Civ Ii - SC - Sales and Lease

CIVIL LAW REVIEW II BATCH 2017 CASE DIGEST
SPEACIAL CONTRACTS (SALES-LEASE)
QUIROGA VS. PARSONS HARDWARE CO. (F) Mr. Parsons binds himself not to sell any other
G.R. No. L-11491; August 23, 1918 kind except the "Quiroga" beds.
ART. 2. In compensation for the expenses of
TOPIC: Sales; Contract of Sale vs. Contract of advertisement which, for the benefit of both
Agency contracting parties, Mr. Parsons may find himself
NATURE: Appeal obliged to make, Mr. Quiroga assumes the
obligation to offer and give the preference to Mr.
FACTS: Parsons in case anyone should apply for the
On Jan. 24, 1911, in Manila, plaintiff Andres exclusive agency for any island not comprised
Quiroga and J. Parsons (to whose rights and with the Visayan group.
obligations the present defendant later
subrogated itself) entered into a contract with the ART. 3. Mr. Parsons may sell, or establish
ff. tenor: branches of his agency for the sale of "Quiroga"
CONTRACT EXECUTED BY AND BETWEEN beds in all the towns of the Archipelago where
ANDRES QUIROGA AND J. PARSONS, BOTH there are no exclusive agents, and shall
MERCHANTS ESTABLISHED IN MANILA, FOR immediately report such action to Mr. Quiroga for
THE EXCLUSIVE SALE OF "QUIROGA" BEDS IN his approval.
THE VISAYAN ISLANDS. xxx.
ARTICLE 1. Don Andres Quiroga grants the
exclusive right to sell his beds in the Visayan Quiroga, in his complaint, averred that defendant
Islands to J. Parsons under the following violated the ff. obligations, among others: not to
conditions: sell the beds at a higher price than those of the
(A) Mr. Quiroga shall furnish beds of his invoices, to have an open establishment in Iloilo;
manufacture to Mr. Parsons for the latter's itself to conduct the agency, and to order the beds
establishment in Iloilo, and shall invoice them at by the dozen in no other manner. He also alleged
the same price he has fixed for sales, in Manila, that defendant was his agent for the sale of the
and, in the invoices, shall make and allowance of beds in Iloilo, and that said obligations are
a discount of 25 per cent of the invoiced prices, as implied in a contract of commercial agency.
commission on the sale; and Mr. Parsons shall ISSUE:
order the beds by the dozen, whether of the same Whether the defendant, by reason of the contract
or of different styles. hereinbefore transcribed, was a purchaser or an
(B) Mr. Parsons binds himself to pay Mr. Quiroga agent of the plaintiff for the sale of his beds.
for the beds received, within a period of sixty days
from the date of their shipment. RULING:
xxx. In order to classify a contract, due regard must be
(D) If, before an invoice falls due, Mr. Quiroga given to its essential clauses. In the contract in
should request its payment, said payment when question, what was essential, as constituting its
made shall be considered as a prompt payment, cause and subject matter, is that the plaintiff was
and as such a deduction of 2 per cent shall be to furnish the defendant with the beds which the
made from the amount of the invoice. latter might order, at the price stipulated, and that
The same discount shall be made on the amount the defendant was to pay the price in the manner
of any invoice which Mr. Parsons may deem stipulated. The price agreed upon was the one
convenient to pay in cash. determined by the plaintiff for the sale of these
xxx. beds in Manila, with a discount of from 20 to 25
per cent, according to their class. Payment was to
ARELLANO UNIVERSITY SCHOOL OF LAW Page 1

be made at the end of sixty days, or before, at the the contract, the effect of its breach would only
plaintiff's request, or in cash, if the defendant so entitle the plaintiff to disregard the orders which
preferred, and in these last two cases an the defendant might place under other
additional discount was to be allowed for prompt conditions; but if the plaintiff consents to fill
payment. These are precisely the essential them, he waives his right and cannot complain for
features of a contract of purchase and sale. There having acted thus at his own free will.
was the obligation on the part of the plaintiff to
supply the beds, and, on the part of the defendant, For the foregoing reasons, we are of opinion that
to pay their price. These features exclude the legal the contract by and between the plaintiff and the
conception of an agency or order to sell whereby defendant was one of purchase and sale, and that
the mandatory or agent received the thing to sell the obligations the breach of which is alleged as a
it, and does not pay its price, but delivers to the cause of action are not imposed upon the
principal the price he obtains from the sale of the defendant, either by agreement or by law.
thing to a third person, and if he does not succeed
in selling it, he returns it. By virtue of the contract
between the plaintiff and the defendant, the
latter, on receiving the beds, was necessarily
obliged to pay their price within the term fixed,
without any other consideration and regardless
as to whether he had or had not sold the beds.
It would be enough to hold, as we do, that the

contract by and between the defendant and the
plaintiff is one of purchase and sale, in order to
show that it was not one made on the basis of a
commission on sales, as the plaintiff claims it was,
for these contracts are incompatible with each
other. But, besides, examining the clauses of this
contract, none of them is found that substantially
supports the plaintiff's contention. Not a single
one of these clauses necessarily conveys the idea
of an agency. The words commission on sales
used in clause (A) of article 1 mean nothing else,
as stated in the contract itself, than a mere
discount on the invoice price. The word agency,
also used in articles 2 and 3, only expresses that
the defendant was the only one that could sell the
plaintiff's beds in the Visayan Islands. With regard
to the remaining clauses, the least that can be said
is that they are not incompatible with the contract
of purchase and sale.
xxx xxx xxx.
In respect to the defendant's obligation to order

by the dozen, the only one expressly imposed by

SANCHEZ VS RIGOS ART. 1479. A promise to buy and sell a

GR NO. L – 25494, JUNE 14, 1972 determinate thing for a price certain is
reciprocally demandable.
FACTS:
Plaintiff Nicolas Sanchez and defendant Severina An accepted unilateral promise to buy or
Rigos executed an instrument entitled "Option to to sell a determinate thing for a price
Purchase," whereby Mrs. Rigos "agreed, promised certain is binding upon the promissor if
and committed ... to sell" to Sanchez the sum of the promise is supported by a
P1,510.00, a parcel of land situated in Nueva Ecija. consideration distinct from the price.
The Agreement provides that for the period of 2
years, the option shall be deemed “terminated On the other hand, Appellee contends that, even
and elapsed” if “Sanchez failed to exercise his granting that the "offer of option" is not
right to buy the property” within the stipulated supported by any consideration, that option
period. became binding on appellant when the appellee
gave notice to it of its acceptance, and that having
Several tenders of payment were made by accepted it within the period of option, the offer
Sanchez but Rigos rejected the same. Sanchez can no longer be withdrawn and in any event such
deposited the amount to the Court and filed an withdrawal is ineffective. In support this
action for specific performance and damages contention, appellee invokes article 1324 of the
against Rigos. Civil Code which provides:
Mrs. Rigos on her answer admitted some "ART. 1324. When the offerer has allowed
allegations of the complaint, denying other the offeree a certain period to accept, the
allegations thereof, and alleging, as special offer may be withdrawn any time before
defense, that the contract between the parties "is acceptance by communicating such
a unilateral promise to sell, and the same being withdrawal, except when the option is
unsupported by any valuable consideration, by founded upon consideration as something
force of the New Civil Code, is null and void". paid or promised."
The lower court rendered judgment for Sanchez, This Court itself, in the case of Atkins, Kroll and
ordering Mrs. Rigos to accept the sum judicially Co., Inc. v. Cua Hian Tek, 8 decided later
consigned by him and to execute, in his favor, the that Southwestern Sugar & Molasses Co. v. Atlantic
requisite deed of conveyance. Mrs. Rigos was, Gulf & Pacific Co., 9 saw no distinction between
likewise, sentenced to pay P200.00, as attorney's Articles 1324 and 1479 of the Civil Code and
fees, and other costs. Hence, this appeal by Mrs. applied the former where a unilateral promise to
Rigos. sell similar to the one sued upon here was
involved, treating such promise as an option
ISSUE: Whether or not the agreement is null and which, although not binding as a contract in itself
void if not supported by any valuable for lack of a separate consideration, nevertheless
consideration. generated a bilateral contract of purchase and
sale upon acceptance. Speaking through Associate
RULING: Justice, later Chief Justice, Cesar Bengzon, this
NO. This case admittedly hinges on the proper Court said:
application of Article 1479 of our Civil Code,
which provides: Furthermore, an option is unilateral: a
promise to sell at the price fixed whenever
the offeree should decide to exercise his consideration, strongly suggests that the two (2)
option within the specified time. After provisions intended to enforce or implement the
accepting the promise and before he same principle.
exercises his option, the holder of the
option is not bound to buy. He is free either
to buy or not to buy later. In this case,
however, upon accepting herein
petitioner's offer a bilateral promise to sell
and to buy ensued, and the
respondent ipso facto assumed the
obligation of a purchaser. He did not just
get the right subsequently to buy or not to
buy. It was not a mere option then; it was
a bilateral contract of sale.
In other words, since there may be no valid

contract without a cause or consideration, the
promisor is not bound by his promise and may,
accordingly, withdraw it. Pending notice of its
withdrawal, his accepted promise partakes,
however, of the nature of an offer to sell which, if
accepted, results in a perfected contract of sale.
This view has the advantage of avoiding a conflict

between Articles 1324 — on the general
principles on contracts — and 1479 — on sales —
of the Civil Code, in line with the cardinal rule of
statutory construction that, in construing
different provisions of one and the same law or
code, such interpretation should be favored as
will reconcile or harmonize said provisions and
avoid a conflict between the same. Indeed, the
presumption is that, in the process of drafting the
Code, its author has maintained a consistent
philosophy or position. Moreover, the decision
in Southwestern Sugar & Molasses Co. v. Atlantic
Gulf & Pacific Co., 10 holding that Art. 1324
is modified by Art. 1479 of the Civil Code, in effect,
considers the latter as an exception to the former,
and exceptions are not favored, unless the
intention to the contrary is clear, and it is not so,
insofar as said two (2) articles are concerned.
What is more, the reference, in both the second
paragraph of Art. 1479 and Art. 1324, to an option
or promise supported by or founded upon a

FIRST OPTIMA REALTY CORPORATION V. The check was eventually deposited with and
SECURITON SECURITY SERVICES, INC. credited to petitioner’s bank account. Thereafter,
G.R. No. 199648, January 28, 2015 respondent through counsel demanded in writing
that petitioner proceed with the sale of the
FACTS: property. In a March 3, 2006 Letter addressed to
Petitioner First Optima Realty Corporation is a respondent’s counsel, petitioner wrote back:
domestic corporation engaged in the real estate
business. It is the registered owner of a 256- Dear Atty. De Jesus:
square meter parcel of land located in Pasay City. Anent your letter dated January 16, 2006 received
Respondent Securitron Security Services, Inc., on on February 20, 2006, please be informed of the
the other hand, is a domestic corporation with following:
offices located beside the subject property. 1. It was your client SECURITRON SECURITY
Looking to expand its business and add to its SERVICES, INC. represented by Mr. Antonio Eleazar
existing offices, respondent – through its General who offered to buy our property located at corner
Manager, Antonio Eleazar – sent a Layug and Lim-An St., Pasay City;
letter addressed to petitioner – through its 2. It tendered an earnest money despite the fact
Executive Vice-President, Carolina T. Young – that we are still undecided to sell the said property;
offering to purchase the subject property 3. Our Board of Directors failed to pass a resolution
at P6,000.00 per square meter. Eleazar personally to date whether it agrees to sell the property;
negotiated with a certain Maria Remoso, who was 4. We have no Contract for the earnest money nor
an employee of petitioner. Contract to Sell the said property with your client;
Sometime thereafter, Eleazar personally went to Considering therefore the above as well as due to
petitioner’s office offering to pay for the subject haste and demands which we feel [are forms] of
property in cash. However, Young declined to intimidation and harassment, we regret to inform
accept payment. She likewise informed Eleazar you that we are now incline not to accept your offer
that prior approval of petitioner’s Board of to buy our property. Please inform your client to
Directors was required for the transaction, to coordinate with us for the refund of this (sic)
which remark Eleazar replied that respondent money.
shall instead await such approval. On February 4,
2005, respondent sent a Letter of which was ISSUE/S:
accompanied by PNB Check No. 24677, issued 1. Whether or not respondent’s offer to purchase
for P100,000.00 and made payable to petitioner. the subject property was accepted so as to
The letter states thus: conclude a sale
As agreed upon, we are making a deposit of ONE 2. Whether or not the money respondent
HUNDRED THOUSAND PESOS (Php 100,000.00) as delivered to petitioner was earnest money
earnest money for your property at the corner of thereby providing a perfected contract of sale
Layug St., & Lim-An St., Pasay City as per TCT No.
125318 with an area of 256 sq. m. at 6,000.00/ sq. RULING:
m. for a total of ONE MILLION FIVE HUNDRED 1. There is no sale to speak of. The lower courts
THIRTY SIX THOUSAND PESOS (Php 1,536,000.00). failed to appreciate that respondent’s offer to
Full payment upon clearing of the tenants at said purchase the subject property was never
property and signing of the Deed of Sale. accepted by the petitioner at any instance, even
after negotiations were held between them.

"When there is merely an offer by one party Since there is no perfected sale between the
without acceptance of the other, there is no parties, respondent had no obligation to make
contract." To borrow a pronouncement in a payment through the check; nor did it possess the
previously decided case, right to deliver earnest money to petitioner in
order to bind the latter to a sale. As contemplated
The stages of a contract of sale are: (1) negotiation, under Art. 1482 of the Civil Code, "there must first
starting from the time the prospective contracting be a perfected contract of sale before we can speak
parties indicate interest in the contract to the time of earnest money." "Where the parties merely
the contract is perfected; (2) perfection, which exchanged offers and counter-offers, no contract
takes place upon the concurrence of the essential is perfected since they did not yet give their
elements of the sale; and (3) consummation, which consent to such offers. Earnest money applies to a
commences when the parties perform their perfected sale."
respective undertakings under the contract of sale,
culminating in the extinguishment of the contract. WHEREFORE, the Petition is GRANTED.
In the present case, the parties never got past the
negotiation stage.
Nothing shows that the parties had agreed on any

final arrangement containing the essential
elements of a contract of sale, namely, (1) consent
or the meeting of the minds of the parties; (2)
object or subject matter of the contract; and (3)
price or consideration of the sale.
2. No. Respondent’s subsequent sending of the

February 4, 2005 letter and check to petitioner –
without awaiting the approval of petitioner’s
board of directors and Young’s decision, or
without making a new offer – constitutes a mere
reiteration of its original offer which was already
rejected previously; thus, petitioner was under no
obligation to reply to the February 4, 2005 letter.
It would be absurd to require a party to reject the
very same offer each and every time it is made;
otherwise, a perfected contract of sale could
simply arise from the failure to reject the same
offer made for the hundredth time. Thus, said
letter cannot be considered as evidence of a
perfected sale, which does not exist in the first
place; no binding obligation on the part of the
petitioner to sell its property arose as a
consequence. The letter made no new offer
replacing the first which was rejected.

MARTINEZ VS CA granted the registration over and against the

GR NO. L-31271, April 29, 2974 opposition of the Attorney-General and the
Director of Forestry. Pursuant to the Court's
FACTS: The spouses Romeo Martinez and Leonor decision, original certificate of title No. 14318,
Suarez are the registered owners of two (2) covering said parcels 1 and 2 was issued to the
parcels of land located in Lubao, Pampanga, spouses Potenciano Garcia and Lorenza Sioson.
covered by transfer certificate of title No. 15856
of the Register of Deeds of the said province. Both These parcels of land were subsequently bought
parcels of land are fishponds. The property by Emilio Cruz de Dios in whose name transfer
involved in the instant case is the second parcel certificate of title No. 1421 was first issued on
mentioned in the above-named transfer November 9, 1925.
certificate of title.
Thereafter, the ownership of these properties
The disputed property was originally owned by changed hands until eventually they were
one Paulino Montemayor, who secured a "titulo acquired by the Martinez spouses who hold them
real" over it way back in 1883. After the death of by virtue of transfer certificate of title No. 15856.
Paulino Montemayor the said property passed to
his successors-in-interest, Maria Montemayor To avoid any untoward incident, the disputants
and Donata Montemayor, who in turn, sold it, as agreed to refer the matter to the Committee on
well as the first parcel, to a certain Potenciano Rivers and Streams. This committee thereafter
Garcia. appointed a Sub-Committee to investigate the
case and to conduct an ocular inspection of the
Because Potenciano Garcia was prevented by the contested property, and on March 11, 1954, said
then municipal president of Lubao, Pedro Beltran, Sub-Committee submitted its report to the
from restoring the dikes constructed on the Committee on Rivers and Streams to the effect
contested property, the former, on June 22, 1914, that Parcel No. 2 of transfer certificate of title No.
filed Civil Case No. 1407 with the Court of First 15856 was not a public river but a private
Instance against the said Pedro Beltran to restrain fishpond owned by the herein spouses.
the latter in his official capacity from molesting On July 7, 1954, the Committee on Rivers and
him in the possession of said second parcel, and Streams rendered its decision restoring the
on even date, applied for a writ of preliminary spouses Martinez to the exclusive possession, use
injunction, which was issued against said and enjoyment of the creek in question which
municipal president. The Court declared forms part of their registered property.
permanent the preliminary injunction, which,
decision, on appeal, was affirmed by the Supreme The municipal officials of Lubao, led by Acting
Court on August 21, 1918. From June 22, 1914, Mayor Mariano Zagad, apparently refused to
the dikes around the property in question recognize the above decision, because on
remained closed until a portion thereof was again September 1, 1954, the spouses Romeo Martinez
opened just before the outbreak of the Pacific and Leonor Suarez instituted Civil Case No. 751
War. before the Court of First Instance of Pampanga
against said Mayor Zagad, praying that the latter
On April 17, 1925. Potenciano Garcia applied for be enjoined from molesting them in their
the registration of both parcels of land in his possession of their property and in the
name, and the Court of First Instance of construction of the dikes therein. The writ of
Pampanga, sitting as land registration court, preliminary injunction applied for was issued

against the respondent municipal Mayor, who These stipulations were accepted by the
immediately elevated the injunction suit for petitioners-appellants in the same conveyance.
review to the Supreme Court, which dismissed
Mayor Zagad's petition on September 7, 1953. Before purchasing a parcel of land, it cannot be
With this dismissal order herein appellee spouses contended that the appellants who were the
proceeded to construct the dikes in the disputed vendees did not know exactly the condition of the
parcel of land. land that they were buying and the obstacles or
restrictions thereon that may be put up by the
Some four (4) years later, and while Civil Case No. government in connection with their project of
751 was still pending the Honorable Florencio converting Lot No. 2 in question into a fishpond.
Moreno, then Secretary of Public Works and Nevertheless, they willfully and voluntarily
Communications, ordered another investigation assumed the risks attendant to the sale of said lot.
of the said parcel of land, directing the appellees One who buys something with knowledge of
herein to remove the dikes they had constructed, defect or lack of title in his vendor cannot claim
on the strength of the authority vested in him by that he acquired it in good faith (Leung Lee v.
Republic Act No. 2056, approved on June 13, Strong Machinery Co., et al., 37 Phil. 664).
1958, entitled "An Act To Prohibit, Remove
and/or Demolish the Construction of Dams.
Dikes, Or Any Other Walls In Public Navigable
Waters, Or Waterways and In Communal Fishing
Grounds, To Regulate Works in Such Waters or
Waterways And In Communal Fishing Grounds,
And To Provide Penalties For Its Violation, And
For Other Purposes. The said order which gave
rise to the instant proceedings, embodied a threat
that the dikes would be demolished should the
herein appellees fail to comply therewith within
thirty (30) days.
ISSUE: Whether or not the Spouses Martinez are

purchasers for value and in good faith.
HELD:
There is no weight in the appellants' argument
that, being a purchaser for value and in good faith
of Lot No. 2, the nullification of its registration
would be contrary to the law and to the applicable
decisions of the Supreme Court as it would
destroy the stability of the title which is the core
of the system of registration. Appellants cannot
be deemed purchasers for value and in good faith
as in the deed of absolute conveyance executed in
their favour.

MAPALO v. MAPALO (2) Whether the Narcisos were purchasers in

G.R. No. L-21489 and L-21628, May 19, 1966 good faith?
HELD: YES, the sale was void.

FACTS: Miguel Mapalo and Candida Quiba, simple
illiterate farmers, were registered owners of a The Civil Code governs the transaction
residential land in Manaoag, Pangasinan. Out of because it was executed in 1936
love and affection for Maximo Mapalo, Miguel’s Accordingly, since the deed of sale of 1936 is
brother who was about to get married, they governed by the Old Civil Code, it should be asked
decided to donate the eastern half of the land. whether its case is one wherein there is no
However, they were deceived into signing a deed consideration, or one with a statement of a false
of absolute sale of the entire land on October 15, consideration. If the former, it is void and
1936. The document showed a consideration of inexistent; if the latter, only voidable, under the
P500, but the spouses actually did not receive Old Civil Code.
anything. The spouses built a fence segregating
the donated land. They continued to possess the There is lack of consideration
western part up to the present. Not known to As observed earlier, the deed of sale of 1936
them, on March 15, 1938, Maximo registered the stated that it had for its consideration Five
deed of sale in his favor and was able to obtain a Hundred (P500.00) Pesos. In fact, however, said
TCT. On October 20, 1951, Maximo sold the entire consideration was totally absent. The problem,
land to the Narcisos, and a TCT was issued. The therefore, is whether a deed which states a
Narcisos took possession of the eastern part and consideration that in fact did not exist, is a
filed a suit against Miguel and Candida, as well as contract without consideration, and therefore
Floro Guieb and Rosalia Mapalo Guieb who had a void ab initio, or a contract with a false
house on the western portion consented by the consideration, and therefore, at least under the
spouses. The spouses filed an answer with Old Civil Code, voidable.
counterclaim, seeking cancellation of the TCT of
the Narcisos on the ground that their consent to When there is no consideration, the contract
the deed of sale in favor of Maximo was obtained is null and void
through fraud. The spouses also instituted a According to Manresa, what is meant by a
complaint to nullify the deeds of sale in 1936 and contract that states a false consideration is one
1951. The trial court tried the case jointly. It ruled that has in fact a real consideration but the same
in favor of Miguel and Candida. The appellate is not the one stated in the document.
court, however, reversed the judgment and
rendered the sale valid on the ground of In our view, therefore, the ruling of this Court in
prescription. According to the appellate court, the Ocejo, Perez & Co. vs. Flores, 40 Phil. 921, is
sale is voidable and subject to annulment only squarely applicable herein. In that case we ruled
within 4 years after discovery of fraud. It that a contract of purchase and sale is null and
reckoned March 15, 1938, the date of registration, void and produces no effect whatsoever where
to be the reckoning period. the same is without cause or consideration in that
the purchase price which appears thereon as paid
ISSUES: 1) Whether, under the old civil code has in fact never been paid by the purchaser to the
which was in effect during the execution of the vendor.
sale, the sale to Maximo is void or merely voidable

(2) No, they were no purchasers in good faith.
Narcisos were not buyers in good faith

Aside from the fact that all the parties in these
cases are neighbors, except Maximo Mapalo the
foregoing facts are explicit enough and
sufficiently reveal that the Narcisos were aware of
the nature and extent of the interest of Maximo
Mapalo their vendor, over the above-described
land before and at the time the deed of sale in
their favor was executed.
The Narcisos were purchaser-in-value but not

purchasers in good faith
What was the necessity, purpose and reason of
Pacifico Narciso in still going to the spouses
Mapalo and asked them to permit their brother
Maximo to dispose of the above-described land?
To this question it is safe to state that this act of
Pacifico Narciso is a conclusive manifestation that
they (the Narcisos) did not only have prior
knowledge of the ownership of said spouses over
the western half portion in question but that they
also have recognized said ownership. It also
conclusively shows their prior knowledge of the
want of dominion on the part of their vendor
Maximo Mapalo over the whole land and also of
the flaw of his title thereto. Under this situation,
the Narcisos may be considered purchasers in
value but certainly not as purchasers in good
faith.

PAREDES V. ESPINO that a written note or memorandum, embodying

GR. No. L-23351. March 13, 1968. the essentials of the contract and signed by the
party charged, or his agent, suffices to make the
FACTS: verbal agreement enforceable, taking it out of the
Appellant Cirilo Paredes had filed an action to operation of the statute.
compel defendant-appellee Jose L. Espino to
execute a deed of sale and to pay damages. The In the case at bar, the complaint in its paragraph
complaint alleged that the defendant "had 3 pleads "that the deal had been closed by letter
entered into the sale" to plaintiff of Lot No. 67 of and telegram", and the letter referred to was
the Puerto Princesa Cadastre at P4.00 a square evidently the one copy of which was appended to
meter; that the deal had been "closed by letter and plaintiff s opposition to the motion to dismiss.
telegram" but the actual execution of the deed of
sale and payment of the price were deferred to
the arrival of defendant at Puerto Princesa; that
defendant upon arrival had refused to execute the
deed of sale altho plaintiff was able and willing to
pay the price, and continued to refuse despite
written demands of plaintiff; that as a result,
plaintiff had lost expected profits from a resale of
the property, and caused plaintiff mental anguish
and suffering, for which reason the complaint
prayed for specific performance and damages.
Defendant filed a motion to dismiss upon the

ground that the complaint stated no cause of
action, and that the plaintiff's claim upon which
the action was founded was unenforceable under
the Statute of Frauds. Plaintiff opposed in writing
the motion to dismiss.
These allegations and documents

notwithstanding, the Court below dismissed the
complaint on the ground that there being no
written contract, under Article 1403 of the Civil
Code of the Philippines.
ISSUE:
Whether enforcement of the contract pleaded in
the complaint is barred by the Statute of Frauds.
RULING:
The Statute of Frauds, embodied in Article 1403
of the Civil Code of the Philippines, does not
require that the contract itself be in writing. The
plain text of Article 1403, paragraph (2) is clear

KUENZLE & STREIFF v. MACKE & CHANDLER delivered to the plaintiff under said sale but that
G.R. No. 5295. December 16, 1909, FIRST said property remained from the time of said sale
DIVISION, MORELAND, J. forward in the exclusive possession and control of
said Stanley & Krippendorf, and that they
FACTS: conducted the business subsequent to the
This is an action brought by the plaintiff to execution of said instrument exactly as they had
recover from the defendants the sum of 1,000 prior thereto — in their own name — purchasing
pesos, the value of certain personal property, goods and paying therefor without reference to
constituting a saloon bar, furniture, furnishings, the plaintiff in this case.
and fixtures.
ISSUE:
The plaintiff alleges that it was the owner of the WON defendant Macke & Chandler obtained a
Oregon Saloon consisting of bar, furniture, good title to the property in question as against
furnishings, and fixtures, of the value of 1,000 the plaintiff in this case?
pesos; that during January, 1907, the defendant
Jose Desiderio, as sheriff, levied upon such RULING:
property by virtue of an execution issued upon a YES.
judgment secured by the defendant Macke &
Chandler, against Stanley & Krippendorf; that The ownership of personal property cannot be
said plaintiff notified the sheriff, in the manner transferred to the prejudice of third persons
provided by law, that it was the owner of said except by delivery of the property itself; and that
goods and forbade the sale thereof under said a sale without delivery gives the would-be
execution; that, notwithstanding such claim upon purchaser no rights in said property except those
the part of the plaintiff, the said sheriff sold said of a creditor. The bill of sale in the case at bar
goods under said execution; that said firm of under the circumstances of this case, could have
Macke & Chandler was the purchaser of said no effect against a person dealing with the
goods and the same were delivered to it; the property upon the faith of appearances.
defendants Bachrach, Elser, and Gale, were the
sureties upon the bond given to the sheriff by The case of Kunzle & Streiff against A.S. Watson &
Macke & Chandler before said goods were sold. Co. cited by the appellant in its brief, does not
sustain its contention. That was a case of the sale
The defendants in this case allege that the of property upon the condition that the title
property described by the plaintiff and sold at the thereto should remain in the vendor until the
execution sale referred to was not the property of purchase price thereof should be fully paid, and
the plaintiff at the time of said levy and sale, but that, in case of nonpayment of the debt or of any
was the property of Stanley & Krippendorf, who installment thereof when due, the vendor would
were in possession of the same at the time of such have a right to take possession of the property
levy. They further allege that during the month of and deal with it as provided for in the contract.
January, 1907, the said Stanley & Krippendorf,
being indebted in a considerable sum to the In that case the court held that such a contract for
plaintiff in this case, attempted to sell to the said the conditional sale of goods was valid in these
plaintiff by an instrument in writing the property Islands between the parties thereto, and was
in question; that said instrument was never valid also as to third persons, provided
recorded; that said instrument was a private possession of the property therein described was
document; that the said property was not

taken by the vendor before the rights of third

persons intervened against the same.
In the case at bar it is evident that the bill of sale,

so called, was in no sense a conditional sale of
property, such as is described in the case of
Kunzle & Streiff against A.S. Watson & Co., and the
principles applicable thereto are entirely
inapplicable in the case at bar. Moreover,
possession of the property in suit was not taken
at any time by the plaintiff.
The defendant Macke & Chandler, having

purchased the property at an execution sale,
properly conducted, obtained a good title to the
property in question as against the plaintiff in this
case.

SUN BROTHERS & COMPANY VS. VELASCO It is true that Lopez, the conditional vendee, never
54 O.G. 5143, January 13, 1958 had any title to the refrigerator in question
because Lopez failed to fully pay the purchase
FACTS: price. When Lopez, who has no title to the
Under a Conditional Sale Agreement refrigerator, sold it to Jose Velasco, the latter did
(“Agreement”), Sun Brothers & Company (“Sun not acquire any better right than what Lopez had
Brothers”) delivered to Francisco Lopez --- which is practically nothing. Velasco was not a
(“Lopez”) an Admiral refrigerator. Out of the purchaser in good faith and for value for the
stipulated price of P1,700, P500 was paid as down reason that since Lopez, being a private person
payment. It was stipulated under said Agreement who is not engaged in the business of selling
that (a) Lopez shall not remove the refrigerator refrigerators, Velasco must be reasonably
from his address nor part possession therewith expected to have inquired from Lopez whether or
without the express written consent of Sun not the refrigerator he was selling has been paid
Brothers; (b) it shall remain as the absolute in full. In this, Velasco has been negligent.
property of Sun Brothers until Lopez has paid in
full the purchase price; and (3) in the event of In the case of Co Kang Chui, since he purchased
violation of the terms of the Agreement, Sun the refrigerator from J.V. Trading, a merchant
Brothers may rescind the sale, recover possession store, paragraph 3 of Article 1505 shall apply. Co
of the refrigerator and any amount paid shall be Kang Chui should be declared as having acquired
forfeited. a valid title to the refrigerator, although his
predecessors in interest did not have any right o f
Without the knowledge of Sun Brothers, Lopez, ownership over it. This is a case of imperfect or
misrepresenting himself as the owner, sold the void title ripening into a valid one, as a result of
refrigerator to J.V. Trading. This is a business some intervening causes. The policy of the law
store owned by Jose Velasco (“Velasco”). The has always been that where the rights and
latter, in turn, displayed the refrigerator in his interests of a vendor come into clash with that of
store and sold the same to Co Kang Chui. This was an innocent buyer for value, the latter must be
delivered to the latter’s residence. protected.
The remedy under Article 559 may not also apply
ISSUE: to Sun Brothers (i.e., to obtain its return provided
Who has the better right, Co Kang Chiu, an he reimburses the one in possession thereof)
innocent buyer from a store, or Sun Brothers, the because it neither lost the property nor was it
conditional vendor? unlawfully deprived of such. The proper remedy
is for Sun Brothers to claim for indemnity against
RULING: Lopez.
Co Kang Chiu has a better right.
Under paragraph 3, Article 1505 of the Civil Code,

sale of goods by one who is not an owner thereof
does not vest a better title to the buyer. However,
where purchases were made in a merchant’s
store, or in fairs, or markets, such rule does not
apply.

BAUTISTA VS SIOSON resale, but only if within the period mentioned

GR NO L-13125, Feb 11, 1919 said vendor would not make the redemption
stipulated, then such sale should become absolute
TOPICS: without needing to execute another instrument.
 VENDOR AND PURCHASER; SALE OF
REALTY TO DIFFERENT PERSONS ISSUE:
 POSSESSION OF REALTY BY VENDOR AS Whether or not the lawful owner of the property
LESSEE in question is the second purchaser in the name of
 RIGHT OF SECOND PURCHASER Raymundo dela Cruz as in accordance of the last
paragraph of Article 1473 of the Civil Code,
FACTS: "should there be no entry, the property shall belong
On September 4, 1912, Francisco Sioson and his to the person who first took possession of it in good
wife Lorenza dela Cruz, through a notarial faith . . ."
instrument, sold to Rosalio Bautista a camarin or
warehouse of strong materials with an iron roof RULING:
and another property. It was stipulated that if NO. It has been shown that Raymundo dela Cruz
within two years from the date of the contract the could not have acquired any right in the camarin
vendors or their successors in interest should not involved in this suit because Francisco Sioson,
repurchase said properties for the sum of P400, who sold to Raymundo dela Cruz said camarin,
the price of the sale, such sale should become occupied it as a mere tenant and not as owner,
absolute. On the same date, Rosalio Bautista, and, consequently, was unable to transmit to the
through a notarial instrument, leased the purchaser any property right whatever or lawful
properties sold to him to the same vendors possession under title of owner.
Francisco Sioson and Lorenza dela Cruz, for the
price of P100 per annum, for the period of two Both alienations, effected successively by
years counted from the date of the instrument. Francisco Sioson in favor of Bautista and dela
Unfortunately, the vendor spouses did not pay the Cruz, are recorded in notarial instruments,
price of the lease, nor repurchased said buildings, though they were not entered in the registry of
even after the term of the contract had elapsed. property. To determine who is the lawful owner
of the camarin sold, if the provisions of said article
As the result, Rosalio Bautista filed this complaint of the Code are to be observed, we have first to
to enforce payment as to cost and recover the determine the contention in regard to which of
properties he purchased against vendor spouses. the two purchasers is in possession thereof, and
While Raymundo dela Cruz, who has the if, on the execution of the contract of lease by the
possession of the camarin in question, was first purchaser in favor of the vendor himself, the
claiming the exclusive ownership over it. That constitutum possessorium agreement is to be
Francisco Sioson executed before a notary a considered to have been stipulated, the
document by which the latter sold under right of conclusion must necessarily be reached as to
repurchase to him the said camarin. It was which of the two purchasers first took possession
stipulated that if within six months (counted from of the camarin sold, and also whether the material
the 1st of August 1914), the vendor Francisco possession of the tenant is of a precarious nature,
Sioson would return to Raymundo dela Cruz the enjoyed in the same and representation of the
sum of P422; the price of the purchase, then owner Bautista.
Raymundo dela Cruz would be obliged to execute
in favor of Francisco Sioson an instrument of Article 1462 of the Civil Code reads: A thing sold

shall be considered as delivered, when it is placed Separate Opinions

in the hands and possession of the vendee. In the CARSON, J., dissenting:
contract of lease, the lessor, Rosalio Bautista, I dissent. Manresa, in his commentaries, on article
states that in his capacity as owner he leased to 1473 of the Civil Code, clearly indicates that the
the spouses Francisco Sioson and Lorenza dela possession referred to in that article is the real,
Cruz, the camarin in question and another the physical possession of the property; and
property at an annual rent of P100, the lessees certain it is that to hold that the possession
binding themselves to report to the lessor any act contemplated in this article may be secured
of disturbance committed by any other person, without the performance of some act which will
and all defects that might be occasioned to the give notice to innocent subsequent purchasers, or
building. The execution of this instrument of lease of which subsequent purchasers may inform
shows that the camarin would be continued to be themselves by due diligence tends to defeats the
occupied by its previous owners and vendors just and equitable provisions of the law.
after it had been delivered, symbolically, by
means of the instrument executed for the purpose
in favor of the purchaser, in order that he might
hold it in the capacity of lessee, it being supposed,
by a legal fiction, that the purchaser entered into
possession of the properties sold, a form of
possession utilized by the purchaser by virtue of
the clause known in law as constitutum
possessorium, stipulated between the contracting
parties.
The material possession which Raymundo dela

Cruz, now enjoys, is an unlawful possession which
was transmitted to him by Francisco Sioson, who
held the camarin precariously and in the capacity
of tenant, and, consequently, without any right
whatever to convey to him the possession under
title of owner referred to in Article 1473 of the
Civil Code.
This article says: "If the same thing should have

been sold to different vendees. . .;" but it must be
understood that said sale was made by its original
owner. In the instant case Francisco Sioson, on
affecting the second sale in favor of Raymundo
dela Cruz, was in possession of the camarin and
occupied it, not in the capacity of owner, but in
that of lessee or tenant, and therefore absolutely
had no right to dispose of the building in the
capacity of owner thereof; consequently Sioson
could not convey to the second purchaser the
lawful possession of the disputed camarin.

LAWYERS COOPERATIVE PUBLISHING In the instant case, the obligor bound himself to
COMPANY VS TABORA assume the loss after the delivery of the goods to
G.R. No. L-21263, April 30, 1965; J. Bautista him. In other words, the obligor agreed to assume
Angelo any risk concerning the goods from the time of
their delivery, which is an exception to the rule
FACTS: provided for in Article 1262 of our Civil Code.
Perfecto Tabora bought from Lawyers
Cooperative Publishing Company one set of
American Jurisprudence, including one set of
general index, payable on installment plan. 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."
Tabora paid only a down payment of P300.00,

leaving a balance of P1,382.40. The books were
duly delivered to his law office in Naga City.
However, in the midnight of the same day, a big
fire broke out which destroyed and burned all the
buildings including the books delivered. Despite
demands made, Tabora failed to pay the monthly
installments. Hence, the company filed an action
for the recovery of the balance of the obligation.
ISSUE:
Whether or not Tabora is liable to pay the
obligation even if the loss occurs thru a fortuitous
event without fault on his part.
RULING:
Yes. Tabora is liable to pay the obligation even if
the loss occurs thru a fortuitous event without
fault on his part.
Article 1504 of our Civil Code, in part provides:

" (1) Where delivery of the goods has been made
to the buyer or to a bailee for the buyer, in
pursuance of the contract and the ownership in
the goods has been retained by the seller merely
to secure performance by the buyer of his
obligations under the contract, the goods are at
the buyer's risk from the time of such delivery."

CARUMBA VS CA
G.R. No. L-27587, February 18, 1970
FACTS: Canuto sold a parcel of land to Carumba

by virtue of a Deed of Sale of Unregistered Land.
The sale was never registered. Thereafter, Canuto
was sued for collection of money, and the said
land was levied upon and sold to Balbuena, who
registered it.
ISSUE: Who has a better right, Carumba or

Balbuena?
HELD: CARUMBA. Art. 1544 does not apply in this

case. Instead, the Rules of Court are applicable.
Balbuena, the later vendee, merely steps into the
shoes of the judgment debtor and acquires all the
rights and interests of the latter. By the time the
lot was sold through the foreclosure proceedings,
it was no longer owned by Canuto by virtue of a
prior sale to Carumba—who has a better right.
Carumba dealt with a double sale of the same

unregistered land. The first sale was made by the
original owners and was unrecorded while the
second was an execution sale that resulted from a
complaint for a sum of money filed against the
said original owners. Applying Section 35, Rule 39
of the Revised Rules of Court, 7 this Court held that
Article 1544 of the Civil Code cannot be invoked
to benefit the purchaser at the execution sale
though the latter was a buyer in good faith and
even if this second sale was registered. It was
explained that this is because the purchaser of
unregistered land at a sheriffs execution sale only
steps into the shoes of the judgment debtor, and
merely acquires the latter's interest in the
property sold as of the time the property was
levied upon.

KATIGBAK VS. CA CA decision: Katigbak failed to take delivery of the

G.R. No. L-16480, January 31, 1962 winch, subject matter of the contract and such
failure or breach was attributable to him, a fact
FACTS: which the Court is bound to accept under the
This case arose from an agreed purchase and sale existing jurisprudence (Hanlon v. Hausserman).
of a Double Drum Carco Tractor Winch. Artemio The right to resell the equipment, therefore,
Katigbak, upon reading an advertisement for the cannot be disputed.
sale of the winch placed by V.K. Lundberg, owner
and operator of a tractor corporation, went to see The appealed judgment is hereby modified by
Lundberg and inspected the equipment. Desiring dismissing the complaint as to V.K. Lundberg; by
a reduction of the price, Katigbak was referred to reducing the judgment in favor of appellee to the
Daniel Evangelista, the owner. After the meeting, sum of P29.85, and by sentencing him, in turn, to
it was agreed that Katigbak was to purchase the pay appellant Evangelista the sum of P700.00 as
winch for P12,000, payable at P5,000 upon attorney’s fees.
delivery and the balance of P7,000 within 60 days.
The condition of the sale was that the winch
would be in good condition. Katigbak was
apprised that the winch needed some repairs,
which could be done in the shop of Lundberg. It
was then stipulated that the amount necessary for
the repairs will be advanced by Katigbak but
deductible from the initial payment of P5,000. For
one reason or another, the sale was not
consummated. Since Katigbak refused to comply
with contract to purchase the same, Evangelista
was forced to sell the same to a third person for
P10,000, thus incurring a loss of P2,000.
Lundberg further alleged that the nonliability for
the amount since the obligation to refund was
purely a personal account between defendant-
appellant Evangelista and plaintiff - appellee
Katigbak.
ISSUE:
Whether or not there is a need for the action of
rescission to authorize the vendor, who is still in
possession, to dispose of the property where the
buyer fails to pay the price and take delivery?
RULING:
WHEREFORE, the petition is dismissed, and the
decision appealed from is affirmed in all aspects,
with cost to petitioner.

SONG FO VS HAWAIIAN PHIL CO. (2) With reference to the second question, doubt
GR. No. 23769 September 16, 1925 has risen as to when Song Fo & Co. was supposed
to make the payments for the delivery of molasses
FACTS: as shown in the documents presented by the
Hawaiian-Philippine Co. got into a contract with parties.
Song Fo & Co. where it would deliver molasses to The Supreme Court said that Hawaiian-Philippine
the latter. Co. does not have the right to rescind the contract.
It should be noted that the time of payment
Hawaiian-Philippine Co. was able to deliver stipulated for in the contract should be treated as
55,006 gallons ofmolasses before the breach of of the presence of the contract. There was only a
contract. slight breach of contract when the payment was
delayed for 20 days after which Hawaiian-
SFC filed a complaint for breach of contract Philippine Co. accepted the payment of the
against Hawaiian-Philippine Co. and asked overdue accounts and continued with the
P70,369.50. Hawaiian-Philippine Co. answered contract, waiving its right to rescind the contract.
that there was a delay in the payment from Song The delay in the payment of Song Fo & Co. was not
Fo & Co. and that Hawaiian-Philippine Co. has the such a violation for the contract.
right to rescind the contract due to that and
claims it as a special defense. (3) With regard to the third question, the first
The judgment of the trial court condemned cause of action of Song Fo & Co. is based on the
Hawaiian-Philippine Co. to pay Song Fo & Co. a greater expense to which it was put in being
total of P35,317.93, with legal interest from the compelled to secure molasses from other sources
date of the presentation of the complaint, and to which Supreme Court ruled that P3,000 should
with costs. be paid by Hawaiian-Philippine Co. with legal
interest from October 2, 1923 until payment.
ISSUE:
(1) Did Hawaiian-Philippine Co. agree to sell The second cause of action was based on the lost
400,000 gallons ofmolasses or 300,000 gallons of profits on account of the breach of contract.
molasses? Supreme Court said that Song Fo & Co. is not
(2) Had Hawaiian-Philippine Co. the right to entitled to recover anything under the second
rescind the contract of sale made with Song Fo & cause of action because the testimony of Mr. Song
Co.? Heng will follow the same line of thought as that
(3) On the basis first, of a contract for 300,000 of the trial court which in unsustainable and there
gallons of molasses, and second, of a contract was no means for the court to find out what items
imprudently breached by Hawaiian-Philippine make up the P14,000 of alleged lost profits.
Co., what is the measure of damages?
RULING:
(1) Only 300,000 gallons of molasses was agreed
to by Hawaiian-Philippine Co. as seen in the
documents presented in court. The language used
with reference to the additional 100,000 gallons
was not a definite promise.

GERARDINO VS. CA The original defendant Rosario Artuz died. Hence

G.R. NO. L-32670, December 29, 1977 she was substituted by her surviving heir, the
petitioners herein.
FACTS:
Jovito Gloria, private respondent herein, The counsel of the plaintiff (respondent herein)
instituted against Rosario Artuz a civil case in the filed a motion for judgment on the pleadings
CFI of Capiz for consolidation of ownership of a and/upon confession which was denied. The case
parcel of land. The complaint stated that on was set for pre-trial. The parties waived the pre-
October 10, 1964, Rosario Artuz executed in favor trial order to save time. The case was set for trial.
of Jovito Gloria a deed of sale with right to The counsel for defendants filed sent a
repurchase within a period of one (1) year of a telegraphic motion for postponement which was
parcel of residential land for a consideration of denied and plaintiff was allowed to present
Php2,025.00; that defendant Rosario allegedly evidence in the absence of defendants and their
failed to exercise her right to repurchase within counsel.
the stipulated period; and that plaintiff had been
in possession of the property immediately after The defendants (petitioners herein) filed a
the execution of the document; and that plaintiff motion for relief from the order allowing the
had been paying taxes thereon. plaintiff (private respondent) to present
evidence. The motion was denied. The petitioners
In her answer, defendant Rosario admitted the filed a motion for new trial which was also denied.
existence of the deed of sale with right to
repurchase but denied the legality and The lower court ordered the consolidation of
genuineness thereof and alleged as affirmative ownership over the property in question in the
defenses that the document in question was an name of the plaintiff because defendant (Rosario,
equitable mortgage, the real intention of the as substituted by petitioners) failed to exercise
parties being merely to secure the payment of a her right to repurchase the property within the
loan in the amount of Php2,025; that she was then stipulated period. It further stated that the fact
deaf, totally blind and senile, did not understand that the original defendant, Rosario Artuz, as
English and was made to affix her thumbmark on vendor-a-retro deposited the repurchase price of
the alleged deed of sale with right to repurchase P2,025.00, with the court on August 30, 1966,
upon representation of plaintiff that the same was issued by the Clerk of Court, with which counsel
mere equitable mortgage; that she had remained for the substituted defendants wanted to be
possession of the property in question had had transferred with the Philippine National Bank, in
been paying the taxes thereon that a tender of his urgent motion, is not only the best reflection
payment was made by her to plaintiff on or before and healthiest index that she knew that what she
October 10, 1965 to repurchase the property but had executed in favor of the plaintiff was a sale
plaintiff refused to accept the amount of with right of repurchase, the same deposit having
Php2,025.00 because he was asking for a bigger been made by her on before she died, and after
amount of Php6,000.00; that by reason of such the expiration of the period of repurchase but also
refusal, she consigned the amount of Php2,025.00 an abandonment and/or waiver of what she had
with the court; and that the actual amount of the alleged in the answer that the real intention of the
loan received by her from plaintiff was only parties, i.e., the vendee-a-retro and vendor-a-
Php1,525.00 as the mount of Php500.00 was retro, in the Deed of Sale with Right of Repurchase
retained by plaintiff as interest on the transaction. was only an "Equitable Mortgage.

ISSUE: The lower court erred in not allowing the

Whether or not deed of sale with right to defendants, as successors-in-interest of Rosario
repurchase executed by respondent, who was Artuz, to repurchase the land within thirty days
then deaf and blind and could not understand the from the date the decision had become final. Since
English language used in the deed, in favor of the petitioners had duly consigned the
petitioner was actually an equitable mortgage. repurchase price, their consignation of the
amount of P2,025.00 validly effected redemption.
RULING:
Yes. It appears from the answer that the vendor- The decision appealed from was set aside and the
a-retro, Rosario Artuz, who died on February 11, private respondent's complaint for consolidation
1968, was deaf and blind and was senile when she of ownership was dismissed. The petitioners are
was made to thumbmark the alleged deed of sale declared entitled to the ownership and ion of the
with right to repurchase. The document is written property in question and the private respondent
in English which was not understood by Rosario is ordered to deliver to petitioners the said
Artuz. The answer alleged that the intention of the property or any part thereof in his possession.
parties was only to execute a deed of equitable
mortgage to secure the loan of P2,025.00; and
that Rosario Artuz actually received only the
amount of P1,525.00 because the private
respondent retained the amount of P500.00 as
interest. It is clear that the defendants have a
meritorious defense. Their motion for new trial
should have been granted.
The nature of the document in question was

squarely placed in issue. The defendants contend
that the document was only an equitable
mortgage The third paragraph of Article 1606 of
the Civil Code of the Philippines provides that "the
vendor may still exercise the right to repurchase
within thirty days from the time final judgment
was rendered in a civil action on the basis that the
contract was a true sale with right to repurchase."
Hence even if after a new trial it is found that the
document in question is a true sale with right of
repurchase, the defendants may still exercise the
right to repurchase the land in question within
thirty days from the time final judgment is
rendered.
In view of the foregoing, it is no longer necessary

to remand this case to the lower court for a new
trial.

DOROMAL VS CA
G.R. No. L-36083 September 5, 1975
The respondent should also pay only the 30K
FACTS: A parcel of land in Iloilo were co-owned stipulated in the deed of sale because a
by 7 siblings all surnamed Horilleno. 5 of the redemptioner’s right is to be subrogated by the
siblings gave a SPA to their niece Mary Jimenez, same terms and conditions stipulated in the
who succeeded her father as a co-owner, for the contract.
sale of the land to father and son Doromal. One of
the co-owner, herein petitioner, Filomena
Javellana however did not gave her consent to the
sale even though her siblings executed a SPA for
her signature. The co-owners went on with the
sale of 6/7 part of the land and a new title for the
Doromals were issued.
Respondent offered to repurchase the land for

30K as stated in the deed of sale but petitioners
declined invoking lapse in time for the right of
repurchase. Petitioner also contend that the 30K
price was only placed in the deed of sale to
minimize payment of fees and taxes and as such,
respondent should pay the real price paid which
was P115, 250.
ISSUE: WON the period to repurchase of

petitioner has already lapsed.
HELD: Period of repurchase has not yet lapsed

because the respondent was not notified of the
sale. The 30-day period for the right of repurchase
starts only after actual notice not only of a
perfected sale but of actual execution and
delivery of the deed of sale.
The letter sent to the respondent by the other co-

owners cannot be considered as actual notice
because the letter was only to inform her of the
intention to sell the property but not its actual
sale. As such, the 30-day period has not yet
commenced and the respondent can still exercise
his right to repurchase.

HEIRS OF JOSE REYES VS AMANDA REYES survived by his wife, Amanda Reyes and her
G.R. No. 158377, March 13, 2010 children.
FACTS: Antonio Reyes and his wife, Leoncia ISSUE: Whether or not the CA erred in finding
Reyes (Leoncia) were owners of a parcel that petitioners were already barred from
residential land with an area of 442 square claiming that the transaction entered into by their
meters in Pulilan, Bulacan, where they predecessors-in-interest was an equitable
constructed their dwelling. The couple hadfour mortgage and not a pacto de retro sale.
children: Jose, Sr., Teofilo, Jose, Jr., and
HELD: Yes. While the CA correctly concluded that
Potenciana. Antonio Reyes died intestate, and was
the true agreement ofthe party vis-à-vis the
survived by Leoncia and their three sons and
Kasulatan ng Biling Mabibiling Muli was
Potenciana. Potenciana having predeceased her
anequitable mortgage not a pacto de retro sale, it
father also died intestate, survived by her
erred when it concluded that petitioners are
children. On July 9, 1955, Leoncia and her three
barred from claiming the transaction as such by
sons executed a deed denominated Kasulatan ng
their failure to redeem the property for a long
Biling Mabibiling Muli, whereby they sold the
period of time. It was undisputed that the
land and its existing improvements to the Sps.
purported vendors had continued in possession
Francia for theamount of P500.00, subject to the
of the property even after the execution of an
vendor’s right to repurchase for the same amount
agreement, and that said property remained
once they benefited from it.
declared for taxation purposes under Leoncia’s
Potenciana’s heirs did not assent to that deed, and name, with the real taxes due paid by her.
Teofilo and Jose, Jr. and their respective families Paragraphs, 2 and 5 of Article 1602 of the Civil
remained in possession of the property and paid Code states that, “The contract shall bepresumed
real property taxes thereon. The Sps. Francia both to be an equitable mortgage, in any of the
died intestate, without Leoncia and herchildren following cases: (2)When the vendor remains in
paying the amount of P500.00. Alejandro, son of possession as lessee or otherwise; (5) When the
Jose, Sr., paid said amount to Sps. Francia. The vendor binds himself to pay the taxes on the thing
heirs of Sps. Francia then, transferred and sold.
conveyed to Alejandro all the rights and interests
The existence of any one of the conditions under
to Alejandro.On August 21, 1970, Alejandro
Article 1602, not the concurrence of all or of a
executed a Kasulatan ng Pagmeme-ari declaring
majority thereof suffices to the presumption itis
that he had acquired all the rights and interestsof
an equitable mortgage. Petitioners in this case are
the heirs of the Sps. Francia after the vendors
not barred from claiming that the transaction
failed to repurchasewithin the given period, and
under the Kasulatan ng Biling Mabibiling Muli
paid realty property taxes from then on.On
was an equitable mortgage by their failure to
October 17, 1970, Alejandro, Leoncia and Jose, Sr.
redeem the property for a longperiod of time.
executed a Magkalakip na Salaysay,
Considering the period of redemption stated in
acknowledging the right of Leoncia, Jose, Jr.and
the Kasulatan ng Biling Mabibiling Muli, which is
Jose, Sr. to repurchase the property at any time for
“sa oras na sila’y makinabang,” signified that no
the sameamount. Leoncia died intestate and was
definite period had been stated pursuant to
survived by Jose, Sr., Teofilo,Jose, Jr. and the heirs
Articles 1142 and 1144 of the Civil Code. The full
of Potenciana. Alejandro likewise died intestate
redemption price should have been paid by July
9, 1955 and foreclosed said mortgage upon

expiration of 10-year period, but the mortgagees
Sps. Francias or their heirs did not do so. Instead,
they accepted Alejandro’s payments until the
debt was fully satisfied. The acceptance of
payments evenbeyond the 10-year period of
redemption estopped the mortgagees’ heirs from
insisting the period to redeem the property had
already expired.

CEBU STATES COLLEGE VS MISTERIO ISSUE: Whether the vendor a retro repurchase
G.R. No. 179025, June 17, 2015 the property even beyond the four year period
prescribed by law?
FACTS: In 1956, the late Asuncion Sadaya, mother
of herein respondents, executed a Deed of Sale HELD: NO. In cases of conventional redemption
covering Lot 1064 in favor of Sudlon Agricultural when the vendor a retro reserves the right to
High School (SAHS). The sale was subject to the repurchase the property sold, the parties to the
right of the vendor to repurchase the property sale must observe the parameters set forth by
after SAHS shall have ceased to exist, or shall have Article 1606 of the New Civil Code, which states:
transferred its school site elsewhere.
Art. 1606. The right referred to in Article 1601, in
When Batas Pambansa (BP) Blg. 412 [enacted on the absence of an express agreement, shall last
June 10, 1983], entitled "An Act Converting the four years from the date of the contract.
Cebu School of Arts and Trades in Cebu City into a
Should there be an agreement, the period cannot
Chartered College to be Known as the Cebu State
exceed ten years.
College of Science and Technology, it
incorporated and consolidated several schools in However, the vendor may still exercise the right
Cebu, including the SAHS. The law also to repurchase within thirty days from the time
transferred all personnel, properties, including final judgment was rendered in a civil action on
buildings, sites, and improvements, records, the basis that the contract was a true sale with
obligations, monies and appropriations of SAHS right to repurchase.
to Cebu State College.
Thus, depending on whether the parties have
Herein respondents as heirs of the seller agreed upon a specific period within which the
Asuncion Sadaya, informed the Governor of Cebu vendor a retro may exercise his right to
of their intention to repurchase the subject repurchase, the property subject of the sale may
property as stipulated in the Deed of Sale on the be redeemed only within the limits prescribed by
ground that SAHS had ceased to exist. When the the aforequoted provision.
claim to repurchase was refused, respondents
Petitioner and respondents in this case did not
filed a Complaint for Nullity of Sale and/or
agree on any period for the exercise of the right to
Redemption against Cebu State College. The RTC
repurchase the property herein, respondents may
declared that the Deed of Sale entered into by and
use said right within four (4) years from the
between Asuncion Sadaya and SAHS as null and
happening of the allocated conditions contained
void for the latter's lack of juridical personality.
in their Deed of Sale: (a) the cessation of the
The CA reversed the latter decision and
existence of the SAHS, or (b) the transfer of the
ratiocinated that while it agrees with the trial
school to other site. However, due to respondents'
court's finding that the SAHS had ceased to exist
failure to exercise their right to redeem the
when BP Blg. 412 took effect, respondents are
property within the required four (4) years from
barred by prescription from exercising their right
the time when SAHS had ceased to exist, or from
to repurchase the subject property, which expired
June 10, 1983, the date of effectivity of BP Blg.
in June 1987, or four years from the effectivity of
412, this Court held that respondents are barred
BP Blg. 412 on June 10, 1983.
by prescription.

Despite this, respondents nevertheless insist on

the redemption of the subject property pursuant
to the second suspensive condition, namely,
petitioner's transfer of its school site. Applicable
law and jurisprudence, however, runs contrary to
respondents' stance.
Article 1606 expressly provides that in the

absence of an agreement as to the period within
which the vendor a retro may exercise his right to
repurchase, the same must be done within four
(4) years from the execution of the contract. In the
event the contract specifies a period, the same
cannot exceed ten (10) years. Thus, whether it be
for a period of four (4) or ten (10) years, this
Court consistently implements the law and limits
the period within which the right to repurchase
may be exercised, adamantly striking down as
illicit stipulations providing for an unlimited right
to repurchase.

LEASE petitioners written agreement, it did so at its own

risk and it could not compel the petitioners to pay.
SPOUSES VICTORIANO CHUNG and DEBBIE The case was elevated to the CA and decided that
CHUNG, VS. ULANDAY CONSTRUCTION, INC., Article 1724 inapplicable because the provision
G.R. NO. 156038, OCTOBER 11, 2010 pertains to disputes arising from the higher cost
of labor and materials, while the respondent
TOPIC: Termination of the Lease demands payment of change order billings and
there was no demand for increase in the costs of
FACTS: labor and materials. Applying the principle of
In February 1985, the petitioners contracted with estoppel in pais, the appellate court noted that the
respondent Ulanday Construction, Inc. petitioners impliedly consented or tacitly ratified
(respondent) to construct, within a 150-day the change orders by payment of several change
period, the concrete structural shell of the order billings and their inaction or non-objection
former’s two-storey residential house in to the construction of the projects covered by the
Urdaneta Village, Makati City. The contract change orders.
stipulates “the CONTRACTOR shall make no
change or alteration in the plans, and ISSUE:
specifications as well as in the works subject Whether or not Article 1724 can be applied in the
hereof without the prior written approval of the case at bar.
OWNER.” During the construction, the
respondent effected change orders without the RULING:
petitioner’s prior written approval. The Yes, Art. 1724 may apply. The CA erred in ruling
petitioner failed to pay the change orders despite that Article 1724 of the Civil Code does not apply
the numerous demands of the respondent. The because the provision pertains to disputes arising
petitioners denied liability, asserting that the from the higher cost of labor and materials and
respondent violated the contract provisions by, there was no demand for increase in the costs of
among others, failing to finish the contract within labor and materials.
the 150-day stipulated period, failing to comply
with the provisions on change orders, and Article 1724 governs the recovery of additional
overstating its billings. costs in contracts for
a stipulated price (such as fixed lump-sum
The case was filed in the RTC and decided that contracts), and the increase in price for additional
both parties have not complied strictly with the work due to change in plans and specifications.
requirements of the contract. It observed that Such added cost can only be allowed upon the: (a)
change orders were made without the parties written authority from the developer or project
prescribed written agreement, and that each owner ordering or allowing the written changes
party should bear their respective costs. It noted in work, and (b) written agreement of parties
that the respondent could not demand from the with regard to the increase in price or cost due to
petitioners the payment for change orders the change in work or design modification.
undertaken upon instruction of the project Compliance with these two requisites is a
architect without the petitioners written condition precedent for the recovery. The
approval. Applying Article 1724 of the Civil Code, absence of one or the other condition bars the
the RTC found that when the respondent recovery of additional costs. Neither the authority
performed the change orders without the for the changes made nor the additional price to

be paid therefor may be proved by any other

evidence.
In the present case, Article I, paragraph 6, of the

Contract incorporates this provision:
The CONTRACTOR shall make no change or

alteration in the plans, and specifications as well
as in the works subject hereof without the prior
written approval of the OWNER. A mere act of
tolerance shall not constitute approval.
Significantly, the respondent did not secure the

required written approval of the petitioners
before making the changes in the plans,
specifications and works. Thus, for undertaking
change orders without the stipulated written
approval of the petitioners, the respondent
cannot claim the additional costs it incurred, save
for the change orders the petitioners accepted
and paid for as discussed below.

CEBU BIONIC BUILDERS SUPPLY, INC v. their MR, and reversed their judgment before.
DEVELOPMENT BANK OF THE PHILIPPINES Thus, the petitioners file the case before the
G.R. No. 153366: November 17, 2010 Supreme Court.
FACTS: ISSUE/S:
Spouses Robles entered into a mortgage contract 1. Whether or not there was a contract of lease
with the DBP to create the State Theatre Building between petitioners and DBP
in Talisay, Cebu. Upon completion, Rudy Robles
executed a contract of lease in favour of Cebu 2. If in the affirmative, whether or not this
Bionic Builders Supply. However, the spouses contract contained a right of first refusal in favor
defaulted on their obligation to pay and DBP of petitioners;
extrajudicially foreclosed the mortgage. DBP sent
a letter to Cebu Bionic that if they were interested 3. Whether or not respondents To Chip, Yap and
in leasing the facilities, they would have to pay Balila are likewise bound by such right of first
DBP. However, nothing came from these refusal.
correspondences.
Ruling:
DBP then invited parties to bid on the property. The petition lacks merit.
Initially, Cebu Bionic submitted their interest in
bidding, but the price that they gave was CIVIL LAW: Contract of lease
insufficient. DBP then awarded the auction to
Respondents To Chip, Yap and Balila. In response Under Article 1305 of the Civil Code, "[a] contract
to several demand letters by the Respondents, is a meeting of minds between two persons
Cebu Bionic filed a petition for preliminary whereby one binds himself, with respect to the
injunction, cancellation of deed of sale and other, to give something or to render some
specific performance against DBP. Petitioners service. "A contract undergoes three distinct
then related that, without their knowledge, DBP stages preparation or negotiation, its perfection,
sold the subject properties to respondents To and finally, its consummation. Negotiation begins
Chip, Yap and Balila. The sale was claimed to be from the time the prospective contracting parties
simulated and fictitious, as DBP still received manifest their interest in the contract and ends at
rentals from petitioners until March 1991.By the moment of agreement of the parties. The
acquiring the subject properties, petitioners perfection or birth of the contract takes place
contended that DBP was deemed to have assumed when the parties agree upon the essential
the contract of lease executed between them and elements of the contract. The last stage is the
Rudy Robles. They alleged that the original leases consummation of the contract wherein the
clause of the Right of First Option to Buy should parties fulfill or perform the terms agreed upon in
be upheld. the contract, culminating in the extinguishment
thereof
The trial court granted their complaint. The Court
of Appeals similarly upheld the decision of the In the case at bar, there was no concurrence of
trial court. Cebu Bionic filed a motion for entry of offer and acceptance vis-à-vis the terms of the
judgment, but Respondents filed a motion for proposed lease agreement. In fact, after the reply
reconsideration on the ground that they relied on of petitioners counsel dated July 7, 1987, there
the friend of their lawyer to personally file the was no indication that the parties undertook any
MR, but apparently did not. The court granted other action to pursue the execution of the

intended lease contract. Petitioners even

admitted that they merely waited for DBP to
present the contract to them, despite being
instructed to come to the bank for the execution
of the same.
DBP cannot, therefore, be accused of violating the

rights of petitioners when it offered the subject
properties for sale, and eventually sold the same
to respondents To Chip, Yap and Balila, without
first notifying petitioners. Neither were the said
respondents bound by any right of first refusal in
favor of petitioners. Consequently, the sale of the
subject properties to respondents was valid.
Petitioners claim for rescission was properly
dismissed.
Petition is DENIED.

ALIDA MORES VS. SHIRLEY M. YU-GO, On February 5, 1999, appellees filed their answer,
VICTORIA M. YU-LIM AND MA. ESTRELLA M. arguing that they were the one who caused the
YU renovation of the said property after the
G.R. No. 172292, July 23, 2010 expiration of lease contract with the Herce
Trucking Service, and further argued that there
Facts: was no final demand given by the appellant, that
On January 21, 2998, plaintiffs-appellants Shirley it was merely as sort of reminder thereof. By way
M. Yu-Go, Ma Victoria M. Yu-Lim and Ma. Estrella of counterclaims they demanded payment of
M. Yu filed a complaint for Injunction and actual damages, attorney’s feed and litigation
Damages with prayer for issuance of Temporary expenses.
Restraining Order and Preliminary Injunction
before the Regional Trial Court (RTC) against the The appellate court ruled in favor of the
defendant, spouses Antonio and Alida Mores, the appellants granting them an award of P100, 000
plaintiffs alleged that they co-owned a parcel of for moral damages
land location in Sto. Tomas, Magarao, Camarines
Sur on which there is a building built on March Issue:
1983 made of strong materials thereof. The Whether or Not the appellate court in awarding
defendant appealed to the appellants family that the Yu siblings moral damages in the amount of
they be allowed to stay to the said property for the P100, 000 is rendered with grave abuse of
reason that they still did not own a house, the discretion and is not in accordance with the court.
appellants agreed without asking for any rentals
but subject to the condition that they have to Ruling:
vacate the said property if one of the appellants The court ruled that Yu siblings are not entitled
would need the subject property. for moral damages thereof. The improvements
caused by the appellees did not altered or
In November 1997, appellants told the appellees damaged the principal building of the said
that they were already in need of the propert, property, furthermore, under article 1678 of the
particularly Shirley Yu- Go, since the defendant civil codes provides that the lessee makes, in good
already owns a house located Villa Grande faith, useful improvements which are suitable to
Homes, Naga city, but still the appellees begged the use for which the lease is intended, upon
that they be given a 6-month extension to stay termination of the lease contract shall pay the
and further extended until the end of year. Thus lessee one-half of the value of the improvements
on the first week of January 1999, appellants gave or should the lessor refuse to pay the said amount,
their final demand for the appellees to vacate the the lessee may remove such improvements, even
property. After such demand, the appellees hired though the principal thing may suffer damage
some laborers to demolish the improvements thereby. He shall not, however, cause any more
they made on the subject property. Consequently, impairment upon the property leased than is
appellants instituted an action for Injunction necessary
where they also prayed for the reimbursement of
the value of the residential building that was The court finds no reason for the appellate court
illegally demolished and for payment of moral to award of moral damages to the Yu siblings
damages, attorney’s fees, litigation expenses and though the court findings that the spouses Mores
costs of suit. removed only the improvements the introduces
to the property without destroying the principal
building, and even the Mores failed to give the

appellants a choice between retaining the said

improvement after paying the half of the price of
the improvements or removing the said
improvements, the Yu siblings should have
offered to pay the spouses Mores, since they failed
to make such offer, the spouses Mores had the
right to remove the same.

DEE VS CA therein that they were illegally dismissed and for

GR NO 135721, May 27, 2004 unfair labor practice. In the said hearing in the
NLRC said Chua Tee Dee was impleaded as
Facts: respondent in the labor case asserting that it was
J.C. Agricom Development Corporation, Inc. a because of the lease contract that the said
corporation duly organized under Philippine Law employees were terminated.
is the owner of a rubber plantation located at
Bayabas, Toril, Davao City with an area of Chua Tee Dee filed a counterclaim against the
132.4012 hectares, more or less. Agricom Agricom stating that she was the one prejudiced
planned to lease the plantation. in the said scenario saying that the Agricom was
not able to leave her at peace and enjoy the lease
Chua Tee Dee is a businesswoman doing business of such plantation and including therein that she
under the name and style of Pioneer Enterprises. religiously paid all her part of the lease and she
Chua Tee Dee, after meeting with Manuel G. Alba, incurred expenses in the said labor case. She also
president of Agricom , made a draft of the lease alleged in the counterclaim that she was exposed
and delivered to Alba on May 22, 1985. The final to public contempt and ridicule which
contract of lease was signed and acknowledged besmirched her reputation, and that she suffered
before a notary public on July 22, 1985. The mental anguish and sleepless nights because of
Agricom, represented by Alba, was referred to as the violation of the contract of lease.
the FIRST PARTY, and Chua Tee Dee as the
SECOND PARTY in the said contract, as well as Issue:
Lillian Carriedo, a stockholder of Agricom also Whether or not Chua Tee Dee had suffered any
signed in the contact. loss from the said On-going labor case.
Alba then met with the employees of the Ruling:

plantation and updated them of their impending Petitioner failed to prove that she suffered any
termination due to the lease contract and told loss from the labor case that was filed against her
them that they will be given their rightful enterprise and her husband. The trial court
separation pay. declared that the petitioner "did not actually
established the alleged losses especially in the
Amado Dee delivered the amount of 270,00 to the labor case with the NLRC where the complaints of
spouses Manuel and Suzanne Alba in compliance the laborers appear to have been
to the said lease contract and a receipt was issued. dismissed…" The CA, likewise, noted thus:
True, the labor case was instituted during the
A certain Azarinas P Liguiz of Agricom sent letters effectivity of the lease contract until the case was
to the said employees, confirming their finally resolved on August 22, 1986. Surprisingly,
termination and informing them that their however, during the interregnum, appellant
separation pay shall be computed at ½ month’s regularly paid the monthly rentals for the years
salary for every year of service rendered, and that 1985 to 1989. It was after the labor case has been
a fraction of at least 6 months service shall be resolved that appellant started to fail to pay her
considered as one year. The corresponding rentals, strongly indicating that the labor case has
vouchers were then prepared. not dampened her peaceful and adequate
possession of the leased premises. That the NLRC
After sometime after the termination of the case did not deter the continuance of the
employees, a complaint was filed containing possession and occupation of the leased

premises. It also proved the continuous IN LIGHT OF ALL THE FOREGOING, the assailed
production of latex in the plantation. Now, if in the Decision of the Court of Appeals in CA-G.R. CV No.
production of latex, the corporation rather than 50306 and the RTC Order dated March 8, 1995
made profit, instead incurred losses, such losses are AFFIRMED WITH MODIFICATION. The
has to be borne by the corporation. petitioner is hereby ordered to pay to the private
respondent monthly rentals in the amount
In sum, then, the petitioner failed to prove that of P60,000 starting July 1990 up to June 30, 1991;
the private respondent breached any of the and in the amount of P75,000.00 per month from
provisions of the contract of lease. Thus, the July 1991 until the petitioner actually left the
petitioner had no valid reason to suspend the leased premises. The petitioner is also ordered to
payment of rentals under Art. 1658. In the pay interest of two percent (2%) of the arrears, as
complaint filed by the private respondent against penalty for the delay in the payment of rentals.
the petitioner, it alleged that the petitioner failed
and/or refused to pay the rent starting in July
1990. Also, the private respondent’s president,
Manuel G. Alba, testified that Agricom had
suffered from the petitioner’s non-payment of
rentals since July 1990. At that time, the parties
were already on their second three-year period of
the lease contract.
We agree with the contention of the petitioner
that her obligation to pay back rentals should
cover only the period of July 1990 until the time
that she vacated the leased premises. The CA,
thus, erred when it affirmed the order of the trial
court ordering the petitioner to pay back rentals,
including the first three (3) years of the lease, as
that period had already been paid by the
petitioner. The petitioner should also be credited
for the amount of P270,000.00 she paid to the
private respondent under paragraph 5 of the
contract of lease.
The personal loan extended by the petitioner to

Lillian Carriedo should not be charged against the
private respondent. While it is true that the
petitioner and Carriedo had agreed that the
personal loan of the latter shall be "chargeable
against Agricom’s account," the private
respondent is not privy to the agreement; nor did
it agree to pay the said loan. It must be stressed
that the private respondent has a personality
separate and distinct from its stockholders.

JOAQUIN MA. HERRERA VS ARSENIO CRUZ

HERRERA
G.R. No. 2965 January 2, 1907
(Full Text)
This action was brought to recover the price of
two oil paintings, claimed to have been executed
by the plaintiff under the order of the defendant
and accepted by him. It is evident from the
testimony that there was a misunderstanding
between the parties as to the charter of the order
and as to the final effect of the exhibition of the
paintings as the property of the plaintiff, and also
of their delivery to him at his house. By virtue of
the rule in the De la Rama case1 we are not at
liberty to enter into an examination of these
questions of fact upon which the trial court has
made express findings, and which are conclusive
upon appeal.
The point of law is raised by the defendant that

under article 1544 of the Civil Code the contract
was not perfect because the price of the work was
not fixed. Upon a like contention this court has
already passed adversely in the case of Perez vs.
Pomar (2 Phil. Rep., 682), a holding which is
sustained by the decision of the supreme court of
Spain of the 18th of October, 1899.
Accordingly there is no ground justifying the

reversal of this judgment, which is affirmed with
the costs of both instances. After expiration of
twenty days let judgment be entered in
accordance herewith and ten days thereafter the
record remanded to the court below for proper
action. So ordered.

GONZALES vs. MATEO

G.R. No. L-49020 February 28, 1944
Facts:
Respondents leased to petitioner a cockpit
located at Malolos, Bulacan for a period of 6 years.
Before using the cockpit, petitioner made some
improvements however its foundation was weak
and as a result thereof when a large attendance
was present the building broke down.
Respondent demanded from petitioner to either
reconstruct the cockpit or pay them the sum of
P3,000 as damages in addition to the unpaid
rentals. Petitioner refused to comply with such
demand, alleging that under his contract he was
not obligated to make repairs, but only
improvements, on the building and that its
collapse was due to hidden defects which the
lessors had concealed from him.
Issue:
Who is liable for the repair of the building?
Held:
Lessee
The collapse of the building in question on the
occasion of the heavily attended cockfight of
September 12, 1937, was not due to any hidden
defect but to the fact that thru petitioner's
negligence in making the repairs he failed to place
the posts on firm, solid, and sound foundation in
spite of one of the lessors' advertence to him on
the matter.
Under article 1563 of the Civil Code, "the lessee is
liable for any deterioration or loss suffered by the
thing leased, unless he proves that it took place
without his fault." And under article 1101 of the
same Code, any person guilty of negligence in the
fulfillment of his obligations, or who in any
manner whatsoever shall fail to comply with the
terms thereof, shall be liable for any damage
caused thereby.
The judgment appealed from, being in accordance
with law, is hereby affirmed, with costs.

DAKUDAO VS. JUDGE CONSOLACION compensation for the occupation thereof

G.R. No. L-54753. June 24, 1983 hence an unlawful detainer case can be
filed against the Laurecios.
Facts:  June 10, 1980 - CFI reconsidered, holding
 Plaintiffs Marietta Dakudao, Antoinetta that no contract was executed between
Quintos, Elsa Almeda, Jose Ebro, and Lucia plaintiffs and the Laurecios.
Pelayo co-own a parcel of land (Lot 202-F-  The Laurecios claim that they cannot be
13) embraced in TCT No. T-34254 of considered privies or successors-in-
Registry Deeds of Davao City. Defendant interest of the former lessee because
Francisco An Singco's house stands on this Article 1649 of the Civil Code provides that
land under a lease contract with plaintiffs. "the lessee cannot assign the lease without
Monthly rental is PhP25.00. the consent of the lessor, unless there is a
 July 1977 - Ang Singco sold this house to stipulation to the contrary."
his co-defendants Federico and Carmen
Laurecio without the consent and Issue:
knowledge of the plaintiffs. He then left the 1. Whether a lessee who succeeds in the
premises while in arrears in his rentals for occupation of a land from a previous lessee
one year and seven months. without the consent or knowledge of the lessor
 Plaintiffs demanded that the Laurecios may be considered a successor of the previous
vacate the premises and that they pay lessee for the purposes of a suit.
PhP100.00 for use and occupation of the 2. Whether a lessee who succeeds in the
same. Laurecios were only willing to pay occupation of a land from a previous lessee
PhP50.00. without the consent or knowledge of the lessor
 July 18, 1979 - City Court of Davao held may be the proper subject of an unlawful detainer
that, since the essence of the action for suit.
unlawful detainer is the existence of a
contract, express or implied, between Held:
plaintiff and defendant, and since there 1. YES. Since there was no contract between the
was never a contract of lease between the lot owners and the Laurecios, the latter's
plaintiffs and the Laurecios, the present occupation of the land is only as successors of Ang
suit for unlawful detainer must fail. Singco from whom they purchased the house built
Neither could it be a forcible entry case, on the lot. If Article 1649 had been followed and
according to the judge, because the the consent of the owners to the sale secured, the
plaintiffs failed to allege in the pleadings or Laurecios would be more than mere successors-in-
prove with evidence the fact that the interest. They would have become the new
defendants occupied the land through lessees. The unlawful detainer case was proper.
stealth and strategy. As regards Ang Article 1649 of the Civil Code is intended
Singco, the court ruled that the action to protect the owner of the leased property. It was
converte dinto a simple one for collection never intended to permit one who claims no right
of back rentals since he was no longer in to the premises to avoid ejectment by the dubious
possession of the land leased to him. allegation that his occupation is not lawful as the
 January 15, 1980 - CFI of Davao held that Civil Code prohibits it. The Laurecios fail to state
an implied contract of lease was created by what right they are occupying the land. If they
when plaintiffs demanded of the Laurecios have no contract, express or implied with the
to pay rental over the parcel of land as owners and they have no claim as successors-in-

interest of the former lessee, they become mere

usurpers or squatters through their own
admission.
2. NO (BUT the SC ruled in favor of the plaintiffs

for equitable consideration, treating the suit for
unlawful detainer as a summary action for
ejectment). The case of Yu v. de Lara holds that
the proper remedy against a person who occupies
the land of another, who has no contract with the
owner, and whose possession is merely tolerated,
but who refuses to vacate despite demand, is the
summary action for ejectment.
As held in the case of Vda. de Cachuela v.
Francisco (.98 SCRA 172), a person who occupies
the land of another at the latter's tolerance or
permission, without any contract between them,
is necessarily bound by an implied promise that
he will vacate upon demand, failing which a
summary action for ejectment is the proper
remedy against him. In such a case, the unlawful
deprivation or withholding of possession is to be
counted from the date of the demand to vacate.

EDUARDO MANLAPAT vs SIMEON SALAZAR predecessors and Bernardo Enriquez. Explained

G.R. No. L-8221; January 31, 1956 the High Court, this shows a desire on the part of
sublessor Esperanza Guillen to repossess the
FACTS: fishpond earlier so that she could prepare the
A contract of lease involving a fishpond was same for delivery to the co-owners. In other
entered into by plaintiff’s predecessors-in- words there is no dissociation by Guillen from the
interest and Bernardo Enriquez who are co- original lease as well as a desire to either abandon
owners and lessors, and the lessee, respectively. or transfer her interest in the estate to defendant
The agreement indicated a lease period from year Salazar, thus her personality did not disappear.
1931 up to June 31, 1967. With the fact of the Second, sublessor Guillen bound herself to
lessee’s death, his widow, Esperanza Guillen respect the sublease and to pay damages should
assumed the responsibilities under the she again sublease the subject property to
agreement in place of her husband. She subleased another person. Third, she bound to pay the land
said fishpond to defendant-appellee Salazar for taxes and such other taxes that may be charged by
twenty (20) years or from May 31, 1947 to May the government. Fourth, the sublease agreement
31, 1967. Following the death of the co-owners provided a prohibition against any cutting of any
and lessors, plaintiff Manlapat as the sole heir of tree within the premises of the fishpond without
the deceaseds filed with the CFI of Bulacan a the sublessor’s written consent. Last, sublessee
complaint for the recovery of possession of the and defendant Salazar was required to return the
subject property against defendant alleging property upon the expiration of the sublease in as
mainly that the sublease agreement between the good as a condition as when he took possession of
latter and Esperanza Guillen, as well as previous it. Guided by these characteristics the High Court
leases undertaken were null and void. is of the conclusion that the agreement is one that
is a sublease, not an assignment of lease.
The CFI of Bulacan dismissed the complaint.
Hence the appeal by plaintiff Manlapat to the High The judgment appealed from is AFFIRMED, with
Court raising two (2) issues, namely: first, the costs against plaintiff-appellant.
sublease agreement is not valid and binding, and
second, it is not a sublease but an assignment of
lease.
ISSUE:
Whether the agreement entered into by
Esperanza Guillen and plaintiff Manlapat is one
that is a sublease.
RULING:
Laying the salient characteristics that differ a
sublease from an assignment of lease, the High
Court pointed out the following: first, the
termination of the period of the sublease
agreement between Bernardo Enriquez’s widow,
Esperanza Guillen and defendant Salazar is one
month earlier than that of the original contract of
lease between the plaintiff-appellant’s

EQUATORIAL REALTY DEVELOPMENT, INC. &

CARMELO & BAUERMANN, INC., vs. MAYFAIR Four years later, on July 30, 1978, Carmelo sold its
THEATER, INC. entire C.M. Recto Avenue land and building, which
G.R. No. 106063; November 21, 1996 included the leased premises housing the
"Maxim" and "Miramar" theatres, to Equatorial by
Facts: virtue of a Deed of Absolute Sale, for the total sum
Petitioners are Carmelo & Bauermann, Inc. the of P11,300,000.00.
owner, seller, lessor and Equatorial Realty
Development, Inc. the buyer and the Mayfair As a result of the sale of the subject properties to
Theater, Inc. the respondent-lessee. Equatorial, Mayfair filed a Complaint before the
Regional Trial Court of Manila for the rescission
Carmelo owned a parcel of land, together with of the Deed of Absolute Sale between Carmelo and
two 2-storey buildings constructed thereon Equatorial, specific performance and damages.
located at Claro M. Recto Avenue, Manila and Mayfair contends that the sale was violative of
covered by TCT No. 18529 issued in its name by Paragraph 8 of the Contract of lease between
the Register of Deeds of Manila. respondent and Carmelo, which reads:
On June 1, 1967, Carmelo entered into a Contract “That if the LESSOR should desire to sell the
of Lease with Mayfair Theater Inc. for 20 years. leased premises, the LESSEE shall be given 30-
The lease covered a portion of the second floor days exclusive option to purchase the same.”
and mezzanine of a two-storey building with
about 1,610 square meters of floor area, which The Trial court ruled in favor of herein petitioners
respondent used as Maxim Theater. on the ground that Paragraph 8 was interpreted
as an option contract.
Two years later, March 31, 1969, Mayfair entered
into a second Lease with Carmelo for another Mayfair appealed and the CA reversed the
portion of the latter’s property this time, a part of decision of the Trial court saying that Paragraph
the second floor of the two-storey building, and 8 should be interpreted as a “right of first refusal”
two store spaces on the ground floor. In that and not an option contract.
space, Mayfair put up another movie house
known as Miramar Theater. The Contract of Lease Issue/s:
was likewise for a period of 20 years. 1. Whether Paragraph 8 constitutes an option
contract clause or a right of first refusal.
Both contract of lease provides identically 2. Whether or not the sale of property to
worded paragraph 8, which reads: Equatorial is valid.
That if the LESSOR should desire to sell the leased
premises, the LESSEE shall be given 30-days Ruling:
exclusive option to purchase the same.
In the event, however, that the leased premises is 1. Supreme Court ruled in favor of Mayfair
sold to someone other than the LESSEE, the ordering rescission of the deed of sale and
LESSOR is bound and obligated, as it hereby binds granting him right of first refusal to buy the
and obligates itself, to stipulate in the Deed of Sale property at P11, 300,000. The issues were
hereof that the purchaser shall recognize this held as follows:
lease and be bound by all the terms and
conditions thereof.

RIGHT OF FIRST REFUSAL, The Supreme

Court agreed with the CA’s ruling that
Paragraph 8 cannot constitute an option
clause (covered in Article 1324 & 1479 of
the Civil Code) for the lack of definite
purchasing price in the
agreement. Furthermore, the SC ruled that
the stipulation in question was created to
manifest a reciprocal obligation to guard
the interest of Mayfair in case of sale of the
property: (a) to give him the option to
purchase the property or (b) to ensure
that purchaser of the property shall
recognize the lease agreement earlier
made. As such, Paragraph 8 is considered
a “right of first refusal”
2. No. Carmelo acted in bad faith when it sold

the entire property to Equatorial without
informing Mayfair, a clear violation of
Mayfair's rights. Carmelo abandoned the
negotiations without giving Mayfair full
opportunity to negotiate within the 30-day
period. Carmelo knowingly and
deliberately broke a contract entered into
with Mayfair. It sold the property to
Equatorial with purpose and intends to
withhold any notice or knowledge of the
sale coming to the attention of Mayfair. All
the circumstances point to a calculated
and contrived plan of non-compliance
with the agreement of first refusal.
On the part of Equatorial, it cannot be a

buyer in good faith because it bought the
property with notice and full knowledge
that Mayfair had a right to or interest in
the property superior to its own. Carmelo
and Equatorial took unconscientiously
advantage of Mayfair.

PAMINTUAN V. CA contract of lease under Article 1659 of the Civil

42 SCRA 344, November 29, 1971 Code providing that 'If the lessor or the lessee
should not comply with the obligations set forth
FACTS: in articles 1654 and 1657, the aggrieved party
A lease contract was executed in favor of may ask for the rescission of the, contract and
petitioners Tan and Pamintuan for two. It indemnification for damages or only the latter,
provided for an agreed monthly rental of P15.00 allowing the contract to remain in force.
payable promptly at the end of every month for
each lot or P30.00 for the two. The lease was
entered into on October 10, 1951 to expire at the
discretion of the lessee after twenty years. There
was another provision that failure on the part of
the lessee to pay the rental for six consecutive
months would automatically annul the contract.
The complaint for rescission filed by private
respondents as plaintiffs against petitioners as
defendants alleged that with respect to the first
lot, Tan was in arrears for the period of twelve
months and, with respect to the second lot, for a
period of eight months. Lower Court granted the
petition to rescind the contract. Appeal to the CA
affirmed lower court’s decision. Hence, this
appeal.
ISSUE:
Whether or not the petitioners had violated the
provision in the contract of lease as to the
monthly rental being promptly paid at the end of
every month as claimed by plaintiffs
HELD:
While claiming to have committed no such
violations, the petitioners nevertheless admitted
that they in their pleadings nor at any time during
the trial, never claimed to have offered to pay the
rental at the end of each month. On the contrary,
they impliedly admitted in their pleadings that no
such monthly payments were ever made. With
their above admission that 'no such monthly
payments were ever made' by them, it stands
clear that they violated the aforequoted provision
of paragraph 2 of the contract of lease. Clearly,
said violation of lessees' obligation to pay the
price of the lease according to the terms
stipulated entitles the respondents to rescind said

HEIRS OF DIMACULANGAN VS. IAC  IAC dismissed the heirs' petition for
G.R. No. L-68021. February 20, 1989 review by certiorari.
Facts: Issue:
 Since 1961, Fausta Dimaculangan and her Whether an unwritten month-to-month contract
children occupy by lease an apartment of lease is for an indefinite period, for the purpose
located at Pasay City at a monthly rental of of applying Presidential Decree No. 20.
PhP250.00. To augment its income, the
family maintains therein a sari-sari store Held:
and bakes hot pan de sal to sell to the NO. Leases are deemed on a "month-to-month
general public. basis" if rentals are paid monthly. A lease contract
 July 5, 1978 - Private respondent Felimon "on a month-to month basis" provides for a
Uy informed Dimaculangan by letter that definite period and may be terminated at the end
the property which she has been of any month. By express exception of P.D. No. 20,
occupying has been sold to him and should judicial ejectment lies when the lease is for a
she desire to continue occupying the same, definite period or when the fixed or definite
she should sign a contract of lease for a period agreed upon has expired.
period of two (2) years at a monthly rental At the time of filing the action, Uy had a clear and
of P1,500.00. indubitable right to eject the petitioners, the
 When Uy did not receive a reply, he sent a period of the lease expiring at the end of every
second letter demanding payment of monthly period. The Rent Control Law now in
P750.00 covering unpaid rentals for the force, Batas Pambansa Blg. 877, has erased the
months of August, September and October, distinction between oral and written leases
1978 but still he received no answer to his- insofar as expiration of the lease period as a
demand. ground for judicial ejectment in leases covered by
 Uy filed a complaint for ejectment. said law, is concerned. "In view of the foregoing,
 Dimaculangan filed an answer stating she there appears to be no necessity to discuss the
sent a reply letter but it was returned other issues in this case; more specifically
undelivered because plaintiff distorted his whether or not the trial court may increase the
address. She tried to pay Uy who did not rental and/or alter the period of the lease from an
want to collect the monthly rentals, even in indefinite period to a definite period; both issues
the form of money orders which were having become moot and academic."
returned unclaimed. She claims the filing
of the complaint was just a scheme to
compel her to agree to the increase in
monthly rental from PhP250.00 to
PhP1,500.00, in violation of P.D. No. 20.
 Pending trial, Dimaculangan died. She was
substituted by her children as defendants.
 October 16, 1980 - City Court of Pasay
rendered a decision increasing the
monthly rentals and fixing a definite
period for the term of the lease.
 RTC affirmed.

FERMIN VS. COURT OF APPEALS rental isP5,000.00 per annum with the escalation
GR NO. 95146, 196 SCRA 273, MAY 6, 1991 clause that the rental shall be increased by 10% at
the end of each five-year period counted from the
Facts: effectivity of the lease agreement. After the 10-
Spouses as petitioners and spouses Meliton Alpas year term and during the renewal period, the
and Lucy Alpas entered into a contract of lease. lessee may, at his/their own option and
Roberto Fermin (petitioner) executed a General discretion, terminate the lease, after giving the
Power of Attorney naming his mother Eduviges lessors a previous written notice in advance, at
Espinasvda de Martin who was tasked to exercise least 180 days from the effective date of
general control and supervision over the termination. Upon termination of the lease after
property. On November 14,1985 Eduviges E. the first 10 years, all improvements which are
Fermin for herself and as attorney-in-fact of her permanent in nature that may have been
other children, including Roberto E. constructed by the lessee on the leased
Fermin(plaintiff in this case), as principal, properties, shall become properties of the lessors,
entered into a Property Administration their heirs or assigns, without any further
Agreement with AGRA & Co., Inc. obligation to reimburse the lessees. The lessee
has the priority to purchase the property if the
In a letter dated 6 February 1987, AGRA & Co., lessors decide to sell said property.
Inc., informed Mr. Alpas that said company would
no longer act in any representative capacity for Before the expiration of the 10 year term of the
the Fermins and advising to refer all matters to lease, private respondents manifested their
the Fermin's attorney-in-fact, Ms. Eduviges E. desire to renew the lease when they sent
Fermin. petitioners' representative a prepared lease
agreement already signed by them but it was
Key Management Corporation in the letter dated never signed nor returned by petitioners.
04 March 1987 and 09 March 1987, informed Nevertheless, on May 31, 1986, AGRA & Co., Inc.,
defendants that said company was appointed as collection agent of petitioners collected from
attorney-in-fact for the administration of the private respondents the sum of P 1,800.00 as
leased premises and to collect rentals due partial payment for the annual rental covering
thereon. March 15, 1986 (the expiry date of the first term
of 10 years) to March 15, 1987. Key Management
Key Management Corp., in another letter dated 12 Corporation which was appointed by petitioners
March 1987 advised Mr. Alpas that they were as attorney-in-fact for the administration of the
unilaterally terminating the lease effective 18 leased premises, advised private respondent
April 1987. Meliton Alpas in a letter dated March 12, 1987
that the lease agreement was terminated effective
Ejectment case was filed with MTC which ruled April 18, 1987. Said respondent, through counsel,
against petitioners, RTC reversed and ordered the replied in a letter dated March 17, 1987
defendants to pay and vacate, CA, however addressed to Key Management Corporation that
reversed RTC. the lease agreement had already been renewed
for another term of ten (10) years from March16,
A reading of the lease agreement shows that it is 1986 and tendered payment of the sum of
for a term of ten (10) years and that the lease shall P10,682.00 covering the balance of the annual
be renewable for another term of 10 years upon rental from March16, 1986 to March 15, 1988
mutual agreement of the parties. The agreed

including 12% interest per annum on rentals in respondents continued to occupy the premises
arrears. for more than 15 days with the acquiescence of
petitioners, then it is understood that there is an
In a letter dated April 20,1987, Key Management implied new lease, not for the period of the
Corporation acknowledged receipt of P10,682.50, original contract, but from year to year. Article
but with notice of its application toaccrued 1670 of the Civil Code so provides for this
rentals at P2,000.00 a month leaving an situation. Art. 1670. If at the end of the contract
outstanding balance of P13,900.00 as of April the lessee should continue enjoying the thing
15,1987. In a letter of May 8, 1987, Atty. Jose J. leased for fifteen days with the acquiescence of
Benemerito of Key Management Corporation the lessor, and unless a notice to the contrary by
reiterated thedemand that private respondents either party has previously been given, it is
pay the accrued rentals and vacate the premises. understood that there is an implied new lease, not
On May 14,1987, private respondents objected in for the period of the original contract, but for the
writing to the aforesaid application of payment of time established in articles 1682 and 1687. The
their remittance of P10,682.50 by Key other terms of the original contract shall be
Management Corporation. In another letter of revived. There is thus an implied renewal of the
same date addressed to one Atty. Benemerito lease from year to year. The extension of the lease
private respondents reiterated said objection and for one year from March 16, 1986 to March 15,
stated that the lease had already been renewed 1987 shall be at the agreed monthly rental in the
for another 10 years. contract of P6,150.00 considering the escalation
clause of 10% after every five (5) years. However,
Issue: from March 16, 1987, the rate of monthly rental
Whether or not the original term of contract as to should be P2,000.00 as demanded by petitioners
10 year period will be applied after expiration of until private respondents vacate the premises.
original lease and after 15 days that lessor
acquiesced to occupation of lessees
Ruling:
NO. From the foregoing set of facts, it cannot be
said that the lease agreement had been effectively
renewed for another 10 years. The stipulation of
the parties is clear in that such a renewal is
subject to the mutual agreement of the parties.
While there is no question that private
respondents expressed their desire to renew the
lease by another 10 years at the rate of the rental
stipulated in the lease agreement, apparently
petitioners would be willing to renew said lease if
the rentals are increased to P2,000.00 monthly.
Obviously, there was no meeting of the minds as
to the rate of the rental. As there was no
agreement reached, then the term of the lease
may not be considered to have been renewed for
another 10 years. However, since after the
expiration of the lease agreement, the private

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CIVIL LAW REVIEW II BATCH 2017 CASE DIGEST

SPEACIAL CONTRACTS (SALES-LEASE)

ARELLANO UNIVERSITY SCHOOL OF LAW Page 1

It would be enough to hold, as we do, that the

In respect to the defendant's obligation to order

ARELLANO UNIVERSITY SCHOOL OF LAW Page 2

SANCHEZ VS RIGOS ART. 1479. A promise to buy and sell a

In other words, since there may be no valid

This view has the advantage of avoiding a conflict

ARELLANO UNIVERSITY SCHOOL OF LAW Page 4

ARELLANO UNIVERSITY SCHOOL OF LAW Page 5

Nothing shows that the parties had agreed on any

2. No. Respondent’s subsequent sending of the

ARELLANO UNIVERSITY SCHOOL OF LAW Page 6

MARTINEZ VS CA granted the registration over and against the

ARELLANO UNIVERSITY SCHOOL OF LAW Page 7

ISSUE: Whether or not the Spouses Martinez are

ARELLANO UNIVERSITY SCHOOL OF LAW Page 8

MAPALO v. MAPALO (2) Whether the Narcisos were purchasers in

HELD: YES, the sale was void.

ARELLANO UNIVERSITY SCHOOL OF LAW Page 9

(2) No, they were no purchasers in good faith.

Narcisos were not buyers in good faith

The Narcisos were purchaser-in-value but not

ARELLANO UNIVERSITY SCHOOL OF LAW Page 10

PAREDES V. ESPINO that a written note or memorandum, embodying

Defendant filed a motion to dismiss upon the

These allegations and documents

ARELLANO UNIVERSITY SCHOOL OF LAW Page 11

ARELLANO UNIVERSITY SCHOOL OF LAW Page 12

taken by the vendor before the rights of third

In the case at bar it is evident that the bill of sale,

The defendant Macke & Chandler, having

ARELLANO UNIVERSITY SCHOOL OF LAW Page 13

Under paragraph 3, Article 1505 of the Civil Code,

ARELLANO UNIVERSITY SCHOOL OF LAW Page 14

BAUTISTA VS SIOSON resale, but only if within the period mentioned

ARELLANO UNIVERSITY SCHOOL OF LAW Page 15

shall be considered as delivered, when it is placed Separate Opinions

The material possession which Raymundo dela

This article says: "If the same thing should have

ARELLANO UNIVERSITY SCHOOL OF LAW Page 16

Tabora paid only a down payment of P300.00,

Article 1504 of our Civil Code, in part provides:

ARELLANO UNIVERSITY SCHOOL OF LAW Page 17

FACTS: Canuto sold a parcel of land to Carumba

ISSUE: Who has a better right, Carumba or

HELD: CARUMBA. Art. 1544 does not apply in this

Carumba dealt with a double sale of the same

ARELLANO UNIVERSITY SCHOOL OF LAW Page 18

KATIGBAK VS. CA CA decision: Katigbak failed to take delivery of the

ARELLANO UNIVERSITY SCHOOL OF LAW Page 19

ARELLANO UNIVERSITY SCHOOL OF LAW Page 20

GERARDINO VS. CA The original defendant Rosario Artuz died. Hence

ARELLANO UNIVERSITY SCHOOL OF LAW Page 21

ISSUE: The lower court erred in not allowing the

The nature of the document in question was

In view of the foregoing, it is no longer necessary

ARELLANO UNIVERSITY SCHOOL OF LAW Page 22

Respondent offered to repurchase the land for

ISSUE: WON the period to repurchase of

HELD: Period of repurchase has not yet lapsed

The letter sent to the respondent by the other co-