the Company until sold by the distributor and 2) the distributor
is not constituted as an agent of US Rubber.

Issue:

Whether or not the relationship between the petitioner and US Rubber is one of
vendor-vendee or broker-principal

Held:

According to the National Internal Revenue Code, a commercial broker "includes all
persons, other than importers, manufacturers, producers, or bona fide employees,
who, for compensation or profit, sell or bring about sales or purchases of merchandise
for other persons or bring proposed buyers and sellers together, or negotiate freights
or other business for owners of vessels or other means of transportation, or for the
shippers, or consignors or consignees of freight carried by vessels or other means of
transportation. The term includes commission merchants."

Since the company retained ownership of the goods, even as it delivered possession
unto the dealer for resale to customers, the price and terms of which were subject to
the company's control, the relationship between the company and the dealer is one
of agency.
Gonzalo Puyat & Sons v. Arco Amusement

G.R. No. L-47538 20 June 1941

Ponente: Laurel, J.

Facts:

Respondent Arco Amusement was engaged in the business of operating

cinematographs while petitioner GPS was the exclusive agent in the Philippines for
the Starr Piano Company. Desiring to equip its cinematograph with sound
reproducing devices, Arco approached GPS, through its president, Gil Puyat, and an
employee named Santos. After some negotiations, it was agreed between the parties
that GPS would order sound reproducing equipment from SPC and that Arco would
pay GPS, in addition to the price of the equipment, a 10% commission, plus all
expenses such as freight, insurance, etc. When GPS inquired SPC the price of the
equipment, the latter quoted such at $1,700.00 FOB Indiana. Being agreeable to the
price, Arco formally authorized the order.

The following year, both parties agreed for another order of sound reproducing
equipment on the same terms as the first at $1,600.00 plus 10% plus all other
expenses. 3 years later, Arco discovered that the prices quoted to them by GPS with
regard to their first 2 orders mentioned, were not the net prices but rather the latter
has obtained a discount from SPC thus, equipment is deemed overpriced and GPS
had to reimburse the excess amount.

Issue:

Is there a contract of agency?

Held:

No. The contract between the petitioner and the respondent was one of purchase and
sale. The letters, Exhibits 1 and 2, by which the respondent accepted the prices of
$1,700.00 and $1,600.00, respectively, for the sound reproducing equipment subject
of its contract with petitioner, are clear in their terms and admit no other
interpretation that the respondent in question at the prices indicated which are fixed
and determinate. The respondent admitted in its complaint with the CFI of Manila
that the petitioner agreed to sell to it the first sound reproducing equipment. To hold
the petitioner an agent of the respondent in the purchase of equipment and
machinery from the SPC of Richmond, Indiana, is incompatible with the admitted fact
that the petitioner is the exclusive agent of the same company in the Philippines. It
is out of the ordinary for one to be the agent of both the vendor and the purchaser.

Far Eastern Import v Lim Teck Suan

G.R. No. L-7144 May 31, 1955

Ponente: Montemayor, J.

Facts:

Ignacio Delizalde, an agent of the petitioner, went to the store of Lim Teck Suan in
Manila and offered to sell textile. Having arrived at an agreement, Delizalde returned
with a buyer’s order. Suan established a letter of credit in favor of Frenkel
International. The textile arrived and was received by Suan but complained to
petitioner because of the inferior quality. Upon the instruction of Far Eastern, Suan
deposited the goods in a warehouse and withdrew the same and was offered for sale.
The net direct loss is now being claimed against Far Eastern.

The defense set up is that Far Eastern only acted as a broker in this transaction. The
lower court acquitted Far Eastern. CA reversed the judgment, basing its decision of
reversal on the case of Jose Velasco v. Universal Trading where the transaction
therein involved was found by the court to be one of purchase and sale and not of
brokerage or agency.

Issue:

Was the transaction a contract of agency or sale?

Held:

The transaction is a sale. Where a foreign company has an agent here selling its
goods and merchandise, that same agent could not very well act as agent for local
buyers, because the interests of his foreign principal and those of the buyer would
be in direct conflict. He could not serve two masters at the same time. In the
present case, the Export Company being an agent of the Frenkel International
Corporation could not, as it claims, have acted as an agent or broker for Suan.
Far Eastern acted as agent for Frenkel International, presumably the supplier of the
textile sold. Suan according to the first part of the agreement is said merely to be
commissioning Far Eastern to procure for him the merchandise in question. The
price of the merchandise bought was paid for by Suan by means of an irrevocable
letter of credit opened in favor of the supplier, Frenkel International Corporation.
The agreement speaks of the items involved as sold, and the sale was even
confirmed by Far Eastern. Far Eastern dealt directly with Suan without expressly
indicating or revealing the principal.

There was no privity of contract between the buyer and supplier. No commission or
monetary consideration was paid or agreed to be paid by the buyer to export
company proof that there was no agency or brokerage, and that the profit of the
latter was undoubtedly the difference between the price listed to the buyer and the
net or special price quoted to the seller by the supplier.

Quiroga v. Parsons

G.R. No. L-11491 23 August 1918

Ponente: Avanceña, J.

Facts:

A contract was entered into between Quiroga and Parsons, who were both merchants,
which granted the exclusive right to sell his beds in the Visayan Islands to Parsons
under the following conditions: 1) There be a discount of 2.5% as commission for the
sale; 2) Parsons shall order the beds by the dozen, whether of the same or of different
styles; 3) Expenses for transportation and shipment shall be borne by Quiroga; 4)
Parsons is bound to pay Quiroga for the beds received within 60 days from the date
of their shipment; 5) If Quiroga should request payment before the invoice falls due,
it shall be considered as prompt payment with 2% deduction; 6) 15-day notice must
at least be given by Quiroga before any alteration in price of beds; and 7) Parsons
binds himself to only sell Quiroga beds.

Quiroga alleged that Parsons breached its contract by selling the beds at a higher
price, not having an open establishment in Iloilo, not maintaining a public exhibition,
and for not ordering the beds by the dozen. Only the last imputation was provided
for by the contract, the others were not stipulated. Quiroga argued that since there
was a contract of agency between them, such obligations were necessarily implied.

Issue:

Is the contract between them one of agency, not of sale?

Held:
No. The agreement between Quiroga and Parsons was that of a simple purchase and
sale — not an agency. Quiroga supplied the beds, while Parsons had the obligation
to pay their purchase price. These features exclude the legal conception of an agency
or order to sell whereby the mandatory or agent received the thing to sell it, and
does not pay its price, but delivers to the principal the price he obtains from the sale
of the thing to a third person, and if he does not succeed in selling it, he returns it.

By virtue of the contract between the plaintiff and the defendant, the latter, on
receiving the beds, was necessarily obliged to pay their price within the term fixed,
without any other consideration and regardless as to whether he had or had not sold
the beds. There was mutual tolerance in the performance of the contract in disregard
of its terms; and it gives no right to have the contract considered, not as the parties
stipulated it, but as they performed it. Only the acts of the contracting parties,
subsequent to, and in connection with, the execution of the contract, must be
considered for the purpose of interpreting the contract, when such interpretation is
necessary.

Tumibay v Lopez

G.R. No.171692 June 3, 2013

Ponente: Del Castillo, J.

Facts:

On March 23, 1998, petitioners filed a Complaint for declaration of nullity ab initio of
sale, and recovery of ownership and possession of land with the RTC of Malaybalay
City.

Petitioners Spouses Delfin and Aurora Tumibay alleged that they are the owners of a
parcel of land in Bukidnod. The TCT was in the name of the petitioner Aurora. On July
23, 1997, Reynalda, the sister of the petitioner sold the land to her daughter, Rowena
Lopez, through a deed of sale for an unconscionable amount of ₱95,000.00 although
said property had a market value of more than ₱2,000,000.00. Petitioner alleged that
the subject sale was done without the knowledge and consent of petitioners.

Respondents averred that petitioners executed an SPA in favor of Reynalda granting

the latter the power to offer for sale the subject land; that sometime in 1994,
respondent Rowena and petitioners agreed that the former would buy the subject
land for the price of ₱800,000.00 to be paid on installment; that on January 25, 1995,
respondent Rowena paid in cash to petitioners the sum of $1,000.00; that from 1995
to 1997, respondent Rowena paid the monthly installments thereon as evidenced by
money orders; that, in furtherance of the agreement, a deed of sale was executed
and the corresponding title was issued in favor of respondent Rowena; that the
subject sale was done with the knowledge and consent of the petitioners as evidenced
by the receipt of payment by petitioners

Issue:

Whether or not there was a valid contract

Held:

There is a valid contract to sell between the parties. A contract to sell is a bilateral
contract whereby the prospective seller, while expressly reserving the ownership of
the subject property despite delivery thereof to the prospective buyer, binds
himself to sell the said property exclusively to the prospective buyer upon
fulfillment of the condition agreed upon, that is, full payment of the purchase price.
In a contract to sell, “ownership is retained by the seller and is not to pass until the
full payment of the price. It is “commonly entered into so as to protect the seller
against a buyer who intends to buy the property in installment[s] by
withholding ownership over the property until the buyer effects full payment therefor.

However, Rowena was in breach of the contract to sell because when the deed of sale
was executed, the full price of the land is yet to be paid. There was a premature
transfer of title without the consent of the petitioners. For this reason, the contract
to sell is rescissible. Article 1191 0f the civil code provides that the power to rescind
obligations is implied in reciprocal ones, in case one of the obligors should not comply
with what is incumbent upon him.

Manuel Uy and Sons Inc. v Valbueco

G.R. No. 179594 September 11, 2013

Ponente: Peralta, J.

Facts:

Petitioner Manuel Uy & Sons, Inc. is the registered owner of parcels of land located
in Teresa, Rizal. On November 29, 1973, two Conditional Deeds of Sale were
executed by petitioner, as vendor, in favor of respondent Valbueco, as vendee.
Respondent was able to pay petitioner the amount of ₱275,055.55 as partial payment
for the two properties corresponding to the initial payments and the first installments
of the said properties.

At the same time, petitioner complied with its obligation under the conditional deeds
of sale wherein the mortgage was released and the unlawful occupants surrendered
their possession and use of the lots.

However, respondent suspended further payment as it was not satisfied with the
manner petitioner complied with its obligations under the conditional deeds of sale.
Consequently, on March 17, 1978, petitioner sent respondent a letter informing
respondent of its intention to rescind the conditional deeds of sale and attaching
therewith the original copy of the respective notarial rescission.

Five years later, or on March 16, 2001, respondent again filed with the RTC of Manila
a Complaint for specific performance and damages, seeking to compel petitioner to
accept the balance of the purchase price for the two conditional deeds of sale and to
execute the corresponding deeds of absolute sale.

Issue:

Is the respondent entitled to the relief granted by the appellate court?

Held:

No. RA 6552 recognizes in conditional sales of all kinds of real estate the right of the
seller to cancel the contract upon non-payment of an installment by the buyer, which
is simply an event that prevents the obligation of the vendor to convey title from
acquiring binding force.

In this case, respondent has paid less than two years of installments; therefore,
Section 4 of R.A. No. 6552 applies wherein if the buyer fails to pay the installments
due at the expiration of the grace period of not less than 60 days, the seller may
cancel the contract after thirty days from receipt by the buyer of the notice of
cancellation or the demand for rescission of the contract by a notarial act.

34. THE HEIRS OF PEDRO ESCANLAR v. CA

G.R. No. 119777. October 23, 1997

ROMERO, J.:

Facts:

On September 15, 1978, Gregorio Cari-ans heirs (private respondents), executed

a Deed of Sale of Rights for and in consideration of the sum of P275,000 over a parcel
of land. Pedro Escanlar and Francisco Holgado, the vendees, were concurrently the
lessees of the said land. They stipulated that the balance of the purchase price
(P225,000.00) shall be paid on or before May 1979 in a Deed of Agreement executed
by the parties on the same day. It was agreed that pending the complete payment
thereof, Vendees shall not assign, sell, lease, nor mortgage the rights, interests and
participation thereof; that in the event the Vendees fail and/ or omit to pay the
balance of said purchase price on May 31, 1979 and the cancellation of said Contract
of Sale is made thereby, the sum of Php50,000.00 shall be deemed as damages to
Vendors.
Petitioners were unable to pay the Cari-an heirs individual shares, amounting
to P55,000.00 each, by the due date.However, said heirs received at least 12
installments from petitioners after May 1979. Private respondents Cari-an instituted
this case for cancellation of sale against petitioners (Escanlar and Holgado). They
complained of petitioners failure to pay the balance of the purchase price by May 31,
1979 and alleged that they only received a total of P132,551.00 in cash and goods.

Issue:
Whether or not the recission is proper.
Ruling:
The rescission of the sale is not proper. With respect to rescission of a sale of real
property, Article 1592 of the Civil Code governs. In the sale of immovable property,
even though it may have been stipulated that upon failure to pay the price at the
time agreed upon the rescission of the contract shall of right take place, the vendee
may pay, even after the expiration of the period, as long as no demand for rescission
of the contract has been made upon him either judicially or by a notarial act. After
the demand, the court may not grant him a new term.
In the instant case, the sellers gave the buyers until May 1979 to pay the balance
of the purchase price. After the latter failed to pay installments due, the former made
no judicial demand for rescission of the contract nor did they execute any notarial act
demanding the same, as required under Article 1592. Consequently, the buyers could
lawfully make payments even after the May 1979 deadline, as in fact they paid
several installments to the sellers which the latter accepted. Thus, upon the
expiration of the period to pay, the sellers made no move to rescind but continued
accepting late payments, an act which cannot but be construed as a waiver of the
right to rescind. When the sellers, instead of availing of their right to rescind,
accepted and received delayed payments of installments beyond the period
stipulated, and the buyers were in arrears, the sellers in effect waived and are
now estopped from exercising said right to rescind.
35. Coronel v CA
G.R. No. 103577. October 7, 1996

MELO, J.:

Facts:

On January 19, 1985, defendants-appellants Romulo Coronel, et. al. executed a

document entitled Receipt of Down Payment in favor of plaintiff Ramona Patricia
Alcaraz for an inherited house and lot of the coronels. The total amount is Php
1,240,000.00 , with Php50,000.00 Down payment; Balance of Php1,190,000.00.

It was stipulated that the transfer certificate of title will be immediately issued by the
vendors upon receipt of the down payment above-stated and will immediately
execute the deed of absolute sale of said property and Ramona Patricia Alcaraz shall
immediately pay the balance of the P1,190,000.00.

On February 18, 1985, the Coronels sold the property to one Catalina B. Mabanag
Php1,580,000.00 after the latter has paid Php300,000. The Coronels canceled and
rescinded the contract (Exh. A) with Ramona by refunding the latter’s downpayment.

Issue:

Whether the contract is a contract of sale or a Contract to Sell.

Ruling:

The agreement could not have been a contract to sell because the sellers herein
made no express reservation of ownership or title to the subject parcel of
land. Moreover, unlike in a contract to sell, petitioners in the case at bar did not
merely promise to sell the property to private respondent upon the fulfillment of the
suspensive condition. On the contrary, having already agreed to sell the subject
property, they undertook to have the certificate of title change to their names and
immediately thereafter, to execute the written deed of absolute sale.

There is no doubt that unlike in a contract to sell which is most commonly entered
into so as to protect the seller against a buyer who intends to buy the property in
installment by withholding ownership over the property until the buyer effects full
payment therefor, in the contract entered into in the case at bar, the sellers were the
ones who were unable to enter into a contract of absolute sale by reason of the fact
that the certificate of title to the property was still in the name of their father. It was
the sellers in this case who, as it were, had the impediment which prevented, so to
speak, the execution of an contract of absolute sale.
Thus, the sale of the subject parcel of land between petitioners and Ramona P.
Alcaraz, perfected on February 6, 1985, prior to that between petitioners and Catalina
B. Mabanag on February 18, 1985, was correctly upheld by both the courts below.
36. LUZON BROKERAGE CO., INC. V MARITIME BUILDING CO., INC

G.R. No. L-25885 January 31, 1972

REYES, J.B.L., J.

Facts:

On April 30, 1949 Myers Building Co., Inc., owner of three parcels of land in the City
of Manila entered into a "Deed of Conditional Sale" in favor of Maritime Building Co.,
Inc. for P1,000,000. P50,000.00 of this price was paid upon the execution of the said
contract and the parties agreed that the balance of P950,000.00 was to be paid in
monthly installments. They agreed that in case of failure on the part of the vendee
to pay any of the installments due and payable, the contract shall be annulled at the
option of the vendor and all payments already made by vendee shall be forfeited and
the vendor shall have right to re-enter the property and take possession thereof. The
mothly installments were paid by Maritime Co., Inc. until the end of February, 1961.
It failed to pay the monthly installment corresponding to the month of March 1961.
The Maritime Building Co., Inc. now contends (1) that the Myers Building Co., Inc.
cannot cancel the contract entered into by them for the conditional sale of the
properties in question extrajudicially and (2) that it had not failed to pay the monthly
installments due under the contract and, therefore, is not guilty of having violated
the same.

Issue:

Whether or not the vendor may unilaterally rescind the contract of conditional sale.

Ruling:

The vendor in the present case may rescind the contract of conditional sale. Maritime,
by its failure to pay, committed a breach of the sale contract; that Myers Company,
from and after the breach, became entitled to terminate the contract, to forfeit the
installments paid, as well as to repossess, and collect the rentals of, the building from
its lessee, Luzon Brokerage Co.

It is argued for Maritime that even if it had really violated the Contract of Conditional
Sale with Myers, the latter could not extrajudicially rescind or resolve the contract,
but must first recourse to the courts. Well settled is, however, the rule that a judicial
action for the rescission of a contract is not necessary where the contract provides
that it may be revoked and cancelled for violation of any of its terms and conditions.

The remedy of the party opposing the rescission for any reason being to file the
corresponding action to question the rescission and enforce the agreement. Of
course, it must be understood that the act of a party in treating a contract as
cancelled or resolved on account of infractions by the other contracting party must
be made known to the other and is always provisional, being ever subject to scrutiny
and review by the proper court.

37. G.R. No. L-25885 November 16, 1978

LUZON BROKERAGE CO., INC. V. MARITIME BUILDING CO., INC.

RESOLUTION ON SECOND MOTION FOR RECONSIDERATION

TEEHANKEE, J.:

Facts: The whole thrust of appellant's stand since the filing of the case on June 17,
1961 up to its pending second motion for reconsideration (seventeen years later)
has been to ask the Court to disregard the rule of stare decisis and to overturn the
long- standing doctrine of 39 years upholding the promissor's contractual right, as
stipulated in contracts to sell, to declare the contract cancelled upon breach thereof
and the putative buyer's failure to pay the stipulated installments which is simply
an event that prevent(s) the obligation of the vendor to convey title from acquiring
binding force and ruling that Article 1592 of the New Civil Code which grants the
vendee of immovable property the right to pay even after the expiration of the
period for payment despite a stipulation to the contrary, as long as no demand by
suit or notarial act has been made upon him but further provides that "after the
demand, the Court may not grant him a new term, does not apply to a contract to
sell.

Issue: Whether or not the motion for reconsideration should be granted.

Ruling:

The Court denies appellant Maritime Building Co. Inc.'s (Maritime) Second Motion
for Reconsideration of October 7, 1972. The motion is from the decided case LUZON
BROKERAGE CO., INC. V MARITIME BUILDING CO., INC, G.R. No. L-25885, January
31, 1972.

The Court has seen no valid reason for yielding to the appellant's insistent
importunings to cast aside the precedents (as an exception in its case) and to
disregard the contractual stipulations, freely entered into by it with the assistance
of counsel and with full awareness of the import of the covenanted terms and
conditions and of the legal consequence of breach thereof in accordance with past
precedents, as the binding law between the parties.

ACCORDINGLY, and for lack of the necessary votes (five votes for denying the
second motion and seven votes for granting the same , appellant Maritime's second
motion for reconsideration is denied and this denial is final.
38. G.R. No. 177783 : January 23, 2013

HEIRS OF FAUSTO C. IGNACIO V. HOME BANKERS SAVINGS AND TRUST

COMPANY

VILLARAMA, JR., J.:

Facts:

In August 1981, petitioner Fausto C. Ignacio mortgaged two parcels of land to Home
Savings Bank and Trust Company, the predecessor of respondent Home Bankers
Savings and Trust Company. When petitioner defaulted in the payment of his loan
obligation, respondent bank proceeded to foreclose the real estate mortgage. At the
foreclosure sale held on January 26, 1983, respondent bank was the highest bidder
for the sum of P764,984.67. Petitioner failed to redeem the foreclosed properties
within one year from registration.

Despite the lapse of the redemption period and consolidation of title in respondent
bank, petitioner offered to repurchase the properties. Petitioner expressed his
willingness to pay the amount of P600,000.00 in full, as balance of the repurchase
price, and requested respondent bank to release to him the remaining parcels of
land. Respondent bank however, turned down his request

On December 27, 1989, petitioner filed an action for specific performance and
damages in the RTC against the respondent bank. As principal relief, petitioner sought
in his original complaint the reconveyance of the subject properties after his payment
of P600,000.00. Respondent bank filed its Answer denying the allegations of
petitioner and asserting that it was merely exercising its right as owner of the subject
properties when the same were sold to third parties.

Issue:

Whether or not a contract for the repurchase of the foreclosed properties was
perfected between petitioner and respondent bank.

Ruling:

The contact to repurchase was not perfected. There must be concurrence between
the offer and the acceptance upon the subject matter, consideration, and terms of
payment, before a contract is produced. The offer must be certain. The acceptance
must be absolute and must not qualify the terms of the offer; it must be plain,
unequivocal, unconditional, and without variance of any sort from the proposal. A
qualified acceptance, or one that involves a new proposal, constitutes a counter-offer
and is a rejection of the original offer. The acceptance must be identical in all respects
with that of the offer so as to produce consent or meeting of the minds. Where a
party sets a different purchase price than the amount of the offer, such acceptance
was qualified which can be at most considered as a counter-offer; a perfected
contract would have arisen only if the other party had accepted this counter-offer. In
the presen case, the offer to repurchase was not accepted.
39. MANILA METAL CONTAINER CORP. V. PNB

G.R. No. 166862, December 20, 2006

CALLEJO, SR., J.:

Facts:

To secure two loans it had obtained from respondent Philippine National Bank
(PNB), petitioner executed a real estate mortgage over a land owned by petitioner,
payable in quarterly installments, plus interests and other charges. On August 5,
1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate
mortgage and sought to have the property sold at public auction.

Petitioner sent a letter to respondent PNB, requesting that it be granted an extension

of time to redeem/repurchase the property. A deposit was also made by petitioner in
favor of repondent. Respondent PNB informed petitioner that the PNB Board of
Directors had accepted petitioners offer to purchase the property, but
for P1,931,389.53 in cash less the P725,000.00 already deposited with it. Petitioner
rejected respondents proposal. It maintained that respondent PNB had agreed to sell
the property for P1,574,560.47, and that since its P725,000.00 downpayment had
been accepted, respondent PNB was proscribed from increasing the purchase price
of the property. Petitioners request was ultimately rejected and respondent offered
to refund its P725,000.00 deposit.

Issue:

Whether or not the contract to repurchase was perfected.

Ruling:

There was no perfected contract of sale between petitioner and respondent

over the subject property. The petitioners cannot claim that respondent had accepted
its offer in accordance with the civil code. There must be concurrence between the
offer and the acceptance upon the subject matter, consideration, and terms of
payment, before a contract is produced. The offer must be certain. The acceptance
must be absolute and must not qualify the terms of the offer; it must be plain,
unequivocal, unconditional, and without variance of any sort from the proposal.
40. G.R. No. 125531. February 12, 1997
JOVAN LAND V. COURT OF APPEALS
HERMOSISIMA, JR. J.:

Facts:

Petitioner Jovan Land, Inc. is a corporation engaged in the real estate

business. Private respondent Eugenio Quesada is the owner of a building located
on the lot in dispute. Petitioner learned that respondent was selling the aforesaid
property. Thus, petitioner made a written offer for P10.25 million. This first offer
was not accepted by respondent. The second written offer for the same price but
inclusive of an undertaking to pay the documentary stamp tax, transfer tax,
registration fees and notarial charges,with earnest money, was again
rejected. Undaunted, a third written offer was sent for twelve million pesos with a
similar check for one million pesos as earnest money. Annotated on this third letter-
offer was the phrase "Received original, 9-4-89" beside which appears the signature
of Conrado Quesada, manager of private respondent Quesada.

On the basis of this annotation which petitioner insists is the proof that there
already exists a valid, perfected agreement to sell the Mayhaligue property, petitioner
filed with the trial court, a complaint for specific performance and collection of sum
of money with damages.
Issue: Whether or not the offer was accepted.
Ruling:
There was acceptance of the offer. It is a fundamental principle that before
contract of sale can be valid, the following elements must be present: (a) consent or
meeting of the minds; (b) determinate subject matter; (3) price certain in money or
its equivalent. Until the contract of sale is perfected, it cannot, as an independent
source of obligation, serve as a binding juridical relation between the parties.
In the case at bench, petitioner, anchors its main argument on the annotation on
its third letter-offer of the phrase "Received original, 9-4-89," beside which appears
the signature of Conrado Quesada is acceptance, but there is nothing written or
documentary to show that such offer was accepted by Conrado Quesada.
The requisites of a valid contract of sale are lacking in said receipt and therefore
the "sale" is neither valid nor enforceable.
Petitioner also asseverates that the failure of Conrado Quesada to return the
check for one million pesos, translates to implied acceptance of its third letter-
offer. It, however, does not rebut the finding of the trial court that private respondent
was returning the check but petitioner refused to accept the same and that when
Conrado Quesada subsequently sent it back to petitioner through registered mail, the
latter failed to claim its mail from the post office.
41. Villanueva V. PNB

GR 154493, Deember 6, 2006

Austria, Martinez, J.

Facts:

PNB issued an advertisement for the sale through bidding of certain PNB properties
in General Santos City, including the lot 17 which has an advertised floor price of
Php 1,409, 000 and lot 19 Php 2,268,000. Villanueva offered to purchase the said
lots for Php 3,677,000. He also deposited Php 400, 000 to show good faith but with
the condition that the said deposit is part of the payment of the purchase only when
PNB accepts the offer. PNB answered that only lot 19 is available and that the
asking price therefor is Php 2,883,300. The answer also indicated that if Villanueva
accepts, the sale shall still be subject to the approval of the Board of Directors. As a
form of acceptance, Villanueva simply inserted at the bottom of the said answer
“Conforme: Price of Php 2,883,300. Downpayment of Php600,000.00 and the
balance payable in 2 years at quarterly amortizations”.

Later on, PNB informed Villanueva that the lot is being subjected to another
appraisal and attempted to refund the deposits made by the latter. Villanueva filed
a complaint for specific performance and damages.

Issue:

Whether or not the contract of sale was perfected.

Ruling:

The contract was not perfected. There was no accepted on the part of PNB of the
offer made by Villanueva.

Contracts of sale are perfected by mutual consent whereby the seller obligates
himself, for a price certain, to deliver and transfer ownership of a specified thing or
right to the buyer over which the latter agrees. Mutual consent being a state of
mind, its existence may only be inferred from the confluence of two acts of the
parties: an offer certain as to the object of the contract and its consideration, and
an acceptance of the offer which is absolute in that it refers to the exact object and
consideration embodied I the said offer.
42. G.R. No. 118509 December 1, 1995

LIMKETKAI SONS MILLING, INC. V. COURT OF APPEALS

MELO, J.:

Facts:

Philippine Remnants Co., Inc. constituted BPI as its trustee to manage, administer,
and sell its real estate property. One such piece of property placed under trust was
the disputed lot, a 33,056-square meter lot at Barrio Bagong Ilog, Pasig, Metro
Manila. Pedro Revilla, Jr., a licensed real estate broker was given formal authority
by BPI to sell the lot for P1,000.00 per square meter.Broker Revilla contacted
Alfonso Lim of petitioner company who agreed to buy the land. Petitioner's officials
and Revilla were given permission by Rolando V. Aromin, BPI Assistant Vice-
President, to enter and view the property they were buying. Revilla formally
informed BPI that he had procured a buyer, herein petitioner. Petitioner's officials,
Alfonso Lim and Albino Limketkai, went to BPI to confirm the sale. Petitioner asked
that the price of P1,000.00 per square meter be reduced to P900.00 while Albano
stated the price to be P1,100.00. The parties finally agreed that the lot would be
sold at P1,000.00 per square meter to be paid in cash.

Petitioner later on learned that the respondent had decided not to proceed with the
sale. An action for specific performance with damages was thereupon filed by
petitioner against BPI.

Issue: Whether or not the contract was perfected.

Ruling:

The court ruled that there was a perfected contract between BPI and petitioner
Limketkai and that the BPI officials who transacted with petitioner had full authority
to bind the bank Respondent.

There must be concurrence between the offer and the acceptance upon the subject
matter, consideration, and terms of payment, before a contract is produced. The
offer must be certain. The acceptance must be absolute and must not qualify the
terms of the offer; it must be plain, unequivocal, unconditional, and without
variance of any sort from the proposal. This was clearly established in the case.
43. G.R. No. 191696, April 10, 2013

DANTIS v. MAGHINANG

MENDOZA, J.:

Facts:

Dantis alleged that he was the registered owner of a parcel of the subject land; that
Julio, Jr. occupied and built a house on a portion of his property without any right at
all; that demands were made upon Julio Maghinang, Jr. that he vacate the premises
but the same fell on deaf ears; and that the acts of Julio, Jr. had created a cloud of
doubt over his title and right of possession of his property.

Julio, Jr. denied the material allegations of the complaint. By way of an affirmative
defense, he claimed that he was the actual owner of the land and that he had been
in open and continuous possession of the property for almost thirty (30) years. As
evidence, Julio Jr. presented an affidavit allegedly executed by Ignacio Dantis,
petitioners grandfather, whereby said affiant attested, among others, to the sale of
the subject lot made by his son, Emilio Dantis, to Julio Maghinang, Sr. and an undated
handwritten receipt of initial downpayment in the amount of P100.00 supposedly
issued by Emilio to Julio, Sr. in connection with the sale of the subject lot.

Issue:

Whether or not there is a perfected contract of sale between Emilio and Julio, Sr.

Ruling:

contract of sale is a consensual contract and, thus, is perfected by mere consent

which is manifested by the meeting of the offer and the acceptance upon the thing
and the cause which are to constitute the contract. Until the contract of sale is
perfected, it cannot, as an independent source of obligation, serve as a binding
juridical relation between the parties. The absence of any of the essential elements
shall negate the existence of a perfected contract of sale.

Julio, Jr. miserably failed to establish by preponderance of evidence that there was a
meeting of the minds of the parties as to the subject matter and the purchase price.

A perusal of the above document alleged to be a contract of sale, it would readily

show that it does not specify a determinate subject matter and does not categorically
declare the price certain in money. Neither does it state the mode of payment of the
purchase price and the period for its payment. For these insufficiencies, the contract
was not perfected.
44. Platinum Plans Phils. V. Cucueco

522 Phil. 133, 2006

AZCUNA, J.:

Romeo R. Cucueco alleged in his complaint that sometime in July 1993, being the
lessee and present occupant of the a condominium unit, he verbally offered to buy
the same from Platinum Philippines Inc., Youth Educational Plans, Inc., and Ernesto
L. Salas, free from any lien or encumbrance in two(2) installments of P2,000,000.00.
Cucueco is to issue a check for P100, 000 as earnest money and a post-dated check
for P1,900,000.00 encashable on 30 September 1993. However, he was surprised to
receive a letter from the defendants-appellants where the due date for the second
installment was changed to 23 September 1993. Despite earnest efforts, both parties
failed to settle the said difference amicably. Apparently, the plaintiff-appellant felt he
was on the short end of the bargain since he stood to forfeit the initial P2,000,000.00
he has paid in favor of the defendants-appellants as provided in their agreement. The
refusal of the defendants-appellants to return the said initial payment thus prompted
the plaintiff-appellant to file a case for specific performance of the said sale and claim
of damages for the injury.

Issue:

Whether what was perfected was a contract of sale or a contract to sell.

Ruling:

The parties entered into a contract to sell. The fact that respondent delivered to
petitioners and petitioners accepted part of the downpayment on the price cannot be
considered as proof of the perfection of the contract of sale as they had not agreed
on how and when the balance was to be paid.

Before a valid and binding contract of sale can exist, the manner of payment of the
purchase price must first be established. The manner of payment affects the essential
validity of the sale notwithstanding that the object and purchase price may have
previously been agreed upon. Although not an express statutory requirement, the
minds of the parties must meet on the terms or manner of payment of the price,
otherwise, there is no sale. An agreement on 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.
Considering that the agreement of the parties did not ripen into a binding and
enforceable contract meaning it did not acquire any obligatory force either for the
transfer of the ownership of the property or the rendition of payments as part of the
purchase price due to the absence of the essential element of consent, the Court is
precluded from finding any cause of action that would warrant the granting of the
reliefs prayed for in respondent's complaint. Accordingly, the initial payment of Two
Million Pesos (P2,000,000) advanced by respondent should be returned by
petitioners.

CASE NO:45
BOSTON BANK OF THE PHILIPPINES, (formerly BANK OF COMMERCE) v. PERLA P.
MANALO and CARLOS MANALO, JR.,
G. R. No. 158149

FACTS:

The Xavierville Estate, Inc. (XEI) was the owner of parcels of land in Quezon City,
known as the Xavierville Estate Subdivision. XEI, through its General Manager,
Antonio Ramos, as vendor, and The Overseas Bank of Manila (OBM), as vendee,
executed a Deed of Sale of Real Estate over some residential lots in the subdivision
then XEI president Emerito Ramos, Jr. contracted the services of Engr. Carlos Manalo,
Jr. who was in business of drilling deep water wells and installing pumps under the
business name Hurricane Commercial, Inc. For P34,887.66, Manalo, Jr. installed a
water pump at Ramos residence at the corner of Aurora Boulevard and Katipunan
Avenue, Quezon City. Manalo, Jr. then proposed to XEI, through Ramos, to purchase
a lot in the Xavierville subdivision, and offered as part of the downpayment
the P34,887.66 Ramos owed him.

Ramos confirmed the reservation of the lots. He also pegged the price of the lots
at P200.00 per square meter, or a total of P348,060.00, with a 20% down payment
of the purchase price amounting to P69,612.00 less the P34,887.66 owing from
Ramos, payable on or before December 31, 1972; the corresponding Contract of
Conditional Sale would then be signed on or before the same date, but if the selling
operations of XEI resumed after December 31, 1972, the balance of the
downpayment would fall due then, and the spouses would sign the aforesaid contract
within five (5) days from receipt of the notice of resumption of such selling
operations. It was also stated in the letter that, in the meantime, the spouses may
introduce improvements thereon subject to the rules and regulations imposed by XEI
in the subdivision. Perla Manalo conformed to the letter agreement.

The spouses Manalo were notified of the resumption of the selling operations of
XEI. However, they did not pay the balance of the downpayment on the lots because
Ramos failed to prepare a contract of conditional sale and transmit the same to
Manalo for their signature.

ISSUE:

Whether there is a perfected contract to sell

HELD:

for a perfected contract of sale or contract to sell to exist in law, there must be an
agreement of the parties, not only on the price of the property sold, but also on the
manner the price is to be paid by the vendee. Under Article 1458 of the New Civil
Code, in a contract of sale, whether absolute or conditional, one of the contracting
parties obliges himself to transfer the ownership of and deliver a determinate thing,
and the other to pay therefor a price certain in money or its equivalent. A contract of
sale is perfected at the moment there is a meeting of the minds upon the thing which
is the object of the contract and the price. From the averment of perfection, the
parties are bound, not only to the fulfillment of what has been expressly stipulated,
but also to all the consequences which, according to their nature, may be in keeping
with good faith, usage and law. On the other hand, when the contract of sale or to
sell is not perfected, it cannot, as an independent source of obligation, serve as a
binding juridical relation between the parties.
It is not enough for the parties to agree on the price of the property. The parties
must also agree on the manner of payment of the price of the property to give rise
to a binding and enforceable contract of sale or contract to sell. 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.

In a contract to sell property by installments, it is not enough that the parties agree
on the price as well as the amount of downpayment. The parties must, likewise, agree
on the manner of payment of the balance of the purchase price and on the other
terms and conditions relative to the sale. Even if the buyer makes a downpayment
or portion thereof, such payment cannot be considered as sufficient proof of the
perfection of any purchase and sale between the parties.

CASE NO:46
LAURA M. MARNELEGO v. BANCO FILIPINO SAVINGS AND MORTGAGE BANK,

G.R. No. 161524

FACTS:

Spouses Patrick and Beatrize Price and petitioner Laura Marnelego executed a Deed
of Conditional Sale over a parcel of land located at Houston Street, BF
Homes, Paraaque, Metro Manila and its improvements. The contract showed that the
property was mortgaged to respondent Banco Filipino Savings and Mortgage Bank
(Banco Filipino) and BF Homes, and that Spouses Price agreed to pay the
amortizations for the first six months beginning August 1980 to January 1981 while
petitioner would assume the succeeding amortizations. It appears, however, that
when the parties faltered on the amortizations, respondent bank foreclosed the
mortgage and acquired the property at public auction.It later consolidated the title
to the property in its name after petitioner failed to redeem it

In January 1985, the Central Bank of the Philippines ordered the closure and
liquidation of Banco Filipino. Pending the liquidation of the bank, the Deputy Sheriff
of the Regional Trial Court of Makati implemented the writ of possession issued by
the court. Petitioner pleaded with the banks Deputy Liquidator to allow her to stay in
the premises while the bank considers her proposal to repurchase the property. after
the bank resumed its operations, it sent a letter to petitioner demanding that they
vacate the premises within five days from receipt thereof.

ISSUE:

Whether there was no perfected contract between the parties.

RULING:

A contract of sale is perfected at the moment there is a meeting of minds upon

the thing which is the object of the contract and upon the price. From that moment,
the parties may reciprocally demand performance subject to the law governing the
form of contracts. In the case at bar, the subject of the contract is clear, that is, the
house and lot where petitioner presently resides. However, it appears from the
records that the parties have not reached an agreement on the purchase price.

It has been ruled that a definite agreement on the manner of payment of the
purchase price is an essential element in the formation of a binding and enforceable
contract of sale. Clearly, there was no agreement yet between the parties as regards
the purchase price and the manner and schedule of its payment. Neither of them had
expressed acceptance of the other partys offer and counter-offer.

CASE NO:47
REYNALDO VILLANUEVA, vs. PHILIPPINE NATIONAL BANK (PNB),

FACTS:
the Philippine National Bank (PNB) issued an advertisement for the sale thru
bidding of certain PNB properties in Calumpang, General Santos City, Bidding was
subject to the following conditions: 1) that cash bids be submitted not later than April
27, 1989; 2) that said bids be accompanied by a 10% deposit in managers or cashiers
check; and 3) that all acceptable bids be subject to approval by PNB authorities.
Manager, PNB-General Santos Branch, Reynaldo Villanueva (Villanueva) offered to
purchase Lot He also manifested that he was depositing P400,000.00 to show his
good faith but with the understanding that said amount may be treated as part of the
payment of the purchase price only when his offer is accepted by PNB. At the bottom
of said letter there appears an unsigned marginal note stating that P400,000.00 was
deposited into Villanuevas account. however, Guevara wrote Villanueva that, upon
orders of the PNB Board of Directors to conduct another appraisal and public bidding
of Lot deferring negotiations with him over said property and returning his deposit
of P580,000.00. undaunted, Villanueva attempted to deliver postdated checks
covering the balance of the purchase price but PNB refused the same.

ISSUE:

Whether the contract of sale has been perfected

RULING:
Contracts of sale are perfected by mutual consent whereby the seller obligates
himself, for a price certain, to deliver and transfer ownership of a specified thing or
right to the buyer over which the latter agrees. Mutual consent being a state of mind,
its existence may only be inferred from the confluence of two acts of the parties: an
offer certain as to the object of the contract and its consideration, and an acceptance
of the offer which is absolute in that it refers to the exact object and consideration
embodied in said offer.

More particularly on the matter of the consideration of the contract, the offer and its
acceptance must be unanimous both on the rate of the payment and on its term. An
acceptance of an offer which agrees to the rate but varies the term is ineffective. To
determine whether there was mutual consent between the parties herein, it is
necessary to retrace each offer and acceptance they made. In sum, the amounts paid
by petitioner were not in the nature of downpayment or earnest money but were
mere deposits or proof of his interest in the purchase of Lot No. 19. Acceptance of
said amounts by respondent does not presuppose perfection of any contract.

CASE NO:48

SWEDISH MATCH, vs. COURT OF APPEALS,

G.R. No. 128120

FACTS:

Swedish Match AB (SMAB) had 3 subsidiary corporations in the Philippines, all

organized under Philippine laws, to wit: Phimco Industries (Phimco), Provident Tree
Farms (PTF), and OTT/Louie. STORA, the parent company of SMAB, decided to sell
SMAB of Sweden and its worldwide match, lighter, and shaving products operation
to Swedish Match NV (SMNV).
Ed Enriquez, VP of Swedish Match Sociedad Anonimas (SMSA) which is SMAB’s
management company, was held under strict instructions that the sale of Phimco
shares should be executed on or before 30 June 1990 in view of the tight loan
covenants of SMNV. He came to the Philippines and informed the Philippine financial
and business circles that the Phimco shares were for sale. Several interested parties
tendered offers to acquire the Phimco shares one of which was private respondent,
Antonio Litonjua, the president and general manager of ALS Management &
Development Corporation.

On November 1989, Litonjua submitted to SMAB a firm offer to buy all of the latter’s
shares in Phimco and all of Phimco’s shares in PTF and OTT for P750,000,000.00.
However, CEO Massimo Rossi informed respondents that their price offer was below
their expectations. Again, on May 1990, Litonjua offered to buy the disputed shares,
excluding the lighter division for US$36M. Rossi wrote that ALS should undertake a
due diligence process or pre-acquisition audit and review of the draft contract for the
Match and Forestry activities of Phimco at ALS convenience. 2 days prior to the
deadline for submission of the final bid, Litonjua told Rossi that they would be unable
to submit the final offer by 30 June 1990, considering that the acquisition audit of
Phimco and the review of the draft agreements had not yet been completed. Thus,
Enriquez sent notice to Litonjua that they would be constrained to entertain bids from
other parties in view of Litonjua’s failure to make a firm commitment for the shares
of Swedish Match. In his letter, Litonjua asserted that they submitted the best bid
and that they were already finalizing the terms of the sale.

More than 2 months from receipt of Litonjua’s last letter, Enriquez advised the former
that the proposed sale of SMAB’s shares in Phimco with local buyers did not
materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the
sale of Phimco shares. He indicated that SMAB would be prepared to negotiate with
ALS on an exclusive basis for a period of 15 days from 26 September 1990 subject
to the terms contained in the letter. Additionally, Enriquez clarified that if the sale
would not be completed at the end of the 15-day period, SMAB would enter into
negotiations with other buyers. Litonjua emphasized that the new offer constituted
an attempt to reopen the already perfected contract of sale of the shares in his favor.
CA ruled that the series of written communications between petitioners and
respondents collectively constitute a sufficient memorandum of their agreement
under Article 1403 of the Civil Code. Thus, letters exchanged by and between the
parties, taken together, were sufficient to establish that an agreement to sell the
disputed shares to respondents was reached. On the other hand, petitioners stress
that Litonjua made it clear in his letters that the quoted prices were merely tentative
and still subject to further negotiations between him and the seller. They point out
that there was no meeting of the minds on the essential terms and conditions of the
sale because SMAB did not accept respondent’s offer that consideration would be paid
in Philippine pesos. They argued as well that the foregoing circumstances prove that
they failed to reach an agreement on the sale of the Phimco shares.

ISSUE:

Was there a perfected contract of sale with respect to Phimco shares?

HELD:

No. There was no perfected contract of sale since Litonjua’s letter of proposing
acquisition of the Phimco shares for US$36M was merely an offer. Consent in a
contract of sale should be manifested by the meeting of the offer and acceptance
upon the thing and the cause which are to constitute the contract. The lack of a
definite offer on the part of respondents could not possibly serve as the basis of their
claim that the sale of the Phimco shares in their favor was perfected, for one essential
element of a contract of sale was obviously wanting the price certain in money or its
equivalent. The price must be certain, otherwise there is no true consent between
the parties. Respondents’ failure to submit their final bid on the deadline set by
petitioners prevented the perfection of the contract of sale. It was not perfected due
to the absence of one essential element which was the price certain in money or its
equivalent.

CASE NO:49
EMILLA M. URACA, vs. COURT OF APPEALS,

G.R. No. 115158

FACTS:

The Velezes were the owners of the lot and commercial building in Cebu while the
petitioners were lessees of the said building. The Velezes through Ting wrote a letter
offering to sell the subject property for P1,050,000.00 and at the same time
requesting the petitioners to reply in three days. Such sale was accepted.

Uraca went to see Ting about the offer to sell but she was told by the latter that the
price was P1,400,000.00 in cash or managers check and not P1,050,000.00 as
erroneously stated in their letter-offer after some haggling. Emilia Uraca agreed to
the price of P1,400,000.00 but counter- proposed that payment be paid in
installments with a down payment of P1,000,000.00 and the balance of P400,000 to
be paid in 30 days. Carmen Velez Ting did not accept the said counter offer of Emilia
Uraca although this fact is disputed by Uraca. However, no payment was made.

The Velezes sold the lot and commercial building to the Avenue Group for
P1,050,000.00 net of taxes, registration fees, and expenses of the sale. At the time
the Avenue Group purchased the subject property on July 13, 1985 from the Velezes,
the certificate of title of the said property was clean and free of any annotation of
adverse claims or lis pendens.
ISSUE:
Whether or not the contract of sale was perfected;

RULING:
The lynchpin of the assailed Decision is the public respondents conclusion that the
sale of the real property in controversy. The Court noted that the petitioners accepted
in writing and without qualification the Velezes written offer to sell at P1,050,000.00
within the three-day period stipulated therein. Hence, from the moment of
acceptance on July 10, 1985, a contract of sale was perfected since undisputedly the
contractual elements of consent, object certain and cause concurred.

Article 1600 of the Civil Code provides that (s)ales are extinguished by the same
causes as all other obligations, x x x. Article 1231 of the same Code states that
novation is one of the ways to wipe out an obligation. Extinctive novation requires:
(1) the existence of a previous valid obligation; (2) the agreement of all the parties
to the new contract; (3) the extinguishment of the old obligation or contract; and (4)
the validity of the new one.

In view of the validity and subsistence of their original contract of sale as previously
discussed, it is unnecessary to discuss public respondents theses that the second
agreement is unenforceable under the Statute of Frauds and that the agreement
constitutes a mere promise to sell.

CASE NO:50

SPS. RUDY PARAGAS and CORAZON B. PARAGAS, petitioners, vs. HRS. OF

DOMINADOR BALACANO, namely: DOMINIC, RODOLFO, NANETTE and CYRIC, all
surnamed BALACANO, represented by NANETTE BALACANO and ALFREDO
BALACANO,

G.R. No. 168220

FACTS:
Gregorio Balacano, married to Lorenza Sumigcay, was the registered owner of Lot
Gregorio purportedly sold on July 22, 1996, or barely a week prior to his death, a
portion of Lot to the Spouses Rudy (Rudy) and Corazon Paragas. This sale appeared
in a deed of absolute sale notarized by Atty. Alexander V. de Guzman, Notary Public
for Santiago City, on the same date July 22, 1996 and witnessed by Antonio Agcaoili
(Antonio) and Julia Garabiles (Julia). The Spouses Paragas then sold on October 17,
1996 a portion of Lot to Catalino for the total consideration of P60,000.00. Domingos
children (Dominic, Rodolfo, Nanette and Cyric, all surnamed Balacano;) filed on
October 22, 1996 a complaint for annulment of sale and partition against Catalino
and the Spouses Paragas. They essentially alleged in asking for the nullification of
the deed of sale that: (1) their grandfather Gregorio could not have appeared before
the notary public on July 22, 1996 at Santiago City because he was then confined at
the Veterans Memorial Hospital in Quezon City; (2) at the time of the alleged
execution of the deed of sale, Gregorio was seriously ill, in fact dying at that time,
which vitiated his consent to the disposal of the property; and (3) Catalino
manipulated the execution of the deed and prevailed upon the dying Gregorio to sign
his name on a paper the contents of which he never understood because of his serious
condition.

ISSUE:

Whether the nullity of the Deed of Sale purportedly executed between petitioners and
the late Gregorio Balacano valid

RULING:

there was no prior and perfected contract of sale that remained to be fully
consummated. oncluded that Gregorios consent to the sale of the lots was absent,
making the contract null and void. Consequently, the spouses Paragas could not have
made a subsequent transfer of the property to Catalino Balacano. Indeed, nemo dat
quod non habet. Nobody can dispose of that which does not belong to him. We
likewise find to be in accord with the evidence on record the ruling of the Court of
Appeals declaring the properties in controversy as paraphernal properties of Gregorio
in the absence of competent evidence on the exact date of Gregorios acquisition of
ownership of these lots. In the case at bar, the Deed of Sale was allegedly signed by
Gregorio on his death bed in the hospital. Gregorio was an octogenarian at the time
of the alleged execution of the contract and suffering from liver cirrhosis at that
circumstances which raise grave doubts on his physical and mental capacity to freely
consent to the contract. Adding to the dubiety of the purported sale and further
bolstering respondents claim that their uncle Catalino, one of the children of the
decedent, had a hand in the execution of the deed

CASE NO:51
Spouses Firme vs. Bukal Enterprises and Development Corp.
GR 146608,

FACTS:

Spouses Constante and Azucena Firme are the registered owners of a parcel of land
located on Dahlia Avenue, Fairview Park, Quezon City. Renato de Castro, the vice
president of Bukal Enterprises and Development Corporation authorized his friend,
Teodoro Aviles, a broker, to negotiate with the Spouses Firme for the purchase of the
Property. On 28 March 1995, Bukal Enterprises filed a complaint for specific
performance and damages with the trial court, alleging that the Spouses Firme
reneged on their agreement to sell the Property. The complaint asked the trial court
to order the Spouses Firme to execute the deed of sale and to deliver the title to the
Property to Bukal Enterprises upon payment of the agreed purchase price. On 7
August 1998, the trial court rendered judgment against Bukal Enterprises, dismissing
the case and ordering Bukal Enterprises to pay the Spouses Constante and Azucena
Firme (1) the sum of P335,964.90 as and by way of actual and compensatory
damages; (2) the sum of P500,000.00 as and by way of moral damages; (3) the sum
of P100,000.00 as and by way of attorney’s fees; and (4) the costs of the suit.

The trial court held there was no perfected contract of sale as Bukal Enterprises failed
to establish that the Spouses Firme gave their consent to the sale of the Property;
and that Aviles had no valid authority to bind Bukal Enterprises in the sale
transaction. Bukal Enterprises appealed to the Court of Appeals, which reversed and
set aside the decision of the trial court. The appellate court ordered the Spouses
Firme to execute the Deed of Absolute Sale transferring the ownership of the subject
property to Bukal Enterprises immediately upon receipt of the purchase price of
P3,224,000.00 and to perform all such acts necessary and proper to effect the
transfer of the property covered by TCT 264243 to Bulak Enterprises; and directed
Bukal Enterprises to deliver the payment of the purchase price of the property within
60 days from the finality of the judgment. The Court of Appeals held that the lack of
a board resolution authorizing Aviles to act on behalf of Bukal Enterprises in the
purchase of the Property was cured by ratification; inasmuch as Bukal Enterprises
ratified the purchase when it filed the complaint for the enforcement of the sale. The
spouses Firme filed the petition for review on certiorari before the Supreme Court.

ISSUE:
Whether there was a perfected contract between the Spouses Firme and Bukal
Enterprises, the latter allegedly being represented by Aviles.

RULING:
There was no consent on the part of the Spouses Firme. Consent is an essential
element for the existence of a contract, and where it is wanting, the contract is non-
existent. The essence of consent is the conformity of the parties on the terms of the
contract, the acceptance by one of the offer made by the other. The Spouses Firme
flatly rejected the offer of Aviles to buy the Property on behalf of Bukal Enterprises.
There was therefore no concurrence of the offer and the acceptance on the subject
matter, consideration and terms of payment as would result in a perfected contract
of sale. Further, there was no approval from the Board of Directors of Bukal
Enterprises as would finalize any transaction with the Spouses Firme. Aviles did not
have the proper authority to negotiate for Bukal Enterprises. Aviles testified that his
friend, De Castro, had asked him to negotiate with the Spouses Firme to buy the
Property. De Castro, as Bukal Enterprises’ vice president, testified that he authorized
Aviles to buy the Property. However, there is no Board Resolution authorizing Aviles
to negotiate and purchase the Property on behalf of Bukal Enterprises. It is the board
of directors or trustees which exercises almost all the corporate powers in a
corporation. Under Sections 23 and 36 of the Corporation Code, the power to
purchase real property is vested in the board of directors or trustees. While a
corporation may appoint agents to negotiate for the purchase of real property needed
by the corporation, the final say will have to be with the board, whose approval will
finalize the transaction. A corporation can only exercise its powers and transact its
business through its board of directors and through its officers and agents when
authorized by a board resolution or its by-laws. Aviles, who negotiated the purchase
of the Property, is neither an officer of Bukal Enterprises nor a member of the Board
of Directors of Bukal Enterprises. There is no Board Resolution authorizing Aviles to
negotiate and purchase the Property for Bukal Enterprises. There is also no evidence
to prove that Bukal Enterprises approved whatever transaction Aviles made with the
Spouses Firme. In fact, the president of Bukal Enterprises did not sign any of the
deeds of sale presented to the Spouses Firme. Even De Castro admitted that he had
never met the Spouses Firme. Considering all these circumstances, it is highly
improbable for Aviles to finalize any contract of sale with the Spouses Firme.
Furthermore, the Court notes that in the Complaint filed by Bukal Enterprises with
the trial court, Aviles signed the verification and certification of non-forum shopping.
The verification and certification of non-forum shopping was not accompanied by
proof that Bukal Enterprises authorized Aviles to file the complaint on behalf of Bukal
Enterprises. The power of a corporation to sue and be sued is exercised by the board
of directors. “The physical acts of the corporation, like the signing of documents, can
be performed only by natural persons duly authorized for the purpose by corporate
by-laws or by a specific act of the board of directors.” The purpose of verification is
to secure an assurance that the allegations in the pleading are true and correct and
that it is filed in good faith. True, this requirement is procedural and not jurisdictional.
However, the trial court should have ordered the correction of the complaint since
Aviles was neither an officer of Bukal Enterprises nor authorized by its Board of
Directors to act on behalf of Bukal Enterprises.

CASE NO:52
SAN MIGUEL PROPERTIES PHILS., INC. v SPOUSES ALFREDO and GRACE HUANG,

G. R. No. 137290,

FACTS:

San Miguel Properties offered two parcels of land for sale and the offer was made to
an agent of the respondents. An “earnest-deposit” of P1 million was offered by the
respondents and was accepted by the petitioner’s authorized officer subject to certain
terms. Petitioner, through its executive officer, wrote the respondent’s lawyer that
because the parties failed to agree on the terms and conditions of the sale despite
the extension granted by the petitioner, the latter was returning the “earnest-
deposit”.

The respondents demanded execution of a deed of sale covering the properties and
attempted to return the “earnest-deposit” but petitioner refused on the ground that
the option to purchase had already expired. A complaint for specific performance was
filed against the petitioner and the latter filed a motion to dismiss the complaint
because the alleged “exclusive option” of the respondents lacked a consideration
separate and distinct from the purchase price and was thus unenforceable; the
complaint did not allege a cause of action because there was no “meeting of the
mind” between the parties and therefore the contact of sale was not perfected.

ISSUE:

Whether there was a perfected contract of sale between the parties

RULING:

It is not the giving of earnest money , but the proof of the concurrence of all the
essential elements of the contract of sale which establishes the existence of a
perfected sale.
The P1 million “earnest-deposit” could not have been given as earnest money
because at the time when petitioner accepted the terms of respondents’ offer, their
contract had not yet been perfected. This is evident from the following conditions
attached by respondents to their letter.
The first condition for an option period of 30 days sufficiently shows that a sale was
never perfected. As petitioner correctly points out, acceptance of this condition did
not give rise to a perfected sale but merely to an option or an accepted unilateral
promise on the part of respondents to buy the subject properties within 30 days from
the date of acceptance of the offer. Such option giving respondents the exclusive
right to buy the properties within the period agreed upon is separate and distinct
from the contract of sale which the parties may enter. All that respondents had was
just the option to buy the properties which privilege was not, however, exercised by
them because there was a failure to agree on the terms of payment. No contract of
sale may thus be enforced by respondents.

Even the option secured by respondents from petitioner was fatally defective. Under
the second paragraph of Art. 1479, an accepted unilateral promise to buy or sell a
determinate thing for a price certain is binding upon the promisor only if the promise
is supported by a distinct consideration. Consideration in an option contract may be
anything of value, unlike in sale where it must be the price certain in money or its
equivalent. There is no showing here of any consideration for the option. Lacking any
proof of such consideration, the option is unenforceable.

Equally compelling as proof of the absence of a perfected sale is the second condition
that, during the option period, the parties would negotiate the terms and conditions
of the purchase. The stages of a contract of sale are as follows: (1) negotiation,
covering the period from the time the prospective contracting parties indicate interest
in the contract to the time the contract is perfected; (2) perfection, which takes place
upon the concurrence of the essential elements of the sale which are the meeting of
the minds of the parties as to the object of the contract and upon the price; and
(3) consummation, which begins when the parties perform their respective
undertakings under the contract of sale, culminating in the extinguishment thereof.
In the present case, the parties never got past the negotiation stage. The alleged
“indubitable evidence” of a perfected sale cited by the appellate court was nothing
more than offers and counter-offers which did not amount to any final arrangement
containing the essential elements of a contract of sale. While the parties already
agreed on the real properties which were the objects of the sale and on the purchase
price, the fact remains that they failed to arrive at mutually acceptable terms of
payment, despite the 45-day extension given by petitioner.

CASE NO:53
XENTREX AUTOMOTIVE, INC., vs. COURT OF APPEALS,
G.R. No. 121559

FACTS:
Petitioner is a dealer of motor vehicles. On October 25, 1991, private respondents
went to petitioner to purchase a brand new car, a 1991 Nissan Sentra Super Saloon
A/T model, valued at P494,000.00. Private respondents ,made an initial deposit
of P50,000.00; petitioner issued the corresponding official receipt (O.R. No. 6504).
The balance was to be paid thru bank financing. Pending the processing of their
application for financing, private respondents paid an additional P200,000.00. to
petitioner which was covered by another receipt (O.R. NO. 6547). Eventually, due to
the slow pace in the processing of their application for financing, private respondents
decided to pay the remaining balance on November 6, 1991 by tendering a check in
the amount of P250,000.00. As it turned out however, to private respondent's shock
and disappointment, the car had already been sold to another buyer without their
knowledge, prompting them to send a demand letter to petitioner asking the latter
to comply with its obligation to deliver the car. Their demand in heeded, private
respondents (plaintiffs below) filed a suit for breach of contract and damages before
the Regional Trial Court of Dagupan City, Branch 42. Denying any liability, petitioner
(defendant below) alleged that the complaint stated no cause of action. After trial,
judgment was rendered by the trial court in private respondents' favor. On appeal by
petitioner, the Court of Appeals affirmed the decision of the trial court.

ISSUE:
Whether there was no perfected contract of sale between the parties due to private
respondents' failure to comply with their obligation to pay the purchase price of the
car in full

RULING:
Undoubtedly, there was a perfected contract of sale between the petitioner and
private respondents as confirmed by the trial court when it found that "[b] y accepting
a deposit of P50,000.00 and by pulling out a unit of Philippine Nissan 1.6 cc Sentra
Automatic (Flamingo red), defendant obliged itself to sell to the plaintiffs a
determinate thing of a price certain in money which was P494,000.00" Resultingly,
petitioner committed a breach of contract when it allowed the unit in question to be
sold to another buyer to the prejudice of private respondents.

. Article 1475 of the New Civil Code is very explicit the "[t]he contract of sale is
perfected at the moment there is a meeting of the minds upon the thing which is the
object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provision of the law governing the
form of contracts."

CASE NO:54
TOYOTA SHAW, INC., v. COURT OF APPEALS
G.R. No. L-116650

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.

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.

CASE NO:55
VILLONCO REALTY COMPANY, v. BORMAHECO, INC.

G.R. No. L-26872

FACTS:
Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a parcel of
land and its improvements located in Buendia, Makati. Bormaheco made the terms
and condition for the sale and Villonco returned it with some modifications.

The sale is for P400 per square meter but it is only to be consummated after
respondent shall have also consummated purchase of a property in Sta. Ana, Manila.
Bormaheco won the bidding for the Sta.Ana land and subsequently bought the
property.

Villonco issued a check to Bormaheco amounting to P100,000 as earnest money. 26

days after signing the contract of sale, Bormaheco returned the P100,000 to Villonco
with 10% interest for the reason that they are not sure yet if they will acquire the
Sta.Ana property.
Villonco rejected the return of the check and demanded for specific performance.

ISSUE:
WON Bormaheco is bound to perform the contract with Villonco.

RULING:
Bormaheco's acceptance of Villonco Realty Company's offer to purchase the Buendia
Avenue property, indubitably proves that there was a meeting of minds upon the
subject matter and consideration of the sale. Therefore, on that date the sale was
perfected. Not only that Bormaheco's acceptance of the part payment of one hundred
,thousand pesos shows that the sale was conditionally consummated or partly
executed subject to the purchase by Bormaheco, Inc. of the Punta property. The
nonconsummation of that purchase would be a negative resolutory condition

The contract is already consummated when Bormaheco accepted the offer by

Villonco. The acceptance can be proven when Bormaheco accepted the check from
Villonco and then returned it with 10% interest as stipulated in the terms made by
Villonco.

On the other hand, the fact that Villonco did not object when Bormaheco encashed
the check is a proof
that it accepted the offer of Bormaheco. Whenever earnest money is given in a
contract of sale, it shall be considered as part of the price and as proof of the
perfection of the contract" (Art. 1482, Civil Code).
SALES DIGEST (56-66)

56. VELOSO V. CA

Facts:

Petitioner Francisco Veloso was the owner of a parcel of land situated in the
district of Tondo, Manila, with an area of 177 square meters. The title was
registered in the name of Francisco A. Veloso. The said title was subsequently
cancelled and a new one issued in the name of Aglaloma B. Escario, married to
Gregorio L. Escario, on May 24, 1988.

On August 24, 1988, petitioner Veloso filed an action for annulment of

documents, reconveyance of property with damages and preliminary injunction
and/or restraining order. Petitioner alleged therein that he was the absolute owner
of the subject property and he never authorized anybody, not even his wife, to sell
it. He alleged that he was in possession of the title but when his wife, Irma, left for
abroad, he found out that his copy was missing. He then verified with the Registry
of Deeds of Manila and there he discovered that his title was already canceled in
favor of defendant Aglaloma Escario. The transfer of property was supported by a
General Power of Attorney dated November 29, 1985 and Deed of Absolute Sale,
dated November 2, 1987, executed by Irma Veloso, wife of the petitioner and
appearing as his attorney-in-fact, and defendant Aglaloma Escario

Petitioner Veloso, however, denied having executed the power of attorney

and alleged that his signature was falsified. He also denied having seen or even
known Rosemarie Reyes and Imelda Santos, the supposed witnesses in the
execution of the power of attorney. He vehemently denied having met or transacted
with the defendant. Thus, he contended that the sale of the property, and the
subsequent transfer thereof, were null and void

ISSUE:
Whether or not there was a valid sale of the subject property.

RULING:

Yes, the sale of the subject property is valid. The Supreme Court held that an
examination of the records showed that the assailed power of attorney was valid
and regular on its face. It was notarized and as such, it carries the evidentiary
weight conferred upon it with respect to its due execution. While it is true that it
was denominated as a general power of attorney, a perusal thereof revealed that it
stated an authority to sell.

The Supreme Court held that an examination of the records showed that the
assailed power of attorney was valid and regular on its face. It was notarized and
as such, it carries the evidentiary weight conferred upon it with respect to its due
execution. While it is true that it was denominated as a general power of attorney,
a perusal thereof revealed that it stated an authority to sell.

Respondent Aglaloma relied on the power of attorney presented by

petitioner's wife, Irma. Being the wife of the owner and having with her the title of
the property, there was no reason for the private respondent not to believe, in her
authority. Thus, having had no inkling on any irregularity and having no
participation thereof, private respondent was a buyer in good faith. It has been
consistently held that a purchaser in good faith is one who buys property of
another, without notice that some other person has a right to, or interest in such
property and pays a full and fair price for the same, at the time of such purchase,
or before he has noticed of the claim or interest of some other person in the
property.
57.

PACIFIC OXYGEN & ACETYLENE CO. V. CENTRAL BANK

37 SCRA 685 (1971)

FACTS:

On December 12 and 14, 1961, plaintiff applied to the Philippine Trust Company for
commercial credit in favor of the Independent Engineering Company, Inc. of
O’Fallen, Illinois, USA to cover shipments of various industrial machinery parts.

On January 21, 1962, issued Circular 133 providing for the suspension of the
margin levy. Thus, while the letters of credit in question opened by the Philippine
Trust Company, as well as the forward exchange contracts between the Central
Bank and the Philippine Trust Company for the account of the plaintiff, were issued
or executed during the period when the margin levy was still imposable, the drafts
against the said letters of credit were negotiated, honored and paid by the
Continental Illinois National Bank and Trust Company to the Independent
Engineering Company, Inc. during the period when collection of the margin fee was
suspended.

ISSUE:

Whether or not the 15% margin fee could properly imposed upon the sales of
foreign exchange in question.

RULING:

Under our Civil and Commercial Codes, a sale comes into existence upon its
perfection by mutual consent, even if the subject-matter or the consideration has
not been delivered, barring law or stipulation to the contrary. It is well settled in
our law that a contract of sale exists from the moment one of the contracting
parties obligates himself to transfer the ownership of and to deliver a determinate
thing, and the other to pay therefor a price certain in money or its equivalent.
There is perfection of such a contract at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price, from which
moment the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts.

In the case at bar, the contracts of sale of foreign exchange existed and were
outstanding from December 14 and 18, 1961, as revealed by the documents,
exhibits 7 and 8. Said dates fall within the period of the effectivity of the 15%
margin fee. Thus, the defendant contravened no law, and, in fact, none of its own
rules and regulations, when it collected from the plaintiff the amount of P5,785.09
as margin fee.
58.

NAVARRO vs. SUGAR PRODUCERS COOPERATIVE MARKETING ASSOCIATION INC.

FACTS:

On September 19th, 1956, defendant formally offered to plaintiff the sale

from 15,000 to 20,000 metric tons of molasses, 1st-degrees gravity, 60%
sugar by invert, at P50.00 per metric ton, ex-warehouse San Carlos and
Bais, Negros Occidental, giving him up to noon of September 24th, 1956 within
which to accept the offer, with the admonition that upon its failure to hear
from him by then, the defendant shall feel free to negotiate the sale with other
possible buyers. Promptly at five minutes before noon of September 24th,
1956, plaintiff formally accepted the offer of sale tendered by the defendant
by informing the latter in writing that he binds himself to purchase
from the preferred 20,000 metric tons of molasses in question for P50.00 per
metric ton, and the day after September 21st, 1956, plaintiff upon the request of
defendant, made the following clarifications of his agreement to purchase the said
molasses, — (1) 20,000 metric tons of Philippine molasses, 185-degrees specific
gravity, 60% sugar by invert; (2) Price — P50.00 Philippine currency, per
metric ton ex-warehouse; (3) shipments to be in quantities of 3,000 or
more metric tons every each shipment during the month of February,
March, April and May until the whole amount has been completely shipped;
and (4)payment shall be by irrevocable, divisible and assignable domestic
letter of credit to be opened in a local bank in defendant's favor;On the same day
plaintiff made the foregoing clarifications of his acceptance of the sale, the
defendant hurried advised plaintiff that it committed a typographical error
indicating the specific gravity of the molasses at 185-degrees which should be
only 85-degrees, the latter being the high for molasses at 60% sugar by
invert, and requesting plain that the "specific gravity" be amended
accordingly, which correction and amendment plaintiff readily agreed to and
accepted: That there was no single word, effort or hint that the defendant's offer,
accepted by the plaintiff, was qualified in any way whatsoever;That on September
24th, 1956, relying upon the consummation and perfection of the purchase and
sale of 20,000 metric tons of molasses in question as indicated above, plaintiff
through his business associate here in Manila (J.D. QUIRINO) continued
negotiations for the resale of said molasses to foreign buyers of said
conunodity by immediately communicating the availability of said commodity
through letters, cablegrams a long-distance calls to the latter's business contacts
in U.S.A., a Japan, and ultimately disposing and reselling the said molasses
for forward deliveries in accordance with plaintiff's agreement with the
defendant; On September 28th, 1956, three days after an agreement had
been consummated on the price, quantity and quality of said molasses and the
manner of payment thereof, the defendant, belatedly and abruptly advised plaintiff
of its desire add certain additional conditions to be incorporated in the
formal contract of purchase and sale then under preparation by it for signature, —
which were never even mentioned nor hinted at in its original offer or proposal, on
the untenable pretext that they were 'standard conditions' on all contracts for the
sale said commodity —peremptorily giving plaintiff up to noon again of
October 26th, 1956, within which to decide upon his acceptance of said
additional conditions with the warning that if he failed to do so, it would feel free
to advise its planters concerned that they could negotiate their molasses with
other parties; On the very same day defendant simply and rudely turned down the
foregoing friendly gesture of the plaintiff caused by the additional conditions
demanded by the defendant in its letter of September 28, 1956 and bluntly
informed plaintiff that in view of his non-acceptance of said conditions it would not
continue with the sale of the molasses in question to plaintiff and that it
felt free to offer the same to any other interested buyer. Claiming breach
of contract, plaintiff prayed that judgment be rendered ordering defendant to
comply with and perform its contractual obligations, pursuant to its
agreement with plaintiff of September 19 and 24, 1956 and in case of failure to do
so, to pay plaintiff any and all damages he may suffer by reason of such non-
compliance, plus moral damages and to pay plaintiff reasonable attorney's
fees and actual costs of the litigation.
In view of Article 1479 of the New Civil Code, the trial court dismissed the
action. His motion for reconsideration having been denied, plain plaintiff
interposed this appeal.

Issue:
Whether or not there was a unilateral promise to buy and sell

Held:
No, this contention is not borne out by the facts alleged in the
complaint. In the first place, as noted by the trial court in its order denying
plaintiff's motion for reconsideration, plaintiff himself, in paragraph 6 of his
complaint, referred to the transaction as an "option" which he exercised on
September 24, 1956. Then again, in his memorandum in lieu of oral
argument, he expressly agreed that the offer made by defendant and
described in paragraph 2 of plaintiff's complaint is, In option, a unilateral
promise to sell. And, undoubtedly, this is the offer, the option, the unilateral
promise to sell that was accepted by plaintiff five minutes before the
deadline — noon of September 24, 1956This acceptance, without
consideration, did not create an enforceable obligation on the part of the
defendant. The offer as well as the acceptance, did not contemplate nor
produce an immediately binding and enforceable contract of sale. Both lack a
most essential element — the manner of payment of the purchase price. in fact, it
was only after the exercise of the option or acceptance of the unilateral promise to
sell that the terms of payment were first discussed. This was in connection
with the clarification of plaintiff's acceptance which was transmitted to
defendant on September 25, 1956Plaintiff's offer of a domestic letter of credit
was not accepted by defendant who insisted on a cash payment of 50% of
the purchase value, upon signing of a contract. Plaintiff, on the other hand,
agreed to accede to this provided the price is reduced from P50.00 per metric ton
to 7132.00 Defendant rejected defendant's alternative counter-offer. In the
circumstance, there was no complete meeting of the minds of the parties
necessary for the perfection of a contract of sale. Consequently, appellee was
justified in withdrawing its offer to sell the molasses in question.
59.

DOMINGO R. ACASIO vs.CORPORACION DE LOS PP. DOMINICOS DE

FILIPINAS

G.R. No. L-9428; December 21, 1956

FACTS:

Respondent company is the owner of the subject house. It was leased to

Esteban Garcia for a monthly rent of Php75.00. Two of the rooms in the said
house were in turn sub-leased by the lessee to the spouse Domingo R. Acasio and
Vicente Tengco Acasio, who were paying there-for a monthly rent of P25.
SUbsequentlu, in 1950, Garcia gave notice to the subleases to vacate the area
which the latter refused thus leading to the filing of an action for illegal detainer. It
was dismissed. Then, Garcia left the premises. Mrs. Acacio on the other hand went
to BPI, administrator of the property, and asked the latter to lease her the house.
The house rent increased to Php 100.00 which the petitioner questioned. Petitioner
then protested on the increase of the rent.

The lessees failed to comply with the P100 rent and only paid 75 pesos. Hence,
respondent filed an ejectment case. In the RTC the decision favored the
respondent. On appeal before the CA, the petition was dismissed.

ISSUE:

Whether or not Acasio was the lessee despite his detention in 1945.

RULING:

No. Esteban Garcia was the lessee in 1945 and petitioner was just a sub-lessee.
Hence, benefits of article 1687 of the New Civil Code does not apply to the present
case because he a mere sub-lessee and what is protected by the article is the
lessee. Moreover, the Court held that if indeed he was the owner then why would
his wife go to BPI and ask the latter to lease her the property. Thus, his wife’s
action is also binding on him. Her conformity gave rise to a new contract of lease
between the corporation and the Acasios — not a renewal of a previous lease. The
latter, therefore, could not, after one month as lessees ask for a "longer term".
60.

UNITED MUSLIM AND CHRISTIAN URBAN POOR ASSOCIATION V.BRYC-V

DEVEOPMENT CORP.

G.R. NO. 179653; JULY 31, 2009

Facts:

The United Muslim and Christian Urban Poor Association (UMCUPAI) manifested its
intention to purchase Lot 300 owned by Sea Foods Corporation (SFC). SFC
executed a Letter of Intent to Sell and Letter of Intent to Purchase,
providing that SFC would sell the said lot at 105php per square Meter and
that UMCUPAI would endeavor to raise the necessary funds for the purchase.
UMCUPAI was unable to secure a loan to allow it to purchase Lot 300, but the lot
was subdivided into 3 smaller lots, of which UMCUPAI was able to purchase
one. SFC sold one of the three lots to Bryc-V Development Corp. UMCUPAI
now seeks to rescind the sale arguing, although not explicitly, that ownership had
already vested in them as the Letters of Intent partook in the nature of a
Conditional Contract of Sale.

Issue:
Whether or not the Letters of Intention could be considered a Conditional Contract
of Sale.

Held:

NO. A Letter of Intent is not a contract between the parties thereto because it does
not bind one party, with respect to the other, to give something or to render some
service. An intention is a mere idea, goal, or plan. It falls show of a definite
proposal, and is a mere declaration to enter into a contract. For a contract
to be perfected, the offer must be absolute; it must be plain and
unconditional. This being the case, it cannot be considered a Conditional Contract
of Sale wherein ownership would have already vested in UMCUPAI, subject
only to the fulfillment of a suspensive condition. In Conditional Contract of Sale, a
third party may be considered a buyer in bad faith should it be shown that he was
aware that when he purchased the property in question, the same had already been
the subject of a contract of sale between the another buyer and the seller, in which
case his right is defeated by the first buyer’s right. There being no Conditional
Contract of Sale- or any contract of sale for that matter, Bryc-V cannot be
held to be a buyer in badfaith.
61.

MAHARLIKA PUBLISHING CORP VS TAGLE

GR NO. 65594 JULY 9, 1986

FACTS:

GSIS owned a parcel of land with a building and printing equipment in Paco,
Manila. It was sold to Maharlika in a Conditional Contract of Sale with the
stipulation that if Maharlika failed to pay monthly installments in 90 days, the GSIS
would automatically cancel the contract. Because Maharlika failed to pay several
monthly installments, GSIS demanded that Maharlika vacate the premises. Even
though Maharlika refused to do so, the GSIS published an advertisement inviting
the public to bid in a public auction. A day before the scheduled bidding, Adolfo
Calica, the President of Maharlika, gave the GSIS head office 2 checks worth
11,000 and a proposal for a compromise agreement. The GSIS General Manager
Roman Cruz gave a not to Maharlika saying “Hold Bidding. Discuss with me.”
However, the public bidding took place as scheduled and the property was
subsequently awarded to Luz Tagle, the wife of the GSIS Retirement Division Chief.
Maharlika demanded that the sale be considered null and void, as Mrs. Tagle should
have been disqualified from bidding for the GSIS property. RTC and CA both ruled
that the Tagles were entitled to the property and Maharlika should vacate the
premises.

ISSUE:

Whether or not the respondents are entitled to the property

RULING:

NO. The sale to them was against public policy. First of all, the GSIS head
office was stopped from claiming that they did not give the impression to Maharlika
that they were accepting the proposal for a compromise agreement. The act of the
general manager is binding on GSIS. Second, Article 1491 (4) of the CC provides
that public officers and employees are prohibited from purchasing the property of
the state or any GOCC or institution, the administration of which has been
entrusted to them cannot purchase, even at public or judicial auction, either in
person or through the mediation of another. The SC held that as an employee of
the GSIS, Edilberto Tagle and his wife are disqualified from bidding on the property
belonging to the GSIS because it gives the impression that there was politics
involved in the sale. It is not necessary that actual fraud be shown, for a contract
which tends to injure the public service is void although the parties entered into it
honestly and proceeded under it in good faith
 63.

MARIA B. CHING v. JOSEPH C. GOYANKO, JR., et al.

506 SCRA 735 (2006)

In line with the policy of the State, the law emphatically prohibits the sale of
properties between spouses.

Respondents Joseph Goyanko et al. filed with the Regional Trial Court of Cebu Citya
complaint for recovery of property and damages against Maria Ching, praying for
the nullification of the deed of sale and of transfer certificate and the issuance of a
new one. Goyanko et al. aver that they are the real owners of the property
involved. They further contend that it was after their father‘s death that they found
out that a contract of sale involving the same property has been executed by their
father and common-law wife Ching. However, Ching claimed that she is the actual
owner of the property as it was she who provided its purchase price. The
RTC dismissed the complaint against Ching, declaring that there is no valid and
sufficient ground to declare the sale as null and void, fictitious and simulated.

On appeal, the Court of Appeals reversed the decision of the trial court and
declared null and void the questioned deed of sale and TCT No. 138405.

ISSUES:

Whether or not the contract of sale and TCT No. 138405, in favor of the
Maria Ching, was null and void for being contrary to morals and public policy

RULING:

The subject property having been acquired during the existence of a valid
marriage between Joseph Sr. and Epifania dela Cruz-Goyanko, is presumed to
belong to the conjugal partnership. Moreover, while this presumption in favor of
conjugality is rebuttable with clear and convincing proof to the contrary, the court
find no evidence on record to conclude otherwise. The record shows that while
Joseph Sr. and his wife Epifania have been estranged for years and that he and
defendant-appellant Maria Ching, have in fact been living together as common-law
husband and wife, there has never been a judicial decree declaring
the dissolution of his marriage to Epifania nor their conjugal partnership. It is
therefore undeniable that the property located at Cebu City belongs to
the conjugal partnership. Assuming that the subject property was not conjugal, still
the court cannot sustain the validity of the sale of the property by Joseph, Sr. to
defendant-appellant Maria Ching, there being overwhelming evidence on records
that they have been living together as common-law husband and wife.

The court therefore finds the contract of sale in favor of the defendant-
appellant Maria Ching null and void for being contrary to morals and public policy.
The purported sale, having been made by Joseph Sr. in favor of his concubine,
undermines the stability of the family, a basic social institution which public policy
vigilantly protects.
64.

PARAGAS V. HEIRS OF BALACANO

468 SCRA 717 (2005)

Facts:

Gregorio Balacano, married to Lorenza Sumigcay, was the registered owner of Lot
1175-E and Lot 1175-F of the Subd. Plan Psd-38042 [located at Baluarte, Santiago
City, Isabela].Gregorio and Lorenza had three children, namely: Domingo, Catalino
and Alfredo, all surnamed Balacano. Lorenza died on December 11, 1991. Gregorio,
on the other hand, died on July 28, 1996. Petitioners were the grandchildren of
Gregorio. Prior to his death, Gregorio was admitted at the Veterans General
Hospital in Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until July
19, 1996. He was transferred in the afternoon of July 19, 1996 to the Veterans
Memorial Hospital in Quezon City where he was confined until his
death. Respondents essentially alleged – in asking for the nullification of the deed
of sale – that: (1) their grandfather Gregorio could not have appeared before the
notary public on July 22, 1996 at Santiago City because he was then confined at
the Veterans Memorial Hospital in Quezon City; (2) at the time of the alleged
execution of the deed of sale, Gregorio was seriously ill, in fact dying at that time,
which vitiated his consent to the disposal of the property; and (3) Catalino (uncle)
manipulated the execution of the deed and prevailed upon the dying Gregorio to
sign his name on a paper the contents of which he never understood because of his
serious condition. Alternatively, they alleged that assuming Gregorio was of sound
and disposing mind, he could only transfer a half portion of Lots 1175-E and 1175-F
as the other half belongs to their grandmother Lorenza who predeceased Gregorio –
they claimed that Lots 1175-E and 1175-F form part of the conjugal partnership
properties of Gregorio and Lorenza. Finally, they alleged that the sale to the
Spouses Paragas covers only a 5-hectare portion of Lots 1175-E and 1175-F leaving
a portion of 6,416 square meters that Catalino is threatening to dispose. They
asked for the nullification of the deed of sale executed by Gregorio and the partition
of Lots 1175-E and 1175-F. The defendants-appellees denied the material
allegations of the complaint. Additionally, they claimed that: (1) the deed of sale
was actually executed by Gregorio on July 19 (or 18), 1996 and not July 22, 1996;
(2) the Notary Public personally went to the Hospital in Bayombong, Nueva Vizcaya
on July 18, 1996 to notarize the deed of sale already subject of a previously
concluded covenant between Gregorio and the Spouses Paragas; (3) at the time
Gregorio signed the deed, he was strong and of sound and disposing mind; (4) Lots
1175-E and 1175-F were Gregorio’s separate capital and the inscription of Lorenza’s
name in the titles was just a description of Gregorio’s marital status; (5) the entire
area of Lots 1175-E and 1175-F were sold to the Spouses Paragas.

Issue:

Whether or not Gregorio has executed a perfected Deed of Sale.

Ruling:

No. Gregorio’s consent was absent in the execution of the Deed of Sale. It is not
disputed that when Gregorio signed the deed of sale, Gregorio was seriously ill, as
he in fact died a week after the deed’s signing. Gregorio died of complications
caused by cirrhosis of the liver. Gregorio’s death was neither sudden nor
immediate; he fought at least a month-long battle against the disease until he
succumbed to death on July 22, 1996. Given that Gregorio purportedly executed a
deed during the last stages of his battle against his disease, we seriously doubt
whether Gregorio could have read, or fully understood, the contents of the
documents he signed or of the consequences of his act. We note in this regard that
Gregorio was brought to the Veteran’s Hospital at Quezon City because his
condition had worsened on or about the time the deed was allegedly signed. This
transfer and fact of death not long after speak volumes about Gregorio’s condition
at that time. We likewise see no conclusive evidence that the contents of the deed
were sufficiently explained to Gregorio before he affixed his signature.

Article 24 of the Civil Code tells us that in all contractual, property or other
relations, when one of the parties is at a disadvantage on account of his moral
dependence, ignorance, indigence, mental weakness, tender age or other handicap,
the courts must be vigilant for his protection.

In the case at bar, the Deed of Sale was allegedly signed by Gregorio on his death
bed in the hospital. Gregorio was an octogenarian at the time of the alleged
execution of the contract and suffering from liver cirrhosis at that – circumstances
which raise grave doubts on his physical and mental capacity to freely consent to
the contract.
65.
CALIMLIM-CANULLAS V. FORTUN

FACT:

Petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married in

1962, with 5 children, and were living on a house situated on a land inherited by
the latter. In 1978, Fernando abandoned his family and lived with Corazon
Daguines. In 1980, Fernando sold the house and lot to Daguines, who initiated a
complaint for quieting of title. Mercedes resisted, claiming that the house and lot
were conjugal properties, and the sale was null and void for she had not consented
thereto.

ISSUES:

(1) Whether or not the construction of a conjugal house on the exclusive property
of the husband ipso facto gave the land the character of conjugal property

(2) Whether or not the sale of the lot together with the house and improvements
thereon was valid under the circumstances surrounding the transaction

HELD:

(1) Both the land and the building belong to the conjugal partnership but the
conjugal partnership is indebted to the husband for the value of the land. The
spouse owning the lot becomes a creditor of the conjugal partnership for the value
of the lot, which value would be reimbursed at the liquidation of the conjugal
partnership. FERNANDO could not have alienated the house and lot to DAGUINES
since MERCEDES had not given her consent to said sale

(2) The contract of sale was null and void for being contrary to morals and public
policy. The sale was made by a husband in favor of a concubine after he had
abandoned his family and left the conjugal home where his wife and children lived
and from whence they derived their support. That sale was subversive of the
stability of the family, a basic social institution which public policy cherishes and
protects. The law emphatically prohibits the spouses from selling property to each
other subject to certain exceptions. Similarly, donations between spouses during
marriage are prohibited. And this is so because if transfers or con conveyances
between spouses were allowed during marriage, that would destroy the system of
conjugal partnership, a basic policy in civil law. It was also designed to prevent the
exercise of undue influence by one spouse over the other, as well as to protect the
institution of marriage, which is the cornerstone of family law. The prohibitions
apply to a couple living as husband and wife without benefit of marriage, otherwise,
"the condition of those who incurred guilt would turn out to be better than those in
legal union." Those provisions are dictated by public interest and their criterion
must be imposed upon the wig of the parties.
66.

Fiestan vs. Court of Appeals, and Developmentt Bank of the Philippines

185 SCRA 751
May 1990

FACTS:

For failure of petitioner spouses Dionisio Fiestan and Juanita Arconada (spouses
Fiestan) to pay their mortgage indebtedness to respondent Development Bank of
the Philippines (DBP), the latter was able to acquire at a public auction sale on
August 6, 1979 the parcel of land (Lot No. 2-B covered by TCT No. T-13218) that
the spouses Fiestan owned in Ilocos Sur after extrajudicial foreclosure of said
property. The Provincial Sheriff issued a certificate of sale that same day which was
registered on September 28 in the Office of the Register of Deeds of Ilocos Sur.
Earlier, or on September 26, spouses Fiestan also executed a Deed of Sale in favor
of DBP which was likewise registered on September 28, 1979. When spouses
Fiestan failed to redeem their parcel of land within the 1 year period which expired
on September 28, 1980, the Register of Deeds cancelled their title over the subject
property and issued TCT No. T-19077 to DBP upon the latter’s duly executed
affidavit of consolidation of ownership.

On April 13, 1982, the DBP sold the lot to Francisco Peria, so the Register of Deeds
of Ilocos Sur cancelled DBP’s title over said property and issued TCT No. T-19229 to
Peria’s name, who later secured a tax declaration for said lot and accordingly paid
the taxes due thereon. He thereafter mortgaged said lot to the PNB-Vigan Branch
as security for his loan of P115,000.00. Since the spouses Fiestan were still in
possession of the property, the Provincial Sheriff ordered them to vacate the
premises, but instead of leaving, they filed a complaint in the RTC of Vigan, Ilocos
Sur for annulment of sale, mortgage and cancellation of transfer certificates of title
against the DBP-Laoag City, PNB-Vigan Branch, Ilocos Sur, Francisco Peria and the
Register of Deeds of Ilocos Sur.

The lower court dismissed said complaint, declaring valid the extrajudicial
foreclosure sale of the mortgaged property in favor of the DBP and its subsequent
sale to Francisco Peria as well as the real estate mortgage constituted in favor of
PNB-Vigan. The Court of Appeals likewise affirmed said decision. The spouses
Fiestan herein seek to annul the extrajudicial foreclosure sale of the mortgaged
property on the ground that the Provincial Sheriff conducted the foreclosure without
first effecting a levy on said property before selling the same at the public auction
sale.

ISSUE:

Who has the right to acquire by purchase the subject property?

RULING:

In denying the petition, the Supreme Court reiterated that the formalities of a levy,
which the Provincial Sheriff of Ilocos Sur allegedly failed to comply with, are not
basic requirements before an extrajudicially foreclosed property can be sold at
public auction. The spouses Fiestan insisted that what prevails over the case are
par. (2) of Article 1491 and par. (7) of Article 1409 of the Civil Code which prohibits
agents from acquiring by purchase, even at a public or judicial auction either in
person or through the mediation of another, the property whose administration or
sale may have been entrusted to them unless the consent of the principal has been
given. However, the Supreme Court ruled that the power to foreclose is not an
ordinary agency that contemplates exclusively the representation of the principal by
the agent but is primarily an authority conferred upon the mortgagee for the
latter's own protection, as provided under Section 5 of Act No 3135, as amended,
which is a special law that must prevail over the Civil Code which is a general law.
Even in the absence of statutory provision, there is authority to hold that a
mortgagee, and in this case the DBP, may purchase at a sale under his mortgage to
protect his own interest or to avoid a loss to himself by a sale to a third person at a
price below the mortgage debt.
A.M. No. 2430 August 30, 1990

MAURO P. MANANQUIL, complainant,

vs.
ATTY. CRISOSTOMO C. VILLEGAS, respondent.

Geminiano M. Eleccion for complainant.

RESOLUTION

CORTES, J.:

Facts:

In a verified complaint for disbarment dated July 5, 1982, Mauro P. Mananquil

charged respondent Atty. Crisostomo C. Villegas with gross misconduct or
malpractice committed while acting as counsel of record of one Felix Leong in the
latter's capacity as administrator of the Testate Estate of the late Felomina Zerna.
The complaint was based on respondent’s act of allowing lease contracts to be
executed between his client Felix Leong and a partnership, of which respondent is
one of the partners, covering several parcels of land of the estate under iniquitous
terms and conditions. Moreover, complainant charges that these contracts were
made without the approval of the probate court and in violation of Articles 1491 and
1646 of the new Civil Code.

The Solicitor General submitted his report, finding that respondent committed a
breach in the performance of his duties as counsel of administrator Felix Leong Thus,
the Solicitor General recommended that respondent be suspended from the practice
of law for a period of THREE (3) months with a warning that future misconduct on
respondent's part will be more severely dealt with .

Issue:
Whether or not respondent subject to disciplinary sanction for having, as the
administrator, participated in the execution of renewals of the lease agreement
involving properties of the estate in favor of the partnership.

Ruling:

Yes. By virtue of Article 1646 of the new Civil Code, the persons referred to in Article
1491 are prohibited from leasing, either in person or through the mediation of
another, the properties or things mentioned in that article, to wit: Agents, the
property whose administration or sale may have been entrusted to them, unless the
consent of the principal have been given.

Thus, even if the parties designated as lessees in the assailed lease contracts were
the "Heirs of Jose Villegas" and the partnership HIJOS DE JOSE VILLEGAS, and
respondent signed merely as an agent of the latter, the Court rules that the lease
contracts are covered by the prohibition against any acquisition or lease by a lawyer
of properties involved in litigation in which he takes part. For, piercing through the
legal fiction of separate juridical personality, the Court cannot ignore the obvious
implication that respondent as one of the heirs of Jose Villegas and partner, later
manager of, in HIJOS DE JOSE VILLEGAS stands to benefit from the contractual
relationship created between his client Felix Leong and his family partnership over
properties involved in the ongoing testate proceedings.
G.R. No. L-66696 July 14, 1986

FRANCISCA ARSENAL and REMEDIO ARSENAL, petitioners,

vs.
THE INTERMEDIATE APPELLATE COURT, HEIRS OF TORCUATO SURALTA, and
SPOUSES FILOMENO PALAOS and MAHINA LAGWAS, respondents.

Ruben Gamolo for respondent Filomeno Palaos.

GUTIERREZ, JR., J.:

Facts:

The State granted the homestead patent application of the spouses Palaos on January
7, 1954. Eventually, on March 14, 1967, Palaos executed a notarial Deed of Sale in
favor of petitioner spouses Arsenal supposedly for the remaining three (3) hectares
of their land without knowing that the document covered the entirety of Lot 81
including the four-hectare portion previously deeded by them to Suralta on
September 10, 1957. Eventually, Francisca Arsenal caused the tax declaration of the
entire lot to be transferred in her name wherein Suralta, because of their good
relations at the time, agreed with Arsenal to contribute in the payment of the land
taxes and paid yearly.

On July 11, 1973, Suralta presented his Sales Contract in the Office of the Register
of Deeds but it was refused registration for having been executed within the
prohibitive period of five years from the issuance of the patent. In order to cure the
defect, he caused Filomeno Palaos to sign a new Sales Contract covering the same
four-hectare portion of Lot 81.

In December 1973, however, Suralta saw the Deed of Sale embracing the whole Lot
81 signed by Filomeno Palaos in favor of Francisca Arsenal wherein Palaos explained
that he sold only three hectares to Arsenal. Suralta approached Francisca Arsenal for
a satisfactory arrangement but she insisted on abiding by her contract, which led to
petitioners registering her Deed of Sale and acquired the TCT incidentally for the
entire Lot 81 without the knowledge of the plaintiff.

On March 6, 1974, Torcuato Suralta filed a case against Filomeno Palaos, Mahina
Lagwas, Francisca Arsenal, Remedio Arsenal and the Register of Deeds of Bukidnon
for the annulment of Transfer Certificate of Title No. T-7879 issued to the Arsenals
insofar as it covers the four-hectare portion previously sold to him.

Issue:

Whether or not the first deed of sale executed between the Spouses Palaos
and Suralta is valid.
Ruling:

No. A contract which purports of alienate, transfer, convey or encumber any

homestead within the prohibitory period of five years from the date of the issuance
of the patent is void from its execution. Under the provisions of the Civil Code, a void
contract is inexistent from the beginning. It cannot be ratified neither can the right
to set up the defense of its illegality be waived. Concededly, the contract of sale
executed between the respondents Palaos and Suralta in 1957 is void. It was entered
into three (3) years and eight (8) months after the grant of the homestead patent to
the respondent Palaos in 1954.
FIRST DIVISION

[G.R. No. L-30786. February 20, 1984.]

OLEGARIO B. CLARIN, Petitioner, v. ALBERTO L. RULONA and THE

HONORABLE COURT OF APPEALS, Respondents..

Facts:

Respondent alleged that the petitioner sold ten hectares of his share of the disputed
lot to him for P2,500.00. The conditions of the sale were that a downpayment of
P1,000.00 was to be made and then the balance of P1,500.00 was to be paid in
monthly installment of P100.00. The respondent delivered to the petitioner a
downpayment of P800.00 and on the first week of June the amount of P200.00 was
also delivered thereby completing the downpayment of P1,000.00. On the first week
of August, another delivery was made by the respondent in the amount of P100.00
as payment for the first installment. Respondent further alleged that despite repeated
demands to let the sale continue and for the petitioner to take back the six postal
money orders, the latter refused to comply.cralawnad

In his answer, the petitioner alleged that the respondent knew fully well the terms
and accepted them as conditions precedent to the perfection or consummation of the
contract; and that respondent delivered the amount of P1,000.00 as earnest money,
subject to the conditions and that the amount was returned by the petitioner upon
his learning definitely that his co-heirs and co-owners refused to give their consent
to the projected sale.

Issue:

Whether or not there is a perfected contract of sale

Ruling:

Yes. A contract of sale is perfected at the moment there is a meeting of minds upon
the thing which is the object of the contract and upon the price. Such contract is
binding in whatever form it may have been entered into. It can be seen that the
petitioner agreed to sell and the respondent agreed to buy a definite object, that is,
ten hectares of land which is part and parcel of Lot 20 PLD No. 4, owned in common
by the petitioner and his sisters although the boundaries of the ten hectares would
be delineated at a later date. The parties also agreed on a definite price which is
P2,500.00. It further shows that the petitioner has received from the respondent as
initial payment, the amount of P800.00. Hence, it cannot be denied that there was a
perfected contract of sale between the parties and that such contract was already
partially executed when the petitioner received the initial payment of P800.00. The
latter’s acceptance of the payment clearly showed his consent to the contract thereby
precluding him from rejecting its binding effect.
Salonga vs. Farrales

Facts:
Farrales was the titled owner of a parcel of residential land that was leased.
Prior to the acquisition by Farrales of the aforesaid land, Salonga was already a lessee
of some portion of the land. She had built a house and paid rentals thereon.
Sometime prior to November 1968, Farrales filed an ejectment case (one of the old
forms of action for recovery of the possession of real property) for non-payment of
rentals against Salonga. The lower court rendered a decision in favor of Farrales and
ordered Salonga and the other lessees (Pascual et al.) to vacate the portion occupied
by them and to pay rentals in arrears, attorney’s fees and costs. Even before the
rendition of the decision of the lower court, Farrales sold to Pascual et al. (the other
lessees of Farrales) the areas occupied by them. Salonga offered to purchase from
Farrales the portion of land that Salonga was leasing. Farrales persistently refused
the offer and insisted to execute the judgment rendered in the ejectment case. Hence
if Salonga’s offer to purchase was persistently refused by Farrales, it is obvious that
no meeting of the minds took place and no contract was ever perfected between
them. It was revealed that Farrales wanted the payment of the portion of land under
consideration to be in cash but Salonga did not have any money for that purpose that
is why Farrales persistently refused to sell the portion of the leased land to the lessee.

Issue:
WON the lower court erred in dismissing the complaint of Salonga on the
ground that no legal contract exists between Farrales and Salonga.

Held:
Farrales rejected and did not accept the offer of Salonga to buy the land in
question. There being no consent there is, therefore, no contract to sell to speak of.
In the case of the other lessees (Pascual et al.) who were able to buy the portion of
land that they occupy, there was an existing contract between them and Farrales,
unlike Salonga who does not have the right to buy the land in question because the
contract between her and Farrales is non-existent.
Rubias v. Batiller

Facts:

Before the war with Japan, Francisco Militante filed an application for registration of
the parcel of land in question. After the war, the petition was heard and denied.
Pending appeal, Militante sold the land to petitioner, his son-in-law. Plaintiff filed an
action for forcible entry against respondent. Defendant claims the complaint of the
plaintiff does not state a cause of action, the truth of the matter being that he and
his predecessors-in-interest have always been in actual, open and continuous
possession since time immemorial under claim of ownership of the portions of the lot
in question.

Issue:

Whether or not the contract of sale between appellant and his father-in-law was void
because it was made when plaintiff was counsel of his father-in-law in a land
registration case involving the property in dispute

Held:

Article 1491 of our Civil Code prohibits certain persons, by reason of the relation of
trust or their peculiar control over the property, from acquiring such property in their
trust or control either directly or indirectly and "even at a public or judicial auction,"
as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and
employees; judicial officers and employees, prosecuting attorneys, and lawyers; and
(6) others especially disqualified by law.
Indeed, the nullity of such prohibited contracts is definite and permanent and cannot
be cured by ratification. The causes of nullity which have ceased to exist cannot
impair the validity of the new contract. Thus, the object which was illegal at the time
of the first contract, may have already become lawful at the time of the ratification
or second contract; or the service which was impossible may have become possible;
or the intention which could not be ascertained may have been clarified by the
parties. The ratification or second contract would then be valid from its execution;
however, it does not retroact to the date of the first contract."
Araneta, Inc. v. Del Paterno (1952)
Tuason, J.
FACTS:

The lots owned by Tuason were subdivided and were occupied by tenants who had
lease contracts. It was stipulated that in the event the owner and lessor should decide
to sell the property, the lessees were to be given priority over other buyers. Said lot
was also mortgaged. Tuason later decided to sell her property to plaintiff Araneta,
Inc. They executed an agreement to buy and sell. This contract provided that subject
to the preferred right of the lessees and that of Jose Vidal as mortgagee, Paz Tuason
would sell to Gregorio Araneta, Inc. and the latter would buy for the said amount of
P400,000 the entire estate.Some of the lessees exercised their right to purchase their
respective leaseholds.An absolute deed of sale was then executed by the parties over
the remaining lots.

Issue:
WON the absolute deed of sale is valid

Ruling:
YES.One of the conditions is that the deed of sale is to be executed only when Tuason
has already determined which lots she can validly dispose of. After the lessees
exercised their right to repurchase, she was already in a position to sell the remaining
lots. Tuason claims that the sale was effected through fraud as the document was
written in English, a language she did not understand. Had she known how one-sided
its provisions were, she would not have affixed her signature thereto.Court doubts
the defendant‘s veracity. She as probably gambling on the chance that no signed
copy
of the document had been saved from the war
FIRST DIVISION

[G.R. No. 112954. August 25, 2000]

RICARDO DISTAJO, ERNESTO DISTAJO, RAUL DISTAJO, FEDERICO DISTAJO,

ZACARIAS A. DISTAJO, EDUARDO DISTAJO, and PILAR DISTAJO
TAPAR, petitioners, vs. COURT OF APPEALS and LAGRIMAS SORIANO
DISTAJO, respondents.

DECISION
Facts:

During the lifetime of Iluminada Abiertas, she designated one of her sons, Rufo
Distajo, to be the administrator of her parcels of land.On May 21, 1954, Iluminada
Abiertas sold a portion to her other children. Three of her other properties were sold
in favour of Rufo. After purchasing the parcels of land, Rufo Distajo took possession
of the property and paid the corresponding real estate taxes thereon. When
Iluminada Abiertas died in 1971, the heirs demanded possession of the seven parcels
of land from Lagrimas S. Distajo, and her husband, Rufo Distajo. The latter refused.
A complaint for recovery of possession and ownership of the lot was filed against
Lagrimas.
Issue:
Whether or not the sale transactions are void for having been entered into by the
administrator of the properties.

Ruling:
No.
Under paragraph (2) of Article 1491 of the Civil Code, the prohibition against
agents purchasing property in their hands for sale or management is not absolute. It
does not apply if the principal consents to the sale of the property in the hands of the
agent or administrator. In this case, the deeds of sale signed by Iluminada Abiertas
shows that she gave consent to the sale of the properties in favor of her son, Rufo,
who was the administrator of the properties. Thus, the consent of the principal
Iluminada Abiertas removes the transaction out of the prohibition contained in Article
1491(2).
11. JUAN & CANDELARIA LAO vs HON. MELECIO GENATO
FACTS:
Sotero Dionisio III, administrator of the estate of his deceased mother
Rosenda Abuton, was authorized by the court to sell certain described properties
of the estate to settle its outstanding obligations at the best price obtainable.
The sale was made to Sotero Dionisio, Jr., the administrator’s son,
forP75,000. On the same date, the son executed a deed of sale of the same
property for P80,000 in favor of William Go. Florida Nuqui, etc., co-heirs of the
administrator, filed an action for the annulment/revocation of the two sales,
claiming that the actual consideration of the landwas P225,000

Issue:WON the contract of sale is valid

Ruling:
1. NO. Sale is illegal, irregular and fictitious since the administrator OCCUPIES A
POSITION OF HIGHEST TRUST AND CONFIDENCE, with the duty to preserve the
estate and guard against its dissipation so as not to prejudice its creditors and
the heirs of the decedent who are entitled to the net residue thereof. In the case at
bar the sale was made necessary “in order to settle other existing obligations
of the estate, but it was made, of all people, to his son, and for a grossly
low price of onlyP75,000. Dionisio Jr. had no income whatsoever, was, in fact, still
a dependent of his father, and not a single centavo of the consideration
was ever accounted for nor reported by him to the court. It was only after the sales
were questioned in court that the son was compelled to admit that the actual
consideration of the sale to William Go was P200,000. The sale to the son was not
submitted to the probate court for approval a s m a n d a t e d b y t h e o r d e r
a u t h o r i z i n g t h e administrator to sell.
MAHARLIKA PUBLISHING CORP V TAGLE

FACTS

GSIS sold to Maharlika a land with improvements therein in a Conditional

Contract of Sale with the stipulation that if Maharlika failed to pay
monthly installments in 90 days, the GSIS would automatically cancel the contract.
Because Maharlika failed to pay several monthly installments, GSIS demanded that
Maharlika vacate the premises. Even though Maharlika refused to do so, the GSIS
published an advertisement inviting the public to bid in a public auction. A day before
the scheduled bidding, Maharlika, gave the GSIS head office 2 checks worth 11,000
and a proposal for a compromise agreement, which caused the order from the GSIS
President to hold biddings. However, the public bidding took place as scheduled and
the property was subsequently awarded to Luz Tagle, the wife of the GSIS Retirement
Division Chief. Maharlika demanded that the sale be considered null and void, as Mrs.
Tagle should have been disqualified from bidding for the GSIS property.

ISSUE

Whether or not Tagle are entitled to the property ?

HELD

NO. The sale to them was against public policy. First of all, the GSIS head office was
stopped from claiming that they did not give the impression to Maharlika that they
were accepting the proposal for a compromise agreement. The act of the general
manager is binding on GSIS. Second, Article 1491 (4) of the CC provides that public
officers and employees are prohibited from purchasing the property of the state or
any GOCC or institution, the administration of which has been entrusted to them
cannot purchase, even at public or judicial auction, either in person or through the
mediation of another. The SC held that as an employee of the GSIS, Edilberto Tagle
and his wife are disqualified from bidding on the property belonging to the GSIS
because it gives the impression that there was politics involved in the sale. It is not
necessary that actual fraud be shown, for a contract which tends to injure the public
service is void although the parties entered into it honestly and proceeded under it
in good faith.
DE LAIG V. CA
Facts:
Petre Galero obtained from the Bureau of Lands a Homestead Patent covering 219,
949 sq. m. of land located at Labo, Camarines Norte. On June 25, 1940, Galero sold
the land to a Mario Escuta for P300. Escuta also sold the same land to Florencio
Caramoan. Through a proper court action, Petre Galero with Atty. Benito
Laig, the deceased husband of herein petitioner Rosarion Vda. De Laig as counsel,
recovered the subject land after the court was convinced that the alienation violated
Sec. 118 of the Public Land Act. Later on, a deed of sale was executed by Galero as
vendo in favor of Atty. Benito Laig as vendee. Galero sold to Atty. Laig the subject
land with its improvements for P1,600 plus Atty.’s fees dueto Atty. De Laig for his
legal services as counsel for Galero.

ISSUE: WON the sale between Galero and Atty. De Laig was made in violation of Art.
1491, CC.

HELD:

NO. The property in question was no longer the subject of litigation. The sale was
made after the reconveyance case has been decided and which decision has become
final. Hence Atty. Laig was no longer prohibited from buying the property in question
because "attorneys are only prohibited from buying their clients' property which is
the subject of litigation." Consequently, the sale having taken place after the finality
of the favorable judgment in the said civil case and not during the pendency of the
litigation, there was no violation of Article 1491, paragraph 5. Hence, the first sale to
Atty. Laig of the property in question is valid.
Valencia v Cabanting

Facts:
On December 15, 1969 Serapia, assisted by Atty. Arsenio Fer Cabanting,
filed a complaint against Paulino for the recovery of possession with damages. The
Valencias engaged the services of Atty. Dionisio Antiniw. Atty. Antiniw advised
them to present a notarized deed of sale in lieu of the private document written in
Ilocano. For this purpose, Paulino Valencia gave Atty. Antiniw an amount of
P200.00 to pay the person who would falsify the signature of the alleged vendor.
On January 22, 1973, the Court of First Instance of Pangasinan, Branch V, rendered
a decision in favor of plaintiff, Serapia Raymundo since the said document is not
authentic.
Paulino, thereafter, filed a Petition for Certiorari, under Rule 65, with
Preliminary Injunction before the Court of Appeals. While the petition was pending,
the trial court issued an order of execution stating that "the decision in this case
has already become final and executor.”
On March 20, 1973, Serapia sold 40 square meters of the litigated lot to Atty.
Jovellanos and the remaining portion she sold to her counsel, Atty. Arsenio Fer
Cabanting, on April 25, 1973.
On March 4, 1974, Paulino filed a disbarment proceeding against Atty.
Cabanting on the ground that said counsel allegedly violated Article 1491 of the
New Civil Code as well as Article II of the Canons of Professional Ethics, prohibiting
the purchase of property under litigation by a counsel.

Issue:

Whether or not Atty. Cabanting purchased the subject property in violation of Art.
1491 of the New Civil Code.

Ruling:
Yes. Art. 1491, prohibiting the sale to the counsel concerned, applies only while the
litigation is pending. In the case at bar, while it is true that Atty. Arsenio Fer
Cabanting purchased the lot after finality of judgment, there was still a
pending certiorari proceeding. A thing is said to be in litigation not only if there is
some contest or litigation over it in court, but also from the moment that it
becomes subject to the judicial action of the judge. The appellate court may either
grant or dismiss the petition. Hence, it is not safe to conclude, for purposes under
Art. 1491 that the litigation has terminated when the judgment of the trial court
become final while a certiorari connected therewith is still in progress. Thus,
purchase of the property by Atty. Cabanting in this case constitutes malpractice in
violation of Art. 1491 and the Canons of Professional Ethics. Clearly, this
malpractice is a ground for suspension.
78 DOMINGA VELASCO ORDONIO V ATTY. JOSEPHINE PALOGAN EDUARTE
207 SCRA 229, March 16, 1992

Facts:

On July 18, 1983, Antonia Ulibari filed for annulment of a document (known as
Affidavit of Adjudication of the Estate of Felicisimo Velasco and Quitclaim Thereof)
against her children. The decision rendered in favor of Antonia Ulibari. Antonia
Ulibari conveyed 20 hectares of land to herein respondent and her husband as their
Attorney's fees for legal services rendered during the pendency of the case.
Dominga Velasco-Ordonio filed this complaint for disbarment against herein
respondent on the basis of an affidavit executed by her mother Antonia Ulibari on
March 2, 1988 stating that affiant never conveyed the subject parcel of land to
respondent as her attorney's fees

Issue:

Was the conveyance of the subject property to the respondent valid?

Ruling:

No. Even granting for the sake argument that Antonia Ulibari knowingly and
voluntarily conveyed the subject property in favor of the respondent and her
husband, the respondent, in causing the execution of the Deed of Conveyance
during the pendency of the appeal of the case involving the said property, has
violated Art. 1491 of the Civil Code which prohibits lawyers from "acquiring by
assignment property and rights which may be the object of any litigation in which
they may take part by virtue of their profession."

79 RAMOS V NGASEO
445 SCRA 529 DECEMBER 9, 2004

Facts:

Federico Ramos and his brother, Dionisio, went to his Makati office to engage his
professional services in connection with a 2-hectare parcel of land. The complainant
offered, in lieu of P3,000.00 per appearance, 1,000 sq. m. of land from the land
subject matter of the case, if they win, or from another piece of property, if they
lose. On July 18, 2001, the Court of Appeals rendered a favorable decision ordering
the return of the disputed 2-hectare land to the complainant and his siblings. The
said decision became final and executory on January 18, 2002. Since then
complainant allegedly failed to contact respondent, which compelled him to send a
demand letter on January 29, 2003.
Issue:

Did the respondent lawyer violated Article 1491 of the Civil Code?

Ruling:

No. Under Article 1491(5) of the Civil Code, lawyers are 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.
However, the said prohibition applies only if the sale or assignment of the property
takes place during the pendency of the litigation involving the client's property.
Consequently, where the property is acquired after the termination of the case, no
violation of paragraph 5, Article 1491 of the Civil Code attaches.

In the instant case, there was no actual acquisition of the property in litigation since
the respondent only made a written demand for its delivery which the complainant
refused to comply. Mere demand for delivery of the litigated property does not
cause the transfer of ownership, hence, not a prohibited transaction within the
contemplation of Article 1491. Even assuming arguendo that such demand for
delivery is unethical, respondent's act does not fall within the purview of Article
1491. The letter of demand dated January 29, 2003 was made long after the
judgment in Civil Case No. SCC-2128 became final and executory on January 18,
2002.

80 GOTINGCO V POBINGUIT
35 PHIL 81
Facts:

Abietras designated one of her sons, Rufu Gotingco, to be the administrator of the
parcels of land that she owned. She, then, sold portions of her lot to her children,
one of which was sold to Rufu Gotingco. Likewise, Abietra‘s brother sold some lot to
Rufu Gotingco. Upon Abietra‘s death, the latter‘s siblings demanded possession of
the land owned by Rufu Gotingco. Upon his refusal, they filed before RTC a
complaint for Recovery of Possession and partition. RTC dismissed the complaint
but the petitioners alleged that Rufu Gotingco cannot acquire the parcels of land
because the Civil Code prohibits the administrator from acquiring the same.

Issue:

Whether or not the contention of the petitioners are correct.

Held:
 Under paragraph (2) of 1491, the prohibition against purchasing property in their
hands for sale and management is not absolute. It does not apply if the principal
consents to the sale of property in the hands of the agent or administrator. In this
case, the deeds of sale signed by Abietras shows that she gave consent to the sale
of the properties in favor of her son, Rufu Gotingco, who was the administrator of
the properties. Thus, the consent of the principal Iluminada Abietras removes the
transaction of the prohibition contained in Article 1491 (2).

Petitioner also alleged that Rufu Gotingco employed fraudulent machinations to

obtain the consent of Iluminada Abietras to the sale of the parcels of land.
However, petitioner failed to adduce convincing evidence to substantiate his
allegations.

81 BERNARDITA R. MACARIOLA V HONORABLE ELIAS B. ASUNCION

A.M. No. 133-J May 31, 1982

Facts:

In 1963, Macariola and her step sister (Reyes) had a dispute over their inheritance
involving parcels of land located in Leyte. A trial ensued and Judge Macariola, after
determining the legibility of the parties to inherit rendered a decision in the civil
case. Thereafter, the counsels of the parties submitted a project partition reflecting
the preference of the parties. The project partition was, however, unsigned by
Macariola. But her lawyer assured Asuncion that he is duly authorized by Macariola
as counsel. The judge then approved the project partition. The decision became
final in 1963 as well.

Reyes et al sold some of their shares to Arcadio Galapon, who later sold the
property to judge Asuncion in 1965.

Issue:

Whether or not Judge Asuncion violated Article 1491.

Ruling:

No. In Article 1491, The following persons cannot acquire by purchase, even
at a public or judicial action, either in person or through the mediation of
another:(5) “Justices, judges, prosecuting attorneys, clerks of superior and inferior
courts, and other officers and employees connected with the administration of
justice, the property and rights in litigation or levied upon an execution before the
court within whose jurisdiction or territory they exercise their respective functions;
this prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any
litigation in which they may take part by virtue of their profession”

In the Case, Judge Asuncion bought the property in 1965 – 2 years after his
decision became final. Further, Asuncion did not buy the property directly from any
of the parties since the property was directly bought by Galapon, who then sold the
property to Asuncion. There was no showing that Galapon acted as a “dummy” of
Asuncion.

82 FORNILDA V RTC
166 SCRA 281 October 6, 1988

Facts:

Julio M. Catolos (deceased) , formerly owned six (6) parcels of which are the
controverted properties in the present litigation. His estate was the subject of
settlement. A Project of Partition was filed in the Intestate Court whereby the
Controverted Parcels were adjudicated to Alfonso I. Fornilda and Asuncion M.
Pasamba. 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. Since the mortgage indebtedness was not
paid, Respondent Amonoy instituted foreclosure proceedings.

Issue:

Is the mortgage within the prohibition under ART 1491?

Ruling

Yes. At the time the mortgage was executed, it was only 8 days after the approval
of the project partition, there is no finality yet.

83 IN RE ATTORNEY MELCHOR E. RUSTE, respondent,

A.M. No. 632 June 27, 1940

Facts:

Sometime in July, 1930, the respondent acted as counsel for the complainant and
his wife when the latter laid claim of ownership upon lot No. 3764 in case No. 6, G.
L. R. O., Cadastral Record 483 of the Court of First Instance of Zamboanga, eleven-
twentieth of said lot having been eventually adjudicated to the wife, Severa
Ventura, on December 20, 1933. On September 22, 1930, that is, during pendency
of said cadastral case, the spouses purportedly leased a part of said lot to the
respondent for P100, which lease was cancelled and superseded by a deed of sale
executed on the same date, whereby the said spouses, in consideration of P1,000,
conveyed eleven-twentieth of the same land in favor of the respondent.

Issue:

Does the act of the respondent lawyer constitute malpractice?

Ruling:

Yes. The property being thus in suit, which the respondent was waging on behalf of
his clients, his acquisition thereof by the deed of sale, Exhibit B, constitutes
malpractice.Whether the deed of sale in question was executed at the instance of
the spouses driven by financial necessity, as contended by the respondent, or at
the latter's behest, as contended by the complainant, is of no moment. In either
case as attorney occupies a vantage position to press upon or dictate his terms to a
harassed client, in breach of the "rule so amply protective of the confidential
relations, which must necessarily exist between attorney and client, and of the
rights of both."

84 HERNANDEZ V Attorney FRANCISCO VILLANUEVA

40 PHIL 775

Facts:

while the case involving the property of his client, Florencia Anuran, was pending
before the Supreme Court, Attorney Francisco Villanueva purchased from her in
consideration of P500, and the value of his professional services, a parcel of land
that was the subject-matter of the litigation which he was conducting. The
respondent was held guilty for violation of the Spanish Civil Code, is entitled,
"Capacity to Purchase or Sell." Article 1459 names the persons who cannot take by
purchase either in person or through the mediation of another. By the last
paragraph of the article, the prohibition is made to include lawyers "with respect to
any property or rights involved in any litigation in which they may take part by
virtue of their profession and office.

Issue:

whether Chapter 2, title IV, book IV of the Spanish Civil Code, is entitled, "Capacity
to Purchase or Sell." Article 1459 is still in effect.

Held:
 The Court held that the last paragraph of division 5 of article 1459 of the Civil
Code to be in full force and effect.

It is a general rule that such municipal law of the former sovereignty as is

consistent with the Constitution and laws of the United States, or the characteristics
and institutions of government, continues in force until abrogated or changed by
the new government. Article 1459 of the Civil Code has never been expressly
repealed by any Act of the United States Congress or the Philippine Legislature. The
codal provisions of the Civil Law are moreover consonant with the principles of the
Common Law and the Statute Law which have been evolved for the guidance of
lawyers. For instance, section 10 of the Code of Ethics of the American Bar
Association adopted by the Philippine Bar Association, provides that. "The lawyer
should not purchase any interest in the subject-matter of the litigation which he is
conducting" While most of the American statutes aim to prevent the purchase of a
law suit as the most odious form of champerty, there is nothing to indicate that the
mischief which our statute aims to prevent is opposed to any maxim of American
jurisprudence. All the reason of the case corroborates a rule 80 amply protective of
the confidential relations, which must necessarily exist between attorney and client,
and of the rights of both. The high trust and confidence which the citizen must
repose in the attorney can only be attained if the attorney observes the utmost
good faith toward the client. Public policy will be promoted by the observance of the
Code provision.

Francisco Villanueva was be suspended for six months.

85 MUNICIPALITY OF ILOILO V EVANGELISTA

55 PHIL 290

The Court of First Instance of Iloilo rendered judgment wherein the appellant
herein, Tan Ong Sze Vda. de Tan Toco was the plaintiff, and the municipality of
Iloilo the defendant, and the former sought to recover of the latter the value of a
strip of land belonging to said plaintiff taken by the defendant to widen a public
street; the judgment entitled the plaintiff to recover P42,966.40, representing the
value of said strip of land, from the defendant. Attorney Jose Evangelista, in his
own behalf and as counsel for the administratrix of Jose Ma. Arroyo’s intestate
estate, filed a claim in the same case for professional services rendered by him,
which the court, acting with the consent of the appellant widow, fixed at 15 per
cent of the amount of the judgment.

The appellant contends, in the first place, that said assignments was not made in
consideration of professional services by Attorney Antero Soriano, for they had
already been satisfied before the execution of said deed of assignment, but in order
to facilitate the collection of the amount of said judgment in favor of the appellant,
for the reason that, being Chinese, she had encountered many difficulties in trying
to collect.

Issue:

Whether or not the appellant's contention that the amounts of P200 and P500
evidence by said receipts should be considered as payments made to Attorney
Antero Soriano for professional services rendered by him personally to the interests
of the widow of Tan Toco, is untenable.

Ruling:

ART. 1459. The following persons cannot take by purchase, even at a public or
judicial auction, either in person or through the mediation of another:

Justices, judges, members of the department of public prosecution, clerks of

superior and inferior courts, and other officers of such courts, the property and
rights in litigation before the court within whose jurisdiction or territory they
perform their respective duties. This prohibition shall include the acquisition of such
property by assignment. Actions between co-heirs concerning the hereditary
property, assignments in payment of debts, or to secure the property of such
persons, shall be excluded from this rule.

The prohibition contained in this paragraph shall include lawyers and solicitors with
respect to any property or rights involved in any litigation in which they may take
part by virtue of their profession and office.It does not appear that the Attorney
Antero Soriano was counsel for the herein appellant in civil case No. 3514 of the
Court of First Instance of Iloilo, which she instituted against the municipality of
Iloilo, Iloilo, for the recovery of the value of a strip of land expropriated by said
municipality for the widening of a certain public street. The only lawyers who
appear to have represented her in that case were Arroyo and Evangelista, who filed
a claim for their professional fees

86 DAROY V ABECIA
298 SCRA 239

Facts:

Abecia was counsel of complainant Daroy in a case for forcible entry udgment was
rendered in favor of complainant as plaintiff. To satisfy the judgment, the sheriff
sold at public auction a parcel of land belonging to one of the defendants to
complainant Daroy as highest bidder for P1,250.00. Upon failure of the defendants
to redeem the land, its ownership was consolidated in complainant Daroy.
Complainant Daroy claimed that respondent Abecia forged his signature in a deed
of absolute sale, transferring the subject parcel of land to Jose Gangay. it was made
to appear that Gangay in turn conveyed the land to Nena Abecia, wife of
respondent Abecia Complainant alleged that he entrusted the title to the land to
Abecia as his counsel and allowed him to take possession of the land upon the
latter's request.

Issue:

Is Abeca guilty of malpractice under article 1491 of the Civil Code?

Ruling:

No. The prohibition under Article 1491 does not apply to the sale of a parcel of land,
acquired by client to satisfy a judgment in his favor, so long as it is not subject to
litigation

87 RECTO V HARDEN,
100 PHIL 427
Facts:

Mrs. Harden, US Citizen, engaged services of Claro M. Recto, for suit to secure an
increase in the amount of support she was receiving to preserve her rights in the
properties of the conjugal partnership in contemplation of a divorce suit she's going
to file in the US. Compensation for RECTO: 20% of value of her share of conjugal
partnership after liquidation

They won in Trial Court, but on appeal, American H & W agreed to settle. Recto
now wants to collect fees for services, but as defense, Harden spouses argues that
the contract's object was unlawful (Divorce not allowed in RP) so it is invalid, thus,
Recto cannot enforce it against them. Court ruled for Recto

Issue:

Whether or not Recto can enforce the agreement?

Ruling:
Yes. CONTRACT OF SERVICES IS NOT CONTRARY TO LAW, MORALS, GOOD
CUSTOMS, PUBLIC ORDER, OR PUBLIC POLICY. The contract has a lawful object: it
is to protect the interests of Mrs. Harden in the conjugal partnership during the
pendency of a divorce suit NOT to secure divorce and to facilitate or promote
procurement of divorce.

88 FABILLO v. IAC
195 SCRA 28 1991

Facts:

Florencio Fabillo contracted the services of Atty. Murillo to revive a lost case over
his inheritance from his deceased sister Justinia. He sought to acquire the San
Salvador and Pugahanay Properties that his sister left behind, against the latter’s
husband. They entered into a contract where a contingent fee in favor of Atty.
Murillo in case the case was won was agreed upon. The fee was for 40% of the
value of whatever benefit Florencio may derive from the suit such as if the
properties were sold, rented, or mortgaged. It was vague, however, regarding the
fee in case Florencio or his heirs decide to occupy the house allowing Atty. Murillo
the option to occupy or lease 40% of the said house and lot. Compromise
agreement was entered into where Florencio acquired both the San Salvador
andPugahanay Properties. Atty. Murillo installed a tenant in the Pugahanay
Property; later on Florencio Claimed exclusive rights over the properties invoking
Art. 1491 of the Civil Code. Florencio and Atty.Murillo both died and were
succeeded by their respective heirs.

Issue:

Whether or not contingent fees agreed upon are valid

Ruling:

Contingent fees are not contemplated by the prohibition in Art. 1491 disallowing
lawyers to purchase properties of their clients under litigation. The said prohibition
applies only during the pendency of the litigation. Payment of the contingent fee is
made after the litigation, and is thus not covered by the prohibition. For as long as
there is no fraud or undue influence, or as long as the fees are not exorbitant,the
same is valid and enforceable. It is even recognized by the Canons of Professional
Ethics.However, considering that the contract is vague on the matter of division of
the shares if Florencio Occupies the property; the ambiguity is to be construed
against Atty. Murillo being the one who drafted the contract and being a lawyer
more knowledgeable about the law. The Court thus, invoking the time-honored
principle that a lawyer shall uphold the dignity of the legal profession, ordered only
a contingent fee of P 3,000.00 as reasonable attorney’s fees.

89 Krivenko v Register of Deeds, 79 Phil. 461, G.R. No. L-630, November 15,
1947
MORAN, C.J.:

FACTS:
Alenxander A. Kriventor alien, bought a residential lot from the Magdalena Estate,
Inc., in December of 1941, the registration of which was interrupted by the war. In
May, 1945, he sought to accomplish said registration but was denied by the register
of deeds of Manila on the ground that, being an alien, he cannot acquire land in this
jurisdiction. Krivenko then brought the case to the fourth branch of the Court of First
Instance of Manila by means of a consulta, and that court rendered judgment
sustaining the refusal of the register of deeds, from which Krivenko appealed to this
Court.

ISSUE:
Whether or not the sale of real property to an alien is valid

RULING:
No, Article XIII, Section 1 of the Philippine Constitution states: "All agricultural,
timber, and mineral lands of the public domain, water, minerals, coal, petroleum,
and other mineral oils, all forces of potential energy, and other natural resources of
the Philippines belong to the State, and their disposition, exploitation, development,
or utilization shall be limited to citizens of the Philippines, or to corporations or
associations at least sixty per centum of the capital of which is owned by such
citizens, subject to any existing right, grant, lease, or concession at the time of the
inaguration of the Government established under this Constitution." Thus, aliens are
prohibited from acquiring ownership of lands in the Philippines. Therefore, the sale is
void.

90 Herrera v Luy Kim Guan, 1 SCRA 406, G.R. No. L-17043, January 31, 1961
BARRERA, J.:

FACTS:
Natividad Herrera is the legitimate daughter of Luis Herrera. Luis Herrera executed a
deed of General Power of Attorney which authorized and empowered the defendant
Kim Guan, among others to administer and sell the properties of said Luis Herrera.
It is the contention of plaintiff-appellant that all the transactions mentioned in the
preceding quoted portion of the decision were fraudulent and were executed after the
death of Luis Herrera and, consequently, when the power of attorney was no longer
operative. It is also claimed that the defendants Lino Bangayan and Luy Kim Guan
who now claim to be the owners are Chinese by nationality and, therefore, are
disqualified to acquire real properties.

ISSUES:
1) Whether or not the contract is sale; and
2) Whether or not the buyers are disqualified to acquire real properties

RULING:
1) Yes, Luy Kim Gua produced in evidence a certification signed by the Register of
Deeds of Dipolog, Zamboanga to the effect that a deed of sale, was execute by Luis
Herrera in favor of Luy Kim Guan and entered in the Primary Book.

2) No, in the deed of sale as well as in TCT No. 3162 issued to Luy Chay, the latter
was referred to as a citizen of the Philippines. Nevertheless, the lower court
acknowledged the probability that Luy Chay could have been actually a Chinese
citizens. At any rate, the property was subsequently purchased by Lino Bangayan, as
a result which TCT No. 3162 in the name of Luy Chay was cancelled and another
certificate was issued in favor of said vendee.

With respect to Luy Kim Guan, while it is true that he is a Chinese citizen,
nevertheless, inasmuch as he acquired his one-half share in Lot No. 4467 in 1931,
long before the Constitution was adopted, his ownership can not be attacked on
account of his citizenship.

91 Godinez v Fong Pak Luen, 120 SCRA 223, G.R. No. L-36731, January 27,
1983
GUTIERREZ, JR., J.:

FACTS:
The plaintiffs filed a complaint alleging among others that they are the heirs of Jose
Godinez who was married to Martina Alvarez Godinez; that during the marriage of
their parents the said parents acquired a parcel of land in the name of Jose Godinez;
that their mother died sometime in 1938 leaving the plaintiffs as their sole surviving
heirs; 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;
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;

ISSUE:
Whether or not 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

RULING:
The question is not a novel one. Judicial precedents indicate fairly clearly how the
question should be resolved. There can be no dispute that the sale in 1941 by Jose
Godinez of his residential lot acquired from the Bureau of Lands as part of the Jolo
townsite to Fong Pak Luen, a Chinese citizen residing in Hongkong, was violative of
Section 5, Article XIII of the 1935 Constitution which provided:

Sec. 5. Save in cases of hereditary succession, no private agricultural land will be

transferred or assigned except to individuals, corporations, or associations qualified
to acquire or hold lands of the public domain in the Philippines.

The meaning of the above provision was fully discussed in Krivenko v. Register of
Deeds of Manila (79 Phil. 461) which also detailed the evolution of the provision in
the public land laws, Act No. 2874 and Commonwealth Act No. 141. The Krivenko
ruling that "under the Constitution aliens may not acquire private or agricultural
lands, including residential lands" is a declaration of an imperative constitutional
policy. Consequently, 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 pro-exhibited. 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. The lower court erred in
treating the case as one involving simply the application of the statute of limitations.
92 Cabalit v Tabu/Commission on Audit, 663 SCRA 32, G.R. No. 180236,
January 17, 2012
VILLARAMA, JR., J.:

FACTS:
On September 4, 2001, the Philippine Star News, a local newspaper in Cebu City,
reported that employees of the LTO in Jagna, Bohol, are shortchanging the
government by tampering with their income reports. Accordingly, Regional Director
Ildefonso T. Deloria of the Commission on Audit (COA) directed State Auditors
Teodocio D. Cabalit and Emmanuel L. Coloma of the Provincial Revenue Audit Group
to conduct a fact-finding investigation. A widespread tampering of official receipts of
Motor Vehicle Registration during the years 1998, 1999, 2000 and 2001 was then
discovered by the investigators.

ISSUE:
Whether or not there was a violation of the right to due process when the hearing
officer at the Office of the Ombudsman-Visayas adopted the procedure under A.O.
No. 17 notwithstanding the fact that the said amendatory order took effect after the
hearings had started

RULING:
Petitioners arguments deserve scant consideration. Suffice to say, petitioners were
not denied due process of law when the investigating lawyer proceeded to resolve
the case based on the affidavits and other evidence on record. Section 5(b)(1) Rule
3, of the Rules of Procedure of the Office of the Ombudsman, as amended by A.O.
No. 17, plainly provides that the hearing officer may issue an order directing the
parties to file, within ten days from receipt of the order, their respective verified
position papers on the basis of which, along with the attachments thereto, the hearing
officer may consider the case submitted for decision. It is only when the hearing
officer determines that based on the evidence, there is a need to conduct clarificatory
hearings or formal investigations under Section 5(b)(2) and Section 5(b)(3) that such
further proceedings will be conducted. But the determination of the necessity for
further proceedings rests on the sound discretion of the hearing officer. As the
petitioners have utterly failed to show any cogent reason why the hearing officers
determination should be overturned, the determination will not be disturbed by this
Court. We likewise find no merit in their contention that the new procedures under
A.O. No. 17, which took effect while the case was already undergoing trial before the
hearing officer, should not have been applied.

While the rule admits of certain exceptions, such as when the statute itself expressly
or by necessary implication provides that pending actions are excepted from its
operation, or where to apply it would impair vested rights, petitioners failed to show
that application of A.O. No. 17 to their case would cause injustice to them. Indeed,
in this case, the Office of the Ombudsman afforded petitioners every opportunity to
defend themselves by allowing them to submit counter-affidavits, position papers,
memoranda and other evidence in their defense. Since petitioners have been afforded
the right to be heard and to defend themselves, they cannot rightfully complain that
they were denied due process of law. Well to remember, due process, as a
constitutional precept, does not always and in all situations require a trial-type
proceeding. It is satisfied when a person is notified of the charge against him and
given an opportunity to explain or defend himself. In administrative proceedings, the
filing of charges and giving reasonable opportunity for the person so charged to
answer the accusations against him constitute the minimum requirements of due
process. More often, this opportunity is conferred through written pleadings that the
parties submit to present their charges and defenses. But as long as a party is given
the opportunity to defend his or her interests in due course, said party is not denied
due process.

93 Binayug v Ugaddan, 687 SCRA 260, G.R. No. 181623, December 5, 2012
LEONARDO-DE CASTRO, J.:

FACTS:
Gerardo acquired title over the subject properties through the grant of Homestead
Patent in his favor on January 12, 1951. Said patent was registered and OCT No. P-
311 was issued in Gerardo’s name on March 5, 1951. Upon Gerardo’s death,
respondents discovered that OCT No. P-311 had been cancelled. The records of the
Registry of Deeds show that Gerardo, with the consent of his wife Basilia, sold the
subject properties on July 10, 1951 to Juan Binayug. As a result of the sale, OCT No.
P-311 in Gerardo’s name was cancelled and Transfer Certificate of Title (TCT) No. T-
106394 in Juan’s name was issued. Juan was the father of petitioner Alejandro
Binayug and the subject properties passed on to him and his wife Ana Ugaddan
Binayug upon Juan’s death. Respondents averred that the purported sale between
Gerardo and Juan was prohibited under Commonwealth Act No. 141, otherwise
known as the Public Land Act, as amended; and that the Absolute Deed of Sale dated
July 10, 1951 between Gerardo and Juan was forged.

ISSUE:
Whether or not Section 118 of the Public Land Act is applicable

RULING:
No, Section 118 of the Public Land Act, as amended, reads that "except in favor of
the Government or any of its branches, units, or institutions, or legally constituted
banking corporations, lands acquired under free patent or homestead provisions shall
not be subject to encumbrance or alienation from the date of the approval of the
application and for a term of five years from and after the date of issuance of the
patent or grant."
The provisions of law are clear and explicit. A contract which purports to alienate,
transfer, convey, or encumber any homestead within the prohibitory period of five
years from the date of the issuance of the patent is void from its execution.

In the present case, it is settled that Homestead Patent No. V-6269 was issued to
Gerardo on January 12, 1951 and the Absolute Deed of Sale between Gerardo and
Juan was executed on July 10, 1951, after a lapse of only six months. Irrefragably,
the alienation of the subject properties took place within the five-year prohibitory
period under Section 118 of the Public Land Act, as amended; and as such, the sale
by Gerardo to Juan is null and void right from the very start. As a void contract, the
Absolute Deed of Sale dated July 10, 1951 produces no legal effect whatsoever in
accordance with the principle “quod nullum est nullum producit effectum,” thus, it
could not have transferred title to the subject properties from Gerardo to Juan and
there could be no basis for the issuance of TCT No. T-106394 in Juan’s name. A void
contract is also not susceptible of ratification, and the action for the declaration of
the absolute nullity of such a contract is imprescriptible.

94 Carabeo v Dingco, 647 SCRA 200, G.R. No. 190823, April 4, 2011
CARPIO MORALES, J.:

FACTS:
On July 10, 1990, Domingo Carabeo entered into a contract denominated as
Kasunduan sa Bilihan ng Karapatan sa Lupa with Spouses Norberto and Susan Dingco
whereby petitioner agreed to sell his rights over a 648 square meter parcel of
unregistered land situated in Purok III, Tugatog, Orani, Bataan to respondents for
P38,000. Respondents tendered their initial payment of P10,000 upon signing of the
contract, the remaining balance to be paid on September 1990. Respondents were
later to claim that when they were about to hand in the balance of the purchase price,
petitioner requested them to keep it first as he was yet to settle an on-going squabble
over the land. Nevertheless, respondents gave petitioner small sums of money from
time to time which totaled P9,100, on petitioners request according to them; due to
respondents inability to pay the amount of the remaining balance in full, according
to petitioner. By respondents claim, despite the alleged problem over the land, they
insisted on petitioners acceptance of the remaining balance of P18,900 but petitioner
remained firm in his refusal, proffering as reason therefor that he would register the
land first. Sometime in 1994, respondents learned that the alleged problem over the
land had been settled and that petitioner had caused its registration in his name on
December 21, 1993 under Transfer Certificate of Title No. 161806. They thereupon
offered to pay the balance but petitioner declined, drawing them to file a complaint
before the Katarungan Pambarangay. No settlement was reached, however, hence,
respondent filed a complaint for specific performance before the Regional Trial Court.
Petitioner countered in his Answer to the Complaint that the sale was void for lack of
object certain, the kasunduan not having specified the metes and bounds of the land.
In any event, petitioner alleged that if the validity of the kasunduan is upheld,
respondents failure to comply with their reciprocal obligation to pay the balance of
the purchase price would render the action premature. For, contrary to respondents
claim, petitioner maintained that they failed to pay the balance of P28,000 on
September 1990 to thus constrain him to accept installment payments totaling
P9,100.

ISSUE:
Whether or not the elements of a valid contract are present in this case

RULING:
That the kasunduan did not specify the technical boundaries of the property did not
render the sale a nullity. The requirement that a sale must have for its object a
determinate thing is satisfied as long as, at the time the contract is entered into, the
object of the sale is capable of being made determinate without the necessity of a
new or further agreement between the parties. s the above-quoted portion of the
kasunduan shows, there is no doubt that the object of the sale is determinate.

95 Paragas v Heirs of Balacano, 468 SCRA 717, G.R. No. 168220, August
31, 2005
CHICO-NAZARIO, J.:

FACTS:
Gregorio Balacano, married to Lorenza Sumigcay, was the registered owner of Lot
1175-E and Lot 1175-F of the Subd. Plan Psd-38042 [located at Baluarte, Santiago
City, Isabela] covered by TCT No. T-103297 and TCT No. T-103298 of the Registry of
Deeds of the Province of Isabela. Gregorio and Lorenza had three children, namely:
Domingo, Catalino and Alfredo, all surnamed Balacano. Lorenza died on December
11, 1991. Gregorio, on the other hand, died on July 28, 1996. Gregorio purportedly
sold on July 22, 1996, or barely a week prior to his death, a portion of Lot 1175-E
and the whole Lot 1175-F to the Spouses Rudy and Corazon Paragas. This sale
appeared in a deed of absolute sale notarized by Atty. Alexander V. de Guzman. The
Spouses Paragas then sold on October 17, 1996 a portion of Lot 1175-E to Catalino.
Domingos children filed a complaint for annulment of sale and partition against
Catalino and the Spouses Paragas. They essentially alleged in asking for the
nullification of the deed of sale that their grandfather Gregorio could not have
appeared before the notary public because he was then confined at the Veterans
Memorial Hospital in Quezon City.

ISSUES:
1) Did Gregorio give an intelligent consent to the sale of Lots 1175-E and 1175-F
when he signed the deed of sale?
2) Whether or not the sale executed by the petitioners and Gregorio was null and
void
RULING:
1) No, It is not disputed that when Gregorio signed the deed of sale, Gregorio was
seriously ill, as he in fact died a week after the deeds signing. Gregorio died of
complications caused by cirrhosis of the liver. Gregorios death was neither sudden
nor immediate; he fought at least a month-long battle against the disease until he
succumbed to death on July 22, 1996. Given that Gregorio purportedly executed a
deed during the last stages of his battle against his disease, we seriously doubt
whether Gregorio could have read, or fully understood, the contents of the documents
he signed or of the consequences of his act.

2) Yes, the irregular and invalid notarization of the deed is a falsity that raises doubts
on the regularity of the transaction itself. While the deed was indeed signed on July
18, 1996 at Bayombong, Nueva Vizcaya, the deed states otherwise, as it shows that
the deed was executed on July 22, 1996 at Santiago City. Why such falsity was
committed, and the circumstances under which this falsity was committed, speaks
volume about the regularity and the validity of the sale.

Article 24 of the Civil Code tells us that in all contractual, property or other relations,
when one of the parties is at a disadvantage on account of his moral dependence,
ignorance, indigence, mental weakness, tender age or other handicap, the courts
must be vigilant for his protection.

Based on the foregoing, the Court of Appeals concluded that Gregorios consent to
the sale of the lots was absent, making the contract null and void. Consequently, the
spouses Paragas could not have made a subsequent transfer of the property to
Catalino Balacano. Indeed, nemo dat quod non habet. Nobody can dispose of that
which does not belong to him.

96 Rufloe v Burgos, 577 SCRA 264, G.R. No. 143573, January 30, 2009
LEONARDO-DE CASTRO, J.:

FACTS:
Petitioner Adoracion Rufloe is the wife of Angel Rufloe, now deceased, while co-
petitioners Alfredo and Rodrigo are their children. During the marriage of Adoracion
and Angel, they acquired a 371-square meter parcel of land located at Barangay
Bagbagan, Muntinlupa, and covered by TCT No. 406851 which is the subject of the
present controversy. Sometime in 1978, respondent Elvira Delos Reyes forged the
signatures of Adoracion and Angel in a Deed of Sale dated September 8, 1978 to
make it appear that the disputed property was sold to her by the spouses Rufloe. On
the basis of the said deed of sale, Delos Reyes succeeded in obtaining a title in her
name, TCT No. S-74933. Thus, in November 1979, the Rufloes filed a complaint for
damages against Delos Reyes alleging that the Deed of Sale was falsified as the
signatures appearing thereon were forged because Angel Rufloe died in 1974, which
was four (4) years before the alleged sale in favor of Delos Reyes. During the
pendency of the case, Delos Reyes sold the subject property to respondent siblings
Anita, Angelina, Angelito and Amy (Burgos siblings). A new title, TCT No. 135860,
was then issued in their names. The Burgos siblings, in turn, sold the same property
to their aunt, Leonarda Burgos. However, the sale in favor of Leonarda was not
registered. Thus, no title was issued in her name. The subject property remained in
the name of the Burgos siblings who also continued paying the real estate taxes
thereon.

ISSUES:
1) Whether or not the sale of the subject property by Delos Reyes to the Burgos
siblings and the subsequent sale by the siblings to Leonarda were valid and binding;
and
2) Whether or not respondents were innocent purchasers in good faith and for value
despite the forged deed of sale of their transferor Delos Reyes.

RULING:
1) No, the issue concerning the validity of the deed of sale between the Rufloes and
Delos Reyes had already been resolved with finality in Civil Case No. M-7690 by the
RTC of Pasay City which declared that the signatures of the alleged vendors, Angel
and Adoracion Rufloe, had been forged. It is undisputed that the forged deed of sale
was null and void and conveyed no title. It is a well-settled principle that no one can
give what one does not have, nemo dat quod non habet. One can sell only what one
owns or is authorized to sell, and the buyer can acquire no more right than what the
seller can transfer legally. Due to the forged deed of sale, Delos Reyes acquired no
right over the subject property which she could convey to the Burgos siblings. All the
transactions subsequent to the falsified sale between the spouses Rufloe and Delos
Reyes are likewise void, including the sale made by the Burgos siblings to their aunt,
Leonarda.

2) No, An innocent purchaser for value is one who buys the property of another
without notice that some other person has a right to or interest in it, and who pays
a full and fair price at the time of the purchase or before receiving any notice of
another persons claim. The burden of proving the status of a purchaser in good faith
and for value lies upon one who asserts that status. This onus probandi cannot be
discharged by mere invocation of the ordinary presumption of good faith.

The circumstances surrounding this case point to the absolute lack of good faith on
the part of respondents. The evidence shows that the Rufloes caused a notice of
adverse claim to be annotated on the title of Delos Reyes as early as November 5,
1979. The annotation of an adverse claim is a measure designed to protect the
interest of a person over a piece of real property, and serves as a notice and warning
to third parties dealing with said property that someone is claiming an interest on the
same or may have a better right than the registered owner thereof. Despite the notice
of adverse claim, the Burgos siblings still purchased the property in question.

The sale, which occurred between Leonarda and the Burgos siblings, was simply a
scheme designed to cleanse the title passed on to them by the forger Delos Reyes.
Respondents had to resort to this strategy because they were fully aware that their
title, having originated from the forged deed of sale of Delos Reyes, was not a clean
and valid title.

97 Tangalin v Court of Appeals, 371 SCRA 49, G.R. No. 121703, November
29, 2001
PARDO, J.:

FACTS:
The spouses Dr. Ramon L. Cocson and Josefina G. Cocson obtained a loan from Atty.
Pedro Martinez. To secure payment of said loan, the spouses Cocson executed in favor
of Atty. Martinez a Contract of Mortgage and Promissory Note, over their two parcels
of land. The spouses defaulted in the payment of their mortgage obligation. Atty.
Martinez caused the extra-judicial foreclosure of the mortgaged properties and was
the only bidder at the public auction conducted. The Provincial Sheriff Ex-Oficio of La
Union issued the corresponding Certificate of Sale which was duly registered. No
redemption was made within the reglementary period. The Sheriff issued the
Certificate of Absolute Definitive Sale over the aforesaid properties in favor of Atty.
Martinez. The spouses Cocson executed a Deed of Absolute Sale covering parcels of
land, different from the subject of the foreclosure proceedings, and which Atty.
Martinez registered with the Register of Deeds of La Union. Atty. Martinez sold to
Natividad T. Tangalin the property evidenced by a Deed of Absolute Sale of Real
Estate. The spouses Cocson filed the complaint for annulment of sales against Atty.
Pedro Martinez and the spouses Mario Go and Natividad T. Tangalin.

ISSUE:
Whether or not the Court of Appeals erred in reversing or modifying the portion of
the trial courts decision that has become final and executory as to petitioner

RULING:
Normally, a party cannot impugn the correctness of a judgment not appealed from
by him, and while he may make counter-assignment of errors, he can do so only to
sustain the judgment on other grounds but not to seek modificaton or reversal thereof
for in such a case he must appeal. A party who does not appeal from the decision
may not obtain any affirmative relief from the appellate court other than what he has
obtained from the lower court, if any, whose decision is brought up on appeal.
However, the appellate court may consider errors, although unassigned, if they
involve (1) errors affecting the lower courts jurisdiction over the subject matter, (2)
plain errors not specified, and (3) clerical errors.
In the case at bar, it was plain error for the trial court to rule that the sale dated
January 22, 1972 was void and at the same time state that the sale of September 9,
1975, that involved the same parcel of land be respected. It is indisputable that the
spouses Cocson did not own the property covered by Tax Declarations Nos. 28472
and 29310 Cocson on January 22, 1972. Both the trial court and the Court of Appeals
are in agreement with this finding of fact.

Since Editha G. Tiglao and Fe Gomez, not Josefina Cocson, are the owners of the
properties subject of the deed of sale then the latter conveys no rights, interests and
title over the said properties to Martinez under the deed of sale.

98 Conculada v Court of Appeals, 367 SCRA 164, G.R. No. 130562, October
11, 2001
QUISUMBING, J.:

FACTS:
Petitioner Paciano Garcia, Jr. and Henrietta Borja with their six siblings were co-
owners of two parcels of land. They inherited them from their parents, Paciano and
Ernestina Garcia. They were leased to 28 individual tenants, including respondent
spouses Kimtoy Jamaani-Wee and Tian Su Wee. petitioner Garcia, Jr. and his lawyer,
petitioner Ulka Ulama, without prior authority from the other Garcia heirs, announced
the sale of the said lots and informed the actual occupants including private
respondent Wee that they had preferential rights to buy the portions they were
occupying. Wee signified his interest to purchase the lot where his store was built.
However, he asked for proof that Garcia, Jr. was authorized by the other Garcia heirs
to represent them. Ulama merely advised Wee to tender the required amount of
deposit with the Allied Bank or Philippine National Bank. Atty. Ulama wrote Wee a
letter stating that Garcia, Jr. was authorized by the other Garcia heirs to sign the
deed of sale over the said parcels of land. Ulama reminded Wee about depositing
P10,000.00. Ulama again wrote Wee, admonishing Wee for failing to pay the
increased rental. Wee through counsel requested Ulama to prepare the contract to
sell as Wee was going to exercise the preferential right to buy Lot 4. Two weeks later,
Wee deposited a P20,000.00 check as initial deposit. Ulama received the deposit
unconditionally.

Despite his acceptance of the deposit, Ulama, with Garcia, Jr. and Borja sold Lot 4 to
herein petitioner Brigida Conculada. Consequently, TCT No. 4381 was issued to
Conculada. Thereafter, she donated the lot to her children and had it titled in their
names under TCT No. T-4387 of the Sulu Registry. After the sale, Ulama tried to
return the P20,000.00 check to Wee, explaining that petitioner Conculada already
purchased Lot 4. Wee refused to accept the refund. Instead, he offered to reimburse
Borja the P455,000.00 paid by Conculada, but Borja declined. Wee was constrained
to consign the money to the Regional Trial Court. Herein private respondents filed
with the RTC a complaint against petitioners for annulment and cancellation of the
sale of Lot 4, and cancellation of the deed of donation executed by Brigida Conculada
in favor of her daughters. Private respondents asked for specific performance and
damages.

ISSUE:
Who has the better right over the disputed property?

RULING:
The over-all review of the pleadings and records of this case conveys the impression
that appellants desired to exercise a certain degree of caution before depositing the
required amount in accepting the offer to sell. In a transaction involving almost half
a million pesos, such course of action is normal. To the mind of this court, the right
of first refusal of legitimate tenant does not contemplate a situation which entirely
disregards the time-honored legal maxim of caveat emptor. The appellants as buyers,
in order to protect themselves, should be aware of the legal flaws that normally might
come with sale. It would therefore seem proper to consider a few months delay as
within reasonable time to exercise the right of first refusal.

Is petitioner Conculada entitled to the restitution of the P455,000 purchase price?

Recall that the contract of sale of Lot 4 to petitioners was declared null and void when
the trial and appellate courts found that petitioners did not let private respondent
spouses exercise their right to purchase Lot 4. Although the sale to Conculada must
be set aside, that sale was, properly speaking, a rescissible contract. The prevailing
doctrine is that a contract of sale entered into in violation of a right of first refusal of
another person is rescissible.

Contract of Sale was not voidable but rescissible. Under Article 1380 to 1381 (3) of
the Civil Code, a contract otherwise valid may nonetheless be subsequently rescinded
by reason of injury to third persons, like creditors. The status of creditors could be
validly accorded the Bonnevies for they had substantial interest that were prejudiced
by the sale of the property to the petitioner without recognizing their right of first
priority under the Contract of Lease.

Thus, conformably with Art. 1385 of the Civil Code, the purchase price must be
restored to the buyer. Accordingly, petitioner Conculada is entitled to restitution in
the amount of P455,000, the price she paid to the sellers. To facilitate restitution, the
same amount of P455,000 consigned by private respondents with the RTC for the
purchase of Lot No. 4 could be utilized for that purpose once Garcia Jr. and Borja
execute the deed of conveyance in favor of private respondents as ordered by the
trial court in its decision dated January 11, 1994.

99 Manalo v Court of Appeals, 371 SCRA 752, G.R. No. 141297, October 8,
2001
PUNO, J.:

FACTS:
On July 19, 1983, S. Villanueva Enterprises, represented by its president, Therese
Villanueva Vargas, obtained a loan from the respondent PAIC Savings and Mortgage
Bank and the Philippine American Investments Corporation. To secure payment of
both debts, Vargas executed in favor of the respondent and PAIC a Joint First
Mortgage over two parcels of land registered under her name. S. Villanueva
Enterprises defaulted in paying the amortizations due. Despite repeated demands
from the respondent, it failed to settle its loan obligation. Accordingly, respondent
instituted extrajudicial foreclosure proceedings over the mortgaged lots.

On August 22, 1984, the Pasay City property was sold at a public auction to the
respondent itself, after tendering the highest bid. The respondent then caused the
annotation of the corresponding Sheriffs Certificate of Sale on the title of the land.
After the lapse of one year, or the statutory period extended by law to a mortgagor
to exercise his/her right of redemption, title was consolidated in respondents name
for failure of Vargas to redeem.

The Central Bank of the Philippines filed a Petition for assistance in the liquidation of
the respondent with the Regional Trial Court. It appears that from the years 1986 to
1991, Vargas negotiated with the respondent for the repurchase of the foreclosed
property. The negotiations, however, fizzled out as Vargas cannot afford the
repurchase price fixed by the respondent based on the appraised value of the land at
that time. Vargas filed a case for annulment of mortgage and extra-judicial
foreclosure sale. The court rendered a decision dismissing the complaint and
upholding the validity of the mortgage and foreclosure sale. On appeal, the appellate
court upheld the assailed judgment and declared the said mortgage and foreclosure
proceedings to be in accord with law.

During the pendency of Civil Case No. 9011, Vargas, on December 23, 1992, executed
a Deed of Absolute Sale selling, transferring, and conveying ownership of the disputed
lot in favor of a certain Armando Angsico. Notwithstanding this sale, Vargas, still
representing herself to be the lawful owner of the property, leased the same to
petitioner Domingo R. Manalo.

ISSUE:
Whether or not the public respondent committed grave abuse of discretion and/or
was patently in error in affirming the ruling of the trial court, totally disregarding the
arguments raised in petitioners supplemental motion for reconsideration only through
a minute order and without taking into consideration the fact that there is a pending
action in another court

RULING:
In the event of foreclosure, whether judicially or extrajudicially, of any mortgage on
real estate which is security for any loan granted before the passage of this Act or
the provisions of this Act, the mortgagor or debtor whose real property has been sold
at public auction, judicially or extrajudicially, for the full or partial payment of an
obligation to any bank, banking or credit institution, within the purview of this Act
shall have the right, within one year after the sale of the real estate mortgage as a
result of the foreclosure of the respective mortgage, to redeem the property by
paying the amount fixed by the court in the order or execution.

Being herself bereft of valid title and rights, Vargas can not legitimately convey any
to some other person. She could not have lawfully sold the land to Angsico nor leased
it to petitioner for her own account. It is axiomatic that one can not transmit what
one does not have. It ought to follow that petitioner could not have acquired any
right or interest from Vargas.

Heirs of Juan San Andres vs. Rodriguez

337 SCRA 769

Facts:
Juan San Andres sold a portion of his property to Rodriguez as evidenced by a
Deed of Sale. Upon his death Ramon San Andres was appointed as administrator of
the property. He hired a land surveyor and found that Rodriguez enlarged the
property he bought from late Juan. Ramon demanded form the Rodriguez to vacate
the portion allegedly occupied but the latter refused hence the present action.
Rodriguez said that the excess portion was also sold to him by late Juan the
following day after the first sale. He argued that the full payment of the whole sold
lot would be effected within five years from the execution of the formal deed of sale
after a survey of the property is conducted, as evidenced by a receipt of sale. The
balance of the purchase price was consigned.
RTC ruled in favor of petitioner while CA reversed the ruling. In SC petitioner
argued that there is no certain object of the contract of sale as the lot was not
described with sufficiency that there should be another contract to finally ascertain
the identity.

Issue:
Whether or not a contract to sell despite its lacking one of the essential
elements of a contract, namely, object certain and sufficiently described.

Ruling:
Petition has no merit. The contract of sale has the following elements: a.
consent or meeting of the minds, b. determinate subject matter, c. price certain in
money.
 There is no dispute that Rodriguez purchased a portion of Lot 1914-B
consisting of 345 square meters. The said portion is located at the middle of the lot.
Since the lot subsequently sold is said to adjoined the previously paid lot, the subject
is capable of being determined without the need of another contract.
In can be gainsaid from the facts that the contract of sale is absolute, and not
conditional. The stipulation that the payment of the full consideration based on a
survey shall be due and payable in 5 years from the execution of the formal deed of
sale is not a condition which affects the efficacy of contract.
CA decision is affirmed.
David vs. Tiongson
313 SCRA 63

Facts:
Certain lots located in Cabalantian, Bacolor, Pampanga were sold to three sets
of plaintiffs, namely, spouses Feliciano and Macaria Ventura, spouses Venancio and
Patricia David and Florencia Ventura Vda. De Basco by respondents spouses
Alejandro and Guadalupe Tiongson.
The parties expressly agreed that as soon as the plaintiffs fully paid the
purchase price on their respective lots, respondents would execute an individual deed
of absolute sale and cause the issuance of the corresponding certificate of title in
plaintiffs' favor.
Spouses Ventura immediately took possession of the lot, erected their house
thereon and fenced the perimeters. When Venturas had fully paid the price of their
lot, evidenced by a certification issued by Alejandro Tiongson, the Venturas
demanded the execution of a deed of sale and the issuance of the corresponding
certificate of title, but the latter refused to issue the same.
Spouses David when fully paid, demanded the execution of a deed of sale and
the issuance of the corresponding certificate of title, but respondents refused. Unlike
the Venturas, they were not able to take possession of the property.
Plaintiff Florencia Ventura Vda. de Basco averred that she bought two parcels
of land, and had paid P12,945.00 for the two lots, evidenced by receipts issued by
Alejandro Tiongson. Subsequently, she demanded the execution of the deeds of sale
and issuance of the corresponding certificates of title over the lots. However,
respondents failed to comply with their obligation.
After no settlement was reached at the barangay level, plaintiffs filed a
complaint with the Regional Trial Court, San Fernando, Pampanga, for specific
performance with damages. Respondents Tiongsons were declared in default for
failure to file their answer, despite the fifteen (15) days extension granted by the
trial court.
The RTC ruled in favor on the plaintiffs, however the CA modified the decision.
Hence this Petition

Issue:
Whether or not the subject lots can be determined notwithstanding the validity
of the contracts.

Ruling:
The Court ruled that there was a perfected contract. However, the statute of
frauds is inapplicable. The rule is settled that the statute of frauds applies only to
executory and not to completed, executed, or partially executed contracts.
The Court of Appeals erred in concluding that there was no perfected contract
of sale. However, in view of the stipulation of the parties that the deed of sale and
corresponding certificate of title would be issued after full payment, then, they had
entered into a contract to sell and not a contract of sale. Any mistake in the
designation of the lot does not vitiate the consent of the parties or affect the validity
and binding effect of the contract of sale. In fact, in the last receipt the parties agreed
on the specific lot area. This suffices to identify the specific lot involved. It was
unnecessary for the parties to enter into another agreement to determine the exact
property bought.
The CA decision was reversed.

Traders Royal Bank vs. Court of Appeals

269 SCRA 15

Facts:
Filriters Guaranty Assurance Corporation is the owner of several Central Bank
Certificates of Indebtedness These certificates are actually proof that FGAC has the
required reserve investment with the Central Bank to operate as an insurer and to
protect third persons from whatever liabilities FGAC may incur. In 1979, FGAC agreed
to assign said CBCI to Philippine Underwriters Finance Corporation Later, PUFC sold
said CBCI to Traders Royal Bank. Said sale with TRB comes with a right to repurchase
on a date certain. However, when the day to repurchase arrived, PUFC failed to
repurchase said CBCI hence TRB requested the Central Bank to have said CBCI be
registered in TRB’s name. Central Bank refused as it alleged that the CBCI are not
negotiable; that as such, the transfer from FGAC to PUFC is not valid; that since it
was invalid, PUFC acquired no valid title over the CBCI; that the subsequent transfer
from PUFC to TRB is likewise invalid.
TRB then filed a petition for mandamus to compel the Central Bank to register
said CBCI in TRB’s name. TRB averred that PUFC is the alter ego of FGAC; that PUFC
owns 90% of FGAC; that the two corporations have identical sets of directors; that
payment of said CBCI to PUFC is like a payment to FGAC hence the sale between
PUFC and TRB is valid. In short, TRB avers that that the veil of corporate fiction,
between PUFC and FGAC, should be pierced because the two corporations allegedly
used their separate identity to defraud TRD into buying said CBCI.

Issue:
Whether or not Traders Royal Bank is correct.

Ruling:
No. Traders Royal Bank failed to show that the corporate fiction is used by the
two corporations to defeat public convenience, justify wrong, protect fraud or defend
crime or where a corporation is a mere alter ego or business conduit of a person. TRB
merely showed that PUFC owns 90% of FGAC and that their directors are the same.
The identity of PUFC can’t be maintained as that of FGAC because of this mere fact;
there is nothing else which could lead the court under the circumstance to disregard
their corporate personalities. Further, TRB can’t argue that it was defrauded into
buying those certificates. In the first place, TRB as a banking institution is not
ignorant about these types of transactions. It should know for a fact that a certificate
of indebtedness is not negotiable because the payee therein is inscribed specifically
and that the Central Bank is obliged to pay the named payee only and no one else.
Eduarte vs. Court of Appeals
256 SCRA 391

Facts:
Domingo Belda and Estelita Ana were the registered owners of a parcel of land
denominated as Lot 118 located at Sorsogon and covered by Original Certificate of
Title No. P-4991 issued on October 5, 1962.On March 1, 1963, a letter was sent by
the Land Investigator Serafin Valcarcel of the Bureau of Lands to Domingo and
Cipriano Bulan calling them to a conference to settle the wrongful issuance of title to
the property they both occupy. At this conference, neither Domingo nor Bulan
appeared but Teotimo Eduarte did.
Eduarte wrote a letter to the Director of Lands requesting him not to give due
course to Domingo and Estelita’s application for a free patent title over lot 118 since
what Domingo and Estelita are occupying is Lot 138 which was titled in the name of
Bulan who refused to accept said title. After the Office of the Director of lands took
note of Eduarte’s protest, an investigation was conducted which revealed that
Eduarte is in actual possession of lot 118 while Domingo and Estelita occupy lot 138.
The District Land Officer recommended that the free patent application of
respondents should refer to lot 138 and the homestead application of petitioner
should refer to lot 118. Eduarte remained and continuously occupied lot 118 until on
December 10, 1986 Domingo and Estelita filed with the RTC of Irosin, a complaint
for recovery of possession and damages against Eduarte, averring that sometime in
August 1985, Eduarte by means of force, threats and intimidation entered the subject
to lot without their consent thereby depriving them of their possession of the
premises. Traversing the complaint, Eduarte asserts that he is the rightful owner of
the property in question; that he has been in possession of the same since 1942;
that the title relied upon by Domingo and Estelita was erroneously issued in their
name which was acknowledged by the Bureau of Lands; that Domingo and Estelita
fully know that they are not the owners of the lot in dispute.
The lower court also ruled that petitioner can attack the validity of respondents'
title only through a direct and not by a collateral proceeding. Decision affirmed by
CA, with modifications.

Issue:
Whether or not Eduarte can, in an ordinary civil action for recovery of
possession filed by Domingo and Estelita, the registered owners, assail the validity
of their title.

Ruling:
The rule is well-settled that mere possession cannot defeat the title of a holder
of a registered torrens title to real property. Moreover, reliance on the doctrine that
a forged deed can legally be the root of a valid title is squarely in point in this case:
Although generally a forged or fraudulent deed is a nullity and conveys no title,
however there are instances when such a fraudulent document may become the root
of a valid title. One such instance is where the certificate of title was already
transferred from the name of the true owner to the forger, and while it remained that
way, the land was subsequently sold to an innocent purchaser. For then, the vendee
had the right to rely upon what appeared in the certificate.

Where there was nothing in the certificate of title to indicate any cloud or vice
in the ownership of the property, or any encumbrance thereon, the purchaser is not
required to explore further than what the Torrens Title upon its face indicates in quest
for any hidden defect or inchoate right that may subsequently defeat his right thereto.
If the rule were otherwise, the efficacy and conclusiveness of the certificate of title
which the Torrens System seeks to insure would entirely be futile and nugatory.
In this regard, it has been held that the proper recourse of the true owner of
the property who was prejudiced and fraudulently dispossessed of the same is to
bring an action for damages against those who caused or employed the fraud, and if
the latter are insolvent, an action against the Treasurer of the Philippines may be
filed for recovery of damages against the Assurance Fund.
The petition is granted.
Segura vs. Segura
165 SCRA 368

Facts:
The land in question consists of 4,060 square meters and was originally
registered under Original Certificate of Title No. 1994 in the Registry of Deeds of Iloilo
in the name of Gertrudes Zamora. She died intestate and without debts in 1936 and
was survived by four children, who never got around to dividing the property among
themselves. This controversy is not among the four brothers, who are now also
deceased. It is Gertrudes's grandchildren by three of her sons (the fourth having died
without issue) who are involved in this complaint for recovery of ownership and
possession of the disputed inheritance, plus damages.

Issue:
Whether or not the petitioners can still recover the said lot.

Ruling:
As a person can sell only what he owns or is authorized to sell, the buyer can
as a consequence acquire no more than what the seller can legally transfer. The deed
of partition being invalid as to the other heirs, the vendors could dispose only of their
respective shares in the land, or one-third only of the property and not the other two-
thirds as well which did not belong to them. The general rule is that no one can give
what he does not have — nemo dat quod non habet. Hence, even if it be assumed
that Amojido had bought the land in good faith from the parties to the extrajudicial
partition, only so much of their share could be validly acquired by him, with the rest
of the property remaining under the ownership of the six excluded co-heirs. In other
words, Amojido became pro indiviso co-owner of the land with the other six heirs,
who retained title to their respective shares although he had possession of the entire
property. The portion pertaining to the herein appellants should be deemed held by
Amojido under an implied trust for their benefit.
Manotok Realty, Inc. vs. Court of Appeals
149 SCRA 372

Facts:
On April 2, 1950, the owner of the lot, Clara Tambunting, died and her entire
estate, including her paraphernal properties which covered the lot occupied by the
private respondent were placed under custodia legis. Thereafter, Don Vicente Legarda
was appointed as a special administrator of the estate. Meanwhile the private
respondent remained in possession of the lot in question.
Subsequently, the petitioner became the successful bidder and vendee of the
Tambunting de Legarda Subdivision consisting of 44 parcels of land spread out in the
districts of Tondo and Sta. Cruz, Manila, pursuant to the deeds of sale executed in its
favor by the Philippine Trust Company as administrator of the Testate Estate of Clara
Tambunting de Legarda. The lot in dispute was one of those covered by the sale.
The trial court dismissed the petitioner's action after finding that the Identity
of the parcel of land described in the complaint had not been sufficiently established
as the very same piece of land in the material and physical possession of the private
respondent.
On appeal, the respondent Court of Appeals found the Identity of the lot sought
to be recovered.

Issue:
Whether or not the sale by Don Vicente Legarda in favor of the private
respondent is valid, binding, and enforceable against the petitioner.

Ruling:
There is nothing in the records that wig show that Don Vicente Legarda was
the administrator of the paraphernal properties of Dona Clara Tambunting during the
lifetime of the latter. Thus, it cannot be said that the sale which was entered into by
the private respondent and Don Vicente Legarda had its inception before the death
of Dona Clara Tambunting and was entered into by the former for and on behalf of
the latter, but was only consummated after her death. Don Vicente Legarda,
therefore, could not have validly disposed of the lot in dispute as a continuing
administrator of the paraphernal properties of Dona Clara Tambunting.
It is also undisputed that the probate court appointed Don Vicente Legarda as
administrator of the estate only on August 28, 1950, more than three months after
the questioned sale had taken place.

We are, therefore, led to the inevitable conclusion that the sale between Don Vicente
Legarda and the private respondent is void ab initio, the former being neither an
owner nor administrator of the subject property. Such being the case, the sale cannot
be the subject of the ratification by the Philippine Trust Company or the probate
court.
Pichel vs. Alonzo
111 SCRA 341

Facts:
That Prudencio Alonzo executed a deed of sale for the coconut fruits of his land
in Balactasan Plantation in Lamitan, Basilan, in favor of Luis Pichel. The land from
which the subject coconut fruits are derived from was subjected to a cancellation of
the award in 1965, due to the reason of violation of the law that disallows alienation
of land .
The vendor and his wife sold to the vendee the fruits of the coconut trees from
1968 to 1976 for consideration of 4,200. Even during the date of sale, the land was
still leased to one Ramon Sua, and it was part of the agreement of the sale that the
sum of 3,650.00 was to be paid by the vendor to Ramon Sua as to release the land.
The RTC decided in favor of the vendor, due to the fact that the deed of sale
that was executed was invalid, due to its supposed violation of RA No. 477, in which
they equated the deed of sale executed by the parties as a contract of lease.

Issue:
Whether or not the sale is valid.

Ruling:
Yes. The RTC erred in constructing the deed of sale as a contract of lease.
There was no need on the part of the RTC to interpret the contract, since there was
no ambiguity, it merely contracts the sale of the fruits of the land, not the land itself.
Under Article 1461 of the New Civil Code, things having a potential existence
may be the object of the contract of sale. A valid sale may be made of a thing, which
though not yet actually in existence, is reasonably certain to come into existence as
the natural increment or usual incident of something already in existence, and then
belonging to the vendor, and the title will vest in the buyer the moment the thing
comes into existence. A man may sell property of which he is potentially and not
actually possessed. The possession of the coconut fruits for 7 years is different from
possession of the land, since the coconut fruits are mere accessories and the land is
the principal- a transfer of accessories does not necessarily mean a transfer of
principal, it is the other way around.
The vendor after having received the consideration for the sale of his coconut
fruits cannot be allowed to impugn the validity of the contracts he entered into, to
the prejudice of petitioner who contracted in good faith and consideration.
Formahan vs. Ong
700 SCRA 758

Facts:
Formaran received by way of donation by his uncle and aunt, Sps. Melquiades
Barraca and Praxedes Casidsid a parcel of land situated in Nabas, Aklan.
From the time of donation until present, Formaran was in actual possession of
the land. Subsequent to the said donation, Ong and father, Melquiades Barraca
approached Formaran to borrow one-half of the land donated to her so the Ong could
obtain a loan from a bank to buy a dental chair. An absolute deed of sale was
executed without monetary consideration.
More or less 30 years after the said deed of sale was executed, Ong filed a
complaint for unlawful detainer before the Municipal Circuit Trial Court of Ibajay-
Nabas, IBajay, Aklan against Formaran ordering the latter to vacate the land sold to
the former. The court rendered a decision in favor of Ong and ordered Formaran to
vacate the land in question.
Petitioner, Formaran filed an action for the annulment of the deed of absolute
sale against Respondent, Ong in the RTC of Kalibo, Aklan. And rendered a decision in
favor of Formaran. Respondent coursed an appeal to the CA and CA reversed and set
aside the decision of the RTC and ordered petitioner to vacate the land. Hence, this
petition.

Issue:
Whether or not the absolute deed of sale is valid.

Ruling:
The Court believes and so holds that the subject Deed of Sale is indeed
simulated,
as it is: (1) totally devoid of consideration; (2) it was executed on August 12, 1967,
less than two months from the time the subject land was donated to petitioner on
June 25, 1967 by no less than the parents of respondent Glenda Ong; (3) on May 18,
1978, petitioner mortgaged the land to the Aklan Development Bank for a ₱23,000.00
loan; (4) from the time of the alleged sale, petitioner has been in actual possession
of the subject land; (5) the alleged sale was registered on May 25, 1991 or about
twenty four (24) years after execution; (6) respondent Glenda Ong never introduced
any improvement on the subject land; and (7) petitioner’s house stood on a part of
the subject land. These are facts and circumstances which may be considered badges
of bad faith that tip the balance in favor of petitioner.
The amplitude of foregoing undisputed facts and circumstances clearly shows
that the sale of the land in question was purely simulated. It is void from the very
beginning.
Intac vs. Court of Appeals
684 SCRA 88

Facts:
Ireneo Mendoza, married to Salvacion Fermin, was the owner of the subject
property... situated at No. 36, Road 8, Bagong Pag-asa, Quezon City, which he
purchased in 1954. Ireneo had two children: respondents Josefina and Martina,
Salvacion being their stepmother. When he was still alive, Ireneo, also took care of
his niece, Angelina, since she was three years old until she got married.
On October 25, 1977, Ireneo, with the consent of Salvacion, executed a deed
of absolute sale of the property in favor of Angelina and her husband, Mario. Despite
the... sale, Ireneo and his family, including the respondents, continued staying in the
premises and paying the realty taxes. After Ireneo died intestate in 1982, his widow
and the respondents remained in the premises. After Salvacion died, respondents
still... maintained their residence there. Up to the present, they are in the premises,
paying the real estate taxes thereon, leasing out portions of the property, and
collecting the rentals.
The controversy arose when respondents sought the cancellation of TCT No.
242655, claiming that the sale was only simulated and, therefore, void. Spouses Intac
resisted, claiming that it was a valid sale for a consideration.

Issue:
Whether or not the Deed of Absolute Sale is a valid agreement.

Ruling:
The deed of sale executed by Ireneo and Salvacion was absolutely simulated
for lack of consideration and cause and, therefore, void. In the case at bench, the
Court is one with the courts below that no valid sale of the subject property actually
took place between the alleged vendors, Ireneo and Salvacion; and the alleged
vendees, Spouses Intac. There was simply no consideration and no intent to sell it.
Villaceran vs. De Guzman
666 SCRA 454

Facts:
De Guzman alleged that she is the registered owner of a parcel of land located
in Echague, Isabela, having an area of 971 square On April 17, 1995, she mortgaged
the lot to the Philippine National Bank of Santiago City to secure a loan of P600,000.
In order to secure a bigger loan to finance a business venture, De Guzman asked
Milagros Villaceran to obtain an additional loan on her behalf. She executed a Special
Power of Attorney in favor of Milagros. Considering De Guzmans unsatisfactory loan
record with the PNB, Milagros suggested that the title of the property be transferred
to her and Jose Villaceran and they would obtain a bigger loan as they have a credit
line of up to P5,000,000 with the bank.

On June 19, 1996, De Guzman executed a simulated Deed of Absolute Sale in

favor of the spouses Villaceran. On the same day, they went to the PNB and paid the
amount of P721,891.67 using the money of the spouses Villaceran. The spouses
Villaceran registered the Deed of Sale in their names. Thereafter, they mortgaged
the property with FEBTC Santiago City to secure a loan of P1,485,000. However, the
spouses Villaceran concealed the loan release from De Guzman. Later, when De
Guzman learned of the loan release, she asked for the loan proceeds less the amount
advanced by the spouses Villaceran to pay the PNB loan. However, the spouses
Villaceran refused to give the money stating that they are already the registered
owners of the property and that they would reconvey the property to De Guzman
once she returns the P721,891.67 they paid to PNB.

Issue:
Whether or not the Deed of Sale is a simulated contract and not a true sale of
the subject property.

Ruling:
Article 1345 of the Civil Code provides that the simulation of a contract may
either be absolute or relative. If the parties state a false cause in the contract to
conceal their real agreement, the contract is only relatively simulated and the parties
are still bound by their real agreement. Hence, where the essential requisites of a
contract are present and the simulation refers only to the content or terms of the
contract, the agreement is absolutely binding and enforceable between the parties
and their successors in interest.
The primary consideration in determining the true nature of a contract is the
intention of the parties. If the words of a contract appear to contravene the evident
intention of the parties, the latter shall prevail. Such intention is determined not only
from the express terms of their agreement, but also from the contemporaneous and
subsequent acts of the parties. In the case at bar, there is a relative simulation of
contract as the Deed of Absolute Sale dated June 19, 1996 executed by De Guzman
in favor of petitioners did not reflect the true intention of the parties.
Heirs of Ureta vs. Heirs of Ureta
657 SCRA 551

Facts:
Alfonso Ureta was financially well-off and owned several properties. He begot
fourteen children, including herein petitioners and Policronio, father of respondents.
For taxation purposes, Alfonso sold, without monetary consideration, several parcels
of land to four of his children, including Policronio. Alfonso continued to own, possess
and enjoy the lands and their produce. Upon his death, Liberato acted as the
administrator. The Fernandez Family rented the portion transferred to Policronio. But
even after the fact, the tenants never turned over the produce of the lands to
Policronio or any of this heirs, but to Alfonso and, later, to the administrators of his
estate. When Policronio died, except for a portion of one of the parcels of land, neither
Policronio nor his heirs ever took possession of the subject lands. Alfonso’s heirs
executed a Deed of Extra-Judicial Partition,8 which included all the lands that were
covered by the four (4) deeds of sale that were previously executed by Alfonso for
taxation purposes. Conrado, Policronio’s eldest son, representing the Heirs of
Policronio, signed the Deed of Extra-Judicial Partition in behalf of his co-heirs. Heirs
of Policronio allegedly learned about the Deed of Extra-Judicial Partition involving
Alfonso’s estate when it was published in the July 19, 1995 issue of the Aklan
Reporter. The Heirs of Policronio averred that the extra-judicial partition is void
because Conrado signed the same without written authority form his siblings.

Issue:
Whether or not the Deed of Sale is valid.

Ruling:
Two veritable legal presumptions bear on the validity of the Deed of Sale: (1)
that there was sufficient consideration for the contract; and (2) that it was the result
of a fair and regular private transaction. If shown to hold, these presumptions infer
prima facie the transactions validity, except that it must yield to the evidence
adduced.
The primary consideration in determining the true nature of a contract is the
intention of the parties. If the words of a contract appear to contravene the evident
intention of the parties, the latter shall prevail. Such intention is determined not only
from the express terms of their agreement, but also from the contemporaneous and
subsequent acts of the parties. The true intention of the parties in this case was
sufficiently proven by the Heirs of Alfonso.
The Heirs of Alfonso established by a preponderance of evidence that the Deed
of Sale was one of the four (4) absolutely simulated Deeds of Sale which involved no
actual monetary consideration, executed by Alfonso in favor of his children,
Policronio, Liberato, and Prudencia, and his second wife, Valeriana, for taxation
purposes.
# 111
Tio v. Abayata
556 SCRA 175(2008)
Facts:
Respondents, who are the successors-in-interest of the late CeledonioAbayata
filed an action for annulment of mortgage, mortgage sale, asubsequent sale and
certificates of title against petitioners David Sia Tioand Robert Sia Tio and the
Commercial Rural Bank of Tabogon (Cebu), Inc.Respondents alleged that through
machinations, defendant Benjamin Lasola(Lasola) was able to register the subject
property in his name and mortgageit to secure a loan (in the amount of P100,000.00)
from the aforesaid RuralBank. The Rural Bank foreclosed the mortgage and bought
the subject propertyat the extra-judicial sale (at P108,185.34).
The Rural Bank then sold the property (for P150,000.00) to petitionerswho
registered the property in their names. Petitioners and the Rural Bank,on the other
hand, answered that that they were innocent purchasers for valueand in good faith.
The RTC rendered its decision declaring respondents as theabsolute owners of the
subject property. The lower court also declared asnull and void the certificates of title
issued to the Tios. On appeal, theCourt of Appeals affirmed the lower court’s decision.
The Tios elevated thecase to the Supreme Court. One of the errors assigned by the
Tios is that thelower court erred in concluding that the P100,000.00 loan of Benjamin
Lasolafrom the Bank with a collateral allegedly worth of P800,000.00
excitessuspicion, hence, both the Tios and the Rural Bank were guilty of bad faith.

Issue:
Whether or not the Tios and the Rural Bank were guilty of bad faith.

Ruling:
The Supreme Court says No. Mere inadequacy of price is not ipso facto abadge
of lack of good faith. To be so, the price must be grossly inadequateor shocking to
the conscience such that the mind revolts against it and suchthat a reasonable man
would neither directly nor indirectly be likely toconsent to it. While there is an
apparent wide disparity in the value of thesubject property between 1989 and 1990,
undisputed attendant circumstancesshow the reasonableness of the purchase price
of the sale between Lasola andthe Rural Bank. It must be stressed that the property
was mortgaged by Lasolato the Rural Bank for P100,000.00. It was bought by the
Rural Bank at theextra-judicial sale of P108,185.34. Also, the Certificate
AuthorizingRegistration issued by the Bureau of Internal Revenue to petitioners
showsthat the prevailing fair market value of the property in 1989was P85,260.00.
All these show that the price in the amount of P150,000.00paid by petitioners for the
purchase of the property was within reasonablebounds.
#112
Macasaet v. R. Transport Corporation

Facts: R. Transport and Macasaet entered into a Deed of Sale with Assumption of
Mortgage over 4 passenger buses whereby Macasaet undertook to pay the
consideration of P12M and assume the existing mortgage obligation on the said buses
in favor of Phil. Hino Sales Corp. Accordingly, R. Transport delivered to Macasaet 2
passenger buses. Despite demands, however, Macasaet failed to pay the stipulated
purchased price. This prompted R. Transport to file a complaint seeking the issuance
of a writ of replevin, praying for judgment declaring R. Transport as the lawful owner
and possessor of the passenger buses and ordering Macasaet to remit the amount of
P660,000 representing the income generated by the 2 buses. Prior to the execution
of the contract, “Special Trip Contract” was entered into by the parties wherein it
stipulated that R. Transport would lease the 4 subject of the deed of sale to Macasaet
for the sum of P10,000 a day per bus. For his defense, petitioner alleged that he had
paid respondent the full consideration of P12M and had agreed to assume the
mortgage obligation. He claimed ownership over the 4 buses. He further contented
that he had already remitted P120,000 to respondent as partial payment of the
mortgage obligation. Petitioner admitted that he had been earning at least P7,000
per day on each bus. For his counterclaim, he prayed for the return of the bus units
seized and the immediate delivery of the other 2 units, as well as payment for
damages.

Issue: W/N respondent has the right to rescind or cancel the deed of sale in view of
petitioner’s failure to pay stipulated consideration.

RULING: The CA erred in stating that the deed of sale was not perfected, for it was.
There was no consummation though. However, the rescission or resolution of the
deed of sale is in order.
Being a consensual contract, sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price. From
that moment, the parties may reciprocally demand performance, subject to the
provisions of the law governing the form of contracts. A perfected contract of sale
imposes reciprocal obligations on the parties whereby the vendor obligates himself
to transfer the ownership of and to deliver a determinate thing to the buyer who, in
turn, is obligated to pay a price certain in money or its equivalent. Failure of either
party to comply with his obligation entitles the other to rescission as the power to
rescind is implied in reciprocal obligations.
Applying these legal precepts to the case at bar, we hold that respondent has the
right to rescind or cancel the deed of sale in view of petitioner’s failure to pay
stipulated consideration.
Non-payment of the purchase price of property constitutes a very good reason to
rescind a sale for it violates the very essence of the contract of sale. While it is
preferable that respondent instead should have filed an action to resolve or cancel
the deed as the right to do so must be invoked judicially, this shortcoming was cured
when the complaint itself made out a case for rescission or resolution for failure of
petitioner to comply with his obligation to pay the full purchase price.
As previously noted, petitioner did not pay the full purchase price as stipulated in the
contract whereas respondent complied with its obligation when it delivered the 2
buses. A necessary consequence of rescission is restitution with payment of damages
under Art. 1191. Also, corollary to the rescission of the contract of sale is the recovery
of possession of the object thereof. Thus, petitioner’s possession over the subject
buses became unlawful when upon demand for return, he wrongfully retained
possession over the same.
As to damages, a party is entitled only up to such compensation for the pecuniary
loss that he has duly proven. Since the amount of damages was founded merely on
speculations, we return to the provisions of the Special Trip Contract wherein the
rental is fixed at P10,000 a day per bus. This duly executed contract was presented,
marked and formally offered in evidence. The fact that Macasaet voluntarily signed
the contract evinced his acquiescence to its terms, particularly the amount of rentals.
#113

Hi-Cement Corporation v. Insular Bank of Asia and America

FACTS: Petitioners Enrique Tan and Lilia Tan (spouses Tan) were the controlling
stockholders of E.T. Henry & Co., Inc. (E.T. Henry). Among its customers are Hi-
Cement Corporation (Hi-Cement), Riverside Mills Corporation (Riverside) and
Kanebo Cosmetics Philippines, Inc. (Kanebo). For their purchases, these
corporations issued postdated checks to E.T. Henry. Respondent Insular Bank of
Asia and America (later PCIB and now Equitable PCI-Bank) granted E.T. Henry a
credit facility known as Purchase of Short Term Receivables. However, in February
1981, 20 checks of Hi-Cement were dishonored. Respondent filed a complaint for
sum of money and sought to collect the deficiencies resulting from the forclosed
mortgageon E.T. Henry's property in Sucat, Paraaque. The trial court rendered a
decision in favour of the respondents which then the CA affirmed in toto.

ISSUE: Whether or not the lower court erred in not declaring the foreclosure of E.T.
Henry's Sucat property as void due to inadecuacy of price.

HELD: With respect to the allegation that foreclosure was void due to the
inadequacy of the bid price, we agree with the CA that the mere inadequacy of the
price obtained at the [s]heriffs sale, unless shocking to the conscience, (was) not
sufficient to set aside the sale if there (was) no showing that, in the event of a
regular sale, a better price (could) beobtained.

Furthermore, in the absence of any irregularity in the foreclosure proceeding or

proof that it was carried out without strict observance of the procedure, we will
continue to assume its regularity and strike down any attempt to vitiate it. In this
case, E.T. Henry and the spouses Tan made no mention of any anomaly to support
the nullification of the foreclosure sale but merely alleged a disparity in the bid price
and the propertys fair market value.

#114

NAVARRA vs. PLANTERS DEVELOPMENT BANK

 FACTS: Jorge Navarra sent a letter to Planters Bank, proposing to repurchase the
five (5) lots earlier auctioned to the Bank, with a request that he be given until
August 31, 1985 to pay the down payment of P300,000.00.
Because the amount of P300,000.00 was sourced from a different transaction
between RRRC and Planters Bank and involved different debtors, the Bank required
Navarra to submit a board resolution from RRRC authorizing him to negotiate for
and its behalf and empowering him to apply the excess amount of P300,000.00 in
RRRC’s redemption payment as down payment for the repurchase of the Navarras’
foreclosed properties.
Then, on January 21, 1987, Planters Bank sent a letter to Jorge Navarra informing
him that it could not proceed with the documentation of the proposed repurchase of
the foreclosed properties on account of his non-
compliance with the Bank’s request for the submission of the needed board
resolution of RRRC.
The Navarras filed their complaint for Specific Performance with Injunction against
Planters Bank. In their complaint the Navarras, as plaintiffs, alleged that a
perfected contract of sale was made between them and Planters Bank whereby they
would repurchase the subject properties for P1,800,000.00 with a down payment of
P300,000.00.

ISSUE:
Whether there is a perfected contract of sale.

HELD:
There is no perfected contract of sale. The essential requisite of consent is
lacking.
The eventual failure of the spouses to submit the required board resolution
precludes the perfection of a contract of sale/repurchase between the parties. C
ontracts are perfected when there is concurrence of the parties’
wills, manifested by the acceptance by one of the offer made by the other. Here,
there was no concurrence of the offer and acceptance as would result in a perfected
contract of sale.
Evidently, what transpired between the parties was only a prolonged
negotiation to buy and to sell, and, at the most, an offer and a counter-offer with
no definite agreement having been reached by them
#115

Bravo-Guerrero v. Bravo
465 SCRA 244

FACTS: Spouses Mauricio Bravo (Mauricio) and Simona Andaya Bravo (Simona)
owned two parcels of land located along Evangelista Street, Makati City, Metro
Manila. Simona executed a General Power of Attorney (GPA) on 17 June 1966
appointing Mauricio as her attorney-in-fact. Mauricio subsequently mortgaged the
Properties. Mauricio executed a Deed of Sale with Assumption of Real Estate
Mortgage (Deed of Sale) conveying the Properties to Roland A. Bravo, Ofelia A.
Bravo and Elizabeth Bravo(vendees). The sale was conditioned on the payment of
P1,000 and on the assumption by the vendees of the PNB and DBP mortgages over
the Properties.Edward, grandson of spouses Bravo later on filed an action for the
judicial partition of the Properties. Edward later amended his complaint to include a
prayer to annul the Deed of Sale, which he claimed was merely simulated to
prejudice the other heirs.
The trial Court denied the judicial partiction, however, the CA reversed its
decision

ISSUE: Whether the subject sale was simulated.

HELD: Gross inadequacy of price by itself will not result in a void contract. Gross
inadequacy of price does not even affect the validity of a contract of sale, unless it
signifies a defect in the consent or that the parties actually intended a donation or
some other contract. Inadequacy of cause will not invalidate a contract unless there
has been fraud, mistake or undue influence. In this case, respondents have not
proved any of the instances that would invalidate the Deed of Sale.
#116

EDRADA v. RAMOS
468 SCRA 597

FACTS: Respondent spouses Eduardo and Carmencita Ramos (respondents) are the
owners of two (2) fishing vessels. Subsequently, respondents and petitioners
executed an untitled handwritten document stating that respondent is the owner of
the vessels and that they agreed with the price of 900,000 as a consideration for
the said vessels. Petitioner then delivered postdated checks.
Respondents filed an action for specific performance with damages before
the RTC. The RTC rendered a decision in favor of the respondents which the CA
affirmed.

ISSUE: Whether or not the contract of sale is perfected.

HELD: In Swedish Match, AB v. Court of Appeals,[20] we held that before a

valid and binding contract of sale can exist, the manner of payment of the purchase
price must first be established, as such stands as essential to the validity of the sale.
After all, such agreement on the terms of payment is integral to the element of a
price certain, such that a disagreement on the manner of payment is tantamount to
a failure to agree on the price.

Assuming arguendo that the document evinces a perfected contract of sale,

the absence of definite terms of payment therein would preclude its enforcement by
the respondents through the instant Complaint. A requisite for the judicial
enforcement of an obligation is that the same is due and demandable. The absence
of a stipulated period by which the purchase price should be paid indicates that at
the time of the filing of the complaint, the obligation to pay was not yet due and
demandable.

In order that respondents could have a valid cause of action, it is essential that
there must have been a stipulated period within which the payment would have
become due and demandable.
#117

Macapagal v. Remorin
458 SCRA 652

FACTS: Corazon, adopted daughter of Candido Caluza who is the owner of the
parcel of land in the present controversy. Pursuant to the Memorandum of
Agreement executed between Purificacion, second wife of Candido, Catalina, whom
Purificacion sold the subject lot when Corazon was in Thailand and Corazon, they
agreed that title to the southernmost apartment (garage) as well as the portion of
the lot shall be transferred direct to its interested buyer with defendant Catalina O.
Remorin assuming and paying (from the proceeds of the sale) her mortgage
obligation with Mrs. Laurelia C. Valenciano.
Controversy erupted anew when Catalina sold the same lot to herein
petitioner Mariquita Macapagal, claiming to be authorized under the Compromise
Agreement. Laurelia demanded that petitioner and her family vacate the premises,
to no avail. Petitioner sought to nullify the sale executed by Corazon in favor of
Laurelia and to declare valid the one executed by Catalina in her favor.
The RTC rendered judgment in favor of the petioner which the CA reversed.

ISSUE: Whether or not that the sale executed by Catalina in her favor should
prevail over the one executed by Corazon in favor of Laurelia.

HELD: The fact that the deed of sale between respondents Corazon and Laurelia
did not accurately reflect the true consideration thereof is not cause for declaration
of its nullity. When the parties intended to be bound by the contract except that it
did not reflect the actual purchase price of the property, there is only a relative
simulation of the contract which remains valid and enforceable. It cannot be
declared null and void since it does not fall under the category of an absolutely
simulated or fictitious contract. The contract of sale is valid but subject to
reformation.
#118

Payongayong v. Court of Appeals

430 SCRA 210 (2004)

FACTS: Eduardo Mendoza was the registered owner of a parcel of land situated in
Barrio San Bartolome, Caloocan. He mortgaged the land to Meralco Employees
Savings and Loan Association (MESALA) to secure a loan of ₱81,700.00. Mendoza
executed a Deed of Absolute Sale with Assumption of Mortgage in favor of Spouses
Isabelo and Erlinda Payongayong and bound themselves to pay the mortgage
indebtedness and consideration of ₱50,000.00. Without knowledge of petitioners, the
same property was mortgaged for a 2nd time to secure a loan of ₱758,000.00.
Meanwhile, the subject property was sold to Spouses Clemente and Rosalinda
Salvador. Thus, complaint for annulment of deed of absolute sale was filed by
Spouses Payongayong. They contend that Spouses Mendoza meticulously sold to
respondents the property which was priorly sold to them and that respondents acted
in bad faith in acquiring it, having absolute knowledge of the Deed of Absolute Sale
with Assumption of Mortgage between petitioners and Mendoza. Further, the deed of
sale was simulated and therefore, null and void. Respondents claim that they are
entitled to the protection accorded to purchasers in good faith for they did not rely
upon Mendoza’s title. Rosalia personally inspected the property and verified with
Registry of Deeds of Quezon City if Mendoza was indeed the registered owner.

ISSUE: Was the sale between Mendoza and Spouses Salvador simulated?

HELD: No. Simulation occurs when an apparent contract is a declaration of a fictitious

will, deliberately made by the agreement of the parties, in order to produce, for the
purpose of deception, the appearance of a juridical act which does not exist or is
different from that which is executed. Its requisites are: a) an outward declaration of
will different from the will of the parties; b) the false appearance must have been by
mutual agreement; and c) the purpose is to deceive third persons. The claim of
simulation does not lie. The cancellation of Mendoza’s certificate of title over the
property and procurement of one in its stead in the name of respondents, which acts
were directed towards the fulfillment of the purpose of the contract unmistakably
show the parties intention to give effect to their agreement. However, the Court
cannot come to petitioners’ succor at the expense of respondents who are innocent
purchasers in good faith.
#119

Buenaventura v. CA
416 SCRA 263

FACTS: The private respondent sold its property to their legitimate children herein
the co-respondent. Thus this petition where the petitioner contends that the
contract of sale was void, Because there inadequate consideration and the contract
was a conspiracy designed to deprive the rest of the compulsory heirs of their
legitime.

ISSUE: Whether or not inadequate consideration renders a contract of sale void.

HELD: No, The court held that the inadequate consideration bears no merit to the
validity of a contract of sale.

At the present case the petitioner has no legal basis because legitime of a
compulsory heir is computed at the time of death of the decedent. Petitioner
therefore cannot claim an impairment of their legitime while their parents live.
#120
Montecillo v. Reynes
385 SCRA 244

FACTS: Reynes asserted that she is the owner of a lot situated in Mabolo, Cebu
City. Reynes alleged further that on March 1, 1984 she signed a Deed of Sale of the
Mabolo Lot in favor of Montecillo (Montecillos Deed of Sale for brevity). Reynes,
being illiterate, signed by affixing her thumb-mark on the document. Montecillo
promised to pay the agreed P47,000.00 purchase price within one month from the
signing of the Deed of Sale. Reynes and the Abucay Spouses alleged that on June
18, 1984 they received information that the Register of Deeds of Cebu City issued
Certificate of Title No. 90805 in the name of Montecillo for the Mabolo Lot.
Reynes and the Abucay Spouses argued that for lack of consideration there
(was) no meeting of the minds[11] between Reynes and Montecillo. Thus, the trial
court should declare null and void ab initio Montecillos Deed of Sale, and order the
cancellation of Certificate of Title No. 90805 in the name of Montecillo.
The trial court declared the he deed of sale in favor of defendant null and
void with then the CA affirmed.

ISSUE: Whether the Deed of Sale is void ab initio or only rescissible.

HELD: On its face, Montecillos Deed of Absolute Sale appears supported by a

valuable consideration. However, based on the evidence presented by both Reynes
and Montecillo, the trial court found that Montecillo never paid to Reynes, and
Reynes never received from Montecillo, the P47,000.00 purchase price. There was
indisputably a total absence of consideration contrary to what is stated in
Montecillos Deed of Sale. As pointed out by the trial court.
This is not merely a case of failure to pay the purchase price, as Montecillo
claims, which can only amount to a breach of obligation with rescission as the
proper remedy. What we have here is a purported contract that lacks a cause - one
of the three essential requisites of a valid contract. Failure to pay the consideration
is different from lack of consideration. The former results in a right to demand the
fulfillment or cancellation of the obligation under an existing valid contract while the
latter prevents the existence of a valid contract.
Where the deed of sale states that the purchase price has been paid but in
fact has never been paid, the deed of sale is null and void ab initio for lack of
consideration.
#121

Cometa v. CA
351 SCRA 292 (2001)

FACTS: CFI awarded to Cometa the sum of P57, 396.85 of which the sheriff levied
on 3 commercial lots of Cometa located in Makati. 2 of the lots were sold to Franco
at public auction.
Later, Herco Realty filed a civil case to annul the levy on execution and sale of
the real properties alleging that the ownership of the lots had been transferred by
Cometa to Herco before the execution of the sale. It also assailed the legality of the
levy contending that the personal properties of Cometa must be exhausted first.
Meanwhile, the RTC Branch 60 issued an order directing the Register of Deeds
to cancel the certificates of title of Cometa and to issue new ones in favor of Franco.

ISSUE: Whether the levy and sale is valid and proper. For if the respondent acquired
no interest in the property by virtue of the levy and sale, then, he is not entitled to
its possession.

RULING:
There is no question that petitioners were remiss in attending with dispatch to
the protection of their interests as regards the subject lots, and for that reason the
case in the lower court was dismissed on a technicality and no definitive
pronouncement on the inadequacy of the price paid for the levied properties was ever
made. In this regard, it bears stressing that procedural rules are not to be belittled
or dismissed simply because their non-observance may have resulted in prejudice to
a party’s substantive rights as in this case. Like all rules, they are required to be
followed except only when for the most persuasive of reasons they may be relaxed
to relieve a litigant of an injustice not commensurate with the degree of his
thoughtlessness in not complying with the procedure prescribed.
While there is no dispute that mere inadequacy of the price per se will not set
aside a judicial sale of real property, nevertheless, where the inadequacy of the price
is purely shocking to the conscience, such that the mind revolts at it and such that a
reasonable man would neither directly or indirectly be likely to consent to it, the same
will be set aside.
The subject lots were sold en masse, not separately as above provided. The
unusually low price for which they were sold to the vendee, not to mention his
vehement unwillingness to allow redemption therein, only serves to heighten the
dubiousness of the transfer.
With regard to the applicability of prescription and laches, there can be no
question
#122

Central Bank of the Philippines v. Bichara

328 SCRA 807 (2000)

FACTS: Respondents SPOUSES ALFONSO and ANACLETA BICHARA were the former
registered owners of Lots 621-C-1 and 621-C-2 situated in Legazpi City. The
respondents sold the two properties to petitioner CENTRAL BANK OF THE
PHILIPPINES for the sum of P405,500. 00, or at P500.00 per square meter.
Despite the issuance of the title, petitioner failed to pay respondent. On its
part, respondents did not fill up the lot with escombro despite several demands
made by petitioner. Petitioner was thus constrained to undertake the filling up of
the said lots, by contracting the services of BGV Construction. Petitioner, however,
still did not pay the respondents.
Subsequently, respondents filed an action for the sescission or specific
performance with damages, against petitioner before the Regional Trial Court.
The trial court ordered the respondents to accept the payment. However, the
CA ordered the rescission of the contract of sale and reconveyance of the
properties.

ISSUE: Whether or not the CA erred in rescinding the contract of sale.

HELD: Evidently then, respondents were guilty of non-performance of said

stipulation. The deed of sale expressly stipulated that the vendors were to
undertake, at their expense, the filling up of the lots with escombro free from waste
material compacted to the street level. This was to be accomplished upon the
signing of the contract and insofar as petitioner was concerned, respondents'
obligation was demandable at once.
In this context, the appellate court erred in decreeing the rescission,
otherwise called resolution, of the the subject deed of sale. Respondents should not
be allowed to rescind the contract where they themselves did not perform their
essential obligation thereunder. It should be emphasized that a contract of sale
involves reciprocity between the parties. Since respondents were in bad faith, they
may not seek the rescission of the agreement they themselves breached.[40]
Consequently, the decision rendered by the trial court should be reinstated as being
just and proper under the premises.

Raet v. CA
295 SCRA 590 (1998)

Facts:
Petitioners Cesar and Elvira Raet (the spouses Raet) and petitioners Rex and
Edna Mitra (the spouses Mitra) negotiated with Amparo Gatus concerning the
possibility of buying the rights of the latter to certain units at the Las Villas de Sto.
Nio Subdivision in Meycauayan, Bulacan. This subdivision was developed by private
respondent Phil-Ville Development and Housing Corporation (PVDHC) primarily for
parties qualified to obtain loans from the Government Service Insurance System
(GSIS). The spouses Raet and the spouses Mitra paid Gatus the total amounts
of P40,000.00 and P35,000.00, respectively, for which they were issued receipts by
Gatus in her own name. In early 1985, the spouses Raet and the spouses Mitra
applied directly with private respondent PVDHC for the purchase of units in the said
subdivision.

The GSIS disapproved the loan applications of petitioners. For this reason, they
were advised by private respondent PVDHC to seek other sources of financing. In the
meantime, they were allowed to remain in the subject premises. The spouses Raet
and the spouses Mitra had earlier filed complaints against private respondent PVDHC
with the Regional Trial Court of Malolos, Bulacan for the recovery of the supplemental
costs they had paid to private respondent PVDHC. However, the complaint of the
spouses Raet was dismissed on the ground that the Regional Trial Court did not have
jurisdiction over cases involving disputes between subdivision buyers and developers
which fall within the exclusive competence of the Housing and Land Use Regulatory
Board (HLURB). On the other hand, the complaint of the spouses Mitra was withdrawn
by them. The spouses Raet and the spouses Mitra then filed a complaint for specific
performance and damages against Amparo Gatus and private respondent PVDHC with
the HLURB which gave judgment in petitioners favor.

Issue:
Whether or not petitioners and private respondents have a perfected and
enforceable contract of sale or at least an agreement to sell over the disputed
housing units.

Ruling:
The parties in this case had not reached any agreement with regard to the sale
of the units in question. As this Court sees it, there was no contract of sale perfected
between the private parties over the said property, there being no meeting of the
minds as to terms, especially on the price thereof. At best, only a proposed contract
to sell obtained which did not even ripen into a perfected contract due at the first
instance to private respondents inability to secure approval of their GSIS housing
loans. As it were, petitioners and private respondents have not hurdled the
negotiation phase of a contract, which is the period from the time the prospective
contracting parties indicate interest on the contract to the time the contract comes
into existence - the perfection stage - upon the concurrence of the essential elements
thereof.
 Villanueva v. CA
267 SCRA 89 (1997)

Facts:
Gamaliel Villanueva is a tenant of a unit in the 3-door apartment building
owned by defendants-spouses (now private respondents) Jose Dela Cruz and Leonila
dela Cruz located at Project 8, Quezon City. Dela Cruz offered said parcel of land with
the 3-door apartment building for sale and plaintiffs, son and mother, showed interest
in the property. Because said property was in arrears (overdue) in the payment of
the realty taxes, dela Cruz approached Irene Villanueva and asked for a certain
amount to pay for the taxes so that the property would be cleared of any
incumbrance. Irene Villanueva gave P10,000.00 on two occasions. It was agreed by
them that said P10,000.00 would form part of the sale price of P550,000.00.

Dela Cruz then executed in favor of their co-defendants, the spouses Guido
Pili and Felicitas Pili, a Deed of Assignment of the other one-half portion of the parcel
of land wherein plaintiff Gamaliel Villanueva’s apartment unit is situated, purportedly
as full payment and satisfaction of an indebtedness obtained from defendants Pili.
The Transfer Certificate of Title No. 356040 was issued in the name of defendants Pili
on the same day. The plaintiffs came to know of such assignment and transfer and
issuance of a new certificate of title in favor of defendants Pili. Plaintiff Gamaliel
Villanueva complained to the barangay captain of Bahay Turo, Quezon City, on the
ground that there was already an agreement between defendants Dela Cruz and
themselves that said portion of the parcel of land owned by defendants Dela Cruz
would be sold to him. As there was no settlement arrived at, the plaintiffs elevated
their complaint to this Court through the instant action.

Issue:
Whether or not there was a perfected sale between Villanueva and Dela Cruz

Ruling:
There was none. The price of the leased land not having been fixed, the
essential elements which give life to the contract were lacking. It follows that the
lessee cannot compel the lessor to sell the leased land to him. The price must be
certain, it must be real, not fictitious. A contract of sale is not void for uncertainty
when the price, though not directly stated in terms of pesos and centavos, can be
made certain by reference to existing invoices identified in the agreement. In this
respect, the contract of sale is perfected. The price must be certain, otherwise there
is no true consent between the parties. There can be no sale without a price. In the
instant case, however, what is dramatically clear from the evidence is that there was
no meeting of mind as to the price, expressly or impliedly, directly or indirectly. Sale
is a consensual contract. He who alleges it must show its existence by competent
proof. Here, the very essential element of price has not been proven.
 Pangilinan v. CA
279 SCRA 590 (1997)

Facts:
Petitioners Pangilinan (husband and wife), and the private respondents Jose
R. Canlas and Luis R. Canlas entered into a Contract to Buy and To Sell a subdivision
lot at Sto. Nio Village, San Fernando, Pampanga, for a total contract price
of P 17,310.00, payable on installment basis at P 189.02 a month for 120 months.
The sum of P 1, 731 representing 10% of the total price of the lot was paid by the
petitioner to the private respondents and thereafter monthly installments which
amounted to about 85% of the total price were effected as of January, 1974; the last
payment thereof was made on May 14, 1975. Paragraph 5 of the contract provided
for automatic extrajudicial rescission upon default in payment of three (3)
consecutive monthly installments or to comply with any of the terms and conditions,
with forfeitures of installment as rents and as payment for damages.

The said contract to buy and to sell as well as the receipts of various payments
made by petitioners in favor of private respondents were given by former to Mr.
Arcadio S. Mallari. Mr. Mallari equipped with a Special Power of Attorney from the
spouses Adoracion C. Pangilinan and George Pangilinan went personally to the private
respondents and requested them to release the title of the lot as he would pay in full
the alleged remaining balance of P 1,875.00. The private respondents told him to
return after two weeks as they would confer with each other. When he returned, the
private respondent Jose R. Canlas told him that they were not in a position to release
the title of said lot because the same had already been disposed of. Mr. Mallari
discovered that the lot was mortgaged to the Rural Bank of Sta. Rita. After the lapse
of eight years from the last date of payment, he instituted a complaint for Specific
Performance and Damages before the Regional Trial Court (RTC) in San Fernando,
Pampanga.

Issue:
Whether or not a creditor can unilaterally and summarily rescind a contract to
sell a subdivision lot.

Ruling:
Yes. Pursuant to Article 1911 of the New Civil Code, the law makes it available
to the injured party alternative remedies such as the power to rescind or enforce
fulfillment of the contract, with damages in either case if the obligor does not comply
with what is incumbent upon him. There is nothing in this law which prohibits the
parties from entering into an agreement that a violation of the terms of the contract
would cause its cancellation even without court intervention. The rationale for the
foregoing is that in contracts providing for automatic revocation, judicial intervention
is necessary not for purposes of obtaining a judicial declaration rescinding a contract
already deemed rescinded by virtue of an agreement providing for rescission even
without judicial intervention, but in order to determine whether or not the rescission
was proper. The validity of the stipulation in the contract providing for automatic
rescission upon non-payment cannot be doubted. It is in the nature of an agreement
granting a party the right to rescind a contract unilaterally in case of breach without
need of going to court. Thus, rescission under Article 1191 was inevitable due to
petitioners failure to pay the stipulated price within the original period fixed in the
agreement.

Ocampo v. CA
233 SCRA 551 (1994)

Facts:
In dispute is an 18,260-square meter lot in the Poblacion of Tigbauan, Iloilo
and registered under Original Certificate of Title No. 0-7743 in the name of seller
Severino Tolosa. Tolosa mortgaged the land to the Philippine Veterans Bank and had
the encumbrance annotated on his certificate of title.Tolosa and Pilar T. Ocampo, the
latter being then represented by Teresa T. Borres, entered into a contract whereby
Tolosa undertook to sell the same parcel of land to Ocampo. On 21 April 1975, the
parties entered into an "Agreement to Sell Real Property" whereby Tolosa "sells,
cedes and transfers" the land to Ocampo in consideration of P25,000.00, P12,500.00
of which was paid upon signing of the deed and the balance to be due within six (6)
months thereafter.

Before the six-month period to complete the payment of the purchase price
expired, Ocampo paid but only the total of P16,700.00. Nevertheless Tolosa
accepted her subsequent late payments amounting to P3,900.00. Meanwhile, the
subject property was involved in a boundary dispute. Upon learning of the mortgage
lien, Ocampo caused her adverse claim to be annotated on Tolosa’s certificate of title.
In his letter to Ocampo, Tolosa sought the cancellation of Ocampo’s adverse claim
and presented her with two options, namely, a refund of payments made, or a share
from the net proceeds if sold to a third party. On even date, Ocampo through counsel
wrote Tolosa expressing her readiness to pay the balance of the purchase price, which
was P5,400.00, should Tolosa be ready to deliver to her the deed of absolute sale
and the owner’s duplicate of OCT No. 0-7743 for purposes of registration.

On 3 June 1977, Tolosa and Magdalena S. Villaruz executed a "Contract to

Sell" whereby Tolosa "sells, cedes, transfers, and conveys" to Villaruz the same land
in consideration of P94,300.00. Tolosa succeeded in securing from another branch of
the court the cancellation of the adverse claims of Ocampo without notice to her. This
paved the way for the registration of the contract of sale of Villaruz dated 8 August
1979 and the subsequent issuance of Transfer Certificate of Title No. T-100021 in her
name which canceled the Original Certificate of Title No. 0-7743 of Tolosa.

Issue:
Who among Villaruz and Ocampo is the preferred buyer of the disputed lot.

Ruling:
While the contract dated 3 June 1977 in favor of Villaruz is also a contract of
sale, that of Ocampo dated 21 April 1975 should prevail pursuant to Art. 1544 of the
Civil code on double sales. While Villaruz may have registered his contract or came
into possession ahead of Ocampo, Villaruz was never in good faith. Since Ocampo
had her adverse claim annotated on Tolosa’s OCT, Villaruz could not profess
innocence thereof when she signed her contract on 3 June 1977; in fact, her full
payment of the purchase price was made dependent, among others, on the
cancelation of this claim. Moreover, Villaruz admitted having been informed by Tolosa
of the first sale to Ocampo while still negotiating to buy the land. Knowledge of the
foregoing should have impelled Villaruz to investigate the circumstances of the
annotation since this is equivalent to registration of Ocampo’s contract of sale as
against Villaruz. In sum, Ocampo having the older title in good faith and considering
that personal knowledge thereof by Villaruz constitutes registration as against the
latter, Ocampo should be considered the preferred buyer.

Rodriguez v. CA
207 SCRA 553 (1992)

Facts:
Petitioner Rodriguez alias Uy Tian Kiu is a businessman from Cebu City whose
business, includes the importation of various commodities from Hongkong which he
occasionally ordered from Allied Overseas Commercial Co., Ltd., a Hongkong
corporation. The Managing Director of Allied Overseas Commercial Co., Ltd is Lin Ping
Huang, a close friend of private respondent Lucman. Petitioner Rodriguez, as a result
of business transactions with the Hongkong Corporation, accumulated an
indebtedness owed to Allied Overseas in the amount of HK $418,729.60 which had
at that time in 1968 an exchange value of P450,553.00. Upon demand for payment
by the Hongkong Corporation, the petitioner issued a pay-to-cash check dated
September 11, 1970 covering the indebtedness. The check was, however, dishonored
for lack of funds, the account having been closed two months earlier. Subsequently,
the Allied Overseas Commercial Co., Ltd., through its Managing Director, Lin Ping
Huang, assigned its credit to the private respondent. The contract was evidenced by
a Deed of Assignment duly executed before Philippine Consular officials in Hongkong

Issue:
Whether or not the consideration given for the deed of assignment which is
stated as "HK$1.00 and other valuable considerations” is valid.
Ruling:
A valuable consideration, however small or nominal if given or stipulated in
good faith is, in the absence of fraud, sufficient. A stipulation in consideration of $1
is just as effectual and valuable a consideration as a larger sum stipulated for or paid
(Penaco v. Ruaya, 110 SCRA 46 [1981]; Ascalon vs. Court of Appeals, 158 SCRA
542, [1988]). It is not clear what considerations led to the assignment but they must
have been sufficiently valuable to the assignor in view of the amount involved. Hence,
by virtue of the deed of assignment whose existence and legality remains unrebutted,
the respondent acquired all the rights of the assignor including the right to sue in his
own name as the legal assignee. The contract was not executed merely to enable the
foreign corporation to sue in the Philippines because even without the assignment,
the foreign corporation can also sue in the Philippines for isolated transactions even
if not licensed to engage in business in this country.

Jocson v. CA
170 SCRA 333 (1989)

Facts:
Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez are the only
surviving offsprings of the spouses Emilio Jocson and Alejandra Poblete, while
respondent Ernesto Vasquez is the husband of Agustina. Alejandra Poblete
predeceased her husband without her intestate estate being settled. Subsequently,
Emilio Jocson also died intestate on April 1, 1972.

As adverted to above, the present controversy concerns the validity of three

(3) documents executed by Emilio Jocson during his lifetime. These documents
purportedly conveyed, by sale, to Agustina Jocson-Vasquez what apparently covers
almost all of his properties, including his one-third (1/3) share in the estate of his
wife. Petitioner Moises Jocson assails these documents and prays that they be
declared null and void and the properties subject matter therein be partitioned
between him and Agustina as the only heirs of their deceased parents.Petitioner
explained that there could be no real sale between a father and daughter who are
living under the same roof, especially so when the father has no need of money as
the properties supposedly sold were all income-producing.

Issue:
Whether or not the aforesaid contracts are void because of alleged
inadequacy of price

Ruling:
No. To begin with, there was no showing that the prices were grossly
inadequate. In fact, the total purchase price paid by Agustina Jocson-Vasquez is
above the total assessed value of the properties alleged by petitioner. Petitioner
alleged that the total assessed value of the properties mentioned was P8,920, P3,500
and, P 24,840, while the purchase price paid was P10,000, P5,000, and P8,000,
respectively, the latter for the 1/3 share of Emilio Jocson from the paraphernal
properties of his wife, Alejandra Poblete. And any difference between the market
value and the purchase price, which as admitted by Emilio Jocson was only slight,
may not be so shocking considering that the sales were effected by a father to her
daughter in which case filial love must be taken into consideration.

Further, gross inadequacy of price alone does not affect a contract of sale,
except that it may indicate a defect in the consent, or that the parties really intended
a donation or some other act or contract (Article 1470, Civil Code) and there is
nothing in the records at all to indicate any defect in Emilio Jocson's consent.

Ong v. Ong
139 SCRA 133 (1985)

Facts:
On February 25, 1976, Imelda Ong, for and in consideration of P1.00 and other
valuable considerations, executed a quitclaim over a parcel of land in Makati in favor
of Sandra Maruzzo, then a minor. On November 19, 1980, Imelda revoked the
quitclaim and donated the property to her son Rex. On June 20, 1983, Sandra,
through her guardial ad litem Alfredo Ong, filed an action to recover the land and to
declare the donation to Rex null and void. In their responsive pleading, petitioners
claimed that the quitclaim is equivalent to a donation which requires acceptance by
the donee, and since Sandra was a minor, there was no valid acceptance. The trial
court ruled that the quitclaim is equivalent to a sale. The Intermediate Appellate
Court affirmed the decision.

Issue:
Whether the quitclaim is equivalent to a deed of sale or to a deed of donation

Ruling:
The execution of a deed purporting to convey ownership of a realty is in itself
prima facie evidence of the existence of a valuable consideration, the party alleging
lack of consideration has the burden of proving such allegation. Even granting that
the Quitclaim deed in question is a donation, Article 741 of the Civil Code provides
that the requirement of the acceptance of the donation in favor of minor by parents
of legal representatives applies only to onerous and conditional donations where the
donation may have to assume certain charges or burdens. Donation to an
incapacitated donee does not need the acceptance by the lawful representative if said
donation does not contain any condition. In simple and pure donation, the formal
acceptance is not important for the donor requires no right to be protected and the
donee neither undertakes to do anything nor assumes any obligation. The Quitclaim
now in question does not impose any condition.
 Ladanga v. CA
31 SCRA 361 (1984)

Facts:
Clemencia Aseneta, a spinster, had a nephew named Bernardo and a niece
named Salvacion. She legally adopted Bernardo in 1961. On April 6, 1974, Clemencia
signed 9 deeds of sale in favor of Salvacion for various real properties, one being the
Paco property which is the subject of this petition, and purportedly sold for P26,000.
In May 1975, Bernardo, as guardian of Clemencia, filed a case for reconveyance of
the Paco property. Clemencia testified that she had not received a single centavo
from Salvacion. The trial court, affirmed by the Court of Appeals, declared the sale
void.

Issue:
Whether the sale is void for lack of consideration

Held:
The Ladanga spouses contend that the Appellate Court disregarded the rule on
burden of proof. This contention is devoid of merit because Clemencia herself testified
that the price of P26,000 was not paid to her. The burden of the evidence shifted to
the Ladanga spouses. They were not able to prove the payment of that amount. The
sale was fictitious. A contract of sale is void and produces no effect whatsoever where
the price, which appears therein as paid, has in fact never been paid by the purchaser
to the vendor. It was not shown that Clemencia intended to donate the Paco property
to the Ladangas. Her testimony and the notary's testimony destroyed any
presumption that the sale was fair and regular and for a true consideration.
 Tongoy v. CA
123 SCRA 99 (1983)

Facts:
This case is an action for reconveyance of the 2 parcles of land in Bacolod City.
The 1st land is Hacienda Pulo which title was registered in the name of Luis D. Tongoy
and the 2nd is Cuaycong property which title was transferred to Luis D. Tongoy. Said
Luis D. Tongoy mortgaged the properties in the year 1936 for a period of 15 years.
The mortgage obligations to PNB were fully paid on April 17, 1956; and that the
release of mortgage was recorded in the Registry of Deeds on May 5, 1958, and that
the case for reconveyance was filed in the trial court on June 2, 1966.

Issue:
Whether or not the rights of herein respondents over subject properties which
were subjects of simulated or fictitious transactions, have already prescribed.

Ruling:
Evidently, the deeds of transfer executed in favor of Luis Tongoy were from
the very beginning absolutely simulated or fictitious, since the same were made
merely for the purpose of restructuring the mortgage over the subject properties and
thus preventing the foreclosure by the PNB. As stated in Articles 1409 and 1410 of
the Civil Code, the action for reconveyance instituted by the respondents, which is
anchored on the said simulated deeds of transfer, cannot and should not be barred
by prescription. There is no implied trust that was generated by the simulated
transfers because being fictitious or simulated, the transfers were null and void ab
initio from the very beginning and thus vested no rights whatsoever in favor of Luis
Tongoy or his heirs.
 Alsua-Bett v. CA
92 SCRA 332 (1979)

Facts:
Don Jesus Alsua and his wife, Doña Tinay, together with all their living children,
entered into a duly notarized agreement, (escritura de particion extrajudicial/extra
judicial partition) for the inventory and partition of all the spouses present and
existing properties. In the provision of said extra judicial partition, each of the four
children was allotted with the properties considered as their share in the estate or as
inheritance left by the deceased where they will be the absolute owner of the
properties assigned in case of death of one of the spouses.

Issue:

Whether or not the sale was fraudulent because of the inadequacy of the price.

Ruling:

No. Inadequacy of consideration does not vitiate a contract unless it is proven

which in the case at bar was not, that there was fraud, mistake or undue influence.
(Article 1355, New Civil Code). The Court does not find the stipulated price as so
inadequate to shock the court's conscience, considering that the price paid was much
higher than the assessed value of the subject properties and considering that the
sales were effected by a father to her daughter in which case filial love must be taken
into account.
 Castillo v. Galvan
85 SCRA 526 (1978)

Facts:
The complaint, filed on August 1, 1961, is for the annulment of a document,
denominated "DEED OF ABSOLUTE SALE", executed on August 3, 1955, by and
between Paulino Galvan, professedly the predecessor-in-interest of herein plaintiffs,
and defendants Josefa Galvan and Natividad S. Galvan, and for damages and
attorney's fees. The plaintiffs therein alleged that Paulino Galvan, during his lifetime,
was the registered owner of an undivided one-half (1/2) interest over two parcels of
land.

The other undivided half is owned by his two daughters by a first marriage,
herein defendants Josefa Galvan and Natividad Galvan. On these lots, which are
contiguous, is built the family home. On February 10, 1961, Paulino Galvan died and
the plaintiffs, out of "delicadeza" waited for the defendants to initiate the move for
the settlement of his estate. But, after waiting for some time and finding that none
was forthcoming, the plaintiffs became apprehensive, so that they began to go over
the papers concerning the properties of the decedent. In the office of the Register of
Deeds of Dagupan City, they were surprised to find a deed of sale, signed by the late
Paulino Galvan and the plaintiff, Maria Encarnacion Castillo, whereby they had
purportedly sold for P500.00 the one-half undivided portion of Paulino Galvan over
said lots in favor of defendants.

The plaintiffs alleged that the undivided half share of Paulino Galvan was
worth around P22,500.00 so that he could not have sold it for only P500.00.
Wherefore, they prayed that the deed of sale be declared null and void; that the
plaintiffs be declared the owners of four-sixths (4/6) of the undivided haIf share
pertaining to Paulino Galvan; that the defendants be ordered to pay the amount of
P1,500.00, as attorney's fees; and to pay the costs of suit.

Issue:

Whether or not the trial court improperly dismissed the complaint on the
ground of prescription.

Ruling:

No. The allegations of the complaint show that the plaintiffs' action is to declare
void and inexistent the deed of sale executed by Paulino Galvan and Encarnacion
Castillo on August 3, 1955, in favor of Josefa and Natividad Galvan, upon the grounds
that (a) there is fraud in securing the signatures of the vendors in said deed of sale;
and (b) there was no consideration given at the time of the transaction. In other
words, the plaintiffs are seeking a judicial declaration that the deed of sale in question
is void ab initio, which action is imprescriptible. The trial court erred, therefore, in
dismissing the complaint. for the reasons stated. The case is remanded to the court
of origin for further proceedings.

De Leon v. Salvador
36 SCRA 507 (1970)

Facts:
A judgment for P35,000.00-actual, moral and exemplary damages obtained by
Enrique de Leon against private respondent Eusebio Bernabe in Civil Case No. C-189
of Branch XII of the Rizal court of first instance, Caloocan City branch presided by
Judge Fernando A. Cruz, having become final and executory, a writ of execution was
issued by said court. Pursuant thereto, the city sheriff, on November 8, 1966 levied
on execution on two parcels of land of 682.5 square meters each registered in
the names of Bernabe under T. C. T. Nos. 94985 and 94986 of Caloocan City. At the
execution sale held on February 14, 1967, the city sheriff sold the said properties to
herein petitioner, Aurora (sister of the judgment creditor) as the highest bidder for
the total sum of P30,194.00, (the property then being subject to an existing mortgage
lien in the amount of P120,000.00). The sheriff executed the corresponding
certificate of sale in her favor, which was duly registered on February 21, 1967 with
the Caloocan City register of deeds.

On February 7, 1968, just about two weeks before the expiration, of the one-
year period to redeem the properties sold in execution, the judgment
debtor Bernabe filed a separate civil action docketed as Civil Case No. C-1217 against
his judgment creditor Enrique de Leon, herein petitioner Aurora P. de Leon as
purchaser and the sheriff as defendants for the setting aside or annulment of the
execution sale held on February 14, 1967 "for being anomalous and irregular", and
for the ordering of a new auction sale.

Issue:

Whether or not the price of the subject property sold at auction was grossly
inadequate.
Ruling:

No. As to the alleged gross inadequacy of the price of P30,194.00 paid by

Aurora when according to Bernabe the properties could have been easily sold for a
total price of P385,000.00, Bernabe has admitted that there was an existing
mortgage lien on the properties in the amount of P120,000.00 which necessarily
affected their value.

However, while in ordinary sales for reasons of equity a transaction may be

invalidated on the ground of inadequacy of price, or when such inadequacy shocks
one's conscience as to justify the courts to interefere, such does not follow when the
law gives to the owner the right to redeem, as when a sale is made at public auction,
upon the theory that the lesser the price the easier it is for the owner to effect the
redemption. And so it was aptly said: 'When there is the right to redeem, inadequacy
of price should not be material, because the judgment debtor may reacquire the
property or also sell his right to redeem' and thus recover the loss he claims to have
suffered by reason of the price obtained at the auction sale.

136. Mapalo Vs. Mapalo

17 SCRA 116

FACTS:

The spouses Miguel Mapalo and Candida Quiba were the registered owners of a
residential land located in Pangasinan. (1,635 sq. m.)

The spouses donated the eastern half of the land to Miguel’s brother – Maximo Mapalo
who was about to get married.

However, they were deceived into signing, on October 15, 1936, a deed of absolute
sale over the entire land in Maximo’s favor. Their signatures were procured by fraud
because they were made to believe by Maximo and the lawyer who acted as notary
public who "translated" the document, that the same was a deed of donation in
Maximo's favor covering one-half of their land. (It must be noted that the spouses
are illiterate farmers).

Although the document of sale stated a consideration of Five Hundred (P500.00)

Pesos, the aforesaid spouses did not receive anything of value for the land.

In 1938, Maximo Mapalo, without the consent of the spouse, registered the sale in
his favor.

After thirteen years (1951), he sold the land to the Narcisos. (Evaristo, Petronila
Pacifico and Miguel) who thereafter registered the sale and obtained a title in their
favor.
In 1952, the Narcisos filed a complaint with the CFI to be declared owners of the
entire land, for possession of its western portion; for damages; and for rentals.

The Mapalo spouses filed a counterclaim seeking cancellation of the the Narcisos’
titles as to the western half of the land. They said that their signatures to the deed
of sale of 1936 was procured by fraud and that the Narcisos were buyers in bad faith.

They also filed another complaint wherein they asked the court to declare deeds of
sale of 1936 and of 1951 over the land in question be declared null and void as to
the western half of said land.

CFI ruled in favor of the Mapalo spouses. Upon appeal filed by Narcisos, CA reversed
the lower court’s RULING solely on the ground that the consent of the Mapalo spouses
to the deed of sale of 1936 having been obtained by fraud, the same was voidable,
not void ab initio, and, therefore, the action to annul the same, within four years
from notice of the fraud, had long prescribed. (From March 15, 1938). Hence, this
appeal.

ISSUE:

WON the deed of sale executed in 1936 was null and void.

RULING:

YES, the sale was void.

The Civil Code governs the transaction because it was executed in 1936

Accordingly, since the deed of sale of 1936 is governed by the Old Civil Code, it should
be asked whether its case is one wherein there is no consideration, or one with a
statement of a false consideration. If the former, it is void and inexistent; if the latter,
only voidable, under the Old Civil Code.

There is lack of consideration

As observed earlier, the deed of sale of 1936 stated that it had for its consideration
Five Hundred (P500.00) Pesos. In fact, however, said consideration was totally
absent. The problem, therefore, is whether a deed which states a consideration that
in fact did not exist, is a contract without consideration, and therefore void ab initio,
or a contract with a false consideration, and therefore, at least under the Old Civil
Code, voidable.

When there is no consideration, the contract is null and void

According to Manresa, what is meant by a contract that states a false consideration
is one that has in fact a real consideration but the same is not the one stated in the
document.

A contract of purchase and sale is null and void and produces no effect whatsoever
where the same is without cause or consideration in that the purchase price which
appears thereon as paid has in fact never been paid by the purchaser to the vendor.

137. MORALES v. COURT OF APPEALS

27 SCRA 484

FACTS:
 138. Borromeo v. Borromeo

98 PHIL 484

FACTS:

Fortunato claimed a portion of the legitime being an illegitimate son of the deceased,
by incorporating a Waiver of Hereditary Rights supposedly signed by the rest of the
Borromeo’s. In the waiver, of the 9 heirs relinquished to Fortunato their shares in the
disputed estate. The petitioners opposed this Waiver for reason that this is without
force and effect because there can be no effective waiver of hereditary rights before
there has been a valid acceptance of the inheritance from the heirs who intend to
transfer the same.

ISSUE:

Whether or not a Waiver of Hereditary Rights can be executed without a valid

acceptance from the heirs in question.

RULING:

YES. The prevailing jurisprudence on waiver of hereditary rights is that “the

properties included in an existing inheritance cannot be considered as belonging to
third persons with respect to the heirs, who by fiction of law continue the personality
of the former. The heirs succeed the deceased by the mere fact of death. More or
less, time may elapse from the moment of the death of the deceased until the heirs
enter into possession of the hereditary property, but the acceptance in any event
retroacts to the moment of the death, in accordance with article 989 of the Civil Code.
The right is vested, although conditioned upon the adjudication of the corresponding
hereditary portion.
138. THE ROMAN CATHOLIC CHURCH v. PANTE

669 SCRA 234

FACTS:

The Church, represented by the Archbishop of Caceres, sold to respondent Regino

Pante a 32-sq.m. Lot that measured 2x16m on the belief that the latter was an actual
occupant of the lot. Consequently, the Church sold a 215-sq.m. Lot that included the
lot previously sold to Pante to the Sps. Nestor and Fidela Rubi. The spouses Rubi
asserted their ownership by erecting a concrete fence over the lot sold to Pante,
effectively blocking Pante and his family’s access from their family home to the
municipal road. Pante instituted with the RTC an action to annul the sale between the
Church and the spouses Rubi, insofar as it included the lot previously sold to him.

The Church alleged that the contract was obtained by fraud when Pante
misrepresented that he had been an actual occupant, when in truth, he was merely
using the 32-sq.m. lot as a passageway from his house to the town proper. It
contended that it was its policy to sell its lots only to actual occupants. Since the Sps.
Rubi and their predecessors-in-interest have long been occupying the 215-sq.m. lot
that included the 32sq.m. lot sold to Pante, the Church claimed that the spouses Rubi
were the rightful buyers.

RTC ruled in favor of the petitioner. However, CA reversed the lower court’s decision,
hence, this petition.

ISSUE:

Whether the consent has been vitiated thus invalidating the contract.

HELD:
The SC resolve to deny the petition. No misrepresentation existed vitiating the seller’s
consent and invalidating the contract.

Where consent, is given through mistake, violence, intimidation, undue influence, or

fraud, the contract is deemed voidable. However, not every mistake renders a
contract voidable. The Civil Code clarifies the nature of mistake that vitiates consent:

Article 1331. In order that mistake may invalidate consent, it should refer to the
substance of the thing which is the object of the contract, or to those conditions which
have principally moved one or both parties to enter into the contract.

Mistake as to the identity or qualifications of one of the parties will vitiate consent
only when such identity or qualifications have been the principal cause of the
contract.

For mistake as to the qualification of one of the parties to vitiate consent, two
requisites must concur:

1. The mistake must be either with regard to the identity or with regard to the
qualification of one of the contracting parties; and

2. The identity or qualification must have been the principal consideration for the
celebration of the contract.

In the present case, the actual occupancy or residency of a buyer over the land does
not appear to be a necessary qualification that the Church requires before it could
sell its land. Had this been indeed its policy, then neither Pante nor the spouses Rubi
would qualify as buyers as none of them actually occupied or resided on the lot; that
a sketch plan, executed by the Church and Pante, clearly labeled the 2×16-meter lot
as a “RIGHT OF WAY” was from the Archbishop’s Palace; the then parish priest was
aware that Pante was not an actual occupant, but still allowed the sale of the lot to
Pante, means there had been no vitiation of the Church’s consent to the sale of the
lot.

There was no vitiation of consent; therefore, the contract between the Church and
Pante stands valid and existing.

139. Santiago Vs. Villamor

686 SCRA 313

FACTS:
Spouses Villamor are the parents of respondents Mancer, Carlos and Domingo Jr. and
the grandparents of respondent John Villamor.

In January 1982: Spouses Villamor mortgaged their 4.5-hectare coconut land in

Masbate to the San Jacinto Bank as security for a P10,000.00 loan.

For failure to pay the loan, the property was extra-judicially foreclosed by the bank.
Spouses Villamor failed to redeem the property so San Jacinto Bank obtained a final
deed of sale in its favor in 1991. The San Jacinto Bank then offered the land for sale
to any interested buyer.

The children of spouses Villamor agreed to buy the property.

The San Jacinto Bank agreed with the respondents and Catalina (one of the sisters
of the respondents) to a P65,000.00 sale, payable in installments.

Upon full payment of the children of spouses Catalina, San Jacinto bank refused to
issue the deed of conveyance. Hence, they filed an action for specific performance.

Spouses Villamor contested that the deed of sale executed in their favor was
equivalent to delivery of the land under Article 1498 of the CC and that they are
purchasers in good faith since they had no knowledge of the supposed transaction
between the San Jacinto Bank and the respondents and Catalina.

The children of Spouses Villamor (respondents) hold that they have a legal title to
the land since they perfected the sale with the San Jacinto Bank as early as November
4, 1991, the first installment payment, and are in actual possession of the land; and
that petitioners-spouses Santiago are not purchasers in good faith because they
failed to show why they are not in possession of the property.

ISSUE: WON the presumptive delivery of the said property considered to be valid
sale.

RULING:

The Court said that spouses Santiago failed to prove that they have any legal or
equitable title over the disputed land.

Execution of the deed of sale only a prima facie presumption of delivery

Article 1477 of the Civil Code recognizes that the "ownership of the thing sold shall
be transferred to the vendee upon the actual or constructive delivery thereof."
Related to this article is Article 1497 which provides that "the thing sold shall be
understood as delivered, when it is placed in the control and possession of the
vendee."

"A person who does not have actual possession of the thing sold cannot transfer
constructive possession by the execution and delivery of a public instrument."

With respect to incorporeal property, Article 1498 of the Civil Code lays down the
general rule: the execution of a public instrument "shall be equivalent to the delivery
of the thing which is the object of the contract, if from the deed the contrary does
not appear or cannot clearly be inferred." However, the execution of a public
instrument gives rise only to a prima facie presumption of delivery, which is negated
by the failure of the vendee to take actual possession of the land sold.

No constructive delivery of the land transpired upon the execution of the deed of sale
since it was not the spouses Villamor, Sr. but the respondents who had actual
possession of the land. The presumption of constructive delivery is inapplicable and
must yield to the reality that the petitioners were not placed in possession and control
of the land.

140. VILLAMAR vs MANGAOIL

669 SCRA 926

FACTS:

The petitioner Villamar, the registered owner of the property, entered into an
agreement with the respondent Mangaoil to purchase and sale a parcel of land. The
terms in their agreement includes the down payment of P 185,000 pesos, which will
be for the payment of a loan secured from the Rural Bankof Cauayan so that it will
be withdrawn and released from the bank and that a deed of absolute sale will be
executed in favor of the respondent Mangaoil which was complied by the parties.
Consequently, the respondent Mangaoil informed the petitioner that he will withdraw
from the agreement for the land was not yet free from encumbrances as there were
still tenants who were not willing to vacate the land without giving them back the
amount that they mortgaged the land. Also, the petitioner failed and refused, despite
repeated demands, to handover the Certificate of Title. Then, the respondent
Mangaoil demanded the refund of the down payment that he had secured with the
petitioner and filed a complaint with the RTC to rescind the contract of sale. In the
response of the petitioner, she averred that she had already complied with the
obligations and caused the release of the mortgaged land and the delivery of the
Certificate of Title will be facilitated by a certain Atty. Pedro C.Antonio. The
respondent insisted that he can rescind the contract for the petitioner had failed to
deliver the Certificate of Title. The RTC and the CA dismissed the complaints for upon
the deed of absolute sale, there was already a valid and constructive delivery.

ISSUE:

Whether or not the failure of delivery of the Certificate of Title will constitute
rescission of the contract.

Whether or not the execution of the deed of sale of real property is equivalent to a
valid and constructive delivery.

RULING:

No, the Court RULING that the failure of the petitioner to comply with the obligation
to deliver to the respondent the possession of the property and the certificate of the
title. Based on Article 1191 of the New Civil Code of the Philippines, it is clear that
“the power to rescind obligations is implied in reciprocal ones, in case one of the
obligors should not comply with what is incumbent upon him.” The respondent cannot
be deprived of his right to demand for rescission in view of the petitioner’s failure to
abide with item nos. 2 and 3 of the agreement. This remains true
notwithstanding the absence of express stipulations in the agreement indicating
the consequences of breaches which the parties may commit. To hold otherwise
would render Article 1191 of the NCC as useless.

The execution of the deed of absolute sale does not constitute a constructive delivery
for this case falls under to the exception since a mere presumption and not
conclusive delivery was created as the respondent failed to take material possession
of the subject property. A person who does not have actual possession of the thing
sold cannot transfer constructive possession by the execution and delivery of a public
instrument. Thus, the respondent can rescind the contract. The petition was denied
and the petitioner is bound return the down payment plus interest to the respondent.
141. BEATINGO v. GASIS

642 SCRA 539

FACTS:

Petitioner bought a piece of land from respondent, which was registered in the name
of Flora’s predecessor-in-interest. In order to register the DOS at the Register of
Deeds, she filed a petition for the issuance of the owner’s duplicate TCT but was
opposed by respondent, claiming that she was in possession of the OCT, and that she
purchased the subject property from Flora without knowledge of the prior sale of the
same property to the petitioner, which makes her an innocent purchaser for value.
Furthermore, respondent declared that, upon payment of the purchase price, she
immediately occupied the subject property and enjoyed its produce.

ISSUE: Whether or not there was double sale, which would give a better right to
possessor of the property.

HELD:
Yes. This is a clear case of double sale, where the seller sold one property to different
buyers, first to petitioner and later to respondent.

Admittedly, the two sales were not registered with the Registry of Property. Since
there was no inscription, the next question is who, between petitioner and
respondent, first took possession of the subject property in good faith. As aptly held
by the trial court, it was respondent who took possession of the subject property and,
therefore, has a better right.

Indeed, the execution of a public instrument shall be equivalent to the delivery of the
thing that is the object of the contract. However, the Court has held that the
execution of a public instrument gives rise only to a prima facie presumption of
delivery. It is deemed negated by the failure of the vendee to take actual possession
of the land sold.

In this case, though the sale was evidenced by a notarized deed of sale, petitioner
admitted that she refused to make full payment on the subject property and take
actual possession thereof because of the presence of tenants on the subject property.
Clearly, petitioner had not taken possession of the subject property or exercised acts
of dominion over it despite her assertion that she was the lawful owner thereof.

Respondent, on the other hand, showed that she purchased the subject property
without knowledge that it had been earlier sold by Flora to petitioner. She had reason
to believe that there was no defect in her title since the owner’s duplicate copy of the
OCT was delivered to her by the seller upon full payment of the purchase price. She
then took possession of the subject property and exercised acts of ownership by
collecting rentals from the tenants who were occupying it.
142. MONASTERIO-PE v. TONG
646 SCRA 161

FACTS:
Tong is the registered owner of two parcels of land known as Lot Nos. 40 and 41 and
covered by Transfer Certificate of Title (TCT) Nos. T-9699 and T-9161, together with
the improvements thereon, located at Barangay Kauswagan, City Proper, Iloilo City;
herein petitioners are occupying the house standing on the said parcels of land
without any contract of lease nor are they paying any kind of rental and that their
occupation thereof is simply by mere tolerance of Tong. petitioners alleged that Tong
is not the real owner of the disputed property, but is only a dummy of a certain alien
named Ong Se Fu, who is not qualified to own the said lot and, as such, Tong's
ownership is null and void; petitioners are the true and lawful owners of the property
in question and by reason thereof they need not lease nor pay rentals to anybody.

ISSUE:
WON the sale is valid when it is made through a public instrument.

RULING:

Respondent, as owner of the subject lots, is entitled to the possession thereof. The
right of possession is a necessary incident of ownership. Petitioners, on the other
hand, are consequently barred from claiming that they have the right to possess the
disputed parcels of land, because their alleged right is predicated solely on their claim
of ownership, which is already effectively debunked by the decisions of this Court
affirming the validity of the deeds of sale transferring ownership of the subject
properties to respondent.

Article 1498 of the Civil Code provides that when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the thing
which is the object of the contract, if from the deed the contrary does not appear or
cannot clearly be inferred. In the instant case, petitioners failed to present any
evidence to show that they had no intention of delivering the subject lots to
respondent when they executed the said deed of sale. Hence, petitioners' execution
of the deed of sale is tantamount to a delivery of the subject lots to respondent. The
fact that petitioners remained in possession of the disputed properties does not prove
that there was no delivery, because as found by the lower courts, such possession is
only by respondent's mere tolerance.

143. ASSET PRIVATIZATION TRUST v. TJ ENTERPRISES

587 SCRA 481

FACTS:

Petitioner and respondents entered into an absolute deed of sale over certain
machinery and refrigeration equipment wherein respondent paid the full amount as
evidenced by petitioner’s receipt. After 2 days respondent demanded the delivery of
the machinery it had purchased. But during the hauling only 9 items were pulled
out. Respondent filed a complaint for specific performance and damages. And upon
inspection of the items they found out that it is damaged and have missing parts.

Petitioner claim there was constructive delivery upon execution of the deed of sale
and it had complied with its obligation to deliver the object of the sale.

ISSUE:

WON the petitioner had complied with its obligation to make delivery of the
properties.

RULING:

No. there was no constructive delivery of the machinery and equipment upon the
execution of the deed of sale or upon the issuance of the gate pass since it was not
the petitioner but creative lines which had actual possession of the property. The
presumption of constructive delivery is not applicableas it has to yield to the reality
that the purchaser was not placed in possession and control of the property.
144. CEBU WINLAND DEVELOPMENT CORPORATION v. ONG SIAO HUA
588 SCRA 120

Facts:

Hua bought 2 condominium units from Cebu Winland Development Corporation.

The area per condominium unit as indicated in the price list is 155 square meters
and the price per square meter is P22,378.95.

On October 10, 1996, possession of the subject properties was turned over to Hua.

After the purchase price was fully paid on January 31, 1997, Cebu Winland sent to
Hua Deeds of Absolute Sale for the two condominium units for signature. Upon
examination of the deed of absolute sale, Hua was distressed to find that the stated
floor area is only 127 square meters contrary to the area indicated in the price list
which was 155 square meters.

Hua filed a Complaint on August 7, 1998 in the Regional Office of the Housing and
Land Use Regulatory Board (HLURB) in Cebu City.

Cebu Winland argues that it delivered possession of the subject properties to Hua
on October 10, 1996, hence, Hua's action filed on August 7, 1998 has already
prescribed.

Issue:

Whether the sale in the case is one made with a statement of its area or at the rate
of a certain price for a unit of measure and not for a lump sum.
RULING:

Article 1539 governs a sale of immovable by the unit, that is, at a stated rate per
unit area. In a unit price contract, the statement of area of immovable is not
conclusive and the price may be reduced or increased depending on the area actually
delivered. If the vendor delivers less than the area agreed upon, the vendee may
oblige the vendor to deliver all that may be stated in the contract or demand for the
proportionate reduction of the purchase price if delivery is not possible. If the vendor
delivers more than the area stated in the contract, the vendee has the option to
accept only the amount agreed upon or to accept the whole area, provided he pays
for the additional area at the contract rate.

In some instances, a sale of an immovable may be made for a lump sum and not at
a rate per unit. The parties agree on a stated purchase price for an immovable the
area of which may be declared based on an estimate or where both the area and
boundaries are stated.

In the case at bar, it is undisputed by the parties that the purchase price of the
subject properties was computed based on the price list prepared by petitioner, or
P22,378.95 per square meter. Clearly, the parties agreed on a sale at a rate of a
certain price per unit of measure and not one for a lump sum. Hence, it is Article
1539 and not Article 1542 which is the applicable law. Accordingly, respondent is
entitled to the relief afforded to him under Article 1539, that is, either a proportional
reduction of the price or the rescission of the contract, at his option. Respondent
chose the former remedy since he prayed in his Complaint for the refund of the
amount of P2,014,105.50 representing the proportional reduction of the price paid to
petitioner.
145. CAOIBIS Jr. v. CAOIBIS PANTOJA
496SCRA 273

FACTS:

In 1982, Jose Caoibes Jr., et al. and Corazon Caoibes-Pantoja entered to a contract
of sale stating that a certain lot will be transferred, ceded and conveyed by the former
in favour of the latter in consideration for a sum of money. The agreement included
the stipulation that Pantoja will be subrogated or substituted to whatever rights,
interests or representations Caoibes Jr., et al. may have pending land registration
proceeding.

Fourteen years after the execution of the parties, Pantoja filed a motion to intervene
and be substituted as applicant in the Land Registration Court. The Land Registration
Court denied the motion. Pantoja filed a complaint before the Regional Trial Court
(RTC) for specific performance of the agreement. Caoibes, Jr., et al. opposed on the
grounds of prescription. The RTC ruled in favor of Caoibes, Jr., et al. On appeal, the
Court of Appeals (CA) reversed the RTC, holding that prescription had not yet set in.

ISSUE:

Whether or not the action of for prescription on Pantoja started from the time of the
agreement of the parties.

RULING:
The law does not require that the application for registration be amended by
substituting the “buyer” or the “person to whom the property has been conveyed”
for the applicant. Neither does it require that the “buyer” or the “person to whom the
property has been conveyed” be a party to the case.

He may thus be a total stranger to the land registration proceedings. The only
requirements of the law are: (1) that the instrument be presented to the court by
the interested party together with a motion that the same be considered in relation
with the application; and (2) that prior notice be given to the parties to the case.

The agreement of the parties is analogous to a deed of sale in favour of Pantoja, it

having transferred ownership for and in consideration of her payment of the loan..
The agreement having been made through public instrument, the execution was
equivalent to the delivery of the property to Pantoja.

The agreement is of course in consonance with Sec. 22 of P.D. 1529 (Property

Registration Decree which became effective on June 11, 1978). In light of the law
and jurisprudence, the substitution by Pantoja of Caoibes, Jr., et al. as applicant in
the land registration case over Lot 2 is not even necessary. All Pantoja has to do is
to comply with the requirements under the above-quoted Sec. 22 of the Property
Registration Decree. It was unnecessary for Pantoja to file the case for specific
performance subject of the present petition against Caoibes, Jr., et al. to honor their
agreement allowing her to be substituted in their stead as applicant in the land
registration proceeding.
146. TEN REALTY & DEVELOPMENT CORPORATION v. CRUZ
410 SCRA 484

FACTS:

Petitioner filed an ejectment complaint against Marina Cruz(respondent) before the

MTC. Petitioner alleges that the land indispute was purchased from Barbara Galino
on December 1996, andthat said land was again sold to respondent on April 1998;

On the other hand, respondent answer with counterclaim that never was there an
occasion when petitioner occupied a portion of the premises. In addition, respondent
alleges that said land was a public land (respondent filed a miscellaneous sales
application with the Community Environment and Natural Resources Office) and the
action for ejectment cannot succeed where it appears that respondent had been in
possession of the property prior to the petitioner;

On October 2000, MTC ordered respondent to vacate the land and surrender to
petitioner possession thereof. On appeal, the RTC reversed the decision. CA sustained
the trial court’s decision.

ISSUE:

Whether or not petitioner should be declared the rightful owner of the property.

RULING:

Execution of Deed of Sale; Not sufficient as delivery. 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. 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. Such constructive or symbolic delivery,
being merely presumptive, was deemed negated by the failure of the vendee to take
actual possession of the land sold. Disqualification from Ownership of Alienable Public
Land.
Private corporations are disqualified from acquiring lands of the public domain, as
provided under Section 3 of Article XII of the Constitution. While corporations cannot
acquire land of the public domain, they can however acquire private land. However,
petitioner has not presented proof that, at the time it purchased the property from
Galino, the property had ceased to be of the public domain and was already private
land. The established rule is that alienable and disposable land of the public domain
held and occupied by a possessor — personally or through predecessors-in-interest,
openly, continuously, and exclusively for 30 years — is ipso jure converted to private
property by the mere lapse of time.

147-158
MANUEL R. DULAY ENTERPRISES vs. COURT OF APPEALS
G.R. No. 91889 August 27, 1993

Facts: Manuel R. Dulay Enterprises, Inc, a domestic corporation obtained various

loans for the construction of its hotel project, Dulay Continental Hotel (now Frederick
Hotel). Manuel Dulay by virtue of Board Resolution No 18 sold the subject property
to spouses Maria Theresa and Castrense Veloso. Maria Veloso (buyer), without the
knowledge of Manuel Dulay, mortgaged the subject property to private respondent
Manuel A. Torres Upon the failure of Maria Veloso to pay Torres, the property was
sold to Torres in an extrajudicial foreclosure sale. Torres filed an action against the
corporation, Virgilio Dulay and against the tenants of the apartment.
RTC ordered the corporation and the tenants to vacate the building.
Petitioners: RTC had acted with GAD when it applied the doctrine of piercing
the veil of corporate entity considering that the sale has no binding effect on
corporation as Board Resolution No. 18 which authorized the sale of the subject
property was resolved without the approval of all the members of the board of
directors and said Board Resolution was prepared by a person not designated by the
corporation to be its secretary.

Issue: Whether or not the sale to Veloso is valid notwithstanding that it was resolved
without the approval of all the members of the board of directors. (YES)

Ruling: Section 101 of the Corporation Code of the Philippines provides:

Sec. 101. When board meeting is unnecessary or improperly held.
Unless the by-laws provide otherwise, any action by the directors of a
close corporation without a meeting shall nevertheless be deemed valid
if:
1. Before or after such action is taken, written consent thereto is signed
by all the directors, or
2. All the stockholders have actual or implied knowledge of the action
and make no prompt objection thereto in writing; or
3. The directors are accustomed to take informal action with the
express or implied acquiese of all the stockholders, or
 4. All the directors have express or implied knowledge of the action in
question and none of them makes prompt objection thereto in writing.
If a directors' meeting is held without call or notice, an action taken
therein within the corporate powers is deemed ratified by a director
who failed to attend, unless he promptly files his written objection with
the secretary of the corporation after having knowledge thereof.
Dulay Inc. is classified as a close corporation and consequently a board
resolution authorizing the sale or mortgage is not necessary to bind the corporation
for the action of its president. At any rate, corporate action taken at a board meeting
without proper call or notice in a close corporation is deemed ratified by the absent
director unless the latter promptly files his written objection with the secretary of the
corporation after having knowledge of the meeting which, in his case, Virgilio Dulay
failed to do. Although a corporation is an entity which has a personality distinct and
separate from its individual stockholders or members, the veil of corporate fiction
may be pierced when it is used to defeat public convenience justify wrong, protect
fraud or defend crime.
TOMAS K. CHUA vs. COURT OF APPEALS and ENCARNACION VALDES-CHOY
G.R. No. 119255 April 9, 2003

FACTS: Chua agreed to purchase the paraphernal house of Valdes-Choy for a purchase
price ofP10,800,000.00 payable in cash. The latter received from Chua a check for P100,000.00
and agreed that the balance is payable on or before 15 July 1989. Failure to pay balance on or
before the said date forfeits the earnest money. On July 13, 1989, Valdes-Choy as vendor and
Chua as vendee signed two Deeds of Absolute Sale. The balance of P10,215,000.00 was not
actually paid to Valdes-Choy on the agreed date. On 13 July 1989, Chua did show to Valdes- Choy
the PBCom manager’s check for P10,215,000.00, with Valdes-Choy as payee. However, Chua
refused to give this check to Valdes-Choy until a new TCT covering the Property is registered in
Chua’s name.
Chua filed a complaint for specific performance against Valdes-Choy. Chua contends that
there is a perfected contract of sale rather than a contract to sell, and that there was no reservation
in the contract of sale that Valdes-Choy shall retain title to the Property until after the sale. There
was no agreement for an automatic rescission of the contract in case of Chua’s
default. He argues that his payment of earnest money and itsacceptance by Valdes-Choy
precludes the latter from rejecting the binding effect of the contract of sale.

ISSUE: Whether or not there is a perfected contract of sale by the payment of the earnest money

RULING: A perusal of the Receipt shows that the true agreement between the parties was a
contract to sell. Ownership over the Property was retained by Valdes-Choy and was not to pass to
Chua until full payment of the purchase price.
The Receipt provides that the earnest money shall be forfeited in case the buyer fails to
pay the balance of the purchase price on or before 15 July 1989. This is also similar to giving the
seller the right to rescind unilaterally the contract the moment the buyer fails to pay within a fixed
period. The agreement between Chua and Valdes-Choy was embodied in a receipt rather than in
a deed of sale, ownership not having passed between them. The signing of the Deeds of
Sale came later when Valdes-Choy was under the impression that Chua was about to pay the
balance of the purchase price. The absence of a formal deed of conveyance is a strong indication
that the parties did not intend immediate transfer of ownership, but only a transfer after full
payment of the purchase price.
Valdes-Choy retained possession of the certificate of title and all other documents relative
to the sale. In a contract to sell, the obligation of the seller to sell becomes demandable only upon
the happening of the suspensive condition. In this case, the suspensive condition is the full
payment of the purchase price by Chua. Such full payment gives rise to Chua’s right
to demand the execution of the contract of sale. Since Chua refused to pay the consideration in
full on the agreed date, which is a suspensive condition, Chua cannot compel Valdes-Choy to
consummate the sale of the Property.

EQUATORIAL REALTY DEVELOPMENT, INC., vs MAYFAIR THEATER, INC.

G.R. No. 133879 November 21, 2001

FACTS: Petitioner Carmelo and Bauermann Inc. leased its parcel of land with 2-storey
building to respondent Mayfair Theater Inc.
They entered a contract which provides that if the LESSOR should desire to
sell the leased premises, the LESSEE shall be given 30-days exclusive option to
purchase the same.
Carmelo informed Mayfair that it will sell the property to Equatorial. Mayfair
made known its interest to buy the property but only to the extent of the leased
premises.
Notwithstanding Mayfair’s intention, Carmelo sold the property to Equatorial.

ISSUE: Whether or not the sale of the property to Equatorial is valid.

HELD: The sale of the property should be rescinded because Mayfair has the right of
first refusal. Both Equatorial and Carmelo are in bad faith because they knew of the
stipulation in the contract regarding the right of first refusal.
The stipulation is a not an option contract but a right of first refusal and as
such the requirement of a separate consideration for the option, has no applicability
in the instant case. The consideration is built in the reciprocal obligation of the parties.
In reciprocal contract, the obligation or promise of each party is the
consideration for that of the other. (Promise to lease in return of the right to first
refusal)
With regard to the impossibility of performance, only Carmelo can be blamed
for not including the entire property in the right of first refusal. Court held that Mayfair
may not have the option to buy the property. Not only the leased area but the entire
property.
 NORKIS DISTRIBUTORS, INC. V. CA
G.R. NO. 91029; FEBRUARY 7, 1991

FACTS: Alberto Nepales bought from the Norkis Distributors, Inc. brand new Yamaha
motorcycle. 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 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.
The motorcycle was delivered to a certain Julian Nepales on January 22, 1980, who
was allegedly the agent of Alberto Nepales but the latter denies it.
On February 3, 1980, the motorcycle met an accident 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 respondent's motorcycle
loan to Norkis in the total sum of P7,500. As the price of the motorcycle later
increased to P7,828, 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. 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.

ISSUE: Who should bear the risk of loss?

RULING: The Supreme Court ruled 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.
In this case, the purpose of the execution of the sales invoice 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. On March 20, 1980, before private respondent's loan
was released and before he even paid Norkis, the motorcycle had already figured in
an accident while driven by one ZacariasPayba. Payba was not shown by Norkis to
be a representative or relative of private respondent. The circumstances in the case
itself more than amply rebut the disputable presumption of delivery upon which
Norkis anchors its defense to Nepales' action.

SANTOS VS. SANTOS

G.R. NO. 133895. OCTOBER 2, 2001

FACTS: Zenaida M. Santos is the widow of Salvador Santos, a brother of private

respondents Calixto, Alberto, Antonio, all surnamed Santos and Rosa Santos-
Carreon.
The spouses Jesus and Rosalia were the parents of the respondents and the
husband of the petitioner. The spouses owned a parcel of registered land with a four-
door apartment administered by Rosalia who rented them out. On January 19, 1959,
the spouses executed a deed of sale of the properties in favor of their children
Salvador and Rosa. Rosa in turn sold her share to Salvador on November 20, 1973,
which resulted in the issuance of new TCT. Despite the transfer of the property to
Salvador, Rosalia continued to lease and receive rentals from the apartment units.
Salvador died, followed by Rosalia who died the following month.
Private respondent instituted an action for reconveyance of property with
preliminary injunction against petitioner in the Regional Trial Court of Manila, where
they alleged that the two deeds of sale were simulated for lack of consideration.
Trial Court decided in favor of private respondents in as much as the deeds of
sale were fictitious. The CA affirmed the trial court’s decision. It held that the subject
deeds of sale did not confer upon Salvador the ownership over the subject property,
because even after the sale, the original vendors remained in dominion, control, and
possession thereof.

ISSUE: Is a sale through a public instrument tantamount to delivery of the thing

sold?

RULING: Nowhere in the Civil Code, however, does it provide that execution of a
deed of sale is a conclusive presumption of delivery of possession. The Code merely
said that the execution shall be equivalent to delivery. The presumption can be
rebutted by clear and convincing evidence. Presumptive delivery can be negated by
the failure of the vendee to take actual possession of the land sold.
In Danguilan vs. IAC, 168 SCRA 22, 32 (1988), we held that for the execution
of a public instrument to effect tradition, the purchaser must be placed in control of
the thing sold. When there is no impediment to prevent the thing sold from converting
to tenancy of the purchaser by the sole will of the vendor, symbolic delivery through
the execution of a public instrument is sufficient. But if, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and material
tenancy nor make use of it himself or through another in his name, then delivery has
not been effected.
As found by both the trial and appellate courts and amply supported by the
evidence on record, Salvador was never placed in control of the property. The original
sellers retained their control and possession. Therefore, there was no real transfer of
ownership.

POWER COMMERCIAL AND INDUSTRIAL CORPORATION vs CA

G.R. No. 119745. June 20, 1997

FACTS: Petitioner asbestos manufacturer Power Commercial and industrial

corporation bought the property of spouses Reynaldo and Angelita Quiambao located
in Makati City.
Since there are lessees occupying the subject land, part of the deed of sale is
a warranty of respondents that will defend its title and peaceful possession in favor
of the petitioners.
The property is mortgage to PNP and as such, petitioners filed a request to
assume responsibility of the mortgage. Because of petitioners failure to produce the
required papers, their petition was denied.
Petitioners allege that the contract should be rescinded because of failure of
delivery.

ISSUE: WON the contract is recissible due to breach of contract.

HELD: There is no breach of contact in this case since there is no provision in the
contract that imposes the obligation to the respondents to eject the people occupying
the property.
There was also a constructive delivery because the deed of sale was made in
a public document. The contention of the petitioners that there could be no
constructive delivery because the respondents is not in possession of the property is
of no merit. What matters in a constructive delivery is control and not possession.
Control was placed in the hands of the petitioners that is why they were able to file
an ejectment case. Prior physical delivery or possession is not legally required and
the execution of the deed of sale is deemed equivalent to delivery.

LAGON vs HOOVEN COMALCO INDUSTRIES, INC.

G.R. No. 135657. January 17, 2001

FACTS: Sometime in April 1981 Lagon, a businessman and Hooven entered into two
(2) contracts, denominated Proposal, whereby for a total consideration of
P104,870.00 Hooven agreed to sell and install various aluminum materials in Lagon‘s
commercial building in Tacurong, Sultan Kudarat.
Hooven filed an action against Lagon claiming that the latter failed to pay his
due despite Hooven‘s performance of its obligation. Lagon, in his answer, denied
liability and averred that Hooven was the party guilty of breach of contract by failing
to deliver and install some of the materials specified in the proposals; that as a
consequence he was compelled to procure the undelivered materials from other
sources; that as regards the materials duly delivered and installed by Hooven, they
were fully paid.

ISSUE: Hooven's bad faith lies not so much on its breach of contract - as there was
no showing that its failure to comply with its part of the bargain was motivated by ill
will or done with fraudulent intent - but rather on its appalling temerity to sue
petitioner for payment of an alleged unpaid balance of the purchase price
notwithstanding knowledge of its failure to make complete delivery and installation
of all the materials under their contracts. Although petitioner was found to be liable
to respondent to the extent of P6,377.66, petitioner's right to withhold full payment
of the purchase price prior to the delivery and installation of all the merchandise
cannot be denied since under the contracts the balance of the purchase price became
due and demandable only upon the completion of the project. Consequently, the
resulting social humiliation and damage to petitioner's reputation as a respected
businessman in the community, occasioned by the filing of this suit provide sufficient
grounds for the award of P50,000.00 as moral damages. On the part of Lagon, he is
ordered by the court to pay HOOVEN the amount corresponding to the value of the
materials admittedly delivered to him.

ANIANO OBAÑA vs CA
G.R.NO. L-36249 March 29, 1985

FACTS: On November 21, 1964, Anicleto Sandoval (owner of Sandoval’s and Sons
Rice Mill) was approached by Chan Lin who offered to purchase from him 170 cavans
of rice at the price of P37.25 per cavan. The driver attempted to collect the payment
from Chan Lin and Petitioner Anacleto Sandoval but the latter refused, stating that
he had already made the payment to Chan Lin. Further demands having been met
with refusal, Sandoval, as plaintiff, filed suit for Replevin against petitioner, before
the Municipal Court of San Fernando, La Union which ordered petitioner- defendant
to pay to Sandoval ½ of the cost of the rice or P2,805. On appeal by the petitioner
to the court of First Instance, judgment was rendered dismissing the complaint. On
appeal to respondent Appellate Court, Sandoval obtained a reversal in his favor.
Hence, the present petition seeks for the review of the decision of Court of Appeals
ordering Obaña inaction for Replevin to return to Sandoval, Private Respondent
herein, 170 cavans of rice or topay its value in the amount P37.25 per cavan, with
legal interest from the filing of the complaint until fully paid.

ISSUE: Who is the rightful owner of the 170 cavans of rice?

RULING: Ownership was transferred to Chan Lin when the cavans of rice were
delivered to Aniano’s store. This was agreed upon in the contract between Sandoval
and Chan Lin. However, it was found that 3days after the delivery, Chan Lin returned
Aniano’s money. Aniano claimed that he then returned the cavans of rice to Sandoval.
But Sandoval’s driver said Aniano never returned the sacks of rice. They would have
withdrawn the replevin case had the sacks of rice been returned. Sandoval has all
the right to recover the rice and rescind the contract as he was not paid. Aniano
cannot unjustly enrich himself at the expense of Sandoval.

BANAWA VS. MIRANO

G.R. No. L-24750 May 16, 1980

FACTS: Maria Mirano, niece of Julia Mendoza, was taken in by spouses, Doroteo
Banawa and Juliana Mendoza, treated and reared her up like their own child.
In 1921 Doroteo Banawa acquired a parcel of land, the IBA property and paid
it in the name of Maria Mirano because they wanted to leave something to Maria
when they are gone. They told Maria that although they placed the property in her
name, she would only become the real owner when the spouses die. In 1935, another
parcel of land was acquired by the spouses and named it after Maria. In the trial the
Banawa’s claimed that the property was named in their favor. In 1949, Maria Mirano
died while the Banawas are still alive.

ISSUE: Whether or not Maria is the owner of the Iba Property

RULING: Spouses Doroteo and Juliana donated the money to Maria which the latter
used in the purchase of the lands in question. The spouses’ intention to make Maria
the owner of the said parcels of land was clearly shown by their conduct at the time
of the execution of the deeds of sale which influenced the vendors to believe that
Maria was indeed the vendee in their agreement.
Article 632 of the Old Code provides that: "Donations of personal property may
be made verbally or in writing. Verbal donation requires the simultaneous delivery of
the gift. In the absence of this requisite the donation shall produce no effect, unless
made in writing and accepted in the same form." The word “Delivery” may be actual
or constructive thus the contention of the petitioners that there was no simultaneous
delivery of the credits to Maria Mirano is not meritorious.
The execution of the deed of sale of the Iba property in favor of Maria was the
constructive transfer of possession of the incorporeal rights of the spouses over said
property.

AGUILAR vs. CA
G.R. No. 116895. July 7, 2000

FACTS: Petitioner Vergilio and respondent Senen bought a house and lot in
Paraňaque where their father could spend and enjoy his remaining years in a peaceful
neighborhood. They initially agreed that Vergilio will get 2/3 and Senen will get 1/3;
but later they agreed on equal shares. Senen was left in the said lot to take care of
their father since Vergilio’s family was in Cebu. After their father’s death petitioner
demanded from private respondent that the latter vacate the house and that the
property be sold and proceeds thereof divided among them but the latter refused.
Petitioner then filed to compel the sale of the property. The chunk of the issue tackled
by the courts was regarding the pre-trial. Respondent filed a motion to cancel Pre-
trial since the counsel had to accompany his wife in Dumaguete City where she would
be a principal sponsor in a wedding. CFI denied the motion; and the pre-trial
proceeded on the scheduled date. The respondents did not appear thus they were
declared in default. The trial went on ex parte without the respondent and held that
the property should be sold to a third party and that the proceeds be distributed to
the parties; in addition respondent was made to pay rent from the time the action
was filed. Respondents appealed this and the decision was reversed by the CA saying
that the TC erred in declaring respondents in default; the case was then remanded
to the trial court. Hence this appeal.

ISSUE: Whether the trial court was correct with regards to the sale and rent?

RULING: Petitioner and respondents are co-owners of subject house and lot in equal
shares; either one of them may demand the sale of the house and lot at any time
and the other cannot object to such demand; thereafter the proceeds of the sale shall
be divided equally according to their respective interests.
Any of the Co-owners may demand the sale of the house and lot at any time
and the other cannot object to such demand; thereafter the proceeds of the sale shall
be divided equally according to their respective interests.
SC held that ½ of the proceeds should go to the petitioner and the remainder
to the respondent (1,200 each.) Also rent was awarded 1,200 pesos per month with
legal interest from the time the trial court ordered the respondent to vacate, for the
use and enjoyment of the other half of the property.

JOSEPH & SONS ENTERPRISES, INC. vs CA

G.R. No. L-46765 August 29, 1986

FACTS: Rodolfo T. Lat purchased the lot in question from the Makati Development
Corporation. One condition embodied in the Deed of Absolute Sale was that the lot
could not be sold, transferred, or conveyed until after the construction of a house
thereon was completed. In spite of his having fully paid for the lot. Lat could not have
it registered in his name because another condition of the sale was that the deed of
sale could not be registered and the title would not be released to the buyer until the
house has been completely constructed. Lat entered into an agreement to purchase
and sell the lot with Paz Banaad Laurel. After paying the full consideration of
P38,830.00, spouses Laurel, hereinafter referred to as the Laurels, constructed a
residential house on the lot.
After completing the construction of the house, the Laurels advertised the
house and lot for sale. Petitioner's President and Secretary, Alfredo Joseph and his
daughter Alegria Neri, went to see the Laurels at the latter's residence and negotiated
for the purchase of the property. Having agreed on the terms and conditions of the
sale, the parties executed a Deed of Conditional Sale. Because the house and lot,
while already owned by the Laurels, were still registered in the name of respondent
Lat, the deed was signed with the latter as vendor and the Laurels as witnesses.
Petitioner failed to pay the second and subsequent installments on time.
Petitioner failed to pay final installment under the deed of conditional sale. It also
failed to pay any of the loan amortizations due to the People's Bank and Trust
Company, this in spite of its having leased the property to the United States Agency
for International Development (USAID) at a monthly rental.

ISSUE:

RULING: Failure to pay the amortizations on the loan as well as the final installment
under the Deed of Conditional Sale, the Laurels had the right to cancel and terminate
the same. Petitioner, however, contends that the Laurels did not comply with Article
1592 of the Civil Code of the Philippines. The contention is without merit. Article 1592
(formerly Article 1504) of the Civil Code of the Philippines is not applicable to a
contract to sell or a deed of conditional sale as in the case at bar.
In was held in the case of Caridad Estates, Inc. vs. Santero:
Appellant, however, gives full reliance on Article 1504 of the Civil Code,
and vigorously argues that whatever be the provision of the contract,
resolution may not be declared in the absence of a demand upon the
vendee 'either judicially or by a notarial act.' A cursory reading of the
provision would be the best refutation of the appellant's argument, as
it leaves no doubt as to its inapplicability in the present instance. The
contract is a sale in installment, in which the parties have laid down
the procedure to be followed in the event the vendee failed to fulfill his
obligation. There is, consequently, no occasion for the application of
the requirements of article 1504.

BUCTON, et al vs. GABAR, et al.

G.R. No. L-36359 January 31, 1974

FACTS: This action for specific performance filed by the plaintiffs prays, inter-alia,
that defendants-spouses be ordered to execute in favor of plaintiffs a deed of sale of
the western half of a parcel of land having an area of 728 sq. m. covered by TCT No.
II of the office of the Register of Deeds of Misamis Oriental. Plaintiffs' evidence tends
to show that sometime in 1946 defendant Josefina Llamoso Gabar bought the above-
mentioned land from the spouses Villarin on installment basis, to wit, P500 down, the
balance payable in installments. Josefina entered into a verbal agreement with her
sister-in-law, plaintiff Nicanora Gabar Bucton, that the latter would pay one-half of
the price (P3,000) and would then own one-half of the land. In January 1947 the
spouses Villarin executed the deed of sale of the land abovementioned in favor of
defendant Josefina Llamoso Gabar, Exhibit I, to whom was issued on June 20, 1947
TCT No. II, cancelling OCT No. 6337. Plaintiffs then sought to obtain a separate title
for their portion of the land in question. Defendants repeatedly declined to
accommodate plaintiffs.

ISSUE: Whether there was a sale between Josefina and Nicanora.

RULING: Yes. There is no question that petitioner Nicanora paid P1,500.00 to

respondent Josefina as purchase price of one-half of the lot now covered by TCT No.
II, for respondent Court of Appeals found as a fact "that plaintiffs really paid for a
portion of the lot in question pursuant to their agreement with the defendants that
they would own one-half (1/2) of the land." That sale, although not consigned in a
public instrument or formal writing, is nevertheless valid and binding between
petitioners and private respondents, for the time-honored rule is that even a verbal
contract of sale or real estate produces legal effects between the parties. Although
at the time said petitioner paid P1,000.00 as part payment of the purchase price on
January 19, 1946, private respondents were not yet the owners of the lot, they
became such owners on January 24, 1947, when a deed of sale was executed in their
favor by the Villarin spouses. In the premises, Article 1434 of the Civil Code, which
provides that "when a person who is not the owner of a thing sells or alienates and
delivers it, and later the seller or grantor acquires title thereto, such title passes by
operation of law to the buyer or grantee," is applicable. Petitioners therefore became
owners of the one-half portion of the lot in question by virtue of a sale which, though
not evidenced by a formal deed, was nevertheless proved by both documentary and
parole evidence.

159-170
GABILA vs. PEREZ
G.R. No. L-29541 January 27,1989

GRIÑO-AQUINO, J.:

FACTS:
Pablo, Ramon and Mercedes Perez, executed in favor of plaintiff-appellant
Carlos Gabila, a Deed of Sale of a parcel of land registered in the name of their
deceased father Mariano Perez which they inherited upon his demise. The Deed of
Sale was duly signed and ratified before a notary public on the same date, September
16, 1948, and possession of the land was immediately delivered to the vendee. The
monthly installments of the price of the sale were completely paid in due time.
However, the vendors took no steps to comply with their promise to execute an
extrajudicial partition of their father's properties so that his title to the land in
question can be transferred in their names and from them, to the vendee Gabila.
Gabila filed action praying that the defendants be ordered to execute an extra-
judicial partition of all the properties of their deceased father or otherwise settle his
estate and pay the corresponding estate and inheritance taxes, and execute the
requisite instruments for the registration and transfer of the title to him.
 The trial court dismissed the complaint. It held that the defendants could not
be ordered to execute an extrajudicial partition of all the properties of their deceased
father because the properties to be partitioned are not identified in the complaint,
and, the defendants can no longer partition the land described in TCT No. 899,
because it has been sold to the plaintiff.

ISSUE:
Whether or not the appeal is meritorious, and whether there is a need for an
extrajudicial partition.

HELD:
The appeal is meritorious. This action is not one for specific performance of the
sale of the property to the appellant, for the sale had been consummated by the
payment of the price to the vendors-appellees as stipulated in the deed, and by the
delivery of the peaceful possession of the land to the plaintiff-vendee. What the
plaintiff seeks merely is the transfer of the title of the land in his name. The appellant,
as vendee of the land, has a right to receive and the appellees the corresponding
obligation to transfer to him, not only the possession and enjoyment of the land but
also the certificate of title. The trial court recognized that right of the appellant, but
it professed to be helpless to enforce it. In dismissing his complaint and, in effect,
denying him a remedy, the trial court forgot a maxim which is as old as the law
itself. Ubi jus ibi remedium. Where there is a right, there is a remedy (Ballentine's
Law Dictionary, 1948 Ed., p. 1307).
The defendants-appellees, as the only legal heirs of their father, the deceased
Mariano Perez, became the owners of the property in question upon his demise. The
rights to the succession were transmitted to them from the moment of his death (Art.
77, Civil Code). Therefore, their sale to the appellant of the property, which they
inherited from their father put an end to their co-ownership over it (Art. 1082 Civil
Code). Consequently, there is no further need for them to partition it, the purpose of
partition being to separate, divide, and assign a thing held in common among those
to whom it may belong (Art. 1079, Civil Code).
 VETERANS FEDERATION OF THE PHILIPPINES vs. COURT OF APPEALS
G.R. No. 119281. November 22, 2000

YNARES-SANTIAGO, J.:

Facts:
A parcel of land situated near the public market of San Pablo City, with an
approximate area of 1,092 square meters. On the 6th of September 1963, the then
owner, Manila Railroad Company of the Philippine Islands (now known as the
Philippine National Railways or PNR) sold the subject property to the Veterans
Federation of the Philippines (VFP) for the amount of One Thousand Ninety-Two
(P1,092.00) Pesos. Meanwhile, the VFP proceeded to clear and fence the property,
following the boundaries as stated in the certificate of title, not realizing that the
technical d descriptions appearing in the deed of sale and the certificate of title did
not match on almost all points. Some eighteen (18) years thereafter, the VFP decided
to erect a building on the subject property to serve as its headquarters. This plan did
not materialize when upon inspection of the subject property, it was discovered that
the fence had long been dismantled and that there were now several permanent
structures standing thereon. The VFP then learned that the residents had been
leasing portions of the subject property from the PNR unbeknownst to VFP.
When the residents refused to heed the VFPs demand to vacate the premises,
the matter was brought before the Barangay authorities, but no settlement was
reached thereat. Hence, the VFP was constrained to file a complaint for accion
publiciana. The trial court rendered judgment declaring the Deed of Sale valid and
enforceable.

ISSUE:
WON the absolute deed of sale between VFP and PNR remains valid and
enforceable.

HELD:
Yes. Ownership over the property was conveyed to plaintiff-appellant by
defendant-appellant PNR by mutual consent after the former had paid the
consideration. The allegation by defendant-appellant PNR that the contract of sale is
void because of plaintiff-appellant’s failure to construct its headquarters and a bank
in the property, a condition of the sale, is without merit. A perusal of the contract
would reveal it does not contain any stipulation regarding the alleged condition. Nor
is there any evidence adduced to support said allegation. Allegation is not
synonymous to proof. A party has the burden of proof to establish its defense by
convincing evidence. In short, the sale was not a conditional sale.
Respondent PNR cannot shirk from its obligation to convey title and surrender
possession of the property which VFP bought on the lame excuse that it is now too
late in the day for VFP to seek such redress. There is no question that had it not been
for PNRs gross mistake in supplying the wrong technical description to the Register
of Deeds, there would have been no erroneous inscription. Justice dictates that the
courts must right this wrong without further delay. It is but fair that petitioner VFP
finally obtain the correct and legal title to the property it bought thirty-seven (37)
years ago.
 MARIANO GONZALES ET AL., v. ALEJANDRO ROJAS
G.R. No. 5449, March 22, 1910

ARELLANO, C.J.:

Facts:
Mariano Gonzales petitioned for the registration of a parcel of land used for the
purposes of a fishery or vivarium, situated in Pitas, barrio of Taliptip, in the town and
Province of Bulacan. Alejandro Rojas opposed this petition for registration, alleging
that he was the owner of the same fishery that was the subject of the application of
Mariano Gonzales and the petitioners. Juliana Samonte sold the subject to Alejandro
Rojas, on February 2, 1900. She died on March 10 of the same year. From March
21, 1895, to the same date of 1907, Mamerto Siaoson was entitled to the possession
and lease of the fishery. For this reason, Juliana Samonte, on February 24, 1900,
said that the lease still had six years to run. Juliana Samonte and Alejandro Rojas
expressly stipulated, in the document of contract that as soon as the said six years
of the lease should have expired "and this land is returned to us — Juliana’s words-
immediately and without delay we will deliver the same to this married couple. On
November 14, 1907, the delivery of this land had not yet been made to Alejandro
Rojas; hence, by means of a notarial proceeding, the latter demanded of two sons of
Juliana Samonte, Brigido and Matias Villanueva, the said delivery.
The petitioners appealed from the first finding of the judgment, but the
respondent did not appeal from the second. It therefore became final, and for this
reason that document must be considered as excluded and all claim on his part to
the second half of the fishery is abandoned.

Issue:
WON the sale between petitioner and heirs of Samonte is valid.

Held:
Yes. It is evident that the sale made by Juliana Samonte to Alejandro Rojas in
1900 remained in a state of dependency on the completion of the contract and was
not consummated; for the consummation, as is known, consists in the delivery of the
thing sold There is nothing that can be set up as a vice of the said contract. No actual
delivery was made of the possession of the reality in question. There was no public
instrument, the execution of which could have constituted a form of delivery of the
thing sold. On the contrary, from the instrument executed, which is only a private
one, it clearly appears that the delivery of the fishery was postponed to a fixed date,
to wit, that of the termination of the contract of lease then pending, which was to be
six years from the date thereof.
The heirs of Juliana Samonte did sell a thing, the fishery, which did not belong
to them, for the ownership thereof had not yet been transmitted by Juliana Samonte,
and they continued to hold it until it should be demanded of them and the transfer
or tradition should be effected by them. It must be concluded that the sales effected
by the heirs of Juliana Samonte to the petitioners were true, valid, and efficacious.
Therefore, the part of the fishery which belonged to the deceased Juliana Samonte
to be the property of the petitioners and shall decree the adjudication and registration
thereof in the name of the petitioners in the same manner as the other half of the
fishery.
 AZNAR v. YAPDIANGCO
13 SCRA 486 (1965)

REGALA, J.:

FACTS:
Teodoro Santos advertised the sale of his FORD FAIRLANE 500 in a newspaper.
On L. De Dios went to the house of Teodoro and talked to his son Ireneo Santos and
said that his uncle Vicente Marella is interested in buying the said car. The next day,
Ireneo went to the house of Marella and they agreed to the price of P14,700 on the
understanding that it will be paid after the car has been registered in the latter’s
name. A deed of sale was executed and the registration was changed to the name of
Marella. Ireneo went to Marella to get the payment and deliver the car who informed
him that he is P2,000 short of the money and that they need to go to his sister to get
it. Ireneo, together with De Dios and an unidentified man went to a house. Once
inside, De Dios asked Ireneo to wait in the sale. After waiting in vain, he went down
and discovered that the car was gone. Marella was able to sell the car to plaintiff-
appellant Jose Aznar and while attending to registration, the car was seized by Phil.
Constabulary due to the report of the incident.

ISSUE:
Between the two parties, who has the better right?

HELD:
Marella never had title to the car as the car wasn't ever delivered to him. While
there was a deed of sale in his favor, he was only able to obtain possession of the
car since he stole it from Santos. The applicable law is Article 559. The rule is to the
effect that if the owner has lost a thing, or if he has been unlawfully deprived of it,
he has a right to recover it, not only from its finder, thief or robber, but also from
third persons who may have acquired it in good faith from such finder, thief or robber.
The said article establishes 2 exceptions to the general rule of irrevindicabilty—to wit,
the owner has lost the thing or has been unlawfully deprived thereof. In these cases,
the possessor cannot retain the thing as against the owner who may recover it
without paying any indemnity, except when the possessor acquired it in a public sale.
Furthermore, the common law principle that where one of two innocent persons must
suffer a fraud perpetrated by another, the law imposes the loss upon the party who,
by his misplaced confidence, has enable the fraud to be committed, cannot be applied
in this case, which is covered by an express provision of law.
Therefore, Teodoro Santos has the better right. Marella did not have any title
to the property under litigation because the same was never delivered to him. He
may have the contract but he never acquired valid title. Although the keys to the car
may have been given to the unidentified companion, it may be done only because
that companion took them to the place where the sister of Marella was supposed to
live. The car was evidently stolen and that the buyer did not acquire any valid title
thereto.
 ALCANTARA-DAUS v. SPOUSES DE LEON
G.R. No. 149750, June 16, 2003

PANGANIBAN, J.:

FACTS:
Spouses De Leon are the owners of a parcel of land situated in the Municipality
of San Manuel, Pangasinan with an area of 4,212 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. 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.
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 decided in favor of herein
petitioner.

ISSUES:
Whether or not the Deed of Absolute was perfected and binding upon the
parties therein.

Whether or not the evidentiary weight of the Deed of Extrajudicial Partition

with Quitclaim was overcome by more than a preponderance of evidence of
respondents.

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 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.
 LA FUERZA v. CA +
GR No. L-24069, June 28, 1968

CONCEPCION, C.J.:

Facts:
The plaintiff (Associated Engineering Co., Inc.) is a corporation engaged in the
manufacture and installation of flat belt conveyors. The defendant (La Fuerza, Inc.)
is also a corporation engaged in the manufacture of wines. Sometime in the month
of January, 1960, Antonio Co, the manager of the plaintiff corporation, who is an
engineer. The president of the defendant corporation did not make up his mind then
but suggested to Antonio Co to put down his offer in writing. Mariano Lim did not act
on the said offer until February 11, 1960, when Antonio Co returned to inquire about
the action of the defendant on his said offer. The defendant's president and general
manager then expressed his conformity to the offer. A few days later, Antonio Co
made the demand for the down payment of P5,000.00 which was readily delivered
by the defendant in the form of a check for the said amount. After that agreement,
the plaintiff started to prepare the premises for the installations of the conveyor
system by digging holes in the cement floor of the plant.
On April 18, 1960, they delivered one unit of 110' 26" wide flat belt conveyor,
valued at P3, 750.00, and another unit measuring 190' and 4" wide flat conveyor,
valued at P4,500.00, or a total of P13,250.00. Deducting the down payment of
P5,000.00 from this value, there is a balance of P8,250.00 to be paid by the
defendant upon the completion of the installation.
The Court of First Instance of Manila rendered a decision rescinding the
contract entered into by the parties in this case. Court of Appeals was, in effect,
based upon the theory of prescription of La Fuerza's right of action for rescission of
its contract with the plaintiff, for - in the language of said resolution.

ISSUE:
WON the transaction between parties is sales in particular under Art. 1571.

HELD:
La Fuerza was in a position to decide whether or not it was satisfied with said
conveyors, and, hence, to state whether the same were accepted or rejected. The
failure of La Fuerza to express categorically whether they accepted or rejected the
conveyors does not detract from the fact that the same were actually in its possession
and control; that, accordingly, the conveyors had already been delivered by the
plaintiff; and that, the period prescribed in said Art. 1571 had begun to run.
In the case at bar, the plaintiff - shall be responsible therefor and the vendee
- or La Fuerza. In the exercise of this right of election, La Fuerza had chosen to with-
draw from the contract, by praying for its rescission; but the action therefor - in the
language of Art. 1571 - "shall be barred after six months, from the delivery of the
thing sold." The period of four (4) years, provided in Art. 1389 of said Code, for "the
action to claim rescission," applies to contracts, in general, and must yield, in the,
instant case, to said Art. 1571, which refers to sales in particular.
 Indeed, in contracts of the latter type, especially when goods merchandise,
machinery or parts or equipment thereof are involved, it is obviously wise to require
the parties to define their position, in relation thereto, within the shortest possible
time. Public interest demands that the status of the relations between the vendor
and the vendee be not left in a condition of uncertainty for an unreasonable length
of time, which would be the case, if the lifetime of the vendee's right of rescission
were four (4) years.
PHILIPPINE VIRGINIA TOBACCO ADMINISTRATION v. HON. WALFRIDO DE
LOS ANGELES
G.R. No. L-27829, August 19, 1988

Paras, J.
An irrevocable letter of credit cannot, during its lifetime, be cancelled or
modified without the express permission of the beneficiary.

Facts:
Timoteo Sevilla, proprietor and General Manager of the Philippine Associated
Resources (PAR)entered into a contract for the importation of kilos of Virginia leaf
tobacco and Farmer’s tobacco. Due to prevailing export or world market price under
which Sevilla will be exporting at a loss, the parties agreed that Sevilla shall open an
irrevocable letter of credit with the Prudential Bank and Trust Co. (Prudential Bank)
in favor of Philippine Virginia Tobacco Administration (PVTA)While Sevilla was trying
to negotiate the reduction of the procurement cost of the PVTA tobacco already
exported, PVTA prepared two (2) drafts to be drawn against the said letter of credit
for the amounts which have become due and payable. Sevilla filed an injunction
against the release of funds with Prudential Bank which was not granted by Judge
Delos Angeles. Consequently, Judge Delos Angeles issued an order directing
Prudential Bank to make the questioned release of funds from the letters of credit.

Issue:
Whether the respondent judge acted with grave abuse of discretion in releasing
the funds from the letters of credit.

HELD:
YES. Respondent Judge violated the irrevocability of the letter of credit issued
by respondent Bank in favor of petitioner. An irrevocable letter of credit cannot during
its lifetime be cancelled or modified Without the express permission of the
beneficiary. Consequently, if the finding the trial on the merits is that respondent
Sevilla has alleged unpaid balance due the petitioner, such unpaid obligation would
be unsecured.
 CHRYSLER PHILIPPINES CORPORATION vs. THE HONORABLE COURT OF
APPEALS and SAMBOK MOTORS CO. (BACOLOD)
G.R. No. L-55684 December 19, 1984

MELENCIO-HERRERA, J:

Facts:
Petitioner filed a Complaint for Damages against Allied Brokerage Corporation,
Negros Navigation Company and Sambok, Bacolod, alleging that on October 2, 1970,
Sambok, Bacolod, ordered from petitioner various automotive products worth
P30,909.61, payable in 45 days; that on November 25, 1970, petitioner delivered
said products to its forwarding agent, Allied Brokerage Corporation, for shipment;
that Allied Brokerage loaded the goods on board the M/S Doña Florentina, a vessel
owned and operated by Negros Navigation Company, for delivery to Sambok,
Bacolod; that when petitioner tried to collect from the latter the amount of
P31,037.56, representing the price of the spare parts plus handling charges, Sambok,
Bacolod, refused to pay claiming that it had not received the merchandise; that
petitioner also demanded the return of the merchandise or their value from Allied
Brokerage and Negros Navigation, but both denied any liability.
On July 31, 1978, the Trial Court rendered its Decision dismissing the Complaint
against Negros Navigation for lack of cause of action, but finding Sambok, Bacolod,
liable for the claim of petitioner,
respondent Appellate Court set aside the appealed judgment and dismissed
petitioner's Complaint, respondent Appellate Court found that there was misdelivery.

Issue:
WON Sambok can be faulted for not accepting or refusing to accept the
shipment in a contract to sell.

HELD:
The matter of misdelivery is not the decisive factor for relieving Sambok,
Bacolod, of liability herein. While it may be that the Parts Order Form specifically
indicated Iloilo as the destination, as testified to by Ernesto Ordonez, Parts Sales
Representative of petitioner, Sambok, Bacolod, and Sambok, Iloilo, are actually one.
In fact, admittedly, the order for spare parts was made by the President of Sambok,
Pepito Ng, through its marketing consultant. Notwithstanding, upon receipt of the Bill
of Lading, Sambok, Bacolod, initiated, but did not pursue, steps to take delivery as
they were advised by Negros Navigation that because some parts were missing. They
would just be informed as soon as the missing parts were located.
Under the circumstances, Sambok, Bacolod, cannot be faulted for not
accepting or refusing to accept the shipment from Negros Navigation four years after
shipment. The evidence is clear that Negros Navigation could not produce the
merchandise nor ascertain its whereabouts at the time Sambok, Bacolod, was ready
to take delivery. Where the seller delivers to the buyer a quantity of goods less than
he contracted to sell, the buyer may reject them.
 CLARA M. BALATBAT vs. COURT OF APPEALS
G.R. No. 109410. August 28, 1996

TORRES, JR., J.:

Facts:
Aurelio Roque field a complaint for partition against his children Corazon,
Feliciano, Severa and Osmundo Roque, and Alberto de los Santos. Eventually, the
trial court rendered a decision in favor of Aurelio; holding that Aurelio and his wife
Maria Mesina acquired the lot (TCT 51330) during their conjugal union, as well as the
house that was constructed thereon; that when Maria Mesina died, leaving no debt,
Aurelio (as surviving spouse) was entitled to ½ share pro-indiviso of the conjugal
property (i.e. house and lot) and that Aurelio and his 4 children were entitled to 1/5
share pro-indiviso each of the ½ share pro-indiviso forming the estate of Maria
Mesina; ordering the partition of the properties;
He also filed a complaint for “Rescission of Contract” against spouses
Repuyan’s grounded on their failure to pay the balance of P45,000.00 of the purchase
price. On 5 September 1980, spouses Repuyan filed their answer with counterclaim.
Clara Balatbat filed a motion for the issuance of a writ of possession, however,
to valid rights and interest of third persons over the same portion thereof, other than
vendor or any other person or persons privy to or claiming any rights or interest
under it. Balatbat and her husband filed a complaint for delivery of the owners
duplicate copy before the RTC against Jose and Aurora Repuyan.
The RTC rendered a decision dismissing the complaint, finding that the
Balatbats were not able to establish their cause of action against the Repuyans and
have no right to the reliefs demanded in the complaint. Dissatisfied, Balatbat filed an
appeal before the Court of Appeals affirming the judgment appealed.

Issue:
Whether the alleged sale to private respondents was merely executory and not
a consummated transaction.

Held:
NO. Contrary to petitioner’s contention that the sale dated April 1, 1980 in
favor of private respondents Repuyan was merely executory for the reason that there
was no delivery of the subject property and that consideration/price was not fully
paid, SC find the sale as consummated, hence, valid and enforceable. The Court
dismissed vendor’s Aurelio Roque complaint for rescission of the deed of sale and
declared that the Sale dated April 1, 1980, as valid and enforceable. No appeal having
been made, the decision became final and executory.
The execution of the public instrument, without actual delivery of the thing,
transfers the ownership from the vendor to the vendee, who may thereafter exercise
the rights of an owner over the same. In the instant case, vendor Roque delivered
the owner’s certificate of title to herein private respondent. The provision of Article
1358 on the necessity of a public document is only for convenience, not for validity
or enforceability. It is not a requirement for the validity of a contract of sale of a
parcel of land that this be embodied in a public instrument. A contract of sale being
consensual, it is perfected by the mere consent of the parties. Delivery of the thing
bought or payment of the price is not necessary for the perfection of the contract;
and failure of the vendee to pay the price after the execution of the contract does not
make the sale null and void for lack of consideration but results at most in default on
the part of the vendee, for which the vendor may exercise his legal remedies.
 Philippine Suburban Dev Corp vs Auditor General
63 SCRA 397 (1975)

ANTONIO, J.:

FACTS:
Petitioner Philippine Suburban Development Corporation, as owner and
People’s Homesite and Housing Corporation (PHHC), as authorized by the President
of the Philippines, entered into a contract embodied in a public instrument entitled
“Deed of Absolute Sale” whereby the former conveyed unto the latter the
unoccupied portion of the Sapang Palay Estate. This was not registered in the Office
of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims, that
the PHHC could not at once advance the money needed for registration expenses. On
April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold
the amount of P30,099.79 from the purchase price to be paid by it to the Philippine
Suburban Development Corporation. Said amount represented the realty tax due on
the property involved for the calendar year 1961. Petitioner, through the PHHC, paid
under protest the abovementioned amount and thereafter, by letter, requested then
Secretary of Finance Dominador Aytona to order a refund of the amount so paid.
Upon recommendation of the Provincial Treasurer of Bulacan, said request was denied
by the Secretary of Finance.

ISSUE
WON there was already a valid transfer of ownership between the parties and
thus petitioner is entitled for a refund.

HELD:
YES. There was already a valid transfer of ownership. Under the civil law,
delivery (tradition) as a mode of transmission of ownership maybe actual (real
tradition) or constructive (constructive tradition). When the sale of real property is
made in a public instrument, the execution thereof is equivalent to the delivery of
the thing/object of the contract, if from the deed the contrary does not appear or
cannot clearly be inferred. In other words, there is symbolic delivery of the property
subject of the sale by the execution of the public instrument, unless from the express
terms of the instrument, or by clear inference therefrom, this was not the intention
of the parties made.
In the case at bar, there is no question that the vendor had actually placed
the vendee in possession and control over the thing sold, even before the date of the
sale. The condition that petitioner should first register the deed of sale and secure
new title in the name of the vendee before the latter shall pay the balance of the
purchase price, did not preclude the transmission of ownership. In the absence of an
express stipulation to the contrary, the payment of the purchase price of the good is
not a condition precedent to the transfer of title to the buyer, but title passes by the
delivery of the goods. It goes without saying that the petitioner is entitled for a
refund.
 ALLIANCE TOBACCO CORPORATION, INC V. PHILIPPINE VIRGINIA
TOBACCO ADNMINISTRATION (PVTA)
179 SCRA 336 (1989)

FERNAN, C.J.:

Facts:
PVTA, a government corporation entered into a contract of procuring, and
servicing with FVTR for the 1963 tobacco trading operation. PVTA also entered into a
merchandising loan agreement with the petitioner, a duly incorporated and
authorized tobacco trading entity, whereby PVTA agreed to lend Php 25,500 to
petitioner for purchase of flue cured from bona fide Virginia tobacco farmer-
producers.
Following month, petitioner shipped to FVTR 96 bales of tobacco (4,800 kilos)
and 167 bales (8,350 kilos) to the Redrying plant. Only 89 bales were graded weighed
and accepted by FTVR, remaining 174 bales were not graded and weighed because
some officer and employee of FVTR asked money for separate weighing and grading
of the remaining bales.
The operations of FVTR in Bauang stopped in October. Plaintiff asked that its
ungraded and unweighted tobacco be withdrawn from Redrying plant. PVTA and FVTR
refused because according to them, those tobaccos were subject to merchandising
loaned and owned by PVTA.
Unfortunately, the remaining 174 bales with total value and application of the
same to its merchandising loan with PVTA but both the latter and FVTR refused to
heed said demand.

Issue:
WON petitioner's delivery of174 bales of tobacco to FVTR perfected the
contract of sale between petitioner and PVTA.

Held:
The court first denied the petition for lack of merit. But was set aside upon
petitioner's motion for reconsideration. While under an Ideal situation, PVTA's
contention that the contract of sale could not have been perfected pursuant to Article
1477 of the Civil Code because to determine the price of the tobacco traded, the
shipment should first be inspected, graded and weighed has merit, said contention
misplaced herein. A strict interpretation of the provision of Article 1475 may result in
adverse effects to small planters who would not be paid forth lost products of their
toil.
Equity and fair dealings, the anchor of said case, must once more prevail. Since
PVTA had virtual control over the lost tobacco bales, delivery thereof to the FVTR
should also be considered effective delivery to PVTA.
 Ocejo, Perez & Co. v. International Banking Corporation
37 Phil. 631 [February 14, 1918]
Fisher, J.:

FACTS:
On March, 1914, Chua Teng Chong gave a promissory note to International
Banking Corporation in exchange for Php 20,000. 5000 piculs1 of sugar, located in a
warehouse in Calle Toneleros, was put up as security for the note. It seems that at
the end of March, Ocejo, Perez and Co. entered into contract with Chua Teng Chong
for the sale of some sugar. The sugar was brought to Manila in the month of April,
and 5,000 piculs were delivered by to Chua Teng Chong whereupon it was stored in
a warehouse. The next day, petitioners attempted to collect the purchase price of the
sugar, but the buyer refused to make payment.
Ocejo demand the bank to return the sugar, which the latter refused.
Petitioners filed a complaint, with the bank as defendant, alleging that the bank was
unlawfully holding the property of the plaintiff firm. By agreement of the parties, the
sugar was sold and the proceeds of the sale deposited in the bank, subject to the
order of the court upon the final disposition.
The lower court rendered judgment in favor of Ocejo, Perez & Co and from this
decision appeals have been taken by the bank and by the intervener.

ISSUE:
Did title to the sugar pass to the buyer upon its delivery to him?

HELD:
Yes. The obligation of the seller to make delivery of the thing sold was not
subject to the condition that the buyer was to pay the price before delivery. Article
1462 of the Civil Code provides that the thing sold is deemed to be delivered "when
it passes into the possession and control of the buyer.” According to Manresa,
tradition is a true mode of acquiring ownership "which effects the passage of title and
the birth of the right in rem. Therefore, the delivery of the thing . . . signifies that
title has passed from the seller to the buyer." The Transaction is not a like a cash
sale in which delivery and payment are to be made simultaneously. When no term
for payment is stipulated, the seller is not bound to deliver the thing sold until the
buyer has paid the price; But if delivery is consummated, he in fact grants a term of
credit to the buyer, however short and indeterminate it may be, and waives his right
to insist upon payment in advance or simultaneously with delivery. But he does
become entitled to payment upon demand made upon the buyer.
Therefore, the pledge asserted by the International Bank is inefficacious. The
mere will of the plaintiff will not produce the rescission of the sale. Although the right
to rescind a sale, is established by article 1506 and 1124 and such right so conferred
is not an absolute one. The same article provides that "the court shall decree the
rescission demanded, unless there are causes which justify him in allowing a term."

Lao v. Court of Appeals

 G.R. No. 47013
February 17, 2000
Facts:
The Associated Anglo-American Tobacco Corporation entered into a “Contract
of Sales Agent “ with Andres Lao. Under the contract, Lao agrees to
sell cigarettes manufactured and shipped by the corporation to his business address
in Tacloban City. Lao would in turn remit the sales. Esteban Co, the Vice president
and general manager of the Corporation summoned Lao for accounting. It was then
established that there was Lao’s liability. Lao encountered difficulties in complying
with these obligations. The corporation sent Ngo Kheng to supervise Lao’s sales
operation. Ngo Kheng discovered that contrary to Lao’s allegation that he still had
huge collectibles from his customers, nothing was due the Corporation from Lao’s
clients. From then on, Lao no longer received shipments. Lao brought a complaint
for accounting and damages against the corporation. During the pendency of the
said civil case, Esteban co, representing the corporation as its new vice-president
filed an estafe case against Lao. Without awaiting the termination of the criminal
case, Lao lodged a complaint for malicious prosecution. The court ruled in favor of
Lao declaring that the estafa case was filed without probable cause and with malice
and orders the corporation and Esteban Co to jointly and severally pay the Laos.

Issue: Can petitioner Co be held solidarily liable with the Corporation for whatever
damages would be imposed upon them?

Held: NO. A perusal of Lao’s affidavit-complaint reveals that at the time he filed the
same petitioner Co was the vice-president of the Corporation. As a corporate
officer, his power to bind the Corporation as its agent must be sought from statute,
charter, by-laws, a delegation of authority to a corporate officer, or from the acts of
the board of directors formally expressed or implied from a habit or custom of doing
business. In this case, no such sources of petitioner’s authority from which
to deduce whether or not he was acting beyond the scope of his responsibilities as
corporate vice-president are mentioned, much less proven. It is thus logical to
conclude that the board of directors or by-laws of the corporation vested petitioner
Co with certain executive duties one of which is a case for the Corporation.
 Municipality of Victorias v. CA
149 SCRA 32
March 31, 1987

Facts:

Lot No. 76 forms a part of Cadastral Lot No. 140, a sugar land located in Bo.
Madaniog, Victorias, Negros Occidental, in thename of the deceased Gonzalo
Ditching under Tax Declaration No. 3429 of Negros Occidental for the year 194.2.

He was survived by his widow Simeona Jingeo Vda. de Ditching and a

daughter, Isabel, who died in 1928 leaving one off-spring, respondent Norma
Leuenberger, who was then only six months old.3.

Respondent Norma Leuenberger, married to Francisco Soliva, inherited the

whole of Lot No. 140 from her grandmother,Simeona J. Vda. de Ditching (not from
her predeceased mother Isabel Ditching). In 1952, she donated a portion of Lot
No.140 to the municipality for the ground of a certain high school and had 4 ha.
converted into a subdivision.4.

In 1963, she had the remaining 21 ha relocated by a surveyor upon request

of lessee Ramon Jover who complained of being prohibited by municipal officials
from cultivating the land. It was then that she discovered that the parcel of land
used by Petitioner Municipality of Victorias, as a cemetery from 1934, is within her
property which is now identified as Lot 76 andcovered by TCT No. 34546.5.

On May 20, 1963, Respondent wrote the Mayor of Victorias regarding her
discovery, demanding payment of past rentals and requesting delivery of the area
allegedly illegally occupied by Petitioner. When the Mayor replied that Petitioner
bought theland she asked to be shown the papers concerning the sale but was
referred by the Mayor to the municipal treasurer who refused to show the same.6.

On January 11, 1964, Respondents filed a complaint in the Court of First Instance
of Negros Occidental, Branch 1, for recovery of possession of the parcel of land
occupied by the municipal cemetery.7.

In its answer, petitioner Municipality, by way of special defense, alleged

ownership of the lot, subject of the complaint, having bought it from Simeona
Jingco Vda. de Ditching sometime in 1934. The lower court decided in favor of the
Municipality. On appeal Respondent appellate Court set aside the decision of the
lower court; hence, this petition for review on certiorari.

Issue:
Was the secondary evidence presented by the petitioner municipality
sufficient to substantiate its claim that it acquired the disputed land by means of a
Deed of Sale?

Ruling:
 Under the Best Evidence Rule when the original writing is lost or otherwise
unavailable, the law in point provides: Sec. 4. Secondary evidence when original is
lost or destroyed.

—
When the original writing has been lost or destroyed, or cannot be produced in
court, upon proof of its execution and loss or destruction or unavailability, its
contents may be proved by a copy, or by a recital of its contents in some authentic
document, or by the recollection of witnesses. (Rule 130, Rules of Court).In lieu of
a Deed of Sale, petitioner presented a certificate issued by the Archives Division of
the Bureau of Records Management inManila, of a page of the 1934 Notarial
Register of Vicente D. AragonSince no deed of sale could be produced, there is no
way of telling what particular portion of the property was sold to defendant
municipality and how big was the sale of the land conveyed to the defendant
municipality.It will be observed that the entries in the notarial register clearly show:
(a) the nature of the instrument.
—
a deed of sale; (b) the subject of the sale
—
two parcels of land, Lot Nos. 140-A and 140-B; (c) the parties of the contract
—
the vendor Simeona J. Vda. De Ditching in her capacity as Administrator in Civil
Case No. 5116 of the Court of First Instance of Negros Occidental and the
vendee,Vicente B. Ananosa, Municipal Mayor of Victorias; (d) the consideration
P750.00; (e) the names of the witnesses Esteban Jalandoni and Gregoria Elizado;
and the date of the sale on July 9, 1934.It is beyond question that the foregoing
certificate is an authentic document clearly corroborated and supported by: (a) the
testimony of the municipal councilor of Victorias, Ricardo Suarez who negotiated
the sale; (b) the testimony of Emilio Cuesta, the municipal treasurer of said
municipality, since 1932 up to the date of trial on September 14, 1964, who
personally paid the amount of P750.00 to Felipe Leuenberger as consideration of
the Contract of Sale; (c) Certificate of Settlement "as evidence of said payment;"
(d) Tax Declaration No. 429 which was cancelled and was substituted by Tax
Declaration No. 3600 covering the portion of the property unsold and (e) Tax
Declaration No. 3601 in the name of the Municipal Government of Victorias covering
the portion occupied as cemetery. The above-mentioned testimonies and
documentary evidence sufficiently Identify the land sold by the predecessors-in-
interest of private respondent. To insist on the technical description of the land in
dispute would be to sacrifice substance to form which would undoubtedly result in
manifest injustice to the petitioner
 Dy Jr. v. CA
198 SCRA 826
July 8, 1991
Facts:
Wilfredo Dy bought a truck and tractor from Libra Finance Corporation. Both
truck and tractor was also mortgage to Libra as security for a loan and as such,
they took possession of it. Brother of Wilfredo, Perfecto Dy and sister Carol Dy-
Seno requested Libra that they be allowed to buy the property and assume the
mortgage debt. Libra agreed to the request.

Meanwhile, a collection suit was filed against Wilfredo Dy by Gelac Trading

Inc. On the strength of a writ of execution, the sheriff was able to obtain the tractor
on the premises of Libra. It was sold in a public auction in which Gelac Trading was
the lone bidder. Gelac subsequently sold it to one of their stockholders.

The respondents claim that at the time of the execution of the deed of sale,
no constructive delivery was effected since the consummation of the sale depended
upon the clearance and encashment of the check which was issued in payment of
the subject tractor.

Issue:
Is William Dy still the owner of the tractor when it was obtained through the
writ of execution?

Ruling:
The tractor was not anymore in possession of William Dy when it was
obtained by the sheriff because he already sold it to his brother.

William Dy has the right to sell his property even though it was mortgage
because in a mortgage, the mortgagor doesn’t part with the ownership over the
property. He is allowed to sell the property as long as there is consent from the
mortgagee such as in this case. But even if there is no consent given, the sale
would still be valid without prejudice to the criminal action against the mortgagor.

When William Dy sold the tractor, he already transferred the ownership of it

because NCC states that the ownership of the thing sold is acquired by the vendee
from the moment it is delivered to him or in any other manner signing an
agreement that the possession is transferred from the vendor to the vendee. In the
instant case, actual delivery of the subject tractor could not be made but there was
constructive delivery already upon the execution of a public instrument which in
this case is a deed of sale.

The payment of the check was actually intended to extinguish the mortgage
obligation.
 Ong Ching Po v. CA
239 SCRA 341
December 20, 1994
Facts:
On July 1947, Joi Jong sold a parcel of land to private respondent Soledad
Parian, the wife of Ong Yee, who died in January 1983. The said sale was evidenced
by a notarized Deed of Sale written in English. Subsequently, the document was
registered with the RD of Manila, which issued a TCT dated September 2, 1947 in
the name of private respondent Parian.
According to private respondent, she entrusted the administration of the lot and
building to the brother of her husband, petitioner Ong Ching Po when the spouses
settled in Iloilo. When her husband died, she demanded that the lot be vacated
because she was going to sell it. Unfortunately, petitioners refused to vacate the
said premises.

On March 19, 1984, Parian filed a case for unlawful detainer against petitioner Ong
Ching Po before the MTC of Manila. The inferior court dismissed her case, and so
did the RTC, Manila and the CA, the CA decision final and executory.

Petitioners, on the other hand, claimed that on July 23, 1946, petitioner Ong
Ching Po bought the said parcel of land from Joi Jong. The sale was evidenced by a
photo copy of a Deed of Sale written in Chinese.

Issue:
May an alien acquire lands in the Philippines by virtue of a Deed of Sale?

Ruling:
No. Whether or not said deed of sale is genuine, the Constitution provides
that aliens, whether individuals or corporations, have been disqualified from
acquiring public lands, hence disqualified also in acquiring private lands.
The capacity to acquire private land is made dependent upon the capacity to
acquire or hold lands of the public domain. Private land may be transferred or
conveyed only to individuals or entities ‘qualified to acquire lands of the public
domain’.
 Navera v. CA
184 SCRA 584
April 26, 1990

Facts:

Leocadio Navera owns a parcel of land in Albay which was inherited by his 5
children. His 3 children already have their share of the inheritance from the other
properties of Leocadio. The subject land was now owned by his 2 daughters. An
OCT was issued in the name of Elena Navera et.al (et.al refers to his sister Eduarda
Navera)

When Elena died, his share of the land was inherited by her heirs Arsenio and
Felix Narez. The other portion was owned by Eduarda.

Eduarda sold her portion to her nephew Arsenio and then one year after to
Mariano Navera. Both sales were made in a public instrument but both sales were
also not registered in the Registry of Property.

Issue:

Was the second sale of the property valid?

Ruling:

Since the records show that both sales were not recorded in the Registry of
Property, the law clearly vests the ownership upon the person who in good faith
was first in possession of the disputed lot.

The possession viewed in the law includes not only the material but also the
symbolic possession, which is acquired by the execution of a public instrument. This
means that after the sale of a realty by means of a public instrument, the vendor,
who resells it to another, does not transmit anything to the second vendee, and if
the latter, by virtue of this second sale, takes material possession of the thing, he
does it as mere detainer, and it would be unjust to protect this detention against
the rights of the thing lawfully acquired by the first vendee.

In the case at bar, the prior sale of the land to respondent Arsenio Nares by means
of a public instrument is clearly tantamount to a delivery of the land resulting in the
material and symbolic possession thereof by the latter.
 Phil. Suburban Dev. Corp. v. The Auditor General
63 SCRA 397
April 18, 1975
Facts:
On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines,
acting on the reports of the Committee created to survey suitable lots for relocating
squatters in Manila and suburbs, approved in principle the acquisition by the
People’s Homesite and Housing Corporation of the unoccupied portion of the
Sapang Palay Estate in Sta. Maria, Bulacan and of another area either in Las Piñas
or Parañaque, Rizal, or Bacoor, Cavite for those who desire to settle south of
Manila. On June 10, 1960, the Board of Directors of the PHHC passed Resolution
No. 700 (Annex “C”) authorizing the purchase of the unoccupied portion of the
Sapang Palay Estate at P0.45 per square meter “subject to the following conditions
precedent:

3. That the President of the Philippines shall first provide the PHHC with the
necessary funds to effect the purchase and development of this property from the
proposed P4.5 million bond issue to be absorbed by the GSIS.
4. That the contract of sale shall first be approved by the Auditor General pursuant
to Executive Order dated February 3, 1959.

On July 13, 1960, the President authorized the floating of bonds under Republic Act
Nos. 1000 and 1322 in the amount of P7,500,000.00 to be absorbed by the GSIS,
in order to finance the acquisition by the PHHC of the entire Sapang Palay Estate at
a price not to exceed P0.45 per sq. meter.

On December 29,1960, Petitioner Philippine Suburban Development Corporation, as

owner of the unoccupied portion of the Sapang Palay Estate and the People’s
Homesite and Housing Corporation, entered into a contract embodied in a public
instrument entitled “Deed of Absolute Sale” whereby the former conveyed unto the
latter the two parcels of land abovementioned. This was not registered in the Office
of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims,
that the PHHC could not at once advance the money needed for registration
expenses.

In the meantime, the Auditor General, to whom a copy of the contract had been
submitted for approval in conformity with Executive Order No. 290, expressed
objections thereto and requested a re-examination of the contract, in view of the
fact that from 1948 to December 20, 1960, the entire hacienda was assessed at
P131,590.00, and reassessed beginning December 21, 1960 in the greatly
increased amount of P4,898,110.00.

It appears that as early as the first week of June, 1960, prior to the signing of the
deed by the parties, the PHHC acquired possession of the property, with the
consent of petitioner, to enable the said PHHC to proceed immediately with the
construction of roads in the new settlement and to resettle the squatters and flood
victims in Manila who were rendered homeless by the floods or ejected from the
lots which they were then occupying.
On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to
withhold the amount of P30,099.79 from the purchase price to be paid by it to the
Philippine Suburban Development Corporation. Said amount represented the realty
tax due on the property involved for the calendar year 1961. Petitioner, through the
PHHC, paid under protest the abovementioned amount to the Provincial Treasurer
of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary
of Finance Dominador Aytona to order a refund of the amount so paid. Upon
recommendation of the Provincial Treasurer of Bulacan, said request was denied by
the Secretary of Finance in a letter-decision dated August 22, 1961.

Issue: Was there already a valid transfer of ownership between the parties?

Ruling:
Considering the aforementioned approval and authorization by the President
of the Philippines of the specific transaction in question, the prior approval by the
Auditor General envisioned by Administrative Order would therefore, not be
necessary.
Under the civil law, delivery (tradition) as a mode of transmission of
ownership maybe actual (real tradition) or constructive (constructive tradition).
When the sale of real property was made in a public instrument, the execution
thereof is equivalent to the delivery of the thing object of the contract, if from the
deed the contrary does not appear or cannot clearly be inferred.
In other words, there is symbolic delivery of the property subject of the sale by the
execution of the public instrument, unless from the express terms of the
instrument, or by clear inference therefrom, this was not the intention of the
parties. Such would be the case, for instance, when a certain date is fixed for the
purchaser to take possession of the property subject of the conveyance, or where,
in case of sale by installments, it is stipulated that until the last installment is
made, the title to the property should remain with the vendor, or when the vendor
reserves the right to use and enjoy the properties until the gathering of the pending
crops, or where the vendor has no control over the thing sold at the moment of the
sale, and, therefore, its material delivery could not have been made.
In the case at bar, there is no question that the vendor had actually placed the
vendee in possession and control over the thing sold, even before the date of the
sale. The condition that petitioner should first register the deed of sale and secure a
new title in the name of the vendee before the latter shall pay the balance of the
purchase price, did not preclude the transmission of ownership. In the absence of
an express stipulation to the contrary, the payment of the purchase price of the
good is not a condition, precedent to the transfer of title to the buyer, but title
passes by the delivery of the goods.
 Danguilan v. IAC
158 SCRA 22
November 28, 1988

Facts:
A parcel of lot owned by Domingo Melad was being claimed by petitioner
Felix Danguilan and respondent Apolonia Melad. Apolonia Melad contends that she
acquired the property when Dominggo Melad sold it to her when she was just 3
years old in which her mother paid the consideration. (Evidence: Deed of sale dated
December 4, 1943 with a sum consideration of P80.00.)
Apolonia contended that she just moved out of the farm only in 1946 when
Felix Danguilan approached her and asked permission to cultivate the land and to
stay therein. Dangguilan, on the other hand, presented for his part 2 documents
executed in September 14, 1941 and December 18, 1943, to prove his claim that
the properties were given to him by Dominggo Melad through an onerous donation.
The onerous part of the donation includes the taking care of the farm and the
arrangement of the burial of Dominggo.
RTC ruled in favor of Danguilan. CA reversed RTC’s ruling. It ruled that there
was a donation, which was void for failing to comply with the formalities.

Issue:
Was there delivery in favor of respondent for the alleged sale?

Ruling:
No constructive delivery allowed if property is in actual and adverse
possession of a third person

In our jurisdiction, it is a fundamental and elementary principle that ownership does

not pass be mere stipulation but only by delivery and the execution of a public
document does not constitute sufficient delivery where the property involved is in the
actual and adverse possession of third persons.

Therefore, in our Civil Code it is a fundamental principle in all matters of contracts

and a well- known doctrine of law that "non mudis pactis sed traditione dominia rerum
transferuntur".

In conformity with said doctrine as established in paragraph 2 of article 609 of said

code, that "the ownership and other property rights are acquired and transmitted by
law, by gift, by testate or intestate succession, and, in consequence of certain
contracts, by tradition".

In accordance with such disposition and provisions the delivery of a thing constitutes
a necessary and indispensable requisite for the purpose of acquiring the ownership
of the same by virtue of a contract.

Power Commercial and Industrial Corporation v. CA

 272 SCRA 597
June 20, 1997
Facts:
Petitioner asbestos manufacturer Power Commercial and industrial
corporation bought the property of spouses Reynaldo and Angelita Quiambao
located in Makati City.

Since there are lessees occupying the subject land, part of the deed of sale is
a warranty of respondents that will defend its title and peaceful possession in favor
of the petitioners.

The property is mortgage to PNP and as such, petitioners filed a request to

assume responsibility of the mortgage. Because of petitioners failure to produce the
required papers, their petition was denied.

Petitioners allege that the contract should be rescinded because of failure of

delivery.

Issue:
Is the contract rescissible due to breach of contract?

Ruling:
There is no breach of contact in this case since there is no provision in the
contract that imposes the obligation to the respondents to eject the people
occupying the property.

There was also a constructive delivery because the deed of sale was made in
a public document. The contention of the petitioners that there could be no
constructive delivery because the respondents is not in possession of the property
is of no merit. What matters in a constructive delivery is control and not
possession. Control was placed in the hands of the petitioners that is why they were
able to file an ejectment case. Prior physical delivery or possession is not legally
required and the execution of the deed of sale is deemed equivalent to delivery.
 Pasaqui v. Villablanca
68 SCRA 18
November 10, 1975

Facts:

On February 4, 1963, appellants Calixto Pasagui and Fausta Mosar filed a

complaint with the Court of First Instance at Tacloban City, alleging that on
November 15, 1962, for and in consideration of Two Thousand Eight Hundred Pesos
(P2,800.00), they bought from appellees Eustaquia Bocar and Catalina Bocar a
parcel of agricultural land with an area of 2.6814 hectares, situated in
Hamindangon, Pastrana, Leyte; that the corresponding document of sale was
executed, notarized on the same date, and recorded in the Registry of Deeds of
Tacloban, Leyte on November 16, 1962; that during the first week of February,
1963, defendant spouses Ester T. Villablanca and Zosimo Villablanca, "illegally and
without any right, whatsoever, took possession of the above property harvesting
coconuts from the coconut plantation thereon, thus depriving plaintiffs" of its
possession; that despite demands made by the plaintiffs upon the above-mentioned
defendants "to surrender to them the above-described property and its possession"
the latter failed or refused to return said parcel of land to the former, causing them
damage; and that Eustaquia and Catalina Bocar, vendors of the property, are
included defendants in the complaint by virtue of the warranty clause contained in
the document of sale. Plaintiffs prayed for a decision ordering defendants to
surrender the possession of the parcel of land above-described to them and to pay
damages in the amounts specified.

On February 21, 1963, appellees moved to dismiss the complaint on the ground
that the Court of First Instance had no jurisdiction over the subject matter, the
action being one of forcible entry. Appellants opposed the Motion to Dismiss
asserting that the action is not one for forcible entry inasmuch as in the complaint,
there is no allegation that the deprivation of possession was effected through
"force, intimidation, threat, strategy or stealth."

On May 13, 1963, the trial court issued an order dismissing the complaint for lack
of jurisdiction, it appearing from the allegations in the complaint that the case is
one for forcible entry, which belongs to the exclusive jurisdiction of the Justice of
the Peace (now Municipal Court) of Pastrana, Leyte. The first Motion for
Reconsideration was denied on May 27, 1963 and the second was likewise denied
on July 5, 1963. From the above-mentioned orders, appeal on a pure question of
law was interposed to this Court.

Issue:
Whether or not, from the nature of the action pleaded as appears in the
allegations of the complaint, the aforesaid action is one of forcible entry, within the
exclusive jurisdiction of the municipal court.

Ruling:
 It is well-settled that what determines the jurisdiction of the municipal court
in a forcible entry case is the nature of the action pleaded as appears from the
allegations in the complaint. In ascertaining whether or not the action is one of
forcible entry within the original exclusive jurisdiction of the municipal court, the
averments of the complaint and the character of the relief sought are the ones to
be consulted.

In the case at bar, the complaint does not allege that the plaintiffs were in physical
possession of the land and have been deprived of that possession through force,
intimidation, threat, strategy, or stealth. It simply avers that plaintiffs-appellants
bought on November 12, 1962 from defendants-appellees Eustaquia Bocar and
Catalina Bocar the parcel of land in question for the amount of P2,800.00; that a
deed of sale was executed, notarized and registered; that "during this first week of
February, 1963, defendants Ester T. Villablanca and her husband, Zosimo
Villablanca, illegally and without any right whatsoever, took possession of the above
described property, harvesting coconuts from the coconut plantation therein, thus
depriving of its possession herein plaintiffs, and causing them damages for the
amount of EIGHT HUNDRED PESOS P800.00)"; that for the purpose of enforcing the
vendors' warranty in case of eviction, Eustaquia Bocar and Catalina Bocar were also
included as defendants; and, therefore, plaintiffs-appellants pray that a decision be
rendered, ordering (a) defendants Ester T. Villablanca and her husband, Zosimo
Villablanca, "to surrender the possession of the above described property to said
plaintiffs"; (b) defendants Ester T. Villablanca and her husband, Zosimo Villablanca,
"to pay to said plaintiffs the amount of EIGHT HUNDRED PESOS (P800.000) as
damages for the usurpation by them of said property"; and (c) defendants
Eustaquia Bocar and Catalina Bocar "to pay the plaintiffs the amount of P2,800.00,
plus incidental expenses, as provided for by Art. 1555 of the Civil Code, in case of
eviction or loss of ownership to said above described property on the part of
plaintiffs."
 Lim v. Equitable PCI Bank
G.R. No. 183918
January 15, 2014
Facts:
Petitioner Francisco Lim executed an SPA in favor of his brother Franco to
mortgage his share in a property in order to secure a loan. This first loan extended
by BDO in 1989 was fully paid by Franco in 1992. However in 1996, Franco and
their mother obtained another loan over the same property which they failed to
pay.

Respondent Bank tried to foreclose the property due to the non-payment of the
loan. Petitioner thus tried to get a TRO and for the foreclosure and to secure a
cancellation of the SPA executed in favor of his brother. Petitioner alleged that he
did not authorize Franco to mortgage the subject property to respondent and that
his signatures in the Real Estate Mortgage and the Surety Agreement were forged.

the RTC rendered a Decision in favor of petitioner. It ruled that petitioner was able
to prove by preponderance of evidence that he did not participate in the execution
of the mortgage contract giving rise to the presumption that his signature was
forged.

The CA reversed the RTC Decision. It ruled that petitioner’s mere allegation that his
signature in the mortgage contract was forged is not sufficient to overcome the
presumption of regularity of the notarized document.

Issue:
Did Respondent Bank fail to exercise due diligence when granting the loan
without the signature of Petitioner's wife in the mortgage contract?

Ruling:
No. Respondent exercised due diligence. The nature of the property was
never raised as an issue. Hence, the absence of his wife’s signature on the
mortgage contract also has no bearing in this case.

All property of the marriage is presumed to be conjugal, unless it is shown that it is

owned exclusively by the husband or the wife; that this presumption is not
overcome by the fact that the property is registered in the name of the husband or
the wife alone; and that the consent of both spouses is required before a conjugal
property may be mortgaged. However, we find it iniquitous to apply the foregoing
presumption especially since the nature of the mortgaged property was never
raised as an issue before the RTC, the CA, and even before this Court. In fact,
petitioner never alleged in his Complaint that the said property was conjugal in
nature. Hence, respondent had no opportunity to rebut the said presumption.

Article 160 of the Civil Code provides as follows:

"Art. 160. All property of the marriage is presumed to belong to the conjugal
partnership, unless it be proved that it pertains exclusively to the husband or to the
wife."

The presumption applies to property acquired during the lifetime of the husband
and wife. In this case, it appears on the face of the title that the properties were
acquired by [one spouse]. When the property is registered in the name of a spouse
only and there is no showing as to when the property was acquired by said spouse,
this is an indication that the property belongs exclusively to said spouse. And this
presumption under Article 160 of the Civil Code cannot prevail when the title is in
the name of only one spouse and the rights of innocent third parties are involved.
 Rosaroso v. Soria
699 SCRA 232
June 19, 2013
Facts:
Sps. Luis Rosaroso and Honorata Duazo acquired several real properties in
Daan Bantayan, Cebu City including the subject properties. The couple had 9
children: Hospicio, Arturo, Florita, Lucila, Eduardo, Manuel, Cleofe, Antonio, and
Angelica. In 1952, Honorata died. Later on, Luis married Lourdes Rosaroso. In
1995, a complaint for Declaration of Nullity of Documents with Damages was filed
by Luis against Lucila, Lucila’s daughter, Laila, and Meridian Realty Corp. Due to
Luis’ untimely death, an amended complaint was filed with the spouse of Laila, Ham
Solutan, and Lourdes, included as defendants. It was alleged by petitioners
Hospicio, Antonio, Angelica, and Cleofe that in 1991, Luis, with the full consent of
Lourdes executed the Deed of Absolute Sale of some of the properties in their
favor. They also alleged that despite the fact that said properties had already been
sold to them, a second sale took place when the respondents, through
unscrupulous means, made Luis sign a Deed of Absolute Sale conveying to Meridian
Realty Corp. 3 parcels of residential land. The RTC ruled in favor of the petitioners
and declared that the first sale of the properties valid and binding. On appeal, the
CA reversed and set aside the trial court’s decision on the ground that the
petitioners failed to prove that they indeed tendered a consideration for the parcels
of land sold to them.

Issue:

Whether or not the first sale of properties in favor of Luis’ children enjoys
the presumption that there was sufficient consideration for said contract.

Ruling:

Yes. The fact that the first deed of sale was executed, conveying the subject
properties in favor of petitioners, was never contested by the respondents. What
they vehemently insist, though, is that the said sale was simulated because the
purported sale was made without a valid consideration. Under Sec. 3, Rule 131 of
the Rules of Court, the following are disputable presumptions: (1) private
transactions have been fair and regular; (2) the ordinary course of business has
been followed; and (3) there was sufficient consideration for a contract. These
presumptions operate against an adversary who has not introduced proof to rebut
them. They create the necessity of presenting evidence to rebut the prima facie
case they created, and which, if no proof to the contrary is presented and offered,
will prevail. The burden of proof remains where it is but, by the presumption, the
one who has the burden is relieved for the time being from introducing evidence
in support of the averment, because the presumption stands in place of evidence
unless rebutted. In this case, the respondents failed to trounce the said
presumption. Aside from their bare allegation that the sale was made without a
consideration, they failed to supply clear and convincing evidence to back this
claim. It is elementary in procedural law that bare allegations, unsubstantiated by
evidence, are not equivalent to proof under the Rules of Court.
 Vallido v. Pono
696 SCRA 381
April 15, 2013
Facts:
This case is a petition for review on certiorari assailing th decision of CA on a
case involving a double sale of a parcel of land.It appears that Martino was the
registered owner of a parcel of land but he then sold that land to Cerna and gave to
the latter the owner's copy of OCT No. P-429. Cerna then sold a portion of the land
to Pono, the husband, and delivered the above mentioned owner's copy to the
latter. Pono, herein respondent, registered the portion he bought for taxation
purposes and later allowed his son, herein respondent, to build a house thereon.On
June 14, 1990, Pono sold the whole subject property to his grandson Vallido but can
no longer deliver any certificate of title since he had delivered the said OCT No. P-
429 to Cerna in 1960.On Sept. 17, 1999, Vallido registered the deed that was
granted by the RTC to Pono when he filed for the same and the Registry of Deeds
issued a Transfer Certificate of Title. Subsequently, herein petitioners filed a
complaint for quieting of title, recovery of possession of real property and damages
against the respondents.The RTC ruled in favor of petitioners and held that there
was a double sale but the CA ruled in favor of the defendant stating that petitioners
were neither buyers or registrants in good faith.

Issue:

Are the petitioners buyers or registrants in good faith?

Ruling:

The Supreme Court ruled on the negative. The Court explained that it is
undisputed that there is a double sale and that the respondents are the first buyers
while the petitioners are the second buyers. The burden of proving good faith lies
with the second buyer (petitioners herein) which is not discharged by simply
invoking the ordinary presumption of good faith. After the Court's assiduous
assessment of the evidentiary records, they find that the petitioners are NOT
buyers in good faith as they failed to discharge their burden of proof.There are
several indicia that should have placed the petitioners on guard and prompted them
to investigate or inspect the property being sold to them. First, Martino, as seller,
did not have possession of the subject property. Second, during the sale on July 4,
1990, Martino did not have the owner’s duplicate copy of the title. Third, there were
existing permanent improvements on the land. Fourth, the respondents were in
actual possession of the land. These circumstances are too glaring to be overlooked
and should have prompted the petitioners, as prospective buyers, to investigate or
inspect the land. Where the vendor is not in possession of the property, the
prospective vendees are obligated to investigate the rights of one in possession.

182. Vallido vs. Pono, 696 SCRA 381, April 15, 2013
J. Mendoza:

Facts:

This case is a petition for review on certiorari assailing the decision of CA on a case
involving a double sale of a parcel of land. It appears that Martino was the registered
owner of a parcel of land but he then sold that land to Cerna and gave to the latter
the owner's copy of OCT No. P-429. Cerna then sold a portion of the land to Pono,
the husband, and delivered the owner's copy to the latter. Pono, herein respondent,
registered the portion he bought for taxation purposes and later allowed his son,
herein respondent, to build a house thereon.On June 14, 1990, Pono sold the whole
subject property to his grandson Vallido but can no longer deliver any certificate of
title since he had delivered the said OCT No. P-429 to Cerna in 1960.

On Sept. 17, 1999, Vallido registered the deed that was granted by the RTC to Pono
when he filed for the same and the Registry of Deeds issued a Transfer Certificate of
Title. Subsequently, herein petitioners filed a complaint for quieting of title, recovery
of possession of real property and damages against the respondents.The RTC ruled
in favor of petitioners and held that there was a double sale but the CA ruled in favor
of the defendant stating that petitioners were neither buyers or registrants in good
faith.

Issue:

Whether or not the petitioners are buyers or registrants in good faith.

Ruling:

The Supreme Court ruled on the negative. The Court explained that it is undisputed
that there is a double sale and that the respondents are the first buyers while the
petitioners are the second buyers. The burden of proving good faith lies with the
second buyer (petitioners herein) which is not discharged by simply invoking the
ordinary presumption of good faith. After the Court's assiduous assessment of the
evidentiary records, they find that the petitioners are NOT buyers in good faith as
they failed to discharge their burden of proof.There are several indicia that should
have placed the petitioners on guard and prompted them to investigate or inspect
the property being sold to them. First, Martino, as seller, did not have possession of
the subject property. Second, during the sale on July 4, 1990, Martino did not have
the owner’s duplicate copy of the title. Third, there were existing permanent
improvements on the land. Fourth, the respondents were in actual possession of the
land. These circumstances are too glaring to be overlooked and should have
prompted the petitioners, as prospective buyers, to investigate or inspect the land.
Where the vendor is not in possession of the property, the prospective vendees are
obligated to investigate the rights of one in possession.
183. Vda. De Viray v. Usi, 686 SCRA 211, November 21, 2012

VELASCO, JR., J.:

FACTS:

The case involves a piece of land, lot no. 733, registered under the name of Ellen and
Moses Mendoza. The said lot was subdivided to 6 parts by Engr.Fajardo but was not
officially approved by the LMB. On, April 29, 1986, Mendoza executed two separate
deeds of absolute sale, the first, transferring Lot 733-F to Jesus Carlo Gerard Viray
(Jesus Viray), and the second deed conveying Lot 733-A to spouses AvelinoViray and
Margarita Masangcay (Sps. Viray).
The aforementioned conveyances notwithstanding, Mendoza, Emerenciana M.
Vda.deMallari (Vda. de Mallari) and respondent spouses Jose Usi and Amelita T. Usi
(Sps. Usi or the Usis), as purported co-owners of Lot 733, executed on August 20,
1990 a Subdivision Agreement, or the 1st subdivision agreement (1st SA) where lot
no. 733 was divided to 3 lots: Lot 733-A, Lot 733-B and Lot 733-C. Lot 733-C was
further subdivided to 13 lots under a 2nd subdivision agreement (2nd SA) where herein
respondents appeared as owners of some the further subdivided lots covering a part
of the lot sold to herein petitioners.
As to be expected, the foregoing overlapping transactions involving the same
property or portions thereof spawned several suits and countersuits between
petitioner and respondents herein.
The RTC rendered judgment dismissing the petition of the Sps. Usi but was reversed
by the CA on appeal, hence this petition.
ISSUE:
Whether the two (2) subdivision agreements dated August 20, 1990 and April 5,
1991, respectively, partake of a bona fide and legally binding partition contracts or
arrangements among co-owners that validly effectuated the transfer of the subject
lots to respondent spouses Usi.
HELD:
NO. The earlier sale of Lot 733-A and Lot 733-F (Fajardo Plan) on April 29, 1986 was
valid and effective conveyances of said portions of Lot Decision G.R. No. 192486 15
733. The subsequent transfers to the Sps. Usi of substantially the same portions of
Lot 733 accomplished through the subdivision agreements constitute in effect double
sales of those portions.
Partition, in general, is the separation, division, and assignment of a thing held in
common by those to whom it may belong. Contrary to the finding of the CA, the
subdivision agreements forged by Mendoza and her alleged co-owners were not for
the partition of pro-indiviso shares of co-owners of Lot 733 but were actually 35 Heirs
of Cesar Marasigan v. Marasigan, G.R. No. 15678, March 14, 2008, 548 SCRA 409,
445; citing Noceda v. Court of Appeals, G.R. No. 119730, September 2, 1999, 313
SCRA 504, 517 and Cruz v. Court of Appeals, G.R. No. 122904, April 15, 2005, 456
SCRA 165, 171. Decision G.R. No. 192486 16 conveyances, disguised as partitions,
of portions of Lot 733 specifically Lots 733-A and 733-B, and portions of the
subsequent subdivision of Lot 733-C.
184. STATE OF MARGARITA D. CABACUNGAN vs. LAIGO, 655 SCRA 366,
August 15, 2011

PERALTA, J.:

Facts:

Margarita Cabacungan owned three parcels of unregistered land in La Union. The

properties were individually covered by tax declaration all in her name. Margarita’s
son, Roberto Laigo, Jr., applied for a non-immigrant visa to the United States, and to
support his application, he allegedly asked Margarita to transfer the tax declarations
of the properties in his name. For said purpose, Margarita, unknown to her other
children, executed an Affidavit of Transfer of Real Property whereby the subject
properties were transferred by donation to Roberto. Roberto later sold the parcels of
land without Margarita’s knowledge. After Roberto’s death, Margarita found out about
the sale and instituted a complaint for the annulment of said sales and for the
recovery of ownership and possession of the subject properties. Margarita pointed
out that transfer was only for the specific purpose of supporting his U.S. visa
application. She emphasized that she never intended to divest herself of ownership
over the subject lands and, hence, Roberto had no right to sell the properties. She
likewise alleged that the sales, which were fictitious and simulated considering the
gross inadequacy of the stipulated price, were fraudulently entered into by Roberto.
The respondents alleged that they were innocent purchasers for value and in good
faith, and that Margarita’s claim was already barred by prescription and laches owing
to her long inaction in recovering the subject properties. The RTC ruled that an
"implied or constructive trust" was created between the Margarita and Roberto but
that the former’s right has already prescribed.

Issues:

Whether or not the complaint is barred by laches and prescription; the rule on
innocent purchaser for value applies in this case of sale of unregistered land; and
there is no evidence to support the finding that there is an implied trust created
between Margarita and her son Roberto.

Ruling:

The sales arose from that contemplated in Article 1449 where property is gratuitously
conveyed for a particular purpose but the beneficial interest was not intended to vest
in the grantee. Roberto is merely a depositary of legal title having no duties as to the
management, control or disposition of the property. Hence, the sales he entered into
with respondents are a wrongful conversion of the trust property and a breach of the
trust.
185. RAYMUNDO S. DE LEON V. BENITA T. ONG G.R. No. 170405 February
2, 2010
CORONA, J.:
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 P415, 000. Ong complied with it. De Leon handed
the keys of 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
Ruling:
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.
186. SPOUSES RAMY and ZENAIDA PUDADERA v. IRENEO MAGALLANES and
the late DAISY TERESA CORTEL MAGALLANES substituted by her children,
NELLY M. MARQUEZ, ELISEO MAGALLANES and ANGEL MAGALLANES

G.R. No. 170073 October 18, 2010

DEL CASTILLO, J.:

Facts:

Belen Lazaro was the absolute owner of a parcel of land. She sold a portion to
Daisy Magallanes under a "Contract To Sale" payable in two years. Upon full payment,
Lazaro executed a "Deed of Definite Sale" in favor of Magallanes. Thereafter,
Magallanes had the lot fenced and had a nipa hut constructed.

The other portions were sold to several buyers. In 1980, Lazaro executed a "Partition
Agreement" but refused to turn over the mother title to the buyers, thus, preventing
them from titling in their names the subdivided portions. They then filed an adverse
claim. In 1981, Lazaro sold the lot assigned to Magallanes to her niece, Lynn. Lyn
then sold the it to Ramy Pudadera.

Sometime thereafter Magallanes constructed two houses on the lot. So

Pudadera filed a forcible entry case against Magallanes but the trial court dismissed
it. Petitioners now filed an action for Recovery of Ownership alleging that they are
the absolute owners.

Issue:

Who has a better right over the subject property.

Held:

Magallanes has the better right. In case of a double sale of immovables,

ownership shall belong to "(1) the first registrant in good faith; (2) then, the first
possessor in good faith; and (3) finally, the buyer who in good faith presents the
oldest title.". However, mere registration is not enough to confer ownership. The law
requires that the second buyer must have acquired and registered the immovable
property in good faith.

In the case at bar, both the trial court and CA found that petitioners were not
buyers and registrants in good faith owing to the fact that Magallanes constructed a
fence and small hut on the subject lot and has been in actual physical possession
since 1979. Hence, petitioners were aware or should have been aware of Magallanes’
prior physical possession and claim of ownership over the subject lot.
187. KINGS PROPERTIES CORPORATION, INC. v. GALIDO G.R. No. 170023
November 27, 2009
CARPIO, J.:

FACTS:
Respondent Canuto A. Galido executed a Deed of Sale with the late Rufina Eniceo
and Maria Eniceo over a parcel of land in Antipolo City on September 10, 1973. The
certificate of title covering the subject property was delivered to Galido. Meanwhile,
Eniceo’s heirs filed a petition for the issuance of a new certificate of title over the
subject property. A new certificate of title was issued to the Eniceo heirs. The
Eniceo’s then sold the subject property to petitioner Kings Properties Corp. and a
new certificate of title was issued to the latter. Galido found out that a new
certificate of title was issued to the Eniceo’s heirs compelling him to file a criminal
case against them for false testimony. Respondent also filed a civil complaint with
the trial court against the Eniceo heirs and petitioner.

The trial court ruled against Galido and declared that the latter slept on his rights.
On appeal to the CA and the appellate court, both held that respondent is not guilty
of laches. Petitioner contends that respondent is guilty of laches because he slept
on his rights by failing to register the sale of the Antipolo property at the earliest
possible time. Petitioner claims that despite respondent’s knowledge of the
subsequent sale, respondent still failed to have the deed of sale registered with the
registry of deeds.

ISSUE:

Is the contract entered into between Eniceo heirs and respondent in September 10,
1973 a perfected contract of sale?

HELD:

YES. A contract is perfected once there is consent of the contracting parties on the
object certain and on the cause of the obligation. In the present case, the object of
the sale is the Antipolo property and the price certain is ₱250,000.

The contract of sale has also been consummated because the vendors and vendee
have performed their respective obligations under the contract. In a contract of
sale, the seller obligates himself to transfer the ownership of the determinate thing
sold, and to deliver the same to the buyer, who obligates himself to pay a price
certain to the seller. The execution of the notarized deed of sale and the delivery of
the owner’s duplicate copy of OCT No. 535 to respondent is tantamount to a
constructive delivery of the object of the sale. In Navera v. Court of Appeals, the
Court ruled that since the sale was made in a public instrument, it was clearly
tantamount to a delivery of the land resulting in the symbolic possession thereof
being transferred to the buyer.
188. Rufloe v. Burgos G.R. No. 143573 January 30, 2009

LEONARDO-DE CASTRO, J.:

FACTS:

During the marriage of Adoracion and Angel, they acquired a 371- square
meter parcel of land at Muntinlupa subject of the present controversy. Respondent
Delos Reyes forged the signatures of Adoracion and Angel in a Deed of Sale to make
it appear that the subject property was sold to her by the petitioner spouses. Because
of this, she succeeded in obtaining a certificate of title in her name. The Rufloes
then filed a complaint for damages against De los Reyes contending that the Deed of
Sale was falsified as the signatures were forged because Angel Rufloe died in 1974,
four (4) years before the alleged sale in favor of De los Reyes. Along with this, they
filed a notice of adverse claim. During the pendency of the case, De los Reyes sold
the property to respondent Burgos siblings thus a new title was issued in their names.
The Burgos siblings sold the same property to their aunt, Leonarda Burgos. Since the
sale in favor of the aunt was not registered, no title was issued in her name. The said
parcel of land remained in the name of Burgos siblings who continued paying real
estate taxes. The RTC ruled in favor of Rufloe saying that the Deed of Sale was
falsified because of the forged signatures. Rufloes then filed a complaint for
Declaration of Nullity of Contract and Cancellation of Transfer Certificate of Titles
against the respondents. Alleging that since Deed of Sale was falsified, then no valid
title was ever given to the Burgos siblings. The RTC ruled in favor of Rufloes averring
that the respondents were not innocent purchasers for value and did not have a
better right to the property in question than the true and legal owners, the Rufloes.
In addition, the sale bet Burgos siblings and their aunt was simulated to make it
appear that the aunt was a buyer in good faith. On the other hand, the CA reversed
the decision of the RTC.

ISSUES: (1) Is the sale of the parcel of land by Delos Reyes to the respondents were
valid and binding?

(2) Are the respondents considered as buyers in good faith and for value despite the
forged deed of sale of their transferor Delos Reyes?

RULING:

No to both.

Since the Deed of Sale executed by De los Reyes in favor of the Burgos siblings
and the subsequent sale to their aunt was simulated based on forged signatures, no
certificate of title was ever issued in their name. Thus, it is a well-settled principle
that no one can give what one does not have. One can sell only what one owns or is
authorized to sell, and the buyer can acquire no righter than what the seller can
transfer legally. The respondents could not be considered buyers in good faith. An
innocent purchaser for value is one who buys the property of another without notice
that some other person has a right to or interest in it, and who pays a full and fair
price at the time of the purchase or before receiving any notice of another person’s
claim. The burden of proving the status of a purchaser in good faith and for value lies
upon one who asserts that status. The Rufloes, by filing an adverse claim, were
more protected of their interest over their property and served as a notice and
warning to third parties dealing with said property that someone is claiming an
interest on the same and may have a better right than the registered owner. Clearly,
the respondent siblings and their aunt were not innocent purchasers for value and in
good faith.
189. SPS. LUMBRES v. SPS. TABLADA G.R. No. 165831 February 23, 2007
GARCIA, J.:

FACTS: on January 9, 1995 Spring Homes, former owner of the parcel of land in
dispute, entered into a pro forma Contract to Sell with the respondent spouses
Tablada. The prepared typewritten contract, with the blank spaces therein merely
filled up, contains the designation of the parcel sold, the price per square meter and
the stipulation as to payment. After having been paid the sum total of P179,500.00,
which the respondents claim to be the full purchase price of the subject lot, Spring
Homes executed a Deed of Absolute Sale in favor of the respondents. In the deed
the subject lot was already made to appear as covered by a TCT. Because the
anticipated Pag-Ibig loan failed to materialize, the P230,000.00, which, under the
Contract to Sell, was supposed to be paid upon release of the loan, was left unpaid.

It appears, however, that after the filing of the Civil Case the spouses Lumbres filed
a civil case before the RTC of Calamba City, against Spring Homes. The petitioners
filed with the Register of Deeds of Calamba City a Notice of Lis Pendens over all the
properties registered in the name of the said corporation, including the subject lot.
The RTC issued an order attaching all of Spring Homes properties, subject lot.
Premiere Development Bank subsequently intervened because all said properties
had been mortgaged to it.
Meanwhile, due to the respondents’ alleged failure to pay the P230,000.00 unpaid
balance as per the Contract to Sell earlier adverted to despite demands, the subject
lot was sold by Spring Homes to the petitioners, again by way of a Deed of
Absolute Sale executed on December 22, 2000 for and in consideration of the
sum of P157,500.00. The mortgage on the lot was released by Premiere
Development Bank. Subsequently a TCT covering the subject lot was issued in
petitioners’ favor.
Aggrieved, the petitioners appealed to the RTC. In The RTC reversed and set aside
the MTCC decision and ordered the respondent spouses to vacate subject lot to
surrender the possession thereof to the petitioners.
ISSUE: Who, as between the petitioners and the respondents, is entitled to the
physical or material possession of the property involved, independent of their
respective claims of ownership thereof

HELD:
petition denied. The reasonable inference is that the consistent amount stated in
the two Deeds of Absolute Sale was the true selling price as it perfectly jibed with
the computation in the Contract to Sell.

Other than the [petitioners'] self-serving assertion that the Deeds of Absolute Sale
was executed solely for the purpose of obtaining a Pag-Ibig loan, no other concrete
evidence was tendered to justify the execution of the deed of absolute sale. They
failed to overcome the clear and convincing evidence of the [respondents] that as
early as July 5, 1995 the latter had already paid the total amount of P179,500.00,
much bigger than the actual purchase price for the subject land.
Having stated that the Deed of Absolute Sale executed in favor of the respondent
spouses is valid and with sufficient consideration, the MTCC correctly applied the
provisions of Article 1544 of the Civil Code. Article 1544 reads:

Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have first taken possession
thereof in good faith, if it should be movable property.

Should it be immovable property, the ownership shall belong to the person

acquiring it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession, and, in the absence thereof, to the person
who presents the oldest title, provided there is good faith.

190. SPOUSES SALERA, V. SPOUSES RODAJE G.R. No. 135900 August 17,
2007

SANDOVAL-GUTIERREZ, J.:

FACTS:

May 7, 1993 Petitioners filed an action for Quieting of title in the RTC against the
Respondents. The Complaint alleged that they are the absolute Owners of a parcel
of land located in Leyte and acquired the property from the heirs of Brigido Tonacao
on June 23, 1986 shown by a deed of absolute sale and registered in the Registry
of deeds. On Jul 1, 1986 in Iloilo, when they asked the Provincial Assessor to
declare the land in their names for taxation purposes the Petitioners found out that
tax declaration for Brigido was already canceled and a new one was already issued
in the name of Respondents. The complaint also alleged that they have been in
possession of the property and house built therein before the execution of the Deed
of sale.

Respondents in their answer, Allegedly claim that they are the Absolute owners of
the property and acquired the property from the Father of Brigido evidenced by a
deed of absolute sale and a tax declaration issued in their names. Prior thereto they
had a verbal Contract of sale with Catalino the Father of Brigido and paid him 1,000
as Downpayment and agreed that the Balance of 4,000 shall be paid at the
execution of deed of sale, since then they have been exercising their rights of
Ownership over the property and buildings therein and allege that they are Buyers
in good faith.

The Court ruled in favor of petitioners. On appeal the CA reversed the decision.

ISSUE:

Whether or not The Respondents are the absolute owner of the property

HELD:
 The Court of Appeals is wrong, Article 1544 of the Civil Code contemplates a case
of double sale or multiple sales by a single vendor. More specifically, it covers a
situation where a single vendor sold one and the same immovable property to two
or more buyers. It cannot be invoked where the two different contracts of sale are
made by two different persons, one of them not being the owner of the property
sold. In the instant case, the property was sold by two different vendors to different
purchasers. The first sale was between Catalino and herein respondents, while the
second was between Brigido’s heirs and herein petitioners.

The plaintiffs-appellees had prior knowledge of the sale of the questioned property
to the defendants-appellants—and even recognized and respected the latter’s
possession thereof—they acted with gross and evident bad faith in perfecting a
contract of sale in their favor. Accordingly, since it has been proven that the
defendants-appellants were the anterior possessors in good faith, ownership of the
questioned property vested in them by sheer force of law. Besides, the defendants-
appellants subsequently registered the deed of sale in their favor on June 10, 1986.
For all intents and purposes, they were the first to register the deed of conveyance.
Since they were the first vendees, their registration enjoyed the presumption of
good faith.

The Decision of the RTC is Reinstated.

191. CARMELITA FUDOT VS CATTLEYA LAND G.R. No. 171008 September
13, 2007

TINGA, J.:
FACTS:

In Jul 1992 respondents asked someone to check on the titles of 9 lots which
includes the subject land which they intend to buy from spouses tecson. Finding no
defect respondent purchase the lots through a conditional sale and executed an
absolute deed of sale in Aug 30, 1993 for the same lots. Both deeds were
registered on Nov 6, 1992 and Oct 4, 1993. The register of deeds however refused
to annotate the deed of sale on the titles because of an existing notice of
attachment pending before a RTC in bohol. The said attachment were canceled by
virtue of compromise agreement between tecson and their creditor. Thus, titles to 6
out of the 9 lots were issued and title to the 3 remaining lots were refused to be
issued.

Jan 23, 1995 petitioner presented for registration before the register of deeds the
owners copy of the title to the subject property together with the deed of sale
executed by the tecsons in favor of petitioner. Respondent oppose the application.
However, the register of deeds had already registered the deed of sale in favor of
petitioner and issued a new title in her name.

May 5, 1995 respondent filed a complaint for quieting of title and/or recovery of
ownership, cancellation of title with damages before the RTC. The court ruled in
favor of respondent. According to the court the respondent had recorded in good
faith the deed of sale in its favor ahead of petitioner. Petitioner appealed. CA
dismissed the appeal.

ISSUE:

Whether or not there is Double sale

HELD:

In the first place, there is no double sale to speak of. Art. 1544 of the Civil Code,
Which provides the rule on double sale, applies only to a situation where the same
property is validly sold to different Vendees. In this case, there is only one valid
sale to advert to, that between the spouses Tecson and respondent.

The act of registration does not validate petitioners otherwise void contract.
Registration is a mere ministerial act by which a deed, contract, or instrument is
sought to be inscribed in the records of the Office of the Register of Deeds and
annotated at the back of the certificate of title covering the land subject of the
deed, contract, or instrument. While it operates as a notice of the deed, contract, or
instrument to others. The registration of petitioners void deed is not an impediment
to a declaration by the courts of its invalidity.
In interpreting this provision, the Court declared that the governing principle is
primus tempore, potior jure (first in time, stronger in right). Knowledge gained by
the first buyer of the second sale cannot defeat the first buyers rights, except
where the second buyer registers in good faith the second sale ahead of the first as
provided by the aforequoted provision of the Civil Code. Such knowledge of the first
buyer does not bar him from availing of his rights under the law, among them to
register first his purchase as against the second buyer. However, knowledge gained
by the second buyer of the first sale defeats his rights even if he is first to register
the second sale, since such knowledge taints his prior registration with bad faith. It
is thus essential, to merit the protection of Art. 1544, second paragraph, that the
second realty buyer must act in good faith in registering his deed of sale.

The Supreme court ruled in favor of Respondent.

192. BLANCO v. RIVERA, G.R. No. 145878 April 25, 2006

CORONA, J.:

A parcel of residential land consisting of 217 square meters was formerly co-owned
in equal undivided shares by respondent and Eugenia Reyes vda. de Rivera, the
mother of both petitioner and respondent. Eugenia sold her undivided share to
petitioner. The sale could not be registered because the original owner’s copy of the
title was allegedly in the custody of respondent who refused to surrender the same.
The deed of sale did not have the consent of respondent. Eugenia, however,
executed an affidavit alleging that she had already notified her co-owner Felimon
and other possible redemptioners of the sale of the property.

Three years later, on April 19, 1980, Eugenia again sold her undivided share, this
time to her co-owner, respondent Felimon, through a quitclaim deed and for a
consideration of P9,785. Respondent registered the sale with the register of deeds
of Rizal. He was issued TCT No. 501585 on May 21, 1980. He thereafter took actual
and physical possession of the property and had since then paid the real property
tax thereon.

Sometime in 1982, petitioner, who was residing on one-fourth (1/4) of the

property, heard about the sale of the property to respondent. He confronted their
mother Eugenia who sought the assistance of barangay authorities in San Pedro,
Angono, Rizal. In the barangay proceedings, petitioner exhibited the deed of sale
and the affidavit executed by Eugenia attesting to the sale of the property and the
prior notice to her co-owner Felimon Rivera.

Issue
Who between petitioner and respondent has the better right over Eugenia’s portion
of the property
Held:
When immovable property is sold to two different buyers at different times,
ownership is determined in accordance with Article 1544 of the Civil Code.
The prior registration of the disputed property by the second buyer does not by
itself confer ownership or a better right over the property. Article 1544 requires
that such registration must be coupled with good faith. Jurisprudence teaches us
that "the governing principle is primus in tempore, potior jure (first in time,
stronger in right). Knowledge gained by the first buyer of the second sale cannot
defeat the first buyer’s rights except where the second buyer registers in good
faith the second sale ahead of the first, as provided by the Civil Code. Such
knowledge of the first buyer does not bar her from availing of her rights under the
law, among them, to register first her purchase as against the second buyer. This is
the price exacted by Article 1544 of the Civil Code for the second buyer being able
to displace the first buyer; that before the second buyer can obtain priority over the
first, he must show that he acted in good faith throughout.

The vendee who first registers the sale in good faith in the registry of property has
a preferred right over another vendee who has not registered his title. This is true
even if the latter is in actual possession of the immovable property. More credit is
given to registration than to actual possession.

Here, both the trial and appellate courts declared respondent to be the true owner
of the property. He was uncontestedly the first to register his ownership over the
property, untainted by proof of any knowledge of the prior sale. Respondent’s
acquisition and registration of the property were therefore in good faith.
193. N AVAL vs. COURT OF APPEALS ET AL G.R. No. 167412 February 22,
2006

FACTS: In 1969, Ildefonso Naval sold a parcel of land located in Camarines Sur to
Galarosa. The sale was recorded in the RD pursuant to Act No. 3344, the law
governing registrations of all instruments on unregistered lands. Subsequently,
Galarosa sold portions of the land to respondents Balilla, Nacion, spouses Moya, and
Camalla. All buyers occupied the portion they bought, built improvements thereon,
and paid the taxes due thereto.
The controversy arose when petitioner Juanita Naval, the great granddaughter of
Ildefonso, was issued by the RD an OCT covering a portion of the subject land. She
claimed that she bought the subject land from Ildefonso in 1972.

Petitioner Juanita filed a complaint for recovery of possession against Aguirre,

Balila, Moya, and Nacion. However, the case was dismissed without prejudice for
failure to prosecute the action for an unreasonable length of time.
Almost 20 years later petitioner re-filed the complaint for recovery of possession
with damages before the MCTC, against Camalla, Balila, Aguirre, Nacion and Moya.
After trial, the MCTC rendered its decision in favor of the plaintiff and against
defendants, declaring: the plaintiff to be the legal owner of the land

Aggrieved, respondents appealed the decision to the RTC of Naga City, which
affirmed in toto the assailed decision. Respondents thereafter elevated the case to
the CA. Finding the prior registration of the deed of sale between Ildefonso and
Galaura with the RD as a constructive notice to subsequent buyers, the appellate
court reversed the decision of the RTC.
ISSUE: Who has the superior right to a parcel of land sold to different buyers at
different times by its former owner.
HELD:
The petition is DENIED. The Decision of the CA and the denial of the motion for
reconsideration are AFFIRMED.
a. It is not disputed that the subject land belonged to Ildefonso and that it
wasnot registered under the Torrens System when it was sold to Gregorio in 1969
and to the petitioner in 1972. Further, the deed of sale between Ildefonso and
Gregorio was registered with the RD of Camarines Sur pursuant to Act No. 3344.
In holding that respondents have a better right to possess the subject land in view
of the bona fide registration of the sale with the RD of Camarines Sur by Ildefonso
and Gregorio, the CA applied Article 1544 of the Civil Code.
194. CONSOLIDATED RURAL BANK v. CA G.R. No. 132161 January 17, 2005

TINGA, J.:

FACTS: The Madrid brothers were the registered owners of Lot A situated in Isabela.

Said lot was subdivided into several lots. Rizal Madrid sold part of his share identified
lot A-7 to Gamiao and Dayag by virtue of a Deed of Sale, to which his brothers offered
no objection as evidenced by their Joint Affidavit .The deed of sale was not registered
with the ORD of Isabela. However, Gamiao and Dayag declared the property in their
names on a Tax Declaration. Gamiao and Dayag sold the subject southern half of lot
to Teodoro dela Cruz, and the northern half to Hernandez. Thereupon, Teodoro dela
Cruz and Hernandez took possession of and cultivated the portions of the property
respectively sold to them (Later Restituto Hernandez donated the northern half to his
daughter. The children of Teodoro dela Cruz continued possession of the southern
half after their father’s death.) In a Deed of Sale the Madrid brothers conveyed all
their rights and interests over lot A-7 to Marquez which the former confirmed. The
deed of sale was registered with the ORD of Isabela. Subsequently, Marquez
subdivided lot A-7 into eight (8) lots. On the same date, Marquez and his spouse,
Mercedita Mariana, mortgaged 4 lots to the Consolidated Rural Bank, Inc. of Cagayan
Valley (hereafter, CRB) to secure a loan. These deeds of real estate mortgage were
registered with the ORD. As Marquez defaulted in the payment of his loan, CRB
caused the foreclosure of the mortgages in its favor and the lots were sold to it as
the highest bidder. The Heirs-now respondents filed a case for reconveyance and
damages for the southern portion of Lot No. 7036-A (hereafter, the subject property)
against Marquez and CRB. The RTC handed down a decision in favor of Marquez. The
Heirs interposed an appeal with the CA, which upheld the claim of the Heirs. Hence,
the instant CRB petition.

ISSUE: WON Art. 1544 of the Civil Code (double sale) applicable in this case

HELD: NO.

The petition is denied, and the decision as modified is affirmed. Like the lower
court, the appellate court resolved the present controversy by applying the rule on
double sale provided in Article 1544 of the Civil Code. They, however, arrived at
different conclusions. The RTC made CRB and the other defendants win, while the
Court of Appeals decided the case in favor of the Heirs.

Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in possession; and, in the absence thereof, to the person who presents
the oldest title, provided there is good faith. The provision is not applicable in the
present case. It contemplates a case of double or multiple sales by a single vendor.
It cannot be invoked where the two different contracts of sale are made by two
different persons, one of them not being the owner of the property sold.

In a situation where not all the requisites are present which would warrant the
application of Art. 1544, the principle of prior tempore, potior jure or simply “he who
is first in time is preferred in right, should apply.” The only essential requisite of this
rule is priority in time. Applying the principle, the Heirs, without a scintilla of doubt,
have a superior right to the subject property. Moreover, it is an established principle
that no one can give what one does not have¾nemo dat quod non habet. Accordingly,
one can sell only what one owns or is authorized to sell, and the buyer can acquire
no more than what the seller can transfer legally. In this case, since the Madrid
brothers were no longer the owners of the subject property at the time of the sale to
Marquez, the latter did not acquire any right to it.

195. Sps. Occea v. Esponilla

431, SCRA 116 (2004)

FACTS:
A 1,198 sqm lot in Sibalom, Antique was owned by the Tordesillas spouses.
They had 3 children: Harod, Angela, and Rosario. When the Tordesillas spouses
died, Harod and Angela, along with Rosario’s children Arnold and Lilia (Rosario had
died by then) inherited the lot. In 1951, they executed a Deed of Pacto de Retro
Sale in favor of Alberta Morales over the southwestern portion of the lot, which had
an area of 748 sqm. Arnold and Lilia executed a Deed of Definite Sale of Shares,
Rights, Interests, and Participations over the same 748-sqm portion in favor of
Alberta Morales. Alberta possessed the lot as owner, constructed a house on it, and
appointed a caretaker to oversee the property. In 1956, Arnold borrowed the OCT
covering the lot from Alberta. He executed an affidavit acknowledging receipt of the
OCT in trust. In 1966, Arnold and Angela, without the knowledge of Alberta,
executed a Deed of Extrajudicial Settlement declaring the two of them as the only
co-owners of the entire lot, without acknowledging the sale of the 748-sqm portion
to Alberta.
Arnold executed an Affidavit of Settlement of the Estate of Angela in 1983,
declaring himself as the sole heir of Angela (who died in 1978). Thus, the title of
the entire lot was consolidated in his name. Alberta died in 1985. Her nieces (her
only heirs) succeeded in the ownership of the 748-sqm lot. They kept asking Arnold
to deliver the title covering the lot, but the latter failed. Arnold used the OCT he
borrowed from Alberta in 1956, subdividing the 1,198 sqm lot into 3 lots and
paying taxes on the property.
Arnold sold 2 of the 3 subdivided lots (which included the 748 sqm portion he
had sold to Alberta) to the Occeña spouses, Tomas and Sylvina. A Deed of Absolute
Sale was executed in their favor, and titles transferred to their names. Arnold died
in 1993. Alberta’s nieces found out about the sale to the Occeña spouses once they
were notified that they were being ejected. Alberta’s nieces filed a case for
annulment of sale with cancellation of titles, with damages, against the Occeña
spouses. Occeña spouses claimed they were in good faith when they bought the
lots, as the titles were free from encumbrances when they bought them. They also
claimed the defenses of laches and prescription (Alberta and the nieces having
failed to assert their right for 40 years). The lower court ruled for the Occeña
spouses as they were buyers in good faith. This was reversed by the CA, who ruled
in favor of Alberta’s nieces and heirs.

ISSUES:
1. Whether or not Occeña spouses were purchasers in good faith
2. Whether or not the action of Alberta’s nieces for annulment is barred by laches
and prescription

RULING:
1. No.
The instant petition is a case of double sale of immovable property.
According to Art. 1544, NCC, the ownership of an immovable sold to different
vendees shall belong:
To the person acquiring it who in good faith first recorded it in the Registry of
Property;
Should there be no inscription, ownership shall belong to the person who in
good faith was first in possession;
If none, the person who presents the oldest title in good faith.
Here, the Occeña spouses failed to prove good faith in their purchase. A
purchaser in good faith and for value is one who buys property without notice that
some other person has a right to or interest in such property and pays its fair price
before he has notice of the adverse claims and interest of another person in the
same property.
During trial, the Occeña spouses admitted that they saw houses built on the
subject lot when they inspected it. They said they relied on the representation of
Arnold that these were owned by squatters.
The Occeña spouses should have verified from the occupants of the land the
nature and authority of their possession instead of merely relying on the
representation of the vendor that they were squatters, having seen for himself that
the land was occupied by persons other than the vendor who was not in possession
of the land at that time.
The settled rule is that a buyer of real property in the possession of persons
other than the seller must be wary and should investigate the rights of those in
possession. Without such inquiry, the buyer can hardly be regarded as a buyer in
good faith and cannot have any right over the property.

2. No.
 Laches cannot be used to defeat justice or perpetuate fraud and injustice.
Prescription does not apply when the person seeking annulment of title or
reconveyance is in possession of the lot because the action partakes of a suit to
quiet title which is imprescriptible.
In this case, Alberta had actual possession of the land when she had a house
built thereon and had appointed a caretaker to oversee her property. Alberta’s
undisturbed possession of the land for a period of fifty 50 long years gave her and
her heirs a continuing right to seek the aid of a court of equity to determine the
nature of the claim of ownership of petitioner-spouses. The general rule is that
registration under the Torrens system is the operative act which gives validity to
the transfer of title on the land.
However, it does not create or vest title especially where a party has actual
knowledge of the claimants actual, open and notorious possession of the property
at the time of his registration.
Petition dismissed.
196. CHENG V. GENATO
300 SCRA 722 (1998)

FACTS:
Respondent Genato entered a contract to sell to spouses Da Jose pertaining
to his property in Bulacan. The contract made in public document states that the
spouses shall pay the down payment and 30 days after verifying the authenticity of
the documents, they shall pay the remaining purchase price.
Da Jose spouses was not able to finish verifying the documents and as such
asked for a 30 day extension. Pending the extension and without notice to the
spouses, Genato made a document for the annulment of the contract.
Petitioner Cheng expressed interest over the property and paid 50K check
with the assurance that the contract between Genato and the spouses Da Jose will
be annulled. Da Jose spouses protested with the annulment and persuaded Genato
to continue the contract. Genato returned the check to Cheng and hence, this
petition.
ISSUE:
Whether or not the contract between the parties was a contract to sell or a
contract of sale.
RULING:
The contract between Genato and spouses Da Jose was a contract to sell
which is subject to a suspensive condition. Thus, there will be no contract to speak
of, if the obligor failed to perform the suspensive condition which enforces a
juridical relation. Obviously, the foregoing jurisprudence cannot be made to apply to
the situation in the instant case because no default can be ascribed to the Da Jose
spouses since the 30-day extension period has not yet expired.
Even assuming that the spouses defaulted, the contract also cannot be
validly rescinded because no notice was given to them. Thus, Cheng's contention
that the Contract to Sell between Genato and the Da Jose spouses was rescinded or
resolved due to Genato's unilateral rescission finds no support in this case.
The contract between Genato and Cheng is a contract to sell not a contract of
sale. But But even assuming that it should be treated as a conditional contract of
sale, it did not acquire any obligatory force since it was subject to a suspensive
condition that the earlier contract to sell between Genato and the Da Jose spouses
should first be cancelled or rescinded.
Art.1544 should apply because for not only was the contract between herein
respondents first in time; it was also registered long before petitioner's intrusion as
a second buyer (PRIMUS TEMPORE, PORTIOR JURE). (Spouses made annotation on
the title of Genato). Since Cheng was fully aware, or could have been if he had
chosen to inquire, of the rights of the Da Jose spouses under the Contract to Sell
duly annotated on the transfer certificates of titles of Genato, it now becomes
unnecessary to further elaborate in detail the fact that he is indeed in bad faith in
entering into such agreement.
197. TENIO-OBSEQUIO V. COURT OF APPEALS
230 SCRA 550 (1994)
FACTS:
On September 10, 1986, private respondents filed a complaint against
petitioners Consorcia Tenio and her husband, Orlando Obsequio, and the heirs of
Eduardo Deguro for recovery of possession and ownership, alleging that sometime
in 1964, they mortgaged the land to Eduardo Deguro for P10,000.00; that to
guaranty the loan they delivered to the latter the original certificate of title to the
land; that in the meantime, they continued to cultivate the same and, at the end of
the harvest season, they gave two-thirds (2/3) of the harvest to Eduardo Deguro;
that on June 25, 1965, Eduardo Deguro and his wife, without the knowledge and
consent of herein private respondents, prepared a document of sale and through
misrepresentation and other manipulations made it appear that private respondents
sold the land to them. This deed of sale was annotated at the back of the said
certificate of title as Entry No. 16007. By virtue thereof, Original Certificate of Title
No. P-1181 in the name of Eufronio Alimpoos was cancelled and Transfer Certificate
of Title No. T-1360 was correspondingly issued in favor of Eduardo Deguro. After
the death of Eduardo Deguro, his heirs sold the land to Consorcia Tenio-Obsequio.
On September 22, 1970, Transfer Certificate of Title No. T-1421 was issued in her
name. It was allegedly only in 1982, when Eufronio Alimpoos received a Certificate
of Agricultural Leasehold of his land from the Department of Agrarian Reform
(DAR), that he learned that the land was already titled in the name of another.

ISSUE:
Whether or not a forged document of sale may give rise to a valid title?

RULING:
Yes.
The court has held that a fraudulent or forged document of sale may give
rise to a valid title if the certificate of title has already been transferred from the
name of the true owner to the name indicated by the forger and while it remained
as such, the land was subsequently sold to an innocent purchaser.
198. PACIANO REMALANTE v. CORNELIA TIBE and THE COURT OF APPEALS
G.R. No. L-59514 February 25, 1988

FACTS:
Cornelia Tibe sought the annulment of certain contracts and other documents
which became the bases for the transfer of six (6) parcels of land from Cornelia to
petitioner Paciano Remalante. Cornelia claimed that petitioner, through fraud, deceit,
abuse of confidence and misrepresentation, induced her to sign three (3) affidavits
of transfer (Exhibits I-3, K and M), purported to be bail bonds, that transferred three
(3) parcels of land under Tax Declaration Nos. 20280, 20273 and 20274 to petitioner.
Petitioner thereafter presented the affidavits to the Provincial Assessor and caused
the three (3) parcels of land to be declared under Tax Declaration Nos. 20323, 20324
and 20325. Cornelia also claimed that petitioner forged her signatureand transferred
to petitioner's name Cornelia’s 3 other parcels of land. Remalante denied the
allegations and claimed ownership over the subject lands. He further claimed that
the first three (3) parcels of land mentioned were bought by him from Silvino
Alminario. The trial court rendered a decision in favor of Remalante which the CA
reversed. Before the SC, Remalante alleged that the provision on double sales must
apply.

ISSUE:

Whether or not this is a situation of double sale.

RULING:

No.
The provision applies to a situation where the same property is sold to
different vendees. No such situation obtains in the instant case. As found by the
Court of Appeals, the three parcels of land covered by Tax Declaration Nos. 20323,
20324 and 20325 were never sold by Silvino Alminario to petitioner. There was only
one sale--the sale to private respondent Cornelia Tibe as testified by Alminario.
Petitioner therefore cannot claim a better right by virtue of his prior registration of
the deeds of sale in the Registry of Property as such registration was found to be
fraudulent since the three parcels of land were never sold to him to begin with.
Thus, inEspiritu v. Valerio[G.R. No. L-18018, December 26, 1963, 9 SCRA 761],
where the same parcel of land was allegedly sold to two different parties, the Court
held that despite the fact that one deed of sale was registered ahead of the other.
Art. 1544 of the Civil Code will not apply where said deed is found to be a forgery
and, thus, the sale to the other vendee should prevail.
199. LAND AUTHORITY and ALEJANDRO DIÑO v. ROSENDO DE LEON and
REGISTER OF DEEDS OF MANILA
G.R. No. L-29428 January 27,1983

FACTS:

In 1960, Felicio Cadenas applied with the defunct Land Tenure Administration
(LTA) to purchase a parcel of land and pursuant thereto the LTA executed an
agreement to sell in favor of Cadenas. In 1961, Cadenas executed in favor of the
plaintiff Alejandro Diño a Deed of Transfer but the LTA withheld the approval of said
Deed of Transfer pending payment of the full amount of purchase price.

In 1963, the LTA issued an order 'IN RE: Application to Purchase of Bonifacio
Magat'. The LTA then executed another Agreement to Sell this time in favor of Magat.
In the same year, Magat executed in favor of the herein defendant Rosendo de Leon
a Deed of transfer of Rights. Rosendo de Leon filed the prescribed application for the
purchase of the lot in question and paid unto -the Land Authority (successor of the
defunct LTA) the full amount of the purchase price. De Leon presented the Deed of
Sale with the Office of the Register of deeds a title was issued in his name. Thus, de
Leon filed before the Land Authority a request to use the purchased land for
mortgage. Meanwhile, Dino paid the purchase price. Hence the issue on alleged
double sales

ISSUE:

Whether or not there was double sales.

RULING:

None. The Court finds no such double sale. On the date the lot was sold to
Rosendo de Leon, there was no sale made to plaintiff Alejandro Diño, although the
deed of transfer of rights from Cadeans to Diño was approved by the land Authority.
His application and deed of transfer of rights were approved by the Land Authority in
the ordinary course of business; the deed of sale was executed in his favor at the
time when the deed of transfer of rights executed by Cadenas in favor of plaintiff
Diño was still pending approval by the Land Authorit. When, therefore, the deed of
sale was executed by the Land Authority in favor of Rosendo de Leon, plaintiff
Alejandro Diño had not acquired any dominical right on the lot in question. It cannot
be said that plaintiff Dino was already the owner of the property. What he had then,
if any, were only the rights of Felicio Cadenas, subject to the approval of the Land
Authority. On the other hand, the records of this case fail to show any bad faith or
false representation made by the defendant Rosendo de Leon. Indeed, it cannot be
said that this is one of double sale because after the Land Authority had sold the
property to de Leon, it did not anymore execute one in favor of Dino.
200. VILLA REY TRANSIT, INC., v. FERRER, PANTRANCO and PSC,
v. VILLARAMA
G.R. No. L-23893 October 29, 1968

FACTS:
Jose Villarama was an operator of a bus transportation pursuant to two
certificates of publicconvenience granted him by the Public Service Commission
(PSC). Later, he sold the certificates to thePangasinan Transportation Company,
Inc. (Pantranco) with the condition that the seller (Villarama) "shallnot for a period
of 10 years, apply for any TPU service identical or competing with the buyer."Barely
three months thereafter, a corporation called Villa Rey Transit, Inc. (the
Corporation) wasorganized with a capital stock of P500,000.00 divided into 5,000
shares of the par value of P100.00 each;P200,000.00 was the subscribed stock;
Natividad Villarama (wife of Jose Villarama) was one of theincorporators, and she
subscribed for P1,000.00; the balance of P199,000.00 was subscribed by
thebrother and sister-in-law of Jose Villarama; of the subscribed capital stock,
P105,000.00 was paid to thetreasurer of the corporation, Natividad.In less than a
month after its registration with the SEC, the Corporation bought five certificates of
public convenience and 49 buses from one Valentin Fernando. Later, the Sheriff of
Manila levied on 2 of the 5 certificates, in favor of Eusebio Ferrer, judgment
creditor, against Fernando, judgment debtor. Apublic sale was conducted. Ferrer
was the highest bidder. Ferrer sold the two certificates to Pantranco.The
Corporation filed a complaint against Ferrer, Pantranco and the PSC for the
annulment of thesheriff's sale. Pantranco, on its part, filed a third-party complaint
against Villarama, alleging that Villaramaand/or the Corporation was disqualified
from operating the two certificates in question by virtue of theprevious agreement.
The trial court declared null and void the sheriff's sale of two certificates of
publicconvenience in favor of Ferrer and the subsequent sale thereof by the latter
to Pantranco and declaring
Villa Rey Transit, Inc., to be the lawful owner of the said certificates of public
convenience.Pantranco disputes the correctness of the decision insofar as it holds
that Villa Rey Transit, Inc.(Corporation) is a distinct and separate entity from
Villarama. Ferrer, for his part, challenges the decisioninsofar as it holds that the
sheriff's sale is null and void.

ISSUE:
Whether the stipulation between Villarama and Pantranco binds Villa Rey
Transit, Inc.

RULING:
Yes.
 The restrictive clause in the contract entered into by the Villarama and
Pantranco is alsoenforceable and binding against the said Corporation. The rule is
that a seller or promisor may not makeuse of a corporate entity as a means of
evading the obligation of his covenant. The evidence hasdisclosed that Villarama,
albeit was not an incorporator or stockholder of the Corporation, his wife,however,
was an incorporator and was elected treasurer of the Corporation. The evidence
further showsthat the initial cash capitalization of the corporation was mostly
financed by Villarama; he supplied theorganization expenses and the assets of the
Corporation, such as trucks and equipment;there was noactual payment by the
original subscribers of the amounts of P95,000.00 and P100,000.00 as appearingin
the books; Villarama made use of the money of the Corporation and deposited
them to his privateaccounts; and the Corporation paid his personal accounts. The
foregoing circumstances are strong persuasive evidence showing that Villarama has
been too much involved in the affairs of the Corporationto altogether negate the
claim that he was only a part-time general manager. They show beyond doubtthat
the Corporation is his alter ego. The doctrine that a corporation is a legal entity
distinct and separate from the members andstockholders who compose it is
recognized and respected in all cases which are within reason and thelaw. When the
fiction is urged as a means of perpetrating a fraud or an illegal act or as a vehicle
for theevasion of an existing obligation, the circumvention of statutes, the
achievement or perfection of amonopoly or generally the perpetration of knavery or
crime, the veil with which the law covers andisolates the corporation from the
members or stockholders who compose it will be lifted to allow for itsconsideration
merely as an aggregation of individuals.

201. ESPERANZA ESPIRITU and ANTONIA APOSTOL

vs.
FRANCISCO VALERIO
GR. No. L-18018, December 26, 1963

FACTS:

Valerio filed an action to quiet title against mother and daughter Espiritu,
alleging in his complaint that he was the owner of a parcel of unregistered land in
Pangasinan having acquired the same from the former owner, Pelagia Vegilia, as
evidenced by a deed of sale executed by the latter in his favor on January 31, 1955
(Exhibit A) and the Espiritus had been asserting adversary rights over said land and
disturbing his possession thereof.

The Espiritus alleged on the other hand that they were the owners of the land
in question, having acquired it by inheritance from the late Santiago Apostol, husband
and father of Espiritu and Apostol respectively; that said deceased bought the
property from Mariano Vegilia on June 3, 1934, as evidenced by the deed of sale
Exhibit 2, who, in turn, had acquired it from his niece, Pelagia Vegilia, on May 26,
1932, by virtue of the deed of sale Exhibit 1.

ISSUE:
Which of the two sales is valid?

RULING:

The sale to Valerio is valid. Under Art. 1544 of the New Civil Code, Exhibit "1"
would be considered to be effective as against Exhibit "A", it having been registered
prior to Exhibit "A". But this is not the only question at issue. Over and the above the
application of Art. 1544 of the New Civil Code is the determination of whether or not
Exhibits "1" and "2" have been falsified" Having arrived at the conclusion that the
two exhibits just mentioned had been falsified, the trial court rendered decision on
July 23, 1956, "adjudging ownership of the land described in the complaint in favor
of the plaintiff and hereby permanently and definitely enjoins the defendants to
abstain and desist from disturbing and molesting the plaintiff from the peaceful
enjoyment and possession of the parcel of land described in the complaint or in any
way to interfere personally or by agents in the said peaceful possession by the plaintiff
of the land in litigation; the defendants are hereby further ordered to pay the costs
of this suit."
202. ROMEO PAYLAGO v. INES PASTRANA JARABE
GR No. L-20046, 1968-03-27

FACTS:
The entire lot involved in this suit was originally registered in the name of
Anselmo Lacatan. After his death, the transfer certificate was issued in the name his
two sons and heirs, Vidal and Florentino Lacatan.After Vidal Lacatan died, his heirs
executed a deed of sale of a portion of their lot in favor of petitioners-spouses. Years
after, Florentino Lacatan also died. His heirs likewise executed a deed of sale in favor
of the same vendees over a portion of the same lot. Upon the registration of the two
deeds of sale, a new TCT was issued in favor of petitioners-spouses. However,
subsequent subdivision survey for the purpose of segregating the two portions of
land described in the deeds revealed that a portion of the total area purchased by
petitioners was being occupied by defendant-respondent. Hence, an action to recover
possession and ownership of the said portion was filed. The lower court rendered
judgment in favor of respondent, and was affirmed in toto by the Court of Appeals.

ISSUE:
Who has a better right in case of double sale of real property, the registered
buyer or the prior but unregistered purchaser?

RULING:
As held by the Court, the general rule in this matter is that, between two
purchasers, the one who has registered the sale in his favor, in good faith, has a
preferred right over the other who has not registered his title, even if the latter is in
the actual possession of the immovable property. This is in accordance with Art
1544, providing that if the same immovable property should have been sold to
different vendees, "the ownership shall belong to the person acquiring it who in
good faith first recorded it in the registry of property. However, it was found that
their acquisition and subsequent registration were tainted with the vitiating element
of bad faith; petitioners knew beforehand that the parcel of land in question was
owned by respondent. The fundamental premise of the preferential rights
established by Article 1544 of the New Civil Code is good faith. To be entitled to the
priority, the second vendee must not only show prior recording of his deed of
conveyance or possession of the property sold, but must, above all, have acted in
good faith, that is to say, without knowledge of the existence of another alienation
by his vendor to a stranger.
203. BEATRIZ V. CEDENA

4 SCRA 617 (1962)

204. Nuguid vs. Court of Appeals, and Guevarra
171 SCRA 213
March 1989

FACTS:

The deceased spouses Victorino and Crisanta dela Rosa (spouses dela Rosa)
were registered owners of a parcel of land in Orani, Bataan, and covered by OCT
No. 3778. On or about May 4, 1931, Victorino dela Rosa (widowed by then) sold
one-half of the said property to Juliana Salazar for P95.00. This sale between him
and Salazar, though evidenced by a document, was not registered. Nevertheless,
Juliana Salazar constructed a house on the lot she purchased immediately after the
sale. On March 10, 1964, petitioner spouses Diosdado Nuguid and Marqiueta
Venegas (spouses Nuguid) caused the registration of a document entitled
"Kasulatan ng Partihan at Bilihan" (Kasulatan) dated June 6, 1961. In this
document, Marciana dela Rosa, together with the heirs of Victorino and Crisanta
dela Rosa, sold to spouses Nuguid the entire area of the property for the sum of
P300.00. Subsequently, OCT No. 3778 was cancelled by the Register of Deeds of
Bataan, and TCT No. T-12782 was issued in the spouses Nuguid’s names.

Private respondents claimed that the presented by spouses Nuguid was

forged. They also allegedly discovered the forged deed as well as the certificate of
title in the name of the petitioners much later, that is, on February 28, 1978, when
respondents Amorita Guevarra and Teresita Guevarra thought of having the title of
their grandmother Juliana Salazar, registered. On the other hand, spouse Nuguid
assert that in the latter part of 1960, Nicolas dela Rosa, uncle of respondent
Marciana dela Rosa and grandfather of the other heirs-signatories, offered to sell
the subject land to them. Apparently, Nicolas dela Rosa claimed that he had already
purchased the shares of the heirs over the subject property as evidenced by a
private document entitled "Kasunduan" (Kasunduan) dated August 31, 1955, and
as a matter of fact, he had in his possession the original certificate of title covering
the property in the name of the deceased Victorino and Crisanta dela Rosa.
The CFI of Bataan dismissed the complaint filed by private respondents, but
the Court of Appeals reversed said decision and ordered the spouses Nuguid to
execute a deed of reconveyance in favor of herein respondents.

ISSUE:

Who is the rightful owner of the subject property?

RULING:
The Supreme Court reinstated the decision of the CFI of Bataan. The basis
for the Court of Appeals' conclusion that petitioners were buyers in bad faith is
ambiguous because said court relied on the singular circumstance that the
petitioners are from Orani, Bataan, and should have personally known that the
private respondents were the persons in actual possession. However, at the time of
the purchase, the spouses Nuguid dealt with Pedro Guevarra and Pascuala
Tolentino, the latter being the actual occupants. The respondents Guevarras,
children of the said Pedro and Pascuala Guevarra, came into the picture only after
their parents died. As for the respondent heirs of Victorino dela Rosa, their being in
actual possession of any portion of the property was, likewise, simply presumed or
taken for granted by the Court of Appeals.

The private respondents cannot also honestly claim that they became aware
of the spouses Nuguid’s title only in 1978, because ever since the latter bought the
property in 1961, the spouse Nuguid have occupied the same openly, publicly, and
continuously in the concept of owners, even building their house thereon. For
seventeen years they were in peaceful possession, with the respondents Guevarras
occupying less than one-half of the same property.
205. TANEDO VS COURT OF APPEALS
252 SCRA 80 (1996)

FACTS:
On October 20, 1962, Lazardo Tanedo executed a notarized deed of absolute
sale in favor of his eldest brother, Ricardo Tanedo and the latter's wife, Teresita
Barera, private respondents herein, whereby he conveyed to the latter in
consideration of P1,500.00, "one hectare of whatever share I shall have over Lot
No. 191", the said property being his future inheritance from his parents. Upon the
death of his father, Lazaro executed an Affidavit of Conformity to re-affirm, respect,
acknowledge and validate the sale I made in 1962. On January 13, 1981, Lazaro
executed another notarized deed of sale in favor of Ricardo and Teresita, covering
his "undivided ONE TWELVE (1/12) of a parcel of land known as Lot 191 ". He
acknowledged his receipt of P10,000 as consideration. Ricardo learned that Lazaro
sold the same property to his children, petitioners herein, through another deed of
sale. On June 7, 1982, private respondents recorded the Deed of Sale in their favor
in the Registry of Deeds and entry was made in the TCT. Petitioners on July 16,
1982 filed a complaint for rescission (plus damages) of the deeds of sale executed
by Lazaro in favor of private respondents. Petitioners claimed that their father,
Lazaro, executed an Absolute Deed of Sale onveying to his ten children his allotted
portion from the extrajudicial partition executed by the heirs of Matias. Petitioners
also presented in evidence: (1) a private writing purportedly prepared and signed
by Matias, stating that it was his desire that whatever inheritance Lazaro would
receive from him should be given to his (Lazaro's) children; (2) a typewritten
document signed by Lazaro wherein he confirmed that he would voluntarily abide
by the wishes of his father; and (3) a letter of Lazaro to his daughter, Carmela,
stating that his share in the extrajudicial settlement of the estate of his father was
intended for his children, petitioners herein. Private respondents, however
presented in evidence a Deed of Revocation of a Deed of Sale, wherein Lazaro
revoked the sale in favor of petitioners for the reason that it was simulated or
fictitious without any consideration whatsoever. Shortly after the case was filed,
Lazaro executed a sworn statement which virtually repudiated the contents of the
Deed of Revocation of a Deed of Sale and the Deed of Sale in favor of private
respondents. However, Lazaro testified that he sold the property to Ricardo, and
that it was a lawyer who induced him to execute a deed of sale in favor of his
children after giving him five pesos (P5.00) to buy a "drink". The trial court decided
in favor of private respondents, holding that petitioners failed "to adduce a
proponderance of evidence to support (their) claim. The CA affirmed the decision of
the trial court, ruling that the Deed of Sale dated January 13, 1981 was valid and
that its registration in good faith vested title in said respondents.

ISSUES:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and registration with the
Registry of Property) of a deed of sale covering the same property to the same
buyers valid?

RULING:
1.The sale made in 1962 involving future inheritance is not really at issue
here. In context, the assailed Decision conceded "it may be legally correct that a
contract of sale of anticipated future inheritance is null and void." But to remove all
doubts, we hereby categorically rule that, pursuant to Article 1347 of the Civil
Code, "(n)o contract may be entered into upon a future inheritance except in cases
expressly authorized by law." Consequently, said contract made in 1962 is not valid
and cannot be the source of any right nor the creator of any obligation between the
parties. Hence, the "affidavit of conformity" dated February 28, 1980, insofar as it
sought to validate or ratify the 1962 sale, is also useless and, in the words of the
respondent Court, "suffers from the same infirmity." Even private respondents in
their memorandum conceded to this.

2. However, the documents that are critical to the resolution of this case are:
(a) the deed of sale of January 13, 1981 in favor of private respondents covering
Lazaro's undivided inheritance of one-twelfth (1/12) share in Lot No. 191, which
was subsequently registered on June 7, 1982; and (b) the deed of sale dated
December 29, 1980 in favor of petitioners covering the same property. These two
documents were executed after the death of Matias (and his spouse) and after a
deed of extra-judicial settlement of his estate was executed, thus vesting in Lazaro
actual title over said property. In other words, these dispositions, though
conflicting, were no longer infected with the infirmities of the 1962 sale. The CA
correctly identified the subject matter of the January 13, 1981 sale to be the entire
undivided 1/12 share of Lazaro in Lot No. 191 and which is the same property
disposed of on December 29, 1980 in favor of petitioners. Critical in determining
which of these two deeds should be given effect is the registration of the sale in
favor of private respondents with the register of deeds on June 7, 1982. Article
1544 of the Civil Code governs the preferential rights of vendees in cases of
multiple sales.
The property in question is land, an immovable, and following the above-
quoted law, ownership shall belong to the buyer who in good faith registers it first
in the registry of property. Thus, although the deed of sale in favor of private
respondents was later than the one in favor of petitioners, ownership would vest in
the former because of the undisputed fact of registration. On the other hand,
petitioners have not registered the sale to them at all. Petitioners contend that they
were in possession of the property and that private respondents never took
possession thereof. As between two purchasers, the one who registered the sale in
his favor has a preferred right over the other who has not registered his title, even
if the latter is in actual possession of the immovable property.
206. BALATBAT v. CA
261 SCRA 128

FACTS:
A parcel of land was acquired by plaintiff Aurelio Roque and Maria Mesina
during their conjugal union. Maria died on August 28, 1966. On June 15, 1977,
Aurelio filed a case for partition. The trial court held that Aurelio is entitled to the ½
portion at his share in the conjugal property, and 1/5 of the other half which
formed part of Maria’s estate, divided equally among him at his 4 children. The
decision having become final and executory, the Register of Deeds of Manila issued
a transfer certificate of title on October 5, 1979 according to the ruling of the court.
On April 1, 1980, Aurelio sold his 6/10 share to spouses Aurora Tuazon-Repuyan
and Jose Repuyan, as evidenced by a deed of absolute sale. On June 21, 1980,
Aurora caused the annotation of her affidavit of adverse claim. On August 20, 1980,
Aurelio filed a complaint for rescission of contract grounded on the buyers’ failure to
pay the balance of the purchase price. On February 4, 1982, another deed of
absolute sale was executed between Aurelio and his children, and herein petitioner
Clara Balatbat, involving the entire lot. Balatbat filed a motion for the issuance of
writ of possession, which was granted by the court on September 20, 1982, subject
to valid rights and interests of third persons. Balatbat filed a motion to intervene in
the rescission case, but did not file her complaint in intervention. The court ruled
that the sale between Aurelio and Aurora is valid.

ISSUES:
1. Whether the alleged sale to private respondents was merely executory
2. Whether there was double sale.
3. Whether petitioner is a buyer in good faith and for value.

RULING:
1. Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of
private respondents Repuyan was merely executory for the reason that there was
no delivery of the subject property and that consideration/price was not fully paid,
we find the sale as consummated, hence, valid and enforceable. The Court
dismissed vendor's Aurelio Roque complaint for rescission of the deed of sale and
declared that the Sale dated April 1, 1980, as valid and enforceable. No appeal
having been made, the decision became final and executory.The execution of the
public instrument, without actual delivery of the thing, transfers the ownership from
the vendor to the vendee, who may thereafter exercise the rights of an owner over
the same. In the instant case, vendor Roque delivered the owner's certificate of title
to herein private respondent. The provision of Article 1358 on the necessity of a
public document is only for convenience, not for validity or enforceability. It is not a
requirement for the validity of a contract of sale of a parcel of land that this be
embodied in a public instrument. A contract of sale being consensual, it is perfected
by the mere consent of the parties. Delivery of the thing bought or payment of the
price is not necessary for the perfection of the contract; and failure of the vendee to
pay the price after the execution of the contract does not make the sale null and
void for lack of consideration but results at most in default on the part of the
vendee, for which the vendor may exercise his legal remedies.

2. Article 1544 of the Civil Code provides that in case of double sale of an
immovable property, ownership shall be transferred (1) to the person acquiring it
who in good faith first recorded it in the Registry of Property; (2) in default thereof,
to the person who in good faith was first in possession; and (3) in default thereof,
to the person who presents the oldest title, provided there is good faith. In the case
at bar, vendor Aurelio Roque sold 6/10 portion of his share to private respondents
Repuyan on April 1, 1980. Subsequently, the same lot was sold again by vendor
Aurelio Roque (6/10) and his children (4/10), represented by the Clerk of Court
pursuant to Section 10, Rule 39 of the Rules of Court, on February 4, 1982.
Undoubtedly, this is a case of double sale contemplated under Article 1544 of the
New Civil Code. Evidently, private respondents Repuyan's caused the annotation of
an adverse claim on the title of the subject property on July 21, 1980. The
annotation of the adverse claim in the Registry of Property is sufficient compliance
as mandated by law and serves notice to the whole world. On the other hand,
petitioner filed a notice of lis pendens only on February 2, 1982. Accordingly,
private respondents who first caused the annotation of the adverse claim in good
faith shall have a better right over herein petitioner. As between two purchasers,
the one who has registered the sale in his favor, has a preferred right over the
other who has not registered his title even if the latter is in actual possession of the
immovable property. Further, even in default of the first registrant or first in
possession, private respondents have presented the oldest title. Thus, private
respondents who acquired the subject property in good faith and for valuable
consideration established a superior right as against the petitioner.

3. Petitioner cannot be considered as a buyer in good faith. If petitioner did

investigate before buying the land on February 4, 1982, she should have known
that there was a pending case and an annotation of adverse claim was made in the
title of the property before the Register of Deeds and she could have discovered
that the subject property was already sold to the private respondents. It is
incumbent upon the vendee of the property to ask for the delivery of the owner's
duplicate copy of the title from the vendor. One who purchases real estate with
knowledge of a defect or lack of title in his vendor cannot claim that he has
acquired title thereto in good faith as against the true owner of the land or of an
interest therein; and the same rule must be applied to one who has knowledge of
facts which should have put him upon such inquiry and investigation as might be
necessary to acquaint him with the defects in the title of his vendor. Good faith, or
the want of it is not a visible, tangible fact that can be seen or touched, but rather a
state or condition of mind which can only be judged of by actual or fancied tokens
or signs.
 Caram v. Laureta
G.R. No. L-28740, February 24, 1981

Facts:
Marcos Mata (Mata) conveyed a large tract of agricultural land in favor of Claro
Laureta (Laureta). The deed of absolute sale in favor of Laureta was not registered.
At the time the sale was executed, there was no authorized officer before whom the
sale could be acknowledged. However, Mata delivered to Laureta the peaceful and
lawful possession of the premises of the land together with the pertinent papers.

Subsequently, the same was sold by Mata to Fermin Caram, Jr. (Caram). The deed
of sale in favor of Caram was acknowledged before Atty. Abelardo Aportadera (Atty.
Aportedara) and witnessed by Pedro Irespe (Irespe). Days after the sale, Mata filed
with the Court of First Instance of Davao (CFI) a petition for the issuance of a new
Owner's Duplicate of Original Certificate of Title (OCT) alleging as ground therefor
the loss of said title. The CFI issued an order directing the Register of Deeds (RD) to
issue a new Owner’s Duplicate of OCT in favor of Mata. Thus, the second sale between
Mata and Caram was registered with the RD. On the same date, Transfer Certificate
of Title (TCT) was issued in favor of Caram.

Laureta filed in the CFI an action for nullity, recovery of ownership and/or
reconveyance with damages against Marcos Mata, Codidi Mata, Fermin Caram, Jr.
and the RD.

The CFI rendered a decision upholding the deed of sale executed by Mata in favor of
Laureta which was affirmed by the Court of Appeals.

Issues:
1) Is Caram a purchaser in good faith?
2) Is Laureta first in possession in good faith?

Held:
1)
No. Irespe and Atty. Aportadera, acting as agents of Caram, purchased the property
of Mata in bad faith. Applying the principle of agency, Caram, as principal, should
also be deemed to have acted in bad faith.

Irespe and Atty. Aportadera had knowledge of circumstances which ought to have
put them an inquiry. Both of them knew that Mata's certificate of title was with
Laureta. Added to this is the fact that at the time of the second sale, Laureta was
already in possession of the land. Irespe and Atty. Aportadera should have
investigated the nature of Laureta's possession. If they failed to exercise the ordinary
care expected of a buyer of real estate, they must suffer the consequences. The rule
of caveat emptor requires the purchaser to be aware of the supposed title of the
vendor and one who buys without checking the vendor's title takes all the risks and
losses consequent to such failure.

2)
Yes. Laureta was first in possession of the property. He is also a possessor in good
faith. It is true that Mata had alleged that the deed of sale in favor of Laureta was
procured by force. Such defect, however, was cured when, after the lapse of four
years from the time the intimidation ceased, Mata lost both his rights to file an action
for annulment or to set up nullity of the contract as a defense in an action to enforce
the same.

A more important reason why Laureta's action could not have prescribed is that the
second contract of sale, having been registered in bad faith, is null and void. Article
1410 of the Civil Code of the Philippines provides that any action or defense for the
declaration of the inexistence of a contract does not prescribe.

Article 1544 specifically provides who shall be the owner in case of a double sale of
an immovable property. To give full effect to this provision, the status of the two
contracts must be determined and clarified. One contract must be declared valid so
that one vendee may exercise all the rights of an owner, while the other contract
must be declared void to cut off all rights which may arise from said contract.
Otherwise, Article 1544 will be meaningless.

The first sale in favor of Laureta prevails over the sale in favor of Caram.
 Gatmaitan v. CA
G.R. No. 76500, August 2, 1991

Facts:
A lot was originally registered in the name of the parents of Aquilino Gatmaitan and
Emeteria Gatmaitan (the siblings). In 1952, the siblings executed in favor of Spouses
Donato Pascual and Rosita Cristobal (Spouses Pascual) an extrajudicial partition and
sale with a right to repurchase covering the lot. Thereafter, the Pascual spouses took
possession of the property and introduced improvements thereon.

In 1956, the siblings again executed an extrajudicial partition adjudicating this time
to Spouses Aquilino and Lilia Ayton (Spouses Gatmaitan) the whole of lot.
Consequently, a TCT was issued in the name of the Spouses Gatmaitan.

In 1970, Spouses Gatmaitan executed in favor of Spouses Pascual an instrument by

which they absolutely conveyed to the latter spouses one-half portion of the lot.

In 1972, Spouses Gatmaitan sold to Spouses Emiliano Dealino and Teodora

Gatmaitan (Spouses Dealino) the whole of the lot. As a consequence of the sale, a
new TCT was issued in the name of Spouses Dealino. This second sale came to the
knowledge of Spouses Pascual. Thus, Donato Pascual executed an Affidavit of
Adverse Claim with respect to the one-half portion of the lot which had earlier been
sold by Spouses Gatmaitan to him and his wife.

Spouses Pascual filed a complaint for reconveyance of the one-half portion of lot
against Spouses Gatmaitan and Spouses Dealino.

The trial court held that the earlier sale of the one-half portion of lot to Spouses
Pascual prevailed over the later sale of the whole lot to Spouses Dealino as the latter
should be deemed to have had constructive notice of that earlier sale of the property,
being neighbors of Spouses Pascual, the actual possessors of the one-half of the lot.
Thus, registration of the sale in their favor had not effectively transferred to them
the ownership of that one-half portion of said lot. The Intermediate Appellate Court
(IAC) affirmed the decision of the trial court.

Issue:
Was the registration of the sale of the whole property to Spouses Dealino had the
effect of transferring to them the ownership of the whole lot including the one-half
portion which had earlier been the subject of an absolute deed of sale executed by
Spouses Gatmaitan in favor of Spouses Pascual?

Held:
No. It is well settled, that if immovable property is sold to two different parties, the
ownership shall pertain to the person acquiring it who, in good faith, first registered
it in the Registry of Property. This rule however, admits of an exception, and that is
where the second purchaser had knowledge of the other sale, prior to or at the time
of the sale. In such case, his knowledge is equivalent to registration and taints his
purchase with bad faith. The applicable rule in this case would be that the ownership
shall pertain to the person who, in good faith, first entered into possession of the
property or, in the absence of possession, to the person who presents the oldest title,
provided there is good faith.

The fact that Spouses Pascual were in possession of the lot, ought to have put
Spouses Dealino on inquiry. Before consenting to the sale to themselves, they should
have investigated the basis of the possession of Spouses Pascual. Since the Dealino
spouses failed to exercise the ordinary care expected from a buyer of real property,
they must suffer the consequence of their negligence. The decision of the IAC should
be upheld.
 Berico v. CA
G.R. No. 96306, August 20, 1993

Facts:
Jose de los Santos (Jose) owned a parcel of land located at Masbate; the property is
specifically described in the Original Certificate of Title (OCT) issued on May 1956. In
1961, Jose sold, in a private document, a portion thereof to Ciriaco Flores and Felisa
Bareja (first vendees). In 1963, however, he executed another deed of sale which he
acknowledged before a notary public. The first vendees took possession of the portion
sold to them immediately after the 1961 sale and declared the same for taxation
purposes in the name of Ciriaco Flores.

In 1963, Jose sold one-half of the lot to Lorenzo Berico (Berico). Thereafter, Jose's
minor children sold to Berico the remaining half. Jose represented his children in this
transaction.

Berico was aware of the 1961 sale of a portion of the lot to the first vendees and of
the latter's possession thereof. Despite such knowledge and recognition of the sale
in favor of and the possession of the property by the first vendees, Berico registered
the two deeds of sale in his favor and caused the cancellation of the OCT; the latter
also secured the issuance in his name of a Transfer Certificate of Title (TCT). He paid
the appropriate taxes thereon only from 1973 to 1986. It appears, however, that he
declared the property for taxation purposes in his wife's name in 1968.

On the other hand, it was only in 1978 that the first vendees registered the deed of
sale in their favor after discovering the cancellation of OCT and issuance in favor of
Berico of the TCT.

In 1978, the first vendees filed against Berico and Visitation Sanchez a complaint for
"Annulment of Title" with the then Court of First Instance of Masbate.

Issue:
In the double sale of an immovable property under Article 1544 of the Civil Code,
does prescription bar an action by the first vendees, who are in possession of the
said property, against the second vendee for the annulment of a transfer certificate
of title over the property procured by the latter who has knowledge of the first sale
and who recognizes the first vendees' possession?

Held:
No. Berico's act in causing the cancellation of OCT and securing a new TCT, knowing
that his transfer certificate included a property not his but belonging to Ciriaco Flores
makes him a holder in bad faith of a certificate and is not to be accorded the
protection of the law.
In a more real sense, and insofar as prescription is concerned, Berico may only
acquire ownership of the questioned property — assuming that they did not register
the deed of sale in their favor — through extraordinary acquisitive prescription under
Article 1137 of the Civil Code, and not by ordinary acquisitive prescription since they
cannot claim just title or good faith.
Finally, the complaint for annulment of title filed by the first vendees is substantially
one for the quieting of title — to quiet their title against a cloud cast by the claim of
Berico. It is settled that an action to quiet title does not prescribe.
 Carumba v. CA
G.R. No. L-27587, February 18, 1970

Facts:
Spouses Amado Canuto and Nemesia Ibasco (Spouses Canuto) sold a parcel of land,
partly residential and partly coconut land, to Spouses Amado Carumba and Benita
Canuto (Spouses Carumba). The deed of sale was never registered in the Office of
the Register of Deeds (RD) and the Notary was not then an authorized notary public.

Subsequently, a complaint for a sum of money was filed by Santiago Balbuena

(Balbuena) against Spouses Canuto. A decision was rendered in favor of Balbuena
and against the Spouses Canuto. Thus, the Sheriff issued a Definite Deed of Sale of
the property in favor of Balbuena which was registered before the RD.

The Court of First Instance (CFI) nullified the sale in favor of Balbuena and declared
Carumba the owner of the litigated property. The Court of Appeals declared that there
having been a double sale of the land subject of the suit, Balbuena's title was superior
to that of his adversary under Article 1544 of the Civil Code of the Philippines, since
the execution sale had been properly registered in good faith and the sale to Carumba
was not recorded.

Issue:
Is Balbuena's title superior over Carumba?

Held:
No. While under Article 1544, registration in good faith prevails over possession in
the event of a double sale by the vendor of the same piece of land to different
vendees, said article is of no application to the case at bar, even if Balbuena, the
later vendee, was ignorant of the prior sale made by Spouses Canuto in favor of
Carumba. The reason is that the purchaser of unregistered land at a sheriff's
execution sale only steps into the shoes of the judgment debtor, and merely acquires
the latter's interest in the property sold as of the time the property was levied upon.

The deed of sale had been executed two years before and while only embodied in a
private document, the same, coupled with the fact that Carumba had taken
possession of the unregistered land sold, sufficed to vest ownership on the said buyer.
When the levy was made by the Sheriff, therefore, the judgment debtor no longer
had dominical interest nor any real right over the land that could pass to the
purchaser at the execution sale. Hence, the latter must yield the land to Carumba.
 Valdez v. CA
G.R. No. 85082, February 25, 1991

Facts:
Spouses Francisco Ante and Manuela Ante (Spouses Ante) were the registered
owners of a parcel of land. Antonio Ante (Ante), their son as attorney-in-fact,
executed a deed of sale in favor of Spouses Pastor Valdez and Virginia Valdez
(Spouses Valdez) who started fencing the whole lot in the presence of Spouses Eliseo
and Felicidad Viernes. Since the owner’s duplicate certificate of title was not delivered
in due time despite Ante's promise to deliver the same in a few days, Spouses Valdez
filed their affidavit of adverse claim over the subject lot with the Register of Deeds of
Quezon City (RD) as the vendees of the property. Thereupon, Spouses Valdez learned
that Ante had delivered the owner’s duplicate certificate of title as a collateral to Dr.
Camilo Garma who then turned over to Spouses Valdez the said title after Spouses
Valdez paid for the obligation of Ante.

Spouses Valdez then proceeded to register the deed of sale in 1981 with the RD and
was informed that the title had been declared null and void because Spouses Ante
had filed a petition earlier for the issuance of a new owner’s duplicate certificate of
title on the ground that the owner’s duplicate copy had been lost. Said owner’s
duplicate copy was delivered by Ante to Felicidad Viernes (Viernes) who thereafter
together with the Deed of Assignment of the same property presented the same to
the RD for registration in 1982.

Issues:
1) Does Viernes have the better right over the property?
2) Can Viernes claim good faith on her part?
3) Shall the subsequent owner's duplicate title be declared null and void and the
previous one be reinstated?

Held:
1)
No. Spouses Valdez acquired the lot in good faith and for valuable consideration from
Spouses Ante, and as such, they fenced the property taking possession thereof.
Thus, when Spouses Valdez annotated their adverse claim in the RD, they established
a superior right to the property as against Viernes.

The sale of the lot to Spouses Valdez was made long before the execution of the Deed
of Assignment of said lot to Viernes and that they annotated their adverse claim as
vendees of the property as early as September 6, 1982 with the RD. On the other
hand, the deed of Assignment in favor of Viernes of the said lot was registered with
the RD only on November 11, 1982.

2)
No. Viernes cannot claim good faith in the purchase of the subject lot and the
subsequent registration of the Deed of Assignment in her favor. After Spouses Valdez
purchased the lot, they immediately fenced the same with the knowledge and without
objection of Viernes and her husband, and they were informed by the petitioners
about their purchase of the same. Moreover, when Spouses Valdez annotated their
adverse claim as vendees of the property with the RD, it was effectively a notice to
the whole world including Viernes.

3)
Yes. Ante, as well as Viernes, knew that the owner’s duplicate copy of certificate of
title was never lost. Consequently, the filing of the petition in court for the issuance
of a new one was attended with fraud and gross misrepresentation, and thus null and
void.
 Vda. de Alcantara v. CA
G.R. No. 114762, January 29, 1996

Facts:
Two lots are covered by a Transfer Certificate of Title (TCT) and registered in the
names of Leona vda. de Alfonso (Leona), one-half, and Ernesto Alcantara married to
Rebecca Desamito, and Gerondina Alcantara, one-half. This title was derived from a
TCT registered in the name of Leona and Dolores Cifra, the latter being the
predecessor-in-interest of Aniceto Cruz and Aniceto Santiago. The Alcantaras are
claiming ownership over one-half undivided portion of the two lots covered by the
subject title by virtue of a Pacto de Retro Sale executed in their favor by Leona and
which said vendor-a-retro failed to redeem within the three-month period.

Cruz and Santiago traversed that the sale con pacto de retro is null and void because
at the time it was executed, Leona, the vendor-a-retro, was no longer the owner of
the one-half portion of the lots as the same had already been transferred by her in a
document entitled, "Deed of Extra-Judicial Partition" of the estates of Cifra, and Deed
of Partition of Co-ownership of property.

Issue:
Does the pacto de retro sale prevail over the deed of extrajudicial partition despite
the fact that the latter was executed and registered earlier than the former?

Held:
Yes. While the Deed of Extrajudicial Partition was registered ahead of the Pacto de
Retro Sale, it did not, however, rise to the level of a valid instrument of conveyance
of the one-half share of Leona in the subject property in favor of Ernesto Alcantara
and Gerondina Alcantara, since it merely mentions of an alleged sale executed by
Leona. The said deed of sale was never offered in evidence by the Alcantaras. There
is, as well, no proof that it was registered. The TCT bears no annotation of the sale.

Without the production of the alleged deed of sale, the registration of the Deed of
Extrajudicial Partition was an idle ceremony or an exercise in futility insofar as the
transfer of Leona’s ownership is concerned.

Good faith or bad faith in the registration of the Pacto de Retro Sale for purposes of
determining who has the better right to the property pursuant to Article 1544 of the
Civil Code has become irrelevant because the Alcantaras never presented in evidence
the deed of sale purportedly executed by Leona. Article 1544 applies only when there
are at least two deeds of sale over the same property.
 Lopez v. CA
G.R. No. L-49739, January 20, 1989

Facts:
Deceased Spouses Tiburcio Pinohermoso and Casiana Flores (Spouses Pinohermoso)
had three children, namely: Hermogenes, Felicidad and Pedro , all surnamed
Pinohermoso. Hermogenes died single. Felicidad was survived by her husband
Melencio Padrelan and children. Pedro died and was substituted by his wife, Juana
Remolona and children.

It appears that Tiburcio was granted a Homestead Application. Tiburcio sold this land
to Bonifacio Lopez and Roberta Llaneras who took possession of the property and its
improvements upon their purchase thereof. By virtue of the said sale, a Transfer
Certificate of Title was issued in the name of Bonifacio Lopez married to Roberta
Llaneras.

The Pinohermoso pray among others that judgment be rendered declaring that the
property in question belongs to the conjugal partnership of the Spouses Pinohermoso
and that as heirs of Casiana Flores, they became the owners of one-half thereof from
the time of her death; that they became the owners of the other half pertaining to
Tiburcio in the conjugal partnership from the time of his death; ordering the Register
of Deeds to issue another certificate of title in their name as heirs of the late Spouses
Pinohermoso.

The trial court declared the lot in question a conjugal property of Spouses
Pinohermoso. Tiburcio had authority only to administer and not to sell the share of
Casiana which passed on to her heirs. Thus, the trial court ordered the reconveyance
of half of the land to the Pinohermoso heirs. The appellate court affirmed the trial
court's decision.

Issue:
Does the Pinohermoso heirs have better right over the share of Casiana on the lot
which was sold solely by Tiburcio?

Held:
No. The land in question is a homestead titled under the Land Registration Act. Under
the established principles of land registration law, the presumption is that the
transferee of registered land is not aware of any defect in the title of the property he
purchased. There is nothing in the questioned decision which indicates why Bonifacio
Lopez should have looked beyond the title and why he should have taken notice of
the fact that the sole registered owner had a legitimate wife who died in 1924 or 16
years before the land was offered to him by the sole registered owner in 1940.
There is no evidence to show bad faith or knowledge of any defect in the title of the
vendor when the land was purchased by Bonifacio Lopez. As the land was titled only
in the name of the vendor Tiburcio Pinohermoso, the vendee may not be faulted for
purchasing what now appears to have been conjugal property at the time.
 Guzman, Bocaling & Co. v. Bonnevie
G.R. No. 86150, March 02, 1992

Facts:
A parcel of land with two buildings belonging to the Intestate Estate of Jose Reynoso
was leased to Raoul and Christopher Bonnevie (the Bonnevies) by Africa Valdez de
Reynoso (Africa) for a period of one starting August 1976. In the contract of lease,
there is a stipulation that in case the lessor desires or decides to sell the leased
property, the lessees shall be given a first priority to purchase the same. On
November 1976, Africa notified Raoul by registered mail that she is selling the
premises and giving them 30 days from receipt to exercise their right of first priority.
If they would not exercise, she expects them to vacate the property in.

In 1977, Africa sent a letter notifying the Bonnevies that in their failure to exercise
their right, she has already sold the property. This is the only letter that the Bonnevies
received. They informed Africa that they are willing to make negotiations and that
they refuse the termination of the lease.

On March 1977, the property was formally sold to Guzman, Bocaling & Co. (GBC).
Africa demanded that the Bonnevies vacate the premises and pay the rentals for four
months. They had a Compromise Agreement that the Bonnevies shall vacate the
premises not later than October 1979, but this was set aside. The Bonnevies filed an
action for annulment of the sale between Africa and the GBC and the cancellation of
the transfer certificate. They also asked that Africa be required to sell the property
to them under the same terms and conditions agreed upon the Contract of Sale.

Issues:
1) Is Contract of Sale rescissible, not voidable?
2) Is GBC a buyer in bad faith?

Held:
1)
Yes. Under Article 1380 to 1381 (3) of the Civil Code, a contract otherwise valid may
nonetheless be subsequently rescinded by reason of injury to third persons, like
creditors. The status of creditors could be validly accorded the Bonnevies for they
had substantial interests that were prejudiced by the sale of the subject property to
the GBC without recognizing their right of first priority under the Contract of Lease.
Rescission is a remedy granted by law to the contracting parties and even to third
persons, to secure reparation for damages caused to them by a contract, even if this
should be valid, by means of the restoration of things to their condition at the moment
prior to the celebration of said contract. It is a relief allowed for the protection of one
of the contracting parties and even third persons from all injury and damage the
contract may cause, or to protect some incompatible and preferential right created
by the contract. Rescission implies a contract which, even if initially valid, produces
a lesion or pecuniary damage to someone that justifies its invalidation for reasons of
equity.

2)
Yes. GBC cannot be deemed a purchaser in good faith for the record shows that it
categorically admitted it was aware of the lease in favor of the Bonnevies, who were
actually occupying the subject property at the time it was sold to them. A purchaser
in good faith and for value is one who buys the property of another without notice
that some other person has a right to or interest in such property and pays a full and
fair price for the same at the time of such purchase or before he has notice of the
claim or interest of some other person in the property. Good faith connotes an honest
intention to abstain from taking unconscientious advantage of another. Tested by
these principles, GBC cannot tenably claim to be a buyer in good faith as it had notice
of the lease of the property by the Bonnevies and such knowledge should have
cautioned it to look deeper into the agreement to determine if it involved stipulations
that would prejudice its own interests.
 David v. Malay
G.R. No. 132644, November 19, 1999

Facts:
Spouses Andres Adona and Leoncia Abad applied for a homestead patent over a
parcel of agricultural land. When Leoncia died, Andres cohabited with Maria Espiritu
without the benefit of marriage. When Andres died Maria Espiritu succeeded in
obtaining title over the land in her name. After Maria Espiritu died, her children as
well as descendants of Andres by his marriage with Leoncia, continued to be in
peaceful and quiet possession of the subject land. David, et. al. executed a Deed of
Extrajudicial Settlement with Sale over the property to Mrs. Venancia Ungson.

Malay, et. al. protested contending they are the true owners of the land. The sale
was however rescinded because Mrs. Ungson failed to pay in full the amount agreed
upon. Subsequently, David, et. al. executed another Deed of Extrajudicial Settlement
with Sale, dividing equally among themselves the land and sold their respective
shares to their co-petitioner Ubago, et. al. where an Original Certificate of Title (OCT)
was issued in their favor. Malay, et. al. filed a complaint for annulment of sale with
restraining order, injunction and damages against David, et. al. contending that the
OCT was obtained by Maria Espiritu by false representation as the widow of Andres.

Issue:
Does the right to seek reconveyance, filed by a person who claims to be the owner
of the property and in actual possession thereof, prescribe?

Held:
No. There is no doubt about the fact that an action for reconveyance based on an
implied trust ordinarily prescribes in ten years. This rule assumes, however, that
there is an actual need to initiate that action, for when the right of the true and real
owner is recognized, expressly or implicitly such as when he remains undisturbed in
his possession, the statute of limitation would yet be irrelevant. An action for
reconveyance, if nonetheless brought, would be in the nature of a suit for quieting of
title, or its equivalent, an action that is imprescriptible. In Faja vs. Court of Appeals,
the Court has held that a person in actual possession of a piece of land under claim
of ownership may wait until his possession is disturbed or his title is attacked before
taking steps to vindicate his right, and that his undisturbed possession gives him the
continuing right to seek the aid of a court of equity to ascertain and determine the
nature of the adverse claim of a third party and its effect on his title. The Court holds
that in such a situation, the right to quiet title to the property, to seek its
reconveyance and annul any certificate of title covering it, accrued only from the time
the one in possession was made aware of a claim adverse to his own, and it is only
then that the statutory period of prescription commences to run against such
possessor.
 Tanongon v. Samson
G.R. No. 140889, May 9, 2002

Facts:
Cayco Marine Service (Cayco) is engaged in the business of hauling oil. It is owned
and operated by Iluminada Cayco Olizon (Olizon). Felicidad Samson, Casiano Osin,
Alberto Belbes and Luisito Venus (respondents) were among the employees of Cayco.

Respondents filed a complaint against Cayco and Olizon for illegal dismissal,
underpayment of wages, non-payment of holiday pay, rest day pay and leave pay.
The labor arbiter dismissed the complaint for lack of merit. On appeal, it was
reversed by the NLRC. Thus, a writ of execution was issued directing the NLRC sheriff
to collect from Cayco and Olizon. After the notice of levy/sale on execution of personal
property was issued, Cayco and Olizon’s motor tanker was seized, to be sold at public
auction.

A certain Dorotea Tanongon (Tanongon) filed a third party claim before the labor
arbiter, alleging that she was the owner of the subject motor tanker, having acquired
the same from Olizon. The labor arbiter issued an order dismissing the third party
claim but the NLRC reversed the decision.

Issue:
Is Tanongon a buyer in good faith?

Held:
No, Tanongon was a buyer in bad faith. The judgment favoring respondents against
Cayco and Olizon was rendered on July 18, 1996, and affirmed by the the Court on
January 15, 1997. The Writ of Execution was issued by the labor arbiter on July 24,
1997. The sale of the levied tanker, however, was made only on July 29, 1997.

The act of Olizon was a “cavalier attempt to evade payment of the judgment debt.”
She obviously got word of the issuance of the Writ and disposed of the tanker to
prevent its sale on execution. Despite knowledge of these antecedents, Tanongon
bought the tanker barely ten days before it was levied upon.

Tanongon should have inquired whether Olizon had other unsettled obligations and
encumbrances that could burden the subject property. Any person engaged in
business would be wary of buying from a company that is closing shop, because it
may be dissipating its assets to defraud its creditors.
 Castro v. Miat
G.R. No. 143297, February 11, 2003

Facts:
Spouses Moises and Concordia Miat (Spouses Miat) bought two parcels of land during
their coverture. They had two (2) children: Romeo and Alexander. While at Dubai,
Moises agreed that the Parañaque and Paco properties would be given to Romeo and
Alexander. However, when Moises returned, he renegotiated the agreement with
Romeo and Alexander. He wanted the Parañaque property for himself but would leave
the Paco property to his two sons. They agreed.

It appears that Spouses Miat bought the Paco property on installment basis. Moises
secured the title over the property in his name as a widower. According to Romeo,
Moises violated the agreement that their (Romeo’s and Alexander’s) names would be
registered in the title once the balance was paid. Upon demand, Moises gave the
owner’s duplicate of the Paco property title to Romeo.

Romeo and Alexander lived on the Paco property. On April 1988, Alexander agreed
to sell to Romeo his share in the Paco property. Nonetheless, he never executed a
deed of assignment in favor of Romeo. Romeo learned from the mother of Virgilio
Castro (Virgilio) that she had given Moises downpayment for the sale by Moises of
the Paco property to her son Virgilio.

Romeo was brought by Virgilio to the Metropolitan Trial Court (MeTC) where the
status of the Paco property was discussed. Thereafter, he received a letter from
Virgilio’s lawyer asking for a conference. Romeo was informed that the Paco property
had been sold to Castro by Moises by virtue of a deed of sale.

Ceferino Miat, brother of Moises, testified that even before the death of Concordia
there was already an agreement that the Paco property would go to Romeo and
Alexander. Initially, Romeo and Alexander orally divided the Paco property between
themselves. Later, however, Alexander sold his share to Romeo.

Later, Moises ran into financial difficulties and he mortgaged the Paco property to the
parents of Virgilio. He informed Romeo and Alexander that he would be forced to sell
the Paco property if they would not redeem the mortgage. After the conference with
Virgilio and his parents, Moises proceeded to sell the property to the Spouses Castro.

Alexander testified that after the sale, his father got one-third of the proceeds while
he received two-thirds. Virgilio testified that he informed Romeo that Moises was
selling the Paco property. Romeo replied: “Bahala siya.” During a meeting, Virgilio
was told by Romeo that the Paco property was already given to him (Romeo) by
Moises. He admitted knowing that the title to the Paco property was in the possession
of Romeo. However, he proceeded with the sale. Moises assured him that he would
be able to get the title from Romeo.

Romeo filed an action to nullify the sale between Moises and Spouses Castro; to
compel Moises and Alexander to execute a deed of conveyance or assignment of the
Paco property to him upon payment of the balance of its agreed price; and to make
them pay damages.
Issues:
1) Is the Paco property a capital property of Moises?
2) Were the Spouses Castro buyers in good faith?

Held:
1)
No. Since Moises and Concordia were married before the effectivity of the Family
Code, the provisions under Article 153(1) of the New Civil Code apply. The records
show that the Paco property was acquired by onerous title during the marriage out
of the common fund. It is clearly conjugal property.

Spouses Castro also overlook Article 160 of the New Civil Code. It provides that “all
property of the marriage is presumed to belong to the conjugal partnership, unless
it be proved that it pertains exclusively to the husband or to the wife.” This article
does not require proof that the property was acquired with funds of the partnership.
The presumption applies even when the manner in which the property was acquired
does not appear

2)
No. In the case at bench, the Spouses Castro have actual knowledge of the adverse
claim of Romeo. The most protuberant index that they are not buyers in good faith
is that before the sale, Virgilio talked with Romeo on the supposed sale. Virgilio
testified that together with Romeo, Alexander and Moises, they went to the MeTC in
order to find out if Romeo has a right over the property. Romeo told Virgilio in that
meeting that Romeo has a right over the Paco property by virtue of an oral partition
and assignment. Virgilio even admitted that he knew Romeo was in possession of
the title and Romeo then insisted that he is the owner of the property. “Virgilio Castro
is further aware that Romeo is in possession of the property, they being neighbors.
A purchaser who was fully aware of another person’s possession of the lot he
purchased cannot successfully pretend to be an innocent purchaser for value.”
 Ulep v. CA
G.R. No. 125254, October 11, 2005

Facts:
Samuel Ulep, now deceased and substituted by his heirs, and Valentina Ulep are
brother-and-sister. Their father, Valentin Ulep, owned a parcel of land. Sometime in
1950, the older Ulep sold the one-half eastern portion of a lot to Maxima Rodico,
while the remaining one-half western portion, to his son Atinedoro Ulep and to his
other daughter Valentina Ulep.

All the transferees of the lot, namely, Maxima Rodico (for the eastern portion) and
Atinedoro Ulep and Valentina Ulep (for the western portion), were jointly issued in
their names a Transfer Certificate of Title (TCT).

Atinedoro, his wife Beatriz, and sister Valentina sold the one-half portion of the area
sold to them by their father to their brother Samuel and the latter's wife, Susana
Repogia-Ulep. The document of sale was registered with the Office of the Registry of
Deeds (RD). Later, an area of the western portion of the lot was sold by Spouses
Atinedoro and Beatriz to Warlito Paringit and the latter's spouse Encarnacion Gante
(Spouses Paringit), who were then issued a TCT.

All the foregoing transactions were done and effected without an actual ground
partition or formal subdivision of lot.

Subsequently, Iglesia ni Cristo (INC) begun constructing its chapel on the lot. In the
process, INC encroached portions thereof allegedly pertaining to the Uleps and
blocked their pathways.

This prompted Samuel and Rosita to make inquiries with the RD. To their
consternation, they discovered from the records of said office that a deed of sale was
purportedly executed by Atinedoro, Beatriz and Valentina in favor of INC over a
portion of 620 square meters, more or less, of the lot, and that on the basis of said
deed, INC was issued a TCT. Samuel was further shocked to find out that an affidavit
of subdivision was executed by INC, Maxima Rodico and the Spouses Paringit
(respondents), on the basis of which affidavit the lot was subdivided into four lots.

Spouses Samuel and Susana, Spouses Atinedoro and Beatriz, and Valentina, filed
their complaint for Quieting of Title, Reconveyance and Declaration of Nullity of Title
and Subdivision Plan with Damages against the respondents. In their complaint, the
Uleps basically alleged that they and respondents are co-owners. Samuel and
Valentina, along with the Spouses Atinedoro and Beatriz, likewise averred that the
subject lot was subdivided without their knowledge and consent.

Issue:
Does the INC have a better right over the 620 square meters of land?

Held:
Yes, INC has a better right over the 620 square meters. As the Court sees it, the
present controversy is a classic case of double sale. On December 1954, Atinedoro,
Beatriz and Valentina sold the disputed area (620 square-meter) of lot to INC.
Subsequently, a second sale was executed by the same vendors in favor of Spouses
Samuel and Susana. The Court is, therefore, called upon to determine which of the
two groups of buyers has a better right to the area in question.

The law provides that a double sale of immovable transfers ownership to (1) the first
registrant in good faith; (2) then, the first possessor in good faith; and (3) finally,
the buyer who in good faith presents the oldest title. Jurisprudence teaches that the
governing principle is primus tempore, potior jure (first in time, stronger in right).
Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's
rights except where the second buyer registers in good faith the second sale ahead
of the first, as provided by Article 1544 of the Civil Code.

Per records, the sale of the disputed 620 square-meter portion of lot to INC was made
on December 1954 and registered with the RD on January 1955. In fact, INC was
issued a title over the same portion on September 1975. On the other hand, the
conveyance to Spouses Samuel and Susana happened on January 1971 and the
Spouses registered their document of conveyance only on February 1973.

Clearly, not only was INC the first buyer of the disputed area. It was also the first to
register the sale in its favor long before Samuel's and Susana's intrusion as second
buyers. Although Samuel and Susana thereafter registered the sale made to them,
they did so only after 18 years from the time INC caused the registration of its own
document of sale.

Here, Spouses Samuel and Susana were fully aware, or could have been, if they had
chosen to inquire, of the rights of INC under the deed of sale duly annotated on the
common title of the Spouses Atinedoro and Beatriz, and Valentina. Verily, the sale to
INC should prevail over the sale made to Spouses Samuel and Susana because INC
was the first registrant in good faith.

Cuizon v. Remoto
472 SCRA 274
Facts:
Petitioner spouses Encarnacion Cuizon and Salvador rely on Transfer
Certificate of Title in the name of Encarnacion, married to Salvador, issued by the
Registry of Deeds of Agusan Del Norte on March 15, 1984. Such Transfer Certificate
of Title stems form a notarized Extrajudicial Settlement with Sale dated August 3,
1983 executed by the heirs of Placida Tabada- Lambo, wherein they adjudicated to
themselves the onefourth share of Placida and at the same time sold said portion to
Encarnacion, their co-heir. TCT No. RT183 where the TCT 3121 came from originally
covers 16 hectares in the name of Placida,EugenioTabada, Raymunda Tabadaand
Patrecia Tabada, each being one-fourth shareowner.
On the other hand, respondents have notarized Deed of Sale of Real property
dated September 19, 1968, involving portion of the same property covered by RT
183, measuring 4,300 square meters, executed by Placida in favor of Angel Remoto,
husband of respondent Mercedes Remoto.
In a previous decision dated March 9, 1990 the court ruled for the property in favor
of the respondents in the case filed against the petitioners. The respondents can
legally claim possession and ownership of the lot in dispute covered by the duly
notarized but unregistered Deed of Sale of Real Property. Vendor Placida Tabada, her
husband and vendee angel Remoto also signed the document.
The petitioners contended that at the time the 1968 deed of sale was executed, no
written notice was given to all possible co-redemptioners, co-hiers and co-owners.

Issues:
Whether or not Remotos have better right to the property over the Cuizons?
Ruling:
Yes, the Reomotos have the better right to the property. the 1968 Deed of
Sale executed by Placida in favor of Angel should prevail over the 1983 Extra-Judicial
Settlement with Sale made by the heirs of Placida in favor of petitioners-spouses
Cuizon. Prior tempore, potior jure. It simply means, He who is first in time is preferred
in right. The only essential requisite of this rule is priority in time, and the only one
who can invoke this is the first vendee. It must be noted that the sale by Placida to
Angel is evidenced by a duly notarized deed of sale. Documents acknowledged before
notaries public are public documents and public documents are admissible in evidence
without necessity of preliminary proof as to their authenticity and due execution.
They have in their favor the presumption of regularity, and to contradict the same,
there must be evidence that is clear, convincing and more than merely preponderant.
Petitioners failed to present any clear and convincing evidence to prove that the deed
of sale is void, fictitious, unenforceable and has no legal effect.

Gatmaitan v. CA
200 scra 37
Facts:
Lot No. 758 located at Baliuag, Bulacan with an area of 623 square meters was
originally registered in the name of the deceased spouses Lorenzo Gatmaitan and
Filomena Dela Cruz, parents of petitioner Aquilino Gatmaitan and his sister, Emeteria
Gatmaitan. On 2 December 1952, Aquilino and Emeteria, for and in consideration of
the sum of P300.00, executed in favor of respondents spouses Donato Pascual and
Rosita Cristobal Pascual an extrajudicial partition and sale with a right to repurchase
covering Lot No. 758. Thereafter, the Pascual spouses took possession of the
property and introduced improvements thereon.
On 4 August 1956, Aquilino and Emeteria again executed an extrajudicial partition
adjudicating this time to Aquilino and his wife petitioner Lilia Ayton the whole of Lot
No. 758. Consequently, Original Certificate of Title No. 12765 was cancelled and in
lieu thereof, TCT No. 155759 was issued in the name of the spouses Aquilino and
Lilia Gatmaitan.

Sometime in January 1970, the Gatmaitan spouses executed in favor of the Pascual
spouses an instrument entitled "Bilihan Tuluyan Ng Lupa" by which they absolutely
conveyed to the latter spouses for a stated consideration of P500.00, a one-half
portion of Lot No. 758 consisting of about 331.5 square meters. While this instrument
was neither notarized nor registered, the Pascual spouses, in accordance with the
contract, continued in possession of the subject half of Lot No. 758

Subsequently, on 17 January 1972, the Gatmaitan spouses by an instrument entitled

"Kasulatan ng Bilihan"sold to petitioner spouses Emiliano Dealino and Teodora
Gatmaitan ( Dealino spouses), who were neighbors of the Pascual spouses in Sto.
Cristo, Baliuag, Bulacan, the whole of Lot No. 758. As a consequence of this sale, TCT
No. 155759 was cancelled and TCT No. 157176 was issued in the name of the Dealino
spouses. This second sale came to the knowledge of the Pascual spouses sometime
in November 1972. Thus, on 8 November 1972, Donato Pascual executed an Affidavit
of Adverse Claim with respect to the one-half (1/2) portion of Lot No. 758 which had
earlier been sold by the spouses Gatmaitan to him and his wife.

On 23 November 1972, the Dealino spouses in an instrument entitled "Kasulatan ng

Bilihang Patuluyan," conveyed back to the Gatmaitan spouses the one-half (1/2)
portion of Lot No. 758 which the Gatmaitan spouses had originally sold to the Pascual
spouses. The following day, the Gatmaitan spouses executed a Deed of Real Estate
Mortgage covering this same one- half (1/2) portion in favor of the Dealino spouses
allegedly to secure an indebtedness of' P1,000.00.

Hence, on 30 April 1973, the Pascual spouses filed a complaint for reconveyance of
the one-half (1/2) portion of Lot No. 758 against the spouses Aquilino and Lilia
Gatmaitan and the spouses Emiliano and Teodora Dealino.

Issue:

Whether or not the registration of the sale of the whole property to the second
vendees Dealino spouses had the effect of transferring to them the ownership of the
whole of Lot No. 758, including the one-half (1/2) portion which had earlier been the
subject of an absolute deed of sale executed by the Gatmaitan spouses in favor of
the Pascual spouses.

Ruling:

It is well settled, that if immovable property is sold to two (2) different parties,
the ownership shall pertain to the person acquiring it who, in good faith, first
registered it in the Registry of Property. This rule however, admits of an exception,
and that is where the second purchaser had knowledge of the other sale, prior to or
at the time of the sale. In such case, his knowledge is equivalent to registration and
maintains his purchase with bad faith. The applicable rule in this case would be that
the ownership shall pertain to the person who, in good faith, first entered into
possession of the property or, in the absence of possession, to the person who
presents the oldest title, provided there is good faith. As earlier noted, the trial court
found that the Dealino spouses were buyers in bad faith in respect of the one-half
(1/2) portion of Lot No. 758 earlier sold by the Gatmaitan spouses to the Pascual
spouses. It held that the Dealino spouses should be considered to have had
constructive notice of that earlier sale of the one-half (1/2) portion to the Pascual
spouses, since the latter were in actual possession of the property and as they were
neighbors in Sto. Cristo. The fundamental rule is that the factual conclusions and
findings of the trial court are entitled to great weight on appeal and should not be
disturbed except for cogent and strong reasons.

Berico v. CA

Facts:
Jose de los Santos owned a 98,254 square-meter parcel of land. On 3 January
1963, Jose de los Santos sold one-half of Lot No. 785 to petitioner Lorenzo Berico.
Thereafter, or on 30 March 1963, Jose's minor children sold to the same petitioner
the remaining half. Jose de los Santos represented his children in this transaction.
When Berico bought the land from Jose delos Santos covered by OCT No. P-671 in
two (2) separate instruments on January 3, 1963 and March 30, 1963, he had prior
knowledge that a portion thereof had been sold to plaintiffs Ciriaco Flores and Felisa
Bareja in 1961. Such knowledge was established by the fact that when Lorenzo Berico
went to the disputed land in 1963, plaintiff confronted him concerning the boundaries
of the area and in fact, pointed to him the boundary of the property he bought from
Jose delos Santos in the presence of his wife and the former owner, Jose de los
Santos.
Berico had knowledge of the plaintiff's possession and occupation of their disputed
property when he caused the cancellation of OCT No. P-671 and secured in lieu
thereof TCT T-1346 on June 5, 1968 and when, on the same date, he registered the
deeds of sale with the Register of Deeds conveying to him the entire property. These
facts undoubtedly show Lorenzo Berico's evident bad faith.
Despite such knowledge and recognition of the sale in favor of and the possession of
the property by the private respondents, petitioner Berico registered on 5 June 1968
the two deeds of sale in his favor and caused the cancellation of OCT No. P-671; the
latter also secured the issuance in his name of (TCT) No. T-1346.
Issue:
Whether or not the acquisition by the petitioners of Jose de los Santos' land
was tainted with bad faith.
Ruling:
It is clear that in the double sale of an immovable, as obtains in this case, the
ownership of the property shall belong to the vendee who, in good faith, first recorded
the sale in the Registry of Property. The term "good faith" in the second paragraph
is not found in the corresponding paragraph of Article 1473 of the old Civil Code from
which Article 1544 of the new Civil Code was taken.
The court ruled that the registration of the questioned land's sale in favor of the
petitioners the issuance of the corresponding certificate of title to them were
fraudulent and vitiated by bad faith hence, the same did not operate as constructive
notice thereof to the whole world. Furthermore, the public respondent reiterated the
rule that the rights conferred by law upon one of the two purchasers of the same real
property who has registered his title in the registry of deeds, do not come into being
if the registration is not made in good faith. Mere registration of the sale is not
enough; good faith must concur with registration, for bad faith renders the
registration futile.

Republic v. IAC
209 SRA 90
Facts:
On February 2, 1979, the ROMAN CATHOLIC BISHOP of Lucena, represented by Msgr.
Jose T. Sanchez, filed an application for confirmation of title to four (4) parcels of
land.
"On February 2, 1979, the ROMAN CATHOLIC BISHOP of Lucena, represented by
Msgr. Jose T. Sanchez, filed an application for confirmation of title to four (4) parcels
of land. In behalf of the Director of Lands and the Director of the Bureau of Forest
Development, the Solicitor General filed an Opposition on April 20, 1979, alleging
therein among others, that the applicant did not have an imperfect title or title in fee
simple to the parcel of land being applied for. At the initial hearing held on November
13, 1979, only the Provincial Fiscal in representation of the Solicitor General appeared
to interpose personal objection to the application. Hence, an Order of General Default
against the whole world was issued by the Court a quo except for the Director of
Lands and the Director of the Bureau of Forest Development.
Lot 1 was acquired by the Roman Catholic Church thru Rev. Father Raymundo
Esquenet by purchase from the spouses Atanacio Yranso and Maria Coronado on
October 20, 1928... portion of Lot 2 also by purchase thru Rev. Father Raymundo
Esquenet from the spouses Benito Maramot and Venancia Descaller on May 22,
1969... while the remaining portion of Lot 2 and Lot 3 were already owned and
possessed by the Roman Catholic Church even prior to the survey of the said three
lots in 1928.
Records of burial of the Roman Catholic Church of Candelaria, Quezon showed that
even as early as November 1918, Lot 3 has already been utilized by the Roman
Catholic Church as its cemetery in Candelaria, Quezon
Accordingly, the court ordered the registration of the four parcels together with the
improvements thereon 'in the name of the ROMAN CATHOLIC BISHOP OF LUCENA,
INC., a religious corporation sole duly registered and existing under the laws of the
Republic of the
Philippines." The Solicitor General filed a Motion for Reconsideration.
Issues:
Whether the Roman Catholic Bishop of Lucena, as a corporation sole is qualified
to apply for confirmation of its title to the four (4) parcels of land subject of this case
Ruling:
Article XIV, Sec. 11 of the 1973 Constitution, in part provides:
"Sec. 11.. No private corporation or association may hold alienable lands of the public
domain except by lease not to exceed one thousand hectares in area; nor may any
citizen hold such lands by lease in excess of five hundred hectares... they were
already private lands, the constitutional prohibition against their acquisition by
private corporation or association obviously does not apply.
The doctrine that open, exclusive and undisputed possession of alienable public land
for the period prescribed by law creates the legal fiction whereby the land, upon
completion of the requisite period ipso jure and without the need of judicial or other...
sanction, ceases to be public land and becomes private property.
There is no doubt that a corporation sole by the nature of its incorporation is vested
with the right to purchase and hold real estate and personal property. It need not
therefore be treated as an ordinary private corporation because whether or not it be
so treated as such, the
Constitutional provision involved will, nevertheless, be not applicable.

AFP Mutual Benefit Association v. CA

327 SCRA 203
Facts:
Prior to September 7, 1976, Investco, Inc. was the owner of six (6) parcels of raw
land, located in Quezon City and Marikina... registered under titles in the names of
its predecessors-in-interests, Angela Perez-Staley and Antonio Perez, Jr.
On September 7, 1976, Investco, Inc. agreed to sell the six (6) parcels of land to
Solid Homes... for P10,211,075.00, payable in installments from July 22, 1977 to
January 22, 1983. Among other terms, the parties agreed that Solid Homes would
pay the amount of P100,000.00 as down payment upon execution of the contract.
The parties agreed that Solid Homes would evict the squatters in the property or
obtain a waiver from them, that it would cause the original titles to be cancelled and
new ones issued in the name of Investco, Inc. and that Investco, Inc. would
contribute one-half of the expenses in clearing the property of occupants, in an
amount not exceeding P350,000.00.
The contract of sale to Solid Homes was not registered with the Registry of Deeds of
Marikina nor annotated on the original titles issued in the name of Investco, Inc.
However, after paying the amount of P2,042,215.00 corresponding to the
downpayment, and the amount of P4,084,430.00 representing the first four (4) semi-
annual installments and a portion of the fifth installment, Solid Homes made no
further payment to Investco, Inc. after
February 19, 1981.
On March 13, 1981, Investco, Inc. and its predecessors-in-interests Angela Perez-
Staley and Antonio Perez, Jr. filed with the Court of First Instance of Rizal, Pasig,
Branch 26 an action for specific performance and damages against Solid Homes, Inc
In the meantime, on April 23, 1984, Investco, Inc. offered to sell the property to AFP
Mutual Benefit Association, Inc. for P27,079,767.00, subsequently reduced to
P24,000,000.00, payable in installments. Investco, Inc. furnished AFP MBAI with
certified true copies of the titles... covering the Marikina property.
After determining that the Investco property was suitable for the housing project of
the Armed Forces of the Philippines and that the titles covering the same were "clean"
and "genuine," AFP MBAI agreed to purchase the same from Investco, Inc. for the
price of P24,000,000.00,... payable in installments for a period of one (1) year.
Issues:
whether Solid Homes is entitled to the annotation of its notice of lis pendens on the
titles of Investco, Inc. and AFP Mutual Benefit Association, Inc.
Ruling:
Basically, Solid Home's complaint was one for "annotation of lis pendens and other
matters with prayer for restraining order and writ of preliminary injunction" against
Investco, Inc. AFP MBAI and the Register of Deeds of Marikina, to cause the
annotation of lis pendens in the titles of Investco, Inc. and AFP MBAI. Actually,
therefore, the suit is to compel the Register of Deeds of Marikina to annotate the
notice of lis pendens on the titles of AFP MBAI with a claim for damages against
Investco, Inc. and AFP MBAI for depriving Solid
Homes of its rights to the property as provided under the contract to buy and sell. In
its verified complaint, Solid Homes alleged that "the act of defendant Register of
Deeds in not causing the annotation of the lis pendens on the titles then registered
in the name of... defendant Investco, Inc. and in issuing titles in the name of
defendant AFP Mutual Benefit Association, Inc., without carrying over the proper
annotation of lis pendens are contrary to law".On the basis of this allegation, it prayed
for an... order directing the Register of Deeds of Marikina "to cause the annotation"
of the notice of lis pendens on the old and new titles.
Obviously, the Register of Deed's obligation to annotate the notice of lis pendens is
one that arises from law. Hence, the action is actually one for mandamus to compel
the performance of a clear legal duty. There is... no such action as one for "annotation
of lis pendens," as Solid Homes sought in its complaint.
Lis pendens is a Latin term which literally means a pending suit or a pending litigation
while a notice of lis pendens is an announcement to the whole world that a particular
real property is in litigation, serving as a warning that one who acquires an... interest
over the said property does so at his own risk, or that he gambles on the result of
the litigation over the said property. It is but a signal to the intending buyer or
mortgagee to take care or beware and to investigate the prospect or non-prospect of
the litigation... succeeding before he forks down his money.
Abad v. Guimba
465 SCRA 356
Facts:
Respondent-Spouses Ceasar and Vivian Guimba are the registered owners of a parcel
of land covered by TCT No. PT- 80617.
On March 7, 1997, Vivian entrusted her copy of the Owner's Duplicate Certificate of
Title to Gemma de la Cruz to serve as collateral for Vivian's application for a loan that
was to be released in four days. Afterwards, Gemma received a phone call from
Vivian, who informed... her that she had changed her mind, was no longer interested
in obtaining the loan, and therefore wanted her TCT back. Told that the Certificate
had been deposited in the vault of the Bank of South East Asia, Vivian inquired at the
bank, but was advised that the TCT was not there.
In November 1997, Vivian received a telegram from Petitioner Abad, a stranger,
reminding her of the impending maturity of her mortgage. It was the first time
respondents learned of any actual mortgage involving their property.
Accordingly, respondents filed with the Regional Trial Court of Pasig City against
petitioner and Gemma de la Cruz for annulment and cancellation of mortgage and a
criminal case with the Metropolitan Trial Court of Pasig City for falsification of public
document.
In his Answer, petitioner countered that respondents had connived with De la Cruz
to swindle him of his hard-earned savings. He testified that he had met her and a
couple posing as the Guimba spouses ("Guimbas") for the first time in March 1997.
The Guimbas allegedly asked him for a loan and presented their duplicate copy of
TCT No. PT-80617 as collateral. He claimed that he accepted the mortgage only after
verifying the authenticity of the Certificate with the Register of Deeds.
Issues:
Whether or not Abad was a mortgagee for value and in good faith.
Ruling:
All told, as mortgagee of a real property, [Petitioner] Abad neglected to make the
necessary inquiries and closed his eyes to facts which should put a reasonable man
on guard as to the value of the property being presented as collateral and of any
flaw... in the title of the mortgagor and of the identity of persons being introduced to
him as the owners of the property being mortgaged. By merely relying on his belief
that there was no defect in the title of the property being presented as collateral and
on the identity of the prospective mortgagors being introduced to him without
undertaking further investigation, Abad cannot be considered a mortgagee in good
faith and for value "as a rule, the purchaser is not... required to explore further than
what the Certificate indicates on its face. This rule, however, applies only to innocent
purchasers for value and in good faith; it excludes a purchaser who has knowledge
of a defect in the title of the vendor, or of facts sufficient to induce a reasonably
prudent man to inquire into the status of the property.
Under Section 32 of PD 1529 an innocent purchaser for value is deemed to include
an innocent mortgagee for value.

Chua v. Soriano
521 SCRA 68
Facts:
Msgr. Virgilio C. Soriano owned a 1,600 square meter parcel of land located in
Barangay Banlat, Quezon City, covered by TCT No. 363471 of the Registry of Deeds
of Quezon City.
Sometime in the early months of 1988, Soriano's first cousin and godson, Emmanuel
C. Celestino, Sr. asked Soriano to lend him TCT No. 363471 as a security for a loan
to be used in the business operation of Celestino's company, Digital Philippines, Inc.
Acceding to Celestino's request, Soriano executed on March 29, 1988 a Special Power
of Attorney authorizing Celestino to mortgage said property.
Then came the June 11, 1988 fire that gutted a portion of the Quezon City Hall and
destroyed in the process the original copy of TCT No. 363471 on file with the Registry
of Deeds of Quezon City.
On August 22, 1988, Soriano executed a SPA authorizing Celestino and one Carlito
Castro to initiate administrative reconstitution proceedings of TCT No. 363471
During the pendency of the administrative reconstitution proceedings, Soriano asked
Celestino whether there was any truth to the spreading rumor that he had already
sold the subject property.Celestino denied the rumor but informed Soriano that the...
subject property was mortgaged with a foreign bank.
Dissatisfied with Celestino's explanation, Soriano made inquiries with the Registry of
Deeds of Quezon City... and discovered, to his dismay, that TCT No. 363471 had
been canceled by TCT No. 14514 in the name of spouses Emmanuel and Edna Chua
and spouses Manuel and Maria Chua Claiming that his signature in the SPA is a
forgery, Soriano filed on August 20, 1990 a complaint against Celestino and the
Chuas for annulment of deed of sale and special power of attorney, cancellation of
title and reconveyance with damages.
The Chuas argue that they are purchasers in good faith since they dealt with Celestino
who had in his possession the owner's duplicate title and the SPA dated March 9,
1989 with Soriano's purported signature; that the SPA was inscribed and annotated
in the owner's duplicate... title; that since verification with the original title in the
Registry of Deeds of Quezon City was not possible, they checked the tax declaration
of the property; that the SPA dated March 9, 1989 was duly annotated in the tax
declaration.
Issues:
whether or not the Chuas are purchasers in good faith.
Ruling:
A purchaser in good faith is one who buys property without notice that some other
person has a right to or interest in such property and pays its fair price before he has
notice of the adverse claims and interest of another person in the same property. The
honesty of intention... which constitutes good faith implies a freedom from knowledge
of circumstances which ought to put a person on inquiry.
When a person who deals with registered land through someone who is not the
registered owner, he is expected to look behind the certificate of title and examine
all the factual circumstances, in order to determine if the vendor has the capacity to
transfer any interest... in the land.
He has the duty to ascertain the identity of the person with whom he is dealing
and the latter's legal authority to convey. In the present case, the Chuas were dealing
with Celestino, Soriano's attorney-in-fact, who presented Soriano's duplicate title, a
SPA dated March 9, 1989 with Soriano's purported signature, and tax declaration.
An examination of the assailed SPA shows that it is valid and regular on its face. It
contains a notarial seal Thus, the reliance by the Chuas on the notarial
acknowledgment found in the duly notarized SPA presented by Celestino is sufficient
evidence of good faith. The Chuas need not prove anything more for it is already the
function of the notarial acknowledgment to establish the appearance of the parties
to the document, its due execution and authenticity.

Carbonell v. CA
49 SCRA 99
Facts:
Respondent Jose Poncio was the owner of the parcel of land located in Rizal.
The said lot was subject to mortgage in favor of the Republic Savings Bank for the
sum of P1,500.00. Carbonell and respondent Emma Infante offered to buy the said
lot from Poncio.Poncio offered to sell his lot to Carbonell excluding the house on which
he and his family stayed. Carbonell accepted the offer and proposed the price of
P9.50/sq. m.. Poncio accepted the price on the condition that from the purchase price
would come the money to be paid to the bank.
 January 27, 1995: The parties executed a document in the Batanes dialect
which is translated as: CONTRACT FOR ONE HALF LOT WHICH I BOUGHT From
Carbonell asked a lawyer to prepare the deed of sale and delivered the document,
together with the balance of P400, to Jose Poncio. However, when she went to Poncio,
the latter informed her that he could no longer proceed with the sale as the lot was
already sold to Emma Infante and that he could not withdraw with the sale.
Poncio admitted that on January 30, 1995, Mrs. Infante improved her offer and he
agreed to sell the land and its improvements to her for P3,535.00.
In a private memorandum agreement, Poncio bound to sell to Infante the lot for the
sum of P2,357.52, with Infante still assuming the mortgage debt of P1,177.48
A deed of sale was executed between Poncio and Infante. February 8, 1995: Knowing
that the sale to Infante has not been registered, Carbonell filed an adverse
claim. February 12, 1995. The deed of sale was registered but it has an annotation
of the adverse claim of Carbonell. Thereafter, Emma Infante took possession of the
lot, built a house and introduced some improvements. In June 1995, Carbonell filed
a complaint praying that she be declared the lawful owner of the land, that the
subsequent sale to spouses Infante be declared null and void, and that Jose Poncio
be ordered to execute the corresponding deed of conveyance of said land in her favor
RTC ruled that the sale to spouses Infante was null and void. After re-trial, it reversed
its ruling. CA ruled in favor of Carbonell but after a motion it reversed its ruling and
ruled in favor of the Infantes.

Issue: Whether or not Carbonell has a superior right over Emma Infante.

Held:

Yes. Article 1544 provides that for double sale of an immovable property, the
ownership shall belong to the person who first acquired it in good faith and recorded
it in the Registry of Property.
Article 1544, New Civil Code, which is decisive of this case, recites:
If the same thing should have been sold to different vendees, the ownership shall be
transferred to the person who may have first taken possession thereof in good faith,
if it should movable property.
Should it be immovable property, the ownership shall belong to the person acquiring
it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in the possession; and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.

Olivares v. Gonzales
159 SCRA 33
Facts:
The Disputed Property is a piece of unregistered land located at Tigbauan, Iloilo,
identified as Assessor's Lot No. 343. It was previously owned by respondents-
appellees Jacinto Tuvilla and Ceferino Tuvilla. Sometime in 1955, the Tuvillas
executed a "Deed of Sale with Right to Repurchase" in favor of respondent-appellee
Juan Tumabini, over the Disputed Property in consideration of the sum of P1,350.00.
The document was duly acknowledged before a Notary Public but was not recorded
in the Registry of Property.
Sometime in 1959, the Tuvillas executed a "Deed of Sale with Pacto de Retro" over
the Disputed Property in favor of petitioners-appellants, Moises Olivares and Juanito
T. Olivares... his document was acknowledged before a Notary Public and...
registered with the Registry of Deeds. In 1966, the Tuvillas also executed in favor of
the Olivareses a "Deed of Absolute Sale" covering the Disputed Property. Petitioners-
appellants have been in possession of the Disputed Property since 1959.
On October 11, 1967, respondent-appellee, Juan Tumabini, filed Civil Case No.
7410 before Branch I of the then Court of First Instance of Iloilo against the Tuvillas
for the consolidation of ownership over the Disputed Property by reason of the alleged
failure of the Tuvillas to... redeem the property from Tumabini. The Olivareses,
however, were not included as parties to the said case.
During the pre-trial of the Consolidation Case, counsel for the parties agreed to
consider the pacto de retro sale as one of equitable mortgage. Thus, the Trial Court
rendered judgment in favor of Tumabini in the amount of P1,350.00, pursuant to
which, the Court subsequently... issued a Writ of Execution on October 23, 1968.
On November 23, 1968, the Olivareses instituted Civil Case No. 7777 before
Branch VI of the former Court of First Instance of Iloilo, for Quieting of Title, against
the Tuvillas, Juan Tumabini, the Provincial Sheriff and Pyramid Surety
The said Court issued a Restraining Order to stop the sale in the Consolidation Case
(No. 7410) pending in Branch I, but the said Order was lifted on February 6, 1969.
Subsequently, in the Consolidation Case (No. 7410), the Disputed Property was sold
at public auction and a Writ of Possession was issued in Tumabini's favor. However,
the tenant of the Olivareses refused to surrender possession, prompting a citation for
contempt. Action thereon was deferred, however, pending termination of Civil Case
No. 7777.
Issues:
Whether the dismissal of the Quieting of Title Case "for failure to prosecute"
barred the institution of a subsequent suit by the same plaintiff against the same
defendants on the same cause of action.
Ruling:
The equities of the case are with the Olivareses. The first sale with pacto de
retro by the Tuvillas to Tumabini was unregistered; in contrast, the sale in favor of
the Olivareses was duly recorded. The Consolidation Case (Case No. 7410) instituted
by Tumabini against the Tuvillas for consolidation of his ownership did not include
the Olivareses as parties defendants even though they were then in possession of
the Disputed Property. Justice and equity demand, therefore, that their side be heard
in the Refiled Case. Then, the contempt incident and the matter of the Writ of
Possession in the Consolidation Case (No. 7410) were left unresolved pending the
outcome of the Quieting of Title Case (No. 7777).
In other words, it would be more in keeping with substantial justice if the controversy
between the parties were to be resolved on the merits rather than on a procedural
technicality in the light of the express mandate of the Rules that they be "liberally
construed in order to promote their object and to assist the parties in obtaining just,
speedy and inexpensive determination of every action and proceeding".
 Manacop v. Casino
1 SCRA 572
Facst:
Florante Manacop and his wife Euaceli purchased on March 1972, a residential
lot with a bungalow located in Quezon City. The petitioner failed to pay the sub-
contract cost pursuant to a deed of assignment signed between petitioner’s
corporation and private respondent herein (FF Cruz & Co). The latter filed a
complaint for the recovery for the sum of money with a prayer for preliminary
attachment against the former. Consequently, the corresponding writ for the
provisional remedy was issued which triggered the attachment of a parcel of land in
Quezon City owned by the Manacop Construction President, the petitioner. The latter
insists that the attached property is a family home having been occupied by him and
his family since 1972 and is therefore exempt from attachment.

ISSUE:
Whether or not the subject property is indeed exempted from attachment.
HELD:
The residential house and lot of petitioner became a family home by operation
of law under Article 153 of the Family Code. Such provision does not mean that said
article has a retroactive effect such that all existing family residences, petitioner’s
included, are deemed to have been constituted as family homes at the time of their
occupation prior to the effectivity of the Family Code and henceforth, are exempt
from execution for the payment of obligations incurred before the effectivity of the
Family Code on August 3, 1988. Since petitioner incurred debt in 1987, it preceded
the effectivity of the Code and his property is therefore not exempt form attachment.

Dela Merced v. GSIS

365 scra 11
Facts:
This case involves five registered parcels of land located within the Anotnio
subdivision, Pasig City Lots 6,7,8, and 10 of Block 2 and Lot 8. These lots were
originally owned by and titled in the name of Jose Zulueta as evidenced by TCT no.
26105 which contains several lots other than the subject properties within Antonio
subdivision.
Later, the Zulueta spouses mortgaged several lots contained in TCT No.26105 to the
GSIS, which eventually foreclosed on the mortgaged properties including the subject
properties. Upon consolidation of GSIS ownership TCT no. 26105 in Zalueta name
was cancelled and TCT no. 23554 was issued in GSIS name.
Upon learining of the foreclosure, petitioners predecessor, Francisco Dela
Merced, later on substituted by his heirs filed a complaint praying for the nullity of
the GSIS foreclosure on the subject properties on the ground that he not the Zaluetas
was the owner of these lots at the time of the foreclosure. Dela Merced also impleaded
Victor and Milagros Manlongat, who were claiming Lot 6, Block 2 by virtue of a s sale
executed by the GSIS in their daughters favor. Dela Merced argued that due to the
nullity of GSISs foreclosure over the subject properties, it had no ownership right
that could be transferred to Elizabeth Manlongat.
Issue:
 Whether or not the foreclosure proceeding by GSIS is null and void, including
the consolidation of ownership thereof by the GSIS and the sale of the lots of the
defendant.
Ruling:
Petitioners Merced aver that when the Zuluetas mortgaged their properties to
GSIS on October 15, 1957, they were no longer the owners of the lots subject of this
litigation, the same having been sold to Francisco dela Merced by virtue of the
contract to sell executed on September 3, 1957. Hence, the mortgage was void from
its inception and GSIS as mortgagee acquired no better right notwithstanding the
registration of the mortgage. Petitioners also argued that GSIS was a mortgagee in
bad faith as it had been negligent in ascertaining and investigating the condition of
the subject lots mortgaged to it as well as rights of petitioners who were already in
possession therof at the time of motgage. Furthermore, petitioners cite the judicial
admission of respondent GSIS in its answer before the trial court wherein it
recognized the rights of ownership of Francisco dela Merced over Lot 8. The
foreclosure and the subsequent certificates of titles issued to GSIS as well as TCT’s
in the name of Elizabeth Manlongat are declare null and Void.

Tanglao v. Parungao
535 SCRA 123
FACTS:
Spouses Parungao, purchased from Spring Homes 7 Subdivision Lots in
Laguna. Respondents made a down payment, leaving a balance exclusive of interest.
Respondents introduced improvements on the lots. Under the terms of the Contracts
to Sell signed by respondents and Spring Homes, the balance of was to be paid by
them within one year from its execution. Respondents failed to pay the installments.
Later, Spring Homes executed two separate Deeds of Absolute Sale in favor of
spouses Tanglao, petitioners, wherein the former sold to the latter two lots. It turned
out that the lots sold to them were among the lots previously sold to the spouses
Parungao. In a letter, respondents demanded that Spring Homes deliver to them the
corrected Contracts to Sell, as well as the TCTs covering the lots they purchased.
Meanwhile, petitioners took possession of the two lots they bought. They forcibly
opened the steel gate as well as the doors of the buildings and entered the premises.
When informed of these events, respondents demanded an explanation from Spring
Homes; it apologized and promised she would settle the matter with petitioners.
However, the controversy was not settled.
Respondent Spouses Parungao filed with the Housing and Land Use Regulatory Board
(HLURB), a complaint for annulment of deed of sale and/or return of investment for
the seven (7) lots and costs of improvements, plus interest and damages. Impleaded
as respondents were Spring Homes and petitioners. Despite notice, Spring Homes
did not appear during the hearings.
Issue: Who between the petitioners and respondents have the right of ownership
over the two lots in controversy.

Ruling:
Spouses Parungao, the First Buyer. The ownership of immovable property sold
to two different persons at different times is governed by Article 1544 of the Civil
Code, which provides:
Art. 1544. If the same thing should have been sold to different vendees, the
ownership shall be transferred to the person who may have taken possession thereof
in good faith, if it should be movable property. Should it be immovable property, the
ownership shall belong to the person acquiring it who, in good faith, first recorded it
in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in possession and, in the absence thereof, to the person who
presents the oldest title, provided there is good faith.
At the time of the second sale to petitioners by Spring Homes, there were
already occupants and improvements on the two lots in question. These facts
should have put petitioners on their guard. Settled is the rule that a buyer of real
property in possession of persons other than the seller must be wary and should
investigate the rights of those in possession, for without such inquiry the buyer can
hardly be regarded as a buyer in good faith and cannot have any right over the
property.
As the petitioners cannot be considered buyers in good faith, they cannot rely upon
the indefeasibility of their TCTs in view of the doctrine that the defense of
indefeasibility of a torrens title does not extend to transferees who take the
certificate of title in bad faith. Considering that respondents who, in good faith,
were first in possession of the subject lots, we rule that the ownership thereof
pertains to them.

AGUIRRE, ET AL. vs. COURT OF APPEALS, ET AL.

G.R. No. 122249
January 29, 2004
AUSTRIA-MARTINEZ, J.:

FACTS:
Leocadio Medrano and his first wife Emilia owned a piece of land. After
the death of Emilia, Leocadio married his second wife Miguela. When Leocadio died,
all his heirs agreed that Sixto Medrano, a child of the first marriage, should manage
and administer the said property. After Sixto died, his heirs learned that he had
executed an Affidavit of Transfer of Real Property in which he falsely stated that he
was the only heir of Leocadio. It turned out that while Sixto were still alive, he sold
a portion of the subject land tp Tiburcio Balitaan and another portion to Maria Bacong,
Maria Bacong later sold the said portion to Rosendo Bacong. Petitioners, all heirs of
Leocadio who were affected by the sale demanded reconveyance of the portions sold
by Sixto but the 3 vendees refused. Resultantly, petitioners filed a suit against them
seeking the nullity of the documents and partition thereof. The vendees contended
that they acquired the property under the valid deed of sale and petitioners’ cause of
action was barred by laches and prescription. Tiburcio also contended that he is an
innocent purchaser for value.
ISSUE:
Whether or not there was a valid sale between Sixto Medrano and the
three purchases considering the fact that it was made without the consent of the co-
owners.

RULING:
Under Article 493 of the New Civil Code, a sale by a co-owner of the whole
property as his will affect only his own share but not those of the other co-owners
who did not consent to the sale). The provision clearly provides that the sale or other
disposition affects only the seller’s share, and the transferee gets only what
corresponds to his grantor’s share in the partition of the property owned in
common. Since a co-owner is entitled to sell his undivided share, a sale of the entire
property by one co-owner without the consent of the other co-owner is not null and
void; only the rights of the co-owner-seller are transferred, thereby making the buyer
a co-owner of the property. It is clear therefore that the deed of sale executed by
Sixto in favor of Tiburcio Balitaan is a valid conveyance only insofar as the share of
Sixto in the co-ownership is concerned. respondents failed to present competent
evidence that the acts of Sixto adversely and clearly repudiate the existing co-
ownership among the heirs of Leocadio Medrano. Respondent’s reliance on the tax
declaration in the name of Sixto Medrano is unworthy of credit since we have held on
several occasions that tax declarations by themselves do not conclusively prove title
to land. Further, respondents failed to show that the Affidavit executed by Sixto to
the effect that he is the sole owner of the subject property was known or made known
to the other co-heirs of Leocadio Medrano.
SIGAYA v. MAYUGA
G.R. NO. 143254
August 18, 2005

AUSTRIA-MARTINEZ, J.:

FACTS
A parcel of land owned by Dionisia Alorsabes was sold to Juanito Fuentes while the
remainder was inherited by her children. Each of the heirs sold their share of portions
to the the respondents. However, a document entitled Extra-Judicial Partition with
Deed of Sale was uncovered wherein the heirs of Dionisia purportedly sold their
shares in favor of Teodulfo Sigaya through a Deed of Sale.
Later on, the petitioners filed a case for recovery of possession against the
respondents arguing that they have the right of ownership and possession over the
property. The respondents answered that the Deed of Sale in favor of Teodulfo was
null and void as it is based on a fictitious extra-judicial settlement considering that
two of the heirs were illiterate. Hence, they were fraudulently made to sign as
vendees. The Regional Trial Court ruled in favor of the respondents believing that the
evidence of actual occupation and possession of the respondents had been
satisfactorily proven. The Court of Appeals affirmed the decision of RTC.
In appealing to the Supreme Court, the petitioners aver that Teodulfo purchased the
property from Francisco, one of the heirs, who was in possession of an OCT of the
property named after Dionisia. Relying on the instrument and after inspecting the
land and seeing nobody occupied the same, Teodulfo bought the land and had the
title subsequently issued in his name. In this manner, Teodulfo was an innocent
purchaser in good faith and also a victim of misrepresentation.
ISSUE
Whether or not a person dealing with a registered land can safely rely on the
correctness of the Certificate of Title issued.
HELD
The Court ruled against the petitioners.
According to the Court, although general rule provides that every person dealing with
registered land may safely rely on the correctness of the certificate of title, the rule
shall not apply when the party has actual knowledge of facts and circumstances that
would impel a reasonably cautious man to make such inquiry or when the purchaser
has knowledge of defect or lack of title in his vendor or of sufficient facts to induce a
reasonably prudent man to inquire into the status of the title of the property.
In the present case, it shows that the respondents had actual possession of the
portions of land conveyed to them the heirs of Dionisia. A witness for the respondents
testified that he even accompanied Francisco and Teodulfo to the different houses of
the respondent as Teodulfo was going to buy the property from Francisco. Seeing
that there were occupants in the property, by itself, the Court cannot sustain good
faith claimed by the petitioners.
MANUEL B. ALORIA v. ESTRELLITA B. CLEMENTE
483 SCRA 634 (2006)
CARPIO MORALES, J.:

Manuel Aloria learned that Transfer Certificate of Title (TCT) No. 195684 covering his
land and two-storey residential building was canceled. In lieu thereof, TCT No. C-
342854 was issued in the name of Estrellita B. Clemente on the basis of a notarized
Deed of Absolute Sale allegedly executed by him and Clemente. Aloria thereafter filed
a Complaint against Clemente and the Register of Deeds before the Regional Trial
Court (RTC) of Caloocan City for annulment of the Deed and TCT No. C-342854,
reconveyance and damages alleging therein that the Deed was falsified and the
signature appearing thereon was not his.
In defense, Clemente claimed that she bought the property from Aloria‘s parents-in-
law as evidenced by a Deed of Sale. The trial court rendered its decision holding that
the Deed of Sale and cancellation of Aloria‘s title were null and void. On appeal,
the Court of Appeals reversed the decision of the trial court. It held that Aloria failed
to overcome by clear, strong, and convincing evidence the presumption of regularity.
Furthermore, the CA held that Clemente is a purchaser for value in good faith. Hence,
this petition.

ISSUES:

Whether or not the Court of Appeals erred in finding Clemente as a purchaser for
value and in good faith.

HELD:

The burden of proving the status of a purchaser in good faith lies upon one who
asserts that status, and the onus cannot be discharged by mere invocation of the
legal presumption of good faith.By Clemente‘s account, she purchased the property
via Deed of Sale from the Spouses Diego whom she claims showed her a Deed of
Sale executed in their favor by Aloria. Given Bernardino Diego‘s denial that his
signature in Deed of Sale executed by the Diegos in Clemente‘s favor is his which, as
earlier observed, is starkly different from his acknowledged genuine
signature, Clemente‘s claim that Bernardino Diego signed the Deed of Sale in her
presence fails, as does her witness Ernesto Tanigue‘s testimony on the same point.

A comparison between her acknowledged signature and the signature appearing

above her name in the Deed of Sale reveals no marked differences. The presumption
that Clemente’s signature in the Deed of Sale is genuine, thus stands. Upon the other
hand, as reflected above, Aloria presented clear and convincing evidence that the
signature attributed to him in the same document is forged
EAGLE REALTY CORPORATION VS REPUBLIC OF THE PHILIPPINES
G.R. No. 151424
July 31, 2009
NACHURA, J.:
FACTS:
Eagle Realty Corporation, a company engaged in the real estate business, bought a
parcel of land from a certain Reyes in 1984 via a Deed of Sale. This Reyes acquired
the land from a certain Martina Medina who earlier acquired the said land via
surreptitiously entering a false record in the records of the Land Registration
Commission. Eventually, the true owners of the said land, Cesario de Leon discovered
that OCT No. 129 was issued to Martina G. Medina. The De Leons sent a letter-
complaint to the LRC asking for an investigation on the matter. The de Leons,
discovered that another title was fraudulently issued to Medina over the same parcel
of land. Atty. Panis concluded that the Medina Decision and the Order for the Issuance
of Decree dated February 14, 1980 were fake. He then recommended that the
appropriate action be filed for the nullification of OCT No. 129 and its derivative titles
– TCT No. 74216 in the name of Pilarita Reyes, and TCT No. 78982 in the name of
petitioner Eagle Realty Corporation.De Leon was able to have the said title annulled
as well as the TCT issued to Eagle Realty by virtue of the Deed of Sale.
ISSUE:
Whether or not Eagle Realty is an innocent purchaser.
HELD:
No. Based on case law (Sunshine Finance vs IAC, Oct. 28, 1991 / 203 SCRA 210), a
corporation engaged in the buying and selling of real estate is expected to exercise
a higher standard of care and diligence in ascertaining the status and condition of the
property subject of its business transaction. Similar to investment and financing
corporations, it cannot simply rely on an examination of a Torrens certificate to
determine what the subject property, looks like as its condition is not apparent in the
document. Petitioner’s claim against the Assurance Fund must necessarily fail. Its
situation does not come within the ambit of the cases protected by the Assurance
Fund. It was not deprived of land in consequence of bringing it under the operation
of the Torrens system through fraud or in consequence of any error, omission,
mistake or misdescription in the certificate of title It was simply a victim of
unscrupulous individuals. More importantly, it is a condition sine qua non that the
person who brings the action for damages against the Assurance Fund be the
registered owner and, as the holders of transfer certificates of title, that they be
innocent purchasers in good faith and f.or valueAnd petitioner does not qualify as
such.
PUDADERA v. MAGALLANES
G.R. No. 170073 October 18, 2010
DEL CASTILLO, J.:
FACTS:
Magallanes, along with the other buyers, filed an adverse claim with the
Register ofDeeds of Iloilo City. On November 23, 1981, Lazaro sold the lot
previously assigned toMagallanes and Mario Gonzales under the Partition
Agreement to her niece, LynnLazaro and her husband Rogelio Natividad for the
sum of P8,000. Magallanes pursuedher claims against the spouses Natividad by
filing a civil case for specific performance,injunction, and damages. The civil
case was dismissed by the trials court. SpousesNatividad sold the lot to Ramy
Pudadera as evidenced by a Deed of Sale for P25,000.Sometime thereafter
Magallanes caused the construction of two houses of strongmaterials on the
subject lot. On April 20, 1990, Pudadera filed an action of forcible entryagainst
Magallanes. The trial court dismissed the action. Petitioners filed a
complaintagainst Magallanes and her husband. During the pendency of this
case, Magallanespassed away and was substituted by her heirs. The trial court
rendered judgment infavor of respondents. The Court of Appeals affirmed the
decision of the Regional TrialCourt.

ISSUE:
Whether the petitioners are considered buyers and registrants in good faith.

RULING:

No. First, as previously explained, the evidence duly established that petitioners were
aware of facts pointing to a possible flaw in the title of Spouses Natividad when they
visited the subject lot on several occasions prior to the sale. This, by itself, was
sufficient basis to rule that they acted in bad faith. Stated differently, the presence
or absence of good faith on the part of Spouses Natividad during the second sale
involving the subject lot will not erase the bad faith of petitioners in purchasing the
subject lot from Spouses Natividad.

Second, petitioners miscomprehend the right to due process. The records indicate
that at no instance during the trial of this case were they prevented from presenting
evidence, including the testimonies of Spouses Natividad, to support their claims.
Thus, they were not denied their day in court. Petitioners seem to forget that they
were the ones who filed this action to recover ownership and quiet title against
Magallanes. If petitioners intended to bolster their claim of good faith by impleading
the Spouses Natividad in this case, there was nothing to prevent them from doing
so. Time and again, we have ruled that the burden of proof to establish the status of
a purchaser and registrant in good faith lies upon the one who asserts it. This onus
probandi cannot be discharged by mere invocation of the legal presumption of good
faith. In sum, petitioners were negligent in not taking the necessary steps to
determine the status of the subject lot despite the presence of circumstances which
would have impelled a reasonably cautious man to do so.
SPOUSES DOMINGO v. ROCES
G.R. No.147468
April 9, 2003
YNARES-SANTIAGO, J.:

FACTS:

Cesar and Lilia Roces were owners of two contiguous parcels of land. In 1962, the
GSIS caused the annotation of an adverse claim on their titles, alleging that the
spouses had mortgaged the same to it. Later on, when the titles were to be
surrendered to GSIS, the spouses failed to do so, and the GSIS had such title
duplicates in their possession declared null and void. Cesar Roces died intestate. He
was survived by his widow and their children. In 1992, a certain Reynaldo Montinola,
a nephew of Lilia Roces, executed an affidavit of self-adjudication over the subject
properties. A year later, he filed a petition against GSIS for the cancellation of the
title which was in the possession of GSIS. GSIS lost the case, and it’s titles were
cancelled, and ownership
awarded to Montinola. Later in the same year, Montinola sold the property in favor
of the Petitioners, the Domingo Spouses.Such sale was subject to the provision of
Section 4 of Rule 74:
“Subject to the provision of Sec. 4, Rule 74 of the RoC with respect to the inheritance
left by the
deceased Sps. Cesar Roces and Lilia Montinola”Now came the Defendants Roces
siblings. They alleged that the affidavit of selfadjudication Montinola executed was
null and void for Lilia Roces was not even dead. Because of this, the sale of the
property was done without authority, and therefore null and void as well.
But the Domingo Spouses, the buyers, contended that despite the annotation of the
provision of Rule 74, they were buyers in good faith, and by that very fact, in addition
to the siblings’ being in estoppel and guilty of laches, the sale was valid.

ISSUE:
Whether the spouses buyers in good faith

HELD:

Rule 74 clearly covers transfers of real property to any person.

Contrary to petitioner's’ contention, the effects of this provision are not confined to
the heirs or original
distributes of the estate properties; As the provision provides, such effects affect any
transferee of the property. There is no doubt the Spouses Domingo were covered by
―any transferee.
Therefore, buyers of real property the title of which contains an annotation pursuant
to Section 4, Rule 74 cannot be considered innocent purchasers for value; The
presence of an irregularity in the title which excites or arouses suspicion should
prompt the buyer to look beyond the certificate and investigate the title of the
vendor; This the spouses did not do, and hence cannot at all be considered buyers in
good faith.As to the claim that the respondents were guilty of laches and estoppel, it
is untenable.
Estoppel by laches arises from the negligence or omission to assert a right within a
reasonable time,warranting a presumption that the party entitled to assert it either
has abandoned it or declined to assert it.In the case at bar, only four months elapsed
from the time respondents discovered Montinolas fraudulent acts, sometime in May
1993, to the time they filed their complaint on September 6, 1993. This relatively
short span of time can hardly be called unreasonable, especially considering that
respondents used this period of time to investigate the transfers of the property
MACADANGDANG V. MARTINEZ
G.R. No. 158682
January 31, 2005
CORONA, J.:

FACTS:
On December 20, 1986, the Macadangdang spouses offered to buy the subject
property from Omalin for P380,000 on installment basis.On the same date, the
Macadangdang spouses made a downpayment of P5,000 through the broker, Sto.
Nino Realty Services, Inc. On January 3, 1987, they paid another P175,000.
Thereafter, Omalin executed a deed of sale with mortgage dated January 5, 1987.
The deed provided for the payment of the balance of P200,000 in three
installments.The Macadangdang spouses took possession of the house and lot on
January 18, 1987. On April 22, 1987, they paid P60,000 and on October 1, 1987,
another P30,000. After the Macadangdangs had paid a total of P270,000, the parties
agreed that the balance of P110,000 was to be paid upon delivery of the TCT.On
January 29, 1988, Omalin executed a deed of absolute sale in favor of the
Macadangdang spouses. However, the latter did not pay the P110,000 balance
because Omalin failed to deliver the TCT. It turned out that the property was
mortgaged to private respondent spouses Ramon and Gloria Martinez (Martinez
spouses).It appears that on March 5, 1987, a certain Atty. Paterno Santos, a broker,
offered to mortgage the subject property to the Martinez spouses for P200,000. Atty.
Santos was in possession of a clean TCT No. 146553 and a fire insurance policy
covering said property. The spouses Martinez accepted the mortgage with interest at
36% p.a. and duly recorded it at the Registry of Deeds of Makati. The proper
annotation was made at the back of the title.
From September 1987 to March 9, 1988, Omalin paid the monthly interest
of P6,000 but failed to pay the subsequent interest from April 1988 to October 1989
amounting to P114,00.The Macadangdang spouses filed a criminal case for estafa
against Omalin and a combined action for specific performance, annulment of
contract and damages against the spouses Martinez and Omalin. RTC rendered a
decision in favor of the Macadangdang spouses

ISSUE:
Whether or not the Macadangdang spouses are entitled to the land despite the fact
that a priorregistered mortgage was attached to it.

RULING:
No. The assailed decision of the appellate court is neither absurd nor unjust. The
registered mortgagecontract of the Martinez spouses has given them the superior
right, not as owners but only asmortgagees. Consequently, they are entitled to be
paid the amounts due them under the real estatemortgage registered in their favor.
In the event Omalin, as mortgagor, fails to pay the mortgageobligation or, should
any party, for that matter, who may have an interest in the mortgaged property
likethe petitioners herein fail to redeem it from the mortgagees, the latter, as
declared by the Court of Appeals, may enforce their rights against the property by
foreclosing on the mortgage, regardless of whoits owner may be, considering that
the registered mortgage attaches to the property.
R.R. PAREDES VS. CALILUNG

G.R. No. 156055

March 5, 2007

CHICO-NAZARIO, J.:

Facts:
Petitioners are sued as official of Caltex Philippines,Inc (CPI). Calilung alleged that
the officials made false representations of the parcels of land that he bought from
Caltex, that some of which were sold by Caltex to DAR by a Voluntary Offer to Sell
(VOS) which the CA decided as a consummated sale. The land was originally owned
by Calilung’s mother-in-law, Vda. de Medina who executed a
Deed of Assignment (with Special Power of Attorney Coupled with Interest), in which,
for and in consideration of her unpaid obligations to CPI, she assigned all of her
"rights, interests, claims and participation from the proceeds of land compensation"
for the property she
voluntarily offered to sell and transfer under the CARP. She claimed in the same Deed
that the VOS over the subject properties was already under process for indorsement
to the Landbank. Hence, she was appointing CPI as her exclusive attorney-in-fact to
follow-up the processing of the VOS papers with the DAR and the Landbank.

Issue:
Whether the filing of a Voluntary Offer to Sell a consummated sale.

Held:
No, a VOS, as its name implies, is a voluntary offer to sell the land to the government
so that the latter can distribute the same to qualified tenants. While a landowner who
voluntarily offered his land for sale is precluded from withdrawing his offer except
under specified circumstances, such a condition does not make the mere offer a
consummated sale. It bears to emphasize that the offer still needs to be accepted by
the DAR on behalf of the government, and just compensation for the land determined
and paid to the landowner. The sale is deemed consummated when the landowner
has received payment or deposit by the DAR of just compensation with an accessible
bank, in cash or Landbank bonds, since only
then is ownership of the land finally transferred from the landowner to the
government.
In the present case, the VOS covering the subject real properties is still being
processed by the DAR. There has so far been no express acceptance by the DAR of
the said VOS or payment of just compensation to CPI. There being no consummated
sale of the subject real properties to DAR, CPI could not have committed a double
sale of the same. It remained a co-owner of the subject real properties, together with
the other heirs of Antonio Medina, and, thus, it could still legally sell its share or
interest therein to another person, such as respondent.
REYES v. SIERRA
G.R. No. L-28658
October 18, 1979
DE CASTRO, J.

FACTS:

Vicente Reyes sought to register under his name a parcel of land located in
Antipolo,Rizal
opposed by Sierra et alTC approved Reyes’ application, declaring him owner of said
land owing to his and his predecessor-in-interest’s constructive possession of the
same, particularly because theyhad been paying the realty taxes thereon since 1926
until 1961
Origin of the dispute over land was because in 1926, the Sierras’ predecessor, Basilia
Beltran, borrowed P100 from Vicente Reyes, Sr. and secured the loan with the said
piece
of land. In so doing, Basilia’s children executed together with her a
document(“katibayan ng papgpapahintulot sa aming ina na ipananagutan kay Vicente
Reyes sa
inutang na halagang P100.Beltran, however, died in 1938 without being able to pay
the loan and Vicente Reyes, Jr.continued in possession thereof, believing that the
document executed was a contractof sale and not of mortgage.Oppositors Sierra et
al now claiming that the words “sangla”, “ipinanagutan sa halagang isangdaang piso”
manifest that the document was one of mortgage

ISSUE:
What was the nature of the document?

RULING:
It is a mortgage contract. The intention of the parties at the time it was executed
mustprevail, i.e., the borrowing and lending of money with security. The terms
indicate adebt and the creation of a creditor-debtor relationship, where the land was
used tosecure repayment of the loan.Following established doctrine, once a mortgage
attaches to a transaction, its characteras a mortgage will always continue. The parties
cannot by any stipulation deprive it of the essential attributes of a mortgage in
equity. Civil Code itself provides: The creditorcannot appropriate the things given by
way of mortgage.Act of Vicente Reyes in registering the property in his name after
failure of mortgagor toredeem the property constitutes a
pactum commisorium which is against good moralsand public policy.Court also
declared that possession by Reues has not been continuous (they had onlyused the
property to spend some vacation time there, but this was discontinued for thelast 23
years). Moreover, mere failure of owner to pay taxes does not necessarily
implyabandonment of a right to property; and on the other hand, payment of realty
taxes byitself does not constitute sufficient evidence of title.
Application by Reyes for registration should therefore
be dismissed. Oppositorsdirected to pay back the P100 debt plus interest (6% p.a.)
from 1926 until paid.
GUTIERREZ HERMANOS vs ORENSE
G.R. No. 9188
December 4, 1914

TORRES, J.:

FACTS:
On and before Februaru 14, 1907, Engracio Orense had been the owner of a parcel
of land in Guinobatan, Albay.On February 14, 1907, Jose Duran, a nephew of Orense,
sold the property for P1,500 to Gutierrez Hermanos, with Orense’s knowledge and
consent, executed before a notary a public instrument. The said public instrument
contained a provision giving Duran the right to repurchase it for the same price within
a period of four years from the date of the said instrument.Orense continued
occupying the land by virtue of a contract of lease.After the lapse of four years,
Gutierrez asked Orense to deliver the property to the company and to pay rentals for
the use of the property.Orense refused to do so. He claimed that the sale was void
because it was done without his authority and that he did not authorize his nephew
to enter into such contract.During trial, Orense was presented as witness of the
defense. He states that the sale was done with his knowledge and consent. Because
of such testimony, it was ascertained that he did give his nephew, Duran, authority
to convey the land. Duran was acquitted of criminal charges and the company
demanded that Orense execute the proper deed of conveyance of the property.
ISSUE:

Whether or not Orense is bound by Duran’s act of selling the former’s property
RULING:
Yes. Ratio It having been proven at the trial that he gave his consent to the said sale, itfollows that
the defendant conferred verbal, or at least implied, power of agency upon hisnephew Duran, who
accepted it in the same way by selling the said property. The principal musttherefore fulfill all the
obligations contracted by the agent, who acted within the scope of hisauthority. (Civil Code, arts.
1709, 1710 and 1727)Article 1259 of the Civil Code prescribes: "Noone can contract in the name
of another without being authorized by him or without his legalrepresentation according to law. A
contract executed in the name of another by one who hasneither his authorization nor legal
representation shall be void, unless it should be ratified by theperson in whose name it was
executed before being revokedby the other contracting party.”Thesworn statement made by
the defendant, Orense, while testifying as a witness at the trial of Duran for Estafa, virtually
confirms and ratifies the sale of his property affected by his nephew,Duran, and, pursuant to article
1313 of the Civil Code, remedies all defects which the contractmay have contained from the
moment of its execution.
LLACER V. MUÑOZ
G.R. No. L-3677
December 23, 1908

JOHNSON, J.:

FACTS:

On the 28th day of July, 1904, the plaintiff presented a complaint in the Court
of First Instance of the Province of Albay against the defendants, alleging:First. That
the said Faustino Llacer and Maria Prollamante were the owners of a certain parcel
of land described in the complaint, together with the house situated upon the same,
and had been in the public and peaceable possession of the same during their lives,
and after their death their children had continued in the possession of the same, and
that such possession had continued for a period of more than thirty years without
interruption.Second. That the defendant, Francisco Muñoz de Bustillo claimed to
bethe owner of the said parcel of land, as well as the house situated upon the
same.Third. That the defendant Muñoz, by means of a possessory information had
solicited and falsely obtained la inscripcion de posesion (the inscription of possession)
of the said parcel of land.Fourth. That the other defendant, Martin Achaval, was
illegally occupying a portion of the land belonging to the plaintiff, which portion is
found described in the 6th paragraph of the complaint, and had been in the illegal
possession of the same since the first day of June, 1903.Fifth. That the defendant
Martin Achaval had obtained permission from one of the sons of Faustino Llacer and
Maria Prollamante to occupy the lands described in paragraph 6 and to erect
a camarin upon the same, and had later refused to recognize the rights of the
plaintiff, and to pay the rent of P100 per month, claiming that the said land belonged
to the other defendant, Francisco Muñoz de Bustillo. The lower court rendered a
sentence in favor of the plaintiff and against the defendants, declaring that the
plaintiff, as administrator of the estate of the said Faustino Llacer and Maria
Prollamante, is the true owner of the land in question and that the said plaintiff should
administer said estate as such owner, charging the costs against the defendant,
Francisco Muñoz de Bustillo.

ISSUE:

Whether defendant or Francisco Muñoz‚ hijos, are now the owners of the land
in question.

RULING:

From all the evidence adduced during the trial of the cause relating to the ownership
of the land, we are convinced that there is a preponderance of evidence showing that
the defendant or Francisco Muñoz‚ hijos, are now the owners of the land in
question.With reference to the house claimed by Maxima Narito situated upon said
land, the lower court found that said house belonged to the said Maxima Narito. An
examination of the evidence adduced during the trial of the cause seems to justify
this conclusion of the lower court. The judgment of the lower court therefore with
reference to the ownership of the house located upon said land is hereby affirmed.The
judgment of the lower court by which the plaintiff, Luis Llacer, is declared to be the
owner of the land in question, is hereby reversed. After the expiration of the time
specified by the rules of this court, let judgment be entered in favor of the defendant
Francisco Muñoz‚ hijos, declaring them to be the owners of the land in question. So
ordered.
ABELLA v. GONZAGA

G.R. No. 34574

September 19, 1931

VILLAMOR, J.:

FACTS:

The plaintiff demands specific performance of the contract entered into with the
defendant on April 15, 1921. The defendant contends in his answer that the plaintiff's
right to compel him to make the transfer of the land in question is not absolute, but
conditional; that the conditions have not been complied with, but violated by the
plaintiff, who made the last payment over a year after the obligation had become
due, that is, on March 27, 1927, instead of March 5, 1926.This case was heard in the
Court of First Instance of Rizal; both parties adduced evidence and the court entered
a decision requiring the defendant: (a) To execute the deed of transfer of the land
described in the complaint to the plaintiff, after redeeming to the Mandaluyong
Estate, i.e., about P21,000; (b) to pay the plaintiff the sum of P21,000 or the
proportional part thereof necessary to redeem the land described in this complaint
from the mortgage to the Mandaluyong Estate, if the defendant should fail to pay
said Mandaluyong Estate the amount of the aforementioned mortgage; and (c) to
pay the costs of the action. The plaintiff contends that it is a contract of sale on
installments, while the defendant holds that it is really a contract of lease. If the
contract is a lease, it is plain that the plaintiff has no right to the relief he seeks; but
if the contract is a sale on installments and the plaintiffs has paid all the installments,
it is obvious he has a right to demand that the defendant execute the proper deed to
transfer the ownership to him.

ISSUE:

Whether the contract is a sale is on its installments.

RULING:

The contract in question is clearly a sale on its installments, and we believe it was
quite right in so holding. The document, Exhibit A, is entitled "Special Contract of
Lease," and the special quality consists in the stipulation found in clause IV, to wit:
that in consideration of the sum of P1,392.92 which the plaintiff had just paid to the
defendant, and of his promise to pay the rental of the remaining 19 quarters within
the time stipulated, the owner bound himself at the termination of said contract to
transfer to the tenant free of charge the full ownership of the property leased,
provided the said tenant has paid all those installments. If the contract were really a
lease, we are at loss to explain how such a clause was inserted therein. If we take
into account the other condition that the expenses of surveying, fixing the
boundaries, registering the title and other expenses should be for the account of the
tenant, the fact that in the five receipts, Exhibits C, D, E, F, and G, the defendant
himself stated that the amounts paid were on account of the first, second, third,
fourth, and fifth installments, and further fact that in his answer the defendant filed
no claim for alleged rental of the land subsequent to the year, when the plaintiff paid
the last installment, we arrive at the inevitable conclusion that although in the
contract Exhibit A the usual words "lease," "lessee," and "lessor" were employed, that
is no obstacle to holding, as we do hereby hold, that said contract was a sale on
installments, for such was the evident intention of the parties in entering into said
contract.

Integrated Packing V. CA (2000)

FACTS:

June 7, 1978: Integrated entered into a contract with Philippine Appliance

Corporation (Philacor) to print three volumes of "Philacor Cultural Books". July 30,
1979: only 1,097 out of the 3,450 had been delivered so it wrote to Fil-anchor that
delay will prejudice them. Integrated entered into an additional printing contract with
Philacor but it failed to comply so Philacor demanded compensation for the delay and
damage it suffered on account of Integrated's failure. Fil-anchor filed a collection suit
of P766,101.70 against Integrated representing unpaid purchase price of printing
paper bought on credit. By way of counterclaim, Fil-anchor alleged the delivery
was short of 2,875 reams so it suffered actual damages and failed to realize expected
profits and that complaint was prematurely filed. RTC: Integrated ordered to pay Fil-
anchor P27,222.60 as compensatory and actual damages after deducting
P763,101.70 for the value of materials received, P100K as moral damages, P30K for
attorney's fees and cost of suit. However, the counterclaim is also meritorious -
Integrated could have sold books to Philacor and realized profit of P790,324.30 for
which the award of moral damages was justified CA: reversed and set aside the
judgment of the trial court

ISSUE: W/N Integrated should be awarded compensatory and moral damages.

HELD: YES. Suspension of its deliveries to Integrated whenever the latter failed to
pay on time, as in this case, is legally justified under the second paragraph of Article
1583 of the Civil Code hence the Fil-anchor did not violate the order agreement. Fil-
anchor is not a party to the agreement between Philacor neither is it a contract pour
autrui so no direct bearing. Indemnification for damages comprehends not only the
loss suffered, that is to say actual damages , but also profits which the obligee failed
to obtain, referred to as compensatory damages. However, to justify a grant of actual
or compensatory damages, it is necessary to prove with a reasonable degree of
certainty, premised upon competent proof and on the best evidence obtainable by
the injured party, the actual amount of loss.

Fule v. CA

Facts:
Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land to Dr. Cruz
in exchange for P40,000 and a diamond earring owned by the latter. A deed of
absolute sale was prepared by Atty. Belarmino, and on the same day Fule went to
the bank with Dichoso and Mendoza, and Dr. Cruz arrived shortly thereafter. Dr. Cruz
got the earrings from her safety deposit box and handed it to Fule who, when asked
if those were alright, nodded and took the earrings. Two hours after, Fule complained
that the earrings were fake. He files a complaint to declare the sale null and void on
the ground of fraud and deceit.

Issue:
Whether the sale should be nullified on the ground of fraud

Held:
A contract of sale is perfected at the moment there is a meeting of the minds upon
the thing which is the object of the contract and upon the price. Being consensual, a
contract of sale has the force of law between the contracting parties and they are
expected to abide in good faith by their respective contractual commitments. It is
evident from the facts of the case that there was a meeting of the minds between
petitioner and Dr. Cruz. As such, they are bound by the contract unless there are
reasons or circumstances that warrant its nullification.

Grageda v. IAC 155 SCRA 95

Facts:

Petitioner Grageda is the owner and manager of the Sorsogon Home Enterprises while
private respodent is a seller of abaca finished products. On March 26, 1975, Grageda
ordered from private respondent 500 sets of rectangular("bacbac") pyrex trays and
500 sets of square ("bacbac") pyrex trays with 3 measurements per sample with
handle, at P4.50 per set.

Prior to April 27, 1975, private respondent delivered some of the items ordered but
they were outrightly rejected. After making the proper corrections, private
respondent made subsequent deliveries.
Said items were all received and duly receipted for by Grageda's caretaker, herein
co-petitioner Montilla.

On several occasions, private respondent demanded payment for the total value of
the deliveries but Grageda requested for extensions of time within which to pay.

Grageda, on the other hand, claimed that the rectangular and square "bacbac" pyrex
trays delivered by the private respondent from April 27, 1975 until May 25, 1975
were not in accordance with the sample agreed upon by and between them, which is
that the edging or "pleje" should be made of steel; that as early as May, 1975, she
advised private respondent of her rejection of the said items because their edgings
were made of tin plates or of inferior quality; that she demanded their withdrawal
from her bodega but despite repeated requests, private respondent refused to
withdraw the same; that she likewise informed private respondent of her rejection of
the said items at the confrontation with the police on June 13, 1975.

Issue:

Whether or not there was an acceptance of the deliveries made, or otherwise stated,
whether or not there was a rejection seasonably made.

Ruling:

While it is true that Article 1584 of the Civil Code accords Grageda (as buyer) the
right to a reasonable opportunity to examine the abaca "bacbac" goods to ascertain
whether they are in conformity with the contract, such opportunity to examine should
be availed of within a reasonable time in order that private respondent (as the seller)
may not be subjected to undue delay or prejudice in the payment of his raw materials,
workers and other damages which may be incurred due to the deterioration of his
products.

We agree with the trial court's observations and conclusions that: The provisions of
Article 1585 (New Civil Code) which provides, among others, that "the buyer is
deemed to have accepted them," ... "when, after the lapse of a reasonable time, he
retains the goods without intimating to the seller that he has rejected them" is
applicable in the instant case. The evidence clearly and unmistakably shows that the
defendants retained possession of the abaca goods, subject matter in this case, for
practically a month and almost two (2) manths on June 20, 1975 or until this case
was filed on June 27, 1975, without intimating their rejection to the supplier or seller,
within a reasonable time ... for which reason such retention of the abaca "bacbac"
goods for a month or more already amounts to a waiver of defendants' right to reject
acceptance and payment of the plaintiffs' abaca "bacbac" goods

Smith Bell & Co. vs Hon Gimenez G.R. No. L-17617 June 29, 1963
Facts: Upon requisition of the Municipality of Paniqui, Tarlac, Smith Bell and Co.
delivered a typewriter to the former amounting to PhP 820.00. The said typewriter
was received on August 30, 1958. However, on September 9,1958, at dawn, the
municipal building of Paniqui was totally razed by fire. Among the office equipment
burnt was the newly acquired typewriter. Thereafter, the Municipal Treasurer of
Paniqui submitted to the Provincial Treasurer of Tarlac a voucher covering the
payment for the lost typewriter. Provincial Treasurer forwarded the document to
Auditor General Gimenez who disapproved of the payment. According to Respondent,
Municipality is not liable for the cost of typewriter. According to Gimenez, the article
in question was never presented for inspection and verification as agreed upon and
consequently, the ownership of the typewriter did not pass to the consignee, and the
risk of loss remained withthe seller.

Issue: Whether or not there was delivery of the typewriter.

Held:

There was a delivery and the Municipality of Paniqui, Tarlac is liable for the loss of
the typewriter. The fact that the municipal officials of Paniqui took delivery of the
typewriter in question and made use thereof for aperiod of 10 days, constitutes proof
that said type writer was accepted and the municipality thereby, as a buyer, became
liable for the payment to the claim. Article 1585 of the Civil Code provides: “The
buyer is deemed to have accepted the goods when he intimates to the seller that he
has accepted them, or when the goods have been delivered to him, and he does any
act in relation to them which is inconsistent with theownership of the
seller, or when, after the lapse of a reasonable time, he retains the goods without
intimating to the seller that he has rejected them. “

G.R. No. 125283 February 10, 2006

PAN PACIFIC INDUSTRIAL SALES CO., INC., Petitioner,

vs.
COURT OF APPEALS and NICOLAS CAPISTRANO, Respondents.

Facts:

On 10 September 1982, Capistrano executed a Special Power of

Attorney10 authorizing Cruz to mortgage the subject lot in favor of Associated Bank
(the Bank) as security for the latter’s loan accommodation.11

Shortly, by virtue of the Special Power of Attorney, Cruz obtained a loan in the
amount of ₱500,000.00 from the Bank. Thus, he executed a Real Estate
Mortgage12 over the subject lot in favor of the Bank.13
Capistrano and Cruz then executed a letter-agreement dated 23 September 1982
whereby Cruz agreed to buy the subject lot for the price of ₱350,000.00, of which
₱200,000.00 would be paid out of the loan secured by Cruz, and the balance of
₱150,000.00 in eight (8) quarterly payments of ₱18,750.00 within two (2) years from
30 October 1982, without need of demand and with interest at 18% in case of default.

On 15 March 1983, Capistrano executed the Deed of Absolute Sale15 over the subject
lot in favor of Cruz. Two (2) days later, on 17 March 1983, Notary Public Vicente J.
Benedicto (Benedicto) notarized the deed. However, it was earlier or on 9 March 1983
that Capistrano’s wife, Josefa Borromeo Capistrano, signed the Marital
Consent16evidencing her conformity in advance to the sale. The Marital Consent was
also sworn to before Benedicto.

May 1987, with the mortgage on the subject lot then being in danger of foreclosure
by the Bank, Cruz filed a case with the RTC of Manila, Branch 11, docketed as Civil
Case No. 87-40647, to enjoin the foreclosure. Cruz impleaded Capistrano and his
spouse Josefa Borromeo Capistrano as defendants, the title to the subject lot not
having been transferred yet to his name.

Cruz also devised a way to save the subject lot from foreclosure by seeking a buyer
for it and eventually arranging for the buyer to pay the mortgage debt. Towards this
end, Cruz succeeded in engaging Pan Pacific. Thus, on 22 September 1988, Pan
Pacific paid off Cruz’s debt in the amount of ₱1,180,000.00.

Issue: Whether or not the documents in question were not properly notarized?

Ruling:

A notarized document carries the evidentiary weight conferred upon it with respect
to its due execution, and it has in its favor the presumption of regularity which may
only be rebutted by evidence so clear, strong and convincing as to exclude all
controversy as to the falsity of the certificate. Absent such, the presumption must be
upheld. The burden of proof to overcome the presumption of due execution of a
notarial document lies on the one contesting the same. Furthermore, an allegation of
forgery must be proved by clear and convincing evidence, and whoever alleges it has
the burden of proving the same.

The courts below both concluded that Capistrano had discharged this burden.
However, this Court does not share the conclusion. Indeed, Capistrano failed to
present evidence of the forgery that is enough to overcome the presumption of
authenticity.

G.R. No. L-28173 September 30, 1971

NAGA DEVELOPMENT CORPORATION, petitioner,
vs.
THE COURT of APPEALS and PACIFIC MERCHANDISING
CORPORATION, respondents.

Facts:

A sales agreement dated August 10, 1962 was entered into by and between the Naga
and the Pacific, by virtue of which the latter agreed to supply the former roofing and
related materials and to be responsible for their installation at the Naga City public
market for a total cost of P238,447.76, exclusive of materials that may be additionally
required during construction.

Several days before the date of the aforesaid agreement, or, on July 21, 1962, the
Pacific already made deliveries to the job site at Naga City of roofing materials to be
used in the construction of the mentioned Naga City public market. The total value
of the materials delivered plus the cost of installation from July 21, 1962 to October
19, 1962 amounted to P250,312.76.

On July 19, 1963 the Pacific filed with the Court of First Instance of Manila a complaint
against the Naga (docketed as civil case 54547), alleging in essence that only
P107,030 of the total obligation of the Naga refused to pay the balance thereof in the
amount of P143,282.76.

The trial, court, however, in an order dated September 20, 1963, denied the motion
to set aside the order of default for the following reasons: (a) The Naga does not
have a valid defense. It does not dispute the completion of the delivery and the
installation of the materials in question. (b) The failure of the Naga to file its answer
within the extended period was due to its fault and negligence. (c) There was no real
need to verify the truth of the averments contained in the Pacific's complaint. (d) The
answer which the Naga belatedly submitted for admission admitted the correctness
of the Pacific's claim to the last centavo, but the Naga sought avoidance thereof solely
upon the grounds that the same was not yet demandable on account of the GSIS's
refusal to release the mentioned loan and that there was as yet no delivery and
acceptance of the installation work performed by the Pacific at the Naga City public
market.

Issue:

Whether the trial court's order of default and its order denying the Naga's motion.

Ruling:

The granting of additional time within which to file an answer to a complaint is a

matter largely addressed to the sound discretion of a trial court. While trial courts
are persuaded, as a matter of policy, to adopt a basically flexible attitude in favor of
the defendant in this area of our adjective law, the defense should never be lulled
into the belief that whenever trial courts refuse a second request for extension to file
an answer, the appellate courts will grant relief. Where, as in the case at bar, another
full period of 15 days to file the answer had been granted, substantial grounds must
be shown by the party declared in default in order that the questioned order of the
trial court may be reversed.

The Naga, in its second request for extension, to file its answer, pleaded that a
verification of the truth of the averments contained in the complaint would be needed
because it had made certain payments, such as the amount of P600, which should
be deducted from the claim of the Pacific.

GOLD LOOP PROPERTIES, INC. and EMMANUEL R. ZAPANTA, petitioners,

vs. THE COURT OF APPEALS, BHAVNA HARILELA SADHWANI and
RAMESHJ. SADHWANI, represented by their attorney-in-fact PURSHUTAM
DIALANI, respondents.

Facts:
On July 16, 1988, private respondents Bhavna Harilela and Ramesh submitted
through St. Martin Realty Corporation, a realtor agent of petitioner Gold Loop
Properties, Inc., a signed pro forma reservation application addressed to GLPI for the
purchase of one (1) condominium unit at Gold Loop Towers residential complex,
located in Ortigas Complex, Pasig. One of the terms of the reservation was the
execution of a contract to sell once the downpayment was paid in full. Upon
submission of the reservation, the Sadhwanis issued a check for P50,000.00 to cover
the reservation fees to Josephine Flores Guina, agent of St. Martin Realty who issued
a receipt to them.
On November 18, 1988, the Sadhwanis paid GLPI the amount of
P819,531.25. Subsequently, Bhavna Harilela signed a Contract To Sell[2] with GLPI,
represented by its President Emmanuel Zapanta. Ms. Guina assured them that they
would be furnished with a copy of the contract after its notarization, and that the
amount, representing the balance of the purchase price, would be included in a loan
application with a bank. However, the contract to sell was not notarized, as the
private respondents were not able to supply GLPI with a copy of their passports.
On March 19 and April 25, 1989, respondent Ramesh J. Sadhwani demanded a
copy of the contract to sell, noting that his wife had no official document to show that
she bought a condominium unit from GLPI and there were conditions and/or
stipulations in the contract which she could not be expected to comply with, unless a
copy of the same be given to her. By letter dated May 22, 1989 to GLPI, respondent
Sadhwanis counsel made a formal demand for the delivery to him of a copy of the
contract to sell.
Issue:
Whether or not respondents may suspend payment of their monthly amortizations
due to failure of petitioners to furnish them copy of the contract to sell.

Ruling:

Supreme Courts subscribe to the findings of fact of the Court of Appeals when it
held that: Private respondents were indeed justified in suspending payment of their
monthly amortizations. The failure of petitioners to give them a copy of the Contract
to Sell sued upon, despite repeated demands therefor, and notwithstanding the
private respondents payment of P878,366.35 for the subject condominium unit was
a valid ground for private respondents to suspend their payments.

BAUTISTA V. UNANGST (2008)

FACTS:

In 1996, Hamilton Salak rented a car from Benjamin BAUTISTA who failed to return
the car after three (3) days prompting the latter to file a complaint against him
demanding the sum of P232,372.00 as payment for car rental fees, fees incurred in
locating the car, attorney's fees and other incidental expenses. Salak and his
common-law wife, Shirley UNANGST, expressed willingness to pay but since they
were then short on cash, they sold to BAUTISTA a house and lot with right to
repurchase.

UNANGST failed to repurchase the property within the stipulated period. As a result,
BAUTISTA filed a complaint for specific performance or recovery of possession, for
sum of money, for consolidation of ownership and damages against UNANGST.

UNANGST argued that her consent to the deed of sale with right to repurchase was
procured under duress and that even assuming that her consent was freely given,
the contract partakes of the nature of an equitable mortgage.
BAUTISTA alleged that the deed should not be construed as an equitable mortgage
as it does not fall under any of the instances mentioned in Article 1602 of the Civil
Code where the agreement can be construed as an equitable mortgage. He added
that the "language and terms of the Deed of Sale with Right to Repurchase executed
by UNANGST in favor of him are clear and unequivocal. Said contract must be
construed with its literal sense."

ISSUE:
Should the deed of sale with right to repurchase executed by the parties be construed
as an equitable mortgage?
HELD:
The Deed of Sale with Right of Repurchase executed by the parties was an equitable
mortgage.

First, before executing the deed, respondent and Salak were under police custody
due to the complaint lodged against them by petitioner. It is established that
respondent signed the deed only because of the urgent necessity of obtaining funds.
Second, petitioner allowed respondent and Salak to retain the possession of the
property despite the execution of the deed. In fact, respondent and Salak were not
bound to deliver the possession of the property to petitioner if they would pay him
the amount he demanded.

In a contract of sale with pacto de retro, the legal title to the property is immediately
transferred to the vendee, subject to the vendor's right to redeem. Retention,
therefore, by the vendor of the possession of the property is inconsistent with the
vendee's acquisition of the right of ownership under a true sale. Third, the purchase
price stated in the deed was the amount of the indebtedness of both respondent and
Salak to petitioner.

ROBERTS v PAPIO

FACTS:

The Spouses Papio were the owners of a 274 sq m residential lot located in
Makati. In order to secure a59k loan from the Amparo Investments Corp, they
executed a real estate mortgage on the property. Upon Papio’s failure to pay the
loan, the corporation filed a petition for the extrajudicial foreclosure of the
mortgage.* Since the couple needed money to redeem the property and to prevent
the foreclosure of the real estate mortgage, they executed a Deed of Absolute Sale
over the property in favor of Martin Papio’s cousin,Amelia Roberts.* Of the 95k
purchase price, 59k was paid to the Amparo Investments Corp, while the 26k
difference was retained by the spouses. As soon as the spouses had settled
their obligation, the corporation returned the owner’s duplicate TCT which was then
delivered to Amelia Roberts.
* The parties (A. Roberts as lessor and Martin Papio as lessee) executed a 2-
year contract of lease. The contract was subject to renewal or extension for a like
period at the option of the lessor, the lessee waiving thereby the benefits of an
implied new lease. The lessee was obliged to pay monthly rentals of 800 to be
deposited in the lessor’s account.
* A new TCT was issued in the name of Amelia Roberts as owner. Martin Papio
paid the rentals and thereafter for another year. He then failed to pay rentals, but he
and his family nevertheless remained in possession of the property for almost 13
years.* A. Roberts reminded Papio that he failed to pay monthly rentals amounting
to a total liability of 410k.She demanded that Papio vacate the property within 15days
from receipt of the letter in case he failed to settle the amount.* A. Roberts filed a
complaint for unlawful detainer and damages against Martin Papio

ISSUE:
W/N THE DEED OF ABSOLUTE SALE AND CONTRACT OF LEASE EXECUTED BY
THE PARTIES IS AN EQUITABLE MORTGAGE OVER THE PROPERTY

RULING:
NO. An equitable mortgage is one that, although lacking in some formality,
form or words, or other requisites demanded by a statute, nevertheless reveals the
intention of the parties to charge a real property as security for a debt and contain
nothing impossible or contrary to law. A contract between the parties is an equitable
mortgage if the following requisites are present: a. the parties entered into a contract
denominated as a contract of sale and b. the intention was to secure an existing debt
by way of mortgage. The decisive factor is the intention of the parties. In an equitable
mortgage, the mortgagor retains ownership over the property but subject to
foreclosure and sale at public auction upon failure of the mortgagor to pay his
obligation.
In contrast, in a pacto de retro sale, ownership of the property sold is
immediately transferred to the vendee a retro subject only to the right of the vendor
a retro to repurchase the property upon compliance with legal requirements for the
repurchase. The failure of the vendor a retro to exercise the right to repurchase within
the agreed time vests upon the vendee a retro, by operation of law, absolute title
over the property. One repurchases only what one has previously sold. The right to
repurchase presupposes a valid contract of sale between same parties. By insisting
that he had repurchased the property, Papio thereby admitted that the deed of
absolute sale executed by him and Roberts was in fact and in law a deed of absolute
sale and not an equitable mortgage; he had acquired ownership over the property
based on said deed. Respondent, is thus estopped from asserting that the contract
under the deed of absolute sale is an equitable mortgage unless there is an allegation
and evidence of palpable mistake on the part of respondent, or a fraud on the part
of Roberts.

Ramos vs. Sarao (461 SCRA 103)

FACTS:
Spouses Jonas Ramos and Myrna Ramos executed a contract over their conjugal
house and lot in favor of respondent for and in consideration of P1,310,430. Entitled
“DEED OF SALE UNDER PACTO DE RETRO,” the contract, inter alia, granted the
Ramos spouses the option to repurchase the property within six months plus an
interest of 4.5 percent. Petitioner tendered to Sarao the amount of P1,633,034.20 in
the form of two manager’s checks, which the latter refused to accept for being
allegedly insufficient. Myrna filed a Complaint, and she deposited with the RTC two
checks that Sarao refused to accept. Sarao filed against the Ramos spouses a Petition
“for consolidation of ownership in pacto de retro sale”. Both RTC and CA dismissed
petitioner’s complaint and appeal respectively in favor of respondent Sarao.

ISSUE:
Whether or not the pacto de retro sale was in reality an equitable mortgage?

RULING:
YES. In order to judge the intention of the contracting parties, their contemporaneous
and subsequent acts shall be principally considered (Art.1371, NCC). The contract
shall be presumed to be an equitable mortgage, in any of the following cases:(1)
When the price of a sale with right to repurchase is unusually inadequate; (2) When
the vendor remains in possession as lessee or otherwise; (3) When upon or after the
expiration of the right to repurchase another instrument extending the period of
redemption or granting a new period is executed; (4) When the purchaser retains for
himself a part of the purchase price; (5) When the vendor binds himself to pay the
taxes on the thing sold; (6) In any other case where it may be fairly inferred that the
real intention of the parties is that the transaction shall secure the payment of a debt
or the performance of any other obligation. (Art. 1602, NCC)

Cadungog v Yap

Facts:

Virgilio Cadungog executed a deed of sale with the right to repurchase on August 17,
1979. Through the document, Cadungog sold to his cousin Franklin Ong six parcels
of land. Based on the deed of sale, Cadungoghad the right to repurchase within 10
years from the mentioned date. Virgilio, however, failed to redeem the subject
property. Subsequently, he executed a deed of absolute sale in favour of Jocelyn Yap,
Franklin’s sister. Such sale covered three parcels of land for P5,000. Thereafter,
Virgilio filed a complaint for the declaration of nullity of the deed of absolute sale
against Yap. Virgilio asseverated that the deed was fictitious because it had been
merely executed to afford Yap claim for the reduction of her tax liabilities in Canada.
Furthermore, he pointed out that after the supposed sale, Yap made no move in order
to consolidate her ownership over the property. The trial court held that Cadungog
was able to repurchase the six parcels of land on May 25-26, 1997which was after
the lapse of 18 years, upon payment to Ong of the amount of P50k. Moreover, the
court held that the 10-year redemption period was to be regarded as extended
because of the failure of Ong to consolidate his title over the property.
Issue: Whether or not there was impairment of the title over the property of the
vendee a retro because of his failure to consolidate the sale

Ruling: The Supreme Court answered in the negative. The court ruled that the failure
of the vendee a retro to consolidate the title under Article 1607 of the Civil Code did
not impair such title and ownership because the methods and procedure prescribed
was merely for the purpose of registering and consolidating the titles to the property.
It declared that it was Franklin Ong and not petitioner should be regarded as the
lawful of wner of the six parcels of land. Cadungod had therefore no right to mortgage
or sell the land to Yap on September 10, under the deed of absolute sale. The decision
of the appellate court that Yap had acquired ownership over the three parcels of land
was declared erroneous. Cadungod, not being the owner of the land, could not have
been then sold lawfully the parcels to responded Jocelyn Yap.

G.R. No. 73573 May 23, 1991

SPOUSES TRINIDAD AND EPIFANIO NATINO, petitioners,

vs.
THE INTERMEDIATE APPELLATE COURT, THE RURAL BANK OF AGUILAR,
INC. AND THE PROVINCIAL SHERIFF EX-OFFICIO OF
PANGASINAN, respondents.

DAVIDE, JR., J.

FACTS

On 12 October 1970 petitioners executed a real estate mortgage in favor of

respondent bank as security for a loan of P2,000.00. Petitioners failed to pay the loan
on due date. The bank applied for the extrajudicial foreclosure of the mortgage. At
the foreclosure sale on 11 December 1974 the respondent bank was the highest and
winning bidder with a bid of P2,945.11. A certificate of sale was executed in its favor
by the sheriff and the same was registered with the Office of the Register of Deeds
on 29 January 1975. The certificate of sale, a copy of which was furnished the
petitioners by registered mail, expressly providedthat the redemption period shall be
two years from the registration thereof.

Since no redemption was made by petitioners within the two-year period,

which expired on 29 January 1977, the sheriff issued a Final Deed of Sale on 15
February 1977.

Petitioners, however, claimed that they were granted by respondent bank an

extension of the redemption period; but the latter denied it.

On 22 November 1979 respondent bank file a petition for a writ of possession,

which petitioners later opposed on the ground that they had consigned the
redemption money of P4,000.00 on 12 December 1979. The court rejected the
opposition and issued the writ of possession. However, to prevent its execution,
petitioners instituted with the then Court of First Instance of Pangasinan a complaint
against respondent bank and the Ex-Officio Provincial Sheriff for the annulment of
the aforementioned final deed of sale and for the issuance of a writ of preliminary
injunction. In their complaint petitioners alleged that the final deed of sale was
prematurely issued since they were granted an extension of time to redeem the
property.

ISSUE

Were the offers made after expiration of the period of redemption and only
after the execution of the deed of final sale by the sheriff?

RULING

The right to redeem becomes functus officio on the date of its expiry, and its
exercise after the period is not really one of redemption but a repurchase. Distinction
must be made because redemption is by force of law; the purchaser at public auction
is bound to accept redemption. Repurchase however of foreclosed property, after
redemption period, imposes no such obligation. After expiry, the purchaser may or
may not re-sell the property but no law will compel him to do so, And, he is not bound
by the bid price; it is entirely within his discretion to set a higher price, for after all,
the property already belongs to him as owner.

It will take better proofs than appellees' mere declaration for the Court to
believe that they had tendered the redemption money within the redemption period
which was refused by the bank. There would have been no valid reason for a refusal;
it is an obligation imposed by law on every purchaser at public auction that admits of
redemption, to accept tender of redemption money. And should there be refusal, the
correlative duty of the mortgagor is clear: he must deposit the money with the sheriff.
The evidence does not show that appellees complied with this duty.
 G.R. No. 117501 July 8, 1997

SOLID HOMES, INC., petitioner,

vs.
HON. COURT OF APPEALS, STATE FINANCING CENTER, INC., and REGISTER
OF DEEDS FOR RIZAL, respondents.

PANGANIBAN, J.

FACTS

It appears that on June 4, 1979, Solid Homes executed in favor of State

Financing (Center, Inc.) a Real Estate Mortgage on its properties in order to secure
the payment of a loan of P10,000,000.00 which the former obtained from the latter.
A year after, Solid Homes applied for and was granted an additional loan of
P1,511,270.03 by State Financing, and to secure its payment, Solid Homes executed
the Amendment to Real Estate Mortgage dated June 4, 1980, whereby the credits
secured by the first mortgage on the abovementioned properties were increased from
P10,000,000.00 to P11,511,270.03.

Sometime thereafter, Solid Homes obtained additional credits and financing

facilities from State Financing in the sum of P1,499,811,97, and to secure its
payment, Solid Homes executed in favor of State Financing the Amendment to Real
Estate Mortgage dated March 5, 1982, whereby the mortgage executed on its
properties on June 4, 1979 was again amended so that the loans or credits secured
thereby were further increased from P11,511,270.03 to P13,011,082.00.

When the loan obligations abovementioned became due and payable, State
Financing made repeated demands upon Solid Homes for the payment thereof, but
the latter failed to do so. So, on December 16, 1982, State Financing filed a petition
for extrajudicial foreclosure of the mortgages abovementioned with the Provincial
Sheriff of Rizal, who, in pursuance of the petition, issued a Notice of Sheriff's Sale
dated February 4, 1983, whereby the mortgaged properties of Solid Homes and the
improvements existing thereon, including the V.V. Soliven Towers II Building, were
set for public auction sale on March 7, 1983 in order to satisfy the full amount of
Solid Homes' mortgage indebtedness, the interest thereon, and the fees and
expenses incidental to the foreclosure proceedings.

Before the scheduled public auction sale the mortgagor Solid Homes made
representations and induced State Financing to forego with the foreclosure of the real
estate mortgages referred to above. By reason thereof, State Financing agreed to
suspend the foreclosure of the mortgaged properties, subject to the terms and
conditions they agreed upon, and in pursuance of their said agreement, they
executed a document entitled MEMORANDUM OF AGREEMENT/DACION EN PAGO
dated February 28, 1983.

ISSUE

Is the total redemption price in contravention of Art. 1616 of the Civil Code?

RULING

The Court does not find said legal provision to be restrictive or exclusive,
barring additional amounts that the parties may agree upon. Said provision should
be construed together with Art. 1601 of the same Code which provides as follows:

Art. 1601. Conventional redemption shall take place when the vendor reserves
the right to repurchase the thing sold, with the obligation to comply with the
provisions of article 1616 and other stipulations which may have been agreed upon.

It is clear, therefore, that the provisions of Art. 1601 require petitioner to "comply
with the other stipulations" of the Memorandum of Agreement/Dacion en Pago it
freely entered into with private respondent.

Contracts have the force of law between the contracting parties who may
establish such stipulations, clauses, terms and conditions as they may want subject
only to the limitation that their agreements are not contrary to law, morals, customs,
public policy or public order — and the provision of the Memorandum does not appear
to be so.

Petitioner, however, is right in its observation that the Court of Appeal's inclusion of
"registration fees, real estate and documentary stamp taxes and other incidental
expenses incurred by State Financing in the transfer and registration of its ownership
(of the subject properties) via dacion en pago" was vague, if not erroneous,
considering that such transfer and issuance of the new titles were null and void. Thus,
the redemption price shall include only those expenses relating to the registration of
the dacion en pago, but not the registration and other expenses incurred in the
issuance of new certificates of title in the name of State Financing.

G.R. No. L-51824 February 7, 1992

PERCELINO DIAMANTE, petitioner,

vs.
HON. COURT OF APPEALS and GERARDO DEYPALUBUS, respondents.
DAVIDE, JR., J.

FACTS

A fishery lot, encompassing an area of 9.4 hectares was previously covered by

Fishpond Permit No. F-2021 issued in the name of Anecita Dionio. Upon Anecita's
death, her heirs, petitioner Diamante and Primitivo Dafeliz, inherited the property
which they later divided between themselves; petitioner got 4.4. hectares while
Dafeliz got 5 hectares. It is the petitioner's share that is the subject of the present
controversy. Primitivo Dafeliz later sold his share to private respondent.

On 21 May 1959, petitioner sold to private respondent his leasehold rights over
the property in question for P8,000.00 with the right to repurchase the same within
three (3) years from said date.

On 16 August 1960, private respondent filed an application with the Bureau of

Fisheries, dated 12 July 1960, for a fishpond permit and a fishpond lease agreement
over the entire lot, submitting therewith the deeds of sale executed by Dafeliz and
the petitioner.

Pressed by urgent financial needs, petitioner, on 17 October 1960, sold all his
remaining rights over the property in question to the private respondent for
P4,000.00. On 25 October 1960, private respondent, with his wife's consent,
executed in favor of the petitioner an Option to Repurchase the property in question
within ten (10) years from said date, with a ten-year grace period.

Private respondent submitted to the Bureau of Fisheries the definite deed of

sale; he did not, however, submit the Option to Repurchase. Thereafter, on 2 August
1961, the Bureau of Fisheries issued to private respondent Fishpond Permit No. 4953-
Q; on 17 December 1962, it approved FLA No. 1372 in the latter's favor.

On 11 December 1963, petitioner, contending that he has a valid twenty-year

option to repurchase the subject property, requested the Bureau of Fisheries to nullify
FLA No. 1372 insofar as the said property is concerned. On 18 December 1964, his
letter-complaint was dismissed. Petitioner then sought a reconsideration of the
dismissal; the same was denied on 29 April 1965. His appeal to the Secretary of the
DANR was likewise dismissed on 30 October 1968. Again, on 20 November 1968,
petitioner sought for a reconsideration; this time, however, he was successful. On 29
August 1969, the DANR Secretary granted his motion in an Order cancelling FLA No.
1372.

ISSUE

What are the effects of a right to repurchase granted subsequently in an

instrument different from the original document of sale?

RULING
Article 1601 of the Civil Code provides:

Conventional redemption shall take place when the vendor reserves the right
to repurchase the thing sold, with the obligation to comply with the provisions of
article 1616 and other stipulations which may have been agreed upon.

In Villarica, et al. vs. Court of Appeals, et al., 4 decided on 29 November 1968,

or barely seven (7) days before the respondent Court promulgated its decision in this
case, this Court, interpreting the above Article, held: “The right of repurchase is not
a right granted the vendor by the vendee in a subsequent instrument, but is a right
reserved by the vendor in the same instrument of sale as one of the stipulations of
the contract. Once the instrument of absolute sale is executed, the vendor can no
longer reserve the right to repurchase, and any right thereafter granted the vendor
by the vendee in a separate instrument cannot be a right of repurchase but some
other right like the option to buy in the instant case.”
 G.R. No. L-24920 November 24, 1970

ROSA QUIMSON, SONIA QUIMSON and FRANCISCO QUIMSON, Heirs of the

late Dr. Francisco Quimson, plaintiffs-appellants,
vs.
PHILIPPINE NATIONAL BANK, thru its SPECIAL ASSETS DEPARTMENT and
RICARDO MENDOZA, defendants-appellees.

BARREDO, J.

FACTS

Francisco Quimson during his lifetime mortgaged several properties with the
Philippine National Bank among which was a parcel of land situated in San Juan,
Rizal. The property was mortgaged for P2,500.00. Because of the failure of said
Francisco Quimson to pay the mortgage loans, the Philippine National Bank filed
foreclosure proceedings in the Court of First Instance of Nueva Ecija.

On December 1, 1956, a Writ of Execution was issued by the said Court of

First Instance and the Provincial Sheriff of Rizal was directed by the said Court to sell
at public auction the property in question. The property was sold to the Philippine
National Bank, it being the highest bidder.

On January 10, 1957, the Provincial Sheriff of Rizal issued a certificate of sale
in favor of the Philippine National Bank which certificate of sale was given judicial
confirmation on September 27, 1957.

On April 24, 1959, the Branch Manager of the Philippine National Bank wrote
a letter to plaintiff's son, Francisco Quimson, Jr. who is occupying the property,
informing him that the property in question was sold by the bank to Ricardo S.
Mendoza for the sum of P7,763.36.

The certificate of sale dated January 10, 1957 as well as the judicial
confirmation of the court was registered only with the Register of Deeds of Rizal on
September 19, 1963.

Plaintiffs who are the heirs of the late Francisco Quimson want to redeem the
property from the Philippine National Bank. Defendant Philippine National Bank,
however, refused alleging that the period of redemption which is to be counted from
the date of judicial confirmation has already expired and that the property has already
been sold to Ricardo S. Mendoza.
 Plaintiffs argued that the period of redemption should be counted from the
date that the sale and the judicial confirmation were registered on September 19,
1963. In support of their argument, plaintiffs cited the case of Ernesto Salazar, et al.
vs. Flor de Lis Meneses, et al., G.R. No. 15378, which was decided and promulgated
by the Supreme Court on July 31, 1963.

ISSUE

Is this a sale resulting from judicial foreclosure of real estate mortgage and
not one by virtue of an extrajudicial foreclosure under Act 3135 as amended by Act
4118?

RULING

The Court does not agree. The property therein involved is registered land.
While, indeed, sales on foreclosure of properties mortgaged to the Philippine National
Bank may partake of being sui generis, they need not depart from the sound
principles governing registration of transactions concerning lands coming under the
Land Registration Act or the Torrens system. As already stated, this Court has
uniformly ruled that redemption from execution sales under ordinary judgments
pursuant to Section 30, Rule 39 of the Rules of Court should be made within twelve
(12) months from the registration of the same and We have as uniformly applied the
same rule to sales upon extrajudicial foreclosure of registered lands. We see no valid
reason why the rule in foreclosure of mortgages of registered real estate where the
mortgagee is the Philippine National Bank should not be the same.

Accordingly, when it comes to the period of redemption of registered real

estate sold on execution, whether in foreclosure proceedings or in ordinary cases,
actual notice of the sale by the judgment debtor or redemptioner is immaterial, the
period must always be computed from the date of registration of the corresponding
auction sale.
 G.R. No. L-20954 May 24, 1967

ELIAS GALLAR, plaintiff-appellee,

vs.
HERMENEGILDA HUSAIN, ET AL., defendants.
BONIFACIO HUSAIN, defendant-appellant.

REGALA, J.

FACTS

A hectare of rice land in Cabatuan, Iloilo, is the subject of this controversy.

On January 9, 1919, Teodoro Husain, the owner, sold this land to Serapio Chichirita
for P30, reserving for himself the right to repurchase it within six years. The deed of
sale, written in Ilongo dialect, is contained in a private instrument. Teodoro Husain
did not redeem the land, although shortly after the execution of the deed of sale,
that is, on January 28, 1919, the vendee a retro, Chichirita, transferred his right to
Graciana Husain, sister of the vendor a retro, in what purports to be a resale of the
land. An annotation appears on the reverse side of the deed of pacto de retro sale.

Graciana Husain subsequently transferred her rights to the land to appellee

Elias Gallar in exchange for one cow. The transaction is recorded in a second note
added on the reverse side of the deed of sale. Possession of the land, together with
the owner's duplicate of the certificate of title of Teodoro Husain, was delivered on
the same occasion to appellee who since then has been in possession of the land.
 In an affidavit dated March 6, 1928, Chichirita confirmed the "redemption" of
the land by Graciana Husain. In another affidavit of the same date, Graciana Husain
for her part confirmed having subsequently sold the land to the appellee.

In 1960, appellee asked the Cadastral Court for the issuance to him of a
transfer certificate of title but the court dismissed his petition for lack of jurisdiction.
(The court, however, granted appellee's request for the amendment of the certificate
of title by changing the surname of "Osaen" to "Husain.") He, therefore, filed this suit
in the Court of Instance of Iloilo on October 10, 1960 to compel Hermenegilda and
Bonifacio Husain, as heirs of Teodoro Husain, to execute a deed of conveyance in his
favor so that he could get a transfer certificate of title. He also asked for damages.

ISSUE

Can an action be brought on the basis of the deed of sale with a right of
repurchase?

RULING

Unlike a debt which a third party may satisfy even against the debtor's
will, the right of repurchase may be exercised only by the vendor in whom the right
is recognized by contract or by any person to whom the right may have been
transferred. Graciana Husain must, therefore, be deemed to have acquired the land
in her own right, subject only to Teodoro Husain's right of redemption. As the new
owner she had a perfect right to dispose of the land as she in fact did when she
exchanged it for a cattle with the appellee.

When Teodoro Husain failed to redeem the land within the stipulated period,
i.e., January 9, 1925, its ownership became consolidated in the appellee. True the
successive sales are in a private instrument, but they are valid just the same. By the
delivery of possession of the land on April 2, 1919 the sale was consummated and
title was transferred to the appellee. Indeed, this action is not for specific
performance; all it seeks is to quiet title, to remove the cloud cast on appellee's
ownership as a result of appellant's refusal to recognize the sale made by their
predecessor. And, as plaintiff-appellee is in possession of the land, the action is
imprescriptible. Appellant's argument that the action has prescribed would be correct
if they were in possession as the action to quiet title would then be an action for
recovery of real property which must be brought within the statutory period of
limitation governing such actions.
 G.R. No. L-22478 May 30, 1972

HEIRS OF FRANCISCO PARCO, petitioners,

vs.
PETRA HAW PIA, respondent.

MAKALINTAL, J.

FACTS

The parcels of land involved in this case are lots 9202 and 9203 of the
Cadastral Survey of Atimonan, Quezon, which were declared public land in a decision
rendered by the Court of First Instance of said province because nobody appeared as
claimants thereof when they were called for hearing on that date.

On May 23, 1957 Petra Haw Pia — hereinafter referred to as respondent —

filed in said cadastral proceedings two separate verified petitions under the provisions
of Republic Act No. 931, praying that the proceedings be reopened; that the decision
declaring Lots 9202 and 9203 public land be set aside, and that after the presentation
of evidence, said lots be declared as her exclusive property.

Only the heirs of Francisco Parco, petitioners herein, opposed the petitions
claiming, inter alia, that said lots belonged to the public domain and could not be the
subject matter of private sales; that they and their predecessors having been in
possession thereof for a long period of time had a preferential right to acquire them
from the Government; that said lots had been the subject of a Sales Application filed
by Zosima Parco, in her behalf and in that of her coheirs, which application was
opposed by respondent; that after the corresponding proceedings, the Department
of Agriculture and Natural Resources gave due course to Zosima's application; that
because of said administrative proceedings the Court had no jurisdiction to entertain
or consider respondent's petitions; that the conveyance of the two lots to the latter
were not by way of absolute sale but only by way of mortgage; and that respondent
being an alien could not own real properties in the Philippines.

ISSUE

Is respondent disqualifed to acquire Lots 9202 and 9203 because she was a
Chinese citizen at the time of the execution of the sales in her favor and is still an
alien at present?

RULING

With respect to Lot 9202 the deed of pacto de retro sale was executed in favor
of respondent on June 14, 1932, and the stipulated three-year period of redemption
expired on June 14, 1935, both dates being prior to the effectivity of the Constitution
which prohibited for the first time acquisition of private agricultural lands by aliens
save through hereditary succession. Respondent's acquisition of this lot was therefore
not affected by said prohibition.

With respect to Lot 9203, respondent acquired it from Lim Kiam on July 14,
1949. The Court of Appeals found that respondent was married to Sergio Tan See,
also a Chinese citizen, before 1941, but that on November 25 of that year the latter
obtained a certificate of naturalization as a Filipino citizen pursuant to a favorable
decision of the Court of First Instance of Manila in the corresponding naturalization
proceeding. Under our ruling in the case of Moy Ya Lim Lao vs. Commission of
Immigration, Oct. 4, 1971, 41 SCRA 293, respondent was deemed a Filipino citizen
as of the date of the naturalization of her husband, pursuant to Section 15 of the
Revised Naturalization Law. The objection of petitioners to her acquisition of Lot 9203
in 1949 on the ground of alienage is therefore without basis unless it be shown in an
appropriate proceeding that she was disqualified to be a citizen of the Philippines
under Section 4 of the same law.

In the deed of pacto de retro sale executed by Ignacio Reyes in favor of Lim
Kiam on May 30, 1932, covering Lot 9203, the period of repurchase was not fixed.
The Court of Appeals correctly held that in accordance with Article 1508 of the old
Civil Code the right could be exercised within four years from the date of execution
of the conveyance in this case up to May 30, 1936. The fact, however, that on this
date the Constitution was already in force did not affect the right acquired by Lim
Kiam. We have held in a number of cases decided under the provisions of the old
Civil Code that the nature of a sale with the right of repurchase is such that the
ownership over the thing sold is transferred to the vendee upon execution of the
contract, subject only to the resolutory condition that the vendor exercise his right
of repurchase within the period agreed upon.
 G.R. No. 92248 December 9, 1992

VICENCIO T. TORRES and SOCORRO S. TORRES, petitioners,

vs.
COURT OF APPEALS, CEFERINO ILLUSCUPIDES, ARACELI ILLUSCUPIDES
and EMILIO OLORES, respondents.

NOCON. J.

FACTS

The Illuscupideses are the owners of two (2) adjoining parcels of lands located
in the Tapuac District, Dagupan City. The said properties were mortgaged to the
Government Service Insurance System (GSIS).

Sometime in 1965, the Illuscupideses contracted Emilio Olores for the

construction of a nine (9) door apartment on the parcels of land for the sum of
P79,400.00. While construction was going on, another door was added, thereby
increasing the cost of the construction to P97,000.00. However, the Illuscupideses
could only pay Olores P54,390.51, thus compelling the latter to sue them for the
balance before the Court of First Instance of Pangasinan. On November 1969,
judgment was rendered in favor of Olores for the unpaid balance with interests and
costs. The Illuscupideses then appealed the decision to the Court of Appeals.

Meanwhile, the Illuscupideses received a notice from the GSIS that it was
going to foreclosure the mortgage for their failure to pay the loan when the same
became due. To stave off the foreclosure, the Illuscupideses sold the properties to
Vivencio Torres and Socorro Torres, as evidenced by the Deed of Sale dated October
19, 1973 for P130,000.00, of which the vendees paid the vendors P10,000.00,
P6,000.00 and P3,000.00. The vendees likewise paid P51,498.97 to the GSIS. The
aforesaid payments were in accordance to the schedule found in the promissory note
executed by the parties on October 19, 1973.

ISSUE

Is the Deed of Sale of October 19, 1973 a pacto de retro sale?

RULING

The petition is totally devoid of merit. The Court of Appeals was correct in
construing the Deed of Sale as an absolute sale inasmuch as the terms thereof are
clear on the matter. The Illuscupideses argue, however, that the appellate court
should have taken into account the circumstances surrounding the execution of the
deed, particularly the fact that an Agreement to resell the apartment was executed
on the very same day as the deed of sale.

The argument is unavailing. Even if this Court were to agree with the
Illuscupideses that parole evidence may be allowed to add to the terms of the deed
of sale, this Court has held in the case of Villarica, et al. vs. Court of Appeals, et
al., that “the right of repurchase is not a right granted the vendor by the vendee in
a subsequent instrument, but is a right reserved by the vendor in the same
instrument of sale as one of the stipulations of the contract. Once the instrument of
absolute sale is executed, the vendor can no longer reserve the right to repurchase,
and any right thereafter granted the vendor by the vendee in a separate instrument
cannot be a right to repurchase but some other right like an option to buy in the
instant case.”

G.R. No. 97822 May 7, 1992

MAURICIO N. CACHOLA, SR., represented by his Attorney-in-Fact, NILO C.

CACHOLA, petitioner,
vs.
HON. COURT OF APPEALS AND SPS. FEDERICO BRIONES and TRINIDAD
ENCINAS, respondents.

GUTIERREZ, JR., J.

FACTS

On July 30, 1973, the respondent spouses Federico Briones and Trinidad
Encinas, as the registered owners of the property mortgaged the same to Benjamin
Ocampo as a security for a loan of P15,000.00. For failure of the spouses to pay the
loan, Ocampo caused the foreclosure of the real estate mortgage and the subsequent
sale of the property at public auction. Ocampo being the highest bidder, purchased
the property at the auction. A certificate of sale was executed in his favor.

The respondents were able to exercise their right of redemption within the
one-year period from the auction sale by paying P19,876.80 plus accrued interests
and taxes. This was made possible through a loan of P40,000.00 obtained from
petitioner, the late Mauricio Cachola and his co-defendant for annulment of deed of
sale, Angelina Alfaras. This second loan was evidenced by a promissory note executed
by the spouses Briones duly signed by them dated March 11, 1975, but subscribed
before a notary public on March 13, 1975.

The loan was also evidenced by a "Kasunduan" between the petitioners, on

the one hand, and the respondent spouses, on the other signed on March 13, 1975
containing the same stipulation for payment. The Kasunduan recognized the full
ownership by the respondents. There was also a stipulation that after the properties
shall have been redeemed from Ocampo, the title should be placed in the hands of
Cachola for the purpose of securing the loan. Hence, another real estate mortgage
was entered into by virtue of the Kasunduan over the same house and lot in favor of
petitioner Cachola and was placed under the custody of Angelina Alfaras on behalf of
the petitioner.

The respondent spouses failed to pay any amount within the stipulated six
month period and even afterwards.

ISSUE

Was the contracted deed of sale actually an equitable mortgage?

RULING

The Court is convinced that the evidence is wanting to substantiate the

conclusion that a contract which in form and substance is a deed of sale is actually
an equitable mortgage. The questioned decision is based on the following: 1) the
gross inadequacy of the price; 2) the fact that the respondents-vendors remained in
possession of the property after the execution of the questioned deed of absolute
sale; and 3) the respondents, being old and knowing no English, could not have
intelligently understood the document they signed.

The Court holds that even assuming that the consideration was below
standard, it was not unusually inadequate during that time. Besides, inadequacy of
the price does not by itself support the conclusion that the property was not at all
sold to the petitioner or that the contract was a loan. Inadequacy is not sufficient to
set aside a sale unless it is purely shocking to the conscience.

An equitable mortgage is "one which although it lacks some formality, form

of words or other requisites prescribed by a statute, show(s) the intention of the
parties to charge a real property as security for a debt and contains nothing
impossible or contrary to law." The words of the contract are clear and leave no doubt
as to the desire of the spouses to transfer the property by way of sale to the
petitioner. No other meaning could be given to the terms and stipulations of the
contract but their literal meaning. (Article 1370, New Civil Code). The contract was
proper in form. It was properly executed and signed by each of the spouses and by
Cachola on its second page as well as on the left hand margin of every page. It was
acknowledged by a notary public.
 G.R. No. 155856 May 28, 2004

LEONORA CEBALLOS, petitioner,

vs.
Intestate Estate of the Late EMIGDIO MERCADO and the Heirs of EMIGDIO
MERCADO, respondents.

PANGANIBAN, J.

FACTS

Petitioner Leonora Emparado Ceballos is the registered owner of a certain

parcel of land situated in Bato, Badian, CebU. Sometime in October 1980, petitioner
was introduced to Emigdio Mercado for the purpose of obtaining a loan as the latter
was also known to be in the business of lending money. Petitioner was able to borrow
the amount of ₱12,000.00 payable in two (2) months and to secure said loan, she
executed in favor of Emigdio Mercado a ‘Deed of Real Estate Mortgage’ over the
subject property. The said mortgage deed was not registered by the mortgagee.
Petitioner was not able to pay her mortgage indebtedness to Emigdio Mercado within
the stipulated period.
 On February 13, 1982, a ‘Deed of Absolute Sale’ was executed whereby the
mortgaged property was sold to Emigdio Mercado for the price of ₱16,500.00. Said
instrument contained the signatures of [petitioner] and her husband Narciso Ceballos
and notarized by Atty. Elias V. Ortiz. It appears that sometime in 1990, petitioner
offered to buy back the property from Emigdio Mercado for the price of ₱30,000.00
but the latter’s wife refused since the same was already transferred in their names.
Emigdio Mercado died on January 12, 1991 and a petition for the issuance of letters
of administration over his intestate estate was filed by her daughter Thelma M.
Aranas.

ISSUE

Should the contract be declared as an equitable mortgage?

RULING

The instances when a contract -- regardless of its nomenclature -- may be

presumed to be an equitable mortgage are enumerated in the Civil Code as follows:

"Art. 1602. The contract shall be presumed to be an equitable mortgage, in any of

the following cases:

(1) When the price of a sale with right to repurchase is unusually inadequate:

(2) When the vendor remains in possession as lessee or otherwise;

(3) When upon or after the expiration of the right to repurchase another instrument
extending the period of redemption or granting a new period is executed;

(4) When the purchaser retains for himself a part of the purchase price;

(5) When the vendor binds himself to pay the taxes on the thing sold;

(6) In any other case where it may be fairly inferred that the real intention of the
parties is that the transaction shall secure the payment of a debt or the performance
of any other obligation.

"In any of the foregoing cases, any money, fruits, or other benefit to be received by
the vendee as rent or otherwise shall be considered as interest which shall be subject
to the usury laws."

"Art. 1604. The provisions of Article 1602 shall also apply to a contract purporting to
be an absolute sale."

In this case, both the trial and the appellate courts found none of the above-
enumerated circumstances. We find no cogent reason to reverse their factual finding.

An equitable mortgage is one that -- although lacking in some formality, form

or words, or other requisites demanded by a statute -- nevertheless reveals the
intention of the parties to charge a real property as security for a debt and contains
nothing impossible or contrary to law. Delay in transferring title is not one of the
instances enumerated by law -- instances in which an equitable mortgage can be
presumed. Moreover, throughout the testimony of petitioner before the trial court,
she never claimed that after the Deed of Absolute Sale had been executed in February
13, 1982, the land continued to be intended merely to secure payment of the ₱12,000
loan taken on December 31, 1980.

G.R. No. 124355 September 21, 1999

CHING SEN BEN, married to CRISTINA TAN SIONG, petitioner,

vs.
COURT OF APPEALS, and DAVID VICENTE, married to ESTELITA M.
VICENTE, respondents.
MENDOZA, J.
FACTS

The Appellant herein petitioner Ching Sen Ben was engaged in the business
of constructing houses on lots owned by him and selling the same to buyers who pay
for the same with the proceeds of the housing loans from financing institutions like
the Social Security System (SSS). The Appellant and the Appellee herein private
respondent David Vicente agreed that the Appellant will construct a house on
Appellants lot located in Bayan-bayanan, Marikina, Metro Manila and transfer the
same to the Appellee at the total price of P150,000.00 to be paid by the Appellee
from the proceeds of the housing loan of the latter from the SSS.

The Appellee filed an application for a housing loan with the SSS in the amount
of P150,000.00 payable in twenty-five (25) years in monthly installment,
compounded monthly. The application of the Appellee was approved by the SSS but
only for the amount of P119,400.00. Nevertheless, on March 24, 1998, Appellant
executed a Deed of Absolute Sale over the aforesaid parcel of land in favor of the
Appellee. On the basis of said deed, a certificate of title was issued to Appellee under
his name. The Appellant informed the Appellee that the balance of his account for the
purchase of the house and lot was P43,000.00.

The Appellee executed a Promissory Note in favor of the SSS. And, to secure
the payment of said loan, the Appellee executed a Deed of Real Estate Mortgage in
favor of the SSS covering the aforesaid lot including existing improvements thereon
and the house that will be constructed thereon. One of the essential conditions of the
deed was that the Appellee cannot mortgage, sell, or dispose of the property
mortgaged without the prior consent of the SSS and if the appellee did, the SSS may
foreclose the mortgage, judicially or extrajudicially.

The proceeds of the loan were remitted to the Appellant by the Appellee in
partial payment of the aforesaid house and lot. The Appellant did construct the house
on the lot as agreed upon. On April 4, 1988, the Appellant sent to the Appellee a
statement of the latters account showing a balance of P43,000.00 still due from the
Appellee. However, the Appellee failed to pay the aforesaid debt. The Appellant and
the Appellee executed on September 21, 1988, a Deed of Sale With Assumption of
Mortgage and With Right to Repurchase

ISSUE

Was the contract between the parties an equitable mortgage?

RULING

In the determination of a contracts real nature, courts are not bound by the
parties denomination of the same. The decisive factor is the intention of the parties,
as shown by the parties contemporaneous acts at the time of the execution of the
said contract and their acts subsequent thereto. Even though a contract is
denominated a pacto de retro sale, the owner of the property may prove that it is
otherwise by showing, by means of parol evidence, the true intent of the parties.

Art. 1603 of the Code provides that, in case of doubt, a contract purporting
to be a sale with right to repurchase should be considered an equitable mortgage. The
policy of the law is to discourage pacto de retro sales and thereby prevent the
circumvention of the prohibition against usury and pactum commissorium. This Court
has taken judicial notice of the fact that pacto de retro sales have been frequently
used to conceal contracts of loan secured by a mortgage. The provisions of the Civil
Code, which consider certain types of sales as equitable mortgages, are intended for
the protection of those who are the unlettered and who are penurious vis-a-vis their
creditors.

In the instant case, we hold that the deed of sale with assumption of mortgage
and right to repurchase is actually an equitable mortgage. For one, the purported
consideration for the sale with right to repurchase in the amount of P60,242.86 is
unusually inadequate compared to the purchase price (150,000.00) of the property
when private respondent bought it from petitioner only six (6) months before the
execution of the said deed of sale. For another, private respondent, the supposed
vendor, remained in possession of the property even after the execution of the
deed. Not only did private respondent retain possession of the subject property, he
also retained ownership thereof which was the reason petitioner had to bring an
action for consolidation of title against private respondent in the trial court. In a
contract of mortgage, the mortgagor merely subjects the property to a lien, but the
ownership and possession thereof are retained by him. Indeed, as the Court of
Appeals found, the real intention of the parties in this case was to secure the payment
by private respondent of the balance of the purchase price and the transfer fees in
the total amount of P43,000.00.

Petitioner cannot invoke the stipulation in the deed of sale with right to
repurchase that absolute title shall be vested in the vendee in case the vendor failed
to redeem the property on the specified date. Such stipulation is void for being
a pactum commissorium.
 G.R. No. L-27136 April 30, 1973

HEIRS OF JOSE A. ARCHES, plaintiffs-appellants,

vs.
MARIA B. VDA. DE DIAZ, defendant-appellee.

MAKALINTAL, Actg. C.J.

FACTS

On July 6, 1966 the heirs of Jose A. Arches filed a complaint against Maria
B. Vda. de Diaz in the court a quo, alleging inter alia: that on January 21, 1954 the
defendant executed in favor of the late Jose A. Arches a deed of sale with pacto de
retro over a parcel of land known as Lot No. 2706 of the Cadastral Survey of Capiz
for and in consideration of P12,500.00; that Jose A. Arches during his lifetime filed a
petition on November 20, 1958 in Cadastral Case No. 6, L.R.C. Record No. 338 of the
Court of First Instance of Capiz, to consolidate ownership over the lot; that the
defendant opposed the petition alleging among other things that the said deed of sale
with pacto de retro did not express the true intention of the parties, which was merely
to constitute a mortgage on the proper security for a loan; that after hearing the case
on the merit trial court, in its order dated March 8, 1960, denied the petition holding
in effect that the contract was an equitable mortgage; that Jose A. Arches appealed
to the Court of Appeals, which on December 29, 1964 rendered judgment affirming
the order of the trial court;

That Jose A. Arches filed in this Court a petition for certiorari to review the
decision of the appellate court, but in a resolution dated March 29, 1965, which
became final and executory on May 29, 1965, this Court dismissed the petition on
the ground that the issues involved were factual; that in addition to the sum of
P12,500.00, the consideration mentioned in the deed of sale a retro, Jose A. Arches
spent P1,543.70 in connection with the reconstitution of the title to Lot No. 2706 in
the name of the vendor and in paying the real estate taxes on said lot for the years
1951 to 1960; that Jose A. Arches died on August 18, 1965, before he could file an
action in court for the collection of the aforestated sums from the defendant; that on
May 31, 1966, the petitioners, as forced heirs of the deceased Jose A. Arches,
demanded by registered letter from defendant the payment of the sum of
P12,500.00, the consideration mentioned in the sale a retro, and reimbursement of
the sum of P1,543.70; and that the defendant failed and refused to pay. They,
therefore, prayed among things that the defendant be ordered to pay the
aforementioned sums, plus damages.

ISSUE

Is the remedy of foreclosure in the event the deed of sale a retro be declared
one of equitable mortgage still available?

RULING

The decision of the cadastral court, holding in effect that the sale with pacto
de retro was an equitable mortgage and consequently dismissing the petition to
consolidate ownership, did not constitute an adjudication of the right to foreclose the
mortgage or to collect the indebtedness. In the case of Correa vs. Mateo and
Icasiano, wherein an unrecorded pacto de retro sale was construed as an equitable
mortgage, it was ruled that the plaintiff had the right "within sixty days after final
judgment, for a failure to pay the amount due and owing him, to foreclose his
mortgage in a proper proceeding and sell all or any part of the ten parcels of land to
satisfy his debt." In effect this Court recognized the right of the plaintiff to enforce
his lien in a separate proceeding notwithstanding the fact that he had failed to obtain
judgment declaring him the sole and absolute owner of the parcels of land in
question.
 G.R. No. L-26295 July 14,1978

SALVACION A. CATANGCATANG, petitioner,

vs.
PAULINO LEGAYADA, respondent.

ANTONIO, J.

FACTS

On May 19, 1952, respondent executed in favor of petitioner a deed of sale

with pacto de retro, with a five-year period of redemption, over a parcel of land
situated at Lambunao, Iloilo, for a specified consideration of P1,400.00. Of the total
consideration, the amount of P1,200.00 was paid upon the execution of the deed and
the balance of P200.00, covered by a promissory note, was agreed to be payable at
a later date.

Subsequently, petitioner found that the area of the land actually delivered
to her was only 5.0779 hectares. Thus, on January 22, 1957, she instituted a civil
case against respondent, seeking the recovery of the area allegedly withheld. In his
answer to the complaint in said case, respondent filed a counterclaim asking for
rescission of the Deed of Sale with Right of Repurchase to the complaint because of
failure of plaintiff to pay the balance of P200.00 of the purchase price on the due
date.

On May 10, 1957, during the pendency of the aforementioned case,

respondent forcibly took back the possession of the land from petitioner. On May 19,
1957, the period for the repurchase of the land expired, allegedly without respondent
having availed himself of his right to repurchase the same.

On June 17, 1957, the Court of First Instance of Iloilo dismissed the complaint, having
found that the parcel of land subject matter of the deed of sale was described by
metes and bounds, as shown by a tax declaration, and has an actual area of 5.0779
hectares, notwithstanding that the stated area in the tax declaration was 8.8272
hectares. In the same decision, the counterclaim of Paulino Legayada was likewise
dismissed. The decision of the Court of First Instance became final, neither party
having appealed therefrom.

ISSUE

Was respondent able to effect redemption of the property in question within

the period stipulated in the contract?

RULING

In the exercise of the right to repurchase, it is not sufficient that the

vendor a retromanifests his desire to repurchase. This statement of intention must
be accompanied with an actual and simultaneous tender of payment which
constitutes the legal exercise of the right to repurchase. While consignation of the
redemption price is not necessary in order to allow the repurchase within the time
provided by law or by contract, a mere tender being enough, said tender does not
relieve the vendor from the obligation of paying the price. In case of absence of the
vendee a retro, the right of redemption may still be exercised, as a vendor who
decides to redeem a property sold with pacto de retro stands as the debtor and the
vendee as the creditor of the purchase price.

The vendor could and should have exercised his right of redemption against
the vendee by filing a suit against him and making a consignation with the court of
the amount due for the redemption. In Rumbaoa v. Arzaga, this Court held that "the
plaintiff should have deposited the full amount in court; not that deposit or
consignation was legally essential to preserve his reserved right of redemption or
repurchase, but because the full amount was already due and payable to his
creditors. Under the circumstances, he should be regarded as having done that which
he said he wanted to do, or should have done, to fulfill his obligation and to terminate
the rights of the defendants over the property." The period for redemption having
lapsed without respondent having validly effected redemption, petitioner is entitled
to consolidation of ownership over the property sold.
 G.R. No. 116635 July 24, 1997

CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner,

vs.
COURT OF APPEALS, ANACLETO NOOL and EMILIA NEBRE, respondents.

PANGANIBAN, J.
FACTS

Two (2) parcels of land are in dispute and litigated upon here. The first has
an area of 1 hectare. It was formerly owned by Victorino Nool and covered by Transfer
Certificate of Title No. T-74950. With an area of 3.0880 hectares, the other parcel
was previously owned by Francisco Nool. Both parcels are situated in San Manuel,
Isabela. The plaintiff spouses, Conchita Nool and Gaudencio Almojera, now the
appellants, seek recovery of the aforementioned parcels of land from the defendants,
Anacleto Nool, a younger brother of Conchita, and Emilia Nebre, now the appellees.

In their complaint, plaintiff-appellants alleged inter alia that they are the
owners of subject parcels of land, and they bought the same from Conchitas other
brothers, Victorino Nool and Francisco Nool; that as plaintiffs were in dire need of
money, they obtained a loan from the Iligan Branch of the Development Bank of the
Philippines, in Ilagan, Isabela, secured by a real estate mortgage on said parcels of
land, which were still registered in the names of Victorino Nool and Francisco Nool,
at the time, and for the failure of plaintiffs to pay the said loan, including interest and
surcharges, totaling P56,000.00, the mortgage was foreclosed; that within the period
of redemption, plaintiffs contacted defendant Anacleto Nool for the latter to redeem
the foreclosed properties from DBP, which the latter did.

And as a result, the titles of the two (2) parcels of land in question were
transferred to Anacleto Nool; that as part of their arrangement or understanding,
Anacleto Nool agreed to buy from the plaintiff Conchita Nool the two (2) parcels of
land under controversy, for a total price of P100,000.00, P30,000.00 of which price
was paid to Conchita, and upon payment of the balance of P14,000.00, plaintiffs were
to regain possession of the two (2) hectares of land, which amounts defendants failed
to pay, and the same day the said arrangement was made; another covenant was
entered into by the parties, whereby defendants agreed to return to plaintiffs the
lands in question, at anytime the latter have the necessary amount; that plaintiffs
asked the defendants to return the same but despite the intervention of the Barangay
Captain of their place, defendants refused to return the said parcels of land to
plaintiffs; thereby impelling them (plaintiffs) to come to court for relief.

ISSUE

Do petitioners have a right to repurchase based on Sec. 119 of the Public

Land Act and as an implied trust relation as brother and sister?

RULING

The Court notes that Victorino Nool and Francisco Nool mortgaged the land
to DBP. The brothers, together with Conchita Nool and Anacleto Nool, were all siblings
and heirs qualified to repurchase the two parcels of land under Sec. 119 of the Public
Land Act which provides that “every conveyance of land acquired under the free
patent or homestead provisions, when proper, shall be subject to repurchase by the
applicant, his widow or legal heirs, within a period of five years from the date of
conveyance.” Assuming the applicability of this statutory provision to the case at bar,
it is indisputable that Private Respondent Anacleto Nool already repurchased from
DBP the contested properties. Hence, there was no more right of repurchase that his
sister Conchita or brothers Victorino and Francisco could exercise. The properties
were already owned by an heir of the homestead grantee and the rationale of the of
the provision to keep homestead lands within the family of the grantee was thus
fulfilled.

The claim of a trust relation is likewise without merit. The records show
that private respondents did not purchase the contested properties from DBP in trust
for petitioners. The former, as previously mentioned, in fact bought the land from
DBP upon realization that the latter could not validly sell the same. Obviously,
petitioners bought it for themselves. There is no evidence at all in the records that
they bought the land in trust for private respondents. The fact that Anacleto Nool was
the younger brother of Conchita Nool and that they signed a contract of repurchase,
which as discussed earlier was void, does not prove the existence of an implied trust
in favor of petitioners.