FilOil Marketing vs.

IAC

FACTS:
Pabalan sold a parcel of land to Villa Rey Transit. On the day of the sale, the TCT was delivered
by Pabalan to Villarama, president of Villa Rey, who caused the issuance of the new title in his
own name. The transfer appeared to be a deed of sale.

On the same day Villarama mortgaged the lot in behalf of Villa Rey to FilOil as security for a
loan. Having defaulted the payment, the lot was extrajudicially foreclosed in which FilOil won the
bidding. However, before FilOil could consolidate the ownership, Pabalan filed a complaint
against Villarama, Villa Rey and FilOil.
The complaint alleged that the sale was conditional and did not transfer the title to the buyer
until full payment of the price. RTC and CA both rendered a judgment in favor of complainant.
In their answer, Villa Rey Transit and Villarama contended that by its terms the contract of sale
effected immediate transfer of ownership over the land to them although payment was to be made in
installments. The transaction was. not a mere contract to sell. Hence, they had the right to mortgage
it after securing a new certificate of title over it in the name of Villarama. 10
Filoil's defense was that of an innocent purchaser for value. It argued that it bad a right to rely on
TCT No. 94229 and the warranties of the mortgagor and could not be held liable for the acts of the
other defendants. Neither should it be prejudiced by a rescission of the contract. 11
It is obvious that the above instrument is not a contract to sell as contended by the private
respondent. We read it as a deed of sale in which title to the subject land was transferred to the
vendee as of the date of the transaction notwithstanding that the purchase price had not yet been
fully paid at that time.
In the first place, the dispositive part of the deed states that "for and in consideration of the sum of
ONE HUNDRED FORTY THOUSAND (Pl40,000.00) PESOS, payable under the terms and
conditions stated in the foregoing premises, the VENDOR sells, transfers and conveys unto the
VENDEE ... the property in question as of December 22, 1971, the date of the said document.
Secondly, and more importantly, it is provided in paragraph 5 thereof that "should the VENDEE, prior
to full payment of all the amounts aforementioned, decide to sell or to assign part or all of the
aforementioned parcel of land, the VENDOR shall be informed in writing and shall have the option to
repurchase the property ... Should the VENDOR herein decide to repurchase and the property is
sold or transferred to a third person, the balance of the consideration herein still due to the VENDOR
shall constitute automatically a prior lien on the consideration to be paid by the third person to herein
VENDEE.'

Under the first-cited stipulation, what is deferred is not the transfer of ownership but the full payment
of the purchase price, which is to be made in installments, on the dates indicated. Under the second
stipulation, it is recognized that the vendee may sell the property even "prior to full payment of all the
amounts aforementioned," which simply means that although the purchase price had not yet been
completely paid, the vendee had already become the owner of the land. As such, he could sell the
same, subject to the right of repurchase reserved to the vendor. In fact, the contract also provides for
the possibility of the vendee selling the property to a third person, in which case the vendor, if she
wishes to repurchase the land, shall have a lien on any balance of the consideration to be paid by
the third person to the vendee.

SC:
It is obvious that the instrument is not a contract to sell as contended by Pabalan. It is a deed of
sale in which the title was transferred to the vendee as of the date of the transaction
notwithstanding that the purchase price had not been fully paid at that time.
In stipulation, it is recognized that the vendee may sell the property prior to full payment of all
the amount.

Villarama acted in bad faith when he secured the cancellation of vendors title and replaced it in
his own name. Pabalan left the drafting of the deed of sale to Villarama whom she trusted. This
circumstance alone imposed to Villarama the moral if not the legal responsibility to explain the
meaning and consequence of the contract she was signing.

FilOil also acted in bad faith in accepting the property as security to the loan without exercising
more vigilance in inquiring with Pabalan, as lessor, into the antecedent of the transfer of title to
Villarama.

G.R. No. L-22358 January 29, 1975

PIO BARRETTO SONS, INC., petitioner, vs. COMPAIA MARITIMA, respondent.

FACTS:
Petitioner as plaintiff filed a complaint for collection of a sum of money against herein respondent,
alleging that during the months of October and November, 1941, the defendant (now respondent)
purchased on credit and received from the plaintiff (now petitioner), lumber worth P5,300.55; and on

December 4, 1941, the defendant-respondent again purchased on credit and received from the
plaintiff-petitioner, lumber worth P453.81, thereby incurring a total indebtedness of P6,054.36 with
stipulated interest of 12% per annum, plus attorney's fees.

Respondent as defendant filed its answer denying all the material allegations of the complaint and,
by way of counterclaim, prayed that plaintiff-petitioner be ordered to pay the sums of P500.00 as
expenses of litigation and P1,500.90 as Attorney's fees, plus costs.

ISSUE:
issue of whether or not there was delivery of the lumber in question.

HELD:
For delivery and payment in a contract of sale, or for that matter in quasi-contracts, are so
interrelated and intertwined with each other that without delivery of the goods there is no
corresponding obligation to pay. The two complement each other. Thus, "by the contract of sale one
of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate
thing, and the other to pay therefor a price certain in money or its equivalent."

It is clear that the two elements cannot be dissociated, for "the contract of purchase and sale is,
essentially, a bilateral contract, as it gives rise to reciprocal obligations; to wit, on the part of the
seller, "to deliver a determinate thing, and on the part of the buyer, "to pay a certain price therefor in
money or in something representing it." " (p. 1, Capistrano, The Law of Purchase and Sale).
That this is basically an action for lumber allegedly bought, received, and not paid for; now just as a
seller, in order to recover, must prove not only that he has sold and delivered and has not been paid,
so a buyer in order to be condemned to pay must be shown to have bought, received, and not paid.
Of course, it is correct to say as plaintiff says that even if there had been no purchase, provided
there had been a delivery, it could recover, not on the sale but on the quasi-contract against unjust
enrichment, but whether on sale or on quasi contract, the vital element is delivery; ... nor should it be
said that there was no issue at all between the parties as to the fact of delivery; because that issue
was present in the pleadings, not only as can be seen in par. 2 of the answer, but also as can be
seen from the fact that plaintiff itself on p. 20 of the tsn. Vol. I, asked its own witness, Roman
Legarda So, this question:

Now on the vital point of delivery, it must be remembered that the procedure between the parties as
sought to be proved by plaintiff itself thru its witness, Juanito G. Perez, had been as follows:

First, there was a purchase order by Maritima; 2ndly, there was an invoice by Barretto; 3rdly, there
was a delivery unto Maritima; 4thly, there was a delivery of the purchase order and delivery receipt
unto Maritima for checking or revision; and since Maritima would because of that retain the purchase
orders and delivery receipts, it would issue in exchange its own counter receipt of said documents;
and 5thly, after due verification had been made, Maritima would then pay; this procedure should now
be correlated to the evidence herein presented;

If that were the case, a litigant would be excused from proving the element most vital to show his
cause of action; and a Court of Justice must have to rely on the presumption that just because one
had in his possession a "delivery receipt", one had already delivered; but the vice of this argument is
that it altogether parts from the basis that the "delivery receipt" thus possessed and surrendered was
a genuine delivery receipt, evidencing the fact that buyer had indeed received; but here, there
absolutely is no proof of that; what this Court has only seen in the evidence nearest to the required
proof is the stamp of Maritima on A-1 to A-6; for as this Court has said, the supposed admission by
defendant witness Narvaez that the lumber therein annotated had been "delivered" was clearly and
unfortunately, one that could not, to be fair to the witness, have been correctly meant to have
by him been made, for he was "purchasing agent" only and could not be qualified at all to declare if
what he had authorized to be purchased had been thereafter delivered, and the witness had in fact
insisted against such alleged delivery to "Posadas", and witness had all the time insisted that only
one "J. Leoncio", could receive, and this clarification is indisputably fortified by the very evidence of
plaintiff, consisting in the purchase order Exh. A, wherein is annotated:
"Not valid unless invoices are receipted
and signed by: J. LEONCIO";

which name, "J. Leoncio" had been written precisely by said witness and this must
mean that the signature of "Posadas" in A-1 to A-6 by the evidence of plaintiff itself,
has been shown to have been unauthorized; and going to the stamp of Maritima on
A-1 to A-6, this had to be correlated to the fact that Narvaez has testified that:

We concur in the foregoing observations and find that the conclusion of the Court of Appeals that
plaintiff did not satisfactorily prove delivery of the lumber in question is in accordance with the facts
and the law

G.R. No. L-29062 March 9, 1987

PHILIPPINE REFINING COMPANY, plaintiff-appellee,
vs.
HON. ENRICO PALOMAR, in his capacity as Postmaster General, defendant-appellant.
Parades, Poblador, Nazareno & Adaza Law Office for plaintiff-appellee.
RESOLUTION

PARAS, J.:
This is an appeal from the decision of the Court of First Instance of Manila in Civil Case No.
72498, 1 entitled "Philippine Refining Company v. Hon. Enrico Palomar," finding that plaintiff-appellee's promotion schemes ("Breeze Easy
Money" and "CAMIA Lucky-Key Hunt") were not in the nature of a lottery and enjoining appellant from issuing a "fraud order" on the
aforementioned schemes of appellee.

It appears that the Philippine Refining Company, herein appellee, resorted to two schemes to
promote the sale of its products: Breeze Easy Money and CAMIA Lucky-Key Hunt, both of which
envisioned the giving away for free of certain prizes (without additional consideration) for the
purchase of Breeze soap and CAMIA cooking oil. In other words, the participants would get the
exact value of the price for the goods plus the chance of winning in the scheme. No one would be
required to pay more than the usual price of the products.
This Court has consistently ruled that a plan whereby prizes can be obtained without any additional
consideration (when a product is purchased) is not a lottery (Uy v. Palomar L-23248, February 28,
1969; U.S. v. Baguio, 39 Phil. 862; Caltex (Phil.) Inc. v. Postmaster-General, 18 SCRA 247). It is thus
clear that the schemes in the case at bar are not lotteries.
The allegation that the prohibition by the Postmaster General should have first been appealed to the
Department Secretary concerned in view of the doctrine denominated as "the exhaustion of
administrative remedies" has no application here because one recognized exception to the doctrine
is when the issue raised is purely a legal one.
In view of the foregoing, the Court RESOLVED to DISMISS this appeal and to AFFIRM the assailed
decision of the Court of First Instance.

TRADERS ROYAL BANK V. CA 269 SCRA 15

FACTS:
Filriters through a Detached Agreement transferred ownership to Philfinance a
Central Bank Certificate of Indebtedness. It was only through one of its officers by
which the CBCI was conveyed without authorization from the company. Petitioner
and Philfinance later entered into a Repurchase agreement, on which
petitioner bought the CBCI from Philfinance. The latter agreed to repurchase the

CBCI but failed to do so. When the petitioner tried to have it registered in its name in the
CB, the latter didn't want to recognize the transfer.
HELD:
The CBCI is not a negotiable instrument. The instrument provides for a promise
to pay the registered owner Filriters. Very clearly, the instrument was only payable to
Filriters. It lacked the words of negotiability which should have served as an
expression of the consent that the instrument may be transferred by negotiation.
The language of negotiability which characterize a negotiable paper as a credit
instrument is its freedom to circulate as a substitute for money. Hence, freedom of
negotiability is the touchstone relating to the protection of holders in due course, and the
freedom of negotiability is the foundation for the protection, which the law throws
around a holder in due course. This freedom in negotiability is totally absent in a
certificate of indebtedness as it merely acknowledges to pay a sum of money to
a
specified
person
or
entity
for
a
period
of
time.
The transfer of the instrument from Philfinance to TRB was merely an
assignment, and is not governed by the negotiable instruments law. The pertinent
question then iswas the transfer of the CBCI from Filriters to Philfinance and
subsequently from Philfinance to TRB, in accord with existing law, so as to entitle
TRB to have the CBCI registered in its name with the Central Bank? Clearly shown
in the record is the fact that Philfinances title over CBCI is defective since it
acquired the instrument from Filriters fictitiously. Although the deed of assignment
stated that the transfer was for value received, there was really no consideration
involved. What happened was Philfinance merely borrowed CBCI from Filriters, a
sister corporation. Thus, for lack of any consideration, the assignment made is a
complete nullity. Furthermore, the transfer wasn't in conformity with the regulations
set by the CB. Giving more credence to rule that there was no valid transfer or
assignment to petitioner.