Spouses Uy Tong v.

CA (and Bayanihan Automotive Corp)

May 21, 1998

Facts:

- Petitioners Uy Tong used to be the owners of Apt. 307 of the Ligaya building, as well as leaseholders for 99 years
over the land on which the building stands.
- In Feb. 1969, the SPOUSES purchased from BAYANIHAN Auto Corp 7 trucks for a total amount of P 47k payable
in 3 installments, evidenced by a written agreement (see Notes 1)
- The agreement contained a clause wherein upon the failure of the SPOUSES to pay BAYANIHAN, the latter shall
automatically be deemed as owners of the apartment, as well as to them the transfer of leaseholder rights upon
an added payment by BAYANIHAN of P 3,535.
- After payment of the downpayment, the SPOUSES failed to pay the remaining balance of P 40k, thereafter
BAYANIHAN filed an action for specific performance against them
- In Oct. 1970, judgement was rendered in favor of BAYANIHAN, wherein the SPOUSES were ordered to pay the P
40k within 30 days or else the clause of transfer of title and leasehold rights shall be enforced
- Thereafter a deed of assignment was issued by the SPOUSES on May 1972, pursuant to the judgement in favor
of BAYANIHAN. (The transfer of the apartment as well as leasehold rights)
- Even after the deed of assignment was perfected, the SPOUSES still did not surrender the premises, and for a
while they were allowed to remain as lessees until Nov 1972
- Still, however, after the expiration of the period, they would not surrender the premises
- In 1979, the demands of BAYANIHAN to vacate the premises were ignored, thereafter BAYANIHAN filed an
action for recovery of possession with damages against both the SPOUSES and the Ligaya Investments (actual
owners of the building and the land)
- Judgement was rendered in favor of BAYANIHAN, ordering the SPOUSES to vacate, as well as Ligaya Investments
to recognize the right of ownership of BAYANIHAN
- SPOUSES thereafter appealed to the court of appeals, which sustained the ruling of the lower court, hence this
recourse.

ISSUES:

- The SPOUSES raised the following defenses (present as issues by putting WON before it)
1. That the deed of assignment is null and void because it was a pactum commissorium
2. That the genuineness of the deed of assignment was not acknowledged by them [IRRELEVANT]
3. That the deed of assignment is unenforceable because of the lack of payment of P 535 pesos
[IRRELEVANT]

Held:

1. The deed of assignment was not in the nature of a pactum commisorium nor was it borne out of the same
- The SC specified that under Art. 2088, in order for a pactum commisorium to exist, there should be (1) a
pledge/mortgage by way of security for the payment and (2) that there is a stipulation for automatic
appropriation. Neither of the elements are present.
- (1) The terms of the agreement did not show that a mortgage existed, the appropriation was agreed
upon though terms made by them. (2) There was also no automatic appropriation, because after the
SPOUSES defaulted, BAYANIHAN had to resort to filing for specific performance, which the court did not
consider anywhere near “automatic”
2. (Rule of Court stuff) The spouses were estopped because they manifested their acknowledgement to the
contract as in their answer to the complaint made against them saying “…contract was duly executed and the
same is genuine”
3. The deed of assignment is enforceable, because the SPOUSES themselves, although acknowledging the receipt
of P 3,000 “more or less” also executed the deed of assignment with the aid of their counsel. The logic is that
since BAYANIHAN could not have compelled them to issue the deed of assignment without first paying, since
they did execute the deed of assignment, there can be no other conclusion except that they did in fact pay the
proper amount.
Notes:

1. The written agreement for the sale of trucks

That immediately upon signing of this Agreement, the VENDEE shall pay unto the VENDOR the amount of Seven
Thousand Seven Hundred (P7,000.00) Pesos, Philippine Currency, and the amount of Fifteen Thousand
(P15,000.00) Pesos shah be paid on or before March 30, 1969 and the balance of Twenty Five Thousand
(P25,000.00) Pesos shall be paid on or before April 30, 1969, the said amount again to be secured by another
postdated check with maturity on April 30, 1969 to be drawn by the VENDEE;

That it is fully understood that should the two (2) aforementioned checks be not honored on their respective
maturity dates, herein VENDOR will give VENDEE another sixty (60) days from maturity dates, within which to
pay or redeem the value of the said checks;

That if for any reason the VENDEE should fail to pay her aforementioned obligation to the VENDOR, the latter
shall become automatically the owner of the former's apartment which is located at No. 307, Ligaya Building,
Alvarado St., Binondo, Manila, with the only obligation on its part to pay unto the VENDEE the amount of
Three Thousand Five Hundred Thirty Five (P3,535.00) Pesos, Philippine Currency; and in such event the VENDEE
shall execute the corresponding Deed of absolute Sale in favor of the VENDOR and or the Assignment of
Leasehold Rights.

2. Art. 2088 of the NCC

The creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of the same. Any
stipulation to the contrary is null and void.

3. Receipt of the 3,000 more or less

This is to acknowledge the fact that the amount of THREE THOUSAND (P3,000.00) PESOS, more or less as
indicated in the judgment of the Hon. Conrado Vasquez, Presiding Judge of the Court of First Instance of Manila,
Branch V, in Civil Case entitled "Bayanihan Automotive Corp. v. Pho (sic) Po Giok, etc." and docketed as Civil
Case No. 80420 has been applied for the payment of the previous rentals of the property which is the subject
matter of the aforesaid judgment.

(Sgd.) Pho (sic) Po Glok

(Sgd.) Henry Uy

August 21, 1971

4. Parties to the Case:

a. Spouses Uy Tong – owned apt. 307 and are leaseholders to a portion of the land to which the building
stands on
b. Ligaya Investments – Actual owners of the building wherein apt. 307 can be found, as well as the lot to
which it stands on
c. Bayanihan Auto Corp – People the spouses bought cars from