Dizon vs.

Suntay

Respondent Lourdes G. Suntay and one Clarita R. Sison entered into a transaction wherein the Suntay’s
three-carat diamond ring, valued at P5,500.00, was delivered to Sison for sale on commission. Upon
receiving the ring, Sison executed and delivered to the receipt to Suntay. After the lapse of a
considerable time without Clarita R. Sison having returned to the ring to her, Suntay made demands on
Clarita R. Sison for the return of said jewelry. Clarita R. Sison, however, could not comply with
Suntay’s demands because on June 15, 1962, Melia Sison, niece of the husband of Clarita R. Sison,
evidently in connivance with the latter, pledged the ring with the petitioner Dominador Dizon's
pawnshop for P2,600.00 without Suntay’s knowledge. When Suntay found out that Clarita R. Sison
pledged the ring, she filed a case of estafa against the latter with the fiscal's office. Subsequently,
Suntay wrote a letter to Dizon on September 22, 1962 asking for the return of her ring which was
pledged with the latter’s pawnshop under its Pawnshop Receipt serial B No. 65606, dated June 15,
1962.

Dizon refused to return the ring, so Suntay filed an action for its recovery with the CFI of Manila, which
declared that she had the right to its possession. The Court of Appeals likewise affirmed said decision.

Who has the right title over the subject property?

The Supreme Court affirmed the decision of the lower courts. The controlling provision is Article 559 of
the Civil Code which provides that “[T]he possession of movable property acquired in good faith is
equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof may recover it from the person in possession of the same. If the possessor of a movable lost of
which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner
cannot obtain its return without reimbursing the price paid therefor.” The only exception the law
allows is when there is acquisition in good faith of the possessor at a public sale, in which case the
owner cannot obtain its return without, reimbursing the price. Hanging on to said exception as his
basis, Dizon insisted that the principle of estoppel should apply in this case but the Supreme Court
ruled otherwise.

In the present case not only has the ownership and the origin of the jewels misappropriated been
unquestionably proven but also that Clarita R. Sison, acting fraudulently and in bad faith, disposed of
them and pledged them contrary to agreement with no right of ownership, and to the prejudice of
Suntay, who was illegally deprived of said jewels and who, as the owner, has an absolute right to
recover the jewels from the possession of whosoever holds them, which in this case is Dizon’s
pawnshop. Dizon ought to have been on his guard before accepting the pledge in question, but
evidently there was no such precaution availed of and he has no one to blame but himself. While the
activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking
advantage of the necessities precisely of that element of our population whose lives are blighted by
extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly
invoked.

DIZON V. SUNTAY- Pledge of Immovable

An owner of a movable unlawfully pledged by another is not estopped from recovering

possession. Where the owner delivered the diamond ring solely for sale on commission
but the seller instead pawned it without authority, the owner is not stopped form
pursuing an action against the pawnshop.

Lourdes Suntay is the owner of a 3-carat diamond ring valued at P5,500. She and
Clarita Sison entered into a transaction wherein the ring would be sold on commission.
Clarita received the ring and issued a receipt. After some time, Lourdes made demands
for the return of the ring but the latter refused to comply. When Lourdes insisted on the
return, Clarita gave her the pawnshop ticket which is the receipt of the pledge and she
found out that 3 days after the ring was received by Clarita, it was pledged by Melia
Sison, the niece of Clarita’s husband in connivance with Clarita with the pawnshop of
Dominador Dizon for P2,600. Lourdes then filed an estafa case. She then asked
Dominador Dizon for the return of the ring pledged but refused to return the ring thus
the case filed by Lourdes.

The CFI issued a writ of replevin so Lourdes was able to have possession of the ring
during the pendency of the case. The CFI also ruled in her favor which was affirmed by
the CA on appeal. Thus the case at bar.

W/N the CA erred in ruling that Lourdes has a right to possession of the ring

NO It reiterated the ruling in de Garcia v. CA, that the controlling provision is Art. 559 of
the CC which states that the possession ofmovable property acquired in good faith is
equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully
deprived thereof may recover it from the person in possession of the same. If the
possessor of a movable lost of which the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.

Lourdes, being unlawfully deprived of her ring thus she has a right to recover it from the
current possessor. Dizon is engaged in a business where presumably ordinary
prudence would require him to inquire whether or not an individual who is offering the
jewelry by pledge is entitled to do so. The principle of estoppel cannot help him at all.
Since there was no precaution availed of, perhaps because of the difficulty of resisting
opportunity for profit, he only has himself to blame and should be the last to complain if
the right of the true owner of the jewelry should be recognized.

Other issues raised:

Principle of estoppel = has its roots in equity, moral right and natural justice.
> For estoppel to exist, there must be a declaration, act or omission by the party who is
sought to be bound.

> A party should not be permitted to go against his own acts to the prejudice of another.
Concurring opinion by J. Teehankee:

> Interpretation of the “unlawfully deprived” in Art. 559 of the CC. It is understood to
include all cases where there has been no valid transmission of ownership. If our
legislature intended interpretation to be that of the French Code, it certainly would have
adopted and used a narrower term than the broad language of Art. 559 (formerly 464)
and the accepted meaning in accordance with our jurisprudence.

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.

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.

Art. 1478. 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.

EDCA PUBLISHING v. SANTOS

FACTS:
The movable property in this case consists of books, which were bought from EDCA by an
impostor who sold it to SANTOS. EDCA Publishing sold to a person identifying himself as
Professor Jose Cruz who placed an order by telephone with the former for 406 books, payable on
delivery. EDCA prepared the corresponding invoice and delivered the books as ordered, for
which Cruz issued a personal check. On October 7, 1981, Cruz then sold the 120 of the books to
Leonor Santos who asked for verification, and was then showed the invoice for the books.
Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before
clearing of his first check, made inquiries with the De la Salle College where he had claimed to
be a dean and was informed that there was no such person in its employ. Further verification
revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against
which he had drawn the payment check. EDCA then went to the police, which set a trap and
arrested Cruz. Investigation disclosed his real name as Tomas de la Peña and his sale of 120 of
the books he had ordered from EDCA to the private respondents.

ISSUE:
Whether or not EDCA PUBLISHINGAND DISTRIBUTING CORP was unlawfully deprived of
the property?
HELD:
NO
Santos was a good faith buyer after taking steps to verify the identity of the seller. When she was
showed the invoice, she reasonably believed that he was a legitimate seller. With regard to
unlawful deprivation, EDCA was not unlawfully deprived of the property by mere failure of
consideration. There was already a perfected contract of sale. Proof was even substantiated when
EDCA gave the invoice as proof of payment upon delivery of the books. This did not amount to
unlawful taking, because by the delivery of EDCA to Cruz, ownership of the books already
transferred to him.
It would certainly be unfair now to make the SANTOSES bear the prejudice sustained by EDCA
as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the
SANTOSES who had acted in good faith, and with proper care, when they bought the books
from Cruz.
\FACTS:
Petitioner EDCA prapared 406 books amounting P8,995.65 for delivery to one Professor Jose Cruz.
Subsequently, the latter sold 120 of the said books to the respondent.
Petitioner became suspicious when Professor Cruz, placed another order without settling his previous
account. EDCA find out that the check released by the same does not have funds and that no Professor
under the name of Jose Cruz works for De La Salle College.
Over investigation it was made known that Jose Cruz's real name is Tomas de la Peña. Petitioners with
the assistance of authority, seized without warrant the books sold to the respondent Leonor Santos and
delivered it to the petitioners.
ISSUE:
Whether or not the petitioner may seize the books from private respondent because it has been
unlawfully deprived of the books due to the dishonored check issued by the impostor.
HELD:
NO
In its extended memorandum, EDCA cites numerous cases holding that the owner who has been
unlawfully deprived of personal property is entitled to its recovery except only where the property was
purchased at a public sale, in which event its return is subject to reimbursement of the purchase price.
The petitioner is begging the question. It is putting the cart before the horse. Unlike in the cases invoked,
it has yet to be established in the case at bar that EDCA has been unlawfully deprived of the books.
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 toEDCA was a
matter between him and EDCA and did not impair the title acquired by the private respondents to the
books.

It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA
as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the Santoses
who had acted in good faith, and with proper care, when they bought the books from Cruz.
Layug v IAC: Mojica

DOCTRINE: Even in residential properties, RA 6552 recognizes and reaffirms the vendor’s right to cancel the contract
to sell upon breach and non-payment of the stipulated instalments. The one who fails to pay the rest of the
instalments as agreed upon is left only to a right to a refund of the cash surrender value of the payments on the
property equivalent to 50% of the total payments already made.

FACTS

1) Gabuya brought a suit against Layug for annulment of the contract and for recovery of damages because Layug failed to
pay the rest of the instalments for the purchase of 12 lots in Iligan City (agreed to cost P120,000 payable in three yearly
instalments). Layug only paid the first 2 installments (P80,000) and failed to pay the last instalment of
P40,000.

2) The TC ruled in favour of Gabuya. This was affirmed by the CA.

3) Layug is relying on the stipulation in the contract a) granting him, as vendee, a 30days grace period within which to pay
any yearly instalment not paid within the time fixed therefor, and b) declaring him liable, in the event of his failure to pay
within the grace period, “for interest at the legal rate.” He argues that the stipulation indicates that rescission was
not envisioned as a remedy against a failure to pay instalments and that such failure was not a ground for
abrogating the contract but merely generated liability for interest at legal rate…”

ISSUE

Whether or not Gabuya had the right to rescind the contract and should this happen, whether Layug should be entitled to
get back the ENTIRE amount he already paid?

HELD

Yes Gabuya could rescind the contract. No, Layug should not be entitled to the entire amount he already paid.
The SC: The grace period clause should be read conjointly with the stipulation on rescission, and in such a manner as to
give full effect. The patent and logical import of both provisions, taken together, is that when the vendee fails to pay any
instalment on its due date, he becomes entitled to a grace period of 30 days to cure default by paying the amount of the
instalment plus interest, but that if he should still fail to pay within the grace period, then rescission of the
contract takes place.

Layug cannot be permitted to claim that all his payments should be credited to him in their entirety without
regard whatever to the damages his default might have caused to Gabuya.

R.A. 6552 governs sales of real estate on installments. It recognizes the vendor's right to cancel such contracts upon failure
of the vendee to comply with the terms of the sale, but imposes, chiefly for the latter's protection, certain conditions
thereon. We have had occasion to rule that "even in residential properties the Act" recognizes and reaffirms the vendor's
right to cancel the contract to sell upon breach and nonpayment of the stipulated installments. ..."

The law provides inter alia that "in all transactions or contracts involving the sale or financing of real estate on installment
payments, including residential condominium apartments, ..., 15 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:

[Grace Period]

(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 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;

[Refund of "Cash Surrender Value"]

(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 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.

In the case at bar, Layug had paid two (2) annual installments of P40,000.00 each. He is deemed therefore, in the words of
the law, to have "paid at least two years of installments." He therefore had a grace period of "one month .. for every year of
installment payments made," or two (2) months (corresponding to the two years of installments paid) within which to pay
the final installment. He has thus been left only with the right to a refund of the " cash surrender value of the
payments on the property equivalent to fifty percent of the total payments made," or P40,000.00 (i.e., ½ of
the total payments of P80,000.00). Such refund will be the operative act to make effective the cancellation of the contract
by Gabuya, conformably with the terms of the law.
POWER COMMERCIAL V. CA (June 20, 1997)

FACTS:

Petitioner asbestos manufacturer Power Commercial and industrial corporation bought the property of
spouses Reynaldo and Angelita Quiambao located in Makati City.

Since there are lessees occupying the subject land, part of the deed of sale is a warranty of respondents
that will defend its title and peaceful possession in favor of the petitioners.

The property is mortgage to PNP and as such, petitioners filed a request to assume responsibility of the
mortgage. Because of petitioners failure to produce the required papers, their petition was denied.

Petitioners allege that the contract should be rescinded because of failure of delivery.

ISSUE:

WON the contract is recissible due to breach of contract.

HELD:

There is no breach of contact in this case since there is no provision in the contract that imposes the
obligation to the respondents to eject the people occupying the property.

There was also a constructive delivery because the deed of sale was made in a public document. The
contention of the petitioners that there could be no constructive delivery because the respondents is not
in possession of the property is of no merit. What matters in a constructive delivery is control and not
possession. Control was placed in the hands of the petitioners that is why they were able to file an
ejectment case. Prior physical delivery or possession is not legally required and the execution of the deed
of sale is deemed equivalent to delivery
090 Power Commercial and Industrial Corp. v. Author: Pat
CA, supra Notes:
GR 119745, June 20, 1997 http://sc.judiciary.gov.ph/jurisprudence/1997/jun1997/119745.htm
Topic: Implied warranties; warranty against
eviction
Ponente: Panganiban, J.
FACTS:
1. Petitioner Power Commercial & Industrial Development Corporation (PowerCom), an industrial asbestos
manufacturer, needed a bigger office space and warehouse for its products.
2. January 31, 1979: Petitioner PowerCom entered into a contract of sale with the respondent spouses Reynaldo and
Angelita R. Quiambao—involving a 612-sq. m. parcel of land in San Antonio Village, Makati City
3. The parties agreed that petitioner PowerCom would pay private respondents spouses Quiambao P108,000.00 as
down payment, and the balance of P295,000.00 upon the execution of the deed of transfer of the title. Further,
petitioner assumed, as part of the purchase price, the existing mortgage on the land. In full satisfaction thereof, he
paid P79,145.77 to respondent PNB
4. June 1, 1979: respondent spouses mortgaged again said land to PNB to guarantee a loan of P145,000.00…
P80,000.00 of which was paid to respondent spouses. Petitioner PowerCom agreed to assume payment of the loan.
5. June 26, 1979: the parties executed a Deed of Absolute Sale With Assumption of Mortgage. On the same date,
Mrs. C.D. Constantino, then General Manager of PowerCom, submitted to PNB said deed with a formal application
for assumption of mortgage
6. February 15, 1980: PNB informed respondent spouses that, for petitioner’s failure to submit the papers necessary for
approval pursuant to the former’s letter dated January 15, 1980, the application for assumption of mortgage was
considered withdrawn; that the outstanding balance of P145,000.00 was deemed fully due and demandable; and that
said loan was to be paid in full within fifteen (15) days from notice
7. Petitioner PowerCom paid PNB P41,880.45 on June 24, 1980 and P20,283.14 on December 23, 1980, payments
which were to be applied to the outstanding loan.
8. On March 17, 1982, petitioner filed Civil Case No. 45217 against respondent spouses for rescission and damages
9. Petitioner demanded the return of the payments it made on the ground that its assumption of mortgage was never
approved
10. May 31, 1983: while this case was pending, the mortgage was foreclosed. The property was subsequently bought by
PNB during the public auction
11. TC: ruled that the failure of respondent spouses to deliver actual possession to petitioner entitled the latter to rescind
the sale, and in view of such failure and of the denial of the latter’s assumption of mortgage, PNB was obliged to
return the payments made by the latter
12. CA: reversed the trial court. it held that the deed of sale between respondent spouses and petitioner did not obligate
the former to eject the lessees from the land in question as a condition of the sale, nor was the occupation thereof by
said lessees a violation of the warranty against eviction. Hence, there was no substantial breach to justify the
rescission of said contract or the return of the payments made
13. Petitioner contends:
 there was a substantial breach of the contract between the parties warranting rescission
 CA gravely erred in failing to consider in its decision that a breach of implied warranty under Article 1547 in
relation to Article 1545 of the Civil Code applies in the case-at-bar.
ISSUE:
1. WON the alleged “failure” of respondent spouses to eject the lessees from the lot in question and to deliver
actual and physical possession can be considered a substantial breach of condition
2. WON there was a substantial breach of the contract between the parties warranting rescission
HELD:
1. No.
2. No. It is petitioner’s failure to establish any breach of the warranty against eviction. Despite its protestation that
its acquisition of the lot was to enable it to set up a warehouse for its asbestos products and that failure to deliver
actual possession thereof defeated this purpose, still no breach of warranty against eviction can be appreciated
because the facts of the case do not show that the requisites for such breach have been satisfied.
RATIO:

The deed of sale provides: ““We hereby also warrant that we are the lawful and absolute owners of the above described
property, free from any lien and/or encumbrance, and we hereby agree and warrant to defend its title and peaceful
possession thereof in favor of the said Power Commercial and Industrial Development Corporation, its successors and
assigns, against any claims whatsoever of any and all third persons; subject, however, to the provisions hereunder
provided to wit:”

1. The alleged “failure” of respondent spouses to eject the lessees from the lot in question and to deliver actual and
physical possession thereof cannot be considered a substantial breach of a condition for two reasons: first, such
“failure” was not stipulated as a condition -- whether resolutory or suspensive -- in the contract; and second, its
effects and consequences were not specified either. The provision adverted to by petitioner does not impose a
condition or an obligation to eject the lessees from the lot

If the parties intended to impose on respondent spouses the obligation to eject the tenants from the lot sold, it should
 have included in the contract a provision similar to that referred to in Romero vs. Court of Appeals, where the
ejectment of the occupants of the lot sold by private respondent was the operative act which set into motion the
period of petitioner’s compliance with his own obligation, i.e., to pay the balance of the purchase price. In the case
cited, the contract specifically stipulated that the ejectment was a condition to be fulfilled; otherwise, the obligation
to pay the balance would not arise. This is not so in the case at bar.

Absent a stipulation therefor, we cannot say that the parties intended to make its nonfulfillment a ground for
rescission. If they did intend this, their contract should have expressly stipulated so.

2. Requisites of Breach of Warranty Against Eviction: A breach of this warranty requires the concurrence of the
following circumstances:
(a) The purchaser has been deprived of the whole or part of the thing sold;
(b) This eviction is by a final judgment;
(c) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(d) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.

In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be
declared.

As correctly pointed out by CA, the presence of lessees does not constitute an encumbrance of the land, nor does it
deprive petitioner of its control thereof.

We note, however, that petitioner’s deprivation of ownership and control finally occurred when it failed and/or
discontinued paying the amortizations on the mortgage, causing the lot to be foreclosed and sold at public auction. But
this deprivation is due to petitioner’s fault, and not to any act attributable to the vendor-spouses.

DOCTRINE
Requisites of Breach of Warranty Against Eviction: A breach of this warranty requires the concurrence of the following
circumstances:
(a) The purchaser has been deprived of the whole or part of the thing sold;
(b) This eviction is by a final judgment;
(c) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(d) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.

Addison vs Felix

Addison sold to Marciana Felix four parcels of land. Felix paid at the execution of the deed 3000 pesos of
the purchase price and the rest in installments. The terms are as follows:

2000 on June 15

5000 30 days after issuance of her certificate transfer of title

within ten ears from date of title, 10 pesos for each coconut tree bearing fruit and 5 pesos for each
coconut tree growing fruit which overall should not exceed 85000 pesos

25% of the products received from the moment of possession until Torrens title is made.

Within 1 year from date of certificate she may rescind the contract in which felix must return all
products of the land and Addison will refund all the money with 10 percent interest. Addison then filed a
case compelling felix to pay the first installment of 2000. Felix answered stating she’d like to rescind the
contract plus the refund of her money for the reason that the property was not delivered to her. It is
noteworthy to include that after executing a deed of sale, petitioner with Felix’s representative in order
to deliver the land sold, he was only able to designate two lands, and of the two lands two thirds were
already occupied by one Villafuerte. The surveyor Santamaria was only able to survey two lands as the
other two were not designated to him. In order to make the survey, he said he needed a write of
injunction from the court to remove the occupants. This defendant tried to apply for but was dismissed.

Where or not there was delivery of the land in question.

No. With respect to the other two lands, Addison was not even able to show them to the purchaser. As
regards to the other two, there was an adverse possessor named vilafuerte. It is true that the execution
of a public documents is equivalent to delivery of the thing but in order that this symbolic delivery may
produce the effect of tradition, it is necessary that the vendor shall had have such control over the thing
sold that, at the moment of sale, its material delivery could have been made. It is not enough to confer
upon the purchaser ownership and right of possession. The things must be placed in his control. It is
evident that mere execution was not fulfillment of vendor’s obligation to deliver the thing sold, and that
from non fulfillment arises the purchaser’s right to demand the rescission of sale and return the price.

If the sale had been made under the express agreement of imposing upon the purchaser the obligation
to take necessary steps to obtain material possession of it, and she knew that it was in the possession of
a third person, such would be valid. But this is not the case here.

Addison vs. Felix

The defendants-appellees spouses Maciana Felix and Balbino Tioco purchased from plaintiff-appellant
A.A. Addison four parcels of land to which Felix paid, at the time of the execution of the deed, the sum
of P3,000 on account of the purchase price. She likewise bound herself to the remainder in
installments, the first of P,2000 on July 15, 1914, the second of P5,000 thirty days after the issuance to
her of a certificate of title under the Land Registration Act, and further, within ten years from the
date of such title, P10 for each cocoanut tree in bearing and P5 for each such tree not in bearing that
might be growing on said parcels of land on the date of the issuance of title to her, with the condition
that the total price should not exceed P85,000. It was further stipulated that Felix was to deliver to
the Addison 25% of the value of the products that she might obtain from the four parcels "from the
moment she takes possession of them until the Torrens certificate of title be issued in her favor," and
that within 1 year from the date of the certificate of title in her favor, Marciana Felix may rescind the
contract of purchase and sale.

In January 1915, Addison , filed suit in the CFI of Manila to compel Felix to pay the first installment of
P2,000, demandable, in accordance with the terms of the contract of sale. The defendants Felix and
her husband Tioco contended that Addison had absolutely failed to deliver the lands that were the
subject matter of the sale, notwithstanding the demands they made upon him for this purpose. The
evidence adduced shows Addison was able to designate only two of the four parcels, and more than
two-thirds of these two were found to be in the possession of one Juan Villafuerte, who claimed to be
the owner of the parts he so occupied. The trial court held the contract of sale to be rescinded and
ordered Addison to return to Felix the P3,000 paid on account of the price, together with interest
thereon at the rate of 10% per annum.

ISSUE:

Was there a delivery made and, therefore, a transfer of ownership of the thing sold?

COURT RULING:

The Supreme Court affirmed the decision of the lower court, with modification that the interest
thereon will be at the rate of 6% (instead of 10%) per annum from the date of the filing of the
complaint until payment.

The thing is considered to be delivered when it is placed "in the hands and possession of the vendee." It
is true that the same article declares that the execution of a public instrument is equivalent to the
delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may
produce the effect of tradition, it is necessary that the vendor shall have had such control over the
thing sold that, at the moment of the sale, its material delivery could have been made. Symbolic
delivery through the execution of a public instrument is sufficient when there is no impediment
whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the
vendor. But if, notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it himself or through another in his
name, because such are opposed by a third person’s will, then the delivery has not been effected. In
the case at bar, therefore, it is evident, that the mere execution of the instrument was not a
fulfillment of the vendor's obligation to deliver the thing sold, and that from such non-fulfillment arises
the purchaser's right to demand, as she has demanded, the rescission of the sale and the return of the
price.
TEN FORTY REALTY V. CRUZ|
FACTS:

• Petitioner filed an ejectment complaint against Marina Cruz(respondent) before the MTC. Petitioner alleges that
the land indispute was purchased from Barbara Galino on December 1996, andthat said land was again sold to
respondent on April 1998;

• On the other hand, respondent answer with counterclaim that never was there an occasion when petitioner
occupied a portion of the premises. In addition, respondent alleges that said land was a public land (respondent filed
a miscellaneous sales application with the Community Environment and Natural Resources Office) and the action
for ejectment cannot succeed where it appears that respondent had been in possession of the property prior to the
petitioner;

• On October 2000, MTC ordered respondent to vacate the land and surrender to petitioner possession thereof. On
appeal, the RTC reversed the decision. CA sustained the trial court’s decision.

ISSUE/S:

Whether or not petitioner should be declared the rightful owner of the property.

HELD:

No. Respondent is the true owner of the land.1) The action filed by the petitioner, which was an action for “unlawful
detainer”, is improper. As the bare allegation of petitioner’s tolerance of respondent’s occupation of the premises
has not been proven, the possession should be deemed illegal from the beginning. Thus, the CA correctly ruled that
the ejectment case should have been for forcible entry. However, the action had already prescribed because the
complaint was filed on May 12, 1999 – a month after the last day forfiling;2) The subject property had not been
delivered to petitioner; hence, it did not acquire possession either materially or symbolically. As between the two
buyers, therefore, respondent was first in actual possession of the property.

As regards the question of whether there was good faith in the second buyer. Petitioner has not proven that
respondent was aware that her mode of acquiring the property was defective at the time she acquired it from Galino.
At the time, the property — which was public land –had not been registered in the name of Galino; thus, respondent
relied on the tax declarations thereon. As shown, the former’s name appeared on the tax declarations for the property
until its sale to the latter in 1998. Galino was in fact occupying the realty when respondent took over possession.
Thus, there was no circumstance that could have placed the latter upon inquiry or required her to further investigate
petitioner’s right of ownership.

DOCTRINE/S:

Execution of Deed of Sale; Not sufficient as delivery. Ownership is transferred not by contract but by tradition or
delivery. Nowhere in the Civil Code is it provided that the execution of a Deed of Sale is a conclusive presumption
of delivery of possession of a piece of real estate. The execution of a public instrument gives rise only to a prima
facie presumption of delivery. Such presumption is destroyed when the delivery is not effected, because of a legal
impediment. Such constructive or symbolic delivery, being merely presumptive, was deemed negated by the failure
of the vendee to take actual possession of the land sold. Disqualification from Ownership of Alienable Public Land.

Private corporations are disqualified from acquiring lands of the public domain, as provided under Section 3 of
Article XII of the Constitution. While corporations cannot acquire land of the public domain, they can however
acquire private land. However, petitioner has not presented proof that, at the time it purchased the property from
Galino, the property had ceased to be of the public domain and was already private land. The established rule is that
alienable and disposable land of the public domain held and occupied by a possessor — personally or through
predecessors-in-interest, openly, continuously, and exclusively for 30 years — is ipso jure converted to private
property by the mere lapse of time.

RULING:

The Supreme Court DENIED the petition.

Dizon vs. Suntay

Respondent Lourdes G. Suntay and one Clarita R. Sison entered into a transaction wherein the Suntay’s
three-carat diamond ring, valued at P5,500.00, was delivered to Sison for sale on commission. Upon
receiving the ring, Sison executed and delivered to the receipt to Suntay. After the lapse of a
considerable time without Clarita R. Sison having returned to the ring to her, Suntay made demands on
Clarita R. Sison for the return of said jewelry. Clarita R. Sison, however, could not comply with
Suntay’s demands because on June 15, 1962, Melia Sison, niece of the husband of Clarita R. Sison,
evidently in connivance with the latter, pledged the ring with the petitioner Dominador Dizon's
pawnshop for P2,600.00 without Suntay’s knowledge. When Suntay found out that Clarita R. Sison
pledged the ring, she filed a case of estafa against the latter with the fiscal's office. Subsequently,
Suntay wrote a letter to Dizon on September 22, 1962 asking for the return of her ring which was
pledged with the latter’s pawnshop under its Pawnshop Receipt serial B No. 65606, dated June 15,
1962.

Dizon refused to return the ring, so Suntay filed an action for its recovery with the CFI of Manila, which
declared that she had the right to its possession. The Court of Appeals likewise affirmed said decision.

Who has the right title over the subject property?

The Supreme Court affirmed the decision of the lower courts. The controlling provision is Article 559 of
the Civil Code which provides that “[T]he possession of movable property acquired in good faith is
equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived
thereof may recover it from the person in possession of the same. If the possessor of a movable lost of
which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner
cannot obtain its return without reimbursing the price paid therefor.” The only exception the law
allows is when there is acquisition in good faith of the possessor at a public sale, in which case the
owner cannot obtain its return without, reimbursing the price. Hanging on to said exception as his
basis, Dizon insisted that the principle of estoppel should apply in this case but the Supreme Court
ruled otherwise.

In the present case not only has the ownership and the origin of the jewels misappropriated been
unquestionably proven but also that Clarita R. Sison, acting fraudulently and in bad faith, disposed of
them and pledged them contrary to agreement with no right of ownership, and to the prejudice of
Suntay, who was illegally deprived of said jewels and who, as the owner, has an absolute right to
recover the jewels from the possession of whosoever holds them, which in this case is Dizon’s
pawnshop. Dizon ought to have been on his guard before accepting the pledge in question, but
evidently there was no such precaution availed of and he has no one to blame but himself. While the
activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking
advantage of the necessities precisely of that element of our population whose lives are blighted by
extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly
invoked.

DIZON V. SUNTAY- Pledge of Immovable

An owner of a movable unlawfully pledged by another is not estopped from recovering

possession. Where the owner delivered the diamond ring solely for sale on commission
but the seller instead pawned it without authority, the owner is not stopped form
pursuing an action against the pawnshop.

Lourdes Suntay is the owner of a 3-carat diamond ring valued at P5,500. She and
Clarita Sison entered into a transaction wherein the ring would be sold on commission.
Clarita received the ring and issued a receipt. After some time, Lourdes made demands
for the return of the ring but the latter refused to comply. When Lourdes insisted on the
return, Clarita gave her the pawnshop ticket which is the receipt of the pledge and she
found out that 3 days after the ring was received by Clarita, it was pledged by Melia
Sison, the niece of Clarita’s husband in connivance with Clarita with the pawnshop of
Dominador Dizon for P2,600. Lourdes then filed an estafa case. She then asked
Dominador Dizon for the return of the ring pledged but refused to return the ring thus
the case filed by Lourdes.

The CFI issued a writ of replevin so Lourdes was able to have possession of the ring
during the pendency of the case. The CFI also ruled in her favor which was affirmed by
the CA on appeal. Thus the case at bar.

W/N the CA erred in ruling that Lourdes has a right to possession of the ring
NO It reiterated the ruling in de Garcia v. CA, that the controlling provision is Art. 559 of
the CC which states that the possession ofmovable property acquired in good faith is
equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully
deprived thereof may recover it from the person in possession of the same. If the
possessor of a movable lost of which the owner has been unlawfully deprived, has
acquired it in good faith at a public sale, the owner cannot obtain its return without
reimbursing the price paid therefor.

Lourdes, being unlawfully deprived of her ring thus she has a right to recover it from the
current possessor. Dizon is engaged in a business where presumably ordinary
prudence would require him to inquire whether or not an individual who is offering the
jewelry by pledge is entitled to do so. The principle of estoppel cannot help him at all.
Since there was no precaution availed of, perhaps because of the difficulty of resisting
opportunity for profit, he only has himself to blame and should be the last to complain if
the right of the true owner of the jewelry should be recognized.

Other issues raised:

Principle of estoppel = has its roots in equity, moral right and natural justice.
> For estoppel to exist, there must be a declaration, act or omission by the party who is
sought to be bound.

> A party should not be permitted to go against his own acts to the prejudice of another.
Concurring opinion by J. Teehankee:

> Interpretation of the “unlawfully deprived” in Art. 559 of the CC. It is understood to
include all cases where there has been no valid transmission of ownership. If our
legislature intended interpretation to be that of the French Code, it certainly would have
adopted and used a narrower term than the broad language of Art. 559 (formerly 464)
and the accepted meaning in accordance with our jurisprudence.

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.

Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.

Art. 1478. 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.

EDCA PUBLISHING v. SANTOS

FACTS:
The movable property in this case consists of books, which were bought from EDCA by an
impostor who sold it to SANTOS. EDCA Publishing sold to a person identifying himself as
Professor Jose Cruz who placed an order by telephone with the former for 406 books, payable on
delivery. EDCA prepared the corresponding invoice and delivered the books as ordered, for
which Cruz issued a personal check. On October 7, 1981, Cruz then sold the 120 of the books to
Leonor Santos who asked for verification, and was then showed the invoice for the books.
Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before
clearing of his first check, made inquiries with the De la Salle College where he had claimed to
be a dean and was informed that there was no such person in its employ. Further verification
revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against
which he had drawn the payment check. EDCA then went to the police, which set a trap and
arrested Cruz. Investigation disclosed his real name as Tomas de la Peña and his sale of 120 of
the books he had ordered from EDCA to the private respondents.

ISSUE:
Whether or not EDCA PUBLISHINGAND DISTRIBUTING CORP was unlawfully deprived of
the property?
HELD:
NO
Santos was a good faith buyer after taking steps to verify the identity of the seller. When she was
showed the invoice, she reasonably believed that he was a legitimate seller. With regard to
unlawful deprivation, EDCA was not unlawfully deprived of the property by mere failure of
consideration. There was already a perfected contract of sale. Proof was even substantiated when
EDCA gave the invoice as proof of payment upon delivery of the books. This did not amount to
unlawful taking, because by the delivery of EDCA to Cruz, ownership of the books already
transferred to him.
It would certainly be unfair now to make the SANTOSES bear the prejudice sustained by EDCA
as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the
SANTOSES who had acted in good faith, and with proper care, when they bought the books
from Cruz.
\FACTS:
Petitioner EDCA prapared 406 books amounting P8,995.65 for delivery to one Professor Jose Cruz.
Subsequently, the latter sold 120 of the said books to the respondent.
Petitioner became suspicious when Professor Cruz, placed another order without settling his previous
account. EDCA find out that the check released by the same does not have funds and that no Professor
under the name of Jose Cruz works for De La Salle College.
Over investigation it was made known that Jose Cruz's real name is Tomas de la Peña. Petitioners with
the assistance of authority, seized without warrant the books sold to the respondent Leonor Santos and
delivered it to the petitioners.
ISSUE:
Whether or not the petitioner may seize the books from private respondent because it has been
unlawfully deprived of the books due to the dishonored check issued by the impostor.
HELD:
NO
In its extended memorandum, EDCA cites numerous cases holding that the owner who has been
unlawfully deprived of personal property is entitled to its recovery except only where the property was
purchased at a public sale, in which event its return is subject to reimbursement of the purchase price.
The petitioner is begging the question. It is putting the cart before the horse. Unlike in the cases invoked,
it has yet to be established in the case at bar that EDCA has been unlawfully deprived of the books.
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 toEDCA was a
matter between him and EDCA and did not impair the title acquired by the private respondents to the
books.

It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA
as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the Santoses
who had acted in good faith, and with proper care, when they bought the books from Cruz.
Layug v IAC: Mojica

DOCTRINE: Even in residential properties, RA 6552 recognizes and reaffirms the vendor’s right to cancel the contract
to sell upon breach and non-payment of the stipulated instalments. The one who fails to pay the rest of the
instalments as agreed upon is left only to a right to a refund of the cash surrender value of the payments on the
property equivalent to 50% of the total payments already made.

FACTS

1) Gabuya brought a suit against Layug for annulment of the contract and for recovery of damages because Layug failed to
pay the rest of the instalments for the purchase of 12 lots in Iligan City (agreed to cost P120,000 payable in three yearly
instalments). Layug only paid the first 2 installments (P80,000) and failed to pay the last instalment of
P40,000.

2) The TC ruled in favour of Gabuya. This was affirmed by the CA.

3) Layug is relying on the stipulation in the contract a) granting him, as vendee, a 30days grace period within which to pay
any yearly instalment not paid within the time fixed therefor, and b) declaring him liable, in the event of his failure to pay
within the grace period, “for interest at the legal rate.” He argues that the stipulation indicates that rescission was
not envisioned as a remedy against a failure to pay instalments and that such failure was not a ground for
abrogating the contract but merely generated liability for interest at legal rate…”

ISSUE

Whether or not Gabuya had the right to rescind the contract and should this happen, whether Layug should be entitled to
get back the ENTIRE amount he already paid?

HELD

Yes Gabuya could rescind the contract. No, Layug should not be entitled to the entire amount he already paid.

The SC: The grace period clause should be read conjointly with the stipulation on rescission, and in such a manner as to
give full effect. The patent and logical import of both provisions, taken together, is that when the vendee fails to pay any
instalment on its due date, he becomes entitled to a grace period of 30 days to cure default by paying the amount of the
instalment plus interest, but that if he should still fail to pay within the grace period, then rescission of the
contract takes place.

Layug cannot be permitted to claim that all his payments should be credited to him in their entirety without
regard whatever to the damages his default might have caused to Gabuya.

R.A. 6552 governs sales of real estate on installments. It recognizes the vendor's right to cancel such contracts upon failure
of the vendee to comply with the terms of the sale, but imposes, chiefly for the latter's protection, certain conditions
thereon. We have had occasion to rule that "even in residential properties the Act" recognizes and reaffirms the vendor's
right to cancel the contract to sell upon breach and nonpayment of the stipulated installments. ..."
The law provides inter alia that "in all transactions or contracts involving the sale or financing of real estate on installment
payments, including residential condominium apartments , ..., 15 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:

[Grace Period]

(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 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;

[Refund of "Cash Surrender Value"]

(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 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.

In the case at bar, Layug had paid two (2) annual installments of P40,000.00 each. He is deemed therefore, in the words of
the law, to have "paid at least two years of installments." He therefore had a grace period of "one month .. for every year of
installment payments made," or two (2) months (corresponding to the two years of installments paid) within which to pay
the final installment. He has thus been left only with the right to a refund of the "cash surrender value of the
payments on the property equivalent to fifty percent of the total payments made ," or P40,000.00 (i.e., ½ of
the total payments of P80,000.00). Such refund will be the operative act to make effective the cancellation of the contract
by Gabuya, conformably with the terms of the law.

POWER COMMERCIAL V. CA (June 20, 1997)

FACTS:

Petitioner asbestos manufacturer Power Commercial and industrial corporation bought the property of
spouses Reynaldo and Angelita Quiambao located in Makati City.
Since there are lessees occupying the subject land, part of the deed of sale is a warranty of respondents
that will defend its title and peaceful possession in favor of the petitioners.

The property is mortgage to PNP and as such, petitioners filed a request to assume responsibility of the
mortgage. Because of petitioners failure to produce the required papers, their petition was denied.

Petitioners allege that the contract should be rescinded because of failure of delivery.

ISSUE:

WON the contract is recissible due to breach of contract.

HELD:

There is no breach of contact in this case since there is no provision in the contract that imposes the
obligation to the respondents to eject the people occupying the property.

There was also a constructive delivery because the deed of sale was made in a public document. The
contention of the petitioners that there could be no constructive delivery because the respondents is not
in possession of the property is of no merit. What matters in a constructive delivery is control and not
possession. Control was placed in the hands of the petitioners that is why they were able to file an
ejectment case. Prior physical delivery or possession is not legally required and the execution of the deed
of sale is deemed equivalent to delivery
090 Power Commercial and Industrial Corp. v. Author: Pat
CA, supra Notes:
GR 119745, June 20, 1997 http://sc.judiciary.gov.ph/jurisprudence/1997/jun1997/119745.htm
Topic: Implied warranties; warranty against
eviction
Ponente: Panganiban, J.
FACTS:
14. Petitioner Power Commercial & Industrial Development Corporation (PowerCom), an industrial asbestos
manufacturer, needed a bigger office space and warehouse for its products.
15. January 31, 1979: Petitioner PowerCom entered into a contract of sale with the respondent spouses Reynaldo and
Angelita R. Quiambao—involving a 612-sq. m. parcel of land in San Antonio Village, Makati City
16. The parties agreed that petitioner PowerCom would pay private respondents spouses Quiambao P108,000.00 as
down payment, and the balance of P295,000.00 upon the execution of the deed of transfer of the title. Further,
petitioner assumed, as part of the purchase price, the existing mortgage on the land. In full satisfaction thereof, he
paid P79,145.77 to respondent PNB
17. June 1, 1979: respondent spouses mortgaged again said land to PNB to guarantee a loan of P145,000.00…
P80,000.00 of which was paid to respondent spouses. Petitioner PowerCom agreed to assume payment of the loan.
18. June 26, 1979: the parties executed a Deed of Absolute Sale With Assumption of Mortgage. On the same date,
Mrs. C.D. Constantino, then General Manager of PowerCom, submitted to PNB said deed with a formal application
for assumption of mortgage
19. February 15, 1980: PNB informed respondent spouses that, for petitioner’s failure to submit the papers necessary for
approval pursuant to the former’s letter dated January 15, 1980, the application for assumption of mortgage was
considered withdrawn; that the outstanding balance of P145,000.00 was deemed fully due and demandable; and that
said loan was to be paid in full within fifteen (15) days from notice
20. Petitioner PowerCom paid PNB P41,880.45 on June 24, 1980 and P20,283.14 on December 23, 1980, payments
which were to be applied to the outstanding loan.
21. On March 17, 1982, petitioner filed Civil Case No. 45217 against respondent spouses for rescission and damages
22. Petitioner demanded the return of the payments it made on the ground that its assumption of mortgage was never
approved
23. May 31, 1983: while this case was pending, the mortgage was foreclosed. The property was subsequently bought by
PNB during the public auction
24. TC: ruled that the failure of respondent spouses to deliver actual possession to petitioner entitled the latter to rescind
the sale, and in view of such failure and of the denial of the latter’s assumption of mortgage, PNB was obliged to
return the payments made by the latter
25. CA: reversed the trial court. it held that the deed of sale between respondent spouses and petitioner did not obligate
the former to eject the lessees from the land in question as a condition of the sale, nor was the occupation thereof by
said lessees a violation of the warranty against eviction. Hence, there was no substantial breach to justify the
rescission of said contract or the return of the payments made
26. Petitioner contends:
 there was a substantial breach of the contract between the parties warranting rescission
 CA gravely erred in failing to consider in its decision that a breach of implied warranty under Article 1547 in
relation to Article 1545 of the Civil Code applies in the case-at-bar.
ISSUE:
3. WON the alleged “failure” of respondent spouses to eject the lessees from the lot in question and to deliver
actual and physical possession can be considered a substantial breach of condition
4. WON there was a substantial breach of the contract between the parties warranting rescission
HELD:
3. No.
4. No. It is petitioner’s failure to establish any breach of the warranty against eviction. Despite its protestation that
its acquisition of the lot was to enable it to set up a warehouse for its asbestos products and that failure to deliver
actual possession thereof defeated this purpose, still no breach of warranty against eviction can be appreciated
because the facts of the case do not show that the requisites for such breach have been satisfied.
RATIO:

The deed of sale provides: ““We hereby also warrant that we are the lawful and absolute owners of the above described
property, free from any lien and/or encumbrance, and we hereby agree and warrant to defend its title and peaceful
possession thereof in favor of the said Power Commercial and Industrial Development Corporation, its successors and
assigns, against any claims whatsoever of any and all third persons; subject, however, to the provisions hereunder
provided to wit:”

3. The alleged “failure” of respondent spouses to eject the lessees from the lot in question and to deliver actual and
physical possession thereof cannot be considered a substantial breach of a condition for two reasons: first, such
“failure” was not stipulated as a condition -- whether resolutory or suspensive -- in the contract; and second, its
effects and consequences were not specified either. The provision adverted to by petitioner does not impose a
condition or an obligation to eject the lessees from the lot

If the parties intended to impose on respondent spouses the obligation to eject the tenants from the lot sold, it should
 have included in the contract a provision similar to that referred to in Romero vs. Court of Appeals, where the
ejectment of the occupants of the lot sold by private respondent was the operative act which set into motion the
period of petitioner’s compliance with his own obligation, i.e., to pay the balance of the purchase price. In the case
cited, the contract specifically stipulated that the ejectment was a condition to be fulfilled; otherwise, the obligation
to pay the balance would not arise. This is not so in the case at bar.

Absent a stipulation therefor, we cannot say that the parties intended to make its nonfulfillment a ground for
rescission. If they did intend this, their contract should have expressly stipulated so.

4. Requisites of Breach of Warranty Against Eviction: A breach of this warranty requires the concurrence of the
following circumstances:
(e) The purchaser has been deprived of the whole or part of the thing sold;
(f) This eviction is by a final judgment;
(g) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(h) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.

In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be
declared.

As correctly pointed out by CA, the presence of lessees does not constitute an encumbrance of the land, nor does it
deprive petitioner of its control thereof.

We note, however, that petitioner’s deprivation of ownership and control finally occurred when it failed and/or
discontinued paying the amortizations on the mortgage, causing the lot to be foreclosed and sold at public auction. But
this deprivation is due to petitioner’s fault, and not to any act attributable to the vendor-spouses.

DOCTRINE
Requisites of Breach of Warranty Against Eviction: A breach of this warranty requires the concurrence of the following
circumstances:
(e) The purchaser has been deprived of the whole or part of the thing sold;
(f) This eviction is by a final judgment;
(g) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(h) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.

Addison vs Felix

Addison sold to Marciana Felix four parcels of land. Felix paid at the execution of the deed 3000 pesos of
the purchase price and the rest in installments. The terms are as follows:

2000 on June 15

5000 30 days after issuance of her certificate transfer of title

within ten ears from date of title, 10 pesos for each coconut tree bearing fruit and 5 pesos for each
coconut tree growing fruit which overall should not exceed 85000 pesos

25% of the products received from the moment of possession until Torrens title is made.

Within 1 year from date of certificate she may rescind the contract in which felix must return all
products of the land and Addison will refund all the money with 10 percent interest. Addison then filed a
case compelling felix to pay the first installment of 2000. Felix answered stating she’d like to rescind the
contract plus the refund of her money for the reason that the property was not delivered to her. It is
noteworthy to include that after executing a deed of sale, petitioner with Felix’s representative in order
to deliver the land sold, he was only able to designate two lands, and of the two lands two thirds were
already occupied by one Villafuerte. The surveyor Santamaria was only able to survey two lands as the
other two were not designated to him. In order to make the survey, he said he needed a write of
injunction from the court to remove the occupants. This defendant tried to apply for but was dismissed.

Where or not there was delivery of the land in question.

No. With respect to the other two lands, Addison was not even able to show them to the purchaser. As
regards to the other two, there was an adverse possessor named vilafuerte. It is true that the execution
of a public documents is equivalent to delivery of the thing but in order that this symbolic delivery may
produce the effect of tradition, it is necessary that the vendor shall had have such control over the thing
sold that, at the moment of sale, its material delivery could have been made. It is not enough to confer
upon the purchaser ownership and right of possession. The things must be placed in his control. It is
evident that mere execution was not fulfillment of vendor’s obligation to deliver the thing sold, and that
from non fulfillment arises the purchaser’s right to demand the rescission of sale and return the price.

If the sale had been made under the express agreement of imposing upon the purchaser the obligation
to take necessary steps to obtain material possession of it, and she knew that it was in the possession of
a third person, such would be valid. But this is not the case here.

Addison vs. Felix

The defendants-appellees spouses Maciana Felix and Balbino Tioco purchased from plaintiff-appellant
A.A. Addison four parcels of land to which Felix paid, at the time of the execution of the deed, the sum
of P3,000 on account of the purchase price. She likewise bound herself to the remainder in
installments, the first of P,2000 on July 15, 1914, the second of P5,000 thirty days after the issuance to
her of a certificate of title under the Land Registration Act, and further, within ten years from the
date of such title, P10 for each cocoanut tree in bearing and P5 for each such tree not in bearing that
might be growing on said parcels of land on the date of the issuance of title to her, with the condition
that the total price should not exceed P85,000. It was further stipulated that Felix was to deliver to
the Addison 25% of the value of the products that she might obtain from the four parcels "from the
moment she takes possession of them until the Torrens certificate of title be issued in her favor," and
that within 1 year from the date of the certificate of title in her favor, Marciana Felix may rescind the
contract of purchase and sale.

In January 1915, Addison , filed suit in the CFI of Manila to compel Felix to pay the first installment of
P2,000, demandable, in accordance with the terms of the contract of sale. The defendants Felix and
her husband Tioco contended that Addison had absolutely failed to deliver the lands that were the
subject matter of the sale, notwithstanding the demands they made upon him for this purpose. The
evidence adduced shows Addison was able to designate only two of the four parcels, and more than
two-thirds of these two were found to be in the possession of one Juan Villafuerte, who claimed to be
the owner of the parts he so occupied. The trial court held the contract of sale to be rescinded and
ordered Addison to return to Felix the P3,000 paid on account of the price, together with interest
thereon at the rate of 10% per annum.

ISSUE:

Was there a delivery made and, therefore, a transfer of ownership of the thing sold?

COURT RULING:

The Supreme Court affirmed the decision of the lower court, with modification that the interest
thereon will be at the rate of 6% (instead of 10%) per annum from the date of the filing of the
complaint until payment.

The thing is considered to be delivered when it is placed "in the hands and possession of the vendee." It
is true that the same article declares that the execution of a public instrument is equivalent to the
delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may
produce the effect of tradition, it is necessary that the vendor shall have had such control over the
thing sold that, at the moment of the sale, its material delivery could have been made. Symbolic
delivery through the execution of a public instrument is sufficient when there is no impediment
whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the
vendor. But if, notwithstanding the execution of the instrument, the purchaser cannot have the
enjoyment and material tenancy of the thing and make use of it himself or through another in his
name, because such are opposed by a third person’s will, then the delivery has not been effected. In
the case at bar, therefore, it is evident, that the mere execution of the instrument was not a
fulfillment of the vendor's obligation to deliver the thing sold, and that from such non-fulfillment arises
the purchaser's right to demand, as she has demanded, the rescission of the sale and the return of the
price.
TEN FORTY REALTY V. CRUZ|
FACTS:

• Petitioner filed an ejectment complaint against Marina Cruz(respondent) before the MTC. Petitioner alleges that
the land indispute was purchased from Barbara Galino on December 1996, andthat said land was again sold to
respondent on April 1998;

• On the other hand, respondent answer with counterclaim that never was there an occasion when petitioner
occupied a portion of the premises. In addition, respondent alleges that said land was a public land (respondent filed
a miscellaneous sales application with the Community Environment and Natural Resources Office) and the action
for ejectment cannot succeed where it appears that respondent had been in possession of the property prior to the
petitioner;

• On October 2000, MTC ordered respondent to vacate the land and surrender to petitioner possession thereof. On
appeal, the RTC reversed the decision. CA sustained the trial court’s decision.

ISSUE/S:

Whether or not petitioner should be declared the rightful owner of the property.

HELD:

No. Respondent is the true owner of the land.1) The action filed by the petitioner, which was an action for “unlawful
detainer”, is improper. As the bare allegation of petitioner’s tolerance of respondent’s occupation of the premises
has not been proven, the possession should be deemed illegal from the beginning. Thus, the CA correctly ruled that
the ejectment case should have been for forcible entry. However, the action had already prescribed because the
complaint was filed on May 12, 1999 – a month after the last day forfiling;2) The subject property had not been
delivered to petitioner; hence, it did not acquire possession either materially or symbolically. As between the two
buyers, therefore, respondent was first in actual possession of the property.

As regards the question of whether there was good faith in the second buyer. Petitioner has not proven that
respondent was aware that her mode of acquiring the property was defective at the time she acquired it from Galino.
At the time, the property — which was public land –had not been registered in the name of Galino; thus, respondent
relied on the tax declarations thereon. As shown, the former’s name appeared on the tax declarations for the property
until its sale to the latter in 1998. Galino was in fact occupying the realty when respondent took over possession.
Thus, there was no circumstance that could have placed the latter upon inquiry or required her to further investigate
petitioner’s right of ownership.

DOCTRINE/S:

Execution of Deed of Sale; Not sufficient as delivery. Ownership is transferred not by contract but by tradition or
delivery. Nowhere in the Civil Code is it provided that the execution of a Deed of Sale is a conclusive presumption
of delivery of possession of a piece of real estate. The execution of a public instrument gives rise only to a prima
facie presumption of delivery. Such presumption is destroyed when the delivery is not effected, because of a legal
impediment. Such constructive or symbolic delivery, being merely presumptive, was deemed negated by the failure
of the vendee to take actual possession of the land sold. Disqualification from Ownership of Alienable Public Land.

Private corporations are disqualified from acquiring lands of the public domain, as provided under Section 3 of
Article XII of the Constitution. While corporations cannot acquire land of the public domain, they can however
acquire private land. However, petitioner has not presented proof that, at the time it purchased the property from
Galino, the property had ceased to be of the public domain and was already private land. The established rule is that
alienable and disposable land of the public domain held and occupied by a possessor — personally or through
predecessors-in-interest, openly, continuously, and exclusively for 30 years — is ipso jure converted to private
property by the mere lapse of time.

RULING:

The Supreme Court DENIED the petition.