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Facts: A lot No. 1109 was adjudicated in favor of spouses Caballero thru a Deed of Sale. They sold to petitioner said lot on the basis of Tax Declaration covering the said property. In the Deed of Sale, it is stated that the parcel of land sold to Carmen Del Prado only covers 4,000 square meters while the total area of the said lot is 14,000 square meters. Issue: Whether or Not the sale of the land was for lump sum or not . Held: The court reiterated the rulings in Esguerra v. Trinidad; In sales involving real estate, the parties may choose between two types of pricing agreement: Unit price contract, where in the purchase price is determined by way of reference to stated rate per area. Lump sum, contract which states a full purchase price for an immovable, the area of which may be declared based on the estimate or where both the area and boundaries are stated. In the instant case the sale of the land was for lump sum because the parties agreed to purchase the land at P 40,000 for pre-determined area of 4,000 square meters, more or less, with boundaries stated therein. In a contract of sale of land in a mass, the specific boundaries stated in the contract prevails over any other statement with respect to the area contained within its boundaries.

2)LEABRES V. COURT OF APPEALS Facts: After the death of Clara Tambunting, Leabres bought on partial payment of P 1,000.00 a portion of the Legarda-Tambunting subdivision owned by the former from the surviving husband Vicente Legarda, acted as special administrator. Upon petition of Vicente Legarda, later appointed as regular administrator, together with Pacific Price and Augusto Tambunting, the Probate Court of Manila in special proceedings over the testate and estate of said Clara Tambunting, authorized the sale of the property. However, when Vicente was relieved as regular administrator, the Philippine Trust Company took over as such administrator, advertised the sale of the subdivision. No adverse claim or interest over such division or any portion thereof was ever presented by any person. By the order of the probate court, the PTC executed a Deed of an Absolute Sale infavor of Manotok Realty. Plaintiff seeks for the quieting of the title over the lot for continuing possession of the land and for damages.

Issue: Whether or Not there is a valid sale of the subdivision between Leabres and Vicente. Held The sale is not valid and unenforceable. The estate of Clara Tambunting was under custodial egis of the Probate Court. Don Vicente entered into said sale in his own personal capacity. The Legarda-Tambunting subdivision is covered by the Torens Certificate of Title. Leabres claims the sale of said lot in his favor, evidence by a Deed of Sale dated May 2, 1950. However he did not registered his suppose interest over the lot in the records of the Register of Deeds, nor did he present his claim for probate in the testate proceedings over the estate of the owner of said subdivision in spite of the notices advertised in its purpose. On the other hand, the Absolute Deed of Sale over the whole subdivision in favor of Manotok Realty was immediately registered under the Torrens Law. Thus, the latter has right over the lot in question. An example of the receipt reveals that the same can never be reagarded as a contract of sale or promise to sell. There was merely of an acknowledgement of the sum of P1,000. There was no agreement to the total price of the land nor to the monthly installment to be paid by the petitioner.

3) SPOUSES TONGSON vs EMERGENCY PAWNSHOP BULA, INC. GR 167874 Facts: Napala purchased from spouses Tongson their 364 square meter parcel of land situated in Davao. The respondent prepared an Absolute Deed of Sale indicating the consideration as P 400,000 and executed another Memorandum of Agreement in conformity with the Deed of Sale. Upon signing, Napala paid two hundred thousand pesos in cash to spouses and issued postdated PNB check to represent the balance. However the check was dishonored for insufficient funds. Despite demand, Napala failed to pay or return the purchase land. The petitioners filed for the annulment of the contract. The trial court ordered the annulment of the contract. Furthermore, Napalas action in giving the check constituted fraud that induced the spouses to enter in the sale. Issue: Whether or Not Napala employed fraud which induces the spouses to enter in the sale. Held: The issuance of PNB check and fraudulently representation made by Napala could not be considered as determining cause for the sale of the subject parcel of land. A valid contract requires occurrence of three elements. In the present, there is no dispute as regards the presence of two requisites; namely, (a) determinate subject matter, and (b) price certain in money. As regards the requisite which is the consent of the parties, it is clearly shown for the record that the spouses agreed to sell the land to Napala who offered to pay the price. The fraud was not employed during the negotiation and perfection stages of the sale, but existed in the consummation when the parties are in the process of their respective obligations.

4)SPOUSES ISABELO and ERLINDA PAYONGAYONG, vs. HON. COURT OF APPEALS, SPOUSES CLEMENTE and ROSALIA SALVADOR FACTS: Eduardo Mendoza was the registered owner of a two hundred square meter parcel of land situated in Barrio San Bartolome, Caloocan.On April 18, 1985, Mendoza mortgaged the parcel of land to the Meralco Employees Savings and Loan Association (MESALA) to secure a loan in the amount of P81,700.00. On July 11, 1987, Mendoza executed a Deed of Sale with Assumption of Mortgage over the parcel of land together with all the improvements in the property in favor of petitioners in consideration of P50,000.00. It is stated in the deed that petitioners bound themselves to assume payment of the balance of the mortgage indebtedness of Mendoza to MESALA. On December 7, 1987, Mendoza, without the knowledge of petitioners, mortgaged the same property to MESALA to secure a loan in the amount of P758, 000.00. After that, on November 28, 1991, Mendoza executed a Deed of Absolute Sale over still the same property in favor of respondents in consideration of P50,000.00. On even date, MESALA issued a Cancellation of Mortgage acknowledging that for sufficient and valuable consideration which it received from Mendoza, it was cancelling and releasing the real estate mortgage over the property. Respondents caused the cancellation of Mendozas title and the issuance of Transfer Certificate Title No. 67432 in their name. Petitioners filed on July 16, 1993 a complaint for annulment of deed of absolute sale and transfer certificate of title with recovery of possession and damages against Mendoza, his wife Sally Mendoza, and respondents before the Quezon City RTC because they alleged that the spouses Mendoza maliciously sold to respondents the property which was priorly sold to them and that respondents acted in bad faith in acquiring it, the latter having had knowledge of the existence of the Deed of Absolute Sale with Assumption of Mortgage between them (petitioners) and Mendoza. ISSUE/S: 1)Whether or Not respondents are entitled to the protection accorded to purchasers in good faith. 2)Whether or Not the sale between Mendoza and respondents was simulated. HELD: Yes they are considered to be purchasers in good faith.It is a well-established principle that a person dealing with registered land may safely rely on the correctness of the

certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.He is charged with notice only of such burdens and claims as are annotated on the title.He is considered in law as an innocent purchaser for value or one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person. In the instant case, at the time of the sale of the property by Mendoza to the respondents only the mortgages in favour of MESALA appeared on the annotations of encumbrances on Mendozas title. The respondents also inspected the property before buying it. 2) No, the contract was not simulated. Simulation occurs when an apparent contract is a declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for the purpose of deception, the appearance of a juridical act which does not exist or is different from that which was really executed. Its requisites are: a) an outward declaration of will different from the will of the parties; b) the false appearance must have been intended by mutual agreement; and c) the purpose is to deceive third persons. The basic characteristic then of a simulated contract is that it is not really desired or intended to produce legal effects or does not in any way alter the juridical situation of the parties. The cancellation of Mendozas certificate of title over the property and the procurement of one in its stead in the name of respondents, which acts were directed towards the fulfillment of the purpose of the contract, unmistakably show the parties intention to give effect to their agreement. The claim of simulation does not thus lie.

5) SPOUSES MAPALO vs. MAXIMO MAPALO FACTS: Spouses Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners of residential land in Manaoag, Pangasinan. They donated the eastern part of their land to Miguel Mapalo however they were deceived into signing a deed of absolute sale over the entire land. Following the execution of the afore-stated document, the spouses Miguel Mapalo and Candida Quiba immediately built a fence of permanent structure in the middle of their land segregating the eastern portion from its western portion. Said fence still exists. The spouses have always been in continued possession over the western half of the land up to the present. Maximo Mapala registered the land to his name and sold it to the Narcisos. They subsequently registered it to their name. The Narcisos took possession only of the eastern portion of the land in 1951, after the sale in their favor was made. On February 7, 1952 they filed suit in the Court of First Instance of Pangasinan (Civil Case No. 1191) to be declared owners of the entire land, for possession of its western portion; for damages; and for rentals. It was brought against the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo Guieb who had a house on the western part of the land with the consent of the spouses Mapalo and Quiba. The Narcisos appealed to the Court of Appeals. In its decision on May 28, 1963, the Court of Appeals reversed the judgment of the Court of First Instance, solely on the ground that the consent of the Mapalo spouses to the deed of sale of 1936 having been obtained by fraud, the same was voidable, not void ab initio, and, therefore, the action to annul the same, within four years from notice of the fraud, had long prescribed. It reckoned said notice of the fraud from the date of registration of the sale on March 15, 1938. The Court of First Instance and the Court of Appeals are therefore unanimous that the spouses Mapalo and Quiba were definitely the victims of fraud. It was only on prescription that they lost in the Court of Appeals. The plaintiffs only assailed the validity of the sale with respect to the western portion of the land. ISSUE: Whether there was an onerous conveyance of ownership, that is, a sale, by virtue of said deed of October 15, 1936, with respect to said western portion. Specifically, was there a cause or consideration to support the existence of a contrary of sale? HELD:

As a general rule, contracts without a cause or consideration produce no effect whatsoever. Nonetheless, under the Old Civil Code, the statement of a false consideration renders the contract voidable, unless it is proven that it is supported another real and licit consideration. And it is further provided by the Old Civil Code that the action for annulment of a contract on the ground of falsity of consideration shall last four years, the term to run from the date of the consummation of the contract. In the instant case, the plaintiffs never received a consideration as purchase price for the western portion of the land. In that case the contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor.

6)G.R. No. 138018 July 26, 2002 RIDO MONTECILLO, petitioner, vs. IGNACIA REYNES and SPOUSES REDEMPTOR and ELISA ABUCAY FACTS: Respondents Ignacia Reynes and Spouses Abucay filed on June 20, 1984 a complaint for Declaration of Nullity and Quieting of Title against petitioner Rido Montecillo. Reynes asserted that she is the owner of a lot situated in Mabolo, Cebu CitY. In 1981, Reynes sold 185 square meters of the Mabolo Lot to the Abucay Spouses who built a residential house on the lot they bought. A Deed of Sale was then issued by Ignacia in favour of Montecillo. The latter promised to pay the agreed price after one month but he failed to fulfil his obligation. Ignacia made a demand to Montecillo that he should return the Deed but Montecillo refused to return the Deed of Sale thats why Reynes executed a document unilaterally revoking the sale and gave a copy of the document to Montecillo. Ignacia Reynes,subsequently sold the land to spouses Abucay but they received an information that the lot was already registered in the name of the Montecillos. Reynes and the Abucay Spouses argued that "for lack of consideration there (was) no meeting of the minds" between Reynes and Montecillo. Thus, the trial court should declare null and void ab initio Montecillos Deed of Sale, and order the cancellation of Certificate of Title in the name of Montecillo. In his Answer, Montecillo claimed he was a buyer in good faith and had actually paid the P47,000.00 consideration stated in his Deed of Sale. Montecillo, however, admitted he still owed Reynes a balance of P10,000.00. He also alleged that he paid P50,000.00 for the release of the chattel mortgage between Cebu Ice Storage and Bienvenido Jayag which he argued constituted a lien on the Mabolo Lot. He further alleged that he paid for the real property tax as well as the capital gains tax on the sale of the Mabolo Lot. . The Issues 1. "Was there an agreement between Reynes and Montecillo that the stated consideration of P47,000.00 in the Deed of Sale be paid to Cebu Ice and Cold Storage to secure the release of the Transfer Certificate of Title?"

2. "If there was none, is the Deed of Sale void from the beginning or simply rescissible?"15


First issue: manner of payment of the P47,000.00 purchase price. Montecillos Deed of Sale does not state that the P47,000.00 purchase price should be paid by Montecillo to Cebu Ice Storage. Montecillo failed to adduce any evidence before the trial court showing that Reynes had agreed, verbally or in writing, that the P47,000.00 purchase price should be paid to Cebu Ice Storage. Absent any evidence showing that Reynes had agreed to the payment of the purchase price to any other party, the payment to be effective must be made to Reynes, the vendor in the sale. Article 1240 of the Civil Code provides as follows: "Payment shall be made to the person in whose favor the obligation has been constituted, or his successor in interest, or any person authorized to receive it." Thus, Montecillos payment to Cebu Ice Storage is not the payment t hat would extinguish16 Montecillos obligation to Reynes under the Deed of Sale.

Second issue: whether the Deed of Sale is void ab initio or only rescissible. One of the three essential requisites of a valid contract is consent of the parties on the object and cause of the contract. In a contract of sale, the parties must agree not only on the price, but also on the manner of payment of the price. An agreement on the price but a disagreement on the manner of its payment will not result in consent, thus preventing the existence of a valid contract for lack of consent. This lack of consent is separate and distinct from lack of consideration where the contract states that the price has been paid when in fact it has never been paid. Reynes expected Montecillo to pay him directly the P47,000.00 purchase price within one month after the signing of the Deed of Sale. On the other hand, Montecillo thought that his agreement with Reynes required him to pay the P47,000.00 purchase price to Cebu Ice Storage to settle Jayags mortgage debt. Montecillo also acknowledged a balance of P10,000.00 in favor of Reynes although this amount is not stated in Montecillos Deed of Sale. Thus, there was no consent, or meeting of the minds, between Reynes and Montecillo on the manner of payment. This prevented the existence of a valid contract because of lack of consent.

In summary, Montecillos Deed of Sale is null and void ab initio not only for lack of consideration, but also for lack of consent. The cancellation of TCT No. 90805 in the name of Montecillo is in order as there was no valid contract transferring ownership of the Mabolo Lot from Reynes to Montecillo.

7) SPOUSES PARAGAS vs. HEIRS. OF DOMINADOR BALACANO Facts: Gregorio Balacano was a registered owner of a parcel of land in the province of Isabela and he has three children (Domingo, Catalino and Alfredo) with Lorenza Balacano. His spouse died in 1991 while his death was on July 28, 1996. Gregorio and Lorenza had three children, namely: Domingo, Catalino and Alfredo, all surnamed Balacano. Lorenza died on December 11, 1991. Gregorio, on the other hand, died on July 28, 1996.Prior to his death, Gregorio was admitted at the Veterans General Hospital in Bayombong, Nueva Vizcaya on June 28, 1996 and stayed there until July 19, 1996. He was transferred in the afternoon of July 19, 1996 to the Veterans Memorial Hospital in Quezon City where he was confined until his death. On July 22, 1996, or barely a week prior to his death, he sold a portion of land to spouses Rudy and Corazon Paragas for the total consideration of P500,000.00. The spouses Paragas also sold some portion of the land to Catalino Balacano. The children of Domingo Balacano assailed the validity of the contract of sale because they alleged that their grandfather could not have appeared before the notary public because he was confined in a hospital at that moment and he was seriously ill at that time which vitiated his consent to the disposal of the property. They also alleged that their uncle , Catalino manipulated the execution of the deed . ISSUE: Whether or Not the contract of sale between Gregorio Balacano and Spouses Rudy and Corazon Paragas. HELD: In the case at bar, the Deed of Sale was allegedly signed by Gregorio on his death bed in the hospital. Gregorio was an octogenarian at the time of the alleged execution of the contract and suffering from liver cirrhosis at that circumstances which raise grave doubts on his physical and mental capacity to freely consent to the contract. Adding to the dubiety of the purported sale and further bolstering respondents claim that their uncle Catalino, one of the children of the decedent, had a hand in the execution of the deed is the fact that on 17 October 1996, petitioners sold a portion of Lot 1175-E consisting of 6,416 square meters to Catalino for P60,000.00.22 One need not stretch his imagination to surmise that Catalino was in cahoots with petitioners in maneuvering the alleged sale.

8)G.R. No. 111238 January 25, 1995 ADELFA PROPERTIES, INC., petitioner, vs. COURT OF APPEALS, ROSARIO JIMENEZ-CASTAEDA and SALUD JIMENEZ, respondents. FACTS:

Jose and Dominador were brothers of the private respondent and they co-owned a registered property. Jose and Dominador sold their share which is the eastern portion of the land to Adelfa. Thereafter, Adelfa expressed interest in buying the western portion of the property from private respondents. Accordingly, an exclusive Option to Purchase was executed between Adelfa and private respondents and an option money of fifty-thousand pesos was given to the latter. Before Adelfa could make payments, it received summons as a civil case was filed against Jose, Dominador and Adelfa by the nephews and nieces of private respondents. As a consequence, Adelfa informed the private respondents that it would hold payment of the full purchase price and suggested that they settle the case with their said nephews and nieces. Salud did not heed the suggestion; respondent informed Atty. Bernardo that they are cancelling the transaction. He further made some offers but they were all rejected. When the case was dismissed, private respondents executed a Deed of Conditional Sale in favor of Chua, over the same property so they rejected the offer of Adelfa to purchase the same. The private respondents sent a letter informing Adelfa about the sale and they also enclosed a check which represent the option money paid by Adelfa. ISSUE: WON the agreement between ADELFA and Private Respondents was strictly an option contract. HELD: The agreement between the parties is a contract to sell and not just a mere option contract or a contract of sale. In the case at bar, the obligation of petitioner to pay the purchase price is specific, definite and certain, and consequently binding and enforceable. Had private respondents chosen to enforce the contract, they could have specifically compelled petitioner to pay the balance. This is distinctly made manifest in the contract itself as an integral stipulation, compliance with which could legally and definitely be demanded

from petitioner as a consequence. The term balance connotes a remainder or something remaining from the original total sum already agreed upon. The alleged option money in the case at bar was actually an earnest money which was intended to form part of the purchase price. The amount was not distinct from the cause or consideration for the sale of the property, but was itself a part of the purchase price. It is a statutory rule that whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as a proof of the perfection of the contract.

9) G.R. No. L-11872

December 1, 1917

DOMINGO MERCADO and JOSEFA MERCADO vs. JOSE ESPIRITU, administrator of the estate of the deceased Luis Espiritu Domingo and Josefa Mercado brought suit in the Court of First Instance of Bulacan, against Luis Espiritu, but, as the latter died soon thereafter, the complaint was amended by being directed against Jose Espiritu in his capacity of his administrator of the estate of the deceased Luis Espiritu. The plaintiffs alleged that they and their sisters Concepcion and Paz, all surnamed Mercado, were the children and sole heirs of Margarita Espiritu, a sister of the deceased Luis Espiritu; that Margarita Espiritu died in 1897, leaving as her paraphernal property a tract of land of 48 hectares in area situated in the barrio of Panducot, municipality of Calumpit, Bulacan, which hereditary portion had since then been held by the plaintiffs and their sisters, through their father Wenceslao Mercado, husband of Margarita Espiritu; that, about the year 1910, said Luis Espiritu, by means of cajolery, induced, and fraudulently succeeded in getting the plaintiffs Domingo and Josefa Mercado to sign a deed of sale of the land left by their mother, for the sum of P400, which amount was divided among the two plaintiffs and their sisters Concepcion and Paz. Two among of the four parties were minors during the signing of the Deed of Sale but on the date of sale, these minors presented themselves that they were of legal age at the time they signed it and they made the same manifestation before the notary public.

Issue: WON the Deed of Sale is valid when the minors presented themselves that they were of legal age.

Held: The courts lay down that such sale of real estate was still valid since it was executed by minors who have passed the age of puberty adolescence and are near the adult age and that the minors pretended that they already reached their majority. Under Art 38, Minority, insanity or imbecility, the state of being deaf mute, prodigality and civil interdiction are mere restrictions on the capacity to act and do not exempt the incapacitated person from certain obligations as when the latter arise from his acts of from property relations such as easements. Also these minors cannot be permitted

afterwards to excuse themselves from compliance with the obligation assumed by them or seek their annulment. This is in accordance with the provisions of the law on estoppel.

10)G.R. No. L-1720

March 4, 1950


Facts: Rufino Alcantara and his sons Damaso Alcantara and Ramon Alcantara conveyed to Sia Suan five parcels of land. Ramon Alcantara was then 17 years, 10 months and 22 days old. On August 27, 1931, Gaw Chiao (husband of Sia Suan) received a letter from Francisco Alfonso, attorney of Ramon Alcantara, informing Gaw Chiao that Ramon Alcantara was a minor and accordingly disavowing the contract. After being contacted by Gaw Chiao, however, Ramon Alcantara executed an affidavit in the office of Jose Gomez, attorney of Gaw Chiao, wherein Ramon Alcantara ratified the deed of sale. On said occasion Ramon Alcantara received from Gaw Chiao the sum of P500. In the meantime, Sia Suan sold one of the lots to Nicolas Azores from whom Antonio Azores inherited the same. On August 8, 1940, an action was instituted by Ramon Alcantara in the Court of First Instance of Laguna for the annulment of the deed of sale as regards his undivided share in the two parcels of land covered by certificates of title Nos. 751 and 752 of Laguna. Said action was against Sia Suan and her husband Gaw Chiao, Antonio, Azores, Damaso Alcantara and Rufino Alcantara (the latter two being, respectively, the brother and father of Ramon Alcantara appealed to the Court of Appealed which reversed the decision of the trial court, on the ground that the deed of sale is not binding against Ramon Alcantara in view of his minority on the date of its execution, Issue: WON the deed of sale should be annulled because one of the parties in the contract is minor. Held: The court ruled that Ramon Alcantara is not allowed to annul such deed, because he already ratified it. The letter written by Alcantara informing the buyers about his minority constituted an effective disaffirmance of the sale and that the choice to disaffirm will not by itself avoid the contract until the courts adjudge the agreement to be invalid, said notice shielded Ramon from laches and consequent estoppel. Ramon may have executed his acts in bad faith because he earned money from Gaw Chiao as a

result of the sale and its ratification, yet the summons the courts to annul the sale because he executed it while he is a minor. 11)REYNALDO VILLANUEVA, - versus PHILIPPINE NATIONAL BANK (PNB), G.R. NO. 154493

Facts: Philippine National Bank issued an advertisement for the sale thru bidding of certain lots. The bidding was subject to the following conditions: 1) that cash bids be submitted not later than April 27, 1989; 2) that said bids be accompanied by a 10% deposit in managers or cashiers check; and 3) that all acceptable bids be subject to approval by PNB authorities. In a June 28, 1990 Reynaldo Villanueva offered to purchase Lot Nos. 17 and 19 for P3,677,000.00. He also manifested that he was depositing P400,000.00 to show his good faith but with the understanding that said amount may be treated as part of the payment of the purchase price only when his offer is accepted by PNB.

On July 6, 1990, Guevara informed Villanueva that only Lot No. 19 is available and that the asking price therefor is P2,883,300.00. He also informed Villanueva that if he is interested with the terms and conditions imposed by the Bank he should submit a revised offer to purchase. But instead of submitting a revised offer, Villanueva merely inserted at the bottom of Guevaras letter a July 11, 1990 marginal note, which indicate that he will deposit P 600,000.00 and the balance will be payable in two years at quarterly amortizations.Also, on July 24, 1990, P380,000.00 was debited from Villanuevas Savings Account No. 43612 and credited to SAMD. After that, Guevara wrote Villanueva that, upon orders of the PNB Board of Directors to conduct another appraisal and public bidding of Lot No. 19, SAMD is deferring negotiations with him over said property and returning his deposit of P580,000.00. Undaunted, Villanueva attempted to deliver postdated checks covering the balance of the purchase price but PNB refused the same. Hence, Villanueva filed with the RTC a Complaint for specific performance and damages against PNB.

Issue: Whether or Not there was no perfected contract of sale because the July 6, 1990 letter of Guevara constituted a qualified acceptance of the June 28, 1990 offer of Villanueva, and to which Villanueva replied on July 11, 1990 with a modified offer.

Held: The sale is not perfected because in the case at bench, consent, in respect to the price and manner of its payment, is lacking. The record shows that appellant, thru Guevaras July 6, 1990 letter, made a qualified acceptance of appellees letter-offer dated June 28, 1990 by imposing an asking price of P2,883,300.00 in cash for Lot 19. The letter dated July 6, 1990 constituted a counter-offer (Art. 1319, Civil Code), to which appellee made a new proposal, i.e., to pay the amount of P2,883,300.00 in staggered amounts, that is, P600,000.00 as down payment and the balance within two years in quarterly amortizations.

A qualified acceptance, or one that involves a new proposal, constitutes a counteroffer and a rejection of the original offer (Art. 1319, id.). Consequently, when something is desired which is not exactly what is proposed in the offer, such acceptance is not sufficient to generate consent because any modification or variation from the terms of the offer annuls the offer (Tolentino, Commentaries and Jurisprudence on the Civil Code of the Philippines, 6th ed., 1996, p. 450, cited in ABS-CBN Broadcasting Corporation v. Court of Appeals, et al., 301 SCRA 572).


Facts: Petitioners Carmelo Baurmann Inc. leased its parcel of land with two-story building to respondent Mayfair theater Incorporated. They entered a contract which provides that if the lessor should desire to sell the property, the lessee shall be given 30days exclusive option to purchase the same. Carmelo informed Mayfair that they have an intention to sell the property to EQUITORIAL. Mayfair made known its interest to buy the property but only to the extent of the leased premises. Notwithstanding Mayfairs intention, Carmelo sold the property to the petitioner company. Issue: WON the sale of the property to Equatorial is valid.

Held: The sale of the property should be rescinded because Mayfair has the right of first refusal. Both Equatorial and Carmelo are in bad faith because they knew of the stipulation in the contract regarding the right of first refusal. The stipulation is a not an option contract but a right of first refusal and as such the requirement of a separate consideration for the option, has no applicability in the instant case. The consideration is built in the reciprocal obligation of the parties. In reciprocal contract, the obligation or promise of each party is the consideration for that of the other. (Promise to lease in return of the right to first refusal)

With regard to the impossibility of performance, only Carmelo can be blamed for not including the entire property in the right of first refusal. Court held that Mayfair may not have the option to buy the property. Not only the leased area but the entire property.

13)G.R. No. L-16394

December 17, 1966


Facts: Spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo, owned a 115,850-square meter parcel of land situated in barrio Balasing, Sta. Maria, Bulacan. On 28 May 1954, they sold two (2) separate portions of the land for P11,000.00 to Rosa Hernandez. After the sale (there were two other previous sales to different vendees of other portions of the land), the petitioners-spouses caused the preparation of a subdivision plan, Psd-43187, was approved on 13 January 1955 by the Director of Lands. Rosa Hernandez, however, unlike the previous vendees, did not conform to the plan and refused to execute an agreement of subdivision and partition for registration with the Register of Deeds of Bulacan; and she, likewise, refused to vacate the areas that she had occupied. Instead, she caused the preparation of a different subdivision plan, which was approved by the Director of Lands on 24 February 1955. This plan, Psd-42844, tallied with the areas that the defendant, Rosa Hernandez, had actually occupied. On 28 February 1955, herein petitioners-spouses filed suit against respondent Rosa Hernandez in the Court of First Instance of Bulacan, claiming that said defendant was occupying an excess of 17,000 square meters in area of what she had bought from them. Defendant Rosa Hernandez, on the other hand, claimed that the alleged excess, was part of the areas that she bought. Issue:

Whether or Not the excess area occupied by Hernandez is part of the land sold.

Held: In the instant case, the sale involves a definite and identified tract, a corpus certum, that obligated the vendors to deliver to the buyer all the land within the boundaries, irrespective of whether its real area should be greater or smaller than what is recited in the deed. To hold the buyer to no more than the area recited on the deed, it must be made clear therein that the sale was made by unit of measure at a definite price for each unit. The sale in this case only involves the definite boundaries but only approximate land areas. As such, Art 1542 concerning the sale for lump sum must be considered. 14)G.R. No. 76031 March 2, 1994 MIGUEL SEMIRA vs. COURT OF APPEALS and BUENAVENTURA .Facts: Juana Gutierrez owned a parcel of land situated in Sto. Nio, Taysan, Batangas which she sold to private respondent Buenaventura for P850.00 by means of a "Kasulatan ng Bilihan ng Lupa" executed on 4 January 1961. Aside from the estimated area of 822.5 square meters appearing in the deed of sale, the following boundaries of the lot are also indicated. Thereafter, private respondent entered the premises observing thereby the boundaries of the property and not the area given. Buenaventura also acquired two (2) other parcels of land, Lot 4215 with an area of 8,606-square meters located on the east of Lot 4221 from the spouses Pascual Hornilla and Gliceria Ilao on 30 June 1964, and another lot with an area of 11,000square meters from Santiago Asi. Pascual Hornilla is the son of Juana Gutierrez. On 18 October 1972, private respondent sold Lot 4221 to his nephew, Cipriano Ramirez, and spouse by means of another "Kasulatan ng Bilihan ng Lupa" for P2,500.00, where the lot was described with the same area and boundaries mentioned in the 4 January 1961 "Kasulatan ng Bilihan ng Lupa" with the exception of the boundary on the east; which was changed from "Juana Gutierrez" to "Buenaventura An" to reflect the acquisition by private respondent of the adjoining Lot 4215. On 12 March 1979, Cipriano Ramirez sold the lot to petitioner Miguel Semira for P20,000.00. However, the area stated in the "Kasulatan ng Bilihan ng Lupa" was 2,200

square meters and not 822.5 appearing in the previous document. As delimited by its boundaries, the lot is actually much bigger than 822.5 square meters. This was confirmed by the Taysan Cadastral Mapping Survey conducted in 1974 where it is definitely stated that the area of Lot 4221 is 2,200 square meters; hence, the reason for the change. On 17 March 1979, Miguel Semira entered the very same premises previously occupied by Ramirez and began the construction of a new rice-mill. However, on 18 April 1979, a complaint for forcible entry was filed against him by private respondent in the Municipal Circuit Trial Court of Taysan-Lobo. The latter claimed that the area of Lot 4221 was 822.5 square meters only and that the excess of 1,377 square meters forcibly occupied by petitioner formed part of Lot 4215 which he acquired from the Hornillas in 1964. Petitioner admits having entered the disputed portion on 17 March 1979, but denies having illegally done so. In his answer, petitioner claims ownership over the property by invoking the 1979 deed of sale in his favor by Cipriano Ramirez. Issue: Whether or Not Miguel Semira is liable for forcible entry because lot 4221 has an area of 822.5 square meters only therefore the excess 1,377 is not covered by the sale. Held: The sale is for lump sum. Thus, he is not liable for forcible entry. The court repeatedly ruled that where land is sold for a lump sum and not so much per unit of measure or number, the boundaries of the land stated in the contract determine the effects and scope of the sale, not the area thereof. Hence, the vendors are obligated to deliver all the land included within the boundaries, regardless of whether the real area should be greater or smaller than that recited in the deed. This is particularly true where the area is described as "humigit kumulang," that is, more or less. These conclusions are drawn from Art. 1542 of the Civil code which states In the sale of real estate, made for a lump sum and not at the rate of a certain sum for a unit of measure or number, there shall be no increase or decrease of the price, although there be a greater or less are or number than that stated in the contract. The same rule shall be applied when two or more immovables are sold for a single price; but if, besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or

number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated. Hence, when private respondent Buenaventura An sold Lot 4221 to his nephew Cipriano Ramirez by means of a "Kasulatan ng Bilihan ng Lupa" which incorporated both the area and the definite boundaries of the lot, the former transferred not merely the 822.5 square meters stated in their document of sale but the entire area circumscribed within its boundaries.



Esguerra spouses were the owners of several parcels of land in Camalig, Meycauayan, Bulacan among them is a 35,284-square meter parcel of land, half of which (17,642 square meters) they sold to their grandchildren, herein petitioners Feliciano, Canuto, Justa, Angel, Fidela, Clara and Pedro, all surnamed Esguerra; and a 23,989-square meter parcel of land covered by Tax Declaration No. 12080, 23,489 square meters of which they also sold to petitioners, and the remaining 500 square meters they sold to their other grandchildren, the brothers Eulalio and Julian Trinidad (Trinidad brothers). Also sold to the Trinidad brothers were a 7,048-square meter parcel of land, a 4,618-square meter parcel of land, and a 768-square meter parcel of land. Eulalio Trinidad later sold his share of the land to his daughters-respondents herein, via a notarized Kasulatan ng Bilihang Tuluyan ng Lupa

On respondents application for registration of title, the CFI awarded Lot No. 3593 in their favor in Land Registration Case No. N-323-V.

Meanwhile, under a notarized deed dated November 10, 1958, petitioners sold to respondents parents Eulalio Trinidad and Damiana Rodeadilla (Trinidad spouses) a portion of about 5,000 square meters of the 23,489-square meter of land which they previously acquired from the Esguerra spouses and during the same cadastral survey conducted in the late 1960s, it was discovered that the about 5,000-square meter portion of petitioners parcel of land sold to the Trinidad spouses which was assigned actually measured 6,268 square meters.

In a subsequent application for registration of title over Lot No. 3591, docketed as Land Registration Case No. N-335-V, the CFI, by Decision of August 21, 1972, awarded Lot No. 3591 in favor of Eulalio Trinidad. Pursuant to the Decision, the LRC issued Decree No. N-149491 by virtue of which the Register of Deeds of Bulacan issued OCT No. 06498 in the name of Trinidad.

Upon the death of the Trinidad spouses, Lot No. 3591 covered by OCT No. 0-6498 was transmitted to respondents by succession.

Petitioners, alleging that upon verification with the LRA they discovered the issuance of the above-stated two OCTs, filed on August 29, 1994 before the Regional Trial Court (RTC) of Malolos, Bulacan two separate complaints for their nullification on the ground that they were procured through fraud or misrepresentation.

ISSUE Whether or not the acquisition and registration by the respondents were fraudulent.

HELD No, the respondents did not fraudulently acquired and registered the property.

It is settled that fraud is a question of fact and the circumstances constituting the same must be alleged and proved in the court below. In the present cases, as did the trial court, the appellate court found no fraud in respondents acquisition and registration of the land. Appellant Pedro Esguerra even testified that he does not know how appellees were able to secure a title over the lot in question and that they never sold Lot No. 3593 to Virginia Trinidad since it is part of the whole lot of 23,489 square meters. The said testimony is a mere conclusion on the part of appellants. On the other hand, the evidence shows that appellees acquired title over the subject property by virtue of a deed of sale executed by their father Eulalio Trinidad in their favor. Under the Torrens System, an OCT enjoys a presumption of validity, which correlatively carries a strong presumption that the provisions of the law governing the registration of land which led to its issuance have been duly followed. Fraud being a serious charge, it must be supported by clear and convincing proof. Petitioners failed to discharge the burden of proof, however in a unit price contract, the statement of area of immovable is not conclusive and the price may be reduced or increased depending on the area actually delivered. If the vendor delivers less than the area the vendee is entitled to proportional reduction of the price of the real property.


October 23, 1923

Luis Asiain owns a hacienda known as "Maria" situated in the municipality of La Carlota, Province of Occidental Negros, containing about 106 hectares while Benjamin Jalandoni is the owner of another hacienda adjoining of Asiain. Sometime in May 1920, Asain conveyed his interest to sell some portion of his hacienda to Jalandoni. With a wave of his hand, he indicated the tract of land in question, affirming that it contained between 25 and 30 hectares. Jalandoni remain doubtful as to the extent of the land and the amount of the crop that can be harvested on it. When Jalandoni possess the property he did two things. He had the sugar cane ground in La Carlota Sugar Central with the result that it gave and output of P800 piculs and 23 cates of centrifugal sugar instead of 2,000 piculs that Asiain positively claimed in the memorandum. When opportunity offered, he secured the certificate of title of Asiain

and produced a surveyor to survey the land. According to his survey, the parcel in question contained an area of 118 hectares, 54 ares, and 22 centiares instead of 25- 30 hectares which Asiain also claimed.

Issue: Whether or Not the contract of sale between Jalandoni and Asiain should be rescinded because there is amistake of fact as to the area of the property and as to the amount of the standing crop.

Held : The Supreme Court affirmed the previous ruling of the trial court which is to annul the contract and both parties should return everything they received from each other. The court further ruled that the contract was not a contract of hazard. It was a sale in gross in which there was a mutual mistake as to the quantity of land sold and as to the amount of the standing crop. The mistake of fact as disclosed not alone by the terms of the contract but by the attendant circumstances, which it is proper to consider in order to throw light upon the intention of the parties, is, as it is sometimes expressed, the efficient cause of the concoction. The mistake with reference to the subject-matter of the contract is such that, at the option of the purchaser, it is rescindable. Without such mistake the agreement would not have been made and since this is true, the agreement is inoperative and void. It is not exactly a case of overreaching on the plaintiff's part, or of misrepresentation and deception, or of fraud, but is more nearly akin to a bilateral mistake for which relief should be granted. Specific performance of the contract can therefore not be allowed at the instance of the vendor. The ultimate result is to put the parties back in exactly their respective positions before they became involved in the negotiations and before accomplishment of the agreement. This was the decision of the trial judge and we think that decision conforms to the facts, the law, and the principles of equity.


Facts: On May 7, 1993, spouses Avelino and Exaltacion Salera, filed with the Regional Trial Court (RTC), Branch 11, Calubian, Leyte, a complaint for quieting of title against spouses Celedonio and Policronia Rodaje. Petitioners alleged that they are the absolute owners of a parcel of land situated at Basud, San Isidro,Leyte with an area of 448.98 square meters, more or less. They acquired the property from the heirs of Brigido Tonacao as shown by a Deed of Absolute Sale executed on June 23, 1986. They had the document registered in the Registry of Deeds of Iloilo on July 1, 1986. When they asked the Provincial Assessor to declare the property under their names for taxation purposes, they found that Tax Declaration No. 2994 (R-5) in the name of Brigido was already cancelled and another one, Tax Declaration No. 2408, was issued in the names of respondents. Petitioners further alleged that they have been in possession of the property and the house they built thereon because they had paid the purchase price even before the execution of the deed of sale. In their answer to the complaint, respondents claimed that they are the absolute owners of the same property. They acquired it from Catalino Tonacao, the father of Brigido, in a Deed of Absolute Sale dated June 6, 1986. The sale was registered in the Registry of Deeds of Leyte on June 10, 1986 and Tax Declaration No. 2408 was issued in their names. Prior thereto, or on January 11, 1984, they had a verbal contract of sale with Catalino. They paid him P1,000.00 as downpayment. They agreed that the balance of P4,000.00 shall be paid upon execution of the deed of sale. Since then, they have been exercising their right of ownership over the property and the building constructed thereon peacefully, publicly, adversely and continuously. Apart from being the first registrants, they are buyers in good faith. The trial court ruled in favor of the petitioners so the respondents elevated the case to Court of Appeals which later reversed the decision of the lower court. The Court of Appeals, in upholding the validity of the sale in favor of respondents, relied on Article 1544 of the Civil Code on double sale. Wherein , as between two purchasers, the one who registered the sale in his favor has a preferred right over the other who has not registered his title, even if the latter is in actual possession of the immovable property. Hence, the defendants-appellants have a superior right over the contested property inasmuch as they have both actual possession and prior registration of the conveyance.

Issue: Whether or Not the Court has correct interpretation of Article 1544 of the Civil Code. Held The Court of Appeals is wrong. Article 1544 of the Civil Code contemplates a case of double sale or multiple sales by a single vendor. More specifically, it covers a situation where a single vendor sold one and the same immovable property to two or more buyers. It cannot be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the property sold. In the instant case, the property was sold by two different vendors to different purchasers. The first sale was between Catalino and herein respondents, while the second was between Brigidos heirs and the petitioners.

The court further ruled that the Deed of Sale contracted by the respondents with Catalino is null and void because he has no power to convey the property because Brigido was already the rightfull owner of the subject land.

18) GR 1085515


Facts: Private respondent Laguna Agro-Industrial Coconut Cooperative, Inc. (hereafter simply LAGUNA), a family corporation organized by the heirs of the deceased spouses Honorio Sumaya and Crispina Orlanda, was the plaintiff in an action to quiet title over a parcel of unregistered coconut land in Bo. Dita. Liliw, Laguna, filed in the Regional Trial Court, Br. XXVII, Laguna against herein private respondents and docketed as Civil Case No. SC-1367. The complaint in said action alleged basically that the land in question had been purchased by the Sumaya spouses (LAGUNA's predecessors) for P800.00 from Consuelo Vda. de Balantakbo (mother of petitioner Luis Balantakbo and Sancho Balantakbo), the sale being evidenced by a deed executed by Consuelo on December 13, 1955; and that some twenty (20) years later, or on March 8, 1975, the seller's heirs, intruded into the land and harvested the coconuts found therein. In their answer the Balantakbos denied knowledge of the sale and alleged that the land claimed sued for was different from that owned and held by them. The Regional Trial Court rendered judgment (per Judge Francisco C. Manabat, Branch 27, Sta. Cruz, Laguna) in favor of the Balantakbos, dismissing LAGUNA's complaint, upholding the former's theory of the case and ruling that what was contemplated in the descriptive words "more or less" immediately following the stated area of 2,000 square meters in the description of the land was construable as referring only to a "slight difference" in said area, not to a difference as large as 4,870 square meters, or more than double the 2,000 square meters actually stated and intended to be sold. The judgment was appealed to the Court of Appeals which after due proceedings reversed it by decision promulgated on July 9, 1992, declaring LAGUNA the owner of

the entire land, not only of a 2,000-square meter portion thereof, ruling that the area embraced within the stated boundaries prevails over the area set forth in the descriptions which must have been based on mere estimates, and that the buyer was entitled to receive all that was included within the boundaries thus stated in the deed of sale. Issue: In case of conflict between the area described and the actual boundaries of the land, which should prevail? Held: The court ruled that where land is sold for a lump sum and not so much per unit of measure or number, the boundaries of the land stated in the contract determine the effects and scope of the sale, not the area thereof. Hence, the vendors are obligated to deliver all the land included within the boundaries, regardless of whether the real area should be greater or smaller than that recited in the deed. This is particularly true where the area is described as "humigit kumulang," that is, more or less. In the present case, it is clear that the disputed parcel of unregistered land was sufficiently identified and described. The Second Partial Stipulation of Facts submitted by the Parties sufficiently demonstrates that the parties lay claim to one and the same parcel of land, that descended to Raul Balantakbo from his father Jose Balantakbo, Sr. later inherited by Consuelo Joaquin Vda. de Balantakbo from the same Raul, her son and then sold by Consuelo to the Spouses Honorio Sumaya and Crispina Orlanda. Uniform descriptions of the subject lot were made in the Deed of Sale executed by Consuelo Joaquin Vda. de Balantakbo in favor of herein private respondent in 1955, in the Affidavit of Self-Adjudication executed by Consuelo on November 3, 1952, and in the Extrajudicial Partition of December 10, 1945.


Facts: Spouses Carlos Valdez, Sr. and Josefina de Leon-Valdez were the owners of a parcel of land with an area of 24,725 square meters located in the commercial district of Isulan, Sultan Kudarat. Carlos Valdez, Sr. died intestate on March 26, 1966, survived by his widow, Josefina, and their children, among whom is Carlos Valdez, Jr., a practicing lawyer. On December 28, 1978, Josefina caused the subdivision of Lot No. 3 into eight (8) lots, namely, Lots Nos. 3-A to 3-H, all fronting the national road. To enhance the value of the property, she decided to sell a 4,094-square meter portion thereof, more particularly Lot No. 3-C and a portion of Lot No. 3-D to her co-respondent herein, Jose V. Lagon , a successful businessman in Sultan Kudarat who owned a construction firm and other business enterprises: the Lagon Enterprises and the Rural Bank of Isulan. He was also one of the clients of Josefinas son, Carlos Valdez, Jr. Hence, on May 9, 1979, Josefina, through her attorney-in-fact, Carlos Valdez, Jr., and Lagon entered into a contract of sale involving the aforementioned 4,094-square meter portion of what used to be Lot No. 3. No transfer certificate of title could as yet be issued to Lagon because at the time of the sale, the intestate estate of the late Carlos Valdez, Sr. had still to be settled and partitioned. The subjet property was subsequently sold by Josefina to Rolendo T Delfin. Upon learning that a portion of the property already sold to him was subsequently sold by Josefina to Delfin, Lagon filed in the RTC of Sultan Kudarat a complaint for specific performance with damages against Josefina and her attorney-infact, Atty. Carlos Valdez, Jr. On the other hand upon knowing of Civil Case instituted by

Lagon, Delfin filed in the same court an action to quiet title against Josefina and Lagon, docketed as Civil Case No. 779, now the subject of the present petition. The trial court denied his application he has an actual knowledge of prior sale of lot to Delfin, making him buyer in bad faith.

Issue: Since there is an alleged double sale in the instant case, who has the better right?

Held: Rolando Delfin has a better right over the property because the prior contract of sale between Valdez and Lagon is not valid due to the latters refusal to perform all the conditions indicated in the contract. It is clear that on account of Lagons failure to comply with the terms and conditions of the so-called first sale, the Court deemed that the sale is null and void without need of any demand from Josefina and her son Carlos Valdez, Jr. for Lagon to comply with the agreed terms and conditions attendant to that so-called first sale.

20) G.R. No. 170405

February 2, 2010


Facts: On March 10, 1993, petitioner Raymundo S. de Leon sold three parcels of land with improvements situated in Antipolo, Rizal to respondent Benita T. Ong. As these properties were mortgaged to Real Savings and Loan Association, Incorporated (RSLAI), petitioner and respondent executed a notarized deed of absolute sale with assumption of mortgage. Benita Ong assumed the responsibility to pay the amount of the loan and the balance will be paid to de Leon. Pursuant to this deed, respondent gave petitioner P415,500 as partial payment. Petitioner, on the other hand, handed the keys to the properties and wrote a letter informing RSLAI of the sale and authorizing it to accept payment from respondent and release the certificates of title. Respondent undertook repairs and made improvements on the properties. He likewise informed RSLAI of her agreement with petitioner for her to assume petitioners outstanding loan. RSLAI required her to undergo credit investigation. Subsequently, respondent learned that petitioner again sold the same properties to one Leona Viloria after March 10, 1993 and changed the locks, rendering the keys he gave her useless. Respondent thus proceeded to RSLAI to inquire about the credit investigation. However, she was informed that petitioner had already paid the amount due and had taken back the certificates of title.

Issue: Whether or Not the parties entered into a contract of sale or a contract to sell. Held: The contract between the respondent and petitioner is a contract of sale. In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the contract. Should the buyer default in the payment of the purchase price, the seller may either sue for the collection thereof or have the contract

judicially resolved and set aside. The non-payment of the price is therefore a negative resolutory condition. On the other hand, a contract to sell is subject to a positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays the purchase price. For this reason, if the buyer defaults in the payment thereof, the seller can only sue for damages. In the instant case the deed executed by the parties stated that petitioner sold the properties to respondent "in a manner absolute and irrevocable" for a sum of P1.1 million. With regard to the manner of payment, it required respondent to pay P415,500 in cash to petitioner upon the execution of the deed, with the balance payable directly to RSLAI (on behalf of petitioner) within a reasonable time. Nothing in said instrument implied that petitioner reserved ownership of the properties until the full payment of the purchase price. On the contrary, the terms and conditions of the deed only affected the manner of payment, not the immediate transfer of ownership (upon the execution of the notarized contract) from petitioner as seller to respondent as buyer. Otherwise stated, the said terms and conditions pertained to the performance of the contract, not the perfection thereof nor the transfer of ownership.



Jose Poncio was the owner of the parcel of land herein involve with improvements situated in San Juan, Rizal, which is subject to mortgage in favor of the Republic Savings Bank for the sum of P1,500.00. Petitioner Rosario Carbonell, a cousin and adjacent neighbor of respondent Poncio lived in the adjoining lot at 177 V. Agan Street. When Poncio is no longer able to keep up with the installments due on the mortgage ,he approached petitioner and offered to sell to the latter the said lot, excluding the house wherein respondent lived. Petitioner accepted the offer and proposed the price of P9.50 per square meter. Respondent Poncio, after having secured the consent of his wife and parents, accepted the price proposed by petitioner, on the condition that from the purchase price would come the money to be paid to the bank. Petitioner and respondent Jose Poncio then went to the Republic Savings Bank and secured the consent of the President thereof for her to pay the arrears on the mortgage and to continue the payment of the installments as they fall due. The amount in arrears reached a total sum of P247.26. But because respondent Poncio had previously told her that the money, needed was only P200.00, only the latter amount was brought by petitioner constraining respondent Jose Poncio to withdraw the sum of P47.00 from his bank deposit with Republic Savings Bank. But the next day, petitioner refunded to Poncio the sum of P47.00. On January 27, 1955, petitioner and respondent Poncio, in the presence of a witness, made and executed a document in the Batanes dialect, which indicates that beginning January 27, 1955, Jose Poncio can start living on the lot sold by him to Rosario Carbonell, until after one year during which time he will not pay anything. Then if after said one can he could not find a place where to move his house, he could still continue occupying the site but he should pay a rent Thereafter, petitioner asked Atty. Salvador Reyes, also from the Batanes Islands, to prepare the formal deed of sale, which she brought to respondent Poncio together with the amount of some P400.00, the balance she still had to pay in addition to her assuming the mortgaged obligation to Republic Savings Bank. However, Poncio

informed Carbonell that he could not proceed any more with the sale, because he had already given the lot to respondent Emma Infante; and that he could not withdraw from his deal with respondent Mrs. Infante, even if he were to go to jail. Petitioner then sought to contact respondent Mrs. Infante but the latter refused to see her. Then her lawyer advised her to file an adverse claim over the lot. issue: Who has a better right over the subject property? Held: In the instant case, Carbonnell has superior right over Infante because


Facts: LPJ Enterprises, Inc. had a contract to supply 300,000 bags of cement per year to Atlas Consolidated Mining and Development Corporation (Atlas for short), a member of the Soriano Group of Companies. The cement was delivered packed in kraft paper bags, then as now, in common use. Sometime in October, 1970, Cesar Campos, a Vice-President of petitioner Industrial Textile Manufacturing Company of the Philippines, asked Lauro Panganiban, Jr., President of Respondent Corporation, if he would like to cooperate in an experiment to develop plastic cement bags. Panganiban acquiesced, principally because Itemcop is a sister corporation of Atlas, respondent's major client. A few weeks later, Panganiban accompanied Paulino Ugarte, another Vice-President of Itemcop, to the factory of respondent's supplier, Luzon Cement Corporation in Norzagaray, Bulacan, to test fifty (50) pieces of plastic cement bags. The experiment, however, was unsuccessful. Cement dust oozed out under pressure through the small holes of the woven plastic bags and the loading platform was filled with dust. The second batch of plastic bags subjected to trial was likewise a failure. Although the weaving of the plastic bags was already tightened, cement dust still spilled through the gaps. Finally, with three hundred (300) "improved bags", the seepage was substantially reduced. Ugarte then asked Panganiban to send 180 bags of cement to Atlas via commercial shipping. Campos, Ugarte, and two other officials of petitioner company followed the 180 bags to the plant of Atlas in Sangi, Toledo, Cebu where they professed satisfaction at the performance of their own plastic bags. On December 29, 1970, Campos sent Panganiban a letter proclaiming dramatic results in the experiment. Consequently, Panganiban agreed to use the plastic cement bags. Four purchase orders (P.O.s) were thereafter issued. Petitioner delivered the orders consecutively on January 12, February 17, March 19, and April 17, 1971.Respondent, on the other hand, remitted the amounts of P1,640.00,

P2,480.00. and P13,230.00 on March 31, April 31, and May 3, 1971 respectively, thereby leaving a balance of P84,123.80. No other payments were made, thus prompting A. Soriano y Cia of petitioner's Legal Department to send demand letters to respondent corporation. Reiterations thereof were later sent by petitioner's counsel. A collection suit was filed on April 11, 1973 when the demands remained unheeded. At the trial on the merits, respondent admitted its liability for the 53,800 polypropylene lime bags covered by the first purchase order. With respect to the second, third, and fourth purchase orders, respondent, however, denied full responsibility therefor. Respondent said that it will pay, as it did pay for, only the 15,000 plastic bags it actually used in packing cement. As for the remaining 47,000 bags, the workers of Luzon Cement strongly objected to the use thereof due to the serious health hazards posed by the continued seepage of cement dust. Notwithstanding the measures adopted by respondent such as the use of masks, glove and conveyor system, the workers still refused to utilize the plastic bags. Respondent was, therefore, constrained to revert to the use of kraft paper bags in packing cement. Thereafter, petitioner was asked to take back the unused plastic bags. Considering however, that the bags were in the cement factory of respondent's supplier, petitioner maintained that it was respondent's obligation to return the bags to them. Apparently, this was not done and so petitioner demanded payment for the said bags. The trial court ruled in favor of the petitioner. Issue: Whether or not respondent maybe held liable for the 47,000 plastic bags which were not actually used for packing cement as originally intended. Held: Yes, the court held that the transaction between respondent and petitioner constituted an absolute sale and respondent is liable for the plastic bags delivered to it by petitioner. It is beyond dispute that prior to respondent's transaction with petitioner, the bags were already tested and the results thereof, albeit initially unsuccessful, were nevertheless favorably considered after due alterations were made. Verily, it is on the basis of such experimental findings that respondent agreed to use the plastic cement bags and thereafter issued the purchase orders heretofore mentioned. Significantly, the quantity of bags ordered by respondent also negates its position that the bags were still under experimentation. Indeed, if it were so, the bags ordered should have been considerably lesser in number and would normally increase as the suitability of the plastic bags became more definite. Likewise, it is worthy to note that as of the date of petitioner's third delivery on March 19, 1971, respondent has received a total of 52,000 bags. By then, it was very probable that the problems alluded to by respondent could no

longer be resolved, thus, only 15,000 bags were actually used and 37,000 bags were already considered unfit for packing cement. Under such predicament, it was but logical for respondent to cancel then the fourth purchase order for another 10,000 bags. Surprisingly, respondent still accepted the same upon delivery on April 17, 1971 and remitted its payments until May 3, 1971. When petitioner sent letters demanding the full payment of the bags, respondent simply declared that it did not receive any because it transferred its offices to another place. In the meantime, the bags remained in the custody of Luzon Cement, respondent's supplier and virtually a stranger as far as petitioner is concerned. It is for this reason that petitioner may not be expected to just pull out its bags from Luzon Cement. We should also consider the fact that Panganiban, respondent corporation's president, also collected due commissions for the four purchase orders issued in favor of petitioner. Finally, the conditions which allegedly govern the transaction according to respondent may not be considered. The trial court correctly observed that such conditions should have been distinctly specified in the purchase orders and respondent's failure to do so is fatal to its cause. We find that Article 1502 of the Civil Code, invoked by both parties herein, has no application at all to this case. The provision in the Uniform Sales Act and the Uniform Commercial Code from which Article 1502 was taken, clearly requires an express written agreement to make a sales contract either a "sale or return" or a "sale on approval". Parol or extrinsic testimony could not be admitted for the purpose of showing that an invoice or bill of sale that was complete in every aspect and purporting to embody a sale without condition or restriction constituted a contract of sale or return. If the purchaser desired to incorporate a stipulation securing to him the right of return, he should have done so at the time the contract was made. On the other hand, the buyer cannot accept part and reject the rest of the goods since this falls outside the normal intent of the parties in the "on approval" situation.

23)G.R. No. L-21263

April 30, 1965

LAWYERS COOPERATIVE PUBLISHING COMPANY, plaintiff-appellee, vs. PERFECTO A. TABORA, defendant-appellant. Facts: Perfecto A. Tabora bought from the Lawyers Cooperative Publishing Company one complete set of American Jurisprudence consisting of 48 volumes with 1954 pocket parts, plus one set of American Jurisprudence, General Index, consisting of 4 volumes, for a total price of P1,675.50 which, in addition to the cost of freight of P6.90, makes a total of P1,682.40. Tabora made a partial payment of P300.00, leaving a balance of P1,382.40. the ownership was also reserved to the company until the whole price is tendered by him. The books were duly delivered and receipted for by Tabora on May 15, 1955 in his law office Ignacio Building, Naga City. However after the delivery of the said books it was burned because a big fire broke out in their locality which destroyed and burned all buildings. Tabora immediately reported the incident to the company regarding the incident. On May 23, the company replied and as a token of goodwill it sent to Tabora free of charge volumes 75, 76, 77 and 78 of the Philippine Reports. As Tabora failed to pay the monthly installments agreed upon on the balance of the purchase price notwithstanding the long time that had elapsed, the company demanded payment of the installments due, and having failed, to pay the same, it commenced the present action before the Court of First Instance of Manila for the recovery of the balance of the obligation. Plaintiff also prayed that defendant be ordered to pay 25% of the amount due as liquidated damages, and the cost of action. Tabora alleged that the books bought from the plaintiff were burned during the fire that broke out in Naga City on May 15, 1955, and since the loss was due to force majeure he cannot be held responsible for the loss. He prayed that the complaint be dismissed and that he be awarded moral damages in the amount of P15,000.00. He also alleged that since ownership was still retained by the company they should bear the loss. Issue: Who should bear the loss if there is stipulation that the seller retains ownership until the payment of the whole price of the goods?

Held: Tabora will bear the loss. While as a rule the loss of the object of the contract of sale is borne by the owner or in case of force majeure the one under obligation to deliver the object is exempt from liability, the application of that rule does not here obtain because the law on the contract entered into on the matter argues against it. It is true that in the contract entered into between the parties the seller agreed that the ownership of the books shall remain with it until the purchase price shall have been fully paid, but such stipulation cannot make the seller liable in case of loss not only because such was agreed merely to secure the performance by the buyer of his obligation but in the very contract it was expressly agreed that the "loss or damage to the books after delivery to the buyer shall be borne by the buyer." Any such stipulation is sanctioned by Article 1504 of our Civil Code, which in part provides: (1) Where delivery of the goods has been made to the buyer or to a bailee for the buyer, in pursuance of the contract and the ownership in the goods has been retained by the seller merely to secure performance by the buyer of his obligations under the contract, the goods are at the buyer's risk from the time of such delivery. Neither can appellant find comfort in the claim that since the books were destroyed by fire without any fault on his part he should be relieved from the resultant obligation under the rule that an obligor should be held exempt from liability when the loss occurs thru a fortuitous event. This is because this rule only holds true when the obligation consists in the delivery of a determinate thing and there is no stipulation holding him liable even in case of fortuitous event. Here these qualifications are not present. The obligation does not refer to a determinate thing, but is pecuniary in nature, and the obligor bound himself to assume the loss after the delivery of the goods to him. In other words, the obligor agreed to assume any risk concerning the goods from the time of their delivery, which is an exception to the rule provided for in Article 1262 of our Civil Code.

24)G.R. No. L-64159 September 10, 1985-12 CIRCE S. DURAN and ANTERO S. GASPAR, petitioners, vs. INTERMEDIATE APPELLATE COURT, ERLINDA B. MARCELO TIANGCO and RESTITUTO TIANGCO,respondents. Petitioner Circe S. Duran owned two (2) parcels of land (Lots 5 and 6, Block A, Psd 32780) covered by Transfer Certificate of Title No. 1647 of the Register of Deeds of Caloocan City which she had purchased from the Moja Estate. She left the Philippines in June 1954 and returned in May 1966. On May 13, 1963, a Deed of Sale of the two lots mentioned above was made in favor of Circe's mother, Fe S. Duran who, on December 3, 1965, mortgaged the same property to private respondent Erlinda B. Marcelo-Tiangco. When petitioner Circe S. Duran came to know about the mortgage made by her mother, she wrote the Register of Deeds of Caloocan City informing the latter that she had not given her mother any authority to sell or mortgage any of her properties in the Philippines. Failing to get an answer from the registrar, she returned to the Philippines. Meanwhile, when her mother, Fe S. Duran, failed to redeem the mortgage properties, foreclosure proceedings were initiated by private respondent Erlinda B. Marcelo Tiangco and, ultimately, the sale by the sheriff and the issuance of Certificate of Sale in favor of the latter. Petitioner Circe S. Duran claims that the Deed of Sale in favor of her mother Fe S. Duran is a forgery, saying that at the time of its execution in 1963 she was in the United States. On the other hand, the adverse party alleges that the signatures of Circe S. Duran in the said Deed are genuine and, consequently, the mortgage made by Fe S. Duran in favor of private respondent is valid. Issue/s: a)Whether or not the signature of the petitioner was forged. b)Whether private respondent Erlinda B. Marcelo-Tiangco was a buyer in good faith and for value.

As to the first issue raised the court held that even if the signatures were a forgery, and the sale would be regarded as void, still the Deed of Mortgage is VALID, with respect to the mortgagees, the defendants-appellants. While it is true that under Art. 2085 of the Civil Code, it is essential that the mortgagor be the absolute owner of the property mortgaged, and while as between the daughter and the mother, it was the daughter who still owned the lots, STILL insofar as innocent third persons are concerned the owner was already the mother (Fe S. Duran) inasmuch as she had already become the registered owner (Transfer Certificates of Title Nos. 2418 and 2419). The mortgagee had the right to rely upon what appeared in the certificate of title, and did not have to inquire further. If the rule were otherwise, the efficacy and conclusiveness of Torrens Certificate of Titles would be futile and nugatory. Thus the rule is simple: the fraudulent and forged document of sale may become the root of a valid title if the certificate has already been transferred from the name of the true owner to the name indicated by the forger (See De la Cruz v. Fable, 35 Phil. 144; Blondeau et al. v. Nano et al., 61 Phil. 625; Fule et al. v. Legare et al., 7 SCRA 351; see also Sec. 55 of Act No. 496, the Land Registration Act). The fact that at the time of the foreclosure sale proceedings (1970-72) the mortgagees may have already known of the plaintiffs' claim is immaterial. What is important is that at the time the mortgage was executed, the mortgagees in good faith actually believed Fe S. Duran to be the owner, as evidenced by the registration of the property in the name of said Fe S. Duran. As regards to the second issue, good faith consists in the possessor's belief that the person from whom he received the thing was the owner of the same and could convey his title (Arriola vs. Gomez dela Serna, 14 Phil. 627). Good faith, while it is always to be presumed in the absence of proof to the contrary, requires a well-founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it (Santiago vs. Cruz, 19 Phil. 148). There is good faith where there is an honest intention to abstain from taking any unconscientious advantage from another (Fule vs. Legare, 7 SCRA 351). Otherwise stated, good faith is the opposite of fraud and it refers to the state of mind which is manifested by the acts of the individual concerned. In the case at bar, private respondents, in good faith relied on the certificate of title in the name of Fe S. Duran and as aptly stated by respondent appellate court even on the supposition that the sale was void, the general rule that the direct result of a previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply here for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow is simple enough: a fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has already been transferred from the name of the true owner to the name of the forger or the name indicated by the forger. Thus, where innocent third persons relying on the correctness of the certificate of title issued, acquire rights over the property, the court cannot disregard such rights and

order the total cancellation of the certificate for that would impair public confidence in the certificate of title; otherwise everyone dealing with property registered under the Torrens system would have to inquire in every instance as to whether the title had been regularly or irregularly issued by the court. Indeed, this is contrary to the evident purpose of the law. Every person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property. Stated differently, an innocent purchaser for value relying on a Torrens title issued is protected. A mortgagee has the right to rely on what appears in the certificate of title and, in the absence of anything to excite suspicion, he is under no obligation to look beyond the certificate and investigate the title of the mortgagor appearing on the face of said certificate.

25)G.R. No. 80298 April 26, 1990 EDCA PUBLISHING & DISTRIBUTING CORP., petitioner, vs. THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, respondents. On October 5, 1981, a person identifying himself as Professor Jose Cruz placed an order by telephone with the petitioner company for 406 books, payable on delivery. EDCA prepared the corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the purchase price of P8,995.65. On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos who, after verifying the seller's ownership from the invoice he showed her, paid him P1,700.00. Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before clearing of his first check, made inquiries with the De la Salle College where he had claimed to be a dean and was informed that there was no such person in its employ. Further verification revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against which he had drawn the payment check. EDCA then went to the police, which set a trap and arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la Pea and his sale of 120 of the books he had ordered from EDCA to the private respondent. On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at the UN Avenue, which forced their way into the store of the private respondents and threatened Leonor Santos with prosecution for buying stolen property. They seized the 120 books without warrant, loading them in a van belonging to EDCA, and thereafter turned them over to the petitioner. The private respondents sued for recovery of the books after demand for their return was rejected by EDCA. A writ of preliminary attachment was issued and the petitioner, after initial refusal, finally surrendered the books to the private

respondents. As previously stated, the petitioner was successively rebuffed in the three courts below and now hopes to secure relief from us. Issue/s: (1)The petitioner contends that the private respondents have not established their ownership of the disputed books because they have not even produced a receipt to prove they had bought the stock. (2)Whether the petitioner has been unlawfully deprived of the books because the check issued by the impostor in payment therefor was dishonored. Hence, the petitioner has the right to seize the books from respondent?

Held: (1)The court held that the petitioners contention is unacceptable because the first sentence of Article 559 provides that "the possession of movable property acquired in good faith is equivalent to a title," thus dispensing with further proof. In the instant case, Leonor Santos first ascertained the ownership of the books from the EDCA invoice showing that they had been sold to Cruz, who said he was selling them for a discount because he was in financial need. Private respondents are in the business of buying and selling books and often deal with hard-up sellers who urgently have to part with their books at reduced prices. To Leonor Santos, Cruz must have been only one of the many such sellers she was accustomed to dealing with. It is hardly bad faith for anyone in the business of buying and selling books to buy them at a discount and resell them for a profit. (2) No, the books were not unlawfully deprived from the petitioner because the contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration. Actual delivery of the books having been made, Cruz acquired ownership over the books which he could then validly transfer to the private respondents. The fact that he had not yet paid for them to EDCA was a matter between him and EDCA and did not impair the title acquired by the private respondents to the books. One may well imagine the adverse consequences if the phrase "unlawfully deprived" were to be interpreted in the manner suggested by the petitioner. A person relying on the seller's title who buys a movable property from him would have to surrender it to another person claiming to be the original owner who had not yet been paid the purchase price therefor. The buyer in the second sale would be left holding the bag, so to

speak, and would be compelled to return the thing bought by him in good faith without even the right to reimbursement of the amount he had paid for it. It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her that the books had been paid for on delivery. By contrast, EDCA was less than cautious in fact, too trusting in dealing with the impostor. Although it had never transacted with him before, it readily delivered the books he had ordered (by telephone) and as readily accepted his personal check in payment. It did not verify his identity although it was easy enough to do this. It did not wait to clear the check of this unknown drawer. Worse, it indicated in the sales invoice issued to him, by the printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership in the buyer. Surely, the private respondent did not have to go beyond that invoice to satisfy herself that the books being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz was presumed under Article 559 by his mere possession of the books, these being movable property, Leonor Santos nevertheless demanded more proof before deciding to buy them. It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the Santoses who had acted in good faith, and with proper care, when they bought the books from Cruz.

26) 27) ACABAL AND NICOLAS vs VILLANER FACTS: Alejandro Acabal and Felicidad Balasbas executed a Deed of Absolute Sale over a parcel of land in favor of their son, respondent Villaner Acabal. Villaner was then married to Justiniana Lipajan. When he become a widower, he executed a deed conveying the same parcel of land in favor of petitioner Leandro Acabal. However, Villaner later claims that the document he signed was a Lease Contract, wherein he leased for the property for three years to Leonardo. Villaner filed a complaint with the RTC against Leonardo and Ramon Nicolas to whom Leonardo in turn conveyed the property for annulment of the Deed of Sale.

The RTC ruled infavor of Acabal and dismissed the complaint. The CA reversed the decision of RTC and held that the Deed of Sale executed by the respondent Villaner in favor of the petitioner Leonardo is a Deed of Absolute Sale.

ISSUE: Whether or Not the Deed of Sale executed by respondent Villaner in favor of petitioner Leonardo is Absolute. HELD: It bears noting, that Villaner failed to present evidence on the fair market value of the property as of April 19, 1990, the date of execution of the disputed deed. Absent any evidence on the fair market value of land as of the time of its sale, it cannot be concluded that the price at which it was sold was inadequate. Inadequacy of price must be proven because mere speculation or conjecture has no place in our judicial system.

28) GR 161223 CADUNGDONG vs. YAP Facts: On August 17, 1979, Virgilio Cadungdong sold six lots with right to repurchase within 10 years to his cousin Franklin Ong. The lots were designated as follows; Lot 000821- 1170 sqm Lot 4978-1444 sqm Lot 29586-4257 sqm Lot 1140-980 sqm Lot-1020 sqm

The petitioner failed to redeem the property. Nevertheless , upon the prodding of Franklin, Virgilio who was merely a letter-carrier, executed a deed of sale in favor of Jocelyn in which it appears that he sold parcel 1,2, and 3, for the price of P 5,000.00. On December 23, 1996 Cresenciano Ong executed Deed of Absolute Sale of parcel no. 2 in favor of APC Group. Inc. When Franklin learned of the said sales, he objected, thus he delivered to Franklin a check drawn an issued by Cresenciano Ong in the amount of P 25,000. Virgilio also delivered to Franklin a check drawn and issued by the same person and the same amount. Franklin acknowledged to have receive the said amount which represents the full payment for the refund of the lot sold in Ginatilan. When Jocelyn learned about the sale of lot to APC she filed a criminal complaint for estafa against him. On the other hand the petitioner filed an action for nullity of the Deed of Absolute Sale in favor of the respondent. He alleged that Franklin had requested him to make the deed to lessen the tax liability of his sister Jocelyn in Canada. He further claimed that there was no consideration in the contract.

Issue: Whether the contract of sale between the petitioner and respondent is null and void. Held: In the case at bar, the contract of sale is null and void because the petitioner was no longer the rightful owner of the subject lot at the time of the execution of the instrument in favor of the respondent. The failure of the petitioner to repurchase the lot within the stipulated period automatically transferred the right of ownership to Franklin. The essence of a pacto de retro sale is that the title and ownership of the property sold are immediately vested in the vendee a retro, subject to the resolutory condition of repurchase by a vendor a retro within a stipulated period.

30) Gallar vs. Husain

Facts: Teodoro Husain sold his land to Serapio Chichirita reserving for himself the right to repurchase within six years. Teodoro was not able to redeem the said property although shortly after the execution of the Deed of Sale, Chichirita transferred his right to Graciana Husain, sister of the vendor. It was indicated in their agreement that Graciana redeemed the lot. She also subsequently transferred the property to Elias Gallar in exchange for one cow. In 1960 asked the Cadastral Court to grant him transfer of certificate of title but it was dismissed due to lack of jurisdiction. He therefore, filed a suit to compel the heirs of Teodoro Huasin to execute proper Deed of Sale so he can transfer the title to his name. The heirs denied the sale and contended that the agreement was just a mortgage to secure a loan of P 30. They claimed that the mortgage had been discharged when Graciana paid Teodoros debt to Chichirita. Issue: Who has better right over the property? Held: The court held that , while it is true that the first note written on the reverse side of the deed of sale speaks of redemption of the land, there is no evidence to show that the vendee, Graciana Husain was acting in behalf of his brother. Unlike a debt which a third party may satisfy even against the will of the debtor the right to repurchase may be exercise 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 therefore must be deemed to have acquire the land in her own right and as such, he may dispose of the land. Since the Teodoro failed to redeem the lot, its ownership is consolidated to the appellee.

31) GR NO. L-19196 VILLARICA vs. CONSUJI Facts: The petitioners, spouses Villarica sold to spouses Consuji a lot situated in the poblacion of the City of Davao for the price of P35,000.00. The public instrument of absolute sale and the certificate of title were delivered to the vendees. On the same day the Consujis executed another public instrument whereby they granted the spouses Villarica an option to buy the property within the period of one year for the price of P 37,750.00. but they secured another title in their names and sold the lot to Francisco for the price of P 47,000.00 by means of a public instrument. Then now, the recent buyer filed an application for an issuance of a new title. On April 14, 1953, the spouses Villarica bought an action in the court against the Consujis and Jovito Francisco for reformation of absolute sale into equitable mortgage as a security for usurious loan. Issue: Whether or Not the Contract executed by the Villaricas in favor of the Consujis is a contarct of Equitable Mortgage.

Held: The contract is a contract of sale. The contention and allegation of the petitioners is not true because the consideration or the price of the lot was not inadequate, the vendors did not remain in possession of the land sold as lessees or otherwise, and lastly, they granted them an option to buy only which is different and distinct from right to repurchase which must be reserved by the vendor.

32) GR NO. 156522 SAN PEDRO vs. SISON

Facts: The petitioner, Erlinda San Pedro secured a loan in the amount of P 105,000.00 with interest of P 45,000.00 or total of P 150,000.00. As security for the loan, she agreed to mortgage a 17,235 square meter of parcel of agricultural land. The transaction took place in the office of Atty. Venustiano Roxas. The petitioner alleged that Atty. Roxas and Lee coerced her to sign the deed and the instrument was executed merely as written evidence of the loan and mortgage. They also assured her that it is just for formality and the respondents will not enforce the contract against her. The respondents presented an entirely different version of evenst and claimed that the contract was a Deed of Sale. Issue: Whether the contract in question is an equitable mortgage or a deed of absolute sale. Held: It is well-settled that the presence of even one of the circumstances provided under Art. 1602 is sufficient to declare a contract as an equitable mortgage, ion consonance with the rule that the law favors the least transmission of property rights. For the presumption of an equitable mortgage to arise under Art. 1602, two requisites must concur: 1) that the parties entered into a contract denominated as a sale; and 2) that their intention was to secure an existing debt by way of mortgage. In the case at bar, there is no cogent reason to disturb the ruling of Court of Appeals in dismissing the case due to lack of merit. Upon the plaintiff in a civil case, the burden of proof never parts. Its upon Erlinda San Pedro as a petitioner to establish her case by a preponderance of evidence. She has the burden of presenting evidence required to obtain a favorable judgment, and she having the burden of proof, will be defeated if no evidence were given on either side.


Facts: The petitioner filed a complaint against respondents Leocadio Macaraya and Maximo Fernandez for declaration of nullity of contract, cancellation of titles, conveyance and damages. She alleged that the contract of sale between her and Macaraya was fictitious and simulated. She claimed that the contents of the contract did not reflect their true agreement, which was a mere transaction of loan of P12,ooo. On the other hand, respondents denied the allegations of the petitioner and insisted that there was no imputation of fraud and insisted upon the regularity of the assailed transactions. Fernandez on the other hand claimed that he is a buyer in good faith. Issue: Whether or Not the contract should be treated as an equitable mortgage. Held: In the case at bar, the consideration is inadequate for 384 square meter lot which is a commercial land. The petitioner continued receiving rentals from Angelo Leonar Enterprises Inc., the lessee of the subject property for atleast six months after the execution of the contract of sale.the collection of rentals ceased only when respondent Fernandez sued the lessee for ejectment and the rentals were subsequently ordered to be deposited in the Municipal Court Mati while the case is pending. This act of Macaraya is contrary to the principle of ownership . Thus, the contract is considered as an equitable mortgage.


Facts: The petitioners filed an action against respondent-spouses Serafin Abutin and Carmen Senir for the annulment of a deed of sale with pacto de retro, over a parcel of land which was transferred to respondents upon the registration of the deed of pacto de retro sale. On July 1, 1971, the trial court, by virtue of the agreement reached by the parties, rendered a decision declaring the transaction an equitable mortgage and fixing the period of ten months within which the petitioners must pay their obligation with legal interest. The petitioners failed to pay their obligation so the respondent moved for the execution of the court decision but the petitioners opposed the motion for execution alleging that there must be foreclosure of mortgage upon failure to redeem and not outright execution sale. Said opposition was denied by the trial court and an Order of Execution was issued on May 10, 1972. Upon implementation of said order the Clerk of Court issued two writs of execution, directing the Provincial Sheriff of Cavite to levy on the properties of petitioners to satisfy their loan to the respondents. The second is to sell the property in public auction. The petitioners move to quash the writ of execution and it was granted. The respondents appealed the decision and the respondents filed another motion for execution sale. This was opposed by petitioners with a prayer for cancellation of Certificate of Title issued in the name of the respondents. Issue: Whether or Not the execution of sale must be annulled. Held: The court do not agree with the interpretation of the Court of Appeals that upon failure of the petitioners to pay their obligation within the period as fixed in the judgment, petitioners also lost the right to redeem the property and as such, the absolute ownership over the subject premises has become consolidated in the respondents. The said ruling of the CA contradicts the agreement between the parties and the declaration in the decision that the contract between the parties was an equitable mortgage, not pacto de retro sale. It would produce the same effect as a pactum commissurium, a forfeiture clause that has traditionally been held as contrary to good morals and public policy, therefore, void.

The declaration therefore, in the decision of July 1, 1971 to the effect that absolute ownership over the subject premises has become consolidated in the respondents upon failure of the petitioners to pay their obligation within the specified period, is a nullity, for consolidation of ownership in an improper and inappropriate remedy to enforce a transaction declared to be one of mortgage. It is the duty of respondents, as mortgagees, to forclose the mortgage and if he wishes to secure a perfect title to the mortgaged property if he buys it in the foreclosure sale.


44)JERRY T. MOLES vs. IAC and MARIANO M. DIOLOSA G.R.No. 73913 January 31, 1989

FACTS: In 1977, petitioner needed a linotype printing machine for his printing business, The LM Press at Bacolod City, and applied for an industrial loan with the Development Bank of the Philippines for the purchase thereof. An agent of Smith, Bell and Co. who is a friend of petitioner introduced the latter to private respondent, owner of the Diolosa Publishing House in Iloilo City, who had two available machines. Thereafter, petitioner went to Iloilo City to inspect the two machines offered for sale and was informed that the same were secondhand but functional. Sometime between April and May, 1977, the machine was delivered to petitioner's publishing house at Tangub, Bacolod City where it was installed by an employee of respondent Diolosa. Another employee of the Diolosa Publishing House stayed at petitioners house for almost a month to train the latter's cousin in operating the machine. 6 Under date of August 29, 1977, private respondent issued a certification wherein he warranted that the machine sold was in A-1 condition, together with other express warranties. On November 29 1977, the petitioner sent a letter to private respondent informing him that the machine was not functioning properly as it needed a new distributor bar. Private respondent made no reply to said letter so petitioner engaged the services of other technicians. Later after several telephone calls regarding the defects in the machine, private respondent sent two technicians to make the necessary repairs but they failed to put the machine in running condition. After receiving a warning that the petitioner would be forced to seek legal remedies to protect his interest, the respondent decided to purchase a new distributor bar but he wanted to share the cost with the petitioner. The Regional Trial Court decided in favor of the petitioner then it was reversed by the appellate court, hence this petition.

ISSUE: Whether or not there is an implied warranty in the quality and fitness of secondhand items?

HELD It is generally held that in the sale of a designated and specific article sold as secondhand, there is no implied warranty as to its quality or fitness for the purpose intended, at least where it is subject to inspection at the time of the sale. On the other hand, there is also authority to the effect that in a sale of a secondhand article there may be, under some circumstances, an implied warranty of fitness for the ordinary purpose of the article sold or for the particular purpose of the buyer. In the instant case, it must be observed that the petitioner made known to the respondent, the purpose of the machine. The court upheld the ruling in the case of Drumar Mining Co. vs. Morris Ravine Mining Co. There is nothing in the Uniform Sales Act declaring there is no implied warranty in the sale of secondhand goods. Section 1735 of the Civil Code declares there is no implied warranty or condition as to the quality or fitness for any particular purpose, of goods supplied under a contract to sell or a sale, except (this general statement is followed by an enumeration of several exceptions). It would seem that the legislature intended this section to apply to all sales of goods, whether new or secondhand. In subdivision 1 of this section, this language is used: where the buyer ... makes known to the seller the particular purpose for which the goods are required, and it appears that the buyer relies on the seller's skill or judgment ... there is an implied warranty that the goods shall be reasonably fit for such purpose.