Gregorio v. Crisologo Vda. de Culig, GR 180559, January 20, 2016, Jardeleza, J.

FACTS:
Maria Crisologo Vda. de Culig is the widow of Alfredo Culig. During his lifetime, Alfredo was
granted a homestead patent under CA 141 over a property in North Cotabato. Alfredo died. on
Oct. 9, 1974, his heirs, including Crisologo, executed an extra-judicial settlement of estate with
simultaneous sale of the property to Sps. Andres Seguritan and Anecita Gregorio. The property
was sold for P25k.

On September 26, 1979, within the 5-year period to redeem in CA 141, Crisologo filed a
complaint demanding repurchase under CA 141, alleging that she approached the spouses and
offered to repurchase the property, but the spouses refused.

Spouses Seguritan claims that Crisologo had no right to repurchase since she only wanted to
redeem to sell it for greater profit. Seguritan died and was substituted by Anecita Grerorio as
petitioner.

RTC dismissed the complaint, saying that formal offer is not sufficient and must be accompanied
with consignation of the repurchase price if repurchase was refused. CA reversed, saying that
consignation is not necessary. Gregorio filed her MR in CA 7 months late and it was denied.
Hence this petition.

ISSUE:
Whether Gregorio must allow the repurchase of the property.
HELD: YES.
1) S119 of CA 141 provides that every conveyance of land acquired under the free patent or
homestead provisions shall be subject to repurchase by the applicant, his widow, or legal heirs
within 5 years from the conveyance. The complaint to repurchase here was filed within 5 years.
The parties agree that there was no consignment.

Gregorio claims that consignment is needed. This is untenable. Tender of the price or
consignation in court is not necessary where the filing of the action itself is equivalent to a
formal offer to redeem. The filing of the action itself is equivalent to a formal offer to redeem.
Tender is not necessary for redemption under CA 141 or Public Land Act.

2) Art. 1616 of NCC does not apply. This speaks only of the amount to be tendered but not the
procedure to be followed in exercising the right. In fact, in Peralta v. Alipio, we rejected the
argument that the provisions on conventional redemption apply as supplementary law to CA
141.

In Lee v. CA, we held that the mere sending of letters demanding repurchase within the 5-year
period was not sufficient exercise of the right to redeem and will not preserve the right to
redeem. But here, the complaint was filed within 5 years.

3) Gregorio claims that even if redemption was timely made, Crisologo is not entitled because
she intends to resell the property for profit and purely for speculation. Indeed, the main purpose
of granting a free or homestead patent is to preserve in the family of the homesteader the public
land granted so that he and his family may have a place to live and become a useful member of
society. If the purpose of repurchase of a patentee is to dispose of it again for greater profit, the
right to repurchase is denied.

But here, the burden of proof of such speculative intent is on Gregorio. His bare allegations as to
Crisologo’s manifestation of affluence, bulging coffers, and their being professionals and that
most of them are living in Canada are not enough to show that they intended to resell the
property.

4) The MR was rightly denied as a client is bound by the negligence of his counsel.

Nolasco v. Cuerpo, GR 210215, December 09, 2015, Perlas-Bernabe, J. (Rescission)

FACTS:
Nolasco and Cuerpo entered into a contract to sell over a land for P33M payable thus: P11M
downpayment, P21M payable in 36 monthly installments of P598k each. Later, Cuerpo sent
Nolasco a letter seeking to rescind the contract on the ground of financial difficulties in
complying with the same. They sought the return of P12M they had paid. This was unheeded.
Thus, Cuerpo filed a complaint for rescission before RTC.

RTC ordered the rescission under Art. 1191. It found that Nolasco substantially breached par.7
of the contract that
7. [Petitioners] shall, within ninety (90) days from the signing of [the subject contract],
cause the completion of the transfer of registration of title of the property subject of [the
subject contract], from Edilberta N. Santos to their names, at [petitioners'] own expense.
Failure on the part of [petitioners] to undertake the foregoing within the prescribed period
shall automatically authorize [respondents] to undertake the same in behalf of
[petitioners] and charge the costs incidental to the monthly amortizations upon due
date
Because Nolasco did not transfer such title. CA affirmed. Hence this petition.

ISSUE:
Whether there was substantial breach.
HELD: NO.
Rescission under Art. 1191 is predicated on a breach of faith that violates the reciprocity between
the parties to the contract. Rescission will not be permitted for a slight or casual breach, but
only for such substantial and fundamental violations that would defeat the very object of the
parties in making the agreement.

Here, par.7 reveals that while RTC and CA were correct that Nolasco failed to perform their
obligation to transfer title, this was not a substantial breach because the same paragraph
provides Cuerpo with a recourse to cause such transfer of title themselves in behalf and at the
expense of Nolasco.

Moldex Realty Inc. v. Flora Saberon, GR 176289, April 08, 2013, Del Cstillo, J.
FACTS:
Flora asked Moldex, developer of Metrogate Subdivision, to reserve the lot for her. She was to
pay P583k at monthly amortizations of P8k payable in 5 years with 21% interest per annum and
additional 5% surcharge for every month of delay. Flora made installment payments from 1992-
1996 worth P375k. She defaulted. On April 1997, Moldex sent Flora a notarized notice of
cancellation of contract to sell. Flora filed a complaint with HLURB.

HLURB ruled that since at the time of the sale Moldex did not have a license to sell as required
in S5, PD 957, the contract was void. It was ordered to refund all that Flora had paid. Board of
Commissioners of HLURB affirmed. OP affirmed. CA affirmed. Hence this petition.

ISSUE:
Whether Moldex must return the entire payments of Flora.
HELD: NO.
1) The lack of a license to sell on the part of a subdivision developer does not result to
nullification of the contract to sell. Nothing in S5, PD 957 requiring a license to sell provides for
the nullity of a contract validly entered into in cases of violation of its provisions. It only imposes
a general penalty.

2) Nevertheless, Flora is entitled to to 50% refund under the Maceda Law, which provides that
the defaulting buyer who has paid at least 2 years of installments has the right either to avail of
the grace period to pay or the cash surrender value of the payments made.

Flora had paid more than 2 years installments from March 11, 1992 to July 19, 1996 of P375k.
She defaulted after July 19, 1996. Moldex sent notices for her to update her account but to no
avail. She could thus no longer avail of the option in S3(a) to pay her unpaid installments within
the grace period. Besides, Moldex already sent Flora a notarized notice of cancellation. Thus,
the only option Flora has is S3(b) where Moldex shall refund to Flora the cash surrender value
of the payments on the property equivalent to 50% of the total payments or P187k.

Sps. Domingo v. Sps. Manzano, GR 201883, November 16, 2016

FACTS:
Sps. Manzano owned a land. They executed, thru their attorney-in-fact and co-respondent
Estabillo, a notarized agreement that the price would be P900k, with payment of P100k
reservation fee, and:
Ayon sa aming napagkasunduan ililipat lamang ang Titulo ng lupa na may no. 160752
at bahay pag nabayaran ko ng lahat ang (P900,000.00) Nine Hundred Thousand Pesos
hanggang Marso ng 2001.
Sps. Domingo failed to tender full payment on March 2001, the deadline. Estabillo advised
them to continue their payments. They made P85k additional payment. In December 2001,
Sps. Domingo offered to pay the remaining P555k but Tita Manzano refused and said that the
property was no longer for sale and she was forfeiting their payments. Thus, Sps. Domingo
caused annotation of an affidavit of adverse claim on the Title. Thereafter, respondent Carmelita
Aquino bought the property and a new title was issued in her name. The adverse claim was
carried over.
Sps. Domingo filed for specific performance to compel Sps. Manzano to accept payment. RTC
ruled that Sps. Domingo have a prior right, applying Art. 1544. CA ruled that Art. 1544 is not
applicable.
ISSUE:
Whether there was a double sale.
HELD: NO.
CA held that
The vendors reserved ownership and title passes only upon full payment of P900k. Sps.
Domingo were never granted possession. No deed of sale was executed. All these are
indications that there is a contract to sell.

In Cheng v. Genato, it was held that Art. 1544 does not apply to a contarct to sell because
the requisites of Art. 1544 (2 or more valid sales etc.) are lacking in a contract to sell for
there is no transfer of ownership nor a sales transaction consummated. Before full
payment, specific performance is an improper remedy. There must be a breach of
contract for specific performance. The non-payment of the price renders the contract to
sell without force and effect.

As to reimbursement, Sps. Domingo paid less than 2 years installments. S4 of RA 6552

must be read with S3, which states that the buyer is “entitled to the following rights in
case he defaults in the payment of succeeding installments.” Thus, S3 and 4 apply only
when the buyer defaults in payment. In case the defaulting buyer paid less than 2 years’
installments, RA 6552 grants him no right to recover his installments. But here, Sps.
Domingo were not in default as Estabillo accepted late installments, thereby waiving
the original period for payment. As agent, Estabillo’s acceptance bound his principals
who also accepted the late payments, amounting to tacit ratification of the agent’s acts.
This Court agrees with CA’s pronouncement that Art. 1544 does not apply here. CA’s
disquisition is succinct, nothing more can be added.

Payment of the price is a positive suspensive condition in a contract to sell, failure of which is
not a breach but just an event that prevents the prospective buyer from compelling the
prospective seller to convey title. Thus, non-fulfillment of the condition renders the sale without
force and effect. Precisely for this reason that Art. 1544 does not apply since failure to pay the
price in full renders the contract to sell ineffective. There is NO SALE TO SPEAK OF. Sps.
Domingo failed to pay the price in full. Aquino did. Since there is only one valid sale, Art. 1544
does not apply.

Luzon Development Bank v. Enriquez, GR 168646, January 12, 2011, Del Castillo, J.
FACTS:
De Leon loaned P8M from LDB to develop Delta Homes. He mortgaged Lot 4 to secure the
loan. Delta obtained a license to sell and executed a contract to sell with Enriquez over lot 4 for
P614k. Delta defaulted in its loan obligation to LDB. LDB and Delta agreed to a dation in
payment where Delta assigned or transferred certain real estate to LDB, including lot 4 subject
of the contract to sell with Enriquez.
Enriquez filed a complaint against Delta and LDB. CA ruled that the dation is void as Delta
hadearlier transferred ownership already to Enriquez via the contract to sell. Hence this petition.

ISSUE:
Whether LDB is bound by the contract to sell to Enriquez.
HELD: YES.
1) Although the mortgages are void for violating S18 of PD 957, the loan just became unsecured.

2) A contract to sell does not transfer ownership. It does not by itself transfer ownership to the
buyer. Delta reserved ownership until full payment su h that Delta even reserved the right to
unilaterally void the contract if Enriquez fails to pay 3 successive monthly amortizations. Thus,
since Delta was still the owner, it could validly transfer such ownership to LDB thru dation.

3) However, LDB is bound by the contract to sell and has to respect Enriquez’s right
thereunder. This is because the contract to sell involving a subdivision lot is covered by PD 957.
S17 of PD 957 allows Enriquez to register the contract to sell to make it binding on third
parties.

While Delta failed to register Enriquez’s contract to sell, this failure will not prejudice
Enriquez as LDB cannot be considered an innocent purchaser for value when it accepted Lot
4 as payment. LDB was aware that Lot 4 were subdivision lots and thus within the purview of
PD 957. It knew that the loaned amounts were to be used to develop Delta’s subdivision project.
Under these circumstances, LDB knew or should have known of the possibility and risk that the
assigned properties were already covered that the assigned properties in the dation were already
covered by existing contracts to sell to subdivision lot buyers. Also, as an entity engaged in the
banking business, LDB is required to observe more care and prudence when dealing with
registered properties.

4) LDB claims that if it must deliver Lot 4 to Enriquez, Delta has the obligation to pay LDB its
value. But Dation extinguished the loan obligation as the parties intended that the assigned
properties would serve as full payment of Delta’s entire obligation without reservation or
condition. LDB thus assumed the risk that some of the assigned properties are covered by
contracts to sell which it is bound to honor under PD 957.

Dation is governed by the law on sales. There is no express warranty here. As to the implied
warranty in case of eviction, it is waivable and cannot be invoked if the buyer knew of the risks
of eviction and assumed its consequences. LDB, in accepting the dation as full payment of
Delta’s “total obligation”, assumed the risk that some of the assigned properties are covered by
contracts to sell.

Repuela v. Estate of Sps. Larawan and Bacus, GR 219638, December 07, 2016, Mendoza, J.
FACTS:
In July, 1963, Marcelino and Cipriano Repuela, brothers, inherited Lot 3357. They went to the
house of Otillo Larawan to borrow P200 for Marcelino’s fare to Iligan. To secure the loan, Sps.
Larawan required them to turn over the title to Lot 3357 and made them sign a purported
mortgage contract. Cipriano affixed his signature while Marcelino, being illiterate, placed his
thumbmark. They remained in possession and had been planting corn etc.

Cipriano’s daughter Cristina went to the treasurer’s office and found out that the title to the
property was already transferred to Sps. Larawan thru a extrajudicial declaration of heirs and
sale bearing the signature of Cipriano and thumb mark of Marcelino. Cipriano and Marcelino
remember that they signed a blank document.

Thus, on January 17, 2003, Cipriano and Marcelino filed a complaint to annul the extrajudicial
declaration of heirs and sale. Burlas, who lived next to the property, testified that Marcelino and
Cipriano remained in possession and that he never saw Otillo on the land.

ISSUE:
Whether the extrajudicial declaration of heirs and sale was an equitable mortgage.
HELD: YES.
Art. 1602, in relation to Art. 1604, provide:
ART. 1602. The contract shall be presumed to be an equitable mortgage, in any of the
following cases:
(2) When the vendor remains in possession as lessee or otherwise;
(6) In any other case where it may be fairly inferred that the real intention of the parties is
that the transaction shall secure the payment of a debt or the performance of any other
obligation.
ART. 1604. The provisions of Article 1602 shall also apply to a contract purporting to be
an absolute sale.

Under Art. 1602, the presence of any of the circumstances suffices for a contract to be deemed
an equitable mortgage. Here, there are 2 instances.

1) Burlas, a disinterested person, testified that it was only the Repuela brothers who remained in
possession of the land and she never saw Otillo work on the land.

Respondents’ claim of possession supported by a TCT and tax declaration of the property in the
name of Sps. Larawan are not persuasive. These do not prove actual possession and do not
rebut the overwhelming evidence of the Repuela brothes that they were in actual possession.

2) It can be inferred that the real intention of the Repuela brothers was to secure their
indebtedness from Sps. Larawan. They needed money for Marcelino’s fare of P200. Since Sps.
Larawan would only agree to extend the loan if they surrender their title, they obliged. It was
never their intention to sell the property.

3) Granting that Cipriano and Marcelino signed and thumbmarked the Extrajudicial Declaration
of Heirs and sale, they did so without understanding the real nature thereof as this was never
explained to them. Cipriano only finished grade 1 and Marcelino was an illiterate. They were in
dire need of money. In dire need, they signed a document knowing that it did not express their
real intention. Thus, they should be afforded the protection on the provisions on equitable
mortgage.
Besides, where a party is unable to read and mistake or fraud is alleged, the obligation to show
that the terms of the contract had been fully explained to such party devolves on the party
seeking to enforce it. Respondent failed to overcome this burden.

Arcaina v. Ingram, GR 196444, February 15, 2017, Jardeleza, J.

FACTS:
Arcaina owns Lot 3230. Thru Banta, her attorney-in-fact, she entered into a contract with Ingram
for its sale. Banta showed Ingram and Archinue, Ingram’s attorney-in-fact, the bounds of the
property and that it has an area of more or less 6,200 m2 as per the tax declaration covering it.
The contract price was P1,860,000. The property was described in the deeds of absolute sale as
with an rea “6200m2 more or less.”

Later, Ingram caused the land to be surveyed and discovered that Lot 3230 has an area of 12,000
m2. Banta insisted that the difference of 5,800m2 remains unsold. Ingram claims that she owns
the whole.

ISSUE:
Whether the sale must be deemed to include the excess of 5800.
HELD: NO.
Lot 3230 was sold for a lump sum. The deeds of sale the parties executed show that the property
was sold to Ingram at the predetermined price of P1,860,000. There was no indication that it
was bought on a per-square-meter basis. Thus, Art. 1542 governs.

This provisions says that where both the area and boundaries of the immovable are declared in a
sale of real estate for a lump sum, the area within the boundaries of the immovable prevails over
the stated area. The vendor is obliged to deliver all that is included within the boundaries
regardless of whether the actual area is more than what was specified in the contract of sale
without a corresponding increase or decrease in price.

Here, the boundaries and estimated area of the property are stated. The area is “more or less
6,200 m2.” But it was actually 12,000m2.

But the rule laid down in Art. 1542 is not hard and fast and admits an exception. the use of
“more or less” or similar words covers only a reasonable excess or deficiency. In case there is
conflict between the area actually covered by the boundaries and the estimated area stated in the
contract of sale for lump sum, the vendor shall deliver the excess or deficiency only if the latter
is REASONABLE.

The difference of 5,800m2 is too substantial to be considered reasonable. Art. 1542 does not
contemplate such an unfair situation to befall a vendor as to make her deliver double the amount
she originally sold without an increase in price. A vendee of land when it is sold in gross or with
the description “more or less” does not ipso facto take all risk of quantity in the land. The use of
“more or less” covers only a reasonable excess or deficiency.
Also, the parties at the time of sale did not have knowledge of the actual area and relied only on
the tax declaration. Thus, when petitioners offered the property for sale and when Ingram
accepted, the object of their consent is only a 6,200 m2 property.

Sps. Castro v. Palenzuela, GR 184698, January 21, 2013, Del Castillo, J.

FACTS:
Respondents Palenzuela et al. own several fishponds of 72ha. They leased it to petitioners Sps.
Castro for 5 years from March 1, 1994 up to June 30, 1999. The lease contained a prohibition
that Sps. Castro cannot sublease the premises. The lease expired. On July 22, 1999, respondents
sent a letter to Sps. Castro declaring them as trespassers and demanded that they pay P378k,
P244k of which is trespassing fee for the whole month of July. Petitioners did not vacate and
continued to occupy the premises until August 11, 1999 or for an additional 41 days.

Respondents instituted a suit for collection of sum of money in RTC, claiming that Sps. Castro’s
aggregate unpaid rents amounted to P863,796. CA affirmed. Hence this petition.

ISSUE:
Whether Sps. Castro are liable for the unpaid rents.
HELD: YES.
The unpaid rental amounts not to P863k, but only to P378k as stated in the letter of respondents
to Sps. Castro. This letter belies the claim that Sps. Castro owed respondents a greater amount.
The P378k consisted of: P244k additional rent for the whole of July 1999, P111k unpaid rentals,
and P23k interest from May 31-July 31, 1999.

Petitioners admit not paying anything. Thus, their liability is P378k.

As for petitioners claim that respondents were not authorized to charge additional rent for their
extended stay, this is settled by petitoiners’ reliance on the July 22, 1999 letter. By adopting the
letter as their own evidence in seeking to reduce the award of P863k rent, they admitted liability
for the additional rent stated therein. Besides, when the lease expired on June 30, 1999, and
petitioners continued enjoying the premises without objection from the respondents, an implied
new lease was created pursuant to Art. 1670 of NCC which placed upon petitioners the
obligation to pay additional rent.

Petitioners also violated the prohibition on sublease. Even though respondents received
payments directly from the sublessee Reyes, this could not erase the fact that petitioners are
guilty of subleasing the fishponds to her. Respondents may have been compelled to accept
payments from Reyes only because petitioners were remiss in paying rent.

Philippine Steel Coating Corp. v. Eduard Quiñones, GR 194533, April 19, 2017, Sereno,
CJ.
FACTS:
Richard Lopez, sales engineer of petitioner PhilSteel, offered Quinones their new product:
primer-coated rolled galvanized iron (GI) sheets. Quinones asked if the sheets were compatible
with the Guilder acrylic paint process used by Amianan Motors in the finishing of its assembled
buses. Uncertain, Lopez referred the query to his superior, Angbengco, PhilSteel’s sales
manager.

Angbengco assured Quinones that the quality of their new product was superior to that of the
non-primer coated GI sheets used by Quinones. Quinones expressed reservations. Angbengco
further guaranteed that a laboratory test was conducted by PhilSteel and that results showed
that the two products were compatible. Thus, Quinones was induced to buy the product.

But Quinones received several complaints from customers who bought the bus units, claiming
that the paint on the buses was breaking and peeling off. Quinones sent a letter-complaint to
PhilSteel invoking its warranties.

Quinones filed a complaint for damages against PhilSteel. PhilSteel claims that it did not induce
Quinones to purchase the product.

RTC ruled for Quinones. CA affirmed. Hence this petition.

ISSUE:

HELD:
This is a case of express warranty under Art. 1546 of NCC. The requisites to prove express
warranty are: 1) the express warranty must be an affirmation of fact or any promise by the seller
relating to the subject matter of the sale; 2) the natural effect of the affirmation or promise is to
induce the buyer to purchase the thing; 3) the buyer purchases the thing relying on that
affirmation or promise.

1) PhilSteel claims that its purported warranties were mere vague oral statements.

A warranty may be oral as long as it is not given as a mere opinion but is a positive affirmation
of a fact that buyers rely on and influences them to purchase the product. Angbengco did not
make mere vague oral statements. He expressly represented to Quinones that his product was
compatible with Quinones’ acrylic paint process. This representation was made in the face of
Quinones’ express concerns regarding incompatibility. Quinones later surrendered his doubts
after meeting 4-5 times with Angbengco.

Thus, these “vague oral statements” were express affirmations of the compatibility of the sheets.
Angbengco uttered these statements with the clear goal of persuading Quinones to buy the
product. They were positive affirmations of fact that the buyer relied on and that induced
him to buy PhilSteel’s sheets.

2) As sales manager, Angbengco made repeated assurance and even invoked laboratory tests that
showed compatibility. In the eyes of Quinones, PhilSteel, thru its representative Angbengco, was
an expert whose word could be relied upon and his statement was not merely an opinion.

3) PhilSteel claims that there was only dealer’s talk. But Quinones did not talk to an ordinary
sales clerk that can be found in a department store or even a sari-sari store. IF Lopez had asserted
compatibility without true knowledge or authority to warrant it, then this would be dealer’s talk.
But he deferred to his superior Angbengco who assured Quinones that laboratory tests showed
compatibility. Thus, Angbengco was no longer giving mere seller’s opinion or exaggeration
in trade. Rather, he was making it appear to Quinones that PhilSteel had already subjected the
latter’s GI sheets to product testing. He was in effect inducing in the mind of the buyer the
belief that he was an expert on the sheets and that his statements could be relied on. Thus,
PhilSteel thru Angbengco induced the buyer Quinones to purchase the sheets.

4) The prescriptive period for express warranty applies. In the absence of agreement, that period
shall be based on the general rule on rescission of contracts: 4 years (Art. 1389 of NCC). The
suit here was filed several months after the last delivery o the thing sold and thus within the
prescriptive period.

5) The nonpayment of the unpaid price was justified. Since what was proven was express
warranty, the remedy for implied warranties under Art. 1567 does not apply. Instead, Art. 1599
applies when an EXPRESS warranty is breached. Quinones opted for a reduction of the price
or nonpayment of the unpaid balance. Applying Art. 1599(1), this remedy is granted.