1. Nool v.

CA, 276 SCRA 149 (1997)

FACTS: Two (2) parcels of land are in dispute. The first has an area of 1 hectare. It was formerly owned by
Victorino Nool. 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 Enbrel, now the appellees.

Plaintiff-appellants alleged that they are the owners of subject parcels of land, and they bought the same from
Victorino Nool and Francisco Nool. As plaintiffs were in dire need of money, they obtained a loan from the
Development Bank of the Philippines, 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. For the failure of plaintiffs to
pay the said loan, the mortgage was foreclosed. 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.

Part of their arrangement or understanding, Anacleto Nool agreed to buy from plaintiff Conchita Nool the two
(2) parcels of land under controversy. 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
plaintiff 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. Defendants-appellees theorized that they acquired the lands in question from the
Development Bank of the Philippines, through negotiated sale, and were misled by plaintiffs when defendant
Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to
redeem the same.
It should be stressed that DBP, certified that the one-year redemption period was not exercised within this
period. Hence, DBP became the absolute owner of said parcels of land for which it was Issued new certificates
of title. About two years thereafter, DBP entered into a Deed of Conditional Sale involving the same parcels of
land with Private Respondent Anacleto Nool as vendee. Subsequently, the latter was Issued new certificates of
title. The lower court adjudged the said private writing (Exhibit "D") as an option to sell not binding upon and
considered the same validly withdrawn by defendants for want of consideration. On appeal, CA affirmed the
decision of trial court in toto.

ISSUE: Is the agreement entered into by Conchita Nool and Gaudencio Almojera and Anacleto Nool, valid
and Enforceable.

RULING:
No, the agreements entered into by Conchita Nool and Gaudencio Almojera and Anacleto Nool is void. Article
1459 of the Civil Code provides that "the vendor must have a right to transfer the ownership thereof [object of
the sale] at the time it is delivered." Here, delivery of ownership is no longer possible. It has become
impossible. In Exhibit C, which was a private handwritten document labeled by the parties as Resibo ti
Katulagan or Receipt of Agreement, the petitioners appear to have "sold" to private respondents the parcels of
land in controversy covered by TCT No. T-74950 and TCT No. T-100945.
On the other hand, Exhibit D, which was also a private handwritten document in Ilocano and labeled as
Kasuratan, private respondents agreed that Conchita Nool "can acquire back or repurchase later on said land
when she has the money."
In seeking to enforce her alleged right to repurchase the parcels of land, Conchita (joined by her co-petitioner-
husband) invokes Article 1370 of the Civil Code which mandates that "(i)f the terms of a contract are clear and
leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall
control." Hence, petitioners contend that the Court of Appeals erred in affirming the trial court's finding and
conclusion that said Exhibits C and D were "not merely voidable but utterly void and inexistent."
In the present case, it is clear that the sellers no longer had any title to the parcels of land at the time of sale.
Since Exhibit D, the alleged contract of repurchase, was dependent on the validity of Exhibit C, it is itself void.
A void contract cannot give rise to a valid one. 17 Verily, Article 1422 of the Civil Code provides that "(a)
contract which is the direct result of a previous illegal contract, is also void and inexistent."
Jurisprudence, on the other hand, teaches us that "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." 21 No one can give
what he does not have — nono dat quod non habet.
On the other hand, Exhibit D presupposes that petitioners could repurchase the property that they "sold" to
private respondents. As petitioners "sold" nothing, it follows that they can also "repurchase" nothing. Nothing
sold, nothing to repurchase. In this light, the contract of repurchase is also inoperative — and by the same
analogy, void.

2. Alcantara-Daus v. de Leon, 404 SCRA 74 (2003)

FACTS:
Respondents are the owners of a parcel of land situated in the Municipality of San Manuel, containing an area
of Four Thousand Two Hundred Twelve (4,212) sq. m., more or less, covered by Original Certificate of Title,
which respondent Hermoso de Leon inherited from his father Marcelino de Leon by virtue of a Deed of Extra-
judicial Partition.
In the early 1960s, respondents engaged the services of Atty. Florencio Juan to take care of the documents of
the properties of his parents. After the death of Atty. Juan, some documents surfaced that their properties had
been conveyed by sale or quitclaim to respondent Hermoso’s brothers and sisters, to Atty. Juan and his sisters,
when no such conveyances were ever intended by them.
His signature in the Deed of Extra-judicial Partition with Quitclaim made in favor of x x x Rodolfo de Leon
was forged. They discovered that the land in question was sold by x x x Rodolfo de Leon to petitioner Aurora
Alcantara. They demanded annulment of the document and reconveyance, but defendants refused.
Petitioner averred that she bought the land in question in good faith and for value on December 6, 1975. She
has been in continuous, public, peaceful, open possession over the same and has been appropriating the
produce thereof without objection from anyone." On August 23, 1994, the RTC of Urdaneta, Pangasinan
rendered its Decision in favor of herein petitioner.
It ruled that respondents’ claim was barred by laches, because more than 18 years had passed since the land
was sold, and that the Deed of Extrajudicial Partition in favor of Rodolfo de Leon was presumptively authentic
since it was a notarial document. In reversing the RTC, the CA held that laches did not bar respondents from
pursuing their claim. The appellate court also held that since Rodolfo de Leon was not the owner of the land at
the time of the sale, he could not transfer any land rights to petitioner.
It further declared that the signature of Hermoso de Leon on the Deed of Extrajudicial Partition and Quitclaim
was a forgery. It added that under the above circumstances, petitioner could not be said to be a buyer in good
faith.
Issue: Whether the Deed of Absolute Sale was perfected and binding upon the parties therein.
Ruling:
The Deed of Absolute Sale dated was perfected but not binding.
A contract of sale is consensual. It is perfected by mere consent, upon a meeting of the minds on the offer and
the acceptance thereof based on subject matter, price and terms of payment. At this stage, the seller’s
ownership of the thing sold is not an element in the perfection of the contract of sale.
The contract, however, creates an obligation on the part of the seller to transfer ownership and to deliver the
subject matter of the contract. It is during the delivery that the law requires the seller to have the right to
transfer ownership of the thing sold. In general, a perfected contract of sale cannot be challenged on the ground
of the seller’s non-ownership of the thing sold at the time of the perfection of the contract.
Further, even after the contract of sale has been perfected between the parties, its consummation by delivery is
yet another matter. It is through tradition or delivery that the buyer acquires the real right of ownership over
the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not the owner of the land he delivered
to petitioner. Thus, the consummation of the contract and the consequent transfer of ownership would depend
on whether he subsequently acquired ownership of the land in accordance with Article 1434 of the Civil Code.
Therefore, we need to resolve the Issue of the authenticity and the due execution of the Extrajudicial Partition
and Quitclaim in his favor.
3. Atilano v. Atilano, 28 SCRA 231 (1969).

FACTS:
In 1916 Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot No. 535 of the then
municipality of Zamboanga cadastre. The vendee thereafter obtained transfer certificate of title No. 1134 in his
name. In 1920 he had the land subdivided into five parts, identified as lots Nos. 535-A, 535-B, 535-C, 535-D
and 535-E, respectively.
On May 18 of the same year, after the subdivision had been effected, Eulogio Atilano I, for the sum of
P150.00, executed a deed of sale covering lot No. 535-E in favor of his brother Eulogio Atilano II, who
thereupon obtained transfer certificate of title No. 3129 in his name. Three other portions, were likewise sold
to other persons, the original owner, Eulogio Atilano I, retaining for himself only the remaining portion of the
land, presumably covered by the title to lot No. 535-A. Upon his death the title to this lot passed to Ladislao
Atilano, defendant in this case.
On December 6, 1952, Eulogio Atilano II having become a widower, he and his children obtained transfer
certificate of title No. 4889 over lot No. 535-E in their names as co-owners. Then, on July 16, 1959, desiring to
put an end to the co-ownership, they had the land resurveyed so that it could properly be subdivided; and it was
then discovered that the land they were actually occupying on the strength of the deed of sale executed in 1920
was lot No. 535-A and not lot 535-E, as referred to in the deed, while the land which remained in the
possession of the vendor, Eulogio Atilano I, and which passed to his successor, defendant Ladislao Atilano,
was lot No. 535-E and not lot No. 535-A.
On January 25, 1960, the heirs of Eulogio Atilano II, who was by then also deceased, filed the present action in
the Court of First Instance of Zamboanga. The plaintiffs' insistence is quite understandable, since lot No. 535-
E has an area of 2,612 square meters, as compared to the 1,808 square-meter area of lot No. 535-A.
In their answer to the complaint the defendants alleged that the reference to lot No. 535-E in the deed of sale of
May 18, 1920 was an involuntary error; that the intention of the parties to that sale was to convey the lot
correctly identified as lot No. 535-A. On the basis of the foregoing allegations the defendants interposed a
counterclaim, praying that the plaintiffs be ordered to execute in their favor the corresponding deed of transfer
with respect to lot No. 535-E. The trial court rendered judgment for the plaintiffs. Hence this appeal.

ISSUE: Whether the trial court rendered judgment correctly.

RULING:
No. The logic and common sense of the situation lean heavily in favor of the defendants' contention. When one
sells or buys real property — a piece of land, for example — one sells or buys the property as he sees it, in its
actual setting and by its physical metes and bounds, and not by the mere lot number assigned to it in the
certificate of title. In the particular case before us, the portion correctly referred to as lot No. 535-A was
already in the possession of the vendee, Eulogio Atilano II, who had constructed his residence therein, even
before the sale in his favor even before the subdivision of the entire lot No. 535 at the instance of its owner,
Eulogio Atillano I. In like manner the latter had his house on the portion correctly identified. The two brothers
continued in possession of the respective portions the rest of their lives, obviously ignorant of the initial
mistake in the designation of the lot subject of the 1920 until 1959, when the mistake was discovered for the
first time.
The real Issue here is not adverse possession, but the real intention of the parties to that sale. From all the Facts
and circumstances we are convinced that the object thereof, as intended and understood by the parties, was that
specific portion where the vendee was then already residing, where he reconstructed his house at the end of the
war, and where his heirs, the plaintiffs herein, continued to reside thereafter: namely, lot No. 535-A; and that
its designation as lot No. 535-E in the deed of sale was simple mistake in the drafting of the document.
The mistake did not vitiate the consent of the parties, or affect the validity and binding effect of the contract
between them. The new Civil Code provides a remedy for such a situation by means of reformation of the
instrument. This remedy is available when, there having been a meeting of the minds of the parties to a
contract, their true intention is not expressed in the instrument purporting to embody the agreement by reason
of mistake, fraud, inequitable conduct on accident (Art. 1359, et seq.) In this case, the deed of sale executed in
1920 need no longer reformed. The parties have retained possession of their respective properties conformably
to the real intention of the parties to that sale, and all they should do is to execute mutual deeds of conveyance.

4. Melliza v. City of Iloilo, 23 SCRA 477 (1968)

FACTS:

Juliana Melliza owned properties located in Iloilo City, three parcels of land known as Lot nos. 2, 5, and 1214.
She then donated lot no. 1214 to the municipality of Iloilo to serve as a site for the municipal hall. However,
the donation was revoked since the lot was inadequate to meet the requirements of the development plan of the
municipality.
Lot 1214 was divided by Certeza Surveying Co., Inc. into lots 1214-A and 1214-B an lot 1214-B was then
again divided into lots 1214-B-1, 1214-B-2 and 1214-B-3. Melliza executed an instrument without a clear
caption providing for the absolute sale involving lot 5, lot 2, and a portion of lot 1214. On January 14, 1938,
Melizza sold her remaining interest in lot 1214 to Remedios Sian Villanueva. n 24 August 1949 the City of
Iloilo, which succeeded to the Municipality of Iloilo, donated the city hall site together with the building
thereon, to the University of the Philippines (Iloilo branch). On 10 December 1955 Pio Sian Melizza filed an
action in the CFI Iloilo against Iloilo City and the University of the Philippines for recovery of Lot 1214-B or
of its value.
After stipulation of facts and trial, the CFI rendered its decision on 15 August 1957, dismissing the complaint.
Said court ruled that the instrument executed by Juliana Melliza in favor of Iloilo municipality included in the
conveyance Lot 1214-B, and thus it held that Iloilo City had the right to donate Lot 1214-B to UP. Pio Sian
Melliza appealed to the Court of Appeals. On 19 May 1965, the CA affirmed the interpretation of the CFI that
the portion of Lot 1214 sold by Juliana Melliza was not limited to the 10,788 square meters specifically
mentioned but included whatever was needed for the construction of avenues, parks and the city hall site.
Nonetheless, it ordered the remand of the case for reception of evidence to determine the area actually taken by
Iloilo City for the construction of avenues, parks and for city hall site. Hence, the appeal by Pio San Melliza to
the Supreme Court.

ISSUE:
Whether contract is perfected if object of the sale is capable of being determinate at the time of the contract.

RULING:

Yes. The paramount intention of the parties was to provide Iloilo municipality with lots sufficient or adequate
in area for the construction of the Iloilo City hall site, with its avenues and parks. For this matter, a previous
donation for this purpose between the same parties was revoked by them, because of inadequacy of the area of
the lot donated. Said instrument described 4parcels of land by their lot numbers and area; and then it goes on to
further describe, not only those lots already mentioned, but the lots object of the sale, by stating that said lots
were the ones needed for the construction of the city hall site, avenues and parks according to the Arellano
plan. If the parties intended merely to cover the specified lots (Lots 2, 5, 1214-C and 1214-D), there would
scarcely have been any need for the next paragraph, since these lots were already plainly and very clearly
described by their respective lot number and areas. Said next paragraph does not really add to the clear
description that was already given to them in the previous one. It is therefore the more reasonable
interpretation to view it as describing those other portions of land contiguous to the lots that, by reference to
the Arellano plan, will be found needed for the purpose at hand, the construction of the city hall site.
The requirement of the law that a sale must have for its object a determinate thing, is fulfilled 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 (Art. 1273, old Civil Code; Art. 1460, New Civil
Code). The specific mention of some of the lots plus the statement that the lots object of the sale are the ones
needed for city hall site; avenues and parks, according to the Arellano plan, sufficiently provides a basis, as of
the time of the execution of the contract, for rendering determinate said lots without the need of a new and
further agreement of the parties.
5.Carabeo v. Dingco, 647 SCRA 200 (2011)

FACTS:

On July 10, 1990, Domingo Carabeo (petitioner) entered into a contract denominated as “Kasunduan sa
Bilihan ng Karapatan sa Lupa” (kasunduan) with Spouses Norberto and Susan Dingco (respondents) 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.
Upon the signing of the contract, the respondents paid an initial amount of P10,000 and the remaining balance
would be paid on September 1990. However, when the respondents were about to pay the balance, the
petitioner refused to accept the amount due to an on-going dispute over the land. Nevertheless, the respondents
occasionally gave the petitioner small sums of money which totaled P9,100. These amounts were allegedly
given due to the request of the petitioner.
Despite the respondents insistence of paying the remaining balance of P19,800, the petitioner remained firm in
his refusal. He reasoned that he would register the land first. However, when the dispute was finally settled and
the registration of the land was made, the petitioner still declined to accept the payment. Thus, forcing the
respondents to file a complaint before the Katarungang Pambarangay. Nevertheless, the parties were not able
to reach a settlement. Hence, the filing of a complaint for specific performance before the RTC.
In the petitioner’s answer in the complaint, he alleged that the sale was void for lack of object certain. The
kasunduan not having specified the metes and bounds of the land. In addition to that, he alleged that assuming
that the validity of the kasunduan is upheld, the respondent failed to comply with their reciprocal obligation in
paying the balance of the P28,000 on September 1900. Thus, forcing him to accept the installment payments.

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

RULING:
Yes. Even though the kasunduan did not specify the technical boundaries of the property, it does 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. As the quoted portion of the kasunduan below
shows, there is no doubt that the object of the sale is determinate.
“Na ako ay may isang partial na lupa na matatagpuan sa Purok 111, Tugatog, Orani Bataan, na may sukat na
27 x 24 metro kuwadrado, ang nasabing lupa ay may sakop na dalawang punong santol at isang punong
mangga, kaya’t ako ay nakipagkasundo sa mag-asawang Norby Dingco at Susan Dingco na ipagbili sa kanila
ang karapatan ng nasabing lupa sa halagang ₱38,000.00.”

6.NHA v. Grace Baptist Church, 424 SCRA 147 (2004)

FACTS:
On June 13, 1986, Respondent Grace Baptist Church wrote a letter to NHA manifesting
intent to purchase Lot 4 and 17 of the General Mariano Alvarez Resettlement Project in Cavite. The latter
granted request hence respondent entered into possession of the lots and introduced improvements thereon.
On February 22, 1991, NHA passed are solution approving the sale of the subject lots to respondent Church for
700 per square meter, a total of P430,500. Respondents were duly informed.
On April 8, 1991, respondent church tendered a check amounting to P55,350 contending that this was the
agreed price. NHA avers stating that the price now (1991) is different from before (1986).

The trial court rendered a decision in favour of NHA stating that there was no contract of sale, ordering to
return the said lots to NHA and to pay NHA rent of 200 pesos from the time it took possession of the lot.
Respondent Church appealed to the CA which affirms the decision of RTC regarding “no contract of sale” but
modifying it by ordering NHA to execute the sale of the said lots to Church for 700 per square, with 6%
interest per annum from March1991. Petitioner NHA filed a motion for reconsideration which was denied.
Hence this petition for review on certiorari.

ISSUE:
WON NHA can be compelled to sell the lots under market value

RULING:
No, because the contract has not been perfected. The Church despite knowledge that its intended contract of
sale with the NHA had not been perfected proceeded to introduce improvements on the land. On the other
hand, NHA knowingly granted the Church temporary use of the subject properties and did not prevent the
Church from making improvements thereon. Thus the Church and NHA, who both acted in bad faith, shall be
treated as if they were both in good faith. In this connection Art 448provides:
“The owner of the land in which anything has been built, sown or planted in good faith, shall have the right to
appropriate as his own the works, sowing or planting, after payment of the indemnity provided for in articles
546 and 548, or to oblige the one who built or planted to pay the price of the land, and the one who sowed, the
proper rent. However, the builder or planter cannot be obliged to buy the land and if its value is considerably
more than that of the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does
not choose to appropriate the building or trees after proper indemnity. The parties shall agree, and in case of
disagreement, the court shall fix.

7. Gallar v. Husain, 20 SCRA 186 (1967)

Facts:

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. 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.
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.
A couple of years after, Gallar 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. The Husains countered
by saying that Graciana already paid the redemption price thus their father had already reacquired ownership
over the same. They also claim that the action of Elias has already prescribed.

Issues:
1) Whether or not ownership was transferred to Gallar?
2) Whether or not the action has already prescribed?

Ruling:
1) YES, ownership has been transferred to Gallar. 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 Gallar.
 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 Gallar.
Now, 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.5 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.

2. NO, the action is imprescriptible. 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.

8. The Estate of Pedro C. Gonzales v. Heirs of Marcos Perez, 605 SCRA 47 (2009)

Facts:

The former Municipality of Marikina in the Province of Rizal (now City of Marikina, Metro Manila)
used to own a parcel of land located in Barrio Concepcion of the said municipality covered by Original
Certificate of Title (OCT) No. 629 of the Register of Deeds of Rizal. The said property was subdivided into
three (3) lots, namely, lots A, B and C, per subdivision plan (LRC) Psd-4571.On January 14, 1966, the
Municipal Council of Marikina passed Resolution No. 9, series of 1966 which authorized the sale through
public bidding of Municipal Lots A and C.

On April 25, 1966, a public bidding was conducted wherein Pedro Gonzales was the highest bidder.
Two days thereafter, or on April 27, 1966, the Municipal Council of Marikina issued Resolution No. 75
accepting the bid of Pedro. Thereafter, a deed of sale was executed in favor of the latter which was later
forwarded to the Provincial Governor of Rizal for his approval. The Governor, however, did not act upon the
said deed.

Sometime in September 1966, Pedro sold to Marcos Perez a portion of Lot C.T he contract of sale was
embodied in a Deed of Sale which, however, was not notarized. To segregate the subject property from the
remaining portions of Lot C, Marcos had the same surveyed wherein a technical description of the subject lot
was prepared by a surveyor. Subsequently, Pedro and Marcos died.

On February 7, 1992, the Municipality of Marikina, through its then Mayor Rodolfo Valentino,
executed a Deed of Absolute Transfer of Real Property over Lots A and C in favor of the Estate of Pedro C.
Gonzales. On June 25, 1992, Transfer Certificate of Title (TCT) No. 223361, covering Lot C, was issued in the
name of the said estate.

Subsequently, herein petitioners executed an extra-judicial partition wherein Lot C was subdivided
into three lots. On October 1, 1992, herein respondents sent a demand letter to one of herein petitioners asking
for the reconveyance of the subject property. However, petitioners refused to reconvey the said lot. As a
consequence, respondents filed an action for "Annulment and/or Rescission of Deed of Absolute Transfer of
Real Property x x x and for Reconveyance with Damages."
Issue: Whether or not the sale is valid despite failure to observe the proper form prescribed by Article 1358.

Ruling:
Yes.

Nonetheless, it is a settled rule that the failure to observe the proper form prescribed by Article 1358
does not render the acts or contracts enumerated therein invalid. It has been uniformly held that the form
required under the said Article is not essential to the validity or enforceability of the transaction, but merely for
convenience. The Court agrees with the CA in holding that a sale of real property, though not consigned in a
public instrument or formal writing, is, nevertheless, valid and binding among the parties, for the time-honored
rule is that even a verbal contract of sale of real estate produces legal effects between the parties.  Stated
differently, although a conveyance of land is not made in a public document, it does not affect the validity of
such conveyance. Article 1358 does not require the accomplishment of the acts or contracts in a public
instrument in order to validate the act or contract but only to insure its efficacy. Thus, based on the foregoing,
the Court finds that the CA did not err in ruling that the contract of sale between Pedro and Marcos is valid and
binding.

9. Salonga v. Concepcion, 470 SCRA 291 (2005)

FACTS: 

The spouses Natalio Salonga and Felicidad Salonga were the owners of the 8 prime parcels of land
located in Dagupan City. They had a commercial building with four floors which stood on their property
located along A.B. Fernandez Avenue, Dagupan City. The spouses leased the building to traders and
merchants, and lived in a house along Arellano Street. The house stood on a lot which they also owned. The
spouses loaned from several banks and mortgaged several of their properties in order to finance their business.
Due to an earthquake that damaged their building, they were unable to pay their loans and some of their
properties were foreclosed. They asked help from respondent to redeem their properties with the agreement
that the building would be sold after 2 months and that the loans would be paid. Due to this agreement a deed
of absolute sale was made in favor of respondents with the condition that it will not be registered. The loan was
not repayed and the building was subsequently transferred in the name of respondents.

 ISSUE: Whether the contract above is one of Equitable Mortgage or Absolute Sale.

RULING:

The Supreme Court ruled that the contract was one of equitable mortgage due to the following
reasons: First, the petitioners were hard-pressed to pay their account to the respondents in the total of the
principal amount of P3, 198, 886.47; the said amount paid by the respondents for the account of the petitioners
to the PNB, the Associated Bank and the DBP, excluding the amount of 36% interest a month of 36% interest
per annum. Second, it was made to appear under the August 31, 1993 Deed of Absolute Sale that the
petitioners had sold their five parcels of land to the respondents for the principal amount of P575,000.00, and
that the petitioners received the said amount from the respondents. However, at the time of the execution of the
said deed, the petitioners were indebted to the respondents for the principal amount of P586, 520.50, which the
respondents had remitted to the Associated Bank for the account of the petitioners. It is incredible that the
petitioners would sell the said parcels of land to the respondents, and that the latter, would remit the purchase
price of P575,000.00 to the petitioners, and retain the said amount to be applied as payment to the petitioner’s
accounts P586, 520.50. Third, respondent Manuel Concepcion had earlier signed on March 10, 1993 an
undertaking that he would not register the deed of absolute sale as long as the petitioners will pay their
outstanding account plus interests thereon at the rate of 3% per month. There was also gross inadequacy of
price in this case as it appeared that their commercial building was sold for only 2M while the actual market
price was 10M.

10.) Santiago v. Villamor, (G.R. No. 168499; November 26, 2012.

FACTS: Spouses Domingo Villamor, Sr. and Trinidad Villamor (spouses Villamor, Sr.) mortgaged their 4.5-
hectare coconut land in Sta. Rosa, San Jacinto, Masbate to the Rural Bank of San Jacinto as security for a
P10,000.00 loan. Due to non-payment, San Jacinto Bank extrajudicially foreclosed the mortgage, and, as the
highest bidder at the public auction, bought the land. When spouses Villamor, Sr. failed to redeem the property
within the prescribed period, the San Jacinto Bank obtained a final deed of sale in its favor sometime in 1991.
The bank then offered the land for sale to interested buyers.
Since the respondents had been in possession and cultivation of the land, they decided, together with their
sister Catalina Villamor Ranchez, to acquire the land from the San Jacinto Bank. The San Jacinto Bank agreed
with the respondents and Catalina to a P65,000.00 sale, payable in installments. San Jacinto Bank refused to
issue a deed of conveyance in their favor despite full payment. It claimed that it already issued a deed of
repurchase in favor of the spouses Villamor, Sr.; the payments made by the respondents and Catalina were
credited to the account of Domingo, Sr. since the real buyers of the land were the spouses Villamor, Sr and not
in the capacity of the Villamor children. Thus, the respondents and Catalina filed a complaint against the San
Jacinto Bank with the RTC for specific performance with damages. The RTC dismissed the specific
performance case finding the San Jacinto Bank in good faith when it executed a deed of "repurchase" in the
spouses Villamor, Sr.’ names since Domingo, Sr., along with the respondents and Catalina, was the one who
transacted with the San Jacinto Bank to redeem the land.
Prior to the filing of the respondents and Catalinas’ complaint for specific performance, the San Jacinto Bank
issued a deed of sale in favor of Domingo, Sr. On July 21, 1994, the spouses Villamor, Sr. sold the land to the
petitioners for P150,000.00.
Spouses Santiago demanded the Villamor children to vacate the property but the latter refused to do so. The
Villamor children argued that they are the lawful owners of the land since they acquired the same from San
Jacinto Bank. Thus, spouses Santiago filed an action for quieting of title and recovery of possession against the
respondents before the RTC. The RTC ruled in favor of spouses Santiago. On appeal, the CA reversed the
RTCs decision on the ground that spouses Santiago failed to prove their legal or equitable title to the land.

ISSUE: 
1.) Whether the execution of a public instrument shall be equivalent to the delivery of the thing which is the
object of the contract.

2.) Whether the petitioners were buyers in good faith.

RULING:  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."
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. "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. Execution of
the deed of sale only a prima facie presumption of delivery.
In this case, 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.
The Petitioner’s complaint for quieting of title and recovery of possession is dismissed for lack of merit.

As for the second issue, the petitioners can hardly claim to be purchasers in good faith.

"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." However, where the land sold is in the possession of a person other than
the vendor, the purchaser must be wary and must investigate the rights of the actual possessor; without such
inquiry, the buyer cannot be said to be in good faith and cannot have any right over the property. ςrνll

In this case, the spouses Villamor, Sr. were not in possession of the land. The petitioners, as prospective
vendees, carried the burden of investigating the rights of the respondents and respondent John who were then
in actual possession of the land. The petitioners cannot take refuge behind the allegation that, by custom and
tradition in San Jacinto, Masbate, the children use their parents' property, since they offered no proof
supporting their bare allegation. The burden of proving the status of a purchaser in good faith lies upon the
party asserting that status and cannot be discharged by reliance on the legal presumption of good faith. The
petitioners failed to discharge this burden.

11. Caoibes, Jr. v. Caoibes-Pantoja 496 SCRA 273 (2006)

FACTS:

Petitioners Jose Caoibes, Jr., Melencio Caoibes and Loida Caoibes, as FIRST PARTY, and respondent
Corazon Caoibes-Pantoja, as SECOND PARTY, forged on May 10, 1982 an agreement entitled "Renunciation
and Transfer of Claims, Rights, and Interests" covering a parcel of land, Lot 2 of plan Psd-162069 (Lot 2),
situated in Calaca, Batangas containing an area of 54,665 sq. m.

The agreement says that petitioners, as FIRST PARTY, renounced, relinquished, abandoned and transferred,
ceded and conveyed whatever rights "[they] may have" over Lot 2 in favor of respondent, as second party, and
on account of the renunciation and transfer, petitioners transferred "whatever rights . . . [they] may have in the
prosecution of the land registration proceeding," LRC No. N-411.

About 14 years after the execution of the parties' above-said agreement or in 1996, respondent filed a motion
to intervene and be substituted as applicant in LRC Case No. N-411. The motion was opposed by petitioners
who denied the authenticity and due execution of the agreement, they claiming that the same was without the
consent and conformity of their mother, the "usufructuary owner" of the land. The land registration court,
finding for petitioners, denied respondent's motion by Order of March 2, 1999.

Respondent thus filed on March 16, 2000 a Complaint for Specific Performance and Damages against
petitioners before the Regional Trial Court (RTC) for the enforcement of petitioners' obligation under the
agreement. To the complaint, petitioners filed a motion to dismiss anchored on prescription, laches and
prematurity of action on account of respondent's failure to refer the case to the barangay lupon for conciliation.
ISSUES:

1.) Whether the execution of the agreement through a public instrument was equivalent to the delivery of
the property to respondent.

2.) Whether the respondent’s complaint for specific performance for her to be subrogated as applicant in
the land registration proceeding tenable.

RULING:

The agreement having been made through a public instrument; the execution was equivalent to the delivery of
the property to respondent. Under Art. 1498, 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.

Since the agreement of the parties is analogous to a deed of sale in favor of respondent, Articles 1458 defining
a contract of sale and Article 1307 as to the rule on innominate contracts find its significance. Having
transferred ownership for and in consideration of her payment of the loan in the principal amount of P19,000
outstanding in the name of one Guillermo C. Javier, such arrangement is clearly analogous to a sale.

In the second issue, the respondent’s claim for specific performance is devoid of merit. Under Sec. 22 of P.D.
1529, cited in Mendoza vs CA, 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.

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

FACTS:
Petitioner Norkis Distributors, Inc. (Norkis for brevity), is the distributor of Yamaha motorcycles in Negros
Occidental with office in Bacolod City with Avelino Labajo as its Branch Manager.
On September 20, 1979, private respondent Alberto Nepales bought from the Norkis-Bacolod branch a brand
new Yamaha Wonderbike motorcycle Model YL2DX with Engine No. L2-329401K Frame No. NL2-0329401,
Color Maroon, then displayed in the Norkis showroom. The price of P7,500.00 was payable by means of a
Letter of Guaranty from the Development Bank of the Philippines (DBP), Kabankalan Branch, which Norkis'
Branch Manager Labajo agreed to accept. Hence, credit was extended to Nepales for the price of the
motorcycle payable by DBP upon release of his motorcycle loan. As security for the loan, Nepales would
execute a chattel mortgage on the motorcycle in favor of DBP. Branch Manager Labajo issued Norkis Sales
Invoice No. 0120 (Exh.1) showing that the contract of sale of the motorcycle had been perfected. Nepales
signed the sales invoice to signify his conformity with the terms of the sale. In the meantime, however, the
motorcycle remained in Norkis' possession.

On November 6, 1979, the motorcycle was registered in the Land Transportation Commission in the name of
Alberto Nepales. A registration certificate (Exh. 2) in his name was issued by the Land Transportation
Commission on November 6, 1979 (Exh. 2-b). The registration fees were paid by him, evidenced by an official
receipt, Exhibit 3.
On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of
Alberto Nepales but the latter denies it. The record shows that Alberto and Julian Nepales presented the unit to
DBP's Appraiser-Investigator Ernesto Arriesta at the DBP offices in Kabankalan, Negros Occidental Branch.
The motorcycle met an accident on February 3, 1980 at Binalbagan, Negros Occidental. An investigation
conducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba at the time of the
accident. The unit was a total wreck, was returned, and stored inside Norkis' warehouse.

On March 20, 1980, DBP released the proceeds of private respondent's motorcycle loan to Norkis in the total
sum of P7,500. As the price of the motorcycle later increased to P7,828 in March, 1980, Nepales paid the
difference of P328 and demanded the delivery of the motorcycle. When Norkis could not deliver, he filed an
action for specific performance with damages against Norkis in the Regional Trial Court of Himamaylan,
Negros Occidental, Sixth (6th) Judicial Region, Branch LVI, where it was docketed as Civil Case No. 1272.
He alleged that Norkis failed to deliver the motorcycle which he purchased, thereby causing him damages.
Norkis answered that the motorcycle had already been delivered to private respondent before the accident,
hence, the risk of loss or damage had to be borne by him as owner of the unit.
After trial on the merits, the lower court rendered a decision dated August 27, 1985 ruling in favor of private
respondent with the defendants ordered to pay solidarity to the plaintiff the present value of the motorcycle
which was totally destroyed, plus interest equivalent to what the Kabankalan Sub-Branch of the Development
Bank of the Philippines will have to charge the plaintiff on fits account, plus P50.00 per day from February 3,
1980 until full payment of the said present value of the motorcycle, plus P1,000.00 as exemplary damages, and
costs of the litigation. In lieu of paying the present value of the motorcycle, the defendants can deliver to the
plaintiff a brand-new motorcycle of the same brand, kind, and quality as the one which was totally destroyed in
their possession last February 3, 1980.
On appeal, the Court of appeals affirmed the appealed judgment on August 21, 1989, but deleted the award of
damages "in the amount of Fifty (P50.00) Pesos a day from February 3, 1980 until payment of the present
value of the damaged vehicle". The Court of Appeals denied Norkis' motion for reconsideration.

ISSUE: Whether there had already been a transfer of ownership of the motorcycle to private respondent at the
time it was destroyed.
RULING:
No, there was no transfer of ownership to the private respondent at the time it was destroyed. Article 1496 of
the Civil Code 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 to this case, for
there was neither an actual nor constructive delivery of the thing sold, hence, the risk of loss should be borne
by the seller, Norkis, which was still the owner and possessor of the motorcycle when it was wrecked. This is
in accordance with the well-known doctrine of res perit domino.
Norkis cannot insist that there was constructive delivery of the unit upon: (1) the issuance of the Sales Invoice
No. 0120 (Exh. 1) in the name of the private respondent and the affixing of his signature thereon; (2) the
registration of the vehicle on November 6, 1979 with the Land Transportation Commission in private
respondent's name (Exh. 2); and (3) the issuance of official receipt (Exh. 3) for payment of registration fees.
The issuance of a sales invoice does not prove transfer of ownership of the thing sold to the buyer. An invoice
is nothing more than a detailed statement of the nature, quantity and cost of the thing sold and has been
considered not a bill of sale (Am. Jur. 2nd Ed., Vol. 67, p. 378). In all forms of delivery, it is necessary that the
act of delivery whether constructive or actual, be coupled with the intention of delivering the thing. The act,
without the intention, is insufficient (De Leon, Comments and Cases on Sales, 1978 Ed., citing Manresa, p.
94). When the motorcycle was registered by Norkis in the name of private respondent, Norkis did not intend
yet to transfer the title or ownership to Nepales, but only to facilitate the execution of a chattel mortgage in
favor of the DBP for the release of the buyer's motorcycle loan. The Letter of Guarantee (Exh. 5) issued by the
DBP, reveals that the execution in its favor of a chattel mortgage over the purchased vehicle is a pre-requisite
for the approval of the buyer's loan. If Norkis would not accede to that arrangement, DBP would not approve
private respondent's loan application and, consequently, there would be no sale.
In other words, the critical factor in the different modes of effecting delivery, which gives legal effect to the
act, is the actual intention of the vendor to deliver, and its acceptance by the vendee. Without that intention,
there is no tradition (Abuan vs. Garcia, 14 SCRA 759).

13.) ASSET PRIVATIZATION TRUST vs. TJ ENTERPRISES

FACTS:

On Nov. 7, 1990, APT and TJ entered into an absolute deed of sale over certain refrigeration machineries
identified as Lots 2, 3, and 5. TJ paid the full amount of 84,000.

After 2 days, TJ demanded the delivery of the machinery it purchased. In March 1991, APT issued Gate Pass
No. 4955. TJ was able to pull out the properties from the compound.

However, during the hauling of Lot 2 consisting of 16 items, only 9 items were pulled out by TJ while 7 items
were left behind. Creative Lines (CL) employees prevented TJ from hauling the remaining machineries.
TJ filed a complaint for specific performance and damages against APT and CL. During the pendency of the
case, TJ was able to pull out the remaining machineries. However, upon inspection, it was discovered that
there were damages and missing parts. APT argued that upon the execution of the deed of sale, it had complied
with its obligation to deliver the object of the sale since there was no contrary stipulation. APT further argued
that being a sale on an “as-is-where-is” basis, it was TJ’s duty to take possession of the property. APT claimed
that there was already a constructive delivery of the machineries. The RTC ruled that APT is liable for breach
of contract and should pay for actual damages. The CA affirmed the RTC in toto. Hence, this appeal.

ISSUES:

1.) WON there was a constructive delivery of the machineries upon the execution of the deed of absolute
sale.
2.) WON the sale was on an “as-is-where-is” basis;
3.) If so, WON TJ was responsible to take possession of the property.
4.) WON the failure to make actual delivery was not due to the fault and was beyond the control of APT,
thus the claim for damages has no basis.

RULING:

No, there was no constructive delivery upon the execution of the deed of absolute sale. As a general rule, when
the sale is made through a public instrument, its execution shall be equivalent to delivery. However, it is
necessary that the vendor shall have control over the thing sold at the moment of sale in order that its material
delivery could have been made. A person who does not have actual possession of the thing sold cannot transfer
constructive possession by the execution of a public instrument. Here, there was no constructive delivery upon
the execution of the deed of absolute sale or upon the issuance of the gate pass since it was not APT but CL
which had actual possession of the property. The presumption of constructive delivery is not applicable as it
has to yield to the reality that TJ was not placed in possession and control of the property.

For the second issue, yes, the phrase “as-is-where-is” pertains solely to the physical condition of the thing sold,
not to its legal situation. The “as-is-where-is” basis merely describes the actual state and location of the thing
sold by APT to TJ. This depiction does not alter APT’s responsibility to deliver the property to respondent.
WON the presence of the disclaimer of warranty in the deed of absolute sale absolves APT from all warranties,
implied or otherwise.

For the third issue, no, the vendor is bound to transfer the ownership of and deliver, as well as warrant the
thing which is the object of the sale. A perusal of the deed of absolute sale shows that both APT and TJ
represented and warranted to each other that head had all the requisite power and authority to enter into the
deed of absolute sale and that they shall perform each of their respective obligations under the deed. Here,
there was no actual or constructive delivery of the things sold. Thus, APT has not performed its obligation to
transfer ownership and possession of the things sold to respondent.

On the fourth issue, no, APT contends that its failure to deliver was beyond its control. APT contends that the
refusal of CL to allow the hauling of the machineries was a fortuitous event. The SC quotes the CA and held
that CL’s refusal to allow the hauling is not a fortuitous event which exculpates APT from the payment of
damages. This event cannot be considered as unavoidable or unforeseen. APT knew that the properties sold
were in the premises leased by CL. It should have made arrangements with CL beforehand for the smooth and
orderly hauling of the machineries. The principle embodied in the act of God doctrine strictly requires that the
act muse be one occasioned exclusively by the violence of human nature and all human agencies are to be
excluded from creating or entering into the cause of the mischief. When the cause is found to be in part the
result of man’s participation, whether through fault, negligence, or omission, the whole occurrence is thereby
humanized and removed from the rules applicable to the acts of God. Assuming arguendo that CL’s refusal to
allow the hauling is a fortuitous event, APT will still be liable for damages based on Article 1170 of the NCC.
14. Santos v. Santos, 366 SCRA 395 (2001)

FACTS:

Petitioner Zenaida M. Santos is the widow of Salvador Santos, a brother of private respondents Calixto,
Alberto, Antonio, all surnamed Santos and Rosa Santos-Carreon. Spouses Jesus and Rosalia Santos owned a
parcel of land registered under TCT No. 27571 with an area of 154 square meters, located at Sta. Cruz Manila.
On it was a four-door apartment administered by Rosalia who rented them out. The spouses had five children,
Salvador, Calixto, Alberto, Antonio and Rosa. Jesus and Rosalia executed a deed of sale of the properties in
favor of their children Salvador and Rosa. Rosa then sold her share to Salvador which resulted in the issuance
of a new TCT No. 113221. 

Despite the transfer of the property to Salvador, Rosalia continued to lease and receive rentals from the
apartment units. Jesus, Salvador and Rosalia died. Petitioner Zenaida, claiming to be Salvador’s heir,
demanded the rent from Antonio Hombrebueno, a tenant of Rosalia. The latter refused to pay, thus Zenaida
filed an ejectment suit against him with the MTC of Manila. The trial court ruled in favor of Zenaida. Private
respondents instituted an action for reconveyance of property with preliminary injunction against petitioner in
the RTC of Manila, where they alleged that the two deeds of sale executed on were simulated for lack of
consideration and that they were executed to accommodate Salvador in generating funds for his business
ventures and providing him with greater business flexibility. The trial court and the Court of Appeals ruled in
favor of the private respondents.

ISSUES:

1.Are payments of realty taxes and retention of possession indications of continued ownership by the original
owners?

2. Is a sale through a public instrument tantamount to delivery of the thing sold?

RULING:

1.Yes. While it is true that neither tax receipts nor declarations of ownership for taxation purposes constitute
sufficient proof of ownership, they are, if supported by other effective proofs. These requisite proofs we find
present in this case. As admitted by petitioner, despite the sale, Jesus and Rosalia continued to possess and
administer the property and enjoy its fruits by leasing it to third persons. Both Rosa and Salvador did not
exercise any right of ownership over it. After Salvador registered the property in his name, he surrendered the
title to his mother.13 These are clear indications that ownership still remained with the original owners. The
continued collection of rentals from the tenants by the seller of realty after execution of alleged deed of sale is
contrary to the notion of ownership.

2. No. Article 1498 provides that when the sale is made through a public instrument, its execution is
equivalent to the delivery of the thing subject of the contract. Petitioner avers that applying said provisions to
the case, Salvador became the owner of the subject property by virtue of the two deeds of sale executed in his
favor.
 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. 16 Presumptive delivery can be negated by
the failure of the vendee to take actual possession of the land sold.

In Danguilan vs. IAC, for the execution of a public instrument to effect tradition, the purchaser must be placed
in control of the thing sold. 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.

Moreover, in Norkis Distributors, Inc. vs. CA, the critical factor in the different modes of effecting delivery,
which gives legal effect to the act is the actual intention of the vendor to deliver, and its acceptance by the
vendee. Without that intention, there is no tradition.

15. Dy Jr. vs. CA, 198 SCRA 826

FACTS:

Petitioner Perfecto Dy and Wilfredo Dy are brothers. Wilfredo Dy purchased a truck and a farm tractor
through financing extended by Libra Finance and Investment Corporation (Libra). Both truck and tractor were
mortgaged to Libra as security for the loan. The petitioner wanted to buy the tractor from his brother so he
wrote a letter to Libra requesting that he be allowed to purchase from Wilfredo Dy the said tractor and assume
the mortgage debt of the latter. – approved by Libra thru its manager Ares.

Wilfredo executed a DAS in favor of Perfecto over the tractor in question. At this time, the subject tractor was
in the possession of Libra Finance due to Wilfredo Dy's failure to pay the amortizations.

Despite the offer of full payment by the petitioner to Libra for the tractor, the immediate release could not be
effected because Wilfredo had obtained financing not only for said tractor but also for a truck and Libra
insisted on full payment for both.

  The petitioner was able to convince his sister, Carol Dy-Seno, to purchase the truck so that full payment could
be made for both.  A PNB check was issued in the amount of P22k in favor of Libra, thus settling in full the
indebtedness of Wilfredo with the financing firm. Payment having been effected through an out-of-town
check, Libra insisted that it be cleared first before Libra could release the chattels in question.

Meanwhile, in another civil case, an alias writ of execution was  issued and the provincial sheriff was able to
seize and levy on the tractor which was in the premises of Libra in Carmen, Cebu. The tractor was
subsequently sold at public auction where Gelac Trading was the lone bidder. Later, Gelac sold the tractor to
one of its stockholders, Antonio Gonzales.
It was only when the check was cleared on January 17, 1980 that the petitioner learned about GELAC having
already taken custody of the subject tractor. Consequently, the petitioner filed an action to recover the subject
tractor against GELAC Trading with the Regional Trial Court of Cebu City.

ISSUE: Whether 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.

RULING: No, there was constructive delivery. The mortgagor who gave the property as security under a
chattel mortgage did not part with the ownership over the same. He had the right to sell it although he was
under the obligation to secure the written consent of the mortgagee or he lays himself open to criminal
prosecution under the provision of Article 319 par. 2 of the Revised Penal Code. And even if no consent was
obtained from the mortgagee, the validity of the sale would still not be affected.

Thus, we see no reason why Wilfredo Dy, as the chattel mortgagor cannot sell the subject tractor. There is no
dispute that the consent of Libra Finance was obtained in the instant case. In a letter dated August 27, 1979,
Libra allowed the petitioner to purchase the tractor and assume the mortgage debt of his brother. The sale
between the brothers was therefore valid and binding as between them and to the mortgagee, as well.

Art. 1498. 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.

Article 1499. The delivery of movable property may likewise be made by the mere consent or agreement of the
contracting parties, if the thing sold cannot be transferred to the possession of the vendee at the time of the
sale, or if the latter already had it in his possession for any other reason.

In the instant case, actual delivery of the subject tractor could not be made. However, there was constructive
delivery already upon the execution of the public instrument pursuant to Article 1498 and upon the consent or
agreement of the parties when the thing sold cannot be immediately transferred to the possession of the vendee
(1499)

While it is true that Wilfredo Dy was not in actual possession and control of the subject tractor, his right of
ownership was not divested from him upon his default. Neither could it be said that Libra was the owner of the
subject tractor because the mortgagee cannot become the owner of or convert and appropriate to himself the
property mortgaged. (Article 2088, Civil Code) Said property continues to belong to the mortgagor. The only
remedy given to the mortgagee is to have said property sold at public auction and the proceeds of the sale
applied to the payment of the obligation secured by the mortgagee.

The sale of the subject tractor was consummated upon the execution of the public instrument on September 4,
1979. At this time constructive delivery was already effected. Hence, the subject tractor was no longer owned
by Wilfredo Dy when it was levied upon by the sheriff in December, 1979.

16. Power Commercial and Industrial Corp. v. CA, 274 SCRA 597 (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.

ISSUES:
1) Whether there was a substantial breach of the contract between the parties warranting rescission.
2) Whether there was symbolic delivery.

RULING:
1.None. The alleged "failure" of respondent spouses to eject the lessees from the lot in question and to deliver
actual and physical possession thereof cannot be considered a substantial breach of a condition for two
reasons: first, such "failure" was not stipulated as a condition — whether resolutory or suspensive — in the
contract; and second, its effects and consequences were not specified either.

By his own admission, Anthony Powers, General Manager of petitioner-corporation, did not ask the
corporation's lawyers to stipulate in the contract that Respondent Reynaldo was guaranteeing the ejectment of
the occupants, because there was already a proviso in said deed of sale that the sellers were guaranteeing the
peaceful possession by the buyer of the land in question. Any obscurity in a contract, if the above-quoted
provision can be so described, must be construed against the party who caused it.  16 Petitioner itself caused the
obscurity because it omitted this alleged condition when its lawyer drafted said contract.

In Romero vs.  Court of Appeals, 17 where the ejectment of the occupants of the lot sold by private respondent
was the operative act which set into motion the period of petitioner's compliance with his own obligation,  i.e.,
to pay the balance of the purchase price. Failure to remove the squatters within the stipulated period gave the
other party the right to either refuse to proceed with the agreement or to waive that condition of ejectment in
consonance with Article 1545 of the Civil Code.

Absent a stipulation therefor, we cannot say that the parties intended to make its nonfulfillment a ground for
rescission. If they did intend this, their contract should have expressly stipulated so. Furthermore, petitioner
was well aware of the presence of the tenants at the time it entered into the sales transaction. In fact, petitioner
actually filed suit to eject the occupants.

2. Yes, there was effective symbolic delivery.

The Court disagrees with petitioner's allegation that the respondent spouses failed to deliver the lot sold.
Petitioner asserts that the legal fiction of symbolic delivery yielded to the truth that, at the execution of the
deed of sale, transfer of possession of said lot was impossible due to the presence of occupants on the lot sold.
We find this misleading.

Although most authorities consider transfer of ownership as the primary purpose of sale, delivery remains an
indispensable requisite as our law does not admit the doctrine of transfer of property by mere consent.  The
Civil Code provides that delivery can either be (1) actual (Article 1497) or (2) constructive (Articles 1498-
1501). Symbolic delivery (Article 1498), as a species of constructive delivery, effects the transfer of ownership
through the execution of a public document. Its efficacy can, however, be prevented if the vendor does not
possess control over the thing sold, 22 in which case this legal fiction must yield to reality.

In order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall
have had such control over the thing sold that . . . its material delivery could have been made. It is not enough
to confer upon the purchaser the ownership and the right of possession. The thing sold must be placed in
his control. When there is no impediment whatever to prevent the thing sold passing into the 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 of the thing and make use of it himself or through another in his name, because such
tenancy and enjoyment are opposed by the interposition of another will, then fiction yields to reality — the
delivery has not been effected.

Considering that the deed of sale between the parties did not stipulate or infer otherwise, delivery was effected
through the execution of said deed. The lot sold had been placed under the control of petitioner; thus, the filing
of the ejectment suit was subsequently done. It signified that its new owner intended to obtain for itself and to
terminate said occupants' actual possession thereof. Prior physical delivery or possession is not legally required
and the execution of the deed of sale is deemed equivalent to delivery. 24 This deed operates as a formal or
symbolic delivery of the property sold and authorizes the buyer to use the document as proof of ownership.
Nothing more is required.

17. Chua v. CA, 401 SCRA 54 (2003)

FACTS: Valdes-Choy advertised for sale her paraphernal house and lot with an area of 718 sqm. in Makati
City covered by TCT No. 162955. Chua responded to the advertisement and after several meetings, both
agreed on a purchase price of P10,800,000.00 payable in cash.

Valdes-Choy received from Chua a check for P100,000 as earnest money, the balance of P10M is payable on
or before July 25, 1989. Capital Gains Tax (CGT) for the account of the seller. Failure to pay balance forfeits
the earnest money, all of these are evidenced in the receipt.

The parties met with their respective counsels to execute the necessary documents and arrange the payments.
Valdes-Choy as vendor and Chua as vendee signed two Deeds of Absolute Sale (DoAS). The first Deed of
Sale covered the house and lot for the purchase price of P8M. The second Deed of Sale covered the
furnishings, fixtures and movable properties contained in the house for the purchase price of P2.8M. The
parties also computed the CGT to amount to P485,000.00.

In order to pay for such, Chua handed to Valdes-Choy the PBCom manager's check for P485,000.00. The latter
issued a receipt showing that Chua had a remaining balance of P10,215,000.00. Chua also showed a PBCom
manager's check for P10,215,000.00 representing the balance of the purchase price but did not give it to
Valdes-Choy because the TCT was still registered in her name. This angered Valdes-Choy who tore up the
Deeds of Sale, claiming that what Chua required was not part of their agreement.

Chua confirmed his stop payment order by submitting to PBCom an affidavit of loss of the PBCom Manager's
Check for P480,000.00 (the payment of CGT) but this was already lifted by his previous verbal advice.

The deadline for the payment of the balance of the purchase price, Valdes-Choy suggested to her counsel that
to break the impasse Chua should deposit in escrow the P10,215,000.00 balance. Upon such deposit, Valdes-
Choy was willing to cause the issuance of a new TCT in the name of Chua even without receiving the balance
of the purchase price. Valdes-Choy believed this was the only way she could protect herself if the certificate of
title is transferred in the name of the buyer before she is fully paid. Valdes-Choy's counsel promised to relay
her suggestion to Chua and his counsel, but nothing came out of it; rather Chua filed a complaint for specific
performance against Valdes-Choy which the trial court dismissed. Chua re-filed his complaint for specific
performance with damages.

After trial in due course, the RTC rendered judgment in favor of Chua holding that: (a) the transaction reached
an impasse because of Valdes-Choy when she wanted to be first paid the full consideration before a new TCT
covering the Property was issued in the name of Chua while the latter on the other hand did not want to pay the
consideration in full unless a new TCT was first issued in his name; (b) the parties entered into a contract to
sell on 30 June 1989, as evidenced by the Receipt for the P100,000.00 earnest money subject to the following
conditions: (1) the balance of P10,700,000.00 was payable not later than 15 July 1989; (2) Valdes-Choy may
stay in the Property until 13 August 1989; and (3) all papers must be “in proper order” before full payment is
made; (c) that Chua complied with the terms of the CTS and showed that he was prepared to pay Valdes-Choy
the consideration in full on 13 July 1989, two days before the deadline of 15 July 1989. Chua even added
P80,000.00 for the documentary stamp tax. He purchased from PBCom two manager's checks both payable to
Valdes-Choy. The first check for P485,000.00 was to pay the CGT. The second check for P10,215,000.00 was
to pay the balance of the purchase price demonstrating his capacity and readiness to pay the balance; (d) that
Valdes-Choy did not perform her correlative obligation under the contract to sell to put all the papers in order;
(e) the CGT had not been paid; (f) Valdes-Choy was in a position to deliver only the owner's duplicate copy of
the TCT, the signed Deeds of Sale, the tax declarations, and the latest realty tax receipt – these documents
were all useless without the BIR receipt evidencing full payment of the CGT which is a prerequisite to the
issuance of a new certificate of title in Chua's name.

Valdes-Choy appealed to the Court of Appeals which reversed the decision of the trial court with the following
findings:

(a) Chua's stance to pay the full consideration only after the Property is registered in his name was not the
agreement of the parties, there is a whale of difference between the phrases “all papers are in proper order”
as written on the Receipt, and "transfer of title" as demanded by Chua; (b) all the papers were in order and that
Chua had no valid reason not to pay on the agreed date. Valdes-Choy was in a position to deliver the owner's
duplicate copy of the TCT, the signed Deeds of Sale, the tax declarations, and the latest realty tax receipt. The
Property was also free from all liens and encumbrances. (c) Chua did not want to give up the check unless “the
property was already in his name”. Although Chua demonstrated his capacity to pay, this could not be equated
with actual payment which he refused to do; (d) the non-payment of the CGT is not a failure by Valdes-Choy
to put the papers “in proper order”, the payment of the CGT has no bearing on the validity of the Deeds of
Sale. It is only after the deeds are signed and notarized can the final computation and payment of the CGT can
be made.

Chua has consistently characterized his agreement with Valdez-Choy, as evidenced by the Receipt, as a
contract to sell and not a contract of sale. This has been Chua's persistent contention in his pleadings before the
trial and appellate courts but later changed his theory on his appeal before the Supreme Court saying that there
is a perfected contract of sale rather than a contract to sell. He contends 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 for the first time that his
payment of earnest money and its acceptance by Valdes-Choy precludes the latter from rejecting the binding
effect of the contract of sale. Thus, Chua claims that Valdes-Choy may not validly rescind the contract of sale
without following Article 1592 of the Civil Code which requires demand, either judicially or by notarial act,
before rescission may take place.

ISSUES: (a) Whether the transaction between Chua and Valdes-Choy is a perfected contract of sale or a mere
contract to sell; and
(b) whether Chua can compel Valdes-Choy to cause the issuance of a new TCT in Chua's name even before
payment of the full purchase price.
RULING: (1) 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.

In a contract of sale, the title to the property passes to the vendee upon the delivery of the thing sold; in a
contract to sell, ownership is, by agreement, reserved in the vendor and is not to pass to the vendee until full
payment of the purchase price. Otherwise stated, in a contract of sale, the vendor loses ownership over the
property and cannot recover it until and unless the contract is resolved or rescinded; whereas, in a contract to
sell, title is retained by the vendor until full payment of the price. In the latter contract, payment of the price
is a positive suspensive condition, failure of which is not a breach but an event that prevents the obligation of
the vendor to convey title from becoming effective.

First, 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. In such an event, Valdes-Choy can sell the Property to other
interested parties. There is in effect a right reserved in favor of Valdes-Choy not to push through with the sale
upon Chua's failure to remit the balance of the purchase price before the deadline. This is in the nature of a
stipulation reserving ownership in the seller until full payment of the purchase price. 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.

Second, 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. T he 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.

Third, Valdes-Choy retained possession of the certificate of title and all other documents relative to the sale.
When Chua refused to pay Valdes-Choy the balance of the purchase price, Valdes-Choy also refused to turn-
over to Chua these documents. These are additional proof that the agreement did not transfer to Chua, either by
actual or constructive delivery, ownership of the Property.

It is true that Article 1482 of the Civil Code provides that "Whenever earnest money is given in a contract of
sale, it shall be considered as part of the price and proof of the perfection of the contract." However, this article
speaks of earnest money given in a contract of sale. In this case, the earnest money was given in a contract to
sell. The Receipt evidencing the contract to sell stipulates that the earnest money is a forfeitable deposit, to be
forfeited if the sale is not consummated should Chua fail to pay the balance of the purchase price. The earnest
money forms part of the consideration only if the sale is consummated upon full payment of the purchase
price. If there is a contract of sale, Valdes-Choy should have the right to compel Chua to pay the balance of the
purchase price. Chua, however, has the right to walk away from the transaction, with no obligation to pay the
balance, although he will forfeit the earnest money. Clearly, there is no contract of sale. The earnest money
was given in a contract to sell, and thus Article 1482, which speaks of a contract of sale, is not applicable.

Since the agreement between Valdes-Choy and Chua is a mere contract to sell, the full payment of the
purchase price partakes of a suspensive condition. The non-fulfillment of the condition prevents the obligation
to sell from arising and ownership is retained by the seller without further remedies by the buyer. Article 1592
of the Civil Code permits the buyer to 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 notarial act. However, Article 1592
does not apply to a contract to sell where the seller reserves the ownership until full payment of the price.

Chua insists that he was ready to pay the balance of the purchase price but withheld payment because Valdes-
Choy did not fulfill her contractual obligation to put all the papers in "proper order." Specifically, Chua claims
that Valdes-Choy failed to show that the capital gains tax had been paid after he had advanced the money for
its payment. For the same reason, he contends that Valdes-Choy may not forfeit the earnest money even if he
did not pay on time.

There is a variance of interpretation on the phrase "all papers are in proper order" as written in the Receipt.
There is no dispute though, that as long as the papers are "in proper order," Valdes-Choy has the right to forfeit
the earnest money if Chua fails to pay the balance before the deadline.

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.

It is only upon the existence of the contract of sale that the seller becomes obligated to transfer the ownership
of the thing sold to the buyer. Article 1458 of the Civil Code defines a contract of sale as follows:

Art. 1458. By the contract of sale 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.

Prior to the existence of the contract of sale, the seller is not obligated to transfer ownership to the buyer, even
if there is a contract to sell between them. It is also upon the existence of the contract of sale that the buyer is
obligated to pay the purchase price to the seller. Since the transfer of ownership is in exchange for the purchase
price, these obligations must be simultaneously fulfilled at the time of the execution of the contract of sale, in
the absence of a contrary stipulation.

In a contract of sale, the obligations of the seller are specified in Article 1495 of the Civil Code, as follows:

Art. 1495. The vendor is bound to transfer the ownership of and deliver, as well as warrant the thing which is
the object of the sale.

The obligation of the seller is to transfer to the buyer ownership of the thing sold. In the sale of real property,
the seller is not obligated to transfer in the name of the buyer a new certificate of title, but rather to transfer
ownership of the real property. There is a difference between transfer of the certificate of title in the name of
the buyer, and transfer of ownership to the buyer. The buyer may become the owner of the real property even
if the certificate of title is still registered in the name of the seller. As between the seller and buyer, ownership
is transferred not by the issuance of a new certificate of title in the name of the buyer but by the execution of
the instrument of sale in a public document.

In a contract of sale, ownership is transferred upon delivery of the thing sold. Delivery is not only a necessary
condition for the enjoyment of the thing, but is a mode of acquiring dominion and determines the transmission
of ownership, the birth of the real right. The delivery, therefore, made in any of the forms provided in articles
1497 to 1505 signifies that the transmission of ownership from vendor to vendee has taken place. The delivery
of the thing constitutes an indispensable requisite for the purpose of acquiring ownership. Our law does not
admit the doctrine of transfer of property by mere consent; the ownership, the property right, is derived only
from delivery of the thing.

In a contract of sale of real property, delivery is effected when the instrument of sale is executed in a public
document. When the deed of absolute sale is signed by the parties and notarized, then delivery of the real
property is deemed made by the seller to the buyer. Article 1498 of the Civil Code provides that –

Art. 1498. 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.
Similarly, in a contract to sell real property, once the seller is ready, able and willing to sign the deed of
absolute sale before a notary public, the seller is in a position to transfer ownership of the real property to the
buyer. At this point, the seller complies with his undertaking to sell the real property in accordance with the
contract to sell, and to assume all the obligations of a vendor under a contract of sale pursuant to the relevant
articles of the Civil Code. In a contract to sell, the seller is not obligated to transfer ownership to the buyer.
Neither is the seller obligated to cause the issuance of a new certificate of title in the name of the buyer.
However, the seller must put all his papers in proper order to the point that he is in a position to transfer
ownership of the real property to the buyer upon the signing of the contract of sale.

In the instant case, Valdes-Choy was in a position to comply with all her obligations as a seller under the
contract to sell. First, she already signed the Deeds of Sale in the office of her counsel in the presence of the
buyer. Second, she was prepared to turn-over the owner's duplicate of the TCT to the buyer, along with the tax
declarations and latest realty tax receipt. Clearly, at this point Valdes-Choy was ready, able and willing to
transfer ownership of the Property to the buyer as required by the contract to sell, and by Articles 1458 and
1495 of the Civil Code to consummate the contract of sale.

Chua, however, refused to give to Valdes-Choy the PBCom manager's check for the balance of the purchase
price. Chua imposed the condition that a new TCT should first be issued in his name, a condition that is found
neither in the law nor in the contract to sell as evidenced by the Receipt. Thus, at this point Chua was not
ready, able and willing to pay the full purchase price which is his obligation under the contract to sell. Chua
was also not in a position to assume the principal obligation of a vendee in a contract of sale, which is also to
pay the full purchase price at the agreed time. Article 1582 of the Civil Code provides that –

Art. 1582. The vendee is bound to accept delivery and to pay the price of the thing sold at the time and place
stipulated in the contract.

In this case, the contract to sell stipulated that Chua should pay the balance of the purchase price "on or before
15 July 1989." The signed Deeds of Sale also stipulated that the buyer shall pay the balance of the purchase
price upon signing of the deeds. However, on the agreed date, Chua refused to pay the balance of the purchase
price as required by the contract to sell, the signed Deeds of Sale, and Article 1582 of the Civil Code. Chua
was therefore in default and has only himself to blame for the rescission by Valdes-Choy of the contract to sell.

Even if measured under existing usage or custom, Valdes-Choy had all her papers "in proper order."
Article 1376 of the Civil Code provides that:

Art. 1376. The usage or custom of the place shall be borne in mind in the interpretation of the ambiguities of a
contract, and shall fill the omission of stipulations which are ordinarily established.

Customarily, in the absence of a contrary agreement, the submission by an individual seller to the buyer of the
following papers would complete a sale of real estate: (1) owner's duplicate copy of the Torrens title; (2)
signed deed of absolute sale; (3) tax declaration; and (3) latest realty tax receipt. The buyer can retain the
amount for the capital gains tax and pay it upon authority of the seller, or the seller can pay the tax, depending
on the agreement of the parties.

The buyer has more interest in having the CGT paid immediately since this is a prerequisite to the issuance of
a new Torrens title in his name. Nevertheless, as far as the government is concerned, the capital gains tax
remains a liability of the seller since it is a tax on the seller's gain from the sale of the real estate. Payment of
the capital gains tax, however, is not a prerequisite to the transfer of ownership to the buyer. The transfer of
ownership takes effect upon the signing and notarization of the deed of absolute sale.

The recording of the sale with the proper ROD and the transfer of the certificate of title in the name of the
buyer are necessary only to bind third parties to the transfer of ownership. As between the seller and the buyer,
the transfer of ownership takes effect upon the execution of a public instrument conveying the real estate.
Registration of the sale with the Registry of Deeds, or the issuance of a new certificate of title, does not confer
ownership on the buyer. Such registration or issuance of a new certificate of title is not one of the modes of
acquiring ownership.

In this case, Valdes-Choy was ready, able and willing to submit to Chua all the papers that customarily would
complete the sale, and to pay as well the capital gains tax. On the other hand, Chua's condition that a new TCT
be first issued in his name before he pays the balance of P10,215,000.00, representing 94.58% of the purchase
price, is not customary in a sale of real estate. Such a condition, not specified in the contract to sell as
evidenced by the Receipt, cannot be considered part of the "omissions of stipulations which are ordinarily
established" by usage or custom. What is increasingly becoming customary is to deposit in escrow the balance
of the purchase price pending the issuance of a new certificate of title in the name of the buyer. Valdes-Choy
suggested this solution but unfortunately, it drew no response from Chua.

Chua had no reason to fear being swindled. Valdes-Choy was prepared to turn-over to him the owner's
duplicate copy of the TCT, the signed Deeds of Sale, the tax declarations, and the latest realty tax receipt.
There was no hindrance to paying the capital gains tax as Chua himself had advanced the money to pay the
same and Valdes-Choy had procured a manager's check payable to the Bureau of Internal Revenue covering
the amount. It was only a matter of time before the capital gains tax would be paid. Chua acted precipitately in
filing the action for specific performance a mere two days after the deadline of 15 July 1989 when there was an
impasse. While this case was dismissed on 22 November 1989, he did not waste any time in re-filing the same
on 29 November 1989.

Accordingly, 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. Article 1181 of the Civil
Code provides that -

ART. 1181. In conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those
already acquired shall depend upon the happening of the event which constitutes the condition.

Chua acquired no right to compel Valdes-Choy to transfer ownership of the Property to him because the
suspensive condition - the full payment of the purchase price - did not happen. There is no correlative
obligation on the part of Valdes-Choy to transfer ownership of the Property to Chua. There is also no
obligation on the part of Valdes-Choy to cause the issuance of a new TCT in the name of Chua since unless
expressly stipulated, this is not one of the obligations of a vendor.

The Decision of the Court of Appeals is AFFIRMED in toto.

18. Raquel-Santos v. CA, 592 SCRA 169 (2009)

FACTS: Three petitions in the Supreme Court, arising from related events, were consolidated. These cases
cropped up from the failure of Finvest Securities Co., Inc. (Finvest), to meet its obligations to its clients and
the Philippine Stock Exchange (PSE), allegedly caused by mishandling of Finvest’s funds and property by its
officers, Armand O. Raquel-Santos, Finvest’s President and nominee to the PSE and Annalissa Mallari,
Finvest’s Administrative Officer, who Finvest holds responsible for the undelivered shares of stock to its
clients.

In the course of its trading operations, Finvest incurred liabilities to PSE representing fines and penalties for
non-payment of its clearing house obligations. PSE also received reports that Finvest was not meeting its
obligations to its clients. Consequently, PSE indefinitely suspended Finvest from trading. The SEC also
suspended its license as broker.
The suspension according to Finvest consequently led to its failure to perform its obligations to its clients.
Thus, a case was instituted against Finvest by two of its clients, Trans-Phil Marine Enterprises, Inc. (TMEI)
and Roland Garcia when the latter filed a complaint against Finvest with the SEC praying for the delivery of
stock certificates and payment of dividends on the stocks they purchased. The Complaint alleged that, from
February 4, 1997 to July 31, 1997, TMEI and Roland Garcia purchased shares of stock of Piltel Corporation
through Finvest but the latter failed to deliver to them the stock certificates despite several demands. TMEI and
Roland Garcia also claimed that they were entitled to the dividends declared by Piltel from the time they
purchased the shares of stock.

In its Answer, Finvest asserted that it could not have complied with complainants’ demand for the delivery of
the stock certificates because it was under indefinite suspension since October 1997 and it had no means to
verify or validate their claims.

During the pre-trial stage, TMEI amended its complaint by modifying its prayer for a refund of the value of the
undelivered shares of stock, instead of the delivery of the stock certificates plus payment of dividends. Both
the RTC and CA found that Finvest failed to comply with its obligation to deliver to TMEI and Garcia the
shares of stock, Finvest was bound to return the amounts paid by them applying Article 1191 of the Civil
Code.

Finvest insists that the trial court and the CA had no basis in awarding in favor of respondents damages
equivalent to the value of the undelivered shares of stock purchased by TMEI and Garcia. Finvest posits that
there was no evidence to show that respondents were entitled thereto.

Finvest further contends that the order for them to pay the said shares of stock is in conflict with the CA
Decision (CA-G.R. CV No. 85176) ordering Finvest’s officers to render an accounting or to pay the value of
stock certificates that included those covering the shares of stock purchased by TMEI and Garcia. According to
Finvest, the two judgments caused an apparent confusion as to who would ultimately be held liable for the
subject shares.

Respondents counter that they have sufficiently proven the value of the shares of stock through the buy
confirmation slips, vouchers and official receipts, which they presented in evidence. They submit that liability
for these undelivered shares of stock of its officers is a corporate liability that Finvest may not pass on to its
erring officers.

ISSUE: Whether Finvest’s failure to deliver the stock certificates representing the shares of stock purchased by
TMEI and Garcia amounted to a substantial breach of their contract which gave rise to a right of the latter to
rescind the sale.

RULING: Yes, the CA was correct in applying Article 1191 of the Civil Code, which indicates the remedies
of the injured party in case there is a breach of contract:

“ART. 1191. 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 injured party may choose between the fulfillment and the rescission of the obligation, with the payment of
damages in either case. He may also seek rescission, even after he has chosen fulfillment, if the latter should
become impossible.”

Initially, respondents sought the fulfillment of Finvest’s obligation to deliver the stock certificates, instead of a
rescission. They changed their minds later and amended the prayer in their complaint and opted for a refund of
the purchase price plus damages. The trial court allowed the amendment, there being no objection from
Finvest.
The right of a party to rescission under Article 1191 of the Civil Code is predicated on a breach of faith by the
other party who violates the reciprocity between them.76 In a contract of sale, the seller obligated itself to
transfer the ownership of and deliver a determinate thing, and the buyer to pay therefor a price certain in
money or its equivalent. In some contracts of sale, such as the sale of real property, prior physical delivery of
the thing sold or its representation is not legally required, as the execution of the Deed of Sale effectively
transfers ownership of the property to the buyer through constructive delivery. Hence, delivery of the
certificate of title covering the real property is not necessary to transfer ownership.

In the sale of shares of stock, physical delivery of a stock certificate is one of the essential requisites for the
transfer of ownership of the stocks purchased. Section 63 of the Corporation Code provides thus:

“SEC. 63. Certificate of stock and transfer of shares.—The capital stock of stock corporations shall be
divided into shares for which certificates signed by the president or vice-president, countersigned by the
secretary or assistant secretary, and sealed with the seal of the corporation shall be issued in accordance with
the by-laws. Shares of stock so issued are personal property and may be transferred by delivery of the
certificate or certificates indorsed by the owner or his attorney-in-fact or other person legally authorized to
make the transfer. No transfer, however, shall be valid, except as between the parties, until the transfer is
recorded in the books of the corporation so as to show the names of the parties to the transaction, the date of
the transfer, the number of the certificate or certificates and the number of shares transferred.

No shares of stock against which the corporation holds any unpaid claim shall be transferable in the books of
the corporation.”

For a valid transfer of stocks, the requirements are as follows:

(a) there must be delivery of the stock certificate;
(b) the certificate must be endorsed by the owner or his attorney-in-fact or other persons legally authorized to
make the transfer; and
(c) to be valid against third parties, the transfer must be recorded in the books of the corporation.

Clearly, Finvest’s failed to deliver the stock certificates representing the shares of stock purchased by TMEI
and Garcia and thus, it amounted to a substantial breach of their contract which gave rise to a right to rescind
the sale.

Rescission creates the obligation to return the object of the contract. This is evident from Article 1385 of the
Civil Code which provides:

“ART. 1385. Rescission creates the obligation to return the things which were the object of the contract,
together with their fruits, and the price with its interest; consequently, it can be carried out only when he who
demands rescission can return whatever he may be obliged to restore.

Neither shall rescission take place when the things which are the object of the contract are legally in the
possession of third persons who did not act in bad faith.

In this case, indemnity for damages may be demanded from the person causing the loss.”

To rescind is to declare a contract void at its inception and to put an end to it as though it never was.
Rescission does not merely terminate the contract and release the parties from further obligations to each other,
but abrogates it from the beginning and restores the parties to their relative positions as if no contract has been
made.

Mutual restitution entails the return of the benefits that each party may have received as a result of the contract.
In this case, it is the purchase price that Finvest must return. The amount paid was sufficiently proven by the
buy confirmation receipts, vouchers, and official/provisional receipts that respondents presented in evidence.
In addition, the law awards damages to the injured party, which could be in the form of interest on the price
paid, as the trial court did in this case.

While the decision in the other case adjudges Finvest’s officers liable to Finvest for the missing stock
certificates, the assailed decision in this petition makes Finvest directly responsible to its clients for
undelivered stock certificates. Moreover, even if Finvest’s officers are blameworthy, the Court cannot hold
them solidarily liable, as they were not impleaded as parties to this case. Consolidation of cases does not make
the parties to one case parties to the other.

Finvest’s Petition is denied and the CA Decision and Resolution in CA-G.R. CV No. 85176 re AFFIRMED.

19 Amigo v. Teves, 96 Phil. 252 (1954)

FACTS: Macario Amigo and Anacleto Cagalitan executed in favor of their son, Marcelino Amigo, a power of
attorney granting him among others, the power “to lease, let, bargain, transfer, convey and sell, remise, release,
mortgage and hypothecate, part or any of the properties upon such terms and conditions, and under such
covenants as he shall think fit.”

Marcelino Amigo, in his capacity as attorney-in-fact, executed a deed of sale of a parcel of land for a price of
P3,000 in favor of Serafin Teves stipulating therein that the vendors could repurchase the land within a period
of 18 months from the date of the sale. In the same document, it was also stipulated that vendors would remain
in possession of the land as lessees for a period of 18 months subject to the following terms and conditions: (a)
the lessees shall pay P180 as rent every six months from the date of the agreement; (b) the period of the lease
shall terminate on April 30, 1940; (c) in case of litigation, the lessees shall pay P100 as attorney's fees; and (d)
in case of failure to pay any rental as agreed upon, the lease shall automatically terminate and the right of
ownership of vendee shall become absolute.

On July 20, 1939, the spouses Macario Amigo and Anacleta Cagalitan donated to their sons Justino Amigo and
Pastor Amigo several parcels of land including their right to repurchase the land in litigation. The deed of
donation was made in a public instrument, was duly accepted by the donees, and was registered in the Office
of the Register of Deeds.

The vendors-lessees paid the rental corresponding to the first six months, but not the rental for the subsequent
semester, and so on January 8, 1940, Serafin Teves, the vendee-lessor, executed an “Affidavit of Consolidation
of Title” in view of the failure of the lessees to pay the rentals as agreed upon, and registered said affidavit in
the Office of the ROD of Negros Oriental, who, on January 28, 1940, issued to Serafin Teves the
corresponding transfer of title over the land in question.

On March 9, 1940, Justino Amigo and Pastor Amigo, as donees of the right to repurchase the land in question,
offered to repurchase the land from Serafin Teves by tendering to him the payment of the redemption price but
the latter refused on the ground that the ownership had already been consolidated in him as purchaser a retro.
Hence, on April 26, 1940, before the expiration of the 18th-month period stipulated for the redemption of the
land, the donees instituted the present action.

Petitioners contend that, while the attorney-in-fact, Marcelino Amigo, had the power to execute a deed of sale
with right to repurchase under the power of attorney granted to him, however, the covenant of lease contained
in said deed whereby the vendors agreed to remain in possession of the land as lessees is not germane to said
power of attorney and, therefore, Marcelino Amigo acted in excess of his powers as such attorney-in-fact. The
Court of Appeals, therefore, committed an error in not declaring said covenant of lease ultra vires and null and
void.
The Court of Appeals, after analyzing the extent and scope of the powers granted to Marcelino Amigo in the
power of Attorney executed in his favor by his principals, found that such powers are broad enough to justify
the execution of any contract concerning the lands covered by the authority even if this be a contract of lease.
The court even went further: even in the supposition that the power to take the land under lease is not included
within the authority granted, petitioners cannot now impugn the validity of the lease covenant because such
right devolves upon the principals, who are the only one who can claim that their agent has exceeded the
authority granted to him, and because said principals had tacitly ratified the act done by said agent.

ISSUES:
(1) The lease covenant contained in the deed of sale with pacto de retro executed by Marcelino Amigo as
attorney-in-fact in favor of Serafin Teves is not germane to, nor within the purview of, the powers granted to
said attorney-in-fact and, therefore, is ultra vires and null and void;

(2) The penal clause stipulated in the lease covenant referring to the automatic termination of the period of
redemption is null and void; and

(3) petitioners should be allowed to repurchase the land on equitable grounds considering the great
disproportion between the redemption price and the market value of the land on the date the period of
redemption is supposed to expire.

RULING: The Court finds no plausible reason to disturb the findings of the Court of Appeals. A cursory
reading of the Power of Attorney would at once reveal that the power granted to the agent is so broad that it
practically covers the celebration of any contract and the conclusion of any covenant or stipulation. Thus,
among the powers granted are: to bargain, contract, agree for, purchase, receive, and keep lands, tenements,
hereditaments, and accept the seizing and possessing of all lands," or "to lease, let, bargain, transfer, convey
and sell, remise, release, mortgage and hypothecate upon such terms and conditions, and under such covenants
as he shall think fit."

When the power of attorney says that the agent can enter into any contract concerning the land, or can sell the
land under any term or condition and covenant he may think fit, it undoubtedly means that he can act in the
same manner and with the same breath and latitude as the principal could concerning the property. The fact
that the agent has acted in accordance with the wish of his principals can be inferred from their attitude in
donating to the herein petitioners the right to redeem the land under the terms and conditions appearing in the
deed of sale executed by their agent.

Nothing unusual in the lease covenant embodied in the deed of sale for such is common in contracts involving
sales of land with pacto de retro. The lease that a vendor executes on the property may be considered as a
means of delivery or tradition by constitutum possessorium. Where the vendor a retrocontinues to occupy the
land as lessee, by fiction of law, the possession is deemed to be constituted in the vendee by virtue of this
mode of tradition. This covenant regarding the lease of the land sold is germane to the contract of sale with
pacto de retro.

While the lease covenant may be onerous or may work hardship on the vendor because of its clause providing
for the automatic termination of the period of redemption, however, the same is not contrary to law, morals, or
public order, which may serve as basis for its nullification. Rather than obnoxious are oppressive, it is a clause
common in a sale with pacto de retro, and as such it received the sanction of our courts.

We have not failed to take notice of the Court's warning that "admitting the validity of such a provision, it is
not to be expected that any court will be reluctant to relieve from its effects wherever this can be done
consistently with established principles of law." We only wish that in this case, a way may be found consistent
with law whereby we would relieve the petitioners from the effects of the penal clause under consideration,
but, to our regret, none we have found, for respondent has been alert and quick enough to assert his right by
consolidating his ownership when the first chance to do so has presented itself. He has shown no vacillation,
nor offered any compromise which may deem as a waiver or a justification for forfeiting the privilege given
him under the penal clause. The only alternative left is to enforce it as stipulated in the agreement.

Petitioners also contend that as the assessed value of the land in 1938, when the contract was celebrated, was
P4,280, the selling price of P3,000 agreed upon is considered as not written, and petitioners should be allowed
to exercise the right to repurchase on equitable considerations. And in support of this contention, counsel
presented evidence to show that the market price of the land in 1940, the year the period of redemption was
supposed to expire was fourteen times more than the money paid for it by respondent such that, if that should
be taken as basis, the value of the land would be P43,004.50.

While this contention may have some basis when considered with reference to an absolute contract of sale, it
loses weight when applied to a contract of sale with pacto de retro, where the price is usually less than in
absolute sale for the reason that in a sale with pacto de retro, the vendor expects to re-acquire or redeem the
property sold. Another flaw we find is that all the evidence presented refers to sales which were executed in
1940 and 1941 and none was presented pertaining to 1938, or its neighborhood, when the contract in question
was entered into. And the main reason we find for not entertaining this claim is that it involves a question of
fact and as the Court of Appeals has found that the price paid for the land is not unreasonable as to justify the
nullification of the sale, such finding, in appeal by certiorari, is final and conclusive upon this Court.

Finding no error in the decision appealed from, the same is hereby affirmed, without pronouncement as to
costs.

20. Fortune Tobacco Corp. v. NLRC, 200 SCRA 766 (1991)

FACTS: On January 29, 1986, the private respondents filed a complaint for illegal dismissal against their
employer, petitioner Fortune Tobacco Corporation (FTC) before the NLRC praying that they be reinstated in
the company with full backwages and without loss of seniority rights.

Petitioner maintained that it had already sold its redrying plant as of October 17, 1985.

The Labor Arbiter to whom the case was assigned rendered a decision, ordering Petitioner to reinstate the
individual complainants to their former positions with full backwages reckoned from October 5, 1985 up to
actual reinstatement, or, in the alternative, to pay each of the complainants their separation pay equivalent at
least to one month salary for every year of service, whichever is higher a fraction of six months being
considered as one whole year, and for purposes of computing said benefit, the usual or normal seasonal period
of one (1) calendar year shall be treated as one (1) whole year.

FTC appealed the said decision of the Labor Arbiter to the NLRC which the latter modified considering that as
alleged by FTC without any contravention from the complainants that the plant had already been sold,
respondent-appellant must pay separation pay to all those who opt not to be rehired by the new owner of the
plant. Respondent appellant must also pay the complainants’ back wages from October 5, 1985 up to the date
the plant was actually sold. Such backwages must be computed by taking into consideration the nature of the
complainant's work as seasonal period in one (1) calendar year should be treated as one (1) whole year. The
decision of the NLRC became final and executory.

On August 21, 1990, the Research and Information Unit of the NLRC came up with its "Computation of
Backwages and Separation Pay" pursuant to the decision dated July 31, 1989. The amount stated in the
computation is P3,863,464.89. The said amount was apparently reached by reckoning the computation period
to start from October 5, 1985 up to August 1990. The research unit also stated that it took into account this
period because the date of the actual sale of the plant is not ascertained.
On August 28, 1990, in a hearing set up for the purpose, the petitioner was given ample time to establish by
way of competent proof the date of the actual sale of the plant and its facilities cited in the final and executory
decision of the NLRC. On September 7, 1990, the petitioner filed its manifestation to which was attached a
certified copy of the "Deed of Conditional Sale" executed by and between the petitioner and Premium Tobacco
Redrying and Fluecuring Company, Inc. (PTRFC) date October 17, 1985. The petitioner also attached its own
computation of the amounts which should be paid to the private respondents. In fine, the petitioner has taken
the position that the date of the actual sale of the plant and its facilities is October 17, 1985 and as such the
amount stated in the computation of the research unit of the NLRC should be substantially reduced.

On September 29, 1990, the private respondents filed the "Opposition to Manifestation" with annexes showing
a certification from the Office of the Municipal Assessor of Marikina Metro Manila, a copy of a Declaration of
Real Property and a affidavit of one of the complainants in this case alleging that there was no actual sale of
the plant and its facilities to the alleged vendee. The opposition alleges, among others, that there was no actual
transfer or actual sale of the plant and its facilities in favor of the PTRFCI; that only a change in name and
form has been undertaken by the petitioner, that the properties are still declared in the name of the petitioner;
that the PTRFCI representative, a certain Mr. Angelo Ang, is the plant manager of the Vigan, Ilocos Sur plant
of the petitioner that the control, management, operation and funding of the plant are in the hands of the
petitioner notwithstanding the alleged sale; and that the computation made by the NLRC is order.

The petitioner filed its comment/rejoinder on September 27, 1990, alleging therein that the sale on October 17,
1985 is valid and that the property remains in the name of the petitioner pending the full payment of the
purchase price agreed upon by the vendor and the vendee.

On October 26, 1990, Labor Arbiter Ramon Reyes issued: order holding, among others, that there was no
actual sale between the petitioner and the PTRFCI; that the Deed of Conditional Sale entered into by the said
parties does not state any consideration; and that no actual sale has taken place. With this observations, the
labor arbiter went on to declare that the computation of the research unit of the NLRC in the amount of
P3,863,464.89 is in accord with the resolution of the said Commission.

On October 30, 1990, the labor arbiter issued a writ of execution directing the Acting Sheriff of the NLRC to
collect the aforestated amount of P3,863,464.89 from the petitioner in satisfaction of its obligation or to cause
the full satisfaction of the same out of the chattels of the immovable properties of the petitioner.

The petitioner elevated the case to the Supreme Court and prayed for the issuance of a TRO and or writ of
preliminary injunction. The thrust of the petition is that the computation made by the NLRC is attended with
grave abuse of discretion and thus, the writ of execution should not be enforced. The petitioner also argues that
the award of damages should be limited to cover a three-year period only, in accordance with prevailing
jurisprudence.

On November 21, 1990, this Court resolved to issue a temporary restraining order enjoining the private
respondents from enforcing the challenged writ of execution. The petitioner filed a bond in the amount of
P100,000.00.

The Office of the Solicitor General, as counsel for the NLRC, filed its comment praying therein for the
dismissal of the petition on the ground that no jurisdictional infirmity attended the issuance of the challenged
writ of execution because there is no actual sale of the plant and its facilities up to the present time.

The Court eventually resolved to give due course to the petition. After the parties filed the required pleadings,
the case was deemed submitted for decision.

Pursuant to the resolution of the NLRC dated July 31, 1989, which was for all intents and purposes sustained
by this Court as explained earlier, the petitioner is required to, among others, pay the backwages of the private
respondents for the period covering October 5, 1985 up to the time the plant and its facilities are actually sold.
The petitioner maintains that the plant and its facilities were sold on October 17, 1985 by virtue of the Deed of
Conditional Sale, bearing the same date, executed by the petitioner and the PTRFCI. Thus put, the petitioner
contends that the amount of backwages to be paid to the private respondents should be based on the period
covering October 5 to 17, 1985. On the other hand, the private respondents maintain that there has been no
actual sale of the plant and its facilities up to the present time and as such the backwages to be paid should be
computed accordingly. The NLRC shares the view of the private respondents.

ISSUE: Whether there is actual sale of the plant that would warrant the Petitioners contention.

RULING: No, while the Deed of Conditional Sale was executed on October 17, 1985, it does not necessarily
follow that the plant and its facilities were, ipso facto, sold on that very day. The pertinent portions of the said
document are as follows:

"1. Upon execution of this Deed the PROPERTIES shall be deemed transferred to the possession of the
VENDEE. Ownership, however, over the PROPERTIES shall be retained by the VENDOR until the VENDEE
shall have paid in full the purchase price stipulated in Article I hereof The VENDEE shall not, in the
meantime, sell, lease, let or otherwise encumber or dispose of the PROPERTIES or assign its rights under this
Agreement without the prior written consent of the VENDOR. Any disposition made in violation of this article
shall be void ab initio.

"2. The VENDOR, upon full payment by the VENDEE of the unpaid balance of the purchase price inclusive of
interest charges above specified will execute and deliver to the VENDEE a final or absolute deed of sale over
the PROPERTIES.

"II. DEFAULT AND FORFEITURE

"1. That in case the VENDEE fails to make timely payment as specified above, or fails to perform any of the
covenants or agreements hereof, this contract shall, at the exclusive option of the VENDOR, be annulled and
in such event, all payments made by the VENDEE by virtue of this contract shall be automatically forfeited
and retained by the VENDOR as rental payments for the use of said PROPERTIES and/or liquidated damages
sustained by it as a result of the VENDEE’S default; and the VENDEE shall forthwith surrender the
possession and custody of the PROPERTIES to the VENDOR" 8

A careful evaluation of the stipulations of the said agreement will readily show that the petitioner has no
intention to transfer ownership over the plant and its facilities to the vendee unless there is full payment of the
purchase price on the part of the latter. In fact, it is clearly stipulated that ownership over the plant and its
facilities will be transferred to the vendee by way of "a final and absolute deed of sale" only after such full
payment, inclusive of interest charges. The terms and conditions of the agreement speak for themselves. At any
rate, even accepting that the plant and its facilities have been sold on a conditional basis, there can be no actual
sale thereof unless the plant and its facilities are unconditionally conveyed to the PTRFCI by virtue of "a final
or absolute deed of sale" in accordance with the terms and conditions stated in the agreement between the
parties.

The Solicitor General manifests that the tax records of the petitioner as well as the certification issued by the
Municipal Assessor of Marikina reveal that the plant is still registered in the name of the petitioner. 9 The
Solicitor General points out that under these circumstances, the petitioner may not validly contend that there
has been an actual sale of the plant and its facilities to the PTRFCI. These observations are well-taken.

The petitioner, however, correctly asserts that the award of backwages should be limited to cover a three-year
period, and, a fortiori, any award in excess of such period is null and void. The contention finds support in
prevailing jurisprudence. 10 A modification is, therefore, in order. The backwages to be paid to the private
respondents should not exceed a period covering three years, computed from October 5, 1985.
WHEREFORE, the instant petition is hereby DISMISSED. The backwages to be paid to the private
respondents should however, not exceed a period covering three (3) years, computed from October 5, 1985. No
pronouncement as to costs.