MANALO VS. DE MESA, G.R. No.

L-9449 Facts: Plaintiff Bonifacia Manalo, filed a complaint against defendant de Mesa for having usurped the lands allegedly part of the estate of the late Placida Manalo, to which the plaintiff is representing as administratix. He contended that he was deprived of the possession and enjoyment of the property, that, despite of demands, defendant refused to deliver the lands and instead have been harvesting the products thereof. De Mesa, on the other hand, asserted that he was in possession of the lands by having acquired them by purchase. However, this acquisition by purchase was questioned by Bonifacia Manalo for it was done through a donation executed in a private document with terms and conditions attached thereto, therefore null and void for it should have been accomplished in a public document. Issue: Whether or not the donation made in favor of defendant De Mesa is valid. Held: The donation made in favor of defendant De Mesa is valid. Art. 1278 of the Civil Code provides that, A contract executed by both parties with all the requisites prescribed by article 1261 of the Civil Code is a perfect, effective and binding contract, although the same has been executed as a private document only. The legalization of a contract by a public instrument and its registration are not essential requisites, but mere conditions of form or solemnities imposed by the law in order that the said contract may be effective as against third parties, and the agreement executed in the form of a deed and inscribed in the registry may be respected. Therefore, de Mesa possesses under title of owner the two parcels of land improperly claimed by the plaintiff Bonifacia Manalo, since he acquired them legally and by the means established by law for transferring and acquiring ownership. INCHAUSTI AND CO. vs. CROMWELL, G.R. No. L-6584 Facts: Inchausti is engaged in the business of buying and selling at wholesale hemp, both for its own account and on commission. It is customary to sell hemp in bales which price is quoted to the buyer at so much per picul, no mention being made of bailing. It is with the tacit understanding that the hemp will be delivered in bales. CIR made demand in writing upon Inchausti for the payment of tax of one third of one per cent on the sums of money as aggreagate sum collected for the baled hemp. The transaction was considered as contract of sale, hence Inchausti is chargeable for the amount of tax based on the baled hemp and not on the raw hemp sold alone. However, Inchausti paid upon protest, contending that the collected amount is illegal upon the ground that the said charge does not constitute a part of the selling price of the hemp, but is a charge made for the service of baling the hemp. Issue: Whether or not the baled hemp constitutes a contract for a piece of work. Held: The baled hemp does not constitute a contract for a piece of work. 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 no 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 been the subject of sale to some other person, even if the order had not been given. In the case at bar, the baling was performed for the general market and was not something done by plaintiff which was a result of any peculiar wording of the particular contract between him and his vendee. It is undoubted that the plaintiff prepared his hemp for the general market. Celestino Vs. CIR, GR L-8506 Facts: Celestino Co & Company is a duly registered general co-partnership doing business under the trade name of "Oriental Sash Factory". It habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. They receive orders for doors and windows of special design only in particular cases but the bulk of their sales is derived from a ready-made doors and windows of standard sizes for the average home. The Bureau of Internal Revenue classified the business and taxed them as a contractor for the reason it specially makes their articles only by special orders from its customers. Issue: Whether or not Oriental Sash Factory be classified as contractor. Held: Oriental Sash Factory cannot be classified as contractor. Factory accepts a job that requires the use of extraordinary or additional equipment, or involves services not generally performed by it-it thereby contracts for a piece of work filing special orders within the meaning of Article 1467. The orders were not shown to be special. They were merely orders for work nothing is shown to call them special requiring extraordinary service of the factory. To fill orders previously made, such orders should not be called special work, but regular work. Therefore, Oriental Sash Factory should be classified as manufacturer and be taxed accordingly. Gaite vs. Fonacier (G.R. No. L-11827 July 31, 1961) 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. He constituted and appointed 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. Gaite then embarked upon the development and exploitation of the mining claims in question. Later, for some reason or another, Isabelo Fonacier decided to revoke the authority granted by him to Gaite. Gaite transferred to Fonacier all his rights and interests with a promise to pay the balance of P65,000 will be paid from and out of the first letter of credit covering the first shipment of iron ores and or the first amount derived from the local sale of iron ore. To secure the payment of the balance, a bond was executed in favor of Gaite that the liability of the surety company would attach only when there had been an actual sale of iron ore. However, when the bond expired, Gaite demanded from Fonacier and his sureties payment of said amount, on the theory that they had lost every right to make use of the period given them when their bond automatically expired and when Fonacier and his sureties failed to pay as demanded by Gaite. The defendant set up a defense that the obligation sued upon by Gaite was subject to a condition that the amount would be payable out of the first letter of credit, covering the first shipment of iron ore and/or the first amount derived from the local sale of the iron ore. Plaintiff contended that up to the time of the filing of the complaint, no sale of the iron ore had been made, hence the condition had not yet been fulfilled and that consequently, the obligation was not yet due and demandable. Issue: Whether or not the estimated tons of iron ore sold by plaintiff Gaite to defendant Fonacier were actually in existence in the mining claims when these parties executed the "Revocation of Power of Attorney and Contract". Held: The estimated tons of iron ore sold by plaintiff Gaite to defendant Fonacier were actually in existence in the mining claims when these parties executed the "Revocation of Power of Attorney and Contract". The only rational view that can be taken is that 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. Nothing is found in the record to evidence that Gaite desired or assumed to run the risk of losing his right over the ore without getting paid for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on a bond a to guarantee payment of the balance, and not only upon a bond by Fonacier, the Larap Mines & Smelting Co., and the companys stockholders, but also on one by a surety company; and the fact that appellants did put up such bonds indicates that they admitted the definite existence of their obligation to pay the balance. De Santos Vs. City of Manila, G.R. No. L-21677 Facts: A contract of exchange was made and entered into by and between the City of Manila and the Arellano University, Inc., whereby five parcels of land of the City of Manila were exchanged for three parcels of land of the Arellano University, Inc. On account of said contract of exchange action was brought by Antonio G. de Santos, plaintiff, against the City of Manila and the Arellano University, Inc., defendants to declare the said contract of exchange null and void. Defendant filed answer, alleging that it is the owner of the lot and that plaintiff has no preferential or better right than defendant Arellano University to acquire said lot by preemption, legal redemption, sale, exchange or other form of acquisition. Issue: Whether or not De Santos has any right of pre-emption or redemption or, as an alternative cause of action, to seek the annulment of the deed of exchange executed by and between the City of Manila and Arellano University. Held: De Santos has no any right of pre-emption or redemption or, as an alternative cause of action, to seek the annulment of the deed of exchange executed by and between the City of Manila and Arellano University. Article 1622 of the new Civil Code provides that xxx When two or more owners of adjoining lands wish to exercise the right of pre-emption or redemption, the owner whose intended use of the land in question appears best justified shall be preferred. In the instant case, petitioner appellant had neither alleged in his complaint nor proved, either that Lot is so small and so situated that a major portion thereof cannot be used for any practical purpose;" or that it has "been bought merely for speculation;" or that it "is about to be re-sold." A person, who is not a party obliged principally or subsidiarily under a contract, may exercise an action for nullity of the contract if he is prejudiced in his rights with respect to one of the contracting parties, and can show detriment which would positively result to him from the contract in which he had no intervention. The said contract of exchange is not detrimental to the right or interest of petitioner-appellant; because he has neither the right of pre-emption nor redemption over the disputed lot. Petitioner-appellant, therefore, cannot legally seek the annulment of said deed of exchange. EREETA VS. BEZORE Facts: Emilio Camon was the lessee of the hacienda Rosario owned by the claimants-appellants. Upon his death, his wife Ereeta filed a petition in the court praying for the grant to her of administration of the estate of the deceased Camon. The appellants and the administratrix-appellee are agreed that the late Emilio Camon appropriated for himself the amounts claimed. The appellants had demanded payment of their claim from Emilio Camon when he was still alive, but the latter ignored the demands. Issue: Whether or not notwithstanding the absence of a written contract of lease for the crop years Emilio Camon's continued cultivation of the hacienda created an express trust in favor of the claimants.

Held: Notwithstanding the absence of a written contract of lease for the crop years Emilio Camon's continued cultivation of the hacienda has not created an express trust in favor of the claimants. Art. 1670 of the New Civil Code provides, If at the end of the contract the lessee should continue enjoying the thing leased for fifteen days with the acquiescence of the lessor, and unless a notice to the contrary by either party has previously been given, it is understood that there is an implied new lease, not for the period of the original contract, but for the time established in articles 1682 and 1687. The other terms of the original contract shall be revived. There is nothing in the record that evidence the creation of a fiduciary relationship between the lessors and the lessee after the expiration of their written contract of lease, which fiduciary relationship is an essential characteristic of trust, and no written instrument has been pointed to as establishing an express trust, which writing is required 5 in express trusts over immovables. There is therefore no basis for the appellants' claim that an express trust was created when Camon continued to cultivate the land after the expiration of the written contract of lease. CIR VS. ENGG EQUIPMENT Facts: Engineering Equipment and Supply Co., a domestic corporation, is an engineering and machinery firm. As operator of an integrated engineering shop, it is engaged, among others, in the design and installation of central type air conditioning system, pumping plants and steel fabrications. One Juan de la Cruz, wrote the then Collector of Internal Revenue denouncing Engineering for tax evasion by misdeclaring its imported articles and failing to pay the correct percentage taxes due thereon and was likewise denounced to the Central Bank (CB) for alleged fraud in obtaining its dollar allocations. As a result, a raid and search was conducted on which occasion voluminous records of the firm were seized and confiscated. Engg was assessed for 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. The firm however, contested the tax assessment and requested that it be furnished with the details and particulars of the Commissioners assessment. When the case was decided by the Court of Tax Appeals, the commissioner claimed that the court erred in holding that the respondent company is a contractor and not a manufacturer. Issue: Whether or not Engineering is a contractor of air conditioning units. Held: Engineering is a contractor of air conditioning units. The word "contractor" has come to be used with special reference to a person who, in the pursuit of the independent business, undertakes to do a specific job or piece of work for other persons, using his own means and methods without submitting himself to control as to the petty details. 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 Engineerings customer, the said air conditioning units were not intended for sale to th e 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. Engineering did not manufacture air conditioning units for sale to the general public, but imported some items; therefore it is classified as contractor. DELPHER TRADES CORPORATION vs. IAC Facts: Delfin Pacheco and sister Pelagia, owners and managers of Delpher Trades Corporation, owned a parcel of land which, they leased to Construction Components International Inc. providing for a right of first refusal should it decide to buy the said property. Construction Components International, Inc. assigned its rights and obligations under the contract of lease in favor of Hydro Pipes Philippines, Inc., herein private respondent, with the signed conformity and consent of Delfin and Pelagia. A deed of exchange was then executed between lessors Delfin and Pelagia Pacheco and Delpher Trades Corporation whereby the Pachecos conveyed to the latter the leased property together with another parcel of land. On the ground that it was not given the first option to buy the leased property pursuant to the proviso in the lease agreement, respondent Hydro Pipes Philippines, Inc., filed an amended complaint for reconveyance of the lot. Their primary defense is that there is no transfer of ownership because the Pachecos remained in control of the original co-owners. The transfer of ownership, if anything, was merely in form but not in substance. Issue: Whether or not the Deed of Exchange of the properties executed by the Pachecos and the Delpher Trades Corporation on the other was meant to be a contract of sale which, in effect, prejudiced the Hydro Phil's right of first refusal over the leased property included in the "deed of exchange". Held: The Deed of Exchange of the properties executed by the Pachecos and the Delpher Trades Corporation on the other was not meant to be a contract of sale which, in effect, prejudiced the Hydro Phil's rightof first refusal over the leased property included in the "deed of exchange". By their ownership of the 2,500 no par shares of stock, the Pachecos have control of the corporation. Their equity capital is 55% as against 45% of the other stockholders, who also belong to the same family group. Ineffect, the Delpher Trades Corporation is a business conduit of the Pachecos. What they really did was to invest their properties and change the nature of their ownership from unincorporated to incorporated form by organizing Delpher Trades Corporation to take control of their properties and at the same time save on inheritance taxes. In the case, there was no transfer of actual ownership interests by the Pachecos to a third party. The Pacheco family merely changed their ownership

from one form to another. The ownership remained in the same hands. Hence, the private respondent has no basis for its claim of a light of first refusal under the lease contract. CIR VS. ARNOLDUS CARPENTRY SHOP, INC.

Facts: Respondent Arnoldus Carpentry Shop, Inc., a domestic corporation existing for its secondary purpose the "preparing, processing, buying, selling, exporting, importing, manufacturing, trading and dealing in cabinet shop products, wood and metal home and office furniture, cabinets, doors, windows, etc., including their component parts and materials, of any and all nature and description. These furniture, cabinets and other woodwork were sold locally and exported abroad. During the conduct of investigation by CIR, it was reported that the company shall be classified as other independent contractor. As a result thereof, the examiners assessed ACSI for deficiency tax. However, the firm protested and maintained that the carpentry shop is a manufacturer and therefor entitled to tax exemption on its gross export sales. The commissioner rendered a decision that it shall be considered as a contractor and not a manufacturer. Issue: Whether or not respondent be classified as contractor. Held: Respondent is not a classified as contractor. It is rather a manufacturer as defined in the tax code. Section 205 (of such Code defines "independent contractors" as xxx persons (juridical and natural) xxx whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees. In the case, ACSI does not fall under the definition. Moreover, its other woodwork products such as barometer cases, knife racks, church furniture, school furniture, knock down chairs, etc., testified that these were manufactured without previous orders. Samples were displayed, and if in stock, were available for immediate sale to local and foreign customers. Therefore, it shall be classified as a contract of sale and not a contract for a piece-of-work. Schmid & Oberly vs. RJL Martinez Facts: RJL Martinez Fishing Corporation is engaged in deep-sea fishing. In the course of its business, it needed electrical generators for the operation of its business. Schmid and Oberly sells electrical generators with the brand of Nagata, a Japanese product. D. Nagata Co. Ltd. of Japan was Schmids supplier. Schmid advertised the 12 Nagata generators for sale and RJL purchased 12 brand new generators. Through an irrevocable line of credit, Nagata shipped to the Schmid the generators and RJL paid the amount of the purchase price. Later, the generators were found to be factory defective. RJL informed the Schmid that it shall return the 12 generators. 3 were returned. Schmid replaced the 3 generators subject of the first sale with generators of a different brand. As to the second sale, 3 were shipped to Japan and the remaining 9 were not replaced. RJL sued the defendant on the warranty, asking for rescission of the contract and that Schmid be ordered to accept the generators and be ordered to pay back the purchase money as well as be liable for damages. Schmid opposes such liability averring that it was merely the indentor in the sale between Nagata Co., the exporter and RJL Martinez, the importer. As mere indentor, it avers that is not liable for the sellers implied warranty against hidden defects, Schmid not having personally assumed any such warranty. Issue: Whether or not the transaction between the parties was an indent transaction Held: The transaction between the parties was an indent transaction. An indentor is a middlemen in the same class as commercial brokers and commission merchants. A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts relative to property with the custody of which he has no concern; the negotiator between other parties, never acting in his own name but in the name of those who employed him; he is strictly a middleman and for some purpose the agent of both parties. There are 3 parties to an indent transaction, (1) buyer, (2) indentor, and (3) supplier who is usually a non-resident manufacturer residing in the country where the goods are to be bought. The chief feature of a commercial broker and a commercial merchant is that in effecting a sale, they are merely intermediaries or middle-men, and act in a certain sense as the agent of both parties to the transaction. RJL MARTINEZ admitted that the generators were purchased through indent order. The evidence also show that RJL MARTINEZ paid directly NAGATA CO, for the generators, and that the latter company itself invoiced the sale and shipped the generators directly to the former. The only participation of Schmid was to act as an intermediary or middleman between Nagata and RJL, by procuring an order from RJL and forwarding the same to Nagata for which the company received a commission from Nagata. Filinvest Credit vs. Court of Appeals Facts: Spouses Sy Bang was engaged in the sale of gravel produced from crushed rocks and used for construction purposes. In order to increase their production, they looked for a rock crusher which Rizal Consolidated Corporation then had for sale. A brother of Sy Bang, went to inspect the machine at the Rizal Consolidateds plant site. Apparently satisfied with the machine, the private respondents signified their intent to purchase the same. Since he does not have the financing capability, Sy Bang applied for financial assistance from Filinvest Credit Corporation. Filinvest agreed to extend financial aid with certain conditions. A

contract of lease of machinery (with option to purchase) was entered into by the parties whereby they to lease from the petitioner the rock crusher for two years. The contract likewise stipulated that at the end of the two-year period, the machine would be owned by Sy Bang. 3 months from the date of delivery, Sy Bang claiming that they had only tested the machine that month, sent a letter-complaint to the petitioner, alleging that contrary to the 20 to 40 tons per hour capacity of the machine as stated in the lease contract, the machine could only process 5 tons of rocks and stones per hour. They then demanded that the petitioner make good the stipulation in the lease contract. Sy Bang stopped payment on the remaining checks they had issued to the petitioner. As a consequence of the non-payment, Filinvest extrajudicially foreclosed the real estate mortgage. Issue: Whether or not the real transaction was a sale on installments. Held: The real transaction was a sale on installments. It is basic that a contract is what the law defines it and the parties intend it to be, not what it is called by the parties. It is apparent here that the intent of the parties to the subject contract is for the socalled rentals to be the installment payments. Upon the completion of the payments, then the rock crusher, subject matter of the contract, would become the property of the private respondents. This form of agreement has been criticized as a lease only in name. Even if there was a contract of sale, Filinvest is still not liable because Sy Bang is presumed to be more knowledgeable, if not experts, on the machinery subject of the contract, they should not therefore be heard now to complain of any alleged deficiency of the said machinery. It was Sy Bang who was negligent, not Filinvest. Further, Sy Bang is precluded to complain because he signed a Waiver of Warranty. PNB vs. Pineda Facts: The Arroyo Spouses obtained a loan from PNB to purchase 60% of the subscribed capital stock, and thereby acquire the controlling interest of Tayabas Cement Company, Inc. (TCC). As security for said loan, the spouses executed a real estate mortgage. TCC filed with petitioner bank an application and agreement for the establishment of an 8 year deferred letter of credit (L/C) in favor of Toyo Menka Kaisha to cover the importation of a cement plant machinery and equipment. The imported cement plant machinery and equipment arrived from Japan and were released to TCC under a trust receipt agreement. Subsequently, Toyo Menka Kaisha made the corresponding drawings against the L/C as scheduled. TCC, however, failed to remit and/or pay the corresponding amount covered by the drawings. Thus, pursuant to the trust receipt agreement, PNB notified TCC of its intention to repossess the imported machinery and equipment for failure of TCC to settle its obligations under the L/C. PNB foreclosed the real estate mortgages executed by the spouses Arroyo in TCCs favor. PNB contends that the sale was made to satisfy not only the amount owed by the spouses on their personal loan but also the amount of expenses owed by said spouses as sureties of TCC. The Arroyos oppose the foreclosure, contending primarily that repossession of the imported machinery and equipment by PNB amounted to dacion en pago that extinguished their obligation as surety to TCC.

Issue: Whether or not the repossession of the machinery was tantamount to a dacion en pago that absolved Arroyo spouses as surety. Held: The repossession of the machinery was tantamount to a dacion en pago that absolved Arroyo spouses as surety. Dation in payment takes place when property is alienated to the creditor in satisfaction of a debt in money and the same is governed by sales. Dation in payment is the delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted equivalent of the performance of the obligation. The repossession of the machinery and equipment in question was merely to secure the payment of TCCs loan obligation and not for the purpose of transferring ownership thereof to PNB in satisfaction of said loan. Thus, no dacion en pago was ever accomplished. Engineering and Machinery Corp. vs. Court of Appeals Facts: Almeda, herein private respondent and Engineering signed a contract, wherein Engineering undertook to fabricate, furnish and install the air-conditioning system in the latters building along Buendia Avenue. Petitioner was to furnish the materials, labor, tools and all services required in order to so fabricate and install said system. The system was completed and accepted by private respondent, who paid in full the contract price. Almeda learned from the employees of NIDC of the defects of the air-conditioning system of the building. Almeda spent for the repair of the airconditioning system. He now sues Engineering for the refund of the repair. Engineering contends that the contract was of sale and the claim is barred by prescription since the responsibility of a vendor for any hidden faults or defects in the thing sold runs only for 6 months. Almeda contends that since it was a contract for a piece of work, hence the prescription period was ten years (Hence Art 1144 should apply on written contracts). RTC found that Engineering failed to install certain parts and accessories called for by the contract, and deviated from the plans of the system, thus reducing its operational effectiveness to achieve a fairly desirable room temperature. Issue: Whether or not the contract for the fabrication and installation of a central air-conditioning system in a building is a contract for a piece of work.

Held: The contract for the fabrication and installation of a central air-conditioning system in a building is a contract for a piece of work. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. In such case, the contract is one for a piece of work, not a sale. 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 as ordered by customers and in accordance with the particular plans and specifications provided by the customers. Naturally, the price or compensation for the system manufactured and installed will depend greatly on the particular plans and specifications agreed upon with the customers. CIR VS. CA, Dagupan Combined Commodities Facts: ADMU Institute of Philippine Culture is engaged in social science studies of Philippine society and culture. Occasionally, it accepts sponsorships for its research activities from international organizations, private foundations and government agencies. CIR sent a demand letter assessing for alleged deficiency contractors tax. According to CIR, ADMU falls under the purview of independent contractor pursuant to Sec 205 of Tax Code a nd is also subject to 3% contractors tax under Sec 205 of the same code. Issue: Whether or not ADMU is an independent contractor hence liable for tax. Held: ADMU is not an independent contractor hence liable for tax. Independent Contractor means any person whose activity consists essentially of the sale of all kinds of services for a fee regardless of whether or not the performance of the service calls for the exercise or use of the physical or mental faculties of such contractors or their employees. Hence, to impose the three percent contractors tax on Ateneos Institute of Philippine Culture, it should be sufficiently proven that the private respo ndent is indeed selling its services for a fee in pursuit of an independent business. FULE VS. CA Facts: Fr. Antonio Jacobe initially mortgage to the Rural Bank of Alaminos, Laguna to secure a loan. Said mortgage was later foreclosed and the property offered for public auction upon his default. Gregorio Fule, as corporate secretary of the bank, asked Remelia Dichoso and Olivia Mendoza to look for a buyer who might be interested in the property. The two found one in the person of Ninevetch Cruz. It so happened that in January of said year, Gregorio Fule, also a jeweler, has shown interest in buying a pair of emerald-cut diamond earrings owned by Dr. Cruz. A subsequent bid by Fule to buy them was made. Subsequently, however, negotiations for the barter of the jewelry and the Tanay property ensued. Atty. Belarmino was requested by Dr. CruZ to check the property and found out that no sale or barter was feasible as the 1-year period of redemption has not expired. In an effort to cut through any legal impediment, Fule executed a deed of redemption on behalf of Fr. Jacobe p and on even date, Fr. Jacobe sold the property to Fule. The haste with which the two deeds were executed is shown by the fact that the deed of sale was notarized ahead of the deed of redemption. As Dr. Cruz had already agreed to the proposed barter, Fule went to Prudential Bank to take a look at the jewelry. Issue: Whether or not there was fraud or inducement made by the private respondents. Held: There was no fraud or inducement made by the private respondents. There is fraud when, through the insidious words or machinations of one of the contracting parties, the other is induced to enter into a contract which, without them, he would not have agreed to. In the present case, the records, are bare of any evidence manifesting that private respondents employed such insidious words or machinations to entice petitioner into entering the contract of barter. Neither is there any evidence showing that Dr. Cruz induced petitioner to sell his Tanay property or that she cajoled him to take the earrings in exchange for said property. On the contrary, Dr. Cruz did not initially accede to petitioners proposal to buy the said jewelry. Rather, it appears that it was petitioner, through his agents, who led Dr. Cruz tobelieve that the Tanay property was worth exchanging for her jewelry than double that of the jewelry. If indeed petitioners property was truly worth that much, it was certainly contrary to the nature of a businessman-banker like him to have parted with his real estate for half its price. In short, it was in fact petitioner who resorted to machinations to convince Dr. Cruz to exchange her jewelry for the Tanay property. VICTORIAS MILLING VS CA Facts: St. Therese Merchandising (hereafter STM) regularly bought sugar from petitioner Victorias Milling Co., Inc., (VMC). Petitioner issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof of purchases. Among these was SLDR No. 1214M, which gave rise to the instant case of which the transaction it covered was a "direct sale. Such was then sold by STM to private respondent Consolidated Sugar Corporation (CSC). CSC wrote petitioner that it had been authorized by STM to withdraw the sugar covered by SLDR No. 1214M. Petitioner replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M because STM had already withdrawn all the sugar covered by the cleared checks. It reiterated that all the sugar corresponding to the amount of STM's cleared checks had been fully withdrawn and hence, there would be no more deliveries of the commodity to STM's account. CSC filed a complaint for specific performance. However, petitioner's primary defense was that he was an unpaid seller and since STM had already drawn in full all the sugar corresponding to the amount of its cleared

checks, it could no longer authorize further delivery of sugar to CSC. Petitioner also contended that it had no privity of contract with CSC. Issue: Whether or not the CSC was an agent of STM and hence, estopped to sue as an assignee. Held: CSC was not an agent of STM and hence, not estopped to sue as an assignee. Art. 1868 of the New Civil Code provides By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter. Thi s Court has ruled that where the relation of agency is dependent upon the acts of the parties, the law makes no presumption of agency, and it is always a fact to be proved, with the burden of proof resting upon the persons alleging the agency, to show not only the fact of its existence, but also its nature and extent. Here, it failed to sufficiently established the existence of an agency relation between CS and STM. The fact alone that it (STM) had authorized withdrawal of sugar "for and in our (STM's) behalf" should not be eyed as pointing to the existence of an agency relation. Therefore, there was a valid sale and transfer to CSC may, therefore, be made thus capacitating it to sue in its own 24 name, without need of joining its imputed principal STM as co-plaintiff. DINO VS. CA Facts: Petitioners spouses Dino, doing business under the trade name "Candy Claire Fashion Garment" are engaged in the 1 business of manufacturing and selling shirts. Respondent Sio is part owner and general manager of a manufacturing corporation 2 doing business under the trade name "Universal Toy Master Manufacturing." They entered into a contract whereby Sio would manufacture for the petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads at P7.00 per piece in accordance with the sample approved by the petitioners. These frogs and mooseheads were to be attached to the shirts petitioners would manufacture and sell. Petitioner fully paid the agreed price. However, Dino returned several pieces of frogs and mooseheads for failing to comply with the approved sample. Petitioners then demanded from the respondent a refund of the purchase price of the returned goods, however, Sio refused to pay which led to the filing of complaint against him. Respondent defended that ction for collection of sum of money based on a breach of warranty had already prescribed. Issue: Whether or not the action for collection of sum of money had already prescribed. Held: The action for collection of sum of money had already prescribed. There is no dispute that respondent made the last delivery of the vinyl products to petitioners on September 28, 1988. It is also settled that the action to recover the purchase 16 price of the goods petitioners returned to the respondent was filed on July 24, 1989, more than nine months from the date of last delivery. Petitioners having filed the action three months after the six-month period for filing actions for breach of warranty 17 against hidden defects stated in Art. 1571, the appellate court dismissed the action. Therefore, petition is denied.

VELARDE V COURT OF APPEALS Facts: David Raymundo, private respondent is the absolute and registered owner of a parcel of land, together with the house and other improvements. Gorge Raymundo, Davids father, negotiated with Avelina and Mariano Velarde, petitioners for the sale of Davids property, which was under lease. A Deed of Sale with Assumption of Mortgage was executed by David Raymundo in favor of Avelina Velarde. It states that David Raymundo sells, cedes, transfers conveys and delivers the property to Avelina Velarde and that Avelina Velarde assumes to pay the mortgage obligations on the property in favor of BPI. As per agreement, the Velardes paid BPI the monthly interest on the loan, but were advised that their Application for Assumption of Mortgage with BPI was not approved. This prompted the Velardes not to make any further payment. The Raymundos, thru counsel, wrote plaintiffs informing them that their nonpayment to BPI constituted nonperformance of their obligation. The Velardes responded thru counsel and advised that they are willing to pay the balance in cash. Defendants sent the Velardes a notarial notice of cancellation/rescission of the intended sale of the property, allegedly due to the plaintiffs failure to comply with the terms and conditions of the Deed of Sale with Assumption of Mortgage and the Undertaking. The Velardes filed a complaint against respondents for specific performance, nullity of cancellation, writ of possession, and damages. RTC instructed the parties to proceed with the sale, directing the Velardes to pay the balance of P1.8M and ordered the Raymundos to execute a deed of absolute sale and to surrender possession of property to the Velardes.

Issue: Whether or not the rescission by the Raymundos of the contract was valid

Held: The rescission by the Raymundos of the contract was valid. Article 1191 of the Civil Code, provides, The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is incumbent upon him. The injured party may choose between fulfillment and the rescission of the obligation, with the payment of damages in either case. He may also seek rescission even after he has chosen fulfillment, of the

latter should become impossible. The right of rescission of a party to an obligation is predicated on a breach of faith by the other party who violates the reciprocity between them. The breach contemplated in said provision is the obligors failure to comply with an existing obligation. When the obligor cannot comply with what is incumbent upon it, the oblige may seek rescission and, in the absence of any just cause for the court to determine the period of compliance, the court shall decree the rescission. Private respondents validly exercised their right to rescind the contract, because of the failure of petitioners to comply with their obligation to pay the balance of the purchase price. The Velardes violated the very essence of reciprocity in the contract of sale, a violation that consequently gave rise to private respondents right to rescind the same in accordance with law. BIONA VS. CA Facts: Petitioner Soledad Biona obtained a loan from respondent and as security therefore, the subject property was mortgaged. It was further agreed upon by the contracting parties that for a period of two years until the debt is paid, respondent shall occupy the land in dispute and enjoy the usufruct thereof. The two-year period elapsed but Soledad Biona was not able to pay her indebtedness. Respondent continued occupying and cultivating the subject property without protest from petitioner. Later, petitioner filed a complaint for recovery of ownership, possession, accounting and damages, alleging, among others, that the latter had unlawfully been depriving them of the use, possession and enjoyment of the subject property. It was alleged by respondent that petitioner approached and begged the former to buy the whole lot since it was then at the brink of foreclosure by the Development Bank of the Philippines and she had no money to redeem the same. As counterclaim, respondent prayed that petitioner be ordered to execute a formal deed of sale over the subject property Issue: Whether or not the deed of sale is valid and if it effectively conveyed to the private respondents the subject property. Held: The deed of sale is valid and if it effectively conveyed to the private respondents the subject property. True, in contracts of sale, the vendor need not possess title to the thing sold at the perfection of the contract.36 However, the vendor must possess title and must be able to transfer title at the time of delivery. In a contract of sale, title only passes to the vendee upon full payment of the stipulated consideration, or upon delivery of the thing sold. The fact that the deed of sale was not notarized 9 does not render the agreement null and void and without any effect. The provision of Article 1358 of the Civil Code on the 10 necessity of a public document is only for convenience, and not for validity or enforceability. The observance of which is only necessary to insure its efficacy, so that after the existence of said contract had been admitted, the party bound may be 11 compelled to execute the proper document. Undeniably, a contract has been entered into by Soledad Biona and the private respondent. Regardless of its form, it was valid, binding and enforceable between the parties PEALOSA VS. SANTOS Facts: Respondents Severino C. Santos (deceased) and Adela Mendez Santos, registered owners of a residential house decided to sell their property and for this purpose, negotiated with petitioner Hernando (or Henry) Pealosa. The property was then 2 occupied by a lessee, Eleuterio Perez, who was given preference to buy it under the same terms offered by the buyer. Perez 3 proposed less favorable terms and expectedly, Severino rejected his offer. Petitioner Pealosa and respondent Santos attempted to enter into an agreement whereby the latter, would sell to the former the property subject of the instant case. The 4 deed of absolute sale (first deed) evidencing this transaction was signed by Henry but not by Severino, because according to the latter, Henry "took time to decide" on the matter. Henry acknowledged in said document that although Severino had agreed to sell the property to him, he had not paid the consideration stated in the first deed. Issue: Whether or not ownership of the property has been transferred to petitioner. Held: Ownership of the property has been transferred to petitioner. Article 1477 of the Civil Code states that ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. It is undisputed that the property was placed in the control and possession of petitioner when he came into material possession thereof after judgment in the ejectment case. Not only was the contract of sale perfected, but also actual delivery of the property effectively consummated the sale. Non-payment of the purchase price is not among the instances where the law declares a contract to be null and void. Although the law allows rescission as a remedy for breach of contract, the same may not be availed of by respondents in this case. To begin with, it was Severino who prevented full payment of the stipulated price when he refused to deliver the owner s original duplicate title to Philam Life. His refusal to cooperate was unjustified, because as Severino himself admitted, he signed the deed precisely to enable petitioner to acquire the loan. PUP Vs. CA Facts: Petitioner National Development Corporation (NDC), a government owned and controlled corporation had in its disposal a ten (10)-hectare property, popularly known as the NDC compound. Private respondent Firestone Ceramics Inc. (FIRESTONE) manifested its desire to lease a portion of the property for its ceramic manufacturing business. NDC and FIRESTONE entered into

a contract of lease for use as a manufacturing plant for a term of ten (10) years, renewable for another ten (10) years under the 1 same terms and conditions. In consequence of the agreement, FIRESTONE constructed on the leased premises several warehouses and other improvements needed for the fabrication of ceramic products. The parties' lessor-lessee relationship went smoothly until when FIRESTONE, cognizant of the impending expiration of their lease agreement with NDC, informed the latter through several letters and telephone calls that it was renewing its lease over the property. However, the rest of its 7 communications remained unacknowledged. FIRESTONE's predicament worsened when rumors of NDC's supposed plans to dispose of the subject property in favor of petitioner Polytechnic University of the Philippines (PUP) came to its knowledge. Forthwith, FIRESTONE served notice on NDC conveying its desire to purchase the property in the exercise of its contractual right of first refusal. Issue: Whether or not the transfer of the leased property from NDC to PUP amounted to a sale. Held: The transfer of the leased property from NDC to PUP amounted to a sale. All three (3) essential elements of a valid sale, without which there can be no sale, were attendant in the disposition and transfer of the property from NDC to PUP consent of the parties, determinate subject matter, and consideration therefor. The defendants-appellants interpretation that there was a mere transfer, and not a sale, apart from being specious sophistry and a mere play of words, is too strained and hairsplitting. For it is axiomatic that every sale imposes upon the vendor the obligation to transfer ownership as an essential element of the contract. At whatever legal angle we view it, therefore, the inescapable fact remains that all the requisites of a valid sale were attendant in the transaction between co-defendants-appellants NDC and PUP concerning the realities subject of the present suit. BUENAVENTURA VS. CA, JOAQUIN Facts: Petitioners, children of the respondent spouses seek the declaration of nullity for the deeds of sale and certificates of title executed by their parents on the grounds that there was no actual valid consideration for the deeds of sale over the properties in litigation and that the properties were more than three-fold times more valuable than the sum. On the other hand, spouses Joaquin averred that the sales were with sufficient considerations and made by voluntarily, in good faith and with full knowledge of the consequences of their deeds of sale and that the certificates of title were issued with sufficient factual and legal basis. Issue: Whether or not petitioners are principally bound to challenge the validity of the executed sales being the compulsory legitimes of the respondents. Held: Petitioners are not principally bound to challenge the validity of the executed sales being the compulsory legitimes of the respondents. The petitioners right to their parents properties is merely inchoate and vests only upon their parents death. While still living, the parents of petitioners are free to dispose of their properties. Therefore, petitioners do not have any legal interest over the properties subject of the Deeds of Sale. FIRST GLOBAL REALTY VS. AGUSTIN Facts: Respondent was in possession of the property in question, whose title was issued in the name of his mother. The conflict started when such property was sold to spouses Camacho, who in turn succeeded petitioner FGRDC to accept partial payment upon the execution of a deed of absolute sale in their favor. The balance of which would be paid once the title will be transferred to them. Petitioner then granted the loan application with the property as collateral. However, despite receipt of the loan and petitioners demand to pay the balance, spouses did not pay the same. Respondent then filed a criminal complaint against the Camachos however they could not be located. In the ensuing period, FGRDC filed a civil action against respondent inasmuch as spouses Camacho defaulted in the payment of their loan obligation. Issue: Whether or not FGRDC has the legal right to dispossess respondent over subject property on the strength of a dacion en pago executed in its favor by Camacho spouses Held: FGRDC has no the legal right to dispossess respondent over subject property on the strength of a dacion en pago executed in its favor by Camacho spouses. It is because it knew of the agreement between respondent and the Camachos. The fact that the property remained in the possession of respondents mother at the time the couple sold it to petitioner have warned it of a defect in its claims. It also shows that dacion en pago was executed in lieu of the foreclosure of the property when they failed to pay their loan obligations. The Camachos nonpayment of the purchase priced agreed upon and the irregularities surrounding the dacion en pago are serious enough to allow him to possess the property pendent lite. ROBERTS VS. PAPIO Facts: Respondent secured a loan from Amparo Investments Corporation with a real estate mortgage on their residential lot. Upon his failure to pay his obligation and to prevent foreclosure of the mortgage, Papio executed a Deed of Absolute Sale over

the property in favor of the Petitioner Roberts. Eventually, respondent was able to settle his obligation of which the corporation returned the duplicate of Transfer Certificate of Title (TCT), and then delivered to Roberts. Thereafter, the parties executed a contract of lease with Roberts as the lessor and Papio as the lessee. After 3 years of occupying, Paio failed to pay the rentals, but his family nevertheless remained in possession of the property for almost 13 years. Petitioner made a demand letter to Papio, ordering him to vacate the property. Despite of it, Papio refused to leave the premises which led her to file a complaint. Respondent, on the other hand, reasoned that the original transaction made with the petitioner was the right to repurchase/redeem the property, thereby giving him the title to retain ownership thereof. However, Roberts calimed that any right to repurchase the property must appear in a public document pursuant to Art, 1358 of the NCC and that her Torrens Title to the property was an absolute and indefeasible evidence. Metropolitan Trial Court ruled in favor of Roberts. Papio appealed to RTC, and in its decision it affirmed the findings of MeTC. Papio file a petiton for review in CA. CA ruled in favor of Papio stating that what transpired is not a contract of absolute sale but an equitable mortgage and that Papio is entitled to possession of the property. Roberts filed a petition for review assigning as error that petitioner did not alleged in his Answer the defense of equitable mortgage; hence the Ca should not have discussed the same. ISSUE: whether or not the transaction entered into by the parties under the Deed of Absolute Sale and Contract of Lease is an equitable mortgage. Held: The transaction entered into by the parties under the Deed of Absolute Sale and Contract of Lease is not an equitable mortgage. An EQUITABLE MORTGAGE is one that although lacking in some formality, form or words, or other requisites demanded by a statute, nevertheless reveals the intention of the parties to change a real property as security for a debt and contain nothing impossible or contrary to law. The decisive factor is the intention of the parties. In Papios Answer he stat ed that he was given the right of redemption at any time; that he had repurchased the property and consequently he obliged Roberts to execute a deed of absolute sale in his favor. With this claims, it is antithetical to an equitable mortgage. In PACTO DE RETRO SALE, ownership of the property sold is immediately transferred to the vendee a retro subject only to the right of the vendor a retro to repurchase the property upon compliance with legal requirements for repurchase. Failure of the vendor a retro to exercise the right to repurchase within the agreed time vests upon the vendee a retro, by operation of law, absolute title over the property. One who repurchase a property means that the property was previously sold. The right of repurchase presupposes a valid contract of sale between the parties. MANILA CONTAINER VS. PNB Facts: Petitioner executed a real estate mortgage over the lot they owned in favor of PNB to obtain a loan thereof. Respondent bank filed a petition for extrajudicial foreclosure of the property and sought to sell it in public auction. PNB was declared to be the winning bidder and certificate of sale was registered thereafter. Petitioner, as a result, sent a letter to PNB requesting for an extension of time to redeem/repurchase the property. However, petitioner failed to redeem which resulted to issuance of new title in favor of PNB, while its request had not been acted by the latter. Petitioner filed a complaint against respondent PNB for Annulment of Mortgage and Mortgage Foreclosure, Delivery of Title, or Specific Performance with damages. PNB averred that it had acquired ownership over the property after the period to redeem had elapsed and that no contract of sale was perfected between it and petitioner after the period to redeem the property had expired. Issue: Whether or not the parties had entered into a perfected contract for petitioner to repurchase the property from respondent. Held: The parties had not entered into a perfected contract for petitioner to repurchase the property from respondent. A contract is a meeting of minds between two persons whereby one binds himself, with respect to the other, to give something or to render some service. Contracts are perfected by mere consent which is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. In order to have a qualified acceptance or one that involves a new proposal constitutes a counter-offer and a rejection of the original offer. In the case, petitioner had enough time within which to reddem the property, however, since it lacked the resources, it rewuested for more time to redeem. But, there was no response from PNB. It appears as well that although respondent requested petitioner to conform to its amended counter-offer, petitioner refused and instead requested respondent to reconsider its amended counter-offer. Therefore, since there was no meeting of the minds, there was also no perfected contract of sale that happened. SAN LORENZO DEVT CORP. VS. CA Facts: Private respondent spouses Lu sold parcels of land to another private respondent Babasanta. Latter demanded the execution of a Deed of Sale in his favor so that he could effect full payment of the purchase price. In the same latter, he notified spouses Lu spouses about having received information that the same property was sold to another without his knowledge and consent, thereby, demanding the cancellation of the second sale and that a final deed of sale be issued instead, in his favor. Petitioner Corporation came into place when he filed a motion before the RTC alleging that it had legal interest in the subject matter under litigation because the property subject to litigation was sold to it in a Deed of Absolute Sale with mortgage, in

good faith and for value. Respondent Babasanta argued that the latter had no legal interest in the case because the two parcels of land involved herein had already been conveyed to him by the Spouses Lu and hence, the vendors were without legal capacity to transfer or dispose of the two parcels of land to the intervenor. Issue: Whether or not petitioner SLDC has a better right over the two parcels of land subject of the instant case in view of the successive transactions executed by the Spouses Lu. Held: Petitioner SLDC has a better right over the two parcels of land subject of the instant case in view of the successive transactions executed by the Spouses Lu. An analysis of the facts irresistibly leads to the conclusion that the agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale. In a contract of sale, title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price. While there is no stipulation that the seller reserves the ownership of the property until full payment of the price, the subsequent acts of the parties convinced the court that the Spouses Lu never intended to transfer ownership to Babasanta except upon full payment of the purchase price.

NHA VS. GRACE BAPTIST CHURCH Facts: Respondent Church manifested its interest in acquiring lots by writing petitioner, of which was instantly approved, as stated in the resolution of NHA. GBC tendered to NHA a managers check as full payment of the subject property with an amount different from the one stated in the resolution, as insisted by the Church, was the price quoted to them by the NHA Office. However, petitioner returned the check stating that the amount was insufficient considering that the price of the properties has changed. The church made several demands to accept their tender of payment, but NHA refused, which then lead to the filing of complaint by the respondent. The RTC and CA rendered the same decision finding that there was no contract of sale between the parties. However, CA included in its ruling that NHA was estopped from fixing a different price considering further that the Church had been occupying the subject lots and even introduced improvements thereon, in the interest of equity, it should be allowed to purchase the subject properties. Hence, this appeal. Issue: Whether or not Petitioner NHA is estopped from fixing a different price equal to the fair market value even if it failed to expressly revoke in its resolution. Held: Petitioner NHA is not estopped from fixing a different price equal to the fair market value even if it failed to expressly revoke in its resolution. Verily, the mere inexistence of a contract, which would ordinarily serve as the law between the parties, does not automatically authorize disposing of a controversy based on equitable principles alone. Notwithstanding the absence of a perfected contract between the parties, their relationship may be governed by other existing laws which provide for their reciprocal rights and obligations. In the case at bar, the offer of the NHA to sell the subject property, as embodied in its Resolution, was similarly not accepted by the respondent. Thus, the alleged contract involved in this case should be more accurately denominated as inexistent. There being no concurrence of the offer and acceptance, it did not pass the stage of 25 generation to the point of perfection. As such, it is without force and effect from the very beginning or from its incipiency, as if 26 it had never been entered into, and hence, cannot be validated either by lapse of time or ratification. Equity cannot give validity to a void contract, and this rule should apply with equal force to inexistent contracts. MANONGSONG VS. ESTIMO Facts: Petitioners, children of Vicente Lopez, one of the 6 heirs of their parents who owned the contested property. The heirs came to an agreement to subdivide proportionately among themselves the property which they inherited. However, two heirs (Jumaquio and Victor Lopez) opposed such for the reason that the property was sold by their grandmother to Enriqueta Lopez Jumaquio. They presented a provincial tax declaration and a notarized Kasulatan. More so, they also invoked the defense of acquisitive prescription against petitioners because they were in peaceful possession of their portion of the property for more than 30 years. Issue: Whether or not the alleged sale is valid and binds the other co-heirs. Held: The alleged sale is valid and binds the other co-heirs. The Kasulatan, being a document acknowledged before a notary public, is a public document and prima facie evidence of its authenticity and due execution. To assail the authenticity and due [24] execution of a notarized document, the evidence must be clear, convincing and more than merely preponderant. Otherwise the authenticity and due execution of the document should be upheld. The trial court itself held that (n)o countervailing proof [26] was adduced by petitioners to overcome or impugn the documents legality or its validity. Since the notarized Kasulatan is evidence of greater weight which petitioners failed to refute by clear and convincing evidence, this Court holds that petitioners were not able to prove by preponderance of evidence that the Property belonged to Guevarras estate. There is therefore no legal basis for petitioners complaint for partition of the Property.

ALCANTARA VS. HERMOSO Facts: Respondents Hermos spouses filed a complaint alleging that they were owners of a parcel of land which they inherited from their father. They engaged the services of a lawyer, however, after the latters death, it surfaced that the documents executed that the properties was conveyed by sale to the respondents siblings, to the lawyer and his sisters, when in truth and in fact, no such conveyances were evere intended by them. His signature in the [D]eed of [E]xtra-judicial [P]artition with [Q]uitclaim made in favor of Rodolfo de Leon was forged. They also discovered that the subject land was sold to petitioner Alcantara. Respondents demanded annulment of the document and reconveyance but petitioner refused. The RTC ruled in favor of the petitioner, however, the CA ruled the other way. Hence, this appeal. Issue: Whether or not the Deed of Absolute Sale executed over the land in question in favor of petitioner was perfected and binding upon the parties therein. Held: The Deed of Absolute Sale executed over the land in question in favor of petitioner was not perfected and binding upon the parties therein. As a general rule, the due execution and authenticity of a document must be reasonably established before [18] it may be admitted in evidence. Notarial documents, however, may be presented in evidence without further proof of their authenticity, since the certificate of acknowledgment is prima facie evidence of the execution of the instrument or document involved. Since Rodolfo de Leon was not the owner of the land at the time of the sale, he could not transfer any land rights to petitioner Alcantara, therefore, could not be said to be a buyer in good faith.

BIAN STEEL CORPORATION VS. CA Facts: Petitioner corporation filed a complaint against spouses Ng for collection of sum of money. A summon has to be served however the spouses cannot be located. Meanwhile, spouses sold the property to private respondents herein, Garcia by means of a deed of sale. The Garcias filed a complaint-in-intervention alleging that they were the registered owners of the property with assumption of mortgage from Ng spouses. On the other hand, the request of BSC for the property to be put in public action was ordered which led the Garciasto file another case. Issue: Whether or not petitioner BSC has better right to the disputed property. Held: BSC has a better right to the disputed property. According to the principle of constructive notice to the whole world, one who deals with registered property which is the subject of an annotated levy on attachment cannot invoke the rights of a purchaser in good faith. As between two purchasers, the one who registers the sale in his favor has a preferred right over the 21 other who has not registered his title even if the latter is in actual possession of the immovable property. And, as between two purchasers who both registered the respective sales in their favor, the one who registered his sale ahead of the other would have better rights than the other who registered later. Applying said provision of the law and settled jurisprudence to the instant case, when the disputed property was consequently sold on execution to BSC, this auction sale retroacted to the date of inscription of BSC's notice of attachment. The earlier registration thus gave BSC superior and preferential rights over the 22 attached property as against the Garcias who registered their purchase of the property at a later date. Notably, the Garcias were not purchasers for value in view of the fact that they acquired the property in payment of the loan earlier obtained from 23 them by the Spouses Ng. PUP VS. CA Facts: ACAP VS. CA Facts: A lot was registered in the name of spouses Santiago Vasquez and Lorenza Oruma whose both spouses died, leaving their only son Felixberto inherited the lot. Felixberto executed a duly notarized document entitled Declaration of Heirship and Deed ofAbsolute Sale in favor of Cosme Pido. Teodoro Acap had been the tenant of a portion of the said land even when ownership was transferred to CosmePido. He religiously paid his leasehold rentals to Pido and thereafter. The controversy began when Pido died intestate and his surviving heirs executed a notarized document denominated as Declaration of Heirship and Waiver of Rights of Lot 1130 Hinigaran Cadastre, wherein they declared to have adjudicated upon themselves the parcel of land in equal share, and that they waive, quitclaim all right, interests and participation over the parcel of land in favor of Edy de los Reyes, private respondent. The document was signed by all of Pidos heirs. Edy de los Reyes did not sign said document. It will be noted that at the time of Cosme Pidos death, title to the property continued to be registered in the name of the Vasquez spouses. Upon obtaining the Declaration of Heirship with Waiver of Rights in his favor, de los Reyes filed the same with the Registry ofDeeds as part of a notice of an adverse claim against the original certificate of title.Thereafter, delos Reyes sought for Acap to personally inform him that he had become the new owner of the land and that the lease rentals thereon should be paid to him. Delos Reyes alleged that he and Acap entered into an oral lease agreement wherein Acap agreed to pay 10cavans of palay per

annum as lease rental. In 1982, Acap allegedly complied with said obligation. However, Acap refused to pay any further lease rentals on the land, prompting delos Reyes to seek the assistance of the then Ministry of Agrarian Reform (MAR). DelosReyes filed a complaint for recovery of possession and damages against Acap, alleging that as his leasehold tenant, Acap refused and failed to pay the agreed annual rental despite repeated demands. Tthe lower court rendered a decision in favor of delos Reyes, ordering the forfeiture of Acaps preferred right of a Certificate of Land Transfer. Subsequently, the CA affirmed.

Issue: Whether or not a notice of adverse claim, by its nature, prove Edy De Los Reyes ownership over the tenanted lot. Held: A notice of adverse claim, by its nature, does not however prove private respondent's ownership over the tenanted lot. "A notice of adverse claim is nothing but a notice of a claim adverse to the registered owner, the validity of which is yet to be established in court at some future date, and is no better than a notice of lis pendenswhich is a notice of a case already pending in court." It is to be noted that while the existence of said adverse claim was duly proven, there is no evidence whatsoever that a deed of sale was executed between Cosme Pido's heirs and private respondent transferring the rights of Pido's heirs to the land in favor of private respondent. Private respondent's right or interest therefore in the tenanted lot remains an adverse claim which cannot by itself be sufficient to cancel the OCT to the land and title the same in private respondent's name.