____________________________________ CRUZ VS.

FERNANDO
____________________________________
477 SCRA 173, December 9, 2005

FACTS:
Spouses Cruz (petitioners) are occupants of the front portion of a property. An accion publiciana was filed against
them by spouses Fernando (respondents), alleging that they are  the  rightful  owners  thereof,  and  asking  that  the
petitioners vacate  the  premises and  pay  reasonable  rent  for  the  use  thereof. Respondents alleged that they
bought the property from spouses Glorioso, who initially offered to sell the rear portion of the property to petitioners
which was embodied in a Kasunduan. Respondents averred that the transaction between spouses Glorioso and
petitioners did not materialize due to the latter’s failure to exercise their option. The RTC ruled in favor of the
respondents. The CA affirmed the decision of the lower court.  

ISSUE:

Whether the Kasunduan involved a contract to sell or a contract of sale. 

RULING:
The Court held that the foregoing terms and conditions of the Kasunduan show that it is a contract to sell and not a
contract of sale. Under Article 1458 of the Civil Code, a contract of sale is a contract by which one of the
contracting parties obligates himself to transfer the ownership and to deliver a determinate thing, and the other to
pay therefor a price certain in money or its equivalent. Article 1475 of the Code further provides that the contract of
sale is perfected at the moment there is meeting of the minds upon the thing which is the object of the contract and
upon the price.
The conspicuous absence of a definite manner of payment of the purchase price---which is an essential element of a
contract of sale---in the agreement confirms the conclusion that it is a contract to sell. Although the Civil Code does
not expressly state that the minds of the parties must also meet on the terms or manner of payment of the price, the
same is needed, otherwise there is no sale. As held in Toyota Shaw, Inc. vs. Court of Appeals, a definite agreement
on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract
of sale.
The Kasunduan does not establish any definite agreement between the parties concerning the terms of payment.
What it merely provides is the purchase price for the 213-square meter property at P40.00 per square meter. In
addition, the absence of any formal deed of conveyance is a strong indication that the parties did not intend
immediate transfer of ownership.

 __________________________________DANTIS vs. MAGHINANG ________________________________

695 SCRA (2013)
 FACTS: 
The case draws its origin from a complaint for quieting of title and recovery of possession with damages filed by
petitioner Rogelio Dantis (Rogelio) against respondent Julio Maghinang, Jr. (Julio, Jr.) “before the RTC, docketed
as Civil Case No. 280-M-2002. Rogelio alleged that he was the registered owner of a parcel of land covered by
Transfer Certificate of  Title (TCT) No. T-125918, with an area of  5,657 square meters, located in Sta. Rita, San
Miguel, Bulacan3 that he acquired ownership of the property through a deed of extra Judicial partition of the estate
of his deceased father, Emilio Dantis (Emilio), dated December 22, 1993; that he had been paying the realty   taxes
on the said property;  that Julio Jr. occupied and built  a house on a portion of his property without any right at all;
that demands were made upon Julio, Jr. that he vacate the premises but the same fell on deaf ears; and that the acts
of Julio,Jr. had created a cloud of doubt over his title and right of possession of his property. 
 
He added that he was constrained to institute an ejectment suit against Julio, Jr.before the Municipal Trial Court of
San Miguel, Bulacan (MTC), but the complaint was dismissed for lack of jurisdiction and lack of cause of action. 
 
Julio claimed that his father, Julio Maghinang Sr., bought the said lot from the parents of Rogelio Dantis.  He
admitted that the affidavit was not signed by the alleged vendor, Emilio Dantis, the father of Rogelio Dantis. The
receipt he presented was admittedly a mere photocopy.
 
RTC’s Ruling:
 
On March 2, 2005  the RTC rendered its decision declaring Rogelio as the true owner of the entire 5,657 - square
meter lot located in Sta. Rita, San Miguel, Bulacan, as evidenced by his TCT over the same. The RTC ruled that
even if the purported affidavit and the receipt presented by Julio were adjudged as competent evidence, still, they
would only serve as proofs that the purchase price for the sub5ect lot had not yet been completely paid and, hence,
Rogelio was not duty bound to deliver the property to Julio, Jr.  The RTC found Julio, Jr. to be a mere possessor by
tolerance. The dispositive portion of the RTC decision reads:
Julio, Jr. moved for a reconsideration of the March 2, 2005 decision, but the motion was denied by the RTC in its
May 3, 2005 Order. Feeling aggrieved, Julio, Jr. appealed the decision to the CA.
The CA held that the receipt was an indubitable proof of the sale of the 352 square meter lot between Emilio and
Julio, Sr.  It also ruled that the partial payment of the purchase price, coupled with the delivery of the res, gave
e9cacy to the oral sale and brought it outside the operation of the statute of frauds. 
 
The motion for reconsideration filed by Rogelio was denied by the CA, hence this petition.
 
 ISSUE: 
 Whether there is a perfected contract of sale between Emilio and  Julio, Sr. 
  
RULING: 

There is no perfected contract of sale. First, the affidavit allegedly executed by Ignacio Dantis (Ignacio), Rogelio’s
grandfather, whereby said affiant attested, among others, to the sale of the subject lot made by his son, Emilio, to
Julio, Sr. Second the undated handwritten receipt of initial down payment in the amount of P100.00 supposedly
issued by Emilio to Julio, Sr. in connection with the sale of the subject lot jurisprudence dictates that an affidavit is
merely hearsay evidence where its affiant /maker did not take the witness stand.
 
The sworn statement of Ignacio is hearsay evidence. It cannot be deemed a declaration against interest for the matter
to be considered as an exception to the hearsay rule because the declarant was not the seller (Emilio), but his father
Ignacio". On the other hand, the undated handwritten receipt is considered secondary evidence being a mere
photocopy which, in this case, cannot be admitted proving the contents of such receipt. The best evidence rule
requires that the highest available degree of proof must be produced. For documentary evidence, the contents of a
document are best proved by the production of the document itself to the exclusion of secondary or substitutionary
evidence, pursuant to Rule 130, Section 3.
 
A secondary evidence is admissible only upon compliance with Rule 130, Section 5,which states that:   when the
original has been lost or destroyed, or cannot  be produced in court, the offeror, upon proof of its execution or
existence and the cause of its unavailability without bad faith on his part, may prove its contents by a copy, or by a
recital of its contents in some authentic document, or by the testimony of witnesses in the order stated. Proof of the
due execution of the document and its subsequent loss would constitute the basis for the introduction of secondary
evidence.
 
In MCC Industrial Sales Corporation v. Sangyong Corporation, it was held that where the missing document is the
foundation of the action, more strictness in proof is required than where the document is only collaterally involved.
 
Guided by these norms, the court holds that Julio, Jr. failed to prove the due execution of the original of affidavit as
well as its subsequent loss. His testimony was riddled with improbabilities and contradictions which tend to erode
his credibility and raise doubt on the veracity of his evidence. His claim of Julio, Jr. that Emilio affixed his signature
on the original affidavit in 1953 is highly improbable because record shows that Emilio died even before that year,
specifically, on November 13, 1952. 
 
Assuming, in, that the receipt is admissible in evidence, there will still be no valid and perfected oral contract for
failure of Julio, Jr. to prove the concurrence of the essential requisites of a contract of sale by adequate and
competent evidence. By the contract of sale, one of the contracting parties obligates himself to transfer the
ownership of, and to deliver, a determinate thing, and the other to pay therefor a price certain in money or its
equivalent. A contract of sale is a consensual contract and, thus, is perfected by mere consent which is manifested by
the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract. Until
the contract of sale is perfected, it cannot, as an independent source of obligation, serve as a binding juridical
relation between the parties. The essential elements of a contract of sale are; a) consent or meeting of the minds, that
is, consent to transfer ownership in exchange for the price; b) determinate subject matter and c) price certain in
money or its equivalent. The absence of any of the essential elements shall negate the existence of a perfected
contract of sale.
 
A perusal of the above document would readily show that it does not specify a determinate subject matter. Nowhere
does it provide a description of the property subject of the sale, including its metes and bounds, as well as its total
area. The Court notes that while Julio, Jr. testified that the land subject of the sale consisted of 352 square meters,
the receipt however, states that it is more than 400 square meters. Moreover, it does not categorically declare the
price certain in money. Neither does it state the mode of payment of the purchase price and the period for its
payment.
 
Seemingly, Julio, Jr. wanted to prove the sale by a receipt when it should be the receipt that should further
corroborate the existence of the sale. At best, his testimony only alleges but does not prove the existence of the
verbal agreement. Julio, Jr. miserably failed to establish by preponderance of evidence.
 
On one hand, It is an age-old rule in civil cases that he who alleges a fact has the burden of proving it and a mere
allegation is not evidence. After carefully sifting through the evidence on record, the Court  finds that Rogelio was
able to establish a prima facie case in his favor  tending to show his exclusive ownership of the parcel of land under
a title with an area of 5,657 square meters, which included the  352 square meter subject lot and is a derivative of a
mother title, which covered a bigger area of land measuring 30,000 square meters registered in the name of  Emilio
Dantis; that Emilio died intestate on November 13, 1952; that Emilio’s five heirs, including Rogelio, executed an
extra judicial partition of estate on December 22, 1993 and divided among themselves specific portions of the
property  In Swedich Match, AB v Court of Appeals, the Court ruled that the manner of payment of the purchase
price was an essential element before a valid and binding contract of sale could exist. Albeit the Civil Code does not
explicitly provide that the minds of the contracting parties must also meet on the terms or manner of payment of the
price, the same is needed, otherwise, there is no sale. An agreement anent the manner of payment goes into the price
so much so that a disagreement on the manner of payment is tantamount to a failure to agree on the price.

 ____________ ACE FOODS, INC., vs. MICRO PACIFIC TECHNOLOGIES CO., LTD. ________________

FACTS:
Micro pacific Technologies Co., LTD. (MTCL), one engaged in the supply of computer hardware and equipment,
sent a letter-proposal for the delivery and sale of the subject products to be installed at various offices of ACE
Foods, a domestic corporation engaged in the trading and distribution of consumer goods in wholesale and retail
bases. The said proposal provides the terms, to wit:

TERMS: Thirty (30) days upon delivery.

VALIDITY: Prices are based on current dollar rate and subject to changes without prior notice.
DELIVERY: Immediate delivery for items on stock, otherwise thirty (30) to forty-five days upon receipt of
[Purchase Order]
WARRANTY: One (1) year on parts and services. Accessories not included in warranty.

ACE Foods accepted the MTCL’s proposal and thereafter issued Purchase Order (No. 100023) for the subject
products amounting to P646,464.00 as a purchase price. Thereafter, MTCL delivered the said products to ACE
Foods as reflected in an invoice receipt (No. 7733). The fine print of the invoice states that “title to sold property is
reserved in MICROPACIFIC TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of
above and payment of the price.”
After delivery, the subject products were installed and configured in ACE Foods’ premises. MTCL’s made demands
against ACE Foods but such demands were, however, unheeded. Instead of paying the purchase price, ACE Foods
sent a letter to MTCL, stating the intention of returning purchase products, thru its sales representative.

ACE Foods filed a complaint against MTCL before the RTC, alleging that MTCL breached its “after delivery
services” obligations to install and configure the subject products, to submit a cost benefit study to justify the
purchase of the subject products, and to train ACE Foods’ technicians on how to use and maintain the subject
products. ACE Foods further claimed that the subject products delivered were defective and not working. 

MTCL answered that it had duly complied with its obligations to ACE Foods and that the subject produts were in
good working condition at the time of delivery, installment and configuration in ACE Foods’ premises. MTCL even
conducted a training course for ACE Foods’ representative/employees. MTCL alleged that there was actually no
agreement as to the purported “after delivery services.”

RTC RULING:

It directed MTCL to remove the subject products from ACE Foods’ premises and pay actual damages and attorney’s
fees in the amounts of P200,000 and P100,000 respectively. It observed that the agreement between the disputing
parties is in the nature of a contract to sell, based on the fine print of the Invoice receipt (title to sold property is
reserved in MICROPACIFIC TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of
above and payment of the price.) Since title remained with MTCL, the RTC directed it to withdraw the subject
products from ACE Foods’ premises. 

CA RULING:

It reversed and set aside the RTC’s ruling, ordering ACE Foods to pay the purchase price of the products plus legal
interest of 6% per annum, plus attorney’s fees of P50,000.00. It found that the agreement between the parties is a
Contract of Sale, by which said contract had been perfected from the time ACE Foods sent the Purchase Order to
MTCL which, in turn, delivered the products covered by the Invoice Receipt and subsequently installed and
configured then in ACE Foods’ premises. ACE Foods’ obligation arose at the time when MTCL had already
complied with its obligation. Its duty is to pay the agreed purchase price within 30 days from the delivery of the
product.

ISSUE:
WON the agreement between the parties is a Contract of Sale.

RULING: 
YES. Article 1458 of the Civil Code provides:

“By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to deliver a
determinate thing, and the other to pay therefor a price certain in money or its equivalent.

A contract of sale may be absolute or conditional.”

Corollary thereto, a contract of sale is classified as a consensual contract, which means that the sale is perfected by
mere consent. No particular form is required for its validity. Upon perfection of the contract, the parties may
reciprocally demand performance, i.e., the vendee may compel transfer of ownership of the object of the sale, and
the vendor may require the vendee to pay the thing sold.

In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly
reserving the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the
property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., the full payment of
the purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller
may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because
in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the
happening of a contingent event which may or may not occur.

In this case, the Court concurs with the CA that the parties have agreed to a contract of sale and not to a contract to
sell as adjudged by the RTC. Bearing in mind its consensual nature, a contract of sale had been perfected at the
precise moment ACE Foods, as evinced by its act of sending MTCL the Purchase Order, accepted the latter’s
proposal to sell the subject products in consideration of the purchase price of P646,464.00. From that point in time,
the reciprocal obligations of the parties —i.e., on the one hand, of MTCL to deliver the said products to ACE Foods,
and, on the other hand, of ACE Foods to pay the purchase price therefor within thirty (30) days from delivery
already arose and consequently may be demanded. 

Article 1475 of the Civil Code makes this clear:

“The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the
contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing
the form of contracts.”
At this juncture, the Court must dispel the notion that the stipulation anent MTCL’s reservation of ownership of the
subject products as reflected in the Invoice Receipt, i.e., the title reservation stipulation, changed the complexion of
the transaction from a contract of sale into a contract to sell. Records are bereft of any showing that the said
stipulation novated the contract of sale between the parties which, to repeat, already existed at the precise moment
ACE Foods accepted MTCL’s proposal.
 ____________________________________ FLANCIA VS. CA _______________________________________
G.R. No. 146997. April 26, 2005

FACTS:
This is an action to declare null and void the mortgage executed by defendant Oakland Development Resources
Corp. in favor of defendant William Ong Genato over the house and lot plaintiffs spouses Godofredo and Dominica
Flancia purchased from defendant corporation.
In the complaint, plaintiffs allege that they purchased from defendant corporation a parcel of land AND that by
virtue of the contract of sale, defendant corporation authorized plaintiffs to transport all their personal belongings to
their house at the lot.
Plaintiffs received a copy of the execution foreclosing the mortgage issued by the RTC, ordering defendant to sell at
public auction several lots formerly owned by defendant corporation including subject lot of plaintiffs.
Plaintiffs averred that the alleged mortgage of subject lot is null and void as it is not authorized by plaintiffs
pursuant to Art. 2085 of the Civil Code which requires that the mortgagor must be the absolute owner of the
mortgaged property.
It turns out that the corporation mortgaged to Genato two parcels of land, including the petitioners’ property, for the
unpaid loans of the former to the latter. That for failure to pay, Genato moved for the foreclosure of such mortgage
which was granted by the RTC and affirmed by the CA.
Respondent Genato avers that the Contract to Sell between Petitioners and corporation is not a mutual promise to
buy and sell nor a contract of sale, hence, the ownership on the subject lots is retained upon him.

ISSUE: 
Whether or not the contract between corporation and petitioners is a contract of sale which would make the
mortgage null and void, and ownership to the lots thereof will be retained on Respondent Corporation?

RULING: 
In the contract between petitioners and Oakland, aside from the fact that it was denominated as a contract to sell, the
intention of Oakland not to transfer ownership to petitioners until full payment of the purchase price was very clear.
Acts of ownership over the property were expressly withheld by Oakland from petitioner. All that was granted to
them by the "occupancy permit" was the right to possess it.
Furthermore, the contract between Oakland and petitioners stated:
24. That this Contract to Sell shall not in any way [authorize] the BUYER/S to occupy the assigned house and lot to
them.
In contracts to sell, full payment is a positive suspensive condition while in contracts of sale, non-payment is a
negative resolutory condition.
Clearly, when the property was mortgaged to Genato in May 1989, what was in effect between Oakland and
petitioners was a contract to sell, not a contract of sale. Oakland retained absolute ownership over the property.
WHEREFORE, the petition for review is hereby DENIED. The decision of the Court of Appeals reinstating the
August 16, 1996 decision of the trial court is hereby AFFIRMED.
WHEREFORE, the petition for review is hereby DENIED. The decision of the Court of Appeals reinstating the
August 16, 1996 decision of the trial court is hereby AFFIRMED.
 ____________________________________ ACAP VS CA _____________________________________
251 SCRA 30 (1995)
FACTS: 
Acap was a tenant of the lot owned by Cosme Pido. Upon Pido's death, Acap paid the monthly rental dues to the
widow Lauranciana Pido. He died intestate. The widow and her 3 sons afterward executed a notarized document
denominated as "Declaration of Heirship and waiver of rights" in favor of private respondant De los Reyes. Acap
did not recognize De los Reyes claim of ownership over the land as he contended that the land still belongs to the
heirs of Cosme Pido, and won't pay the rent demanded by De los Reyes.
On 28 April 1988, after the lapse of four (4) years, private respondent filed a complaint for recovery of possession
and damages against petitioner, alleging in the main that as his leasehold tenant, petitioner refused and failed to pay
the agreed annual rental of ten (10) cavans of palay despite repeated demands.
On 20 August 1991, the lower court rendered a decision in favor of private respondent,
CA: like the trial court, respondent court was also convinced that the said document stands as prima facie proof of
appellee's (private respondent's) ownership of the land in dispute.

ISSUE:
Whether or not the subject declaration of Heirship and Waiver of Rights is a recognized mode of acquiring
ownership

RULING:
1 No, the trial court was obviously confused as to the nature and effect of the Declaration of Heirship and Waiver of
Rights, equating the same with a contract (deed) of sale. They are not the same. In a Contract of Sale, one of the
contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other
party to pay a price certain in money or its equivalent. Upon the other hand, a declaration of heirship and waiver of
rights operates as a public instrument when filed with the Registry of Deeds whereby the intestate heirs adjudicate
and divide the estate left by the decedent among themselves as they see fit. It is in effect an extrajudicial settlement
between the heirs under Rule 74 of the Rules of Court.
2 No A notice of adverse claim was filed with the Registry of Deeds which contained the Declaration of Heirship
with Waiver of rights and was annotated at the back of the Original Certificate of Title (OCT) to the land in
question. This said notice, by its nature, does not however prove private respondent's ownership over the tenanted
lot.   The Court emphasized that while the existence of said adverse claim was duly proven, there was no evidence
whatsoever that a deed of sale was executed between  the parties transferring the rights in favor of private
respondent. An adverse claim cannot by itself be sufficient to cancel the OCT to the land and title the same in
private respondent's name.
_________________________________ CAVITE DEV. BANK VS LIM ________________________________
324 SCRA 346 (2000)

FACTS:
Rodolfo Guansing mortgaged a parcel of land in order to obtain a loan in the amount of P90k from CDB. He
defaulted on his payment thus, the land was foreclosed. CDB was the highest bidder and he failed to redeem. Sps.
Lim offered to buy the land under the terms and conditions specified below (please read it). Pursuant to the terms
and conditions, Lim paid P30k option money. Subsequently, she found out that the title of Rodolfo was cancelled,
and the land is actually under the name of Rodolfo’s father. Lim is suing for specific performance and damages. SC
held that there was a valid contract of sale even though P30k was termed as Option Money because it was, despite
its name, was earnest money. Even if it was a valid contract of sale, the performance is impossible because CDB
cannot give what it does not own, thus making the contract a nullity.

ISSUE/S:
Whether or not there was a perfected contract of sale.
Whether or not there was a valid contract of sale.

RULING:
1. YES
In determining the nature of a contract, the courts are not bound by the name or title given to it by the contracting
parties.
In the case at bar, the P30,000.00, although termed as “option money” is actually in the nature of earnest money or
down payment when considered with the other terms of the offer.
After the payment of the 10% option money, the Offer to Purchase provides for the payment only of the balance of
the purchase price, implying that the “option money” forms part of the purchase price—thus, it is earnest money.
CDB had accepted Lim’s offer to purchase and should no longer be subject to the final approval of FEBTC.

2. NO
It is already impossible for CDB to perform its obligation as seller to deliver and transfer ownership of the property
under the principle of Nemo dat quod non habet (One cannot give what one does not have).
Ownership of the thing sold is required not during the perfection of the contract, but during consummation.
Thus, the sale by CDB to Lim of the property mortgaged by Rodolfo Guansing must be deemed a nullity because
CDB did not have a valid title for the property since the mortgagor was not the owner of the property foreclosed.
There exists an exception to the rule that mortgaged property is void when mortgagor is not the owner thereof: when
the mortgagee is in good faith on the principle that all persons dealing with property covered by a TCT are not
required to go beyond what appears on the face of the title.
However, contrary to their claims, CDB cannot be considered a mortgagee in good faith because they cannot be
excused from the duty of exercising the due diligence required of respectable banking institutions.
It is standard practice for banks, prior to the approval of loans, to send representatives to the premises of the land
offered as security and to determine who are the real owners thereof.
Banking institutions are expected to exercise more care and prudence than private individuals in their dealings
because their business is affected with public interest.
Spouses Lim are thus entitled to recover the P30,000.00 money paid by them plus legal interest. Considering CDB’s
negligence, an award for moral damages was also given.

________________________________________FULE vs. CA _________________________________________

286 SCRA 698 (1998)

Civil Law; Contracts; Sale; A contract of sale is perfected at the moment there is a meeting of the minds upon the
thing which is the object of the contract and upon the price. The Civil Code provides that contracts are perfected by
mere consent. A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is
the object of the contract and upon the price. Being consensual, a contract of sale has the force of law between the
contracting parties, and they are expected to abide in good faith by their respective contractual commitments 
This is a PETITION for review on certiorari of a decision of the Court of Appeals. 

FACTS: 
Petitioner Gregorio Fule acquired a 10-hectare property in Tanay, Riza. The latter had mortgaged it earlier to the
Rural Bank of Alaminos Laguna, Inc. 
In July 1984, petitioner, as corporate secretary of the bank, asked Remelia Dichoso and Oliva Mendoza to look for a
buyer who might be interested in the Tanay property. The two found one in the person of herein private respondent
Dr. Ninevetch Cruz. 
Petitioner had shown interest in buying a pair of emerald-cut diamond earrings owned by Dr. Cruz.  Petitioner
inspected said jewelry at the lobby of the Prudential Bank branch in San Pablo City and then made a sketch thereof.
Having sketched the jewelry for twenty to thirty minutes, petitioner gave them back to Dr. Cruz who again refused
to sell them.
Subsequently, however, negotiations for the barter of the jewelry and the Tanay property ensued. Dr. Cruz requested
herein private respondent Atty. Juan Belarmino to check the property who, in turn, found out that no sale or barter
was feasible because the one-year period for redemption of the said property had not yet expired at the time. 
This caused the preparation of the documents of sale.

For services rendered, petitioner paid the agents, Dichoso and Mendoza, the amount of US$300.00 and some pieces
of jewelry.  In the evening of the same day, petitioner arrived at the residence of Atty. Belarmino complaining that
the jewelry given to him was fake. He then used a tester to prove the alleged fakery 

Petitioner then accused Dichoso and Mendoza of deceiving him which they, however, denied. They countered that
petitioner could not have been fooled because he had vast experience regarding jewelry. 

Petitioner filed a complaint before the Regional Trial Court of San Pablo City against private respondents praying
that the contract of sale over the Tanay property be declared null and void on the ground of fraud and deceit. 
The lower court rendered its decision on the issue of whether or not the genuine pair of earrings used as
consideration for the sale was delivered by Dr. Cruz to petitioner, the lower court said:
“The lower court further ruled that all the elements of a valid contract under Article 1458 of the Civil Code were
present, namely: (a) consent or meeting of the minds; (b) determinate subject matter, and (c) price certain in money
or its equivalent. The same elements, according to the lower court, were present despite the fact that the agreement
between petitioner and Dr. Cruz was principally a barter contract. “
The lower court explained thus: Plaintiff’s ownership over the Tanay property passed unto Dra. Cruz upon the
constructive delivery thereof by virtue of the Deed of Absolute Sale On the other hand, the ownership of Dra. Cruz
over the subject jewelries transferred to the plaintiff upon her actual personal delivery to him at the lobby of the
Bank. It is expressly provided by law that the thing sold shall be understood as delivered, when it is placed in the
control and possession of the vendee

Aside from concluding that the contract of barter or sale had in fact been consummated when petitioner and Dr.
Cruz parted ways at the bank, the trial court likewise dwelt on the unexplained delay with which petitioner
complained about the alleged fakery 
Petitioner elevated the matter to the Court of Appeals. The Court of Appeals, however, rendered a decision
affirming in toto the lower court’s decision 
ISSUE: 
Whether the Court of Appeals erred in upholding the validity of the contract of barter or under the circumstances of
this case.

RULING: NO.
The Civil Code provides that contracts are perfected by mere consent. From this moment, the parties are not
only to the fulfillment of what has been expressly stipulated but also to all the consequences which, according to
their nature, may be in keeping with good faith, usage and law. 
A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of
the contract and upon the price. Being consensual, a contract of sale has the force of law between the contracting
parties, and they are expected to abide in good faith by their respective contractual commitments.
It is evident from the facts of the case that there was a meeting of the minds between petitioner and Dr. Cruz. As
such, they are bound by the contract unless there are reasons or circumstances that warrant its nullification.

_____________________ FERNANDO A. GAITE v. ISABELO FONACIER _____________________

G.R. No. L-11827, July 31, 1961
FACTS:
This appeal comes to us directly from the Court of First Instance because the claims involved aggregate more than
P200,000.00.
Isabelo Fonacier was the owner of mineral claims, known as the Dawahan Group. He appointed Fernando A. Gaite
as his attorney-in-fact to enter into contracts for the exploration and development of the mining claims. Gaite in turn
executed a general assignment into the Larap Iron Mines, a single proprietorship owned by him. 
For some reasons, Isabelo Fonacier revoked the authority, which was acceded to by Gaite, subject to certain
conditions, one of which being the transfer of ores extracted from the mineral claims for P75,000, of which P10,000
has already been paid upon signing of the agreement and the balance to be paid from the first letter of credit for the
first local sale of the iron ores. 
To secure payment, Fonacier executed a surety agreement with Larap Mines and its stockholders, however, Gaite
refused to sign the same unless another bond underwritten by a bonding company was put up by defendants to
secure the payment of the balance of the price of the iron ore. Hence, a second bond was executed with Far Eastern
Insurance as additional surety. 
When the second surety agreement expired with no sale being made on the ores, Gaite demanded the P65,000
balance. Defendants contended that the payment was subject to the condition that the ores will be sold.
The lower court held that the obligation of the Fonacier to pay Gaite the balance was one with a term: i.e., that it
would be paid upon the sale, such sale to be effected within one year; that the giving of security was a condition
precedent to Gaite's giving of credit to defendants; and that as the latter failed to put up a good and sufficient
security in lieu of the Far Eastern Surety bond which had already expired, the obligation became due and
demandable under Article 1198 of the New Civil Code.
ISSUE:
Whether the obligation of Fonacier to pay Gaite is one with a period or term and not one with a suspensive
condition, and that the term had already expired.
HELD:
The shipment or local sale of the iron ore is not a condition precedent (or suspensive) to the payment of the balance
of P65,000.00, but was only a suspensive period or term. What characterizes a conditional obligation is the fact that
its efficacy or obligatory force (as distinguished from its demandability) is subordinated to the happening of a future
and uncertain event; so that if the suspensive condition does not take place, the parties would stand as if the
conditional obligation had never existed.
A contract of sale is normally commutative and onerous: not only does each one of the parties assume a correlative
obligation (the seller to deliver and transfer ownership of the thing sold and the buyer to pay the price), but each
party anticipates performance by the other from the very start. While in a sale the obligation of one party can be
lawfully subordinated to an uncertain event, so that the other understands that he assumes the risk of receiving
nothing for what he gives (as in the case of a sale of hopes or expectations, emptio spei), it is not in the usual course
of business to do so; hence, the contingent character of the obligation must clearly appear. Nothing is found in the
record to evidence that Gaite desired or assumed to run the risk of losing his right over the ore without getting paid
for it, or that Fonacier understood that Gaite assumed any such risk. This is proved by the fact that Gaite insisted on
a bond a to guarantee payment of the P65,000.00, and not only upon a bond by Fonacier, the Larap Mines &
Smelting Co., and the company's stockholders, but also on one by a surety company; and the fact that appellants did
put up such bonds indicates that they admitted the definite existence of their obligation to pay the balance of
P65,000.00.
The appellant has forfeited the right court below that the appellants have forfeited the right to compel Gaite to wait
for the sale of the ore before receiving payment of the balance of P65,000.00, because of their failure to renew the
bond of the Far Eastern Surety Company or else replace it with an equivalent guarantee. The expiration of the
bonding company's undertaking on December 8, 1955 substantially reduced the security of the vendor's rights as
creditor for the unpaid P65,000.00, a security that Gaite considered essential and upon which he had insisted when
he executed the deed of sale of the ore to Fonacier.
 ____________________________ Equatorial Realty Dev. Vs. Mayfair Theater ________________________
370 SCRA 56 (2001)
FACTS: 
The present case arose out of an earlier case decided by the Court on November 21, 1996, entitled Equatorial Realty
Development, Inc. v. Mayfair Theater, Inc. Carmelo & Bauermann, Inc. used to own a parcel of land, together with
two 2-storey buildings constructed thereon, located at Claro M. Recto Avenue, Manila.

In 1967, Carmelo entered into a Contract of Lease with Mayfair Theater Inc. for a portion of the second floor and
mezzanine of the two-storey building which Mayfair used as a movie house known as Maxim Theater. Two years
later, in1969, Mayfair entered into a second Contract of Lease with Carmelo for the lease of another portion of the
property where Mayfair put up another movie house known as Miramar Theater.

Both Contracts of Lease was for a period of 20 years and contained a provision granting Mayfair a right of first
refusal to purchase the subject properties.

However, on July 30, 1978 - within the 20-year-lease term -- the subject properties were sold by Carmelo to
Equatorial Realty Development, Inc. for the total sum of P11.3 Million, without their first being offered to Mayfair.

Consequently, Mayfair filed a Complaint before the RTC for (a) the annulment of the Deed of Absolute Sale
between Carmelo and Equatorial, (b) specific performance, and (c) damages.

The lower court rendered a Decision in favor of Carmelo and Equatorial. On appeal, the Court of Appeals reversed
the judgment of the lower court.
When Equatorial raised the CA decision with the Supreme Court via Petition for Review, the SC declared the sale
between Equatorial and Carmelo as rescinded and ordered Carmelo to return the purchase price paid by Equatorial.
Carmelo was likewise ordered to allow Mayfair to purchase the property for P11.3Million.

The SC decision in the mother case became final and executory. Mayfair filed a Motion for Execution, which the
trial court granted. However, Carmelo could no longer be located. Thus, Mayfair deposited with the clerk of court its
payment to Carmelo in the sum of P11,300,000 less P847,000 as withholding tax. The lower court issued a Deed of
Reconveyance in favor of Carmelo and a Deed of Sale in favor of Mayfair. On the basis of these documents, the
Registry of Deeds of Manila cancelled Equatorial's titles and issued new Certificates of Title in the name of Mayfair.

When Equatorial questioned the manner of execution, the SC declared that “Mayfair may not deduct from the
purchase price the amount of P847,000 as withholding tax. The duty to withhold taxes due, if any, is imposed on the
seller, Carmelo and Bauermann, Inc.

Meanwhile, Equatorial, representing itself as the owner of the subject premises by reason of the Contract of Sale on
July 30, 1978, filed with the RTC an action for the collection of a sum of money against Mayfair, claiming payment
of rentals for Mayfair's use of the subject premises after its lease contracts had expired. (present case)

The trial court dismissed the complaint of Equatorial for unpaid back rentals, holding that the rescission of the Deed
of Absolute Sale in the mother case did not confer on Equatorial any vested or residual proprietary rights, even in
expectancy. In other words, by virtue of the rescission decreed by the courts in the mother case, the Deed of
Absolute Sale between Equatorial and Carmelo dated July 31, 1978 was effectively void at its inception.

ISSUE: WON Equatorial becomes the owner of the property

RULING: 
No. Equatorial never took actual control and possession of the property sold, in view of Mayfair's timely objection
to the sale and the continued actual possession of the property. The objection took the form of a court action
impugning the sale which was rescinded by a judgment rendered by the Court in the mother case. It has been held
that the execution of a contract of sale as a form of constructive delivery is a legal fiction. It holds true only when
there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the
vendee. When there is such impediment, "fiction yields to reality - the delivery has not been effected." Mayfair's
opposition to the transfer of the property by way of sale to Equatorial was a legally sufficient impediment that
effectively prevented the passing of the property into the latter's hands. 

In sales, ownership is transferred not by contract, but by delivery of the thing sold to the buyer. Ownership of the
thing sold is a real right which the buyer acquires only upon delivery of the thing to him "in any of the ways
specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred
from the vendor to the vendee." This right is transferred, not by contract alone, but by tradition or delivery. 
There is said to be delivery if and when the thing sold "is placed in the control and possession of the vendee. Thus, it
has been held that while the execution of a public instrument of sale is recognized by law as equivalent to the
delivery of the thing sold, such constructive or symbolic delivery, being merely presumptive, is deemed negated by
the failure of the vendee to take actual possession of the land. 
 ____________________________ Sps. Beltran v. Sps. Cangayda _________________________________
G.R. No. 225033, August 15, 2018
FACTS:
Respondents verbally agreed to sell the disputed property to petitioners. After making an initial payment, petitioners
occupied the disputed property and built their family home thereon. Petitioners subsequently made additional
payments. However, despite respondents' repeated demands, petitioners failed to pay their remaining balance. This
prompted respondents to refer the matter to the Office of the Barangay Chairman of Barangay Magugpo, Tagum
City (OBC) where the parties signed an Amicable Settlement.
Petitioners failed to pay within the period set forth in the Amicable Settlement but attempted to tender payment two
days after said deadline, to which respondents refused acceptance of payment. 
Subsequently, respondents filed a complaint for recovery of possession and damages (Complaint) before the RTC.
In so ruling, the RTC characterized the oral agreement between the parties as a contract to sell. The RTC held that
the consummation of this contract to sell was averted due to petitioners' failure to pay the purchase price in full. The
CA affirmed the decision of the lower court. 
ISSUE: 
Whether the agreement between the parties is a contract to sell or a contract of sale.
RULING:
The Court held that the agreement between the parties is an oral contract of sale. As a consequence, ownership of
the disputed property passed to petitioners upon its delivery.
Jurisprudence defines the distinctions between a contract of sale and a contract to sell to be as follows:
In a contract of sale, title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by
agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price. In a contract
of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded;
whereas in a contract to sell, title is retained by the vendor until the full payment of the price, x x x.
The CA characterized the parties' agreement as a contract to sell primarily on the basis of respondent Loreta's
testimony which purportedly confirms their intent to reserve ownership of the disputed property until full payment
of the purchase price. The CA’s finding is erroneous. Contrary to the CA's findings, neither respondent Loreta's
testimony nor Clause 6 of the Amicable Settlement supports the conclusion that the parties' agreement is not a
contract of sale, but only a contract to sell — the reason being that it is not evident from said testimony and clause 6
that there was an express agreement to reserve ownership despite delivery of the disputed property.
Respondent Loreta's testimony shows that the parties' oral agreement constitutes a meeting of the minds as to the
sale of the disputed property and its purchase price. Respondent Loreta's statements do not in any way suggest that
the parties intended to enter into a contract of sale at a later time. Such statements only pertain to the time at which
petitioners expected, or at least hoped, to acquire the sufficient means to pay the purchase price agreed upon. 
Clause 6 of the Amicable Settlement merely states respondent Apolonio, Jr.'s commitment to formalize and reduce
the oral agreement of the parties into a public instrument upon payment of petitioners' outstanding balance. A formal
document is not necessary for the sale transaction to acquire binding effect. Hence, the subsequent execution of a
formal deed of sale does not negate the perfection of the parties' oral contract of sale which had already taken place
upon the meeting of the parties' minds as to the subject of the transaction and its purchase price.

___________________________________ CORONEL vs CA ____________________________________

 263 SCRA 15 (1996)
 
 FACTS:
 Romulo Coronel executed a document entitled ‘Receipt of Down payment´ in favor of Ramona Patricia Alcaraz for
P50,000 down payment of the amount of P1.24M as purchase price for an inherited house and lot, without
reservation to withhold the transfer of such property until full payment. The purpose of such down payment was for
the heirs to transfer the title to their name. Upon the registration of the property to name of the heirs, the Coronels
sold the same property to Catalina B. Mabanag for P1.58M. The Coronels rescinded the contract with Alcaraz by
depositing the down payment amount in a bank account in favor of Alcaraz. Alcaraz filed a complaint for specific
performance, which the trial and the appellate court ruled in her favor.
 
ISSUE:
Whether or not the “Receipt of Down payment” embodied a perfected contract of sale and not a mere contract to
sell?
  
RULING:
Yes. The agreement is a contract of sale as there was no express reservation of ownership or title to the subject
parcel of land. Petitioners did not merely promise to sell the property to private respondent upon the fulfillment of
the suspensive condition but on the contrary, having already agreed to sell the subject property, they undertook to
have the certificate of title changed to their names and immediately thereafter, to execute the written deed of
absolute sale. The suspensive condition was fulfilled on 6 February 1985 and thus, the conditional contract of sale
between the parties became obligatory, the only act required for the consummation thereof being the delivery of the
property by means of the execution of the deed of absolute sale in a public instrument, which petitioners
unequivocally committed themselves to do as evidenced by the ‘Receipt of Down Payment

 _______________________ JOVAN LAND v. COURT OF APPEALS & QUESADA

_____________________
G.R. No. 125531
FACTS:
Petitioner Jovan Land, Inc. is a corporation engaged in real estate business. Its President is on Joseph Sy. On the
other hand, herein private respondent Eugenio Quesada is the owner of the Q Building located in Mayhaligue, Sta.
Cruz, Manila.
Petitioner learned from one Consolacion Mendoza that private respondent was selling his Mayhaligue property.
Thus, petitioner thru its president made a written offer to private respondent. The first two offers were rejected.
However, on the third attempt, Sy sent a letter to Quesada constituting the offer; the letter having annotation with the
phrase “received original, 9-8-89” beside which appears the signature of private respondent.
In lieu, petitioner insist that a perfected agreement to sell the Mayhaligue property existed, hence, it filed with the
RTC of Quezon City a complaint for specific performance and collection of sum of money and damages. However,
the trial court ruled against petitioner. On appeal to the CA, the appelate court just affirmed the trial court’s decision.
Hence this.

ISSUE: Whether or not there was a contract of sale perfected and thus is valid?

RULING:
The Court held No.
That it is a fundamental principle that before a contract of sale be valid, the following must be present: 1. consent or
meeting of the minds; 2. determinate subject matter; and, 3. price certain in money or its eqivalent. That until
contract of sale is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation
between the parties.
In the case at bar, petitioner anchors its arguments on the third letter-offer, however, the court ruled that there is
nothing written or documentary to show that such offer was accepted by private respondent and such annotation in
the letter is just a mere memorandum of the receipt. The requisites of a valid contract of sale are lacking in the said
receipt and therefore, the “sale” is not valid.

_________________________________ PEÑALOSA VS SANTOS ___________________________________

G.R. No. 133749 August 23, 2001

FACTS:
Respondents Severino C. Santos (deceased) and Adela Mendez Santos are registered owners of a residential house
and lot
Severino and Adela decided to sell their property and for this purpose, negotiated with petitioner Hernando
Petitioner Henry Peñalosa and respondent Severino Santos attempted to enter into an agreement whereby the latter,
for a consideration of P1,800.000.00, would sell to the former the property subject of the instant case. The deed of
absolute sale4 (first deed) evidencing this transaction was signed by Henry but not by Severino, because according
to the latter, Henry "took time to decide" on the matter
Henry signed a document stating that the first deed was executed between him and Severino, for the sole purpose of
helping the latter eject Perez, the occupant of the property. Henry acknowledged in said document that although
Severino had agreed to sell the property to him, he had not paid the consideration stated in the first deed.
Thereafter, Henry and Severino executed another deed of absolute sale. This second deed was signed by both parties
and duly notarized. It states that Severino sells and transfers the house and lot to Henry, who had paid the full price
of P2,000,000.00 therefor.
After execution of the second deed, Henry filed a loan application with the Philippine American Life Insurance
Company (Philam Life) for the amount of P2,500,000.00.11 According to Henry, he had agreed with Severino
during the signing of the second deed, that the balance of P1,700,000.00 would be paid by means of a loan, with the
property itself given as collateral.
The release of the loan proceeds was made subject to the submission of certain documents in Severino's possession,
one of which is the owner's duplicate of the Transfer Certificate of Title (TCT) pertaining to the property. However,
when Henry and Severino met with officials of Philam Life to finalize the loan/mortgage contract, Severino refused
to surrender the owner's duplicate title and insisted on being paid immediately in cash. As a consequence, the
loan/mortgage contract with Philam Life did not materialize.
Henry and his family moved into the disputed house and lot on August 1989
On July 27, 1992, Severino sent a letter to Henry, through counsel, demanding that Henry vacate the house and lot,
on the ground that Henry did not conclusively offer nor tender a price certain for the purchase of the property. The
letter also stated that Henry's alleged offer and promise to buy the property has since been rejected by Severino.
When Henry refused to vacate the property, Severino brought this action for quieting of title, recovery of possession
and damages before the Regional Trial Court of Quezon City, Branch 78, on September 28, 1992. Severino alleged
in his complaint that there was a cloud over the title to the property, brought about by the existence of the second
deed of sale.
Essentially, Severino averred that the second deed was void and inexistent because there was no cause or
consideration therefor, since he did not receive the P2,000,000.00 stated in the deed AND that the deed is fictitious
and simulated because it was executed only for the purpose of placing Henry in possession of the property because
he tendered "earnest money". Severino also claimed that there was no meeting of minds with respect to the cause or
consideration, since Henry's varied offers of P1,800,000.00, P2,000,000.00, and P2,500,000.00, were all rejected by
him.
ISSUE:
Whether or not the second deed is valid and constitutes evidence of the final agreement between the parties
regarding the sale transaction entered into by them.
RULING:
Simulation is a declaration of a fictitious will, deliberately made by agreement of the parties, in order to produce, for
purposes of deception, the appearance of a juridical act which does not exist or is different from that which was
really executed. Its requisites are: a) an outward declaration of will different from the will of the parties; b) the false
appearance must have been intended by mutual agreement; and c) the purpose is to deceive third persons. None of
these requisites is present in this case.
However, in this case, the parties already undertook certain acts which were directed towards fulfillment of their
respective covenants under the second deed, indicating that they intended to give effect to their agreement.
The fact that Severino executed the two deeds in question, primarily so that petitioner could eject the tenant and
enter into a loan/mortgage contract with Philam Life, is to our mind, a strong indication that he intended to transfer
ownership of the property to petitioner
Since the genuineness and due execution of the second deed was not seriously put in issue, it should be upheld as the
best evidence of the intent and true agreement of the parties.
The elements of a valid contract of sale under Art. 1458 of the Civil Code are: (1) consent or meeting of the minds;
(2) determinate subject matter; and (3) price certain in money or its equivalent. In the instant case, the second deed
reflects the presence of all these elements and as such, there is already a perfected contract of sale.
However, it is well-settled that non-payment of the purchase price is not among the instances where the law declares
a contract to be null and void.
The contract in this case is absolute in nature and is devoid of any proviso that title to the property is reserved in the
seller until full payment of the purchase price
Te only conclusion which can be deduced from the aforesaid circumstances is that ownership of the property has
been transferred to petitioner
Article 1477 of the Civil Code states that ownership of the thing sold shall be transferred to the vendee upon the
actual or constructive delivery thereof. It is undisputed that the property was placed in the control and possession of
petitioner when he came into material possession thereof after judgment in the ejectment case. Not only was the
contract of sale perfected, but also actual delivery of the property effectively consummated the sale. 
WHEREFORE, the petition is GRANTED.

______________________________ San Miguel Properties v. Huang ____________________________

G.R. No. 137290, 31 July 2000, 336 SCRA 2000
FACTS:
Petitioner San Miguel Properties Philippines, Inc. offered for sale a two parcels of land totalling 1, 738 square
meters to respondent spouses Huang represented by their lawyer, Atty. Dauz. In a letter sent to the petitioner, Atty.
Dauz signified her clients’ interest in purchasing the properties for the amount for which they were offered by
petitioner under the following terms: the sum of ₱500,000.00 would be given as earnest money and the balance
would be paid in eight equal monthly instalments but was refused by petitioner. Respondent spouse then wrote
another letter enclosing the sum of ₱1,000,000.00 representing earnest-deposit money provided that petitioner shall
give respondent an exclusive option to buy the said property within 30 days, stipulate the terms and conditions of
both parties during the said period and a refund of the earnest deposit money in case of failure to agree which was
confirmed by Isidro A. Sobrecarey, petitioner’s vice-president and operations manager for corporate real estate.
Negotiation commenced but parties failed to agree on the terms and conditions of the sale despite the extension
granted by petitioner is returning the amount of ₱1 million given as “earnest-deposit”. Respondent spouses filed
specific performance before the Regional Trial Court of Pasig City but was dismissed. The decision was appealed by
respondents before the CA and was overturned by the appellate court holding that all the requisites of a perfected
contract of sale had been complied with as the offer made on March 29, 1994, in connection with which the earnest
money in the amount of ₱1 million was tendered by respondents, had already been accepted by petitioner citing Art,
1482. Hence, this petition.
ISSUE:
Whether or not the ₱1 million allegedly given by respondents and accepted by petitioner through its vice-president
and operations manager, Isidro A. Sobrecarey can be considered as “earnest money” as contemplated under Art.
1482 of the Civil Code.
RULING:
NO. With regard to the alleged payment and acceptance of earnest money, the Court holds that respondents did not
give the ₱1 million as “earnest money” as provided by Art. 1482 of the Civil Code. They presented the amount
merely as a deposit of what would eventually become the earnest money or downpayment should a contract of sale
be made by them. The amount was thus given not as a part of the purchase price and as proof of the perfection of the
contract of sale but only as a guarantee that respondents would not back out of the sale. Respondents in fact
described the amount as an “earnest-deposit.” In Spouses Doromal, Sr. v. Court of Appeals, it was held:
. . . While the ₱5,000 might have indeed been paid to Carlos in October, 1967, there is nothing to show that the
same was in the concept of the earnest money contemplated in Art. 1482 of the Civil Code, invoked by petitioner, as
signifying perfection of the sale. Viewed in the backdrop of the factual milieu thereof extant in the record, We are
more inclined to believe that the said ₱5,000.00 were paid in the concept of earnest money as the term was
understood under the Old Civil Code, that is, as a guarantee that the buyer would not back out, considering that it is
not clear that there was already a definite agreement as to the price then and that petitioners were decided to buy 6/7
only of the property should respondent Javellana refuse to agree to part with her 1/7 share.
In the present case, the ₱1 million “earnest-deposit” could not have been given as earnest money as contemplated in
Art. 1482 because, at the time when petitioner accepted the terms of respondents’ offer of March 29, 1994, their
contract had not yet been perfected. This is evident from the following conditions attached by respondents to their
letter, to wit: (1) that they be given the exclusive option to purchase the property within 30 days from acceptance of
the offer; (2) that during the option period, the parties would negotiate the terms and conditions of the purchase; and
(3) petitioner would secure the necessary approvals while respondents would handle the documentation.
 _________ NATIONAL HOUSING AUTHORITY vs. GRACE BAPTIST CHURCH and the CA _________
G.R. No. 156437 March 1, 2004

FACTS:
The respondent Grace Baptist Church (hereinafter, the Church) wrote a letter to petitioner National
Housing Authority (NHA), manifesting its interest in acquiring Lots 4 and 17 of the General Mariano Alvarez
Resettlement Project in Cavite. In its letter-reply dated July 9, 1986, petitioner informed respondent: In reference to
your request letter dated 13 June 1986, regarding your application for Lots 4 and 17, Block C-3-CL, we are glad to
inform you that your request was granted, and you may now visit our Project Office at General Mariano Alvarez for
processing of your application to purchase said lots. On February 22, 1991, the NHA’s Board of Directors passed
Resolution No. 2126, approving the sale of the subject lots to respondent Church at the price of P700.00 per square
meter, or a total price of P430,500.00. The Church was duly informed of this Resolution through a letter sent by the
NHA.On April 8, 1991, the Church tendered to the NHA a manager’s check in the amount of P55,350.00,
purportedly in full payment of the subject properties. The Church insisted that this was the price quoted to them by
the NHA Field Office, as shown by an unsigned piece of paper with a handwritten computation scribbled thereon. 

Petitioner NHA returned the check, stating that the amount was insufficient considering that the price of the
properties has changed. The Church made several demands on the NHA to accept their tender of payment, but the
latter refused. Thus, the Church instituted a complaint for specific performance and damages against the NHA with
the Regional Trial Court of Quezon City.

ISSUE:
Whether or not the NHA can be compelled to sell the subject lots to Grace Baptist Church in the absence of
any perfected contract of sale between the parties.

RULING:
NO.
In the case at bar, the offer of the NHA to sell the subject property, as embodied in Resolution No. 2126, was
similarly not accepted by the respondent. Thus, the alleged contract involved in this case should be more accurately
denominated as inexistent. There being no concurrence of the offer and acceptance, it did not pass the stage of
generation to the point of perfection. As such, it is without force and effect from the very beginning or from its
incipiency, as if it had never been entered into, and hence, cannot be validated either by lapse of time or ratification.
Equity can not give validity to a void contract, and this rule should apply with equal force to inexistent contracts.
We note from the records, however, that the Church, despite knowledge that its intended contract of sale with the
NHA had not been perfected, proceeded to introduce improvements on the disputed land. On the other hand, the
NHA knowingly granted the Church temporary use of the subject properties and did not prevent the Church from
making improvements thereon. 

Thus, the Church and the NHA, who both acted in bad faith, shall be treated as if they were both in good faith. In
this connection, Article 448 of the Civil Code provides:The owner of the land on which anything has been built,
sown or planted in good faith, shall have the right to appropriate as his own the works, sowing or planting, after
payment of the indemnity provided for in articles 546 and 548, or to oblige the one who built or planted to pay the
price of the land, and the one who sowed, the proper rent. 

However, the builder or planter cannot be obliged to buy the land and if its value is considerably more than that of
the building or trees. In such case, he shall pay reasonable rent, if the owner of the land does not choose to
appropriate the building or trees after proper indemnity. The parties shall agree upon the terms of the lease and in
case of disagreement, the court shall fix the terms thereof.
 ________________________________ Agro Conglomerates, Inc. vs CA. ____________________________
348 SCRA 450

Contracts; Sales; A contract of sale is a reciprocal transaction, the obligation or promise of each party being the
cause or consideration for the obligation or promise of the other. A contract of sale is a reciprocal transaction. The
obligation or promise of each party is the cause or consideration for the obligation or promise by the other. The
vendee is obliged to pay the price, while the vendor must deliver actual possession of the land. In the instant case the
original plan was that the initial payments would be paid in cash. Subsequently, the parties (with the participation of
respondent bank) executed an addendum providing instead, that the petitioners would secure a loan in the name of
Agro Conglomerates Inc. for the total amount of the initial payments, while the settlement of said loan would be
assumed by Wonderland. Thereafter, petitioner Soriano signed several promissory notes and received the proceeds
in behalf of petitioner-company.

Facts:
Petitioner Agro-Conglomerates, Inc. as vendor, sold two parcels of land to Wonderland Food Industries, Inc. In their
Memorandum of Agreement, the parties covenanted that the purchase price of Five Million (P5,000,000.00) Pesos
would be settled by the vendee, under the following terms and conditions: 
(1) One Million (P1,000,000.00) Pesos shall be paid in cash upon the signing of the agreement. 
(2) Two Million (P2,000,000.00) Pesos worth of common shares of stock of the Wonderland Food Industries, Inc.;
and 
(3) The balance of P2,000,000.00 shall be paid in four equal installments, the first installment falling due, 180 days
after the signing of the agreement and every six months thereafter, with an interest rate of 18% per annum, to be
advanced by the vendee upon the signing of the agreement.

On July 19, 1982, the vendor, the vendee, and the respondent bank Regent Savings & Loan Bank (formerly Summa
Savings & Loan Association), executed an Addendum4 to the previous Memorandum of Agreement. The new
arrangement pertained to the revision of settlement of the initial payments of P1,000,000.00 and prepaid interest of
P360,000.00

The parties have agreed to qualify the stipulated terms for the payment of the said ONE MILLION THREE
HUNDRED SIXTY THOUSAND (P1,360,000.00) PESOS.

That the VENDEE instead of paying the amount of ONE MILLION THREE HUNDRED SIXTY THOUSAND
(P1,360,000.00) PESOS in cash, hereby authorizes the VENDOR to obtain a loan from Summa Savings and Loan
Association with office address at Valenzuela, Metro Manila, being represented herein by its President, Mr. Jaime
Cariño and referred to hereafter as Financier; in the amount of ONE MILLION THREE HUNDRED SIXTY
THOUSAND (P1,360,000.00) PESOS, plus interest thereon at such rate as the VENDEE and the Financier may
agree, which amount shall cover the ONE MILLION (P1,000,000.00) PESOS cash which was agreed to be paid
upon signing of the Memorandum of Agreement, plus 18% interest on the balance of two million pesos stipulated
upon in Item No. 1(c) of the said agreement; provided however, that said loan shall be made for and in the name of
the VENDOR.

In their answer, petitioners interposed the defense of novation and insisted there was a valid substitution of debtor.
They alleged that the addendum specifically states that although the promissory notes were in their names,
Wonderland shall be responsible for the payment thereof.
The trial court held that petitioners are liable, to wit:
The evidences, however, disclose that Wonderland did not comply with its obligation under said ‘Addendum’ as the
agreement to turn over the farmland to it, did not materialize, and there was, actually no sale of the land. Hence,
Wonderland is not answerable.

ISSUE: Was there a valid contract of sale

HELD:
Revealed by the facts on record, the conflict among the parties started from a contract of sale of a farmland between
petitioners and Wonderland Food Industries, Inc. As found by the trial court, no such sale materialized.

A contract of sale is a reciprocal transaction. The obligation or promise of each party is the cause or consideration
for the obligation or promise by the other. The vendee is obliged to pay the price, while the vendor must deliver
actual possession of the land. In the instant case the original plan was that the initial payments would be paid in
cash. Subsequently, the parties (with the participation of respondent bank) executed an addendum providing instead,
that the petitioners would secure a loan in the name of Agro Conglomerates Inc. for the total amount of the initial
payments, while the settlement of said loan would be assumed by Wonderland. Thereafter, petitioner Soriano signed
several promissory notes and received the proceeds in behalf of petitioner-company.
  _____CONGREGATION OF THE RELIGIOUS OF THE VIRGIN MARY v. EMILIO Q. OROLA _____
G.R. NO. 169790, April 30, 2008

FACTS:

Petitioner Religious of the Virgin Mary (RVM), acting through its local unit and specifically   through   Sr.   Fe  
Enhenco,   met   to   discuss   the   sale   of   the   latter’s   property adjacent   to   St.   Mary’s   Academy.   Josephine
Orola   went   to   Manila   to   see   the   Mother Superior General of the RVM, in the person of VRM Balleque
regarding the sale of the property subject of this instant case.

A   contract   to   sell   dated   June   2,   1999   made   out   in   the   names   of   petitioner   and respondents as
parties to the agreement was presented in evidence pegging the total consideration   of   the   property   at
5,555,000.00   with   10%   of   the   total   consideration payable   upon   the   execution   of   the   contract,   and  
which   was   already   signed   by respondents and Sr. Enhenco, Josephine Orola and Antonio Orola, acknowledged
receipt of RCBC Check No. 0005188 dated June 7, 1999 bearing the amount of P 555,500.00 as 10% down payment
for Lot 159-B-2 from the RVM. Respondents, armed with an undated Deed of Absolute Sale which they signed,
scheduled a meeting with VRM Balleque, to obtain   payment   of   the   balance.   However,  VRM   Balleque   did  
not   meet   them. In   an exchange of correspondence, RVM denied respondents’ demand for payment because: 

(1) the purported Contract to Sell was merely signed by Sr. Enhenco as witness, and not by VRM Balleque, head of
the corporation sole; and 

(2) as discussed by counsels in their phone conversations, RVM will only be in a financial position to pay the
balance of the purchase price in two years’ time. Thus, respondents filed with the RTC a complaint with alternative
causes of action of specific performance or rescission

ISSUE: 

Whether RVM is liable for interest on the balance of the purchase price?

HELD:  

YES.  A contract of sale   carries   the   correlative   duty of  the   seller  to   deliver  the property and the obligation
of the buyer to pay the agreed price. As there was already a binding contract of sale between the parties, RVM had
the corresponding obligation to pay the remaining balance of the purchase price upon the issuance of the title in the
name of respondents. The supposed 2-year period within which to pay the balance did not affect the nature of the
agreement as a perfected contract of sale. In fact, we note that this 2-year period is neither reflected in any of the
drafts to the contract, nor in the acknowledgment receipt of the down payment executed by respondents Josephine
and Antonio   with   the   conformity   of   Sr.   Enhenco. In   any   event, we   agree   with   the   CA’s observation
that the 2-year period to effect payment has been mooted by the lapse of time. 

Article   1191, as   presently   worded, speaks   of   the   remedy   of   rescission   in   reciprocal obligations within
the context of Article 1124 of the Old Civil Code which uses the term "resolution." The remedy of resolution applies
only to reciprocal obligations such that a party’s breach thereof partakes of a tacit resolutory condition which entitles
the injured party   to   rescission.   The   present   article, as   in   the   Old   Civil Code, contemplates alternative  
remedies   for   the   injured   party   who   is   granted   the   option   to   pursue, as principal   actions, either   a  
rescission   or   specific   performance   of   the   obligation, with payment of damages in each case. 
On the other hand, rescission under Article 1381 of the Civil Code, taken from Article 1291 of the Old Civil Code,
is a subsidiary action, and is   not based on   a party’s breach of obligation.  Thus, when RVM refused  to pay the
balance  and thereby breached the contract,  respondents   rightfully availed   of   the alternative remedies provided
in Article 1191. Accordingly, respondents are entitled to damages regardless of whichever relief, rescission or
specific performance, would be granted by the lower courts.

Manongsong vs. Estimo , 404 SCRA 683 (2003)

FACTS:
Allegedly, Agatona Guevarra (“Guevarra”) inherited a property from Justina Navarro, which is now
under possession of the heirs of Guevarra. Guevarra had six children, one of them is Vicente Lopez, the
father of petitioner Milagro Lopez Manongsong (“Manongsong”). The respondents, the Jumaquio sisters
and Leoncia Lopez claimed that the property was actually sold to them by Justina Navarro prior to her
death. The respondents presented deed of sale dated October 11, 1957. Milagros and Carlito Manongsong
(“petitioners”) filed a Complaint on June 19, 1992 praying for the partition and award to them of an area
equivalent to one-fifth (1/5), by right of representation. 
The RTC ruled that the conveyance made by Justina Navarro is subject to nullity because the property
conveyed had a conjugal character and that Agatona Guevarra as her compulsory heir should have the
legal right to participate with the distribution of the estate under question to the exclusion of others. The
Deed of Sale did not at all provide for the reserved legitime or the heirs, and, therefore it has no force and
effect against Agatona Guevarra and should be declared a nullity ab initio.

ISSUE: Whether or not the rights of the compulsory heirs were impaired by the alleged sale of the
property by Justina in connection with Article 1458 of the Civil Code that enumerates the elements of a
valid contract of sale.

RULING: 
No. Under Article 1458 of the Civil Code, the elements of a valid contract of sale are: (1) consent or
meeting of the minds; (2) determinate subject matter and (3) price certain in money or its equivalent. The
Kasulatan, being a document acknowledged before a notary public, is a public document and prima facie
evidence of its authenticity and due execution. There is no basis for the trial court’s declaration that the
sale embodied in the Kasulatan deprived the compulsory heirs of Guevarra of their legitimes. As opposed
to a disposition inter vivos by lucrative or gratuitous title, a valid sale for valuable consideration does not
diminish the estate of the seller. When the disposition is for valuable consideration, there is no diminution
of the estate but merely a substitution of values, that is, the property sold is replaced by the equivalent
monetary consideration. The Property was sold in 1957 for P250.00.

The trial court’s conclusion that the Property was conjugal, hence the sale is void ab initio was not based
on evidence, but rather on a misapprehension of Article 160 of the Civil Code, which provides: “All
property of the marriage is presumed to belong to the conjugal partnership; unless it be proved that it
pertains exclusively to the husband or to the wife.” The presumption under Article 160 of the Civil Code
applies only when there is proof that the property was acquired during the marriage. Proof of acquisition
during the marriage is an essential condition for the operation of the presumption in favor of the conjugal
partnership. There was no evidence presented to establish that Navarro acquired the Property during her
marriage.

Mar Yuson vs. Atty. Jeremias Vitan

FACTS: 

Complainant Mar Yuson wanted to purchase a secondhand taxi, and was able to do so with the help of
Atty. Vitan. In December 2002, the lawyer borrowed P100,000 from Yuson. It was agreed that the loan
would be repaid before the end of the following year. Atty. Vitan executed in favor of Yuson several
postdated checks to cover the loaned amount, but it turned out that such checks were worthless. After
repeatedly trying to recover the debt, Yuson demanded a collateral from Atty. Vitan to secure the loan.
The latter executed a Deed of Absolute Sale, covering his parcel of land located in Sta. Maria, Bulacan.
The agreement was to transfer the title of the property to Yuson temporarily, and if it was mortgaged,
Atty. Vitan would redeem it as partial or full payment of the loan.
However, the parties executed a second Deed of Absolute Sale, this time in favor of Atty. Vitan, with
complainant as vendor. Yuson was able to mortgage the property for P30,000.  However, Atty. Vitan did
not redeem it from the mortgagee and, instead, simply sent Yuson a letter promising to pay, but the
former again failed to do so within the agreed time. The IBP-NCLA sent a letter to Atty. Vitan that an
administrative case would be filed against him, unless he settled his obligations within the date given by
Yuson. In his reply dated July 30, 2004, Atty. Vitan explained that he had already settled his obligation
when he executed, in Yuson's favor, a Deed of Absolute Sale covering his Bulacan property. He attached
the second Deed of Absolute Sale in which he was the vendee and complainant the vendor. 
Atty. Vitan also admitted having incurred the P100,000 loan. It was only in his Answer that the lawyer
suddenly denied that he had personally incurred this obligation. This time, he pointed to his employee,
Estur, as the true debtor. Commissioner San Juan recommended that Atty. Vitan be suspended until his
restitution of the amount he had borrowed. On November 24, 2005, the Supreme Court received the IBP
Resolution adopting, with modification, the Report and Recommendation of the investigating
commissioner. 

ISSUE: 
Whether or not Atty. Vitan’s obligation was extinguished by virtue of the first Deed of Absolute Sale.  

RULING: 

No. The records reveal that Atty. Vitan did not really intend to sell and relinquish ownership over his
property in Sta. Maria, Bulacan, notwithstanding the execution of a Deed of Absolute Sale in favor of
Yuson. The second Deed of Absolute Sale, which reconveyed the property to the lawyer, is proof that he
had no such intention. This second Deed, which he referred to as his "safety net,”  betrays his intention to
counteract the effects of the first one.

The second Deed of Absolute Sale returned the parties right back where they started, as if there were no
sale in favor of Yuson to begin with. In effect, on the basis of the second Deed of Sale, respondent took
back and asserted his ownership over the property despite having allegedly sold it. Thus, there was no
bona fide dation in payment or sale that took place between the parties; that is, that there was no
extinguishment of obligation.
It appears that the true intention of the parties was to use the Bulacan property to facilitate payment. They
only made it appear that the title had been transferred to Yuson to authorize him to sell or mortgage the
property. Atty. Vitan himself admitted in his letter dated July 30, 2004, that their intention was to convert
the property into cash, so that payment could be obtained by Yuson and the excess returned to him. The
records, however, do not show that the proceeds derived were sufficient to discharge the obligation of the
lawyer fully; thus, he is still liable to the extent of the deficiency. 

In respondent’s letter of July 30, 2004, was an admission that the personal checks he issued in favor of
Yuson had all been dishonored. Whether those checks were issued for the account of him or of Estur is
not important. The fact remains that the lawyer knowingly issued worthless checks and thus revealed his
disposition to defraud Yuson. 

The Court found Atty. Vitan guilty of gross misconduct and suspended from the practice of law for six (6)
months. 
 Commissioner of Internal Revenue v. Court of Appeals

Facts:
Private respondent is a non-stock, non-profit educational institution with auxiliary units and branches all
over the Philippines. One such auxiliary unit is the Institute of Philippine Culture (IPC), which has no
legal personality separate and distinct from that of private respondent.

Engaged in social science studies of Philippine society and culture. Occasionally, it accepts
sponsorships for its research activities from international organizations, private foundations and
government agencies

In July 8, 1983, private respondent received from petitioner Commissioner of Internal Revenue a demand
letter dated June 3, 1983.

 assessing private respondent the sum of P174,043.97 for alleged deficiency   contractor's
tax, and an assessment dated June 27, 1983 in the sum of P1,141,837 for alleged
deficiency income tax, both for the fiscal year ended March 31, 1978
On March 17, 1988, petitioner rendered a letter-decision canceling the assessment for deficiency income
tax but modifying the assessment for deficiency contractor's tax by increasing the amount due to
P193,475.55

Unsatisfied, private respondent requested for a reconsideration or reinvestigation of the modified

assessment. 

At the same time, it filed in the respondent court a petition for review of the said letter-decision of the
petitioner.

While the petition was pending before the respondent court, petitioner issued a final decision dated
August 3, 1988 reducing the assessment for deficiency contractor's tax from P193,475.55 to P46,516.41,
exclusive of surcharge and interest.

Court of Appeal’s Decision

Deficiency contractor's tax assessment in the amount of P46,516.41 exclusive of surcharge and interest
for the fiscal year ended March 31, 1978 is CANCELED. 

Petitioner not in accord with the decision, hence, this petition

Ratio Decidendi

Whether or Not  IPC is a IPC is not a contractor, it never contracted to sell its research projects for a
contractor? fee.

The funds received by ADMU are not payments but donations which are
tax exempt. Furthermore, the research activities conducted by IPC are not
focused on business but on social science projects/studies. Regarding
sponsored projects, IPC requires that the topic must be consistent with
IPC’s academic agenda, that there was no proprietary/commercial purpose
for research, and that IPC retains ownership/right to publish results.
.

W/N the research project Contract of sale requires a transfer of ownership of a determinate thing
is considered a contract of while a contract for a piece of work requires execution of a piece of work
sale/contract for a piece for the employer
of work?
In the present case, there was no sale or contract for a piece of work since
there was no transfer of ownership over research data obtained or results of
results of research projects undertaken by IPC.

Ruling
WHEREFORE, premises considered, the petition is DENIED and the assailed Decision of the Court of
Appeals is hereby AFFIRMED in full.

CELESTINO Co & COMPANY v. COLLECTOR OF INTERNAL REVENUE

FACTS:

Celestino Co & Company paid percentage taxes of 7% on the gross receipts of its sash, door and window
factory, in accordance with Section 186 of the National Revenue Code from 1946 to 1951. The said
provision imposes taxes on sales of manufactured articles. However, in 1952, it only paid 3% tax under
Section 191 of the same Code, alleging that Oriental Sash Factory does not manufacture ready-made
doors, sash and windows for the public but only upon special order of its selected customers. 

When the company failed to convince the Bureau of Internal Revenue for its contention, it brought the
matter to the Court of Tax Appeals (CTA).

CTA’s DECISION:
The company failed to convince the CTA, holding that it would take all the trouble and expense of
registering a special trade name for its sash business and then orders company stationary carrying the bold
print “Oriental Sash Factory.” The company has chosen for its tradename and has offered itself to the
public as a “Factory”, which it is out to do business, in its chosen lines on a big scale.

The CTA also found that from January 1-September 30, 1952, it sold sash, doors and windows worth
P188,754.69. this Court would find it hard to believe that the company only renders special services to
few customers for earning such amount.

Even if the CTA believed the company’s claim that it does not manufacture ready-made sash, doors and
windows for the public and that it makes these articles only upon special order of its customers, that does
not make it a contractor within the purview of Section 191 of the National Internal Revenue Code.
Furthermore, this Court did not find that the line of business of the petitioner company under the
aforesaid section included in the coverage.

ISSUE:
WON the petitioner provides special services.

RULING:

NO. The company invoked Article 1467 of the New Civil Code to support its contention. It alleged that
the filling of orders for windows and doors, which is according to specifications, does not constitute a
contract of sale, but merely a contract for a piece of work or “merely sold its services.” Article 1467 of
the New Civil Code provides that:
“A contract for the delivery at a certain price of an article which the vendor in the
ordinary course of his business manufactures or procures for the general market, whether the same is on
hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the
customer and upon his special order, and not for the general market, it is a contract for a piece of work.”

In the case at bar, although the Factory does not manufacture and keep on stock doors sold to Teodoro &
Co, it could stock and/or probably had in stock the sash, mouldings and panels it used therefor. When this
Factory accepts a job that requires the use of extraordinary or additional equipment, or involves services
not generally performed by it-filling special orders within the meaning of Article 1467. The orders herein
exhibited were not shown to be special. They were merely orders for work-nothing is shown to call them
special requiring extraordinary service of the factory. 

In conclusion, all the work of the company in filling orders previously made, such orders should not be
called special work, but regular work. 

DISPOSITIVE:
The appealed decision is consequently AFFIRMED.
 Quiroga vs Parsons

FACTS:
A contract was entered into between Andres Quiroga and J. Parsons, who were both merchants, which
granted the exclusive right to sell his beds in the Visayan Islands to Parsons under the following
conditions: 1) There be a discount of 2.5% as commission for the sale; 2) Parsons shall order the beds by
the dozen, whether of the same or of different styles; 3) Expenses for transportation and shipment shall be
borne by Quiroga; 4) Parsons is bound to pay Quiroga for the beds received within 60 days from the date
of their shipment; 5) If Quiroga should request payment before the invoice falls due, it shall be considered
as prompt payment with 2% deduction; 6) 15-day notice must at least be given by Quiroga before any
alteration in price of beds; and 7) Parsons binds himself to only sell Quiroga beds. Quiroga alleged that
Parsons breached its contract by selling the beds at a higher price, not having an open establishment in
Iloilo, not maintaining a public exhibition, and for not ordering the beds by the dozen. Only the last
imputation was provided for by the contract, the others were not stipulated. Quiroga argued that since
there was a contract of agency between them, such obligations were necessarily implied.
ISSUE:
Whether the contract is a contract of agency or of sale
HELD:
The agreement between Quiroga and Parsons was that of a simple purchase and sale — not an
agency. Quiroga supplied the beds, while Parsons had the obligation to pay their purchase price. These
features exclude the legal conception of an agency or order to sell whereby the mandatory or agent
received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains
from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue
of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily
obliged to pay their price within the term fixed, without any other consideration and regardless as to
whether he had or had not sold the beds. There was mutual tolerance in the performance of the contract in
disregard of its terms; and it gives no right to have the contract considered, not as the parties stipulated it,
but as they performed it. Only the acts of the contracting parties, subsequent to, and in connection with,
the execution of the contract, must be considered for the purpose of interpreting the contract, when such
interpretation is necessary.
 Victorias Milling Co., Inc. Vs. CA 166 SCRA 493 (1988)

FACTS:
St. Therese Merchandising (STM) regularly bought sugar from Victorias Milling Co (VMC). In the
course of their dealings, VMC issued several Shipping List/Delivery Receipts (SLDRs) to STM as proof
of purchases. Among these was SLDR No. 1214M. SLDR No. 1214M, dated October 16, 1989, covers
25,000 bags of sugar. Each bag contained 50 kg and priced at P638.00 per bag. The transaction covered
was a “direct sale”.

On October 25, 1989, STM sold to private respondent Consolidated Sugar Corporation (CSC) its rights in
the same SLDR for P14,750,000.00. CSC issued checks in payment. That same day, CSC wrote petitioner
that it had been authorized by STM to withdraw the sugar covered by the said SLDR. Enclosed in the
letter were a copy of SLDR No. 1214M and a letter of authority from STM authorizing CSC to
“withdraw for and in our behalf the refined sugar covered by the SLDR” On Oct. 27, 1989, STM issued
checks to VMC as payment for 50,000 bags, covering SLDR No. 1214M. CSC surrendered the SLDR
No. 1214M and to VMC’s NAWACO Warehouse and was allowed to withdraw sugar. But only 2,000
bags had been released because VMC refused to release the other 23,000 bags. 

Therefore, CSC informed VMC that SLDR No. 1214M had been “sold and endorsed” to it. But VMC
replied that it could not allow any further withdrawals of sugar against SLDR No. 1214M because STM
had already withdrawn all the sugar covered by the cleared checks. VMC also claimed that CSC was only
representing itself as STM’s agent as it had withdrawn the 2,000 bags against SLDR No. 1214M “for and
in behalf” of STM. Hence, CSC filed a complaint for specific performance against Teresita Ng Sy (doing
business under STM's name) and VMC. However, the suit against Sy was discontinued because later
became a witness. RTC ruled in favor of CSC and ordered VMC to deliver the 23,000 bags left. CA
concurred. Hence this appeal.

ISSUE:

Whether or not CA erred in not ruling that CSC was an agent of STM and hence, estopped to sue upon
SLDR No. 1214M as assignee.

RULING:

NO. CSC was not an agent of STM. VMC heavily relies on STM’s letter of authority that said CSC is
authorized to withdraw sugar “for and in our behalf”. 

It is clear from Art. 1868 that the: basis of agency is representation. On the part of the principal,
there must be an actual intention to appoint or an intention naturally inferable from his words or
actions, and on the part of the agent, there must be an intention to accept the appointment and act
on it, and in the absence of such intent, there is generally NO agency. 
One factor, which most clearly distinguishes agency from other legal concepts, is control; one person –
the agent – agrees to act under the control or direction of another – the principal. Indeed, the very word
“agency” has come to connote control by the principal. The control factor, more than any other, has
caused the courts to put contracts between principal and agent in a separate category. Where the relation
of agency is dependent upon the acts of the parties, the law makes no presumption of agency and it is
always a fact to be proved, with the burden of proof resting upon th

e persons alleging the agency, to show not only the fact of its existence but also its nature and extent. It
appears that CSC was a buyer and not an agent of STM. CSC was not subject to STM’s control. The
terms “for and in our behalf” should not be eyed as pointing to the existence of an agency
relation. Whether or not a contract is one of sale or agency depends on the intention of the parties as
gathered from the whole scope and effect of the language employed. Ultimately, what is decisive is
the intention of the parties. In fact, CSC even informed VMC that the SLDR was sold and endorsed to
it.

Agency distinguished from sale:

In an agency to sell, the agent, in dealing with the thing received, is bound to act according to the
instructions of his principal, while in a sale, the buyer can deal with the thing as he pleases, being the
owner. The elementary notion of sale is the transfer of title to a thing from one to another, while the
essence of agency involves the idea of an appointment of one to act for another. Agency is a relationship
which often results in a sale, but the sale is a subsequent step in the transaction. (Teller, op. cit., p. 26; see
Commissioner of Internal Revenue vs. Manila Machinery & Supply Co., 135 SCRA 8 [1985].) An
authorization given to another containing the phrase “for and in our behalf’’ does not necessarily establish
an agency, as ultimately what is decisive is the intention of the parties. Thus, the use of the words “sold
and endorsed’’ may mean that the parties intended a contract of sale, and not a contract of agency.
 LABAGALA VS SANTIAGO

Facts:
Jose T. Santiago owned a parcel of land covered by TCT No. 64729, located in Rizal Avenue Extension,
Sta. Cruz, Manila. Alleging that Jose had fraudulently registered it in his name alone, his sisters sued Jose
for recovery of 2/3 share of the property. On April 20, 1981, the trial court in that case decided in favor of
the sisters, recognizing their right of ownership over portions of the property covered by TCT No. 64729.
Jose died intestate on February 6, 1984. On August 5, 1987, respondents filed a complaint for recovery of
title, ownership, and possession against herein petitioner, Ida C. Labagala, before the Regional Trial
Court of Manila, to, recover from her the 1/3 portion of said property pertaining to Jose but which came
into petitioner's sole possession upon Jose's death.

Respondents alleged that Jose's share in the property belongs to them by operation of law, because they
are the only legal heirs of their brother, who died intestate and without issue. They claimed that the
purported sale of the property made by their brother to petitioner sometime in March 19795 was executed
through petitioner's machinations and with malicious intent. 

Respondents insisted that the deed of sale was a forgery. The deed showed that Jose affixed his
thumbmark thereon but respondents averred that, having been able to graduate from college, Jose never
put his thumb mark on documents he executed but always signed his name in full. 

On the other hand, petitioner claimed that her true name is not Ida C. Labagala as claimed by respondent
but Ida C. Santiago. She claimed not to know any person by the name of Ida C. Labagala. She claimed to
be the daughter of Jose and thus entitled to his share in the subject property.
On October 17, 1990, the trial court ruled in favor of petitioner. According to the trial court, while there
was indeed no consideration for the deed of sale executed by Jose in favor of petitioner, said deed
constitutes a valid donation. Even if it were not, petitioner would still be entitled to Jose's 1/3 portion of
the property as Jose's daughter.

Respondents appealed to the Court of Appeals, which reversed the decision of the trial court. The
appellate court noted that the birth certificate of Ida Labagala presented by respondents showed that Ida
was born of different parents, not Jose and his wife. It also took into account the statement made by Jose
in Civil Case No. 56226 that he did not have any child.

Issue: Whether the sale/donation was valid? NO

Ruling: 
Clearly, there is no valid sale in this case. Jose did not have the right to transfer ownership of the entire
property to petitioner since 2/3 thereof belonged to his sisters. Petitioner could not have given her consent
to the contract, being a minor at the time. Consent of the contracting parties is among the essential
requisites of a contract, including one of sale, absent which there can be no valid contract. Moreover,
petitioner admittedly did not pay any centavo for the property, which makes the sale void. Article 1471 of
the Civil Code provides:

Art. 1471. If the price is simulated, the sale is void, but the act may be shown to have been in reality a
donation, or some other act or contract. 
Sps. Paragas v. Heirs of Dominador Balacano
FACTS:
Barely a week prior to his death on July 28, 1996, Gregorio Balacano, an octogenarian, was diagnosed to
have liver cirrhosis, purportedly sold a portion of Lot 1175-E and the whole Lot 1175-F on July 22, 1996,
to the Spouses Rudy (Rudy) and Corazon Paragas (collectively, the Spouses Paragas). This sale appeared
in a deed of absolute sale is notarized. The Spouses Paragas then sold to Catalino.

The heirs of Domingo filed a complaint for annulment of sale and partition against Catalino and the
Spouses Paragas alleging that Gregorio was seriously ill, in fact dying at that time, which vitiated his
consent to the disposal of the property. On the other hand, Atty. De Guzman explained that the execution
of the deed was merely a confirmation of a previous agreement between the Spouses Paragas and
Gregorio that was concluded at least a month prior to Gregorio’s death; that, in fact, Gregorio had
previously asked him to prepare a deed that Gregorio eventually signed on July 18, 1996.

Instead of filing their Answer, the defendants Catalino and the Spouses Paragas moved to dismiss the
complaint on the ground, among others, that the complaint states no cause of action – they failed to allege
a ground for the annulment of the deed of sale; they did not cite any mistake, violence, intimidation,
undue influence or fraud, but merely alleged that Gregorio was seriously ill. Domingo’s children opposed
this motion.

The lower court rendered a decision declaring null and void the deed of sale purportedly executed by
Gregorio Balacano in favor of the spouses Rudy Paragas and Corazon Paragas. 

The Court of Appeals affirmed the Decision of the trial court. Herein petitioners’ motion for
reconsideration was met with similar lack of success when it was denied for lack of merit by the Court of
Appeals.

Hence, this appeal via a petition for review.

ISSUE:
Whether or not Gregorio Balacano give an intelligent consent to the sale.

HELD: 

YES. The Court declared as null and void the deed of sale therein inasmuch as the seller, at the time of
the execution of the alleged contract, was already of advanced age and senile. We held –

The general rule is that a person is not incompetent to contract merely because of advanced years or
by reason of physical infirmities. However, when such age or infirmities have impaired the mental
faculties so as to prevent the person from properly, intelligently, and firmly protecting her property
rights then she is undeniably incapacitated. He is clearly at a disadvantage, and the courts must be
vigilant for his protection. In this case, Gregorio’s consent was clearly absent– hence the sale was null
and void. The dubious circumstances raise serious doubts on his capacity to render consent.

It is not disputed that when Gregorio signed the deed of sale, Gregorio was seriously ill, as he in fact died
a week after the deed’s signing. Gregorio died of complications caused by cirrhosis of the liver.
Gregorio’s death was neither sudden nor immediate; He fought at least a month-long battle against the
disease until he succumbed to death on July 22, 1996. Given that Gregorio purportedly executed a deed
during the last stages of his battle against his disease, we seriously doubt whether Gregorio could have
read, or fully understood, the contents of the documents he signed or of the consequences of his act. We
note in this regard that Gregorio was brought to the Veteran’s Hospital at Quezon City because his
condition had worsened on or about the time the deed was allegedly signed. This transfer and fact of
death not long after speak volumes about Gregorio’s condition at that time. We likewise see no
conclusive evidence that the contents of the deed were sufficiently explained to Gregorio before he
affixed his signature.

GUIANG VS. CA, G.R. No. 125172, June 26, 1998

DOCTRINE: The sale of a conjugal property requires the consent of both the husband and the wife. The
absence of the consent of one renders the sale null and void, while the vitiation thereof makes it merely
voidable. Only in the latter case can ratification cure the defect.
 
Facts: 
Private respondent Gilda Corpuz and Judie Corpuz are legally married spouses. They have three children,
namely: Junie (18 years old), Harriet (17), and Jodie (15). The couple bought a 421 sq. meter lot in
Koronadal, South Cotabato from Manuel Callejo through a conditional deed of sale. The consideration
was payable in installment. 
In 1988, the couple sold one-half portion of their Lot to petitioner-spouses Antonio and Luzviminda
Guiang. Since then, Guiang occupied the one-half portion and built their house thereon. They are thus
adjoining neighbors of the Corpuzes. 

Gilda Corpuz left for Manila to look for work abroad. Unfortunately, she became a victim of an
unscrupulous illegal recruiter. She was not able to go abroad. She stayed for sometime in Manila. After
his wife's departure for Manila, Judie Corpuz seldom went home to the conjugal dwelling. He stayed most
of the time at his place of work. 

Harriet Corpuz learned that her father intended to sell the remaining one-half portion including their
house to Guiangs. She wrote a letter to her mother. Gilda Corpuz replied that she was objecting to the
sale. Harriet, however, did not inform her father about this; but instead gave the letter to Luzviminda
Guiang so that she would advise her father. However, in the absence of his wife Gilda, Judie Corpuz
pushed through the sale. He sold to Luzviminda Guiang thru a "Deed of Transfer of Rights" remaining
one-half portion of their lot and the house. 

Gilda returned home. She found her children staying with other households. Only Junie was staying in
their house. Harriet and Joji were with Mr. Panes. Gilda gathered her children together and stayed at their
house. Her husband was nowhere to be found. She was informed by her children that their father had a
wife already. 

For staying in their house sold by her husband, spouses Guiang complained before the Barangay
authorities for trespassing. The parties thereat signed a document for amicable settlement stating that
Gilda Corpuz and her three children must leave voluntarily the house without any charge. Thereafter,
Gilda approached the Barangay Captain for the annulment of the settlement. Annulment not having been
made, they stayed put in her house and lot. 

Spouses Guiang filed a motion for execution of the amicable settlement with the MTC. However, Private
Respondent Gilda Corpuz filed a Complaint against her husband Judie Corpuz and Petitioner-Spouses
Antonio and Luzviminda Guiang. The said Complaint sought the declaration of a Deed of Transfer of
Right, which involved the conjugal property, null and void. The trial court ruled in favor of private
respondent. CA affirmed. 

Issue: 
WON the assailed Deed of Transfer of Rights was validly executed.

Ruling: 
NO. Petitioners insist that the questioned Deed was validly executed by the parties in good faith and for
valuable consideration and that the absence of private respondent's consent merely rendered the Deed
voidable under Article 1390 of the Civil Code. The provision in par. 2, refers to contracts visited by vices
of consent, i.e., contracts which were entered into by a person whose consent was obtained and vitiated
through mistake, violence, intimidation, undue influence or fraud. In this instance, private respondent's
consent to the contract of sale of their conjugal property was totally inexistent or absent. 

The contract falls within the ambit of Article 124 of the Family Code, which provides that "In the
absence of such authority or consent, the disposition or encumbrance shall be void "

Furthermore, it must be noted that the fraud and the intimidation referred to by petitioners were
perpetrated in the execution of the document embodying the amicable settlement. Gilda Corpuz alleged
during trial that barangay authorities made her sign said document through misrepresentation and
coercion. In any event, its execution does not alter the void character of the deed of sale between the
husband and the petitioners-spouses. The fact remains that such contract was entered into without the
wife’s consent.

Doctrinally and clearly, a void contract cannot be ratified. Neither can the amicable settlement be
considered a continuing offer that was accepted and perfected by the parties, following the last sentence
of Article 124.

Petition is DENIED.

Pelayo vs. Perez, 459 SCRA 475 (2005)

Facts:
David Pelayo (Pelayo), by a Deed of Absolute Sale executed on January 11, 1988, conveyed to Melki
Perez (Perez) two parcels of agricultural land (the lots) situated in Panabo, Davao which are portions of
Lot 4192, Cad. 276 covered by OCT P-16873.
Loreza Pelayo (Loreza), wife of Pelayo, and another one whose signature is illegible witnessed the
execution of the deed.
Loreza, however, signed only on the third page in the space provided for witnesses on account of which
Perez' application for registration of the deed with the Office of the Register of Deeds in Tagum, Davao
was denied.
Perez thereupon asked Loreza to sign on the first and second pages of the deed but she refused, hence, he
instituted on August 8, 1991 the instant complaint for specific performance against her and her husband
Pelayo (defendants).

Issue:
The CA made a novel ruling that there was implied marital consent of the wife of petitioner David
Pelayo.

Ruling:
We agree with the CA ruling that petitioner Lorenza, by affixing her signature to the Deed of Sale on the
space provided for witnesses, is deemed to have given her implied consent to the contract of sale. Sale is a
consensual contract that is perfected by mere consent, which may either be express or implied
A wife's consent to the husband's disposition of conjugal property does not always have to be explicit or
set forth in any particular document... so long as it is shown by acts of the wife that such consent or
approval was indeed given.
In the present case, although it appears on the face of the deed of sale that Lorenza signed only as an
instrumental witness, circumstances leading to the... execution of said document point to the fact that
Lorenza was fully aware of the sale of their conjugal property and consented to the sale.
It has been held that the contract is valid until the court annuls the same and only upon an action brought
by the wife whose consent was not obtained.
In the present case, despite respondent's repeated demands for Lorenza to affix her... signature on all the
pages of the deed of sale, showing respondent's insistence on enforcing said contract, Lorenza still did not
file a case for annulment of the deed of sale.  It was only when respondent filed a complaint for specific
performance on August 8, 1991 when... petitioners brought up Lorenza's alleged lack of consent as an
affirmative defense.  Thus, if the transaction was indeed entered into without Lorenza's consent, we find it
quite puzzling why for more than three and a half years, Lorenza did absolutely nothing to seek the...
nullification of the assailed contract.
The foregoing circumstances lead the Court to believe that Lorenza knew of  the  full  import  of  the 
transaction  between  respondent  and  her husband; and, by affixing her signature on the deed of sale,
she, in effect,... signified her consent to the disposition of their conjugal property.
 Mercedes Calimlim-Canullas vs. Hon. Willelmo Fortun

FACTS: 

Petitioner Mercedes Calimlim-Canullas and Fernando Canullas were married and had five children. They
lived in a small house on the residential land in question. After Fernando's father died in 1965, Fernando
inherited the land. In 1978, Fernando abandoned his family and was living with private respondent
Corazon Daguines. They were convicted of concubinage.
On April 15, 1980, Fernando sold the subject property with the house thereon to Daguines for the sum of
P2,000.00. In the document of sale, Fernando described the house as "also inherited by me from my
deceased parents."

Unable to take possession of the lot and house, Daguines initiated a complaint for quieting of title and
damages against Mercedes. The latter resisted and claimed that the house in dispute, including the
coconut trees on the land, were built and planted with conjugal funds and through her industry; that the
sale of the land together with the house and improvements to Daguines was null and void because they
are conjugal properties and she had not given her consent to the sale.
In its original judgment, respondent Court principally declared Daguines "as the lawful owner of the land
in question as well as the one-half of the house erected on said land." Upon reconsideration prayed for by
Mercedes, however, respondent Court declared Daguines as the true and lawful owner of the land in
question, and declared as null and void the sale of the conjugal house to her. 

ISSUE:

(1) Whether or not the construction of a conjugal house on the exclusive property of the husband ipso
facto gave the land the character of conjugal property; and
(2) Whether or not the sale of the lot together with the house and improvements thereon was valid under
the circumstances surrounding the transaction.
RULING: 
(1) Yes. Article 158 of the Civil Code states that: “Buildings constructed at the expense of the partnership
during the marriage on land belonging to one of the spouses also pertain to the partnership, but the value
of the land shall be reimbursed to the spouse who owns the same.”
Pursuant to the foregoing provision both the land and the building belong to the conjugal partnership but
the conjugal partnership is indebted to the husband for the value of the land. The spouse owning the lot
becomes a creditor of the conjugal partnership for the value of the lot, which value would be reimbursed
at the liquidation of the conjugal partnership. 
In Padilla vs. Paterno, 3 SCRA 678, 691 (1961), it was stated that: “The acquisition by the partnership of
these properties was … subject to the suspensive condition that their values would be reimbursed to the
widow at the liquidation of the conjugal partnership; once paid, the effects of the fulfillment of the
condition should be deemed to retroact to the date the obligation was constituted (Art. 1187, New Civil
Code) …”
(2) No. The contract of sale was null and void for being contrary to morals and public policy. That sale
was subversive of the stability of the family, a basic social institution which public policy cherishes and
protects.

Article 1409 of the Civil Code states inter alia that: “Contracts whose cause, object, or purpose is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from
the very beginning.”
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no
effect whatsoever. The cause is unlawful if it is contrary to law, morals, good customs, public
order, or public policy."

Additionally, the law emphatically prohibits the spouses from selling property to each other subject to
certain exceptions. The prohibitions apply to a couple living as husband and wife without benefit of
marriage, otherwise, "the condition of those who incurred guilt would turn out to be better than those in
legal union." Those provisions are dictated by public interest and their criterion must be imposed upon the
wig of the parties. 

NOTES (relevant/additional discussions lang; not included sa digest)

 Anent the first issue  

In the case of Maramba vs. Lozano, relied upon by respondent Judge, it was held that the land belonging
to one of the spouses, upon which the spouses have built a house, becomes conjugal property only when
the conjugal partnership is liquidated and indemnity paid to the owner of the land. The SC believes that
the better rule is that enunciated by Mr. Justice J.B.L. Reyes in Padilla vs. Paterno, 3 SCRA 678, 691
(1961), where the following was explained:

As to the above properties, their conversion from paraphernal to conjugal assets should be
deemed to retroact to the time the conjugal buildings were first constructed thereon or at the very
latest, to the time immediately before the death of Narciso A. Padilla that ended the conjugal
partnership. They can not be considered to have become conjugal property only as of the time
their values were paid to the estate of the widow Concepcion Paterno because by that time the
conjugal partnership no longer existed and it could not acquire the ownership of said properties.
The acquisition by the partnership of these properties was, under the 1943 decision, subject to
the suspensive condition that their values would be reimbursed to the widow at the liquidation of
the conjugal partnership; once paid, the effects of the fulfillment of the condition should be
deemed to retroact to the date the obligation was constituted (Art. 1187, New Civil Code) …”
The foregoing premises considered, it follows that Fernando could not have alienated the house and lot to
Daguines since Mercedes had not given her consent to said sale.

 Donations between spouses during marriage are prohibited. This is so because if transfers or
conveyances between spouses were allowed during marriage, that would destroy the system of
conjugal partnership, a basic policy in civil law. It was also designed to prevent the exercise of
undue influence by one spouse over the other, as well as to protect the institution of marriage,
which is the cornerstone of family law. 

DISPOSITIVE PORTION
WHEREFORE, the Decision of respondent Judge, dated October 6, 1980, and his Resolution of
November 27, 1980 on petitioner's Motion for Reconsideration, are hereby set aside and the sale of the
lot, house and improvements in question, is hereby declared null and void. No costs.

Rubias v. Batiller

FACTS: 

Before the war with Japan, Francisco Militante filed an application for registration of the parcel of land in
question. After the war, the petition was heard and deRnied. Pending appeal, Militante sold the land to
petitioner, his son-in-law. On August 31, 1964, Domingo Rubias, a lawyer, filed an action for forcible
entry against respondent or a suit to recover the ownership and possession of certain portions of a lot
located in Barrio General Luna, Barotac Viejo, Iloilo, which he bought from his father-in-law, Francisco
Militante in 1956. The lot was occupied by Isaias Batiller, who illegally entered said portions of the lot on
two occasions—in 1945 and 1959. Rubias also prayed for damages and attorney’s fee. Meanwhile, in his
answer, Batiller claims that claims the complaint of the plaintiff does not state a cause of action, and that
he and his predecessors-in-interest have always been in actual, open, and continuous possession since
time immemorial under claim and ownership of the portions of the lot in question. Batiller claims that due
to the allegations, he has suffered moral damages in the amount of P2,000 and a sum of P500 for
attorney’s fees.

ISSUE:

Whether or not the contract of sale between appellant and his father-in-law was void because it was made
when plaintiff was counsel of his father-in-law in a land registration case involving the property in
dispute.

RULING: 
Yes. The stipulated facts and exhibits of record indisputably established plaintiff’s lack of cause of action
and justified the outright dismissal of the complaint. Plaintiff’s claim of ownership to the land in question
was predicated on the sale thereof for P2,000.00 made in 1956 by his father-in-law, Francisco Militante,
in his favor, at a time when Militante’s application for registration thereof had already been dismissed by
the Iloilo land registration court and was pending appeal in the Court of Appeals. Hence, there was no
right or title to the land that could be transferred or sold by Militante’s purported sale in 1956 in favor of
plaintiff. Manifestly, then plaintiff’s complaint against defendant, to be declared absolute owner of the
land and to be restored to possession thereof with damages was bereft of any factual or legal basis. Article
1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs
certain persons, by reason of the relation of trust or their peculiar control over the property,
THE PHILIPPINES TRUST COMPANY v. SOCORRO ROLDAN, FRANCISCO HERMOSO,
FIDEL C. RAMOS and EMILIO CRUZ.

PETITIONER: The Philippine Trust Company (as guardian of the property of Mariano L. Bernardo, a
minor)
RESPONDENT:
1. Socorro Roldan – former guardian of Mariano Bernardo; stepmother of the minor
2. Fidel C. Ramos – Roldan’s brother-in-law
3. Emilio Cruz –

FACTS:
The 17 parcels located in Guiguinto, Bulacan, were part of the properties inherited by Mariano Bernardo
(Mariano), a minor, from his father, Marcelo Bernardo (Marcelo). Socorro Roldan (Roldan) was
appointed as his guardian, as instituted in the guardianship proceedings. Roldan was the surviving spouse
of Marcelo, and the stepmother of Mariano.

In the said guardianship proceedings, Roldan filed a motion asking for authority to sell the 17 parcels of
Mariano to Dr. Fidel C. Ramos (Ramos), for the sum of P14,700, for the purpose of investment in a
residential house, which Mariano desired to have on Tindalo Street, Manila. The motion was granted.

Roldan executed a proper deed of sale to Ramos, and thereafter asked for judicial confirmation of the
sale. Ramos executed personally to Roldan, a deed of conveyance covering the subject parcels for the
sum of P15,000. Roldan, thereafter, sold 4 out of 17 parcels to Emilio Cruz (Cruz) for P3,000, with
reservation to herself the right to repurchase.

The Philippine Trust Company replaced Roldan as guardian, and thereafter filed before the CFI Manila a
complaint to annul two (2) contracts regarding 17 parcels of land, to wit:
 FIRST CONTRACT – sale made by Roldan to Ramos
 SECOND CONTRACT – sale made by Ramos to Roldan personally. 

The complaint likewise sought to annul the conveyance of 4 out of 17 parcels of land made by Roldan to
Cruz.

PETITIONER’s CONTENTION:

It alleged that the first two sales were a sale made by the guardian to herself, therefore, null and void
under Article 1459 of the Civil Code, which prohibits the guardian from purchasing “either in person or
through the mediation of another” the property of her ward. It also alleged that the third conveyance is
also ineffective, because Roldan had not acquired valid title to convey to Cruz.

CFI’s RULING:
It held that Article 1459 was not controlling due to lack of proof. It rendered judgment upholding the
contracts but allowing the minor to repurchase all parcels by paying P15,000 within one year.
CA’s RULING:
Affirmed the judgment of the CFI, adding that the minor knew the particulars and approved the
transaction.
ISSUE:
WON the sale made by Roldan was null and void pursuant to Article 1459 of the Civil Code.

RULING:
YES. Article 1459 of the Civil Code provides:
“The following persons cannot acquire by purchase, even at a public or judicial auction,
either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under his
guardianship;
Xxx

Guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to
neglect his ward’s interest and in line with the court’s suspicion whenever the guardian acquires the
ward’s property, the Court has no hesitation to declare that in this case, in the eyes of the law, Socorro
Roldan took by purchase her ward’s parcel thru Dr. Ramos, and that Article 1459 of the Civil Code
applies.

There may have been no previous agreement between Roldan and Ramos to effect that the latter would
but the land for her. But the fact remains that she acquired her protégé’s properties, through her brother-
in-law. she planned to get the property for herself at the time of selling them to Ramos. The temptation
which naturally besets a guardian so circumstances, necessitates the annulment of the transaction, even if
no actual collusion is proved between such guardian and the intermediate purchaser. 

In conclusion, the three sales should not be sustained, for first two for violation by Article 1459 of the
Civil Code, and the third because Roldan could pass no title to Emilio Cruz. 

DISPOSITIVE:
Judgment is therefore rendered:
1. Annulling the three contracts of sales in question;
2. Declaring the minor as the owner of the 17 parcels, with the obligation to return to
Roldan the price of P14,700 with legal interest;
3. Ordering Roldan and Cruz to deliver said parcels of line to minor;
4. Requiring Roldan to pay him the fruits (P1,522 a year);
5. Ordering the minor to deliver to Cruz the sum of P3,000
6. Charging appellees with the costs.
 Director of Lands vs. Ababa
The adverse claimant, Atty. Alberto B.  Fernandez was retained as counsel by petitioner, Maximo
Abarquez, in a civil case for  the  annulment  of  a  contract  of  sale  with  right  of  repurchase and  for 
the recovery of the land which was the subject matter thereof. The Court of First Instance of Cebu
rendered a decision on May 29, 1961 adverse to the petitioner and so he appealed to the Court of Appeals.
Litigating as a pauper and engaging the services of his lawyer on a contingent basis, petitioner, executed a
document whereby he obliged himself to give to his lawyer one-half (1/2) of whatever he might recover
from Lots 5600 and 5602 should the appeal prosper. Thereafter, the case was resolved in favour of
Maximo Abarquez but he refused to comply with his obligation and instead offered to sell the whole
parcels of land to petitioner-spouses Juan Larrazabal and Marta C. de Larrazabal. In order to protect his
interest, Atty. Fernandez filed an adverse claim for the half portion of the land, and it was annotated in the
certificate title of said land. Notwithstanding the annotation of the adverse claim, petitioner-spouse
Maximo Abarquez and Anastacia Cabigas conveyed by deed of absolute sale two-thirds (2/3) of the lands
to petitioner-spouses Juan Larrazabal and Marta C. de Larrazabal. Petitioner spouses petitioned for the
cancellation of the adverse claim, contending that it is contrary to law and of the Canons of Professional
Ethics

Del Rosario vs. Millado, 26 SCRA 700 (1969)

FACTS:
One Eladio Tiburcio, now deceased, claimed title to a tract of land of about 430 hectares, in Diliman,
Quezon City.

Parts of said land were the object of two (2) ejectment cases of the City Court of Quezon City, against La
Paz Mesina Vda. de Pascual, one of the heirs of said deceased, one filed by herein complainant,
Florentino B. del Rosario, and the other by Leonor Sta. Clara. 

Prior to the institution of said cases, one Conrado Baluyot, who claims to be another heir of Eladio
Tiburcio, offered to allow respondent to construct a house on part of said land of about 430 hectares, in
consideration of his professional services in defense of the claim thereto of the Tiburcios.
 
Baluyot's understanding with respondent was that, should he succeed in securing a decision favorable to
the Tiburcios, he (respondent) could buy the land on which his house was built, namely, lots 4 and 5 of
Block E-102 of Quezon City, by paying the current value thereof. 

Mrs. Pascual, who occupied another lot in the same block, knew that respondent was in possession of said
lots 4 and 5 and had constructed a house thereon, by agreement with Baluyot, as one of the heirs of the
deceased. Mrs. Pascual, who claimed an interest in the whole Block E-102, asked respondent to be her
counsel in said ejectment cases.
 
After filing the answer of Mrs. Pascual, as defendant in said two cases, respondent ceased to be her
counsel therein. 

ISSUE:
Whether or not respondent Millado violated Article 1491 of the Civil Code of the Philippines and Canon
No. 10 of the Canons of Legal Ethics, by acquiring an interest in the land involved in a litigation in which
he had taken part by reason of his profession.

RULING:
NO. Respondent Millado did not violate Article 1491 of the Civil Code of the Philippines and Canon No.
10 of the Canons of Legal Ethics.

Article 1491 of the Civil Code and Canon No. 10 of the Canons of Legal Ethics prohibit the purchase by
lawyers of any interest in the subject matter of the litigation in which they participated by reason of their
profession.

However, in this case, the records show that respondent's alleged interest in said lots was
acquired before he intervened as counsel for Mrs. Pascual in the ejectment cases against her and that said
interest is not necessarily inconsistent with that of his aforementioned client, aside from the fact that he
had made no substantial misrepresentation in the pleadings filed by him in said cases. This fact and the
absence of said conflict are made more manifest by the circumstance that the charges under consideration
have been preferred, not by Mrs. Pascual, but by her opponent in one of the ejectment cases above
mentioned.

Prohibition does not apply to a lawyer who acquired the property prior to the time he intervened as
counsel in an ejectment suit involving such property.

 ISSUE: 
Whether or not the contract for a contingent fee, basis of the interest of Atty. Fernandez, is prohibited by
the Article 1491 of the New Civil Code
Ruling:
This contention is without merit. Article 1491 prohibits only the sale or assignment between the lawyer
and his client, of property which is the subject of litigation. A contract for a contingent fee is not covered
by Article 1491 because the transfer or assignment of the property in litigation takes effect only after the
finality of a favourable judgment.
 In the instant case, the attorney's fees of Atty. Fernandez, consisting of one-half (1/2) of whatever 
Maximo  Abarquez  might  recover  from  his  share  in  the  lots  in  question,  is contingent upon the
success of the appeal. Hence, the payment of the attorney's fees, that is, the transfer or  assignment of one-
half (1/2) of the property in litigation will take place only if the appeal prospers. Therefore, the transfer
actually takes effect after the finality of a favorable judgment rendered on appeal
and not during the pendency  of  the  litigation  involving  the  property  in  question.  Consequently, the
contract for a contingent fee is not covered by Article 1491.

FLORENCIO FABILLO and JOSEFA TANA (substituted by their heirs Gregorio Fabillo, Roman
Fabillo, Cristeta F. Maglinte and Antonio Fabillo)
vs.
THE HONORABLE INTERMEDIATE APPELLATE COURT (Third Civil Case Division) and
ALFREDO MURILLO (substituted by his heirs Fiamita M. Murillo, Flor M. Agcaoili and Charito M.
Babol)

Facts:
In the instant petition for review on certiorari, petitioners seek the reversal of the appellate court's
decision interpreting in favor of lawyer Alfredo M. Murillo the contract of services entered into between
him and his clients, spouses Florencio Fabillo and Josefa Taña.

In her last will and testament dated August 16, 1957, Justina Fabillo bequeathed to her brother, Florencio,
a house and lot in San Salvador Street, Palo, Leyte which was covered by tax declaration No. 19335, and
to her husband, Gregorio D. Brioso, a piece of land in Pugahanay, Palo, Leyte.

Two years later, Florencio sought the assistance of lawyer Alfredo M. Murillo in recovering the San
Salvador property. Acquiescing to render his services, Murillo wrote Florencio the following handwritten
letter:

“Dear Mr. Fabillo:

I have instructed my stenographer to prepare the complaint and file the same on Wednesday if you are
ready with the filing fee and sheriffs fee of not less than P86.00 including transportation expenses.

Considering that Atty. Montilla lost this case and the present action is a revival of a lost case, I trust that
you will gladly give me 40% of the money value of the house and lot as a contigent (sic) fee in case of a
success. When I come back I shall prepare the contract of services for your signature.

Thank you.”

Thirteen days later, Florencio and Murillo entered into a contract of service. Pursuant to said contract,
Murillo filed for Florencio Fabillo Civil Case No. 3532 against Gregorio D. Brioso to recover the San
Salvador property. The case was terminated on October 29, 1964 when the court, upon the parties' joint
motion in the nature of a compromise agreement, declared Florencio Fabillo as the lawful owner not only
of the San Salvador property but also the Pugahanay parcel of land.

Consequently, Murillo proceeded to implement the contract of services between him and Florencio
Fabillo by taking possession and exercising rights of ownership over 40% of said properties. Sometime in
1966, Florencio Fabillo claimed exclusive right over the two properties and refused to give Murillo his
share of their produce.

Inasmuch as his demands for his share of the produce of the Pugahanay property were unheeded, Murillo
filed on March 23, 1970 in the then Court of First Instance of Leyte a complaint captioned "ownership of
a parcel of land, damages and appointment of a receiver" against Florencio Fabillo, his wife Josefa Taña,
and their children Ramon (sic) Fabillo and Cristeta F. Maglinte.

Issue: WON the contract of services agreed upon is in violation of Article 1491 of the Civil Code.
Ruling: NO

The contract of services did not violate said provision of law. Article 1491 of the Civil Code, prohibits
lawyers from acquiring by purchase even at a public or judicial auction, properties and rights which are
the objects of litigation in which they may take part by virtue of their profession. The said prohibition,
however, applies only if the sale or assignment of the property takes place during the pendency of the
litigation involving the client's property. Hence, a contract between a lawyer and his client stipulating a
contingent fee is not covered by said prohibition under Article 1491 (5) of the Civil Code because the
payment of said fee is not made during the pendency of the litigation but only after judgment has been
rendered in the case handled by the lawyer.
As long as the lawyer does not exert undue influence on his client, that no fraud is committed or
imposition applied, or that the compensation is clearly not excessive as to amount to extortion, a contract
for contingent fee is valid and enforceable.  Moreover, contingent fees were impliedly sanctioned by No.
13 of the Canons of Professional Ethics which governed lawyer-client relationships when the contract of
services was entered into between the Fabillo spouses and Murillo.

THEODORE C. BRITANICO v. JUDGE WENIE D. ESPINOSA

FACTS: 
This is an administrative complaint filed by Theodore C. Britanico against Judge Wenie D. Espinosa. 1 

The complainant averred that complainant was introduced to respondent and his wife, Eprol Z. Espinosa,
because they were selling beach properties. Trusting in the stature of respondent as a judge, complainant
agreed to buy six parcels of land. Upon seeing the deed of sale, complainant questioned the authenticity
of the signatures of the lot owners, aware that they were all living in the United States, he even requested
for a special power of authority from the property co-owners authorizing either respondent or his wife to
sell the property for them. But respondent assured complainant of the regularity of the sale and said that
he was putting his position as judge on the line for the transaction.

Upon closer scrutiny of the properties' titles, complainant discovered that the alienation of the properties
within five years of the issuance of the title was prohibited by Commonwealth Act No. 141. The
certificates of title were issued on October 21, 1997. The negotiations and initial payments were made in
1999 or within two years of the issuance of the titles. Complainant learned later on that the same
properties were being sold to another buyer. This forced complainant to place a notice of adverse claim
on the titles to protect his interests over the properties.

Respondent, in his comment,  alleged that during the entire transaction with respondent's wife,
complainant was aware of the nature of the properties being sold. Prior to complainant's decision to buy
the properties, he examined and scrutinized the titles. He, therefore, cannot claim that he was being
deceived. Respondent admits the preparation of the Deed of Absolute Sale. But the same was made at the
instance of complainant and that such was only a draft and was not intended to formalize the transaction. 

Complainant manifested that in spite of the fact that respondent knew of the prohibition on alienation of
the properties, respondent still participated in the negotiation of the sale of the properties. In fact, aware
of the prohibition, respondent advised the parties to execute an undated deed of absolute sale, to be dated
only when the period of prohibition shall have lapsed. Thus, instead of advising against the sale during
the prohibited period, respondent pursued it. Respondent assured him of the legality of the transaction and
that respondent was placing his capacity as a judge on the line to assure its legality. And only by such
assurance did complainant continue to pursue the transaction.

ISSUE:
Whether or not respondent's act of drafting the Deed of Absolute Sale is highly improper. 

HELD:
YES. The sale of the property was prohibited by law. The Original Certificate of Title was a Free Patent
which on its face cited Commonwealth Act No. 141, Section 18, 13 which prohibits alienation of the
property within five years of the grant of the patent. The Free Patent was granted on October 21, 1997.
Therefore, the negotiations which took place and the down payments which were made in 1999 were well
within the prohibited period. This is a clear indication of respondent's participation in the commission of
an irregular act. His complicity in the transaction is indubitable. He even used his position to lend
credence to the transaction.
Thus, there is sufficient evidence to hold the respondent liable under Canon 2 of the Code of Judicial
Ethics14 states that "A judge should avoid impropriety and the appearance of impropriety in all
activities." 

It is evident from the aforesaid provisions that both the reality and the appearance must concur. Case law
repeatedly teaches that judicial office circumscribes the personal conduct of a judge and imposes a
number of restrictions thereon, which he has to pay for accepting and occupying an exalted position in the
administration of justice. The irresponsible or improper conduct of a judge erodes public confidence in
the judiciary. It is thus the duty of the members of the bench to avoid any impression of impropriety to
protect the image and integrity of the judiciary.

This reminder applies all the more sternly to municipal, metropolitan and regional trial court judges like
herein respondent, because they are judicial front-liners who have direct contact with the litigating
parties. They are the intermediaries between conflicting interests and the embodiments of the people's
sense of justice. Thus, their official conduct should remain free from any appearance of impropriety and
should be beyond reproach.15

Respondent, being a member of the Judiciary, should have restrained himself from participating in the
sale of the properties. In fact, it was incumbent upon him to advise the parties to discontinue the
transaction because it was contrary to law. Granting, for the sake of argument, that the deed of sale he
prepared was only a draft, it is still an act which pursued the continuance of the sale. Being a judge, he
should have taken steps to prevent the sale, or at least he should have informed the parties that the sale
was illegal.
It is clear, therefore, that respondent violated Canon 2 of the Code of Judicial Conduct. Considering,
however, the nature of respondent's violation, and taking into account his degree of involvement in the
transaction, and considering further that he made no pecuniary gain, and that this is his first violation, a
tempered sanction is appropriate.

MACARIOLA VS ASUNCION, A.M. No. 133-J May 31, 1982

Doctrine: The prohibition to judges from acquiring properties in litigation applies only where the sale
takes place during the pendency of the litigation.

Facts: 
Petitioner is an heir to contested properties involving parcels of land. The respondent judge, then a judge
of the of the Court of First Instance of Leyte, decided the case distributing and dividing the contested
properties among the heirs of the original property which is the subject of contention. Furthermore,
respondent judge required the parties concerned to submit a project of partition agreed upon by them. The
decision became final for lack of an appeal. 

Lot 1184-E, which was part of the properties subdivided and distributed by the court, according to the
project of partition submitted and signed by counsels of the contending parties and approved by the court,
was sold to Dr. Arcadio Galapon, who after almost a year, sold a portion of it to respondent judge and her
wife.  After more than a year, respondent judge and his wife conveyed their respective shares and interest
in the said lot to The Traders Manufacturing and Fisheries Inc. 

Petitioner filed a case against respondent judge with acts unbecoming a judge, specifically   for violation
of paragraphs 1 and 5 Article 14 of the Code of Commerce for being a ranking officer and stockholder of
a corporation while at the same time performing the duties of a judge. Said corporation having been
organized to engage in business. 

Issue: 
Whether or not respondent judge is prohibited from acquiring the lot.
Ruling: 
No. In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E,
the decision in Civil Case No. 3010 which he rendered was already final because none of the parties
therein filed an appeal within the reglementary period. Hence, the lot in question was no longer subject of
the litigation. Moreover, at the time of the sale respondent’s order and the amended order dated approving
the project of partition made had long become final for there was no appeal from said orders.

The prohibition in Article 1491 of the New Civil Code applies only to the sale or assignment of the
property which is the subject of litigation to the persons disqualified therein. The SC has already ruled
that for the prohibition to operate, the sale or assignment of the property must take place during the
pendency of the litigation involving the property. 

Furthermore, respondent Judge did not buy the lot in question directly from the plaintiffs but from Dr.
Arcadio Galapon who earlier purchased it after the finality of the decision a Civil Case. 

While a judge may not have acquired property in litigation before him in the technical sense, it was,
however, improper for him to have done so under the Canons of Judicial Ethics.

The respondent judge is reminded to be more discreet in his private and business activities.

Tañedo v. Court of Appeals

FACTS:
Lazardo Tañedo executed a notarized deed of absolute sale in favor of his eldest brother, Ricardo Tañedo,
and the latter’s wife, Teresita Barera. Private respondents recorded the Deed of Sale in their favor in the
Registry of Deeds and the corresponding entry was made in Transfer Certificate of Title No. 166451.
On January 13, 1981, Lazaro executed another notarized deed of sale in favor of private respondent. In
February 1981, Ricardo learned that Lazaro sold the same property to his children, petitioners herein,
through a deed of sale dated December 29, 1980.
Petitioners on July 16, 1982, filed a complaint for rescission (plus damages) of the deeds of sale executed
by Lazardo in favor of private respondents covering the property inherited by Lazaro from his father.
Petitioners claimed that their father, Lazaro, executed an “Absolute Deed of Sale” dated December 29,
1980.
ISSUES:
1. Is the sale of a future inheritance valid?
2. Was the subsequent execution on January 13, 1981 (and registration with the Registry of Property) of a
deed of sale covering the same property to the same buyers valid?
RULING:
1. No.
We hereby categorically rule that, pursuant to Article 1347 of the Civil Code, “(n)o contract may be
entered into upon a future inheritance except in cases expressly authorized by law.”
Consequently, said contract made in 1962 is not valid and cannot be the source of any right nor the
creator of any obligation between the parties.
Hence, the “affidavit of conformity” dated February 28, 1980, insofar as it sought to validate or ratify the
1962 sale, is also useless and, in the words of the respondent Court, “suffers from the same infirmity.”
Even private respondents in their memorandum concede this.
2. Yes.
Article 1544 of the Civil Code governs the preferential rights of vendees in cases of multiple sales, as
follows:
Art. 1544. If the same thing should have been sold to different vendees, the ownership shall be transferred
to the person who may have first taken possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in good faith
first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was first in the
possession; and, in the absence thereof, to the person who presents the oldest title, provided there is good
faith.
The property in question is land, an immovable, and following the above-quoted law, ownership shall
belong to the buyer who in good faith registers it first in the registry of property. Thus, although the
deed of sale in favor of private respondents was later than the one in favor of petitioners, ownership
would vest in the former because of the undisputed fact of registration. On the other hand, petitioners
have not registered the sale to them at all.
 Juanito Pineda vs. Court of Appeals

FACTS:

On January 4, 1982, Spouses Virgilio and Adorita Benitez obtained a loan of P243,000 from Juanita
Pineda and Leila Sayoc and mortgaged a house and lot in their favor. Pineda and Sayoc did not register
the mortgage but the spouses delivered a duplicate of the TCT to Pineda.

On November 9, 1983, the spouses sold the house to Olivia Mojica with Pineda’s consent. On the same
date, Mojica filed a petition for the issuance of a second owner's duplicate alleging that she purchased the
parcel of land and the owner's duplicate copy was lost. The petition was granted by the trial court and a
second owner's duplicate was issued in the name of the Spouses Benitez. Eventually, the spouses sold the
lot to Mojica, cancelling the old TCT and issuing a new one in Mojica’s name.

On February 22, 1985, Mojic obtained a loan from Teresita Gonzales, executing a promissory note and a
deed of mortgage which Gonzales registered with the Register of Deeds.

Meanwhile, on May 8, 1985, Pineda and Sayoc filed a complaint against the Spouses and Mojica to
cancel the second owner's duplicate. The Spouses admitted to selling the house and lot to Mojica but
denied having knowledge of the petition for the issuance of the second owner's duplicate. On the other
hand, Mojica denied conspiring with the Spouses and committing fraud. The trial court declared the
second owners duplicate to be null and void. The CA affirmed the trial court’s decision.

On December 7, 1987, Mojica defaulted in paying her obligation prompting Gonzales to foreclose the
same. When Mojica failed to redeem the property within the redemption period, Gonzales consolidated
the title to the property, executing the corresponding affidavit of consolidation.

On motion of Pineda and Sayoc, the trial court issued a writ of execution to enforce its judgement.
However, it could not be enforced because a new TCT was registered in the Gonzales’ name.
Subsequently, the trial court reinstated the old TCT in Benitez’s name. The CA, upon Gonzales’s appeal,
reversed the decision and issued a permanent prohibitory injunction.

 ISSUE: 
Whether or not Gonzales is an innocent purchaser for value making her title to the property indefeasible
and imprescriptible.

RULING:

Yes.The rule is that a mortgage annotated on a void title is valid if the mortgagee registered the mortgage
in good faith. Gonzales registered her mortgage in good faith because she had no actual notice of the prior
unregistered mortgage in favor of Pineda and Sayoc. To bind third parties to an unregistered
encumbrance, the law requires actual notice.

The nullity of TCT 13138 did not affect the validity of the title or ownership of Mojica or Gonzales as
subsequent transferees of the property. What is void is the certificate of title, not the title or ownership
itself of Mojica or Gonzales. The notice of lis pendens could not defeat Gonzales’ rights over the property
for two reasons. First, Gonzales registered in good faith her mortgage before the notation of lis pendens,
making the registration of her mortgage valid despite the invalidity of TCT 13138. Second, since
Gonzales’ mortgage was valid, the auction sale retroacted to the date of registration of her mortgage,
making the auction sale prior in time to the notice of lis pendens. Thus, TCT 16084, issued to Gonzales as
a result of the forbearance sale is valid.
 DIONISIO ESGUERRA v. THE PEOPLE OF THE PHILIPPINES

Facts:
Appellant Dionisio Esguerra was found by the Court of Appeals guilty of estafa, defined an penalized
under Article 315, paragraph 3, 2(a) of the Revised Penal Code, and sentenced to the penalty therein
provided.
INFORMATION

"The undersigned fiscal accuses Dionisio Esguerra of the crime of ‘Estafa’ defined and punished
under Art. 315, 3rd paragraph (b), committed as follows:

"That on or about and during the period from January 12, 1952 to March 26, 1952, in the barrio
of Siain, municipality of Atimonan, province of Quezon, Philippines, and within the jurisdiction
of this Honorable Court the said accused upon representations made with Yu Yek Huy & Co., a
business firm duly organized and existing under and by virtue of the laws of the Philippines, thru
the Manager of said Company, Yu Yek Bio, that the said accused had copras ready for delivery to
it, took and received from said Yu Yek Bio the sum of FOUR THOUSAND FOUR HUNDRED
PESOS (P4,400.00) under the express obligation on the part of the said accused to deliver to the
said company the equivalent worth of copras at its bodega at Siain, Atimonan, Quezon as
follows: P2,400.00 worth of copras on or before January 31, 1952; and P2,000.00 worth of
copras on or before fifteen days from March 11, 1952, or the same sum of money on the
respective dates aforestated but the said accused once in possession of the said sum of money and
far from complying with aforesaid obligation, despite repeated demands made upon him to do so,
did then and there wilfully, unlawfully and feloniously with intent to defraud the aforesaid
company, misapply, misappropriate and convert the said amount to his own personal use and
benefit to the damage and prejudice of the Yu Yek Huy & Co., in the aforestated amount of
P4,400.00 Philippine Currency."cralaw virtua1aw li
It is to be noted that the first paragraph for the Information specifically refers to the 3rd paragraph (b) of
Article 315 of the Revised Penal Code as the provision under which the accused was being prosecuted.
This particular paragraph refers to estafa committed by resorting to some fraudulent practice to insure
success in a gambling game. On the other hand, that part of the information referring to representations
that the accused had copras ready for delivery, would seem to imply that the estafa charged is that defined
and penalized under paragraph 2(a) — by falsely pretending to possess . . property, business, etc. The
succeeding portion, however, of the same information which alleges failure to deliver the copra or return
the money on the dates agreed, charges the accused of misappropriation and conversion under paragraph
1(b) of the same Article 315.
In view of this ambiguity in the information, a motion to quash was filed by the accused.

Issue:
Whether after denial of a motion to quash, precisely on the vagueness of the information, upon assurance
by the fiscal and the private prosecutor and accepted by the court that the offense for which the accused
was being prosecuted is that of misappropriation defined in paragraph 1(b) of Article 315, involving
unfaithfulness or abuse of confidence and under which the accused entered trial, the latter could, on
appeal, be convicted of an entirely different offense with different elements, that of false pretenses of
possessing property or business made prior to or simultaneously with the commission of the fraud.

Ruling: No.
It is undisputed that the information contains no allegation of misrepresentation, bad faith or false
pretenses, essential element in the crime of which appellant was found guilty by the Court of Appeals.
This is so, evidently, because, as already stated, the fiscal and the private prosecutor avowedly were
prosecuting the accused for the crime of misappropriation and conversion committed with unfaithfulness
and abuse of confidence for which the appellant went to trial and was convicted by the lower court.
It is true the information states that "the accused, upon representations (not misrepresentations)
that the accused had copras ready for delivery to it, took and received" the sum of P4,400.00. Nowhere
does it appear in the information that these "representations" were false or fraudulent, or that the accused
had no such copra at the time he allegedly made such "representations." The falsity or fraudulentness of
the pretense or representation or act being the very constitutive element of the offense, allegation to that
effect, either in the words of the law or in any other language of similar import, must be made in the
information if the right of the accused to be informed of the nature and cause of the accusation against
him is to be preserved. In this case, for instance, since the representation wherefore the money was
delivered is not being charged as false, and since, if not false, the receipt of the money on such
representation does not constitute an offense, the motion to quash the information on the ground that it
did not charge an offense or the allegations therein did not constitute an offense, should have been
granted.
On the merits, there is reason to believe that the responsibility of herein appellant is only civil in nature.
Exhibit A, upon the strength of which the prosecution mainly relies, reads:
"RECEIVED from Messrs. YU YEK HUY & CO., the sum of Two Thousand four hundred Pesos
(P2,400.00) only representing advance payment of 10,000 kilos of copra which I sold them and
shall be delivered in their bodega at Siain, P.I., on or before Jan. 31, 1952. Jan. 12, 1952.
The language of this receipt, together with the finding of the Court of Appeals that "Factually, the
appellant used to supply copra not only to complainant, but also to other copra exporters in Siain", clearly
indicate, in our opinion, that the transaction was that of sale of copra for future delivery. Obviously, an
advance payment is subject to the disposal of the vendor. If the transaction fails, the liability arising
therefrom is of a civil and not of a criminal nature.
The accused is acquitted.

NOOL v. COURT OF APPEALS

FACTS:

Two (2) parcels are in dispute and litigated upon here. The first has an area of 1 hectare, formerly
owned by Victorino Nool, covered by TCT No. T-74950. The second parcel has an area of 3.0880
hectares, previously owned by Francisco Nool under TCT No. T-100945. Both parcels are situated in San
Manuel, Isabela. The plaintiffs seek recovery of the parcels of land from the defendants.

Plaintiffs alleged that they were owners of subject parcels of land, and they bought the same from
Victor and Francisco Nool. They obtained a loan from the Ilagan Branch of the Development Bank of the
Philippines, secured by a real estate mortgage on said parcels of land, which were still in the names of the
former owners. At the time that the plaintiffs fail to pay the loan, the mortgage was foreclosed. 

Within the period of redemption, plaintiffs contacted defendant Anacleto Nool to redeem the
foreclosed properties from DBP, and later on transferred to Anacleto. As part of their arrangement,
Anacleto agreed to buy from Conchita the properties for a total price of P100,000. P30,000 was paid
to Conchita, and upon payment of the balance of P14,000, plaintiffs were to regain possession of the
lands, which amounts defendants failed to pay.

Another agreement was made between the parties, whereby the defendants agreed to return to
plaintiffs the lands in question. When the plaintiffs asked the defendants to return the same, despite the
intervention of the Barangay Captain, defendants refused to return the lands in question. This made the
plaintiffs file a complaint. 

DEFENDANT’S CONTENTION: 

They acquired the lands from the DBP, through negotiated sale, and were misled by the plaintiffs
when Anacleto signed the private writing, agreeing to return subject lands when plaintiffs have the money
to redeem the same. Anacleto thought that Conchita still had the right to redeem the said properties.

LOWER COURT’S RULING:

The said private writing was an option to sell not binding upon and considered the same validly
withdrawn by defendants for want of consideration. The authorizing officer of DBP certified that the one-
year redemption period was not exercised by the mortgagors. Hence, DBP became the absolute owner of
said parcels of land for which it was issued new certificates of title by the Registry of Deeds. Two years
thereafter, DBP entered into a Deed of Conditional Sales with Anacleto Nool as vendee. Subsequently,
the latter issued new certificated of title.

CA’S RULING:
It affirmed the judgment of trial court.

ISSUE:

WON the purchase of the subject lands to Anacleto is valid.

RULING:

Article 1505 of the Civil Code provides that "where goods are sold by a person who is not the
owner thereof, and who does not sell them under authority or with consent of the owner, the buyer
acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct
precluded from denying the seller's authority to sell." Here, there is no allegation at all that petitioners
were authorized by DBP to sell the property to the private respondents. Jurisprudence, on the other hand,
teaches us that "a person can sell only what he owns or is authorized to sell; the buyer can as a
consequence acquire no more than what the seller can legally transfer." No one can give what he does not
have — nono dat quod non habet. On the other hand, the contract of repurchase that the parties entered
presupposes that petitioners could repurchase the property that they "sold" to private respondents. As
petitioners "sold" nothing, it follows that they can also "repurchase" nothing. Nothing sold, nothing to
repurchase. In this light, the contract of repurchase is also inoperative — and by the same analogy, void.

Alcantara-Daus v. de Leon

Facts:
This is a complaint for annulment of documents and title, ownership, possession, injunction, preliminary
injunction, restraining order and damages.
[Respondents] alleged in their complaint that they are the owners of a parcel of land hereunder described
as follows, to wit:
A parcel of land (Lot No. 4786 of the Cadastral Survey of San Manuel) situated in the Municipality of
San Manuel, Bounded on the NW., by Lot No. 4785; and on the SE., by Lot Nos. 11094 & 11096;
containing an area of Four Thousand Two Hundred Twelve (4,212) sq. m., more or less. Covered by
Original Certificate of Title No. 22134 of the Land Records of Pangasinan.
Which [Respondent] Hermoso de Leon inherited from his father Marcelino de Leon by virtue of a deed of
extra-judicial partition. Sometime in the early 1960s, [respondents] engaged the services of the late Atty.
Florencio Juan to take care of the documents of the properties of his parents. Atty. Juan let them sign
voluminous documents. After the death of Atty. Juan, some documents surfaced and most revealed that
their properties had been conveyed by sale or quitclaim to [Respondent] Hermosos brothers and sisters, to
Atty. Juan and his sisters, when in truth and in fact, no such conveyances were ever intended by them. His
signature in the deed of extra-judicial partition with quitclaim made in favor of Rodolfo de Leon was
forged. They discovered that the land in question was sold by Rodolfo de Leon to [Petitioner] Aurora
Alcantara. They demanded annulment of the document and reconveyance but defendants refused.
[Petitioner] Aurora Alcantara-Daus [averred] that she bought the land in question in good faith and for
value on December 6, 1975. [She] has been in continuous, public, peaceful, open possession over the
same and has been appropriating the produce thereof without objection from anyone.
On August 23, 1994, the RTC (Branch 48) of Urdaneta, Pangasinan rendered its Decision in favour of
herein petitioner. It ruled that respondent’s claim was barred by laches, because more than 18 years had
passed since the land was sold. It further ruled that since it was a notarial document, the Deed of
Extrajudicial Partition in favour of Rodolfo de Leon was presumptively authentic.
Ruling of the Court of Appeals
In reversing the RTC, the CA held that laches did not bar respondents from pursuing their claim.
Notwithstanding the delay, laches is a doctrine in equity and may not be invoked to resist the enforcement
of a legal right.
The appellate court also held that since Rodolfo de Leon was not the owner of the land at the time of the
sale, he could not transfer any land rights to petitioner. It further declared that the signature of Hermoso
de Leon on the Deed of Extrajudicial Partition and Quitclaim -- upon which petitioner bases her claim
was a forgery. It added that under the above circumstances, petitioner could not be said to be a buyer in
good faith.
Hence, this Petition.
Issue:

1) Whether or not the Deed of Absolute Sale dated December 6, 1975 executed by Rodolfo de Leon
(deceased) over the land in question in favor of petitioner was perfected and binding upon the parties
therein?
2) Whether or not the evidentiary weight of the Deed of Extrajudicial Partition with Quitclaim, executed
by respondent Hermoso de Leon, Perlita de Leon and Carlota de Leon in favor of Rodolfo de Leon was
overcome by more than [a] preponderance of evidence of respondents?

Ruling:
1) No, Petitioner argues that, having been perfected, the Contract of Sale executed on December 6, 1975
was thus binding upon the parties thereto.
A contract of sale is consensual. It is perfected by mere consent, upon a meeting of the minds on the offer
and the acceptance thereof based on subject matter, price and terms of payment. At this stage, the sellers
ownership of the thing sold is not an element in the perfection of the contract of sale.
The contract, however, creates an obligation on the part of the seller to transfer ownership and to deliver
the subject matter of the contract. It is during the delivery that the law requires the seller to have the right
to transfer ownership of the thing sold. In general, a perfected contract of sale cannot be challenged on the
ground of the sellers non-ownership of the thing sold at the time of the perfection of the contract.
Further, even after the contract of sale has been perfected between the parties, its consummation by
delivery is yet another matter. It is through tradition or delivery that the buyer acquires the real right of
ownership over the thing sold.
Undisputed is the fact that at the time of the sale, Rodolfo de Leon was not the owner of the land he
delivered to petitioner. Thus, the consummation of the contract and the consequent transfer of ownership
would depend on whether he subsequently acquired ownership of the land in accordance with Article
1434 of the Civil Code. Therefore, we need to resolve the issue of the authenticity and the due execution
of the Extrajudicial Partition and Quitclaim in his favor.
2 No, Petitioner claims that her possession of the land is in good faith and that, consequently, she has
acquired ownership thereof by virtue of prescription. We are not persuaded.
It is well-settled that no title to registered land in derogation of that of the registered owner shall be
acquired by prescription or adverse possession. Neither can prescription be allowed against the hereditary
successors of the registered owner, because they merely step into the shoes of the decedent and are
merely the continuation of the personality of their predecessor in interest. Consequently, since a
certificate of registration covers it, the disputed land cannot be acquired by prescription regardless of
petitioners good faith.

Asuncion Atilano v. Ladislao Atilano

FACTS:
  In 1916, Eulogio Atilano I acquired, by purchase from one Gerardo Villanueva, lot No. 535 of
the then municipality of Zamboanga. The vendee then obtained transfer certificate of title No. 1134 in
his name.

In 1920, he had the land subdivided into five parts, identified as lots Nos. 535-A, 535-B, 535-C,
535-Dand 535-E, respectively.

On May 18 of the same year, after the subdivision had been effected, Eulogio Atilano I, for the
sum ofP150.00, executed a deed of sale covering lot No. 535-E in favor of his brother Eulogio Atilano II,
who then obtained transfer certificate of title No. 3129 in his name.
 
Three other portions, namely, lots Nos. 535-B, 535-C, and 535-D, were likewise sold to other
persons. Atilano I retained for himself the remaining portions of the land, presumably covered by the title
to lot No. 535-A. upon his death, the title to this lot passed to Ladislao, in whose name the corresponding
certificate was issued.

On 1959, Atilano II and his children had the land resurveyed so that it could be properly
subdivided. However, they discovered that the land they were actually occupying on the strength of the
deed of sale was lot No. 353-A and not lot 535-E, while the land which remained in the possession of
Atilano I, and which was passed to Ladislao was lot No. 353-E and not lot  No. 535-A.

On 1960, the heirs of Atilano II alleging, inter alia, that they offered to surrender to the
possession of lot No. 535-A and demanded in return the possession of lot No. 535-E, but the defendants
refused to accept the exchange. The plaintiffs' insistence is quite understandable, since lot No. 535-E
has an area of2,612 square meters as compared to the 1,808 square-meter area of lot No. 535-A.

In their answer to the complaint, the defendants alleged that the reference to lot No. 535-E in the
deed of sale was an involuntary error; that the intention of the parties to that sale was to convey the lot
correctly identified as lot No. 535-A. On the basis of the foregoing allegations the defendants interposed a
counterclaim, praying that the plaintiffs be ordered to execute in their favor the corresponding deed of
transfer with respect to Lot No. 535-E.

The trial court rendered judgment in favor of the plaintiffs.

ISSUE:
Whether or not the heirs of Atilano II are entitled to the real lot bearing No. 535-E, as stated in
the deed of sale.

RULING:
NO.
When one sells or buys real property — a piece of land, for example — one sells or buys the
property as he sees it, in its actual setting and by its physical metes and bounds, and not by the
mere lot number assigned to it in the certificate of title.

In this case, the portion correctly referred to as lot No. 535A was already in the possession of the
Atilano II, who had built a house on it even before Atilano I had sold it to him. Atilano I had built a house
for himself on the real 535-E, and both brothers had lived on their respective lands for years until the
mistake was discovered in 1959.

The real issue here is not adverse possession, but the real intention of the parties to that
sale. From all the facts and circumstances, the object of the sale between the Atilano brothers was 535-A,
even if the deed referred to it as 535-E, which was a simple mistake in the drafting of the document. The
mistake did not vitiate the consent of the parties or affect the validity and binding effect of the contract
between them. 

The proper remedy to such mistake is reformation of the instrument. This remedy is available
when, there having been a meeting of the funds of the parties to a contract, their true intention is not
expressed in the instrument purporting to embody the agreement by reason of mistake, fraud, inequitable
conduct on accident (Art. 1359, et seq.) In this case, there is no need to reform the 1920 deed of sale since
the parties retained possession their respective properties conformably to the real intention of the parties
to that sale, and all they should do is to execute mutual deeds of conveyance.  
 Melliza v. City of Iloilo

FACTS:

Juliana Melliza owned 3 parcels of residential land in Iloilo City (OCT 3462). Said parcels of land were
known as Lots Nos. 2, 5 and 1214. On November 27, 1931 she donated to the then Municipality of Iloilo,
9,000 sq. m. of Lot 1214 to serve as site for the municipal hall, avenue and parks and for “Arellano Plan.”

In 1952, the University of the Philippines enclosed the site donated with a wire fence. Pio Sian
Mellizathereupon made representations with the city authorities for payment of the value of the lot (Lot
1214-B). The University of the Philippines, meanwhile, obtained Transfer Certificate of Title No. 7152
covering the three lots, Nos. 1214-B, 1214-C and 1214-D.

On December 10, 1955, Melizza filed an action in the Court of First Instance of Iloilo against Iloilo City
and the University of the Philippines for recovery of Lot 1214-B or of its value.

On May 19, 1965, the Court of Appeals affirmed the interpretation of the Court of First Instance that the
portion of Lot 1214 sold by Juliana Melliza was not limited to the 10,788 square meters specifically
mentioned but included whatever was needed for the construction of avenues, parks and the city hall site.

ISSUE:
 Whether contract is perfected if object of the sale is capable of being determinate at the time of the
contract.

HELD:

Yes. The requirement of the law that a sale must have for its object a determinate thing is fulfilled as long
as at the time of the contract is entered into, the object is capable of being determinate without the
necessity of a new or further agreement between the parties. The specific lots and purpose that the lots
object of sale are the ones needed for city hall site, avenue and parks according to “Arellano Plan”
sufficiently provides a basis as of the time of the execution of the contract for rendering determinate said
lots without the need of a new and further agreement of the parties.

DOMINGO CARABEO v. SPOUSES DINGCO

Domingo Carabeo (petitioner) entered into a contract denominated as "Kasunduan sa Bilihan ng

Karapatan sa Lupa"1 (kasunduan) with Spouses Norberto and Susan Dingco (respondents) whereby
petitioner agreed to sell his rights over a parcel of unregistered land situated to respondents.
Respondents tendered their initial payment upon signing of the contract, the remaining balance to
be paid on September 1990. Respondents were later to claim that when they were about to hand in the
balance of the purchase price, petitioner requested them to keep it first as he was yet to settle an on-going
"squabble" over the land.
Nevertheless, respondents gave petitioner small sums of money from time to time on petitioner’s
request according to them; due to respondents’ inability to pay the amount of the remaining balance in
full, according to petitioner.
By respondents’ claim, despite the alleged problem over the land, they insisted on petitioner’s
acceptance of the remaining balance but petitioner remained firm in his refusal, proffering as reason
therefor that he would register the land first.
Sometime in 1994, respondents learned that the alleged problem over the land had been settled
and that petitioner had caused its registration in his name. They thereupon offered to pay the balance but
petitioner declined, drawing them to file a complaint before the Katarungan Pambarangay. No settlement
was reached, however, hence, respondent filed a complaint for specific performance before the Regional
Trial Court (RTC).
Petitioner countered in his Answer to the Complaint that the sale was void for lack of object
certain, the kasunduan not having specified the metes and bounds of the land. In any event, petitioner
alleged that if the validity of the kasunduan is upheld, respondents’ failure to comply with their reciprocal
obligation to pay the balance of the purchase price would render the action premature. For, contrary to
respondents’ claim, petitioner maintained that they failed to pay the balance on September 1990 to thus
constrain him to accept installment payments.
 After the case was submitted for decision, petitioner passed away. The records do not show that
petitioner’s counsel informed the RTC, where the complaint was lodged, of his death and that proper
substitution was effected. The trial court ruled in favor of respondents
Petitioner’s counsel filed a Notice of Appeal but the Court of Appeals affirmed that of the trial
court. Petitioner’s motion for reconsideration was likewise denied. Hence, the present petition for review.

ISSUE:
Whether or not the sales is void for the element of a contract, i.e., an object certain is lacking in
this case.

HELD:
NO.  The fact that the kasunduan did not specify the technical boundaries of the property did not
render the sale a nullity. The requirement that a sale must have for its object a determinate thing is
satisfied as long as, at the time the contract is entered into, the object of the sale is capable of being made
determinate without the necessity of a new or further agreement between the parties. 9 As the above-
quoted portion of the kasunduan shows, there is no doubt that the object of the sale is determinate.

WHEREFORE, the petition is DENIED.

Pichel v. Alonzo
Facts:
Respondent Prudencio Alonzo was awarded by the Government that parcel of land in Basilan City in
accordance with Republic Act No. 477. The award was cancelled by the Board of Liquidators on January
27, 1965 on the ground that, previous thereto, plaintiff was proved to have alienated the land to another,
in violation of law. In 1972, plaintiff's rights to the land were reinstated.
On August 14, 1968, plaintiff and his wife sold to defendant Luis Pichel all the fruits of the coconut trees
which may be harvested in the land in question for the period, September 15, 1968 to January 1, 1976, in
consideration of P4,200.00. Even as of the date of sale, however, the land was still under lease to one,
Ramon Sua, and it was the agreement that part of the consideration of the sale, in the sum of P3,650.00,
was to be paid by defendant directly to Ramon Sua so as to release the land from the clutches of the latter.
Pending said payment plaintiff refused to allow the defendant to make any harvest. In July 1972,
defendant for the first time since the execution of the deed of sale in his favor, caused the harvest of the
fruit of the coconut trees in the land.
Alonzo filed for the annulment of the contract on the ground that it violated the provisions of R.A. 477,
which states that lands awarded under the said law shall not be subject to encumbrance or alienation,
otherwise the awardee shall no longer be entitled to apply for another piece of land. The lower court ruled
that the contract, which it held as a contract of lease, is null and void.

Issues:
(1) Whether the respondent had the right or authority to execute the "Deed of Sale" in 1968, his award
having been cancelled previously by the Board of Liquidators on January 27, 1965
(2) Whether the contract is one for lease of the land, or for sale of coconut fruits
(3) Whether the contract is an encumbrance as contemplated by R.A. 477
Held:
(1) Until and unless an appropriate proceeding for reversion is instituted by the State, and its reacquisition
of the ownership and possession of the land decreed by a competent court, the grantee cannot be said to
have been divested of whatever right that he may have over the same property. Herein respondent is not
deemed to have lost any of his rights as grantee during the period material to the case at bar, i.e., from the
cancellation of the award in 1965 to its reinstatement in 1972. Within said period, respondent could
exercise all the rights pertaining to a grantee.
(2) A perusal of the deed fails to disclose any ambiguity or obscurity in its provisions, nor is there doubt
as to the real intention of the contracting parties. The terms of the agreement are clear and unequivocal,
hence the literal and plain meaning thereof should be observed. The document in question expresses a
valid contract of sale. It has the essential elements of a contract of sale. The subject matter of the contract
of sale in question are the fruits of the coconut trees on the land during the years from September 15,
1968 up to January 1, 1976, which subject matter is a determinate thing. Under Article 1461 of the New
Civil Code, things having a potential existence may be the object of the contract of sale. Pending crops
which have potential existence may be the subject matter of sale. The essential difference between a
contract of sale and a lease of things is that the delivery of the thing sold transfers ownership, while in
lease no such transfer of ownership results as the rights of the lessee are limited to the use and enjoyment
of the thing leased.
The contract was clearly a "sale of the coconut fruits." The vendor sold, transferred and conveyed "by
way of absolute sale, all the coconut fruits of his land," thereby divesting himself of all ownership or
dominion over the fruits during the seven-year period. The possession and enjoyment of the coconut trees
cannot be said to be the possession and enjoyment of the land itself because these rights are distinct and
separate from each other, the first pertaining to the accessory or improvements (coconut trees) while the
second, to the principal (the land). A transfer of the accessory or improvement is not a transfer of the
principal. It is the other way around, the accessory follows the principal. Hence, the sale of the nuts
cannot be interpreted nor construed to be a lease of the trees, much less extended further to include the
lease of the land itself.
The grantee of a parcel of land under R.A. No. 477 is not prohibited from alienating or disposing of the
natural and/or industrial fruits of the land awarded to him. What the law expressly disallows is the
encumbrance or alienation of the land itself or any of the permanent improvements thereon. Permanent
improvements on a parcel of land are things incorporated or attached to the property in a fixed manner,
naturally or artificially. They include whatever is built, planted or sown on the land which is characterized
by fixity, immutability or immovability. Houses, buildings, machinery, animal houses, trees and plants
would fall under the category of permanent improvements, the alienation or encumbrance of which is
prohibited. The purpose of the law is not violated when a grantee sells the produce or fruits of his land.
On the contrary, the aim of the law is thereby achieved, for the grantee is encouraged and induced to be
more industrious and productive, thus making it possible for him and his family to be economically self-
sufficient and to lead a respectable life. At the same time, the Government is assured of payment on the
annual installments on the land. We agree with herein petitioner that it could not have been the intention
of the legislature to prohibit the grantee from selling the natural and industrial fruits of his land, for
otherwise, it would lead to an absurd situation wherein the grantee would not be able to receive and enjoy
the fruits of the property in the real and complete sense.
Alcantara-Daus vs. Spouses de Leon

FACTS:

Spouses De Leon are the owners of a parcel of land situated in the Municipality of San Manuel,
Pangasinan.

Sometime in 1960, Spouses De Leon engaged the services of the late Atty. Florencio Juan to take care of
the documents of their properties.  They were asked to sign voluminous documents by the latter. After the
death of Atty. Florencio, some documents surfaced and most revealed that their properties had been
conveyed by sale or quitclaim to Hermoso’s brothers and sisters, to Atty. Juan and his sisters, when in
truth and in fact, no such conveyances were ever intended by them. Furthermore, respondent found out
that his signature in the Deed of Extra-judicial Partition with Quitclaim made in favor of Rodolfo de Leon
was forged. They discovered that the land in question was sold by Rodolfo de Leon to Aurora Alcantara –
the petitioner herein.

ISSUE:

1. Whether or not the Deed of Absolute Sale executed by Rodolfo De Leon over the land in question
in favor of petitioner was perfected and binding upon the parties therein.

RULING:

This question cannot be answered without first determining the authenticity and the due execution of the
Extrajudicial Partition and Quitclaim in favor of Rodolfo De Leon.  After poring over the records, the SC
finds no reason to reverse the factual finding of the appellate court.  A comparison of the genuine
signatures of Hermoso De Leon with his purported signature on the Deed of Extrajudicial Partition with
Quitclaim will readily reveal that the latter is a forgery.  As aptly held by the CA, such variance cannot be
attributed to the age or the mechanical acts of the person signing. 

Because the Extrajudicial Partition and Quitclaim is a forgery, the Deed of Absolute of Sale executed by
Rodolfo in favor of Alcantara is not binding upon the parties.

1) No. It is during the delivery that the law requires the seller to have the right to transfer ownership of
the thing sold. In general, a perfected contract of sale cannot be challenged on the ground of the seller’s
non-ownership of the thing sold at the time of the perfection of the contract.
Further, even after the contract of sale has been perfected between the parties, its consummation by
delivery is yet another matter.  It is through tradition or delivery that the buyer acquires the real right of
ownership over the thing sold.

Undisputed is the fact that at the time of the sale, Rodolfo De Leon was not the owner of the land he
delivered to petitioner.  Thus, the consummation of the contract and the consequent transfer of ownership
would depend on whether he subsequently acquired ownership of the land in accordance with Article
1434 of the Civil Code. Therefore, we need to resolve the issue of the authenticity and the due execution
of the Extrajudicial Partition and Quitclaim in his favor.

 2) No. As a general rule, the due execution and authenticity of a document must be reasonably
established before it may be admitted in evidence. Notarial documents, however, may be presented in
evidence without further proof of their authenticity, since the certificate of acknowledgment is prima facie
evidence of the execution of the instrument or document involved. To contradict facts in a notarial
document and the presumption of regularity in its favor, the evidence must be clear, convincing and more
than merely preponderant.

 The CA ruled that the signature of Hermoso De Leon on the Extrajudicial Partition and Quitclaim was
forged.  However, this factual finding is in conflict with that of the RTC.  While normally this Court does
not review factual issues, this rule does not apply when there is a conflict between the holdings of the CA
and those of the trial court, as in the present case.

 After poring over the records, the SC finds no reason to reverse the factual finding of the appellate court. 
A comparison of the genuine signatures of Hermoso De Leon with his purported signature on the Deed of
Extrajudicial Partition with Quitclaim will readily reveal that the latter is a forgery.  As aptly held by the
CA, such variance cannot be attributed to the age or the mechanical acts of the person signing. 

MITSUI BUSSAN KAISHA vs. MANILA E.R.R. & L. CO

 FACTS

 “Coal tax case” On December 23, 1914, the Legislature passed Act No. 2432 imposing a specific tax of
P1.00 per metric ton on coal. The Act was later amended by Act. 2445, and the provision was inserted,
“Whenever any person has prior to the enactment of this law entered into a contract… the burden of said
tax or increased rate of tax shall be borne by the person to whom said article is furnished pursuant to such
contract, unless the parties have agreed or shall agree otherwise.”

Prior to the enactment of Act No. 2432 and Act 2445, Mitsui Bussan Kaisha had contracted to sell large
quantities of coal to the Manila Electric Railroad and Light Company. The basic price fixed in the
contract was P9.45 per long ton but it was stipulated that the price was subject to modification “in
proportion to variations in calories and ash content, and not otherwise.” This means that the price could
be made certain by the application of known factors.

From March to October 1915, Mitsui brought to Manila from Japan 11,874.75 metric tons for delivery
and paid the new internal revenue tax imposed by Acts No. 2432 and 2445. When Mitsui demanded
reimbursement of the P11,874.75 taxes it paid, Manila E.R.R. & L. refused saying that Mitsui was
obligated to deliver at that price and incidentally was bound to bear any expense necessary to enable it so
to deliver coal to the defendant, and that the parties had agreed that the internal-revenue tax should be
paid that the seller.

ISSUES: 

1. Is the contract to sell at a FIXED PRICE within the contemplation of the law stating “unless the
parties have agreed or shall agree otherwise”?

2. The contract states “in proportion to variations in calories and ash content, and not otherwise.”
Can this be considered that the parties have already agreed as to the fixed price and therefore the
seller shall bear the additional tax burden?

3. Whether or not the plaintiff can demand reimbursement of the taxes paid from the defendant,
basing its claim upon the provision above quoted from Act No. 2445

RULING:

1.YES. The words “unless the parties have agreed or shall agree otherwise” contemplates the case
where express provision has been made with direct reference to the burden of such internal
revenue taxes as the Legislature might impose. The very purpose of the phrase was to evade the
effect of the implication that the seller should bear all the expenses necessary to enable It to
fulfill the principal obligation, and to put the burden of the new tax on the purchaser in the
absence of express stipulation to the contrary. Evidently the intent of the Legislature was to
relieve the person who had bound himself to make deliveries at a fixed price. 

2. NO. The stipulation between Mitsui and Manila E.R.R.&L has exclusive reference to the quality
of the coal delivered, and has no other purpose than to supply a means of ascertaining the value of
the coal by determining its utility in combustion. It has no bearing upon liability for the internal-
 revenue tax.

3. Yes, under Article 1158 of the Civil Code any person who makes payment for the account of
another may, in any case recover from the debtor the sum so paid out, at least in the extent to
which the payment may have been beneficial to the debtor.

ACABAL v. ACABAL

FACTS:
 Villaner’s parents owned a parcel of land situated in Barrio Tanglad, Manjuyod, Negros Oriental,
containing an area of 18.15 hectares more or less. By a deed of Absolute Sale, his parents transferred for
P2,000.00 ownership of the said land to him, who was then married to Justiniana Lipajan. After the
foregoing transfer, Villaner became a widower.

Subsequently, he executed a deed conveying the same property in favor of Leonardo. Villaner
was later to claim that while the document was actually a Deed of Absolute Sale, what he signed was a
document captioned as “Lease Contract.”, wherein he leased for 3 years the property to Leonardo at
P1,000 per hectare and which was witnessed by two women employees of one Judge Villegas.

Villaner filed a complaint against Leonardo and Ramon Nicolas (to whom Leonardo in turn
conveyed the property) for annulment of the deeds of sale. The complaint was later amended to implead
his eight children as party plaintiffs.

TRIAL COURT’S DECISION:

It ruled in favor of defendants and dismissed the complaint.

CA’S DECISION:
It reversed the ruling of the trial court, holding that the Deed of Absolute Sale was simulated and
fictitious.

ISSUE:
WON the Deed of Absolute Sale is valid.

RULING:
YES. It is a basic rule in evidence that the burden of proof lies on the party who makes the
allegations – ei incumbit probatio, qui dicit, non qui negat; cum per rerum naturam factum negantis
probatio nulla sit. If he claims a right granted by law, he must prove it by competent evidence, relying on
the strength of his own evidence and not upon the weakness of that of his opponent.

More specifically, allegations of a defect in or lack of valid consent to a contract by reason of

fraud or undue influence are never presumed but must be established not by mere preponderance of
evidence but by clear and convincing evidence. For the circumstances evidencing fraud and
misrepresentation are as varied as the people who perpetrate it in each case, assuming different shapes
and forms and may be committed in as many different ways.

In the case at bar, it was incumbent on the plaintiff-herein respondent Villaner to prove that he
was deceived into executing the Deed of Absolute Sale. Except for his bare allegation that the transaction
was one of lease, he failed to adduce evidence in support thereof. His conjecture that "perhaps those
copies of the deed of sale were placed by Mr. Cadalin under the documents which I signed the contract of
lease," must fail, for facts not conjectures decide cases.

In Villaner’s claim that two women employees of Judge Villegas signed as witnesses to the deed
but that the signatures appearing thereon are not those of said witnesses, the same must be discredited in
light of his unexplained failure to present such alleged women employee-witnesses.

In another vein, Villaner zeroes in on the purchase price of the property — ₱10,000.00 — which
to him was unusually low if the transaction were one of sale. To substantiate his claim, Villaner presented
Tax Declarations covering the property for the years 1971,41 1974,42 1977,43 1980,44 1983,45 1985,46
as well as a Declaration of Real Property executed in 1994.47
 It bears noting, however, that Villaner failed to present evidence on the fair market value of the
property as of April 19, 1990, the date of execution of the disputed deed. Absent any evidence of the fair
market value of a land as of the time of its sale, it cannot be concluded that the price at which it was sold
was inadequate. Inadequacy of price must be proven because mere speculation or conjecture has no place
in our judicial system

Even, however, on the assumption that the price of ₱10,000.00 was below the fair market value
of the property in 1990, mere inadequacy of the price per se will not rule out the transaction as one of
sale. For the price must be grossly inadequate or shocking to the conscience such that the mind revolts at
it and such that a reasonable man would neither directly nor indirectly be likely to consent to it.

NHA v. Grace Baptist Church

Facts: 
Respondent Church applied to purchase lots from a Resettlement Project in Cavite. Petitioner approved
the respondent’s application. Respondents then proceeded to possess the land and made improvements.
The Respondents received the letter from the petitioner duly approving the sale of the subject lots but in a
price not declared to them by the NHA Field Office. Petitioner returned the check stating that the amount
was insufficient considering that the price of the properties had changed. The Church made demands to
the petitioner but the latter refused to accept the payment.
The Church instituted a complaint for specific performance and the trial court ruled that there was a valid
contract of sale between the parties and ordered that the petitioners reimburse the respondent Church the
overpayment made for the lots. NHA appealed the case and the appellate court affirmed the trial court’s
decision that there was a valid contract of sale but held that the petitioner sell the lots at the price
approved by the NHA.
A motion for reconsideration was filed but was denied.
Issue:
 Whether or not  there was a valid contract of sale.
Ruling: 
There was no contract at all.
The principle of estoppel will not apply in this case because it does not operate against the Government
for the acts or inaction of its agents. The case will cover the principle of equity under the law ad will
require the determination of the laws that will govern. Contracts, once perfected, are binding upon the
parties and obligations arising from it have the force of law between them and should be complied in
good faith. However, contracts are not the only source of law that govern obligations. A contract must not
run in contrary to law, morals, good customs, public order and public policy.
The offer of the NHA to sell the subject property was not accepted by the respondent. Thus, the alleged
contract involved in this case should be more accurately denominated as inexistent. There being no
concurrence of the offer and acceptance, it did not pass the stage of generation to the point of perfection.
As such, it is without force and effect from the very beginning or from its incipiency, as if it had never
been entered into, and hence, cannot be validated either by lapse of time or ratification. Equity cannot
give validity to a void contract, and this rule should apply with equal force to inexistent contracts.
The Church, despite knowledge that its intended contract of sale with the NHA had not been perfected,
proceeded to introduce improvements on the disputed land. On the other hand, the NHA knowingly
granted the Church temporary use of the subject properties and did not prevent the Church from making
improvements thereon. Thus, the Church and the NHA, who both acted in bad faith, shall be treated as if
they were both in good faith.
The case was remanded back to the trial court to access the value of the improvements made on the land
and fix the terms of the lease if the parties so agree