Professional Documents
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Sales Digest 3
Sales Digest 3
RELEVANT FACTS
Plaintiff spouses seek recovery of the disputed parcels of land formerly owned by Victorino Nool from
defendants, Anacleto Nool and Emilia Nebre. Plaintiffs were in dire need of money after they obtained a
loan from the DBP, secured by the real estate mortgage. Upon failing to pay the loan, the mortgage was
foreclosed. Anacleto Nool redeem the foreclosed properties from DBP and the properties were
transferred and obtained by Anacleto.
As part of their understanding, Anacleto agreed to buy from Conchita the 2 parcels of land , for a total
price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the balance of
P14,000.00, the plaintiffs were to regain possession of the 2 hectares of land, which amounts spouses
Anacleto Nool and Emilia Nebre failed to pay.
Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the
money to redeem the same; defendant Anacleto having been made to believe, then, that his sister,
Conchita, still had the right to redeem the said properties.
ISSUE
Whether there is a valid sale of the subject parcels of land in this case.
RULING
No.
It is clear that the sellers can no longer deliver the object of the sale to the buyers, as the buyers
themselves have already acquired title and delivery thereof from the rightful owner, the DBP. Petitioner’s
contention in invoking Article 1370 of the Civil Code is untenable since the aforementioned article is
applicable only to valid and enforceable contracts. The sellers no longer had any title to the property at
the time of sale. Since the evidence presented (Exhibit D), the alleged contract of repurchase, was
dependent on the validity of Exhibit C, it is itself void.
Exhibit D 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.
Further, 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.
Article 1505 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.”
Spouses De Leon are the owners of a parcel of land situated in the Municipality of San Manuel,
Pangasinan with an area of Four Thousand Two Hundred Twelve square meters more or less.
Respondent Hermoso De Leon inherited the said lot from his father Marcelino De Leon by virtue of a
Deed of Extra-Judicial Partition. Said lot is covered by Original Certificate of Title No. 22134 of the Land
Records of Pangasinan.
Sometime 1960s, 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. Juan, 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
Spouses De Leon demanded the annulment of the document and re-conveyance but defendants refused.
Petitioner, Aurora Alcantara-Daus averred that she bought the land in question in good faith and for
value on December 1975 and that she has been in continuous, public, peaceful, open possession over the
same and has been appropriating the produce thereof without objection from anyone.
The RTC of Urdaneta, Pangasinan rendered its Decision in favor of herein petitioner. It ruled that
respondents’ 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 favor of
Rodolfo de Leon was presumptively authentic.
ISSUE
RULING
Negative.
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.
Article 1460: A thing is determinate when it is particularly designated or physically segregated from all
others of the same class.
The requisites that a thing be determinate is satisfied if at the time the contract is entered into, the thing is
capable of being made determinate without the necessity of a new or further agreement between the
parties.
RELEVANT FACTS
Eulogio Atilano I bought a parcel land, subdivided it into 5 and built his house on one of the portions. He
sold one portion to his brother Eulogio Atilano II upon which the latter also built his house. The titles to
the lots were obtained at once. However, it was discovered many years later that the title of Atilano I’s lot
pertained to the lot sold to Atilano II, and the latter’s title conversely pertained to the lot of Atilano I
which had a much bigger area. Atilano II’s family sought to obtain the land on the force of the title.
The Court denied their plea. It held that the families are in possession of the lots which the contracting
parties have intended. There was only a mistake with the content of the instruments thus reformation
may be sought; however, this is no longer needed since the intent of the parties have already been carried
out. The parties must only convey to each other a document reflecting the correct description of their lots.
ISSUE
Whether the heirs of Atilano II are entitled to acquire the subject lot as stated in the Deed of Sale.
RULING
No.
The portion correctly referred to as lot No. 535A was already in the possession of the Atilano 2, who had
built a house on it even before Atilano 1 had sold it to him. Atilano 1 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.
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 535E, 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.
Thus, 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.
CASE 24: Melliza v. City of Iloilo, 23 SCRA 477 (1968).
RELEVANT FACTS
On November 27, 1931 petitioner Juliana Melliza, who owned three parcels of residential land, 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
RULING
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.
CASE 25: Carabeo v. Dingco, 647 SCRA 200 (2011).
RELEVANT FACTS
Petitioner entered into a contract named as Kasunduan s Bilihan ng Karapatan sa Lupa” with respondent
spouses whereby the former ageed to sell his rights over a parcel of unregistered land located at Orani,
Bataan for Php 38,000.00.
Upon signing, the spouses paid and initial amount of Php 10,000 and the remaining balance will be paid
on Spetember 1990. Upon paying, the petitioner refuse to accept the amount due to an on-going dispute
over the subject property. The respondents, however, gave the petitioner small sums of money, which is
allegedly given due to the request of the petitioner.
Petitioner still refuses to accept the subsequent payments for the reason that he would register first the
land. Despite the successful registration of the land, the petitioner still declined. Thus, the respondents
file a complaint before the Katarungang Pambarangay which both parties failed to reach a settlement.
Hence, the filing of a complaint before RTC.
In the petitioner’s answer in the complaint, he alleged that the sale was void for lack of object certain. The
kasunduannot having specified the metes and bounds of the land. In addition to that, he alleged that
assuming that the validity of the kasunduan is upheld, the respondent failed to comply with their
reciprocal obligation in paying the balance of the P28,000 on September 1900. Thus, forcing him to accept
the installment payments.
After the case was submitted for decision, the petitioner passed away. However, the records do not show
that petitioner’s counsel informed the lower court of his death and that proper substitution was effected.
The RTC ruled in favor of the respondents ordering them to sell their rights over the land and to pay the
costs of suit. The CA affirmed the decision of the lower court.
ISSUE
RULING
I. Even though the kasunduan did not specify the technical boundaries of the property, it does 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.
II. The question as to whether an action survives or not depends on the nature of the action and the
damage sued for. In the causes of action which survive, the wrong complained [of] affects
primarily and principally property and property rights, the injuries to the person being merely
incidental, while in the causes of action which do not survive, the injury complained of is to the
person, the property and rights of property affected being incidental.
Thus, in the present case, the respondents are pursuing a property right arising from the
kasunduan, whereas petitioner is invoking nullity of the kasunduan to protect his proprietary
interest. Since the action involves property rights, it survives. Assuming arguendo, however, that
the kasunduan is deemed void, there is a corollary obligation of petitioner to return the money
paid by respondents.
Article 1474
CASE 26: NHA v. Grace Baptist Church, 424 SCRA 147 (2004).
RELEVANT 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.
ISSUE
RULING
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.
Article 1475
RELEVANT FACTS
Teodoro Husain sold the land under dispute for 30 pesos to Serapio Chichirita with the right to
repurchase within 6 years. Teodoro transferred his right to his sister, Graciana Husain. Graciana paid the
redemption price and later sold the land to Elias Gallar for a cattle. Possession of the land, together with
the owner's duplicate of the certificate of title of Teodoro Husain, was delivered on the same occasion to
Gallar, who since then has been in possession of the land. A couple of years after, Gallar filed this suit in
the Court of Instance of Iloilo on October 10, 1960 to compel Hermenegilda and Bonifacio Husain, as heirs
of Teodoro Husain, to execute a deed of conveyance in his favor so that he could get a transfer certificate
of title. He also asked for damages. The Husains countered by saying that Graciana already paid the
redemption price thus their father had already reacquired ownership over the same. They also claim that
the action of Elias has already PRESCRIBED.
ISSUE
RULING
I. Yes. The right of repurchase may be exercised only by the vendor in whom the right is
recognized by contract or by any person to whom the right may have been transferred. Graciana
Husain must, therefore, be deemed to have acquired the land in her own right, subject only to
Teodoro Husain's right of redemption. As the new owner she had a perfect right to dispose of the
land as she in fact did when she exchanged it for a cattle with Gallar.
II. No, the action is imprescriptible. This action is not for specific performance; all it seeks is to quiet
title, to remove the cloud cast on appellee's ownership as a result of appellant's refusal to
recognize the sale made by their predecessor. And, as plaintiff-appellee is in possession of the
land, the action is imprescriptible. Appellant's argument that the action has prescribed would be
correct if they were in possession as the action to quiet title would then be an action for recovery
of real property which must be brought within the statutory period of limitation governing such
actions.
CASE 28: The Estate of Pedro C. Gonzales v. Heirs of Marcos Perez, 605 SCRA 47 (2009)
RELEVANT FACTS
The former Municipality of Marikina in the Province of Rizal (now City of Marikina, Metro Manila) used
to own a parcel of land located in Barrio Concepcion. The said property was subdivided into three (3)
lots, namely, lots A, B and C, per subdivision plan.
On January 14, 1966, the Municipal Council of Marikina passed Resolution No. 9, series of 1966 which
authorized the sale through public bidding of Municipal Lots A and C. Public bidding was conducted
wherein Pedro Gonzales was the highest bidder. Two days thereafter, the Municipal Council of Marikina
issued Resolution No. 75 accepting the bid of Pedro. Thereafter, a deed of sale was executed in favor of
the latter which was later forwarded to the Provincial Governor of Rizal for his approval. The Governor,
however, did not act upon the said deed.
Pedro sold to Marcos Perez a portion of Lot C, denominated as Lot C-3. The contract of sale was
embodied in a Deed of Sale which, however, was not notarized. To segregate the subject property from
the remaining portions of Lot C, Marcos had the same surveyed wherein a technical description of the
subject lot was prepared by a surveyor. Subsequently, Pedro and Marcos died.
The Municipality of Marikina, through its then Mayor Rodolfo Valentino, executed a Deed of Absolute
Transfer of Real Property over Lots A and C in favor of the Estate of Pedro C. Gonzales. Subsequently,
herein petitioners executed an extra-judicial partition wherein Lot C was subdivided into three lots. As a
result of the subdivision, new titles were issued wherein the 370-square-meter portion of Lot C-3 is now
denominated as Lot C-1. Respondents sent a demand letter to one of herein petitioners asking for the
reconveyance of the subject property. However, petitioners refused to reconvey the said lot. As a
consequence, respondents filed an action for "Annulment and/or Rescission of Deed of Absolute Transfer
of Real Property x x x and for Reconveyance with Damages.".
The RTC rendered its Decision DISMISSING the complaint subject of the case in caption for lack of merit;
DECLARING VALID both Transfer Certificates of Title issued by the Register of Deeds of Marikina. It
ruled that since the Deed of Sale executed between Pedro and Marcos was not notarized, the same is
considered void and of no effect. In addition, the trial court also held that Pedro became the owner of the
subject lot only on February 7, 1992; as such, he could not have lawfully transferred ownership thereof to
Marcos in 1966.
Herein respondents appealed the RTC Decision to the CA. The CA rendered its presently assailed
Decision. The instant Appeal is hereby GRANTED and the assailed Decision dated February 2, 1998 is
REVERSED and SET ASIDE. TCT No. 244447 and partially, TCT No. 244448, with respect to five (5)
square meters, are declared NULL and VOID. The CA held that a sale of real property, though not
consigned in a public instrument, is nevertheless valid and binding among the parties and that the form
required in Article 1358 of the Civil Code is not essential to the validity or enforceability of the
transactions but only for convenience.
ISSUE
Whether the Deed of Sale failed to meet the solemnity requirements provided under the law for its
validity.
RULING
As regards the municipal transactions specified in Section 2196 of the Revised Administrative Code, the
Provincial Governor has two courses of action to take - either to approve or disapprove the same. And
since absence of such approval does not necessarily render the contract entered into by the municipality
null and void, the transaction remains voidable until such time when by subsequent unfavorable action
of the governor, for reasons of public interest, the contract is thereby invalidated.
The pending approval or disapproval by the Provincial Governor of a contract entered into by a
municipality which falls under the provisions of Section 2196 of the Revised Administrative Code, such
contract is considered voidable. In the instant case, there is no showing that the contract of sale entered
into between Pedro and the Municipality of Marikina was ever acted upon by the Provincial Governor.
Hence, consistent with the rulings enunciated above, the subject contract should be considered voidable.
Voidable or annullable contracts, before they are set aside, are existent, valid, and binding, and are
effective and obligatory between the parties.
There is no dispute that Pedro took control and possession of the said lot immediately after his bid was
accepted by the Municipal Government of Marikina. This only shows that upon the perfection of the
contract of sale between the Municipality of Marikina and Pedro, the latter acquired ownership of the
subject property by means of delivery of the same to him.
The execution of the Deed of Absolute Transfer of Real Property and the issuance of the TCT could no be
considered as the operative acts.
CASE 29: Salonga v. Concepcion, 470 SCRA 291 (2005)
RELEVANT FACTS
The spouses Salonga were the owners of the eight (8) prime parcels of land located in Dagupan City.
They had a commercial building with four floors which stood on their property located along A.B.
Fernandez Avenue, Dagupan City. The spouses leased the building to traders and merchants, and lived
in a house along Arellano Street. The house stood on a lot which they also owned. The spouses loaned
from several banks and mortgaged several of their properties in order to finance their business. Due to an
earthquake that damaged their building, they were unable to pay their loans and some of their properties
were foreclosed. They asked help from respondent to redeem their properties with the agreement that the
building would be sold after 2 months and that the loands would be paid. Due to this agreement a deed
of absolute sale was made in favor of respondents with the condition that it will not be registered. The
loan was not repayed and the building was subsequently transferred in the name of respondents.
ISSUE
RULING
Affirmative.
First, the petitioners were hard-pressed to pay their account to the respondents in the total of the
principla amount of P3, 198, 886.47; the said amount paid by the respondents for the account of the
petitioners to the PNB, the Associated Bank and the DBP, excluding the amount of 36% interest a month
of 36% interest per annum.
Second, it was made to appear under the August 31, 1993 Deed of Absolute Sale that the petitioners had
sold their five parcels of land to the respondents for the principal amount of P575,000.00, and that the
petitioners received the said amount from the respondents. However, at the time of the execution of the
said deed, the petitioners were indebted to the respondents for the principal amount of P586, 520.50,
which the respondents had remitted to the Associated Bank for the account of the petitioners. It is
incredible that the petitioners would sell the said parcels of land to the respondents, and that the latter,
would remit the purchase price of P575,000.00 to the petitioners, and retain the said amount to be applied
as payment to the petitioner’s accounts P586, 520.50.
Third, respondent Manuel Concepcion had earlier signed on March 10, 1993 an undertaking that he
would not register the deed of absolute sale as long as the petitioners will pay their outstanding account
plus interests thereon at the rate of 3% per month. There was also gross inadequacy of price in this case as
it appeared that their commercial building was sold for only 2M while the actual market price was 10M.
Articles 1498 - 1601
RELEVANT FACTS
Spouses Villamor executed a deed of sale covering a parcel of land in favor of petitioners Spouses
Santiago. The land in dispute was occupied by spouses Villamor, Sr.’s children, herein respondents
Mancer Villamor, Carlos Villamor, and Domingo Villamor, Jr. (Villamor children)
Spouses Santiago demanded the Villamor children to vacate the property but the latter refused to do so.
Villamor children argued that they are the lawful owners of the land since they acquired the same from
San Jacinto Bank. Thus, spouses Santiago filed an action for quieting of title before the RTC. The RTC
ruled in favor of spouses Santiago. On appeal, the CA reversed the RTCs decision on the ground that
spouses Santiago failed to prove their legal or equitable title to the land.
ISSUE
RULING
Quieting of title is a common law remedy for the removal of any cloud, doubt or uncertainty affecting
title to real property. The plaintiffs must show not only that there is a cloud or contrary interest over the
subject real property,but that they have a valid title to it.Worth stressing, in civil cases, the plaintiff must
establish his cause of action by preponderance of evidence; otherwise, his suit will not prosper.
After considering the parties’ evidence and arguments, we agree with the CA that the petitioners failed to
prove that they have any legal or equitable title over the disputed land.
Article 1477 of the Civil Code recognizes that the "ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof." Related to this article is Article 1497 which
provides that "the thing sold shall be understood as delivered, when it is placed in the control and
possession of the vendee."
With respect to incorporeal property, Article 1498 of the Civil Code lays down the general rule: the
execution of a public instrument "shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred." However, the
execution of a public instrument gives rise only to a prima facie presumption of delivery, which is
negated by the failure of the vendee to take actual possession of the land sold."A person who does not
have actual possession of the thing sold cannot transfer constructive possession by the execution and
delivery of a public instrument."
In this case, no constructive delivery of the land transpired upon the execution of the deed of sale since it
was not the spouses Villamor, Sr. but the respondents who had actual possession of the land. The
presumption of constructive delivery is inapplicable and must yield to the reality that the petitioners
were not placed in possession and control of the land.
CASE 31: Caoibes, Jr. v. Caoibes-Pantoja, 496 SCRA 273 (2006)
RELEVANT FACTS
Herein petitioner and respondent entered to a contract of sale stating that a certain lot will be transferred,
ceded and conveyed by the former in favour of the latter in consideration for Php 19,000.00.
The agreement further stated that respondent will subrogated or substituted to whatever rights, interest
or representations petitioners may have pending in the land registration proceeding.
After the execution of the parties, about fourteen years after, respondent filed a motion to intervene and
be substituted as applicant in the Land Registration Court. The Land Registration Court denied the
motion. Pantoja filed a complaint before the Regional Trial Court (RTC) for specific performance of the
agreement. Caoibes, Jr., et al. opposed on the grounds of prescription. The RTC ruled in favor of Caoibes,
Jr., et al. On appeal, the Court of Appeals (CA) reversed the RTC, holding that prescription had not yet
set in.
ISSUE
RULING
The law does not require that the application for registration be amended by substituting
the "buyer" or the "person to whom the property has been conveyed" for the applicant. Neither
does it require that the "buyer" or the "person to whom the property has been conveyed" be a
party to the case. He may thus be a total stranger to the land registration proceedings.
The agreement of the parties is analogous to a deed of sale in favor of respondent, it having transferred
ownership for and in consideration of her payment of the loan in the principal amount of P19,000
outstanding in the name of one Guillermo C. Javier. The agreement having been made through a public
instrument, the execution was equivalent to the delivery of the property to respondent.
CASE 32: Norkis Distributors v. CA, 193 SCRA 694 (1991)
RELEVANT FACTS
Alberto Nepales bought from Norkis Distributors, Inc. a brand-new Yamaha motorcycle payable by a
means of Letter of Guaranty from the Development Bank of the Philippines (DBP). As security, Alberto
executed a chattel mortgage on the motorcycle in favor of DBP. To facilitate the chattel mortgage, Norkis
Distributors issued a sales invoice showing that the contract of sale was perfected. Further, the
motorcycle was registered with the Land Transportation Office (LTO) in the name of Alberto. The
motorcycle was delivered to a certain Julian Nepales who allegedly was an agent of Alberto, which the
latter denied being his agent.
Later on, the motorcycle met an accident which resulted to its total wreck. DBP released the loan
proceeds to Norkis Distributors, which prompted Alberto to demand the delivery of the motorcycle.
When Norkis Distributor could not deliver, Alberto filed an action for specific performance with damages
before the Regional Trial Court (RTC). Norkis Distributor answered that the motorcycle had been
delivered already. The RTC ruled in favor of Alberto, which was affirmed by the Court of Appeals (CA).
Hence, Norkis Distributor filed a Petition before the Supreme Court averring that the motorcycle has
already been delivered as evidenced by the issuance of the Sales Invoice and registration of the
motorcycle under the name of Alberto.
ISSUE
RULING
Affirmative.
The act of delivery whether constructive or actual, must be coupled of delivering the thing, without
which the act is insufficient. In other words, the critical factor which gives legal effect to the act is the
actual intention of the vendor to deliver, and its acceptance by the vendee. Without that intention, there is
no tradition.
In the present case, the issuance of sales invoice did not prove the transfer of ownership as it is nothing,
but a detailed statement of the thing sold. It is also not considered as a bill of sale. Further, with the said
issuance and the subsequent registration in the name of Alberto, Norkis Distributor did not intend to
transfer the title to Alberto. It only made so to facilitate the execution of the chattel mortgage in favor of
DBP. Hence, there was no tradition.
As such, the Civil Code provides that the things sold remain at the seller’s risk until ownership thereof is
transferred to the buyer, in the absence of an express assumption of risk by the buyer, for there was
neither an actual or constructive delivery of the thing.
CASE 33: Asset Privatization Trust v. T.J. Enterprises, 587 SCRA 481 (2009)
RELEVANT FACTS
The development, exploration and utilization of the mineral deposits in the Surigao Mineral Reservation
have been authorized by the Republic Act No. 1528, as amended by Republic Act No. 2077 and Republic
Act No. 4167, by virtue of which laws, a memorandum of agreement was drawn on July 3, 1968, whereby
the Republic of the Philippines thru the Surigao Mineral Reservation Board, granted MMIC the exclusive
right to explore, develop and exploit nickel, cobalt, and other minerals in the Surigao Mineral
Reservation. MMIC is a domestic corporation engaged in mining with respondent Jesus S. Cabarrus Sr. as
president and among its original stockholders.
The Philippine government undertook to support the financing of MMIC by purchase of MMIC
debenture bonds and extension of guarantees. Further, from the DBP and/or the government financing
institutions to subscribe in MMIC and issue guarantee/s of foreign loans or deferred payment
arrangements secured from the US Eximbank, Asian Development Bank (ADB), Kobe steel of amount
not exceeding US$100 million.
On July 13, 1981, MMIC, PNB, and DBP executed a mortgage trust agreement whereby MMIC as
mortgagor, agreed to constitute a mortgage in favor of PNB and DBP as mortgages, over all MMIC assets;
subject of real estate and chattel mortgage executed by the mortgagor, and additional assets described
and identified, including assets of whatever kind, nature or description, which the mortgagor may
acquire whether in substitution of, in replenishment or in addition thereto.
Due to the unsettled obligations, a financial restructuring plan (FRP) was suggested, however not
finalized. The obligations matured and the mortgage was foreclosed. The foreclosed assets were sold to
PNB as the lone bidder and were assigned to the newly formed corporations namely Nonoc Mining
Corporation, Maricalum Mining and Industrial Corporation and Island Cement Corporation. In 1986,
these assets were transferred to the asset privatization trust. On February 28, 1985, Jesus S. Cabarrus Sr.
together with the other stockholders of MMIC, filed a derivative suit against DBP and PNB before the
RTC of Makati branch 62, for annulment of foreclosures, specific performance and damages.
The suit docketed as civil case no. 9900, prayed that the court: 1.) Annul the foreclosures, restore the
foreclosed assets to MMIC, and require the banks to account for their use and operation in the interim; 2.)
Direct the banks to honor and perform their commitments under the alleged FRP; 3.) Pay moral and
exemplary damages, attorney’s fees, litigation expenses and costs. A compromise and arbitration
agreement was entered by the parties to which committee awarded damages in favor of Cabarrus.
ISSUE
RULING
Yes. The point need not be belabored that PNB and DBP had the legitimate right to foreclose of the
mortgages of MMIC whose obligations were past due. The foreclosure was not a wrongful act of the
banks and, therefore, could not be the basis of any award of damages. There was no financial
restructuring agreement to speak of that could have constituted an impediment to the exercise of the
banks' right to foreclose. Moreover, PNB and DBP had to initiate foreclosure proceedings as mandated by
P.D. No. 385, which took effect on January 31, 1974. The decree requires government financial institutions
to foreclose collaterals for loans where the arrearages amount to 20% of the total outstanding obligations.
Private respondents' thesis that the foreclosure proceedings were null and void because of lack of
publication in the newspaper is nothing more than a mere unsubstantiated aliegation not borne out by
the evidence. In any case, a disputable presumption exists in favor of petitioner that official duty has been
regularly performed and ordinary course of business has been followed.
CASE 34: Santos v. Santos, 366 SCRA 395 (2001)
RELEVANT FACTS
Petitioner Zenaida M. Santos is the widow of Salvador Santos. Salvador Santos is a brother of private
respondents Calixto, Alberto, and Antonio, all of whom have the surname Santos, as well as Rosa Santos-
Carreon.
On January 19, 1959, the couple legally transferred ownership of the properties to their children Salvador
and Rosa by means of a deed of sale that had been executed. On November 20, 1973, Rosa subsequently
surrendered her portion of the TCT to Salvador, which ultimately led to the issuing of brand new TCT. In
spite of the fact that the property was transferred to Salvador, Rosalia maintained the leases on the
apartment units and continued to collect the rents.
Salvador passed away on January 9, 1985, and Rosalia passed away the following month, on February 9,
1985. A little time later, the petitioner Zenaida claimed payment for the rent from Antonio Hombrebueno,
who was Rosalia's renter. She stated that she was Salvador's successor. After the other party failed to pay,
Zenaida initiated eviction proceedings against the other party at the Metropolitan Trial Court of Manila.
In the end, the court ruled in Zenaida's favor and evicted the other party.
On January 5, 1989, private respondent filed an action against petitioner in the Regional Trial Court of
Manila for reconveyance of property with preliminary injunction. In their complaint, they alleged that the
two deeds of sale were simulated because there was no consideration exchanged between the parties. The
petitioner, on the other hand, denied the material allegations in the complaint, and she further alleged
that the respondents' right to reconveyance was already barred by prescription and laches, taking into
consideration the fact that more or less twelve (12) years had elapsed between the date of sale from Rosa
to Salvador and the date of his death, and that from his death up to the filing of the case for
reconveyance, four (4) years have elapsed. The petitioner also alleged that the respondents. In addition,
the petitioner contends that an action to annul a contract for lack of consideration must be brought within
ten (10) years of the contract's execution, and even if it is assumed that the cause of action has not yet
expired, the respondents are still guilty of laches because they have failed to take any action for a
significant amount of time.
Inasmuch as the deeds of sale were false, the trial court concluded in favor of the private respondents
since the action to assail the same did not prescribe. The judgement made by the trial court was upheld
by the Court of Appeals after it was appealed. Because even after the sale, the original sellers remained in
dominion, control, and possession of the land, it was decided that the subject deeds of sale did not convey
ownership of the subject property onto Salvador.
ISSUE
RULING
Petitioner in her memorandum seeks to expunge the testimony of Rosa Santos-Carreon before the trial
court in view of Sec. 23, Rule 130 of the Revised Rules of Court, otherwise known as the "Dead Man's
Statute." It is too late for petitioner, however, to invoke said rule. The trial court in its order dated
February 5, 1990, denied petitioner's motion to disqualify respondent Rosa as a witness. Petitioner did not
appeal therefrom. Trial ensued and Rosa testified as a witness for respondents and was cross-examined
by petitioner's counsel. By her failure to appeal from the order allowing Rosa to testify, she waived her
right to invoke the dean man's statute. Further, her counsel cross-examined Rosa on matters that occurred
during Salvadors' lifetime. In Goñi vs. CA, 144 SCRA 222, 231 (1986) we held that protection under the
dead man's statute is effectively waived when a counsel for a petitioner cross-examines a private
respondent on matters occurring during the deceased's lifetime. The Court of appeals cannot be faulted in
ignoring petitioner on Rosa's disqualification.
CASE 35: Dy Jr. vs. CA, 198 SCRA 826
RELEVANT FACTS
Wilfredo Dy purchased a truck and a farm tractor through LIBRA which was also mortgaged with the
latter, as a security to the loan. Petitioner, expresses his desire to purchased his brother’s tractor in a letter
to LIBRA which also includes his intention to shoulder its mortgaged. LIBRA approved the request. At
the time that Wilfredo Dy executed a deed of absolute sale in favor of petitioner, the tractor and truck
were in the possession of LIBRA for his failure to pay the amortization. When petitioner finally fulfilled
its obligation to pay the tractor, LIBRA would only release the same only if he would also pay for the
truck. In order to fulfill LIBRA’s condition, petitioner convinced his sister to pay for the remaining truck,
to which she released a check amounting to P22,000. LIBRA however, insisted that the check must be first
cleared before it delivers the truck and tractor.
Meanwhile, another case penned “Gelac Trading Inc vs. Wilfredo Dy” was pending in Cebu as a case to
recover for a sum of money (P12,269.80). By a writ of execution the court in Cebu ordered to seize and
levy the tractor which was in the premise of LIBRA, it was sold in a public auction to which it was
purchased by GELAC. The latter then sold the tractor to Antonio Gonzales.
RTC rendered in favor of petitioner. CA dismissed the case, alleging that it still belongs to Wilfredo Dy.
ISSUE
RULING
NO. The relationship between Libra and the petitioner is not one of sale but still a mortgage. The
payment of the check was actually intended to extinguish the mortgage obligation so that the tractor
could be released to the petitioner. It was never intended nor could it be considered as payment of the
purchase price because the relationship between Libra and the petitioner is not one of sale but still a
mortgage.
The clearing or encashment of the check which produced the effect of payment determined the full
payment of the money obligation and the release of the chattel mortgage. It was not determinative of the
consummation of the sale. The transaction between the brothers is distinct and apart from the transaction
between Libra and the petitioner.
The contention, therefore, that the consummation of the sale depended upon the encashment of the check
is untenable.
CASE 36: Power Commercial and Industrial Corp. v. CA, 274 SCRA 597 (1997)
RELEVANT FACTS
Petitioner asbestos manufacturer Power Commercial and industrial corporation bought the property of
spouses Reynaldo and Angelita Quiambao located in Makati City.
Since there are lessees occupying the subject land, part of the deed of sale is a warranty of respondents
that will defend its title and peaceful possession in favor of the petitioners.
The property is mortgage to PNP and as such, petitioners filed a request to assume responsibility of the
mortgage. Because of petitioners failure to produce the required papers, their petition was denied.
Petitioners allege that the contract should be rescinded because of failure of delivery.
ISSUE
RULING
(1) The purchaser has been deprived of the whole or part of the thing sold;
(2) This eviction is by a final judgment;
(3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and
(4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance
of the vendee.
In the absence of these requisites, a breach of the warranty against eviction under Article 1547 cannot be
declared. Petitioner argues in its memorandum that it has not yet ejected the occupants of said lot, and
not that it has been evicted therefrom.
As correctly pointed out by Respondent Court, the presence of lessees does not constitute an
encumbrance of the land, nor does it deprive petitioner of its control thereof. We note, however, that
petitioner’s deprivation of ownership and control finally occurred when it failed and/or discontinued
paying the amortizations on the mortgage, causing the lot to be foreclosed and sold at public auction. But
this deprivation is due to petitioner’s fault, and not to any act attributable to the vendor-spouses. Because
petitioner failed to impugn its integrity, the contract is presumed, under the law, to be valid and
subsisting
CASE 37: Chua v. CA, 401 SCRA 54 (2003)
RELEVANT FACTS
Encarnacion Valdes-Choy advertised for sale her paraphernal house and lot in Makati. They agreed on a
purchase price of P10,800,000.00. Chua gave P100,000 to Valdes-Choy as earnest money They agreed that
the balance is payable on or before 15 July 1989. Failure to pay balance on or before the said date forfeits
the earnest money. On July 13, 1989, Valdes-Choy as vendor and Chua as vendee signed two Deeds of
Absolute Sale. The first Deed of Sale covered the house and lot for the purchase price of P8,000,000.00.
The second Deed of Sale covered the furnishings, fixtures andmovable properties contained in the house
for the purchase price of P2,800,000.00.
The parties also computed the capital gains tax to amount to P485,000.00. The next day, Valdes-Choy
deposited the P485,000.00 manager's check to her account and check to the counsel who undertook to pay
the capitalgains tax. Chua showed to ValdesChoy a PBCom manager's check for P10,215,000.00
representing the balance of the purchase price. Chua, however, did not give this PBCom manager's check
to Valdes-Choy because the TCT was still registered in the name of Valdes-Choy. Chua required that the
Property be registered first in his name before he would turn over the check to Valdes-Choy.
This angered Valdes-Choy who tore up the Deeds of Sale, claiming that what Chua required was not part
of their agreement. Valdes-Choy demanded the payment of the remaining purchase balance be first
deposited in her account before she transfers the title of the property to him. Chua filed a complaint for
specific performance against Valdes-Choy.
ISSUE
Whether the petitioner can comple respondent Choy to transfer the title of the property.
RULING
Negative.
Chua’s condition that a new TCT should first be issued in his name, a found neither in the law nor in the
contract to sell as evidenced by the Receipt. Thus, at this point Chua was not ready, able and willing to
pay the full purchase price which is his obligation under the contract to sell. Chua was also not in a
position to assume the principal obligation of a vendee in a contract of sale, which is also to pay the full
purchase price at the agreed time. Article 1582 of the Civil Code provides that – Art. 1582. The vendee is
bound to accept delivery and to pay the price of the thing sold at the time and place stipulated in the
contract. In this case, the contract to sell stipulated that Chua should pay the balance of the purchase price
“on or before 15 July 1989.”
The signed Deeds of Sale also stipulated that the buyer shall pay the balance of the purchase price upon
signing of the deeds. However, on the agreed date, Chua refused to pay the balance of the purchase price
as required by the contract to sell, the signed Deeds of Sale, and Article 1582 of the Civil Code. Chua was
therefore in default and has only himself to blame for the rescission by Valdes-Choy of the contract to
sell. Accordingly, since Chua refused to pay the consideration in full on the agreed date, which is a
suspensive condition, Chua cannot compel Valdes-Choy to consummate the sale of the Property. Chua
acquired no right to compel Valdes-Choy to transfer ownership of the Property to him.
CASE 38: Raquel-Santos v. CA, 592 SCRA 169 (2009)
RELEVANT FACTS
Finvest incurred liabilities to PSE representing fines and penalties for non-payment of its clearing house
obligations. PSE also received reports that Finvest. was not meeting its obligations its clients. PSE
suspended Finvest from trading. Finvest’s total obligation to PSE totaled to P5,990,839.99. Finvest
promised to settle all obligations to its clients and to PSE subject to verification of the amount due, but
PSE granted Finvest’s request, with the warning that, should Finvest fail to meet the deadline, PSE might
exercise its right to sell Finvest’s membership seat and use the proceeds thereof to settle its obligations to
the PSE, its member-brokers and its clients. Finvest protested the imposition of the deadline for being
arbitrary on the ground that the claims against it had not yet been established.At this juncture, Finvest
filed a Complaint with the SEC for accounting and damages with prayer for a temporary restraining
order and/or preliminary injunction and mandamus.Consequently, notices of garnishment and sale were
issued against Raquel-Santos’ (FINVEST presideny) Manila Golf Shares and Sta. Elena Golf Shares.
On June 29, 2000, the parties entered into an Agreement, approved by the SEC en banc in its Order of July
11, 2000, to remand the case to the Securities Investigation and Clearing Division for service of
summonses to Raquel-Santos and Mallari.
With the enactment of the Securities Regulation Code, the case was transferred to the Regional Trial
Court (RTC), Makati City, and docketed as Civil Case No. 00-1589. On October 2, 2001, the RTC issued an
Order lifting the garnishment. The CA held that the sale of Raquel-Santos’ share in Manila Golf Club was
valid.
ISSUE
RULING
The injured party may choose between the fulfillment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if
the latter should become impossible.
In some contracts of sale, such as the sale of real property, prior physical delivery of the thing sold or its
representation is not legally required, as the execution of the Deed of Sale effectively transfers ownership
of the property to the buyer through constructive delivery. Hence, delivery of the certificate of title
covering the real property is not necessary to transfer ownership.
In the sale of shares of stock, physical delivery of a stock certificate is one of the essential requisites for the
transfer of ownership of the stocks purchased. Clearly, Finvest’s failure to deliver the stock certificates
representing the shares of stock purchased by TMEI and Garcia amounted to a substantial breach of their
contract which gave rise to a right to rescind the sale. Rescission creates the obligation to return the object
of the contract.
In this case, indemnity for damages may be demanded from the person causing the loss.
To rescind is to declare a contract void at its inception and to put an end to it as though it never was.
Rescission does not merely terminate the contract and release the parties from further obligations to each
other, but abrogates it from the beginning and restores the parties to their relative positions as if no
contract has been made.
Mutual restitution entails the return of the benefits that each party may have received as a result of the
contract. In this case, it is the purchase price that Finvest must return. The amount paid was sufficiently
proven by the buy confirmation receipts, vouchers, and official/provisional receipts that respondents
presented in evidence. In addition, the law awards damages to the injured party, which could be in the
form of interest on the price paid, as the trial court did in this case.
CASE 39: Amigo v. Teves, 96 Phil. 252 (1954)
RELEVANT FACTS
In 1937, Macario Amigo and Anacleto Cagalitan executed in favor of their son, Marcelio, a power of
attorney granting him the power to “lease, let, bargain, transfer, convey and sell, remise, release,
mortgage and hypothecate, part or any of the properties . . . upon such terms and conditions, and under
such covenants as he shall think fit."Marcelino, as attorney -in-fact, executed a deed of sale of a parcel of
land for a price of P3,000 in favor of Serafin Teves, stipulating that vendors could repurchase the land
within a period of 18 months from date of sale. It also said that the vendors would remain in land as
lessees for 18 months:
● Lessees shall pay P180 as rent every 6 months from date of agreement
● Period of the lease shall terminate on April 30, 1940
● In case of litigation, lessees shall pay P100 as attorney’s fees
● In case of failure to pay any rental as agreed upon, lease auto terminate and right of ownership of
vendee shall become absolute
In 1939, Spouses Amigo donated to their sons Pastor and Justino (petitioners) several parcels of land
including their right to repurchase the land in litigation. Deed made on public instrument, accepted and
registered in Office of the Register of Deeds. Vendor-lessees paid the rental for the 1st 6 months but not
for the next ones.
Teves, the vendee-lessor, executed an “Affidavit of Consolidation of Title” due to the failure of the lessees
to pay the rent and registered the affidavit in the Office of the Register of Deeds who then issued to Teves
the corresponding transfer of title over the land in question. Justino and Pastor, as donees of the right to
repurchase, offered to repurchase the land from Teves by tendering the redemption price; but Teves
refused saying the ow nership had already been consolidated to him as purchaser a retro. Thus, before
the expiration of the 18th month period for the redemption of the land, donees instituted the present
action.
ISSUE
RULING
Yes, the power of attorney had the power to execute such a deed. Cursory reading showed that the power
granted is so broad it covers the celebration of any contract or covenant. The fact that the agent has acted
in accordance with the wish of his principals can be inferred from their attitude in donating to the herein
petitioners the right to redeem the land under the terms and conditions appearing in the deed of sale
executed by their agent. The lease covenant is a common provision in contracts of sales of land with pacto
de retro. The lease that a vendor executes on the property may be considered as a means of delivery or
tradition by constitutum possessorium.
Where the vendor a continues to occupy the land as lessee, by fiction of law, the possession is deemed to
be constituted in the vendee by this mode of delivery. While the lease covenant may be hard on the
vendor because of the clause for automatic termination of the period of redemption, it is not contrary to
law, morals, or public order, which may void it.
Although it found that the act of the vendee in taking possession of the land by way of compromise
constituted a waiver of the penal provision relative to the acceleration of the period of redemption. The
parties to a contract of this character may legitimately fix any period to please, not in excess of ten years,
for the redemption of the property by the vendor; and the determination of the right of redemption may
be made validly to depend on the delinquency of the vendor-lessee.
CASE 40: Fortune Tobacco Corp. v. NLRC, 200 SCRA 766 (1991)
RELEVANT FACTS
A complaint for illegal dismissal was filed by the private respondents to their employer before NLRC
praying that they be reinstated in the company with full backwages without loss of seniority rights.
NLRC rendered in favor of the private respondents.
Petitioner appealed before NLRC, the modification was made. The latter filed a petition before Supreme
Court but dismissed, making NLRC’s decision final and executory. NLRC came up with the computation.
The said amount was apparently reached by reckoning the computation period to start from OCt. 5, 1985
to August 1990.
Petitioner filed its manifestation which a Deed of Conditional sale was attached—executed between
petitioner and tobacco Redrying, likewise with its own computation of the amounts which should be paid
the private respondents.
On September 29, 1990, the private respondents filed the "Opposition to Manifestation". It alleges that
there was no actual transfer or actual sale of the plant and its facilities in favor of the PTRFCI; that only a
change in name and form has been undertaken by the petitioner, that the properties are still declared in
the name of the petitioner; that the PTRFCI representative, a certain Mr. Angelo Ang, is the plant
manager of the Vigan, Ilocos Sur plant of the petitioner that the control, management, operation and
funding of the plant are in the hands of the petitioner notwithstanding the alleged sale; and that the
computation made by the NLRC is order.
On October 26, 1990, Labor Arbiter Ramon Reyes issued: order holding, among others, that there was no
actual sale between the petitioner and the PTRFCI; that the Deed of Conditional Sale entered into by the
said parties does not state any consideration; and that no actual sale has taken place.
ISSUE
RULING
No actual sale. While the Deed of Conditional Sale was executed on October 17, 1985, it does not
necessarily follow that the plant and its facilities were, ipso facto, sold on that very day.
A careful evaluation of the stipulations of the said agreement will readily show that the petitioner has no
intention to transfer ownership over the plant and its facilities to the vendee unless there is full payment
of the purchase price on the part of the latter. In fact, it is clearly stipulated that ownership over the plant
and its facilities will be transferred to the vendee by way of "a final and absolute deed of sale" only after
such full payment, inclusive of interest charges. The terms and conditions of the agreement speak for
themselves. At any rate, even accepting that the plant and its facilities have been sold on a conditional
basis, there can be no actual sale thereof unless the plant and its facilities are unconditionally conveyed to
the PTRFCI by virtue of "a final or absolute deed of sale" in accordance with the terms and conditions
stated in the agreement between the parties.