CIVIL LAW

PART II

SALES

I. DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE

A. DEFINITIONANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125December 2, 1994

A contract of sale is perfected when a person, called the seller, obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another, called the buyer, over which the latter agrees.

B. CONTRACT OF OPTION NOT A CONTRACT OF SALE

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125December 2, 1994

Both the trial court and CA found that defendants' offer to sell was never accepted by the plaintiffs for the reason that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. An accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of option and not perfected contract of sale.

C. CONTRACT OF CONDITIONAL SALE

ART 1458

TAN vs BENOLIRAO, G.R. NO. 153820. October 16, 2009

The Deed of Conditional Sale, as termed by the parties, states that "in case, BUYER has complied with the terms and conditions of this contract, then the SELLERS shall execute and deliver to the BUYER the appropriate Deed of Absolute Sale". The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised, but where the seller promises to execute a deed of absolute sale upon the completion by the buyer of the payment of the price, the contract is only a contract to sell, even if it is denominated as a Deed of Conditional Sale.

D. CONTRACT TO SELLPADILLA vs. SPOUSES PAREDES, G.R. NO. 124874, March 17, 2000

Under the parties contract, the property will be transferred to petitioner only upon the latter's "complete compliance of his obligation provided in the contract" but because of petitioners failure to fully pay the purchase price, the obligation of private respondents to convey title to the property did not arise.Petitioner's reliance on Article 1592 of the Civil Code is misplaced because what this provision contemplates is an absolute sale and not a contract to sell as in the present case.

ART 1478

SPOUSES REYES vs. SALVADOR, SR., G.R. NO. 139047, September 11, 2008

CRISTOBAL vs. SALVADOR, SR., G.R. NO. 139365, September 11, 2008

The Seller executed three separate contracts on the same property with three different parties, wherein only the first two contracts contained a stipulation that "if the Vendee fails to pay the Vendor the sums stated within the period stipulated and after the grace period for each payment, this contract shall automatically be null and void and of no effect without the necessity of any demand, and the Vendor shall have the full and exclusive right to sell to any person. The first two contracts were both mere contracts to sell and did not transfer ownership to either of the buyers for failure to comply with the condition of full payment of the purchase price, hence, vendor can still validly convey the subject property to another buyer.

E. ELEMENTS OF A VALID CONTRACT OF SALE

PEALOSA vs. SANTOS, G.R. NO. 133749, August 23, 2001

Respondent insist that the second deed is a complete nullity because a) the consideration stated in the deed was not paid; b)seller was not present when the deed was notarized; c) seller did not surrender a copy of the title; d)real estate taxes were not paid. The elements of a valid contract of sale are: (1) consent or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent which are present in the second Deed of Sale hence there is already a perfected contract of sale.

ART 1475

HEIRS OF JUAN SAN ANDRES vs. RODRIGUEZ, G.R. NO. 135634 May 31, 2000

Respondent alleged that there was no contract of sale to speak of, while petitioner as proof of the sale presented a receipt stating that Andres received from Rodriguez a sum representing an advance payment for a residential lot with the agreed price of 15php per square meter and that the payment of the full consideration after the survey shall be due and payable in 5 years from the execution of the formal deed of sale. All of the essential elements of a contract of sale are present, i.e., that there was a meeting of the minds between the parties, by virtue of which the late Andres undertook to transfer ownership of and to deliver a determinate thing for a price certain in money.

II. PARTIES TO A CONTRACT OF SALE

A. SELLER

ART 1459

HEIRS OF ARTURO REYES vs SOCCO-BELTRAN, G.R. 176474 November 27, 2008

It was unmistakably stated in the Contract to Sell and made clear to both parties thereto that the vendor was not yet the owner of the subject property and was merely expecting to inherit the same. The law specifically requires that the vendor must have ownership of the property at the time of delivery hence, there was no valid sale from which ownership of the subject property could have been transferred.

DACLAG vs. MACAHILIG et al., G.R. NO. 159578, February 18, 2009

Petitioners contend that the 10-year period for reconveyance is applicable if the action is based on an implied or a constructive trust. However, since respondents' action for reconveyance was based on fraud, the action must be filed within four years from the discovery of the fraud. Respondent's action for reconveyance was not even subject to prescription, since the deed of sale that was executed in favor of petitioners was null and void because the seller was not the owner of the land, nor has the authority when she sold it to petitioners, hence, being an absolute nullity, the deed is subject to attack anytime because an action to declare the inexistence of a void contract does not prescribe.

ART 1505

NOOL vs. COURT OF APPEALS, G.R. NO. 116635 July 24, 1997

Petitioners contend that they could repurchase the property that they "sold" to private respondents when they allowed the respondent to redeem the properties for them from DBP but DBP certified that the mortgagors' right of redemption was not exercised within the period. Article 1505 of the Civil Code provides that "where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller's authority to sell.", hence, petitioners "sold" nothing, it follows that they can also "repurchase" nothing.

B. BUYER

ART 1491

DAROY vs. ATTY. ABECIA, A.C. NO. 3046, October 26, 1998

The prohibition in Art. 1491 does not apply to the sale of a parcel of land, acquired by a client to satisfy a judgment in his favor to his counsel as long as the property was not the subject of the litigation.ARCENIO vs. JUDGE PAGOROGON, A.M. NO. MTJ-89-270 July 5, 1993

OFFICE OF THE COURT ADMINISTRATOR vs. JUDGE PAGOROGON, A.M. NO. MTJ-92-637 July 5, 1993

The respondent judge engaged the services of a mechanic to tow the jeep in custodia legis and to place the jeep in good running condition, spending in the process her own money and also registered the same in her brother's name. The act of respondent judge is not unlike the prohibited acquisition by purchase described in Article 1491 of the New Civil code and is in fact, even worse when she did not acquire the said vehicle from it's owner but instead whimsically spent for its repairs and automatically appropriated the jeep for her own use and benefit.

VALENCIA vs. ATTY. CABANTING, A.M. Nos. 1302, 1391 and 1543 April 26, 1991

Paulino alleged that the trial court failed to provide a workable solution concerning his house and while the petition for certiorari was pending the trial court issued an order of execution stating that "the decision in this case has already become final and executory". While it is true that Atty. Cabanting purchased the lot after finality of judgment, there was still a pending certiorari proceeding, and a thing is said to be in litigation not only if there is some contest or litigation over it in court, but also from the moment that it becomes subject to the judicial action of the judge.

FABILLO vs. THE HONORABLE INTERMEDIATE APPELLATE COURT, G.R. NO. L-68838 March 11, 1991

After the court declared with finality that the petitioners are the lawful owners, they refused to comply when the respondent lawyer proceeded to implement the contract of services between him and the petitioners by taking possession and exercising rights of ownership over 40% of said properties which are the subject of litigation. A contract between a lawyer and his client stipulating a contingent fee is not covered by said prohibition under Article 1491 (5) of the Civil Code because the payment of said fee is not made during the pendency of the litigation but only after judgment has been rendered in the case handled by the lawyer.

MANANQUIL vs. ATTY. VILLEGAS, A.M. NO. 2430 August 30, 1990

Complainant alleges that for over a period of 20 years, respondent counsel allowed lease contracts to be executed between his client and a partnership of which respondent is one of the partners, covering parcels of land of the estate, but respondent claims that he is only acting as an agent. Even if the respondent signed merely as an agent, the lease contracts are covered by the prohibition against any acquisition or lease by a lawyer of properties involved in litigation in which he takes part.

BAUTISTA vs. ATTY. GONZALES, A.M. NO. 1625 February 12, 1990

The Solicitor General found that respondent counsel transferred to himself one-half of the properties of his clients during the pendency of the case where the properties were involved. Persons mentioned in Art. 1491 of the Civil Code are prohibited from purchasing the property mentioned therein because of the existing fiduciary relationship with such property and rights, as well as with the client.

ART 1492

IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORY OF GUAM OF ATTY. LEON G. MAQUERA, B.M. NO. 793. July 30, 2004

Maquera was suspended from the practice of law in Guam for misconduct, as he acquired his clients property by exercising the right of redemption previously assigned to him by the client in payment of his legal services, then sold it and as a consequence obtained an unreasonably high fee for handling his clients case. The prohibition extends to sales in legal redemption and such prohibition is founded on public policy because, by virtue of his office, an attorney may easily take advantage of the credulity and ignorance of his client and unduly enrich himself at the expense of his client.

ART 1493

PROVINCE OF CEBU vs. HEIRS OF RUFINA MORALES, G.R. NO. 170115, FEBRUARY 19, 2008The City of Cebu was no longer the owner of the lot when it ceded the same to petitioner under the compromise agreement and at that time, the city merely retained rights as an unpaid seller but had effectively transferred ownership of the lot to Morales. A successor-in-interest could only acquire rights that its predecessor had over the lo which include the right to seek rescission or fulfillment of the terms of the contract and the right to damages in either case.

III. SUBJECT MATTER

A. SALE OF AN EXPECTED THING

ART 1461

HEIRS OF AMPARO DEL ROSARIO vs. SANTOS, G.R. NO. L-46892 September 30, 1981

By the terms of the Deed of Sale itself, appellants declared themselves to be owners of one-half (1,2) interest thereof and contend that the deed of assignment of one-half (1,2) interest thereof executed by said Custodio in their favor is strictly personal between them. Notwithstanding the lack of any title to the said lot by appellants at the time of the execution of the deed of sale in favor of appellee, the said sale may be valid as there can be a sale of an expected thing.

B. SALE OF A MERE HOPE OR EXPECTANCY

JAVIER vs. COURT OF APPEALS, G.R. NO. L-48194 March 15, 1990

The efficacy of a deed of assignment is subject to the condition that the application of private respondent for an additional area for forest concession be approved by the Bureau of Forestry which was not obtained. The efficacy of the sale of a mere hope or expectancy is deemed subject to the condition that the thing will come into existence, which did not happen, hence the agreement executed never became effective or enforceable.

C. BOUNDARIES OF THE SUBJECT MATTER

DEL PRADO vs SPOUSES CABALLERO, G.R. NO. 148225, March 3,2010

The parties agreed on the purchase price of P40,000.00 for a predetermined area of 4,000 sq m, more or less, but when the OCT was issued, the area was declared to be 14,475 sq m, with an excess of 10,475 sq m. Petititiomer, however, claims that respondents are, therefore, duty-bound to deliver the whole area within the boundaries stated, without any corresponding increase in the price. Article 1542 is not hard and fast and admits of an exception and the use of more or less or similar words in designating quantity covers only a reasonable excess or deficiency, and clearly, the discrepancy of 10,475 sq m cannot be considered a slight difference in quantity.

SEMIRA vs. COURT OF APPEALS, G.R. NO. 76031 March 2, 1994

Private respondent sold Lot 4221 to his nephew by means of a "Kasulatan ng Bilihan ng Lupa" which incorporated both the area and the definite boundaries of the lot, the former transferred not merely the 822.5 square meters stated in their document of sale but the entire area circumscribed within its boundaries.

If besides mentioning the boundaries, which is indispensable in every conveyance of real estate, its area or number should be designated in the contract, the vendor shall be bound to deliver all that is included within said boundaries, even when it exceeds the area or number specified in the contract; and, should he not be able to do so, he shall suffer a reduction in the price, in proportion to what is lacking in the area or number, unless the contract is rescinded because the vendee does not accede to the failure to deliver what has been stipulated.

IV. OBLIGATIONS OF A SELLER TO TRANSFER OWNERSHIP

ART 1462

DANGUILAN vs. IAC, G.R. NO. L-69970 November 28, 1988

Respondent admits that she did not take physical possession of property but argues that symbolic delivery was effected through the notarized deed of sale. The thing is considered to be delivered when it is placed "in the hands and possession of the vendee," and in order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold at the moment of the sale, but if there is no impediment to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic delivery through the execution of a public instrument is sufficient.

ART 1495

CHUA vs COURT OF APPEALS, G.R. NO. 119255, April 9, 2003

Petitioner insists that he was ready to pay the balance of the purchase price but withheld payment because he required that the property be registered first in his name before he would turn over the check to the private respondent. The obligation of the seller is to transfer to the buyer ownership of the thing sold, but in the sale of a real property, the seller is not obligated to transfer in the name of the buyer a new certificate of title, but rather to transfer ownership of the real property, because as between the seller and buyer, ownership is transferred not by the issuance of a new certificate of title in the name of the buyer but by the execution of the instrument of sale in a public document.

ART 1496

VISAYAN SAWMILL COMPANY, INC., vs. COURT OF APPEALS, G.R. NO. 83851. March 3, 1993.

The seller gave access to the buyer to enter his premises, manifesting no objection thereto but even sending people to start digging up the scrap iron. The seller has placed the goods in the control and possession of the vendee and such action or real delivery (traditio) transfered ownership.

ART 1497

MUNICIPALITY OF VICTORIAS vs. THE COURT OF APPEALS, G.R. NO. L-31189 March 31, 1987

Respondent discovered that a parcel of land she owns is being used by Petitioner, Municipality of Victorias, as a cemetery for 29 years and when the Mayor replied that Petitioner bought the land from her grandmother, she asked to be shown the papers concerning the sale but petitioner refused to show the same. Where there is no express provision that title shall not pass until payment of the price, and the thing sold has been delivered, title passes from the moment the thing sold is placed in the possession and control of the buyer.

DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010

Petitioner sold three parcels of land to respondent which were mortgaged to a bank, hence petitioner and respondent executed a notarized deed of absolute sale with assumption of mortgage, but petitioner some time thereafter paid the mortgage and sold the properties to another person. Settled is the rule that the seller is obliged to transfer title over the properties and deliver the same to the buyer, and as a rule, the execution of a notarized deed of sale is equivalent to the delivery of a thing sold.

ART 1523

PUROMINES, INC., vs. COURT OF APPEAL, G.R. NO. 91228. March 22, 1993.

Petitioner argues that the sales contract does not include the contract of carriage which is a different contract entered into by the carrier with the cargo owners.

As worded, the sales contract is comprehensive enough to include claims for damages arising from carriage and delivery of the goods. As a general rule, the seller has the obligation to transmit the goods to the buyer, and concomitant thereto, the contracting of a carrier to deliver the same. Art. 1523 of the Civil Code provides:

"Art. 1523. Where in pursuance of a contract of sale, the seller in authorized or required to send the goods to the buyer, delivery of the goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the buyer, except in the cases provided for in article 1503, first, second and third paragraphs, or unless a contrary intent appear.

"Unless otherwise authorized by the buyer, the seller must take such contract with the carrier on behalf of the buyer as may be reasonable, having regard to the nature of the goods and the other circumstances of the case. If the seller omit so to do, and the goods are lost or damaged in course of transit, the buyer may decline to treat the delivery to the carrier as a delivery to himself,, or may hold the seller responsible in damages."

xxx xxx xxx

The disputed sales contact provides for conditions relative to the delivery of goods, such as date of shipment, demurrage, weight as determined by the bill of lading at load port. ART 1477

BOY vs. COURT OF APPEALS, G.R. NO. 125088, April 14, 2004

Petitioner sold the subject property to respondents as evidenced by a notarized Deed of Absolute Sale, but contends that the respondents have no right to material possession of the property since the respondents have not paid the property in full. Unless there is a stipulation to the contrary, when the sale is made through a public instrument, the execution thereof is equivalent to the delivery of the thing which is the object of the contract.

V. PRICE

A. G.R.OSS INADEQUACY OF THE PRICE

ART 1470

SPOUSES BUENAVENTURA et al vs. COURT OF APPEALS, G.R. NO. 126376. November 20, 2003Petitioners assert that their respondent siblings did not actually pay the prices stated in the Deeds of Sale to their respondent father and assuming that there is consideration, the same is grossly inadequate as to invalidate the Deeds of Sale. If there is a meeting of the minds of the parties as to the price, the contract of sale is valid and gross inadequacy of price does not affect a contract of sale, except if there is a defect in the consent, or that the parties really intended a donation or some other contract.

ART 1471

HO, JR. vs TENG GUI, G.R. NO. 130115, July 16, 2008

RTC considered that although the sales of the properties on the lot were simulated, it can be assumed that the intention of Ho in such transaction was to give and donate such properties to the respondent. The Court holds that the reliance of the trial court on the provisions of Article 1471 of the Civil Code to conclude that the simulated sales were a valid donation to the respondent is misplaced because its finding was based on a mere assumption when the law requires positive proof, which the respondent was unable to show.B. FIXING OF THE PRICE

ART 1473

HYATT ELEVATORS vs. CATHEDRAL HEIGHTS, G.R. NO. 173881 December 1, 2010

As revealed by the records, it was only Hyatt who determined the price, without the acceptance or conformity of CHBCAI. The fixing of the price can never be left to the decision of one of the contracting parties, but a price fixed by one of the contracting parties, if accepted by the other, gives rise to a perfected sale.

C. WHEN AND WHERE TO PAY THE PRICE

CHUA vs. COURT OF APPEALS, G.R. NO. 119255, April 9, 2003

On the agreed date, Chua refused to pay the balance of the purchase price as required by the contract to sell, the signed Deeds of Sale, and imposes another condition. The vendee is bound to accept delivery and to pay the price of the thing sold at the time and place stipulated in the contract.

D. INTEREST

ART 1589

FULE vs. COURT OF APPEALS, G.R. NO. 112212, March 2, 1998

While it is true that the amount of P40,000.00 forming part of the consideration was still payable to petitioner, its nonpayment by Dr. Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and possession of the things exchanged considering the fact that their contract is silent as to when it becomes due and demandable.

Neither may such failure to pay the balance of the purchase price result in the payment of interest thereon. Article 1589 of the Civil Code prescribes the payment of interest by the vendee "for the period between the delivery of the thing and the payment of the price" in the following cases:

(1) Should it have been so stipulated;

(2) Should the thing sold and delivered produce fruits or income;

(3) Should he be in default, from the time of judicial or extrajudicial demand for the payment of the price.E. SUSPENSION OF PAYMENT OF THE PRICE

ART 1590CENTRAL BANK OF THE PHILIPPINES vs. SPOUSES ALFONSO, G.R. NO. 131074, March 27, 2000

Respondents aver that they are entitled to cancel the obligation altogether in view of petitioner's failure to pay the purchase price when the same became due, while Petitioner claims that the respondent failed to comply with their contractual obligations hence it was entitled to withhold payment of the purchase price. Should the vendee be disturbed in the possession or ownership of the thing acquired, he may suspend the payment of the price until the vendor has cause the disturbance or danger to cease. This is not, however, the only justified cause for retention or withholding the payment of the agreed price, but also, if the vendor fails to perform any essential obligation of the contract.

ART 1592

SOLIVA vs. The INTESTATE ESTATE of MARCELO M.VILLALBA, G.R. NO. 154017, December 8, 2003

While petitioner is now barred from recovering the subject property due to laches, all is not lost for her since by respondent's own admission, a balance of P1,250 of the total purchase price remains unpaid. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or extrajudicially or by a notarial act.

VI. FORMATION OF A CONTRACT OF SALE

A. STAGES TO THE CONTRACT OF SALE

SWEDISH MATCH vs. COURT OF APPEALS, G.R. NO. 128120 October 20, 2004

Petitioners stress that respondent Litonjua made it clear in his letters that the quoted prices were merely tentative and still subject to further negotiations between him and the seller, hence, there was no meeting of the minds on the essential terms and conditions of the sale because SMAB did not accept respondents offer that consideration would be paid in Philippine pesos. In general, contracts undergo three distinct stages, to wit: (1) Negotiation - begins from the time the prospective contracting parties manifest their interest in the contract and ends at the moment of agreement of the parties; (2) Perfection or birth of the contract takes place when the parties aG.R.ee upon the essential elements of the contract; and (3) Consummation occurs when the parties fulfill or perform the terms agreed upon in the contract, culminating in the extinguishment thereof.

B. ACCEPTED UNILATERAL PROMISE

ART 1479 (Read together with ART 1324)TUAZON vs. DEL ROSARIO-SUAREZ, G.R. NO. 168325, December 8, 2010

The lessor made an offer to sell to the lessee the property at a fixed price within a certain period, but the lessee failed to accept the offer or to purchase on time, hence, the lessor sold the said property to her daughter. An accepted unilateral promise can only have a binding effect if supported by a consideration separate and distinct from the purchase price. Hence, the option can still be withdrawn, even if accepted, if the same is not supported by any consideration.

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125, December 2, 1994

Both the trial court and CA found that defendants' offer to sell was never accepted by the plaintiffs for the reason that the parties did not agree upon the terms and conditions of the proposed sale, hence, there was no contract of sale at all. When the sale is not absolute but conditional, such as in a "Contract to Sell" where invariably the ownership of the thing sold is retained until the fulfillment of a positive suspensive condition (normally, the full payment of the purchase price), the breach of the condition will prevent the obligation to convey title from acquiring an obligatory force.

An imperfect promise (policitacion) is merely an offer and is not considered binding commitments, thus, at any time prior to the perfection of the contract, either negotiating party may stop the negotiation, and the offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal.

SERRA vs. COURT OF APPEALS, G.R. NO. 103338, January 4, 1994

The court found the contract to be valid, but nonetheless ruled that the option to buy is unenforceable because it lacked a consideration distinct from the price and RCBC did not exercise its option within reasonable time. Article 1324 of the Civil Code provides that when an offeror has allowed the offeree a certain period to accept, the offer maybe withdrawn at anytime before acceptance by communicating such withdrawal, except when the option is founded upon consideration, as something paid or promised; on the other hand, Article 1479 of the Code provides that an accepted unilateral promise to buy and sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price.

C. EARNEST MONEY

ART 1482

SPOUSES SERRANO vs. CAGUIAT, G.R. NO. 139173, February 28, 2007

The lower court ruled that the receipt stating that the respondent made a partial payment and that the execution and final deed of sale would be signed upon payment of the balance, is a Contract of Sale and considered the partial payment as earnest money, which prompted the respondent to demand specific performance and damages when the herein petitioners cancelled the transaction. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and proof of the perfection of the contract, but the earnest money given in a contract to sell will form part of the consideration only if the sale is consummated upon full payment of the purchase price.

SAN MIGUEL PROPERTIES PHILIPPINES, INC., vs. SPOUSES HUANG, G.R. NO. 137290. July 31, 2000

The appellate court held that all the requisites of a perfected contract of sale had been complied with upon acceptance of the petitioner of the earnest money tendered by respondents. It is not the giving of earnest money, but the proof of the concurrence of all the essential elements of the contract of sale which establishes the existence of a perfected sale.

VII. TRANSFER OF OWNERSHIP

A. DEED OF SALE

ART 1498

DAILISAN vs. COURT OF APPEALS, G.R. NO. 176448, July 28, 2008

Respondents question the notarized deed of absolute sale presented by the petitioner and refused to partition the property purportedly co-owned by them. Ownership of the thing sold is acquired only from the time of delivery thereof, either actual or constructive, and when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot be inferred.LEONARDO vs MARAVILLA, G.R. NO. 143369, November 27, 2002

It is not disputed that petitioner neither had, nor demanded, material possession of the disputed lot as well as the transfer of title to his name notwithstanding the alleged execution of a deed of absolute sale and it was the respondents who have been in control and possession thereof in the concept of owners. The execution of the deed of sale is only a presumptive, not conclusive delivery which can be rebutted by evidence to the contrary, as when there is failure on the part of the vendee to take material possession of the land subject of the sale in the concept of a purchaser-owner.

SPOUSES SABIO vs THE INTERNATIONAL CORPORATE BANK, INC. (now UNION BANK OF THE PHILIPPINES) et al., G.R. NO. 132709, September 4, 2001

Petitioners claims that, Ayala Corporation failed to "complete and perfect ownership and title" to the subject property since it was never in actual occupation, possession, control and enjoyment of said property due to the presence of illegal occupants. Notwithstanding the presence of illegal occupants on the subject property, transfer of ownership by symbolic delivery under Article 1498 can still be effected through the execution of the deed of conveyance in a public document which is equivalent to the delivery of the property.

B. CONSTRUCTIVE DELIVERY

ART 1499

DY, JR. vs. COURT OF APPEALS, G.R. NO. 92989, July 8, 1991

There is constructive delivery already upon the execution of the public instrument pursuant to Article 1498 and upon the consent or agreement of the parties when the thing sold cannot be immediately transferred to the possession of the vendee. (Art. 1499)

DIGNOS vs CA, G.R. NO. L-59266, February 29, 1988

Although denominated a "Deed of Conditional Sale," a sale is still absolute where the contract is devoid of any proviso that title is reserved or the right to unilaterally rescind is stipulated, e.g., until or unless the price is paid. Ownership will then be transferred to the buyer upon actual or constructive delivery (e.g., by the execution of a public document) of the property sold.

C. POSSESSOR IN GOOD FAITH

ART 1544

DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010

Petitioner delivered the properties to respondent upon the execution of the notarized deed and handed over to respondent the keys to the properties, hence respondent took actual possession and exercised control over the property before he made the second sale. Should there be no inscription, ownership shall pertain to the person who in good faith was first in possession.

VIII. RISK OF LOSS

ART 1504 (2)

AEROSPACE CHEMICAL INDUSTRIES, INC. vs. CA, G.R. NO. 108129 September 23, 1999

The petitioner contends that rental expenses of storing sulfuric acid should be at private respondent's account, as a seller, until ownership is transferred. The general rule that before delivery, the risk of loss is borne by the seller who is still the owner, is not applicable in this case because petitioner had incurred delay in the performance of its obligation.

IX. DOCUMENTS OF TITLE

VDA. DE MELENCION vs COURT OF APPEALS, G.R. NO. 148846, September 25, 2007

A. TORRENS TITLE

The subject property was under the operation of the Torrens System even before the respective conveyances to AZNAR and Go Kim Chuan were made. AZNAR knew of this, and admits this as fact. Yet, despite this knowledge, AZNAR registered the sale in its favor under Act 3344 on the contention that at the time of sale, there was no title on file.

The fact that the certificate of title over the registered land is lost does not convert it into unregistered land. After all, a certificate of title is merely an evidence of ownership or title over the particular property described therein. T

Act 3344 provides for the system of recording of transactions or claims over unregistered real estate without prejudice to a third party with a better right. But if the land is registered under the Land Registration Act (and therefore has a Torrens Title), and it is sold and the sale is registered not under the Land Registration Act but under Act 3344, as amended, such sale is not considered registered, as the term is used under Art. 1544 of the New Civil Code.

Although it is obvious that Go Kim Chuan registered the sale in his favor under Act 496 while AZNAR did not, SC did not make an outright award of the subject property to the petitioners solely on that basis. For the law is clear: mere registration of title is not enough. Good faith must accompany the registration.

Thus, to be able to enjoy priority status, the second purchaser must be in good faith, i.e., he must have no knowledge of the previous alienation of the property by the vendor to another. Notably, what is important for this purpose is not whether the second buyer is a buyer in good faith, but whether he registers the second sale in good faith, meaning, he does so without knowledge of any defect in the title over the property sold. B. FIRST TO REGISTER IN GOOD FAITH

DAUZ vs. SPOUSES ELIGIO, G.R. NO. 152407, September 21, 2007

Respondents caused the registration of the sale of the land in the Registry of the Deeds. Petitioners, on the other hand, failed to cause the registration of the sale to them. Where both parties claim to have purchased the same property, the one who registered the sale in his favor, in good faith, has a preferred right over the other who has not registered his title, even if the latter is in actual possession of the immovable property.

SPOUSES AVELINO vs. SPOUSES CELEDONIO, G.R. NO. 135900, August 17, 2007

Article 1544 of the Civil Code contemplates a case of double sales or multiple sales by a single vendor. It cannot be invoked where the two different contracts of sale are made by two different persons, one of them not being the owner of the property sold.

Spouses ABRIGO vs. DE VERA, G.R. NO. 154409, June 21, 2004

Both petitioners Abrigo and respondent registered the sale of the property, but petitioners registered their sale under Act 3344, while respondent registered the transaction under the Torrens system.

Between two buyers of the same immovable property, the law gives ownership priority to (1) the first registrant in good faith; (2) then, the first possessor in good faith; and (3) finally, the buyer who in good faith presents the oldest title.

Since the property in dispute in the present case was already registered under the Torrens system, petitioners registration of the sale under Act 3344 was not effective for purposes of Article 1544 of the Civil Code.

SPOUSES OCCEA vs. MORALES OBSIANA, G.R. NO. 156973, June 4, 2004

The general rule is that one who deals with property registered under the Torrens system need not go beyond the same, but only has to rely on the title. He is charged with notice only of such burdens and claims as are annotated on the title. However, this principle does not apply when the party has actual knowledge of facts and circumstances that would impel a reasonably cautious man to make such inquiry or when the purchaser has knowledge of a defect or the lack of title in his vendor or of sufficient facts to induce a reasonably prudent man to inquire into the status of the title of the property in litigation. One who falls within the exception can neither be denominated an innocent purchaser for value nor a purchaser in good faith.ISABELA COLLEGES, INC. vs. THE HEIRS OF NIEVES TOLENTINO-RIVERA, G.R. NO. 132677, October 20, 2000

Cortez filed a complaint-in-intervention claiming ownership over two parcels of land by virtue of a sale in 1988, alleging that the lots were included in the four-hectare land covered by a Torrens Title of petitioner Isabela Colleges.

Even assuming that Cortez was not guilty of bad faith when he bought the land in question, the fact remains that the Isabela Colleges was first in possession. Petitioner has been in possession of the land since 1949. Between petitioner and Cortez, therefore, the former had a better right for the latter only bought the property in 1988 when it was already purchased by and titled under the name of petitioner.

BAYOCA et al vs. GAUDIOSO NOGALES, G.R. NO. 138201. September 12, 2000

First buyer registered the sale under Act 3344, while second buyer registered the sale under PD 1529. The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first buyers rights except when the second buyer first registers in good faith the second sale, conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since such knowledge taints his registration with bad faith.

BARICUATRO, JR., vs. COURT OF APPEALS, G.R. NO. 105902 February 9, 2000

Amores was in good faith when he bought the disputed lots. When he registered his title, however, he already had knowledge of the previous sale of the disputed lots to petitioner. Such knowledge tainted his registration with bad faith, and to merit protection under article 1544, the second buyer must act in good faith from the time of the sale until the registration of the same

X. REMEDIES OF AN UNPAID SELLER

ART 1484 , 1485

PCI LEASING AND FINANCE, INC. vs. GIRAFFE-X CREATIVE IMAGING, INC., G.R. NO. 142618, July 12, 2007

Petitioner having recovered thru (replevin) the personal property sought to be payable, leased on installments, still demanded the balance of the rent. In choosing, through replevin, to deprive the respondent of possession of the leased equipment, the petitioner waived its right to bring an action to recover unpaid rentals on the said leased items.

ART 1486

PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION, vs. COURT OF APPEALS, G.R. NO. 112733 October 24, 1997

When petitioner failed to abide by its obligation to pay the installments in accordance with the contract to sell, and provision in the contract automatically took effect, which provides that "(I)f the buyer fails to pay the installments due at the expiration of the grace period, the seller may cancel the contract and any and all sums of money paid under this contract shall be considered and become rentals on the property. A stipulation that the installments or rents paid shall not be returned to the vendee or lessee shall be valid insofar as the same may not be unconscionable under the circumstances.

GIL vs. HON. COURT OF APPEALS, G.R. NO. 127206, September 12, 2003

The consignation by the vendee of the purchase price of the property is sufficient to defeat the right of the petitioners to demand for a rescission of the said deed of absolute sale.

IRINGAN vs. HON. COURT OF APPEALS, G.R. NO. 129107, September 26, 2001

Petitioner contends that no rescission was effected simply by virtue of the letter sent by respondent stating that he considered the contract of sale rescinded. Petitioner asserts that a judicial or notarial act is necessary before one party can unilaterally effect a rescission.

Respondent, on the other hand, contends that the right to rescind is vested by law on the obligee and since petitioner did not oppose the intent to rescind the contract, petitioner in effect agreed to it and had the legal effect of a mutually agreed rescission.Article 1592 of the Civil Code is the applicable provision regarding the sale of an immovable property.

Article 1592. In the sale of immovable property, even though it may have been stipulated that upon failure to pay the price at the time agreed upon the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the court may not grant him a new term.

A judicial or notarial act is necessary before a valid rescission can take place, whether or not automatic rescission has been stipulated. It is to be noted that the law uses the phrase "even though" emphasizing that when no stipulation is found on automatic rescission, the judicial or notarial requirement still applies.XI. PERFORMANCE OF A CONTRACT

EASTERN ASSURANCE & SURETY CORPORATION vs. IAC, G.R. NO. L-69450, November 22, 1988

The ordinary meaning of execution is not limited to the signing or concluding of a contract but includes as well the performance or implementation or accomplishment of the terms and conditions of such contract.

XII. WARRANTIES

A. EXPRESS WARRANTIES

ART 1502

INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES, INC., vs. LPJ ENTERPRISES, INC., G.R. NO. 66140, January 21, 1993

Respondent alleges that it cannot be held liable for the 47,000 plastic bags which were not used for packing cement as originally intended invoking it's right of return. Article 1502 of the Civil Code, has no application at all to this case, since the provision in the Uniform Sales Act and the Uniform Commercial Code from which Article 1502 was taken, clearly requires an express written agreement to make a sales contract either a "sale or return" or a "sale on approval", which is absent in this case.

Parol or extrinsic testimony could not be admitted for the purpose of showing that an invoice or bill of sale that was complete in every aspect and purporting to embody a sale without condition or restriction constituted a contract of sale or return. If the purchaser desired to incorporate a stipulation securing to him the right of return, he should have done so at the time the contract was made. On the other hand, the buyer cannot accept part and reject the rest of the goods since this falls outside the normal intent of the parties in the "on approval" situation.

B. IMPLIED WARRANTIES

ART 1628

LO vs. KJS ECO-FORMWORK SYSTEM PHIL., INC., G.R. NO. 149420 October 8, 2003

The vendor in good faith shall be responsible for the existence and legality of the credit at the time of the sale, unless it should have been sold as doubtful; but not for the solvency of the debtor, unless it has been so expressly stipulated or unless the insolvency was prior to the sale and of common knowledge.

ART 1546

ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008

The seller, in declaring that he owned and had clean title to the vehicle at the time the Deed of Absolute Sale, is giving an implied warranty of title which prescribes six months after the delivery of the vehicle.

ART 1547

PNB vs MEGA PRIME REALTY AND HOLDINGS CORPORATION, G.R. NO. 173454, October 6, 2008

MEGA PRIME REALTY AND HOLDINGS CORPORATION vs. PNB, G.R. NO. 173456, October 6, 2008

In a contract of sale, unless a contrary intention appears, there is an implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to pass, and that the buyer shall have a peaceful possession of the thing and it shall be free from any hidden faults or defects, or any charge or encumbrance not declared or known to the buyer.

ART 1548

ANG vs. COURT OF APPEALS, G.R. NO. 177874, September 29, 2008

The seller, in pledging that he will defend the same from all claims or any claim whatsoever [and] will save the vendee from any suit by the government of the Republic of the Philippines, is giving a warranty against eviction. A breach of this warranty requires the concurrence of these four requisites:(1) The purchaser has been deprived of the whole or part of the thing sold; (2) This eviction is by a final judgment; (3) The basis thereof is by virtue of a right prior to the sale made by the vendor; and (4) The vendor has been summoned and made co-defendant in the suit for eviction at the instance of the vendee.

ART 1561

DE YSASI vs. ARCEO, G.R. NO. 136586, November 22, 2001

Petitioner admitted that he inspected the premises three or four times before signing the lease contract and during his inspection, he noticed the rotten plywood on the ceiling which in his opinion was caused by leaking water or "anay" (termites), yet he decided to go through with the lease agreement. The lessor is responsible for warranty against hidden defects, but he is not answerable for patent defects or those which are visible.

C. REMEDIES AGAINST VIOLATIONS OF WARRANTIES

ART 1567

ENGINEERING & MACHINERY CORPORATION vs. COURT OF APPEALS, G.R. NO. 52267, January 24, 1996

The original complaint is one for damages arising from breach of a written contract - and not a suit to enforce warranties against hidden defects. The remedy against violations of the warranty against hidden defects is either to withdraw from the contract (redhibitory action) or to demand a proportionate reduction of the price (accion quanti minoris), with damages in either case.

ART 1571

DINO vs COURT OF APPEALS, G.R. NO. 113564, June 20, 2001

Respondent made the last delivery of the vinyl products to petitioners on September 28, 1988 and the action to recover the purchase price of the goods petitioners returned to the respondent was filed on July 24, 1989, more than nine months from the date of last delivery. Actions arising from breach of warranty against hidden defects shall be barred after six months from the delivery of the thing sold.

XIII. BREACH OF CONTRACT

ART 1545

LAFORTEZA vs. MACHUCA, G.R. NO. 137552, June 16, 2000

A MOA has this stipulation "....SELLER-LESSOR hereby agrees to sell unto BUYER-LESSEE the property described within six (6) months from the execution date hereof, or upon issuance by the Court of a new owner's certificate of title and the execution of extrajudicial partition with sale of the estate of Francisco Laforteza, whichever is earlier;...". Petitioner contends that since the condition was not met, they no longer had an obligation to proceed with the sale of the house and lot. The petitioners fail to distinguish between a condition imposed upon the perfection of the contract and a condition imposed on the performance of an obligation, failure to comply with the first condition results in the failure of a contract, while the failure to comply with the second condition only gives the other party the option either to refuse to proceed with the sale or to waive the condition.

ART 1583

INTEGRATED PACKAGING CORP. vs. COURT OF APPEALS, G.R. NO. 115117, June 8, 2000

There is no dispute that the agreement provides for the delivery of printing paper on different dates and a separate price has been agreed upon for each delivery. When there is a contract of sale of goods to be delivered by stated installments, which are to be separately paid for, and the seller makes defective deliveries in respect of one or more installments, it depends in each case on the terms of the contract and the circumstances of the case, whether the breach of contract is so material as to justify the injured party in refusing to proceed further and suing for damages for breach of the entire contract, or whether the breach is severable, giving rise to a claim for compensation but not to a right to treat the whole contract as broken.

ART 1597

VISAYAN SAWMILL COMPANY, INC., vs. THE HONORABLE COURT OF APPEALS, G.R. NO. 83851. March 3, 1993.

The petitioner agreed to deliver the scrap iron only upon payment of the purchase price by means of an irrevocable and unconditional letter of credit, which the respondent failed to obtain, thus, there was no actual sale. Where the goods have not been delivered to the buyer, and the buyer has repudiated the contract of sale, or has manifested his inability to perform his obligations, thereunder, or has committed a breach thereof, the seller may totally rescind the contract of sale by giving notice of his election to do to the buyer.

XIV. EXTINGUSHMENT OF THE SALE

A. SALE WITH PACTO DE RETRO

ART 1601

NOOL vs. COURT OF APPEALS, G.R. NO. 116635, July 24, 1997

Petitioners contend that they could repurchase the property that they "sold" to private respondents when they allowed the respondent to redeem the properties for them from DBP. DBP, however, certified that the petitioner-mortgagors' right of redemption was not exercised within the period, hence DBP became the absolute owner of said parcels of land when it entered into a Deed of Conditional Sale involving the same parcels of land with Private Respondent as vendee. One "repurchases" only what one has previously sold since the right to repurchase presupposes a valid contract of sale between the same parties.

DIAMANTE vs. HON. COURT OF APPEALS, G.R. NO. L-51824 February 7, 1992

A right to repurchase was granted subsequently in an instrument different from the original document of sale which caused the cancellation of the permit or lease by the Secretary of Fisheries. An agreement to repurchase becomes a promise to sell when made after the sale, because when the sale is made without such an agreement, the purchaser acquires the thing sold absolutely, and if he afterwards grants the vendor the right to repurchase, it is a new contract entered into by the purchaser, as absolute owner already of the object.

VASQUEZ vs. HONORABLE COURT OF APPEALS, G.R. NO. 83759 July 12, 1991

Respondents sold the lot to the petitioners under a Deed of Sale, On the same day and along with the execution of the Deed of Sale, a separate instrument, denominated as Right to Repurchase was executed by the parties, Later, petitioners resisted the action for redemption. The transaction between the petitioners and private respondents was not a sale with right to repurchase, the second instrument is just an option to buy since it is not embodied in the same document of sale but in a separate document, and since such option is not supported by a consideration distinct from the price, said deed for right to repurchase is not binding upon them.

ART 1603

BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

Where in a contract of sale with pacto de retro, the vendor remains in possession, as a lessee or otherwise, the contract shall be presumed to be an equitable mortgage because in a contract of sale with pacto de retro, the legal title to the property is immediately transferred to the vendee, subject to the vendors right to redeem and retention by the vendor of the possession of the property is inconsistent with the vendees acquisition of the right of ownership under a true sale.

ART 1606

ABILLA vs. ANG GOBONSENG, JR., G.R. NO. 146651, January 17, 2002

The legal question to be resolved is "May the vendors in a sale judicially declared as a pacto de retro exercise the right of repurchase under Article 1606, third paragraph, of the Civil Code, after they have taken the position that the same was an equitable mortgage?" No, where the proofs established that there could be no honest doubt as to the parties intention, that the transaction was clearly and definitely a sale with pacto de retro, the vendor a retro is not entitled to the benefit of the third paragraph of Article 1606.

AGAN vs. HEIRS OF SPS. NUEVA, G.R. NO. 155018, December 11, 2003

The lower court's dispositive position states: "However, the vendors can still exercise the right to repurchase said property within thirty (30) days from receipt of this decision pursuant to Article 1606 and 1607 of the New Civil Code." Article 1606 grants the vendor a retro thirty (30) days from the time final judgment was rendered, not from the defendants receipt of the judgment, "final judgment must be construed to mean one that has become final and executory.

ART 1607

Spouses CRUZ vs. LEIS et al., G.R. NO. 125233, March 9, 2000

The lower court rationalized that petitioners failed to comply with the provisions of Article 1607 of the Civil Code requiring a judicial order for the consolidation of the ownership in the vendee a retro to be recorded in the Registry of Property. A judicial order is necessary in order to determine the true nature of the transaction and to prevent the interposition of buyers in good faith while the determination is being made, however, notwithstanding Article 1607, the recording in the Registry of Property of the consolidation of ownership of the vendee is not a condition sine qua non to the transfer of ownership for the method prescribed thereunder is merely for the purpose of registering the consolidated title.

ART 1616

BPI FAMILY SAVINGS BANK, INC. vs. SPS. VELOSO, G.R. NO. 141974, August 9, 2004

The respondents offer to redeem the foreclosed properties and the subsequent consignation in court were made within the period of redemption, but the amount consigned did not include the interest and was also way below the amount paid by the highest bidder-purchaser of the properties during the auction sale. The redemption price should either be fully offered in legal tender or else validly consigned in court because only by such means can the auction winner be assured that the offer to redeem is being made in good faith.

ART 1619

LEE CHUY REALTY CORPORATION vs.HON. COURT OF APPEALS, G.R. NO. 104114 December 4, 1995

Petitioner questions the ruling of the Court of Appeals which concluded that a prior tender or offer of redemption is a prerequisite or precondition to the filing of the action for legal redemption. To avail of the right of redemption what is essential is to make an offer to redeem within the prescribed period. There is actually no prescribed form for an offer to redeem to be properly effected. It can either be through a formal tender with consignation, or by filing a complaint in court coupled with consignation of the redemption price within the prescribed period.

VILLANUEVA vs. HON. ALFREDO C. FLORENDO, G.R. NO. L-33158, October 17, 1985

It is not disputed that co-ownership exists but the lower court disallowed redemption because it considered the vendee, Vallangca, a co-heir, being married to Concepcion Villanueva.

The term "third person" or "stranger in Art. 1620 refers to all persons who are not heirs in succession, either by will or the law or any one who is not a co-owner.

ART 1621

PRIMARY STRUCTURES CORP. vs. SPS. VALENCIA, G.R. NO. 150060. August 19, 2003

Article 1621 of the Civil Code expresses that the right of redemption it grants to an adjoining owner of the property conveyed may be defeated if it can be shown that the buyer or grantee does not own any other rural land.

ART 1622

G.R. NO. 134117. February 9, 2000

SEN PO EK MARKETING CORPORATION vs. MARTINEZ

Petitioner invokes its right of first refusal against private respondents, when Teodora sold the property that petitioner has been leasing. Article 1622 of the New Civil Code only deals with small urban lands that are bought for speculation where only adjoining lot owners can exercise the right of pre-emption or redemption. It does not apply to a lessee trying to buy the land that it was leasing, especially when such right was never stipulated in any of the several lease contracts.

ART 1623

CABALES vs. COURT OF APPEALS, G.R. NO. 162421, August 31, 2007

Petitioners may redeem the subject property from respondents-spouses, but they must do so within thirty days from notice in writing of the sale by their co-owners vendors. In requiring written notice, Art. 1623 seeks to ensure that the redemptioner is properly notified of (a) the sale and (b) the date of such notice, as the date thereof becomes the reckoning point of the 30-day period of redemption.

SPOUSES SI vs. COURT OF APPEALS, G.R. NO. 122047, October 12, 2000

Co-owners with actual notice of the sale are not entitled to written notice. A written notice is a formal requisite to make certain that the co-owners have actual notice of the sale to enable them to exercise their right of redemption within the limited period of thirty days. But where the co-owners had actual notice of the sale at the time thereof and/or afterwards, a written notice of a fact already known to them, would be superfluous. The statute does not demand what is unnecessary.FRANCISCO vs. BOISER, G.R. NO. 137677, May 31, 2000

Art. 1623 of the Civil Code is clear in requiring that the written notification should come from the vendor or prospective vendor, not from any other person. Since the vendor of an undivided interest is in the best position to know who are his co-owners who under the law must be notified of the sale, and is in the best position to confirm whether consent to the essential obligation of selling the property and transferring ownership thereof to the vendee has been given.

LEDONIO vs. CAPITOL DEVELOPMENT CORPORATION, G.R. NO. 149040, July 4, 2007

An assignment of credit has been defined as an agreement by virtue of which the owner of a credit (known as the assignor), by a legal cause - such as sale, dation in payment or exchange or donation - and without need of the debtor's consent, transfers that credit and its accessory rights to another (known as the assignee), who acquires the power to enforce it, to the same extent as the assignor could have enforced it against the debtor.

ART 1625

TEOCO, JR.,vs METROPOLITAN BANK AND TRUST COMPANY, G.R. NO. 162333, December 23, 2008

Would the exercise by the brothers Teoco of the right to redeem the properties in question be precluded by the fact that the assignment of right of redemption was not contained in a public document? NO, the phrase "effect as against third person" in Article 1625 of the Civil Code is interpreted as to be damage or prejudice to such third person, hence if the third person would not be prejudiced then the assignment of right to redeem may not be in a public instrument.

B. EQUITABLE MORTGAGE

ART 1602

HEIRS OF JOSE REYES, JR. vs. REYES, G.R. NO. 158377, August 13, 2010

The provisions of the Civil Code governing equitable mortgages disguised as sale contracts, like the one herein, are primarily designed to curtail the evils brought about by contracts of sale with right to repurchase, particularly the circumvention of the usury law and pactum commissorium. Courts have taken judicial notice of the well-known fact that contracts of sale with right to repurchase have been frequently resorted to in order to conceal the true nature of a contract, that is, a loan secured by a mortgage. It is a reality that grave financial distress renders persons hard-pressed to meet even their basic needs or to respond to an emergency, leaving no choice to them but to sign deeds of absolute sale of property or deeds of sale with pacto de retro if only to obtain the much-needed loan from unscrupulous money lenders. This reality precisely explains why the pertinent provision of the Civil Code includes a peculiar rule concerning the period of redemption, to wit:

Art. 1602. The contract shall be presumed to be an equitable mortagage, in any of the following cases:

x x x(3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed;VDA. DE DELFIN vs DELLOTA, G.R. NO. 143697, January 28, 2008

The essential requisites of an equitable mortgage are: (1) the parties enter into what appears to be a contract of sale, (2) but their intention is to secure an existing debt by way of mortgage and the presence of even one of the circumstances enumerated in Article 1602.

SPS. SANTIAGO vs. DIZON, G.R. NO. 172771, January 31, 2008

Respondent alleged that the transaction was an equitable mortgage because after the sale of the property respondent remained therein, and the price according to respondent was grossly inadequate. The presumption of equitable mortgage created in Article 1602 of the Civil Code is not conclusive and may be rebutted by competent and satisfactory proof of the contrary.

CEBALLOS vs. Intestate Estate of the Late EMIGDIO MERCADO, G.R. NO. 155856, May 28, 2004

Petitioner argues that Mercados delay in registering the Deed of Absolute Sale and transferring the land title shows that the real agreement was an equitable mortgage. Delay in transferring title is not one of the instances enumerated by law in which an equitable mortgage can be presumed.

CEBALLOS vs. Intestate Estate of the Late EMIGDIO MERCADO, G.R. NO. 155856, May 28, 2004

Petitioners contend that the sale was only an equitable mortgage because (1) the price was grossly inadequate, and (2) the vendors remained in possession of the land and enjoyed its fruits. For the presumption of an equitable mortgage to arise, one must first satisfy the requirement that the parties entered into a contract denominated as a contract of sale, and that their intention was to secure an existing debt by way of mortgage.

BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

The purchase price stated in the deed was the amount of the indebtedness of the respondent to petitioner but the deed purports to be a sale with right to purchase. The rule is firmly settled that whenever it is clearly shown that a deed of sale with pacto de retro, regular on its face, is given as security for a loan, it must be regarded as an equitable mortgage.

ART 1604

DEHEZA-INAMARGA vs ALANO, G.R. NO. 171321, December 18, 2008

The provisions of Article 1602 shall also apply to a contract purporting to be an absolute sale, and in case of doubt, a contract purporting to be a sale with right to repurchase shall be construed as an equitable mortgage in consonance with the rule that the law favors the least transmission of property rights.XV. The Subdivision and Condominium Buyers' Protective Decree (P.D. 957)

EUGENIO vs. EXECUTIVE SECRETARY, G.R. NO. 109404, January 22, 1996

Did the failure to develop a subdivision constitute legal justification for the non-payment of amortizations by a buyer on installment under land purchase agreements entered into prior to the enactment of P.D. 957, "The Subdivision and Condominium Buyers' Protective Decree"? P.D. 957 is undeniably applicable to the contracts in question, it follows that Section 23 thereof had been properly invoked by private respondent when he desisted from making further payment to petitioner due to petitioner's failure to develop the subdivision project according to the approved plans and within the time limit for complying with the same.

PNB vs. OFFICE OF THE PRESIDENT, G.R. NO. 104528, January 18, 1996

A buyer of a property at a foreclosure sale cannot disposses prior purchasers on installment of individual lots therein, or compel them to pay again for the lots which they previously bought from the defaulting mortgagor-subdivision developer on the theory that P.D. 957, "The Subdivision and Condominium Buyers' Protective Decree", is not applicable to the mortgage contract in question, the same having been executed prior to the enactment of P.D. 957.

Moreover, the SC held that, P.D. 957 being applicable, Section 18 of said law obliges petitioner Bank to accept the payment of the remaining unpaid amortizations tendered by private respondents. Privity of contracts as a defense does not apply in this case for the law explicitly grants to the buyer the option to pay the installment payment for his lot or unit directly to the mortgagee (petitioner), which is required to apply such payments to reduce the corresponding portion of the mortgage indebtedness secured by the particular lot or unit being paid for.

XVI. The Condominium Act (R.A. NO. 4726)

HULST vs. PR BUILDERS, INC., G.R. NO. 156364, September 25, 2008

Petitioner contends that the Contract to Sell between petitioner and respondent involved a condominium unit and did not violate the Constitutional proscription against ownership of land by aliens. The law expressly allows foreigners to acquire condominium units and shares in condominium corporations up to not more than 40% of the total and outstanding capital stock of a Filipino-owned or controlled corporation, since under this set up, the ownership of the land is legally separated from the unit itself.

CARDINAL BUILDING OWNERS ASSOCIATION, INC. vs. ASSET RECOVERY AND MANAGEMENT CORPORATION, G.R. No. 149696, July 14, 2006

Section 20 of R.A. No. 4726, otherwise known as the Condominium Act, provides:

Sec. 20. An assessment upon any condominium made in accordance with a duly registered declaration of restrictions shall be an obligation of the owner thereof at the time the assessment is made. The amount of any such assessment plus any other charges thereon, such as interest, costs (including attorney's fees) and penalties, as such may be provided for in the declaration of restrictions, shall be and become a lien upon the condominium assessed when the management body causes a notice of assessment to be registered with the Register of Deeds of the city or province where such condominium project is located. The notice shall state the amount of such assessment and such other charges thereon as may be authorized by the declaration of restrictions, a description of the condominium unit against which the same has been assessed, and the name of the registered owner thereof. Such notice shall be signed by an authorized representative of the management body or as otherwise provided in the declaration of restrictions. Upon payment of said assessment and charges or other satisfaction thereof, the management body shall cause to be registered a release of the lien.

Such lien shall be superior to all other liens registered subsequent to the registration of said notice of assessment except real property tax liens and except that the declaration of restrictions may provide for the subordination thereof to any other liens and encumbrances. Such liens may be enforced in the same manner provided for by law for the judicial or extra-judicial foreclosure of mortgage or real property. Unless otherwise provided for in the declaration of restrictions, the management body shall have power to bid at foreclosure sale. The condominium owner shall have the right of redemption as in cases of judicial or extra-judicial foreclosure of mortgages.

Records do not show that petitioner had its notice of assessment registered with the Registry of Deeds of Manila in order that the amount of such assessment could be considered a lien upon Marual's two condominium units. Clearly, pursuant to the above provisions, petitioner's claim can not be considered superior to that of respondent. As mentioned earlier, the deed of sale wherein Marual conveyed to respondent his two condominium units, was registered in the Registry of Deeds of Manila.CHATEAU DE BAIE CONDOMINIUM CORPORATION vs. SPOUSES MORENO, G.R. NO. 186271, February 23, 2011

The petition sought to prohibit the scheduled extrajudicial sale for lack of a special power to sell from the registered owner. Under RA 4726 (the Condominium Act), when a unit owner fails to pay the association dues, the condominium corporation can enforce a lien on the condominium unit by selling the unit in an extrajudicial foreclosure sale, and a special authority from the condominium owner before a condominium corporation can initiate a foreclosure proceeding is not needed.

SUCCESSION

Death & Presumptive Death & Death of Marriage;

Inheritance v. Succession, Patrimony; Money Obligations

Transmission, Non-transmission; Presumptive Legitimes

Survivorship Agreement, Succession & Taxes; Aleatory Contract (Art. 2010, NCC)

Laws governing Form and content In the matter of the Testate Estate of Edward Christensen, G.R. L-16749, January 31, 1963

Whether or not, the intrinsic validity of the testamentary disposition should be governed by Philippine Law, when the national law of the testator refers back to the Philippine Law. Edward is domiciled in the Philippines hence, Philippine court must apply its own laws which makes natural children legally acknowledge as forced heirs of the parent recognizing them.

Vitug vs. Court of Appeals, G.R.NO. 82027, Mar. 29, 1990 183 SCRA 755

A will has been defined as "a personal, solemn, revocable and free act by which a capacitated person disposes of his property and rights and declares or complies with duties to take effect after his death." Cayatenao vs Leonidas, 129 SCRA 524

The law which governs Adoracion Campos will is the law of Pennsylvania, USA which is the national law of the decedent. It is settled that as regards to the intrinsic validity of the provisions of the wills as provided for by article 16 and 1039 of the New Civil Code, the national law of the decedent must apply.Subjects and Object of Succession

Parish Priest of Victoria vs. Rigor, 89 SCRA 483

The issue in this case is whether or not a male relative referred in the will should include those who are born after the testators death. To construe it as referring to the nearest male relative at any time after his death would render the provisions difficult to apply and create uncertainty as to the disposition of the estate.

Opening of Succession

De Borja vs De Borja, G.R. No, L-28040, August 18, 1972

There is no legal bar to a successor to dispose his or her share immediately after such death, even if the actual extent of such share is not determined until the subsequent liquidation of the estate. The effect of such alienation is to be deemed limited to what is ultimately adjudicated to the vendor heir.

Bonilla vs Leon Barcena, G.R. L-41715, June 18, 1976

The right of the heirs to the property of the deceased vests in them even before the judicial declaration of their being declared as heirs. When Fortunata died, her claim or right to the parcel of land in litigation in civil case number 856 was not extinguished by her death but was transmitted to her heirs upon her death.

Borromeo-Herrera vs Borromeo, 152 SCRA 171

The properties included in an existing inheritance cannot be the subject of a contract. The heirs acquire a right to succession from the moment of death of the decedent. In this case, the purported waiver of hereditary rights cannot be considered effective.

Testamentary Succession

Form and Solemnities of Notarial Wills

Baltazar v. Laxa, G.R.NO. 174489, April, 11, 2012 It is an established rule that "[a] testament may not be disallowed just because the attesting witnesses declare against its due execution; neither does it have to be necessarily allowed just because all the attesting witnesses declare in favor of its legalization; what is decisive is that the court is convinced by evidence before it, not necessarily from the attesting witnesses, although they must testify, that the will was or was not duly executed in the manner required by law."Echavez vs. Dozen Cons., G.R.NO. 192916, Oct. 11, 2010An attestation must state all the details the third paragraph of Article 805 requires. In the absence of the required avowal by the witnesses themselves, no attestation clause can be deemed embodied in the Acknowledgement of the Deed of Donation Mortis Causa.

Lopez v. Lopez, G.R.NO. 189984, Nov. 12, 2012

The law is clear that the attestation must state the number of pages used upon which the will is written. The purpose of the law is to safeguard against possible interpolation or omission of one or some of its pages and prevent any increase or decrease in the pages.

Azuela v. CA, 487 SCRA 119 The signatures on the left-hand corner of every page signify, among others, that the witnesses are aware that the page they are signing forms part of the will. On the other hand, the signatures to the attestation clause establish that the witnesses are referring to the statements contained in the attestation clause itself.

Lee v. Tambago, 544 SCRA 393 An acknowledgment is the act of one who has executed a deed in going before some competent officer or court and declaring it to be his act or deed. It involves an extra step undertaken whereby the signatory actually declares to the notary public that the same is his or her own free act and deed. The acknowledgment in a notarial will has a two-fold purpose: (1) to safeguard the testators wishes long after his demise and (2) to assure that his estate is administered in the manner that he intends it to be done.Suroza vs. Honrado, 110 SCRA 388 In the opening paragraph of the will, it was stated that English was a language "understood and known" to the testatrix but in its concluding paragraph, it was stated that the will was read to the testatrix "and translated into Filipino language". That could only mean that the will was written in a language not known to the illiterate testatrix and, therefore, it is void because of the mandatory provision of article 804 of the Civil Code that every will must be executed in a language or dialect known to the testator.Garcia vs. Vasquez, 32 SCRA 489 The rationale behind the requirement of reading the will to the testator if he is blind or incapable of reading the will himself (as when he is illiterate), is to make the provisions thereof known to him, so that he may be able to object if they are not in accordance with his wishes. That the aim of the law is to insure that the dispositions of the will are properly communicated to and understood by the handicapped testator, thus making them truly reflective of his desire, is evidenced by the requirement that the will should be read to the latter, not only once but twice, by two different persons, and that the witnesses have to act within the range of his (the testator's) other senses.

Alvarado vs. Gaviola, Jr., 226 SCRA 348

This Court has held in a number of occasions that substantial compliance is acceptable where the purpose of the law has been satisfied, the reason being that the solemnities surrounding the execution of wills are intended to protect the testator from all kinds of fraud and trickery but are never intended to be so rigid and inflexible as to destroy the testamentary privilege. In the case at bar, private respondent read the testator's will and codicil aloud in the presence of the testator, his three instrumental witnesses, and the notary public. Prior and subsequent thereto, the testator affirmed, upon being asked, that the contents read corresponded with his instructions. Only then did the signing and acknowledgement take place. There is no evidence, and petitioner does not so allege, that the contents of the will and codicil were not sufficiently made known and communicated to the testator. On the contrary, with respect to the "Huling Habilin," the day of the execution was not the first time that Brigido had affirmed the truth and authenticity of the contents of the draft. The uncontradicted testimony of Atty. Rino is that Brigido Alvarado already acknowledged that the will was drafted in accordance with his expressed wishes even prior to 5 November 1977 when Atty. Rino went to the testator's residence precisely for the purpose of securing his conformity to the draft.Javellana vs. Ledesma GR. No. L-7179, 97 Phil 258

The subsequent signing and sealing by the notary of his certification that the testament was duly acknowledged by the participants therein is no part of the acknowledgment itself nor of the testamentary act. Hence their separate execution out of the presence of the testatrix and her witnesses cannot be said to violate the rule that testaments should be completed without interruption.

Cruz vs. Villasor NO.L-32213, 54 SCRA 31

The notary public before whom the will was acknowledged cannot be considered as the third instrumental witness since he cannot acknowledge before himself his having signed the will. This cannot be done because he cannot split his personality into two so that one will appear before the other to acknowledge his participation in the making of the will.

Caneda vs. CA, 222 SCRA 781

The rule on substantial compliance in Article 809 cannot be revoked or relied on by respondents since it presupposes that the defects in the attestation clause can be cured or supplied by the text of the will or a consideration of matters apparent therefrom which would provide the data not expressed in the attestation clause or from which it may necessarily be gleaned or clearly inferred that the acts not stated in the omitted textual requirements were actually complied within the execution of the will.

Lopez v. Lopez, 685 SCRA 209 The statement in the Acknowledgment portion of the subject last will and testament that it "consists of 7 pages including the page on which the ratification and acknowledgment are written"cannot be deemed substantial compliance. The will actually consists of 8 pages including its acknowledgment which discrepancy cannot be explained by mere examination of the will itself but through the presentation of evidence aliunde.

Guerrero v. Bihis, 521 SCRA 394The issue in this case whether the will acknowledged by the testatrix and the instrumental witnesses before a notary public acting outside the place of his commission satisfies the requirement under Article 806 of the Civil Code? Outside the place of his commission, he is bereft of power to perform any notarial act; he is not a notary public. Any notarial act outside the limits of his jurisdiction has no force and effect.Celada v. Abena, 556 SCRA 569

While it is true that the attestation clause is not a part of the will, error in the number of pages of the will as stated in the attestation clause is not material to invalidate the subject will. It must be noted that the subject instrument is consecutively lettered with pages A, B, and C which is a sufficient safeguard from the possibility of an omission of some of the pages.

Form and Solemnities of Holographic Wills

Rodelas vs. Aranza, 119 SCRA 16

The photostatic or xerox copy of a lost or destroyed holographic will may be admitted because then the authenticity of the handwriting of the deceased can be determined by the probate court.

Codoy vs. Calugay, 312 SCRA 333 The word shall connotes a mandatory order. We have ruled that shall in a statute commonly denotes an imperative obligation and is inconsistent with the idea of discretion and that the presumption is that the word shall, when used in a statute is mandatory."

Ajero vs. CA, 236 SCRA 488 Thus, unless the unauthenticated alterations, cancellations or insertions were made on the date of the holographic will or on testator's signature, their presence does not invalidate the will itself. The lack of authentication will only result in disallowance of such changes.Kalaw vs. Relova, 132 SCRA 237 To state that the Will as first written should be given efficacy is to disregard the seeming change of mind of the testatrix. But that change of mind can neither be given effect because she failed to authenticate it in the manner required by law by affixing her full signature. Roxas vs. De Jesus, 134 SCRA 245 As a general rule, the "date" in a holographic Will should include the day, month, and year of its execution. However, when as in the case at bar, there is no appearance of fraud, bad faith, undue influence and pressure and the authenticity of the Will is established and the only issue is whether or not the date "FEB.,61" appearing on the holographic Will is a valid compliance with Article 810 of the Civil Code, probate of the holographic Will should be allowed under the principle of substantial compliance.

Labrador vs. CA, 184 SCRA 170 The law does not specify a particular location where the date should be placed in the will. The only requirements are that the date be in the will itself and executed in the hand of the testator.

Seangio v. Reyes, 508 SCRA 172

Holographic wills being usually prepared by one who is not learned in the law, as illustrated in the present case, should be construed more liberally than the ones drawn by an expert, taking into account the circumstances surrounding the execution of the instrument and the intention of the testator.

Palaganas v. Palaganas, 2011 640 SCRA 538

A foreign will can be given legal effects in our jurisdiction. But, reprobate or re-authentication of a will already probated and allowed in a foreign country is different from that probate where the will is presented for the first time before a competent court.Vda.De Perez vs. Tolete, 232 SCRA 722

What the law expressly prohibits is the making of joint wills either for the testators reciprocal benefit or for the benefit of a third person (Civil Code of the Philippines, Article 818). In the case at bench, the Cunanan spouses executed separate wills. Since the two wills contain essentially the same provisions and pertain to property which in all probability are conjugal in nature, practical considerations dictate their joint probate.

Revocation of Wills and Testamentary Disposition

Modes of Revocation

Casiano vs CA 158 SCRA 451

Revocation under this condition to be effective must have complied with the two requirements: the overt act as mentioned under the law; the intent to revoke on the part of the testator. The document or paper burned by one of the witnesses was not satisfactorily established to be the will at all, much less the will of Adriana.

Adriana Maloto vs. CA, 158 SCRA 451 For one, the document or papers burned by Adriana's maid, Guadalupe, was not satisfactorily established to be a will at all, much less the will of Adriana Maloto. For another, the burning was not proven to have been done under the express direction of Adriana. And then, the burning was not in her presence.

Gago vs. Mamuyac NO. L-26317, 49 Phil 902 Where a will which cannot be found is shown to have been in the possession of the testator, when last seen, the presumption is, in the absence of other competent evidence, that the same was cancelled or destroyed. The same presumption arises where it is shown that the testator had ready access to the will and it cannot be found after his death. It will not be presumed that such will has been destroyed by any other person without the knowledge or authority of the testator.

Seangio v. Reyes, 2006 508 SCRA 172

For disinheritance to be valid, Article 916 of the Civil Code requires that the same must be effected through a will wherein the legal cause therefor shall be specified. With regard to the reasons for the disinheritance that were stated by Segundo in his document, the Court believes that the incidents, taken as a whole, can be considered a form of maltreatment of Segundo by his son, Alfredo, and that the matter presents a sufficient cause for the disinheritance of a child or descendant under Article 919 of the Civil Code.

Doctrine of dependent relative revocation

Molo vs. Molo NO. L- 2538, 90 Phil 37The failure of a new testamentary disposition upon whose validity the revocation depends, is equivalent to the non-fulfillment of a suspensive conditions, and hence prevents the revocation of the original will. But a mere intent to make at some time a will in the place of that destroyed will not render the destruction conditional.

Allowance of Wills

Requirements for probate

Gan vs Yap, 104 Phil. 509 The loss of the holographic will entail the loss of the only medium of proof; if the ordinary will is lost, the subscribing witnesses are available to authenticate. In case of holographic will if oral testimony were admissible only one man could engineer the fraud this way.

Rodelas vs Aranza 119 SCRA 16 If the holographic will has been lost or destroyed and no other copy is available, the will cannot be probated because the best and only evidence is the handwriting of the testator. But a photostatic copy or Xerox copy of the holographic will may be allowed because comparison can be made with the standard writings of the testator.

Azaola vs Singson 109 Phil. 102 Since the authenticity of the will was not contested, the appellant is not required to produce more than one witness. Even if the genuiness of the holographic will were contested, article 811 cannot be interpreted as to require the compulsory presentation of three witnesses to identify the handwriting of the testator, under penalty of having denied the probate.

Codoy vs Calugay, 312 SCRA 333

We cannot eliminate the possibility that if the will is contested, the law requires that three witnesses to declare that the will was in the handwriting of the deceased. A visual examination of the holographic will convince us that the strokes are different when compared with other documents written by the testator.

Effect of allowance of Wills

Gallanosa vs Arcangel, 83 SCRA 676

After the finality of the allowance of a will, the issue as to the voluntariness of its execution cannot be raised anymore. It is not only the 1939 probate proceeding that can be interposed as res judicata with respect to private respondents complaint.

Roberts vs Leonidas, 129 SCRA 33 It is anomalous that the estate of a person who died testate should be settled in an intestate proceeding. Therefore, the intestate case should be consolidated with the testate proceeding and the judge assigned to the testate proceeding should hearing the two cases.

Nepomuceno vs CA, 139 SCRA 206

The general rule is that in probate proceedings, the courts area of inquiry is limited to an examination and resolution of the extrinsic validity of the will. Where practically considerations demand that the intrinsic validity of the will be passed upon, even before it is probated, the court should meet the issue.

Legitime, Institution, Preterition

Aznar vs. Duncan, 17 SCRA 590 To constitute preterition, the omission must be total and complete, such that nothing must be given to the compulsory heir.

Acain vs. IAC, 155 SCRA 100Preterition annuls the institution of an heir and annulment throws open to intestate succession the entire inheritance. The only provisions which do not result in intestacy are the legacies and devises made in the will for they should stand valid and respected, except insofar as the legitimes are concerned.

Nuguid vs. Nuguid, 17 SCRA 449

The will here does not explicitly disinherit the testatrix's parents, the forced heirs. It simply omits their names altogether. Said will rather than be labeled ineffective disinheritance is clearly one in which the said forced heirs suffer from preterition.Seangio v. Reyes G.R.NO. 140371-72, Nov. 27, 2006 508 SCRA 172 The mere mention of the name of one of the petitioners, Virginia, in the document did not operate to institute her as the universal heir. Her name was included plainly as a witness to the altercation between Segundo and his son, Alfredo.

Legitime and Simulated Contracts; Spousal Marital Estrangement

Francisco vs.