Dignos vs.

Court of Appeals, and Jabil ISSUE:

158 SCRA 378
February 1988
FACTS:
In July 1965, herein petitioners Silvestre T. Dignos and Isabela
Lumungsod de Dignos (spouses Dignos) sold their parcel of land in
Opon, LapuLapu to herein private respondent Antonio Jabil for the
sum of P28,000 payable for two installments, with an assumption of
indebtedness with the First Insular Bank of Cebu in the sum of
P12,000 and the next installment of P4,000 to be paid in September
1965. In November 1965, the spouses Dignos sold the same parcel
of land for P35,000 to defendants Luciano Cabigas and Jovita L. de
Cabigas (spouses Cabigas) who were then US citizens, and
executed in their favor an Absolute Deed of Sale duly registered in
the Office of the Register of Deeds.
Is the contract between the parties a contract of sale or a contract to
sell?
COURT RULING:
The Supreme Court affirmed the Decision of the Court of Appeals
saying stated that all the elements of a valid contract of sale are
present in the document and that the spouses Dignos had no right to
sell the land in question because an actual delivery of its possession
has already been made in favor of Jabil as early as March 1965. It
was also found that the spouses Dignos never notified Jabil by
notarial act that they were rescinding the contract, and neither did
they file a suit in court to rescind the sale. There is no showing that
Jabil properly authorized a certain Cipriano Amistad to tell petitioners
that he was already waiving his rights to the land in question.

Upon discovery of the 2nd sale of the subject land, Jabil filed the
case at bar in the CFI of Cebu which rendered its Decision in August
1975 declaring the 2nd sale to the spouses Cabigas null and void ab
initio and the 1st sale to Jabil not rescinded. The CFI of Cebu also
ordered Jabil to pay the remaining P16,000 to the spouses Dignos
and to reimburse the spouses Cabigas a reasonable amount
corresponding the expenses in the construction of hollow block
fences in the said parcel of land. The spouses Dignos were also
ordered to return the P35,000 to the spouses Cabigas.

Both Jabil and the spouses Dignos appealed to the Court of Appeals,
which affirmed in July 1981 the CFI of Cebus Decision except for the
part of Jabil paying the expenses of the spouses Cabigas for building
a fence. The spouses Dignos contested that the contract between
them and Jabil was merely a contract to sell and not a deed of sale.
Tan v Benorilao 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 im- proper for the sellers to garnish upon the down
payment of Mr. Tan as the encumbrance which discouraged him
Facts: The spouses Taningco and spouses Benolirao co-owned a from complying with the contract was not his fault
parcel of land, which they decided to alienate in favor of Mr. Delfin
Tan in considera- tion 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 condi- tions, 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 Con- tract 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 own- ership. 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 con- vey
title from acquiring obligatory force. As the sellers remained owners
 1956 which in no doubt, is within the 5 year prohibition period.
ARTATES AND POJAS VS URBI ET AL. Furthermore, the sale is simulated and is only intended to place the
property beyond the reach of the judgment debtor. The execution
January 30, 1971 sale being null and void, the contract of sale never perfected and the
Facts: On September 1952, a homestead was granted and possession of the land should be returned to the owners without
registered under the names of spouses Artates and Pojas. On Oct. prejudice to their continuing obligation to pay the judgment debt and
1955 however, the court ordered the execution sale of the said ex- penses connected therewith.
homestead in favor of Daniel Urbi for the satisfaction of Artates
indebtedness for the physical injuries that he in- flicted upon Urbi.
Urbi subsequently sold the homestead to a Crisanto Soliv- en, 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

Heirs of Enrique Zambales vs. Court of Appeals & Nin Bay
Mining Corp.
120 SCRA 897 misrepresentation in the execution of the Compromise Agreement
February 1983
FACTS:
The spouses Enrique Zambales and Joaquina Zambales (the
Zambaleses), who are illiterate, were the homestead patentees of a
parcel of land in the Municipality of Del Pilar, Roxas, Palawan,
pursuant to Homestead Patent No. V-59502 dated September 6,
1955. They claimed in November 1956 that respondent Nin Bay
Mining Corporation (Corporation) had removed silica sand from their
land and destroyed the plants and other improvements thereon, to
which said Corporation denied to have done so. On October 29,
1959, the Zambaleses, duly assisted by their counsel, Atty. Perfecto
de los Reyes, and the Corporation, entered into a Compromise
Agreement which state, among others, that the Zambaleses are
giving the Corporation full power and authority to sell, transfer and
convey on September 10, 1960 or at any time thereafter the whole or
any part of herein subject property. However, while the Compromise Agreement was held to be in
On September 10, 1960, the Corporation sold the disputed property
to Joaquin B. Preysler for the sum of P8,923.70 fixed in the
Compromise Agreement. On December 6, 1969, or ten (10) years
after the Trial Court's Decision based on the Compromise
Agreement, and nine (9) years after the sale to Preysler, the
Zambaleses filed a civil action in the CFI of Palawan for "Annulment
of a Deed of Sale with Recovery of Possession and Ownership with
Damages, alleging that Atty. de los Reyes and the Corporation
induced them through fraud, deceit and manipulation to sign the
Compromise Agreement.
The trial court declared null and void the deed of sale executed
between Preysler and the Corporation, but the Court of Appeals
reversed the said decision after finding that the alleged fraud or
had not been substantiated by evidence.
ISSUE:
Are the compromise agreement and the subsequent deed of sale
valid and legal?
COURT RULING:
The Supreme Court sustained the finding of the appellate court that
fraud and misrepresentation did not vitiate petitioners' consent to the
Agreement because the latter were not as ignorant as they
themselves tried to show. The Zambaleses were political leaders
who speak in the platform during political rallies, and the lawyers
they have hired belong to well-established law firms in Manila, which
show that although they were illiterate, they are still well-informed.
violation of the Public Land Act, which prohibits alienation and
encumbrance of a homestead lot within five years from the issuance
of the patent. Although the issue was not raised in the Courts below,
the Supreme Court has the authority to review matters even if they
are not assigned as errors in the appeal, if it is found that their
consideration is necessary in arriving at a just decision of the case.
The bilateral promise to sell between the Zambaleses and the
Corporation, and the subsequent deed of sale between Preysler and
the latter were declared null and void.

ANDRES QUIROGA vs. PARSONS HARDWARE CO. his beds.
G.R. No. L-11491 August 23, 1918
AVANCEA, 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 Is- lands to J.Parsons, subject to
some conditions provided in the contract. Likewise, it was agreed
that. In compensation for the expenses of adver- tisement 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
ex- clusive 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 ex- clusive 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 advertise- ment 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 commer-
cial agency.
Issue: Whether or not the defendant, by reason of the contract
hereinbefore transcribed, was an agent of the plaintiff for the sale of
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 oblig- ations 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 con- tract, 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 receiv- ing 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 de- fendant 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.
 subject to the law governing the form of contracts. Art. 1181, NCC
PEOPLE HOMESITE VS COURT OF APPEALS DEC. 26, 1984 further states that In conditional obligations, the acquisition of the
rights, as well as the extinguishment or loss of those already
Facts: On Feb. 1960, People Homesite and Housing Corporation acquired, shall depend upon the happening of the event which
(PHHC) passed Resolution No. 513 which grants Lot 4 of its constitutes the condition. In the case at bar, there having been no
Consolidated Subdivi- sion Plan (CSP) to Mendoza spouses with a concurrence as to the offer and acceptance between PHHC and the
condition that it is subject to the approval of the Quezon City Council Mendoza spouses, the contract of sale never perfected, hence, the
and the PHHC Valuation Committee. The Quezon City Council re- awarding and subsequent sale of the lot to Sto. Domingo, et. al is
initially disapproved the CSP on 1961 and such disapproval was valid
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
de- posit 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 de- posit 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 disap- proved by the City Council. The Mendozas were
sufficiently informed of such disapproval. However on 1964, when
the lot area was reduced and ap- proved 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,
TOYOTA SHAW, INC. vs. CA Issue: Whether or not the executed VSP, which was signed by the
G.R. No. L-116650 Toyotas sales representative, a perfected contract of sale binding
May 23, 1995 upon the parties.

Held: No. It is not a contract of sale. The provision on the down

Facts: Luna L. Sosa wanted to purchase a Toyota Lite Ace. It was payment of P100,000 made no specific reference to a sale of a
difficult to find a dealer with an available unit for sale, but upon vehicle. If it was intended for a contract of sale, it could only refer to
contacting Toyota Shaw, he was told that there was an available a sale on installment basis as the VSP confirmed. But, nothing was
unit. Sosa, and his son, Gilbert went to the Toyota office at Shaw mentioned about the full purchase price and the manner the
Boulevard, Pasig, Metro Manila and met Popong Bernardo, who was installments are to be paid. A definite agreement on the manner of
a sales representative of Toyota. Sosa in- formed Bernardo that the payment of the price is an essential element in the formation of a
needed the Lite Ace not later than June 17, 1989 because it is to be binding and enforceable contract of sale. Moreover, there was an
used by his family, and a balikbayan guest, in going to Marinduque absence of the meeting of the minds between Sosa and Toyota, and
where he would be celebrating his birthday on the 19th of June. He Sosa did not even sign it. Futhermore, Sosa was not dealing with
also told Bernardo that if he wont be arriving in his hometown with a Toyota but with Bernardo and that the latter did not misrepresent that
new car, he will become a laughing stock. Bernardo assured Sosa he had the authority to sell a Toyota Vehicle. The VSP was a mere
that a unit will already be available for pick up on June 17, 1989, at proposal and it created no demandable right in favor of Sosa for the
10:00 AM. Bernardo then signed a document which had the heading delivery of the vehicle to him.
Agreements Between Mr. Sosa and Popong Bernardo of Toyota
Shaw, Inc. Sosa and his son deliv- ered the down payment of
P100,000 the next day, and Bernardo accom- plished 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 be- ing readied for delivery. Subsequently, Sosa was also
informed that B.A. Fi- nance 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 Sosas de- mand, and
further alleged that they did not enter into a contract of sale with

Sosa.

Sampaguita Pictures, Inc. vs. Jalwindor Manufacturers, Inc. the Compromise Agreement, and on July 31, 1966, the Sheriff of
93 SCRA 420 Quezon City made levy on the glass and wooden jalousies.
October 1979
FACTS:
Both the plaintiff-appellant Sampaguita Pictures Inc. (Sampaguita)
and defendant-appellee Jalwindor Manufacturers Inc. (Jalwindor)
were domestic corporations duly organized under the Philippine
laws. Sampaguita leased to Capitol 300 Inc. (Capitol) the roof deck
of its building with the agreement that all permanent improvements
Capitol will make on said property shall belong to Sampaguita
without any part on the latter to reimburse Capitol for the expenses
of said improvements. Shortly, Capitol purchased on credit from
Jalwindor glass and wooden jalousies, which the latter itself
delivered and installed in the leased premises, replacing the existing
windows.
On June 1, 1964, Jalwindor filed with the CFI of Rizal, Quezon City
an action for collection of a sum of money with a petition for
preliminary attachment against Capitol for its failure to pay its
purchases. Later, Jalwindor and Capitol submitted to the trial court a
Compromised Agreement wherein Capitol acknowledged its
indebtedness of P9,531.09, payable in monthly installments of at
least P300.00 a month beginning December 15,1964 and that all the
materials that Capitol purchased will be considered as security for
such undertaking. Meanwhile, Sampaguita filed a complaint for
ejectment and for collection of a sum of money against Capitol for
the latters failure to pay rentals from March 1964 to April 1965, and
the City Court of Quezon City ordered Capitol on June 8, 1965 to
vacate the premises and to pay Sampaguita. ownership thereof, as prescribed by the rules, an entirely different
On the other hand, Capitol likewise failed to comply with the terms of
Sampaguita filed a third-party claim alleging that it is the owner of
said materials and not Capitol, but Jalwindor filed an idemnity bond
in favor of the Sheriff and the items were sold at public auction on
August 30, 1966, with Jalwindor as the highest bidder for P6,000.00.
Sampaguita filed with the CFI of Rizal, Quezon City an action to
nullify the Sheriff's sale and for an injunction to prevent Jalwindor
from detaching the glass and wooden jalousies. Jalwindor was
ordered to maintain the status quo pending final determination of the
case, and on October 20, 1967, the lower court dismissed the
complaint and ordered Sampaguita to pay Jalwindor the amount of
P500.00 as attorney's fees.
ISSUE:
Was there a delivery made and, therefore, a transfer of ownership of
the thing sold?
COURT RULING:
The Supreme Court reversed the decision of the lower court
declaring Sampaguita as declared the lawful owner of the disputed
glass and wooden jalousies, permanently enjoining Jalwindor from
detaching said items from the roof deck of the Sampaguita Pictures
Building, and ordered Jalwindor to pay Sampaguita the sum of
P1,000.00 for and as attorney's fees.
When a property levied upon by the sheriff pursuant to a writ of
execution is claimed by a third person in a sworn statement of
matter calling for a new adjudication arises. The items in question
were illegally levied upon since they do not belong to the judgment
debtor. The power of the Court in execution of judgment extends
only to properties unquestionably belonging to the judgment debtor.
The fact that Capitol failed to pay Jalwindor the purchase price of the
items levied upon did not prevent the transfer of ownership to Capitol
and, later, to Sampaguita by virtue of the agreement in their lease
contract. Therefore, the complaint of Sampaguita to nullify the
Sheriff's sale is well founded, and should prosper.

Norkis Distributor vs. CA G.R. No. 91029
, Whether or not there has been a transfer of ownership of the
February 7,1991; 193 SCRA 694
FACTS:
Petitioner Norkis Distributors, Inc. is the distributor of Yamaha
motorcycles in Negros Occidental. On September 20, 1979, private
respondent Alberto Nepales bought from the Norkis Bacolod branch
a brand new Yamaha Wonderbike motorcycle Model YL2DX. The
price of P7,500.00 was payable by means of a Letter of Guaranty
from the DBP, which Norkis agreed to accept. Credit was extended
to Nepales for the price of the motorcycle payable by DBP upon
release of his motorcycle loan. As security for the loan, Nepales
would execute a chattel mortgage on the motorcycle in favor of DBP.
Petitioner issued a sales invoice which Nepales signed in conformity
with the terms of the sale. In the meantime, however, the
motorcycle remained in Norkis possession. On January 22, 1980,
the motorcycle was delivered to a certain Julian
Nepales, allegedly the agent of Alberto Nepales. The motorcycle met
an accident on February 3, 1980 at Binalbagan, Negros Occidental.
An investigation conducted by the DBP revealed that the unit was
being driven by a certain Zacarias Payba at the time of the accident.
The unit was a total wreck was returned. On March 20, 1980, DBP
released the proceed
s of private respondents motorcycle loan to Norkis in the total sum of
P7,500. As the price of the motorcycle later increased to P7,828 in
March, 1980, Nepales paid the difference of P328 and demanded
the delivery of the motorcycle. When Norkis could not deliver, he
filed an action for specific performance with damages against Norkis
in the RTC of Negros Occidental. He alleged that Norkis failed to
deliver the motorcycle which he purchased, thereby causing him
damages. Norkis answered that the motorcycle had already been
delivered to private respondent before the accident, hence, the risk
of loss or damage had to be borne by him as owner of the unit.
ISSUE:
motorcycle to Alberto Nepales.
HELD:
No.The issuance of a sales invoice does not prove transfer of
ownership of the thing sold to the buyer. An invoice is nothing more
than a detailed statement of the nature, quantity and cost of the thing
sold and has been considered not a bill of sale. In all forms of
delivery, it is necessary that the act of delivery whether constructive
or actual, be coupled with the intention of delivering the thing. The
act, without the intention, is insufficient. When the motorcycle was
registered by Norkis in the name of private respondent, Norkis did
not intend yet to transfer the title or ownership to Nepales, but only to
facilitate the execution of a chattel mortgage in favor of the DBP for
the release of the buyers motorcycle loan.
Article 1496 of the Civil Code which
provides that in the absence of an express assumption of risk by the
buyer, the things sold remain at sellers risk until the ownership
thereof is transferred to the buyer, is applicable to this case, for
there was neither an actual nor constructive delivery of the thing
sold, hence, the risk of loss should be borne by the seller, Norkis,
which was still the owner and possessor of the motorcycle when it
was wrecked. This is in accordance with the well known doctrine of
res perit domino.

Southern Motors Inc vs. Moscoso
2 SCRA 168
May 1961
FACTS:
In June 1957, plaintiff-appellee, Southern Motors, Inc. (Southern
Motors) sold to defendant-appellant Angel Moscoso one Chevrolet
truck, on installment basis, for P6,445.00. Upon making a down
payment, the defendant executed a promisory note for the sum of
P4,915,00, representing the unpaid balance of the purchase price to
secure the payment of which, a chattel mortgage was constituted on
the truck in favor of Southern Motors. Of the P4,915,00, defendant
was only able to pay a total of P550.00, which P110.00 was applied
to the interest up to August 15, and P400.00 to the principal, thus
leaving an unpaid balance of P4,475.00. The defendant failed to pay
3 more installments on the balance of the purchase price. judgment that may be favorable to it, on all personal and real
In November 1957, the Southern Motors filed a complaint against the
Moscoso to recover the unpaid balance of the promissory note, and
the lower court issued a writ of attachment on Moscosos properties.
The Sheriff of San Jose, Antique, attach the Chevrolet truck, as well
as a house and lot belonging to Moscoso, and said truck was
brought to the Southern Motors compound in Iloilo City for safe
keeping. The Provincial Sheriff of Iloilo sold the said truck on January
2, 1958 at a public auction in which Southern Motors itself was the
only bidder for P1,000.00. In March 1958, the trial court condemned
the defendant Moscoso to pay the plaintiff Southern Motors the
unpaid balance of P4,475.00 with interest at the rate of 12% per
annum from August 16, 1957, until fully paid. While Southern Motors
claims that in filing the complaint, demanding payment of the unpaid
balance of the purchase price, it has availed of the first remedy
provided in Article 1484 of the new Civil Code i.e. to exact fulfillment
of the obligation (specific performance), Mosocoso, on the other
hand, contends that Southern Motors had availed itself of the third
remedy viz, the foreclosure of the chattel mortgage on the truck.
ISSUE:
Which remedy under the Civil Code did the vendor Southern Motors
avail?
COURT RULING:
The Supreme Court, in affirming the decision of the lower court,
found that there is nothing unlawful or irregular in appellee Southern
Motors's act of attaching the mortgaged truck itself.
Since it has chosen to exact the fulfillment of the appellant
Moscoso's obligation, Southern Motors may enforce execution of the
properties of the latter not exempt from execution sufficient to satisfy
such judgment. No one can successfully contest that the attachment
of a house and lot at San Jose, Antique was merelly an incident to all
ordinary civil action. (Sections 1 & 11, Rule 59; sec. 16 Rule 39.) The
mortgage creditor may recover judgment on the mortgage debt and
cause an execution on the mortgaged property and may cause an
attachment to be issued and levied on such property, upon beginning
his civil action.

Pascual vs. Universal Motors Corp. amount of P50,000. The said CFI rendered judgment in favor of the
61 SCRA 121 spouses Pascual and ordered the cancellation of the mortgage.
November 1974
FACTS:
Plaintiff-appellee spouses Lorenzo Pascual and Leonila Torres
(spouses Pasqual) executed the real estate mortgage subject matter
of this complaint on December 14, 1960 to secure the payment of
the indebtedness of PDP Transit, Inc. (PDP Trans.) for the purchase
of 5 units of Mercedes Benz trucks, with a total purchase price or
principal obligation of P152,506.50 which was to bear interest at 1%
per month starting that day, but the plaintiffs' guarantee is not to
exceed P50,000.00 which is the value of the mortgage. The PDP
Trans., as the spouses Pasqual's principal, paid to
defendant-appellant Universal Motors Corporation (Universal Motors)
the sum of P92,964.91 on April 5, 1961 for two of the five Mercedes
Benz trucks and on May 22, 1961 for the remaining three, thus
leaving a balance of P68,641.69 including interest due on February
8, 1965.
On March 19, 1965, Universal Motors filed this complaint with the
CFI of Manila against the PDP Trans. to collect the balance due
under the Chattel Mortgages and to repossess all the units sold to
PDP Trans. as the spouse Pascuals principal, including the 5 units
guaranteed under the subject Real (Estate) Mortgage. During the
hearinbg, Universal Motors admitted that it was able to repossess all
the units sold to the latter, including the 5 units guaranteed by the
subject real estate mortgage, and to foreclose all the chattel
mortgages constituted thereon, resulting in the sale of the trucks at
public auction. As the real estate mortgagors, the spouses Pascual
filed an action with the CFI of Quezon City for the cancellation of the
mortgage they constituted on 2 parcels of land in favor of the
Universal Motors to guarantee the obligation of PDP Trans. to the
ISSUE:
Was Article 1484 of the New Civil Code applicable in the case at
bar?
COURT RULING:
The Supreme Court affirmed the lower courts decision. Appellant
Universal Motors argues that Article 1484 is not applicable to the
case at bar because there is no evidence on record that the
purchase by PDP Trans. of the 5 trucks was payable in installments
and that the PDP Trans. had failed to pay two or more installments.
Universal Motors also contends that what Article 1484 prohibits is for
the vendor to recover from the purchaser the unpaid balance of the
price after he has foreclosed the chattel mortgage on the thing sold,
but not a recourse against the security put up by a third party.
The Supreme Court concluded to the contrary, saying that the first
issue was whether or not the sale was one on installments. The
lower court found that it was, and that there was failure to pay two or
more installments, a finding which is not subject to review by the
Supreme Court.
The next contention is that what article 1484 withholds from the
vendor is the right to recover any deficiency from the purchaser after
the foreclosure of the chattel mortgage, and not a recourse to the
additional security put up by a third party to guarantee the
purchaser's performance of his obligation. But the Supreme Court to
sustain this argument of the appellant would be to indirectly subvert
and public policy overturn the protection given by Article 1484. Natural Resources (DENR) prompting them to file a
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 peti- tioner
Filinvest Land, Inc. was executed. Upon its execution, re- spondents
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 Envi- ronment and
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 par- ties..
The CA, nullified the disposition of those properties granted through
patents in 1991 . CA ruled that the contract of sale be- tween 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
prohibi- tion against alienation of homesteads under the Public Land
Act.
Held:
Yes.
The fiveyear prohibitory period following the issuance of the
homestead year patent is provided under Section 118 of Common-
wealth Act No. 141, as amended by Commonwealth Act No. 456,
otherwise known as the Public Land Act. It bears stressing that the period following the issuance of the homestead patent is null and
law was enacted to give the homesteader or patentee every chance void and cannot be enforced, for it is not within the com- petence of
to preserve for himself and his family the land that the State had any citizen to barter away what public policy by law seeks t o
gratuitously given to him as a reward preserve

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 vi- olative 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 Condi- tional Sale was executed. On October 28,
1995, respondents re- ceived the downpayment of P14,000.000.00
for the properties cov-

ered by the patents issued in 1991.

Applying the fiveyear 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

Spouses Dela Cruz vs CA 214 SCRA 103 GR. No. 94828,
September 18, 1992
DOCTRINE:
While it is true that under par. 3 of 1484, the vendor, after he decides
to foreclose the mortgage upon the thing sold, is precluded from
instituting any further action against the purchaser to recover any
unpaid balance of the price, it is the fact of herein appellee, can only operate to extinguish appellants liability if
foreclosure and actual sale of the mortgaged chattel that bar
recovery
by the vendor of any balance of the recovered possession thereof.
purchasers outstanding obligation not satisfied by the sale
Facts
: Petitioner purchased on installment a truck from BENTER motor
sales Corp. And to secure payment, petitioners executed in favor of
BENTER a chattel mortgage over the vehicle and a promissory note.
BENTER then assigned its rights and interest over the vehicle in
favor of private respondent ASIAN consumer and industrial finance
corp. Petitioners initially paid some installment but subsequently
defaulted for more than 2 installments. A demand letter was sent by
respondent corp to petitioner, but the latter failed to settle their
obligation. Subsequently, by virtue of a petition for extrajudicial
foreclosure, the sheriff attempted to repossess vehicle but was
unsuccessful because of the refusal of the son of petitioner to
turnover the same. Some 2 weeks later, the petitioner brought the
vehicle to the office of respondent corp. And left it there for inventory
and inspection. Respondent thereafter filed an ordinary action for the
collection of the balance of the purchase price. The trial court
rendered judgment in favor of respondent. Ca affirmed the jusgment
on appeal.
Issue:
Is the chattel mortgage, after opting to foreclose the mortgage but
failing afterward to sell the property at public auction, still sue to
recover the unpaid balance of the purchase price?
Ruling:
Yes. The Supreme Court, citing several pertinent cases, have stated
in the wise:
Under the law, the delivery of possession of the mortgaged property
to the mortgagee, the
the appellee had actually
caused the foreclosure sale of the mortgaged property when it
It is worth noting that it is the fact of foreclosure and actual sale of
the mortgaged chattel that bar
recovery by the vendor of any balance of the purchasers
outstanding obligation not satisfied by
the sale (New Civil Code, par. 3, Article 1484).
Consequently, there being no actual foreclosure of the mortgaged
property, ASIAN is correct in resorting to an ordinary action for
collection of the unpaid balance of the purchase price

Fiestan vs. Court of Appeals, and Developmentt Bank of the
Philippines
185 SCRA 751
May 1990
FACTS:
For failure of petitioner spouses Dionisio Fiestan and Juanita
Arconada (spouses Fiestan) to pay their mortgage indebtedness to
respondent Development Bank of the Philippines (DBP), the latter
was able to acquire at a public auction sale on August 6, 1979 the
parcel of land (Lot No. 2-B covered by TCT No. T-13218) that the
spouses Fiestan owned in Ilocos Sur after extrajudicial foreclosure of
said property. The Provincial Sheriff issued a certificate of sale that
same day which was registered on September 28 in the Office of the
Register of Deeds of Ilocos Sur. Earlier, or on September 26,
spouses Fiestan also executed a Deed of Sale in favor of DBP which
was likewise registered on September 28, 1979. When spouses
Fiestan failed to redeem their parcel of land within the 1 year period
which expired on September 28, 1980, the Register of Deeds
cancelled their title over the subject property and issued TCT No.
T-19077 to DBP upon the latters duly executed affidavit of
consolidation of ownership.
On April 13, 1982, the DBP sold the lot to Francisco Peria, so the
Register of Deeds of Ilocos Sur cancelled DBPs title over said
property and issued TCT No. T-19229 to Perias name, who later
secured a tax declaration for said lot and accordingly paid the taxes
due thereon. He thereafter mortgaged said lot to the PNB-Vigan
Branch as security for his loan of P115,000.00. Since the spouses
Fiestan were still in possession of the property, the Provincial Sheriff
ordered them to vacate the premises, but instead of leaving, they
filed a complaint in the RTC of Vigan, Ilocos Sur for annulment of
sale, mortgage and cancellation of transfer certificates of title against
the DBP-Laoag City, PNB-Vigan Branch, Ilocos Sur, Francisco Peria
and the Register of Deeds of Ilocos Sur.
The lower court dismissed said complaint, declaring valid the
extrajudicial foreclosure sale of the mortgaged property in favor of
the DBP and its subsequent sale to Francisco Peria as well as the
real estate mortgage constituted in favor of PNB-Vigan. The Court of
Appeals likewise affirmed said decision. The spouses Fiestan herein
seek to annul the extrajudicial foreclosure sale of the mortgaged
property on the ground that the Provincial Sheriff conducted the
foreclosure without first effecting a levy on said property before
selling the same at the public auction sale.
ISSUE:
Who has the right to acquire by purchase the subject property?
COURT RULING:

In denying the petition, the Supreme Court reiterated that the

formalities of a levy, which the Provincial Sheriff of Ilocos Sur
allegedly failed to comply with, are not basic requirements before an
extrajudicially foreclosed property can be sold at public auction. The
spouses Fiestan insisted that what prevails over the case are par. (2)
of Article 1491 and par. (7) of Article 1409 of the Civil Code which
prohibits agents from acquiring by purchase, even at a public or
judicial auction either in person or through the mediation of another,
the property whose administration or sale may have been entrusted
to them unless the consent of the principal has been given. However,
the Supreme Court ruled that the power to foreclose is not an
ordinary agency that contemplates exclusively the representation of
the principal by the agent but is primarily an authority conferred upon
the mortgagee for the latter's own protection, as provided under
Section 5 of Act No 3135, as amended, which is a special law that
must prevail over the Civil Code which is a general law. Even in the
absence of statutory provision, there is authority to hold that a
mortgagee, and in this case the DBP, may purchase at a sale under
his mortgage to protect his own interest or to avoid a loss to himself
by a sale to a third person at a price below the mortgage debt.
 payment of theirinstallments due by telegram. The plaintiff attempted
to collect bysending a demand letter to the Borbons which totaled
P185,257.80. The Borbonss claim that what they intended to buy
was a jeepney typeIsuzu K. C. Cab. The vehicle that they bought
was not delivered.Instead, through misrepresentation and
machination, the PAMIdelivered an Isuzu crew cab. Later the
representative of PAMI told theBorbons that their available stock is
an Isuzu Cab but minus the rearbody, which the Borbons agreed to
deliver with the understanding thatthe PAMI will refund the Borbons
the amount of P10,000.00 to have therear body completed. PAMI
was not able to replace the vehicle until thevehicle delivered was
seized by order of this court. The assigneeexercise all the rights of
the assignor. The Borbons further claim thatthey are not in default of
their obligation because the Pangasinan AutoMart was first guilty of
not fulfilling its obligation in the contract.

ISSUE:
Borbon II vs. ServicewideG.R. No. 106418. July 11, 1996VITUG,
Whether petitioners could not avoid liability under thepromissory note
and the chattel mortgage
J.:

HELD:
FACTS:

No
The Borbons signed a promissory note where they jointly
andseverally promised to pay Pangasinan Auto Mart, Inc. the sum of
.
P122,856.00, to be payable without need of notice or demand,
ininstallments of P10,238.00 monthly for 12 months. To secure
thePromissory Note, the defendants executed a Chattel Mortgage on When the seller assigns his credit to another person, thelatter is
1brand new 1984 Isuzu, KCD 20 Crew Cab. The rights of PAMI was likewise bound by the same law. Accordingly, when theassignee
laterassigned to Filinvest with notice to the Borbons. Filinvest forecloses on the mortgage, there can be no further recoveryof the
assigned allits rights over the Promissory Note and the chattel deficiency, and the seller-mortgagee is deemed to haverenounced
mortgage to theplaintiff. Because the Borbons did not pay their any right thereto. A contrario, in the event the seller-mortgagee first
monthly installments,Filinvest demanded from the defendants the
seeks, instead, the enforcement of the additionalmortgages,
guarantees or other security arrangements, he must then
FACTS:
Jerome C. Aviso
Lourdes Suntay is the owner of a 3-carat diamond ring valued at
P5,500. She and Clarita Sison entered into a transaction wherein the
ring would be sold on commission. Clarita received the ring and
issued a receipt. After some time, Lourdes made demands for the
be held to have lost by waiver or non-choice his lien on the
return of the ring but the latter refused to comply. When Lourdes
chattelmortgage of the personal property sold by any mortgaged
insisted on the return, Clarita gave her the pawnshop ticket which is
back to him,although, similar to an action for specific performance,
the receipt of the pledge and she found out that 3 days after the ring
he may stilllevy on it.
was received by Clarita, it was pledged by Melia Sison, the niece of
Claritas husband in connivance with Clarita with the pawnshop of
Dominador Dizon for P2,600. Lourdes then filed an estafa case. She
then asked Dominador Dizon for the return of the ring pledged but
refused to return the ring thus the case filed by Lourdes.

The CFI issued a writ of replevin so Lourdes was able to have

possession of the ring during the pendency of the case. The CFI also
ruled in her favor which was affirmed by the CA on appeal. Thus the
case at bar.

ISSUE:
DIZON V. SUNTAY- Pledge of Immovable
W/N the CA erred in ruling that Lourdes has a right to possession of
the ring

An owner of a movable unlawfully pledged by another is not

estopped from recovering possession. Where the owner delivered
the diamond ring solely for sale on commission but the seller instead HELD: NO
pawned it without authority, the owner is not stopped form pursuing
an action against the pawnshop. It reiterated the ruling in de Garcia v. CA, that the controlling
provision is Art. 559 of the CC which states that the possession
ofmovable property acquired in good faith is equivalent to a title.
Nevertheless, one who has lost any movable or has been unlawfully
> Interpretation of the unlawfully deprived in Art. 559 of the CC. It is
deprived thereof may recover it from the person in possession of the
understood to include all cases where there has been no valid
same. If the possessor of a movable lost of which the owner has
transmission of ownership. If our legislature intended interpretation to
been unlawfully deprived, has acquired it in good faith at a public
be that of the French Code, it certainly would have adopted and used
sale, the owner cannot obtain its return without reimbursing the price
a narrower term than the broad language of Art. 559 (formerly 464)
paid therefor.
and the accepted meaning in accordance with our jurisprudence

Lourdes, being unlawfully deprived of her ring thus she has a right to
recover it from the current possessor. Dizon is engaged in a
business where presumably ordinary prudence would require him to
inquire whether or not an individual who is offering the jewelry by
pledge is entitled to do so. The principle of estoppel cannot help him
at all. Since there was no precaution availed of, perhaps because of
the difficulty of resisting opportunity for profit, he only has himself to
blame and should be the last to complain if the right of the true
owner of the jewelry should be recognized.

Other issues raised:

Principle of estoppel = has its roots in equity, moral right and natural
justice.

> For estoppel to exist, there must be a declaration, act or omission

by the party who is sought to be bound.

> A party should not be permitted to go against his own acts to the
prejudice of another.

Concurring opinion by J. Teehankee: