Sales Digests 2020

Sales & Lease Digests 2020 | Francisco
Fullido vs. Grilli, 785 SCRA 278, G.R. No. 215014

FACTS:
Grilli, an italian national, was in a common law relationship with Fullido. Grilli Financially
assisted Fullido in procuring a lot from her parents which was registered in her name under TCT
no 30626. On the said property, they constructed a house, which was funded by Grilli. Upon
completion, they maintained the relationship and lived there whenever Grilli was on vacation in
the Philippines twice a year.
In 1998, they executed a contract of lease, a MOA and a special power of attorney to define
their respective rights over the house and lot. The lease contract stipulated among others, that
Grilli as the lessee, would rent the lot, registered in the name of Fullido, for a period of 50 years,
to be automatically renewed for another 50 years upon its expiration in the amount of
P10,000.00 for the whole term of the lease contract and that Fullido as the lessor was prohibited
from selling, donating or encumbering the lease contract over the house and lot. The lease
contract was registered in the register of deed of Bohol.
The MOA, stated that Grilli paid for the purchase price of the house and lot; that ownership of
the house and lot was to reside with him; and that should the common law relationship be
terminated, Fullido could only sell the house and lot to whomever Grilli so desired.
The SPA allowed Grilli to administer, manage and transfer the house and lot on behalf of Fullido.
After 16 years of living together, their relationship turned sour. They could not agree who should
leave the common property and Grilli demanded Fullido leave the property but was left
unheeded. On Sept. 8, 2010, Grilli filed a complaint for unlawful detainer.
The MCTC dismissed the case finding that Fullido could not be ejected from the house and lot.
MCTC opined that she was a co-owner of the house as she contributed to it by supervising its
construction. Moreover, the MCTC respected the TPO which directed that Grilli be removed
from Fullido’s residence.
The RTC reversed and set aside the MCTC decision. RTC was of the view that Grili had the
exclusive right to use and possess the house and lot by virtue of the contract of lease executed
by the parties. Absent a judicial declaration of nullity, the contract of lease was valid and binding.
Fullido appealed to the CA. CA upheld the decision of the RTC.The CA stressed that if Fullido
would insist that the said documents were voidable as her consent was vitiated then she must
institute a separate action for annulment of contracts.
Fullido filed a motion for reconsideration but was denied by the CA, hence this petition.
ISSUE:
1. WON a contract could be declared void in a summary action of unlawful detainer
2. WON the lease contract and MOA are null and void
M.L. Francisco | Atty. Busmente

HELD:
1. YES. Contracts may be declared void even in a summary action for unlawful detainer
because, precisely, void contracts do not produce legal effect and cannot be the source
of any right. To emphasize, void contract may not be invoked as a valid action or defense
in any court proceeding, including an ejectment suit.
2. YES. The lease contract and MOA are null and void for virtually transferring the reigns of
the land to a foreigner. The prohibition to transfer of lands to aliens was adopted in the
present sections 2,3 and 7 of Art XII of the 1987 Constitution. Agricultural lands,
whether public or private, include residential, commercial and industrial lands. The
purpose of prohibiting the transfer of lands to foreigners is to uphold the conservation of
our national patrimony and ensure that agricultural resources remain in the hands of
Filipino Citizens.
The prohibition, however, is not limited to the sale of lands to foreigners. It also covers
leases of lands amounting to the transfer of all or substantially all the rights of Dominion.
In the landmark case of Philippine Banking Corporation v. Lui She, the court struck down
a lease contract of a parcel of land in favor of a foreigner for a period of 99 years with an
option to buy the land for 50 years. Where a scheme to circumvent the constitutional
prohibition against the transfer of lands to aliens is readily revealed as the purpose for
the contacts, then the illicit purpose becomes the illegal cause rendering the contracts
void. Thus, if an alien is given not only a lease of, but also an option to buy, a piece of
land by virtue of which the Filipino owner cannot sell or otherwise dispose of his
property, this to last for 50 years, then it becomes clear that the arrangement is a virtual
transfer of ownership whereby the owner divests himself in stages not only of the right to
enjoy the land but also of the right to dispose of it - rights which constitute ownership. If
this can be done, then the Constitutional ban against alien landholding in the Philippines
is indeed grave peril.
Consequently, PD No. 471 was enacted to regulate the lease of lands to aliens. It
provides that the maximum period allowable for the duration of leases of private lands to
aliens not qualified to acquire private lands in the Philippines shall be 25 years,
renewable for another 25 years upon mutual agreement of both lessor and lessee. It
also provides that any contract or agreement made or executed in violation thereof shall
be null and void ab initio.
Wherefore, petition is Granted.
Melecio Domingo v. Spouses Genaro Molina and Elena Molina, substituted by Ester
Molina, G.R. No. 200274, April 20, 2016
FACTS:
In June 15, 1951, Spouses Anastacio and Flora Domingo bought a property in Tarlac consisting
of one half undivided portion over an 18,164 square meter parcel of land.

Anastacio borrowed money from respondent spouses. 10 years after Flora’s death, Anastacio
sold his interest over the land to the spouses Molina to answer for his death. The sale was
annotated at the OCT of the property. In 1986 Anastacio died.
In May 19 1995, the sale of Anastacio’s interest was registered under TCT and transferrer the
entire one half undivided portion of land to the spouses.
Melecio, one of the children of Anastacio and Flora, learned of the transfer and file a Complaint
for Annulment of Title and Recovery of Ownership (Complaint) against the spouses Molina on
May 17 1999.
The RTC dismissed the case and the CA affirmed the RTC ruling in toto. Melecio filed the
present petition for review on certiorari to challenge the CA ruling.
ISSUES:
1. WON the sale of a conjugal property to the spouses Molina without Flora’s consent is
valid and legal
2. WON fraud attended the transfer of the subject property to the spouses Molina
HELD:
1. YES. Anastacio and Flora’s conjugal partnership was dissolved upon Flora’s death
pursuant to Article 175(1) of the Civil code (now Art. 126 of the Family code).
In the case of Taningco v. Register of Deeds of Laguna, we held that the properties of a
dissolved conjugal partnership fall under the regime of co-ownership among the
surviving spouse and the heirs of the deceased spouse until final liquidation among the
surviving spouse and the heirs of the deceased spouse until final liquidation and
partition. The surviving spouse, however, has an actual and vested one-half undivided
share of the properties, which does not consist of determinate and segregated properties
until liquidation and partition of the conjugal partnership.
Anastacio as a co-owner, had the right to freely sell and dispose of his undivided
interest, but not the interest of his co-owners. Consequently, Anastacio’s sale to the
spouses Molina without the consent of the other co-owners was not totally void, for
Anastacio’s rights or a portion thereof were thereby effectively transferred, making the
spouses Molina a co-owner of the subject property to the extent of Anastacio’s interest.
This result conforms with the well-established principle that the binding force of a
contract must be recognized as far as it is legally possible to do so (quando res non valet
ut ago, valeat quantum valere potest).
Melecio’s recourse as a co-owner of the conjugal properties is an action for partition

under Rule 69 (nice) of the Revised Rules of Court.
2. NO. Melecio’s argument that no document was executed for the sale is negated by the
CA finding that there was a notarized deed of conveyance executed between Anastacio
and the spouses Molina, as annotated on the OCT of the disputed property.
Wherefore we hereby DENY the petition.

EDCA Publishing vs. Spouses Leonor and Gerardo Santos 184 SCRA 614
FACTS:
EDCA Publishing delivered 120 books amounting to P8,995.65 to a Professor Jose Cruz who
paid by check. Petitioner issued a delivery receipt to Jose Cruz. After delivery to Jose Cruz,
Cruz sold the books to respondent spouses for P1,700.00. Leonor demanded to see a delivery
receipt and saw that it was addressed to Jose Cruz and found nothing out of the ordinary.
Meanwhile, EDCA became suspicious over a second order by Cruz even before clearing of his
check, made inquiries with De La Salle College where he had claimed to be dean and was
informed that there was no such person in its employ. Further verification revealed cruz had no
more account or deposit with the Philippine Amanah Bank. EDCA then went to the police and
had Cruz arrested who turned out to be Tomas De La Pena.
On the same night, EDCA with the assistance of police, forced their way into the store of private
respondent and seized 120 books without warrant, loading them in a van belonging to EDCA
and turned them over to petitioner.
Private respondent sued for recovery of book. Petitioner was successively rebuffed in the 3
courts below and hopes to secure relief.
ISSUE:
WON Petitioner has been unlawfully deprived of the books because the check issued by the
impostor in payment therefor was dishonored.
HELD:
NO. The contract of sale is consensual and is perfected once agreement is reached between
the parties on the subject matter and the consideration. ART. 1475, 1477, 1478.
It is clear from these provisions that ownership in the thing sold shall not pass to the buyer until
full payment of the purchase price ONLY if there is a stipulation to that effect. Otherwise, the
rule is that such ownership shall pass from the vendor to the vendee upon the actual or
constructive delivery of the thing sold even if the purchase price has not yet been paid.
Delivery of the thing sold will effectively transfer ownership to the buyer who can in turn transfer
it to another.
Actual delivery of the books having been made, Cruz acquired ownership over the books which
he could then validly transfer to the private respondents. The fact that he had not yet paid for
them to EDCA was a matter between him and EDCA and did not impair the title acquired by the
private respondents to the books.
It would certainly be unfair now to make the private respondents bear the prejudice sustained by
EDCA as a result of its own negligence. We cannot see the justice in transferring EDCA’s loss to

the Santoses who had acted in good faith and with proper care, when they bought the books
from Cruz.
Wherefore, the challenged decision is affirmed and petition is DENIED.
Phil. Suburban Development Corp. vs. Auditor General, 63 SCRA 397

FACTS:
The Auditor General disallowed petitioner’s request for refund of real estate tax on the Sapang
Palay estate for the year 1961 which petitioner paid under protest. The estate was purchased by
the People’s Homesite and Housing Corporation (PHHC), as authorized by the President, from
petitioner for the purpose of relocating squatters. The deed of sale was signed in 1960; but prior
to the signing of the deed, the PHHC acquired possession of the property with the consent of
petitioner.
ISSUE: WON the Auditor General erred in disallowing the refund of the real estate tax
HELD:
YES. there is no question that the vendor had actually placed the vendee in possession and
control over the thing sold, even before the date of the sale. The condition that petitioner should
first register the deed of sale and secure a new title in the name of the vendee before the latter
shall pay the balance of the purchase price, did not preclude the transmission of ownership. In
the absence of an express stipulation to the contrary, th payment of the purchase price of the
goods is not a condition precedent to the transfer of title to the buyer, but title passes by the
delivery of the goods.
.
On review, the SC held that since the delivery of possession coupled with the execution of deed
of Absolute sale had consummated the sale and transferred the title to the purchaser, the
payment of the real estate tax after such transfer is the responsibility of the purchaser. The court
ruled, however, that in the case at bar, the purchaser PHHC is a government entity and
therefore not subject to real property tax.
WHEREFORE, The appealed decision is hereby REVERSED and the real property tax is
hereby ordered REFUNDED.
Skunac Corporation vs. Sylianteng, 723 SCRA 625, G.R. No. 205879 April 23, 2014
FACTS:
The civil cases involved 2 parcels of land in Greenhills, San Juan City previously registered in
the name of Luis A. Pujalte on October 29, 1945.
Plaintiffs-appellants Roberto S. Sylianteng and Ceasar S. Sylianteng base their claim of
ownership over the subject lots of a Deed of Absolute sale executed in the favor by their mother,
Emerenciana Sylianteng on June 27, 1983. Appellants allege that Emerenciana acquired the
lots from the late Luis Pujalte through a Deed of Absolute Sale dated June 20, 1958. Annotated
on the covering TCT.

Skunac Corporation and Alfonso Enriquez claim that a certain Romeo Pujalte who was declared
by the RTC of Pasig the sole heir of Luis Pujalte caused the reconstitution of the Mother Title
resulting to its cancellation and the issuance of TCT in his favor. Romeo then sold the lots to
petitioners in 1992.
ISSUE:
1. WON respondents’ predecessor-in-interest, Emerenciana, validly acquired the subject
lots from Luis
2. WON respondents, in turn, validly acquired the same lots from Emerenciana
HELD:
1. YES. Petitioners failed to present convincing evidence to prove that the notarization of
the subject deed was irregular as to strip it of its public character. On the contrary, a
certified copy of page 26 of the notarial register of the notary public who notarized the
subject deed of sale, which was issued by the Records Management and Archives office
of Manila, shows that the sale of the subject lots by Luis to Emerenciana was indeed
regularly notarized.
2. YES. the disputed lots were already sold by Luis during his lifetime. Thus, these parcels
of land no longer formed part of his estate when he died. As a consequence, Romeo’s
sale of the lots to petitioners was not affirmed by the estate court, because the subject
parcels of land were not among those included in the said estate at the time that Romeo
was appointed as the administrator thereof.
Layug v. IAC
G.R.No. 75364. November 23, 1988
FACTS:
Layug purchased on installments from Gabuya, 12 lots by virtue of a contract.
The price of the lots at Php 120,000.00 payable in 3 yearly installments
1. 40,000 upon signing of contract
2. 40,000 after 12 months from signing
3. 40,000 after 24 month from signing
The contract also provided for the automatic cancellation of the contract and forfeiture of all
installments thus far paid which would be considered as rentals for the use of the lots.
Layug failed to pay the last installment. Gabuya made several informal demands to no avail. He
brought suit.
RTC judgment went against Layug. CA affirmed the decision.
ISSUE: WON Layug is entitled to a conveyance of at least 8 of the 12 lots subject of the
conditional sale when he already paid P80,000.00

HELD:
NO. Layug cannot be permitted to claim that all his payments should be credited to him in their
entirety, without regard whatever to the damages his default might have caused to Gabuya.
Pursuant to R.A. 6552 which governs the sales of real estate on installment, he is deemed to
have paid 2 annual installment. He therefore had a grace period of one month.. For every year
of installment payments made or 3 months from oct 4 1980 within which to pay the final
installment. That he made no payment within the grace period is clear. He has thus been left
only with the right to a refund of the “cash surrender value of the payments on the property
equivalent to 50% of the total payments made or p40,000.00. Such refund will be the operative
act to make effective the cancellation of the contract by Gabuya, conformably with the terms of
the law. The additional formality of a demand on Gabuya’s part for rescission by notarial act
would appear, in the premises, to be merely circuitous and consequently superfluous.
Wherefore the decision of CA is affirmed in so far as the cancellation of contract but modified
that cash surrender value will be paid.
ODYSSEY PARK INC V. CA

G.R. No. 107992. October 8, 1997
FACTS:
Bancom development corp and Odyssey park entered into a contract to sell whereby the former
agreed to sell to the latter a parcel of land in Baguio City and the structure thereon identified as
Europa Clubhouse. In a separate deed of Conveyance, Bancom confirmed it has conveyed in
favor of Union Bank all its rights over the property.
In the contract to sell, the purchase price was agreed to be paid in installment and in the event
Odyssey fails to pay, Bancon may at its absolute discretion cancel and rescind the contract and
declare as null, void and no further force and effect by serving on Odyssey a written notice 30
days in advance.
Odyssey defaulted in payment so a MOA was drafted but was not signed.
Union bank rescinded the contract to sell and ordered Odyssey to vacate but they did not.
ISSUE: WON there was failure to comply with the requirements of the law on Rescission or RA
6552
HELD:
NO. The law normally applies to the sale or financing of real estate on installment payments and
excludes industrial lots, commercial buildings and sales to tenants.
Art. 1592 is also inapplicable as the provision contemplates an ABSOLUTE SALE.
It is a familiar doctrine in the law on contracts that the parties are bound by the stipulations,
clauses, terms and conditions they have agreed to the only limitation being that these
stipulations, clauses, terms and conditions are not contrary to law, morals or public policy. Not
being repugnant to any legal proscription, the agreement entered into by the parties herein
involved must be respected and held to be the law between them.

JM Tuazon & Co., Inc. vs. CA, 94 SCRA 413
2. Escaler vs. CA, 138 SCRA 1;
Moles vs. IAC, 169 SCRA 777

FACTS:
In 1977, Moles needed a linotype printing machine for his printing business, The LM Press at
Bacolod City and applied for an industrial loan with the DBP. Moles went to iloilo city to inspect
the machines offered for sale by Diolosa Publishing.
On his 2nd visit, he decided to buy the linotype machine, the transaction was verbal but to
facilitate the loan application, a pro forma invoice was signed with an addendum that payment
had not yet been made but that he promised to pay the full amount upon the release of his loan
from DBP.
Mole was able to pay the machine in full after DBP released his loan.
Some time later, Moles wrote private respondent that the machine was not functioning properly
as it needed a new distributor bar and that upon being inspected by some technicians, the
machines’ price was just 5,000 and not 50,000 as paid by petitioner. Although 2 technicians
were sent by private respondent, the machine was never used again.
Moles commenced a suit against private respondent Diolosa for rescission of contract with
damages. Respondent moved to dismiss on the ground of improper venue saying that all
judicial actions arising from the contract shall be instituted in Iloilo City forwarding the Sales
invoice executed in Iloilo City.
. Moles opposed averring that there is no formal document evidencing the sale which is
substantially verbal in character.
Trial court decided for Moles, IAC reversed the decision and dismissed the complaint.
ISSUE:
WON there is no formal document evidencing the sale as it is verbal in character
WON in the sale of 2nd hand items, there is an implied warranty of its quality or fitness
WON the defects in the machine is sufficient to warrant a rescission of the contract
between the parties
HELD:
YES. it error for the respondent court, after adopting the factual findings of the lower court to
reverse the latter’s holding that the sales invoice is merely a pro forma memorandum. The
records do not show that this finding is grounded entirely on speculation, surmises or
conjectures as to warrant a reversal thereof. The sales invoice was merely a pro forma invoice.
Consequently, the printed provisions therein, especially since the printed form used was for
purposes of other types of transactions, could not have been intended by the parties to govern
their transaction on the printing machine. It is obvious that a venue stipulation, in order to bind
the parties, must have been intelligently and deliberately intended by them to exclude their case
from the reglementary rules on venue.
NO. it is generally held that in the sale of a designated and specific article sold as 2nd hand,
there is no implied warranty as to its quality or fitness for the purpose intended, at least where it

is subject to inspection at the time of the sale. On the other hand, there is also authority to the
effect that in a sale of 2nd hand articles, there may be, under some circumstances, an implied
warranty of fitness for the ordinary purpose of the article sold or for the particular purpose of the
buyer.
In a line of decisions rendered in the US supreme court, it had theretofore been held that there
is no implied warranty as to the condition, adaptation, fitness or suitability for the purpose for
which made, or the quality, of an article sold as and for a 2nd hand article.
The general rule is not without exceptions. Article 1562 of our Civil code:
In a sale of goods, there is an implied warranty or conditions as to the quality or fitness of the
goods as follows:
1. Where the buyer, expressly or by implication, makes known to the seller the particular
purpose for which the goods are acquired and it appears that the buyer relies on the
seller’s skill or judgment (whether he be the grower or manufacturer or not) there is an
implied warranty that the goods shall be reasonably fit for such purpose.”
We disagree with respondent court that private respondent’s express warranty as to the A-1
Condition of the machine was merely dealer’s talk. Private respondent was not a dealer of
printing or linotype machines to whom could be ascribed the supposed resort to the usual
exaggerations of trade in said items. His certification as to the condition of the machine was not
made to induce petitioner to purchase it but to confirm in writing for purposes of the financing
aspect of the transaction his representations thereon. Ordinarily what does not appear on the
face of the written instrument should be regarded as dealer’s or trader’s talk, conversely, what is
specifically represented as true in said document cannot be considered as mere dealer’s talk.
YES. The rule on redhibitory defects in Art. 1561 of the Civil code shall be contemplated. A
redhibitory defect must be an imperfection or defect of such nature as to engender a certain
degree of importance. An expert witness for the petitioner categorically established that the
machine required major repairs before it could be used plus the fact that the machine was never
appropriately used from the time of the purchase until an action was filed attest to the major
defects in said machine.
The present case involves one with express warranty. Consequently, the general rule on
rescission of contract, which is 4 years shall apply.
Nutrimix Feeds Corporation vs. CA, 25 October 2004
FACTS:
Spouses Efren and Maura Evangelista started to directly procure various kinds of animal feeds
from petitioner Nutrimix feeds corp. THey incurred about P766,151.00 unsettled account.
Nutrimix demanded payment but the spouses did not pay them and some of the checks issued
by the spouses were dishonored due to account closed.
Nutrimix filed a complaint for sum of money and damages.
Spouses averred that the feeds given to them were what caused the deaths of their various
poultry and livestock submitting to a veterinarian and various government agencies samples of
the feeds and the results showed that the feeds were laced with pesticide.
The RTC rules in favor of Nutrimix, upon appeal, the CA modified the decision and dismissed
the complaint ruling taht respondents were not obligated to pay their outstanding obligation to
the petitioner in view of its breach of warranty against hidden defects.
ISSUE: WON there is sufficient evidence to hold the petitioner guilty of breach of

warranty.
HELD:
NO. We hold that the respondents failed to prove that the petitioner is guilty of breach of
warranty due to hidden defects. The bevy of expert evidence adduced by the respondents is too
shaky and utterly insufficient to prove that the Nutrimix feeds caused the death of their animals.
For these reasons, the expert testimonies lack probative weight. The respondents’ case of
breach of implied warranty was fundamentally based upon the circumstantial evidence that the
chickens and hogs sickened, stunted and died after eating nutrimix feeds; but this was not
enough to raise a reasonable supposition that the unwholesome feeds were the proximate
cause of death with that degree of certainty and probability required. The rule is well-settled that
if there be no evidence, or if evidence be so slight as not reasonably to warrant interference of
the fact in issue or furnish more than materials for a mere conjecture, the court will not hesitate
to strike down the evidence and rule in favor of the other party. This rule is both fair and sound.
Any other interpretation of the law would unloose the courts to meander aimlessly in the arena
of speculation.
Philippine Steel Coating Corp. vs. Quinones, G.R. No. 194533, February 15, 2017
FACTS:
Quinones filed a complaint for damages against Philsteel after buying paint to manufacture bus
units and sometime after that received several complaints from customers that the paint or finish
used on the purchased vehicles were breaking and peeling off. Quinones sent a letter complaint
to philsteel invoking the warranties given by the latter.
Philsteel counters that Quinones himself offered to purchase the product without being induced
by philsteel representatives. According to its own investigation, the breaking and peeling off of
the paint was caused by the erroneous painting application done by Quinones.
RTC rendered a decision in favor of Quinones and the CA affirmed the decision.
Hence the petition.
ISSUE:
WON the vague oral statements made by seller on the characteristics of a generic good
can be considered warranties that may be invoked to warrant payment of damages
WON general warranties on the suitability of product sold prescribe in 6 months under
Art. 1571
WON Non payment of price is justified on allegations of breach of warranty.
HELD:
YES. Under Art. 1546, no affirmation of the value of the thing, nor any statement purporting to
be a statement of the seller’s opinion only, shall be construed as a warranty unless the seller
made such affirmation or statement as an expert and it was relied upon by the buyer.
Despite its claims to the contrary, petitioner was an expert in the eyes of the buyer Quinones.
The court cannot subscribe to petitioner’s stand that what they told Quinones was mere dealer’s
talk or an exaggeration in trade that would exempt them from liability for breach of warranty.
However, contrary to that, Art. 1340 cannot be applied. Quinones did not talk to an ordinary
sales clerk, Quinones talked to Angbengco, the boss. Angbengco was making it appear to
Quinones that Philsteel had already subjected the latter’s primed G.I. Sheets to product testing.

Philsteel was in effect inducing the mind of the buyer the belief that the former was an expert on
the primed GI Sheets in question and that the statements of Angbengco could be relied on.
NO. there being an express warranty, this court holds that the prescription period applicable is
that prescribed for breach of express warranty. The applicable prescription period is based on
Art. 1389, 4 years.
YES. since what was proven was express warranty, Art. 1599 applies. Quinones had opted for a
reduction in price or non payment of the unpaid balance of the purchase price. Art. 1599 defined
the remedy of recoupment in the diminution or extinction of price in case of a seller’s breach of
warranty. According to the provision, recoupment refers to the reduction or extinction of the price
of the same item, unit, transaction or contract upon which a plaintiff’s claim is founded.
Spouses Batalla vs. Prudential Bank, G.R. No. 200676, March 25, 2019
FACTS:
Spouses BATALLLA purchased a brand new Honda Civic from Honda cars san pablo Inc.
Prudential bank brokered the deal. 3 days after delivery, the spouses reported that the car rear
right door broke down and that a certain Sanchez was consulted who claimed that the power
lock of the rear right door was defective and that the car was no longer brand new because of
the paint of the roof was merely retouched.
Unable to secure a brand new car in replacement of the alleged defective vehicle, Spouses
Batalla filed a complaint for rescission of contracts and damages against prudential and Honda.
RTC and CA decided for Private respondents.
ISSUE:
WON The motor vehicle had hidden defects
WON the spouses may rescind the contract of sale, car loan agreement and promissory
note due to the defects of the motor sold.
HELD:
NO. the hidden defects of the car door were not sufficiently proven to be important or serious.
The hidden defect contemplated under Art. 1561 of the Civil code is an imperfection or defect of
such nature as to engender a certain degree of importance and not merely one of little
consequence. The spouses failed to prove that such defect had severely diminished the
roadworthiness oft he motor vehicle. In fact, they admitted that they had no problem as to the
road worthiness of the car. In addition, it cannot be ascertained whether the defects existed at
the time of the sale. A remote control door mechanism was immediately installed after the car
was delivered to spouses Batalla. The modification made to the motor vehicle raises the
possibility that the defect could have been caused or had occurred after the installation of the
remote control door system.
NO. They transactions of Spouses Batalla with Prudential and Honda are distinct and separate
from each other. From the time the spouses accepted the loan proceeds from Prudential, the
loan agreement had been perfected. As such, they were bound to comply with their obligations
under the loan agreement regardless of the outcome of the contract of sale with Honda. The
spouses recourse in case of defects in the motor vehicle delivered to them was limited against
Honda and does not extend to Prudential as it merely lent the money to purchase the car.
Jurado vs. Spouses Chai, G.R. No. 236516, March 25, 2019

FACTS:
Petitioners Asuncion and Catalina claimed to be the registered owners together with their
deceased brother of a 7,086 parcel of land denominated as Lot 4900 of the Cadastral survey of
Santiago, Isabela which they inherited from the father, Dominador Zamora.
Sometime in 1997, they discovered that respondents unlawfully caused the subdivision of
Lot4900 into several parcels of land under 4 certificates of title. This prompted the Zamoras to
file an annulment case against respondents, and the Register of Deeds for Isabela. They
claimed that the titles of Chai et. al. proceeded from a fake Original Certificate of Title No 3429
that was reconstituted judicially and administratively without notice to all concerned parties, and
without following the prescribed procedure.
RTC ruled petitioners were able to discharge their burden of proving their claim of ownership
over lot 4900 by preponderance of evidence. It held that petitioners were able to show that they
and their predecessors-in-interest were issued certificates of title over the said land.
CA reversed the RTC decision and dismissed the annulment case for lack of merit.
ISSUE:
WON Respondents were purchasers in good faith
WON Petitioners have proven their claim of ownership over lot 4900
HELD:
NO. Persons dealing with administratively reconstituted titles should conduct an inquiry or
investigation as might be necessary to acquaint themselves with the defects in the titles of their
vendors. Case law states that reconstituted titles shall have the same validity and legal effect as
to the originals thereof unless the reconstitution was made extrajudicially or administratively.
This is because administrative reconstitution is essentially ex parte and without notice, and thus,
administratively reconstituted title do not share the same indefeasible character of the original
certificates of title. Anyone dealing with such copies are put on notice of such fact and warned to
be extra careful.
It is apparent that Spouses Parinas were not issued OCT 3429 and said title is totally inexistent.
That is was reconstituted is of no moment because an administrative reconstitution of title is
merely a restoration or replacement of a lost or destroyed title in its original form at the time of
the loss or destruction. The issuance of a reconstituted title vests no new rights and determined
no ownership issues, and shall always be without prejudice to any party whose right or interest
in the property was duly noted in the original, at the time it was lost or destroyed, but entry or
notation of which ahs not been made on the reconstituted certificate of title, as expressly
provided under Sec. 7 of RA 26. Consequently, this court finds respondents not to be innocent
purchaser for value, and as such, acquired no better title to lot 4900 than what their
predecessors-in-interest had, and which is without prejudice to the rights of another person who
may prove a better right thereto than their transferors.
YES. Petitioner shave an owner’s duplicate certificate of title in genuine/authentic judicial form
109-D. The title bearing serial number had been duly certified by the LRA. Petitioners are in
possession of ancient documents showing acts of dominion by Antonio Parinas and Dominador
Zamora over lot 4900 prior to the supposed acquisition of the same land by respondents.
ENGINEERING AND MACHINERY CORP. VS. CA, G.R. NO. 52267, JAN. 24, 1996

FACTS:
Pursuant to the contract dated September 10, 1962 between petitioner and private respondent,
the former undertook to fabricate, furnish and install the airconditioning system in the latter’s
building. The system was completed in 1963 and accepted by private respondent who paid in
full price.
Sometimes in 1971, it was learned that there are defects in the airconditioning system of the
building and affirmed by an engineer who rendered a technical evaluation of the system in
relation to the contract with peititoner. In the report, enumerated defects of the system and
concluded that it was not capable of maintaining the desired room temperature of 76 Fahrenheit
-2 Fah.
On the basis of this report, private respondent filed on May 8 1971 an action for damages
against petitioner. The complain alleged that the airconditioining system installed by petitioner
did not comply with the agreed plans and specifications. Private respondent payed for the
amount of P210,000. Representing rectification cost, P100,000 as damages and P15,000 as
attorney’s fees.
Petitioner moved to dismiss the complaint alleging that the prescriptive period of 6 months had
set in pursuant to Art. 1566 and 1567 in relation to Art. 1571 of the Civil code regarding the
responsibility of a vendor for any hidden faults or defects in the thing sold.
Private respondent countered that the contract was not a contract of sale but a contract for a
piece of work under Art. 1713 of the civil code. Thus in accordance with Art 1144, the complaint
was timely brought within the 10 year prescriptive period.
Petitioner argued that Art. 1571 providing 6 months prescriptive period is applicable to a
contract for a piece of work by virtue or Art. 1714, which provides that such a contract shall be
governed by the pertinent provision on warranty of title and against hidden defects and the
payment of price in a contract of sale.
RTC ruled in favor of private respondent and denied motion to dismiss of petitioner. CA affirmed
the decision of the RTC.
ISSUE:
WON the contract was one of sale or for a piece of work.
HELD:
NO. the contract in question is one for piece of work. It is not petitioner’s line of business to
manufacture airconditioning systems to be sold off the shelf. Its business and particular field of
expertise is the fabrication and installation of such systems as ordered by customers and in
accordance with the particular plans and specifications provided by the customers. Naturally, the
price or compensation for the system manufactured and installed will depend greatly on the
particular plans and specifications agreed upon with the customers.
Redhibitory action can only be applied in implied warranties. And where there is express

warranty in the contract as in the case at bench, the prescriptive period is the one specified in
the express warranty and in the absence of such period the general rule on rescission of
contract which is 4 years (Art. 1389) would apply.
It would appear that this suit is barred by prescription because the complaint was filed more
than 4 years after the execution of the contract and the completion of the airconditioning
system.
However, a close scrutiny of of the complaint reveals that the original action is not really for
enforcement of warranties against hidden defects but one for breach of the contract itself. It
alleged that the petitioner in the installation of the airconditioining system did not comply with
the specifications provided in the written agreement between the parties and an evaluation of
the airconditioinig system as installed by defendant.
Having concluded that the original complaint for damages arising from breach of a written
contract, the governing law is Art. 1715. However in asmuch as this provision does not contain a
specific prescriptive period, the general law on prescription, which is Art. 1144 of the Civil code
will apply. It says that actions upon a written contract prescribe in 10 years. Since the governing
contract was executed on Sept. 10 1962 and the complaint was filed on May 8 1971, it is clear
that the action has not prescribed.
The mere fact that private respondent accepted the work does not ipso facto relieve the
petitioner from liability for deviations from and violations of the written contract as the law gives
him 10 years within which to file an action based on breach thereof.
Spring Homes Subdivision Co., Inc. vs. Tablada, Jr., 815 SCRA 114, G.R. No. 200009
January 23, 2017
FACTS:
Petitioners Spouses Lumbres and Springhomes entered into a joint venture agreement for the
development of several parcels of lands. For reasons of convenience and in order to facilitate
the acquisition of permits and licenses i nconnection with the project, the spouses transferred
the titles to the parcels of land in the name of Spring homes.
On Jan. 9 1995, Spring homes entered into a contract to sell with the respondents, spouses
TTablada for the sale of a parcel of land covered by a TCT.
On March 20 1995, spouses Lumbres filed with RTC a complaint for collection of sum of
money, specific performance and damages against Spring homes for its alleged failure to
comply with the terms of the Joint venture.
Spouses Tablada began constructing their house on the subject lot.

On January 16 1996, Spring homes executed a deed of Absolute sale in faovr of the Spouses
tablada who paid a total of P179,500.00. The tiel over the subject property however remained
with Spring homes for its failure to cause the cancelleation of the TCT and the issuance of a
new one in favor of the spouses Tablada who received only a photocopy.
Spouses Tablada discovered the property was mortgaged as a security loan with Premiere
Development Bank as mortgagee and Spring Homes as mortgagor.
Without waiting for the trial of specific performance, Spouses Lumbres and Spring homes
entered into a compromise agreement where in Spring homes conveyed the subject property to
the spouses Lumbres.Lumbres were authorized to collect Spring homes account receivables
arising from the conditional sales of several properties as well as to cancel said sales in the
event of default of payment by the subdivision lot buyers.
Spouses Lumbres sent demand letters to Spouses Tablada for the payment of an alleged
outstanding balance. When no payment was received, the spouses Lumbres cancelled the
contract to sell previously executed. The title was issued i nthe name of Lumbres.
Spouses Tablada filed a complaint of Nullification of title, reconveyance and damages against
Spring homes and Lumbres praying for the nullifiction of the second deed of absolute sale
executed in favor of the Lumbres.
RTC dismissed the Tablada complaint for lack of jurisdiction. CA reversed and set aside the
RTC decision.
ISSUE:
WON the Deed of Sale executed by the Spouses Tablada is void for having no valuable
consideration
WON Spouses Tablada acquired ownership over the subject property on the first Deed of
Absolute sale
HELD:
No. It is clear from the first deed of absolute sale that the consideration for the subject property
is P157,500.00. In fact, the same amount was indicated as the purchase price in the 2nd deed
of Absolute sale between springhomes and spouses Lumbres.
The deed of Absolute sale between Springhomes and the spousess Tablada, the court shall
now determine who as between the spouses
YES. Art. 1544 of the civil code reads:

Art. 1544 if the same thing should have been sold to different vendees the ownership shall be
transferred to the person who may have first taken possession thereof in good faith, if it should
be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession, and, in the absence thereof, to the person who presents the oldest title,
provided there if good faith.
The principle of primus tempore, potior jure (first in time, stronger in right) gains greater
significance in case of a double sale of immovable property. Thus, the court had consistently
ruled that ownership of an immovable property which is the subject of a double sale shall be
transferred:
1. To the person acquiring it who in good faith first recorded it in the REGISTRY OF
PROPERTY
2. In default thereof, to the person who in good faith was first in possession
3. In default thereof, to the person who present the oldest tile, provided there is good faith
The requirement of the law then is two fold: acquisition in good faith and registration in good
faith. Good faith must concur with the registration - that is the registrant must have no
knowledge of the defect or lack of title of his vendor or must not have been aware of facts which
should have put him upon such inquiry and investigation as might be necessary to acquaint him
with the defects in the title of his vendor. If it is shown that a buyer was in bad faith, the alleged
registration they have made amounted to no registration at all.
Here the Tablada were able to take said property into possession but failed to register the same
because of Spring homes unjustified failure to deliver the owner’s copy of the title whereas the
2nd buyers, Spouses Lumbres were able to register the property in their names. But while said
spouses Lumbres successfully caused the transfer of the title in their names, the same was
done in bad faith. The spouses Lumbres cannot claim good faith since at the time of the
execution of the compromise agreement with Spring homes, they were indisputably and
reasonably informed that the subject lot was previously sold to the Spouses Tablada. They were
also aware that the Tabladas had constructed a house thereon and were in physical possession
thereof. They cannot be permitted to freely claim good faith for the simple reason that the first
deed of absolute sale between spring homes and spouses tablada was not annotated at the
back of the subject property’s title.
Edu vs. Gomez, 129 SCRA 601;
FACTS:
The subject matter is a 1968 model Volkswagen, bantam car, allegedly owned by Lt. Walter A.
Bala and reported missing.
The car was already in possession of private respondent Lucila Abello who bought it from
Marcelino Guansing under the notarial deed of absolute sale dated August 11 1970. She has
been in possession thereof since then until February 3 1971 when the Anti Carnapping unit of
the Philippine Constabulary took possession of the car and immediately seized and impounded
the car as stolen property.

Private respondent filed a complaint for replevin with damages in respondent court.
ISSUE:
WON petitioners, on complaint of a certain party, have the right to seize the subject car
as it appears to be the property that was stolen from Lt. Walter A. Bala several months
ago
HELD:
NO. The acquirer or the purchaser in good faith of a chattel of movable property is entitled to be
respected and protected in his possession as if he were the true owner thereof until a
competent court rules otherwise. In the meantime, as the true owner, the possessor in good
faith cannot be compelled to surrender possession nor to be required to institute an action for
the recovery of the chatter, whether or not an indemnity bond is issued in his favor. The filing of
an information charging that the chattel was illegally obtained through estafa from its true owner
by the transferor of the bona fide possessor does not warrant disturbing the possession of the
chattel against the will of the possessor.
The Land transportation commission may issue a warrant of constructive or actual distraint
against motor vehicle for collection of unpaid fees for registration, re-registration or delinquent
registration of vehicles.
Spouses Manlan vs. Spouses Beltran, G.R. No. 222530, October 16, 2019
FACTS:
The present case involves the conflicting claims of 2 sets of buyers over a parcel of land.
Spouses Manlan bought the property from one of its co-owners and built their house thereon in
good faith. Meanwhile, spouses Beltran claims of having bought the same land from all the
co-owners and registered in good faith.
Spouses Beltran after having registered the TCT in their name, demanded from petitioners to
vacate the property in dispute to no avail. They brought the matter to the barangay lupon. When
conciliation failed, respondents filed an action for quieting of title and recovery of possession of
the 500 sp.m. portion of the subject land.
In the complaint, respondents claimed to be the absolute owners of the property having bought
it from the Orbetas. Petitioners contend that the DOAS dated Nov. 20 1990 executed by
respondents and the Orbetas was fictitious, having been procured by means of falsification and
insidious scheme and machination because at the time it was notarized, one of the co-owners,
Serbia was already dead.
ISSUE:
WON The rules on double sale are applicable
WON the DOAS dated November 20 1990 is valid.
WON the respondents are innocent purchasers for value and were in bad faith in

registering the subject lot.
HELD:
NO. In Cheng v. Genato, the court enumerated the requisites in order for Art. 1544 to apply
a. The 2 or more sales transaction in issue must pertain to exactly the same subject matter,
and must be valid sales transactions
b. The 2 or more buyers at odds over the rightful ownership of the subject matter must
each represent conflicting interests and
c. The 2 or more buyers over the rightful ownership of the subject matter must each have
bought from the very same seller.
Here, the petitioners and respondents acquired the subject property from different transferors.
Evidently, there are two sets of vendors who sold the subject land to 2 different vendees. Thus,
this court upholds the findings of the trial court and CA that the rule on double sale is not
applicable in the instant case.
YES. Basic is the rule in civil law that the necessity of a public document for contracts which
transmit or extinguish real rights over immovable property, as mandated by Art. 1358 of the Civil
Code is only for convenience. Its not necessary for validity or enforceability. In other words, the
failure to follow the proper form by Art. 1358 of the Civil code does not render the acts or
contracts invalid. Where a contract is not in the form prescribed by the law, the parties can
merely compel each other to observe that form, once the contract has been perfected.
In addition, the sale of a real property that is not consigned in a public instrument is,
nevertheless, valid and binding among the parties. This is in accordance with the time-honored
principle that even a verbal contract of sale of real estate produces legal effects between the
parties. Contracts are obligatory, in whatever form they may have been entered into, provided all
the essential requisites for their validity are present.
YES. the court finds that petiitoner’s objective in alleging respondent’s bad faith in securing the
title is to annul and set aside the judgment pursuant to which such title was decreed. Apparently,
the attack on the proceeding granting respondents’ title was made as an incident in the main
action for quieting of title and recovery of possession. Evidently, petitioner’s action is a collateral
attack on the respondent’s title, which is prohibited under the rules.
Ten Forty Realty & Dev’t Corp. vs. Cruz, G.R. No. 151212 Sept. 10, 2003
FACTS:
Galino allegedly sold the property in question to Ten Forty in 1996, then sold the same property
to respondent in 1998. Petitioner argued that being the first buyer, it has a better right to own the
realty. Petitioner admitted that its deed of sale had not been recorded in the registry of deeds.
Subject property had also not been delivered to petitioner. Hence, as between the 2 buyers,
respondent was first in actual possession of the property.

ISSUE:
WON respondent’s occupation or possession of the property was merely through the
tolerance or permission of herein petitioner
WON the ejectment case should have been forcible entry case where prior physical
possession is indispensable
WON the respondent’s possession or occupation of the said property is in the nature an
exercise of ownership which should put the herein petitioner on guard
HELD:
NO. Petitioner’s tolerance of respondent’s occupation of the premises has not been proven, the
possession should be deemed illegal from the beginning. Thus the CA correctly ruled that the
ejectment case should have been for forcible entry - an action that had already prescribed when
complaint was filed.
NO. The CA did not err when it ruled that petitioner’s complaint for unlawful detainer was a mere
subterfuge or a disguised substitute action for forcible entry which ahd already prescribed. To
repeat, to maintain a viable action for forcible entry, plaintiff must have been in prior physical
possession of the property; this is an essential element of the suit.
YES. In the absence of the required inscription, the law gives preferential right to the buyer who
in good faith is first in possession. In determining the question of who is first in possession,
certain basic parameters have been established by jurisprudence.
1. The possession in Art. 1544 includes not only material but also symbolic possession
2. Possessors in good faith are those who are not aware of any flaw in their title or mode of
acquisition
3. Buyers of real property that is in the possession of persons other than the seller must be
wary - they must investigate the rights of the possessors
4. Good faith is always presumed; upon those who allege bad faith on the part of the
possessors rests the burden of proof
Petitioner has not proven that respondent was aware that her mode of acquiring the property
was defective at the time she acquired it from Galinol thus respondent relied on the tax
declarations thereon.
In view of the foregoing, we affirm the CA ruling that respondent is entitle to possession de
facto. This determination, however, is only provisional in nature. Well settled is the rule that an
award of possession de facto over a piece of property does not constitute res judicata as to the
issue of its ownership.
Spouses Tomas and Silvina Occena vs. Esponilla, GR No 156973, 6-4-2004

FACTS:
The subject land was owned by spouses Tordecillas and inherited by their children Harod,
Angela and Rosario.
Harod and Angela and grandchildren Arnold and Lilia in 1951 executed a Deed of Pacto De
Retro Sale in favor of Alberta Morales covering the southwestern portion of the lot within an
area of 748 sq.m. 3 years later, in 1954, Arnold and Lilia executed a deed of definite sale of
shares, rights, interests and participation over the same lot in favor of Alberta Morales.
Alberta possessed the lot as owner, constructed a house on it and appointed a caretaker to
oversee her property. There after, in July 1956, Arnold de la Flor borrowed the OCT from Alberta
covering the lot. He executed an affidavit acknowledging receipt of the OCT in trust and
undertook to return said title free from changes, modifications or cancellations.
1966 - Arnold and Angela, nephew and daughter respectively of the Tordesillas spouses,
without knowledge of Alberta, executed a deed of extrajudicial settlement declaring the 2 as the
only co-owners of the undivided 1,198 sq.m. lot no 265 without acknowledging their previous
sale to Alberta. A number of times, thereafter, Alberta and her nieces asked Arnold for the OCT
of the land but Arnold just kept promising to return it.
In 1983, Arnold executed an Affidavit of Settlement of the Estate of Angela who died in 1978
without issue, declaring himself as the sole heir of Angela and thus consolidating the title of the
entire lot in his name.
In 1985, Alberta Morales died. Her nieces-heirs succeeded in the ownership of the lot. Nieces
went to the US, Arnold did not return the OCT.
Arnold used the OCT and subdivided the entire lot into 3 sublots and registered them all under
his name. (SNAAAKKE!)
Arnold sold lots 265 B and C to spouses Tomas and Sylvina Occena which included Alberta’s
lot. DOAS were transferred to their names.
In 1993, the nieces learned about the second sale when they were notified by caretaker Abas
that they were being ejected from the land.
The heirs filed a case for annulment of sale and cancellation of title with damages against the
Occena spouses.
RTC ruled in favor of Occena, CA reversed the decision and found the Occena purchased the
land in bad faith and the action of Alberta’s heirs was not barred by prescription or laches.
ISSUE:
WON Respondents were purchasers in good faith

WON the action to annul filed by respondents is barred by laches and prescription
HELD:
NO. The petition at bar presents a case of double sale of an immovable property Art. 1544 of
the New Civil code provides that in case an immovable property is sold to different vendees, the
ownership shall belong:
1. To the person who acquiring it who in good faith first recorded it in the registry of
property
2. Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in possession
3. In the absence thereof, to the person who presents the oldest title, provided there is
good faith.
In all cases, good faith is essential. It is the basic premise of the preferential rights granted to
the one claiming ownership over an immovable. What is material is whether the 2nd buyer first
registers the 2nd sale in good faith. The defense of indefeasibility of a Torrens title does not
extend to a transferee who takes the certificate of title in bad faith with notice of a flaw.
Petitioners failed to prove good faith in their purchase and registration of the land. A purchaser
in good faith and for value is one who buys without notice that some other person has a right to
or interest in such property and pays its fair price before he has notice of the adverse claims
and interest of another person in the same property. So it is that the honesty of intention which
constitutes good faith implies a freedom from knowledge of circumstances which ought to put a
person on inquiry. At the trial, Tomas Occena admitted that he found houses built on the land
during its ocular inspection prior to his purchase. He relied on the representation of vendor,
Arnold that these houses were owned by squatters and that he was merely tolerating their
presence on the land. Tomas should have verified from the occupants of the land the nature and
authority of their possession isntead of merely relying on the representation of the vendor,
having seen for himself that the land was occupied by persons other than the vendor who was
not in possession of the land at that time.
The settled rule is that a buyer of real property in the possession of persons other than the seller
must be wary and should investigate the rights of those in possession. Without such inquiry, the
buyer can hardly be regarded as a buyer in good faith and cannot have any right over the
property.
NO. The action to annul title filed by respondent heirs is not barred by laches and prescription.
Firstly, laches is a creation of equity and its application is controlled by equitable considerations.
Laches cannot be used to defeat justice or perpetuate fraud and injustice. Neither should its
application be used to prevent the rightful owners of a property from recovering from what has
been fraudulently registered in the name of another.
Secondly, prescription does not apply when the person seeking annulment of title or
reconveyance is in possession of the lot because the action partakes of a suit to quiet title which
is imprescriptible.
Manigque-Stone vs. Cattleya Land, Inc., 802 SCRA 173, G.R. No. 195975 September 5,

2016
FACTS:
Cattleya land inc entered into a Contract of Conditional Sale with Tecson spouses in Bohol and
sent their atty who found that there were no encumbrances or liens on the subject property
except for an attachment issued in connection with civil case no. 3399 entitled Tantrade Corp
vs. Bohol Resort Hotel Inc.
However the conditional sale and DOAS could not be annotated on the certificate oftitle
covering the subject property because the register of deeds of bohol Atty. Dela Serna refused to
annotate both deed. Atty. Dela Serna said it was improper to do so because of the writ of
attachment due to civil case no 3399.
The writ of attachment was lifted later but still Cattleya did not succeed in having the DOAS
registered because it could not surrender the owner’s copy of TCT which was in possession of
the Tecson spouses. Tecson spouses say that the TCT was destroyed in a fire which broke out
in Bohol.
The claim turned out to be false. The TCT had been presented by Taina at the office of the
register of deeds of bohol along with the deed of sale that was executed by the Tecson spouses
in favor of Taina covering the subject property.
Taina’s commonlaw husband, Michael Stone purchased the land from Tecson. The DOAS was
named in favor of Taina. Taina and Mike eventually marry.
Cattleya instituted against Taina a civil action for quieting of title and recovery of ownership and
cancellation of title with civil damages.
RTC decided for Cattleya finding that Cattleya was the first to register and that the sale to Mike
Stone was null and void because under the Philippine Constitution a foreigner or alien cannot
acquire real property in the Philippines. In the time of sale, Taina was only Mike’s dummy and
their subsequent marriage did not validate or legitimize the salee and that Taina herself admitted
that at the time she cause the sale to be registered and title thereto issued to her, she knew or
was otherwise aware that the very same lot had already been sold to Cattleya or at leaset
claimed by the latter and constitutive of bad faith on her part.
CA Affirmed RTC decision.
ISSUE:
WON the sale of land by the Tecson Spouses to Michael Stone a foreigner, although
ostensibly made in Taina’s name was valid despite the constitutional prohibition against
the sale of lands in the Philippines to foreigner or aliens.
HELD:
NO. Given the plain and explicit language of this constitutional mandate, it has been held that

aliens, whether individuals or corporations, are disqualified from acquiring lands of the public
domain. hence , they are also disqualified from acquiring private lands. The primary purpose of
the constitutional provision is the conservation of the national patrimony.
Given the fact that the sale by the Tecson spouses to Taina as Mike’s dummy was totally
abhorrent and repugnant to the Philippine Constitution, and is thus, void ab initio, it stands to
reason that there can be no double sale to speak of here. There is only one sale to reckon with,
that is, the sale to Cattleya.
Limson vs. CA, 357 SCRA 209;

FACTS:
Limson alleged that spouses De Vera through their agent, offered to sell petitioner a parcel of
land in Paranaque. She agreed and gave the sum of P20,000.00 to respondent spouses as
earnest money that respondents signed a receipt therefor and gave her a 10 day option period
to purchase the property.
Spouses De Vera failed to meet with petitioner to consummate the transaction. In a second
meeting, petitioner was informed that respondents failed to pay the back taxes of the property.
Petitioner gave De Vera 3 checks for the payment of back taxes and for the payment of the
quitclaims of the 3 tenants of subject land. The amount was purportedly considered part of the
purchase price and respondent signed the receipts therefor.
Petitioner alleged that she was surprised to learn that the respondent spouses were negotiating
the sale of the subject land to respondent Sunvar. As a consequence, she filed an Affidavit of
Adverse claim. The DOAS between respondent spouses and SUNVAR was executed. Petitioner
claimed that her valid and legal right to purchase was ignored, if not, violated. She maintained
SUNVAR was in bad faith as it knew of her contract to purchase the subject property from
respondent spouses.
RTC decided for petitioner, CA reversed the decision.
ISSUE:
WON there was a perfected contract to sell between petitioner and respondent
HELD:
NO. A scrutiny of the facts as well as the evidence of the parties overwhelmingly leads to the
conclusion that the agreement between the parties was a contract of option and not a contract
to sell.
An option is a continuing offer or contract by which the owner stipulates with another that the
latter shall have the right to buy the property at a fixed price within a time certain, or under, or in
compliance with, certain terms and conditions, or which gives to the owner of the property the
right to sell or demand a sale. It is also sometimes called an unaccepted offer. An option is not a
purchase but merely secured the privilege to buy. A vendor does not sell his land, he sells the
right or privilege to buy at the election or option of the other party.

The P20,000.00 paid by petitioner was not earnest money but option money. Earnest money is
part of the purchase price while option money is the money given as a distinct consideration for
an option contract. Earnest money is given only where there is already a sale, option money
applies to a sale not yet perfected and when earnest money is given, the buyer is bound to pay
the balance while when the would-be buyer gives option money, he is not required to buy, but
may even forfeit it depending on the terms of the option.
As to whether respondent spouses were at fault for the non consummation, we agree with the
CA that they were not to be blamed.
1. Respondent spouses were the ones who initiated the meeting
2. The Ramoses failed to appear was beyond the control of respondent spouses
3. The succeeding meetings that transpired were all beyond the option period.
4. The presence of petitioner was not enough as she was not even prepared to pay the
purchase price in cash as agreed upon.
5. Without the presence of the Ramoses, petitioner could have easily made the necessary
payment in cash as the price of the property was already set at P34.00 per sq. m.
San Miguel Properties vs. Huang, 336 SCRA 2000

FACTS:
Respondent spouses wanted to purchase the land of petitioner and sent 1 million earnest
money however with the following conditions:
1. That they be given the exclusive option to purchase the property withi n30 days from
acceptance of the offer
2. That during the period, the parties would negotiate the terms and conditions of the
purchase
3. And in the event that the parties do not come into an agreement the said P1million shall
be refundable.
San Miguel returned the P1 Million when the parties failed to agree on the terms and conditions
of the sale.
Spouses demanded execution of a DOAS and returned the earnest deposit. Petitioner refused
on the ground the respondents option to purchase had already expired.
Spouses filed a complaint for specific performance.
RTC dismissed the complaint. The CA reversed the judgment.
ISSUE:
WON there was a perfected contract of sale between the parties.
HELD:

NO. The 1 million earnest deposit could not have been given as earnest money contemplated in
Art. 1482 because at the time when petitioner accepted the terms of respondents offer, their
contract had not yet been perfected. This is evident from the following conditions attached by
respondent to their letter.
The first condition for an option period of 30 days sufficiently shows that a sale was never
perfected. Acceptance of this condition did not give rise to a perfected sale but merely to an
option or an accepted unilateral promise on the part of respondents to buy the subject property
within 30 days from date of acceptance of the offer. Such option giving the respondents the
exclusive right to buy the properties within the period agreed upon is separate and distinct from
the contract of sale which the parties may enter. All that respodnents had was the option to buy
the properties which privilege was not, however exercised by them because there was a failure
to agree on the terms of payment. No contract of sale may thus be enforced by respondents.
Atkins, Kroll & Co. vs. Cua Hian Tek, 102 Phil 948
FACTS:
Petitioner was sued for failure to deliver 1000 cartons which it had sold to B. Cua Hian Tek.
petitioner says that there was no contract of sale but only an option to buy which was not
enforceable for lack of consideration.
A letter was sent reading:
We are pleased to make you herewith the following firm offer subject to reply…. Supplier: Atikin,
Kroll, & Co.
Respondents accepted the offer unconditionally and delivered his letter of acceptance. However
due to shortage, the petitioner failed to deliver the commodities it had offered for sale.
ISSUE:
WON the acceptance only created an option, which lacking consideration had no
obligatory force
HELD:
NO. The acceptance was a contract of Sale. The petitioner argues that a unilateral promise
arose when the offeree accepted. Such an assumption is a mistake because a bilateral contract
to sell and to buy was created upon acceptance. So much so that respondents could be sued,
had he backed out after accepting, by refusing to get the sardines and/or to pay for their price.
Indeed the word option is found neither in the offer nor in the acceptance. On the contrary Exh.
respondents accepted the firm offer for the sale and adds the undersigned buyer has
immediately filed an application for import license.

Ang Yu Asuncion vs. CA, December 2, 1994

FACTS:
A complaint for specific performance was filed by Asuncuin and Tiong et al., against Cu Unjieng
and Tan. The plaintiffs are tenants or lessees of residential and commercial spaces owned by
defendants described as No. 630-638 Ongpin St., Binondo, Manila; that they have occupied
said spaces since 1935 and have been religiously paying the rental and complying with all the
conditions of the lease contract; that on several occasions before Oct. 9 defendants informed
plaintiffs that they are offering to sell the premises and are giving them priority to acquire the
same; that during the negotiations, Bobby Cu Unjieng offered a price of P6 M while plaintiffs
made a counter offer of P5M; thereafter, plaintiffs asked defendants to put their offer in writing to
which the defendants acceededl that in reply plaintiffs wrote asking that they specify the terms
and conditions of the offer to sell; that when plaintiffs did not receive any reply, they sent another
letter with the same reply. That since defendants failed to specify the terms and conditions of the
offer to sell and because of information received that defendants were about to sell the property,
plaintiffs were compelled to file the complaint to compel defendants to sell the property to them.
RTC decided in favor of defendants but should defendants decide to sell the property for
11million or lower, plaintiffs shall have the right of first refusal. CA affirmed the decision with
modification saying we find no reason not to grant the same right of refusal to herein appellants
in the event that the subject property is sold for a price in excess of 11 Million pesos.
Pending the appeal to the supreme court, Cu Unjieng spouses executed a DOAS transferring
the property in question to petitioner Buen Realty and Development Corp in consideration of the
sum of 15 Million pesos. The TCT was registered to Buen Realty.
Buen wrote to the lessees demanding that the latter vacate the premises. Lessees wrote a reply
to Buen stating that petitioner bought the property subject to the notice of lis pendens regarding
Civil case in the name of Cu Unjieng.
The lessees filed a motion for execution. The court rendered the execution of the necessary
DOS of the property in favor of plaintiffs in recognition of their right of first refusal. All previous
transaction involving the same property notwithstanding the issuance of another title to Buen
realty is hereby set aside as having been in bad faith.
On appeal, the CA set aside the decision and declared without force and effect.
ISSUE:
WON the Buen Realty can be held bound by the writ of execution by virtue of the notice
of lis pendens
HELD:
NO. The so called Right of First Refusal is an innovative juridical relation. It cannot be deemed
a perfected contract of sale under Art. 1458 of the Civil code. Neither can it per se brought
within the purview of an option under the 2nd paragraph of Art. 1479 OR possibly an offer under
Art. 1319. An option or an offer would require among other things, a clear certainty on both the

object and the cause or consideration of the envisioned contract. In a right of first refusal, while
the object might be made determinate, the exercise of the right, however, would be dependent
not only on the grantor’s eventual intention to enter into a binding juridical relation with another
but also on terms, including the price, that obviously are yet to be later formed up. Prior thereto,
it can at best be so described as merely belonging to a class of preparatory juridical relations
governed not by contracts but by among other laws of general application, the pertinent
scattered provisions of the Civil code on human conduct.
Even on the premise that such right of first refusal has been decreed under a final judgment, like
here, its breach cannot justify correspondingly an issuance of a writ of execution under a
judgment that merely recognizes its existence nor would it sanction an action for specific
performance without thereby negating the indispensable element of consensuality in the
perfection of contracts. It is not to say, however, that the right of first refusal would be
inconsequential for, such as already intimated above, an unjustified disregard thereof given, for
instance, the circumstances expressed in Art. 19 of the civil code can warrant a recovery for
damages.
F
The final judgment has merely accorded a right of first refusal. In fine, as it is here conveyed,
petitioners are aggrieved by the failure to honor the right of first refusal, the remedy is not a writ
of execution on the judgment since there is none to execute but an action for damages in a
proper forum for the purpose.
Bible Baptist Church vs. CA, 26 November 2004

FACTS:
The petitioner Baptist church entered into a contract of lease with respondents Villanueva
spouses. The pertinent stipulations in the lease contract were:
1. …
2. …
3. …
4. That upon signing of the Lease agreement, the lessee shall pay the sum 84k. Said sum
is to be paid directly to the Rural Bank for the purpose of redemption of said property
which is mortgaged by the Lessor
5. The title will remain in the safe keeping of the Baptist church until expiration of the lease
agreement or the leased premises be purchased by the lessee whichever comes first….
6. The leased premises may be renovated by the Lessee to the satisfaction of the Lessee.
7. …
8. That the Lessee has the option to buy the leased premises during the 15 years of the
lease. If the lessee decides to purchase the premises the terms will be:
a. Selling price of 1.8 M
b. Down payment agree upon by both parties
c. Balance of the selling price may be paid at the rate of 120k per year.

ISSUES:
WON the option to buy given to Baptist church is founded upon a consideration
WON by the terms of the lease agreement, a price certain for the purchase had been fixed
WON Baptist church is entitled to attorney’s fees.
HELD:
NO. Petitioners cannot insist that the 84K they paid in order to release the Villanueva’s property
from the mortgage should be deemed the separate consideration to support the contract of
option. It must be pointed out that said amount was in fact apportioned into monthly rentals
spread over a period of one year at P7,000.00 per month. The court agrees with respondent
that the amount of P84,000 has been fully exhausted and utilized by their occupation of the
premises and there is no separate consideration to speak of which could support the option.
To summarize the rules, an option contract needs to be supported by a separate consideration.
The consideration need not be monetary but could consist of other things or undertakings.
However, if the consideration is not monetary, these must be things or undertaking of value, in
view of the onerous nature of the contract of option. Furthermore, when a consideration for an
option contract is not monetary, said consideration must be clearly specified as such in the
option contract or clause.
NO. Having found that the option to buy granted to the petitioner Baptist Church was not
founded upon a separate consideration, and hence, not enforceable against respondents, this
Court finds no need to discuss whether a price certain had been fixed as purchase price.
NO. The option contract is not enforceable for being without consideration, the respondents
Villanueva’s refusal to comply with it cannot be basis of a claim for attorney’s fees.
Ridad v Filipinas Investments

FACTS:
Petitioner purchased from Supreme sales and development corp 2 brand new ford consul
sedanss. To secure payment, plaintiffs executed on the same date a promissory note covering
the purchase price and deed of chattel mortgage not only onthe 2 vehicles but also on another
car (Chevrolet) and plaintiff’s franchise or certificate of public convenience.
Due to the failure of the plaintiffs to pay their monthly installments as per promissory note, the
defendant corporation foreclosed the chattel mortgage extrajudicially and at the public auction
sale of the 2 ford consul cars, the defendant was the highest bidder. Due to the deficiency on
the 1st bidding, another auction on the remaining chattel mortgages were done and defendant
corporation was still the highest bidder who then sold and conveyed the same to herein
defendant, Jose Sebastian.
Plaintiffs filed for an action for annulment of contract. RTC ruled that the chattel mortgage in so

far as the taxicab franchise and used chevrolet car of plaintiff are null and void.
There being no issue of fact in the appeal, the CA subsequently certified to this court pursuant
to Sec. 3 of Rule 50 of the Rules of Court.
ISSUE:
WON the chattel mortgage in so far as the franchise and the subsequent sale was valid.
HELD:
NO. In the instant case, defendant corporation elected to foreclose its mortgage upon default by
the plaintiffs in the payment of the agreed installments. Having chosen to foreclose the chattel
mortgage and bought the purchased vehicles at the public auction as the highest bidder, it
submitted itself to the consequences of the law as specifically mentioned in Art. 1484, by which
it is deemed to have renounced any and all rights which it might otherwise have under the
promissory note and the chattel mortgage as well as the payment of the unpaid balance.
The lower court rightly declared the nullity of the chattel mortgage in so far as the taxicab
franchise and the Chevrolet car of plaintiffs are concerned holding that under the law, should the
vendor choose to foreclose the mortgage, he has to content himself with the proceeds of the
sale at the public auction of the chattels which were sold on installment and mortgaged to him
and having chosen the remedy of foreclosure, he cannot nor should he be allowed to insist on
the sale… this would be contrary to public policy and the very spirit and purpose of the law,
limiting the vendor’s right to foreclose the chattel mortgage only on the thing sold.
If the mortgagor unjustifiably refused to surrender the chattel subject of the mortgage upon
failure of 2 or more installments, if he concealed the chattel to place it beyond the reach of the
mortgagee that there by constrained the latter to seek court relief, the expenses, incurred, for
the prosecution of the case, such as attorney’s fees could rightly be awarded.
Borbon vs Servicewide
FACTS:
Borbon purchased a motor vehicle in favor oof Pangasinan Auto Mart through a promissory
note. The Promissory note was then assigned to Filinvest Corporation with notice to defendants.
Filinvest then assigned its rights, interest and title over the promissory note and the chattel
mortgage to servicewide.
Defendants did not pay their monthly installments. After sending the demand letter, Filinvest
then demanded the entire obligation.
Defendants claim that through misrepresentation and machination, Pangasinan Motor delivered
an insuzu crew cab, not what they purchased. The defendants claim they are not in default
since Pangasinan auto mart was first guilty of not fulfilling its obligation in the contract.
The CA ruled that petitioners could not avoid liability under the promissory note and chattel
mortgage that secured it since private respondent took the note for value and in good faith.
On appeal, petitioners merely seek a modification of the decision.

ISSUE:
WON an award of liquidated damages and attorney’s fees in favor of private respondent
was due.
HELD:
NO for the liquidated damages but YES for attorney’s fees. The promissory note may
appear to have been a negotiable instrument, private respondent, however, clearly
cannot claim unawareness of its accompanying documents so as to thereby gain a right
greater than that of the assignor.
11. Norkis Distributors Inc vs CA
Facts:
Petitioner Norkis is the distributor of Yamaha motorcycle in Negros Occidental. Private
respondent Alberto Nepales bought a new yamaha motorcycle from petitioner. The price of Php
7,500.00 was payable by means of a letter of Guaranty from the Development Bank of the
Philippines. Branch manager Labajo agreed to accept. As security for the loan, Nepales would
execute a chattel mortgage in favor of DBP. Labajo issued sales invoice no. 0120 showing that
contract of sale had been perfected. Nepales signed the invoice however the motorcycle
remained in Norkis’ possession.
Norkis delivered the motorcycle to a certain Julian Nepales who was allegedly the agent of
Alberto Nepales but the latter denies it. The record shows that Alberto and Julian Nepales
presented the unit to DBP’s appraiser-investigator Ernesto Arriesta at the DBP office. The
motorcycle met an accident on Feb 3 1980. The unit was being driven by a certain Zacarias
Payba at the time. The unit was a total wreck, was returned and stored inside the Norkis’
warehouse.
DBP released the proceeds of private respondent’s motorcycle loan to Norkis in the total sum of
Php 7,500.00. As the price of the motorcycle later increased, Nepales paid additional Php
328.00 and demanded delivery of the motorcycle. When Norkis could not deliver, Nepales filed
an action for specific performance with damages against Norkis.
Norkis answered that the motorcycle had already been delivered to private respondent before
the accident, hence, the risk of loss or damage had to be borne by him as owner of the unit.
Lower court ruled in favor of private respondent. On appeal, the CA affirmed the judgment but
deleted the award for the damages and denied Norkis’ motion for reconsideration. Hence, this
petition for review.
ISSUE: WON there had already been transfer of ownership of the motorcycle to Nepales at the
time it was destroyed.
HELD:
NO. In all forms of delivery, it is necessary that the act of delivery whether constructive or actual,
be coupled with the intention of delivering the thing. The act, without the intention, is insufficient.
When the motorcycle was registered by Norsis in the name of private respondent, Norkis did not
intent yet to transfer the title or ownership to Nepales but only to facilitate the execution of a
chattel mortgage in favor of the DBP for the release of the buyer’s motorcycle loan. The
execution in its favor of a chattel mortgage over the purchased vehicle is a pre-requisite for the

approval of the buyer’s loan.

The critical factor in the different modes of effecting delivery, 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 not tradition. In Addison vs Felix, the thing sold must be placed in his control.
The purchaser cannot have the enjoyment and material tenancy of the thing and make use of it
himself or through another in his name, because such tenancy and enjoyment are opposed by
the interposition of another will then fiction yields to reality- the delivery ha riot been effects.
Art. 1496 of the Civil code provides that “in the absence of an express assumption of risk by the
buyet, the things sold remain at seller’s risk until the ownership thereof is transferred to the
buyer”. There was neither an actual nor constructive delivery of the thing sold, hence, the risk of
loss should be borne by the seller.
Wherefore, finding no reversible error in the decision, petition is denied.
12. Luis and Lourdes Ridad vs Filipinas Investment 1983
FACTS:
Plaintiffs purchased from the Supreme Sales and Development Corporation 2 brand new Ford
Consuls sedans complete with accessories for Php 26,887.00 payable in 24 monthly
installments. To secure payment, they executed a promissory note covering the purchase price
and a deed of chattel mortgage not only on the 2 vehicles but also on another car (Chevrolet)
and plaintiff’s franchise or certificate of public convenience granted by the defunct Public
Service Commission for the operation of a taxi fleet. Then with the conformity of the plaintiffs,
the vendor assigned its rights, title and interest to the above mentioned promissory note and
chattel mortgage to defendant Filipinas Investment and Finance Corporation.
Due to their failure to pay the monthly installments as per promissory note, the defendant
foreclosed the chattel mortgage extra judicially and at a public auction sold the 2 ford consul
cars of which the plaintiffs were not notified, the defendant corporation was the highest bidder
and purchaser. The remaining properties in the chattel mortgage as well as the franchise to
operate 5 taxi cabs was sold for P8,000.00 to the highest bidder, defendant corporation. Which
subsequently sold and conveyed the same to herein defendant Jose Sebastian.
Plaintiffs filed an action for annulment of contract and was granted by the lower court.
Defendants appealed to the CA.
ISSUE: WON the chattel mortgage is valid in so far as the franchise and the subsequent sale
thereof are concerned to recover the deficiency on the first mortgage.
HELD: YES. The vendor of personal property sold on the installment basis is precluded after
foreclosing the chattel mortgage on the thing sold from having a recourse against the additional
security put up by a third party to guarantee the purchaser’s performance of his obligation on
the theory that to sustain the same would overlook the fact that if the guarantor should be
compelled to pay the balance of the purchase price, said guarantor will in turn be entitled to
recover what he has paid from the debtor-vendee, and ultimately it will be the latter who will be
made to bear the payment of the balance of the price, despite the earlier foreclosure of the
chattel mortgage given by him, thereby indirectly subverting the protection given the latter.
If the vendor under such circumstance is prohibited from having a recourse against the

additional security for reasons therein stated, there is no ground why such vendor should not
likewise be precluded from further extrajudicially foreclosing the additional security put up by the
vendees themselves, as in the instant case, it being tantamount to a further action 5 that would
violate Article 1484 of the Civil Code, for then is actually no between an additional security put
up by the vendee himself and such security put up by a third party insofar as how the burden
would ultimately fall on the vendee himself is concerned.
Arra Realty Corporation vs. Spouse Arguelles, 20 September 2004 [G.R. 169761.
December 1, 2010]
FACTS:
ARRA Realty and respondent Paces entered into an agreement to purchase a 5 storey building.
Paces failed to pay the full amount and Paces mortgaged the property to China bank. In order
for the foreclosure on the property to be stopped, Arra sold the property to Guarantee.

Guarantee then demand Paces to vacate.

Due to the harassment it allegedly suffered, Paces filed a complaint against Guarantee and
herein petitioners for Annulment of Sale, Title and Recovery of Real Property and Damages.
They entered into a compromise agreement.
Paces then filed an amended complaint dropping guarantee as defendant.
RTC ruled that Paces did not acquire ownership of the 3rd and 4th floor due to its failure to pay
full amount. The RTC ordered Arra to reimburse or pay Paces the amount it paid Arra with legal
interest from the time of the filing of the complaint.
CA ruled that Paces obtained ownership of the 3rd and 4th floors.
Subsequently, Paces filed a Motion for Entry of Judgment pointed out that a copy of the CA
decision was actually delivered to counsel’s address of record, but it was returned to sender
with notation, “Moved left no Address”. Petitioner opposed the motion.
ISSUE:
WON the CA decision has indeed attained finality
WON the petitioners be deemed to have received the decision only on June 23,2005 and
begin counting the 15 day period for filing a motion for reconsideration only from said
date
HELD:
YES. This doctrine of finality of judgment is grounded on fundamental consideration of public
policy and sound practice. In fact, nothing is more settled in law than that once a judgment
attains finality it thereby becomes immutable and unalterable. It may no longer be modified in
any respect, even if the modification is meant to correct what is perceived to be an erroneous
conclusion of fact or law, and regardless of whether the modification is attempted to be made by
the court rendering it or by the highest court of the land.
The finality of decision is a jurisdictional event which cannot be made to depend on the
convenience of the party. To rule otherwise would completely negate the purpose of the rule on
completeness of service, which is to place the date of receipt of pleadings, judgment and
processes beyond the power of the party being served to determine at his pleasure.
It should be borned in mind that the right of the winning party to the finality of the resolution of
the case is also an essential part of public policy and the orderly administration of justice.
Hence, such right is just as weighty or equally important as the right of the losing party to appeal
or seek reconsideration within the prescribed period.
NO. The filing of a notice of forwarding address with the office of the Postmaster can never be a
substitute to filing a notice of change of address with the court. The CA sent the notice of the
decision to counsel’s address of record via registered mail. Respondent submitted a letter
stating that mail was delivered to Atty. Lat’s address on April 15 2005. Hence as ruled in the
Philiippine Airlines case, such constructive service to herein petitioners should be considered
completed five days after the first notice, in this case, April 20, 2005. Petitioners then only had
until May 5 2005 within which to file a motion for reconsideration.
Laforteza vs. Machuca, 333 SCRA 643 [G.R. No. 137552. June 16 2000]
FACTS:
The property involved consists of a house and lot registered in the name of the late Francisco
Laforteza. The heirs of Francisco, through their representatives, entered into a MOA (Contract
to Sell) with Alonzo Machuca over the subject property for the sum of P630,000.00. After
payment of the earnest money in the amount of P30,000.00, Machuca was not able to

immediately pay the P600,000.00 balance. Later, cancellin

g the MOA in view of Machuca’s failure to comply with his contractual obligations. Machuca
insisted on making his payment and both RTC and CA ruled in his favor.
ISSUE:
WON the MOA is merely a lease agreement with option to purchase.
WON the failure of the respondent to pay the balance of the purchase price within the
period allowed is fatal to his right to enforce the agreement
HELD:
NO. A perusal of the MOA shows that the transaction between the petitioners and respondent
was one of sale and lease.
A contract of sale is a consensual contract and is perfected at the moment there is a meeting of
the minds upon the thing which is the object of the contract and upon the price. From that
moment the parties may reciprocally demand performance subject to the provisions of the law
governing the form of contracts. The elements of a valid contract of sale under Art. 1458 of the
Civil Code are 1. Consent or meeting of the minds, 2. Determinate subject matter and 3. Price
certain in money or its equivalent.
In the case at bench, there was a perfected agreement between the petitioners and the
respondent whereby petitioners obligated themselves to transfer the ownership and deliver the
house and lot and the respondent to pay the price. All the elements of a contract of sale were
thus present. However, the balance of the purchase price was to be paid only upon the issuance
of the new certificate of title in lieu of the one in the name of the late Laforteza and upon the
execution of an extrajudicial settlement of his estate. Prior to the issuance, the respondent was
already placed in possession of the house and lot as lessee thereof for 6 months at a monthly
rate of 3,500.00.
The 6 month period during which the respondent would be in possession of the property as
lessee, was clearly not a period within which to exercise an option. An option is a contract
granting a privilege to buy or sell within an agreed time and at a determined price. An option
contract is separate and distinct contract from that which the parties may enter into upon the
consummation of the option.
The 6 month period merely delayed the demandability of the contract of sale and did not
determine its perfection for after the expiration of the 6 month period, there was an absolute
obligation on the part of the petitioners and the respondent to comply with the terms of the sale.
There is no reservation of title made by the petitioners over the property, or any provision which
would impose non-payment of the price as a condition for the contract’s entering into force.
Although the MOA was also denominated as a Contract to sell, we hold that the parties
contemplated a contract of sale. A deed of sale is absolute in nature although denominated a
conditional sale in the absence of a stipulation reserving title in the petitioners until full payment
of the purchase price.
NO. Evidence reveals that after the expiration of the 6 month period provided for in the contract,
the petitioners were not ready to comply with the delivery of the reconstituted title of the house
and lot. It was only after nearly 8 month from execution of the MOA when the petitioners
informed the respondent that they already had a copy of the reconstituted title and demanded
the payment of the balance. The respondent could not therefore be considered in delay for in
reciprocal obligations, neither party incurs delay if the other party does not comply or is not
ready to comply in a proper manner with what was incumbent upon him.
Vda. De Mistica vs. Naguiat, 418 SCRA 73 [G.R. No. 137909. December 11, 2003]
FACTS:
On April 5, 1979, Eulalio Mistica entered into a contract to sell with respondent Bernardino
Naguiat over a portion of lot containing an area of 200 sq.m. Pursuant to their agreement, a

respondent gave a downpayment of P2,000.00 out of the full purchase price of P20,000.00. On
February 7, 1980, respondent made another payment of P1,000.00 and after that no other
payment was made. Eulalio died sometime in 1986. Petitioner Del Castillo, Eulalio’s widow, filed
with the trail court a complaint for rescission of the contract to sell alleging that the failure of
respondent to pay the balance constituted a violation of the contract which entitles her to
rescind the same. The trial court dismissed the complaint and ordered respondent to pay the
balance. The CA likewise disallowed rescission of the contract holding that the conclusion of the
10 year period was not a resolutory term because the contract stipulated that payment could still
be made if respondents failed to pay within the term. The court further ruled that rescission
would be unjust because respondents had already transferred the land title to their names.
ISSUE:
WON Petitioner is entitled to rescind the contract under Art. 1191 of the Civil code
because respondents committed a substantial breach when they did not pay the balance
of the purchase price within 10 year period.
HELD:
NO. The transaction between Mistica and respondents, as evidenced by the kasulatan, was
clearly a contract of sale. A deed of sale is considered absolute in nature when there is neither a
stipulation in the deed that title to the property sold is reserved to the seller until the full payment
of the price; nor a stipulation giving the vendor the right to unilaterally resolve the contract the
moment the buyer fails to pay within a fixed period.
The failure of the respondents to pay the balance of the purchase price within 10 years did not
amount to a substantial breach. In the Kasulatan, it was stipulated that payment could be made
even after 10 years from execution of the contract, provided the vendee paid 12% interest. The
stipulations of the contract constitute the law between the parties; thus, courts have no
alternative but to enforce them as agreed upon and written.
Malabanan vs. Spouses Montano, G.R. No. 187225, March 6, 2019

FACTS:
Melinda Malabanan is the widow of Jose Malabanan. In a Deed of Absolute Sale, they acquired
a 310 sq. m. lot a portion of a 2000 sq.m. land registered under Maria Cristina Rodriguez.
Subsequently, the TCT was issued to Jose covering the disputed property. The spouses built a
house on the lot which the family had possessed since 1984.
On October 1984, Melinda left the Philippines to work in Libya. Unfortunately, Jose was
murdered in 1985 prompting here return. She returned to Libya in August 1985 and only came
home on Nov. 1990.
Later on Melinda discovered the TCT had long been canceled through a string of transactions
and that the property was registered under the name Spouses Dominador III and Guia Montano.
When Melinda’s mother in law, Adelfina died, her family executed an extrajudicial settlement of
her estate. The property, then covered by TCT, was adjudicated to Ramon Mlabanan who was
Jose’s brother.
Melinda filed a complaint of Annulment of Title with Damages against Spouses Malabanan and
Francisco Malabannan. Ramon sold the property to the Montano Spouses.
Melinda implead the Montano Spouses. She argued that the Special Power of Attorney was
void as her signature in it was forged and that she and Jose remained the real owners of the
property.
The RTC ruled in favor of Melinda. The CA set aside the RTC ruling. It gave weight to
Francisco’s claim that the property was an advance on Jose legitime. It found that in the Special
Power of Attorney, Jose himself acknowledged executing it as gratitude to his parent who
actually paid for the whole cost of said property and cause the registration of the same in my
name.

ISSUE:
WON the property was conjugal and thus, rendering its sale without the wife’s consent
void.
HELD:
YES. The circumstances here transpired prior to the effectivity of the Family Code on August 3
1988. Thus, petitioner and Jose’s marriage and property relations are governed by the Civil
code.
Under the Civil Code, property acquired during marriage is presumed to be conjugal. There is
no need to prove that the money used to purchase a property came from a conjugal fund. What
must be established is that the property was acquired during marriage. Only through clear,
categorical and convincing proof to the contrary will it be considered the paraphernal property of
one of the spouses.
Here, the pieces of evidence presented by respondents were insufficient to overturn this
presumption.
Jose executed a deed of conditional sale with Rodriguez on September 20 1984. The following
month, Melinda left for Libya. On Dec. 18 1983, the Deed of Absolute sale between Jose and
Rodriguez was executed. The house underwent construction while Melinda was in Libya and
before Jose’s death on June 12 1985.
A contract conveying conjugal properties entered into by the husband without the wife’s consent
may be annulled entirely. In Bucoy v. Paulino.
Jose had no right to either unilaterally dispose the conjugal property or grant respondent
Francisco this authority through the supposed special power of attorney.
Considering that petitioner was in Libya when the Special Power of Attorney was executed, and
that an expert witness testified on the forgery of petitioner’s signature, we rule that the SPOA is
void.
The Montano spouses were not buyers in good faith. Here the land has always been possessed
by petitioner and not respondent Ramon Malabanan who sold it. Respondent Dominador,
should have inquired about this before he purchased the property. Verifying the status of the
property would not have been difficult for a seasoned businessman like him, who incidentally
lives in the same neighborhood where the property is located.
Pablo Uy vs. Heirs of Julita Uy, G.R. No. 227460, December 5, 2019
FACTS:
The subject lot is covered by a TCT registered in the name of petitioner Uy’s mother, Eufronia
Labnao.
Labnao had 2 children, Petitioner Uy and Julita Uy-Renales. Julita produced 3 children, i.e. the
respondent Heirs of Julita. Julita died intestate on May 9 1976.
In his complaint for declaration of Nullity of Deed of sale, reconveyance, and damage, petitioner
Uy maintains that upon the death of Labnao in 1995, as the surviving offspring of Labnao, he
became the owner of ½ share of the subject lot and subject building owned by his deceased
mother, with the other half pertaining to the respondents Heirs of Julita as co-owners.
However, petitioner Uy discovered that the subject lot was allegedly fraudulently sold by Labnao
in 1990 in favor of the respondents heirs of Julita through a Deed of Absolute Sale dated April
11 1990 purportedly executed by Labnao. Petitioner Uy asserted that the signature of Labnao in
the DOAS is a patent forgery as shown by the findings of the PNP crime lab.
Upon discovery of the falsification, petitioner Uy confronted his nieces and nephew before the
Brgy. Chairman for a possible settlement to no avail.
RTC ruled in favor of the Heirs of Julita. CA affirmed RTC decision.
ISSUE:
WON there was a contract of sale that was entered into between the parties’ predecessor

in interest, Labnao, and the respondents Heirs of Julita transferring ownership over the
subject lot in the latter’s favor
HELD:
NO. There is no valid contract of sale or donation of immovable property transferring the subject
lot from Labnao to the respondents Heirs of Julita bearing in mind the RTC’s holding in the joint
decision that the subject building is under the co-ownership of petitioner Uy and the
respondents heirs of Julita was left undisturbed, the court holds that both the subject lot and
building are under the co-ownership of petitioner Uy and the respondents heirs of Julita as the
intestate heirs of Labnao.
Villamil vs. Spouses Erguiza, G. R. No. 195999, June 20, 2018

FACTS:
Villamil was co-owner of a parcel of land with their siblings and offsprings. They sold the parcel
of land with spouses Erguiza. In the contract to sell, the condition was that the Villamil siblings
would get the authorization for their minor children, if they would not get the same after 20 years
then the payments of Erguiza for the full price of the lot will be considered as rent.
The MTC and RTC ruled in favor of Villamil and the CA reversed the decision and decided for
the spouses Erguiza.
ISSUE:
WON the petitioner had a better right to possess the property after petitioners failed to
pay the balance of the purchase price and the 2nd condition had set in, that is, the down
payment was applied as rentals for 20 years from 1972 to 1992
HELD:
NO. First of all, parties entered into a contract to sell. A contract to sell is defined as a bilateral
contract whereby the prospective seller, while expressly reserving the ownership of the subject
property despite delivery thereof to the prospective buyer, binds himself to sell the said property
exclusively to the latter upon his fulfillment of the conditions.
Petitioner and her then co-owners undertook, upon receipt of the down payment from
respondent-spouses, the filing of a petition in court, after which they promised the latter to
execute the DOAS whereupon the latter shall in turn, pay the entire balance of the purchase
price. The balance of the consideration shall be paid only upon grant of the court’s approval and
upon execution of the DOAS.
Here there is no doubt that petitioner prevented the fulfillment of the suspensive condition. She
herself admitted that they did not file any petition to seek approval of the court as regards the
sale of the shares of the minor owners. Responder-spouses’ obligation to pay the balance of the
purchase price arises only when the court’s approval of the sale of the minor owners’ shares
shall have been successfully secure, in accordance with Art. 1181 of the Civil Code. When it has
become evident that the condition would no longer be fulfilled, it was incumbent upon petitioner
to inform respondent-spouses of such circumstances because the choice whther to waive the
condition or continue with the agreement clearly belongs to the latter.
In as much as petitioner has not yet complied with her obligation to execute a deed of sale after
the condition has been deemed fulfilled, respondent-spouses are still entitled to possess the
subject property. The contract cannot be converted into a contract of lease because of the
failure of petitioner to seek the court’s approval of the sale as regards the shares of the minor
owners.
Respondent-spouses remained to prospective buyers who are up to now are waiting for
fulfillment of the obligation of the prospective sellers to execute a deed of sale.
Moldex Realty vs. Saberon, G.R. No. 176289, April 8, 2013

FACTS:
Flora saberon was interested in acquiring a 180 sq.m. lot and asked Moldex, the developer to
reserve the lot for her. She wanted to pay in installments and the price is P583,498.20 at
monthly amortization of P8,140.97 payable in 5 years with 21% interest per annum based on
the balance and an additional 5% surcharge every month of delay on the monthly installment
due. She made periodical payments from 1992 to 1996 in the total amount of P375,294.49.
In 1996, Flora was shocked to find that as of July 1996, she owed Moldex P247,969.10. In
November, it ballooned to P491,265.91.
Moldex suggested to Flora to execute a written authorization for the sale of the subject lot to a
new buyer and a written requisition for refund so that she can get half of all payments she
made. However, Flora never made a written request for refund.
Flora filed before the Housing and Land use Regulatory Board a complaint for the annulment of
the contract to sell, recovery of all her payments with interests, damages and the cancellation of
Moldex’s license to sell.
The HLURB Arbiter declared as void the Contract to sell entered into by the parties because
Moldex lacked the required license to sell at the time of the contract’s perfection.
Moldex appealed to the HLURB Board of Commissioners. HLURB board dismissed the petition.
Moldex then appealed to the Office of the President who also affirmed the decision of the
HLURB.
Moldex sought relief from the CA. the CA agreed with the finding of the tribunals.
ISSUE:
WON the contract to sell it entered with Flora remains valid and binding
HELD:
YES. The intrinsic validity of the contract to sell is not affected by the developer’s violation of
Sec. 5 of PD 957.
In spouses Co Chien v. Sta Lucia Realty, this court has already ruled that the lack of a certificate
of registration and a license to sell on the part of the a subdivision developer does not result to
the nullification or invalidation of the contract to sell it entered into with a buyer. The contract to
sell remains valid and subsisting. Extrapolating the ratio decidendi in Co Chien, non-registration
of an instrument of conveyance will not affect the validity of a contract to sell. It will remain valid
and effective as under PD 1529 or the Property Registration Decree, registration merely serves
as a constructive notice to the whole world to bind 3rd parties.
Respondent is nevertheless entitled to a 50% refund under the Maceda law. The defaulting
buyer who has paid at least 2 years of installments has the right of either to avail of the grace
period to pay or the cash surrender value of the payments made.
Since Flora has defaulted in her succeeding payment despite the notices sent by Moldex, she
could no longer avail of the option to pay her unpaid installments within the grace period.
Moldex shall refund to the buyer the cash surrender value of the payments on the property
equivalent to 50% of the total payments made, or P187,647.75.
Spouses Domingo vs. Spouses Manzano, G.R. No. 201883, November, 16, 2016
FACTS:
Respondents spouses Manzano were the registered owners of subject land. Through their
attorney-in-fact and herein co-respondent Estabillo, in 2001 they executed a notarized
agreement with petitioners Domingo which provided
“Ayon sa aming napagkasunduan ililipat lamang ang titulo ng lupa pag nabayaran ko ng lahat
ang P900,000.00 hanggang Marso ng 2001.”
Petitioners paid the P100,000 reservation fee upon execution of the agreement. Thereafter they
also made payments on several occasions amounting to P160,000.00. When the deadline
came, they failed to tender fullpayment but Estabillo advised petitioners to continue their
payments thus they made additional payments. As of November 2001, petitioners had made

payment in the amount of P345,000.

All this time the Manzanos remained in possession of the property.
In December 2001, petitioners offered to pay the remaining balance but Estabillo refused to
accept payment, instead he advised petitioners to await respondent Tita Manzano’s arrival from
abroad.
Tita refused the payment and told them that property was no longer for sale and she was
forfeiting their payments.
Soon thereafter, petitioners discovered that respondent Carmelita Aquino bought the subject
property on May 7 2002 and a new title has been issued in her name.
Petitioners filed a complaint for specific performance and damages with injunctive relief against
respondents. They sought to compel Manzano to accept payment and execute a deed of sale
and restrain the sale in favor of Aquino.
RTC issued a decision that, as against Aquino, petitioners have a prior right over the subject
property. RTC held that Aquino was a buyer in bad faith as she knew of petitioner’s prior
purchase and registered adverse claim.
The CA denied petitioner’s motion for reconsideration.
ISSUE:
WON petitioners have superior right over the subject property as against Aquino, who
was a buyer in bad faith.
HELD:
NO. Failure to pay the price in full in a contract to sell renders the same ineffective and without
force and effect, then there is no sale to speak of nullifying any claim or better right they may
have had. There can not be a double sale that would render Aquino a buyer in bad faith. As far
as this court is concerned, there is only one sale and that is the sale in Aquino’s favor. Since
there is only one valid sale, the rule on double sales under Art. 1544 of the civil code does not
apply.
Nolasco vs. Cuerpo, G.R. No. 210215, December 9, 2015

FACTS:
On July 22, 2008, petitioners and respondents entered into a Contract to Sell. the subject
contract provides, inter alia that:
a. The consideration for the sale is P33,155,000.00 payable as follows: down payment in the
amount of P11,604,250.00 money/reservation fee, and the remaining balance of
P21,550,750.00 payable in 36 monthly installments each in the amount of 598,632 through post
dated checks.
b. in case of dishonor, the amounts already paid shall be forfeited in petitioner’s favor and the
latter shall be entitled to cancel the subject contract without recourse
C. respondents are not entitled to possess subject land until full purchase price
D. petitioners shall transfer the title from a certain Santos to petitioner’s names and should they
fail to do so, respondents may cause the said transfer and charge the costs incurred against
monthly amortization.
E. upon full payment of the purchase price, petitioners shall transfer title over the subject land to
respondents.
However on November 7 2008, respondent sent a letter seeking to rescind the contract on the
ground of financial difficulties in complying with the same. They also sought the return of the
amount of P12,202,882.00 they had paid to petitioners. They filed instant complaint for
rescission before the RTC.
In their defense, petitioners countered that respondents’ act is unilateral cancellation of the
subject contract as the former did not consent. Moreover, the ground for financial difficulties is
not among the grounds provided by law to effect a valid rescission.

RTC ruled in favor of respondents. CA affirmed the RTC ruling.

ISSUE:
WON the CA correctly affirmed the rescission of the subject contract and the return of
the amounts already paid by respondents to petitioners, as well as the remaining
post-dated checks issued by respondent Cuerpo representing monthly amortization.
HELD:
Petition is partly meritorious.
The RTC and CA were indeed correct in finding that petitioners failed to perform their obligation
to effect the transfer of the title to the subject land from Santos to their names within the
prescribed period, said courts erred in concluding that such failure constituted a substantial
breach that would entitle respondent to rescind the subject contract. To reiterate, for a
contracting party to be entitled to rescission in accordance with Art. 1191 of the Civil Code, the
other contracting party must be in substantial breach of the terms and conditions of their
contract. A substantial breach is a fundamental breach of a contract that defeats the object of
the parties in entering into an agreement. Here, it cannot be said that petitioner’s failure to
undertake their obligation under Par. 7 defeats the object of the parties into entering into the
subject contract., considering that the same paragraph provides respondents contractual
recourse that is to cause such transfer themselves in behalf and at the expense of petitioners.
The foregoing notwithstanding, the Court cannot grant petitioner’s prayer in the instant petition
to order the cancellation of the contract and forfeiture of the amounts already paid by
respondents on account of the latter’s failure to pay its monthly amortizations, simply because in
their answer with compulsory counterclaim and motion for summary judgment filed before the
RTC, petitioners neither prayed for this specific relief nor argued that they were entitled to the
same. Worse, petitioners were declared as in default for failure to file the required pre-trial brief
and thus, failed to present any evidence in support of their defense. It is settled that when a
party deliberately adopts a certain theory and the case is decided upon that theory in the court
below, he will not be permitted to change the same on appeal because to permit him to do so
would be unfair to the adverse party.
Heirs of Macalalad vs. Rural Bank of Pola, Inc. G.R. No. 200899, June 20, 2018
FACTS:
Petitioner’s predecessor-in-interest, Paz Macalalad filed a complaint for Declaration of Nullity of
TCT No. T-117484 alleging that she is the sole surviving legal heir of Leopoldo Constantino who
died intestate on Nov. 13 1995 and without any issue, during his lifetime Leopoldo owned a
parcel of land. After the death of leopoldo, it was made to appear that the latter sold subject
property to spouses Pimentel in whose names a new TCT was issued; thereafter, they obtained
a loan from herein respondent Rural Bank of Pola, Inc and gave the subject land as collateral.
The Pimentels failed to pay their loan leading respondent bank to foreclose the mortgage where
it emerged as the highest bidder. Consequently, respondent bank obtained ownership of the lot
and the TCT of Pimentel was cancelled and a new one was issued in respondent bank’s name.
Paz contended that respondent bank be made to suffer the ill effects of its negligent acts by
praying that TCT be cancelled and a new one be issued in the name of Leopoldo, the original
owner.
The RTC dismissed the complaint for lack of merit. The CA affirmed the decision of the RTC.
ISSUE:
WON the Deed of sale executed between Leopoldo Constantino and Spouses Pimentel
was valid
WON the respondent bank acted in good faith and was an innocent purchaser for value.
HELD:

The factual issue of whether or not the deed of sale between Pimentel and Leopoldo is valid
was not resolved by the RTC or the CA because petitioners did not implead the Spouses
Pimentel in their complaint. Nonetheless, without delving into this issue, this Court reiterates the
settled principle that no one can give what one does not have. Nemo dat quod non habet.
However, there is an exception to the rule - that is when an innocent purchaser for value
intervenes. A purchaser in good faith and for value is one who buys the property of another
without notice that some other person has a right to or interest in such property and pays a full
and fair price for the same, at the time of such purchase, or before he has notice of the claims
or interest of some other person in the property. Under Sec. 32 of PD 1529, the definition of an
innocent purchaser for value has been expanded to include an innocent lessee, mortgagee or
other encumbrancer for value.
YES, In this case, the court finds no cogent reason to depart from the findings of both the RTC
and the CA that respondent was able to successfully discharge its burden of proving its status
as a mortgagor and subsequent purchaser in good faith and for value. In the factual finding of
the RTC:
Defendant-appelee bank was not remiss in its duty to conduct an ocular inspection on the
subject premises and to investigate as to the validity of the title of the property being given as
security. Records would show, defendant appellee bank sent an appraiser to conduct ocular
inspection. Moreover, defendant appelee bank made a verification from the office of the register
of deed if the subject property is indeed titled in the name of the mortgagors.
Delta Dev. And Management Services vs. Enriquez, G.R. No. 168646, January 12, 2011
FACTS:
Petitioner DELTA is a domestic corporation engaged in the business of developing and selling
real estate properties, particularly Delta Homes I in Cavite. DELTA is owned by Ricardo De
Leon, who is the registered owner of a parcel of land covered by TCT . Said Lot 4 is the subject
matter of these cases.
On July 3 1995, De Leon and his spouse obtained a P4 million loan from the Bank for the
express purpose of developing Delta Homes I. To secure the loan, the spouses De Leon
executed in favor of the Bank a real estate mortgage on several of their properties, Including lot
4. Subsequently, this REM was amended by increasing the amount of the secured loan from P4
Million to P8 million. Both the REM and the amendment were annotated on TCT no. T-637183.
DELTA then obtained a Certificate of Registration and a license to sell from the Housing and
Land Use Regulatory Board.
Sometime in 1997, Delta executed a Contract to sell with respondent Angeles Enriquez, over
the house and lot in Lot 4 for the purchase price of P614,950.00. Enriquez made a
downpayment of P114,950.00.
When DELTA defaulted on its loan obligation, the BANK, instead of foreclosing the REM, agreed
to a dation in payment. The deed of assignment in payment of Debt was executed on Sept. 30
1998 and stated that Delta assigns, transfers and conveys and sets over to the assignee that
real estate with the building and improvements existing thereon… inpayment of the total
obligation owing to the bank…” Unknown to Enriquez, among the properties assigned was Lot 4
which is the subject of her contract to sell with DELTA.
On November 18 1999, Enriquez filed a complaint against Delta and the Bank before the
HLURB alleging that DELTA violated the terms of its license to sell by:
a. Selling the house and lots for a price exceeding that prescribed in BP 220
b. Failing to get a clearance for the mortgage from the HLURB
Enriquez sought a full refund of the P301,063.42 that she had already paid to DELTA, award of
damages, and the imposition of administrative fines on DELTA and the Bank.

HLURB upheld the validity of the purchase price but ordered DELTA to accept payment of the
Balance of P108013.36 and deliver to Enriquez the title to the house and lot free from liens and
encumbrances.
The Board upheld the validity of the contract to sell between DELTA and Enriquezz despite the
alleged violation of the price ceilings in BP220.
The office of the president affirmed the HLURB decisions in toto.
The CA ruled against the validity of the dacion en pago.
ISSUE:
WON Contract to sell conveys ownership
WON the dacion en pago extinguished the loan obligation, such that DELTA has no more
obligation to the bank
HELD:
No. Contract to sell does not transfer ownership. A contract to sell is one where the
prspective seller reserves the transfer of title to the prospective buyer until the happening of an
event, such as full payment of the purchase price.
Since the Contract to Sell did not transfer ownership of Lot 4 to Enriquez, said ownership
remained with DELTA. DELTA could then validly transfer such ownership (as it did) to another
person (the BANKS). However, the transferee bank is bound by the Contract to Sell, involving a
subdivision lot, is covered and protected by PD 957. One of the protections afforded by PD 957
to buyers such as Enriquez is the right to have her contract to sell registered with the register of
Deeds in order to make it binding on 3rd parties.
YES. Dacion en pago extinguished the loan obligation. The BANK then posits that, if title to
Lot 4 is ordered delivered to Enriquez, DELTA has the obligation to pay the BANK the
corresponding value of Lot 4. According to the BANK, the dation in payment extinguished the
loan only to the extent of the value of the thing delivered. Since Lot 4 would have no value to the
BANK if it will be delivered to Enriquez, DELTA would remain indebted to that extent.
In the case at bar, the Dacion en Pago executed by DELTA and the BANK indicates a clear
intention by the parties that the assigned properties would serve as full payment for DELTA’s
entire obligation.
Dacion en pago is governed by the law of sales. Contracts of sale come with warranties, either
express (if explicitly stipulated by the parties) or implied (under Art. 1547) in this case, however,
the BANK does not even point to any breach of warranty by DELTA in connection with the
Dation in payment. To be sure, the Dation in payment has no express warranties relating to
existing contracts to sell over the assigned properties. As to the implied warranty in case of
eviction, it is waivable and cannot be invoked if the buyer knew of the risks or danger of eviction
and assumed its consequence. As we have noted earlier, the BANK, in accepting the assigned
properties as full payment of DELTA’s total obligation, has assumed the risk that some of the
assigned properties are covered by contracts to sell which must be honored under PD 957.
Mendoza vs. Spouses Palugod, G. R. No. 220517, June 20, 2018

FACTS:
Lolita Mendoza and Jasminia Palugod were close friends. The 2 bought the subject lot on
installment for 1 year until they decided to pay the balance in full. In 1995, Jasminia became
afflicted with breast cancer. Sometime in 1996, Lolita and Jasminia constructed a residential
house on the subject lot. Although Lolita has no receipts, she shared in the cost of the
construction of the house. On May 11 2004, Jasminia executed a Deed of Sale in favor of Lolita
who eventually mortgaged the subject property to Elizabeth Gutierrez as a security for a loan in
the amount of PHP800,000.00.
On the other hand, respondent spouses alleged that their daughter the late Jasminia, acquired
the property located in Sagana homes. Prior to and after the said acquisition of the subject
property, Jasminia was living with Lolita a lesbian. Lolita was fully dependent on Jasminia. When

Jasminia was nearing her death, she told her mother, Natividad Palugod that her house and lot
shall go to her brother Ramonito Palugod, but petitioner shall be allowed to stay therein.
Meanwhile, taking advantage, Lolita cause Jasminia to sign a deed of absolute sale in her favor.
Both RTC and the CA declared the DAS void on the ground that it was fictitious or simulated on
account of lack of consideration.
ISSUE:
WON the Deed of sale executed by Jasminia in favor of Lolita is valid
HELD:
YES. Given the foregoing, contrary to the findings of the CA and the RTC, which evidently arose
from their misapprehension and non-consideration of relevant facts, respondents have not
discharged their burden of proof to rebut either the presumption of sufficient consideration of the
DAS or the evidence of petitioner Lolita. In fine, respondents failed to establish their cause of
action by preponderance of evidence.
All told, petitioner’s evidence has superior weight. While petitioner Lolita could not present
receipts to show her payments to the late Jasminia, her sworn testimony which in certain
portions were corroborated by pertinent documents, remains more credible than that of
respondent Natividad. Indeed, the lack of receipts may be explained by the close friendship
between petitioner Lolita and Jasminia. The non-admission by petitioner Lolita of the husband
and wife relationship that she shared with Jasminia and her being a lesbian or tomboy, as
respondent Natividad claimed, is of no moment. Whatever transpired between her and Jasminia
is a private matter, which the court would not even speculate on. As to the gender identity and
sexual preference of petitioner Lolita, that is likewise a private matter.
That being the situation, respondents, who have the burden of proof in the present case, fail
upon their cause of action. Following Rivera v. CA, as neither party was able to make out a
case, neither side having established his/her cause of action, the Court can only leave them
where they are and it has no choice but to dismiss the complaint, as the lower courts should
have done.
January 1 laptop sold

Payment and delivery be made jan. 10
Failure to make payment
Cebu State College of Science and Technology (CSCST) vs. Misterio, 759 SCRA G.R. No.
179025 June 17, 2015
FACTS:
On December 31, 1956, the late Asuncion Sadaya executed a Deed of Sale covering a parcel of
land with Sudlon Agricultural High School (SAHS). The sale was subject to the right of the
vendor to repurchase the property after, 1. SAHS shall have ceased to exist or 2. Shall have
transferred its school site elsewhere.
On June 10 1983, Batas Pambansa 412 “An Act Converting the Cebu School of Arts and
Trades in Cebu City into a Chartered College to be known as the Cebu State College of Science
and Technology, Expanding its jurisdiction and curricular programs” took effect. It incorporated
and consolidated several schools in the province of Cebu, including SAHS.
On August 19, 1988, respondents Misterio as heirs of the late Asuncion Sadaya informed the

governor of Cebu their intention to repurchase the subject property on the ground that SAHS
had ceased to exist. However, they were informed that SAHS still existed as only the name of
the school was changed.
The RTC ruled in favor of the plaintiffs, the CA reversed the decision ruling that while it agrees
with the trial court’s finding that SAHS had ceased to exist, respondent are barred by
prescription from exercising their right to repurchase the subject property which expired in June
1987 or 4 years from effectivity of BP Blg. 412, as provided by Art.1606 of the New Civil Code.
On June 23 2005, the SC affirmed the decision of the CA and denied petition for review.
However on Feb 5 2001, the respondent filed an amended complaint impleading the province of
Cebu and the Register of deeds essentially alleging that pursuant to petitioner’s transfer of its
school site, their right of redemption on said condition became operative.
RTC dismissed the amended complaint. CA reversed the decision of RTC holding that the case
is not barred by litis pendentia for while there is an identity of parties and reliefs prayed for
between the 2 complaints, there exists no identity of causes of action to wit.
ISSUE:
WON there is clear fact of res juridicata and forum shopping bars the filing of the 2nd complaint
WON the 2nd complaint lacks a cause of action
HELD:
At the outset, it must be noted that we do not find any error when the CA reversed the RTC
decision dismissing the instant case on the ground that the present action is barred by litis
pendentia or res judicata because as between the first and second complaint, there exists no
identity of cause of action or rights asserted.
Notwithstanding the preceding discussion, respondent’s cause of action in their 2nd complaint
based on petitioner’s transfer of its school site must nonetheless fail.
In 2005, this court ruled that since petitioner and respondents in this case did not agree on any
period for the exercise of the right to repurchase the property herein, respondents may use said
right within 4 years from the happening of the allocated conditions contained in their deed of
sale: a. The cessation of the existence of the SAHD or b. The transfer of the school to other site.
However, due to respondents’ failure to exercise their right to redeem the property within the
required 4 years from the time when SAHS had ceased to exist of from the date of effectivity of
BP 412, this court held that respondents are barred by prescription.
Indubitably, it would be rather absurd to permit respondents to repurchase the subject property
upon the occurence of the 2nd suspensive condition, particularly, the relocation of SAHS on Oct.
3 1997, the time when petitioner ceded the property to the province of Cebu, which is nearly 41
years after the execution of the DOS on Dec. 31 1956. This court must, therefore, place it upon
itself to suppress these kinds of attempts in keeping with the fundamentally accepted principles
of law

Catangcatang vs. Legayada, 84 SCRA 51

FACTS:
Legayada executed in favor of Catangcatang a deed of sale with pacto de retro with a 5 year
period of redemption over a parcel of land in Iloilo in consideration of Php 1,400.00. Of the total
consideration, the amount of Php1,200.00 was paid upon the execution and the balance was
covered by a promissory note agreed to be payable at a later date.
Subsequently, Catangcatang found that the area of the land delivered to her was short of 3
hectares. She instituted a civil case. In answer to the complaint, respondent filed a counterclaim
asking for rescission of the Deed of sale with right of repurchase to the complaint because of
failure of plaintiff to pay the balance of Php200.00 of the purchase price on the due date.
During pendency of the case, respondent forcibly took back possession of the land from
petitioner. On May 19, 1957, the period for the repurchase of the land expired, allegedly without
respondent having availed himself of his right to repurchase the same.
RTC dismissed the complaint, the counterclaim was likewise dismissed.
ISSUE:
1. WON the failure to pay the Php 200 suspended the running of the period of
redemption
2. WON respondent was able to effect redemption
HELD:
NO. The sale was consummated upon the execution of the document and the delivery of the
land subject matter thereof to the vendee, petitioner therein. It was perfectly valid agreement
and the non-payment of the balance of the purchase price could not have the effect of
suspending the efficacy of the provisions thereof. The sale was perfected from the moment
Legayada consented to sell the land in question and Catangcatang agreed to purchase it for the
sum of P1,400.00 and the latter had partially complied the obligation. Moreover, there was
nothing whatsoever in the deed of sale to indicate that the agreement of the parties was to
suspend the running of the period of redemption until full payment of the purchase price, on the
contrary, said period was agreed to be 5 years from date of execution of the deed.
NO. The records reveal that respondent without knowledge of petitioner took possession of the
subject property. The letter for redemption never reached respondent and the reason was that
petitioner could not be found, this was found by the trial court to be unworthy of credence. The
statement of intention must be accompanied with an actual and simultaneous tender of payment
which constitutes the legal exercise of the right to repurchase. The period of redemption having
lapsed without respondent having validly effected redemption, petitioner is entitled to
consolidation of ownership over the property sold.
Alonzo vs. IAC, 150 SCRA 259;

FACTS:
A parcel of land was inherited by 5 brothers and sisters in equal pro diviso registered in the
name of their deceased parents.
On March 15 1963, one of the siblings sold his undivided share to petitioners by way of absolute
sale. On April 22, 1964, a sister sold her own share to the same vendees in an instrument
denominated Con Pacto de Retro sale.
By virtue of the agreements, petitioners occupied the said sales. Subsequently enclosed the
same with a fence. In 1975, with their consent, their son Eduardo Alonzo and his wife built a

semi-concrete house on a part of the enclosed area.
On May 27, 1977, one of the 5 co-heirs filed a complaint invoking a right of redemption.
The RTC dismissed the complaint on the ground that the right had lapsed not having been
exercised within 30 days from notice of the sales in 1963 and 1964. Although there was no
written notice, it was held that actual knowledge of the sales by the co-heirs satisfied the
requirement of the law. The IAC reversed the decision.
ISSUE:
WON the 30 day period from notice of the sale had lapsed
HELD:
YES. Although the Art. 1088 and Art. 1623 of the Civil code provides that the 30 day period for
the right of redemption only commences after a WRITTEN notice of the sale, this court held that
ACTUAL knowledge of the heirs of the sale will suffice.
The petitioners and the co-heirs lived on the land together, their children went to school together
and the heirs had knowledge of the fencing of the land and the building of the semi concrete
house. In face of the established facts, we cannot accept the private respondents’ pretense that
they were unaware of the sales made by their brother and sister in 1963 and 1964. We are
satisfied that in this case the other brothers and sisters were actually informed, although not in
writing, of the sales made in 1963 and 1964 and that such notice was sufficient.
When did the 30 day period of redemption begin?

The 30 day period could have happened any time during the interval of 13 years, when none of
the co-heirs made a move to redeem the properties.
Lee Chuy Realty Corporation vs. Court of Appeals, December 4, 1995

FACTS:
A valuable piece of land in Meycauayan Bulacan is disputed by petitioner Lee Chuy Realty and
private respondent Marc Realty. Originally the property was co-owned by Ruben Jacinto to the
extent of ⅙ and Dominador, Arsenio, Liwayway Bascara and Ernesto Jacinto collectively owned
the remaining ⅚.
On February 1981, Ruben Jacinto his ⅙ pro-indiviso share to Lee Chuy Realty. The sale was
registered on April 30, 1981. On May 5 1989, the Bascaras and Ernesto Jacinto also sold their
share to Marc Realty. The sale was registered on Oct. 16 1989.
Lee Chuy claims to not have been informed of the existence of the sale. Marc Realty contends
that it was verbally notified of the sale and given a copy of the deed of sale.
On November 1989, Lee Chuy Realty filed a complaint for legal redemption against Marc Realty
and sonsigned a managers check. Marc REALTY insisted the complaint be dismissed for failure
to state a cause of action.
The RTC ruled in favor of Lee Chuy holding that there was prior valid tender of payment and
consignation.CA reversed the decision of the RTC.
ISSUE:
WON the filing of the action itself is equivalent to a formal offer to redeem, which is a

condition precedent to the valid exercise of the right of legal redemption.
HELD:
YES. Arts. 1620 and 1623 of the civil code provides:
Art. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all
the other co-owners or of any of them are sold t a third person. If the price of the alienation is
grossly excessive, the redemptioner shall pay only a reasonable one.
Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within 30
days from the notice in writing by the prospective vendor or by the vendor as the case may be.
The Deed of sale shall not be recorded in the Registry of Property unless accompanied by an
affidavit of the vendor that he has given written notice thereof to all possible redemptioners.
There is actually no prescribed form for an offer to redeem to be properly effected. Hence, it can
either be through a formal tender with consignation, or by filing a complaint in court coupled with
consignation of the redemption price within the prescribed period. What is condition precedent
to a valid exercise of the right of legal redemption is either the formal tender with consignation or
the filing of a complain in court. What is paramount is the availment of the fixed and definite
period within which to exercise the right of legal redemption.
Anecita Gregorio v. Crisologo Vda. De Culig, G.R. No. 180559; January 20, 2016
FACTS:
Respondent Maria Crisologo is the widow of Afredo Culig. During his lifetime, Alfredo was
granted a homestead patent under the Public Land Act (C.A. 141). Alfredo died sometime in
1971 and in 1974, his heirs executed an extrajudicial settlement of estate with simultaneous
sale fo the property in favor of spouses Seguritan and Gregorio.
On Sept. 1979, respondent filed a complaint demanding repurchase of the property under the
provisions of the Public Land Act. Spouses Seguritan countered that the respondent had no
right to repurchase the property since the latter only wanted to redeem the property to sell it for
a greater profit.
The RTC dismissed the complaint relying on the case of Lee Chuy Realty Corp vs CA that a
formal offer alone or the filing of a case alone, within the prescribed period of 5 years is not
sufficient to effect a valid offer to redeem - either must or should be coupled with consignation of
the repurchase price if bona fide tender of payment has been refused.
CA reversed the decision ruling that Lee Chuy case was not applicable.
ISSUES:
WON respondent validly exercised the right of redemption
HELD:
YES. In Hulganza vs CA we held that bona fide tender of the redemption price or its equivalent -
consignation of said price in court is not essential or necessary where the filing of the action
itself is equivalent to a formal offer to redeem. The case of Vda. De Panaligan vs. CA further
clarified that tender of payment of the repurchase price is not among the requisites and thus
unnecessary for redemption under the public land act.

Art. 1616 only speaks of the amount to be tendered when exercising the right to repurchase, but
it does not state the procedure to be followed in exercising the right.
Assignment of Credits and Other Incorporeal Rights (Articles 1624-1635 (New Civil Code)
Cases:
Liam vs. United Coconut Planters Bank, 793 SCRA 383, G.R. No. 194664 June 15, 2016
FACTS:
Liam entered into a contract to sell with developer Primetown Property Group, Inc. (PPGI) for
the purchase of condo unit.
To finance the construction of the condominium project, PPGI obtained a loan from UCPB. PPGI
thereafter partially settled its loan by transferring to UCPB its right to collect all receivables from
condominium buyers, including Liam.
PPGI notified Liam of the sale of its receivables to UCPB.
Liam heeded the notice and forthwith remitted her payments to UCPB. However, on March 9
1999, Liam wrote UCPB asking for the deferment of her amortization payments until such time
that the unit is ready for delivery. Liam stopped making payment. In 2001, Liam again wrote
UCPB complaining of the delayed delivery reiterating that she will only resume making
payments once the unit is delivered. Liam also requested the waiver of interests and penalties
for the period prior to UCPB’s assumption as the payee of her amortizations. Her requests were
left unanswered. On April 2004, Liam demanded for the refund of all the payments she made for
PPGI’s failure to deliver the unit on the stipulated date.
Liam filed a complaint for specific performance before the HLURB against PPGI and UCPB. The
complaint alleged that UCPB promised to deliver the unit within 6 months.
PPGI denied receiving any demand from Liam and averred that she is already estopped from
making any claims against PPGI because she agreed to the substitution of PPGI by UCPB.
UCPB averred it had no legal obligation to deliver the unit to Liam because it is not the
developer of the condominium project. UCPB maintained that it is merely a creditor of PPGI.
HLURB ruled in favor of Liam. upon appeal, the ruling was modified claiming that Liam cannot
complain about the lower purchase price of other units or demand for the amendment of the
stipulated price in her contract to sell with PPGI.
UCPB appealed to the office of the president arguing it should not be obligated to refund Liam’s
alleged total installment payments because it did not step into the shoes of PPGI. The OP
rejected UCPB’s argument.
The CA revered the rulings and ruled in favor of UCPB. It ruled that Liam had no right to
demand for specific performance from UCPB because it was not a privy to the contract to sell.
The obligations of PPGI to Liam remained subsisting and it continued to be Liam’s obligor with
respect to the delivery of the condo units even after assignment. Thus, UCPB cannot be held
liable for PPGI’s breach of its obligation to Liam.
ISSUE:

WON the transaction between UCPB and PPGI was an assignment of credit and not
subrogation
WON UCPB was improperly impleaded in Liam’s complaint
HELD:
Yes. The crucial distinction between assignment and subrogation actually deals with the
necessity of the consent of the debtor in the original transaction. In assignment of credit, the
consent of the debtor is not necessary in order that the assignment may fully produce legal
effects. What the law requires is merely notice to him as the assignment takes effect only from
the time he has knowledge thereof.
The terms of the MOA and Deed of Sale/Assignment between PPGI and UCPB unequivocally
show that the parties intended an assignment of PPGI’s credit in favor of UCPB.
YES. As a mere assignee, UCPB cannot be impleaded in Liam’s complaint for specific
performance. It is clear that the intention of the parties was merely to assign the receivables and
therefore there is no ground to hold UCPB solidarily liable with PPGI.
Sonny Lo v. KJS Eco-Formwork System Phil., Inc., G.R. No. 149420, October 8, 2003
FACTS:
Petitioner purchased on account scaffolding equipment from respondent. When petitioner failed
to settle his obligation to respondent, he executed a Deed of Assignment in favor of respondent
assigning to the latter his receivables from Jomero Realty Corporation. When respondent tried
to collect the said credit from Jomero Realty, the latter refused to honor the Assignment of
Credit because it claimed that petitioner had an outstanding indebtedness to it. When asked to
settle his obligation, petitioner refused to pay claiming that his obligation had been extinguished
when they executed the Deed of Assignment of Credit. Consequently, the respondent filed an
action for recovery of a sum of money before the RTC of Makati. The trial court ruled in favor of
the petitioner. The CA reversed the decision.
ISSUE: WON the Deed of Assignment did not extinguish petitioner’s obligation on the wrong
notion that petitioner failed to comply with hfis warranty thereunder
HELD:
YES. An assignment of credit is an agreement by virtue of which the owner of a credit, known
as the assignor, by a legal cause, such as sale, dacion en pago, exchange or donation and
without the consent of the debtor, transfers is credit and accessory rights to another, known as
the assignee, who acquires the power to enforce it to the same extent as the assignor could
enforce it against the debtor.
In any other contract of sale, the vendor or assignor is bound by certain warranties. More
specifically, the first paragraph of Article 1628 of the civil code provides:
The vendor in good faith shall be responsible for the existence; and legality of the credit at the

time of the sale, unless it should have been sold as doubtful but not for the solvency of the
debtor, unless it has been so expressly stipulated or unless the insolvency was prior to the sale
and of common knowledge.
From the above provision, petitioner, as vendor or assignor, is bound to warrant the existence
and legality of the credit at the time of the sale or assignment. When Jomero claimed that it was
no longer indebted to petitioner since the latter also had an unpaid obligation to it, it essentially
meant that its obligation to petitioner has been extinguished by compensation. In other words,
respondent alleged the non-existence of the credit and asserted its claim to petitioner’s warranty
under the assignment. Therefore, it behooved on petitioner to make good its warranty and paid
the obligation.
Indeed by warranting the existence of the credit, petitioner should be deemed to have ensured
the performance thereof in case the same is later found to be inexistent. He should be liable to
pay to respondent the amount of his indebtedness.
I. General Provisions and Barter or Exchange (Articles 1636-1641 (New Civil Code)
Assignment #10
Additional Assignment: Articles 1642-1657
Cases:
Chua Tee Dee Vs. CA, GR 135721, 27 May 2004
FACTS:
Agricom leased a rubber plantation to Chua Tee Dee, a businesswoman with company Pioneer.
The final contract of lease was signed and acknowledged on July 22, 1985. Due to a provision
in the contract that employees who will not be retained by Chua Tee Dee on her lease contract
period, such employees would be terminated resulting to a labor case which included Chua Tee
Dee resulting to her paying to settle the case. Chua Tee Dee complained also that her lease
was disturbed by various claimants which presented Tax declarations effectively limiting the
operations of her business. As a result, Chua Tee Dee did not pay rentals because her peaceful
enjoyment was not warranted.
Agricom filed a civil complaint for a sum of money. Pioneer filed her answer with damages
claiming that Agricom failed to comply with the terms and conditions of the contract of lease
when it failed to settle the labor dispute with its former employees and that the plaintiff failed to
maintain her in the quiet and peaceful possession and enjoyment of the leased premises during
the effectivity of the lease contract in violation of paragraphs 6 and 11 thereof.
The court rendered judgment dismissing the complaint and declaring the lease contract
terminated for failure of the plaintiff to implement the terms thereof. Agricom filed a motion and
the court modified its decision ordering Pioneer to pay rentals to the plaintiff since the defendant
had occupied, used and continually operated the rubber plantation while the case was pending.
The CA affirmed the order of the lower court.

ISSUE:
WON Pioneer was disturbed in its quiet and peaceful possession and enjoyment of the
leased premises under Art. 1654 of the Civil code.
HELD:
NO. The duty to maintain the lessee in the peaceful and adequate enjoyment of the lease for
the duration of the contract mention in no. 3 of art. 1654 is merely a warranty that the lessee
shall not be disturbed in his legal and not physical, possession.
In the case at bar, the petitioner claims that several people presented tax declarations to her
and claimed some portions of the leased premises. However, no case was filed by any of the
said claimiang against her or her lessor during the time she occupied the premises.
Patently then, the petitioner had not been disturbed in her legal possession of the property in
derogation of Art. 1654. When the petitioner’s representative saw that a portion of the leased
premises was being fenced by the claimants, she had all the right to sue the intruders who had
disturbed her physical possession as provided for in Art. 1664. However the petitioner did not
file any suit against any of the claimants. Thus it cannot be said that private respondent violated
par. 11 of the contract of lease.
Pioneer also failed to prove that she suffered any loss from the labor case that was filed against
her enterprise.
Her obligation to pay back rentals should cover only the period of July 1990 until the time she
vacated the leased premises. The petitioner should also be credited for the amount of P270,000
she paid to the respondent under par. 5 of the contract.
Spouses Ricardo And Elena C. Golez V. Meliton Nemeño, G.R. No. 178317, September 23,
2015
FACTS:
Nemeno is the registered owner of the subject lot. Nemeno entered into a lease contract with
Spouses Golez. Part of the contract involves the following provisions:
1. That the lessor leased the commercial lot
2. That the lessees shall construct a commercial building and pay monthly rental
3. Term of the contract is 4 years however if the amount is not fully paid within the period,
the parties hereby reserves the right to extend this contract until such time the amount is
fully paid.
4. As soon the amount is fully paid, the building shall be deemed owned by the lessor
however the lessee is obligated to cause the repair of the building before it shall be
turned over to the lessor.
The contract took effect June 1 1989. On May 23 1992, the building of the lease contract burned
down. Because of the destruction, Nemeno sent a letter demanding accumulated rentals from

March 17 1989 to June 17 1992. The demand was left unheeded, respondent filed a complaint
for collection before the RTC.
Before the burning, the petitioners insured the building without Nemeno’s knowledge for face
values more than its cost. This resulted to Nemeno charging Ricardo with Arson. Petitioners
contend that that the rental payment is amortized over the cost of the subject building thus
respondent had already become its co-owner who must suffer the loss of his property. They
denied liability in the burning contending it has been destroyed by fortuitous event.
Criminal case for arson was dismissed.
On complaint for collection, RTC decided that respondent did not become co-owner of the
subject building as it was burned down. It held that ownership will only pertain to him as soon as
the amount agreed upon shall have been fully paid. The RTC also noted that petitioners have
never paid respondent rent for the leased premises. RTC also found Ricardo as author of the
burning. Respondent’s debt to petitioners has been ruled as paid since the promissory note is in
the possession of the debtor.
The CA affirmed the decision.
ISSUE:
WON petitioners are liable to pay respondent for back rentals
HELD:
YES. There is no dispute that the contract entered into is a contract of lease. The destruction of
the building should not in any way be made a bsis to exempt petitioners from paying rent for the
period they made use of the leased property. Otherwise, this will be a clear case of unjust
enrichment. The fact that the parties agreed to a different mode of payment - in this case, a
building- does not in any way exempt petitioners from paying compensation due to respondent
for the use of the latter’s property because the building was destroyed.
While the court sustained the award of back rentals, petitioners should only be liable for rent
during the period within which they were in possession of the leased property.
D.M. Ragasa Enterprises, Inc. Vs. Banco De Oro, Inc., G.R. No. 190512, June 20, 2018
FACTS:
D.M. Ragasa leased to Equitable bank that became Banco De Oro the ground and 2nd floors of
a commercial building. A lease contract of sale was agreed upon. Thereafter, Banco De Oro
wanted to preterminate the contract and sent a letter informing ragasa of pre-terminating their
lease effective June 30, 2001. Ragasa responded with a demand letter dated June 20, 2001 for
payment of monthly rentals for the remaining term of the lease contract from July 1 2001 to
January 31 2003.
Ragasa filed a complaint for collection of sum of money. RTC ruled in Ragasa’s favor. CA
reversed the decision.
ISSUE:

WON the bank is liable to pay the remaining term of the lease contract due to their
pretermination of the contract which is a breach of it?
HELD:
NO. Ragasa is not entitled to the rental for the unexpired period of the lease contract. In the
case at bar, there is no question that the bank breached the lease contract. When it served
upon Ragasa the notice of pre-termination effective June 30 2001 and when it, indeed, vacated
the subject premises on said date, the bank, in effect, breached item 2 of the lease contract,
providing for a five year term. It must be noted that the lease contract does not contain a
pre-termination clause.
Thus having contravened the tenor of the lease contract regarding its term or period, the bank
should be liable for damages. However, how much in damages should the bank be liable?
In the present case, there is an express stipulation in item 8 of the lease contract “breach or
non-compliance of any of the provisions of this contract especially non-payment of 2
consecutive monthly rentals on time shall mean the termination of this contract”.
Pursuant to the automatic termination cluase, in furtherance of the autonomy characteristics of
contracts, the lease was terminated upon its unauthorized pretermination by the bank on June
30 2001. Thus, Ragasa is precluded from availing of the second option which is to claim
damages by reason of the breach and allow the lease to remain in force. With the lease having
been automatically resolved or terminated by agreement of the parties, Ragasa is entitled only
to indemnification for damages.
CLUTARIO VS. CA, 216 SCRA 341

FACTS:
Private respondents spouses Gandia are owners of a two storey residential apartment. They
occupy the 2nd floor while petitioner Clutario occupies the ground floor. Due to their old age,
they decided to occupy the entire apartment and sent a letter through counsel to Clutario giving
them 90 days to vacate the premises. Clutario did not heed the demand letter. Clutario was also
behind payment of his rentals since August 1980.
On March 1981, Respondents then filed a complaint for ejectment before the MTC. The MTC
dismissed the complaint. Respondents filed an appeal before the RTC. The RTC reversed the
MTC judgment. The CA affirmed the decision of the RTC.
Petitioners started defaulting for the period of August 1980 to May 15 1981. On May 15 1981
they paid P1,500 for their rents for this period. By then, they had been in arrears for 9 months.
Petitioners contend that private respondents, by accepting payment of the back rentals, waived
their non-payment of rentals for more than 3 months as a ground for ejectment.
ISSUE:
WON private respondents waived petitioner’s non-payment of rentals for accepting the payment
of back rentals.
HELD:
NO. the contention is without merit. The court notes that when petitioners paid the back rentals,
private respondents had already filed the complaint for ejectment earlier. The conduct of private
respondents subsequent to their acceptance of the back rentals belies any intention to waive
their right to eject petitioners as a result of the latter’s failure to pay the rent for more than 3
months. They did not enter into an amicable settlement neither did they notify the trial court of
their intention to have the complaint dismissed.
YAP VS. CRUZ, 208 SCRA 692

FACTS:

Private Respondent Dr. Cruz is the bonafide tenant of Amado Bugayon. Sometime in July 1985,
he offered for sale the goodwill of the veterinary clinic to some doctors including Dr. Wendelyn
Yap (petitioner). The negotiations did not materialized but petitioners managed to enter into a
contract of lease with the landlord. As a result, Cruz brought an action for forcible entry with
damages with the MTC against petitioners and the landlord.
]The MTC decided in favor of Cruz. The RTC affirmed the decision and the CA dismissed
petitions for review of petitioners and affirmed RTC decision.
ISSUE:
WON the lease between private respondent and landlord was automatically terminated because
while the negotiations for the sale of the goodwill was still on-going, the private respondent
stopped paying the rentals as the formal lease had long expired.
HELD:
NO. When the petitioners and the landlord executed a new contract of lease, the lease of
private respondent was still valid and subsisting. There is no question that private respondent
has not effectively relinquished his leasehold rights over the premises in question in view of the
failure of negotiations for the sale of the goodwill. Clearly, the transfer of the leasehold rights is
conditional in nature and has no force and effect if the condition is not complied with.
In the case at bar, the lack of proper notice or demand to vacate upon the private respondent is
clearly evident. Such absence of notice means that the lease of private respondent continues to
be in force and cannot be deemed to have expired as of the end of the month automatically.
Neither can non payment of the rent for the month of august 1985 be a ground to for termination
of the lease without a demand to pay and to vacate.
Thus when the landlord and the petitioners entered into a new contract of lease effectively
depriving the private respondent of his lease, they were clearly guilty of forcible entry in view of
the subsisting lease of private respondent.
Up to Art. 1679, New Civil Code)

Cases:
1. Tagbilaran Integrated Settlers Association Vs. CA, 444 SCRA 193
FACTS:
TISA were lessees of TWC (Tagbilaran Women’s Club), private respondent. In a letter to
petitioners dated January 6 1990, TWC Demanded that they vacate the rented premises on the
following grounds: expiration of the lease contracts, non-payment of rentals and violations of the
conditions of lease including noncompliance with sanitary and building ordinances. Petitioners
refused to vacate.
On February 25, 1993, TWC entered into a lease contract on the lot with Lambert Lim.
Petitioners nevertheless refused to vacate the lot contending that the contract between Lim is
null and void because TWC impliedly extended to them new contracts of lease when it
continued collecting monthly rentals from them.
Petitioners filed a petition against TWC and lim for prohibition, annulment of contract of lease
and damages with prayer for the issuance of a writ of preliminary prohibitory injunction.The RTC
dimissed the petition. The CA affirmed the decision of the RTC.
ISSUE:
WON there was a contract subsisting between TISA and TWC rendering the contract between
Lim and TWC null and void.
HELD:

NO. Contrary to petitioners’ contention, the subsequent acceptance by the lessor of rental
payments does not, absent any circumstance that may dictate a contrary conclusion, legitimize
the unlawful character of their possession. The lease contracts executed by TWC and
petitioners in 1986 and 1987 were for a period of 1 year. Following art. 1669, the lease contracts
having been executed for a determinate time, they ceased on the day fixed, that is, a year after
their execution without need of further demand.
While no subsequent lease contracts extending the duration of the original lease were forged,
TWC continued to demand, collect and accept monthly rentals. An implied new lease (tacita
reconduccion) was thus created pursuant to Art. 1670.
Since the period for tacita reconduccion was not fixed and the rentals were paid on a monthly
basis, the contract was from month to month.
Month to month lease under art. 1687 is a lease with a definite period, hence it is terminable at
the end of each month upon demand to vacate by the lessor.
Spouses Modomo Vs. Spouses Layug, G.R. No. 197722, August 14, 2019
FACTS:
Spouses Layug were the registered owners of the subject leased property to Spouses Modomo.
In their contract of lease, Spouses Modomo agreed to pay the amount of P170,000.00 as
monthly rentals subject to anescalation per year. It was also agreed by the parties that real
estate taxes on the property shall be paid by spouses Modomo. Subsequently, Spouses
Modomo defaulted i nthe payment of the escalation of rental fees commencing from the year
2006 upto the filing of the complaint, July 2008. Spouses Layug wrote a letter to Spouses
Modomo ordering the latter to vacate the matter.
Spouses Modomo contends that a subsequent verbal agreement was reached reducing the
monthly rentals to P150,000.00 and the non imposition of the escalation clause and the real
estate tax provision. They also allege that the contract of lease has been novated in view of the
subsequent oral agreements.
The METC rendered judgment ordering the immediate surrender of the property with
improvements and likewise to pay Spouses Layug rental arrearages in the amount of P208,725
per month for the reasonable use of the property.
The RTC affirmed the decision of the MeTC. The CA denied due course and dismissed the
petition and affirmed the decision of the RTC with Modification.
ISSUE:
1. WON the provisions of the contract of lease governing rental fees, escalation and real
estate tax payment have been partially novated by the parties alleged subsequent verbal
agreement
2. WON the principle of estoppel in pais applied so as to preclude Spouses Layug from
denying partial novation of the contract of lease
3. WON spouses Modomo are entitled to reimbursement for useful improvement made
upon the leased property
HELD:

1. The modification of the monthly rental fee through the verbal agreement is confirmed by
the evidence on record and the Spouses Layug’s own submissions. Spouses Modomo
failed to establish that the provisions governing escalation and proportional payment of
real estate tax payment have ben similarly modified.
Partial novation is governed by Art. 1291.
ART. 1291. Obligation may be modified by:
I. Changing their object or principal conditions
Ii. Substituting the person of the debtor
Iii. Subrogating a 3rd person in the rights of the creditor.
While the civil code permits the subsequent modification of existing obligations, these
obligations cannot be deemed modified in the absence of clear evidence to this effect. Novation
is never presumed and the animus novandi whether total or partial, must appear by express
agreement of the parties, or by their acts that are too clear and unequivocal to be mistaken.
2. NO. for the principle of estoppel in pais to apply, there must be

1. Conduct amounting to false representation or concealment of material facts or at least
calculated to convey the impression that the facts are otherwise than, and inconsistent with,
those which the party subsequently attempts to asset
ii. Intent or atleast expectation that this conduct shall be acted upon or at least influenced by the
other party and
iii. knowledge , actual or constructive of the actual facts.
Based on the records, spouses Layug served upon Modomo several letters expressing their
objection to the latter’s deficient payments. These letters belie spouses Modomo’s imputation of
silence and acquiescence on the part of Spouses Layug. It can hardly be said that spouses
Layug falsely conveyed their acquiescence to Spouses Modomo’s deficient payments through
silence, there being no silence to speak of.
3. NO. Spouses Modomo upon vacating the premises and left no single piece of wood or
materials on the premises and demolished everything. Hence they are precluded from seeking
reimbursement for improvements that are now inexistent.
Booklight, Inc. Vs. Tiu, G.R. No. 213650, June 17, 2019
FACTS:
Petitioner Booklights entered into a contract of lease with respondent for a space in
respondent’s buidling to be used for petitioner’s bookstore business. The lease was for five year
which expired on Sept. 1 2001. It was never renewed upon expiration although petitioner
continued to occupy the premises until its business operations ceased on Feb. 28 2003.
Alleging unpaid rentals from Dec. 2001, respondent filed a complaint for collection of sum of
money, damages, attorney’s fees, litigation expenses and attachment against Booklight before
the RTC.
In its answer with compulsory counterclaim, petitioner alleged that there was no prior demand
made by respondent that it fully paid its rentals up to july 22 among others.
RTC ruled in favor of respondent. CA affirmed the decision.
ISSUES:
1. WON there was an advanced rental and deposit amounting to P109,440

2. WON this amount was already refunded or considered in the computation of the unpaid
rentals
3. WON the electric bills pertain to March 2003
HELD:
The issues raised herein are purely factual in nature. The records are bereft of any evidence to
support petitioner’s claim that it paid advanced rental and deposit and that the same have not
yet been refunded or utilized; nor was there any record to definitely show that the subject
electric bills pertain only to a month when petitioner was not occupying the premises anymore.
Muller Vs. Philippine National Bank, G.R. No. 215922, October 1, 2018
FACTS:
Spouses Muller are the occupants of 2 parcels of land owned by PNB. On May 26 1987, PNB
informed the Mullers that ther lease will expire on June 1 1987; that they had rental arrears for 2
and a half years amounting to P18,000.00.
PNB demanded the spouses to vacate the properties and the demand fell on deaf ears. Due to
continued occupation of the Mullers PNB sent its final demand letter dated July 17 2006
demanding from them the payment of the rental arrears from June 1984 up to June 1 2006.
PNB Instituted a complaint for ejectment.
The MTC rendered a decision in favor of PNB. The RTC declared that the reckoning point from
which a claimant in an unlawful detainer case, PNB, may invoke the accrual of its claims is the
date of receipt of last demand; that the MTCC cannot take judicial notice of the fair rental value
of the subject properties and that prescription is applicable to the case. RTC rendered a
decision modifying the MTCC decision. Fixing the reasonable rental awarded to PNB at 1000
per month to be reckoned only from the date of the Muller’s receipt of the latest demand letter
until Aug. 1 2007 when they vacated the subject property.
CA assailed decision decreeing that 1. Reasonable compensation for the use and occupancy of
the subject properties should be reckoned from receipt of initial demand and not receipt of last
demand. 2. Prescription does not apply hence PNB can collect rentals which accrued prior to
receipt of last demand and the 3. MTCC properly fixed the rental value of the properties.
ISSUES:
1. WON the award of rentals in an ejectment case may be reckoned from a date beyond
the latest demand to vacate
2. WON rentals in an ejectment case may be retroactively reckoned beyond the latest
demand to vacate
3. WON the award of rentals beyond the latest demand letter has prescribed
HELD:

1. NO. Under Art. 1670 if at the end of the contract the lessee should continue enjoying the
thing leased for 15 days with acquiescence of the lessor, and unless a notice to the
contrary by either party has previously been given, it is understood that there is an
implied new lease, not for the period of the original contract but for the time established
in Art. 1682 and 1687. The other terms of the original contract shall be revived. Thus
when petitioners’ written lease agreement expired and they did not vacate the subject
properties, the terms of the written lease other than that covering the period thereof were
revived. The lease thus continued. In this sense, the prescriptive periods are
inapplicable.
The CA is thus correct in ruling that petitioners should be made liable for damages in the form of
rent or reasonable compensation for the occupation of the properties not only from the time of
the last demand but starting from the time they have been occupying the subject properties
without paying for its rent. Suffice it to state, the amount demandable and recoverable from a
defendant in ejectment proceedings regardless of its denomination as rental or reasonable
compensation or damages, flows from the detainer or illegal occupation of the property involved
is merely incidental thereto.
Yek Seng Co Vs. Ca, 205 Scra 305

FACTS:
The subject of the petition is a verbal contract of lease over a portion of a building belonging to
the private respondents and occupied by the petitioner as lessee. The leased premises have
been used by the petitioner for its general merchandise business for more than 20 years. The
agreed monthly rental was P3,000.00
On December 12, 1985, the lessors notified the petitioner that they were terminating the lease
as they intended to renovate the building and thereafter use it themselves. The petitioner
refused to vacate. The private respondents then filed a complaint for ejectment. Petitioner filed a
petitioner for consignation of the monthly rentals which it claimed had been refused by the
lessors.
RTC and CA rendered decision in favor of private respondents
ISSUE:
WON Petitioner is guaranteed extension of lease in accordance to Art. 1687 of the civil code
HELD:
NO. The circumstance that the petitioner has paid its rentals religiously during the past 20 years
is not sufficient to justify the extension it demands. Neither are the substantial improvements it
allegedly made on the leased premises nor the difficulty of finding another place of business, on
which it has not submitted any evidence at all. The court makes the wry observation that the
petitioner has only itself to blame if, being engaged in business, it did not take the necessary
precautions against its possible and even abrupt displacement because of the termination of the
month-to-month lease. As for the argument that the private respondents had not yet secured a
building permit for the alleged intended renovation, it is obviously no argument at all and
deserves no further comment.

At the time petitioner was asked to vacate, the lease contract had already expired and therefore,
following the above-quoted decisions, could no longer be extended. In fact, even if such
contract had not yet expired, its extension would still be subject to the sound discretion of the
court and was by no means obligatory upon it as a merely ministerial duty.
United Realty Corp. Vs. Ca, 183 Scra 725

FACTS:
Petitioner and private respondent Rev. Father Jose Torralba Sy, entered into separate contracts
of lease over two apartments. It was a contract of month to month basis at 200 pesos per month
payable in advance on the first 10 days of the month. It is also stipulated that in case the lessee
shall continuously withhold possession of the apartments after he or she has been properly
notified of the termination of his or her right to occupy the same, the lessor shall be entitled to
collect P400 every month.
In 1970, the contract was amended to rent of P300 per month and penalty of P500 every month
or fraction.
On 1975, the new rental was P500 per door or P1,000.00 for the 2 doors.
Private respondent complained to the Department of Public Information. In the confrontation

between parties, the committee found that there was no violation of PD 20 as the subject
premises are being used principally as a buddhist temple and therefore not covered.
On 1988, petitioner demanded private respondent vacate and surrender the 2 premises within 5
days from receipt of the same and to pay his rental indebtedness minus the deposit.
Nevertheless, private respondent failed to vacat.
Petitioner filed a complaint for unlawful detainer. The complaint was dismissed. The court of first
instance decided the same but finding private respondent entitled to moral damages, exemplary
damages and attorney’s fees..
Petition for review was filed by petitioner to the CA. The CA dismissed the petitioner.
ISSUE:
Whether the contract of lease is for a definite or indefinite period of time
WON PD 20 and BP25 are applicable
HELD:
The contract of lease is definite. A reading of the 2 contracts of lease entered show that its
period is from month to month and that the lease may be terminated when either party gives a 5
day notice in writing.
No doubt such a stipulation between parties demonstrates that the agreement is for a definite
period and not for an indefinite period as held by the appellate court.
Since the lease agreement in question is for a definite period it follows that petitioner has a right
to judicially eject private respondent from the premises as an exception to the general rule
provided for in Sec. 4 of PD 20.
Moreover, under Sec. 5 of BP 25 one of the grounds for ejectment is the expiration of the period
of a written lease contract.

Legar Mgnt And Realty Corp Vs. Ca, G.R. No. 117423, Jan. 24, 1996.
FACTS:
Spouses Legasto entered into a written contract of lease with no definite period with private
respondents Pascual and Ancheta. Thereafter, petitioner allowed private respondents to
continue occupying their apartment unit by virtue of a verbal contract of lease which was
renewable on a month to month basis. Pursuant to their verbal agreement, private respondents
were to pay petitioner a monthly rental of P1,545.00.
Petitioner wrote private respondent a formal notice of termination requesting him to vacate. Both
refused to heed petitioner’s demand and did not vacate. Petitioner instituted an ejectment case.
MTC found for petitioner. RTC reversed the decision. The CA upheld the decision of the RTC.
ISSUE:
WON lessee of a residential property covered by the Rent Control law can be ejected on
the basis alone of the expiration of the verbal lease contract under which rentals are paid
monthly.
HELD:
YES. Lease agreements with no specified period, but in which rentals are paid monthly, are
considered to be on a month to month basis. They are for a definite period and expire after the
last day of any given 30 day period upon proper demand and notice by the lessor to vacate.
Where the verbal lease agreement entered into has been validly terminated, there is sufficient
cause for ejectment under Sec. 5(f) of BP 877.

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Sales & Lease Digests 2020 | Francisco

Fullido vs. Grilli, 785 SCRA 278, G.R. No. 215014

M.L. Francisco | Atty. Busmente

Wherefore, petition is Granted.

M.L. Francisco | Atty. Busmente

Melecio’s recourse as a co-owner of the conjugal properties is an action for partition

Wherefore we hereby DENY the petition.

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

Wherefore, the challenged decision is affirmed and petition is DENIED.

Phil. Suburban Development Corp. vs. Auditor General, 63 SCRA 397

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

ODYSSEY PARK INC V. CA

Art. 1592 is also inapplicable as the provision contemplates an ABSOLUTE SALE.

M.L. Francisco | Atty. Busmente

JM Tuazon & Co., Inc. vs. CA, 94 SCRA 413

2. Escaler vs. CA, 138 SCRA 1;

Moles vs. IAC, 169 SCRA 777

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

Spouses Tablada began constructing their house on the subject lot.

M.L. Francisco | Atty. Busmente

YES. Art. 1544 of the civil code reads:

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

registering the subject lot.

M.L. Francisco | Atty. Busmente

Spouses Tomas and Silvina Occena vs. Esponilla, GR No 156973, 6-4-2004

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

CA Affirmed RTC decision.

M.L. Francisco | Atty. Busmente

Limson vs. CA, 357 SCRA 209;

M.L. Francisco | Atty. Busmente

San Miguel Properties vs. Huang, 336 SCRA 2000

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

Ang Yu Asuncion vs. CA, December 2, 1994

M.L. Francisco | Atty. Busmente

Bible Baptist Church vs. CA, 26 November 2004

M.L. Francisco | Atty. Busmente

Ridad v Filipinas Investments

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

approval of the buyer’s loan.

Wherefore, finding no reversible error in the decision, petition is denied.

12. Luis and Lourdes Ridad vs Filipinas Investment 1983

M.L. Francisco | Atty. Busmente

M.L. Francisco | Atty. Busmente

Guarantee then demand Paces to vacate.

M.L. Francisco | Atty. Busmente

immediately pay the P600,000.00 balance. Later, cancellin

M.L. Francisco | Atty. Busmente

Malabanan vs. Spouses Montano, G.R. No. 187225, March 6, 2019

M.L. Francisco | Atty. Busmente