Dignos vs.

Court of Appeals, and Jabil 158 SCRA 378 February 1988 FACTS: In July 1965, herein petitioners Silvestre T. Dignos and Isabela Lumungsod de Dignos (spouses Dignos) sold their parcel of land in Opon, LapuLapu to herein private respondent Antonio Jabil for the sum of P28,000 payable for two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000 and the next installment of P4,000 to be paid in September 1965. In November 1965, the spouses Dignos sold the same parcel of land for P35,000 to defendants Luciano Cabigas and Jovita L. de Cabigas (spouses Cabigas) who were then US citizens, and executed in their favor an Absolute Deed of Sale duly registered in the Office of the Register of Deeds. Upon discovery of the 2nd sale of the subject land, Jabil filed the case at bar in the CFI of Cebu which rendered its Decision in August 1975 declaring the 2nd sale to the spouses Cabigas null and void ab initio and the 1st sale to Jabil not rescinded. The CFI of Cebu also ordered Jabil to pay the remaining P16,000 to the spouses Dignos and to reimburse the spouses Cabigas a reasonable amount corresponding the expenses in the construction of hollow block fences in the said parcel of land. The spouses Dignos were also ordered to return the P35,000 to the spouses Cabigas. Both Jabil and the spouses Dignos appealed to the Court of Appeals, which affirmed in July 1981 the CFI of Cebus Decision except for the part of Jabil paying the expenses of the spouses Cabigas for building a fence. The spouses Dignos contested that the contract between them and Jabil was merely a contract to sell and not a deed of sale. ISSUE: Is the contract between the parties a contract of sale or a contract to sell? COURT RULING: The Supreme Court affirmed the Decision of the Court of Appeals saying stated that all the

elements of a valid contract of sale are present in the document and that the spouses Dignos had no right to sell the land in question because an actual delivery of its possession has already been made in favor of Jabil as early as March 1965. It was also found that the spouses Dignos never notified Jabil by notarial act that they were rescinding the contract, and neither did they file a suit in court to rescind the sale. There is no showing that Jabil properly authorized a certain Cipriano Amistad to tell petitioners that he was already waiving his rights to the land in question. JACOBUS BERNHARD HULST v. PR BUILDERS INC. (G.R. No. 156364) FACTS: The Petitioner and his spouse, both Dutch Nationals, entered into a Contract to Sell with PR Builders, Inc. to purchase a 210-sq m residential unit in the respondent's townhouse project in Batanagas. When PR Builder's failed to comply with their verbal promise to complete the project, the spouses Hulst filed a complaint for recession of contract with interest, damages and attorney's fees before the Housing and Land Regulatory Board (HLURB), which then was granted. A Writ of Execution was then addressed to the Ex-Officio Sheriff of the RTC of Tanauan, Batangas, but upon the complaint of the respondent, the levy was set aside, leaving only the respondent's personal properties to be levied first. The Sheriff set a public auction of the said levied properties, however, the respondent filed a motion to quash Writ of levy on the ground that the sheriff made an over levy since the aggregate appraised value of the properties at P6,500 per sq m is P83,616,000. Instead of resolving the objection of the respondent's regarding the auction, the Sheriff proceeded with the auction since there was no restraining order from the HLURB. The 15 parcels of land was then awarded to Holly Properties Realty at a bid of P5,450,653. On the same day, the Sheriff remitted the legal fees and submitted to contracts of sale to HLURB, however, he then received orders to suspend proceedings on the auction for the reason that the market value of the properties was not fair. There was disparity between the appraised value and the value made by the petitioner and the Sheriff, which should've been looked into by the Sheriff before making the sale. While an inadequacy in

price is not a ground to annul such sale, the court is justified to such intervention where the price shocks the conscience. ISSUE: 1. Whether or not the Sheriff erred in the value that was attached to the properties during the auction and as well as disregarding the objection made by the respondent's? 2. Whether or not the market value of the said property was inadequate? 2. Whether or not the spouses Hulst's request for damages is actionable? HELD: 1. No. According to the Rules of Court, the value of the property levied is not required to be exactly the same as the judgment debt. In the levy of property, the Sheriff does not determine the exact valuation of the levied property. The Sheriff is left to his own judgment. He should be allowed a reasonable margin between the value of the property levied upon and the amount of the execution; the fact that the Sheriff levies upon a little more than is necessary to satisfy the execution does not render his actions improper. In the absence of a restraining order, no error can be imputed to the Sheriff in proceeding with the auction sale despite the pending motion to quash the levy filed by the respondents with the HLURB. Sheriffs, as officers charged with the task of the enforcement and/or implementation of judgments, must act with considerable dispatch so as not to unduly delay the administration of justice. It is not within the jurisdiction of the Sheriff to consider and resolve respondent's objection to the continuation of the conduct of the auction sale. The Sheriff has no authority, on his own, to suspend the auction sale. His duty being ministerial, he has no discretion to postpone the conduct of the auction sale. 2. No. The HLURB Arbiter and Director had no sufficient factual basis to determine the value of the levied property. The Appraisal report, that was submitted, was based on the projected value of the townhouse project after it shall have been fully developed, that is, on the assumption that the residential units appraised had already been built. Since it is undisputed that the townhouse project did not push through, the projected value did not

become a reality. Thus, the appraisal value cannot be equated with the fair market value. 3. No. Under Article 12, Sec.7 of the 1987 Constitution, foreign nationals, the spouses Hulst, are disqualified form owning real property. However, under article 1414 of the Civil Code, one who repudiates the agreement and demands his money before the illegal act has taken place is entitled to recover. Petitioner is therefore entitled to recover what he has paid, although the basis of his claim for rescission, which was granted by the HLURB, was not the fact that he is not allowed to acquire private land under the Philippine Constitution. But petitioner is entitled to the recovery only of the amount of P3,187,500.00, representing the purchase price paid to respondent. No damages may be recovered on the basis of a void contract; being nonexistent, the agreement produces no juridical tie between the parties involved. Further, petitioner is not entitled to actual as well as interests thereon, moral and exemplary damages and attorney's fees.

Toyota Shaw Inc. vs. Court of Appeals, and Sosa 244 SCRA 320 May 1995 FACTS: Luna L. Sosa and his son, Gilbert, went to purchase a yellow Toyota Lite Ace from the Toyota office at Shaw Boulevard, Pasig (petitioner Toyota) on June 14, 1989 where they met Popong Bernardo who was a sales representative of said branch. Sosa emphasized that he needed the car not later than June 17, 1989 because he, his family, and a balikbayan guest would be using it on June 18 to go home to Marinduque where he will celebrate his birthday on June 19. Bernardo assured Sosa that a unit would be ready for pick up on June 17 at 10:00 in the morning, and signed the "Agreements Between Mr. Sosa &Popong Bernardo of Toyota Shaw, Inc., a document which did not mention anything about the full purchase price and the manner the installments were to be paid. Sosa and Gilbert delivered the down payment of P100,000.00 on June 15, 1989 and Bernardo accomplished a printed Vehicle

Sales Proposal (VSP) No. 928 which showed Sosas full name and home address, that payment is by "installment," to be financed by "B.A.," and that the "BALANCE TO BE FINANCED" is "P274,137.00", but the spaces provided for "Delivery Terms" were not filled-up. When June 17 came, however, petitioner Toyota did not deliver the Lite Ace. Hence, Sosa asked that his down payment be refunded and petitioner Toyota issued also on June 17 a Far East Bank check for the full amount of P100,000.00, the receipt of which was shown by a check voucher of Toyota, which Sosa signed with the reservation, "without prejudice to our future claims for damages." Petitioner Toyota contended that the B.A. Finance disapproved Sosas the credit financing application and further alleged 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. The trial court found that there was a valid perfected contract of sale between Sosa and Toyota which bound the latter to deliver the vehicle and that Toyota acted in bad faith in selling to another the unit already reserved for Sosa, and the Court of Appeals affirmed the said decision. ISSUE: Was there a perfected contract of sale between respondent Sosa and petitioner Toyota? COURT RULING: The Supreme Court granted Toyotas petition and dismissed Sosas complaint for damages because the document entitled Agreements Between Mr. Sosa &Popong Bernardo of Toyota Shaw, Inc., was not a perfected contract of sale, but merely an agreement between Mr. Sosa and Bernardo as private individuals and not between Mr. Sosa and Toyota as parties to a contract. There was no indication in the said document of any obligation on the part of Toyota to transfer ownership of a determinate thing to

Sosa and neither was there a correlative obligation on the part of the latter to pay therefor a price certain. 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 VSP No.928 executed on June 15, 1989 confirmed. The VSP also created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury. SPS. ALFREDO R. EDRADA and ROSELLA L. EDRADA vs. CARMENCITA RAMOS, SPS. EDUARDO RAMOS Facts: Respondent spouses Eduardo and Carmencita Ramos (respondents) are the owners of two (2) fishing vessels, the "Lady Lalaine" and the "Lady Theresa." On 1 April 1996, respondents and petitioners executed an untitled handwritten document which lies at the center of the present controversy.Upon the signing of the document, petitioners delivered to respondents four (4) postdated Far East Bank and Trust Company (FEBTC) checks payable to cash drawn by petitioner Rosella Edrada, in various amounts totaling One Hundred Forty Thousand Pesos (P140,000.00). The first three (3) checks were honored upon presentment to the drawee bank while the fourth check for One Hundred Thousand Pesos (P100,000.00) was dishonored because of a "stop payment" order.On 3 June 1996, respondents filed an action against petitioners for specific performance with damages before the RTC, praying that petitioners be obliged to execute the necessary deed of sale of the two fishing vessels and to pay the balance of the purchase price. In their Complaint,7 respondents alleged that petitioners contracted to buy the two fishing vessels for the agreed purchase price of Nine Hundred Thousand Pesos (P900,000.00), as evidenced by the above-quoted document, which according to them evinced a contract to buy. However, despite delivery of said vessels and repeated oral demands, petitioners failed to pay the balance, so respondents further averred. Belying the allegations of respondents, in their Answer with Counterclaim,8petitioners averred that the document sued upon merely embodies an agreement brought about by the loans they extended to respondents. According

to petitioners, respondents allowed them to manage or administer the fishing vessels as a business on the understanding that should they find the business profitable, the vessels would be sold to them for Nine Hundred Thousand Pesos (P900,000.00). But petitioners "decided to call it quits" after spending a hefty sum for the repair and maintenance of the vessels which were already in dilapidated condition. Issue: Whether or not there is a perfected contract of sale. Held: An examination of the document reveals that there is no perfected contract of sale. The agreement may confirm the receipt by respondents of the two vessels and their purchase price. However, there is no equivocal agreement to transfer ownership of the vessel, but a mere commitment that "documents pertaining to the sale and agreement of payments[are] to follow." Evidently, the document or documents which would formalize the transfer of ownership and contain the terms of payment of the purchase price, or the period when such would become due and demandable, have yet to be executed. But no such document was executed and no such terms were stipulated upon. The fact that there is a stated total purchase price should not lead to the conclusion that a contract of sale had been perfected. A contract is perfected when there is concurrence of the wills of the contracting parties with respect to the object and the cause of the contract. In this case, the agreement merely acknowledges that a purchase price had been agreed on by the parties. There was no mutual promise to buy on the part of petitioners and to sell on the part of respondents. Again, the aforestated proviso in the agreement that documents pertaining to the sale and agreement of payments between the parties will follow clearly manifests lack of agreement between the parties as to the terms of the contract to sell, particularly the object and cause of the contract. The agreement in question does not create any obligatory force either for the transfer of title of the vessels, or the rendition of payments as part of the purchase price. At most, this agreement bares only their intention to enter into either a contract to sell or a contract of sale.

Doctrine: Before a valid and binding contract of sale can exist, the manner of payment of the purchase price must first be established, as such stands as essential to the validity of the sale. After all, such agreement on the terms of payment is integral to the element of a price certain, such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. [G.R. No. 171373, June 18, 2008] LLOYD'S ENTERPRISES AND CREDIT CORPORATION, PETITIONERS, VS. SPS. FERDINAND AND PERSEVERANDA DOLLETON, RESPONDENTS. FACTS: Respondents spouses Dolleton, were the registered owners of a parcel of land covered by TCT No. 153554 with a four-door apartment building being leased to various tenants. Respondents mortgaged the property to a certain Santos to secure a loan in the amount of P100,000.00. Upon payment of the loan on 15 August 1994, Santos executed a release and cancellation of the mortgage. The same was annotated on the TCT. On 15 September 1994, TCT No. 153554 in the name of respondents was cancelled and a new TCT No. 197220 was issued in the name of Gagan on the basis of a Deed of Absolute Sale dated 5 August 1994 whereby respondents purportedly sold to Gagan the subject property for the sum of P120,000.00. On 19 September 1994, Gagan and Gueverra mortgaged said property with TCT No. 197220 to petitioner LECC for second loan of P542,928.00 and was annotated on said Title. However, Gagan and Guevarra failed to pay the loan upon maturity. Thus, petitioner foreclosed mortgaged property being the highest bidder and was not redeemed within the one-year period. Hence, ownership was consolidated in favor of petitioner and was issue a new TCT No. 210363 cancelling TCT No. 197220. Petitioner then sent notices to the apartment tenants on the transfer of ownership and rentals were not remitted to respondents anymore, prompting the latter to cause the annotation of an adverse claim on TCT No. 210363.

Respondents prayed among others for the restoration of TCT No. 153554 and nullification of the Deed of Absolute Sale, and the extrajudicial foreclosure proceedings. They denied having executed the Deed of Absolute Sale and alleged that they had merely offered to sell to Gagan the subject property for P900,000.00 on installment basis so that they could pay their loan obligation to Santos. After Gagan had initially paid P200,000.00, they entrusted the owner's copy of TCT No. 153554 to him. Gagan was unable to pay the balance of the purchase price, rather she caused the fraudulent cancellation of TCT No. 153554 and the issuance of TCT No. 197220 in her name, and of eventually using TCT No. 197220 to secure the loans obtained from petitioner. Respondents also faulted petitioner for failing to make adequate inquiries on the true ownership of the property considering the suspicious circumstances surrounding Gagan's and Guevarra's request for loan immediately after the issuance of the new certificate of title. The RTC declared the Deed of Absolute Sale between Gagan and Dolleton as spurious and directed the reconveyance of the property to the true and genuine owners, the spouses Dolleton. CA affirmed RTCs decision. ISSUE: WON Petitioner is a Mortgagee and Buyer in Good Faith RULING: The Court affirmed the reconveyance of the property to respondents Dolleton as petitioner is not a mortgagee in good faith, hence, foreclosure was not valid. Petitioner failed to verify the actual condition of the property, particularly as to who is in actual possession and if the premises are leased to third persons, who is receiving the rental payments therefore. Appellant LECC merely submitted in evidence forms for credit investigation on the borrower's capacity to pay, there is no showing that they actually inspected the property offered as collateral. Had precautionary measure been taken, the lending company's representatives would have easily discovered that the four (4)-

door apartment in the premises being mortgaged is rented by tenants and they could have been provided with information that plaintiffs-appellees are still the present lessors/owners thereof. Moreover, the circumstance that the certificate of title covering the property offered as security was newly issued should have put petitioner on guard and prompted it to conduct an investigation surrounding the transfer of the property to defendant Gagan. Had it inquired further, petitioner would have discovered that the property was sold for an unconscionably low consideration of only P120,000.00 when it could have fetched as high as P900,000.00. A purchaser cannot close his eyes to facts which should put a reasonable man on his guard and claim that he acted in good faith under the belief that there was no defect in the title of the vendor. Petitioner is engaged in the business of extending credit to the public and is, thus, expected to exercise due diligence in dealing with properties offered as security. The failure of respondent to take such precautionary steps is considered negligence on its part and would thereby preclude the defense of good faith. G.R. No. L-25494 June 14, 1972 NICOLAS SANCHEZ vs. SEVERINA RIGOS FACTS: Nicolas Sanchez and SeverinaRigos executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos agreed, promised and committed to sell to Sanchez a parcel of land within two (2) years from said date with the understanding that said option shall be deemed terminated and elapsed if Sanchez shall fail to exercise his right to buy the property within the stipulated period. Inasmuch as several tenders of payment made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with the Court of First Instance of Nueva Ecija and commenced against the latter the present action, for specific performance and damages. Rigos contended that the contract between them was only aunilateral promise to sell, and the same being unsupported by any

valuable consideration, by force of the New Civil Code, is null and void. Sanchez alleged in his compliant that, by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to buy" the land described in the option. The lower court rendered judgment in favor of Sanchez and ordered Rigos to accept the sum Sanchez judicially consigned, and to execute in his favor the requisite deed of conveyance. ISSUE: Whether there was a contract to buy and sell between the parties or only a unilateral promise to sell. COURT RULING: The Supreme Court affirmed the lower courts decision. The instrument executed in 1961 is not a "contract to buy and sell," but merely granted SANCHEZ an option to buy, as indicated by its own title "Option to Purchase." The option did not impose upon Sanchez the obligation to purchase Rigos' property. Rigos "agreed, promised and committed" herself to sell the land to Sanchez, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land. Article 1479 refers to "an accepted unilateral promise to buy or to sell." Since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. GUZMAN, BOCALING & CO. vs. BONNEVIE Facts: Respondents Raoul and Christopher Bonnievie were lessees of a parcel of land with two buildings constructed thereon belonging to the intestate estate of Jose Reynoo. The contact of lease contained the ff stipulation: in case the lessor desires or decides to sell the leased property, the lessees shall be given a first priority to purchase the same, all things and considerations being equal. On Nov 1976, administratix Afria Valdez de Reynoso notified

respondents by registered mail that she is selling the premises for 600k less a mortgage of 100k, giving them 30 days from receipt to exercise their right of first priority, otherwise, they should vacate the property not later than March 1977. On Jan 1977, she sent another letter to respondents notifying them that she already sold the property since respondents failed to buy the same. Upon receipt of this letter, respondents informed Reynoso that neither of them received her letter dated Nov 1976; that they had advised her agent to inform them officially should she decide to sell the property so negotiations could be initiated; and that they were constrained to refuse (her) request for the termination of the lease. On March 1977, the property was formally sold to petitioner Guzman, Bocaling&Corp for 400k with 137,500 paid as downpayment and the balance to be paid when respondents vacate the premises. Administratix Reynoso filed a complaint for ejectment against respondents when the latter refused to vacate the premises after the formers demand. A Compromise Agreement was made which provided that respondents will voluntarily leave the premises not later than 1979. However, respondents failed to comply with the agreement. A motion for execution of the judgment by compromise was granted. Respondents filed a motion to set aside said decision but it was denied. While the ejectment case was pending in the City court, respondents filed an action for annulment of sale between Reynoso and petitioner GBC and the cancellation of the transfer of certificate of title. They also required Reynoso to sell the property to them under the same terms and conditions agreed upon in the Contract of Sale. The City Court ruled that the respondents must vacate the premises and deliver possession of the property to the petitioner as well as pay the rent due to them. Upon appeal to the CFI Manila, it affirmed the said ejection case with modification and granted respondents petition to cancel the Deed of Sale executed between Africa and the petitioner and ordered her to sell the property to respondent. CA affirmed the said decision. Issue: WON CA erred in ruling that the grant of first priority to purchase the subject properties by the Reynoso needed no authority from the probate court; holding that the Contract of Sale was not voidable but rescissible; and in considering petitioner as buyer in bad faith

ordering Reynoso to execute the deed of sale in favor of respondents. Held: The Court held that respondent court was correct that it was not necessary to secure the approval by the probate court of the Contract of Lease because it did not involve an alienation of real property of the estate nor did the term of the lease exceed one year so as to make it fall underArticle 1878(8) of the Civil Code. The Court also agreed with the respondent court that the Contract of Sale was not voidable but rescissible. Under Article 1380 to 1381 (3) of the Civil Code, a contract otherwise valid may nonetheless be subsequently rescinded by reason of injury to third persons, like creditors. The status of creditors could be validly accorded the Bonnevies for they had substantial interests that were prejudiced by the sale of the subject property to the petitioner without recognizing their right of first priority under the Contract of Lease. Rescission is a remedy granted by law to the contracting parties and even to third persons, to secure reparation for damages caused to them by a contract, even if this should be valid, by means of the restoration of things to their condition at the moment prior to the celebration of said contract. Petitioner is not considered a third party in relation to the Contract of Sale. Petitioner was not a buyer in good faith because it was aware of the lease in favor of the Bonnevies, as it had notice of the lease of the property by the Bonnevies. 12. RIVERA FILIPINA INC v CA FACTS: In 1982, Reyes executed a 10-year (renewable)Contract of Lease with Riivera Filipina over a parcel ofland in EDSA. Under such contract, the lessee is given aright of first refusal should the lessor decide to sell theproperty during the terms of the lease.Such property was subject of a mortgage executed byReyes in favor of Prudential Bank. Since Reyes failed topay the loan with the bank, it foreclosed the mortgageand it emerged as the highest bidder in the auction sale.Realizing that he could not redeem the property, Reyesdecided to sell it and offered it to Riviera Filipina forP5,000/sqm. However, it bargained

for P3,500/sqm.Reyes rejected such offer. After 7 months, it againbargained for P4,000/sqm, which again was rejected byReyes who asked for P6,000/sqm price. After 2 months,it again bargained for P5,000/sqm, but since Reyesinsisted on P6,000/sqm price, he rejected Riviera'soffer.Nearing the expiry of the redemption period, Reyesand Traballo (his friend) agreed that the latter wouldbuy the same for P5,300. But such deal was not yetformally concluded and negotiations with Riviera Filipinaonce again transpired but to no avail.In 1989, Cypress and Cornhill Trading were able tocome up with the amount sufficient to cover theredemption money, with which Reyes paid to PrudentialBank to redeem the property. Subsequently, a Deed ofAbsolute Sale was executed in favor of Cypress andCornhill for P5.4M. Cypress and Cornhill mortgaged theproperty in favor of Urban Dev. Bank for P3M.Riviera Filipina filed a suit against Reyes, Cypress andCornhill on the ground that they violated its right of firstrefusal under the lease contract. RTC ruled in favor of Reyes, Cypress, and Cornhill. On appeal, CA affirmedthe decision of the RTC. ISSUE: W/N Riviera Filipina lost its right of first refusal HELD: YES. As clearly shown by the records andtranscripts of the case, the actions of the parties to thecontract of lease, Reyes and Riviera, shaped theirunderstanding and interpretation of the lease provision"right of first refusal" to mean simply that should thelessor Reyes decide to sell the leased property duringthe term of the lease, such sale should first be offeredto the lessee Riviera. And that is what exactly ensuedbetween Reyes and Riviera, a series of negotiations onthe price per square meter of the subject property withneither party, especially Riviera, unwilling to budgefrom his offer, as evidenced by the exchange of lettersbetween the two contenders.It can clearly be discerned from Rivieras letters thatRiviera was so intractable in its position and tookobvious advantage of the knowledge of the timeelement in its negotiations with Reyes as theredemption period of the subject foreclosed propertydrew near. Riviera strongly exhibited a "take-it or leave-it" attitude in its negotiations with Reyes. It quoted its"fixed and final" price as Five Thousand Pesos(P5,000.00) and not any peso

more. It voiced out that ithad other properties to consider so Reyes should decideand make known its decision "within fifteen days."Riviera even downgraded its offer when Reyes offeredanew the property to it, such that whatever amountReyes initially receives from Riviera would absolutely beinsufficient to pay off the redemption price of thesubject property. Naturally, Reyes had to disagree withRivieras highly disadvantageous offer.Nary a howl of protest or shout of defiance spewedforth from Rivieras lips, as it were, but a seeminglywhimper of acceptance when the counsel of Reyesstrongly expressed in a letter dated December 5, 1989that Riviera had lost its right of first refusal. Rivieracannot now be heard that had it been informed of theoffer of Five Thousand Three Hundred Pesos (P5,300.00)of Cypress and Cornhill it would have matched saidprice. Its stubborn approach in its negotiations withReyes showed crystalclear that there was never anyneed to disclose such information and doing so would bejust a futile effort on the part of Reyes. Reyes wasunder no obligation to disclose the same. Pursuant toArticle 1339 of the New Civil Code, silence orconcealment, by itself, does not constitute fraud, unlessthere is a special duty to disclose certain facts, or unlessaccording to good faith and the usages of commerce thecommunication should be made. The general rule isapplicable in the case at bar since Riviera failed toconvincingly show that either of the exceptions arerelevant to the case at bar 10. PARANAQUE KINGS ENTERPRISES INC v CA FACTS: Catalina owned 8 parcels of land leased to Chua,who assigned its rights thereto to Lee Ching Bing, who,in turn, assigned said rights to Paranaque KingEnterprises, which introduced significant improvementson the premises. Under the lease agreement, in case ofsale, the lessee shall have the option or priority to buythe said properties. Catalina, in violation of the saidstipulation, sold the lot to Raymundo for P5M.Paranaque King notified her of the said breach, and sheimmediately had the lots reconveyed. She then offeredthe lot to Paranaque King for P15M; but the latterrefused claiming that the offer was ridiculous.Catalina thereafter sold it again to Raymundo for P9M.

ISSUE: W/N there was compliance with the Right of FirstRefusal assigned to Paranaque King HELD: NO. In a Right of First Refusal, the seller cannotoffer the property to another for a lower price or underterms more favorable. It must be offered under thesame terms & conditions to Paranaque King; otherwise,the right of first refusal becomes illusory. Only ifParanaque King fails to meet the offer may the propertybe offered for sale to another buyerand under thesame terms and conditions as well. The Right of FirstRefusal may also be validly transferred or assignedas inthis case

LAO VS. GENATO No. L-56451 June 19, 1985 Ponente: Cuevas, J. FACTS: Spouses Juan and Candelaria Lao were promisees in a Mutual Agreement of Promise to Sell executed between them and Sotero Dionisio III, the son of the heir and administrator of the intestate estate of deceased Rosenda Abuton, Sotero Dionisio Jr. The Laos were promised by Dionisio III a commercial property belonging to such estate. On June 25,1980, Dionisio Jr. filed with the Probate Court a Motion for Authority to Sell which the said court granted. Thereafter, he sold to his son Dionisio III the subject property for P75,000. The latter then sold the same property in favor of a certain William Go for P80,000. Subsequently, the title was transferred to Go. On August 27, 1980, Florida Nuqui (another heir of the estate), filed a motion for Annulment of the Deeds of Absolute Sale on the ground that the sale and subsequent transfer of title of the property were grossly inadequate. According to Nuqui, the market value of the property is P400,000. On February 6, 1981, the Laos filed a Manifestation wherein they alleged that Dionisio Jr., without revealing that the property had already been sold to Go, entered into a Mutual Agreement of Promise to Sell to the former for P220,000 (the Laos even offered to pay for the property for P300,000). They further alleged that they paid the earnest money with a check worth P70,000 in favor of

Dionisio III. Moreover, the Laos contended that the agreement regarding the balance will only be paid upon the production of the TCT and the execution of the final Deed of Sale. Because of the conflict, all the parties, except the Lao spouses and Dionisio III, entered an Amicable Settlement. The Lao spouses filed an opposition but despite such opposition, respondent Judge Genato approved the Amicable Settlement. ISSUE: Whether or not the sale between the administrator and his son valid. HELD: NO. A sale made by an administrator of decedents property which is fictitious and illegal cannot be made lawful by the assent thereto of the heirs and approval by the trial court of the compromise settlement, being prejudicial to creditors and to government. The price was grossly low. Dionisio III had no income whatsoever. On top of that, not a single centavo of the P75,000 was ever accounted for nor reported to the Probate Court. Dionisio Jr. was only compelled to admit that the actual consideration for the sale made by him was P200,000 and not for P80,000 (This happened in the amicable settlement). In addition, the offer by the Laos of P300,000 for the purchase of the property is more beneficial and advantageous. No satisfactory and convincing reason appeared given the rejection and non-acceptance of said offer, thus giving rise to a well-grounded suspicion that a collusion of some sort exists between the administrator and the heirs to defraud the creditors and the government. FORNILDA VS. BR. 164, RTC IVTH JUDICIAL REGION, PASIG No. L-72306 October 5, 1988 Ponente: Melencio-Herrera FACTS: Julio Catolos (deceased) formerly owned 6 parcels of Land in Rizal. His estate was subject of a settlement where the legal heirs including Alfonso Fornilda were represented by Atty. Sergio Amonoy. A Project of Partition was filed in the Intestate Court whereby the cotroverted parcels were adjudicated to Fornilda and a certain Asuncion

Pasamba. The Court approved the Project of Partition. Thereafter, the estate was declared closed and terminated after estate and inheritance taxes had been paid, the claims against the estate settled, and all the parties adjudicated. Fornilda and Pasamba then executed a contract of mortgage wherein they mortgaged the controverted parcels to Atty. Amonoy as security for payment of his Attorneys fees in the aforementioned proceedings in the amount of P27,600. In 1969, both Fornilda and Pasamba died. Petitioners are some of Fornildas heirs Since the mortgage indebtedness was not paid, Atty. Amonoy instituted foreclosure proceedings. In 1973, the controverted parcels were foreclosed. An auction sale was then held where Amonoy was the only bidder for P23,760. The sale was confirmed by the trial court. To satisfy the deficiency, another sale was conducted, again, Amonoy was the only bidder for P12,137.50. A year after, an action for annulment was filed. The trial court dismissed the action. ISSUE: Whether or not the acquisition of Atty. Amonoy of the controverted parcels of land from petitioners valid. HELD: NO. Under Art. 1491. A lawyer is prohibited from acquiring either by purchase or assignment of the property or rights involved which are object of the litigation in which they intervene by virtue of their profession. The rationale advanced for the prohibition is that public policy disallows the transactions in view of the fiduciary relationship involved. The fact that the properties were first mortgaged and only subsequently acquired in an auction sale will not remove it from the scope of prohibition. Director of Lands v. Ababa February 27, 1979 FACTS: The adverse claimant Atty. Alberto Fernandez was retained as counsel of Maximo Abarquez in a case for annulment of contract of sale with right of repurchase and for the recovery of land subject matter of this case. Being a pauper, Abarquez executed a document agreeing to pay a contingent fee of of

whatever he might recover as compensation for his lawyer. When the original case has been resolved, Abarquez was unable to comply with his obligation to deliver with Fernandez portion of said parcels of land. The latter took steps to protect his claim by filing a motion to annotate his attorneys lien and by notifying prospective buyers of his claim. The motion was granted. Petitioners now argue that a contract of contingent fee violates Article 1491 of the Civil Code. ISSUE: WON the contract of contingent fee as basis of the interest of Atty. Fernandez is prohibited under Art. 1491. HELD: NO. The contention is unmeritorious. Article 1491 prohibits only the sale of or assignment between lawyer and his client of property which is the subject of litigation. For the prohibition to operate, the sale or assignment must take place during the pendency of the litigation involving the property. Further, a contract of contingent fee is not covered by Art. 1491 because transfer or assignment of property in litigation takes effect only after the finality of favorable judgment. Here, the attorneys fee is contingent upon the success of the appeal.

Victoriano T. Cuenco (respondent herein), a naturalized Filipino, for the sum of P5,000.00. On March 6, 1962, Epifania "usurped" the controverted property, and on July 26, 1962, Epifania (through her only daughter and child, Emeteria Barsobia), sold a one-half (1/2) portion of the land in question to Pacita W. Vallar, the other petitioner herein .On September 19, 1962, respondent filed a Forcible Entry case against Epifania before the Municipal Court of Sagay, Camiguin. The case was dismissed for lack of jurisdiction since, as the laws then stood, the question of possession could not be properly determined without first settling that of ownership. On December 27, 1966, respondent instituted before the Court of First Instance of Misamis Oriental a Complaint for recovery of possession and ownership of the litigated land, against Epifania and Pacita Vallar ISSUE: Whether or not Victoriano Cuenco, a naturalized Filipino is the rightful owner of the land after buying it from Ong King Po, a Chinese. HELD: YES. The SC declared that the sale by Epifania to Ong King Po was void as it is against public policy under the 1935 Constitution and that Cuenco was the rightful owner as Epifania is also barred by laches. G.R. NO. L-17043: NATIVIDAD HERRERA V. LUY KIM GUAN Facts: Herein plaintiff is the legitimate heir of Luis Herrera. Luis Herrera, now deceased, owned three parcels of land. Before leaving for China in 1931 or early part of 1932, Luis Herrera executed a deed of General Power of Attorney which authorized defendant Luy Kim Guan to administer and sell the aforementioned parcels of land. He died on an unknown date. On the dates of July 23, 1937, August 4, 1937, and September 11, 1939, the three parcels of land were respectfully sold to different individuals through the attorney-in-fact of Luis Herrera Luy Kim Guan. Herein plaintiff assails the assumption that Luis Herrera died on 1936 and so herein defendant Luy Kim Guan had no right to sell the parcels of land because Luis Herrera had died prior to the transactions thus extinguishing their agent-principal relationship.

SARSOSA VDA. DE BARSOBIA and PACITA W. VALLAR v VICTORIANO T. CUENCO April 16, 1982 FACTS: For review is the decision of CA declaring Victoriano T. Cuenco (now the respondent) as the absolute owner of a coconut land in question. The lot in controversy is a one-half portion (on the northern side) of two adjoining parcels of coconut land located at Barrio Mancapagao, Sagay, Camiguin, Misamis Oriental (now Camiguin province), with an area of 29,150 square meters, more or less. The entire land was owned previously by a certain Leocadia Balisado, who had sold it to the spouses Patricio Barsobia (now deceased) and Epifania Sarsosa, Filipino citizens. On September 5, 1936, Epifania Sarsosa then a widow, sold the land in controversy to a Chinese, Ong King Po, for the sum of P1,050.00 .Ong King Po took actual possession and enjoyed the fruits thereof. On August 5, 1961, Ong King Po sold the litigated property to

Thus according to the plaintiff, the transactions should be null and void. Issue: Whether or not the transactions should be null and void since they were made without any authority Held: No. The Court held that even granting argument that Luis Herrera did die in 1936, plaintiffs presented no proof and there is no indication in the record, that the age Luy Kim Guan was aware of the death of his prince at the time he sold the property. The death of the principal does not render the act of an agent unenforceable, where the latter had no knowledge of such extinguishment the agency. G.R. NO. L-36731: GODINEZ V. FONG PAK LUEN Facts: The plaintiffs filed a case to recover a parcel of land sold by their father Jose Godinez to defendant Fong Pak Luen. Said defendant executed a power of attorney in favour of his co-defendant Kwan Pun Ming, who conveyed and sold the above described parcel of land to co-defendant Trinidad S. Navata. The latter is aware of and with full knowledge that Fong Pak Luen is a Chinese citizen as well as Kwan Pun Ming, who under the law are prohibited and disqualified to acquire real property; that Fong Pak Luen has not acquired any title or interest in said parcel of land as purported contract of sale executed by Jose Godinez alone was contrary to law and considered non-existent. The defendant filed her answer that the complaint does not state a cause of action since it appears from the allegation that the property is registered in the name of Jose Godinez so that as his sole property he may dispose of the same; that the cause of action has been barred by the statute of limitations as the alleged document of sale executed by Jose Godinez on November 27, 1941, conveyed the property to defendant Fong Pak Luen as a result of which a title was issued to said defendant; that under Article 1144(1) of the Civil Code, an action based upon a written contract must be brought within 10 years from the time the right of action accrues; that the right of action accrued on November 27, 1941 but the complaint was filed only on September

30, 1966, beyond the 10-year period provided by law. The trial court issued an order dismissing the complaint. A motion for reconsideration was filed by plaintiffs but was denied. Issue: Whether or not the sale was null and void ab initio since it violates applicable provisions of the Constitution and the Civil Code. Ruling: No. Prescription may never be invoked to defend that which the Constitution prohibits. However, we see no necessity from the facts of this case to pass upon the nature of the contract of sale executed by Jose Godinez and Fong Pak Luen whether void ab initio, illegal per se, or merely prohibited. It is enough to stress that insofar as the vendee is concerned, prescription is unavailing. But neither can the vendor or his heirs rely on an argument based on imprescriptibility because the land sold in 1941 is now in the hands of a Filipino citizen against whom the constitutional prescription was never intended to apply. As earlier mentioned, Fong Pak Luen, the disqualified alien vendee later sold the same property to Navata, a Filipino citizen qualified to acquire real property. Navata, as a naturalized citizen, was constitutionally qualified to own the subject property. Jacobus Bernhard vs PR Builders Inc 25 September 2008 Facts: Petitioner contends that the Contract to Sell between petitioner and respondent involved a condominium unit and did not violate the Constitutional proscription against ownership of land by aliens. He argues that the contract to sell will not transfer to the buyer ownership of the land on which the unit is situated; thus, the buyer will not get a transfer certificate of title but merely a Condominium Certificate of Title as evidence of ownership; a perusal of the contract will show that what the buyer acquires is the seller's title and rights to and interests in the unit and the common areas. The Contract to Sell between petitioner and respondent provides as follows: Section 3. TITLE AND OWNERSHIP OF UNIT

Upon full payment by the BUYER of the purchase price stipulated in Section 2 hereof, x x x, the SELLER shall deliver to the BUYER the Deed of Absolute Sale conveying its rights, interests and title to the UNIT and to the common areas appurtenant to such UNIT, and the corresponding Condominium Certificate of Title in the SELLER's name; x x x The Seller shall register with the proper Registry of Deeds, the Master Deed with the Declaration of Restrictions and other documents and shall immediately comply with all requirements of Republic Act No. 4726 (The Condominium Act) and Presidential Decree No. 957 (Regulating the Sale of Subdivision Lots and Condominiums, Providing Penalties for Violations Thereof). It is hereby understood that all title, rights and interest so conveyed shall be subject to the provisions of the Condominium Act, the Master Deed with Declaration of Restrictions, the Articles of Incorporation and By-Laws and the Rules and Regulations of the Condominium Corporation, zoning regulations and such other restrictions on the use of the property as annotated on the title or may be imposed by any government agency or instrumentality having jurisdiction thereon.[4] (Emphasis supplied) Under Republic Act (R.A.) No. 4726, otherwise known as the Condominium Act, foreign nationals can own Philippine real estate through the purchase of condominium units or townhouses constituted under the Condominium principle with Condominium Certificates of Title. Issue: w/n the purchase of a condo unit by an alien falls under the express prohibition of land ownership by aliens Ruling: No. Considering that the rights and liabilities of the parties under the Contract to Sell is covered by the Condominium Act wherein petitioner as unit owner was simply a member of the Condominium Corporation and the land remained owned by respondent, then the constitutional proscription against aliens owning real property does not apply to the present case. There being no circumvention of the constitutional prohibition, the Court's pronouncements on the invalidity of the Contract of Sale should be set aside.