Second Syllabus SALES

125
MARCIANA CONLU, ET AL., vs. PABLO ARANETA G.R. No. L-

4508 March 4, 1910
FACTS:
Plaintiffs commenced an action against the defendants to recover, as owners, certain parcels of
land located in the pueblo of Molo, Province of Iloilo, together with damages, which parcels of
land are described in par. 6 of the complaint. Defendants allege that they are the owners of the
parcels of land in question. The question thus presented by the complaint was ―Who are the
owners of said parcels of land?‖ The lower court found that the plaintiffs were the owners and
were entitled to the possession of all of the parcels of land described in said paragraph 6 of the
complaint, except that parcel, together with the house located thereon, described in subsection (d)
of said paragraph 6. This latter parcel of land the lower court held belonged to the estate of Vito
Tiongco.
It was established that the house in question, with the tile roof, was originally the property of
Catalina Tiongco, sister of Anselma, which was afterwards left to Anselma by virtue of the will
made by Catalina before her death. In 1887, her nephew, Vito Tiongco, was appointed
gobernadorcillo of Molo, whose appointment was contested on the ground that he was not the
owner of any reality. Anselma, who then possessed many properties, put him into possession of
the said tile-roofed house as apparently his own property. Vito lived in the house from that date
up to the time of his death in 1904, and, as it appeared to everybody, he considered it as if he was
the real owner thereof. He made many repairs as well as alterations in the house on his account
further, after being put into possession of the house in the manner above mentioned, Anselma
agreed that he could have the house as his own if he would pay to her P3,000, which sum is
alleged to be the amount paid by her sister Catalina for the erection of said house; and that
afterwards, and before the death of Anselma, he had paid this sum to the satisfaction of Anselma,
It was found that the house with tile roof was, at the time of the death of Anselma, really the
property of Vito Tiongco.
ISSUE:
Whether or not the sale of real property made in 1887 be proved by oral testimony.
HELD:
YES. ‖An oral contract for the sale of real estate, made prior to the enactment of the Code of
Civil Procedure, is binding between the parties thereto, although it may still be necessary for the
parties seeking to enforce such contract to take some action to secure the execution of proper
documents, but this requirement will not render the agreement invalid.‖
Further, Sec. 335 of the Code of Procedure in Civil Actions, now in force, has established a rule
relating to the method of proving contracts of sale of real property, and an oral contract for the
sale of real property can not now be proven under said section 335 except "some note or
memorandum thereof be in writing and subscribed by the party charged or by his agent."
However, said sectionmakes no attempt to render oral contracts invalid. It simply provides that
the contract shall not be enforced by an action, unless the same is evidenced by some note or
memorandum. The contract exists and is valid, though it may not be clothed with the necessary
form and the effect of a noncompliance with the provisions of the statute is simply that no action
SALES AND LEASE under ATTY. CASINO - CASE DIGESTS - CLASS 2K A.Y. 2016-2017
ABONG, ABRIO, ACOSTA, ALIH, ARGOSO, BELLO, BERNALES, BRINGAS, CHING, CULAJARA, DADAYAN, DELGADO, DIZON, ENDAYA,
FAJANILAN, GARCIA, GOLANGCO, HIPE, LIM, MACABATO, MINGUA, PABLO, SALONGA, SANGUYO, SANTOS, SILLA, TOLENTINO, VALERA,
VELASCO, VERCELES, VILLANUEVA, VITORILLO
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can be proved unless the requirement is complied with; but a failure to except to the evidence
because it does not conform with the statute is a waiver of the provisions of the law. If the parties
to the action, during the trial make no objection to the admissibility of oral evidence to support a
contract of sale of real property, and thus permit the contract to be proved, it will be just as
binding upon the parties as if it had been reduced to writing.
In the present case the defendants called thirteen witnesses, who each testified concerning the sale
of the parcel of land and the house in question in or about the year 1887, and no objection was
made by the plaintiffs to the admissibility of this testimony. They permitted the defendants to
prove the oral contract of sale. The contract of sale, therefore, being fully proven, and under the
provisions of the law an oral contract for the sale of real property being binding and valid
between the parties, we see no escape from the conclusion that if the evidence was sufficient to
show the sale, that the contract was binding, even though it had not been reduced to writing.
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JULIO TAPEC VS. COURT OF APPEALS G.R. No. 111952 October 26, 1994
FACTS:
On 4 December 1994, the petitioners, who are husband and wife, filed a complaint for recovery of
ownership with the Regional Trial Court at Batac, Ilocos Norte, against David Cabuyadao and herein
private respondent Loreto Raguirag. The petitioners alleged in their complaint that they are the owners of
a parcel of land with an area of 11,850 square meters, located at Barangay No. 26, Oaiag-Upay, Paoay,
Ilocos Norte
The petitioners' claim of ownership is based on two deeds of absolute sale, one executed on 2 January
1950 by Trinidad Gonzales in favor of petitioner Julio Tapec,and the other executed on 28 May 1949 by
Rosario Gonzales in favor of the petitioners, 5 both acknowledged before the same notary public and duly
registered with the Office of the Register of Deeds under Act No. 3344 on 8 March 1950 and 29 July 1949
Respondent Loreto Raguirag, on the other hand, anchored his defense on a document, dated 15 May
1931and handwritten in Ilocano, wherein the brothers Victoriano, Gregorio, Matias, and Alejandro, all
surnamed Gonzales,sold to the spouses Manuel Raguirag and Clara Tapec, grandparents of respondent
Raguirag, for a consideration of P150.00 a pasture situated in Dumalaoing, Paoay, Ilocos Norte, with an
area of 3,450 sq. meters
ISSUE:
Whether or not the petitioner’s deed of sale should prevail over the alleged sale to the ancestors of
respondent Raguirag executed much earlier in a private instrument.
HELD:
No. The said private instrument is a deed of sale in which all the requisites of a valid contract are present
and which is binding upon the parties. Contracts shall be obligatory, in whatever form they may have
been entered into, provided all the essential requisites for their validity are present. The trial court
erroneously held that it is invalid because it is not in a public document as required by Article 1358 of the
Civil Code and pursuant to Manotok Realty, Inc. vs. Court of Appeals. 27 Article 1358 does not invalidate
the acts or contracts enumerated therein if they are not embodied in public documents.
This Article enumerates certain contracts that must appear in public or private documents. This provision
does not require such form in order to validate the act or contract but to insure its efficacy. It is limited to
an enumeration of the acts and contracts which should be reduced to writing in a public or private
instrument. The reduction to writing in a public or private document, required in this article, is not an
essential requisite for the existence of the contract, but is simply a coercive power granted to the
contracting parties by which they can reciprocally compel the observance of these formal requisites.
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ZAIDE VS. COURT OF APPEALS

GR No. L-46715-16
July 29, 1988
FACTS:
On January 11, 1965, EditaZaide executed a public instrument denominated ―Deed os Sale‖ by which, in
consideration of P5,000 paid to her, she sold the parcel of land covered by TCT No. 69088 to
LeonciaZaide. The deed described both the vendor, EditaZaide, and the vendee, LeonciaZaide, as
―married‖ but named neither of their husbands. The document however did bear the signature of Edita’s
husband, Roberto De Leon, indicating his ―marital consent.‖
The omission of the name of the vendee’s husband in the deed of sale gave rise to a problem. Precisely
because of it, the Register of Deeds refused to accept it for registration. A second deed of sale – couched
in the same terms as the first but this time with the names of the husbonds of both vendor and vendee –
was made and shortly thereafter was presented to, and was promptly accepted for registration, by the
register of deeds. The latter then issued new title, TCT No. 138606, in the name of ―LeonciaZaide,
married to PrimitivoZaide.‖
With this lot as collateral, the Zaide spouses thereafter obtained a loan from the GSIS a sum of P28,500.
This was sometime November 1964. The proceeds were used to construct a two-story apartment building
on the land.
On June 1, 1969, the house of the De Leons burned down. They moved to one of the doors of the
apartment built by the Zaide spouses. They were asked to pay rentals, they refused and litigation ensued.
The De Leon spouses filed a complaint with the court of first instant of Rizal against the Zaide spouses
alleging that the second deed of sale was forged and therefore should be cancelled. The De Leon spouses
reasoned that they ―could not possibly have sold their lot for the measly sum of P5,000 appearing in the
forged deed ..considering that the market price of the land … cannot be less than P20,000.‖
CFI rendered judgement in favor of the Zaide Spouses i.e the second deed of sale is VALID. The CA
reversed the decision. Hence, the instant case.
ISSUE:
Whether or not the first Deed of Sale is valid even if defective of faulty in its form
HELD:
YES, the first deed of sale is VALID. Although the first deed of sale was genuine, it was so far defective
as to render it unregistrable in the Registry of Property. As already pointed out, it did not set forth the
name of the vendee’s husband and was for this reason refused registration by the Register of Deeds.
The Defect was unsubstantial. It did not invalidate the deed. The legal Dispositions are clear. Though
defective in form, the sale was valid; and the parties could compel each other to do wat was needful to
make the document of sale registrable.
The law generally allows a contract of sale to be entered into any form, whether ―in writing, or by word
of mouth, or partly in writing and partly by word or mouth, or (even) inferred from the conduct of the
parties;‖ but if the agreement concerns ―the sale of land or of an interest therein,‖ the law requires not
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only that ―the same, or some note or memorandum thereof, be in writing, and subscribed by the party
charged’ in order that it may be enforceable by action, but also that the writing be in the form of a
―public document.‖ The law finally provides that ―if the law requires a document or other special form,
as in the acts and contracts enumerated in .. (Article 1358), the contracting parties may compel each other
to observe that form, once the contract has been perfected .. (and such) right may be exercises
simultaneously with the action upon the contract.‖
In the case at bar, the Zaides thus had the right to compel the De Leons to observe the special form
prescribed by law; i.e., revised the public document by inserting the name of the vendee’s husband.
Indeed, this was precisely what was done in the second deed of sale.
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LIMKETKAI SONS MILLING, INC vs. COURT OF APPEALS G.R. No. 118509
December 1, 1995
FACTS:
In 1976, Philippine Remnants Co., Inc. constituted the Bank of the Philippine Islands (BPI) as its trustee
to manage, administer, and sell its real estate property, one of which was the disputed lot in Pasig. In
1988, Pedro Revilla, Jr., a licensed real estate broker, was given formal authority by BPI to sell the lot for
P1,000/sqm. Broker Revilla contacted Alfonso Lim of Limketkai Sons Milling (LSM) who agreed to buy
the land. LSM asked that the price of P1,000/sqm. be reduced to P900.00 while Albano stated the price is
to be P1,100.00. The parties finally agreed that the lot would be sold at P1,000/sqm. to be paid in cash.
Notwithstanding the final agreement to pay P1,000/sqm. on a cash basis, Alfonso Lim (LSM official)
asked if it was possible to pay on terms. The bank officials stated that there was no harm in trying to ask
for payment on terms because in previous transactions, the same had been allowed. It was the
understanding, however, that should the term payment be disapproved, then the price shall be paid in cash.
It was Albano who dictated the terms under which the installment payment may be approved, and acting
thereon, Alfonso Lim wrote BPI through Merlin Albano embodying the payment initially of 10% and the
remaining 90% within a period of 90 days. 2 or 3 days later, LSM learned that its offer to pay on terms
had been frozen. Alfonso Lim went to BPI and tendered the full payment of P33,056,000.00 to Albano.
The payment was refused because Albano stated that the authority to sell that particular piece of property
in Pasig had been withdrawn from his unit. The same check was tendered to BPI Vice-President Nelson
Bona who also refused to receive payment.
LSM filed an action for specific performance with damages against BPI. In the course of the trial, BPI
informed the trial court that it had sold the property under litigation to National Book Store (NBS) in
1989. The complaint was thus amended to include NBS. RTC ruled in favor of LSM, holding that there
was a perfected contract of sale between LSM and BPI. CA reversed, holding that no contract of sale was
perfected because there was no concurrence of the three requisites enumerated in Article 1318 of the Civil
Code.
ISSUE:
Whether or not there was a perfected contract between petitioner Limketkai Sons Milling, Inc. and
respondent Bank of the Philippine Islands (BPI)
HELD:
Yes. There was a meeting of the minds between the buyer and the bank in respect to the price of
P1,000/sqm. The requirements in the payment of the purchase price on terms instead of cash were
suggested by BPI Vice-President Albano. Since the authority given to broker Revilla specified cash
payment, the possibility of paying on terms was referred to the Trust Committee but with the mutual
agreement that ―if the proposed payment on terms will not be approved by our Trust Committee,
Limketkai should pay in cash, the amount was no longer subject to the approval or disapproval of the
Committee, it is only on the terms.‖ The record shows that if payment was in cash, either broker Revilla or
Aromin had full authority. But because LSM took advantage of the suggestion of Vice-President Albano,
the matter was sent to higher officials. Immediately upon learning that payment on terms was frozen
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and/or denied, Limketkai exercised his right within the period given to him and tendered payment in full,
thus complying with their agreement.
The negotiation or preparation stage started with the authority given by Philippine Remnants to BPI to sell
the lot, followed by the authority given by BPI and confirmed by Philippine Remnants to broker Revilla to
sell the property, the offer to sell to Limketkai, the inspection of the property and the negotiations with
Aromin and Albano at the BPI offices. The perfection of the contract took place when Aromin and
Albano, acting for BPI, agreed to sell and Alfonso Lim with Albino Limketkai, acting for LSM, agreed to
buy the disputed lot at P1,000/sqm. Aside from this there was the earlier agreement between LSM and the
authorized broker.
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SWEDISH MATCH, AB, ET AL. vs. COURT OF APPEALS, ALS MANAGEMENT &
DEVELOPMENT CORPORATION AND ANTONIO K. LITONJUA G.R. No. 128120,
October 20, 2004
FACTS:
Swedish Match AB (hereinafter SMAB) is a corporation organized under the laws of Sweden not doing
business in the Philippines. SMAB, however, had three subsidiary corporations in the Philippines, all
organized under Philippine laws, to wit: Phimco Industries, Inc. (Phimco), Provident Tree Farms, Inc.,
and OTT/Louie (Phils.), Inc.
Sometime in 1988, STORA, the then parent company of SMAB, decided to sell SMAB of Sweden and the
latter’s worldwide match, lighter and shaving products operation to Eemland Management Services, now
known as Swedish Match NV of Netherlands, (SMNV), a corporation organized and existing under the
laws of Netherlands. STORA, however, retained for itself the packaging business.
SMNV initiated steps to sell the worldwide match and lighter businesses while retaining for itself the
shaving business. SMNV adopted a two-pronged strategy, the first being to sell its shares in Phimco
Industries, Inc. and a match company in Brazil, which proposed sale would stave-off defaults in the loan
covenants of SMNV with its syndicate of lenders. The other move was to sell at once or in one package
all the SMNV companies worldwide which were engaged in match and lighter operations thru a global
deal (hereinafter, global deal).
Ed Enriquez (Enriquez), Vice-President of Swedish Match SociedadAnonimas (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.
In his letter dated 3 November 1989, Litonjua submitted to SMAB a firm offer to buy all of the latter’s
shares in Phimco and all of Phimco’s shares in Provident Tree Farm, Inc. and OTT/Louie (Phils.), Inc. for
the sum of P750,000,000.00
Rossi sent his letter dated 11 June 1990, informing the former that ALS should undertake a due diligence
process or pre-acquisition audit and review of the draft contract for the Match and Forestry activities of
Phimco at ALS’ convenience. 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, for the shares of
SMAB corresponding to ninety-six percent (96%) of the Match and Forestry activities of Phimco. Rossi
added that in case the "global deal" presently under negotiation for the Swedish Match Lights Group
would materialize, SMAB would reimburse up to US$20,000.00 of ALS’ costs related to the due
diligence process.
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Litonjua in a letter dated 18 June 1990, expressed disappointment at the apparent change in SMAB’s
approach to the bidding process. He pointed out that in their 4 June 1990 meeting, he was advised that one
final bidder would be selected from among the four contending groups as of that date and that the decision
would be made by 6 June 1990. He criticized SMAB’s decision to accept a new bidder who was not
among those who participated in the 25 May 1990 bidding. 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.
Two days prior to the deadline for submission of the final bid, Litonjua again advised Rossi that they
would be unable to submit the final offer by 30 June 1990, considering that the acquisition audit of
Phimco and the review of the draft agreements had not yet been completed. He said, however, that they
would be able to finalize their bid on 17 July 1990 and that in case their bid would turn out better than any
other proponent, they would remit payment within ten (10) days from the execution of the contracts.
Enriquez sent notice to Litonjua that they would be constrained to entertain bids from other parties in view
of Litonjua’s failure to make a firm commitment for the shares of Swedish Match in Phimco by 30 June
1990.
Respondents prayed that petitioners be enjoined from selling or transferring the Phimco shares, or
otherwise implementing the sale or transfer thereof, in favor of any person or entity other than
respondents, and that any such sale to third parties be annulled and set aside. Respondents also asked that
petitioners be ordered to execute all documents or instruments and perform all acts necessary to
consummate the sales agreement in their favor.
Traversing the complaint, petitioners alleged that respondents have no cause of action, contending that no
perfected contract, whether verbal or written, existed between them. Petitioners added that respondents’
cause of action, if any, was barred by the Statute of Frauds since there was no written instrument or
document evidencing the alleged sale of the Phimco shares to respondents.
Petitioners filed a motion for a preliminary hearing of their defense of bar by the Statute of Frauds, which
the trial court granted. Both parties agreed to adopt as their evidence in support of or against the motion to
dismiss, as the case may be, the evidence which they adduced in support of their respective positions on
the writ of preliminary injunction incident.
ISSUE:
Whether or not there was a perfected contract of sale between petitioners and respondents with respect to
the Phimco shares.
HELD:
NO. A contract is defined as a juridical convention manifested in legal form, by virtue of which one or
more persons bind themselves in favor of another, or others, or reciprocally, to the fulfillment of a
prestation to give, to do, or not to do. There can be no contract unless the following requisites concur: (a)
consent of the contracting parties; (b) object certain which is the subject matter of the contract; (c) cause
of the obligation which is established. Contracts are perfected by mere consent, which is manifested by
the meeting of the offer and the acceptance upon the thing and the cause which are to constitute the
contract.
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Specifically, in the case of a contract of sale, required is the concurrence of three elements, to wit: (a)
consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b)
determinate subject matter, and (c) price certain in money or its equivalent. Such contract is born from the
moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.
In general, contracts undergo three distinct stages, to wit: negotiation; perfection or birth; and
consummation. Negotiation begins from the time the prospective contracting parties manifest their interest
in the contract and ends at the moment of agreement of the parties. Perfection or birth of the contract takes
place when the parties agree upon the essential elements of the contract. Consummation occurs when the
parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.
A negotiation is formally initiated by an offer. A perfected promise merely tends to insure and pave the
way for the celebration of a future contract. An imperfect promise (policitacion), on the other hand, is a
mere unaccepted offer. Public advertisements or solicitations and the like are ordinarily construed as mere
invitations to make offers or only as proposals. At any time prior to the perfection of the contract, either
negotiating party may stop the negotiation. The offer, at this stage, may be withdrawn; the withdrawal is
effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree
learns of the withdrawal.
An offer would require, among other things, a clear certainty on both the object and the cause or
consideration of the envisioned contract. Consent in a contract of sale should be manifested by the
meeting of the offer and the acceptance upon the thing and the cause which are to constitute the contract.
The offer must be certain and the acceptance absolute. A qualified acceptance constitutes a counter-offer.
Quite obviously, Litonjua’s letter dated 21 May 1990, proposing the acquisition of the Phimco shares for
US$36 million was merely an offer. This offer, however, in Litonjua’s own words, "is understood to be
subject to adjustment on the basis of an audit of the assets, liabilities and net worth of Phimco and its
subsidiaries and on the final negotiation between ourselves."
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UP v. PHILAB G.R. No. 152411 September 29, 2004
FACTS:
University of the Philippines (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 Baños. Providentially, the Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to fund
the acquisition of the laboratory furniture, including the fabrication thereof. Renato E. Lirio, the Executive
Assistant of the FEMF, gave the go-signal to BIOTECH to contact a corporation to accomplish the
project. Dr. William 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 a Letter dated July 23, 1982, Padolina informed Hector Navasero, the President of PHILAB, to proceed
with the fabrication of the laboratory furniture, per the directive of FEMF Executive Assistant Lirio.
Padolina also requested for copies of the shop drawings and a sample contract for the project, and that
such contract and drawings had to be finalized before the down payment could be remitted to the PHILAB
the following week. However, PHILAB failed to forward any sample contract.
On August 24, 1982, FEMF remitted P600,000 to PHILAB as downpayment for the laboratory furniture
for the BIOTECH project, for which PHILAB issued Official Receipt No. 253 to FEMF. On October 22,
1982, FEMF made another partial payment of P800,000 to PHILAB, for which the latter issued Official
Receipt No. 256 to FEMF. The remittances were in the form of checks drawn by FEMF and delivered to
PHILAB, through Padolina.
On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP Los Baos and FEMF, represented
by its Executive Officer, Rolando Gapud, 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. In the
meantime, Navasero promised to submit the contract for the installation of laboratory furniture to
BIOTECH, by January 12, 1983. However, Navasero failed to do so. Instead of submitting the said
contract, PHILAB submitted to BIOTECH an accomplishment report on the project as of February 28,
1983, and requested payment thereon.
President Marcos was ousted from office during the February 1986 EDSA Revolution. On March 26,
1986, 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.
ISSUE:
Whether or not the CA failed to apply the law on contracts between PHILAB and FEMF?
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HELD:
The ruling of the Supreme Court is 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. No contract existed
between UP and PHILAB as it could not have entered into any agreement without the requisite public
bidding and a formal written contract. 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.
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PERPETUA ABUAN VS. EUSTAQUIO GARCIA G.R. No. L-20091 July 30, 1965
FACTS:
On August 7, 1953, petitioners Perpetua Abuan et al. sold a parcel of rice land to defendants Eustaquio
Garcia et al. through a Deed of Absolute Sale. A TCT was issued to defendants. Later, petitioners filed an
action to recover the land, alleging the sale was tainted with fraud and was without consideration.
Reaching an amicable settlement, the parties entered into an "Agreement" dated February 28, 1955, under
which defendants paid P500 as partial payment of the purchase price of the land, and promised to pay the
balance of P1, 500 on or before April 30, 1955, with a grace period of 30 days. The Agreement also stated
that it "shall supersede all previous agreements or contracts heretofore entered into..." Plaintiffs instituted
the present action on March 4, 1960. Defendants moved to dismiss, on the ground that plaintiffs' right of
action was already barred, because the five-year redemption period had already expired.
Section 119 of the Public Land Law provides: o Every conveyance of land acquired under the free patient
or homestead provisions, when proper, shall be subject to re-purchase by the applicant, his widow, or
legal heirs, for a period of five years from the date of conveyance . Plaintiffs argue that the period should
be counted from the date of full payment (May 1965) since it was on this date that the contract was
consummated. CFI Nueva Vizcaya dismissed the complaint, fixing the starting date as February 28, 1955,
when the Agreement was entered into. CA certified the case to SC. SC: "Conveyance" means transfer of
ownership; it means the date when the title to the land is transferred from one person to another. The
5year period should, therefore, be reckoned with from the date that defendants acquired ownership.
ISSUE:
Whether or not the defendants legally acquire ownership of the land?
HELD:
Upon execution of the Deed of Absolute Sale (August 7, 1953). Dismissal affirmed. Under Art. 1498,
When the sale is made through a public instrument, as in this case, the execution thereof shall be
equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary
does not appear or cannot be clearly inferred. This manner of delivery is common to personal as well as
real property.
It is clear, therefore, that defendants acquired ownership to the land in question upon the execution of the
Deed of Absolute on August 7, 1953. The Agreement of February 28, 1955, only superseded the deed as
to the terms and conditions of payment. The Agreement did not operate to revest the ownership of the
land in the plaintiffs. Assuming arguendo that the Deed is null and void as petitioners allege, we can
consider the date of the Agreement at the latest, as the time within which ownership is vested in the
defendants.
While it is a private instrument the execution of which could not be construed as constructive delivery
under Art. 1498, Art.1496 explicitly provides that ownership of the thing sold is acquired by the vendee
from the moment it is delivered to him "in any other manner signifying an agreement that the possession
is transferred from the vendor to the vendee." The intention to give possession (and ownership) is
manifest in the Agreement, especially considering the following circumstances: (1) the payment of part of
the purchase price, there being no stipulation in the agreement that ownership will not vest in the vendees
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until full payment of the price; and (2) the fact that the agreement was entered into in consideration of
plaintiffs' desistance, as in fact they did desist, in prosecuting their reivindicatory action, thereby leaving
the property in the hands of the then and now defendants — as owners thereof, necessarily. This was
delivery brevimanu permissible under Articles 1499 and 1501 of the New Civil Code. In the absence of an
express stipulation to the contrary, the payment of the price is not a condition precedent to the transfer of
ownership, which passes by delivery of the thing to the buyer.
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FILINVEST CREDIT CORPORATION, PLAINTIFF-APPELLEE, VS.PHILIPPINE

ACETYLENE, CO., INC., DEFENDANT-APPELLANT.
GR No L-50449 January 30, 1982
FACTS:
Defendant-appellant Philippine Acetylene Co., Inc., purchased from Alexander Lim, as evidenced by a
Deed of Sale, a motor vehicle (Chevrolet, 1969 model) for P55,247.80 with a down payment of
P20,000.00 and the balance of P35,247.80 payable, under the terms and conditions of the promissory note.
As security for the payment of said promissory note, the appellant executed a chattel mortgage over the
same motor vehicle in favor of said Alexander Lim. Subsequently, Alexander Lim assigned to the
Filinvest Finance Corporation all his rights, title, and interests in the promissory note and chattel mortgage
by virtue of a Deed of Assignment.
Thereafter, the Filinvest Finance Corporation, as a consequence of its merger with the Credit and
Development Corporation assigned to the new corporation, herein plaintiff-appellee Filinvest Credit
Corporation, all its rights, title, and interests on the aforesaid promissory note and chattel mortgage which,
in effect, the payment of the unpaid balance owed by defendant-appellant to Alexander Lim was financed
by plaintiff-appellee such that Lim became fully paid.
Philippine Acetylene Co., Inc failed to comply with the terms and conditions set forth in the promissory
note and chattel mortgage since it had defaulted in the payment of nine successive installments. Filinvest
then sent a demand letter to remit the said amount in full in addition to stipulated interest and charges or
return the mortgaged property to my client within five (5) days from date of the letter. Philippine
Acetylene Co., Inc wrote back advising Filinvest of its decision to "return the mortgaged property, which
return shall be in full satisfaction of its indebtedness pursuant to Article 1484 of the New Civil Code."
Accordingly, the mortgaged vehicle was returned to Filinvest together with the document "Voluntary
Surrender with Special Power of Attorney To Sell" executed by Philippine Acetylene Co., Inc. (PACI)
Later on, Filinvest wrote a letter to PACI informing the latter that Filinvest cannot sell the motor vehicle
as there were unpaid taxes on the vehicle. Filinvest then offered to deliver back the motor vehicle to PACI
but the latter refused to accept it, so Filinvest instituted an action for collection of a sum of money with
damages.
Appellant PACI avers that Filinvest has no cause of action against it since its obligation towards Filinvest
was extinguished when in compliance with the demand letter, it returned the mortgaged property to
Filinvest, and that assuming arguendo that the return of the property did not extinguish its obligation, it
was nonetheless justified in refusing payment since Filinvest is not entitled to recover the same due to the
breach of warranty committed by the original vendor-assignor Alexander Lim.
PACI further contended that when it opted to return, as in fact it did return, the mortgaged motor vehicle
to Filinvest, said return necessarily had the effect of extinguishing appellant's obligation for the unpaid
price to the appellee, construing the return to and acceptance by the appellee of the mortgaged motor
vehicle as a mode of payment, specifically, dation in payment or dacion en pago which according to
PACI, virtually made Filinvest the owner of the mortgaged motor vehicle by the mere delivery thereof.
ISSUE:
140
Whether or not the return of the mortgaged motor vehicle to the appellee by virtue of its voluntary
surrender by the appellant totally extinguished and/or cancelled its obligation to the appellee?
HELD:
NO. The evidence on the record fails to show that the mortgagee, the herein appellee, consented, or at
least intended, that the mere delivery to, and acceptance by him, of the mortgaged motor vehicle be
construed as actual payment
The mere return of the mortgaged motor vehicle by the mortgagor, the herein appellant (PACI), to the
mortgagee, the herein appellee (Filinvest), does not constitute dation in payment or dacion en pago in the
absence, express or implied of the true intention of the parties. Dacion en pago, according to Manresa, is
the transmission of the ownership of a thing by the debtor to the creditor as an accepted equivalent of the
performance of obligation. In dacion en pago, as a special mode of payment, the debtor offers another
thing to the creditor who accepts it as equivalent of payment of an outstanding debt. The undertaking
really partakes in one sense of the nature of sale, that is, the creditor is really buying the thing or property
of the debtor, payment for which is to be charged against the debtor's debt. As such, the essential elements
of a contract of sale, namely, consent, object certain, and cause or consideration must be present. In its
modern concept, what actually takes place in dacion en pago is an objective novation of the obligation
where the thing offered as an accepted equivalent of the performance of an obligation is considered as the
object of the contract of sale, while the debt is considered as the purchase price. In any case, common
consent is an essential prerequisite, be it sale or innovation to have the effect of totally extinguishing the
debt or obligation.
A more solid basis of the true intention of the parties is furnished by the document executed by appellant
captioned "Voluntary Surrender with Special Power of Attorney To Sell." An examination of the language
of the document reveals that the possession of the mortgaged motor vehicle was voluntarily surrendered
by the appellant to the appellee authorizing the latter to look for a buyer and sell the vehicle in behalf of
the appellant who retains ownership thereof, and to apply the proceeds of the sale to the mortgage
indebtedness, with the undertaking of the appellant to pay the difference, if any, between the selling price
and the mortgage obligation. With the stipulated conditions as stated, the appellee, in essence was
constituted as a mere agent to sell the motor vehicle which was delivered to the appellee, not as its
property, for if it were, he would have full power of disposition of the property, not only to sell it as is the
limited authority given him in the special power of attorney. Had appellee intended to completely release
appellant of its mortgage obligation, there would be no necessity of executing the document captioned
"Voluntary Surrender with Special Power of Attorney To Sell." Nowhere in the said document can We
find that the mere surrender of the mortgaged motor vehicle to the appellee extinguished appellant's
obligation for the unpaid price.
PERFECTO DY, JR. vs. COURT OF APPEALS, GELAC TRADING INC., and
141
ANTONIO V. GONZALES,
G.R. No. 92989
July 8, 1991
FACTS:
WilfredoDy purchased a truck and a farm tractor through LIBRA which was also mortgaged with the
latter, as a security to the loan.
Petitioner, expresses his desire to purchased his brother’s tractor in a letter to LIBRA which also includes
his intention to shoulder its mortgaged. LIBRA approved the request. At the time that WilfredoDy
executed a deed of absolute sale in favor of petitioner, the tractor and truck were in the possession of
LIBRA for his failure to pay the amortization.
When petitioner finally fulfilled its obligation to pay the tractor, LIBRA would only release the same only
if he would also pay for the truck. In order to fulfill LIBRA’s condition, petitioner convinced his sister to
pay for the remaining truck, to which she released a check amounting to P22,000. LIBRA however,
insisted that the check must be first cleared before it delivers the truck and tractor.
Meanwhile, another case penned ―Gelac Trading Inc vs. WilfredoDy‖ was pending in Cebu as a case to
recover for a sum of money (P12,269.80). By a writ of execution the court in Cebu ordered to seize and
levy the tractor which was in the premise of LIBRA, it was sold in a public auction to which it was
purchased by GELAC. The latter then sold the tractor to Antonio Gonzales.
RTC rendered in favor of petitioner.
CA dismissed the case, alleging that it still belongs to Wilfredo Dy.
ISSUE:
Whether or not there was a consummated sale between Petitioner and LIBRA?
HELD:
NO.The payment of the check was actually intended to extinguish the mortgage obligation so that the
tractor could be released to the petitioner. It was never intended nor could it be considered as payment of
the purchase price because the relationship between Libra and the petitioner is not one of sale but still a
mortgage. The clearing or encashment of the check which produced the effect of payment determined the
full payment of the money obligation and the release of the chattel mortgage. It was not determinative of
the consummation of the sale. The transaction between the brothers is distinct and apart from the
transaction between Libra and the petitioner. The contention, therefore, that the consummation of the sale
depended upon the encashment of the check is untenable.
142
VISAYAN SAWMILL COMPANY, INC., and ANG TAY, vs. THE HONORABLE
COURT OF APPEALS and RJH TRADING, RAMON J. HIBIONADA, G.R. No.
83851. March 3, 1993.
FACTS:
On May 1, 1983, herein plaintiff-appellee and defendants-appellants entered into a sale involving scrap
iron located at the stockyard of defendant-appellant corporation at Cawitan, Sta. Catalina, Negros
Oriental, subject to the condition that plaintiff-appellee will open a letter of credit in the amount of
P250,000.00 in favor of defendant-appellant corporation on or before May 15, 1983. This is evidenced by
a contract entitled `Purchase and Sale of Scrap Iron' duly signed by both parties.
On May 17, 1983, plaintiff-appellee through his man (sic), started to dig and gather and (sic) scrap iron at
the defendant-appellant's (sic) premises, proceeding with such endeavor until May 30 when
defendantsappellants allegedly directed plaintiff-appellee's men to desist from pursuing the work in view
of an alleged case filed against plaintiff-appellee by a certain Alberto Pursuelo. This, however, is denied
by defendants-appellants who allege that on May 23, 1983, they sent a telegram to plaintiff-appellee
cancelling the contract of sale because of failure of the latter to comply with the conditions thereof.
On May 24, 1983, plaintiff-appellee informed defendants-appellants by telegram that the letter of credit
was opened May 12, 1983 at the Bank of the Philippine Islands main office in Ayala, but then (sic) the
transmittal was delayed.
On May 26, 1983, defendants-appellants received a letter advice from the Dumaguete City Branch of the
Bank of the Philippine Islands dated May 26, 1983, the content of which is quited (sic) as follows:
'Please be advised that we have received today cable advise from our Head Office which reads as follows:
'Open today our irrevocable Domestic Letter of Credit No. 01456-d fot (sic) P250,000.00 favor ANG
TAY c/o Visayan Sawmill Co., Inc. Dumaguete City, Negros Oriental Account of ARMACOMARSTEEL
ALLOY CORPORATION 2nd Floor Alpap 1 Bldg., 140 Alfaro stp (sic) Salcedo Village, Makati, Metro
Manila Shipments of about 500 MT of assorted steel scrap marine/heavy equipment expiring on July 24,
1983 without recourse at sight draft drawn on ArmacoMarsteel Alloy Corporation accompanied by the
following documents: Certificate of Acceptance by Armaco-Marsteel Alloy Corporation shipment from
Dumaguete City to buyer's warehouse partial shipment allowed/transhipment (sic) not allowed'.
For your information'.
On July 19, 1983, plaintiff-appellee sent a series of telegrams stating that the case filed against him by
Pursuelo had been dismissed and demanding that defendants-appellants comply with the deed of sale,
otherwise a case will be filed against them.
In reply to those telegrams, defendants-appellants' lawyer, on July 20, 1983 informed plaintiff-appellee's
lawyer that defendant-appellant corporation is unwilling to continue with the sale due to plaintiffappellee's
failure to comply with essential pre-conditions of the contract.
143
On July 29, 1983, plaintiff-appellee filed the complaint below with a petition for preliminary attachment.
The writ of attachment was returned unserved because the defendant-appellant corporation was no longer
in operation and also because the scrap iron as well as other pieces of machinery can no longer be found
on the premises of the corporation."
ISSUE:
Whether or not here was delivery of the scrap iron subject of the sale?
HELD:
Paragraph 6 of the Complaint reads: "6. That on May 17, 1983 Plaintiff with the consent of defendant
AngTay sent his men to the stockyard of Visayan Sawmill Co., Inc. at Cawitan, Sta. Catalina, Negros
Oriental to dig and gather the scrap iron and stock the same for weighing."
This permission or consent can, by no stretch of the imagination, be construed as delivery of the scrap iron
in the sense that, as held by the public respondent, citing Article 1497 of the Civil Code, petitioners placed
the private respondent in control and possession thereof. In the first place, said Article 1497 falls under
the Chapter Obligations of the Vendor, which is found in Title VI (Sales), Book IV of the Civil Code. As
such, therefore, the obligation imposed therein is premised on an existing obligation to deliver the subject
of the contract. In the instant case, in view of the private respondent's failure to comply with the positive
suspensive condition earlier discussed, such an obligation had not yet arisen. In the second place, it was a
mere accommodation to expedite the weighing and hauling of the iron in the event that the sale would
materialize. The private respondent was not thereby placed in possession of and control over the scrap
iron. Thirdly, We cannot even assume the conversion of the initial contract or promise to sell into a
contract of sale by the petitioner corporation's alleged implied delivery of the scrap iron because its action
and conduct in the premises do not support this conclusion. Indeed, petitioners demanded the fulfillment
of the suspensive condition and eventually cancelled the contract.
SAN LORENZO DEVELOPMENT CORPORATION vs. COURT OF APPEALS G.R.

No. 124242 January 21, 2005
144
FACTS:
On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo
Babasanta who made a down payment of fifty thousand pesos (P50,000.00) as evidenced by a
memorandum receipt issued by Pacita Lu of the same date. Several other payments totaling two hundred
thousand pesos (P200,000.00) were made by Babasanta. He demanded the execution of a Final Deed of
Sale in his favor so he may effect full payment of the purchase price; however, the spouses declined to
push through with the sale. They claimed that when he requested for a discount and they refused, he
rescinded the agreement. Thus, Babasanta filed a case for Specific Performance. San Lorenzo
Development Corporation (SLDC) alleged that on 3 May 1989, the two parcels of land involved had been
sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was a buyer in good faith and for
value and therefore it had a better right over the property in litigation.
ISSUE:
Whether or not there was a perfected contract of sale between Babasanta and Spouses Lu.
HELD:
No. The agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale.
The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos
(P50,000.00) from Babasanta as partial payment. Spouses Lu never intended to transfer ownership to
Babasanta except upon full payment of the purchase price. Babasanta’s letter dated 22 May 1989 was
quite telling. He stated therein that despite his repeated requests for the execution of the final deed of sale
in his favor so that he could effect full payment of the price, Pacita Lu allegedly refused to do so. In
effect, Babasanta himself recognized that ownership of the property would not be transferred to him until
such time as he shall have effected full payment of the price. The receipt signed by Pacita Lu should
legally be considered as a perfected contract to sell. There was no double sale in this case because the
contract in favor of Babasanta was a mere contract to sell; hence, Art. 1544 is not applicable. There was
neither actual nor constructive delivery as his title is based on a mere receipt. Based on this alone, the
right of SLDC must be preferred.
EUFEMIA BALATICO VDA. DE AGATEP VS.

ROBERTA* L. RODRIGUEZ and NATALIA AGUINALDO VDA. DE LIM G.R. No.
170540 October 28, 2009
FACTS:
145
The present case arose from a dispute involving a parcel of land located at Zinundungan, Lasam, Cagayan
with an area of 1,377 square meters and covered by Transfer Certificate of Title (TCT) No. T-10759 of
the Register of Deeds of the Province of Cagayan.
The subject property was previously owned by herein respondent Natalia Aguinaldo Vda. de Lim. On July
18, 1975, Lim mortgaged the lot to the Philippine National Bank (PNB), Tuguegarao Branch, to secure a
loan of P30,000.00 which she obtained from the said bank. The mortgage contract was duly annotated on
TCT No. T-10759. Lim was not able to pay her loan prompting PNB to foreclose the property. On April
13, 1983, the subject parcel of land was sold at public auction to PNB as the highest bidder. Lim failed to
redeem the property. After the expiration of the one-year redemption period allowed by law, PNB
consolidated its ownership over the disputed land. As a consequence, TCT No. T-10759 in the name of
Lim was canceled and a new certificate of title (TCT No. T-65894) was issued in the name of PNB on
November 8, 1985.
Meanwhile, on August 18, 1976, while the mortgage was still in effect, Lim sold the subject property to
herein petitioner's husband, Isaac Agatep (Agatep), for a sum of P18,000.00. However, the sale was not
registered. Neither did Lim deliver the title to petitioner or her husband. Nonetheless, Agatep took
possession of the same, fenced it with barbed wire and introduced improvements thereon. Subsequently,
Agatep died in 1978. Despite his death, his heirs, including herein petitioner, continued to possess the
property.
In July 1992, the subject lot was included among PNB's acquired assets for sale. Later on, an invitation to
bid was duly published. On April 20, 1993, the disputed parcel of land was sold to herein respondent
Roberta L. Rodriguez (Rodriguez), who is the daughter of respondent Lim. Subsequently, TCT No.
T65894, in the name of PNB, was canceled and a new title (TCT No. T-89400) was issued in the name of
Rodriguez.
On January 27, 1995, herein petitioner filed a Complaintfor "reconveyance and/or damages" with the RTC
of Aparri, Cagayan against herein respondents.
Later, the complaint was amended to implead PNB as a party-defendant.
RTC and CA dismissed the case for lack of merit
ISSUE:
Whether or not PNB acquire ownership over the disputed land?
HELD:
The Court finds petitioner's arguments untenable.
The Court's ruling in Manuel R. Dulay Enterprises, Inc. v. Court of Appeals is instructive, to wit:
Petitioner's contention that private respondent Torres never acquired ownership over the subject property
since the latter was never in actual possession of the subject property nor was the property delivered to
him is also without merit.
146
Paragraph 1, Article 1498 of the New Civil Code provides:

When the sale is made through a public instrument, the execution thereof shall be equivalent to the
delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or
cannot clearly be inferred.
Under the aforementioned article, the mere execution of the deed of sale in a public document is
equivalent to the delivery of the property. Likewise, this Court had held that:
It is settled that the buyer in a foreclosure sale becomes the absolute owner of the property purchased if it
is not redeemed during the period of one year after the registration of the sale. As such, he is entitled to
the possession of the said property and can demand it at any time following the consolidation of
ownership in his name and the issuance to him of a new transfer certificate of title. The buyer can, in fact,
demand possession of the land even during the redemption period except that he has to post a bond in
accordance with Section 7 of Act No. 3133, as amended. No such bond is required after the redemption
period if the property is not redeemed. Possession of the land then becomes an absolute right of the
purchaser as confirmed owner.
Therefore, prior physical delivery or possession is not legally required since the execution of the Deed of
Sale is deemed equivalent to delivery.
RAYMUNDO S. DE LEON VS BENITA T. ONG G.R. No. 170405 February 2, 2010
FACTS:
On March 10, 1993, Raymundo S. De Leon (petitioner) sold 3 parcels of land to Benita T.
Ong(respondent). The said properties were mortgaged to a financial institution; Real Savings & Loan
Association Inc. (RSLAI). The parties then executed a notarized deed of absolute sale with assumption of
mortgage. As indicated in the deed of mortgage, the parties stipulated that the petitioner (de Leon) shall
execute a deed of assumption of mortgage in favor of Ong (respondent)after full payment of the P415,000.
147
They also agreed that the respondent (Ong) shall assume the mortgage. The respondent then subsequently
gave petitioner P415,000 as partial payment. On the other hand, de Leon handed the keys to Ong and de
Leon wrote a letter to inform RSLAI that the mortgage will be assumed by Ong.
Thereafter, the respondent took repairs and made improvements in the properties. Subsequently,
respondent learned that the same properties were sold to a certain Viloria after March 10, 1993 and
changed the locks, rendering the keys given to her useless. Respondent proceeded to RSLAI but she was
informed that the mortgage has been fully paid and that the titles have been given to the said person.
Respondent then filed a complaint for specific performance and declaration of nullity of the second sale
and damages. The petitioner contended that respondent does not have a cause of action against him
because the sale was subject to a condition which requires the approval of RSLAI of the mortgage.
Petitioner reiterated that they only entered into a contract to sell. The RTC dismissed the case. On appeal,
the CA upheld the sale to respondent and nullified the sale to Viloria. Petitioner moved for
reconsideration to the SC.
ISSUE:
Whether the parties entered into a contract of sale or a contract to sell?
HELD:
In a contract of sale, the seller conveys ownership of the property to the buyer upon the perfection of the
contract. The non-payment of the price is a negative resolutory condition. Contract to sell is subject to a
positive suspensive condition. The buyer does not acquire ownership of the property until he fully pays
the purchase price.In the present case, the deed executed by the parties did not show that the owner
intends to reserve ownership of the properties. The terms and conditions affected only the manner of
payment and not the immediate transfer of ownership. It was clear that the owner intended a sale because
he unqualifiedly delivered and transferred ownership of the properties to the respondent
NFF Industrial Corp. vs. G & L Associated Brokerage and/or Gerardo Trinidad
G.R. No. 178169, January 12,2015
FACTS:
148
On 20 July 1999, G&L ordered 1,000 pieces of bulk bags from NFF, at P380.00 per piece, payable within
30 days from delivery covered by Purchase Order No. 97-002. It was also stated in the purchase order
that bags were for immediate delivery to G&L, c/o Hi-Cement Corporation. G&L then ordered additional
1,000 bulk bags. According to NFF, it had complied with its obligation after making three deliveries to
G&L which were all acknowledged by the latter’s representatives. After lapse of 30 days from the time of
the last alleged delivery, NFF made demands for payment of P760, 000.00 total purchase price. As
demands remained unheeded, NFF filed a complaint for sum of money. G&L contended that the Purchase
Order specifically provided that bulk bags were to be delivered at Hi-Cement Corporation to Mr. Raul
Ambrosio, G&L’s authorized representative. Since the bulk bags were not received by authorized
representative in conformity with terms of the purchase order, there was no delivery and G&L could not
be obliged to pay price of the bulk bags. RTC ruled in favor of NFF. CA reversed the judgment of the
lower court. NFF filed petition in Supreme Court.
ISSUE:
Whether or not there a valid delivery by NFF, which would give rise to obligation to pay on the part of
G&L?
HELD:
Yes, there was a valid delivery by NFF to G&L. Civil Code provides that ownership of the thing sold is
acquired by vendee once it is delivered to him. The thing sold shall be understood as delivered when it is
placed in the control and possession of the vendee. Delivery is described as a composite act, a thing in
which both parties must join and the minds of both parties concur.
In the present case, there were various occasions of delivery by NFF to G&L into premises of Hi-Cement,
which was the designated delivery site. These were all duly acknowledged by respondent Trinidad,
general manager of G&L. NFF actually delivered the bulk bags, although it was not delivered to the
person named in the Purchase Order. Nevertheless, G&L had effectively abandoned whatever infirmities
may have attended the delivery of the bulk bags for its failure of bringing up immediately its wary about
the manner of delivery and acknowledging receipt of the bulk bags. Thus, petition was granted. G&L
was ordered by Supreme Court to pay P760, 000.00 plus interest.
SPOUSES EROSTO SANTIAGO and NELSIE SANTIAGOVS.MANCER VILLAMOR,

CARLOS VILLAMOR, JOHN VILLAMOR and DOMINGO VILLAMOR, JR.
G.R. No. 168499 November 26, 2012
FACTS:
149
In January 1982, the spouses Domingo Villamor, Sr. and Trinidad Gutierrez Villamor (spouses Villamor,
Sr.), the parents of MancerVillamor, Carlos Villamor and Domingo Villamor, Jr. (respondents) and the
grandparents of respondent John Villamor, mortgaged their 4.5-hectare coconut land in Sta. Rosa, San
Jacinto, Masbate, known as Lot No. 1814, to the Rural Bank of San Jacinto (Masbate), Inc. (San Jacinto
Bank) as security for a P10,000.00 loan.
For non-payment of the loan, the San Jacinto Bank extrajudicially foreclosed the mortgage, and, as the
highest bidder at the public auction, bought the land. When the spouses Villamor, Sr. failed to redeem the
property within the prescribed period, the San Jacinto Bank obtained a final deed of sale in its favor
sometime in 1991. The San Jacinto Bank then offered the land for sale to any interested buyer.
a. The Specific Performance Case
Since the respondents had been in possession and cultivation of the land, they decided, together with their
sister Catalina VillamorRanchez, to acquire the land from the San Jacinto Bank. The San Jacinto Bank
agreed with the respondents and Catalina to a P65,000.00 sale, payable in installments. The respondents
and Catalina made four (4) installment payments of P28,000.00, P5,500.00, P7,000.00 and P24,500.00 on
November 4, 1991, November 23, 1992, April 26, 1993 and June 8, 1994, respectively.
When the San Jacinto Bank refused to issue a deed of conveyance in their favor despite full payment, the
respondents and Catalina filed a complaint against the San Jacinto Bank (docketed as Civil Case No. 200)
with the RTC on October 11, 1994. The complaint was for specific performance with damages.
The San Jacinto Bank claimed that it already issued a deed of repurchase in favor of the spouses Villamor,
Sr.; the payments made by the respondents and Catalina were credited to the account of Domingo, Sr.
since the real buyers of the land were the spouses Villamor, Sr.
In a February 10, 2004 decision, the RTC dismissed the specific performance case. It found that the San
Jacinto Bank acted in good faith when it executed a deed of "repurchase" in the spouses Villamor, Sr.’s
names since Domingo, Sr., along with the respondents and Catalina, was the one who transacted with the
San Jacinto Bank to redeem the land.
The CA, on appeal, set aside the RTC’s decision. The CA found that the respondents and Catalina made
the installment payments on their own behalf and not as representatives of the spouses Villamor, Sr. The
San Jacinto Bank mistakenly referred to the transaction as a "repurchase" when the redemption period had
already lapsed and the title had been transferred to its name; the transaction of the respondents and
Catalina was altogether alien to the spouses Villamor, Sr.’s loan with mortgage. Thus, it ordered the San
Jacinto Bank to execute the necessary deed of sale in favor of the respondents and Catalina, and to pay
P30,000.00 as attorney’s fees.No appeal appears to have been taken from this decision.
b. The Present Quieting of Title Case
On July 19, 1994 (or prior to the filing of the respondents and Catalina’s complaint for specific
performance, as narrated above), the San Jacinto Bank issued a deed of sale in favor of Domingo, Sr. On
July 21, 1994, the spouses Villamor, Sr. sold the land to the petitioners for P150,000.00.
150
After the respondents and Catalina refused the petitioners’ demand to vacate the land, the petitioners filed
on October 20, 1994 a complaint for quieting of title and recovery of possession against the respondents.
This is the case that is now before us.
The respondents and Catalina assailed the San Jacinto Bank’s execution of the deed of sale in favor of
Domingo, Sr., claiming that the respondents and Catalina made the installment payments on their own
behalf.
In its May 28, 1997 decision, the RTC declared the petitioners as the legal and absolute owners of the
land, finding that the petitioners were purchasers in good faith; the spouses Villamor, Sr.’s execution of
the July 21, 1994 notarized deed of sale in favor of the petitioners resulted in the constructive delivery of
the land. Thus, it ordered the respondents to vacate and to transfer possession of the land to the petitioners,
and to pay P10,000.00 as moral damages.
On appeal, the CA, in its August 10, 2004 decision, found that the petitioners’ action to quiet title could
not prosper because the petitioners failed to prove their legal or equitable title to the land. It noted that
there was no real transfer of ownership since neither the spouses Villamor, Sr. nor the petitioners were
placed in actual possession and control of the land after the execution of the deeds of sale. It also found
that the petitioners failed to show that the respondents and Catalina’s title or claim to the land was invalid
or inoperative, noting the pendency of the specific performance case, at that time on appeal with the CA.
Thus, it set aside the RTC decision and ordered the dismissal of the complaint, without prejudice to the
outcome of the specific performance case.
When the CA denied the motion for reconsideration that followed, the petitioners filed the present Rule 45
petition.
ISSUE:
Whether or not Spouses Santiago has legal title over the property?
HELD:
The Court said that spouses Santiago failed to prove that they have any legal or equitable title over the
disputed land.
Article 1477 of the Civil Code recognizes that the "ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof."
Related to this article is Article 1497 which provides that "the thing sold shall be understood as delivered,
when it is placed in the control and possession of the vendee."
With respect to incorporeal property, Article 1498 of the Civil Code lays down the general rule: the
execution of a public instrument "shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred." However, the
execution of a public instrument gives rise only to a prima facie presumption of delivery, which is negated
by the failure of the vendee to take actual possession of the land sold.
In this case, no constructive delivery of the land transpired upon the execution of the deed of sale since it
was not the spouses Villamor, Sr. but the respondents who had actual possession of the land. The
presumption of constructive delivery is inapplicable and must yield to the reality that the petitioners were
not placed in possession and control of the land.
151
In this case, the spouses Villamor, Sr. were not in possession of the land. The petitioners, as prospective
vendees, carried the burden of investigating the rights of the respondents who were then in actual
possession of the land. The petitioners cannot take refuge behind the allegation that, by custom and
tradition in San Jacinto, Masbate, the children use their parents' property, since they offered no proof
supporting their bare allegation.
The burden of proving the status of a purchaser in good faith lies upon the party asserting that status and
cannot be discharged by reliance on the legal presumption of good faith. The petitioners failed to
discharge this burden.
EstelitaVillamar vs. BalbinoMangaoil G.R. No. 188661 April 11, 2012
FACTS:
The petitioner Villamar, the registered owner of the property, entered into an agreement with the
respondent Mangaoil to purchase and sale a parcel of land. The terms in their agreement includes the
down payment of P 185,000 pesos, which will be for the payment of a loan secured from the Rural Bank
152
of Cauayan so that it will be withdrawn and released from the bank and that a deed of absolute sale will be
executed in favor of the respondent Mangaoil which was complied by the parties.
Consequently, the respondent Mangaoil informed the petitioner that he will withdraw from the agreement
for the land was not yet free from incumbrances as there were still tenants who were not willing to vacate
the land without giving them back the amount that they mortgaged the land. Also, the petitioner failed and
refused, despite repeated demands, to handover the Certificate of Title. Then, the respondent Mangaoil
demanded the refund of the down payment that he had secured with the petitioner and filed a complaint
with the RTC to rescind the contract of sale.
In the response of the petitioner, she averred that she had already complied with the obligations and
caused the release of the mortgaged land and the delivery of the Certificate of Title will be facilitated by a
certain Atty. Pedro C. Antonio. The respondent insisted that he can rescind the contract for the petitioner
had failed to deliver the Certificate of Title.The RTC and the CA dismissed the complaints for upon the
deed of absolute sale, there was already a valid and constructive delivery
ISSUE:
1) Whether or not the failure of delivery of the Certificate of Title will constitute rescission of the
contract?
2) Whether or not the execution of the deed of sale of real property is equivalent to a valid and
constructive delivery?
HELD:
1) No, the Court held that the failure of the petitioner to comply with the obligation to deliver to the
respondent the possession of the property and the certificate of the title.
Based on Article 1191 of the New Civil Code of the Philippines, it is clear that ―the power to rescind
obligations is implied in reciprocal ones, in case one of the obligors should not comply with what is
incumbent upon him.‖ The respondent cannot be deprived of his right to demand for rescission in view of
the petitioner’s failure to abide with item nos. 2 and 3 of the agreement. This remains true notwithstanding
the absence of express stipulations in the agreement indicating the consequences of breaches which the
parties may commit. To hold otherwise would render Article 1191 of the NCC as useless.
2) The execution of the deed of absolute sale does not constitute a constructive delivery for this case
falls under to the exception since a mere presumption and not conclusive delivery was created as the
respondent failed to take material possession of the subject property. A person who does not have actual
possession of the thing sold cannot transfer constructive possession by the execution and delivery of a
public instrument. Thus, the respondent can rescind the contract.The petition was denied and the
petitioner is bound return the down payment plus interest to the respondent.
ALEJANDRA BUGARIN VDA. DE SARMIENTOvs. JOSEFA R. LESACA G.R. No. L-

15385 June 30, 1960
FACTS:
153
On January 18, 1949, plaintiff bought from defendant two parcels of land for P5,000; that after the sale,
plaintiff tried to take actual physical possession of the lands but was prevented from doing so by one
Martin Deloso who claims to be the owner thereof; that on February 1, 1949, plaintiff instituted an action
before the Tenancy Enforcement Division of the Department of Justice to oust said Martin Deloso from
the possession of the lands, which action she later abandoned for reasons known only to her; that on
December 12, 1949, plaintiff wrote defendant asking the latter either to change the lands sold with another
of the same kind and class or to return the purchase price together with the expenses she had incurred in
the execution of the sale, plus 6 per cent interest; and that since defendant did not agree to this proposition
as evidenced by her letter dated December 21,1949, plaintiff filed the present action.
ISSUE:
Whether or not the execution of the deed of sale in a public document (Exhibit A) is equivalent to delivery
of possession of the lands sold to appellee thus relieving her of the obligation to place appellee in actual
possession thereof?
HELD:
NO. There was no delivery; hence, rescission was proper. Rescission was proper since a contract of sale is
a reciprocal obligation. ―Undoubtedly in a contract of purchase and sale the obligation of the parties is
reciprocal, and, as provided by the law, in case one of the parties fails to comply with what is incumbent
upon him to do, the person prejudiced may either exact the fulfillment of the obligation or rescind the
sale.‖
When a contract of sale is executed the vendor is bound to deliver to the vendee the thing sold by placing
the vendee in the control and possession of the subject-matter of the contract. However, if the sale is
executed by means of a public instrument, the mere execution of the instrument is equivalent to delivery
unless the contrary appears or is clearly to be inferred from such instrument.
The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is considered to be
delivered when it is placed "in the hands and possession of the vendee." (Civ. Code, art. 1462.) It is true
that the same article declares that the execution of a public instrument is equivalent to the delivery of the
thing which is the object of the contract, but in order that this symbolic delivery may produce the effect of
tradition, it is necessary that the vendor shall have such control over the thing sold that, at the moment of
the sale, its material delivery could have been made. It is not enough to confer upon the purchaser the
ownership and right of possession. The thing sold must be placed in his control. When there is no
impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will
of the vendor, symbolic delivery through the execution of a public instrument is sufficient.But if,
notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material
tenancy of the thing and make use of it himself or through another in his name, because such tenancy and
enjoyment are opposed by the interposition of another will, then fiction yields to reality -the delivery has
not been effected.
PERPETUA ABUAN, ET AL., vs. EUSTAQUIO S. GARCIA, ET AL., G.R. No. L-20091
July 30, 1965
154
FACTS:
This is an action for legal redemption under Section 119 of the Public Land Law which provides that
―Every conveyance of land acquired under the free patent or homestead provisions, when proper, shall
be subject to re-purchase by the applicant, his widow, or legal heirs, for a period of five years from the
date of conveyance.‖LaureanoAbuan acquired the homestead passed after his death to his legal heirs, the
plaintiffs herein. Consequently, the OCT in his name was cancelled, and in lieu thereof, TCT No. T-5486
was issued in their names. On August 7, 1953, plaintiffs sold the parcel of land to defendants, the sale
being evidenced by a public instrument entitled "Deed of Absolute Sale"; and by virtue thereof, a TCT
was issued to defendants. Later, plaintiffs filed an action to recover the land, alleging that the deed of
absolute sale had been executed through fraud, without consideration.
However, the case was subsequently settled amicably, when the parties entered into an "Agreement" dated
February 28, 1955, under the terms of which defendants paid P500.00 on that day as partial payment of
the purchase price of the land, and promised to pay the balance of P1,500.00 on or before April 30, 1955,
with a grace period of thirty days. The parties also stipulated in said Agreement that it shall supersede all
previous agreements or contracts heretofore entered into and executed by and between plaintiff and
defendants, involving the same parcel of riceland. Claiming that full payment had been effected only
sometime in May 1955, plaintiffs instituted the present action on March 4, 1960.
Defendants moved to dismiss, on the ground that plaintiffs' right of action was already barred, because the
five-year redemption period had already expired. the Nueva Vizcaya court dismissed the complaint.
Plaintiffs appealed to the Court of Appeals, which certified the case to the SC because only a legal issue
remains to be determined.
ISSUE:
Whether or not the five-year period within which plaintiffs may exercise their right of repurchase begin to
run on August 7, 1953, when the Deed of Absolute Sale was executed.
HELD:
YES. Conveyance means transfer of ownership; it means the date when the title to the land is transferred
from one person to another. The five-year period should, therefore, be reckoned with from the date that
defendants acquired ownership of the land.
Art. 1477 of the New Civil Code provides that ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof; and Art. 1496 points out that ownership of the
thing sold is acquired by the vendee from the moment it is delivered to him in any of the ways specified in
articles 1497 to 1501. Under Art. 1498, When the sale is made through a public instrument — as in this
case — the execution thereof shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot be clearly inferred. This manner of
delivery of the thing through the execution of a public document is common to personal as well as real
property.
155
It is clear that defendants acquired ownership to the land in question upon the execution of the deed of
sale. The deed of sale was executed on August 7, 1953, which was "superseded" by the Agreement of
February 28, 1955, as to the terms and conditions of payment of the purchase price. The latter agreement
did not operate to revest the ownership of the land in the plaintiffs. It is apparent that five years had
elapsed since the execution of the deed of sale at the time plaintiffs filed this action for redemption. the
SC finds support in a long line of decisions holding, that the five-year period starts from the date of the
execution of the instrument of conveyance.
156
NORKIS DISTRIBUTORS, INC. v. THE COURT OF APPEALS & ALBERTO

NEPALES
G.R. No. 91029.
February 7, 1991
FACTS:
On September 20, 1979, private respondent Alberto Nepales bought from the Norkis-Bacolod branch a
brand new Yamaha Wonderbike motorcycle. The price of P7,500.00 was payable by means of a Letter of
Guaranty from the Development Bank of the Philippines (DBP), Kabankalan Branch, which Norkis'
Branch Manager Labajo agreed to accept. Hence, 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. Branch Manager Labajo issued Norkis
Sales Invoice No. 0120 showing that the contract of sale of the motorcycle had been perfected. Nepales
signed the sales invoice to signify his conformity with the terms of the sale. In the meantime, however, the
motorcycle remained in Norkis' possession.
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 ZacariasPayba at the time of
the accident. The unit was a total wreck, and was returned and stored inside Norkis' warehouse.
Upon claim by respondent, 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.
Norkis concedes that there was no "actual" delivery of the vehicle. However, it insists that there was
constructive delivery of the unit upon:
1. the issuance of the Sales Invoice No. 0120 (Exh. 1) in the name of the private respondent and the
affixing of his signature thereon;
2. the registration of the vehicle on November 6, 1979 with the Land Transportation Commission in
private respondent's name
ISSUE:
Whether or not Delivery has been made which places liability on Nepales?
HELD:
No. The Supreme Court ruled that 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 seller's risk until the ownership
thereof is transferred to the buyer," is applicable in the case at bar for there was neither an actual nor
constructive delivery of the thing sold.
In this case, the purpose of the execution of the sales invoice and the registration of the vehicle in the
name of Alberto Nepales with the Land Registration Commission was not to transfer the ownership and
dominion over the motorcycle to him, but only to comply with the requirements of the DBP for processing
private respondent's motorcycle loan. On March 20, 1980, before private respondent's loan was released
and before he even paid Norkis, the motorcycle had already figured in an accident while driven by one
157
ZacariasPayba. Payba was not shown by Norkis to be a representative or relative of private respondent.
The circumstances in the case itself more than amply rebut the disputable presumption of delivery upon
which Norkis anchors its defense to Nepales' action.
Balatbat vs. Court of Appeals GR No. 109410 August 28, 1996
FACTS:
A parcel of land was acquired by plaintiff Aurelio Roque and Maria Mesina during their conjugal union.
Maria died on August 28, 1966. On June 15, 1977, Aurelio filed a case for partition. The trial court held
that Aurelio is entitled to the ½ portion at his share in the conjugal property, and 1/5 of the other half
which formed part of Maria’s estate, divided equally among him at his 4 children. The decision having
become final and executory, the Register of Deeds of Manila issued a transfer certificate of title on
October 5, 1979 according to the ruling of the court. On April 1, 1980, Aurelio sold his 6/10 share to
spouses Aurora Tuazon-Repuyan and Jose Repuyan, as evidenced by a deed of absolute sale. On June 21,
1980, Aurora caused the annotation of her affidavit of adverse claim. On August 20, 1980, Aurelio filed a
complaint for rescission of contract grounded on the buyers’ failure to pay the balance of the purchase
price.
On February 4, 1982, another deed of absolute sale was executed between Aurelio and his children, and
herein petitioner Clara Balatbat, involving the entire lot. Balatbat filed a motion for the issuance of writ of
possession, which was granted by the court on September 20, 1982, subject to valid rights and interests of
third persons. Balatbat filed a motion to intervene in the rescission case, but did not file her complaint in
intervention. The court ruled that the sale between Aurelio and Aurora is valid.
ISSUE:
1) Whether or not the alleged sale to private respondents was merely executor?
2) Whether or notthere was double sale?
3) Whether or notpetitioner is a buyer in good faith and for value?
HELD:
1) Contrary to petitioner's contention that the sale dated April 1, 1980 in favor of private respondents
Repuyan was merely executory for the reason that there was no delivery of the subject property and that
consideration/price was not fully paid, we find the sale as consummated, hence, valid and enforceable.
The Court dismissed vendor's Aurelio Roque complaint for rescission of the deed of sale and declared that
the Sale dated April 1, 1980, as valid and enforceable. No appeal having been made, the decision became
final and executory.The execution of the public instrument, without actual delivery of the thing, transfers
the ownership from the vendor to the vendee, who may thereafter exercise the rights of an owner over the
same. In the instant case, vendor Roque delivered the owner's certificate of title to herein private
respondent. The provision of Article 1358 on the necessity of a public document is only for convenience,
not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of
land that this be embodied in a public instrument.
A contract of sale being consensual, it is perfected by the mere consent of the parties. Delivery of the
thing bought or payment of the price is not necessary for the perfection of the contract; and failure of the
vendee to pay the price after the execution of the contract does not make the sale null and void for lack of
consideration but results at most in default on the part of the vendee, for which the vendor may exercise
his legal remedies.
158
2) Article 1544 of the Civil Code provides that in case of double sale of an immovable property,
ownership shall be transferred (1) to the person acquiring it who in good faith first recorded it in the
Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and(3)
in default thereof, to the person who presents the oldest title, provided there is good faith. In the case at
bar, vendor Aurelio Roque sold 6/10 portion of his share to private respondents Repuyan on April 1, 1980.
Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10) and his children (4/10),
represented by the Clerk of Court pursuant to Section 10, Rule 39 of the Rules of Court, on February 4,
1982. Undoubtedly, this is a case of double sale contemplated under Article 1544 of the New Civil Code.
Evidently, private respondents Repuyan's caused the annotation of an adverse claim on the title of the
subject property on July 21, 1980. The annotation of the adverse claim in the Registry of Property is
sufficient compliance as mandated by law and serves notice to the whole world. On the other hand,
petitioner filed a notice of lispendens only on February 2, 1982.
Accordingly, private respondents who first caused the annotation of the adverse claim in good faith shall
have a better right over herein petitioner. As between two purchasers, the one who has registered the sale
in his favor, has a preferred right over the other who has not registered his title even if the latter is in
actual possession of the immovable property. Further, even in default of the first registrant or first in
possession, private respondents have presented the oldest title. Thus, private respondents who acquired the
subject property in good faith and for valuable consideration established a superior right as against the
petitioner.
3) Petitioner cannot be considered as a buyer in good faith. If petitioner did investigate before
buying the land on February 4, 1982, she should have known that there was a pending case and an
annotation of adverse claim was made in the title of the property before the Register of Deeds and she
could have discovered that the subject property was already sold to the private respondents. It is
incumbent upon the vendee of the property to ask for the delivery of the owner's duplicate copy of the title
from the vendor. One who purchases real estate with knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an
interest therein; and the same rule must be applied to one who has knowledge of facts which should have
put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the
title of his vendor. Good faith, or the want of it is not a visible, tangible fact that can be seen or touched,
but rather a state or condition of mind which can only be judged of by actual or fancied tokens or signs.
159
GONZALES VS. HABERER G.R. No. L-22604 February 3, 1925
FACTS:
The defendant admits that of the purchase price stated in the agreement a balance of P31,000 remains
unpaid, but by way of special defense, alleges that at the time of entering into the contract the plaintiffs
through false representations lead him to believe that they were in possession of the land and that the title
to the greater portion thereof was not in dispute; that on seeking to obtain possession he found that
practically the entire area of the land was occupied by adverse claimants and the title thereto disputed; that
he consequently has been unable to obtain possession of the land; and that the plaintiffs have made no
efforts to prosecute the proceedings for the registration of the land. He therefore asks that the contract be
rescinded; that the plaintiffs be ordered to return to him the P30,000 already paid by him to them and to
pay P25,000 as damages for breach of the contract.
The contract in question reads as follows:
Know all men by these presents:
That I, Guadalupe Gonzalez y Morales de Gomez, married with Luis Gomez, of age, and resident of the
municipality of Bautista, Province of Pangasinan, Philippine Islands, do hereby state:
xxx
3. That in consideration of the sum of P125 per hectare I do hereby agree and bind myself to sell and
transfer by way of real and absolute sale the land above described to Mr. E.J. Habere, binding myself to
execute the deed of sale immediately after the decree of the court adjudicating said land in my favor is
registered in the registry of property of the Province of Nueva Ecija. The condition of this obligation to
sell are as follows: xxx
"3. That said Mr. E.J. Haberer shall have the right to take possession of the aforesaid land immediately
after the execution of this document together with all the improvements now existing on the same land,
such as palay plantation and others.
The court below declared the contract rescinded and void and gave Haberer judgment upon his
counterclaim for the sum of P30,000, with interest from the date upon which the judgment becomes final.
The case is now before this court upon appeal by the plaintiffs from that judgment.
ISSUE:
Whether or not the plaintiff under the obligation to place the defendant under the possession of the land?
HELD:
YES.Cause 3 of paragraph 3 of the contract gave the defendant the right to take possession of the land
immediately upon the execution of the contract and necessarily created the obligation on the part of the
plaintiffs to make good the right thus granted; it was one of the essential conditions of the agreement and
the failure of the plaintiffs to comply with this condition, without fault on the part of the defendant, is in
itself sufficient ground for the rescission, even in the absence of any misrepresentation on their part. The
contention of the appellants that the symbolic delivery effected by the execution and delivery of the
agreement was a sufficient delivery of the possession of the land, is also without merit.
160
The possessionreferred to in the contract is evidently physical; if it were otherwise it would not have been
necessary to mention it in the contract.
AGCAOILI VS.GSIS No. L-30056 August 30, 1988
FACTS:
The appellant Government Service Insurance System (GSIS) approved the application of the appellee
Marcelo Agcaoili for the purchase of the house and lot in the GSIS Housing Project at Nangka, Marikina,
Rizal, but said application was subject to the condition that the latter should forthwith occupy the house.
Agcaoili lost no time in occupying the house but he could not stay in it and had to leave the very next day
because the house was nothing more than a shell, in such a state that civilized occupation was not
possible: ceiling, stairs, double walling, lighting facilities, water connection, bathroom, toilet kitchen,
drainage, were inexistent. Agcaoili did however asked a homeless friend, a certain Villanueva, to stay in
the premises as some sort of watchman, pending the completion of the construction of the house. He
thereafter complained to the GSIS but to no avail. Subsequently, the GSIS asked Agcaoili to pay the
monthly amortizations of P35.56 and other fees. He paid the first monthly amortizations and incidental
fees, but refused to make further payments until and unless the GSIS completed the housing unit.
Thereafter, GSIS cancelled the award and required Agcaoili to vacate the premise. The house and lot
was consequently awarded to another applicant. Agcaoili reacted by instituting suit in the Court of First
Instance of Manila for specific performance and damages. The judgment was rendered in favor of
Agcaoili. GSIS then appealed from that judgment.
ISSUE:
Whether or not the cancellation by GSIS of the award in favor of petitioner Agcaoili just and proper?
HELD:
No. It was the duty of the GSIS, as seller, to deliver the thing sold in a condition suitable for its enjoyment
by the buyer for the purpose contemplated. There would be no sense to require the awardee to
immediately occupy and live in a shell of a house, structure consisting only of four walls with openings,
and a roof. GSIS had an obligation to deliver to Agcaoili a reasonably habitable dwelling in return for his
undertaking to pay the stipulated price. Since GSIS did not fulfill that obligation, and was not willing to
put the house in habitable state, it cannot invoke Agcaoili’s suspension of payment of amortizations as
cause to cancel the contract between them. It is axiomatic that ―In reciprocal obligations, neither party
incurs in delay if the other does not comply.
161
DR. and MRS. MERLIN CONSING VS. THE COURT OF APPEALS and CARIDAD
SANTOS G.R. No. 78272 August 29, 1989
FACTS:
On October 4, 1971 private respondent Caridad Santos and the Consings entered into an agreement
denominated as a "Contract of Sale" whereby the latter agreed to sell, transfer and convey to the former a
house and lot more particularly described as follows:
A newly constructed 4 bedrooms, two bathrooms, complete with light and water connections bungalow,
fenced on two parcels of land (Lot No. 26 of subdivision plan (LRC) Psd 134075 and Lot No. 25 of
subdivision plan (LRC) Psd 134075, all being a portion of Lot B (LRC) Psd 133634, LRC Rec No. 7672
containing an area of TWO HUNDRED NINETY FOUR (294) SQUARE METERS & TWO HUNDRED
NINETY FIVE (295) SQUARE METERS, respectively more or less including the voluntary right of way,
covered by TCT No. 313386 and TCT 313385, respectively; located at Barrio Bayanbayanan,
Municipality of Marikina, Rizal
It is stipulated in said "Contract of Sale" that in consideration of the agreement to sell the buyer will pay
the seller P 110,000.00 with interest at 12% per annum, payable as follows: P25,000.00 upon the signing
of the contract and a monthly installment of P 1,020.14 payable on or before the fifth day of each month
beginning December 1971 without necessity of demand until the amount of the purchase price and interest
shall have been fully paid after which ownership would be transferred to the buyer.
Santos paid her monthly installments to the Consings. Starting May 1972, however, she defaulted in her
payments. Consing sent her several letters of demand to which she did not reply. On June 28, 1974,
counsel for the Consings sent a final demand letter to Santos asking her to settle her obligations which by
then have accrued to Pl 2,818.61, otherwise, they shall be constrained to resort to court litigation.
Subsequently, on July 26, 1974, the Consings filed an ejectment case against Santos. After trial, on
November 4, 1974, judgment was rendered by Judge Gregorio de la Paz of the Municipal Court of
Marikina in favor of the Consings.
It appears, however, that on August 22, 1974, with the ejectment case still pending, Santos filed with the
then Court of First Instance (CFI) a complaint for specific performance with damages against the
Consings. On March 17, 1975, the CFI issued a restraining order enjoining the Municipal Court of
Marikina from resolving the motion for execution filed by the Consings in the ejectment case and from
taking further action in said case until further orders from the CFI
Also borne out by the record is the criminal complaint filed by Santos against Merlin Consing charging
him with the crime of Violation of Municipal Ordinance No. 7, Series of 1964 of Marikina for contracting
to sell to her the two lots in question without first securing the approval of the Municipal Council of
Marikina for his subdivision plan [Exh. "1"]. On May 21, 1975 this complaint was dismissed by the fiscal
on the grounds of lack of a prima facie case and prescription [Exh. "1-b"].
At about the same time, Consing submitted his subdivision plan to the Municipal Council of Marikina for
approval. The council, in turn, referred the same to the Department of Local Government and Community
Development (DLGCD) in compliance with its Memorandum Circular No. 73-41 of September 7, 1973.
The DLGCD in its second endorsement dated March 13, 1975, noted that the "subdivision plan meets in
general the requirements in the subdivision regulations of this Office with respect to lot areas and lot
162
frontages except the street widths which are not indicated as road lots and which are below the 10 m.
minimum requirement. It is therefore recommended that the existing roads should be indicated on the plan
as road lots and the corresponding areas along the sides of the said roads as corrected, be reserved for
future road widening and annotated in the title as such and should be excluded from the sale of the
corresponding affected lots. . . ." [Exh. "D"]
ISSUE:
Whether or not Consings has the right to sell?
HELD:
No, Petitioners assail the decision of the Court of Appeals finding that a portion of Lots 25 and 26,
although called a voluntary right of way, is a subdivision road which they have no right to sell. The
Consings argue that it is a voluntary easement which they have a right to constitute by virtue of Art. 619
of the New Civil Code and "[b]y constituting and establishing a voluntary right of way in said two lots,
the portions subject to the voluntary right of way did not become streets or roads as held by Judge Pineda
and the respondent Court of Appeals; they continue to be the property of the Consings but subject to an
encumbrance, i.e. subject to an easement of right of way." [Petition, p. 22; Rollo, p. 27].
Further, the Consings contend that "the portions of Lots 25 and 26 subject to voluntary right of way can
never be used as streets or road lots because [their] subdivision plan was approved by the Land
Registration Commissioner as a simple subdivision plan which means that there are no streets or road lots
in the subdivision, otherwise it would not have been approved as [such]." [Petition, p. 24; Rollo, p. 29]. In
fine, the Consings are alleging that there is no basis for the reduction in the purchase price of the two lots.
Private respondent Santos on the other hand, avers that the alleged right of way is actually a subdivision
road. This road is included in the two lots sold to her and she is deprived of the use and enjoyment
thereof, hence, a reduction in the purchase price of said lots is in order.
Petitioners' contentions are devoid of merit. The evidence on record negates the Consings' assertion that
the portions subject to the voluntary easement of right of way are not roads. It is undisputed that the
Consings' subdivision plan was approved by the LRC as a simple subdivision which indicated no streets
or roads. However, this does not preclude the need for them within the subdivision. An examination of the
Consings' subdivision plan reveals that the land is subdivided into 38 lots with the so-called voluntary
right of way cutting across lots 2 and 3, 7 and 6, 8 and 9,13 and 12,14 and 15, 19 and 18, 20 and 21, 25
and 24, 26 and 27, 31 and 30, 32 and 33. The relative position of this "right of way" vis-a-vis the lots
shows that it is in fact a road without which the subdivision lot buyers would have no means of access to
and from the subdivision.
163
Carlos Gabilavs Pablo Perez, Ramon Perez and Mercedes Perez G.R. No.
L2954
FACTS:
On September 16, 1948, in the City of Davao, Pablo, Ramon and Mercedes, all surnamed Perez, executed
in favor of Carlos Gabila, a Deed of Sale of a parcel of land registered in the name of their deceased father
Mariano Perez under Transfer Certificate of Title No. 899 of the Registry of Deeds of Davao, which they
inherited upon his demise. The Deed of Sale was duly signed and ratified before Notary Public Isidro
Bastida of Davao City on the same date, September 16, 1958, and possession of the land was immediately
delivered to the vendee. The monthly installments of the price of the sale were completely paid in due
time.
However, the vendors took no steps to comply with their promise to execute an extrajudicial partition of
their father's properties so that his title to the land in question can be transferred in their names and from
them, to the vendee Gabila. Gabila filed this action praying that the defendants be ordered:
1) To execute an extra-judicial partition of all the properties of their deceased father or otherwise settle his
estate and pay the corresponding estate and inheritance taxes, and execute the requisite instruments for
the registration and transfer of the title to him; and
2) To pay him Pl,000 as attorney's fees and expenses of the suit, plus costs.
The Perez’s alleged in their Answer that the deed of sale was intended merely to guarantee a loan of P2,
500 and then Gabila alleged that at the time of the execution of the deed of sale, Mercedes Perez stated
that she was of age, and plaintiff had no reason to doubt that statement. But, assuming that she was under
age at the time, she ratified the sale by her failure to repudiate it in due time; that the allegation that the
deed was only a guarantee for a P2,500 loan was not true because a part of the purchase price was paid to
the defendants in ten (10) monthly installments; that the price agreed upon in 1948 was fair and
reasonable; and, that the approval of the sale by the Secretary of Agriculture and Natural Resource was
not necessary. On January 21, 1961, the trial court rendered the assailed decision, dismissing the
complaint. It held that the Perez's could not be ordered to execute an extrajudicial partition of all the
properties of their deceased father because the properties to be partitioned are not Identified in the
complaint, and, the Perez’s can no longer partition the land described in TCT No. 899, because it has been
sold to Gabila.
ISSUE:
Whether or not the an extrajudicial partition of their father's properties so that his title to the land in
question can be transferred in their names?
HELD:
This action is not one for specific performance of the sale of the property to the appellant, for the sale had
been consummated by the payment of the price to the vendors-appellees as stipulated in the deed, and by
the delivery of the peaceful possession of the land to the plaintiff-vendee. What the plaintiff seeks merely
is the transfer of the title of the land in his name.
The defendants-appellees, as the only legal heirs of their father, the deceased Mariano Perez, became the
owners of the property in question upon his demise. The rights to the succession were transmitted to them
from the moment of his death (Art. 77, Civil Code). · Their sale to the appellant of the property, which
they inherited from their father put an end to their co-ownership over it (Art. 1082 Civil Code).
Consequently there is no further need for them to partition it, the purpose of partition being to separate,
divide, and assign a thing held in common among those to whom it may belong (Art. 1079, Civil Code).
164
Their declaration therein that the registered owner of the land is Mariano Perez, who died on October 11,
1942, is the father of the vendors, that "the vendors inherited said land from their deceased father, being
the legitimate children" and that "the Vendors are the owners" of said land is, in effect, an adjudication of
the land to themselves. Such adjudication renders the stipulation in the deed of sale that "the Vendors will
execute immediately an Extrajudicial Partition of all the properties of their deceased father" (Exhibit A-1),
superfluous and unnecessary. It may be overlooked or deemed not written at all.
All that needs to be done now is to register on the TCT No. 899 of the late Mariano Perez the deed of sale
which may also be treated as an affidavit of adjudication of the land to the vendors in order that their
father's title may be cancelled and a new one can be issued to their vendee, Carlos Gabila.
165
ALFONSO QUIJADA ET AL VS COURT OF APPEALS ET AL GR No 126444

December 4, 1998
FACTS:
Petitioners are the children of the late Trinidad CorveraVda. De Quijada. Trinidad was one of the heirs of
the late Pedro Corvera and inherited from the latter two-hectare parcel of land subject of the case located
in the barrio of San Agustin, Talacogon, Agusandel Sur. Trinidad Quijada together with her sisters
LeonilaCorveraVda. deSequeña and Paz CorveraCabiltes and brother EpapiaditoCorvera executed a
conditional deed of donation of the two-hectare parcel of land subject of the case in favor of the
Municipality of Talacogon, the condition being that the parcel of land shall be used solely and exclusively
as part of the campus of the proposed provincial high school in Talacogon. Apparently, Trinidad remained
in possession of the parcel of land despite the donation.
Thereafter, Trinidad sold one (1) hectare of the subject parcel of land to defendant-appellant
RegaladoMondejar. Subsequently, Trinidad verbally sold the remaining one (1) hectare to
defendantappellant (respondent) RegaladoMondejar without the benefit of a written deed of sale and
evidenced solely by receipts of payment.
In 1980, the heirs of Trinidad, who at that time was already dead, filed a complaint for forcible entry
against defendant-appellant (respondent) RegaladoMondejar, which complaint was, however, dismissed
for failure to prosecute. In 1987, the proposed provincial high school having failed to materialize, the
Sangguniang Bayan of the municipality of Talacogon enacted a resolution reverting the two (2) hectares
of land donated back to the donors. In the meantime, defendant-appellant (respondent) RegaladoMondejar
sold portions of the land to defendants-appellants (respondents) Fernando Bautista, Rodolfo Goloran,
EfrenGuden and Ernesto Goloran.
plaintiffs-appellees (petitioners) filed this action against defendants-appellants (respondents). In the

complaint, plaintiffs-appellees (petitioners) alleged that their deceased mother never sold, conveyed,
transferred or disposed of the property in question to any person or entity much less to RegaladoMondejar
save the donation made to the Municipality of Talacogon in 1956; that at the time of the alleged sale to
RegaladoMondejar by Trinidad Quijada, the land still belongs to the Municipality of Talacogon, hence,
the supposed sale is null and void.
Defendants-appellants (respondents), on the other hand, in their answer claimed that the land in dispute
was sold to RegaladoMondejar, the one (1) hectare on July 29, 1962, and the remaining one (1) hectare on
installment basis until fully paid. As affirmative and/or special defense, defendants-appellants
(respondents) alleged that plaintiffs' action is barred by laches or has prescribed.
The RTC ruled in favor of the petitioners, ruling that Trinidad Quijada had no legal title or right to sell the
land to Mondejar, the same not being hers to dispose of because ownership belongs to the Municipality of
Talacogon. The Court of Appeals reversed and set aside the judgment a quoruling that the sale made by
Trinidad Quijada to respondent Mondejar was valid as the former retained an inchoate interest on the lots
by virtue of the automatic reversion clause in the deed of donation.
ISSUE:
166
Whether or not the sale of the subject property made by Trinidad Quijada to Mondejar is valid?
HELD:
NO. The donation made on April 5, 1956 by Trinidad Quijada and her brother and sisterswas subject to
the condition that the donated property shall be "used solely and exclusively as a part of the campus of the
proposed Provincial High School in Talacogon." The donation further provides that should "the proposed
Provincial High School be discontinued or if the same shall be opened but for some reason or another, the
same may in the future be closed" the donated property shall automatically revert to the donor.Such
condition, not being contrary to law, morals, good customs, public order or public policy was validly
imposed in the donation.
When the Municipality's acceptance of the donation was made known to the donor, the former became the
new owner of the donated property -- donation being a mode of acquiring and transmitting ownership -
notwithstanding the condition imposed by the donee. The donation is perfected once the acceptance by the
donee is made known to the donor.Accordingly, ownership is immediately transferred to the latter and
that ownership will only revert to the donor if the resolutory condition is not fulfilled.
In this case, that resolutory condition is the construction of the school. It has been ruled that when a
person donates land to another on the condition that the latter would build upon the land a school, the
condition imposed is not a condition precedent or a suspensive condition but a resolutory one.Thus, at the
time of the sales made in 1962 towards 1968, the alleged seller (Trinidad) could not have sold the lots
since she had earlier transferred ownership thereof by virtue of the deed of donation. So long as the
resolutory condition subsists and is capable of fulfillment, the donation remains effective and the donee
continues to be the owner subject only to the rights of the donor or his successors-in-interest under the
deed of donation.
167
UNION MOTOR CORPORATION vs. THE COURT OF APPEALS

G.R. No. 117187.
July 20, 2001
FACTS:
Bernal spouses purchased from Union Motor Corporation one Cimarron Jeepney to be paid in installments
and executed a promissory note and a deed of chattel mortgage in favor of the petitioner.
They entered into a contract of assignment of the promissory note and chattel mortgage with
JardineManila Finance, Inc through Manuel Sosmeña, an agent of the petitioner, although the respondent
spouses have not yet physically possessed the vehicle. Sosmeña required them to sign the receipt as a
condition for the delivery of the vehicle that Spouses continued paying the installments even if the subject
motor vehicle remained undelivered in asmuch as Jardine-Manila Finance, Inc. promised to deliver the
subject jeepney.
The respondent spouses have paid a total of worth of installments before they discontinued paying on
account of non-delivery of the subject motor vehicle, the reason why the vehicle was not delivered was
due to the fact that Sosmeña allegedly took the subject motor vehicle in his personal
capacity.JardineManila Finance, Inc., filed a complaint for a sum of money, against the respondent Bernal
spouses before the then Court of First Instance of Manila.
The complaint was amended and transferred to the Regional Trial Court of Makati to include petitioner
Union Motor Corporation as alternative defendant.Trial court rendered a decision ordering petitioner to
pay the spouses. Not satisfied the petitioner interposed an appeal before the Court of Appeals while the
respondent spouses appealed to hold the petitioner solidarily liable with Jardine-Manila Finance, Inc.
Appeal was denied.
ISSUE:
Whether or not there has been a delivery, physical or constructive, of the subject motor vehicle.
HELD:
NO. The respondent Bernal spouses should bear the loss thereof in accordance with Article 1504 that
when the ownership of goods is transferred to the buyer, the goods are at the buyer’s risk. But Bernal
spouses never came into possession of the subject motor vehicle. It is but appropriate that they be
reimbursed by the petitioner of the initial payment which they made.
The court ruled in favor of the respondent Bernal spouses.Undisputed is the fact that the respondent
Bernal spouses did not come into possession of the subject Cimarron jeepney that was supposed to be
delivered to them by the petitioner.The registration certificate, receipt and sales invoice that the
respondent Bernal spouse assigned were signed as a part of the processing and for the approval of their
168
application to buy the subject motor vehicle. Without such signed documents, no sale, much less delivery,
of the subject jeepney could be made.
The documents were not therefore an acknowledgment by respondent spouses of the physical acquisition
of the subject motor vehicle but merely a requirement of delivery. 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. The
thing is considered to be delivered when it is placed in the hands and possession of the vendee. (Civil
Code, Art. 1462). It is true that the same article declares that the execution of a public instrument is
equivalent to the delivery of the thing which is the object of the contract, but, in order that this symbolic
delivery may produce the effect, it is necessary that the vendor shall have had control over the thing sold
that, at the moment of the sale, its material delivery could have been made. It is not enough to confer upon
the purchaser the ownership and the right of possession. The thing sold must be placed in his control.
When there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser
by the sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient
.But if,notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and
material tenancy of the thing and make use of it himself or through another in his name, because such
tenancy and enjoyment are opposed by the interposition of another will, then the delivery has not been
effected .
169
SAN LORENZO DEVELOPMENT CORPORATION vs. COURT OF APPEALS G.R.

No. 124242 January 21, 2005
FACTS:
On 20 August 1986, the Spouses Lu purportedly sold the two parcels of land to respondent Pablo
Babasanta who made a down payment of fifty thousand pesos (P50,000.00) as evidenced by a
memorandum receipt issued by Pacita Lu of the same date. Several other payments totaling two hundred
thousand pesos (P200,000.00) were made by Babasanta. He demanded the execution of a Final Deed of
Sale in his favor so he may effect full payment of the purchase price; however, the spouses declined to
push through with the sale. They claimed that when he requested for a discount and they refused, he
rescinded the agreement. Thus, Babasanta filed a case for Specific Performance. San Lorenzo
Development Corporation (SLDC) alleged that on 3 May 1989, the two parcels of land involved had been
sold to it in a Deed of Absolute Sale with Mortgage. It alleged that it was a buyer in good faith and for
value and therefore it had a better right over the property in litigation.
ISSUE:
Whether or not there was a perfected contract of sale between Babasanta and Spouses Lu.
HELD:
No. The agreement between Babasanta and the Spouses Lu is a contract to sell and not a contract of sale.
The receipt signed by Pacita Lu merely states that she accepted the sum of fifty thousand pesos
(P50,000.00) from Babasanta as partial payment. Spouses Lu never intended to transfer ownership to
Babasanta except upon full payment of the purchase price. Babasanta’s letter dated 22 May 1989 was
quite telling. He stated therein that despite his repeated requests for the execution of the final deed of sale
in his favor so that he could effect full payment of the price, Pacita Lu allegedly refused to do so. In
effect, Babasanta himself recognized that ownership of the property would not be transferred to him until
such time as he shall have effected full payment of the price. The receipt signed by Pacita Lu should
legally be considered as a perfected contract to sell. There was no double sale in this case because the
contract in favor of Babasanta was a mere contract to sell; hence, Art. 1544 is not applicable. There was
neither actual nor constructive delivery as his title is based on a mere receipt. Based on this alone, the
right of SLDC must be preferred.
170
171
FACTS:
ISABEL FLORES vs. TRINIDAD LIM G.R. No. 26844 September 27, 1927
Subject land of Isabel Flores in Tayabas Province was sold to Trinidad Lim at sheriff’s sale for P1,603.78.
The land has 164 coconut trees planted, 1,000 non-bearing and about 300 buri trees. The usual certificate
of sale was issued to the defendant. Prior to one-year period of redemption, Lim took the actual physical
possession of the property. The latter refused and still refuses to render an account of fruits, profits, to
plaintiff’s damage in the sum of P1,000. Flores prays judgment that Lim be ordered to render an itemized
account, the amount if which be deducted from the price of redemption; that plaintiff have the right to
redeem; and that the defendant pay her P1,000 for damages and costs.
ISSUE:
Whether of not Lim is entitled to reimbursement for the coconut trees he had planted as well as other
improvements?
HELD:
No. Lim is a possessor in bad faith, for he should have waited for the termination of one-year redemption
period before entering into the possession of the property and therefore not entitled to a refund of useful
improvements.
172
FACTS:
TAMBUNTING vs. COURT OF APPEALS GR No. L-41847 December 12, 1986
Clara Tambunting de Legarda died testate on April 22, 1950. Among the properties left by the deceased is
the ―LegardaTambunting Subdivision‖ located on Rizal Avenue Extension, City of Manila. Shortly after
the death of said deceased, plaintiff CatalinoLeabres bought, on a partial payment of Pl,000.00 a portion
(No. VIII, Lot No. 1) of the Subdivision from surviving husband Vicente J. Legarda who acted as special
administrator, the deed or receipt of said sale appearing to be dated May 2, 1950. On August 28, 1950, the
Probate Court of Manila appointed Vicente Legarda as an administrator together with Pacifica Price and
Augusto Tambunting over the testate estate of said Clara Tambunting and authorized through its order of
November 21, 1951 the sale of the property.
Vicente L. Legarda was relieved as a regular Administrator and the Philippine Trust Co. which took over
as such administrator advertised the sale of the subdivision which includes the lot subject matter herein in
various issues of the Manila Times and Daily Mirror. No adverse claim or interest over the subdivision or
any portion thereof was ever presented by any person, and in the sale that followed, the Manotok Realty,
Inc. emerged the successful bidder. By order of the Probate Court, the Philippine Trust Co. executed the
Deed of Absolute Sale of the subdivision in favor of the Manotok Realty, Inc. which deed was judicially
approved on March 20, 1959, and recorded immediately in the proper Register of Deeds which issued the
corresponding Certificates of Title to the Manotok Realty, Inc., the defendant appellee herein.
A complaint dated February 8, 1966, was filed by herein plaintiff, which seeks, among other things, for
the quieting of title over the lot subject matter herein, for continuing possession thereof, and for damages.
Leabres anchors his claim on the receipt dated May 2, 1950, which he claims as evidence of the sale of
said lot in his favor. However, CatalinoLeabres has not registered his supposed interest over the lot in the
records of the Register of Deeds, nor did he present his claim for probate in the testate proceedings over
the estate of the owner of said subdivision, in spite of the notices advertised in the papers. Both the RTC
and CA dismissed the petitioner’s claim.
ISSUE:
Whether or not a receipt is a valid basis for a contract of sale.
HELD:
173
FACTS:
An examination of the receipt reveals that the same can neither be regarded as a contract of sale or a
promise to sell. There was merely an acknowledgment of the sum of One Thousand Pesos (P1,000.00).
There was no agreement as to the total purchase price of the land nor to the monthly installment to be paid
by the petitioner. The requisites of a valid Contract of Sale namely 1) consent or meeting of the minds of
the parties; 2) determinate subject matter; 3) price certain in money or its equivalent-are lacking in said
receipt and therefore the ―sale‖ is not valid nor enforceable. Furthermore, it is a fact that Dona Clara
Tambunting died on April 22, 1950. Her estate was thereafter under custodialegis of the Probate Court
which appointed Don Vicente Legarda as Special Administrator on August 28, 1950. Don Vicente
Legarda entered into said sale in his own personal-capacity and without court approval, consequently, said
sale cannot bind the estate of Clara Tambunting. Petitioner should have submitted the receipt of alleged
sale to the Probate Court for its approval of the transactions. Anent his possession of the land, petitioner
cannot be deemed a possessor in good faith in view of the registration of the ownership of the land. To
consider petitioner in good faith would be to put a premium on his own gross negligence. The Court
resolved to DENY the petition for lack of merit and to AFFIRM the assailed judgment.
SPS. VICENTE PINGOL, ET AL. vs. COURT OF APPEALS, G.R. No. 102909,
September 6, 1993
Petitioner Vicente Pingol is the owner of Lot No. 3223 of the Cadastral Survey of Caloocan, with an area
of 549 square meters, located at Bagong Barrio, Caloocan City and more particularly described in
Transfer Certificate of Title (TCT) No. 7435 of the Registry of Deeds of Caloocan City. On 17 February
1969, he executed a "DEED OF ABSOLUTE SALE OF ONE-HALF OF (1/2) [OF] AN UNDIVIDED
PORTION OF A PARCEL OF LAND" in favor of Francisco N. Donasco which was acknowledged
before a notary public. The parcel of land referred to herein is Lot No. 3223.
Pursuant to the contract, Donasco paid P2,000.00 to Pingol. The one-half portion, designated as Lot No.
3223-A, was then segregated from the mother lot, and the parties prepared a subdivision plan (Exhibit
"C") which was approved by the Land Registration Commission.Francisco immediately took possession
of the subject lot and constructed a house thereon. In January 1970, he started paying the monthly
installments but was able to pay only up to 1972.
On 13 July 1984, Francisco Donasco died. At the time of his demise, he had paid P8,369.00, plus the
P2,000.00 advance payment, leaving a balance of P10,161.00 on the contract price. Lot No. 3223-A
remained in the possession of Donasco's heirs.
On 19 October 1988, the heirs of Francisco Donasco filed an action for "Specific Performance and
Damages, with Prayer for Writ of Preliminary Injunction" against the spouses Vicente and Lourdes Pingol
(petitioners herein) before the RTC of Caloocan City. The action was docketed as Civil Case No. 13572
and raffled off to Branch 125 of the said court.
ISSUE:
Whether or not there is a valid contract of sale?
174
FACTS:
HELD:
The decisive issue in this case is whether Exhibit "A" embodies a contract of sale or a contract to sell. The
distinction between the two is important for in a contract of sale, the title passes to the vendee upon the
delivery of the thing sold, whereas in a contract to sell, by agreement, ownership is reserved in the vendor
and is not to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot
recover ownership until and unless the contract is resolved or rescinded, whereas in a contract to sell, title
is retained by the vendor until the full payment of the price, such payment being a positive suspensive
condition, failure of which is not a breach but an event that prevented the obligation of the vendor to
convey title from becoming effective.
A perusal of Exhibit "A" leads to no other conclusion than that it embodies a contract of sale. The plain
and clear tenor of the "DEED OF ABSOLUTE SALE OF ONE-HALF (1/2) [OF] AN UNDIVIDED
PORTION OF A PARCEL OF LAND" is that "the VENDOR hereby . . . SELL, CONVEY AND
CONVEY by way Absolute Sale the one-half (1/2) portion . . . to the VENDEE . . . his heirs, assigns and
successors-in-interest." That the vendor, petitioner Vicente Pingol, had that clear intention was further
evidenced by his failure to reserve his title thereto until the full payment of the price.
175
In Dignos vs. Court of Appeals, we held that a deed of sale is absolute in nature although denominated as
a "Deed of Conditional Sale" where there is no stipulation in the deed that title to the property sold is
reserved in the seller until the full payment of the price, nor is there a stipulation giving the vendor the
right to unilaterally resolve the contract the moment the buyer fails to pay within a fixed period. Exhibit
"A" contains neither stipulation. What is merely stated therein is that "the VENDEE agrees that in case of
default in the payment of the installments due the same shall earn a legal rate of interest, and to which the
VENDOR likewise agrees."
Furthermore, as found by the Court of Appeals, the acts of the parties, contemporaneous and subsequent
to the contract, clearly show that an absolute deed of sale was intended, by the parties and not a contract to
sell:
[P]ursuant to the deed, the vendor delivered actual and constructive possession of the property to the
vendee, who occupied and took such possession, constructed a building thereon, had the property
surveyed and subdivided and a plan of the property was prepared and submitted to the Land Registration
Commission which approved it preparatory to segregating the same and obtaining the corresponding TCT
in his name. Since the sale, appellee continuously possessed and occupied the property as owner up to his
death on July 13, 1984 and his heirs, after his death, continued the occupancy and possession of the
property up to the present. Those contemporaneous and subsequent events are demonstrative acts that the
vendor since the sale recognized the vendee as the absolute owner of the property sold. All those attributes
of ownership are admitted by defendants in their answer, specifically in paragraphs 7 and 9 of their special
and affirmative defenses.
The contract here being one of absolute sale, the ownership of the subject lot was transferred to the buyer
upon the actual and constructive delivery thereof. The constructive delivery of the subject lot was made
upon the execution of the deed of sale while the actual delivery was effected when the private
respondents took possession of and constructed a house on Lot No. 3223-A.
176
Bucton vs. Gabar and Court of Appeals G.R. No. L-36359 31 January 1974
FACTS:
Nicanora G. Bucton is the sister of ZosimoGabarwho, is the husband of Josefina. In 1946, spouses Gabar
bought a parcel of land from spouses Villarin to be paid on installment basis. Josefina entered into a
verbal agreement with Nicanora that the latter would pay one-half of the purchase price (P3, 000.00) and
would then own one-half of the land. Nicanora had paid in full by installments; payments were evidenced
by receipts issued by Josefina. Her family thereafter took possession of the portion of land indicated to
them by Josefina. In 1947, spouses Villarin executed a deed of sale in favor of Josefina. Nicanora sought
to obtain a separate title for their portion of the land but Josefina refused. Nicanora filed an action for
specific performance, praying that spouses Gabar would execute a deed of sale of western half of the
portion of land. Josefina contended that the amounts she had received from Nicanora were loans, not
payment of one-half of the price of the land. CFI ruled in favor of Nicanora. Judgment was reversed by
Court of Appeals. Nicanora filed present petition in Supreme Court.
ISSUE:
Who owns one-half of the land in question?
HELD:
Nicanora would be the owner of one-half portion of parcel of land. A verbal contract of sale produces
legal effects between the parties. Under Article 1434 of the Civil Code, When a person who is not the
owner of a thing sells or alienates and delivers it, and later the seller acquires title thereto, such title passes
by operation of law to the buyer. At the time Nicanora paid part payment of purchase price, Sps. Gabar
were not yet the owners of the lot. They only became owners in 1947 with execution of deed of sale by
spouse Villarin. Since Nicanora’s payment resulted in full payment of purchase price, they then have
subsequently acquired ownership over one-half of the lot. Thus, the Supreme Court granted the petition
of Nicanora.
177
VICTORIA R. VALLARTA vs. COURT OF APPEALS, G.R. No. L-40195, May 29,
1987
FACTS:
As found by the trial court and the Court of Appeals, Rosalinda Cruz, the private offended party, and
accused Victoria Vallarta are long time friends and business acquaintances. On November 20, 1968, Cruz
entrusted to Victoria Vallarta seven pieces of jewelry. In December of the same year, Vallarta decided to
buy some items, exchanged one item with another, and issued a post-dated check in the amount of P5,000
dated January 30, 1969. Rosalinda Cruz deposited said check with the bank. However, upon presentment,
the check was dishonored and Cruz was informed that Vallarta's account had been closed. Cruz apprised
Vallarta of the dishonor and the latter promised to give another check. Later, Vallarta pleaded for more
time. Still later, she started avoiding Cruz. Hence, this criminal action was instituted.
In seeking acquittal, petitioner stresses that the transaction between her and Cruz was a "sale or return,"
perfected and consummated on November 20, 1968 when the seven pieces of jewelry were delivered. The
check issued in December 1968 was therefore in payment of a pre-existing obligation. Thus, even if it was
dishonored, petitioner claims that she can only be held civilly liable, but not criminally liable under Art.
315 (2) (d), Revised Penal Code. She also argues that at any rate, what prompted Cruz to deliver the
jewelry was the social standing of petitioner Vallarta and not the postdated check.
She thus assigns as errors the finding of that Court a quo that the jewelries were entrusted on November
20, 1968, but the sale was perfected in December 1968, and the finding that there was deceit in the
issuance of the postdated check.
ISSUE:
Whether or not the sale is characterized as ―sale or return‖?
HELD:
In order to arrive at the proper characterization of the transaction between Vallarta and Cruz, that is,
whether it was a "sale or return" or some other transaction, it is necessary to determine the intention of the
parties.
The following excerpts from the transcript of stenographic notes are significant:
I. Direct Examination of Rosalinda Cruz
Q: Now, what happened with that business transaction of yours with Mrs. Vallarta?
A: After that and after she finally agreed to buy two sets and changed the ruby ring with
another ring, she gave me postdated check; I waited for January 30, 1969. 1 deposited the
check in the Security Bank. And after that I knew (learned) that it was closed account
(TSN, June 29, 1972, p. 9) (Emphasis supplied).
II. Cross-Examination of Rosalinda Cruz
178
Q: Now, you mentioned about certain jewelries in Exh. "A. Could you tell under your
oath whether all the jewelries listed here (Exh. "A") were taken by Mrs. Vallarta at one
single instance?
A: Yes, Sir. It was on one (1) day when I entrusted them to her so she can select what she
wants (Id at p. 22) (Emphasis supplied).
III. Cross-Examination of Rosalinda Cruz
COURT: But could you still recall or you cannot recall whether you agreed to reduce the
cost to Five Thousand Eight Hundred ( P5,800.00) Pesos?
A Yes, Sir. I agreed to reduce it to Five Thousand Eight Hundred (P5,800.00) Pesos, Sir,
when I went to see her in her house to finalize what jewelries she wanted (Id. at p. 26)
If there was no meeting of the minds on November 20, 1968, then, as of that date, there was yet no
contract of sale which could be the basis of delivery or tradition. Thus, the delivery made on November
20, 1968 was not a delivery for purposes of transferring ownership — the prestation incumbent on the
vendor. If ownership over the jewelry was not transmitted on that date, then it could have been transmitted
only in December 1968, the date when the check was issued. In which case, it was a "sale on approval"
since ownership passed to the buyer. Vallarta, only when she signified her approval or acceptance to the
seller, Cruz, and the price was agreed upon.
Properly, then, the transaction entered into by Cruz and Vallarta was not a "sale or return." Rather, it was a
"sale on approval " (also called " sale on acceptance, " "sale on trial." or "sale on satisfaction" [CIVIL
CODE, art. 1502]). In a "sale or return," the ownership passes to the buyer on delivery (CIVIL CODE, art.
1502). (The subsequent return of the goods reverts ownership in the seller [CIVIL CODE, art. 1502]).
Delivery, or tradition. as a mode of acquiring ownership must be in consequence of a contract (CIVIL
CODE, art. 712)
179
ROMAN vs. GRIMALT G.R.No. 2412 April 11, 1906
FACTS:
Pedro 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 or not 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.
180
JOSE DE LEON, CECILIO DE LEON, in their individual capacity, and JOSE DE

LEON and CECILIO DE LEON , as administrators of the intestate estate of Felix de
Leon vs. ASUNCION SORIANO
FACTS:
Jose de Leon, Cecilio de Leon and Albina de Leon, were natural children of Felix de Leon, deceased,
while Asuncion Soriano, is his widow. In the administration and settlement of the decedent's estate, the
said widow, on the one hand, and the natural children, reached an agreement, approved by the probate
court, whereby the natural children obligated themselves to deliver cavanes of rice at the end of each
agricultural year.
The defendants failed to deliver exact cavanes to the plaintiff due to "the Huk troubles in Central Luzon
which rendered impossible full compliance with the terms of the agreement;" and it was contended that
"inasmuch as the obligations of the defendants to deliver the full amount of the palay is depending upon
the produce as this is in the nature of an annuity, . . . the obligations of the defendants have been fully
fulfilled by delivering in good faith all that could be possible under the circumstances." It
was to recover this shortage or its value that this action was commenced.
ISSUE:
Whether or not there is a delivery of the property?
HELD:
Article 1182 of the Civil Code, provide that "Any obligation which consists in the delivery of a
determinate thing shall be extinguished if such thing should be lost or destroyed without fault on the part
of the debtor and before he is in default. Inversely, the obligation is not extinguished if the thing that
perishes is indeterminate.
Except as to quality and quantity, the first of which is itself generic, the contract sets no bounds or limits
to the palay to be paid, nor was there even any stipulation that the cereal was to be the produce of any
particular land. Any palay of the quality stipulated regardless of origin on however acquired (lawfully)
would be obligatory on the part of the obligee to receive and would discharge the obligation. It seems
therefore plain that the alleged failure of crops through alleged fortuitous cause did not excuse
performance.
The decision of the Court of Appeals is affirmed with costs against the petitioners and appellants.
181
UNION MOTOR CORPORATION vs. THE COURT OF APPEALS

G.R. No. 117187.
July 20, 2001
FACTS:
On September 14, 1979, the respondent Bernal spouses purchased from petitioner Union Motor
Corporation one Cimarron Jeepney for P37,758.60 to be paid in installments. For this purpose, the
respondent spouses executed a promissory note and a deed of chattel mortgage in favor of the petitioner.
Meanwhile, the petitioner entered into a contract of assignment of the promissory note and chattel
mortgage with Jardine-Manila Finance, Inc. Through Manuel Sosmea, an agent of the petitioner, the
parties agreed that the respondent spouses would pay the amount of the promissory note to Jardine-Manila
Finance, Inc., the latter being the assignee of the petitioner. To effectuate the sale as well as the
assignment of the promissory note and chattel mortgage, the respondent spouses were required to sign a
notice of assignment, a deed of assignment, a sales invoice, a registration certificate, an affidavit, and a
disclosure statement. The respondent spouses were obliged to sign all these documents for the reason that,
according to Sosmea, it was a requirement of petitioner Union Motor Corporation and Jardine-Manila
Finance, Inc. for the respondent spouses to accomplish all the said documents in order to have their
application approved. Upon the respondent spouses tender of the downpayment worth P10,037.00, and the
petitioners acceptance of the same, the latter approved the sale. Although the respondent spouses have not
yet physically possessed the vehicle, Sosmea required them to sign the receipt as a condition for the
delivery of the vehicle.
The respondent spouses continued paying the agreed installments even if the subject motor vehicle
remained undelivered. The respondent spouses have paid a total of P7,507.00 worth of installments before
they discontinued paying on account of non-delivery of the subject motor vehicle. According to the
respondent spouses, the reason why the vehicle was not delivered was due to the fact that Sosmea
allegedly took the subject motor vehicle in his personal capacity.
Jardine-Manila Finance, Inc., filed a complaint for a sum of money against the respondent Bernal spouses.
The complaint was amended to include petitioner Union Motor Corporation as alternative defendant, the
reason being that if the respondent spouses refusal to pay Jardine-Manila Finance, Inc. was due to
petitioners non-delivery of the unit, the latter should pay Jardine-Manila Finance, Inc. what has been
advanced to the petitioner. The respondent spouses presented witnesses in support of their defense and
counterclaim against the plaintiff and cross-claim against the petitioner. The petitioner did not present any
evidence inasmuch as the testimony of the witness it presented was ordered stricken off the record for his
repeated failure to appear for cross-examination on the scheduled hearings. The trial court deemed the
presentation of the said witness as having been waived by the petitioner.
ISSUE:
Whether or not there has been a delivery, physical or constructive, of the subject motor vehicle.
HELD:
182
NONE. Undisputed is the fact that the respondent Bernal spouses did not come into possession of the
subject Cimarron jeepney that was supposed to be delivered to them by the petitioner. The registration
certificate, receipt and sales invoice that the respondent Bernal spouses signed were explained during the
hearing without any opposition by the petitioner. According to testimonial evidence adduced by the
respondent spouses during the trial, the said documents were signed as a part of the processing and for the
approval of their application to buy the subject motor vehicle. Without such signed documents, no sale,
much less delivery, of the subject jeepney could be made. The documents were not therefore an
acknowledgment by respondent spouses of the physical acquisition of the subject motor vehicle but
merely a requirement of petitioner so that the said subject motor vehicle would be delivered to them.
The SC ruled that 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.
The registration certificate signed by the respondent spouses does not conclusively prove that constructive
delivery was made nor that ownership has been transferred to the respondent spouses. Like the receipt and
the invoice, the signing of the said documents was qualified by the fact that it was a requirement of
petitioner for the sale and financing contract to be approved. In all forms of delivery, it is necessary that
the act of delivery, whether constructive or actual, should be coupled with the intention of delivering the
thing. The act, without the intention, is insufficient.The critical factor in the different modes of effecting
delivery which gives legal effect to the act, is the actual intention of the vendor to deliver, and its
acceptance by the vendee. Without that intention, there is no tradition.
Further, It is true that the execution of a public instrument is equivalent to the delivery of the thing which
is the object of the contract, but, in order that this symbolic delivery may produce the effect of tradition, it
is necessary that the vendor shall have had control over the thing sold that, at the moment of the sale, its
material delivery could have been made. It is not enough to confer upon the purchaser the ownership and
the right of possession. The thing sold must be placed in his control. When there is no impediment
whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor,
symbolic delivery through the execution of a public instrument is sufficient. But if, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing
and make use of it himself or through another in his name, because such tenancy and enjoyment are
opposed by the interposition of another will, then fiction yields to reality-the delivery has not been
effected.
183
Lawyers Cooperative Publishing Company v. Perfecto Tabora G.R. No. L-21263

APRIL 30, 1965
FACTS:
On May 3, 1955, Perfecto A. Tabora bought from the Lawyers Cooperative Publishing Company one
complete set of American Jurisprudence consisting of 48 volumes with 1954 pocket parts, plus one set of
American Jurisprudence, General Index, consisting of 4 volumes, for a total price of P1,675.50 which, in
addition to the cost of freight of P6.90, makes a total of P1,682.40. Tabora made a partial payment of
P300.00, leaving a balance of P1,382.40. The books were duly delivered and receipted for by Tabora on
May 15, 1955 in his law office Ignacio Building, Naga City.
It was provided in the contract that "title to and ownership of the books shall remain with the seller until
the purchase price shall have been fully paid. Loss or damage to the books after delivery to the buyer shall
be borne by the buyer."
As Tabora failed to pay the monthly installments agreed upon on the balance of the purchase price
notwithstanding the long time that had elapsed, the company demanded payment of the installments due,
and having failed, to pay the same, it commenced the present action before the Court of First Instance of
Manila for the recovery of the balance of the obligation. Plaintiff also prayed that defendant be ordered to
pay 25% of the amount due as liquidated damages, and the cost of action.
Defendant, in his answer, pleaded force majeure as a defense. He alleged that the books bought from the
plaintiff were burned during the fire that broke out in Naga City on May 15, 1955, and since the loss was
due toforce majeure he cannot be held responsible for the loss.
ISSUE:
Whether or notTabora is still obligated to pay despite the attending circumstances?
HELD:
Yes. Neither can appellant find comfort in the claim that since the books were destroyed by fire without
any fault on his part he should be relieved from the resultant obligation under the rule that an obligor
should be held exempt from liability when the loss occurs thru a fortuitous event. This is because this rule
only holds true when the obligation consists in the delivery of a determinate thing and there is no
stipulation holding him liable even in case of fortuitous event. Here these qualifications are not present.
The obligation does not refer to a determinate thing, but is pecuniary in nature, and the obligor bound
himself to assume the loss after the delivery of the goods to him. In other words, the obligor agreed to
assume any risk concerning the goods from the time of their delivery, which is an exception to the rule
provided for in Article 1262 of our Civil Code.
184
Norkis Distributors, Inc. v. Court of Appeals GR No. 91029 February 7, 1991
FACTS:
Petitioner Norkis Distributors, Inc. is the distributor of Yamaha motorcycles in Negros Occidental.
Alberto Nepales bought from the Norkis Bacolod branch a brand new Yamaha Wonderbike motorcycle.
The price of P7,500 was payable by means of a Letter of Guaranty from the DBP, which Norkis’ Branch
Manager Labajoagrred to accept. Hence, 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. Branch Manager Labajo issued Norkis Sales Invoice
No. 0120 (Exh.1) showing that the contract of sale of the motorcycle had been perfected. Nepales signed
the sales invoice to signify his conformity with the terms of the sale. In the meantime, however, the
motorcycle remained in Norkis' possession.
The motorcycle was then registered in the Land Transportation Commission in the name of Alberto
Nepales. The motorcycle was delivered to a certain Julian Nepales who was allegedly the agent of Alberto
Nepales but the latter denies it. The motorcycle met an accident and an investigation conducted by the
DBP revealed that the unit was being driven by a certain ZacariasPayba at the time of the accident. The
unit was a total wreck, was returned, and stored inside Norkis' warehouse.
DBP released the proceeds of private respondent's motorcycle loan to Norkis in thetotal sum of P7,500.
As the price of the motorcycle later increased to P7,828 in March, 1980, Nepalespaid 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 himdamages. Norkis
answered that the motorcycle had already been delivered to private respondent beforethe accident, hence,
the risk of loss or damage had to be borne by him as owner of the unit.
ISSUE:
Whether or not there had already been a transfer of ownership of the motorcycle to Alberto Nepales at the
time it was destroyed?
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 buyer's motorcycle loan. The Letter of Guarantee (Exh. 5) issued
by the DBP, reveals that the execution in its favor of a chattel mortgage over the purchased vehicle is a
185
pre-requisite for the approval of the buyer's loan. If Norkis would not accede to that arrangement, DBP
would not approve private respondent's loan application and, consequently, there would be no sale.
In other words, the critical factor in the different modes of effecting delivery, which gives legal effect to
the act, is the actual intention of the vendor to deliver, and its acceptance by the vendee. Without that
intention, there is no tradition.
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 seller's 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.
186
YU TEK CO vs GONZALES G.R. No. L-9935 February 1, 1915
FACTS:
In a written contract, Mr. Basilio Gonzalez acknowledges receipt of the sum of P3,000 from Messrs. Yu
Tek and Co., and that in consideration of said sum be obligates himself to deliver to the said Yu Tek and
Co., 600 piculs of sugar of the first and second grade, according to the result of the polarization, within
the period of three months, beginning on the 1st day of January, 1912, and ending on the 31st day of
March of the same year 2012. Mr. Basilio Gonzales also obligates himself to deliver at any place within
the said municipality of Santa Rosa which the said Messrs. Yu Tek and Co., or a representative of the
same may designate. Lastly, in case Gonzales does not deliver within the period of three months, this
contract will be rescinded and Gonzales will then be obligated to return to Yu Tek and Co. the P3,000
received and also the sum of P1,200 by way of indemnity for loss and damages.
Plaintiff proved that no sugar had been delivered to it under this contract nor had it been able to recover
the P3,000. Plaintiff prayed for judgment for the P3,000 and, in addition, for P1,200 under paragraph 4,
supra. Judgment was rendered for P3,000 only, and from this judgment both parties appealed.
The defendant assumes that the contract was limited to the sugar he might raise upon his own plantation;
that the contract represented a perfected sale; and that by failure of his crop he was relieved from
complying with his undertaking by loss of the thing due. (Arts. 1452, 1096, and 1182, Civil Code.)
ISSUE:
Whether or not compliance of the obligation to deliver depends upon production in defendant’s
plantation?
HELD:
NO.In the case at bar, there is no clause in the written contract which even remotely suggests the condition
that the sugar was to be obtained exclusively from the crop raised by the defendant.. The defendant
undertook to deliver a specified quantity of sugar within a specified time. The contract placed no
restriction upon the defendant in the matter of obtaining the sugar.He was equally at liberty to purchase it
on the market or raise it himself. It may be true that defendant owned a plantation and expected to raise
the sugar himself, but he did not limit his obligation to his own crop of sugar. Our conclusion is that the
condition which the defendant seeks to add to the contract by parol evidence cannot be considered. The
rights of the parties must be determined by the writing itself.
The defendant’s assumption that there was a perfected sale is faulty. Article 1450 defines a perfected sale
as follows:
187
The sale shall be perfected between vendor and vendee and shall be binding on both of them, if they have
agreed upon the thing which is the object of the contract and upon the price, even when neither has been
delivered.
Article 1452 reads: "The injury to or the profit of the thing sold shall, after the contract has been
perfected, be governed by the provisions of articles 1096 and 1182." This court has consistently held that
there is a perfected sale with regard to the "thing" whenever the article of sale has been physically
segregated from all other articles. We conclude that the contract in the case at bar was merely an
executory agreement; a promise of sale and not a sale. At there was no perfected sale, it is clear that
articles 1452, 1096, and 1182 are not applicable.
For the foregoing reasons the judgment appealed from is modified by allowing the recovery of P1,200
under paragraph 4 of the contract. As thus modified, the judgment appealed from is affirmed, without
costs in this instance.
188
BUNGE CORPORATION and UNIVERSAL COMMERCIAL AGENCIES,VSELENA

CAMENFORTE and COMPANY, ET AL.
G.R. No. L-4440 August 29, 1952
FACTS:
Plaintiffs claim that on October 22, 1947, in the City of Cebu a contract was entered into between the
Visayan Products Company and Bunge Corporation (represented by the Universal Commercial Agencies)
whereby the former sold to the latter 500 long tons of merchantable Philippine copra in bulk at the prices
of $188.80, U.S. currency, per ton, less 1 per cent brokerage per short ton of 2,000 pounds, C & F Pacific
Coast, U.S.A.; that, according to the terms and conditions of the contract, the vendor should ship the
stipulated copra during the month of November or December 1947, to San Francisco, California, U.S.A.
for delivery to the vendee; that, notwithstanding repeated demands made by the vendee, the vendor failed
to ship and deliver the copra during the period agreed upon; that believing in good faith that the vendor
would ship and deliver the copra on time, the vendee sold to El Dorado Oil Works the quantity of copra it
had purchased at the same price agreed upon; and that because of the failure of the vendor to fulfill its
contract to ship and deliver the quantity of copra agreed upon within the period stipulated, the vendee has
suffered damages in the amount of P180,00.
Defendants answered separately the allegations set forth in the complaint and, with the exception of
Vicente Kho, denied that the Visayan Products Company has ever entered into a contract of sale of copra
with the plaintiffs, as mentioned in the complaint. They aver that if a contract of that tenor has ever been
entered into between said company and the plaintiffs, the truth is that Vicente Kho who signed for and in
behalf of the company never had any authority to act for that company either expressly or impliedly,
inasmuch as the only ones who had the authority to do so are Elena Camenforte, the general manager, Tan
Se Chong, the manager, and Tiu Kee, the assistant manager.
Vicente Kho, on his part, after admitting that the commercial transaction mentioned in the complaint had
actually taken place, avers that the contract was concluded with the Visayan Products Company which
had its office in Tacloban, Leyte, and not with the Visayan Products Company established in Cebu, which
is not a party to the transaction; that the Visayan Products Company organized in organized in Tacloban is
the one that was presented by him in the transaction, of which he is the manager and controlling
stockholder, which fact was clearly known to the plaintiffs when the contract was entered into believing
that the company he was representing was the one recently organized in Cebu; that he, Vicente Kho, did
his best to comply with the contract, but he failed because of force majeure as follows: he informed the
plaintiffs sometime in December, 1947, that he would have all the copra covered by the contract ready for
shipment somewhere in the port of San Ramon, Samar, in order that they may make an arrangement for
189
the booking of a ship, but before the arrival of the ship, a strong storm visited the place causing the
bodega where the copra was stored to be destroyed and the copra washed away into the sea; and that,
because of this force majeure, he cannot now be held liable for damages.
ISSUE:
Whether or not appellants are not relieved of civil liability under the contract, what are then the damages
for which they stand liable to the appellees?
HELD:
A perusal of the contract is necessary to see the feasibility of this contention. The contract is embodied in
Exhibit C. A perusal of this contract shows that the subject matter is Philippine copra. The sale is to be
made by weight, — 500 long tons. It does not refer to any particular or specific lot of copra, nor does it
mention the place where the copra is to be acquired. No portion of the copra has been earmarked or
segregated. The vendor was at liberty to acquire the copra from any part of the Philippines. The sale
simply refers to 500 long tons of the Philippine copra. The subject-matter is, therefore, generic, not
specific.
It appearing that the obligation of appellant is to deliver copra in a generic sense, the obligation cannot be
deemed extinguised by the destruction or disappearance of the copra stored in San Ramon, Samar. Their
obligation subsists as long as that commodity is available. A generic obligation is not extinguished by the
loss of a thing belonging to a particular genus. Genus nunquanperit.
190
Philippine Virginia Tobacco Administration v Judge Delos Santos G.R. No. L-

27829 August 19, 1988
FACTS:
Respondent TimoteoSevilla, proprietor and General Manager of the Philippine Associated Resources
(PAR) together with two other entities, namely, the Nationwide Agro-Industrial Development Corp. and
the Consolidated Agro-Producers Inc. were awarded in a public bidding the right to import Virginia leaf
tobacco for blending purposes and exportation by them of PVTA and farmer's low-grade tobacco at a rate
of one (1) kilo of imported tobacco for every nine (9) kilos of leaf tobacco actually exported. The contract
entered into between the petitioner Philippine Virginia Tobacco Administration and respondent Sevilla
was for the importation of 85 million kilos of Virginia leaf tobacco and a counterpart exportation of 2.53
million kilos of PVTA and 5.1 million kilos of farmer's and/or PVTA at P3.00 a kilo. In accordance with
their contract respondent Sevilla purchased from petitioner and actually exported 2,101.470 kilos of
tobacco, paying the PVTA the sum of P2,482,938.50 and leaving a balance of P3,713,908.91. Before
respondent Sevilla could import the counterpart blending Virginia tobacco, amounting to 525,560 kilos,
Republic Act No. 4155 was passed and took effect on June 20, 1 964, authorizing the PVTA to grant
import privileges at the ratio of 4 to 1 instead of 9 to 1 and to dispose of all its tobacco stock at the best
price available.
Thus, on September 14, 1965 subject contract which was already amended on December 14, 1963 because
of the prevailing export or world market price under which respondent will be exporting at a loss,
(Complaint, Rollo, p. 3) was further amended to grant respondent the privileges under aforesaid law,
subject to the following conditions: (1) that on the 2,101.470 kilos already purchased, and exported, the
purchase price of about P3.00 a kilo was maintained; (2) that the unpaid balance of P3,713,908.91 was to
be liquidated by paying PVTA the sum of P4.00 for every kilo of imported Virginia blending tobacco and;
(3) that respondent Sevilla would open an irrevocable letter of credit No. 6232 with the Prudential Bank
and Trust Co. in favor of the PVTA to secure the payment of said balance, drawable upon the release from
the Bureau of Customs of the imported Virginia blending tobacco.
While respondent was trying to negotiate the reduction of the procurement cost of the 2,101.479 kilos of
PVTA tobacco already exported which attempt was denied by petitioner and also by the Office of the
President, petitioner prepared two drafts to be drawn against said letter of credit for amounts which have
already become due and demandable.
ISSUE:
191
Whether or not Judge Delos Angeles acted with grave abuse of discretion in releasing the funds to the
applicant of the letter of credit.
HELD:
Judge Delos Angeles violated the irrevocability of the letter of credit issued by respondent Bank in favor
of petitioner. An irrevocable letter of credit cannot, during its lifetime, be cancelled or modified Without
the express permission of the beneficiary. Consequently, if the finding the trial on the merits is that
respondent Sevilla has ailieged unpaid balance due the petitioner, such unpaid obligation would be
unsecured.
ALLIANCE TOBACCO CORPORATION, INC vs PHILIPPINE VIRGINIA TOBACCO

ADMINISTRATION, FARMER'S 'VIRGlNlA TOBACCO REDRYING COMPANY, INC.
and INTERMEDIATE APPELLATE COURT
FACTS:
The Philippine Virginia Tobacco Administration (PVTA), a government corporation created under
Republic Act No. 2265 to promote the tobacco industry, entered into a contract of procuring, redrying and
servicing with Farmer's Virginia Tobacco Redrying Company, Inc. (FVTR) for the1963 tobacco trading
operation.
In June of that year, the PVTA also entered into a merchandising loan agreement with the Alliance
Tobacco Corporation, a duly incorporated and authorized tobacco trading entity, whereby the PVTA
agreed to lend P25,500 to the Alliance Tobacco Corporation for the purchase of flue-cured Virginia
tobacco from bona fide Virginia tobacco former-producers. The following month, Alliance Tobacco
Corporation shipped to the FVTR 96 bales of tobacco weighing 4,800 kilos covered by Guia but the
remaining un-graded and un-weighed 174 bales with a total value of P28,382 were lost while they were in
the possession of the FVTR Having learned of such loss in 1965, petitioner demanded for its value and the
application of the same to its merchandising loan with PVTA but both the latter and the FVTR refused to
heed said demands.
Alliance Tobacco Corporation filed in the then Court of First Instance of La Union, in its filling it stated
that the PVTA and FVTR ordered to pay it P4,443 representing the value of the 89 bales which were
weighed, graded and accepted by them, P28,382.00 representing the value of the lost bales of tobacco
and/or that the said amount be applied to its loan with PVTA and P4,000 as attorney's fees and litigation
expenses. FVTR was declared in default and the PVTA submitted a stipulation of facts and agreed that a
partial judgment be rendered as to the 89 bales of tobacco which had been weighed and graded. The ruling
is that the PVTA should not be held responsible for the lost bales of tobacco because they were not yet
properly graded and weighed and that Alliance Tobacco Corporation failed to present the weigher's tally
sheets and warehouse receipts or quedans.
ISSUE:
192
Whether or not there is a perfected contract of sale between Alliance Tobacco Corporation and respondent
PVTA with respect to the aforesaid remaining bales of tobacco?
HELD:
At the outset, it should be emphasized that the lower court made a definitive factual finding on the actual
and physical delivery of the lost bales of tobacco from Alliance Tobacco Corporation to the FVTR. The
parties, however, disagree as to the legal implications of such delivery.
Petitioner contends that it bound not only FVTR but also the PVTA and perfected the contract of sale
between petitioner and the PVTA On the other hand, the PVTA argues that the delivery was not valid and
binding on it considering that, not having been weighed and graded by its agents, it had not duly accepted
the shipments so as to perfect the contract of sale. the actual, physical delivery of the shipments was not
proven.
On the other hand, in this case, the lower court established from the testimonies of witnesses the fact that
petitioner entrusted to the FVTR a total of 263 bales of tobacco 89 bales of which were even actually
weighed and graded in the redrying plant. FVTR also refused to grant Alliance Tobacco Corporation's
request to withdraw the un-weighed and un-graded shipments. As it turned out later, said shipments were
lost while in the custody of FVTR thereby placing the Alliance Tobacco Corporation in a "no win"
situation.
193
JOSE R. CRUZ vs REYNALDO PAHATI, ET AL GR No L-8257

April 13, 1956
FACTS:
Jose Cruz delivered his car to Belizo for the latter to sell the same. Belizo forged the letter of Cruz to the
Motor Section of the Bureau of Public Works and converted the same into a Deed of Sale. Using the
forged deed, he had the car registered in his name. Thereafter, Belizo sold the car to Bulahan, who in turn
sold the same to Pahati. However, the car was impounded by the police, and the sale to Pahati was
cancelled. Bulahan now contends that between 2 innocent parties (Bulahan and Cruz), the person who
made possible the injury must bear the loss—in this case, supposedly Cruz.
ISSUE:
Whether Cruz may recover the car from Bulahan
HELD:
YES. It is true that both Bulahan and Cruz acted in good faith. One who has lost a movable or had been
deprived of the same may recover it from the possessor. This rule applies squarely to this case. Cruz has a
better right to the car in question than defendant Bulahan for it cannot be disputed that plaintiff had been
illegally deprived thereof because of the ingenious scheme utilized by Belizo to enable him to dispose of
it as if he were the owner thereof. Plaintiff therefore can still recover the possession of the car even if
defendant Bulahan had acted in good faith in purchasing it from Belizo. Nor can it, be pretended that the
conduct of plaintiff in giving Belizo a letter to secure the issuance of a new certificate of registration
constitutes a sufficient defense that would preclude recovery because of the undisputed fact that that letter
was falsified and this fact can be clearly seen by a cursory examination of the document. If Bulahan had
been more diligent he could have seen that the pertinent portion of the letter had been erased which would
have placed him on guard to make an inquiry as regards the authority of Belizo to sell the car.
194
CHUA HAI vs. HON. RUPERTO KAPUNAN, JR.

G.R. No. L-11108 June 30, 1958
FACTS:
Roberto Soto purchased from Youngstown Hardware, owned by OngShu, 700 corrugated galvanized iron
sheets and 249 pieces of round iron bar for P6,137.70, and in payment thereof he issued a check drawn
against the Security Bank and Trust Company for P7,000.00, without informing OngShu that he had no
sufficient funds in said bank to answer for the same. When the check was presented for payment, it was
dishonored for insufficiency of funds. Soto sold 165 sheets in Pangasinan and 535 sheets in Calapan,
Mindoro. Of those sold in Pangasinan, 100 were sold to petitioner Chua Hai. When the case was filed in
the Court of First Instance of Manila against Roberto Soto, for estafa, the offended party filed a petition
asking that the 700 galvanized iron sheets, which were deposited with the Manila Police Department, be
returned to him, as owner of the Youngstown Hardware. Petitioner herein opposed the motion with
respect to the 100 sheets that he had bought from Soto. Notwithstanding the opposition, the court ordered
the return of the galvanized iron sheets to OngShu. Petitioner then presented a motion to reconsider the
order, alleging that by the return thereof to the offended party, the court had not only violated the contract
of deposit, because it was in that concept that petitioner had delivered the 100 sheets to the Manila Police
Department, and that said return to OngShu amounted to a deprivation of his property without due process
of law. It is also claimed that Article 105 of the Revised Penal Code, under whose authority the return was
ordered, can be invoked only after the termination of the criminal case and not while said criminal case is
still pending trial.
The court having given no heed to these protests on the part of the petitioner, the latter brought the present
petition to this Court alleging that the order of the respondent judge constitutes a deprivation of
petitioner's property without due process of law, violating the contract of deposit under which the sheets
were delivered to the police department of the City of Manila, and determining the respective rights of
petitioner and respondent OngShu without a previous trial of the criminal case — all of which constitute a
grave abuse of discretion and excess of jurisdiction.
195
ISSUE:
Whether or not the failure to make good tge price would rescind the sale?
HELD:
No.It cannot be assumed at this stage of the proceedings that respondent OngShu is still the owner of the
property; to do so it take for granted that the estafa was in fact committed, when so far, the trial on the
merits has not even started, and the presumption of innocence holds full sway.
The civil liability of the offender to make restitution, under Art. 105 of the Revised Penal Code, does not
arise until his criminal liability is finally declared, since the former is a consequence of the latter. Art. 105
of the Revised Penal Code, therefore, can not be invoked to justify the order of the court below, since that
very article recognizes the title of an innocent purchaser when it says:
But even if the articles in dispute had not been acquired in a market, fair or merchant's store, still, so far as
disclosed, the facts do not justify a finding that the owner, respondent OngShu, was illegally deprived of
the iron sheets, at least in so far as appellant was concerned. It is not denied that OngShu delivered the
sheets to Soto upon a perfected contract of sale, and such delivery transferred title or ownership to the
purchaser. The ownership of the thing sold is acquired by the vendee from the moment it is delivered to
him in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement
that the possession is transferred from the vendor to the vendee.
The failure of the buyer to make good the price does not, in law, cause the ownership to revest in the seller
until and unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the
new Civil Code. And, assuming that the consent of OngShu to the sale in favor of Sotto was obtained by
the latter through fraud or deceit, the contract was not thereby rendered void ab initio, but only voidable
by reason of the fraud,.
Hence, until the contract of OngShu with Sotto is set aside by a competent court (assuming that the fraud
is established to its satisfaction), the validity of appellant's claim to the property in question cannot be
disputed, and his right to the possession thereof should be respected.
It is no excuse that the respondent OngShu was required to post a redelivery bond. An indemnity bond,
while answering for damages, is not, by itself alone, sufficient reason for disturbing property rights,
whether temporarily or permanently. If the invasion is not warranted, the filing of a bond will not make it
justifiable.
196
JOSE B. AZNAR vs. RAFAEL YAPDIANGCO G.R. No. L-18536 March 31, 1965
FACTS:
Theodoro Santos advertised in the newspapers the sale of his Ford Fairlane 500. Certain de Dios, claiming
to be the nephew of Marella, went to the residence of Santos and expressing his uncle’s intent to purchase
the car. Since Santos wasn't around, it was his son Irineo who talked with de Dios. Marella expressed his
intention to purchase the car. A deed of sale was prepared. When Irineo and de Dios arrived at the
residence of Marella, the latter averred that his money was short and had to borrow from his sister. He
then instructed de Dios and Irineo to go the supposed house of the sister to obtain the money with an
unidentified person. He also asked Irineo to leave the deed to have his lawyer see it. Relying on the good
faith of Marella, Irineo did as requested.
Upon arriving at the house of Marella’s supposed to be sister, de Dios and the unidentified person then
disappeared together with the car. This prompted Santos to report the incident to the authorities.
Thereafter, Marella was able to sell the car to Aznar. And while in possession of the car, police authorities
confiscated the same.
ISSUE:
Whether or not Santos has better right than Aznar.
HELD:
Yes. Teodoro Santos has the better right. Marella did not have any title to the property under litigation
because the same was never delivered to him. He may have the contract but he never acquired valid title.
Although the keys to the car may have been given to the unidentified companion, it may be done only
because that companion took them to the place where the sister of Marella was supposed to live. The car
was evidently stolen and that the buyer did not acquire any valid title thereto. Article 559 of Civil Code
provides the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a
197
right to recover it, not only from its finder, thief or robber, but also from third persons who may have
acquired it in good faith from such finder, thief or robber.
VICENTE T. TAN, VICTAN & COMPANY, INC., VS.THE HONORABLE COURT OF

APPEALS (FORMER SPECIAL FIRST DIVISION), CENTRAL BANK OF THE
PHILIPPINES G.R. No. 90365 March 18, 1991
FACTS:
It appears from the record that on June 15, 1974, private respondent Tan was arrested by the military
authorities pursuant to an Arrest, Search and Seizure Order (ASSO) issued by the then Secretary of
National Defense on the basis of criminal charges filed against him before the PC Criminal Investigation
Service for alleged irregular transactions at Continental Bank. At the time of his arrest, respondent Tan
was neither a director nor an officer of said bank. Subsequently, three (3) other officers of Continental
Bank, all with the rank of vice-presidents, were arrested. However, the bank's chairman of the board,
Cornelio Balmaceda, and its President, Jose Moran, were not arrested, and in fact continued to run the
operations of the bank.
Because of a possible bank run as a result of the arrests, the officers of Continental Bank requested an
emergency loan to meet pending withdrawals of depositors. The Monetary Board approved the request on
June 21, 1974 subject, however, to a verification of the bank's assets.
On June 24, 1974, the Director of petitioner's department of Commercial and Savings Banks, after
conducting said verification, reported that Continental Bank's assets cannot meet its liabilities, since the
latter exceeded the former by P 67.260 million. The report also indicated that Continental Bank was
insolvent and that its continuance in business would involve probable loss to its depositors and creditors,
which are the two grounds mandated under Section 29 of Republic Act No. 265, otherwise known as the
Central Bank Act, justifying the closure and placing under receivership of a bank.
On the basis of the report, petitioner ordered the closure of Continental Bank effective June 24, 1974 and
designated the Director of its Department of Commercial and Savings Banks as receiver with instructions
to take charge of the bank's assets pursuant to Sec. 29 of R.A. No. 265..
198
While still under detention by the military, respondent Tan executed certain agreements on February 2,
1977, May 12, 1977 and July 5, 1977 transferring and assigning 359,615 shares of stock in Continental
Bank, as well as other properties belonging to him and his affiliate firms, to Executive Consultants, Inc.,
Orobel Property Management, Inc. and Antolum International Trading Corporation in consideration of the
assumption by these assignees of the liabilities and obligations of respondents Tan and his companies. The
assignees of respondents Tan and his companies rehabilitated Continental Bank and, in support thereof,
respondent Tan wrote the petitioner on July 5, 1977 certifying on his own behalf and in behalf of the
corporations owned and controlled by him, that they have no objection to the reopening and rehabilitation
of Continental Bank under its new name, International Corporate Bank or Interbank. Interbank reopened
in 1977 and since then operated as a banking institution with controlling ownership thereof changing
hands during the past decade.
On January 13, 1987, after the lapse of more than twelve (12) years, private respondents filed the present
case of reconveyance of shares of stock with damages and restraining order before the respondent court.
On March 3, 1987, petitioner filed a Motion to Dismiss dated February 27, 1987 on the grounds that the
action is barred by the statute of limitations or prescription and that plaintiffs therein (private respondents
herein) have no cause of action against the defendant (herein petitioner), as well as laches on the part of
plaintiffs. On April 1, 1987, private respondents filed their Opposition to the Motion to Dismiss to which
petitioner filed its Reply dated April 10, 1987.
The respondent court (trial court) resolved the motion to dismiss in favor of private respondent(s) in an
Order dated May 15, 1987, which stated among other things:
As to the prescription of an action based on implied or constructive trust, the Supreme Court held that it
prescribes in ten years. . . .
As alleged in the complaint, plaintiffs were fraudulently divested of their Continental Bank shares in
1977. Consequently, the ten-year prescription period has not yet lapsed.
Plaintiffs likewise are not guilty of laches. . . .
With regards (sic) to the second ground, this Court finds that the allegations in the complaint, passed the
test laid down in Ruiz vs. Court of Appeals, G.R. No. 29213, Oct. 21, 1977, 79 SCRA 525, 534, regarding
sufficiency of ultimate facts. A valid judgment can be rendered upon the facts alleged in the complaint
(which are deemed admitted for purposes of the Motion to Dismiss) in accordance with the prayer of this
complaint. (p. 4, Petition)
Not satisfied with the Order petitioner filed a Motion for Reconsideration of the same, alleging that the
grounds of prescription and laches were raised principally in connection with private respondents' claim
for damages, while the ground of no cause of action was raised in connection with private respondents'
claim for reconveyance. In spite of petitioner's arguments, the Motion for Reconsideration was denied by
the respondent court in its Order of August 12, 1987. Hence, the (sic) petition for certiorari.
ISSUE:
Whether or not the action for damages is barred by prescription under Article 1146 of the Civil Code.
HELD:
At any rate, actions on tort—assuming that the complaint is one for tort-prescribe in four years under, as
aforesaid, Article 1146 of the Code. That Article 1149 — which refers to "periods not fixed in this Code
or other laws— "is the applicable provision becomes therefore untenable because, please note, Article
1146 speaks of "injury to the rights of the plaintiff " and "quasi-delict"— specific legal nomenclatures for
tort—assuming, again, that the action is for tort. The Court does not see how Article 1149 can therefore
enter into the picture.
199
Please note also that in the case of Allied Banking Corporation vs. Court of Appeals 8 we specifically held
that an action against the Central Bank for "tortious interference," that is, in closing and liquidating a
bank, prescribes in four years from the date of closure. In that case —which is one for tort — we held that
Article 1146 is the applicable law.
Be that as it may, and assuming ex gratia argumenti that Article 1149 were applicable, it still would not
have rescued the petitioners since that meant that they had until 1982 at most, within which to institute a
claim. Prescription would still have been a bar.
The next question is whether or not any action for reconveyance has nevertheless prescribed, on the bases
of provisions governing reconveyance.
The rule anent prescription on recovery of movables (shares of stock in this case) is expressed in Article
1140 of the Civil Code, which we quote:
Art. 1140. Actions to recover movables shall prescribe eight years from the time the possession thereof is
lost, unless the possessor had acquired the ownership by prescription for a less period, according to article
1132, and without prejudice to the provisions of articles 559, 1505, and 1133.
As it provides, Article 1140 is subject to the provisions of Articles 1132 and 1133 of the Code, governing
acquisitive presciption, in relation to Articles 559 and 1505 thereof. Under Article 1132:
Art. 1132. The ownership of movables prescribes through uninterruped possession for four years in good
faith.
The ownership of personal property also prescribes through uninterrupted possession for eight years,
without need of any other condition.
With regard to the right of the owner to recover personal property lost or of which he has been illegally
deprived, as well as with respect to movables acquired in a public sale, fair, or market, or from a
merchant's store the provisions of articles 559 and 1505 of this Code shall be observed.
acquisitive prescription sets in after uninterrupted possession of four years, provided there is good faith,
and upon the lapse of eight years, if bad faith is present. Where, however, the thing was acquired through
a crime, the offender can not acquire ownership by prescription under Article 1133, which we quote: Art.
1133. Movables possessed through a crime can never be acquired through prescription by the offender.
Please note that under the above Article, the benefits of prescription are denied to the offender;
nonetheless, if the thing has meanwhile passed to a subsequent holder, prescription begins to run (four or
eight years, depending on the existence of good faith).
For purposes of existence prescription vis-a-vis movables, we therefore understand the periods to be:
1. Four years, if the possessor is in good faith;
2. Eight years in all other cases, except where the loss was due to a crime in which case, the offender can
not acquire the movable by prescription, and an action to recover it from him is imprescriptible.
It is evident, for purposes of the complaint in question, that the petitioners had at most eight years within
which to pursue a reconveyance, reckoned from the loss of the shares in 1977, when the petitioner Vicente
Tan executed the various agreements in which he conveyed the same in favor of the Executive
Consultants, Inc., Orobel Property Management, Inc., and Antolum Trading Corporation.
We are hard put to say, in this regard, that the petitioners' action is after all, imprescriptible pursuant to the
provisions of Article 1133 of the Civil Code, governing actions to recover loss by means of a crime. For
one thing, the complaint was not brought upon this theory. For another, there is nothing there that suggests
that the loss of the shares was indeed made possible by a criminal act, other than simple bad faith and
probably abuse of right
200

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125

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