August 20, 2008

ORDEN vs. AUREA

FACTS:
Petitioner spouses Orden, owners of two parcels of land at Sibulan, Negros Oriental
covered by TCT with a residential house.
On 29 September 1994, petitioners executed a Deed of Absolute Sale to
respondents spouses Aurea, their heirs, successors and assigns.
Failing to pay the balance of the purchase price, petitioners wrote respondents
Cobile a letter informing of their intention to dispose of the properties to other
interested parties if they will not comply with their promise to pay the remaining
balance. Petitioners, gave respondents Cobile ten days from receipt of the letter to
pay.
Respondents Cobile did not make any further payment. Petitioners did not transfer
the titles to the properties to respondents Cobile.
petitioners sold the properties to Houthuijzen and the titles transferred.
respondents Aurea and Cobile, and Quijano filed a Complaint before the RTC for
Enforcement of Contract and Damages with a Prayer for a Writ of Preliminary
Attachment, Prohibitory Injuction and Restraining Order against petitioners and the
ROD.
The complaint, asked to order petitioners and the ROD for the delivery of the titles
in the names of respondents Cobile; if the titles could not be delivered, petitioners
must pay the whole consideration of the sale plus 20% interest per annum.
petitioners filed their Answer with Counterclaim, They asked dismissal for lack of
cause of action, the Deed of Absolute Sale be rescinded and asked for damages.
RTC dismissed the case for lack of interest to prosecute. respondents filed a MR
which was granted.
spouses Houthuijzen filed Motion to Dismiss, RTC granted ruling they were buyers in
good faith that the complaint could be enforced only against petitioners.
respondents filed a MR which was denied.
During pre-trial conference, the parties agreed on the identities of the parties and
the subject properties.
respondents filed a Motion for Inhibition and was granted.
RTCs judgment ordering the defendants to return to spouses Cobile the
P738,596.28 representing the total amount advanced and to pay 20% interest per
annum.
RTC found that petitioners and Cobile entered into a contract of sale, subject to the
conditions in the promissory note. It was a reciprocal obligation. Since respondents

Cobile already violated the terms, petitioners should have filed for rescission which
he failed to do. The letter was not the rescission envisaged by law, thus open to
contest.
The ownership had passed to Houthuijzen an innocent purchaser for value.
respondents Cobile could not demand specific performance or rescission, for they
failed to comply with the terms and conditions.
neither could petitioners forfeit the P738,596.28 paid by respondents because they
had not rescinded the contract of sale between them either judicially or by notarial
act.
petitioners filed a Notice of Appeal.
the CA affirmed in toto the decision of RTC.
ISSUE:
whether CA erred in holding that the case involves a perfected contract of sale and
that an action for rescission should have been pursued by petitioners.
RULING: Rescission, judicially or by notarial act, is not required to be done by
petitioners. There can be no rescission of an obligation that is still non-existing, the
suspensive condition not having happened. there was no contract to rescind
because from the moment respondent failed to pay on time the contract was
deemed ipso facto rescinded. The reason is that their obligation did not arise. The
remedy of rescission is predicated on a breach of faith by the other party that
violates the reciprocity between them, it does not apply to contracts to sell.
In the exercise of the seller's right to automatically cancel the contract to sell, at
least a written notice must be sent to the defaulter informing him. The act of
petitioners in notifying respondents Cobile of their intention to sell the properties to
other interested persons if respondents failed to pay the balance was sufficient
notice for the cancellation.
the partial payments made by Cobile be returned to them, there being no provision
regarding forfeiture of payments made in any of the documents executed by the
parties. to be just and equitable otherwise, there will be unjust enrichment on the
part of petitioners at the expense of Cobile. the 12% Interest per annum shall also
be paid fully.
Spouses Cobile are liable for moral damages and attorney's fees.

January 28, 2008

DELFIN vs. DELLOTA
FACTS:
the late Dionisia Dorado Delfin, represented by her heirs, was the owner of Lot No.
1213 in Panitan, Capiz with an area of 143,935 square meters covered by an OCT.

Dionisia executed an "Escritura De Venta Con Pacto de Retro" over a 50,000-square

meter in favor of spouses Ildefonso Dellota and Patricia Delfin and Dionisia failed to
exercise her right of redemption.
Dionisia sold another 50,000 square meters to Gumersindo Delea and never
redeemed. Salvador Dellota leased this area from Gumersindo. Dionisia executed a
"Deed of Mortgage and Promise To Sell" in favor of Salvador over a 90,000-square
meter without specifying whether it included the portion sold to Gumersindo.
Dionisia filed with the then CFI for recovery of possession and damages with an
application for a writ of preliminary mandatory injunction.
Gumersindo filed a motion for intervention.
after the proceedings for almost three decades, the RTC rendered judgment
Ordering Dellota to allow redemption of 40,000-square meter, after Cadastre paid
P2,000.
Declaring ownership over the 50,000-square meter to Interventors and heirs of
Delena.
On appeal by Dionisia, the CA affirmed in toto the judgment of RTC. Hence, the
present petition.
ISSUE:
Whether CA erred in not holding that the Deed of Sale with Right of Redemption an
equitable mortgage under Article 1602 of the Civil Code.
RULING:
Jurisprudence recognizes that there is no conclusive test to determine whether a
deed purporting to be a sale on its face is really a simple loan accommodation
secured by a mortgage.5 However it consistently shows that the presence of even
one of the circumstances in Article 1602 suffices to convert a purported contract of
sale into an equitable mortgage.6 In this case, the consideration is "unusually
inadequate." In Aguilar v. Ribato and Gonzales Vila, there is gross inadequacy in
price if a reasonable man will not agree to dispose of his property. In De Ocampo
and Custodio v. Lim,8 this Court held that in sales denominated as pacto de
retro, the price agreed upon should not generally be considered as the just
value of the thing sold, absent other corroborative evidence. Subsequently,
in Buenaventura v. Court of Appeals,9 this Court ruled that there is no requirement
in sales that the price be equal to the exact value of the thing subject matter of the
sale.
There is no reason to conclude that the agreed price was unreasonable or unusually
inadequate. no evidence show that Dionisia did not understand the ramifications of
her signing the "Deed of Sale with Right of Redemption." Nor is there any showing
that she was threatened, forced or defrauded into affixing her signature on the said
contract.

If the terms of the pacto de retro sale were unfavorable to Dionisia, this Court has
no business extricating her from that bad bargain. Courts are not guardians of
persons who are not legally incompetent, like Dionisia.

September 5, 2007
DIZON vs. DIZON
petitioner Domingo A. Dizon, , purchased from his nephew, respondent Elpidio R.
Dizon a house and lot on Limay St., Tondo, Manila. respondent failed to deliver the
house and lot, It appears that the co-owner of the lot, his brother Ricardo, did not
give a written authority to sell his share. petitioner filed with the (RTC), for
specific performance and money with damages.
RTC rendered a Decision rescinding the contract of sale between the parties. RTC
issued a writ of execution implemented by sheriff Cabildo, who scheduled an
auction sale. Petitioner and respondent with their counsel participated. Petitioner is
the highest bidder.
In same day, the sheriff went to the house of respondent and showed him the
"Supplemental Minutes on Sheriffs Sale" specifying that petitioners counsel offered
a new bid.
Respondent refused to sign the supplemental sale, he filed a motion to quash the
"Supplemental Minutes on Sheriffs Sale" alleging inter alia that it is void because it
was prepared after the auction sale.
RTC denied respondents motion to quash "it appearing that the supplemental sale
redounds to the benefit of defendant.
Respondent filed a MR but was denied. He then filed a petition for certiorari and
prohibition with the CA alleging that the RTC judge committed grave abuse of
discretion in upholding the validity of the "Supplemental Minutes on Sheriffs Sale."
CA granted the petition and set aside the Orders of the RTC.
Petitioner filed a MR but it was denied.
Hence, the instant petition.
ISSUE:
Whether an auction sale had been perfected after the bidding, and its consideration
can no longer be modified.
RULING:
Article 1476, paragraph 2 of the Civil Code provides, In the case of a sale by
auction:
(2) A sale by auction is perfected when the auctioneer announces its perfection by
the fall of the hammer, or in other customary manner. Until such announcement is

made, any bidder may retract his bid; and the auctioneer may withdraw the goods
from the sale unless the auction has been announced to be without reserve.
the sheriff declared petitioner the highest bidder. Considering that the auction sale
had already been perfected, a supplemental sale with higher consideration at the
instance of only one party could no longer be validly executed.Therefore the trial
court gravely abused its discretion.

September 13, 2007

FUDOT vs. CATTLEYA LAND, INC.
FACTS:
respondent Cattleya Land, Inc. asked someone to check, the titles of nine (9) lots,
which it intended to buy from the spouses Tecson. Finding no defect on the titles,
respondent purchased the nine lots through a Deed of Conditional Sale on 6
November 1992. They executed a Deed of Absolute Sale over the properties, it was
registered with the ROD on 06 November 1992 and 04 October 1993. The ROD, Atty.
Serna, refused to annotate the deed of sale on the titles because of the existing
notice of attachment in connection with Civil Case pending before the RTC which
was eventually cancelled by virtue of a compromise agreement between the
Tecsons and their attaching creditor which was brokered by respondent. Titles to six
(6) of the nine (9) lots were issued because the three titles were still unaccounted
for.
petitioner presented for registration before the ROD the owners copy of the title
together with the deed of sale executed by the Tecsons in favor of petitioner.
respondent sent a letter of opposition to petitioners application. respondent learned
that the ROD already registered the deed of sale in favor of petitioner and issued a
new title.
respondent filed its Complaint6 for Quieting Of Title and Recovery Of Ownership,
Cancellation Of Title With Damages before the RTC. Asuncion filed a complaint-inintervention, claiming that she never signed any deed of sale covering any part of
their conjugal property in favor of petitioner, her signature forged thus it be
declared null and void. She discovered only recently that there was an amorous
relationship between her husband and petitioner.
RTC rendered its decision:11 (i) quieting the title or ownership of the subject land in
favor of respondent; (ii) declaring the deed of sale between petitioner and spouses
Tecson invalid.
respondent had recorded in good faith the deed of sale ahead of petitioner. the
forged signature of Asuncion was an unrebutted testimony.
Petitioner sought recourse to the CA, that the rule on double sale was applicable to
the case. CA dismissed her appeal, that there was no double sale because sale was

null and void in view of the forgery of Asuncions signature. Petitioner sought
reconsideration but was denied, hence the petition.
ISSUE:
Whether double sale existed between the first and second buyers.
RULING:
there was no double sale.
Under Art. 1544 of the Civil Code, the rule on double sale, applies only to a situation
where the same property is validly sold to different vendees. In this case, there is
only one sale to advert to, that between the spouses Tecson and respondent.
In Remalante v. Tibe,25 this Court ruled that the Civil Law provision on double sale is
not applicable where there is only one valid sale, the previous sale having been
found to be fraudulent. Likewise, in Espiritu and Apostol v. Valerio, 26 where the same
parcel of land was purportedly sold to two different parties, the Court held that
despite the fact that one deed of sale was registered ahead of the other, Art. 1544
of the Civil Code will not apply where said deed is found to be a forgery, the result
of this being that the right of the other vendee should prevail.
The congruence of the wills of the spouses is essential for the valid disposition of
conjugal property.27 Thus, under Article 166 of the Civil Code 28 which was still in
effect when the deed of sale was executed, the husband cannot generally alienate
or encumber any real property of the conjugal partnership without the wifes
consent.
The act of registration does not validate petitioners otherwise void contract. While
it operates as a notice of the deed it does not add to its validity nor converts an
invalid instrument into a valid one as between the parties. 33 The registration of
petitioners void deed is not an impediment to a declaration by the courts of its
invalidity.
the governing principle is primus tempore, potior jure (first in time, stronger in
right). Knowledge gained by the first buyer of the second sale cannot defeat the
first buyers rights, except where the second buyer registers in good faith the
second sale ahead of the first.
respondent was a buyer in good faith, without any notice of a previous sale, but
only a notice of attachment relative to a pending civil case.

July 14, 2008

IRAO vs. BY THE BAY, INC.
Ruby Roxas (Ruby) the representative of the Estate of Doa Trinidad de Leon Roxas
and Ronald Magbitang (Ronald) representative of By the Bay, Inc. forged a contract
of lease of a 3-storey building located in Pasay City for 5 years.

By the Bays restaurant was closed by the City Government when they started
defaulting in the payment of the rent. Ruby executed another contract of lease in
favor of Paul T. Irao (Paul), herein petitioner. Paul, together with the Barangay
Kagawad and Security Guards, entered and took possession of the leased premises.
By the Bay, Inc. filed a case of Forcible Entry to the Metropolitan Trial Court of Pasay
City (MeTC) with Prayer for Preliminary Injunction and Damages. The MeTC
dismissed the complaint of By the Bay Inc. holding that the failure of By the Bay Inc.
to pay monthly rentals renders them with unclean hands. By the Bay Inc. contends
that the letter sent to them by Ruby Roxas was the demand to pay the rental
arrears and not a notice to terminate the contract of lease.
The Regional Trial Court affirmed the decision of the MeTC. It was reversed by
the Court of Appeals holding that Paul Irao should turn over the possession to By the
Bay, Inc.
ISSUE:
Whether or not the lessors demand letter to respondent sufficiently contained a
notice of termination of the lease contract and a demand to vacate
the leasedpremises to justify the taking over the possession
HELD:
The language and intent x x x of the demand letter are unambiguous. The lessor
demanded from By the Bay Inc. the full payment of its unpaid rentals of
P2,517,333.36 within five days from notice. The phrase otherwise we shall be
constrained, much to our regret in the letter sends a clear warning that failure to
settle the amount within the stated period would constrain the lessor to terminate
[the] Contract of Lease and take the necessary legal measures against
[respondent] to protect [its] interest without further notice.
The letter made it clear to respondent that the therein stated adverse
consequences would ensue without further notice, an unmistakable warning to
respondent that upon its default, the lease contract would be deemed terminated
and that its continued possession of the leased premises would 0no longer be
permitted.
The notice of impending termination was not something strange to respondent since
it merely implemented the stipulation in Section 31 of their contract that if default
or breach be made of any of such covenants and conditions, then this lease, at the
discretion of the LESSOR, may be terminated and cancelled forthwith.
To warn means to give notice to somebody beforehand, especially of danger;
and a warning may be a notice of termination of an agreement, employment,
etc. Its purpose is to apprise a party of the existence of danger of which he is not
aware to enable him to protect himself against it.
[W]here, as here, the party is aware of the danger, the warning will serve no
useful purpose and is unnecessary, and there is no duty to warn against risks which
are open and obvious.

The appellate courts ruling that the lessors letter did not demand respondent to
vacate is flawed. A notice or demand to vacate does not have to expressly use the
word vacate, as it suffices that the demand letter puts the lessee or occupant on
notice that if he does not pay the rentals demanded or comply with the terms of the
lease contract, it should move out of the leased premises.
Contractual stipulations empowering the lessor and/or his representative to
repossess the leased property extrajudicially from a deforciant lessee, as in the
present case, have been held to be valid. Being the law between the parties, they
must be respected. By the Nay, Inc. cannot thus feign ignorance that the
repossession of the leased property by the lessor and/or its representative-herein
Paul was the appropriate legal measure it (respondent) itself authorized under their
contract.