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2. BUENAVENTURA v CA
4. COMMISSIONER OF INTERNAL REVENUE v
FACTS: Joaquin spouses sold 6 subdivision lots to some ENGINEERING EQUIPMENT & SUPPLY CO.
of their 9 children evidenced by corresponding Deeds of
Sale. The other children, interested in protecting their FACTS: Engineering Equipment & Supply (EES) was
inheritance, sought to have the deeds of sale declared engaged in the business of designing and installing
null and void for prejudicing their legitimes, lack of central air-conditioning systems. It was assessed by the
consideration, and gross inadequacy of price. CIR for 30% advanced sales tax, among other penalties
pursuant to an anonymous complaint filed before the
ISSUE: W/N the contract of sale is valid BIR. EES vehemently objected and argued that they are
contractors and not manufacturers, and thus, should
HELD: YES. At the onset, their rights to the legitimes are only be liable for the 3% tax on sales of services or
merely inchoate and vest only upon the death of their pieces of work.
parents; thus they have no legal interest thereof.
Payment of the price has nothing to do with the ISSUE: W/N EES is a contractor (piece of work)
perfection of the contract of sale; it was perfected by
mere consent. Failure to pay consideration cannot be HELD: YES. EES was NOT a manufacturer of air-
equated with lack of consideration, which prevents the conditioning units. While it imported such items, they
existence of a valid contract. The former only results in were NOT for sale to the general public and were used
the right to demand payment or rescission. There was as mere components for the design of the centralized
already a meeting of the minds as to the price which air-conditioning system, wherein its designs and
was reflected in the Deed of Saleand that was specifications are different for every client. Various
sufficient. In fact, evidence suggests that the purchase technical factors must be considered and it can be
process have indeed been paid. The sales are thus valid. argued that no 2 plants are the same; all are engineered
ISSUE: W/N there was perfected contract of sale HELD: YES. In the present case, Soriano initially offered
7. NOOL v CA
to sell palay grains produced in his farmland to NFA.
When the latter accepted the offer by noting in
FACTS: One lot formerly owned by Victorio Nool has an
Sorianos Farmers Information Sheet a quota of 2,640
area of 1 hectare. Another lot previously owned by
cavans, there was already a meeting of the minds
Francisco Nool has an area of 3.0880 hectares. Both
between the parties. The object of the contract, being
parcels are situated in San Manuel, Isabela. Spouses
the palay grains produced in Sorianos farmland and the
Conchita Nool and Gaudencio Almojera (plaintiffs)
NFA was to pay the same depending upon its quality.
alleged that they are the owners of the subject land as
The contention that since the delivery were not
they bought the same from Victorio and Francisco Nool,
rebagged, classified and weighed in accordance with the
and that as they are in dire need of money, they
palay procurement program of NFA, there was no
obtained a loan from DBP, secured by a real estate
acceptance of the offer thus this is a clear case of
mortgage on said parcels of land, which were still
policitation or an unaccepted offer to sell, is untenable.
registered in the names of Victorino and Francisco Nool,
The fact that the exact number of cavans of palay to
at the time, and for the failure of the plaintiffs to pay
be delivered has not been determined does not affect
the said loan, including interest and surcharges, totaling
the perfection of the contract. Article 1349 of the New
P56,000.00, the mortgage was foreclosed; that within
Civil Code provides that the fact that the quantity is
the period of redemption, the plaintiffs contacted
not determinate shall not be an obstacle to the
Anacleto Nool for the latter to redeem the foreclosed
existence of the contract, provided it is possible to
properties from DBP, which the latter did; and as a
determine the same, without the need of a new
result, the titles of the 2 parcels of land in question
contract between the parties. In the present case,
were transferred to Anacleto; that as part of their
there was no need for NFA and Soriano to enter into a
arrangement or understanding, Anacleto agreed to buy
new contract to determine the exact number of cavans
from Conchita the 2 parcels of land under controversy,
of palay to be sold. Soriano can deliver so much of his
for a total price of P100,000.00, P30,000.00 of which
produce as long as it does not exceed 2,640 cavans.
price was paid to Conchita, and upon payment of the
balance of P14,000.00, the plaintiffs were to regain
possession of the 2 hectares of land, which amounts
6. JOHANNES SCHUBACK & SONS PHIL. TRADING spouses Anacleto Nool and Emilia Nebre (defendants)
CORP. v CA failed to pay, and the same day the said arrangement
was made; another covenant was entered into by the
FACTS: SJ Industrial, through Ramon San Jose, parties, whereby the defendants agreed to return to
approached Schuback & Sons Phil. Trading (SSPT) to plaintiffs the lands in question, at anytime the latter
purchase bus spare parts. He submitted the list of parts have the necessary amount; that latter asked the
he wanted and SSPT coordinated with its Germany defendants to return the same but despite the
Office to quote the prices, and forwarded its formal intervention of the Barangay Captain of their place,
offer to SJ Industrial, containing the prices, item defendants refused to return the said parcels of land to
numbers, descriptions, etc. SJ informed SSPT of his plaintiffs; thereby impelling the plaintiffs to come to
desire to purchase such items and promised to submit court for relief. On the other hand, defendants
the quantity per unit. SJ then submitted such quantities theorized that they acquired the lands in question from
needed to SSPTs GM, Mr. Reichert. San Jose indicated the DBP, through negotiated sale, and were misled by
the same in the Purchase Order with the inscription plaintiffs when defendant Anacleto Nool signed the
this will serve as our initial purchase order. PO will private writing, agreeing to return subject lands when
include 3% discount. SSPT immediately ordered the plaintiffs have the money to redeem the same;
products from Germany to avail of the old prices defendant Anacleto having been made to believe, then,
partial deliveries of which were made. Then, for his that his sister, Conchita, still had the right to redeem
failure to secure letters of credit, SJ failed to purchase the said properties.
the same and alleged that there was no perfected It should be stressed that Manuel S. Mallorca,
contract of sale. Thus, SSPT sought damages. authorized officer of DBP, certified that the 1-year
redemption period and that the mortgagors right of
ISSUE: W/N there was a perfected contract of sale redemption was not exercised within this period. Hence,
DBP became the absolute owner of said parcels of land
HELD: YES. Quantity is immaterial in the perfection of a for which it was issued new certificates of title. About 2
contract of sale. What is important is the meeting of the years thereafter, DBP entered into a Deed of Conditional
minds as to the object and cause of the sale. There was Sale involving the same parcels of land with Anacleto
already a meeting of the minds in this case from the Nool as vendee. Subsequently, the latter was issued new
moment SJ manifested that he will order the parts, certificates of title in 1988.
although he will communicate quantities later on. In RTC ruled in favor of Anacleto Nool. CA affirmed.
fact, he indeed communicated such needed quantities
this goes to the execution of the contract of sale ISSUE: W/N there was a valid contract of sale between
already. By ordering the parts, SJ acceded to the prices Anacleto and Conchita
offered by SSPT. On the other hand, SSPT acceded to
SJs request for discount by immediately ordering the HELD: NO. Article 1459 of the Civil Code provides that
parts. SJ Industrial is thus liable for damages the vendor must have a right to transfer the ownership
to the goods than the seller had, unless the owner of the
thereof [object of the sale] at the time it is delivered.
goods is by his conduct precluded from denying the
Here, delivery of ownership is no longer possible. The
sellers authority to sell. In the present case, there is
sellers can no longer deliver the object of the sale to
no allegation at all that petitioners were authorized by
the buyers, as the buyers themselves have already
DBP to sell the property to the private respondents.
acquired title and delivery thereof from the rightful
Further, the contract of repurchase that the parties
owner, the DBP. Thus, such contract may be deemed to
entered into presupposes that petitioners could
be inoperative and may thus fall, by analogy, under item
repurchase the property that they sold to private
5 of Article 1409 of the Civil Code: Those which
respondents. As petitioners sold nothing, it follows
contemplate an impossible service.
that they can also repurchase nothing. In this light,
Article 1505 of the Civil Code provides that where
the contract of repurchase is also inoperative and by the
goods are sold by a person who is not the owner thereof,
same analogy, void.
and who does not sell them under authority or with
consent of the owner, the buyer acquires no better title
FACTS: Angelica Lacson and her children were registered FACTS: Sanchez and Rigos executed an Option to
owners of agricultural lands. Tiamzon and others were Purchase where Rigos agreed, promised, and committed
their farmer-tenants. The tenants executed a Deed of to sell to Sanchez a parcel of land in Nueva Ecija for
Assignment in favor of Tayagassigning to the latter P1,510. In spite of the repeated tenders made by
their rights to purchase the lands as tenant-tillers of the Sanchez, Rigos refused to sell the same. Thus, Sanchez
landholdings possessed by them at P50.00 per sqm. This consigned the amounts and filed a case for specific
was subject to the conditions that (1) Lacson, the performance. Rigos alleged that the contract between
landowner, would agree to sell the same parels and (2) them was a unilateral promise to sell, which is not
that there are no more legal impediments to the supported by any consideration, hence, it is not binding.
assignment. Tayag invited the tenants to a meeting to
discuss the agreement, but the latter did not attend and ISSUE: W/N there was a valid option contract
wrote Tayag that they have decided to sell their rights
to the Lacsons instead because he allegedly betrayed HELD: NO. The promisee (Sanchez) cannot compel the
their trust by filing a certain lawsuit. Tayag thus filed a promissor (Rigos) to comply with the promise unless the
Complaint before the RTC asking that the court fix the former can establish that the promise was for a
period for the payment; he also asked for a Writ of consideration. The burden of proof to establish the
Preliminary Injunction against Lacson and the tenants to existence of the consideration lies with Sanchez.
enjoin them from accepting any offers for sale made by Therefore, there was no valid option contract in this
the tenants. case. However, an option without consideration is a
mere offer, which is not binding until accepted. But
ISSUE: W/N the assignment was in the form of an option from the moment it is accepted before it is withdrawn,
contract
FACTS: Catalina owned 8 parcels of land leased to Chua, FACTS: In 1982, Reyes executed a 10-year (renewable)
who assigned its rights thereto to Lee Ching Bing, who, Contract of Lease with Riivera Filipina over a parcel of
in turn, assigned said rights to Paranaque King land in EDSA. Under such contract, the lessee is given a
Enterprises, which introduced significant improvements right of first refusal should the lessor decide to sell the
on the premises. Under the lease agreement, in case of property during the terms of the lease.
sale, the lessee shall have the option or priority to buy Such property was subject of a mortgage executed by
the said properties. Catalina, in violation of the said Reyes in favor of Prudential Bank. Since Reyes failed to
stipulation, sold the lot to Raymundo for P5M. pay the loan with the bank, it foreclosed the mortgage
Paranaque King notified her of the said breach, and she and it emerged as the highest bidder in the auction sale.
immediately had the lots reconveyed. She then offered Realizing that he could not redeem the property, Reyes
the lot to Paranaque King for P15M; but the latter decided to sell it and offered it to Riviera Filipina for
refused claiming that the offer was ridiculous. P5,000/sqm. However, it bargained for P3,500/sqm.
Catalina thereafter sold it again to Raymundo for P9M. Reyes rejected such offer. After 7 months, it again
bargained for P4,000/sqm, which again was rejected by
ISSUE: W/N there was compliance with the Right of First Reyes who asked for P6,000/sqm price. After 2 months,
Refusal assigned to Paranaque King it again bargained for P5,000/sqm, but since Reyes
insisted on P6,000/sqm price, he rejected Riviera's
HELD: NO. In a Right of First Refusal, the seller cannot offer.
offer the property to another for a lower price or under Nearing the expiry of the redemption period, Reyes
terms more favorable. It must be offered under the and Traballo (his friend) agreed that the latter would
same terms & conditions to Paranaque King; otherwise, buy the same for P5,300. But such deal was not yet
the right of first refusal becomes illusory. Only if formally concluded and negotiations with Riviera Filipina
Paranaque King fails to meet the offer may the property once again transpired but to no avail.
be offered for sale to another buyerand under the In 1989, Cypress and Cornhill Trading were able to
same terms and conditions as well. The Right of First come up with the amount sufficient to cover the
Refusal may also be validly transferred or assignedas in redemption money, with which Reyes paid to Prudential
this case. Bank to redeem the property. Subsequently, a Deed of
Absolute Sale was executed in favor of Cypress and
Cornhill for P5.4M. Cypress and Cornhill mortgaged the
property in favor of Urban Dev. Bank for P3M.
11. VASQUEZ v AYALA CORP.
Riviera Filipina filed a suit against Reyes, Cypress and
Cornhill on the ground that they violated its right of first
FACTS: In 1984, Ayala Corp. entered into a Memorandum
refusal under the lease contract. RTC ruled in favor of
of Agreement with Dr. Vasquez buying the latters
shares with Conduit Developmentwhich constitute
some 50 hectares of the land in Ayala Alabang. Under
FACTS: Macion and Dela Vida Institute entered into a FACTS: Cervantes and his wife owned 3 parcels of land
contract to sell, where the latter assured the former along Buendia where he buildings of Bormaheco Inc
that it will buy the 2 parcels of land in Cotabato City on were situated. Beside their property were lots owned by
or before July 31, 1991 at P1.75M. In the meantime, Villonco Realty. Cervantes entered into several
with a downpayment of P100,000 to serve as earnest
negotiations with Villonco for sale of the Buendia money. The offer also made the consummation of the
property. Cervantes| IMPERIAL
ANTONIO | HIPOLITO made a |written offer of P400/sqm
ZARAGOSA sale dependent upon the acquisition by Bormaheco of13 a
Sta. Ana property. Villonco made a counter-offer stating signatories
that the earnest money was to earn 10% interest p.a.
The check was enclosed with the reply letter. Cervantes HELD: NO. It is true that the signatures of the 5 siblings
accepted and cashed the check. The Sta. Ana Property did not confer authority on Ernesto as agent to sell their
was awarded to Bormaheco; the transfer was also duly respective shares in the properties, because such
approved. However, Cervantes sent the check back to authority to sell an immovable is required to be in
Villonco with the interest thereonstating that he was writing. However, those signatures signify their act of
no longer interested in selling the property. He also directly (not through an agent) selling their personal
claims that no contract was perfected; Villonco sues for shares to Paraiso Dev. Corp.
specific performance. In the case at bar, the Contract to Sell was perfected
when the petitioners consented to the sale to the
ISSUE: W/N there was a perfected contract of sale respondent of their shares in the subject parcels of land
by affixing their signatures on the said contract. Such
HELD: YES. There was a perfected contract of sale. The signatures show their acceptance of what has been
alleged changes made in the counter-offer are stipulated in the Contract to Sell and such acceptance
immaterial and are mere clarifications. The changes of was made known to respondent corporation when the
the words Sta. Ana property to another property as duplicate copy of the Contract to Sell was returned to
well as the insertion of the number 12 in the date, the latter bearing petitioners signatures.
and the words per annum in the interest are trivial. As to petitioner Enriquetas claim that she merely
There is no incompatibility in the offer and counter- signed as a witness to the said contract, the contract
offer. Cervantes assented to the interest and he, in itself does not say so. There was no single indication in
fact, paid the same. Also, earnest money constitutes the said contract that she signed the same merely as a
prood of the perfection of the contract of sale and witness. The fact that her signature appears on the
forms part of the consideration. The condition regarding right-hand margin of the Contract to Sell is
the acquisition of the Sta. Ana property was likewise insignificant. The contract indisputably referred to the
fulfilled; there is thus no ground for the refusal of Heirs of Bibiano and Encarnacion Oesmer, and since
Cervantes to consummate the sale. there is no showing that Enriqueta signed the document
in some other capacity, it can be safely assumed that
she did so as one of the parties to the sale.
15. OESMER v PARAISO DEV CORP. In the instant case, the consideration of P100,000.00
paid by respondent to petitioners was referred to as
FACTS: Oesmers are co-owners of undivided shares of 2 option money. However, a careful examination of the
parcels of agricultural and tenanted land in Cavite, words used in the contract indicates that the money is
which are unregistered and originally owned by their not option money but earnest money. Earnest money
parents. When their parents died, they acquired the lots and option money are not the same but distinguished
as heirs by right of succession. thus: (a) earnest money is part of the purchase price,
In 1989, Paular, a resident and former Mun. Sec. of while option money is the money given as a distinct
Carmona Cavite, brought Ernesto Oesmer (one of the consideration for an option contract; (b) earnest money
heirs) to meet with Lee, President of Paraiso is given only where there is already a sale, while option
Development Corp, in Manila for the purpose of money applies to a sale not yet perfected; and, (c)
brokering the sale of Ernesto's properties to Paraiso Dev. when earnest money is given, the buyer is bound to pay
Corp. A contract to sell was entered into between the balance, while when the would-be buyer gives
Paraiso Dev. Corp and Ernesto as well as Enriqueta. A option money, he is not required to buy, but may even
check in the amount of P100,000 payable to Ernesto was forfeit it depending on the terms of the option.
given as option money. Eventually, Rizalino, Leonora,
Bibiano Jr, and Librado also signed the Contract to Sell.
However, 2 of their brothers, Adolfo and Jesus, refused 16. FULE v CA
to sign the document.
A couple of months after, the Oesmers informed FACTS: Fule, a banker and a jeweler, acquired a 10-
Paraiso (through a letter) that it is rescinding the hectare property in Rizal (Tanay Property), which used
Contract to Sell and returning the option money. to be under the name of Fr. Antonio Jacobe, who
However, Paraiso did not respond and thus, Oesmers mortgaged it to Rural Bank of Alaminos to secure a loan
filed a complaint for declaration of nullity of the of P10,000. However, the mortgage was foreclosed.
Contract to Sell with the RTC, which ruled in favor of In 1984, Fule asked Dichoso and Mendoza to look for a
Paraiso Dev. Corp. On appeal, CA modified by declaring buyer of the Tanay property. They found one in the
that the Contract to Sell is valid and binding as to the person of Cruz, who owns a pair of diamond earrings.
undivided shares of the six signatories of the document. Fule was interested to buy these earrings, but Cruz
refused to sell them to him for the price he offered.
ISSUE: W/N the Contract to Sell is valid as to all Subsequently, negotiations for the barter between the
earrings and the property ensued. But it turned out that
the redemption period for the property has not yet
expired. Thus, Fule executed a deed of redemption on
behalf of Fr. Jacobe in the amount of P16,000, and on
even date, Fr. Jacobe sold the property to Fule for
Subsequently, a Deed of Sale over the earrings was
P75,000. The Deed of Sale was notarized ahead of the executed and when it was delivered, Fule contends that
Deed of Redemption.
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA the earrings were fake, even using a tester to prove 14
such allegation. Thereafter, they decided to Dimayuga, 17. DAILON v CA
a jeweler, to have the earrings tested. After a glance,
Dimayuga declared them fake. FACTS: Sabesaje sues to recover ownership of a parcel
Fule filed a complaint with the RTC against Cruz and of land based on a private document of absolute sale
her lawyer, Belarmino, praying that the contract of sale executed by Dailon. Dailon denies the fact of the sale
over the Tanay property be declared null and void on alleging that the same being embodied in a private
the ground of fraud and deceit. RTC ruled in favor of instrument, the same cannot convey title under Art.
Cruz and Belarmino. 1358 of the Civil Code which requires that contracts
which have for their object the creation, transmission,
ISSUE: W/N the Deed of Sale over the Tanay Property is modification, or extinction of real rights over immovable
valid property must appear in a public instrument.
HELD: YES. It is evident from the facts of the case that ISSUE: W/N there was a valid/perfected contract of sale
there was a meeting of the minds between petitioner
and Dr. Cruz. As such, they are bound by the contract HELD: YES. The necessity of a public instrument is only
unless there are reasons or circumstances that warrant for conveniencenot for validity and enforceability.
its nullification. The records, however, are bare of any Such is not a requirement for the validity of a contract
evidence manifesting that private respondents employed of sale, which is perfected by mere consent. Dailon
such insidious words or machinations to entice should thus be compelled to execute the corresponding
petitioner into entering the contract of barter. Neither deed of conveyance in a public instrument in favor of
is there any evidence showing that Dr. Cruz induced Sabesaje. If the sale is made through a public
petitioner to sell his Tanay property or that she cajoled instrument, it amounts to constructive delivery.
him to take the earrings in exchange for said property.
On the contrary, Dr. Cruz did not initially accede to
petitioner's proposal to buy the said jewelry. Rather, it 18. SECUYA v VDA DE SELMA
appears that it was petitioner, through his agents, who
led Dr. Cruz to believe that the Tanay property was
FACTS: Caballero owned certain friar lands. She entered
worth exchanging for her jewelry as he represented that
into an Agreement of Partition where she parted with
its value was P400,000.00 or more than double that of
1/3 of the said property in favor of Sabellona. Sabellona
the jewelry which was valued only at P160,000.00. If
took possession thereof and sold a portion to Dalmacio
indeed petitioner's property was truly worth that much,
Secuya through a private instrument that is already lost.
it was certainly contrary to the nature of a businessman-
Secuya, along with his many relatives took possession of
banker like him to have parted with his real estate for
the said land. Later on, Selma bought a portion of the
half its price. In short, it was in fact petitioner who
said land, including that occupied by Secuya; she bought
resorted to machinations to convince Dr. Cruz to
it from Caesaria Caballero. She presented a Deed of
exchange her jewelry for the Tanay property.
Absolute Sale and a TCT. Secuya filed a case for quieting
Furthermore, petitioner was afforded the reasonable
of title. CA upheld Selmas title considering that she had
opportunity required in Article 1584 of the Civil Code
a TCT and a Deed of Sale.
within which to examine the jewelry as he in fact
accepted them when asked by Dr. Cruz if he was
ISSUE: Who has a better right, Secuya or Selma?
satisfied with the same. By taking the jewelry outside
the bank, petitioner executed an act which was more
HELD: The Secuyas have nothing to support their
consistent with his exercise of ownership over it. This
supposed ownership over the parcel of land. The best
gains credence when it is borne in mind that he himself
evidence they could have had was the private
had earlier delivered the Tanay property to Dr. Cruz by
instrument indicating the sale to their predecessor-in-
affixing his signature to the contract of sale. That after
interest. But the instrument is lost. Even so, it is only
two hours he later claimed that the jewelry was not the rd
binding as between the parties and cannot prejudice 3
one he intended in exchange for his Tanay property,
persons since it is not embodied in the public document.
could not sever the juridical tie that now bound him and
Selma, on the other hand, has all the supporting
Dr. Cruz. The nature and value of the thing he had taken
documents necessary; she also acted in good faith and
preclude its return after that supervening period within
thought that the Secuyas were merely tenants. They did
which anything could have happened, not excluding the
not even pay realty taxes and did not have their claim
alteration of the jewelry or its being switched with an
annotated to the certificate of sale.
inferior kind.
FACTS: Ortega occupied a parcel of land. After the FACTS: Cecilio Claudel acquired a lot from the Bureau of
liberation, the government assigned the lot to the Rural Lands. He occupied the same, declared it in his name
Progress Admin. She asserted her right thereto; but was and dutifully paid his taxes. After his death, his heirs
disputed by Leonardo. Ortega and Leonardo agreed to a and siblings contested each other claiming ownership
compromise. The agreement was for Ortega to desist thereof. It was his heirs who were in possession of the
from pressing her claim, and Leonardo, upon getting the property. They partitioned it amongst themselves,
lot, would sell to her a portion thereof provided she registered each portion under the Torrens System, and
paid for the surveying of the lot. If he acquired title, she each paid their respective taxes. The siblings filed a
could stay as tenant. Ortega thus desisted from her case for cancellation of titles and reconveyance arguing
claim, paid for the surveying of the lot and the that there was a verbal sale between Cecilio and their
preparation of the plan, and regularly paid him a parents over the lot. As evidence, they presented a
monthly rental. When she remodeled her sons house subdivision plan. CA ordered the cancellation of the
beside the lot, it extended over the subject lot. When TCTs in favor of the heirs.
Leonardo acquired title, he refused to sell the portion
agreed upon. He claims that the contract is ISSUE: W/N there was a valid sale between Cecilio and
unenforceable based on the Statute of Frauds. his siblings
ISSUE: W/N the contract is unenforceable HELD: NO. As a rule, a sale of land is valid regardless of
the form it may have been entered into. However, in
HELD: NO. The contract is enforceable because there rd
the event that a 3 party disputes the ownership, there
was partial performance. Ortega made substantial is no such proof in support of the ownership. As such, it
improvements on the lot, desisted from her claim, rd
cannot prejudice 3 personssuch as the heirs in this
continued possession, and paid for the surveying, and case. Also, the heirs had a right to rely upon their
also paid the rentals. All these put together amount to Torrens titles, which, as opposed to the subdivision
plans, are definitely more credible.
Further, the subsequent buyers were in bad faith
because Armando & Adelia registered their adverse claim
23. ALFREDO v BORRAS this amounts to constructive notice, which
negates good faith.
FACTS: Godofredo & Carmen mortgaged their land to The Statute of Frauds likewise does not apply
DBP for P7,000. To pay their debt, they sold the land to considering that Godofredo & Carmen had already
Armando & Adelia for P15,000. The latter also assumed derived the benefits from the salesuch as the money to
to pay the loan. Carmen issued Armando & Adelia a pay for the loan. The receipt also suffices to constitute
receipt for the sale. They also delivered to Armando & the memorandum required by the Statute of Frauds.
Adelia the Original Certificate of Title, tax declarations, Assuming that the sale was voidable because it was
and tax receipts. They also introduced Armando & conjugal property, the same was ratified by Godofredo
Adelia to the Natanawans, the tenants of the said by introducing Armando & Adelia to the Natanawans as
property as the new lessors. They thereafter took the new lessors. Also, even though titled as Specific
possession of the said land. Later, they found out that Performance, the complaint was one for reconveyance
Godofredo & Carmen sold the land again to other buyers and prescription does not lie of one who is in actual
by securing duplicate copies of the OCTs upon petition possession of the property.
with the court. Thus, they filed for specific
performance. Godofredo & Carmen claimed that the
sale, not being in writing, is unenforceable under the 23. TOYOTA SHAW INC v CA
Statute of Frauds.
FACTS: Luna Sosa wanted to buy a Toyota Lite Ace. He
ISSUE: W/N the contract of sale is unenforceable under went to Toyota Shaw where he met Popong Bernardo, a
the Statute of Frauds. sales rep. Sosa explained that he needed the Lite Ace by
June 17, otherwise, he would become a laughing stock.
HELD: NO. The Statute of Frauds is applicable only to Bernardo guaranteed that the vehicle would be
executory contracts, not those that have already been delivered. They executed a document entitled
partially or completely consummated. In this case, the Agreements between Sosa & Popong Bernardo of Toyota
sale of the land to Armando & Adelia had already been Shaw where a P100K downpayment was stipulated and
consummated. The ownership of the land was also that the Lite Ace would be available at a given date.
transferred to Armando & Adelia when they were When the day of reckoning arrived, the Lite Ace was
introduced to the Natanawans and took possession unavailablethe explanation of Bernardo being nasulot
thereof. Therefore, when Godofredo & Carmen sold the ng ibang malakas. However, according to Toyota, the
land to other buyers, it was no longer theirs to sell. true reason was that BA Finance, which was supposed to
answer for the balance of the purchase price, did not ISSUE: W/N there was a perfected contract of
approve Sosas application. Toyota also returned the sale
downpayment. Thus, Sosa sued for damages amounting
to P1.2M due to his humiliation, hurt feelings, sleepless
nights, and
ANTONIO so on. | IMPERIAL | ZARAGOSA
| HIPOLITO 17
HELD: NO. Toyota Shaw should NOT be held liable for essential to the perfection of the sale. It was also clear
damages because there was no perfected contract of that Bernardo signed the document in his personal
sale in the first place. There was no agreement as to the capacity and it was up to Sosa to inquire as to the
price and the manner of paymentwhich are both extent of the formers capacity. Sosa did not even sign
it. It was nothing but a mere proposal, which did not
mature into a perfected contract of sale in lieu of the
subsequent events. In fact, it made no specific
reference to the sale of a vehicle. No obligations could
thus arise therefrom. Sosa has no one else to blame but
himself for his humiliation for bragging about something
he does not own yet.
CONSUMMATION/PERFECTION OF CONTRACT
1. SANTOS v SANTOS ISSUE: W/N Wilfredo, as mortgagor, can sell the tractor
subject of a mortgage
FACTS: Jesus and Rosalia owned a lot with a 4-door
apartment. They sold through a public instrument the HELD: YES. The mortgagor (Wilfredo) had every right to
said property to their children, Salvador and Rosawho sell the property subject to mortgageeven without the
sold her share to Salvador as well. Nonetheless, in spite consent of the mortgagee as long as the purchaser
of the sale, Rosalia remained in possession and control assumes the liability of the mortgagor.
over the property. Jesus, Rosalia and Salvador died. In this case, there was constructive delivery already
Zenaida, claiming to be Salvadors heir, demanded rent upon the execution of the public instrumenteven if the
from the tenants. The other children of Jesus and tractor could not yet be delivered. Execution of the
Rosalia filed a case for reconveyance averring that the public instrument and mutual consent of the parties was
sale to Salvador was fictitious and done merely to equivalent to constructive delivery. Therefore, at the
accommodate him. time when the sheriff levied upon the tractor, it was no
longer the property of Wilfredo. Also the clearing of the
ISSUE: W/N the sale to Salvador was fictitious check was not a condition for the consummation of the
sale but only upon the extinguishment of the mortgage.
HELD: YES. While it is true that sale through a public
instrument is equivalent to delivery of the things sold
which has the effect of transferring ownership, the
3. ADDISON v FELIX
delivery can be rebutted by clear and convincing
evidence. The vendors continuous possession makes the
FACTS: Addison owned 4 parcels of land, which he sold
sale dubious. Salvador never took possession of the
to Felix, through public instrument. The down payment
property. He surrendered the titles to his mother after
was made; the final installment to be paid after the
having registered the lots in his name, he never
issuance of the certificate of title. Addison sued Felix to
collected rentals, neither has he paid the taxes thereon.
compel the latter to pay the last installmentbut Felix
Thus, there was no real transfer of ownership. That
refused and sought to rescind the contract due to the
being the case, the action for reconveyance was
absolute failure of Addison to deliver the thing sold.
imprescriptible.
ISSUE: W/N there was delivery
7. CHUA v CA
5. PASAGUI v VILLABLANCA
FACTS: Valdes-Choy is the owner of the subject matter,
FACTS: Pasagui purchased a parcel of land form the when she advertised the property for sale. Chua
Bocar Spouses for P2,800, which was embodied in a responded to the advertisement, and met up with
public instrument. They failed to take possession of the Valdes-Choy. They agreed for the purchase price of
property because the Villablancas illegally took P10,800,000, to be paid on July 15, 1989. This was
possession of the property and harvested the coconuts evidenced by an earnest money for P100,000, which was
therein. Thus, Pasagui filed a case for ejectment before put on a receipt, stating that the money will be
the CFI. The Bocar spouses were likewise impleaded. forfeited upon failure to pay on the dat stipulated. On
The latter contested that the case should be dismissed July 13, Valdes-Choy executed two deeds of absolute
because the CFI did not have jurisdiction over forcible sale, first, pertaining to the house and lot, valued at
entry cases. P8,000,000, and second, pertaining to the movable
properties therein. The next day, Chua issued a check
ISSUE: W/N this is a case of forcible entry worth P485,000 for the purpose paying the capital gains
tax. The value was deducted from the balance, with an
HELD: NO. The case was not for forcible entry because outstanding value of P10,295,000 (additional P80,000 for
there was no allegation that Pasagui was in prior the documentary stamp tax). Chua also showed a check
physical possession of the land and that the worth P10,215,00 to Valdes-Choy, however, he
Villablancas, through force, stealth, or threat, deprived demanded that the TCT should first be transferred to his
them thereof. While the sale was made through a public name before paying the check. Out of anger, Valdes-
document is equivalent to delivery, this presumption Choy tore the deed of absolute sale. On the reckoning
only holds true if there is no impediment to the date, Valdes-Choy tried to make a compromise with
possession of the purchaser. Such is not the case here. Chua, but she did not get any response. Two days later,
Since Pasagui had not yet acquired physical possession Chua filed an action for specific performance, which the
of the land, the case was not one for forcible entry and trial court dismissed. A week later, he filed another
the CFI (not municipal courts) has jurisdiction. action for specific performance, where the court ruled
in favor of him. On appeal, CA reversed.
Genuino Ice demanded that VELI pay its capital gains ISSUE: W/N ownership is transferred/delivery is effected
tax amounting to P285,000. However, VELI refused with FOB and CIF from seller to buyer
saying that the Spouses Flores and Tobias (broker of the
sale) are responsible to pay the tax. Genuino Ice filed an HELD: NO. The terms FOB and CIF mean that the costs
action for specific performance against VELI, contending of delivery are for the seller. This means that it is the
that VELI failed to transfer title to and in the name of sellers duty to make sure that the goods are duly
Genuino Ice, to cause the eviction of the occupants, and delivered. Until then, ownership of the goods had not
to pay the tax and other dues to effectuate the transfer yet passed. Had the expenses been for the buyer, the
of the title of the property. RTC ruled in favor of goods are deemed delivered upon delivery to the
Genuino Ice, CA affirmed. common carrier. In this case, the delivery has not been
effected to the buyer, thus, the latter had every right to
rescind the contract of sale.
FACTS:
General Foods is a foreign corporation licensed to do
business in the Philippines.
National Coconut Corporation (NACOCO) sold to
General Foods 1500 tons of long copra under the terms:
a. Quantity: Seller could deliver 5% more or less than
the contracted quantity, and the
b. Price: CIF New York.
surplus/deficiency shall be paid on the basis of
the| delivered
ANTONIO HIPOLITO |weight.
IMPERIAL | ZARAGOSA 20
c. Payment: Buyers to open an Irrevocable Letter of contracted quantity, and the surplus/deficiency
Credit for 95% of invoice value based on shipping shall be paid on the basis of the delivered
weight. weight.
d. Balance of the price was to be ascertained on the While the risk of loss was apparently placed on
basis of outturn weights and quality of the cargo General Foods after the delivery of the cargo to the
at the port of discharge. carrier, it was agreed that the payment of the price was
e. Weights: Net landed weights. to be according to the net landed weight which is 898
In the Philippines, the net cargo was weighed at 1054 (weighed in New York) and not 1054 (weighed in the
tons, the alleged weight delivered by NACOCO. NACOCO Philippines).
then withdrew 95% (or $136,000) of the amount in the NACOCO had the burden to prove that the shortage
Letter of Credit in favor of NACOCO. was due to risks of voyage and not the natural drying up
In New York, the net cargo was reweighed and found of copra. In other words, if the weight deficiency was
to weigh only 898 short tons. General Foods demanded due to the risks of the voyage, General Food would not
the refund of the amount of $24000. have been entitled to any claim in the deficiency.
NACOCOs officers-in-charge acknowledged in a letter The provision on the balance of the price was to be
liability the deficiency and promised payment as soon as ascertained on the basis of outturn weights and quality
funds were available. of the cargo at the port of discharge should not be
However, NACOCO was abolished and went into construed separately from the provision that the net
liquidation. The Board of Liquidators refused to pay the landed weight was to control.
claim of General Foods. The manifest intention of the parties was for the total
General Foods then filed to recover $24,000 and 17% price to be finally ascertained only upon determining
exchange tax plus attorneys fees and costs. the net weight and quality of the goods upon arrival in
General Foods alleges that although the sale quoted New York, most likely because the nature of copra is
CIF New York, the agreement contemplated the that it dries up and diminishes weight during the
payment of the price according to the weight and voyage.
quality of the cargo upon arrival in New York (port of In fact, this intention was shown by the letter of the
destination). Therefore, the risk of shipment was upon officer-in-charge of NACOCO acknowledging NACOCOs
the seller. liability to General Foods. Though this letter of
NACOCO alleges that the contract is an ordinary CIF, acknowledgement should not be construed as an
which means that delivery to the carrier is delivery to admission of liability of NACOCO, it is nevertheless
the buyer. Therefore, the shipment having been competent evidence of NACOCOs intention to be bound
delivered to the buyer and the buyer having paid the by the net landed weight or outturn weight of the copra
price, the sale was consummated. at the port of discharge.
ISSUES:
1. Whether the weight in New York should be the basis 11. PACIFIC VEGETABLE OIL CORP v SINGZON
upon payment of the price of copra should be made.
Yes. The weight in New York should be the basis. FACTS:
2. Whether what is to be ascertained based upon the
Petitioner and respondent entered into a contract in
outturn weights and quality at port of discharge was
the US whereby Singzon agreed to ship 500 tons of
only the balance due to be paid. No. The balance due
copra, with the agreement CIF, Pacific Coast
to be paid is not the only basis.
Singzon failed to deliver, but the parties entered into
a settlement, whereby Singzon would deliver 300 tons at
HELD:
the same terms the contract provided that should
Under an ordinary CIF agreement, delivery to the
Singzon again default, he would pay $10,000 for
buyer is complete upon delivery of the goods to the
damages and the original contract would be revived
carrier and tender of the shipping and other documents Singzon again failed to ship the copra, and he did not
required by the contract and the insurance policy are pay the fine or ship the 500 tons as originally agreed
taken in the buyers behalf. However, the parties may, Pacific filed an action to recover damages
by express stipulation, modify a CIF contract and throw
Singzon claims that Pacific had no legal personality to
the risk upon the seller until the arrival in the port of
sue because it is a foreign corporation
destinations.
In this case, the terms of the contract indicate and
HELD:
intention that the precise amount to be paid by the
The contract was perfected in the US by a broker and
buyer depended upon the ascertainment of the exact
representatives of the parties payment was made to a
net weight of the cargo at the point of destination:
bank in California and delivery undertaken through CIF,
a. Net landed weights were to govern. Pacific Coast
b. The balance of the price was to be ascertained on Under that arrangement, the vendor is to pay not only
the basis of outturn weights and quality of the the cost of goods, but also the freight and insurance
cargo at the port of discharge. expenses, and this is taken to indicate that the delivery
c. The seller could deliver 5% more or less than the is to be made at the port of destination
Since CIF includes both insurance and freight expenses
to be paid by the seller, ordinarily, before the vessel
arrives at the point of destination the risk of loss be for
ISSUE: Who has a better title, Naawan or Lumo spouses? HELD: DABON. The decision of the lower court in favor
of Gonzales was void due to extrinsic fraud. The Dabons
HELD: LUMO SPOUSES. Where a person claims to have were deprived of their day in court and through
superior property rights by virtue of a sheriffs sale, the questionable means at thatsuch as the failure to give
benefit of Art. 1544 applies favorably only if the them appropriate notice of the proceedings, and not
property is registered under the Torrens Systemnot having them impleaded even though they are the parties
under Act 3344. Registration under the Torrens System to be adversely affected. Instead, it was the agent who
is the operative act that gives validity to the transfer was impleadednot the principal or the subsequent
purchasers. The court never acquired jurisdiction.
It must be noted that the property was sold to
Gonzales in 1988, while the same was sold to the Dabons
in 1989; nonetheless, the requirements of double-sale
are two-fold: acquisition in good faith and registration
in good faith. Based on the foregoing, the case is
ANTONIO | HIPOLITO | IMPERIAL | ZARAGOSA remanded to the lower court for further proceeding. 22
16. CARBONELL v CA 18. MENDOZA v KALAW
FACTS: Poncio, a Batanes native, owned a parcel of FACTS: In 1919, Federico Canet sold to Kalaw a parcel of
land, which he offered to sell to Carbonell and Infante. land under a Conditional Sale. 2 months after, Canet
The land was mortgaged to Republic Bank. Poncio and sold to Mendoza the same parcel of land under an
Carbonell agreed to the sale of the land, and the latter Absolute Sale. Mendoza took possession thereof, cleaned
assumed to pay the mortgage in favor of the bank. and fenced it, and sought to have the same registered
Poncio and Carbonell executed an instrument where the but Kalaw opposed. When Kalaw first tried to register
latter allowed the former to remain in the premises in the same, he was denied but an anotacion preventiva
spite of the sale for a period of 1 year. Later on, when was annotated in the title.
the Formal Deed of Sale was to be executed, Poncio told
Carbonell that he could no longer proceed with the sale ISSUE: Who has a better title, Canet or Kalaw?
as he had already sold the same to Infante for a better
price. Carbonell immediately sought to register adverse HELD: CANET. While a conditional sale came before the
claim; 4 days later, Infante registered the sale with the absolute sale, still the latter must prevail. A conditional
adverse claim annotated thereto. Infante thereafter sale, before the happening of the condition, is hardly a
introduced significant improvements on the property. sale especially if the condition has yet to be complied
They now dispute ownership over the said land. with. The anotacion preventiva obtained by Kalaw
cannot create an advantage in his favor as the same was
ISSUE: Who has a better title, Carbonell or Infante? good for only 30 days. The court ruled in favor of
Mendoza.
HELD: CARBONELL. In order to claim the benefit of Art.
1544, the buyer of realty must register the property in
good faith. It is a pre-condition to a superior title. In 19. ADALIN v CA
this case, Infante was not in good faith, thus the prior
sale to Carbonell must prevail. Infante registered her FACTS: Elena Kado and her siblings owned a lot with a 5-
claim 4 days after the adverse claim was registered, she door commercial building fronting Imperial Hotel. The
had notice that Carbonell paid off the mortgage debt as units were leased. Elena contracted the services of
the mortgage passbook was already in his possession. Bautista, who brought Yu and Lim to her for the purpose
She likewise ignored Carbonell and refused to talk to of buying the premises. During the meeting, it was
here. These are badges of bad faith that taint her agreed that the Yu and Lim would buy the said units
th
registration. except for the 5 which is to be bought by Adalin. They
entered into a Conditional Sale where Elena was
obligated to evict the tenants before the full payment
17. SAN LORENZO DEV CORP v CA of the purchase price. Elena offered the same for sale to
the lessees but they refused claiming that they could
FACTS: Spouses Lu owned 2 parcels of land, which they not afford; thus, she filed a case for ejectment against
purportedly sold to Babasanta. He demanded the them. Thereafter, the lessees decided to exercise their
execution of a Final Deed of Sale in his favor so he may right to buy the unitsKalaw ruled that since the sale to
effect full payment of the purchase price; however, the Yu and Lim was conditional, the subsequent sale to the
spouses declined to push through with the sale. They lessees must be preferred.
claimed that when he requested for a discount and they
refused, he rescinded the agreement. Thus, Babasanta ISSUE: Who has a better title, Yu and Lim or the lessees?
filed a case for Specific Performance. San Lorenzo
Development Corp. (SLDC) intervened claiming that the HELD: YU AND LIM. While it is true that the Deed was for
lots have been sold to it by virtue of a Deed of Absolute Conditional Sale, examination of the contents thereof
Sale with Mortgage and that it was a purchaser in good would show that it was one for the actual sale. During
faith. Both sales were not registered. the meeting, the property was already sold; the only
conditions were that Elena would evict the lessees
ISSUE: Who has a better title, Babasanta or SLDC? before the full payment of the price. The choice of to
whom to sell the property had already been decided.
HELD: SLDC. There was no double sale in this case That being the case, since the sale in favor of Yu and
because the contract in favor of Babasanta was a mere Lim was the prior sale, it must be preferred.
contract to sell; hence, Art. 1544 is not applicable. The Besides, Elena was guilty of double-dealing, which
ownership of the property was not to be transmitted in cannot be sanctioned in law. It was, after all, her
his favor until the full payment of the purchase price. obligation to evict the lessees. The lessees were in bad
There was neither actual nor constructive delivery as his faith as well for having knowledge of the supposed sale
title is based on a mere receipt. Based on this alone, the in favor of Yu and Lim. Their subsequent registration of
right of SLDC must be preferred. the sale cannot shield them in their fraud.
dealer or intermediary between the field office and the FACTS: Sun Brothers sold an Admiral Refrigerator to
customers. Thus, it is not liable for the said taxes. Lopez upon the agreement that ownership will only pass
to the latter upon payment of the full purchase price.
Lopez paid only the downpayment and sold the same to
5. SUN BROS. & CO. v VELASCO JV Trading (owned by Velasco) and was displayed in the
latters store. It was thereafter bought by CO Kang Chiu Tagatac was NOT unlawfully deprived within the context
from JV Trading. Sun Brothers sought to recover the of the Civil Code.
refrigerator. The sale between Feist and Tagatac was merely
voidablevalid until annulled. There was a valid
ISSUE: W/N Sun Brothers may recover the thing transmission of ownership. The fact that Feist did not
pay only gives rise to an action to resolve the contract
HELD: NO. It is true that where a person who is not the or demand payment. When Feist sold the car to
owner of a thing sells the same, the buyer acquires no Sanchez, the sale between him and Tagatac was still
better title than the seller has. In this case. Lopez valid; therefore, good title passed to Sanchez. As
obviously had no title to the goods for having failed to between 2 innocent parties, the one who made possible
pay the full price. It only follows that JV Trading had no the injury must bear the loss.
title thereto as Velasco was not in good faith. He should
have inquired if Lopez had good title to itthe same not
being engaged in the business of selling appliances. 7. EDCA PUBLISHING v SANTOS
HOWEVER, when the refrigerator passed to Co Kang
Chiu, the latter acquired valid title thereto. The FACTS: EDCA sold books to Tomas dela Pena who
exception to the foregoing rule is the purchase in good fraudulently represented himself to be Prof. Jose Cruz,
faith in a merchant store or a fair or a market. This rule a Dean of DLSU. EDCA delivered him the books, the
fosters stability to commerce and business transactions. check Tomas issued was dishonored because he did not
Co Kang Chiu purchased the refrigerator in a merchant have an account at all. Tomas thereafter sold the books
storeand for value and in good faith. Thus, he is at a discount to Leonor Santos. EDCA, with the aid of
protected by the law. Sun Brothers would not be the police, stormed the Santos Bookstore to retrieve the
entitled to recover the refrigeratornot even if they pay books.
its valuesince they were not deprived of the same
unlawfully. Lopez is the one who should be liable to Sun ISSUE: W/N EDCA may retrieve the books from Santos
Brothers for the full purchase price of the ref.
HELD: NO. Ownership of the books passed to Tomas
upon the delivery thereof. He had the right to transfer
6. TAGATAC v JIMENEZ the same to Santos. The fact that he did not pay for the
books only warrants rescission or an action for payment.
FACTS: Tagatac bought a car abroad and brought it to EDCA cannot be considered to have been unlawfully
the Philippines. Warner Feist deceived her into believing deprived under the CC as to warrant recovery of the
that he was very rich and purchased her car. She books from Santos. Possession of movable property
delivered possession thereof. Levy (another name of acquired in good faith is equivalent to title. Santos was
Feist) issued her a postdated check, which was a buyer in good faith, thus he is protected by the law.
dishonored. Feist then disappeared with the car. Feist
was able to register the car in his name and eventually
sold the car to Sanchez, who then sold the same to 8. AZNAR v YAPDIANGCO
Jimenez. Jimenez even labored to verify the cars
records with Motor Vehicle Office. Jimenez then FACTS: Teodoro advertised for sale his Ford Fairlane
delivered the car to California Car Exchange for display. car. De Dios approached them purporting to be a
Tagatac, upon finding out, sought to recover the car, nephew of Marella. Teodoro transacted with Marella
but Jimenez refused. who agreed to buy the car, agreeing to pay the same
only after the car has been registered in his name. The
ISSUE: W/N Jimenez may refuse to give the car back Deed was registered in his name, but Marella has yet to
pay so the documents were not delivered to him, he
HELD: YES. Jimenez was a buyer in good faith of the pleaded with Ireneo, Teodoros son, that they proceed
carhe had no knowledge of any defect in the title of to Marellas sister to secure the shortage of cash. Ireneo
the seller. It is true that one who has lost any movable agreed. They proceeded thereto, Ireneo was
or has been unlawfully deprived thereof may recover accompanied by De Dios and an anonymous person. De
the same from the possessor. However, in this case, Dios was able to induce Ireneo to hand over the
documents under the pretext that he will show them to
his lawyer, Ireneo agreed. De Dios made Ireneo wait and
thereafter escaped with the car and the deed. Marella
was then able to sell the car to Aznar. The police
thereafter seized the car in Aznars possession. Aznar
countered with a complaint for Replevin.
FACTS: Grimalt transacted with Roman for the purchase FACTS: Tabora purchased volumes of AmJur from
of a schooner called the Santa Marina. The sale was Lawyers Coop. The agreement was for ownership to
predicted upon the condition that it was seaworthy and remain with Lawyers Coop until payment of the full
that Roman would perfect his title theretothe same price. Loss or damage to the goods after delivery to
being registered to Paulina Giron. Only of the said the buyer is for the account of the latter. The books
conditions were complied with will Grimalt purchase the were delivered to his office; that same night, his office
same. The terms of payment were likewise agreed upon. was razed by fire. Tabora failed to pay the full purchase
Roman did nothing to perfect his title; then due to a price. Now Lawyers Coop sues him for the balance.
severe storm, the vessel sank. Roman now sues Grimalt Tabora invokes force majeure.
for the purchase price of the vessel.
ISSUE: Who bears the loss?
ISSUE: W/N Grimalt is liable for the loss
HELD: TABORA. While it is true that generally, loss is for
HELD: NO. There was yet to be a perfected contract the account of the owner, the same does not apply here
between them for the failure of Roman to perfect his because the parties themselves have expressly
title. That being the case, the loss is for the account of stipulated that loss, after delivery to the buyer, are for
Roman as the owner thereof. the account of the latter. Besides, the stipulation
retaining ownership to the seller is intended merely to
secure payment by the buyer. Likewise, the obligation
of Tabora consists of the delivery not a determinate
thing, but a generic thingmoney. Thus, he is not
absolved from liability.
2. DELTA MOTOR SALES CORP. v NIU KIM DUAN FACTS: Tajanlangit bought 2 tractors and a thresher
from Southern Motors. They executed a promissory note
FACTS: Niu Kim Duan purchased from Delta Motors 3 air in payment thereof; it contained an acceleration clause.
conditioning units. Niu paid the downpayment, the Tajanlangit failed to pay any of the stipulated
repossessed the machineries (mortgaged), he was
installments. Thus, Southern Motors sued him on the PN. therefore relieved from liability on the balance of the
The sheriff levied upon the properties of Tajanlangit purchase price.
(same machineries) and sold them at a public auction to
satisfy the debt. Southern Motors now prayed for ISSUE: W/N Tajanlangit is relieved from his obligation to
execution. Tajanlangit sought to annul the writ of pay
executionclaiming that since Southern Motors
HELD: NO. While it is true that the foreclosure on the HELD: NO. When the unpaid seller forecloses on the
chattel mortgage on the thing sold bars further action mortgage, the law precludes him from bringing further
for the recovery of the balance of the purchase price, actions against the vendee for whatever balance, which
this does not apply in this case since Southern did not was not satisfied by the first foreclosure. By choosing to
foreclose on the mortgage but insteas sued based on the foreclose on the Ford sedans, Filinvest renounced all
PNs exclusively. That being the case, it is not limited to other rights which it might have had under the PN; it
the proceeds of the sale on execution of the mortgaged must content itself with the proceeds of the sale of the
goods and may claim the balance from Tajanlangit. sedans at the public auction.
FACTS: Nonato spouses purchased from Peoples Car a FACTS: Zayas purchased a Ford Thames Freighter from
Volkwagen car. They issued a PN with chattel mortgage. Escano Enterprises, the dealer of Luneta Motor Co. The
Peoples Car thereafter assigned its rights to the note to unit was delivered and Zayas issued a PN payable in 26
Investors Finance. The Nonatos defaulted, thus Investors installments secured by a chattel mortgage over the
Finance repossessed the car and demanded the payment subject motor vehicle. Zayas failed to pay, thus Luneta
of the balance of the purchase price. extra-judicially foreclosed on the mortgage and was the
highest bidder. However, considering that the proceeds
ISSUE: W/N Investors Finance may still demand for the of the sale was insufficient to cover the debt, Luneta
payment of the balance when it repossessed the car filed a case for the recovery of the balance of the
purchase price. Zayas refused to pay.
HELD: NO. The remedies contemplated under Art. 1484
are ALTERNATIVEnot cumulative. Investors Finance in ISSUE: W/N Luneta may still recover the balance
effect cancelled the sale and it cannot now claim the
balance of the purchase price. When it took possession HELD: NO. When the unpaid seller forecloses on the
of the car, it gave the spouses 15 days to redeem the mortgage, the law precludes him from bringing further
car. This could mean that their failure to do so would actions against the vendee for whatever balance, which
constrain the company to retain the permanent was not satisfied from the foreclosure. Luneta contends
possession of the car. There was no attempt at all the that Escano Enterprises is a different and distinct entity
return the carthus, it is untrue that the same was and maintains that its contract with Zayas was a loan.
retained merely for appraisal. This is unsubstantiated as the agency relationship
between Luneta and Escano is clear.
Nevertheless, assuming that they were distinct
5. RIDAD v FILIPINAS INVESTMENT (Filinvest) entities, the nature of the transaction remains the
same. If Escano assigned its right to Luneta, the latter
FACTS: Ridad purchased from Supreme Sales 2 Ford merely acquires the rights of the formershence, Art.
Consul Sedans, payable in 24 installments, for which he 1484 of the CC would likewise be inapplicable.
executed a PN with chattel mortgage over the said
property. Another chattel mortgage was executed this
time upon a separate Chevy car, and another one upon 7. NORTHERN MOTORS v SAPINOSO
the franchise to operate taxi cabs. Supreme Sales
thereafter assigned its rights under the PN to Filinvest. FACTS:
Ridad defaulted and Filinvest foreclosed on the Respondent Casiano Sapinoso purchased from
mortgage. It was the highest bidder for the foreclosure petitioner Northern Motors an Opel Kadett car for
sale of the sedans. But unable to fully satisfy the debt, P12,171 making a downpayment and executing a
it also foreclosed the Chevy and the franchise. promissory note for the balance of P10,540 payable in
installments
ISSUE: W/N Filinvest may still foreclose the Chevy and To secure the payment of the note, Sapinoso executed
the franchise to fully satisfy the debt in favor of Northern Motors a chattel mortgage on the
car; the mortgage provided among others that upon
Sapinosos default in payment of any part of the
principal or interest, Northern Motors may elect any of
the ff. remedies (a) sale of the car by Northern (b)
cancellation of the sale to Sapinoso (c) extrajudicial
foreclosure (d) ordinary civil action for fulfillment of the
mortgage contract; additionally, whichever remedy is
chosen, Sapinoso waives his right to reimbursement of
any and all amounts on the principal and interest
already paid
Sapinoso failed to pay the first 5 installments due from
August-November 1965; he made payments though on
November and December and on April the next year but
failed to make subsequent payments
delivery, Sapinoso be ordered to pay the balance with
Northern Motors filed a complaint stating that it was interest
availing of the option of extrajudically foreclosing the Subsequent to the commencement of the action but
mortgage and prayed that (a) a writ of replevin be before filing of his answer, Sapinoso made 2 payments
issued upon its filing of a bond (b) it be declared to have amounting to P1,250 on the promissory note; in the
the rightful possession of the car (c) in default of
meantime, a writ of replevin was issued and the car was 8. CRUZ v FILIPINAS INVESTMENT & FINANCE CORP.
turned over to Northern Motors
Sapinoso claimed that he withheld payments because FACTS: Ruperto Cruz bought a bus from Far East Motor
the car was defective and Northern Motors failed to fix Corp which was payable on installments of
it despite his repeated demands P1,487.20/month for 30 months with 12% interest. Cruz
executed a PN in the sum of the purchase price. To
TRIAL COURT RULING secure the paypent of the PN, Cruz executed a chattel
Northern Motors had the right to foreclose the chattel mortgage on the bus. Since no downpayment was made,
mortgage with Sapinoso failing to pay more than 2 Far East required Cruz to execute another security and
installments for the a REM was executed on the land and building of
However, the foreclosure and the recovery of unpaid Mrs. Reyes which at that time was mortgaged to DBP.
balance are alternative remedies which may not be Far East then assigned all its rights and indorsed the
pursued conjunctively; Northern Motors thereby PN to Filipinas Investment and Financing Corp. Cruz
renounced whatever claim it had on the promissory note defaulted in payment of the PN with only P500 being
Ordered Northern Motors to return of the P1,250 which ever paid. Filipinas had the chattel mortgage foreclosed
it had received from Sapinoso after filing the case and and it was the highest bidder at the foreclosure sale.
electing to foreclose However, the proceeds were not sufficient to cover the
balance so it paid the indebtedness of Mrs. Reyes and
ISSUE: W/N as under Article 1484 of the Civil Code,21 requested that it be sold at foreclosure sale as well.
plaintiff Northern Motors is barred from recovering Thus Cruz and Mrs. Reyes filed an action with the CFI to
unpaid balance of the debt having elected to foreclose have the REM constituted on her land cancelled.
on the chattel mortgage. NO. The CFI ruled in favor of Cruz and Reyes finding that
the extrajudicial foreclosure barred further action for
HELD: recovery thus the case at bar.
In issuing the writ of replevin and upholding after trial
the right to possession of the car by Northern Motors, ISSUE: W/N recovery from an additional security is
the court below correctly considered the action as one included in the prohibition thus allowing Filipinas to
of replevin to secure possession of the car as preliminary recover the balance
step to a foreclosure sale
The court below however erred in concluding that the HELD: NO
legal effect of the action was to bar Northern Motors Art. 1484 provides that when in a (1) a sale of
from accepting further payments on the promissory note personal property and (2) payable on installments there
It is the fact of foreclosure and actual sale of the was default in payment of 2 or more installments, the
mortgaged chattel that bars further recovery by the remedies of the seller are:
vendor of any balance on the vendees outstanding 1. To exact fulfillment of the obligation, should
obligation not satisfied by the sale the vendor fail to pay
In the present case, there is no occasion to apply the 2. Cancel the sale,
restrictive provision of Article 1484 as there has not yet 3. Foreclose the chattel mortgage on the thing
been a foreclosure sale resulting in a deficiency sold, if one has been constituted, should the
A mortgage creditor before the actual foreclosure sale vendees failure to pay cover 2 or more
is not precluded from recovering the unpaid balance installments. In this case, he shall have no
although he has filed for replevin for the purpose of further action against the purchaser to recover
extrajudicial foreclosure any unpaid balance of the price. x x x
Also, a mortgage creditor who has elected to foreclose
but subsequently desists from proceeding with the It has been held that these remedies are alternative
auction sale without gaining any advantage and without thus the exercise of one bars the exercise of the others.
causing any disadvantage to the mortgagor is not barred This is so to prevent he abuses committed in connection
from suing on the unpaid account with foreclosure mortgages wherein the mortgagees
And as applicable here, a mortgage creditor is not would seize the mortgaged property and buying them at
barred from accepting before a foreclosure sale a very low price at the sale and then bringing suit for
payments voluntarily tendered by the debtor-mortgagor collection of the unpaid balance resulting in the
who admits indebtedness. mortgagor still liable to pay his original debt plus losing
the property.
To allow Filipinas to recover thru the additional
security would result in a circumvention of the law.
Should the guarantor be compelled to pay the balance
then the guarantor would be entitled to recover from
the debtor-vendee. In the end, it would still be the
debtor-vendee who would bear the payment of the
purchase price.
Also, the word action in Art. 1484 covers all types of
legal demand of ones right whether judicial or
extrajudicial thus the barring effect applies to an
extrajudicial foreclosure.
FACTS: Daniel and Francisco Borbon issued a PN in
favor of Pangasinan Auto Mart for the purchase of certain
chattels. It was secured by a chattel mortgage. The
9. BORBON II v SERVICEWIDE SPECIALISTS INC. rights under the note were assigned to Filinvest,
which later assigned said rights to Servicewide. The
Borbons failed to pay, thus the mortgages were
foreclosed. The Borbons aver that the seller The car was worth 13,371 of which 1,160 was paid
delivered chattels not strictly in accord with their upon delivery, and the remaining balance to be paid in
instructions; nonetheless, they cannot evade liability 24 monthly installments. A promissory note and chattel
because the notes have passed to holders for value and mortgage were executed by the Ridads to ensure
in good faith. The trial court sustained the foreclosure fulfillment of their obligation.
but awarded liquidated damages and attorneys fees in The Ridad Spouses failed to pay the last 5
addition to the proceeds of the auction sale. installments, which prompted Filipinas to file a replevin
suit in the city court of Manila, or in the alternative, to
ISSUE: W/N it was proper for the trial court to award recover the unpaid balance if delivery could not be
liquidated damages and attorneys fees in addition to effected.
the proceeds of the auction sale The complaint of Filipinas stated that there was an
unjustifiable failure and refusal of the Ridad Spouses to
HELD: NO. First, when a person assigns credits to surrender the car for foreclosure. The sheriff was able
another, the latter is bound under the same law; thus, to seize the car and sell it in a public auction.
Art. 1484 is equally applicable. In case of foreclosure, The Ridad Spouses were declared in default during
the legislative intent is not merely to limit the these proceedings due to their alleged non-receipt of
proscription to collecting the unpaid balance of the debt summons; and the order of default included an order to
but also to other claims including costs of litigation and pay Filipinas 500 for attorneys fees and 163 for
attorneys fees. That being the case, the SC struck down expenses incurred in seizing the car. (this is what the
the award of liquidated damages, but considering the case is about)
facts of the case, the award of attorneys fees is Their motion to set aside the order of default was
reasonable and sustained. denied by the city court of Manila, thus the Ridads
appealed to the CFI Manila. The CFI said that the only
issue to be resolved was with regard to the attys fees
10. MACONDRAY & CO v EUSTAQUIO and the expenses incurred due to the seizure of the car.
It ruled that Filipinas was entitled to recover both
FACTS: Eustaquio bought a De Soto car from Macondray amounts; for the seizure of the car, and the lowered the
for which he executed a PN, payable in installments, attys fees of 300.
This decision was appealed to the SC
with a stipulation of attorneys fees, expenses for
collection, and other costs. It was secured by a chattel
RIDAD SPOUSES CONTENTIONS
mortgage over the said car. As usual Eustaquio failed to
Pursuant to Art 148422 (specifically #3) Filipinas, by
pay, and Macondray foreclosed on the mortgage.
opting to foreclose the chattel mortgage renounced all
However, there remained a balance of some P340 for
rights it had under the promissory note, as well as
which Macondray sues Eustaquio. Macondray also
payment for the unpaid balance, including any amount
contends that at least the stipulated interests and
it would be entitled to under this action, such as attys
attorneys fees must be claimable.
fees and costs of suit.
ISSUE: W/N Macondray may still claim the interests and
FILIPINAS CONTENTIONS:
attorneys fees stipulated
They are entitled to an award for attys fees and costs
of suit by virtue of the unjustifiable failure and refusal
HELD: NO. If the seller avails of his right to foreclose on
of the Ridad Spouses to comply with their obligations.
the mortgage, he can no longer bring an action against
What 1484 prohibit is the recovery of the unpaid
the buyer for the unpaid balancethis includes all the
balance by means of another replevin suit.
obligations such as attorneys fees, stipulated interests,
expenses of collection and other costs.
ISSUE: Whether under Art 1484 (the Recto Law) Fiipinas
is entitled to the award for attorneys fees and expenses
incurred due to the seizure of the car. Yes, but with
11. FILIPINAS INVESTMENT & FINANCE CORP v RIDAD certain qualifications.
FACTS: HELD: Art 1484 is called the Recto Law, and was created
The RIDAD SPOUSES purchased a Ford Consul Sedan to protect mortgagors from mortgagees who wanted to
from Supreme Sales and Devt. Corp. Supreme Sales was unjustly enrich themselves. No. 3 of Art 1484, discussing
the assignor-in-interest of FILIPINAS Investment and the right to foreclose, means that if the vendor opts for
Finance, appellees herein. this remedy he shall have no further action to recover
any unpaid balance of the same.
The decided case of Macondray & Co. v Estaquio has
almost the exact facts and deals with the same issue of
this case. In Macondray, it was ruled that the words
unpaid balance in no. 3 of art 1848 refer to the
deficiency judgement which the mortgagee may be
entitled to, when after the public auction of the
mortgaged chattel, the proceeds are insufficient to
cover the full amount of the secured obligation, which
property mortgaged and is not entitled to attys fees and
include attorneys fees and costs of suit. Were it the costs of suit.
intention of legislature to limit its meaning to the Such doctrine prevents the circumvention of the Recto
unpaid balance of the principal, it would have so Law. Prior to its enactment, sellers unjustly enriched
stated. In other words, the mortgagee is limited to the themselves at the expense of their buyers; by recovering
the goods sold upon default of installment payers, by
retaining the amounts already paid, and by claiming for and turn around to lease it to a client who gets, in
damages. Looking at the doctrine of Macondray, it addition, an option to purchase the property at the
appears that in no instance may the mortgagee recover expiry of the lease period.
any sum from the mortgagor after the foreclosure of the In the case at bar, PCI acquired the office equipments
mortgage. for their subsequent lease to Giraffe, with the latter
But although the court agrees with the above stated undertaking to pay a monthly fixed rental for the whole
doctrine, it seems that the mortgagees are not 36 months. Giraffe made a guaranty deposit. Their
protected against perverse mortgagors. Examples of agreement was that in case Giraffe fails to pay any
perverse mortgagors are those who deceitfully hide their rental due, PCI will have cumulative remedies, such as,
mortgaged movables, or upon default of payment, to recover all rentals for the remaining term of the
refuse to give up its possession for foreclosure. When lease and recover all amounts advanced for Giraffes
the mortgagor does these acts, the mortgagee has no account.
choice but to institute a suit for replevin to recover When PCI demanded for payment of the balance, it
possession of the chattel and enforce his rights over made a demand for either of the choices. Either to pay
such. It logically follows that the necessary expenses the balance hence Giraffe can keep the equipment or
incurred by the mortgagee to regain possession of what surrender them if he cannot. The so-called monthly
he had a right to possess should be borne by the rentals were in fact monthly amortizations of the price
mortgagor. Such recoverable expenses include attys of the leased office equipment.
fees, and expenses incurred in seizing the chattel. In The imperatives of equity, the contractual stipulations
this case, the court found that the amounts awarded by and the actuations of the parties, the SC has treated a
the lower court were reasonable. purported financial lease as actually a sale of movable
The ruling in this case, in so far as it conflicts with property on installments and prevented recovery. The
previously established doctrines, is pro tanto qualified. Lease Agreement is in reality a lease with an option to
purchase the equipment. This has been made manifest
by the actions of PCI itself.
12. PCI LEASING AND FINANCE INC v GIRAFFE-X In choosing replevin, PCI waived its right to bring an
CREATIVE IMAGING INC action to recover unpaid rentals.
3. PNB v CA
FACTS:
PNB owned a parcel of land which Lapaz Kaw Ngo
offered to buy. Events under the first letter-agreement
PNB accepted Lapazs offer subject to certain
stipulations. The important ones are the following:
1. The selling price shall be P5.4million. Lapaz had
already paid P100,000 as deposit.
4. Sale was subject to other terms and conditions to be
2. Upon failure to pay the additional deposit worth imposed.
P970,000, the P100,000 shall be forfeited and PNB shall Lapaz agreed, so she proceeded to clear the lot of its
be authorized to sell the property to another. tenants at her own expense.
3. The property shall be cleared of its present tenants at However, due to difficulties in money, she requested
the expense of Lapaz. for adjustment of payment proposals, which the bank
denied. PNB also reminded her that she had not yet sent the vendors obligation to transfer title is subordinated
her letter of conformity to the agreement reached and to a happening of a future and uncertain event. So that
told her to pay the full price of P5.4million. If not, the if the suspensive condition does not take place, the
lot will be sold to other parties. parties would stand as if the conditional obligation
Lapaz requested for a reduction of the price as the never existed.
size of the land was substantially reduced. PNB agreed. In the instant case, the second letter-agreement was
PNB still did not receive payment from Lapaz, and replete with conditions that Lapaz had to fulfill before
gave the latter the last chance to pay the balance of the the sale could be executed. The sale was dependent
down payment. If she failed to pay, the sale shall be upon Lapazs compliance with certain conditions (i.e.,
cancelled and the P100,000 payment shall be forfeited. payment, eviction of occupants). It was stipulated in
Lapaz failed to pay, so P100,000 was forfeited and the the contract that her failure to pay the additional
sale never materialized. PNB leased the premises to a deposit would allow PNB to forfeit the price and allow
certain Rivera. them to sell the property to other parties.
Lapaz requested for a refund of her deposit in the This stipulation took the nature of a reservation of
total amount of P660,000 and asked that the forfeited title in the vendor until full payment of the purchase
P100,000 be reduced to P30,000. PNB agreed. Events price, or giving the vendor the right to unilaterally
under the second letter-agreement rescind the contract the moment the buyer fails to pay
Lapaz requested for a revival of the previously within the fixed period.
approved offer to PNB. PNB approved. In addition, Lapazs refusal to evict the occupants on
All conditions as in the first agreement were the same, the ground that she had already done so under the first
except for the purchase price and deposit. The price agreement was not justified as the two letter-
was P5.1million, the deposit was P200,000. agreements were different transactions all together.
Lapaz refused, however, to conform to the condition Her fulfillment of the conditions in the first one did not
of vacating the premises at her expense as she had carry over to the second one despite the identity of the
already done so under the first agreement. (She stipulation.
apparently considered this second letter-agreement as a The P100,000 and the P200,000 were not also earnest
continuation of the first so she said that she was no money. Article 1482, which defines earnest money,
longer required to evict the tenants as she had already gives only a disputable presumption that prevails in the
done so.) Besides, according to her, the occupants of absence of rebuttal evidence. In the instant case, the
the property were tenants of PNB. PNB refused this letter-agreements themselves were the evidence that
offer. proved the intention of the parties to enter into
To prevent the forfeiture of her P200,000 deposit, she negotiations leading to a contract of sale mutually
signed the letter-agreement. She told PNB that she was acceptable to both as to absolutely bind them. The
willing to pay the remaining deposit of P800K as long as P100,000 and the P200,000 could not have been proof of
it was PNB who would clear the property. PNB refused, the perfection of the sale as the letter-agreements were
and forfeited the P200,000 of Lapaz. full of condition precedents before the sale could be
PNB informed Lapaz that they had already decided to executed. The money thus given could be considered as
sell the property for not less than P7M. part of the consideration of PNBs promise to reserve
the property for Lapaz.
ISSUES:
1. Whether or not there was a perfected contract of
sale. No. There was no perfected contract of sale.
4. BABASA v CA
2. Whether or not the P100,000 or the P200,000 was
earnest money. No. They were not earnest money.
FACTS: In 1981, a contract of Conditional Sale of
Registered Lands was executed between the spouses
HELD:
Vivencio and Elena Babasa as vendors and Tabangao
It is important to note that the first letter-agreement
Realty Inc. (Tabangao) as vendee over 3 parcels of land
was cancelled and thereafter no longer existed. The
in Batangas. Since the certificates of title over the lots
second letter-agreement is not a contract of sale but a
were in the name of third persons who had already
contract to sell whose conditions were not fulfilled,
executed deeds of reconveyance and disclaimer in favor
which prevented the obligations therein from obtaining
of the Babasas, it was agreed that the total purchase
obligatory force.
price of P2,121,920.00 would be paid in the following
A contract to sell is one where the obligatory force of
manner: P300,000.00 upon signing of the contract, and
P1,821,920.00 upon presentation by the Babasas of
transfer certificates of titles in their name, free from all
liens and encumbrances, and delivery of registerable
documents of sale in favor of Tabangao within 20
months from the signing of the contract. In the
meantime, the retained balance of the purchase price
would earn interest at 17% per annum or P20,648.43
monthly payable to the Babasas until 31 December 1982.
It was expressly stipulated that Tabangao would have
the absolute and unconditional right to take immediate
possession of the lots as well as introduce any
Tabangao is the real estate arm of SHELL. The parties
improvements thereon. On 18 May 1981 Tabangao substantially complied with the terms of the contract.
leased the lots to Shell Gas Philippines, Inc. (SHELL), Tabangao paid the first installment of P300,000.00 to
which immediately started the construction thereon of a the Babasas while the latter delivered actual possession
Liquefied Petroleum Gas Terminal Project, an approved of the lots to the former. In addition, Tabangao paid
zone export enterprise of the Export Processing Zone. P379,625.00 to the tenants of the lots as disturbance
compensation and as payment for existing crops as well instant case, ownership over Lots 17827-A, 17827-B and
as P334,700.00 to the owners of the houses standing 17827-C passed to Tabangao both by constructive and
thereon in addition to granting them residential lots actual delivery. Constructive delivery was accomplished
with the total area of 2,800 square meters. Tabangao upon the execution of the contract of 11 April 1981
likewise paid the stipulated monthly interest for the 20- without any reservation of title on the part of the
month period amounting to P408,580.80. Meanwhile, the Babasas while actual delivery was made when Tabangao
Babasas filed Civil Case 519 and Petition 373 for the took unconditional possession of the lots and leased
transfer of titles of the lots in their name. However, 2 them to its associate company SHELL which constructed
days prior to the expiration of the 20-month period, its multi-million peso LPG Project thereon.
specifically on 31 December 1982, the Babasas asked In Romero v. Court of Appeals and Lim v. Court of
Tabangao for an indefinite extension within which to Appeals, the Court distinguished between a condition
deliver clean titles over the lots. They asked that imposed on the perfection of a contract and a condition
Tabangao continue paying the monthly interest of imposed merely on the performance of an obligation.
P20,648.43 starting January 1983 on the ground that While failure to comply with the first condition results in
Civil Case 519 and Petition 373 had not yet been the failure of a contract, failure to comply with the
resolved with finality in their favor. Tabangao refused second merely gives the other party the option to either
the request. In retaliation the Babasas executed a refuse to proceed with the sale or to waive the
notarized unilateral rescission dated 28 February 1983 condition. In the present case, the spouses contract
to which Tabangao responded by reminding the Babasas with Tabangao did not lose its efficacy when the 20-
that they were the ones who did not comply with their month period stipulated therein expired without the
contractual obligation to deliver clean titles within the spouses being able to deliver clean certificates of title
stipulated 20-month period, hence, had no right to such that Tabangao may no longer demand performance
rescind their contract. The Babasas insisted on the of their obligation.
unilateral rescission and demanded that SHELL vacate
the lots.
On 19 July 1983 Tabangao instituted an action for 5. VALDEZ v CA
specific performance with damages in the RTC Batangas
City to compel the spouses to comply with their FACTS: Carlos Valdez Sr. and Josefina Valdez were
obligation to deliver clean titles over the properties. owners of a parcel of land. When Carlos Sr. died,
The Babasas moved to dismiss the complaint on the Josefina subdivided the property into eight lots. On May
ground that their contract with Tabangao became null 1, 1979, she executed a special power attorney,
and void with the expiration of the 20-month period authorizing her son Carlos Jr, who was a practicing
given them within which to deliver clean certificates of lawyer, to sell a portion thereof (lots 3-C and 3-D) to
title. SHELL entered the dispute as intervenor praying Jose Lagon for P80,000. Part of consideration was also
that its lease over the premises be respected by the for Lagon to transfer the Rural Bank of Isulan to the
Babasas. RTC ruled in favor of Tabangao and Shell. CA subject property, and to construct a commercial
affirmed. building beside the bank. Without knowledge of
Josefina, Carlos Jr. entered into a different agreement,
ISSUE: W/N there was a contract of absolute sale selling the property for P40/square meter, and it was
between the Babasa and Tabagao indicated in the deed that the P80,000 had already been
paid in cash. A downpayment of P20,000 was paid by the
HELD: YES. Although denominated Conditional Sale of wife of Lagon, to which Josefina issued a receipt. Carlos
Registered Lands, the contract between the spouses Jr. prepared an affidavit, signed by Lagon, the transfer
and Tabangao is one of absolute sale. Aside from the of the bank and the construction of commercial building
terms and stipulations used therein indicating such kind as part of the condition, else the deed of absolute sale
of sale, there is absolutely no proviso reserving title in shall be null and void without need of demand. Lagon
the Babasas until full payment of the purchase price, failed to comply with the considerations stated in the
nor any stipulation giving them the right to unilaterally deed, to which the Valdez refused to deliver the torrens
rescind the contract in case of non-payment. A deed of title. Lagon had Lot 3-C to be subdivided into three
sale is absolute in nature although denominated a separate lots, to which he paid the professional
conditional sale absent such stipulations. In such cases, services. Josefina used the subdivision survey, and sold
ownership of the thing sold passes to the vendee upon Lot 3-C-2 to PCIB, evidenced by a deed of absolute sale,
the constructive or actual delivery thereof. In the exectued a real mortgage over Lot 3-C-3 to DBP, and
executed a deed of absolute sale in favor of Carlos Jr.
over Lot 3-C-1. She also sold lot 3-D to Engr. Rodolfo
Delfin. Lagon filed a complaint against Josefina and
Carlos Jr for specific performance and damages. Trial
Court ruled in favor of Lagon. CA reversed, but reversed
itself, ruling in favor or Lagon.
HELD:
UP and ALUMCO expressly stipulated in their
Acknowledgement of Debt that upon default of
payment, creditor UP has the right and power to rescind
their Logging Agreement without the necessity of a
judicial suit.
There is nothing in the law that prohibits the parties
from entering into agreements that violation of terms of
being subject to scrutiny and review by the proper
the contract would cause its cancellation even without court.
court intervention. If the other party deems the rescission unjustified, he
Act of a party in treating a contract as cancelled on free to resort to judicial action. The court shall,
account of any infraction by the other party must be after due hearing, decide if the rescission was
made known to the other and is always provisional,
proper, in which case it will be affirmed and if not P246.42 until fully paid. Par. 6 of the contract provided
proper, the responsible party will be liable for damages. for automatic extrajudicial rescission upon default in
A party who deems the contract violated may consider payment of any monthly installment after the lapse of
it rescinded and act accordingly, even without court 90 days from the expiration of the grace period of a
action but it proceeds at its own risk. Only the final month, without need of notice and forfeiture of all
judgment of the court will conclusively settle whether installments paid.
the action taken was proper or not. But the law does not Dumpit was able to pay the dp and several
prohibit the parties from exercising due diligence to installments amounting to P13,722.50, with the last
minimize their own damages. payment made on Dec. 5, 1967 for installments up to
UP was able to show a prima facie case of breach of Sept. 1967.
contract and default in payment by ALUMCO. Excuses by In 1973, Dumpit requested Palay Inc to update his
ALUMCO are not proper for them to suspend their overdue accounts and sought its permission to assign his
payments. rights to Dizon. However, Palay informed him that his
Thus, the Supreme Court lifted the injunction. Contract to Sell had long been rescinded pursuant to
Par. 6 and that the lot had already been resold.
Dumpit filed a complaint with the NHA for
8. PALAY INC v CLAVE reconveyance with an alternative prayer for refund.
NHA ruled in favor of Dumpit, stating that the rescission
is void for lack of either judicial or notarial demand.
Office of the President affirmed.
ISSUE:
1. W/N notice or demand may be dispensed with by
stipulation in a contract to sell
2. W/N Palay should be liable for the refund of the
installment payments made by Dumpit
HELD:
FACTS: In 1965, Palay Inc., through its President 1. NO. Although a judicial action for rescission of a
Onstott, executed in favor of Dumpit (respondent) a contract is not necessary where the contract provides
Contract to Sell a parcel of land in Antipolo, RIzal. The for its revocation and cancellation for violation of any of
sale was for P23,300 with 9% interest p.a., payable with its terms and condition, jurisprudence has shown that at
a downpayment of P4,660 and monthly installments of
least, there was a written notice sent to the defaulter including the said land, to Pacifico Banking Corp. (PBC).
informing him of the rescission. Par. 6 cannot be In 1975, the Orlinos, who remained in possession of the
considered a waiver of Dumpit's right to be notified land, made a written offer to PBC to redeem the
because it was a contract of adhesion. A waiver must be property. In response, the bank agreed provided that
certain and unequivocal and intelligently made; such P160K should be paid in full upon signing of the Deed of
waiver follows only where the liberty of choice has been Absolute Sale and that as additional consideration,
fully accorded. Orlinos' share on a property in Caloocan City should be
Moreover, the indispensability of notice of conveyed to the bank.
cancellation to the buyer is protected under RA 6551. It After a year, PBC advised the Orlinos that if the
is a matter of public policy to protect the buyers of real transaction will not be finalized in 30 days, it would be
estate on installment payments against onerous and offered to other buyers. However, negotiations ensued
oppressive conditions. Waiver of notice is one such between them until 2 years after, PBC sold the land to
onerous and oppressive condition to buyers of real spouses Lim for P300K.
estate on installment payments. The Orlinos filed a complaint against PBC and Lim for
the annulment of the deed of sale on the ground that
2. YES. As a consequence of the rescission of the the subject land had bee earlier sold to them. RTC held
contract, right to the lot should be restored to Dumpit that PBC and Lim acted in bad faith knowing that there
or the same should be replaced by another acceptable was a cloud in the status of the property. CA affirmed.
lot. However, considering that the lot had been resold
to a third person, Dumpit is entitled to refund of the ISSUE: Whether the transaction between PBC and the
installments paid plus legal interest of 12%. Orlinos is a contract to sell or a contract of sale
4. GUINHAWA v PEOPLE
FACTS:
* Jaime Guinhawa was engaged in the business of selling
brand new motor vehicles, including Mitsubishi vans,
under the business name of Guinrox Motor Sales. His
office and display room for cars were located along
Panganiban Avenue, Naga City. He employed Gil Azotea
as his sales manager.
heart attack. The van went out of control, traversed the
* Guinhawa purchased a brand new Mitsubishi L-300 highway onto the opposite lane, and was ditched into
Versa Van from the Union Motors Corporation (UMC) in the canal parallel to the highway. The van was
Paco, Manila. damaged, and the left front tire had to be replaced.
* The van bore Plate no. DLK 406. Guinhawas driver, * The van was repaired and later offered for sale in
Olayan, drove the van from Manila to Naga City. Guinhawas showroom.
* However, while the van was traveling along the
highway in Daet, Camarines Norte, Olayan suffered a
* Spouses Ralph and Josephine Silo wanted to buy a new ISSUE: W/N THERE WERE FRAUDULENT
van for their garment business; they purchased items in REPRESENTATIONS MADE BY THE SELLER, GUINHAWA BY
Manila and sold them in Naga City. VIRTUE OF THE CONTRACT OF SALE EXECUTED BETWEEN
* Unaware that the van had been damaged and repaired HIM AND THE COUPLE
on account of the accident in Daet, the couple decided
to purchase the van for 591k. Azotea, sales manager, RULING: YES
suggested that the couple make a downpayment of Article 1389 of NCC provides that failure to disclose
118,200, and pay the balance of the purchase price by facts when there is a duty to reveal them constitutes
installments via a loan from the United Coconut Planters fraud. In a contract of sale, a buyer and seller do not
Bank (UCPB), with the van as collateral. deal from equal bargaining positions when the latter has
* Azotea offered to make the necessary arrangements knowledge, a material fact which, if communicated to
with UCPB for the consummation of the loan transaction the buyer, would render the grouns unacceptable or, at
wherein the couple agreed. least, substantially less desirable.
* The spouses executed a Promissory Note for the If, in a contract of sale, the vendor knowingly allowed
amount of 692,676 as payment of the balance on the the vendee to be deceived as to the thing sold in a
purchase price, and as evidence of the chattel mortgage material matter by failing to disclose an intrinsic
over the van in favor of UCPB. circumstance that it vital to the contract, knowing that
* The couple arrived in Guinhawas office to take the vendee is acting upon the presumption that no such
delivery of the van. The latter executed the deed of fact exists, deceit is accomplished by the suppression of
sale, and the couple paid the 161,470 downpayment, for the truth.
they were issued a receipt. They were furnished a In this case, Guinhawa and Azotea knew that the van
Service Manual which contained the warranty terms and had figured in an accident, was damaged and had to be
conditions. repaired. Nevertheless, the van was placed in the
* Azotea instructed the couple on how to start the van showroom, thus making it appear to the public that it
and to operate its radio. Ralph Silo no longer conducted was a brand new unit. Guinhawa was mandated to
a test drive; he and his wife assumed that there were no reveal the foregoing facts to Silos but they even
defects in the van as it was brand new. obdurately declared when they testified that the court
* Josephine Silo, accompanied by Glenda Pingol, went to did not figure in an accident, nor had it been repaired.
Manila on board the van, with Glendas husband as the Even when Guinhawa was apprised that Silos had
driver. On their return trip to Naga from Manila, the discovered the vans defects, the former agreed to
driver heard a squeaking sound, which seemed to be replace the van, but changed his mind and insisted that
coming from underneath the van. The squeaking sound it must be first sold.
persisted and upon examination at the Shell gasoline Guinhawa is not relieved of his criminal liability for
station, it was found out that some parts underneath deceitful concealment of material facts, even if Silos
the van had been welded. made a visual inspection of the vans interior and
* Guinhawa insisted that the defects were mere factory exterior before she agreed to buy and failed to inspects
defects. As the defects persisted, the spouses requested its under chassis.
that Guinhawa replace the van with 2 Charade-Daihatsu
vehicles within a week or two, with the additional costs
to be taken from their downpayment. 5. ANG v CA
* The spouses brought the car to Rx Auto Clinic for
examination wherein the mechanic discovered that it FACTS:
was the left front stabilizer that was producing the * Under a car-swapping scheme, Bruno Soledad sold his
annoying sound, and that it had been repaired. Mitsubishi GSR sedan 1982 model to Jaime Ang by a
* Josephine Silo filed for rescission of the sale and Deed of Absolute Sale
refund of their money. * For his part, Ang conveyed to Soledad his Mitsubishi
* They instituted also a criminal complaint for other Lancer model 1988 also by a Deed of Absolute Sale
deceits made by Guinhawa by making fraudulent * As Angs car was of a later model, Soledad paid him an
representations about the car being brand new and that additional 55,000
it never encountered an accident. * Ang, a buyer and seller of used vehicles, later offered
the Mitsubishi GSR for sale through Far Eastern Motors, a
second hand auto display center. The car was even sold
to a certain Paul Bugash for 225k.
* Before the Deed could be registered in Bugashs name,
however, the vehicle was seized by virtue of a writ of
replevin on account of the alleged failure of Ronaldo
Panes, the owner of the car prior to Soledad, to pay the
mortgage debt constituted thereon.
* To secure the release of the vehicle, Ang paid BA
Finance the amount of 62,038.47. Soledad refused to
reimburse the said amount, despite repeated demands,
drawing Ang to charge him for estafa with abuse of
confidence.
A warranty is a statement or representation made by
ISSUE: W/N THE COMPLAINT HAD PRESCRIBED HINGES ON the seller of goods, contemporaneously and as part of
A DETERMINATION OF WHAT KIND OF WARRANTY IS the contract of sale, having reference to the character,
PROVIDED IN THE DEED OF ABSOLUTE SALE quality or title of the goods, and by which he promises
or undertakes to insure that certain facts are or shall be
RULING: YES as he then represents them.
Warranties by the seller may be express or implied.
In declaring that Soledad owned and had clean title to action is reckoned from the date, Ang instituted his first
the vehicle at the time of the deed of absolute sale was complaint for damages and not when filed the complaint
forged, he gave an implied warranty of title. In pledging subject of this case, the action just the same had
that he will defend the same from all claims or any prescribed, it having been filed 16 months after the
claim whatsoever and will save the vendee from any suit date of delivery of the vehicle.
by the government of the Republic of the Phils, Soledad On the basis of breach of warranty against eviction,
gave a warranty against eviction. essential requisites thereof were not met. For one,
Given Angs business of buying and selling used there is no judgment, which deprived Ang of the
vehicles, he could not have merely relied on Soledads vehicle. For another, there was no suit for eviction
affirmation that the car was free from liens and which Soledad as seller was impleaded as co-defendant
encumbrances. He was expected to have thoroughly at the instance of the vendee.
verified the cars registration and related documents. Even under the principle of solutio indebiti, Ang
Since what Soledad, as seller, gave was an implied cannot recover from Soledad the amount he paid BA
warranty, the prescriptive period to file a breach Finance. For, Ang settled the mortgage debt on his own
thereof is 6 months after the delivery of the vehicle, volition under the supposition that he would resell the
following Art. 1571. But even if the date of filing of the car. It turned out that he did pay BA Finance in order to
damages. Various expert witnesses were presented avoid returning the payment made by the ultimate
during the trial. buyer Bugash.
HELD: NO. In alleging that there was a violation of FACTS: Evangelista spouses purchased feeds from
warranty against hidden defects, the spouses assumed Nutrimix. They refused to pay their unsettled debt
the burden of proof. However, this they failed to claiming that thousands of their livestock were poisoned
overcome. Under the law, the defect must exist at the by the Nutrimix feeds. Nutrimix sued them for collection
time the sale was made and at the time the product left of money. The spouses countered with a suit for
the hands of the seller, which the spouses failed to
prove. The feeds were belatedly tested3 months after that time, they may have already been contaminated.
the death of the broilers and hogs. This means that at They failed to prove that the feeds delivered to be
tested were the same feeds that allegedly poisoned the
animals. It is also common practice for them to mix
different kinds of feeds. The mere death of the animals
does not raise a prima facie case of breach of warranty.
In this case, the evidence presented by the spouses are
only circumstantial.
The remedies of breach of warranty against hidden
defects are either withdrawal from the contract or to
demand a proportionate reduction of the price plus
damages in either case. In this case, though the spouses
failed to make out their case, hence they should be
liable for their debt.
EXTINGUISHMENT OF SALE
1. ROBERTS v PAPIO obligation, the corporation returned the owners
duplicate TCT which was then delivered to Amelia
FACTS: Roberts.
* The Spouses Papio were the owners of a 274 sqm * The parties (A. Roberts as lessor and Martin Papio as
residential lot located in Makati. In order to secure a lessee) executed a 2-year contract of lease. The
59k loan from the Amparo Investments Corp, they contract was subject to renewal or extension for a like
executed a real estate mortgage on the property. Upon period at the option of the lessor, the lessee waiving
Papios failure to pay the loan, the corporation filed a thereby the benefits of an implied new lease. The lessee
petition for the extrajudicial foreclosure of the was obliged to pay monthly rentals of 800 to be
mortgage. deposited in the lessors account.
* Since the couple needed money to redeem the * A new TCT was issued in the name of Amelia Roberts
property and to prevent the foreclosure of the real as owner. Martin Papio paid the rentals and thereafter
estate mortgage, they executed a Deed of Absolute Sale for another year. He then failed to pay rentals, but he
over the property in favor of Martin Papios cousin, and his family nevertheless remained in possession of
Amelia Roberts. the property for almost 13 years.
* Of the 95k purchase price, 59k was paid to the Amparo * A. Roberts reminded Papio that he failed to pay
Investments Corp, while the 26k difference was retained monthly rentals amounting to a total liability of 410k.
by the spouses. As soon as the spouses had settled their She demanded that Papio vacate the property within 15
ISSUE: W/N THE DEED OF ABSOLUTE SALE AND
days from receipt of the letter in case he failed to settle CONTRACT OF LEASE EXECUTED BY THE PARTIES IS AN
the amount. EQUITABLE MORTGAGE OVER THE PROPERTY
* A. Roberts filed a complaint for unlawful detainer and
damages against Martin Papio RULING: NO
An equitable mortgage is one that, although lacking in HELD: NO. Their right has already prescribed.
some formality, form or words, or other requisites Considering that no period for redemption was agreed
demanded by a statute, nevertheless reveals the upon, the law imposes a 4-year limitation. This means
intention of the parties to charge a real property as that from the time the school was merged to Cebu State
security for a debt and contain nothing impossible or College, they had 4 years, or until June 1987 to redeem
contrary to law. A contract between the parties is an the property. However, they failed to do so within the
equitable mortgage if the following requisites are period. Failure to redeem automatically consolidates
present: a. the parties entered into a contract ownership in favor of the vendee. The fact that the right
denominated as a contract of sale and b. the intention to redeem was annotated does not make it
was to secure an existing debt by way of mortgage. The imprescriptible, it only serves to notify third persons.
decisive factor is the intention of the parties.
In an equitable mortgage, the mortgagor retains
ownership over the property but subject to foreclosure 3. SOLID HOMES INC v CA
and sale at public auction upon failure of the mortgagor
to pay his obligation. FACTS:
In contrast, in a pacto de retro sale, ownership of the * Solid Homes executed in favor of State Financing
property sold is immediately transferred to the vendee a Center a Real Estate Mortgage on its properties
retro subject only to the right of the vendor a retro to embraced in the TCT, in order to secure the payment of
repurchase the property upon compliance with legal a loan of 10M which the former obtained from the
requirements for the repurchase. The failure of the latter.
vendor a retro to exercise the right to repurchase within * A year later, Solid Homes applied for and was
the agreed time vests upon the vendee a retro, by granted an additional loan of 1, 511,270.03 by State
operation of law, absolute title over the property. Financing, and to secure its payment, Solid executed an
One repurchases only what one has previously sold. amendment to real estate mortgage whereby the credits
The right to repurchase presupposes a valid contract of secured by the first mortgage on the abovementioned
sale between same parties. By insisting that he had properties were increased from 10M to 11,511,270.03.
repurchased the property, Papio thereby admitted that * Solid homes obtained additional credits and
the deed of absolute sale executed by him and Roberts financing facilities from State Financing in the sum of
was in fact and in law a deed of absolute sale and not an 1,499,811.97 and to secure its payment, the former
equitable mortgage; he had acquired ownership over the executed the amendment to real estate mortgage
property based on said deed. whereby the mortgage executed on its properties was
Respondent, is thus estopped from asserting that the again amended so that the loans or credits secured
contract under the deed of absolute sale is an equitable thereby were further increased from 11,511, 270.03 to
mortgage unless there is an allegation and evidence of 13,011,082.00
palpable mistake on the part of respondent, or a fraud * When the obligations became due and payable, State
on the part of Roberts. Financing made repeated demands upon Solid homes for
the payment thereof, but the latter failed to do so.
* State Financing filed a petition for extrajudicial
2. MISTERIO v CEBU STATE COLLEGE OF SCIENCE AND foreclosure of the mortgages who in pursuance of the
TECHNOLOGY petition, issued a notice of sheriffs sale whereby the
mortgaged properties of Solid homes and the
FACTS: Asuncion sold to Sudlon Agricultural High School improvements existing thereon, including the V.V.
(SAHS) a parcel of land, reserving the right to Soliven Towers II Building were set for public auction
repurchase the same in case (1) the school ceases to sale in order to satisfy the full amount of Solid homes
exist, or (2) the school transfers location. She had her mortgage indebtedness, the interest thereon, and the
right annotated. She died. By virtue of BP 412, SAHS was fees and expenses incidental to the foreclosure
merged with the Cebu State College, effective June proceedings.
1983. In 1990, the heirs of Asuncion sought to exercise * Before the scheduled public auction sale, the
their right to redeem, claiming that school has ceased to mortgagor Solid homes made representations and
exist. induced State Financing to forego with the foreclosure
of the real estate mortgage. By reason thereof, State
ISSUE: W/N the heirs of Asuncion may still exercise their Financing agreed to suspend the foreclosure of
right to redeem the property mortgaged properties, subject to the terms and
conditions they agreed upon, and in pursuance of the
said agreement, they executed a document entitled
MEMORANDUM OF AGREEMENT/DACION EN PAGO.
ISSUE:
FACTS:
Petitioner Adalia Francisco and three of her sisters,
Ester, Elizabeth, and Adeluisa, were co-owners of four
parcels of registered land in Caloocan City
On August 1979, they sold 1/5 of their undivided share
to their mother, Adela Blas, for PhP10,000, making her a
co-owner of the real property to that extent
demanding her share in the rentals being collected from
7 years later, in 1986, however, Adela sold her 1/5 the tenants of the Ten Commandments Building, which
share for PhP10,000 to respondent Zenaida Boiser, stands on the co-owned property
another sister of petitioner Adalia then informs Zenaida that she was exercising
In 1992 or 6 years after the sale, Adalia received
summons with a copy of a complaint by Zenaida
her right of redemption as co-owner of the subject under the law must be notified of the sale
property, depositing for that purpose PhP10,000 with Notice by the co-owner likewise removes all doubt as
the Clerk of Court to the fact of the sale, its perfection, and its validity by
The case was however dismissed after Zenaida was not immediately notifying, or not notifying at all, a co-
declared non-suited, and Adalias counterclaim was thus owner, the vendor can delay or even effectively prevent
dismissed as well the meaningful exercise of the right of redemption
3 years after, Adalia institutes a complaint demanding However, it would be unjust in the case at bar to
the redemption of the property, contending that the 30- require the vendor Adela to serve notice of the sale,
day period for redemption under Art. 1623 had not when the fact has already been established in both
begun to run against her or any of the other co-owners, lower courts Adalia has effectively exercised her right
since the vendor Adela did not inform them about the when she deposited the PhP10,000 redemption price 7
sale, which fact they only came to know of when Adalia days after receiving the summons
received the summons in 1992
Zenaida on the other hand contends that Adalia Fallo
already knew of the sale even before she received the Petition granted, decision of the CA reversed
summons since Zenaida had informed Adalia by letter of The decision in Etcuban v. CA is abandoned, and the
the sale with a demand for her share of the rentals one in Butte v. Manuel Uy and Sons, Inc., as affirmed in
three months before filing suit, attaching to it a copy of Salatandol v. Retes, upheld
the deed of sale
Adalias receipt of the said letter is proven by the fact NOTE
that within a week, she advised the tenants of the The Court failed to negate or possibly appreciate the
building to disregard Zenaidas letter-demand fact of Adalias knowledge of the sale prior to the
The trial court dismissed the complaint for legal summons, as proven her letter-advise to the tenants of
redemption, holding that Art. 1623 does not prescribe the building
any particular form of notifying co-owners on appeal, The period given by the Court to Adalia was 30 days
the CA affirmed after the receipt of the summons on 5 August 1992,
which is 4 September 1992
ISSUE: Whether the letter-demand by Zenaida to Adalia,
to which the deed of sale was attached, can be
considered as sufficient compliance with the notice 7. SORIANO v BAUTISTA
requirement of Art. 1623 for the purpose of legal
redemption FACTS: Bautista spouses mortgaged their lot to Soriano,
who took possession thereof and cultivated the same.
HELD: Pursuant to Par. 5 of their agreement, Soriano decided
The petitioner points out that the case does not to buy the lot. Bautista refused to sell claiming that
concern the particular form in which such notice must being mortgagors, they cannot be deprived of their right
be given, but rather the sufficiency of notice given by a to redeem the property.
vendee in lieu of the required notice to be given by the
vendor or prospective vendor ISSUE: W/N Soriano may buy the mortgaged property of
The text of Art. 1623 clearly and expressly prescribes Bautista
that the 30 days for making the redemption shall be
counted from notice in writing by the vendor it makes
HELD: YES. True that the transaction is a mortgage,
sense to require that notice be given by the vendor and
which carried with it a customary right of redemption.
nobody else, since the vendor of an undivided interest is
However, the mortgagors right to redeem was rendered
in the best position to know who are his co-owners, who
defeasible at the election of the mortgagees by virtue of
Par. 5, allowing them the option to purchase the said
lot. There is nothing immoral or illegal about such
stipulation. It was supported by the same consideration
as the mortgage contract and constituted an irrevocable
continuing offer within the time stipulated. That being
the case, Bautista spouses must be compelled to honor
the sale.
ASSIGNMENT
1. NYCO SALES CORP v BA FINANCE made by Licaros with the Anglo-Asean Bank at the
former's expense. When Gatmaitan contacted the
FACTS: NYCO Sales Corp extended a credit foreign bank, it said they will look into it, but it didn't
accommodation to the Fernandez Brothers. The prospered. Because of the inability to collect,
brothers, acting in behalf of Sanshell Corp, discounted a Gatmaitan did not bother to pay Licaros the value of the
BPI check for P60,000 with NYCO, which then indorsed promissory note. Licaros, however, believing that he had
the said check to BA Finance accompanied by a Deed of a right to collect from Gatmaitan regardless of the
Assignment. BA Finance, in turn, released the funds, outcome, demanded payment, but was ignore. Licaros
which were used by the brothers. The BPI check was filed a complaint against Gatmaitan for the collection of
dishonored. The brothers issued a substitute check, the note. The trial court ruled in favor of Licaros, but
which was also dishonored. Now BA Finance goes after CA reversed.
NYCO, which disclaims liability.
ISSUE: Whether the memorandum of agreement
ISSUE: W/N NYCO, as the assignor, is liable for breach of between petitioner and respondent is one of assignment
warranties of credit or one of conventional subrogation
HELD: YES. The assignor (NYCO) warrants both the RULING: It is a conventional subrogation. An assignment
existence and legality of the credit, as well as the of credit has been defined as the process of transferring
solvency of the debtor. If there is a breach of any of the the right of the assignor to the assignee who would then
2 warranties, the assignor is liable to the assignee. That have a right to proceed against the debtor. Consent of
being the case, NYCO cannot evade liability. So long as the debtor is not required is not necessary to product its
the credit remains unpaid, the assignor remains liable legal effects, since notice of the assignment would be
notwithstanding failure to give notice of dishonor that is enough. On the other hand, subrogation of credit has
because the liability of NYCO stems form the been defined as the transfer of all the rights of the
assignment, not on the checks alone. creditor to a third person, who substitutes him in all his
rights. It requires that all the related parties thereto,
the original creditor, the new creditor and the debtor,
2. LICAROS v GATMAITAN enter into a new agreement, requiring the consent of
the debtor of such transfer of rights. In the case at
FACTS: Abelardo Licaros invested his money worth hand, it was clearly stipulated by the parties in the
$150,000 with Anglo-Asean Bank, a money market memorandum of agreement that the express conformity
placement by way of deposit, based in the Republic of of the third party (debtor) is needed. The memorandum
Venatu. Unexpectedly, he had a hard time getting back contains a space for the signature of the Anglo-Asean
his investments as well as the interest earned. He then Bank written therein "with our conforme". Without such
sought the counsel of Antonio Gatmaitan, a reputable signature, there was no transfer of rights. The usage of
banker and investor. They entered into an agreement, the word "Assignment" was used as a general term, since
where a non-negotiable promissory note was to be Gatmaitan was not a lawyer, and therefore was not
executed in favor of Licaros worth $150,000, and that well-versed with the language of the law.
Gatmaitan would take over the value of the investment