Sales Case Digests (Atty. Casino)

People's Homesite & Housing Corp V Court of Appeals G.R. No L-61623 December 26, 1984 Aquino, J.: Facts: PHHC board of directors passed Resolution No 513 awarding the consolidated Subdivision Plan Lot 4 to spouses Mendoza at a price of 21php per sq meter. The aforementioned Subdivision plan is subject to the approval of the Quezon City Council. The awarding to the spouses was also subject to the approval of OEC (PHHC) Valuation Committee and higher authorities. The city council disapproved the subdivision plan. Another plan was prepared and submitted to the city council. This plan was approved by the city council. The revised plan reduced the area of the lot. Another resolution was passed, which recalled all the awarded plans from those who failed to pay the deposit or down payment. Mendoza spouses were one of those who failed to pay. PHHC issued resolution 218, which withdrew the awarded lot of Mendoza spouses. The lot was reawarded to Sto. Domingo, Esteban, Pinzon, Redublo and Fernandez. The 5 awardees deposited the DP and deeds of sale were executed in their favor. The subdivision of lot 4 was approved by the city council and bureau of lands. The Mendoza spouses asked for reconsiderationg of the previous award and to cancel the reawards of the said lot. Trial court sustained the withdrawing and awarding of lot. Apellate court reversed the ruling. Issue: WON there was a prefected sale between PHHC and Mendoza spouses. Held: No, the sale was not perfected. The sale was conditionally awarded to the spouses subject to the approval of the city council (of the subdivision plans) and the approval of the award by the valuation committee and higher authorities. The city council did not approve the subdivision plan. The Mendoza spouses were made aware through mail. The spouses should have manifested in wiriting their acceptance of the award of the purchase pf Lot 4 just to show they were interested although the lot had been reduced in terms of area. Under the facts, we cannot say there was a meeting of the mind on the renewed area of Lot 4 since the spouses did not manifest acceptance on their part.

Delta Motors V Genuino GR No 5565 Feb 8 1989 Cortes, J.: Facts: In July 1972, two letters were sent by Delta to Genuino offering to sell black iron pipes. The first letter quoted 1,200 length of black iron pipes schedule 40, 2"x20' including delivery at 66000php with certain terms of payment. The second letter quoted 150 lengths of black iron pipes schedule 40 1 1/4" x 20' including delivery at 5,400 also with terms of payment. Both letter quotations contain the following stipulation, "Our price offer indicated therein shall remain firm within a period of 30 days from the date thereof. Any order placed after said period will be subject to our review and confirmation." Hector agreed and signed both letter quotations. He made initial payments on both contracts - 13,200 and 2,700 respectively. Delta did not deliver the iron pipes. Genuino did not make subsequent payments and the non-execution of promissory note as conditioned on the 1st contract. Sometime in July 1972, Delta offered to deliver but was not accepted by Genuino since construction on his ice plant building was not yet finished. Almost 3 years later, Genuino asked from Delta the delivery of the pipes and manifested his preparedness to pay. Delta countered that it cannot anymore deliver on the original quoted price because of the 30day limit proviso. Genuino fileda complaint for a specific performance with damages seeking to compel Delta to deliver while Delta asked for a rescission of contract. RTC ruled in favor of Delta. CA reversed the ruling. CA reasons 1) Delta should have included a deadline of delivery having knowldege of the fact that the iceplant was only being constructed, 2) the black iron pipes had already been paid and Delta had made use of the payments. (unjust enrichment) Issue: WON delta can ask for increased prices based on the price offer stipulation in the contracts. Held: No, Delta cannot change the price of an accepted offer. Reliance by Delta on the price offer stipulation is misplaced. Said stipulation makes referene to Delta's price offer as remaining firm for 30 days and thereafter will be subject to its review and confirmation. The offers of Delta, however were accepted by the private respondents within the 30day period. And as stipulated in the two letter quotations, acceptance of the offer gives rise to a contract betweenn the parties. Art 1475, the contract of sale is perfected at the moment there is meeting of minds upon thing which is the object of the contract and upon the price. Thus, the moment Genuino accepted the offer of Delta, the contract of sale between them was perfected and neither party could change the terms thereof.

Dignos V Court of Appeals No L-59266 Feb 29 1988 Bidin, J.: Facts: The Dignos spouses were owners of a parcel of land. The land was sold to Jabil for the sum of 28,000 to be paid in two installments, with an assumption of indebtedness with the First Insular Bank of Cebu for 12000, which was paid and acknowledged by the vendor. The next installment should be made on Sept 15 1965. On Nov 25 1965, the spouses sold the same lot to spouses Cabigas (who were then US citizens) for the price of 35000. A deed of absolute sale was executed and it was registered in the Office of the Registered Deeds. When Dignos spouses refused to accept payment from Jabil, he subsequently discovered the second sale and filed the complaint against them. Court of First Instance declared the deed of sale (Spouses Cabigas) null and void ab initio. Jabil was ordered to pay 16000 to Spouses Cabigas. CA affirmed the decision except the order of Jabil to reimburse the Spouses Cabigas. Issue: WON the subject contract is a deed of absolute sale or a contract to sell. Held:1. The subject contract was a deed of absolute sale. It has been held that a deed of sale is absolute in nature although denominated as a "Deed of Conditional Sale" where nowhere in the contract in question is a proviso or stipulation to the effect that the title to the property sold is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. Also, all the valid elements of a valid contract of sale under 1458 are present. Further, Article 1477 provides that the ownership of the thing sold shall be transferred to the vendee upon actual or constructive delivery. The spouses delivered the lot as early as March 27 1965. The CA in its resolution found the acts of the spouses clearly show that an aboslute deed of sae was intended by the parties and not a contract to sell.

Romero V CA GR No 107207 Nov 23 1995 Vitug, J,: Facts: Romero (Petitioner) decided to put up a central warehouse in Manila. Flores (Private Respondent) and his wife with a broker offered a parcel of land. Romero liked the property except for the squatters therein. Flores spouses offered to advance 50000php as payment, so they have money to file for an ejectment case against the squatters. Romero accepted the offer. On june 9, 1988, a "Deed of CONDITIONAL Sale" was executed. The deed contained the following stipulations, 1) 50000 will be paid upon signing and execution of instrument, 2) the balance shall be paid 45 days AFTER THE REMOVAL OF SQUATTERS, 3) upon full payment vendor withou necessity of demand shall sign and execute and deliver deed of sale. If after 60 days of signing the VENDOR fails to remove squatters the DP shall be reimbursed. In the event the VENDEE shall not pay the balance after 45 DAYS of written notification of removal of squatters the DP shall be forefeited." Vendors were able to secure a judgment against said squatters but the decision was handed down beyond the 60day period. Flores sought to return the DP but Romero refysed. Atty Apostol (rep of Romero) told Atty Yuseco (Rep of Flores) that they will be handling the ejectment case and that all expenses will be chargeable to the purchase price. Atty Yuseco replied asking for the declaratio of the contract null and void. Romero's refusal to accept payment promted Flores to file a case of rescission and consignation of 50000 cash. Lower court dismissed the case and ordered Flores to eject or cause the ejectment of the squatters and to execute the deed of sale. CA reversed the decision and opined that the perfectio of contract was dependent on a resolutory condition. Issue: WON there was a perfected contract of sale. WON Private Respondent can rescind the contract. Held: 1) Yes, the contract of sale was perfected the moment the parties had a meeting of the minds. A perfected contract of sale may either be absolute or conditional depending on whether the agreement is subject to any condition on the passing of the title of the thing to be conveyed or on the obligation of a party thereto. When ownership is retained until the fulfillment of a positive condition the breach of the condition will simply prevent the duty to convey title from acquiring an obligatory force. If the condition is imposed on an oblilgation of a party which is not complied with, the other party may either refuse to proceed or waive said condition. If the condition is imposed upon the perfection of the contract itself, the failure of such condition would prevent the juridical relation itself from coming into existence. The ejectment of the squatters is a condition the operative act of which sets into motion the period of compliance. The so called "potestative condition" is imposed not on the birth of the obligation but on its fulfillment, only the condition is avoided, leaving unaffected the obligation itself.

Coronel v. CA GR No. 103577 Oct. 7, 1996 Melo, J.: Facts: Romulo Coronel, et. al. issued a receipt in favor of Ms. Ramona Alcaraz for the amount of 50,000php as “down payment” for the purchase of their “inherited house and lot” in the total amount of 1,240,00.00php. In the receipt is was stated that: “We (the Coronels) bind ourselves to effect the transfer in our names from our deceased father… the transfer certificate of tittle immediately upon receipt of the down payment…” and: “On our presentation of the TCT already in or(sic) name, We will immediately execute the deed of absolute sale of said property and Miss Ramona Alcaraz shall immediately pay the balance of the 1,190,000.00php” However, upon the issuance of the new title to the Coronels, they sold the said house and lot to a third party (Mabanag) for a greater price. The Coronels executed a Deed of Absolute Sale in favor of Mabanag and a title was subsequently in her favor. Ramona Alcaraz seeks to nullify the subsequent sale, but the Coronels argue in favor of its validity, saying that the contract between them and Alcaraz was a merely an executory “Contract to Sell”. Thus, ownership was reserved to them and the obligation was subject to a suspensive condition, and since Alcaraz was in America, the same could not ripen into a Contract of Absolute Sale. Issue: WON the agreement between the Coronels and Ramona Alcaraz was a “Contract to Sell” Held: NO. It is important to distinguish a Contract to Sell from a Conditional Contract of Sale as one of the elements to a perfected Contract of Sale is missing from the former. In a Contract to Sell, the element of Consent or the meeting of the minds, that is, the consent to transfer ownership in exchange for the price, is missing. The prospective seller explicitly reserves the transfer of title to the prospective buyer until the happening of an event, such as, for example the payment of the purchase price. In a Conditional Contract of Sale, the element of consent is present although conditioned upon the happening of an event. In a Contract to Sell, fulfillment of the condition will not automatically result in the transfer of ownership. Also, in a Contract to Sell, a third party which purchased the thing cannot be considered a buyer in bad faith because ownership had not been transferred by the fulfillment of the condition, and thus the seller was within his right to sell to a third party. The opposite can be said in the case of a Conditional Contract of Sale, where the fulfillment of the condition resulted perfection of the buyer’s right to ownership. A reading of the receipt issued by the Coronels reveals that the same is in the nature of an Conditional Contract of Sale, there being no reservation of ownership, and the Coronels undertaking to immediately issue a Deed of Absolute Sale upon the payment of the down payment- which had been complied with.

United Muslim and Christian Urban Poor Association v. Bryc-V Development Corp. G.R. No. 179653 July 31, 2009 Nachura, J.: Facts: The United Muslim and Christian Urban Poor Association (UMCUPAI) manifested it’s intention to purchase Lot 300 owned by Sea Foods Corporation (SFC). SFC executed a Letter of Intent to Sell and Letter of Intent to Purchase, providing that SFC would sell the said lot at 105php per square meter and that UMCUPAI would endeavor to raise the necessary funds for the purchase. UMCUPAI was unable to secure a loan to allow it to purchase Lot 300, but the lot was subdivided into 3 smaller lots, of which UMCUPAI was able to purchase one. SFC sold one of the three lots to Bryc-V Development Corp. UMCUPAI now seeks to rescind the sale arguing, although not explicitly, that ownership had already vested in them as the Letters of Intent partook in the nature of a Conditional Contract of Sale. Issue: WON the Letters of Intention could be considered a Conditional Contract of Sale. Held: NO. A Letter of Intent is not a contract between the parties thereto because it does not bind one party, with respect to the other, to give something or to render some service. An intention is a mere idea, goal, or plan. It falls show of a definite proposal, and is a mere declaration to enter into a contract. For a contract to be perfected, the offer must be absolute; it must be plain and unconditional. This being the case, it cannot be considered a Conditional Contract of Sale wherein ownership would have already vested in UMCUPAI, subject only to the fulfillment of a suspensive condition. In Conditional Contract of Sale, a third party may be considered a buyer in bad faith should it be shown that he was aware that when he purchased the property in question, the same had already been the subject of a contract of sale between the another buyer and the seller, in which case his right is defeated by the first buyer’s right. There being no Conditional Contract of Sale- or any contract of sale for that matter, Bryc-V cannot be held to be a buyer in bad faith.

Tan v. Benolirao GR. No. 153820 Oct. 16, 2009 Brion, J.: Facts: The spouses Taningco and spouses Benolirao co-owned a parcel of land, which they decided to alienate in favor of Mr. Delfin Tan in consideration of the sum of 1,1178,000.00 with a down-payment of 200,000php in a document denominated as a “Conditional Contract of Sale”. It was stipulated that Tan had 150 days to pay the balance, with an extendable period of 60 days on the condition of interest. They agreed that should Mr. Tan fail to comply with the conditions, the sellers shall have the right to forfeit the down payment and rescind that conditional sale. The sellers undertook that once the Tan complied with the terms, they shall execute and deliver to him the appropriate Deed of Absolute Sale. Tan paid the down payment, but upon the death of Lamberto Benolirao (one of the sps. Benolirao) an encumbrance was annotated in the title to the lot excluding others from the enjoyment of the same for a period of two years. Tan, unable to comply with the conditions, argued that the period of his payment should be extended due to the sudden encumbrance on the property. The sellers, on the other hand, sold the property in question to a Mr. de Guzman. Issue: WON Mr. Tan has a right to purchase the property. Held: NO. A reading of the terms and conditions of the contract would show that notwithstanding the fact that it was denominated as a “Conditional Contract of Sale”, it is actually a mere Contract to Sell. The sellers undertook to deliver the Absolute Deed of Sale only upon the fulfillment of all the terms and conditions of the contract, hence being an effective reservation of ownership. The failure to pay the price agreed upon is not a mere breach, casual or serious, but a situation that prevents the obligation of the vendor to convey title from acquiring obligatory force. As the sellers remained owners of the land as the condition had not been complied with, they were within their right to sell the property to a third person. However, the Court did find it improper for the sellers to garnish upon the down payment of Mr. Tan as the encumbrance which discouraged him from complying with the contract was not his fault.

De Leon v. Ong GR. No.170405 Feb. 2, 2010 Corona, J.: Facts: Raymundo de Leon sold three parcels of land to Benita Ong which were mortgaged to Real Savings and Loan Association. The contract stated that that for 1.1million pesos, de Leon would sell, tansfer and convey in a manner absolute and irrevocable the lands and the buildings, provided that upon the payment of 415,000php Ms. Ong would assume the obligation to pay the mortgages. The amount of 415k was paid, and both parties informed Real Savings that Ms. Ong would assume the payment of the mortgages. Mr. de Leon also transferred the keys to the property to Ms. Ong. During the pendency of a credit investigation by Real Savings on Ms. Ong, she found out that the keys to the property had been changed. Apparently, the property had been sold to a certain Ms. Leona Viloria. Ong went to Real Savings to inquire on the status of the credit investigation but found that the titles to the properties has been released to de Leon, the loan having been satisfied. Issue: WON Ms. Ong has a right to the property. Held: YES. A close reading of the agreement would show that de Leon bound himself to “sell, transfer and convey in a manner absolute and irrevocable” the lands in question to Ong “for an in consideration” of the sum of 1.1 million pesos. Nowhere in the contract did de Leon explicitly withhold ownership of the property. It is also important to note that de Leon gave the keys to the property to Ong, constituting constructive delivery. The agreement, therefore, is a Contract of Sale and not a Contract to Sell. The said contract was conditional in the sense that it did impose the obligation to assume the mortgage on the part of Ms. Ong, but this condition was deemed fulfilled when the obligee voluntarily prevented the fulfillment of the condition, as per Article 1186.

Luzon Development Bank vs. Angeles Catherine Enriquez G.R. No. 168646 January 12, 2011 Del Castillo, J.: Facts: Petitioner DELTA (which is owned by Ricardo de Leon) is a domestic corporation engaged in the business of developing and selling real estate properties. Ricardo De Leon and his spouse obtained a loan of P4,000,000 from Luzon Development Bank (LDB) to develop Delta Development and Management Services, Inc. (DELTA) Homes I. They executed a real estate mortgage over several of their property, including Lot 4 owned by Ricardo. Later, the mortgage was amended by increasing the loan to P8,000,000. The Real Estate Mortgage and the amendment were annotated on TCT No. T 637183. Sometime in 1997, DELTA executed a Contract to Sell with Angeles Catherine Enriquez (Enriquez) over Lot no. 4 for P614, 950. Enriquez made a downpayment of P114,590. The Contract to Sell provides that the failure to pay 3 successive monthly installments, gives the owner the power to consider the Contract to Sell as void. Paid installments are forfeited in favor of the owner as liquidated damages and to cover documentation expenses. DELTA defaulted on its loan to LDB. When DELTA defaulted on its loan obligation, the BANK, instead of foreclosing the REM, agreed to a dation in payment or a dacion en pago. The Deed of Assignment in Payment of Debt was executed on September 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 x x x in payment of the total obligation owing to the Bank x x x." Unknown to Enriquez, among the properties assigned to the BANK was the house and lot of Lot 4, which is the subject of her Contract to Sell with DELTA. The records do not bear out and the parties are silent on whether the BANK was able to transfer title to its name. It appears, however, that the dacion en pago was not annotated on the TCT of Lot 4. Enriquez filed a complaint against DELTA with the Housing and Land Use Regulatory Board (HLURB) for violating the terms of its License to sell by: (1) selling houses below the price prescribed by BP 220; (2) failing to get clearance for the mortgage from the HLURB. Enriquez sought a full refund of 301, 063 that she had already paid to DELTA plus damages and administrative fines against the LDB and DELTA. Issue: WON a Contract to Sell conveys ownership over the Lot Held: The Supreme Court held that a contract to sell does not transfer ownership. A contract to sell is one where the prospective seller reserves the transfer of title to the prospective buyer until the happening of an event, such as full payment of the purchase price. What the seller obliges himself to do is to sell the subject property only when the entire amount of the purchase price has already been delivered to him. In other words, the full payment of

the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. It does not, by itself, transfer ownership to the buyer. In this case, Enriquez has not fully paid the purchase price of the Lot. She does not own the Lot. Therefore, DELTA's transfer of ownership over the lot to LDB is valid. However, LDB is bound to respect the contract to sell with Enriquez. PD 957 provides that contracts to sell registered by the seller with the Register of Deeds is binding on third persons. While this particular contract was not registed with the Register of Deeds by DELTA, this does not prejudice Enriquez or extinguish LDB's obligation to respect the Contract to Sell. LDB cannot claim to be an innocent purchaser as the Lot was clearly marked to be a part of the subdivision project of Delta. While the general rule is that persons dealing with registered property can rely on just the certificate of title, banks are covered by a special rule. Banks should know that there is a risk in this dealing with this type of business because they might be covered by existing contracts to sell Finally, as to the effect of the dation in payment on the loan. While the lot would have no value to the Bank if it is delivered to Enriquez, the intent of the parties show that the dation was meant to extinguish the obligation fully, not just to the extent of the value of the thing delivered. Note: The Court also found that the mortgage over the Lot was void because DELTA did not acquire prior clearance from HLURB

Sps. Onnie Serrano and Amparo Herrera vs. Godofredo Caguiat G.R. No. 139173 February 28, 2007 Sandoval-Gutierrez, J.: Facts: Petitioners are registered owners of a lot located in Las Piñas. On March 23, 1990, respondent offered to buy the lot and petitioners agreed to sell it at P1,500 per square meter. Respondent then gave P100,000 as partial payment. A few days after, respondent, through his counsel, wrote petitioners informing them of his readiness to pay the balance of the contract price and requesting them to prepare the Deed of Sale. Petitioners, through counsel, informed respondent in a letter that Amparo Herrera would be leaving for abroad on or before April 15, 1990 and they are canceling the transaction and that respondent may recover the earnest money (P100,000) anytime. Petitioners also wrote him stating that they already delivered a manager’s check to his counsel in said amount. Respondent thus filed a complaint for specific performance and damages with the RTC of Makati. The trial court ruled that there was already a perfected contract of sale between the parties and ordered the petitioners to execute a final deed of sale in favor of respondent. The Court of Appeals affirmed said decision. Issue: WON there was a contract of sale. Held: The transaction was a contract to sell. “When petitioners declared in the “Receipt for Partial Payment” that they – “RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED THOUSAND PESOS AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIÑAS… MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON OR BEFORE MARCH 23, 1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL DEED OF SALE ON THIS DATE.” There can be no other interpretation than that they agreed to a conditional contract of sale, consummation of which is subject only to the full payment of the purchase price. A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor’s obligation to transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does not take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is commonly full payment of the purchase price. In this case, the “Receipt for Partial Payment” shows that the true agreement between the parties is a contract to sell. First, ownership over the property was retained by petitioners and was not to pass to respondent until full payment of the purchase price. Second, the agreement between the parties was not embodied in a deed of sale. The absence of a formal deed of conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer after full payment of the purchase price. Third, petitioners retained possession of the

certificate of title of the lot. It is true that Article 1482 provides that whenever earnest money is given in a contract of sale, it shall be considered as part of the price and proof of the perfection of the contract. However, this article speaks of earnest money given in a contract of sale. In this case, the earnest money was given in a contract to sell. The earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase price. Clearly, respondent cannot compel petitioners to transfer ownership of the property to him.”

Darrel Cordero, et al. vs. F.S. Management & Development Corporation G.R. No. 167213 October 31, 2006 Carpio-Morales, J. Facts: On or about October 27, 1994, petitioner Belen Cordero (Belen), in her own behalf and as attorney-in-fact of her co-petitioners Darrel Cordero, Egmedio Bautista, Rosemay Bautista, Marion Bautista, Danny Boy Cordero and Ladylyn Cordero, entered into a contract to sell with respondent, F.S. Management and Development Corporation (FSMDC), through its chairman Roberto P. Tolentino over five (5) parcels of land located in Nasugbu, Batangas described in and covered by TCT Nos. 62692, 62693, 62694, 62695 and 20987. Pursuant to the terms and conditions of the contract to sell, respondent paid earnest money in the amount of P500,000 on October 27, 1994. She likewise paid P1,000,000 on June 30, 1995 and another P1,000,000 on July 6, 1995. No further payments were made thereafter. Petitioners thus sent respondent a demand letter dated November 28, 1996 informing her that they were revoking/canceling the contract to sell and were treating the payments already made as payment for damages suffered as a result of the breach of contract, and demanding the payment of the amount of P10 Million Pesos for actual damages suffered due to loss of income by reason thereof. Respondent ignored the demand, however. Hence, on February 21, 1997, petitioner Belen, in her own behalf and as attorney-in-fact of her co-petitioners, filed before the RTC of Parañaque a complaint for rescission of contract with damages alleging that respondent failed to comply with its obligations under the contract to sell, specifically its obligation to pay the downpayment of P3.5 Million by April 30, 1995, and the balance within 18 months thereafter; and that consequently petitioners are entitled to rescind the contract to sell as well as demand the payment of damages. FSMDC, on the other hand, alleged that Cordero has no cause of action considering that they were the first to violate the contract to sell. It was Cordero who prevented FSMDC from complying with its obligation to pay in full by refusing to execute the final contract of sale unless additional payment of legal interest is made. Moreover, Cordero‘s refusal to execute the final contract of sale was due to the willingness of another buyer to pay a higher price. The RTC ruled in favour of Belen and the others while the CA ruled in favor of respondent. In their motion for reconsideration, Belen and the others contend that the contract to sell may be subject to rescission under Article 1191 of the Civil Code as it involves reciprocal obligations. Issue: WON a contract to sell may be subject to rescission under Article 1191 of the Civil Code. Held: No. Under a contract to sell, the seller retains title to the thing to be sold until the purchaser fully pays the agreed purchase price. The full payment is a positive suspensive condition, the non-fulfillment of which is not a

breach of contract but merely an event that prevents the seller from conveying title to the purchaser. The non-payment of the purchase price renders the contract to sell ineffective and without force and effect. Since the obligation of Cordero et al. did not arise because of the failure of FSMDC to fully pay the purchase price, Article 1191 of the Civil Code would have no application. The non-fulfillment by the FSMDC of his obligation to pay, which is a suspensive condition to the obligation of the Cordero et al. to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect. The parties stand as if the conditional obligation had never existed. Article 1191 of the New Civil Code will not apply because it presupposes an obligation already extant. There can be no rescission of an obligation that is still non-existing, the suspensive condition not having happened.

Dao Heng Bank, Inc., now Banco De Oro Universal Bank vs. Sps. Lilia and Reynaldo Laigo G.R. No 173856 November 20, 2008 Carpio-Morales, J. Facts: Spouses Laigo obtained a loan from Dao Heng Bank Inc. in the total amount of P11 million. As a security 3 real estate mortgages were executed covering 2 parcels of land. As of 2000, the Laigos failed to pay on time so as a remedy, they verbally agreed to cede one of the mortgaged property to Dao Heng by way of dacion en pago (dation in payment). In August 2000, Dao Heng, thru a letter informed the Laigos that there total obligation amounts to P10.8 million. The Laigos took no action so their property was foreclosed and sold at public auction. The spouses filed for a complaint praying for the annulment of the foreclosure of the properties subject of the real estate mortgages and for them to be allowed "to deliver by way of ‘dacion en pago' one of the mortgaged properties as full payment of their mortgaged obligation". They now contend that the foreclosure was illegal since there was a verbal agreement for dacion en pago. Dao Heng, however, contends that the dacion en pago falls under the statute of fraud therefore it is not enforceable. The Laigo’s counter this by stating that the dacion is an exception since it is no longer executory but had undergone partial performance when the titles to the property were delivered to Dao Heng. Issues: (1) Whether the obligation of the spouses has been extinguished through dacion en pago (2) Is the foreclosure valid? Held: (1) No. There is no showing that the dacion en pago has been accepted by both parties. Since there is no mutual consent, there is no dacion Dacion en pago as a mode of extinguishing an existing obligation partakes of the nature of sale whereby property is alienated to the creditor in satisfaction of a debt in money. It is an objective novation of the obligation, hence, common consent of the parties is required in order to extinguish the obligation. Being likened to that of a contract of sale, dacion en pago is governed by the law on sales. The partial execution of a contract of sale takes the transaction out of the provisions of the Statute of Frauds so long as the essential requisites of consent of the contracting parties, object and cause of the obligation concur and are clearly established to be present. In the case at bar, the titles to the property were delivered as a security for the mortgage. (2) The foreclosure is valid. It is the proper remedy for securing payment for a mortgage. The law clearly provides that the debtor of a thing cannot compel the creditor to receive a different one, although the latter may be of the same value, or more valuable than that which is due (Article 1244, New Civil Code). The obligee is entitled to demand fulfillment of the obligation or per-

formance as stipulated. The power to decide whether to foreclose on the mortgage is the sole prerogative of the mortgagee.

Development Bank of the Philippines vs. Court of Appeals (284 SCRA 14) Facts: Private respondent Lydia Cuba is a grantee of a fishpond lease agreement from the Government. She later obtained a loan from DBP in the amounts of P109, 000, P109, 000, and P98, 700 under the terms stated in the three promissory notes. As a security for the said loan Cuba executed two Deed of Assignment of her Leasehold Rights. Then she failed to pay her loan when it became due in accordance with the terms of the promissory notes. DBP in turn appropriated the leasehold rights of Cuba over the fishpond, without foreclosure proceedings, whether judicial or extrajudicial. After appropriating the said leasehold rights DBP executed a Deed of Conditional Sale of the Leasehold Rights in favor of respondent Cuba over the same fishpond, to which Cuba agreed. Respondent Cuba failed to pay the amortizations stipulated in the Deed of Conditional Sale, however she was able enter with DBP a temporary arrangement with DBP for theDeferment Notarial Rescission of Deed of Conditional Sale. However, a Notice of Rescission thru Notarial Act was sent the DBP to Cuba, and then it took possession of the fishpond in question. After it took possession of the said fishpond, DBP disposed the property in favor of AgripinaCaperal through a deed of conditional sale. Then a new fishpond lease agreement was awarded by the Government to Caperal. Lydia Cuba filed an action with the Regional Trial Court of Pangasinan for the declaration of nullity of DBP’s appropriation of her leaseholds over the subject fishpond, for the annulment of the Deed of Conditional Sale xecuted in her favor by DBP, the annulment of DBP’s sale of the fishpond to Caperal, and the restoration of her rights over the said fishpond and for damages. The RTC ruled in favor of Cuba, declaring that DBP’s taking possession and ownership of the subject property without foreclosure was violative of Art. 2088 of the Civil Code, and that condition No.12 of the Assignment of the Leasehold Rights was void for being a clear case of pactum commissorium. Both Cuba and DBP elevated the case to the CA, with Cuba seeking an increase in the amount of damages, while DBP questioned the findings of fact and law of the RTC. The CA reversed the ruling of the RTC with regards to the validity of the acts of DBP. Issues: 1. Whether or not the two Deed of Assignment executed by Cuba in favor of DBP would operate as a mortgage or some other contract. 2. Whether or not condition No. 12 of the Assignment of the Leasehold Rights would operate as case of pactum commissorium3. 3. Whether the act of DBP in appropriating to itself Cuba’s leasehold rights over the fishpond in question without foreclosure proceeding was contrary to Article 2088 of the Civil Code, and therefore, invalid. Held: 1.Lydia executed the 2 Deeds of Assignment as a security for the loans that she obtained from DBP, according the case of People’s Bank and Trust Co.

vs. Odom: an assignment to guaranty an obligation is in effect a mortgage. And it was also indicated in the provisions of the promissory note executed by Cuba, that her assigned le aseholdrights were referred to as mortgaged properties and the instrument itself a mortgage contract. 2&3. The act of DBP under condition No. 12 of the Assignment of Leasehold Rights did not constitute as a case of pactum commissorium, when appropriated for itself Cuba’s leasehold rights over the subject fishpond, because condition No. 12 only gave DBP the authority to sell the said property and use the proceeds of the sale to satisfy Cuba’s obligation, it did not operate as an automatic transfer of ownership of the said property to DBP. However, DBP exceeded its authority granted under condition No. 12, when it appropriated for itself such rights without judicial or extrajudicial foreclosure, thereby making his acts violative of Article 2088 of the Civil Code, which forbids a creditor from appropriating, or disposing of, the thing given as security for the payment of a debt

ANDRES QUIROGA vs. PARSONS HARDWARE CO. G.R. No. L-11491 August 23, 1918 AVANCEÑA, J.: Facts: On January 24, 1911, herein plaintiff-appellant Andress Quiroga and J. Parsons, both merchants, entered into a contract, for the exclusive sale of "Quiroga" Beds in the Visayan Islands. It was agreed, among others, that Andres Quiroga grants the exclusive right to sell his beds in the Visayan Islands to J.Parsons, subject to some conditions provided in the contract. Likewise, it was agreed that. In compensation for the expenses of advertisement which, for the benefit of both contracting parties, Mr.Parsons may find himself obliged to make, Mr.Quiroga assumes the obligation to offer and give the preference to Mr. Parsons in case anyone should apply for the exclusive agency for any island not comprised with the Visayan group; and that, Mr. Parsons may sell, or establish branches of his agency for the sale of "Quiroga" beds in all the towns of the Archipelago where there are no exclusive agents, and shall immediately report such action to Mr. Quiroga for his approval.Plaintiff filed a complaint, alleging that the defendant violated the following obligations: not to sell the beds at higher prices than those of the invoices; to have an open establishment in Iloilo; itself to conduct the agency; to keep the beds on public exhibition, and to pay for the advertisement expenses for the same; and to order the beds by the dozen and in no other manner. He alleged that the defendant was his agent for the sale of his beds in Iloilo, and that said obligations are implied in a contract of commercial agency. Issue: Whether or not the defendant, by reason of the contract hereinbefore transcribed, was an agent of the plaintiff for the sale of his beds. Held: No. The Supreme Court declared that the contract by and between the plaintiff and the defendant was one of purchase and sale, and that the obligations the breach of which is alleged as a cause of action are not imposed upon the defendant, either by agreement or by law. In order to classify a contract, due regard must be given to its essential clauses. In the contract in question, there was the obligation on the part of the plaintiff to supply the beds, and, on the part of the defendant, to pay their price. These features exclude the legal conception of an agency or order to sell whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. By virtue of the contract between the plaintiff and the defendant, the latter, on receiving the beds, was necessarily obliged to pay their price within the term fixed, without any other consideration and regardless as to whether he had or had not sold the beds.In respect to the defendant's obligation to order by the dozen, the only one expressly imposed by the contract, the effect of its breach would only entitle the plaintiff to disregard the orders which the defendant might place under other conditions; but if the plaintiff consents to fill them, he waives his right and cannot complain for having acted thus at his own free will.

KER & CO., LTD. vs. LINGAD G.R. No. L-20871 April 30, 1971 Facts: CIR assessed the sum of P20,272.33 as the commercial broker’s percentage tax, surcharge, and compromise penalty against Ker & Co. There was a request on the part of petitioner for the cancellation of such assessment, which request was turned down. As a result, it filed a petition for review with the Court of Tax Appeals. CTA ruled that that Ker & Co is liable as a commercial broker under Section 194 (t) of the National Internal Revenue Code. Ker & Co signed a contract with the United States Rubber International, the former being referred to as the Distributor and the latter specifically designated as the Company. The shipments would cover products “for consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, and Mindanao except [the] province of Davao”. Ker & Co, as Distributor, was precluded from disposing such products elsewhere than in the above places unless written consent would first be obtained from the Company. It was required to exert every effort to have the shipment of the products in the maximum quantity and to promote in every way the sale thereof. The prices, discounts, terms of payment, terms of delivery and other conditions of sale were subject to change in the discretion of the Company. Issue: Wether or not the relationship Ker & Co and US Rubber was that of a vendor-vendee or principal-broker? PRINCIPAL- BROKER, hence liable under Section 194 (t) of the NIRC. Held: The relationship between them is one of brokerage or agency. That the petitioner Ker & Co., Ltd. is, by contractual stipulation, an agent of U.S. Rubber International is borne out by the facts that: 1. petitioner can dispose of the products of the Company only to certain persons or entities and within stipulated limits, unless excepted by the contract or by the Rubber Company; 2. it merely receives, accepts and/or holds upon consignment the products, which remain properties of the latter company 3. every effort shall be made by petitioner to promote in every way the sale of the products (Par. 3); that sales made by petitioner are subject to approval by the company 4. on dates determined by the rubber company, petitioner shall render a detailed report showing sales during the month 5. the rubber company shall invoice the sales as of the dates of inventory and sales report (Par. 14); that the rubber company agrees to keep the consigned goods fully insured under insurance policies payable to it in case of loss 6. upon request of the rubber company at any time, petitioner shall render an inventory of the existing stock which may be checked by an authorized representative of the former 7. upon termination or cancellation of the Agreement, all goods held on consignment shall be held by petitioner for the account of the rubber company until their disposition is provided for by the latter.

CONTROLLING TEST (cited CIR vs. Constantino): Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price and terms of which were subject to the company’s control, the relationship between the company and the dealer is one of agency. Sale vs. Agency a. In sale, the essence is the transfer of title or agreement to transfer it for a price paid or promised. In agency, the essence is the delivery to an agent. b. In sale, the transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction is a sale. In agency, the transfer does not make the property as the agent’s own, but that of principal, who remains the owner and has the right to control sales, fix the price, and terms, demand and receive the proceeds less the agent’s commission upon sales made. Besides, The control by the United States Rubber International over the goods in question is “pervasive”.

LOURDES VALERIO LIM vs. PEOPLE OF THE PHILIPPINES G.R. No. L-34338 November 21, 1984 RELOVA, J.: Facts: Lim is a businesswoman. She went to the house of Maria Ayroso and proposed to sell Ayroso’s tobacco. Ayroso agreed to the proposition of the appellant to sell her tobacco consisting of 615 kilos at P1.30 a kilo. The appellant was to receive the overprice for which she could sell the tobacco. EXHIBIT A: To Whom It May Concern: This is to certify that I have received from Mrs. Maria de Guzman Vda. de Ayroso. of Gapan, Nueva Ecija, six hundred fifteen kilos of leaf tobacco to be sold at Pl.30 per kilo. The proceed in the amount of Seven Hundred Ninety Nine Pesos and 50/100 (P 799.50) will be given to her as soon as it was sold. (This was signed by the appellant and witnessed by the complainant's sister, Salud Bantug, and the latter's maid, Genoveva Ruiz.) Of the total value of P799.50, the appellant had paid to Ayroso only P240.00, and this was paid on three different times. Demands for the payment of the balance of the value of the tobacco were made but even trips to Lim’s camarin proved futile because the same was empty. Petitioner Lourdes Valerio Lim was found guilty by the TrialCourt and Court of Appeals of the crime of estafa (Ca only modified the penalty). Issue: Wether or not the receipt, Exhibit "A", is a contract of agency to sell or a contract of sale of the subject tobacco between petitioner and the complainant, Maria de Guzman Vda. de Ayroso, thereby precluding criminal liability of petitioner for the crime charged. Held: It is a contract of Agency. It is clear in the agreement, Exhibit "A", that the proceeds of the sale of the tobacco should be turned over to the complainant as soon as the same was sold, or, that the obligation was immediately demandable as soon as the tobacco was disposed of. Hence, Article 1197 of the New Civil Code, which provides that the courts may fix the duration of the obligation if it does not fix a period, does not apply. Re: Agency… “Aside from the fact that Maria Ayroso testified that the appellant asked her to be her agent in selling Ayroso's tobacco, the appellant herself admitted that there was an agreement that upon the sale of the tobacco she would be given something. The appellant is a businesswoman, and it is unbelievable that she would go to the extent of going to Ayroso's house and take the tobacco with a jeep which she had brought if she did not intend to make a profit out of the transaction. Certainly, if she was doing a favor to Maria Ayroso and it was Ayroso who had requested her to sell her tobacco, it would not have been the appellant who would have gone to the house of Ayroso, but it would have been Ayroso who would have gone to the house of the appellant

and deliver the tobacco to the appellant.” (CA) The fact that appellant received the tobacco to be sold at P1.30 per kilo and the proceeds to be given to complainant as soon as it was sold, strongly negates transfer of ownership of the goods to the petitioner. The agreement (Exhibit "A') constituted her as an agent with the obligation to return the tobacco if the same was not sold.

SPOUSES FERNANDO and LOURDES VILORIA vs. CONTINENTAL AIRLINES, INC. G.R. No. 188288 January 16, 2012 REYES, J.: Facts: In 1997, while the spouses Viloria were in the United States, they approached Holiday Travel, a travel agency working for Continental Airlines, to purchase tickets from Newark to San Diego. The travel agent, Margaret Mager, advised the couple that they cannot travel by train because it is fully booked; that they must purchase plane tickets for Continental Airlines; that if they won’t purchase plane tickets; they’ll never reach their destination in time. The couple believed Mager’s representations and so they purchased two plane tickets worth $800.00. Later however, the spouses found out that the train trip isn’t fully booked and so they purchased train tickets and went to their destination by train instead. Then they called up Mager to request for a refund for the plane tickets. Mager referred the couple to Continental Airlines. As the couple are now in the Philippines, they filed their request with Continental Airline’s office in Ayala. The spouses Viloria alleged that Mager misled them into believing that the only way to travel was by plane and so they were fooled into buying expensive tickets. Continental Airlines refused to refund the amount of the ticket and so the spouses sued the airline company. In its defense, Continental Airlines claimed that the ticket sold to them by Mager is non-refundable; that, if any, they are not bound by the misrepresentations of Mager because there’s no agency existing between Continental Airlines and Mager. The trial court ruled in favor of spouses Viloria but the Court of Appeals reversed the ruling of the RTC. ISSUE: Whether or not a contract of agency exists between Continental Airlines and Mager. HELD: Yes. All the elements of agency are present, to wit: (1) there is consent, express or implied of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself, and (4) the agent acts within the scope of his authority. The first and second elements are present as Continental Airlines does not deny that it concluded an agreement with Holiday Travel to which Mager is part of, whereby Holiday Travel would enter into contracts of carriage with third persons on the airlines’ behalf. The third element is also present as it is undisputed that Holiday Travel merely acted in a representative capacity and it is Continental Airlines and not Holiday Travel who is bound by the contracts of carriage entered into by Holiday Travel on its behalf. The fourth element is also present considering that Continental Airlines has not made any allegation that Holiday Travel exceeded the authority that was granted to it. Continental Airlines also never questioned the validity of the transaction be-

tween Mager and the spouses. Continental Airlines is therefore in estoppels. Continental Airlines cannot be allowed to take an altogether different position and deny that Holiday Travel is its agent without condoning or giving imprimatur to whatever damage or prejudice that may result from such denial or retraction to Spouses Viloria, who relied on good faith on Continental Airlines’ acts in recognition of Holiday Travel’s authority. Estoppel is primarily based on the doctrine of good faith and the avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it in this case would result in gross travesty of justice.

CELESTINO CO VS COLLECTOR (99 Phil 841) Facts: Celestino Co & Company is a general co-partnership registered under the trade name “Oriental Sash Factory”. From 1946 to 1951, it paid taxes equivalent to 7% on the gross receipts under Sec. 186 of the NIRC, which is a tax on the original sales of articles by manufacturer, producer or importer. However, in 1952 it began to claim only 3% tax under Sec. 191, which is a tax on sales of services. Petitioner claims that it does not manufacture ready-made doors, sash and windows for the public, but only upon special orders from the customers, hence, it is not engaged in manufacturing, but only in sales of services. Issue: Whether the petitioner company is engaged in manufacturing, or is merely a special service provider. Held: Celestino Co & Company habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. That it "manufactures" the same is practically admitted by appellant itself. The fact that windows and doors are made by it only when customers place their orders, does not alter the nature of the establishment, for it is obvious that it only accepted such orders as called for the employment of such materialmoulding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture. Any builder or homeowner, with sufficient money, may order windows or doors of the kind manufactured by this appellant. Therefore it is not true that it serves special customers only or confines its services to them alone. And anyone who sees, and likes, the doors ordered by Don Toribio Teodoro & Sons Inc. may purchase from appellant doors of the same kind, provided he pays the price. Surely, the appellant will not refuse, for it can easily duplicate or even mass-produce the same doors-it is mechanically equipped to do so. The Oriental Sash Factory does nothing more than sell the goods that it mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to such sizes and combining them in such forms as its customers may desire. When this Factory accepts a job that requires the use of extraordinary or additional equipment, or involves services not generally performed by it-it thereby contracts for a piece of work filing special orders within the meaning of Article1467. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is shown to call them special requiring extraordinary service of the factory. Anyway, supposing for the moment that the transactions were not sales, they were neither lease of services nor contract jobs by a contractor. But as the doors and windows had been admittedly “manufactured" by the Oriental Sash Factory, such transactions could be, and should be taxed as "transfers" thereof under section 186 of the National Revenue Code.

Commissioner vs Engineering and Supply Company (64 SCRA 590) Facts: Engineering Equipment & Supply (EES) was engaged in the business of designing and installing central air-conditioning systems. It was assessed by the CIR for 30% advanced sales tax, among other penalties pursuant to an anonymous complaint filed before the BIR. EES vehemently objected and argued that they are contractors and not manufacturers, and thus, should only be liable for the 3% tax on sales of services or pieces of work. Issue: Whether or not EES is a contractor (piece of work). Held: YES. EES was NOT a manufacturer of air-conditioning units. While it imported such items, they were NOT for sale to the general public and were used as mere components for the design of the centralized air-conditioning system, wherein its designs and specifications are different for every client. Various technical factors must be considered and it can be argued that no 2 plants are the same; all are engineered separately and distinctly. Each project requires careful planning and meticulous layout. Such central airconditioning systems and their designs would not have existed were it not for the special order of the party desiring to acquire it. Thus, EES is not liable for the sales tax of 30%.

Del Monte Philippines vs Aragones (GR No. 153033) Facts: On September 18, 1988, herein petitioner Del Monte Philippines Inc. (DMPI) entered into an “Agreement” with MEGA-WAFF, represented by “Managing Principal” Edilberto Garcia (Garcia), whereby the latter undertook “the supply and installation of modular pavement” at DMPI’s condiments warehouse at Cagayan de Oro City within 60 calendar days from signing of the agreement. To source its supply of concrete blocks to be installed on the pavement of the DMPI warehouse, MEGA-WAFF, as CONTRACTOR represented by Garcia, entered into a “Supply Agreement” with Dynablock Enterprises, represented by herein respondent Aragones, as SUPPLIER. After the installation of the pavement in the warehouse, Aragones later on demand from MEGA-WAFFthe full payment of the concrete blocks on which he failed to collect. Aragones later failed to collect from MEGA-WAFF the full payment of the concrete blocks. He thus sent DMPI a letter dated March 10, 1989, received by the latter on March 13, 1989, advising it of MEGA-WAFF’s unpaid obligation and requesting it to earmark and withhold the amount of P188,652.65 “from [MEGA-WAFF’s] billing” to be paid directly to him “lest Garcia collects and fails to pay him.” Issue: Whether or not it was a sale or piece of work. Held: Under Art. 1467 then of the Civil Code which provides:
 ART. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work (Emphasis and underscoring supplied),The Supply Agreement was in the nature of a contract for a piece of work. Following Art. 1729 of the Civil Code which provides:
 ART. 1729. Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made. x x x

Antonio S. Lim Jr V. San and Lo September 9, 2004 G. R. No. 159723 Facts: The plaintiff is an owner of a parcel of land situated at Bajada, Davao City, containing an area of 1,763 square meters. On may 29, 1991, there herein defendant took advantage of the depressed mental state of plaintiff's attorney in fact brought about by the demise of her late husband, caused her to sign some papers which,turned out to be a deed of absolute sale. The defendant in this case denied all the allegations made by the plaintiff in his complaint arguing that the parcel of land covered by the Registry of Deeds in Davao City was registered in his name and was validly issued. He also contested that he does not have a lease contract with the petitioner with respect to the contested property and does not pay any montly rent over the same. The Trial Court ruled in favor of the Respondent. The Court of Appeals affirmed the decision of the lower court. Hence this petition for Certitiorari. Issue: WON the Court of Appeals erred in affirming the trial courts judgment declaring that the petitioner failed to prove by clear and convincing evidence that the signature of his attorney-in-fact was obtained through fraud and trickery and that no consideration was ever paid. Held: No. A contract of sale is consensual, as such it is perfected by mere consent. Consent is essential for the existence of a contract, and where it is wanting, the contract is non-existent. Consent in contracts presupposes the following requisites: (1) it should be intelligent or with an exact notion of the matter to which it refers; (2) it should be free; and (3) it should be spontaneous. Intelligence in consent is vitiated by error; freedom by violence, intimidation or undue influence; and spontaneity by fraud. Thus, a contract where consent is given through mistake, violence, intimidation, undue influence or fraud is voidable.Defect or lack of valid consent, in order to make the contract voidable, must be established by full, clear and convincing evidence, and not merely by a preponderance thereof. Petitioners mere allegations that respondent threatened his mother with harm if she will not sign the contract failed to measure up to the yardstick of evidence required, not only to prove vitiation of consent, but also to overturn the presumption that private transactions have been fair and regular.

Swedish Match v. CA October 20, 2004 G.R. No. 128120 Facts: SMNV initiated steps to sell the worldwide match and lighter businesses while retaining for itself the shaving business. Ed Enriquez (Enriquez), Vice-President of Swedish Match Sociedad Anonimas (SMSA) the management company of the Swedish Match group was commissioned and granted full powers to negotiate by SMNV, with the resulting transaction, however, made subject to final approval by the board. Enriquez was held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990, in view of the tight loan covenants of SMNV. Enriquez came to the Philippines in November 1989 and informed the Philippine financial and business circles that the Phimco shares were for sale. among the interested parties who offered to buy the Phimco shares were herein respondent ALS Management & Development Corporation and respondent Antonio Litonjua (Litonjua), the president and general manager of ALS.On 3 November 1989, Litonjua submitted a letter to SMAB tendering his offer to buy all of the latters shares in Phimco and all of Phimcos shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. Through its Chief Executive Officer, Massimo Rossi (Rossi), SMAB, in its letter dated 1 December 1989, informed respondents that their price offer was below their expectations but urged them to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares, with the assurance that respondents would enjoy a certain priority although several parties had indicated their interest to buy the shares. Rossi sent his letter dated 11 June 1990, informing Litonjua that ALS should undertake a due diligence process or pre-acquisition audit and review of the draft contract . However, Rossi made it clear that at the completion of the due diligence process, ALS should submit its final offer in US dollar terms not later than 30 June 1990.Litonjua in a letter dated 18 June 1990, expressed disappointment at the apparent change in SMABs approach to the bidding process.He informed Rossi that it may not be possible for them to submit their final bid on 30 June 1990, citing the advice to him of the auditing firm that the financial statements would not be completed until the end of July. Litonjua added that he would indicate in their final offer more specific details of the payment mechanics and consider the possibility of signing a conditional sale at that time.Apparently irked by SMABs decision to junk his bid, Litonjua promptly responded by letter dated 4 July 1990. He stressed that they were firmly committed to their bid of US $36 million.More than two months from receipt of Litonjuas last letter, Enriquez sent a fax communication to the former, advising him that the proposed sale of SMABs shares in Phimco with local buyers did not materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the sale of Phimco shares. He indicated that SMAB would be prepared to negotiate with ALS on an exclusive basis for a period of fifteen (15) days from 26 September 1990 subject to the terms contained in the letter. Additionally, Enriquez clarified that if the sale would not be completed at the end of the fifteen (15)-day period, SMAB would enter into negotiations with other buyers. Shortly thereafter, Litonjua sent a letter expressing his objections to the totally new set of terms and conditions for the sale of the Phimco shares. He em-

phasized that the new offer constituted an attempt to reopen the already perfected contract of sale of the shares in his favor. He intimated that he could not accept the new terms and conditions contained therein. On 14 December 1990, respondents, as plaintiffs, filed before the Regional Trial Court (RTC) of Pasig a complaint for specific performance with damages. The Trial Court dismissed the case due to there being no perfected contract of sale. The Court of Appeals reversed the decision of the Trial Court ruling that the letters exchanged by and between the parties, taken together, were sufficient to establish that an agreement to sell the disputed shares to respondents was reached. Hence, this petition. Issue: Whether or not the contract between petitioner and respondents has been perfected. Held: No. The acquisition audit and submission of a comfort letter, even if considered together, failed to prove the perfection of the contract. Quite the contrary, they indicated that the sale was far from concluded. Respondents conducted the audit as part of the due diligence process to help them arrive at and make their final offer. On the other hand, the submission of the comfort letter was merely a guarantee that respondents had the financial capacity to pay the price in the event that their bid was accepted by petitioners. Therefore there was no perfection of the contract of sale.

Manila Metal Container Corporation v. PNB December 20, 2009 G.R. No. 166862 Facts: Petitioner was the owner of 8,015 square meters of parcel of land located in Mandaluyong City, Metro Manila. To secure a P900,000.00 loan it had obtained from respondent Philippine National Bank, petitioner executed a real estate mortgage over the lot. Respondent PNB later granted petitioner a new credit accommodation. On August 5, 1982, respondent PNB filed a petition for extrajudicial foreclosure of the real estate mortgage and sought to have the property sold at public auction. After due notice and publication, the property was sold at public action where respondent PNB was declared the winning bidder. Petitioner sent a letter to PNB, requesting it to be granted an extension of time to redeem/repurchase the property. Some PNB personnel informed that as a matter of policy, the bank does not accept “partial redemption”. Since petitioner failed to redeem the property, the Register of Deeds cancelled TCT No. 32098 and issued a new title in favor of PNB. Meanwhile, the Special Asset Management Department (SAMD) had prepared a statement of account of petitioner’s obligation. It also recommended the management of PNB to allow petitioner to repurchase the property for P1,574,560.oo. PNB rejected the offer and recommendation of SAMD. It instead suggested to petitioner to purchase the property for P2,660,000.00, in its minimum market value. Petitioner declared that it had already agreed to SAMD’s offer to purchase for P1,574,560.47 and deposited a P725,000.00.

Traders Royal Bank v. Cuison Lumber Co. June 5, 2009 G.R. No. 174286 Facts: On July 14, 1978 and December 9, 1979, respectively, CLCI, through its then president, Roman Cuison Sr., obtained two loans from the bank. CLCI failed to pay the loan, prompting the bank to extrajudicially foreclose the mortgage on the subject property. The bank was declared the highest bidder at the public auction that followed, conducted on August 1, 1985. A Certificate of Sale and a Sheriffs Final Certificate of Sale were subsequently issued in the banks favor. In a series of written communications between CLCI and the bank, CLCI manifested its intention to restructure its loan obligations and to repurchase the subject property. On July 31, 1986, Mrs. Cuison, the widow and administratrix of the estate of Roman Cuison Sr., wrote the banks Officer-in-Charge, Remedios Calaguas, a letter indicating her offered terms of repurchase. CLCI paid the bank P50,000.00 (on August 8, 1986) and P85,000.00 (on September 3, 1986). The bank received and regarded these amounts as earnest money for the repurchase of the subject property .On October 20, 1986, the bank sent Atty. Roman Cuison, Jr. (Atty. Cuison), as the president and general manager of CLCI, a letter informing CLCI of the banks board of directors resolution of October 10, 1986 (TRB Repurchase Agreement), laying down the conditions for the repurchase of the subject property. CLCI failed to comply with the conditions nor did it make any express acceptance.

Issue: Whether or not there was a perfected contract of sale.

Issue: whether or not there was a perfected contract of sale.

Held: No. There must be an agreement as to the price of the thing to be sold for there to be a perfected contract of sale. In the case at bar, the parties to the contract is between Manila Metal Container Corporation and Philippine National Bank and not to Special Asset Management Department. Since the price offered by PNB was not accepted, there is no contract. Hence it cannot serve as a binding juridical relation between the parties.

Held: Yes. A reading of the petitioners letter of October 20, 1986 informing CLCI that the banks board of directors passed a resolution for the repurchase of [your] property shows that the tenor of acceptance, except for the repurchase price, was subject to conditions not identical in all respects with the CLCIs letter-offer of July 31, 1986. In this sense, the banks October 20, 1986 letter was effectively a counter-offer that CLCI must be shown to have accepted absolutely and unqualifiedly in order to give birth to a perfected contract. Evidence exists showing that CLCI did not sign any document to show its conformity with the banks counter-offer. Testimony also exists explaining why CLCI did not sign. Atty. Cuison testified that CLCI did not agree with the implementation of the repurchase transaction since the bank made a wrong computation. These indicators notwithstanding, we find that CLCI accepted the terms of the TRC Repurchase Agreement and thus unqualifiedly accepted the banks counter-offer under the TRB Repurchase Agreement and, in fact, partially executed the agreement,

Arturo Abalos v. Galicano Macatangay Facts: Spouses Arturo and Esther Abalos are the registered owners of a parcel of land with improvements locates at Azucena St., Makati City covered by Transfer Certificate of Title of the Registry of Deeds. Arturo executed a Receipt and Memorandum Agreement (RMOA) in favor of respondent, binding himself to sell to respondent the subject property and not to offer the same to any other party within 30days from date. Arturo acknowledged receipt of a check from respondent in the amount of P5,000 representing earnest monet for the subject property the amount of which would be deducted from the purchase price of P1,3000,000. Further, the RMOA states that full payment would be effected as soon as possession of the property shall have been turned over to respondent. Subsequentlt, Arturo and Esther had a marital squabble at that time and Macatangay, to protect his interest, made an annotation in the title of property. He then sent a letter informing tyem of his readiness to pay the full amount of the purchase price. Esther, through her SPA, executed in favor of Macatangay, a contract to sell the property to the extent of her conjugal interest for the sum kf P650,000 less the sum already received by her and Arturo. She agreed to surrender the property to macatangay within 20days along with the deed of sale upon full payment, while he promised to pay the balance of the purchase price of P1, 290,000 after being placed in possession of the property. Issue: Whether may petitioner may be compelled to convey the property to respond under tge terms of the RMOA and the contract to sell Held: The contract of sale, being essentially consensual, a contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract of sale. On the other hand, an accepted unilateral promise which specifies the thing to be solf and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may oroperly be termed a perfected contract of option. A perfected contract of option does not result in the perfection or consummation of the sale; only when the option is exercised may a sale be perfected.

XYST CORPORATION V. DMC URBAN PROPERTIES DEVELOPMENT INC. GR No. 171968 Facts: DMC Urban Properties Development Inc. and Citibank N.A. Entered into agreement whereby the former would take part in the construction of Citibank Tower. The said agreement allocated in favour of DMC the 18th floor of the building with the condition that DMC shall not transfer any portion of the floor or rights or interests thereto prior to the completion of the building without the written consent of Citibank NA. Later, DMC through intervenor Fe Aurora Castro, found a prospetive buyer, Saint Agen Et Fils Limited (SAEFL) which is a foreign corporation represented by William Seitz. This was done despite the construction was not yet completed. In a letter dated September 14 , 1994 SAEFL accepted DMC's offer to sell. The letter included a property description and terms of payment. In September 16, 1994 SAEFL sent a letter obliging DMC to cause citibank N.A. To give its consent and enter into a contract to sell woth SAEFL. Seitz was informed that the 18th floor was not available for foreign acquisition and so XYST Corporation, a domestic corporation and where Seitz is a director and shareholder was substituted. XYST then paid a reservation fee but was later advised by DMC that the signing of the formal contract will not take place since Citibank N.A, opted to excercise its right of first refusal. XYST and DMC agreed that if Citibank N.A. Fails to pirchase the 18th floor om the agreed date, the same should be sold to XYST. Citibank N.A did not excercise its right of first refusal but it reminded DMC that the dale of the 18th floor must be consistent with the documents adopted with the co founders. DYST made amendments to the pro-forma contract and was allowed by DMC to directly negotiate with Citibank to facilitate the transaction. But Citibank N.A, refused to concur with the changes imposed by XYST hence DMC decided to call off the deal and returned the reservation fee of P1,000,000 to XYST. A complaint was filed. Issue: Whether there is a perfected contract of sale between DMC and XYST Held: No contract was perfected. XYST and DMC were still in negotiation stage when the latter called off the deal.

ROMAN vs. GRIMALT G.R.No. 2412 April 11, 1906 Facts: UbPedro Roman, the owner of the schooner Sta. Maria and Andres Grimalt had been negotiating for several days for the purchase of the schooner. They agreed upon the sale of the vessel for the sum of P1500 payable on three installments, provided the title papers to the vessel were in proper form. The sale was not perfected and the purchaser did not consent to the execution of the deed of transfer for the reason that the title of the vessel was in the name of one Paulina Giron and not in the name of Pedro Roman. Roman promised however, to perfect his title to the vessel but he failed to do so. The vessel was sunk in the bay in the afternoon of June 25, 1904 during a severe storm and before the owner had complied with the condition exacted by the proposed purchaser. On the 30th of June 1904, plaintiff demanded for the payment of the purchase price of the vessel in the manner stipulated and defendant failed to pay. Issue: Whether there was a perfected contract of sale and who will bear the loss. Held: There was no perfected contract of sale because the purchase of which had not been concluded. The conversations had between the parties and the letter written by defendant to plaintiff did not establish a contract sufficient in itself to create reciprocal rights between the parties. If no contract of sale was actually executed by the parties the loss of the vessel must be borne by its owner and not by the party who only intended to purchase it and who was unable to do so on account of failure on the part of the owner to show proper title to the vessel and thus enable them to draw up contract of sale.

CIRILO PAREDES V. ESPINO L-23351 Facts: Appellant Cirilo Paredes had filed an action to compel defendant Jose Espino to execute a deed of sale and to pay for damages. The complaint alleged that the defendant "had entered into a sale" to plaintiff of Lot. No. 67 of the Puerto Princesa Cadastr at P4.00 per square meter and that the deal had been closed by letter and telegram but the actual execution of the deed of sale and payment of the price were deferred to the arrival of defendant of Puerto Princesa; that the defendsnt upon arrival had refused to execute the deed of sale although plaintiff was able and willing to to lay the price, and comtinued to refuse depite written demands of plaintiff; that as a result, plaintiff had lost expected prifits from a resale of the property, and caused the plaintiff mental anguish and suffering, for which reason the complaint prayed for specific performance and damages. Defendant filed a motion to dismiss upon the ground that the complaint stated no cause of action andthe plaintiff's claim upon which the action was founded unenforceable under the statute of frauds Issue: Whether there is a perfected contract of sale through letter or telegram Held: The letter and telegram constitute an adequate memorandum of the transaction. They are signed by the defendant and all essential terms of the contract are present and they satisfy the requirements of the statute of frauds.

DIZON vs. CA G.R. No. 122544 January 28, 2003 Facts: Both cases are consolidated which involved Private Respondent, Overland Express Lines, Inc. entering into a Contract of Lease with Option to Buy with Petitioners which involved a 1, 755.80 square meter parcel land located at MacArthur Highway and South “H” Street, Diliman, Quezon City. The term of the lease was for one year, and the private respondent was granted an option to purchase for the amount of P3,000.00 per square meter. Private Respondent failed to pay the increased rental of P8,000 prompting Petitioners to file a case for ejectment against them. The City Court ordered Private Respondents to vacate the leased premises and to pay the sum of P624,000 which represented rentals in arrears and as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer. Private Respondent alleged that there was a perfected contract of sale between the parties, and it opined that the partial payment for the leased property which petitioners accepted through Alice Dizon, for which an official receipt was issued was the operative act that gave rise to a perfected contract of sale, and that for the failure of the petitioners to deny receipt thereof, private respondent can therefore assume that Alice Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf. The Court ruled otherwise, prompting Private Respondents to file this suit. Issue: Whether or not there was a perfected contract of sale. Held: No. There was no perfected contract of sale between the parties. There was no written proof of Alice Dizon’s authority to bind the Petitioners. First of all, she was not even a co-owner of the property. Neither was she empowered by the co-owners to act on their behalf. Furthermore, the Civil Code in Article 1874 provides that if a sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing otherwise the sale shall be void. It cannot be even said that Alice Dizon’s acceptance of money bound at least the share of Fidela Dizo, who was supposed to be paid by the Petitioners. The implied renewal of the contract of lease between the parties affected only those terms and conditions which are germane to the lessees right of continued enjoyment of the property. The option to purchase expired after the one year term granted in the contract.

TOYOTA SHAW, INC. vs. CA G.R. No. L-116650 May 23, 1995 Facts: Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was difficult to find a dealer with an available unit for sale, but upon contacting Toyota Shaw, he was told that there was an available unit. Sosa, and his son, Gilbert went to the Toyota office at Shaw Boulevard, Pasig, Metro Manila and met Popong Bernardo, who was a sales representative of Toyota. Sosa informed Bernardo that the needed the Lite Ace not later than June 17, 1989 because it is to be used by his family, and a balikbayan guest, in going to Marinduque where he would be celebrating his birthday on the 19th of June. He also told Bernardo that if he won’t be arriving in his hometown with a new car, he will become a “laughing stock.” Bernardo assured Sosa that a unit will already be available for pick up on June 17, 1989, at 10:00 AM. Bernardo then signed a document which had the heading “Agreements Between Mr. Sosa and Popong Bernardo of Toyota Shaw, Inc.” Sosa and his son delivered the down payment of P100,000 the next day, and Bernardo accomplished a printed Vehicle Sales Proposal No. 928 on which Gilbert signed. Bernardo, on June 17, called Gilbert to inform him that the vehicle was not available for pick up at 10:00 AM, but instead, it will be ready by 2:00 PM. Sosa and Gilbert met Bernardo, and was informed that the Lite Ace was being readied for delivery. Subsequently, Sosa was also informed that B.A. Finance Corp. denied to finance his credit financing application. Sosa, upon it being clear that the Lite Ace was not going to be delivered to him, demanded for the refund of his down payment. Toyota refused to accede to Sosa’s demand, and further alleged that they did not enter into a contract of sale with Sosa. Issue: Whether or not the executed VSP, which was signed by the Toyota’s sales representative, a perfected contract of sale binding upon the parties. Held: No. It is not a contract of sale. The provision on the down payment of P100,000 made no specific reference to a sale of a vehicle. If it was intended for a contract of sale, it could only refer to a sale on installment basis as the VSP confirmed. But, nothing was mentioned about the full purchase price and the manner the installments are to be paid. A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. Moreover, there was an absence of the meeting of the minds between Sosa and Toyota, and Sosa did not even sign it. Futhermore, Sosa was not dealing with Toyota but with Bernardo and that the latter did not misrepresent that he had the authority to sell a Toyota Vehicle. The VSP was a mere proposal and it created no demandable right in favor of Sosa for the delivery of the vehicle to him.

VIRGINIA PAGCO vs. CA G.R. No. L-109236 March 18, 1994 Facts:Private Respondent Peter Quimson is the owner of a parcel of land situated at San Isidro Street, Singalong, Manila with an area of 1000 square meters and covered by TCT no. 173114. Eleven occupants were in possession of the property with their respective residential houses built thereon, among whom are herein Petitioners. Private Respondent had earlier negotiated with Petitioners for the latter to buy the portions they occupy for P980.00 but petitioners backed off because they wanted P850.00. He then informed the lessees to pay their back rentals and to remove their houses because he needed the property for his own use and that of the immediate member of his family. Petitioners failed to heed Private Respondent’s demand, so a complaint for ejectment was filed. Petitioners and other defendants filed their answer denying that there were negotiations for them to buy the property and alleged that private respondent has no cause of action as the property is within the area for priority development, hence, their eviction is prohibited under P.D. 2016. Issue: Whether or not there was a perfected contract of sale between the parties. Held: No. A contract of sale is perfected from the time there exists an agreement upon the thing which is the object of the contract and upon the price. The price fixed by Quimson was P980.00 per square meter but the occupants were willing only to pay P850.00. Clearly, therefore, there was no agreement reached between the parties as to the price of the lot in question. As no price was agreed upon, there can be no perfected contract of sale within the contemplation of Article 1475 of the Civil Code. There was indeed a negotiation for the offer to sell but it fell through because of the refusal of the petitioners to talk further. Finally, even if there was a perfected contract of sale, it can be implied that there was subsequently a mutual withdrawal from the contract, therefore there was no contract to speak off.

CESAR RAET, ET. AL vs. CA G.R. No. 128016 September 17, 1998 Facts: Petitioners Cesar and Elvira Raet and Petitioners Rex and Edna Mitra negotiated with Amparo Gatus concerning the possibility of buying the rights of the latter to certain units at the Las Villas de Sto Nino Subdivision in Meyacauayan, Bulacan. Such subdivision was developed by Respondent, PhilVille Development and Housing Corporation primarily for parties qualified to obtain loans from the GSIS. The spouses Raet and the spouses Mitra paid Gatus the total amount of P40,000 and P35,000 for which they were issued receipts by Gatus in her own name. The Spouses Raet and Mitra applied with PVDHC for purchase of units in the subdivision. Since they were not GSIS members, the looked for members who could act as accommodation parties by allowing them to use their policies. Sps. Raet used Ernesto Casidsid’s policy, and Sps. Mitra used that of Edna Lim’s. Sps, Raet paid P32, 653 while the Sps. Mitra paid P27,000 to PVDHC on understanding that such amounts will be credited to purchase prices of the units. The spouses Raet and Mitra were given units to occupy for the meantime. The GSIS disapproved the loan applications of the spouses and were advised by PVDHC to seek other sources of financing while being allowed to remain in the premises. Due to the failure of the petitioners to raise money, PVDHC filed ejectment cases against them. The spouses Mitra and Raet also filed complaints against PVDHC and Amparo Gatus. Issue: Whether or not there were perfected contracts of sale between petitioners and private respondent PVDHC over the subject units. Held: No. The parties had not reached any agreement with regard to the sale of the units in question. The records do not show the total costs of the units and the payment schemes therefor. The figures referred to by Petitioners were mere estimates given by Gatus. The transaction of the parties, lacked the requisites essential for the perfection of contracts. Furthermore, petitioners dealt with Gatus, but Gatus was not the agent of PVDHC. PVDHC also had no knowledge of the figures Gatus gave to petitioners as estimates. At any rate, PVDHC was to enter into agreements with petitioners only upon the approval of the GSIS loans which was denied. Moreover, there are no written contracts to evidence the alleged sales. If Petitioners and PVDHC entered into contracts involving the units, it is strange that contracts of such importance have not been reduced to writing. There was no contract of sale there being no meeting of the minds especially on the price thereof. There was only a proposed contract to sell which did not even ripen into a perfect contract due to the inability of the spouses to secure approval of the GSIS loan.

PEOPLE HOMESITE VS COURT OF APPEALS DEC. 26, 1984 Facts: On Feb. 1960, People Homesite and Housing Corporation (PHHC) passed Resolution No. 513 which grants Lot 4 of its Consolidated Subdivision Plan (CSP) to Mendoza spouses with a condition that it is subject to the approval of the Quezon City Council and the PHHC Valuation Committee. The Quezon City Council initially disapproved the CSP on 1961 and such disapproval was communicated to Mendoza spouses through registered mail. On 1964 however, the City Council approved a revised plan reducing the area of lot 4. The Mendoza spouses failed to pay for the 20% initial deposit or down payment for the lot so it was recalled by the PHHC and was granted instead to Sto. Domingo, et al. The awardees made the initial deposit hence, the corresponding deeds of sale were executed in their favor. Mendoza spouses filed a complaint in the court for specific performance and damages and prayed for the cancellation of the deeds of sale. Issue: Whether or not there was a perfected contract of sale of Lot 4 with the reduced area to Mendoza spouses which they can enforce against the PHHC by an action for specific performance. Held: There was no perfected contract of sale with regard to Mendoza spouses. The award of Lot 4 to them was conditional and was initially disapproved by the City Council. The Mendozas were sufficiently informed of such disapproval. However on 1964, when the lot area was reduced and approved by the City Council, the Mendozas should have manifested in writing their acceptance of the award just to show that they were still interested in the purchase. They did not do so. Art. 1475, NCC states that “The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the law governing the form of contracts.” Art. 1181, NCC further states that “In conditional obligations, the acquisition of the rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition.” In the case at bar, there having been no concurrence as to the offer and acceptance between PHHC and the Mendoza spouses, the contract of sale never perfected, hence, the reawarding and subsequent sale of the lot to Sto. Domingo, et. al is valid.

ARTATES AND POJAS VS URBI ET AL. January 30, 1971 Facts: On September 1952, a homestead was granted and registered under the names of spouses Artates and Pojas. On Oct. 1955 however, the court ordered the execution sale of the said homestead in favor of Daniel Urbi for the satisfaction of Artates’ indebtedness for the physical injuries that he inflicted upon Urbi. Urbi subsequently sold the homestead to a Crisanto Soliven, a minor, hence, the spouses Artates and Pojas sought annulment of the execution of the homestead and its subsequent sale on the ground that it violated the Public Land Law exempting said property from execution for any debt contracted within 5 years from the issuance of the patent and that the contract of sale between Urbi and Soliven is null and void. Issue: Whether or not there is a perfected contract of sale between Urbi and Soliven. Held: No, there was no perfected contract of sale for the reason that the sale is null and void being in violation of Sec. 118 of the Public Land Law. Under said provision, for a period of 5 years from the date of the government grant, lands acquired by free or homestead patent shall not only be incapable of being encumbered or alienated except in favor of the government itself or any of its institutions, but also, they shall not be liable to the satisfaction of any debt contracted within the said period. This provision is mandatory and intended to preserve and keep for the homesteader or his family, the land given to him gratuitously by the State, so that being a property owner, he may become and remain a contented and useful member of our society. In the case at bar, the land in question was issued on Sept. 1952 to Artates spouses and was sold at public auction on March 1956 which in no doubt, is within the 5 year prohibition period. Furthermore, the sale is simulated and is only intended to place the property beyond the reach of the judgment debtor. The execution sale being null and void, the contract of sale never perfected and the possession of the land should be returned to the owners without prejudice to their continuing obligation to pay the judgment debt and expenses connected therewith.

CAVITE DEVELOPMENT BANK VS. CYRUS LIM FEBRUARY 1, 2000 Facts: On June 1983, Rodolfo Guansing obtained a loan from Cavite Development Bank (CDB) in the amount of 90,000.00 which was secured by a mortgage on his parcel of land located in Quezon City. Guansing failed to pay the loan at maturity and as a consequence thereof, the mortgage was foreclosed. The TCT was issued in the name of CDB. On June 1988, Lolita Lim purchased the property and paid 30,000.00 as Option Money thereof. Subsequently, Lim discovered the irregularity on the land’s title. It was found out that the title was not under the name of the mortgagor, Rodolfo Guansing but of his father, Perfecto Guansing. Hence, Lim filed for an action for specific performance and damages against CDB. Issue: Whether or not there was a perfected contract of sale between CDB and Lolita Lim in order to warrant the action for specific performance and damages against the petitioners. Held: Yes, there was a perfected contract of sale. Art. 1475, NCC provides that “A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.”The 30,000.00 payment of Lolita Lim, though given as an “Option Money”, is nevertheless intended as an earnest money or part of the purchase price as evidenced by their agreement. Therefore, what existed is a contract of sale and not a mere option contract. An option contract is separate from and only preparatory to a contract of sale, which, if perfected, does not result in the perfection or consummation of the sale. Only when the option is exercised may a sale be perfected. The act of CDB in accepting the offer of Lim concludes the perfection of the contract.

CONCHITA NOOL VS. COURT OF APPEALS July 24, 1997 Facts: Conchita Nool obtained a loan from the DBP which was secured by a real estate mortgage of 2 parcels of land. She failed to pay the loan at maturity and as a result, DBP foreclosed the mortgaged properties. Conchita Nool likewise failed to redeem the lands within the 1-year redemption period so DBP contacted Anacleto Nool, Conchita’s brother to redeem the properties. Anacleto did so and the titles on the lands were later on transferred to him. As part of their agreement, Anacleto agreed to buy from Conchita the 2 parcels of land under controversy, with another undertaking that the plaintiffs can redeem said lands, at anytime they have the necessary amount. Conchita asked Anacleto to return the same but was refused by the latter, impelling them to come to court for relief in order to redeem the properties subject to their agreement. Issue: Whether or not there is a valid and perfected contract of sale and repurchase between Anacleto and Conchita Nool. Held: No. The contract of sale and repurchase are not valid for the reason that the sellers were no longer the owners of the property at the time it is delivered. Nemo dat quod non habet states the principle that “no one can give what he does not have.” In the case at bar, sellers can no longer deliver the object of the sale to the buyers, as the buyers themselves have already acquired title and delivery thereof from the rightful owner, which is DBP. Furthermore, Art. 1459 of the Civil Code provides that the vendor must the right to transfer the ownership thereof at the time it is delivered. Here, delivery of ownership is no longer possible. It has become impossible. The contract of sale being void, the subsequent contract of repurchase is likewise void. As petitioners sold nothing, it follows that they can also repurchase nothing. Nothing sold, nothing to repurchase.

Heirs of San Miguel vs. Court of Appeals Facts: Severina San Miguel originally claimed a parcel of land situated in Bacoor, Cavite. Without Severina’s knowledge, Dominador managed to cause the subdivision of the land into 3 lots. The latter filed a petition in the RTC, as a land registration court to issue title over Lots 1 and 2 which the Land Registration Commission issued. Severina filed a petition for the review of the decision alleging that the land registration proceedings were fraudulently concealed by Dominador from her. Thereafter, Severina’s heirs decided not to pursue the writs of possession and demolition and entered into a compromise with Dominador, which was to sell the subject lots to the latter for Php1.5M with the delivery of the Transfer of Certificate Title conditioned upon the purchase of another lot which was not yet titled. Severina’s heirs and Dominador executed a deed of sale. The latter filed a motion with the trial court for Severina’s heirs to deliver the owner’s copy of the certificate of title to them. Severina’s heirs opposed this by stressing that the certificate of title would only be surrendered upon Dominador’s payment of the Php300K which was not yet complied with. Dominador admitted non-payment due to the fact that Severina’s heirs have not presented proof of ownership over the untitled parcel of land which was actually declared in the name of a third party, Emilio Eugenio. Issue: Whether or not respondent shall be compelled to pay the Php 300K despite petitioner’s proof of lack of ownership? Held: True, in contracts of sale, the vendor need not possess title to the thing sold at the perfection of the contract. However, the vendor must possess title and must be able to transfer title at the time of delivery. In a contract of sale, title only passes to the vendee upon full payment of the stipulated consideration, or upon delivery of the thing sold. Under the facts of the case, Severinas heirs are not in a position to transfer title. Without passing on the question of who actually owned the land covered by LRC Psu -1312, we note that there is no proof of ownership in favor of Severinas heirs. In fact, it is a certain Emiliano Eugenio, who holds a tax declaration over the said land in his name. Though tax declarations do not prove ownership of the property of the declarant, tax declarations and receipts can be strong evidence of ownership of land when accompanied by possession for a period sufficient for prescription.Severinas heirs have nothing to counter this document. Therefore, to insist that Dominador, et al. pay the price under such circumstances would result in Severinas heirs unjust enrichment. If the sellers cannot deliver the object of the sale to the buyers, such contract may be deemed to be inoperative. By analogy, such a contract may fall under Article 1405, No. 5 of the Civil Code which are considered void and inexistent from the beginning. Hence, the non-payment of the three hundred thousand pesos (P300,000.00) is not a valid justification for refusal to deliver the certificate of title. Besides, we note that the certificate of title covers Lots 1 and 2 of LRC Psu-1313, which were fully paid for by Dominador, et al. Therefore, Severinas heirs are bound to deliver the certificate of title covering the lots.

Clemento Jr. vs. Lobregat G.R. No. 137845. September 9, 2004 Facts: The Spouses Nilus and Teresita Sacramento were the owners of a parcel of land which they mortgaged with the Social Security System as security for their housing loan. The spouses executed a deed of sale with Assumption of Mortgage in favor of Maria Linda Clemeno and her husband Angel C. Clemeno, Jr., with the conformity of SSS. The Register of Deeds issued TCT over the property in the name of the vendees, who, in turn, executed a Real Estate Mortgage Contract over the property in favor of the SSS to secure the payment of the amount of the balance of the loan. However, per the records of the SSS Loans Department, the vendors (the Spouses Sacramento) remained to be the debtors. Respondent Romeo R. Lobregat, filed a Complaint against the petitioners, the Spouses Clemeno, and Nilus Sacramento for breach of contract, specific performance with damages. The petitioners, for their part, filed a Complaint against the respondent for recovery of possession of property with damages. Angel Clemeno, Jr., relatives by consanguinity, entered into a verbal contract of sale over the property covered. The respondents counsel wrote petitioner Clemeno, Jr., informing the latter that he (the respondent) had already paid the purchase price of the property and that he was ready to pay the balance thereof. He demanded that petitioner Clemeno, Jr. execute a deed of absolute sale over the property and deliver the title thereto in his name upon his receipt of the amount. Petitioner Clemeno, Jr. stated that he never sold the property to the respondent; that he merely tolerated the respondents possession of the property for one year or until 1987, after which the latter offered to buy the property, which offer was rejected; and that he instead consented to lease the property to the respondent. The petitioner also declared in the said letter that even if the respondent wanted to buy the property, the same was unenforceable as there was no document executed by them to evince the sale. Issue: Whether or not there was a contract of sale? Held: We find and so hold that the contract between the parties was a perfected verbal contract of sale, not a contract to sell over the subject property, with the petitioner as vendor and the respondent as vendee. Conformably to Article 1477 of the New Civil Code, the ownership of the property was transferred to the respondent upon such delivery. The petitioners cannot re-acquire ownership and recover possession thereof unless the contract is rescinded in accordance with law. The failure of the respondent to complete the payment of the purchase price of the property within the stipulated period merely accorded the petitioners the option to rescind the contract of sale as provided for in Article 1592 of the New Civil Code. The contract entered into by the parties was not a contract to sell because there was no agreement for the petitioners to retain ownership over the property until after the respondent shall have paid the purchase price in full, nor an agreement reserving to the petitioners the right to unilaterally resolve the contract upon the buyers failure to pay within a fixed period. Unlike in a contract of sale, the payment

of the price is a positive suspensive condition in a contract to sell, failure of which is not a breach but an event that prevents the obligation of the vendor to convey the title from becoming effective. The contract of sale of the parties is enforceable notwithstanding the fact that it was an oral agreement and not reduced in writing. This is so because the provision applies only to executory, and not to completed, executed or partially executed contracts.In this case, the contract of sale had been partially executed by the parties, with the transfer of the possession of the property to the respondent and the partial payments made by the latter of the purchase price thereof.

Atkins Kroll & Co. Inc. vs Cua Hian Tek Facts: Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the shortage of catch of sardines by the packers in California. HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor. Atkins herein contends that there was no such contract of sale but only an option to buy, which was not enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price.” Atkins also insisted that the offer was a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23. Issue: Whether or not there was a contract to sell? Held: Yes, The Supreme Court held that there was a contract of sale between the parties. Petitioner’s argument assumed that only a unilateral promise arose when the respondent accepted the offer, which is incorrect because a bilateral contract to sell and to buy was created upon respondent’s acceptance. Had B. Cua Hian Tek backed out after accepting, by refusing to get the sardines and /or to pay for their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm offer for the sale" and that "the undersigned buyer has immediately filed an application for import license.” After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In this case at bar, however, upon respondent’s acceptance of herein petitioner's offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the obligations of a purchaser

PAMECA Wood Treatment Plant Inc. vs Court of Appeals Facts: PAMECA Wood Treatment Plant, Inc. (PAMECA) obtained a loan from respondent Bank. By virtue of this loan, petitioner PAMECA, through its President, petitioner Herminio C. Teves, executed a promissory note for the said amount, promising to pay the loan by installment. As security for the said loan, a chattel mortgage was also executed over PAMECAs properties in Dumaguete City, consisting of inventories, furniture and equipment, to cover the whole value of the loan. Upon PAMECAs failure to pay, respondent bank extrajudicially foreclosed the chattel mortgage, and, as sole bidder in the public auction, purchased the foreclosed properties. On Thereafter, respondent bank filed a complaint for the collection of the balance against petitioner PAMECA and private petitioners herein, as solidary debtors with PAMECA under the promissory note. Pameca argues that Public auction sale were tainted with fraud. Claims the chattels were bought by DBP as sole bidder in only 1/6 of themarket value, hence unconscionable and inequitable, and so it is null and void and that NCC 1484 and 2115 should be applied by analogy reading the spirit of the law, and taking into consideration that thecontract of loan was a contract of adhesion. Issue: Whether or not the public auction was tainted with fraud? Held: No, The mere fact that DBP was the sole bidder does not warrant the conclusion that the transaction was attended with fraud. Fraud is a serious allegation that requires full and convincing evidence, and may not be inferred from the lonecircumstance that it was only DBP that bid. The sparseness of evidence leaves the SC no discretion but to uphold thepresumption of regularity in the conduct of the public sale.

DEVELOPMENT BANK OF THE PHILIPPINES vs. COURT OF APPEALS and EMERALD RESORT HOTEL CORPORATION G.R. No. 125838 June 10, 2003 Facts: Private respondent Emerald Resort Hotel Corporation obtained a loan from petitioner Development Bank of the Philippines. DBP released the loan of P3,500,000.00 in three installments: P2,000,000.00 on 27 September 1975, P1,000,000.00 on 14 June 1976 and P500,000.00 on 14 September 1976. To secure the loan, ERHC mortgaged its personal and real properties to DBP.On 18 March 1981, DBP approved a restructuring of ERHC’s loan subject to certain conditions. On 25 August 1981, DBP allegedly cancelled the restructuring agreement for ERHC’s failure to comply with some of the material conditions of the agreement. ERHC delivered to DBP three stock certificates of ERHC.On 5 June 1986, alleging that ERHC failed to pay its loan, DBP filed with the Office of the Sheriff, Regional Trial Court of Iriga City, an Application for Extra-judicial Foreclosure of Real Estate and Chattel Mortgages. Deputy Provincial Sheriffs Abel Ramos and Ruperto Galeon issued the required notices of public auction sale of the personal and real properties. However, Sheriffs Ramos and Galeon failed to execute the corresponding certificates of posting of the notices. On 10 July 1986, the auction sale of the personal properties proceeded. The Office of the Sheriff scheduled on 12 August 1986 the public auction sale of the real properties. The Bicol Tribune published on 18 July 1986, 25 July 1986 and 1 August 1986 the notice of auction sale of the real properties. However, the Office of the Sheriff postponed the auction sale on 12 August 1986 to 11 September 1986 at the request of ERHC. DBP did not republish the notice of the rescheduled auction sale because DBP and ERHC signed an agreement to postpone the 12 August 1986 auction sale.6 ERHC, however, disputes the authority of Jaime Nuevas who signed the agreement for ERHC.ERHC informed DBP of its intention to lease the foreclosed properties. On 22 December 1986, ERHC filed with the Regional Trial Court of Iriga City a complaint for annulment of the foreclosure sale of the personal and real properties. Subsequently, ERHC filed a Supplemental Complaint. ERHC alleged that the foreclosure was void mainly because (1) DBP failed to comply with the procedural requirements prescribed by law; and (2) the foreclosure was premature. ERHC maintained that the loan was not yet due and demandable because the DBP had restructured the loan. DBP moved to dismiss the complaint because it stated no cause of action and ERHC had waived the alleged procedural defenses. The trial court denied the motion to dismiss. Meanwhile, acting on ERHC’s application for the issuance of a writ of preliminary injunction, the trial court granted the writ on 20 August 1990. Accordingly, the trial court enjoined DBP from enforcing the legal effects of the foreclosure of both the chattel and real estate mortgages. The trial court rendered a Decision8 dated 28 January 1992 declaring as null and void the foreclosure and auction sale of the personal properties of plaintiff corporation held on July 10, 1986;The Court of Appeals, which consoli-

dated the appeals, affirmed the decision of the trial court. Issue: Whether DBP complied with the posting and publication requirements under applicable laws for a valid foreclosure. Held: No, The Court held recently in Ouano v. Court of Appeals22 that republication in the manner prescribed by Act No. 3135 is necessary for the validity of a postponed extrajudicial foreclosure sale. Another publication is required in case the auction sale is rescheduled, and the absence of such republication invalidates the foreclosure sale. The Court also ruled in Ouano that the parties have no right to waive the publication requirement in Act No. 3135. Publication, therefore, is required to give the foreclosure sale a reasonably wide publicity such that those interested might attend the public sale. To allow the parties to waive this jurisdictional requirement would result in converting into a private sale what ought to be a public auction. The last paragraph of the prescribed notice of sale allows the holding of a rescheduled auction sale without reposting or republication of the notice. However, the rescheduled auction sale will only be valid if the rescheduled date of auction is clearly specified in the prior notice of sale. The absence of this information in the prior notice of sale will render the rescheduled auction sale void for lack of reposting or republication. If the notice of auction sale contains this particular information, whether or not the parties agreed to such rescheduled date, there is no more need for the reposting or republication of the notice of the rescheduled auction sale.
 In the instant case, there is no information in the notice of auction sale of any date of a rescheduled auction sale. Even if such information were stated in the notice of sale, the reposting and republication of the notice of sale would still be necessary because Circular No. 7-2002 took effect only on 22 April 2002. There were no such guidelines in effect during the questioned foreclosure. Clearly, DBP failed to comply with the publication requirement under Act No. 3135. There was no publication of the notice of the rescheduled auction sale of the real properties. Therefore, the extrajudicial foreclosure of the real estate mortgage is void.

PROVINCE OF CEBU vs HEIRS OF RUFINA MORALES Facts: On September 27, 1961, petitioner Province of Cebu leased in favor of Rufina Morales a 210-square meter lot which formed part of Lot No. 646-A of the Banilad Estate. Petitioner donated several parcels of land to the City of Cebu. Among those donated was Lot No. 646-A which the City of Cebu divided into sub-lots. The area occupied by Morales was thereafter denominated as Lot No. 646-A-3, for which Transfer Certificate of Title (TCT) No. 30883 was issued in favor of the City of Cebu. On July 19, 1965, the city sold Lot No. 646-A-3 as well as the other donated lots at public auction. The highest bidder for Lot No. 646-A-3 was Hever Bascon but Morales was allowed to match the highest bid since she had a preferential right to the lot as actual occupant thereof. Morales thus paid the required deposit and partial payment for the lot. Petitioner filed an action for reversion of donation against the City of Cebu. On May 7, 1974, petitioner and the City of Cebu entered into a compromise agreement which the court approved on July 17, 1974.The agreement provided for the return of the donated lots to petitioner except those that have already been utilized by the City of Cebu. Pursuant thereto, Lot No. 646-A-3 was returned to petitioner and registered in its name under TCT No. 104310.Morales died on February 20, 1969 during the pendency of Civil Case No. 238-BC.Apart from the deposit and down payment, she was not able to make any other payments on the balance of the purchase price for the lot. respondents filed an action for specific performance and reconveyance of property against petitioner, They also consigned with the court the amount of P13,450.00 representing the balance of the purchase price which petitioner allegedly refused to accept. Respondents averred that the award at public auction of the lot to Morales was a valid and binding contract entered into by the City of Cebu and that the lot was inadvertently returned to petitioner under the compromise judgment. The trail court rendered a decision that the Court is convinced that there was already a consummated sale between the City of Cebu and Rufina Morales. There was the offer to sell in that public auction sale. It was accepted by Rufina Morales with her bid and was granted the award for which she paid the agreed downpayment. Issue: Whether or not the sale of the lot in public action valid. Held: Yes, The appellate court correctly ruled that petitioner, as successor-ininterest of the City of Cebu, is bound to respect the contract of sale entered into by the latter pertaining to Lot No. 646-A-3. The City of Cebu was the owner of the lot when it awarded the same to respondents predecessor-ininterest, Morales, who later became its owner before the same was erroneously returned to petitioner under the compromise judgment. The award is tantamount to a perfected contract of sale between Morales and the City of Cebu, while partial payment of the purchase price and actual occupation of the property by Morales and respondents effectively transferred ownership of

the lot to the latter. This is true notwithstanding the failure of Morales and respondents to pay the balance of the purchase price. Petitioner can no longer assail the award of the lot to Morales on the ground that she had no right to match the highest bid during the public auction. Whether Morales, as actual occupant and/or lessee of the lot, was qualified and had the right to match the highest bid is a foregone matter that could have been questioned when the award was made. When the City of Cebu awarded the lot to Morales, it is assumed that she met all qualifications to match the highest bid. The subject lot was auctioned in 1965 or more than four decades ago and was never questioned. Thus, it is safe to assume, as the appellate court did, that all requirements for a valid public auction sale were complied with. A sale by public auction is perfected when the auctioneer announces its perfection by the fall of the hammer or in other customary manner. It does not matter that Morales merely matched the bid of the highest bidder at the said auction sale. The contract of sale was nevertheless perfected as to Morales, since she merely stepped into the shoes of the highest bidder.

Beaumont vs Prieto Facts: Negotiations having been had, prior to December 4, 1911, between W. Borck and Benito Valdes, relative to the purchase, at first, of a part of the Nagtajan Hacienda, situated in the district of Sampaloc of this city of Manila and belonging to Benito Legarda, and later on, of the entire hacienda, said Benito Valdes, on the date above-mentioned, addressed to said Borck a letter giving W. Borck an option for three months to buy the property. Subsequent to the said date, W. Borck addressed to Benito Valdes several letters relative to the purchase and sale of the hacienda, and as he did not obtain what he expected or believe he was entitled to obtain from Valdes, he filed the complaint that originated these proceedings, which was amended on the 10th of the following month, April, by bringing his action not only against Benito Valdes but also against Benito Legarda, referred to in the letter mentioned. The defendant Benito Valdez gave to the plaintiff the document written and signed by him stating that on January 19, 1912, while the offer or option mentioned in said document still stood, the plaintiff in writing accepted the terms of said offer and requested of Valdes to be allowed to inspect the property, titles and other documents pertaining to the property, and offered to pay to the defendant, immediately and in cash as soon as a reasonable examination could be made of said property titles and other documents. It was also alleged that, in spite of the frequent demands made by the plaintiff, the defendants had persistently refused to deliver to him the property titles and other documents relative to said property and to execute any instrument of conveyance thereof in his favor and that the plaintiff, on account of said refusal on the part of the defendant Valdes, based on instructions from the defendant Legarda, had suffered damages. Issue: Whether the agreement between the parties constitutes a mere offer to sell or an actual contract of option. Held: The plaintiff Borck accepted the offer of sale made to hmi, or the option of purchase given him in document Exhibit E by the defendant Valdes, of the Nagtajan Hacienda, for the assessed valuation of the same, but his acceptance was not in accordance with the condition with regard to the payment of the price of the property. The plaintiff Borck made the offer to pay the said price, in the first of them, within the period of five months from December 14, 1911; in the second, within the period of three months from the same date, and, finally, in the other two documents, within an indefinite period which could as well be ten days as twenty or thirty or more, counting from the date when the muniments of title relative to the said hacienda should have been placed at his disposal to be inspected and he should have found them satisfactory and, in consequence thereof, the deed of conveyance should have been executed in his favor by the defendant Valdes. There was no concurrence of the offer and the acceptance as to one of the conditions related to the cause of the contract, to wit, the form in which the payment should be made. The expression of Borck's will was not in accordance with all the terms of Valdes' proposal, or, what amounts to the same thing, the latter's promise was not accepted by the former in the specific

terms, in which it was made, and finally, the acceptance of the said proposal on Borck's part was not unequivocal and without variance of any sort between it and the proposal.

Cronico vs JM Tuason & Co., Inc. Facts: Appellant J. M. Tuason & Co. Inc. was the registered owner of Lot No. 22, Block 461, Sta. Mesa Heights Subdivision. Plaintiff Florencia Cronico offered to buy the lot from the appellant company with the help of Mary E. Venturanza. In the first week of March, 1962, defendant-appellant Claudio Ramirez also learned that the lot in question was being sold by the appellant company. On March 20, 1962, the appellant company sent separate reply letters to prospective buyers including plaintiff Cronies and defendant-appellant Ramirez. It so happened that plaintiff Cronico went to the appellant company's office on March 21, 1962, and she was informed that the reply letter of the appellant company to prospective buyers of the same lot had been mailed. With this information, plaintiff Cronies and Mary E. Venturanza went to the post office in Manila and she was able to get the letter at about 3:30 in the afternoon of the same date. After she got the letter, plaintiff Cronies and Mary E. Venturanza went directly to the office of Gregorio Araneta Inc., Escolta, Manila, and presented the letter to Benjamin Bautista, Head of the Real Estate Department of said company. He advised plaintiff Cronies that it is Gregorio Araneta II who would decide whose offer to buy may be accepts after the appellant company receives the registry return cards attached to the registered letters sent to the offerors. On March 22, 1962, between 10:00 and 11:00 a.m., appellant Ramirez received from the post office at San Francisco del Monte, Quezon City, the reply letter of the appellant company. On April 2, 1962, the J. M. Tuason & Co. Inc., and Claudio R. Ramirez executed a contract to sell whereby the appellant company agreed to sell to appellant Ramirez the lot in question for a total price of P167,896.00 subject to the terms and conditions therein set forth. On April 28,1962, plaintiff Florencia Cronico lodged in the Court of First Instance of Rizal (Quezon City Branch) a complaint against the defendants-appellants J. M. Tuason & Co., Inc. and Claudio Ramirez. The main purpose of the said suit is to annul and set aside the contract to sell executed by and between appellant company and appellant Ramirez. Issue: Whether or not petitioner has better right to purchase the subj property than appellant Ramirez. Held: NO. The act of the petitioner in taking delivery of her letter at the entry section of the Manila post office without waiting for said letter to be delivered to her in due course of mail is a violation of the "first come first served" condition imposed by the respondent J. M. Tuason & Co. Inc., acting through Gregorio Araneta Inc. In order that a unilateral promise may be binding upon the promisor, Article 1479, Civil Code of the Philippines, requires the concurrence of the condition that the promise be "supported by a consideration distinct from the price. The petitioner, Florencia Cronies, has not established the existence of a consideration distinct from the price of the lot in question.The petitioner cannot claim that she had accepted the promise before it was withdrawn because, as stated above, she had violated the condition of "first, come, first served”

Natino vs Intermediate Appellate Court Facts: On 12 October 1970 petitioners executed a real estate mortgage in favor of respondent bank as security for a loan of P2,000.00. Petitioners failed to pay the loan on due date. The bank applied for the extrajudicial foreclosure of the mortgage. At the foreclosure sale on 11 December 1974 the respondent bank was the highest and winning bidder with a bid of P2,945.11. Since no redemption was made by petitioners within the two-year period, which expired on 29 January 1977, the sheriff issued a Final Deed of Sale on 15 February 1977. Petitioners, however, claimed that they were granted by respondent bank an extension of the redemption period; but the latter denied it. In their complaint petitioners alleged that the final deed of sale was prematurely issued since they were granted an extension of time to redeem the property. Issue: Whether or not the final deed of sale was prematurely issued. Held: It seems clear from testimony elicited on cross-examination of the president and manager of the bank that the latter offered to re-sell the property for P30,000.00 but after the petition for a writ of possession had already been filed, and well after expiry of the period to redeem. Appellants failed to accept the offer; they deposited only P4,000.00. There was therefore no meeting of the minds, and accordingly, appellants may no longer be heard. the attempts to redeem the property were done after the expiration of the redemption period and that no extension of that period was granted to petitioners.

Atkins Kroll & Co., Inc. vs Cua Hian Tek Facts: For its failure to deliver one thousand cartons of sardines, which it had sold to B. Cua Hian Tek, petitioner was sued, and after trial was ordered by the Manila court of first instance to Pay damages, which on appeal was reduced by the Court of Appeals to P3,240.15 representing unrealized profits. It was shown that B. Cua Hian Tek accepted the offer unconditionally and delivered his letter of acceptance Exh. B on September 21, 1951. However, due to shortage of catch of sardines by the packers in California, Atkins Kroll & Co., failed to deliver the commodities it had offered for sale. Issue: Whether or not there was a contract of sale. Held: After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to later. In this case, however, upon accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligations of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was bilateral contract of sale. We must therefore hold, as the lower courts have held that there was a contract of sale between the parties.


RURAL BANK OF PARARAQUE, INC. vs. ISIDRA REMOLADO and COURT OF APPEALS G.R. No. L-62051 March 18, 1985 Facts: Isidra Remolado, 64, a widow, and resident of Makati, Rizal, owned a lot with an area of 308 square meters, with a bungalow thereon, which was leased to Beatriz Cabagnot. In 1966 she mortgaged it to the Rural Bank of Parañaque, Inc. as security for a loan of P15,000. She paid the loan. On April 17, 1971 she mortgaged it again to the bank. She eventually secured loans totaling P18,000. The loans become overdue. The bank foreclosed the mortgage on July 21, 1972 and bought the property at the foreclosure sale for P22,192.70. The one-year period of redemption was to expire on August 21, 1973. The bank advised Remolado that she had until August 23 to redeem the property. The bank gave her a statement showing that she should pay P25,491.96 for the redemption of the property on August 23. No redemption was made on that date. The bank consolidated its ownership over the property---Remolado's title was cancelled. A new title, TCT No. 418737, was issued to the bank. On September 24, 1973, the bank gave Remolado up to ten o'clock in the morning of October 31, 1973, or 37 days, within which to repurchase (not redeem since the period of redemption had expired) the property. The bank did not specify the price. On October 26, 1973 Remolado and her daughter, Patrocinio Gomez, promised to pay the bank P33,000 on October 31 for the repurchase of the property. Exhibits 1-1 and X do not evidence any perfected repurchase agreemi6nt. Even if it is assumed that the bank's commitment to resell the property was accepted by Remolado, that option was not supported by a consideration distinct from the price. Lacking such consideration, the option is void. Contrary to her promise, Remolado did not repurchase the property on October 31. Five days later, or on November 5, Remolado and her daughter delivered P33,000 rash to the bank's assistant manager as repurchase price. The amount was returned to them the next day. At that time, the bank was no longer willing to allow the repurchase. On that day, November 6, Remolado filed an action to compel the bank to reconvey the property to her for P25,491.96 plus interest and other charges and to pay P35,000 as damages. The repurchase price was not consigned. A notice of lis pendens was registered. The bank sold the property to Pilar Aysip for P50,000. A new title was issued to Aysip with an annotation of lis pendens. The trial court ordered the bank to return the property to Remolado upon payment of the redemption price of P25,491.96 plus interest and other bank charges and to pay her P15,000 as damages. The Appellate Court affirmed the judgment. The bank appealed to this Court. It contends that Remolado had no more right of redemption and, therefore, no cause of action against the bank.

Issue: Whether or not Remolado still had the right of redemption or repurchase over the property 


Held: No, we hold that the trial court and the Appellate Court erred in ordering the reconveyance of the property. There was no binding agreement for its repurchase. Even on the assumption that the bank should be bound by its commitment to allow repurchase on or before October 31, 1973, still Remolado had no cause of action because she did not repurchase the property on that date. There may be a moral obligation, often regarded as an equitable consideration (meaning compassion), but if there is no enforceable legal duty, the action must fail although the disadvantaged party deserves commiseration or sympathy. In the instant case, the bank acted within its legal rights when it refused to give Remolado any extension to repurchase after October 31, 1973. It had given her about two years to liquidate her obligation. She failed to do so. WHEREFORE, the Appellate Court's judgment is reversed and set aside.

R. F. NAVARRO vs. SUGAR PRODUCERS COOPERATIVE MARKETING ASSOCIATION INC. G.R. No. L-12888 April 29, 1961 FACTS: On September 19th, 1956, defendant formally offered to plaintiff the sale from 15,000 to 20,000 metric tons of molasses, 1st-degrees gravity, 60% sugar by invert, at P50.00 per metric ton, ex-warehouse San Carlos and Bais, Negros Occidental, giving him up to noon of September 24th, 1956 within which to accept the offer, with the admonition that upon its failure to hear from him by then, the defendant shall feel free to negotiate the sale with other possible buyers. Promptly at five minutes before noon of September 24th, 1956, plaintiff formally accepted the offer of sale tendered by the defendant by informing the latter in writing that he binds himself to purchase from the preferred 20,000 metric tons of molasses in question for P50.00 per metric ton, and the day after September 21st, 1956, plaintiff upon the request of defendant, made the following clarifications of his agreement to purchase the said molasses, — (1) 20,000 metric tons of Philippine molasses, 185-degrees specific gravity, 60% sugar by invert; (2) Price — P50.00 Philippine currency, per metric ton ex-warehouse; (3) shipments to be in quantities of 3,000 or more metric tons every each shipment during the month of February, March, April and May until the whole amount has been completely shipped; and (4)payment shall be by irrevocable, divisible and assignable domestic letter of credit to be opened in a local bank in defendant's favor; On the same day plaintiff made the foregoing clarifications of his acceptance of the sale, the defendant hurried advised plaintiff that it committed a typographical error indicating the specific gravity of the molasses at 185-degrees which should be only 85-degrees, the latter being the high for molasses at 60% sugar by invert, and requesting plain that the "specific gravity" be amended accordingly, which correction and amendment plaintiff readily agreed to and accepted: That there was no single word, effort or hint that the defendant's offer, accepted by the plaintiff, was qualified in any way whatsoever; That on September 24th, 1956, relying upon the consummation and perfection of the purchase and sale of 20,000 metric tons of molasses in question as indicated above, plaintiff through his business associate here in Manila (J.D. QUIRINO) continued negotiations for the resale of said molasses to foreign buyers of said conunodity by immediately communicating the availability of said commodity through letters, cablegrams a long-distance calls to the latter's business contacts in U.S.A., a Japan, and ultimately disposing and reselling the said molasses for forward deliveries in accordance with plaintiff's agreement with the defendant; On September 28th, 1956, three days after an agreement had been consummated on the price, quantity and quality of said molasses and the manner of payment thereof, the defendant, belatedly and abruptly advised plaintiff of its desire add certain additional conditions to be incorporated in the formal contract of purchase and sale then under preparation by it for signature, — which were never even mentioned nor hinted at in its original offer or proposal, on the untenable pretext that they were 'standard conditions' on all contracts for the sale said commodity —peremptorily giving plaintiff up to

noon again of October 26th, 1956, within which to decide upon his acceptance of said additional conditions with the warning that if he failed to do so, it would feel free to advise its planters concerned that they could negotiate their molasses with other parties; On the very same day defendant simply and rudely turned down the foregoing friendly gesture of the plaintiff caused by the additional conditions demanded by the defendant in its letter of September 28, 1956 and bluntly informed plaintiff that in view of his non-acceptance of said conditions it would not continue with the sale of the molasses in question to plaintiff and that it felt free to offer the same to any other interested buyer. Claiming breach of contract, plaintiff prayed that judgment be rendered ordering defendant to comply with and perform its contractual obligations, pursuant to its agreement with plaintiff of September 19 and 24, 1956 and in case of failure to do so, to pay plaintiff any and all damages he may suffer by reason of such noncompliance, plus moral damages and to pay plaintiff reasonable attorney's fees and actual costs of the litigation. In view of Article 1479 of the New Civil Code, the trial court dismissed the action. His motion for reconsideration having been denied, plain plaintiff interposed this appeal. Issue: Whether or not there was a unilateral promise to buy and sell Held: No, this contention is not borne out by the facts alleged in the complaint. In the first place, as noted by the trial court in its order denying plaintiff's motion for reconsideration, plaintiff himself, in paragraph 6 of his complaint, referred to the transaction as an "option" which he exercised on September 24, 1956. Then again, in his memorandum in lieu of oral argument, he expressly agreed that the offer made by defendant and described in paragraph 2 of plaintiff's complaint is, In option, a unilateral promise to sell. And, undoubtedly, this is the offer, the option, the unilateral promise to sell that was accepted by plaintiff five minutes before the deadline — noon of September 24, 1956This acceptance, without consideration, did not create an enforceable obligation on the part of the defendant. The offer as well as the acceptance, did not contemplate nor produce an immediately binding and enforceable contract of sale. Both lack a most essential element — the manner of payment of the purchase price. In fact, it was only after the exercise of the option or acceptance of the unilateral promise to sell that the terms of payment were first discussed. This was in connection with the clarification of plaintiff's acceptance which was transmitted to defendant on September 25, 1956Plaintiff's offer of a domestic letter of credit was not accepted by defendant who insisted on a cash payment of 50% of the purchase value, upon signing of a contract. Plaintiff, on the other hand, agreed to accede to this provided the price is reduced from P50.00 per metric ton to 7132.00 Defendant rejected defendant's alternative counter-offer. In the circumstance, there was no complete meeting of the minds of the parties necessary for the perfection of a contract of sale. Consequently, appellee was justified in withdrawing its offer to sell the molasses

in question WHEREFORE, finding no reversible error in the order appealed from, the same is hereby affirmed, with cost against the plaintiff-appellant. So ordered.

NICOLAS SANCHEZ vs. SEVERINA RIGOS G.R. No. L-25494 June 14, 1972 Facts: On April 3, 1961, plaintiff Nicolas Sanchez and defendant Severina Rigos executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos "agreed, promised and committed ... to sell" to Sanchez the sum of P1,510.00, a parcel of land situated in the barrios of Abar and Sibot, municipality of San Jose, province of Nueva Ecija, and more particularly described in Transfer Certificate of Title No. NT-12528 of said province, within two (2) years from said date with the understanding that said option shall be deemed "terminated and elapsed," if "Sanchez shall fail to exercise his right to buy the property" within the stipulated period. Inasmuch as several tenders of payment of the sum of Pl,510.00, made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with the Court of First Instance of Nueva Ecija and commenced against the latter the present action, for specific performance and damages. Alleging, as special defense, that the contract between the parties "is a unilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void" — on February 11, 1964, both parties, assisted by their respective counsel, jointly moved for a judgment on the pleadings. Accordingly, on February 28, 1964, the lower court rendered judgment for Sanchez, ordering Mrs. Rigos to accept the sum judicially consigned by him and to execute, in his favor, the requisite deed of conveyance. Mrs. Rigos was, likewise, sentenced to pay P200.00, as attorney's fees, and other costs. Hence, this appeal by Mrs. Rigos. Issue: Whether or not there was a unilateral promise to buy and sell Held: This case admittedly hinges on the proper application of Article 1479 of our Civil Code, which provides: ART. 1479. A promise to buy and sell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. In his complaint, plaintiff alleges that, by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to buy" the land described in the option, copy of which was annexed to said pleading as Annex A thereof and is quoted on the margin. 1 Hence, plaintiff maintains that the promise contained in the contract is "reciprocally demandable," pursuant to the first paragraph of said Article 1479. Although defendant had really "agreed, promised and committed" herself to sell the land to the plaintiff, it is not true that the latter had, in turn, "agreed and committed himself" to buy said property. The option did not impose upon plaintiff the obligation to purchase defendant's property. Annex A is not a "contract to buy and sell." It merely granted plaintiff an "option" to buy. And both parties so understood it, as indicated by

the caption, "Option to Purchase," given by them to said instrument. Under the provisions thereof, the defendant "agreed, promised and committed" herself to sell the land therein described to the plaintiff for P1,510.00, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land. Furthermore, an option is unilateral: a promise to sell at the price fixed whenever the offeree should decide to exercise his option within the specified time. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. He is free either to buy or not to buy later. In this case, however, upon accepting herein petitioner's offer a bilateral promise to sell and to buy ensued, and the respondent ipso facto assumed the obligation of a purchaser. He did not just get the right subsequently to buy or not to buy. It was not a mere option then; it was a bilateral contract of sale. If the option is given without a consideration, it is a mere offer of a contract of sale, which is not binding until accepted. If, however, acceptance is made before a withdrawal, it constitutes a binding contract of sale, even though the option was not supported by a sufficient consideration. In other words, since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale. WHEREFORE, the decision appealed from is hereby affirmed, with costs against defendant-appellant Severina Rigos. It is so ordered.

Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Co. 51 O.G. 3447 Facts: On March 24, 1953, defendant Atlantic Gulf & Pacific Co. granted an option to plaintiff Southwestern Sugar & Molasses Co. to buy its barge for P30,000.00 to be exercised within ninety days. On May 11, 1953, Atlantic Gulf wrote Southwestern Sugar that it was exercising its option and that it be notified as soon as the barge was available. On May 12, 1953, Atlantic Gulf replied that their understanding was that the "offer of option" is to be cash transaction and to be effected at the time the barge was available. On June 25, 1953, Atlantic Gulf informed Southwestern Sugar that the damage action could not be turned over to the latter. On June 27, 1953, Southwestern Sugar instituted an action for specific performance in line with the accepted option, depositing with the Court the purchase price of 30,000.00. Atlantic Gulf, relying upon Article 1479 of the New Civil Code, contended that the option was not valid because it was not supported by any consideration apart from the price. Southwestern Sugar contended that the option became binding on Atlantic Gulf when plaintiff gave notice of its acceptance during the option period citing as its authority Article 1324 of the New Civil Code which provides that 'when the offer or has allowed the offeree a certain period to accept, the offer may be withdrawn at any time before acceptance by communicating such withdrawal except "when the option is founded upon a consideration, as something paid or promised." Issue: Whether or not the promise to sell was valid Held: No, the promise to sell was not valid because it was not supported by a consideration distinct from the price. There is no question that under Article 1479 of the New Civil Code "an option to sell" or a "promise to buy or to sell", as used in said article, to be valid must be "supported by a consideration distinct from the price". This is clearly inferred from the context of said article that a unilateral promise to buy or to sell, even if accepted, is only binding if supported by a consideration. In other words, "an accepted unilateral promise" can only have a binding effect if supported by a consideration. Here, it is not disputed that the option is without consideration. It can, therefore, be withdrawn notwithstanding the acceptance made of it by appellee. It is true that under Article 1324 of the New Civil Code, the general rule regarding offer and acceptance is that, when the offer or gives to the offeree a certain period to accept, "the offer may be withdrawn at any time before acceptance" except when the option is founded upon consideration, but this general provision must be interpreted as modified by the provision of Article 1479 above referred to, which applies to "a promise to buy and sell" specifically. As already stated, this rule requires that a premise to sell to be valid must be supported by a consideration distinct from the price. While under the "offer of option" in question, appellant has assumed a clear obligation to sell its barge to appellee and the option has been exercised in accordance with its terms, and there appears to be no valid or justifiable rea-

son for the appellant to withdraw its offer, this Court cannot adopt a different attitude because the la on the matter is clear. Our imperative duty is to apply it unless modified by Congress." WHEREFORE, the Court sustains, as it hereby sustain the defendant's motion to dismiss and hereby declares plaintiff's complaint dismissed, without costs. SO ORDERED.

Nietes vs CA Facts: Petitioner Aquilino Nietes and respondent Dr.Pablo Garcia entered a “Contract of Lease and Option to Buy” where the latter agreed to lease his Angeles Educational Institute to the former.

Mas vs Lanuza Facts: Judgment was rendered in favor of Jose Mas for the possession of a certain lot of land described in Tondo, Manila, and declared said lot to be the property of the estate of which the plaintiff is administrator

The rent is set to P5000 per year up to 5 years and that the LESSOR agrees to give the LESSEE an option to buy the land and the school building, for P100,000 within the period of the Contract of Lease.

Mas submitted in evidence an agreement signed by the Lanuzas and Hilario that one Francisca Hilario gave the Lanuzas permission to enter upon the land in question, and to occupy it for such time as Hilario’s heirs should permit, the appellants, on their part, expressly acknowledging the right and title of Hilario, deceased, to the possession and ownership of said property, and, among other stipulations, binding themselves to close the opening in the wall which divided the said lot from their own, should any question ever arise over the title thereto.

Nietes paid P3000 September 4, 1961 as per advance pay for the school and he also paid Garcia P2200 on Dec.16, 1962 for partial payment on the purchase of the property, both were acknowledged by Garcia through the issuance of receipts. Garcia decided to rescind the contract on the grounds that Nietes: (1) had not maintained the building in good condition, (2) had not been using the original name of the school-thereby extinguishing its existence in the eyes of the public and injuring its prestige, (3) no inventory has been made of all properties of the school, (4) had not collected or much less helped in the collection of back accounts of former students. Garcia’s lawyers reminded Nietes that the foregoing obligations had been one, if not, the principal moving factors which had induced the lessor in agreeing with the terms embodied in the contract of lease, without which fulfillment, said contract could not have come into existence. Nietes also deposited 84K to a bank corresponding to the balance for the purchase of the property.

Plaintiff also introduced in evidence that the lot in question was the property of the said Francisco Hilario, and that Timoteo Lanuza had been treating with her for the purchase thereof. The defendants admit the execution of the agreement, and that they took possession of the lot but they allege that they entered into it under the mistaken belief that Francisca Hilario was in fact the owner of the property and that they discovered later that she held the property merely as administratrix for the true owner. On December 7, 1982 they loaned the true owner, LaoJico, 200 pesos, and took from him an agreement in writing whereby he promised to sell them the said property for 500 pesos, an agreement which was never consummated however, because he died a short time thereafter. 
 


Issue: Whether or not Nietes can avail of his option to buy the property.

The defendants offered in evidence and certain other documents which tended to show that the title to said property was in Lao-Jico.

Held: Nietes can avail of the option to buy because he already expressed his intention to buy the property before the termination of the contract. The contention of the respondent that the full price of the property should first be paid before the option could be exercised is of no merit. The contract doesn’t provide such stipulation and as such, the provision of reciprocal obligations in obligations and contracts should prevail. Notice of the creditor's decision to exercise his option to buy need not be coupled with actual payment of the price, so long as this is delivered to the owner of the property upon performance of his part of the agreement.

Held: Trial Court refused to admit these documents in evidence because of the defendant’s own showing that the agreement to sell did not pass title or dominion over the property, and only gave the defendants a right to demand the fulfillment of the terms thereof, should it appear that the title was in fact in Lao-Jico.


Nietes had validly and effectively exercised his option to buy the property of Dr. Garcia, at least, on December 13, 1962, when he acknowledged receipt from Mrs. Nietes of the sum of P2,200 then delivered by her "in partial payment on the purchase of the property" described in the "Contract of Lease with Option to Buy"







No weight can be given to the defendants’ claim to title by prescription, for even if it were admitted that they had been in possession for the full prescriptive period, they took possession by virtue of the express permission of the deceased Francisca Hilario, and continued in possession by virtue of said permission until January 15, 1900, as appears from the above-mentioned certified copy of the statement under oath of one of the defendants, Timoteo Lanuza. (Art. 447, Civil Code.) 
 Neither the plaintiff nor defendants have proven title to the property in question, but that the plaintiff administrator is entitled to possession thereof; thus modified the judgment should be affiremed.

Barretto vs. Sta Marina WHOLE ARTICLE The material facts upon which our disposition of this appeal necessarily turns are set out at length in our opinion in the case of Barretto vs. Santa Marina, decided December 2, 1913 (26 Phil rep., 200). This court having ruled against the plaintiff's contention in the former case, he now sets up a claim for interest at the legal rate upon the amount of the purchase price of his share (participacion) in the business from the 1st day of July, 1909, to the 22d day of November, 1910, the day upon which it was turned over to him. The finding of facts, and the reasoning upon which we based our rulings in the former case, are manifestly conclusive in the present case as to the plaintiff's claim of a right to interest from the first of July, 1909, to the third of May, 1910. In the former case we held that the sale of plaintiff's share (participacion) in the tobacco factory was consummated on the latter date; that the valuation set upon his share (participacion) in business was determined as of that day by the committee charged with the duty of ascertaining the cash value of this share (participacion) in order to determine the exact amount which the parties had agreed upon as the purchase price to be paid therefor; and that the committee had included that the plaintiff's share of the profits of the business down to the third of May, 1910, in their estimate of the value of his share (participacion) in the business of that date. These rulings were made after a review of the same record which is now relied upon by the plaintiff in support of his claim of interest upon the amount fixed by the committee as the true value of his share (participacion) in the business. We find nothing in the record of the contention of counsel in this regard which would justify or necessitate a modification or reversal of the conclusions reached by us in our former opinion. Plaintiff's share (participacion) in the business having been sold on the 3rd day of May, 1910, for a stipulated price, that is to say, for its value on that day as fixed by the valuation committee, it is very clear that he is not entitled to interest on the amount fixed by the committee, prior to the date on which the sale was consummated (3rd of may, 1910). So also plaintiff's contention that he should be allowed interest on the amount of the purchase price from the date of the sale, May 3, 1910, down to the day upon which the money was actually turned over to him, November 22, 1910, cannot be sustained. Under the express terms of the agreement for the sale on May 3, 1910, the plaintiff agreed to accept, and the defendant to pay, the amount which the committee should find to be the true value of plaintiff's share (participacion) in the business as of that day. Under the agreement the defendant neither expressly nor impliedly obligated himself to pay interest on that amount pending the report of the committee. The only contractual obligation assumed by him was that he would pay the amount fixed by the committee in cash immediately upon the making of the award by the committee, and in accordance with its terms. The committee's report is dated November 14, 1910, and it appears that promptly upon the submission of this report, the amount awarded the plaintiff

(P280,025.16) was paid over by the defendant to the plaintiff in cash; and the letter of counsel for plaintiff dated November 17, 1910, tendering a formal deed of sale of plaintiff's share (participacion) in the business and making demand for the purchase price as fixed by the committee, read together with the formal deed of sale executed November 22, 1910, with its acknowledgment of the receipt of the purchase price, leaves no room for doubt that at that time the parties understood and accepted the purchase price therein set forth as full payment of plaintiff's share (participacion) in the business in exact conformity with the conditions imposed in the agreement consummated to May 3, 1910. The right to interest arises either by virtue of a contract or by way of damages for delay or failure (demora) to pay the principal on which interest is demanded, at the time when the debtor is obligated to make such payment. In the case at bar where was no contract, express or implied, for the payment of interest pending the award of the committee appointed to value the property sold on May 3, 1910, and there was no delay in the punctual compliance with defendant's obligation to make immediate payment, in cash, of the amount of the award, upon the filing of the report of the committee. We conclude that the judgment entered in the court below dismissing the complaint in this case sine die should be affirmed, with the costs of this instance against the appellant. So ordered. The plaintiff argued that if the agreement of May 3, 1910, was a perfected sale he cannot recover any profits after that date; while on the other hand the defendant concedes that if said agreement was only a promise to sell in the future it, standing alone, would not prevent recovery in this action.

UP vs Philab Facts: In the year 1979, UP decided to construct an integrated system of research organization known as the Research Complex. As part of the project, laboratory equipment and furniture were purchased for the National Institute of Biotechnology and Applied Microbiology (BIOTECH) at the UP Los Banos. The Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to fund the acquisition of the laboratory furniture, including the fabrication thereof. Lirio, the Executive Assistant of the FEMF, gave the go-signal to BIOTECH to contact a corporation to accomplish the project. On July 23, 1982, Dr. Padolina, the Executive Deputy Director of BIOTECH, arranged for Philippine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory furniture and deliver the same to BIOTECH for the BIOTECH Building Project, for the account of the FEMF. Lirio directed Padolina to give the go-signal to PHILAB to proceed with the fabrication of the laboratory furniture, and requested Padolina to forward the contract of the project to FEMF for its approval. In 1982, Padolina wrote Lirio and requested for the issuance of the purchase order and downpayment for the office and laboratory furniture for the project. Padolina also requested for copies of the shop drawings and a sample contract[5]for the project, but PHILAB failed to forward any sample contract. PHILAB made partial deliveries of office and laboratory furniture to BIOTECH after having been duly inspected by their representatives and FEMF Executive Assistant Lirio. On August 24, 1982, FEMF remitted P600,000 to PHILAB as downpayment for the laboratory furniture for the BIOTECH project and FEMF made another partial payment of P800,000 to PHILAB. UP, through Chancellor Javier and Gapud from FEMP executed a Memorandum of Agreement (MOA) in which FEMF agreed to grant financial support and donate sums of money to UP for the construction of buildings, installation of laboratory and other capitalization for the project, not to exceed P29,000,000.00. The MOA, additionally states that: (1)the foundation shall acquire and donate to the UNIVERSITY the site for the RESEARCH COMPLEX, (2) donate or cause to be donated to the UNIVERSITY the sum of P29,000,000.00, and (3) shall continue to support the activities of the RESEARCH COMPLEX. Navasero promised to submit the contract for the installation of laboratory furniture to BIOTECH but failed to do so. BIOTECH reminded Navasero but instead PHILAB submitted to BIOTECH an accomplishment report on the project and requested payment thereon. By May 1983, PHILAB had completed 78% of the project, amounting to P2,288,573.74 out of the total cost of P2,934,068.90. The FEMF had already paid forty percent (40%) of the total cost of the project. Padolina wrote Lirio and furnished him the progress billing from PHILAB.[10] FEMF made another partial payment, in check, ofP836,119.52 representing the already delivered laboratory and office furniture after the requisite inspection and verification thereof by representatives from the BIOTECH, FEMF, and PHILAB. FEMF failed to pay the bill and PHILAB reiterated its request for payment

through a letter however, there was no response from the FEMF. Philab appealed for the payment of its bill even on installment basis. Navasero wrote BIOTECH requesting for its much-needed assistance for the payment of the balance already due plus interest of P295,234.55 for its fabrication and supply of laboratory furniture. PHILAB asked Cory Aquino for help to secure the payment of the amount due from the FEMF. It was referred to then Budget Minister Romulo and referred the same to UP President Edgardo Angara on June 9, 1986. Raul P. de Guzman, the Chancellor of UP Los Baos, wrote then Chairman of the (PCGG) Jovito Salonga, submitting PHILABs claim to be officially entered as accounts payable as soon as the assets of FEMF were liquidated by the PCGG. Chancellor De Guzman wrote Navasero requesting for a copy of the contract executed between PHILAB and FEMF. Exasperated, PHILAB filed a complaint for sum of money and damages against UP and the latter denied liability and alleged that PHILAB had no cause of action against it because it was merely the donee/beneficiary of the laboratory furniture in the BIOTECH; and that the FEMF, which funded the project, was liable to the PHILAB for the purchase price of the laboratory furniture. UP specifically denied obliging itself to pay for the laboratory furniture supplied by PHILAB. Case was dismissed by lack of merit. Held: Petitioner argues that the CA overlooked the evidentiary effect and substance of the corresponding letters and communications which support the statements of the witnesses showing affirmatively that an implied contract of sale existed between PHILAB and the FEMF. The petitioner furthermore asserts that no contract existed between it and the respondent as it could not have entered into any agreement without the requisite public bidding and a formal written contract. The respondent, on the other hand, submits that the CA did not err in not applying the law on contracts between the respondent and the FEMF. It, likewise, attests that it was never privy to the MOA entered into between the petitioner and the FEMF. The respondent adds that what the FEMF donated was a sum of money equivalent to P29,000,000, and not the laboratory equipment supplied by it to the petitioner. The respondent submits that the petitioner, being the recipient of the laboratory furniture, should not enrich itself at the expense of the respondent. It bears stressing that the respondents cause of action is one for sum of money predicated on the alleged promise of the petitioner to pay for the purchase price of the furniture, which, despite demands, the petitioner failed to do. However, the respondent failed to prove that the petitioner ever obliged itself to pay for the laboratory furniture supplied by it. Hence, the respondent is not entitled to its claim against the petitioner. There is no dispute that the respondent is not privy to the MOA executed by the petitioner and FEMF; hence, it is not bound by the said agreement. Contracts take effect only between the parties and their assigns. A contract cannot be binding upon and cannot be enforced against one who is not a party to it, even if he is aware of such contract and has acted with knowledge

thereof. Likewise admitted by the parties, is the fact that there was no written contract executed by the petitioner, the respondent and FEMF relating to the fabrication and delivery of office and laboratory furniture to the BIOTECH. Based on the records, an implied-in-fact contract of sale was entered into between the respondent and FEMF. A contract implied in fact is one implied from facts and circumstances showing a mutual intention to contract. It arises where the intention of the parties is not expressed, but an agreement in fact creating an obligation. It is a contract, the existence and terms of which are manifested by conduct and not by direct or explicit words between parties but is to be deduced from conduct of the parties, language used, or things done by them, or other pertinent circumstances attending the transaction. To create contracts implied in fact, circumstances must warrant inference that one expected compensation and the other to pay. An implied-infact contract requires the parties intent to enter into a contract; it is a true contract. The conduct of the parties is to be viewed as a reasonable man would view it, to determine the existence or not of an implied-in-fact contract. The totality of the acts/conducts of the parties must be considered to determine their intention. An implied-in-fact contract will not arise unless the meeting of minds is indicated by some intelligent conduct, act or sign. Judgement is reversed.

Villanco Realty vs. Bormaheco 65 SCRA 352 Facts: Francisco Cervantes of Bormaheco Inc. agrees to sell to Villonco Realty a parcel of land and its improvements located in Buendia, Makati.Bormaheco made the terms and condition for the sale and Villonco returned it with some modifications.The sale is for P400 per square meter but it is only to be consummated after respondent shall have also consummated purchase of a property in Sta. Ana, Manila. Bormaheco won the bidding for the Sta.Ana land and subsequently bought the property.Villonco issued a check to Bormaheco amounting to P100,000 as earnest money. 26 days after signing the contract of sale, Bormaheco returned the P100,000 to Villonco with 10% interest for the reason that they are not sure yet if they will acquire the Sta.Ana property.Villonco rejected the return of the check and demanded for specific performance. Issue: WON Bormaheco is bound to perform the contract with Villonco. Held: The contract is already consummated when Bormaheco accepted the offer by Villonco. The acceptance can be proven when Bormaheco accepted the check from Villonco and then returned it with 10% interest as stipulated in the terms made by Villonco. On the other hand, the fact that Villonco did not object when Bormahecoencashed the check is a proof that it accepted the offer of Bormaheco. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract" (Art. 1482, Civil Code).

Velasco vs CA Facts: Lorenzo Velasco& Magdalena Estate, Inc. entered into a contract of sale involving a lot in New Manila for 100K.The agreement was that Lorenzo would give a down payment of 10K (as evidenced by a receipt) to be followed by 20K (time w/in which to make full down payment was not specified) and the balance of 70K would be paid in installments, the equal monthly amortization to be determined as soon as the 30K had been paid. Lorenzo paid the 10K but when he tendered payment for 20K, Magdalena refused to accept & refused to execute a formal deed of sale. Velasco filed a complaint for damages. Magdalena denied having any dealings/contractual relations w/ Lorenzo. It contends that a portion of the property was being leased by Lorenzo’s sister-in-law, Socorro Velasco who went to their office & they agreed to the sale of the property (30K down payment, 70K on installments +9% interest). Since Socorro was only able to pay10K, it was merely accepted as deposit & on her request, the receipt was made in the name of Lorenzo. Socorro failed to complete the down payment & neither has she paid the 70K. It was only 2 years after that she tendered payment for 20K & by then, Magdalena considered their offer to sell rescinded. According to Lorenzo, he had requested Socorro to make the necessary contracts & he had authorized her to make negotiations w/ Magdalena on her own name, as he doesn’t understand English. He also uses as evidence the receipt to prove that there already had been a perfected contract to sell as the annotations therein indicated that earnest money for 10K had been received & also the agreed price (100K, 30K dp&bal in 10 yrs) appears thereon. To further prove that it was w/ him & not w/ Socorro that Magdalena dealt with, he showed 5 checks drawn by him for payment of the lease of the property. Issue: WON there was a consummated sale? NO Held: The minds of the parties did not meet in regard to the matter of payment. It is admitted that they still had to meet and agree on how & when the down payment & installments were to be paid. Therefore, it cannot be said that a definite & firm sales agreement between the parties had been perfected. The definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding & enforceable contract of sale.The fact that Velasco delivered to Magdalena the sum of 10K as part of the down payment that they had to be pay cannot be considered as sufficient proof of the perfection of any purchase & sale agreement between the parties under Art 1428, NCC.

SPS DOROMAL VS CA FACTS: A parcel of land in Iloilo were co-owned by 7 siblings all surnamed Horilleno. 5 of the siblings gave a SPA to their niece Mary Jimenez, who succeeded her father as a co-owner, for the sale of the land to father and son Doromal. One of the co-owner, herein petitioner, Filomena Javellana however did not gave her consent to the sale even though her siblings executed a SPA for her signature. The co-owners went on with the sale of 6/7 part of the land and a new title for the Doromals were issued. Respondent offered to repurchase the land for 30K as stated in the deed of sale but petitioners declined invoking lapse in time for the right of repurchase. Petitioner also contend that the 30K price was only placed in the deed of sale to minimize payment of fees and taxes and as such, respondent should pay the real price paid which was P115, 250. Issue: WON the period to repurchase of petitioner has already lapsed. Held: Period of repurchase has not yet lapsed because the respondent was not notified of the sale. The 30-day period for the right of repurchase starts only after actual notice not only of a perfected sale but of actual execution and delivery of the deed of sale. The letter sent to the respondent by the other co-owners cannot be considered as actual notice because the letter was only to inform her of the intention to sell the property but not its actual sale. As such, the 30-day period has not yet commenced and the respondent can still exercise his right to repurchase. The respondent should also pay only the 30K stipulated in the deed of sale because a redemptioner’s right is to be subrogated by the same terms and conditions stipulated in the contract.

SALAS RODRIGUEZ VS LEUTERIO Facts: On September 24, 1920, the parties to this action entered into a contract by which the defendant agreed to sell, and the plaintiff to buy, seven thousand square meters of land in the barrio of Tuliahan, municipality of Caloocan, Rizal, for the consideration of P5,600, which was paid by the plaintiff in the act of transfer. At the time of this sale the particular lots contemplated as the subject of the sale had not been segregated, but the seller agreed to establish the lots with a special frontage on a principal thoroughfare as soon as the streets should be laid out in a projected new subdivision of the city. As time passed the seller was unable to comply with this part of the agreement and was therefore unable to place the purchaser in possession. The present action was accordingly instituted by the purchaser in the Court of First Instance of the Province of Rizal for the resolution (in the complaint improperly denominated rescission) of the contract and a return of double the amount delivered to the defendant as the purchase price of the land. The trial court decreed a rescission (properly resolution) of the contract and ordered the defense to return to the plaintiff the amount received, or the sum of P5,600, with legal interest from the date of the filing of the complaint. From this judgment the plaintiff appealed. Issue: WON the plaintiff is entitled to recover double the amount paid out by him as the purchase price of the land Held: Article 1454 of the Civil Code is relied upon by plaintiff-appellant as authority for claiming double the amount paid out by him. In this article it is declared that when earnest money or pledge is given to bind a contract of purchase and sale, the contract may be rescinded if the vendee should be willing to forfeit the earnest money or pledge or the vendor to return double the amount. This provision is clearly not pertinent to the case, for the reason that where the purchase price is paid in whole or in part, the payment cannot be considered to be either earnest money or pledge. In this connection the commentator Manresa observes that the delivery of part of the purchase should not be understood as constituting earnest money unless it be shown that such was the intention of the parties.

Mercado vs. Mercado (NO DIGEST)

SIA SUAN and GAW CHIAO vs.RAMON ALCANTARA Facts: On August 3, 1931, a deed of sale was executed by Rufino Alcantara and his sons Damaso Alcantara and Ramon Alcantara conveying to Sia Suan five parcels of land. Ramon Alcantara was then 17 years, 10 months and 22 days old. On August 27, 1931, Gaw Chiao (husband of Sia Suan) received a letter from Francisco Alfonso, attorney of Ramon Alcantara, informing Gaw Chiao that Ramon Alcantara was a minor and accordingly disavowing the contract. After being contacted by Gaw Chiao, however, Ramon Alcantara executed an affidavit in the office of Jose Gomez, attorney of Gaw Chiao, wherein Ramon Alcantara ratified the deed of sale. Sia Suan sold one of the lots to Nicolas Azores from whom Antonio Azores inherited the same. On August 8, 1940, an action was instituted by Ramon Alcantara in the Court of First Instance of Laguna for the annulment of the deed of sale as regards his undivided share in the two parcels of land. Said action was against Sia Suan and her husband Gaw Chiao, Antonio, Azores, Damaso Alcantara and Rufino Alcantara. the latter two being, respectively, the brother and father of Ramon Alcantara appealed to the Court of Appealed which reversed the decision of the trial court, on the ground that the deed of sale is not binding against Ramon Alcantara in view of his minority on the date of its execution. From this judgment Sia Suan and Gaw Chiao have come to us on appeal by certiorari. Issue: Whether or not the contract of sale between the parties valid? Held: The circumstance that, about one month after the date of the conveyance, the appellee informed the appellants of his minority, is of no moment, because appellee's previous misrepresentation had already estopped him from disavowing the contract. Said belated information merely leads to the inference that the appellants in fact did not know that the appellee was a minor on the date of the contract, and somewhat emphasizes appellee's had faith, when it is borne in mind that no sooner had he given said information than he ratified his deed of sale upon receiving from the appellants the sum of P500. Counsel for the appellees argues that the appellants could not have been misled as to the real age of the appellee because they were free to make the necessary investigation. The suggestion, while perhaps practicable, is conspicuously unbusinesslike and beside the point, because the findings of the Court of Appeals do not show that the appellants knew or could suspected appellee's minority. The Court of Appeals seems to be of the opinion that the letter written by the appellee informing the appellants of his minority constituted an effective disaffirmance of the sale, and that although the choice to disaffirm will not by itself avoid the contract until the courts adjudge the agreement to be invalid, said notice shielded the appellee from laches and consequent estoppel. This position is untenable since the effect of estoppel in proper cases is unaffected by the promptness with which a notice to disaffirm is made.

3 August 1931 conveying to Sia Suan five parcels of land is null and void insofar as the interest, share, or participation of Ramon Alcantara in two parcels of land is concerned, because on the date of sale he was 17 years, 10 months and 22 days old only. Consent being one of the essential requisites for the execution of a valid contract, a minor, such as Ramon Alcantara was, could not give his consent thereof. The only misrepresentation as to his age, if any, was the statement appearing in the instrument that he was of age. On 27 August 1931, or 24 days after the deed was executed, Gaw Chiao, the husband of the vendee Sia Suan, was advised by Atty. Francisco Alfonso of the fact that his client Ramon Alcantara was a minor. The fact that the latter, for and in consideration of P500, executed an affidavit, whereby he ratified the deed of sale, is of no moment. He was still minor. The majority opinion invokes the rule laid down in the case of Mercado et al. vs. Espiritu, 37 Phil., 215. The rule laid down by this Court in that case is based on three judgments rendered by the Supreme Court of Spain on 27 April 1960, 11 July 1868, and 1 March 1875. In these decisions the Supreme Court of Spain applied Law 6, Title 19, of the 6th Partida which expressly provides:

PADILLA, J., concurring: I concur in the result not upon the grounds stated in the majority opinion but for the following reasons: The deed of sale executed by Ramon Alcantara on

Fuentes v. Conrado Roca, G.R. 178902, April 2010 Facts: On, Oct 11, 1982, Tarciano Roca bought a 358-square meter lot in Zambales from his mother. Six years later in 1988, Tarciano offered to sell the lot to the peti-

The contract of sale involved in the case of Mercado vs. Espiritu, supra, was executed by the minors on 17 May 1910. The Law in force on this last-mentioned date was not Las Siete Partidas, 1 which was the in force at the time the cases decided by the Supreme Court of Spain referred to, but the Civil Code which took effect in the Philippines on 8 December 1889. As already stated, the Civil Code requires the consent of both parties for the valid execution of a contract (art. 1261, Civil Code). As a minor cannot give his consent, the contract made or executed by him has no validity and legal effect. There is no provision in the Civil Code similar to that of Law 6, Title 19, of the 6th Partida which is equivalent to the common law principle of estoppel. If there be an express provision in the Civil Code similar law 6, Title 19, of the 6th Partida, I would agree to the reasoning of the majority. The absence of such provision in the Civil Code is fatal to the validity of the contract executed by a minor. It would be illogical to uphold the validity of a contract on the ground of estoppel, because if the contract executed by a minor is null and void for lack of consent and produces no legal effect, how could such a minor be bound by misrepresentation about his age? If he could not be bound by a direct act, such as the execution of a deed of sale, how could he be bound by an indirect act, such as misrepresentation as to his age? The rule laid down in Young vs. Tecson, 39 O. G. 953, in my opinion, is the correct one. Nevertheless, as the action in this case was brought on 8 August 1940, the same was barred, because it was not brought within four (4) years after the minor had become of age, pursuant to article 1301 of the Civil Code. Ramon Alcantara became of age sometime in September 1934.

tioners Fuentes spouses through the help of Atty. Plagata who would prepare the documents and requirements to complete the sale. In the agreement between Tarciano and Fuentes spouses there will be a Php 60,000 down payment and Php 140,000 will be paid upon the removal of Tarciano of certain structures on the land and after the consent of the estranged wife of Tarciano, Rosario, would be attained. Atty. Plagata thus went about to complete such tasks and claimed that he went to Manila to get the signature of Rosario but notarized the document at Zamboanga . The deed of sale was executed January 11, 1989. As time passed, Tarciano and Rosario died while the Fuentes spouses and possession and control over the lot. Eight years later in 1997, the children of Tarciano and Rosario filed a case to annul the sale and reconvey the property on the ground that the sale was void since the consent of Rosario was not attained and that Rosarios’ signature was a mere forgery. The Fuentes spouses claim that the action has prescribed since an action to annul a sale on the ground of fraud is 4 years from discovery. The RTC ruled in favor of the Fuentes spouses ruling that there was no forgery, that the testimony of Atty. Plagata who witnessed the signing of Rosario must be given weight, and that the action has already prescribed. On the other hand, the CA reversed the ruling of stating that the action has not prescribed since the applicable law is the 1950 Civil Code which provided that the sale of Conjugal Property without the consent of the other spouse is voidable and the action must be brought within 10 years. Given that the transaction was in 1989 and the action was brought in 1997 hence it was well within the prescriptive period. Issues: 1. Whether or not Rosario’s signature on the document of consent to her husband Tarciano’s sale of their conjugal land to the Fuentes spouses was forged; 2. Whether or not the Rocas’ action for the declaration of nullity of that sale to the spouses already prescribed; and 3. Whether or not only Rosario, the wife whose consent was not had, could bring the action to annul that sale. Held: 1. The SC ruled that there was forgery due to the difference in the signatures of Rosario in the document giving consent and another document executed at the same time period. The SC noted that the CA was correct in ruling that the heavy handwriting in the document which stated consent was completely different from the sample signature. 2. Although Tarciano and Rosario was married during the 1950 civil code, the sale was done in 1989, after the effectivity of the Family Code. The Family Code applies to Conjugal Partnerships already established at the enactment of the Family Code. The sale of conjugal property done by Tarciano without the consent of Rosario is completely void under Art 124 of the family code. With that, it is a given fact that assailing a void contract never prescribes. On the argument that the action has already prescribed based on the discovery of the fraud, that prescriptive period applied

to the Fuentes spouses since it was them who should have assailed such contract due to the fraud but they failed to do so. On the other hand, the action to assail a sale based on no consent given by the other spouse does not prescribe since it is a void contract. 3. It is argued by the Spouses Fuentes that it is only the spouse, Rosario, who can file such a case to assail the validity of the sale but given that Rosario was already dead no one could bring the action anymore. The SC ruled that such position is wrong since as stated above, that sale was void from the beginning. Consequently, the land remained the property of Tarciano and Rosario despite that sale. When the two died, they passed on the ownership of the property to their heirs, namely, the Rocas. As lawful owners, the Rocas had the right, under Article 429 of the Civil Code, to exclude any person from its enjoyment and disposal.

Titan Construction Corporation vs. Manuel David and Martha David Facts: Manuel and Martha were married in March 25, 1957. In 1970, spouses acquired a lot located at White Plains which was registered in the name of Martha David married to Manuel David. In 1976, spouses separated de facto and no longer communicated with each other. In March 1995, Manuel discovered that Martha had previously sold the property to Titan through a deed of sale. Manuel filed a complaint for annulment of contract and reconveyance against Titan. He alleged that the sale executed by Martha in favor of titan was without his knowledge and consent and therefore void. Titan claimed that it was a buyer in good faith and for value because it relied on the SPA signed by Manuel which authorized Martha to dispose of the property on behalf of the spouses. Manuel claimed that the SPA was spurious and the signature purporting to be his was a forgery. Hence Martha has no authority to sell it. Issue: WoN the property is conjugal thus Martha doesn’t have the authority to sell it without the consent of Manuel. Held: YES, The property is part of the spouses’ conjugal partnership. Article 160. All property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. Manuel was not required to prove that the property was acquired with funds of the partnership. Rather, the presumption applies even when the manner in which the property was acquired does not appear. Here, we find that Titan failed to overturn the presumption that the property, purchased during the spouses’ marriage, was part of the conjugal partnership. In the absence of Manuel’s consent, the Deed of Sale is void. Since the property was undoubtedly part of the conjugal partnership, the sale to Titan required the consent of both spouses. Article 165 of the Civil Code expressly provides that "the husband is the administrator of the conjugal partnership".Likewise, Article 172 of the Civil Code ordains that "(t)he wife cannot bind the conjugal partnership without the husband’s consent, except in cases provided by law". Similarly, Article 124 of the Family Code requires that any disposition or encumbrance of conjugal property must have the written consent of the other spouse, otherwise, such disposition is void. The Special Power of Attorney purportedly signed by Manuel is spurious and void. Titan is not a buyer in good faith. Because at the face of the TCT it can be inferred that the said property is owned by Martha married to Manuel, thus it may deemed to be conjugal property.

SPOUSES REX AND CONCEPCION AGGABA vs. DIONISIO Z. PARULAN, JR. and MA. ELENA PARULAN Facts: Involved in this action are two parcels of land and their improvements in Parañaque City and registered under the name of Spouses Parulan, who have been estranged from one another. Real estate broker Atanacio offered the property to Spouses Aggabao who upon Atanacio’s insistence prevailed upon them, so that they and Atanacio met with Ma. Elena (Parulan’s wife) at the site of the property. During their meeting, Spouses Aggabao paid Ma. Elena earnest money amounting to P20,000 which she acknowledged with a handwritten receipt. Then and there, they agreed on the terms of how the buyers will pay the price of the property. Spouses Aggabao complied with all the terms with regard to the payment of the properties, but when Ma. Elena already needed to turn over the owner’s duplicate copies for both lands, she was able to turn over only one (which was successfully transferred to the name of spouses Aggabao). For the other one, she said that it is with a relative in HongKong but she promised to deliver it to the spouses in a week. Needless to say, she failed to do so and by doing their own verification, the spouses found out that said copy of title was in the hands of Dionisio’s brother. The spouses met with Dionisio’s brother, Atty. Parulan, who told them that he is the one with the power to sell the property. He demanded P800,000 for said property and gave the spouses several days to decide. When Atty. Parulan did not hear back from the spouses, he gave them a call, and was then informed that they have already paid the full amount to Ma. Elena. Subsequently, Dionisio, through Atty. Parulan, commenced an action praying for the declaration of the nullity of the deed of absolute sale executed by Ma. Elena, and the cancellation of the title issued to the petitioners by virtue thereof. ISSUE: Whether or not the sale of conjugal property made by Ma. Elena, by presenting a special power of attorney to sell (SPA) purportedly executed by respondent husband in her favor was validly made to the vendees. Held: No, the Court ruled that the sale of conjugal property without the consent of the husband was not merely voidable but void; hence, it could not be ratified. Spouses Aggabao also cannot use the defense that they are buyers in good faith because they did not exercise the necessary prudence to inquire into the wife’s authority to sell. The relevant part of Article 124 of the Family Code provides that: xxx In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal properties, the other spouse may assume sole powers of administration. Thesepowers do not include disposition or encumbrance without authority of the court or the written consent of the other spouse. In the absence of such authority or consent, the disposition or encumbrance shall be void.

Bravo-Guerrero vs. Bravo Facts: Spouses Mauricio and Simona Bravo owned two parcels of land in Makati City, Metro Manila. Simona executed a General Power of Attorney appointing Mauricio as her attorney-in-fact. In the GPA, Simona authorized Mauricio to "mortgage or otherwise hypothecate, sell, assign and dispose of any and all of my property, real, personal or mixed, of any kind whatsoever and wheresoever situated, or any interest therein xxx." Mauricio subsequently mortgaged the Properties to the Philippine National Bank (PNB) and Development Bank of the Philippines (DBP) for P10,000 and P5,000, respectively. Mauricio executed a Deed of Sale with Assumption of Real Estate Mortgage conveying the Properties to "Roland A. Bravo, Ofelia A. Bravo and Elizabeth Bravo” ("vendees"). The sale was conditioned on the payment of P1,000 and on the assumption by the vendees of the PNB and DBP mortgages over the Properties. However, the Deed of Sale was not annotated on the certificates. Neither was it presented to PNB and DBP. The mortage loans and the receipts for loan payments issued by PNB and DBP continued to be in Mauricio’s name even after his death. Edward, represented by his wife, Fatima Bravo, filed an action for the judicial partition of the Properties. Edward claimed that he and the other grandchildren of Mauricio and Simona are co-owners of the Properties by succession. Despite this, petitioners refused to share with him the possession and rental income of the Properties. Edward later amended his complaint to include a prayer to annul the Deed of Sale, which he claimed was merely simulated to prejudice the other heirs. ISSUE: WON Maurico who was only given a GPA by his wife was authorized to sell the property. HELD Yes. Simona authorized Mauricio to dispose of the Properties when she executed the GPA. True, Article 1878 requires a special power of attorney for an agent to execute a contract that transfers the ownership of an immovable. However, the Court has clarified that Article 1878 refers to the nature of the authorization, not to its form. Even if a document is titled as a general power of attorney, the requirement of a special power of attorney is met if there is a clear mandate from the principal specifically authorizing the performance of the act. In Veloso v. Court of Appeals, the Court explained that a general power of attorney could contain a special power to sell that satisfies the requirement of Article 1878, thus: An examination of the records showed that the assailed power of attorney was valid and regular on its face. It was notarized and as such, it carries the evidentiary weight conferred upon it with respect to its due execution. While it is true that it was denominated as a general power of attorney, a perusal thereof revealed that it stated an authority to sell, to wit:

"2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and

hereditaments or other forms of real property, more specifically TCT No. 49138, upon such terms and conditions and under such covenants as my said attorney shall deem fit and proper." Thus, there was no need to execute a separate and special power of attorney since the general power of attorney had expressly authorized the agent or attorney in fact the power to sell the subject property. The special power of attorney can be included in the general power when it is specified therein the act or transaction for which the special power is required. (Emphasis supplied) In this case, Simona expressly authorized Mauricio in the GPA to " sell, assign and dispose of any and all of my property, real, personal or mixed, of any kind whatsoever and wheresoever situated, or any interest therein xxx" as well as to "act as my general representative and agent, with full authority to buy, sell, negotiate and contract for me and in my behalf." Taken together, these provisions constitute a clear and specific mandate to Mauricio to sell the Properties. Even if it is called a "general power of attorney," the specific provisions in the GPA are sufficient for the purposes of Article 1878. These provisions in the GPA likewise indicate that Simona consented to the sale of the Properties.

FRANCISCO A. VELOSO vs. COURT OF APPEAL FACTS: Petitioner Francisco Veloso was the owner of a parcel of land situated in the district of Tondo, Manila, registered under his name, single. The said title was subsequently cancelled and a new one, Transfer Certificate of Title was issued in the name of Aglaloma B. Escario, married to Gregorio L. Escario. -Petitioner filed an action for annulment of documents, reconveyance of property with damages. -He alleged that he was the absolute owner of the subject property, and he never authorized anybody, not even his wife, to sell it. -Upon verification at the registry of deeds, he transfer of property was supported by a General Power of Attorney and Deed of Absolute Sale, executed by Irma Veloso, wife of the petitioner and appearing as his attorney-in-fact, and defendant Aglaloma Escario. Petitioner denied having executed the power of attorney and alleged that his signature was falsified. -Defendant Aglaloma Escario in her answer alleged that she was a buyer in good faith and denied any knowledge of the alleged irregularity. She allegedly relied on the general power of attorney of Irma Veloso which was sufficient in form and substance and was duly notarized. -Trial court adjudged defendant Aglaloma as the lawful owner of the property as she was deemed an innocent purchaser for value. The assailed general power of attorney was held to be valid and sufficient for the purpose. The trial court ruled that there was no need for a special power of attorney when the special power was already mentioned in the general one. . The court also stressed that plaintiff was not entirely blameless for although he admitted to be the only person who had access to the title and other important documents, his wife was still able to possess the copy. Petitioner Veloso filed his appeal with the Court of Appeals. The respondent court affirmed in toto the findings of the trial court. Hence, this petition ISSUE: W/N The Court of Appeals committed a grave error in not finding that the forgery of the power of attorney had been adequately proven, despite the preponderant evidence HELD: We find petitioner's contentions not meritorious. An examination of the records showed that the assailed power of attorney was valid and regular on its face. It was notarized and as such, it carries the evidentiary weight conferred upon it with respect to its due execution. While it is true that it was denominated as a general power of attorney, a perusal thereof revealed that it stated an authority to sell, to wit: 2. To buy or sell, hire or lease, mortgage or otherwise hypothecate lands, tenements and hereditaments or other forms of real property, more specifically TCT No. 49138, upon such terms and conditions and under such covenants as my said attorney shall deem fit and proper. Whether the instrument be denominated as "general power of attorney" or "special power of attorney", what matters is the extent of the power or powers contemplated upon the agent or attorney in fact. If the power is couched in general terms, then such power cannot go beyond acts of administration. However, where the power to sell is specific, it not being merely implied, much less couched in general terms, there can not be any doubt that the at-

torney in fact may execute a valid sale. An instrument may be captioned as "special power of attorney" but if the powers granted are couched in general terms without mentioning any specific power to sell or mortgage or to do other specific acts of strict dominion, then in that case only acts of administration may be deemed conferred. Further, the right of an innocent purchaser for value must be respected and protected, even if the seller obtained his title through fraud. The fact remains that the Certificate of Title, as well as other documents necessary for the transfer of title were in the possession of plaintiff's wife, Irma L. Veloso, consequently leaving no doubt or any suspicion on the part of the defendant as to her authority.

In addition, under the jurisprudence prevailing at the time of Benitos death, the rule was that while parents may be the guardians of their minor children, such guardianship did not extend to the property of their minor children. Parents then had no power to dispose of the property of their minor children without court authorization. Without authority from a court, no person could make a valid contract for or on behalf of a minor or convey any interest of a minor in land. Admittedly, Maria Baltazar showed no authorization from a court when she signed the Deed of Sale of August 26, 1948, allegedly conveying her childrens realty to Leon.

JOSEFINA VILLANUEVA-MIJARES vs. THE COURT OF APPEALS FACTS: Petitioners Josefina, Waldetrudes, Godofredo, Eduardo, Germelina, and Milagros are the legitimate children of the late Leon Villanueva. Petitioner Concepcion is his widow. Leon was one of eight (8) children of Felipe Villanueva, predecessor-in-interest of the parties in the present case.

Private respondents They are related by blood to the petitioners as descendants of Felipe. Leon held in trust for his co-heirs the property left by their late father. During Leons lifetime, his co-heirs made several seasonable and lawful demands upon him to subdivide and partition the property, but no subdivision took place. After the death of Leon, private respondents discovered that the shares of four of the heirs of Felipe was purchased by Leon as evidenced by a Deed of Sale executed on August 25, 1946 but registered only in 1971. Also, Leon had, sometime in July 1970, executed a sale and partition of the property in favor of his own children, herein petitioners. Private respondents then filed a case for partition with annulment of documents and/or reconveyance and damages. The latter contended that the sale in favor of Leon was fraudulently obtained through machinations and false pretenses. Thus, the subsequent sale of the lot by Leon to his children was null and void despite the OCT in his favor. Petitioners, for their part, claimed that the sale by Simplicio, Fausta, Nicolasa, and Maria Baltazar was a valid sale. Trial court rendered favorable decision to the herein petitioners. However, CA reversed the ruling of lower court as far as the authority of Maria Baltazar to convey any portion of her late husbands estate. Maria Baltazar had no authority to sell the portion of her late husbands share inherited by her then minor children since she had not been appointed their guardian. Respondent court likewise declared that as far as private respondents Procerfina, Prosperidad, Ramon and Rosa, were concerned, the Deed of Sale of August 25, 1946 was "unenforceable." Hence this petition. ISSUE: W/N the Deed of Sale unenforceable against the private respondents for being an unauthorized contract. HELD: We find no reversible error committed by the respondent appellate court in declaring the Deed of Sale unenforceable on the children of Maria Baltazar. Under the law then prevailing at the time of the demise of her spouse, her husbands share in the common inheritance pertained to her minor children who were her late husbands heirs and successors-in-interest. The old Civil Code governs the distribution and disposition of his intestate estate. Thereunder, the legitime of the children and descendants consisted of two-thirds (2/3) of the hereditary estate of the father and of the mother (first paragraph, Article 808); and the widower or widow, as the case may be, who, at the time of death of his or her spouse, was not divorced or if divorced, due to the fault of the deceased spouse, was entitled to a portion in usufruct equal to that which pertains as legitime to each of the legitimate children or descendants not bettered (Article 834, 1st paragraph.)" 


NAPOLEON D. NERI vs. HEIRS OF HADJI YUSOP UY AND JULPHA* IBRAHIM UY FACTS: Anunciacion Neri (Anunciacion) had seven children, two (2) from her first marriage with Gonzalo Illut (Gonzalo), namely: Eutropia and Victoria, and five (5) from her second marriage with Enrique Neri (Enrique), namely: Napoleon, Alicia, Visminda, Douglas and Rosa. Throughout the marriage of spouses Enrique and Anunciacion, they acquired several homestead properties with a total area of 296,555 square meters located in Samal, Davao del Norte, embraced by Original Certificate of Title Anunciacion died intestate. Her husband, Enrique, in his personal capacity and as natural guardian of his minor children executed an Extra-Judicial Settlement of the Estate with Absolute Deed of Sale on July 7, 1979, adjudicating among themselves the said homestead properties, and thereafter, conveying them to the late spouses Hadji Yusop Uy and Julpha Ibrahim Uy (spouses Uy) for a consideration of P 80,000.00. The children of Enrique filed a complaint for annulment of sale of the said homestead properties against spouses Uy (later substituted by their heirs) before the RTC assailing the validity of the sale for having been sold within the prohibited period. The complaint was later amended to include Eutropia and Victoria as additional plaintiffs for having been excluded and deprived of their legitimes as children of Anunciacion from her first marriage. The heirs of Uy countered that the sale took place beyond the 5-year prohibitory period from the issuance of the homestead patents. They also denied knowledge of Eutropia and Victoria’s exclusion from the extrajudicial settlement and sale of the subject properties, and interposed further the defenses of prescription and laches. RTC rendered a decision ordering, among others, the annulment of the extra-judicial settlement with absolute deed of sale. CA reversed the ruling of RTC ISSUE: VALIDITY OF THE "EXTRA JUDICIAL SETTLEMENT OF THE ESTATE WITH ABSOLUTE DEED OF SALE" AS FAR AS THE SHARES OF EUTROPIA AND VICTORIA WERE CONCERNED, THEREBY DEPRIVING THEM OF THEIR INHERITANCE HELD: The petition is meritorious. It bears to stress that all the petitioners herein are indisputably legitimate children of Anunciacion from her first and second marriages with Gonzalo and Enrique, respectively, and consequently, are entitled to inherit from her in equal shares, pursuant to Articles 979 and 980 of the Civil Code which read: ART. 979. Legitimate children and their descendants succeed the parents and other ascendants, without distinction as to sex or age, and even if they should come from different marriages. ART. 980. The children of the deceased shall always inherit from him in their own right, dividing the inheritance in equal shares. Hence, in the execution of the Extra-Judicial Settlement of the Estate with Absolute Deed of Sale in favor of spouses Uy, all the heirs of Anunciacion should have participated. Considering that Eutropia and Victoria were admittedly excluded and that then minors Rosa and Douglas were not properly

represented therein, the settlement was not valid and binding upon them and consequently, a total nullity. SEC. 7. Parents as Guardians. – When the property of the child under parental authority is worth two thousand pesos or less, the father or the mother, without the necessity of court appointment, shall be his legal guardian. When the property of the child is worth more than two thousand pesos, the father or the mother shall be considered guardian of the child’s property, with the duties and obligations of guardians under these Rules, and shall file the petition required by Section 2 hereof. For good reasons, the court may, however, appoint another suitable persons. Administration includes all acts for the preservation of the property and the receipt of fruits according to the natural purpose of the thing. Any act of disposition or alienation, or any reduction in the substance of the patrimony of child, exceeds the limits of administration. Thus, a father or mother, as the natural guardian of the minor under parental authority, does not have the power to dispose or encumber the property of the latter. Such power is granted by law only to a judicial guardian of the ward’s property and even then only with courts’ prior approval secured in accordance with the proceedings set forth by the Rules of Court.

DOMINGO D. RUBIAS vs. ISAIAS BATILLER FACTS: Before the war with Japan, Francisco Militante filed an application for registration of the parcel of land in question. After the war, the petition was heard and denied. Pending appeal, Militante sold the land to petitioner, his son-in-law. Plaintiff filed an action for forcible entry against respondent. Defendant claims the complaint of the plaintiff does not state a cause of action, the truth of the matter being that he and his predecessors-in-interest have always been in actual, open and continuous possession since time immemorial under claim of ownership of the portions of the lot in question. ISSUE: W/N the contract of sale between appellant and his father-in-law was void because it was made when plaintiff was counsel of his father-in-law in a land registration case involving the property in dispute HELD: The stipulated facts and exhibits of record indisputably established plaintiff's lack of cause of action and justified the outright dismissal of the complaint. Plaintiff's claim of ownership to the land in question was predicated on the sale thereof made by his father-in- law in his favor, at a time when Militante's application for registration thereof had already been dismissed by the Iloilo land registration court and was pending appeal in the Court of Appeals. Article 1491 of our Civil Code (like Article 1459 of the Spanish Civil Code) prohibits in its six paragraphs certain persons, by reason of the relation of trust or their peculiar control over the property, from acquiring such property in their trust or control either directly or indirectly and "even at a public or judicial auction," as follows: (1) guardians; (2) agents; (3) administrators; (4) public officers and employees; judicial officers and employees, prosecuting attorneys, and lawyers; and (6) others especially disqualified by law. Fundamental consideration of public policy render void and inexistent such expressly prohibited purchase (e.g. by public officers and employees of government property entrusted to them and by justices, judges, fiscals and lawyers of property and rights in litigation and submitted to or handled by them, under Article 1491, paragraphs (4) and (5) of our Civil Code) has been adopted in a new article of our Civil Code, viz, Article 1409 declaring such prohibited contracts as "inexistent and void from the beginning." Indeed, the nullity of such prohibited contracts is definite and permanent and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In his aspect, the permanent disqualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians, agents and administrators (Article 1491, Civil Code), as to whose transactions it had been opined that they may be "ratified" by means of and in "the form of a new contact, in which cases its validity shall be determined only by the circumstances at the time the execution of such new contract. The causes of nullity which have ceased to exist cannot impair the validity of the new contract. Thus, the object which was illegal at the time of the first contract, may have already become lawful at the time of the ratification or second contract; or the service which was impossible may have become possible; or the intention which could not be ascertained may have been clarified by the parties. The ratification or second contract would then be valid from its execution; however, it does not retroact to the date of the first contract.”

JACOBUS BERNHARD HULST vs. PR BUILDERS, INC. G.R. No. 156364 ; September 3, 2007 AUSTRIA-MARTINEZ, J. Facts: Jacobus Bernhard Hulst and his spouse, Dutch nationals, entered into a Contract to Sell with PR Builders, Inc. for the purchase of a 210-sq m residential unit in respondent's townhouse project in Batangas. When respondent failed to comply with its verbal promise to complete the project by June 1995, the spouses Hulst filed before the Housing and Land Use Regulatory Board (HLURB) a complaint for rescission of contract with interest, damages and attorney's fees. HLURB rendered a Decision in favor of the spouses. A writ of execution was ordering the sheriff to execute the judgment and the levy the property was executed. But upon the motion of the respondent, the levy was set aside, leaving only the respondent's personal properties to be levied first. The Sheriff set a public auction of the said levied properties. the respondent filed a motion to quash Writ of levy on the ground that the sheriff made an over levy since the aggregate appraised value of the properties at P6,500 per sq m is P83,616,000. Instead of resolving the objection of the respondent's regarding the auction, the Sheriff proceeded with the auction since there was no restraining order from the HLURB. The 15 parcels of land was then awarded to Holly Properties Realty at a bid of P5,450,653. On the same day, the Sheriff remitted the legal fees and submitted to contracts of sale to HLURB, however, he then received orders to suspend proceedings on the auction for the reason that the market value of the properties was not fair. There was disparity between the appraised value and the value made by the petitioner and the Sheriff, which should've been looked into by the Sheriff before making the sale. While an inadequacy in price is not a ground to annul such sale, the court is justified to such intervention where the price shocks the conscience Issue: Whether or not the sale may be annulled on the basis that it was inadequately priced Held: Under Article 1414, one who repudiates the agreement and demands his money before the illegal act has taken place is entitled to recover. Petitioner is therefore entitled to recover what he has paid, although the basis of his claim for rescission, which was granted by the HLURB, was not the fact that he is not allowed to acquire private land under the Philippine Constitution. But petitioner is entitled to the recovery only of the amount of P3,187,500.00, representing the purchase price paid to respondent. No damages may be recovered on the basis of a void contract; being nonexistent, the agreement produces no juridical tie between the parties involved. Further, petitioner is not entitled to actual as well as interests thereon, moral and exemplary damages and attorney's fees. The HLURB Decision resulted in the unjust enrichment of petitioner at the expense of respondent. Petitioner received more than what he is entitled to recover under the circumstances.

IN RE: PETITION FOR SEPARATION OF PROPERTY ELENA BUENAVENTURA MULLER vs. HELMUT MULLER G.R. No. 149615 August 29, 2006 YNARES-SANTIAGO, J. Facts: Petitioner Elena Buenaventura Muller and respondent Helmut Muller were married in Hamburg, Germany. The couple resided in Germany at a house owned by respondent’s parents but decided to move and reside permanently in the Philippines. Respondent had inherited a house in Germany from his parents which he sold and used the proceeds for the purchase of a parcel of land in Antipolo, Rizal at the cost of P528,000.00 and the construction of a house amounting to P2,300,000.00. The Antipolo property was registered in the name of petitioner. The spouses eventually separated and the trial court rendered a decision which terminated the regime of absolute community of property between the petitioner and respondent and decreed the separation of properties between them and ordered the equal partition of personal properties located within the country, excluding those acquired by gratuitous title during the marriage. With regard to the Antipolo property, the court held that it was acquired using paraphernal funds of the respondent. However, it ruled that respondent cannot recover his funds because the property was purchased in violation of Section 7, Article XII of the Constitution.

CELSO R. HALILI and ARTHUR R. HALILI vs. COURT OF APPEALS, HELEN MEYERS GUZMAN, DAVID REY GUZMAN and EMILIANO CATANIAG G.R. No. 113539 March 12, 1998 PANGANIBAN, J Facts: Simeon de Guzman, an American citizen, died sometime in 1968, leaving real properties in the Philippines. His forced heirs were his widow, defendant appellee Helen Meyers Guzman, and his son, defendant appellee David Rey Guzman, both of whom are also American citizens. On August 9, 1989, Helen executed a deed of quitclaim, assigning, transferring and conveying to David Rey all her rights, titles and interests in and over six parcels of land which the two of them inherited from Simeon. David Rey Guzman sold said parcel of land to defendant-appellee Emiliano Cataniag. Petitioners, who are owners of the adjoining lot, filed a complaint before the Regional Trial Court of Malolos, Bulacan, questioning the constitutionality and validity of the two conveyances between Helen Guzman and David Rey Guzman, and between the latter and Emiliano Cataniag and claiming ownership thereto based on their right of legal redemption.

Issue: Whether or not Elena should reimburse Helmut for the amount used for the acquisition of the land

Ruling: Article XII, Section 7 of the Constitution provides that “Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain” The capacity to acquire private land is made dependent upon the capacity to acquire or hold lands of the public domain. Private land may be transferred or conveyed only to individuals or entities qualified to acquire lands of the public domain. In fine, non-Filipinos cannot acquire or hold title to private lands or to lands of the public domain, except only by way of legal succession. In this case, there was a valid sale between the parties.

Held: 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. Respondent was aware of the constitutional prohibition and expressly admitted his knowledge thereof to this Court. He declared that he had the Antipolo property titled in the name of petitioner because of the said prohibition. The distinction made between transfer of ownership as opposed to recovery of funds is a futile exercise on respondent’s part. To allow reimbursement would in effect permit respondent to enjoy the fruits of a property which he is not allowed to own.

Issue: Whether or not there is a valid sale between De Guzman and Cataniag

CAMILO F. BORROMEO vs. ANTONIETTA O. DESCALLAR, G.R. No. 159310 February 24, 2009 PUNO, C.J.: Facts: Wilhelm Jambrich, an Austrian, arrived in the Philippines in 1983. He met respondent Antonietta Opalla-Descallar, a separated mother of two boys who was working as a waitress at St. Moritz Hotel. The two fell in love with each other and they were able to acquire some real properties in the Philippines composed of several houses and lots which the' bought from Agro Macro Development Corporation. The deed of sale of said real properties were placed in the name of both Jambrich and Descallar as buyers, but were registered under the Torrens system in the name of Descallar alone as Jambrich is disqualified to own real properties in the country. The relationship turned sour so they got separated. Jambrich met petitioner Camilo F. Borromeo sometime in 1986. Petitioner was engaged in the real estate business and building and repairing speedboats as a hobby. In 1989, Jambrich purchased an engine and some accessories for his boat from petitioner, for which he became indebted to the latter for about P150,000.00. To pay for his debt, he sold his rights and interests in the Agro-Macro properties to petitioner for P250,000, as evidenced by a "Deed of Absolute Sale/Assignment." Issue: Whether or not there is valid sale between Jambrich and Borromeo Ruling: Jambrich has all authority to transfer all his rights, interests and participation over the subject properties to petitioner by virtue of the Deed of Assignment he executed on July 11, 1991. Respondent argued that aliens are prohibited from acquiring private land. However in the instant case, the transfer of land from Agro-Macro Development Corporation to Jambrich, who is an Austrian, would have been declared invalid if challenged, had not Jambrich conveyed the properties to petitioner who is a Filipino citizen. It is a well settled rule that if land is invalidly transferred to an alien who subsequently becomes a Filipino citizen or transfers it to a Filipino, the flaw in the original transaction is considered cured and the title of the transferee is rendered valid. Therefore the sale is valid

J.G. SUMMIT HOLDINGS, INC. vs. COURT OF APPEALS; COMMITTEE ON PRIVATIZATION, its Chairman and Members; ASSET PRIVATIZATION TRUST; and PHILYARDS HOLDINGS, INC., G.R. No. 124293 January 31, 2005 PUNO, J.: Facts: The National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (Kawasaki) for the construction, operation, and management of the Subic National Shipyard, Inc. (SNS), which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO). Under the JVA, NIDC and Kawasaki would maintain a shareholding proportion of 60% - 40%, respectively. One of the provisions of the JVA accorded the parties the right of first refusal should either party sell, assign or transfer its interest in the joint venture. On 25 November 1986, NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB). More than two months later, by virtue of Administrative Order 14, PNB's interest in PHILSECO was transferred to the National Government. Meanwhile, on 1986, President Corazon C. Aquino issued Proclamation 50 establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to and possession of, conserve, manage and dispose of non-performing assets of the National Government. On 27 February 1987, a trust agreement was entered into between the National Government and the APT by virtue of which the latter was named the trustee of the National Government's share in PHILSECO. In 1989, as a result of a quasi-reorganization of PHILSECO to settle its huge obligations to PNB, the National Government's shareholdings in PHILSECO increased to 97.41% thereby reducing Kawasaki's shareholdings to 2.59%. Exercising their discretion, the COP and the APT deemed it in the best interest of the national Issue: Whether or not the purchase of share in a land holding is valid Ruling: An "invitation to bid, there is a condition imposed upon the bidders to the effect that the bidding shall be subject to the right of the government to reject any and all bids subject to its discretion. No law disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land. Section 7. Save in cases of hereditary succession, no private lands shall be transferred or conveyed except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain. The petitioner further argues that "an option to buy land is void in itself but in a case the court stated that: To be sure, a lease to an alien for a reasonable period is valid. So is an option giving an alien the right to buy real property on condition that he is granted Philippine citizenship. Aliens are not completely excluded by the Constitution from the use of lands for residential purposes. Since their residence in the Philippines is temporary, they may be granted temporary rights such as a lease contract which is not forbidden by the Constitution. Should they desire to remain here forever and share our fortunes and misfortunes, Filipino citizenship is not impossible to acquire.

JG Summit Holdings, Inc. vs. CA GR No. 124293, 31 January 2005 Facts: National Investment and Development Corporation (NIDC), a government corporation, entered into a Joint Venture Agreement (JVA) with Kawasaki Heavy Industries, Ltd. of Kobe, Japan (KAWASAKI) for the construction, operation and management of the Subic National Shipyard, Inc. (SNS) which subsequently became the Philippine Shipyard and Engineering Corporation (PHILSECO). One of JVA’s salient features is the grant to the parties of the right of first refusal should either of them decide to sell, assign or transfer its interest in the joint venture. NIDC transferred all its rights, title and interest in PHILSECO to the Philippine National Bank (PNB). President Corazon C. Aquino issued Proclamation establishing the Committee on Privatization (COP) and the Asset Privatization Trust (APT) to take title to, and possession of, conserve, manage and dispose of non-performing assets of the National Government. APT was named the trustee of the National Government’s share in PHILSECO. In the interest of the national economy and the government, the COP and the APT deemed best to sell the National Government’s share in PHILSECO to private entities. APT and KAWASAKI agreed that the latter's right of first refusal under the JVA be "exchanged" for the right to top by five percent (5%) the highest bid for the said shares. They further agreed that KAWASAKI would be entitled to name a company in which it was a stockholder, which could exercise the right to top. KAWASAKI informed APT that Philyards Holdings, Inc. (PHI) would exercise its right to top. Petitioner J.G. Summit Holdings, Inc. submitted a bid with an acknowledgment of KAWASAKI/[PHILYARDS'] right to top. As petitioner was declared the highest bidder, the COP approved the sale. However, PHI offered to top the bid. Petitioner protested on the ground that no right of first refusal could be exercised in a public bidding or auction sale. Issue: Whether or not the right to top granted to KAWASAKI in exchange for its right of first refusal violate the principles of competitive bidding Held: NO. The right to top was a condition imposed by the government in the bidding rules, which was made known to all parties. It was a condition imposed on all bidders equally, based on the APT's exercise of its discretion in deciding on how best to privatize the government's shares in PHILSECO. It was not a whimsical or arbitrary condition plucked from the ether and inserted in the bidding rules but a condition which the APT approved as the best way the government could comply with its contractual obligations to KAWASAKI under the JVA and its mandate of getting the most advantageous deal for the government. The right to top had its history in the mutual right of first refusal in the JVA and was reached by agreement of the government and KAWASAKI. The right of first refusal over shares pertains to the shareholders whereas the capacity to own land pertains to the corporation. Hence, the fact that PHILSECO owns land cannot deprive stockholders of their right of first refusal. No law disqualifies a person from purchasing shares in a landholding corporation even if the latter will exceed the allowed foreign equity, what the law disqualifies is the corporation from owning land.

Regarding the 60%-40% corporation rule, the prohibition in the Constitution applies only to ownership of land. It does not extend to immovable or real property as defined under Article 415 of the Civil Code. Otherwise, we would have a strange situation where the ownership of immovable property such as trees, plants and growing fruit attached to the land would be limited to Filipinos and Filipino corporations only.

Clarin v. Rulona GR No. L-30786, 20 February 1984 Facts: Two exhibits were shown by the Petitioner. Exhibit A contains an authorization to survey the 10 hectares to be awarded to the respondents which the couple (Rulonas) purchased from the Clarins for 2,500 pesos. Exhibit B contains the acknowledgment of Clarin that Mr. Rulona paid 800 pesos as initial payment. The conditions of the sale were that a downpayment of P1,000.00 was to be made and then the balance of P1,500.00 was to be paid in monthly installment of P100.00. As shown by Exhibit B, the respondent delivered to the petitioner a downpayment of P800.00 and on the first week of June the amount of P200.00 was also delivered thereby completing the downpayment of P1,000.00. On the first week of August, another delivery was made by the respondent in the amount of P100.00 as payment for the first installment. Respondent further alleged that despite repeated demands to let the sale continue and for the petitioner to take back the six postal money orders, the latter refused to comply. petitioner alleged that while it is true that he had a projected contract of sale of a portion of land with the respondent, such was subject to the following conditions: (1) that the contract would be realized only if his co-heirs would give their consent to the sale of a specific portion of their common inheritance from the late Aniceto Clarin before partition of the said common property and (2) that should his co-heirs refuse to give their consent, the projected contract would be discontinued or would not be realized. The trial court and CA ruled in favor of the respondent. Hence, this petition. Issue: Whether or not there has been a perfected contract of sale between petitioner and respondent Held: YES. While it is true that Exhibits A and B are, in themselves, not contracts of sale, they are, however, clear evidence that a contract of sale was perfected between the petitioner and the respondent and that such contract had already been partially fulfilled and executed. A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. Such contract is binding in whatever form it may have been entered into. Construing Exhibits A and B together, it can be seen that the petitioner agreed to sell and the respondent agreed to buy a definite object, that is, ten hectares of land which is part and parcel of Lot 20 PLD No. 4, owned in common by the petitioner and his sisters although the boundaries of the ten hectares would be delineated at a later date. The parties also agreed on a definite price which is P2,500.00. Exhibit B further shows that the petitioner has received from the respondent as initial payment, the amount of P800.00. Hence, it cannot be denied that there was a perfected contract of sale between the parties and that such contract was already partially executed when the petitioner received the initial payment of P800.00. The latter's acceptance of the payment clearly showed his consent to the contract thereby precluding him from rejecting its binding effect.

Carabeo v. Spouses Dingco GR No. 190823, 4 April 2011 Facts: Domingo Carabeo (petitioner) entered into a contract denominated as "Kasunduan sa Bilihan ng Karapatan sa Lupa" with Spouses Norberto and Susan Dingco (respondents) whereby petitioner agreed to sell his rights over a 648 square meter parcel of unregistered land situated in Orani, Bataan to respondents for P38, 000. Respondents tendered their initial payment of P10, 000 upon signing of the contract, the remaining balance to be paid on September 1990. Respondents were later to claim that when they were about to hand in the balance of the purchase price, petitioner requested them to keep it first as he was yet to settle an on-going "squabble" over the land. Respondents learned that the alleged problem over the land had been settled and that petitioner had caused its registration in his name. They thereupon offered to pay the balance but petitioner declined. Respondent filed a complaint for specific performance before the Regional Trial Court (RTC) of Balanga, Bataan. Issue: Whether or not the contract of sale contains a determinate object Held: YES. Even though the kasunduan did not specify the technical boundaries of the property, it did not render the sale a nullity. The requirement that a sale must have for its object a determinate thing is satisfied as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties. As shown by the kasunduan, there is no doubt that the object of the sale is determinate. Respondents are pursuing a property right arising from the kasunduan, whereas petitioner is invoking nullity of the kasunduan to protect his proprietary interest. Assuming arguendo, however, that the kasunduan is deemed void, there is a corollary obligation of petitioner to return the money paid by respondents, and since the action involves property rights, it survives.

Tanedo v. CA GR No. 104482, 22 January 1996 Facts: Lazardo Tañedo executed a notarized deed of absolute sale in favor of his eldest brother, Ricardo Tañedo, and the latter's wife, Teresita Barera, private respondents herein, whereby he conveyed to the latter in consideration of P1,500.00 a lot in Gerona, Tarlac stating that it is his future inheritance from his parents. Upon the death of his father, Lazaro executed an "Affidavit of Conformity" re-affirm, respect, acknowledge and validate the sale he made. Ricardo learned that Lazaro sold the same property to his children, petitioners herein, through a deed of sale. Petitioners filed a complaint for rescission (plus damages) of the deeds of sale executed by Lazaro in favor of private respondents covering the property inherited by Lazaro from his father. Lazaro testified that he sold the property to Ricardo. Both the trial court and the CA ruled in favor of the respondents. Issue: Whether or not a sale of future inheritance valid? Held: NO. Pursuant to Article 1347 of the Civil Code, "(n)o contract may be entered into upon a future inheritance except in cases expressly authorized by law." Consequently, said contract made in 1962 conveying one hectare of his future inheritance is not valid and cannot be the source of any right nor the creator of any obligation between the parties. Hence, the "affidavit of conformity" dated February 28, 1980, insofar as it sought to validate or ratify the 1962 sale, is also useless and, in the words of the respondent Court, "suffers from the same infirmity." Even private respondents in their memorandum concede this. However, the documents which followed after the death of Lazaro’s father in favor of private respondents are material. These two documents were executed after the death of Matias (and his spouse) and after a deed of extra-judicial settlement of his (Matias') estate was executed, thus vesting in Lazaro actual title over said property.

Atty. Pedro M. Ferrer vs Spouses Alfredo Diaz and Imelda Diaz, Reina Comandante and Spouses Bienvenido Pangan and Elizabeth Panga GR No. 165300, April 23, 2010 Facts:Petitioner Atty. Ferrer claimed in his complaint that on May 7, 1999, the Diazes, as represented by their daughter Comandante, through a Special Power of Attorney (SPA),obtained from him a loan of P1,118,228.00. The loan was secured by a Real Estate Mortgage Contract by way of second mortgage over Transfer Certificate of Title (TCT) No. RT6604 and a Promissory Note payable within six months or up to November 7, 1999. Comandante also issued to petitioner postdated checks to secure payment of said loan. Petitioner further claimed that prior to this or on May 29, 1998, Comandante, for a valuable consideration of P600,000.00, which amount formed part of the abovementioned secured loan, executed in his favor an instrument entitled Waiver of Hereditary Rights and Interests Over a Real Property (Still Undivided).In her Reply, respondent alleged that sometime in 1998, she sought the help of petitioner with regard to the mortgage with a bank of her parents lot located at No. 6, Rd. 20, Project 8, Quezon City and covered by TCT No. RT6604. She also sought financial accommodations from the couple on several occasions which totaled P500,000.00. Comandante, however, claimed that these loans were secured by chattel mortgages over her taxi units in addition to several postdated checks she issued in favor of petitioner. As she could not practically comply with her obligation, petitioner and his wife, presented to Comandante sometime in May 1998 a document denominated as Waiver of Hereditary Rights and Interests Over a Real Property (Still Undivided) pertaining to a waiver of her hereditary share over her parents’ property. The Pangans, on the other hand, asserted that the annotation of petitioners adverse claim on TCT No. RT6604 cannot impair their rights as new owners of the subject property. They claimed that the Waiver of Hereditary Rights and Interests O ver a Real Property (Still Undivided) upon which petitioners adverse claim is anchored cannot be the source of any right or interest over the property considering that it is null and void under paragraph 2 of Article 1347 of the Civil Code. Issue: Is Comandantes waiver of hereditary rights valid? Is petitioners adverse claim based on such waiver likewise valid and effective? Held: No. Pursuant to the second paragraph of Article 1347 of the Civil Code,no contract may be entered into upon a future inheritance except in cases expressly authorized by law. For the inheritance to be considered future, the succession must not have been opened at the time of the contract. A contract may be classified as a contract upon future inheritance, prohibited under

the second paragraph of Article 1347, where the following requisites concur: 1)That the succession has not yet been opened. (2) (3)That the object of the contract forms part of the inheritance; and, That the promissor has, with respect to the object, an expectancy of a right which is purely hereditary in nature. In this case, there is no question that at the time of execution of Comandantes Waiver of Hereditary Rights and Interest Over a Real Property (Still Undivided), succession to either of her parents properties has not yet been opened since both of them are still living. With respect to the other two requisites, both are likewise present considering that the property subject matter of Comandantes waiver concededly forms part of the properties that she expect to inherit from her parents upon their death and, such expectancy of a right, as shown by the facts, is undoubtedly purely hereditary in nature. From the foregoing, it is clear that Comandante and petitioner entered into a contract involving the formers future inheritance as embodied in the Waiver of Hereditary Rights and Interest Over a Real Property (Still Undivided) executed by her inpetitioners favor. Hence, the Waiver of Hereditary Rights and Interest Over a Real Property (Still Undivided) executed by Comandante in favor of petitioner as not valid and that same cannot be the source of any right or create an obligation between them for being violative of the second paragraph of Article 1347 of the Civil Code.

HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA vs. VICENTE RODRIGUEZ G.R. No. 135634 May 31, 2000 Facts: Juan San Andres was the registered owner of Lot No. 1914-B1335, as situated in Liboton, Naga City. On September 28, 1964, he sold a portion thereof, consisting of 345 square meters, to respondent Vicente S. Rodriguez for P2,415.00. The sale is evidenced by a Deed of Sale.Upon the death of Juan San Andres on May 5, 1965, Ramon San Andres was appointed judicial administrator of the decedent's estate. Ramon San Andres engaged the services of a geodetic engineer, Jose Peñero, to prepare a consolidated plan of the estate. Engineer Peñero also prepared a sketch plan of the 345-square meter lot sold to respondent. From the result of the survey, it was found that respondent had enlarged the area which he purchased from the late Juan San Andres by 509 square meters.Accordingly, the judicial administrator sent a letter,dated July 27, 1987, to respondent demanding that the latter vacate the portion allegedly encroached by him. However, respondent refused to do so, claiming he had purchased the same from the late Juan San Andres. Thereafter, on November 24, 1987, the judicial administrator brought an action, in behalf of the estate of Juan San Andres, for recovery of possession of the 509 lot. Respondent alleged that the full payment of the 509square meter lot would be effected within five (5) years from the execution of a formal deed of sale after a survey is conducted over said property. He further alleged that with the consent of the former owner, Juan San Andres, he took possession of the same and introduced improvements thereon as early as 1964. Respondent Vicente Rodriguez died on August 15, 1989 and was substituted by his heirs. Bibiana B. Rodriguez, widow of respondent Vicente Rodriguez, testified that they had been in possession of the 509 square -meter lot since 1964 when the late Juan San Andres signed the receipt. She testified that they did not know at that time the exact area sold to them because they were told that the same would be known after the survey of the subject lot. Petitioner contends,that the "property subject of the sale was not described with sufficient certainty such that there is a necessity of another agreement between the parties to finally ascertain the identity; size and purchase price of the property which is the object of the alleged sale. Issue: (1)Whether or not the object of the contract is determinate?

(2)Is the contract of sale between the parties absolute? Held: (1)Yes. There is no dispute that respondent purchased a portion of Lot 1914-middle of Lot 1914-B-B-2 consisting of 345 square meters. This portion is located in the 2, which has a total area of 854 square meters, and is clearly what was referred to in the receipt as the "previously paid lot." Since the lot subsequently sold to respondent is said to adjoin the "previously paid lot" on three sides thereof, the subject lot is capable of being determined without the need of any new contract. The fact that the exact area of these adjoining residential lots is subject to the result of a survey does not detract from the fact that they are determinate or determinableConcomitantly, the object of the sale is certain and determinate. Under Article 1460 of the New Civil Code, a thing sold is determinate if at the time the contract is entered into, the thing is capable of being determinate without necessity of a new or further agreement betwe en the parties. Here, this definition finds realization. Appellee's Exhibit "A" affirmingly shows that the original 345 sq. m. portion earlier sold lies at the middle of Lot 1914-of the said Lot 19 14-B-B-2 surrounded by the remaining portion 2 on three (3) sides, in the east, in the west and in the north. The northern boundary is a 12 meter road. Conclusively, therefore, this is the only remaining 509 sq. m. portion of Lot 1914 Rod-B-2 surrounding the 345 sq. m. lot initially purchased by Rodriguez. It is quite definite, determinate and certain. (2)Yes.A deed of sale is considered absolute in nature where there is neither a stipulation in the deed that title to the property sold is reserved in the seller until full payment of the price, nor one giving the vendor the right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. In this case, there is no reservation of ownership nor a stipulation providing for a unilateral rescission by either party. In fact, the sale was consummated upon the delivery of the lot to respondent. Thus, Art. 1477 provides that the ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof.

Filinvest Land, Inc., Efren C. Gutierrez and Lina De Guzman –Ferrer vs Abdul Backy Abehera et al., GR No. 193747 June 5, 2013 Facts: Respondents were grantees of agricultural public lands located in Tambler, General Santos City through Homestead and Fee patents sometime in 1986 and 1991. Negotiations were made by petitioner, represented by Lina de Guzman-Ferrer with the patriarch of the Ngilays, Hadji Gulam Ngilay sometime in 1995. Eventually, a Deed of Conditional Sale of the said properties in favor of petitioner Filinvest Land, Inc. was executed. Upon its execution, respondents were asked to deliver to petitioner the original owner's duplicate copy of the certificates of title of their respective properties. Respondents received the downpayment for the properties on October 28, 1995. A few days after the execution of the aforestated deeds and the delivery of the corresponding documents to petitioner, respondents came to know that the sale of their properties was null and void, because it was done within the period that they were not allowed to do so and that the sale did not have the approval of the Secretary of the Department of Environment and Natural Resources (DENR) prompting them to file a case for the declaration of nullity of the deeds of conditional and absolute sale of the questioned properties. The RTC ruled in favor of Filinvest Land, Inc. and upheld the sale of all the properties in litigation. It found that the sale of those properties whose original certificates of title were issued by virtue of the 1986 Patents was valid.. As to those patents awarded in 1991, the same court opined that since those properties were the subject of a deed of conditional sale, compliance with those conditions is necessary for there to be a perfected contract between the parties.. The CA, nullified the disposition of those properties granted through patents in 1991 . CA ruled that the contract of sale between the parties was a perfected contract, hence, the parties entered into a prohibited conveyance of a homestead within the prohibitive period of five years from the issuance of the patent. Issue: Whether the conditional sale involving the 1991 patents violated the prohibition against alienation of homesteads under the Public Land Act. Held: Yes. The five year prohibitory period following the issuance of the homestead year patent is provided under Section 118 of Commonwealth Act No. 141, as amended by Commonwealth Act No. 456,

otherwise known as the Public Land Act. It bears stressing that the law was enacted to give the homesteader or patentee every chance to preserve for himself and his family the land that the State had gratuitously given to him as a reward for his labour in cleaning and cultivating it. Its basic objective, as the Court had occasion to stress, is to promote public policy that is to provide home and decent living for destitute, aimed at providing a class of independent small landholders which is the bulwark of peace and order. Hence, any act which would have the effect of removing the property subject of the patent from the hands of a grantee will be struck down for being violative of the law. In the present case, the negotiations for the purchase of the properties covered by the patents issued in 1991 were madein 1995 and, eventually, an undated Deed of Conditional Sale was executed. On October 28, 1995, respondents received the downpayment of P14,000.000.00 for the properties covered by the patents issued in 1991. Applying the five year prohibition, the properties covered by the patent issued on November 24, 1991 could only be alienated after November 24, 1996. Therefore, the sale, having been consummated on October 28, 1995, or within the five-year prohibition, is as ruled by the CA, void. The prohibition does not distinguish between consummated and executory sale. The conditional sale entered into by the parties is still a conveyance of the homestead patent.And, even assuming that the disputed sale was not yet perfected or consummated, still, the transaction cannot be validated. The prohibition of the law on the sale or encumbrance of the homestead within five years after the grant is MANDATORY. To repeat, the conveyance of ahomestead before the expiration of the fiveyear prohibitory period following the issuance of the homestead patent is null and void and cannot be enforced, for it is not within the competence of any citizen to barter away what public policy by law seeks t o preserve.

Joselito C. Borromeo vs Juan T. Mina Gr No, 193747, June 5,2013 Facts: Subject of this case is a 1.1057 hectare parcel of agriculture land, situated in Barangay Magsaysay, Naguilian, Isabela, denominated as Lot No. 5378 and covered by Certificate of Title (TCT) No. EP-Transfer 43526,4 registered in the name of respondent (subject property). It appears from the foregoing TCT that respondent’s title over the said property is based on Emancipation Patent No. 393178 issued by the Department of Agrarian Reform (DAR) on May 2, 1990. Petitioner filed a Petition before the Provincial Agrarian Reform Office (PARO) of Isabela, seeking that: (a) his landholding over the subject property (subject landholding) be exempted from the coverage of the government’s OLT program under Presidential Decree No. 27 dated October 21, 19727 (PD 27); and (b) respondent’s emancipation patent over the subject property be consequently revoked and cancelled.To this end, petitioner alleged that he purchased the aforesaid property from its previous owner, one Serafin M. Garcia (Garcia), as evidenced by a deed of sale notarized on February 19, 1982 (1982 deed of sale). For various reasons, however, he was not able to effect the transfer of title in his name. Subsequently, to his surprise, he learned that an emancipation patent was issued in respondent’s favor without any notice to him. Issue: Whether or not the sale of subject property to petitioner is valid? Held: No.PD 27 prohibits the transfer of ownership over tenanted rice and/or corn lands after October 21, 1972 except only in favor of the actual tenant tillers thereon. Records reveal that the subject landholding fell under the coverage of PD 27 on October 21, 1972 and as such, could have been subsequently sold only to the tenant thereof, i.e., the respondent. Notably, the status of respondent as tenant is now beyond dispute considering petitioner’s admission of such fact.Likewise, as earlier discussed, petitioner is tied down to his initial theory that his claim of ownership over the subject property was based on the 1982 deed of sale. Therefore, as Garcia sold the property in 1982 to the petitioner who i s evidently not the tenant beneficiary of the same, the said transaction is null and void for -being contrary to law. In consequence, petitioner cannot assert any right over the subject landholding, such as his present claim for landholding exemption, because his title springs from a null and void source. A void contract is equivalent to nothing; it produces no civil effect; and it does not create, modify or extinguish a juridical relation.Hence, notwithstanding the erroneous identification of the subject landholding by the MARO as owned by Cipriano Borromeo, the fact remains that petitioner had no right to file a petition for landholding exemption since the sale of the said property to him by Garcia in 1982 is null and void.

REPUBLIC V. PHIL. RESOURCES DEV. CORP FACTS: The Republic brought an action against Apostol for the collection of sum sowing to it for his purchase of Palawan Almaciga and other logs. His total debt amounted to some P34,000. PRDC intervened claiming that Apostol, as President of the Company, without prior authority took goods (steel sheets, pipes, bars, etc) from PRDC warehouse and appropriated them to settle his personal debts in favor of the government. The Republic opposed the intervention of PDRC, arguing that price is always paid in money and that payment in kind is no payment at all; hence , money and not the goods of PDRC are under dispute. ISSUE: WON payment in kind is equivalent to price paid in money RULING: Yes. Price may be paid in money or its equivalent (the goods). Payment need not be in the for of money. The price for the goods have in fact, been assessed and determined. PDRC thus has a substantial interest in the case and must be permitted to intervene- it's goods paid out without authority being under dispute in this case.

BAGNAS V. CA FACTS: Hilario died with no will and was survived only by collateral relatives. Bagnas (et al) were the nearest kin. Retonil (et al) were also relatives but to a farther extent. They claimed ownership over 10 lots from the estate of Hilario presenting notarized and registered estate of Hilario presenting notarized and registered Deeds of Sale where the consideration for the lands was P1 and services rendered, and to be rendered. Bagnas argued that the sales were fictitious, while Retonil claimed to have done many things for Hilario - such as nursing him on his deathbed. ISSUE: WON there was a valid contract of sale RULING: No. At the onset, if a contract has no considerate, it is not merely voidable, but void- and even in collateral heirs may assail the contract. In this case, there was no consideration. Price must be in money or its equivalent; services are not equivalent of money insofar as the requirement of price is concerned. A contract is not one for sale if the consideration consists of services. Not only are they vague, they are unknown and not susceptible of determination without a new agreement between the parties.

GOQUILAY V. SYCIP FACTS: >Tan Sin An and Goquiolay entered into a general commercial partnership under the name "Tan Sin An and Antonio Goquiolay" for the purpose of dealing in real estate. >The agreement lodged upon Tan Sin An as the sole management of partnership affairs. >The lifetime of the partnership was fixed at ten years and the Artticles of Copartnership stipulated that in the event of death of any of the partners before the expiration of the term, the partnership will not be dissolved but will be continued by the heirs or assigns of the deceased partner. But the partnership could be dissolved upon mutual agreement in writing of the partners. >The plaintiffs challenged the authority of Kong Chai Pin to sell the partnership properties on the ground that she had no authority to sell because even granting that she became a partner upon the death of Tn Sin An the power of attorney granted in favor of the latter expired after his death. ISSUE: WON in sale of partnership properties, consent of all partners are necessary. RULING: No. As to whether or not the consent of the other partners was necessary to perfect the sale of the partnership properties, the Court believes that it is not. Strangers dealing with a partnership have the right to assume, in the absence of restrictive clauses in the co- partnership agreement, that every general partner has power to bind the partnership.

Ladanga v. CA Facts: Clemencia Aseneta, a spinster, had a nephew named Bernardo and a niece named Salvacion. She legally adopted Bernardo in 1961. On April 6, 1974, Clemencia signed 9 deeds of sale in favor of Salvacion for various real properties, one being the Paco property which is the subject of this petition, and purportedly sold for P26,000. In May 1975, Bernardo, as guardian of Clemencia, filed a case for reconveyance of the Paco property. Clemencia testified that she had not received a single centavo from Salvacion. The trial court, affirmed by the Court of Appeals, declared the sale void. Issue: Whether the sale is void for lack of consideration Held: The Ladanga spouses contend that the Appellate Court disregarded the rule on burden of proof. This contention is devoid of merit because Clemencia herself testified that the price of P26,000 was not paid to her. The burden of the evidence shifted to the Ladanga spouses. They were not able to prove the payment of that amount. The sale was fictitious. A contract of sale is void and produces no effect whatsoever where the price, which appears therein as paid, has in fact never been paid by the purchaser to the vendor. It was not shown that Clemencia intended to donate the Paco property to the Ladangas. Her testimony and the notary's testimony destroyed any presumption that the sale was fair and regular and for a true consideration.

G.R. No. L-59952 August 31, 1984 RUBY H. GARDNER and FRANK GARDNER, JR., vs
 COURT OF APPEALS, DEOGRACIAS R. NATIVIDAD and JUANITA A. SANCHEZ Facts: Ruby Gardner, married to Frank Gardner, Jr. an American, was the registered owner of two adjoining parcels of agricultural land situated at Calamba, Laguna, designated as Lot No. 1426-new and Lot No. 4748-new covered by TCT Nos. T-20571 and T-20573. On November 27, 1961, The Gardners and the Santoses entered into an agreement for the subdivision of the two parcels, with the Santoses binding themselves to advance to the Gardners the amount of P93,000.00 in installments. The Gardners remained in actual possession of the properties. On June 10, 1964, Unknown to the Gardners, Santoses transferred Lot No. 1426-New to Jose Cuenca. On October 19, 1966, Cuenca transferred the lots to Michael C. Verroya. On March 29, 1967, Verroya constituted a mortgage on both lots in favor of Anita Nolasco and Rosario Dalina, which encumbrance was registered on the existing titles. On June 29, 1967, Verroya executed a deed of transfer of the properties to respondent Deogracias Natividad, married to Juanita Sanchez. On September 30, 1967, the Natividads transferred the lots to Ignacio Bautista and Encarnacion de los. No titles were issued to the Bautistas. On July 8, 1969, the Gardners filed suit for "Declaration of Nullity, Rescission and Damages" against the Five Transferees, including the mortgagees, Anita Nolasco and Rosario Dalina before the CFI of Laguna, praying for the declaration of nullity of all the Five Transfers and the cancellation of all titles issued pursuant thereto on the ground that they were all simulated, fictitious, and without consideration.The Trial Court ruled in favor of the Gardners nullifying the said transfers. Respondents appealed to the CA which reversed the decision of the Trial Court. Hence, this petition is filed. Issue: W/N the transfers involved in the case is void and inexistent. Ruling: Yes. Added proof of the fictitiousness of the chain of transfers is that fact that, notwithstanding the same, the GARDNERS remained in actual possession, cultivation and occupation of the disputed lots throughout the entire series of transactions. All Five Transfers starting from that of the SANTOSES down to the NATIVIDADS, were absolutely simulated and fictitious and were, therefore, void ab initio and inexistent. Contracts of sale are void and produce no effect whatsoever where the price, which appears therein as paid, has, in fact, never been paid by the purchaser to the vendor. Such sales are inexistent and cannot be considered consummated.

CORNELIA CLANOR VDA. DE PORTUGAL vs. INTERMEDIATE APPELLATE COURT and HUGO C. PORTUGAL G.R. No. 73564 March 25, 1988 Facts: Cornelia Clanor and her late husband Pascual Portugal, during the lifetime of the latter, were able to accumulate several parcels of real property. Among these were a parcel of residential land situated in Poblacion, Gen. Trias, Cavite covered by T.C.T. No. RT-9355 and an agricultural land located at Pasong Kawayan, Gen. Trias, Cavite under T.C.T. No. RT-9356. Sometime in January, 1967, the private respondent Hugo Portugal, a son of the spouses, borrowed from his mother, Cornelia, the certificates of title to the above-mentioned parcels of land on the pretext that he had to use them in securing a loan that he was negotiating. On November 17, 1974, Pascual Portugal died. For the purposes of executing an extra-judicial partition of Pascual's estate, wished to have all the properties of the spouses collated, Cornelia asked the private respondent for the return of the two titles she previously loaned, Hugo manifested that the said titles no longer exist. Transfer Certificate of Title T.C.T. No. 23539 registered in his and his brother Emiliano Portugal's names, and which new T.C.T. cancelled the two previous ones. This falsification was triggered by a deed of sale by which the spouses Pascual Portugal and Cornelia Clanor purportedly sold for P8,000.00 the two parcels of land adverted to earlier to their two sons, Hugo and Emiliano. Emiliano caused the reconveyance of Lot No. 2337 previously covered by TCT No. RT-9356 and which was conveyed to him in the void deed of sale. Hugo, on the other hand, refused to make the necessary restitution thus compelling the petitioners, his mother and his other brothers and sisters, to institute an action for the annulment of the controversial deed of sale and the reconveyance of the title over Lot No. 3201.The Trial Court hereby declares inoperative the Deed of Sale. The CA reversed the decision stating that the action had already presrcribed. Issue: W/N the sale is valid. Ruling: No. No consideration was ever paid at all by the Hugo Portugal. Applying the provisions of Articles 1350, 1352, and 1409 of the new Civil Code in relation to the indispensable requisite of a valid cause or consideration in any contract, and what constitutes a void or inexistent contract, we rule that the disputed deed of sale is void ab initio or inexistent, not merely voidable.

GAUDENCIO VALERIO vs VICENTA REFRESCA G.R. No. 163687 March 28, 2006 Facts: In 1963, Spouses Alejandro and Vicenta Refresca started cultivating the 6.5-hectare land as tenants owned by the Valerios. On February 10, 1975, Narciso Valerio, with the consent of his wife Nieves, executed a Deed of Sale whereby he sold his 6.5-hectare landholding to his heirs, the petitioners. Narciso likewise conveyed 511 sq. m. of his landholding, known as Lot 428-A, in favor of his tenants Alejandro Refresca in recognition of his long service and cultivation of the subject land. Nieves Valerio entered into another leasehold agreement with the Refrescas over the 6.5-hectare landholding for the period 1984-1985 in exchange for the latter payment of rentals. On March 4, 1987, Nieves Valerio, died. After tenant Alejandros demise in 1994, his widow, Vicenta Refresca, succeeded him by operation of law in tilling the land. Thereafter, petitioners demanded that the respondents vacate the land. The Department of Agrarian Reform issued a Resolution recognizing the right of respondent Vicenta Refresca, widow of tenant Alejandro, to continue her peaceful possession and cultivation of the 6.5hectare land. The RTC ruled in favor of petitioners. It held that as the Deed of Sale executed by Narciso Valerio is absolutely simulated or fictitious. On appeal, the CA reversed the decision of the RTC. It ruled that the Deed of Sale was not absolutely, but relatively simulated as the parties intended to be bound by it. Issue: W/N the petitioners contend the 1975 Deed of Sale between Narciso and Alejandro is absolutely simulated or fictitious and produced no legal effect as there was no monetary consideration involved. Ruling: No. Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or relative. In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is relatively simulated and the parties are still bound by their real agreement. Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the contract, the agreement is absolutely binding and enforceable between the parties and their successors in interest 1975 Deed of Sale between the parties is a relatively simulated contract as the clear intent was to transfer ownership over the land. Narciso was motivated by generosity when he divested himself of ownership over the land. This was the true intent of the parties although they tried to conceal it with the execution of a deed of sale, when the contract is in reality one of donation inter vivos.

SPOUSES VILLACERAN and FAR EAST BANK & TRUST COMPANY, vs JOSEPHINE DE GUZMAN G.R. No. 169055 February 22, 2012 Facts: De Guzman alleged that she is the registered owner of a parcel of land covered by Transfer Certificate of Title (TCT) No. T-236168, located in Echague, Isabela, having an area of 971 square meters and described as Lot 8412-B of the Subdivision Plan Psd-93948. On April 17, 1995, she mortgaged the lot to the Philippine National Bank (PNB) of Santiago City to secure a loan of P600,000. In order to secure a bigger loan to finance a business venture, De Guzman asked Milagros Villaceran to obtain an additional loan on her behalf. She executed a Special Power of Attorney in favor of Milagros. Considering De Guzmans unsatisfactory loan record with the PNB, Milagros suggested that the title of the property be transferred to her and Jose Villaceran and they would obtain a bigger loan as they have a credit line of up toP5,000,000 with the bank. On June 19, 1996, De Guzman executed a simulated Deed of Absolute Sale in favor of the spouses Villaceran. On the same day, they went to the PNB and paid the amount of P721,891.67 using the money of the spouses Villaceran. The spouses Villaceran registered the Deed of Sale and secured TCT No. T-257416 in their names. Thereafter, they mortgaged the property with FEBTC Santiago City to secure a loan of P1,485,000. The loan was released and they failed to pay it so the property was foreclosed in favor of the FEBTC. De Guzman filed an action for the annulment of the sale, but the RTC and CA ruled that the Deed of sale was valid and binding. Issue: W/N the Deed of Sale is relatively simulated. Ruling: Yes. Article 1345 of the Civil Code provides that the simulation of a contract may either be absolute or relative. In absolute simulation, there is a colorable contract but it has no substance as the parties have no intention to be bound by it. The main characteristic of an absolute simulation is that the apparent contract is not really desired or intended to produce legal effect or in any way alter the juridical situation of the parties. As a result, an absolutely simulated or fictitious contract is void, and the parties may recover from each other what they may have given under the contract. However, if the parties state a false cause in the contract to conceal their real agreement, the contract is only relatively simulated and the parties are still bound by their real agreement. Hence, where the essential requisites of a contract are present and the simulation refers only to the content or terms of the contract, the agreement is absolutely binding and enforceable between the parties and their successors in interest. The primary consideration in determining the true nature of a contract is the intention of the parties. If the words of a contract appear to contravene the evident intention of the parties, the latter shall prevail. Such intention is determined not only from the express terms of their agreement, but also from the contemporaneous and subsequent acts of the parties. In the case at bar, there is a relative simulation of contract as the Deed of Absolute Sale dated June 19, 1996 executed by De Guzman in favor of petitioners did not reflect the true intention of the parties. It is worthy to note that both the RTC and the CA found that the evidence established that the aforesaid document of sale was executed only to enable petitioners to use the property as collateral for a bigger loan, by way of accommodating De Guzman.

YU BUN GUAN vs. ELVIRA ONG G.R. No. 144735 October 18, 2001

Facts: Respondent’s averment: Elvira Ong and Yu Bun Guan are husband and wife, They lived together until she and her children were abandoned by Yu Bun Guan on August 26, 1992, because of the latter's 'incurable promiscuity, volcanic temper and other vicious vices'; out of thier union, 3 children were born, now living with her respondent. She purchased on March 20, 1968, out of her personal funds, a parcel of land, then referred to as the Rizal property, from Aurora Seneris, and supported by Title No. 26795, then subsequently registered on April 17,1968, in her name. Before their separation in 1992, she 'reluctantly agreed' to Yu Bun Guan 'importunings' that she execute a Deed of Sale of the J.P. Rizal property in his favor, but on the promise that he would construct a commercial building for the benefit of the children. He suggested that the J.P. Rizal property should be in his name alone so that she would not be involved in any obligation. The consideration for the 'simulated sale' was that, after its execution in which he would represent himself as single, a Deed of Absolute Sale would be executed in favor of the three (3) children and that he would pay the Allied Bank, Inc. the loan he obtained. Because of the glib assurances of petitioner, respondent executed a Deed of Absolute Sale in 1992, but then he did not pay the consideration of P200,000.00, supposedly the ostensible valuable consideration. On the contrary, she paid for the capital gains tax and all the other assessments even amounting to not less thanP60,000.00, out of her personal funds. Because of the sale, a new title (TCT No. 181033) was issued in his name, but to insure that he would comply with his commitment, she did not deliver the owners copy of the title to him. Petitioner, on the other hand, filed a Petition for Replacement of an owners duplicate title. He made it appear that it was lost, following which a new owners copy of the title was issued to petitioner. Upon discovery of the fraudulent steps taken by the petitioner, respondent immediately executed an Affidavit of Adverse Claim on November 29, 1993. She precisely asked the court that the sale of the JP Rizal property be declared as null and void; for the title to be cancelled; payment of actual, moral and exemplary damages; and attorneys fees. Petioner’s version: It was, on the other hand, the version of petitioner that sometime in 1968 or before he became a Filipino, through naturalization, the JP Rizal property was being offered to him for sale. Because he was not a Filipino, he utilized respondent as his dummy and agreed to have the sale executed in the name of respondent, although the consideration was his own and from his personal funds.

When he finally acquired a Filipino citizenship in 1972, he purchased another property being referred to as the Juno lot out of his own funds. If only to reflect the true ownership of the JP Rizal property, a Deed of Sale was then executed in 1972. Believing in good faith that his owners copy of the title was lost and not knowing that the same was surreptitiously concealed by respondent, he filed in 1993 a petition for replacement of the owners copy of the title, in court. Petitioner added that respondent could not have purchased the property because she had no financial capacity to do so; on the other hand, he was financially capable although he was disqualified to acquire the property by reason of his nationality. Respondent was in pari delicto being privy to the simulated sale. Issue:\Whether or not the Court of Appeals likewise palpably erred in declaring the sale of the subject property to herein petitioner in 1992 to be fictitious, simulated and inexistent. Whether or not the Court of Appeals gravely erred in annulling the title (TCT No. 181033) to the subject property in the name of herein petitioner in the absence of actual fraud Held:

A contract of purchase and sale is null and null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to vendor. In the present case, it is clear from the factual findings of both lower courts that the Deed of Sale was completely simulated and, hence, void and without effect.No portion of the P200,000 consideration stated in the Deed was ever paid. And, from the facts of the case, it is clear that neither party had any intention whatsoever to pay that amount. The Deed of Sale was executed merely to facilitate the transfer of the property to petitioner pursuant to an agreement between the parties to enable him to construct a commercial building and to sell the Juno property to their children. Finally, based on the foregoing disquisition, it is quite obvious that the Court of Appeals did not err in ordering the cancellation of TCT No. 181033, because the Deed of Absolute Sale transferring ownership to petitioner was completely simulated, void and without effect.

MOISES JOCSON vs. HON. COURT OF APPEALS, AGUSTINA JOCSONVASQUEZ, ERNESTO VASQUEZ G.R. No. L-55322 February 16, 1989 Facts:Petitioner Moises Jocson and respondent Agustina Jocson-Vasquez are the only surviving offsprings of the spouses Emilio Jocson and Alejandra Poblete, while respondent Ernesto Vasquez is the husband of Agustina. Alejandra Poblete predeceased her husband without her intestate estate being settled. Subsequently, Emilio Jocson also died intestate on April 1, 1972. The present controversy concerns the validity of three (3) documents executed by Emilio Jocson during his lifetime. These documents purportedly conveyed, by sale, to Agustina Jocson-Vasquez what apparently covers almost all of his properties, including his one-third (1/3) share in the estate of his wife. Petitioner Moises Jocson assails these documents and prays that they be declared null and void and the properties subject matter therein be partitioned between him and Agustina as the only heirs of their deceased parents. 1) Emilio Jocson sold to Agustina Jocson-Vasquez six (6) parcels of land, all located at Naic, Cavite, for the sum of ten thousand P10,000.00 pesos. On the same document Emilio Jocson acknowledged receipt of the purchase price, 2)

Emilio Jocson purportedly sold to Agustina Jocson-Vasquez, for the sum of FIVE THOUSAND (P5,000.00) PESOS, two rice mills and a camarin (camalig) located at Naic, Cavite. As in the first document, Moises Jocson acknowledged receipt of the purchase price

3) Whereby Emilio Jocson and Agustina Jocson-Vasquez, without the participation and intervention of Moises Jocson, extrajudicially partitioned the unsettled estate of Alejandra Poblete, dividing the same into three parts, one-third (1/3) each for the heirs of Alejandra Poblete, namely: Emilio Jocson, Agustina Jocson-Vasquez and Moises Jocson. By the same instrument, Emilio sold his onethird (1/3) share to Agustin for the sum of EIGHT THOUSAND (P8,000.00) PESOS. As in the preceding documents, Emilio Jocson acknowledged receipt of the purchase price Petitioner avers: With regard the first document, that the defendants, through fraud, deceit, undue pressure and influence and other illegal machinations, were able to induce, led, and procured their father to sign the contract of sale, for the simulated price of P10,000.00, which is a consideration that is shocking to the conscience of ordinary man and despite the fact that said defendants have no work or livelihood of their own ...; that the sale is null and void, also, because it is fictitious, simulated and fabricated contract With regards the second and third document, that they are null and void because the consent of the father, Emilio Jocson, was obtained with fraud, deceit, undue pressure, misrepresentation and unlawful machinations and trickeries committed by the defendant on him; and that the said contracts

are simulated, fabricated and fictitious, having been made deliberately to exclude the plaintiff from participating and with the dishonest and selfish motive on the part of the defendants to defraud him of his legitimate share on said properties [subject matter thereof]; and that without any other business or employment or any other source of income, defendants who were just employed in the management and administration of the business of their parents, would not have the sufficient and ample means to purchase the said properties except by getting the earnings of the business or by simulated consideration . Issue: Wheteher or not there is a simulated sale as alleged by the petitioner and if it may cause the contract to be void. Held: As pointed out by petitioner, he further assailed the deeds of conveyance on the ground that they were without consideration since the amounts appearing thereon as paid were in fact merely simulated. “According to Article 1352 of the Civil Code, contracts without cause produce no effect whatsoever. A contract of sale with a simulated price is void (Article 1471; also Article 1409 [3]]), and an action for the declaration of its nullity does not prescribe (Article 1410, Civil Code) Moises Jocson saction, therefore, being for the judicial declaration of nullity of and 4 on the ground of simulated price, is imprescriptible. Neither may the contract be declared void because of alleged inadequacy of price. To begin with, there was no showing that the prices were grossly inadequate. In fact, the total purchase price paid by Agustina Jocson-Vasquez is above the total assessed value of the properties alleged by petitioner and any difference between the market value and the purchase price, which as admitted by Emilio Jocson was only slight, may not be so shocking considering that the sales were effected by a father to her daughter in which case filial love must be taken into consideration Furthermore, gross inadequacy of price alone does not affect a contract of sale, except that it may indicate a defect in the consent, or that the parties really intended a donation or some other act or contract (Article 1470, Civil Code) and there is nothing in the records at all to indicate any defect in Emilio Jocson's consent.

RAFAEL G. SUNTAY vs. THE HON. COURT OF APPEALS and FEDERICO C. SUNTAYG.R. No. 114950 December 19, 1995 Facts: Respondent Federico Suntay was the registered owner of a parcel of land situated in Sto. Niño, Hagonoy, Bulacan. A rice miller, Federico, in a letter, dated September 30, 1960, applied as a miller-contractor of the then National Rice and Corn Corporation (NARIC). His application, although prepared by his nephew-lawyer, petitioner Rafael Suntay, was disapproved, obviously because at that time he was tied up with several unpaid loans. For purposes of circumvention, he had thought of allowing Rafael to make the application for him. Rafael prepared an absolute deed of sale whereby Federico, for and in consideration of P20,000.00 conveyed to Rafael said parcel of land with all its existing structures. Said deed was notarized. Less than three months after this conveyance, a counter sale was prepared and signed by Rafael who also caused its delivery to Federico. Through this counter conveyance, the same parcel of land with all its existing structures was sold by Rafael back to Federico for the same consideration of P20,000.00. Although on its face, this second deed appears to have been notarized, an examination thereof will show that, it is not the said deed of sale but a certain "real estate mortgage on a parcel of land with TCT No. 16157 to secure a loan of P3,500.00 in favor of the Hagonoy Rural Bank." Nowhere could be found any entry pertaining to Rafael's deed of sale. Testifying on this irregularity, Atty. Flores (notary public) admitted that he failed to submit to the Clerk of Court a copy of the second deed. Neither was he able to enter the same in his notarial register. Even Federico himself alleged in his Complaint that, when Rafael delivered the second deed to him, it was neither dated nor notarized. Federico, requested that Rafael deliver his copy of TCT No. T-36714 so that Federico could have the counter deed of sale in his favor registered in his name. The request was turned down, In opposition thereto, Rafael chronicled the discrepancy in the notarization of the second deed of sale upon which said petition was premised and ultimately concluded that said deed was a counterfeit or "at least not a public document which is sufficient to transfer real rights according to law." Rafael insisted that said property was "absolutely sold and conveyed for a consideration of P20,000.00, Philippine currency, and for other valuable consideration". He insists that the sale was dacion en pago. Issue: Whether or not the sale constitutes as a sale of dacion en pago. Held: The late Rafael insisted that the sale to him of his uncle's property was in fact a "dacion en pago" in satisfaction of Federico's unpaid attorney's fees, What prominently stands out from the mass of records, however, is the fact that this claim of the late Rafael was only raised in 1976 when he testified on direct examination. The answer that he filed in 1970 in response to Federico's complaint never mentioned nor even alluded to any standing liability on the part of Federico as regards unpaid attorney's fees. Neither did

the late Rafael deny or refute Federico's testimony that they did not have a clear-cut compensation scheme and that Federico gave him money at times, which compensation enabled the late Rafael to purchase his first car. The late Rafael even affirmed Federico's testimony respecting his appointment as the legal counsel and corporate secretary of the Hagonoy Rural Bank for which he received compensation as well. The failure of the late Rafael to take exclusive possession of the property allegedly sold to him is a clear badge of fraud. The fact that, notwithstanding the title transfer, Federico remained in actual possession, cultivation and occupation of the disputed lot from the time the deed of sale was executed until the present, is a circumstance which is unmistakably added proof of the fictitiousness of the said transfer, the same being contrary to the principle of ownership. According to the late Rafael, he allowed Federico to remain in the premises and enjoy the fruits thereof because of their understanding that Federico may subsequently repurchase the property. Contrary to what Rafael thought, this in fact is added reason for simulation. The idea of allowing a repurchase goes along the same lines posed by the theory of Federico. If it were true that the first sale transaction was actually a "dacion en pago" in satisfaction of Federico's alleged unpaid attorney's fees, it does strain the logical mind that Rafael had agreed to allow the repurchase of the property three months thereafter. Federico was obviously financially liquid. Had he intended to pay attorney's fees, he would have paid Rafael in cash and not part with valuable income-producing real property.

Sweedish Match vs. CA Facts: The petitioner was selling their companies to prospective buyers, respondent was one of them. The respondent went a letter to petitioner saying that he is willing to buy at $36 million. Petitioner said it was too low and urged respondent to reconsider. Petitioner gave respondent 2 weeks to submit its final bid. During the two weeks, petitioner was negotiating with other people, thus respondent said that its offer of $36 million was its final bid. Petitioner sent a letter saying that it would give respondent 15 days which they will negotiate exclusively with respondent to negotiate a better price. Respondent sued for specific performance compelling the petitioner to deliver the shares. Issue: WON there was a perfected contract of sale Held: NO. There was no meeting of the minds on the price. Respondent said that the manner of payment will have to be agreed upon, thus no cause. Also the action is barred by the statute of frauds, the Court said that the note evidencing the contract, the letter, must have all the requisites of a contract in them. In the case, the letters had no indication of the manner of payment, thus barred.

UP vs. PHILAB Facts: UP wanted to build a research complex called Biotech. For the manufacturing of the equipment to be used in Biotech, FEMF orally contracted with Philab for the same. Philab began manufacturing the said equipment without drafting a contract between them and FEMF. The equipment was delivered to UP, and FEMF issued a check in favor of Philab. This method of payment was repeated 2 times, until only 700k was left of the whole 2.6 million. FEMF didn’t pay the outstanding balance despite repeated demands. FEMF now sues UP for the balance. Issue: WON UP is liable Held: No. UP was never the buyer of the equipment, it was FEMF. The Court said that FEMF and Philab had an implied-in-fact contract of sale which is a contract that is implied from the facts and circumstances showing a mutual intention to contract. It’s a valid contract the existence and terms of which are governed by the conduct of the parties. Philab knew it contracted with FEMF and not UP. It never started fabricating until the FEMF told it to. FEMF was always the one paying, not UP.

Conlu vs. Araneta Facts: Petitioners seek the recovery of a house from the possession of respondents. Respondents claim it under ownership pursuant to a sale by Anselma Tiongco to Vito Tiongco for 3k. The contract of sale was a oral contract. During trial respondent presented witnesses to prove the contract, and petitioner cross-examined them. Issue: WON respondent may prove an oral contract of sale. Held: Yes. Under the Civil Code, an oral contract of sale of real property is unenforceable and may not be proven by oral evidence, except when the adverse party fails to object to the presentation of evidence.