E.
STATUTE OF FRAUDS
5. SPOUSES VILBAR VS. OPINION
G.R NO. 176043, JANUARY 15, 2014
FACTS:
 Spouses Vilbar claimed that on 1979, they and Dulos
Realty and Devt. Corp. entered into a contract to sell
involving a 108 sq.m. lot (Lot 20-B) in Las Piñas
covered by a transfer cert. of title for P19,440. Lot 20-
A is also the subject of another Contract to Sell
between Elena and Dulos Realty. Spouses took
possession of subject Lot 20-B in the concept of
owners and exercised acts of ownership with the
permission of Dulos Realty.
 Dulos Realty executed a notarized Deed of Absolute
Sale (DOAS) in favor of spouses Vilbar and their co-
purchaser Elena upon full payment of the purchase
price. However, spouses Vilbar and Elena were unable
to register and transfer said titles in their names
because Dulos Realty failed to have the lot formally
subdivided despite its commitment to do so.
 Spouses Vilbar and Dulos Realty also executed a
Contract to Sell covering Lot 21. To pay for the
balance of the purchase price, spouses Vilbar obtained
a housing loan from the Development Bank of the
Philippines (DBP) secured by a real estate mortgage
over the said lot. Dulos Realty facilitated the approval
of the loan, the proceeds of which were immediately
paid to it as full payment of the purchase price.
Spouses Vilbar were able to pay the loan in full and
DBP issued the requisite Cancellation of Mortgage.
The spouses Vilbar have been in actual, open and
peaceful possession of Lot 21 and occupy the same as
absolute owners since 1981.
 Opinion claimed that he legally acquired Lots 20 and
21 through extrajudicial foreclosure of mortgage
constituted over the said properties by the Gorospes.
They defaulted in payment, prompting Opinion to file
a petition for Extra-Judicial Foreclosure of Real Estate
Mortgage. Subsequently, the subject properties were
sold at a public auction where Opinion emerged as the
highest bidder. A Certificate of Sale was issued in his
favor on December 18,1995 and annotated on the
TCTs of the properties. The Gorospes failed to redeem
the properties within the reglementary period
resulting in the eventual cancellation of their titles.
Thus, the issuance of the titles to Opinion. Opinion
filed a Petition for Issuance of a Writ of Possession
against the Gorospes. Spouses Vilbar and Elena were
served with a notice to vacate the premises. However,
the writ was quashed when spouses Vilbar filed an
urgent motion for the quashal of the writ and
presented their title to Lot 21, while Elena presented
the Deed of Absolute Sale executed by Dulos Realty
covering Lot 20. Consequently, Opinion filed a
Complaint for Accion Reinvindicatoria with Damages
for him to be declared as the lawful owner and
possessor of the subject properties and for his titles to
be declared as authentic; praying for the cancellation
of the titles of spouses Vilbar and Elena.
 The RTC rendered its decision in favor of Opinion
declaring that he lawfully acquired the disputed
properties and that his titles are valid, the sources of
which having been duly established.
The CA agreed with the trial courts ruling that Opinion
validly acquired title over Lots 20 and 21 through a
valid mortgage, extrajudicial foreclosure and eventual
consolidation proceedings instituted over the said
properties.
ISSUE:
 W/N respondent Opinion has better title over subject
properties Lots 20 and 21.
HELD:
 Petition for review on certiorari DENIED. CA ruling
AFFIRMED.
RATIO DECIDENDI:
 Court recognizes the settled rule that levy on
attachment, duly registered, takes preference over a
prior unregistered sale. This result is a necessary
consequence of the fact that the properties involved
were duly covered by the Torrens system which works
under the fundamental principle that registration is
the operative act which gives validity to the transfer or
creates a lien upon the land.
 For unknown reasons, the spouses Vilbar did not cause
the transfer of the certificate title in their name, or at
the very least, annotate or register such sale in the
original title in the name of Dulos Realty. This, sadly,
proved fatal to their cause. Time and time again, this
Court has ruled that a certificate of title serves as
evidence of an indefeasible and incontrovertible title
to the property in favor of the person whose name
appears therein. Having no certificate of title issued in
their names, spouses Vilbar have no indefeasible and
incontrovertible title over Lot 20 to support their
claim. Further, it is an established rule that
registration isthe operative act which gives validity to
the transfer or creates a lien upon the land.
 The spouses Vilbar do not even know if a Deed of
Absolute Sale over Lot 21 was executed in their favor.
Only a Contract to Sell which is legally insufficient to
serve as basis for the transfer of title over the property
is available. At most, it affords spouses Vilbar an
inchoate right over the property. Absent that
important deed of conveyance over Lot 21 executed
between Dulos Realty and the spouses Vilbar, TCT No.
36777 issued in the name of Bernadette Vilbar cannot
 be deemed to have been issued in accordance with the
processes required by law.
 Simply, spouses Vilbar were not able to present
material evidence to prove that TCT of Lot 21 was
issued in accordance with the land registration rules.
12. AGASEN VS. CA, G.R NO. 115508; FEB 15, 2000
FACTS:
 In 1980, private respondent Petra Bilog assisted by her
husband Felipe Bilog, filed a complaint for recovery of
possession and ownership with the RTC involving an
8,474 sq. m. parcel of land registered in her name
under a TCT of the Registry of Deeds in La Union
praying that, after demands to petitioners to vacate
subject land, she be declared the true owner of subject
land and petitioners be ordered to turn over
possession to her.
 Herein petitioners Agasen asserted that the subject
land used to form part of a 42,372 sq.m. parcel of land
owned in common by 5 Bilog siblings. Petitioners
assert that they became owners of the portion of the
subject land which belonged to Bilog as her share by
virtue of 1) the sale in favor of 1,785 sq.m by Leonora
Calonge, sister of Agasen; and 2) the sale in their favor
by Bilog with the remaining 6,717.5 sqm by virtue of a
notarized sale.
 RTC rendered judgment in favor of herein petitioners,
dismissing the complaint and declaring the transfer
certificate of title in the name of private respondent
null and void. CA reversed the decision of the lower
court and private respondent was declared the true
owner of subject land.
ISSUE:
 W/N there was a valid document of transfer
HELD:
 Petition for review GRANTED. Decision of RTC
REINSTATED finding petitioners to be the lawful
owners of the land covered by the same.
RATIO DECIDENDI:
 YES. The memorandum of sale appearing is sufficient
to prove the sale between petitioner Fortunata
Calonge Agasen and her late sister, the previous
vendee of the land subject of the Deed of Absolute
Sale from private respondent. After all, contracts are
obligatory in whatever form they may have been
entered into provided all essential requisites are
present.
 The provision of Article 1358 on the necessity of a
public document is only for convenience, not for
validity or enforceability. It is not a requirement for
the validity of a contract of sale of a parcel of land that
this be embodied in a public instrument.
 In the light of the foregoing, we reverse the Court of
Appeals’ ruling that the failure of petitioners to
register the Partition with Sale was fatal.
C. KINDS OF DELIVERY
SAN LORENZO DEVT CORP VS. CA; G.R NO. 124242;
JAN 21, 2005
FACTS:
 Spouses Lu sold 2 parcels of land in Sta Rosa Laguna
to respondent Babasanta to which the latter made
payments which totaled P200,000 evidenced by
memorandum receipts issued by Pacita Lu. Babasanta
demanded the execution of a final deed of sale so he
could effect full payment of the purchase price.
Despite his repeated demands for the execution of a
final deed of sale in his favor, respondents allegedly
refused. Respondents alleged that when he requested
for a discount of the purchase price and they refused,
he had already rescinded the contract to sell.
Babasanta thus filed a complaint for specific
performance.
 Subsequently, San Lorenzo Devt. Corporation alleged
that sometime in 1989 the subject lands was sold to it
in a Deed of Absolute Sale with Mortgage and it
claimed that it was a buyer in good faith and good
purchaser for value; thus they had a better right over
the property in litigation.
 The trial court ruled that since both Babasanta and
SLDC did not register the respective sales in their
favor, ownership of the property should pertain to the
buyer who first acquired possession of the property. It
equated the execution of a public instrument in favor
of SLDC as sufficient delivery of the property to the
latter. Upon appeal to CA, it ruled in favor of
Babasanta, stating the sale to the same as valid.
ISSUE:
 Who between SLDC and Babasanta has a better right
over the two parcels of subject land of successive
transactions executed by the Spouses Lu?
HELD:
 Petition GRANTED. Decision of CA REVERSED & SET
ASIDE. Ruled in favor of SLDC.
RATIO DECIDENDI:
 The agreement between Babasanta and the Spouses
Lu is a contract to sell and not a contract of sale. The
letter sent by Babasanta to Spouses Lu stated that
despite his repeated requests for the execution of the
final deed of sale in his favor so that he could effect
full payment of the price, Pacita Lu allegedly refused
to do so. In effect, Babasanta himself recognized that
ownership of the property would not be transferred to
him until such time as he shall have effected full
 payment of the price. Moreover, had the sellers
intended to transfer title, they could have easily
executed the document of sale in its required form
simultaneously with their acceptance of the partial
payment, but they did not.
 The perfected contract to sell imposed upon
Babasanta the obligation to pay the balance of the
purchase price. There being an obligation to pay the
price, Babasanta should have made the proper tender
of payment and consignation of the price in court as
required by law. Glaringly absent from the records is
any indication that Babasanta even attempted to
make the proper consignation of the amounts due,
thus, the obligation on the part of the sellers to
convey title never acquired obligatory force. There
was no double sale in this case because the contract in
favor of Babasanta was a mere contract to sell. There
was neither actual nor constructive delivery as his title
is based on a mere receipt. Thus, the right of SLDC
must be preferred.
 (NOTES: The distinction between a contract to sell and
a contract of sale is quite germane. In a contract of sale,
title passes to the vendee upon the delivery of the thing
sold; whereas in a contract to sell, by agreement the
ownership is reserved in the vendor and is not to pass
until the full payment of the price. In a contract of sale,
the vendor has lost and cannot recover ownership until
and unless the contract is resolved or rescinded;
whereas in a contract to sell, title is retained by the
vendor until the full payment of the price, such payment
being a positive suspensive condition and failure of
which is not a breach but an event that prevents the
obligation of the vendor to convey title from becoming
effective.)
C. TYPES OF DOCUMENTS OF TITLE
PNB VS. NOAH’S ARK SUGAR REFINERY; G.R NO.
107243; SEPT 1, 1993
FACTS:
 In accordance with Act No. 2137, the Warehouse
Receipts Law, Noah's Ark Sugar Refinery issued on
several dates warehouse receipts to Rosa Sy, RNS
Merchandising, and St. Therese Merchandising. The
receipts are substantially in the form, and contain the
terms, prescribed for negotiable warehouse receipts
by Section 2 of the law. Zoleta and Ramos, having
used the receipts (quedans) as security for loans
obtained by them from PNB in the amounts of P23.5M
and P15.6M, endorsed the quedans to the bank.
 Both failed to pay their loans upon maturity. PNB
wrote to Noah’s Ark demanding delivery of the sugar
covered by the said quedans. Noah’s Ark refused to
comply with the demand; thus, PNB filed with the RTC
a complaint for specific performance against herein
respondent which it denied. PNB’s MR was denied by
the RTC. Hence this petition.
ISSUE:
 W/N the non-payment of the purchase price for the
quedans by the original vendees rendered the
negotiation by vendees/first indorsers and the
subsequent negotiation of Ramos and Zoleta to PNB
invalid
 W/N as indorsee/pledgee of quedans was entitled to
delivery of sugar stocks from Noah’s Ark
HELD:
 Petition GRANTED. Decision of trial court REVERSED
and SET ASIDE. Decision of CA AFFIRMED.
RATIO DECIDENDI:
 Non-payment of the purchase price does not render
the subsequent negotiation invalid. The validity of the
negotiation in favor of PNB cannot be impaired even if
the negotiation between Noah and its first vendees
was in breach of faith on the part of the vendees or by
the fact that Noah was deprived of the possession of
the same by fraud, mistake or conversion if PNB paid
value in good faith without notice of such breach
of duty, fraud, mistake or conversion.
 PNB is entitled to the delivery of the sugar covered by
the quedans. PNB whose debtor was the owner of the
quedan shall be entitled to such aid from the court
of appropriate jurisdiction attaching such document or
in satisfying the claim by means as is allowed by law or
in equity in regard to property which cannot be readily
attached or levied upon by ordinary process. If
the quedans were negotiable in form and duly
indorsed to PNB, the delivery of the quedans to PNB
makes PNB the owner of the property covered by said
quedans and on deposit with Noah, the
warehouseman. PNB's right to enforce the obligation
of Noah as a warehouseman, to deliver the sugar
stock to PNB as holder of the quedans, does not
depend on the outcome of the third-party complaint
because the validity of the negotiation transferring
title to the goods to PNB as holder of the quedans is
not affected by an act of RNS Merchandising and St.
Therese Merchandising in breach of trust, fraud
or conversion against Noah's Ark. It is also held that
the quedans were negotiable documents and had
been duly negotiated to the PNB which acquired the
rights set out in Article 1513 of the Civil Code.
VII. BREACH OF CONTRACT ART. 1597
PCI LEASING AND FINANCE INC. VS. GIRAFFE-X
CREATIVE IMAGING, INC.; G.R NO. 142618; JULY 12,
2007
FACTS:
  PCI Leasing and Giraffe-X entered into a lease
agreement wherein the former leased several
machineries for rent as follows: P116, 878 per month
for 36 months and P181, 362 per month for 36 months
with a total of P10, 736, 647.56. Herein respondent
paid the amount of 3,120,000 as a guaranty deposit
but after a year, it defaulted in its obligation of
monthly rental payments.
 PCI Leasing ordered a formal pay-or-surrender
equipment kind of demand yet to Giraffe-X but the
demand went unheeded. Thus, PCI Leasing filed a
case against Giraffe-X with the RTC which issued a
writ of replevin. Giraffe-X filed a motion to dismiss
arguing that PCI was barred from pursuing any other
claim since seizure of two leased equipment because
the contract was in reality a lease with option to buy.
RTC granted the motion to dismiss ruling that it was
akin to a contract covered by Art. 1485 thus it cannot
pursue it claim.
ISSUE:
 W/N the contract between PCI Leasing and Giraffe-X
is covered by Art. 1484 and 1485
HELD:
 Petition DENIED. Decision of RTC AFFIRMED.
RATIO DECIDENDI:
 Yes, the transaction involved is a financial lease where
a financing company would initially purchase a mobile
equipment and turn around to lease it to a client who
gets an option to purchase the property at the expiry
of the lease period.
 ISSUE:
 Giraffe made a guaranty deposit. Their agreement
was that in case Giraffe fails to pay any rental due, PCI
will have cumulative remedies, such as to recover all
rentals for the remaining term of the lease and recover
all amounts advanced for Giraffe’s account.
 The PCI LEASING-GIRAFFE lease agreement is in
reality a lease with an option to purchase the
equipment. This has been made manifest by the
actions of the petitioner itself, foremost of which is
the declarations made in its demand letter to the
respondent. There could be no other explanation than
that if Giraffe-X paid the balance, then it could keep
the equipment for its own; if not, then it should return
them. This is clearly an option to purchase given to the
respondent. Being so, Article 1485 of the Civil Code
should apply.
2. EQUITABLE MORTGAGE
SPS. SOLITARIOS AND TORDA VS. SPS JAQUE; G.R
NO. 199852; NOV. 12, 2014
FACTS:
 Herein respondent spouses Jaque claimed that they
purchased a parcel of land in Samar from Spouses
Jacque in stages through a complaint for ownership
and recovery of possession with the RTC; and that
they initially bought one-half of the subject property
for P7,000 evidenced by a notarized deed of sale.
Spouses Solitarios supposedly mortgaged the
remaining half of the lot to the Jacques via a Real
Estate Mortgage to secure a loan for P3,000. After two
years, spouses Solitarios finally agreed to sell the
mortgaged half. But no deed of sale was executed for
the second half. Instead, a deed of sale was executed
for the entire lot to save on taxes by making it appear
that the consideration of the entire lot with regard to
the sale was only 12,000 when spouses Jaque actually
paid 19,000 in cash and condoned Spouses Solitarios’
P3,000 loan. The title was transferred and registered
to spouses Solitarios.
 Spouses Jaque allowed the latter to retain possession
of the land subject to the condition that spouses
Solitarios will regularly deliver a portion of the
produce of the property to which the latter stopped.
Spouses Solitarios claimed ownership of the subject
property despite the previous sale alleging that they
merely mortgaged the same to Spouses Jaque after
the latter helped them redeem the land from PNB.
 RTC held that the parties entered into was an
equitable mortgage under Article 1602 in relation to
Article 1604 of the New Civil Code, and not a
sale. Upon appeal to CA, it rejected the trial court’s
ruling that the contract between the parties
constituted an equitable mortgage.
 W/N what was agreed upon was a contract of sale or
equitable mortgage.
HELD:
 Petition DISMISSED. Judgment against plaintiffs.
RATIO DECIDENDI:
 A purported contract of sale where the vendor
remains in physical possession of the land, as lessee or
otherwise, is an indicium of an equitable mortgage.
 The transaction between the parties of the present
case is actually one of equitable mortgage pursuant to
the foregoing provisions of the Civil Code. It has never
denied by respondents that the petitioners, the
spouses Solitarios, have remained in possession of the
subject property and exercised acts of ownership over
the said lot even after the purported absolute sale of
Lot 4089. It is immediately apparent from the
testimonies of the parties and the evidence extant on
record, showing that the real intention of the parties
was for the transaction to secure the payment of a
debt. Nothing more.
 Jaques extended two loans to the spouses Solitarios,
who offered to the former the subject property, not to
transfer ownership thereto, but to merely secure the
payment of their debts.