SALES - Assigned - Cases - Week - 3 - To - Docx Filename UTF-8''SALES Assigned Cases Week 3 To Week 4

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Form of Contracts
Paredes v Espino
Date: March 13, 1968

Ponente: Reyes, JBL
Facts:
Paredes filed an action to compel (i.e. specific performance and damages)
Espino to execute a deed of sale and to pay damages. The complaint alleged
that Espino had entered into the sale to Paredes of Lot. 67 of the Puerto Princesa
Cadastre at P4.00 a square meter. According to Paredes, said deal had been
closed by letter and telegram but the actual execution of the deed of sale and
payment of the price were deferred to the arrival of Espino at Puerto Prinsesa.
However, upon Espinos arrival, he refused and to execute the deed of sale. As a
result, Paredes lost expected profits from a resale of the property.
o Exhibit A: Letter from Espino accepting Paredes offer re: purchase price
of P4.00 a square meter
o Exhbit B: Telegram from Espino advising Paredes of his arrival by boat
Espino filed a MD on the ground that the complaint stated no cause of action
and was unenforceable under the Statute of Frauds.
CFI: Dismissed complaint there being no written contract (CC 1403).
Issue: WON enforcement pleaded in the complaint is barred by the Statute of Frauds;
therefore, unenforceable
Held: No.
Ratio:
Article 1403 (2) unless the same, or some note of memorandum thereof, be
in writing, and subscribed by the party charged, or by his agent; evidence,
therefore, of the agreement cannot be received without the writing, or a
secondary evidence of its contents.
Exhibits A and B constitute an adequate memorandum of the transaction. All
essential terms of the contract are present; hence, they satisfy the requirements
of the Statue of Frauds
o Signed by Espino
o Refered to property sold as Lot. 67 covered by TCT No. 62
o Stipulated its area as 1826 square meters
o Purchase price payable in cash
Berg v Magdalena Estate: a sufficient memorandum may be contained in two
or more documents.
Shaffer v Palma: whether the agreement is in writing or not, is a question of
evidence; and the authenticity of the writing need not be established until the
trial is held. Paredes having alleged that the contract is backed by letter and
telegram, and the same being a sufficient memorandum, his cause of action is
thereby established, especially since Espino has not denied the letters in
question. At any rate, if the Court below entertained any doubts about the
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existence of the written memorandum, it should have called for a preliminary

hearing on that point, and not dismissed the complaint.
Dispositive: Appealed order is set aside and the case remanded to the Court of origin
for trial and decision.
Recto Law: Sales of Movables on Installments

ADELFA PROPERTIES INC VS CA
240 SCRA 565
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
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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:
Whether or not the agreement between Adelfa and Private Respondents was strictly
an option contract, wherefore Adelfa can invoke Recto Law?
Ruling:
NO. The agreement between the parties is a contract to sell, and not an option
contract nor a contract of sale. Also, Adelfa Properties cannot invoke Recto Law as
well since the law covers contracts of sale of personal property by installments. It is also
applied to contracts purporting to be leases of personal property with option to buy,
when the lessor has deprived the lessee of the possession or enjoyment of the thing. In
this case, the object in dispute is a real property land.
The alleged option contract is a contract to sell, rather than a contract of sale. The
distinction between the two is important for in contract of sale, the title passes to the
vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement
the ownership is reserved in the vendor and is not to pass until the full payment of the
price. In a contract of sale, the vendor has lost and cannot recover ownership until and
unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained
by the vendor until the full payment of the price, such payment being a positive
suspensive condition and failure of which is not a breach but an event that prevents
the obligation of the vendor to convey title from becoming effective. Thus, a deed of
sale is considered absolute in nature where there is neither a stipulation in the deed that
title to the property sold is reserved in the seller until the full payment of the price, nor
one giving the vendor the right to unilaterally resolve the contract the moment the
buyer fails to pay within a fixed period.
Be that as it may, and the validity of the suspension of payment notwithstanding, the
Jimenezes may no longer be compelled to sell and deliver the subject property to
Adelfa Properties for two reasons, that is, Adelfas failure to duly effect the consignation
of the purchase price after the disturbance had ceased; and, secondarily, the fact that
the contract to sell had been validly rescinded by the Jimenezes.

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THE BACHRACH MOTOR CO., INC., vs.MARIANO LACSON LEDESMA, TALISAY-SILAY

MILLING CO., INC., and THE PHILIPPINE NATIONAL BANK, G.R. No. L-42462, August 31,
1937
FACTS
o June 30, 1927: Court of First Instance favored Bachrach Motor Co., Inc
(Bachrach) against Mariano Lacson Ledesma
o Mariano Ledesma mortgaged to the Philippine National Bank (PNB) Talisay-Silay
Milling Co., Inc shares
o September 29, 1928: The Philippine National Bank brought an action against
Ledesma and his wife Concepcion Diaz for the recovery of a mortgage credit
o January 2, 1929: PNB amended its complaint by including the Bachrach Motor
Co., Inc., as a party defendant because they claim to have rights to some of the
subject matters of this complaint
o January 30, 1929: Bachrach field a general denial of the accusation by the PNB
o The CFI favored the PNB
o December 20, 1929: Bachrach brought an action in the CFI against the Talisay-
Silay Milling Co., Inc., to recover P13,850 against the bonus or dividend w/c, by
virtue of the resolution of December 22, 1923, Central Talisay-Silay Milling Co.,
Inc., had declared in favor of Ledesma as one of the owners of the hacienda
which had been mortgaged to the PNB to secure the obligation of the Talisay-
Silay Milling Co., Inc. in favor of said bank
o The CFI favored Bachrach Motor Co., Inc.
ISSUE
o Whether shares of stock are personal property and can be subject to pledge or
chattel mortgage
o Whether a pledge could not legally exist because the certificate of stock is not
the shares themselves or itcannot be the subject matter of the contract of
pledge or of chattel mortgage
HELD
o On the first issue: Yes, stocks are personal property and can be subject to pledge
or chattel mortgage.
o It is true, according to article 1865 of the Civil Code, that in order that a pledge
may be effective as against third person, evidence of its date must appear in a
public instrument in addition to the delivery of the thing pledged to the creditor.
This provision has been interpreted in the sense that for the contract to affect
third person, it must appear in a public instrument in addition to delivery of the
thing pledged. It cannot be denied, however, that section 4 of Act No. 1508,
otherwise known as the Chattel Mortgage Law, implicitly modified article 1865 of
the Civil Code in the sense that a contract of pledge and that of chattel
mortgage, to be effective as against third persons, need not appear in public
instruments provided the thing pledged or mortgaged be delivered or placed in
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the possession of the creditor.The provision of this article has, undoubtedly, been
modified by section 4 of the Chattel Mortgage Law, in so far as it provides that a
chattel mortgage shall not be valid against any person except the mortgagor,
his executors or administrators, unless the possession of the property is delivered
to and retained by the mortgagee or unless the mortgage is recorded in the
office of the register of deeds of the province in which the mortgagor resides.
o Pledge of the 6,300 stock dividends is valid against the Bachrach because the
certificate was delivered to the creditor bank, notwithstanding the fact that the
contract does not appear in a public instrument.
o On the second issue: Yes, a pledge could legally exist because the certificate of
stock is not the shares themselves or it cannot be the subject matter of the
contract of pledge or of chattel mortgage.
o Certificates of stock or of stock dividends, under the Corporation Law, are quasi
negotiable instruments in the sense that they may be given in pledge or
mortgage to secure an obligation. Certificates of stock, while not negotiable in
the sense of the law merchant, like bills and notes, are so framed and dealt with
as to be transferable, when property endorsed, by mere delivery, and as they
frequently convey, by estoppel against the corporation or against prior holders,
as good a title to the transferee as if they were negotiable, and inasmuch as a
large commercial use is made of such certificates as collateral security, and it is
to the public interest that such use should be simplify and facilitated by placing
them as nearly as possible on the plane of commercial paper, they are often
spoken of and treated as quasi negotiable, that is as having some of the
attributes and partaking of the character of negotiable instruments, in passing
from hand to hand, especially where they are accompanied by an assignment
and power of attorney, executed in blank, to transfer them to anyone who may
obtain possession as holders, even though such assignment and power are
under seal.

LEVY HERMANOS, INC. VS. LAZARO BLAS GERVACIO
G.R. L-46306 10/27/1939
Facts:
Plaintiff (herein petitioner) Levy Hermanos Inc., filed a case for sum of money for the
balance obligation and its interest against defendant (herein respondent) Lazaro
Gervacio before the CFI (RTC).
Plaintiff alleged that they sold to defendant a Packard car. After making the initial
payment, defendant executed da promissory note for hte balance, payable on or
before June 15, 1937, with interest at 12% per annum, to secure the payment of the
note, he mortgaged the car to the plaintiff. Defendant failed to pay the note in its
maturity, hence plaintiff foreclosed the mortgage and the car was sold at public
auction, at which plaintiff was the highest bidder.
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Defendant admitted the allegations of plaintiff and the case was submitted for
decision.
THe CFI ruled in favor of defendant, the Court considered their contract as one on
installments, applying the provisions of Act. No. 4122 (known as Recto Law), inserted as
articles 1454-A (article 1484 of the present code) of the Civil Code. Plaintiff appealed.
Issue: Whether or not the contract is one on installments, considering that it involves
sale of personal property.
Ruling:
Yes, since the contract is not one on installments.
Article 1454-A of the Civil Code reads that:

In a contract for the sale of personal property payable in installments shall confer
upon the vendor the right to cancel the sale or foreclose the mortgage if one has been
given ont he property, withiout reimbursement to the purchase of the installments
already paid, if there be an agrreement to this effect.
However, if the vendor has chosen to foreclose the mortgage he shall have no
further action against the purchaser for the recovery of any unpaid balance owing by
the same and any agreement to the contrary shall be null and void.
The Court cited the case of Macondray and Co. Vs. De Santos, which they held that in
order to apply the provisions of article 1454-A of the Civil Code it must appear that
there has been a failure to pay two or more installments.In the instant case, the
contract, while a sale of personal property, is not, however, one on installments, but on
a straight term, in which the balance, after paymentof the initial sum, should be paid in
its totality at the time specified in the promissory note. The transaction is not, therefore,
the one contemplated in Act. No. 4122 and accordingly the mortgagee is not bound
by the prohibition therein contained as to the right to the recovery of the unpaid
balance.
The law is aimed at those sales where the price is payable in several installments, for,
generally, it is in these cases that partial payments consist in relatively small amounts,
constituting thus a great temptation for improvident purchasers to buy beyond their
means. There is no such temptation where the price is to be paid in cash, or, as in the
instant case, partyly in cash and partly in one term, for, in the latter case, the partial
payments are not so small as to place purchsers off their guard and delude them to a
miscalculation of their ability to pay. Theoritically perhaps, there is no difference
between paying the price in tow installments, in so far as the size of each partial
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payment is concerned; but in actual practice the difference exists, for, according to
the regular course of business, in contracts providing for payment of the price in two
installments, there is generally a provision for initial payment. But all these
considerations are immateral, the language of the law being so clear as to require no
construction at all.
A cash payment cannot be considered as a payment by installment, and even if it can

be so considered, still the law does not apply, for it requires non-payment of two or
more installments in order that its provisions may be invoked; in the case at bar, only
one installment was unpaid.
The Court reversed the lower courts decision.
Recto Law: Sales of Movables on Installments (Finance Company)

Zayas Jr vs. Luneta Motors
Foreclosure of chattel mortgage; Agency; Principal and agent relationship; Being a

collecting agent of a company proves the nature of relationship between principal
and agent. The Escao Enterprises of Cagayan de Ore City was an agent of Luneta
Motor Company.
Facts:
EutropioZayas, Jr, purchased on installment basis a motor vehicle described as ONE (1)
UNIT FORD THAMES FREIGHTER from Mr. RoqueEscao of the Escao Enterprises in
Cagayan de Oro City, dealer of respondent Luneta Motor Company.
The promissory note stated the amounts and dates of payment of twenty-six
installments covering the P7,920.00 debt. Simultaneously with the execution of the
promissory note and to secure its payment, Zayas executed a chattel mortgage on the
subject motor vehicle in favor of the respondent.
After paying a total amount of P3,148.00, the petitioner was unable to pay further
monthly installments prompting the respondent Luneta Motor Company to extra-
judicially foreclose the chattel mortgage.
In his answer with affirmative defenses and counterclaim, EutropioZayas, Jr. admitted
having executed the promissory note for the monthly payments, on a Ford Thames
vehicle bearing Engine No. 400E-127738 which he purchased from the Luneta Motor
Company but he denied his alleged outstanding liability of P1,551.74 plus interest
thereoo, the said obligation if there was any, had already been discharged either by
payment or by sale in public auction of the said motor vehicle as evidenced by a
Notice of Sale
Issue:
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Whether or not Luneta Motors can collect the deficiency of the Chattel Mortgage.
Ruling:
The Escao Enterprises of Cagayan de Ore City was an agent of Luneta Motor
Company. A very significant evidence which proves the nature of the relationship
between Luneta Motor Company and Escao Enterprises is Annex A of the petitioners
OPPOSITION TO URGENT MOTION FOR RECONSIDERATION. Annex A is a certification
from the cashier of Escao Enterprises on the monthly installments paid by Mr.
EutropioZayas, Jr.
In the certification, the promissory note in favor of Luneta Motor Company was
specifically mentioned. There was only one promissory note executed by EutropioZayas,
Jr. in connection with the purchase of the motor vehicle. The promissory note
mentioned in the certification refers to the promisorry note executed by EutropioZayas,
Jr. in favor of respondent Luneta Motor Company. x xxEscao Enterprises, a dealer of
respondent Luneta Motor Company, was merely a collecting-agent as far as the
purchase of the subject motor vehicle was concerned. The principal and agent
relationship is clear.
But even assuming that the distinct and independent entity theory of the private
respondent is valid, the nature of the transaction as a sale of personal property on
installment basis remains. When, therefore, Escao Enterprises, assigned its rights vis-a-vis
the sale to respondent Luneta Motor Company, the nature of the transaction involving
Escao) Enterprises and EutropioZayas, Jr. did not change at all.
As assignee, respondent Luneta Motor Company had no better rights than assignor
Escao Enterprises under the same transaction. The transaction would still be a sale of
personal property in installments covered by Article 1484 of the New Civil Code.
To rule otherwise would pave the way for subverting the policy underlying Article 1484
of the New Civil Code, on the foreclosure of chattel mortgages over personal property
sold on installment basis.
Recto Law: Sales of Movables on Installments (Finance Company)
PAMECA WOOD TREATMENT PLANT, INC., HERMINIO G. TEVES, VICTORIA V.EVES and
HIRAM DIDAY R. PULIDO vs. HON. COURT OF APPEALS and DEVELOPMENT BANK
OF THE PHILIPPINES,
FACTS:
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Petitioner PAMECA Wood Treatment Plant, Inc. (PAMECA) obtained a loan of

equivalent to P2,000,000.00 from respondent Bank. With this loan, petitioner PAMECA,
through its President, petitioner Herminio C. Teves, executed a promissory note for the
said amount, promising to pay the loan by installment. As security for the said loan, a
chattel mortgage was also executed over PAMECAs properties in Dumaguete City,
consisting of inventories, furniture and equipment, to cover the whole value of the loan.
PAMECA failed to pay so respondent bank extrajudicially foreclosed the chattel
mortgage, and, as sole bidder in the public auction, purchased the foreclosed
properties for a sum of P322,350.00. Respondent bank filed a complaint for the
collection of the balance against petitioner PAMECA and private petitioners herein, as
solidary debtors with PAMECA under the promissory note.
RTCs DECISION:
RTC of Makati rendered a decision ordering the defendants to pay jointly and
severally the remaining balance plus 21% interest per annum and other charges
CAs DECISION:
The Court of Appeals affirmed the RTC decision.
ISSUE: Whether or not petitioner can be compelled to pay the deficiency resulting
from the loan secured by chattel mortgage.
SCs DECISION:
Yes. It is clear from the above provision Sec 14 Act no. 1508 as amended that
effects of foreclosure under the Chattel mortgage law run inconsistent with Pledge
under Art 2115. Whereas, in pledge, the sale of the thing pledged extinguishes the
entire principal obligation, such that the pledgor may no longer recover proceeds of
the sale in excess of the amount of the principal obligation, Section 14 of the Chattel
Mortgage Law expressly entitles the mortgagor to the balance of the proceeds, upon
satisfaction of the principal obligation and costs.
Since the Chattel Mortgage Law bars the creditor-mortgagee from retaining the
excess of the sale proceeds there is a corollary obligation on the part of the debtor-
mortgagee to pay the deficiency in case of a reduction in the price at public auction.
It is not also tenable to apply by analogy of Article 1484 of the Civil Code to the instant
case. As correctly pointed out by the trial court, the said article applies clearly and
solely to the sale of personal property the price of which is payable in
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installments. Although Article 1484, paragraph (3) expressly bars any further action
against the purchaser to recover an unpaid balance of the price, where the vendor
opts to foreclose the chattel mortgage on the thing sold, should the vendees failure to
pay cover two or more installments, this provision is specifically applicable to a sale on
installments
To accommodate petitioners prayer even on the basis of equity would be to expand

the application of the provisions of Article 1484 to situations beyond its specific purview,
and ignore the language and intent of the Chattel Mortgage Law. Equity, which has
been aptly described as justice outside legality, is applied only in the absence of,
and never against, statutory law or judicial rules of procedure.
(additions lang nako ni. Kay wala mani mastate)
Article 1484. In a contract of sale of personal property the price of which is payable in
installments, the vendor may exercise any of the following remedies:
(1) Exact fulfillment of the obligation, should the vendee fail to pay;
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more installments. In
this case, he shall have no further action against the purchaser to recover any
unpaid balance of the price. Any agreement to the contrary shall be void.
Article 2115. The sale of the thing pledged shall extinguish the principal obligation,
whether or not the proceeds of the sale are equal to the amount of the principal
obligation, interest and expenses in a proper case. If the price of the sale is more than
said amount, the debtor shall not be entitled to the excess, unless it is otherwise agreed.
If the price of the sale is less, neither shall the creditor be entitled to recover the
deficiency, notwithstanding any stipulation to the contrary.
Remedies (Art. 1484)

Borbon vs Servicewide Specialists
Facts:
Defendants Daniel L. Borbon and Francisco Borbon signed a promissory note to

the order of Pangasinan Auto Mart Inc., to pay without notice or demand the amount
of P 122856 payable in instalment for twelve months and a late payment charge of 3%
shall be added on each unpaid instalment. It was further stipulated that acceptance
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by the holder of payment of any installment after due date will not be considered as
extending the time for payment nor the failure of the holder to exercise any of its rights
be deemed a waiver of such rights. The rights of Pangasinan Auto Mart were later
assigned to Filinvest Credit Corporation. Filinvest assigned all its rights, interest and
titleover the Promissory notes and the chattel mortgage to the plaintiff. Defendants
failed to pay their monthly installments, Filinvest demanded from defendants payment
of their installments. After accounts were assigned to the plaintiff, it attempted to
collect by sending a demand letter to the defendant for them to pay their entire
obligation. Defendants claim that what they intend to buy from Pangasinan was a
jeepney type Isuzu K.C Cab. The vehicle they bought was not delivered. Instead,
through misinterpretation and machination, the Pangasinan Motor Inc. delivered an
Isuzu crew cab, as this is the unit available at their warehouse. Later the representative
of Pangasinan Auto mart, Inc. (assignor) told the defendants that their available stock is
an Isuzu Cab but minus the rear body, which the defendants agreed to deliver with the
understanding that the Pangasinan Auto Mart, Inc. will refund the defendants the
amount of P10,000.00 to have the rear body completed Despite communications with
the Pangasinan Auto Mart, Inc. the latter was not able to replace the vehicle until the
vehicle delivered was seized by order of this court. The defendants argue that an
asignee stands in the place of an assignor which, to the mind of the court, is correct.
The asignee exercise all the rights of the assignor. The defendants further claim that they
are not in default of their obligation because the Pangasinan Auto Mart was first guilty
of not fulfilling its obligation in the contract. The defendants claim that neither party
incurs delay if the other does not comply with his obligation.
Issue: WON the petitioners may recover the deficiency?
Held:
No. When the seller assigns his credit to another person, the latter is likewise
bound by the same law. Accordingly, when the assignee forecloses on the mortgage,
there can be no further recovery of the deficiency, and the seller-mortgagee is
deemed to have renounced any right thereto. A contrario, in the event of the seller-
mortgagee first seeks, instead, the enforcement of the additional mortgages,
guarantees or other security arrangements, he must be then be held to have lost by
waiver or non-choice his lien on the chattel mortgage of the personal property sold by
and mortgaged back to him, although, similar to an action for specific performance,
he may still levy on it.
In ordinary alternative obligations, a mere choice categorically an unequivocally made

and then communicated by the person entitled to exercise the option concludes the
parties. The creditor may not thereafter exercise any other option, unless the chosen
alternative proves to be innefectual or unavailing due to no fault on his part. This rule, in
essence, is the difference between alternative obligations, on the one hand, and
alternative remedies, upon the other hand, where, in the latter case, the choice
generally becomes conclusive only upon the exercise of the remedy. For instance, in
one of the remedies expressed in Article 1484 of the Civil Code, it is only when there has
been a foreclosure of the chattel mortgage that the vendee-mortgagor would be
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permitted to escape from a deficiency liability. Thus, if the case is one for specific
performance, even when this action is selected after the vendee has refused to
surrender the mortgaged property to permit an extrajudicial foreclosure, that property
may still be levied on execution and an alias writ may be issued if the proceeds thereof
are insufficient to satisfy the judgment credit. So, also, a mere demand to surrender the
object which is not heeded by the mortgagor will not amount to a foreclosure, but the
repossession thereof by the vendor-mortgagee would have the effect of a foreclosure.
The parties here concede that the action for replevin has been instituted for the
foreclosure of the vehicle in question (now in the possession of private respondent). The
sole issue raised before us in this appeal is focused on the legal propriety of the
affirmance by the appellate court of the awards made by the court a quo of
liquidated damages and attorney's fees to private respondent. Petitioners hold that
under Article 1484 of the Civil Code, aforequoted, the vendor-mortgagee or its
assignees loses any right "to recover any unpaid balance of the price" and any
"agreement to the contrary (would be) void.
The argument is aptly made. In Macondray & Co. vs. Eustaquio, we have said
that the phrase "any unpaid balance" can only mean the deficiency judgment to
which the mortgagee may be entitled to when the proceeds from the auction sale are
insufficient to cover the "full amount of the secured obligations which . . . include
interest on the principal, attorney's fees, expenses of collection, and the costs." In sum,
we have observed that the legislative intent is not to merely limit the proscription of any
further action to the "unpaid balance of the principal" but, as so later ruled in Luneta
Motor Co. vs. Salvador, to all other claims that may be likewise be called in for in the
accompanying promissory note against the buyer-mortgagor or his guarantor,
including costs and attorney's fees.
In Filipinas Investment & Finance Corporation vs. Ridad while we reiterated and
expressed our agreement on the basic philosophy behind Article 1484, we stressed,
nevertheless, that the protection given to the buyer-mortgagor should not be
considered to be without circumscription or as being preclusive of all other laws or legal
principles. Hence, borrowing from the examples made in Filipinas Investment, where the
mortgagor unjustifiably refused to surrender the chattel subject of the mortgage upon
failure of two or more installments, or if he concealed the chattel to place it beyond the
reach of the mortgagee, that thereby constrained the latter to seek court relief, the
expenses incurred for the prosecution of the case, such as attorney's fees, could rightly
be awarded.
Remedies (Art. 1484) - Forclosure
Universal Motors Corp. vs. Sy Hian Tat
FACTS:
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Appellant Dy Hian Tat bought from appellee Universal Motors Corporation a

Mercedes-Benz diesel truck on an instalment basis.
When appellant defaulted in the payment of the instalments, appellee filed an
action for replevin before the CFI of Manila in order to recover possession of said
truck.
Appellee further prayed that in event said truck could not be recovered,
appellant should pay to the former not only the unpaid balance for the sale of
the truck but also the attorneys fees and the costs of suit.
Appellant, on the hand, admits that appellee is entitled to the possession of the
said truck.
The CFI rendered its judgment adjudging that the appellee has the right of
possession over the Mercedes-Benz Diesel Truck.
The lower court further ordered that appellant pay to appellee amounts
representing attorney's fees and costs of suit.
Appellant appealed the decision of the CFI to the Supreme Court on the ground
that the awarding of attorneys fees by the lower court erred to the appellee is
contrary to the provisions of article 1484 of the New Civil Code of the Philippines.
ISSUE:
Whether Article 1484 of the Civil Code is applicable to the case at bar.
RULING:
The Supreme Court say NO.
According to the Supreme Court, Article 1484 of the Civil Code does not apply to the
case at bar because the present case is an action for replevin and not a foreclosure of
mortgage.
ART. 1484. In a contract of sale of personal property the price of which is payable in
(2) Cancel the sale, should the vendee's failure to pay cover two or more
installments;
(3) Foreclose the chattel mortgage on the thing sold if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case, he
shall have no further action against the purchaser to recover any unpaid balance of
the price. Any agreement to the contrary shall be void.
Nowhere in the stipulation of facts or even in the pleadings does it appear that
appellee has foreclosed its mortgage. Merely because a copy of the mortgage has
been attached to the complaint does not make this action one of foreclosure of a
chattel mortgage. True, appellee succeeded in recovering the truck in question,
precisely by means of the present action of replevin, but surely, this case is far from
being the action of foreclosure of chattel mortgage.
The mere fact that appellee has secured possession of the truck in question does not
necessarily mean that it will foreclose its mortgage. Indeed, there is no showing at all
that appellee is causing the sale thereof at public auction or in even preparing to do
14
so. It is quite possible that appellee wanted merely to be sure that the truck is not lost or
rendered valueless, preparatory to having it levied upon under a writ of attachment

INDUSTRIAL FINANCE CORPORATION vs.HON. PEDRO A. RAMIREZ, Judge of the Court of
First instance of Manila, and CONSUELO ALCOBA
FACTS:
On December 4, 1970 ArnaldoDizon sold to Consuelo Alcoba his 1966 model Chevrolet
car for P13,157.89, payable in eighteen monthly installments, which were secured by a
chattel mortgage on the car.
On that same date, Dizon assigned for ten thousand pesos to Industrial Finance
Corporation all his rights and interest in the chattel mortgage. Consuelo Alcoba
defaulted in the payment of the first four installments. Because of that default and by
virtue of the acceleration clause in the promissory note forming part of the mortgage,
the whole obligation became due and demandable.
On November 20, 1971, or less than a year after Industrial Finance Corporation had
discounted Consuelo Alcoba's promissory note to Dizon, the corporation sued her in the
Court of First Instance of Manila (Civil Case No. 85583). The complaint, a printed form
used by the corporation in collection cases, is denominated "replevin with damages".
In its complaint Industrial Finance Corporation prayed for alternative reliefs. The main
objective of its complaint was recovery of the mortgaged car by means of a writ of
replevin.
The mortgagee-assignee wanted to foreclose extrajudiciallythe chattel mortgage but,

before it could do so, the sheriff had to seize the car by means of the provisional
remedy of an order for the delivery of personal property.
The lower court issued the writ of replevin. But the sheriff was not able to seize the
mortgaged car. Consequently, there was no extrajudicial foreclosure of the mortgage
15
since, for that purpose, possession of the car by the sheriff is necessary.
A second alias writ of execution was issued. The sheriff was able to levy upon the
mortgaged car which was then in the possession of the Aco Motor Service of Dagupan
City. At the execution sale held on April 25, 1974 Industrial Finance Corporation bought
the mortgaged car for P4,000 (Exh. 3-A, p. 72, Expedients).
The lower court in its order of March 2, 1976 denied the motion for a third alias writ of
execution. It treated the execution sale as a "virtual foreclosure of the chattel
mortgage".
ISSUE:
Whether or not by means of that complaint, Industrial Finance Corporation sought to

foreclose the chattel mortgage as contemplated in article 1484 of the Civil Code,
formerly Act No. 4122, otherwise known as the Recto Installment Sales Law.
RULING:
The Civil Code provides.
(2) Cancel the sale, should the vendee's failure to pay cover two or more installments;
16
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendee's failure to pay cover two or more installments. In this case, he shall
have no further action against the purchaser to recover any unpaid balance of the
price. Any agreement to the contrary shall be void. (1454-A-a).
According to article 1484, it is only when there has been a foreclosure that the
mortgagor is not liable for any deficiency.
In this case, there was no foreclosure. The mortgagee evidently chose the remedy of
specific performance. It levied upon the car by virtue of an execution and not as an
incident of a foreclosure proceeding. It is entitled to an alias writ of execution for the
portion of the judgment that has not been satisfied.
The rule is that in installment sales, if the action instituted is for specific performance and
the mortgaged property is subsequently attached and sold, the sale thereof does not
amount to a foreclosure of the mortgage. Hence, the seller-creditor is entitled to a
deficiency judgment.

Northern Motors, Inc. vs. Sapinoso
FACTS:
On June 4, 1965, CasianoSapinoso purchased from Northern Motors, Inc. an Opel

Kadett car for the price of P12,171.00, making a down payment and executing a
promissory note for the balance of P10,540.00 payable in installments with interest at
12% per annum
To secure the payment of the promissory note, Sapinoso executed in favor of Northern
Motors, Inc. a chattel mortgage on the car. The mortgage contract provided, among
others, that upon default by the mortgagor in the payment of any part of the principal
or interest due, the mortgagee may elect any of the following remedies: (a) sale of the
car by the mortgagee; (b) cancellation of the contract of sale; (c) extrajudicial
foreclosure; (d) judicial foreclosure; (e) ordinary civil action to exact fulfillment of the
mortgage contract. It was further stipulated that "[w]hichever remedy is elected by the
17
mortgagee, the mortgagor expressly waives his right to reimbursement by the

mortgagee of any and all amounts on the principal and interest already paid by him."
The vendee-mortgagor having failed to make payments, Northern Motors, Inc. filed the
present complaint on July 22, 1966, against Sapinoso and a certain person whose
name, identity and address were still unknown to the plaintiff, hence denominated in
the complaint as "John Doe." In its complaint, Northern Motors, Inc. stated that it was
availing itself of the option given it under the mortgage contract of extrajudicially
foreclosing the mortgage, and prayed that a writ of replevin be issued upon its filing of
a bond for the seizure of the car and for its delivery to it; that after hearing, the plaintiff
be adjudged to have the rightful possession and ownership of the car; that in default of
delivery, the defendants be ordered to pay the plaintiff the sum of P10,218.10 with
interest, at 12% per annum from April 18, 1966, until full payment of the said sum, as well
as an amount equivalent to 25% of the sum due as and for attorney's fees and
expenses of collection, and the costs of the suit. Plaintiff also prayed for such other
remedy as might be deemed just and equitable in the premises.
the plaintiff's filing of a bond, a writ of replevin was issued by the court. On October 20,
1966, copies of the summons, complaint and annexes thereto were served on
defendant Sapinoso by the sheriff who executed the seizure warrant by seizing the car
from defendant Sapinoso on the same date, and turning over its possession to the
plaintiff
defendant Sapinoso filed an answer admitting the allegations in the complaint with
respect to the sale to him of the car, the terms thereof, the execution of the promissory
note and of the chattel mortgage contract, and the options open to the plaintiff under
the said contract.
As special defenses the said defendant alleged that he failed to pay the installments
due because the car was defective, and the plaintiff failed to have it fixed although he
had repeatedly called the plaintiff's attention thereto, hence, the defendant had to
procrastinate in his payments in order to move the plaintiff to repair the car; and that
although the car could not be used, he paid P700.00 to the plaintiff upon the latter's
assurance that the car would be fixed, but that instead of having the car fixed, the
plaintiff, in bad faith, filed the present complaint. The defendant prayed that the
complaint be dismissed and that the plaintiff be ordered to return the car to him. He
stated in his prayer that he would be very much willing to pay the car in a compromise
agreement between him and the plaintiff.
After trial, the court a quo, in its decision dated April 4, 1967, held that defendant
Sapinoso having failed to pay more than two (2) installments, plaintiff-mortgagee
acquired the right to foreclose the chattel mortgage, which it could avail of as it has
done in the present case by filing an action of replevin to secure possession of the
18
mortgaged car as a preliminary step to the foreclosure sale contemplated in the

Chattel Mortgage Law; and that the foreclosure of the chattel mortgage and the
recovery of the unpaid balance of the price are alternative remedies which may not
be pursued conjunctively, so that in availing itself of its right to foreclose the chattel
mortgage, the plaintiff thereby renounced whatever claim it may have had on the
promissory note, and, therefore, the plaintiff has no more right to the collection of the
attorney's fees stipulated in the promissory note, and should return to defendant
Sapinoso the sum of P1,250.00 which the plaintiff had received from the latter after
having filed the present case on July 22, 1966, and elected to foreclose the chattel
mortgage.
plaintiff contends that under Article 1484 of the Civil Code it is the exercise, not the
mere election, of the remedy of foreclosure that bars the creditor from recovering the
unpaid balance of the debt; that what the said Article 1484 prohibits is "further action"
to collect payment of the deficiency after the creditor has foreclosed the
mortgageand that in paying plaintiff-appellant the sum of P1,250.00 before defendant-
appellee Sapinoso filed his answer, and in not filing a counterclaim for the recovery
thereof, the said defendant-appellee in effect renounced whatever right he might
have had to recover the said amount.
ISSUE: whether the plaintiffs contention has merit
HELD: The appeal is meritorious.
RULING:
"Article 1484. Civil Code - In a contract of sale of personal property the price of which is
payable in installments, the vendor may exercise any of the following remedies:
1) Exact fulfillment of the obligation, should the vendee fail to pay;
2) Cancel the sale, should the vendee's failure to pay cover two or more installments;
3) Foreclose the chattel mortgage on the thing sold, if one has been constituted, should
the vendee's failure to pay cover two or more installments. In this case, he shall have no
further action against the purchaser to recover any unpaid balance of the price. Any
agreement to the contrary shall be void."
"Under the law, the delivery of possession of the mortgaged property to the mortgagee,
the herein appellee, can only operate to extinguish appellant's liability if the appellee
had actually caused the foreclosure sale of the mortgaged property when it recovered
possession thereof. It is worth noting that it is the fact of foreclosure and actual sale of
the mortgaged chattel that bar recovery by the vendor of any balance of the
purchaser's outstanding obligation not satisfied by the sale (New Civil Code, par. 3,
Article 1484). As held by this Court, if the vendor desisted, on his own initiative, from
19
consummating the auction sale, such desistance was a timely disavowal of the remedy
of foreclosure, and the vendor can still sue for specific performance"
In issuing a writ of replevin, and, after trial, in upholding plaintiff-appellant's right to the
possession of the car, and ratifying and confirming its delivery to the said plaintiff-
appellant, the court below correctly considered the action as one of replevin to secure
possession of the mortgaged vehicle as a preliminary step to this foreclosure sale

Cruz v. Filipinas Investment & Finance Corp.
Facts:
Petitioner Ruperto Cruz purchased on installments one (1) unit of Isuzu Diesel bus from
Far East Motors. Petitioner issued a promissory note as evidence of his indebtedness to
Far East Motors. To secure such promissory note, chattel mortgage was instituted on the
said vehicle. Since no down payment was made by Cruz, an additional security was
required by Far East Motors. The additional security was given by plaintiff Felicidad de
Reyes over her land which at the time was mortgaged to DBP. Later, Far East Motors
assigned all its rights and interests to the Deed of Chattel Mortgage and Deed of Real
Estate Mortgage to respondent, with due notice of assignment to the petitioners.
Subsequently, petitioner defaulted on the promissory note so respondent foreclosed the
chattel mortgage on the bus. However, the proceeds from the chattel mortgage were
insufficient to discharge fully the indebtedness. Preparatory to extra-judicially
foreclosing the real estate mortgage on Reyes land, defendant paid DBP her unpaid
balance. Petitioner Reyes sent a letter demanding cancellation of her real estate
mortgage, but defendant did not heed so the former instituted a suit against the latter
for cancellation of said real estate mortgage.
RTC: sustained petitioner and declared that the extrajudicial foreclosure of the chattel
mortgage on the bus barred further action against the additional security put up by
Reyes
Ratio of the lower court:

There is no controversy that, involving as it does a sale of personal property on
installments, the pertinent legal provision in this case is Article 1484 of the Civil Code, to
wit:
Art. 1484. In a contract of sale of personal property the price of which is payable in
(2) Cancel the sale, should the vendees failure to pay cover two or more installments;
(3) Foreclose the chattel mortgage on the thing sold, if one has been constituted,
should the vendees failure to pay cover two or more installments. In this case, he shall
have no further action against the purchaser to recover any unpaid balance of the
price. Any agreement to the contrary shall be void.
20
Issue: Whether or not the action referred in Art. 1484 is confined only to those actions
where there is a judicial suit or proceeding in court
Ruling:
No, the action referred to in Art. 1484 is not limited to judicial suits or proceedings.
The word action is without a definite or exclusive meaning. It has invariably been
defined as:
the legal demand of ones right, or rights;
the lawful demand of ones right in a court of justice;
the legal and formal demand of ones rights from another person or party, made and
insisted on in a court of justice;
a claim made before a tribunal;
an assertion in a court of justice of a right given by law;
a demand or legal proceeding in a court of justice to secure ones rights;
the prosecution of some demand in a court of justice;
the means by which men litigate with each other;
the means that the law has provided to put the cause of action into effect;
Considering the purpose for which the prohibition contained in Article 1484, the word
action used therein may be construed as referring to any judicial or extrajudicial
proceeding by virtue of which the vendor may lawfully be enabled to exact recovery
of the supposed unsatisfied balance of the purchasing price form the purchaser or his
privy. Certainly, an extrajudicial foreclosure of a real estate mortgage is one such
proceeding.
Lease with Option to Purchase

Title: PCI Leasing v. Giraffe-X Creative
Citation: 527 SCRA 405
Facts:
PCI Leasing and Giraffe entered into a Lease Agreement, whereby the former leased
out the latter one set of Silicon High Impact Graphics and accessories, and one unit of
Oxberry Cinescan 6400-10. Both parties signed two separate documents, each
denominated as Lease Schedule and another two separate documents, denominated
21
as Disclosure Statements of Loan/Credit Transaction (Single Payment or Installment

Plan). One year after the execution of the agreement, Giraffe defaulted in its monthly
rental payment obligations. And following a three-month default, PCI addressed a
formal pay-or-surrender-equipment type of demand letter to Giraffe but it went
unheeded.
PCI filed a complaint before the RTC of Quezon City praying for the issuance of writ of
replevin for the recovery of the leased property. Upon PCI LEASINGs posting of a
replevin bond, the trial court issued a writ of replevin, paving the way for PCI LEASING to
secure the seizure and delivery of the equipment covered by the basic lease
agreement. On the other hand, Giraffe argued that, pursuant to Article 1484 of the Civil
Code on installment sales of personal property, PCI LEASING is barred from further
pursuing any claim arising from the lease agreement and the companion contract
documents, adding that the agreement between the parties is in reality a lease of
movables with option to buy. PCI Leasing argued that it is a straight lease without an
option to buy.
The RTC granted Giraffes motion to dismiss the case on the basis of the following
premises: 1) the lease agreement package, as memorialized in the contract
documents, is akin to the contract contemplated in Article 1485 of the Civil Code, and
2) GIRAFFEs loss of possession of the leased equipment consequent to the enforcement
of the writ of replevin is akin to foreclosure, the condition precedent for application of
Articles 1484 and 1485 [of the Civil Code].
Hence, this petition for review on certiorari.
Issue/s:
Whether or not the underlying Lease Agreement, Lease Schedules and the Disclosure
Statements that embody the financial leasing arrangement between the parties are
covered by and subject to the consequences of Articles 1484 and 1485 of the New Civil
Code.
Ruling:
The Supreme Court denied the petition and affirmed the ruling of the trial court. On the
whole, then, we rule, as did the trial court, that the PCI LEASING- GIRAFFE lease
agreement is in reality a lease with an option to purchase the equipment. This has been
made manifest by the actions of the petitioner itself, foremost of which is the
declarations made in its demand letter to the respondent. There could be no other
explanation than that if the respondent paid the balance, then it could keep the
equipment for its own; if not, then it should return them. This is clearly an option to
purchase given to the respondent. Being so, Article 1485 of the Civil Code should apply.
22
The present case reflects a situation where the financing company can withhold and
conceal - up to the last moment - its intention to sell the property subject of the finance
lease, in order that the provisions of the Recto Law may be circumvented. It may be, as
petitioner pointed out, that the basic lease agreement does not contain a purchase
option clause. The absence, however, does not necessarily argue against the idea that
what the parties are into is not a straight lease, but a lease with option to purchase. This
Court has, to be sure, long been aware of the practice of vendors of personal property
of denominating a contract of sale on installment as one of lease to prevent the
ownership of the object of the sale from passing to the vendee until and unless the
price is fully paid.
In choosing, through replevin, to deprive the respondent of possession of the leased

equipment, the petitioner waived its right to bring an action to recover unpaid rentals
on the said leased items. Paragraph (3), Article 1484 in relation to Article 1485 of the
Civil Code, which we are hereunder re-reproducing, cannot be any clearer.
xxx xxx xxx
(3) Foreclose the chattel mortgage on the thing sold, if one has been
constituted, should the vendee's failure to pay cover two or more installments. In
this case, he shall have no further action against the purchaser to recover any
unpaid balance of the price. Any agreement to the contrary shall be void.
ART. 1485. The preceding article shall be applied to contracts purporting to be leases of
personal property with option to buy, when the lessor has deprived the lessee of the
possession or enjoyment of the thing.
Lease with Option to Purchase

Elisco Tool Manufacturing Corporation, Petitioner, v.
CA, Rolando Lantan and Rina Lantan, Respondents
G.R. No. 109966, May 31, 1999, 2nd Division
J. Mendoza
Facts:
23
On January 9, 1980, Private Respondent Rolando Lantan entered into a lease

agreement with option to buy with his company, Elisco Tool Manufacturing
Corporation, as head of its cash department, over a car Colt Lancer 2 door for a period
of Five (5) years with a monthly rental of PhP 1,010.65, to be made through salary
deduction, and at the end of Five (5) year period or upon payment of the 60th monthly
rental, Respondent Lantan may exercise the option to purchase the motor vehicle from
his employer, and all monthly rentals shall be applied to the payment of the full
purchase price of the car. A Promissory Note was executed therefor which provided,
among others, that In case of default, in the payment of any installment on the
stipulated due date, we agree to pay as liquidated damages 2% of the amount due
and unpaid for every thirty (30) days of default or fraction thereof.
In 1981, Elisco Tool ceased operations, as a result of which Private Respondent Rolando
Lantan was laid off. Nonetheless, as of December 4, 1984, private respondent was able
to make payments for the car in the total amount of P61,070.94.
On June 6, 1986, Petitioner filed a complaint, entitled "replevin plus sum of money,"
against Private Respondent Rolando and Rina Lantan before the RTC of Pasig, Metro
Manila, alleging that (1) Private Respondents failed to pay the monthly rentals which, as
of May 1986, totalled PhP 39,054.86, (2) despite demands, Private Respondents failed to
settle their obligation thereby entitling Petitioner to the possession of the car, and
praying that, in the event that manual delivery of the car cannot be effected for any
reason, to render judgment ordering the Private Respondents to pay PhP 60,000.00, the
estimated actual value of the car.
The trial court sustained Private Respondents' claim that the agreement in question was
one of sale and held that the latter had fully paid the price of the car having paid the
total amount of PhP 61,070.94. The Court of Appeals affirmed in toto the decision of the
court a quo declaring Respondent Spouses Rolando Lantan and Rina Lantan owners of
the said car which they had acquired under a car plan for top employees of the
Elizalde group of companies.
Thus, this petition for review.
Issue:
Whether the lease contract with option to buy is a contract of sale on installment, and
whether Private Respondents are the owners of the car.
Ruling:
Petitioner does not deny that private respondent Rolando Lantan acquired the vehicle
in question under a car plan for executives of the Elizalde group of companies. Under a
typical car plan, the company advances the purchase price of a car to be paid back
by the employee through monthly deductions from his salary. The company retains
ownership of the motor vehicle until it shall have been fully paid for.
24
This Court has long been aware of the practice of vendors of personal property of
denominating a contract of sale on installment as one of lease to prevent the
ownership of the object of the sale from passing to the vendee until and unless the
price is fully paid. As this Court noted in Vda. de Jose v. Barrueco:
Sellers desirous of malting conditional sales of their goods, but who do not wish
openly to make a bargain in that form, for one reason or another, have frequently
resorted to the device of making contracts in the form of leases either with options
to the buyer to purchase for a small consideration at the end of term, provided
the so-called rent has been duly paid, or with stipulations that if the rent
throughout the term is paid, title shall thereupon vest in the lessee. It is obvious that
such transactions are leases only in name. The so-called rent must necessarily be
regarded as payment of the price in installments since the due payment of the
agreed amount results, by the terms of the bargain, in the transfer of title to the
lessee.
In the case at bar, although the agreement provides for the payment by Private
Respondents of "monthly rentals," the fifth paragraph thereof gives them the option to
purchase the motor vehicle at the end of the 5th year or upon payment of the 60th
monthly rental when "all monthly rentals shall be applied to the payment of the full
purchase price of the car." It is clear that the transaction in this case is a lease in name
only. The so-called monthly rentals are in truth monthly amortizations on the price of the
car.
Both the trial court and the Court of Appeals correctly ruled that private respondents
could no longer be held liable for the amounts of PhP 39,054.86 or PhP 60,000.00
because Private Respondents had fulfilled their part of the obligation. The agreement
does not provide for the payment of interest on unpaid monthly "rentals" or installments
because it was entered into in pursuance of a car plan adopted by the company for
the benefit of its deserving employees.
Petitioner contends that the promissory note provides for such interest payment.
However, as the Court of Appeals held:
The promissory note in which the 2% monthly interest on delayed payments
appears does not form part of the contract. There is no consideration for the
promissory note. There is nothing to show that plaintiff advanced the purchase
price of the vehicle for Lantan so as to make the latter indebted to the former for
the amount stated in the promissory note x x x x In other words, Plaintiff did not buy
the vehicle for Rolando Lantan, advancing the purchase price for that purpose.
There is nothing in the complaint or in the evidence to show such arrangement.
Therefore, there was no indebtedness secured by a promissory note to speak of.
There being no consideration for the promissory note, the same, including the
penalty clause contained thereon, has no binding effect.
There is no evidence that private respondents received the amount of PhP 60,639.00
indicated in the promissory note as its value. What was proven below is the fact that
private respondents received from petitioner the 2-door Colt Lancer car which was
25
valued at PhP 60,000 and for which private respondent Rolando Lantan paid monthly
amortizations of P1,010.65 through salary deductions.
The 2% surcharge is not provided for in the agreement. Its collection by the company
would in fact run counter to the purpose of providing "added emoluments" to its
deserving employees. Consequently, the total amount of PhP 61,070.94 already paid to
petitioner should be considered payment of the full purchase price of the car or the
total installments paid.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED.
Capacity to Buy and Sell

MERCEDES CALIMLIM- CANULLAS vs JUDGE FORTUN (CFI, BRANCH 1) , CORAZON
DAGUINES
Petition for Review on certiorari assailing the Decision, dated October 6, 1980
and Motion for Reconsideration on November 26, 1980 for this case whereby it was
ruled: upholding the sale of parcel of land in favor of Daguines but not on the
conjugal house thereon
Facts:
Petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married in

1962 and bore five children. They lived in a small house on the residential land
(size: 891sqm) in question located at Bacabac, Bugallon, Pangasinan. He
inherited the land when his father died in 1965.
In 1978, he abandoned his family and lived with the private respondent, Corazon
Daguines.
On April 15, 1980, Fernando sold the subject property with the house to Daguines
for 2,000 pesos. In the document of sale, Fernando described the house as also
inherited from my deceased parents
During the pendency of this appeal, Fernando and Daguines were convicted of
concubinage on October 27, 1981, the judgement has become final.
Unable to take possession of the lot and house, DAGUINES initiated a complaint
on June 19, 1980 for quieting of title and damages against MERCEDES.The latter
resisted and claimed that the house in dispute where she and her children were
residing, including the coconut trees on the land, were built and planted with
conjugal funds and through her industry; that the sale of the land together with
the house and improvements to DAGUINES was null and void because they are
conjugal properties and she had not given her consent to the sale.
Ruling of CFI Pangasinan:
Principally declared DAGUINES "as the lawful owner of the land in question as
well as the one-half of the house erected on said land."
26
Issue:
Whether or not the sale of the lot together with the house and
improvementsthereon was valid under the circumstances surrounding the
transaction.
Held:
We find that the contract of sale was null and void for being contrary to
morals and public policy.
Article 1409 of the Civil Code: contracts whose cause, object, or purpose
is contrary to law, morals, good customs, public order, or public policy are void
and inexistent from the very beginning.
Article 1352also provides that: "Contracts without cause, or with unlawful

cause, produce no effect whatsoever. The cause is unlawful if it is contrary to
law, morals, good customs, public order, or public policy."
Application of law: The sale was made by a husband in favor of a

concubine after he had abandoned his family and left the conjugal home
where his wife and children lived and from whence they derived their support.
That sale was subversive of the stability of the family, a basic social institution
which public policy cherishes and protects.
Capacity to Buy and Sell

Cruzvs. CA, 281 SCRA 491
(G.R. No. 120122 November 6, 1997)
This a case of a woman spurned and beguiled now whines a costly odyssey in
relations extra legem.
FACTS:
Gloria R. Cruz was the owner of a lot with an area of 747.7 square meters, together with
the improvements thereon. In 1977 she and respondent Romeo V. Suzara lived together
as husband and wife without benefit of marriage; in September 1982, solely out of love
and affection for Suzara, she executed a deed of absolute sale over the lot in favor of
Suzara without any monetary consideration; thereafter, Suzara registered the
document in his favor and used the property as collateral for a bank loan P350,000.00;
he however failed to pay the loan so that after four (4) years the mortgage was
foreclosed. She paid the bank P40,638.88 to restructure the loan resulting in the
extension of the redemption period to two (2) years. However, without her knowledge
and before the expiration of the extended period, Suzara redeemed the property. She
tried to talk to him but he avoided her. Finally, to protect her interest, she executed an
Affidavit of Adverse Claim which she filed with the Register the Deeds of Quezon City
27
asserting that her sale in favor of Suzara was null and void for lack of consideration and
being contrary to law and public policy.
On 22 February 1990 she filed a complaint with Regional Trial Court of Manila against
respondent Suzara for quieting of title, declaration of nullity of documents and
damages with prayer for writ of preliminary injunction.
The Registry of Deeds (ROD), in response to the courts order to show cause why it was
refusing to annotate the notice of lispendens,filed a manifestation informing the trial
court that the property had been sold by respondent Suzara to his co-respondent
Vizconde who was already the registered owner thereof and since Vizconde was not
impleaded in the case the notice of lispendens could not be annotated on his title until
the requirements of law were met and the annotation of the notice judicially ordered.
As stated in the immediately preceding paragraph, the motion to admit amended
complaint impleading respondent Vizconde was filed ex parte on 3 April 1990.
In response to the amended complaint, Vizconde answered that there was no privity of
contract between him and petitioner; he (Vizconde) was a purchaser for value in good
faith; the sale between him and Suzara was executed on 22 December 1989 or long
before the execution of the Affidavit of Adverse Claim; and, the action was barred by
laches, estoppel and prescription.
RTC & CA RULING:

The trial court rendered a decision dismissing the complaint and the counterclaims as
well as the cross claim of respondent Vizconde. It ruled that the sale between petitioner
and respondent Suzara was valid with "love, affection and accommodation" being the
consideration for the sale. It also found Vizconde an innocent purchaser for value
because at the time he purchased the property he was unaware of the adverse claim
of petitioner.
On appeal, the Court of Appeals affirmed the judgment of the court a quo.
ISSUES:
1. Whether or not the lower courts erred in holding that the sale between her and
Suzara was valid for there was no price paid in money or its equivalent and that
the consideration of "love, affection and accommodation" for the sale was not a
valid cause for the conveyance of the property;and that there could be no valid
sale among them for being common-law spouses under Art. 1490 of the Civil
Code; and
2. Whether or not respondent Vizconde was an innocent purchaser for value in
good faith considering that there was substitution by a second deed of dated 5
February 1990, registered 6 March 1990 to avoid payment of fines and penalties
for late registration, where there was already and adverse claim on 22 January
1990.
RULING:
28
We cannot sustain petitioner. Although under Art. 1490 the husband and wife cannot
sell property to one another as a rule which, for policy consideration and the dictates of
morality require that the prohibition apply to common-law relationships, petitioner can
no longer seek reconveyance of the property to her as it has already been acquired by
respondent Vizcondein good faith and for valuefrom her own transferee.
The real purpose of the Torrens system of registration is to quiet title to land and to put a
stop to any question of legality of the title except claims which have been recorded in
the certificate of title at the time of registration or which may arise subsequent thereto.
Every registered owner and every subsequent purchaser for value in good faith holds
the title to the property free from all encumbrances except those noted in the
certificate. Hence, a purchaser is not required to explore further what the Torrens title on
its face indicates in quest for any hidden defect or inchoate right that may subsequently
defeat his right thereto.
Where innocent third persons, relying on the correctness of the certificate of title thus
issued, acquire rights over the property the court cannot disregard such rights and
order the total cancellation of the certificate. The effect of such an outright
cancellation would be to impair public confidence in the certificate of title, for
everyone dealing with property registered under the Torrens system would have to
inquire in every instance whether the title has been regularly or irregularly issued. This is
contrary to the evident purpose of the law. Every person dealing with registered land
may safely rely on the correctness of the certificate of title issued therefor and the law
will in no way oblige him to go behind the certificate to determine the condition of the
property. Even if a decree in a registration proceeding is infected with nullity, still an
innocent purchaser for value relying on a Torrens title issued in pursuance thereof is
protected. A purchaser in good faith is one who buys the property of another without
notice that some other person has a right to or interest in such property and pays a full
and fair price for the same at the time of such purchase or before he has notice of the
claim of another person.
For purposes of resolving the present controversy, the allegation that there was a
second deed of sale executed solely for the purpose of evading the penalties resulting
from late payment of taxes and registration is immaterial. The fact is, petitioner herself
admits that the actual sale of the property occurred on 22 December 1989. A contract
of sale is consensual and is perfected once agreement is reached between the parties
on the subject matter and the consideration therefor.
Vizcondebeing a purchaser of registered land for value in good faith holds an

indefeasible title to the land. This is without prejudice however to any appropriate
remedy petitioner may take against her erstwhile common-law husband, respondent
Suzara.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals affirming that
of the trial court is AFFIRMED. Costs against petitioner.
29
Capacity to Buy and Sell (Guardians)

THE PHILIPPINE TRUST COMPANY, AS GUARDIAN OF THE PROPERTY OF THE MINOR,
MARIANO L. BERNARDO, PETITIONER, VS. SOCORRO ROLDAN, FRANCISCO HERMOSO,
FIDEL C. RAMOS AND EMILIO CRUZ, RESPONDENTS. [ G.R. No. L-8477, May 31, 1956 ]
FACTS:
Mariano L Bernardo, a minor, inherited from his father, Marcelo Bernardo 17 parcels of
land located in Guiguinto, Bulacan. In view of his minority, guardianship proceedings
were instituted on July 27, 1947, where Socorro Roland, surviving spouse of Marcelo and
step-mother of Mariano, was appointed as guardian of the latter. Also, Socorro filed a
motion asking authority to sell as guardian the 17 parcels for the sum of P14,700 to his
brother-in-law, Dr. Fidel C. Ramos, the purpose of the sale being allegedly to invest
money in a residential house, which the minor desired to have on Tindalo St., Manila.
The motion was granted.
On August 5, 1947 Socorro, as guardian, then executed the proper deed of sale in favor
of
Fidel Ramos and on August 12, 1947, she asked for and obtained judicial confirmation
of the sale. However, on August 13, 1947, Fidel Ramos executed in favor of Socorro
personally, a deed of conveyance covering the same 17 parcels for the sum of P15,000.
And on October 21, 1947 Socorro sold 4 out of the 17 parcels to Emilio Cruz for P3,000,
reserving herself the right to repurchase.
On August 10, 1948, petitioner Phil. Trust Co. replaced Socorro as guardian. Petitioner
filed a complaint to annul two contracts regarding the 17 parcels of land: a) the sale
thereof by Socorro, as guardian, to Fidel Ramos; and b) sale thereof by Fidel Ramos to
Socorro personally. Petitioner contends that the step-mother in effect, sold to herself,
the properties of her ward thus should be annulled as it violates Art. 1459 of the Civil
Code prohibiting the guardian from purchasing either in person or through the
mediation of another the property of her ward. As to the third conveyance, that
Socorro had acquired no valid title to convey to Cruz. The trial court held that Art 1459
was not controlling as there was no proof that Ramos was a mere intermediary or that
the latter agreed with Socorro to but the parcels of land for her benefit. The Court of
Appeals affirmed the judgment, adding that the minor new the particulars of, and
approved the transactions, and that only clear and positive evidence of fraud and
bad faith, and not mere insinuations and interferences will overcome the presumptions
that a sale was concluded in all good faith for value. Hence, this petition.
ISSUE: Whether the two contracts of sale made by Socorro was valid.
HELD:
30
No. The court held that even without proof that Socorro had connived with Fidel
Ramos.
Remembering the general doctrine that guardianship is a trust of the highest order, and
the trustee cannot be allowed to have any inducement to neglect his ward's interest
and in line with the court's suspicion whenever the guardian acquires the ward's
property we have no hesitation to declare that in this case, in the eyes of the law,
Socorro Roldan took by purchase her ward's parcels thru Dr. Ramos, and that Article
1459 of the Civil Code applies.
The temptation which naturally besets a guardian so circumstanced, necessitates the

annulment of the transaction, even if no actual collusion is proved (so hard to prove)
between such guardian and the intermediate purchaser. This would uphold a sound
principle of equity and justice.
From both the legal and equitable standpoints these three sales should not be
sustained:
the first two for violation of article 1459 of the Civil Code; and the third because Socorro
Roldan could pass no title to Emilio Cruz. The annulment carries with it (Article 1303 Civil
Code) the obligation of Socorro Roldan to return the 17 parcels together with their fruits
and the duty of the minor, through his guardian to repay P14,700 with legal interest.
Capacity to Buy and Sell (Attorneys disqualification)

Valencia vs Cabanting 196 SCRA 302
Facts: In 1933, complainant Paulino Valencia and his wife Romana allegedly bought a
parcel of land, where they built their residential house, from a certain Serapia
Raymundo, an heir of Pedro Raymundo the original owner. However, they failed to
register the sale or secure a transfer certificate of title in their names.Sometime in 1968,
a conference was held in the house of Atty. Eduardo Jovellanos to settle the land
dispute. Valencia exhibited a deed of sale written in the Ilocano dialect. However,
Raymundo claimed that the deed covered a different property. Valencia and
Raymundo were not able to settle their differences.
On 1969,Raymundo, assisted by Atty.Cabanting, filed a complaint against Valencia for

the recovery of possession with damages.
On 1973, Raymundo sold 40 square meters of the litigated lot to Atty. Jovellanos and
the remaining portion she sold to her counsel, Atty. Arsenio Fer. Cabanting.
On 1974, Valencia filed a disbarment proceeding against Atty. Cabanting on the

ground that said counsel allegedly violated Article 1491 of the New Civil Code as well
as Article II of the Canons of Professional Ethics, prohibiting the purchase of property
under litigation by a counsel.
31
Issue: Whether or not Atty. Cabanting purchased the subject property in violation of
Art. 1491 of the New Civil Code
Ruling: Yes. The purchase of the property by Atty. Cabanting in this case constitutes
malpractice in violation of Art. 1491 and the Canons of Professional Ethics. Clearly, this
malpractice is a ground for suspension.
Under Article 1491 of the New Civil Code:
The following persons cannot acquire by purchase, even at a public of judicial auction,
either in person or through the mediation of another:
(5) . . . this prohibition includes the act of acquiring by assignment and shall apply to
lawyers, with respect to the property and rights which may be the object of any
litigation in which they make take part by virtue of their profession.
Public policy prohibits the transactions in view of the fiduciary relationship involved. It is
intended to curtail any undue influence of the lawyer upon his client. Greed may get
the better of the sentiments of loyalty and disinterestedness. Any violation of this
prohibition would constitute malpractice and is a ground for suspension.
Capacity to Buy and Sell (Contingent Fees)
THE DIRECTOR OF LANDS vs.SILVERETRA ABABA, ET AL., claimants, JUAN LARRAZABAL,

MARTA C. DE LARRAZABAL, MAXIMO ABAROQUEZ and ANASTACIA CABIGAS,
petitioners-appellants, ALBERTO FERNANDEZ, G.R. No. L-26096, February 27, 1979
FACTS
The adverse claimant, Atty. Alberto B. Fernandez was retained as counsel by petitioner,
Maximo Abarquez, for the annulment of a contract of sale with right of repurchase and
for the recovery of the land. Litigating as a pauper in the lower court and engaging the
services of his lawyer on a contingent basis, petitioner, liable to compensate his lawyer
whom he also retained for his appeal executed a document in the Cebuano-Visayan
dialect whereby he obliged himself to give to his lawyer one-half (1/2) of whatever he
might recover from Lots 5600 and 5602 should the appeal prosper.
The case having been resolved and title having been issued to petitioner, adverse
claimant waited for petitioner to comply with his obligation under the document
executed by him on June 10, 1961 by delivering the one-half () portion of the said
parcels of land.
Petitioner refused to comply with his obligation and instead offered to sell the whole
parcels of land covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and
Marta C. de Larrazabal. Upon being informed of the intention of the petitioner, adverse
claimant immediately took steps to protect his interest by filing with the trial court a
32
motion to annotate attorney's lien on TCT No. 31841 on June 10, 1965 and by notifying
the prospective buyers of his claim over the one-half portion of the parcels of land.
Notwithstanding the annotation of the adverse claim, petitioner-spouse Maximo

Abarquez and Anastacia Cabigas conveyed by deed of absolute sale two-thirds (2/3)
of the lands covered by TCT No. 31841 to petitioner-spouses Juan Larrazabal and Marta
C. de Larrazabal. When the new transfer certificate of title No. 32996 was issued, the
annotation of adverse claim on TCT No. 31841 necessarily had to appear on the new
transfer certificate of title. This adverse claim on TCT No. 32996 became the subject of
cancellation proceedings filed by herein petitioner-spouses. The adverse claimant, Atty.
Alberto B. Fernandez, filed his opposition to the petition for cancellation. The trial court
resolved the issue when it declared that the petition to cancel the adverse claim should
be denied. The admission by the petitioners that the lawyers (Attys. Fernandez and
Batiguin) are entitled to only one-third of the lot described in Transfer Certificate of Title
No. 32966 is the best proof of the authority to maintain said adverse claim
The trial court resolved the issue on March 19, 1966 when it declared that the petition
to cancel the adverse claim should be denied. The admission by the petitioners that
the lawyers (Attys. Fernandez and Batiguin) are entitled to only one-third of the lot
described in Transfer Certificate of Title No. 32966 is the best proof of the authority to
maintain said adverse claim.
Petitioner-spouses decided to appeal the order of dismissal to this Court. They contend
that a contract for a contingent fee violates Article 1491 because it involves an
assignment of a property subject of litigation.
ISSUE
Whether the registration of the adverse claim of Atty. Fernandez is valid in the contract
for a contingent fee as basis of his interest.
HELD
The registration of adverse claim is valid. For the prohibition in Article 1941 to operate,
the sale or transfer of the property must take place during the pendency of the
litigation involving the property.
A contract for a contingent fee is not covered by Article 1491 because the transfer or
assignment of the property in litigation takes effect only after the finality of a favorable
judgment. In the instant case, the attorney's fees of Atty. Fernandez, consisting of one-
half (1/2) of whatever Maximo Abarquez might recover from his share in the lots in
question, is contingent upon the success of the appeal. Hence, the payment of the
attorney's fees, that is, the transfer or assignment of one-half (1/2) of the property in
litigation will take place only if the appeal prospers. Therefore, the transfer actually
takes effect after the finality of a favorable judgment rendered on appeal and not
during the pendency of the litigation involving the property in question. Consequently,
the contract for a contingent fee is not covered by Article 1491.
33
The one-half () interest of Atty. Fernandez in the lots in question should therefore be
respected. Indeed, he has a better right than petitioner-spouses, Juan Larrazabal and
Marta C. de Larrazabal. They purchased their two-thirds (2/3) interest in the lots in
question with the knowledge of the adverse claim of Atty. Fernandez. The adverse
claim was annotated on the old transfer certificate of title and was later annotated on
the new transfer certificate of title issued to them. As held by this Court:
The annotation of an adverse claim is a measure designed to protect the interest of a

person over a piece of real property where the registration of such interest or right is not
otherwise provided for by the Land Registration Act, and serves as a notice and
warning to third parties dealing with said property that someone is claiming an interest
on the same or a better right than the registered owner thereof.
Having purchased the property with the knowledge of the adverse claim, they are
therefore in bad faith. Consequently, they are estopped from questioning the validity of
the adverse claim.
Constructive Delivery
AVILES VS. ARCEGA 44 PHIL 924
Facts:
Plaintiff (herein petitioner) bring and action to recover title to a house of mixed
materials erected on a leasehold land of the Nagtahan estate. While plaintiff claim
owership of said house, the defendants (herein respondents) assert title in themselves.
Ith may raise the question, which of the two sales was the title to the house in dispute
transferred.
The house in question originally belong to Sps. Vinancio and Vicenta Alcantara (owner).
On October 1917, the owner sold the said khouse in a public document to the plaintiff,
with a stipulation that during 4 months from sale, the owners would continue in
possession of the house. It should be noted that palintiff never had possession of the
house even after the expiration of the 4 months following the sale.
On March 13, 1918, the same owners, who continued having possession of the house, in
a public document sold the same house to the defendants (herein respondents), who
then and there took possession of said house. Thus the case for recovery of title was
filed.
At the trial of the case, the parties entered into the following stipulation of facts:
1. That the house in dispute in this cse was on October 10, 1917, sold by the owners to
the plaintiffs, and acknowledge on the 8th of November 1971, before the notary public,
34
it having been stipulated that during 4 months from the 10th of October, 1917, the
vendors would continue in possession of the house the expenses for repair, land and
other tax to be for their account, as well as the payment of the rent for the lot on whihc
it is erected.
2. That in a document dated March 13, 1918, and acknowldeged on the following day
before the notary public, the same property was sold by the same owners to
defendants, who took possession of the property, as stated in the complaint, the
plaintiff never taken possession thereof.
The trial court rendered judgment declaring defendants to be the owners of the house.
Plaintiffs appealled.
Issue: Whether or not the trial court was correct in declaring the second sale as the
valid sale.
Ruling:
Yes. The court entertain no doubt, either under the facts or under the law of hte case,
as to the right of the defendants to the house in question, with absolute exlusion of the
plaintiffs.
Constructive Delivery
JOSE FLORENDO, Plaintiff-Appellee, v. EUSTAQUIO P. FOZ, defendant and appellee.
JUAN CALVO and LUIS FOZ, sureties of the defendant Eustaquio P. Foz, Appellants.
Facts:
The appellants became the sureties of the defendant on an appeal bond, the
condition of which was "that the appellant was obligated to the appellee in the sum of
P2,000 Philippine currency, for the fulfillment of the judgment appealed from in case it
should be wholly or partly affirmed." Said judgment was as follows: "For the reasons
above expressed, the court decrees the specific performance by the defendant of the
contract for the purchase and sale of the lands, said defendant to deliver to plaintiff
the land described in the complaint; said defendant paying to the plaintiff the rents
which he would save received for said lands described in the complaint from the 1st
day of July, 1909, until full compliance with this judgment; that from the P4,000
deposited in the provincial treasury of Ilocos Sur there be paid to the Roman Catholic
Apostolic Church of Vigan the mortgage now due which the said church holds against
the defendant, together with the costs of the action; that the balance of the said
P4,000 after satisfying this decree shall be paid to the said defendant." Said balance of
the P4,000, after the deduction of the mortgage of the Roman Catholic Apostolic
Church, instead of being paid over to the defendant in this case, the appellant in the
case in which the bond was given, was seized by another judgment creditor and
35
applied to the payment of another and different judgment. Upon the appeal of the
sureties from a judgment rendered against them upon said bond, Held: That the
fulfillment of the said provision in the judgment ordering that the balance of the P4,000
which remained after the payment of the mortgage of the Roman Catholic Apostolic
Church, be turned over the defendant in this case, the appellant in the case in which
the bond was given, was not a condition precedent to their liability upon the bond,
and that they were liable thereon although said provision was not carried out.
Issue(s):
1. Whether or not the Court of First Instance erred in not declaring invalid and of force
or effects the payment of the sum of P1,079.41 to the sheriff of Ilocos Sur in part
satisfaction of the execution issued by the clerk of the Court of First Instance of Manila
on the 30th day of April, 1912.
2. Whether or not the court erred in not declaring null and void the undertaking
executed by Juan Calvo and Luis Foz jointly and severally with Eustaquio P. Foz upon
the ground that said Foz was insolvent at the time of and since the execution of said
undertaking.
Ruling:
1. The appellants argue that they bound themselves to the fulfillment of the judgment in
case it should be affirmed and that said judgment contained a clause that the
balance of the P4,000, after paying the mortgage held by the Roman Catholic
Apostolic Church, should be turned over to the appellant in the action in which said
judgment was obtained; and that it was a breach of the condition upon which the
bond was given to permit that sum to be turned over for the payment of another and
different judgment. They also argue that said sum having been paid to a stranger
instead of to the defendant and appellant, the execution in all its parts of the judgment
appealed from was rendered impossible, the defendant was deprived of certain
resources which he otherwise would have had, and the plaintiff and appellee in this
case would have collected upon his execution said sum of P1,079.41, thus reducing to
that extent the sum which the sureties must pay.
Perhaps the appellants have some grievance at the manner in which the P1,079.41 was
handled by the court when we look at the requirement of the judgment for the
execution of which they stood guarantors. It is a grievance, however, which, in our
judgment, cannot be remedied in this proceeding or on this appeal, even if it be
conceded that it have a remedy at all.
The sureties bound themselves to the fulfillment of the judgment, not in those particulars
in which it was favorable to the appellants, but to those in which it was favorable to the
appellee. The appellee, if his judgment should be affirmed, was entitled to receive a
certain sum of money, or sum which, by a subsequent procedure, was made certain. To
assure him the payment of this sum, the obligation was incurred by the sureties on the
bond. They may have had, generally speaking, strong reasons to believe that in case
they were obliged to pay the judgment they would receive the benefit of the sum of
P1,079.41, which the court had ordered to be turned over to the defendant after the
36
payment of the church mortgage. This, however, was merely an expectation, a hope
rather than a right.
The judgment upon which that sum was paid might have taken preference over the
judgment for the payment of which they stood surety. In that event there would have
been grave doubt of the efficacy of the order, if contested , that said sum of P1,079.41
be paid upon said judgment, as against the rights of the judgment creditor upon whose
judgment the sum was actually paid.
2. We might say that we have been cited to no provision of law, and we know of none,
which renders an appeal bond void because the appellant happens to be insolvent at
the time the bond is executed. The precise purpose of a bond on appeal is to protect
the appellee from the insolvency of the appellant and to assure to him the effective
execution of the judgment on the termination of the litigation.
To say the least, the sureties took the chance of having that sum withdrawn from the
defendants resources and paid upon another obligation, or of having it paid to Foz
himself for his personal use. As a legal proposition the sureties agreed to see that the
judgment appealed from should be paid if affirmed, and that is all that the appellee is
asking of them.
The judgment appealed from is hereby affirmed, with costs against the appellants.

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1

Date: March 13, 1968

existence of the written memorandum, it should have called for a preliminary

Recto Law: Sales of Movables on Installments

Recto Law: Sales of Movables on Installments

THE BACHRACH MOTOR CO., INC., vs.MARIANO LACSON LEDESMA, TALISAY-SILAY

Recto Law: Sales of Movables on Installments

Article 1454-A of the Civil Code reads that:

A cash payment cannot be considered as a payment by installment, and even if it can

The Court reversed the lower courts decision.

Recto Law: Sales of Movables on Installments (Finance Company)

Foreclosure of chattel mortgage; Agency; Principal and agent relationship; Being a

Recto Law: Sales of Movables on Installments (Finance Company)

Petitioner PAMECA Wood Treatment Plant, Inc. (PAMECA) obtained a loan of

To accommodate petitioners prayer even on the basis of equity would be to expand

(additions lang nako ni. Kay wala mani mastate)

Remedies (Art. 1484)

Defendants Daniel L. Borbon and Francisco Borbon signed a promissory note to

Issue: WON the petitioners may recover the deficiency?

In ordinary alternative obligations, a mere choice categorically an unequivocally made

Remedies (Art. 1484) - Forclosure

Universal Motors Corp. vs. Sy Hian Tat

Appellant Dy Hian Tat bought from appellee Universal Motors Corporation a

Remedies (Art. 1484)

The mortgagee-assignee wanted to foreclose extrajudiciallythe chattel mortgage but,

Whether or not by means of that complaint, Industrial Finance Corporation sought to

The Civil Code provides.

Remedies (Art. 1484)

On June 4, 1965, CasianoSapinoso purchased from Northern Motors, Inc. an Opel

mortgagee, the mortgagor expressly waives his right to reimbursement by the

mortgaged car as a preliminary step to the foreclosure sale contemplated in the

ISSUE: whether the plaintiffs contention has merit

HELD: The appeal is meritorious.

Remedies (Art. 1484)

Ratio of the lower court:

the legal demand of ones right, or rights;

the lawful demand of ones right in a court of justice;

a claim made before a tribunal;

an assertion in a court of justice of a right given by law;

a demand or legal proceeding in a court of justice to secure ones rights;

the prosecution of some demand in a court of justice;

the means by which men litigate with each other;

Lease with Option to Purchase

as Disclosure Statements of Loan/Credit Transaction (Single Payment or Installment

Hence, this petition for review on certiorari.

In choosing, through replevin, to deprive the respondent of possession of the leased

Lease with Option to Purchase

On January 9, 1980, Private Respondent Rolando Lantan entered into a lease

Thus, this petition for review.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED.

Capacity to Buy and Sell

Petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married in

Ruling of CFI Pangasinan:

Article 1352also provides that: "Contracts without cause, or with unlawful

Application of law: The sale was made by a husband in favor of a

Capacity to Buy and Sell

RTC & CA RULING:

Vizcondebeing a purchaser of registered land for value in good faith holds an

Capacity to Buy and Sell (Guardians)

The temptation which naturally besets a guardian so circumstanced, necessitates the

Capacity to Buy and Sell (Attorneys disqualification)

On 1969,Raymundo, assisted by Atty.Cabanting, filed a complaint against Valencia for

On 1974, Valencia filed a disbarment proceeding against Atty. Cabanting on the