PILONES, Ronalyn Villa

Sales and Lease Digests

ACE Foods, Inc. v. Micro Pacific, G.R. No. 200602, December 11, 2013

Facts ACE Foods engaged in the trading and distribution of consumer goods in
wholesale and retail bases, while MTCL engaged in the supply of computer
hardware and equipment.
For the delivery and sale of subject products to be installed at various
offices of ACE Foods, MTCL sent a proposal containing the following:
● TERMS : Thirty (30) days upon delivery
● VALIDITY : Prices are based on current dollar rate and subject to
changes without prior notice.
● DELIVERY : Immediate delivery for items on stock, otherwise thirty
(30) to forty-five days upon receipt of [Purchase Order]
● WARRANTY : One (1) year on parts and services. Accessories not
included in warranty.
Ace Foods accepted the proposal and issued PO 100023 for the subject
products amounting to a purchase price of P646,464. Thereafter, MTCL
delivered the said products to ACE Food as reflected in the Invoice Receipt
in which MTCL reserved title to the items until full compliance of the terms
and conditions and payment of the purchase price.

MTCL’s demands for payment went unheeded and instead, Ace Foods sent
a letter stating that it has been returning the products to MTCL’s
representative but the latter failed to pull out the products. It then filed a
complaint praying that the latter pull out from its premises the subject
products since MTCL breached its “after delivery services” obligations to it.

MTCL maintained that it complied with its obligations, that there was
actually no agreement as to the purported “after delivery services” and that
Ace Foods should be compelled to pay the purchase price.

RTC directed MTCL to remove the subject products from ACE Foods’s
premises and pay actual damages and attorney fees. CA reversed and set
aside the RTC’s ruling.

Issue Whether or not ACE Foods should pay MTCL the purchase price for the
Ruling/Doctrine subject products

The very essence of a contract of sale is the transfer of ownership in

exchange for a price paid or promised. This may be gleaned from Article
1458* of the Civil Code. It is a consensual contract, which means that the
sale is perfected by mere consent. No particular form is required for its
validity. Upon perfection of the contract, the parties may reciprocally
demand performance, i.e., the vendee may compel transfer of ownership of
the object of the sale, and the vendor may require the vendee to pay the
 thing sold.

In contrast, a contract to sell is defined as a bilateral contract whereby the

prospective seller, while expressly reserving the ownership of the property
despite delivery thereof to the prospective buyer, binds himself to sell the
property exclusively to the prospective buyer upon fulfillment of the
condition agreed upon.

In this case, the parties have agreed to a contract of sale and not to a
contract to sell. A contract of sale had been perfected at the precise
moment ACE Foods, as evinced by its act of sending MTCL the Purchase
Order, accepted the latter’s proposal to sell the subject products in
consideration of the purchase price.

From that point in time, the reciprocal obligations of the parties – i.e., on the
one hand, of MTCL to deliver the said products to ACE Foods, and, on the
other hand, of ACE Foods to pay the purchase price therefore within thirty
(30) days from delivery – already arose and consequently may be
demanded. Art. 1475 makes this clear.

MTCL’s reservation of ownership of the subject products as reflected in the

Invoice Receipt hanged the complexion of the transaction from a contract of
sale into a contract to sell. However, records are bereft of any showing that
the said stipulation novated the contract of sale between the parties which
already existed at the precise moment ACE Foods accepted MTCL’s
proposal.

Novation is never presumed, and the animus novandi, whether totally or

partially, must appear by express agreement of the parties, or by their acts
that are too clear and unequivocal to be mistaken. Here, it has not been
shown that the title reservation stipulation appearing in the Invoice Receipt
had been included or had subsequently modified or superseded the original
agreement of the parties.

The fact that the Invoice Receipt was signed by a representative of ACE
Foods does not, by and of itself, prove animus novandi since: (a) it was not
shown that the signatory was authorized by ACE Foods (the actual party to
the transaction) to novate the original agreement; (b) the signature only
proves that the Invoice Receipt was received by a representative of ACE
Foods to show the fact of delivery; and (c) as matter of judicial notice,
invoices are generally issued at the consummation stage of the contract and
not its perfection, and have been even treated as documents which are not
actionable per se, although they may prove sufficient delivery.

Laig v CA, November 21, 1978

Facts A deed of sale was executed by and between Petre Galero as vendor and
Atty. Benito K. Laig as vendee, whereby the former sold to the latter the
land. This deed of sale was executed in the house of Carmen Verzo and
witnessed by Claudio Muratalla and Rosario Verzo Villarente, sister of
Carmen Verzo. OCT was delivered by Galero to Atty. Laig . Unfortunately,
vendee Atty. Benito failed to solicit the approval of the Secretary of
Agriculture and Natural Resources. It was only after Atty. Laig's death that
his wife,Rosario, noticed the deficiency.

Petitioner then wrote to the Register of Deeds, respondent Baldomero M.

Lapak, stating that the land had been sold to her late husband, requesting
that she be informed of any claim of ownership by other parties. Lapak
replied it was still intact and took note of her letter.
Petitioner filed with the Bureau of Lands an affidavit together with copy of
the deed of sale in her husband's favor to have the ownership over the land
transferred to her husband's name. Meanwhile, Galero, with the assistance
of Atty. Jose L. Lapak, son of Baldomero M. Lapak, sought in court the
issuance of a second owner's duplicate copy of OCT, claiming that his first
duplicate of said OCT was lost during World War 11.

A second owner's duplicate copy was issued by respondent in favor of

Galero. Right on that same day, Galero executed in favor of respondent
Carmen Verzo a deed of sale of the land in issue for the sum of P600.00.
The deed of sale in Verzo's favor was registered, and a TCT was issued in
her name.

Vda. de Laig inquired from the Register of Deeds of Camarines Norte if it

was true that the OCT had already been cancelled and a TCThad been
issued in favor of another person. Respondent Register of Deeds Lapak
replied in the affirmative.

Petitioner together with her minor children, filed the present action against
respondents Carmen Verzo, Petre Galero, the Director of Lands, the
Register of Deeds of Camarines Norte and the Secretary of Agriculture and
Natural Resources praying for the annulment of the sale in favor of Carmen
Verzo and the cancellation of the second owner's duplicate of OCT and
TCT by declaring the first OCT valid and effective or in the alternative, by
ordering Carmen Verzo to reconvey the land in question to petitioners, plus
P5,000.00 by way of damages.

Issue Whether the first sale of the property in question made by Petre Galero in
Ruling/Doctrine favor of Atty. Benito Laig was void ab initio, for being in violation of Article
1491, paragraph 5, of the New Civil Code.
NO. It must be noted that only one-half [1/2] of the property in question was
sold by Petre Galero to Atty. Laig; because the other one-half (½) was given
 to him as contingent attorney's fees for his legal services as counsel of
Petre Galero.
The first sale of the one-half (½) of the property in question in favor of Atty.
Laig was not in violation of Art. 1491, paragraph 5. ​The prohibition in said
article applies only to a sale or assignment to the lawyer by his client of the
property which is the subject of litigation. In other words, for the prohibition
to operate, the sale or assignment of the property must take place during
the pendency of the litigation involving the properly.

When the one-half portion of the property in question was sold by Petre
Galero to Atty. Laig on June 1, 1948, the decision in Civil Case No.
164-R-14 was already final and therefore the property in question was no
longer subject of litigation. Hence Atty. Laig was no longer prohibited from
buying the property in question because "attorneys are only prohibited from
buying their clients' property which is the subject of litigation.”

Furthermore, any question on the validity of the sale of the one-half of the
property in question has been foreclosed by the final decision in Criminal
Case No. 533 which upheld the genuineness and in effect the validity of the
sale made by Petre Galero in favor of Atty. Laig.

With respect to the other one-half (1/2) of the property in question, which
was given to Atty. Laig as his attorney's fees on a contingent basis, the
Court finds nothing wrong in this for the reason that contingent fees are
recognized in this jurisdiction (Canon 13 of the Canons of Professional
Ethics adopted by the Philippine Bar Association in 1917 [Appendix B,
Revised Rules of Court]), which contingent fees may be a portion of the
property in litigation.

Macaslang v Zamora, May 30, 2011

Facts Macaslang sold to Sps Zamora, a residential land located in Sabang,

Danao City. Macaslang requested to be allowed to live in the house with a
"promise to vacate as soon as she would be able to find a new residence.
Macaslang failed or refused to vacate the premises, despite their demand
after a year. Sps. Zamora filed for unlawful detainer.

Issue Whether or not Macaslang’s defense of ownership is meritorious?

Ruling/Doctrine
YES. Ejectment was not proper due to defense of ownership being
established.
1. The nature of transaction was one of equitable mortgage and NOT
 sale.
2. Macaslang did not really sell property to Sps. Zamora. Because of
the following findings:
3. The petitioner, as the vendor, was paid the amount of only
P100,000.00, a price too inadequate in comparison with the sum of
P1,600,000.00 demanded
4. The petitioner retained possession of the property despite the
supposed sale; and
5. The deed of sale was executed as a result or by reason of the loan
the Sps. Zamora extended to the Macaslang, because they still
allowed Macaslang to "redeem" the property by paying her
obligation under the loan
6. There was the earlier dated instrument (deed of pacto de retro)
involving the same property, executed between Macaslang vendor a
retro and the respondent Renato Zamora as vendee a retro.
● There were two receipts for the payments Macaslang had made to
the Sps. Zamora totaling P300,000.00.[30]
● The former secretary of respondent Melba Zamora executed an
affidavit acknowledging that the petitioner had already paid a total of
P500,000.00 to Sps. Zamora
● All these confirmed the petitioner's claim that she remained the
owner of the property and was still entitled to its possession.
● BUT, where the cause of action in an ejectment suit is based on
ownership of the property, the defense that the defendant retained
title or ownership is a proper subject for determination by the MTC
but only for the purpose of adjudicating the rightful possessor of the
property.

Dee Hwa Liong v. Asiamed, G.R. No. 205638, August 23, 2017

Facts Petitioner Dee Hwa Liong Foundation Medical Center and respondent
Asiamed Supplies and Equipment Corporation entered into a Contract of
Sale. This Contract of Sale stated that DHLFMC agreed to purchase from
Asiamed a machine. The machine was delivered. A Sales Invoice and two
(2) Delivery Invoices were signed by petitioner Anthony Dee and DHLFMC
Vice President for Administration, Mr. Alejandro Mateo. During the appeal,
Petitioners argue that the Court of Appeals and the Regional Trial Court
erred in finding them liable for interest, penalty charges, and attorney's fees
based on Delivery Invoices. Petitioners claim that these are in the nature of
contracts of adhesion. The delivery invoices were unilaterally prepared by
respondent, without petitioners' conformity. These stipulations attempted to
modify the Contract of Sale. However, petitioners insist that the delivery
invoices cannot be deemed to have modified the Contract of Sale,
 considering that they lacked the informed consent of petitioner DHLFMC. In
any case, the penalty stipulated in the delivery invoices was
unconscionably high and should be reduced

Ruling/Doctrine A contract need not be contained in a single writing. It may be collected

from several different writings which do not conflict with each other and
which, when connected, show the parties, subject matter, terms and
consideration, as in contracts entered into by correspondence. A contract
may be encompassed in several instruments even though every instrument
is not signed by the parties, since it is sufficient if the unsigned instruments
are clearly identified or referred to and made part of the signed instrument
or instruments. Similarly, a written agreement of which there are two
copies, one signed by each of the parties, is binding on both to the same
extent as though there had been only one copy of the agreement and both
had signed it.

Petitioners claim that the delivery invoice receipts are contracts of adhesion
and that they were unwittingly signed, without informed consent. However,
it is not disputed that the delivery invoices provided for the interest and
attorney's fees or that petitioner Anthony and Mateo signed these invoices.
Thus, the Regional Trial Court and the Court of Appeals ruled that the
parties mutually agreed to the interest and attorney's fees as a factual
matter. Although petitioners allege that these invoices lacked petitioner
DHLFMC's informed consent, there is no attempt to prove this. It is also not
proven that the stipulations were somehow hidden or obscured such that
DHLFMC could not have read them, making it impossible for DHLFMC to
agree to the terms.

Optimum Development Bank v. Spouses Jovellanos, G.R. No. 189145, December 4, 2013

Facts Spouses entered into a Contract to Sell with Optimum Development Bank
over a lot in Alegria Subdivision.

Downpayment was to be paid and the balance was to be paid in

installments. The spouses failed to pay installments causing Optimum
cancelled the contract and filed a complaint for unlawful detainer when the
spouses refused to vacate the premises of the property upon their demand.

MeTC and RTC held in favor of Optimum.

CA reversed their rulings due to lack of jurisdiction.

SC held that MeTC has jurisdiction holding that the allegations in the
complaint filed properly made a case for unlawful detainer. Jurisdiction is
determined by the allegations of the complaint and not the defenses set up
 in the answer. It also held that the MeTC may rule on the ownership of the
property if it is necessary to determine possession (although conditional).
The court also ruled whether the cancellation of the contract was done by
Optimum in accordance with RA 6552. The court held that the rules under
Section 4 of the said law applies since the spouses only paid the
downpayment and no installments. Finally, it held that the procedure there
required was properly complied with. CA decision reversed.

Issue When the Contract to Sell has for its object real property to be sold on an
Ruling/Doctrine installment basis, the said contract is especially governed by — and thus,
must be examined under the provisions of — RA 6552, or the “Realty
Installment Buyer Protection Act, which provides for the rights of the buyer
in case of his default in the payment of succeeding installments.

Essential Requisites before seller may actually cancel the contract when
the buyer has paid less than 2 years-worth of installments:
● First, the seller shall give the buyer a 60-day grace period to
be reckoned from the date the installment became due
● Second, the seller must give the buyer a notice of
cancellation/demand for rescission by notarial act if the buyer
fails to pay the installments due at the expiration of the said
grace period
● Third, the seller may actually cancel the contract only after
thirty (30) days from the buyer’s receipt of the said notice of
cancellation/demand for rescission by notarial act

In a contract to sell, the prospective seller binds himself to sell the property
subject of the agreement exclusively to the prospective buyer upon
fulfillment of the condition agreed upon which is the full payment of the
purchase price but reserving to himself the ownership of the subject
property despite delivery thereof to the prospective buyer.

Metropolitan Trial Courts are conditionally vested with authority to resolve

the question of ownership raised as an incident in an ejectment case where
the determination is essential to a complete adjudication of the issue of
possession.

Equatorial v Mayfair, 264 SCRA 483 (1996) (en banc)

Facts Carmelo entered into a contract of lease with Mayfair over a piece of land
and 2 buildings. The Lease Contract contained a provision granting Mayfair
 a right to be given an option to purchase the subject properties should
Carmelo decide to sell such properties. Years later, Carmelo sold the
subject properties to Equatorial without first offering the same to Mayfair.
Mayfair sued for the rescission of the sale and for it to exercise its right
under the said provision. Equatorial and Carmelo contend that the
provision constitutes an option clause, and is therefore void for lack of
consideration.

Provision in question states: ​That if the LESSOR should desire to sell the
leased premises, the LESSEE shall be given 30-days exclusive option to
purchase the same.
In the event, however, that the leased premises is sold to someone other
than the LESSEE, the LESSOR is bound and obligated, as it hereby binds
and obligates itself, to stipulate in the Deed of Sale hereof that the
purchaser shall recognize this lease and be bound by all the terms and
conditions thereof.

Issue Whether or not par. 8 of the contract of lease is a right of first refusal
Ruling/Doctrine
YES.
There is nothing in par. 8 which would bring it into the ambit of the usual
offer or option requiring an independent consideration. The true nature of
the provision is that of a contractual grant of the right of first refusal to
Mayfair. It was incorporated into the contracts of lease for the benefit of
Mayfair which wanted to be assured that it shall be given the first option to
buy the property at the price which Carmelo is willing to accept.
Furthermore, a buyer cannot be a “buyer in good faith” when he/she bought
the property with notice and full knowledge that a third party had a right of
first refusal, an interest in the property superior to its own.

PUP v Golden Horizon, 615 SCRA 478 (2010)

Facts NDC entered into a contract of lease with Golden Horizon (GHRC) a
portion of its property for 10 years, renewable for another 10 years with
mutual consent of the parties. A 2nd contract of lease was executed
between NDC and Golden Horizon renewable upon mutual consent after
the expiration of the 10-year lease period.
GHRC as lessee was granted the “option to purchase the area leased, the
price to be negotiated and determined at the time the option to purchase is
exercised.”
Under the lease agreements, GHRC was obliged to construct at its own
expense buildings of strong material at no less than the stipulated cost,
 and other improvements which shall automatically belong to the NDC as
lessor upon the expiration of the lease period. Accordingly, GHRC
introduced permanent improvements and structures as required by the
terms of the contract. After the completion of the industrial complex
project, for which GHRC spent P5 million, it was leased to various
manufacturers, industrialists and other businessmen thereby generating
hundreds of jobs.
GHRC discovered that NDC had decided to secretly disposed the property
to a third party.
GHRC filed in the RTC a complaint for specific performance, damages with
preliminary injunction and temporary restraining order.
In a memorandum order: NDC coumpound was transferred to the National
Government which in turn would convey such property to PUP at
acquisition cost.
The Court rendered a decision in another case which declared that the
sale to PUP by NDC violated the right of first refusal granted to Firestone
under its 3rd leased contract with NDC.

Issue Whether or not SC’s ruling in ​Polytechnic University of the Philippines v.

Ruling/Doctrine Court of Appeals applies in this case involving another lessee of NDC who
claimed that the option to purchase the portion leased to it was similarly
violated by the sale of the NDC Compound in favor of PUP pursuant to
Memorandum Order No. 214

YES. The second lease contract contained the following provision:

III. It is mutually agreed by the parties that this Contract of Lease shall be
in full force and effect for a period of ten (10) years counted from the
effectivity of the payment of rental as provided under sub-paragraph (b) of
Article I, with option to renew for another ten (10) years with the mutual
consent of both parties. In no case should the rentals be increased by
more than 100% of the original amount fixed.

Lessee shall also have the option to purchase the area leased, the price to
be negotiated and determined at the time the option to purchase is
exercised.

An option is a contract by which the owner of the property agrees with

another person that the latter shall have the right to buy the former’s
property at a fixed price within a certain time. It is a condition offered or
contract by which the owner stipulates with another that the latter shall
have the right to buy the property at a fixed price within a certain time, or
under, or in compliance with certain terms and conditions; or which gives
to the owner of the property the right to sell or demand a sale. It binds the
party, who has given the option, not to enter into the principal contract with
any other person during the period designated, and, within that period, to
 enter into such contract with the one to whom the option was granted, if
the latter should decide to use the option.1avvphi1

Upon the other hand, a right of first refusal is a contractual grant, not of the
sale of a property, but of the first priority to buy the property in the event
the owner sells the same. As distinguished from an option contract, in a
right of first refusal, while the object might be made determinate, the
exercise of the right of first refusal would be dependent not only on the
owner’s eventual intention to enter into a binding juridical relation with
another but also on terms, including the price, that are yet to be firmed up.

As the option to purchase clause in the second lease contract has no

definite period within which the leased premises will be offered for sale to
respondent lessee and the price is made subject to negotiation and
determined only at the time the option to buy is exercised, it is obviously a
mere right of refusal, usually inserted in lease contracts to give the lessee
the first crack to buy the property in case the lessor decides to sell the
same. That respondent was granted a right of first refusal under the
second lease contract appears not to have been disputed by petitioners.

Roman Catholic Church v Pante, supra

Facts The Church, represented by the Archbishop of Caceres, owned a 32sqm

lot that measured 2x16 meters located in Camarines Sur. The Church
contracted with Regino Pante for the sale of the lot (thru a Contract to Sell
and to Buy) ​on the belief t​ hat the latter was an actual occupant of the lot.
The Church sold in favor of the spouses Nestor and Fidela Rubi (​spouses
Rubi​) a 215sqm lot that included the lot previously sold to Pante. The
church alleged that it has a policy to only sell its lots to actual occupants,
and Pante misrepresented himself as an actual occupant. RTC favored the
Church and CA reversed.

Issue Who is the rightful owner of the subject land? Pante was the first to acquire
Ruling/Doctrine possession of the lot under both actual and constructive delivery

Art. 1533 on the rule on double sales states that when neither sale was
registered, the question now is who, between the two, was first in
possession of the property in good faith. Possession in NCC 1544 to mean
both ​actual physical delivery ​and c​ onstructive delivery.​

Under either mode of delivery, the facts show that Pante was the first to
acquire possession of the lot.

1. ACTUAL DELIVERY: the thing is placed under the control and

possession of the vendee.
 ● Pante claimed that he had been using the lot as a passageway,
with the Church’s permission, since 1963 and continued to do so
after purchasing the lot in 1992.This is a clear assertion of his right
of ownership that preceded the spouses Rubi’s claim of ownership.
● Pante also stated that he had placed electric connections and
water pipes on the lot, even before he purchased it in 1992, and the
existence of these connections and pipes was known to the
spouses Rubi.
● Sps Rubi are buyers in bad faith ​because a buyer of real property
in the possession of persons other than the seller must be wary
and should investigate the rights of those in possession. Without
such inquiry, the buyer can hardly be regarded as a buyer in good
faith and cannot have any right over the property.
2. CONSTRUCTIVE DELIVERY: NCC 1498. When the sale is made
through a public instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot
clearly be inferred

Domingo v Manzano, G.R. No. 201883, Nov. 16, 2016

Facts Respondents Emmanuel and Tita Manzano (the Manzanos) were the
registered owners of a 35,281-square meter parcel of land with
improvements in Bagong Barrio, Caloocan City. Manzanos execited a
notarized agreement with the Domngos whereby the petitioners paid the
P100, 000 reservation fee upon execution of the agreement. They made
payments amounting to P160,000. However, they failed to tender full
payment of the balance when the March 2001 deadline came. They made
additional payments of up to P 85,000.00. The Manzanos remained in
possession of the subject property. In December 2001, petitioners offered
to pay the remaining P555,000 balance. This was refused. Manzanos
informed them that the property was no longer for sale and were forfeiting
their payments. Domingos caused the annotation of adverse claim and
discovered that respondent Aquino bought the property with a new TCT.

Issue In a contract to sell, payment of the price is a positive suspensive

Ruling/Doctrine condition, failure of which is not a breach of contract warranting rescission
but rather just an event that prevents the prospective buyer from
compelling the prospective seller to convey title. In other words, the
non-fulfillment of the condition of full payment renders the contract to sell
ineffective and without force and effect. ​Non-fulfillment of the condition of
full payment renders the contract to sell ineffective and without force and
effect.

Art. 1544 of the civil code does not apply. Since failure to pay the price in
 full in a contract to sell renders the same ineffective, and without force and
effect, then there is no sale to speak of.

De los Santos v CA, G.R. No. 147912, April 26, 2006

Facts Petitioners entered into a contract to sell with private respondent Pasig
Realty and Development Corporation for the purchase of a parcel of land
in Phase I-D of Parkwood Greens Executive Village, Maybunga, Pasig.
Upon execution of the contract, petitioners paid the down payment. They
issued ten postdated checks in the amount of P5,000 each in favor of
private respondent corporation. Only one of the checks was honored while
the others were dishonored by reason of insufficiency of funds.

Respondent demanded the settlement of all unpaid amortizations.

Petitioners paid only 1/4 but no further payment was made. Respondent
notified petitioners that it was exercising its option to cancel the contract to
sell with forfeiture of payments made, effective 30 days from notice, in
accordance to Section 4 of RA 6552 and paragraph 6 of the contract to
sell. requested petitioners to vacate the property to enable the new buyer
to take possession of the same. Instead, petitioners questioned the
cancellation of the contract alleging that they stopped payment due to
private respondent corporation’s failure to develop the subdivision.
Subsequently, they filed an action for specific performance and damages
with the Housing and Land Use Regulatory Board (HLURB).

Issue The rescission of the contract and the consequent forfeiture of the
Ruling/Doctrine payments made were in accordance to the contract itself and RA 6552.
Petitioners defaulted in the payment of several monthly amortizations. In
cases such as this where less than two years of installments have been
made, Section 4 of RA 6552 grants the vendee a grace period of not less
than sixty days from the date the installment became due to pay the
amortizations. If the vendee fails to pay at the end of the grace period, the
vendor may cancel the contract 30 days after the receipt by the vendee of
the notice of cancellation. In the same vein, paragraph 6 of the contract to
sell granted the vendor an option to cancel the contract and forfeit the
payments made should the vendee fail to pay any of the monthly
amortizations within 60 days from the due date. Thereafter, the vendor
may dispose of the subject lot to any other person as if said contract had
never been made. Petitioners cannot seek protection from PD 957 28
particularly its provision providing for non-forfeiture of payments when the
vendee desists from further payment due to the failure of the developer or
owner to develop the subdivision.
David v David, G.R. No. 162365, January 15, 2014

Facts Respondent Eduardo initiated this replevin suit against, his first cousin and
former business partner, to recover the possession of one unit of
International CO 9670 Truck Tractor and Mi-Bed Trailer.

Eduardo and his brother Edwin C. David (Edwin), acting on their own and
in behalf of their co-heirs, sold their inherited properties to Roberto. A
deed of sale with assumption of mortgage (deed of sale) embodied the
terms of their agreement, stipulating that the consideration for the sale
was P6,000,000.00, of which P2,000,000 was to be paid to Eduardo and
Edwin, and the remaining P4,000,000.00 to be paid to Development Bank
of the Philippines (DBP) in Baguio City to settle the outstanding obligation
secured by a mortgage on such properties. The parties further agreed to
give Eduardo and Edwin the right to repurchase the properties within a
period of three years from the execution of the deed of sale based on the
purchase price agreed upon, plus 12% interest per annum.

Roberto and Edwin executed a memorandum of agreement (MOA) with

the Spouses Marquez and Soledad Go (Spouses Go), by which they
agreed to sell the Baguio City lot to the latter for a consideration of
P10,000,000.00. The MOA stipulated that "in order to save payment of
high and multiple taxes considering that the x x x subject matter of this
sale is mortgaged with DBP, Baguio City, and sold [to Roberto], Edwin will
execute the necessary Deed of Absolute Sale in favor of [the Spouses
Go], in lieu of [Roberto]." The Spouses Go then deposited the amount of
P10,000,000.00 to Roberto’s account.

After the execution of the MOA, Roberto gave Eduardo P2,800,000.00 and
returned to him one of the truck tractors and trailers subject of the deed of
sale. Eduardo demanded for the return of the other truck tractor and
trailer, but Roberto refused to heed the demand.

Thus, Eduardo initiated this replevin suit against Roberto, alleging that he
was exercising the right to repurchase under the deed of sale; and that he
was entitled to the possession of the other motor vehicle and trailer.

In his answer, Roberto denied that Eduardo could repurchase the

properties in question; and insisted that the MOA had extinguished their
deed of sale by novation.

Issue Whether or not Eduard has the right to repurchase.

Ruling/Doctrine
Yes. A sale with right to repurchase is governed by Article 1601 of the Civil
 Code, which provides that: "​Conventional redemption shall take place
when the vendor reserves the right to repurchase the thing sold, with the
obligation to comply with the provisions of Article 1616 and other
stipulations which may have been agreed upon​." Conformably with Article
1616,14 the seller given the right to repurchase may exercise his right of
redemption by paying the buyer: (a) the price of the sale, (b) the expenses
of the contract, (c) legitimate payments made by reason of the sale, and
(d) the necessary and useful expenses made on the thing sold.

The deed of sale entered into by Eduardo and Roberto contained the
following stipulation on the right to repurchase.

The CA and the RTC both found and held that Eduardo had complied with
the conditions stipulated in the deed of sale and prescribed by Article 1616
of the Civil Code.

Alonzo v CA, May 29, 1987 (supra, Family Relations)

Facts Five brothers & sisters inherited in equal shares a parcel of land. Celestino
Padua transferred his undivided share to the petitioner by way of absolute
sale. A year later his sister also sold her own share to the same petitioner
in an instrument denominated “Con Pacto De Retro Sale”.

One of the co-heirs sought to redeem the area sold but denied when it
appeared that he was an American Citizen. Tecla Padua the other co-heir
also filed her complaint invoking the same right of redemption; complaint
was also dismissed on the ground that the right had elapsed, not having
been exercised within 30 days. Although there was no written notice, it
was held that actual knowledge of the sales by the co-heirs satisfied the
requirements of the law.

Issue Whether or not actual knowledge satisfied the requirement of Art. 1088 of
Ruling/Doctrine the NCC.?

Whether or not the interpretation and application of the law correct is

correct and interestingly enough to both the petitioner and respondent?

YES. The petition appears to be an illustration of the Holmes dictum that

“hard cases make bad laws” as the petitioners obviously cannot argue
against the fact that there was no written notice given by the vendors to
 their co-heirs. Strictly applied and interpreted, Article 1088 can lead to only
one conclusion to wit, that in view of such deficiency, the 30-day period
from redemption had not begun to run, much less expired in 1977.

But as has also been aptly observed, we test a law by its results; and
likewise, we may add, by its purposes. It is a cardinal rule that, in seeking
the meaning of the law, the first concern of the judge should be to discover
in its provisions the intent of the lawmaker. The law was applied
independently but in consonance with justice. Law and justices are
inseparable. In requiring written notice, ART. 1088:

“S​hould any of the heir sell his hereditary rights to a stranger before the
partition, any or all of the co-heirs may be subrogated to the rights of the
purchaser by reimbursing him for the price of the sale, provided they do so
within the period of one month from the time they were notified in writing of
the sale by the vendor”

seeks to ensure that the redemptioner is properly notified of the sale and
to indicate the date of such notice as the starting time of the 30-day period
of redemption. The instant case presents no such problem because the
right of redemption was invoked not days but years after the sales were
made in 1963 and 1964. The complaint was filed thirteen years after the
first sale and fourteen years after the second sale. In arriving at the
conclusion the respondent court understandably applied pursuant to
existing jurisprudence. The said court acted properly as it had no
competence to reverse the doctrines laid down by the higher court in this
case and adopting an exception to the general rule, in view of the peculiar
circumstances of the case. When the facts warrants the court interpret the
law in a way that it will render justice, presuming that it was the intention of
the lawmaker, to begin with, that the law be dispensed with justice.

Locsin II v. Mekeni Food Corporation, G.R. No. 192105, December 9, 2013

Facts Mekeni offered Antonio Locsin II the position of Regional Sales Manager
to over see Mekeni’s National Capital RegionSupermarket. In addition to a
compensation and benefit package, Mekeni offered petitioner a car plan.
Mekeni’s offer was contained in an Offer Sheet.To be able to effectively
cover his appointed sales territory, Mekeni furnished petitioner with a used
Honda Civic car valuedat P 280,000.00, which used to be the service
vehicle of petitioner’s immediate supervisor. Petitioner paid for his 50%
share through salary deductions of P5,000.00 each month. Locsin
resigned. By then, a total of P112,500 had been deducted from his
monthly salary and applied as part of the employee’s share in the car plan.
 In his resignation letter, Locsin made an offer to purchase his service
vehicle by paying the outstandingbalance. The parties could not agree on
the terms of the proposed purchase. Petitioner thus returned the vehicle to
Mekeni.Petitioner made personal and written follow-ups regarding his
unpaid salaries and offer to purchase his service vehicle. Mekenireplied
that the company car plan benefit applied only to employees who have
been with the company for five years; for thisreason, Locsin has to pay
P116,380.00 if he opts to purchase the same. Petitioner filed against
Mekeni, a Complaint for the recovery of monetary claims which were
earmarked for his cost-sharing in thecar plan.

Issue Whether petitioner is entitled to a refund of all the amounts applied to the
Ruling/Doctrine cost of the service vehicle under the car plan?
In the absence of specific terms and conditions governing the car plan
arrangement between the petitioner and Mekeni, a quasi-contractual
relation was created between them. Consequently, Mekeni may not enrich
itself by charging petitioners for the use of its vehicle which is otherwise
absolutely necessary to the full and effective promotion of its business. It
is seen that the Mekeni car plan offered to petitioner was subject to no
other term or condition than that Mekeni shall cover one-half of its value,
and petitioner shall in turn pay the other half through deductions from his
monthly salary.

There is no evidence to suggest that if petitioner failed to completely cover

one-half of the cost of the vehicle, then all the... deductions from his salary
going to the cost of the vehicle will be treated as rentals for his use thereof
while working with Mekeni, and shall not be refunded.

It was made clear in the above pronouncement that installments made on

the car plan may be treated as rentals only when there is an express
stipulation in the car plan agreement to such effect.

Indeed, the Court cannot allow that payments made on the car plan should
be forfeited by Mekeni and treated simply as rentals for petitioner's use of
the company service vehicle.

Sime Darby v Goodyear, 2011

Facts Macgraphics owned billboards across Metro Manila, one of which was a
billboard located at the Magallanes Interchange. This was leased by
Macgraphics to Sime Darby at a monthly rental of P120,000.00. The lease
had a term of four years and was set to expire on March 30, 1998. Upon
signing of the contract, Sime Darby paid Macgraphics a total ofP1.2
million representing the ten-month deposit which the latter would apply to
the last ten months of the lease. Sime Darby executed a Memorandum of
Agreement[(MOA)with Goodyear, whereby it agreed to sell its tire
manufacturing plants and other assets to the latter for a total of P1.5
billion.
Then, Goodyear improved its offer to buy the assets of Sime Darby from P
1.5 billion to P1.65 billion. The increase of the purchase price was made in
consideration of the assignment by Sime Darby of the receivables in
connection with its billboard advertising in Makati City and Pulilan,
Bulacan. A "Deed of Assignment in connection with Microwave
Communication Facility and in connection with Billboard Advertising in
Makati City and Pulilan, Bulacan was executed which Sime Darby
assigned its leasehold rights and deposits made to Macgraphics pursuant
to its lease contract over the Magallanes billboard.

Sime Darby then notified Macgraphics of the assignment of the

Magallanes billboard in favor of Goodyear. Macgraphics informed
Goodyear that the monthly rental of the Magallanes billboard isP
250,000.00. Goodyear could not accept Macgraphics’ offer to integrate the
cost of changing the design to the monthly rental. Goodyear stated that it
intended to honor the P120,000.00 monthly rental rate given by
Macgraphics to Sime Darby. It then requested that Macgraphics send its
quotation for the simple background repainting and re-lettering of the neon
tubing for the Magallanes billboard. Macgraphics replied that it couldnt
give its consent to the assignment of lease to Goodyear. Macgraphics
explained that the transfer of Sime Darbys leasehold rights to Goodyear
would necessitate drastic changes to the design and the structure of the
neon display of the Magallanes billboard and would entail the commitment
of manpower and resources that it did not foresee at the inception of the
lease. Macgraphics advised Goodyear that any advertising service it
intended to get from them would have to wait until after the expiration or
valid pre-termination of the lease then existing with Sime Darby.

Due to Macgraphics refusal to honor the Deed of Assignment, Goodyear

sent Sime Darby a letter demanding partial rescission of the Deed of
Assignment and the refund ofP1,239,000.00, the pro-rata value of Sime
Darby's leasehold rights over the Magallanes billboard.

Sime Darby refused to accede to Goodyears demand for partial

rescission. Goodyear alleged that Sime Darby [1] was unable to deliver
the object of the Deed of Assignment and [2] was in breach of its warranty
under Title VII, Section B, paragraph 2 of the MOA, stating that "no
consent of any third party with whom Sime Darby has a contractual
relationship is required in connection with the execution and delivery of
the MOA, or the consummation of the transactions contemplated therein."

Including Macgraphics as an alternative defendant, Goodyear argued that

should the court find the partial rescission of the Deed of Assignment not
proper, it must be declared to have succeeded in the rights and interest of
Sime Darby in the contract of lease and Macgraphics be ordered to pay it
 the amount of P1,239,000.00.

Issue Whether or not partial rescission of the Deed of Assignment is proper

Ruling/Doctrine The petition of Sime Darby remains bereft of any merit. Article 1649 of the
New Civil Code provides:

Art. 1649. The lessee cannot assign the lease without the consent of the
lessor, unless there is a stipulation to the contrary. (n)

In an assignment of a lease, there is a novation by the substitution of the

person of one of the parties the lessee.The personality of the lessee, who
dissociates from the lease, disappears. Thereafter, a new juridical relation
arises between the two persons who remain the lessor and the assignee
who is converted into the new lessee. The objective of the law in
prohibiting the assignment of the lease without the lessors consent is to
protect the owner or lessor of the leased property.

A review of the lease contract between Sime Darby and Macgraphics

discloses no stipulation that Sime Darby could assign the lease without
the consent of Macgraphics. Moreover, contrary to the assertions of Sime
Darby, the records are bereft of any evidence that clearly shows that
Macgraphics consented to the assignment of the lease. As aptly found by
the RTC and the CA, Macgraphics was never part of the negotiations
between Sime Darby and Goodyear.Neither did it give its conformity to the
assignment after the execution of the Deed of Assignment. The consent of
the lessor to an assignment of lease may indeed be given expressly or
impliedly. It need not be given simultaneously with that of the lessee and
of the assignee. Neither is it required to be in any specific or particular
form. It must, however, be clearly given. In this case, it cannot be said that
Macgraphics gave its implied consent to the assignment of lease.

Modomo v Layug, GR 197722, August 14, 2019

Facts Petitioners are lessees of a parcel of land owned by the respondents.

According to the respondents, they executed a lease contract for 7 years
in 2005 where they agreed that petitioners pay 170k ofmonthly rental fees
on the first year with escalation rate of 10% for 2 nd and 3 rd year, 15%
for 4 th and 5 th year, and 20% for the 6 th and 7 th year; and to pay
proportional real estate tax on the property.The stipulation of the parties
was written in an addendum.Petitioners defaulted in the payment of the
escalation and in 2008 respondents filed an ejectment case.On the other
hand, petitioners alleged that there was a verbal agreement made by the
parties to pay 150k instead of 170k and not topay the escalation rate as
well as the real estate tax since petitioners introduced an improvement
amounting to 2M.Praying that the case must be dismissed because the
 lease contract was novated by the verbal agreement. The lower courts
ruled in favor of the respondents.

Issue Whether or not the lease contract was totally novated by the verbal
Ruling/Doctrine agreement

NO. Novation is never presumed, whether total or partial, it must be

proven by clear evidence by express agreements of the parties orthrough
their acts that are clear and unequivocal.The subsequent verbal
agreement partially novated the lease contract which lowered the monthly
rental payments of the petitioners.Evidenced by statement of accounts
served by respondents which is computed based on the lowered amount
as well as the finaldemand letter. Further evidenced by the comments of
the respondents to the petition that they agreed unequivocally to the
lowering ofthe rental payments.However, there was no evidence that the
payment of the escalation rate and proportional real estate tax be waived.
The writtenaddenda made by the parties is to reinforce the imposition of
the escalation rate and the payment of the proportional real estate tax.