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THE NATURE OF SALE
1. GAITE v FONACIER Gross inadequacy of price does NOT affect the validity
of sale, unless it indicates either (1) a vice of consent or
FACTS: Fonacier was the holder of 11 iron lode mineral (2) that the parties intended a donation or some other
claims. By a Deed of Assignment, he appointed Gaite as contract. No evidence suggests such circumstances. The
his attorney-in-fact for the purpose of operating the price need not be the exact value of the property. In
same. Gaite then executed a general assignment fact, all the parties to the sale believed that they
conveying the right to develop and exploit the mining received the commutative value of what they paid for.
claim to Larap Iron Mines, owned by him, and then
started to develop the same. Fonacier then decided to
revoke the authority granted to Gaite; the latter 3. CELESTINO & CO. v COLLECTOR
acceded and transferred the claims back to Fonacier but
for considerationroyalties and a sum of P75,000, FACTS: Celestino & Co. (Oriental Sash Factory) was
P10,000 of which was already paid. A balance of P65,000 paying 7% taxes based on gross receipts for the
remained for which Fonacier issued 2 sureties, good for manufacture and sale of sash products. It now seeks to
a year. There was a stipulation that the P65,000 balance pay only the 3% tax imposable upon contracts for piece
will be paid from the 1st shipment of ores and its local of workas opposed to the 7% tax on salesclaiming
sale. Eventually, the sureties expired and Fonacier that they do not manufacture ready-made doors for the
defaulted in settling his debt. He now alleges that the public but only upon special order of the customers.
payment of the balance was subject to a suspensive
conditionbeing the 1st shipment and sale of iron ores. ISSUE: W/N Celestino & Co. is a contractor (piece of
st
work)
ISSUE: W/N the 1 shipment and sale of iron ores are
considered suspensive condition HELD: NO. The fact that the sash products are made
only upon the order of the customers does NOT change
HELD: NO. It was only a SUSPENSIVE TERM. What took the nature of the establishment. Timing is not the
place between Gaite and Fonacier, regarding the controlling factor but the nature of the work done. They
transfer of the mining rights, was a sale. A contract of habitually make sash products and can easily duplicate
sale is normally ONEROUS and COMMUTATIVE. Each and mass-produce the same. The bulk of their sales
party anticipates performance form the very start. Since come from standard ready-made productsspecial
a sale is essentially onerous, any doubts must be settled orders are the exception and come only occasionally. If
in favor of the greatest reciprocity of rightsin this the goods are manufactured specifically upon special
case, that a period, and not a condition, was order of the customer and requires extraordinary
contemplated. Had it been a suspensive condition, service, then that would be the time when it can be
Fonacier would have been able to postpone payment classified as piece of work. But such is not the case
indefinitely. here. Oriental Sash is clearly a manufacturer and mass-
producer of doors.
2. BUENAVENTURA v CA
4. COMMISSIONER OF INTERNAL REVENUE v
FACTS: Joaquin spouses sold 6 subdivision lots to some ENGINEERING EQUIPMENT & SUPPLY CO.
of their 9 children evidenced by corresponding Deeds of
Sale. The other children, interested in protecting their FACTS: Engineering Equipment & Supply (EES) was
inheritance, sought to have the deeds of sale declared engaged in the business of designing and installing
null and void for prejudicing their legitimes, lack of central air-conditioning systems. It was assessed by the
consideration, and gross inadequacy of price. CIR for 30% advanced sales tax, among other penalties
pursuant to an anonymous complaint filed before the
ISSUE: W/N the contract of sale is valid BIR. EES vehemently objected and argued that they are
contractors and not manufacturers, and thus, should
HELD: YES. At the onset, their rights to the legitimes are only be liable for the 3% tax on sales of services or
merely inchoate and vest only upon the death of their pieces of work.
parents; thus they have no legal interest thereof.
Payment of the price has nothing to do with the ISSUE: W/N EES is a contractor (piece of work)
perfection of the contract of sale; it was perfected by
mere consent. Failure to pay consideration cannot be HELD: YES. EES was NOT a manufacturer of air-
equated with lack of consideration, which prevents the conditioning units. While it imported such items, they
existence of a valid contract. The former only results in were NOT for sale to the general public and were used
the right to demand payment or rescission. There was as mere components for the design of the centralized
already a meeting of the minds as to the price which air-conditioning system, wherein its designs and
was reflected in the Deed of Saleand that was specifications are different for every client. Various
sufficient. In fact, evidence suggests that the purchase technical factors must be considered and it can be
process have indeed been paid. The sales are thus valid. argued that no 2 plants are the same; all are engineered
5. QUIROGA v PARSONS ISSUE: W/N there was a contract of agency, not of sale
FACTS: Quiroga and Parsons Hardware entered into a HELD: NO. The letters containing Arco's acceptance of
contract where the former granted the latter the the prices for the equipment are clear in their terms
exclusive right to sell Quiroga Beds in the Visayas. It and admit no other interpretation that the prices are
provided for a discount of 25% as commission for the fixed and determinate. While the letters state that GPS
sales, among other conditions. Quiroga alleged that was to receive a 10% commission, this does not
Parsons breached its contractual obligations by selling necessarily mean that it is an agent of Arco, as this
the beds at a higher price, not having an open provision is only an additional price which it bound itself
establishment in Iloilo, not maintaining a public to pay, and which stipulation is not incompatible with
exhibition, and for not ordering beds by the dozen. Only the contract of sale.
the last imputation was provided for by the contract, It is GPS that is the exclusive agent of Starr Piano in
the others were never stipulated. Quiroga argued that the Philippines, not the agent of Arco. it is out of the
since there was a contract of agency between them, ordinary for one to be the agent of both the seller and
such obligations were necessarily implied. the buyer. The facts and circumstances show that Arco
entered into a contract of sale with GPS, the exclusive
ISSUE: W/N the contract between them was one of agent of Starr Piano. As such, it is not duty bound to
agency, not sale reveal the private arrangement it had with Starr Piano
relative to the 25% discount.
HELD: NO. The agreement between Quiroga and Parsons Thus, GPS is not bound to reimburse Arco for any
was that of a simple purchase and salenot an agency. difference between the cost price and the sales price,
Quiroga supplied beds, while Parsons had the obligation which represents the profit realized by GPS out of the
to pay their purchase price. These are characteristics of transaction.
a purchase and sale. In a contract of agency (or order to
sell), the agent does not pay its price yet, and sells the
products, remitting to the principal its proceeds. Unsold 7. LO v KJS ECO-FORMWORK SYSTEM PHIL., INC.
products must also be returned to the principal. The
provisions on commission and the use of the word FACTS: KJS Inc was engaged in the sale of steel
agency in the contract as well as the testimonies in scaffolding. Sonny Lo, a contractor, purchased
court do not affect its nature. Contracts are what the scaffolding equipment worth P540,000. He made a
law defines it to be, not what the parties call it. deposit of P150,000, the balance payable within 10
months. Due to financial difficulties, Lo defaulted after
paying only 2 installments. A debt of some P335,000
6. PUYAT v ARCO AMUSEMENT CO. remained. Thus, Lo assigned in favor of KJS all his
receivables from Jomero Realty Corp. which refused to
FACTS: Arco Amusement was engaged in the business of pay and raised the defense of compensationclaiming
operating cinematopgraphs. Gonzalo Puyat & Sons Inc that Lo also had debts in its favor. KJS thus again sought
(GPS) was the exclusive agent in the Philippines for the to collect from Lo who them averred that his debts have
Starr Piano Company. Desiring to equip its already been extinguished by the said assignment.
cinematograph with sound reproducing devices, Arco
approached GPS, through its president, GIl Puyat, and ISSUE: W/N the assignment of credit extinguished the
an employee named Santos. After some negotiations, it debts
was agreed between the parties that GPS would order
sound reproducing equipment from Starr Piano Company HELD: NO. The assignment of credit made by Lo in favor
and that Arco would pay GPS, in addition to the price of of KJS was in the nature of dacion en pago, which is
the equipment, a 10% commission, plus all expenses governed by the law on sales. It is as if KJS bought the
such as freight, insurance, etc. When GPS inquired Starr credit from Lo, the payment of which is to be charged
Piano the price (without discount) of the equipment, the upon the latters debt. Lo, as vendor not good faith,
latter quoted such at $1,700 FOB Indiana. Being shall be liable for the existence and legality of the
agreeable to the price (plus 10% commission plus all credit at the time of the sale (but not for the solvency
other expenses), Arco formally authorized the order. of the debtor). He is bound by certain warranties. In this
The following year, both parties agreed for another case, since the assignment he made in favor of KJS has
order of sound reproducing equipment on the same already been compensated, he should still be liable to
terms as the first at $1,600 plus 10% plus all other pay KJS for his indebtedness. He should make good the
expenses. warranty and pay the obligation.
FACTS: Mercedes and Fernando were married and had 5 4. PHIL. TRUST CO. v ROLDAN
children. Fernando inherited the land upon which their
house was built. Fernando left his family to live with FACTS: Mariano Bernardo, a minor, inherited among
his concubine Corazon. He then sold the said lot with others 17 parcels of land from his deceased father.
the house in favor of Corazon for P2,000. Corazon, Soccoro Roldan was appointed as his guardian. Soccoro
unable to take possession of the house and lot, filed a sought and was granted authority to sell the lots to her
complaint for quieting of title. Mercedes objected brother-in-law Ramos for P14,700. Very shortly after,
alleging that the properties pertained to their conjugal Ramos sold back to Soccoro the same properties for
partnership. P15,000. She then sold 4 parcels to Emilio Cruz. Phil.
Trust Co. replaced Soccoro as guardian and sought to
ISSUE: W/N the sale to Corazon was valid annul all the aforesaid sales.
HELD: NO. The properties pertained to the conjugal ISSUE: W/N the sale to Ramos was valid
partnership of Mercedes and Fernando, thus the sale is
null and void for lack of Mercedes consent and for HELD: NO. Guardianship is the trust of the highest order.
being contrary to morals and public policy. The law In this case, for all intents and purposes, it was as if
generally prohibits spouses from selling or donating
HELD: Consideration was totally absent; the P5,000 FACTS: Josefina approached Fernando asking for help.
price stipulated was never received/delivered to the Her family was to be sued by Tan for issuing rubber
spouses. Thus, the sale to the Narcisos was VOID ab checks; thus she asked him to cede his 3 lots to Tan and
initio for want of consideration. The inexistence of the it will be Josefina who will repurchase them for him. He
contract is permanent and cannot be the subject of initially rejected her offer. Then, Josefina issued him 2
prescription. The Narcisos are also in bad faiththey checks, one for P1.4M, pertaining to the value of the
had knowledge of the true nature and extent of lot, and another for P420,000 corresponding to 6
Maximos right over the land. months interests. He agreed, drafted the instrument
himself, and ceded his properties to Tan. Later, both
checks bounced; he sued Tan for annulment of the sale
2. RONGAVILLA v CA for lack of consideration since he never received
anything. He also sued Josefina criminally, but
FACTS: Both spinsters and unschooled in English, absconded.
Mercedes and Florencia dela Cruz are the aunts of
Rongavilla. Dela Cruz co-owned a parcel of land (1/2 ISSUE: W/N there was a valid contract of sale
pro-indiviso) in Las Pinas with another niece named
Juanita Jimenez (elder sister of Rongavilla), who kept HELD: YES. There was consideration in the form of the
the OCT, as well as the TCT after it was subdivided. check for P420,000. It was his fee for executing the
In 1976, Dela Cruz borrowed P2,000 from Rongavilla sale. It was not only kindness that impelled him to cede
for the repair of their dilapidated rooftop. A month his property, it was also his interest for profit.
later, Rongavilla and Jimenez visited their aunts' home That he never received money is of no moment; a sale
and brought with them a document for the signature of is a consensual contract. He also tacitly admitted to the
their aunts. While the document was in English and upon sale when he filed criminal charges against Josefina.
inquiry by Dela Cruz what it was about, Rongavilla Fernando, being a lawyer, has no one else to blame but
answered that it was merely evidencing the P2,000
HELD: YES. Even if Carceller failed to purchase the ISSUE: W/N the option contract is void for lack of
property within the said period, still equity must consideration
intervene. He had introduced substantial improvements
thereon; to rule against him would cause damage to HELD: NO. The Option Contract is supported by a
himand SIHI does not stand to gain much therefrom. considerationthat being the difference of the agreed
SIHI clearly intended to sell the lot to him considering price and the market price of the other half of the land,
that it was under financial distress, that is constantly which was sold to the Villamors. Thus, it is valid and
reminded him of the option and the impending deadline. may be enforced by the Villamors. The consideration
The delay of 18 days is not substantial. Carcellers letter may consist of anything of value.
to SIHI expressing his intent to purchase the lot is fair The option was, in fact, the only reason why they
notice of intent to exercise the option despite the purchased the other half for an expensive price. Since
request for extension. Carceller should thus be allowed the Villamors exercised their option, this is tantamount
to buy the lots. to an acceptance of the offera valid and obligatory
contract of sale was thus perfected.
3. TAYAG v LACSON
5. SANCHEZ v RIGOS
FACTS: Angelica Lacson and her children were registered
owners of agricultural lands. Tiamzon and others were FACTS: Sanchez and Rigos executed an Option to
their farmer-tenants. The tenants executed a Deed of Purchase where Rigos agreed, promised, and committed
Assignment in favor of Tayagassigning to the latter to sell to Sanchez a parcel of land in Nueva Ecija for
their rights to purchase the lands as tenant-tillers of the P1,510. In spite of the repeated tenders made by
landholdings possessed by them at P50.00 per sqm. This Sanchez, Rigos refused to sell the same. Thus, Sanchez
was subject to the conditions that (1) Lacson, the consigned the amounts and filed a case for specific
landowner, would agree to sell the same parels and (2) performance. Rigos alleged that the contract between
that there are no more legal impediments to the them was a unilateral promise to sell, which is not
assignment. Tayag invited the tenants to a meeting to supported by any consideration, hence, it is not binding.
discuss the agreement, but the latter did not attend and
wrote Tayag that they have decided to sell their rights ISSUE: W/N there was a valid option contract
to the Lacsons instead because he allegedly betrayed
their trust by filing a certain lawsuit. Tayag thus filed a HELD: NO. The promisee (Sanchez) cannot compel the
Complaint before the RTC asking that the court fix the promissor (Rigos) to comply with the promise unless the
period for the payment; he also asked for a Writ of former can establish that the promise was for a
Preliminary Injunction against Lacson and the tenants to consideration. The burden of proof to establish the
enjoin them from accepting any offers for sale made by existence of the consideration lies with Sanchez.
the tenants. Therefore, there was no valid option contract in this
case. However, an option without consideration is a
ISSUE: W/N the assignment was in the form of an option mere offer, which is not binding until accepted. But
contract from the moment it is accepted before it is withdrawn,
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a valid contract of sale arises. In this case, even though exercise of the option need not be coupled with actual
there was no option contract, there was nevertheless an payment so long as such payment is made upon the
offer and acceptance enough to constitute a valid fulfillment of the owners undertaking to deliver the
contract of sale. property. This is based on the principle that such option
contracts involve reciprocal obligationsand one does
not incur delay if the other party fails or refuses to
6. VASQUEZ v CA comply with his respective obligation. That being the
case, there was no need for Nietes to deposit the said
FACTS: The Vallejera spouses sought to recover from amountsand his withdrawal thereof does not affect his
Vasquez an agricultural lot, which they previously sold right.
to him. Along with the previous execution of a Deed of
Sale, the parties also executed a Right of Repurchase
allowing Vallejera to repurchase the said estate. 8. ANG YU ASUNCION v CA
Vasquez resisted the redemption arguing that the option
to buy was not supported by any considerationand thus FACTS: The Unijeng spouses owned certain residential
not binding upon him. and commercial spaces leased by Ang Yu. They offered
to sell the said units to Ang Yu on several occasions and
ISSUE: W/N there was a valid option contract for P6M. Ang Yu made a counter offer for P5M. The
Unijeng spouses asked Ang Yu to specify his terms in
HELD: NO. It is apparent that the Right to Repurchase writing but the latter failed to do so. They failed to
was not supported by any consideration. Thus, in order arrive at any definite agreement. When Ang Yu
for the doctrine under Sanchez v Rigos to apply, giving discovered that the spouses were planning to sell the
rise to a valid contract of sale, it must be shown that property to others, he sued them for specific
the promissee (Vallejera) accepted the right of performance. While the case was pending, the spouses
repurchase before it was withdrawn by Vasquez. In this sold the units to Buen Realty for P15M.
case, no such acceptance was made. The vendor a retro
(Vallejera) must make actual and simultaneous tender ISSUE: W/N there was a perfected contract of sale
of payment and consignation. Mere expressions of between Unijeng and Ang Yu
readiness and willingness to repurchase are insufficient.
Their ineffectual acceptance allowed Vasquez to HELD: NO. There was no perfected contract of sale yet
withdraw the offer through his refusal to sell the lot. since there was yet any meeting of the minds. Thus,
Vasquez thus cannot be compelled to sell the lot. there is no ground for specific performance. During the
negotiation stage, any party may withdraw the offer
madeespecially if it was not supported by any
7. NIETES v CA consideration.
An Option Contract of a Right of First Refusal is
FACTS: Nietes leased from Dr. Garcia the Angeles separate and distinct from the actual contract of sale
Educational Institute; the contract contained an Option which is the basis for specific performance. The remedy
to Buy the land and school buildings within the period of available to Any Yu, in case the withdrawal was made
the lease. It also stipulated that the unused payment capriciously and arbitrarily, would be to sue on the basis
will be applied to the purchase price of the school. of abuse of right. In case there was an option contract,
Nietes paid Garcia certain sums in excess of the rent, timely acceptance would create an obligation to sell on
which Garcia acknowledged as forming partial payment the part of the vendor; but no such circumstance
of the purchase price of the property. Later on, Garcia, attends in this case.
through counsel, wrote Nietes informing him of his
decision to rescind the contract due to certain violations
of the contractsuch as poor maintenance, lack of 9. EQUATORIAL REALTY DEV. INC. v MAYFAIR
inventory of school equipment, and the use of another THEATER INC.
name for the said school. Nietes replied by informing
Garcia that he decided to exercise his Option to Buy, FACTS: For its theaters, Mayfair was leasing a portion of
but Garcia refused to sell. Nietes thereafter deposited the property in CM Recto, which Carmelo owns. Under
the balance of the price to Agro-Industrial Bank, but he the lease agreement, if Carmelo should decide to sell
later withdrew the said amounts. CA ruled in favor of the leased premises, Mayfair shall be given 30 days
Garcia stating that the full purchase price must be paid exclusive option to purchase the same. Carmelo,
before the Option to Buy may be exercised. Thus, Nietes through Henry Yang, informed the president of Mayfair
brought the matter to the SC. that the former is interested in selling the whole CM
Recto propertyand that Araneta offered to purchase
ISSUE: W/N actual payment is needed before one may the same for $1.2M. Mayfair twice replied through a
exercise the option to buy letter of its intention to exercise its right to
repurchasebut Carmelo never replied. Thereafter,
HELD: NO. There is nothing in the contract that required Carmelo sold the entire property to Equatorial Realty
Nietes to pay the full price before he could exercise the for some P11M. Thus, Mayfair instituted an action for
option. It was sufficient that he informed Garcia of his specific performance and annulment of the sale.
choice and that he was at that time ready to pay. The
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Carmelo alleges that the right, being an option contract, the MOA, Ayala was to undertake the development of
is void for lack of consideration. the lands except the retained area. Under Par. 5.15 of
the MOA, Ayala agreed to give Vasquez a first option to
ISSUE: W/N the right to repurchase is an option contract purchase the 4 adjacent lots to the retained area at the
and void for lack of consideration prevailing market price at the time of the purchase. A
case was filed by one of the former sub-contractors of
HELD: NO. The clause in the lease agreement was NOT Conduit against Ayala causing a 6-year delay in the
an option contract, but a RIGHT OF FIRST REFUSAL. It development of the project. Now, Vasquez comes
was premised on Carmelos decision to sell the said forward invoking Par. 5.15 claiming that it was a valid
property. It also did not contain a stipulation as to the option contract, and that Ayala should sell to him the
price of said property. The requirement of separate said property at the 1984 prevailing price. Ayala offered
consideration does not apply to a right of 1st refusal to sell the said properties to Vasquez at the prevailing
because consideration is already an integral part of the prices (1990); but the latter refused to accept. Ayala
lease. Carmelo violated such right by not affording discounted the price from P6,500/sqm to P5,000/sqm,
Mayfair a fair chance to negotiate. It abandoned the but still, Vasquez refused.
negotiations arbitrarily.
Equatorial was likewise in bad faith; it was well aware ISSUE: W/N there was a valid option contract given to
of the right conferred upon Mayfair because its lawyers Vasquez
had ample time to review the contract. That being the
case, the contract between Carmelo and Equatorial is HELD: NO. Par. 5.15 was NOT an option contract, but a
rescissible. Mayfair should be allowed to purchase the RIGHT OF FIRST REFUSAL. It was predicated upon
entire property for the price offered by Equatorial. Ayalas decision to sell the said properties. The price
Rights of First Refusal are also governed by the law on was also not specified. It was also not supported by any
contracts, not the amorphous principles on human independent consideration. By twice refusing to accept
relations. Ayalas offers, Vasquez lost his right to repurchase.
Ayala did not breach its obligation.
FACTS: Macion and Dela Vida Institute entered into a FACTS: Cervantes and his wife owned 3 parcels of land
contract to sell, where the latter assured the former along Buendia where he buildings of Bormaheco Inc
that it will buy the 2 parcels of land in Cotabato City on were situated. Beside their property were lots owned by
or before July 31, 1991 at P1.75M. In the meantime, Villonco Realty. Cervantes entered into several
ISSUE: W/N the Deed of Sale over the Tanay Property is HELD: YES. The necessity of a public instrument is only
valid for conveniencenot for validity and enforceability.
Such is not a requirement for the validity of a contract
HELD: YES. It is evident from the facts of the case that of sale, which is perfected by mere consent. Dailon
there was a meeting of the minds between petitioner should thus be compelled to execute the corresponding
and Dr. Cruz. As such, they are bound by the contract deed of conveyance in a public instrument in favor of
unless there are reasons or circumstances that warrant Sabesaje. If the sale is made through a public
its nullification. The records, however, are bare of any instrument, it amounts to constructive delivery.
evidence manifesting that private respondents employed
such insidious words or machinations to entice
petitioner into entering the contract of barter. Neither 18. SECUYA v VDA DE SELMA
is there any evidence showing that Dr. Cruz induced
petitioner to sell his Tanay property or that she cajoled FACTS: Caballero owned certain friar lands. She entered
him to take the earrings in exchange for said property. into an Agreement of Partition where she parted with
On the contrary, Dr. Cruz did not initially accede to 1/3 of the said property in favor of Sabellona. Sabellona
petitioner's proposal to buy the said jewelry. Rather, it took possession thereof and sold a portion to Dalmacio
appears that it was petitioner, through his agents, who Secuya through a private instrument that is already lost.
led Dr. Cruz to believe that the Tanay property was Secuya, along with his many relatives took possession of
worth exchanging for her jewelry as he represented that the said land. Later on, Selma bought a portion of the
its value was P400,000.00 or more than double that of said land, including that occupied by Secuya; she bought
the jewelry which was valued only at P160,000.00. If it from Caesaria Caballero. She presented a Deed of
indeed petitioner's property was truly worth that much, Absolute Sale and a TCT. Secuya filed a case for quieting
it was certainly contrary to the nature of a businessman- of title. CA upheld Selmas title considering that she had
banker like him to have parted with his real estate for a TCT and a Deed of Sale.
half its price. In short, it was in fact petitioner who
resorted to machinations to convince Dr. Cruz to ISSUE: Who has a better right, Secuya or Selma?
exchange her jewelry for the Tanay property.
Furthermore, petitioner was afforded the reasonable HELD: The Secuyas have nothing to support their
opportunity required in Article 1584 of the Civil Code supposed ownership over the parcel of land. The best
within which to examine the jewelry as he in fact evidence they could have had was the private
accepted them when asked by Dr. Cruz if he was instrument indicating the sale to their predecessor-in-
satisfied with the same. By taking the jewelry outside interest. But the instrument is lost. Even so, it is only
the bank, petitioner executed an act which was more binding as between the parties and cannot prejudice 3rd
consistent with his exercise of ownership over it. This persons since it is not embodied in the public document.
gains credence when it is borne in mind that he himself Selma, on the other hand, has all the supporting
had earlier delivered the Tanay property to Dr. Cruz by documents necessary; she also acted in good faith and
affixing his signature to the contract of sale. That after thought that the Secuyas were merely tenants. They did
two hours he later claimed that the jewelry was not the not even pay realty taxes and did not have their claim
one he intended in exchange for his Tanay property, annotated to the certificate of sale.
could not sever the juridical tie that now bound him and
Dr. Cruz. The nature and value of the thing he had taken
preclude its return after that supervening period within
19. YUVIENGCO v DACUYCUY
which anything could have happened, not excluding the
alteration of the jewelry or its being switched with an
FACTS: Yuvienco entered into a contract with Yao King
inferior kind.
Ong and the other occupants, wherein the former will
sell to the latter the Sotto property in Tacloban City for
P6.5M provided that the latter made known their
decision to buy it or not later than July 31, 1978. When
Yuvienco's representative went to Cebu with a prepared
and duly signed contract for the purpose of perfecting
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and consummating the transaction, Yao King Ong and asked if it was possible to pay on terms. The bank
other occupants found variance between the terms of officials stated that there was no harm in trying to ask
payment stipulated in the document and what they had for payment on terms because in previous transactions,
in mind. Thus, it was returned unsigned. Thus, the the same had been allowed. It was the understanding,
action for specific performance. however, that should the term payment be disapproved,
then the price shall be paid in cash. It was Albano who
ISSUE: W/N the claim for specific performance of Yao dictated the terms under which the installment payment
King Ong is enforceable under the Statute of Frauds may be approved, and acting thereon, Alfonso Lim
wrote BPI through Merlin Albano embodying the
HELD: YES. It is nowhere alleged in the complaint that payment initially of 10% and the remaining 90% within a
there is any writing or memorandum, much less a duly period of 90 days. 2 or 3 days later, LSM learned that its
signed agreement to the effect, that the price of offer to pay on terms had been frozen. Alfonso Lim went
P6,500,000 fixed by petitioners for the real property to BPI and tendered the full payment of P33,056,000.00
herein involved was agreed to be paid not in cash but in to Albano. The payment was refused because Albano
installments as alleged by Yao King Ong. The only stated that the authority to sell that particular piece of
documented indication of the non-wholly-cash payment property in Pasig had been withdrawn from his unit. The
extant in the record is the deeds already signed by same check was tendered to BPI Vice-President Nelson
Yuvienco and taken to Tacloban by Atty. Gamboa for the Bona who also refused to receive payment.
signatures of the respondents. In other words, the 90- LSM filed an action for specific performance with
day term for the balance of P4.5 M insisted upon by damages against BPI. In the course of the trial, BPI
respondents choices not appear in any note, writing or informed the trial court that it had sold the property
memorandum signed by either the petitioners or any of under litigation to National Book Store (NBS) in 1989.
them, not even by Atty. Gamboa. Hence, looking at the The complaint was thus amended to include NBS. RTC
pose of respondents that there was a perfected ruled in favor of LSM, holding that there was a perfected
agreement of purchase and sale between them and contract of sale between LSM and BPI. CA reversed,
petitioners under which they would pay in installments holding that no contract of sale was perfected because
of P2 M down and P4.5 M within ninety 90) days there was no concurrence of the three requisites
afterwards it is evident that such oral contract involving enumerated in Article 1318 of the Civil Code.
the "sale of real property" comes squarely under the
Statute of Frauds (Article 1403, No. 2(e), Civil Code.) ISSUE: W/N there was a valid contract of sale
In any sale of real property on installments, the
Statute of Frauds read together with the perfection HELD: YES. There was a meeting of the minds between
requirements of Article 1475 of the Civil Code must be the buyer and the bank in respect to the price of
understood and applied in the sense that the idea of P1,000/sqm. The requirements in the payment of the
payment on installments must be in the requisite of a purchase price on terms instead of cash were suggested
note or memorandum therein contemplated. While such by BPI Vice-President Albano. Since the authority given
note or memorandum need not be in one single to broker Revilla specified cash payment, the possibility
document or writing and it can be in just sufficiently of paying on terms was referred to the Trust Committee
implicit tenor, imperatively the separate notes must, but with the mutual agreement that if the proposed
when put together', contain all the requisites of a payment on terms will not be approved by our Trust
perfected contract of sale. To put it the other way, Committee, Limketkai should pay in cash, the amount
under the Statute of Frauds, the contents of the note or was no longer subject to the approval or disapproval of
memorandum, whether in one writing or in separate the Committee, it is only on the terms. The record
ones merely indicative for an adequate understanding of shows that if payment was in cash, either broker Revilla
all the essential elements of the entire agreement, may or Aromin had full authority. But because LSM took
be said to be the contract itself, except as to the form. advantage of the suggestion of Vice-President Albano,
the matter was sent to higher officials. Immediately
upon learning that payment on terms was frozen and/or
20. LIMKETKAI SONS MILLING INC v CA denied, Limketkai exercised his right within the period
given to him and tendered payment in full, thus
FACTS: In 1976, Philippine Remnants Co., Inc. complying with their agreement.
constituted the Bank of the Philippine Islands (BPI) as its The negotiation or preparation stage started with the
trustee to manage, administer, and sell its real estate authority given by Philippine Remnants to BPI to sell the
property, one of which was the disputed lot in Pasig. In lot, followed by the authority given by BPI and
1988, Pedro Revilla, Jr., a licensed real estate broker, confirmed by Philippine Remnants to broker Revilla to
was given formal authority by BPI to sell the lot for sell the property, the offer to sell to Limketkai, the
P1,000/sqm. Broker Revilla contacted Alfonso Lim of inspection of the property and the negotiations with
Limketkai Sons Milling (LSM) who agreed to buy the land. Aromin and Albano at the BPI offices. The perfection of
LSM asked that the price of P1,000/sqm. be reduced to the contract took place when Aromin and Albano, acting
P900.00 while Albano stated the price is to be for BPI, agreed to sell and Alfonso Lim with Albino
P1,100.00. The parties finally agreed that the lot would Limketkai, acting for LSM, agreed to buy the disputed
be sold at P1,000/sqm. to be paid in cash. lot at P1,000/sqm. Aside from this there was the earlier
Notwithstanding the final agreement to pay agreement between LSM and the authorized broker.
P1,000/sqm. on a cash basis, Alfonso Lim (LSM official)
FACTS: Ortega occupied a parcel of land. After the FACTS: Cecilio Claudel acquired a lot from the Bureau of
liberation, the government assigned the lot to the Rural Lands. He occupied the same, declared it in his name
Progress Admin. She asserted her right thereto; but was and dutifully paid his taxes. After his death, his heirs
disputed by Leonardo. Ortega and Leonardo agreed to a and siblings contested each other claiming ownership
compromise. The agreement was for Ortega to desist thereof. It was his heirs who were in possession of the
from pressing her claim, and Leonardo, upon getting the property. They partitioned it amongst themselves,
lot, would sell to her a portion thereof provided she registered each portion under the Torrens System, and
paid for the surveying of the lot. If he acquired title, she each paid their respective taxes. The siblings filed a
could stay as tenant. Ortega thus desisted from her case for cancellation of titles and reconveyance arguing
claim, paid for the surveying of the lot and the that there was a verbal sale between Cecilio and their
preparation of the plan, and regularly paid him a parents over the lot. As evidence, they presented a
monthly rental. When she remodeled her sons house subdivision plan. CA ordered the cancellation of the
beside the lot, it extended over the subject lot. When TCTs in favor of the heirs.
Leonardo acquired title, he refused to sell the portion
agreed upon. He claims that the contract is ISSUE: W/N there was a valid sale between Cecilio and
unenforceable based on the Statute of Frauds. his siblings
ISSUE: W/N the contract is unenforceable HELD: NO. As a rule, a sale of land is valid regardless of
the form it may have been entered into. However, in
HELD: NO. The contract is enforceable because there the event that a 3rd party disputes the ownership, there
was partial performance. Ortega made substantial is no such proof in support of the ownership. As such, it
improvements on the lot, desisted from her claim, cannot prejudice 3rd personssuch as the heirs in this
continued possession, and paid for the surveying, and case. Also, the heirs had a right to rely upon their
also paid the rentals. All these put together amount to Torrens titles, which, as opposed to the subdivision
plans, are definitely more credible.
Further, the subsequent buyers were in bad faith
because Armando & Adelia registered their adverse
23. ALFREDO v BORRAS claimthis amounts to constructive notice, which
negates good faith.
FACTS: Godofredo & Carmen mortgaged their land to The Statute of Frauds likewise does not apply
DBP for P7,000. To pay their debt, they sold the land to considering that Godofredo & Carmen had already
Armando & Adelia for P15,000. The latter also assumed derived the benefits from the salesuch as the money to
to pay the loan. Carmen issued Armando & Adelia a pay for the loan. The receipt also suffices to constitute
receipt for the sale. They also delivered to Armando & the memorandum required by the Statute of Frauds.
Adelia the Original Certificate of Title, tax declarations, Assuming that the sale was voidable because it was
and tax receipts. They also introduced Armando & conjugal property, the same was ratified by Godofredo
Adelia to the Natanawans, the tenants of the said by introducing Armando & Adelia to the Natanawans as
property as the new lessors. They thereafter took the new lessors. Also, even though titled as Specific
possession of the said land. Later, they found out that Performance, the complaint was one for reconveyance
Godofredo & Carmen sold the land again to other buyers and prescription does not lie of one who is in actual
by securing duplicate copies of the OCTs upon petition possession of the property.
with the court. Thus, they filed for specific
performance. Godofredo & Carmen claimed that the
sale, not being in writing, is unenforceable under the 23. TOYOTA SHAW INC v CA
Statute of Frauds.
FACTS: Luna Sosa wanted to buy a Toyota Lite Ace. He
ISSUE: W/N the contract of sale is unenforceable under went to Toyota Shaw where he met Popong Bernardo, a
the Statute of Frauds. sales rep. Sosa explained that he needed the Lite Ace by
June 17, otherwise, he would become a laughing stock.
HELD: NO. The Statute of Frauds is applicable only to Bernardo guaranteed that the vehicle would be
executory contracts, not those that have already been delivered. They executed a document entitled
partially or completely consummated. In this case, the Agreements between Sosa & Popong Bernardo of Toyota
sale of the land to Armando & Adelia had already been Shaw where a P100K downpayment was stipulated and
consummated. The ownership of the land was also that the Lite Ace would be available at a given date.
transferred to Armando & Adelia when they were When the day of reckoning arrived, the Lite Ace was
introduced to the Natanawans and took possession unavailablethe explanation of Bernardo being nasulot
thereof. Therefore, when Godofredo & Carmen sold the ng ibang malakas. However, according to Toyota, the
land to other buyers, it was no longer theirs to sell. true reason was that BA Finance, which was supposed to
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 17
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answer for the balance of the purchase price, did not essential to the perfection of the sale. It was also clear
approve Sosas application. Toyota also returned the that Bernardo signed the document in his personal
downpayment. Thus, Sosa sued for damages amounting capacity and it was up to Sosa to inquire as to the
to P1.2M due to his humiliation, hurt feelings, sleepless extent of the formers capacity. Sosa did not even sign
nights, and so on. it. It was nothing but a mere proposal, which did not
mature into a perfected contract of sale in lieu of the
ISSUE: W/N there was a perfected contract of sale subsequent events. In fact, it made no specific
reference to the sale of a vehicle. No obligations could
HELD: NO. Toyota Shaw should NOT be held liable for thus arise therefrom. Sosa has no one else to blame but
damages because there was no perfected contract of himself for his humiliation for bragging about something
sale in the first place. There was no agreement as to the he does not own yet.%
price and the manner of paymentwhich are both
CONSUMMATION/PERFECTION OF CONTRACT
1. SANTOS v SANTOS ISSUE: W/N Wilfredo, as mortgagor, can sell the tractor
subject of a mortgage
FACTS: Jesus and Rosalia owned a lot with a 4-door
apartment. They sold through a public instrument the HELD: YES. The mortgagor (Wilfredo) had every right to
said property to their children, Salvador and Rosawho sell the property subject to mortgageeven without the
sold her share to Salvador as well. Nonetheless, in spite consent of the mortgagee as long as the purchaser
of the sale, Rosalia remained in possession and control assumes the liability of the mortgagor.
over the property. Jesus, Rosalia and Salvador died. In this case, there was constructive delivery already
Zenaida, claiming to be Salvadors heir, demanded rent upon the execution of the public instrumenteven if the
from the tenants. The other children of Jesus and tractor could not yet be delivered. Execution of the
Rosalia filed a case for reconveyance averring that the public instrument and mutual consent of the parties was
sale to Salvador was fictitious and done merely to equivalent to constructive delivery. Therefore, at the
accommodate him. time when the sheriff levied upon the tractor, it was no
longer the property of Wilfredo. Also the clearing of the
ISSUE: W/N the sale to Salvador was fictitious check was not a condition for the consummation of the
sale but only upon the extinguishment of the mortgage.
HELD: YES. While it is true that sale through a public
instrument is equivalent to delivery of the things sold
which has the effect of transferring ownership, the 3. ADDISON v FELIX
delivery can be rebutted by clear and convincing
evidence. The vendors continuous possession makes the FACTS: Addison owned 4 parcels of land, which he sold
sale dubious. Salvador never took possession of the to Felix, through public instrument. The down payment
property. He surrendered the titles to his mother after was made; the final installment to be paid after the
having registered the lots in his name, he never issuance of the certificate of title. Addison sued Felix to
collected rentals, neither has he paid the taxes thereon. compel the latter to pay the last installmentbut Felix
Thus, there was no real transfer of ownership. That refused and sought to rescind the contract due to the
being the case, the action for reconveyance was absolute failure of Addison to deliver the thing sold.
imprescriptible.
ISSUE: W/N there was delivery
FACTS: Domingo owned 2 lots, which he donated FACTS: Power Commercial Corp. entered into a contract
through a private instrument to Danguilan for the of sale with the Quiambao spouses. It agreed to assume
consideration that the latter must take care of him for the mortgages thereon. A Deed of Absolute Sale with
the remainder of his life and manage his burial. Assumption of Mortgage was executed. Power
Domingos daughter, Apolonia, laid claim to the land, Commercial failed to settle the mortgage debt
presenting a public document allegedly executed in her contracted by the spouses, thus it could not undertake
favor, the purchase price being paid for by her mother. the proper action to evict the lessees on the lot. Power
She however failed to take possession of the said Commercial thereafter sought to rescind the contract of
property after the execution of the deed. In fact, she the sale alleging that it failed to take actual and
moved out of the farm when Danguilan started to physical possession of the lotwhich allegedly negated
cultivate the same for as long as she was given a share constructive delivery.
from the harvests. She decided to file a case only after
the deliveries of farm produce have ceased. ISSUE: W/N there was delivery
ISSUE: Who has a better title over the land, Danguilan or HELD: YES. First, such a condition that the Quiambao
Apolonia? spouses would evict the lessees therein was not
stipulated in the contract. In fact, Power Commercial
HELD: DANGUILAN. At the onset, the donation in favor was well aware of the presence of the tenants therein.
of Danguilan was valid even though embodied in a Also in this case, Power Commercial was given control
private instrument, because it was an onerous donation. over the said lot and it endeavored to terminate the
The deed of sale presented by Apolonia was also occupation of the actual tenants.
suspicious. It was only 3 years old and the consideration Control cannot be equated with actual possession.
was paid for by her mother. Assuming that it was valid, Power Commercial, as purchaser, agreed voluntarily to
still the presumptive delivery is overcome by the fact assume the risks involved. The public instrument
that she failed to take possession of the property. executed amounted to symbolic delivery of the property
Ownership, after all, is not transferred by mere sold and authorized the buyer to use the document as
stipulation butby actual and adverse possession. She proof of ownership. Power Commercial was deprived of
even transferred the same to Danguilan possession of ownership only after it failed to remit the
the same. She cannot have a better right in this case amortizations, but not due to failure of delivery.
than Danguilan.
7. CHUA v CA
5. PASAGUI v VILLABLANCA
FACTS: Valdes-Choy is the owner of the subject matter,
FACTS: Pasagui purchased a parcel of land form the when she advertised the property for sale. Chua
Bocar Spouses for P2,800, which was embodied in a responded to the advertisement, and met up with
public instrument. They failed to take possession of the Valdes-Choy. They agreed for the purchase price of
property because the Villablancas illegally took P10,800,000, to be paid on July 15, 1989. This was
possession of the property and harvested the coconuts evidenced by an earnest money for P100,000, which was
therein. Thus, Pasagui filed a case for ejectment before put on a receipt, stating that the money will be
the CFI. The Bocar spouses were likewise impleaded. forfeited upon failure to pay on the dat stipulated. On
The latter contested that the case should be dismissed July 13, Valdes-Choy executed two deeds of absolute
because the CFI did not have jurisdiction over forcible sale, first, pertaining to the house and lot, valued at
entry cases. P8,000,000, and second, pertaining to the movable
properties therein. The next day, Chua issued a check
ISSUE: W/N this is a case of forcible entry worth P485,000 for the purpose paying the capital gains
tax. The value was deducted from the balance, with an
HELD: NO. The case was not for forcible entry because outstanding value of P10,295,000 (additional P80,000 for
there was no allegation that Pasagui was in prior the documentary stamp tax). Chua also showed a check
physical possession of the land and that the worth P10,215,00 to Valdes-Choy, however, he
Villablancas, through force, stealth, or threat, deprived demanded that the TCT should first be transferred to his
them thereof. While the sale was made through a public name before paying the check. Out of anger, Valdes-
document is equivalent to delivery, this presumption Choy tore the deed of absolute sale. On the reckoning
only holds true if there is no impediment to the date, Valdes-Choy tried to make a compromise with
possession of the purchaser. Such is not the case here. Chua, but she did not get any response. Two days later,
Since Pasagui had not yet acquired physical possession Chua filed an action for specific performance, which the
of the land, the case was not one for forcible entry and trial court dismissed. A week later, he filed another
the CFI (not municipal courts) has jurisdiction. action for specific performance, where the court ruled
in favor of him. On appeal, CA reversed.
ISSUES: FACTS:
1. Whether the weight in New York should be the basis Petitioner and respondent entered into a contract in
upon payment of the price of copra should be made. the US whereby Singzon agreed to ship 500 tons of
Yes. The weight in New York should be the basis. copra, with the agreement CIF, Pacific Coast
2. Whether what is to be ascertained based upon the Singzon failed to deliver, but the parties entered into
outturn weights and quality at port of discharge was a settlement, whereby Singzon would deliver 300 tons at
only the balance due to be paid. No. The balance due the same terms the contract provided that should
to be paid is not the only basis. Singzon again default, he would pay $10,000 for
damages and the original contract would be revived
HELD: Singzon again failed to ship the copra, and he did not
Under an ordinary CIF agreement, delivery to the pay the fine or ship the 500 tons as originally agreed
buyer is complete upon delivery of the goods to the Pacific filed an action to recover damages
carrier and tender of the shipping and other documents Singzon claims that Pacific had no legal personality to
required by the contract and the insurance policy are sue because it is a foreign corporation
taken in the buyers behalf. However, the parties may,
by express stipulation, modify a CIF contract and throw HELD:
the risk upon the seller until the arrival in the port of The contract was perfected in the US by a broker and
destinations. representatives of the parties payment was made to a
In this case, the terms of the contract indicate and bank in California and delivery undertaken through CIF,
intention that the precise amount to be paid by the Pacific Coast
buyer depended upon the ascertainment of the exact Under that arrangement, the vendor is to pay not only
net weight of the cargo at the point of destination: the cost of goods, but also the freight and insurance
a. Net landed weights were to govern. expenses, and this is taken to indicate that the delivery
b. The balance of the price was to be ascertained on is to be made at the port of destination
the basis of outturn weights and quality of the Since CIF includes both insurance and freight expenses
cargo at the port of discharge. to be paid by the seller, ordinarily, before the vessel
c. The seller could deliver 5% more or less than the arrives at the point of destination the risk of loss be for
ISSUE: Whether the sale between Buriol and Rudolf Lietz HELD: NO. Art. 1544 is not applicable because the land
Inc is a lump sum or unit price sale was unregistered under the Torrens System at the time
of the 1st sale. The applicable law is Act 3344. Under
HELD: LUMP SUM SALE. The Deed of Absolute Sale shows said law, registration by the 1st buyer is constructive
that the parties agreed on the purchase price on a notice to the 2nd buyerand as such, the latter cannot
predetermined area of 5 hectares within the specified be deemed to be in good faith. Applying the principle of
boundaries and not based on a particular rate per area. priority in time, priority in rights, Juanita cannot claim
In accordance with Art. 1542, there shall be no to have a better right. The fact that Juanita was able to
reduction in the purchase price even if the area secure a title in her name does not operate to vest
delivered to Rudolf Lietz Inc is less than that states in ownership. The Torrens System cannot be used as a
the contract. In the instant case, the area within the means to protect usurpers.
boundaries as stated in the contract shall control over
the area agreed upon in the contract.
15. CARILLO v CA
13. NAAWAN COMMUNITY RURAL BANK INC v CA FACTS: Gonzales purchased from Priscilla, acting as
agent of Aristotle, the latters land. For failure to
FACTS: Comayas offered to sell to the Lumo Spouses a execute the Deed of Sale, she filed a case for specific
house and lot. The property was already registered performance and impleaded Priscilla (not Aristotle). The
under the Torrens System that time and they made latter defaulted and judgment was rendered against her
appropriate inquiries with the RD; they found out that it ordering the nullification of the OCT of Aristotle and the
was mortgaged for P8,000, paid Comayas to settle the issuance of a new certificate of title in favor of
mortgage, and the release of the adverse claim was Gonzales. The Dabons thereafter surfaced and sought to
annotated in the title. Thereafter, they executed an annul the judgment of the trial court averring that they
Absolute Deed of Sale over the subject property and purchased the property from Aristotle himself and they
registered the same. However, it turns out that it was were not impleaded as the real parties in interest.
already previously sold to Naawan Community Rural
Bank; it was then unregistered. The Bank foreclosed on ISSUE: Who has better title, Gonzales or Dabon?
the property, purchased the same, and registered it
under Act 3344. Thus, the Bank sought to eject the HELD: DABON. The decision of the lower court in favor
spouses. However, the latter countered with an action of Gonzales was void due to extrinsic fraud. The Dabons
for quieting of title. were deprived of their day in court and through
questionable means at thatsuch as the failure to give
ISSUE: Who has a better title, Naawan or Lumo spouses? them appropriate notice of the proceedings, and not
having them impleaded even though they are the parties
HELD: LUMO SPOUSES. Where a person claims to have to be adversely affected. Instead, it was the agent who
superior property rights by virtue of a sheriffs sale, the was impleadednot the principal or the subsequent
benefit of Art. 1544 applies favorably only if the purchasers. The court never acquired jurisdiction.
property is registered under the Torrens Systemnot It must be noted that the property was sold to
under Act 3344. Registration under the Torrens System Gonzales in 1988, while the same was sold to the Dabons
is the operative act that gives validity to the transfer in 1989; nonetheless, the requirements of double-sale
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 22
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are two-fold: acquisition in good faith and registration
in good faith. Based on the foregoing, the case is
remanded to the lower court for further proceeding. 18. MENDOZA v KALAW
FACTS: By virtue of a compromise agreement judicially FACTS: Canuto sold a parcel of land to Carumba by
approved, Villafania sold to Rosenda and Rosita a house virtue of a Deed of Sale of Unregistered Land. The sale
and lot. Unknown to them, Villafania obtained a free was never registered. Thereafter, Canuto was sued for
patent over the said land and sold it to De Vera. On the collection of money, and the said land was levied upon
other hand, Rosenda and Rosita sold the property to the and sold to Balbuena, who registered it.
spouses Abrigo. Now De Vera and Abrigo dispute
ownership over the propertythe former filing an ISSUE: Who has a better right, Carumba or Balbuena?
ejectment suit against the latter.
HELD: CARUMBA. Art. 1544 does not apply in this case.
ISSUE: Who has a better title, Abrigo or De Vera? Instead, the Rules of Court are applicable. Balbuena,
the later vendee, merely steps into the shoes of the
HELD: DE VERA. Abrigo registered the property under judgment debtor and acquires all the rights and
Act 3344, while De Vera registered the same under the interests of the latter. By the time the lot was sold
Torrens System. Naturally, De Veras right prevails. through the foreclosure proceedings, it was no longer
Registration must be done in the proper registry to bind owned by Canuto by virtue of a prior sale to Carumba
the land. It was also proven that De Vera acted in good who has a better right.
faith considering that there was nothing in the
certificate of title or the circumstances, which would
have aroused suspicion and mandated her to make an 26. ACABAL v ACABAL
inquiry. Registration under Act 3344 does not suffice to
constitute constructive notice in order to negate the FACTS: Sps. Acabal sold their lot to their son Villaner
good faith of the registrant under the Torrens System. Acabal who in turn transferred it to his godson-nephew
De Veras right must be upheld. Leonardo Acabal. This was later on sold to Leonardo and
Ramon Nicolas hence a complaint was filed by Villaner
against them and his nephew arguing that what he
24. DAGUPAN TRADING CO v MACAM signed was a Lease contract and not a sales contract.
The RTC ruled in favor of Nicolas which was reversed by
FACTS: Sammy Maron and his 7 brothers were co-owners the CA thus the case at bar.
of a parcel of land for which they applied for
registration. Pending the proceedings, they sold the ISSUE: W/N there was a valid sale
same to Macam, who thereafter introduced substantial
improvements thereon. Later on, the property was HELD: YES
levied upon and sold in favor of Dagupan Trading, which It is valid only insofar as 5/9 of the land is concerned.
thereafter registered the Sheriffs Final Certificate of This is so because the property in question was bought
Sale during the pendency of the marriage of Villaner
therefore it is presumed to belong to the conjugal
ISSUE: Who has a better right, Macam or Dagupan? partnership. Leonarda failed to prove otherwise.
Nevertheless, when Justiniana (wife) died, her share
HELD: MACAM. In this case, the sale in favor of Macam vested on her 8 children, and her husband vesting him
was executed before the land was registered, while the with 5/9 share on the property. Since it is not yet
sale in favor of Dagupan was made after the partitioned, he cannot yet claim title to any definite
registration. In such a case, the Rules of Court will apply portion of the property but only to his ideal, abstract or
such that the delivery of the Sheriffs Final Certificate spiritual share. He may still dispose of the same for
of Sale in favor of Dagupan merely substitutes the latter every co-owner has absolute ownership over his
into the shoes of the seller Maron and acquires all undivided interest in the co-owned property. However,
rights, interests, and claims of the latter. Considering he cannot dispose of the shares of his co-owners based
that at the time of the levy, Maron was no longer the on nemo dat qui non habet. Since he sold it without the
owner of the land, then no title can thereafter pass in consent of the other co-owners, the sale is still valid
favor of Dagupan. Macams title is thus sustained. only insofar as his shares are concerned.
And the finding that both Leonardo and Villaner were
in pari delicto, the same is irrelevant because the
property concerned is unregistered.
FACTS: Rosenda and Sotero were among co-owners of 3 4. CITY OF MANILA v BUGSUK LUMBER
parcels of land, which they sold to Ildefonso Yap for
some P100K without the consent of the other co-owners. FACTS: Bugsuk Lumber had an office in Manila. The City
They included in the sale certain buildings and Treasurer assessed it for license fees and mayors
laboratory and other educational equipment within the permitalleging that Bugsuk sold at wholesale and retail
said properties, which were actually owned by Mindanao to different lumber dealers in Manila. Bugsuk refused to
Academy. Mindanao Academy and the other co-owners pay alleging that the lumber it produced were delivered
assailed the validity of the sale. The trial court declared directly from the shipper to the buyer, that they paid
the sale null and void. Yap contends that Erlinda, one of the appropriate Timber License Fees and that their
the co-owners owning 5/12 share of the co-ownership, Manila Office only received orders and accepted
does not have the standing to challenge the sale for payments. Bugsuk alleges that it is not a dealer and its
being in bad faith. office is not a store to warrant the imposition of the
additional taxes.
ISSUE: W/N the sale is null and void as to its entirety
ISSUE: W/N Bugsuk is liable for the additional taxes
HELD: YES. Although the general rule is that if a co-
owner alienates the entire property without the consent HELD: NO. A dealer buys to sell again; Bugsuk produced
of the other co-owners, the sale will affect only his its own lumber from Palawan. Thus, it is not a dealer.
share, such rule does not apply if the property cannot Its Manila office is not a store as well. A store is a place
be partitioned/subdivided. In this case, aside from the where goods are kept for salewhether for retail or
fact that Rosenda and Sotero cannot sell the entire wholesale. The Manila office only processed the orders
property including the school equipment, they cannot and payments; it did not keep goods therein or act as a
ISSUE: W/N Sun Brothers may recover the thing FACTS: EDCA sold books to Tomas dela Pena who
fraudulently represented himself to be Prof. Jose Cruz,
HELD: NO. It is true that where a person who is not the a Dean of DLSU. EDCA delivered him the books, the
owner of a thing sells the same, the buyer acquires no check Tomas issued was dishonored because he did not
better title than the seller has. In this case. Lopez have an account at all. Tomas thereafter sold the books
obviously had no title to the goods for having failed to at a discount to Leonor Santos. EDCA, with the aid of
pay the full price. It only follows that JV Trading had no the police, stormed the Santos Bookstore to retrieve the
title thereto as Velasco was not in good faith. He should books.
have inquired if Lopez had good title to itthe same not
being engaged in the business of selling appliances. ISSUE: W/N EDCA may retrieve the books from Santos
HOWEVER, when the refrigerator passed to Co Kang
Chiu, the latter acquired valid title thereto. The HELD: NO. Ownership of the books passed to Tomas
exception to the foregoing rule is the purchase in good upon the delivery thereof. He had the right to transfer
faith in a merchant store or a fair or a market. This rule the same to Santos. The fact that he did not pay for the
fosters stability to commerce and business transactions. books only warrants rescission or an action for payment.
Co Kang Chiu purchased the refrigerator in a merchant EDCA cannot be considered to have been unlawfully
storeand for value and in good faith. Thus, he is deprived under the CC as to warrant recovery of the
protected by the law. Sun Brothers would not be books from Santos. Possession of movable property
entitled to recover the refrigeratornot even if they pay acquired in good faith is equivalent to title. Santos was
its valuesince they were not deprived of the same a buyer in good faith, thus he is protected by the law.
unlawfully. Lopez is the one who should be liable to Sun
Brothers for the full purchase price of the ref.
8. AZNAR v YAPDIANGCO
6. TAGATAC v JIMENEZ FACTS: Teodoro advertised for sale his Ford Fairlane
car. De Dios approached them purporting to be a
FACTS: Tagatac bought a car abroad and brought it to nephew of Marella. Teodoro transacted with Marella
the Philippines. Warner Feist deceived her into believing who agreed to buy the car, agreeing to pay the same
that he was very rich and purchased her car. She only after the car has been registered in his name. The
delivered possession thereof. Levy (another name of Deed was registered in his name, but Marella has yet to
Feist) issued her a postdated check, which was pay so the documents were not delivered to him, he
dishonored. Feist then disappeared with the car. Feist pleaded with Ireneo, Teodoros son, that they proceed
was able to register the car in his name and eventually to Marellas sister to secure the shortage of cash. Ireneo
sold the car to Sanchez, who then sold the same to agreed. They proceeded thereto, Ireneo was
Jimenez. Jimenez even labored to verify the cars accompanied by De Dios and an anonymous person. De
records with Motor Vehicle Office. Jimenez then Dios was able to induce Ireneo to hand over the
delivered the car to California Car Exchange for display. documents under the pretext that he will show them to
Tagatac, upon finding out, sought to recover the car, his lawyer, Ireneo agreed. De Dios made Ireneo wait and
but Jimenez refused. thereafter escaped with the car and the deed. Marella
was then able to sell the car to Aznar. The police
ISSUE: W/N Jimenez may refuse to give the car back thereafter seized the car in Aznars possession. Aznar
countered with a complaint for Replevin.
HELD: YES. Jimenez was a buyer in good faith of the
carhe had no knowledge of any defect in the title of ISSUE: W/N Teodoro may recover the car from Aznar
the seller. It is true that one who has lost any movable
or has been unlawfully deprived thereof may recover HELD: YES. Teodoro was clearly unlawfully deprived of
the same from the possessor. However, in this case, the car. There was no valid delivery to Marella, hence
the latter acquired no title to the car. Delivery must be
FACTS: Jose Cruz delivered his car to Belizo for the HELD: NO
latter to sell the same. Belizo forged the letter of Cruz It reiterated the ruling in de Garcia v. CA, that the
to the Motor Section of the Bureau of Public Works and controlling provision is Art. 559 of the CC which states
converted the same into a Deed of Sale. Using the that the possession ofmovable property acquired in
forged deed, he had the car registered in his name. good faith is equivalent to a title. Nevertheless, one
Thereafter, Belizo sold the car to Bulahan, who in turn who has lost any movable or has been unlawfully
sold the same to Pahati. However, the car was deprived thereof may recover it from the person in
impounded by the police, and the sale to Pahati was possession of the same. If the possessor of a movable
cancelled. Bulahan now contends that between 2 lost of which the owner has been unlawfully deprived,
innocent parties (Bulahan and Cruz), the person who has acquired it in good faith at a public sale, the owner
made possible the injury must bear the lossin this cannot obtain its return without reimbursing the price
case, supposedly Cruz. paid therefor.
Lourdes, being unlawfully deprived of her ring thus
ISSUE: W/N Cruz may recover the car from Bulahan she has a right to recover it from the current possessor.
Dizon is engaged in a business where presumably
HELD: YES. It is true that both Bulahan and Cruz acted in ordinary prudence would require him to inquire whether
good faith. One who has lost a movable or had been or not an individual who is offering the jewelry by
deprived of the same may recover it from the possessor. pledge is entitled to do so. The principle of estoppel
This rule applies squarely to this case. Thus, since Cruz cannot help him at all. Since there was no precaution
was unlawfully deprived by Belizo through the latters availed of, perhaps because of the difficulty of resisting
artifice, he is entitled to recover the same even against opportunity for profit, he only has himself to blame and
a subsequent purchaser in good faith. The only should be the last to complain if the right of the true
exception to this rule is if the purchaser acquired the owner of the jewelry should be recognized.
same from a public salein which case, reimbursement
is in order. It was, in fact, Bulahan who acted Other issues raised:
negligently in failing to detect the forged Deed of Sale. 1. Principle of estoppel = has its roots in equity, moral
right and natural justice.
" For estoppel to exist, there must be a
declaration, act or omission by the party who is
10. DIZON v SUNTAY
sought to be bound.
" A party should not be permitted to go against his
FACTS: Lourdes Suntay is the owner of a 3-carat
own acts to the prejudice of another.
diamond ring valued at P5,500. She and Clarita Sison
entered into a transaction wherein the ring would be
Concurring opinion by J. Teehankee:
sold on commission. Clarita received the ring and issued
" Interpretation of the unlawfully deprived in Art. 559
a receipt. After some time, Lourdes made demands for
of the CC. It is understood to include all cases where
the return of the ring but the latter refused to comply.
there has been no valid transmission of ownership. If
When Lourdes insisted on the return, Clarita gave her
our legislature intended interpretation to be that of
the pawnshop ticket which is the receipt of the pledge
the French Code, it certainly would have adopted and
and she found out that 3 days after the ring was
used a narrower term than the broad language of Art.
received by Clarita, it was pledged by Melia Sison, the
559 (formerly 464) and the accepted meaning in
niece of Claritas husband in connivance with Clarita
accordance with our jurisprudence.
with the pawnshop of Dominador Dizon for P2,600.
Lourdes then filed an estafa case. She then asked
FACTS: Grimalt transacted with Roman for the purchase FACTS: Tabora purchased volumes of AmJur from
of a schooner called the Santa Marina. The sale was Lawyers Coop. The agreement was for ownership to
predicted upon the condition that it was seaworthy and remain with Lawyers Coop until payment of the full
that Roman would perfect his title theretothe same price. Loss or damage to the goods after delivery to
being registered to Paulina Giron. Only of the said the buyer is for the account of the latter. The books
conditions were complied with will Grimalt purchase the were delivered to his office; that same night, his office
same. The terms of payment were likewise agreed upon. was razed by fire. Tabora failed to pay the full purchase
Roman did nothing to perfect his title; then due to a price. Now Lawyers Coop sues him for the balance.
severe storm, the vessel sank. Roman now sues Grimalt Tabora invokes force majeure.
for the purchase price of the vessel.
ISSUE: Who bears the loss?
ISSUE: W/N Grimalt is liable for the loss
HELD: TABORA. While it is true that generally, loss is for
HELD: NO. There was yet to be a perfected contract the account of the owner, the same does not apply here
between them for the failure of Roman to perfect his because the parties themselves have expressly
title. That being the case, the loss is for the account of stipulated that loss, after delivery to the buyer, are for
Roman as the owner thereof. the account of the latter. Besides, the stipulation
retaining ownership to the seller is intended merely to
secure payment by the buyer. Likewise, the obligation
of Tabora consists of the delivery not a determinate
thing, but a generic thingmoney. Thus, he is not
absolved from liability.
2. DELTA MOTOR SALES CORP. v NIU KIM DUAN FACTS: Tajanlangit bought 2 tractors and a thresher
from Southern Motors. They executed a promissory note
FACTS: Niu Kim Duan purchased from Delta Motors 3 air in payment thereof; it contained an acceleration clause.
conditioning units. Niu paid the downpayment, the Tajanlangit failed to pay any of the stipulated
ISSUE: W/N Tajanlangit is relieved from his obligation to 6. ZAYAS v LUNETA MOTORS
pay
FACTS: Zayas purchased a Ford Thames Freighter from
HELD: NO. While it is true that the foreclosure on the Escano Enterprises, the dealer of Luneta Motor Co. The
chattel mortgage on the thing sold bars further action unit was delivered and Zayas issued a PN payable in 26
for the recovery of the balance of the purchase price, installments secured by a chattel mortgage over the
this does not apply in this case since Southern did not subject motor vehicle. Zayas failed to pay, thus Luneta
foreclose on the mortgage but insteas sued based on the extra-judicially foreclosed on the mortgage and was the
PNs exclusively. That being the case, it is not limited to highest bidder. However, considering that the proceeds
the proceeds of the sale on execution of the mortgaged of the sale was insufficient to cover the debt, Luneta
goods and may claim the balance from Tajanlangit. filed a case for the recovery of the balance of the
purchase price. Zayas refused to pay.
4. NONATO v IAC ISSUE: W/N Luneta may still recover the balance
FACTS: Nonato spouses purchased from Peoples Car a HELD: NO. When the unpaid seller forecloses on the
Volkwagen car. They issued a PN with chattel mortgage. mortgage, the law precludes him from bringing further
Peoples Car thereafter assigned its rights to the note to actions against the vendee for whatever balance, which
Investors Finance. The Nonatos defaulted, thus Investors was not satisfied from the foreclosure. Luneta contends
Finance repossessed the car and demanded the payment that Escano Enterprises is a different and distinct entity
of the balance of the purchase price. and maintains that its contract with Zayas was a loan.
This is unsubstantiated as the agency relationship
ISSUE: W/N Investors Finance may still demand for the between Luneta and Escano is clear.
payment of the balance when it repossessed the car Nevertheless, assuming that they were distinct
entities, the nature of the transaction remains the
HELD: NO. The remedies contemplated under Art. 1484 same. If Escano assigned its right to Luneta, the latter
are ALTERNATIVEnot cumulative. Investors Finance in merely acquires the rights of the formershence, Art.
effect cancelled the sale and it cannot now claim the 1484 of the CC would likewise be inapplicable.
balance of the purchase price. When it took possession
of the car, it gave the spouses 15 days to redeem the
car. This could mean that their failure to do so would 7. NORTHERN MOTORS v SAPINOSO
constrain the company to retain the permanent
possession of the car. There was no attempt at all the FACTS:
return the carthus, it is untrue that the same was Respondent Casiano Sapinoso purchased from
retained merely for appraisal. petitioner Northern Motors an Opel Kadett car for
P12,171 making a downpayment and executing a
promissory note for the balance of P10,540 payable in
5. RIDAD v FILIPINAS INVESTMENT (Filinvest) installments
To secure the payment of the note, Sapinoso executed
FACTS: Ridad purchased from Supreme Sales 2 Ford in favor of Northern Motors a chattel mortgage on the
Consul Sedans, payable in 24 installments, for which he car; the mortgage provided among others that upon
executed a PN with chattel mortgage over the said Sapinosos default in payment of any part of the
property. Another chattel mortgage was executed this principal or interest, Northern Motors may elect any of
time upon a separate Chevy car, and another one upon the ff. remedies (a) sale of the car by Northern (b)
the franchise to operate taxi cabs. Supreme Sales cancellation of the sale to Sapinoso (c) extrajudicial
thereafter assigned its rights under the PN to Filinvest. foreclosure (d) ordinary civil action for fulfillment of the
Ridad defaulted and Filinvest foreclosed on the mortgage contract; additionally, whichever remedy is
mortgage. It was the highest bidder for the foreclosure chosen, Sapinoso waives his right to reimbursement of
sale of the sedans. But unable to fully satisfy the debt, any and all amounts on the principal and interest
it also foreclosed the Chevy and the franchise. already paid
Sapinoso failed to pay the first 5 installments due from
ISSUE: W/N Filinvest may still foreclose the Chevy and August-November 1965; he made payments though on
the franchise to fully satisfy the debt November and December and on April the next year but
failed to make subsequent payments
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 30
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Northern Motors filed a complaint stating that it was 8. CRUZ v FILIPINAS INVESTMENT & FINANCE CORP.
availing of the option of extrajudically foreclosing the
mortgage and prayed that (a) a writ of replevin be FACTS: Ruperto Cruz bought a bus from Far East Motor
issued upon its filing of a bond (b) it be declared to have Corp which was payable on installments of
the rightful possession of the car (c) in default of P1,487.20/month for 30 months with 12% interest. Cruz
delivery, Sapinoso be ordered to pay the balance with executed a PN in the sum of the purchase price. To
interest secure the paypent of the PN, Cruz executed a chattel
Subsequent to the commencement of the action but mortgage on the bus. Since no downpayment was made,
before filing of his answer, Sapinoso made 2 payments Far East required Cruz to execute another security and
amounting to P1,250 on the promissory note; in the for the a REM was executed on the land and building of
meantime, a writ of replevin was issued and the car was Mrs. Reyes which at that time was mortgaged to DBP.
turned over to Northern Motors Far East then assigned all its rights and indorsed the
Sapinoso claimed that he withheld payments because PN to Filipinas Investment and Financing Corp. Cruz
the car was defective and Northern Motors failed to fix defaulted in payment of the PN with only P500 being
it despite his repeated demands ever paid. Filipinas had the chattel mortgage foreclosed
and it was the highest bidder at the foreclosure sale.
TRIAL COURT RULING However, the proceeds were not sufficient to cover the
Northern Motors had the right to foreclose the chattel balance so it paid the indebtedness of Mrs. Reyes and
mortgage with Sapinoso failing to pay more than 2 requested that it be sold at foreclosure sale as well.
installments Thus Cruz and Mrs. Reyes filed an action with the CFI to
However, the foreclosure and the recovery of unpaid have the REM constituted on her land cancelled.
balance are alternative remedies which may not be The CFI ruled in favor of Cruz and Reyes finding that
pursued conjunctively; Northern Motors thereby the extrajudicial foreclosure barred further action for
renounced whatever claim it had on the promissory note recovery thus the case at bar.
Ordered Northern Motors to return of the P1,250 which
it had received from Sapinoso after filing the case and ISSUE: W/N recovery from an additional security is
electing to foreclose included in the prohibition thus allowing Filipinas to
recover the balance
ISSUE: W/N as under Article 1484 of the Civil Code,21
plaintiff Northern Motors is barred from recovering HELD: NO
unpaid balance of the debt having elected to foreclose Art. 1484 provides that when in a (1) a sale of
on the chattel mortgage. NO. personal property and (2) payable on installments there
was default in payment of 2 or more installments, the
HELD: remedies of the seller are:
In issuing the writ of replevin and upholding after trial 1. To exact fulfillment of the obligation, should
the right to possession of the car by Northern Motors, the vendor fail to pay
the court below correctly considered the action as one 2. Cancel the sale,
of replevin to secure possession of the car as preliminary 3. Foreclose the chattel mortgage on the thing
step to a foreclosure sale sold, if one has been constituted, should the
The court below however erred in concluding that the vendees failure to pay cover 2 or more
legal effect of the action was to bar Northern Motors installments. In this case, he shall have no
from accepting further payments on the promissory note further action against the purchaser to recover
It is the fact of foreclosure and actual sale of the any unpaid balance of the price. x x x
mortgaged chattel that bars further recovery by the
vendor of any balance on the vendees outstanding It has been held that these remedies are alternative
obligation not satisfied by the sale thus the exercise of one bars the exercise of the others.
In the present case, there is no occasion to apply the This is so to prevent he abuses committed in connection
restrictive provision of Article 1484 as there has not yet with foreclosure mortgages wherein the mortgagees
been a foreclosure sale resulting in a deficiency would seize the mortgaged property and buying them at
A mortgage creditor before the actual foreclosure sale a very low price at the sale and then bringing suit for
is not precluded from recovering the unpaid balance collection of the unpaid balance resulting in the
although he has filed for replevin for the purpose of mortgagor still liable to pay his original debt plus losing
extrajudicial foreclosure the property.
Also, a mortgage creditor who has elected to foreclose To allow Filipinas to recover thru the additional
but subsequently desists from proceeding with the security would result in a circumvention of the law.
auction sale without gaining any advantage and without Should the guarantor be compelled to pay the balance
causing any disadvantage to the mortgagor is not barred then the guarantor would be entitled to recover from
from suing on the unpaid account the debtor-vendee. In the end, it would still be the
And as applicable here, a mortgage creditor is not debtor-vendee who would bear the payment of the
barred from accepting before a foreclosure sale purchase price.
payments voluntarily tendered by the debtor-mortgagor Also, the word action in Art. 1484 covers all types of
who admits indebtedness. legal demand of ones right whether judicial or
extrajudicial thus the barring effect applies to an
extrajudicial foreclosure.
14. JESTRA DEV AND MANAGEMENT CORP v PACIFICO FACTS: Petitioner Luisa McLaughlin (seller) and private
respondent Ramon Flores (buyer) entered into a
FACTS: Daniel Pacifico signed a Reservation application contract of conditional sale of real property. The total
with Fil-Estate Marketing Assn for the purchase of a purchase price is P140,000. P26,550 should be paid upon
house nad lot and paid the reservation fee. The execution of the deed and the balance not later than
Reservation application contained the amounts to be May 31, 1977 with an interest of 1% per month until fully
paid in installments with interests. Unable to comply paid.
with the schedule of payments, Pacifico requested Flores failed to pay and hence petitioner filed a
Jestra to allow him to make periodic payments which complaint for the rescission of the deed of conditional
the latter granted. They later on executed a contract to sale. Eventually, the parties entered into a compromise
sell when the remaining balance was only P260K. agreement, which was accepted by the court.
Pacifico requested twice for a restructuring of his The parties agreed that Flores shall pay P50,000 upon
unsettled obligation which Jestra granted subject to signing of the agreement and the balance in 2 equal
certain conditions of additional penalties et al. As installments payable on June 30, 1980 and December
compliance to the condition, Pacifico issued 12 post- 31, 1980. Flores also agreed to pay P1,000 monthly
dated checks however he is unable to pay so he rental until the obligation is fully paid for the use of the
requested that he be allowed to dispose the property to subject matter of the deed of conditional sale. They
recover his interest and he could recover the 12 post also agreed that in the event Flores fails to comply with
dated checks, which was this time was denied by Jestra. his obligations, the petitioner will be entitled to the
Jestra then sent a notarial notice of cancellation that issuance of a writ of execution rescinding the deed of
they are giving him until a certain date to pay or else conditional sale and all the payments made will be
the contract will be automatically cancelled. forfeited in favor of the plaintiff.
Pacifico then filed a complaint before the HLURB On October 15, 1980, petitioner wrote to Flores
claiming that despite his full payment of the demanding payment of the balance on or before October
downpayment, Jestra failed to deliver to him the 31. This demand included the installment due on June
property and instead sold it to another buyer. HRLURB 30 and December 31, 1980. On October 30, Flores sent a
Arbiter decided in Pacificos favor finding Jestra liable. letter signifying his willingness and intention to pay the
FACTS:
2. CORONEL v CA PNB owned a parcel of land which Lapaz Kaw Ngo
offered to buy. Events under the first letter-agreement
FACTS: In 1985, Coronel executed a document entitled PNB accepted Lapazs offer subject to certain
"Receipt of Down Payment" in favor of Alcaraz for stipulations. The important ones are the following:
P50,000 dp of P1.24M as purchase price for an inherited 1. The selling price shall be P5.4million. Lapaz had
house and lot promising to execute a deed of absolute already paid P100,000 as deposit.
EXTINGUISHMENT OF SALE
1. ROBERTS v PAPIO obligation, the corporation returned the owners
duplicate TCT which was then delivered to Amelia
FACTS: Roberts.
* The Spouses Papio were the owners of a 274 sqm * The parties (A. Roberts as lessor and Martin Papio as
residential lot located in Makati. In order to secure a lessee) executed a 2-year contract of lease. The
59k loan from the Amparo Investments Corp, they contract was subject to renewal or extension for a like
executed a real estate mortgage on the property. Upon period at the option of the lessor, the lessee waiving
Papios failure to pay the loan, the corporation filed a thereby the benefits of an implied new lease. The lessee
petition for the extrajudicial foreclosure of the was obliged to pay monthly rentals of 800 to be
mortgage. deposited in the lessors account.
* Since the couple needed money to redeem the * A new TCT was issued in the name of Amelia Roberts
property and to prevent the foreclosure of the real as owner. Martin Papio paid the rentals and thereafter
estate mortgage, they executed a Deed of Absolute Sale for another year. He then failed to pay rentals, but he
over the property in favor of Martin Papios cousin, and his family nevertheless remained in possession of
Amelia Roberts. the property for almost 13 years.
* Of the 95k purchase price, 59k was paid to the Amparo * A. Roberts reminded Papio that he failed to pay
Investments Corp, while the 26k difference was retained monthly rentals amounting to a total liability of 410k.
by the spouses. As soon as the spouses had settled their She demanded that Papio vacate the property within 15
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 44
%
days from receipt of the letter in case he failed to settle HELD: NO. Their right has already prescribed.
the amount. Considering that no period for redemption was agreed
* A. Roberts filed a complaint for unlawful detainer and upon, the law imposes a 4-year limitation. This means
damages against Martin Papio that from the time the school was merged to Cebu State
College, they had 4 years, or until June 1987 to redeem
ISSUE: W/N THE DEED OF ABSOLUTE SALE AND the property. However, they failed to do so within the
CONTRACT OF LEASE EXECUTED BY THE PARTIES IS AN period. Failure to redeem automatically consolidates
EQUITABLE MORTGAGE OVER THE PROPERTY ownership in favor of the vendee. The fact that the right
to redeem was annotated does not make it
RULING: NO imprescriptible, it only serves to notify third persons.
An equitable mortgage is one that, although lacking in
some formality, form or words, or other requisites
demanded by a statute, nevertheless reveals the 3. SOLID HOMES INC v CA
intention of the parties to charge a real property as
security for a debt and contain nothing impossible or FACTS:
contrary to law. A contract between the parties is an * Solid Homes executed in favor of State Financing
equitable mortgage if the following requisites are Center a Real Estate Mortgage on its properties
present: a. the parties entered into a contract embraced in the TCT, in order to secure the payment of
denominated as a contract of sale and b. the intention a loan of 10M which the former obtained from the
was to secure an existing debt by way of mortgage. The latter.
decisive factor is the intention of the parties. * A year later, Solid Homes applied for and was
In an equitable mortgage, the mortgagor retains granted an additional loan of 1, 511,270.03 by State
ownership over the property but subject to foreclosure Financing, and to secure its payment, Solid executed an
and sale at public auction upon failure of the mortgagor amendment to real estate mortgage whereby the credits
to pay his obligation. secured by the first mortgage on the abovementioned
In contrast, in a pacto de retro sale, ownership of the properties were increased from 10M to 11,511,270.03.
property sold is immediately transferred to the vendee a * Solid homes obtained additional credits and
retro subject only to the right of the vendor a retro to financing facilities from State Financing in the sum of
repurchase the property upon compliance with legal 1,499,811.97 and to secure its payment, the former
requirements for the repurchase. The failure of the executed the amendment to real estate mortgage
vendor a retro to exercise the right to repurchase within whereby the mortgage executed on its properties was
the agreed time vests upon the vendee a retro, by again amended so that the loans or credits secured
operation of law, absolute title over the property. thereby were further increased from 11,511, 270.03 to
One repurchases only what one has previously sold. 13,011,082.00
The right to repurchase presupposes a valid contract of * When the obligations became due and payable, State
sale between same parties. By insisting that he had Financing made repeated demands upon Solid homes for
repurchased the property, Papio thereby admitted that the payment thereof, but the latter failed to do so.
the deed of absolute sale executed by him and Roberts * State Financing filed a petition for extrajudicial
was in fact and in law a deed of absolute sale and not an foreclosure of the mortgages who in pursuance of the
equitable mortgage; he had acquired ownership over the petition, issued a notice of sheriffs sale whereby the
property based on said deed. mortgaged properties of Solid homes and the
Respondent, is thus estopped from asserting that the improvements existing thereon, including the V.V.
contract under the deed of absolute sale is an equitable Soliven Towers II Building were set for public auction
mortgage unless there is an allegation and evidence of sale in order to satisfy the full amount of Solid homes
palpable mistake on the part of respondent, or a fraud mortgage indebtedness, the interest thereon, and the
on the part of Roberts. fees and expenses incidental to the foreclosure
proceedings.
* Before the scheduled public auction sale, the
2. MISTERIO v CEBU STATE COLLEGE OF SCIENCE AND mortgagor Solid homes made representations and
TECHNOLOGY induced State Financing to forego with the foreclosure
of the real estate mortgage. By reason thereof, State
FACTS: Asuncion sold to Sudlon Agricultural High School Financing agreed to suspend the foreclosure of
(SAHS) a parcel of land, reserving the right to mortgaged properties, subject to the terms and
repurchase the same in case (1) the school ceases to conditions they agreed upon, and in pursuance of the
exist, or (2) the school transfers location. She had her said agreement, they executed a document entitled
right annotated. She died. By virtue of BP 412, SAHS was MEMORANDUM OF AGREEMENT/DACION EN PAGO.
merged with the Cebu State College, effective June
1983. In 1990, the heirs of Asuncion sought to exercise ISSUE:
their right to redeem, claiming that school has ceased to
exist. 1. W/N THE MEMORANDUM OF AGREEMENT/
DACION EN PAGO EXECUTED BY THE PARTIES IS
ISSUE: W/N the heirs of Asuncion may still exercise their VALID AND BINDING
right to redeem the property 2. W/N SOLID HOMES CAN CLAIM DAMAGES
ARISING FROM THE NON-ANNOTATION OF ITS
1. Whether the RTC had jurisdiction over the case 6. FRANCISCO v BOISER
(property issue)
2. Whether the sale was considered as an FACTS:
equitable mortgage Petitioner Adalia Francisco and three of her sisters,
Ester, Elizabeth, and Adeluisa, were co-owners of four
RULING: Even though the case was filed less than one parcels of registered land in Caloocan City
year after the demand to vacate, making it an action of On August 1979, they sold 1/5 of their undivided share
unlawful detainer, there were other issues to be to their mother, Adela Blas, for PhP10,000, making her a
considered such as: a) the validity of the transfer of co-owner of the real property to that extent
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA 46
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7 years later, in 1986, however, Adela sold her 1/5 under the law must be notified of the sale
share for PhP10,000 to respondent Zenaida Boiser, Notice by the co-owner likewise removes all doubt as
another sister of petitioner to the fact of the sale, its perfection, and its validity by
In 1992 or 6 years after the sale, Adalia received not immediately notifying, or not notifying at all, a co-
summons with a copy of a complaint by Zenaida owner, the vendor can delay or even effectively prevent
demanding her share in the rentals being collected from the meaningful exercise of the right of redemption
the tenants of the Ten Commandments Building, which However, it would be unjust in the case at bar to
stands on the co-owned property require the vendor Adela to serve notice of the sale,
Adalia then informs Zenaida that she was exercising when the fact has already been established in both
her right of redemption as co-owner of the subject lower courts Adalia has effectively exercised her right
property, depositing for that purpose PhP10,000 with when she deposited the PhP10,000 redemption price 7
the Clerk of Court days after receiving the summons
The case was however dismissed after Zenaida was
declared non-suited, and Adalias counterclaim was thus Fallo
dismissed as well Petition granted, decision of the CA reversed
3 years after, Adalia institutes a complaint demanding The decision in Etcuban v. CA is abandoned, and the
the redemption of the property, contending that the 30- one in Butte v. Manuel Uy and Sons, Inc., as affirmed in
day period for redemption under Art. 1623 had not Salatandol v. Retes, upheld
begun to run against her or any of the other co-owners,
since the vendor Adela did not inform them about the NOTE
sale, which fact they only came to know of when Adalia The Court failed to negate or possibly appreciate the
received the summons in 1992 fact of Adalias knowledge of the sale prior to the
Zenaida on the other hand contends that Adalia summons, as proven her letter-advise to the tenants of
already knew of the sale even before she received the the building
summons since Zenaida had informed Adalia by letter of The period given by the Court to Adalia was 30 days
the sale with a demand for her share of the rentals after the receipt of the summons on 5 August 1992,
three months before filing suit, attaching to it a copy of which is 4 September 1992
the deed of sale
Adalias receipt of the said letter is proven by the fact
that within a week, she advised the tenants of the 7. SORIANO v BAUTISTA
building to disregard Zenaidas letter-demand
The trial court dismissed the complaint for legal FACTS: Bautista spouses mortgaged their lot to Soriano,
redemption, holding that Art. 1623 does not prescribe who took possession thereof and cultivated the same.
any particular form of notifying co-owners on appeal, Pursuant to Par. 5 of their agreement, Soriano decided
the CA affirmed to buy the lot. Bautista refused to sell claiming that
being mortgagors, they cannot be deprived of their right
ISSUE: Whether the letter-demand by Zenaida to Adalia, to redeem the property.
to which the deed of sale was attached, can be
considered as sufficient compliance with the notice ISSUE: W/N Soriano may buy the mortgaged property of
requirement of Art. 1623 for the purpose of legal Bautista
redemption
HELD: YES. True that the transaction is a mortgage,
HELD: which carried with it a customary right of redemption.
The petitioner points out that the case does not However, the mortgagors right to redeem was rendered
concern the particular form in which such notice must defeasible at the election of the mortgagees by virtue of
be given, but rather the sufficiency of notice given by a Par. 5, allowing them the option to purchase the said
vendee in lieu of the required notice to be given by the lot. There is nothing immoral or illegal about such
vendor or prospective vendor stipulation. It was supported by the same consideration
The text of Art. 1623 clearly and expressly prescribes as the mortgage contract and constituted an irrevocable
that the 30 days for making the redemption shall be continuing offer within the time stipulated. That being
counted from notice in writing by the vendor it makes the case, Bautista spouses must be compelled to honor
sense to require that notice be given by the vendor and the sale.
nobody else, since the vendor of an undivided interest is
in the best position to know who are his co-owners, who
ASSIGNMENT
1. NYCO SALES CORP v BA FINANCE made by Licaros with the Anglo-Asean Bank at the
former's expense. When Gatmaitan contacted the
FACTS: NYCO Sales Corp extended a credit foreign bank, it said they will look into it, but it didn't
accommodation to the Fernandez Brothers. The prospered. Because of the inability to collect,
brothers, acting in behalf of Sanshell Corp, discounted a Gatmaitan did not bother to pay Licaros the value of the
BPI check for P60,000 with NYCO, which then indorsed promissory note. Licaros, however, believing that he had
the said check to BA Finance accompanied by a Deed of a right to collect from Gatmaitan regardless of the
Assignment. BA Finance, in turn, released the funds, outcome, demanded payment, but was ignore. Licaros
which were used by the brothers. The BPI check was filed a complaint against Gatmaitan for the collection of
dishonored. The brothers issued a substitute check, the note. The trial court ruled in favor of Licaros, but
which was also dishonored. Now BA Finance goes after CA reversed.
NYCO, which disclaims liability.
ISSUE: Whether the memorandum of agreement
ISSUE: W/N NYCO, as the assignor, is liable for breach of between petitioner and respondent is one of assignment
warranties of credit or one of conventional subrogation
HELD: YES. The assignor (NYCO) warrants both the RULING: It is a conventional subrogation. An assignment
existence and legality of the credit, as well as the of credit has been defined as the process of transferring
solvency of the debtor. If there is a breach of any of the the right of the assignor to the assignee who would then
2 warranties, the assignor is liable to the assignee. That have a right to proceed against the debtor. Consent of
being the case, NYCO cannot evade liability. So long as the debtor is not required is not necessary to product its
the credit remains unpaid, the assignor remains liable legal effects, since notice of the assignment would be
notwithstanding failure to give notice of dishonor that is enough. On the other hand, subrogation of credit has
because the liability of NYCO stems form the been defined as the transfer of all the rights of the
assignment, not on the checks alone. creditor to a third person, who substitutes him in all his
rights. It requires that all the related parties thereto,
the original creditor, the new creditor and the debtor,
2. LICAROS v GATMAITAN enter into a new agreement, requiring the consent of
the debtor of such transfer of rights. In the case at
FACTS: Abelardo Licaros invested his money worth hand, it was clearly stipulated by the parties in the
$150,000 with Anglo-Asean Bank, a money market memorandum of agreement that the express conformity
placement by way of deposit, based in the Republic of of the third party (debtor) is needed. The memorandum
Venatu. Unexpectedly, he had a hard time getting back contains a space for the signature of the Anglo-Asean
his investments as well as the interest earned. He then Bank written therein "with our conforme". Without such
sought the counsel of Antonio Gatmaitan, a reputable signature, there was no transfer of rights. The usage of
banker and investor. They entered into an agreement, the word "Assignment" was used as a general term, since
where a non-negotiable promissory note was to be Gatmaitan was not a lawyer, and therefore was not
executed in favor of Licaros worth $150,000, and that well-versed with the language of the law.
Gatmaitan would take over the value of the investment