LEONORA ESTOQUE, plaintiff-appellant, vs.ELENA M. PAJIMULA, assisted by her husband CIRIACO PAJIMULA, defendants-appellees. G.R. No.

L-24419 FACTS: Lot No. 802 of the Cadastral survey of Rosario, was originally owned by the late spouses, Rosendo Perez and Fortunata Bernal, who were survived by her children, namely, Crispina Perez, Lorenzo Perez and Ricardo Perez. Ricardo Perez is also now dead. On October 28, 1951, Crispina P. Vda. de Aquitania sold her right and participation in Lot No. 802 consisting of 1/3 portion with an area of 640 square meters to Leonora Estoque. On October 29, 1951, a deed of extrajudicial settlement was entered into wherein Lorenzo Perez, Emilia P. Posadas and her minor children assigned all their right, interest and participation in Lot No. 802 to Crispina Perez. On December 30, 1959, Crispina Perez and her children Rosita Aquitania Belmonte, Remedios Aquitania Misa, Manuel Aquitania, Sergio Aquitania and Aurora Aquitania sold to Elena Pajimula, the remaining 2/3 western portion of Lot No. 802 with an area of 958 square meters. Plaintiff based her complaint for legal redemption on a claim that she is a co-owner of Lot No. 802, for having purchased 1/3 portion thereof, containing an area of 640 square meters as evidenced by a deed of sale,which was executed on October 28, 1951 by Crispina Perez de Aquitania, one of the co-owners, in her favor. On the other hand, the defendant, who on December 30, 1959 acquired the other 2/3 portion of Lot No. 802 from Crispina Aquitania and her children, claimed that the plaintiff bought the 1/3 southeastern portion, which is definitely identified and segregated, hence there existed no co-ownership at the time and after said plaintiff bought the aforesaid portion, upon which right of legal redemption can be exercised or taken advantage of. Estoques stand is that the deed in her favor was inoperative to convey the southeastern third of Lot 802 of the Rosario Cadastre notwithstanding the description in the deed itself, for the reason that the vendor, being a mere co-owner, had no right to sell any definite portion of the land held in common but could only transmit her undivided share, since the specific portion corresponding to the selling co-owner is not known until partition takes place (Lopez vs. Ilustre, 5 Phil. 567; Ramirez vs. Bautista, 14 Phil. 528). From this premise, the appellant argues that the sale in her favor, although describing a definite area, should be construed as having conveyed only the undivided 1/3 interest in Lot 802 owned at the time by the vendor, Crispina Perez Vda. de Aquitania. Wherefore, when the next day said vendor acquired the 2/3 interest of her two other co-owners, Lot 802 became the common property of appellant and Crispina Perez. Therefore, appellant argues, when Crispina sold the rest of the property to appellee Pajimula spouses, the former was selling an undivided 2/3 that appellant, as co-owner, was entitled to redeem, pursuant to Article 1620 of the New Civil Code. ART. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them, are sold to a third person. If the price of the alienation is grossly excessive the redemptioner shall pay only a reasonable one. Should two or more co-owners desire to exercise the right of redemption, they may only do so in proportion to the share they may respectively have in the thing owned in common. July 15, 1968

The lower court, upon motion of defendant, dismissed the complaint, holding that the deeds of sale show that the lot acquired by plaintiff Estoque was different from that of the defendants Pajimula; hence they never became co-owners, and the alleged right of legal redemption was not proper. Estoque appealed.

ISSUE: WON right of redemption can be exercised by Estoque? HELD: NO. Appellant Estoque became the actual owner of the southeastern third of lot 802 on October 29, 1951. Wherefore, she never acquired an undivided interest in lot 802. And when eight years later Crispina Perez sold to the appellees Pajimula the western two-thirds of the same lot, appellant did not acquire a right to redeem the property thus sold, since their respective portions were distinct and separate. (1) The deed of sale to Estoque (Annex A of the complaint) clearly specifies the object sold as the southeastern third portion of Lot 802 of the Rosario Cadastre, with an area of 840 square meters, more or less. Granting that the seller, Crispina Perez Vda. de Aquitania could not have sold this particular portion of the lot owned in common by her and her two brothers, Lorenzo and Ricardo Perez, by no means does it follow that she intended to sell to appellant Estoque her 1/3 undivided interest in the lot forementioned. There is nothing in the deed of sale to justify such inference. That the seller could have validly sold her onethird undivided interest to appellant is no proof that she did choose to sell the same. . (2) While on the date of the sale to Estoque (Annex A) said contract may have been ineffective, for lack of power in the vendor to sell the specific portion described in the deed, the transaction was validated and became fully effective when the next day (October 29, 1951) the vendor, Crispina Perez, acquired the entire interest of her remaining co-owners (Annex B) and thereby became the sole owner of Lot No. 802 of the Rosario Cadastral survey (Llacer vs. Muoz, 12 Phil. 328). Article 1434 of the Civil Code of the Philippines clearly prescribes that . When a person who is not the owner of a thing sells or alienates and delivers it, and later the seller or grantor acquires title thereto, such title passes by operation of law to the buyer or grantee." CA decision affirmed JESUS AZCONA, plaintiff-appellee, vs.ALBERTA L. REYES and GERVASIO LARRACAS, special administrator of the estate of Florentina Cordero, defendants-appellants. G.R. No. L-39590 FACTS: On October 11, 1920, Florentina Cordero, now deceased, executed a power of attorney authorizing her only daughter, the herein defendant-appellant Alberta L. Reyes, to February 6, 1934

mortgage in her name and representation all her land situated in the municipality of Pola, Mindoro. On October 22, 1920, Alberta L. Reyes, personally and as attorney in fact of her mother Florentina Cordero, in consideration of the sum of P6,500 received from Enrique Azcona, now deceased, sold to the latter, with the right of repurchase within the period of four years, five parcels of land with certificates of title belonging to her and her mother Florentina Cordero. The vendors became lessees of the property sold, at a yearly rental of P780 (Exhibit 1). On October 23, 1920, said defendant-appellant Alberta L. Reyes, as attorney in fact of her mother Florentina Cordero, in consideration of the sum of P5,000 received from Enrique Azcona, sold to the latter, with the right of repurchase within the period of four years, one parcel of land with certificate of title No. 58 of the registry of deeds of Mindoro, belonging to the principal Florentina Cordero. Florentina Cordero became the lessee of said property at a yearly rental of P600 (Exhibit 2). On October 1, 1925, Alberta L. Reyes and her mother Florentina Cordero jointly executed a power of attorney authorizing Gregorio Venturanza to sell and encumber all their real and personal property including their cattle (Exhibit 12). Enrique Azcona died on May 12, 1925, and was succeeded in all his rights by his only son, the plaintiff-appellee Jesus Azcona, to whom the entire estate of his deceased father, together with the credits evidence by the documents Exhibits 1 and 2, was judicially adjudicated. Inasmuch as neither the defendant-appellant Alberta L. Reyes nor the deceased Florentina Cordero, during her lifetime, had exercised her right of redemption in accordance with the aforesaid deeds Exhibits 1 and 2 within the period of four years, and inasmuch as they had asked for an extension of time, on November 29, 1926, Gregorio Venturanza, as attorney in fact of said Alberta L. Reyes and Florentina Cordero, on one side, and Jesus Azcona, on the other, executed a deed whereby the deeds of sale with the right of repurchase, Exhibits 1 and 2, dated October 22 and 23, 1920, respectively, were cancelled and their respective amounts of P6,500 and P5,000, together with the sum of P1,000 representing the unpaid accrued interest thereon, or a total amount of P12,500, were converted into a mortgage credit. In order to secure the cancellation of the registration of the alleged sales with the right of repurchase, the parcels of land described in the respective deeds were resold to the vendors and a mortgage was constituted thereon to secure the payment of said mortgage credit of P12,500 within the period of two years, extensible to another two years, with interest at 12 per cent per annum. Under said contract the mortgagors Alberta L. Reyes and Florentina Cordero were permitted to liquidate said debt by installments in the sum of P2,500 with the interest due, to be paid on December first of every year, beginning December 1, 1927 (Exhibit A). The mortgagors Alberta L. Reyes and Florentina Cordero, through their said attorney in fact Gregorio Venturanza, paid by the way of amortization and interest. Since September 20, 1929, leaving a balance of P8,935.12, the mortgagors failed to pay amortization and interest so that on June 30, 1932, the unpaid balance thereof together with the unpaid accrued interest amounted to P11,958.05. The parties admit and the trial court so found that, although Exhibits 1 and 2 are in the form of deeds of sale with pacto de retro, in reality they represent mortgage loans. ISSUE:

WON deeds are deeds of pacto de retro sale? The Supreme Court found no error in the judgment appealed from, and thus affirmed it in toto, with the cost against Reyes and Larracas. 1.Deeds of sale are not true deeds of pacto de retro sale but o f m o r t g a g e ; R e s a l e m e r e f o r m a l i t y t o cancellation of registration and the notation of the mortgage deed The instruments are not true deeds of sale with pacto de retro but of mortgage, the resale of the parcels of land, made by Jesus Azcona in favor of Reyes and Cordero, is null and void on the ground that, as mere mortgagors, they never ceased to be the owners thereof and that Enrique Azcona, as a mere mortgagee, never acquired any title of ownership thereto. In order for a sale to be valid, it is necessary that the vendor be the owner of the thing sold. However, the sales with pacto de retro were fictitious for the reason that the contracts entered into by Reyes and the deceased Enrique Azcona were really mortgage in their nature. Therefore, the resale was a mere formality resorted to for the purpose of obtaining the lawful cancellation of the registration thereof in the registry of deeds and the notation of the mortgage deed. 2.Mortgage deed not void, does not lack c o n s i d e r a t i o n o r p r i n c i p a l o b l i g a t i o n w h i c h i t p u r p o r t s t o secure Reyes received the sum of P6,500 and another sum of P5,000 from the deceased Enrique Azcona, both sums representing the purchase price of certain parcels of land, which were sold with the right of repurchase. The sum of P12,500 which constitutes the cause or consideration of the deed of resale and mortgage Exhibit A is the total of the sums of P6,500 and P5,000 which Reyes, personally and as attorney in fact of Cordero, received from Enrique Azcona, together with the sum of P1,000 representing the unpaidcredits passed by inheritance to Jesus Azcona. It cannot be said that the mortgage, executed by Venturanza, as attorney in fact of Reyes and Cordero, in favor of Jesus Azcona, lacks consideration or principal obligation for the fulfilment of which said instrument was executed as security. 3.Contracts of mortgage loans executed in form (attachment of SPA), binds Cordero Upon examination of said documents, Reyes made it appear that she acted as Florentina Corderosattorney in fact under a power of attorney issued to her by attaching a copy of said power of attorney to thedeed in question. In the case of Orden de Dominicos vs. De Coster (50 Phil., 115), the Court held that suchform is valid and sufficient under the law. Considered as mere contracts of mortgage loans, the deeds dated22-23 October 1920 are binding upon Cordero, and compliance with the obligations contracted thereundermay be demanded in her intestate proceedings either as credit in favor of the intestate estate of EnriqueAzcona or as credit in favor of Jesus Azcona against Cordero under the mortgage deed.

ENGRACIO CORONEL, administrator of the estate of the late Isidra Coronel, ET AL., plaintiffs-appellees, vs. CENON ONA, ET AL., defendants-appellants. G.R. No. L-10280 FACTS: February 7, 1916

In the administration of the intestate estate of the deceased Isidra Coronel, the administrator thereof, Engracio Coronel, discovered certain arrangements between the surviving spouse, Cenon Ona, and other persons, which decreased and injured the property under administration, wherefore, by permission of the court, the said administrator on May 16, 1913, filed a suit, by agreement of the parties, there were included as plaintiffs the heirs of the said deceased. Plaintiffs allege in their complaint that the plaintiff administration is the owner of one-half pro indiviso of a rural estate, situate in the barrio of Lagalag of the town of Tiaong, Province of Tayabas, planted with 2,000, coco palms from 4 to 5 years old, the boundaries whereof are set forth in the complaints, said realty being conjugal property as it was acquired for a consideration by the deceased Isidra Coronel and her husband Cenon Ona during their marriage ; that upon the death of the wife in April, 1911, the surviving spouse Cenon Ona became the administrator of said undivided property, taking all its products and refusing to make partition of the land with the lawful heirs of his deceased wife. On November 5, 1912, Cenon Ona and the other defendants formed a conspiracy, with intent of gain for themselves, to the fraud and injury of the plaintiff administration, and drew up and signed an alleged instrument of sale, whereby Cenon Ona sold to the spouses Benigno Nadres and Victoria Villa the said land, which instrument they falsely dated as prior to the death of his wife Isidra Coronel and forged and imitated her signature or mark by writing her name and surname thereon with a cross between them; that on the same date, November 5, 1912, the same defendants, continuing their fraudulent proceedings, wherein they made to appear as vendors thereof Benigno Nadres and Victoria Villa and as vendees the spouses Crispin Castillo and Maria Recto, so that thereby it would be more difficult for the plaintiff administration to recover said estate, and from that date the defendant Cenon Ona surrendered possession and enjoyment of the said land to the spouses Crispin Castillo and Maria Recto, who have been up to the present time in possession thereof and have taken the products therefrom, having refused to give the plaintiff administration any portion of the latter; that by reasons of the malicious and fraudulent acts of these defendants the plaintiff administration has suffered damages. On May 29, 1913, the defendants Benigno Nadres and Victoria Villa, Crispin Castillo, and Maria Recto answered the foregoing complaint, denying all the allegations thereof generally and specifically and alleging in special defense: spouses Benigno Nadres and Victoria Castillo [Villa] had acquired the land at a genuine and absolute sale from the spouses Cenon Ona and Isidra Coronel, that the other instrument, Exhibit B, which was made a part of the same answer, shows that the defendant spouses Crispin Castillo and Maria Recto acquired the same land on November 5, 1912, at a genuine and absolute sale from their codefendants, Benigno Nadres and Victoria Villa. In another document of a later date the defendant spouses, Crispin Castillo and Maria Recto, denied the facts set forth in the complaint and in special defense alleged that they are the exclusive owners of the land described in the complaint, as they acquired it by purchase from the spouses Nadres and Villa by virtue of an instruments already in the court's possession; that they had never concerted nor conspired with their other codefendants for the purchase of the said land, nor had they intervened at all in the purchase thereof made by the spouses Nadres and Villa from Cenon Ona; that as purchasers in good faith they had caused the land in question to be cleared and cultivated at great expense to themselves; that the malicious complaint filed against then by Engracio Coronel had caused them injury to the extent of P500; and therefore they prayed that they be absolved from the complaint and that the plaintiffs be sentenced to pay them the sum of P500 as damages, in addition to the costs.

Counsel for Cenon Ona in answer denied generally and specifically all the paragraphs of the complaint and alleged solely in special defense that he had never, either before or at the time of the sale made by him and his deceased wife Isidra Coronel of the land which is the subject matter of the complaint, concerted or conspired with his codefendants to effect said sale, and therefore he asked to be absolved from the complaint filed by the plaintiffs, with the costs against them. After trial and examination of the evidence adduced by both parties and on 29 April 1914, the CFI Tayabas rendered the judgment denying the claim of spouses Crispin Castillo and Maria Recto, for recovery of damages they had suffered by reason of the filing of the complaint against them, finding that the instruments of conveyance of the land in litigation void and of no force or legal effect because the parties who sold the land by means of said instruments lacked any right to alienate it; denying the claim of Coronel, et. al. that the defendants pay the value of one-half of the products.

ISSSUE: WON the instrument of purchase and sale is false and fraudulent. HELD: YES

1 . F a c t s : I d e n t i t y o f p ro p e r t y n o t d i s p u t e d There is no question whatsoever as to the identity of the land claimed in the complaint, it being a ruralestate situated in the barrio of Lagalag of the municipality of Tiaong, Tayabas, with an area of ten hectaresand forty-two centiares and planted with 2,000 coco palms. 2.Property conjugal; Coronels heirs by operation of law so the heirs that by operations of law must succeed said deceased Isidra Coronel are her brothers and sisters and nephews and nieces, residing in the town of San Juan de Bocboc,Batangas. The land in litigation is not only conjugal property, with one-half thereof belonging to the deceased Isidra Coronel, but also from the moment of her death it passed by operation of law into the ownership of her intestate heirs, and for this reason her widower could not dispose of said half to the injury of the nearest relatives and heirs of his deceased wife. (Arts. 657, 659, 661, Civil Code.) 3.Facts: Stipulations in the sale instrument of purchase and

In the instrument of purchase and sale, written in the Tagalog dialect (Case 776) and translated in the present case, the spouses Cenon Ona and Isidra Coronel transferred by absolute sale on 8 November 1910, the land litigation to te spouses Benigno Nadres and Victoria Villa, under the following conditions: (1) Thespouses Cenon Ona and Isidra Coronel had planted coco palms on a certain tract of land belonging to BenignoNadres and his wife, which land Cenon Ona and Isidra Coronel had alienated without the consent of theowners thereof, the said Nadres and wife; (2) on their part the spouses Ona and Coronel possessed anothertract of land which they had purchased from Juan Cadiz, whereon they has already set out 1,400 young cocopalms and 800 more could be planted; (3) as Benigno Nadres and his wife were demanding return of the landpreviously sold by Ona and Coronel, the latter thought it fair to cede their own land to said Nadres and wife inexchange for what they had alienated, Nadres and his wife there in hand paying P2,500 as the increase in theprice; (4) this exchange was made on the

condition that Cenon Ona and his wife should for the period of fouryears; (5) the betel nut, paddy, buri, and other products shall pertain exclusively to the vendors, Cenon Onaand Isidra Coronel, who shall pay the land tax for the said four years of the life of the contract; and (6) thespouses Benigno Nadres and Victoria Villa were agreed that they would no participation in the crops from theland. This instrument is signed by the contracting parties and the witnesses, except Isidra Coronel, who placedher mark on the instrument her name and surname, which must have been affixed by another person, as shecould not write. 4 . D e d u c e d f a c t s o f t h e c a s e

From the abundant, but contradictory, evidence adduced at the trial, the following facts are deduced:(1) The consideration which gave rise to the execution by Cenon Ona and Isidra Coronel, with reference totheir having alienated a parcel of land belonging to Benigno Nadres and his wife, is not a valid one; (2) theconsideration for the transfer of the land in question to the Nadres couple, with payment by them of P2,500 tothe vendors, is false and simulated; (3) the instrument evidencing the sale of this land was executed after Isidra Coronels death and cannot therefore produce any effect against her heirs; and (4) the transfer by exchange and sale of the land to the vendee Benigno Nadres is not valid, as said transfer was recorded in the instrument for the sole and deliberate purpose of preventing the lawful heirs of Isidra Coronel from inheriting their portion thereof. 5 . C o n s id e r a t i o n f a l s e a n d s i m u l a t e d

Cenon Ona stated that he and his wife Isidra Coronel had received a tract of land from said Benigno Nadres, on which to set out coco-palms, with the condition that after the planting had been finished and 6years had elapsed, he and his wife should become the owners if one-half of the said tract, as had happened, and as he was then in need of money he had sold to a third person said portion of land that then belonged to him; but it is not true that he obligated himself not to sell that portion of land to anybody but its original owner, Nadres. This testimony of Ona, which was not rebutted or contradicted by the other defendants, constitutes conclusive proof of the invalidity of the reason given for the exchange of the land in question for that previously sold and for transferring it to the said Benigno Nadres and his wife; and it is furthermore to be noted that Ona himself stated under oath that in transferring this land to Nadres on 8 November 1910, he had no intention of transferring it absolutely but had made this transfer appear in an instrument so that Nadres might take charge of the land and not bother him, as he was then old, and also to prevent the heirs of his wife Coronel from participating in her inheritance. Hence it is inferred that the consideration which gave rise to the transfer of this land to Nadres and his wife is not valid, but false and simulated. Hence, said realty was not sold to Nadres but a pretense was made of transferring it in order to sell it as the agent of Ona, and therefore the land continued to belong to Ona and his wife, the deceased Coronel. It is furthermore to be noted that when said transfer was made to Nadres the heirs of the deceased Coronel had already filed a claim for the land and consequently any alienation thereof that may have been made after the date of said claim filed by the heirs of the deceased Coronel is fraudulent. (Oria vs. McMicking, 21 Phil., Rep., 243,249) 7 . I n s t r u m e n t s i m u l a t e d

The simulation of the instrument is corroborated by the fact that Cenon O n a d e l i v e r e d t o t h e administrator, Engracio Coronel, the sum of P900 so that the latter and his co plaintiffs should desist from filing a judicial, claim to the land in litigation, and, according to agreement, they executed the instrument setting forth that sum, both parties, signing it in the presence of two witnesses and ratifying it before a justice of

the peace. Coronel and Ona affirm the truth of the fact set forth in said instrument to demonstrate that thel a n d w a s n o t a b s o l u t e l y a l i e n a t e d b u t c o n t i n u e d t o b e a t t h e d i s p o s i t i o n o f t h e w i d o w e r . B u t t h e C F I disapproved said agreement and ordered restitution to the widower Ona of the money received by Coronel. 9.First sale simulated, Second sale void and ineffective for lack of right to dispose of land Having reached the conclusion that the instrument, where it appears that the spouses Benigno Nadresand Victoria Villa purchased the land in question, is false and void, because said sale was not effected. Therefore, the sale made by them to the spouses Crispin Castillo and Maria Recto on 5 November 1912, is also void and ineffective, for the parties who figure therein as vendors had no right to dispose of the land, nor could they transmit to the vendees any title of ownership, nor could the latter acquire ownership of the land sold. 10.Article 1254 of the Civil Code; Consent Article 1254 of the Civil Code states A contract exists from the moment one or more personsconsent to bind himself or themselves, with regard to another or others, to give something or to render someservice. In the present case, since Coronel was dead on the date when the contract was drawn up and could not have taken part in the execution thereof or given her consent to the pretended sale of the land to which itrefers and which belonged to the conjugal partnership of Ona and Coronel, said contract has never existed,and being void it could not serve as a legal means for transferring ownership to the alleged purchasers, Nadres and Villa; and as they could not acquire any right of ownership to the land sold by virtue of a contract that had not existed and was consequently null and void they had not transfer such a right to the spouses Crispin Castillo and Maria Recto. 11.Requisites of a valid contract; Article 1261 There is no contract, says article 1261 of the same Code, unless there exist the essential requisites of c o n s e n t o f t h e c o n t r a c t i n g p a r t i e s , a d e f i n i t e o b j e c t w h i c h m a y b e t h e s u b j e c t o f t h e c o n t r a c t , a n d t h e consideration for the obligation which may be established. In the present case, Isidra Coronel was not present to give her consent to the alleged contract of sale, because she was dead when said contract was simulated, nor is any consideration for the obligation stated therein, and consequently the contract set forth in saidinstrument is flagrantly null and void. Although it appears to have been dated 8 November 1910, while IsidraCoronel was still alive, it was prepared on 5 November 1912, for the widower Cenon Ona so testified.

G.R. No. 59550 January 11, 1995 EDILBERTO NOEL (now PINITO W. MERCADO) as ADMINISTRATOR OF THE INTESTATE ESTATE OF GREGORIO NANAMAN and HILARIA TABUCLIN, petitioner, vs. COURT OF APPEALS and JOSE C. DELESTE, respondents.

G.R. No. 60636 January 11, 1995 PINITO W. MERCADO, as SPECIAL ADMINISTRATOR OF THE INTESTATE ESTATE OF GREGORIO NANAMAN and HILARIA TABUCLIN, petitioner, vs. HONORABLE COURT OF APPEALS and JOSE C. DELESTE, respondents. FACTS: Gregorio Nanaman and Hilaria Tabuclin (Nanaman spouses) were a childless, legallymarried couple. Gregorio, however, had a child named Virgilio Nanaman by another woman. Since he was two years old, Virgilio was reared by Gregorio and Hilaria. He was sent to school by the couple until he reached third year of the law course. During their marriage, Gregorio and Hilaria acquired certain property including a 34.7-hectare land in Tambo, Iligan City on which they planted sugarcane, corn and bananas. They also lived there with Virgilio and fifteen tenants. On October 2, 1945, Gregorio died. Hilaria then administered the property with the help of Virgilio enjoyed the procedure of the land to the exclusion of Juan Nanaman, the brother of Gregorio, and Esperanza and Caridad Nanaman, Gregorio's daughters by still another woman. In 1953, Virgilio declared the property in his name for taxation purposes under Tax Declaration No. 5534. On November 1, 1952, Hilaria and Virgilio, mortgaged the 34.7-hectare land in favor of private respondent, in consideration of the amount of P4,800.00. On February 16, 1954, Hilaria and Virgilio executed a deed of sale over the same tract of land also in favor of Jose Deleste in consideration of the sum of P16,000.00. Witnesses to the sale were the wife of Virgilio, Rosita S. Nanaman, Rufo C. Salas, the driver of private respondent, and Remedios Pilotan. The document was notarized on February 17, 1954 and was registered with the Register of Deeds of Iligan city on March 2, 1954. The tax declaration in the name of Virgilio was cancelled and a new tax declaration was issued in the name of private respondent. Having discovered that the property was in arrears in the payment of taxes from 1952, private respondent paid the taxes for 1952, 1953 and 1954. From then on, private respondent has paid the taxes on the property. On May 15, 1954, Hilaria died. On October 27, 1954, Esperanza and Caridad Nanaman filed intestate estate proceedings concerning the estate of their father, Gregorio. Included in the list of property of the estate was the 34.7-hectare land. Inasmuch as only Esperanza, Caridad and Virgilio Nanaman were named as heirs of Gregorio in the petition, Juan Nanaman, Gregorio's brother, opposed it. On November 26, 1954, the petition was amended to include the estate of Hilaria with Alejo Tabuclin, Hilaria's brother, and Julio Tabuclin, a son of Hilaria's deceased brother, Jose, as additional petitioners. Having been appointed special administrator of the estate of the Nanaman couple, Juan Nanaman included the 34.7-hectare land in the list of the assets of the estate. On July 18, 1957, private respondent and the heirs of the Nanaman spouses executed an amicable settlement of the Nanaman estate. In the document, private respondent agreed "to relinquish his rights to one-half (1/2) of the entire parcel of land in Tambo, Iligan City, indicated in item 1 under the Estate, sold to him by Hilaria Tabuclin, in favor of all the heirs of the abovementioned intestate [estate] for the reason that not all of the heirs of Gregorio Nanaman have signed and agreed" . The court approved the amicable settlement but when it was questioned by some heirs, the court set aside its approval and declared it null and void.

The court thereafter ordered Noel, as regular administrator, to file an action to recover the 34.7-hectare land from private respondent. Consequently, on April 30, 1963, Noel filed an action against private respondent for the version of title over the 34.7-hectare land to the Nanaman estate and to order private respondent to pay the rentals and attorney's fees to the estate. On December 14, 1973, the trial court rendered a decision, holding that the action for annulment of the deed of sale had prescribed in 1958 inasmuch as the sale was registered in 1954 and that Gregorio's heirs had slept on their rights by allowing Hilaria to exercise rights of ownership over Gregorio's share of the conjugal property after his death in 1945. Noel appealed to the Court of Appeals. In its Decision of February 18, 1980, the appellate court ruled that the transaction between Hilaria and Virgilio on one hand and private respondent on the other, was indeed a sale. It found that no fraud, mistake or misrepresentation attended in the execution of the deed of sale and that no proof was shown that the contract was merely a mortgage. The appellate court, however, agreed with Noel that Hilaria could not validly sell the 37.7-hectare land because it was conjugal property, and Hilaria could sell only her one-half share thereof. Since no fraud, mistake or misrepresentation attended the execution of the deed of sale, the prescriptive period of ten years had not yet elapsed when the action to recover the property was filed in 1963. ISSUE: Whether Hilaria and Virgilio could dispose of the entire property sold to private respondent and assuming that they did not have full ownership thereof, whether the right of action to recover the share of the collateral heirs of Gregorio had prescribed or been lost through laches. HELD: Thus, succession to the estate of Gregorio was governed primarily by the provisions of the Spanish Civil Code of 1889. Under Article 953 thereof, a spouse like Hilaria, who is survived by brothers or sisters or children of brothers or sisters of the decedent, as is obtaining in this case, was entitled to receive in usufruct the part of the inheritance pertaining to said heirs. Hilaria, however, had full ownership, not merely usufruct, over the undivided half of the estate (Spanish Civil Code of 1889, Art. 493). It is only this undivided half-interest that she could validly alienate. On the other hand, Virgilio was not an heir of Gregorio under the Spanish Civil Code of 1889. Although he was treated as a child by the Nanaman spouses, illegitimate children who were not natural were disqualified to inherit under the said Code .Therefore, Virgilio had no right at all to transfer ownership over which he did not own. In a contract of sale, it is essential that the seller is the owner of the property he is selling. The principal obligation of a seller is "to transfer the ownership of" the property sold (Civil Code of the Philippines, Art. 1458). This law stems from the principle that nobody can dispose of that which does not belong to him (Azcona v. Reyes, 59 Phil. 446 [1934]; Coronel v. Ona, 33 Phil. 456 [1916). NEMO DAT QUAD NON HABET .

While it cannot be said that fraud attended the sale to private respondent, clearly there was a mistake on the part of Hilaria and Virgilio in selling an undivided interest in the property which belonged to the collateral heirs of Gregorio. On the issue of prescription, we hold that the action for recovery of title or possession over the 34.7-hectare land had not yet prescribed when the complaint was filed on April 30, 1963. In its Amended Decision, the Court of Appeals reckoned the prescriptive period from the death of Gregorio on October 2, 1945. Under the law in force in 1945, the surviving spouse was given the management of the conjugal property until the affairs of the conjugal partnership were terminated. The surviving spouse became the owner of one-half interest of the conjugal estate in his own right. he also became a trustee with respect to the other half for the benefit of whoever may be legally entitled to inherit the said portion. "He could therefore no more acquire a title by prescription against those for whom he was administering the conjugal estate than could a guardian his ward or a judicial administrator against the heirs of an estate. . . . The surviving husband as the administrator and liquidator of the conjugal estate occupies the position of a trustee of the highest order and is not permitted by the law to hold that estate or any portion thereof adversely to those for whose benefit the law imposes upon him duty of administration and liquidation" (Pamittan v. Lasam, 60 Phil. 908 [1934]). The action to recover the undivided half-interest of the collateral heirs of Gregorio prescribes in ten years. The cause of action is based on Article 1456 of the Civil Code of the Philippines, which made private respondent a trustee of an implied trust in favor of the said heirs. Under Article 1144 of the Civil Code of the Philippines, actions based upon an obligation created by law, can be brought within ten years from the time the right of action accrues (Rosario v. Auditor General, 103 Phil. 1132 [1958]). The ten-year prescriptive period within which the collateral heirs of Gregorio could file an action to recover their share in the property sold to private respondent ( prescripcion extintiva) accrued only on march 2, 1954, when the deed of sale was registered with the Register of Deeds (Cf. Arradaza v. Court of Appeals, 170 SCRA 12 [1987]). From march 2, 1954 to April 30, 1963, when the complaint for the recovery of the property was filed, less than ten years had elapsed. Therefore, the action had not been barred by prescription. The ten-year prescriptive period before title to real estate shall vest by adverse possession ( prescripcion adquisitiva) is also reckoned in the case of private respondent from March 2, 1954 (Corporacion de PP. Agustinos Recoletos v. Crisostomo, 32 Phil. 427 [1915]). WHEREFORE, the Amended Decision dated May 14, 1981 of the Court of Appeals is REVERSED and SET ASIDE and the Decision dated February 18, 1980 is REINSTATED and AFFIRMED in toto.

CONCHITA NOOL and GAUDENCIO ALMOJERA, petitioner, vs.COURT OF APPEALS, ANACLETO NOOL and EMILIA NEBRE, respondents. G.R. No. 116635 July 24, 1997 FACTS: Two (2) parcels of land are in dispute and litigated upon here. The first has an area of 1 hectare. It was formerly owned by Victorino Nool and covered by Transfer Certificate of Title No. T-74950. With an area of 3.0880 hectares, the other parcel was previously owned by Francisco Nool under Transfer Certificate of Title No. T-100945. Both parcel's are situated in San Manuel, Isabela. The plaintiff spouses, Conchita Nool and Gaudencio Almojera, now the appellants, seek recovery of the aforementioned parcels of land from the defendants, Anacleto Nool, a younger brother of Conchita, and Emilia Nebre, now the appellees. In their complaint, plaintiff-appellants alleged that they are the owners of subject parcels of land, and they bought the same from Conchita's other brothers, Victorino Nool and Francisco Nool; that as plaintiffs were in dire need of money, they obtained a loan from the Ilagan Branch of the Development Bank of the Philippines, in Ilagan, Isabela, secured by a real estate mortgage on said parcels of land, which were still registered in the names of Victorino Nool and Francisco Nool, at the time, and for the failure of plaintiffs to pay the said loan, including interest and surcharges, totaling P56,000.00, the mortgage was foreclosed; that within the period of redemption, plaintiffs contacted defendant Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of the two (2) parcels of land in question were transferred to Anacleto Nool; that as part of their arrangement or understanding, Anacleto Nool agreed to buy from plaintiff Conchita Nool the two (2) parcels of land under controversy, for a total price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the balance of P14,000.00, plaintiffs were to regain possession of the two (2) hectares of land, which amounts defendants failed to pay, and the same day the said arrangement 6 was made; another covenant 7 was entered into by the parties, whereby defendants agreed to return to plaintiffs the lands in question, at anytime the latter have the necessary amount; that plaintiffs asked the defendants to return the same but despite the intervention of the Barangay Captain of their place, defendants refused to return the said parcels of land to plaintiffs; thereby impelling them (plaintiffs) to come to court for relief. There is no quibble over the fact that the two (2) parcels of land in dispute were mortgaged to the Development Bank of the Philippines, to secure a loan obtained by plaintiffs from DBP (Ilagan Branch), Ilagan, Isabela. For the non-payment of said loan, the mortgage was foreclosed and in the process, ownership of the mortgaged lands was consolidated in DBP (Exhibits 3 and 4 for defendants). After DBP became the absolute owner of the two parcels of land, defendants negotiated with DBP and succeeded in buying the same. By virtue of such sale by DBP in favor of defendants, the titles of DBP were cancelled and the corresponding Transfer Certificates of Title (Annexes "C" and "D" to the Complaint) issued to the defendants. There was a 1 yr right to redemption but was never exercised, hence DBP was the absolute owner. About two years thereafter, on April 1, 1985, DBP

entered into a Deed of Conditional Sale 11 involving the same parcels of land with Private Respondent Anacleto Nool as vendee. The trial court ruled in favor of the defendants, declaring the private writing to be an option to sell, not binding and considered validly withdrawn by the defendants for want of consideration; CA affirmed RTC ISSUE: WON There is valid sale HELd: The Supreme Court denied the petition, and affirmed the assailed decision of the Court of Appeals. 1.Contract of repurchase arising out of a contract of sale w h e r e t h e s e l l e r d o e s n o t h a v e t i t l e n o t valid A contract of repurchase arising out of a contract of sale where the seller did not have any title to the property sold is not valid. Since nothing was sold, then there is also nothing to repurchase. 2.Article 1370 NCC applicable only to valid and enforcement contracts Article 1370 of the Civil Code, which provides that if the terms of a contract are clear and leave no doubt upon the intention of the contracting parties, the literal meaning of its stipulations shall control, isapplicable only to valid and enforceable contracts. 3.A void contract cannot give rise to a valid one A void contract cannot give rise to a valid one. Article 1422 of the Civil Code provides that acontract which is the direct result of a previous illegal contract, is also void and inexistent. In the presentcase. the alleged contract of repurchase being dependent on the validity of the contract of sale, it is itself void.Thus, the principal contract of sale and the auxiliary contract of repurchase are both void. 4.Clarification of sale of property, when seller is no l o n g e r t h e o w n e r , n u l l a n d v o i d ; S a l e possible even if owner is not owner at time of sale, provided that he acquires title to the property at timeof delivery In the case of Dignos v. CA, the Court did not cite its basis for ruling that a sale is null and voidwhere the sellers were no longer the owners of the property. Such a situation (where the sellers were nolonger owners) does not appear to be one of the void contracts enumerated in Article 1409 of the Civil Code.Moreover, the Civil Code itself recognizes a sale where the goods are to be acquired by the seller after theperfection of the contract of sale, clearly implying that a sale is possible even if the seller was not the ownerat the time of sale, provided he acquires title to the property later on. 5.Void contracts (Article 1409 [5]); those which contemplates an impossible service Article 1459 of the Civil Code provides that the vendor must have a right to transfer the ownershipthereof [object of the sale] at the time it is delivered. Here, delivery of ownership is no longer possible. Thesellers can no longer deliver the object of the sale to the buyers, as the buyers themselves have alreadyacquired title and delivery thereof from the rightful owner, the DBP. Thus, such contract may be deemed to beinoperative and may thus fall, by analogy, under item 5 of Article 1409 of the Civil Code: Those whichcontemplate an impossible service.

6.Nono dat quod non habet, No one can give what he d o e s n o t h a v e ; C o n t r a c t o f r e p u r c h a s e inoperative thus void Article 1505 of the Civil Code provides that where goods are sold by a person who is not the ownerthereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no bettertitle to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denyingthe sellers authority to sell. Jurisprudence, on the other hand, teaches us that a person can sell only what heowns or is authorized to sell; the buyer can as a consequence acquire no more than what the seller can legallytransfer. No one can give what he does not have nono dat quod non habet. In the present case, there is noallegation at all that petitioners were authorized by DBP to sell the property to the private respondents.Further, the contract of repurchase that the parties entered into presupposes that petitioners could repurchasethe property that they sold to private respondents. As petitioners sold nothing, it follows that they can alsorepurchase nothing. In this light, the contract of repurchase is also inoperative and by the same analogy,void. 7.Right to repurchase presupposes a valid contract of sale One repurchases only what one has previously sold. In other words, the r i g h t t o r e p u r c h a s e presupposes a valid contract of sale between the same parties. Undisputedly, private respondents acquired titleto the property from DBP, and not from petitioners. 8.Arguendo, Scenario where the Contract of repurchase d i s t i n c t f r o m t h a t o f s a l e ; P e t i t i o n s s t i l l do not acquire a right to repurchase the property; Unilateral promise to pay only binding if supportedby consideration distinct from price Assuming arguendo that the contract of repurchase is separate and distinct from the contract of saleand is not affected by the nullity of the latter, still petitioners do not thereby acquire a right to repurchase theproperty. In that scenario, the contract of repurchase ceases to be a right to repurchase ancillary andincidental to the contract of sale; rather, it becomes an accepted unilateral promise to sell. Article 1479 of theCivil Code, however, provides that an accepted unilateral promise to buy or sell a determinate thing for aprice certain is binding upon the promissor if the promise is supported by a consideration distinct from theprice. In the present case, the alleged written contract of repurchase is bereft of any consideration distinctfrom the price. Accordingly, as an independent contract, it cannot bind private respondents. 9.Conventional redemption; Compliance with Article 1616 and other agreed stipulations Article 1601 of the Civil Code provides that conventional redemption shall take place when thevendor reserves the right to repurchase the thing sold, with the obligation to comply with the provisions ofArticle 1616 and other stipulations which may have been agreed upon. 10.Right of repurchase a right granted by vendor in t h e s a m e i n s t r u m e n t o f s a l e , n o t i n a subsequent instrument In the Court ruled that the right of repurchase is not a rightgranted the vendor by the vendee is a subsequent instrument, but is a right reserved by the vendor in the sameinstrument of sale as one of the stipulations of the contract. Once the instrument of absolute sale is executed,the vendor can no longer reserve the right to repurchase, and any right thereafter granted the vendor by thevendee in a separate instrument cannot be a right of repurchase but some other right (like the option to buy). 11.Sale, without agreement to repurchase, absolute In

Ramos, et al. vs. Icasiano, et al. (1927) the Court ruled that an agreement to repurchase becomesa promise to sell when made after the sale, because when the sale is made without such an agreement, thepurchaser acquires the thing sold absolutely. and if he afterwards grants the vendor the right to repurchase, itis a new contract entered into by the purchaser, as absolute owner already of the object. In that case thevendor has not reserved to himself the right to repurchase. 12.Option to repurchase a promise to sell, governed by Article 1479 The Option to Repurchase executed by private respondent in the present case, was merely a promiseto sell, which must be governed by Article 1479 of the Civil Code which provides that a promise to buy andsell a determinate thing for a price certain is reciprocally demandable. An accepted unilateral promise to buyor to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by aconsideration distinct from the price.

EDCA PUBLISHING & DISTRIBUTING CORP., Petitioner, vs. THE SPOUSES LEONOR and GERARDO SANTOS, doing business under the name and style of "SANTOS BOOKSTORE," and THE COURT OF APPEALS, Respondents. G.R. No. 80298 April 26, 1990 FACTS: On October 5, 1981, Professor Jose Cruz placed an order by telephone with the petitioner company for 406 books, payable on delivery. 4 EDCA prepared the corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the purchase price of P8,995.65. 5 On October 7, 1981, Cruz sold 120 of the books to private respondent Leonor Santos who, after verifying the seller's ownership from the invoice he showed her, paid him P1,700.00. Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before clearing of his first check, made inquiries with the De la Salle College where he had claimed to be a dean and was informed that there was no such person in its employ. Further verification revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against which he had drawn the payment check. 7 EDCA then went to the police, which set a trap and arrested Cruz on October 7, 1981. Investigation disclosed his real name as Tomas de la Pea and his sale of 120 of the books he had ordered from EDCA to the private respondents.

On the night of the same date, EDCA sought the assistance of the police in Precinct 5 at the UN Avenue, which forced their way into the store of the private respondents and threatened Leonor Santos with prosecution for buying stolen property. They seized the 120 books without warrant, loading them in a van belonging to EDCA, and thereafter turned them over to the petitioner. The Court expresses its disapproval of the arbitrary action of the petitioner in taking the law into its own hands and forcibly recovering the disputed books from the private respondents. ISSUE: WON there is a a perfected sale (consideration) HELD: The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration. According to the Civil Code: Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Art. 1477. The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. Art. 1478. The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price. It is clear from the above provisions, particularly the last one quoted, that ownership in the thing sold shall not pass to the buyer until full payment of the purchase only if there is a stipulation to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing sold even if the purchase price has not yet been paid. Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing checks. But absent the stipulation above noted, delivery of the thing sold will effectively transfer ownership to the buyer who can in turn transfer it to another. Actual delivery of the books having been made, Cruz acquired ownership over the books which he could then validly transfer to the private respondents. The fact that he had not yet paid for them to EDCA was a matter between him and EDCA and did not impair the title acquired by the private respondents to the books. It bears repeating that in the case before us, Leonor Santos took care to ascertain first that the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her that the books had been paid for on delivery. By contrast, EDCA was less than cautious - in fact, too trusting in dealing with the impostor. Although it had never transacted with him before, it readily delivered the books he had ordered (by telephone) and as readily accepted his personal check in payment. It did not verify his identity although it was easy enough to do this. It did not wait to clear the check of this

unknown drawer. Worse, it indicated in the sales invoice issued to him, by the printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership in the buyer. Surely, the private respondent did not have to go beyond that invoice to satisfy herself that the books being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz was presumed under Article 559 by his mere possession of the books, these being movable property, Leonor Santos nevertheless demanded more proof before deciding to buy them. It would certainly be unfair now to make the private respondents bear the prejudice sustained by EDCA as a result of its own negligence. We cannot see the justice in transferring EDCA's loss to the Santoses who had acted in good faith, and with proper care, when they bought the books from . WHEREFORE, the challenged decision is AFFIRMED and the petition is DENIED, with costs against the petitioner.

JOSE B. AZNAR, plaintiff-appellant, vs.RAFAEL YAPDIANGCO, defendantappellee; TEODORO SANTOS, intervenor-appellee. G.R. No. L-18536 March 31, 1965

FACTS: That sometime in May, 1959, Teodoro Santos advertised in two metropolitan papers the sale of his FORD FAIRLANE 500. In the afternoon of May 28, 1959, a certain L. De Dios, claiming to be a nephew of Vicente Marella, went to the Santos residence to answer the ad. However, Teodoro Santos was out during this call and only the latter's son, Irineo Santos, received and talked with De Dios. The latter told the young Santos that he had come in behalf of his uncle, Vicente Marella, who was interested to buy the advertised car.

Teodoro Santos instructed his son to see the said Vicente Marella the following day at his given address in Sampaloc Manila. At this meeting, Marella agreed to buy the car for P14,700.00 on the understanding that the price would be paid only after the car had been registered in his name. Irineo Santos then fetched his father who, together with L. De Dios, went to the office of a certain Atty. Jose Padolina where the deed of the sale for the car was executed in Marella's favor. The parties to the contract thereafter proceeded to the Motor Vehicles Office in Quezon City where the registration of the car in Marella's name was effected. Up to this stage of the transaction, the purchased price had not been paid. Irineo Santos and L. De Dios then proceeded to 1642 Crisostomo Street, Sampaloc, Manila where the former demanded the payment from Vicente Marella. Marella said that the amount he had on hand then was short by some P2,000.00 and begged off to be allowed to secure the shortage from a sister supposedly living somewhere on Azcarraga Street, also in Manila. Thereafter, he ordered L. De Dios to go to the said sister and suggested that Irineo Santos go with him. At the same time, he requested the registration papers and the deed of sale from Irineo Santos on the pretext that he would like to show them to his lawyer. Trusting the good faith of Marella, Irineo handed over the same to the latter and thereupon, in the company of L. De Dios and another unidentified person, proceeded to the alleged house of Marella's sister. Once inside, L. De Dios asked Irineo Santos to wait at the sala while he went inside a room. That was the last that Irineo saw of him. For, after a considerable length of time waiting in vain for De Dios to return, Irineo went down to discover that neither the car nor their unidentified companion was there anymore.. Finally, he reported the matter to his father who promptly advised the police authorities. That very same day, Vicente Marella was able to sell the car in question to the plaintiffappellant herein, Jose B. Aznar, for P15,000.00. While the car in question was thus in the possession of Jose B. Aznar and while he was attending to its registration in his name, agents of the Philippine Constabulary seized and confiscated the same in consequence of the report to them by Teodoro Santos that the said car was unlawfully taken from him. RTC ruled in favour of Teodoro Santos pursuant of Art. 559 ART. 559. The possession of movable property acquired in good faith is equivalent to title. Nevertheless, one who lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. Aznar appealed ISSUE: Between Teodoro Santos and the plaintiff-appellant, Jose B. Aznar, who has a better right to the possession of the disputed automobile? HELD: Teodoro Santos.

However, the appellant contends that upon the facts of this case, the applicable provision of the Civil Code is Article 1506 and not Article 559 as was held by the decision under review. Article 1506 provides: ART. 1506. Where the seller of goods has a voidable title thereto, but his, title has not been voided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith, for value, and without notice of the seller's defect of title. The contention is clearly unmeritorious. Under the aforequoted provision, it is essential that the seller should have a voidable title at least. It is very clearly inapplicable where, as in this case, the seller had no title at all. Vicente Marella did not have any title to the property under litigation because the same was never delivered to him. He sought ownership or acquisition of it by virtue of the contract. Vicente Marella could have acquired ownership or title to the subject matter thereof only by the delivery or tradition of the car to him. In the case on hand, the car in question was never delivered to the vendee by the vendor as to complete or consummate the transfer of ownership by virtue of the contract. It should be recalled that while there was indeed a contract of sale between Vicente Marella and Teodoro Santos, the former, as vendee, took possession of the subject matter thereof by stealing the same while it was in the custody of the latter's son. There is no adequate evidence on record as to whether Irineo Santos voluntarily delivered the key to the car to the unidentified person who went with him and L. De Dios to the place on Azcarraga where a sister of Marella allegedly lived. But even if Irineo Santos did, it was not the delivery contemplated by Article 712 of the Civil Code. For then, it would be indisputable that he turned it over to the unidentified companion only so that he may drive Irineo Santos and De Dios to the said place on Azcarraga and not to vest the title to the said vehicle to him as agent of Vicente Marella. Article 712 above contemplates that the act be coupled with the intent of delivering the thing. (10 Manresa 132) The lower court was correct in applying Article 559 of the Civil Code to the case at bar, for under it, the rule is to the effect that if the owner has lost a thing, or if he has been unlawfully deprived of it, he has a right to recover it, not only from the finder, thief or robber, but also from third persons who may have acquired it in good faith from such finder, thief or robber. The said article establishes two exceptions to the general rule of irrevindicability, to wit, when the owner (1) has lost the thing, or (2) has been unlawfully deprived thereof. In these cases, the possessor cannot retain the thing as against the owner, who may recover it without paying any indemnity, except when the possessor acquired it in a public sale. (Del Rosario v. Lucena, 8 Phil. 535; Varela v. Finnick, 9 Phil. 482; Varela v. Matute, 9 Phil. 479; Arenas v. Raymundo, 19 Phil. 46. Tolentino, id., Vol. II, p. 261.)

LEVY HERMANOS, INC., plaintiff-appellant, vs.LAZARO BLAS GERVACIO, defendantappellee. G.R. No. L-46306 October 27, 1939

FACTS: On March 10, 1937, plaintiff Levy Hermanos, Inc., sold to defendant Lazaro Blas Gervacio, a Packard car. Defendant, after making the initial payment, executed a promissory note for the balance of P2,400, payable on or before June 15, 1937, with interest at 12 per cent per annum, to secure the payment of the note, he mortgaged the car to the plaintiff. Defendant failed to pay the note it its maturity. Wherefore, plaintiff foreclosed the mortgage and the car was sold at public auction, at which plaintiff was the highest bidder for P1,800. The present action is for the collection of the balance of P1,600 and interest. The lower court applied, the provisions of Act No. 4122, inserted as articles 1454-A of the Civil Code, and rendered judgment in favor of the defendant. Plaintiff appealed. Article 1454-A of the Civil Code reads as follows: In a contract for the sale of personal property payable in installments shall confer upon the vendor the right to cancel the sale or foreclose the mortgage if one has been given on the property, without reimbursement to the purchaser of the installments already paid, if there be an agreement to this effect. However, if the vendor has chosen to foreclose the mortgage he shall have no further action against the purchaser for the recovery of any unpaid balance owing by the same and any agreement to the contrary shall be null and void. ISSUE: WON The contract of sale is payable in instalments, and will be governed by 1454-A of the civil code. HELD: The contract, in the instant case, while a sale of personal property, is not, however, one on installments, but on straight term, in which the balance, after payment of the initial sum, should be paid in its totality at the time specified in the promissory note. The transaction is not is not, therefore, the one contemplated in Act No. 4122 and accordingly the mortgagee is not bound by the prohibition therein contained as to the right to the recovery of the unpaid balance. Undoubtedly, the law is aimed at those sales where the price is payable in several installments, for, generally, it is in these cases that partial payments consist in relatively small amounts, constituting thus a great temptation for improvident purchasers to buy beyond their means. There is no such temptation where the price is to be paid in cash, or, as in the instant case, partly in cash and partly in one term, for, in the latter case, the partial payments are not so small as to place purchasers off their guard and delude them to a miscalculation of their ability to pay. The suggestion that the cash payment made in this case should be considered as an installment in order to bring the contract sued upon under the operation of the law, is completely untenable. A cash payment cannot be considered as a payment by instalment, and even if it can be so considered, still the law does not apply, for it requires non-payment of two or more instalments in order that its provisions may be invoked. Here, only one instalment was unpaid. Judgment is reversed, and the defendant-appellee is hereby sentenced to pay plaintiff-appellant the sum of P1,600 with interest at the rate of 12 per

cent per annum from June 15, 1937, and the sum of P52.08 with interest at the rate of 6 per cent from the date of the filing of the complaint, with costs in both instances against the appellee. Delta Motors Sales vs. Niu Kim Duan [G.R. No. 61043. September 2, 1992.] Facts: On 5 July 1975, Niu Kim Duan and Chan Fue Eng (defendants) purchased from Delta Motor Sales Corporation 3 units of DAIKIN air-conditioner all valued at P19,350.00. The deed of sale stipulates that the defendants shall pay a down payment of P774.00 and the balance of P18,576.00 shall be paid by them in 24 installments; that the title to the properties purchased shall remain with Delta Motors until the purchase price thereof is fully paid; that if any two installments are not paid by the defendants on their due dates, the whole of the principal sum remaining unpaid shall become due, with interest at the rate of 14% per annum: and in case of a suit, the defendants shall pay an amount equivalent to 25% of the remaining unpaid obligation as damages, penalty and attorneys fees; that to secure the payment of the balance of P18,576.00 the defendants jointly and severally executed in favor of the Delta Motors a promissory note. The 3 air-conditioners were delivered to and received by the defendants. After paying the amount of P6,966.00, the defendants failed to pay at least 2 monthly installments; that as of 6 January 1977, the remaining unpaid obligation of the defendants amounted to P12,920.08. Statements of accounts were sent to the defendants and the Delta Motors collectors personally went to the former to effect collections but they failed to do so. Because of the unjustified refusal of the defendants to pay their outstanding account and their wrongful detention of the properties in question, Delta Motors tried to recover the said properties extra-judicially but it failed to do so. The matter was later referred by Delta Motors to its legal counsel for legal action. In view of the failure of the defendants to pay their obligations, the amount ofP6,966.00 which had been paid by way of installments were treated as rentals for the units in question for 2years pursuant to the provisions of paragraph 5 of the Deed of Conditional Sale. The trial court promulgated its decision on 11 October 1977 ordering the defendants to pay Delta Motors the amount of P6,188.29 with a14% per annum interest which was due on the 3 Daikin air-conditioners the defendants purchased fromDelta Motors under a Deed of Conditional Sale, after the same was declared rescinded by the trial court. The ywere likewise ordered to pay Delta Motors P1,000.00 for and as attorneys fees.Niu Kim Duan and Chan Fue Eng appealed.

1.Treatment of installment payments as rentals not unconscionable (even if it approximates 1/3 of cost of the 3 airconditioners)
Defendants cannot complain that their down payment of P774.00 and installment payments ofP5,655.92 were treated as rentals, even though thetotal amount of P6,429,92 which they had paid,approximates one-third (1/3) of the cost of the 3 air-conditioners. A stipulation in a contract that the installments paid shall not be returned to the vendee is valid insofar as the same may not be unconscionable under the circumstances is sanctioned by Article 1486 of the New Civil Code. The monthly instalment payable by defendants was P774.00. The P5,655.92 installment payments correspond only to 7 monthly installments. Since they admit having used the airconditioners for 22 months, this means that they did not pay 15 monthly installments on the said air-conditioners and were thus using the same FREE for said period,to the prejudice

of Delta Motors. Under the circumstances, the treatment of the installment payments asrentals cannot be said to be unconscionable. 2.Remedies available to vendor property payable in instalments in a sale of personal

The vendor in a sale of personal property payable in installments may exercise one of three remedies,namely, (1) exact the fulfillment of the obligation, should the vendee fail to pay; (2) cancel the sale upon thevendees failure to pay two or more installments; (3) foreclose the chattel mortgage, if one has beenconstituted on the property sold, upon the vendees failure to pay two or more installments. The third optionor remedy, however, is subject to the limitation that the vendor cannot recover any unpaid balance of the priceand any agreement to the contrary is void (Art. 1484). 4. Air-conditioning units repossessed, bars action to exact payment for balance of the price Delta Motors had taken possession of the 3 air-conditioners, through a writ of replevin when defendants refused to extra-judicially surrender the same. The case Delta Motors filed was to seek a judicial declaration that it had validly rescinded the Deed of Conditional Sale. Delta Motors thus chose the second remedy of Article 1484 in seeking enforcement of its contract with defendants. Having done so, it is barred from exacting payment from defendants of the balance of the price of the three air-conditioning units which it had already repossessed. It cannot have its cake and eat it too.