COMPILATION OF CASE DIGESTS

SUBJECT MATTER OF SALE

1. MELLIZA vs CITY OF ILOILO (23 SCRA 477)
Facts: Juliana Melliza during her lifetime owned, among
other properties, 3 parcels of residential land in Iloilo City
(OCT 3462).Said parcels of land were known as Lots Nos. 2,
5 and 1214. The total area of Lot 1214 was 29,073 sq. m. On
27 November 1931she donated to the then Municipality of
Iloilo, 9,000 sq. m. of Lot 1214, to serve as site for the
municipal hall. The donation was however revoked by the
parties for the reason that the area donated was found
inadequate to meet the requirements of the development
plan of the municipality, the so-called Arellano Plan.
Subsequently, Lot 1214 was divided by Certeza Surveying
Co., Inc. into Lots 1214-A and 1214-B. And still later, Lot
1214-B was further divided into Lots 1214-B-1, Lot 1214-B-2
and Lot1214-B-3. As approved by the Bureau of Lands, Lot
1214-B-1, with 4,562 sq. m., became known as Lot 1214-B;
Lot 1214-B-2,with 6,653 sq. m., was designated as Lot 1214C; and Lot 1214-B-3, with 4,135 sq. m., became Lot 1214-D.
On 15 November1932, Juliana Melliza executed an
instrument without any caption providing for the absolute
sale involving all of lot 5, 7669 sq.m. of Lot 2 (sublots 2-B
and 2-C), and a portion of 10,788 sq. m. of Lot 1214 (sublots
1214-B2 and 1214-B3) in favor of the Municipal Government
of Iloilo for the sum of P6,422; these lots and portions being
the ones needed by the municipal government for the
construction of avenues, parks and City hall site according
the Arellano plan.
On 14 January 1938, Melliza sold her remaining interest in
Lot 1214 to Remedios Sian Villanueva (thereafter TCT
18178). Remedios in turn on 4 November1946 transferred
her rights to said portion of land to Pio Sian Melliza

(thereafter TCT 2492). Annotated at the back of Pio Sian

Mellizas title certificate was the following that a portion of
10,788 sq. m. of Lot 1214 now designated as Lots 1412-B-2
and1214-B-3 of the subdivision plan belongs to the
Municipality of Iloilo as per instrument dated 15 November
1932. On 24 August 1949 the City of Iloilo, which
succeeded to the Municipality of Iloilo, donated the city hall
site together with the building thereon, to the University of
the Philippines (Iloilo branch). The site donated consisted of
Lots 1214-B, 1214-C and 1214-D, with a total area of 15,350
sq. m., more or less. Sometime in 1952, the University of the
Philippines enclosed the site donated with a wire fence. Pio
Sian Melliza thereupon made representations, thru his
lawyer, with the city authorities for payment of the value of
the lot (Lot 1214-B). No recovery was obtained, because as
alleged by Pio Sian Melliza, the City did not have funds. The
University of the Philippines, meanwhile, obtained Transfer
Certificate of Title No. 7152 covering the three lots, Nos.
1214-B,1214-C and 1214-D.On 10 December 1955 Pio Sian
Melizza filed an action in the CFI Iloilo against Iloilo City and
the University of the Philippines for recovery of Lot 1214-B
or of its value. After stipulation of facts and trial, the CFI
rendered its decision on 15 August 1957, dismissing the
complaint. Said court ruled that the instrument executed by
Juliana Melliza in favor of Iloilo municipality included in the
conveyance Lot 1214-B, and thus it held that Iloilo City had
the right to donate Lot 1214-B to UP. Pio Sian Melliza
appealed to the Court of Appeals. On 19 May 1965, the CA
affirmed the interpretation of the CFI that the portion of Lot
1214 sold by Juliana Melliza was not limited to the 10,788
square meters specifically mentioned but included whatever
was needed for the construction of avenues, parks and the
city hall site. Nonetheless, it ordered the remand of the case
for reception of evidence to determine the area actually
taken by Iloilo City for the construction of avenues, parks

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and for city hall site. Hence, the appeal by Pio San Melliza to
the Supreme Court.
One of his causes of action was that the contract of sale
executed between Melliza and the Mun. referred only to lots
1214-C and 1214-D and it is unwarranted to include lot
1214-B as being included under the description therein
because that would mean that the object of the contract of
sale would be indeterminate. One of the essential
requirements for a contract of sale is that it should have for
its object a determinate thing.
HELD: The paramount intention of the parties was to
provide Iloilo municipality with lots sufficient or adequate in
area for the construction of the Iloilo City hall site, with its
avenues and parks. For this matter, a previous donation for
this purpose between the same parties was revoked by
them, because of inadequacy of the area of the lot donated.
Said instrument described 4parcels of land by their lot
numbers and area; and then it goes on to further describe,
not only those lots already mentioned, but the lots object of
the sale, by stating that said lots were the ones needed for
the construction of the city hall site, avenues and parks
according to the Arellano plan. If the parties intended
merely to cover the specified lots (Lots 2, 5, 1214-C and
1214-D), there would scarcely have been any need for the
next paragraph, since these lots were already plainly and
very clearly described by their respective lot number and
areas. Said next paragraph does not really add to the clear
description that was already given to them in the previous
one. It is therefore the more reasonable interpretation to
view it as describing those other portions of land contiguous
to the lots that, by reference to the Arellano plan, will be
found needed for the purpose at hand, the construction of
the city hall site.

The requirement of the law that a sale must have for its
object a determinate thing, is fulfilled as long as, at the time
the contract is entered into, the object of the sale is capable
of being made determinate without the necessity of a new
or further agreement between the parties (Art. 1273, old
Civil Code; Art. 1460, New Civil Code). The specific mention
of some of the lots plus the statement that the lots object of
the sale are the ones needed for city hall site; avenues and
parks, according to the Arellano plan, sufficiently provides a
basis, as of the time of the execution of the contract, for
rendering determinate said lots without the need of a new
and further agreement of the parties.
The Supreme Court affirmed the decision appealed from
insofar as it affirms that of the CFI, and dismissed the
complaint; without costs
2. YU TEK vs GONZALES (29 Phil 384)
FACTS: A written contract was executed between Basilio
Gonzalez and Yu Tek and Co., where Gonzales was obligated
to deliver600 piculs of sugar of the 1st and 2nd grade to Yu
Tek, within the period of 3 months (1 January-31 March
1912) at any place within the municipality of Sta. Rosa,
which Yu Tek & Co. or its representative may designate; and
in case, Gonzales does not deliver, the contract will be
rescinded and Gonzales shall be obligated to return the
P3,000 received and also the sum of P1,200by way of
indemnity for loss and damages. No sugar had been
delivered to Yu Tek & Co. under this contract nor had it been
able to recover the P3,000. Yu Tek & Co. filed a complaint
against Gonzales, and prayed for judgment for the P3,000
and the additional P1,200. Judgment was rendered for
P3,000 only, and from this judgment both parties appealed.

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Defendant alleges that the court erred in refusing to permit
parol evidence showing that the parties intended that the
sugar was to be secured from the crop which the defendant
raised on his plantation, and that he was unable to fulfill the
contract by reason of the almost total failure of his crop.
The second contention of the defendant arises from the first.
He assumes that the contract was limited to the sugar he
might raise upon his own plantation; that the contract
represented a perfected sale; and that by failure of his crop
he was relieved from complying with his undertaking by loss
of the thing due. (Arts. 1452, 1096, and 1182, Civil Code.)
ISSUES: 1) Whether compliance of the obligation to deliver
depends upon the production in defendants plantation
2) Whether there is a perfected sale
3) Whether liquidated damages of P1,200 should be
awarded to the plaintif
HELD: 1) The case appears to be one to which the rule
which excludes parol evidence to add to or vary the terms of
a written contract is decidedly applicable. 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. It may be true that defendant owned a
plantation and expected to raise the sugar himself, but he
did not limit his obligation to his own crop of sugar. Our
conclusion is that the condition which the defendant seeks

to add to the contract by parol evidence cannot be

considered. The rights of the parties must be determined by
the writing itself.
2) Article 1450 defines a perfected sale as 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. Article 1452 provides
that the injury to or the profit of the thing sold shall, after
the contract has been perfected, be governed by the
provisions of articles 1096 and 1182. There is a perfected
sale with regard to the thing whenever the article of sale
has been physically segregated from all other articles
In McCullough vs. Aenlle & Co. (3 Phil 285), a particular
tobacco factory with its contents was held sold under a
contract which did not provide for either delivery of the
price or of the thing until a future time. In Barretto vs. Santa
Marina (26 Phil 200),specified shares of stock in a tobacco
factory were held sold by a contract which deferred delivery
of both the price and the stock until the latter had been
appraised by an inventory of the entire assets of the
company. In Borromeo vs. Franco (5 Phil.Rep., 49) a sale of a
specific house was held perfected between the vendor and
vendee, although the delivery of the price was withheld until
the necessary documents of ownership were prepared by
the vendee. In Tan Leonco vs. Go Inqui (8 Phil. Rep.,531) the
plaintif had delivered a quantity of hemp into the
warehouse of the defendant. The defendant drew a bill of
exchange in the sum of P800, representing the price which
had been agreed upon for the hemp thus delivered. Prior to
the presentation of the bill for payment, in said case, the
hemp was destroyed. Whereupon, the defendant suspended
payment of the bill. It was held that the hemp having been

COMPILATION OF CASE DIGESTS

already delivered, the title had passed and the loss was the
vendees. It is our purpose to distinguish the case at bar
from all these cases.
The contract in the present case was merely an executory
agreement; a promise of sale and not a sale. As there was
no perfected sale, it is clear that articles 1452, 1096, and
1182 are not applicable. The agreement upon the thing
which was the object of the contract was not within the
meaning of article 1450. Sugar is one of the staple
commodities of this country. For the purpose of sale its bulk
is weighed, the customary unit of weight being denominated
a picul.' There was no delivery under the contract. If called
upon to designate the article sold, it is clear that Gonzales
could only say that it was sugar. He could only use this
generic name for the thing sold. There was no
appropriation of any particular lot of sugar. Neither party
could point to any specific quantity of sugar.
The contract in the present case is diferent from the
contracts discussed in the cases referred to. In the
McCullough case, for instance, the tobacco factory which the
parties dealt with was specifically pointed out and
distinguished from all other tobacco factories. So, in the
Barretto case, the particular shares of stock which the
parties desired to transfer were capable of designation. In
the Tan Leonco case, where a quantity of hemp was the
subject of the contract, it was shown that quantity had been
deposited in a specific warehouse, and thus set apart and
distinguished from all other hemp
The Supreme Court affirmed the judgment appealed from
with the modification allowing the recovery of P1,200 under
paragraph 4 of the contract, without costs
3. NATONAL GRAINS AUTHORITY vs IAC

FACTS: National Grains Authority (now National Food

Authority, NFA) is a government agency created under PD 4.
One of its incidental functions is the buying of palay grains
from qualified farmers. On 23 August 1979, Leon Soriano
ofered to sell palay grains to the NFA, through the Provincial
Manager (William Cabal) of NFA in Tuguegarao, Cagayan. He
submitted the documents required by the NFA for prequalifying as a seller, which were processed and
accordingly, he was given a quota of 2,640 cavans of palay.
The quota noted in the Farmers Information Sheet
represented the maximum number of cavans of palay that
Soriano may sell to the NFA. On 23 and 24 August 1979,
Soriano delivered 630 cavans of palay. The palay delivered
were not rebagged, classified and weighed. When Soriano
demanded payment of the 630 cavans of palay, he was
informed that its payment will beheld in abeyance since Mr.
Cabal was still investigating on an information he received
that Soriano was not a bona fide farmer and the palay
delivered by him was not produced from his farmland but
was taken from the warehouse of a rice trader, Ben de
Guzman. On 28 August 1979, Cabal wrote Soriano advising
him to withdraw from the NFA warehouse the 630 cavans
stating that NFA cannot legally accept the said delivery on
the basis of the subsequent certification of the BAEX
technician (Napoleon Callangan) that Soriano is not a bona
fide farmer.
Instead of withdrawing the 630 cavans of palay, Soriano
insisted that the palay grains delivered be paid. He then
filed a complaint for specific performance and/or collection
of money with damages on 2 November 1979, against the
NFA and William Cabal (Civil Case 2754). Meanwhile, by
agreement of the parties and upon order of the trial court,
the 630 cavans of palay in question were withdrawn from
the warehouse of NFA. On 30 September 1982, the trial

COMPILATION OF CASE DIGESTS

court found Soriano a bona fide farmer and rendered
judgment ordering the NFA, its officers and agents to pay
Soriano the amount of P47,250.00 representing the unpaid
price of the 630 cavans of palay plus legal interest thereof
(12% per annum, from the filing of complaint on 20
November1979 until fully paid). NFA and Cabal filed a
motion for reconsideration, which was denied by the court
on 6 December 1982.Appeal was filed with the Intermediate
Appellate Court. On 23 December 1986, the then IAC upheld
the findings of the trialc ourt and affirmed the decision
ordering NFA and its officers to pay Soriano the price of the
630 cavans of rice plus interest. Themotion for
reconsideration of the appellate courts decision was denied
in a resolution dated 17 April 1986. Hence, the present
petition for review with the sole issue of whether or not
there was a contract of sale in the present case.
ISSUE: Whether there was a perfected sale
HELD: Soriano initially ofered to sell palay grains produced
in his farmland to NFA. When the latter accepted the ofer by
noting in Soriano's Farmer's Information Sheet a quota of
2,640 cavans, there was already a meeting of the minds
between the parties. The object of the contract, being the
palay grains produced in Soriano's farmland and the NFA
was to pay the same depending upon its quality.
The fact that the exact number of cavans of palay to be
delivered has not been determined does not afect the
perfection of the contract. Article 1349 of the New Civil Code
provides: ".The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract,
provided it is possible to determine the same, without the
need of a new contract between the parties." In this case,
there was no need for NFA and Soriano to enter into a new

contract to determine the exact number of cavans of palay

to be sold. Soriano can deliver so much of his produce as
long as it does not exceed 2,640 cavans. From the moment
the contract of sale is perfected, it is incumbent upon the
parties to comply with their mutual obligations or "the
parties may reciprocally demand performance" thereof.
The Supreme Court dismissed the instant petition for review,
and affirmed the assailed decision of the then IAC (now
Court of Appeals) is affirmed; without costs.
4. SCHUBACK & SONS vs. CA
FACTS: In 1981, Ramon San Jose (Philippine SJ Industrial
Trading) established contact with Johannes Schuback & Sons
Philippine Trading Corporation through the Philippine
Consulate General in Hamburg, West Germany, because he
wanted to purchase MAN bus spare parts from Germany.
Schuback communicated with its trading partner, Johannes
Schuback and Sohne Handelsgesellschaft m.b.n. & Co.
(Schuback Hamburg) regarding the spare parts San Jose
wanted to order. On 16 October 1981,San Jose submitted to
Schuback a list of the parts he wanted to purchase with
specific part numbers and description. Schuback referred
the list to Schuback Hamburg for quotations. Upon receipt of
the quotations, Schuback sent to San Jose a letter dated25
November 1981 enclosing its ofer on the items listed. On 4
December 1981, San Jose informed Schuback that he
preferred genuine to replacement parts, and requested that
he be given a 15% discount on all items. On 17 December
1981, Schuback submitted its formal ofer containing the
item number, quantity, part number, description, unit price
and total to San Jose. On24 December 1981, San Jose
informed Schuback of his desire to avail of the prices of the
parts at that time and enclosed its Purchase Order 0101

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dated 14 December 1981. On 29 December 1981, San Jose
personally submitted the quantities he wanted to Mr. Dieter
Reichert, General Manager of Schuback, at the latters
residence. The quantities were written in ink by San Jose in
the same PO previously submitted. At the bottom of said PO,
San Jose wrote in ink above his signature: NOTE: Above PO
will include a 3% discount. The above will serve as our initial
PO. Schuback immediately ordered the items needed by
San Jose from Schuback Hamburg. Schuback Hamburg in
turn ordered the items from NDK, a supplier of MAN spare
parts in West Germany.

On 4 January 1982, Schuback Hamburg sent Schuback a

proforma invoice to be used by San Jose in applying for a
letter of credit. Said invoice required that the letter of credit
be opened in favor of Schuback Hamburg. San Jose
acknowledged receipt of the invoice. An order confirmation
was later sent by Schuback Hamburg to Schuback which
was forwarded to and received by San Jose on 3 February
1981. On 16 February 1982, Schuback reminded San Jose to
open the letter of credit to avoid delay in shipment and
payment of interest. In the meantime, Schuback Hamburg
received invoices from NDK for partial deliveries on Order
12204. On 16 February 1984, Schuback Hamburg paid NDK.
On 18 October 1982, Schuback again reminded San Jose of
his order and advised that the case may be endorsed to its
lawyers. San Jose replied that he did not make any valid PO
and that there was no definite contract between him and
Schuback. Schuback sent a rejoinder explaining that there is
a valid PO and suggesting that San Jose either proceed with
the order and open a letter of credit or cancel the order and
pay the cancellation fee of 30% F.O.B. value, or Schuback
will endorse the case to its lawyers. Schuback Hamburg
issued a Statement of Account to Schuback enclosing
therewith Debit Note charging Schuback 30% cancellation
fee, storage and interest charges in the total
amount of DM 51,917.81. Said amount was deducted from
Schubacks account with Schuback Hamburg. Demand
letters sent to San Jose by Schubacks counsel dated 22
March 1983 and 9J une 1983 were to no avail.
Schuback filed a complaint for recovery of actual or
compensatory damages, unearned profits, interest,
attorneys fees and costs against San Jose. In its decision
dated 13 June 1988, the trial court ruled in favor of
Schuback by ordering San Jose to pay it, among others,

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actual compensatory damages in the amount of DM
51,917.81, unearned profits in the amount of DM14,061.07,
or their peso equivalent. San Jose elevated his case before
the Court of Appeals. On 18 February 1992, the appellate
court reversed the decision of the trial court and dismissed
Schubacks complaint. It ruled that there was no perfection
of contract since there was no meeting of the minds as to
the price between the last week of December 1981 and the
first week of January 1982. Hence, the petition for review on
certiorari.
ISSUE: Whether or not a contract of sale has been
perfected between the parties
HELD: Article 1319 of the Civil Code states: "Consent is
manifested by the meeting of the ofer and acceptance upon
the thing and the cause which are to constitute the contract.
The ofer must be certain and the acceptance absolute. A
qualified acceptance constitutes a counter ofer." The facts
presented to us indicate that consent on both sides has
been manifested. The ofer by petitioner was manifested on
December 17, 1981 when petitioner submitted its proposal
containing the item number, quantity, part number,
description, the unit price and total to private respondent.
On December 24, 1981, private respondent informed
petitioner of his desire to avail of the prices of the parts at
that time and simultaneously enclosed its Purchase Order.
At this stage, a meeting of the minds between vendor and
vendee has occurred, the object of the contract: being the
spare parts and the consideration, the price stated in
petitioner's ofer dated December 17, 1981 and accepted by
the respondent on December 24, 1981.
Although the quantity to be ordered was made determinate
only on 29 December 1981, quantity is immaterial in the

perfection of a sales contract. What is of importance is the

meeting of the minds as to the object and cause, which from
the facts disclosed, show that as of 24 December 1981,
these essential elements had already concurred. Thus,
perfection of the contract took place, not on 29 December
1981, but rather on 24 December 1981.
5. NOOL vs CA
FACTS: One lot formerly owned by Victorio Nool (TCT T74950) has an area of 1 hectare. Another lot previously
owned byF rancisco Nool (TCT T-100945) has an area of
3.0880 hectares. Both parcels are situated in San Manuel,
Isabela. Spouses Conchita Nool and Gaudencio Almojera
(plaintifs) alleged that they are the owners of the subject
land as they bought the same from Victorio and Francisco
Nool, and that as they are in dire need of money, they
obtained a loan from the Ilagan Branch of the DBP (Ilagan,
Isabela), secured by a real estate mortgage on said parcels
of land, which were still registered in the names of Victorino
and Francisco Nool, at the time, and for the failure of the
plaintifs to pay the said loan, including interest and
surcharges, totaling P56,000.00, the mortgage was
foreclosed; that within the period of redemption, the
plaintifs contacted Anacleto Nool for the latter to redeem
the foreclosed properties from DBP, which the latter did; and
as a result, the titles of the2 parcels of land in question were
transferred to Anacleto; that as part of their arrangement or
understanding, Anacleto agreed to buy from Conchita the 2
parcels of land under controversy, for a total price of
P100,000.00, P30,000.00 of which price was paid to
Conchita, and upon payment of the balance of P14,000.00,
the plaintifs were to regain possession of the 2 hectares of
land, which amounts spouses Anacleto Nool and Emilia
Nebre (defendants) failed to pay, and the same day the said

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arrangement was made; another covenant was entered into
by the parties, whereby the defendants agreed to return to
plaintifs the lands in question, at anytime the latter have
the necessary amount; that latter asked the defendants to
return the same but despite the intervention of the
Barangay Captain of their place, defendants refused to
return the said parcels of land to plaintifs; thereby impelling
the plaintifs to come to court for relief. On the other hand,
defendants theorized that they acquired the lands in
question from the DBP, through negotiated sale, and were
misled by plaintifs when defendant Anacleto Nool signed
the private writing, agreeing to return subject lands when
plaintifs have the money to redeem the same; defendant
Anacleto having been made to believe, then, that his sister,
Conchita, still had the right to redeem the said properties
It should be stressed that Manuel S. Mallorca, authorized
officer of DBP, certified that the 1-year redemption period
(from 16March 1982 up to 15 March 1983) and that the
mortgagors right of redemption was not exercised within
this period. Hence, DBP became the absolute owner of said
parcels of land for which it was issued new certificates of
title, both entered on 23 May1983 by the Registry of Deeds
for the Province of Isabela. About 2 years thereafter, on 1
April 1985, DBP entered into a Deed of Conditional Sale
involving the same parcels of land with Anacleto Nool as
vendee. Subsequently, the latter was issued new certificates
of title on 8 February 1988.
The trial court ruled in favor of the defendants, declaring the
private writing to be an option to sell, not binding and
considered validly withdrawn by the defendants for want of
consideration; ordering the plaintifs to return to the
defendants the sum of P30,000.00 plus interest thereon at
the legal rate, from the time of filing of defendants

counterclaim until the same is fully paid; to deliver peaceful

possession of the 2 hectares; and to pay reasonable rents on
said 2 hectares at P5,000.00 per annum or at P2,500.00 per
cropping from the time of judicial demand until the said lots
shall have been delivered to the defendants; and to pay the
costs. The plaintifs appealed to the Court of Appeals (CA GR
CV 36473), which affirmed the appealed judgment intoto on
20 January 1993. Hence, the petition before the Supreme
Court.
ISSUE: Whether the Contract of Repurchase is valid.
HELD: Nono dat quod non habet, No one can give
what he does not have; Contract of repurchase
inoperative thus void.
A contract of repurchase arising out of a contract of sale
where the seller did not have any title to the property sold
is not valid. Since nothing was sold, then there is also
nothing to repurchase.
Article 1505 of the Civil Code provides that where goods
are sold by a person who is not the owner thereof, and who
does not sell them under authority or with consent of the
owner, the buyer acquires no better title to the goods than
the seller had, unless the owner of the goods is by his
conduct precluded from denying the sellers authority to
sell. Jurisprudence, on the other hand, teaches us that a
person can sell only what he owns or is authorized to sell;
the buyer can as a consequence acquire no more than what
the seller can legally transfer. No one can give what he
does not have nono dat quod non habet.
In the present case, there is no allegation at all that
petitioners were authorized by DBP to sell the property to
the private respondents. Further, the contract of repurchase

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that the parties entered into presupposes that petitioners
could repurchase the property that they sold to private
respondents. As petitioners sold nothing, it follows that
they can also repurchase nothing. In this light, the
contract of repurchase is also inoperative and by the same
analogy, void.
The Supreme Court denied the petition, and affirmed the
assailed decision of the Court of Appeals
6. VILLAFLOR vs CA
FACTS: On 16 January 1940, Cirilo Piencenaves, in a Deed
of Absolute Sale, sold to Vicente Villafor, a parcel of
agricultural land (planted to Abaca) containing an area of 50
hectares, more or less. The deed states that the land was
sold to Villaflor on 22 June1937, but no formal document
was then executed, and since then until the present time,
Villaflor has been in possession and occupation of the same.
Before the sale of said property, Piencenaves inherited said
property form his parents and was in adverse possession of
such without interruption for more than 50 years. On the
same day, Claudio Otero, in a Deed of Absolute Sale sold to
Villaflor a parcel of agricultural land (planted to corn),
containing an area of 24 hectares, more or less;
Hermogenes Patete, in a Deed of Absolute Sale sold to
Villaflor, a parcel of agricultural land (planted to abaca and
corn), containing an area of 20 hectares, more or less. Both
deed state the same details or circumstances as that of
Piencenaves. On 15 February 1940, Fermin Bocobo, in a
Deed of Absolute Sale sold to Villaflor, a parcel of
agricultural land (planted with abaca), containing an area of
18 hectares, more or less.
On 8 November 1946, Villaflor leased to Nasipit Lumber Co.,
Inc. a parcel of land, containing an area of 2 hectares,

together with all the improvements existing thereon, for a

period of 5 years (from 1 June 1946) at a rental of P200.00
per annum to cover the annual rental of house and building
sites for 33 houses or buildings. The lease agreement
allowed the lessee to sublease the premises to any person,
firm or corporation; and to build and construct additional
houses with the condition the lessee shall pay to the lessor
the amount of 50 centavos per month for every house and
building; provided that said constructions and improvements
become the property of the lessor at the end of the lease
without obligation on the part of the latter for expenses
incurred in the construction of the same.
On 7 July 1948, in an Agreement to Sell Villaflor conveyed
to Nasipit Lumber, 2 parcels of land. Parcel 1 contains an
area of 112,000 hectares more or less, divided into lots
5412, 5413, 5488, 5490,5491, 5492, 5850, 5849, 5860,
5855, 5851, 5854, 5855, 5859, 5858, 5857, 5853, and 5852;
and containing abaca, fruit trees, coconuts and thirty houses
of mixed materials belonging to the Nasipit Lumber
Company. Parcel 2 contains an area of 48,000more or less,
divided into lots 5411, 5410, 5409, and 5399, and
containing 100 coconut trees, productive, and 300 cacao
trees. From said day, the parties agreed that Nasipit Lumber
shall continue to occupy the property not anymore in
concept of lessee but as prospective owners.
On 2 December 1948, Villaflor filed Sales Application V-807
with the Bureau of Lands, Manila, to purchase under the
provisions of Chapter V, XI or IX of CA 141 (The Public Lands
Act), as amended, the tract of public lands. Paragraph 6 of
the Application, states: I understand that this application
conveys no right to occupy the land prior to its approval,
and I recognize that the land covered by the same is of
public domain and any and all rights I may have with

COMPILATION OF CASE DIGESTS

respect thereto by virtue of continuous occupation and
cultivation are hereby relinquished to the Government.
On 7 December 1948, Villaflor and Nasipit Lumber executed
an Agreement, confirming the Agreement to Sell of 7 July
1948, but with reference to the Sales Application filed with
the Bureau of Land. On 31 December 1949, the Report by
the public land inspector (District Land Office, Bureau of
Lands, in Butuan) contained an endorsement of the said
officer recommending rejection of the Sales Application of
Villaflor for having leased the property to another even
before he had acquired transmissible rights thereto. In a
letter of Villaflor dated 23 January1950, addressed to the
Bureau of Lands, he informed the Bureau Director that he
was already occupying the property when the Bureaus
Agusan River Valley Subdivision Project was inaugurated,
that the property was formerly claimed as private property,
and that therefore, the property was segregated or excluded
from disposition because of the claim of private ownership.
Likewise, in a letter of Nasipit Lumber dated 22 February
1950 addressed to the Director of Lands, the corporation
informed the Bureau that it recognized Villaflor as the real
owner, claimant and occupant of the land; that since June
1946, Villaflor leased 2hectares inside the land to the
company; that it has no other interest on the land; and that
the Sales Application of Villaflor should be given favorable
consideration.
On 24 July 1950, the scheduled date of auction of the
property covered by the Sales Application, Nasipit Lumber
ofered the highest bid of P41.00 per hectare, but since an
applicant under CA 141, is allowed to equal the bid of the
highest bidder, Villaflor tendered an equal bid, deposited the
equivalent of 10% of the bid price and then paid the
assessment in full.

10

On 16 August 1950, Villaflor executed a document,

denominated as a Deed of Relinquishment of Rights, in
favor on Nasipit Lumber, in consideration of the amount of
P5,000 that was to be reimbursed to the former
representing part of the purchase price of the land, the
value of the improvements Villaflor introduced thereon, and
the expenses incurred in the publication of the Notice of
Sale; in light of his difficulty to develop the same as Villaflor
has moved to Manila. Pursuant thereto, on 16 August1950,
Nasipit Lumber filed a Sales Application over the 2 parcels of
land, covering an area of 140 hectares, more or less. This
application was also numbered V-807. On 17 August 1950
the Director of Lands issued an Order of Award in favor of
Nasipit Lumber; and its application was entered in the
record as Sales Entry V-407.On 27 November 1973, Villafor
wrote a letter to Nasipit Lumber, reminding the latter of
their verbal agreement in 1955; but the new set of
corporate officers refused to recognize Villaflors claim.
In a formal protest dated 31 January 1974 which Villaflor
filed with the Bureau of Lands, he protested the Sales
Application of Nasipit Lumber, claiming that the company
has not paid him P5,000.00 as provided in the Deed of
Relinquishment of Rights dated 16 August 1950. On 8
August 1977, the Director of Lands found that the payment
of the amount of P5,000.00 in the Deed and the
consideration in the Agreement to Sell were duly proven,
and ordered the dismissal of Villaflors protest.
On 6 July 1978, Villaflor filed a complaint in the trial court
for Declaration of Nullity of Contract (Deed of
Relinquishment of Rights), Recovery of Possession (of two
parcels of land subject of the contract), and Damages at
about the same time that he appealed the decision of the
Minister of Natural Resources to the Office of the President.

COMPILATION OF CASE DIGESTS

On 28 January 1983, he died. The trial court ordered his
widow, Lourdes D. Villaflor, to be substituted as petitioner.
After trial in due course, the then CFI Agusan del Norte and
Butuan City, Branch III, dismissed the complaint on the
grounds that: (1) petitioner admitted the due execution and
genuineness of the contract and was estopped from proving
its nullity, (2) the verbal lease agreements were
unenforceable under Article 1403 (2)(e) of the Civil Code,
and (3) his causes of action were barred by extinctive
prescription and/or laches. It ruled that there was
prescription and/or laches because the alleged verbal lease
ended in 1966, but the action was filed only on 6 January
1978. The 6-year period within which to file an action on an
oral contract per Article 1145 (1) of the Civil Code expired in
1972. Nasipit Lumber was declared the lawful owner and
actual physical possessor of the 2 parcels of land
(containing a total area of 160 hectares). The Agreements to
Sell Real Rights and the Deed of Relinquishment of Rights
over the 2 parcels were likewise declared binding between
the parties, their successors and assigns; with double costs
against Villaflor. The heirs of petitioner appealed to the
Court of Appeals which, however, rendered judgment
against them via the assailed Decision dated 27 September
1990 finding petitioners prayers (1) for the declaration of
nullity of the deed of relinquishment, (2) for the eviction of
private respondent from the property and (3) for the
declaration of petitioners heirs as owners to be without
basis.
Not satisfied, petitioners heirs filed the petition for review
dated 7 December 1990. In a Resolution dated 23 June
1991, the Court denied this petition for being late. On
reconsideration, the Court reinstated the petition.

11

ISSUE: Whether the sale is valid or void for the alleged

existence of simulation of contract
HELD: The provision of the law is specific that public lands
can only be acquired in the manner provided for therein and
not otherwise(Sec. 11, CA. No. 141, as amended). In his
sales application, petitioner expressly admitted that said
property was public land. This is formidable evidence as it
amounts to an admission against interest. The records show
that Villaflor had applied for the purchase of lands in
question with this Office (Sales Application V-807) on 2
December 948. There is a condition in the sales application
to the efect that he recognizes that the land covered by the
same is of public domain and any and all rights he may have
with respect thereto by virtue of continuous occupation and
cultivation are relinquished to the Government of which
Villaflor is very much aware. It also appears that Villaflor had
paid for the publication fees appurtenant to the sale of the
land. He participated in the public auction where he was
declared the successful bidder. He had fully paid the
purchase price thereof. It would be a height of absurdity for
Villaflor to be buying that which is owned by him if his claim
of private ownership thereof is to be believed. The area in
dispute is not the private property of the petitioner.
It is a basic assumption of public policy that lands of
whatever classification belong to the state. Unless alienated
in accordance with law, it retains its rights over the same as
dominus. No public land can be acquired by private persons
without any grant, express or implied from the government.
It is indispensable then that there be showing of title from
the state or any other mode of acquisition recognized by
law. s such sales applicant manifestly acknowledged that he
does not own the land and that the same is a public land
under the administration of the Bureau of Lands, to which

COMPILATION OF CASE DIGESTS

the application was submitted, all of its acts prior thereof,
including its real estate tax declarations, characterized its
possessions of the land as that of a sales applicant. And
consequently, as one who expects to buy it, but has not as
yet done so, and is not, therefore, its owner.
The rule on the interpretation of contracts (Article 1371) is
used in affirming, not negating, their validity. Article 1373,
which is a conjunct of Article 1371, provides that, if the
instrument is susceptible of two or more interpretations, the
interpretation which will make it valid and efectual should
be adopted. In this light, it is not difficult to understand that
the legal basis urged by petitioner does not support his
allegation that the contracts to sell and the deed of
relinquishment are simulated and fictitious.
Simulation occurs when an apparent contract is a
declaration of a fictitious will, deliberately made by
agreement of the parties, in order to produce, for the
purpose of deception, the appearance of a juridical act
which does not exist or is diferent from that which was
really executed. Such an intention is not apparent in the
agreements. The intent to sell, on the other hand, is as clear
as daylight. The fact, that the agreement to sell (7
December 1948) did not absolutely transfer ownership of
the land to private respondent, does not show that the
agreement was simulated. Petitioners delivery of the
Certificate of Ownership and execution of the deed of
absolute sale were suspensive conditions, which gave rise to
a corresponding obligation on the part of the private
respondent, i.e., the payment of the last installment of the
consideration mentioned in the Agreement. Such conditions
did not afect the perfection of the contract or prove
simulation

12

Nonpayment, at most, gives the vendor only the right to sue

for collection. Generally, in a contract of sale, payment of
the price is a resolutory condition and the remedy of the
seller is to exact fulfillment or, in case of a substantial
breach, to rescind the contract under Article 1191 of the
Civil Code. However, failure to pay is not even a breach, but
merely an event which prevents the vendors obligation to
convey title from acquiring binding force.
T he requirements for a sales application under the Public
Land Act are: (1) the possession of the qualifications
required by said Act (under Section 29) and (2) the lack of
the disqualifications mentioned therein (under Sections 121,
122, and 123). Section121 of the Act pertains to acquisitions
of public land by a corporation from a grantee: The private
respondent, not the petitioner, was the direct grantee of the
disputed land. Sections 122 and 123 disqualify corporations,
which are not authorized by their charter, from acquiring
public land; the records do not show that private respondent
was not so authorized under its charter
The Supreme Court dismissed the petition.
PRICE
7. LOYOLA vs CA
FACTS: A parcel of land (Lot 115-A-1 of subdivision plan
[LRC] Psd-32117, a portion of Lot 115-A described on Plan
Psd-55228, LRC[GLRO] Record 8374, located in Poblacion,
Binan, Laguna, and containing 753 sq.m., TCT T-32007) was
originally owned in common by the siblings Mariano and
Gaudencia Zarraga, who inherited it from their father.
Mariano predeceased his sister who died single, without
ofspring on 5 August 1983, at the age of 97. Victorina
Zarraga vda. de Loyola and Cecilia Zarraga, are sisters of

COMPILATION OF CASE DIGESTS

Gaudencia and Mariano. The property was subject of Civil
Case B-1094 before the then CFI Laguna (Branch 1, Spouses
Romualdo Zarraga, et al. v .Gaudencia Zarraga, et al.).
Romualdo Zarraga was the plaintif in Civil Case B-1094. The
defendants were his siblings: Nieves, Romana, Guillermo,
Purificacion, Angeles, Roberto, Estrella, and Jose, all
surnamed Zarraga, as well as his aunt, Gaudencia. The trial
court decided Civil Case B-1094 in favor of the defendants.
Gaudencia was adjudged owner of the 1/2 portion of Lot
115-A-1. Romualdo elevated the decision to the Court of
Appeals and later the Supreme Court. The petition (GR
59529) was denied by the Court on 17 March 1982.On 24
August 1980, nearly 3 years before the death of Gaudencia
while GR 59529 was still pending before the Supreme Court.
On said date, Gaudencia allegedly sold to the children of
Mariano Zarraga (Nieves, Romana, Romualdo, Guillermo,
Lucia, Purificacion, Angeles, Roberto, Estrella Zarraga) and
the heirs of Jose Zarraga Aurora, Marita, Jose, Ronaldo,
Victor, Lauriano,and Ariel Zarraga; first cousins of the
Loyolas) her share in Lot 115-A- 1 for P34,000.00. The sale
was evidenced by a notarizeddocument denominated as
Bilihang Tuluyan ng Kalahati (1/2) ng Isang Lagay na Lupa.
Romualdo, the petitioner in GR 59529, was among the
vendees.The decision in Civil Case B-1094 became final. The
children of Mariano Zarraga and the heirs of Jose Zarraga
(privaterespondents) filed a motion for execution.
On 16 February 1984, the sherif executed the
corresponding deed of reconveyance to Gaudencia. On 23
July 1984, however, the Register of Deeds of Laguna,
Calamba Branch, issued in favor of private respondents, TCT
T-116067, on the basis of the sale on 24 August 1980 by
Gaudencia to them. On 31 January 1985, Victorina and
Cecilia filed a complaint, docketed as Civil Case B-2194, with

13

the RTC of Bian, Laguna, for the purpose of annulling the

sale and the TCT. Victorina died on 18 October 1989, while
Civil Case B-2194 was pending with the trial court. Cecilia
died on 4 August 1990, unmarried and childless. Victorina
and Cecilia were substituted by Ruben, Candelaria,Lorenzo,
Flora, Nicadro, Rosario, Teresita and Vicente Loyola as
plaintifs. The trial court rendered judgment in favor of
complainants; declaring the simulated deed of absolute sale
as well as the issuance of the corresponding TCT null and
void, ordering the Register of Deeds of Laguna to cancel TCT
T-116087 and to issue another one in favor of the plaintifs
and the defendants as co-owners and legal heirs of the late
Gaudencia, ordering the defendants to reconvey and deliver
the possession of the shares of the plaintif on the subject
property, ordering the defendants to pay P20,000 as
attorneys fees and cost of suit, dismissing the petitioners
claim for moral and exemplary damages, and dismissing the
defendants counterclaim for lack of merit. On appeal, and
on 31 August 1993, the appellate court reversed the trial
court (CA-GR CV 36090). On September 15, 1993, the
petitioners (as substitute parties for Victorina and Cecilia,
the original plaintifs) filed a motion for reconsideration,
which was denied on 6 June 1994. Hence, the petition for
review on certiorari.
ISSUE: Whether the alleged sale between Gaudencia and
respondents is valid
HELD: Petitioners vigorously assail the validity of the
execution of the deed of absolute sale suggesting that since
the notary public who prepared and acknowledged the
questioned Bilihan did not personally know Gaudencia, the
execution of the deed was suspect. The rule is that a
notarized document carries the evidentiary weight conferred
upon it with respect to its due execution, and documents

COMPILATION OF CASE DIGESTS

acknowledged before a notary public have in their favor the
presumption of regularity. By their failure to overcome this
presumption, with clear and convincing evidence,
petitioners are estopped from questioning the regularity of
the execution of the deed.

in the deed of sale, was the one who questioned

Gaudencias ownership in Civil Case B-1094, Romana
testified that Romualdo really had no knowledge of the
transaction and he was included as a buyer of the land only
because he was a brother.

Petitioners suggest that all the circumstances lead to the

conclusion that the deed of sale was simulated. Simulation
is "the declaration of a fictitious will, deliberately made by
agreement of the parties, in order to produce, for the
purposes of deception, the appearances of a juridical act
which does not exist or is diferent what that which was
really executed." Characteristic of simulation is that the
apparent contract is not really desired or intended to
produce legal efect or in any way alter the juridical situation
of the parties. Perusal of the questioned deed will show that
the sale of the property would convert the co-owners to
vendors and vendees, a clear alteration of the juridical
relationships. This is contrary to the requisite of simulation
that the apparent contract was not really meant to produce
any legal efect. Also in a simulated contract, the parties
have no intention to be bound by the contract. But in this
case, the parties clearly intended to be bound by the
contract of sale, an intention they did not deny. The
requisites for simulation are: (a) an outward declaration of
will diferent from the will of the parties; (b) the false
appearance must have been intended by mutual
agreement; and (c) the purpose is to deceive third persons.
None of these are present in the assailed transaction.

Petitioners fault the Court of Appeals for not considering

that at the time of the sale in 1980, Gaudencia was already
94 years old; that she was already weak; that she was living
with private respondent Romana; and was dependent upon
the latter for her daily needs, such that under these
circumstances, fraud or undue influence was exercised by
Romana to obtain Gaudencia's consent to the sale. The rule
on fraud is that it is never presumed, but must be both
alleged and proved. For a contract to be annulled on the
ground of fraud, it must be shown that the vendor never
gave consent to its execution. If a competent person has
assented to a contract freely and fairly, said person is
bound. There also is a disputable presumption, that private
transactions have been fair and regular. Applied to
contracts, the presumption is in favor of validity and
regularity. In this case, the allegation of fraud was
unsupported, and the presumption stands that the contract
Gaudencia entered into was fair and regular.

Contracts are binding only upon the parties who execute

them. Article 1311 of the Civil Code clearly covers this
situation. In the present case Romualdo had no knowledge
of the sale, and thus, he was a stranger and not a party to it.
Even if curiously Romualdo, one of those included as buyer

14

Petitioners also claim that since Gaudencia was old and

senile, she was incapable of independent and clear
judgment. However, a person is not incapacitated to
contract merely because of advanced years or by reason of
physical infirmities. Only when such age or infirmities impair
his mental faculties to such extent as to prevent him from
properly, intelligently, and fairly protecting his property
rights, is he considered incapacitated. Petitioners show no
proof that Gaudencia had lost control of her mental faculties
at the time of the sale. The notary public who interviewed

COMPILATION OF CASE DIGESTS

her, testified that when he talked to Gaudencia before
preparing the deed of sale, she answered correctly and he
was convinced that Gaudencia was mentally fit and knew
what she was doing.
Petitioners seem to be unsure whether they are assailing the
sale of Lot 115-A-1 for being absolutely simulated or for
inadequacy of the price. These two grounds are
irreconcilable. If there exists an actual consideration for
transfer evidenced by the alleged act of sale, no matter how
inadequate it be, the transaction could not be a simulated
sale. No reversible error was thus committed by the Court
of Appeals in refusing to annul the questioned sale for
alleged inadequacy of the price
The Supreme Court denied the petition, and affirmed the
assailed decision of the Court of Appeals; with costs against
petitioners
8. UY vs CA
FACTS: William Uy and Rodel Roxas are agents authorized
to sell 8 parcels of land by the owners thereof. By virtue of
such authority, they ofered to sell the lands, located in
Tuba, Tadiangan, Benguet to National Housing Authority
(NHA) to be utilized and developed as a housing project. On
14 February 1989, the NHA Board passed Resolution 1632
approving the acquisition of said lands, with an area of
31.8231 hectares, at the cost of P23.867 million, pursuant to
which the parties executed a series of Deeds of Absolute
Sale covering the subject lands. Of the 8 parcels of land,
however, only 5 were paid for by the NHA because of the
report it received from the Land Geosciences Bureau of the
Department of Environment and Natural Resources
(DENR)that the remaining area is located at an active

15

landslide area and therefore, not suitable for development

into a housing project.
On 22 November 1991, the NHA issued Resolution 2352
cancelling the sale over the 3 parcels of land. The NHA,
through Resolution 2394, subsequently ofered the amount
of P1.225 million to the landowners as daos perjuicios. On
9 March 1992, petitioners Uy and Roxas filed before the RTC
Quezon City a Complaint for Damages against NHA and its
General Manager Robert Balao. After trial, the RTC rendered
a decision declaring the cancellation of the contract to be
justified. The trial court nevertheless awarded damages to
plaintifs in the sum of P1.255 million, the same amount
initially ofered by NHA to petitioners as damages.
Upon appeal by petitioners, the Court of Appeals reversed
the decision of the trial court and entered a new one
dismissing the complaint. It held that since there was
sufficient justifiable basis in cancelling the sale, it saw no
reason for the award of damages. The Court of Appeals also
noted that petitioners were mere attorneys-in-fact and,
therefore, not the real parties-in-interest in the action before
the trial court. Their motion for reconsideration having been
denied, petitioners seek relief from the Supreme Court.
ISSUES: 1) Whether the petitioners are real parties in
interest
2) Whether the cancellation is justified

HELD: 1) Section 2, Rule 3 of the Rules of Court requires

that every action must be prosecuted and defended in the
name of the real party-in-interest. The real party-in-interest
is the party who stands to be benefited or injured by the
judgment or the party entitled to the avails of the suit.

COMPILATION OF CASE DIGESTS

Interest, within the meaning of the rule, means material
interest, an interest in the issue and to be afected by the
decree, as distinguished from mere interest in the question
involved, or a mere incidental interest. Cases construing the
real party-in-interest provision can be more easily
understood if it is borne in mind that the true meaning of
real party-in-interest may be summarized as follows: An
action shall be prosecuted in the name of the party who, by
the substantive law, has the right sought to be enforced.
Where the action is brought by an attorney-in-fact of a land
owner in his name, (as in our present action) and not in the
name of his principal, the action was properly dismissed
because the rule is that every action must be prosecuted in
the name of the real parties-in-interest (Section 2, Rule 3,
Rules of Court)
Petitioners claim that they lodged the complaint not in
behalf of their principals but in their own name as agents
directly damaged by the termination of the contract.
Petitioners in this case purportedly brought the action for
damages in their own name and in their own behalf. An
action shall be prosecuted in the name of the party who, by
the substantive law, has the right sought to be enforced.
Petitioners are not parties to the contract of sale between
their principals and NHA. They are mere agents of the
owners of the land subject of the sale. As agents, they only
render some service or do something in representation or on
behalf of their principals. The rendering of such service did
not make them parties to the contracts of sale executed in
behalf of the latter. Since a contract may be violated only by
the parties thereto as against each other, the real parties-ininterest, either as plaintif or defendant, in an action upon
that contract must, generally, either be parties to said
contract. Petitioners have not shown that they are assignees

16

of their principals to the subject contracts. While they

alleged that they made advances and that they sufered loss
of commissions, they have not established any agreement
granting them "the right to receive payment and out of the
proceeds to reimburse [themselves] for advances and
commissions before turning the balance over to the
principal[s]."
2) The right of rescission or, more accurately, resolution, of
a party to an obligation under Article 1191 is predicated on
a breach of faith by the other party that violates the
reciprocity between them. The power to rescind, therefore,
is given to the injured party. Article 1191 states that the
power to rescind obligations is implied in reciprocal ones, in
case one of the obligors should not comply with what is
incumbent upon him. The injured party may choose
between the fulfillment and the rescission of the obligation,
with the payment of damages in either case. He may also
seek rescission, even after he has chosen fulfillment, if the
latter should become impossible. In the present case, the
NHA did not rescind the contract. Indeed, it did not have the
right to do so for the other parties to the contract, the
vendors, did not commit any breach, much less a substantial
breach, of their obligation. Their obligation was merely to
deliver the parcels of land to the NHA, an obligation that
they fulfilled. The NHA did not sufer any injury by the
performance thereof
The cancellation was not a rescission under Article 1191.
Rather, the cancellation was based on the negation of the
cause arising from the realization that the lands, which were
the object of the sale, were not suitable for housing. Cause
is the essential reason which moves the contracting parties
to enter into it. In other words, the cause is the immediate,
direct and proximate reason which justifies the creation of

COMPILATION OF CASE DIGESTS

an obligation through the will of the contracting parties.
Cause, which is the essential reason for the contract, should
be distinguished from motive, which is the particular reason
of a contracting party which does not afect the other party.
Ordinarily, a party's motives for entering into the contract
do not afect the contract. However, when the motive
predetermines the cause, the motive may be regarded as
the cause. In this case, it is clear, and petitioners do not
dispute, that NHA would not have entered into the contract
were the lands not suitable for housing. In other words, the
quality of the land was an implied condition for the NHA to

17

enter into the contract. On the part of the NHA, therefore,

the motive was the cause for its being a party to the sale.
We hold that the NHA was justified in canceling the contract.
The realization of the mistake as regards the quality of the
land resulted in the negation of the motive/cause thus
rendering the contract inexistent.
The Supreme Court denied the petition