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Osumo, Ma. Lovella E.

SALES CASE DIGESTS

Submitted by:

Osumo, Ma. Lovella E.


LLB II-B

Submitted to:

Atty. Lucio R. Mabalod, Jr.


1. GAITE VS. FONACIER (2 SCRA 830)

Facts:
Fonacier was the owner and/or holder of 11 iron lode mineral claims, known as the Dawahan
Group. By a "Deed of Assignment" dated September 29, 1952, Fonacier constituted and appointed Gaite
as his true and lawful attorney-in-fact to enter into a contract with any individual or juridical person for
the exploration and development of the mining claims. On March 19, 1954, Gaite in turn executed a
general assignment conveying the development and exploitation of said mining claims into the Larap
Iron Mines, a single proprietorship owned solely by and belonging to him, on the same royalty basis
provided by the Deed of Assignment".
Fonacier decided to revoke the authority granted by him to Gaite to exploit and develop the
mining claims in question, and Gaite assented thereto subject to certain conditions. As a result, a
"Revocation of Power of Attorney and Contract" was executed on December 8, 1954, wherein Gaite
transferred to Fonacier, all his rights and interests on development and exploitation of said mining
claims, in consideration of the sum of P75,000.00, P10,000.00 of which was paid upon the signing of the
agreement, and b. The balance of P65,000.00 will be paid from and out of the first letter of credit
covering the first shipment of iron ores and of the first amount derived from the local sale of iron ore
made by the Larap Mines & Smelting Co. Inc., its assigns, administrators, or successors in interests.
Payment of P65, 000.00 was secured by two surety bonds: One from Larap Mines and its
stockholders and the other from Far Eastern Surety and Insurance Co.

Issue:
Whether or not Fonacier and his sureties are entitled to take full advantage of the period
granted them for making the payment.

Held:
SC agreed with the court below that the appellant have forfeited the right to compel Gaite to
wait for the sale of the ore before receiving payment of the balance of P65,000.00, because of their
failure to renew the bond of the Far Eastern Surety Company or else replace it with an equivalent
guarantee. The expiration of the bonding company's undertaking on December 8, 1955 substantially
reduced the security of the vendor's rights as creditor for the unpaid P65,000.00, a security that Gaite
considered essential and upon which he had insisted when he executed the deed of sale of the ore to

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Fonacier. The case squarely comes under paragraphs 2 and 3 of Article 1198 of the Civil Code of the
Philippines. When by his own acts he has impaired said guaranties or securities after their establishment,
and when through fortuitous event they disappear, unless he immediately gives new ones equally
satisfactory. Appellants' failure to renew or extend the surety company's bond upon its expiration plainly
impaired the securities given to the creditor (appellee Gaite), unless immediately renewed or replaced.

2. KERR & CO. VS LINGAD (38 SCRA 524)

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Facts:
CIR assessed the sum of P20,272.33 as the commercial brokers percentage tax, surcharge, and
compromise penalty against Ker & Co. There was a request on the part of petitioner for the cancellation
of such assessment, which request was turned down. As a result, it filed a petition for review with the
Court of Tax Appeals. CTA ruled that that Ker & Co is liable as a commercial broker under Section 194 (t)
of the National Internal Revenue Code.
Ker & Co signed a contract with the United States Rubber International, the former being
referred to as the Distributor and the latter specifically designated as the Company. The shipments
would cover products for consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, and
Mindanao except [the] province of Davao. Ker & Co, as Distributor, was precluded from disposing such
products elsewhere than in the above places unless written consent would first be obtained from the
Company. It was required to exert every effort to have the shipment of the products in the maximum
quantity and to promote in every way the sale thereof. The prices, discounts, terms of payment, terms of
delivery and other conditions of sale were subject to change in the discretion of the Company.

Issue:
Whether or not the relationship Ker & Co and US Rubber was that of a vendor-vendee or
principal-broker?

Held:
The relationship between them is one of brokerage or agency. That the petitioner Ker & Co., Ltd.
is, by contractual stipulation, an agent of U.S. Rubber International is borne out by the facts that
petitioner can dispose of the products of the Company only to certain persons or entities and within
stipulated limits, unless excepted by the contract or by the Rubber Company.
It merely receives, accepts and/or holds upon consignment the products, which remain
properties of the latter company. Every effort shall be made by petitioner to promote in every way the
sale of the products (Par. 3); that sales made by petitioner are subject to approval by the company. On
dates determined by the rubber company, petitioner shall render a detailed report showing sales during
the month.

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The rubber company shall invoice the sales as of the dates of inventory and sales report (Par.
14); that the rubber company agrees to keep the consigned goods fully insured under insurance policies
payable to it in case of loss.
Upon request of the rubber company at any time, petitioner shall render an inventory of the
existing stock which may be checked by an authorized representative of the former.
Upon termination or cancellation of the Agreement, all goods held on consignment shall be held
by petitioner for the account of the rubber company until their disposition is provided for by the latter.

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3. SCHMID & OBERLY, INC. VS RJL MARTINEZ FISHING CORP. (166 SCRA 493)

Facts:
RJL Martinez Fishing Corporation is engaged in deep-sea fishing. In the course of its business, it
needed electrical generators for the operation of its business. Schmid and Oberly sells electrical
generators with the brand of Nagata, a Japanese product. D. Nagata Co. Ltd. of Japan was Schmids
supplier. Schmid advertised the 12 Nagata generators for sale and RJL purchased 12 brand new
generators. Through an irrevocable line of credit, Nagata shipped to the Schmid the generators and RJL
paid the amount of the purchase price. (First sale = 3 generators; Second sale = 12 generators).
Later, the generators were found to be factory defective. RJL informed the Schmid that it shall
return the 12 generators. 3 were returned. Schmid replaced the 3 generators subject of the first sale
with generators of a different brand. As to the second sale, 3 were shipped to Japan and the remaining 9
were not replaced.
RJL sued the defendant on the warranty, asking for rescission of the contract and that Schmid be
ordered to accept the generators and be ordered to pay back the purchase money as well as be liable for
damages. Schmid opposes such liability averring that it was merely the indentor in the sale between
Nagata Co., the exporter and RJL Martinez, the importer. As mere indentor, it avers that is not liable for
the sellers implied warranty against hidden defects, Schmid not having personally assumed any such
warranty.

Issue:
WON the second transaction between the parties was a sale or an indent transaction?

Held:
An indentor is a middleman in the same class as commercial brokers and commission merchants.
A broker is generally defined as one who is engaged, for others, on a commission, negotiating contracts
relative to property with the custody of which he has no concern; the negotiator between other parties,
never acting in his own name but in the name of those who employed him; he is strictly a middleman
and for some purpose the agent of both parties. There are 3 parties to an indent transaction, (1) buyer,
(2) indentor, and (3) supplier who is usually a non-resident manufacturer residing in the country where
the goods are to be bought. The chief feature of a commercial broker and a commercial merchant is that

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in effecting a sale, they are merely intermediaries or middle-men, and act in a certain sense as the agent
of both parties to the transaction.
RJL MARTINEZ admitted that the generators were purchased through indent order. RJL
admitted in its demand letter previously sent to SCHMID that 12 of 15 generators were purchased
through your company, by indent order and three (3) by direct purchase. The evidence also shows that
RJL MARTINEZ paid directly NAGATA CO, for the generators, and that the latter company itself invoiced
the sale and shipped the generators directly to the former. The only participation of Schmid was to act as
an intermediary or middleman between Nagata and RJL, by procuring an order from RJL and forwarding
the same to Nagata for which the company received a commission from Nagata.

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4. FILINVEST CREDIT CORP. VS COURT OF APPEALS (178 SCRA 188)

Facts:
Herein private respondents spouses Jose Sy Bang and Iluminada Tan were engaged in the sale of
gravel produced from crushed rocks and used for construction purposes. They intended to buy rock
crusher from Rizal Consolidated Corporation which carried a cash price tag of P550,000.00. They applied
for financial assistance from herein petitioner Filinvest Credit Corporation, who agreed to extend
financial aid on the certain conditions.
A contract of lease of machinery (with option to purchase) was entered into by the parties
whereby the private respondents agreed to lease from the petitioner the rock crusher for two years
starting from July 5, 1981, payable as follows: P10,000.00 first 3 months, P23,000.00 next 6 months,
P24,800.00 next 15 months. It was likewise stipulated that at the end of the two-year period, the
machine would be owned by the private respondents. Thus the private respondent issued in favor of the
petitioner a check for P150,550.00, as initial rental (or guaranty deposit), and 24 postdated checks
corresponding to the 24 monthly rentals. In addition, to guarantee their compliance with the lease
contract, the private respondent executed a real estate mortgage over two parcels of land in favor of the
petitioner. The rock crusher was delivered to the spouses.
However, 3 months later, the souses stopped payment when petitioner had not acted on the
complaints of the spouses about the machine. As a consequence, petitioner extra-judicially foreclosed
the real estate mortgage. The spouses filed a complaint before the RTC. The RTC rendered a decision in
favor of private respondent. The petitioner elevated the case to CA which affirmed the decision in toto.
Hence, this petition.

Issue:
Whether or not the nature of the contract is one of a contract of sale.
Whether or not the remedies of the seller provided for in Article 1484 are cumulative.

Held:
Yes. The intent of the parties to the subject contract is for the so-called rentals to be the
installment payments. Upon the completion of the payments, then the rock crusher, subject matter of
the contract, would become the property of the private respondents. This form of agreement has been
criticized as a lease only in name.

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Sellers desirous of making 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 restored 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 bargain, in the transfer
of title to the lessee.
No, it is alternative. The seller of movable in installments, in case the buyer fails to pay 2 or more
installments, may elect to pursue either of the following remedies: (1) exact fulfillment by the purchaser
of the obligation; (2) cancel the sale; or (3) foreclose the mortgage on the
purchased property if one was constituted thereon. It is now settled that the said remedies are
alternative and not cumulative, and therefore, the exercise of one bars the exercise of the others.
Indubitably, the device contract of lease with option to buy is at times resorted to as a means to
circumvent Article 1484, particularly paragraph (3) thereof. Through the set-up, the vendor, by retaining
ownership over the property in the guise of being the lessor, retains, likewise the right to repossess the
same, without going through the process of foreclosure, in the event the vendee-lessee defaults in the
payment of the installments. There arises therefore no need to constitute a chattel mortgage over the
movable sold. More important, the vendor, after repossessing the property and, in effect, canceling the
contract of sale, gets to keep all the installments-cum-rentals already paid.

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5. LUZON BROKERAGE CO. VS MARITIME BLDG. CO. (43 SCRA 93)

Facts:
In Manila, Myers owned 3 parcels of land w/ improvements. Myers then entered into a contract
called a Deed of Conditional Sale with Maritime Building. Myers sold the land for P1million. They
agreed on the manner of payment (installment, initial payment upon execution of contract, interest
rate). In the contract it was stipulated that in case of failure of buyer to pay any of the installments, the
contract will be annulled at the option of the seller and all payments made by the buyer is forfeited.
Later on, the stipulated installment of P10k with 5%interest was amended to the P5k with 5.5% per
annum. Maritime paid the monthly installments but failed to pay the monthly installment of March. VP
of Maritime wrote to Pres of Myers requesting for a moratorium on the monthly payment of the
installments because the company was undergoing financial problems. Myers refused. For the months of
March, April, and May, Maritime failed to pay and did not heed the demand of Myers. Myers wrote
Maritime cancelling the Deed of Conditional Sale Myers demanded return of possession of
properties. Held Maritime liable for use and occupation amounting to P10k per month.
In the meantime, Luzon Brokerage was leasing the property from Maritime. Myers demanded
from Luzon the payment of monthly rentals of P10k Myers also demanded surrender of property. While
actions and cross claims between Myers and Maritime were happening, the contract between Maritime
and Luzon was extended for 4 more years. Turns out, Maritimes suspension of its payments to Myers
corp arose from a previous event: An award of backwages made by the Court of Industrial Relations in
favor of Luzon Labor Union (employees employed by Luzon). FH Myers was a major stockholder of Luzon
Brokerage. FH Myers promised to indemnify Schedler (who controlled Maritime) when Shedler
purchased FH Myerss stock in Luzon Brokerage company. (This indemnification is for the award of
backwages by the CIR) Schedler claims that after FH Myers estates closed, he was notified that the
indemnity on the Labor Union case will not be honored anymore. And so, Schedler advised Myers corp
that Maritime is withholding payments to Myers corp in order to offset the liability when Myers heirs
failed to honor the indemnity agreement. TC ruled Maritime in breach of contract.

Issue:
Has there been a breach of contract?
Can Myers extrajudicially terminate the contract?

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Held:
Yes. Failure to pay monthly installments constitute a breach of contract. Default was not made in
good faith. The letter to Myers corp means that the non-payment of installments was deliberately made
to coerce Myers corp into answering for an alleged promise of the dead FH Myers. Whatever obligation
FH Myers had assumed is not an obligation of Myers corp. No proof that board of Nyers corp agreed to
assume responsibility to debts of FH Myers and heirs. Schaedler allowed the estate proceedings of FH
Myers to close without providing liability. By the balance (of payment) in the Deed of Conditional Sale,
Maritime was attempting to burden the Myers corp with an uncollectible debt, since enforcement
against FH Myers estate was already barred. Maritime acted in bad faith. Maritimes contract with Myers
is not the ordinary sale contemplated in NCC 1592 (transferring ownership simultaneously with delivery).
The distinction between contracts of sale and contract to sell with reserved title has been recognized by
this Court in repeated decisions upholding the power of promisors under contracts to sell in case of
failure of the other party to complete payment, to extrajudicially terminate the operation of the
contract, refuse conveyance and retain the sums or installments already received, where such rights are
expressly provided for, as in this case. Decision affirmed.

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6. DIGNOS VS COURT OF APPEALS (158 SCRA 375)

Facts:
In July 1965, herein petitioners Silvestre T. Dignos and Isabela Lumungsod de Dignos (spouses
Dignos) sold their parcel of land in Opon, LapuLapu to herein private respondent Antonio Jabil for the
sum of P28,000 payable for two installments, with an assumption of indebtedness with the First Insular
Bank of Cebu in the sum of P12,000 and the next installment of P4,000 to be paid in September 1965. In
November 1965, the spouses Dignos sold the same parcel of land for P35,000 to defendants Luciano
Cabigas and Jovita L. de Cabigas (spouses Cabigas) who were then US citizens, and executed in their favor
an Absolute Deed of Sale duly registered in the Office of the Register of Deeds.
Upon discovery of the 2nd sale of the subject land, Jabil filed the case at bar in the CFI of Cebu
which rendered its Decision in August 1975 declaring the 2nd sale to the spouses Cabigas null and void
ab initio and the 1st sale to Jabil not rescinded. The CFI of Cebu also ordered Jabil to pay the remaining
P16,000 to the spouses Dignos and to reimburse the spouses Cabigas a reasonable amount
corresponding the expenses in the construction of hollow block fences in the said parcel of land. The
spouses Dignos were also ordered to return the P35,000 to the spouses Cabigas.
Both Jabil and the spouses Dignos appealed to the Court of Appeals, which affirmed in July 1981
the CFI of Cebus Decision except for the part of Jabil paying the expenses of the spouses Cabigas for
building a fence. The spouses Dignos contested that the contract between them and Jabil was merely a
contract to sell and not a deed of sale.

Issue:
Whether or not the contract between the parties a contract of sale or a contract to sell?

Held:
The Supreme Court affirmed the Decision of the Court of Appeals saying stated that all the
elements of a valid contract of sale are present in the document and that the spouses Dignos had no
right to sell the land in question because an actual delivery of its possession has already been made in
favor of Jabil as early as March 1965. It was also found that the spouses Dignos never notified Jabil by
notarial act that they were rescinding the contract, and neither did they file a suit in court to rescind the
sale. There is no showing that Jabil properly authorized a certain Cipriano Amistad to tell petitioners that
he was already waiving his rights to the land in question.

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7. MARTIN VS REYES ET AL (G.R. NO. L-4402; JULY 20, 1952)

Facts:
Respondent Pedro Revilla and Maria Reyes obtained from the La Previsora Filipina sometime
before November 18, 1939 a loan of P6,500; and with the money, they the price of a lot, with
improvements, which they paid had previously purchased from the Archibishop of Manila. And they
mortgaged the property to La Previsora for the purpose of guaranteeing repayment of the debt in
installments with interest at 12 per cent per annum. It turned out later that Monte de Piedad y Caja de
Ahorros had obtained a judgment against Pedro Revilla for the sum of P45,000 and had levied execution
therefor upon the property and its rentals. Apprised of this development, the La Previsora started
foreclosure proceedings, alleging non-payment of its credit by the mortgagors. It seems that La Previsora
at the same time, or immediately thereafter conveyed the property by Exhibit C to petitioner Canuto
Martin, who then executed the document Exhibit D undertaking to allow respondents to repurchase the
property within sixty days from October 31, 1941, but at the price of P14,000. This document Exhibit D
was signed by Maria Reyes signifying her assent.

Issue:
Whether or not the respondents properly exercised their right to repurchase?

Held:
No. The Court of Appeals stated that in December 1941, Maria Reyes accompanied by Marcela
Mota de Malonso went to the office of La Previsora, not for the purpose of repurchasing the property,
but to ask for extension of the period. Nevertheless, that Court opined that inasmuch as the complaint
to compel repurchase had been filed on January 2, 1952 within the sixty-day period mentioned in Exhibit
E, the vendors had preserved their redemption option. Upon a move to reconsider, the Court of Appeals
amplified its decision saying, In view of the refusal of Atty. Pete A. Revilla who was acting in behalf of
appellee Canuto Martin, to receive any amount less than P14,000, nor to accept in behalf of the La
Previsora Filipina, claiming that the latter's right were already ceded to appellee Canuto Martin, we hold
that the question to the efficiency of the amount offered at the time is not as vital to the issue as the
necessity of making one. We find that the plaintiff Maria Reyes, accompanied to one Marcela Mota de
Malonso did make an offer to redeem the property in the property days of December, 1941. Whether or

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not the amount they had on that occasion was sufficient to redeem the property at P8,204.60 or
P10,204.60 is not vital to the preservation of the rights of the plaintiff's in view of the refusal to accept
any amount less than P14,000.

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8. MINDANAO ACADEM VS YAP (13 SCRA 190)

Facts:
By deed entitled "Mutual Agreement", executed on May 10, 1964, Rosenda A. de Nuqui and her
son Sotero Dionisio, Jr. sold three parcels of residential land in Oroquieta, Misamis Occidental, and
another parcel in Ozamis City in favor of Ildefonso D. Yap. Included in the sale were certain buildings
situated on said lands as well as laboratory equipment, books, furniture and fixtures used by two schools
established in the respective properties, the Mindanao Academy in Oroquieta and the Misamis Academy
in Ozamis City. The aggregate price stated in the deed was P100,700.00, to be paid according to the
terms and conditions specified in the contract. Besides Rosenda and her son Sotero, Jr., both of whom
signed the instrument, Adelaida Dionisio-Nuesa is also named therein as co-vendor, but actually did not
take part either personally or through her uncle and supposed attorney-in-fact, Restituto Abuton. These
three Rosenda and her two children above named are referred to in the deed as the owners pro-
indiviso of the properties sold. The truth, however, was that there were other co-owners of the lands.
The buyer, Ildefonso D. Yap, obtained possession of the properties by virtue of the sale, took over the
operation of the two schools and even changed their names to Harvardian Colleges.

Issue:
Whether or not the Mindanao Academy can reimburse even in bad faith?

Held:
Yes. The appellant claims reimbursement for the value of the improvements he allegedly
introduced in the schools, consisting of a new building worth P8,000.00 and a toilet costing P800.00,
besides laboratory equipment, furniture, fixtures and books for the libraries. It should be noted that the
judgment of the trial court specifies, for delivery to the plaintiffs, only "the buildings and grounds
described in the mutual agreement together with all the permanent improvements thereon." If the
defendant constructed a new building, as he alleges, he cannot recover its value because the
construction was done after the filing of the action for annulment, thus rendering him a builder in bad
faith who is denied by law any right of reimbursement. In connection with the equipment, books,
furniture and fixtures brought in by him, he is not entitled to reimbursement either, because the
judgment does not award them to any of the plaintiffs in these two actions. What is adjudged is for the
defendant to restore to the Mindanao Academy, Inc. all the books, laboratory apparatus, furniture and

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other equipment "described in the Mutual Agreement and specified in the Inventory attached to the
records of this case; or in default thereof, their value in the amount of P23,500.00." In other words,
whatever has been brought in by the defendant is outside the scope of the judgment and may be
retained by him.

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9. ESTOQUE VS PAJIMULA (24 SCRA 59)

Facts:
Lot No. 802 of the Cadastral survey of Rosario, was originally owned by the late spouses,
Rosendo Perez and Fortunata Bernal, who were survived by her children, namely, Crispina Perez, Lorenzo
Perez and Ricardo Perez. Ricardo Perez is also now dead. On October 28, 1951, Crispina P. Vda. de
Aquitania sold her right and participation in Lot No. 802consisting of 1/3 portion with an area of 640
square meters to Leonora Estoque. On October29, 1951, a deed of extrajudicial settlement was entered
into wherein Lorenzo Perez, Emilia P. Posadas and her minor children. On December 30, 1959, Crispina
Perez and her children Rosita Aquitania Belmonte, Remedios Aquitania Misa, Manuel Aquitania, Sergio
Aquitania and Aurora Aquitania sold to Elena Pajimula, the remaining 2/3 western portion of Lot No.
802with an area of 958 square meters. Plaintiff based her complaint for legal redemption on a claim that
she is a co-owner of Lot No. 802, for having purchased 1/3 portion thereof, containing an area of 640
square meters as evidenced by a deed of sale, which was executed on October 28, 1951 by Crispina
Perez de Aquitania, one of the co-owners, in her favor.
On the other hand, the defendant, who on December 30, 1959 acquired the other 2/3portion of
Lot No. 802 from Crispina Aquitania and her children, claimed that the plaintiff bought the 1/3 south-
eastern portion, which is definitely identified and segregated, hence there existed no co-ownership at
the time and after said plaintiff bought the aforesaid portion, upon which right of legal redemption can
be exercised or taken advantage of. Estoques stand is that the deed in her favor was inoperative to
convey the south-eastern third of Lot 802 of the Rosario Cadastre notwithstanding the description in the
deed itself, for the reason that the vendor, being a mere co-owner, had no right to sell any definite
portion of the land held in common but could only transmit her undivided share, since the specific
portion corresponding to the selling co-owner is not known until partition takes place (Lopez vs. Ilustre, 5
Phil. 567; Ramirez vs. Bautista, 14 Phil. 528). From this premise, the appellant argues that the sale in her
favor, although describing a definite area, should be construed as having conveyed only the undivided
1/3 interest in Lot 802 owned at the time by the vendor, Crispina Perez Vda. de Aquitania. Wherefore,
when the next day said vendor acquired the 2/3 interest of her two other co-owners, Lot 802 became
the common property of appellant and Crispina Perez.
Therefore, appellant argues, when Crispina sold the rest of the property to appellee Pajimula
spouses, the former was selling an undivided2/3 that appellant, as co-owner, was entitled to redeem,
pursuant to Article 1620 of the New Civil Code ART. 1620. A co-owner of a thing may exercise the right of
redemption in case the shares of all the other co-owners or of any of them are sold to a third person. If
the price of the alienation is grossly excessive the redemptioner shall pay only a reasonable one. Should
two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to
the share they may respectively have in the thing owned in common.

Issue:
Whether or not right of redemption can be exercised by Estoque?

Held:
NO. Appellant Estoque became the actual owner of the South eastern third of lot 802on October
29, 1951. Wherefore, she never acquired an undivided interest in lot 802. And when eight years later
Crispina Perez sold to the appellee Pajimula the western two-thirds of the same lot, appellant did not
acquire a right to redeem the property thus sold, since their respective portions were distinct and
separate. The deed of sale to Estoque clearly specifies the object sold as the south-eastern third portion
of Lot 802 of the Rosario Cadastre, with an area of 840square meters, more or less. Granting that the
seller, Crispina Perez Vda. de Aquitania could not have sold this particular portion of the lot owned in
common by her and her two brothers, Lorenzo and Ricardo Perez, by no means does it follow that she
intended to sell to appellant Estoque her 1/3 undivided interest in the lot for mentioned.
There is nothing in the deed of sale to justify such inference. That the seller could have validly
sold her one-third undivided interest to appellant is no proof that she did choose to sell the same. While
on the date of the sale to Estoque said contract may have been ineffective, for lack of power in the
vendor to sell the specific portion described in the deed, the transaction was validated and became fully
effective when the next day (October 29, 1951) the vendor, Crispina Perez, acquired the entire interest of
her remaining co-owners and thereby became the sole owner of Lot No. 802 of the Rosario Cadastral
survey (Llacer vs. Muoz, 12 Phil. 328). Article 1434 of the Civil Code of the Philippines clearly prescribes
that .When a person who is not the owner of a thing sells or alienates and delivers it, and later the
seller or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee." CA
decision affirmed.
10. ESTOQUE VS PAJIMULA (24 SCRA 59)

Facts:
The land in question consists of 4,060 square meters and was originally registered under Original
Certificate of Title No. 1994 in the Registry of Deeds of Iloilo in the name of Gertrudes Zamora. 1 She
died intestate and without debts in 1936 and was survived by four children, who never got around to
dividing the property among themselves. This controversy is not among the four brothers, who are now
also deceased. It is Gertrudes grandchildren by three of her sons (the fourth having died without issue)
who are involved in this complaint for recovery of ownership and possession of the disputed inheritance,
plus damages. The conflict began when on April 6, 1941, three of these nine grandchildren, executed a
deed of extrajudicial partition arrogating the entire property to themselves alone as equal pro in diviso
owners. This partition was not registered immediately, but only in 1946, or five years later.

Issue:
Whether or not the plaintiff can apply prescription in acquiring the land.

Held:
It is noted that when Amojido secured the registration of the land in his name following the
deed of sale executed in his favor by the parties to the extrajudicial partition, his certificate of title
carried an express reservation of whatever rights might pertain to the other heirs. This annotation
constituted an acknowledgement of the possibility that a portion of the land might not belong to him
and the commitment that he would be holding such part as impliedly conveyed to him in trust by and for
its true owners.
However, when Amojido himself sold the land to Mirope Mascareas vda. de Elison on March
13, 1953, the transfer certificate of title issued in her name no longer carried the said encumbrance. By
the deletion of this annotation, Mirope, as the new transferee, repudiated as of the date of registration
the claim of the other heirs to their shares in the property. From then on her assertion of ownership over
the whole land became adverse even as against the appellants herein. And as the certificate of title was
notice to the whole world of her exclusive title to the land, such rejection was binding on the said heirs
and started as against them the period of prescription.
The record does not show when TCT No. T-19396 in the name of Mirope Mascareas vda. de
Elison was issued, but it can be conjectured that this was done before February 14, 1957, when she sold
the land to Mildred Elison vda. de Javelosa. On the assumption that the land was registered in the name
of Mirope in 1953 following her purchase without acknowledgement of the co-heirs' rights, the 10-year
prescriptive period would have started from that year. Suspended on May 28, 1956, when the first
complaint was filed, it began running again on February 16, 1958, 30 days after it was dismissed, and was
completed after seven more years in 1965, two years before the second complaint was filed in 1968.
Hence, that complaint was barred by prescription, as correctly held by the trial court, although the
different starting point it used, erroneously, was 1941, date of the extrajudicial partition.
11. REPUBLIC VS COURT OF APPEALS ( 14 SCRA 480)

Facts:
Private respondent Vicente Yupangco is the owner of a unit in a condominium building in Legaspi
Street, Makati City, as evidenced by Certificate of Title No. 7648. Because his aforesaid certificate could
not be located, he filed, on January 28, 1994, in the Regional Trial Court, Branch 136, Makati, a petition
for the issuance of a new duplicate certificate of title in lieu of his lost copy, pursuant to 109 of P.D. No.
1529 (Property Registration Decree). The trial court ordered the Register of Deeds of Makati to comment
on the petition and thereafter set the case for initial hearing.

Issue:
Whether or not in a proceeding for the issuance of an owners duplicate certificate of title, the
Solicitor General is required to be notified, such that failure to give such notice would render the
proceedings void.

Held:
The decision of the Court of Appeals is AFFIRMED. This is not correct. Considering that the law
does not impose such notice requirement in proceedings for the issuance of a new owners duplicate
certificate of title, the lack of notice to the Solicitor General, as counsel for the Registrar of Deeds, was at
most only a formal and not a jurisdictional defect.
This case should be distinguished from our rulings in cadastral registration cases and original
land registration proceedings which require that the Solicitor General be notified of decisions and hold
as decisive, for the purpose of determining the timeliness of the appeal filed by the government, the
date of his receipt of the decisions therein and not that of the Director of Lands or of his other
representatives. The issue and the applicable laws in those cases are different.
12. TOMAS T. TEODORO VS COURT OF APPEALS (170 SCRA 620)

Facts:
PAMI Development Corporation registered with the Mining Records of Bulacan its mining claims
to a parcel of land consisting of 185.8611 hectares, located at San Mateo, Norzagaray, Bulacan. it was
issued Placer Lease Contracts, later renamed Mining Lease Contracts (MLC), Nos. V-202 and V-203, for a
period of twenty-five years. On January 5, 1965, PAMI sold its mining claims to respondent Continental
Cement Corporation.
Almost fifteen years later, on April 10, 1980, Francisco and Tomas Teodoro applied for quarry
permits with the Bureau of Mines, denominated as AQP-551 and AQP-552, over their property located at
Barrio Pinagkamaligan, Norzagaray, Bulacan. The Bureau of Mines denied the Teodoros application since
it will conflict with the mining claims of respondent.
Subsequently, the Teodoros filed with the then Ministry of Natural Resources a petition for
cancellation of respondents MLC Nos. V-202 and V-203 on the ground of non-development of mineral
lands. The said mining lease contracts of respondent were cancelled for non-compliance with the work
obligations under the law.

Issue:
Whether or not there was extrinsic fraud.

Held:
Extrinsic fraud refers to any fraudulent act of the prevailing party in the litigation which is
committed outside of the trial of the case, whereby the unsuccessful party has been prevented from
exhibiting fully his case, by fraud or deception practiced on him by his opponent. Fraud is regarded as
extrinsic where it prevents a party from having a trial or from presenting his entire case to the court, or
where it operates upon matters pertaining not to the judgment itself but to the manner in which it is
procured. The overriding consideration when extrinsic fraud is alleged is that the fraudulent scheme of
the prevailing litigant prevented a party from having his day in court. None of these conditions obtain in
the case at bar.
13. YU TEK AND CO. VS BASILIO GONZALES (29 PHIL 384)

Facts:
A contract was executed between the herein parties, whereby Mr. Basilio Gonzales
acknowledges the receipt of Php3, 000 from Yu Tek & Co., and that in consideration of which he
obligates himself to deliver to the latter 600 piculs of sugar of the first and second grade, according to
the result of polarization, within 3 months. There is a stipulation providing for rescission with Php1,200
penalty in case of failure to deliver. No sugar was delivered, so plaintiff filed a case praying for the
judgment of Php3,000 plus Php1,200. Php3,000 was awarded, thus, both parties appealed.

Issue:
Whether compliance of the obligation to deliver depends upon the production in defendants
plantation.
Whether there is a perfected Sale.

Held:
There is not the slightest intimation in the contract that the sugar was to be raised by the
defendant. Parties are presumed to have reduced to writing all the essential conditions of their contract.
While parol evidence is admissible in a variety of ways to explain the meaning of written contracts, it
cannot serve the purpose of incorporating into the contract additional contemporaneous conditions
which are not mentioned at all in the writing, unless there has been fraud or mistake. In an early case
this court declined to allow parol evidence showing that a party to a written contract was to become a
partner in a firm instead of a creditor of the firm. (Pastor vs. Gaspar, 2 Phil. Rep., 592.) Again, in Eveland
vs. Eastern Mining Co., a contract of employment provided that the plaintiff should receive from the
defendant a stipulated salary and expenses. The defendant sought to interpose as a defense to recovery
that the payment of the salary was contingent upon the plaintiff's employment redounding to the
benefit of the defendant company. The contract contained no such condition and the court declined to
receive parol evidence thereof.
We conclude that the contract in the case at bar was merely an executory agreement; a promise
of sale and not a sale. At there was no perfected sale, it is clear that articles 1452, 1096, and 1182 are
not applicable. The defendant having defaulted in his engagement, the plaintiff is entitled to recover the
P3,000 which it advanced to the defendant, and this portion of the judgment appealed from must
therefore be affirmed.
14. ONG JANG CHUAN VS WISE & CO. (33 PHIL. 339)

Facts:
This is an appeal from a judgment of the Court of First Instance of Manila condemning the
defendant to pay the plaintiff the sum of P1,237.50, together with interest and costs, as damages for a
breach of contract. It has been established by a preponderance of evidence that the reason for the
nonfulfillment, on the part of Wise & Co., of the contract made with the plaintiff, was that the "Mano"
brand of flour which the defendant bound itself to deliver during the months of September and October
had to come from Australia, and at the time the contract was executed Wise & Co. did not have a
sufficient stock of the said brand of flour; and that, as the government of Australia prohibited the
exportation of flour, because of the scarcity of grain in that country, due to the war that had been
declared between Great Britain, of which Australia is an integral part and the German Empire, it was
impossible for the importers to supply Wise & Co. with a sufficient quantity of flour to enable the latter,
in turn, to serve its customers.

Issue:
Whether or not there was a perfected sale.

Held:
The judgment appealed from is affirmed, with costs against the appellant. The undertaking of
the defendant was to sell to the plaintiff 1,000 sacks of "Mano" flour at P11.05 per barrel, 500 sacks to
be delivered in September and 500 in October. There was no delivery at all under the contract. If called
upon to designate the article sold, the defendant could only say that it was "Mano" flour. There was no
appropriation of any particular lot of flour. The flour mentioned in the contract was not "physically
segregated from all other articles.' In fact, the defendant did not have in its possession in Manila, at the
time the contract was entered into, the 1,000 sacks of flour which it agreed to deliver in September and
October. It is therefore clear that under the rule laid down in the case of Yu Tek & Co., supra, and the
case cited in that opinion, the sale here in question was not a perfected one.
15. BUNGE CORP. ET.AL VS ELENA CAMENFORTE AND CO. (48 OFF.GAZ. 3377)

Facts:
A contract was entered into between the Visayan Products Company and Bunge Corporation
(represented by the Universal Commercial Agencies) whereby the former sold to the latter 500 long tons
of merchantable Philippine copra in bulk at the prices of $188.80, U.S. currency, per ton, less 1 per cent
brokerage per short ton of 2,000 pounds, C & F Pacific Coast, U.S.A.; that, according to the terms and
conditions of the contract, the vendor should ship the stipulated copra during the month of November
or December 1947, to San Francisco, California, U.S.A. for delivery to the vendee; , the vendee sold to El
Dorado Oil Works the quantity of copra it had purchased at the same price agreed upon; and that
because of the failure of the vendor to fulfill its contract to ship and deliver the quantity of copra agreed
upon within the period stipulated, the vendee has suffered damages. Visayan product contended that no
contract of sale was perfected. If any, it was that signed by Vicente Kho, the manager and controlling
stockholder in Visayan product Tacloban, but he was not authorized to sign a contract for Visayan
Product Cebu. Kho admitted that he signed the contract and tried his best to deliver the copra but due to
force majeure failed to do so. Lower court ordered for payment of damages by Visayan Product to Bunge
Corp.

Issue:
Whether or not there was a perfected contract of sale between El Dorado and Bunge
Corporation of the copra to be acquired from sale by Visayan Products.

Held:
We are of the opinion that the lower court erred in disregarding the transaction with the El
Dorado Oil Works simply because it found an apparent discrepancy in the dates appearing in the
contracts Exhibits O and C. Exhibit C appears dated on October 22, 1947, and was executed in Cebu,
Philippines, whereas Exhibit O appears dated on October 21, 1947, and was executed in New York City.
The difference of one day in the execution of these documents is merely nominal because New York time
is several hours behind Cebu time. In fact both transactions have been practically executed on the same
day. Even supposing that the contract with the El Dorado Oil Works calls for future and not present
deliveries.
There is nothing improbable for the appellees to sell copra which they expect to acquire
sometime in the future for purposes of speculation. But this error cannot now materially change the
result of this case considering that plaintiffs-appellees did not appeal from the decision. "It has been
held that appellee, who is not appellant, may also assign errors in his brief where his purpose is to
maintain the judgment on other grounds, but he may not do so if his purpose is to have the judgment
modified or reversed, for, in such case, he must appeal." Wherefore, the decision appealed from is
affirmed, with costs against appellants.
16. PATERNO VS SALUD (9 SCRA 81)

Facts:
Defendant claims to be the owner of the land which plaintiffs seek to recover having been in
adverse possession thereof since 1890 and having registered it in his name Registration Case No. 23 of
the same court on April 16, 1940 for which he obtained a Torrens title.
On March 1912, Jose T. Paterno, as administrator of the estate Maximino Molo Agustin Paterno,
acquired at an auction sale certain parcels of land that were levied in execution belonging to Esteban de
Villa. These includes the land in question which contained 5 hectares. In 1927, all these lands were
adjudicated to Concepcion Paterno Vda. de Padilla, daughter of the late Maximino Molo Agustin Paterno
as her share in the estate. In that year, the lease of the lands to the De Villas was not renewed and so
their possession was returned to the Paternos. In 1943, Concepcion Paterno died leaving all the lands
she owned in Batangas, including the one in question, to plaintiffs as her heirs. Hence, from 1927, when
the lease to the De Villas was terminated, to 1949, plaintiffs had been in possession of the lot with an
area of 5 hectares.
The Court of Appeals ruled in favor of the defendant that land in question and the bigger Parcel
of 30.5285 hectares of which it was originally a part, were not included in the auction in 1912 of the
properties of Esteban de Villa.

Issue:
Whether or not the 5 hectares of land is owned by the defendant

Held:
The Supreme Court ruled that the Court of Appeals erred in declaring defendant owner of the
parcel of land claimed in his counterclaim. The evidence shows that plaintiff predecessor-in-interest
Concepcion Paterno Vda. de Villa secured in 1928 Original Certificate of Title No. 49 over a parcel of land
of which the land involved here was a part. This parcel of land was originally acquired by the Paternos in
1912. This was leased to Esteban Villa and Pia de Villa from 1917 to 1925; surveyed Jose T. Paterno on
September 25, 1924; was the subject of petition for registration by the Paternos in 1926, due notice of
which was given to the De Villas, and upon the death of Concepcion Paterno Vda. de Padilla, it was
transmitted to plaintiffs by succession.
Since the land in question was registered in the name of the Paternos in 1928 and it was only on
November 19, 1952, date of defendant' answer, that he sought its reconveyance to him, that title
became indefeasible under Section 38, Act No. 496, as amended by Act No. 3630.
17. JOSE SANTA ANA, JR. VS ROSA HERNANDEZ (18 SCRA 973)

Facts:
Spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo sold a land in Bulacan to respondent Rosa
Hernandez for 11,000 pesos lump sum. (There were two other previous sales to different vendees of
other portions of the land).
The boundaries of the land were stated in the deed of sale and its approximate land area.
Petitioner spouses caused the preparation of the subdivision plan but Hernandez didnt agree to the
partition. As such, petitioners-spouses filed a case alleging that Hernandez is occupying in excess of
17000 square meter of the land sold. Hernandez claims that the excess area is part of the land she
bought.

Issue:
Whether or not the excess area occupied by Hernandez is part of the land sold.

Held:
The sale involves a definite and identified tract, a corpus certrum that obligated the vendors to
deliver to the buyer all the lands within the boundaries, irrespective of whether its real area should be
greater or smaller than what is recited in the deed.
To hold the buyer to no more than the area recited on the deed, it must be made clear therein
that the sale was made by unit of measure at a definite price for each unit. The sale in this case only
involves the definite boundaries but only approximate land areas. As such, Article 1542 concerning the
sale of lump sum must be considered.
18. SIBAL VS. VALDEZ (50 PHIL 512)

Facts:
Plaintiff alleged that the defendant Vitaliano Mamawal, deputy sheriff of the Province of Tarlac,
by virtue of a writ of execution issued by the Court of First Instance of Pampanga, attached and sold to
the defendant Emiliano J. Valdez the sugarcane planted by the plaintiff and his tenants on seven parcels
of lands. Plaintiff offered to redeem said sugarcane and tendered to the defendant Valdez the amount
sufficient to cover the price paid by the latter, the interest thereon after the purchase, and the interest
corresponding thereto. However, Valdez refused to accept the money and to return the sugarcane to the
plaintiff. Meanwhile, defendant argued that the sugar cane was personal property hence not subject to
redemption.

Issue:
Whether or not future crops to be harvested can be considered a valid object of sale.

Held:
Yes. A valid sale may be made of a thing, which though not yet actually in existence, is
reasonably certain to come into existence as the natural increment or usual incident of something
already in existence and then belonging to the vendor, and then title will vest in the buyer the moment
the thing comes into existence. (Emerson vs. European Railway Co. ., 67 Me, 387; Cutting vs. Packers
Exchange, 21 Am. St. Rep, 63)
A man may sell property of which he is potentially and not actually possessed.
19. LUIS PICHEL VS PRUDENCIO ALONZO (111 SCRA 341)

Facts:
Prudencio Alonzo (vendor) executed a deed of sale for the coconut fruits of his land in
Balactasan, Lamitan, Basilan City in favor of Luis Pichel (vendee). The land from which the subject
coconut fruits are derived from was subjected to a cancellation of the award in 1965, due to the reason
of violation of the law that disallows alienation of land. The vendor and his wife sold to the vendee the
fruits of the coconut trees from 1968 to 1976 for consideration of 4,200. Even during the date of sale,
the land was still leased to one Ramon Sua, and it was part of the agreement of the sale that the sum of
3,650.00 was to be paid by vendor to Ramon Sua as to release the land.
The RTC decided in favor of the vendor, due to the fact that the deed of sale that was executed
was invalid, due to its supposed violation of R.A. No. 477, in which they equated the deed of sale
executed by the parties as a contract of lease.

Issue:
Whether or not the deed of sale is valid

Held:
Yes, the RTC erred in constructing the deed of sale as a contract of lease. There was no need on
the part of the RTC to interpret the contract, since there was no ambiguity; it merely contracts the sale
of the fruits of the land, not the land itself.
The Supreme Court relied upon the Article 1370 of the Civil Code, regarding the rule on
interpreting contracts. Its interpretation in express form is the preferred. Construction shall be employed
when such literal interpretation is impossible.
The possession of the coconut fruits for 7 years is different from possession of the land, since the
coconut fruits are mere accessories and the land is the principal- a transfer of accessories and the land is
the principal; it is the other way around. The vendor having received the consideration for the sale of his
coconut fruits cannot be allowed to impugn the validity of the contracts he entered into, to the prejudice
of petitioner who contracted in good faith and consideration. Therefore the judgement of the lower
court has been set aside.
20. BUCTON VS GABAR (55 SCRA 499)

Facts:
Nicanora Bucton & Josefina Gabar are sisters-in-law. Josefina bought a land from Villarin on
installment basis. Josefina then entered into a verbal agreement with Nicanora that the latter would pay
one-half of the price and would then own one-half of the land. Nicanora agreed. She paid the initial
amount evidenced by a receipt. Bucton then took possession of the land and made thereon
improvements. When a deed of sale was executed in favor of Gabar for the land, Bucton sought to
obtain a separate title but was refused. Bucton filed a case for specific performance which was granted
by the trial court. CA reversed, ruling that the action for specific performance was based on the receipt
of the initial payment which was executed 22 years ago, thus had already prescribed (10 years
prescription for an action based on a written agreement Art. 1444). Bucton argues that as owners in
actual, continuous and physical possession of the land since its purchase, their right of action did not
prescribe.

Issue:
Whether or not Buctons right of action to compel Gabar to execute a formal deed of
conveyance in their favor, has prescribed.

Held:
No. The real and ultimate basis of petitioners action is their ownership of one-half of the lot
coupled with their possession thereof (not the receipt), which entitles them to a conveyance of the
property.
By the delivery of the possession of the land, the sale was consummated and title was
transferred to Bucton, that the action is actually not for specific performance, since all it seeks is to quiet
title, to remove the cloud cast upon Buctons ownership as a result of Gabars refusal to recognize the
sale made and that as Bucton are in possession of the land, the action is imprescriptible.
21. REPUBLIC OF THE PHILIPPINES VS LICHAUCO, ET. AL (46 SCRA 305)

Facts:
The Republic of the Philippines, by authority of Republic Act No. 1400, represented by the Land
Tenure Administration, filed on December 2, 1957, in the Court of First Instance of Pangasinan a
complaint against the defendants for the expropriation of the lands of the "Hacienda El Porvenir",
situated in the province of Pangasinan. In the complaint it was alleged, among other things, that the
continuous agrarian conflicts between defendants and their tenants could be solved only through the
purchase of said property by the government. Defendants, in their amended motion to dismiss, sought
the dismissal of the complaint, alleging that the hacienda was no longer a co-ownership but had been
partitioned among the several heirs of Crisanto Lichauco, herein defendant.
Both the plaintiff and the defendants filed in court an Agreement and Joint Motion and it is
stipulated, among other things, that "the plaintiff shall have the option to buy the said portions in
question as adjudicated and pay the corresponding price as in this expropriation case".

Issue:
Whether or not the sale of property yet to be adjudicated by a court is valid and binding

Held:
Yes. Where it was expressly stipulated that in the event that the difference in area is still subject
of judicial determination is adjusted and/or adjudicated in favor of defendant co-owners, "the plaintiff
shall have the option to buy the said portions in question as adjudicated and pay the corresponding price
as in this expropriation case", said stipulation has the force of law between the contracting parties and
should be complied with.
22. DEL ROSARIO VS. SANTOS, ET.AL (108 SCRA 43)

Facts:
On January 14, 1974, Amparo del Rosario filed a complaint against the spouses Andres F Santos
and Aurora O. Santos, for specific performance and damages allegedly for failure of the latter to execute
the Deed of Confirmation of Sale of an undivided 20,000 square meters of land, part of Lot 1, Psu-
206650, located at Barrio Sampaloc, Tanay, Rizal, in malicious breach of a Deed of Sale dated September
28, 1964.
Amparo del Rosario died on September 21, 1980 so that she is now substituted by the heirs
named in her will. Andres F. Santos also died, on September 5, 1980, and he is substituted by his heirs.
Plaintiff claimed fulfillment of the conditions for the execution of the Deed of Confirmation of
Sale, namely: the release of the title of the lot and the approval of the subdivision plan of said lot by the
Land Registration Commission. The following titles with their corresponding land areas are: TCT 203580 -
30,205 sq.m.; TCT 203581 - 19, 790 sq.m.; and TCT 167568 - 40,775 sq.m.
In a motion to dismiss, defendants pleaded, inter alia, the defenses of lack of jurisdiction of the
court a quo over the subject of the action and lack of cause of action. They likewise set up the defense of
prescription allegedly because the deed of sale was dated September 28, 1964 and supposedly ratified
October 1, 1964 but the complaint was filed only on January 14, 1974, a lapse of more than nine years
when it should have been filed within five years from 1964 in accordance with Art. 1149, New Civil Code.
Defendant also claimed that the demand set forth in the complaint has been waived, abandoned or
otherwise extinguished. It is alleged that the deed of sale was only an accommodation graciously
extended, out of close friendship between the defendants and the plaintiff and her casual business
partner in the buy and sell of real estate, one Erlinda Cortez. Defendants characterized the said deed of
sale as a mere tentative agreement which was never intended nor meant to be ratified by and
acknowledged before a notary public. In fact, they claimed that they never appeared before Notary
Public Florencio Landrito. Finally, defendants alleged that the claim on which the action or suit is
founded is unenforceable under the statute of frauds and that the cause or object of the contract did not
exist at the time of the transaction.
Hence, this appeal as only questions of law are involved.

Issue::
Whether or not the sale is valid as to the cause or object of the contract.
Held:
Supreme Court held that the execution of the deed of sale is valid notwithstanding the lack of
any title to the lot by appellants at the time of execution of the deed of sale in favor of appellee as there
can be a sale of an expected thing in accordance with Article 1461 of the New Civil Code:
Art. 1461. Things having a potential existence may be the object of the contract of sale.
The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that
the thing will come into existence.
The sale of a vain hope or expectancy is void. The case at bar is not a case of a vain hope or
expectancy which is void under the law. The expectant right came into existence or materialized for the
appellants actually derived titles from Lot 1 which subsequently became the object of subdivision.
Further, a sale of real property to be enforceable need not be notarized. As correctly pointed out
by the court a quo, the alleged false notarization of the deed of sale is of no consequence. For a sale of
real property or of an interest therein to be enforceable under the Statute of Frauds, it is enough that it
be in writing. It need not be notarized. But the vendee may avail of the right under Article 1357 of the
New Civil Code to compel the vendor to observe the form required by law in order that the instrument
may be registered in the Registry of Deeds. Hence, the due execution and genuineness of the deed of
sale are not really in issue in this case.
As to the appellants allegation that the appellees claim is barred by prescription, the ruling of
the trial court that only seven years and six months of the ten-year prescription period provided under
Arts. 1144 and 155 in cases of actions for specific performance of the written contract of sale had
elapsed and that the action had not yet prescribed, as in accordance with law. This Court affirmed.
23. TIBURCIO LUTERO VS SIULIONG & CO. (54 PHIL 272)

Facts:
On June 30, 1919, the plaintiff Tiburcio Lutero and the defendant Siuliong & Co. entered into a
contract (Exhibit A).
On August 21, 1919, the same parties entered into another contract (Exhibit C).
Under contract Exhibit A, the plaintiff had received from the defendant in cash, goods, and other
expenses the amount of P4,606.15. Having delivered 337 piculs and 57 cates of muscovado sugar, the
total value of which is P3,405.58, he had still a balance of P1,199.87 to pay, and 162 piculs and 44 cates
of sugar to deliver.
Under contract Exhibit C, the plaintiff received from the defendant in cash, goods, and other
expenses the total sum of P6,862. Having delivered 319 piculs and 77 cates of muscovado sugar, the full
value whereof is P3,822.44, he had still a balance of P3,031.54 to pay, and 490 piculs and 24 cates of
sugar to deliver.
In accordance with contracts Exhibits A and C, the plaintiff bound himself to pay in cash,
according to the current market price, for the undelivered difference.
It is contended by the plaintiff-appellant that the defendant having advanced money to the
plaintiff upon both contracts, said money was given as a loan payable in sugar, which, according to the
law, must be computed on the basis of the market price at the time of delivery; and that as the
maximum price of sugar on the respective dates of delivery was P30, and the price stipulated in said
contracts was not even one-half of the market price, said contracts are usurious.

Issue:
Whether or not the contracts Exhibits A and C, entered into by and between Lutero and Siuliong
& Co. are for usurious loans of money payable in sugar;
Whether or not the plaintiff must pay to the defendant for the sugar which the former failed to
deliver in accordance with the aforesaid contracts.

Held:
The sale of sugar to be delivered at a future definite time and for a fixed price, a part of which is
advanced by the purchaser to the vendor, is neither usurious nor illegal even though said price should
prove to be much less than the market price on the date of delivery.
The fact that the purchaser does not bring suit against the vendor immediately upon the latters default
in the delivery of the sugar sold, and that he allows six years to elapse, does not deprive him of his right
to bring such action on account of laches, inasmuch as such actions, arising from a written contract, does
not prescribe until after ten years from the time the cause of action arises (Sec. 43, Code of Civil
Procedure).
The purchaser is entitled to damages sustained on account of the vendors default, said damages
consisting in the difference between the price stipulated and the market price of the goods at the time
delivery thereof should have been made.
24. KER & CO., LTD VS. JOSE B. LINGAD (38 SCRA 524)

Facts:
Petitioner was assessed by then Commissioner of Internal Revenue Domingo the sum of
P20,272.33 as the commercial brokers percentage, tax, surcharge, and compromise penalty for the
period from July 1, 1949 to December 31, 1953.There was a request on the part of the petitioner for the
cancellation of such assessment, which request was turned down. As a result, it filed a petition for
review with Court of Tax Appeals.

Issue:
Whether or not the relationship thus created is one of vendor and vendee (contract of sale) or of
broker and principal (contract of agency).

Held:
The difficulty in distinguishing between the contracts of sale and the creation of an agency to sell
has led to the establishment of rules by the application of which this difficulty may be solved. The
decisions say the transfer of title or agreement to transfer it for a price paid or promised is the essence
of sale. If such transfer puts the transferee in the attitude or position of an owner and makes him liable
to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the
proceeds of a resale, the transaction is a sale; while the essence of an agency to sell is the delivery to an
agent, not as his property, but as the property of the principal, who remains the owner and has the right
to control sales, fix the price, and terms, demand and receive the proceeds less the agents commission
upon sales made.
SC then ruled that the relationship is that of a broker and principal (contract of agency).
National Internal Revenue Code defined commercial broker as all persons, other than importer,
manufacturers, producers or bona fide employees who, for compensation or profit, sell or bring about
sales or purchase of merchandise for other persons or bring proposed buyers and sellers together and
also includes commission merchants such as Ker in this case.
The mere disclaimer in a contract that an entity like petitioner is not the agent or legal
representative xxx for any purpose whatsoever does not suffice to yield the conclusion that it is an
independent merchant if the control over the goods for resale of the goods consigned is pervasive in
character. Thus, SC rejected Kers petition to reverse decision of CTA.
25. INCHAUSTI AND CO. VS ELLIS CROMWELL (20 PHIL 345)

Facts:
Inchausti is engaged in the business of buying and selling at wholesale hemp. It is customary to
sell hemp in bales. The operation of bailing hemp is designated among merchants by the word. In all
sales of hemp by the plaintiff firm, the price is quoted to the buyer at so much per picul, no mention
being made of bailing; but with the tacit understanding, unless otherwise expressly agreed, that the
hemp will be delivered in bales and that, according to the custom prevailing among hemp merchants and
dealers in the Philippine Islands, a charge, is to be made against the buyer under the denomination of
prensaje. This charge is made in the same manner in all cases, even when the operation of bailing was
performed by the plaintiff or by its principal long before the contract of sale was made.
Plaintiff Inchausti has always paid to the defendant Collector of Internal Revenue or to his
predecessor in the office of the Collector of Internal Revenue the tax collectible upon the selling price
expressly agreed upon for all hemp sold by the plaintiff firm, but has not, until compelled to do so, paid
the said tax upon sums received from the purchaser of such hemp under the denomination of
prensaje. Subsequently, the defendant acting in his official capacity as Collector of Internal Revenue of
the Philippine Islands, made demand in writing upon plaintiff frim for the payment as tax on sums of
money collected from purchasers of hemp under the denomination of prensaje.
The plaintiff firm paid to the defendant under protest that the tax for the collected money under
the denomination of prensaje is illegal upon the ground that said charge does not constitute a part of
the selling price of the hemp, but is a charge made for the service of baling the hemp.
It is the contention of the defendant that the said charge made under the denomination of
prensaje is in truth and in fact a part of the gross value of the hemp sold and of its actual selling price.

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

Held:
The distinction between a contract of sale and one for work, labor, and materials is tested by the
inquiry whether the thing transferred is one no in existence and which never would have existed but for
the order of the party desiring to acquire it, or a thing which would have existed and been the subject of
sale to some other person, even if the order had not been given. It is clear that in the case at bar the
hemp was in existence in baled form before the agreements of sale were made, or, at least, would have
been in existence even if none of the individual sales here in question had been consummated. It would
have been baled, nevertheless, for sale to someone else, since, according to the agreed statement of
facts, it is customary to sell hemp in bales. When a person stipulates for the future sale of articles which
he is habitually making, and which at the time are not made or finished, it is essentially a contract of sale
and not a contract for labor.
It is otherwise when the article is made pursuant to agreement. Where labor is employed on the
materials of the seller he cannot maintain an action for work and labor. If the article ordered by the
purchaser is exactly such as the plaintiff makes and keeps on hand for sale to anyone, and no change or
modification of it is made at the defendant's request, it is a contract of sale, even though it may be
entirely made after, and in consequence of, the defendant's order for it.
A contract for the sale of an article which the vendor in the ordinary course of his business
manufactures or procures for the general market, whether the same is on hand at the time or not, is a
contract for the sale of goods to which the statute of frauds applies. But if the goods are to be
manufactured especially for the purchaser and upon his special order, and not for the general market,
the case is not within the statute.
It is clear to our minds that in the case at bar the baling was performed for the general market
and was not something done by plaintiff which was a result of any peculiar wording of the particular
contract between him and his vendee. It is undoubted that the plaintiff prepared his hemp for the
general market.

26. MAJARABAS, ET.AL. VS LEONARDO (11 PHIL 272)


Facts:
The plaintiff had rendered services as wet nurse and governess to an infant daughter of the
defendant by virtue of a verbal agreement entered into with the now deceased parents of the
defendant, who, to use the language of the complaint, " promised to liberally compensate the services of
the plaintiff, providing the maintenance of herself, her husband and their child, during all the time that
the services of the plaintiff where required as such wet nurse and governess."
It is maintained in the demurrer that the obligation contracted by the parents of the defendant
was to support the plaintiff and her family, and that the reason of the death of the former, as stated in
the complaint, under the provision of article 150 of the Civil Code, the said obligation has been
extinguished in fact and in law, and the plaintiff cannot therefore, bring suit for compliance herewith.
The demurrer was overruled by the court below on the ground that aforesaid agreement constituted a
contract for services, although the price was to be measured by the cost of the maintenance of the
plaintiff. This ruling has been assigned as error by the appellant in his brief.

Issue:
Whether or not a contract of services exist although no specified or fixed price was stipulated

Held:
Yes. It is not necessary that the certainty of the price be actual or determined at the time of
executing the contract, but that it is sufficient compliance with the law if the same can be determined by
the speculations of the contract made by the party thereto. In the present case the contracting parties
fixed the maintenance of the plaintiff and her family as the price for the services required of her. Said
maintenance is the specific and determinate thing that in its turn fixes the price, inasmuch as its cost
determines the price according to the agreement of the parties to the contract.
There might be a question as to the actual cost of the plaintiffs maintenance, but this is a matter
of fact which in such a case would have to be proven. Be it as it may, whatever might be the cost of said
subsistence, it would constitute the price for the services rendered by the plaintiff; said price is
unquestionably the specified one since it refers to a specified thing designated by the parties as the rate
regulating the amount thereof. Therefore, the appellant's allegation is unfounded, and the order of the
court below overruling the demurrer must be affirmed.
27. MITSUI BUSSAN KAISHA VS THE MANIAL E.R. AND L. CO. (39 PHIL 624)
Facts:
Prior to December 23, 1914, the plaintiff corporation, Mitsui Bussan Kaisha, had contracted to
sell large quantities of coal to the defendant, the Manila Electric Railroad and Light Company. Deliveries
under this contract were made from time to time to meet the requirements of the defendant company
from shipments arriving from Japan. The basic price fixed in the contract was P9.45 per long ton, but it
was stipulated that the price was subject to modification "in proportion to variations in calories and ash
content, and not otherwise." This means of course and ash contend, and not otherwise." This means of
course that the price could be made certain by the application of known factors.
While extensive deliveries were still to be made under the contract above referred to, the
Legislature, by Act No. 2432, passed December 23, 1914, and imposed a specific tax of one pose per
metric ton on coal. Shortly thereafter this Act was amended in certain respects by Act No. 2445.
In the period embracing the months from March to October, inclusive, of the year 1915, the
plaintiff company brought to Manila from Japan large quantities of coal amounting in all to 11,874.75
metric tons for delivery to the defendant company upon the contract above-mentioned. In order to
effect the entrance of said coal, through the Bureau of Customs, at the port of Manila, it was necessary
for the plaintiff company to pay the new internal-revenue tax imposed by Acts Nos. 2432 and 2445; and
it did in fact pay in satisfaction of said tax the aggregate sum of P11,874.75. The plaintiff then demanded
reimbursement of said sum from the defendant, basing its claim upon the provision from Act No. 2445.
The defendant refused to accede to this demand, and the present action was instituted by the plaintiff to
recover the amount so paid out by it. From judgment entered in favor of the plaintiff the defendant has
appealed.

Issue:
Whether or not the parties have already agreed as to a fixed price when a contract entered into
states "in proportion to variations in calories and ash content and not otherwise"

Held:
Yes. The stipulation means that the price could be made certain by the application of known
factors (Civil Code, art. 1447), and for the purposes of this case it may be assumed that the price was
fixed at P9.45 per long ton. This provision has exclusive reference to the quality of the coal delivered, and
has no other purpose than to supply a means of ascertaining the value of the coal by determining its
utility combustion.
28. MITSUI BUSSAN KAISHA VS THE MANIAL E.R. AND L. CO. (39 PHIL 624)

Facts:
The plaintiff and defendant entered into an agreement August 27, 1901, for the purchase by the
plaintiff and sale by the defendant of certain real property, the tobacco and cigarette factory known as
"La Maria Cristina," said sale including the trade-mark "La Maria Cristina," which was been duly
registered, the stock of tobacco in leaf and manufacture, machinery, labels, wrappers, furniture, fixtures,
and everything else belonging to the said factory, as shown in the inventory to be drawn up for the
purpose of making formal delivery of the said property.
In this inventory the value of each individual piece of furniture will be fixed at 10 per cent below
the price shown in the partnership inventory. The machinery and cost of installing the same will also be
fixed at 10 per cent below its invoice price. The value of the tobacco, both in leaf and in process of
manufacture, boxes, labels, wrappers, cigars, cigarettes, and paper mouthpieces for cigarettes will be
fixed at the invoice price. The value of tobacco made up into cigars will be fixed in accordance with the
price list of the partnership, less 20 per cent discount. The cigars will be inventoried at the prices in the
same list, less a discount of 35 per cent.

Issue:
Whether or not under the terms of the agreement, the price of the property sold be considered
certain

Held:
Yes. The articles which were the subject of the sale were definitely and finally agreed upon. The
appellee agreed to buy, among other things, all of the leaf tobacco in the factory. This was sufficient
description of the thing sold. The price for each article was fixed. It is true that the price of this tobacco,
for example, was not stated in dollars and cents in the contract. But by its terms the appellee agreed to
pay therefor the amount named in the invoices then in existence. The price could be made certain by a
mere reference to those invoices. By the instrument of August 27 the contract was perfected and
thereafter each party could compel the other to fulfill it. By its terms the appellee was bound to take all
the leaf tobacco then belonging to the factory and to pay therefor the prices named in the invoices. This
obligation was absolute and did not depend at all upon the quality of the tobacco or its value. The
appellee did not, in this contract, reserve the right to reject the tobacco if it were not of a specific crop.
He did not buy tobacco of a particular kind, class, or quality. He bought all the tobacco which the
appellant owned and agreed to pay for it what the defendant had paid for it.
29. ZACARIAS ROBLES VS LIZARRAGA HERMANOS (50 PHIL 387)

Facts:
It appears that the hacienda "Nahalinan," belonged originally to the spouses Zacarias Robles and
Anastacia de la Rama, parents of the present plaintiff, Zacarias Robles. Upon the death of Zacarias Robles
Sr., his widow Anastacia de la Rama was appointed administrator of his estate; and on May 20, 1913, as
widow and administrator, she leased the hacienda to the plaintiff, Zacarias Robles, for the period of six
years beginning at the end of the milling season in May, 1915, and terminating at the end of the milling
season in May, 1920. It was stipulated that any permanent improvements necessary to the cultivation
and exploitation of the hacienda should be made at the expense of the lessee without right to indemnity
at the end of the term. As the place was in a run-down state, and it was foreseen that the lessee would
be put to much expense in bringing the property to its productive capacity, the annual rent was fixed at
the moderate amount of P2,000 per annum.
The plaintiff made various improvements and additions to the plant. The firm of Lizarraga
Hermanos was well aware of the nature and extent of these improvements.
When the plaintiffs mother died, defendant came forward with a proposal to buy the heirs
portion of the property. In consideration that the plaintiff should shorten the term of his lease to the
extent stated, the defendant agreed to pay him the value of all betterments that he had made on the
land and furthermore to purchase from him all that belonged to him personally on the land. The plaintiff
agreed to this.
On the ensuing instrument made, no reference was made to the surrender of the plaintiffs
rights as lessee, except in fixing the date when the lease should end; nor is anything said concerning the
improvements which the plaintiff had placed. At the same time the promise of the defendant to
compensate for him for the improvements was wanting. Accordingly, the representative of the
defendant explained that this was unnecessary in view of the confidence existing between the parties.
On the part of the defendant it was claimed that the agreement with respect to compensating
the plaintiff for improvements and other things was never in fact made.

Issue:
Whether or not the stipulation for appraisal and agreement as to the price was a suspensive
condition for the enforceability of the contract
Held:
No. In this connection it is claimed that the true meaning of the proven verbal agreement is that,
in case the parties should fail to agree upon the price, after an appraisal of the property, the agreement
would not be binding; in other words, that the stipulation for appraisal and agreement as to the price
was a suspensive condition in the contract: and since the parties have never arrived at any agreement on
the price (except as to the carabao), it is contended that the obligation of the defendant has never
become effective. We are of the opinion that the stipulation with respect to the appraisal of the property
did not create a suspensive condition. The true sense of the contract evidently was that the defendant
would take over the movables and the improvements at an appraised valuation, and the defendant
obligated itself to promote the appraisal in good faith. As the defendant partially frustrated the
appraisal, it violated a term of the contract and made itself liable for the true value of the things
contracted about; as such value may be established in the usual course of proof. Furthermore, it must
occur to any one, as the trial judge pointed out, that an unjust enrichment of the defendant would result
from allowing it to appropriate the movables without compensating the plaintiff thereof.
30. ASKAY VS COSALAN (46 PHIL. 179)

Facts:
Askay, an illiterate Igorrote between 70 and 80 years of age, residing in the municipal district of
Tublay, Province of Benguet, who at various times has been the owner of mining property. The
defendant is Fernando A. Cosalan, the nephew by marriage of Askay, and municipal president of Tublay,
who likewise has been interested along with his uncle in mining enterprises.AS
About 1907, Askay obtained title to the Pet Kel Mineral Claim located in Tublay, Benguet. On
November 23, 1914, if we are to accept defendant's Exhibit 1, Askay sold this claim to Cosalan. Nine
years later, in 1923, Askay instituted action in the Court of First Instance of Benguet to have the sale of
the Pet Kel Mineral Claim adhered null, to secure possession of the mineral claim, and to obtain damages
from the defendant in the amount of P10,500. Following the presentation of various pleadings including
the answer of the defendant, and following trial before Judge of First Instance Harvey, judgment was
rendered dismissing the complaint and absolving the defendant from the same, with costs against the
plaintiff. On being informed of the judgment of the trial court, plaintiff attacked it on two grounds: The
first, jurisdiction, and the second, formal. Both motions were denied and an appeal was perfected.

Issue:
Whether or not the deed of sale can be cancelled based on the plaintiffs claim

Held:
No, in our judgment he has failed to establish his claim. Fraud must be both alleged and proved.
One fact exists in plaintiff's favor, and this is the age and ignorance of the plaintiff who could be easily
duped by the defendant, a man of greater intelligence. Another fact is the inadequacy of the
consideration for the transfer which, according to the conveyance, consisted of P1 and other valuable
consideration, and which, according to the oral testimony, in reality consisted of P107 in cash, a bill fold,
one sheet, one cow, and two carabaos. Gross inadequacy naturally suggests fraud and is some evidence
thereof, so that it may be sufficient to show it when taken in connection with other circumstances, such
as ignorance or the fact that one of the parties has an advantage over the other. But the fact that the
bargain was a hard one, coupled with mere inadequacy of price when both parties are in a position to
form an independent judgment concerning the transaction, is not a sufficient ground for the cancellation
of a contract.
31. WARNER, BARNES & CO.,LTD. VS SANTOS (14 PHIL 446)
Facts:
Plaintiff brought an action for the purpose of foreclosing a mortgage. Later the cause was
brought on for trial, and after hearing the evidence adduced during the trial, the lower court rendered a
judgment in favor of the plaintiff. The judgment of the lower court further provided that if the defendant
failed to pay the amount of aid judgment that an execution might issue against the property. On the 6th
day of March, 1908, upon the petition of the plaintiff, the amount of said judgment not having been
paid, judge of said court, issued an order of execution, directing the sheriff to sell the property covered
by the said mortgage. The mortgaged property, under said execution, was duly sold on the 10th day of
April, 1908. On the 21st day of April, 1908, the defendant appeared in the court and objected to the
confirmation of the sale upon the ground that there was another person who would pay the sum of
P5,500 for the property sold. The return of the sheriff shows that he sold the property for the sum of
P4,715. The defendant in said motion requested that the property be put up and sold again. It will be
noticed that the defendant appeared and objected to the confirmation of the sale eleven days after the
sale had been consummated, and so far as the record discloses this was his first appearance during the
pendency of the cause in the lower court. On the 21st day of April, 1908, after duly considering the
objection made by the defendant, the lower court overruled the said objection and confirmed the sale of
said property.

Issue:
Whether or not the objection of the defendant to the confirmation of the sale constituted a
sufficient cause for refusing to confirm such sale.

Held:
The basis of the objection of the defendant in the lower court was that he was able to obtain
from another person about P800 more than the sheriff received from the person to whom he sold said
property. This person was not discovered by the defendant until ten or twelve days after the sale took
place. No objection is made by the defendant that the sale was not duly advertised or that there was any
collusion on the part of the sheriff or the other parties interested in the sale. It is the duty of the court,
of course, in the sale of the property under the conditions of the present case, to obtain as much money
for the judgment debtor out of his property as it is possible. This duty on the part of the court, however,
does not justify negligent delay in an attempt to protect his rights on the part of the said judgment
debtor.
In the present case the defendant made no attempt to defend his rights until some days after judgment,
execution, and sale. The Supreme Court of the United States has held in numerous decisions, that a sale
under foreclosure proceedings would not be set aside upon the ground that the sheriff did not receive as
much money as he might have received, providing all of the proceedings were valid and regular, unless
the sale was made for a sum grossly inadequate in comparison with the real value of the property.
32. PHILIPPINE NATIONAL BANK VS GONZALEZ (45 PHIL. 693)

Facts:
November 23, 1921, Philippine National Bank commenced a suit against Manuel Ernesto
Gonzales to foreclose a real mortgage made to secure a promissory note for P15,000. March 17, 1922,
the plaintiff bank filed an amended complaint against the same defendant, in which the original was
reproduced, to foreclose a second mortgage for P15,000 upon the same land described in the original
complaint. The bank filed for default and the court subsequently declared defendant in default. On
January 11, 1923, an execution was issued for the sale of the real property described in the mortgages to
satisfy the amount of the judgment. On August 28, 1922, the total of the judgment in the first cause of
action, including the interest, was P17,313.59, and in the second mortgage, on the same date, it was
P17,755. February 16, 1923, the sheriff filed a motion to confirm the sale to Lopez and the court made
an order duly conforming the sale. April 5, 1923, the defendant Gonzales, through his then attorney, filed
a motion for reconsideration of the order entered in this case
April 16, 1923, the court rendered a decision in which he found as a fact that all of the necessary
requisites for the notice of sale had been duly complied with but that it appeared that the value of the
land, which was sold to the appellant, was P45,940, for which he did only 15,000, and on account of this
difference in value for taxation purposes and the value for which the land was sold, the court set aside
the confirmation, and ordered a resale "thereby giving the aforesaid defendant a greater opportunity in
order that he may obtain a better price, if possible, from the sale of the aforesaid lands." From that
order, Lopez appeals, assigning as error that "the trial court erred in setting aside, without good cause
having been shown, the prior order confirming the judicial sale, and ordering the resale of the land in
question.

Issue:
Whether or not the trial court erred in setting aside the decision.

Held:
It will be noted that in the first instance, the trial court confirmed the sale on the motion of the
sheriff, and that in the last order, he specifically found as a fact that there had been a compliance of all of
the essential requisites for a sale on execution, and that the order, confirming the sale, was set aside
upon the sole ground of inadequacy of consideration. It will also be noted that in the motion to set aside
the sale, the only ground specified is "that order is not in accordance with law." In other words, in the
motion itself no grounds are specifically set forth or alleged as to why the sale should be set aside, and
that in the body of the motion, it is not claimed that the land was sold for an inadequate consideration.
Not a witness was called to testify as to the value of the land. In other words, the only evidence
before the court as to value was the certificate of the deputy municipal treasurer, and that was to the
effect that the four pieces of land therein described had an assessed valuation of P45,940. Neither was
there any showing made nor any evidence presented, that, in the event the property in question was
resold, that it would sell for more than P15,000. That as to the land in question, it appears of record that
on August 28, 1922, the amount of the bank's judgment was P17,313.59. It also appears that the bank
was personally represented at the sale, and that it refused to bid more than P15,000. For such reason,
the property was sold to Lopez, as the highest bidder. In other words, it appears of record that the bank
itself consented and agreed to the sale of the property in question for more than P3,000 less than the
amount of its claim.
33. THE DIRECTOR OF LANDS VS ABARCA (61 PHIL 70)

Facts:
The lot now in question was the subject of litigation between Datu Bualan and his co-claimants,
on the one hand, and Ciriaco Lizada, on the other. Juan A. Sarenas and Domingo Braganza were the
attorneys for Datu Bualan and his co-claimants in that suit, wherein a judgment was rendered declaring
Datu Bualan and his co-claimants the owners of the land involved in the litigation. Subsequently, a
controversy arose between the Bagobos and their attorneys as to the amount of fees due the latter,
whereupon the attorneys took possession of the property now in question. Action was brought by the
Bagobos against their former attorneys for the recovery of the land. In this action (civil case No. 607)
judgment was rendered ordering the attorneys to return the property seized by them, and requiring the
Bagobos to pay their former attorneys the sum of P6,000 as fees. As a result of this judgment Datu
Bualan and his co-claimants paid Sarenas and Braganza the sum of P5,126.13. They also paid to the
municipal treasurer of Davao in the name of Sarenas and Braganza, for taxes and penalties due on the
property in the year 1926, while the same was in the possession of the latter, the sum of P1,035.87. The
Bagobos assumed that, by these payments which amounted in all to P6,162, the judgment rendered
against them for P6,000 together with interests due thereon, was fully satisfied.
Claiming that the sum paid to the municipal treasurer of Davao should not be credited on the
amount of the judgment obtained by them, Sarenas and Braganza caused the clerk of the court to issue
a writ of execution on the said judgment. By reason of the writ of execution so issued, the sheriff levied
on the property here in question and sold it to Sarenas and Braganza for the sum of P877.25. Upon the
failure of the Bagobos to redeem the property, they filed their claim in the present cadastral case,
alleging that they were the absolute owners of lot No. 700.

Issue:
Whether or not the sum paid by the Bagobos to the municipal treasurer should be credited.

Held:
Yes, it should be credited. In fairness and equity, which after all are the true aims of the law, the
amount paid by Datu Bualan and his co-claimants for taxes and penalties due on the contested property
should be credited on the judgment obtained by Sarenas and Braganza in civil case No. 607. Such taxes
and penalties accrued while the property was in that possession under a claim of ownership. It follows
that the error assigned by Datu Bualan and his co-claimants against the judgment below, to the effect
that the lower court erred in subjecting the property sought to be registered to a lien in favor of Sarenas
and Braganza for P877.25 with interests, must be sustained.
34. DE LEON VS SALVADOR (36 SCRA 567)

Facts:
A judgment for P35,000.00-actual, moral and exemplary damages and a writ of execution was
obtained by Enrique de Leon against private respondent Eusebio Bernabe in Civil Case No. C-189 of
Branch XII of the Rizal court of first instance, Caloocan City branch presided by Judge Fernando A. Cruz.
The city sheriff sold the said properties to herein petitioner, as the highest bidder for the total sum of
P30,194.00. The sheriff executed the corresponding certificate of sale in her favor, which was duly
registered on February 21, 1967 with the Caloocan City register of deeds. On February 7, 1968, Bernabe
filed a separate civil action for the annulment of execution sale. This second case, instead of being
referred to Judge Cruz presiding over Branch XII which had issued the writ of execution, was assigned to
Branch XIV, the other Caloocan City branch of the Rizal Court of First Instance presided by Judge Serafin
Salvador, who issued on February 19, 1968 a writ of preliminary injunction enjoining therein defendants,
particularly the sheriff to desist "from taking further proceedings against the properties of the plaintiff
[Bernabe] that were sold at public auction on February 14, 1967, and from issuing a sheriffs deed of sale
at the expiration of the period of redemption on February 21, 1968 in favor of defendant Aurora P. de
Leon." Aurora moved to dissolve the injunction and to dismiss this second case on the grounds of laches
and lack of jurisdiction of Judge Salvadors court to interfere with the execution proceedings pending in
the first case before Judge Cruz court which is of equal and co-ordinate jurisdiction.

Issue:
Whether or not Branch XIV presided by Judge Salvador has exclusive jurisdiction to set aside for
alleged irregularities the execution sale made by Judge Cruzs court.

Held:
It is patent that such exclusive jurisdiction was vested in Judge Cruz court. Having acquired
jurisdiction over Case No. C-189 and rendered judgment that had become final and executory, it retained
jurisdiction over its judgment, to the exclusion of all other co-ordinate courts for its execution and all
incidents thereof, and to control, in furtherance of justice, the conduct of its ministerial officers in
connection therewith. 2 Execution of its judgment having been carried out by the sheriff with the levy
and sale of the judgment debtors properties, Eusebio Bernabe as judgment debtor could not in the
guise of a new and separate second action (Case No. 1217) ask another court of coordinate jurisdiction,
Judge Salvadors court, to interfere by injunction with the execution proceedings, to set them aside and
to order the holding of a new execution sale instead of seeking such relief by proper motion and
application from Judge Cruz court which had exclusive jurisdiction over the execution proceedings and
the properties sold at the execution sale. As early as 1922, in Cabigao v. del Rosario, 3 this Court laid
down the doctrine that "no court has power to interfere by injunction with the judgments or decrees of
a court of concurrent or coordinate jurisdiction having power to grant the relief sought by injunction,"
pointing out that" the various branches of the Court of First Instance of Manila are in a sense coordinate
courts and to allow them to interfere with each others judgments or decrees by injunctions would
obviously lead to confusion and might seriously hinder the administration of justice.
35. BORROMEO VS BORROMEO ET.AL ( 52 OFF. GAZ. 1392)

Facts:
Vito Borromeo, a widower and permanent resident of the City of Cebu, died on March 13, 1952,
at the age of 88 years, without forced heirs but leaving extensive properties in the province of Cebu.
Of the same year, Jose H. Junquera, filed with the Court of First Instance of said province a
petition for the probate of a one page document as the last will left by said deceased, devising all his
properties to Tomas, Fortunato and Amelia, all surnamed Borromeo, in equal and undivided shares, and
designating Junquera as executor thereof (Special Proceedings No. 916-R). The document was dated May
17, 1946, drafted in Spanish, and allegedly signed, and thumb marked by said deceased, in the presence
of Dr. Cornelio G. Gandionco, Eusebio Cabiluna and Filiberto Leonardo as attesting witnesses. On June
14, 1952, the probate court appointed Junquera as special administrator of the estate.
On November 14 of the same year, Teofilo Borromeo filed an opposition to the probate of the
will based on the following grounds: (1) that the formalities required by law had not been complied with;
(2) that the testator was mentally incapable of making a will at the time of its execution; (3) that the will
was procured by undue and improper influence, on the part of the beneficiaries and/or some other
person; (4) that the signature of the testator was procured by fraud; and (5) that the testator acted by
mistake or did not intend the instrument he signed to be his will at the time he affixed his signature
thereto.
On May 28, 1960, the Court rendered a decision denying the probate of the will and declaring
itself without jurisdiction to pass upon the question of ownership over the thirteen lots which the Cebu
Arcade etc. claimed as its own. All the parties appealed the proponents of the will from the portion of
the decision denying probate, and the oppositors and the Republic of the Philippines, from that portion
thereof where the court refused to decide the question of ownership of the thirteen lots already
mentioned.

Issue:
Whether or not the evidence of record is sufficient to prove the due execution of the will in
question.

Held:
It must be conceded that in this jurisdiction, the subscribing witnesses to a contested will are
regarded as the best witnesses in connection with its due execution. It is similarly true, however, that to
deserve full credit, their test, testimony must be reasonable and unbiased, and that, as in the case of any
other witness, their testimony may be overcome by any competent evidence direct or circumstantial
(Board, etc. vs. Shasser, 10 Kan. 585, 168 Pac. 836.
It is also an appellate practice of long standing in this jurisdiction to accord great weight to the
findings of fact made by the trial court and not to disturb them unless said court had failed to consider
material facts and circumstances or had given undue weight to, or misconstrued the testimony of
particular witnesses, the reason for this being that the trial judge had full opportunity to hear and
observe the conduct and demeanor of the witnesses while testifying and was consequently in a better
position than the reviewing court to determine the question of their credibility. While this is not
applicable to the present case because His Honor, the judge who penned the appealed decision was not
the same judge before whom the evidence of the parties was presented, it must be stated that, judging
from the carefully written decision under review, it was only after a thorough study of the record that His
Honor arrived at the conclusion that the subscribing witnesses do not appear to be wholly disinterested
persons.
While it is true that the testimony of these subscribing witnesses was given around eight years
after the alleged execution of the questioned will, still we believe that the transaction in which they
claim to have taken an important part is of such character and importance that it cannot be a very easy
matter for anyone of them to have a hazy recollection of the number of copies signed by the testator and
by them. Stranger still would it be for them to say something in open contradiction with the reality on
the matter. If, as may be clearly deduced from their testimony.
36. CRUZADO VS BUSTOS AND ESCALLER (34 PHIL 17)

Facts:
Agapito Cruzado was a poor man living in Pampanga, he had a job in court but was still not
enough to support his family. He aspired to hold the office of procurador in the CFI of Pampanga but he
was unable to give the required bond, an indispensable condition for his appointment.
Since Cruzado was friends with Bustos, a rich woman in their place. He begged the latter to
simulate a mortgage deed of a certain property and have it executed in court in his favor only to pose
that he has real property to enable him to qualify to such position of procurador. In truth, the said
mortgage was a front and fraudulent but was effected by making a pretended contract which bore the
appearance of truth.
It is unquestionable that the contract of sale was perfect and binding upon both contracting
parties since their names both appear in that instrument to have agreed upon the thing sold. But it is
also undeniable that the said contract was not consummated. (1) Cruzado did not pay the purchase price
of P2, 200 (2) He never took possession of the land apparently sold in the said deed. All that the vendee
did was to pledge the land as a security for the faithful discharge of the duties of his office.
Santiago Cruzado, the son, brought an action for recovery of possession, founded on the right
transmitted to him by his father at his death a right arising from the said simulated deed of sale of the
land in question.

Issue:
Whether or not the said deed of sale was simulated, not with the intent to defraud 3rd persons,
but for the sole purpose of making it appear that Agapito Cruzado has real property
Whether or not the rights of transmission acquired by Santiago Cruzado from the death of his
father, pertaining to the said land in contest is valid and without defect

Held:
Under the law, the contract of purchase and sale, as consensual, is perfected by consent as to
the price and the thing and is consummated by the reciprocal delivery of the one and the other. Full
ownership of the thing sold being conveyed to the vendee, from which moment the right of action
derived from this right may be exercised. The record discloses that there was no payment made by
Cruzado to Bustos, thus, rendering the contract not to be consummated.
Art 1164 states that, a creditor has a right to the fruits of the time the obligation to deliver it
arise. However, he shall not acquire a property right thereto until it has been delivered to him Besides
the failure to pay the purchase price, neither the vendee nor his heirs, had at any time taken possession
of the land. Seven witnesses attest to the fact, Bustos and her husband while still living, continued to
possess the said land supposedly sold to Agapito Cruzado and cultivated it, as she had done long before
the sale of September 1875 to September 1891, the date of complaint by Santiago Cruzado.
Consequently, at the death of Agapito, he could not have transmitted to the Santiago as his
successor any greater right than a personal right to exact fulfillment of a contract, as plaintiff was not the
owner of the said land, he could not validly register it. This fulfillment of a right as already prescribed
since, under the law, prescription towards real property shall be 30years. In the case at bar, the action to
recover took 34 years to bring it to court, thus has already prescribed.
Petition is denied.
37. GARDNER VS COURT OF APPEALS (131 SCRA 585)

Facts:
The case involves several transfers of the subject real property. It appears that petitioners the
Gardner spouse enter into an agreement with Respondent spouses, the Santoss to subdivide 2 parcels
of land and executed an absolute deed of sale in favor of the latter. The real truth is that what occurred
was a sale in trust since the petitioner obtained an amount of money from the respondents, who in
turn promised to improve the land.
Apparently, the Santoss transferred the properties to the Cuencas who in turn transferred it to
the Verroyas who executive a mortgage over the lot. Then Verroya executed a deed of transfers to the
Natividads. Note that from the titles of the Cuencas (the Second Transferee) to the titles of the
Natividads (the Fourth Transferee), the Adverse Claim of the Gardners continued to be carried, and that
throughout the successive transfers, the petitioners continued to remain in possession, cultivation and
occupation of the disputed properties.
In their Answer, the Santoss claimed that the sale to them was conditional in the sense that the
properties were to be considered as the investment of the petitioners in the subdivision venture and
that in the event that this did not materialize they were to re-convey the lots to petitioners upon
reimbursement by the latter of all sums advanced to them; and that the deed of sale was to be
registered for the protection of the Santoss considering the moneys that the latter would be advancing.
Hence, the Gardners filed an action for declaration of Nullity, Rescission and damages against the
5 transferees and mortgagees. The RTC ruled in favor of petitioners declaring the transfers null and void.
The CA affirmed in Toto the RTC but reconsidered it decision and ruled that the sale of land to
Natividads are valid.

Issue:
Whether or not the admissions made by Santos in the pleadings are admissible

Held:
NO, the testimony of Ariosto Santos is at variance with the allegations in his Answer. As a general
rule, facts alleged in a party's pleading are deemed admissions of that party and binding upon it, but this
is not an absolute and inflexible rule. An Answer is a mere statement of fact which the party filing it
expects to prove, but it is not evidence.
Santos himself, in open Court, had repudiated the defenses raised in his answer and against his own
interest, his testimony is deserving of weight and credence. Both the Trial Court and the Appellate Court
believed in his credibility and we find no reason to overturn their findings thereon. Santos likewise
admitted against his own interest that the petitioners did not receive from him any consideration, which
corroborated the declarations of the petitioners. The Subdivision Joint Venture Agreement and the
Supplemental Agreement express that the true and real nature of the agreement between the parties,
which was for a subdivision and not a sale transaction.

All Five Transfers were absolutely simulated and fictitious and were, therefore, void ab initio and
inexistent. Contracts of sale are void and produce no effect whatsoever where the price, which appears
therein as paid, has, in fact, never been paid by the purchaser to the vendor.
38. ODEGAR VS GUICO (10 SCRA 372)

Facts:
FerminaMaluto and her husband, Isidro P. Guico, to whom one of the five (5) lots in controversy
was sold by RufinoTamisin on April 10, 1953, supra, took no part. It was not until March 12, 1975-almost
twenty-two (22) years after they had purchased the lot from RufinoTamisin, and after FerminaMaluto
had died-that Isidro P. Guico, Fermina's husband, and their two (2) children, Emmanuel Guico and
Lourdes G. Amoranto, finally went to Court to vindicate their rights over the land sold to FerminaMaluto.
They filed suit, described by them as one "for annulment of documents and tax declaration and to quiet
title to property with damages," in the Court of First Instance of Laguna. Their complaint named
AmbrocioOdejar and GliceriaGibas as defendants, but when it was discovered soon thereafter that these
two had already died, the pleading was amended so as to include said spouses' heirs as defendants,
namely: IreneoOdejar, LibradaOdejar and JuanitoOdejar. Also named as defendants were Attorney Juan
Baes, the Odejars' counsel, to whom they had conveyed one-half (1/2) interest pro indiviso in the five (5)
lots; the provincial sheriff, CecilioBituin; and the Provincial Assessor of Laguna. The complaint prayed
that the sheriffs certificate of sale dated June 16, 1960, and the conveyance to Atty. Juan Baes of an
undivided interest over the land sold to FerminaMaluto, be declared null and void.

Issue:
Whether or not the sale can still be cancelled and be declared null and void even after the lapse
of 22 years.

Held:
The facts above detailed, considered conjointly, irresistibly conduce to the conclusion that
RufinoTamisin and FerminaMaluto never intended to effect a genuine, bona fide transfer of property
when they entered into the sale of April 10, 1953, a reality made manifest and according to which the
parties, vendors and vendees as well as their privies guided their actions, during the period of twenty
(20) years or so following the transaction. The Tamisins' acts clearly show that they considered
themselves still the owners of the property and as never having parted therewith even after the sale,
publicly and openly proclaiming their title and demanding recognition thereof on several occasions. The
Guicos, for their part, tacitly acquiesced, at least never presented any opposition, to such assertions of
title by the Tamisins until March 12, 1975, when it had already become apparent that the latter had
exhausted every possible recourse for the recovery of the property from the Odejars. All indications,
therefore, are that the ostensible conveyance was executed solely to prevent the property of the
Tamisins from being levied upon in execution of the judgment in Civil Case No. 9401, or ever applied in
satisfaction of the Tamisins' adjudicated liability to the Odejars. Such a stratagem cannot be allowed to
succeed.
The defect of the sale of April 10, 1953 thus produced effects transcending mere rescissibility.
The sale could not be treated merely as a simple conveyance of "things under litigation ... entered into
by the defendant without the knowledge and approval of the litigants or of competent judicial
authority," rescindable by action within four (4) years. It was in reality "absolutely simulated or fictitious"
and hence " inexistent and void" in contemplation of Article 1409 of the Civil Code. Since, as Article 1411
of the Civil Code provides, the "action or defense for the declaration of the inexistence of a contract does
not prescribe," the Odejars were not precluded from invoking such nullity, as they did, even after the
lapse of twenty-two years.
39. MARIA ENCARNACION CASTILLO vs. JOSEFA GALVAN (175 PHIL 28)

Facts:
The complaint, is for the annulment of a document, denominated "Deed of Absolute Sale",
executed on August 3, 1955, by and between Paulino Galvan, the predecessor-in-interest, and
defendants Josefa Galvan and Natividad S. Galvan. The plaintiffs alleged that Paulino Galvan, during his
lifetime, was the registered owner of an undivided one-half (1/2) interest over two parcels of land, the
other undivided half is owned by his two daughters by a first marriage, herein defendants Josefa Galvan
and Natividad Galvan. On these lots, which are contiguous, is built the family home. On February 10,
1961, Paulino Galvan died. Plaintiffs found a deed of sale, signed by the late Paulino Galvan and the
plaintiff, Maria Encarnacion Castillo, whereby they had purportedly sold for P500.00 the one-half
undivided portion of Paulino Galvan over said lots in favor of defendants. Plaintiffs stated that the
undivided half share of Paulino Galvan was worth around P22,500.00 so that he could not have sold it for
only P500.00.
Wherefore, they prayed that the deed of sale be declared null and void; that the plaintiffs be
declared the owners of four-sixths (4/6) of the undivided haIf share pertaining to Paulino Galvan; that
the defendants be ordered to pay the amount of P1,500.00, as attorney's fees; and to pay the costs of
suit.The defendants claimed that "they are the absolute and exclusive owners of whole parcels of land
described in the complaint for having acquired the portions belonging to their late father Paulino Galvan
through legal and valid conveyance and this fact is known to the plaintiffs long before the filing of the
complaint."On August 27, 1966, the defendants filed a motion to dismiss the complaint upon the ground
that the action is barred by the statute of limitations for the reason that the present action for the
annulment of the instrument of sale is based upon fraud which should be brought within four (4) years
from the time of the discovery of the same in accordance with Article 1391 of the Civil Code; and fraud,
as a ground for annulment, shall be deemed to be discovered from the date of the registration of the
alleged fraudulent documents; and considering that the deed of sale in question was registered on
August 4, 1955, while the action for its annulment was commenced only on August 1, 1961, or after the
lapse of more than four (4) years from its registration with the Register of Deeds, the action for
annulment had prescribed.Trial court infavor of the Defendants.

Issue:
Whether or not the trial court improperly dismissed the complaint on the ground of prescription
Held:
In its order dated September 22, 1966, dismissing the complaint, the trial court said:"The
complaint, among others, prays for the annulment of document, which is a deed of sale dated August 3,
1955, purporting conveyance of the two parcels described in the complaint in favor of defendants Josefa
Galvan and Natividad Galvan and Emilio Samson. Said document was registered on August 4, 1955. It is
the contention of the defendants that plaintiffs' action has prescribed as the same was not presented
within four years from the registration of the document."The court sustains defendants' contention. The
basis of the annulment is alleged fraud, and the action for the annulment of the document should be
brought within 4 years from the discovery of fraud, and that such discovery of fraud is deemed to have
taken place when the instrument was filed and registered with the Register of Deeds and new transfer
certificate of title is issued in the name of the vendee for the registration of the deed constitutes
constructive notice to the whole world.
"In view of the foregoing, the court resolves to dismiss, as it hereby dismisses, the complaint
without costs."The allegations of the complaint show, however, that the plaintiffs' action is to declare
void and inexistent the deed of sale executed by Paulino Galvan and Encarnacion Castillo on August 3,
1955, in favor of Josefa and Natividad Galvan, upon the grounds that (a) there is fraud in securing the
signatures of the vendors in said deed of sale; and (b) there was no consideration given at the time of
the transaction. In other words, the plaintiffs are seeking a judicial declaration that the deed of sale in
question is void ab initio, which action is imprescriptible. The trial court erred, therefore, in dismissing
the complaint for the reasons stated. The judgment appealed from is reversed and the order of
September 22, 1966, dismissing the complaint, is hereby set aside. Let this case be remanded to the
court of origin for further proceedings.
40. LEOPOLDO DE BELEN VS COLLECTOR OF CUSTOMS (46 PHIL 241)

Facts:
Timoteo Tienzo was a duly accredited customs broker in the City of Manila, and in connection
with his business as such broker, operated a number of trucks for the purpose of conveying merchandise
arriving at the port of Manila to various consignees, his customers, throughout the city. On or about April
7, 1921, Tienzo procured a permit from the Insular Collector for the withdrawal of 12,500 sacks of flour
from one of the piers for delivery to one Chua Soco, then a merchant in the City of Manila.
The bill of lading for said flour was not produced by Tienzo at the time he procured the delivery
permit, and in order to get possession of the flour he obligated himself, upon his bond as a customs
broker, to have the bill of lading forthcoming in due time. Said bill of lading, however, was never
produced by Tienzo or his principal, Chua Soco, with the result that the collector of customs caused an
action of replevin to be begun in the name of the Government on June 10, 1921, to recover the flour
which had been delivered as aforesaid, or in case the flour itself could not be secured, to recover
judgment for the value thereof in the amount of P47,816.32. an attachment was sued out by the plaintiff
against the property of the defendant Tienzo, on the ground that he was about fraudulently to dispose
thereof; and on June 13, 1921, the sheriff levied said attachment on seven trucks that had been
operated by Tienzo in connection with his business as customs broker and truckman.
After the sheriff had taken the trucks into custody the plaintiff in this case, Leopoldo de Belen, a
brother-in-law of Tienzo, made claim to the trucks, relying on a document of transfer (Exhibit A), dated
June 1, 1921, and executed by Tienzo and himself, in which Tienzo purports to convey to Belen all of the
trucks involved in this controversy. The consideration stated in this instrument is the sum of P25,000,
said to have been advanced upon previous occasions to Tienzo by Belen. The sheriff having ignored the
claim of Belen to the ownership of the trucks, the present action of replevin was instituted by Belen
against the Collector of Customs and the sheriff for the recovery of the trucks and compensation for the
unlawful detention of the same.
Upon hearing the cause the trial judge found that the document referred to (Exhibit A) was
evidently a fictitious transfer, conceived and executed for the purpose of placing the trucks in question
beyond the reach of the creditors of Tienzo, and he held said instrument to be completely without effect.
He therefore absolved the defendants from the complaint, and the plaintiff appealed.

Issue:
Whether or not that the document referred to (Exhibit A) was evidently a fictitious transfer,
conceived and executed for the purpose of placing the trucks in question beyond the reach of the
creditors of Tienzo.

Held:
Yes. It is sufficient to refer to the testimony of one Gerardo Garcia, specially deputized by the sheriff to
serve the summons and other papers relating to the case No. 20110, instituted by the Government and
the Collector of Customs against Chua Soco and Timoteo Tienzo. This witness states that in a
conversation between himself and the present plaintiff soon after the service of the complaint, the latter
said that Tienzo was owner of the trucks and that he (Belen) was merely an instrument of Tienzo. This
admission of the plaintiff, in connection with the relation of the parties and the financial difficulties then
impending over Tienzo, establish in our opinion a strong presumption that the transfer referred to was
made for the purpose of placing the trucks beyond the reach of legal process directed against Tienzo.
Nor is this presumption overcome by the documents C to C-6, purporting to be receipts for money
advanced by Belen to Tienzo during the years, 1918, 1919, and 1920. The Court thinks the trial judge was
right in entertaining the suspicion that these receipts might have been manufactured to meet the
situation, without representing bona fide debts of Tienzo to Belen. At any rate it is quite clear that Belen
was aware of the financial embarrassment in which Tienzo was involved, and the evidence in our opinion
establishes the conclusion drawn by the trial court, namely, that the transfer of the trucks was
a simulated transaction.
41. FRANCISCO IRURETA GOYENA VS ILDEFONSO TAMBUNTING (1 PHIL 490)

Facts:
The plaintiff's principal owned a tract of land and the building thereon known as No. 20 Calle San
Jose, Ermita, Manila. This tract contained 152.46 square meters of land. A broker, representing the
plaintiff, stated to the defendant that this lot was for sale and, on information received from the plaintiff,
that it measured 23 meters in front and 8 meters in depth. The plaintiff and defendant had certain
negotiations between themselves concerning the sale. On March 12, 1901, the defendant signed the
following document:
On this date I have bought from Don Francisco Yrureta Goyena a lot at No. 20 Calle San Jose,
Ermita, for the sum of thirty-two hundred pesos, this money to be paid as soon as the bill of sale is
signed. Manila, March 12, 1901. (Signed) Tambunting.
The plaintiff signed a similar document. What the negotiations between the parties were prior to
the signing of the these documents does not appear. There is no evidence whatever in the record that
they came to any agreement in regard to the sale other than the one contained in the papers of March
12. On the day assigned for the execution of the instrument, all the parties being in the office of the
notary, the defendant told the latter to insert in the writing the price, $3,200, and then refused to sign it
because the lot did not contain the area which the plaintiff, through the broker, had represented that it
contained. He expressed his willingness to sign it if a proportional reduction was made in the price. The
plaintiff refused to make, and this action was brought under article 1451 of the Civil Code. The private
contract expresses a specific thing as the object of the contract. Upon this point there is no controversy.
There is no doubt as to which lot is No. 20 on Calle San Jose, of the District of Ermita of the city of
Manila. The private contract specifies a certain price, 3,200 pesos. There is no controversy whatsoever
upon this point. There is no question that this sum is there specified plainly and specifically, and without
being made subject to any condition whatever.

Issue:
Whether or not there was a perfect contract

Held:
Evidently nothing is lacking for the existence of a perfect contract of purchase and sale. Article 1445 of
the Civil Code is as follows: "By the contract of purchase and sale one of the contracting parties
undertakes to deliver a specific thing, and the other to pay therefore a price certain, in money or in
something representing it. Article 1450 of the same Code is a follows: "The sale shall be perfected
between vendor and vendee and shall be binding on both of them, if they have agreed upon the thing
which is the object of the contract and upon the price, even when neither has been delivered." This
private document was not a more draft or project. It cannot be said that the purchase is not to be
understood as perfected until the execution of the public instrument. That private document is not
subject to any term or condition whatever. The least that can be said about the private document is that
it contains a promise to buy, not a mere project of sale, and a promise to buy, according to article 1451,
confers upon the contracting parties the right to reciprocally demand the performance of the contract. If
the contract were not perfected no right would accrue in favor of the contracting parties to reciprocally
demand its performance. A thing which has no existence can produce no effect. Because it is merely a
private document which contemplates the subsequent execution of a public instrument, it does not
follow that it is not enforceable as it now stands. "Contracts," says article 1278, "shall be obligatory
whatever may be the form in which they have been entered into, provided that the essential elements
for their validity are present," to wit, a determinate thing, a price certain, and a meeting of the minds
with respect to the object of the contract. Hence the contract in question is obligatory.
42. FILIPINAS COLLEGES, INC. VS TIMBANG, ET.AL (52 OFF.GAZ. 3624)

Facts:
This is an appeal taken from an order of the Court of First Instance of Manila dated May 10, 1957
(a) declaring the Sheriff's certificate of sale covering a school building sold at public auction null and void
unless within 15 days from notice of said order the successful bidders, defendants-appellants spouses
Maria Garcia Timbang and Marcelino Timbang, shall pay to, appellee Maria Gervacio Blas directly or
through the Sheriff of Manila the sum of P5,750.00 that the spouses Timbang had bid for the building at
the Sheriff's sale; (b) declaring the other appellee Filipinas Colleges, Inc. owner of 24,500/3,285,934
undivided interest in Lot No. 2-a covered by certificate of tile No 45970, on which the building sold in the
auction sale is situated; and (c) ordering the sale in public auction of the said undivided interest of the
Filipinas Colleges, Inc., in lot No. 2-a aforementioned to satisfy the unpaid portion of the judgment in
favor of appellee Blas and against Filipinas Colleges, Inc. in the amount of P8,200.00 minus the sum of
P5,750.00 mentioned in (a) above.
The order appealed from is the result of three motions filed in the court a quo in the course of
the execution of a final judgment of the Court of Appeals rendered in 2 cases appealed to it in which the
spouses Timbang, the Filipinas Colleges, Inc., and Maria Gervacio Blas were the parties. Filipinas
Colleges, Inc. having failed to pay or deposit the sum of P32,859.34 within the time prescribed, the
spouses Timbang, in compliance with the judgment of the Court of Appeals, on September 28, 1956,
made known to the court their decision that they had chosen not of appropriate the building but to
compel Filipinas Colleges, Inc., for the payment of the sum of P32,859,34. The motion having been
granted, a writ of execution was issued on January 8, 1957. On January 16, 1957, appellee Blas in turn
filed a motion for execution of her judgment of P8,200.00 representing the unpaid portion of the price of
the house sold to Filipinas Colleges, Inc. Over the object of the Timbangs, the court grated the motion
and the corresponding writ of execution was issued on January 30, 1957, date of the granting of the
motion for execution, Blas through counsel, sent a letter to the Sheriff of Manila advising him of her
preferential claim or lien on the house to satisfy the unpaid balance of the purchase price thereof under
Article 2242 of the Civil Code, and to withhold from the proceed of the auction sale the sum of
P8,200.00. Levy having been made on the house in virtue of the writs of execution, the Sheriff of Manila
on March 5, 1957, sold the building in public auction in favor of the spouses Timbang, as the highest
bidders, in the amount of P5,750.00.
Personal properties of Filipinas Colleges, Inc. were also auctioned for P245.00 in favor of the
spouses Timbang. As a result of these actuation, three motion were subsequently filed before the lower
court. The Timbang spouses presented their opposition to each and all of these motions.

Issue:
Whether or not the appellants as owner of the land may seek recovery of the value of the land
by writ of execution, levy the house of the builder and sell it in public auction.

Held:
No. The Court has already held in Matias vs. The Provincial Sheriff of Nueva Ecija that while it is
the inveriable practice, dictated by common sense, that where the successful bidder is the execution
creditor himself, he need not pay down the amount of the bid if it does not exceed the amount of his
judgement, nevertheless, when there is a claim by a third-party, to the proceeds of the sale superior to
his judgment credit, the execution creditor, as successful bidder, must pay in cash the amount of his bid
as a condition precedent to the issuance to him of the certificate of sale. In the instant case, the Court of
Appeals has already adjudged that appellee Blas is entitled to the payment of the unpaid balance of the
purchase price of the school building. Blas is actually a lien on the school building are concerned. The
order of the lower court directing the Timbang spouses, as successful bidders, to pay in cash the amount
of their bid in the sum of P5,750.00 is therefore correct. With respect to the order of the court declaring
appellee Filipinas Colleges, Inc. part owner of the land to the extent of the value of its personal
properties sold at public auction in favor of the Timbang, this Court Likewise finds the same as justified,
for such amount represents, in effect, a partial payment of the value of the land. failure of the Timbang
spouses to pay to the Sheriff or to Manila Gervacio Blas said sum of P5,750.00 within fifteen (15) days
from notice of the final judgment, an order of execution shall issue in favor of Maria Gervasio Blas to be
levied upon all properties of the Timbang spouses not exempt from execution for the satisfaction of the
said amount.
43. BARRETTO VS SANTA MARIA (26 PHIL 200)

Facts:
La Insular cigar and cigarette factory is a joint account association with a nominal capital of
P865,000, the plaintiff's share being P20,000, or 4/173 of the whole. On March 14, 1910, the plaintiff's
attorneys wrote the defendant's local representative a letter offering to sell to the defendant plaintiff's
participation in the factory. The result of the correspondence between the parties and their
representatives was that Exhibit G was duly executed on May 3, 1910. In accordance with the terms of
this exhibit a committee of appraisers was appointed to ascertain and fix the actual value of La Insular.
The net value was at P4,428,194.44. Of this amount 4/173 part represented the plaintiffs share on his
P20,000 of the nominal capital. In Exhibit J which was executed on November 22, 1910, the plaintiff
acknowledged to have received from the defendant that amount. Subsequently to the execution of
Exhibit J, demand was made by the plaintiff upon the defendant for his share of the profits from June 30,
1909, to November 22, 1910. This demand was refused and thereupon this action was instituted to
recover said profits. The plaintiff admits that if the agreement of May 3, 1910, was a perfected sale he
cannot recover any profits after that date; while on the other hand defendant concedes that if the said
agreement was only a promise to sell in the future it, standing alone, would not prevent recovery in this
action.

Issue:
Whether the agreement executed by both parties on May 03, 1910 was a perfected contract of
sale?

Held:
Yes. Article 1450 of the Civil Code reads: "The sale shall be perfected between vendor and
vendees and shall be binding on both of them, if they have agreed upon the thing which is the object of
the contract and upon the price, even when neither has been delivered." This is supplemented by article
1447 of the Code which reads as follows: "In order that the price may be considered fixed, it shall be
sufficient that it be fixed with regard to another determinate thing also specific, or that the
determination of the same be left to the judgment of a specified person."
Under article 1450, there are two indispensable requisites in a perfected sale: (1) There must be an
agreement upon the thing which is the object of the contract; and (2) the contracting parties must agree
upon the price. The object of the contract in the case at bar was the whole of the plaintiff's right, title,
and interest in La Insular. This whole was 4/173 of the entire net value of the business. The parties
agreed that the price should be 4/173 of the total net value. The fixing of such net value was
unreservedly left to the judgment of the appraisers. As to the thing and the price the minds of the
contracting parties met, and all questions relating thereto were settled. Nothing was left unfinished in so
far as the contracting parties were concerned. Neither party could withdraw from the contract without
the consent of the other. The result is that the two essential requisites necessary to constitute a
perfected sale were present.
44. NATIONAL BANK (PNB) VS AH SING (69 PHIL 611)

Facts:
On April 4, 1934, PNB filed a case to annul the contract it entered with defendant, Ah Sing, a
Chinese citizen, over the 2 parcels of land. The contract states that PNB undertakes to sell, assign, and
transfer to Ah Sing all its right, title, interest and participation in two parcels of land PhP 25,000.00.
Furthermore, it states that Ah Sing will pay PhP 2,000.00 in cash in the act of granting this contract and
the balance (PhP 23,000.00) of which will be paid with interest at 8% per annum in 20 equal annual
installments. It is also stated that the possession of the aforementioned properties is assigned to Ah Sing
on the date of the granting of this contract. Ah Sing has been religiously fulfilling his obligations under
such terms and has been in continuous possession of the land since.On the ground of the constitutional
prohibition that the transfer of agricultural land to a foreigner is prohibited, PNB requested to reconvey
the lands but Ah Sing refused. PNB further contends that the terms of the contract is merely a promise
of sale.
Ah Sing argues that the contract is an absolute sale and it fulfilled all the conditions stipulated
and that the prohibition of the Constitution is not applicable because it has no retroactive effect.CFI
Davao ruled in favor of PNB which held, among others, that the contract is null and void as it is merely a
unilaterally accepted promise but ordered the bank to pay Ah Sing the sum of P2,877.50 for value of the
useful and necessary expenses made by the latter on the land. Both parties appealed as PNB should not
be bound to pay Ah Sing of the value of the fruits of the lands whereas the Ah Sing appealed on the part
of the same judgment that declared that the contract is a promise of sale only; that the improvements
which he has introduced into the land may be acquired by PNB through payment by him of his value;
that the contract is null and void; and that the parties must reciprocally return the land and the
amortizations paid, with legal interests over the latter since April 4, 1934.

Issue:
Whether or not the contract is an absolute sale with the stipulation that the rest of the price
would be paid within the time limits set.

Held:
Yes. It was held that the contract concluded by the parties is the actual sale of the properties
that were the subject of the contract. While it may be implied that the contract is a unilateral accepted
promise that in law does not confer any action to the one that tries to buy, it is believed that the contract
was an accepted bilateral promise that in law becomes the same contract of purchase and sale that
defines Article 1445 of the Civil Code. Based also on Article 1497 of the Civil Code, delivery of the thing
together with the payment of the price, marks the consummation of the contract of sale. The transaction
was as good as a perfected sale. Decision Reversed. Contract in question is now considered valid.

45. OBANA VS COURT OF APPEALS (135 SCRA 557)


Facts:
Petitioner bought 170 cavans of rice from a Chinese Chan Lin for 33 pesos each, Chan lin
purchase this rice from respondent Sandoval and ask to be delivered to San Fernando, La Union upon
the delivery of goods chan lin was nowhere to be found and herein petitioner claim that he had already
paid for the goods and refuse to pay Sandovals driver. Respondent Sandoval filed an action for replevin
for the recovery of said goods but was dismissed by the trials courts on his appeal there appellate court
ruled in favour of respondent ordering petitioner to return or pay the value of the goods, hence the
petition for review.

Issue:
Whether or not there was a perfected sale.
Whether or not ownership was transferred to Chan Lin.
Whether or not the action for replevin is proper against petitioner.

Held:
Yes there was a perfected sale between Chan Lin and respondent Sandoval under article 1475 of
the civil code there is a perfected sale when there is consent upon the subject matter and price, even if
neither is delivered.
Yes ownership of the rice was transferred to Chan Lin upon to delivery of the thing to him under
pursuant to art 1477 and 1496 of the civil code.
Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or
constructive delivery thereof.
Art. 1496. The ownership of the thing sold is acquired by the vendee from the moment it is
delivered to him in any of the ways specified in Articles 1497 to 1501, or in any manner signifying an
agreement that the possession is transferred from the vendor to the vendee.
Yes the action of replevin or recovery of personal property is tenable since petitioner has already
been reimbursed by Chan Lin hence rescinding the sale between him and Sandoval, therefore petitioner
no longer has any reason not to return the goods.

46. CAMPILLIO VS. COURT OF APPEALS (129 SCRA 513)


Facts:
Herein petitioner was able to purchase 2 parcels of land at an auction, the said lots where own
by Tomas de Vera. De vera previously sold the said parcels of land to a Simplicio Santos, the sale was a
private sale and was not recorded in the registry of deeds. Petitioner was issued a deed of sale and it was
registered. Simplicio Santos now files an action to annul the levy and the sale of the parcels of land, the
trial court dismissed his action but was reversed by the appellate court on ground thats herein
petitioner had acquired no right over the parcels of land since the parcels of land were no longer the
property of the judgment debtor de vera during the time of the sale and auction. Hence this petition for
certiorari assailing the judgment of the appellate court.

Issue:
Who has superior right to the disputed parcels land?
In cases of double sale such as this who has superior rights.

Held:
The court held that herein petitioner has superior right over the disputed land, on grounds that
It is settled in this jurisdiction that a sale of real estate, whether made as a result of a private transaction
or of a foreclosure or execution sale, becomes legally effective against third persons only from the date
of its registration, hence the ruling of the court of appeals is not proper since as far as the register is
concerned the legal owner of the lot is the judgement debtor de Veras during the time it was sold in
auction therefore transferring all his rights to herein petitioner. Furthermore in Philippine National Bank
vs. Court of Appeals, 98 SCRA 207 it is stated that a A bona fide purchaser for value of such property at
an auction sale acquires good title as against a prior transferee of same property if such transfer was
unrecorded at the time of the auction sale.
The person who registers the land in good faith has superior right in cases of double sale.

47. KERR & CO. LTD. VS. COLECTOR OF INTERNAL REVENUE (70 PHIL. 36)
Facts:
Petitioner Company bought goods from Shaw, Wallace & Co. of Calcutta, India, in which they
offered a priced and was accepted, Petitioner now in their own name contracted sale with the local
buyers for the sale of the goods for a much higher price which includes their profit. Petitioner now
assails the action of the government which collected them traders tax, they contend that they are
merchants and not traders and are exempted from tax under article 1459.

Issue:
Whether or not there is a perfected sale between petitioner and Shaw & Wallace Company.
Whether or not there was a perfected sale between petitioner and local buyers.
Whether or not Petitioner Company can be considered as a merchant under Art.1459.

Held:
Yes there was a perfected sale since the price was already agreed upon or the offer
was accepted.
No, there was no sale between local buyers and petitioner since the goods never ended in the
hands of the petitioner but directly to the local buyers hence they merely acted as a mediator between
the parties and gain profit for the transaction.
No. Court held that petitioner is a trader and not a merchant, therefore is not exempted from
the traders tax, petitioner was never the one who sold the goods to the local buyers but only acted as a
broker between them. Therefore they never engage in any contract of sale with the local buyers.

48. SORONGON, ET.AL VS. PARREAS, ET. AL (54 OFFICIAL GAZETTE 1860)
Facts:
The Case was mentioned in in BALATBAT, vs. COURT OF APPEALS, G.R. No. 109410. August 28,
1996.

Jurisprudence:
Delivery of the thing brought or payment of the price is not necessary for the perfection of the
contract; and failure of the vendee to pay the price after the execution of the contract does not make the
sale null and void for lack of consideration but results at most in default on the part of the vendee, for
which the vendor may exercise his legal remedies.[33] Article 1544 of the New Civil Code provides: If the
same thing should have been sold to different vendees, the ownership shall be transferred to the person
who may have first taken possession thereof in good faith, if it should be movable property. Should it be
movable property, the ownership shall belong to the person acquiring it who in good faith first recorded
it in the Registry of Property. Should there be no inscription, the ownership shall pertain to the person
who in good faith was first in the possession and in the absence thereof, to the person who present the
oldest title, provided there is good faith.

49. PEOPLES HOMESITE & HOUSING CORP. VS COURT OF APPEALS (133 SCRA 777)
Facts:
The PHHC board of directors on February 18, 1960 passed Resolution No. 513 wherein it stated
"that subject to the approval of the Court Council of the PHHCs consolidation subdivision plan, awarding
Lot 4 with an area of 4,182.2 square meters located at Diliman, Court City to respondents Rizalino and
Adelaida Mendoza (spouses Mendoza) at a price of twenty-one pesos (P21.00) per square meter. The
City Council disapproved the consolidation subdivision plan in August 1960 but approved in February
1964 its revised version where Lot 4 was reduced to an area of 2,608.7 square meters. Then in October
1965, the PHHC withdrew the tentative award of Lot 4 to the spouses Mendoza for the latters failure
neither to pay its price nor to make a 20% initial deposit, and re-awarded said lot jointly and in equal
shares to Miguela Sto. Domingo, Enrique Esteban, Virgilio Pinzon, Leonardo Redublo and Jose Fernandez,
all of whom made the initial deposit. The subdivision of Lot 4 into five lots was later approved by the
Court council and the Bureau of Lands.
The spouses Mendoza asked for reconsideration and for the withdrawal of the said 2nd award to
Sto. Domingo and four others, and at the same time filed an action for specific performance plus
damages. The trial court sustained the award but the Court of Appeals reversed the said decision,
declared void the re-award to Sto. Domingo and four others, and ordered the PHHC to sell Lot 4 with an
area of 2,608.7 square meters at P21.00 per square meter to spouses Mendoza.

Issue:
Whether or not there was a perfected sale of Lot 4, with the reduced area, to the Mendozas
which they can enforce against the PHHC by an action for specific performance.

Held:
The Court held that there was no perfected sale of Lot 4. It was conditionally or contingently
awarded to the Mendozas subject to the approval by the city council of the proposed consolidation
subdivision plan and the approval of the award by the valuation committee and higher authorities.
When the plan with the area of Lot 4 reduced to 2,608.7 square meters was approved, the
Mendozas should have manifested in writing their acceptance of the award for the purchase of Lot 4
just to show that they were still interested in its purchase although the area was reduced and to obviate
ally doubt on the matter. They did not do so. The PHHC board of directors acted within its rights in
withdrawing the tentative award.
"The contract of sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price. From that moment, the parties may reciprocally
demand performance, subject to the law governing the form of contracts." (Art. 1475, Civil Code).

50. ANG VS COURT OF APPEALS (170 SCRA 286)


Facts:
Petitioners Ernesto Ang and Rosalinda Ang, brother and sister, are the owners of three parcels of
land located at Quezon City with an aggregate area of 2,096 sq. m which they purchased at a price of
P680,000.00. Negotiations were undertaken for the sale of the aforementioned properties between the
petitioners as sellers and private respondent Lee Chuy Realty Corporation, through its president Henry
Lee Chuy as buyer.
Lee Chuy issued in favor of Ang a check in the amount of P50,000.00 together with a receipt
embodying the terms and conditions of their agreement indicating the agreed total price of P1,600,000.
The accompanying receipt was not returned by Ang and instead another receipt prepared and signed by
Ang which did not state the agreed price and forwarded to Lee Chuy.
Ang demanded to Lee Chuy to pay the balance of the purchase price and failure to do so will
result in the cancellation of their agreement. Lee Chuy replied that they had been ready since December
to perform its part of the agreement while Ang had not yet complied with their undertaking to clear the
subject properties of the obstructions thereon. Ang demanded the refund of the P 50,000.00 down
payment on account of the failure of Ang to comply with their undertaking and their subsequent
withdrawal from the sale. Upon the failure of the Ang to return the down payment, Lee Chuy filed a
complaint for the collection of a sum of money with damages before RTC. The trial court rendered its
decision in favor of Ang.
CA reversed the RTC decision and held that Ang were the ones who breached the agreement.

Issue:
Whether or not Ang breach the agreement and the agreed price is P2,340,000.00.

Held:
Yes, Ang is liable to refund the P 50, 000 down payment of Lee Chuy.
CA found that Ang breached the agreement when they failed to undertake fulfillment of the 2
conditions; (1) that Ang will remove and clear the subject property of all occupants and obstructions and
(2) that when the property is cleared of all occupants and obstructions, Ang shall deliver a deed of
absolute sale in favor of Lee Chuy with all pertinent papers necessary.

However, such breach does not warrant a resolution of the contract. While it is true that in reciprocal
obligations, such as the contract of purchase and sale, the power to rescind is implied and any of the
contracting parties may, upon non-fulfillment by the other party of his part of the obligation, resolve the
contract, rescission wig not be permitted for a slight or casual breach of the contract. Rescission may be
had only for such breaches that are so substantial and fundamental as to defeat the object of the parties
in making the agreement.
The two conditions that were breached by petitioners are not essential for the fulfillment of the
obligations to but merely an incidental undertaking. The rescission of the contract may not be allowed
on this ground alone. Lee Chuy at first did not seek to rescind the contract on the basis of the non-
fulfillment of these conditions. Lee in fact sought definite advice from Ang as to when they can comply
with the conditions. Indeed, it was the failure of the Ang to comply with
the conditions of the agreement that caused the delay in the payment by Lee. When Ang refused to
proceed with the sale unless Lee agreed to pay the higher price, Ang thereby committed a serious
breach of the agreement. There was a perfected contract of sale and the purchase price was set at
P1,600,000. Ang cannot increase the purchase price agreed upon without the consent of private
respondent. Lee had the right to rescind the agreement.
Since Ang had already sold the properties to Chua, they can no longer perform to deliver the
property to Lee. This is another breach of their agreement. CA aptly characterized the actuations of Ang
to be "double-dealing."
As to the agreed price, there is is no doubt that there was a perfected contract for the sale as
evidenced by the down payment of P50,000.00. If the price was really P2,340,000, they could have easily
written the amount in the receipt. Ang were the ones who clearly caused the obscurity when they
omitted the purchase price in the receipt they prepared and signed. Hence, such obscurity must be
construed against them.
If the true price was P2,340,000, it would be unusual for Ang to enter into such an agreement
with Chua at a lesser purchase price. The only logical conclusion is that Ang had intentionally omitted the
price of P1,600,000 in the receipt they signed either to compel Lee Chuy to agree to a price increase or
to enable them to back out of their agreement notwithstanding their plan to reduce their capital gains
tax liability. The claim of Ang is that they could no longer accept the offers from Dolora Chua because of
their previous commitment with Lee Chuy. - This pretension is not supported by the evidence. The
records show that Ang had entered into an "Agreement of Purchase or Sale" with Dolora 1 day before
the date of the receipt of down payment.
Ang also argue that the document is an agreement and not a mere offer.- We find no cogent
basis to view the same as a mere offer. It is clearly stated in the agreement that petitioners received
P20,000 from Chua as down payment with the balance of the purchase price of P2,160,000.00 to be paid
in full at the time the land shall have been cleared and that Ang bind themselves to deliver to Chua the
deed of sale upon full payment.

51. CHRYSLER CORPORATION VS COURT OF APPEALS (133 SCRA 567)


Facts:
Petitioner is a domestic corporation engaged in the assembling and sale of motor vehicles and
other automotive products. Respondent Sambok Motors Co., a general partnership, during the period
relevant to these proceedings, was its dealer for automotive products with offices at Bacolod (Sambok,
Bacolod) and Iloilo (Sambok, Iloilo).
On October 2, 1970, Sambok, Bacolod, ordered from petitioner various automotive products
worth P30,909.61, payable in 45 days; that on November 25, 1970, petitioner delivered said products to
its forwarding agent, Allied Brokerage Corporation, for shipment; that Allied Brokerage loaded the goods
on board the M/S Doa Florentina, a vessel owned and operated by Negros Navigation Company, for
delivery to Sambok, Bacolod; that when petitioner tried to collect from the latter the amount of
P31,037.56, representing the price of the spare parts plus handling charges, Sambok, Bacolod, refused to
pay claiming that it had not received the merchandise; that petitioner also demanded the return of the
merchandise or their value from Allied Brokerage and Negros Navigation, but both denied any liability. In
its Answer, Sambok, Bacolod, denied having received from petitioner or from any of its co-defendants,
the automotive products referred to in the Complaint, and professed no knowledge of having ordered
from petitioner said articles.

Issue:
Whether or not Sambok Bacolod bears the loss of the cargo for which it is liable in damages to
Chrysler.

Held:
No, Sambok Bacolod cannot be faulted for not accepting or refusing to accept the shipment from
Negros Navigation four years after shipment. It was found out that upon receipt of the Bill of Lading,
Sambok Bacolod initiated, but did not pursue steps to take delivery as they were advised by Negros
Navigation that because some party were missing, they would just be informed as soon as the missing
parts were located. It was only four years later that the said parts were found in their off-shore bodega
but were already deteriorated and valueless. The evidence is clear that Negros Navigation could not
produce the merchandise nor ascertain its whereabouts at the time Sambok, Bacolod, was ready to take
delivery. Where the seller delivers to the buyer a quantity of goods less than he contracted to sell, the
buyer may reject them.
From the evidentiary record, Negros Navigation was the party negligent in failing to deliver the
complete shipment either to Sambok, Bacolod, or to Sambok, Iloilo, but as the Trial Court found,
petitioner failed to comply with the conditions precedent to the filing of a judicial action. Thus, in the
last analysis, it is petitioner that must shoulder the resulting loss. The general rule that before, delivery,
the risk of loss is home by the seller who is still the owner, under the principle of "res petit domino", is
applicable in petitioner's case.
In sum, the judgment of respondent Appellate Court will have to be sustained not on the basis of
misdelivery but on non-delivery since the merchandise was never placed in the control and possession
of Sambok, Bacolod, and the vendee.

52. ARTEMIO KATIGBAK VS COURT OF APPEALS (4 SCRA 243)


Facts:
This case arose from an agreed purchase and sale of a Double Drum Carco Tractor Winch.
Artemio Katigbak upon reading an advertisement for the sale of the winch placed owner and operator of
the International Tractor and Equipment Co., Ltd., went to see Lundberg and inspected the equipment.
The price quoted was P12,000.00. Desiring a reduction of the price, Katigbak was referred to Daniel
Evangelista, the owner. After the meeting, it was agreed that Katigbak was to purchase the winch for
P12,000.00, payable at P5,000.00 upon delivery and the balance of P7,000.00 within 60 days. The
condition of the sale was that the winch would be delivered in good condition. Katigbak was apprised
that the winch needed some repairs, which could be done in the shop of Lundberg.
It was then stipulated that the amount necessary for the repairs will be advanced by Katigbak
but deductible from the initial payment of P5,000.00. The repairs were undertaken and the total of
P2,029.85 for spare parts was advanced by Katigbak for the purpose. For one reason or another, the sale
was not consummated and Katigbak sued Evangelista, Lundberg and the latter's company, for the refund
of such amount. Lundberg and Evangelista filed separate Answers to the complaint, the former alleging
non-liability for the amount since the same (obligation for refund) was purely a personal account
between defendant Evangelista and plaintiff Katigbak. Evangelista, on his part, claimed that while there
was an agreement between him and Katigbak for the purchase and sale of the winch and that Katigbak
advanced the payment for the spare parts, he (Katigbak) refused to comply with his contract to purchase
the same that as a result of such refusal he (Evangelista) was forced to sell the same to a third person for
only P10,000.00, thus incurring a loss of P2,000.00. The lower court ordered the defendants to pay
plaintiff with legal interest. The Court of Appeals reversed the judgment. Plaintiff-appellee Katigbak
brought the matter to this Court on appeal by certiorari.

Issue:
Whether or not Evangelist can dispose of the property where the buyer fails to pay the price and
take delivery.

Held:
The facts of the case under consideration are identical to those of the Hanlon case. The herein
petitioner failed to take delivery of the winch, subject matter of the contract and such failure or breach
was, according to the Court of Appeals, attributable to him, a fact which We are bound to accept under
existing jurisprudence. The right to resell the equipment, therefore, cannot be disputed. It was also
found by the Court of Appeals that in the subsequent sale of the winch to a third party, the vendor
thereof lost P2,000.00, the sale having been only for P10,000.00, instead of P12,000.00 as agreed upon,
said difference to be borne by the supposed vendee who failed to take delivery and/or to pay the price .

53. JULIAN BORROMEO VS JOSE FRANCO Y FRANCO, ET.AL (5 PHIL 49)


Facts:
On the 29th of April, 1902, and before the notary public Jose Maria Rosado y Calvo, a resident
attorney of the city of Manila, Jose Franco, Cesar Franco, Antonio Franco, Manuel Franco, Soledad
Franco, and Catalina Franco, as parties of the first part, the latter in her own behalf and in behalf of her
minor child, Concepcion Franco, and Julian Borromeo y Galan, as party of the second part, executed a
contract.
This contract was an agreement to sell a property owned by defendants-appellees, namely
frame houses with nipa roofs built upon lots, to plaintiff-appellant with the corresponding set of
conditions wherein each party is set to fulfill. One of the conditions as provided for in the agreement is
that plaintiff be given six months from the date of the execution of the instrument to complete the
documents for said property. However, plaintiff failed to comply with the condition, hence, with liberty
defendants disposed the property as they may deemed fit. Plaintiff instituted a complaint in the Court of
First Instance praying that judgment be rendered in his favor and against the defendants. Defendants in
their answer stated that the plaintiff has failed to comply with the conditions under which the promise
to sell the property to him was made.

Issue:
Whether or not plaintiff has the right to compel the defendants to carry out their agreement to
sell notwithstanding his failure to comply with the condition in the agreement.

Held:
Yes, plaintiff has the right to do so. The agreement on the part of plaintiff as set out in clause (c),
to complete the title papers to the said property within the six months, is not a condition subsequent of
the obligation to sell. It is only a mere incidental stipulation which the parties saw fit to include in the
agreement. Being not contrary to law, public morals, or public policy, unable to complete the title papers
of the said property does not prevent performance of sale. The stipulation is incidental and not inherent
to the agreement or promise to sell. Also, the contract in question contains mutual obligations and is
considered bilateral in nature. In this regard, the obligation to buy the property in question is correlative
with the obligation to sell it.
Plaintiff to perfect the papers to the property within six (6) months is not correlative to
obligation to sell the property. Hence the stipulation in the agreement does not create reciprocal rights
and therefore, defendants do not have the right to cancel the obligation. As state in the case, one
obligation is entirely independent of the other. The latter obligation is not subordinate to nor does it
depend upon the fulfillment of the obligation to perfect the title deeds to the property. Hence, the
judgment of the lower court is REVERSED. Defendants are directed to sell to the plaintiff the two houses
and lots upon which they stand under the terms and conditions as provided for in the agreement.

54. TAN LEONCO VS GO INQUI ( 8 PHIL 531)

Facts:
Plaintiff Tan Leonco left for China in 1987, before leaving, he turned over the management of his
abaca (hemp) plantation to Tan Tonguan. Tan Tonguan obtained P800 worth of fiber that he delivered to
Respondents warehouse in exchange for a cheque. Upon returning from China, Tan Leonco duly
presented the Cheque to Lim Uyco, who refused payment because he had received instructions to that
effect from the company.
Respondents argument: Bill of exchange was not protested after presentment, and that there is
some question of the right of the plaintiff to recover upon said bill without the same having been duly
protested.

Issue:
Whether or not protest is needed in this case in order to hold respondent/drawer liable?

Held:
NO. In as much as the defendant had himself ordered the drawee not to pay the said bill of
exchange, protest and notice of nonpayment under these conditions, was unnecessary in order to render
the drawer, or defendant in this case, liable. Also, it is not disputed that the warehouse in which the
hemp was deposited was the warehouse of the defendant. The hemp became the property of the
defendant upon the delivery thereof in the warehouse of the defendant (arts. 1462 and 1463, Civil
Code), and was property of the defendant at the time of its destruction by the insurrectos. There had
been a complete delivery of the said abaca to the defendant, and the loss occurring thereafter, without
any fault of the plaintiff, was loss of the defendant.

55. ASIATIC PETROLEUM COM. VS. COLLECTOR OF INTERNAL REVENUE (38 PHIL. 510)
Facts:
The defendant, under threat of penalty, compelled the plaintiff to pay the internal revenue tax
provided for under above said section of Act No. 2432 upon all such oils which the plaintiff had on hand
on the first day of January, 1915, whether or not the same had been sold theretofore or not. The tax was
paid under protest.
The plaintiff contends that the tax collected was illegal, for the reason that the law had expressly
relieved him from the necessity of paying the same on all such oils which he had "disposed of to
consumers or persons other than manufacturers or wholesale dealers, prior to January 1, 1915"; that
inasmuch as he had made a valid and legal sale of such oils before January 1, 1915 even though the
same had not been actually delivered they had been "disposed of" and he was therefore relieved from
the necessity of paying the tax imposed by said Act. No contention was made that the oils "disposed of"
had been disposed of to "manufacturers or wholesale dealers." To this note, Section 17 (paragraph 72a)
of Act No. 2432, among other things, provides that "no tax (imposed by law) shall be collected on such
articles have been disposed of to consumers or persons other than manufacturers or wholesale dealers.
Said Act took effect upon the first day of January, 1915.

Issue:
Whether or not a dealer is required to pay the internal revenue tax, provided for under section
17, (paragraph 72a) of Act No. 2342, upon mineral oils, but not delivered, prior to the first day of
January, 1915.

Held:
Considering the provisions of said quoted section, it is clear that the plaintiff could not be
compelled to pay the tax imposed by said Act upon mineral oils which had been disposed of to
consumers or persons, etc., prior to the first day of January, 1915. The court ruled that the plaintiff had
"disposed of" the mineral oils in question before the first day of January, 1915, and was therefore
relieved from the necessity of paying the internal revenue tax imposed by the defendant. Moreover, the
Legislature, by Act No. 2445, fully recognized that the phrase "disposed of" meant nothing more or less
than a contract whereby the vendor was bound to furnish an article, because in said Act (No. 2445) it
provided that "whenever any person has prior to the enactment of this law (2432) entered into a
contract whereby he has bound himself to furnish to another an article subject to the tax or increased
rate of tax . . .," the purchaser, and not the vendor, was subject to pay such tax in the absence of
stipulations to the contrary.

56. AUYONG HIAN VS COURT OF APPEALS (104 SCRA 470)


Facts:
On December 30, 1961, 600 hogsheads of Virginia leaf tobacco arrived in the Port of Manila. As
the Import Control Law was already expired, the Collector of Customs in Manila refused to release the
shipment of the subject goods. The shipment was then, declared illegal upon the ground that the
importation was made long after the expiration of the effectivity of the Import Control Law and that the
importation contravened the government policy as declared in Republic Acts 698 and 1194. The goods
were declared forfeited to the government and its sale was ordered for public auction which the CTIP
took advantage of. The petitioner prayed for several errors by the CTA. One of them is the petitioners
contention that the sale to the CTIP was invalid on ground that the amount paid by the CTIP was
insufficient in respect with the petitioners claim that the goods value was Php 7,000,000 and what CTIP
paid was only Php 1,500,000.

Issue:
Whether the sale of the tobacco from the public auction to STIP was invalid?

Ruling:
No. The sale of the tobacco from the public auction to CTIP was valid. Even if the consideration
paid for the forfeited tobacco was inadequate, such inadequate consideration is not a ground for the
invalidity of a contract. Article 1355 of the Civil Code provides the law for this matter. It was not shown
that the instant sale is a case exempted by law from the operation of the aforementioned Article; neither
has the petitioner shown that there was fraud, mistake or undue influence in the sale. Therefore, the SC
can only conclude with the CTA that In these circumstances, we find no reason to invalidate the sale of
said tobacco to CTIP.

57. LEONQUINCO VS POSTAL SAVINGS BANK, ET.AL (48 PHIL 772)


Facts:
This is a case involving of a piece or parcel of land belonging to the Bank, situated at Navotas,
Province of Rizal, having offered P27,000 for said property. The Plaintiff herein alleged that he was the
highest bidder at a public auction held by the defendants on March 31, 1924. Then he wrote a letter to
the defendants on May 9, 1924, advising that he was ready to tender payment for the land as soon as
the deed of sale of the same in his favor is executed and delivered by the defendants. That the
defendants refused to execute the deed in spite of requests made therefor by him and that said refusal
caused him damages in the sum of P25,000 more or less. Plaintiff prayed that said defendants be
ordered to execute and deliver the deed of sale of said land in his favor, and to pay him damages
amounting to P25,000, and the costs.

Issue:
Whether or not Leoquinco may compel PSB accept his offer and to execute a deed of sale of the
land in his favor.

Held:
No. In a resolution adopted by the board of directors authorizing the sale at public auction of the
property in question, as well as in the notice announcing said sale, the defendants expressly reserved to
themselves "the right to reject any and all bids. By taking part in the auction and offering Leoquinco
voluntarily submitted to the terms and conditions of the auction sale as announced in the notice and has
clearly acknowledged the right to reserve to the PSB. Clearly, Leoquinco has no ground of action to
compel the PSB to execute a deed of sale of the land in his favor nor to comply his bid and offer. The
owner of the property offered to sale in auction has the right to prescribe the manner.
Therefore, the sentence appealed from should be and is hereby affirmed, with costs against the
appellant.

58. FIDELITY & DEPOSIT CO. VS WILLIAM A. WILSON, ET.AL. (8 PHIL 51)
Facts:
On October 17, 1904, the plaintiff filed a complaint against Wilson and The American Surety
Company asking, first, that judgment be rendered against Wilson for the sum of $4,464.90, that amount
having been paid by plaintiff to the Government under plaintiff's surety bond; second, that there be
applied to the payment of said judgment the said sum of $785 found in possession of Wilson and that
said plaintiff be preferred in its right to the said money and to receive the same; and third, that a
depositary be named by the court for the purpose of caring for and administering said amount during
the pendency of the case.
Wilson had ceded and transferred to the said Terrell all of his, the said Wilson's rights in and to
the said $785 in payment on account of a larger sumhen owed by said Wilson to the said H.D. In this case
of intervention The Fidelity and Deposit Company of Maryland, the plaintiff in the principal cause, and
The American Surety Company of New York together in cooperation and against the claim of the
intervenor Terrell, both of them, alleging on their part, better right that the intervenor to receive the
sum in question, asked that the said sum be delivered to them in equal shares and portions as part
payment and on account of the amounts which they had paid respectively to the Government as sureties
on the bond of Wilson.

Issue:
Whether or not Terrell and The Fidelity and Deposit Company of Maryland can claim ownership
of the funds in accordance to Art 609 of the Civil Code

Held:
In conformity with said doctrine as established in paragraph 2 of article 609 of said code, "the
ownership and other property rights are acquired and transmitted by law, by gift, by testate or intestate
succession, and, in consequence of certain contracts, by tradition." And as the logical application of this
disposition article 1095 prescribes the following: "A creditor has the right to the fruits of a thing from the
time the obligation to deliver it arises. However, he shall not acquire areal right." (And the ownership is
surely such) "Until the property has been delivered to him." In accordance with such disposition and
provisions, the delivery of a thing constitutes a necessary and indispensable requisite for the purpose of
acquiring the ownership of the same by virtue for a contract. With this, it can therefore be concluded
that: "The transfer of the ownership in the contract of such transfer, does not produce the effect by the
fact of the mere consent, but is acquired by tradition and in the due observance of general precepts."
Therefore, by reason of the non-delivery Terrell did not acquire the ownership of the property
transferred to him by Wilson.
The court therefore finds that neither of the two creditors should enjoy preference with regard
to the other.

59. RUFINA YATCO VS JESUALDO GANA (13 PHIL 305)


Facts:
Rufina Yatco brought these proceedings against Jesualdo Gana for the recovery of two parcels of
arable land and one building lot situated in the municipality of Cabuyao, Province of La Laguna, a
description of which is contained in the complaint. She prayed therein that the said lands be returned to
her, that the defendant be sentenced to pay her P850 for losses and damages, that said defendant lose
he crops existing thereon at the present time as well as the fruits of said lands, and that he pay the costs.
Besides a general denial of all the facts alleged in the complaint, the defendant, on his part set up the
following as special defense: First. That he is the sole and exclusive owner of the building lot and the two
parcels of land referred to in the complaint, he having acquired them from Eugenio Andal by a contract
of purchase and sale on the 16th of October, 1894. Second. That he has been in the quiet and peaceful
possession of the said property as owner for more than 11 years, to wit, since the aforesaid 16th day of
October, 1894; and he asked to be absolved of the complaint. At the hearing it was stipulated between
the parties that the two parcels of unirrigated lands situated on the east and west side of the road from
Calamba to Cabuyao, as well as the building lot concerning which the defendant had offered evidence,
are the same as those claimed by the plaintiff.

Issue:
Whether or not who among the purchasers had acquired ownership and dominion over the
subject property.

Held:
According to the Civil Code, and before its enactment, it was already common doctrine that a
contract of purchase and sale is perfected by the consent of the parties thereto as to the thing and the
price, and is consummated upon the payment of the price and the delivery of the thing. There might be
a question as to which of these acts would authorize intervention in accordance with the principles of
law, and the law has preferred to fix the act of consummation, considering, no doubt, that until this is
realized the property is at the disposition of the court having jurisdiction of the question of dominion,
and which may deliver the property to the proper party, thus avoiding new complications and expenses.
But even outside of the said term, or after the limit fixed by law, when the state of the proceedings in
execution no longer permitted an intervention, and it was therefore the duty of the judge to reject the
same by an order of dismissal, if the action was one for dominion, the right of the third party was
reserved to institute an action against the proper person and as it might be proper, as provided in
paragraph 2 of the said article, in order that there may be no doubt as to his being entitled to bring an
action against the person who acquired the property. (Manresa, Ley de Enjuiciamiento Civil, 641, 642,
and 647.)
Thus the right of action of the third party who was prejudiced by the judicial sale as to his
intervention, could only be exercised while the proceedings in execution were pending and before the
consummation of the judicial sale by any of the acts fixed in article 1515 of the law which was in force at
the time, that is to say, before the execution of the public instrument of sale, or before the delivery of
the thing sold adjudicated in payment; but with respect to an action for recovery, the same may be
exercised at any time so long as the right has not expired by limitation. Hence, the silence of the
defendant in the face of the proceedings in connection with the attachment, adjudication, and
possession of the property claimed, did not prejudice him in any way. Inasmuch as the main point is the
legitimacy of the sale made by Eugenio Andal to Jesualdo Gana, and in view of the fact that this contract
was executed even before the lands that were sold had been judicially attached, the trial court has not
committed any error by declaring that Eugenio Andal could validly sell them to Jesualdo Gana; and the
circumstance that they were subject to the credit of Isidro Yatco against the spouses Andal and Faciolco
was not an obstacle to the validity of the sale because they were not subject to the security of the credit
as by a real right formally attached to the said lands, but by the mere delivery of the title deeds that the
debtors made to the creditors.

60. KUENZLE & STREIFF VS. MACKE & CHANDLER, ET.AL. ( 14 PHIL 610)
Facts;
This is an action brought by the plaintiff to recover of the defendants the sum of 1,000 pesos,
the value of certain personal property, constituting a saloon bar, furniture, furnishings, and fixtures. The
plaintiff alleges that on or about the month of January, 1907, it was the owner of the Oregon Saloon in
Cavite, Province of Cavite, consisting of bar, furniture, furnishings, and fixtures, of the value of 1,000
pesos; that during the said month of January, 1907, the defendant Jose Desiderio, as sheriff, levied upon
such property by virtue of an execution issued upon a judgment secured by the defendant Macke &
Chandler, against Stanley & Krippendorf; that said plaintiff notified the sheriff, in the manner provided by
law, that it was the owner of said goods and forbade the sale thereof under said execution; that,
notwithstanding such claim upon the part of the plaintiff, the said sheriff sold said goods under said
execution; that said firm of Macke & Chandler was the purchaser of said goods and the same were
delivered to it; that the defendants Bachrach, Elser, and Gale, were the sureties upon the bond given to
the sheriff by Macke & Chandler before said goods were sold.
The defendants in this case allege that the property described by the plaintiff and sold at the
execution sale referred to was not the property of the plaintiff at the time of said levy and sale, but was
the property of Stanley & Krippendorf, who were in possession of the same at the time of such levy. They
further allege that during the month of January, 1907, the said Stanley & Krippendorf, being indebted in
a considerable sum to the plaintiff in this case, attempted to sell to the said plaintiff by an instrument in
writing the property in question; that said instrument was never recorded; that said instrument was a
private document; that the said property was not delivered to the plaintiff under said sale but that said
property remained from the time of said sale forward in the exclusive possession and control of said
Stanley & Krippendorf, and that they conducted the business subsequent to the execution of said
instrument exactly as they had prior thereto in their own name purchasing goods and paying
therefor without reference to the plaintiff in this case.

Issue:
Whether or not the said instrument of sale had any effect in transferring the property in
question.

Held:
The case of the Fidelity and Deposit Company against Wilson (8 Phil. 51) lays down a doctrine
which we think is decisive of this case. In that case it was held that the ownership of personal property
cannot be transferred to the prejudice of third persons except by delivery of the property itself; and that
a sale without delivery gives the would-be purchaser no rights in said property except those of a creditor.
The bill of sale in the case at bar, under the circumstances of this case, could have no effect against a
person dealing with the property upon the faith of appearances.
The case of Kuenzle & Streiff against A. S. Watson & Co. (7 Off Gaz., 425), 1 cited by the appellant in its
brief, does not sustain its contention. That was a case of the sale of property upon the condition that the
title thereto should remain in the vendor until the purchase price thereof should be fully paid, and that,
in case of non-payment of the debtor of any installment thereof when due, the vendor would have a
right to take possession of the property and deal with it as provided for in the contract. In that case the
court held that such a contract for the conditional sale of goods was valid in these Islands between the
parties thereto, and was valid also as to third persons, provided possession of the property therein
described was taken by the vendor before the rights of third persons intervened against the same. In the
case at bar it is evident that the bill of sale, so called, was in no sense a conditional sale of property, such
as is described in the case of Kuenzle & Streiff against A. S. Watson, & Co., and the principles applicable
thereto are entirely inapplicable in the case at bar. Moreover, possession of the property in suit was not
taken at any time by the plaintiff. The defendant Macke & Chandlre, having purchased the property at an
execution sale, property conducted, obtained a good title to the property in question as against the
plaintiff in this case.
61. GONZALES ET. AL. VS ROJAS ( 16 PHIL 51)

Facts:
That this land of fishery belonged to the sisters Juliana Samonte and Atanasia Samonte, during
their lifetime, who are said to have inherited it from their grandfather, Jose Samonte; that while these
sisters were still living, and being co-owners of the said land, they leased the same to Mamerto Siaoson
on March 21, 1895. There is to be noted in this contract the period covered by the lease, which was for
twelve years, so that, beginning on March 21, 1895, it was not to terminate until the same day and
month of 1907. It is also to be observed that this contract was executed in the form of a public
instrument, registerable in the registry of property, though it does not appear as actually registered
therein; that the two sisters, Juliana and Atanasia Samonte, obtained, each one of them, a title of
ownership to this land, by halves, on March 26, 1895, both titles being obtained by composition with the
Government; that Juliana Samonte left at her death four legitimate children, to wit, Brigido Matias,
Natalia, and Felisa Villanueva y Samonte; and that Atanasia at her death also left three children, Eugenio,
Margarita, and Leon Reyes y Samonte. Mariano Gonzales, in his own behalf and in the name of his
brother and sister, Juan, Silvestra, Cipriana, and Candida Gonzales, petitioned for the registration of a
parcel of land used for the purposes of a fishery or vivarium, situated in Pitas, barrio of Taliptip, in the
town and Province of Bulacan, the boundaries and area of which are specified in the application and
plan filed, the total area thereof being 16 hectares, 10 acres, 95 centares, and 25 square decimetres,
appraised in the last assessment at $1,650, United States currency.
Alejandro Rojas opposed this petition for registration, alleging that he was the owner of the
same fishery that was the subject of the application of Mariano Gonzales and the co-petitioners.

Issue:
Whether or not the sale made by Juliana Samonte to Alejandro Rojas in 1900 was consummated.

Held:
Article 1462 of the Civil Code provides that "A thing sold shall be considered as delivered when
it is placed in the hands of the vendee. "When the sale is made by means of a public instrument, the
execution thereof shall be equivalent to the delivery of the thing which is the object of the contract; if in
said instrument the contrary does not appear or may be clearly inferred." No actual delivery was made
of the possession of the reality in question. There was no public instrument, the execution of which
could have constituted a form of delivery of the thing sold. On the contrary, from the instrument
executed, which is only a private one, it clearly appears that the delivery of the fishery was postponed to
a fixed date, to wit, that of the termination of the contract of lease then pending, which was to be six
years from the date thereof.
"This form of delivery, says Manresa, is subject, however, with respect to its efficacy, to the terms
of the instrument; for, if from the latter it should appear, or can be deduced, that it was not the purpose
of the contracting parties to effect the delivery, it could not be understood that the delivery had taken
place. Such a case would arise, for example, when a fixed date was set when the vendee must take
possession of the thing (10 Civil Code, 122.)" Consequently, at the death of the vendor, Juliana Samonte,
the fishery sold was a specific property bound by an obligation, but not delivered, and continued to form
part of the mass of her property, subject to an eventual right unknown to her heirs, who were those
upon whom it was incumbent, in 1907, to fulfill her obligation to make the delivery. Her heirs, being
entirely unaware of such an obligation, for in nowise could they have known that fishery had been sold
and was a thing owing and obligated to a third party, disposed of it by selling it to the petitioners. In
good faith, they possessed the fishery; in good faith, they sold it; and in good faith, the petitioners
acquired it. Against this sale so effected there is nothing that can be set up as a vice of the said contract.
The heirs of Juliana Samonte did not sell a thing, the fishery, which did not belong to them, for the
ownership thereof, had not yet been transmitted by Juliana Samonte, and they continued to hold it until
it should be demanded of them and the transfer or tradition should be effected by them.
62. WALTER EASTON VS E. DIAZ AND CO. (32 PHIL 180)

Facts:
On October 24, 1913, counsel for Walter Easton filed a written complaint in the Court of First
Instance of Albay in which he alleged as a cause of action that he was the sole and exclusive owner of a
still bearing the trade-mark "Ecrot," valued at P500, installed on a piece of land occupied by Smith, Bell &
Co., Ltd., and in charge of Jose Parlade; that, as a result of the civil case No. 1737 of said court, brought
by E. Diaz and company against Jose Parlade, in spite of Parlade having testified the still was the property
of the plaintiff Walter Easton, the defendant knowing that this still did not belong to Parlade, and for the
purpose of prejudicing the plaintiff, sought in bad faith to have it attached; that, on October 22, 1913, it
was duly attached by the sheriff who took it apart and removed it from the place where it stood; that, on
October 23, 1913, the plaintiff presented to the sheriff a third party claim of ownership, setting forth
therein that damages to the extent of not less that P100 a day were being caused the claimant for each
day the sheriff retained the still in his possession because this was the season for the distillation of ilang-
ilang, a period which lasts only until the end of the month of November; but that the defendant
company gave bond to secure the sheriff in order that he might proceed to sell the still at public auction;
that the said sheriff would proceed with the said public sale and would cause the plaintiff damage, very
difficult if not impossible to repair, unless the court ordered the suspension of the sale; that, by the
retention of the still by the sheriff or other persons, the plaintiff was being damaged to the extent of
P100 for each day that it was out of his possession, which damages could be only partly prevented by
the immediate restitution of the property so detained to the plaintiff.
The latter's counsel, therefore, prayed the court that a preliminary injunction issue against the
defendant company, its attorneys, agents and employees, and the provincial sheriff, restraining them
from performing any act whatever which might prevent the plaintiff from using the said distilling
apparatus; to order the sheriff to make immediate return of the still to the place where it had been
installed, upon the furnishing of such bond as the court might consider sufficient; to declare that the said
still is the exclusive property of the plaintiff, and to sentence the defendant company to pay to the
plaintiff the sum of at least P100 for each day that has elapsed or may elapse from the date of the
attachment of the still to that of its return; with the costs against the defendant.

Issue:
Whether or not who was the owner of the ilang-ilang still which, on October 22, 1913.
Held:
The fact that the still was never delivered to the purchaser is an additional circumstance which,
in view of the evidence adduced by the defendant company, strengthens the conviction that no such sale
took place and that the still continues to belong to Parlade. For the acquisition and transmission by law
of ownership and other property rights, delivery of the things transferred is indispensable. (Art. 609, Civ.
Code.) It is a doctrine established by jurisprudence, that the delivery of a thing is a necessary and
indispensable requisite in order to acquire its ownership by virtue of a contract. In the decision of the
case of Kuenzle & Streiff vs. Macke & Chandler (14 Phil. 610) and also in others, the following doctrine is
laid down: The ownership of personal property cannot be transferred to the prejudice of third persons
except by delivery of the property itself, and a sale without such delivery gives the would-be purchaser
no rights in said property except those of a creditor.
In conclusion, it appears then from the record in this case that the still attached against Jose
Parlade at the instance of E. Diaz & Co. is the exclusive property of the debtor and that the sale said to
have been made by Parlade to the plaintiff, Walter Easton, was simulated and made long after the
attachment of the said still and for the purpose of preventing its sale and the payment of the sum which
Parlade owed to E. Diaz & Co.
63. OCEJO, PEREZ & CO. VS THE INTERNATIONAL BANK (37 SCRA 631)

Facts:
On the 7th day of March, 1914, Chua Teng Chong of Manila, executed and delivered to the
International Banking Corporation, hereinafter referred to as "the bank," a promissory note, payable one
month after date, for the sum of P20,000. Attached to this note was another private document, signed
by Chua Teng Chong, in which it was stated that he had deposited with the bank, as security for the said
note, 5,000 piculs of sugar, which in said document were said to be stored in a warehouse situated at No
1008, Calle Toneleros, Binondo, Manila. It appears from the evidence, assuming that the sugar was in the
warehouse on that date, that the bank did not take possession of it when the document was executed
and delivered, and that Chua Teng Chong continued to retain the sugar in his possession and control. The
bank made no effort to exercise any active ownership over said merchandise until the 16th of April,
when it discovered that the amount of sugar stored in the said warehouse was much less than the 5,000
piculs mentioned in the contract.
The agreement between the bank and Chua Teng Chong with respect to the alleged pledge of
the sugar was never recorded in a public instrument. It does not appear from the evidence that the
promissory note represents money delivered by the bank on the date of its execution, although it is
stated therein that it was executed for value received. On the 24th day of March, 1914, the plaintiff
partnership Ocejo, Perez and Co., entered into contract with Chua Teng Chong for the sale to him of a lot
of sugar. It was agreed that delivery should be made in the month of April, the sugar to be weighed in
the buyer's warehouse. It appears that this sugar was brought to Manila by a steamer in the month of
April, and 5,000 piculs were delivered by plaintiff to Chua Teng Chong. The delivery was completed April
16, 1914, and the sugar was stored in the buyer's warehouse situated at No. 119, Muelle de la Industria.
On April 17, 1914, plaintiff partnership presented, for collection, its account for the purchase price of the
sugar, but the buyer refused to make payment, and put up to the present time the sellers have been
unable to collect the purchase price of the merchandise in question.

Issue:
Whether or not can the pledge of the sugar to the bank be sustained upon the evidence as to
the circumstances under which it obtained physical possession thereof?

Held:
There can be no doubt that from March 24, 1914, on which date the parties agreed in regard to the
quantity of the sugar which the seller was to deliver and the price which the buyer was to pay, the
contract was perfected (Civil Code, Art. 1450). It is also clear that the obligation of the seller to make
delivery of the thing sold was not subject to the condition that the buyer was to pay the price before
delivery. The witness Pomar, called on behalf of the seller, testified that the price was to be paid after the
completion of delivery. (Stenographic notes, p. 4.) The sugar was delivered to the buyer March 16, 1914.
The seller delivered it into the buyer's warehouse, leaving it entirely subject to his control. Article 1462
of the Civil Code provides that the thing sold is deemed to be delivered "when it passes into the
possession and control of the buyer." It is difficult to see how the seller could have divested himself more
completely of the possession of the sugar, or how he could have placed it more completely under the
control of the buyer. Article 1506 of the Civil Code provides that the contract of sale may be rescinded
for the same causes as all other obligations, in addition to the special causes enumerated in the
preceding articles. It is also observed that the article does not distinguish the consummated sale from
the merely perfected sale, and we do not believe that there is any reason for making this distinction.

64. ROMAN VS. GRIMALT ( 6 PHIL 96)


Facts:
Grimalt transacted with Roman for several days for the purchase of a schooner named Santa
Marina. They agreed upon the sale of the vessel for the sum of P1500 payable on three installments. The
sale was predicted upon the condition that it was seaworthy and that Roman would perfect his title
thereto as it was found out to be registered to Paulina Giron. If the said conditions were complied with
only then will Grimalt purchase the same. Roman promised however, to perfect his title to the vessel but
he failed to do so, then due to a storm, the vessel sank in the bay. On the 30th of June 1904, plaintiff
demanded for the payment of the purchase price of the vessel in the manner stipulated and defendant
failed to pay.

Issue:
Whether there was a perfected contract of sale and who will bear the loss.

Held:
No. Where no valid contract of sale exists it creates no mutual rights or obligations between the
alleged purchaser and seller, nor any legal relation binding upon them. There was no perfected contract
of sale because the purchase of which had not been concluded. The conversations had between the
parties and the letter written by defendant to plaintiff did not establish a contract sufficient in itself to
create reciprocal rights between the parties. If no contract of sale was actually executed by the parties
the loss of the vessel must be borne by its owner and not by the party who only intended to purchase it
and who was unable to do so on account of failure on the part of the owner to show proper title to the
vessel and thus enable them to draw up contract of sale.

65. NAVAL, ET. AL. VS ENRIQUEZ, ET.AL (3 PHIL 669)


Facts:
Don Jorge Enriquez, as heir of his deceased parents, Antonio Enriquez and Doa Ciriaca
Villanueva, whose estates were at that time still undistributed, by public instrument sold to Don
Victoriano Reyes his interest in both estates. The deed was executed in Manila before Don Enrique
Barrera, a notary public, who certified in the document that the vendor received the said consideration
at the time of the execution of the instrument. The plaintiffs demand that these deeds be declared null
and void, as well as the contracts evidenced thereby, apparently solely so far as they refer to the estate
of Don Antonio Enriquez, no mention being made of the estate of Doa Ciriaca Villanueva in the
complaint. The plaintiffs contended that the deeds in question were consummated and were executed
for the purpose of deceiving and defrauding Don Jorge Enriquez and his family. The conclusion of the
plaintiffs was that as such executor Don Francisco was unable to acquire by his own act or that of any
intermediary the said heredity portion of Don Jorge under the provision of paragraph 3 of Article 1459 of
the Civil code.

Issue:
Whether or not Don Francisco Enriquez as executor and administrator of estate of Don Antonio
is incapacitated to acquire by purchase the hereditary right of Jorge Enriquez

Held:
Although an executor cannot lawfully purchase property in his possession as such, this
prohibition does not forbid the purchase by him of the undivided interest of an heir in the estate. The
thing sold in the two contracts of sale mentioned in the complained was the hereditary right of Don
Jorge Enriquez, which evidently was not in charge of the executor, Don Francisco Enriquez. Executors,
even in those cases in which they administer the property pertaining to the estate, do not administer the
hereditary rights of any heir. This right is vested entirely in the heirs, who retain it or transmit it in whole
or in part, as they may deem convenient, to some other person absolutely independent of the executor,
whose authority, whatever powers the testator may have desired to confer upon him, do not and cannot
under any circumstances in the slightest degree limit the power of the heirs to dispose of the said right
at will. That right does not form part of the property delivered to the executor for administration. This
conclusion having been reached, the Court is of the opinion that article 1459 of the Civil Code, cited by
the plaintiffs to show the alleged incapacity of Don Francisco Enriquez as executor of the will of Don
Antonio Enriquez, to acquire by purchase the hereditary right of Jorge Enriquez, and has no application
to the present case. The prohibition which paragraph 3 of that article imposes upon executors refers to
the property confided to their care, and does not extend, therefore, to property not falling within this
class.
Consequently, even upon the supposition that the executor, Don Francisco Enriquez, was the
person who really acquired the hereditary rights of Jorge Enriquez, the sale in question would not for
that reason be invalid, the executor, Don Francisco Enriquez, not being legally incapable of acquiring the
hereditary right in question as the plaintiffs erroneously suppose.

66. UY PIAOCO VS MCMICKING (10 PHIL 286)


Facts:
Uy Chiam Liong, in a notarial document dated January 17, 1906, purporting to be a contract of
purchase and sale, sold and transferred to the plaintiff the property and shares of stock which is the
subject-matter of a case filed by the defendants Antonio R. Bayan Ju, Yap Qui Chin and Khy Pack. The
certificates evidencing these shares of stock, under the charter or by laws of the said company, were
transferable only by endorsement and the issue of new scrip to the purchaser by the company upon the
surrender of the duly indorsed certificate of the vendor. The certificates of stock not being in the
immediate possession and control of the vendor at the time of said alleged sale, no endorsements
thereof was made in accordance with the by-laws of the company, nor is there any evidence in the
record that the company was notified of the alleged sale. The trial court ruled in favor of the defendants
and issued attachment orders against the property of Uy Chiam Liong. Plaintiff prayed that the
attachments be dissolved and that the stock be restored to its legitimate owner.

Issue:
Whether the ownership and title to the stock in question passed from the original owner to the
plaintiff in this action by virtue of the contract of purchase and sale evidenced by the notarial document

Held:
A bona fide contract of purchase and sale of stock in a company or corporation set out in a
notarial document conveys to the vendee, as between the vendor and vendee, the entire title, legal and
equitable of the vendor; although as between the vendee and the company or corporation the vendee
acquires only an equitable title, which the company or corporation is bound to recognize and permit to
be ripened into a legal title when he presents to do the acts required by the charter or by-laws in order
to make a transfer. Statutory provisions and by-laws of companies or corporations which require
transfers of stock to be recorded on the books of such companies or corporations regulate merely the
respective rights of the corporation and the individual stockholder.
No one can claim to be a stockholder, and to exercise the rights of a member of such company or
corporation, in virtue of a sale to him, until the corporation has taken cognizance of the sale, and, by
transfer on its books, has substituted the purchaser for the vendor; for whether one has acquired the
rights of a member of a company or corporation is a question to be determined by the laws of the
company or corporations, promulgated in conformity with statutory regulations. But the question
whether a purchaser has acquired a good and perfect title to any property or things, tangible or
intangible, is a question solely to be determined by the provisions of general law touching the sale and
transfer of such objects. The Court is of opinion therefore that all the right, title, and interest of Uy
Chiam Liong in and to the stock in question vested in the plaintiff on the 17th day of January, 1906, the
date of the contract of purchase and sale evidenced by the notarial document. Hence subsequent
attachments levied on this stock at the issuance of creditors of Uy Chiam Liong are invalid and should be
dissolved.

67. BUENCAMINO, ET.AL. VS VICEO, ET.AL. (13 PHIL 97)


Facts:
On the 28th day of April, 1898, Anastacio Sabat, father of Anselmo Sabat, sold and conveyed the
two parcels of land to Doa Manuela David, the mother of the petitioners, for 3,500 pesos. The deed of
conveyance contained an agreement that the vendor might repurchase the same within three years from
the date thereof. Anastacio, who died in 1902, and Anselmo, have never repurchased the property or
made any offer to do so. It is claimed, however, by this appellant, that the contract evidenced by notarial
document was afterwards changed by him and Doa David from a contract of sale with a right of
repurchase to a mortgage contract. The trial court rejected their claims, hence this appeal.

Issue:
Whether or not the document was of a contract of sale with a right to repurchase

Held:
The document set forth in the opinion held to be a contract of sale with a right to repurchase. In
a contract of sale with a right to repurchase, when no time is specified within which the repurchase must
be made, it must be done within four years. Considering it as a sale with the right to repurchase, no time
being mentioned therein for the exercise of the right to repurchase, it lasted only for four years, which
had expired prior to the commencement of this proceeding. Although the defendant Sabat testified that
he had been in possession of the property until 1905, the evidence of the petitioners satisfies us that
they and their mother had been in possession since 1901, and probably since 1898. Gelasio Buencamino
testified that he went to see Anastasio Sabat in 1901 to tell him that the time repurchase had expired
and that Sabat then told him that the purchaser should continue in possession because he, Sabat, had
no money with which to repurchase the property.

68. YAP UNKI VS. CHUA JAMCO (14 PHIL 602)


Facts:
On November 10, 1906, plaintiff and defendant executed a written agreement whereby the
business partnership then existing between them was dissolved, and plaintiff sold and defendant bought
plaintiff's interest in the partnership for the sum of P1, 728.94, payable in three installments, as set out
in the agreement. Appellant admits the execution of the contract, but denies plaintiff's right to a
recovery thereunder, on the ground that plaintiff failed to comply with his obligation to deliver the
property sold to the purchaser and to secure to him the peaceable possession thereof. The amended
complaint alleged that the total indebtedness thus contracted by the defendant had become due and
payable and had not been paid in whole or in part at the time when that complaint was filed. Judgment
was rendered by the trial court in favor of the plaintiff and against the defendant for P1, 728.94 together
with interest upon the various installments from the date when they fell due. From this judgment
defendant appealed, and the case is now before the Court on his bill of exceptions.

Issue:
Whether or not the defendant has the right to set up a counterclaim for unliquidated damages
against plaintiff's claim based on the contractual obligation

Held:
Compensation as defined in Articles 1195 and 1195 of the Civil code, while it resembles in many
respects the common-law set-off, and certain counterclaim provided for in the Code of Civil Procedure,
differs therefrom in that compensation takes place by mere operation of law, and extinguishes
reciprocally the two debts as soon as they exist simultaneously, while a set-off or counterclaim must be
pleaded to be effectual. The provisions of Chapter 5 of the new Code of Civil Procedure, and especially
Section 95 thereof, give to the defendant, in any action instituted against him the right, if he so desires,
to secure in that action the final disposition of all claims which he may against the plaintiff, whatever
may be their nature or origin, and the judgment appealed from should, therefore, be reversed, and the
record returned to the trial court, where the parties will be given an opportunity to submit evidence
upon the last above-mentioned cause of action set up in defendant's counterclaim, and the judgment
already rendered will be modified or not in accordance with defendant's success or failure in establishing
the damages alleged in this counterclaim.
69. JOSE FLORENDO VS EUSTAQUICO P. FOZ (20 PHIL 388)
Facts:
Eustaquio P. Foz executed in Manila a contract, ratified before a notary on May 11, 1909. In the
contract a consideration of the sum of six thousand pesos (P 6000.00), sold ceded and conveyed forever
and perpetually to Sr. Jose Florendo, his house and camarin of strong materials, together with the lots on
which they are erected as well as the specified boundaries. Florendo paid P 2000.00 and which shall pay
the remaining four thousand in Vigan at any time during the said month or the said next month. If in
case the buyer cannot go to Vigan, he could pay the debt to the church at Vigan and obtain the title of
the house and that he could also send the remainder to Manila. Records were also made in this
instrument that the rents of the said property may be collected by Foz only up to and including the
month of June.
Eustaquio Foz went to Vigan, and on June 23 of the same year, Jose Florendo, accompanied by a
notary, tendered to the former the P 4000.00, the rest of thd price of the sale; but Foz refused to receive
them, saying that the true price of the sale, recorded in another instrument held by Florendo, while still
in Manila, repudiated the contract. Whereby, these were recorded with the notarial certificate. Then,
Florendo executed against Foz. He asked the defendant be sentenced: (a) to comply with the contract of
absolute purchase and sale, by delivering to the plaintiff the property sold; (b) to pay to the plaintiff the
rents of the entire realty from July 1, 1909; (c) that, out of the P 4000.00 deposited by the plaintiff in the
municipal treasury of Vigan, Ilocos Sur, payment be made to the Roman Catholic Apostolic Church and
(d) to pay the costs of the trial.
The defendant alleged that it was false that he had sold his property for the price of P 6000.00;
that, if he signed the deed of sale, he has deceived in so doing, as he had heard, or believed that he had
heard, when it was previously read to him, that the amount stated therein was P 10,000, which was the
true sum agreed upon between himself and the plaintiff as the price of the property. Therefore, he asked
that the deed of sale be declared to be false, null and void, and in counter-complaint, prayed that the
plaintiff be compelled to return to him the ownership title of the property, which was in the plaintiffs
possession.

Issue:
Whether or not the deposit of 4000.00 php is a part of the price and Florendo can file against
Foz for completion of the contract.
Held:
The conveyance of s thing sold does not depend on the payment of the price. As the contrary
does not appear nor is to be inferred from the public instrument executed by the defendant, its
execution was really a formal or symbolical delivery of the property sold and authorized the plaintiff to
use the title of ownership as proof that he was thenceforth the owner of the property. It is the material
delivery of the property sold which the defendant must make in compliance with the contract; inasmuch
the formal delivery de jure was made. The judgment appealed is affirmed and the cost against appellant.

70. DOMICIANO GONZAGA VS ANGEL JAVELLANA (23 PHIL 125)


Facts:
On May 21, 1910, Gonzaga brought suit against Angel Javellana for the ownership of the said
parcel of land consisting of the 449 square meters and 30 square centimeters, the identification of which
is a fact agreed upon at the trial, requested that he be declared the owner thereof and that the
defendant be compelled to recognize the said parcel to be of the plaintiffs exclusive and legitimate
ownership, and that the latter be place in the possession thereof.
The defendant, after denying all the facts set forth in the complaint, impugned the purchase
alleged by the plaintiff and claim that it was fictitious. The Court of First Instance of Iloilo decided the
suit in behalf of the plaintiff. The defendant appealed from that judgment and forwarded his appeal to
this court through the means of a bill of exceptions.
It appears that the parcel of land concerned in this suit was sold twice to different purchasers: to
the plaintiff, on June 23, 1905, and the sale was inscribed in the property registry on December 15, 1909;
and to the defendant on October 26 , 1908, and this sale was likewise entered in the said registry on May
5, 1910.
In the judgment, good faith is supposed on the part of both purchasers, and it is not argued in
this appeal that either of them showed bad faith.

Issue:
Whether or not, Gonzaga can claim the ownership of the said property.

Held:
Therefore, as the judgment appealed from is in accord with this legal provision and the merits of
the proceedings, the same is hereby affirmed, with the costs of this instance against the appellant. The
rules of the preference provide by the Civil Code for deciding between the claims of the different
purchasers of one it shall belong to the first person acquiring it and first recorded in the registry; second,
there should be no entry, it shall belong to the person who first took possession
The first purchaser, therefore, has in his favor priority of the title and priority of entry in the
property registry; and it is this priority of registration that is the positive reason for deciding on this
appeal that If the thing to be real property, ownership thereof shall belong to the person acquiring it
who first recorded it in the registry.
71. VIEGELMANN AND CO. ET.AL. VS JOSE PEREZ (37 PHIL 678)
Facts:
Tan Achiong alias Yap Cangco is a merchant and a resident of this city Manila. He is the sole and
absolute owner of a hat factory situated on Calle Sacristia, No. 231, Binondo, Manila and to which the
goods are free of charges and liabilities. He received 1000 php from Don Jose Perez to which he
assigned, sold, and the said personal property and to take over the title of the said goods. The said sale
was executed under the covenant or condition that if he should return to the purchaser within the
period of three months from the date of the execution of this instrument the 1000.00 php. So, Jose
Perez accepted the said deed of sale under right of repurchase, in the precise terms and conditions upon
which it has been executed in his favor by the vendor. Due to that, Jose leased the said property during
the term for redemption, to Yap Cangco, the personal property sold to him by Cangco for the monthly
rental of 30 php.
After the date of the acknowledgement of the said instrument, for more than three months, Yap
Cangco was declared insolvent; that on the 4th day of November, 1913, K. Matsumato was designated as
assignee y the creditors; and that on the same day he was ordered to sell all the insolvents estate.
On November 18, 1913, Perez presented a claim in the course of the insolvency proceedings,
setting forth that under the terms of the foregoing document, he had become the owner of the property
described therein, as a result of the failure of the insolvent to redeem or repurchase it at the time
stipulated.

Issue:
Whether or not the said sale is valid.

Held:
It must be clear that Perez the purchaser of the goods described therein, is entitled to the
possession of these goods as against the assignee of the vendor, in the insolvency proceedings, or to the
proceeds of the sale of these goods by the assignee in the course of those proceedings. In the said
instrument and the circumstances under which it was executed, it should not be held to be a genuine
and valid sale of the goods therein mentioned with a reserved right to repurchase the vendor. Twenty
days and hereafter the judgment entered in the court below is reversed, in so far as it denies the right of
the appellant, Jose Perez, to a preference, as against unsecured general creditors, in the distribution of
funds in the hands of the assignee in these bankruptcy proceedings, to the full amount of the
indebtedness acknowledged in the public document above set forth, without costs in this instance, and
ten days thereafter let the record be returned to the court below where the judgment will be entered
making provision for the distribution of these funds in accordance herewith.
72. SOSTENES CAMPILLO VS COURT OF APPEALS (129 SCRA 513)

Facts:
On February 27, 1961, Tomas de Vera and his wife Felisa Serafico sold two parcels of land located
in Tondo, Manila, designated as Lots 1 and 2 of the consolidation and subdivision plan (LRC) Pcs. 888 and
segregated from Transfer Certificate of Title No. 37277 under Transfer Certificate of Title No. 63559, to
Simplicio Santos, now deceased and is represented by his administrator, Zenaida Diaz Vda. De Santos,
the herein private respondents. Said sale was however never presented for registration in the office of
the Registry of Deeds of Manila nor noted in the title covering the property.
On January 27, 1962, petitioner Sostenes Campillo obtained a judgment for a sum of money
against Tomas de Vera in Civil Case No. 49060 of the Court of First Instance of Manila. That judgment
became final and executory, and petitioner obtained an order for the issuance of a writ of execution. The
writ was issued on April 4, 1962 and pursuant thereto, the City Sheriff levied on three (3) parcels of land
covered by TCT No. 63559 in the name of Tomas de Vera, including the two (2) parcels of land which the
latter previously sold to Simplicio Santos.
On July 25, 1962, the three parcels of land were sold at the public auction for P 17,550.8 in favor
of the petitioner who was issued the corresponding certificate of sale. Claiming to be the owner of the
two parcels of land by reason of the previous sale of him by Tomas de Vera, Simplicio Santos filed an
action to annul the levy, notice of sale, sale at public auction and final deed of sale at the said land and in
favor of the petitioner. In resisting the complaint, the herein petitioner as one of the defendants below,
alleged that he is an innocent purchase for the value and that the supposed previous sale could not be
preferred over the levy and sale at public action because it was not registered. After due trial, the lower
court rendered judgment sustaining the validity of the levy and sale at public auction primarily because
at the time of the levy and sale, the disputed properties were still registered in the name of the
judgment debtor, Tomas de Vera. The trial court ruled, the sale to Simplicio Santos which was neither
registered nor noted in the title of the subject lots, cannot bind third persons.

Issue:
Whether or not the said right of title to Sostenes Campilio who subsequently purchase them at
an execution sale and obtained through a certificate of title.

Held:
It is settled in this jurisdiction that a sale of real estate, whether made as a result if a private transaction
or of a foreclosure or execution sale, becomes legally effective against third persons only from the date
of its registration. Consequently, and considering that the properties subject matter thereof were
actually attached and levied upon at the time when said properties stood in the official records of the
Registry of Deeds as still owned by and registered in the name of the judgment debtor, Tomas de Vera,
the attachment, levy and subsequent sale of said properties are proper and legal. The net result is that
the execution sale made in favor of the herein petitioner transferred to him all the rights, interest and
participation of the judgment debtor in the aforestated properties as actually appearing in the certificate
of title, unaffected by any transfer or encumbrance not so recorded therein. Since the sale made in favor
of the vendee did not comply with the above-quoted provision, the transaction was ineffectual as to
third persons. And since the sale made in favor of the second vendee complied with relevant provision,
the sale to him was good and should be protected.
The questioned decision of the respondent appellate court is hereby reversed and set aside, and
that the judgment of the lower court is reinstated. Without pronouncement to the cost.
73. OBAA VS COURT OF APPEALS AND SANDOVAL (135 SCRA 557)

Facts:
On November 21, 1964, Anicleto Sandoval (owner of Sandovals and Sons Rice Mill) was
approached by Chan Lin who offered to purchase from him 170 cavans of rice at the price of P37.25 per
cavan. The driver attempted to collect the payment from Chan Lin and Petitioner Anacleto Sandoval but
the latter refused, stating that he had already made the payment to Chan Lin. Further demands having
been met with refusal, Sandoval, as plaintiff, filed suit for Replevin against petitioner, before the
Municipal Court of San Fernando, La Union which ordered petitioner- defendant to pay to Sandoval of
the cost of the rice or P2,805. On appeal by the petitioner to the court of First Instance, judgment was
rendered dismissing the complaint. On appeal to respondent Appellate Court, Sandoval obtained a
reversal in his favor. Hence, the present petition seeks for the review of the decision of Court of Appeals
ordering Obaa inaction for Replevin to return to Sandoval, Private Respondent herein, 170 cavans of
rice or to pay its value in the amount P37.25 per cavan, with legal interest from the filing of the
complaint until fully paid.

Issue:
Whether or not the petitioner-dependent had unjustly enriched himself at the expense of
another by holding on to property no longer belonging to him.

Held:
The judgment under review is hereby affirmed. No person should be benefited without a valid
basis or justification, shall enrich himself at the expense of another and hold on to a property no longer
belonging to him. The petition- defendant in his own testimony said that he was repaid the sum of
P5,600 by Chan Lin and claimed that he delivered the rice back to them. However, the driver denied that
the rice had ever been returned. The drivers version is more credible since Sandovals lawyer had
manifested in open court that they would have withdrawn the complaint if the return of the rice had
been effected. In law and equity, therefore, Sandoval is entitled to recover the rice, or the value thereof
since he was not paid the price there for. Costs against petitioner.
74. DANGUILAN VS IAC (168 SCRA 22)

Facts:
A parcel of lot owned by Domingo Melad was being claimed by petitioner Felix Danguilan and
respondent Apolonia Melad.
Apolonia Melad contends that she acquired the property when Dominggo Melad sold it to her
when she was just 3 years old in which her mother paid the consideration. (Evidence: Deed of sale dated
December 4, 1943 with a sum consideration of P80.00.) Apolonia contended that she just moved out of
the farm only in 1946 when Felix Danguilan approached her and asked permission to cultivate the land
and to stay therein.
Dangguilan, on the other hand, presented for his part 2 documents executed in September 14,
1941 and December 18, 1943, to prove his claim that the properties were given to him by Dominggo
Melad through an onerous donation. The onerous part of the donation includes the taking care of the
farm and the arrangement of the burial of Dominggo.
RTC ruled in favor of Danguilan. CA reversed RTCs ruling. It ruled that there was a donation,
which was void for failing to comply with the formalities.

Issue:
Who has the better right between parties?

Held:
Domingo Melad intended to donate the property to petitioner Danguilan
It is our view, considering the language of the two instruments that Domingo Melad did intend
to donate the properties to the petitioner Danguilan. We do not think, however, that the donee was
moved by pure liberality. While truly donations, the conveyances were onerous donations as the
properties were given to petitioner Danguilan in exchange for his obligation to take care of the donee for
the rest of his life and provide for his burial.
Hence, it was not covered by the rule in Article 749 of the Civil Code requiring donations of real
properties to be effected through a public instrument, and the 2 private documents remain valid.
Assuming there was a valid deed of sale, PR Melad failed to show that it was consummated (no actual
delivery + no possession). At any rate, even assuming the validity of the deed of sale, the record shows
that Apolonia Melad did not take possession of the disputed properties and indeed waited until 1962 to
file this action for recovery of the lands from petitioner Danguilan. If she did have possession, she
transferred the same to Danguilan in 1946, by her own sworn admission, and moved out to another lot
belonging to her step-brother. Her claim that the petitioner was her tenant (later changed to
administrator) was disbelieved by the trial court, and properly so, for its inconsistency. In short, she
failed to show that she consummated the contract of sale by actual delivery of the properties to her and
her actual possession thereof in concept of purchaser-owner.
No constructive delivery allowed if property is in actual and adverse possession of a third
person. In our jurisdiction, it is a fundamental and elementary principle that ownership does not pass be
mere stipulation but only by delivery and the execution of a public document does not constitute
sufficient delivery where the property involved is in the actual and adverse possession of third persons.
Therefore, in our Civil Code it is a fundamental principle in all matters of contracts and a well-
known doctrine of law that "non mudis pactis sed traditione dominia rerum transferuntur". In
conformity with said doctrine as established in paragraph 2 of article 609 of said code, that "the
ownership and other property rights are acquired and transmitted by law, by gift, by testate or intestate
succession, and, in consequence of certain contracts, by tradition". In accordance with such disposition
and provisions the delivery of a thing constitutes a necessary and indispensable requisite for the purpose
of acquiring the ownership of the same by virtue of a contract. One who is in possession is presumed to
be the owner.
In this case, there no dispute that it is Danguilan and not Melad who is in actual possession of
the litigated properties. And even if the claim of petitioner and respondent are weak, judgment must be
in favor of the Danguilan for one who is in possession is presumed to be the owner, and cannot be
obliged to show or prove a better right.
75. ALLIANCE TOBACCO CORP. VS PHIL. VIRGINIA TOBACCO ADMIN. (1790 SCRA 336)

Facts;
PVTA, a government corporation entered into a contract of procuring, redrying and servicing
with FVTR for the 1963 tobacco trading operation. In June of the same year, PVTA also entered into a
merchandising loan agreement with the petitioner, a duly incorporated and authorized tobacco trading
entity, whereby PVTA agreed to lend P25,500 to petitioner for purchase of fluecured Virgina tobacco
from bona fide Virginia tobacco farmer-producers.
Following month, petitioner shipped to FVTR 96 bales of tobacco (4,800 kilos) covered by Guia
No. 1 and 167 bales (8,350 kilos) covered by Guia No. 2 to the Redrying plant. Only 89 bales from Guia
No. 2 were graded, weighed and accepted by FVTR, the remaining 174 bales were not graded and
weighed because some officer and employee of FVTR asked money for separate weighing and grading of
the remaining bales.
The operations of FVTR in Bauang stopped in October 1963. Plaintiff asked that its ungraded and
unweighed tobacco be withdrawn from Redrying plant. PVTA and FVTR refused because according to
the, those tobacco were subject to merchandising loaned and owned by PVTA.
Unfortunately, the remaining 174 bales with total value of P28,382 were lost while in the possession of
FVTR. Having learned of such loss, petitioner demanded for its value and application of the same to its
merchandising loan with PVTA but both the latter and the FVTR refused to heed said demands.

Issu:
WON Petitioners delivery of 174 bales of Tobacco to FVTR, a contractee of PVTA perfected the
contract of sale between petitioner and PVTA so as to hold the latter liable for the loss of the said bales
while in possession of FVTR.

Held:
The court first denied the petition for lack of merit. But was set aside upon petitioners motion
for reconsideration. While under an Ideal situation, PVTA's contention that the contract of sale could not
have been perfected pursuant to Article 1475 22 of the Civil Code because to determine the price of the
tobacco traded, the shipment should first be inspected, graded and weighed has merit, said contention
misplaced herein. A strict interpretation of the provision of Article 1475 may result in adverse effects to
small planters who would not be paid for the lost products of their toil.
Equity and fair dealing, the anchor of said case, must once more prevail. Since PVTA had virtual
control over the lost tobacco bales, delivery thereof to the FVTR should also be considered effective
delivery to the PVTA.
76. PHILIPPINE SUBURBAN DEV. CORP. VS AUDITOR GENERAL (63 SCRA 397)

Facts:
On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines, acting on the
reports of the Committee created to survey suitable lots for relocating squatters in Manila and suburbs,
approved in principle the acquisition by the Peoples Homesite and Housing Corporation of the
unoccupied portion of the SapaPng Palay Estate in Sta. Maria, Bulacan and of another area either in Las
Pias or Paraaque, Rizal, or Bacoor, Cavite for those who desire to settle south of Manila. On June 10,
1960, the Board of Directors of the PHHC passed Resolution No. 700 (Annex C) authorizing the
purchase of the unoccupied portion of the Sapang Palay Estate at P0.45 per square meter subject to
the following conditions precedent:
That the President of the Philippines shall first provide the PHHC with the necessary funds to
effect the purchase and development of this property from the proposed P4.5 million bond issue to be
absorbed by the GSIS.
That the contract of sale shall first be approved by the Auditor General pursuant to Executive
Order dated February 3, 1959.
On July 13, 1960, the President authorized the floating of bonds under Republic Act Nos. 1000
and 1322 in the amount of P7,500,000.00 to be absorbed by the GSIS, in order to finance the acquisition
by the PHHC of the entire Sapang Palay Estate at a price not to exceed P0.45 per sq. meter.
On December 29,1960, Petitioner Philippine Suburban Development Corporation, as owner of
the unoccupied portion of the Sapang Palay Estate and the Peoples Homesite and Housing Corporation,
entered into a contract embodied in a public instrument entitled Deed of Absolute Sale whereby the
former conveyed unto the latter the two parcels of land abovementioned. This was not registered in the
Office of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims, that the PHHC
could not at once advance the money needed for registration expenses.
In the meantime, the Auditor General, to whom a copy of the contract had been submitted for
approval in conformity with Executive Order No. 290, expressed objections thereto and requested a re-
examination of the contract, in view of the fact that from 1948 to December 20, 1960, the entire
hacienda was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly
increased amount of P4,898,110.00.
It appears that as early as the first week of June, 1960, prior to the signing of the deed by the
parties, the PHHC acquired possession of the property, with the consent of petitioner, to enable the said
PHHC to proceed immediately with the construction of roads in the new settlement and to resettle the
squatters and flood victims in Manila who were rendered homeless by the floods or ejected from the
lots which they were then occupying. On April 12, 1961, the Provincial Treasurer of Bulacan requested
the PHHC to withhold the amount of P30,099.79 from the purchase price to be paid by it to the
Philippine Suburban Development Corporation. Said amount represented the realty tax due on the
property involved for the calendar year 1961. Petitioner, through the PHHC, paid under protest the
abovementioned amount to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by
letter, requested then Secretary of Finance Dominador Aytona to order a refund of the amount so paid.
Upon recommendation of the Provincial Treasurer of Bulacan, said request was denied by the Secretary
of Finance in a letter-decision dated August 22, 1961. Petitioner claimed that it ceased to be the owner
of the land in question upon the execution of the Deed of Absolute Sale on December 29, 1960. It is now
claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax in
the amount of P30,460.90 because aside from the presumptive delivery of the property by the execution
of the deed of sale on December 29, 1960, the possession of the property was actually delivered to the
vendee prior to the sale, and, therefore, by the transmission of ownership to the vendee, petitioner has
ceased to be the owner of the property involved, and, consequently, under no obligation to pay the real
property tax for the year 1961.
Respondent, however, argues that the presumptive delivery of the property under Article 1498
of the Civil Code does not apply because of the requirement in the contract that the sale shall first be
approved by the Auditor General, pursuant to the Executive Order.

Issue:
WON there was already a valid transfer of ownership between the parties.

Held:
Considering the aforementioned approval and authorization by the President of the Philippines
of the specific transaction in question, the prior approval by the Auditor General envisioned by
Administrative Order would therefore, not be necessary.
Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe actual
(real tradition) or constructive (constructive tradition). 2 When the sale of real property is made in a
public instrument, the execution thereof is equivalent to the delivery of the thing object of the contract,
if from the deed the contrary does not appear or cannot clearly be inferred.
In other words, there is symbolic delivery of the property subject of the sale by the execution of
the public instrument, unless from the express terms of the instrument, or by clear inference therefrom,
this was not the intention of the parties. Such would be the case, for instance, when a certain date is
fixed for the purchaser to take possession of the property subject of the conveyance, or where, in case of
sale by installments, it is stipulated that until the last installment is made, the title to the property should
remain with the vendor, or when the vendor reserves the right to use and enjoy the properties until the
gathering of the pending crops, or where the vendor has no control over the thing sold at the moment of
the sale, and, therefore, its material delivery could not have been made.
In the case at bar, there is no question that the vendor had actually placed the vendee in
possession and control over the thing sold, even before the date of the sale. The condition that
petitioner should first register the deed of sale and secure a new title in the name of the vendee before
the latter shall pay the balance of the purchase price, did not preclude the transmission of ownership. In
the absence of an express stipulation to the contrary, the payment of the purchase price of the good is
not a condition, precedent to the transfer of title to the buyer, but title passes by the delivery of the
goods.
WHEREFORE, the appealed decision is hereby reversed, and the real property tax paid under
protest to the Provincial Treasurer of Bulacan by petitioner Philippine Suburban Development
Corporation, in the amount of P30,460,90, is hereby ordered refunded. Without any pronouncement as
to costs.
77. JOSEPH AND SONS ENTERPRISES VS COURT OF APPEALS (143 SCRA 663)

Facts:
On April 1, 1964 respondent Rodolfo T. Lat purchased the lot in question from the Makati
Development Corporation. One condition embodied in the Deed of Absolute Sale was that the lot could
not be sold, transferred, or conveyed until after the construction of a house thereon was completed. In
spite of his having fully paid for the lot, respondent Lat could not have it registered in his name because
another condition of the sale was that the deed of sale could not be registered and the title would not
be released to the buyer until the house has been completely constructed.
On July 24, 1965, respondent Lat entered into an agreement to purchase and sell the lot with
respondent Paz Banaad Laurel. After paying the full consideration of P38,830.00, respondent spouses
Laurel, hereinafter referred to as the Laurels, constructed a residential house on the lot.
After completing the construction of the house, the Laurels advertised the house and lot for sale.
Petitioner's President and Secretary, Alfredo Joseph and his daughter Alegria Neri, went to see the
Laurels at the latter's residence and negotiated for the purchase of the property.
Having agreed on the terms and conditions of the sale, the parties executed a Deed of
Conditional Sale on April 23, 1966. Because the house and lot, while already owned by the Laurels, were
still registered in the name of respondent Lat, the deed was signed with the latter as vendor and the
Laurels as witnesses.
The consideration for the conditional sale was P125,000.00, of which P20,000.00 was payable
upon the execution of the deed and the balance payable in six equal installments of P17,500.00 each at
specified dates between June 7, 1966 and January 22, 1967.
Petitioner failed to pay the second and subsequent installments on time. As of October 22, 1966,
when petitioner should have paid P90,000.00 under the contract, it had paid only P60,000.00. The July
22, 1966 installment was paid only on September 1, 1966 while the September 7, 1966 installment was
paid with a check which bounced.
Because of its difficulties in paying its obligations and to enable it to pay the Laurels in full,
petitioner through Mrs. Alegria Neri proposed to the Laurels that a loan be secured from a bank using
the property as collateral. The proceeds of the loan would be applied to the unpaid installments already
due while petitioner would assume the payment of the bank loan.
Since the title to the property was still in respondent Lat's name, the People's Bank and Trust Co. advised
the parties to have the title transferred to respondent Paz Banaad Laurel. A deed of absolute sale was
executed by respondent Bienvenido Laurel as attorney-in-fact of Rodolfo T. Lat in favor of Paz Banaad
Laurel on November 7, 1966. On November 9, 1966 a confirmation of the sale was executed by Rodolfo
T. Lat and TCT No. 176760 was issued in Paz Banaad's name.
On November 28, 1966, the Laurels mortgaged the disputed property to the bank to secure a
P56,000.00 loan. The loan was payable in quarterly installments of P14,000.00 each between February
28, 1967 and November 28, 1967.
Out of the P54,217.47 net proceeds of the bank loan, P48,145.12 was applied to petitioner's
unpaid installments already past due, while the balance of P6,063.35 was turned over to it. Petitioner
failed to pay the P17,500.00 final installment under the deed of conditional sale executed on April 23,
1966. It also failed to pay any of the loan amortizations due to the People's Bank and Trust Company, this
in spite of its having leased the property to the United States Agency for International Development
(USAID) at a monthly rental of Pl,000.00.
To stave off foreclosure, the Laurels paid for bank loan, interests and expenses, including the
P6,083.35 earlier given to petitioner, in the total sum of P63,452.22. On July 25, 1967 in view of
petitioner's refusal to surrender the house and lot to them, the Laurels filed a complaint for ejectment
against the petitioner and USAID with the Municipal Court of Makati. The court decided the case in favor
of the Laurels. The record is not clear as to the present status of this case. Petitioner states in its brief
that this case was later dismissed on appeal to the Court of First Instance, but respondents state in their
brief that the case is still pending.
On December 18, 1967, petitioner filed a complaint for annulment of title and of contract, with
damages and preliminary injunction. The Laurels filed a counterclaim for the cancellation and
termination of the Deed of Conditional Sale; for the recovery of possession and payment of rentals; and
for damages. As earlier stated, both the former Court of First Instance of Rizal and the Court of Appeals
decided the case against petitioner. The trial court issued an order of execution pending appeal but it
was stayed upon the filing of a supersede as bond by petitioner.

Issue:
The property was delivered to it after the execution of the Deed of Conditional Sale.

Held:
Finally, petitioner claims that because the property was delivered to it after the execution of the
Deed of Conditional Sale, the ownership thereof was transferred to it in accordance with Articles 1477
and 1496 of the Civil Code of the Philippines. This claim is without basis. Petitioner fails to distinguish
between a contract of sale and a contract to sell, between a deed of absolute sale and a deed of
conditional sale. In a contract of sale or in a deed of absolute sale, ownership is transferred
simultaneously with the delivery of the real property sold; whereas in a contract to sell or in a deed of
conditional sale, ownership is transferred after the full payment of the installments of the purchase price
or the fulfillment of the condition and the execution of a definite or absolute deed of sale. In the case at
bar, ownership could have been transferred to petitioner only after it had fully paid the installments of
the purchase price and a deed of absolute sale had been executed in its favor.
WHEREFORE, the petition is hereby dismissed for lack of merit and the decision appealed from is
affirmed, with costs against petitioner.
78. JOSEPH AND SONS ENTERPRISES VS COURT OF APPEALS (143 SCRA 663)

Facts:
The controversy here hinges on Lot No. 1777 of the Cadastral Survey of Passi, Province of Iloilo.
Plaintiff- appellee, Geronimo Panizales, based his claim to the disputed lot as purchaser in a private sale
on March 19, 1958. While defendant Valerio Palmares, the sole appellant, bought the same at the public
auction sale on March 16, 1961 by virtue of a writ of execution. It appears on the record that insofar as
Amado Panizales and Estrella Castromayor, are concerned, all their rights, title, interests, share and
participation in Lot 1777, Passi Cadastre, were transferred to Juan Panizales on March 4, 1958. Likewise,
the same were transferred to Geronimo Panizales on March 19, 1958. The lower court decided in favor
of Geronimo Panizales. However, Valerio Palmares appealed the decision alleging, principally, that Lot
No. 1777 was his despite the acquisition by Geronimo in a private sale. Moreover, the writ of execution
could not be declared invalid for the reason of its nonconformity with the judgment to be executed in
Civil Case No. 4044.

Issue:
Whether or not the lower court was correct in deciding that Geronimo Panizales was the rightful
owner of the lot in question by virtue of private sale on 19 March 1958 as against the acquisition of
Valerio Palmares who bought the subject property at the public auction sale on 16 March 1961?

Held:
It is undisputed that as far back as March 19, 1958, the lot in question had been disposed of. It
ceased therefore as of that date to form part of the property of the judgment debtor. Without stretch of
imagination, if at that time the judgment debtor had no more right to or interest in the property because
he had already sold it to another then the purchaser acquires nothing.
79. JOSE B. AZNAR VS RAAEL YAPDIANGCO (13 SCRA 486)

Facts:
Sometime in May, 1959, Teodoro Santos advertised in two metropolitan papers the sale of his
FORD FAIRLANE 500. A certain L. De Dios, claiming to be a nephew of Vicente Marella, went to the
Santos residence to answer the Consequently, Ireneo Santos, son of Teodoro Santos, together with L. De
Dios went to the house Marella who agreed to buy the car for P 14, 700.00 on the understanding that
the price would be paid only after the car had been registered in his name. Vicente Marella said that the
amount he had on hand then was short by some P2,000.00 and begged off to be allowed to secure the
shortage from her sister supposedly living somewhere on Azcarraga Street, also in Manila. Marella
requested the registration papers who, said that he would show them to his lawyer. Trusting the good
faith of Marella, Irineo Santos handed over the registration papers to the latter. On the same day, Vicente
Marella was able to sell the car in question to the plaintiff-appellant herein, Jose B. Aznar, for P15,000.00
which was later on seized by Captain Rafael Yapdiangco, the head of the Philippine Constabulary unit. In
due time, Jose B. Aznar filed a complaint for replevin against Captain Rafael Yapdiangco, the head of the
Philippine Constabulary unit which seized the car in question Claiming ownership of the vehicle, he
prayed for its delivery to him. In the course of the litigation, however, Teodoro Santos moved and was
allowed to intervene by the lower court.

Issue:
Between Teodoro Santos and the plaintiff-appellant, Jose B. Aznar, who has a better right to the
possession of the disputed automobile?

Held:
Under Article 712 of the Civil Code, "ownership and other real rights over property are acquired
and transmitted by law, by donation, by testate and intestate succession, and in consequence of certain
contracts, by tradition." As interpreted by this Court in a host of cases, by this provision, ownership is not
transferred by contract merely but by tradition or delivery. Contracts only constitute titles or rights to the
transfer or acquisition of ownership, while delivery or tradition is the mode of accomplishing the same
(Gonzales v. Rojas, 16 Phil. 51; Ocejo, Perez and Co. v. International Bank, 37 Phil. 631, Fidelity and
Deposit Co. v. Wilson, 8 Phil. 51; Kuenzle & Streiff v. Wacke & Chandler, 14 Phil. 610; Easton v. Diaz Co.,
32 Phil. 180).
In the case on hand, the car in question was never delivered to the vendee by the vendor as to
complete or consummate the transfer of ownership by virtue of the contract. It should be recalled that
while there was indeed a contract of sale between Vicente Marella and Teodoro Santos, the former, as
vendee, took possession of the subject matter thereof by stealing the same while it was in the custody of
the latter's son.
80. LUZON BROKERAGE CO., INC. VS MYERS BUILDING CO. INC. (43 SCRA 93)

Facts:
Originally, this case stemmed from the decision of the Court of First Instance Manila when it
declared that Myers Building Co. is only entitled to receive the rentals, inter alia, despite breach of
contract by Maritime Building Co. It is undisputed that Myers Building Co., Inc., owner of three parcels of
land in the City of Manila, together with the improvements thereon, entered into a contract entitled
"Deed of Conditional Sale" in favor of Bary Building Co., Inc., later known as Maritime Building Co., Inc.,
whereby the former sold the same to the latter for P1,000,000.00, Philippine currency.
They agreed that in case of failure on the part of the vendee to pay any of the installments due
and payable, the contract shall be annulled at the option of the vendor and all payments already made
by vendee shall be forfeited and the vendor shall have right to re-enter the property and take possession
thereof. Maritime Building Co., defaulted in payment. In fact, it failed to pay the monthly installment
corresponding to the month of March 1961, for which the Vice-President, George Schedler, of the
Maritime Building Co., Inc., wrote a letter to the President of Myers, Mr. C. Parsons, requesting for a
moratorium on the monthly payment of the installments until the end of the year 1961, for the reason
that the said company was encountering difficulties in connection with the operation of the warehouse
business. Hence, Myers Building Co., Inc. demanded upon Luzon Brokerage Co., Inc. to whom the
Maritime Building Co., Inc. leased the properties. Likewise, Myers demanded the payment of monthly
rentals of P10,000.00 and the surrender of the same to it. As a consequence, the Luzon Brokerage Co.,
Inc. found itself in a payment to the wrong party, filed this action for interpleader against the Maritime
Building Co., Inc.

Issues:
Whether or not there has been no breach of contract by Maritime; and assuming that there was
one, Myers was not entitled to rescind or resolve the contract without recoursing to judicial process?
Who is entitled to the rentals?

Held:
Well settled is, however, the rule that a judicial action for the rescission of a contract is not
necessary where the contract provides that it may be revoked and cancelled for violation of any of its
terms and conditions" (Lopez vs. Commissioner of Customs, L-28235, 30 January 1971, 37 SCRA 327,
334,, and cases cited therein). Resort to judicial action for rescission is obviously not contemplated....
The validity of the stipulation cannot be seriously disputed. It is in the nature of a facultative resolutory
condition which in many cases has been upheld by this Court. (Ponce Enrile vs. Court of Appeals, L-
27549, 30 Sept. 1969; 29 SCRA 504).
While Myers was not a party to the lease, its cancellation of the conditional sale of the premises
to Maritime, Luzon's lessor, could not but raise reasonable doubts as to the continuation of the lease, for
the termination of the lessor's right of possession of the premises necessarily ended its right to the
rentals falling due thereafter. In any event, Luzon's doubts were grounded under the law and the
jurisprudence of this Court. Hence, it was correct for Luzon to deposit the rentals in court "until
otherwise directed by a court of competent jurisdiction.
81. ENRIQUEZ DE LA CAVADA VS ANTONIO DIAZ ( 37 PHIL 982)

Facts:
This case requires the fulfillment of a contract option. Defendant-appellant Antonio Diaz granted
an option contract to Antonio Enriquez to purchase his hacienda consisting of 100 and odd hectares. But
such sale was subject to the approval and issuance of a Torrens title by the government for which
Enriquez will pay Diaz the sum of thirty thousand pesos (P30,000.00) in cash or within the period of six
years beginning with the date of purchase. Soon after the execution of said contract, defendant
presented two petitions in the Court of Land Registration for obtaining registration. Said petitions were
granted, and each parcel as registered and a certificate of title was issued for each part under the
Torrens system to the defendant herein. Later, and pretending to comply with the terms of said contract,
the defendant offered to transfer to the plaintiff one of said parcels only, which was a part of said
"hacienda." The plaintiff refused to accept said certificate for a part only of said "hacienda". The theory
of the defendant is that the contract of sale of said "Hacienda de Pitogo" included only 100 hectares,
more or less, of said "hacienda," and that by offering to convey to the plaintiff a portion of said
"hacienda" composed of "100 hectares, more or less," he thereby complied with the terms of the
contract. The theory of the plaintiff is that he had purchased all of said "hacienda," and that the same
contained, at least, 100 hectares, more or less.

Issue:
Whose theory is correct- defendant or the plaintiff?

Held:
The lower court sustained the contention of the plaintiff, to wit, that the sale was a sale of the
"Hacienda de Pitogo" and not a sale of a part of it, and rendered a judgment requiring the defendant to
comply with the terms of the contract by transferring to the plaintiff, by proper deeds of conveyance, all
said "hacienda," or to pay in lieu thereof the sum of P20,000 damages, together with 6 per cent interest
from the date upon which said conveyance should have been made.
82. NICOLAS SANCHEZ VS SEVERINA RIGOS (45 SCRA 368)

Facts:
Nicolas Sanchez and Severina Rigos executed an instrument entitled "Option to Purchase,"
whereby Mrs. Rigos agreed, promised and committed to sell to Sanchez a parcel of land within two (2)
years from said date with the understanding that said option shall be deemed terminated and elapsed if
Sanchez shall fail to exercise his right to buy the property within the stipulated period. Inasmuch as
several tenders of payment made by Sanchez within said period were rejected by Mrs. Rigos, on March
12, 1963, the former deposited said amount with the Court of First Instance of Nueva Ecija and
commenced against the latter the present action, for specific performance and damages. Rigos
contended that the contract between them was only a unilateral promise to sell, and the same being
unsupported by any valuable consideration, by force of the New Civil Code, is null and void. Sanchez
alleged in his compliant that, by virtue of the option under consideration, "defendant agreed and
committed to sell" and "the plaintiff agreed and committed to buy" the land described in the option. The
lower court rendered judgment in favor of Sanchez and ordered Rigos to accept the sum Sanchez
judicially consigned, and to execute in his favor the requisite deed of conveyance.

Issue:
Whether or not there was a contract to buy and sell between the parties or only a unilateral
promise to sell.

Held:
The Supreme Court affirmed the lower courts decision. The instrument executed in 1961 is not a
"contract to buy and sell," but merely granted Sanchez an option to buy, as indicated by its own title
"Option to Purchase." The option did not impose upon Sanchez the obligation to purchase Rigos'
property. Rigos "agreed, promised and committed" herself to sell the land to Sanchez, but there is
nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is
supported by a consideration "distinct from the price" stipulated for the sale of the land. Article 1479
refers to "an accepted unilateral promise to buy or to sell." Since there may be no valid contract without
a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it.
Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to
sell which, if accepted, results in a perfected contract of sale.
83. EUSEBIO S. MILLAR VS DOROTEO NADRES (74 PHIL 307)

Facts:
A judgment having been secured by plaintiff Eusebio S. Millar in the justice of the peace court of
Tayabas against defendant Doroteo Nadres for the sum of P558.14, the provincial sheriff, pursuant to a
writ of execution, sold at public auction the two parcels of land belonging to said defendant and plaintiff
was the highest bidder for the mount of the judgment. Defendant failed to redeem the property within
the time prescribed by the rules, and on March 8, 1934, a final deed of sale was executed in plaintiff's
favor and thereafter transfer certificates of title were issued to him. Subsequently, upon defendant's
request, plaintiff accorded him an option to repurchase the two parcels of land until December 31, 1934.
In November of same year, defendant paid P200 on account but failed to pay the balance until the
period of option expired. Finally, defendant was ordered to vacate the property and to deliver their
possession to plaintiff. From this judgment defendant interposed the present appeal.

Issue:
Whether or not there was an implied extension of the period for the right of redemption since
that extension has not been determined then by both parties.

Held:
This contention is not borne out by the facts found by the trial court. In the trial court's decision
it is stated that upon the expiration of the first option on December 31, 1934, plaintiff gave defendant a
second option to expire on April 30, 1938. There is nothing in the decision to show that an indefinite
extension of time has ever been given impliedly the defendant. Furthermore, such an implied extension
was without consideration in so far as plaintiff was concerned and may be treated merely as a period of
grace which may be made ineffectual upon failure of the debtor to comply with the terms thereof within
a reasonable time. The first option given the defendant was for one year, and when for more than three
years he failed to take advantage of the period of grace given him, plaintiff was more than justified in
terminating such period of grace. In this connection a distinction should be drawn between the
consideration for the option to repurchase itself. The P400 paid by defendant to plaintiff were part of the
repurchase price but not of the consideration for the option to repurchase. For such option and for the
extensions given the defendant, no consideration at all has even been paid to plaintiff. Thus, the
provisions of articles 1128 of the Civil Code do not apply.
84. J.F. WRIGHT VS LA COMPAIA DE TRANVIAS (5 PHIL 242)

Facts:
On April 1901, Walter Fitton, as one of the parties thereto, and Rafael Reyes, Enrique Brias,
Cosme Churruca, and Jose Rosales, who then composed the administrative council of the anonymous
partnership called the Street Car Company of the Philippines, entered into a contract with the following
terms and conditions, that, Fitton binds himself to acquire two-thirds at least of the shares of the Street
Car Company; that, Fitton binds himself to deposit in the Chartered Bank of India, Australia, and China a
guarantee for the sum of thirty thousand pesos, Mexican, as security of the proposal and for the safety
of the shareholders of the company; that, the conditions of the contract will be valid for the period of
two months from this date, after which, should Fitton not take charge, for any reason, of the two-thirds
of the shares and founders stock of the Street Car Company, he will lose every right on the security
deposited. The day after the two months had expires, Reyes notified Fitton for the second time in writing
that the number of stocks and cedulas were deposited already at his disposition. Fitton wrote a letter to
Reyes asking for an extension of time of payment. The Administrative Council granted his request.
Finally, the money was so deposited in cash with the company. Mr. Samson, Attorney in Fact of Fitton,
wrote Reyes for the return of Thirty Thousand pesos because half of the shares were still in Madrid and
it will be impossible for Reyes to deliver the said stocks. The defendant demanded Fitton for the
fulfillment of the contract. On the other hand, plaintiff prayed for the recovery of the money deposited.

Issue:
Whether or not Fittons failure to buy the stock depend upon the will of the stockholders.

Held:
The Court hold, as have been said before, that the provisions of paragraph 4 of the contract must
govern; that if the reason why Fitton did not buy the stock did not depend upon the will of the
stockholders, the plaintiff cannot recover; that the real reason why he did not buy the stock was because
he did not have the money to pay for it; that this reason did not depend upon the will of the
stockholders, and that consequently the plaintiff cannot recover.

85. MEYER & CO. VS YANCO (38 PHIL 602)


Facts:
A sale of eighty (80) drums of caustic soda was agreed between Behn, Meyer and Co. and
Teodoro Yanco. The merchandise was shipped from New York to Manila. However, the ship carrying the
cargo was detained at Penang and the seventy-one (71) of the eighty (80) drums were removed.
Respondent Yangco also refused to accept the nine (9) remaining and also refused to accept the offer of
Behn meyer to have the products substituted with other merchandise, which however were different
from what was ordered. It must be noted that the contract provided for c.i.f. Manila, pagadero against
delivery of documents. Yanco filed an action seeking for damages for alleged breach of contract.

Issue:
Whether or not Behn, Meyer and Co. should bear the burden of the loss of the merchandise.

Held:
The Court held that the appellant should bear the burden of the loss of the merchandise. The
facts show that the contract provided for c.i.f. Manila, pagadero against delivery of documents. This
view is corroborated by the facts. The goods were not shipped nor consigned from New York to plaintiff.
The place of delivery was Manila and plaintiff has not legally excused default in delivery of the specified
merchandise at that place. In resume, the Court find that the plaintiff has not proved the performance
on its part of the conditions precedent in the contract. The warranty- the material promise- of the seller
to the buyer has not been complied with. The buyer may therefore rescind the contract of sale because
of a breach in substantial particulars going to the essence of the contract. As contemplated by Article
1451 of the Civil Code, the vendee can demand fulfillment of the contract, and this being shown to be
impossible, is relieved of his obligation. There thus being sufficient ground for rescission, the defendant
is not liable.

86. LOTHAR F. ENGEL VS MARIANO VELASCO AND CO. (47 PHIL 115)
Facts:
Plaintiffs were export brokers, or jobbers, of textile merchandise in the City of New York, while
the defendant was the owner, as it still is, of a large store in Manila where general merchandise is sold
both at wholesale and retail. Defendant Velasco from time to time imports textile fabrics on a large scale.
In 1920 commercial relations were established between the plaintiffs and the defendant, and in the
succeeding three (3) months the defendant sent to the plaintiffs numerous orders for merchandise.
The defendant would first obtain from the plaintiffs by cable information as to the prices of the
goods desired, and would thereupon send a cablegram to the plaintiffs, instructing them to buy and hold
specified qualities of goods in the amount and at the prices stated. Defendant would dispatch by mail
more extended instructions, confirming the cablegram and giving such other advice as was desirable.
Upon receiving the defendant's written order by mail the plaintiffs transmitted the instructions
contained therein to the manufacturer for execution and at the same time prepared and forwarded to
the defendant a formal written sales note, conforming in the main to the terms specified in the previous
communications between the plaintiffs and the defendant. As a result of this procedure the plaintiffs
became directly obligated to the manufacturer who produced the goods, while the defendant became
obligated to the plaintiffs, assuming that all conditions essential to the creation of liability had been
fulfilled. The plaintiffs proceed upon the idea of breach of contract on the part of the defendant in its
failure to accept and to pay for the goods covered by the orders above referred to.
The defendant interposed answers in the three cases denying generally the allegations of the
complaints and setting forth various special defenses, with counterclaims and an affirmative cross action.
Upon hearing the proof the trial judge absolved the plaintiffs from the defendant's counterclaims and
cross complaint and gave judgment for the plaintiffs to recover of the defendant the sum of P152,217.74,
with interest at six per centum, to be calculated upon different portions of the total from specified dates.
From this judgment the defendant appealed.

Issue:
Whether or not the correspondence conducted by cable are admissible against the defendant.

Held:
The provision, Telegraphic correspondence shall only be the basis of an obligation between
contracting parties who have previously admitted this medium in a written contract, and provided the
telegrams fulfill the conventional conditions or conventional signs which may have been previously fixed
and agreed to by the contracting parties, this provision was in force at the time all of the orders
involved in this litigation were given, and it is therefore insisted that the messages transmitted by cable
are inadmissible against the defendant. In this connection it will be noted that no prior written
agreement is in evidence by which the parties expressly admitted telegraphic correspondence as a basis
of contract, though it is true that the private cable code used by the defendant in its cable
correspondence with the plaintiffs had been supplied by the latter. We are unable to concede to this
provision the effect claimed for it by the defendant, namely, of eliminating entirely from the case so
much of the correspondence as was conducted by cable. Upon examining the documentary proof, it will
be found that upon sending its orders by cable, the defendant followed with letters of confirmation by
mail, in which the various cables were referred to and in effect incorporated in the written
correspondence. By reason of this circumstance it is proper to refer to the cablegrams in relation with
the letters.
There is nothing in the provision quoted from article 51 which prohibits parties to a contract
from ratifying agreements effected by telegraphic communications; and subsequent ratification, or
incorporation of the telegraphic communications in written letters of the same or later date, must be
conceded to have all the effect of a previous written agreement under the provision quoted.
Furthermore, it is apparent that even under the statute telegraphic communications conveying
notification of acts done could not be ignored, where the basis of a contract has already been
established, and the same must be true of telegraphic directions communicated by one contracting party
to another in relation with the performance of the contract. In this connection we note that the
attorneys for the defendant, while vigorously insisting upon the elimination of the telegraphic
correspondence in general, have not hesitated to rely upon more than one cablegram passing between
the parties. The failure of the defendant to accept and pay for all the goods ordered and shipped to
Manila was undoubtedly due, as will hereafter more fully appear, to the inability of the defendant to
command the funds necessary to meet the obligations, but when confronted with the necessity of
dishonoring the orders, the responsible officers of the defendant put forth various pretexts to justify its
position. Several of these excuses are manifestly of trivial import, but inasmuch as they have been called
upon to do service in the defendant's answer and cross complaint, they will be examined by us in due
time.
87. PACIFIC COMMERCIAL COMPANY VS ERMITA MARKET & COLD STORES, INC. (56 PHIL 617)
Facts:
On September 14, 1927, the Pacific Commercial Co., the plaintiff herein, sold to the Ermita
Market & Cold Stores, Inc., the defendant herein, an automatic refrigerating machine.
The parties signed the usual printed sales-contract form of the plaintiff company, the purchase
price, payable by installments as stated in the sales contract. By mutual agreement, the said machine
was installed by the plaintiff, to be paid by the defendant, in favor of the plaintiff. Complying with the
terms of the sales contract, the defendant paid the plaintiff an initial amount of the purchase price of the
machine, leaving a balance.
A few days after installation, the defendant advised the plaintiff that the machine was not
serving the purpose for which it was sold and that it was lacking ammonia receiver and oil separator, and
further alleges that the temperature in the refrigerating rooms did not reach, and had never reached,
owing to the negligence of the plaintiff in not repairing or putting in good working condition the said
refrigerating machine, the defendant had been forced to close its establishment and for which reason
the defendant claimed damages against the plaintiff.
The plaintiff denied generally and specifically each and every and every allegation in the said
cross-complaint and by way of special defense, alleged that whatever defects or deficiency there might
have been in the temperature in the refrigerating rooms of defendant's establishment, or in the
functioning of the machine, these were due to the defects and imperfections of the coils which were
supplied and installed by the defendant itself, as well as to the incompetency and inefficiency of the
defendant's personnel to operate the machine. By which the Court of First Instance of Manila rendered
its judgment, ordering the defendant to pay the remaining amount plus interest and other damages, so,
the defendant appealed.

Issue:
Whether or not the installed refrigeration machine was the same machine agreed upon by the
plaintiff and the defendant

Held:
The judgment of the Court of First Instance of Manila is affirmed in its entirety.
After a careful examination of the record, we have not the least doubt that the plaintiff delivered
the machine as described in the sales contract, and the fact that the defendant could not use it
satisfactorily in the three cold stores division cannot be attributed to plaintiff's fault; as far as we can see,
the machine was strictly in accordance with the written contract between the parties, and the defendant
can hardly honestly say that there was any deception by the plaintiff.
But it is clear that the defendant company did not fully understand the use of the motor. It
complains that the machine would not properly refrigerate the refrigerating rooms, but it is evident that
the machine could not operate automatically when the defendant had three refrigerating rooms which it
expected to maintain at three different temperatures.
The defendant also complained that the machine was not equipped with a thermostat and that
the lack of its obstructed the work of the refrigerating. In the first place, the thermostat was not include
in the sales contract and in the second place it would not have been of any service to defendant because
it could not possibly operate automatically at three different temperatures with the defendant's
insufficient equipment.
The defendant's complaint that the machine did not contain an oil separator is not true; the oil
separator is combined with the receiver and condenser in a single combined piece in the machine.

88. VILLONCO REALTY VS BORMAHECO, INC.( 65 SCRA 352)

Facts:
Cervantes and his wife owned 3 parcels of land along Buendia where the buildings of Bormaheco
Inc were situated. Beside their property were lots owned by Villonco Realty. Cervantes entered into
several negotiations with Villonco for sale of the Buendia property. Cervantes made a written offer of
P400/sqm with a down payment of P100,000.00 to serve as earnest money. The offer also made the
consummation of the sale dependent upon the acquisition by Bormaheco of a Sta. Ana property.
Villonco made a counter-offer stating that the earnest money was to earn 10% interest p.a. The check
was enclosed with the reply letter. Cervantes accepted and cashed the check. The Sta. Ana Property was
awarded to Bormaheco; the transfer was also duly approved. However, Cervantes sent the check back to
Villonco with the interest thereonstating that he was no longer interested in selling the property. He
also claims that no contract was perfected; Villonco sues for specific performance.

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

Held:
YES. There was a perfected contract of sale. The alleged changes made in the counter-offer are
immaterial and are mere clarifications. The changes of the words Sta. Ana property to another
property as well as the insertion of the number 12 in the date, and the words per annum in the
interest are trivial. There is no incompatibility in the offer and counter-offer. Cervantes assented to the
interest and he, in fact, paid the same. Also, earnest money constitutes proof of the perfection of the
contract of sale and forms part of the consideration. The condition regarding the acquisition of the Sta.
Ana property was likewise fulfilled; there is thus no ground for the refusal of Cervantes to consummate
the sale.

89. VELASCO VS COURT OF APPEALS (51 SCRA 439)

Facts:
On November 29, 1962, herein petitioners and respondents had entered into a contract of sale
by virtue of which the latter offered to sell and agreed to buy by the former, a parcel of land with an area
of 2,059 sq. ms. Located in Quezon City, for a total purchase price of P 100,000.00.
Petitioners alleged he was to give a down payment of 10,000.00 pesos to be followed by P
20,000.00 and the balance of P70,000.00 to be paid in installment basis, the monthly amortization of
which was to be determined as soon as the P 30,000.00 down payment had been completed.
On January 8, 1964, the petitioners tendered to pay the additional down payment of P 20,000.00
to complete the down payment of P 30,000.00, but the respondents refused to accept and eventually it
likewise refused to execute a deed of sale agreed upon, so, petitioner demanded for damages and
specific performance from the respondents of an alleged deed of sale of a parcel of land residential land
in their favor.
Respondents denied that it has had any direct-dealing, much less, contractual relations with the
petitioners regarding the property in question and contends that the alleged contract described attached
to the complaint is entirely unenforceable under the statute of fraud. Accordingly, respondents refused
to accept the additional down payment for it had considered the offer to sell rescinded on the account of
the petitioners failure to pay on or before December 31, 1962.
On November 3, 1968, the CFI Quezon City rendered a decision dismissing the complaint of the
petitioners, which was affirmed by the Court of Appeals on September 5, 1969, upon motion by the
petitioner. So, a petition for certiorari and mandamus was filed before the Supreme Court by the
petitioners.

Issue:
Whether or not there was a perfected contract of sale
Whether or not a definite agreement on matters of payment of purchase price is an essential
element in the formation of a binding and enforceable contract

Held:
No contract of sale was perfected because the minds of the parties did not meet in regard to
the manner of payment. The material averments contained in Velascos complaint themselves disclose a
lack of complete agreement in regard to the manner of payment of the lot in question. The complaint
states penitently that plaintiff and defendant further agreed that the total down payment shall be P30,
000.00, Including the P10.000.00 partial payment as mentioned , and that upon completion of the said
down payment of P30,000.00, the balance P70,000.00 shall be paid by the plaintiff to the defendant in
10 years from November 29, 1962; and that the time within which the full down payment of the
P30,000.00 was to be completed was not specified by the parties but the defendant was duly
compensated during the said time prior to the completion of the down payment of P30,000.00 by way of
lease rentals on the house existing thereon which was earlier leased by the defendant to the plaintiffs
sister-in-law, Socorro J. Velasco, and which were duly paid to the defendant by checks drawn by plaintiff.
The Velascos themselves admit that they and Magdalena Estate still have to meet and agree on how and
when the down payment and the installment payments were to be paid. Such being the situation, it
cannot be said that a definite and firm sales agreement between the parties have been perfected over
the lot in question.
A Definite agreement on the manner of payment of the purchase is an essential element in the
formation of a binding and enforceable contract of sale. In the present case, the Velascos delivered to
Magdalena Estate the sum of P10, 000.00 as part of the down payment that they had to pay cannot be
considered as sufficient proof of the perfection of any purchase and sale agreement between the parties
under article 1482 of the new Civil Code, as the Velascos themselves admit that some essential matter
(the terms of payment) still had to be mutually covenanted.

90. SPOUSES DOROMAL, SR AND SALAS VS COURT OF APPEALS (66 SCRA 575)

Facts:
Lot 3504 of the cadastral survey of Iloilo, situated in the poblacion of La Paz, one of its districts,
with an area of a little more than 2-1/2 hectares was originally decreed in the name of the late Justice
Antonio Horilleno, in 1916, under Original Certificate of Title No. 1314, Exh. A, but before he died, he
executed a last will and testament attesting to the fact that it was a co-ownership between himself and
his brothers and sisters, the co-owners were: beside 1. Justice Horilleno (daughter Mary as heir), 2. Luis,
3. Soledad, 4. Fe, 5. Rosita, 6. Carlos and 7. Esperanza,' all surnamed Horilleno, and since Esperanza had
already died, she was succeeded by her only daughter and heir herein plaintiff, Filomena Javellana, in the
proportion of 1/7 undivided ownership each; even though their right had not as yet been annotated in
the title, the co-owners led by Carlos, had wanted to sell their shares, or if possible if plaintiff Filomena
Javellana were agreeable, wanted to sell the entire property, and they hired an acquaintance Cresencia
Harder, to look for buyers, and the latter came to interest defendants, the father and son, named Ramon
Doromal, Sr. and Jr., and in preparation for the execution of the sale, since the brothers and sisters
Horilleno were scattered in various parts of the country, 1. Carlos in Ilocos Sur, 2. Mary in Baguio, 3.
Soledad and 4. Fe, in Mandaluyong, Rizal, and 5. Rosita in Basilan City, they all executed various powers
of attorney in favor of their niece, Mary H. Jimenez they also caused preparation of a power of
attorney of identical tenor for signature by plaintiff, Filomena Javellana, and sent it with a letter of
Carlos, dated 18 January, 1968 Carlos informed Filomina that the price was P4.00 a square meter,-
although it now turns out according to Exh. 3 that as early as 22 October, 1967, Carlos had received in
check as earnest money from defendant Ramon Doromal, Jr., the sum of P5,000.00 and the price therein
agreed upon was five (P5.00) pesos a square meter in another letter also of Carlos to Plaintiff Filomina
in 5 November, 1967, Exh. 6, he had told her that the Doromals had given the earnest money of
P5,000.00 at P6.00 a square meter At any rate, Plaintiff Filomina not being agreeable, did not sign the
power of attorney, and the rest of the co-owners went ahead with their sale of their 6/7, Carlos first
seeing to it that the deed of sale by their common attorney in fact, Mary H. Jimenez be signed and
ratified as it was signed and ratified in Candon, Ilocos Sur, on 15 January, 1968, Exh; 2, then brought to
Iloilo by Carlos in the same month, and because the Register of Deeds of Iloilo refused to register right
away, since the original registered owner, Justice Antonio Horilleno was already dead, Carlos had to ask
as he did, hire Atty. Teotimo Arandela to file a petition within the cadastral case, on 26 February, 1968,
for the purpose, after which Carlos returned to Luzon, and after compliance with the requisites of
publication, hearing and notice, the petition was approved. on 29 April, 1968, Carlos already back in
Iloilo went to the Register of Deeds and caused the registration of the order of the cadastral court
approving the issuance of a new title in the name of the co-owners, as well as of the deed of sale to the
Doromals, as a result of which on that same date, a new title was issued TCT No. 23152, in the name of
the Horillenos to 6/7 and plaintiff Filomena Javellana to 1/7, the Doromals paid unto Carlos by check, the
sum of P97,000,00 of Chartered Bank which was later substituted by check of Phil. National Bank,
because there was no Chartered Bank Branch in Ilocos Sur, but besides this amount paid in check, the
Doromals according to their evidence still paid an additional amount in cash of P18,250.00 since the
agreed price was P5.00 a square meter and thus was consummated the transaction. On 10 June, 1968,
there came to the residence of the Doromals in Dumangas, Iloilo, plaintiff Filomenas lawyer, Atty. Arturo
H. Villanueva, bringing with him her letter of that date, making a formal offer to repurchase or redeem
the 6/7 undivided share in Lot 3504 for P30,000.00 in cash which will be delivered as soon as the
contract of sale is executed in favor of Filomena. the Doromals were aghast, and refused the next day, 11
June, 1968, plaintiff Filomena filed this case, and in the trial, thru oral and documentary proofs, sought
to show that as co-owner, she had the right to redeem at the price stated in the deed of sale of
P30,000.00 but defendants Spouses Doromals in answer, and in their evidence, oral and documentary
sought to show that plaintiff had no more right to redeem, and that if ever she should have, that it
should beat the true and real price paid by them which amounts to P115,250.00 trial judge : plaintiff had
no more right, to redeem, because 'Plaintiff was informed of the intended sale of the 6/7 share
belonging to the Horillenos. 'Court of Appeals reversed the trial court's decision and held that although
respondent Filomena Javellana was informed of her co-owners' Proposal to sell the land in question to
petitioners she was, however, "never notified... least of all, in writing", of the actual execution and
registration of the corresponding deed of sale, hence, said respondent's right to redeem had not yet
expired at the time she made her offer for that purpose thru her letter of June 10, 1968 delivered to
petitioners on even date. The intermediate court further held that the redemption price to be paid by
respondent should be that stated in the deed of sale which is P30, 000.00 notwithstanding that the
preponderance of the evidence proves that the actual price paid by petitioners was P115,250.00

Issue:
Whether or not Filomenas right to redeem had expired

Held:
NO. There is No showing that Filomena was notified. The letters sent by Carlos Horilleno to
respondent and dated January 18, 1968, Exhibit 7, and November 5, 1967, Exhibit 6, constituted the
required notice in writing from which the 30-day day period fixed in said provision should be computed.
But to start with, there is no showing that said letters were in fact received by respondent Filomena and
when they were actually received. Besides, petitioners do not pinpoint which of these two letters, their
dates being more than two months apart, is the required notice. In any event, as found by the appellate
court, neither of said letters referred to a consummated sale.
It cannot be said that the Court of Appeals erred in holding that the letters aforementioned
sufficed to comply with the requirement of notice of a sale by co-owners under Article 1623 of the Civil
Code. We are of the considered opinion and so hold that for purposes of the co-owner's right of
redemption granted by Article 1620 of the Civil Code, the notice in writing which Article 1623 requires to
be made to the other co-owners and from receipt of which the 30-day period to redeem should be
counted is a notice not only of a perfected sale but of the actual execution and delivery of the deed of
sale. This is implied from the latter portion of Article 1623 which requires that before a register of deeds
can record a sale by a co-owner, there must be presented to him, an affidavit to the effect that the notice
of the sale had been sent in writing to the other co-owners. A sale may not be presented to the register
of deeds for registration unless it is in the form of a duly executed public instrument.
91. ELIAS GALLAR VS HERMENEGILDA HUSAIN, ET.AL. (20 SCRA 186)

Facts:
Husains in this case are the heirs of Teodoro Husain. Teodoro Husain sold the land under dispute
for 30 pesos to Serapio Chichirita with the right to repurchase within 6 years. Teodoro transferred his
right to his sister, Graciana Husain. Graciana paid the redemption price and later sold the land to Elias
Gallar for cattle. Possession of the land, together with the owner's duplicate of the certificate of title of
Teodoro Husain, was delivered on the same occasion to Gallar, who since then has been in possession of
the land. A couple of years after, Gallar filed this suit in the Court of Instance of Iloilo on October 10,
1960 to compel Hermenegilda and Bonifacio Husain, as heirs of Teodoro Husain, to execute a deed of
conveyance in his favor so that he could get a transfer certificate of title. He also asked for damages. The
Husains countered by saying that Graciana already paid the redemption price thus their father had
already reacquired ownership over the same. They also claim that the action of Elias has already
PRESCRIBED.

Issue:
Whether or not ownership was transferred to Gallar
Whether or not the action has already prescribed

Held:
YES, ownership has been transferred to Gallar. The right of repurchase may be exercised only by
the vendor in whom the right is recognized by contract or by any person to whom the right may have
been transferred. Graciana Husain must, therefore, be deemed to have acquired the land in her own
right, subject only to Teodoro Husain's right of redemption. As the new owner she had a perfect right to
dispose of the land as she in fact did when she exchanged it for cattle with Gallar.
NO, the action is imprescriptible. This action is not for specific performance; all it seeks is to
quiet title, to remove the cloud cast on appellee's ownership as a result of appellant's refusal to
recognize the sale made by their predecessor. And, as plaintiff-appellee is in possession of the land, the
action is imprescriptible. Appellant's argument that the action has prescribed would be correct if they
were in possession as the action to quiet title would then be an action for recovery of real property
which must be brought within the statutory period of limitation governing such actions.
92. GUZMAN VS GUIEB (48 SCRA 68)

Facts:
That on September 15, 1964 defendant filed Civil Case No. 126601 in the City Court of Manila
against the plaintiffs for specific performance with consignation, which case is now pending trial before
Branch VIII of the City Court of Manila with the agreement that the said case be held in abeyance
pending a final decision in the instant case. As show in Official Receipt No. 048717-I, dated September
15,1965 issued by the Treasurer of Manila, photosatic copy of which is hereto attached and made part
hereof as Exhibit 23 for the defendants, defendants duly consigned with the City Court of Manila,
sum of P4,040.00 the sum which plaintiff Genoveva Rodriguez refused to accept when it was tendered to
her on July 31,1964 by defendants; That on October 22,1964, the plaintiff Leon de Guzman filed an
ejectment case against the defendants herein in the City Court of Manila, Branch II, for non-payment of
rentals from August 1964, Civil Case No. 128123 which case is also pending, awaiting a final decision in
the instant case; That plaintiffs or their predecessor in interest were never in actual physical possession
of the property involved in this litigation.

Issue:
Whether the option to purchase real property, contained in Exhibit 1, was renewed in the option
to purchase real property, Exhibit 16, Whether upon failure of defendants to pay rentals for forty five
(45) months, their right to exercise the option to purchase real property was extinguished.

Held:
Option to Purchase Real Property dated October 5,1959 cannot be considered as a renewal of
the first Option dated November 20,1954 as the same is not duly acknowledge before a notary public
and not signed in the presence of witnesses and because if it were such as renewal, it should have
been executed on November 29,1959, the date of the expiration: of the first option, and, furthermore,
because there is no statement therein saying that it is a renewal. It is obvious that this posture is without
merit. To be effective is an option, there was no need at all that the document of October 5, 1959 be a
renewal of the first option for there is no why it cannot be considered as another option by itself, in fact,
nowhere in the appealed decision does it appear that the trial court took it as a renewal. And since there
is no dispute that it is genuine, as very well pointed out by His Honor, it constitutes an enforceable
agreement under Article 1403 (2) of the Civil Code, or the Statute of Frauds, the same being at least a
note or memorandum, in writing, of the agreement of the parties and signed by the party charged, in
this case, Teodoro de Guzman, the Predecessor in interest of appellants. Secondly, in effect, the
contention of appellants is that the failure of appellees to pay the stipulated rentals for long periods,
particularly, those for the forty-five months they paid only on July 21, 1964, rendered their option null
and void under the following provision of the option agreement.
93. BUCTON VS GABAR (55 SCRA 499)

Facts:
Josefina bought a parcel of land from Villarin. By verbal agreement, Josefina sold a portion
thereof to Nicanora for P3, 000. Nicanora paid P1, 000 then P400--all evidence by receipts---then she
loaned Josefina P1, 000 and thereafter along with her spouse, took possession of the lot and built their
house as well as apartments thereon. Villarin then issued a Deed of Sale to Josefina, but the latter
refused to execute the corresponding Deed of Sale to Nicanora. Josefina claimed that the amounts paid
by Nicanora were in the concept of loans. Thus, Nicanora filed a case for specific performance.

Issue:
WON there was a sale between Josefina and Nicanora

Held:
YES. Assuming that at the time when Josefina sold the lot to Nicanora, she was not yet the
owner thereof. When Villarin executed the Deed of Sale in her favor, title passed to Nicanora by
operation of law. Although the sale between Josefina and Nicanora was verbal. It was as between them.
Considering that Nicanora has paid the purchase price, she became owner of of the lot. Likewise,
although the complaint was titled specific performance it was actually one for quieting of title, which
is imprescriptible so long as the plaintiff is in possession of the lot.
94. CARBONELL VS COURT OF APPEALS ( 69 SCRA 99)

Facts:
Poncio, a Batanes native, owned a parcel of land, which he offered to sell to Carbonell and
Infante. The land was mortgaged to Republic Bank. Poncio and Carbonell executed an instrument where
the latter allowed the former to remain in the premises in spite of the sale for a period of 1 year. Later
on, when the Formal Deed of Sale was to be executed, Poncio told Carbonell that he could no longer
proceed with the sale as he had already sold the same to Infante for a better price. Carbonell
immediately sought to register adverse claim; 4 days later, Infante registered the sale with the adverse
claim annotated thereto. Infante thereafter introduced significant improvements on the property. They
now dispute ownership over the said land.

Issue:
Who has a better title, Carbonell or Infante?

Held:
Carbonell. In order to claim the benefit of Art.1544, the buyer of realty must register the
property in good faith. It is a pre-condition to a superior title. In this case, Infante was not in good faith,
thus the prior sale to Carbonell must prevail. Infante registered her claim 4 days after the adverse claim
was registered, she had notice that Carbonell paid off the mortgage debt as the mortgage passbook was
already in his possession. She likewise ignored Carbonell and refused to talk to here. These are badges of
bad faith that taint her registration.
95. THE BOARD OF LIQUIDATION VS JOSE ROXAS (179 SCRA 809)

Facts:
On April 12, 1940, PDCI entered into a management contract with the National Food Products
Corporation (NFPC) whereby the latter agreed to finance the construction, maintenance, management
and operation of the fishponds of PDCI and NFPC gave loans and advances necessary therefor. As
security for the payment of said loan, PDCI executed a real estate mortgage on all its properties in favor
of NFPC. Among the properties given as collateral was lot No. 3247, formerly belonging to Maria Roxas
Lisao and covered by TCT No. RO-4331 (17921) of the Register of Deeds of Capiz, which contains an
annotation stating that the same was transferred and assigned in favor of PDCI and mortgaged to NFPC.
Said original certificate of title was later cancelled by TCT No. 12651 in the name of PDCI. The NFPC was
later abolished under Executive Order No. 372, series of 1950, and petitioner Board of Liquidators (Board
for short) was created to liquidate and settle its affairs and dispose of its properties. On December 13,
1972 petitioner Board executed with the PDCI a contract of amicable settlement whereby petitioner
PDCI agreed to pay the Board the sum of P170, 000.00 in full settlement of its mortgage obligation.
Petitioner Board agreed to assist PDCI in ejecting the squatters in the premises and to deliver the
certificate of title covering the property as well as the records pertinent thereto. Said contract of
amicable settlement was approved by the Office of the President.

Issue:
When there was a valid conveyance of the subject matter by Maria to her brothers and
sisters.

Held:
Thus, since what appears to have been conveyed by Maria to her brothers and sisters was no
longer her property, the quitclaim, deed and donation that she executed are null and void. As a matter of
fact even prior to said conveyance, the property had been mortgaged by PDCI to the NFPC who is
certainly a mortgagee in good faith. Furthermore, the alleged verbal sale executed by the donees
brothers and sister of Maria Roxas Lisao in favor of respondent Jose Roxas is also null and void not only
because they had no title to convey but also because the sale of the land, which is verbal, and the
presentation of which was timely objected to, are not enforceable under the statue of frauds. It is not a
valid sale, and is inadmissible in evidence.
96. SOSTENES, CAMPILLO VS PHILIPPINE NATIONAL BANK (28 SCRA 220)

Facts:
After receiving the deed of final sale, appellee presented it for registration to the Register of
Deeds of Pasay City on April 18, 1961. As in this connection he was required to comply with the
provisions of Section 78 of Act 496, on April 28, 1961 he filed in the Court of First Instance of Rizal (Pasay
City Branch) "A Petition for Entry of New Certificate of Title Under Section 78, Act 496". After due
hearing with previous notice served upon the Register of Deeds of said city, the Court issued on May 9,
1961 an order directing the latter to cancel T.C.T. No. 236-A and to issue in lieu thereof another
certificate in the name of appellee. However, said officer refused to comply with said order unless the
owner's duplicate of T.C.T. No. 236-A which was in the possession of the Bank which was
surrendered to his office. Appellee's request for the delivery of said owner's duplicate made upon the
Bank was, however, denied by the latter. As set out in par. 6 of the complaint the said mortgage
encumbrance of P13,000.00 in favor of defendant appears annotated in the covering Certificate of Title
No. 236-A aforesaid at the time plaintiff attached said property, and consequently, it was the duty of
plaintiff to investigate the status of said property as well as the aforementioned encumbrance, before
purchasing the property and assuming the mortgage.

Issue:
WON plaintiff's pretensions of assumption of the defendants mortgage are not valid. WON the
sale of real estate, made as a result of a private transaction or of a foreclosure
or execution sale, becomes legally effective against third parties.

Held:
It is an admitted fact that the extra-judicial foreclosure sale made in favor of the Bank on
December 17, 1958 was registered in the Office of the Register of Deeds of Pasay City only on April 21,
1960. It is settled in this jurisdiction that a sale of real estate, whether made as a result of a private
transaction or of a foreclosure or execution sale, becomes legally effective against third parties only from
the date of its registration (Section 50, Act 496; Anderson & Co. vs. Garcia 64:506) which, in the case of
the foreclosure sale in favor of the Bank, as stated heretofore, was effected only on April 21, 1960.
Consequently, when the same property subject-matter thereof was act usually attached and levied upon
on March 16, 1960 and the levy thus made was registered on the same date, the property stood in the
official records of the government still as property of Justiniano D. Quirino and was therefore properly
attached, levied upon and subsequently sold as his property. The net result of this is that the execution
sale made in favor of herein appellee transferred to him all the rights, interest and participation of
Quirino in the aforesaid property at that time, subject only to the lone encumbrance duly registered and
annotated on the back of Certificate of Title No. 236-A issued in the name of Quirino (Ramirez vs. Causin,
G.R. L-10794, July 31, 1957; Capistrano vs. Philippine National Bank, et al., G.R. L-9628, August 30, 1957;
Vargas vs. Tancioco 67:308; Philippine Executive Commission vs. Abadilla 74:68).
97. EULOGIO RODRIGUEZ, SR VS SOFRONIO FRANCISCO (2 SCRA 648)

Facts:
This is an Appeal from the decision of the Court of First Instance of Manila. Exequiel Ampil was
the registered owner of the land in question under Original Certificate of Title No. 2497. On March 24,
1924, Exequiel Ampil executed a deed of sale covering the land in favor of defendant Maximo Francisco.
Despite the sale, the Torrens title continued until 1937 in the name of the vendor Exequiel Ampil. At the
trial, defendant presented the owner's duplicate of Original Certificate of Title No. 2497 which was
delivered to defendant by Ampil. Prior to October 21, 1933, Exequiel Ampil was indebted to various
creditors but the payment of this indebtedness was guaranteed by the plaintiff Eulogio Rodriguez, Sr., so
that on that date Exequiel Ampil executed a document entitled "Venta Condicional". The deed was duly
registered in the office of the Register of Deeds on November 15, 1933. This deed conveyed the land
together with some other parcel to plaintiff by a conditional sale, the conveyance to be absolute upon
the fulfillment of certain conditions. On December 10, 1936, plaintiff filed an affidavit consolidating
ownership over the land in question by virtue of the fact that the conditional sale of October 21, 1933
between him and Ampil had become absolute. However, as the Owner's Duplicate Certificate of Title was
unavailable, a petition was filed in the original registration proceedings in the Court of First Instance of
Rizal for the issuance of a new owner's duplicate and after due notice and hearing, the court ordered
that the lost certificate be cancelled and a new one issued to the owner. Then, on February 12, 1937 by
virtue of the affidavit of consolidation, the Register of Deeds of Rizal cancelled Original Certificate of Title
No. 2497 and issued to plaintiff Transfer Certificate of Title No. 31204.

Issue:
Whether or not the public document entitled "CONTRATO DE VENTA CONDICIONAL" is a deed of
equitable mortgage.

Held:
No. The provisions of the deed of sale in question may be summarized as follows: that the
vendor sold to the vendee the real properties in consideration of the obligation assumed by the vendee
to pay what the vendor owed to several parties; that if the vendor paid the debts aforesaid, the sale
shall become inoperative and void, but that if the vendee paid the same debts by reason of the vendor's
failure to do so, the sale made shall become absolute and irrevocable automatically, without the need of
executing any other deed of conveyance. Considering the provisions of the agreement, we agree with
the trial court that "the contract is obviously a perfected contract of sale and subject to a resolutory
condition, authorized by Articles 1145, 1113 (2nd par.) and 1114 of the Civil Code." It does not constitute
a mere security which is the manifest purpose of a contract of mortgage but instead it makes a
conditional transfer of ownership which becomes automatically absolute and final upon performance of
the condition agreed upon, namely, payment by the vendee of what the vendor owed the parties
mentioned in the deed of conveyance. This, as the lower court found, had been done by the vendee. As
a consequence, the conditional sale in his favor became absolute. WHEREFORE, the decision appealed
from is affirmed, with costs.
98. MANOTOK REALTY, INC. VS COURT OF APPEALS AND FELIPE CARILLO (148 SCRA 174)

Facts:
Herein appellee MANOTOK REALTY, INC. is the registered owner of the lot in dispute. It acquired
the aforementioned property from the Testate Estate of Clara Tambunting de Legarda, being the highest
bidder in a sale conducted by the Probate Court. After having acquired said property, the appellee
subdivided it, but could not take possession thereof because the whole area is occupied by several
houses among which is the one belonging to the herein appellant Felipe Carillo. Demands to vacate and
to surrender possession of the property were made and served to the appellant. In spite of such
demands, the appellant continued to occupy the disputed lot and refused to surrender possession
thereof. He argues that he acquired the lot in dispute from a certain Delfin Dayrit on September 25,
1962, pursuant to a deed of assignment; that Dayrit in turn had acquired the property from the late
Carla Tambunting by virtue of a Contract of Sale on Installment Basis; that Dayrit had religiously paid the
monthly installments as they fell due, his last payment being on May 25, 1954, then leaving an unpaid
balance when the said parcel was conveyed to defendant Carillo, for which receipts were duly issued;
that Dayrit could not continue paying the succeeding installments as they fen due because Vicente
Legarda, the surviving spouse of Clara Tambunting, refused to receive any payment for the same and
that it was only on September 25, 1962, when Dayrit conveyed the lot to appellant Carillo. After the
petitioner failed in its attempts to take possession of the lot, it filed the reivindicatory action against the
respondent. The trial court decided the case in favor of the petitioner.

Issue:
Whether or not appellant may be considered as a possessor in good faith of the property in
question.

Held:
having been paid, the property, therefore, reverted to Clara Tambunting and therefore formed part of
her estate, which was subsequently acquired by appellee. Thus, when appellant purchased the parcel of
land in question from Dayrit on August 25, 1962or eight (8) years after the defaultthe latter had no
more right over the same. A purchaser cannot close his eyes to facts which should put a reasonable man
upon his guard and then claim that he acted in good faith under the behalf that there was no defect in
the title of the vendor (Leung Yee v. Strong Machinery Co., 37 Phil. 644). Consequently, appellant cannot
be deemed a possessor in good faith and is not, therefore, entitled to reimbursement for the
improvements he had introduced in the property in question.
99. BRAULIO CASTILLO, ET.AL. VS SIMPLICIA NAGTALON (4 SCRA 48)

Facts:
On November 11, 1952, Court of First Instance of Ilocos Norte rendered judgment declaring the
plaintiffs Braulio Castillo, et al., owners pro-indiviso of the land described in the complaint with the right
to possess it and that the defendants are ordered to restore the possession of the eastern portion
thereof to the plaintiffs, to pay damages in the amount of P210.00 every year since 1943 until they
deliver the possession of said portion to the plaintiffs, and to pay the costs. On appeal by the
defendants, the Court of Appeals affirmed said decision in all respects, with costs against the
defendants-appellants therein. The decision having become final, a writ of execution was issued against
all the defendants, to satisfy the damages and costs awarded therein which, together with the expenses
incidental to such execution, amounted to P3,401.00. Consequently, ten parcels of land, three of which
belonged exclusively to herein appellee Simplicia Nagtalon, one of the defendants, were levied upon and
sold for P3,401.00 at the execution sale conducted on July 8, 1957.
On July 8, 1958, the last day of the one-year period for redemption, appellee Simplicia Nagtalon
deposited with the Deputy Provincial Sheriff the sum of P317.44 representing 1/12 of the consideration
of the sale plus 1% interest thereon, and prayed for the issuance of the corresponding deed of
redemption as to the three parcels of land belonging to her. The purchaser opposed the same on the
ground that the amount thus tendered did not cover the full redemption price of the said three parcels
of land which were auctioned separately. In view of said opposition, Nagtalon filed a motion with the
court to compel the Sheriff to issue the deed of redemption prayed for. On August 26, 1958, the court,
acting on said motion, issued an order holding that the liability of the defendants, as appearing in the
dispositive part of the executed decision, was only joint and that the tender by movant Nagtalon of the
sum corresponding to 1/12 of the purchase price was sufficient to redeem her properties sold at public
auction. Thus, the Deputy Provincial Sheriff was directed to execute and deliver to movant Nagtalon the
certificate of redemption covering the three parcels of land owned by her. The purchaser's and the
Sheriff's motion for reconsideration having been denied, they instituted the instant appeal.

Issue:
Whether or not the lower court committed an error in holding movant's tender of the sum of
P317.44 as valid redemption of the three parcels of land owned by her, and in ordering the issuance of
the corresponding certificate of redemption therefor.
Held:
No. The procedure for the redemption of the properties sold at execution sale is prescribed in Section
26, Rule 39, of the Rules of Court. Thereunder, the judgment debtor or redemptioner may redeem the
property from the purchaser, within 12 months after the sale, by paying the purchaser the amount of his
purchase, with 1% per month interest thereon up to the time of redemption, together with the taxes
paid by the purchaser after the purchase, if any. In other words, in the redemption of properties sold at
an execution sale, the amount payable is no longer the judgment debt but the purchase price.
Considering that appellee tendered payment only of the sum of P317.44, whereas the three parcels of
land she was seeking to redeem were sold for the sums of P1,240.00, P21.00, and P30.00, respectively,
the aforementioned amount of P317.44 is insufficient to effectively release the properties. However, as
the tender of payment was timely made and in good faith in the interest of justice we incline to give the
appellee opportunity to complete the redemption purchase of the three parcels, as provided in Section
26, Rule 39 of the Rules of Court, with and executory. The decision of the lower court is hereby affirmed.
100. MARIA MAHILUM, ET. AL. VS COURT OF APPEALS (17 SCRA 482)

Facts:
Pedro Mahilum was the registered owner of a parcel of land. Upon the death of Pedro Mahilum
in 1934, he was succeeded by his six children, namely, Tomas, Juan, Clemente, Antonia, Juliana and
Tomasa who on May 13, 1935, executed a "deed of definite sale" in favor of Gorgonia Flora, married to
Basilio Sotes. The vendors had acknowledged the deed of sale before Notary Public Nicolas D. Destua. It
further appears that Gorgonia Flora, the herein plaintiff, had declared the contested portion for taxation
purposes and began paying the taxes therefor in 1936. The Mahilums, however, claimed that they never
sold any portion of the aforesaid Lot. As a matter of fact, according to them, Original Certificate of Title
No. RO-6024 (22893) is free from any encumbrance whatsoever. They further claimed that if plaintiff had
been in possession of a portion of said lot, it was a mere toleration on their part, but not an
acknowledgment of her right of ownership over the property. In the six children of the late Tomas
Mahilum, only two were living at the trial of this case, namely, Tomasa and Juan. According to Tomasa,
neither she nor her brothers and sisters appeared before notary public Nicolas Destua, much less thumb
marked and/or signed the deed of sale. According to the plaintiff, only Clemente Mahilum affixed his
signature on the document, and they simply thumb marked the same. Juan Mahilum alleged in their
complaint for "Annulment of Contract of Definite Sale," that Gorgonia Flora Vda. de Sotes fraudulently
took advantage of the illiteracy or incapacity of the plaintiff and their brothers and sisters, Tomas,
Clemente and Antonia who were then living, induced them to sign a certain writing, which writing the
defendant, in conspiracy with Notary Public, Nicolas D. Destua ..., falsely and fraudulently represented to
be an acknowledgment of debt of plaintiffs father, Pedro Mahilum, but which is in fact a Definite
Contract of Sale disposing of Lot No. 2195 as aforesaid.

Issue:
Whether or not the Court of Appeals erred in not holding that the deed of sale is inadmissible in
evidence because it lacks the necessary documentary stamps.

Held:
No. The stamps referred to by petitioners (and required by Section 238 of the Internal Revenue
Code so that a public document may be admitted as evidence) are supposed to be, and as a matter of
practice actually are, affixed to the original or first copy of the document and not to any of the duplicates
or carbon copies thereof. There is no evidence whatsoever that such practice was not observed in regard
to the deed of sale involved in this case, and consequently the presumptions that official duty has been
regularly performed, that private transactions have been fair and regular, and that the regular course of
business has been followed, must be applied (Sec. 69[q], Rule 123; now Sec. 5, Rule 131). The burden is
upon those who seek to destroy this presumption to do so by convincing proof. The decision of the Court
of Appeals is affirmed, with costs against petitioners-appellants.
101. MACONDRAY & CO., INC. VS PRAXEDES R. DE SANTOS (61 PHIL 730)

Facts:
The complaint alleges, for a first cause of action, that on January 11, 1934, Praxedes R. De Santos
executed and delivered to the plaintiff Macondray & Co., INC. a promissory note for the sum of P1,000,
with interest rate of 12 per cent per annum, payable in installments and in case of default in the
payment of the principal or interest an additional sum equal to 20 per cent of the total amount due was
to be paid as attorney's fees; that to guarantee the payment of this note the defendant executed a
chattel mortgage on a automobile; if the mortgaged property be lost, destroyed or damages, the
mortgage would immediately have the right to foreclose and declare the whole amount of the principal
and interest, secured by said mortgage, due and payable; on January 21, 1934, the mortgaged
automobile, while in possession of the defendant, met with an accident resulting in its total wreck and
loss; by reason of the failure of the defendant to replace or to restore the automobile or to pay the value
thereof plaintiff foreclosed its mortgage and what remained of the wrecked automobile was sold at
public auction for the sum of P50; that after applying this amount to the account of defendant there was
an unpaid balance of P980.39 plus interest at 12 per cent per annum from March 24, 1934, and 20 per
cent of the amount due as attorney's fees, which defendant refused to pay. As an alternative cause of
action, the plaintiff reproduces the allegations contained in the first cause of action and prays that
defendant be sentenced to pay the plaintiff the above-mentioned amount with interest. The defendant,
as the only ground of her demurrer, alleges that under the provisions of Act No. 4122, article 1454-A of
the Civil Code, there is no cause of action against her. The defendant demurred to the complaint, the
trial court sustained it and gave the plaintiff five days within which to amend. Plaintiff accepted to the
order sustaining the demurrer and gave notice that it elected to stand upon its complaint and thereupon
the lower court, upon motion of the defendant, dismissed the complaint with costs against the plaintiff.
Plaintiff accepted to the order dismissing the complaint and moved for a new trial. Upon the denial of
this motion and upon appeal to this court, plaintiff alleges that the trial court erred: I. In sustaining the
demurrer of the defendant to the plaintiff's complaint; II. In dismissing the case; III. In not rendering
judgment in accordance with the prayer of the plaintiff's complaint; IV. Conceding, but not admitting,
that the case falls under the provisions of Act No. 4122, the lower court erred in not finding that the said
law is unconstitutional in that it confiscates property without due process of law and denies the equal
protection of the laws of the plaintiff. V. In not granting the plaintiff's motion for new trial.
Issue:
Whether or not the contention of the defendant that under the provisions of Act No.
4122, article 1454-A of the Civil Code, there is no cause of action against her is valid.

Held:
No. In order to apply the provisions of article 1454-A of the Civil Code it must appear that there
was a contract for the sale of personal property payable in installments and that there has been a failure
to pay two or more installments. In view of the above, the trial court erred in sustaining the demurrer.
The appellant's first, second, third and fifth assignments of error are sustained. Wherefore it is not
necessary to pass upon the fourth assignment of error. The order of the trial court dismissing the
complaint is hereby set aside and this case will be remanded to the trial court for further proceedings in
accordance with law, with the costs of this appeal against the defendant-appellee.
102. LEVY HERMANOS, INC. VS. GERVACIO (69 PHIL 52)

Facts:
On March 10, 1937, plaintiff Levy Hermanos, Inc., sold to defendant Lazaro Blas Gervacio, a
Packard car. Defendant, after making the initial payment, executed a promissory note for the balance of
P2,400, payable on or before June 15, 1937, with interest at 12 per cent 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. Wherefore, plaintiff foreclosed the mortgage and the car was sold at public auction, at which
plaintiff was the highest bidder for P1,800. The present action is for the collection of the balance of
P1,600 and interest.

Issue:
Whether or not the cash payment made by Gervacio should be considered as an installment

Held:
No. Article 1454-A of the Civil Code reads as follows:
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 on the property,
without reimbursement to the purchaser of the installments already paid, if there be an agreement 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. In order to apply the provisions of article 1454-A of the old Civil Code
it must appear that there was a contract for the sale of personal property payable in installments and
that there has been a failure to pay two or more installments.
The contract in this case, while a sale of personal property, is not, however, one on installments,
but on straight term, in which the balance, after payment of 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
Article 1454-A and accordingly the mortgagee is not bound by the prohibition therein contained as to
the right to the recovery of the unpaid balance.
103. INDUSTRIAL FINANCE CORP. VS TOBIAS (78 SCRA 28)

Facts:
On June 16, 1968, respondent Castor Tobias bought on installment one (1) Dodge truck from
Leelin Motors, Inc. To answer for his obligation he executed a promissory note in favor of the latter, for
the sum of P29.070.28 payable in thirty-six (36) equal installments with interest at the rate of 12% per
annum payable in the amounts and dates indicated in said promissory note.
On June 19, 1969, Leelin Motors, Inc. indorsed the promissory note and assigned the chattel
mortgage to petitioner Industrial Finance Corporation. As a consequence respondent Tobias paid six (6)
installments on the promissory note directly to the petitioner Industrial Finance Corporation the last of
which was made on February 19, 1970.
On February 16, 1971, petitioner filed in the Court of First Instance of Manila an action against
respondent Tobias to recover the unpaid balance of the promissory note. The lower court dismissed the
complaint. On appeal, the Court of Appeals affirmed the decision of the lower court dismissing the
complaint of petitioner Industrial Finance Corporation but modifying the same by ordering respondent
Tobias to pay the cost of repairs of the damaged truck in the amount of P5, 396.78 plus interest.

Issue:
Whether the petitioner is still free to avail of the remedy of exacting fulfillment of the obligation
of respondent Tobias

Held:
Art. 1484 is clear that "should the vendee or purchaser of a personal property be in default in
the payment of two or more of the agreed installments, the vendor or seller has the option to either
exact fulfillment by the purchaser of the obligation, or to cancel the sale, or to foreclose the mortgage on
the purchased personal property, if one was constituted. Since the case involves the sale of personal
property on installments Art. 1484 of the Civil Code should apply.

Here, petitioner has not cancelled the sale, nor has it exercised the remedy of foreclosure. Since the
petitioner has not availed itself of the remedy of cancelling the sale of the truck in question or of
foreclosing the chattel mortgage on said truck, petitioner is still free to avail of the remedy of exacting
fulfillment ' of the obligation of respondent Tobias.
Also, it is claimed by respondent Tobias that he has surrendered the truck to petitioner in his letter dated
May 27, 1970. But the alleged surrender was ineffectual as far as the petitioner is concerned because
petitioner could not take possession of the truck in question as it was in the custody of Leelin Motors,
Inc., which had a mechanic's lien over it. Even respondent Tobias cannot expect petitioner to accept the
term of surrender because aside from the fact that the truck being surrendered met an accident
petitioner was not satisfied with the repair of the finished portion of the truck in question. Petitioner
therefore was justified refusing to accept such surrender and in bringing suit to recover the balance of
the purchase price.
104. RIDAD VS FILIPINAS INVESTMENT ( 120 SCRA 246)

Facts:
Plaintiffs purchased from the Supreme Sales arid Development Corporation two (2) brand new
Ford Consul Sedans complete with accessories, for P26,887 payable in 24 monthly installments. To
secure payment thereof, plaintiffs executed on the same date a promissory note covering the purchase
price and a deed of chattel mortgage not only on the two vehicles purchased but also on another car
(Chevrolet) and plaintiffs' franchise or certificate of public convenience granted by the defunct Public
Service Commission for the operation of a taxi fleet. Then, with the conformity of the plaintiffs, the
vendor assigned its rights, title and interest to the above-mentioned promissory note and chattel
mortgage to defendant Filipinas Investment and Finance Corporation.
Due to the failure of the plaintiffs to pay their monthly installments as per promissory note, the
defendant corporation foreclosed the chattel mortgage extra-judicially of the two Ford Consul cars
where plaintiff were not notified and defendant corporation was the highest bidder and purchaser.
Another auction sale was held involving the remaining properties subject of the deed of chattel
mortgage since plaintiffs' obligation was not fully satisfied by the sale of the vehicles.
On February 21, 1966, plaintiffs filed an action for annulment of contract with Filipinas
Investment and Finance Corporation before the Court of First Instance of Rizal. The court declared that
the chattel mortgage is null and void in so far as the taxicab franchise and the used Chevrolet car of
plaintiffs are concerned, and the sale at public auction conducted by the City Sheriff of Manila
concerning said taxicab franchise has no legal effect.

Issue:
Whether or not the foreclosure of the chattel mortgage is valid

Held:
NO. Under Art. 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 installment.
In the instant case, Defendant Corporation elected to foreclose its mortgage upon default by the
plaintiffs in the payment of the agreed installments. Having chosen to foreclose the chattel mortgage,
and bought the purchased vehicles at the public auction as the highest bidder, it submitted itself to the
consequences of the law as specifically mentioned, by which it is deemed to have renounced any and all
rights which it might otherwise have under the promissory note and the chattel mortgage as well as the
payment of the unpaid balance. The foreclosure is null and void.
105. ESGUERRA VS COURT OF APPEALS (173 SCRA 1)

Facts:
Julieta Esguerra filed a complaint for administration of conjugal partnership or separation of
property against her husband Vicente Esguerra, Jr. before (the trial) court. The parties entered into a
compromise agreement which was submitted to the court. By virtue of said agreement, Esguerra Bldg. I
located at 140 Amorsolo St., Legaspi Village was sold and the net proceeds distributed according to the
agreement.
Petitioner started claiming one-half of the rentals of the said building which VECCI refused. Thus,
petitioner filed a motion with respondent court praying that VECCI be ordered to remit one-half of the
rentals to her effective January 1990 until the same be sold. On October 30, 1990 respondent (trial)
court ruled in favor of herein petitioner. Meanwhile, Esguerra Bldg. was sold to (herein private
respondent Sureste Properties. Inc.) for P150,000,000.00. On 17 June 1993, (Julieta V. Esguerra) filed a
motion seeking the nullification of the sale before respondent (trial) court on the ground that VECCI is
not the lawful and absolute owner thereof and that she has not been notified nor consulted as to the
terms and conditions of the sale.
Not being a party to the civil case, private respondent Sureste filed a Manifestation concerning
(herein petitioner's) motion to declare the sale void ab initio. In its Manifestation (Sureste) points out
that in the compromise agreement executed by VECCI and (Julieta V. Esguerra), she gave her express
consent to the sale of the said building.

Issue:
Whether or not the Contract of Sale is unenforceable

Held:
The Civil Code provides that a contract is unenforceable when it is ". . . entered into in the name
of another person by one who has been given no authority or legal representation, or who has acted
beyond his powers." And that "(a) contract entered into in the name of another by one who has no
authority or legal representation, or who has acted beyond his powers, shall be unenforceable, . . ."
In the case at bar, the sale of Esguerra Building II by VECCI to private respondent Sureste
Properties, Inc is valid. The sale was expressly and clearly authorized under the judicially-approved
compromise agreement freely consented to and voluntarily signed by petitioner Julieta Esguerra. Thus,
petitioner's contention that the sale is unenforceable as to her share for being unauthorized is plainly
incongruous with the express authority granted by the compromise agreement to VECCI, which specified
no condition that the latter shall first consult with the former prior to selling any of the properties listed
there.
Moreover, petitioner's contention runs counter to Article 1900 of the Civil Code which provides
that: So far as third persons are concerned, an act is deemed to have been performed within the scope
of the agent's authority, if such act is within the terms of the power of attorney, as written, even if the
agent has in fact exceeded the limits of his authority according to an understanding between the
principal and the agent.
Thus, as far as private respondent Sureste Properties, Inc. is concerned, the sale to it by VECCI
was completely valid and legal because it was executed in accordance with the compromise agreement,
authorized not only by the parties thereto, who became co-principals in a contract of agency created
thereby, but by the approving court as well. Consequently, the sale to Sureste Properties, Inc. of Esguerra
Building II cannot in any manner or guise be deemed unenforceable, as contended by petitioner.

106. FILINVEST CREDIT CORP. VS COURT OF APPEALS (178 SCRA 188)


Facts:
The private respondents, the spouses Jose Sy Bang and Iluminada Tan were engaged in the sale
of gravel produced from crushed rocks and used for construction purposes. They intended to buy rock
crusher from Rizal Consolidated Corporation which carried a cash price tag of P550,000.00. They applied
for financial assistance from herein petitioner Filinvest Credit Corporation, who agreed to extend
financial aid on the certain conditions.
A contract of lease of machinery (with option to purchase) was entered into by the parties
whereby the private respondents agreed to lease from the petitioner the rock crusher for two years
starting from July 5, 1981, payable as follows: P10,000.00 first 3 months, P23,000.00 next 6 months,
P24,800.00 next 15 months. It was likewise stipulated that at the end of the two-year period, the
machine would be owned by the private respondents. Thus the private respondent issued in favor of the
petitioner a check for P150,550.00, as initial rental (or guaranty deposit), and 24 post-dated checks
corresponding to the 24 monthly rentals. In addition, to guarantee their compliance with the lease
contract, the private respondent executed a real estate mortgage over two parcels of land in favor of the
petitioner. The rock crusher was delivered to the spouses.
However, 3 months later, the spouses stopped payment when petitioner had not acted on the
complaints of the spouses about the machine. As a consequence, petitioner extra-judicially foreclosed
the real estate mortgage. The spouses filed a complaint before the RTC. The RTC rendered a decision in
favor of private respondent. The petitioner elevated the case to CA which affirmed the decision of RTC in
toto.

Issues:
Whether or not the nature of the contract is one of a contract of sale.
Whether or not the remedies of the seller provided for in Article 1484 are cumulative.

Held:
YES. The intent of the parties to the subject contract is for the so-called rentals to be the
installment payments. Upon the completion of the payments, then the rock crusher, subject matter of
the contract, would become the property of the private respondents. This form of agreement has been
criticized as a lease only in name. Thus in, Vda. De Jose v. Barrueco, we stated: Sellers desirous of making
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 restored 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 bargain, in the transfer of title to the lessee.
NO, it is alternative. The seller of movable in installments, in case the buyer fails to pay two or
more installments, may elect to pursue either of the following remedies: (1) exact fulfillment by the
purchaser of the obligation; (2) cancel the sale; or (3) foreclose the mortgage on the purchased property
if one was constituted thereon. It is now settled that the said remedies are alternative and not
cumulative, and therefore, the exercise of one bars the exercise of the others. Indubitably, the device
contract of lease with option to buy is at times resorted to as a means to circumvent Article 1484,
particularly paragraph (3) thereof. Through the set-up, the vendor, by retaining ownership over the
property in the guise of being the lessor, retains, likewise the right to repossess the same, without going
through the process of foreclosure, in the event the vendee-lessee defaults in the payment of the
installments. There arises therefore no need to constitute a chattel mortgage over the movable sold.
More important, the vendor, after repossessing the property and, in effect, cancelling the contract of
sale, gets to keep all the installments-cum-rentals already paid.
The Petition is GRANTED; the Decision of the Court of Appeals dated March 17, 1988 is hereby
REVERSED AND SET ASIDE, and another one rendered DISMISSING the complaint. Costs against the
private respondents.

107. INDUSTRIAL FINANCE CORP. VS RAMIREZ (77 SCRA 153)


Facts:
On December 4, 1970 Arnaldo Dizon 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 the same date, Dizon assigned for ten thousand pesos to Industrial Finance Corporation (herein
petitioner) 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. As of
February 27, 1972 Consuelo Alcoba owed petitioner the sum of P7,678.05. Petitioner sued her in the
Court of First Instance of Manila for "replevin with damages for the recovery of the mortgaged car by
means of a writ of replevin. The lower court issued the writ of replevin. But the sheriff was not able to
seize the mortgaged car.
On September 27, 1973, or long after the judgment had become final, she paid Industrial
Finance Corporation the sum of P2,000. The lower court issued Writs of Execution but were returned
unsatisfied. 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. However, in
order to take possession of the car, the corporation had to pay P4,250 to the Aco Motor Service to satisfy
its lien for the repair and storage of the car. The corporation contended that, because of that payment, it
sustained a loss of P250 in the execution sale. It asked for a third alias writ of execution in order to satisfy
the balance of Consuelo Alcoba's obligation. Consuelo Alcoba opposed the motion for a third alias writ
of execution. 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" which, although
not beneficial to the mortgagee, Industrial Finance Corporation, barred it from recovering the deficiency
under article 1484. Hence, the instant certiorari case.

Issue:
Whether or not the mortgagee-assignee in installment sales of personal property is entitled to
an alias writ of execution after choosing the remedy of specific performance.

Held:
YES. 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 (Southern
Motors, Inc. vs. Moscoso, 112 Phil. 94).
WHEREFORE, the trial court's order denying the motion for a third writ of execution is reversed
and set aside. Costs against respondent Consuelo Alcoba.
108. SOUTHERN MOTOR INC. VS ANGELO MOSCOCO (2 SCRA 168)

Facts:
Plaintiff Southern Motors, Inc. sold to defendant Angel Moscoso one Chevrolet truck on
installment basis, for P6,445.00. Upon making a down payment, the defendant executed a promissory
note for the sum of P4,915.00, representing the unpaid balance of the purchase price to secure the
payment of which, a chattel mortgage was constituted on the truck in favor of the plaintiff. Of said
account, the defendant had paid a total of P550.00, of which P110.00 was applied to the interest and
P400.00 to the principal, thus leaving an unpaid balance of P4,475.00. The defendant failed to pay three
(3) installments on the balance of the purchase price. Plaintiff filed a complaint against the defendant, to
recover the unpaid balance of the promissory note. Upon plaintiff's petition, a writ of attachment was
issued by the lower court on the properties of the defendant. Pursuant thereto, the said Chevrolet truck,
and a house and lot belonging to defendant, were attached by the Sheriff and said truck was brought to
the plaintiff's compound for safe keeping. After attachment and before the trial of the case on the
merits, acting upon the plaintiff's motion for the immediate sale of the mortgaged truck, the Provincial
Sheriff of Iloilo sold the truck at public auction in which plaintiff itself was the only bidder for
P1,OOO.OO. The trial court condemned the defendant to pay the plaintiff the amount of P4,475.00 with
interest at the rate of 12% per annum from August 16, 1957, until fully paid, plus 10% thereof as
attorneys fees and costs. Hence, this appeal by the defendant.

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

Held:
NO. Article 1484 of the Civil Code provides that in a contract of sale of personal property the
price of which is payable in installments, the vendor may exercise any of the following remedies: (I) Exact
fulfillment of the obligation, should the vendee fail to pay; (2) Cancel the sale, should the vendee's
failure to pay cover two or more installments; and (3) Foreclose the chattel mortgage on the thing sold, if
one has been constituted, should the vendee's failure to pay cover two or more installments. In this
case, he shall have no further action against the purchaser to recover any unpaid balance of the price.
Any agreement to the contrary shall be void. The plaintiff had chosen the first remedy. The complaint is
an ordinary civil action for recovery of the remaining unpaid balance due on the promissory note. The
plaintiff had not adopted the procedure or methods outlined by Sec. 14 of the Chattel Mortgage Law but
those prescribed for ordinary civil actions, under the Rules of Court. Had the plaintiff elected the
foreclosure, it would not have instituted this case in court; it would not have caused the chattel to be
attached under Rule 59, and had it sold at public auction, in the manner prescribed by Rule 39. That the
plaintiff did not intend to foreclose the mortgage truck is further evinced by the fact that it had also
attached the house and lot of the appellant at San Jose, Antique. We perceive nothing unlawful or
irregular in plaintiff's act of attaching the mortgaged truck itself. Since the plaintiff has chosen to exact
the fulfillment of the appellant's obligation, it may enforce execution of the judgment that may be
favorably rendered hereon, on all personal and real properties of the latter not exempt from execution
sufficient to satisfy such judgment. It should be noted that a house and lot at San Jose, Antique were also
attached. No one can successfully contest that the attachment was merely an incident to an ordinary civil
action. The mortgage creditor may recover judgment on the mortgage debt and cause an execution on
the mortgaged property and may cause an attachment to be issued and levied on such property, upon
beginning his civil action.
109. SERVICEWIDE SPECIALISTS INC. VS INTERMEDIATE APPEALLATE COURT (174 SCRA 80)

Facts:
The private respondent Galicano Siton purchased from Car Traders Philippines, Inc. a Mitsubishi
Celeste vehicle and paid P25,000.00 as down payment of the price leaving a balance of P68,400.00. On
August 14, 1979, Siton executed a promissory note in favor of Car Traders Philippines, Inc. expressly
stipulating that the face value of the note which is P 68,400.00, shall "be payable, without need of notice
of demand, in installments of the amounts following and at the dates hereinafter set forth, to wit: P
1,900.00 monthly for 36 months due and payable on the 14th day of each month starting September 14,
1979, thru and inclusive of August 14, 1982". As further security, Siton executed a Chattel Mortgage over
the subject motor vehicle in favor of Car Traders Philippines, Inc. The credit covered by the promissory
note and chattel mortgage executed by respondent Galicano Siton was first assigned by Car Traders
Philippines, Inc. in favor of Filinvest Credit Corporation who subsequently reassigned said credit in favor
of petitioner Servicewide Specialists, Inc. and respondent Siton was advised of this second assignment.
Alleging that Siton failed to pay 3 monthly installments, the petitioner filed this action against Galicano
Siton and "John Doe." The relief sought by the plaintiff is a Writ of Replevin over subject motor vehicle
or, in the alternative, for a sum of money of P 20,319.42 plus interest thereon at the rate of 14% per
annum from January 11, 1982 until fully paid. After the service of summons, Justiniano de Dumo,
identifying himself as the "John Doe" in the Complaint, inasmuch as he is in possession of the subject
vehicle, he alleged the fact that he has bought the motor vehicle from Galicano Siton on November 24,
1979. The Regional Trial Court rendered a decision denying the Writ of Replevin and ordered the
defendants to pay the remaining balance on the motor vehicle without additional interest. Not satisfied
with the decision of the trial court, the petitioner appealed to the Intermediate Appellate Court which
affirms in toto the decision of the trial court in its judgment on April 25, 1986. Hence, this petition.

Issues:
Whether or not the sale of a mortgaged property without notice to the mortgagee affects the
validity of the sale.
Whether or not in sale of personal property in installment, when the seller chose the remedy of
fulfillment it is deemed to have waived the third remedy of foreclosure.

Held:
NO. The rule is settled that the chattel mortgagor continues to be the owner of the property, and
therefore, has the power to alienate the same; however, he is obliged under pain of penal liability, to
secure the written consent of the mortgagee. (Francisco, Vicente, Jr., Revised Rules of Court in the
Philippines, (1972), Volume IV-B Part I, p. 525). Thus, the instruments of mortgage are binding, while
they subsist, not only upon the parties executing them but also upon those who later, by purchase or
otherwise, acquire the properties referred to therein. The absence of the written consent of the
mortgagee to the sale of the mortgaged property in favor of a third person, therefore, affects not the
validity of the sale but only the penal liability of the mortgagor under the Revised Penal Code and the
binding effect of such sale on the mortgagee under the Deed of Chattel Mortgage.
YES. Article 1484 of the New Civil Code prescribes three remedies which a vendor may pursue in a
contract of sale of personal property the price of which is payable in installments, to wit: 1) to exact
fulfillment of the obligation; 2) cancel the sale; and 3) foreclose the mortgage on the thing sold. These
remedies are alternative and the vendor cannot avail of them at the same time. It is clear from the
prayer of petitioner in its brief on appeal to the appellate court that it had chosen the remedy of
fulfillment when it asked the appellate court to order private respondents to pay the remaining unpaid
sums under the promissory note. By having done so, it has deemed waived the third remedy of
foreclosure, and it cannot therefore ask at the same time for a Writ of Replevin as preparatory remedy to
foreclosure of mortgage. In a similar case, where the vendor filed an action containing three remedies:
to collect the purchase price; to seize the property purchased by suing for replevin and to foreclose the
mortgage executed thereon, We held that such a scheme is not only irregular but is a flagrant
circumvention of the prohibition of the law (Luneta Motor Company vs. Dimagiba No. L-17061,
December 30, 1961, 3 SCRA 884).

110. BACHRACH MOTOR CO., INC. VS PABLO A. MILLAN (61 PHIL 409)
Facts:
On December 12, 1933, the defendant, Pablo A. Millan, for value received, executed and
delivered to the Bachrach Motor Co., Inc. (plaintiff) his promissory note for the sum of P939 payable in
the City of Manila, Philippine Islands, in monthly installments. Said amount of P939 was the balance of
the purchase price of one second hand Renault touring car purchased by the said defendant from the
plaintiff, as may be seen from the chattel mortgage executed by the defendant in favor of the plaintiff on
December 12, 1933, and registered in the office of the Register of Deeds of the City of Manila. Defendant
failed to pay three monthly installments (December 22, 1933, and January 22 and February 22, 1934)
which violated the terms of the said promissory note and chattel mortgage. After crediting all the
payments made by defendant on account of said promissory note, he still owes the plaintiff the sum of
P928.50, together with interest thereon. Defendant offered to return the second hand Renault touring
car to the plaintiff in payment of the full amount under the promissory note and the chattel mortgage
but plaintiff refused to receive the same, and has filed this complaint for the full amount of the purchase
price without foreclosing the chattel mortgage. The trial court dismissed the case.

Issue:
Whether or not the adoption of article 1454-A (Act No. 4122), amending article 1454 of the Civil
Code also repealed that part of article 1124 of the Civil Code, which gives the prejudiced person the right
to exact the fulfillment of an obligation.

Held:
NO. Before Act No. 4122 was adopted the legal right to exact the fulfillment of an obligation was
also available to the person prejudiced by the failure of one of the obligors to comply with the terms of
an obligation. Act No. 4122 does not expressly or impliedly prohibit the party injured by the failure of
one of the obligors, in a sale of personal property on installments, from exacting the fulfillment of that
obligation. Neither do the terms of that Act expressly provide nor do they imply that, upon failure to pay
two or more installments on the purchase price of personal property sold on the installment plan, the
vendor must "cancel the sale or foreclose the mortgage if one has been given on the property."

In view of the foregoing, it is evident that the Legislature in adopting Act No. 4122 did not intend to limit
the remedies available to a vendor of personal property on the installment plan to the right to cancel the
sale or foreclose the mortgage if one had been given on the property. The real object of that law is to
prevent the exercise of either of these rights by such a vendor until after the vendee has failed to pay
two or more installments and furthermore to prescribe and limit the rights of the vendor after he has
availed himself of either of the remedies mentioned therein.
In a sale of personal property on the installment plan the vendor may elect to exact the
fulfillment of the obligation, as the plaintiff has done in this case, cancel the sale or foreclose his
mortgage if one has been given on the property so sold. If he elects to cancel or foreclose he is bound by
the provisions of article 1454-A of the Civil Code.
111. MACHONDRAY & CO. VS. BENITO & OCAMPO (61 SCRA 121)

Facts:
Plaintiff-appellee spouses Lorenzo Pascual and Leonila Torres (spouses Pasqual) executed the
real estate mortgage subject matter of this complaint on December 14, 1960 to secure the payment of
the indebtedness of PDP Transit, Inc. (PDP Trans.) for the purchase of 5 units of Mercedes Benz trucks,
with a total purchase price or principal obligation of P152,506.50 which was to bear interest at 1% per
month starting that day, but the plaintiffs' guarantee is not to exceed P50,000.00 which is the value of
the mortgage. The PDP Trans., as the spouses Pasqual's principal, paid to defendant-appellant Universal
Motors Corporation (Universal Motors) the sum of P92,964.91 on April 5, 1961 for two of the five
Mercedes Benz trucks and on May 22, 1961 for the remaining three, thus leaving a balance of
P68,641.69 including interest due on February 8, 1965.
On March 19, 1965, Universal Motors filed this complaint with the CFI of Manila against the PDP
Trans. to collect the balance due under the Chattel Mortgages and to repossess all the units sold to PDP
Trans. as the spouse Pascuals principal, including the 5 units guaranteed under the subject Real (Estate)
Mortgage. During the hearing, Universal Motors admitted that it was able to repossess all the units sold
to the latter, including the 5 units guaranteed by the subject real estate mortgage, and to foreclose all
the chattel mortgages constituted thereon, resulting in the sale of the trucks at public auction. As the
real estate mortgagors, the spouses Pascual filed an action with the CFI of Quezon City for the
cancellation of the mortgage they constituted on 2 parcels of land in favor of the Universal Motors to
guarantee the obligation of PDP Trans. to the amount of P50,000. The said CFI rendered judgment in
favor of the spouses Pascual and ordered the cancellation of the mortgage.

Issue:
Was Article 1484 of the New Civil Code applicable in the case at bar?

Held:
The Supreme Court affirmed the lower courts decision. Appellant Universal Motors argues that Article
1484 is not applicable to the case at bar because there is no evidence on record that the purchase by
PDP Trans. of the 5 trucks was payable in installments and that the PDP Trans. had failed to pay two or
more installments. Universal Motors also contends that what Article 1484 prohibits is for the vendor to
recover from the purchaser the unpaid balance of the price after he has foreclosed the chattel mortgage
on the thing sold, but not a recourse against the security put up by a third party. The Supreme Court
concluded to the contrary, saying that the first issue was whether or not the sale was one on
installments. The lower court found that it was, and that there was failure to pay two or more
installments, a finding which is not subject to review by the Supreme Court. The next contention is that
what article 1484 withholds from the vendor is the right to recover any deficiency from the purchaser
after the foreclosure of the chattel mortgage, and not a recourse to the additional security put up by
a third party to guarantee the purchaser's performance of his obligation. But the Supreme Court to
sustain this argument of the appellant would be to indirectly subvert and public policy overturn the
protection given by Article 1484.
112. PASCUAL VS UNIVERSAL MOTORS CORP ( 61 SCRA 121)

Facts:
Plaintiff-appellee spouses Lorenzo Pascual and Leonila Torres (spouses Pasqual) executed the
real estate mortgage subject matter of this complaint on December 14, 1960 to secure the payment of
the indebtedness of PDP Transit, Inc. (PDP Trans.) for the purchase of 5 units of Mercedes Benz trucks,
with a total purchase price or principal obligation of P152,506.50 which was to bear interest at 1% per
month starting that day, but the plaintiffs' guarantee is not to exceed P50,000.00 which is the value of
the mortgage. The PDP Trans., as the spouses Pasqual's principal, paid to defendant-appellant Universal
Motors Corporation (Universal Motors) the sum of P92,964.91 on April 5, 1961 for two of the five
Mercedes Benz trucks and on May 22, 1961 for the remaining three, thus leaving a balance of
P68,641.69 including interest due on February 8, 1965.
On March 19, 1965, Universal Motors filed this complaint with the CFI of Manila against the PDP
Trans. to collect the balance due under the Chattel Mortgages and to repossess all the units sold to PDP
Trans. as the spouse Pascuals principal, including the 5 units guaranteed under the subject Real (Estate)
Mortgage. During the hearinbg, Universal Motors admitted that it was able to repossess all the units sold
to the latter, including the 5 units guaranteed by the subject real estate mortgage, and to foreclose all
the chattel mortgages constituted thereon, resulting in the sale of the trucks at public auction. As the
real estate mortgagors, the spouses Pascual filed an action with the CFI of Quezon City for the
cancellation of the mortgage they constituted on 2 parcels of land in favor of the Universal Motors to
guarantee the obligation of PDP Trans. to the amount of P50,000. The said CFI rendered judgment in
favor of the spouses Pascual and ordered the cancellation of the mortgage.

Issue:
Was Article 1484 of the New Civil Code applicable in the case at bar?

Held:
The Supreme Court affirmed the lower courts decision. Appellant Universal Motors argues that
Article 1484 is not applicable to the case at bar because there is no evidence on record that thepurchase
by PDP Trans. of the 5 trucks was payable in installments and that the PDP Trans. had failed to pay two or
more installments. Universal Motors also contends that what Article 1484 prohibits is for the vendor to
recover from the purchaser the unpaid balance of the price after he has foreclosed the chattel mortgage
on the thing sold, but not a recourse against the security put up by a third party.
The Supreme Court concluded to the contrary, saying that the first issue was whether or not the
sale was one on installments. The lower court found that it was, and that there was failure to pay two or
more installments, a finding which is not subject to review by the Supreme Court.
The next contention is that what article 1484 withholds from the vendor is the right to recover
any deficiency from the purchaser after the foreclosure of the chattel mortgage, and not a recourse to
the additional security put up by a third party to guarantee the purchaser's performance of his
obligation. But the Supreme Court to sustain this argument of the appellant would be to indirectly
subvert and public policy overturn the protection given by Article 1484.
113. ZAYAS VS LUNETA MOTORS (117 SCRA 726)

Facts:
Eutropio Zayas, Jr, purchased on installment basis a motor vehicle described as ONE (1) UNIT
FORD THAMES FREIGHTER Mr. Roque Escao 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, Eutropio Zayas, 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 thereon 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:
Whether or not Luneta Motors can collect the deficiency of the Chattel Mortgage.

Held:
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. 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. Eutropio
Zayas, Jr. In the certification, the promissory note in favor of Luneta Motor Company was specifically
mentioned. There was only one promissory note executed by Eutropio Zayas, Jr. in connection with the
purchase of the motor vehicle. The promissory note mentioned in the certification refers to the
promissory note executed by Eutropio Zayas, Jr. in favor of respondent Luneta Motor Company. x x x
Escao 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 Eutropio Zayas, 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.
114. MANILA TRADING & SUPPLY CO. VS REYES (62 PHIL 461)

Facts:
On December 13, 1933, following the enactment of Act No. 4122 or the Installment Sales Law,
E.M. Reyes executed in favor of the Manila Trading & Supply Co., a chattel mortgage on an automobile as
security for the payment of the sum of P400, which Reyes agreed to pay in ten equal monthly
installments. As found by the trial judge, Reyes failed to pay some of the installments due on his
obligation. Thereupon the Manila Trading & Supply Co., proceeded to foreclose its chattel mortgage. The
mortgaged property was sold at public auction by the sheriff of the City of Manila for the sum of P200,
after applying this sum, with interest, costs, and liquidated damages to Reyes' indebtedness, the latter
owed the company a balance of P275.47, with interest thereon at the rate of 12 percent per annum from
February 19, 1934.
When Reyes failed to pay the deficiency on the debt, the company instituted an action in the
Court of First Instance of Manila for the recovery thereof. To plaintiff's complaint defendant filed an
answer in which he pleaded as a defense that plaintiff, having chosen to foreclose its chattel mortgage,
had no further action against defendant for the recovery of the unpaid balance owed by him to plaintiff,
as provided by Act No. 4122. After trial the lower court sustained defendant's defense and rendered a
judgment absolving him from the complaint, with costs. From this judgment, the plaintiff has taken an
appeal and here contends that the lower court erred in not declaring Act No. 4122 of the Philippine
Legislature unconstitutional for the following reasons: (1) in that it embraces more than one subject, (2)
in that it unduly restrains the liberty of a person to contract with respect to his property rights, (3) in that
it is class legislation, and (4) in that it denies vendors and lessors of personal property the equal
protection of the laws.

Issues:
1.) Whether or not Act No. 4122 violates the constitutional provision "that no bill which may be
enacted into law shall embraced more than one subject and that subject shall be expressed in the title of
the bill.
2.) Whether or not the said law violates the non-impairment clause.

Held:
Act No. 4122 known as the enforcement sales law is valid and enforceable.
The Philippine Legislature having had the purpose in mind in enacting Act No. 4122 to provide
legislation concerning sales on the installment plan, this subject was sufficiently expressed by indicating
in the title that the law had to do with an amendment of the Civil Code in the portion thereof given to
purchase and sale. Legislation should not be embarrassed by overly strict construction. The
constitutional provision "that no bill which may be enacted into law shall be expressed in the title of the
bill" while designed to remedy an evil was not designed to require great particularity in stating the object
of the law in its title.
Parties have no vested rights in particular remedies or modes of procedure, and the Legislature
may change existing remedies and modes of procedure without impairing the obligations of contracts,
provided an efficacious remedy remains for the enforcement of a mortgage may not, even when public
policy is invoked as an excuse, be pressed so far as to cut down the security of a mortgage without
moderation or reason or in a spirit of oppression.
In the Philippines three remedies are available to the vendor who has sold personal property on
the installment plan. (1) He may elect to exact fulfillment of the obligation (Bachrach Motor Co. vs.
Millan [1935], 61 Phil 409). (2) If the vendee shall have failed to pay two or more installments, the
vendor may cancel the sale. (3) If the vendee shall have failed to pay two or more installments, the
vendor may foreclose the mortgage if one has been given on the property. Act 4122 does no more than
qualify the remedy.
The question of the validity of an act is solely one of constitutional power. Questions of
expediency of motive or of results are irrelevant. Nevertheless it is not improper to inquire as to the
occasion for the enactment of a law. Most constitutional issues are determined by the Court's approach
to them. The proper approach should be to resolve all presumptions in favor of the validity of an act in
the absence of a clear conflict between it and the constitution. All doubts should be resolved in its favor.
Public policy, obvious from a statute, when defined and established by legislative authority and when
violative of no constitutional principle, should be perpetuated by the Courts.
115. INDUSTRIAL FINANCE CORPORATION VS CASTOR TOBIAS 978 SCRA 28)

Facts:
Tobias bought on installment one a dodge truck from Leelin Motors, Inc. To answer for his
obligation he executed a promissory note in favor of the latter, for the sum of P29 070.28 payable in
thirty six (36) equal installments with interest at the rate of 12% per annum payable in the amounts
and dates indicated in said promissory note. To secure payment of the promissory note, respondent
Tobias executed in favor of Leelin Motors, Inc. a chattel mortgage on the dodge truck. Leelin Motors, Inc.
indorsed the promissory note and assigned the chattel mortgage to petitioner Finance Corporation.
Tobias paid six (6) installments on the promissory note directly to the petitioner Industrial
Finance Corporation but defaulted on more than two installments, IFC through a letter gave Tobias a
choice of either paying the balance of the purchase price or surrender the truck. Tobias responded to the
letter voluntarily and willingly surrendering the truck which was still in the custody of Leelin Motors ever
since the truck met an accident. Upon learning that the truck met an accident, IFC decided not to get the
truck anymore from Leelin Motors. Instead, IFC filed an action against Tobias to recover the unpaid
balance of the promissory note.

Issue:
Whether possession by the mortgagee of the disputed vehicle bars its foreclosure.

Held:
Possession by the mortgagee of the disputed vehicle bars the chattel mortgage foreclosure. The
contract being a sale of machinery payable in installments, the applicable provision of law is Article 1484
of the Civil Code, which gives the vendor the option to exercise any one of the alternative remedies
therein mentioned: exact fulfillment of the obligation, cancel the sale, or foreclose the chattel mortgage.
But he vendor mortgagor in the present case desisted, on its own initiative, from consummating the
auction sale, without gaining any advantage or benefit, and without causing any disadvantage,, or harm
to the vendees mortgagees. The least that could be said is that such desistance of the plaintiff from
proceeding with auction sale was a timely disavowal that cancelled or rendered useless its previous
choice to foreclose; its acts, being extra-judicial, brought no trouble upon any court, and were harmless
to the defendants. For this reason, the plaintiff cannot be considered as having exercised (the Code
uses the word exercise) the remedy of foreclosure because of its incomplete implementation, and,
therefore, the plaintiff is not barred from suing on the unpaid account.

The remedies provided for in Art. 1484 are considered alternative, not cumulative such that the exercise
by the others. Here, petitioner has not cancelled the sale, nor has it exercised the remedy of foreclosure.
Foreclosure, judicial or extrajudicial, presupposes something more than a mere demand to surrender
possession of the object of the mortgage. Since the petitioner has not availed itself of the remedy of
cancelling the sale of truck in question or of foreclosing the chattel mortgage on said truck, petitioner is
still free to avail of the remedy of exacting fulfillment of the obligation of respondent Tobias, the vendee
of the truck in question. In Radio wealth Inc. vs. Lavin, the facts of which are similar to the present case,
the issue was whether the plaintiff is precluded to press for collection of an account secured by a
chattel mortgage after it shall have informed the defendants of its intention to foreclose said mortgage,
and the voluntary acceptance of such step (foreclosure) by defendant mortgagor, the Supreme Court
ruled in favor of the plaintiff mortgagee.
116. SPOUSES NONATO VS IAC AND INVESTORS FINANCE CORP. (140 SCRA 255)

Facts:
In 1976, Spouses Restituto Nonato and Ester Nonato purchased a Volkswagen from the Peoples
Car Inc. on installment basis. To secure their complete payment, Nonato executed a promissory note and
a chattel mortgage in favor of Peoples Car Inc. Subsequently, Peoples Car Inc. assigned its rights and
interest over the note and mortgage in favor of Investors Finance Corp (IFC). For failure of the spouses
to pay two or more installments, despite demands, the car was repossessed by IFC. Despite
repossession, IFC still demanded from Nonato that they pay the balance of the price of the car. IFC, then,
filed a complaint for the payment of the price of the car with damages. Nonato, in their defense, argued
that when the company repossessed the car, IFC had, by that act, effectively cancelled the sale of the
vehicle. As such, it was barred from exacting the recovery of the unpaid balance of the purchase price as
mandated by Article 1484. The trial court rendered in favor of IFC and ordered the spouses Nonato pay
the balance of the purchase price of the car with interest. CA affirmed the same.

Issue:
WON a vendor or his assignee, who had cancelled the sale of a motor vehicle for failure of the
buyer to pay two or more of the stipulated installments, may also demand payment of the balance of the
purchase price.

Held:
No. The applicable law in this case at bar is Article 1484 which provides that in a contract of sale
of personal property the price of which is payable in installments, the vendor may exercise any of the
following remedies:
Exact fulfillment of the obligation, should the vendee fail to pay;
Cancel the sale, should the vendees failure to pay cover two or more installments;
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 contrary shall be
void.
This provision means that should the vendee or the purchaser of a personal property default in
the payment of two or more of the agreed installments, the vendor or the seller has the option to avail
any of these 3 remedies either to exact fulfillment by the purchaser of the obligation, or to cancel the
sale, or to foreclose the mortgage on the purchased personal property, if one was constituted. These
remedies have been recognized as an alternative, not cumulative, that the exercise of one should bar the
exercise of the others.
In the present case, it is not disputed that IFC had taken possession of the car purchased by the
Nonatos after the spouses defaulted in their payments. The defense of IFC that it the repossession of the
vehicle was only for the purpose of appraising its value and for storage and safekeeping pending full
payment of the spouses is untenable. The receipt issued by IFC to the spouses when it took possession
of the vehicle that the vehicle could be redeemed within 15 days. This could only mean that should the
spouses fail to redeem the car within the period provided, IFC would retain permanent possession of the
vehicle. IFC even notified the spouses Nonato that the value of the car was not sufficient to cover the
balance of the purchase price and there was no attempt at all on the part of the company to return the
car.
The acts performed by IFC are consistent with the conclusion that it had opted to cancel the sale
of the vehicle. Therefore, it is barred from exacting payment from the petitioners of the balance of the
price of the vehicle which it had already repossessed (it cannot have its cake and eat it too).
117. VDA. QUIAMBAO VS MANILA MOTORS CO. (3 SCRA 444)

Facts:
On 7 March 1940, Gaudencio R. Quiambao, deceased husband of Nestora Rigor Vda. De
Quiambao and father of the other petitioners bought from Manila Motor Company, Inc. one (1)
Studebaker car on installment plan. Upon default in the payment of a number of installments, the
company sued Gaudencion Quiambao in Civil Case 53043 of the CFI Manila. On 4 December 1940,
judgment was entered in said case, awarding in favor of the company the sum of P3, 054.32, with
interest thereon at 12% per annum, and P300.00 attorneys fees. On 14 July 1941, the court issued a writ
of execution directed to the Provincial sheriff of Tarlac, who thereupon levied on and attached two
parcels of land covered by TCT 18390 of the Office of the Register of Deeds for Tarlac.
On 27 August 1941, Atty. Felix P. David, then counsel for the Manila Motor Company,
accompanied by the sheriff, personally apprised Gaudencio Quiambao of the levy. The latter pleaded to
have the execution sale suspended and begged for time within which to satisfy the judgment debt,
proposing that in the meanwhile, he would surrender to the company the Studebaker car. This
proposition was accepted; accordingly, Gaudencio Quiambao delivered the car to the company, and Atty.
David issued a receipt therefore. On 16 October 1941, Gaudencio Quiambao remitted to the company,
on account of the judgment, the sum of P500.00; he , however, failed to make further payments, thus
leaving a balance still unsettled of P1,952.47, with interest thereon at 12% per annum from 6 March
1940.
In the meantime, the Pacific war broke out, and when the Japanese forces occupied the country
shortly thereafter, the invader seized all the assets of the Manila Motor Company, Inc. as enemy
property. After the war, the company filed with the Philippine War Damage Commission, among other
things, a claim for its mortgage lien on the car of Gaudencio Quiambao and was awarded the sum of
P780.47, P409.75 of which amount had already been paid. On 12 October 1949, the company addressed
a letter to Gaudencio Quiambao asking him to fill a blank form relative to the lost car. Quiambao having
since died, his widow, Nestora Rigor Vda. De Quiambao, returned the form with the statement that the
questioned car was surrendered to the company for storage. On 18 May 1953, a demand was made on
the widow to settle the deceaseds unpaid accounts, but in view of her refusal, the company urged the
Sheriff of Tarlac to carry out the pre-war writ of execution issued in Civil Case 58043. Although the
records of the case had been lost during the war, and have not been reconstructed, a copy of said writ of
execution kept on file by the provincial sheriff was saved. Accordingly, the latter advertised for sale at
public auction the properties levied upon.

Issue:
Whether or not the heirs of the deceased Quiambao may file the suit to annul and set aside the
writ of execution and to recover damages.

Held:
Judgment was rendered by the CFI in favor of the Quiambaos, but on appeal to the Court of
Appeals (CA GR 17031 R), the decision was reversed and another entered dismissing the complaint.
Hence, the appeal by writ of certiorari..Heacock case does not apply; delivery of car to company did not
produce the effect of rescinding or annulling the contract of sale; buyer surrendered car to postpone
satisfaction of the judgment amount. Receipt of car not for appropriation but as security to satisfaction
of judgment credit; does not amount to foreclosure of chattel mortgage. Since the company did not
receive the car for the purpose of appropriating the same, but merely as security for the ultimate
satisfaction of its judgment credit, the situation under consideration could not have amounted to a
foreclosure of the chattel mortgage.
Payment of war damage compensation does not produce same and equal legal effect as formal
foreclosure. Having been the party who was last in possession of the lost car, the company was well
within its rights, or better still, under obligation, to protect the interest of the car owner, as well as its
own, by claiming, as it did, the corresponding war damage compensation for the car. Such action of the
company cannot reasonably be construed as a constriction of its rights under the pre-war judgment. Suit
filed was for specific performance and not for rescission or cancellation of contract of sale. The best
reason why respondent company may not be construed as having rescinded or cancelled the contract of
sale or foreclosed the mortgage on the automobile is precisely because it brought suit for specific
performance, and won, in the pre-war Civil Case 58043.
Pre-war judgment has not prescribed; period covered by moratorium law and closure of regular
courts at the outbreak of war deducted. The pre-war judgment was entered on 4 December 1940, and
on 14 July 1941, a writ of execution was issued. The company took no further step to enforce the
judgment until 19 may 1954, on which date, Manila Motors scheduled 2 parcels of land owned by the
Quiambaos for sale at public auction pursuant to the writ of 14 July 1941.
Pre-war writ of execution and levy may still be enforced by sale of the levied property after the
lapse of the 5-year period within which a judgment may be executed by motion. A valid execution issued
and levy made within the period provided by law may be enforced by a sale thereafter. The sale of the
property by the sheriff and the application of the proceeds are simply the carrying out of the writ of
execution and levy which when issued were valid. This rests upon the principle that the levy is the
essential act by which the property is set apart for the satisfaction of the judgment and taken into
custody of the law, and that after it has been taken from the defendant, his interest is limited to its
application to the judgment, irrespective of the time when it may be sold.
Amount received from the Philippine War Damage Commission must be credited to the
Quiambaos account. The Quiambaos should be credited the amount of P409.75 which the Manila
Motors Actually received from the Philippine War Damage Commission on account of the car of
Gaudencio Quiambao that had been seized from it by the enemy occupant during the war. This should
reduce the principal amount still due Manila Motors from the Quiambao to the sum of P1,542.72
118. ABELLA VS GONZAGA (56 PHIL 132)

Facts:
Cirilo Abella demanded specific performance of the contract entered into with Mariano Gonzaga
on April 15, 1921, which parts of it read as follows:
SPECIAL CONTRACT OF LEASE
Mariano Gonzaga, landowner, and Cirilo Abella, tenant, do hereby enter into a contract of lease
under the following conditions:
First. Mariano Gonzaga, as land owner, does hereby lease the following described parcel of land
situate within the jurisdiction of San Felipe Neri to Cirilo Abella to use with all the active and passive
easements thereof, to wit: etc. The surveyed parcel contains an area of one hectare, seventy-eight ares,
and fifty-eight centares.
Second. The lease shall run for five years: from March 5, 1921 to March 5, 1926.
Third. The rent shall be one thousand one hundred fourteen pesos and 34/100 (P1,114.34) per
annum payable in advance at the house of the undersigned on the 5th of March every year.
Fourth. In consideration of the sum of one thousand three hundred ninety two pesos and
(P1,392.92) which the tenant has now paid, and his promise to pay rent of the remaining nineteen
quarters at the periods fixed in the preceding clause, the owner undertakes at the termination of this
contract to transfer free of charge to the tenant the full ownership of the leased property, provided the
tenant has made the aforesaid payments.
Gonzaga contended in his answer that Abellas right to compel him to make the transfer of the
land in question is not absolute, but conditional; that the conditions have not been complied with, but
violated by the latter, who made the last payment over a year after the obligation had become due.

Issue:
Is the special contract of lease entered into by the parties a contract of sale on installments?

Held:
Yes. The contract is clearly a sale on installments. The document entitled Special Contract of Lease
and the special quality consists in the stipulation found in clause IV, to wit: that in consideration of the
sum of one thousand three hundred ninety two pesos and 92/100 (P1,392.92) which the tenant has
now paid, and his promise to pay rent of the remaining nineteen quarters at the periods fixed in the
preceding clause, the owner undertakes at the termination of this contract to transfer free of charge to
the tenant the full ownership of the leased property, provided the tenant has made the aforesaid
payments. When Abella paid the last installments, the SC arrived at the inevitable conclusion that
although in the contract the usual words lease, lessee, and lessor were employed, that is no
obstacle to the holding that said contract was a sale on installments, for such was the evident intention
of the parties in entering into said contract. (Art 1281, par. 2, of the Civil Code, as interpreted in the
cases of Reyes vs. Limjap, 15 Phil 420; and De la Vega vs. Ballilos, 34 Phil 683).
119. HEACOCK CO. VS BUNTAL MANUFACTURING CO. (66 PHIL. 246)

Facts:
Buntal, et al rented a machine from Heacock Company for a term of 20 calendar months. Buntal,
et al unable to return the machine and failed to pay the lease. The lower court held that the contract is a
contract of lease. It also decided that Heacock should pay P555, the total amount they bound
themselves to pay (rate of rent is P35 a month starting august 1931).

Issue:
Is the contract a contract of purchase and sale on installments?

Held:
Yes.
1. It was stipulated in the contract that:
In consideration of the sum of P160 to it in hand paid by the hirer, the owner hereby grants to hirer
the option to purchase while the present lease is in force and effect, the property made the subject of
this agreement, at the purchase price of P860.
The court finds that the amount P160 paid by Buntal Manufacturing Company was an initial
payment for the P860 purchase price.
The court also stated that the intention of the parties should be taken into consideration when
the contract in question is not clear. The intention was seen in the contract they stipulated.
120. MACONDRAY & CO., INC. VS BENITO AND OCAMPO (62 PHIL. 246)

Facts:
The defendants admit each and every allegation in each and every paragraph of the plaintiffs
amended complaint subject to the stipulations herein contained. The promissory notes mentioned were
executed by the defendants to cover the unpaid balance of the price of certain personal properties
purchased by them from the plaintiff payable in installments, the said properties being covered by the
two chattel mortgages specified therein. Upon the failure of the defendants to pay the two (2) and more
installments on the purchase price of said personal properties, plaintiff foreclosed the mortgages
executed on said properties. The properties mortgaged were sold at public auction to the plaintiff which
was the only bidder therefor. The parties, in view of this stipulation, submit for determination by the
court the sole question of law whether by virtue of sec. 1454-A of the Civil Code (Act No. 4122 of the
Philippine Legislature) plaintiff is entitled to recover from the defendants the unpaid balance of the
purchase price of said personal properties.

Issue:
Whether or not the provisions of Law No.4122 of the Philippine Legislature benefits in this case
the defendants.

Held:
Yes. Not challenged the effectiveness and the validity of the Act. The notes in question are hand
granted after the rule of law. It is obvious, therefore, that the transaction at issue here falls within its
laws, among which are available expressly that the seller will have no action against the purchaser, to
recover the unpaid balance after the property executed, and that any agreement contrary to this legal
provision is null and void.
121. FELIX GOCHAN AND SONS REALTY CORP. VS HEIRS OF RAYMUNDO BABA (G.R. NO. 138945)

Facts:
In 1966, DoroteaInot and 2 of her children, Victoriano Baba and Gregorio Baba sold a parcel of
land to Felix Gochan and Sons Realty Corporation (Gochan Realty). Consequently, the title over the land
was transferred to Gochan Realty.
In 1995, the other 5 children of Inot (Bestra, Maricel, Crecencia, Antonio and Petronila all
surnamed Baba) discovered the sale executed in 1966. They filed a complaint for quieting of title and
reconveyance with damages against Gochan Realty. They alleged that Gochan Realty and their mother
and two siblings connived in executing the extrajudicial settlement and deed of sale which fraudulently
deprived them of their hereditary share in the said parcel of land. And that said transactions are void
insofar as their respective shares are concerned because they never consented to the said sale and
extrajudicial settlement.
The trial court dismissed the complaint filed by Baba et al as it ruled that their action has
prescribed by reason of prescription and laches. It applied the rule that the fraudulent conveyance of the
property creates an implied trust, an obligation created by law, which prescribes in ten years from the
date of the issuance of the certificate of title. The Court of Appeals reversed the decision of the trial
court. It found that the heirs action is a suit to enforce an implied or constructive trust based on fraud,
but it ruled that since the heirs are in possession of the disputed property, their action cannot be barred
by prescription and laches, being in the nature of a suit for quieting of title.

Issue:
Whether or not from the allegations of the complaint, there exists a cause of action to declare
the inexistence of the contract of sale with respect to the shares of respondents in Lot No. 3537 on the
ground of absence of any of the essential requisites of a valid contract.

Held:
If the answer is in the negative, then the dismissal of the complaint must be upheld, otherwise,
the dismissal on the ground of prescription is erroneous because actions for the declaration of
inexistence of contracts on the ground of absence of any of the essential requisites thereof do not
prescribe.
Under Article 1318 of the Civil Code, there is no contract unless the following requisites concur:
(1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and
(3) cause of the obligation. The absence of any of these essential requisites renders the contract
inexistent and an action or defense to declare said contract void ab initio does not prescribe, pursuant to
Article 1410 of the same Code. In Delos Reyes v. Court of Appeals, it was held that one of the requisites
of a valid contract under Article 1318 of the Civil Code, namely, the consent and the capacity to give
consent of the parties to the contract, is an indispensable condition for the existence of consent. There is
no effective consent in law without the capacity to give such consent. In other words, legal consent
presupposes capacity. Thus, there is said to be no consent, and consequently, no contract when the
agreement is entered into by one in behalf of another who has never given him authorization therefor
unless he has by law a right to represent the latter.
122. PHILIPPINE-LAWIN BUS, CO. VS COUR OF APPEALS (G.R. NO. 130972)

Facts:
On 7 August 1990 plaintiff Advance Capital Corporation, a licensed lending investor, extended a
loan to defendant Philippine Lawin Bus Company (hereafter referred to as LAWIN), in the amount of
P8,000,000.00 payable within a period of one (1) year, as evidenced by a Credit Agreement (Exhibits B to
B-4-B). To guarantee payment of the loan, defendant Lawin executed in favor of plaintiff the following
documents: (1) A Deed of Chattel Mortgage wherein 9 units of buses were constituted as collaterals. On
02 November 1990, defendant Bus Company was able to avail an additional loan of P2,000,000.00 for
one (1) month under Promissory Note 00028. Defendant LAWIN failed to pay. Thus, plaintiff foreclosed
the mortgaged buses and as the sole bidder thereof, the amount of P2,000,000.00 was accepted by the
deputy sheriff conducting the sale and credited to the account of defendant LAWIN. Thereafter, despite
repeated demands, the defendants failed to pay their indebtedness which totaled of P16,484,992.42.
Thus, the suit for sum of money, wherein the plaintiff prays among others that defendants solidarily pay
plaintiff as of July 31, 1992 the sum of (a) P16,484,994.12 as principal obligation under the two
promissory notes Nos. 003 and 00037, plus interests and penalties. In answer to the complaint,
defendants-appellees assert by way of special and affirmative defense, that there was already an
arrangement as to the full settlement of the loan obligation by way of Sale of the nine (9) units
passenger buses the proceeds of which will be credited against the loan amount as full payment thereof;
or in the alternative. The trial court declaring the obligation or indebtedness of defendants
EXTINGUISHED. CA reversed the said decision.

Issue:
Whether or not there was dacion en pago between the parties upon the surrender or transfer of
the mortgaged buses to the respondent.

Held:
No. SC agreed with the Court of Appeals that there was no dacion en pago that took place
between the parties.
In dacion en pago, property is alienated to the creditor in satisfaction of a debt in money. It is the
delivery and transmission of ownership of a thing by the debtor to the creditor as an accepted
equivalent of the performance of the obligation. It extinguishes the obligation to the extent of the value
of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by
agreement, express or implied, or by their silence, consider the thing as equivalent to the obligation, in
which case the obligation is totally extinguished."
Article 1245 of the Civil Code provides that the law on sales shall govern an agreement of dacion
en pago. A contract of sale is perfected at the moment there is a meeting of the minds of the parties
thereto upon the thing which is the object of the contract and upon the price.
In this case, there was no meeting of the minds between the parties on whether the loan of the
petitioners would be extinguished by dacion en pago.
123. INSULAR LIFE ASSURANCE COMPANY, LTD VS YOUNG (G.R. NO. 140964)

Facts:
In December, 1987, respondent Robert Young, together with his associates and co-respondents
(Gabriel La'O II, Arthur Tan, Lope Juban, Jr., Maria Lourdes Ongpin, Antonio Ongpin, Elsie Dizon, Yolanda
Bayer, Cecilia Viray, Manuel Viray and Jose Vito Borromeo) acquired by purchase Home Bankers Savings
and Trust Co., now petitioner Insular Savings Bank ("the Bank," for brevity), from the Licaros family for
P65,000,000.00. On October 1, 1991, Insular Life and Insular Life Pension Fund formally informed Young
of their intention to acquire 30% and 12%, respectively, of the Bank's outstanding shares, subject to due
diligence audit and proper documentation. On October 9, 1991, Insular Life and Young, authorized to
represent the other stockholders, entered into a Memorandum of Agreement (MOA), wherein Insular
Life and its Pension Fund agreed to purchase 830,860 common shares and 311,572 common shares,
respectively, for a total consideration of P198,000,000.00. Under its terms, the MOA is subject to Young's
representations and warranties that, as of September 30, 1991, the Bank has (a) a total outstanding
paid-in capital of P157,714,900.00, (b) a total net worth of P114,801,539.00, and (c) total loans with
doubtful recovery of P60,000,000.00. The MOA is also subject to these "condition precedents": (1) Young
shall infuse additional capital of P50,000,000.00 into the Bank, and (2) Insular Life and its Pension Fund
shall undertake a due diligence audit on the Bank to determine whether the provision for
P60,000,000.00 doubtful account made by Young is sufficient.
On January 7, 1992, Young and his associates filed with the Regional Trial Court (RTC), Branch
142, Makati City, a complaint against the Bank, Insular Life and its counsel, Atty. Jacinto Jimenez,
petitioners, for annulment of notarial sale, specific performance and damages, docketed as Civil Case No.
92-049. The complaint alleges that under the MOA, Insular Life should apply the purchase price of
P198,000,000.00 (corresponding to the 55% of the outstanding capital stock of the Bank) to Young's loan
of P200,000,000.00 and pay the latter P162,000,000.00, representing the remaining 45% of its
outstanding capital stock, which must be set-off against the loans of the other respondents. The RTC
dismissed the complaint, ordered the respondents to pay the Bank their respective loans with interest at
the rate of 30% per annum and monthly penalty interest of 3% from the date they are due until fully
paid. CA reverse the decision. The Court of Appeals construed the MOA as a contract of sale since it
applied Article 1599 of the Civil Code which pertains to cases where there is a breach of warranty.

Issue:
Whether or not the MOA is a contract of sale.

Held:
No. The foregoing provisions of the MOA negate the existence of a perfected contract of sale.
The MOA is merely a contract to sell since the parties therein specifically undertook to enter into a
contract of sale if the stipulated conditions are met and the representation and warranties given by
Young prove to be true. The obligation of petitioner Insular Life to purchase, as well as the concomitant
obligation of Young to convey to it the shares, are subject to the fulfillment of the conditions contained
in the MOA. Once the conditions, representation and warranties are satisfied, then it is incumbent upon
the parties to perform their respective obligations under the contract. Conversely, in the event that
these conditions are not met or complied with, no obligation on the part of either party arises. This is in
accord with Article 1181.