FILINVEST CREDIT CORPORATION vs CA 178 SCRA 188, G.R. No.

82508 September
29, 1989
FACTS:
Herein private respondents spouses Jose Sy Bang and Iluminada Tan were engaged in the sale
of gravel produced from crushed rocks and used for construction purposes. They intended to
buy rock crusher from Rizal Consolidated Corporation which carried a cash price tag of
P550,000.00. They applied for financial assistance from herein petitioner Filinvest Credit
Corporation, who agreed to extend financial aid on the certain conditions.
A contract of lease of machinery (with option to purchase) was entered into by the parties
whereby the private respondents agreed to lease from the petitioner the rock crusher for two
years starting from July 5, 1981, payable as follows: P10,000.00 first 3 months, P23,000.00
next 6 months, P24,800.00 next 15 months. It was likewise stipulated that at the end of the
two-year period, the machine would be owned by the private respondents. Thus the private
respondent issued in favor of the petitioner a check for P150,550.00, as initial rental (or
guaranty deposit), and 24 postdated checks corresponding to the 24 monthly rentals. In
addition, to guarantee their compliance with the lease contract, the private respondent
executed a real estate mortgage over two parcels of land in favor of the petitioner. The rock
crusher was delivered to the spouses.
However, 3 months later, the souses stopped payment when petitioner had not acted on the
complaints of the spouses about the machine. As a consequence, petitioner extra-judicially
foreclosed the real estate mortgage. The spouses filed a complaint before the RTC. The RTC
rendered a decision in favor of private respondent. The petitioner elevated the case to CA
which affirmed the decision in toto. Hence, this petition.
ISSUES:
1. Whether or not the nature of the contract is one of a contract of sale.
2. Whether or not the remedies of the seller provided for in Article 1484 are cumulative.
HELD:
1. Yes. The intent of the parties to the subject contract is for the so-called 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.
Sellers desirous of making conditional sales of their goods, but who do not wish openly to
make a bargain in that form, for one reason or another, have frequently restored to the device
of making contracts in the form of leases either with options to the buyer to purchase for a
small consideration at the end of term, provided the so-called rent has been duly paid, or with
stipulations that if the rent throughout the term is paid, title shall thereupon vest in the
lessee. It is obvious that such transactions are leases only in name. The so-called rent must
necessarily be regarded as payment of the price in installments since the due payment of the
agreed amount results, by the terms of bargain, in the transfer of title to the lessee.
2. No, it is alternative. The seller of movable in installments, in case the buyer fails to pay 2 or
more installments, may elect to pursue either of the following remedies: (1) exact fulfillment
by the purchaser of the obligation; (2) cancel the sale; or (3) foreclose the mortgage on the
purchased property if one was constituted thereon. It is now settled that the said remedies
are alternative and not cumulative, and therefore, the exercise of one bars the exercise of the
others. Indubitably, the device contract of lease with option to buy is at times resorted to
as a means to circumvent Article 1484, particularly paragraph (3) thereof. Through the set-up,
the vendor, by retaining ownership over the property in the guise of being the lessor, retains,
likewise the right to repossess the same, without going through the process of foreclosure, in

the event the vendee-lessee defaults in the payment of the installments. There arises
therefore no need to constitute a chattel mortgage over the movable sold. More important,
the vendor, after repossessing the property and, in effect, canceling the contract of sale, gets
to keep all the installments-cum-rentals already.
PCI Leasing and Finance Inc. Vs. Giraffe- X Creative Imaging, Inc. July 12, 2007
GR 142618
Facts:
-On December 4, 1996, petitioner PCI LEASING and respondent GIRAFFE entered into a Lease
Agreement, whereby the former leased out to the latter one (1) set of Silicon High Impact
Graphics and accessories worth P3,900,00.00 and one (1) unit of Oxberry Cinescan 6400-10
worth P6,500,000.00.
- A year into the life of the Lease Agreement, GIRAFFE defaulted in its monthly rental-payment
obligations. And following a three-month default, PCI LEASING addressed a formal pay-orsurrender-equipment type of demand letter dated February 24, 1998 to GIRAFFE.
- The demand went unheeded.
- PCI Leasing instituted a case against GIRAFFE. PCI prayed for the issuance of a writ of
replevin for the recovery of the leased property
- Upon PCI LEASINGs posting of a replevin bond, the trial court issued a writ of replevin,
paving the way for PCI LEASING to secure the seizure and delivery of the equipment covered
by the basic lease agreement.
- Instead of an answer, GIRAFFE filed a Motion to Dismiss,arguing that the seizure of the two
(2) leased equipment stripped PCI LEASING of its cause of action.
-GIRAFFE argues that, pursuant to Article 1484 of the Civil Code on installment sales of
personal property, PCI LEASING is barred from further pursuing any claim arising from the
lease agreement and the companion contract documents, adding that the agreement
between the parties is in reality a lease of movables with option to buy.
-GIRAFFE asserts in its Motion to Dismiss that the civil complaint filed by PCI LEASING is
proscribed by the application to the case of Articles 1484 and 1485, supra, of the Civil Code.
- PCI Leasing on the other hand maintains that its contract with GIRAFFE is a straight lease
without an option to buy.
- petitioner contends that the financial leasing arrangement it concluded with the respondent
represents a straight lease covered by R.A. No. 5980, the Financing Company Act, as last
amended by R.A. No. 8556, otherwise known as Financing Company Act of 1998, and is
outside the application and coverage of the Recto Law. To the petitioner, R.A. No. 5980
defines and authorizes its existence and business.
-the trial court granted GIRAFFEs motion to dismiss
- motion for reconsideration was denied, hence this petition for review.
Issue:
Whether the agreement between PCI Leasing and GIRAFFE is governed by Articles 1484 and
1485 of the Civil Code?
Held:
Petition denied. Trial Courts decision affirmed
Ratio:
-The PCI LEASING- GIRAFFE lease agreement is in reality a lease with an option to purchase
the equipment. This has been made manifest by the actions of the petitioner itself,
foremost of which is the declarations made in its demand letter to the respondent. There
could be no other explanation than that if the respondent paid the balance, then it could keep

the equipment for its own; if not, then it should return them. This is clearly an option to
purchase given to the respondent. Being so, Article 1485 of the Civil Code should apply.
- The present case reflects a situation where the financing company can withhold and conceal
- up to the last moment - its intention to sell the property subject of the finance lease, in order
that the provisions of the Recto Law may be circumvented. It may be, as petitioner pointed
out, that the basic lease agreement does not contain a purchase option clause. The
absence, however, does not necessarily argue against the idea that what the parties are into
is not a straight lease, but a lease with option to purchase. This Court has, to be sure, long
been aware of the practice of vendors of personal property of denominating a contract of sale
on installment as one of lease to prevent the ownership of the object of the sale from passing
to the vendee until and unless the price is fully paid.
-Being leases of personal property with option to purchase as contemplated in the above
article, the contracts in question are subject to the provision that when the lessor in such case
has chosen to deprive the lessee of the enjoyment of such personal property, he shall have
no further action against the lessee for the recovery of any unpaid balance owing by the
latter, agreement to the contrary being null and void.
-In choosing, through replevin, to deprive the respondent of possession of the leased
equipment, the petitioner waived its right to bring an action to recover unpaid rentals on the
said leased items. Paragraph (3), Article 1484 in relation to Article 1485 of the Civil Code,
which we are hereunder re-reproducing, cannot be any clearer.
ART. 1484. In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies:
xxx

xxx

xxx

(3)
Foreclose the chattel mortgage on the thing sold, if one has been constituted, should
the vendee's failure to pay cover two or more installments. In this case, he shall have no
further action against the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void.
ART. 1485. The preceding article shall be applied to contracts purporting to be leases of
personal property with option to buy, when the lessor has deprived the lessee of the
possession or enjoyment of the thing.
-As we articulated in Elisco Tool Manufacturing Corp. v. Court of Appeals, the remedies
provided for in Article 1484 of the Civil Code are alternative, not cumulative. The exercise of
one bars the exercise of the others. This limitation applies to contracts purporting to be leases
of personal property with option to buy by virtue of the same Article 1485. The condition that
the lessor has deprived the lessee of possession or enjoyment of the thing for the purpose of
applying Article 1485 was fulfilled in this case by the filing by petitioner of the complaint for a
sum of money with prayer for replevin to recover possession of the office equipment. By
virtue of the writ of seizure issued by the trial court, the petitioner has effectively deprived
respondent of their use, a situation which, by force of the Recto Law, in turn precludes the
former from maintaining an action for recovery of accrued rentals or the recovery of the
balance of the purchase price plus interest.
The imperatives of honest dealings given prominence in the Civil Code under the heading:
Human Relations, provide another reason why we must hold the petitioner to its word as
embodied in its demand letter. Else, we would witness a situation where even if the
respondent surrendered the equipment voluntarily, the petitioner can still sue upon its claim.
This would be most unfair for the respondent. We cannot allow the petitioner to renege on its
word. Yet more than that, the very word or as used in the letter conveys distinctly its
intention not to claim both the unpaid balance and the equipment. It is not difficult to discern
why: if we add up the amounts paid by the respondent, the residual value of the property
recovered, and the amount claimed by the petitioner as sued upon herein (for a total of

P21,779,029.47), then it would end up making an instant killing out of the transaction at the
expense of its client, the respondent. The Recto Law was precisely enacted to prevent this
kind of aberration. Moreover, due to considerations of equity, public policy and justice, we
cannot allow this to happen. Not only to the respondent, but those similarly situated who may
fall prey to a similar scheme.
MEDINA VS CIR 1 SCRA 302 JANUARY 28, 1961
FACTS:
On 20 May 1944, Antonio Medina married Antonia Rodriguez. Before 1946, the spouses had
neither property nor business of their own. Later, however, Antonio acquired forest
concessions in the municipalities of San Mariano and Palanan, Isabela. In 1949, Antonia
started to engage in business as a lumber dealer, and up to around1952, Antonio sold to her
almost all the logs produced in his San Mariano concession. Antonia, in turn, sold in Manila the
logs bought from her husband through the same agent, Mariano Osorio. The proceeds were
either received by Osorio for Antonio or deposited by said agent in Antonios current account
with the PNB. On the thesis that the sales made by Antonio to his wife were null and void
pursuant to the provisions of Article 1490 of the Civil Code of the Philippines, the Collector
considered the sales made by Antonia as Antonios original sales taxable under Section 186
of the National Internal Revenue Code and, therefore, imposed a tax assessment on Antonio.
On 30 November 1963,Antonio protested the assessment; however, the Collector insisted on
his demand. On 9 July 1954, Antonio filed a petition for reconsideration, revealing for the first
time the existence of an alleged premarital agreement of complete separation of properties
between him and his wife, and contending that the assessment for the years 1946 to 1952
had already prescribed. After one hearing, the Conference Staff of the Bureau of Internal
Revenue eliminated the 50% fraud penalty and held that the taxes assessed against him
before 1948 had already prescribed. Based on these findings, the Collector issued a modified
assessment, demanding the payment of only P3,325.68. Thus, this review.
ISSUE:
Whether or not the sales in question made by petitioner to his wife were fictitious, simulated,
and not bona fide
HELD:
The petitioner argues that the prohibition to sell expressed under Article 1490 of the Civil
Code has no application to the sales made by said petitioner to his wife, because said
transactions are contemplated and allowed by the provisions of Articles 7 and 10 of the Code
of Commerce. But said provisions merely state, under certain conditions, a presumption that
the wife is authorized to engage in business and for the incidents that flow therefrom when
she so engages therein. But the transactions permitted are those entered into with strangers,
and do not constitute exceptions to the prohibitory provisions of Article 1490 against sales
between spouses. Contracts violative of the provisions of Article 1490 of the Civil Code are
null and void Being void transactions, the sales made by the petitioner to his wife were
correctly disregarded by the Collector in his tax assessments that considered as the taxable
sales those made by the wife through the spouses' common agent, Mariano Osorio.
Rubias vs Batiller (1973)
Facts:
-Francisco Militante claimed that he owned a parcel of land located in Iloilo. He filed with the
CFI of Iloilo an application for the registrationof title of the land. This was opposed by the
Director of Lands, the Director of Forestry, and other oppositors. The case was docked as a
land case, and after trial the court dismissed the application for registration. Militante
appealed to the Court of Appeals.
- Pending that appeal, he sold to Rubias (his son-in-law and a lawyer) the land.
- The CA rendered a decision, dismissing the application for registration.
- Rubias filed a Forcible Entry and Detainer case against Batiller.

- In that case, the court held that Rubias has no cause of action because the property in
dispute which Rubias allegedly bought from Militante was the subject matter of a land case, in
which case Rubias was the counsel on record of Militante himself. It thus falls under
Article1491 of the Civil Code. (Hence, this appeal.)
Issue: Whether the sale of the land is prohibited under Article 1491.Held: YES
. Article 1491 says that The following persons cannot acquire any purchase, even at a public
or judicial auction, either in person or through the mediation of another. (5) Justices, judges,
prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees
connected with the administration of justice, the property and rights in litigation or levied
upon an execution before the court within whose jurisdiction or territory they exercise their
respective functions; this prohibition includes the act of acquiring by assignment and shall
apply to lawyesr, with respect to the property and rights which may be the object of any
litigation in which they may take part by virtue of their profession. The present case clearly
falls under this,
especially since the case was still pending appeal when the sale was made.
Issue: Legal effect of a sale falling under Article1491?
Held: NULL AND VOID.CANNOT BE RATIFIED.
Manresa considered such prohibited acquisitions (which fell under the Spanish Civil Code)as
merely voidable because the Spanish Code did not recognize nullity. But our Civil Code does
recognize the absolute nullity of contracts whose cause, object or purpose is contract to law,
morals, good customs, public order or public policy or which are expressly prohibited or
declared void by law and declares such contracts inexistent and void from the beginning.
The nullity of such prohibited contracts is definite and permanent, and cannot be cured by
ratification. The public interest and public policy remain paramount and do not permit of
compromise or ratification. In this aspect, the permanent disqualification of public and judicial
officers and lawyers grounded on public policy differs from the first three cases of guardians
agents and administrators (under Art 1491). As to their transactions, it has been opined that
they may be ratified by means of and in the form of a new contract, in which case its
validity shall be determined only by the circumstances at the time of execution of such new
contract. In those cases, the object which was illegal at the time of the first contract may
have already become lawful at the time of the ratification or second contract, or the intent, or
the service which was impossible. The ratification or second contract would then be valid from
its execution; however, it does not retroact to the date of the first contract. Decision affirmed.
MAHARLIKA PUBLISHING CORP VS TAGLE GR NO. 65594 JULY 9, 1986
FACTS
GSIS owned a parcel of land with a building and printing equipment in Paco, Manila. It was
sold to Maharlika in a Conditional Contract of Sale with the stipulation that if Maharlika failed
to pay monthly installments in 90 days, the GSIS would automatically cancel the contract.
Because Maharlika failed to pay several monthly installments, GSIS demanded that Maharlika
vacate the premises. Even though Maharlika refused to do so, the GSIS published an
advertisement inviting the public to bid in a public auction. A day before the scheduled
bidding, Adolfo Calica, the President of Maharlika, gave the GSIS head office 2 checks worth
11,000 and a proposal for a compromise agreement. The GSIS General Manager Roman Cruz
gave a not to Maharlika saying Hold Bidding. Discuss with me. However, the public bidding
took place as scheduled and the property was subsequently awarded to Luz Tagle, the wife of
the GSIS Retirement Division Chief. Maharlika demanded that the sale be considered null and
void, as Mrs. Tagle should have been disqualified from bidding for the GSIS property. RTC and
CA both ruled that the Tagles were entitled to the property and Maharlika should vacate the
premises.
ISSUE
Whether or not the respondents are entitled to the property

HELD
NO. The sale to them was against public policy. First of all, the GSIS head office was stopped
from claiming that they did not give the impression to Maharlika that they were accepting the
proposal for a compromise agreement. The act of the general manager is binding on GSIS.
Second, Article 1491 (4) of the CC provides that public officers and employees are prohibited
from purchasing the property of the state or any GOCC or institution, the administration of
which has been entrusted to them cannot purchase, even at public or judicial auction, either
in person or through the mediation of another. The SC held that as an employee of the GSIS,
Edilberto Tagle and his wife are disqualified from bidding on the property belonging to the
GSIS because it gives the impression that there was politics involved in the sale. It is not
necessary that actual fraud be shown, for a contract which tends to injure the public service is
void although the parties entered into it honestly and proceeded under it in good faith.
LUIS PICHEL vs. PRUDENCIO ALONZO G.R. No. L-36902 January 30, 1982
FACTS:
On August 14, 1968, Prudencio Alonzo (plaintiff) and his wife sold to Luis Pichel
(defendant) the fruits of the coconut trees which may be harvested in their land for the
period, September 15, 1968 to January 1, 1976, in consideration of P4,200.00. Even as of the
date of sale, however, the land was still under lease to one, Ramon Sua, and it was the
agreement that part of the consideration of the sale, in the sum of P3,650.00, was to be paid
by defendant directly to Ramon Sua so as to release the land from the clutches of the latter.
Pending said payment plaintiff refused to snow the defendant to make any harvest. Prudencio
Alonzo filed an action for the annulment of the Deed of Sale.
The lower court rendered its decision holding that such Deed of Sale was actually a contract
of lease of the land itself.
ISSUE:

Whether or not such Deed of Sale is actually a contract of lease?

HELD:
No, Simply and directly stated, the "Deed of Sale dated August 14, 1968 is
precisely what it purports to be. It is a document evidencing the agreement of herein parties
for the sale of coconut fruits of Lot No. 21. Under Article 1458 of the New Civil Code:
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.
The subject matter of the contract of sale in question is the fruits of the coconut trees on the
land during the years from September 15, 1968 up to January 1, 1976, which subject matter is
a determinate thing. Under Article 1461 of the New Civil Code, things having a potential
existence may be the object of the contract of sale.
The essential difference between a contract of sale and a lease of things is that the delivery of
the thing sold transfers ownership, while in lease no such transfer of ownership results as the
rights of the lessee are limited to the use and enjoyment of the thing leased.
The contract was clearly a "sale of the coconut fruits." The vendor sold, transferred and
conveyed "by way of absolute sale, all the coconut fruits of his land," thereby divesting
himself of all ownership or dominion over the fruits during the seven-year period.
IN VIEW OF THE FOREGOING, the judgment of the lower Court is hereby set aside and another
one is entered dismissing the Complaint.

**Philippine Law Cases: Martinez vs. Court of Appeals, 56 SCRA 647 ...
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2. Similar
Apr 23, 2012 - Martinez vs. Court of Appeals, 56 SCRA 647, No. L-31271, April 29, 1974.
Posted by Alchemy Business Center and Marketing Consultancy at ...
MELLIZA v CITY OF ILOILO
FACTS: Meliza owned Lot 1214, 9,000 sqm of which she donated to the Mun. of Iloilo for the
use of the site of the Mun. Hall. However, the donation was revoked because it was
inadequate to meet the requirements of the Arellano Plan. Lot 1214 was later divided into 4
lots. Meliza then sold Lots C and D to the Municipality; Lot B was not mentioned in the sale.
However, the contract stipulated that the area to be sold to the Municipality would include
such areas needed for the construction of the City Hall according the Arellano Plan. She then
sold the remaining portions of the lots to Villanueva, who then sold the same to Pio. The sale
was for such lots not included in the sale to the Mun. of Iloilo. The City of Iloilo, assuming that
Lot B has been sold in its favor pursuant to the Arellano Plan, then donated Lot B to UP. Pio
objected and sought to recover the lots stating that Lot B was not included in the initial sale
made by Meliza to the Municipalityand that the subject matter of sale should be a
determinate thing.
ISSUE: W/N there was a determinate/determinable subject matter
HELD: YES. The requirement for the subject matter to be determinate is satisfied in this case.
Simple reference to the Arellano Plan would indicate that it could determine what portions of
the contiguous land (lot B) were needed for the construction of the City Hall. There was no
need for a further agreement to establish the lots covered by the sale; thus, the sale is valid.
Besides, the portions of Lot B covered by the sale were practically at the heart of the City Hall
site.
ATILANO v ATILANO
FACTS: Eulogio Atilano I purchased Lot 535 and had it subdivided into 5 parts (A to E). He
occupied Lot A; his brother, Eulogio II, occupied Lot E. He then sold lots B, C, and D to other
persons. He then sold Lot E to his brother Eulogio II. Both brothers died and their heirs found
out after a survey that Eulogio I actually occupied Lot E and Eulogio II occupied Lot A. Thus,
the heirs of Eulogio II offered to exchange the properties. However, the heirs of Eulogio I
refused because Lot E was bigger than Lot A.
ISSUE: W/N an exchange of the properties was proper
HELD: NO. What took place was a simple mistake in drafting the instrument evidencing the
agreement between the brothers. One sells or buys property as he sees it in actual setting
and not by the mere lot number in the certificate of title. The brothers remained in possession
of their respective portions throughout their lives unaware of the mistake in the designation of
the lots. In this case, the instrument simply failed to reflect the true intention of the parties;
thus, an exchange of the properties is unnecessary. All the heirs should do is to execute
mutual deeds of conveyance
YU TEK & CO. v GONZALES
FACTS: Gonzales received P3,000 from Yu Tek and obligated himself in favor of the latter to
deliver 600 piculs of sugar of the 1st and 2nd grade within 3 months. He failed to deliver the
sugar and refused to return the moneythus Yu Tek sued him. Gonzales, in seeking to evade
liability, invokes fortuitous event, alleging the total failure of his crop.
ISSUE: W/N there was perfected contract of sale
HELD: NO. The subject matter was not yet determinate. The sugar agreed upon has yet to be
segregated from all other articles. That being the case, there was merely an executory
agreementa promise of sale, and not a contract of sale itself. Moreover, there was no

stipulation that the sugar was to be derived from his crop; he was at liberty to get it from
whatever source he could find. The obligation he incurred was for the delivery of the generic
thing. Thus, he cannot invoke force majeure under the maxim genus never perishes. His
obligation to deliver the sugar is not extinguished. Yu Tek is thus entitled to rescind the
contract and recover the money in addition to the stipulated P1,200 as indemnity for losses.
DD: This rule no longer holds true. Generic things may now be the subject matter of a
contract of sale provided that they have the quality of being DETERMINABLE at the perfection
of the contract.
Gaite vs. Fonacier G.R. No. 11827, July 31, 1961
Facts: Defendant-appellant Fonacier was the owner/holder of 11 iron lode mineral claims,
known as the Dawahan Group, situated in Camrines Norte. By Deed of Assignment,
Respondent constituted and appointed plaintiff-appellee Gaite as attorney-in-fact to enter into
contract for the exploration and development of the said mining claims on. Petitioner
executed a general assignment conveying the claims into the Larap Iron Mines, which owned
solely and belonging to him. Thereafter, he underwent development and the exploitation for
the mining claims which he estimates to be approximately 24 metric tons of iron ore.
However, Fonacier decided to revoke the authority given to Gaite, whereas respondent
assented subject to certain conditions. Consequently a revocation of Power of Attorney and
Contract was executed transferring P20k plus royalties from the mining claims, all rights and
interest on the road and other developments done, as well as , the right to use of the business
name, goodwill, records,documents related to the mines. Furthermore, included in the transfer
was the rights and interest over the 24K+ tons of iron ore that had been extracted. Lastly the
balance of P65K was to be paid for covering the first shipment of iron ores. To secure the
payment of P65k, respondent executed a surety bond with himself as principal, the Larap
Mines and Smelting Co. and its stockholder as sureties. Yet, this was refused by petitioner. A
complaint in the CFI of Manila for the payment of the balance and other damages was filed.
The Trial Court ruled in favor of plaintiff ordering defendant to pay the balance of P65k with
interest. Afterwards an appeal was affected by the respondent where several motions were
presented for resolution: a motion for contempt; two motions to dismiss the appeal for
becoming moot and academic; motion for a new trial, filed by appellee Gaite. The motion for
contempt was held unmeritorious, while the rest of the motions were held unnecessary to
resolve
Issue: Whether or not the Lower Court erred in holding the obligation of appellant Fonacier to
pay appelle Gaite the balance of P65k, as one with a period or term and not one with a
suspensive condition; and that the term expired on December 1955.
Held: No error was found, affirming the decision of the lower court. Gaite acted within his
rights in demanding payment and instituting this action one year from and after the contract
was executed, either because the appellant debtors had impaired the securities originally
given and thereby forfeited any further time within which to pay; or because the term of
payment was originally of no more than one year, and the balance of P65k, became due and
payable thereafter. The Lower Court was legally correct in holding the shipment or sale of the
iron ore is not a condition or suspensive to the payment of the balance of P65k, but was only a
suspensive period or term. What characterizes a conditional obligation is the fact that its
efficacy or obligatory force as distinguished from its demandability, is subordinated to the
happening of a future and uncertain event; so that if the suspensive condition does not take
place, the parties would stand as if the conditional obligation had never existed. The sale of
the ore to Fonacier was a sale on credit, and not an aleatory contract where the transferor,
Gaite, would assume the risk of not being paid at all; and that the previous sale or shipment
of the ore was not a suspensive condition for the payment of the balance of the agreed price,
but was intended merely to fix the future date of the payment.
While as to the right of Fonacier to insist that Gaite should wait for the sale or shipment of the
ore before receiving payment; or, in other words, whether or not they are entitled to take full
advantage of the period granted them for making the payment. The appellant had indeed
have forfeited the right to compel Gaite to wait for the sale of the ore before receiving
payment of the balance of P65,000.00, because of their failure to renew the bond of the Far

Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the
bonding company's undertaking on December 8, 1955 substantially reduced the security of
the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite considered
essential and upon which he had insisted when he executed thedeed of sale of the ore to
Fonacier (first bond).
Under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines: ART. 1198. The
debtor shall lose every right to make use of the period: (2) When he does not furnish to the
creditor the guaranties or securities which he has promised. (3) When by his own acts he has
impaired said guaranties or securities after their establishment, and when through fortuitous
event they disappear, unless he immediately gives new ones equally satisfactory.

**LAROZA VS GUIA CASE DIGEST????

BAGNAS v CA
FACTS: Hilario died with no will and was survived only by collateral relatives. Bagnas (et al)
were the nearest kin. Retonil (et al) were also relatives but to a farther extent. They claimed
ownership over 10 lots from the estate of Hilario presenting notarized and registered Deeds of
Sale (in Tagalog) where the consideration for the lands was P1 and services rendered, being
rendered, and to be rendered. Bagnas argued that the sales were fictitious, while Retonil
claimed to have done many things for Hilariosuch as nursing him on his deathbed.
ISSUE: W/N there was a valid contract of sale
HELD: NO. At the onset, if a contract has no consideration, it is not merely voidable, but VOID
and even collateral heirs may assail the contract. In this case, there was no consideration.
Price must be in money or its equivalent; services are not the equivalent of money insofar as
the requirement of price is concerned. A contract is not one for sale if the consideration
consists of services. Not only are they vague, they are unknown and not susceptible of
determination without a new agreement between the parties.

**Because we all deserve a good cup of coffee...: VDA. DE GORDON V ...

coffeespeak.blogspot.com/2010/10/vda-de-gordon-v-ca-november-23-1981.html
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Oct 3, 2010 - Two parcels of land owned by Restituto Vda. De Gordon were sold by City
Treasurer of Quezon City in a public auction to respondent Rosario ...

**My Collection of Case Digests: Ong v. Ong

princesslawyer.blogspot.com/2010/06/ong-v-ong.html
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Jun 21, 2010 - Ong v. Ong. Facts: On February 25, 1976, Imelda Ong, for and in consideration of
P1.00 and other valuable considerations, executed a ...

**Philippine Law Cases: Velasco vs. Court of Appeals, No. L-31018, 51 ...
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Apr 19, 2012 - L-31018, 51 SCRA 439 , June 29, 1973. G.R. No. L-31018 June 29, 1973.
LORENZO VELASCO AND SOCORRO J. VELASCO, petitioners, vs.
Toyota Shaw vs CA GR No. 116650 May 23, 1995
Facts:

Sometime in June of 1989, private respondent Sosa wanted to purchase a Toyota Lite Ace.
Upon contacting Toyota Shaw, Inc., he was told that there was an available unit. So on 14 June
1989, Sosa and his son went to the Toyota office at Shaw, where they met Popong Bernardo, a
sales representative of Toyota. Bernardo assured Sosa that a unit would be ready for pick up
at 10AM on 17 June 1989. Bernardo then signed the Agreements Between Mr. Sosa & Popong
Bernardo of Toyota Shaw, Inc./ Exhibit A P100,000 was the downpayment, but the purchase
price was not mentioned in the contract. It was also agreed upon by the parties that the
balance of the purchase price would be paid by credit financing through B.A. Finance.
Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the
disapproval by B.A. Finance of the credit financing application of Sosa. It 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 financing corporation seemed to have not approved Sosas application.
Issue: Whether or not there was a perfected contract of sale?
Held:
No. Nothing was mentioned about the full purchase price and the manner the installments
were to be paid. A definite agreement on the manner of payment of the price is an essential
element in the formation of a binding and enforceable contract of sale. This is so because the
agreement as to the manner of payment goes into the price such that a disagreement on the
manner of payment is tantamount to a failure to agree on the price. Definiteness as to the
price is an essential element of a binding agreement to sell personal property.
Exhibit A shows the absence of a meeting of minds between Toyota and Sosa. For one thing,
Sosa did not even sign it. He was not dealing with Toyota but with Popong Bernardo. Bernardo
was only a sales representative of Toyota and hence a mere agent of the latter.
Exhibit A may be considered as part of the initial phase of the generation or negotiation
stage of a contract of sale. The Vehicle Sales Proposal was a mere proposal which was aborted
in lieu of subsequent events. It follows that the VSP 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.