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JOSE P.

DIZON,
petitioner, vs.
ALFREDO G. GABORRO (Substituted by PACITA DE GUZMAN GABORRO as
Judicial Administratrix of theEstate of Alfredo G. Gaborro) and the
DEVELOPMENT BANK OF THE PHILIPPINES,
respondents.
Facts:
Petitioner Jose P. Dizon was the owner of the three (3) parcels of land. He
constituted a first mortgage lien in favor of the Development Bank of the
Philippines in order to secure a loan in the sum of P38,000.00 trial a second
mortgage lien in favor of the Philippine National Bank to cure his
indebtedness to said bank in the amount of P93,831.91.Petitioner Dizon
having defaulted in the payment of his debt, the Development Bank of the
Philippines foreclosed the mortgage extrajudicially. Sometime prior to October
6, 1959 Alfredo G. Gaborro trial Jose P. Dizon met. Gaborro became interested
in the lands of Dizon. Dizon originally intended to lease to Gaborro the
property which had been lying idle for some time. But as the mortgage was
already foreclosed by the DPB trial the bank in fact purchased the lands at the
foreclosure sale on May 26, 1959, they abandoned the projected lease. Dizon
and Alfredo Gaborro. on the same day, October 6, 1959, constitute in truth
and in fact an absolute sale of the three parcels of land therein described or
merely an equitable mortgage or conveyance thereof by way of security for
reimbursement or repayment by petitioner Jose P. Dizon of any and all sums
which may have been paid to the Development Bank of the Philippines and
the Philippine National Bank by Alfredo G. Gaborro Said documents were
executed by the parties and the payments were made by Gaborro for the
debt of Dizon to said banks after the Development Bank of the Philippines had
foreclosed the mortgage executed by Dizon and during the period of
redemption after the foreclosure sale of the mortgaged property to said credit
orbank.
Gaborros contention;
Deed of Sale with Assumption of Mortgage trial Option to Purchase Real
Estate
Dizons contention:
merely an equitable mortgage or conveyance thereof by way of security
forreimbursement, refund or repayment by petitioner Jose P. Dizon
Issue: whether or not the deed was of a Deed of Sale with Assumption of
Mortgage', trial Option to Purchase Real Estate or merely an equitable
mortgage or conveyance thereof by way of security for reimbursement,
refund or repayment by petitioner Jose P. Dizon?
Held:
In the light of the foreclosure proceedings and sale of the properties, a legal
point of primary importance here, as well as other relevant facts and
circumstances, We agree with the findings of the trial and appellate courts
that the true intention of the parties is that respondent Gaborro would
assume and pay the indebtedness of petitioner Dizon to DBP and PNB, and in
consideration there for, respondent Gaborro was given the possession, the
enjoyment and use of the lands until petitioner can reimburse fully the
respondent the amounts paid by the latter to DBP and PNB, to accomplish the

following ends: (a) payment of the bank obligations; (b) make the lands
productive for the benefit of the possessor, respondent Gaborro, (c) assure
the return of the land to the original owner, petitioner Dizon, thus rendering
equity and fairness to all parties concerned. In view of all these
considerations, the law and Jurisprudence, and the facts established. We find
that the agreement between petitioner Dizon and respondent Gaborro is one
of those inanimate contracts under Art.1307 of the New Civil Code whereby
petitioner and respondent agreed "to give and to do" certain rights and
obligations respecting the lands and the mortgage debts of petitioner which
would be acceptable to the bank. but partaking of the nature of the
antichresis insofar as the principal parties, petitioner Dizon and
respondent Gaborro, are concerned
Daywalt vs. La Corporation de los Padres Agustinos Recoletos (Art 1314)
Facts: Teodorica Endencia obligated herself to sell a parcel of land to the
plaintiff. It was agreed that the final deed of sale will be executed when the
land was registered in Endencias name. Subsequently, the Torrens Title for
the land was issued in her favor but in the course of the proceedings for
registration it was found that the land involved in the sale contained a greater
area than what Endencia originally thought and she became reluctant to
consummate the sale of the land to the plaintiff. This reluctance was due to
the advice of the defendant which exercised a great moral influence over her.
However, in advising Endencia that she was not bound by her contract with
the plaintiff, the defendant was not actuated with improper motives but did so
in good faith believing that, under the circumstances, Endencia was not really
bound by her contract with the plaintiff. In view of Endencias refusal to make
the conveyance, the plaintiff instituted a complaint for specific performance
against her and, upon appeal, the Supreme Court held that she was bound by
the contract and she was ordered to make the conveyance of the land in
question to the plaintiff. The plaintiff then instituted an action against the
defendant to recover the following damages: (a) The amount of Pesos
24,000.00 for the use and occupation of the land in question by reason of the
pasturing of cattle therein during the period that the land was not conveyed
by Endencia to the plaintiff; (b) The amount of Pesos 500,000.00 for plaintiffs
failure to sell the land in question to a sugar growing and milling enterprise,
the successful launching of which depended on the ability of Daywalt to get
possession of the land and the Torrens Title. The lower court held that the
defendant was liable to the plaintiff for the use and occupation of the land in
question and condemned the defendant to pay the plaintiff Pesos 2,497.00 as
damages. The Supreme Court affirmed this adjudication of the lower court.
With respect to the claim of Pesos 500,000.00 damages, the Supreme Court.
Held: The most that can be said with reference to the conduct of Teodorica
Endencia is that she refused to carry out a contract for the sale of certain land
and resisted to the last an action for specific performance in court. The result
was that the plaintiff was prevented during a period of several years from
exerting that control over the property which he was entitled to exert and was
meanwhile unable to dispose of the property advantageously. The extent of
the liability for the breach of a contract must be determined in the light of the
situation in existence at the time the contract is made; and the damages
ordinarily recoverable in all events limited to such as might be reasonably
foreseen in the light of the facts then known to the contracting parties. Where
the purchaser desires to protect himself, in the contingency of the failure of

the vendor promptly to give possession, from the possibility of incurring other
damages than such as are incident to the normal value of the use and
occupation, he should cause to be inserted in the contract a clause providing
for stipulated amount to be paid upon failure of the vendor to give
possession; and no case has been called to our attention where, in the
absence of such a stipulation, damages have been held to be recoverable by
the purchase in excess of the normal value of use and occupation.
The damages recoverable in case of the breach of a contract are two sorts,
namely, (1) the ordinary, natural, and in a sense, necessary damage; and (2)
special damages. Ordinary damages is found in all breaches of contract
where there are no special circumstances to distinguish the case especially
from other contracts. The consideration paid for an unperformed promise is
an instance of this sort of damage. In all such cases the damages recoverable
are such as naturally and generally would result from such a breach,
according to the usual course of things. In cases involving only ordinary
damage, it is conclusively presumed from the immediateness and
inevitableness of the damage, and the recovery of such damage follows as a
necessary legal consequence of the breach. Ordinary damage is assumed as
a matter of law to be within the contemplation of the parties. Special
damage, on the other hand, is such as follows less directly from the breach
than ordinary damage. It is only found in cases where some external
condition, apart from the actual terms of the contract exists or intervenes, as
it were, to give a turn to affairs and to increase damage in a way that the
promissor, without actual notice of the external condition, could not
reasonably be expected to foresee.
Plaintiffs right chiefly as against Teodorica Endencia; and what has been said
suffices in our opinion to demonstrate that the damages laid under the
second cause of action in the complaint could not be recovered from her, first,
because the damages in question are special damages which were not within
contemplation of the parties when the contract was made, and secondly,
because said damages are too remote to be subject of recovery. This
conclusion is also necessarily fatal to the right of the plaintiff to recover such
damages from the defendant corporation for, as already suggested, by
advising Teodorica Endencia not to perform the contract, said corporation
could in no event render itself more extensively liable than the principal in the
contract. Our conclusion is that the judgment of the trial court should be
affirmed, and it is so ordered, with costs against the appellant.
ADELFA PROPERTIES, INC vs. CA et al
G.R. No. 111238
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 owners copy of the certificate of title was issued (as the copy with
respondent Salud was lost) was issued but was kept by Adelfas counsel, Atty.
Bernardo.

Before Adelfa could make payments, it received summons as a case was filed
(RTC Makati) 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; respondents 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 owners 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
WON Article 1590 applies in this case, thereby justifiying the refusal by Adelfa
to pay the balance of the purchase price
WON Private respondents could unilaterraly and prematurely terminate the
option period, if indeed it is a option contract, as the option period has not
lapsed yet.
HELD: The judgement of the CA is AFFIRMED
1. NO. The agreement between the parties is a contract to sell, and not an
option contract or a contract of sale.
Theis vs CA
Sps. Theis vs. CA et. al.
G.R. No. 126013. 12 Feb 1997
Petition to review the decision of the CA
Hermosisima, Jr., J.:
Facts: Private respondent Calsons Development Corporation is the owner of
three (3) adjacent parcels of land (parcel nos.1, 2 and 3). All three parcels of
land are situated in Tagaytay City. Adjacent to parcel no.3 is a vacant lot
denominated as parcel no. 4. In 1985, Private respondent constructed a twosrorey house on parcel no. 3 and the two other lots remained idle.
In a survey conducted in 1985, parcel no. 3 was erroneously indicated to be
covered by the TCT of parcel no. 1, while the parcel no. 1 and parcel no. 2
were mistakenly surveyed to be located on parcel no. 4 instead. Unaware of
the mistake private respondent sold said parcel no. 4 to petitioners.
In 1990, petitioners discovered that parcel no. 4 was owned by another
person. They also discovered that the lots actually sold to them were parcel
nos. 2 and 3. To remedy the mistake, private respondent offered parcel nos. 1

and 2 as these two were precisely the two vacant lots which private
respondent owned and intended to sell. Petitioners rejected the good faith
offer. Private respondent made another offer, this time the return of an
amount double the price paid by petitioners. Petitioners still refused. Private
respondent was then compelled to file an action for annulment of deed of sale
and reconveyance of the properties subject thereof in the RTC which ruled on
their favor and on appeal, the CA affirmed the same.
Issue: WON petitioners should be allowed to take parcel no. 3.
Ruling: Petition dismissed. CA decision affirmed.
The SC held that private respondent obviously committed an honest mistake
in selling parcel no. 4. The good faith of the private respondent is evident in
the fact that when the mistake was discovered, it immediately offered two
other vacant lots to the petitioners or to reimburse them with twice the
amount paid. That petitioners refused either option left the private
respondent with no other choice but to file an action for the annulment of the
deed of sale on the ground of mistake.
To allow the petitioners to take parcel no. 3 would be to countenance unjust
enrichment. Considering that petitioners intended at the outset to purchase a
vacant lot, their refusal to accept the offer of the private respondent to give
them two (2) other vacant lots in exchange, as well as their insistence on
parcel no. 3, which is a house and lot, is manifestly unreasonable.