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Nool & Almojera v. CA, Nool & Nebre / GR No. 116635 / 7.24.

97 /
Sales / PANGANIBAN, J p:
F: Two parcels of land were mortgaged by herein petitioners to DBP to
secure a loan. The subject properties were foreclosed by the bank for
failure of the private petitioners to pay their loan. After DBP became the
absolute owner of the two parcels of land, Anacleto, a younger brother of
Conchita, negotiated with DBP and succeeded in buying the lands. New
titles were issued in name private respondents. Petitioners seek recovery
of the aforementioned parcels of land from the respondents on the
strength of two private documents. The first, an agreement which
appeared to have sold to respondents the two parcels of land and the
second, in which there was an agreement that Conchita can repurchase
the said lands when she has the money. The trial court voided both
contracts and decided in favor of the respondents. The Court of Appeals
affirmed the decision of the lower court, hence, this petition for review on
I: WON the sale to PR by the bank is void.
R: Affirmed. The principal contract of sale contained and the auxiliary
contract of Repurchase are both void. It is clear that the seller had no
longer had any title to the parcels of land at the time the Contract of Sale
was drawn.
This conclusion of the two lower courts appears to find support in Dignos
vs. Court of Appeals, where the Court held: "Be that as it may, it is
evident that when petitioners sold said land to the Cabigas spouses, they
were no longer owners of the same and the sale is null and void." In the
present case, it is clear that the sellers no longer had any title to
the parcels of land at the time of sale. Since Exhibit D, the
alleged contract of repurchase, was dependent on the validity of
Exhibit C, it is itself void. A void contract cannot give rise to a
valid one. Verily, Article 1422 of the Civil Code provides that "(a)
contract which is the direct result of a previous illegal contract, is
also void and inexistent."
Moreover, the Civil Code itself recognizes a sale where the goods are to
be "acquired . . . by the seller after the perfection of the contract of sale,"
clearly implying that a sale is possible even if the seller was not the
owner at the time of sale, provided he acquires title to the property later
on. In the present case however, it is likewise clear that the sellers
can no longer deliver the object of the sale to the buyers, as the

buyers themselves have already acquired title and delivery

thereof from the rightful owner, the DBP. Thus, such contact may
be deemed to be inoperative and may thus fall, by analogy, under
item no. 5 of Article 1409 of the Civil Code: "Those which
contemplate an impossible service." Article 1459 of the Civil Code
provides that "the vendor must have a right to transfer the
ownership thereof [object of the sale] at the time it is delivered."
Here, delivery of ownership is no longer possible. It has become
Peoples Homesite & Housing Co. v. CA & Mendoza sps. / GR No.
61623 / 12.26.84 / Sales / Aquino, J p:
F: PHHC (P) prepared and awarded a parcel of land to PR sps, subject to
the approval of the QC Council, which the latter disapproved, PR was
advised. P then prepared a new parcel w/ a smaller area for PR, submitted
for approval - approved. P then, after a while, issued a resolution recalling
all awards to persons who failed to pay, PR failed to pay, P then offered
the land (tentatively awarded to PR) to others. The new awardees paid,
and deeds of sale where executed. PR moved for reconsideration of P, but
before that they sued. CFI ruled in favor of P, CA reversed, hence this.
I: WON there was a perfected sale w/ PR.
R: Reversed.
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. The city council did not approve the subdivision
plan. The Mendozas were advised in 1961 of the disapproval. In 1964,
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 any doubt on the matter. They
did not do so. The People's Homesite and Housing corporation
(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). "In conditional obligations. the acquisition of rights, as
well as the extinguishment or loss of those already acquired, shall depend
upon the happening of the event which constitutes the condition." (Art.
1181, Civil Code). Under the facts of the case, there was no meeting of
minds on the purchase of Lot 4 with an area of 2,608.7 square meters at
P21 a square meter.

Heirs of J. San Andres, V. Ziga, & S. Tria v. Vicente rodriguez / GR

No. 135634 / 5.31.00 / Sales / MENDOZA, J p:
F: Juan San Andres was the registered owner of Lot 1914-B-2 situated in
Liboton, Naga City. On September 28, 1964, he sold a portion thereof,
consisting of 345 square meters to respondent Vicente Rodriguez for
P2,415.00. A Deed of Sale evidenced the sale. Upon the death of Juan San
Andres on May 5, 1985, Ramon San Andres was appointed judicial
administrator of the decedent's estate. A sketch plan of the 345-square
meter lot sold to respondent was prepared and from there it was found
that respondent had enlarged the area, which he purchased, by 509
square meters. Thereafter, the judicial administrator brought an action, in
behalf of the estate of Juan San Andres, for recovery of possession of the
509-square meter lot. Respondent alleged that apart from the 345-square
meter lot which had been sold to him by Juan San Andres, the latter
likewise sold to him the following day the remaining portion of the lot
consisting of 509 square meters, with both parties treating the two lots as
one whole parcel with a total area of 854 square meters. As proof of the
sale to him of 509 square meters, respondent attached to his
answer a receipt signed by the late Juan San Andres. Respondent
also attached to his answer a letter of judicial administrator
Ramon San Andres asking payment of the balance of the
purchase price. CFI ruled in favor of petitioner. It ruled that there was
no contract of sale to speak of for lack of a valid object because there was
no sufficient indication in the receipt presented to identify the property
subject of the sale, hence, the need to execute a new contract.

Respondent appealed to the Court of Appeals (CA). The CA reversed

decision of the trial court. The appellate court held that the object of
contract was determinable, and that there was conditional sale with
balance of the purchase price payable within five years from
execution of the deed of sale. Hence, this petition.


I: WON the sale was conditional or absolute.

The Supreme Court ruled that since the lot subsequently sold to
respondent was said to adjoin the "previously paid lot" on three sides
thereof, the subject lot was capable of being determined without the need
of any new contract. Thus, all of the essential elements of a
contract of sale were present, i.e. that there was a meeting of
the minds between the parties, by virtue of which the late Juan
San Andres undertook to transfer ownership of and to deliver a
determinate thing for a price certain in money. The perfected
contract of sale was confirmed by the former administrator of the
estate, who wrote a letter to respondent asking P300.00 as
partial payment for the subject lot. It cannot be gainsaid that the
contract of sale between the parties was absolute, not
conditional. There was no reservation of ownership nor a stipulation
providing for a unilateral rescission by either party. The decision of the
Court of Appeals was affirmed with the modification that respondent was
ordered to reimburse petitioners for the expenses of the survey.
Servicewide Specialist Inc. v. IAC, Siton & Judge De Dumo / GR
No. 74553 / 6.8.89 / Sales / MEDIALDEA, J p:
F: PR bought a car for 25k (down payment remaining 68.4K), issuing a
promisory note that balance shall be paid in installments. Siton made a
promissory note to the car dealer, in addition, he mortgaged the same to
a Chattel Mortgage Car Traders Phils (CTP). The mortgage was assigned
by CTP to Filininvest, w/c in turn reassigned the same to P. PR was
advised. Alleging that PR failed to pay, P moved for a writ of replevin
(recovery of the chattel) or payment. De Dumo, claiming that he bought
the car from PR, claims that he paid regularly. CFI dismissed, and ordered
PRs to pay, P appealed to IAC, w/c affirmed in toto, hence this.
I: WON the sale of Sito to De Dumo was valid.
R: Reversed. Pay in Full w/ Interest.
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. 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
We cannot ignore the findings, however, that before the sale, prompt
inquiries were made by private respondents with Filinvest Credit
Corporation regarding any possible future sale of the mortgaged property;
and that it was upon the advice of the company's credit lawyer that such
a verbal notice is sufficient and that it would be convenient if the account
would remain in the name of the mortgagor Siton. Even the personal
checks of de Dumo were accepted by petitioner as payment of
some of the installments under the promissory note (p. 92,
Rollo). If it is true that petitioner has not acquiesced in the sale,
then, it should have inquired as to why de Dumo's checks were
being used to pay Siton's obligations. Based on the foregoing
circumstances, the petitioner is bound by its predecessor
company's representations. This is based on the doctrine of estoppel.
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.

Traders Royal Bank v. CA, FGA, & CB / GR No. 93397 / 3.3.97 /

Sales Right to Transfer Ownership / TORRES, JR., J p:
F: On 11.27.79, Filriters (thru Alfredo Banaria) sold and transferred to
Philfinance CBCIs worth 3.5M. On 2.4.81, P repurchased CBCI D891 for
500k, the repurchase agreement stipulated that such will be repurchased
again from P for 519.3k on 4.27.81, w/c Philfinance failed to do because
the checks was dishonored. Because of this Philfinance executed a

Detached Assignment in favor of P, by which Philfinance transferred and

assigned all its rights & title in the said CBCI, and authorized CB to
transfer the same to P. When P went to CB for the issuance of a new
certificate for absolute ownership it was refused. CB holds that the
requirements arent complied with. Suing ensued, Filriters claimed the
ownership to be void, as such, the assignment was w/o authorization from
the board, purportedly for and in favor of Filriters, and ultimately it was
fictitious, and therefore void and inexistent, also, since such CBCI isnt a
negotiable instrument. CFI ruled in favor of, appealed in the CA failed,
hence this.
I: WON such instrument may be transferred, even though it isnt
a negotiable instrument.
R: Petition dismissed. The transfer made by Filriters to Philfinance did not
conform to the said Central Bank Circular, which for all intents, is
considered part of the law.
The language of negotiability which characterizes a negotiable paper as a
credit instrument is its freedom to circulate as a substitute for money.
This freedom in negotiability is totally absent in a certificate of
indebtedness as it merely acknowledges to pay a sum of money
to a specified person or entity for a period of time.
Petitioner, being a commercial bank, cannot feign ignorance of Central
Bank Circular 769, and its requirements. An entity which deals with
corporate agents within circumstances showing that the agents are acting
in excess of corporate authority, may not hold the corporation liable. The
unauthorized use or distribution of the same by a corporate officer of
Filriters cannot bind the said corporation, not without the approval of its
Board of Directors, and the maintenance of the required reserve fund.
Consequently, the title of Filriters over the subject certificate of
indebtedness must be upheld over the claimed interest of Traders Royal
Piercing the veil of corporate entity requires the court to see through the
protective shroud which exempts its stockholders from liabilities that
ordinarily, they could be subject to or distinguishes one corporation from
a seemingly separate one, were it not for the existing corporate fiction.
But to do this, the court must be sure that the corporate fiction was
misused, to such an extent that injustice, fraud, or crime was committed
upon another, disregarding, thus, his, her, or its rights. It is the protection

of the interests of innocent third persons dealing with the corporate entity
which the law aims to protect by this doctrine.

De Leon v. Salvador; Bernabe v. Cruz GR Nos. L-30871; L-31603

12.28.70 / Sales / Teehankee, J p:
F: In the original case (CFI Caloocan Branch of Judge Cruz), Enrique De
Leon obtained favorable decision against judgment debtor or respondent
Bernabe. By virtue of the favorable decision, two properties of Bernabe
were sold in auction. Petitioner De Leon won the auction. The one-year
redemption period lapsed without Bernabe redeeming the property, and
thus, a Certificate of Sale was issued in favor of De Leon.
In the meantime and before the expiration of the one year redemption
period, Bernabe filed a civil case against Enrique De Leon (judgment
creditor), Sheriff of Judge Cruz, and De Leon as the winning bidder on the
alleged irregularity during the auction sale, with another CFI Caloocan
Branch of Judge Salvador). Judge Salvador issued injunction order
enjoining the sale of the properties in favor of De Leon. Further, Judge
Bernabe issued an order to the Sheriff to allow Bernabe to redeem the
properties. Bernabe was able to obtain the titles again. Hence Petitioner
De Leon filed a case of certiorari on the orders issued by Judge Salvador.
One of the reasons alleged by Bernabe on the irregularity of the auction
sale is the inadequate price set during the auction.
I: WON the forced sale/execution is valid. Was the auction sale invalid due
to inadequacy of price?
R: As to the alleged inadequacy of price of Php30,194.00 when the
properties could have been sold for at least Php385,000.00 It is not a
ground to invalidate the auction sale in favor of De Leon. General Rule: In
ordinary sales, for reasons of equity in transactions, the sale may be
invalidated due to gross inadequacy of price.
Exception: In case of Forced Sales (i.e. sale at public auction) wherein the
law gives the owner the right to redeem, the theory is that the lesser the
price, the easier for the owner to redeem the property.
As to jurisdiction, the Judge Cruz's court has jurisdiction over the case
from excution sale upto the issuance of Sheriff's Certificate of Sale in
favor of the winning bidder/judgment creditor. Judge Salvador's court
cannot interfere with the orders of the Judge Cruz's court. They are of

equal level of courts and Judge Cruz's court acquired original jurisdiction
of the case.