PULUMBARIT SR. VS.

COURT OF APPEALS
G.R. NOs. 153745-46; October 14, 2015

FACTS:

Sometime in 1982, San Juan Macias Memorial Park, Inc. (SJMMPI), through its President Lourdes
Pascual, authorized Atty. Soledad de Jesus to look for a buyer for the San Juan Memorial Park for P1.5
Million. Thereafter, Pascual, Leonila Acasio, and the other officers of SJMMPI were introduced to
Nemencio Pulumbarit. The parties eventually came to an agreement, with Pulumbarit issuing 18 checks
in the name of SJMMPI’s Secretary-Treasurer Acasio. Pulumbarit and/or his lawyer took charge of
reducing the agreement into writing and securing the signatures of all concerned parties. On June 13,
1983, Pascual et. al sent a letter to Palumbarit requesting for a copy of their written agreement and to
reissue new checks to replace the ones he previously issued due to termination of Acasio’s services
with SJMMPI. Failing to get a favourable response, Pascual et. al filed a Complaint for Rescission of
Contract, Damages, and Accounting with Prayer for Preliminary Injunction or Receivership against
Pulumbarit. Trial ensued and procedural matters were discussed leading to the consolidation of two
cases because when a decision was rendered by the trial court favouring Pascual et. al, the latter
moved for discretionary execution pending appeal of Pulumbarit.

ISSUE:

Whether the agreement between the parties was a contract to sell the shares of SJMMPI or a contract
of sale or a management contract with option to buy.

RULING:

The agreement between the parties was a contract to sell the shares of SJMMPI and not a contract of
sale or a management contract with option to buy. While Pascual et. al are technically correct in arguing
that they did not enter into a contract of sale with Pulumbarit, they cannot deny the existence of the
stipulation in page three of the MOA evidencing a contract to sell and negating their claim of a
management contract with option to buy. Notably, page three bears the signatures of Pulumbarit,
Pascual, and the other SJMMPI stockholders. We further note that Pascual did not dispute the
authenticity of her signature appearing on page there of the MOA. Neither did she allege during the
course of the proceedings that she signed another document or entered into another written transaction
with Pulumbarit aside from the MOA.

AKANG VS. MUNICIPALITY OF ISULAN, SULTAN KUDARAT PROVINCE

Ali Akang (petitioner) is a member of the national and cultural community belonging to the
Maguindanaon tribe of Isulan, Province of Sultan Kudarat and the registered owner of parcel of land
located at Isulan, Sultan Kudarat, with an area of 20,030 square meters. Sometime in 1962, a two-
hectare portion of the property was sold by the petitioner to the Municipality of Isulan, Province of Sultan
Kudarat (respondent) through then Isulan Mayor Datu Ampatuan under a Deed of Sale executed on
July 18, 1962 for P3,000 to be used purposely and exclusively as a Government Center site. The
respondent immediately took possession of the property and began construction of the municipal
building. Thirty-nine (39) years later or on October 26, 2001, the petitioner, together with his wife, Patao
Talipasan, filed a civil action for Recovery of Possession of Subject Property and/or Quieting of Title
thereon and Damages against the respondent, represented by its Municipal Mayor, et al. In his
complaint, the petitioner alleged, among others, that the agreement was one to sell, which was not
consummated as the purchase price was not paid.

ISSUE:

Whether or not the Deed of Sale is a valid and perfected contract of sale.

RUING:

YES. The Deed of Sale is a valid contract of sale.

The Deed of Sale executed by the petitioner and the respondent is a perfected contract of sale, all its
elements being present. There was mutual agreement between them to enter into the sale, as shown
by their free and voluntary signing of the contract. There was also an absolute transfer of ownership of
the property by the petitioner to the respondent. There was also a determinate subject matter, that is,
the two-hectare parcel of land as described in the Deed of Sale. Lastly, the price or consideration is at
Three Thousand Pesos (P3,000.00), which was to be paid after the execution of the contract. The fact
that no express reservation of ownership or title to the property can be found in the Deed of Sale
bolsters the absence of such intent, and the contract, therefore, could not be one to sell.

QUIROGA VS. PARSONS

FACTS:
A contract was entered into by herein plaintiff Quiroga and defendant J. Parsons wherein the former
granted the latter with the exclusive right to sale Quiroga beds in the Visayan Islands subject to
conditions. A complaint was filed by plaintiff averring that defendant violated the ff. obligations: not to
sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself
to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses
for the same; and to order the beds by the dozen and in no other manner. With the exception of the
obligation on the part of the defendant to order the beds by the dozen and in no other manner, none of
the obligations imputed to the defendant are expressly set forth in the contract. Plaintiff alleged that the
defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a
contract of commercial agency.

ISSUE:

Whether or not the defendant, by reason of the contract, was a purchaser or an agent of the plaintiff for
the sale of his beds.

RULING:

The contract contains the essential features of a contract of purchase and sale. There was the
obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their
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. I 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.

CIR VS. ARNOLDUS CARPENTRY

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 (CIR) 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:

Whether or not Arnoldus Carpentry is a manufacturer?

RULING:

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. As a matter of fact, the purchase orders from its foreign buyers showed that they ordered by
referring to the models designated by petitioner. Even purchases by local buyers for television cabinets
were by orders for existing models except only for some adjustments in sizes and accessories utilized.

HEIRS OF FAUSTO C. IGNACIO VS. HOME BANJERS SAVINGS AND TRUST COMPANY
G.R. NO.

FACTS:

The case sprang from a real estate mortgage of two parcels of land in August 1981. Fausto C. Ignacio
mortgaged the properties to Home Bankers Savings and Trust Company (Bank) as security for a loan
extended by the Bank. After Ignacio defaulted in the payment of the loan, the property was foreclosed
and subsequently sold to the Bank in a public auction. Ignacio offered to repurchase the property.
Universal Properties Inc. (UPI), the bank’s collecting agent sent Ignacio a letter on March 22, 1984
which contained the terms of the repurchase. However, Ignacio annotated in the letter new terms and
conditions. He claimed that these were verbal agreements between himself and the Bank’s collection
agent, UPI. No repurchase agreement was finalized between Ignacio and the Bank. Thereafter the
Bank sold the property to third parties. Ignacio then filed an action for specific performance against the
Bank for the reconveyance of the properties after payment of the balance of the purchase price.

ISSUE:

Whether or not the negotiations between Ignacio and UPI is binding on the Bank.

RULING:

A contract of sale is perfected only when there is consent validly given. There is no consent when a
party merely negotiates a qualified acceptance or a counter-offer. An acceptance must reflect all
aspects of the offer to amount to a meeting of the minds between the parties. In this case, while it is
apparent that Ignacio proposed new terms and conditions to the repurchase agreement, there was no
showing that the Bank approved the modified offer. The negotiations between Ignacio and UPI, the
collection agent, were merely preparatory to the repurchase agreement and, therefore, was not binding
on the Bank. Ignacio could not compel the Bank to accede to the repurchase of the property.

PAYONGAYONG VS. CA

G.R. NO. 144576; May 28, 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.

ISSUE:

Whether or not the sale between Mendoza and Spouses Salvador was simulated?

RULING:

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.

MAPALO VS. MAPALO

FACTS:

Spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners of a
residential land in Manaoag, Pangasinan. Said spouses out of love for Maximo Mapalo — Miguel’s
brother who was about to get married — decided to donate the eastern half of the land to him. As a
result, in 1936, they were deceived into signing a deed of absolute sale over the entire land in Maximo’s
favor. The document of sale stated a consideration of P500.00 which Spouses Mapalo did not receive
anything. Following the execution of document, Miguel and Candida built a fence of permanent
structure in the middle of the land segregating the eastern portion from its western portion. 13 years
later, Maximo sold for P2,500.00 the entire land in favor of the Narcicos and they registered the same.
Narcisos filed to be declared owners of the entire land with possession of its western portion. Spouses
Mapalo contend that the deed of sale of 1936 was procured with fraud and the Narcicos were buyers
in bad faith.
ISSUE:

Does the contract involve ‘no consideration’ or ‘false consideration’?

RULING:

The rule under the Civil Code, be it the old or the new, is that contracts without a cause or consideration
produce no effect whatsoever. Nonetheless, under the Old Civil Code, the statement of a false
consideration renders the contract voidable, unless it is proven that it is supported by
another real and licit consideration. And it is further provided by the Old Civil Code that the action for
annulment of a contract on the ground of falsity of consideration shall last 4 years, the term to run from
the date of the consummation of the contract. In the present case, the contract of sale has no
consideration and therefore it is void and inexistent for the said consideration of P500.00 was totally
absent. Purchase price which appears thereon as paid has in fact never been paid by the purchaser to
vendor. This is contrary to 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. Needless to add, the
inexistence of a contract is permanent and incurable and cannot be the subject of prescription.

SWEDISH MATCH VS. COURT OF APPEALS

FACTS:

1988, STORA, its parent company, decided to sell SMAB and the latter’s worldwide match, lighter and
shaving products operation to Swedish Match NV (SMNV). Enriquez, VP of SMSA (management
company of SMAB), was held under special instructions that the sale of Phimco shares should be
executed on or before June 30, 1990. Respondent GM Antonio Litonjua of ALS Management and
Development Corp. was one of the interested parties to acquire Phimco shares, offering US$36 million.
After an exchange of information between CEO Rossi of SMAB and Litonjua, the latter informed that
they may not be able to submit their final bid on the given deadline considering that the acquisition audit
of Phimco and the review of the draft agreements have not been completed.

ISSUE:

Whether or not there was a perfected contract of sale between petitioners and respondents, with
respect to the Phimco shares.
RULING:

No, there was no perfected contract of sale since Litonjua’s letter of proposing acquisition of the Phimco
shares for US$36 million 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 the 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 needed to be certain --- the price in money or its equivalent. Obviously, there can
be no sale without a price. Respondents’ attempt to prove the alleged verbal acceptance of their US$36
million bid becomes futile since there was in the first place no meeting of the minds with respect to the
price, and such was merely a preliminary offer. Respondents’ failure to submit their final bid on the
deadline set by the petitioners prevented the perfection of the contract of sale.

SAN MIGUEL PROPERTIES VS. HUANG

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 ethe 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.
The trial court granted the petitioner’s motion and dismissed the action.

ISSUE:

Whether or not there was a perfected contract of sale between the parties.

RULING:

NO. 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.

ATKINS, KROLL & CO. VS. CUA HIAN TEK

FACTS:

Petitioner sent a letter to respondent dated September 13, 1951 offering the latter certain goods with
their respective prices until September 23. Respondent accepted the offer unconditionally and delivered
the letter of acceptance on September 21, 1951. However, petitioner failed to deliver the commodities
it had offered due to shortage of catch of sardines. Due to this failure, respondent sued petitioner.
Petitioner was ordered by the CFI of Manila to pay damages. On appeal, the Court of Appeals upheld
the ruling of the trial court with some modifications. Petitioner however argued that upon the acceptance
of the offer, it became an accepted unilateral promise to sell a determinate thing for price certain.
Hence, for petitioner, there was no contract of sale but merely an option to buy which, though timely
accepted, was not enforceable for lack of a separate consideration.

ISSUE:

Whether there is a perfected contract of sale in the case at bar?

RULING:

Yes, a contract of sale was perfected in this case. The assumption that only a unilateral promise was
created upon the acceptance of the offer is incorrect. A bilateral contract to sell and to buy was created
upon acceptance. In addition, the option, though not supported by an independent consideration,
obligates the offeror to keep the offer open up to specified time, in this case September 23, 1951.
Moreover, while it is true that an option not supported by a separate consideration can be withdrawn
by the offeror, this can be done only before acceptance and such withdrawal should be communicated
with the offeree as provided for by Art. 1324. The Supreme Court affirmed the decision of the Court of
Appeals.

SANCHEZ VS. RIGOS

FACTS:

Nicolas Sanchez and Severina Rigos executed an instrument entitled “Option toPurchase” wherein
Mrs. Rigos agreed, promised and committed to sell to Mr. Sancheza parcel of land for the amount of
P1, 510. 00 within two years from the date of the instrument, with the understanding that the said option
shall be deemed terminated and elapsed if Mr. Sanchez shall fail to exercise his right to buy the property
within the stipulated period.
Mrs. Rigos agreed and committed to sell and Mr. Sanchez agreed and committed to buy. But there is
nothing in the contract to indicate that her agreement, promise and undertaking is supported by a
consideration distinct from the price stipulated for the sale of the land. Mr. Sanchez has made several
tenders of payment in the said amount within the period before any withdrawal from the contract has
been made by Mrs. Rigos, but were rejected nevertheless.

ISSUE:
Can an accepted unilateral promise to sell without consideration distinct from the price be withdrawn
arbitrarily?

RULING:

NO. An accepted promise to sell is an offer to sell when accepted becomes a contract of sale. Since
there may be no valid contract without a cause or consideration, the promisor is not bound by his
promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise
partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of
sale. This view has the advantage of avoiding a conflict between Articles 1324 – on the general
principles on contracts – and 1479 – on sales – of the Civil Code. Article 1324 – When the offeror has
allowed the offeree a certain period to accept, the offer may be withdrawn at any time before
acceptance by communicating such withdrawal, except when the option is founded upon a
consideration, as something paid or promised.

ANG YU ASUNCION VS. COURT OF APPEALS

FACTS:

A complaint for Specific Performance was filed by Ang Yu Asuncion et al., against Bobby Cu Unjieng
and Jose Tan. The plaintiffs were tenants or lessees of residential and commercial spaces owned by
defendants in Binondo. On several conditions defendants informed the plaintiffs that they are offering
to sell the premises and are giving them priority to acquire the same. During negotiations, Cu Unjieng
offered a price of P6- million while plaintiffs made a counter of offer of P5-million. Plaintiff thereafter
asked the defendants to put their offer in writing to which the defendants acceded. In reply to
defendants’ letter, plaintiffs wrote, asking thatthey specify the terms and conditions of the offer to sell.
When the plaintiffs did not receive any reply, they sent another letter with the same request. Since
defendants failed to specify the terms and conditions of the offer to sell and because of information
received that the defendants were about to sell the property, plaintiffs were compelled to file the
complaint to compel defendants to sell the property to them.

ISSUE:

Whether the plaintiff can compel defendants to execute the necessary Deed of Sale of the property in
litigation in favor of the plaintiffs who has a right of first refusal?

RULING:

NO. The final judgment in in favor to the plaintiff was merely a “right of first refusal”. The consequence
of such a declaration entails no more than what has heretofore been said. In fine, if, as it is here so
conveyed to us, petitioners are aggrieved by the failure of private respondents to honor the right of first
refusal, the remedy is not a writ of execution on the judgment, since there is none to execute, but an
action for damages in a proper forum for the purpose.
BIBLE BAPTIST CHURCH VS. COURT OF APPEALS

FACTS:

On June 7, 1985, petitioner Bible Baptist Church entered into a contract of lease with respondents Mr.
& Mrs. Elmer Tito Medina Villanueva who own the subject property located at No. 2436 Leon Guinto
St., Malate, Manila. Petitioner seeks to buy the leased premises from the spouses Villanueva, under
the option given to them. Petitioners claim that they (Baptist Church) agreed to advance the large
amount needed for the rescue of the property but, in exchange, it asked the Villanuevas to grant it a
long term lease and an option to buy the property for P1.8 million. However, the respondents did not
agree saying that there is no separate consideration. In this hand, the petitioners argue that there is a
consideration — the consideration supporting the option was their agreement to pay off the Villanuevas
P84,000 loan with the bank, thereby freeing the subject property from the mortgage encumbrance.

ISSUE:

Whether or not there is a separate consideration that would render the option contract valid and binding.

RULING:

An option contract, to be valid and binding, needs to be supported by a separate consideration. The
consideration need not be monetary but could consist of other things or undertakings. However, if the
consideration is not monetary, these must be things or undertakings of value, in view of the onerous
nature of the contract of option. Furthermore, when a consideration for an option contract is not
monetary, said consideration must be clearly specified as such in the option contract or clause.
OSMEÑA III VS. POWER SECTOR ASSETS AND LIABILITIES MANAGEMENT CORPORATION
FULLIDO VS. GRILLI
G.R. NO. 215014; FEBRUARY 29, 2016

FACTS:

Grilli financially assisted Fullido in procuring a lot from her parents which was registered in her name.
On the said property, they constructed a house, which was funded by Grilli. Upon completion, they
maintained a common-law relationship and lived there whenever Grilli was on vacation in the
Philippines twice a year. In 1998, Grilli and Fullido executed a contract of lease, to define their
respective rights over the house and lot. The lease contract stipulated, among others, that Grilli as the
lessee, would rent the lot, registered in the name of Fullido, for a period of fifty (50) years, to be
automatically renewed for another fifty (50) years upon its expiration in the amount of
P10,000.00 for the whole term of the lease contract; and that Fullido as the lessor, was prohibited from
selling, donating, or encumbering the said lot without the written consent of Grilli. Their harmonious
relationship turned sour after 16 years of living together.

ISSUE:

May patently null and void contracts be a basis of an ejectment order?

RULING:

No. A void or inexistent contract may be defined as one which lacks, absolutely either in
fact or in law, one or some of the elements which are essential for its validity. It is one which has no
force and effect from the very beginning, as if it had never been entered into; it produces no effect
whatsoever either against or in favor of anyone. Quod nullum est nullum producit effectum. Article 1409
of the New Civil Code explicitly states that void contracts also cannot be ratified; neither can the right
to set up the defense of illegality be waived. Accordingly, there is no need for an action to set aside a
void or inexistent contract.
MELECIO DOMINGO VS. SPS. MOLINA
G.R. NO. 200274; APRIL 20, 2016

FACTS:

On June 15, 1951, the spouses Anastacio and Flora Domingo bought a property in Camiling, Tarlac,
consisting of a one-half undivided portion over an 18, 164 square meter parcel of land which was
annotated on the Original Certificate of Title (OCT) No. 16354. Anastacio has been borrowing money
from the respondent spouses Genaro and Elena Molina all throughout his life. Ten years after the death
of Flora in 1978, Anastacio sold his interest over the land to the spouses Molina to answer for his debts.
It was registered under Transfer Certificate of Title (TCT) No. 2729677 and the entire one-half undivided
portion of the land was transferred to the them. One of the children of Anastacio and Flora filed a
Complaint for Annulment of Title and Recovery of Ownership against the spouses Molina when he
learned of the transfer on May 17, 1999.

ISSUES:

Whether or not the sale of a conjugal property to the spouses Molina without Flora’s consent is valid
and legal.

RULING:

The Supreme Court denied the petition. Melecio argues that the sale of the disputed property to the
spouses Molina is void without Flora’s consent. However, this argument is unmeritorious. Anastacio
and Flora Domingo married before the Family Code’s effectivity which was on August 3, 1988 and so
their property relation is a conjugal partnership. It dissolved when Flora died in 1968, pursuant to now
Article 126 (1) of the Family Code. The heirs of Flora were governed by an implied co-ownership among
the conjugal properties pending liquidation and partition. This will also include Anastacio with respect
to Flora’s share of the conjugal partnership. Anastacio being a co-owner, cannot claim title to any
specific portion of the conjugal properties without having done an actual partition first, either by
agreement or by judicial decree. On the other hand, Anastacio owns one-half of the original conjugal
partnership properties as his share, but this is an undivided interest. As a consequence, he had the
right to freely sell and dispose his undivided interest in the subject property.
BANZON VS. CRUZ
G.R. NO. 47258; JULY 13, 1989

FACTS:

Sometime in the year 1952, Maximo R. Sta. Maria obtained several crop loans from PNB. For these
loans, Associated acted as surety for Sta. Maria by filing surety bonds in favor of PNB to guarantee
and answer for the prompt and faithful repayment of said loans. In turn, plaintiff Antonio R. Banzon and
one Emilio R. Naval acted as indemnitors of Associated in the indemnity agreements, obligating
themselves to indemnify and hold it harmless from any liabilities. However, Sta. Maria failed to pay his
crop loan obligations in favor of PNB when the same fell due, and accordingly, the bank demanded
payment from Associated as surety. Instead of paying the bank, Associated filed a complaint against
Maximo R. Sta. Maria and indemnitors Banzon and Naval. A writ of execution was issued and the
properties of Banzon were levied and later on sold in execution.

ISSUE:

Whether or not respondent Maximo and Valeriana Sta. Maria were liable to the petitioners for the
prejudice and damages the latter suffered.

RULING:

NO. The Court held that it was the trial court that erred when it arrived at the conclusion that the Sta
Marias were responsible for the prejudice caused petitioners. The Court ruled that it is a settled principle
that moral damages may be recovered if they are the proximate result of the defendant’s wrongful act
or omission. While ideally such debacle could have been avoided by Sta Marias’ payment of their
obligations to PNB, such fact of non-payment alone, without Associated’s premature action and
subsequent fraudulent acts, could not possibly have resulted in the prejudice and damage complained
of. While private respondents’ non-payment was admittedly the remote cause or the factor which set in
motion the ensuing events, Associated’s premature action and execution were the immediate and
direct causes of the damage and prejudice suffered by petitioners.
EDCA PUBLISHING VS. SANTOS
G.R. NO. 80298; APRIL 26, 1990

FACTS:

EDCA Publishing sold 406 books to a certain Professor Jose Cruz who ordered these by telephone,
which was agreed to be payable on delivery. The books were subsequently delivered to him with the
corresponding invoice, and he paid with a personal check. Cruz then sold the 120 of the books to
Leonor Santos who asked for verification, and was then showed the invoice for the books. EDCA
became suspicious when Cruz ordered another set of books even before his check cleared. Upon
investigation, EDCA found that he wasn’t the person he claimed to be (Dean in DLSU). EDCA had the
police capture Cruz, as well as seize the books from Santos. Santos demanded the return of the books.

ISSUE:

Whether or not the owner was unlawfully deprived of the property?

RULING:

NO. Santos was a good faith buyer after taking steps to verify the identity of the seller. When she was
showed the invoice, she reasonably believed that he was a legitimate seller. With regard to unlawful
deprivation, EDCA was not unlawfully deprived of the property by mere failure of consideration. There
was already a perfected contract of sale. Proof was even substantiated when EDCA gave the invoice
as proof of payment upon delivery of the books. This did not amount to unlawful taking, because by the
delivery of EDCA to Cruz, ownership of the books already transferred to him.
PHILIPPINE SUBURBAN DEVELOPMENT CORP VS. AUDITOR GENERAL
G.R. NO. L-19545; APRIL 18, 1975

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.

ISSUE:

Whether or not there was already a valid transfer of ownership between the parties and thus petitioner
is entitled for a refund.

RULING:

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.

ROSAROSO VS. SORIA

Spouses Luis Rosaroso and Honorata Duazo acquired several real properties through the years. They
had 9 children. When Honorata died, Luis married Lourdes Rosaroso. Petitioners (children of Luis and
Honorata) alleged that 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, including daughter of Luis,
Lucila, through unscrupulous means, made Luis sign a Deed of Absolute Sale conveying to Meridian
Realty Corp 3 parcels of residential land. Petitioners argue that the second sale was null and void
because Luis could not have validly transferred the ownership of the subject properties to Meridian, he
being no longer the owner after selling them to his children.

ISSUE:

Whether or not the second sale is valid.

RULING:

NO. The first deed of sale was valid and Meridian is not a buyer in good faith. SC cited Art 1544 of the
CC and stated that ownership of an immovable property which is the subject of a double sale 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. The requirement of the law
then is two-fold: acquisition in good faith and registration in good faith. Good faith must concur with the
registration. If it would be shown that a buyer was in bad faith, the alleged registration they have made
amounted to no registration at all.

SKUNANC CORP. VS. SYLIANTENG

FACTS:
Luis Pujalte owned two parcels of land in Greenhills, San Juan City. Respondents claim that they own
said lots because they purchased them from their mother back in 1983. Their mother, Emerenciana,
acquired the lots from Luis through a Deed of Sale back in 1958. Petitioners, on the other hand, claim
ownership on the subject lots stating that they purchased them from Romeo Puljate, who claims to be
the sole heir of Luis. Sale was done in 1992. Respondents contend that they have a better right to the
lots in question because the transactions conveying the same to them preceded those claimed by
petitioners as source of the latter's titles. Respondents further assert that petitioners could not be
considered as innocent purchasers in good faith and for value because they had prior notice of the
previous transactions as stated in the memorandum of encumbrances annotated on the titles covering
the subject lots.

ISSUE:

Whether or not there was double sale.

RULING:

NO. SC stated that reliance by the trial and appellate courts on Article 1544 of the Civil Code is
misplaced. The requisites that must concur for Article 1544 to apply are: a) The two (or more sales)
transactions must constitute valid sales; b) The two (or more) sales transactions must pertain to exactly
the same subject matter; c) The two (or more) buyers at odds over the rightful ownership of the subject
matter must each represent conflicting interests; and d) The two (or more) buyers at odds over the
rightful ownership of the subject matter must each have bought from the very same seller.

MANIGQUE-STONE VS. CATTLEYA LAND INC.

FACTS:

Sometime in 1992, Cattleya Land purchased properties from SPS Tecson. Cattleya, however is unable
to register the Deed of Absolute Sale and have the subject property transferred to its name because it
could not surrender the owner’s copy of TCT, which according to the SPS Tecson had been destroyed
in a fire. This, however, turned out to be false, since Cattleya found out that Petitioner, Taina, has
presented the owner’s copy of the TCT, along with the Deed of Sale that was executed by the Tecson
spouses in favor of Taina covering the subject property, at the Register of Deeds. Apparently, sometime
in 1985 Mike Stone, who was an alien and was Taina’s then common-law husband visited Bohol and
fell in love with the place and decided to buy a portion of the subject property. They met with Col.
Tecson and they agreed to buy the portion of the beach for $85,000. And in 1987, a Deed of Absolute
Sale was executed under Taina’s name.

ISSUE:

Whether or not there was double sale.

HELD:

NO. There is no double sale to speak of. A scrutiny of the records would show that the RTC and CA
aptly held that the Taina was only a dummy for Mike Stone who is a foreigner. Even if the Deed of
Absolute Sale is in the name of Taina Manigque-Stone that does not change the fact that the real buyer
was Mike Stone, a foreigner, since he was the one who paid for the subject lots with his own money.
Taina herself had admitted in court that the buyer was Mike Stone and at the time of the negotiation
she was not yet legally married to him. Placing her name on the Deed of Absolute Sale was only done
as a way of circumventing the constitutional prohibition barring aliens from purchasing or acquiring
lands in the country. They cannot do indirectly what is prohibited directly by the law.

SPRING HOMES SUBDIVISION CO. VS. TABLADA JR.

FACTS:

On October 12, 1992, petitioners, Spouses Pedro L. Lumbres and Rebecca T. Roaring, entered into a
Joint Venture Agreement with Spring Homes Subdivision Co., Inc., through its chairman, the late Mr.
Rolando B. Pasic, for the development of several parcels of land consisting of an area of 28,378 square
meters. January 9, 1995, Spring Homes entered into a Contract to Sell with respondents, Spouses
Pedro Tablada, Jr. and Zenaida Tablada, for the sale of a parcel of land located at Lot No. 8, Block 3,
Spring Homes Subdivision. Subsequently, the Spouses Tablada discovered that the subject property
was mortgaged as a security for a loan in the amount of over P4,000,000.00 with Premiere
Development Bank as mortgagee and Spring Homes as mortgagor.

ISSUE:

Whether or not spouses Tablada were purchased a parcel of land in Spring Homes Subdivision in bad
faith.

RULING:

YES. Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's rights
except only as provided by law, as in cases where the second buyer first registers in good faith the
second sale ahead of the first. Such knowledge of the first buyer does bar her from availing of her rights
under the law, among them, first her purchase as against the second buyer. But conversely, 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.

EDU VS. GOMEZ

FACTS:

Lt. Walter Bala was allegedly the registered owner of a 1968 Volkswagen bantam car, which was stolen
from his residence. Petitioners, who are agents of the Anti-Carnaping Unit (ANCAR) of the Phil
Constabulary, recognized the subject car in the possession of private respondent, Lucila Abello and
immediately seized and impounded the car as stolen property. Likewise, petitioner Romeo F. Edu, then
Commissioner of Land Transportation, seized the car pursuant to Section 60 of Republic Act 4136
which empowers him to seize the motor vehicle for delinquent registration. Lucila then filed a complaint
for replevin with damages in respondent court, impleading petitioners to order the sheriff or other proper
officer of the court to take the said car into his custody and to dispose of it in accordance with law.

ISSUE:

Whether or not the ANCAR agents are justified in the seizure of the car despite Abello being a purchaser
in good faith.

RULING:

NO. There is no merit in the petition considering that the acquirer or the purchaser in good faith of a
chattel of movable property is entitled to be respected and protected in his possession as if he were
the true owner thereof until a competent court rules otherwise. In the meantime, as the true owner, the
possessor in good faith cannot be compelled to surrender possession nor to be required to institute an
action for the recovery of the chattel, whether or not an indemnity bond is issued in his favor.

DURAN VS. IAC

FACTS:

Circe S. Duran owned two parcels of land. She left the Philippines in June 1954. In 1963, a Deed of
Sale of the two lots were made in favor of Fe S. Duran, her mother, who, in turn, mortgaged the same
to Erlinda Marcelo-Tiangco. When Petitioner came to know about the mortgage made by her mother,
she wrote the Register of Deeds informing that she did not give her mother any authority to sell or
mortgage her properties. Failing to get an answer, she returned to the Philippines. Meanwhile, when
her mother failed to redeem the mortgage properties, foreclosure proceedings were initiated by
Tiangco, which resulted to the sale by sheriff and the issuance of Certificate of Sale in her favor.

ISSUE:
Whether private respondent was a buyer in good faith and for value.

RULING:

YES. Good faith consists in the possessor’s belief that the person from who he received the thing was
the owner of the same and could convey his title. Good faith, while it is always to be presumed in the
absence of proof to the contrary, requires a well-founded belief that the person from whom title was
received was himself the owner of the land, with the right to convey it.

JM TUAZON & CO., INC. VS. COURT OF APPEALS

G.R. NO. L-41233; NOVEMBER 21, 1979

FACTS:

In 1952, Petitioner executed in favor of Ricardo De Leon a contract to sell a certain lot in Sta. Mesa
Heights Subdivision. At the execution, Ricardo paid a down-payment and agreed to pay monthly
installments for the balance. Meanwhile, Petitioner signed a Compromise Agreement with the Deudors.
In 1965, Ricardo transferred all his rights to the lot in favor of his parents, herein private respondents.
Private respondents paid the outstanding balance and Petitioner then executed in their favor the Deed
of Sale of the subject lot and upon registration, ROD issued to them the TCT. At the time of the
execution of the contract to sell, the contracting parties knew that a portion of the lot in question was
actually occupied by Ramon Rivera. However, it was their understanding that the latter will be ejected
by the petitioner from the premises.
ISSUE:

Whether or not the respondents De Leon are entitled to the vendor’s warranty against eviction and
damages.

RULING:

NO. SC stated that there was no willful deception or fraud on the part of Petitioner when he entered the
Compromise Agreement with the Deudors since it was sanctioned by the Court. The prior right of
Ramon Rivera to purchase the lot in litigation was based more on his prior occupancy to the same
since 1949, about which fact respondents De Leon were informed by petitioner at the time of the
execution of the contract to sell. The execution of the compromise agreement merely recognized this
prior right, under the condition as stipulated in said agreement, that it was possible to do so.

ESCALER VS. COURT OF APPEALS

FACTS;

Africa Reynoso and Jose Reynoso sold to petitioners a parcel of land and the Deed of Sale of which
contained a warranty against eviction. In 1961, Register of Deeds of Rizal and A. Doronilla Resources
Development Inc., filed a case for the cancellation of OCT issued in the name of Angelina Reynoso
(predecessor-in-interest of private respondents) on the ground that the property is already previously
registered under the TCT issued in the name of A. Doronilla Development Inc. CFI ruled to cancel the
OCT as well as subsequent TCTs emanating therefrom.

ISSUE:

Whether or not formal notice of the eviction case as mandated by Arts. 1558 and 1559 were given by
the petitioners to the respondents.
RULING:

NO. In order that a vendor's liability for eviction may be enforced, the following requisites must concur:
a) there must be a final judgment; b) the purchaser has been deprived of the whole or part of the thing
sold; c) said deprivation was by virtue of a right prior to the sale made by the vendor; and d) the vendor
has been summoned and made co-defendant in the suit for eviction at the instance of the vendee. In
the case at bar, the fourth requisite — that of being summoned in the suit for eviction at the instance of
the vendee — is not present.

MOLES VS IAC

G.R. NO. 73913; JANUARY 31, 1989

FACTS:

Jerry Moles bought from Mariano Diolosa owner of Diolosa Publishing House a linotype printing
machine. Moles promised Diolosa that will pay the full amount after the loan from DBP worth
P50,000.00 will be released. Private respondent on return issued a certification wherein he warrated
that the machine was in A-1 condition, together with other express warranties. After the release of the
of the money from DBP, Petitioner required the Respondent to accomplish some of the requirements.
On which the dependant complied the requirements on the same day. On November 29, 1977,
petitioner wrote private respondent that the machine was not functioning properly. The petitioner found
out that the said machine was not in good condition as experts advised and it was worth lesser than
the purchase price.

ISSUE/S:
Whether there is an implied warranty of its quality or fitness.

RULING:

It is generally held that in the sale of a designated and specific article sold as secondhand, there is no
implied warranty as to its quality or fitness for the purpose intended, at least where it is subject to
inspection at the time of the sale. On the other hand, there is also authority to the effect that in a sale
of secondhand articles there may be, under some circumstances, an implied warranty of fitness for the
ordinary purpose of the article sold or for the particular purpose of the buyer. Said general rule,
however, is not without exceptions. Article 1562 of our Civil Code.

NUTRIMIX FEEDS CORPORATION VS. COURT OF APPEALS

G.R. NO. 152219; OCTOBER 25, 2004

FACTS:

Respondent spouses herein started to directly procure various kinds of animal feeds from petitioner
Nutrimix Feeds Corporation. Initially, the respondents were good paying customers. In some instances,
however, they failed to issue checks despite the deliveries of animal feeds which were appropriately
covered by sales invoices. Consequently, the respondents incurred an aggregate unsettled account
with the petitioner. The petitioner made several demands for the respondents to settle their unpaid
obligation, but the latter failed and refused to pay their remaining balance with the petitioner.

ISSUE:

Whether or not the petitioner is guilty of breach of warranty due to hidden defects despite a finding that
there was a difference of approximately three months from delivery of the animal feeds, to respondent
spouses, to the time the animals died and the animal feeds were examined?
RULING:

A difference of approximately three months enfeebles the respondents’ theory that the petitioner is
guilty of breach of warranty by virtue of hidden defects. In a span of three months, the feeds could
have already been contaminated by outside factors and subjected to many conditions unquestionably
beyond the control of the petitioner. In essence, the court held that the respondents failed to prove that
the petitioner is guilty of breach of warranty due to hidden defects. It is, likewise, rudimentary that
common law places upon the buyer of the product the burden of proving that the seller of the product
breached its warranty.

ARRA REALTY CORPORATION VS. SPS. ARGUELLES

FACTS:
Arra Realty Corporation (ARC) was the owner of a parcel of land located at Makati City. Through its
president, Architect Carlos Arguelles, ARC decided to construct a five-storey building on its property
and engaged the services of Engr. Erlinda Peñaloza as the project and structural engineer. ARC
and Peñaloza agreed that the former would share the purchase price of one floor of the building which
the latter took possession on the one-half portion of the second floor. Unknown to her, ARC executed
a mortgage over the entire lot and building to China Bank Corporation. When ARC failed to pay its loan
to the said Bank, the subject property was foreclosed extrajudicially and sold at a public auction by the
said Bank. Peñaloza filed a complaint for specific performance against petitioners.

ISSUE:
Whether or not there has been a perfected contract of sale?

HELD:
YES. The parties agreed on the price and the terms of payment. The contract of sale was perfected. It
being consensual in nature, perfected by mere consent, was manifested the moment there was meeting
of the minds as to the offer and acceptance. The parties entered into the contract of sale as vendor and
vendee. Perfection per se does not transfer ownership but which occurs upon actual or constructive
delivery of the thing sold. Moreover, Article 1205 provides that, if the creditor accepted the debtor’s
defaulted payment without any protest, it is deemed complied with. In the case at bar, Peñaloza
defaulted in the downpayment but the petitioner ARC still accepted it without any objections. Hence, it
still deemed complied with.

LAFORTEZA VS. MACHUCHA

FACTS:
Roberto Laforteza and Gonzalo Laforteza, Jr., in their capacities as attorneys-in-fact of Dennis
Laforteza, entrered into a MOA (Contract to Sell) with Alonzo Machuca over a house and lot registered
in the name of the late Francisco Laforteza. Machuca was able to pay the earnest money but however
failed to pay the balance on time. Upon a request of an extension of time, Machuca informed petitioner
heirs that the balance was already covered, but petitioners refused to accept the balance and told
Machuca that the subject property is no longer for sale. The petitioners contend that the Memorandum
of Agreement is merely a lease agreement with “option to purchase”; hence, it only gave the respondent
a right to purchase the subject property within a limited period without imposing upon them any
obligation to purchase it.

ISSUE:
Whether or not the tender of payment after the lapse of the option agreement gave rise to the perfection
of a contract of sale.

RULING:
YES. A perusal of the Memorandum Agreement shows that the transaction between the petitioners and
the respondent was one of sale and lease. A contract of sale is a consensual contract and 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
provisions of the law governing the form of contracts. In the case at bench, all the elements of a contract
of sale were thus present.

VDA. DE MISTICA VS. NAGUIAT

FACTS:
Predecessor-in-interest of Petitioner and herein Defendants entered into a contract to sell in which the
latter prayed the initial payment and undertake to pay the remaining by installment within 10 years
subject to 12% interest per annum. Petitioner filed a complaint for rescission alleging failure and refusal
of Defendants to pay the balance constitutes a violation of the contract which entitles her to rescind the
same. Petitioner argues that period for performance of obligation cannot be extended to 10 years
because to do so would convert the obligation to purely potestative

ISSUE:
Whether or not there is a breach of obligation that warrants rescission under Article 1911.

RULING:
Under Art. 1191 of Civil Code, the right to rescind an obligation is predicated on violation between
parties brought about by breach of faith by one of them. Rescission, however, is allowed only when the
breach is substantial and fundamental to the fulfillment of the obligation. In this case, no substantial
breach – in the Kasulatan, it was stipulated that payment could be made even after 10 years from
execution of contract, provided they will pay the 12% interest. Civil Code prohibits purely potestative,
suspensive, conditional obligation that depend on the whims of the debtor.
FEDMAN DEVELOPMENT CORPORATION VS. FEDERICO AGCAOILI
G.R. NO. 165025; AUGUST 31, 2011

FACTS:
On October 10, 1980, Interchem, with FDC’s consent, transferred all its rights in Unit 411 to respondent
Federico Agcaoili (Agcaoili). As consideration for the transfer, Agcaoili agreed: (a) to pay Interchem
₱150,000.00 upon signing of the deed of transfer; (b) to update the account by paying to FDC the
amount of ₱15,473.17 through a 90 day-postdated check; and (c) to deliver to FDC the balance of
₱137,286.83 in 135 equal monthly installments of ₱1,857.24 effective October 1980, inclusive of 12%
interest per annum on the diminishing balance. The obligations Agcaoili assumed totaled ₱302,760.00.
In December 1983, the centralized air-conditioning unit of FSB’s fourth floor broke down. He then
informed FDC and FSCC that he was suspending the payment of his condominium dues and monthly
amortizations. FDC cancelled the contract to sell. Agcaoili was thus prompted to sue FDC and FSCC
in the RTC, Makati City, Branch 144 for injunction and damages. The parties later executed a
compromise agreement that the RTC approved through its decision of August 26, 1985. RTC rendered
judgment in favor of Agcaoili, FDC appealed, but the CA affirmed the RTC.

ISSUE:
Whether RTC did not acquire jurisdiction over this case for failure to pay the correct amount of docket
fee.

RULING:
If the amount of docket fees paid is insufficient in relation to the amounts being sought, the clerk of
court or his duly authorized deputy has the responsibility of making a deficiency assessment, and the
plaintiff will be required to pay the deficiency. The non-specification of the amounts of damages does
not immediately divest the trial court of its jurisdiction over the case, provided there is no bad faith or
intent to defraud the Government on the part of the plaintiff. The non-payment of the prescribed filing
fees at the time of the filing of the complaint or other initiatory pleading fails to vest jurisdiction over the
case in the trial court.
LEVY HERMANOS, INC. VS. GERVACIO
G.R. NO. 46306; OCTOBER 27, 1939

FACTS:
Levy Hermanos, Inc. sold to Lazaro Blas Gervacio, a Packard car. The latter, after making the initial
payment, executed a promissory note for the balance of P2,400, payable on or before June 15, 1937,
with interest at 12% per annum; to secure the payment of the note, he mortgaged said car to Levy
Gervacio failed to pay the note it its maturity. Levy foreclosed the mortgage and the car was sold at
public auction, at which plaintiff was the highest bidder for P1,800. It brought an action to collect the
balance P1,600 and interest (note that P2,400 was the amount due from Gervacio).

ISSUE:
Whether or not the cash payment made by Gervacio should be considered as an installment in order
to bring the contract sued upon within the ambit of Art. 1454-A of the old Civil Code.

RULING:
NO. In order to apply the provisions of article 1454-A of the old Civil Code it must appear that there was
a contract for the sale of personal property payable in installments and that there has been a failure to
pay two or more installments. The contract in this case, while a sale of personal property, is not,
however, one on installments, but on straight term, in which the balance, after payment of the initial
sum, should be paid in its totality at the time specified in the promissory note. The transaction is not is
not, therefore, the one contemplated in Article 1454-A and accordingly the mortgagee is not bound by
the prohibition therein contained as to the right to the recovery of the unpaid balance.
ZAYAS VS. LUNETA MOTOR COMPANY
G.R. NO. L-30583; OCOTBER 23, 1982

FACTS:
Eutropio Zayas, Jr, purchased on installment basis a motor vehicle from Mr. Roque Escaño of the
Escaño Enterprises. The motor vehicle was delivered to the petitioner who paid the initial payment in
the amount of P1,006.82, and executed a promissory note in the amount of P7,920.00, the balance of
the total selling price, in favor of respondent Luneta Motor Company. The promissory note stated the
amounts and dates of payment of 26 installments covering the P7,920.00 debt. Simultaneously with
the execution of the promissory note and to secure its payment, the petitioner executed a chattel
mortgage on the subject motor vehicle in favor of the respondent. After paying a total amount of
P3,148.00, the petitioner was unable to pay further monthly installments prompting the respondent
Luneta Motor Company to extra- judicially foreclose the chattel mortgage.

ISSUE:
Whether or not a deficiency amount after the motor vehicle, subject of the chattel mortgage, has been
sold at public auction could still be recovered by respondent company.

RULING:
NO. The main defense of respondent Luneta Motor Company is that Escano ̃ Enterprises, Cagayan de
Oro City from which petitioner Zayas, Jr. purchased the subject motor vehicle was a distinct and
different entity; that the role of Luneta Motor Company in the said transaction was only to finance the
purchase price of the motor vehicle; and that in order to protect its interest as regards the promissory
note executed in its favor, a chattel mortgage covering the same motor vehicle was also executed by
petitioner Zayas, Jr. In short, respondent Luneta Motor Company maintains that the contract between
the company and the petitioner was only an ordinary loan removed from the coverage of Article 1484
of the New Civil Code.
TAJANLANGIT VS. SOUTHERN MOTORS, INC.
G.R. NO. L-10789;

FACTS:
The petitioner bought 2 tractors and a thresher for 25K from the respondent on the condition to pay the
said property in an instalment basis. However, the petitioner failed to pay the purchase price, and
subsequently the respondent filed a case and levied the execution on the said property sold, and
subsequently bought the subject property in a public auction for 10K. The respondent obtain another
writ of execution for the real properties of the petitioner, herein the latter filed a petition contending that
the obligation was already satisfied because the property sold was returned to the respondent, and that
the respondent was only limited to the proceeds of the sale.

ISSUE:
Whether or not the vendor of a movable on instalment is limited to the proceeds of the sale.

RULING:
NO. In the sale of movables on instalment the vendor has 3 remedies: 1) Exact fulfillment of the
obligation 2) Cancellation of the sale if the buyer failed to pay 2 or more instalment and 3) To foreclose
the chattel mortgage over the good being sold if the buyer failed to pay 2 or more instalments, but this
will bar the seller from further recovery. At the present case since the seller chooses the exact fulfilment
of the obligation the seller may still recover from the other property of the buyer.
CRUZ VS. FILIPINAS INVESTMENT & FINANCE CORP.
G.R. NO. L-24772; MAY 27, 1968

FACTS:
Petitioner Ruperto Cruz purchased on installments one (1) unit of Isuzu Diesel bus from Far East
Motors. Petitioner issued a promissory note as evidence of his indebtedness to Far East Motors. To
secure such promissory note, chattel mortgage was instituted on the said vehicle. Since no down
payment was made by Cruz, an additional security was required by Far East Motors. The additional
security was given by plaintiff Felicidad de Reyes over her land which at the time was mortgaged to
DBP. Later, Far East Motors assigned all its rights and interests to the Deed of Chattel Mortgage and
Deed of Real Estate Mortgage to respondent, with due notice of assignment to the petitioners.
Subsequently, petitioner defaulted on the promissory note so respondent foreclosed the chattel
mortgage on the bus.

ISSUE:
Whether or not the action referred in Art. 1484 is confined only to those actions where there is a judicial
suit or proceeding in court.

RULING:
No, the “action” referred to in Art. 1484 is not limited to judicial suits or proceedings. The word ‘action’
is without a definite or exclusive meaning. Considering the purpose for which the prohibition contained
in Article 1484, the word “action” used therein may be construed as referring to any judicial or
extrajudicial proceeding by virtue of which the vendor may lawfully be enabled to exact recovery of the
supposed unsatisfied balance of the purchasing price form the purchaser or his privy. Certainly, an
extrajudicial foreclosure of a real estate mortgage is one such proceeding.