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LAW ON SALES

COMPILATION OF CASE DIGESTS

I. Nature and Form of the Contract


A. Definition (Article 1458)

1. Coronel vs CA GR No. 103577, October 7, 1996

Facts:
Romulo Coronel executed a document entitled ‘Receipt of Downpayment´ in favor of Ramona
Patricia Alcaraz for P50,000 downpayment of the amount of P1.24M as purchase price for an
inherited house and lot, without reservation to withhold the transfer of such property until full
payment. The purpose of such downpayment was for the heirs to transfer the title to their name.
Upon the registration of the property to name of the heirs, the Coronels sold the same property to
Catalina B. Mabanag for P1.58M. The Coronels rescinded the contract with Alcaraz by depositing
the downpayment amount in a bank account in favor of Alcaraz. Alcaraz filed acomplaint for
specific performance, which the trial and the appellate court ruled in her favor.
Issue:
Whether or not the “Receipt of Down payment” embodied a perfected contract of sale and not a
mere contract to sell?
Held:
Yes. The agreement is a contract of sale as there was no express reservation of ownership or title
to the subject parcel of land. Petitioners did not merely promise to sell the property to private
respondent upon the fulfillment of the suspensive condition but on the contrary, having already
agreed to sell the subject property, they undertook to have the certificate of title changed to their
names and immediately thereafter, to execute the written deed of absolute sale. The suspensive
condition was fulfilled on 6 February 1985 and thus, the conditional contract of sale between the
parties became obligatory, the only act required for the consummation thereof being the delivery
of the property by means of the execution of the deed of absolute sale in a public instrument,
which petitioners unequivocally committed themselves to do as evidenced by the ‘Receipt of
Down Payment.´

2. Toyota Shaw vs CA GR No. 116650 May 23, 1995

Facts:

Sometime in June of 1989, private respondent Sosa wanted to purchase a Toyota Lite Ace. Upon
contacting Toyota Shaw, Inc., he was told that there was an available unit. So on 14 June 1989,
Sosa and his son went to the Toyota office at Shaw, where they met Popong Bernardo, a sales
representative of Toyota. Bernardo assured Sosa that a unit would be ready for pick up at 10AM
on 17 June 1989. Bernardo then signed the “Agreements Between Mr. Sosa & Popong Bernardo
of Toyota Shaw, Inc.”/ Exhibit “A” P100,000 was the downpayment, but the purchase price was
not mentioned in the contract. It was also agreed upon by the parties that the balance of the
purchase price would be paid by credit financing through B.A. Finance.
Toyota contends, however, that the Lite Ace was not delivered to Sosa because of the disapproval
by B.A. Finance of the credit financing application of Sosa. It further alleged that a particular unit
had already been reserved and earmarked for Sosa but could not be released due to the
uncertainty of payment of the balance of the purchase price. Toyota then gave Sosa the option to
purchase the unit by paying the full purchase price in cash but Sosa refused. The financing
corporation seemed to have not approved Sosa’s application.

Issue: Whether or not there was a perfected contract of sale?

Held:

No. Nothing was mentioned about the full purchase price and the manner the installments were
to be paid. A definite agreement on the manner of payment of the price is an essential element in
the formation of a binding and enforceable contract of sale. This is so because the agreement as
to the manner of payment goes into the price such that a disagreement on the manner of payment
is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element
of a binding agreement to sell personal property.

Exhibit “A” shows the absence of a meeting of minds between Toyota and Sosa. For one thing,
Sosa did not even sign it. He was not dealing with Toyota but with Popong Bernardo. Bernardo
was only a sales representative of Toyota and hence a mere agent of the latter.

Exhibit “A” may be considered as part of the initial phase of the generation or negotiation stage
of a contract of sale. The Vehicle Sales Proposal was a mere proposal which was aborted in lieu
of subsequent events. It follows that the VSP created no demandable right in favor of Sosa for
the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable
injury.

3. Alfredo vs Borras 404 SCRA 145 June 17, 2003

Facts:

A parcel of land measuring 81,524 square meters (“Subject Land”) in Barrio Culis, Mabiga,
Hermosa, Bataan is the subject of controversy in this case. Petitioners (“Godofredo and Carmen”)
had mortgaged the Subject Land for P7,000.00 with the Development Bank of the Philippines
(“DBP”). To pay the debt, Carmen and Godofredo sold the Subject Land to private respondents
(“Armando and Adelia”) for P15,000.00, the buyers to pay the DBP loan and its accumulated
interest, and the balance to be paid in cash to the sellers. Armando and Adelia gave Godofredo
and Carmen the money to pay the loan to DBP which signed the release of mortgage. The former
subsequently paid the balance of the purchase price of the Subject Land for which Carmen issued
a receipt dated 11 March 1970. They then took possession of the Subject Land. Subsequently,
Armando and Adelia discovered that Godofredo and Carmen had re-sold portions of the Subject
Land to several persons. The private respondents then filed a complaint for specific performance
against petitioners.

Issue: Whether or not there was a perfected contract of sale between the parties?
Held:

Yes. The contract of sale between the spouses Godofredo and Carmen and the spouses
Armando and Adelia was a perfected contract. A contract is perfected once there is consent of
the contracting parties on the object certain and on the cause of the obligation. In the instant case,
the object of the sale is the Subject Land, and the price certain is P15,000.00. The trial and
appellate courts found that there was a meeting of the minds on the sale of the Subject Land and
on the purchase price of P15,000.00. The contract of sale of the Subject Land has also been
consummated because the sellers and buyers have performed their respective obligations under
the contract. In a contract of sale, the seller obligates himself to transfer the ownership of the
determinate thing sold, and to deliver the same, to the buyer who obligates himself to pay a price
certain to the seller. In the instant case, Godofredo and Carmen delivered the Subject Land to
Armando and Adelia, while Armando and Adelia paid the full purchase price as evidenced by the
receipt issued by Carmen.

4. Roberts vs Papio 515 SCRA 346 February 9, 2007

Facts:

The spouses were the owners of a 274-square-meter residential lot, which they mortgaged in
order to secure a loan from the Amparo Investments Corporation. Since the couple needed money
to redeem the property and to prevent a foreclosure, they executed a Deed of Absolute Sale over
the property on April 13, 1982 in favor of Martin Papio’s cousin, Amelia Roberts. Of
the P85,000.00 purchase price, P59,000.00 was paid to the Amparo Investments Corporation,
while the P26,000.00 difference was retained by the spouses. Thereafter, the parties (Amelia
Roberts as lessor and Martin Papio as lessee) executed a two-year contract of lease dated April
15, 1982, effective May 1, 1982. However, Papio refused to vacate the premises upon the
expiration of the period and stopped paying the monthly rentals, despite demands from Roberts.
Roberts then filed a Complaint for unlawful detainer and damages against Martin Papio.

Issue: Whether the contract of sale entered into by Papio and Roberts is actually an equitable
mortgage?

Held:

No. It is a contract of sale. By the contract of sale, one of the contracting parties obligates himself
to transfer the ownership of and deliver a determinate thing and the other, to pay therefor a price
certain in money or its equivalent. The absence of any of the essential elements will negate the
existence of a perfected contract of sale. Respondent’s insistent position that he repurchased the
property pursuant to his right to redeem granted by the petitioner is antithetical to an equitable
mortgage. An equitable mortgage is one that, although lacking in some formality or other requisite
demanded by a statute nevertheless reveals the intention of the parties to change a real property
as security for debt and contain nothing impossible or contrary to law. A contract between two
parties is an equitable mortgage if the following requisites are present: a.Parties entered into a
contract denominated as contract of sale; b.The intention was to secure an existing debt by way
of mortgage. In contrast, the right to repurchase presupposes a valid contract of sale. By insisting
that he had repurchases the property, Papio actually admits that the deed of absolute sale
executed by him and petitioner was really a contract of sale. Respondent is thus bound by his
admission of petitioner’s ownership of the property and is barred from claiming otherwise.

5. Sanchez vs Mapalad Realty Corp. GR No. 148516 December 27, 2007

Facts:

Respondent Mapalad was the registered owner of 4 parcels of land located along Roxas
Boulevard, Baclaran, Paranaque. On March 21, 1986, shortly after EDSA revolution, Jose
Campos executed an affidavit admitting that Mapalad was one of the companies held in trust for
former President Marcos. Campos turned over, all assets, properties, records and documents
pertaining to Mapalad to the new administration led by President Corazon Aquino. PCSS issued
writs of sequestration for Mapalad and all its properties. Rolando Josef, appointed Vice
President/Treasurer and GM of Mapalad, discovered for that there was 4 TCTs missing. Josef
inquired about it and discovered Felicito Manalili, Mapalad’s former director and general manager
took them. On November 16, 1992, Nordelak Development Corporation filed a notice of adverse
claim over the subject properties based on deed of sale purportedly executed by Miguel
Magsaysay in his capacity as President and board chairman of Mapalad. A. Magsaysay Inc., a
corporation controlled by Miguel Magsaysay, acquired ownership of all the shares of stock of
Mapalad however was terminated after selling all his shares to Novo Properties on December 3,
1982. Mapalad commenced the present action for annulment of deed of sale and reconveyance
of title with damages against Nordelak. During the pendency of the case, Nordelak sold the
subject property to a certain Manuel Luis Sanchez, now petitioner.

Issue: Whether or not there is a valid sale between Mapalad and Nordelak?

Held:

No. By the contract of sale, one of the contracting parties obligates himself to transfer ownership
of and to deliver a determinate thing and the other party to pay therefor a price certain in money
or its equivalent.

The essential requisites of a valid contract of sale are:

(1) Consent of the contracting parties by virtue of which the vendor obligates himself to
transfer ownership of and to deliver a determinate thing, and the vendee obligates himself to
pay therefor a price certain in money or its equivalent.

(2) Object certain which is the subject matter of the contract. The object must be licit and
at the same time determinate or, at least, capable of being made determinate without the
necessity of a new or further agreement between the parties.
(3) Cause of the obligation which is established. The cause as far as the vendor is
concerned is the acquisition of the price certain in money or its equivalent, while the cause as far
as the vendee is concerned is the acquisition of the thing which is the object of the contract.

Contracts of sale are perfected by mere consent, which is manifested by the meeting of the offer
and the acceptance upon the thing and the cause which are to constitute the contract.

Consent may be given only by a person with the legal capacity to give consent. In the case of
juridical persons such as corporations like Mapalad, consent may only be granted through its
officers who have been duly authorized by its board of directors. In this case, there was lack of
consent on the part of Mapalad, Magsaysay being no long connected with Mapalad when the
contract was executed. There was likewise no consideration, since there was no payment effected
by Nordelak for this transaction.

6. Del Prado vs SPS. Caballero GR No. 170405 February 2, 2010

Facts:

Several parcels of land, including Cadastral Lot No. 11909, were


adjudicatedin favor of Spouses Antonio and Leonarda Caballero in 1985; hence, the court
ordered for the issuance of the decree of registration and the corresponding titles of the lots in
favor of the Caballeros. On June 11, 1990, Spouses Caballero sold to Carmen del Prado,
Cadastral LotNo. 11909 on the basis of the tax declaration covering the property. On March
20,1991, petitioner filed in the same cadastral proceedings a "Petition for Registration of
Document Under PD 1529" in order that a certificate of title be issued in her name, covering the
whole Lot No. 11909, which is in excess of the allotted area to
be sold. In the petition, she alleged that the tenor of the instrument of sale indicated that the sale
was for a lump sum, in which case, the vendor was bound to deliver all that was included within
said boundaries even when it exceeded the area specified in the contract.

Issue: Whether or not the sale of the land was for a lump sum or not?

Held:

No. The records reveal that when the parties made an ocular inspection, petitioner specifically
pointed to that portion of the lot, which she preferred to purchase, since there were mango trees
planted and a deep well thereon. After the sale, respondents delivered and segregated the area
of 4,000 sq m in favor of petitioner by fencing off the area of 10,475 sq m belonging to them.

Contracts are the law between the contracting parties. Sale, by its very nature, is a consensual
contract, because it is perfected by mere consent. The essential elements of a contract of sale
are the following: (a) consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price; (b) determinate subject matter; and (c) price certain in money or its
equivalent. All these elements are present in the instant case.
B. Subject Matter of Sale (Articles 1459-1465)

7. Heirs of Enrique Zambales vs Court of Appeals GR No. L-54070 February 28, 1983

Facts:

The spouses Enrique Zambales and Joaquina Zambales (the Zambaleses), who are illiterate,
were the homestead patentees of a parcel of land in the Municipality of Del Pilar, Roxas, Palawan,
pursuant to Homestead Patent No. V-59502 dated September 6, 1955. They claimed in
November 1956 that respondent Nin Bay Mining Corporation (Corporation) had removed silica
sand from their land and destroyed the plants and other improvements thereon, to which said
Corporation denied to have done so. On October 29, 1959, the Zambaleses, duly assisted by
their counsel, Atty. Perfecto de los Reyes, and the Corporation, entered into a Compromise
Agreement which state, among others, that the Zambaleses are giving the Corporation full power
and authority to sell, transfer and convey on September 10, 1960 or at any time thereafter the
whole or any part of herein subject property.

On September 10, 1960, the Corporation sold the disputed property to Joaquin B. Preysler for the
sum of P8,923.70 fixed in the Compromise Agreement. On December 6, 1969, or ten (10) years
after the Trial Court's Decision based on the Compromise Agreement, and nine (9) years after
the sale to Preysler, the Zambaleses filed a civil action in the CFI of Palawan for "Annulment of a
Deed of Sale with Recovery of Possession and Ownership with Damages”, alleging that Atty. de
los Reyes and the Corporation induced them through fraud, deceit and manipulation to sign the
Compromise Agreement.

The trial court declared null and void the deed of sale executed between Preysler and the
Corporation, but the Court of Appeals reversed the said decision after finding that the alleged
fraud or misrepresentation in the execution of the Compromise Agreement had not been
substantiated by evidence.

Issue: Whether or not the compromise agreement and the subsequent deed of sale valid and
legal?

Held:

No. The Compromise Agreement was held to be in violation of the Public Land Act, which prohibits
alienation and encumbrance of a homestead lot within five years from the issuance of the patent.
The bilateral promise to buy and sell the homestead lot at a price certain, which was reciprocally
demandable, was entered into within the five-year prohibitory period and is therefore, illegal and
void. Hence, the bilateral promise to sell between the Zambaleses and the Corporation, and the
subsequent deed of sale between Preysler and the latter were declared null and void. As the
contract is void from the beginning, for being expressly prohibited by law the action for the
declaration of its inexistence does not prescribe.
8. Acap vs CA GR No. 118114 December 7, 1995

Facts:

Felixberto Oruma sold his inherited land to Cosme Pido, which land is rented by petitioner
Teodoro Acap. When Cosme died intestate, his heirs executed a “Declaration of Heirship and
Waiver of Rights” in favor of private respondent Edy delos Reyes. Respondent informed petitioner
of his claim over the land, and petitioner paid the rental to him in 1982. However in subsequent
years, petitioner refused to pay the rental, which prompted respondent to file a complaint for the
recovery of possession and damages. Petitioner averred that he continues to recognize Pido as
the owner of the land, and that he will pay the accumulated rentals to Pido’s widow upon her
return from abroad. The lower court ruled in favor of private respondent.

Issues: Whether or not the above document can be considered a deed of sale in favor of private
respondent

Held:

No. In a Contract of Sale, one of the contracting parties obligates himself to transfer the ownership
of and to deliver a determinate thing, and the other party to pay a price certain in money or its
equivalent. Upon the other hand, a declaration of heirship and waiver of rights operates as a
public instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate
and divide the estate left by the decedent among themselves as they see fit. It is in effect an
extrajudicial settlement between the heirs under Rule 74 of the Rules of Court. Hence, there is a
marked difference between a sale of hereditary rights and a waiver of hereditary rights. The first
presumes the existence of a contract or deed of sale between the parties. The second is,
technically speaking, a mode of extinction of ownership where there is an abdication or intentional
relinquishment of a known right with knowledge of its existence and intention to relinquish it, in
favor of other persons who are co-heirs in the succession. Private respondent, being then a
stranger to the succession of Cosme Pido, cannot conclusively claim ownership over the subject
lot on the sole basis of the waiver document which neither recites the elements of either a sale,
or a donation, or any other derivative mode of acquiring ownership.

9. Melliza vs City of Iloilo GR No. L-24732april 30, 1968

Facts:

Juliana Melliza executed an instrument providing for the absolute sale involving 4 lots of land,
ones needed by the municipal government for the construction of avenues, parks and City hall
site according to the “Arellano plan.” Later, Pio Sian Melliza made representations with the city
authorities, for payment of the value of one of the lots. The trial court ruled that the instrument
executed by Juliana Melliza in favor of Iloilo municipality included in the conveyance Lot 1214-B.
The CA affirmed the interpretation of the CFI that the portion of Lot 1214 sold by Juliana Melliza
was not limited to the 10,788 square meters specifically mentioned but included whatever was
needed for the construction of avenues, parks and the city hall site.

Issue: Whether or not the object of sale is determinate?


Held:

Yes. The requirement of the law that a sale must have for its object a determinate thing, is fulfilled
as long as, at the time the contract is entered into, the object of the sale is capable of being made
determinate without the necessity of a new or further agreement between the parties (Art. 1273,
old Civil Code; Art. 1460, New Civil Code). The specific mention of some of the lots plus the
statement that the lots object of the sale are the ones needed for city hall site; avenues and parks,
according to the Arellano plan, sufficiently provides a basis, as of the time of the execution of the
contract, for rendering determinate said lots without the need of a new and further agreement of
the parties.

10. Heirs of Arturo Reyes vs Socco Beltran GR No. 176474 November 27, 2008

Facts:

The subject property in this case is a parcel of land allocated to the Spouses Laquian, who paid
for the same with Japanese money. When the husband died, the property was left to his
wife Constancia;. Upon her death, the original parcel of land was left with her heirs – her
siblings. The subject property, Lot No. 6-B, was adjudicated to respondent, but no title had been
issued in her name. On 25 June 1998, respondent Elena Socco-Beltran filed an application for
the purchase of Lot No. 6-B before the Department of Agrarian Reform (DAR), alleging that it was
adjudicated in her favor in the extra-judicial settlement of Constancia Socco’s estate.

Petitioners herein, the heirs of the late Arturo Reyes, filed their protest to respondent’s petition
before the DAR on the ground that the subject property was sold by respondent’s brother, Miguel
R. Socco, in favor of their father, Arturo Reyes, as evidenced by a Contract to Sell.

Issue: Whether or not petitioners acquired ownership over the disputed property by virtue of the
contract to sell?

Held:

No. Under Article 1459 of the Civil Code on contracts of sale, “The thing must be licit and the
vendor must have a right to transfer ownership thereof at the time it is delivered.” The law
specifically requires that the vendor must have ownership of the property at the time it is
delivered. Petitioners claim that the property was constructively delivered to them in 1954 by
virtue of the Contract to Sell. However, it was explicit in the Contract itself that, at the time it was
executed, Miguel R. Socco was not yet the owner of the property and was only expecting to inherit
it. Hence, there was no valid sale from which ownership of the subject property could have
transferred from Miguel Socco to Arturo Reyes. Without acquiring ownership of the subject
property, Arturo Reyes also could not have conveyed the same to his heirs, herein petitioners.

 Articles 1466-1468
11. Quiroga vs Parsons Hardware, Co. GR No. 11491 August 23, 1918

Facts:

On Jan 24, 1911, plaintiff and the respondent entered into a contract making the latter an “agent”
of the former. The contract stipulates that Don Andres Quiroga, here in petitioner, grants exclusive
rights to sell his beds in the Visayan region to J. Parsons. The contract only stipulates that
J.Parsons should pay Quiroga within 6 months upon the delivery of beds.
Quiroga filed a case against Parsons for allegedly violating the conntract. Only the obligation on
the part of the defendant to order the beds by the dozen and in no other manner, was expressly
set forth in the contract. But the plaintiff alleged that the defendant was his agent for the sale of
his beds in Iloilo, and that said obligations are implied in a contract of commercial agency.

Issue: Whether the contract is a contract of agency

Held:

No. There was the obligation on the part of the plaintiff to supply the beds, and, on the part of the
defendant, to pay their price. These features exclude the legal conception of an agency or order
to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but
delivers to the principal the price he obtains from the sale of the thing to a third person, and if he
does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the
defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the
term fixed, without any other consideration and regardless as to whether he had or had not sold
the beds.

12. Ker and Co., LTD vs Lingad GR No. L-20871 April 30, 1971

Facts:

CIR assessed the sum of P20,272.33 as the commercial broker’s percentage tax,
surcharge, and compromise penalty against Ker & Co. Ker and Co. requested for the
cancellation of the assessment and filed a petition for review with the Court of Tax Appeals. The
CTA ruled that Ker and Co is liable as a commercial broker. Ker has a contract with US rubber.
Ker is the distributor of the said company. Ker was precluded from disposing the products
elsewhere unless there has been a written consent from the company. The prices, discounts,
terms of payment, terms of delivery and other conditions of sale were subject to change in the
discretion of the Company.
Issue:
Whether the relationship of Ker and Co and US rubber was that of a vendor- vendee or
principal-broker

Ruling:
The relationship of Ker and Co and US rubber was that of a principal-broker/ agency.
Ker and Co is only an agent of the US rubber because it can dispose of the products of the
Company only to certain persons or entities and within stipulated limits, unless excepted by the
contract or by the Rubber Company, it merely receives, accepts and/or holds upon consignment
the products, which remain properties of the latter company, every effort shall be made by
petitioner to promote in every way the sale of the products and that sales made by petitioner
are subject to approval by the company. Since the company retained ownership of the goods,
even as it delivered possession unto the dealer for resale to customers, the price and terms of
which were subject to the company’s control, the relationship between the company and the
dealer is one of agency.

13. Inchausti vs Cromwell 20 Phil. 345 October 16, 1911

Facts:
Inchausti is engaged in the business of buying and selling wholesale hemp on
commission. It is customary to sell hemp in bales which are made by compressing the loose
fiber by means of presses, covering two sides of the bale with matting, and fastening it by
means of strips of rattan; that the operation of bailing hemp is designated among merchants by
the word “prensaje.” In all sales of hemp by Inchausti, the price is quoted to the buyer at so
much per picul, no mention being made of bailing. It is with the tacit understanding that the
hemp will be delivered in bales. The amount depends under the denomination of “prensaje” or
the baled hemp. CIR made demand in writing upon Inchausti for the payment of the sum of
P1,370.68 as a tax of one third of one per cent on the sums of money mentioned as aggreagate
sum collected as prensaje or the baled hemp. Inchausti paid upon protest, contending that the
collected amount is illegal upon the ground that the said charge does not constitute a part of the
selling price of the hemp, but is a charge made for the service of baling the hemp.

Issue:
Whether or not the baled hemp constitutes a contract of sale

Ruling:
Yes, the baled hemp constitutes a contract of sale. In the case at bar, the baled form before the
agreement of sale were made and would have been in existence even if none of the individual
sales in question had been consummated. The hemp, even if sold to someone else, will be sold
in bales. When a person stipulates for the future sale of articles which he is habitually making,
and which at the time are not made or finished, it is essentially a contract of sale and not a
contract for piece of work. It is otherwise when the article is made pursuant to agreement. If the
article ordered by the purchaser is exactly such as the plaintiff makes and keeps on hand for
sale to anyone, and no change or modification of it is made at the defendant’s request, it is a
contract of sale, even though it may be entirely made after, and in consequence of, the
defendant’s order for it.

14. Celestino vs CIR 99 Phil. 841 August 31, 1956


Facts:

Celestino is the owner of Oriental Sash Factory. It paid 7% on the gross sales of their
sales. In 1952, they began to pay only 3% tax. Petitioner claims that it does not manufacture
ready-made doors, sash and windows for the public, but only upon special orders from the
customers, hence, it is not engaged in manufacturing under sec 186, but only in sales of
services covered by sec 191. Having failed to convince BIR, petitioner went to the Court of Tax
Appeal where it also failed. CTA, in its decision, holds that the “petitioner has chosen for its
tradename and has offered itself to the public as a “Factory”, which means it is out to do
business, in its chosen lines on a big scale. As a general rule, sash factories receive orders for
doors and windows of special design only in particular cases but the bulk of their sales is
derived from a ready-made doors and windows of standard sizes for the average home.

Issue:
Whether the petitioner company provides special services or is engaged in manufacturing.

Ruling:
The Oriental Sash Factory is engaged in manufacturing. The company habitually makes
sash, windows and doors as it has been represented to the public.The fact that windows and
doors are made by it only when customers place their orders, does not alter the nature of the
establishment, for it is obvious that it only accepted such orders as called for the employment of
such material-moulding, frames, panels-as it ordinarily manufactured or was in a position
habitually to manufacture. The Oriental Sash Factory does nothing more than sell the goods
that it mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to
such sizes and combining them in such forms as its customers may desire.

15. Movido vs Pastor GR No. 172279 February 11, 2010


Facts:
Pastor alleged that he and Movido executed a contract to sell where Movido agreed to
sell a parcel of his land in Cavite. Pastor also alleged that the contract provided that if a
Napocor power line transvered the subject lot, the purchase price would be lowered. He also
claimed that Movido undertook the cause of the survey of the property in order to determine the
portion affected by the Napocor power line. The petitioner also alleged that he already paid
more than half of the price and that he was willing and ready to pay the balance of the
purchase price but due to petitioner’s refusal to have the property surveyed despite incessant
demands, his unpaid balance could not be determined with certainty. Movido alleged that there
original negotiation for the sale of his property involved a smaller lot area and that Pastor was in
delay in paying several installments and that this is a material breach because they agreed that
the survery of the property would only be done after Pastor would have paid the 7th installment.

Issue:
Whether or not the validity of a contract will depend on certain stipulations in it

Ruling:
No, the validity of a contract will not depend on certain stipulations in it. In this case, the
2 contracts that were executed by the parties would reveal that the payment of the purchase
price does not depend on the survey of the property. In other words, the purchase price should
be paid whether or not the property is surveyed. The survey of the property is important only
insofar as the right of respondent to the reduction of the purchase price is concerned. On the
other hand, the survey of the property to determine the metes and bounds of the 1,731 sq. m.
portion that is excluded from the contract as well as the portions covered by
the kasunduan which will be subject to reduction of the purchase price, is also not conditioned
on the payment of any installment.

16. De Leon vs Ong GR No. 170405 February 2, 2010

Facts:
De Leon sold 3 parcels of land to Ong. The properties were mortgaged to Real Savings
and Loan Association. The parties executed a notarized deed of absolute sale with assumption
of mortgage. The deed of Assumption of mortgage shall be executed in favor of Ong after the
payment of 415K. Ong complied with it. De Leon handed the keys of to Ong and informed the
loan company that the mortgage has been assumed by Ong. Ong made some improvements in
the property. After sometime, Ong learned that the properties were sold to Viloria and changed
the locks to it. Ong went to the mortgage company and learned that the mortgage was already
paid and the titles were given to Viloria. Ong filed a complaint for the nullity of second sale and
damages. De Leon contended that Ong does not have a cause of action against him because
the sale was subject to a condition which requires the approval of the loan company and that
he and Ong only entered a contract to sell.

Issue:
Whether or not the parties entered into a contract of sale

Ruling:
Yes, the parties entered into a contract of sale. In a contract of sale, the seller conveys
ownership of the property to the buyer upon the perfection of the contract. The non-payment
of the price is a negative resolutory condition. Contract to sell is subject to a positive suspensive
condition. The buyer does not acquire ownership of the property until he fully pays the purchase
price. In the present case, the deed executed by the parties did not show that the owner intends
to reserve ownership of the properties. The terms and conditions affected only the manner
of payment and not the immediate transfer of ownership. It was clear that the owner intended a
sale because he unqualifiedly delivered and transferred ownership of the properties to
the respondent

C. Price (Articles 1469-1474)

17. Sps. Bernardo Buenaventora and consolacion Joaquin, et. al vs Court of Appeals, et. al GR
No. 126376 November 20, 2003

Facts:
Joaquin and Landrito are the parents of the plaintiffs and the defendants. They would
like to be declared null and void ab initio certain deeds of sale of real property executed by
Joaquin and landrito in favor of their co-defendants. Petitioners aver that the deeds are
simulated and therefore null and void ab initio because firstly, there was no actual valid
consideration for the deeds of sale over the properties, secondly, assuming that there was
consideration in the sumsr eflected in the questioned deeds, the properties are more than three-
fold times more valuable than the measly sums appearing therein, thirdly, the deeds of sale do
not reflect and express the true intent of the parties (vendors and vendees), fourthly, the
purported sale of the properties in litis was the result of a deliberate conspiracy designed to
unjustly deprive the rest of the compulsory heirsof their legitime.

Issue:

Whether or not the Deeds of sale are void for lack of consideration

Ruling:
No, the deeds of sale are not void for lack of consideration. A contract of sale is not a
real contract, but a consensual contract. As a consensual contract, a contract of sale becomes a
binding and valid contract upon the meeting of the minds as to price. If there is a meeting of the
minds of the parties as to the price, the contract of sale is valid, despite the manner of payment,
or even the breach of that manner of payment. If the real price is not stated in the contract, then
the contract of sale is valid but subject to reformation. If there is no meeting of the minds of the
parties as to the price, because the price stipulated in the contract is simulated, then the
contract is void. Article 1471 of the Civil Code states that if the price in a contract of sale is
simulated, the sale is void. It is not the act of payment of price that determines the validity of a
contract of sale. Payment of the price has nothing to do with the perfection of the contract.
Payment of the price goes into the performance of the contract. Failure to pay the consideration
is different from lack of consideration.The former results in a right to demand the fulfillment or
cancellation of the obligation under an existing valid contract while the latter prevents the
existence of a valid contract.

18. Toyota Shaw vs CA GR No. 116650 May 23, 1995


Facts:

Sosa wanted to purchase a Toyota Car. She met Bernardo, the sales representative of Toyota.
Sosa emphasized to the sales rep that she needed the car not later than 17 June 1989. They
contracted an agreement on the delivery of the unit and that the balance of the purchase price
would be paid by credit financing. The following day, Sosa delivered the downpayment and a
Vehicle sales proposal was printed. On the day of delivery, Bernardo called Sosa to inform him
that the car could not be delivered. Toyota contends, on the other hand, that the Lite Ace was
not delivered to Sosa because of the disapproval by B.A. Finance of the credit financing
application of Sosa. Toyota then gave Sosa the option to purchase the unit by paying the full
purchase price in cash but Sosa refused. Sosa asked that his down payment be refunded.
Toyota did so on the very same day by issuing a Far East Bank check for the full amount, which
Sosa signed with the reservation, “without prejudice to our future claims for damages.”
Thereafter, Sosa sent two letters to Toyota. In the first letter, she demanded the refund of the
down payment plus interest from the time she paid it and for damages. Toyota refused to the
demands of Sosa.

Issue:
Whether or not there was a perfected contract of sale

Ruling:
What is clear from the agreement signed by Sosa and Gilbert is not a contract of sale. No
obligation on the part of Toyota to transfer ownership of the car to Sosa and no correlative
obligation on the part of Sosa to pay . The provision on the down payment of
PIOO,OOO.OO made no specific reference to a sale of a vehicle. If it was intended for a
contract of sale, it could only refer to a sale on installment basis, as the VSP executed the
following day. Nothing was mentioned about the full purchase price and the manner the
installments were to be paid. An agreement on the manner of payment of the price is an
essential element in the formation of a binding and enforceable contract of sale. This is so
because the agreement as to the manner of payment goes, into the price such that a
disagreement on the manner of payment is tantamount to a failure to agree on the price.
Definiteness as to the price is an essential element of a binding agreement to sell personal
property.

19. Mccullough vs Aenille & Co. 13 hil. 285 February 3, 1904

Facts:
Furniture and tobacoo were being sold by Aenille and Co. The furniture was sold at 90%
of the price that is shown in a subsequent inventory. The tobacco was sold with the price
indicated in the invoice.
Issue:
Whether or not the price is already considered certain

Ruling:
Yes, the price is already considered certain. A written agreement by which one party buys and
the other sells can be made certain by reference to certain invoices in existence and identified
by the agreement. The contract of sale is therefore completed.

20. Penalosa vs Santos 363 SCRA 545, GR No. 133749 August 23, 2001

Facts:

Penalosa entered into 2 contracts of sale with Santos. The contract is a conditional
contract of sale. According to the stipulations of the contract, Penalosa would have to evict the
illegal settlers in the lot afterwhich, the sale will be formalised. However, Penalosa failed to pay
the purchase price. Santos contends that the contracts are absolutely simulated and therefore,
void.

Issue:
Whether or not the contract of sale was absolutely simulated for want of consideration

Ruling;
No, the contract of sale was not simulated. The contracts were perfected and the entire
requirement for the perfection of a contract of sale were satisfied. The meeting of the minds of
Santos and Penalosa perfected the contract despite the failure of Penalosa to pay the purchase
price.

21. Mapalo vs Mapalo GR No. 21489 &21623 May 19, 1966

Facts:

Magpalo and Quiba are farmers who are the registered owners of a residential land.
Magpalo decided to donate the eastern half of his land to Maximo. However, Magpalo and
Quiba were deceived into signing a deed of absolute sale of the entire land. The document
showed a consideration of P500 but Magpalo contended that he was not able to receive
anything. Magpalo built a fence to segregate the donated land. Maximo registered the deed of
sale in his favor and was able to obtain a TCT. Maximo then sold the entire land to Narciso.
Narciso took possession of the eastern part of the land.
Issue:
Whether or not the contract is voidable

Ruling:
No, the contract is not voidable but void. The contract of purchase and sale is null and void and
produces no effect whatsoever where the same is without cause or consideration in that
purchase price which appears thereon as paid, has in fact never been paid by the purchaser or
the vendor.

22. Ting Ho vs Teng Gui GR No. 130115 July 16, 2008

Facts:

Felix Ting Ho, Jr., Merla Ting Ho Braden, Juana Ting Ho and Lydia Ting Ho Belenzo against
their brother, respondent Vicente Teng Gui. The controversy revolves around a parcel of land,
and the improvements which should form part of the estate of their deceased father, Felix Ting
Ho, and should be partitioned equally among each of the siblings. Petitioners alleged that their
father Felix Ting Ho died intestate on June 26, 1970, and left upon his death an estate.
According to petitioners, the said lot and properties were titled and tax declared under trust in
the name of respondent Vicente Teng Gui for the benefit of the deceased Felix Ting Ho who,
being a Chinese citizen, was then disqualified to own public lands in thePhilippines; and that
upon the death of Felix Ting Ho, the respondent took possession of the same for his own
exclusive use and benefit to their exclusion and prejudice.

Issue:
Whether or not the sale was void

Ruling:
No, the sale was not void. Article 1471 of the Civil Code has provided that if the price is
simulated, the sale is void, but the act may be shown to have been in reality a donatin, or some
other act or contract. The sale in this case, was however valid because the sale was in fact a
donation. The law requires positive proof of the simulation of the price of the sale. But since the
finding was based on a mere assumption, the price has not been proven to be a simulation.

D. Perfection of Contract

23. Lafortezza vs. Machica,

Facts: Roberto Laforteza and Gonzalo Laforteza, Jr., in their capacities as attorneys-in-fact of
Dennis Laforteza, entrered into a MOA (Contract to Sell) with Alonzo Machuca over a house and
lot registered in the name of the late Francisco Laforteza. Machuca was able to pay the earnest
money but however failed to pay the balance on time. Upon a request of an extension of time,
Machuca informed petitioner heirs that the balance was already covered, but petitioners refused
to accept the balance and told Machuca that the subject property is no longer for sale. The
petitioners contend that the Memorandum of Agreement is merely a lease agreement with “option
to purchase”; hence, it only gave the respondent a right to purchase the subject property within a
limited period without imposing upon them any obligation to purchase it. And since the
respondent’s tender of payment was made after the lapse of the option agreement, his tender did
not give rise to the perfection of a contract of sale.

Issue: (1) WON the tender of payment after the lapse of the option agreement gave rise to the
perfection of a contract of sale. (2) WON the six-month period during which the respondent would
be in possession of the property as lessee was a period within which to exercise an option.

Held: (1) It did. A perusal of the Memorandum Agreement shows that the transaction between the
petitioners and the respondent was one of sale and lease. A contract of sale is a consensual
contract and is perfected at the moment there is a meeting of the minds upon the thing which is
the object of the contract and upon the price. From that moment the parties may reciprocally
demand performance subject to the provisions of the law governing the form of contracts. In the
case at bench, all the elements of a contract of sale were thus present.

(2) The six-month period during which the respondent would be in possession of the property as
lessee, was clearly not a period within which to exercise an option. An option is a contract granting
a privilege to buy or sell within an agreed time and at a determined price. An option contract is a
separate and distinct contract from that which the parties may enter into upon the consummation
of the option. An option must be supported by consideration. An option contract is governed by
the second paragraph of Article 1479 of the Civil Code, which reads: An accepted unilateral
promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if
the promise is supported by a consideration distinct from the price. In the present case, the six-
month period merely delayed the demandability of the contract of sale and did not determine its
perfection for after the expiration of the six-month period, there was an absolute obligation on the
part of the petitioners and the respondent to comply with the terms of the sale.

24. Limketkai vs. CA

Facts: In this motion for reconsideration, the Court based its decision on several exhibits
presented by Limketkai which showed, among others, BPI’s repeated rejection of Limketkai’s
proposal to buy a certain property which was issued to a real estate broker to sell the property.

Issue: WON there was, as evidenced by the affidavits, a perfected contract of sale between
Limketkai and BPI over the subject property.

Held: There was none. Article 1475 of the NCC specifically provides when a contract of sale is
deemed perfected, to wit: The contract of sale is perfected at the moment there is meeting of
minds upon the thing which is the object of the contract and upon the price. From that moment,
the parties may reciprocally demand performance, subject to the provisions of the law governing
the form of contracts.

On the subject of consent as an essential element of contracts, Article 1319 of the Civil
Code has this to say: Consent is manifested by the meeting of the offer and the acceptance upon
the thing and the cause which are to constitute the contract. The offer must be certain and the
acceptance absolute. A qualified acceptance constitutes a counter-offer. The acceptance of an
offer must therefore be unqualified and absolute. In other words, it must be identical in all respects
with that of the offer so as to produce consent or meeting of the minds. This was not the case
herein considering that petitioner’s acceptance of the offer was qualified, which amounts to a
rejection of the original offer. 7 And contrary to petitioner’s assertion that its offer was accepted
by respondent BPI, there was no showing that petitioner complied with the terms and conditions
explicitly laid down by respondent BPI for prospective buyers. Neither was the petitioner able to
prove that its offer to buy the subject property was formally approved by the beneficial owner of
the property and the Trust Committee of the Bank; an essential requirement for the acceptance
of the offer which was clearly specified in Exhibits F and H. Even more telling is petitioner’s
unexplained failure to reduce in writing the alleged acceptance of its offer to buy the property at
P1,000/sq. m.

25. EDCA vs. Santos

Facts: Mr. Cruz bought 406 books payable upon delivery from EDCA. Upon discovery that said
Mr. Cruz was an impostor and that the check issued by the impostor as payment was dishonored,
EDCA with the assistance of the police, seized the 120 books from spouses Santos who bought
said books from the impostor, without a warrant. After petitioner refused the demand made by the
spouses Santos for recovery of the books, said spouses obtained a writ of preliminary attachment,
and thus petitioner surrendered the books to the spouses. Now, petitioner alleges that they have
been unlawfully deprived of the books. The petitioner argues that it was, because the impostor
acquired no title to the books that he could have validly transferred to the private respondents. Its
reason is that as the payment check bounced for lack of funds, there was a failure of consideration
that nullified the contract of sale between it and Cruz.

Issue: WON the Contract of Sale between Mr. Cruz and EDCA was null and void for lack of
consideration.

Held: The Contract of Sale is valid. The contract of sale is consensual and is perfected once
agreement is reached between the parties on the subject matter and the consideration. According
to the Civil Code: Art. 1475. The contract of sale is perfected at the moment there is a meeting of
minds upon the thing which is the object of the contract and upon the price. From that moment,
the parties may reciprocally demand performance, subject to the provisions of the law governing
the form of contracts. Thus, Art. 1477 states that the ownership of the thing sold shall be
transferred to the vendee upon the actual or constructive delivery thereof. Also Art. 1478 speaks
of that the parties may STIPULATE that ownership in the thing shall not pass to the purchaser
until he has fully paid the price. It is clear from the above provisions, particularly the last one
quoted, that ownership in the thing sold shall not pass to the buyer until full payment of the
purchase only if there is a stipulation to that effect. Otherwise, the rule is that such ownership
shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing
sold even if the purchase price has not yet been paid. Non-payment only creates a right to
demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing
checks. But absent the stipulation above noted, delivery of the thing sold will effectively transfer
ownership to the buyer who can in turn transfer it to another. Actual delivery of the books having
been made, Cruz acquired ownership over the books which he could then validly transfer to the
private respondents. The fact that he had not yet paid for them to EDCA was a matter between
him and EDCA and did not impair the title acquired by the private respondents to the books.

26. Ledesma vs CA GR. No. 86051 September 1, 1992

27. Sanchez vs. Rigos


Facts: Nicolas Sanchez and Severina Rigos executed an instrument entitled “Option to
Purchase,” whereby Mrs. Rigos agreed, promised and committed to sell to Sanchez the sum of
P1,510.00, a parcel of land situated within two (2) years from said date with the understanding
that said option shall be deemed “terminated and elapsed,” if “Sanchez shall fail to exercise his
right to buy the property” within the stipulated period. Inasmuch as several tenders of payment of
the sum of Pl,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, Mr.
Sanchez deposited said amount with the Court of First Instance and commenced against the latter
the present action, for specific performance and damages. Defendant’s special defense: the
contract between the parties “is a unilateral promise to sell, and the same being unsupported by
any valuable consideration, by force of the New Civil Code, is null and void.”

Issue: Whether or not a promise to buy or to sell must be supported by a consideration distinct
from the price.

Held: Since there may be no valid contract without a cause or consideration, the promisor is not
bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his
accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results
in a perfected contract of sale. There is no question that under article 1479 of the new Civil Code
“an option to sell,” or “a promise to buy or to sell,” as used in said article, to be valid must be
“supported by a consideration distinct from the price.” This is clearly inferred from the context of
said article that a unilateral promise to buy or to sell, even if accepted, is only binding if supported
by consideration. In other words, “an accepted unilateral promise can only have a binding effect
if supported by a consideration which means that the option can still be withdrawn, even if
accepted, if the same is not supported by any consideration. It is not disputed that the option is
without consideration. It can therefore be withdrawn notwithstanding the acceptance of it by
appellee.

28. Serra vs. CA

Facts: Federico Serra, owner of a parcel of land in Masbate, and private respondent Rizal
Commercial Banking Corporation (RCBC) in its desire to put up a branch in said place, entered
into a “Contract of Lease with Option to Buy.” Pursuant to said contract, a building and other
improvements were constructed on the land which housed the branch office of RCBC in Masbate,
Masbate. Within three years from the signing of the contract, petitioner complied with his part of
the agreement by having the property registered and placed under the TORRENS SYSTEM.
When the respondent bank decided to exercise its option and informed petitioner, through a
letter, of its intention to buy the property at the agreed price of not greater than P210.00 per square
meter or a total of P78,430.00, petitioner replied that he is no longer selling the property.

Issue: WON there was no consideration to support the option, distinct from the price, hence, the
option cannot be exercised, as required by Art. 1479 of the NCC.

Held: There was a consideration, thus the option can be exercised. Article 1324 of the Civil Code
provides that when an offeror has allowed the offeree a certain period to accept, the offer maybe
withdrawn at any time before acceptance by communicating such withdrawal, except when the
option is founded upon consideration, as something paid or promised. On the other hand, Article
1479 of the Code provides that an accepted unilateral promise to buy and sell a determinate
thingfor a price certain is binding upon the promisor if the promise is supported by a consideration
distinct from the price.
In a unilateral promise to sell, where the debtor fails to withdraw the promise before the
acceptance by the creditor, the transaction becomes a bilateral contract to sell and to buy,
because upon acceptance by the creditor of the offer to sell by the debtor, there is already a
meeting of the minds of the parties as to the thing which is determinate and the price which is
certain. In which case, the parties may then reciprocally demand performance. In the present
case, the consideration entails transferring of the building and/or improvements on the property
to petitioner, should respondent bank fail to exercise its option within the period stipulated.

29. Pacific Oxygen and Acetylene Co. vs Central Bank GR No. 21881 March 1, 1968

30. Gaite vs. Fonacier G.R. No. 11827, July 31, 1961

Facts: Defendant-appellant Fonacier was the owner/holder of 11 iron lode mineral claims, known
as the Dawahan Group, situated in Camrines Norte. By “Deed of
Assignment, Respondent constituted and appointed plaintiff-appellee Gaite as attorney-in-fact to
enter into contract for the exploration and development of the said mining claims on. Petitioner
executed a general assignment conveying the claims into the Larap Iron Mines, which owned
solely and belonging to him. Thereafter, he underwent development and the exploitation for the
mining claims which he estimates to be approximately 24 metric tons of iron ore. However,
Fonacier decided to revoke the authority given to Gaite, whereas respondent assented subject to
certain conditions. Consequently a revocation of Power of Attorney and Contract was executed
transferring P20k plus royalties from the mining claims, all rights and interest on the road and
other developments done, as well as , the right to use of the business name, goodwill,
records,documents related to the mines. Furthermore, included in the transfer was the rights and
interest over the 24K+ tons of iron ore that had been extracted. Lastly the balance of P65K was
to be paid for covering the first shipment of iron ores. To secure the payment of
P65k, respondent executed a surety bond with himself as principal, the Larap Mines and Smelting
Co. and its stockholder as sureties. Yet, this was refused by petitioner. A complaint in the CFI of
Manila for the payment of the balance and other damages was filed. The Trial Court ruled in favor
of plaintiff ordering defendant to pay the balance of P65k with interest. Afterwards an appeal was
affected by the respondent where several motions were presented for resolution: a motion for
contempt; two motions to dismiss the appeal for becoming moot and academic; motion for a new
trial, filed by appellee Gaite. The motion for contempt was held unmeritorious, while the rest of
the motions were held unnecessary to resolve

Issue: Whether or not the Lower Court erred in holding the obligation of appellant Fonacier to pay
appelle Gaite the balance of P65k, as one with a period or term and not one with a suspensive
condition; and that the term expired on December 1955.
Held: No error was found, affirming the decision of the lower court. Gaite acted within his rights
in demanding payment and instituting this action one year from and after the contract was
executed, either because the appellant debtors had impaired the securities originally given and
thereby forfeited any further time within which to pay; or because the term of payment was
originally of no more than one year, and the balance of P65k, became due and payable
thereafter. The Lower Court was legally correct in holding the shipment or sale of the iron ore is
not a condition or suspensive to the payment of the balance of P65k, but was only a suspensive
period or term. What characterizes a conditional obligation is the fact that its efficacy or obligatory
force as distinguished from its demandability, is subordinated to the happening of a future and
uncertain event; so that if the suspensive condition does not take place, the parties would stand
as if the conditional obligation had never existed. The sale of the ore to Fonacier was a sale on
credit, and not an aleatory contract where the transferor, Gaite, would assume the risk of not
being paid at all; and that the previous sale or shipment of the ore was not a suspensive condition
for the payment of the balance of the agreed price, but was intended merely to fix the future date
of the payment.
While as to the right of Fonacier to insist that Gaite should wait for the sale or shipment of
the ore before receiving payment; or, in other words, whether or not they are entitled to take full
advantage of the period granted them for making the payment. The appellant had indeed have
forfeited the right to compel Gaite to wait for the sale of the ore before receiving payment of the
balance of P65,000.00, because of their failure to renew the bond of the Far Eastern Surety
Company or else replace it with an equivalent guarantee. The expiration of the bonding
company's undertaking on December 8, 1955 substantially reduced the security of the vendor's
rights as creditor for the unpaid P65,000.00, a security that Gaite considered essential and upon
which he had insisted when he executed thedeed of sale of the ore to Fonacier (first bond).
Under paragraphs 2 and 3 of Article 1198 of the Civil Code of the Philippines: ART. 1198.
The debtor shall lose every right to make use of the period: “(2) When he does not furnish to the
creditor the guaranties or securities which he has promised. (3) When by his own acts he has
impaired said guaranties or securities after their establishment, and when through fortuitous event
they disappear, unless he immediately gives new ones equally satisfactory.”

31. Seventh Day Adventistvs. Northwestern Mission, G.R. No. 150416

FACTS: This case involves two supposed transfers of the lot previously owned by the spouses
Cosio. The first transfer was a donation to petitioners’ alleged predecessors-in-interest in 1959 while the
second transfer was through a contract of sale to respondents in 1980. A TCT was later issued in
the name of respondents. Claiming to be the alleged donee’s successors-in-interest, petitioners filed a
case for cancellation of title, quieting of ownership and possession, declaratory relief and
reconveyance with prayer for preliminary injunction and damages against respondents.
Respondents, on the other hand, argued that at the time of the donation, petitioners’ predecessors-in-
interest has no juridical personality to accept the donation because it was not yet incorporated.
Moreover, petitioners were not members of the local church then. The RTC upheld the sale in
favor of respondents, which was affirmed by the Court of Appeals, on the ground that all the
essential requisites of a contract were present and it also applied the indefeasibility of title.

ISSUE: Whether or not the donation was void.

HELD: Yes, the donation was void because the local church had neither juridical personality nor
capacityto accept such gift since it was inexistent at the time it was made. The Court denied
petitioners’ contention that there exists a de facto corporation. While there existed the old
Corporation Law (Act 1459), a law under which the local church could have been organized,
petitioners admitted that they did not even attempt to incorporate at that time nor the organization
was registered at the Securities and Exchange Commission. Hence, petitioners obviously could
not have claimed succession to an entity that never came to exist. And since some of the
representatives of petitioner Seventh Day Adventist Conference Church of Southern Philippines,
Inc. were not even members of the local church then, it necessarily follows that they could not
even claim that the donation was particularly for them

 Option to buy or sell (Article 1479)

32. Cavite Develepment Bank vs. Sps. Lim, G.R. No. 131679, February 01, 2000

Facts:
Rodolfo Guansing obtained a loan from Cavite Development Bank(CDB) and offered as security
his real estate property. For failing to pay his loan the property was foreclosed and title was issued
in the name of CDB. Now here comes Lolita Chan Lim, the respondent on this case who offered
to buy the property from CDB. Mrs. Lim paid P30,000.00 as option money and was issued receipt
by CDB. However , Mrs. Lim later discovered that the title of the property is being disputed by
Perfecto Guansing, the father of the mortgagee Rodolfo Guansing. In fact, in a separate case it
was declared that Rodolfo fraudulently secured title to the said mortgaged property and title to it
was restored to Perfecto . The decision has since become final and executory. Aggrieved by what
she considered a serious misrepresentation by CDB and its mother company FEBTC, on their
ability to sell the subject property, filed an action for specific performance and damage against
petitioners.

Issues: Was the sale between CDB and Mrs. Lim perfected? Is CDB liable for damges?

Held: Contracts are not defined by the parties thereto but by the principles of law. In determining
the nature of a contract, the courts are not bound by the name or title given to it by the contracting
parties. In the case at bar, the sum of P30,000.00, although denominated in the offer to purchase
as “option money’ is actually in the nature of “earnest money’ or down payment when considered
with the other terms of the offer.
It is because when Mrs. Lim offered to buy the property the 10% so called “option money”
forms part of the purchase price as contemplated under Art. 1482 of the Civil Code. It is clear then
that the parties in this case actually entered into a contract of sale, partially consummated as to
the payment of the price.
CDB cannot invoke the defense that it is a mortgagee in good faith. It only applies to
private individuals and not to banking institutions. They cannot be excused from the duty of
exercising the due diligence required of banking institutions. It is standard practice for banks,
before approving a loan, to investigate who are the real owners thereof. Banking is affected with
public interest that is why they are expected to exercise more care and prudence than private
individuals. Considering CDB’s negligence it is therefore liable for damages. As to its validity, the
doctrine of “Nemo dat quod non habet” applies. One cannot give what one does not have. The
seller not being the owner the sale is void.

33. Sanchez vs Rigos GR No. L-25494 June 14, 1972

34. Cronico vs JM Tuason and Co., Inc. GR No. L-3527 August 26, 1977

FACTS:

JM Tuason was the registered owner of Lot 22. Florencio Cronico offered to buy the lot
from JM Tuason with the help of Mary Venturanza. Cronico was required to present proofs of her
rights to the lot, and indeed presented certain documents showing her priority rights to buy the
lot. Claudio Ramirez also learned that said lot was being sold. Both Cronico and Ramirez then
sent individual letters to JM Tuason expressing their desire to purchase the land and requested
information concerning the area, the price, and other terms and conditions of the contract to sell.
JM Tuason sent separate reply letters to the prospective buyers. Cronico was able to obtain the
letter the next day and thus presented the letter to the Head of the Real Estate Department of JM
Tuason; and requested Venturanza to issue a check as down payment, but the same was refused.
Ramirez, on the other hand, received the letter two days after it was sent stating that the lot was
available for sale under the conditions set forth and that said lot was being offered for sale on a
first come first serve basis. He then immediately verbally accepted such, followed by a letter to
JM Tuason confirming the verbal acceptance, the next day. Counsel of Ramirez then wrote JM
Tuason for the early execution of the Contract to Sell with a check as down payment (Mar 31).
Counsel of Cronico, however, also wrote JM Tuason requesting that the lot be sold to him (Mar
27). Subsequently, JM Tuason and Ramirez executed a Contract to Sell, which resulted an instant
suit.

ISSUE:
Whether or not JM Tuason’s promise to sell the lot to Cronico has a consideration separate from
the selling price of said lot and thus binding upon the promissory to comply with such promise.

HELD:

No, the promise of the respondent company to sell the lot in question to the petitioner, Florencia
Cronico has no consideration separate from the selling price of said lot. It appears that the
Compromise Agreement upon which Cronico predicates her right to buy the lot in question has
been rescinded and set aside.

In order that a unilateral promise may be binding upon the promisor, Article 1479, Civil Code of
the Philippines, requires the concurrence of the condition that the promise be “supported by a
consideration distinct from the price. Accordingly, the promisee can not compel the promisor to
comply with the promise, unless the former establishes the existence of said distinct
consideration. The promisee has the burden of proving such consideration.

35. Asuncion vs CA GR No. 109125 238 SCRA 602 December 2, 1994

FACTS:

Petitioners Ang Yu Asuncion et. al. are lessees of residential and commercial spaces
owned by the Unjiengs. They have been leasing the property and possessing it since 1935 and
have been paying rentals.

In 1986, the Unjiengs informed Petitioners Ang Yu Asuncion that the property was being sold and
that Petitioners were being given priority to acquire them (Right of First Refusal). They agreed on
a price of P5M but they had not yet agreed on the terms and conditions. Petitioners wrote to the
Unjiengs twice, asking them to specify the terms and conditions for the sale but received no reply.
Later, the petitioners found out that the property was already about to be sold, thus they instituted
this case for Specific Performance [of the right of first refusal]. The Trial Court dismissed the case.
The trial court also held that the Unjieng’s offer to sell was never accepted by the Petitioners for
the reason that they did not agree upon the terms and conditions of the proposed sale, hence,
there was no contract of sale at all. The Court of Appeals affirmed the decision of the Trial Court.
In the meantime, in 1990, the property was sold to De Buen Realty, Private Respondent in this
case. The title to the property was transferred into the name of De Buen and demanded that the
Petitioners vacate the premises.

CA directed the Sheriff to execute an order directing the Unjiengs to issue a Deed of Sale in the
Petitioner’s favour and nullified the sale to De Buen Realty. But then, the CA reversed itself when
the Private Respondents Appealed.

ISSUE:

Whether or not the Contract of Sale is perfected by the grant of a Right of First Refusal.
HELD:

No. A Right of First Refusal is not a Perfected Contract of Sale under Art. 1458 or an option under
Par. 2 Art 1479 or an offer under Art. 1319. In a Right of First Refusal, only the object of the
contract is determinate. This means that no vinculum juris is created between the seller-offeror
and the buyer-offeree.

36. Enriquez de la Cavada vs Diaz GR No. L-11668 April 1, 1918

FACTS:

The defendant and the plaintiff entered into a “contract of option” whereby defendant-
appellant Antonio Diaz granted the option to the plaintiff-appellee Antonio Enriquez dela Cavada
to purchase his hacienda in Tayabas within the period necessary for the approval and issuance
of a Torrens title. In the same instrument he obligated himself to sell said hacienda for P70
thousand pesos. The plaintiff on the other hand has agreed to buy said property at the agreed
purchase price. Soon after the execution of said contract, and in part compliance with the terms
thereof, the defendant obtained the registration of a part of the “Hacienda de Pitogo” for which he
was given certificates of title. Later, and pretending to comply with the terms of said contract, the
defendant offered to transfer to the plaintiff one of said parcels only, which was a part of said
“hacienda.” The plaintiff refused to accept said certificate for a part only of said “hacienda” upon
the ground (a) that it was only a part of the “Hacienda de Pitogo,” and (b) under the contract he
was entitled to a transfer to him all said “hacienda.” The trial court ruled for the plaintiff hence this
petition.

ISSUE:

Whether or not there was a perfected contract of sale.

HELD:

Yes. The subject contract was not, in fact, an “optional contract” as that phrase is generally
used. Reading the said contract from its four corners it is clearly as absolute promise to sell a
definite parcel of land for a fixed price upon definite conditions. The defendant promised to convey
to the plaintiff the land in question as soon as the same was registered under the Torrens system,
and the plaintiff promised to pay to the defendant the sum of P70,000, under the conditions
named, upon the happening of that event. The contract was not, in fact, what is generally known
as a “contract of option.” It differs very essentially from a contract of option. The contract of option
is a separate and distinct contract from the contract which the parties may enter into upon the
consummation of the option. A consideration for an optional contract is just as important as the
consideration for any other kind of contract. If there was no consideration for the contract of option,
then it cannot be entered any more than any other contract where no consideration exists.

37. Soriano vs Bautista 6 SCRA 946 GR No. L-15752 December 29, 1962

FACTS:

Spouses Bautista (Respondent) owned a parcel of land in the Municipality of Teresa,


province of Rizal, containing 30,222 square meters, by a creek. The respondents entered into a
“Kasulatan ng Sanglaan” in favor of petitioners Rupert Soriano and Olimpia de Jesus. It
haslikewise been agreed that if the financial condition of the mortgagees will permit, they may
purchase said land absolutely on any date within the two-year term of this mortgage at the agreed
price of P3,900.00. Sometime after entering into the agreement, the petitioners paid a sum of
P450 pursuant to the conditions agreed upon. However, the respondents did not issue a receipt
and returned the money. The Attorney of the petitioners informed the respondent of their desire
to buy the land. Despite this, the respondents refused to comply with the demand hence, the
petitioners filed before the CFI a case. The respondent filed a case against the petitioners but
was dismissed for lack of jurisdiction. They then filed a case again asking the CFI to order the
petitioners to accept payment of the principal and release the mortgage. The CFI of Rizal ruled
after a joint trial of the cases filed both by the Petitioners and the Respondents that the
Respondents should issue a deed of sale for the property upon Petitioners’ payment of the
balance price. Hence, this appeal

ISSUE:

Whether or not the Petitioners are entitled to special performance consisting of the
execution of the deed of sale.

HELD:

Yes. The respondents being mortgagors, they cannot be deprived of the right to redeem
the mortgaged property. While the agreement is a mortgage and contains a customary right of
redemption, it has a special provision which renders the mortgagor’s right to redeem defeasible
at the election of the mortgagees. There is nothing illegal or immoral in this. It is an option to buy,
allowed by Art. 1479 of the Civil Code. The mortgagor’s promise to sell is supported by the same
consideration as that of the mortgage itself, which is distinct from that which would support the
sale, an additional amount having been agreed upon to make up the entire price of P3, 900.00,
should the option be exercised. The mortgagor’s promise was in the nature of a continuing offer,
non-withdrawable during a period of two years, which upon acceptance by the mortgagees rise
to a perfected contract of purchase and sell.

38. Limson vs CA 375 SCRA 209 April 20, 2001


FACTS:

Spouses offered to sell to Lourdes Limson the subject land through their agent Marcosa
Sanchez. She agreed to buy the property and gave them 20K as ‘earnest money’; respondent
signed a receipt and gave her 10-day option period to buy the property. Lorenzo de Vera informed
her that the property was mortgaged to the Ramoses and asked her to pay the balance of the
purchase price to settle the obligation with the latter. She agreed to meet with respondents and
Ramoses to consummate transaction but Asuncion and the Ramoses did not appear. She claimed
that she was willing to pay but transaction did not materialize because of unpaid back taxes on
the property. She gave respondents checks to pay the said taxes which were considered as part
of the purchase price. Limson learned that the property is subject to negotiation between the
spouses and SUNVAR Realty Development Corporation. Limson Filed an Affidavit of Adverse
Claim which was annotated to the title. A Deed of Sale executed between spouses and SUNVAR
and a title was issued to SUNVAR with the annotation of adverse claim.

ISSUE:

Whether or not there was a perfected contract to sell between petitioner and respondents.

HELD:

No. The agreement was a “contract of option” not a “contract to sell”. An option is not of
itself a purchase, but merely secures the privilege to buy. It is not a sale of property but a sale of
the right to purchase. It is simply a contract by which the owner of property agrees with another
person that he shall have the right to buy his property at a fixed price within a certain time. He
does not sell his land; he does not then agree to sell it; but he does sell something, i.e., the right
or privilege to buy at the election or option of the other party. Its distinguishing characteristic is
that it imposes no binding obligation on the person holding the option, aside from the consideration
for the offer. Until acceptance, it is not, properly speaking, a contract, and does not vest, transfer,
or agree to transfer, any title to, or any interest or right in the subject matter, but is merely a
contract by which the owner of the property gives the optionee the right or privilege of accepting
the offer and buying the property on certain terms

39. Adelfa Properties, Inc. vs CA 240 SCRA 565 January 25, 1995

FACTS:

Private respondents and their brothers Jose and Dominador were the registered
CO-OWNERS of a parcel of land in Las Pinas, covered by a TCT. Jose and Dominador sold their
share to Adelfa. Thereafter, Adelfa expressed interest in buying the western portion of the
property from private respondents herein. Accordingly, an “exclusive Option to Purchase” was
executed between Adelfa and Private Respondents and an option money of 50,000 was given to
the latter. Before Adelfa could make payments, it received summons as a case was filed against
Jose and Dominador and Adelfa, because of a complaint in a civil case by the nephews and
nieces of private respondents herein. As a consequence, Adelfa, through a letter, informed the
private respondents that it would hold payment of the full purchase price and suggested that they
settle the case with their said nephews and nieces. Salud did not heed the suggestion;
respondent’s informed Atty. Bernardo that they are canceling the transaction. Atty Bernardo made
offers but they were all rejected.

RTC Makati dismissed the civil case. A few days after, private respondents executed a Deed of
Conditional Sale in favor of Chua, over the same parcel of land. Atty Bernardo wrote private
respondents informing them that in view of the dismissal of the case, Adelfa is willing to pay the
purchase price, and requested that the corresponding deed of Absolute Sale be executed. This
was ignored by private respondents. Private respondents sent a letter to Adelfa enclosing therein
a check representing the refund of half the option money paid under the exclusive option to
purchase, and requested Adelfa to return the owner’s duplicate copy of Salud. Adelfa failed to
surrender the certificate of title, hence the private respondents filed a civil case before the RTC
Pasay, for annulment of contract with damages. The trial court directed the cancellation of the
exclusive option to purchase. On appeal, respondent CA affirmed in toto the decision of the RTC
hence this petition.

ISSUE:

Whether or not the agreement between the parties is a contract to sell

HELD:

Yes. The alleged option contract is a contract to sell, rather than a contract of sale. The
distinction between the two is important for in contract of sale, the title passes to the vendee upon
the delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is
reserved in the vendor and is not to pass until the full payment of the price. In a contract of sale,
the vendor has lost and cannot recover ownership until and unless the contract is resolved or
rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the
price Thus, a deed of sale is considered absolute in nature where there is neither a stipulation in
the deed that title to the property sold is reserved in the seller until the full payment of the price,
nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails
to pay within a fixed period.

40. Equatorial Realty Dev., Inc. vs Mayfair Theater 264 SCRA 483 March 21, 1996

FACTS:

Mayfair Theater, Inc. was a lessee of portions of a building owned by Carmelo & Bauermann, Inc.
Their lease contracts of 20. Lease contracts contained a provision granting Mayfair a right of first
refusal to purchase the subject properties. However, before the contracts ended, the subject
properties were sold for P11,300 by Carmelo to Equatorial Realty Development, Inc. This
prompted Mayfair to file a case for the annulment of the Deed of Absolute Sale between Carmelo
and Equatorial, specific performance and damages. The Court ruled in favor of Mayfair. Barely
five months after Mayfair had submitted its Motion for Execution, Equatorial filed an action for
collection of sum of money against Mayfair claiming payment of rentals or reasonable
compensation for the defendant’s use of the subject premises after its lease contracts had
expired. Maxim Theater contract expired, while the Lease Contract covering the premises
occupied by Miramar Theater lapsed. The lower court debunked the claim of Equatorial for unpaid
back rentals, holding that the rescission of the Deed of Absolute Sale in the mother case did not
confer on. Equatorial any vested or residual propriety rights, even in expectancy. It further ruled
that the Court categorically stated that the Deed of Absolute Sale had been rescinded subjecting
the present complaint to res judicata. Hence, Equatorial filed the present petition.

ISSUE:

Whether or not Equatorial is entitled to back rentals

HELD:

No. In the case, there was no right of ownership transferred from Carmelo to Equatorial in
view of a patent failure to deliver the property to the buyer. By a contract of sale, “one of the
contracting parties obligates himself to transfer ownership of and to deliver a determinate thing
and the other to pay therefore a price certain in money or its equivalent.” Ownership of the thing
sold is a real right, which the buyer acquires only upon delivery of the thing to him “in any of the
ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the
possession is transferred from the vendor to the vendee.” In the case, Mayfair’s opposition to the
transfer of the property by way of sale to Equatorial was a legally sufficient impediment that
effectively prevented the passing of the property into the latter’s hands. Rent is a civil fruit that
belongs to the owner of the property producing it by right of accession. Consequently and
ordinarily, the rentals that fell due from the time of the perfection of the sale to petitioner until its
rescission by final judgment should belong to the owner of the property during that period. Not
having been the owner, Equatorial cannot be entitled to the civil fruits of ownership like rentals of
the thing sold.

41. JMA House Inc. vs. Sta Monica Industrial and Development Corp. GR No. 15411 August 31,
2006

FACTS:

JMA House Incorporated (JMA) applied loan from the Pioneer Savings and Loan
Association, Inc. (Pioneer). To secure payment thereof, JMA executed a real estate mortgage
over a parcel of land; there was likewise a three-storey commercial and residential building which
was occupied by tenants. Upon the failure of JMA to pay its loan, the real estate mortgage was
foreclosed extrajudicially. Pioneer was the winning bidder during the sale at public auction. The
Sheriff executed a Certificate of Sale over the property in favor of Pioneer JMA had one year to
redeem the property. JMA decided to redeem the property from Pioneer. It offered to borrow from
Sta. Monica Industrial and Development Corporation (Sta. Monica) the amount of P2, 300,000.00.
Trinidad insisted that JMA execute a deed of absolute sale over the property. Rosita Alberto
suggested that instead of a deed of absolute sale, a real estate mortgage be executed. Trinidad
refused. By way of a compromise, Alberto suggested that a supplement deed giving JMA the
option to repurchase the property within a period of two years be executed. Trinidad agreed to
this proposal. Thus, the lawyers of JMA and Sta. Monica prepared two deeds.

JMA executed a Deed of Absolute Sale over the lot, including the buildings thereon, in favor of
Sta. Monica. As agreed upon by the parties, the parties likewise executed a contract denominated
as Option to Buy, in which Sta. Monica gave JMA the option to buy the property within one (1)
year from the execution of the Deed Of Absolute Sale. Sta. Monica, through Eugenio Trinidad,
informed Rosita Alberto and the tenants of the buildings in the property that due to the failure of
JMA to “repurchase” the property, it had been sold to A. Guerrero Development Corporation
(AGCOR). Rosita Alberto protested to Trinidad, insisting that the period given to JMA to buy back
the property had not yet elapsed.

JMA filed a complaint against Sta. Monica and AGCOR for specific performance, reconveyance
and damages. An Option to Buy was also executed in its favor, giving it the option to buy the
property within a period of one (1) year from execution thereof, and in the meantime, it retained
dominion over the property.

ISSUE:

Whether or not AGCOR has no knowledge of the option to buy

HELD:

No. The rule is that he who alleges that a contract does not reflect the true intention of the
parties thereto may prove the same by documentary or parol evidence. In this case, petitioner
alleges that the Deed of Absolute Sale and Option to buy do not reflect the true intention of the
parties, which according to it is a loan with mortgage or an equitable mortgage. The petitioner is
burdened to prove, by clear and convincing evidence, the terms of the writings. The presumption
is that the contract is what it purports to be; and, to establish its character as a mortgage, the
evidence must be clear, unequivocal and convincing which reasons tending to show that the
transaction was intended as a security for debt; and thus to be a mortgage must be sufficient to
satisfy every reasonable mind without hesitation. Unless the testimony is entirely plain and
convincing beyond reasonable controversy, the writing will be held to express correctly the
intention of the parties. If there is a doubt as to the fact whether the transaction is in the nature of
a mortgage, the presumption, in order to avoid forfeiture is always in favor of a position to redeem,
to sub serve abstract justice and avert injurious consequences.
42. Vasquez vs Ayala Corporation GR No. 149734 November 19, 2004

FACTS:

Vasquez owns Conduit Development Inc. In 1981, Vasquez enters into a MOA with
AYALA wherein AYALA bought Conduit from Vasquez. AYALA committed to develop Conduit’s
lands including 4 parcels of land adjacent to Vasquez’ retained land. Be it noted that these parcels
of land were in the 3rdphase of AYALA’s development plan. Paragraph 5.15 of the MOA provides:

“5.15. The BUYER (AYALA) agrees to give the SELLERS (Vasquez) a first option to purchase
four developed lots next to the “Retained Area” at the prevailing market price at the time of the
purchase.”

In 1990, after AYALA was able to develop the said lots. This was after some slump, and some
litigation between Conduit’s former contractor (GP construction) and GP’s subcontractor (Lancer
Builders). AYALA then offered to sell the 4 parcels of land to Vasquez at P6.5k/sq m which was
the market price in 1990. Vasquez refused the offer. Vasquez contended that the purchase price
should be P460/ sq m which was the market price in 1981 (time of purchase). AYALA then lowered
the purchase price to P5k/ sq m but Vasquez refused again. Instead he made a counter offer to
buy the lots at P2k/ sq m. This time, AYALA refused.

ISSUE:

Whether or not Paragraph 5.15 of the MOA is an option contract

HELD:

No. The said paragraph is a mere right of first refusal. Although the paragraph has a
definite object, i.e., the sale of the 4 lots, the period within which they will be offered for sale to
Vasquez and, necessarily, the price for which the subject lots will be sold are not specified. The
phrase “at the prevailing market price at the time of the purchase” connotes that there is no definite
period within which AYALA is bound to reserve the subject lots for Vasquez to exercise his
privilege to purchase. Neither is there a fixed or determinable price at which the subject lots will
be offered for sale. The price is considered certain if it may be determined with reference to
another thing certain or if the determination thereof is left to the judgment of a specified person or
persons. Further, paragraph 5.15 was inserted into the MOA to give Vasquez the first crack to
buy the subject lots at the price which AYALA would be willing to accept when it offers the subject
lots for sale. It is not supported by an independent consideration.
43. Sps. Garcia vs CA GR No. 172036 April 23, 2010

FACTS:

Spouses Faustino and Josefina Garcia and spouses Meliton and Helen Galvez
(appellees) and defendant Emerlita De la Cruz (appellant) entered into a contract to sell to the
former a parcel of land in Tanza, Cavite. As agreed, plaintiffs shall make a down payment upon
signing of the contract while the balance shall be paid in 3 instalments. Plaintiffs failed to pay the
last instalment. They offered to pay the unpaid balance after 1.5 year delay which defendant
refused to accept. Defendant sold the parcel of land to intervenor Diogenes Bartolome. In order
to compel the defendant to accept full payment and execute the necessary documents, plaintiffs
filed before the RTC a complaint for specific performance. The trial court ruled that Emerlita’s
rescission of the contract was not valid. It applied RA 6552 (Maceda Law) and stated that Dela
Cruz is not allowed to unilaterally cancel the Contract to sell. It declared the deed of sale executed
by Emerlita, null and void. On appeal, the appellate court reversed the trial court’s decision and
dismissed the case. Hence, this petition.

ISSUE:

Whether or not rescission was correctly applied due to petitioner’s failure to pay the full
payment

HELD:

No. Contracts are law between the parties and they are bound by it’s stipulations. It is
clear that the parties intended their agreement to be a Contract to sell. Emerlita retains the
ownership of the subject lands and does not have the obligation to execute a deed of absolute
sale until petitioners’ payment of the full purchase price. Payment of the price is a suspensive
condition, failure of which is not a breach but an event that prevents the obligation of the vendor
to convey the title from becoming effective. Strictly speaking, there can be no rescission or
resolution of an obligation that is still non-existent due to the non-happening of the suspensive
condition. Emerlita is thus not obliged to execute of deed of absolute sale because of petitioners’
failure to make the payment.

 Article 1482 (Earnest money)

44. Spouses Serrano and Herrera vs Cagulat GR No. 139173 February 28, 2007

FACTS:

Spouses Serrano agreed to sell in favour of respondent Caguiat a parcel of land at P


1,500.00 per square meter. Caguiat partially paid petitioners P 1oo, ooo.oo as evidenced by a
receipt issued by petitioners indicating therein respondent’s promise to pay the remaining
balance. Respondent, after making known his readiness to pay the balance, requested from
petitioners the preparation of the necessary deed of sale. When petitioners cancelled the
transaction and intended to return to Caguiat his partial payment, respondent filed a complaint for
specific performance and damages. The trial court relying on Article 1482 of the Civil Code ruled
that the payment of P 100, ooo.oo being an earnest money signified the perfection of the contract.
CA denied petitioner’s motion and affirmed lower court’s decision.

ISSUE:

Whether or not the partial payment constitutes an earnest money as manifested in Article
1482 of the Civil Code

HELD:

No.Article 1482 applies only to earnest money given in a contract of sale. It was apparent
that the earnest money in the case at bar was given in lieu of a contract to sell. Unlike in a contract
of sale, the ownership of the parcel of land was retained by the Spouses Serrano and shall only
be passed to Caguiat upon full payment of the purchase price as evidenced by the receipt.
Relatively, no Deed of Sale has been executed as proof of the intention of the parties to
immediately transfer the ownership of the parcel of land. Spouses Serrano also retained
ownership of the certificate of title of the lot, thereby indicating no actual or constructive delivery
of the ownership of the property. Finally, should the transaction pushed through, Caguiat’s
payment of the remaining balance would have been a suspensive condition since the transfer of
ownership was subordinated to the happening of a future and uncertain event.

45. Chua vs Court of Appeals 401 SCRA 54 April 9, 2003

46. LAFORTEZA VS MACHICA


333 SCRA 643, JUNE 16,2000

Facts:
Dennis Laforteza, entrered into a MOA (Contract to Sell) with Alonzo Machuca over a house and
lot registered in the name of the late Francisco Laforteza. Machuca was able to pay the earnest
money but however failed to pay the balance on time. Upon a request of an extension of time,
Machuca informed petitioner heirs that the balance was already covered, but petitioners refused
to accept the balance and told Machuca that the subject property is no longer for sale. The
petitioners contend that the Memorandum of Agreement is merely a lease agreement with “option
to purchase”; hence, it only gave the respondent a right to purchase the subject property within a
limited period without imposing upon them any obligation to purchase it. And since the
respondent’s tender of payment was made after the lapse of the option agreement, his tender did
not give rise to the perfection of a contract of sale.

Issue:
(1) WON the tender of payment after the lapse of the option agreement gave rise to the perfection
of a contract of sale.
(2) WON the six-month period during which the respondent would be in possession of the
property as lessee was a period within which to exercise an option.

Held:
(1) YES. A perusal of the Memorandum Agreement shows that the transaction between the
petitioners and the respondent was one of sale and lease.
A contract of sale is a consensual contract and is perfected at the moment there is a meeting of
the minds upon the thing which is the object of the contract and upon the price. From that moment
the parties may reciprocally demand performance subject to the provisions of the law governing
the form of contracts. In the case at bench, all the elements of a contract of sale were thus
present.

(2) NO. The six-month period during which the respondent would be in possession of the property
as lessee, was clearly not a period within which to exercise an option. An option is a contract
granting a privilege to buy or sell within an agreed time and at a determined price. An option
contract is a separate and distinct contract from that which the parties may enter into upon the
consummation of the option. An option must be supported by consideration. An option contract
is governed by the second paragraph of Article 1479 of the Civil Code, which reads:
Art. 1479… .
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding
upon the promissor if the promise is supported by a consideration distinct from the price.
In the present case, the six-month period merely delayed the demandability of the contract of sale
and did not determine its perfection for after the expiration of the six-month period, there was an
absolute obligation on the part of the petitioners and the respondent to comply with the terms of
the sale.

47. SAN MIGUEL PROPERTIES VS. SPS. HUANG


GR No. 137290 July 31, 2000

Facts:

San Miguel Properties is engaged in the purchase and sale of real properties, of which include
two parcels of land. Such offer was made to Atty. Dauz on behalf of Sps. Huang. Atty. Dauz wrote
San Miguel informing the respondents’ interest to buy the property and enclosed therein a check
(P1,000,000.00) as earnest deposit subject to certain conditions, to wit: (1) that they be given the
exclusive option to purchase the property within 30 days from acceptance of the offer; (2) that
during the option period, the parties would negotiate the terms and conditions of the purchase;
and (3) petitioner would secure the necessary approvals while respondents would handle the
documentation. Sobrecarey, San Miguel Properties VP indicated his conformity to the offer;
signed the letter; and accepted the earnest deposit. By agreement of the parties, they agreed that
respondents will be given 6 months within which to pay. Upon failure of respondents to pay despite
the extension of time given, petitioner through its Pres & CEO Gonzales, wrote Atty. Dauz, that
they are returning the earnest deposit. Respondent spouses through counsel, wrote petitioner
demanding the execution of a deed of conveyance in their favor. They attempted to return the
earnest deposit but was refused by San Miguel. Respondent spouses filed a complaint for specific
performance. Trial court, upon motion, dismissed the complaint, which was reversed by the CA.

Issue:

WON the earnest deposit could have been given as earnest money contemplated in Art. 1482,
and thus there was a perfected contract of sale.

Held:

No, hence, there was no perfected contract of sale. In the present case, the P1 million "earnest-
deposit" could not have been given as earnest money as contemplated in Art. 1482 because, at
the time when petitioner accepted the terms of respondents’ offer, their contract had not yet been
perfected. The first condition for an option period of 30 days sufficiently shows that a sale was
never perfected. Such option giving respondents the exclusive right to buy the properties within
the period agreed upon is separate and distinct from the contract of sale which the parties may
enter.

48. TOPACIO VS COURT OF APPEALS


GR No. 102606 July 3, 1992

The spouses De Villa (parents-in-law of Topacio) were the former owners of a lot in QC. It was
previously mortgaged to Ayala Investment and Development Corp to secure an obligation of
P500k. For failure to pay, the mortgage was foreclosed and consequently, BPI acquired the
property as highest bidder.

Topacio wanted to buy the property and paid the initial payment of P375 K .BPI wrote to Topacio
and informed him that he had until January 4, 1986 to pay the balance of P875k. Topacio was
unable to meet the several deadline extensions given, and so BPI mailed the initial check that he
paid back to him which Topacio did not encash.
The RTC ruled that there is a perfected contract of sale which is still enforceable because BPI
did not rescind either by judicial or notarial rescission. But CA reversed the decision stating that
the contract is a contract to sell, not a contract of sale.

Issue: Whether or not the contract is a contract to sell or contract of sale

Held:
It is a contract of sale. The payment by Topacio of P375k was the operative act that gave rise to
a perfect contract of sale. It is considered an earnest money (something of value to show that the
buyer was really in earnest, and given to the seller to bind the bargain). It is considered part of
the purchase price and proof of the perfection of the contract. The parties agreed on the object
(house and lot in White Plains), and the price and the manner of payment.

Nowhere in the transaction did it indicate that BPI reserved its title on the property, nor did it
provide for any automatic rescission in case of default. So when Topacio failed to pay the balance
of P875k despite several extensions, BPI could not validly rescind the contract w/o complying with
the provision of Art1592 or Art 1191 on notarial or judicial rescission respectively.

49. ADELFA PROPERTIES INC VS CA


240 SCRA 565, JANUARY 25,1995

FACTS:
Private respondents and their brothers Jose and Dominador were the registered CO-OWNERS
of a parcel of land in Las Pinas, covered by a TCT. Jose and Dominador sold their share (eastern
portion of the land) to Adelfa. Thereafter, Adelfa expressed interest in buying the western portion
of the property from private respondents herein. Accordingly, an “exclusive Option to Purchase”
was executed between Adelfa and Private Respondents and an option money of 50,000 was
given to the latter. A new owner’s copy of the certificate of title was issued but was kept by Adelfa’s
counsel, Atty. Bernardo.

Before Adelfa could make payments, private respondents informed Atty. Bernardo that they are
cancelling the transaction. Atty Bernardo made offers but they were all rejected. Private
respondents executed a Deed of Conditional Sale in favor of Chua, over the same parcel of land.
Private respondents sent a letter to Adelfa enclosing therein a check representing the refund of
half the option money paid under the exclusive option to purchase, and requested Adelfa to return
the owner’s duplicate copy of Salud. Adelfa failed to surrender the certificate of title, hence the
private respondents filed a civil case before the RTC Pasay, for annulment of contract with
damages. The trial court directed the cancellation of the exclusive option to purchase. On appeal,
respondent CA affirmed in toto the decision of the RTC hence this petition.

ISSUE:

WON the agreement between Adelfa and Private respondents was strictly an option contract

HELD:

NO. The agreement between the parties is a contract to sell, and not an option contract or a
contract of sale.

The SC does not conform with the findings of respondent court that the contract executed between
the parties is an option contract, for the reason that the parties were already contemplating on
the payment of the balance of the purchase price, and were not merely quoting an agreed value
for the property. In other words, the alleged option money was actually earnest money which was
intended to form part of the purchase price. The amount was not distinct from the cause or
consideration for the sale of the property, but was itself a part thereof. It is a statutory rule that
whenever earnest money is given in a contract of sale, it shall be considered as part of the price
and as proof of the perfection of the contract. It constitutes an advance payment and must,
therefore, be deducted from the total price. Also, earnest money is given by the buyer to the seller
to bind the bargain.

Unfortunately, petitioner failed to seasonably make payment. By reason of petitioner’s failure to


comply with its obligation, private respondents elected to resort to and did announce the
rescission of the contract through its letter to petitioner. That written notice of rescission is deemed
sufficient under the circumstances. Judicial action for rescission of a contract is not necessary
where the contract provides for automatic rescission in case of breach, as in the contract involved
in the present controversy.

 Article 1483

50. HEIRS OF CECILIO CLAUDEL VS. CA & HEIRS OF MACARIO CLAUDEL (SIBLINGS OF
CECILIO)
Gr No. 85240, July 12,199

Facts:
Cecilio Claudel acquired from the Bureau of Lands a parcel of land. Thirty-nine years after his
death, two branches of Cecilio’s family contested the ownership over the land – the Heirs of
Cecilio and the Siblings of Cecilio. The Heirs of Cecilio partitioned the lot among themselves and
obtained the corresponding TCTs. Siblings of Cecilio filed a complaint for Cancellation of Titles
and Reconveyance with Damages alleging that their parents had purchased from the late Cecilio
several portions of the lot. They admitted that the transaction was verbal but they were able to
present the subdivision plan. The CFI dismissed the complaint disregarding the evidence. The
CA reversed the CFI’s ruling ordering the cancellation of the TCTs issued in the name of the Heirs
of Cecilio. As ruled by the CA, the Statute of Frauds applies only to executory contracts and not
to consummated sales as in the case at bar where oral evidence may be admitted.

Issue:
WON a contract of sale of land may be proven orally.

Held:
YES. A contract of sale of land may be proven orally subject to certain exceptions. This case falls
within the exception. The rule of thumb is that a sale of land, once consummated, is valid
regardless of the form it may have been entered into. For nowhere does law or jurisprudence
prescribe that the contract of sale be put in writing before such contract can validly cede or
transmit rights over a certain real property between the parties themselves.

However, in the event that a third party, as in this case, disputes the ownership of the property,
the person against whom that claim is brought cannot present any proof of such sale and hence
has no means to enforce the contract. Thus the Statute of Frauds was precisely devised to protect
the parties in a contract of sale of real property so that no such contract is enforceable unless
certain requisites, for purposes of proof, are met.

The purpose of the Statute of Frauds is to prevent fraud and perjury in the enforcement of
obligations depending on the evidence upon the unassisted memory of witnesses by requiring
certain enumerated contracts and transactions to be evidenced in writing.

Therefore, except under the conditions provided by the Statute of Frauds, the existence of the
contract of sale made by Cecilio with his siblings cannot be proved

51. SPS. DALION VS. CA & SABESAJE JR.


Gr. No 78903, February 28,1990

Facts:
Sabesaje sued to recover ownership of a parcel of land, based on a private document of absolute
sale, allegedly executed by Dalion. Dalion denied the fact of sale, contending that the document
sued upon is fictitious, his signature thereon, a forgery, and that subject land is conjugal property.
Dalion further argued that assuming authenticity of his signature and the genuineness of the
document, Dalion nonetheless still impugns the validity of the sale on the ground that the same
is embodied in a private document, and did not thus convey title or right to the lot in question since
“acts and contracts which have for their object the creation, transmission, modification or
extinction of real rights over immovable property must appear in a public instrument”.

Issue:
WON the sale is valid considering that such was executed in a private document.

Held:
YES, the sale is valid. The provision of Art. 1358 on the necessity of a public document is only
for convenience, not for validity or enforceability. It is not a requirement for the validity of a contract
of sale of a parcel of land that this be embodied in a public instrument.

A contract of sale is a consensual contract, which means that the sale is perfected by mere
consent. No particular form is required for its validity. Upon perfection of the contract, the parties
may reciprocally demand performance (Art. 1475, NCC), i.e., the vendee may compel transfer of
ownership of the object of the sale, and the vendor may require the vendee to pay the thing sold
(Art. 1458, NCC). The trial court thus rightly and legally ordered Dalion to deliver to Sabesaje the
parcel of land and to execute corresponding formal deed of conveyance in a public document.

52. ORTEGA VS LEONARDO


103 Phil. 870 May 28, 1958

FACTS
Ortega occupied a parcel of land, but was disputed by Leonardo. Ortega and Leonardo both
agreed to a compromise, where Ortega would desist from pressing her claim and that Leonardo
would sell to her a portion provided thereof, provided she paid for the surveying of the lot. Ortega
thus desisted the claim, paid for the surveying of the lot and the preparation of the plan and paid
regularly a monthly rental . When Leonardo acquired title, he refused to sell the agreed portion of
lot. He claims that the contract is unenforceable based on the Statute of Frauds.

ISSUE
Whether or not the contract is unenforceable based on the Statute of Frauds

HELD
NO. The contract is enforceable. This case described several circumstance indicating partial
performance: relinquishment of rights. continued possession, building of improvements, tender of
payment plus the surveying of the lot at plaintiff's expense and the payment of rentals. Hence, as
there was partial performance, the principle excluding parol contracts for the sale of realty and
hence the Statute of Frauds, does not apply.

53. UNIVERSAL ROBINA SUGAR MILLING CORP VS HEIRS OF ANGEL TEVES


389 SCRA 316 September 18, 2002

FACTS
Andres Abanto's heirs executed an “Extrajudicial Settlement of the Estate of the Deceased Andres
Abanto and Simultaneous Sale.” In this document, Abanto's heirs adjudicated unto themselves
the two lots and sold the (a) unregistered lot of 193,789 square meters to the United Planters
Sugar Milling Company, Inc. (UPSUMCO), and (b) the registered lot covered by TCT No. H-37
to Angel M. Teves. The sale was not registered.
Teves verbally allowed UPSUMCO to use the lot covered by TCT No. H-37 for pier and loading
facilities, free of charge, subject to the condition that UPSUMCO shall shoulder the payment of
real property taxes and that its occupation shall be co-terminus with its corporate existence.i
URSUMCO then took possession of UPSUMCO’s properties, including Teves' lot covered by TCT
No. H-37.Teves formally asked the corporation to turn over to him possession thereof or the
corresponding rentals. URSUMCO refused to heed Teves' demand, claiming that it acquired the
right to occupy the property from UPSUMCO which purchased it from Andres Abanto; and that it
was merely placed in the name of Angel Teves, as shown by the “Deed of Transfer and Waiver
of Rights and Possession.
ISSUE
WON the contract of sale to Teves was valid even if not executed in a public document
HELD
That the contract of sale was not registered does not affect its validity. Being consensual in
nature, it is binding between the parties, the Abanto heirs and Teves. The embodiment of certain
contracts in a public instrument, is only for convenience, and the registration of the instrument
would merely affect third persons. Formalities are intended for greater efficacy or convenience or
to bind third persons, if not done, would not adversely affect the validity or enforceability of the
contract between the contracting parties themselves. Thus, by virtue of the valid sale, Angel
Teves stepped into the shoes of the heirs of Andres Abanto and acquired all their rights to the
property.

 Article 1484 with Article 1485 and 1486

54 LUNETA MOTOR COMPANY VS. DIMAGIBA


3 SCRA 884 December 30, 1961

Facts:

Angel Dimagiba bought from the Luneta Motor Company a truck for a price which was
compromised at P16,126.12 payable in 18 monthly installments, to guarantee which he executed
a chattel mortgage on the same truck on May 7, 1956. As a further security thereto, he also
executed on the same date a chattel mortgage on another truck which belonged to the latter.
When Dimagiba failed to pay several installments as he agreed in the promissory note he
executed to cover the price of the truck he purchased, the company instituted an action not only
to recover the balance of his obligation but to secure the seizure of the two trucks mortgaged with
a prayer that the proceeds that may be realized after the sale of said trucks be applied to the
payment of the judgment that may be rendered in the case. Because of the vague nature of the
allegations contained in the complaint, as well as in its prayer, the court a quo, as well as the
Court of Appeals, considered the action taken as one of both replevin and foreclosure of
mortgage.
Issue:

WON the scheme of the company is a flagrant violation of Art. 1484 of the Civil Code.

Held:
YES. Art. 1484 prescribes three remedies which a vendor may pursue in a contract of sale of
personal property the price of which is payable in installments, to wit: (1) exact fulfillment of the
obligation; (2) cancel the sale; and (3) foreclose the mortgage on the thing sold. If he chooses the
third remedy, the article provides that he shall have no further action against the purchaser to
recover any unpaid balance of the purchase price. It even adds that any agreement to the contrary
shall be void.

But in the instant case the vendor was not content in choosing any of the three remedies, but
chose to avail itself of the first and third remedies. More than that, plaintiff even went to the extent
of suing for replevin, in other words, it filed an action containing three remedies: to collect the
purchase price, to seize the property purchased, and to foreclose the mortgage executed thereon.
Plaintiff even went to the extent of selling first the property of Noriel, who is not the vendee, out
of court, and after doing so, it asked the court for judgment in the balance. Such a scheme is not
only irregular but is a flagrant circumvention of the prohibition of the law.

55. PAMECA WOOD TREATMENT PLANT VS. CA & DBP


310 SCRA 281 July 14, 1999

Facts:
Pameca obtained a loan from DBP. By virtue of this loan, Pameca executed a promissory note
for the amount obtained, promising to pay the loan by installment. As security for said loan, a
chattel mortgage was executed over Pameca’s properties in Dumaguete. Upon Pameca’s failure
to pay, DBP extrajudicially foreclosed the chattel mortgage, and as sole bidder in the public
auction, purchased the same. DBP then filed a complaint for the collection of the balance. Trial
court rendered decision in favor of DBP, affirmed by CA.

Issue:
WON Art 1484, CC, can be applied in the case, hence, precludes DBP from collecting the balance.

Held:
NO.The said article applies clearly and solely to the sale of personal property the price of which
is payable in installments. Although Article 1484, paragraph (3) expressly bars any further action
against the purchaser to recover an unpaid balance of the price, where the vendor opts to
foreclose the chattel mortgage on the thing sold, should the vendees failure to pay cover two or
more installments, this provision is specifically applicable to a sale on installments.

To accommodate petitioners prayer even on the basis of equity would be to expand the application
of the provisions of Article 1484 to situations beyond its specific purview, and ignore the language
and intent of the Chattel Mortgage Law. Equity, which has been aptly described as justice outside
legality, is applied only in the absence of, and never against, statutory law or judicial rules of
procedure.

56. Pascual vs Universal Corp. 61 SCRA 121 November 20, 1974


FACTS:

Plaintiff-appellee spouses Lorenzo Pascual and Leonila Torres (spouses Pasqual) executed the
real estate mortgage subject matter of this complaint on December 14, 1960 to secure the
payment of the indebtedness of PDP Transit, Inc. (PDP Trans.) for the purchase of 5 units of
Mercedes Benz trucks, with a total purchase price or principal obligation of P152,506.50 which
was to bear interest at 1% per month starting that day, but the plaintiffs' guarantee is not to exceed
P50,000.00 which is the value of the mortgage. The PDP Trans., as the spouses Pasqual's
principal, paid to defendant-appellant Universal Motors Corporation (Universal Motors) the sum
of P92,964.91 on April 5, 1961 for two of the five Mercedes Benz trucks and on May 22, 1961 for
the remaining three, thus leaving a balance of P68,641.69 including interest due on February 8,
1965.

On March 19, 1965, Universal Motors filed this complaint with the CFI of Manila against the PDP
Trans. to collect the balance due under the Chattel Mortgages and to repossess all the units sold
to PDP Trans. as the spouse Pascual’s principal, including the 5 units guaranteed under the
subject Real (Estate) Mortgage. During the hearinbg, Universal Motors admitted that it was able
to repossess all the units sold to the latter, including the 5 units guaranteed by the subject real
estate mortgage, and to foreclose all the chattel mortgages constituted thereon, resulting in the
sale of the trucks at public auction. As the real estate mortgagors, the spouses Pascual filed an
action with the CFI of Quezon City for the cancellation of the mortgage they constituted on 2
parcels of land in favor of the Universal Motors to guarantee the obligation of PDP Trans. to the
amount of P50,000. The said CFI rendered judgment in favor of the spouses Pascual and ordered
the cancellation of the mortgage.

ISSUE:

Whether or not Article 1484 of the New Civil Code applicable in the case at bar?

HELD:

The Supreme Court affirmed the lower court’s decision. Appellant Universal Motors argues that
Article 1484 is not applicable to the case at bar because there is no evidence on record that the
purchase by PDP Trans. of the 5 trucks was payable in installments and that the PDP Trans. had
failed to pay two or more installments. Universal Motors also contends that what Article 1484
prohibits is for the vendor to recover from the purchaser the unpaid balance of the price after he
has foreclosed the chattel mortgage on the thing sold, but not a recourse against the security put
up by a third party.

The Supreme Court concluded to the contrary, saying that the first issue was whether or not the
sale was one on installments. The lower court found that it was, and that there was failure to pay
two or more installments, a finding which is not subject to review by the Supreme Court.

The next contention is that what article 1484 withholds from the vendor is “the right to recover any
deficiency from the purchaser after the foreclosure of the chattel mortgage,” and not a “recourse
to the additional security put up by a third party to guarantee the purchaser's performance of his
obligation.” But the Supreme Court to sustain this argument of the appellant would be to indirectly
subvert and public policy overturn the protection given by Article 1484.

57. Southern Motors vs Moscoso 2 SCRA 168 May 30, 1961

FACTS:

Plaintiff Southern Motors, Inc. sold to defendant Angel Moscoso one Chevrolet truck on
installment basis, for P6,445.00. Upon making a down payment, the defendant executed a
promissory note for the sum of P4,915.00, representing the unpaid balance of the purchase price
to secure the payment of which, a chattel mortgage was constituted on the truck in favor of the
plaintiff. Of said account, the defendant had paid a total of P550.00, of which P110.00 was applied
to the interest and P400.00 to the principal, thus leaving an unpaid balance of P4,475.00. The
defendant failed to pay 3 installments on the balance of the purchase price.

Plaintiff filed a complaint against the defendant, to recover the unpaid balance of the promissory
note. Upon plaintiff’s petition, a writ of attachment was issued by the lower court on the properties
of the defendant. Pursuant thereto, the said Chevrolet truck, and a house and lot belonging to
defendant, were attached by the Sheriff and said truck was brought to the plaintiff’s compound for
safe keeping. After attachment and before the trial of the case on the merits, acting upon the
plaintiff’s motion for the immediate sale of the mortgaged truck, the Provincial Sheriff of Iloilo sold
the truck at public auction in which plaintiff itself was the only bidder for P1,OOO.OO. The trial
court condemned the defendant to pay the plaintiff the amount of P4,475.00 with interest at the
rate of 12% per annum from August 16, 1957, until fully paid, plus 10% thereof as attorneys fees
and costs. Hence, this appeal by the defendant.

ISSUE:

Whether or not the attachment caused to be levied on the truck and its immediate sale at public
auction, was tantamount to the foreclosure of the chattel mortgage on said truck.

HELD:

No.Article 1484 of the Civil Code provides that in a contract of sale of personal property the price
of which is payable in installments, the vendor may exercise any of the following remedies: (I)
Exact fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the
vendee’s failure to pay cover two or more installments; and (3) Foreclose the chattel mortgage on
the thing sold, if one has been constituted, should the vendee’s failure to pay cover two or more
installments. In this case, he shall have no further action against the purchaser to recover any
unpaid balance of the price. Any agreement to the contrary shall be void.

The plaintiff had chosen the first remedy. The complaint is an ordinary civil action for recovery of
the remaining unpaid balance due on the promissory note. The plaintiff had not adopted the
procedure or methods outlined by Sec. 14 of the Chattel Mortgage Law but those prescribed for
ordinary civil actions, under the Rules of Court. Had the plaintiff elected the foreclosure, it would
not have instituted this case in court; it would not have caused the chattel to be attached under
Rule 59, and had it sold at public auction, in the manner prescribed by Rule 39. That the plaintiff
did not intend to foreclose the mortgage truck, is further evinced by the fact that it had also
attached the house and lot of the appellant at San Jose, Antique.

We perceive nothing unlawful or irregular in plaintiff’s act of attaching the mortgaged truck itself.
Since the plaintiff has chosen to exact the fulfillment of the appellant’s obligation, it may enforce
execution of the judgment that may be favorably rendered hereon, on all personal and real
properties of the latter not exempt from execution sufficient to satisfy such judgment. It should be
noted that a house and lot at San Jose, Antique were also attached. No one can successfully
contest that the attachment was merely an incident to an ordinary civil action. The mortgage
creditor may recover judgment on the mortgage debt and cause an execution on the mortgaged
property and may cause an attachment to be issued and levied on such property, upon beginning
his civil action.

58. Zayas vs Luneta Motors Co. GR No. L-30583 October 23, 1982

FACTS:

Zayas purchased a Ford Thames Freighter from Escano Enterprises, the dealer of Luneta Motor
Co. The unit was delivered and Zayas issued a PN payable in 26 installments secured by a chattel
mortgage over the subject motor vehicle. Zayas failed to pay, thus Luneta extra-judicially
foreclosed on the mortgage and was the highest bidder. However, considering that the proceeds
of the sale was insufficient to cover the debt, Luneta filed a case for the recovery of the balance
of the purchase price. Zayas refused to pay.

ISSUE: W/N Luneta may still recover the balance

HELD: NO. When the unpaid seller forecloses on the mortgage, the law precludes him from
bringing further actions against the vendee for whatever balance, which was not satisfied from
the foreclosure. Luneta contends that Escano Enterprises is a different and distinct entity and
maintains that its contract with Zayas was a loan. This is unsubstantiated as the agency
relationship between Luneta and Escano is clear. Nevertheless, assuming that they were distinct
entities, the nature of the transaction remains the same. If Escano assigned its right to Luneta,
the latter merely acquires the rights of the formers—hence, Art. 1484 of the CC would likewise be
inapplicable.

59. Ridad vs Filipinas Investment and Finance Corporation GR No. 39806 January 27, 1983

FACTS:
Ridad purchased from Supreme Sales 2 Ford Consul Sedans, payable in 24 installments, for
which he executed a PN with chattel mortgage over the said property. Another chattel mortgage
was executed this time upon a separate Chevy car, and another one upon the franchise to operate
taxi cabs. Supreme Sales thereafter assigned its rights under the PN to Filinvest. Ridad defaulted
and Filinvest foreclosed on the mortgage. It was the highest bidder for the foreclosure sale of the
sedans. But unable to fully satisfy the debt, it also foreclosed the Chevy and the franchise.

ISSUE: W/N Filinvest may still foreclose the Chevy and the franchise to fully satisfy the debt

HELD: NO. When the unpaid seller forecloses on the mortgage, the law precludes him from
bringing further actions against the vendee for whatever balance, which was not satisfied by the
first foreclosure. By choosing to foreclose on the Ford sedans, Filinvest renounced all other rights
which it might have had under the PN; it must content itself with the proceeds of the sale of the
sedans at the public auction.

60. Levy Hermanos Inc. vs Gervacio 69 Phil 62 October 27, 1939

FACTS: Levy Hermanos sold a Packard car to Lazaro Gervacio. Gervacio made an initial
payment and executed a promissory note for the balance of P2,400. He failed to pay the note at
maturity date so Levy Hermanos foreclosed the mortgage and bought it at the public auction for
P800. Levy Hermanos then filed a complaint for the collection of the remaining balance and
interest. CFI ruled in favor of Gervacio finding that Levy can no longer recover the unpaid balance
once he has chosen foreclosure. Thus the case at bar.

ISSUE: W/N Levy Hermanos can still collect the balance

HELD: YES

In order to apply Art. 1454-A of the CC, there must be (1) a contract of sale of personal property
payable in installments and (2) there has been a failure to pay 2 or more installments. In the case
at bar, although it is a sale of personal property, it is not payable in installments. It is payable in a
straight term in which the balance should be paid in its totality at maturity date of the PN, therefore
the prohibition does not apply.

61. U.S. Commercial Co. vs Halili GR No. L-5535 May 29, 1953

 RA No. 6552 (Maceda Law)


62. G.R. No. 147695 September 13, 2007

MANUEL C. PAGTALUNAN, petitioner,


vs.
RUFINA DELA CRUZ VDA. DE MANZANO, respondent

FACTS

Patricio Pagtalunan (Patricio), petitioner’s stepfather and predecessor-in-interest, entered into a


Contract to Sell with respondent, wife of Patricio’s former mechanic, Teodoro Manzano, whereby
the former agreed to sell, and the latter to buy, a house and lot which formed half of a parcel of
land. The consideration of P17,800 was agreed to be paid in the following manner: P1,500 as
down payment upon execution of the Contract to Sell, and the balance to be paid in equal monthly
installments of P150 on or before the last day of each month until fully paid.

It was alleged that respondent did not paid the monthly installment as what they have agreed
upon. On the other hand, it was denied by the respondent that she is religiously paying her
balance but the petitioner changes its mind and want to refund all the payments she gave,
however, she refused. She admittedly, that she had failed to pay some installments but she
continued paying later on.

Patricio and his wife died. Petitioner became their sole successor-in-interest pursuant to a waiver
by the other heirs. He eventually filed before the MTC unlawful detainer case and it was ruled in
favor of him. However, on appeal to RTC, it ruled to dismiss the complaint for lack of merit. The
Court of Appeals affirmed the decision of the RTC to dismiss the case. The CA found that the
parties, as well as the MTC and RTC failed to advert to and to apply Republic Act (R.A.) No. 6552,
more commonly referred to as the Maceda Law, which is a special law enacted in 1972 to protect
buyers of real estate on installment payments against onerous and oppressive conditions.The CA
held that the Contract to Sell was not validly cancelled or rescinded under Sec. 3 (b) of R.A. No.
6552, and recognized respondent’s right to continue occupying unmolested the property subject
of the contract to sell.

ISSUE

Whether or not the Maceda Law (RA 6552) is applicable to this case

RULING

Yes, it is applicable.

The CA correctly ruled that R.A No. 6552, which governs sales of real estate on installment, is
applicable in the resolution of this case.

This case originated as an action for unlawful detainer. Respondent is alleged to be illegally
withholding possession of the subject property after the termination of the Contract to Sell
between Patricio and respondent. It is, therefore, incumbent upon petitioner to prove that the
Contract to Sell had been cancelled in accordance with R.A. No. 6552.
The pertinent provision of R.A. No. 6552 reads:

Sec. 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding
industrial lots, commercial buildings and sales to tenants under Republic Act Numbered
Thirty-eight hundred forty-four as amended by Republic Act Numbered Sixty-three
hundred eighty-nine, where the buyer has paid at least two years of installments, the
buyer is entitled to the following rights in case he defaults in the payment of succeeding
installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him, which is hereby fixed at the rate of one month grace period for
every one year of installment payments made: Provided, That this right shall be
exercised by the buyer only once in every five years of the life of the contract and its
extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender
value of the payments on the property equivalent to fifty percent of the total payments
made and, after five years of installments, an additional five percent every year but not
to exceed ninety percent of the total payments made: Provided, That the actual
cancellation of the contract shall take place after thirty days from receipt by the buyer of
the notice of cancellation or the demand for rescission of the contract by a notarial act
and upon full payment of the cash surrender value to the buyer.9

R.A. No. 6552, otherwise known as the "Realty Installment Buyer Protection Act," recognizes in
conditional sales of all kinds of real estate (industrial, commercial, residential) the right of the
seller to cancel the contract upon non-payment of an installment by the buyer, which is simply
an event that prevents the obligation of the vendor to convey title from acquiring binding
force.10 The Court agrees with petitioner that the cancellation of the Contract to Sell may be
done outside the court particularly when the buyer agrees to such cancellation.

However, the cancellation of the contract by the seller must be in accordance with Sec. 3 (b) of
R.A. No. 6552, which requires a notarial act of rescission and the refund to the buyer of the full
payment of the cash surrender value of the payments on the property. Actual cancellation of the
contract takes place after 30 days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act and upon full payment of the cash
surrender value to the buyer.

63. G.R. No. L-57552 October 10, 1986

LUISA F. MCLAUGHLIN, petitioner,


vs.
THE COURT OF APPEALS AND RAMON FLORES, respondents.

FACTS

Petitioner Luisa F. McLaughlin and private respondent Ramon Flores entered into a contract of
conditional sale of real property. Petitioner filed a complaint in the then Court of First Instance of
Rizal (Civil Case No. 33573) for the rescission of the deed of conditional sale due to the failure of
private respondent to pay the balance.
The parties entered into Compromise Agreement in which the court rendered into a decision. In
said compromise agreement, private respondent acknowledged his indebtedness to petitioner
under the deed of conditional sale in the amount of P119,050.71, and the parties agreed that said
amount would be payable as follows: a) P50,000.00 upon signing of the agreement; and b) the
balance of P69,059.71 in two equal installments.

On October 30, 1980, private respondent sent a letter to petitioner signifying his willingness and
intention to pay the full balance of P69,059.71, and at the same time demanding to see the
certificate of title of the property and the tax payment receipts. Private respondent contended
that on the first working day of said month, he tendered payment to petitioner but this was
refused acceptance by petitioner.

Petitioner filed a Motion for Writ of Execution alleging that private respondent failed to pay the
installment due and he had failed to pay the monthly rental of P l,000.00. Petitioner prayed that
a) the deed of conditional sale of real property be declared rescinded with forfeiture of all
payments as liquidated damages; and b) the court order the payment of Pl,000.00 back rentals
since June 1980 and the eviction of private respondent. The RTC ruled in favor of petitioners
but the RTC nullified and set aside the orders of the RTC.

ISSUE

Whether or not the respondent court committed grave abuse of discretion

RULING

NO. The general rule is that rescission will not be permitted for a slight or casual breach of the
contract, but only for such breaches as are substantial and fundamental as to defeat the object
of the parties in making the agreement. (Song Fo & Co. vs. Hawaiian-Philippine Co., 47 Phil.
821)

In aforesaid case, it was held that a delay in payment for a small quantity of molasses, for some
twenty days is not such a violation of an essential condition of the contract as warrants
rescission for non-performance.

Private respondent also invokes said law as an expression of public policy to protect buyers of
real estate on installments against onerous and oppressive conditions (Section 2 of Republic
Act No. 6552).

Section 4 of Republic Act No. 6552 which took effect on September 14, 1972 provides as
follows:

In case where less than two years of installments were paid, the seller shall give
the buyer a grace period of not less than sixty days from the date the installment
became due. If the buyer fails to pay the installments due at the expiration of the
grace period, the seller may cancel the contract after thirty days from receipt by
the buyer of the notice of the cancellation or the demand for rescission of the
contract by a notarial act.

Section 7 of said law provides as follows:


Any stipulation in any contract hereafter entered into contrary to the provisions of
Sections 3, 4, 5 and 6, shall be null and void

64. G.R. No. 141205 May 9, 2002

ACTIVE REALTY & DEVELOPMENT CORPORATION, petitioner,


vs.
NECITA G. DAROYA, represented by Attorney-In-Fact Shirley Daroya-Quinones, respondents.

FACTS

Petitioner ACTIVE REALTY & DEVELOPMENT CORPORATION is the owner and developer of
Town & Country Hills Executive Village. It entered into a Contract to Sell1 with respondent
NECITA DAROYA, a contract worker in the Middle East, whereby the latter agreed to buy a 515
sq. m. lot forP224,025.00 in petitioner’s subdivision.

The contract to sell stipulated that the respondent shall pay the initial amount upon execution of
the contract and the balance in monthly installments. The respondent was in default in three
amortizations and by this petitioner sent respondent a notice of cancellation2 of their contract to
sell, to take effect thirty (30) days from receipt of the letter. It does not appear from the records,
however, when respondent received the letter. Nonetheless, when respondent offered to pay for
the balance of the contract price, petitioner refused as it has allegedly sold the lot to another
buyer.

The respondent filed before Arbitration Branch of the Housing and Land Use Regulatory Board
(HLURB) a complaint for damages and specific performance. The HLURB ruled in favor of the
respondents and declared that the cancellation of the contract to sell is void. On appeal, the
HLURB Board of Commissioners set aside the Arbiter’s Decision. The Board refused to apply
the remedies provided under the Maceda Law and instead deemed it fit to formulate an
"equitable" solution to the case. Respondent appealed to the Office of the President. On June 2,
1998, then Chief Presidential Counsel Renato C. Corona, acting by authority of the
President, modified the Decision of the HLURB as he found that it was not in accord with the
provisions of the Maceda Law.

ISSUE

Whether or not the petitioner can be compelled to refund to the respondent the value of the lot
or to deliver a substitute lot at respondent’s option.

RULING

Yes. The contract to sell in the case at bar is governed by Republic Act No. 6552 -- "The Realty
Installment Buyer Protection Act," or more popularly known as the Maceda Law -- which came
into effect in September 1972. Its declared public policy is to protect buyers of real estate on
installment basis against onerous and oppressive conditions.16 The law seeks to address the
acute housing shortage problem in our country that has prompted thousands of middle and
lower class buyers of houses, lots and condominium units to enter into all sorts of contracts with
private housing developers involving installment schemes. Lot buyers, mostly low income
earners eager to acquire a lot upon which to build their homes, readily affix their signatures on
these contracts, without an opportunity to question the onerous provisions therein as the
contract is offered to them on a "take it or leave it" basis.17 Most of these contracts of adhesion,
drawn exclusively by the developers, entrap innocent buyers by requiring cash deposits for
reservation agreements which oftentimes include, in fine print, onerous default clauses where all
the installment payments made will be forfeited upon failure to pay any installment due even if
the buyers had made payments for several years.18 Real estate developers thus enjoy an
unnecessary advantage over lot buyers who they often exploit with iniquitous results. They get
to forfeit all the installment payments of defaulting buyers and resell the same lot to another
buyer with the same exigent conditions. To help especially the low income lot buyers, the
legislature enacted R.A. No. 6552 delineating the rights and remedies of lot buyers and protect
them from one-sided and pernicious contract stipulations.

More specifically, Section 3 of R.A. No. 6552 provided for the rights of the buyer in case of
default in the payment of succeeding installments, where he has already paid at least two (2)
years of installments, thus:

"(a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him, which is hereby fixed at the rate of one month grace period for
every one year of installment payments made; x x x

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender
value of the payments on the property equivalent to fifty per cent of the total payments
made; provided, that the actualcancellation of the contract shall take place after thirty
days from receipt by the buyer of the notice of cancellation or the demand for rescission
of the contract by a notarial act and upon full payment of the cash surrender value to the
buyer."

Thus, for failure to cancel the contract in accordance with the procedure provided by law, we
hold that the contract to sell between the parties remains valid and subsisting. Following Section
3(a) of R.A. No. 6552, respondent has the right to offer to pay for the balance of the purchase
price, without interest, which she did in this case.

65. G.R. No. 167452 January 30, 2007

JESTRA DEVELOPMENT AND MANAGEMENT CORPORATION, Petitioner,


vs.
DANIEL PONCE PACIFICO, represented by his attorney-in-fact Jordan M.
Pizarras, Respondent.

FACTS
Daniel Ponce Pacifico (Pacifico) signed a Reservation Application1 with Fil-Estate Marketing
Association for the purchase of a house and lot. Under the Reservation Application, the total
purchase price of the property was P2,500,000, and the down payment equivalent to 30% of the
purchase price. Based on the application, upon the fulfillment of the 30% down payment by pacific,
he will sign a contract to sell with the owner and developer of the property which is the JESTRA
Development and Management Corporation.

Pacifico run out funds to pay for the property and he requested to JESTRA to suspend the
payment in which the latter denied his request. Pacifico filed a complaint before the HLURB
against JESTRA claiming that despite the full payment of his down payment, JESTRA failed to
deliver to him the property within 90 days as provided in the contract to sell and instead JESTRA
sold the property to another buyer.

ISSUE

Whether or not the act of JESTRA in cancelling the contract to sell with Pacifico is valid

RULING

Yes. RA No. 6552 was enacted to protect buyers of real estate on installment against onerous
and oppressive conditions. While the seller has under the Act the option to cancel the contract
due to non-payment of installments, he must afford the buyer a grace period to pay them and, if
at least two years installments have already been paid, to refund the cash surrender value of
the payments. Thus Section of the Act provides:

SECTION 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding industrial
lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight
hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the buyer is entitled to the following
rights in case he defaults in the payment of succeeding installments:

(a) To pay, without additional interest, the unpaid installments due within the total grace
period earned by him which is hereby fixed at the rate of one month grace period for
every one year of installment payments made: Provided, That this right shall be
exercised by the buyer only once in every five years of the life of the contract and its
extensions, if any.

(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender
value of the payments on the property equivalent to fifty per cent of the total payments
made, and, after five years of installments, an additional five per cent every year but not
to exceed ninety per cent of the total payments made: Provided, That the actual
cancellation of the contract shall take place after thirty days from receipt by the buyer of
the notice of cancellation or the demand for rescission of the contract by a notarial act
and upon full payment of the cash surrender value to the buyer.

Down payments, deposits or options on the contract shall be included in the computation of the
total number of installment payments made.
As respondent failed to pay at least two years of installments, he is not, under above-quoted
Section 3 of RA No. 6552, entitled to a refund of the cash surrender value of his payments.
What applies to the case instead is Section 4 of the same law, viz:

SECTION 4. In case where less than two years of installments were paid, the seller shall give
the buyer a grace period of not less than sixty days from the date the installment became due.

If the buyer fails to pay the installments due at the expiration of the grace period, the seller may
cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act.

66. G.R. No. 140468 January 16, 2003

OLYMPIA HOUSING, INC., petitioner,


vs.
PANASIATIC TRAVEL CORPORATION and MA. NELIDA GALVEZ-YCASIANO, respondents.

FACTS

The object in litigation is a condominium unit sold at the price of P2,340,000.00 payable on
installments at the rate of P33,657.40 per month. On August 8, 1984, plaintiff Olympia Housing,
Inc. and defendant Ma. NelidaGalvez-Ycasiano entered into a Contract to Sell, whereby the
former agreed to sell to the latter condominium unit. Pursuant to the Contract to Sell, defendant
Ma. Nelida Galvez-Ycasiano made a reservation/deposit in the amount of P100,000.00 on July
17, 1984and 50% down payment in the amount of P1,070,000.00 on July 19, 1984.Defendants
made several payments in cash and thru credit memos issued by plaintiff representing plane
tickets bought by plaintiff from defendant Panasiatic Travel Corp., which is owned by defendant
Ma. Nelida Galvez-Ycasiano, who credited/offset the amount of the said plane tickets to
defendant’s account due to plaintiff.

Plaintiff alleged that far from complying with the terms and conditions of said Contract to Sell,
defendants failed to pay the corresponding monthly installments which as of June 2,
1988 amounted to P1,924,345.52. Demand to pay the same was sent to defendant Ma. Nelida
Galvez-Ycasiano, but the latter failed to settle her obligation. For failure of defendant to pay her
obligation plaintiff allegedly rescinded the contract by a Notarial Act of Rescission. At present, the
subject condominium unit is being occupied by defendant Panasiatic Travel Corp., hence the suit
for Recovery of Possession (Accion Publiciana) with prayer for attorney’s fees, exemplary
damages and reasonable rentals for the unit from July 28,1988 at the rate of P32,100.00per month
until the condominium unit is finally vacated. Defendant Ma. Nelida Galvez-Ycasiano, while
admitting the existence of the contract to sell, interposed the defense that she has made
substantialpayments of the purchase price of the subject condominium unit amountingto
P1,964,452.82 in accordance with the provisions of the contract to sell;that she decided to stop
payment of the purchase price in the meantimebecause of substantial differences between her
and the plaintiff in thecomputation of the balance of the purchase price. The Regional Trial Court
dismissed the complaint, having been prematurelyfiled without complying with
RA6552.Respondents tendered the amount of P4,304,026.53 to petitioner via Metrobank
Cashier’s Check. Petitioner refused to accept the payment,constraining respondents to consign
at the disposal of the court.
Both parties appealed the judgment of the trial court. In its now questioneddecision of 11 June
1999, the appellate court sustained the trial court

ISSUES:

Effect of the filing of the complaint and the notarial act of rescission attached thereto vis-à-vis the
requirements of r.a. 6552

RULING

The notarial act of rescission must be accompanied by the refund of the cash surrender value.

x x x The actual cancellation of the contract can only be deemed to take place upon the expiry
of a 30-day period following the receipt by the buyer of the notice of cancellation or demand for
rescission by a notarial act and the full payment of the cash surrender value.

A. Legality of sale
1. RA 6425 (Narcotics) THE DANGEROUS DRUGS ACT OF 1972

Section 1. Short Title. This Act shall be known and cited as "The Dangerous Drugs Act of 1972."

Definition of terms

Section 2. Definitions. As used in this Act, the term:

(a) "Administer" refers to the act of introducing any dangerous drug into the body of any person,
with or without his knowledge, by injection, ingestion or other means or of committing any act of
indispensable assistance to a person in administering a dangerous drug to himself;
(b) "Board" refers to the Dangerous Drugs Board created under Section 35, Article VIII of this Act;
(c) "Centers" refers to any of the treatment and rehabilitation centers for drug dependents
referred to in Section 34, Article VII of this Act;
(d) "Cultivate or culture" means the act of knowingly planting, growing, raising or permitting the
planting, growing or raising of any plant which is the source of a prohibited drug;
(e) "Dangerous drugs" refers to either:
(1) "Prohibited drug," which includes opium and its active components and derivatives, such as
heroin and morphine; coca leaf and its derivatives, principally cocaine; alpha and beta eucaine;
hallucinogenic drugs, such as mescaline, lysergic acid diethylamide (LSD) and other substances
producing similar effects; Indian hemp and its derivates; all preparations made from any of the
foregoing; and other drugs, whether natural or synthetic, with the physiological effects of a
narcotic drug; or
(2) "Regulated drug," which includes self-inducing sedatives, such as secobarbital, phenobarbital,
pentobarbital, barbital, amobarbital and any other drug which contains a salt or a derivative of a
salt of barbituric acid; any salt, isomer or salt of an isomer, of amphetamine, such as benzedrine
or dexedrine, or any drug which produces a physiological action similar to amphetamine; and
hypnotic drugs, such as methaqualone or any other compound producing similar physiological
effects;
(f) "Deliver" refers to a person's act of knowingly passing a dangerous drug to another, personally
or otherwise, and by any means, with or without consideration;
(g) "Drug dependence" means a state of psychic or physical dependence, or both, on a dangerous
drug, arising in a person following administration or use of that drug on a periodic or continuous
basis;
(h) "Employee" of a prohibited drug den, dive or resort includes the caretaker, helper, watchman,
lookout and other persons employed by the operator of a prohibited drug den, dive or resort
where any prohibited drug is administered, delivered, distributed, sold or used, with or without
compensation, in connection with the operation thereof;
(i) "Indian hemp," otherwise known as "Marijuana," embraces every kind and class of the plant
cannabis sativa L. from which the resin has not been extracted, including cannabis americana,
hashish, bhang, guaza, churrus and ganjah, and embraces every kind, class and character of Indian
hemp, whether dried or fresh, flowering or fruiting tops of the pistillate plant, and all its
geographic varieties, whether as a reefer, resin, extract, tincture or in any form whatsoever;
(j) "Manufacture" means the production, preparation, compounding or processing of a dangerous
drug either directly or indirectly or by extraction from substances of natural origin, or
independently by means of chemical synthesis or by a combination of extraction and chemical
synthesis, and shall include any packaging or repackaging of such substance or labeling or
relabelling of its container; except that such term does not include the preparation, compounding,
packaging, or labeling of a drug or other substance by a duly authorized practitioner as an incident
to his administration or dispensing of such drug or substance in the course of his professional
practice;
(k) "Narcotic drug" refers to any drug which produces insensibility, stupor, melancholy or dullness
of mind with delusions and which may be habit-forming, and shall include opium, opium
derivatives and synthetic opiates;
(l) "Opium" refers to the coagulated juice of the opium poppy (papaver somniferum) and
embraces every kind and class of opium, whether crude or prepared; the ashes or refuse of the
same; narcotic preparations thereof or therefrom; morphine or any alkaloid of opium;
preparations in which opium, morphine or any alkaloid of opium enters as an ingredient; opium
poppy straw; and leaves or wrappings of opium leaves, whether prepared for use or not;
(m) "Pusher" refers to any person who sells, administers, delivers, or gives away to another, on
any terms whatsoever, or distributes, dispatches in transit or transports any dangerous drug or
who acts as a broker in any of such transactions, in violation of this Act;
(n) "School" includes any university, college, or institution of learning, regardless of the course or
courses it offers;
(o) "Sell" means the act of giving a dangerous drug, whether for money or any other material
consideration;
(p) "Use" refers to the act of injecting, intravenously or intramuscularly, or of consuming, either
by chewing, smoking, sniffing, eating, swallowing, drinking, or otherwise introducing into the
physiological system of the body, any of the dangerous drugs.

ARTICLEII

Prohibited Drugs
Section 3. Importation of Prohibited Drugs. The penalty of imprisonment ranging from fourteen years and
one day to life imprisonment and a fine ranging from fourteen thousand to thirty thousand pesos shall be
imposed upon any person who, unless authorized by law, shall import or bring into the Philippines any
prohibited drug.

Section 4. Sale, Administration, Delivery, Distribution and Transportation of Prohibited Drugs. The penalty
of imprisonment ranging from twelve years and one day to twenty years and a fine ranging from twelve
thousand to twenty thousand pesos shall be imposed upon any person who, unless authorized by law,
shall sell, administer, deliver, give away to another, distribute, dispatch in transit or transport any
prohibited drug, or shall act as a broker in any such transactions. In case of a practitioner, the additional
penalty of the revocation of his license to practice his profession shall be imposed. If the victim of the
offense is a minor, the maximum of the penalty shall be imposed.

Should a prohibited drug involved in any offense under this Section, be the proximate cause of the death
of a victim thereof, the penalty of life imprisonment to death and a fine ranging from twenty thousand to
thirty thousand pesos shall be imposed upon the pusher.

Section 5. Maintenance of a Den, Dive or Resort for Prohibited Drug Users. The penalty of imprisonment
ranging from twelve years and one day to twenty years and a fine ranging from twelve thousand to twenty
thousand pesos shall be imposed upon any person or group of persons who shall maintain a den, dive or
resort where any prohibited drug is used in any form.

The maximum of the penalty shall be imposed in every case where a prohibited drug is administered,
delivered or sold to a minor who is allowed to use the same in such place.

Should a prohibited drug be the proximate cause of the death of a person using the same in such den,
dive or resort, the penalty of life imprisonment to death and a fine ranging from twenty thousand to thirty
thousand pesos shall be imposed on the maintainer.

Section 6. Employees and Visitors of Prohibited Drug Den. The penalty of imprisonment ranging from two
years and one day to six years and a fine ranging from two thousand to six thousand pesos shall be
imposed upon:

(a) Any employee of a prohibited drug den, dive or resort; and


(b) Any person who, not being included in the provisions of the next preceding, paragraph, shall
knowingly visit any prohibited drug den, dive or resort.
Section 7. Manufacture of Prohibited Drugs. The penalty of life imprisonment to death and a fine ranging
from twenty thousand to thirty thousand pesos shall be imposed upon any person who, unless authorized
by law, shall engage in the manufacture of any prohibited drug.

Section 8. Possession or Use of Prohibited Drugs. The penalty of imprisonment ranging from six years and
one day to twelve years and a fine ranging from six thousand to twelve thousand pesos shall be imposed
upon any person who, unless authorized by law, shall possess or use any prohibited drug, except Indian
hemp as to which the next following paragraph shall apply.
The penalty of imprisonment ranging from six months and one day to six years and a fine ranging from six
hundred to six thousand pesos shall be imposed upon any person who, unless authorized by law, shall
possess or use Indian hemp.

Section 9. Cultivation of Plants Which are Sources of Prohibited Drugs. The penalty of imprisonment
ranging from fourteen years and one day to life imprisonment and a fine ranging from fourteen thousand
to thirty thousand pesos shall be imposed upon any person who shall cultivate or culture Indian hemp,
opium poppy ( papaver somniferum) and other plants from which any prohibited drug may be
manufactured.

The land on which any of said plants is cultivated or cultured shall be confiscated and escheated to the
State, unless the owner thereof can prove that he did not know of such cultivation or culture despite the
exercise of due diligence on his part.

Section 10. Records of Prescriptions, Sales, Purchases, Acquisitions and/or Deliveries of Prohibited
Drugs. The penalty of imprisonment ranging from one year and one day to six years and a fine ranging
from one thousand to six thousand pesos shall be imposed upon any pharmacist, physician, dentist,
veterinarian, manufacturer, wholesaler, importer, distributor, dealer or retailer who violates or fails to
comply with the provisions of Section 25 of this Act, if the violation or failure involves a prohibited drug.

The additional penalty of the revocation of his license to practice his profession, in case of a practitioner,
or of his or its business license, in case of a manufacturer, seller, importer, distributor or dealer, shall be
imposed.

Section 11. Unlawful Prescription of Prohibited Drugs. The penalty of imprisonment ranging from eight
years and one day to twelve years and a fine ranging from eight thousand to twelve thousand pesos shall
be imposed upon any person who, unless authorized by law, shall make or issue a prescription or any
other writing purporting to be a prescription for any prohibited drug.

Section 12. Unnecessary Prescription of Prohibited Drugs. The penalty of imprisonment ranging from four
years and one day to twelve years and a fine ranging from four thousand to twelve thousand pesos and
the additional penalty of the revocation of his license to practice shall be imposed upon any physician or
dentist who shall prescribe any prohibited drug for any person whose physical or physiological conditions
does not require the use thereof.

Section 13. Possession of Opium Pipe and Other Paraphernalia for Prohibited Drugs. The penalty of
imprisonment ranging from six months and one day to four years and a fine ranging from six hundred to
four thousand pesos shall be imposed upon any person who, unless authorized by law, shall possess or
have under his control any opium, pipe, equipment, instrument, apparatus or other paraphernalia fit or
intended for smoking, consuming, administering, injecting, ingesting or otherwise using opium or any
other prohibited drug.

The possession of such opium pipe, equipment, instrument, apparatus or other paraphernalia, fit or
intended for any of the purposes enumerated in this Section shall be prima facie evidence that the
possessor has smoked, consumed, administered to himself, injected, ingested or used a prohibited drug.
ARTICLE III
Regulated Drugs

Section 14. Importation of Regulated Drugs. The penalty of imprisonment ranging from six years and one
day to twelve years and a fine ranging from six thousand to twelve thousand pesos shall be imposed upon
any person who, unless authorized by law, shall import or bring any regulated drug into the Philippines.

Section 15. Sale, Administration, Dispension, Delivery, Transportation and Distribution of Regulated
Drugs. The penalty of imprisonment ranging from six years and one day to twelve years and a fine ranging
from six thousand to twelve thousand pesos shall be imposed upon any person who, unless authorized by
law, shall sell, dispense, deliver, transport or distribute any regulated drug. In case of a practitioner, the
maximum of the penalty herein prescribed and the additional penalty of the revocation of his license to
practice his profession shall be imposed.

Section 16. Possession or Use of Regulated Drugs. The penalty of imprisonment ranging from six months
and one day to four years and a fine ranging from six hundred to four thousand pesos shall be imposed
upon any person who shall possess or use any regulated drug without the corresponding license or
prescription.

Section 17. Records of Prescriptions, Sales, Purchases, Acquisitions and/or Deliveries of Regulated
Drugs. The penalty of imprisonment ranging from six months and one day to four years and a fine ranging
six hundred to four thousand pesos shall be imposed upon any pharmacist, physician, dentist,
veterinarian, manufacturer, wholesaler, importer, distributor, dealer or retailer who violates or fails to
comply with the provisions of Section 25 of this Act, if the violation or failure involves a regulated drug.

Section 18. Unlawful Prescription of Regulated Drugs. The penalty of imprisonment ranging from four
years and one day to eight years and a fine ranging from four thousand to eight thousand pesos shall be
imposed upon any person who, unless authorized by law, shall make or issue a prescription for any
regulated drug.

Section 19. Unnecessary Prescription of Regulated Drugs. The penalty of imprisonment ranging from six
months and one day to four years and a fine ranging from six hundred to four thousand pesos and the
additional penalty of the revocation of his license to practice shall be imposed upon any physician or
dentist who shall prescribe any regulated drug for any person whose physical or physiological condition
does not require the use thereof.

ARTICLE IV
Provisions of Common Application to Offenses Penalized under Articles II and III

Section 20. Confiscation and Forfeiture of the Proceeds or Instruments of the Crime. Every penalty imposed
for the unlawful importation, sale, administration, delivery, transportation or manufacture of dangerous
drugs, the cultivation of plants which are sources of prohibited drugs and the possession of any opium
pipe and other paraphernalia for prohibited drugs shall carry with it the confiscation and forfeiture, in
favor of the Government, of the proceeds of the crime and the instruments or tools with which it was
committed, unless they are the property of a third person not liable for the offense, but those which are
not of lawful commerce shall be ordered destroyed. Dangerous drugs and plant-sources of prohibited
drugs so confiscated and forfeited in favor of the Government shall be turned over to the Board for safe-
keeping and proper disposal.

Section 21. Attempt and Conspiracy. The same penalty prescribed by this Act for the commission of the
offense shall be imposed in case of any attempt or conspiracy to commit the same in the following cases:

a) importation of dangerous drugs;


b) sale, administration, delivery, distribution and transportation of dangerous drugs;
c) maintenance of a den, diver or resort for prohibited drug users;
d) manufacture of dangerous drugs; and
e) cultivation or culture of plants which are sources of prohibited drugs.
Section 22. Additional Penalty if Offender is an Alien. In addition to the penalties therein prescribed, any
alien who violates any of the provisions of Articles II and III of this Act shall be deported without further
proceedings immediately after service of sentence.

Section 23. Criminal Liability of Officers of Partnerships, Corporations, Associations and other Juridical
Persons; Liability in Cases Where Vehicles, Vessels or Aircraft or Other Instruments are used to Commit a
Crime. In case any violation of this Act is committed by a partnership, corporation, association or any
juridical person, the partner, president, director or manager who consents to or knowingly tolerates such
violation shall be held criminally liable as a co-principal.

The penalty provided for the offense under this Act shall be imposed upon the partner, president, director,
manager, officer or stockholder who knowingly authorizes, tolerates or consents to the use of a vehicle,
vessel, or aircraft as an instrument in the importation, sale, delivery, distribution or transportation of
dangerous drugs, or to the use of their equipment, machines or other instruments in the manufacture of
any dangerous drug, if such vehicle, vessel, aircraft, equipment or other instrument is owned by or under
the control or supervision of the partnership, corporation, association or juridical entity to which they are
affiliated.

Section 24. Penalty for Government Officials and Employees and Officers and Members of Police Agencies
and the Armed Forces. The maximum penalties provided for in Sections 3, 4, 5, 6, 8, 9, 11 and 12 of Article
II and Sections 14, 15, 16, and 19 of Article III shall be imposed if those found guilty of any of the said
offenses are government officials, employees or officers, including members of police agencies and the
armed forces.

Section 25. Records Required of Pharmacists, Physicians, Veterinarians or Dentists Dispensing or


Prescribing Dangerous Drugs, and of Importers, Manufacturers, Wholesalers, Distributors, Dealers and
Retailers of Dangerous Drugs. (a) Every pharmacist dealing in dangerous drugs shall maintain and keep an
original record of sales, purchases, acquisitions and deliveries of dangerous drugs, indicating therein the
license number and address of the pharmacist; the name, address and license of the manufacturer,
importer or wholesaler from whom dangerous drugs have been purchased; the quantity and name of the
dangerous drugs so purchased or acquired; the date of acquisition or purchase; the name, address and
class A residence certificate number of the buyer; the serial number of the prescription and the name of
the doctor, dentist, veterinarian or practitioner issuing the same; the quantity and name of the dangerous
drug so sold or delivered; and the date of sale or delivery.
A certified true copy of such record covering a period of three calendar months, duly signed by the
pharmacist or the owner of the drug store or pharmacy, shall be forwarded to the city or municipal health
officer within fifteen days following the last day of every quarter of each year.

The city or municipal health officer shall forward such records to the Board within fifteen (15) days from
receipt thereof.

(b) A physician, dentist, veterinarian or practitioner authorized to prescribe any dangerous drug
shall issue the prescription therefor in one original and two duplicate copies. The original, after
the prescription has been filled, shall be retained by the pharmacist for a period of one year from
the date of sale or delivery of such drug. One copy shall be retained by the buyer or by the person
to whom the drug is delivered until such drug is consumed, while the second copy shall be
retained by the person issuing the prescription.
For purposes of this Act, all prescriptions issued by physicians, dentists, veterinarians or
practitioners shall be made out on forms exclusively issued by and obtained from the Board. Such
forms shall be made of a special kind of paper and shall be distributed in such quantities and
contain such information and other data as the Board may, by rules and regulations, require. Such
forms shall not be issued by the Board or any of its employees except to license physicians,
dentists, veterinarians and practitioners in such quantities, as the Board may authorize. In such
emergency cases, however, as the Board may specify in the public interest, prescriptions need
not be accomplished on such forms. The prescribing physician, dentist, veterinarian or
practitioner shall, within three days after issuing such prescription, inform the Board of the same
in writing. No prescription once issued may be refilled.
(c) All manufacturers, wholesalers, distributors, importers, dealers and retailers of dangerous
drugs shall keep a record of all sales, purchases, acquisitions and deliveries of dangerous drugs,
the names, addresses and licenses of the persons from whom the dangerous drugs were
purchased or acquired or to whom such drugs were sold or delivered, the name and quantity of
the drugs and the date of the transaction.
Section 26. Penalty for a Person Importing Dangerous Drugs by Making Use of a Diplomatic Passport. The
penalty of life imprisonment and a fine of thirty thousand pesos shall be imposed upon any person who,
unless authorized under this Act, shall import or bring into the Philippines any dangerous drug by making
use of a diplomatic passport, diplomatic facilities, or any other means involving his official status intended
to facilitate the unlawful entry of dangerous drugs. In addition, the diplomatic passport shall be
confiscated and canceled.

Section 27. Criminal Liability of Possessor or User of Dangerous Drugs During Social Gatherings. The
maximum of the penalties provided for in Section 8, Article II and Section 16, Article III of this Act shall be
imposed upon any person found possessing or using any dangerous drug during a party or at a social
gathering or in a group of at least five persons possessing or using such drugs.

2. ACT NO. 2590


AN ACT FOR THE PROTECTION OF GAME AND FISH

SEC. 7.A permit may be granted by the Secretary of the Interior to any person of good repute, of the age
of fifteen years or upward permitting the holder thereof to collect specimens of protected animal life, or
the nests or eggs of protected birds, for scientific purposes only. Such a permit shall remain in force for a
period of one year only from the date of issue and shall not be transferable.
Upon proof that the holder of such a permit has taken or killed any protected creature or taken the nest
or eggs of any protected bird for other than a scientific purpose, he shall be subject to the same penalty
as if he had no permit.

3. ACT NO. 3983


– AN ACT TO PROTECT WILD FLOWERS AND PLANTS IN THE PHILIPPINE ISLANDS AND TO PRESCRIBE
CONDITIONS UNDER WHICH THEY MAY BE COLLECTED, KEPT, SOLD, EXPORTED, AND FOR OTHER
PURPOSES

Section 1. Except as provided in this Act, it shall be unlawful for any person in the Philippine Islands to
take collect, kill, mutilate, or have in his or her possession, living or dead, or to purchase, offer or expose
for sale, transport, ship, or export, alive or dead, any protected flowering plant, fern, orchid, lycopod or
club moss or other wild plants in the Philippines.

4. REPUBLIC ACT NO. 1288


AN ACT TO REGULATE THE PLANTING, GATHERING OR SELLING OF "TUBLI" AND OTHER POISONOUS
PLANTS AND TO PENALIZE ANY VIOLATION THEREOF

Section 1. No person shall plant, gather or sell "tubli" or other poisonous plants or the fruits thereof
without a permit duly issued by the Director of the Bureau of Plant Industry, or his duly authorized
representative.
A nominal fee may be charged for the issuance of such permit.
Section 2. The Director of Plant Industry shall promulgate such rules and regulations as he may deem
proper and necessary to regulate the planting, gathering or selling of "tubli" and other poisonous plants
or the fruits thereof.
Section 3. Any person who sells "tubli" or other poisonous plants or the fruits thereof shall immediately
submit a report of such sale to the Chief of Police stating the name of the purchaser, quantity sold, the
purchase price, and the lawful use intended for the same, who shall in turn forward the same to the
Director of Plant Industry.
Section 4. Any violation of the provisions of this Act shall be punished by a fine of not more than one
hundred pesos or by imprisonment for not more than fifteen days, or by both such fine and imprisonment,
in the discretion of the court.
Section 5. This Act shall take effect upon its approval.

5. REPUBLIC ACT NO. 428

REPUBLIC ACT NO. 428 – AN ACT TO DECLARE ILLEGAL THE POSSESSION, SALE OR DISTRIBUTION OF
FISH OR OTHER AQUATIC ANIMALS STUPEFIED, DISABLED OR KILLED BY MEANS OF DYNAMITE OR
OTHER EXPLOSIVE OR TOXIC SUBSTANCES AND PROVIDING PENALTIES THEREFOR
Section 1. It shall be unlawful for any person knowingly to possess, sell or distribute, in any place and
manner, fish or other aquatic animals stupefied, disabled or killed by means of dynamite or other
explosive or toxic substances.
6. ACT NO. 2255

AN ACT PROHIBITING MANUFACTURE, POSSESSION, AND SALE OF DYNAMITE AND OTHER EXPLOSIVES
WITHOUT A SPECIAL PERMIT, PROVIDING A PENALTY THEREFORE, AND FOR OTHER PURPOSES.

By authority of the United States, be it enacted by the Philippine Legislature, that:

Section 1. The manufacture, distribution, storage, use or possession of gunpowder, dynamite, explosives,
blasting supplies, or ingredients thereof, except in accordance with the provisions hereof and of Act
Numbered Fourteen hundred and ninety-nine,1 as amended, is hereby declared illegal: Provided,
however, That nothing herein contained shall be construed to prevent the manufacture, purchase,
importation or possession of dynamite, explosives or their ingredients by the Army and Navy of the United
States of America: Provided, further, That the Chief of Constabulary may, upon application, under such
rules and regulations as may be promulgated by him and approved by the Secretary of the Interior2 issue
licenses as follows:
(a) Dealer’s license, authorizing the importation, purchase, possession, sale, transfer, and general business
handling gunpowder, dynamite, explosives or their ingredients.
(b) Manufacturer’s license, authorizing the manufacture of gunpowder, dynamite, explosives, or their
ingredients, or the manufacture and sale of fireworks for use on fiesta days, etc.
(c) Purchaser’s license, authorizing the purchase and possession of dynamite, explosives or their
ingredients for use in mines, quarries, road construction, wrecking and for use in any other legal and lawful
occupation.
(d) Foreman’s license, authorizing the purchase and possession of dynamite, explosives, or their
ingredients by workmen in mines, quarries, road construction, wrecking or for use in any other legal and
lawful public or private works.

7. PRESIDENTIAL DECREE No. 9 October 2, 1972

DECLARING VIOLATIONS OF GENERAL ORDERS NO. 6 AND NO. 7 DATED SEPTEMBER 22, 1972 AND
SEPTEMBER 23, 1972, RESPECTIVELY, TO BE UNLAWFUL AND PROVIDING PENALTIES THEREFOR.

WHEREAS, pursuant to Proclamation No. 1081 dated September 21, 1972, the Philippines has been placed
under a state of martial law;

WHEREAS, by virtue of said Proclamation No. 1081, General Order No. 6 dated September 22, 1972 and
General Order No. 7 dated September 23, 1972, have been promulgated by me;

WHEREAS, subversion, rebellion, insurrection, lawless violence, criminally, chaos and public disorder
mentioned in the aforesaid Proclamation No. 1081 are committed and abetted by the use of firearms,
explosives and other deadly weapons;

NOW, THEREFORE, I, FERDINAND E. MARCOS, Commander-in-Chief of all the Armed Forces of the
Philippines, in order to attain the desired result of the aforesaid Proclamation No. 1081 and General
Orders Nos. 6 and 7, do hereby order and decree that:
1. Any violation of the aforesaid General Orders Nos. 6 and 7 is unlawful and the violator shall, upon
conviction suffer:lawphil.net

(a) The mandatory penalty of death by a firing squad or electrocution as a military


court/tribunal/commission may direct, if the firearm involved in the violation is unlicensed and is attended
by assault upon, or resistance to persons in authority or their agents in the performance of their official
functions resulting in death to said persons in authority or their agent; of if such unlicensed firearm is used
in the commission of crimes against persons, property or chastity causing the death of the victim, or used
in violation of any other General Orders and/or Letters of Instructions Promulgated under said
Proclamation No. 1081;]

(b) The penalty of imprisonment ranging from twenty years to life imprisonment as a Military
Court/Tribunal/Commission may direct, when the violation is not attended by any of the circumstances
enumerated under the preceding paragraph;

(c) The penalty provided for in the preceding paragraphs shall be imposed upon the owner,
president, manager, members of the board of directors or other responsible officers of any public or
private firms, companies, corporations or entities who shall willfully or knowingly allow any of the firearms
owned by such firm, company, corporation or entity concerned to be used in violation of said General
Orders No. 6 and 7.

2. It is unlawful to possess deadly weapons, including hand-grenades, rifle grenades and other explosives,
including, but not limited to, "pill box bombs," "molotov cocktail bombs," "fire bombs," or other
incendiary device consisting of any chemical, chemical compound, or detonating agents containing
combustible units or other ingredients in such proportion, quantity, packing, or bottling that ignites by
fire, by friction, by concussion, by percussion, or by detonation of all or part of the compound or mixture
which may cause such a sudden generation of highly heated gases that the resultant gaseous pressures
are capable of producing destructive effects on contiguous objects or of causing injury or death of a
person; and any person convicted thereof shall be punished by imprisonment ranging from ten to fifteen
years as a Military Court/Tribunal/Commission may direct.

3. It is unlawful to carry outside of residence any bladed, pointed or blunt weapon such as "fanknife,"
"spear," "dagger," "bolo," "balisong," "barong," "kris," or club, except where such articles are being used
as necessary tools or implements to earn a livelihood and while being sued in connection therewith; and
any person found guilty thereof shall suffer the penalty of imprisonment ranging from five to ten years as
a Military Court/Tribunal/Commission may direct.

4. When the violation penalized in the preceding paragraphs 2 and 3 is committed during the commission
of or for the purpose of committing, any other crime, the penalty shall be imposed upon the offender in
its maximum extent, in addition to the penalty provided for the particular offenses committed or intended
to be committed.

Done in the City of Manila, this 2nd day of October, in the year of Our Lord, nineteen hundred and seventy-
two.
8. REPUBLIC ACT NO. 4254
AN ACT PROVIDING FOR THE ESTABLISHMENT OF AN EMERGENCY HOSPITAL IN THE MUNICIPALITY OF
STA. LUCIA, PROVINCE OF ILOCOS SUR, TO BE KNOWN AS THE STA. LUCIA EMERGENCY HOSPITAL,
AND AUTHORIZING THE APPROPRIATION OF FUNDS THEREFOR

Section 1. There shall be established, under the direct supervision of the Director of Medical Services, an
emergency hospital in the Municipality of Sta. Lucia, Province of Ilocos Sur, to be known as the Sta. Lucia
Emergency Hospital.
Section 2. The sum of two hundred fifty thousand pesos is hereby authorized to be appropriated out of
any funds in the National Treasury not otherwise appropriated, for the establishment, operation and
maintenance of said hospital during the fiscal year nineteen hundred sixty-six, including the purchase of
the site and the construction of buildings thereof. Thereafter, such sum as may be needed for its operation
and maintenance shall be included in the annual General Appropriations Act.
Section 3. This Act shall take effect upon its approval.
Approved, June 19, 1965.

9. RA 8550 (fish and fishery species illegally caught)

Commercial Fishing - the taking of fishery species by passive or active gear for trade, business or profit
beyond subsistence or sports fishing, to be further classified as:

1. Small scale commercial fishing - fishing with passive or active gear utilizing fishing vessels of
3.1 gross tons (GT) up to twenty (20) GT;
2. Medium scale commercial fishing - fishing utilizing active gears and vessels of 20.1 GT up to
one hundred fifty (150) GT; and
3. Large scale commercial fishing - fishing utilizing active gears and vessels of more than one
hundred fifty (150) GT.
Commercial scale - a scheme of producing a minimum harvest per hectare per year of milkfish or other
species including those raised in pens, cages, and tanks to be determined by the Department in
consultation with the concerned sectors.

SEC. 26. Commercial Fishing Vessel License and Other Licenses. - No person shall operate a commercial
fishing vessel, pearl fishing vessel or fishing vessel for scientific, research or educational purposes, or
engage in any fishery activity, or seek employment as a fishworker or pearl driver without first securing a
license from the Department, the period of which shall be prescribed by the Department: Provided, That
no such license shall be required of a fishing vessel engaged in scientific research or educational purposes
within Philippine waters and pursuant to an international agreement of which the Philippines is a
signatory and which agreement defines the status, privileges and obligations of said vessel and its crew
and the non-Filipino officials of the international agency under which vessel operates: Provided further,
That members of the crew of a fishing vessel used for commercial fishing except the duly licensed and/or
authorized patrons, marine engineers, radio operators and cooks shall be considered as fisherfolk:
Provided furthermore, That all skippers/master fishers shall be required to undertake an orientation
training on detection of fish caught by illegal means before they can be issued their fishworker
licenses: Provided finally, That the large commercial fishing vessel license herein authorized to be granted
shall allow the licensee to operate only in Philippine waters seven (7) or more fathoms deep, the depth
to be certified by the NAMRIA, and subject to the conditions that may be stated therein and the rules and
regulations that may be promulgated by the Department.

SEC. 27. Persons Eligible for Commercial Fishing Vessel License. - No commercial fishing vessel license shall
be issued except to citizens of the Philippines, partnership or to associations, cooperatives or corporations
duly registered in the Philippines at least sixty percent (60%) of the capital stock of which is owned by
Filipino citizens. No person to whom a license has been issued shall sell, transfer or assign, directly or
indirectly, his stock or interest therein to any person not qualified to hold a license. Any such transfer, sale
or assignment shall be null and void and shall not be registered in the books of the association, cooperative
or corporation.
For purposes of commercial fishing, fishing vessel owned by citizens of the Philippines, partnerships,
corporations, cooperatives or associations qualified under this section shall secure Certificates of
Philippine Registry and such other documents as are necessary for fishing operations from the concerned
agencies: Provided, That the commercial fishing vessel license shall be valid for a period to be determined
by the Department.
SEC. 28. Commercial Fishing Vessel Registration. - The registration, documentation, inspection and
manning of the operation of all types of fishing vessels plying Philippine waters shall be in accordance with
existing laws, rules and regulations.

SEC. 61. Importation and Exportation of Fishery Products. -


a. Export of fishery products shall be regulated whenever such exportation affects domestic food
security and production: Provided, that the exportation of live fish shall be prohibited except those
which are hatched or propagated in accredited hatcheries and ponds.
b. To protect and maintain the local biodiversity or ensure the sufficiency of domestic supply, spawners,
breeders, eggs and fry of bangus, prawn and other endemic species, as may be determined by the
Department, shall not be exported or caused to be exported by any person;
c. Fishery products may be imported only when the importation has been certified as necessary by the
Department, in consultation with the FARMC, and all the requirements of this Code, as well as all
existing rules and regulations have been complied with: Provided, That fish imports for
canning/processing purposes only may be allowed without the necessary certification, but within the
provisions of Section 61 (d) of this Code; and
d. No person, shall import and/or export fishery products of whatever size, stage or form for any
purpose without securing a permit from the Department.
10. RA 9147 (wildlife)

AN ACT PROVIDING FOR THE CONSERVATION AND PROTECTION OF WILDLIFE RESOURCES AND THEIR
HABITATS, APPROPRIATING FUNDS THEREFOR AND FOR OTHER PURPOSES
ARTICLE ONE
General Provision

Section 1. Title. This act shall be known as the "Wildlife Resources Conservation and Protection Act."

Section 2. Declaration of Policy. It shall be the policy of the State to conserve the country's wildlife
resources and their habitats for sustainability. In the pursuit of this policy, this Act shall have the following
objectives:

(a) to conserve and protect wildlife species and their habitats to promote ecological balance and enhance
biological diversity;

(b) to regulate the collection and trade of wildlife;

(c) to pursue, with due regard to the national interest, the Philippine commitment to international
conventions, protection of wildlife and their habitats; and

(d) to initiate or support scientific studies on the conservation of biological diversity.

Section 3. Scope of Application. The provisions of this Act shall be enforceable for all wildlife species found
in all areas of the country, including protected areas under Republic Act No. 7586, otherwise known as
the National Integrated Protected Areas System (NIPAS) Act, and critical habitats. This Act shall also apply
to exotic species which are subject to trade, are cultured, maintained and/or bred in captivity or
propagated in the country.

Section 4. Jurisdiction of the Department of Environment and Natural Resources and the Department of
Agriculture. The Department of Environment and Natural Resources (DENR) shall have jurisdiction over
all terrestrial plant and animal species, all turtles and tortoises and wetland species, including but not
limited to crocodiles, waterbirds and all amphibians and dugong. The Department of Agriculture (DA) shall
have jurisdiction over all declared aquatic critical habitats, all aquatic resources including but not limited
to all fishes, aquatic plants, invertebrates and all marine mammals, except dugong. The secretaries of the
DENR and the DA shall review, and by joint administrative order, revise and regularly update the list of
species under their respective jurisdiction. In the Province of Palawan, jurisdiction herein conferred is
vested to the Palawan Council for Sustainable Development pursuant to Republic Act No. 7611.

Section 6. Wildlife Information. All activities, as subsequently manifested under this Chapter, shall be
authorized by the Secretary upon proper evaluation of best available information or scientific data
showing that the activity is, or for a purpose, not detrimental to the survival of the species or subspecies
involved and/or their habitat. For this purpose, the Secretary shall regularly update wildlife information
through research.
Section 7. Collection of Wildlife. Collection of wildlife may be allowed in accordance with Section 6 of this
Act:Provided, That in the collection of wildlife, appropriate and acceptable wildlife collection techniques
with least or no detrimental effects to the existing wildlife populations and their habitats shall, likewise,
be required: Provided, further, That collection of wildlife by indigenous people may be allowed for
traditional use and not primarily for trade: Provided, furthermore, That collection and utilization for said
purpose shall not cover threatened species:Provided, finally, That Section 23 of this Act shall govern the
collection of threatened species.
Section 8. Possession of Wildlife. - No person or entity shall be allowed possession of wildlife unless such
person or entity can prove financial and technical capability and facility to maintain said wildlife: Provided,
That the source was not obtained in violation of this Act.
Section 9. Collection and/or Possession of By-Products and Derivatives. By-products and derivatives may
be collected and/or possessed: Provided, That the source was not obtained in violation of this Act.
Section 10. Local Transport of Wildlife, By-Products and Derivatives. - Local transport of wildlife, by-
products and derivatives collected or possessed through any other means shall be authorized unless the
same is prejudicial to the wildlife and public health.
Section 11. Exportation and/or Importation of Wildlife. Wildlife species may be exported to or imported
from another country as may be authorized by the Secretary or the designated representative, subject to
strict compliance with the provisions of this Act and rules and regulations promulgated pursuant
thereto: Provided, That the recipient of the wildlife is technically and financially capable to maintain it.
Section 12. Introduction, Reintroduction or Restocking of Endemic or Indigenous Wildlife. - The
introduction, reintroduction or restocking of endemic and indigenous wildlife shall be allowed only for
population enhancement of recovery purposes subject to prior clearance from the Secretary of the
authorized representative pursuant to Section 6 of this Act. Any proposed introduction shall be subject to
a scientific study which shall focus on the bioecology. The proponent shall also conduct public
consultations with concerned individuals or entities.
Section 13. Introduction of Exotic Wildlife. - No exotic species shall be introduced into the country, unless
a clearance from the Secretary or the authorized representative is first obtained. In no case shall exotic
species be introduced into protected areas covered by Republic Act No. 7586 and to critical habitats under
Section 25 hereof.
In cases where introduction is allowed, it shall be subject to environmental impact study which shall focus
on the bioecology, socioeconomic and related aspects of the area where the species will be introduced.
The proponent shall also be required to secure the prior informed consent from the local stakeholders.
Section 14. Bioprospecting. - Bioprospecting shall be allowed upon execution of an undertaking by any
proponent, stipulating therein its compliance with and commitment(s) to reasonable terms and
conditions that may be imposed by the Secretary which are necessary to protect biological diversity.
The Secretary or the authorized representative, in consultation with the concerned agencies, before
granting the necessary permit, shall require that prior informed consent be obtained by the applicant
from the concerned indigenous cultural communities, local communities, management board under
Republic Act No. 7586 or private individual or entity. The applicant shall disclose fully the intent and scope
of the bioprospecting activity in a language and process understandable to the community. The prior
informed consent from the indigenous peoples shall be obtained in accordance with existing laws. The
action on the bioprospecting proposal by concerned bodies shall be made within a reasonable period.
Upon submission of the complete requirements, the Secretary shall act on the research proposal within a
reasonable period.
If the applicant is a foreign entity or individual, a local institution should be actively involved in the
research, collection and, whenever applicable and appropriate in the technological development of the
products derived from the biological and genetic resources.
Section 15. Scientific Researches on Wildlife. Collection and utilization of biological resources for scientific
research and not for commercial purposes shall be allowed upon execution of an undertaking/agreement
with and issuance of a gratuitous permit by the Secretary or the authorized representative: Provided, That
prior clearance from concerned bodies shall be secured before the issuance of the gratuitous
permit: Provided, further, That the last paragraph of Section 14 shall likewise apply.
Section 16. Biosafety - All activities dealing on genetic engineering and pathogenic organisms in the
Philippines, as well as activities requiring the importation, introduction, field release and breeding of
organisms that are potentially harmful to man and the environment shall be reviewed in accordance with
the biosafety guidelines ensuring public welfare and the protection and conservation of wildlife and their
habitats.
Section 17. Commercial Breeding or Propagation of Wildlife Resources. - Breeding or propagation of
wildlife for commercial purposes shall be allowed by the Secretary or the authorized representative
pursuant to Section 6 through the issuance of wildlife farm culture permit: Provided, That only progenies
of wildlife raised, as well as unproductive parent stock shall be utilized for trade: Provided, further: That
commercial breeding operations for wildlife, whenever appropriate, shall be subject to an environmental
impact study.
Section 18. Economically Important Species. The Secretary, within one (1) year after the effectivity of this
Act, shall establish a list of economically-important species. A population assessment of such species shall
be conducted within a reasonable period and shall be regularly reviewed and updated by the Secretary.
The Collection of certain species shall only be allowed when the results of the assessment show that,
despite certain extent of collection, the population of such species can still remain viable and capable of
recovering its numbers. For this purpose, the Secretary shall establish a schedule and volume of allowable
harvests.
Whenever an economically important species become threatened, any form of collection shall be
prohibited except for scientific, educational or breeding/propagation purposes, pursuant to the provisions
of this Act.
Section 19. Designation of Management and Scientific Authorities for International Trade in Endangered
Species of Wild Fauna and Flora. For the implementation of International agreement on international
trade in endangered species of wild fauna and fora, the management authorities for terrestrial and
aquatic resources shall be the Protected Areas and Wildlife Bureau (PAWB) of the DENR and the Bureau
of Fisheries and Aquatic Resources (BFAR) of the DA, respectively and that in the Province of Palawan the
implementation hereof is vested to the Palawan Council for Sustainable Development pursuant to
Republic Act No. 7611.
To provide advice to the management authorities, there shall be designated scientific authorities for
terrestrial and aquatic/marine species. For the terrestrial species, the scientific authorities shall be the
Ecosystems Research and Development Bureau (ERDB) of the DENR, the U.P. Institute of Biological
Sciences and the National Museum and other agencies as may be designated by the Secretary. For the
marine and aquatic species, the scientific authorities shall be the BFAR, the U.P. Marine Science Institute,
U.P. Visayas, Siliman University and the National Museum and other agencies as may be designated by
the Secretary: Provided, That in the case of terrestrial species, the ERDB shall chair the scientific
authorities, and in the case of marine and aquatic species, the U.P. Marine Science Institute shall chair the
scientific authorities.
Section 20. Authority of the Secretary to Issue Permits. - The Secretary or the duly authorized
representative, in order to effectively implement this Act, shall issue permits/certifications/clearances
with corresponding period of validity, whenever appropriate, which shall include but not limited to the
following:
(1) Wildlife farm or culture permit 3 to 5 years;

(2) Wildlife collector's permit 1 to 3 years;

(3) Gratuitous permit 1 year;

(4) Local transport permit 1 to 3 months; and


(5) Export/Import/Reexport permit 1 to 6 months.
These permits may be renewed subject to the guidelines issued by the appropriate agency and upon
consultation with concerned groups.
Section 21. Fees and Charges. - Reasonable fees and charges as may be determined upon consultation
with the concerned groups, and in the amount fixed by the Secretary shall be imposed for the issuances
of permits enumerated in the preceding section.
For the export of wildlife species, an export permit fee of not greater than three percentum (3%) of the
export value, excluding transport costs, shall be charged: Provided, however, That in the determination of
aforesaid fee, the production costs shall be given due consideration. Cutflowers, leaves and the like,
produced from farms shall be exempted from the said export fee: Provided, further, That fees and charges
shall be reviewed by the Secretary every two (2) years or as the need arises and revise the same
accordingly, subject to consultation with concerned sectors.

CHAPTER IV
ILLEGAL ACTS

Section 27. Illegal Acts. - Unless otherwise allowed in accordance with this Act, it shall be unlawful for any
person to willfully and knowingly exploit wildlife resources and their habitats, or undertake the following
acts;

(a) killing and destroying wildlife species, except in the following instances;

(i) when it is done as part of the religious rituals of established tribal groups or indigenous cultural
communities;
(ii) when the wildlife is afflicted with an incurable communicable disease;
(iii) when it is deemed necessary to put an end to the misery suffered by the wildlife;
(iv) when it is done to prevent an imminent danger to the life or limb of a human being; and
(v) when the wildlife is killed or destroyed after it has been used in authorized research or
experiments.
(b) inflicting injury which cripples and/or impairs the reproductive system of wildlife species;

(c) effecting any of the following acts in critical habitat(s)

(i) dumping of waste products detrimental to wildlife;


(ii) squatting or otherwise occupying any portion of the critical habitat;
(iii) mineral exploration and/or extraction;
(iv) burning;
(v) logging; and
(vi) quarrying
(d) introduction, reintroduction or restocking of wildlife resources;

(e) trading of wildlife;

(f) collecting, hunting or possessing wildlife, their by-products and derivatives;

(g) gathering or destroying of active nests, nest trees, host plants and the like;
(h) maltreating and/or inflicting other injuries not covered by the preceding paragraph; and

(i) transporting of wildlife.

II. CAPACITY TO BUY OR SELL (Article 1489-1492)


A. Article 1490

67. G.R. No. L-60174 February 16, 1983

EDUARDO FELIPE, HERMOGENA V. FELIPE AND VICENTE V. FELIPE, petitioners,


vs.
HEIRS OF MAXIMO ALDON, NAMELY: GIMENA ALMOSARA, SOFIA ALDON, SALVADOR
ALDON, AND THE HONORABLE COURT OF APPEALS, respondents.

FACTS

Maximo Aldon married Gimena Almosara in 1936. The spouses bought several pieces of land
and the lands were divided into three lots. Afterwards, Gimena Almosara sold the lots to the
spouses Eduardo Felipe and Hermogena V. Felipe. The sale was made without the consent of
her husband, Maximo. Later on, the heirs of Maximo Aldon, namely his widow Gimena and their
children Sofia and Salvador Aldon, filed a complaint in the Court of First Instance of Masbate
against the Felipes. The respondents asserted that they had orally mortgaged the same to the
defendants; and an offer to redeem the mortgage had been refused so they filed the complaint
in order to recover the three parcels of land. On the other hand, the defendants asserted that
they had acquired the lots from the plaintiffs by purchase and subsequent delivery to them. The
RTC ruled in favor of the defendants but the Court of Appeals set aside the decision of the lower
court contending that the defendants should surrender the lot to the plaintiffs.

ISSUE

Whether or not sale made by Gimena is a defective contract but of what category?

RULING

It is voidable. The voidable contracts are "[T]hose where one of the parties is incapable of giving
consent to the contract." In the instant case-Gimena had no capacity to give consent to the
contract of sale. The capacity to give consent belonged not even to the husband alone but to
both spouses.

The view that the contract made by Gimena is a voidable contract is supported by the legal
provision that contracts entered by the husband without the consent of the wife when such
consent is required, are annullable at her instance during the marriage and within ten years from
the transaction questioned. (Art. 173, Civil Code.)
Gimena's contract is not rescissible for in such contract all the essential elements are untainted
but Gimena's consent was tainted. Neither can the contract be classified as unenforceable
because it does not fit any of those described in Art. 1403 of the Civil Code. And finally, the
contract cannot be void or inexistent because it is not one of those mentioned in Art. 1409 of the
Civil Code. By process of elimination, it must perforce be a voidable contract.

The voidable contract of Gimena was subject to annulment by her husband only during the
marriage because he was the victim who had an interest in the contract. Gimena, who was the
party responsible for the defect, could not ask for its annulment. Their children could not
likewise seek the annulment of the contract while the marriage subsisted because they merely
had an inchoate right to the lands sold.

68. CASTILLO VS CASTILLO GR NO. L-18238 JANUARY 22, 1980

FACTS:

Ysidro C. Castillo died on October 15, 1947 leaving as his heirs his wife Enriqueta Katigbak and
their nine children Intestate proceedings for the settlement of the deceased's estate were
instituted and in January, 1948, Enriqueta was appointed administratrix. On June 21, 1948, she
filed an inventory of the properties as well as the obligations left by the deceased. However, on
November 11, 1948, Enriquetta submitted a project of partition, stating that the properties which
constituted the residuary hereditary estate of the deceased Ysidro are: (1) 38 parcels of land
which are properties brought to the marriage by the deceased Ysidro and (2) 19 parcels of land
which are conjugal properties of the spouses. Under said project of partition, all the 38 parcels of
land brought by the deceased into the marriage and 4 parcels of the conjugal properties were
adjudicated to all the nine children in equal shares, pro-indiviso; 8 parcels of the conjugal
properties were adjudicated to the widow as her share in the conjugal partnership and the
remaining 7 parcels given in usufruct to the widow. Despite approval of the project of partition and
the closing of the intestate proceedings, the properties remained under the administration of
Enriqueta.

On February 4, 1960, after an extrajudicial demand for partition failed, herein plaintiff-appellant
Zenaida K. Castillo, filed an action for partition with accounting and receivership against her
mother Enriqueta and siblings alleging that the project of partition omitted to include certain
properties acquired by the defendants using community funds in their acquisition, she prayed that
said properties be divided and partitioned accordingly.

ISSUE:

Whether or not lower court erred when it held that the money used in the purchase of 1/2 of the
land covered by Exhibit Plaintiff 2 below to the spouses Ysidro C. Castillo and Enriqueta Katigbak
and therefore, erred when it ordered that the same be partitioned as a conjugal partnership
property

HELD:
We find no error in the lower court's ruling that the money used in the purchase of ½ of the land
covered by Exhibit Plaintiff 2 belonged to the spouses Ysidro C. Castillo and Enriqueta Katigbak
and ordering that such land be partitioned as conjugal partnership property. We must here
underscore the specific rule in our civil law that all properties of the marriage shall be presumed
conjugal unless it be proved that they belong exclusively to either of the spouses. To rebut or
overcome this presumption, there must be clear, convincing and satisfactory proof that this
consideration of the sale was paid by only one of the spouses and from her exclusive or separate
property. The document in question, Exhibit Plaintiff 2, is a public instrument valid and binding
even as against third parties, the said deed of sale having been duly registered in the Register of
Deeds on June 23, 1947. The Register of Deeds has duly certified that said deed of sale was duly
recorded in the Registration Book under Act 3344. It needs no further argumentation to hold that
the defendants-appellants' gratuitous testimony cannot prevail over the recitals in said public
instrument, for it must be here reiterated that: A recital in a public instrument celebrated with all
the legal formalities under the safeguard of a notarial certificate is evidence against the parties
and a high degree of proof is necessary to overcome the legal presumption that such recital is
true. (Valencia v. Tantoco, et al., 99 Phil. 824).

69. UY SIU PIN VS CANTOLLAS 70 PHIL. 55 JUNE 20, 1940

FACTS:

Sps. Pedro Velegaño and Casimira Cantollas were indebted to El Hogar Filipino in the sum of
P2,000 secured by a mortgage on certain land. Upon the death of Pedro Velegaño in the same
year, there remained an unpaid balance of P1,300. Thus, Cantollas entered into a contract with
the petitioner wherein the latter will possess and enjoy the land in exchange of paying the former’s
debt to El Hogar. The payments thus made amounted to P600 up to July, 1933, when Uy Siu Pin
ceased to make further payments to El Hogar Filipino , as a result of which the latter foreclosed
the mortgage which it held on the land in question which was then in the possession of Uy Siu
Pin by reason of the agreement between him and Casimira and Blas already above referred to.
In the foreclosure sale, the land was bought by El Hogar Filipino for P1,062.66. The mortgage
debtors, Casimira and Blas, having failed to redeem the land within the statutory period, a final
deed of sale was issued in favor of El Hogar Filipino on December 24, 1934. On December 26,
1934 the latter sold the aforesaid land to Uy Siu Pin for P1,198.17. On December 28, 1934 Uy
Siu Pin in turn sold the land to his wife Chua Hue in consideration of P4,000. Transfer certificate
of title No. 8446 was issued in favor of Uy Siu Pin but it was later cancelled by a new transfer
certificate of title No. 8447, issued in the name of Chua Hue.

ISSUE:

Whether or not Court of Appeals erred in declaring null and void the sale of the land in question
in favor of the petitioner Chua Hue

HELD:

t cannot be contended with fairness that Uy Siu Pin acquired the land in his own right from El
Hogar Filipino after the latter had foreclosure the mortgage thereon, because the foreclosure was
brought about by his own failure to pay, as stipulated in the contract Exhibit A, the indebtedness
of Casimira and Blas. Neither could the latter be blamed for their failure to redeem the land from El
Hogar Filipino after the foreclosure sale, for the reason that they had the perfect right to rely on
their contract with Uy Siu Pin. In any event, whether we consider Uy Siu Pin as having purchased
the land from El Hogar Filipino in his own right, and not on behalf of Casimira Cantollas and Blas
Velegaño, he is still bound, under the circumstances of this case, to reconvey the same to
Casimira and Blas after the expiration of the period stipulated in the existing contract Exhibit A. It
is pretended, however, that the obligations assumed by Uy Siu Pin under Exhibit A have been
validly extinguished when "he returned the possession of the property in question to the debtors
Casimira Cantollas and Blas Velegaño." Against this pretension there is the finding of fact of the
Court of Appeals, not capable of review by us in the present proceedings, that Uy Siu Pin has
remained in possession of the land since April 2, 1932.

The sale from Uy Siu Pin to his wife Chua Hue is null and void not only because the former had
no right to dispose of the land in controversy in view of the existence of the contract but because
such sale comes within the prohibition of article 1458 of the Civil Code. It is not necessary to dwell
upon the sale from Chua Hue to the intervenor Juan Magbajos, as the latter has not appealed
from the decision complained of by the petitioners.

70. COOK VS MCMICKING 27 PHIL 10 MARCH 3, 1914

FACTS:

The complaint alleges that the plaintiff is the wife of Edward Cook; that she is the absolute owner
of a piece of square meters in area, and that the same is registered in her name under the Torrens
Law by certificate No. 130; that on the 15th of June 1912, a judgment was entered against Edward
Cook, plaintiff's husband, for the sum of P10,000 in the CFI; that by virtue of said judgment an
execution was issued on the 10th of July of that year and levied upon the land described in the
complaint as belonging to the plaintiff and that the same was advertised for sale on the 8th of
August at 9 o' clock in the morning. After other allegations appropriate to an action of this kind,
plaintiff prays from an junction permanently prohibiting the defendants from selling the said land.

It is claimed by the appellants that the so-called transfer from plaintiff's husband to her was
completely void under article 1458 of the Civil Code and that, therefore, the property still remains
the property of Edward Cook and subject to levy under execution against him.

ISSUE:

Whether or not the contention of the petitioner is tenable

HELD:

In our opinion the position taken by appellants is untenable. They are not in the position the
challenge the validity of the transfer, if it may be called such. They bore absolutely no relation to
the parties to the transfer at the time it occurred and had no rights or interest inchoate, present,
remote, or otherwise, in the property in question at the time the transfer occurred. Although certain
transfers from husband to wife or from wife to husband are prohibited in the article referred to,
such prohibition can be taken advantage of only two person who bear such a relation to the parties
making the transfer with their rights or interest. Unless such a relationship appears the transfer
cannot be attacked.

71. MEDINA VS CIR 1 SCRA 302 JANUARY 28, 1961

FACTS:

On 20 May 1944, Antonio Medina married Antonia Rodriguez. Before 1946, the spouses had
neither property nor business of their own. Later, however, Antonio acquired forest concessions
in the municipalities of San Mariano and Palanan, Isabela. In 1949, Antonia started to engage in
business as a lumber dealer, and up to around1952, Antonio sold to her almost all the logs
produced in his San Mariano concession. Antonia, in turn, sold in Manila the logs bought from her
husband through the same agent, Mariano Osorio. The proceeds were either received by Osorio
for Antonio or deposited by said agent in Antonio‟s current account with the PNB. On the thesis
that the sales made by Antonio to his wife were null and void pursuant to the provisions of Article
1490 of the Civil Code of the Philippines, the Collector considered the sales made by Antonia as
Antonio‟s original sales taxable under Section 186 of the National Internal Revenue Code and,
therefore, imposed a tax assessment on Antonio. On 30 November 1963,Antonio protested the
assessment; however, the Collector insisted on his demand. On 9 July 1954, Antonio filed a
petition for reconsideration, revealing for the first time the existence of an alleged premarital
agreement of complete separation of properties between him and his wife, and contending that
the assessment for the years 1946 to 1952 had already prescribed. After one hearing, the
Conference Staff of the Bureau of Internal Revenue eliminated the 50% fraud penalty and held
that the taxes assessed against him before 1948 had already prescribed. Based on these findings,
the Collector issued a modified assessment, demanding the payment of only P3,325.68. Thus,
this review.

ISSUE:

Whether or not the sales in question made by petitioner to his wife were fictitious, simulated, and
not bona fide

HELD:

The petitioner argues that the prohibition to sell expressed under Article 1490 of the Civil Code
has no application to the sales made by said petitioner to his wife, because said transactions are
contemplated and allowed by the provisions of Articles 7 and 10 of the Code of Commerce. But
said provisions merely state, under certain conditions, a presumption that the wife is authorized
to engage in business and for the incidents that flow therefrom when she so engages therein. But
the transactions permitted are those entered into with strangers, and do not constitute exceptions
to the prohibitory provisions of Article 1490 against sales between spouses. Contracts violative of
the provisions of Article 1490 of the Civil Code are null and void Being void transactions, the sales
made by the petitioner to his wife were correctly disregarded by the Collector in his tax
assessments that considered as the taxable sales those made by the wife through the spouses'
common agent, Mariano Osorio.

72. MANONSONG VS ESTIMO 404 SCRA 683 GR NO. 136773 JUNE 25, 2003

FACTS:

Allegedly, Guevarra inherited a property from Justina Navarro, which is now under possession of
the heirs of Guevarra. Guevarra had six children, one of them is Vicente Lopez, the father of
petitioner Manongson. The respondents, the Jumaquio sisters and Leoncia Lopez claimed that
the property was actually sold to them by Justina Navarro prior to her death. The respondents
presented the deed of sale. The petitioners filed a complaint praying for the partition and award
to them of an area equivalent to 1/5 by right of representation. RTC ruled that the conveyance
made by Justina Navarro is subject to nullity because the property conveyed had a conjugal
character and that Guevarra as her compulsory heir should have the legal right to participate with
the distribution of the estate under question to the exclusion of others. The deed of sale did not
at all provide for the reserved legitime or the heirs, and, therefore it has no force and effect against
Guevarra and should 'e declared a nullity ab initio.

ISSUE:

Whether petitioners were able to prove that Manongsong is a co-owner of the Property and
therefore entitled to demand for its partition

HELD:

There was no evidence presented to establish that Navarro acquired the Property during her
marriage. There is no basis for applying the presumption under Article 160 of the Civil Code to
the present case. On the contrary, Tax Declaration No. 911 showed that, as far back as in 1949,
the Property was declared solely in Navarro’s name.This tends to support the argument that the
Property was not conjugal.

We likewise find no basis for the trial court’s declaration that the sale embodied in the Kasulatan
deprived the compulsory heirs of Guevarra of their legitimes. As opposed to a disposition inter
vivos by lucrative or gratuitous title, a valid sale for valuable consideration does not diminish the
estate of the seller. When the disposition is for valuable consideration, there is no diminution of
the estate but merely a substitution of values, that is, the property sold is replaced by the
equivalent monetary consideration.

Under Article 1458 of the Civil Code, the elements of a valid contract of sale are: (1) consent or
meeting of the minds; (2) determinate subject matter and (3) price certain in money or its
equivalent. The presence of these elements is apparent on the face of the Kasulatan itself. The
Property was sold in 1957 for P250.00
A. Articles 1491 & 1492

73. GODINEZ VS FONG GR NO. L-36731 JANUARY 27, 1983

FACTS:

The petitioner’s parents acquired a parcel land which was sold, for valuable consideration, to the
respondent who is a Chinese citizen. The respondent executed a power of attorney to another
Chinese citizen who conveyed such land to Navata who, with full knowledge that Fong is Chinese
citizen and under the law is prohibited and disqualified to acquire a real property. The petitioners
filed a complaint before CFI praying to be adjudged as owners of the land. The petitioner contends
that the TCT issued to Fong was null and void because the transaction constitutes a non-existent
contract since it violates applicable provisions of the Constitution and the Civil Code.

ISSUE:

Whether or not the heirs of a person who sold a parcel of land to an alien in violation of a
constitutional prohibition may recover the property if it had, in the meantime, been conveyed to a
Filipino citizen qualified to own and possess it

HELD:

he Krivenko ruling that "under the Constitution aliens may not acquire private or agricultural lands,
including residential lands" is a declaration of an imperative constitutional policy. Consequently,
prescription may never be invoked to defend that which the Constitution prohibits. However, we
see no necessity from the facts of this case to pass upon the nature of the contract of sale
executed by Jose Godinez and Fong Pak Luen whether void ab initio, illegal per se or merely pro-
exhibited.** It is enough to stress that insofar as the vendee is concerned, prescription is
unavailing. But neither can the vendor or his heirs rely on an argument based on imprescriptibility
because the land sold in 1941 is now in the hands of a Filipino citizen against whom the
constitutional prescription was never intended to apply. The lower court erred in treating the case
as one involving simply the application of the statute of limitations.

From the fact that prescription may not be used to defend a contract which the Constitution
prohibits, it does not necessarily follow that the appellants may be allowed to recover the property
sold to an alien. As earlier mentioned, Fong Pak Luen, the disqualified alien vendee later sold the
same property to Trinidad S. Navata, a Filipino citizen qualified to acquire real property.

Herrera v. Luy Kim Guan (SCRA 406) reiterated the above ruling by declaring that where land is
sold to a Chinese citizen, who later sold it to a Filipino, the sale to the latter cannot be impugned.

In the light of the above considerations, we find the second and third assignments of errors without
merit. Respondent Navata, the titled owner of the property is declared the rightful owner.

74. GAN TINGCO VS PABINGUIT GR NO. 10439 OCTOBER 17, 1916


FACTS:

Acabo sold parcels of land to the petitioner. However, the land was in possession of the
respondent alleges certain rights therein. Her claims o have purchased them from Faustino Abad;
that Abad had become their owner through purchase from Henry Gardner; that the latter, in turn,
had owned them by reason of having purchased them for P555 at a public auction. Gardner was
a justice of peace at that time. CFI declared the petitioners as the owner of such lands and ordered
the respondents to restore the former its possession. The respondent, however, appealed
contending that notwithstanding the sale of the land at the public auction, Acabo did not ceased
to be the owner of the properties because of the irregularities and defect in the auction.

ISSUE:

Whether or not the respondent’s contention is correct

HELD:

If under the law Gardner was prohibited from acquiring the ownership of Acabo's lands, then he
could not have transmitted to Faustino Abad the right of ownership that he did not possess; nor
could Abad, to whom this alleged ownership had not been transmitte, have conveyed the same
to Pabinguit. What Gardner should have done in view of the fact that the sale, as he finally
acknowledged, was void, was to claim the price that had been deposited in court, and the justice
of the peace of Guijulngan should have declared the auction void and have ordered a new sale
to be held, besides correcting the errors that had been committed in the proceedings. To the
reasons already stated, there is to be added the additional one, with respect to the sale made by
Faustino Abad to Silvino Pabinguit, that Abad was a minor at the time — a circumstance that
deprived him of capacity to sell (Civil Code, art. 1263). Abad had no ownership to transmit to
anyone and, besides, he had no personality to enable him to contract by himself, on account of
his lack of legal age.

Sanchez, the sheriff, the sole notary who certified all these deeds of conveyance in order that
Pabinguit might become owner of those coconut lands with which his own lands adjoined, was in
such a hurry that, as he testified at the trial, on the very same day of the auction he had already
executed in behalf of Henry Gardner the final deed of sale of the said lands, without allowing time
for their possible redemption. Section 466 of Act No. 190 prescribes that if redemption has not
been requested, this deed is to be executed within the twelve months subsequent to the sale.

This court finds no reason whatever why it should not affirm the judgment appealed from. It is
therefore hereby affirmed with the costs of this instance against the appellant.

75. DISTAJO VS CA GR NO. 112954 AUGUST 25, 2000

FACTS:

Abiertas designated one of her sons, Rufu, to be the administrator of the parcels of land that she
owned. She, then, sold portions of her lot to her children, one of which was sold to Rufu. Likewise,
Abiertra’s brother sold some lot to Rufu. Upon Abietra’s death, the latter’s siblings demanded
possession of the land owned by Rufu. Upon his refusal, they filed before RTC a complaint for
recovery of possession and partition. RTC dismissed the complaint. But the petitioners allege that
Rufu cannot acquire the parcels of land because the Civil Code prohibits the administrator from
acquiring the same.

ISSUE:

Whether or not the contention of the petitioners are correct

HELD:

Under paragraph (2) of 1491, the prohibition against agents purchasing property in their hands
for sale or management is not absolute. It does not apply if the principal consents to the sale of
the property in the hands of the agent or administrator. In this case, the deeds of sale signed by
Iluminada Abiertas shows that she gave consent to the sale of the properties in favor of her son,
Rufo, who was the administrator of the properties. Thus, the consent of the principal Iluminada
Abiertas removes the transaction out of the prohibition contained in Article 1491(2).
Petitioner also alleges that Rufo Distajo employed fraudulent machinations to obtain the consent
of Iluminada Abiertas to the sale of the parcels of land. However, petitioner failed to adduce
convincing evidence to substantiate his allegations.

76. FEDERICO N. RAMOS VS PATRICIO A. NGASEO A.C. NO. 6210 DECEMBER 9, 2004

FACTS:

Ramos engaged the respondet’s services as a counsel in a case involving a piece of land. After
the CA rendered a favorable judgment ordering the land to be returned to Ramos, the respondent
sent a demand letter asking for the delivery of such land which the former has allegedly promised
as payment for her services. As a result, Ramos filed before IBP for violation the Code for
Professional Responsibility for demanding the delivery of such land. Respondent argues that he
did not violate Article 1491 of the Civil Code because when he demanded the delivery of the land
which was offered and promised to him in lieu of the appearance fees, the case has been
terminated, when the appellate court ordered the return of the 2-hectare parcel of land to the
family of the complainant. Respondent further contends that he can collect the unpaid appearance
fee even without a written contract on the basis of the principle of quantum meruit.

ISSUE:

Whether or not the contention of the respondent is correct

HELD:
Under Article 1491(5) of the Civil Code, lawyers are prohibited from acquiring either by purchase
or assignment the property or rights involved which are the object of the litigation in which they
intervene by virtue of their profession.[7] The prohibition on purchase is all embracing to include
not only sales to private individuals but also public or judicial sales. The rationale advanced for
the prohibition is that public policy disallows the transactions in view of the fiduciary relationship
involved, i.e., the relation of trust and confidence and the peculiar control exercised by these
persons.[8] It is founded on public policy because, by virtue of his office, an attorney may easily
take advantage of the credulity and ignorance of his client and unduly enrich himself at the
expense of his client.[9] However, the said prohibition applies only if the sale or assignment of the
property takes place during the pendency of the litigation involving the client’s property.
Consequently, where the property is acquired after the termination of the case, no violation of
paragraph 5, Article 1491 of the Civil Code attaches.

Invariably, in all cases where Article 1491 was violated, the illegal transaction was consummated
with the actual transfer of the litigated property either by purchase or assignment in favor of the
prohibited individual. In the instant case, there was no actual acquisition of the property in litigation
since the respondent only made a written demand for its delivery which the complainant refused
to comply. Mere demand for delivery of the litigated property does not cause the transfer of
ownership, hence, not a prohibited transaction within the contemplation of Article 1491. Even
assuming arguendo that such demand for delivery is unethical, respondent’s act does not fall
within the purview of Article 1491. The letter of demand dated January 29, 2003 was made long
after the judgment in Civil Case No. SCC-2128 became final and executory on January 18, 2002.

77. WOLFSON VS ESTATE OF MARTINEZ 20 PHIL. 340 OCTOBER 13, 1911

FACTS:

On the 29th day of January, 1906, a judgment was entered in this court by Hon. John C. Sweeney,
one of the judges thereof, in favor of Mariano Yap-Tuangco against the deceased Francisco
Martinez for the sum of twelve thousand pesos;

That there was a contract agreement between the plaintiff in that judgment and the above
mentioned Joseph N. Wolfson and one Basilio Regalado y Mapa should have as their fees for
prosecuting the case fifty per cent of whatever amount might be obtained;

That subsequently said Mapa assigned his interest in said contract to the said Wolfson; That
subsequently and on the 18th day of June, 1907, the plaintiff Mariano Yap-Tuangco, for value
received, sold and transferred and delivered to said Wolfson all his right, title and interest in and
o the aforementioned judgment

ISSUE:

Whether or not under the provisions of article 1459 of the Civil Code the plaintiff, Joseph N.
Wolfson, was prohibited from purchasing the judgment of his client in such manner and to such
extent that the contract of which such purchase was a part was absolutely null and void and could
be attacked by a person not a party to the transaction

HELD:

The judgment appealed from in so far as it declares that the instrument of dissolution of the
partnership between A and B was null and void for the reason that the plaintiff was not bound,
either principally or subsidiarily, by the said instrument, is contrary to the provisions of article 1302
of the Civil Code.

Even if the sale of the judgment in question is found comprehended within the prohibition of article
1459, a question which we do not now decide, still the defendant is not entitled to invoke the terms
of said article for the reason, above stated, that such prohibition is personal to the parties to the
contract, being available only to them or their representatives

78. OLAGUER VS PURUNGGANAN JR. 515 SCRA 460 (2007) GR. NO. 158907

FACTS:

The respondent was the owner of shares of stocks of Business Day Corp. He was active in the
political opposition against Marcos dictatorship. Anticipating the possibility of his arrest and
detention by the military, he executed a SPS appointing his attorneys-in-fact Locsin, Joaquin and
Hofileña for the purpose of selling or transferring his shares of stocks with Business day. During
the trial, petitioner testified that he agreed to execute the SPA in order to cancel his shares of
stock, even before they are sold, for the purpose of concealing that he was a stockholder of
Businessday, in the event of a military crackdown against the opposition. The parties
acknowledge the SPA before Emilio Purugganan, the corporate Secretary and the notary public.
Then, he was arrested. When he was released from detention, he discovered that he was no
longer registered as stockholder. He demanded that respondents restore to him full ownership ,
but they refused to do so. He filed a complaint before RTC against Purugganan and Locsin to
declare as illegal the sale of the shares of stock. He alleged that respondent exceeded his
authority under the SPA. SPA only applied in absence and incapacity .RTC dismissed and found
the sale of shares between him and respondent Locsin was valid.

ISSUE:

Whether or not the CA erred in ruling that there was perfected sale

HELD:

Petitioner sought to impose a strict construction of the SPA by limiting the definition of the word
ABSENCE to a condition wherein a person disappears from his domicile, his whereabouts being
unknown without leaving an agent to administer his property. Incapacity for the petitioner would
be limited to mean “minority, insanity, imbecility, the state of being deaf-mute, prodigality and civil
interdiction. He claims that his arrest and subsequent detention are not among the instances
covered by the terms absence and incapacity as provided in the SPA in favor of Locsin. It is a
general rule the SPA must be strictly construed, however, the rule is not absolute and should not
be applied to the extent of destroying the very purpose of the power. He already authorized agents
to do specific acts of administration and no longer necessitated the appointment of one by the
court.

79. MAHARLIKA PUBLISHING CORP VS TAGLE GR NO. 65594 JULY 9, 1986

FACTS

GSIS owned a parcel of land with a building and printing equipment in Paco, Manila. It was sold
to Maharlika in a Conditional Contract of Sale with the stipulation that if Maharlika failed to pay
monthly installments in 90 days, the GSIS would automatically cancel the contract. Because
Maharlika failed to pay several monthly installments, GSIS demanded that Maharlika vacate the
premises. Even though Maharlika refused to do so, the GSIS published an advertisement inviting
the public to bid in a public auction. A day before the scheduled bidding, Adolfo Calica, the
President of Maharlika, gave the GSIS head office 2 checks worth 11,000 and a proposal for a
compromise agreement. The GSIS General Manager Roman Cruz gave a not to Maharlika saying
“Hold Bidding. Discuss with me.” However, the public bidding took place as scheduled and the
property was subsequently awarded to Luz Tagle, the wife of the GSIS Retirement Division Chief.
Maharlika demanded that the sale be considered null and void, as Mrs. Tagle should have been
disqualified from bidding for the GSIS property. RTC and CA both ruled that the Tagles were
entitled to the property and Maharlika should vacate the premises.

ISSUE

Whether or not the respondents are entitled to the property

HELD

NO. The sale to them was against public policy. First of all, the GSIS head office was stopped
from claiming that they did not give the impression to Maharlika that they were accepting the
proposal for a compromise agreement. The act of the general manager is binding on GSIS.
Second, Article 1491 (4) of the CC provides that public officers and employees are prohibited
from purchasing the property of the state or any GOCC or institution, the administration of which
has been entrusted to them cannot purchase, even at public or judicial auction, either in person
or through the mediation of another. The SC held that as an employee of the GSIS, Edilberto
Tagle and his wife are disqualified from bidding on the property belonging to the GSIS because it
gives the impression that there was politics involved in the sale. It is not necessary that actual
fraud be shown, for a contract which tends to injure the public service is void although the parties
entered into it honestly and proceeded under it in good faith

STOP RIGHT HERE. NEXT CASES


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I. ASSIGNMENT OF CREDITS AND OTHER INCORPOREAL RIGHTS

A. ARTICLES 1624-1635

B. RA 3952
THE BULK SALES LAW (as amended)

AN ACT TO REGULATE THE SALE, TRANSFER, MORTGAGE OR ASSIGNMENT OF GOODS, WARES,


MERCHANDISE, PROVISIONS OR MATERIALS, IN BULK, AND PRESCRIBING PENALTIES FOR THE
VIOLATION OF THE PROVISIONS THEREOF

Section 1. This Act shall be known as "The Bulk Sales Law."

Sec. 2. Sale and transfer in bulk. — Any sale, transfer, mortgage or assignment of a stock of goods, wares,
merchandise, provisions, or materials otherwise than in the ordinary course of trade and the regular
prosecution of the business of the vendor, mortgagor, transferor, or assignor, or sale, transfer, mortgage
or assignment of all, or substantially all, of the business or trade theretofore conducted by the vendor,
mortgagor, transferor, or assignor, or of all, or substantially all, of the fixtures and equipment used in and
about the business of the vendor, mortgagor, transferor, or assignor, shall be deemed to be a sale and
transfer in bulk, in contemplation of this Act: Provided, however, That if such vendor, mortgagor,
transferor or assignor, produces and delivers a written waiver of the provisions of this Act from his
creditors as shown by verified statements, then, and in that case, the provisions of this section shall not
apply.

Sec. 3. Statement of creditors. — It shall be the duty of every person who shall sell, mortgage, transfer, or
assign any stock of goods, wares, merchandise, provisions or materials in bulk, for cash or on credit, before
receiving from the vendee, mortgagee, or his, or its agent or representative any part of the purchase price
thereof, or any promissory note, memorandum, or other evidence therefor, to deliver to such vendee,
mortgagee, or agent, or if the vendee, mortgagee, or agent be a corporation, then to the president, vice-
president, treasurer, secretary or manager of said corporation, or, if such vendee or mortgagee be a
partnership firm, then to a member thereof, a written statement, sworn to substantially as hereinafter
provided, of the names and addresses of all creditors to whom said vendor or mortgagor may be indebted,
together with the amount of indebtedness due or owing, or to become due or owing by said vendor or
mortgagor to each of said creditors, which statement shall be verified by an oath to the following effect:

PHILIPPINE ISLANDS
PROVINCE OR CITY OF _________________}
Before me, the undersigned authority, personally appeared __________________ (vendor,
mortgagor, agent or representative, as the case may be), bearing cedula No. ____________ issued
at ___________ on the day of _____________ who, by me being first duly sworn, upon his oath,
deposes and states that the foregoing statement contains the names of all of the creditors of
________________ (vendor, or mortgagor) together with their addresses, and that the amount
set opposite each of said respective names, is the amount now due and owing, and which shall
become due and owing by _____________ (vendor or mortgagor) to such creditors, and that
there are no creditors holding claims due or which shall become due, for or on account of goods,
wares, merchandise, provisions or materials purchased upon credit or on account of money
borrowed, to carry on the business of which said goods, wares, merchandise, provisions or
materials are a part, other than as set forth in said statement.
______________________
Subscribed and sworn to before me this _______ day of ______, 19___, at ________
Sec. 4. Fraudulent and void sale, transfer or mortgage. — Whenever any person shall sell, mortgage,
transfer, or assign any stock of goods, wares, merchandise, provisions or materials, in bulk, for cash or on
credit, and shall receive any part of the purchase price, or any promissory note, or other evidence of
indebtedness for said purchase price or advance upon mortgage, without having first delivered to the
vendee or mortgagee or to his or its agent or representative, the sworn statement provided for in section
three hereof, and without applying the purchase or mortgage money of the said property to the pro rata
payment of the bona fide claim or claims of the creditors of the vendor or mortgagor, as shown upon such
sworn statement, he shall be deemed to have violated this Act, and any such sale, transfer or mortgage
shall be fraudulent and void.

Sec. 5. Inventory. — It shall be the duty of every vendor, transferor, mortgagor, or assignor, at least ten
days before the sale, transfer or execution of a mortgage upon any stock of goods, wares, merchandise,
provisions or materials, in bulk, to make a full detailed inventory thereof and to preserve the same
showing the quantity and, so far as is possible with the exercise of reasonable diligence, the cost price to
the vendor, transferor, mortgagor or assignor of each article to be included in the sale, transfer or
mortgage, and notify every creditor whose name and address is set forth in the verified statement of the
vendor, transferor, mortgagor, or assignor, at least ten days before transferring possession thereof,
personally or by registered mail, of the price, terms conditions of the sale, transfer, mortgage, or
assignment.

Sec. 6. Any vendor, transferor, mortgagor or assignor of any stock of goods, wares, merchandise,
provisions or materials, in bulk, or any person acting for, or on behalf of any such vendor, transferor,
mortgagor, or assignor, who shall knowingly or willfully make, or deliver or cause to be made or delivered,
a statement, as provided for in section three hereof, which shall not include the names of all such
creditors, with the correct amount due and to become due to each of them, or shall contain any false or
untrue statement, shall be deemed to have violated the provisions of this Act.

Sec. 7. It shall be unlawful for any person, firm or corporation, as owner of any stock of goods, wares,
merchandise, provisions or materials, in bulk, to transfer title to the same without consideration or for a
nominal consideration only.

Sec. 8. Nothing in this Act contained shall apply to executors, administrators, receivers, assignees in
insolvency, or public officers, acting under judicial process.
Sec. 9. The sworn statement containing the names and addresses of all creditors of the vendor or
mortgagor provided for in section three of this Act, shall be registered in the Bureau of Commerce. For
the registration of each such sworn statement a fee of five pesos shall be charged to the vendor or
mortgagor of the stock of goods, wares, merchandise, provisions or materials, in bulk.

Sec. 10. The provisions of this Act shall be administered by the Director of the Bureau of Commerce and
Industry, who is hereby empowered, with the approval of the Department Head, to prescribe and adopt
from time to time such rules and regulations as may be deemed necessary for the proper and efficient
enforcement of the provisions of this Act.

Sec. 11. Any person violating any provision of this Act shall, upon conviction thereof, be punished by
imprisonment not less than six months, nor more than five years, or fined in sum not exceeding five
thousand pesos, or both such imprisonment and fine, in the discretion of the court.

Sec. 12. This Act shall take effect on its approval.

C. PRESIDENTIAL DECREE NO. 714 AMENDING REPUBLIC ACT NO. 1180 ENTITLED "AN ACT TO
REGULATE THE RETAIL BUSINESS"

WHEREAS, the statutory definition in Republic Act No. 1180, otherwise known as the Retail Trade
Nationalization Law, of the term "retail business" is vague and ambiguous, and this ambiguity has given
rise to conflicting theories as to its precise scope;

WHEREAS, it is believed to be not within the intendment of the said nationalization law to include within
its scope sales made to industrial or commercial users or consumers;

WHEREAS, it is likewise in the interest of the national economy to exclude from the provisions of the said
law the business of restaurants located in hotels, irrespective of the amount of capital, as long as the
restaurant is merely incidental to the hotel business;

NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the powers vested
in me by the Constitution, do hereby order and decree:

Section 1. Section 4 of Republic Act No. 1180 is hereby amended to read as follows:
"Section 4. As used in this Act, the term 'retail business' shall mean any act, occupation or calling of
habitually selling direct to the general public merchandise, commodities or goods for consumption, but
shall not include:
"(a) a manufacturer, processor, laborer or worker selling to the general public the products manufactured,
processed, or produced by him if his capital does not exceed five thousand pesos.
"(b) a farmer or agriculturist selling the product of his farm.
"(c) a manufacturer or processor selling to the industrial and commercial users or consumers who use the
products bought by them to render service to the general public and/or to produce or manufacture goods
which are in turn sold to them.
"(d) a hotel-owner or keeper operating a restaurant irrespective of the amount of capital, provided that
the restaurant is necessarily included in, or incidental to, the hotel business."
D. PRESIDENTIAL DECREE NO. 715

AMENDING COMMONWEALTH ACT NO. 108, AS AMENDED, OTHERWISE KNOWN AS "THE ANTI-
DUMMY LAW"

WHEREAS, there have been conflicting interpretations as to whether Section 2-A of


Commonwealth Act No. 108, as amended, otherwise known as the Anti-Dummy Law, allows aliens to
become members of the board of directors or governing body of corporations or associations
engaging in partially nationalized activities;
WHEREAS, it is fair and equitable and in line with the constitutional policy expressed in Article
XIV, Section 5 of the Constitution, that foreign investors be allowed limited representation in the
governing board or body of corporations or associations in proportion to their allowable participation
in the equity of the said entities;
NOW, THEREFORE, I, FERDINAND E. MARCOS, President of the Philippines, by virtue of the
powers vested in me by the Constitution, do hereby order and decree:
SECTION 1. Section 2-A of Commonwealth Act No. 108, as amended, is hereby further
amended to read as follows:
"SEC. 2-A. Any person, corporation, or association which, having in its name or
under its control, a right, franchise, privilege, property or business, the exercise or
enjoyment of which is expressly reserved by the Constitution or the laws to citizens of the
Philippines or of any other specific country, or to corporations or associations at least
sixty per centum of the capital of which is owned by such citizens, permits or allows the
use, exploitation or enjoyment thereof by a person, corporation or association not
possessing the requisites prescribed by the Constitution or the laws of the Philippines; or
leases, or in any other way, transfers or conveys said right, franchise, privilege, property
or business to a person, corporation or association not otherwise qualified under the
Constitution, or the provisions of the existing laws; or in any manner permits or allows
any person, not possessing the qualifications required by the Constitution, or existing
laws to acquire, use, exploit or enjoy a right, franchise, privilege, property or business,
the exercise and enjoyment of which are expressly reserved by the Constitution or
existing laws to citizens of the Philippines or of any other specific country, to intervene in
the management, operation, administration or control thereof, whether as an officer,
employee or laborer therein with or without remuneration except technical personnel
whose employment may be specifically authorized by the Secretary of Justice, and any
person who knowingly aids, assists, or abets in the planning, consummation or
perpetration of any of the acts herein above enumerated shall be punished by
imprisonment for not less than five nor more than fifteen years and by a fine of not less
than the value of the right, franchise or privilege enjoyed or acquired in violation of the
provisions hereof but in no case less than five thousand pesos:Provided, however, that
the president, managers or persons in charge of corporations, associations or
partnerships violating the provisions of this section shall be criminally liable in lieu
thereof: Provided, further, That any person, corporation or association shall, in addition
to the penalty imposed herein, forfeit such right, franchise, privilege and the property or
business enjoyed or acquired in violation of the provisions of this Act; and Provided,
finally, That the election of aliens as members of the board of directors or governing body
of corporations or associations engaging in partially nationalized activities shall be
allowed in proportion to their allowable participation or share in the capital of such
entities.

E. Republic Act No. 9341

AN ACT ESTABLISHING REFORMS IN THE REGULATION OF RENT OF CERTAIN RESIDENTIAL UNITS,


PROVIDING THE MECHANISMS THEREFOR AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives of the Philippines in Congress assembled:

SECTION 1. Short Title. - This Act shall be known and cited as the "Rent Control Act of 2005."

SEC. 2. Declaration of Policy. - The State shall, for the common good, undertake a continuing program of
encouraging the development of affordable housing for the lower income brackets.

Toward this end, the State shall continue to protect housing tenants in the lower income brackets from
unreasonable rent increases.

SEC. 3. Limit on Increases in Rent. - The rent of any residential unit covered by this Act shall not be
increased by more than ten percent (10%) annually as long as the unit is occupied by the same lessee.
When the residential unit becomes vacant, the lessor may set the initial rent for the next lessee.

SEC. 4. Definition of Terms. - The following terms as used in this Act shall be understood as:

(a) "Rent" shall mean the amount paid for the use or occupancy of a residential unit whether
payment is made on a monthly or other basis.
(b) "Residential unit" shall refer to an apartment, house and/or land on which another’s dwelling
is located and used for residential purposes and shall include not only buildings, part or units
thereof used solely as dwelling places, boarding houses, dormitories, rooms and bedspaces
offered for rent by their owners, except motels, motel rooms, hotels, hotel rooms, but also those
used for home industries, retail stores or other business purposes if the owner thereof and his or
her family actually live therein and use it principally for dwelling purposes.
(c) "Immediate members of family of the lessee or lessor" for purposes of repossessing the leased
premises, shall be limited to his or her spouse, direct descendants or ascendants, by consanguinity
or affinity.
(d) "Lessee" shall mean the person renting a residential unit.
(e) "Owner/Lessor" shall include the owner or administrator or agent of the owner of the
residential unit.
(f) "Sublessor" shall mean the person who leases or rents out a residential unit leased to him by
an owner.
(g) "Sublessee" shall mean the person who leases or rents out a residential unit from a sublessor.
SEC. 5. Rent and Requirement of Bank Deposit. - Rent shall be paid in advance within the first five (5) days
of every current month or the beginning of the lease agreement unless the contract of lease provides for
a later date of payment. The lessor cannot demand more than one (1) month advance rent. Neither can
he demand more than two (2) months deposit which shall be kept in a bank under the lessor's account
name during the entire duration of the lease agreement. Any and all interest that shall accrue therein shall
be returned to the lessee at the expiration of the lease contract.

In the event however, that the lessee fails to settle rent, electric, telephone, water or such other utility
bills or destroys any house components and accessories, the deposits and interests therein shall be
forfeited in favor of the latter in the amount commensurate to the pecuniary damage done by the former.

SEC. 6. Assignment of Lease or Subleasing. - Assignment of lease or subleasing of the whole or any portion
of the residential unit, including the acceptance of boarders or bedspacers, without the written consent
of the owner/lessor is prohibited.

SEC. 7. Grounds for Judicial Ejectment. - Ejectment shall be allowed on the following grounds:

(a) Assignment of lease or subleasing of residential units in whole or in part, including the
acceptance of boarders or bedspacers, without the written consent of the owner/lessor;
(b) Arrears in payment of rent for a total of three (3) months: Provided, That in the case of refusal
by the lessor to accept payment of the rent agreed upon, the lessee may either deposit, by way
of consignation, the amount in court, or with the city or municipal treasurer, as the case may be,
or in a bank in the name of and with notice to the lessor, within one month after the refusal of
the lessor to accept payment.
The lessee shall thereafter deposit the rent within ten (10) days of every current month. Failure
to deposit the rent for three (3) months shall constitute a ground for ejectment.
The lessor, upon authority of the court in case of consignation or upon joint affidavit by him and
the lessee to be submitted to the city or municipal treasurer and to the bank where deposit was
made, shall be allowed to withdraw the deposits;
(c) Legitimate need of the owner/lessor to repossess his or her property for his or her own use or
for the use of any immediate member of his or her family as a residential unit: Provided,
however, That the lease for a definite period has expired: Provided, further, that the lessor has
given the lessee the formal notice three (3) months in advance of the lessor's intention to
repossess the property and: Provided, finally, that the owner/lessor is prohibited from leasing the
residential unit or allowing its use by a third party for a period of at least (1) year from the time
of repossession.
(d) Need of the lessor to make necessary repairs of the leased premises which is the subject of an
existing order of condemnation by appropriate authorities concerned in order to make the said
premises safe and habitable: Provided, That after said repair, the lessee ejected shalI have the
first preference to lease the same premises: Provided, however, That the new rent shall be
reasonably commensurate with the expenses incurred for the repair of the said residential unit
and: Provided, finally, That if the residential unit is condemned or completely demolished, the
lease of the new building will no longer be subject to the aforementioned first preference rule in
this subsection; and
(e) Expiration of the period of the lease contract.
SEC. 8. Prohibition Against Ejectment by Reason of Sale or Mortgage. - No lessor or his successor-in-
interest shall be entitled to eject the lessee upon the ground that the leased premises have been sold or
mortgaged to a third person regardless of whether the lease or mortgage is registered or not.
SEC. 9. Rent-to-Own Scheme. - At the option of the lessor, he or she may engage the lessee in a written
rent-to-own agreement that will result in the transfer of ownership of the particular dwelling in favor of
the latter. Such an agreement shall be exempt from the coverage of Section 3 of this Act.

SEC. 10. Application of the Civil Code and Rules of Court of the Philippines. - Except when the lease is for a
definite period, the provision of paragraph (1) of Article 1673 of the Civil Code of the Philippines, insofar
as they refer to residential units covered by this Act, shall be suspended during the effectivity of this Act,
but other provisions of the Civil Code and the Rules of Court on lease contracts, insofar as they are not in
conflict with the provisions of this Act shall apply.

SEC. 11. Coverage of this Act. - All residential units in the National Capital Region and other highly
urbanized cities the total monthly rent for each of which does not exceed Ten thousand pesos
(P10,000.00) and all residential units in all other areas the total monthly rent for each of which does not
exceed Five thousand pesos (P5,000.00) as of the effectivity date of this Act shall be covered, without
prejudice to existing contracts.

SEC. 12. Penalties. - A fine of not less than Five thousand pesos (P5,000.00) nor more than Fifteen
thousand pesos (P15,000.00) or imprisonment of not less than one (1) month and one (1) day to not more
than six (6) months or both shall be imposed on any person, natural or juridical, found guilty of violating
any provision of this Act.

189. Oscar C. Fernandez vs Sps. Carlos and Narcisa Tarun GR No. 143868 November 14,
2002

Facts:
Brothers Antonio, Santiago, Demetria and Angel and their uncle Armando owned 1/6 of
the fishpond. When Armando died, his share was distributed to others. Antonion sold his share
to Tarun and the sales were registered and annotated. The co-owners of the fishpond executed
an Extrajudicial deed of partition in exchange of the shares. The deed stipulated that the sale of
the shares of demetria and antonio be recognised. When Tarun was already paying her realty
taxes on their share of the fishpond, Angel and others were still in possession of the entire
fishpond. Angel refused to the partition of the property.

Issue:
Whether or not the petitioners are entitled to exercise their right of legal redemption

Ruling:

No, the petitioners are not entitled to exercise their right of legal redemption. The right to
redeemonly applies when a portion is sold to a non-co-owner. Tarun became a co owner of the
fishpond because they were sold shares of it by Demetria and Antionio before Tarun succeeded
angel. Legal redemption is in the nature of a privilege created by law partly for reasons of public
policy and partly for the benefit and convenience of the redemptioner, to afford him a way out of
what might be a disagreeable or inconvenient association into which he has beenthrust. The
petitioner’s contention that the sales of the shares in the disputed fishpond to the respondents
are void because a notice in writing to the other co-owners wasnot sent as required under
Article 1625 of the Civil Code is not meritorious. The provision only states that thedeed of sale
shall not be recorded in the registry of property without such notice but it does not make the sale
void.

191. TUPAS vs. DAMASCO

FACTS:

The subject matter of this case is a parcel of land, situated in the City of General Santos
in South Cotabato. The aforesaid parcel was acquired by spouses Benjamin Tupas and Leonor
Baldonado (now plaintiffs-appellees) Plaintiffs-spouses sold the said land to Juanita Bulaong,
then still a minor being only eleven (11) years old, but was represented by her father Eusebio
Bulaong, now one of the defendants-appellants. Since 1951 to the present, Juanita Bulaong and
her father, defendant-appellant Eusebio Bulaong, have been actually occupying the said parcel
and later caused the construction of a residential building thereon Benjamin Tupas had obtained
a special crop loan, for failure to pay the said loan, the bank instituted a Civil Case against him.
Pursuant to a writ of execution issued by the CFI, the Provincial Sheriff of Cotabato sold the land
in question at public auction to the Philippine National Bank being the sole bidder.

Juanita Bulaong, then already married to Daniel Damasco, instituted before the same
court an action against the Philippine National Bank for "Recovery of Ownership of the same
parcel of land. Judgment was rendered in the said case in favor of the Philippine National Bank,
nullifying the sale by spouses Tupas in favor of Juanita Bulaong. Appeal was taken to the then
Court of Appeals. Juanita Bulaong and Daniel Damasco, was presented for registration and
Transfer Certificate of Title was issued, this time, in the name of the said spouses.

Appellant Eusebio Bulaong filed a Civil Case against spouses Daniel Damasco and
Juanita Bulaong for "Recovery of Real Property”. Court dismissed the complaint.

ISSUE:

Whether or not the 5-year period to the right to repurchase had already expired

HELD:

No. The five-year period should be counted from the date of the consolidation of the
ownership and the issuance of the transfer certificate of title in the name of the purchaser at public
auction not only because under Act 496 the act of registration of the deed is the operative act
which binds the land and vests title in the transferee and from such time is the land deemed
conveyed, within the meaning of Section 119, but also because of the far more important reason
for public policy conceived in this right to repurchase to enable the family of the applicant or
grantee to keep that homestead thus, the law must be liberally construed in order to carry out the
purpose. Homestead law should be interpreted in favor of the homesteader and that the
underlying purpose of said Section 119 is to give the homesteader every chance to preserve for
himself and his family the land that the State had gratuitously given him.
201. NYCO SALES CORP VS BA FINANCE CORP GR NO. 71694 AUGUST 16, 1991

FACTS:

NYCO Sales Corp extended a credit accommodation to the Fernandez Brothers. The brothers,
acting in behalf of Sanshell Corp, discounted a BPI check for P60,000 with NYCO, which then
indorsed the said check to BA Finance accompanied by a Deed of Assignment. BA Finance, in
turn, released the funds, which were used by the brothers. The BPI check was dishonored. The
brothers issued a substitute check, which was also dishonored. Now BA Finance goes after
NYCO, which disclaims liability

ISSUE:

Whether or not the assignor is liable to its assignee for its dishonored checks

HELD:

An assignment of credit is the process of transferring the right of the assignor to the assignee,
who would then be allowed to proceed against the debtor. It may be done either gratuitously or
generously, in which case, the assignment has an effect similar to that of a sale.

According to Article 1628 of the Civil Code, the assignor-vendor warrants both the credit itself (its
existence and legality) and the person of the debtor (his solvency), if so stipulated, as in the case
at bar. Consequently, if there be any breach of the above warranties, the assignor-vendor should
be held answerable therefor. There is no question then that the assignor-vendor is indeed liable
for the invalidity of whatever he assigned to the assignee-vendee.

Considering now the facts of the case at bar, it is beyond dispute that Nyco executed a deed of
assignment in favor of BA Finance with Sanshell Corporation as the debtor-obligor. BA Finance
is actually enforcing said deed and the check covered thereby is merely an incidental or collateral
matter. This particular check merely evidenced the credit which was actually assigned to BA
Finance. Thus, the designation is immaterial as it could be any other check. Both the lower and
the appellate courts recognized this and so it is utterly misplaced to say that Nyco is being held
liable for both the BPI and the SBTC checks. It is only what is represented by the said checks that
Nyco is being asked to pay. Indeed, nowhere in the dispositive parts of the decisions of the courts
can it be gleaned that BA Finance may recover from the two checks.

Nyco's pretension that it had not been notified of the fact of dishonor is belied not only by the
formal demand letter but also by the findings of the trial court that Rufino Yao of Nyco and the
Fernandez Brothers of Sanshell had frequent contacts before, during and after the dishonor
(Rollo, p. 40). More importantly, it fails to realize that for as long as the credit remains outstanding,
it shall continue to be liable to BA Finance as its assignor. The dishonor of an assigned check
simply stresses its liability and the failure to give a notice of dishonor will not discharge it from
such liability. This is because the cause of action stems from the breach of the warranties
embodied in the Deed of Assignment, and not from the dishonoring of the check alone (See Art.
1628, Civil Code).