INDUSTRIAL FINANCE CORP, pet. vs. HON. PEDRO A. RAMIREZ, et.al., resp.

Antipuesto, Chino Facts: On December 4, 1970 Arnaldo Dizon sold to Consuelo Alcoba his 1966 model Chevrolet car for P13, 157.89, payable in eighteen monthly installments, which were secured by a chattel mortgage on the car. Dizon assigned P10, 000.00 to Industrial Finance Corporation all his rights and interest in the chattel mortgage. Consuelo Alcoba defaulted in the payment of the first four installments. Because of that default and by virtue of the acceleration clause in the promissory note forming part of the mortgage, the whole obligation became due and demandable. On November 20, 1971, the corporation sued her in the Court of First Instance of Manila. The complaint, a printed form used by the corporation in collection cases, is denominated "replevin with damages". The main objective of its complaint was recovery of the mortgaged car by means of a writ of replevin. The mortgagee-assignee wanted to foreclose extrajudicially the chattel mortgage but the sheriff had to seize the car by means of the provisional remedy of an order for the delivery of personal property. The lower court issued the writ of replevin. But the sheriff was not able to seize the mortgaged car. A second alias writ of execution was issued. The sheriff was able to levy upon the mortgaged car which was then in the possession of the Aco Motor Service of Dagupan City. However, in order to take possession of the car, the corporation had to pay P4, 250 to the Aco Motor Service to satisfy its lien. The corporation contended that, because of that payment, it sustained a loss of P250 in the execution sale. It asked for a third alias writ of execution in order to satisfy the balance of Consuelo Alcoba's obligation which, together with the 12% interest, it computed at P11, 300.92 as of September 26, 1975. Issue: Whether or not by means of that complaint, Industrial Finance Corporation sought to foreclose the chattel mortgage as contemplated in article 1484 of the Civil Code. Ruling: Consuelo Alcoba acted perversely in not surrendering the mortgaged car to the corporation and in preventing extrajudicial foreclosure. Had she complied with the writ of replevin, then the corporation could have foreclosed the mortgage and, she would not be liable for any deficiency. But she violated the mortgage by removing the car from her residence. She did not comply with the stipulation that, upon her default, the car should be delivered, on demand, to the mortgagee in Manila. The corporation's action was for specific performance or fulfillment of the obligation and not for judicial foreclosure. Consuelo Alcoba's payment of P2, 000 on account of the money judgment against her signified that she acquiesced in the action for specific performance. According to article 1484, it is only when there has been a foreclosure that the mortgagor is not liable for any deficiency. In this case, there was no foreclosure. The mortgagee chose the remedy of specific performance. It levied upon the car by virtue of an execution and not as an incident of a foreclosure proceeding. It is entitled to an alias writ of execution for the portion of the judgment that has not been satisfied. The rule is that in installment sales, if the action instituted is for specific performance and the mortgaged property is subsequently attached and sold, the sale thereof does not amount to a foreclosure of the mortgage. Hence, the seller-creditor is entitled to a deficiency judgment.

FILEMON H. MENDOZA, ET AL., p-appellants, vs. AQUILINA COMPLE, d-appellee. Pasquin, Irish Mae Facts: The plaintiffs have appealed from the order of Judge Honorio Romero of the Batangas court of first instance, which dismissed their action to require defendant to comply with their alleged contract of purchase and sale of a parcel of land. His honor held that the complaint merely described an accepted promise to sell by defendant, which promise could be withdrawn (and was withdrawn on time) because it was not supported by "a consideration distinct" from the price of the sale. The material allegations of the complaint are the following: 1. That, the plaintiffs were at first reluctant to purchase the said parcel of land ...; 2. That, after a series of negotiations ... upon the insistence of the defendant that the plaintiffs purchase the said parcel of land, the defendant finally agreed to sell to the plaintiffs the parcel of land in question plus the additional area of twenty-four square meters above stated, for the price of P4,500.00, and upon their mutual agreement, the plaintiffs were given by the defendant a period of three weeks from April 15, 1961 and until May 6, 1961, within which to raise the amount of P4,500.00; 3. That, it was likewise agreed upon between the plaintiffs and the defendants that the final deed of conveyance will be executed by the latter in favor of the former as soon as the plaintiffs shall be ready with the cash within the period given them; 4. That, on May 1, 1961, before the expiration of the period of three weeks given to the plaintiffs by the defendant on aforesaid, the said defendant came over to the house of the plaintiffs, and then and there advised them that she is calling off the deal and that she is backing out from their agreement. Issue: Whether or not the accepted promise to sell by defendant could be withdrawn because it was not supported by "a consideration distinct" from the price of the sale Ruling: It will be observed that there is no allegation that plaintiffs had agreed to buy the land. So, according to the facts described in the complaint, if plaintiffs did not produce or have the money on or before May 6, 1961, no liability attached to them. Neither could defendant compel them to buy. The negotiations as thus related in the complaint merely amounted to an undertaking by defendant that if plaintiffs had the amount of P4, 500.00 on or before May 6, 1961, she would sell the lot to them for that sum upon the execution of the contract; and that plaintiffs accepted or agreed to such promise. The New Civil Code provides that such promise is binding upon the promisor if the promise is supported by a consideration distinct from the price (Art. 1479). Now, as there was no such "distinct" consideration, the defendant was not bound to stand by her promise even if accepted, before withdrawal. The lower court applied and followed our decisions in South-western Sugar & Molasses Co. v. Atlantic, Gulf & Pacific Co., 51 Off. Gaz. 3447 and Navarro v. Sugar Producers Association, 60 Off. Gaz. 511. We are satisfied that on the facts and the law, both said cases enunciated principles conclusive on this litigation. Consequently, the appealed order is affirmed, with costs.

CO CHO CHIT pet., vs. HANSON, ORTH and STEVENSON, INC., ET AL., resp. Sinsona, Norberto Facts: On March 10, 1949, Co Cho Chit entered a contract with Hanson, Orth and Stevenson, Inc., in virtue of which the latter bought from the former one hemp press for the sum of P8,000.00, which the buyer paid the purchaser under the terms and conditions stipulated in the contract of sale, one of which was that the vendor would furnish free of charge the services of a competent mechanic to supervise the installation of the above hemp press and turn same over to the purchaser in satisfactory running order, as well as the mechanic to supervise the installation of the power drive engine to be furnished by the purchaser for said hemp press. In consonance with the contract and letter aforementioned, said hemp press was shipped to, and installed at, plaintiff's Fiber Plant in Davao City under the supervision and direction of the vendor's mechanics, though in spite of all efforts and cooperation given by the purchaser, the same has never been up to the present in a satisfactory running order, nor could it give satisfactory service. By reason of such vendor's alleged failure to comply with his aforementioned obligations, the purchaser demanded from him the refund of the sum of P8, 000.00 paid as purchase price of the hemp press, and as Co Cho Chit refused to yield to this demand, Hanson, Orth and Stevenson, Inc., instituted on October 13, 1949, the corresponding complaint that gave rise to this action in the Court of First Instance of Manila. After hearing the court rendered judgment, the dispositive part of which is as follows: "IN VIEW FOREGOING, the Court hereby renders judgments in favor of the plaintiff and against the defendant... The defendant appealed to the C.A. which modified the same as stated above. Issue: Whether or not the hemp press is in a satisfactory running order; that it gives satisfactory service; that it can press and turn out hemp bales in government regulation size; and that it has been turned over to the plaintiff by the defendant. Ruling: From the above findings, the following appears clear; that respondent, needed this machine in the operation of its business of exporting hemp from the country; that with the exception of a very small percentage, almost all the hemp produced in the Philippines is for exportation; that since its installation, the hemp press in question has not been able to bale hemp of regulation size for exportation; and that because of this failure or defect, respondent has never accepted said hemp press. The letter-contract Exhibit A shows clearly that petitioner obligated himself to perform only two obligations, to wit: first, to sell and deliver to respondent the described hemp press, and, second, to furnish free of charge the services of a competent mechanic to supervise the installation of the hemp press and turn the same over to respondent in satisfactory running condition. Moreover, the hemp press installed was strictly in accordance with the description in the contract. There is no claim to the contrary. The fact that respondent could not use it to suit its own private and specific purpose cannot render the contract rescindable. The vendor has done his part and it is but fair that the vendee should do his. The contract in such a case is valid and binding and not rescindable. Wherefore, Decision appealed from is reversed. Complaint is dismissed, with costs against respondent.

LOPE ATIENZA, d.y.apelante, vs. MAXIMINO CASTILLO, et.al., d.y.apelados. Barrera, Alexis Ben Facts: The claimant, Lope Atienza, began demand against Maximino Castillo, Eulogia Giga and Juana Castillo, before the Court of the First Instance of Tayabas, in order to receive (charge) of these the quantity of P1, 836, by way of damages, for the alleged nonperformance on the part of Maximino Castillo and Eulogia Giga of the agreement had between both parts of that the daughter of these, Juana Castillo, would marry the claimant. On having called him to sight this matter in the lower Court, demonstrating by means of tests attest the existence of the supposed (alleged) agreement between the parents and those of Juana Castillo, one of the respondents, with regard to the marriage between this one and the claimant, and the services given by the claimant to the defendants in consideration to the above mentioned agreement of marriage. The defendants then were opposed to the presentation of the above mentioned tests, alleging that, according to the article 335 of the Code of Civil Procedure, any agreement had in consideration to the marriage cannot be proved by means of tests attest them. The lower Court supported this objection, and, as the claimant could not present any documentary witness, the Court, on motion of the defendants, dismissed the matter. Hence this appeal. Issue: Whether or not the case falls within the prohibition of the Law on Frauds. Ruling : We have reviewed the record in this matter and found that the same holds for the defendants. The action presented by the complainant is not to bind the appealed, Juana Castillo to fulfill any agreed or promise to marry with the complainant. On the contrary, this suit was filed in order to claim for the payment of damages incurred by the plaintiff, who claims to have served the defendants, in consideration for the promise of marriage provided by these parents. The case falls within the prohibition of the Law of Frauds. As for that the appellees should have alleged the dispositions of the Law of Frauds applicable to the present case, and be allowed one doing it, to claim the benefits of the same one, it is proved that only during the sight of this matter in the lower Court the defendants had news of that the matrimonial agreement, on which the claimant is founded to claim damages, was not in writing, and, therefore, badly the defendants could anticipate the tests that the claimant would present in support of its allegations, especially not all in the demand indicates if the above mentioned matrimonial agreement was or was not in writing. This presumption is that it was, since according to the Law Frauds, it must be in writing, and, therefore, it is a general rule that has to presume the ordinary course of any step or agreement. Finally, even if we should admit the allegations of the appellant, we think that the lower Court was right on having dismissed the present matter, since according to the claimant the alleged matrimonial agreement had between its parents and those of the demanded, Juana Castillo, it took place in May, 1934, and in one agreed that the marriage between the above mentioned respondent and the alone appellant would take place in 1938, when that one was fulfilling its eighteen years. Therefore, in accordance with the Law of Frauds, which arranges that any contract that, according to its terms, does not have to fulfill in one year from the date of its granting, to be proved in judgment by means of documentary witnesses, it is clear that the agreement in the present matter, given that that, as the claimant alleges, four years had to be fulfilled after carried out between both parts, it should be had proved by documentaries and do not attest them. It is, therefore, confirm, as this is to confirm, the appealed judgment in all its parts, with costs against the appellant. Commanded. (As translated via http://www.spanishdict.com/translation)

FORTUNATA SOLIS, p-appellee, vs. MAXIMA BARROSO, ET AL., d-appellants. Yanto, Jennifer Kristine Facts: The spouses Juan Lambino and Maria A. Barroso begot three children named Alejo, Eugenia and Marciana Lambino. On June 2, 1919 said spouses made a donation of propter nuptias of the lands described in the complaint in favor of their son Alejo Lambino and Fortunata Solis in a private document in consideration of the marriage which the latter were about to enter into. One of the conditions of this donation is that in case of the death of one of the donees, one-half of these lands thus donated would revert to the donors while the surviving donee would retain the other half. On the 8th of the said month of June 1919, Alejo Lambino and Fortunata Solis were married and immediately thereafter the donors delivered the possession of the donated lands to them. On August 3, 1919 donee Alejo Lambino died. In the same year donor Juan Lambino also died. After the latter's death, his wife, Maxima Barroso, recovered possession of the donated lands. The surviving donee Fortunata Solis filed the action, which is the subject matter of this appeal, against the surviving donor Maxima Barroso and Eugenia and Marcelina Lambino, heirs of the deceased donor Juan Lambino, with their respective husbands, demanding of the defendants the execution of the proper deed of donation according to law, transferring one-half of the donated property, and moreover, to proceed to the partition of the donated property and its fruits. The court rendered judgment based upon article 1279 of the Civil Code granting plaintiff's prayer and ordering the defendants to execute a deed of donation in favor of the plaintiff, adequate in form and substance to transfer the legal title of the donated lands assigned to her in the original donation. Issue: Whether or not article 1279 of the Civil Code is applicable to the present case. Ruling: We are concerned with a donation propter nuptias, which, according to article 1328 of the Civil Code, must be governed by the rules established in Title II, Book III of this Code, on donations (articles 618 to 656), Article 633 provides that in order that a donation of real property may be valid, it must be made in a public instrument. This is the article applicable to donation propter nuptias in so far as its formal validity is concerned. The only exceptions to this rule are onerous and remuneratory donations, in so far as they do not exceed the value of the charge imposed, which are then governed by the rules on contracts (art. 622), and those which are to take effect upon the donor's death, which are governed by the rules established for testamentary successions (art. 620). We have, therefore, a donation propter nuptias which is not valid and did not create any right, since it was not made in a public instrument, and hence, article 1279 of the Civil Code which the lower court applied is not applicable thereto. The last named article provides that, should the law require the execution of an instrument or any other special form in order to make the obligations of a contract effective, the contracting parties may compel each other to comply with such formality from the moment that consent has been given, and the other requirements for the validity of the contract exist. Suffice it to state that this article refers to contracts and is inapplicable to the donation in question which must be governed by the rules on donations. It may further be noted, at first sight, that this article presupposes the existence of a valid contract and cannot possibly refer to the form required in order to make it valid, which it already has, but rather to that required simply to make it effective, and for this reason, it would, at all events, be inapplicable to the donation in question, wherein the form is required precisely to make it valid. The judgment appealed from is reversed and the defendants are hereby absolved from the complaint, without special pronouncement of costs. So ordered.

EUTIQUIANO CUYUGAN, p-appellant, vs.ISIDORO SANTOS, d-appellee. Lasala, Renan Norbert Facts: The complaint in this case alleges that the plaintiff is the sole heir of his mother, Guillerma Cuyugan y Candia, deceased; that in the year 1895 she borrowed P3,500 from the defendant and executed the document which purports on its face to be a deed of sale of the land described therein, with a reservation in favor of the vendor of the right to repurchase for P3,500; that although the instrument purports on its face to be a deed of sale, it was intended by the parties merely to evidence the loan of the nominal purchase price and to serve as a security for the repayment of the amount of the loan; that under the terms of the instrument plaintiff's mother was left in possession of the land as a nominal tenant of the defendant at an annual rental of P420, an amount equal to the agreed upon annual interest on the loan at the rate of 12 per cent per annum; that in the year 1897 the borrower paid P1,000 on the loan, whereupon the nominal rent on the land was reduced from P420 to P300 per annum, that being the amount of the interest on the unpaid balance of the loan at the rate of 12 per cent per annum; that plaintiff and his mother continued in the peaceable possession of the land until the defendant, in the year prior to the institution of this action, served notice on the plaintiff that an annual payment of P420 would be required of him thereafter, that is to say, the original amount of the annual payments as agreed upon prior to the payment of P1,000 on the debt in the year 1897; that upon plaintiff's refusal to meet this demand, defendant set up a claim of ownership in himself and threatened to eject the plaintiff from the land; that thereupon plaintiff offered to pay, and still stands ready to pay the balance due on the original indebtedness and the unpaid interest thereon for one year, but that defendant declined and continues to decline to accept the amount tendered and to cancel the formal deed of sale to the land. Issue: Whether or not the defendant can be required to accept the amount thus tendered, and to cancel the formal deed of conveyance. Ruling: The demurrer should have been overruled on two separate and distinct grounds. 1. Since the demurrer to the complaint admits all the material facts well pleaded therein, it follows that the defendant admits that the true nature and intent of the transaction mentioned in the complaint was a mere loan of money secured by a formal conveyance of the land of the vendor; that the written instrument, purporting to be a deed of sale of the land, with a right of repurchase reserved by the vendor, did not set forth the real nature of the agreement between the parties thereto; and that the true intention and understanding of the parties at the time when the deed was executed and delivered was that it should be held by the defendant, not as a deed of sale of the land, but rather as an instrument in the nature of a mortgage, evidencing a loan secured by the lands of the borrower. 2. The second ground upon which the demurrer should have been overruled is that it admits the truth of the allegation of the complaint that in the year 1897, two years after the date of the execution of the instrument purporting to be a deed of sale, the nominal vendor paid the nominal purchaser P1,000, whereupon the nominal rent of the land was reduced from P420 to P300 per annum, the real purpose and object of this arrangement being to reduce the amount of the annual interest on the original loan made to the nominal vendor of the land, proportionately to the reduction of the amount of the loan itself by the payment of P1,000. If it be true that two years after the transaction evidenced by the instrument attached to the complaint, the defendant accepted from the plaintiff's mother the sum of P1, 000, and thereafter reduced the amount of the annual payments to be made by her, it cannot be doubted that the plaintiff has a good cause of action against the defendant. The order entered in the court below, sustaining the demurrer to the complaint must be reversed.

OESMER, et.al. petitioners, vs. PARAISO DEVELOPMENT CORP, respondent. Jambangan, Adam Dandro Facts: Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all surnamed Oesmer, together with Adolfo Oesmer and Jesus Oesmer, are brothers and sisters, and co-owners of undivided shares of two parcels of land situated in Barangay Ulong Tubig, Carmona, Cavite, identified as Lot 720 and Lot 834. Both lots are unregistered and originally owned by their parents, Bibiano Oesmer and Encarnacion Durumpili, who declared the lots for taxation purposes. When the spouses Oesmer died, petitioners, acquired the lots as heirs of the former by right of succession. Sometime in March 1989, Rogelio Paular, a resident and former Municipal Secretary of Carmona, Cavite, brought along petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso Development Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of brokering the sale of petitioners properties to respondent corporation. Pursuant to the said meeting, a Contract to Sell was drafted by the Executive Assistant of Sotero Lee, Inocencia Almo. On 1 April 1989, petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell. A check in the amount of P100, 000.00, payable to Ernesto, was given as option money. In a letter dated 1 November 1989, petitioners informed the former of their intention to rescind the Contract to Sell and to return the amount of P100, 000.00 given by respondent as option money. Issue: 1. Whether or not the Contract to Sell is binding upon petitioner Ernestos co-owners; 2. Whether or not the Contract to Sell is void altogether considering that respondent itself did not sign it as to indicate its consent to be bound by its terms; and, 3. Whether or not Exhibit D is really a unilateral promise to sell without consideration distinct from the price, and hence, void. Ruling: In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to the respondent of their shares in the subject parcels of land by affixing their signatures on the said contract. Such signatures show their acceptance of what has been stipulated in the Contract to Sell and such acceptance was made known to respondent corporation when the duplicate copy of the Contract to Sell was returned to the latter bearing petitioners signatures. The Contract to Sell is not void merely because it does not bear the signature of the respondent corporation. Respondent Corporations consent to be bound by the terms of the contract is shown in the uncontroverted facts which established that there was partial performance by respondent of its obligation in the said Contract to Sell when it tendered the amount of P100, 000.00 to form part of the purchase price, which was accepted and acknowledged expressly by petitioners. The Contract to Sell is not a unilateral promise to sell merely because it used the word option money when it referred to the amount of P100, 000.00, which also form part of the purchase price. The sum of P100, 000.00 was part of the purchase price. Although the same was denominated as "option money," it is actually in the nature of earnest money or down payment when considered with the other terms of the contract. Doubtless, the agreement is not a mere unilateral promise to sell, but, indeed, it is a Contract to Sell as both the trial court and the appellate court declared in their Decisions.

ADELFA PROPERTIES, INC., petitioner, vs. C.A., et.al. respondents. Velarde, Jessa Ela Facts: Herein private respondents and their brothers, Jose and Dominador Jimenez, were the registered co-owners of a parcel of land situated in Barrio Culasi, Las Pias, Metro Manila. On July 28, 1988, Jose and Dominador Jimenez sold their share, specifically the eastern portion thereof, to petitioner. Thereafter, petitioner expressed interest in buying the western portion of the property. On November 25, 1989, an "Exclusive Option to Purchase" was executed between petitioner and private respondents. Before petitioner could make payment, it received summons on November 29, 1989, together with a copy of a complaint filed by the nephews and nieces of private respondents against the latter, Jose and Dominador Jimenez, and herein petitioner in the Regional Trial Court of Makati, for annulment of the deed of sale in favor of Household Corporation and recovery of ownership of the property. On July 27, 1990, private respondents' counsel sent a letter to petitioner enclosing therein a check for P25, 000.00 representing the refund of fifty percent of the option money paid under the exclusive option to purchase. Private respondents then requested petitioner to return the owner's duplicate copy of the certificate of title of respondent Salud Jimenez. Petitioner failed to surrender the certificate of title, hence private respondents filed Civil Case No. 7532 in the Regional Trial Court of Pasay City, Branch 113, for annulment of contract with damages, praying, among others, that the exclusive option to purchase be declared null and void; that defendant, herein petitioner, be ordered to return the owner's duplicate certificate of title; and that the annotation of the option contract on TCT No. 309773 be cancelled. Issue(s): 1. Whether or not the "Exclusive Option to Purchase" executed between petitioner and private respondents is an option contract; and, 2. Whether or not there was a valid suspension of payment of the purchase price by said petitioner, and the legal effects on the contractual relations of the parties. Ruling : An analysis of the facts obtaining in this case, irresistibly leads to the conclusion that the agreement between the parties is a contract to sell, and not an option contract or a contract of sale. 1. Firstly, the exclusive option to purchase, does not mention that petitioner is obliged to return possession or ownership of the property as a consequence of non-payment. Secondly, it has not been shown there was delivery of the property, actual or constructive, made to herein petitioner. 2. Petitioner was justified in suspending payment of the balance of the purchase price by reason of the aforesaid vindicatory action filed against it. The assurance made by private respondents that petitioner did not have to worry about the case because it was pure and simple harassment is not the kind of guaranty contemplated under the exceptive clause in Article 1590. In the case at bar, it has been shown that although petitioner was duly furnished and did receive a written notice of rescission which specified the grounds therefore, it failed to reply thereto or protest against it. Its silence thereon suggests an admission of the veracity and validity of private respondents' claim. 53 Furthermore, the initiative of instituting suit was transferred from the rescinder to the defaulter by virtue of the automatic rescission clause in the contract. 54 But then, the records bear out the fact that aside from the lackadaisical manner with which petitioner treated private respondents' latter of cancellation, it utterly failed to seriously seek redress from the court for the enforcement of its alleged rights under the contract.

A.W. BEAN, p-appellee, vs. THE B.W. CADWALLADER COMPANY, d-appellant. Bayani JM A. Solana Facts: On September 6, 1906 [1905], the plaintiff and the defendants entered into a written contract, by virtue of which the former bound himself to furnish and sell to the latter a cargo of pieces of native wood, about eight to ten thousand (8,000 to 10,000) cubic feet, for the sum of sixty (60) cents, Philippine currency, per English cubic foot, and to deliver said pieces of wood to the defendants alongside the latter's ship at Basilan, which delivery was to be effected within three months from the date of the contract, and to wire the defendants regarding the date on which the above delivery could be made. The plaintiff interviewed Mr. B.W. Cadwallader, the agent of the defendant company, for the purpose of getting a boat for Basilan in order to take away the lumber there ready for shipment, and, after an inquiry made by him at the office of the Atlantic, Gulf and Pacific Company, it was agreed by the defendants and the said Atlantic, Gulf and Pacific Company, that the lighter Primera, towed by the S.S. Robert K., would be sent there for the transportation of the lumber. New steps were taken by the plaintiff, together with the defendants, about the beginning of February, 1906, in order to make arrangements with the Atlantic, Gulf and Pacific Company of this city for the transportation of said lumber from Basilan to Manila, when the logs covered by the second contract were cut and ready at Basilan, and the Atlantic Gulf furnished the lighter Juanita, towed also by the same S.S. Robert K. That the lighter, after having appeared first on March 23 at the place for the shipment of the lumber, without making any attempt at loading, on account of the unsettled condition of the sea, did attempt to effect the shipment during the early part of the following month of April, by anchoring near the place where the logs were placed on rafts ready for delivery; but on placing the gang planks necessary for loading, the anchor chain was broken at the moment when operations began, which resulted in the suspension of the shipment, and the return of the lumber to its original place on shore. Issue: 1. Whether or not the defendant received or accepted the timber which is the object of the contracts. 2. Whether or not the defendant has defaulted in receiving the property and whether or not the plaintiff has pursued the remedies provided by law. 3. Whether or not there has been default upon the part of the defendant. 4. Whether or not the plaintiff has ever said that timber is ready for delivery at ship's side. 5. Whether or not the default is therefore on the part of the plaintiff and not on the part of the defendant. Ruling: It is a rule well established that a contract for the sale of goods, where nothing remains to be done by the seller before making delivery, transfers the right of property, although the price has not been paid, nor the thing sold actually delivered to the purchaser. The evidence shows that the logs were at the disposal of the defendant, and thereby became liable for the price of the same under the contract. Our conclusion is that a large preponderance of the evidence shows that it was perfectly feasible of the defendant, with proper apparatus, to take on board the logs in question at the point of delivery. However, it would not be just to conclude that, because on certain days it is impossible to load and unload ships in said bay had made misrepresentations, because of the fact that on a particular day ships could not be loaded or unloaded by reason of the conditions of the sea resulting from wind or storm. We are of the opinion that the plaintiff is entitled to a confirmation of the judgment of the lower court.

NORKIS DISTRIBUTORS, INC., petitioner, vs. C.A., et.al., respondents. Antipuesto, Chino Facts: Petitioner Norkis Distributors, Inc., is the distributor of Yamaha motorcycles in Negros Occidental with office in Bacolod City with Avelino Labajo as its Branch Manager. On September 20, 1979, private respondent Alberto Nepales bought from the Norkis-Bacolod branch a brand new Yamaha Wonderbike motorcycle Model YL2DX then displayed in the Norkis showroom. The price of P7,500.00 was payable by means of a Letter of Guaranty from the Development Bank of the Philippines (DBP), Kabankalan Branch, which Norkis' Branch Manager Labajo agreed to accept. Hence, credit was extended to Nepales for the price of the motorcycle payable by DBP upon release of his motorcycle loan. As security for the loan, Nepales would execute a chattel mortgage on the motorcycle in favor of DBP. Branch Manager Labajo issued Norkis Sales Invoice No. 0120 showing that the contract of sale of the motorcycle had been perfected. Nepales signed the sales invoice to signify his conformity with the terms of the sale. In the meantime, however, the motorcycle remained in Norkis' possession. On January 22, 1980, the motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of Alberto Nepales but the latter denies it. The record shows that Alberto and Julian Nepales presented the unit to DBP's Appraiser-Investigator Ernesto Arriesta at the DBP offices in Kabankalan, Negros Occidental Branch. The motorcycle met an accident on February 3, 1980 at Binalbagan, Negros Occidental. An investigation conducted by the DBP revealed that the unit was being driven by a certain Zacarias Payba at the time of the accident. The unit was a total wreck, was returned, and stored inside Norkis' warehouse. Issue: Whether or not there had already been a transfer of ownership of the motorcycle to private respondent at the time it was destroyed. Ruling: In all forms of delivery, it is necessary that the act of delivery whether constructive or actual, be coupled with the intention of delivering the thing. The act, without the intention, is insufficient. When the motorcycle was registered by Norkis in the name of private respondent, Norkis did not intend yet to transfer the title or ownership to Nepales, but only to facilitate the execution of a chattel mortgage in favor of the DBP for the release of the buyer's motorcycle loan. The Letter of Guarantee issued by the DBP, reveals that the execution in its favor of a chattel mortgage over the purchased vehicle is a prerequisite for the approval of the buyer's loan. If Norkis would not accede to that arrangement, DBP would not approve private respondent's loan application and, consequently, there would be no sale. The Court of Appeals correctly ruled that the purpose of the execution of the sales invoice dated September 20, 1979 and the registration of the vehicle in the name of plaintiff-appellee (private respondent) with the Land Registration Commission was not to transfer to Nepales the ownership and dominion over the motorcycle, but only to comply with the requirements of the Development Bank of the Philippines for processing private respondent's motorcycle loan. Article 1496 of the Civil Code which provides that "in the absence of an express assumption of risk by the buyer, the things sold remain at seller's risk until the ownership thereof is transferred to the buyer," is applicable to this case, for there was neither an actual nor constructive delivery of the thing sold, hence, the risk of loss should be borne by the seller, Norkis, which was still the owner and possessor of the motorcycle when it was wrecked. This is in accordance with the well-known doctrine of res perit domino.

PHILIPPINE SUBURBAN DEVT CORP vs. THE AUDITOR GENERAL Barrera, Alexis Ben Facts: It cannot be denied that the President of the Philippines, on June 8, 1960, at his Cabinet meeting, approved and authorized the purchase by the national government, through the PHHC, of the unoccupied portion of the property of petitioner; that on June 10, 1960, the PHHC, acting pursuant to the aforecited approval of the President, passed its Resolution No. 700 approving and authorizing the purchase of the unoccupied portion of said property; and that after the PHHC took possession of the aforementioned property on the first week of June, 1960 to use it as a resettlement area for squatters and flood victims from Manila and suburbs, the President of the Philippines at his Cabinet meeting on June 13, 1960, approved and authorized the purchase by the PHHC of the entire property consisting of 752.4940 hectares, instead of only the unoccupied portion thereof as was previously authorized. On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold the amount of P30, 099.79 from the purchase price to be paid by it to the Philippine Suburban Development Corporation. Said amount represented the realty tax due on the property involved for the calendar year 1961 Petitioner, through the PHHC, paid under protest the abovementioned amount to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary of Finance Dominador Aytona to order a refund of the amount so paid. It is now claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax in the amount of P30,460.90 because aside from the presumptive delivery of the property by the execution of the deed of sale on December 29, 1960, the possession of the property was actually delivered to the vendee prior to the sale, and, therefore, by the transmission of ownership to the vendee, petitioner has ceased to be the owner of the property involved, and, consequently, under no obligation to pay the real property tax for the year 1961. Issue: Whether or not the Auditor General erred in disallowing the refund of the real estate tax. Ruling: Considering the aforementioned approval and authorization by the President of the Philippines of the specific transaction in question, and the fact that the contract here involved - which is for a special purpose to meet a special situation - was entered into precisely to implement the Presidential directive, the prior approval by the Auditor General envisioned by Administrative Order No. 290, dated February 3, 1959, would therefore, not be necessary. In the case at bar, there is no question that the vendor had actually placed the vendee in possession and control over the thing sold, even before the date of the sale. The condition that petitioner should first register the deed of sale and secure a new title in the name of the vendee before the latter shall pay the balance of the purchase price, did not preclude the transmission of ownership. In the absence of an express stipulation to the contrary, the payment of the purchase price of the good is not a condition, precedent to the transfer of title to the buyer, but title passes by the delivery of the goods. In the case at bar, no rights of third persons are involved, much less is there any subsequent alienation of the same property. It is undisputed that the property is in the possession of the vendee, even as early as the first week of June, 1960, or six (6) months prior to the execution of the Deed of Absolute Sale on December 29, 1960. Since the delivery of possession, coupled with the execution of the Deed of Absolute Sale, had consummated the sale and transferred the title to the purchaser, We, therefore, hold that the payment of the real estate tax after such transfer is the responsibility of the purchaser. However, in the case at bar, the purchaser PHHC is a government entity not subject to real property tax.

ENGRACIO OBEJERA, et.al., plaintiffs-appellees, vs. IGA SY, defendant-appellant. Jambangan, Adam Dandro Facts: On 13 Dec 1941, plaintiffs and defendant sought refuge in the house of Leon Villena, barrio lieutenant of Dalig, Batangas, Batangas, on account of the Japanese invasion of the Philippines. On January 2, 1942, news having spread that the Japanese forces were closing in and were committing barbarous acts, which gripped the people in terror, plaintiffs and defendant, after consultation with their host Leon Villena, decided to hide their things and valuables in a dug-out belonging to Leon Villena about thirty meters away from his house. The defendant placed in said dug-out her money allegedly amounting to P5,021 and jewelry worth P400 in her own container; Leon Villena and his wife also placed therein their own things; the plaintiffs also placed their things and money allegedly amounting to P3,000. They did this at night and covered the dug-out with palay belonging to Leon Villena and the defendant Iga Sy. On February 18, 1942, at the instance of the defendant who desired to move to another house, the plaintiffs and the defendant, together with Leon Villena, went to the dug-out to take out the defendant's container and discovered, that their money and things, except for a few papers, had been lost. One day during the first week of April, 1942, the defendant reported the loss of her money and jewels, causing the arrest and investigation of Leon Villena, two others and the plaintiff Engracio Obejera, who were released shortly after, except Engracio Obejera who was released only on April 19, 1942 after he had consented to execute a document was sought to be annulled by the plaintiffs and appellees herein. Issue: Whether or not there was a deposit of money and jewelry and whether or not the consent to the deed of transfer was obtained through violence and intimidation. Ruling: The evidence of record, in this regard, uniformly shows that the plaintiffs were not in any way responsible for the loss of the defendant's money and jewelry. Both Mayor Roman L. Perez and Chief of Police Apolonio Corpus testified that they did not find any evidence that the plaintiffs, who also lost their own valuables, could be in any manner connected with the loss. It necessarily follows that the deed of transfer dated April 19, 1942, whereby the plaintiffs paid P500 to the defendant and further promised to transfer their property under Transfer Certificate of Title No. 666 in case they failed to return on December 31, 1942 the balance of the loss for which, as already stated, they cannot be held liable, is null and void for lack of cause or consideration. The continued detention of the plaintiff from April 11-19, 1942 by the mayor and policemen, in spite of the fact that they had not found any evidence against the plaintiffs; the fact that the policemen applied pressure on the plaintiffs to make good the loss; the fact that the mayor, did not release the plaintiff until he and his wife consented to execute the deed of transfer, in spite of their continuous protestations of innocence and supplications of mercy; and the fear created in their minds, unless they executed the said deed of transfer, all show very clearly the irresistible force and intimidation employed, to coerce the plaintiffs into executing the said document, rendering it, therefore, null and void for lack of free consent. The contention that plaintiffs offered to transfer their property in acknowledgment of their responsibility for the loss of her things appears groundless. Aside from the fact that it cannot be believed, as already stated, that there was constituted in this case a deposit, we are of the opinion that such an offer, made by way of compromise in order that plaintiff Obejera might escape continued detention, grueling punishment or even death in the hands of the Japanese soldiers, for the alleged loss for which he was not in any way criminally liable, is not an admission of debt and is not admissible in evidence against the plaintiffs. .

JESUS AZCONA vs. PACIFIC COMMERCIAL COMPANY Lasala, Renan Norbert Facts: Plaintiff commenced this case in the Court of First Instance of Manila to obtain the rescission of a certain contract into which, he alleges, he entered with the defendant on January 5, 1933 for the purpose of acquiring through purchase a Fricke-Glasser X-Ray Dosimeter machine; and to secure also an order for the refund to him of the sum of P658.37 which he has paid on account of the price agreed upon of the machine referred to, which was P1,300, as soon as he should have returned, on his part, said machine, with legal interest on the aforesaid sum from the date of the filing of his complaint. The case was heard after defendant has filed its answer in which, besides a general and specific denial of the allegation of plaintiff's complaint, and the special defense that plaintiff bought the machine in question at his own risk, that he received it in good state and condition, and that defendant never guaranteed that it would function to plaintiff's satisfaction, it put up the counterclaim that plaintiff still owed it the amount of P786.68 as balance of the price of the machine referred to, plus the agreed interest at 12% per annum from September 6, 1935 until its full payment. Upon the conclusion of the trial, the court rendered judgment dismissing plaintiff's complaint and sentencing him on defendant's counterclaim to pay the latter P786.68 plus interest at the rate of 12 per cent per annum from September 6, 1935 until full payment, and to pay also an amount equivalent to 10 per cent of P786.68 as attorney's fees and expenses of collection, and the costs of the suit. Issue: Whether or not defendant is liable in the event that the Fricke-Glasser X-Ray Dosimeter machine should not function properly. Ruling: We believe that the conclusions and findings of the lower court as above shown are in accordance with law, especially because its opinion is supported by what this court held in the case of Pacific Commercial Company vs. Ermita Market & Cold Stores, Inc. (56 Phil., 617), which is based on the provision contained in article 327 of the Code of Commerce, cited in the decision appealed from. And it cannot be said that the sale of the machine in question was made subject to trial (article 1453 of the Civil Code), for, as the lower court held in its decision, the appellant himself considered the sale consummated after the installation of the machine in his clinic, executing the promissory note, Exhibit C, and later making partial payments pursuant to the terms thereafter. Neither can it be said that the appellant made the purchase under the circumstances provided in article 328 of the Code of Commerce. The purchaser shall also be entitled to rescind said contract if he reserved the right by an express agreement to examine the goods contracted for. The reason is that, according to the facts found by the lower court to have been proved, the appellant was an expert in dosimeters and was moreover the owner of five machines of the same kind; that he knew the details and particulars of the machine which had been delivered and sold to him by virtue of his order before making it; that he had before him two other machines of the same kind before he decided to keep the one in question; that he installed it in his clinic, making it function thereafter, and attempted to preserve it from dampness; and that he allowed almost three years to pass before taking action to free himself from the effects of the obligation formally assumed by him. In conclusion, we hold that the appeal taken by the appellant from the decision and judgment of the lower court is without merit and that said decision and judgment are in accordance with law.

EDILBERTO NOEL petitioner vs. C.A. and JOSE C. DELESTE, respondents. Pasquin, Irish Mae Facts: Gregorio Nanaman and Hilaria Tabuclin were a childless, legally-married couple. Gregorio, however, had a child named Virgilio Nanaman by another woman. Since he was two years old, Virgilio was reared by Gregorio and Hilaria. He was sent to school by the couple until he reached third year of the law course. During their marriage, the Nanaman spouses acquired a 34.7-hectare land in Tambo, Iligan City on which they planted sugarcane, corn and bananas. They also lived there with Virgilio and fifteen tenants. On 02 Oct 1945, Gregorio died. Hilaria then administered the property with the help of Virgilio to the exclusion of Juan Nanaman, the brother of Gregorio, and Esperanza and Caridad Nanaman, Gregorio's daughters by still another woman. In 1953, Virgilio declared the property in his name for taxation purposes under Tax Declaration No. 5534. On 01 Nov 1952, Hilaria and Virgilio, mortgaged the 34.7hectare land in favor of private respondent, in consideration of the amount of P4, 800.00. On 16 Feb 1954, Hilaria and Virgilio executed a deed of sale over the same tract of land also in favor of private respondent in consideration of the sum of P16, 000.00. The document was notarized on February 17, 1954 and was registered with the Register of Deeds of Iligan city on March 2, 1954. The tax declaration in the name of Virgilio was cancelled and a new tax declaration was issued in the name of private respondent. Having discovered that the property was in arrears in the payment of taxes from 1952, private respondent paid the taxes for 1952, 1953 and 1954. On May 15, 1954, Hilaria died. On October 27, 1954, Esperanza and Caridad Nanaman filed intestate estate proceedings concerning the estate of their father, Gregorio. Included in the list of property of the estate was the 34.7-hectare land. Issue(s): Whether Hilaria and Virgilio could dispose of the entire property sold to private respondent and assuming that they did not have full ownership thereof, whether the right of action to recover the share of the collateral heirs of Gregorio had prescribed or been lost through laches. Ruling: Gregorio died in 1945 long before the effectivity of the Civil Code of the Philippines on August 30, 1950. Under Article 2263 of the said Code, "rights to the inheritance of a person, who died, with or without a will, before the effectivity of this Code, shall be governed by the Civil Code of 1889, by other previous laws, and by the rules of Court." The sale, having been made in 1954, was governed by the Civil Code of the Philippines. Under Article 1456 of said Code, an implied trust was created on the one-half undivided interest over the 34.7-hectare land in favor of the real owners. Said Article provides: If property is acquired through mistake or fraud, the person obtaining it is, by force of law, considered a trustee of an implied trust for the benefit of the person from whom the property comes. Under the law in force in 1945, the surviving spouse was given the management of the conjugal property until the affairs of the conjugal partnership were terminated. The surviving spouse became the owner of one-half interest of the conjugal estate in his own right. He also became a trustee with respect to the other half for the benefit of whoever may be legally entitled to inherit the said portion.

JESUS AZCONA, p-appellee, vs. ALBERTA L. REYES, et.al., d-appellants. Sinsona, Norberto Jr. Facts: On October 22, 1920, the defendant-appellant Alberta L. Reyes, personally and as attorney in fact of her mother Florentina Cordero, in consideration of the sum of P6, 500 received from Enrique Azcona, now deceased, sold to the latter, with the right of repurchase within the period of four years, five parcels of land with certificates of title belonging to her and her mother Florentina Cordero. The vendors became lessees of the property sold, at a yearly rental of P780. On October 23, 1920, said defendant-appellant Alberta L. Reyes, as attorney in fact of her mother Florentina Cordero, in consideration of the sum of P5, 000 received from Enrique Azcona, sold to the latter, with the right of repurchase within the period of four years, one parcel of land with certificate of title No. 58 of the registry of deeds of Mindoro, belonging to the principal Florentina Cordero. Florentina Cordero became the lessee of said property at a yearly rental of P600. On October 1, 1925, Alberta L. Reyes and her mother Florentina Cordero jointly executed a power of attorney authorizing Gregorio Venturanza to sell and encumber all their real and personal property including their cattle. Enrique Azcona died on May 12, 1925, and was succeeded in all his rights by his only son, the plaintiff-appellee Jesus Azcona, to whom the entire estate of his deceased father, together with the credits evidence by the documents Exhibits 1 and 2, was judicially adjudicated. The parties admit and the trial court so found that, although Exhibits 1 and 2 are in the form of deeds of sale with pacto de retro, in reality they represent mortgage loans. Issue: 1. Whether or not the deed of resale and mortgage dated 29 Nov1926 is legal and valid. Ruling: Both appellants contend that inasmuch as the deeds Exhibits 1 and 2, executed by Alberta L. Reyes, personally and in representation of her mother Florentina Cordero, in favor of Enrique Azcona, are not true deeds of sale with pacto de retro but of mortgage, the resale of the parcels of land described therein, made by Jesus Azcona in favor of said Alberta L. Reyes and Florentina Cordero, is null and void on the ground that, as mere mortgagors, they never ceased to be the owners thereof and that Enrique Azcona, as a mere mortgagee, never acquired any title of ownership thereto. Such theory is legally correct; in order for a sale to be valid, it is necessary that the vendor be the owner of the thing sold, inasmuch as it is a principle of law that nobody can dispose of that which does not belong to him. However the sales with pacto de retro were fictitious for the reason that the contracts entered into by Alberta L. Reyes and the deceased Enrique Azcona were really mortgage in their nature. Therefore, the resale was a mere formality resorted to for the purpose of obtaining the lawful cancellation of the registration thereof in the registry of deeds and the notation of the mortgage deed Exhibit A. In regard to the question of usury, although it is true that failure to file a sworn answer to a crosscomplaint for the recovery of usurious interest paid implies an admission of the existence of a usurious rate of interest, however, the counterclaim and cross-complaint filed in this case failed to state facts constituting the alleged usury but merely allege that in payment of a debt of P9, 500 the plaintiff and his predecessor in interest received the amount of P20, 130. Such statement does not constitute an allegation of usury and failure to file a reply thereto implies denial of such allegation. With respect to the true state of the accounts of the mortgagor Alberta L. Reyes and the deceased Florentina Cordero with the mortgagee Jesus Azcona, the evidence presented has been examined and this court has found that the conclusions arrived at by the court a quo are supported thereby.

GUTIERREZ HERMANOS, p-appellee, vs. ENGRACIO ORENSE, d-appellant. Bayani JM A. Solana Facts: This suit involves the validity and efficacy of the sale under right of redemption of a parcel of land and a masonry house with the nipa roof erected thereon, effected by Jose Duran, a nephew of the owner of the property, Engracio Orense, for the sum of P1, 500 by means of a notarial instrument executed and ratified on February 14, 1907. After the lapse of the four years stipulated for the redemption, the defendant refused to deliver the property to the purchaser, the firm of Gutierrez Hermanos, and to pay the rental thereof at the rate of P30 per month for its use and occupation since February 14, 1911, when the period for its repurchase terminated. His refusal was based on the allegations that he had been and was then the owner of the said property, which was registered in his name in the property registry; that he had not executed any written power of attorney to Jose Duran, nor had he given the latter any verbal authorization to sell the said property to the plaintiff firm in his name; and that, prior to the execution of the deed of sale, the defendant performed no act such as might have induced the plaintiff to believe that Jose Duran was empowered and authorized by the defendant to effect the said sale. The plaintiff firm, therefore, charged Jose Duran with estafa, for having represented himself in the said deed of sale to be the absolute owner of the aforesaid land and improvements, whereas in reality they did not belong to him, but to the defendant Orense. However, at the trial of the case Engracio Orense, called as a witness, being interrogated by the fiscal as to whether he and consented to Duran's selling the said property under right of redemption to the firm of Gutierrez Hermanos, replied that he had. In view of this statement by the defendant, the court acquitted Jose Duran of the charge of estafa. Notwithstanding the allegations of the defendant, the record in this case shows that he did give his consent in order that his nephew, Jose Duran, might sell the property in question to Gutierrez Hermanos, and that he did confirm and ratify the sale by means of a public instrument executed before a notary. Issue: Whether or not the defendant conferred an implied power of agency upon his nephew Duran, who accepted it in the same way by selling the said property. Ruling: It having been proven at the trial that he gave his consent to the said sale, it follows that the defendant conferred verbal, or at least implied, power of agency upon his nephew Duran, who accepted it in the same way by selling the said property. The principal must therefore fulfill all the obligations contracted by the agent, who acted within the scope of his authority. Even should it be held that the said consent was granted subsequently to the sale, it is unquestionable that the defendant, the owner of the property, approved the action of his nephew, who in this case acted as the manager of his uncle's business, and Orense'r ratification produced the effect of an express authorization to make the said sale. The sale of the said property made by Duran to Gutierrez Hermanos was indeed null and void in the beginning, but afterwards became perfectly valid and cured of the defect of nullity it bore at its execution by the confirmation solemnly made by the said owner upon his stating under oath to the judge that he himself consented to his nephew Jose Duran's making the said sale. The repeated and successive statements made by the defendant Orense in two actions, wherein he affirmed that he had given his consent to the sale of his property, meet the requirements of the law and legally excuse the lack of written authority, and, as they are a full ratification of the acts executed by his nephew Jose Duran, they produce the effects of an express power of agency.

CITY OF MANILA, plaintiff-appellee, vs. BUGSUK LUMBER CO., defendant-appellant. Yanto, Jennifer Kristine Facts: In 1951 and during the 1st, 2nd and 3rd quarters of 1952, the Bugsuk Lumber Company made sales of lumber to several firms including Pio Barreto & Sons, Inc., Gotamco & Sons, Co., Basilan Lumber Co., Dy Pac & So, Inc., Central Sawmill, Woodart Inc., Felipe Yupangco & Sons, Inc., Jacinto Music Store and P. E. Domingo & Co., Inc. On October 10, 1952, the Office of the Treasurer of the City of Manila sent a demand to the Company for the payment of the amount of P544.50 for license fees corresponding to the years 1951 and 1952, and P40.00 for the necessary mayor's permit, on the ground that said business firm was found to be engaged in the sales of timber products without first securing the required licenses and permits pursuant to City Ordinances Nos. 3420, 3364 and 3000. The record shows that the Municipal Court of Manila rendered judgment in favor of plaintiff and defendant Company appealed the case to the Court of First Instance of Manila based practically in the same arguments. On July 18, 1954, the Court of First Instance rendered decision holding that the Company sold logs to various firms in wholesale and retail transactions and although defendant had no store or lumber yard in the City, this fact alone cannot destroy the findings of the inspector of the City Treasurer's Office that it sold logs to different buyers in Manila; that the imposition of the taxes in question did not constitute double taxation and that the municipal taxes sought to be collected by the City authorities were not excessive and, consequently, ordered the defendant Company to pay the sum of P584.50 plus legal interests and costs. Issue: Whether or not appellant, maintaining a principal office in Manila, receiving orders for its products and accepting in said office payments thereto, can be considered a dealer in this City and is, therefore, subject to the payment of the license tax and permit fees in question. Ruling: Appellant does not dispute the power of the Municipal Board of the City of Manila to enact Ordinance No. 3000 requiring wholesale and retail dealers to secure and pay the mayor's permit annually; neither does it contest the validity of Ordinance No. 3364 nor of Ordinance No. 3420. We see no reason why a producer or manufacturer selling its own produce or manufactured goods would be considered a dealer just to make it liable for the corresponding dealer's tax, as is the case in the instant appeal. It could be seen that the placing of an order for goods and the making of payment thereto at a principal office does not transform said office into a store, for it is a necessary element that there must also be goods or wares stored therein or on display, and provided also that the firm or person maintaining that office is actually engaged in the business of buying and selling. These elements are wanting in the case at bar for it needs no further clarification that the principal office alluded to as a store only serves to facilitate the transactions relative to the sale of its produce, but does not act as a dealer or intermediary between its field office and its customers. Wherefore, the decision appealed from is hereby reversed and appellant declared exempt from the liabilities sought to be charged against it under the provisions of the aforementioned ordinances, without pronouncement as to costs. It is so ordered.

THE UNITED STATES, p-appellee, vs. GABINO SORIANO, et.al., d-appellants. Velarde, Jessa Ela Facts : Gabino Soriano appealed from the judgment of the Court of First Instance of Occidental Negros sentencing him as guilty of the theft of a carabao, to pay a fine of 1,875 pesetas and one-half of the costs, and in case of insolvency to suffer subsidiary imprisonment at the rate of one day for every 12 pesetas that he failed to pay. Gerardo Villalobos in his turn appealed from that part of the judgment which "orders the return to Candido Montilla of the carabao in question, deposited with the said Villalobos whose right of action against Gabino Soriano is reserved." As to Gabino Soriano, he appealed from the judgment because he was charged with criminal participation in the act; the court below considered that this participation in the commission of the crime was that of an abettor for the reason that he prohibited by the carabao, although it was not proven that he was guilty as principal of the appropriation. Given these facts and the settled rule of this court, the fact that a number of stolen carabaos were found in the possession of an individual who kept them hidden away, and that a few days prior to the recovery thereof he had altered or modified the old marks on the animals, gives rise to the presumption that said individual was the principal in the crime, and not merely by an accessory, unless it be satisfactorily proven that it was another person who stole the carabaos. His participation as an accessory, as found in the judgment appealed from, cannot be admitted; he must be considered as principal in the crime as sustained by the Attorney-General in this instance, therefore, he is guilty as principal in the crime theft as defined by paragraph 3 of article 518 of the Penal Code, applied by the court below. With respect to the appeal of Gerardo Villalobos, it is based on the allegation that the court below erred in ordering that the stolen carabao be returned to its lawful owner, Candido Montilla, without reimbursing Gerardo Villalobos for its value, notwithstanding the fact that he was fully acquitted and declared to be possessor and purchaser thereof, in good faith, and holding title in accordance with Act No. 1147. Issue : Whether or not Villalobos was a possessor and purchaser in good faith.

Ruling : Had Villalobos acquired it in good faith at a public sale, he would be entitled to reimbursement by the real owner upon recovery by the latter, but the third purchaser in this case, Villalobos, did not obtain the animal at a public sale, but by private purchase from Soriano. The registration of the purchaser and transfer in the books of a municipality does not confer a public character upon a sale agreed to between two individuals only, without previous publication of notice for general information in order that bidders may appear. Therefore, the finding contained in the judgment impugned on this appeal is entirely in accordance with the law. In view of the foregoing, the said judgment is reversed as far as concerns the penalty imposed on Gabino Soriano as an accessory, and we hereby sentence him to five years or presidio correccional with the accessories of article 58 of the Penal Code and one-half of the costs of both instances; and we affirm the said judgment as to the restoration of the stolen carabao to its lawful owner, Candido Montilla, without right on the part of Gerardo Villalobos to first obtain reimbursement for the value thereof; is reserved and he is hereby sentenced to pay one-half of the costs of this instance.

THE AMERICAN FOREIGN BANKING CORP. vs. J. R. HERRIDGE, et.al. Bayani JM A. Solana Facts: On or about April 28, 1920, the debtor, U. de Poli, a licensed public warehouseman in the City of Manila, issued warehouse receipt No. A-48, commonly known as a "quedan," for 560 bales of tobacco, which tobacco was particularly described therein as "Cagayan tabacco en rama" with specified marks thereon. This quedan was endorsed in bank by U. de Poli, who delivered it to the American Foreign Banking Corporation as security upon his overdraft, then amounting to about P40, 000. The evidence shows that there were only 530 bales of this tobacco. The quedan calls for "Cagayan tobacco," but it was stipulated in this case that the 530 bales of tobacco claimed by the American Foreign Banking Corporation are Isabela tobacco. Mr. De Poli explained this by saying that he "had the description of grade only and made the quedan without giving importance if it was Cagayan or Isabela tobacco; that he asked only for grade, and did not ask whether it was Cagayan or Isabela tobacco, because he had to deliver the security no matter whether it was Isabela or Cagayan tobacco. The quedan in question was issued by J. Magpantay, who was "encargado" of all the U. de Poli warehouse, but he did not have control of the warehouses, but he did not have control of the warehouses, according to Mr. de Poli. Molina did not see the quedan when it was issued, but said that he knew of the tobacco which Mr. De Poli transferred to the claimant bank, because Mr. De Poli told him about it; that it was tobacco from Isabela for the year 1919, was stored in the warehouse on Calle Azcarraga, and that there was no other tobacco in the warehouse except the 1919 Isabela tobacco. Said quedan was taken by the American Foreign Banking Corp. for value, believing it to be a negotiable warehouse receipt, and without reasonable cause to believe that the debtor U. de Poli was insolvent. Issue: Whether or not the use of the word "Cagayan" instead of "Isabela" in describing the tobacco in the quedan rendered the quedan null and void as a negotiable warehouse receipt for the tobacco intended to be covered by it. Ruling: The court is of the opinion that the intention of the parties to the transaction must prevail against such a technical objection as to the sufficiency of the description of the tobacco. It might be different if there had been Cagayan tobacco in the warehouse at the time of the issuance of the quedan, or if there were any doubt whatever as to the identity of the tobacco intended to be covered by the quedan. The assignee stands in the shoes of the insolvent, and while it is his duty to protect the general creditors, he is not in the position of a judgment creditor with an unsatisfied execution. In view of the foregoing considerations, the court is of the opinion that the quedan is a negotiable warehouse receipt which was duly issued and delivered by the debtor U. de Poli to the American Foreign Banking Corporation, and that it divested U. de Poli of his title to said tobacco and transferred the position and the title thereof to the American Foreign Banking Corporation. It is therefore ordered and adjudged that the consignee deliver the said five hundred and thirty (530) bales of tobacco to the American Foreign banking Corporation, upon payment by said bank of any liens or charges thereon, or, in the event of said tobacco having been sold, the proceeds thereof, less the storage and insurance charges paid after the declaration of insolvency; and thereafter due report will be made to this court of such delivery to the claimant bank in order that the proceeds be deducted from the balance to said claimant bank from the insolvent debtor.

FERNANDO A. GAITE, p-appellee, vs. ISABELO FONACIER, et.al., d-appellants. Antipuesto, Chino Facts: Isabelo Fonacier was the owner and/or holder, either by himself or in a representative capacity, of 11 iron lode mineral claims, known as the Dawahan Group, situated in the municipality of Jose Panganiban, province of Camarines Norte. By a "Deed of Assignment" dated 29 Sep 1952, Fonacier constituted and appointed plaintiff-appellee Fernando A. Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical person for the exploration and development of the mining claims on a royalty basis of not less than P0.50 per ton of ore that might be extracted therefrom. For some reason or another, Fonacier decided to revoke the authority granted by him to Gaite; and Gaite assented thereto subject to certain conditions. As a result, a document entitled "Revocation of Power of Attorney and Contract" was executed on December 8, 1954, wherein Gaite transferred to Fonacier, for the consideration of P20, 000.00, plus 10% of the royalties that Fonacier would receive. To secure the payment of the said balance of P65, 000.00, Fonacier promised to execute in favor of Gaite a surety bond, and pursuant to the promise, Fonacier delivered to Gaite a surety bond dated December 8, 1954 with himself as principal and the Larap Mines and Smelting Co. and its stockholders as sureties. A second bond, also dated December 8, 1954, was executed by the same parties to the first bond Exhibit "A-1", with the Far Eastern Surety and Insurance Co. as additional surety, but it provided that the liability of the surety company would attach only when there had been an actual sale of iron ore by the Larap Mines & Smelting Co. for an amount of not less than P65,000.00, and that, furthermore, the liability of said surety company would automatically expire on December 8, 1955. Issue: (1) Whether or not the obligation of P65, 000.00 is one with a period or term and not one with a suspensive condition, and that the term expired on December 8, 1955; and (2) Whether or not there were only 10,954.5 tons in the stockpiles of iron ore. Ruling: The shipment or local sale of the iron ore is not a condition precedent to the payment of the balance of P65, 000.00, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory force is subordinated to the happening of a future and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The sale of the ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of not being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition for the payment of the balance of the agreed price, but was intended merely to fix the future date of the payment. The appellant have forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the balance of P65, 000.00, because of their failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as creditor for the unpaid P65, 000.00, a security that Gaite considered essential and upon which he had insisted when he executed the deed of sale of the ore to Fonacier. There was no short-delivery in this case, nor could Gaite have been guilty of any fraud in making any misrepresentation to appellants as to the total quantity of ore in the stockpiles of the mining claims in question, as charged by appellants, since Gaite's estimate appears to be substantially correct.

GENERAL FOODS CORP., P-Appellant, vs. NATL COCONUT CORP., D-Appellee. Barrera, Alexis Ben Facts: On September 23, 1947, Appellee sold to Appellant 1,500 long tons of copra, at $164 per ton of 2,000 pounds. From November 14 to December 3, 1947, Appellee shipped 1054.6278 short tons of copra to Appellant on board the S. S. Mindoro. The weighing of the cargo was done by the Luzon Brokerage Co., in its capacity as agent of the General Superintendence Co., Ltd., of Geneva, Switzerland, by taking the individual weight of each bag of copra and summing up the total gross weight of the shipment, then weighing a number of empty bags to determine the average tare of the empty bags, which was subtracted from the gross weight of the shipment to determine the net weight of the cargo. Upon arrival in New York, the net cargo was reweighed by Appellant and was found to weigh only 898.792 short tons. Deducting from the value of the shortage the sum of $8,092.02 received by Appellant from the insurer for 58.25 long tons lost or destroyed even before the copra was loaded on board the vessel, Appellant demanded from Appellee the refund of the amount of $24,154.59. Sometime after the receipt of Appellants demand, the Appellee, through its officers-in-charge Jose Nieva, Sr., acknowledged in a letter liability for the deficiency in the outturn weights of the copra and promised payment thereof as soon as funds were available. Then Appellee was, as already stated, abolished and went into liquidation. Appellant submitted its claim to the Board of Liquidators, which refused to pay the same, wherefore, it filed the present action in the Court of First Instance of Manila to recover from Defendant-Appellee the amount of $24,154.49 and the 17 per cent exchange tax thereon which, under the provisions of Republic Act 529, had to be paid in order to remit said amount to the United States, plus attorneys fees and costs. Issue: Whether or not the agreement contemplated the payment of the price according to the weight and quality of the cargo upon arrival in New York, the port of destination, and that therefore, the risk of the shipment was upon the seller; or the contract in question was an ordinary C. I. F. agreement wherein delivery to the carrier is delivery to the buyer, and that the shipment having been delivered to the buyer and the latter having paid its price, the sale was consummated. Ruling: In the transaction now in question, despite the quoted price of CIF New York, and the right of the seller to withdraw 95% of the invoice price from the buyers letter of credit upon tender of the shipping and other documents required by the contract, the express agreement that the Net Landed Weights were to govern, and the provision that the balance of the price was to be ascertained on the basis of outturn weights and quality of the cargo at the port of discharge, indicate an intention that the precise amount to be paid by the buyer depended upon the exact net weight of the cargo at the port of destination. That is shown by the provision that the seller could deliver 5% more or less than the contracted quantity, such surplus or deficiency to be paid on the basis of the delivered weight. While the risk of loss was apparently placed on the Appellant after delivery of the cargo to the carrier, it was nevertheless agreed that the payment of the price was to be according to the net landed weight. The net landed or outturn weight of the cargo, upon arrival in New York, was 898.692 short tons. Although the evidence shows that the estimated weight of the shipment when it left Manila was 1,054.6278 tons, the Appellee had the burden of proof to show that the shortage in weight upon arrival in New York was due to risks of the voyage and not the natural drying up of the copra while in transit, or to reasonable allowances for errors in the weighing of the gross cargo and the empty bags in Manila. In the absence of such proof, we are constrained to hold that the net landed weight of the shipment in New York should control, as stipulated in the agreement, and that the Appellee should be held liable for the amount of $24,154.59 which it had overdrawn from Appellants letter of credit.

LA FUERZA, INC., petitioner, vs. C.A. et.al., respondents. Jambangan, Adam Dandro Facts: Sometime in January, 1960, Antonio Co, the manager of the plaintiff corporation, called the office of the defendant told Mariano Lim, the President and general manager of the defendant that he had just visited the defendant's plant at Pasong Tamo, Makati, Rizal and was impressed by its size and beauty but he believed it needed a conveyor system. He therefore offered his services to manufacture and install a conveyor system which would increase production and efficiency of his business. The defendants president and general manager then expressed his conformity to the offer made by writing at the foot thereof under the word "confirmation" his signature. A few days later, Antonio Co made the demand for the down payment of P5,000.00 which was delivered by the defendant in the form of a check. The work went under way during the months of March and April, during which time the president and general manager of the defendant corporation was duly apprised of the progress because his plant mechanic, had kept him informed of the installation for which he gave the go signal. As a result of this trial or experimental runs, it was discovered that the conveyor system did not function to their satisfaction as represented by the technical manager for the reason that, when operated several bottles collided with each other, some jumping off the conveyor belt and were broken, causing considerable damage. It seems that the defects indicated by the said president and general manager of the defendant had not been remedied so that they came to the parting of the ways with the result that when the plaintiff billed the defendant for the balance of the contract price, the latter refused to pay for the reason that according to the defendant the conveyor system installed by the plaintiff did not serve the purpose for which the same was manufactured and installed at such a heavy expense. Issue: 1) Whether or not there has been no delivery of the conveyors by the plaintiff; and 2) Whether or not the period of six (6) months prescribed in said Art. 1571 refers to the "period within which" La Fuerza may "bring an action to demand compliance of the warranty against hidden defects", not the action for rescission of the contract. Both grounds are untenable. Ruling: Upon the completion of the installation of the conveyors, in May, 1960, particularly after the last trial run, in July 1960, La Fuerza was in a position to decide whether or not it was satisfied with said conveyors, and, hence, to state whether the same were a accepted or rejected. The failure of La Fuerza to express categorically whether they accepted or rejected the conveyors does not detract from the fact that the same were actually in its possession and control; that, accordingly, the conveyors had already been delivered by the plaintiff; and that, the period prescribed in said Art. 1571 had begun to run. If the thing sold has hidden faults or defects, the vendor shall be responsible therefor and the vendee or La Fuerza, in the present case "may elect between withdrawing from the contract and demanding a proportional reduction of the price, with damages in either case." In the exercise of this right of election, La Fuerza had chosen to withdraw from the contract, by praying for its rescission; but the action therefor in the language of Art. 1571 "shall be barred after six months, from the delivery of the thing sold." The period of four (4) years, provided in Art. 1389 of said Code, for "the action to claim rescission," applies to contracts, in general, and must yields, in the instant case, to said Art. 1571, which refers to sales in particular.

LEODEGARIO AZARRAGA, plaintiff-appellee, vs. MARIA GAY, defendant-appellant. Lasala, Renan Norbert Facts: By a public document Exhibit A, dated January 17, 1921, the plaintiff sold two parcels of lands to the defendant for the lump sum of P47,000, payable in installments. The conditions of the payment were: P5,000 at the time of signing the contract Exhibit A; P20,000 upon delivery by the vendor to the purchaser of the Torrens title to the first parcel described in the deed of sale, P10,000 upon delivery by the vendor to the purchaser of Torrens title to the second parcel; and lastly the sum of P12,000 one year after the delivery of the Torrens title to the second parcel. The vendee paid P5,000 to the vendor when the contract was signed. The vendor delivered the Torrens title to the first parcel to the vendee who, pursuant to the agreement, paid him P20,000. In the month of March 1921, Torrens title to the second parcel was issued and forthwith delivered by the vendor to the vendee who, however, failed to pay the P10,000 as agreed, neither did she pay the remaining P12,000 one year after having received the Torrens title to the second parcel. The defendant admits that she purchased the two parcels of land referred to by plaintiff, by virtue of the deed of sale Exhibit A, but alleges in defense: (a) That the plaintiff knowing that the second parcels of land he sold had an area of 60 hectares, by misrepresentation lead the defendant to believe that said second parcel contained 98 hectares, and thus made it appear in the deed of sale and induced the vendee to bind herself to pay the price of P47,000 for the two parcels of land, which he represented contained an area of no less than 200 hectares, to which price the defendant would not have bound herself had she known that the real area of the second parcel was 60 hectares, and, consequently, she is entitled to a reduction in the price of the two parcels in proportion to the area lacking, that is, that the price be reduced to P38,000; (b) that the defendant, in addition to the amounts acknowledged by the plaintiff, had paid other sums amounting to P4,000; and (c) that the defendants never refused to pay the justly reduced price, but the plaintiff refused to receive the just amount of the debt. Issue: Whether or not the plaintiff induced the defendant by deceit, to pay him the stipulated price for the two parcels he sold, stating falsely in the deed of sale that the second of said parcels had an area of 98 hectares when he knew that in reality it only had about 60 hectares more or less, or at least, if such deceit was not practiced that there was a mistake on the part of Maria Gay in believing that said second parcel contained 98 hectares. Ruling: The defendant had ample opportunity to appraise herself of the condition of the land which she purchased, and the plaintiff did nothing to prevent her from making such investigation as she deemed fit, and as was said in Songco vs. Sellner, supra, when the purchaser proceeds to make investigations by himself, and the vendor does nothing to prevent such investigation from being as complete as the former might wish, the purchaser cannot later allege that the vendor made false representations to him. Considering the facts of the present controversy, it seems clear to us that the rule formulated for the second paragraph or article 1471 is inapplicable in the instant case inasmuch as all the land included within the boundaries of the two parcels sold has been delivered in its entirety to the vendee. There is no division of the land enclosed within the boundaries of the properties sold; the determinate object which is the subject matter of the contract has been delivered by the vendor in its entirety as he obligate himself to do. Therefore, there is no right to complain either on the part of the vendor, even if there be a greater area than that stated in the deed, or on the part of the vendee, though the area of the second parcel is really much smaller.

MARCIANO BLANCO, Petitioner vs. FELIMON RIVERA, Respondent Pasquin, Irish Mae Facts: The subject matter of the controversy is a parcel of residential land consisting of 217 square meters. It was formerly co-owned in equal undivided shares by respondent and Eugenia Reyes vda. de Rivera, the mother of both petitioner and respondent. On February 21, 1977, Eugenia sold her undivided share to petitioner. The sale could not be registered because the original owners copy of the title was allegedly in the custody of respondent who refused to surrender the same. The deed of sale did not have the consent of respondent. Eugenia, however, executed an affidavit alleging that she had already notified her co-owner Felimon and other possible redemptioners of the sale of the property. Three years later, on April 19, 1980, Eugenia again sold her undivided share, this time to her co-owner, respondent Felimon, through a quitclaim deed and for a consideration of P9,785. Respondent registered the sale with the register of deeds of Rizal. He was issued TCT No. 501585 on May 21, 1980. He thereafter took actual and physical possession of the property and had since then paid the real property tax thereon. Sometime in 1982, petitioner, who was residing on one-fourth (1/4) of the property, heard about the sale of the property to respondent. He confronted their mother Eugenia who sought the assistance of barangay authorities in San Pedro, Angono, Rizal. In the barangay proceedings, petitioner exhibited the deed of sale and the affidavit executed by Eugenia attesting to the sale of the property and the prior notice to her co-owner Felimon Rivera. On March 3, 1991, respondent filed the present civil case for quieting of title. Eugenia failed to testify because of her untimely demise. Issue: Essentially, the issue before us is who, between petitioner and respondent, has the better right over Eugenias portion of the property. Ruling: When immovable property is sold to two different buyers at different times, ownership is determined in accordance with Article 1544 of the Civil Code. The requirement of the law is two-fold: acquisition in good faith and registration in good faith. The vendee who first registers the sale in good faith in the registry of property has a preferred right over another vendee who has not registered his title. This is true even if the latter is in actual possession of the immovable property. More credit is given to registration than to actual possession. But the law is clear mere registration of title is not enough. Good faith must concur with registration. To be in a priority status, the second purchaser must be in good faith, that is, without knowledge of the previous alienation by the vendor to another. What holds relevance and materiality is not whether the second buyer is a buyer in good faith but whether he registers such second sale in good faith, meaning, without knowledge of any defect in the title of the property sold. Here, both the trial and appellate courts declared respondent to be the true owner of the property. He was uncontestedly the first to register his ownership over the property, untainted by proof of any knowledge of the prior sale. Respondents acquisition and registration of the property were therefore in good faith.

REV. FR. DANTE MARTINEZ, petitioner, vs. C.A., et.al. respondents. Sinsona, Norberto Jr. Facts: Sometime in February 1981, private respondents Godofredo De la Paz and his sister Manuela De la Paz, entered into an oral contract with petitioner Rev. Fr. Dante Martinez for the sale of Lot No. 1337-A3 at the Villa Fe Subdivision in Cabanatuan City for the sum of P15,000.00. After giving the P3,000.00 down payment, petitioner started the construction of a house on the lot after securing a building permit from the City Engineers Office on April 23, 1981, with the written consent of the then registered owner, Claudia de la Paz. Petitioner likewise began paying the real estate taxes on said property. Construction on the house was completed on October 6, 1981. Since then, petitioner and his family have maintained their residence there. However, private respondents De la Paz never delivered the Deed of Sale they promised to petitioner. In the meantime, in a Deed of Absolute Sale with Right to Repurchase dated October 28, 1981, private respondents De la Paz sold three lots with right to repurchase the same within one year to private respondents spouses Reynaldo and Susan Veneracion for the sum of P150,000.00. Before the expiration of the one year period, private respondent Godofredo De la Paz informed private respondent Reynaldo Veneracion that he was selling the three lots to another person for P200,000.00. Private respondent Veneracion offered to purchase the same two lots from the De la Pazes for the same amount. The offer was accepted by private respondents De la Paz. Petitioner discovered that the lot he was occupying with his family had been sold to the spouses Veneracion after receiving a letter from private respondent Reynaldo Veneracion on March 19, 1986, claiming ownership of the land and demanding that they vacate the property and remove their improvements thereon. Issues: Whether or not private respondents Veneracion are buyers in good faith of the lot in dispute as to make them the absolute owners thereof in accordance with Art. 1544 of the Civil Code. Ruling: This case involves double sale and Art. 1544 of the Civil Code provides that where immovable property is the subject of a double sale, ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it to the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default thereof, to the person who presents the oldest title. The requirement of the law, where title to the property is recorded in the Register of Deeds, is two-fold: acquisition in good faith and recording in good faith. To be entitled to priority, the second purchaser must not only prove prior recording of his title but that he acted in good faith, i.e., without knowledge or notice of a prior sale to another. The presence of good faith should be ascertained from the circumstances surrounding the purchase of the land. WHEREFORE, the decision of the Court of Appeals is REVERSED and a new one is RENDERED: 1. declaring as null and void the deed of sale executed by private respondents Godofredo and Manuela De la Paz in favor of private respondents spouses Reynaldo and Susan Veneracion; 2. ordering private respondents to execute a deed of absolute sale in favor of petitioner; 3. ordering respondents to reimburse spouses Veneracion; 4. ordering the Register of Deeds to cancel TCT No. T-44612 and issue a new one in the name of petitioner Rev. Fr. Dante Martinez; and 5. ordering respondents to pay petitioner jointly and severally the sum of P20,000.00 as attorneys fees and to pay the costs of the suit.

BELINDA TAREDO, et.al., petitioners, vs. C.A., et.al., respondents. Solana, Bayani JM Facts: On October 20, 1962, Lazardo Taedo executed a notarized deed of absolute sale in favor of his eldest brother, Ricardo Taedo, and the latters wife, Teresita Barera, private respondents herein, whereby he conveyed to the latter in consideration of P1,500.00, one hectare of whatever share I shall have over Lot No. 191 of the cadastral survey of Gerona, Province of Tarlac.. the said property being his future inheritance from his parents. Upon the death of his father Matias, Lazaro executed an Affidavit of Conformity dated February 28, 1980 to re-affirm, respect. acknowledge and validate the sale I made in 1962. On January 13, 1981, Lazaro executed another notarized deed of sale in favor of private respondents. He acknowledged therein his receipt of P 10,000.00 as consideration therefor. In February 1981, Ricardo learned that Lazaro sold the same property to his children, petitioners herein, through a deed of sale dated December 29, 1980. On June 7, 1982, private respondents recorded the Deed of Sale in their favor in the Registry of Deeds and the corresponding entry was made in Transfer Certificate of Title No. 166451. Petitioners on July 16, 1982 filed a complaint for rescission of the deeds of sale executed by Lazaro in favor of private respondents covering the property inherited by Lazaro from his father. Petitioners claimed that their father, Lazaro, executed an Absolute Deed of Sale dated December 29, 1980, conveying to his ten children his allotted portion under the extrajudicial partition executed by the heirs of Matias, which deed included the land in litigation. Issues: 1. Is the sale of a future inheritance valid? 2. Was the subsequent execution on January 13, 1981 (and registration with the Registry of Property) of a deed of sale covering the same property to the same buyers valid? 3. May this Court review the findings of the respondent Court (a) holding that the buyers acted in good faith in registering the said subsequent deed of sale and (b) in failing to consider petitioners evidence? Are the conclusions of the respondent Court illogical and off-tangent? Ruling: We hereby categorically rule that, pursuant to Article 1347 of the Civil Code, (n)o contract may be entered into upon a future inheritance except in cases expressly authorized by law. Consequently, said contract made in 1962 is not valid and cannot be the source of any right nor the creator of any obligation between the parties. However, the documents that are critical to the resolution of this case are: (a) the deed of sale of January 13, 1981 in favor of private respondents covering Lazaros undivided inheritance of one-twelfth (1/12) share in Lot No. 191, which was subsequently registered on June 7, 1982; and (b) the deed of sale dated December 29, 1980 in favor of petitioners covering the same property. These two documents were executed after the death of Matias (and his spouse) and after a deed of extrajudicial settlement of his (Matias) estate was executed, thus vesting in Lazaro actual title over said property. In other words, these dispositions, though conflicting, were no longer infected with the infirmities of the 1962 sale. It is well-settled that the Supreme Court is not a trier of facts. In petitions for review under Rule 45 of the Revised Rules of Court, only questions of law may be raised and passed upon. Absent any whimsical or capricious exercise of judgment, and unless the lack of any basis for the conclusions made by the lower courts be amply demonstrated, the Supreme Court will not disturb their findings..

MARIA P. VDA. DE JOMOC, et.al., petitioners, vs. C.A., et.al., respondents. Velarde, Jessa Ela Facts: The subject lot in Cagayan de Oro City forms part of the estate of the late Pantaleon Jomoc. Because it was fictitiously sold and transferred to third persons, petitioner Maria P. Vda. Jomoc, as administratrix of the estate and in behalf of all the heirs, filed suit to recover the property before the trial court of Misamis Oriental in Civil Case No. 4750. Mariano So, the last of the transferees and the husband of Maria So, intervened. The case was decided in favor of Jomoc and was accordingly appealed by Mariano So and one Gaw Sur Cheng to the Court of Appeals. In February 1979, pending the appeal, Jomoc executed a Deed of Extrajudicial Settlement and Sale of Land with private respondent for P300,000.00. The document was not yet signed by all the parties nor notarized but in the meantime, Maura So had made partial payments amounting to P49,000.00. In 1983, Mariano So, the appellant in the recovery proceeding, agreed to settle the case by executing a Deed of Reconveyance of the land in favor of the heirs of Pantaleon Jomoc. The reconveyance was in compliance with the decision in the recovery case and resulted in the dismissal of his appeal. On February 28, 1983, the heirs of Jomoc executed another extra-judicial settlement with absolute sale in favor of intervenors Lim Leong Kang and Lim Pue filing. Later, Maura So demanded from the Jomoc family the execution of a final deed of conveyance. They ignored the demand. Thus, private respondent Maria So sued petitioners-heirs for specific performance to compel them to execute and deliver the proper registrable deed of sale over the lot. Issue: Whether or not private respondent Maura So abandoned or backed out from the agreement for the purchase of a lot belonging to the heirs of Pantaleon Jomoc, so that the subsequent sale to petitioner spouses Lim is null and void. Ruling: The petitioners' allegation that the contract of sale by Maria P. Jomoc with private respondent is unenforceable under the Statute of Frauds, is without merit. The petitioners-heirs, in their brief before the appellate court, admitted that the extrajudicial settlement with sale in favor of Maura So is valid and enforceable under the Statute of Frauds. Of importance to the Court is the fact that the petitioners do not deny the existence of Exhibit "A"; including its terms and contents, notwithstanding the incompleteness in form. The meeting of the minds and the delivery of sums as partial payment is clear and this is admitted by both parties to the agreement. Hence, there was already a valid and existing contract, not merely perfected as the trial court saw it, but partly executed. The contract of sale of real property even if not complete in form, so long as the essential requisites of consent of the contracting parties, object, and cause of the obligation concur and they were clearly established to be present, is valid and effective as between the parties. Under Article 1357 of the Civil Code, its enforceability is recognized as each contracting party is granted the right to compel the other to execute the proper public instrument so that the valid contract of sale of registered land can be duly registered and can bind third persons. The complainant respondent correctly exercised such right simultaneously with a prayer for the enforcement of the contract in one complaint. The spouses Lim purchased the land with full knowledge of a previous sale to private respondent and without requiring from the vendors-heirs any proof' of the prior vendee's revocation of her purchase. When they registered the sale on April 27, 1983 after having been charged with notice of lis pendens annotated as early as February 28, 1983, they did so in bad faith or on the belief that a registration may improve their position being subsequent buyers of the same lot. Under Article 1544, mere registration is not enough to acquire new title. Good faith must concur.

PACIANO REMALANTE, petitioner, vs. CORNELIA TIBE, and C.A., respondents. Yanto, Jennifer Kristine Facts: In a complaint filed before the trial court, private respondent Cornelia Tibe, as plaintiff, sought the annulment of certain contracts and other documents which became the bases for the transfer of six (6) parcels of land from private respondent to petitioner Paciano Remalante. Private respondent claimed that petitioner, through fraud, deceit, abuse of confidence and misrepresentation, induced her to sign three (3) affidavits of transfer, purported to be bail bonds, which transferred three (3) parcels of land to petitioner. Private respondent also claimed that petitioner forged her signature in a deed of absolute sale whereby her other three parcels of land were transferred to petitioner's name. Petitioner in his answer denied the allegations of private respondent and claimed that he is the absolute owner of the six (6) parcels of land described in the complaint. He further claimed that the first three (3) parcels of land mentioned were bought by him from Silvino Alminario and that it was private respondent, who, by means of fraud and misrepresentation caused the transfer of the three (3) parcels of land to her name, and declared them under Tax Declaration Nos. 20280, 20273 and 20274, purportedly so that she can use the land as collateral to secure a loan from a bank in Leyte. Petitioner also claimed that he bought the three (3) parcels of land described under Tax Declaration Nos. 13959,17388 and 16999 from private respondent, as evidenced by a deed of absolute sale executed by her in his favor. Issue: Whether or not the C.A. erred in awarding the ownership of the three (3) parcels of land covered by Tax Declaration Nos. 20323, 20324 and 20325 to private respondent. Ruling: This Court finds no basis to disturb the appellate court's findings and conclusions. As regards the first three (3) parcels previously covered by Tax Declaration Nos. 20280,20273 and 20274 in the name of Cornelia Tibe and now, under Tax Declaration Nos. 20323,20324 and 20325 in the name of Paciano Remalante, this court is convinced that the said three parcels of land were sold by the previous owner Silvino Mayoc or Alminario only to the plaintiff, Cornelia Tibe and were never sold to defendant, Paciano Remalante. The preponderance of evidence points towards this direction. Petitioner cannot claim a better right by virtue of his prior registration of the deeds of sale in the Registry of Property as such registration was found to be fraudulent since the three parcels of land were never sold to him to begin with. Petitioner cannot invoke the parol evidence rule to argue that the affidavits of transfer constitute conclusive evidence that petitioner is the absolute owner of the three parcels of land covered by Tax Declaration Nos. 20323, 20324 and 20325 and that the fact that Silvino Alminario testified that he did not sell said parcels of land to petitioner will not vary the terms of said affidavits. In the case at bar, the parol evidence rule finds no application because, precisely, the validity of the affidavits of transfer is the very fact in dispute, the action instituted in the court below being one for the annulment of the documents of transfer. To adopt petitioner's theory would render nugatory the remedy founded on the basic rule in the law on contracts that "a contract where consent is given through mistake, violence, intimidation, undue influence, or fraud is voidable" (Art. 1330, Civil Code). Consequently, as the decision of the Court of Appeals is based on its finding of preponderance of evidence in the record and is in accord with law and jurisprudence, this Court finds no cogent reason to overrule the decision. WHEREFORE, the instant petition is denied and the decision of the Court of Appeals is affirmed in toto.

ELIAS GALLAR, p-appellee, vs.HERMENEGILDA HUSAIN, et.al., d-appellant. Solana, Bayani JM Facts: A hectare of rice land in Cabatuan, Iloilo, is the subject of this controversy. On January 9, 1919, Teodoro Husain, the owner, sold this land to Serapio Chichirita for P30, reserving for himself the right to repurchase it within six years. Teodoro Husain did not redeem the land, although shortly after the execution of the deed of sale, that is, on January 28, 1919, the vendee a retro, Chichirita, transferred his right to Graciana Husain, sister of the vendor a retro, in what purports to be a resale of the land. Graciana Husain subsequently transferred her rights to the land to appellee Elias Gallar in exchange for one cow. The transaction is recorded in a second note added on the reverse side of the deed of sale. Possession of the land, together with the owner's duplicate of the certificate of title of Teodoro Husain, was delivered on the same occasion to appellee who since then has been in possession of the land. In 1960, appellee asked the Cadastral Court for the issuance to him of a transfer certificate of title but the court dismissed his petition for lack of jurisdiction. He filed this suit in the Court of Instance of Iloilo on October 10, 1960 to compel Hermenegilda and Bonifacio Husain, as heirs of Teodoro Husain, to execute a deed of conveyance in his favor so that he could get a transfer certificate of title. In their answer, Hermenegilda and Bonifacio Husain denied the sale and contended that the agreement between their father and Serapio Chichirita was that of a mortgage to secure a loan of P30. They claimed that the mortgage had been discharged on January 28, 1919 when Graciana Husain paid Teodoro Husain's debt to Chichirita. Hermenegilda and Bonifacio Husain likewise invoked prescription to bar appellee's action and asked for damages for the value of palay which they claimed they failed to receive on account of appellee's refusal to return possession of the land to them. Issue: Whether or not the land in question is the same land which Teodoro Husain sold to Serapio Chichirita on January 9, 1919. Ruling: According to appellant he raised this question at the trial but the lower court passed it up in its decision. The records on appeal do not disclose that appellant made such a claim. About the only hint that he was questioning the identity of the land sold by means of the deed of sale of January 9, 1919 was an objection to a question during the direct examination of the appellee. Otherwise, the records do not show any allegation made much less evidence presented, by appellant of the supposed difference in the identity of the land sold in the deed of pacto de retro sale and the land now in question. Indeed, the only defense put up by appellant was that the pacto de retro sale was in reality a mortgage and that, at any rate, appellee's action was barred by the statute of limitations. In so doing, appellant joined issues with the appellee and he will not now be permitted to bring up new matters on appeal as this would constitute changing of theory so utterly unfair to the adverse party that the lower court deliberately, perhaps, ignored the point. Now, when Teodoro Husain failed to redeem the land within the stipulated period, its ownership became consolidated in the appellee. True the successive sales are in a private instrument, but they are valid just the same. By the delivery of possession of the land on April 2, 1919 the sale was consummated and title was transferred to the appellee. Indeed, this action seeks to quiet title, to remove the cloud cast on appellee's ownership as a result of appellant's refusal to recognize the sale made by their predecessor. And, as plaintiff-appellee is in possession of the land, the action is imprescriptible.

BA FINANCE CORPORATION, petitioner, vs. C.A., et.al., respondents. Antipuesto, Chino Facts: On June 20, 1977, the defendant entered into a purported contract of lease with the plaintiff, wherein the latter purportedly leased to the former one (1) unit motor vehicle for a purported monthly rental of P1,689.48, payable in advance on the 20th day of each month, commencing on June 20, 1987, without the necessity of any previous demand or notice; that rentals in arrears shall bear interest at the rate of 14% per annum; that upon the signing of said contract, the defendant gave the plaintiff a guaranty deposit of P20,800.00 to serve, among others, as security for the prompt and faithful performance of his obligation; that the defendant defaulted in complying with the terms and conditions of their agreement by failing to pay several monthly installments stipulated therein; that because of such failure of the defendant to pay the said monthly installments, the plaintiff sent a letter of demand to the defendant, dated May 25, 1978, inviting his attention to his outstanding balance of P6,889.64 including interest thereon, as of May 25, 1978, with warning that plaintiff would be filing the complaint against him on May 30, 1978 if by that time his account still remains unpaid or the personal property involved is not returned to plaintiff in substantially the same condition as when he received it. The trial court ruled in favor of herein private respondent, prompting the petitioner to elevate the case to the Court of Appeals. The respondent appellate court, on 28 April 1992, affirmed the assailed decision of the trial court. Issue: Whether or not it is just and equitable for the guaranty deposit made by the private respondent to be applied in his arrearages and thereafter to hold the contract terminated. Ruling: The transaction involved in the present case admittedly is one of a "financial leasing," where a financing company would, in effect, initially purchase a mobile equipment and turn around to lease it to a client who gets, in addition, an option to purchase the property at the expiry of the lease period. A financial lease is a species of secured financing which is fairly new. It is considered a legitimate contract, and it has been accorded statutory and administrative recognition. It indicate no less than a financing scheme extended by a financing company to a client in acquiring a motor vehicle and allowing the latter to obtain the immediate possession and use thereof pending full payment of the financial accommodation that is given. In the case at bench, the contract was executed over a motor vehicle, with the petitioner, as lessor, and the private respondent, as lessee. The term of the contract was for thirty-six (36) months at a "monthly rental" of one thousand six hundred eighty nine pesos and forty centavos (P1, 689.40), or for a total amount of P60, 821.28. After the private respondent had paid the sum of P41, 670.59, excluding the guaranty deposit of P20, 800.00, he stopped further payments. Putting the two sums together, the financing company had in its hands the amount of P62, 470.59 as against the total agreed "rentals" of P60, 821.28 or an excess of P1, 649.31. Considering the factual findings of both the court a quo and the appellate court, the only logical conclusion is that the private respondent did opt, as he has claimed, to acquire the motor vehicle, justifying then the application of the guarantee deposit to the balance still due and obligating the petitioner to recognize it as an exercise of the option by the private respondent. The result would thereby entitle said respondent to the ownership and possession of the vehicle as the buyer thereof. We, therefore, see no reversible error in the ultimate judgment of the appellate court.

MARGARITA SURIA, et.al., Petitioners, vs. I.A.C., et.al., Respondents. Barrera, Alexis Ben Facts: On June 20, 1983, private-respondents filed a complaint before the Regional Trial Court of Laguna, Branch XXIV, for rescission of contract and damages, alleging among others: 1. That on March 31, 1975, plaintiffs being the owners of a parcel of land situated at Barrio San Antonio, San Pedro, Laguna, entered into a contract denominated as DEED OF SALE WITH MORTGAGE, with herein defendants, 2. That the defendants violated the terms and conditions of the contract by failing to pay the stipulated installments and in fact only one installment due in July 1975 was made; 3. That repeated verbal and written demands were made by plaintiff upon the defendants for the payment of the installments, but defendants failed to comply with the demands of plaintiffs. In the meantime, on August 6, 1984, petitioners formerly offered to pay private-respondents all the outstanding balance under the Deed of Sale with Mortgage, which offer was rejected by private respondents on August 7, 1984. Issue(s): 1. Is the subsidiary and equitable remedy of rescission available in the presence of a remedy of foreclosure in the light of the express provision of article 1383 of the civil code?

2. May the seller legally demand rescission of the deed of sale with mortgage without offering to
restore to the buyer what he has paid, as required by article 1385, or complying with the requirements of the Maceda Law (R.A. 6552) granting the buyer a grace period to pay without interest, and, in case of cancellation in case the buyer still could not pay within the grace period, requiring the seller to order payment of the cash surrender value before the cancellation may legally take effect? Ruling: There is no dispute that the parties entered into a contract of sale. By the contract of sale, the vendor obligates himself to transfer the ownership of and to deliver a determinate thing to the buyer, who in turn, is obligated to pay a price certain in money or its equivalent (Art. 1458, Civil Code). We note that the respondents have fully complied with their part of the reciprocal obligation. The buyer fulfilled his end of the bargain when he executed the deed of mortgage. The payments on an installment basis secured by the execution of a mortgage took the place of a cash payment. In other words, the relationship between the parties is no longer one of buyer and seller because the contract of sale has been perfected and consummated. It is already one of a mortgagor and a mortgagee. The petitioners' breach of obligations is not with respect to the perfected contract of sale but in the obligations created by the mortgage contract. The remedy of rescission is not a principal action retaliatory in character but becomes a subsidiary one which by law is available only in the absence of any other legal remedy. (Art. 1384, Civil Code). Foreclosure here is not only a remedy accorded by law but, as earlier stated, is a specific provision found in the contract between the parties. There is, therefore, no cause for the resolution of the sale as prayed for by the plaintiff. His action, at all events, should have been one for the foreclosure of the mortgage, which is not the action brought in this case.

LUZON BROKERAGE CO., INC. vs. MARITIME BUILDING CO., INC., et.al. Jambangan, Adam Dandro Facts: It appears that on April 30, 1949, in the City of Manila, the defendant Myers Building Co., Inc., owner of three parcels of land in the City of Manila, together with the improvements thereon, entered into a contract entitled "Deed of Conditional Sale" in favor of Bary Building Co., Inc., later known as Maritime Building Co., Inc., whereby the former sold the same to the latter for P1, 000, 000.00, Philippine currency. P50, 000.00 of this price was paid upon the execution of the said contract and the parties agreed that the balance of P950, 000.00 was to be paid in monthly installments at the rate of P10, 000.00 with interest of 5% per annum until the same was fully paid. The monthly installments under the contract were regularly paid by the Bary Building Co., Inc. and/or the Maritime Co., Inc. until the end of February, 1961. It failed to pay the monthly installment corresponding to the month of March 1961, for which the Vice-President, George Schedler, of the Maritime Building Co., Inc., wrote a letter to the President of Myers, Mr. C. Parsons, requesting for a moratorium on the monthly payment of the installments until the end of the year 1961, for the reason that the said company was encountering difficulties in connection with the operation of the warehouse business. However, Mr. C. Parsons, in behalf of the Myers Estate, answered that the monthly payments due were not payable to the Myers Estate but to the Myers Building Co., Inc., and that the Board of Directors of the Myers Co., Inc. refused to grant the request for moratorium for suspension of payments under any condition. On May 16, 1961, the Myers Building Co., Inc. made a demand upon the Maritime Building Co., Inc., for the payment of the installments that had become due and payable. Then, on June 5, 1961, the Myers Building Co., Inc. wrote the Maritime Building Co., Inc. advising it of the cancellation of the Deed of Conditional Sale entered into between them and demanding the return of the possession of the properties and holding the Maritime Building Co., Inc. liable for use and occupation of the said properties. Issue: Whether or not there has been breach of contract by Maritime; and if there was, whether Myers was entitled to rescind or resolve the contract without recoursing to judicial process. Ruling: Under the circumstances, the action of Maritime in suspending payments to Myers Corporation was a breach of contract tainted with fraud or malice (dolo), as distinguished from mere negligence (culpa), "dolo" being succinctly defined as a "conscious and intentional design to evade the normal fulfillment of existing obligations", and therefore incompatible with good faith. Maritime likewise invokes Article 1592 of the Civil Code of the Philippines as entitling it to pay despite its default. Appellant overlooks that its contract with appellee Myers is not the ordinary sale envisaged by Article 1592, transferring ownership simultaneously with the delivery of the real property sold, but one in which the vendor retained ownership of the immovable object of the sale, merely undertaking to convey it provided the buyer strictly complied with the terms of the contract. In suing to recover possession of the building from Maritime, appellee Myers is not after the resolution or setting aside of the contract and the restoration of the parties to the status quo ante, as contemplated by Article 1592, but precisely enforcing the provisions of the agreement that it is no longer obligated to part with the ownership or possession of the property because Maritime failed to comply with the specified condition precedent, which is to pay the installments as they fell due. PREMISES CONSIDERED, the appealed decision should be, and hereby is, affirmed, and appellant Maritime Building Co., as well as appellee Luzon Brokerage Co., are further ordered to surrender the premises to the appellee Myers Building Co. Costs against appellant.

RUPERTO G. CRUZ vs. FILIPINAS INVESTMENT and FINANCE CORPORATION Lasala, Renan Norbert Facts: On July 15, 1963, plaintiff Ruperto G. Cruz purchased on installments, from the Far East Motor Corporation, one (1) unit of Isuzu Diesel Bus, described in the complaint, for P44,616.24, Philippine Currency, payable in installments of P1,487.20 per month for thirty (30) months, beginning October 22, 1963, with 12 % interest per annum, until fully paid. As evidence of said indebtedness, plaintiff Cruz executed and delivered to the Far East Motor Corporation a negotiable promissory note in the sum of P44, 616.24. To secure the payment of the promissory note, Cruz executed in favor of the seller, Far East Motor Corporation, a chattel mortgage over the aforesaid motor vehicle. As no down payment was made by Cruz, the seller, Far East Motor Corporation, on the very improvements thereon, in San Miguel, Blanca required and Cruz agreed to give, additional security for his obligation besides the chattel mortgage, which said additional security was given by plaintiff Felicia Veda. de Reyes in the form of SECOND MORTGAGE on a parcel of land owned by her, together with the building. It is agreed that plaintiff Cruz failed to pay several installments as provided in the contract; that there was extrajudicial foreclosure of the chattel mortgage on the said motor vehicle; and that defendant-appellant itself bought it at the public auction duly held thereafter, for a sum less than the purchaser's outstanding obligation. Defendant-appellant, however, sought to collect the supported deficiency by going against the real estate mortgage which was admittedly constituted on the land of plaintiff Reyes as additional security to guarantee the performance of Cruz' obligation, claiming that what is being withheld from the vendor, by the proviso of Article 1484 of the Civil Code, is only the right to recover "against the purchaser", and not a recourse to the additional security put up, not by the purchaser himself, but by a third person. Issue(s): Whether defendant, which has already extrajudicially foreclosed the chattel mortgage executed by the buyer, plaintiff Cruz, on the bus sold to him on installments, may also extrajudicially foreclose the real estate mortgage constituted by plaintiff Mrs. Reyes on her own land, as additional security, for the payment of the balance of Cruz' Obligation, still remaining unpaid"; and Ruling: There is no controversy that, involving as it does a sale of personal property on installments, the pertinent legal provision in this case is Article 1484 of the Civil Code of the Philippines. The aforequoted provision is clear and simple: should the vendee or purchaser of a personal property default in the payment of two or more of the agreed installments, the vendor or seller has the option to avail of any one of these three remedies either to exact fulfillment by the purchaser of the obligation, or to cancel the sale, or to foreclose the mortgage on the purchased personal property, if one was constituted. These remedies have been recognized as alternative, not cumulative, that the exercise of one would bar the exercise of the others. However, we find merit in appellant's complaint against the trial court's failure to order the reimbursement by Vda. de Reyes of the amount which the former paid to the Development Bank of the Philippines, for the release of the first mortgage on the land of said appellee. To the extent that she was benefited by such payment, plaintiff-appellee Vda. de Reyes should have been required to reimburse the appellant. WHEREFORE, the decision appealed from is modified, by ordering plaintiff-appellee Felicidad Vda. de Reyes to reimburse to defendant-appellant Filipinas Investment & Finance Corporation the sum of P2, 148.07, with legal interest thereon from the finality of this decision until it is fully paid. In all other respects, the judgment of the court below is affirmed, with costs against the defendant-appellant.

LEVY HERMANOS, INC., p-appellant, vs. LAZARO BLAS GERVACIO, d-appellee. Pasquin, Irish Mae Facts: On March 10, 1937, plaintiff Levy Hermanos, Inc., sold to defendant Lazaro Blas Gervacio, a Packard car. Defendant, after making the initial payment, executed a promissory note for the balance of P2, 400, payable on or before June 15, 1937, with interest at 12 per cent per annum, to secure the payment of the note, he mortgaged the car to the plaintiff. Defendant failed to pay the note it its maturity. Wherefore, plaintiff foreclosed the mortgage and the car was sold at public auction, at which plaintiff was the highest bidder for P1, 800. The present action is for the collection of the balance of P1, 600 and interest. Defendant admitted the allegations of the complaint, and with this admission, the parties submitted the case for decision. The lower court applied, the provisions of Act No. 4122, inserted as articles 1454-A of the Civil Code, and rendered judgment in favor of the defendant. Plaintiff appealed. Issue: Whether or not a cash payment can be considered as a payment by installment. Ruling: The contract, in the instant case, while a sale of personal property, is not, however, one on installments, but on straight term, in which the balance, after payment of the initial sum, should be paid in its totality at the time specified in the promissory note. The transaction is not, therefore, the one contemplated in Act No. 4122 and accordingly the mortgagee is not bound by the prohibition therein contained as to the right to the recovery of the unpaid balance. Undoubtedly, the law is aimed at those sales where the price is payable in several installments, for, generally, it is in these cases that partial payments consist in relatively small amounts, constituting thus a great temptation for improvident purchasers to buy beyond their means. There is no such temptation where the price is to be paid in cash, or, as in the instant case, partly in cash and partly in one term, for, in the latter case, the partial payments are not so small as to place purchasers off their guard and delude them to a miscalculation of their ability to pay. Theoretically, perhaps, there is no difference between paying the price in installments, in so far as the size of each partial payment is concerned; but in actual practice the difference exists, for, according to the regular course of business, in contracts providing for payment of the price in two installments, there is generally a provision for initial payment. But all these considerations are immaterial, the language of the law being so clear as to require no construction at all. The suggestion that the cash payment made in this case should be considered as an installment in order to bring the contract sued upon under the operation of the law, is completely untenable. A cash payment cannot be considered as a payment by installment, and even if it can be so considered, still the law does not apply, for it requires non-payment of two or more installments in order that its provisions may be invoked. Here, only one installment was unpaid. Judgment is reversed, and the defendant-appellee is hereby sentenced to pay plaintiff-appellant the sum of P1, 600 with interest at the rate of 12 per cent per annum from June 15, 1937, and the sum of P52.08 with interest at the rate of 6 per cent from the date of the filing of the complaint, with costs in both instances against the appellee.

MACONDRAY & CO., INC., p-appellant, vs. PRAXEDES R. DE SANTOS, d-appellee. Sinsona, Norberto Jr. Facts: The complaint alleges, for a first cause of action, that on January 11, 1934, the defendant executed and delivered to the plaintiff a promissory note for the sum of P1,000, with interest thereon at the rate of 12 per cent per annum, payable in installments as set forth in said promissory note and in case of default in the payment of the principal or interest an additional sum equal to 20 per cent of the total amount due was to be paid as attorney's fees; that to guarantee the payment of this note the defendant executed a duly registered chattel mortgage on a Willis 77, Sedan, automobile; that one of the conditions of said mortgage is that if the mortgaged property be lost, destroyed or damages, for any cause whatsoever, the mortgage would immediately have the right to foreclose and declare the whole amount of the principal and interest, secured by said mortgage, due and payable; that on January 21, 1934, the mortgaged automobile, while in possession and control of the defendant, met with an accident resulting in its total wreck and loss; that by reason of the failure of the defendant to replace or to restore the automobile to its former condition or to pay the value thereof plaintiff foreclosed its mortgage and what remained of the wrecked automobile was sold at public auction for the sum of P50; that after applying this amount to the account of defendant there was an unpaid balance of P980.39 plus interest at 12 per cent per annum from March 24, 1934, until paid, and 20 per cent of the amount due as attorney's fees, which defendant refused to pay in spite of demand therefor. As a second and alternative cause of action, the plaintiff reproduces the allegations contained in the first cause of action and alleges that another condition of the above-mentioned chattel mortgage is that the defendant agreed to use extraordinary care and diligence in the preservation and maintenance of the mortgaged property and further engaged to pay any and all damages for deterioration, reasonable wear and tear excepted, resulting directly or indirectly from carelessness or neglect of any kind on the part of the mortgagor and alleges further that through the carelessness, neglect or reckless imprudence of the defendant and or her agents while the automobile was in her possession or under her control the same was totally wrecked by reason of which the plaintiff was damaged in the sums mentioned in the first cause of action and therefore the plaintiff prays that defendant be sentenced to pay the plaintiff and abovementioned sum of P980.39 with interest at the rate of 12 per cent per annum for March 24, 1934, until paid, and 20 per cent of said sum as attorney's fees and the costs of this case. Issue: Whether or not there was a contract for the sale of personal property payable in installments and whether or not there has been a failure to pay two or more installments. Ruling: Granting that there was a contract between the parties for the sale of personal property payable in installments, which does not clearly appear in the record before this court, the complaint does not allege nor does it appear in the record that there was a failure to pay two or more installments. On the contrary the promissory note, copied in the complaint, was executed January 11, 1934, and, according to the complaint, on or about January 21, 1934, the automobile, while in the possession of the defendant, was wrecked and by reason of the failure of the defendant to replace said automobile or to pay the value thereof the plaintiff foreclosed the mortgage on what remained of the wrecked automobile and brought this suit to recover the balance due on the promissory note executed in its favor. In order to apply the provisions of article 1454-A of the Civil Code there must be a contract for the sale of personal property payable in installments and there has been a failure to pay two or more installments. The order dismissing the complaint is hereby set aside and case remanded to the trial court for further proceedings in accordance with law, with the costs of this appeal against the defendant-appellee.

PHILIPPINE NATIONAL BANK vs. OFFICE OF THE PRESIDENT, et.al. Solana, Bayani JM Facts: Private respondents were buyers on installment of subdivision lots from Marikina Village, Inc. Notwithstanding the land purchase agreements it executed over said lots, the subdivision developer mortgaged the lots in favor of the petitioner, Philippine National Bank. Unaware of this mortgage, private respondents duly complied with their obligations as lot buyers and constructed their houses on the lots in question. Subsequently, the subdivision developer defaulted and PNB foreclosed on the mortgage. As highest bidder at the foreclosure sale, the bank became owner of the lots. Acting on suits brought by private respondents, the HLURB Office of Appeals, Adjudication and Legal Affairs (OAALA) in a decision rendered on October 28, 1988 ruled that PNB -- without prejudice to seeking relief against Marikina Village, -- Inc. may collect from private respondents only the remaining amortizations, in accordance with the land purchase agreements they had previously entered into with Marikina Village, Inc., and cannot compel private respondents to pay all over again for the lots they had already bought from said subdivision developer. On May 2, 1989, the Housing and Land Use Regulatory Board affirmed this decision. On March 10, 1992, the Office of the President, invoking P.D. 957, likewise concurred with the HLURB. Hence, the present recourse to this Court. Issue: May a buyer of a property at a foreclosure sale dispossess prior purchasers on installment of individual lots therein, or compel them to pay again for the lots which they previously bought from the defaulting mortgagor-subdivision developer, on the theory that P.D. 957, The Subdivision and Condominium Buyers Protective Decree, is not applicable to the mortgage contract in question, the same having been executed prior to the enactment of P.D. 957? Ruling: While P.D. 957 did not expressly provide for retroactivity in its entirety, yet the same can be plainly inferred from the, unmistakable intent of the law to protect innocent lot buyers from scheming subdivision developers. As between these small lot buyers and the gigantic financial institutions which the developers deal with, it is obvious that the law -- as an instrument of social justice -- must favor the weak. Indeed, the petitioner Bank had at its disposal vast resources with which it could adequately protect its loan activities, and therefore is presumed to have conducted the usual due diligence checking and ascertained the actual status, condition, utilization and occupancy of the property offered as collateral. It could not have been unaware that the property had been built on by small lot buyers. On the other hand, private respondents obviously were powerless to discover the attempt of the land developer to hypothecate the property being sold to them. It was precisely in order to deal with this kind of situation that P.D. 957 was enacted, its very essence and intendment being to provide a protective mantle over helpless citizens who may fall prey to the razzmatazz of what P.D. 957 termed unscrupulous subdivision and condominium sellers. Finally, before closing this Resolution, we enjoin petitioner Bank to focus not only on the strictly legal issues involved in this case but also to take another look at the larger issues including social justice and the protection of human rights as enshrined in the Constitution; firstly, because legal issues are raised and decided not in a vacuum but within the context of existing social, economic and political conditions, law being merely a brick in the up-building of the social edifice; and secondly, petitioner, being THE state bank, is for all intents and purposes an instrument for the implementation of state policies so cherished in our fundamental law. These considerations are obviously far weightier than the winning of any particular suit or the acquisition of any specific property.

ROMULO A. CORONEL, et.al. petitioners, vs. C.A., et.al., respondents. Velarde, Jessa Ela Facts: On January 19, 1985, defendants-appellants Romulo Coronel, et. al. executed a document entitled Receipt of Down Payment in favor of plaintiff Ramona Patricia Alcaraz. The conditions appurtenant to the sale are the following:

1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upon execution of the 2. The Coronels will cause the transfer in their names of the title of the property registered in the name 3. Upon the transfer in their names of the subject property, the Coronels will execute the deed of
absolute sale in favor of Ramona and the latter will pay the former the whole balance of One Million One Hundred Ninety Thousand (P1,190,000.00) Pesos. On February 18, 1985, the Coronels sold the property covered by TCT No. 327043 to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) for One Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latter has paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. F3; Exh. 6-C) For this reason, Coronels canceled and rescinded the contract (Exh. A) with Ramona by depositing the down payment paid by Concepcion in the bank in trust for Ramona Patricia Alcaraz. On February 22, 1985, Concepcion, et. al., filed a complaint for a specific performance against the Coronels and caused the annotation of a notice of lis pendens at the back of TCT No. 327403. Issue: Whether or not the Receipt of Down Payment embodied a perfected contract of sale, or a mere executory contract to sell, subject to certain suspensive conditions. Ruling: What is clearly established by the plain language of the subject document is that when the said Receipt of Down Payment was prepared and signed by petitioners Coronel, et. al., the parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioners father, Constancio, to their names. The inevitable conclusion is that on January 19, 1985, as evidenced by the document denominated as Receipt of Down Payment, the parties entered into a contract of sale subject to the suspensive condition that the sellers shall effect the issuance of new certificate title from that of their fathers name to their names and that, on February 6, 1985, this condition was fulfilled. With the foregoing conclusions, the sale to the other petitioner, Catalina B. Mabanag, gave rise to a case of double sale where Article 1544 of the Civil Code will apply. Thus, the sale of the subject parcel of land between petitioners and Ramona P. Alcaraz, perfected on February 6, 1985, prior to that between petitioners and Catalina B. Mabanag on February 18, 1985, was correctly upheld by both the courts below. of their deceased father upon receipt of the Fifty Thousand (P50,000.00) Pesos down payment; document aforestated;

ATKINS, KROLL and CO., INC., petitioner, vs. B. CUA HIAN TEK, respondent. Yanto, Jennifer Kristine Facts: Review of a Court of Appeals' decision. For its failure to deliver one thousand cartons of sardines, which it had sold to B. Cua Hian Tek, petitioner was sued, and after trial was ordered by the Manila court of first instance to Pay damages, which on appeal was reduced by the Court of Appeals to P3,240.15 representing unrealized profits. There was no such contract of sale, says petitioner, but only an option to buy, which was not enforceable for lack of consideration because in accordance with Art. 1479 of the New Civil Code "an accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. The Court of first instance and the Court of Appeals found that B. Cua Hian Tek accepted the offer unconditionally and delivered his letter of acceptance on September 21, 1951. However, due to shortage of catch of sardines by the packers in California, Atkins Kroll & Co., failed to deliver the commodities it had offered for sale. There are other details to which reference shall not be made, as they touch the question whether the acceptance had been handed on time; and on that issue of Court of Appeals definitely found for plaintiff. Issue: Whether or not there was a contract of sale between the parties. Ruling: The offer, petitioner argues, "was a promise to sell a determinate thing for a price certain. Upon its acceptance by respondent, the offer became an accepted unilateral promise to sell a determinate thing for price certain. Inasmuch as there was no consideration to support the promise to sell distinct from the price, it follows that under Art. 1479 aforequoted, the promise is not binding on the petitioner even if it was accepted by respondent." The argument, manifestly assumes that only a unilateral promise arose when the offeree accepted. Such assumption is a mistake, because a bilateral contract to sell and to buy was created upon acceptance. So much so that B. Cua Hian Tek could be sued, had he backed out after accepting, by refusing to get the sardines and/or to pay for their price. Petitioner, however, insists the offer was a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23, "an option is nothing more than a continuing offer" for a specified time. In our opinion implies more than that: it implies the legal obligation to keep open for the time specified. Furthermore, an option is unilateral: a promise to sell at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to later. In this case, however, upon accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligations of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was bilateral contract of sale. We must therefore hold, as the lower courts have held that there was a contract of sale between the parties. And as no legal excuse has been proven, the seller's failure to comply therewith gave around to

an award for damages, which has been fixed by the Court of Appeals at P3, 240.15-amount which petitioner does not dispute in this final instance.

FELIX DE VILLA, p-appellee, vs. ANACLETO TRINIDAD, et.al., d-appellants. Solana, Bayani JM Facts: Cesario Fabricante owned land located in Sitio Salog, Barrio San Agustin, Municipality of Iriga, Camarines Sur. To secure a loan, he mortgaged on April 18, 1944 this land, together with another lot, in favor of Felix de Villa to whom he surrendered his duplicate certificate, and with whom it remained until it was lost. On November 3, 1945, Cesario Fabricante petitioned the Court of First Instance of Camarines Sur for the issuance of a new duplicate of Transfer Certificate of Title (TCT) No. 50 upon the alleged ground that his duplicate was lost. On November 27, 1945, Fabricante sold the land for P10, 000 to Eustaquio Palma who, on the same day, secured in his name TCT No. 12 covering said lot. In 1946, to secure two loans, Palma mortgaged the property covered by TCT No. 12 in favor of the Agricultural and Industrial Bank, which later became the Development Bank of the Philippines (DBP). On October 11, 1951, Palma assigned his right of redemption to Anacleto Trinidad who was allowed by the DBP later to buy the land in consideration of P27, 005.11 payable on installments. Meanwhile, Felix de Villa, having lost the duplicate of TCT No. 50 surrendered to him by Fabricante filed before the Court of First Instance of Camarines Sur a petition to reconstitute TCT No. 50 in favor of Cesario Fabricante. Seven days later, the Register of Deeds moved for reconsideration and cancellation of the orders of reconstitution on the ground that TCT No. 50 was found intact in the office but was already cancelled by TCT No. 12 in the name of Eustaquio Palma who had mortgaged the same to the Agricultural and Industrial Bank. When Fabricante failed to redeem the land, De Villa foreclosed the mortgage and bought the land in public auction as highest bidder. He obtained a writ of possession in his favor on January 6, 1961 and took possession of the land three days later from the incumbent possessor, Anacleto Trinidad. On January 30, 1961 De Villa secured TCT No. 3347 in his name and TCT No. RT-29 (50) was cancelled. Subsequently, Anacleto Trinidad filed a forcible entry case against Felix de Villa. On January 26, 1962, Felix de Villa filed the present complaint in the Court of First Instance of Camarines Sur against Anacleto Trinidad for declaration of ownership, recovery of the land, and payment of P500 a day the value of products allegedly being received by Trinidad as well as P10, 000 worth of abaca plants alleged to have been improperly cut, and the costs of the suit. Issue: The main points at issue are the ownership of the land, the presence of laches or estoppel and the propriety of the award of damages by the lower court. Ruling: We have laid the rule that where two certificates of title are issued to different persons covering the same land in whole or in part, the earlier in date must prevail as between original parties and in case of successive registrations where more than one certificate is issued over the land, the person holding under the prior certificate is entitled to the land as against the person who rely on the second certificate. Consequently, since Original Certificate of Title No. 183 was registered on 30 Jan 1920, De Villa's claim should prevail, as against Trinidad's whose original title was registered on 25 Nov 1920. When, as a result of the sale at public auction, Felix de Villa was able to secure TCT No. 3347 in his name, his rights were already protected and he had the right to feel secure in them. Upon his

dispossession by Anacleto Trinidad, he had all the right to come to the courts to seek redress. Damages, however should be offset against the value of whatever necessary and useful expenses and improvements were made or incurred by Trinidad with respect to the land, provided that in the case of useful expenses or improvements these were made or incurred prior to the filing of the present action.

ILUMINADO HANOPOL, p-appellant, vs. PERFECTO PILAPIL, d-appellee. Antipuesto, Chino Facts: Appellant Hanopol claims ownership of the land by virtue of a series of purchases effected in 1938 by means of private instruments, executed by the former owners Teodora, Lucia, Generosa, Sinforosa and Isabelo, all surnamed Siapo. Additionally, he invokes in his favor a decision rendered by the Court of First Instance of Leyte on a complaint he filed on June 16, 1948, against the same vendors, who, according to his own averments, took possession of the said property in December, 1945 through fraud, threat and intimidation, pretending falsely to be the owners thereof and ejecting the tenants of Hanopol thereon, and since then had continued to possess the land. On the other hand, appellee Pilapil asserts title to the property on the strength of a duly notarized deed of sale executed in his favor by the same owners on December 3, 1945, which deed of sale was registered in the Registry of Deeds of Leyte on August 20, 1948 under the provisions of Act No. 3344. The case was submitted for decision without any testimonial evidence, both parties relying exclusively on their documentary evidence consisting, on the part of Hanopol, of the private instruments alluded to and a copy of the decision in the reivindicatory case, and on the part of Pilapil, the notarized deed of sale in his favor bearing annotation of its registration under Act No. 3344. Issue: 1. Whether or not the judgment in the former case No. 412 against the vendors Siapos is binding upon the defendant-appellee as their successor-in-interest; and, 2. Whether or not the registration of the second deed of sale in favor of appellee Pilapil affects his right as the first vendee. Ruling: Under the first assignment of error, the appellant contends that inasmuch as appellee claims to be the successor-in-interest of the vendors, he is bound by the judgment rendered against the latter. This contention is without merit, because appellee Pilapil derived his right to the land from the sale to him of the said property on December 3, 1945, long before the filing of the complaint against the vendors in 1948. He was not made a party in the case against the Siapos, and there was not even a claim that he had knowledge of said litigation. He cannot, therefore, be bound by such judgment. Appellant argues under the second issue raised by him that the registration of Pilapil's notarized deed of sale in 1948 under Act No. 3344 "shall be understood to be without prejudice to a third party with a better right". He contends that since at the time the Siapos sold the land in question in 1945 to Pilapil, the former were no longer the owners as they had already sold the same to appellant since 1938, the first sale to him is a better right which cannot be prejudiced by the registration of the second sale. In the case at bar, there appears to be no clear evidence of Hanopol's possession of the land in controversy. In fact, Hanopol alleged that the Siapos took possession of the same land under claim of ownership in 1945 and continued and were in such possession in 1948. Consequently, since the Siapos were in actual occupancy of the property under claim of ownership, when they sold the said land to

appellee Pilapil on December 3, 1945, such possession was transmitted to the latter, at least constructively, with the execution of the notarial deed of sale, if not actually and physically as claimed by Pilapil in his answer filed in the present case. Thus, even on this score, Hanopol cannot have a better right than appellee Pilapil who, according to the trial court, "was not shown to be a purchaser in bad faith".

GURBAX SINGH PABLA & CO., et.al. vs. HERMOGENES REYES, et.al. Barrera, Alexis Ben Facts: John Tan Chin Eng is the owner of the land and on July 23, 1948, he entered into a contract with the petitioner-appellees, under the terms of which petitioners-appellees were to construct thereon a threestory building of concrete and of strong materials valued at from P80, 000 to P90, 000. The contract also provided that the building shall become the exclusive property of the owner of the land, but that the petitioner-appellees were to occupy, hold, or possess it as lessees for a period of three years and six months from its completion, without paying any rentals therefore, the sum spent in the construction being considered as the rentals; that after the above period of three years and six months petitioners were to continue occupying the said building for another two years at a monthly rental of P2,000. This contract of lease was filed and registered in the office of the Register of Deeds of Manila on August 10, 1948. At the time that the contract was entered into there was an existing mortgage over the land in favor of Jose Calvo and Carlos Calvo. This mortgage was cancelled, and a new mortgage was executed by the owner in favor of respondents-appellants herein dated March 8, 1949. On May 14, 1949, the original contract of lease, was amended by virtue of which the period under which the lessees were to hold any occupy the property without rentals was extended to seven years and four months, and the rental for the additional two years thereafter reduced to P1,148. On June 3, 1949, the petitioners-appellees filed a motion in the Court of First Instance of Manila praying that an order issue to the owner for the delivery of the owner's duplicates of transfer certificates of title Nos. 8071 and 8072 to the petitioners in order that the Register of Deeds of Manila may be able to make the annotation thereon of the contract of lease, and its amendment. Against this petition Hermogenes Reyes and Teodora Tantoco filed an opposition, alleging that they had no knowledge whatsoever of the contract of lease, or of its amendments, and that the execution of the amendment, violated the express provision of the mortgage, to the effect that the owner could not sell, assign, or encumber the mortgaged premises without the written consent of the mortgages. Issue: Whether or not petitioners have a right to have said deeds registered. Ruling: The purpose of registering an instrument is to give notice thereof to all persons; it is not intended by the proceedings for registration to seek to destroy or otherwise affect already registered rights over the land, subsisting or existing at the time of the registration. The rights of these parties, who have registered their rights, are not put in issue when an instrument is presented for registration; nor are its effects on other instruments previously registered put in issue by the procedure of registration. We find that the issues raised by respondents-appellants, namely, that the contracts of lease, are invalid because they violate the contracts of mortgage executed in favor of the owner of the land, that Tirso T. Reyes is not the attorney-in-fact of the respondents-appellants, and that the respondents-appellants had no knowledge of the execution of the contract of lease, these issues were not properly investigated because respondents-appellants did not have the opportunity to present evidence thereon and did not even present copy of their mortgage at the hearing, and the trial court decided the questions without full and complete investigation.

Wherefore, the opposition to the motion for the surrender of the certificates of title to the Register of Deeds of Manila is overruled, and the order appealed from, in so far as it orders the surrender of the certificates of title for the registration of the contracts of lease, is hereby affirmed, but the other rulings are reversed, and the other issues raised reserved for determination in a proper proceeding.

PO SUN TUN, plaintiff-appellant, vs. W. S. PRICE, et.al., defendants-appellees. Jambangan, Adam Dandro Facts: On November 29, 1921, Gabino Barreto P. Po Ejap was the owner of a certain parcel of land situated in the municipality of Tacloban, Province of Leyte. On the date mentioned, he sold the land to Po Tecsi for the sum of P8, 000. On June 21, 1923, Po mortgaged the land to W. S. Price in the amount of P17, 000. The mortgage was duly noted in the office of the register of deeds of Leyte on August 18th of the same year. On December 17, 1924, Po executed a deed of sale of the land to Price in consideration of P17, 000. This sale was recorded with the register of deeds on January 22, 1925. Price in turn, with the consent of his wife, sold the land on February 16, 1927, to the Province of Leyte for P20, 570. In connection with the above facts, it should further be stated that when the Tacloban Cadastral Case was before the courts in 1918, this land was claimed by Gabino Barreto P. Po Ejap acting through his agent, Po Tecsi, but subsequently on motion the names of Mr. and Mrs. Price were substituted as claimants. On March 17, 1927, the original certificate of title was issued in the name of the spouses Price. Later, the proper transfer certificate of title was provided for the Province of Leyte. Returning again to the original date of November 29, 1921, on that date Po Tecsi gave a general power of attorney including the right to sell to Gabino Barreto P. Po Ejap. Acting under this power, Gabino sold the land on November 22, 1923, for P8, 000 to Jose H. Katigbak. On this document there appears on the upper right-hand margin the following: "Register of Deeds, Received, Dec. 15, 1923, Province of Leyte." In turn Jose H. Katigbak transferred the property to Po Sun Tun on October 12, 1927, for P8, 000. Predicated on these facts, Po Sun Tun began an action in the Court of First Instance of Leyte to gain the possession of the property and to secure damages in the amount of P3, 600. Judge Causing sitting in first instance decided the case on the pleadings and the evidence, absolving the defendants W. S. Prince and the Province of Leyte from the complaint, with costs against the plaintiff. The principal error assigned on appeal by the plaintiff in connection with this judgment is that the trial judge erred in finding that the deed, Exhibit D, in favor of Jose H. Katigbak had not been registered in the corresponding registry of property. Issue: Recalling that the deed of Po Tecsi to Price was duly registered on January 22, 1925, and that thereafter a Torrens title was obtained in the name of Price, and that the deed of Gabino Barreto P. Po Ejap to Jose H. Katigbak has noted on it "Register of Deeds, Received, Dec. 15, 1923, Province of Leyte," can it be said that within the meaning of the law this latter deed was ever recorded? Ruling: We are clearly of the opinion that it was not. The law and the authorities are overwhelmingly demonstrative of this statement. The mere presentation to the office of the register of deeds of a document on which acknowledgment of receipt is written is not equivalent to recording or registering the real property. Escriche says that registration, in its juridical aspect, must be understood as the entry made in a book or public registry of deeds. It results as a matter of course since the deed made by Gabino Barreto P. Po Ejap in favor of Jose H. Katigbak was not only not first recorded in the registry of deeds but never legally so recorded, and since

the purchaser who did record his deed was Price, who secured a Torrens title and transferred the same to the Province of Leyte, that Po Sun Tun, the holder of a defeasible title, has no legal rights as against Price and the Province of Leyte, the holders of indefeasible titles. Also, if necessary, it could be ruled that within the meaning of section 38 of the Land Registration Law, Price and the Province of Leyte are innocent purchasers for value of the disputed property.

AGRIPINO MENDOZA, petitioner-appellee, vs.PRIMITIVO KALAW, objector-appellant. Lasala, Renan Norbert. Facts: From the record it appears that on the 26th day of November, 1919, the petitioner presented a petition in the Court of First instance of the City of Manila for the registration, under the Torrens system, of a piece or parcel of land. The said lot is alleged to have an area of 371.6 square meters. The petitioner alleged that he was the owner in fee simple of said parcel of land for the reason that he had purchased the same of Federico Caet on the 8th day of November, 1919. Accompanying the petition, there was united a plan containing a technical description of the metes and bounds of said parcel of land. To the registration of said parcel of land the oppositor, Primitivo Kalaw, presented his opposition, alleging that he was the owner of the same and that he had acquired it from the said Federico Caet. Upon the issue thus presented by the petitioner and opposition, the Honorable James A. Ostrand, on the 23d day of January, 1920, in a carefully prepared opinion, reached the conclusion that the petitioner was the owner in fee simple of said parcel of land, and ordered it registered in his name in accordance with the provisions of the Land registration Act. From that decree the oppositor appealed to this court. Issue: Whether or not the petitioner was the owner in fee simple of said parcel of land. Ruling: It will be noted that Federico Caet made two sales of the same property one of the oppositor and the other to the petitioner. The first was but a conditional sale while the latter was an absolute sale. It will also be noted that while the absolute sale to the petitioner was subsequent to the conditional sale to the oppositor, the former obtained the actual possession of the property first. It will further be noted from a reading of Exhibits 1 and B that the petitioner actually paid to his vendor the purchase price of the property in question, while the payment by the oppositor depended upon the performance of certain conditions mentioned in the contract of sale. While was have stated that there were two sales of the parcel of land in question, that is hardly the fact, because a conditional sale, before the performance of the condition, can hardly be said to be a sale of property, especially where the condition has not been performed or complied with. That being true, article 1473 of the Civil Code can hardly be said to be applicable. Neither can the "anotacion preventiva" obtained by the oppositor be said to have created any advance in his favor, for the reason that a preventative precautionary notice on the records of the registry of deeds only protects the rights of the person securing it for a period of thirty days. A preventative precautionary notice only protects the interests and rights of the person who secures it against those who acquire an interest in the property subsequent thereto, and then, only for a period of thirty days. It cannot affect the rights or interests of persons who acquired an interest in the property theretofore. In the present case the petitioner had acquired an absolute deed to the land in question, and had actually entered into the possession of the same, before the preventative precautionary notice was noted in the office of the

registry of deeds. Therefore, under the provisions of the Mortgage Law above cited, it could in no way affect the rights or interests of persons, acquired theretofore. For all of the foregoing reasons, we are fully persuaded that the judgment ordering the registration of the parcel of land in question in the name of the petitioner should be and is hereby affirmed, with costs. So ordered.

LUCIO BUZON, P-Appellee, vs. MAXIMO LICAUCAO, et.al., D-Appellants. Pasquin, Irish Mae Facts: On 15 Dec 1904, a certificate of title to the parcel of land described in the complaint was issued in pursuance of a decree of the Court of Land Registration to one Rafael Herrera. Thereafter Maximo Licauco, one of the Defendants in these proceedings, instituted an action against Herrera in the Court of First Instance of Manila, and obtained an order of attachment against the property of Herrera, which was levied on this land on 01 Oct 1907, by filing and registering a copy of the order in the office of the register of deeds. On 10 Mar 1908, Licauco undertook to subject the property thus attached to execution on the judgment in his favor in the action wherein the order of attachment was issued; and together with his coDefendant in these proceedings, Jose McMicking, ex officio sheriff of Manila, took the necessary steps looking to the sale at public auction of the above-mentioned parcel of land, for the purpose of recovering therefrom the amount of that judgment. Thereupon Lucio Buzon, the Plaintiff in the case at bar, claiming to be the true owner of the land in question, instituted these proceedings for the purpose of enjoining Licauco and the sheriff of Manila from proceeding with the execution of sale. On 06 Sep, 1907, Herrera executed a deed of sale of the land in question to Lucio Buzon, which was duly acknowledged before a notary public, but was not presented to the register of deeds until 04 Oct 1907, when Buzon secured from the office of the register of deeds of the city of Manila a certificate of transfer and title to the land in question, which contains, in the memorandum of incumbrances affecting the property described therein, an annotation of the order of attachment filed and registered by Licauco in the office of the register of deeds, on 01 Oct 1907. Issue: Whether or not the evidence established Defendants allegations that the conveyance to Plaintiff of the land in controversy was fraudulent as to the Defendant Licauco, and that the deed of conveyance to Buzon, executed on 06 Sep 1907, though unrecorded takes priority over the subsequent attachment of execution against the same property, levied on October 1, 1907 Ruling: While an unrecorded deed of conveyance executed by the owner of land not registered under the provisions of the Land Registration Act conveys the title and ownership to the purchaser as of the date of its execution, so that a subsequent levy of an attachment or execution by a judgment creditor of the vendor is void and of no effect, the same rule cannot be applied where the land has been registered under that Act, because, by its terms, an unrecorded deed of conveyance does not convey or affect the land until and unless the transaction is duly registered. It is clear that the deed of sale of Herrera to Buzon did not take effect as a conveyance, or bind the land, until 04 Oct 1907, and that the levy of Licaucos attachment against the land by the filing and recording of the order of attachment in the office of the register of deeds on 01 Oct was not affected thereby. Buzon, on the back of whose certificate of transfer and title appears a memorandum of the levy of attachment, had both actual and constructive notice of the fact that the attachment had been levied upon

the land purchased by him, before he became the owner, and clearly he is not entitled to an injunction to restrain Licauco from subjecting this land to execution, in accordance with the provisions of the Land Registration Act touching attachments and other liens. The judgment of the trial court is reversed, and the injunction granted therein is dissolved, with the costs in the Court of First Instance in favor of the Defendants, but without costs to either party in this instance.

REMEDIOS R. SANDEJAS. et.al., petitioners, vs. ALEX A. LINA, respondent. Sinsona, Norberto Jr. Facts: On February 17, 1981, Eliodoro Sandejas, Sr. filed a petition in the lower court praying that letters of administration be issued in his favor for the settlement of the estate of his wife, REMEDIOS R. SANDEJAS, who died on April 17, 1955. On July 1, 1981, Letters of Administration were issued by the lower court appointing Eliodoro Sandejas, Sr. as administrator. On April 19, 1983, an Omnibus Pleading for motion to intervene and petition-in-intervention was filed by Alex A. Lina alleging that on June 7, 1982, Administrator Eliodoro P. Sandejas, bound and obligated himself, his heirs, administrators, and assigns, to sell in their entirety the parcels of land which formed the estate of the late Remedios R. Sandejas. On 28 Aug 1986, heirs Sixto, Roberto, Antonio and Benjamin, all surnamed Sandejas, filed a [M]otion for [R]econsideration and the appointment of another administrator Mr. Sixto Sandejas, in lieu of [I]ntervenor Alex A. Lina. On 02 Oct 1986, Intervenor Alex A. Lina filed his [M]anifestation and [C]ounter [M]otion alleging that he ha[d] no objection to the appointment of Sixto Sandejas as [a]dministrator of the [i]ntestate [e]state of his mother Remedios R. Sandejas, provided that Sixto Sandejas be also appointed as administrator of the [i]ntestate [e]state of his father, Eliodoro P. Sandejas, Sr. On 29 Nov 1993, Intervenor filed [an] Omnibus Motion (a) to approve the deed of conditional sale executed between Alex A. Lina and Elidioro [sic] Sandejas, Sr. on 07 Jun 1982; (b) to compel the heirs of Remedios Sandejas and Eliodoro Sandejas, Sr. thru their administrator, to execute a deed of absolute sale in favor of Alex A. Lina pursuant to said conditional deed of sale to which the administrator filed a [M]otion to [D]ismiss and/or [O]pposition to said omnibus motion on 13 Dec 1993. Issue: Whether the CA erred in modifying the trial courts Decision and in obligating petitioners to sell 3/5 of the disputed properties to respondent, even if the suspensive condition had not been fulfilled. Ruling: A contract of sale is not invalidated by the fact that it is subject to probate court approval. The transaction remains binding on the seller-heir, but not on the other heirs who have not given their consent to it. In settling the estate of the deceased, a probate court has jurisdiction over matters incidental and collateral to the exercise of its recognized powers. Such matters include selling, mortgaging or otherwise encumbering realty belonging to the estate. Rule 89, Section 8 of the Rules of Court, deals with the conveyance of real property contracted by the decedent while still alive. In contrast with Sections 2 and 4 of the same Rule, the said provision does not limit to the executor or administrator the right to file the application for authority to sell, mortgage or otherwise encumber realty under administration. The standing to pursue such course of action before the probate court inures to any person who stands to be benefited or injured by the judgment or to be entitled to the avails of the suit. The agreement between Eliodoro Sr. and respondent is subject to a suspensive condition -- the procurement of a court approval, not full payment. There was no reservation of ownership in the agreement. In accordance with paragraph 1 of the Receipt, petitioners were supposed to deed the

disputed lots over to respondent. This they could do upon the courts approval, even before full payment. Hence, their contract was a conditional sale, rather than a contract to sell as determined by the CA. WHEREFORE, the Petition is hereby PARTIALLY GRANTED. The appealed Decision and Resolution are AFFIRMED with the MODIFICATION that respondent is entitled to only a pro-indiviso share equivalent to 11/20 of the disputed lots.

JERRY T. MOLES, petitioner, vs. I.A.C. and MARIANO M. DIOLOSA, respondents. Solana, Bayani JM Facts: Sometime 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 DBP 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.. On his second visit to the Diolosa Publishing House, petitioner together with Rogelio Yusay, a letter press machine operator, decided to buy the linotype machine, Model 14. The transaction was basically verbal in nature but to facilitate the loan application with the DBP, a pro forma invoice, dated April 23, 1977 and reflecting the amount of P50,000.00 as the consideration of the sale, was signed by petitioner. Sometime between April and May, 1977, the machine was delivered to petitioner's publishing house at Tangub, Bacolod City. On 29 Aug1977, private respondent issued a certification wherein he warranted that the machine sold was in A-1 condition, together with other express warranties. It is to be noted that the aforesaid official receipt No. 0451, dated September 30, 1977 and prepared and signed by private respondent, expressly states that he received from the petitioner the DBP check for P50,000.00 issued in full payment of one (1) Unit Model 14 Linotype Machine as per Pro forma Invoice dated 23 Apr 1977. On 29 Nov 1977, petitioner wrote private respondent 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. An expert witness for the petitioner, one Gil Legaspina, declared that he inspected the linotype machine involved in this case at the instance of petitioner. In his opinion, major repairs were needed to put the machine back in good running condition. Issue: Whether or not there is an implied warranty of its quality or fitness when an article is sold as a secondhand item; and, whether or not the hidden defects in the machine are sufficient to warrant a rescission of the contract between the parties. Ruling: It must be remembered that the certification was a condition sine qua non for the release of petitioner's loan which was to be used as payment for the purchase price of the machine. Private respondent failed to refute this material fact. Neither does he explain why he made that express warranty on the condition of the machine if he had not intended to be bound by it. In fact, the respondent court, in declaring that petitioner should have availed of the remedy of requiring repairs as provided for in said certification, thereby considered the same as part and parcel of the verbal contract between the parties. On the basis of the foregoing circumstances, the inescapable conclusion is that private respondent is indeed bound by the express warranty he executed in favor of herein petitioner.

On the question as to whether the hidden defects in the machine is sufficient to warrant a rescission of the contract between the parties, we have to consider the rule on redhibitory defects contemplated in Article 1561 of the Civil Code. A redhibitory defect must be an imperfection or defect of such nature as to engender a certain degree of importance. An imperfection or defect of little consequence does not come within the category of being redhibitory. The fact that petitioner never made appropriate use of the machine from the time of purchase until an action was filed, attest to the major defects in said machine, by reason of which the rescission of the contract of sale is sought. The factual finding, therefore, of the trial court that the machine is not reasonably fit for the particular purpose for which it was intended must be upheld, there being ample evidence to sustain the same.

HEIRS OF SOFIA QUIRONG vs. DEVELOPMENT BANK OF THE PHILIPPINES Velarde, Jessa Ela Facts: When the late Emilio Dalope died, he left a 589-square meter untitled lot Pangasinan, to his wife, Felisa Dalope and their nine children, one of whom was Rosa Dalope-Funcion. To enable Rosa and her husband get a loan from respondent DBP, Felisa sold the whole lot to the Funcions. With the deed of sale in their favor and the tax declaration in their names, the Funcions mortgaged the lot with the DBP. On 12 Feb 1979, after the Funcions failed to pay their loan, the DBP foreclosed the mortgage on the lot and consolidated ownership in its name. On 20 Sep 1983, the DBP conditionally sold the lot to Sofia Quirong. In their contract of sale, Sofia Quirong waived any warranty against eviction. On 28 Nov 1983, Felisa and her eight children filed an action for partition and declaration of nullity of documents with damages against DBP and the Funcions. On 27 Dec 1984 the DBP executed a deed of absolute sale of the subject lot in Sofia Quirongs favor. On 11 May 1985, Sofia Quirongs heirs filed an answer in intervention in Civil Case D-7159 in which they asked the RTC to award the lot to them and, should it instead be given to the Dalopes, to allow the Quirong heirs to recover the lots value from the DBP. On 16 Dec 1992, the RTC rendered a decision, declaring the DBPs sale to Sofia Quirong valid only with respect to the shares of Felisa and Rosa Funcion in the property. It declared Felisas sale to the Funcions, the latters mortgage to the DBP, and the latters sale to Sofia Quirong void insofar as they prejudiced the shares of the eight other children of Emilio and Felisa who were each entitled to a tenth share in the subject lot. On 10 Jun 1998, the Quirong heirs filed the present action against the DBP for rescission of the contract of sale between Sofia Quirong, their predecessor, and the DBP and praying for the reimbursement of the price that she paid the bank plus damages. On 14 Jun 2004, after hearing the case, the RTC rendered a decision, rescinding the sale between Sofia Quirong and DBP and ordering the latter to return to the Quirong heirs the P78,000.00 Sofia Quirong paid the bank. On appeal by the DBP, the Court of Appeals (CA) reversed the RTC decision and dismissed the heirs action on the ground of prescription. Issue: Whether or not the Quirong heirs action for rescission of respondent DBPs sale of the subject property to Sofia Quirong was already barred by prescription; and in the negative, whether or not the heirs of Quirong were entitled to the rescission of the DBPs sale of the subject lot to the late Sofia Quirong as a consequence of her heirs having been evicted from it. Ruling: Their action was for rescission, since their complaint asked for the rescission of the contract of sale between Sofia Quirong and the DBP and reimbursement of the price that Sofia Quirong paid the bank plus damages. The prescriptive period for rescission is four years. The cause of action of the Quirong heirs stems from their having been ousted by final judgment from the ownership of the lot that the DBP sold to Sofia Quirong, their predecessor, in violation of the warranty against eviction. With the loss of 80% of the subject lot to the Dalopes by reason of the judgment of the RTC, the Quirong heirs had the right to file an action for rescission against the DBP pursuant to Article 1556 of the Civil Code.

And that action for rescission, was the action that the Quirong heirs took against the DBP. Consequently, it prescribed as Article 1389 provides in four years from the time the action accrued. Since it accrued on 28 Jan 1993 when the decision became final and executory and ousted the heirs from the lot, the latter had only until 28 Jan 1997 within which to file their action for rescission. Given that they filed their action on 10Jun 1998, they did so beyond the four-year period. With the conclusion that the Court has reached respecting the first issue presented in this case, it would serve no useful purpose for it to further consider the issue of whether or not the heirs of Quirong would have been entitled to the rescission of the DBPs sale of the subject lot to Sofia Quirong as a consequence of her heirs having been evicted from it.

FERMIN BOBIS, et.al. vs. THE PROVINCIAL SHERIFF OF CAM. NORTE, et.al. Yanto, Jennifer Kristine Facts: Rufina Camino and Pastor Eco were the registered owners of a parcel of land which was cultivated by the spouses Fermin Bobis and Emilia Guadalupe. On 25 Jul 1950, one Alfonso Ortega filed a complaint against R.Camino, P.Eco, E.Guadalupe, and F.Bobis, for the recovery of possession of onehalf (1/2) of the cleared and planted portion of the land. On 26 Aug 1950, R.Camino and P.Eco sold the parcel of land to their co-defendants. On 19 Jan 1951, the parties submitted a compromise agreement to the court which was approved. The defendants R.Camino and P.Eco, however, only paid the amount of P50.00 to A.Ortega when the obligation became due. As a result, a writ of execution was issued, commanding the Provincial Sheriff that the goods and chattels of the defendants R.Camino, P.Eco, E.Guadalupe, and F.Bobis be caused to be made the sum of P140.00. Upon learning of the levy on execution, E.Guadalupe and F.Bobis filed a motion seeking the modification of the writ of execution to exclude them because only the defendants R.Camino and P.Eco were obligated to pay the A.Ortega. On 03 Sep 1951, the Provincial Sheriff sold the parcel of land at an execution sale to Zosimo Rivera, the highest bidder. Z.Rivera asked for a writ of possession. The Provincial Fiscal filed a motion praying that E.Guadalupe be directed to surrender the owner's duplicate of TCT No. T-838. E.Guadalupe did not surrender her duplicate copy and, instead, filed a motion for the reconsideration which was denied by the court. E.Guadalupe refused to surrender the owner's duplicate copy and she was declared guilty of contempt and sentenced to undergo imprisonment. On 04 Mar 1960, F.Bobis and E.Guadalupe filed the action for the annulment of the sheriff's deed of sale and for damages, upon the ground that the writ of execution issued was not in conformity with the judgment rendered therein and therefore, void and of no legal effect. Upon the filing of the complaint, the court ordered the release of E.Guadalupe who had been confined in jail for about 8 months. Issues: The appellants contend that the trial court erred:

1. In declaring that the sale executed in favor of Z.Rivera valid and legal, and that he is now the
owner; 2. In dismissing the complaint for annulment of the sale which is void from the beginning; 3. In declaring the sale executed in favor of EGuadalupe rescinded when theres no action for the same; 4. In ordering E.Guadalupe to execute a deed of conveyance in favor of defendant Z.Rivera when the property is of the conjugal partnership of F.Bobis and E.Guadalupe; and, 5. In not granting damages against Z.Rivera and the Provincial Sheriff when the machination to deprive plaintiffs of their land is very evident in their actuations not only because of the ridiculously niggardly price but also because the true plaintiff (Ortega) was not benefited by the sale.

Ruling: The writ of execution issued is null and void with respect to the spouses F.Bobis and E.Guadalupe; hence, the sale of their property at a subsequent sale at public auction to the defendant Z.Rivera is void and of no legal effect. When the lower court commanded the Provincial Sheriff that the goods and chattels of the defendants R.Camino, P.Eco, E.Guadalupe and F.Bobis be caused to be made the sum of P140.00 whereby making the spouses F.Bobis and E.Guadalupe equally liable for the judgment debt of the spouses R.Camino and P.Eco, adding to the judgment sought to be executed a new relief, it acted in excess of jurisdiction, if not abuse of authority. The defect was in the writ of execution issued by the lower court and not in the levy or in the sale at public auction. Hence, no fault can be attributed to the sheriff. Therefore, he cannot be made liable for the damages incurred by the appellant spouses. Corollarily, no damages can also be recovered from the buyer of the property at the sale at public auction.

BPI v. Domingo Pasquin, Irish Mae Facts: FSB entered into a contract of lease with Julian Cruz. Subsequently, FSB was acquired by BPI but before the expiration of the lease contract, a new agreement was executed now between BPI-FSB and Cruz. Both the original and new agreement contained a stipulation to the following effect: Assignment and Sublease The lessee has the right to sublease the premises or any portion thereof to a third party. The lessee may not, however, assign or transfer its right or interest under this lease without the written consent of the lessor. Subsequently, BPI-FSB subleased the property to Benjamin Villa without the consent of Cruz, however, the latter acceded to the sublease because he did not interpose any objection thereto. The sublease contract between BPIFSB and Villa contained the following stipulation: The sublessee shall not assign this contract of sublease or sublease any part of the premises to any person or entity. Villa used the commercial premises for his restaurant business which however did not succeed, so after a year, they stopped operations. However, before the restaurant closed down, one Mrs. Zenaida Domingo indicated his interest in taking over the restaurant business of Villa. Negotiations pushed through and the parties agreed to the price of 650, 000. Villa informed Mrs. Domingo that he cannot assign his rights to Mrs. Domingo pursuant to the aforequoted stipulation and so Villa asked for the rescission of his sublease contract with BPI-FSB so that a new sublease contract between BPI-FSB and Domingo can be executed. The bank acceded to the transaction. Domingo paid the full price and Villa ceded all his rights over his restaurant to Domingo. However, when Domingo went to clean they cannot enter the property since it was padlocked and a sign to the effect that the property was not for lease or sublease was posted on the glass window. Combined efforts of BPI-FSB and Villa proved futile as Cruz refused to open the premises. This prompted Domingo to file an action for the opening of the property or for the return of their 650, 000. The RTC rendered its decision ordering BPI-FSB and Villa to solidarily pay Domingo the 650, 000 and damages, the trial court likewise ordered Cruz to reimburse BPI-FSB and Villa whatever they will pay Domingo. The CA affirmed the decision of the RTC. Hence, this petition. Issue: WON BPI-FSB should be solidarily liable with Villa to pay Domingo 650, 000 and damages. Whether the contract between BPI-FSB and Villa is a sublease or an assignment of credit. Held: Yes. BPI-FSB is solidarily liable with Villa to pay Domingo. Both BPI-FSB and Villa each had their own respective agreements with the Domingos, albeit for a single purpose. Villa sold to the Domingos the goodwill of his

restaurant business, as well as all his rights and interests in the premises and its improvements. BPI-FSB, on the other hand, subleased the same premises to the Domingos. These two contracts are intertwined. Indeed, the Domingos' enjoyment of the goodwill and business of Villa would be an impossibility without the BPI-FSB Domingos sublease contract. The Court cannot give credence to BPI-FSB's posture that it had nothing to do with, nor even had knowledge of, the agreement between Villa and the Domingos. This scenario is far-fetched, what with the fact that BPI-FSB is a party to the sublease contract with the Domingos, and, in pursuance thereof, even executed a deed of rescission of its earlier sublease agreement with Villa. It had also exerted efforts, along with Villa, towards putting the Domingos in possession of the premises by seeking out Cruz. With such a factual backdrop, it is difficult to grasp how BPI-FSB could not have taken part and assured the Domingos of possession of the premises, as found by the two (2) courts below. Indeed, it insults ones credulity for the petitioner to feign ignorance of the sublease agreement between Villa and the Domingos. In any event, it is clear that BPI-FSBs failure to put the Domingos in possession of the premises as its sublessees, in breach of its own contract with them, makes the petitioner solidarily liable with Villa for the amount the Domingos had paid to enjoy the premises. The contract between BPI-FSb and Villa is a sublease contract and not an assignment of rights. If the contract had been an assignment the consent of Cruz would have been necessary to validate the contract but since no such consent was necessary pursuant to the stipulation in their contract, the transaction was one of sublease. College Assurance Plan v. Belfranlt Development Inc. Pasquin, Irish Mae
Facts: CAP leased premises with Belfranlt. On Oct. 8, 1994, fire destroyed portions of the building including the 3 rd floor occupied by CAP. Upon investigation, it was discovered that the origin of the fire was the stockroom in the 3 rd floor occupied by CAP and that the fire was due to an accident caused by an overheated coffee percolator. Based on the foregoing findings, Belfranlt sent a notice to CAP to vacate the premises and to pay for reparation amounting to 1.5 mln. CAP vacated the premises including the units on the second floor which were not affected by fire but did not act on the payment of reparation damages. Belfranlt wrote a second letter clarifying that CAP need not vacate the units on in the 2nd floor and they are thus still liable for rent, the letter further reiterated about the payment for reparation damagesIn reply, petitioners explained that they could no longer re-occupy the units on the second floor of the building for they had already moved to a new location and entered into a binding contract with a new lessor. Petitioners also disclaimed liability for reparation, pointing out that the fire was a fortuitous event for which they could not be held responsible. After its thirs demand went unheeded, Belfranlt filed an action for damages with the RTC. The RTC rendered its decision ordering CAP to pay the reparation damages worth 2.2mln and to pay other damages. The trial court likewise ordered CAP to pay for unpaid rentals. The CA however, modified tha decision of the RTC. It deleted the payment of 2.2mln reparation damages, the unpaid rentals, the moral and exemplary damages and attorneys fees. The CA however granted an award of temperate damages worth 500, 000. Hence, this petition. Issue: WON CAP is liable for the fire. Held: Yes. Article 1667 of the Civil Code, provides: The lessee is responsible for the deterioration or loss of the thing leased, unless he proves that it took place without his fault. This burden of proof on the lessee does not apply when the destruction is due to earthquake, flood, storm or other natural calamity. This creates the presumption that the lessee is liable for the deterioration or loss of a thing leased. To overcome such legal presumption, the lessee must prove that the deterioration or loss was due to a fortuitous event which took place without his fault or negligence. In the present case, it was fire that caused the damage to the units being occupied by petitioners. The legal presumption therefore is that petitioners were responsible for the damage. Petitioners insist, however, that they are exempt from liability for the fire was a fortuitous event that took place without their fault or negligence. The CA correctly applied the doctrine of res ipsa loquitur under which expert testimony may be dispensed with35 to sustain an allegation of negligence if the following requisites obtain: a) the accident is of a kind which does not ordinarily occur unless someone is negligent; b) the cause of the injury was under the exclusive control of the person in charge and c) the injury suffered must not have been due to any voluntary action or contribution on the part

of the person injured.36The fire that damaged Belfranlt Building was not a spontaneous natural occurrence but the outcome of a human act or omission. It originated in the store room which petitioners had possession and control of. Respondent had no hand in the incident. Hence, the convergence of these facts and circumstances speaks for itself: petitioners alone having knowledge of the cause of the fire or the best opportunity to ascertain it, and respondent having no means to find out for itself, it is sufficient for the latter to merely allege that the cause of the fire was the negligence of the former and to rely on the occurrence of the fire as proof of such negligence.37 It was all up to petitioners to dispel such inference of negligence, but their bare denial only left the matter unanswered. The certification issued by the Bureau of Fire Protection clearly indicated that the cause of the fire was an overheated coffee percolator. This documentary evidence is credible because it was issued by a government office which conducted an investigation of the cause and circumstances surrounding the fire of October 8, 1994. Temperate or moderate damages may be availed when some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be proved with certainty.39 The amount thereof is usually left to the discretion of the courts but the same should be reasonable, bearing in mind that temperate damages should be more than nominal but less than compensatory. 40 Without a doubt, respondent suffered some form of pecuniary loss for the impairment of the structural integrity of its building as a result of the fire. However, as correctly pointed out by the CA, because of respondent's inability to present proof of the exact amount of such pecuniary loss, it may only be entitled to temperate damages in the amount of P500,000.00,41 which we find reasonable and just.

Mortel vs. KASSCO, Inc. Velarde, Jessa Velarde Facts: KASSCO, Inc. is the registered owner of a building located at Sta. Cruz, Manila. In order to secure a loan from the Philippine National Bank (PNB), which was renting the first floor of the building, KASSCO mortgaged such property to the latter. In 1985, KASSCO applied for the conversion of the building into a condominium which was granted by the Human Settlement and Regulatory Commission. As a requirement for registration and issuance of a license to sell, KASSCO wrote PNB to secure its approval of the said conversion and the partial cancellation of the mortgage over the fully-paid units. In the same year, Kassco, represented by Oscar Santos, entered into an Agreement with Reynaldo Mortel which provides that upon securing the individual condominium certificate of title (CCT), KASSCO shall execute a Deed of Absolute Sale in favor of Mortel and to deliver to him the CCT corresponding to the second floor of the building. Furthermore, the Agreement provides that pending the delivery of the title to Mortel and payment to KASSCO of the full amount of the purchase price, a contract of lease for a period of one year is constituted covering the second floor of the building. However, the one-year lease period with Mortel expired without KASSCO securing and delivering the CCT to Mortel because PNB did not act upon the request earlier made by KASSCO. Thus, KASSCO and Mortel executed another agreement which substantially contained the same terms and conditions as the first agreement and modified only isofar as the purchase price and monthly rental fee. The period covered by the second agreement again lapsed without KASSCO obtaining the above-mentioned documents. Nonetheless, Mortel continued to occupy the premises. In November 1988, KASSCO ordered Mortel to vacate the premises but Mortel refused and, instead, demanded from KASSCO the CCT over the subject property and the Deed of Absolute Sale. This prompted KASSCO to file a complaint for unlawful detainer against Mortel. Issue:Whether or not the contract to sell embodied in the agreements took effect. Ruling: No. In a contract to sell, ownership is reserved in the vendor and title is not to pass until full payment of the purchase price. In contracts subject to a suspensive condition, the birth or effectivity of such contracts only takes place if and when the event constituting the condition happens or is fulfilled, and if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. In the present petition, the effectivity of the contract to sell is conditioned upon the obtainment and delivery of the condominium certificate of title to petitioner by private respondent. Under the terms of the agreement, title shall only pass and a deed of absolute sale shall only

be executed in favor of the buyer upon securing individual CCTs over the subject property. The nonfulfillment of this condition is thus evident when KASSCO failed to secure the partial cancellation of its mortgage and the return of its Transfer Certificate of Title by PNB, both of which were indispensable to registration and the issuance of a license to sell a condominium, which in turn, are prerequisites to the issuance of a CCT. When private respondent thus failed to secure CCTs over the property subject of this controversy, the contract to sell did not take into effect.

Dionisio Esguerra vs. The People of the Philippines Velarde, Jessa Ela Facts: On or about and during the period from January 12, 1952 to March 26, 1952, in the barrio of Siain, municipality of Atimonan, province of Quezon, Philippines, accused Dionision Esguerra, upon representations made with Yu Yek Huy & Co., thru the Manager of said Company, Yu Yek Bio, that the accused had copras ready for delivery to it. Accused then took and received from said Yu Yek Bio the sum of four thousand four hundred pesos (P 4,400.00) under the express obligation on part of the said accused to deliver to the said company the equivalent worth of copras at its bodega at Siain, Atimonan, Quezon as follows: P2,400.00 worth of copras on or before January 31, 1952, and P2,000.00 worth of copras on or before fifteen days from March 11, 1952, or the same sum of money on the respective dates aforestated. However, when the said accused was in possession of the said sum of money, he did not perform his obligation towards said company. This led the company to demand from the accused to deliver the copras. Still, accused did not deliver the same. Issue: Whether or not there is an object for the contract entered into between Dionisio Esguerra and Yu Yek Huy and Co. Ruling: Yes. The language of this receipt, together with the finding of the Court of Appeals that "factually, the appellant used to supply copra not only to complainant, but also to other copra exporters in Siain", clearly indicate, in the Courts opinion, that the transaction was that of sale of copra for future delivery. Obviously, an advance payment is subject to the disposal of the vendor. If the transaction fails, the liability arising therefrom is of a civil and not of a criminal nature.

The Provincial Sheriff of Rizal vs. Court of Appeals and Sandra K. Shaouy Antipuesto, Chino Facts: Sandra K. Shaouy, herein private respondent, was a tenant of Charles Hollmann at the latter's house at 217 Ortega Street, San Juan, Rizal. On September 24, 1956, Charles Hollmann filed a civil action against private respondent for unlawful detainer. The case was decided based on a compromise agreement which the Justice of the Peace approved. The Compromise Agreement provided that Sandra Shaouy acknowleges her obligation of paying rentals to Charles Hollman and promises to pay such obligation. However, she was not able to fulfill said obligation. Thus, Charles Hollmann asked for and secured a writ of execution from the Justice of the Peace, dated July 10, 1957, and pursuant thereto, petitioner levied upon various personal properties of respondent Sandra Shaouy, namely radio phono, matrimonial bed, electric range, rattan set, lamp shade, television, refrigerator, air conditioning unit, and tableware cabinet and had them advertised for sale for August 23, 1957. During the sale, Charles Hollman was the only bidder and, therefore, he acquired all of the properties which were levied from Sandra Shaouy. Sandra questioned the sale on the ground that Charles paid very low prices for the levied properties. Issue: Whether or not the sale of the levied properties was valid. Ruling: No, the sale was not valid. The gross inadequacy of the price paid by petitioner Hollmann as judgment-creditor for the personal properties of private respondent is so shocking to the conscience as to render the sale null and void. Thus, the Court of Appeals stated:

... (I)t further being established by petitioner that 1st, her radio phone worth P1,000.00, Majestic, acquired in 1953, was sold for P100.00; secondly, her matrimonial bed worth P500.00 was sold for P50,00; thirdly, her electric range with four burners Norge, which she acquired in the States for P1,000.00 was sold for P100.00; fourthly, her TV set, 21 inches which she bought in 1954 for P1,500.00 was sold for P100.00; fifthly her refrigerator 7 or 8 cubic feet which she acquired for P1,000.00 was sold for P85.00; sixthly her airconditioning unit which she acquired from the States for P1,500.00 each was sold for P120.00 each; and her imported Bangkok tableware cabinet for which she paid P800.00 was sold for P61.00 xxxxxxx.

Catalino Leabres vs. Court of Appeals and Manotok Realty, Inc. G.R. No. L-41847, December 12, 1986 Velarde, Jessa Ela

Facts: Clara Tambunting de Legarda died testate on April 22, 1950. Among the properties left by the deceased is the "Legarda Tambunting Subdivision" located on Rizal Avenue Extension, City of Manila. Shortly after the death of said deceased, plaintiff Catalino Leabres bought, on a partial payment of Pl,000.00 a portion (No. VIII, Lot No. 1) of the Subdivision from surviving husband Vicente J. Legarda who acted as special administrator, the deed or receipt of said sale appearing to be dated May 2, 1950. Upon petition of Vicente L. Legarda, the Probate Court of Manila through a Special Proceedings authorized the sale of the property. In the meantime, Vicente L. Legarda was relieved as a regular Administrator and the Philippine Trust Co., which took over as such administrator, advertised the sale of the subdivision in the Manila Times and Daily Mirror. In the aforesaid Special Proceedings, no adverse claim or interest over the subdivision or any portion thereof was ever presented by any person, and in the sale that followed, the Manotok Realty, Inc. emerged the successful bidder. By order of the Probate Court, the Philippine Trust Co. executed the Deed of Absolute Sale of the subdivision in favor of the Manotok Realty, Inc. which deed was judicially and recorded immediately in the proper Register of Deeds which issued the corresponding Certificates of Title to the Manotok Realty, Inc. Issue: Whether or not there was a valid contract of sale based on the above-mentioned receipt. Ruling: No. An examination of the receipt reveals that the same can neither be regarded as a contract of sale or a promise to sell. There was merely an acknowledgment of the sum of One Thousand Pesos. There was no agreement as to the total purchase price of the land nor to the monthly installment to be paid by the petitioner. The requisites of a valid Contract of Sale namely consent or meeting of the minds of the parties; determinate subject matter; price certain in money or its equivalent-are lacking in said receipt and therefore the "sale" is not valid nor enforceable. Furthermore, it is a fact that Dona Clara Tambunting died on April 22, 1950. Her estate was thereafter under custodia legis of the Probate Court which appointed Don Vicente Legarda as Special Administrator on August 28, 1950. Don Vicente Legarda entered into said sale in his own personal-capacity and without court approval, consequently, said sale cannot bind the estate of Clara Tambunting. Petitioner should have submitted the receipt of alleged sale to the Probate Court for its approval of the transactions.

Toyota Shaw, Inc. vs. Court of Appeals Jambangan, Adam Dandro Facts: Luna L. Sosa wanted to purchase a Toyota Lite Ace. Sosa and his son, Gilbert, went to the Toyota office at Shaw Boulevard, Pasig, Metro Manila. There they met Popong Bernardo, a sales representative of Toyota. Sosa emphasized to Bernardo that he needed the Lite Ace not later than 17 June 1989 because he would use it on 18 June 1989 to go to Marinduque. He added that if he does not arrive in his hometown with the new car, he would become a "laughing stock." Bernardo assured Sosa that a unit would be ready for pick up at 10:00 a.m. on 17 June 1989. Bernardo then signed a document titled "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc." It was also agreed upon by the parties that the balance of the purchase price would be paid by credit financing through B.A. Finance, and for this Gilbert, on behalf of his father, signed the documents of Toyota and B.A. Finance pertaining to the application for financing. The next day, Sosa and Gilbert went to Toyota to deliver the downpayment of P100,000.00. They met Bernardo who then accomplished a printed Vehicle Sales Proposal (VSP) No. 928, 2 on which Gilbert signed under the subheading CONFORME. However, the vehicle was not delivered at the promised date because of the disapproval by B.A. Finance of the credit financing application of Sosa. Toyota said that a particular unit had already been reserved and earmarked for Sosa but could not be released due to the uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to purchase the unit by paying the full purchase price in cash but Sosa refused. After it became clear that the Lite Ace would not be delivered to him, Sosa asked that his downpayment be refunded. Toyota did so on the very same day by issuing a Far East Bank check for the full amount of P100,000.00. Thereafter, Sosa filed a civil case against Toyota Shaw for damages alleging that her reputation was besmirched due to the failure of Toyota Shaw to deliver the vehicle pursuant to the above-mentioned document which was a perfected contract of sale.

Issue: Whether or not the "Agreements Between Mr. Sosa & Popong Bernardo of Toyota Shaw, Inc." was a perfected contract of sale.

Ruling: No, the said agreement was not a perfected contract of sale. No obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefor a price certain appears therein. The provision on the downpayment of P100,000.00 made

no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis, as the VSP executed the following day confirmed. But nothing was mentioned about the full purchase price and the manner the installments were to be paid. The Court had already ruled that a definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell personal property. At the most, said agreement may only be considered as part of the initial phase of the generation or negotiation stage of a contract of sale.

Sy Kiong vs. Marcelino Sarmiento Pasquin, Irish Mae Facts: This is an action for declaratory relief filed in the Court of First Instance of Manila for the purpose of determining if petitioner is liable to pay the municipal license tax upon his sales of flour to bakeries under Ordinance No. 2723 of the city of Manila, as amended. Petitioner is the owner of a duly licensed grocery store located in the city of Manila and an importer of flour who sells it either to bakeries or to retail dealers for the purposes of resale. Sometime in September 1948, the Treasurer of the City of Manila assessed against him the sum of P566.50 which, it is claimed, represents the alleged deficiency municipal license tax due from him on his gross sales made to retail dealers for the purposes of resale. Petitioner, instead of honoring the demand, filed the present action for declaratory relief. In his answer, respondent admitted all the factual allegations of the complaint, but contended that the sales in question are sales at retail and in this sense are subject to the provisions of Ordinance No. 2723, as amended.

Issue: Whether or not the sale made by petitioner to bakeries to be manufactures into bread are retail and are, therefore, taxable.

Ruling: Yes. In much the same way that the sale of fish to a hotel by a vendor in a public market during a certain period of time and for a certain value, even if the fish is later on sold, has been held to be a sale at retail, and therefore, is subject to the retail tax law, so also the sale of flour to bakeries to be manufactured into bread and to be resold to the public, in the absence of any provision of law on the matter, should be treated as sale at retail and should subject the vendor to the retail tax law. To explain the above ruling, the earlier case of case of Buenaventura vs. Collector of Internal Revenue (50 Phil. 875) is instructive. In that case the Court ruled that the sale of fish to a hotel by a vendor in a public market during certain period of time and for a certain value is a sale at retail and, therefore, is subject to the retail sales tax law. And then the Court added: "even the isolated case of those made to the Hotel de Francia cannot be considered as transactions for resale of fish, because it has not been proved, nor is it probable, that said hotel, as such, cannot be said or considered to be a reseller of fish". The implication of this ruling is that the sale of fish to a hotel is retail even if the same is to be sold later in the form of food.

The Court believes this ruling to be in point and one of persuasive force in the present case in the absence of any express provisions of law on the matter. The parallelism between that case and the one we are considering is apparent. In one case, the fish is converted into food through certain physical process, and, therefore, it suffers an alteration in form before it is sold. In such case the fish is resold in different form. A similar situation obtains in the case of a bakery. The flour is converted into a bread through a physical or chemical process and later is sold to the public in the form of bread.

Eusebio Manuel vs. Eulogio Rodriguez, Sr., et al. Barrera, Alexis Ben Facts: In 1924, Januaria Rodriguez, the owner of a big tract of land, ceded and transferred said land to the Payatas Subdivision Inc., to be administered, subdivided and sold by said firm. At that time, Eulogio Rodriguez was its Secretary-Treasurer. Sometime in April 1926, Eusebio Manuel offered to buy Lot 51 (lot in question) which the company agreed to sell for P2,240 in cash or by installments with 10% interest. Counter-offers were made by each party which led to Manuel paying only P1,300 as downpayment and the balance to be paid within 9 to 10 months without interest. The company agreed to this arrangement through the intercession of Eulogio Rodriguez, Sr. who was Manuels friend. After making the initial payment, a provisional receipt was issued to Manuel which was later on substituted by the official receipt. Soon after, Manuel was placed in the possession of the said lot. However, Manuel did not make any payments within the 9 to 10 month period mentioned which led the company to send Manuel a letter urging him to pay his unpaid account of P819.23. Manuel responded by paying only P300, which was also the last payment he made. This prompted the company to send him another letter on April 24, 1929 urging immediate payment thereof. Still, Manuel did not pay his account. Because of Manuels repeated default, the company then considered his contract cancelled and extinguished and the amounts already paid, forfeited to the company for the transaction was merely a contract to sell or promise to sell. Sometime in 1939, when the company, having sold all its properties, was extrajudicially dissolved and all unsold properties belonging to Januaria Rodriguez were returned to her. In 1941, Januaria, who was the aunt of Eulogio, sold several properties to the latter including the lot in question. On the same year, Eulogio, instructed his secretary to write Manuel to urge him to pay his unsettled account. Still, there was no payment. In 1944, Eulogio sold the said lot to John Landahi.

Issue: Whether or not the contract in 1926 was an absolute sale.

Ruling: No, the contract was a mere contract to sell. The absence of a formal deed of conveyance strongly indicates that the parties did not intend immediate transfer of title, but only a transfer after full payment of the price. As observed by the trial court, if the contract were an absolute sale, it is unlikely that

Manuel would not have insisted that the same be reduced to a public document, considering that Lot 51 is covered by a Torrens title. On the other hand, it is unlikely for the Payatas Subdivision Inc. to have agreed to an immediate transfer of ownership without guaranty of the balance being ever paid. One other evidence of the true character of the transaction is the statement contained in the April 24, 1929 letter of the following tenor: "at ng kayo naman ay mabigyan na ng katibayan, alinsunod sa pinagkayarian", strengthening the conclusion that what transpired in 1926 was a mere contract to sell, transfer of title being conditioned on full payment of the price. Adding to the pile of circumstances, the fact that plaintiffappellant did not file this action to enforce the contract until after more than 20 years from the alleged absolute sale in 1926 induces no other conclusion than that the transaction was a mere contract to sell, for it if were an absolute sale, it was unlikely for plaintiff-appellant to wait as long as he did before commencing the present action, considering that as the land was covered by a Torrens title, it could have been very easy for the Payatas Subdivision to dispose or encumber the same to another party.

Romeo Martinez, et. al., vs. Court of Appeals, et. al. Sinsona, Norberto

Facts: The petitioners-appellees Romeo Martinez and Leonor Suarez are the registered owners of two parcels of land located in Lubao, Pampanga. Both parcels of land are fishponds. The disputed property is the second parcel (Lot No. 2). The disputed property was originally owned by one Paulino Montemayor. After the death of Paulino Montemayor the said property passed to his successors-in-interest, Maria and Donata Montemayor, who in turn, sold it, as well as the first parcel, to a certain Potenciano Garcia. Potenciano then restored the dikes constructed on the contested property. In 1925, Potenciano Garcia applied for the registration of both parcels of land in his name, and the Court of First Instance of Pampanga granted the registration. These parcels of land were subsequently bought by Emilio Cruz de Dios. Thereafter, the ownership of these properties changed hands until eventually they were acquired by the herein appellee spouses who hold them by virtue of transfer certificate of title No. 15856. However, the spouses ownership over the disputed property was questioned on various occasions because said land was believed to be a public river. One such occasion was when the municipal officials of Lubao, led by Acting Mayor Mariano Zagad disturbed their possession of the property and prevented them from constructing dikes therein. Another was when Florencio Moreno, then Secretary of Public Works and Communications, ordered another investigation of the said parcel of land, directing the appellees to remove the dikes they had constructed, on the strength of the authority vested in him by Republic Act No. 2056 ("An Act To Prohibit, Remove and/or Demolish the Construction of Dams. Dikes, Or Any Other Walls In Public Navigable Waters, Or Waterways and In Communal Fishing Grounds, To Regulate Works in Such Waters or Waterways And In Communal Fishing Grounds, And To Provide Penalties For Its Violation, And For Other Purposes).

Issue: Whether the disputed property is a public river and, therefore, is not capable of private appropriation.

Ruling: Yes. The evidence submitted before the trial court which was passed upon by the respondent Court of Appeals shows that Lot No. 2 of Transfer Certificate of Title No. 15856 is a river of the public domain. The technical description of both Lots Nos. 1 and 2 appearing in Original Certificate of Title No. 14318 of the Register of Deeds of Pampanga, from which the present Transfer Certificate of Title No. 15856 was derived, confirms the fact that Lot No. 2 embraced in said title is bounded practically on all sides by rivers. As held by the Court of First Instance of Pampanga in Civil Case No. 1247 for injunction filed by the petitioners' predecessors-in-interest against the Municipal Mayor of Lubao and decided in 1916 , Lot No. 2 is a branch of the main river that has been covered with water since time immemorial and, therefore, part of the public domain. This finding having been affirmed by the Supreme Court, there is no longer any doubt that Lot No. 2 of Transfer Certificate of Title No. 15856 of petitioners is a river which is not capable of private appropriation or acquisition by prescription.

Commissioner of Internal Revenue vs. Engineering Equipment and Supply Co. Velarde, Jessa Ela Engineering Equipment and Supply Company is an operator of an integrated engineering shop which designs and installs central type air conditioning systems. On July 27, 1956, one Juan de la Cruz, wrote the then Collector, now Commissioner, of Internal Revenue denouncing Engineering for tax evasion by misdeclaring its imported articles and failing to pay the correct percentage taxes due thereon in connivance with its foreign suppliers. Engineering was likewise denounced to the Central Bank (CB) for alleged fraud in obtaining its dollar allocations. Acting on these denunciations, a raid and search was conducted by a joint team of CB, NBI and BIR agents where records of the firm were seized and confiscated. On September 30, 1957, revenue examiners Quesada and Catudan reported and recommended to the then Collector, now Commissioner, of Internal Revenue that Engineering be assessed for P480,912.01 as deficiency advance sales tax on the theory that it misdeclared its importation of air conditioning units and parts and accessories thereof which are subject to tax under Section 185(m) 1 of the Tax Code, instead of Section 186 of the same Code. This assessment was revised on January 23, 1959, in line with the observation of the Chief, BIR Law Division, and was raised to P916,362.56 representing deficiency advance sales tax and manufacturers sales tax, inclusive of the 25% and 50% surcharges. On March 3, 1959. the Commissioner assessed against, and demanded upon, Engineering payment of the increased amount and suggested that P10,000 be paid as compromise in extrajudicial settlement of Engineering's penal liability for violation of the Tax Code. However, Engineering contested the tax assessment.

Issue: Whether or not the contracts entered into by Engineering Equipment and Supply Co. with its customers is one of a contract for furnishing services, labor and materials.

Ruling:

Yes. The Court held that the supply of air conditioning units to Engineer's various customers, whether the said machineries were in hand or not, was especially made for each customer and installed in his building upon his special order. The air conditioning units installed in a central type of air conditioning system would not have existed but for the order of the party desiring to acquire it and if it existed without the special order of Engineering's customer, the said air conditioning units were not intended for sale to the general public. The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. If the article ordered by the purchaser is exactly such as the plaintiff makes and keeps on hand for sale to anyone, and no change or modification of it is made at defendant's request, it is a contract of sale, even though it may be entirely made after, and in consequence of, the defendants order for it.

INDUSTRIAL FINANCE CORP, pet. vs. HON. PEDRO A. RAMIREZ, et.al., resp. Solana, Bayani JM Facts: On December 4, 1970 Arnaldo Dizon sold to Consuelo Alcoba his 1966 model Chevrolet car for P13, 157.89, payable in eighteen monthly installments, which were secured by a chattel mortgage on the car. Dizon assigned P10, 000.00 to Industrial Finance Corporation all his rights and interest in the chattel mortgage. Consuelo Alcoba defaulted in the payment of the first four installments. Because of that default and by virtue of the acceleration clause in the promissory note forming part of the mortgage, the whole obligation became due and demandable. On November 20, 1971, the corporation sued her in the Court of First Instance of Manila. The complaint, a printed form used by the corporation in collection cases, is denominated "replevin with damages". The main objective of its complaint was recovery of the mortgaged car by means of a writ of replevin. The mortgagee-assignee wanted to foreclose extrajudicially the chattel mortgage but the sheriff had to seize the car by means of the provisional remedy of an order for the delivery of personal property. The lower court issued the writ of replevin. But the sheriff was not able to seize the mortgaged car. A second alias writ of execution was issued. The sheriff was able to levy upon the mortgaged car which was then in the possession of the Aco Motor Service of Dagupan City. However, in order to take possession of the car, the corporation had to pay P4, 250 to the Aco Motor Service to satisfy its lien. The corporation contended that, because of that payment, it sustained a loss of P250 in the execution sale. It asked for a third alias writ of execution in order to satisfy the balance of Consuelo Alcoba's obligation which, together with the 12% interest, it computed at P11, 300.92 as of September 26, 1975. Issue: Whether or not by means of that complaint, Industrial Finance Corporation sought to foreclose the chattel mortgage as contemplated in article 1484 of the Civil Code. Ruling: Consuelo Alcoba acted perversely in not surrendering the mortgaged car to the corporation and in preventing extrajudicial foreclosure. Had she complied with the writ of replevin, then the corporation could have foreclosed the mortgage and, she would not be liable for any deficiency.

But she violated the mortgage by removing the car from her residence. She did not comply with the stipulation that, upon her default, the car should be delivered, on demand, to the mortgagee in Manila. The corporation's action was for specific performance or fulfillment of the obligation and not for judicial foreclosure. Consuelo Alcoba's payment of P2, 000 on account of the money judgment against her signified that she acquiesced in the action for specific performance. According to article 1484, it is only when there has been a foreclosure that the mortgagor is not liable for any deficiency. In this case, there was no foreclosure. The mortgagee chose the remedy of specific performance. It levied upon the car by virtue of an execution and not as an incident of a foreclosure proceeding. It is entitled to an alias writ of execution for the portion of the judgment that has not been satisfied. The rule is that in installment sales, if the action instituted is for specific performance and the mortgaged property is subsequently attached and sold, the sale thereof does not amount to a foreclosure of the mortgage. Hence, the seller-creditor is entitled to a deficiency judgment.

FILEMON H. MENDOZA, ET AL., p-appellants, vs. AQUILINA COMPLE, d-appellee. Antipuesto, Chino Facts: The plaintiffs have appealed from the order of Judge Honorio Romero of the Batangas court of first instance, which dismissed their action to require defendant to comply with their alleged contract of purchase and sale of a parcel of land. His honor held that the complaint merely described an accepted promise to sell by defendant, which promise could be withdrawn (and was withdrawn on time) because it was not supported by "a consideration distinct" from the price of the sale. The material allegations of the complaint are the following: 5. That, the plaintiffs were at first reluctant to purchase the said parcel of land ...; 6. That, after a series of negotiations ... upon the insistence of the defendant that the plaintiffs purchase the said parcel of land, the defendant finally agreed to sell to the plaintiffs the parcel of land in question plus the additional area of twenty-four square meters above stated, for the price of P4,500.00, and upon their mutual agreement, the plaintiffs were given by the defendant a period of three weeks from April 15, 1961 and until May 6, 1961, within which to raise the amount of P4,500.00; 7. That, it was likewise agreed upon between the plaintiffs and the defendants that the final deed of conveyance will be executed by the latter in favor of the former as soon as the plaintiffs shall be ready with the cash within the period given them; 8. That, on May 1, 1961, before the expiration of the period of three weeks given to the plaintiffs by the defendant on aforesaid, the said defendant came over to the house of the plaintiffs, and then and there advised them that she is calling off the deal and that she is backing out from their agreement. Issue: Whether or not the accepted promise to sell by defendant could be withdrawn because it was not supported by "a consideration distinct" from the price of the sale

Ruling: It will be observed that there is no allegation that plaintiffs had agreed to buy the land. So, according to the facts described in the complaint, if plaintiffs did not produce or have the money on or before May 6, 1961, no liability attached to them. Neither could defendant compel them to buy. The negotiations as thus related in the complaint merely amounted to an undertaking by defendant that if plaintiffs had the amount of P4, 500.00 on or before May 6, 1961, she would sell the lot to them for that sum upon the execution of the contract; and that plaintiffs accepted or agreed to such promise. The New Civil Code provides that such promise is binding upon the promisor if the promise is supported by a consideration distinct from the price (Art. 1479). Now, as there was no such "distinct" consideration, the defendant was not bound to stand by her promise even if accepted, before withdrawal. The lower court applied and followed our decisions in South-western Sugar & Molasses Co. v. Atlantic, Gulf & Pacific Co., 51 Off. Gaz. 3447 and Navarro v. Sugar Producers Association, 60 Off. Gaz. 511. We are satisfied that on the facts and the law, both said cases enunciated principles conclusive on this litigation. Consequently, the appealed order is affirmed, with costs.

CO CHO CHIT pet., vs. HANSON, ORTH and STEVENSON, INC., ET AL., resp. Barrera, Alexis Ben Facts: On March 10, 1949, Co Cho Chit entered a contract with Hanson, Orth and Stevenson, Inc., in virtue of which the latter bought from the former one hemp press for the sum of P8,000.00, which the buyer paid the purchaser under the terms and conditions stipulated in the contract of sale, one of which was that the vendor would furnish free of charge the services of a competent mechanic to supervise the installation of the above hemp press and turn same over to the purchaser in satisfactory running order, as well as the mechanic to supervise the installation of the power drive engine to be furnished by the purchaser for said hemp press. In consonance with the contract and letter aforementioned, said hemp press was shipped to, and installed at, plaintiff's Fiber Plant in Davao City under the supervision and direction of the vendor's mechanics, though in spite of all efforts and cooperation given by the purchaser, the same has never been up to the present in a satisfactory running order, nor could it give satisfactory service. By reason of such vendor's alleged failure to comply with his aforementioned obligations, the purchaser demanded from him the refund of the sum of P8, 000.00 paid as purchase price of the hemp press, and as Co Cho Chit refused to yield to this demand, Hanson, Orth and Stevenson, Inc., instituted on October 13, 1949, the corresponding complaint that gave rise to this action in the Court of First Instance of Manila. After hearing the court rendered judgment, the dispositive part of which is as follows: "IN VIEW FOREGOING, the Court hereby renders judgments in favor of the plaintiff and against the defendant... The defendant appealed to the C.A. which modified the same as stated above. Issue: Whether or not the hemp press is in a satisfactory running order; that it gives satisfactory service; that it can press and turn out hemp bales in government regulation size; and that it has been turned over to the plaintiff by the defendant. Ruling: From the above findings, the following appears clear; that respondent, needed this machine in the operation of its business of exporting hemp from the country; that with the exception of a very small

percentage, almost all the hemp produced in the Philippines is for exportation; that since its installation, the hemp press in question has not been able to bale hemp of regulation size for exportation; and that because of this failure or defect, respondent has never accepted said hemp press. The letter-contract Exhibit A shows clearly that petitioner obligated himself to perform only two obligations, to wit: first, to sell and deliver to respondent the described hemp press, and, second, to furnish free of charge the services of a competent mechanic to supervise the installation of the hemp press and turn the same over to respondent in satisfactory running condition. Moreover, the hemp press installed was strictly in accordance with the description in the contract. There is no claim to the contrary. The fact that respondent could not use it to suit its own private and specific purpose cannot render the contract rescindable. The vendor has done his part and it is but fair that the vendee should do his. The contract in such a case is valid and binding and not rescindable. Wherefore, Decision appealed from is reversed. Complaint is dismissed, with costs against respondent.

LOPE ATIENZA, d.y.apelante, vs. MAXIMINO CASTILLO, et.al., d.y.apelados. Jambangan, Adam Dandro Facts: The claimant, Lope Atienza, began demand against Maximino Castillo, Eulogia Giga and Juana Castillo, before the Court of the First Instance of Tayabas, in order to receive (charge) of these the quantity of P1, 836, by way of damages, for the alleged nonperformance on the part of Maximino Castillo and Eulogia Giga of the agreement had between both parts of that the daughter of these, Juana Castillo, would marry the claimant. On having called him to sight this matter in the lower Court, demonstrating by means of tests attest the existence of the supposed (alleged) agreement between the parents and those of Juana Castillo, one of the respondents, with regard to the marriage between this one and the claimant, and the services given by the claimant to the defendants in consideration to the above mentioned agreement of marriage. The defendants then were opposed to the presentation of the above mentioned tests, alleging that, according to the article 335 of the Code of Civil Procedure, any agreement had in consideration to the marriage cannot be proved by means of tests attest them. The lower Court supported this objection, and, as the claimant could not present any documentary witness, the Court, on motion of the defendants, dismissed the matter. Hence this appeal. Issue: Whether or not the case falls within the prohibition of the Law on Frauds. Ruling: We have reviewed the record in this matter and found that the same holds for the defendants. The action presented by the complainant is not to bind the appealed, Juana Castillo to fulfill any agreed or promise to marry with the complainant. On the contrary, this suit was filed in order to claim for the payment of damages incurred by the plaintiff, who claims to have served the defendants, in consideration for the promise of marriage provided by these parents. The case falls within the prohibition of the Law of Frauds. As for that the appellees should have alleged the dispositions of the Law of Frauds applicable to the present case, and be allowed one doing it, to claim the benefits of the same one, it is proved that only during the sight of this matter in the lower Court the defendants had news of that the matrimonial agreement, on which the claimant is founded to claim damages, was not in writing, and, therefore, badly the defendants could anticipate the tests that the claimant would present in support of its allegations, especially not all in the demand indicates if the above mentioned matrimonial agreement was or was not

in writing. This presumption is that it was, since according to the Law Frauds, it must be in writing, and, therefore, it is a general rule that has to presume the ordinary course of any step or agreement. Finally, even if we should admit the allegations of the appellant, we think that the lower Court was right on having dismissed the present matter, since according to the claimant the alleged matrimonial agreement had between its parents and those of the demanded, Juana Castillo, it took place in May, 1934, and in one agreed that the marriage between the above mentioned respondent and the alone appellant would take place in 1938, when that one was fulfilling its eighteen years. Therefore, in accordance with the Law of Frauds, which arranges that any contract that, according to its terms, does not have to fulfill in one year from the date of its granting, to be proved in judgment by means of documentary witnesses, it is clear that the agreement in the present matter, given that that, as the claimant alleges, four years had to be fulfilled after carried out between both parts, it should be had proved by documentaries and do not attest them. It is, therefore, confirm, as this is to confirm, the appealed judgment in all its parts, with costs against the appellant. Commanded. (As translated via http://www.spanishdict.com/translation)

FORTUNATA SOLIS, p-appellee, vs. MAXIMA BARROSO, ET AL., d-appellants. Lasala, Renan Norbert Facts: The spouses Juan Lambino and Maria A. Barroso begot three children named Alejo, Eugenia and Marciana Lambino. On June 2, 1919 said spouses made a donation of propter nuptias of the lands described in the complaint in favor of their son Alejo Lambino and Fortunata Solis in a private document in consideration of the marriage which the latter were about to enter into. One of the conditions of this donation is that in case of the death of one of the donees, one-half of these lands thus donated would revert to the donors while the surviving donee would retain the other half. On the 8th of the said month of June 1919, Alejo Lambino and Fortunata Solis were married and immediately thereafter the donors delivered the possession of the donated lands to them. On August 3, 1919 donee Alejo Lambino died. In the same year donor Juan Lambino also died. After the latter's death, his wife, Maxima Barroso, recovered possession of the donated lands. The surviving donee Fortunata Solis filed the action, which is the subject matter of this appeal, against the surviving donor Maxima Barroso and Eugenia and Marcelina Lambino, heirs of the deceased donor Juan Lambino, with their respective husbands, demanding of the defendants the execution of the proper deed of donation according to law, transferring one-half of the donated property, and moreover, to proceed to the partition of the donated property and its fruits. The court rendered judgment based upon article 1279 of the Civil Code granting plaintiff's prayer and ordering the defendants to execute a deed of donation in favor of the plaintiff, adequate in form and substance to transfer the legal title of the donated lands assigned to her in the original donation. Issue: Whether or not article 1279 of the Civil Code is applicable to the present case. Ruling: We are concerned with a donation propter nuptias, which, according to article 1328 of the Civil Code, must be governed by the rules established in Title II, Book III of this Code, on donations (articles 618 to 656), Article 633 provides that in order that a donation of real property may be valid, it must be made in a public instrument. This is the article applicable to donation propter nuptias in so far as its formal

validity is concerned. The only exceptions to this rule are onerous and remuneratory donations, in so far as they do not exceed the value of the charge imposed, which are then governed by the rules on contracts (art. 622), and those which are to take effect upon the donor's death, which are governed by the rules established for testamentary successions (art. 620). We have, therefore, a donation propter nuptias which is not valid and did not create any right, since it was not made in a public instrument, and hence, article 1279 of the Civil Code which the lower court applied is not applicable thereto. The last named article provides that, should the law require the execution of an instrument or any other special form in order to make the obligations of a contract effective, the contracting parties may compel each other to comply with such formality from the moment that consent has been given, and the other requirements for the validity of the contract exist. Suffice it to state that this article refers to contracts and is inapplicable to the donation in question which must be governed by the rules on donations. It may further be noted, at first sight, that this article presupposes the existence of a valid contract and cannot possibly refer to the form required in order to make it valid, which it already has, but rather to that required simply to make it effective, and for this reason, it would, at all events, be inapplicable to the donation in question, wherein the form is required precisely to make it valid. The judgment appealed from is reversed and the defendants are hereby absolved from the complaint, without special pronouncement of costs. So ordered.

EUTIQUIANO CUYUGAN, p-appellant, vs.ISIDORO SANTOS, d-appellee. Pasquin, Irish Mae Facts: The complaint in this case alleges that the plaintiff is the sole heir of his mother, Guillerma Cuyugan y Candia, deceased; that in the year 1895 she borrowed P3,500 from the defendant and executed the document which purports on its face to be a deed of sale of the land described therein, with a reservation in favor of the vendor of the right to repurchase for P3,500; that although the instrument purports on its face to be a deed of sale, it was intended by the parties merely to evidence the loan of the nominal purchase price and to serve as a security for the repayment of the amount of the loan; that under the terms of the instrument plaintiff's mother was left in possession of the land as a nominal tenant of the defendant at an annual rental of P420, an amount equal to the agreed upon annual interest on the loan at the rate of 12 per cent per annum; that in the year 1897 the borrower paid P1,000 on the loan, whereupon the nominal rent on the land was reduced from P420 to P300 per annum, that being the amount of the interest on the unpaid balance of the loan at the rate of 12 per cent per annum; that plaintiff and his mother continued in the peaceable possession of the land until the defendant, in the year prior to the institution of this action, served notice on the plaintiff that an annual payment of P420 would be required of him thereafter, that is to say, the original amount of the annual payments as agreed upon prior to the payment of P1,000 on the debt in the year 1897; that upon plaintiff's refusal to meet this demand, defendant set up a claim of ownership in himself and threatened to eject the plaintiff from the land; that thereupon plaintiff offered to pay, and still stands ready to pay the balance due on the original indebtedness and the unpaid interest thereon for one year, but that defendant declined and continues to decline to accept the amount tendered and to cancel the formal deed of sale to the land. Issue: Whether or not the defendant can be required to accept the amount thus tendered, and to cancel the formal deed of conveyance. Ruling: The demurrer should have been overruled on two separate and distinct grounds.

3. Since the demurrer to the complaint admits all the material facts well pleaded therein, it follows that the defendant admits that the true nature and intent of the transaction mentioned in the complaint was a mere loan of money secured by a formal conveyance of the land of the vendor; that the written instrument, purporting to be a deed of sale of the land, with a right of repurchase reserved by the vendor, did not set forth the real nature of the agreement between the parties thereto; and that the true intention and understanding of the parties at the time when the deed was executed and delivered was that it should be held by the defendant, not as a deed of sale of the land, but rather as an instrument in the nature of a mortgage, evidencing a loan secured by the lands of the borrower. 4. The second ground upon which the demurrer should have been overruled is that it admits the truth of the allegation of the complaint that in the year 1897, two years after the date of the execution of the instrument purporting to be a deed of sale, the nominal vendor paid the nominal purchaser P1,000, whereupon the nominal rent of the land was reduced from P420 to P300 per annum, the real purpose and object of this arrangement being to reduce the amount of the annual interest on the original loan made to the nominal vendor of the land, proportionately to the reduction of the amount of the loan itself by the payment of P1,000. If it be true that two years after the transaction evidenced by the instrument attached to the complaint, the defendant accepted from the plaintiff's mother the sum of P1, 000, and thereafter reduced the amount of the annual payments to be made by her, it cannot be doubted that the plaintiff has a good cause of action against the defendant. The order entered in the court below, sustaining the demurrer to the complaint must be reversed.

OESMER, et.al. petitioners, vs. PARAISO DEVELOPMENT CORP, respondent. Sinsona, Norberto Jr. Facts: Petitioners Rizalino, Ernesto, Leonora, Bibiano, Jr., Librado, and Enriqueta, all surnamed Oesmer, together with Adolfo Oesmer and Jesus Oesmer, are brothers and sisters, and co-owners of undivided shares of two parcels of land situated in Barangay Ulong Tubig, Carmona, Cavite, identified as Lot 720 and Lot 834. Both lots are unregistered and originally owned by their parents, Bibiano Oesmer and Encarnacion Durumpili, who declared the lots for taxation purposes. When the spouses Oesmer died, petitioners, acquired the lots as heirs of the former by right of succession. Sometime in March 1989, Rogelio Paular, a resident and former Municipal Secretary of Carmona, Cavite, brought along petitioner Ernesto to meet with a certain Sotero Lee, President of respondent Paraiso Development Corporation, at Otani Hotel in Manila. The said meeting was for the purpose of brokering the sale of petitioners properties to respondent corporation. Pursuant to the said meeting, a Contract to Sell was drafted by the Executive Assistant of Sotero Lee, Inocencia Almo. On 1 April 1989, petitioners Ernesto and Enriqueta signed the aforesaid Contract to Sell. A check in the amount of P100, 000.00, payable to Ernesto, was given as option money. In a letter dated 1 November 1989, petitioners informed the former of their intention to rescind the Contract to Sell and to return the amount of P100, 000.00 given by respondent as option money. Issue: 1. Whether or not the Contract to Sell is binding upon petitioner Ernestos co-owners; 2. Whether or not the Contract to Sell is void altogether considering that respondent itself did not sign it as to indicate its consent to be bound by its terms; and,

3. Whether or not Exhibit D is really a unilateral promise to sell without consideration distinct from the price, and hence, void. Ruling: In the case at bar, the Contract to Sell was perfected when the petitioners consented to the sale to the respondent of their shares in the subject parcels of land by affixing their signatures on the said contract. Such signatures show their acceptance of what has been stipulated in the Contract to Sell and such acceptance was made known to respondent corporation when the duplicate copy of the Contract to Sell was returned to the latter bearing petitioners signatures. The Contract to Sell is not void merely because it does not bear the signature of the respondent corporation. Respondent Corporations consent to be bound by the terms of the contract is shown in the uncontroverted facts which established that there was partial performance by respondent of its obligation in the said Contract to Sell when it tendered the amount of P100, 000.00 to form part of the purchase price, which was accepted and acknowledged expressly by petitioners. The Contract to Sell is not a unilateral promise to sell merely because it used the word option money when it referred to the amount of P100, 000.00, which also form part of the purchase price. The sum of P100, 000.00 was part of the purchase price. Although the same was denominated as "option money," it is actually in the nature of earnest money or down payment when considered with the other terms of the contract. Doubtless, the agreement is not a mere unilateral promise to sell, but, indeed, it is a Contract to Sell as both the trial court and the appellate court declared in their Decisions.

ADELFA PROPERTIES, INC., petitioner, vs. C.A., et.al. respondents. Solana, Bayani JM Facts: Herein private respondents and their brothers, Jose and Dominador Jimenez, were the registered co-owners of a parcel of land situated in Barrio Culasi, Las Pias, Metro Manila. On July 28, 1988, Jose and Dominador Jimenez sold their share, specifically the eastern portion thereof, to petitioner. Thereafter, petitioner expressed interest in buying the western portion of the property. On November 25, 1989, an "Exclusive Option to Purchase" was executed between petitioner and private respondents. Before petitioner could make payment, it received summons on November 29, 1989, together with a copy of a complaint filed by the nephews and nieces of private respondents against the latter, Jose and Dominador Jimenez, and herein petitioner in the Regional Trial Court of Makati, for annulment of the deed of sale in favor of Household Corporation and recovery of ownership of the property. On July 27, 1990, private respondents' counsel sent a letter to petitioner enclosing therein a check for P25, 000.00 representing the refund of fifty percent of the option money paid under the exclusive option to purchase. Private respondents then requested petitioner to return the owner's duplicate copy of the certificate of title of respondent Salud Jimenez. Petitioner failed to surrender the certificate of title, hence private respondents filed Civil Case No. 7532 in the Regional Trial Court of Pasay City, Branch 113, for annulment of contract with damages, praying, among others, that the exclusive option to purchase be declared null and void; that defendant, herein petitioner, be ordered to return the owner's duplicate certificate of title; and that the annotation of the option contract on TCT No. 309773 be cancelled. Issue(s): 1. Whether or not the "Exclusive Option to Purchase" executed between petitioner and private respondents is an option contract; and,

2. Whether or not there was a valid suspension of payment of the purchase price by said petitioner, and the legal effects on the contractual relations of the parties. Ruling: An analysis of the facts obtaining in this case, irresistibly leads to the conclusion that the agreement between the parties is a contract to sell, and not an option contract or a contract of sale. 3. Firstly, the exclusive option to purchase, does not mention that petitioner is obliged to return possession or ownership of the property as a consequence of non-payment. Secondly, it has not been shown there was delivery of the property, actual or constructive, made to herein petitioner. 4. Petitioner was justified in suspending payment of the balance of the purchase price by reason of the aforesaid vindicatory action filed against it. The assurance made by private respondents that petitioner did not have to worry about the case because it was pure and simple harassment is not the kind of guaranty contemplated under the exceptive clause in Article 1590. In the case at bar, it has been shown that although petitioner was duly furnished and did receive a written notice of rescission which specified the grounds therefore, it failed to reply thereto or protest against it. Its silence thereon suggests an admission of the veracity and validity of private respondents' claim. 53 Furthermore, the initiative of instituting suit was transferred from the rescinder to the defaulter by virtue of the automatic rescission clause in the contract. 54 But then, the records bear out the fact that aside from the lackadaisical manner with which petitioner treated private respondents' latter of cancellation, it utterly failed to seriously seek redress from the court for the enforcement of its alleged rights under the contract.

AGRIFINA AQUINTEY vs. SPOUSES FELICIDAD AND RICO TIBONG Yanto, Jennifer Kristine Facts: On May 6, 1999, petitioner Agrifina Aquintey filed before the RTC of Baguio City, a complaint for sum of money and damages against the respondents, spouses Felicidad and Rico Tibong. Agrifina alleged that Felicidad had secured loans from her on several occasions, at monthly interest rates of 6% to 7%. Despite demands, the spouses Tibong failed to pay their outstanding loan, amounting to P773, 000.00 exclusive of interests. In their Answer with Counterclaim, spouses Tibong admitted that they had secured loans from Agrifina. The proceeds of the loan were then re-lent to other borrowers at higher interest rates. They, likewise, alleged that they had executed deeds of assignment in favor of Agrifina, and that their debtors had executed promissory notes in Agrifinas favor. According to the spouses Tibong, this resulted in a novation of the original obligation to Agrifina. They insisted that by virtue of these documents, Agrifina became the new collector of their debtors; and the obligation to pay the balance of their loans had been extinguished. The spouses Tibong specifically denied the material averments in paragraphs 2 and 2.1 of the complaint. While they did not state the total amount of their loans, they declared that they did not receive anything from Agrifina without any written receipt. They prayed for that the complaint be dismissed. Issue(s): The threshold issues are: (1) whether respondent Felicidad Tibong borrowed P773, 000.00 from petitioner; and (2) whether the obligation of respondents to pay the balance of their loans, including interest, was partially extinguished by the execution of the deeds of assignment in favor of petitioner,

relative to the loans of Edna Papat-iw, Helen Cabang, Antoinette Manuel, and Fely Cirilo in the total amount of P371, 000.00. Ruling: We find in this case that the CA correctly found that respondents obligation to pay the balance of their account with petitioner was extinguished, pro tanto, by the deeds of assignment of credit executed by respondent Felicidad in favor of petitioner. All the requisites for a valid dation in payment are present in this case. As gleaned from the deeds, respondent Felicidad assigned to petitioner her credits to make good the balance of her obligation. Felicidad testified that she executed the deeds to enable her to make partial payments of her account, since she could not comply with petitioners frenetic demands to pay the account in cash. Petitioner and respondent Felicidad agreed to relieve the latter of her obligation to pay the balance of her account, and for petitioner to collect the same from respondents debtors. The assignment binds the debtor upon acquiring knowledge of the assignment. Thus, the duty to pay does not depend on the consent of the debtor. The purpose of the notice is only to inform that debtor from the date of the assignment. Payment should be made to the assignee and not to the original creditor. In the present case, petitioner and respondent Felicidad agreed that the amounts due from respondents debtors were intended to make good in part the account of respondents. Case law is that, an assignment will, ordinarily, be interpreted or construed in accordance with the rules of construction governing contracts generally, the primary object being always to ascertain and carry out the intention of the parties. Considering all the foregoing, we find that respondents still have a balance on their account to petitioner in the principal amount of P33,841.00, the difference between their loan of P773,000.00 less P585,659.00, the payment of respondents other debtors amounting to P103,500.00, and the P50,000.00 payment made by respondents.

[G.R. No. 151333. 20 Sep 2005] Case Ponente : NATALIO and FELICIDAD SALONGA vs. MANUEL and NENITA CONCEPCION : CALLEJO, SR., J.

Facts : The spouses Natalio Salonga and Felicidad Salonga were the owners of eight prime parcels of land located in Dagupan City. They had a commercial building with four floors which stood on their property located in Dagupan City. To finance their business, the spouses secured loans from the Associated Bank, Philippine National Bank (PNB), Development Bank of the Philippines (DBP). To secure the payments thereof, they executed a Real Estate Mortgage in favor of the banks over their properties. The devastating earthquake of 16 Jul 1990 severely damaged the spouses commercial building, adversely affecting their business. The creditor banks foreclosed or threatened to foreclose their real estate mortgages. Beleaguered, the spouses Salonga secured three loans, from the spouses Manuel and Nenita Concepcion, who were engaged in the business of lending money, to repay their loan to the PNB, Associated Bank and DBP. The Spouses Concepcion remitted payments to the banks of the spouses Salongas account. The banks then executed Deeds; the receipt of said payments and the owners duplicate of TCTs which were released to Manuel Concepcion. The spouses Salonga failed to pay the loans, interest and commission. In the meantime, they continued residing in the same house. On 31 Aug 1993, the spouses Salonga executed, in favor of the spouses Concepcion, a Deed of Absolute Sale over their properties previously mortgaged to PNB, Associated Bank and DBP. Sometime in 1994,

the spouses and their daughter offered to redeem the property from the spouses Concepcion. However, the latter informed the spouses Salonga and their daughter that the title to the property had already been transferred to their names, and agreed to the redemption of the property for P10, 000,000.00. On 12 Jul 1994, the spouses Salonga filed a complaint against the spouses Concepcion and the Florencia Realty Corporation with the RTC of Dagupan City for annulment of the 31 Aug 1993 and 18 Oct 1993 Deeds of Absolute Sale, as well as the reconveyance of the property subject of said deeds with damages. Issue :

1. Whether or not the deeds of sale in favor of respondents Concepcions are null and void as they
are absolutely simulated and their causes were inexistent at the time of the transaction,

2. Whether or not the petitioners gave their consent to a sale, 3. Whether or not the deeds are voidable or at least the petitioners are entitled to reformation of the
deeds as they did not express the true intent of the parties as they are equitable mortgages at best. Ruling : For the presumption in Article 1602 of the New Civil Code to arise, two requirements must concur: (a) that the parties entered into a contract denominated as a contract of sale; and (b) that their intention was to secure an existing debt by way of a mortgage. The existence of any of the circumstances defined in Article 1602 of the New Civil Code, not the concurrence nor an overwhelming number of such circumstances is sufficient for a contract of sale to be presumed an equitable mortgage. Articles 1602, 1603 and 1604 of the New Civil Code were designed to prevent the circumvention of the use of usury and the prohibition against the creditor appropriating the mortgaged properties. After a thorough examination of the records, we find and so hold that the August 31 and October 18, 1993 Deeds of Absolute Sale are mere equitable mortgages and not bona fide absolute sale of the parcels of land therein described. Case Digest by: Bayani JM A. Solana D.B.P., p-appellant vs. LOURDES GASPAR BAUTISTA, et.al., d-appellees. Pasquin, Irish Mae Facts: The Development Bank of the Philippines, filed a complaint against one of its debtors, Lourdes Gaspar Bautista, for the recovery of a sum of money representing the unpaid mortgage indebtedness, which previously had been wiped out with the creditor bank acquiring the title of the mortgaged property in an extrajudicial sale. The title was nullified in a judicial proceeding, the land being adjudged as belonging to another claimant, without such debtor having been cited to appear in such court action. DBP was unsuccessful, the lower court being of the view that with the due process requirement thus flagrantly disregarded, since she was not a party in such action where her title was set aside, such a judgment could in no wise be binding on her and be the source of a claim by the appellant bank. On or before May 31, 1949, Lourdes Gaspar Bautista, who shall hereafter be referred to as Bautista, applied to the Government for the sale favor of a parcel of land located at Bo. Barbara, San Jose, Nueva Ecija. After proper investigation, Sales Patent no. V-132 covering said property was issued in her favor. On July 16, 1949, Bautista applied for a loan with the Rehabilitation Finance Corporation, predecessor in interest of Development Bank of the Philippines (DBP), offering as security the parcel of land covered by O.C.T. No. P-389. RFC approved a loan of P4,000.00 in favor of Bautista. On July 16, 1949, Bautista executed the mortgage contract over the property covered by O.C.T. No. P-389 and the promissory note for P4,000.00 in favor of RFC, after which the proceeds of the loan were released.

Bautista failed to pay the amortization on the loan so that the RFC took steps to foreclose the mortgage extra-judicially under Act 3135, as amended. On July 21, 1952, upon failure of Bautista to redeem the property within the one (1) year period as provided bylaw, plaintiff-appellant RFC consolidated its ownership thereon. On July 26, 1952, the Register of Deeds of Nueva Ecija cancelled O.C.T. No. P-389 and replaced it with T.C.T. No. NT-12108 in the name of the RFC. However, an action was filed by Rufino Ramos and Juan Ramos in the Court of First Instance of Nueva Ecija against the Government of the Republic of the Philippines and the RFC claiming ownership of the land in question. A decision thereon was rendered on June 27, 1955 whereby the certificates of title were declared null and void. Issue: What is the right, if any, of a creditor which previously satisfied its claim by foreclosing extrajudicially on a mortgage executed by the debtor, whose title was thereafter nullified in a judicial proceeding where she was not brought in as a party? Ruling: As stated at the outset, the decision must be affirmed. The fundamental due process requirement having been disregarded, appellee Bautista could not in any wise be made to suffer, whether directly or indirectly, from the effects of such decision. After appellant bank had acquired her title by such extrajudicial foreclosure sale and thus, through its own act, seen to it that her obligation had been satisfied, it could not thereafter, seek to revive the same on the allegation that the title in question was subsequently annulled, considering that she was not made a party on the occasion of such nullification. According to the Civil Code: "The vendor shall not be obliged to make good the proper warranty, unless he is summoned in the suit for eviction at the instance of the vendee." The principle on which the above requirement is based sustains the decision of the lower court. In effect, appellant bank would hold appellee Bautista liable for the warranty on her title, its annulment having the same effect as that of an eviction. In such a case, it is wisely provided by the Civil Code that appellee Bautista, as vendor, should have been summoned and given the opportunity to defend herself. In view of her being denied her day in court, it would to be respected, that she is not "obliged to make good the proper warranty."

JERRY T. MOLES, petitioner, vs. I.A.C. and MARIANO M. DIOLOSA, respondents. Lasala, Renan Norbert Facts: Sometime 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 DBP 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.. On his second visit to the Diolosa Publishing House, petitioner together with Rogelio Yusay, a letter press machine operator, decided to buy the linotype machine, Model 14. The transaction was basically verbal in nature but to facilitate the loan application with the DBP, a pro forma invoice, dated April 23, 1977 and reflecting the amount of P50,000.00 as the consideration of the sale, was signed by petitioner. Sometime between April and May, 1977, the machine was delivered to petitioner's publishing house at Tangub, Bacolod City. On 29 Aug1977, private respondent issued a certification wherein he warranted that the machine sold was in A-1 condition, together with other express warranties. It is to be noted that the aforesaid official receipt No. 0451, dated September 30, 1977 and prepared and signed by private respondent, expressly states that he received from the petitioner the DBP check for P50,000.00 issued in full payment of one (1) Unit Model 14 Linotype Machine as per Pro forma Invoice dated 23 Apr 1977.

On 29 Nov 1977, petitioner wrote private respondent 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. An expert witness for the petitioner, one Gil Legaspina, declared that he inspected the linotype machine involved in this case at the instance of petitioner. In his opinion, major repairs were needed to put the machine back in good running condition. Issue: Whether or not there is an implied warranty of its quality or fitness when an article is sold as a secondhand item; and, whether or not the hidden defects in the machine are sufficient to warrant a rescission of the contract between the parties. Ruling: It must be remembered that the certification was a condition sine qua non for the release of petitioner's loan which was to be used as payment for the purchase price of the machine. Private respondent failed to refute this material fact. Neither does he explain why he made that express warranty on the condition of the machine if he had not intended to be bound by it. In fact, the respondent court, in declaring that petitioner should have availed of the remedy of requiring repairs as provided for in said certification, thereby considered the same as part and parcel of the verbal contract between the parties. On the basis of the foregoing circumstances, the inescapable conclusion is that private respondent is indeed bound by the express warranty he executed in favor of herein petitioner. On the question as to whether the hidden defects in the machine is sufficient to warrant a rescission of the contract between the parties, we have to consider the rule on redhibitory defects contemplated in Article 1561 of the Civil Code. A redhibitory defect must be an imperfection or defect of such nature as to engender a certain degree of importance. An imperfection or defect of little consequence does not come within the category of being redhibitory. The fact that petitioner never made appropriate use of the machine from the time of purchase until an action was filed, attest to the major defects in said machine, by reason of which the rescission of the contract of sale is sought. The factual finding, therefore, of the trial court that the machine is not reasonably fit for the particular purpose for which it was intended must be upheld, there being ample evidence to sustain the same.

ALICIA DE SANTOS, petitioner, vs. I.A.C., et.al., respondents. Jambangan, Adam Dandro Facts: The parcel of land in question is Lot No. 5659 of the Opon Cadastre, situated in the barrio of Marigondon, Opon Island of Mactan, Cebu, consisting of 27,193 square meters. It was originally registered pursuant to Decree No. 526850 way back, on March 19, 1934. On May 3, 1962, Domingo Sulliano, in representation of his parents-in-law, spouses Serapio Aton and Eustaquia Arong, sold the undivided one-half (1/2) share of the said spouses to Eleuteria Pino who petitioned for the reconstitution of the lost certificate of title in the names of the original co-owners, Spouses Serapio Aton and Eustaquia Arong, one-half (1/2) share, and Spouses Silverio Casiban and Teodora Aton, one (1/2) share. Thereafter, the said owners effected an oral division, whereby E.Pino as the successor-in-interest of the spouses S.Aton and E.Arong, was awarded the northern portion of the said Lot. On 03 Nov 1962, an extrajudicial declaration of heirs was executed by the heirs of S.Aton and E.Arong, wherein each of them received equal shares of 2.264 square meters each of the northern portion of Lot No. 5659. On 16 Nov 1962, OCT No. RO-0034 was cancelled and in lieu thereof, TCT No. T-0034 was issued in the name of E.Pino one-half (1/2) share; spouses S.Casiban and T.Aton one-half (1/2) share.

On 30 Nov 1966, spouses S.Casiban and T.Aton sold their undivided one-half (1/2) share of Lot No. 5659 to Spouses Espiritu Bunagan and Felicidad de los Angeles. On November 30, 1966 the Deed of Sale executed by the Spouses S.Casiban and T.Aton in favor of the spouses E.Bunagan and F.delosAngeles was registered and OCTitle No. RO-0769 was cancelled and TCT No. 1766 was issued in the names of spouses E.Bunagan and F.delosAngeles one-half (1/2) share and spouses S.Aton and E.Arong one-half (1/2) share. On 31 Dec 1977, the Bunagans ceded, sold and conveyed absolutely and forever Lot No. 5659-A to Alicia de Santos who registered the deed. Issue: Essentially, the issue boils down to which particular portion of Lot 5659 belongs to petitioner Alicia de Santos and which portion of the same lot belongs to respondent heirs and successors-in-interest of Eleuteria Pino. Both claim to be the owners of Lot 5659-A, the northern portion thereof. Ruling: It is not disputed that petitioner's certificate of title, TCT No. 8433 was derived from the title of Espiritu Bunagan, TCT No. 1766, issued on January 4, 1968. This TCT No. 1766 was a transfer from OCT No. RO-0769, a judicially reconstituted title issued on December 28, 1967 by order of the court dated August 28, 1967 upon petition of Espiritu Bunagan. Clearly then, this later reconstitution proceeding had no legal effect and validity because there was already a prior reconstitution of the original certificate of title covering the same lot way back in 1962. The fact that there already existed a perfectly valid reconstituted title, TCT No. T-0043 in the name of Eleuteria Pino and the spouses Silverio Casiban and Teodora Aton, will make subsequent petition for reconstitution void and without any force and effect. All subsequent certificates of title are also void because of the legal truism that the spring cannot rise higher than its source. Petitioner is deemed to have knowledge of a public record, that there is a prior reconstituted title on file with the Registry of Deeds of Lapu-Lapu City. Even after the sale in favor of Espiritu Bunagan, tax declarations issued in his name invariably point to the fact that what was acquired by him is the portion towards the south. Tax Declarations No. 00431-0047800781, all issued in the name of Espiritu Bunagan confirms beyond any shadow of doubt that what he acquired was the southern portion. Being a geodetic engineer, Engineer Bunagan cannot feign ignorance as to which portion of the property was purchased by him. Besides, on the basis of the above tax declaration, he paid taxes on the property, proving beyond doubt that he knew that what he had bought was the southern portion of the property. This southern portion was the one he sold to petitioner.

ENGINEERING & MACHINERY CORP., petitioner, vs. C.A., et.al., respondents. Antipuesto, Chino Facts: Pursuant to the contract dated 10 Sep 1962 between petitioner and private respondent, the former undertook to fabricate, furnish and install the air-conditioning system in the latters building along Buendia Avenue, Makati in consideration of P210,000.00. The system was completed in 1963 and accepted by private respondent. On 02 Sep 1965, private respondent sold the building to the National Investment and Development Corporation (NIDC). However, on account of NIDCs noncompliance with the terms and conditions of the deed of sale, private respondent was able to secure judicial rescission. Private Respondent re-acquired possession and learned of the defects of the air-conditioning system. Acting on this information, private respondent commissioned Engineer David R. Sapico to render a technical evaluation of the system. In his report, Sapico enumerated the defects of the system and concluded that it was not capable of maintaining the desired room temperature. On the basis of this report, private respondent filed on 08 May 1971 an action for damages against petitioner. The complaint alleged that the air-conditioning system installed by petitioner did not comply with the agreed plans and

specifications. Petitioner moved to dismiss the complaint, alleging that the prescriptive period of six months had set in pursuant to Articles 1566 and 1567, in relation to Article 1571 of the Civil Code. Private respondent countered that the contract dated 10 Sep 1962 was not a contract of sale but a contract for a piece of work under Article 1713 of the Civil Code. Thus, in accordance with Article 1144 (1) of the same Code, the complaint was timely brought within the ten-year prescriptive period. In its reply, petitioner argued that Article 1571 of the Civil Code is applicable to a contract for a piece of work by virtue of Article 1714, which provides that such a contract shall be governed by the pertinent provisions on warranty of title and against hidden defects and the payment of price in a contract of sale. Issue: Is a contract for the fabrication and installation of a central air-conditioning system in a building, one of sale or for a piece of work? What is the prescriptive period for filing actions for breach of the terms of such contract? Ruling: Article 1713 of the Civil Code defines a contract for a piece of work. A contract for a piece of work, labor and materials may be distinguished from a contract of sale by the inquiry as to whether the thing transferred is one not in existence and which would never have existed but for the order of the person desiring it. In such case, the contract is one for a piece of work, not a sale. Clearly, the contract in question is one for a piece of work. It is not petitioners line of business to manufacture air-conditioning systems to be sold off-the-shelf. Its business and particular field of expertise is the fabrication and installation of such systems. The obligations of a contractor for a piece of work are set forth in Articles 1714 and 1715 of the Civil Code. The provisions on warranty against hidden defects are found in Articles 1561 and 1566. The remedy against violations of the warranty against hidden defects is either to withdraw from the contract or to demand a proportionate reduction of the price, with damages. Having concluded that the original complaint is one for damages arising from breach of a written contract - and not a suit to enforce warranties against hidden defects - we herewith declare that the governing law is Article 1715 (supra). However, inasmuch as this provision does not contain a specific prescriptive period, the general law on prescription, which is Article 1144 of the Civil Code, will apply. Since the governing contract was executed on September 10, 1962 and the complaint was filed on May 8, 1971, it is clear that the action has not prescribed. The mere fact that the private respondent accepted the work does not, ipso facto, relieve the petitioner from liability for deviations from and violations of the written contract, as the law gives him ten (10) years within which to file an action based on breach thereof.

LOTHAR F. ENGEL, et.al., p-appellees, vs. MARIANO VELASCO & CO., d-appellant. Barrera, Alexis Ben Facts: At the time of the transactions with which we are here concerned the plaintiffs were export brokers, or jobbers, of textile merchandise in the City of New York, while the defendant was the owner of a large store in Manila where general merchandise is sold both at wholesale and retail. In connection with this business the defendant from time to time has occasion to import textile fabrics on a large scale. In 1920 commercial relations were established between the plaintiffs and the defendant, and in the succeeding three months the defendant sent to the plaintiffs numerous orders for merchandise. Upon receiving the defendant's written order by mail the plaintiffs transmitted the instructions contained therein to the manufacturer for execution and at the same time prepared and forwarded to the defendant a formal written sales note, conforming in the main to the terms specified in the previous communications. A number of these orders were duly honored by the defendant upon the receipt of the goods and the price paid in due course. The causes of action stated in the three complaints have their origin in sixteen or

seventeen orders nearly all of which were sent to the plaintiffs between February 5 and April 2, 1920, inclusive. These orders appears to have been promptly placed with the manufacturers by the plaintiffs, but delay occurred in the matter of shipment; and when delivery was finally tendered in Manila of the goods covered by the orders included in actions 19917 and 20637, acceptance was refused. The goods covered by case No. 20321 were never shipped from New York to Manila, and after it was found that said goods would not be here accepted, plaintiffs caused the same to be sold in New York City. Issue: The plaintiffs proceed upon the idea of breach of contract on the part of the defendant in its failure to accept and to pay for the goods covered by the orders referred to. On the part of the defense a preliminary question is made with reference to the admissibility of the correspondence as was conducted by cable, and for the rest it is claimed that the plaintiffs have not complied with the terms of the orders and that the refusal of the defendant to accept and pay for the goods in question was justified. Ruling: The question thus presented has certain perplexing aspects, but two propositions seem to be clear beyond the possibility of dispute. The first is that the judgment of this court should be expressed in the Philippine currency, which is the lawful currency of these Islands and the only currency in universal use. The circumstance that gold coins of the US are by law made a legal tender in these Islands for all debts, public and private, at the rate of one dollar for two pesos does not effect the proposition that the judgments of the courts here should be expressed in our own currency. The real point which is to be decided, which is whether, in converting the plaintiffs' claim from dollars to pesos, we shall take the value prevailing at the time of defendant's breach or that prevailing supposedly at the date of this judgment. The ground upon which the court rules against the allowance of exchange may be briefly expressed as follows: As the actions before us are actions for the recovery of damages the plaintiffs are entitled to recover a sum of money which, with the interest allowed, will constitute indemnity for the damage occasioned by defendant's breach of contract. The obligation assumed by the defendant was to pay to the plaintiffs a sum of money expressed in American currency; and the indemnity to be allowed should be expressed in Philippine currency at the present rate of exchange rather than at the rate prevailing on the date of the defendant's breach. Otherwise the plaintiffs upon collecting the judgment would be able to convert the amount received into a larger sum of American money than would have been received by them if the contract had been in all respects fulfilled by the defendant.

ARRA REALTY CORP., et.al., pet., vs. GUARANTEE DEVT CORP.et.al., resp. Velarde, Jessa Ela Facts: Arra Realty Corporation (ARC), through its president, Architect Carlos D. Arguelles, decided to construct a five-story building on its property and engaged the services of Engineer Erlinda Pealoza as project and structural engineer. In the process, Pealoza and ARC, agreed on 18 Nov 1982 that Pealoza would share the purchase price of one floor of the building. Unknown to her, ARC had executed a real estate mortgage over the lot and the entire building in favor of the China Banking Corporation (CBC) as security for a loan on 12 May 1983. Pealoza wrote the CBC on 01 Aug 1984 informing the bank that the ARC had conveyed a portion of the second floor of the building to her. She then wrote the ARC informing it of CBCs rejection of her offer to assume its equivalent loan from the bank and reminded it that it had conformed to her proposal. When the ARC failed to pay its loan to CBC, the property was foreclosed extrajudicially, and sold at public auction to CBC on 13 Aug 1986. On 29 Apr 1987, the ARC and the Guarantee Devt Corp. and Insurance

Agency (GDCIA) executed a deed of conditional sale covering the building and the lot. With the money advanced by the GDCIA, the property was redeemed on 04 May 1987. On 14 May 1987, the petitioner executed a deed of absolute sale over the lot and building in favor of the GDCIA. Issue:

1. Whether or not a contract of sale over the subject property was perfected, 2. Whether or not Pealoza should pay damages under Article 19 because she acted in bad faith, 3. Whether or not respondent GDCIA was a purchaser of the property in bad faith.
Ruling: As gleaned from the 18 Nov 1982 letter-agreement of the parties; ARC, as vendor, and Pealoza, as vendee, entered into a contract of sale over a portion of the second floor of the building yet to be constructed. The parties agreed on the three elements of subject matter, price, and terms of payment. Hence, the contract of sale was perfected, perfected by mere consent, which was manifested the moment there was a meeting of the minds as to the offer and the acceptance thereof. In May 1983, respondent Pealoza took possession of a portion of the second floor sold to her. She put up her office and operated the St. Michael International Institute of Technology. In a contract of sale, the vendor cannot recover the thing sold even if the vendee failed to pay in full the initial payment for the property. Such failure will merely give the vendor the option to rescind the contract of sale judicially or by notarial demand as provided for by Article 1592 of the New Civil Code (NCC). The respondent cannot be blamed for suspending payment to ARC because when she pushed for the issuance of her title to the property, ARC failed to comply. She was aghast when she discovered that in July 1984, ARC had already mortgaged the lot and the building to the CBC; when she offered to pay the balance of the purchase price of the property to enable her to secure her title thereon, ARC ignored her offer. Under Article 1590 of the NCC, a vendee may suspend the payment of the price of the property sold. In view of the failure of ARC to transfer the title of the property to her name because of the mortgage thereof to CBC and the subsequent sale thereof to the GDCIA, Pealoza is entitled to the refund of the amount she paid to ARC, conformably to Article 1398 of the NCC. In this case, respondent Pealoza suspended the payment of the balance of the purchase price of the property because she had the right to do so. Hence, she is not liable for damages to the petitioners under Article 19 of the NCC.

DAVID INES and HORTENCIA CASTRO-INES, pet. vs. C.A., et.al., resp. Solana, Bayani JM Facts: David Ines and Hortencia Castro-Ines filed an action before the Regional Trial Court to annul a deed of sale over their conjugal residential house and lot in favor of private respondents spouses Geronimo. The trial court declared the deed of sale void as to the one-half conjugal share of David Ines in the subject property due to the forgery of his signature and the other half belonging to his wife as equitable mortgage. Private respondents were ordered to reconvey the one-half share of the wife upon the return of the sum of P150,000.00, the consideration of the contract. Petitioners appealed to the Court of Appeals on the ground that the husband's forged signature did not bind the conjugal partnership, hence the entire contract is voidable as the consent of an indispensable party, the husband, was lacking. Private respondents did not appeal. Public respondent Court of Appeals sustained petitioners' contention,

declared the deed of sale void in its entirety and ordered private respondents to reconvey the entire subject property in favor of petitioners who were again ordered to return the P150,000.00 consideration they received from the sale, but with legal interest from April 15, 1982 until fully paid. Petitioners' motion for the partial reconsideration of the decision to delete the imposition of legal interest on the amount of P150,000.00 was subsequently denied. Hence this petition. Issue: Whether or not the Court of Appeals erred in awarding "legal interest" in favor of defendants (now private respondents) who did not appeal from the trial court's decision which did not award any such "legal interest". Ruling: We find the appeal unmeritorious. The respondent court ruled for the return of the contract price of P150,000.00 with legal interest over the subject property to private respondents with the following justification which we quote with approval: . . . Since the sale is annulled the parties are to be governed by Article 1398 of the Civil Code whereunder they shall restore to each other the things which have been the subject matter of the contract, with their fruits, and the price with interest; the same precept is substantially embodied in Article 1385 in reference to rescission of contracts. Indeed even the principle against unjust enrichment (Article 22, Civil Code) would eschew a contrary conclusion. Furthermore, in resolving the petitioner's motion for reconsideration to delete the award of interest, respondent court correctly explained that the imposition of legal interest on the amount due was made not because the appellees sought affirmative relief but because the award of legal interest on the amount due is a necessary consequence of the finding that the Contract of Sale executed by appellant Hortencia Ines is void in its entirety, and in the exercise of its appellate jurisdiction it may resolve or consider errors not assigned in the appellant's brief when it is necessary for a just, fair and equitable resolution of the case. To the above quoted justification, we must moreover add that the award of legal interest is based on equitable grounds duly sanctioned by the Civil Code under Article 2210. We take exception, however, to the ruling of public respondent as to the date when the legal interest should commence to run which we hold, in view of the consistent rulings of this Court, should start from the time of the rendition of the trial court's decision on July 31, 1990 instead of April 15, 1982, the date when the deed of sale was executed. ACCORDINGLY, subject to the above modification that the legal interest should commence to run from 31 Jul 1990 until fully paid, the decision appealed from is hereby AFFIRMED in all other respects.

NEWTON JISON and SALVACION I. JOSUE petitioners, vs. C.A., et.al., respondents. Pasquin, Irish Mae Facts: Newton and Salvacion Jison, entered into a Contract to Sell with private respondent, Robert O. Phillips & Sons, Inc., whereby the latter agreed to sell to the former a lot at the Victoria Valley Subdivision in Antipolo, Rizal payable on an installment basis. Pursuant to the contract, petitioners paid private respondents a down payment on 20 Oct 1961 and from 27 Oct 1961 to 08 May 1965 a monthly installment of P533.85. Thereafter, due to the failure of petitioners to build a house, the stipulated penalty of P5.00 per square meter was imposed to the effect that the monthly amortization was increased. From 01 Jan-01 Mar 1966, petitioners failed to pay the monthly installments due on said dates although petitioners subsequently paid the amounts due and these were accepted by private respondent. Again from 01 Oct 1966-01 Jan 1967, petitioners failed to pay. On 11 Jan 1967, private respondent sent a letter

to petitioners calling their attention to the fact that their account was four months overdue. This letter was followed up by another letter dated 27 Feb 1967 where private respondent reminded petitioner of the automatic rescission clause of the contract. Petitioners eventually paid on 01 Mar 1967. Petitioners again failed to pay the monthly installments due on 01 Feb- 01 Apr 1967. Thus, in a letter dated 06 Apr 1967, private respondent returned petitioners' check and informed them that the contract was cancelled when petitioners failed to pay the monthly installment due, thereby making their account delinquent for three months. On 19 Apr 1967, petitioners tendered payment for all the installments already due but the tender was refused. Thus, petitioners countered by filing a complaint for specific performance with the Court of First Instance of Rizal on 04 May 1967 and consigning the monthly installments due with the court. Issue: Whether or not the rescission of the contract and the forfeiture of the payments already made by petitioners is legal. Ruling: There is no denying that in the instant case the resolution or rescission of the Contract to Sell was valid. Neither can it be said that the cancellation of the contract was ineffective for failure of private respondents to give petitioners notice thereof as petitioners were informed that the contract was cancelled in the letter dated 06 Apr 1967. As R.A. No. 65856 (the Realty Installment Buyers', Protection Act), was not yet effective, the notice of cancellation need not be by notarial act, private respondent's letter being sufficient compliance with the legal requirement. While the resolution of the contract and the forfeiture of the amounts already paid are valid and binding upon petitioners, the Court is convinced that the forfeiture of the amounts, although it includes the accumulated fines for petitioners' failure to construct a house as required by the contract, is clearly iniquitous considering the contract price. The forfeiture of fifty percent (50%) of the amount already paid appears to be a fair settlement. The Court's decision to reduce the amount forfeited finds support in the Civil Code. As stated in paragraph 3 of the contract, in case the contract is cancelled, the amounts already paid shall be forfeited in favor of the vendor as liquidated damages. The Code provides that liquidated damages, whether intended as an indemnity or a penalty, shall be equitably reduced if they are iniquitous or unconscionable [Art. 2227.] Further, in obligations with a penal clause, the judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. WHEREFORE, the Decision of the Court of Appeals is hereby MODIFIED as to the amount forfeited which is reduced to fifty percent (50%) of the amount already paid or P23,656.32 and AFFIRMED as to all other respects. Private respondent is ordered to refund to petitioners the excess of P23,656.32 within thirty (30) days from the date of finality of this judgment.

LEGARDA HERMANOS, et.al., petitioners, vs. FELIPE SALDAA, et.al., respondents. Yanto, Jennifer Kristine Facts: The action originated as a complaint for delivery of two parcels of land in Sampaloc, Manila and for execution of the corresponding deed of conveyance after payment of the balance still due on their purchase price. Private respondent as plaintiff had entered into two written contracts with petitioner Legarda Hermanos as defendant subdivision owner, whereby the latter agreed to sell to him Lots Nos. 7 and 8 of block No. 5N of the subdivision with an area of 150 square meters each, for the sum of P1,500.00 per lot, payable over the span of ten years divided into 120 equal monthly installments of P19.83 with 10% interest per annum, to commence on May 26, 1948, date of execution of the contracts.

It is undisputed that respondent faithfully paid for eight continuous years about 95 monthly installments totaling P3,582.06 up to the month of February, 1956. After February, 1956 up to the filing of respondent's complaint in 1961, respondent did not make further payments. The account thus shows that he owed petitioners the sum of P1,317.72 on account of the balance of the purchase price of the two lots. Almost five years later, on February 2, 1961 just before the filing of the action, respondent wrote petitioners stating that his desire to build a house on the lots was prevented by their failure to introduce improvements on the subdivision, and requesting information of the amount owing to update his account. Petitioners replied in their letter of February 11, 1961 that as respondent had failed to complete total payment of the 120 installments by May, 1958 as stipulated in the contracts to sell, "Said cancellation being in order, is hereby confirmed." Issue: Whether or not petitioners have the right of cancellation under the "plainly valid written agreements which constitute the law between the parties" as against "the broad principles of equity and justice" applied by the appellate court. Ruling: The Court finds that the appellate court's judgment finding that of the total sum of P3,582.06 already paid by respondent, the sum applied by petitioners to the principal alone in the amount of P1,682.28 was more than the value of one lot of P1,500.00 and hence one of the two lots as chosen by respondent would be considered as fully paid, is fair, just and in accordance with law and equity. As already stated, the monthly payments for eight years made by respondent were applied to his account without specifying or distinguishing between the two lots subject of the two agreements under petitioners' own statement of account. Even considering respondent as having defaulted after February 1956, when he suspended payments after the 95th installment, he had already paid by way of principal more than the full value of one lot. The judgment recognizing this fact and ordering the conveyance to him of one lot of his choice while also recognizing petitioners' right to retain the interests of P1,889.78 paid by him for eight years on both lots, besides the cancellation of the contract for one lot which thus reverts to petitioners, cannot be deemed to deny substantial justice to petitioners nor to defeat their rights. The Court's doctrine in the analogous case of J.M. Tuason & Co. Inc. vs. Javier is fully applicable to the present case. In affirming, the Court held that "Regardless, however, of the propriety of applying said Art. 1592 thereto, We find that plaintiff herein has not been denied substantial justice, for, according to Art. 1234 of said Code: 'If the obligation has been substantially performed in good faith, the obligor may recover as though there had been a strict and complete fulfillment, less damages suffered by the obligee," and "that in the interest of justice and equity, the decision appealed from may be upheld upon the authority of Article 1234 of the Civil Code."

LAURA ADIARTE, et.al., petitioners, vs. C.A., et.al., respondents. Sinsona, Norberto Jr Facts: On 03 Feb 1939, J.M. Tuazon & Co., Inc., through its agent Gregorio Araneta Inc., sold to Cenon Rimando, a parcel of land, under the terms and conditions contained in the contract to sell No. 367. In May 1940, defendant Rimando sold to plaintiff Adiarte one-half of said lot, under the terms and conditions stipulated by the parties in the document. On 06 May 1940, plaintiff Adiarte and defendant Rimando signed an agreement whereby they ratified all the terms and stipulations agreed upon in the deed of assignment. From that time, plaintiff Adiarte and defendant Rimando made separate payments, to J.M. Tuazon and Co. Inc., for their respective portions of the lot in dispute.

In view of the findings of fact and the approval of J.M. Tuazon and Co. Inc. of the transfer by Rimando of his right and interest in one-half of the lot to Adiarte, Adiarte became the purchaser of Rimando's right or interest in said half directly from Tuazon and Co. Inc., and bound to pay the installment price to the latter, separately and independently from the purchase of the remaining one-half of said lot and payment by Rimando of its purchase price to J.M. Tuazon and Co. Inc. That the transfer or assignment of Rimando to Adiarte of his right and interest in said one-half of the lot was absolute is corroborated. Issue: Whether or not the Rimando-Adiarte contract is an invalid pactum commissorium. Ruling: The petitioner-appellants do not assail as invalid the pactum commissorium or stipulation in the Rimando-Adiarte contract regarding the resolution of the sale upon failure of Adiarte to pay the balance of the purchase price to Araneta, Inc.. What the appellants contend is that articles 1100 and 1504 of the Civil Code are applicable, and Sanchez paid Adiarte's debt to Gregorio Araneta, Inc. and waived his right to recover from Laura Adiarte what he has paid Araneta for her. Appellants' contention is correct. (1) Adiarte had not failed to pay the monthly installment to Gregorio Araneta Inc., because no demand had been made, judicially or extra-judicially, by Rimando upon Adiarte to make such payments, as required by article 1100 of the old Civil Code, since there is no stipulation in the Rimando-Adiarte contract to the effect that failure of any of the parties to pay at the time agreed upon would give rise to the forfeiture stipulated and cancellation of said contract without the necessity of any demand. (2) Assuming that there is such stipulation in said contract, article 1504 of the old Civil Code is applicable because the contract is of absolute sale of real property or right, and therefore Rimando has not reacquired the right or interest in the half of the lot he sold to Adiarte, and Adiarte may still pay what she owned to Araneta if it had not yet been paid, because no demand for such resolution has never been made judicially or by notarial act by Rimando. (3) And Sanchez, and not Adiarte, paid Adiarte's debt to Gregorio Araneta, Inc. From the fact that, upon the rescission of the contract of sale by Rimando of his house and portion of lot, Rimando had to reimburse almost the whole he had received from Sanchez, it does not follow that Sanchez's payments to Araneta of Adiarte's indebtedness to the latter was imputable to and inured to the benefit of Rimando. There was no privacy or fiduciary relation between Sanchez and Rimando, and no duty was ever imposed upon Sanchez by Rimando to pay Adiarte obligation, in any event, to take Adiarte's land and turn it over to Rimando.

VISAYAN SAWMILL COMPANY, INC., et.al., petitioners, vs. C.A., et.al., respondents. Barrera, Alexis Beb Facts: On 01 May 1983, herein p-appellee and d-appellants entered into a sale involving scrap iron located at the stockyard of d-appellant corporation at Cawitan, Sta. Catalina, Negros Oriental, subject to the condition that p-appellee will open a letter of credit in the amount of P250,000.00 in favor of dappellant corporation on or before 15 May 1983. This is evidenced by a contract entitled `Purchase and Sale of Scrap Iron' duly signed by both parties. On 17 May 1983, p-appellee, started to dig and gather scrap iron at the d-appellant's premises until 30 May when d-appellants allegedly directed p-appellee's men to desist from pursuing the work in view of an alleged case filed by a certain Alberto Pursuelo. This is

denied by d-appellants who allege that on 23 May 1983, they sent a telegram to p-appellee cancelling the contract of sale because of failure of the latter to comply with the conditions thereof. On 24 May 1983, p-appellee informed d-appellants by telegram that the letter of credit was opened on 12 May 1983 at the Bank of the Philippine Islands (BPI), but the transmittal was delayed. On 26 May 1983, d-appellants received a letter advice from the Dumaguete City Branch of BPI dated 26 May 1983. On 19 Jul 1983, p-appellee sent a series of telegrams stating that the case filed against him by Pursuelo had been dismissed and demanding that d-appellants comply with the deed of sale. In reply, d-appellants' lawyer, on 20 Jul 1983 informed p-appellee's lawyer that d-appellant corporation is unwilling to continue with the sale due to p-appellee's failure to comply with essential pre-conditions of the contract. Issue: Whether or not there is a contract to sell or a contract of sale. Ruling: To this Court's mind, what obtains in the case at bar is a mere contract to sell or promise to sell, and not a contract of sale. The petitioner corporation's obligation to sell is unequivocally subject to a positive suspensive condition, i.e., the private respondent's opening, making or indorsing of an irrevocable and unconditional letter of credit. The former agreed to deliver the scrap iron only upon payment of the purchase price by means of an irrevocable and unconditional letter of credit. Thus, there was to be no actual sale until the opening, making or indorsing of the irrevocable and unconditional letter of credit. Since what obtains in the case at bar is a mere promise to sell, the failure of the private respondent to comply with the positive suspensive condition cannot even be considered a breach casual or serious but simply an event that prevented the obligation of petitioner corporation to convey title from acquiring binding force. In the instant case, not only did the private respondent fail to open, make or indorse an irrevocable and unconditional letter of credit on or before 15 May 1983 despite his earlier representation in his 24 May 1983 telegram that he had opened one on 12 May 1983, the letter of advice received by the petitioner corporation on 26 May 1983 from BPI Dumaguete City branch explicitly makes reference to the opening on that date of a letter of credit in favor of petitioner Ang Tay c/o Visayan Sawmill Co. Inc., drawn without recourse on ARMACO-MARSTEEL ALLOY CORPORATION and set to expire on 24 Jul 1983, which is indisputably not in accordance with the stipulation in the contract signed by the parties. Private respondent's complaint fails to disclose the sudden entry into the picture of this corporation. Consequently, the obligation of the petitioner corporation to sell did not arise; it therefore cannot be compelled by specific performance to comply with its prestation. In short, Article 1191 of the Civil Code does not apply; on the contrary, pursuant to Article 1597 of the Civil Code, the petitioner corporation may totally rescind, as it did in this case, the contract.