Oblicon Cases From 1168 to 1170edted

7/28/2019 Oblicon Cases From 1168 to 1170edted

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G.R. No. 107737 October 1, 1999JUAN L. PEREZ, LUIS KEH, CHARLIE LEE and ROSENDO G.TANSINSIN, JR., petitioners,vs.COURT OF APPEALS, LUIS CRISOSTOMO and VICENTE ASUNCION,respondents.GONZAGA-REYES, J.:This is a petition for review on certiorariof the Decision 1 of the Court ofAppeals affirming the decision of the Regional Trial Court of Bulacan, Branch

9 2 that disposed of Civil Case No. 5610-M (Luis Crisostomo v. Luis Keh,Juan Perez, Charlie Kee and Atty. Rosendo G. Tansinsin, Jr.) as follows:

WHEREFORE, premises considered, judgment is herebyrendered:

a) directing defendant JUAN PEREZ to allowplaintiff LUIS CRISOSTOMO to occupy andoperate the "Papaya Fishpond" for a period of 51/2 years at the rental rates of P150,000.00 forthe first six months and P175,000.00 for theremaining five years (the same rates provided forin Exh. 4);b) ordering defendants LUIS KEH, CHARLIELEE, JUAN PEREZ and Atty. ROSENDOTANSINSIN, JR. to pay unto the plaintiff theamounts of P150,000.00 as actual damages;P20,000.00 as moral damages; P20,000.00 asexemplary damages; and P10,000.00 asattorney's fees, plus the costs of the suit;c) directing the release, delivery or paymentdirectly to plaintiff LUIS CRISOSTOMO of theamounts of P128,572.00 and P123,993.85,including the interests which may have alreadyaccrued thereon, deposited with the Paluwaganng Bayan Savings Bank (Paombong, BulacanBranch) in the name of the Clerk of Court and/orDeputy Clerk of Court Rodrigo C. Libunao underthis Court's Order dated February 14, 1980;however, the plaintiff is required to pay defendantPerez the corresponding rental on the fishpondfor the period June 1979-January 1980 based on

the rate of P150,000.00 per annum, deductintherefrom the amount of P21,428.00 alreadyto and received by then co-usufructuary MarPerez (Exh. E);d) dismissing the defendants' separate countclaims for damages, for lack of merit; ande) dismissing the Pleading in Intervention PrInteresse Suo filed by VICENTE ASUNCIONthe ground oflis pendens.

SO ORDERED.The facts upon which the Court of Appeals based its Decision are thefollowing:Along with Maria Perez, Fructuosa Perez, Victoria Perez, Apolonio Loreand Vicente Asuncion, petitioner Juan Perez is a usufructuary of a parceland popularly called the "Papaya Fishpond." Covered by Transfer Certiof Title No. 8498 of the Registry of Deeds for the Province of Bulacan, thfishpond is located in Sto. Rosario, Hagonoy, Bulacan and has an area around 110 hectares. On June 5, 1975, the usufructuaries entered into acontract leasing the fishpond to Luis Keh for a period of five (5) years anrenewable for another five (5) years by agreement of the parties, under condition that for the first five-year period the annual rental would beP150,000.00 and for the next five years, P175,000.00. Paragraph 5 of thlease contract states that the lessee "cannot sublease" the fishpond "noassign his rights to anyone." 3

Private respondent Luis Crisostomo, who reached only the 5th grade, isbusinessman engaged in the operation of fishponds. On September 20,1977, while he was at his fishpond in Almazar, Hermosa, Bataan, his bofriend named Ming Cosim arrived with petitioner Charlie Lee. The twopersuaded private respondent to take over the operation of "PapayaFishpond" as petitioner Lee and his partner, petitioner Luis Keh, wereallegedly losing money in its operation. Private respondent having accedto the proposal, sometime in December of that year, he and petitioners and Keh executed a written agreement denominated as "pakiao buwis"whereby private respondent would take possession of the "PapayaFishpond" from January 6, 1978 to June 6, 1978 in consideration of theamount of P128,000.00 broken down as follows: P75,000.00 as rental,P50,000.00 for the value of milkfish in the fishpond and P3,000 for laborexpenses. Private respondent paid the P75,000.00 to petitioner Keh at thouse of petitioner Lee in Sta. Cruz, Hagonoy, Bulacan in the presence


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be deposited in the name of the deputy clerk ofcourt of Branch 6 of the then Court of FirstInstance of Bulacan with the same branch of thePaluwagan ng Bayan Savings & LoanAssociation, Inc. and which deposit shall not bewithdrawn unless upon order of the court afterhearing.

The court approved that agreement on that same date.Thereafter, the usufructuaries entered into a contract of lease with Vicente

Raymundo and Felipe Martinez for the six-year period of June 1, 1981 toMay 30, 1987 in consideration of the annual rentals of P550,000.00 for thefirst two years and P400,000.00 for the next four years. Upon expiration ofthat lease, the same property was leased to Pat Laderas for P1 million ayear.The complaint was later amended to include petitioner Tansinsin, the allegedadministrator of the fishpond, as one of the defendants. 9 Except in the jointanswer that the defendants had filed, petitioners Keh and Lee did not appearbefore the court. Neither did they testify.In their defense, petitioners Juan Perez and Tansinsin presented evidence toprove that they had negotiated for the lease of the property with Benito Kehin 1975. However, they averred, for reasons unknown to petitioner Perez, in

the contract of lease that petitioner Tansinsin prepared, petitioner Luis Kehwas named as lessee. Petitioner Perez had never met Keh or Lee butaccording to petitioner Tansinsin, petitioner Luis Keh was substituted forBenito Keh because the latter was preoccupied with his other businesses.Sometime in 1979, petitioner Keh's agent named Catalino Alcantara relayedto petitioner Perez, Keh's intention to surrender possession of the fishpond tothe usufructuaries. Because petitioner Perez demanded that said intentionshould be made in writing, on June 5, 1979, Perez received from Keh a letterto that effect.When private respondent received a copy of that letter of petitioner Keh, hetook the position that petitioner Perez had no right to demand possession ofthe fishpond from him because Perez had no contract with him. Privaterespondent was allowed four (4) months within which to vacate the premisesbut he immediately filed the complaint for injunction and damages.Thereafter, private respondent's counsel, Atty. Angel Cruz and other personstried to prevail upon petitioner Perez to allow private respondent to occupythe property for three (3) more years. Petitioner Perez declined thatproposition.

On September 6, 1989, the lower court rendered the aforesaid decision.arrived at the conclusion that the defendants therein "conspired with oneanother to exploit the plaintiff's naivete and educational inadequacies anthe process, to defraud him by inducing him into taking possession of th"Papaya Fishpond" in their fond hope that, as soon as the plaintiff applying his known expertise as a successful fishpond operator shall considerably improved the fishpond, they will regain possession of thepremises and offer the lease thereof to other interested parties at muchhigher rental rates as laid bare by supervening realities." That conclusio

was founded on the following:1. The plaintiffs (private respondent Crisostotestimony bears the "hallmarks of truth: candstraightforward and uncontrived." He had prohimself a "much more credible witness than hopponents."2. The notarized receipt of Maria Perez of heshare as a usufructuary in the rental for 1979is a "clear avowal of plaintiffs legitimate operof the "Papaya Fishpond" as assignee ortransferee thereof." It was impossible for the usufructuaries, especially Juan Perez who w

residing in the same locality and actively invoin the "affairs of the fishpond," not to have knthat plaintiff occupied the fishpond for one anhalf years as assignee of Keh and Lee. It waunbelievable that both Tansinsin and Perez wonly perceive the plaintiff as a mere encargaKeh and Lee.3. The receipt whereby Tansinsin acknowledpayment of P150,000.00 as rental for June 1May 1979 bears "tell-tale signs" of the conspFirstly, the statement "Mr. Luis Keh has nottransferred his rights over the fishpond to anyperson" is entirely irrelevant to that receipt unit was intended "to preempt plaintiff's claim orights and interests over the said property aseither sub-lessee or assignee." Secondly, Kehaving signified "Conforme to the above" is agratuitous notation as it actually indicates tha


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be in possession of the Papaya Fishpond as findings of fact of the trial courtcannot be reviewed in a certiorariproceeding.1wphi1.ntThe Court of Appeals ruled further that appellee Crisostomo "cannot beconsidered a possessor in bad faith, considering that he took possession ofthe fishpond when appellants Keh and Lee assigned to him appellant Keh'sleasehold right." It held that appellant Perez knew of the transfer ofpossession of the fishpond to appellee and that the receipt evidencingpayment of the 1978-1979 rental even bears an expressed admission by Leethat the payment came from appellee Crisostomo.

Agreeing with the court a quo that "defendants-appellants employed fraud tothe damage and prejudice of plaintiff-appellee," the Court of Appeals heldthat appellants should be held liable for damages. As regards theintervention pro interesse suo, the appellate court ruled that the same shouldbe allowed because, even if the litigation would not be technically bindingupon him, complications might arise that would prejudice his rights. Pointingout that a usufruct may be transferred, assigned or disposed of, the Court ofAppeals ruled that the intervenor cannot be excluded as a usufructuarybecause he had acquired his right as such from a sale in execution of theshare of Jorge Lorenzo, one of the usufructuaries of the fishpond.Herein petitioners filed a motion for the reconsideration of that Decision ofthe Court of Appeals. They alleged that the Decision was premature because

it was rendered when they had not yet even received a copy of theintervenor's brief wherein assignments of errors that directly affected theirrights and interests were made. They insisted that the principle ofresjudicata was applicable because in G.R. No. 64354, this Court upheld theDecision of the Court of Appeals in CA-G.R. No. 10415. They added thatappellee Crisostomo was guilty of forum shopping because the issue ofpossession had been "squarely decided" in CA-G.R. No. 10415. Theystressed that the contract of lease between Keh and the usufructuariesprohibited subleasing of the fishpond; that by the receipt dated June 6, 1978,it was Keh who paid the rental; that appellee Crisostomo was a perjuredwitness because in the notebook showing his expenses, the amount ofP150,000.00 for rentals does not appear; that the term of the contract hadexpired and there was no renewal thereof, and that the consideration ofP150,000.00 was grossly inadequate. They averred that the Court of Appealserred in awarding damages that were not prayed for in the second amendedcomplaint and that amounts not specified in the complaint were awarded asdamages. They disclaimed that Atty. Tansinsin was the administrator of thefishpond.

On October 30, 1992, the Court of Appeals denied the motion forreconsideration for lack of merit. It ruled that the Decision was notprematurely promulgated "considering that the intervention proceeding isolely between intervenor and defendants-appellants, which is completeseparable and has nothing to do with the merits of the appeal."In the instant petition for review on certiorari, petitioners raise six (6) grofor giving due course to it. 11 Those grounds may be distilled into thefollowing: (a) the applicability of the principle ofres judicata; (b) thepremature promulgation of the Decision of the Court of Appeals, and (c)

private respondent was not a sublesee of the fishpond under the law.In arguing that the principle ofres judicata applies in this case, petitionerely on the portion of the Decision 12 of the Court of Appeals in CA-G.R. 10415 that states:

We find no basis for declaring respondent Judge guilty of gabuse of discretion on this regard. The trial court's finding petitioner does not appear entitled to any contract or law tretain possession of the fishpondin question since he is nan assignee or sub-lessee and, therefore, merely a strangthe contract of lease is a finding of fact review of which is nproper in a certiorariproceedings. Not only is petitioner noparty to the lease agreement over the fishpond in question

also the very authority upon which he predicates hispossession over the fishpond that the leasehold right ofKeh had been assigned to him undoubtedly lacks basis the very contractbetween Luis Keh and the lessors expresprovides

That the lessee cannot sub-lease above-described fishpond nor assign his rights toanyone.

xxx xxx xxx(Emphasis supplied by petitioners.) 13

Petitioners assert that said Decision of the Court of Appeals which was effect upheld by this Court when it denied the petition for review on certiin G.R. No. 64354 (Luis Crisostomo v. Intermediate Appellate Court), 14

"res judicata to the issue of possession in this case." 15 However, asexpressed in that quoted portion of the Decision in CA-G.R. No. 10415, issue of whether private respondent is an assignee or a sub-lessee "is afinding of fact review of which is not proper in a certiorariproceeding" orproceeding in that case.


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respondent sought to intervene in the latter case simply toprotect his right as usufructuary in the money deposited in thecourt by the plaintiff Luis Crisostomo. We hold that in allowingthe intervention in this case the trial court acted with prudenceand exercised its discretion wisely. 24

Unconvinced by the Court of Appeals' Decision in CA-G.R. SP No. 13519,petitioner Juan Perez filed a petition for review on certiorariwith this Courtunder G.R. No. 82096. On May 9, 1988, this Court denied the petition on thegrounds that the issues raised are factual and that there is no sufficient

showing that the findings of the respondent court are not supported bysubstantial evidence or that the court had committed any reversible error inthe questioned judgment. 25 The Resolution of the Court dated May 9, 1988became final and executory on August 26, 1988. 26

Moreover, granting that the intervention be considered as Vicente Asuncion's"appeal," a litigant's failure to furnish his opponent with a copy of his appealdoes not suffice to warrant dismissal of that appeal. In such an instance, allthat is needed is for the court to order the litigant to furnish his opponent witha copy of his appeal. 27 This is precisely what happened in this case. On May13, 1992, the Court of Appeals issued a Resolution directing counsel forintervenor to furnish herein petitioners with a copy of intervenor VicenteAsuncion's brief within a 10-day period. It also granted petitioners an

opportunity to file a reply-brief or memorandum and the intervenor, a reply tosaid memorandum. 28 That Resolution is proper under the premises because,by the nature of an intervention pro interesse suo, it can proceedindependently of the main action. Thus, in the Resolution of October 30,1992, in resolving the issue of the alleged prematurity of its Decision, theCourt of Appeals held that "the proceeding is solely between intervenor anddefendants-appellants, which is completely separable and has nothing to dowith the merits of the appeal." 29

At the hearing of Civil Case No. 5610-M, petitioner Juan Perez attempted toestablish the death on October 14, 1979 of Jorge Lorenzo, 30 theusufructuary from whom Vicente Asuncion derived his right to intervene prointeresse suo. Since under Article 603 of the Civil Code a usufruct is

extinguished "by the death of the usufructuary, unless a contrary intentionclearly appears," there is no basis by which to arrive at the conclusion thatthe usufruct originally exercised by Jorge Lorenzo has indeed beenextinguished or, on the contrary, has survived Lorenzo's demise on accountof provisions in the document constituting the usufruct. That matter is bestaddressed in Civil Case No. 8215-M wherein Vicente Asuncion seeks his

share as a transferee of the usufruct established for Jorge Lorenzo. All tdiscussed here is the matter of intervention pro interesse suovis-a-vis tissue of prematurity of the Decision of the Court of Appeals.Petitioners' principal argument against the Court of Appeals' Decision inof private respondent Crisostomo is that he could not have been an assor sub-lessee of the fishpond because no contract authorized him to be Petitioners' argument is anchored on factual issues that, however, haveroom for discussion before this Court. It is well-entrenched doctrine thatquestions of fact are not proper subjects of appeal by certiorariunder R

45 of the Rules of Court as this mode of appeal is confined to questionslaw. 31 Factual findings of the Court of Appeals are conclusive on the paand carry even more weight when said court affirms the factual findings the trialcourt. 32 Accordingly, this review shall be limited to questions of law arisifrom the facts as found by both the Court of Appeals and the trial court.Admittedly, the contract between the usufructuaries and petitioner Keh hprovision barring the sublease of the fishpond. However, it was petitioneKeh himself who violated that provision in offering the operation of thefishpond to private respondent. Apparently on account of privaterespondent's apprehensions as regards the right of petitioners Keh and to transfer operation of the fishpond to him, on January 9, 1978, petition

Keh executed a document ceding and transferring his rights and interesover the fishpond to petitioner Lee. That the same document might havebeen a ruse to inveigle private respondent to agree to their proposal thaoperate the fishpond is of no moment. The fact is, petitioner Keh did tranhis rights as a lessee to petitioner Lee in writing and that, by virtue of thadocument, private respondent acceded to take over petitioner Keh's righa lessee of the fishpond.Although no written contract to transfer operation of the fishpond to privarespondent was offered in evidence, 33 the established facts further showpetitioner Juan Perez and his counsel, petitioner Tansinsin, knew of andacquiesced to that arrangement by their act of receiving from the privaterespondent the rental for 1978-79. By their act of receiving rental from p

respondent through the peculiarly written receipt dated June 6, 1978,petitioners Perez and Tansinsin were put in estoppel to question privaterespondent's right to possess the fishpond as a lessee. Estoppel in paisarises when one, by his acts, representations or admissions, or by his osilence when he ought to speak out, intentionally or through culpablenegligence, induces another to believe certain facts to exist and such ot


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rightfully relies and acts on such belief, so that he will be prejudiced if theformer is permitted to deny the existence of such facts. 34

Nevertheless, we hesitate to grant private respondent's prayer that he shouldbe restored to the possession of the fishpond as a consequence of hisunjustified ejectment therefrom. To restore possession of the fishpond to himwould entail violation of contractual obligations that the usufructuaries haveentered into over quite a long period of time now. Supervening events, suchas the devaluation of the peso as against the dollar as well as the addition ofimprovements in the fishpond that the succeeding lessees could have

introduced, have contributed to the increase in rental value of the property.To place private respondent in the same position he was in before the liftingof the restraining order in 1980 when he was deprived the right to operate thefishpond under the contract that already expired in 1985 shall be to sanctioninjustice and inequity. This Court, after all, may not supplant the right of theusufructuaries to enter into contracts over the fishpond through this Decision.Nonetheless, under the circumstances of the case, it is but proper thatprivate respondent should be properly compensated for the improvements heintroduced in the fishpond.1wphi1.ntArt. 1168 of the Civil Code provides that when an obligation "consists in notdoing and the obligor does what has been forbidden him, it shall also beundone at his expense." The lease contract prohibited petitioner Luis Keh, as

lessee, from subleasing the fishpond. In entering into the agreement forpakiao-buwis with private respondent, not to mention the apparent artificethat was his written agreement with petitioner Lee on January 9, 1978,petitioner Keh did exactly what was prohibited of him under the contract tosublease the fishpond to a third party. That the agreement forpakiao-buwiswas actually a sublease is borne out by the fact that private respondent paidpetitioners Luis Keh and Juan Perez, through petitioner Tansinsin theamount of annual rental agreed upon in the lease contract between theusufructuaries and petitioner Keh. Petitioner Keh led private respondent tounwittingly incur expenses to improve the operation of the fishpond. Byoperation of law, therefore, petitioner Keh shall be liable to privaterespondent for the value of the improvements he had made in the fishpond or

for P486,562.65 with interest of six percent (6%) per annum from therendition of the decision of the trial court on September 6, 1989. 35

The law supports the awards of moral and exemplary damages in favor ofprivate respondent and against the petitioners. Their conspiratorial schemeto utilize private respondent's expertise in the operation of fishponds to bailthemselves out of financial losses has been satisfactorily established to

warrant a ruling that they violated Article 21 of the Civil Code and therefprivate respondent should be entitled to an award of moral damages. Ar21 states that "(a)ny person who wilfully causes loss or injury to anothermanner that is contrary to morals, good customs or public policy shallcompensate the latter for the damage." Exemplary damages shall likewiawarded pursuant to Article 2229 of the Civil Code. 36 Because privaterespondent was compelled to litigate to protect his interest, attorney's feshall also be awarded. 37

WHEREFORE, in light of the foregoing premises, the decision of the Co

Appeals is AFFIRMED insofar as it (a) directs the release to privaterespondent of the amounts of P128,572.00 and P123,993.85 deposited the Paluwagan ng Bayan Savings Bank in Paombong, Bulacan and (b)requires private respondent Crisostomo to pay petitioner Juan Perez therental for the period June 1979 to January 1980 at the rate of P150,000.per annum less the amount of P21,428.00 already paid to usufructuary Perez. It should, however, be subject to the MODIFICATIONS that:

1. Petitioner Luis Keh shall pay privaterespondent Luis Crisostomo in the amount oP486,562.25 with legal interest from the rendof the judgment in Civil Case No. 5610-M or September 6, 1989, and

2. Petitioners be made liable jointly and seveliable for moral damages of P50,000.00,exemplary damages of P20,000 and attorneyfees of P10,000.00.

No costs.SO ORDERED.G.R. No. L-22359 November 28, 1924

JULIO DE LA ROSA, plaintiff-appellant,vs.THE BANK OF THE PHILIPPINE ISLANDS, defendant-appellant.

Ramon Sotelo for plaintiff-appellant.

Araneta and Zaragoza for defendant-appellant.

ROMUALDEZ,J.:This action was instituted on June 11, 1923, by means of a complaint on

ground that the defendant bank started a contest of designs and plans for theconstruction of a building, announcing that the prizes would be awarded not latthat on November 30, 1921; that the plaintiff took part in said contest, havingperformed work and incurred expenses for that purpose; that said bank refraine


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from naming judges and awarding the prizes in accordance with the conditionsstipulated. The plaintiff prays that judgment be rendered in his favor for the sum ofP30,000 as damages, with interest and the costs.

The defendant bank answered denying the facts contained in the second andfollowing paragraphs of the complaint.

After the trial, the court rendered judgment ordering the defendant bank to paythe plaintiff an indemnity of P4,000 and the costs.

Both parties appealed from this judgment, the plaintiff assigning the followingerrors as committed by the trial court:

1. In holding that the sum of P4,000 was a just and reasonable indemnity tothe plaintiff.2. In not ordering the defendant bank to pay the P30,000 prayed for in thecomplaint.

The defendant bank, in turn, assigned the following errors as committed by thetrial court:

1. In holding that the date set for the award of prizes is essential in thecontract.2. In ordering that the sum of P4,000 be paid to the plaintiff.

The fundamental question on which the plaintiff's action depends is raised inthe first assignment of error made by the defendant bank, or, whether or not the dateset for the award of the prizes was essential in the contract and, therefore, whether or

not the failure to award the prizes on said date was breach of contract on the part ofthe defendant.

First of all, we find that due to the fact that the bank started and advertised thesaid contest, offering prizes under certain conditions, and the plaintiff prepared, bylabor and expense, and took part in said contest, the bank is bound to comply withthe promise made in the rules and conditions prepared and advertised by it.

A binding obligation may even originate in advertisements addressedto the general public. (6 R. C. L., 600.)

It is an elementary principle that where a party publishes an offer to theworld, and before it is withdrawn another acts upon it, the party making theoffer is bound to perform his promise. This principle is frequently applied incases of the offer of rewards, . . . (6 R. C. L., 607.)

What is to be determined is whether or not the defendant bank was in defaultin not awarding the prizes on November, 30, 1921.

The plaintiff contends that it was, according to paragraph 2 of article 1100 ofthe Civil Code, the complete text of which is as follows:

Persons obliged to deliver or to do something are in default from moment the creditor demands of them judicially or extrajudicially thefulfillment of their obligation.

Nevertheless, the demand of the creditor shall not be necessary inthat the default may arise

1. When the obligator or the law expressly so provides;2. When by reason of the nature and circumstances of the obligashall appear that the designation of the time at which the thing wbe delivered or the service rendered was the principal induceme

the creation of the obligation.In reciprocal obligations neither of the obligators shall be in defau

the other does not fulfill or does not submit to the fulfillment of that whincumbent upon him. From the time on the obliges performs his obligatthe default begins for the other party.

And the party plaintiff contends that the said date was the principalinducement because the current cost of concrete buildings at the time was fixedfixation of said price cannot be considered as the principal inducement of thecontract, but undoubtedly only for the uniformity of the designs to be presentedto secure greater justice in the appreciation of the relative merits of each worksubmitted.

Such fixation of price, naturally, was not the principal inducement for the

contestants. Neither was it for the bank which could not certain that said price wcontinue to be current price when it desired to construct the building designed.

We do not find sufficient reason for considering that the date set for the rof the prizes was the principal inducement to the creation of the obligation. Andtaking into consideration the criterion that must be followed in order to judgewhether or not the time for the performance of the obligation is the principalinducement in a given case, we hold that it was not in the instant case.

The distinguished Manresa explains the matter in the following terms:1awphi1.net

These words ("principal inducement" in paragraph 2 of article 11the Civil Code) whose special meaning in connection with this article ancircumstances of each obligation does not permit of their being confuse

the permanent general idea, and the distinct clearness of consideration ocontracts, may give rise to serious doubts by reason of the breadth ofexpression, and must be judged in each particular case, it being impossigive a general rule to explain them. It will for instance, be unquestionabthat the hypothesis implied in this exception is affected when the matterinstance, is the delivery of things of the rendition of services to be empl


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in agricultural work, and the time of said work has been designated as thedate for the fulfillment of the obligation; it will also exist when, for instance,fruits or any objects are to be delivered which might be used by the creditorin industrial operations having a determinate period for carrying them out anddesignated for their delivery; and, finally, it will also assist whenever, as inthese cases, it appears that the obligation would not have been created for adate other than that fixed.

The defendant bank cannot be held to have been in default through the merelapse of time. For this judicial or extrajudicial demand was necessary for the

performance of the obligation, and it was not alleged here, nor does it appear thatbefore bringing this action the plaintiff had ever demanded it from the defendantbank in any manner whatsoever. The defendant bank, therefore, was not in default.

The plaintiff's allegation that the defendant bank abstained from continuing thecontest was not proven. On the contrary, it was proved, and so stated in the decisionappealed from, that during the trial of this case in the Court of First Instance thedesigns were on the way to New York where they were sent to a technicalcommittee.

This committee, according to the new evidence before us presented by thedefendant bank and which we now hold admissibe and admit, was appointed by thedefendant bank for the study and determination of the designs presented and entitledto the prizes advertised, and which rendered its report and awarded the prizes in

accordance with the rules and conditions of the contract, except in regard to the dateof such award of prizes which, as we have found, is not essential to the contract inquestion.

It appearing that the defendant bank was not in default it is needles to discussthe other questions raised, all depending upon the existence of said default.

We find the plaintiff has no cause of action in this case,The judgment appealed from is reversed and the defendant is entirely absolved

from the complaint, without any express finding as to costs. So ordered.Johnson, Street, Malcolm, Villamor, Ostrand and Johns, JJ., concur.PEDRO MARTINEZ,Plaintiff-Appellant,

G. R. No. 7663

October 20, 1913-versus-

MATIAS CAVIVES, ET AL.,Defendants-Appellees.

ROBERT LINEAU, ADMINISTRATOR,Intervener-Appellant.

D E C I S I O NTREN

Pedro Martinez, the plaintiff in this case, seeks to recover from M

Cavives and Severino Cavives, the defendants, on some promissory executed by them in 1896. The first note, in the sum of $4,317.15 Mecurrency, was executed on April 8 of that year, and was jointly signthem and their brother, Carlos Cavives, now deceased. The note calinterest at ten per cent annum. Matias Cavives obtained $300 on Ap$200 on May 30 and $200 on June 7 of that year, and Severino Cav$600 on June 9 [all Mexican currency], each of which stipulated thasums mentioned therein had been borrowed under the same termconditions as were expressed in the joint obligation of the three broabove mentioned. The due execution of all these notes is admitted. Nothese notes were ever paid by any of the three brothers. On June 14, 189deceased brother Carlos entered into an agreement with the plaintiff wh

all the obligations contracted by the three brothers during the year 1896liquidated and a new note was executed and signed by these two p(Exhibit 4), its amount, $9,483,5 reales, 17 cuartos, purporting to includprincipal and interest at the specified rate up to the date of its executionevidence of record shows that Carlos Cavives, in executing this note, ato obtain the signatures of his brothers to it, but this was never done. Dthe settlement of the estate of the deceased Carlos, an agreement was eninto by his widow and Pedro Martinez, whereby the latter agreed to aP3,000 in full satisfaction of his claim against her husband's estate, aconsiderably less than the principal and accumulated interest of the orinotes. A note [Exhibit 5] was executed under these conditions, wherebwidow was to pay its face value in annual installmen

The contention of the defendants, sustained by the Court below, was thoriginal obligations had been novated by the agreement made in between Carlos Cavives and Pedro Martinez. It was held that as eitherto this agreement exercised proper diligence in securing the signatures other brothers, there was a tacit consent to permit the obligation to stan


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debt against Carlos Cavives alone. The fact that the compromise settlementmade between the plaintiff and the widow of Carlos Cavives made nomention of the amounts borrowed by Matias and Severino Cavives wasdeemed by the court further proof of the intention of the plaintiff to novatethe debts of the three brothers and hold only Carlos liable for their payment.

Article 1205 of the Civil Code reads as follows: "Novation, consisting in thesubstitution of a debtor in the place of the original one, may be made withoutthe knowledge of the latter, but not without the consent of the creditor."

So far as Exhibit 4 is concerned, it cannot be presumed that the plaintiffconsidered the liability of Carlos alone as better than the liability of all threeof the brothers, since Carlos promised, at his request, to secure the signaturesof his brothers to this document. Nor can it be presumed, in the absence ofevidence, that there was any consideration present to induce Carlos toassume what was theretofore strictly a liability of his brothers. So that toconstrue Exhibit 4 to the effect that by its terms Carlos was substituted as thesole debtor of the plaintiff would mean that the latter accepted less securityfor his loans than he originally had, and that the former assumed liabilitieswhich he was under no obligation to assume and for which he was no validconsideration. At the time this instrument was executed, then, it was not the

intention of either of the signers to release these defendants as debtors of theplaintiff. As to the subsequent silence of both parties to this agreement, Wedo not consider that it was, at least so far as the plaintiff was concerned, ofany significance. He signed Exhibit 4 at the time Carlos Cavives signed it onthe condition that the latter would secure the signatures of his two brothersto it, thereby creating a joint obligation against the three. Carlos Cavivesnever secured the signatures of his brothers. The contract in questioncontained mutual obligations which were to be fulfilled by each of thesigners, i.e., on the part of Carlos to secure the signatures of his brothers tothe instrument, and then on the part of the plaintiff to recognized it as a jointobligation of the three brothers covering their indebtedness to him.

The last paragraph of Article 1100 of the Civil Code reads as follows: "Inmutual obligations, none of the persons bound shall incur default if the otherdoes not fulfill or does not submit to properly fulfill what is incumbent uponhim. From the time one of the persons obligated fulfills his obligation, thedefault begins for the other party."

Until Carlos obtained the signatures of his brothers to this instrumencannot say that the plaintiff was in any way bound to acknowledgeanything more than an executory contract containing a condition precwhich was to be performed by Carlos Cavives before his [the plainobligation was due. Mere continued silence on his part could signify nountil the signatures of the two brothers had been secured. As fuindication that this contract [Exhibit 4] was not considered as dischathe original obligation of the defendants in this case, it may be noted thplaintiff has never surrendered, nor was he ever called upon to surrend

far as this record shows, the original promissory notes executed by defendants. They are still in his possession. Up to the time of the comprsettlement between the plaintiff and the widow of Carlos, at least, there a scintilla of evidence to show that either party to the contract of considered it as a discharge of the original debtors, Severino and MCavives. The compromise settlement with the widow of Carlos, Exhibirelied upon to show novation. In this document, plaintiff makesettlement, in effect, that the whole sum of the liquidated obligation obrothers set forth in Exhibit 4 was a liability against the estate of Carlourged that this shows the plaintiff's intention to novate the desubstituting Carlos as his sole debtor in lieu of the defendants. There ifact which points strongly against this conclusion. That is, that the pr

action against these defendants was instituted some months previous tdate of the compromise settlement and has been prosecuted by the plawith due diligence ever since its institution. But admitting, for the mothat by this compromise settlement he was desirous of so substituting Cas his sole debtor in lieu of the defendants, it does not by any means fthat he could do so without the consent of Carlos. The consent of thedebtor is as essential to the novation as is that of the creditor. As Weseen, there is nothing to show that Carlos ever consented to suarrangement. Indeed, the evidence is all the other way. A mere recital thhad so consented to accept full liability for the debts of his broespecially after his death, would not be sufficient to establish the fact. Bcannot believe that this statement was intended to have any such meani

the plaintiff in view of the fact that at the time it was made he was acprosecuting a suit against the brothers who were originally liable adebtors, and the further fact that the total amount due him, inclinterest, was greatly in excess of the sum due him in 18

Furthermore, the position taken by these defendants in their Ame


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Answer is diametrically opposed to the defense of novation. In that AmendedAnswer, they say: "That these defendants have never refused to pay theproportion of the total amount borrowed which they justly owe, that is, one-third of it, to Don Francisco Martinez, or his executor or administrator, or toall of his heirs, but they do refuse to pay to one of the heirs what belongs toall of them."

Article 1204 of the Civil Code reads: "In order that an obligation may beextinguished by another which substituted it, it is necessary that it should be

so expressly declared, or that the old and new be incompatible in all points."

In its Decision of December 31, 1904, the Supreme Court of Spain said:"Novation of contracts cannot be presumed in any case unless it is anecessary result of the express will of the parties, or that the old and the newobligations are incompatible in all points."

To the same effect is its Decision of January 25, 1899. In its Decision ofMarch 14, 1908, that High Court said [quoting from the syllabus]: "It is notproper to consider an obligation novated by unimportant modificationswhich do not alter its essence and when it is not extinguished by anotherwhich takes its place or substitutes the person of the debtor." To the same

effect are the Decisions of April 15, 1909, and July 8, 1910.

In Latiolais, Admrx. vs. Citizens' Bank of Louisiana [33 La. Ann., 1444], oneDuclozel mortgaged property to the defendant band for the triple purpose ofobtaining shares in the capital stock of the bank, bonds which the bank wasauthorized to issue, and loans to him as a stockholder. Duclozel subsequentlysold this mortgaged property to one Sproule, who, as one of the terms of thesale, assumed the liabilities of his vendor to the bank. Sproule sold part of theproperty to Graff and Chalfant. The debt becoming due, the bank broughtsuit against the last two named persons and Sproule as owners. Duclozel wasnot made a party. The bank discontinued these proceedings and subsequentlybrought suit against Latiolais, administratrix of Duclozel, who had died.

The Court said:"But the plaintiff insists that in its petition in the proceeding firstbrought the bank ratified the sale made by Duclozel to Sproule, and bythe latter to other parties, in treating them as owners. Be that so, but itdoes not follow, in the absence of either a formal and express or of an

implied consent to novate, which should be irresistibly inferredsurrounding circumstances, that it has discharged Duunconditionally, and has accepted those parties as new deledebtors in his place.Nemo presumitur donare."Novation is a contract, the object of which is: either to extinguiexisting obligation and to substitute a new one in its place; discharge an old debtor and substitute a new one to him; substitute a new creditor to an old creditor with regard to whomdebtor is discha

"It is never presumed. The intention must clearly result fromterms of the agreement or by a full discharge of the original Novation by the substitution of the new debtor can take place withe consent of the debtor, but the delegation does not opernovation, unless the creditor has expressly declared that he intendischarge with delegating debtor, and the delegating debtor was nopen failure or insolvency at the time. The mere indication by a dof a person who is to pay in his place does not operate a novaDelegatus debitor est odiosus in "The most that could be inferred would be that the bank i

exercise of a sound discretion, proposed to better its conditioaccepting an additional debtor to be and remain bound witoriginal one."

In Fidelity L. & T. Co. vs. Engleby (99 Va., 168), the Court said: "Whethnot a debt has been novated is a question of fact and depends entirely the intention novated. In the absence of satisfactory proof to the contrarpresumption is that the debt has not been extinguished by taking theevidence of indebtedness; such new evidence, in the absence of an inteexpressed or implied, being treated as a conditional payment mer

In Hamlin vs. Drummond [91 Me., 175; 39 A., 551], it was said that novis never presumed but must always be proven. In Netterstorm vs. Ga

[110 Ill. App., 352], it was said that the burden of establishing a novaton the party who asserts its existence; that novation is not easily presuand that it must clearly appear before the court will recognize

There is no express stipulation in any of the documents of record thaobligation of the defendants was novated, and the parole evidence tend


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show that it was novated is not sufficient in law to establish that fact.

During the progress to this case, Robert Lineau, administrator of the estate ofFrancisco Martinez, father of the plaintiff, intervened claiming that theobligations of the defendant were justly due to the estate of the said FranciscoMartinez. The notes themselves [Exhibit G] make no mention whatever ofFrancisco Martinez, nor is there any evidence upon which the relation ofprincipal and agent between Francisco Martinez and Pedro Martinez could bepredicated. The notes must therefore be declared the sole property of the

plaintiff, and the intervener's claim must be denied.

For the foregoing reasons, it is hereby ordered that the defendants SeverinoCavives and Matias Cavives, comply with their obligations as set forth inExhibit G, by the payment of the principal and interest thereon at the rate often per cent per annum as called for in the said notes, from the date of theirexecution up to the full satisfaction of the judgment in this case. It isunderstood that as to the first note signed by the three brothers, thesedefendants are each liable for one-third of its principal and accumulatedinterest; that Matias Cavives is alone liable for the notes executed by him ofApril 30th, May 30th , and June 7th, 1896, whose amounts are $300, $200,and $200, respectively; and that Severino Cavives is alone liable for the note

of June 9, 1896, signed by him, amounting to $600.

The judgment appealed from is reversed and in accordance with Sections 3,4, and 5 of Act No. 1045, and the Decision of this Court in Urbano vs.Ramirez [15 Phil. Rep., 371], the record will be returned to the Court belowand a new trial will be had for the sole purpose of ascertaining, after duehearing, the present actual value of Mexican money as compared withPhilippine currency, in order to reduce the debt to Philippine currency. Finaljudgment will then be entered against the defendant in accordance with thisdecisions. Without costs.

Arellano, C.J., Torres, Johnson, Carson and Moreland,JJ.,

concur.G.R. No. L-11328 January 15, 1918RUFINA CAUSING, plaintiff-appellant,vs.ALFONSO BENCER, defendant-appellee.

Perfecto J. Salas Rodriguez for appellant.De leon and Magalona and J. M.a Arroyo for appellee.

STREET,J.:

This action was instituted by Rufina Causing upon November 14, 1914, in the Cof First Instance of Iloilo, to annul a contract for the sale of a parcel of land andrecover the property itself from Alfonso Bencer as follows:

A parcel of land for rice and sugar cane in the barrio of Bokbokay, VistAlegre, district of Barotac Viejo municipality of Banate, Province of IloI., having an area of about 70 hectares, bounded on the North by lands

belonging to Pacifico Bencer, Maria Salome Causing, and that of AlfonBalleza; on the South by those of Esteban Navarro, Maria Salome Causand the heirs of Jorge Lachica; on the East by the Barotac Viejo River; on the West by those of Alfonso Bencer, Ignacio Balleza, Alfonso Balleand Maria Salome Causing.

It appears that in years gone by this land had been owned by the plaintiff, a singwoman of full legal age, in common with certain nieces of hers who were thenminors and over whom she seems to have exercised an informal guardianship. Iyear 1909 negotiations were begun between her and the defendant with a view sale of this land to him; and an agreement was effected by which she undertookconvey the property to him for the sum of P1,200. Needing legal assistance in oto get the conveyance drawn up properly, the parties repaired to the office of he

relative, Casiano Causing, attorney, but when he learned that the minors had aninterest in the property, he informed them that the conveyance could not be legwithout judicial sanction.The efforts to effect the transfer of title by deed was then abandoned for the timbeing; but Bencer paid her P800 of the purchase price upon August 14, 1909, atook possession of the land, with the understanding that he was to pay the balanlater and that meanwhile she would take steps to procure judicial approval of thas regards the interests of the minors. In 1910 a new engagement was made in rto the price to be paid, which was to the effect that Bencer should pay P600 inaddition to what he had already paid or P1,400 in all, provided the plaintiff wougive him an extension of time to May, 1911, within which to pay the balance.Time went on and neither party performed the engagement. Bencer's failure to

may have been due in part, as the plaintiff alleges, to his lack of ready money; omay have been due as he claims, to the fact that the plaintiff had become reluctcarry out the engagement and did not appear to collect the money at the placestipulated as the place of payment. However this may be, it is evident that theplaintiff was not yet in a position to execute a deed conveying the entire interesthe property, as no steps had been taken to get judicial approval for the sale of t


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shares belonging to the minors. However, as these heirs reached majority theplaintiff successively acquired their respective interests by purchase, and before theaction in this case was instituted she had become the possessor of all their shares.The property meanwhile increased in value-a circumstance possibly due in part toimprovements which the defendant claims to have made on property. In view of thechanged conditions, the plaintiff appears to have become desirous of rescinding thecontract, and accordingly brought this suit to annul the contract and recover theproperty, together with the sum of P3,850 alleged to be due as damages for the useand occupation of the land by the defendant during the time he has been in

possession. The plaintiff also prayed for general relief.At the hearing the court below dismissed the action in so far as it sought the recoveryof the land and damages for use and occupation, but gave judgment in plaintiff'sfavor for P600 with interest at 6 per cent from August 14, 1910, until paid. From thisaction of the court the plaintiff has appealed.We can see no valid reason why the plaintiff should be permitted to rescind thiscontract, It is evidently a case where the contract entailed mutual obligation, and ifeither party can be said to have been in default it was the plaintiff, Rufina Causing,rather than the defendant, Bencer. In article 1100 of the Civil Code it is declared thatin mutual obligations neither party shall be deemed to be in default if the other doesnot fulfill, or offer to fulfill his own obligation, and that from the time one personobligated fulfills his obligation the default begins for the other party. We find that the

contract contemplated a conveyance of the entire interest in the land; and the plaintiffclearly obligated herself to that extent. She was therefore not in a position to compelthe defendant to pay until she could offer to him a deed sufficient to pass the wholelegal estate; and for the same reason, she cannot now be permitted to rescind thecontract on the ground that the defendant has heretofore failed to pay the purchaseprice.At the time the plaintiff accepted the payment of P800 in 1909, from an agent of thedefendant, she executed a receipt in which it was said that this was an advancepayment for the land in case the sale that should be effected (anticipo del terreno encaso se effective la venta); and from this it is argued that it was understood that thenegotiations were merely provisional and that the sale could be abandoned. We donot so interpret the transaction; and it was evidently not so interpreted by the

defendant Bencer, who has been continuously in possession claiming as owner byvirtue of the original contract.Reduced to its simplest terms the case presented is this.One of several owners of a piece of property pro indiviso has made a valid contractfor the sale thereof with the understanding that she should convey the interest of hercoowners or procure the same to be conveyed. Since the contract was executed she

has acquired the interest of the coowners by purchase and is now in a position fto perform the contract. It results that she is, in our opinion, under a legal obligato transfer the estate, and is not entitled to rescind the contract and recover theproperty from the person to whom she contracted to convey it. In this situation party is entitled to enforce performance, and neither will be relieved from hisobligation without the consent of the other. There can be no question of the powa person to bind himself to sell something which he does not yet possess; acquititle to the thing sold. The most reasonable interpretation of the action of the plain buying out the minor heirs as they reached majority was that she thereby inte

to place herself in a position to comply with the contract which she had made wthe defendant Bencer. Of course if she had never acquired these interests an actfor damages would have been Bencer's only remedy.Under the prayer for general relief the court gave judgment in favor of the plainfor the sum of P600 the unpaid balance of the purchase money. This was propecourt also allowed interest on this sum from August 14, 1910. The right of theplaintiff to recover interest for the period prior to the institution of the suit isquestionable in point of law, but the justice of allowing it is evident, in view of fact that the defendant has had continuous use of the property. As the defendannot appealed, or complained of the action of the court, the judgment will be affin all respects, with costs against the appellant. So ordered.

G.R. No. 77648 August 7, 1989CETUS DEVELOPMENT, INC., petitioner,vs.COURT OF APPEALS and ONG TENG, respondents.G.R. No. 77647 August 7, 1989CETUS DEVELOPMENT, INC., petitioner,vs.COURT OF APPEALS and EDERLINA NAVALTA, respondents.G.R. No. 77649 August 7, 1989CETUS DEVELOPMENT, INC., petitioner,vs.COURT OF APPEALS and JOSE LIWANAG, respondents.

G.R. No. 77650 August 7, 1989CETUS DEVELOPMENT, INC., petitioner,vs.COURT OF APPEALS and LEANDRO CANLAS, respondents.G.R. No. 77651 August 7, 1989


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CETUS DEVELOPMENT, INC., petitioner,vs.COURT OF APPEALS and VICTORIA SUDARIO respondents.G.R. No.77652 August 7, 1989CETUS DEVELOPMENT, INC., petitioner,vs.COURT OF APPEALS and FLORA NAGBUYA respondents.

MEDIALDEA, J.:

This is a petition for review on certiorariof the decision dated January 30,1987 of the Court of Appeals in CA-GR Nos. SP-07945-50 entitled, "CetusDevelopment, Inc., Petitioner vs. Hon. Conrado T. Limcaoco, PresidingJudge, Regional Trial Court of Manila, Branch Ederlina Navalta, et. al.,respondents.The following facts appear in the records:The private respondents, Ederlina Navalta, Ong Teng, Jose Liwanag,Leandro Canlas, Victoria Sudario, and Flora Nagbuya were the lessees ofthe premises located at No. 512 Quezon Boulevard, Quiapo, Manila,originally owned by the Susana Realty. These individual verbal leases wereon a month-to month basis at the following rates: Ederlina Navalta at the rateof P80.50; Ong Teng at the rate of P96.10; Jose Liwanag at the rate of

P40.35; Leandro Canlas at the rate of P80.55; Victoria Sudario at the rate ofP50.45 and Flora Nagbuya at the rate of P80.55. The payments of therentals were paid by the lessees to a collector of the Susana Realty whowent to the premises monthly.Sometime in March, 1984, the Susana Realty sold the leased premises tothe petitioner, Cetus Development, Inc., a corporation duly organized andexisting under the laws of the Philippines. From April to June, 1984, theprivate respondents continued to pay their monthly rentals to a collector sentby the petitioner. In the succeeding months of July, August and September1984, the respondents failed to pay their monthly individual rentals as nocollector came.On October 9, 1984, the petitioner sent a letter to each of the private

respondents demanding that they vacate the subject premises and to pay theback rentals for the months of July, August and September, 1984, withinfifteen (15) days from the receipt thereof. Immediately upon the receipt of thesaid demand letters on October 10, 1984, the private respondents paid theirrespective arrearages in rent which were accepted by the petitioner subjectto the unilateral condition that the acceptance was without prejudice to the

filing of an ejectment suit. Subsequent monthly rental payments werelikewise accepted by the petitioner under the same condition.For failure of the private respondents to vacate the premises as demandthe letter dated October 9, 1984, the petitioner filed with the MetropolitanTrial Court of Manila complaints for ejectment against the manner, as fo(1) 105972-CV, against Ederlina Navalta (2) 105973-CV, against JoseLiwanag; (3) 105974-CV, against Flora Nagbuya; (4) 105975-CV, againsLeandro Canlas; (5) 105976-CV, against Victoria Sudario and (6) 10597CV, against Ong Teng.

In their respective answers, the six (6) private respondents interposed acommon defense. They claimed that since the occupancy of the premisethey paid their monthly rental regularly through a collector of the lessor; their non-payment of the rentals for the months of July, August andSeptember, 1984, was due to the failure of the petitioner (as the new owto send its collector; that they were at a loss as to where they should patheir rentals; that sometime later, one of the respondents called the officthe petitioner to inquire as to where they would make such payments anwas told that a collector would be sent to receive the same; that no collewas ever sent by the petitioner; and that instead they received a uniformdemand letter dated October 9, 1984.The private respondents, thru counsel, later filed a motion for consolidat

the six cases and as a result thereof, the said cases were consolidated Metropolitan Trial Court of Manila, Branch XII, presided over by JudgeEduardo S. Quintos, Jr. On June 4, 1985, the trial court rendered its decdismissing the six cases, a pertinent portion of which reads, as follows:

The records of this case show that at the time of the filing this complaint, the rentals had all been paid. Hence, the plcannot eject the defendants from the leased premises, becat the time these cases were instituted, there are no rentalarrears.The acceptance of the back rental by the plaintiff before thfiling of the complaint, as in these case, the alleged rentalarrearages were paid immediately after receipt of the dem

letter, removes its cause of action in an unlawful detainer ceven if the acceptance was without prejudice.x x x.Furthermore, the court has observed that the account invowhich constitutes the rentals of the tenants are relatively s


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to which the ejectment may not lie on grounds of equity and forhumanitarian reasons.Defendants' counterclaim for litigation expenses has no legaland factual basis for assessing the same against plaintiff.WHEREFORE, judgment is hereby rendered dismissing thesecases, without pronouncement as to costs.Defendants' counterclaim is likewise dismissed.SO ORDERED. (pp. 32-33, Rollo, G.R. No. 77647)

Not satisfied with the decision of the Metropolitan Trial Court, the petitioner

appealed to the Regional Trial Court of Manila and the same was assigned toBranch IX thereof presided over by Judge Conrado T. Limcaoco (nowAssociate Justice of the Court of Appeals).lwph1.t In its decision datedNovember 19, 1985, the Regional Trial Court dismissed the appeal for lack ofmerit.In due time, a petition for review of the decision of the Regional Trial Courtwas filed by the petitioner with the Court of Appeals. Said petition wasdismissed on January 30, 1987, for lack of merit.Aggrieved by the decision of the Court of Appeals, petitioner now comes toUs in this petition, assigning the following errors:

ASSIGNMENT OF ERRORSI

RESPONDENT COURT OF APPEALS COMMITTED AGRAVE ABUSE OF DISCRETION, AMOUNTING TO LACK OFJURISDICTION, WHEN IT ERRED IN HOLDING THAT THECAUSE OF ACTION FOR UNLAWFUL DETAINER IN THESECASES DID NOT EXIST WHEN THE COMPLAINTS WEREFILED BECAUSE PRIVATE RESPONDENTS TENDERED,AND PETITIONER ACCEPTED, THE PAYMENT OF THETHREE (3) MONTHS RENTAL IN ARREARS WITHIN THEFIFTEEN (15) DAY PERIOD FROM PRIVATERESPONDENTS' RECEIPT OF PETITIONER'S DEMANDLETTERS TO VACATE THE SUBJECT PREMISES AND TOPAY THE RENTALS IN ARREARS.

IIRESPONDENT COURT OF APPEALS COMMITTED AGRAVEABUSE OF DISCRETION, AMOUNTING TO LACK OFJURISDICTION COMMITTED A GRAVE WHEN IT ERRED INAFFIRMING THE DISMISSAL OF THE COMPLAINTS INTHESE CASES NOTWITHSTANDING THE EXISTENCE OF

VALID GROUNDS FOR THE JUDICIAL EJECTMENT OFPRIVATE RESPONDENT.IIIRESPONDENT COURT OF APPEALS COMMITTED AGRAVE ABUSE OF DISCRETION, AMOUNTING TO LACJURISDICTION, WHEN IT ERRED IN HOLDING THAT THCASES ARE CLASSIC EXAMPLES TO CIRCUMVENT THRENT CONTROL LAW. (pp. 164-165, Rollo, G.R. No. 776

The Court of Appeals defined the basic issue in this case as follows: wh

or not there exists a cause of action when the complaints for unlawfuldetainer were filed considering the fact that upon demand by petitioner fprivate respondents for payment of their back rentals, the latter immediatendered payment which was accepted by petitioner.In holding that there was no cause of action, the respondent Court reliedSection 2, Rule 70 of the Rules of Court, which provides:

Sec. 2. Landlord to proceed against tenant only after dema No landlord or his legal representative or assign, shall bsuch action against a tenant for failure to pay rent due or tocomply with the conditions of his lease, unless the tenant shave failed to pay such rent or comply with such conditiona period of fifteen (15) days or five (5) days in case of build

after demand therefor, made upon qqqm personally, or byserving written notice of such demand upon the person fouon the premises, or by posting such notice on the premiseno persons be found thereon.

It interpreted the said provision as follows:.....the right to bring an action of ejectment or unlawful detamust be counted from the time the defendants failed to paafter the demand therefor. It is not the failure per se to payas agreed in the contract, but the failure to pay the rent aftdemand therefor is made, that entitles the lessor to bring aaction for unlawful detainer. In other words, the demandcontemplated by the above-quoted provision is not a dema

vacate, but a demand made by the landlord upon his tenanthe latter to pay the rent due if the tenant fails to comply wthe said demand with the period provided, his possessionbecomes unlawful and the landlord may then bring the actfor ejectment. (p. 28,, G.R. No. 77647)


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We hold that the demand required and contemplated in Section 2,aforequoted, is a jurisdictional requirement for the purpose of bringing anunlawful detainer suit for failure to pay rent or comply with the conditions oflease. It partakes of an extrajudicial remedy that must be pursued beforeresorting for judicial action so much so that when there is full compliance withthe demand, there arises no necessity for court action.As to whether this demand is merely a demand to pay rent or comply with theconditions of the lease or also a demand to vacate, the answer can begleaned from said Section 2. This section presupposes the existence of a

cause of action for unlawful detainer as it speaks of "failure to pay rent due orcomply with the conditions of the lease." The existence of said cause ofaction gives the lessor the right under Article 1659 of the New Civil Code toask for the rescission of the contract of lease and indemnification fordamages, or only the latter, allowing the contract to remain in force.Accordingly, if the option chosen is for specific performance, then thedemand referred to is obviously to pay rent or to comply with the conditionsof the lease violated. However, if rescission is the option chosen, the demandmust be for the lessee to pay rents or to comply with the conditions of thelease and to vacate. Accordingly, the rule that has been followed in ourjurisprudence where rescission is clearly the option taken, is that bothdemands to pay rent and to vacate are necessary to make a lessee a

deforciant in order that an ejectment suit may be filed (Casilan et al. vs.Tomassi, L-16574, February 28,1964, 10 SCRA 261; Rickards vs. Gonzales,109 Phil. 423, Dikit vs. Icasiano, 89 Phil. 44).lwph1.tThus, for the purpose of bringing an ejectment suit, two requisites mustconcur, namely: (1) there must be failure to pay rent or comply with theconditions of the lease and (2) there must be demand both to pay or tocomply and vacate within the periods specified in Section 2, Rule 70, namely15 days in case of lands and 5 days in case of buildings. The first requisiterefers to the existence of the cause of action for unlawful detainer while thesecond refers to the jurisdictional requirement of demand in order that saidcause of action may be pursued.It is very clear that in the case at bar, no cause of action for ejectment has

accrued. There was no failure yet on the part of private respondents to payrents for three consecutive months. As the terms of the individual verballeases which were on a month-to-month basis were not alleged and proved,the general rule on necessity of demand applies, to wit: there is default in thefulfillment of an obligation when the creditor demands payment at thematurity of the obligation or at anytime thereafter. This is explicit in Article

1169, New Civil Code which provides that "(t)hose obliged to deliver or tsomething incur in delay from the time the obligee judicially or extrajudicdemands from them the fulfillment of their obligation." Petitioner has notshown that its case falls on any of the following exceptions where demanot required: (a) when the obligation or the law so declares; (b) when frothe nature and circumstances of the obligation it can be inferred that timof the essence of the contract; and (c) when demand would be useless, when the obligor has rendered it beyond his power to perform.The demand required in Article 1169 of the Civil Code may be in any for

provided that it can be proved. The proof of this demand lies upon thecreditor. Without such demand, oral or written, the effects of default do narise. This demand is different from the demand required under SectionRule 70, which is merely a jurisdictional requirement before an existing cof action may be pursued.The facts on record fail to show proof that petitioner demanded the paymof the rentals when the obligation matured. Coupled with the fact that nocollector was sent as previously done in the past, the private respondencannot be held guilty ofmora solvendior delay in the payment of rentalsThus, when petitioner first demanded the payment of the 3-month arreaand private respondents lost no time in making tender and payment, whpetitioner accepted, no cause of action for ejectment accrued. Hence, its

demand to vacate was premature as it was an exercise of a non-existingright to rescind.In contradistinction, where the right of rescission exists, payment of thearrearages in rental after the demand to pay and to vacate under SectioRule 70 does not extinguish the cause of action for ejectment as the lesnot only entitled to recover the unpaid rents but also to eject the lessee.Petitioner correctly argues that acceptance of tendered payment does nconstitute a waiver of the cause of action for ejectment especially whenaccepted with the written condition that it was "without prejudice to the fof an ejectment suit". Indeed, it is illogical or ridiculous not to accept thetender of payment of rentals merely to preserve the right to file an actionunlawful detainer. However, this line of argument presupposes that a ca

of action for ejectment has already accrued, which is not true in the instacase.Petitioner likewise claims that its failure to send a collector to collect therentals cannot be considered a valid defense for the reason that sendingcollector is not one of the obligations of the lessor under Article 1654. Wis true that a lessor is not obligated to send a collector, it has been duly


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established that it has been customary for private respondents to pay therentals through a collector. Besides Article 1257, New Civil Code providesthat where no agreement has been designated for the payment of therentals, the place of payment is at the domicile of the defendants. Hence, itcould not be said that they were in default in the payment of their rentals asthe delay in paying the same was not imputable to them. Rather, it wasattributable to petitioner's omission or neglect to collect.Petitioner also argues that neither is its refused to accept the rentals adefense for non-payment as Article 1256 provides that "[i]f the creditor to

whom the tender of payment has been made refuses without just cause toaccept it, the debtor shall be released from responsibility by the consignationof the thing due." It bears emphasis that in this case there was no unjustifiedrefusal on the part of petitioner or non-acceptance without reason that wouldconstitute mora accipiendiand warrant consignation. There was simply lackof demand for payment of the rentals.In sum, We hold that respondent Court of Appeals did not commit graveabuse of discretion amounting to lack of jurisdiction in its conclusion affirmingthe trial court's decision dismissing petitioner's complaint for lack of cause ofaction. We do not agree, however, with the reasons relied upon.ACCORDINGLY, the petition for review on certiorariis hereby DENIED forlack of merit and the decision dated January 30, 1987 of respondent Court of

Appeals is hereby AFFIRMED.SO ORDERED.[G.R. No. 103577. October 7, 1996]

ROMULO A. CORONEL, ALARICO A. CORONEL, ANNETTE A.

CORONEL, ANNABELLE C. GONZALES (for herself and on behalf of

Floraida C. Tupper, as attorney-in-fact), CIELITO A. CORONEL, FLORAIDA

A. ALMONTE, and CATALINA BALAIS MABANAG,Petitioners, vs. THE

COURT OF APPEALS, CONCEPCION D. ALCARAZ and RAMONA

PATRICIA ALCARAZ, assisted by GLORIA F. NOEL as attorney-in-fact,

Respondents.

D E C I S I O N

MELO,J.:chanroblesvirtualawlibrary

The petition before us has its roots in a complaint for specific performance to compelherein petitioners (except the last named, Catalina Balais Mabanag) to consummatethe sale of a parcel of land with its improvements located along Roosevelt Avenue inQuezon City entered into by the parties sometime in January 1985 for the price ofP1,240,000.00.chanroblesvirtualawlibrary

The undisputed facts of the case were summarized by respondent court in thiswise:chanroblesvirtualawlibraryOn January 19, 1985, defendants-appellants Romulo Coronel, et. al. (hereinaftereferred to as Coronels) executed a document entitled "Receipt of Down Payme(Exh. "A") in favor of plaintiff Ramona Patricia Alcaraz (hereinafter referred toRamona) which is reproduced hereunder:chanroblesvirtualawlibrary

RECEIPT OF DOWN PAYMENTchanroblesvirtualawlibraryP1,240,000.00 - Total amountchanroblesvirtualawlibrary50,000.00 - Down paymentchanroblesvirtualawlibrary

------------------------------------------ chanroblesvirtualawlibraryP1,190,000.00 - BalancechanroblesvirtualawlibraryReceived from Miss Ramona Patricia Alcaraz of 146 Timog, Quezon City, the s

Fifty Thousand Pesos purchase price of our inherited house and lot, covered byNo. 119627 of the Registry of Deeds of Quezon City, in the total amount of

P1,240,000.00.chanroblesvirtualawlibraryWe bind ourselves to effect the transfer in our names from our deceased father,

Constancio P. Coronel, the transfer certificate of title immediately upon receipthe down payment above-stated.chanroblesvirtualawlibraryOn our presentation of the TCT already in or name, We will immediately execudeed of absolute sale of said property and Miss Ramona Patricia Alcaraz shall

immediately pay the balance of the P1,190,000.00.chanroblesvirtualawlibrary

Clearly, the conditions appurtenant to the sale are thefollowing:chanroblesvirtualawlibrary1. Ramona will make a down payment of Fifty Thousand (P50,000.00) pesos upexecution of the document aforestated;chanroblesvirtualawlibrary2. The Coronels will cause the transfer in their names of the title of the propertyregistered in the name of their deceased father upon receipt of the Fifty Thousa(P50,000.00) Pesos down payment;chanroblesvirtualawlibrary3. Upon the transfer in their names of the subject property, the Coronels will exthe deed of absolute sale in favor of Ramona and the latter will pay the former twhole balance of One Million One Hundred Ninety Thousand (P1,190,000.00)Pesos.chanroblesvirtualawlibraryOn the same date (January 15, 1985), plaintiff-appellee Concepcion D. Alcaraz

(hereinafter referred to as Concepcion), mother of Ramona, paid the down paymof Fifty Thousand (P50,000.00) Pesos (Exh. "B", Exh."2").chanroblesvirtualawlibraryOn February 6, 1985, the property originally registered in the name of the Corofather was transferred in their names under TCT No. 327043 (Exh. "D"; Exh"4")chanroblesvirtualawlibrary


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On February 18, 1985, the Coronels sold the property covered by TCT No. 327043to intervenor-appellant Catalina B. Mabanag (hereinafter referred to as Catalina) forOne Million Five Hundred Eighty Thousand (P1,580,000.00) Pesos after the latterhas paid Three Hundred Thousand (P300,000.00) Pesos (Exhs. "F-3"; Exh. "6-C")chanroblesvirtualawlibraryFor this reason, Coronels canceled and rescinded the contract (Exh. "A") withRamona by depositing the down payment paid by Concepcion in the bank in trust forRamona Patricia Alcaraz.chanroblesvirtualawlibraryOn February 22, 1985, Concepcion, et. al., filed a complaint for a specific

performance against the Coronels and caused the annotation of a notice oflispendens at the back of TCT No. 327403 (Exh. "E"; Exh."5").chanroblesvirtualawlibraryOn April 2, 1985, Catalina caused the annotation of a notice of adverse claimcovering the same property with the Registry of Deeds of Quezon City (Exh. "F";Exh. "6").chanroblesvirtualawlibraryOn April 25, 1985, the Coronels executed a Deed of Absolute Sale over the subjectproperty in favor of Catalina (Exh. "G"; Exh. "7").chanroblesvirtualawlibraryOn June 5, 1985, a new title over the subject property was issued in the name ofCatalina under TCT No. 351582 (Exh. "H"; Exh. "8").chanroblesvirtualawlibrary(Rollo, pp. 134-136)chanroblesvirtualawlibraryIn the course of the proceedings before the trial court (Branch 83, RTC, Quezon

City) the parties agreed to submit the case for decision solely on the basis ofdocumentary exhibits. Thus, plaintiffs therein (now private respondents) profferedtheir documentary evidence accordingly marked as Exhibits "A" through "J",inclusive of their corresponding submarkings. Adopting these same exhibits as theirown, then defendants (now petitioners) accordingly offered and marked them asExhibits "1" through "10", likewise inclusive of their corresponding submarkings.Upon motion of the parties, the trial court gave them thirty (30) days within which tosimultaneously submit their respective memoranda, and an additional 15 days withinwhich to submit their corresponding comment or reply thereto, after which, the casewould be deemed submitted for resolution.chanroblesvirtualawlibraryOn April 14, 1988, the case was submitted for resolution before Judge ReynaldoRoura, who was then temporarily detailed to preside over Branch 82 of the RTC of

Quezon City. On March 1, 1989, judgment was handed down by Judge Roura fromhis regular bench at Macabebe, Pampanga for the Quezon City branch, disposing asfollows:chanroblesvirtualawlibraryWHEREFORE, judgment for specific performance is hereby rendered orderingdefendant to execute in favor of plaintiffs a deed of absolute sale covering that parcelof land embraced in and covered by Transfer Certificate of Title No. 327403 (now

TCT No. 331582) of the Registry of Deeds for Quezon City, together with all thimprovements existing thereon free from all liens and encumbrances, and onceaccomplished, to immediately deliver the said document of sale to plaintiffs anupon receipt thereof, the plaintiffs are ordered to pay defendants the whole balaof the purchase price amounting to P1,190,000.00 in cash. Transfer Certificate Title No. 331582 of the Registry of Deeds for Quezon City in the name of interis hereby canceled and declared to be without force and effect. Defendants andintervenor and all other persons claiming under them are hereby ordered to vacthe subject property and deliver possession thereof to plaintiffs. Plaintiffs claim

damages and attorneys fees, as well as the counterclaims of defendants andintervenors are hereby dismissed.chanroblesvirtualawlibraryNo pronouncement as to costs.chanroblesvirtualawlibrarySo Ordered.chanroblesvirtualawlibrary

Macabebe, Pampanga for Quezon City, March 1, 1989.chanroblesvirtualawlibr(Rollo, p. 106)chanroblesvirtualawlibraryA motion for reconsideration was filed by petitioners before the new presiding jof the Quezon City RTC but the same was denied by Judge Estrella T. Estrada,thusly:chanroblesvirtualawlibraryThe prayer contained in the instant motion, i.e., to annul the decision and to renanew decision by the undersigned Presiding Judge should be denied for thefollowing reasons: (1) The instant case became submitted for decision as of Ap

1988 when the parties terminated the presentation of their respective documentevidence and when the Presiding Judge at that time was Judge Reynaldo Rourafact that they were allowed to file memoranda at some future date did not changfact that the hearing of the case was terminated before Judge Roura and therefosame should be submitted to him for decision; (2) When the defendants andintervenor did not object to the authority of Judge Reynaldo Roura to decide thprior to the rendition of the decision, when they met for the first time before theundersigned Presiding Judge at the hearing of a pending incident in Civil Case Q-46145 on November 11, 1988, they were deemed to have acquiesced theretothey are now estopped from questioning said authority of Judge Roura after thereceived the decision in question which happens to be adverse to them; (3) Whiis true that Judge Reynaldo Roura was merely a Judge-on-detail at this Branch

Court, he was in all respects the Presiding Judge with full authority to act on anpending incident submitted before this Court during his incumbency. When hereturned to his Official Station at Macabebe, Pampanga, he did not lose his authto decide or resolve cases submitted to him for decision or resolution because hcontinued as Judge of the Regional Trial Court and is of co-equal rank with theundersigned Presiding Judge. The standing rule and supported by jurisprudence


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that a Judge to whom a case is submitted for decision has the authority to decide thecase notwithstanding his transfer to another branch or region of the same court (Sec.9, Rule 135, Rule of Court).chanroblesvirtualawlibraryComing now to the twin prayer for reconsideration of the Decision dated March 1,1989 rendered in the instant case, resolution of which now pertains to theundersigned Presiding Judge, after a meticulous examination of the documentaryevidence presented by the parties, she is convinced that the Decision of March 1,1989 is supported by evidence and, therefore, should not bedisturbed.chanroblesvirtualawlibrary

IN VIEW OF THE FOREGOING, the "Motion for Reconsideration and/or to AnnulDecision and Render Anew Decision by the Incumbent Presiding Judge" datedMarch 20, 1989 is hereby DENIED.chanroblesvirtualawlibrarySO ORDERED.chanroblesvirtualawlibraryQuezon City, Philippines, July 12, 1989.chanroblesvirtualawlibrary(Rollo, pp. 108-109)chanroblesvirtualawlibraryPetitioners thereupon interposed an appeal, but on December 16, 1991, the Court ofAppeals (Buena, Gonzaga-Reyes, Abad-Santos (P), JJ.) rendered its decision fullyagreeing with the trial court.chanroblesvirtualawlibraryHence, the instant petition which was filed on March 5, 1992. The last pleading,private respondents Reply Memorandum, was filed on September 15, 1993. The casewas, however, re-raffled to undersignedponente only on August 28, 1996, due to the

voluntary inhibition of the Justice to whom the case was lastassigned.chanroblesvirtualawlibraryWhile we deem it necessary to introduce certain refinements in the disquisition ofrespondent court in the affirmance of the trial courts decision, we definitely find theinstant petition bereft of merit.chanroblesvirtualawlibraryThe heart of the controversy which is the ultimate key in the resolution of the otherissues in the case at bar is the precise determination of the legal significance of thedocument entitled "Receipt of Down Payment" which was offered in evidence byboth parties. There is no dispute as to the fact that the said document embodied thebinding contract between Ramona Patricia Alcaraz on the one hand, and the heirs ofConstancio P. Coronel on the other, pertaining to a particular house and lot coveredby TCT No. 119627, as defined in Article 1305 of the Civil Code of the Philippines

which reads as follows:chanroblesvirtualawlibraryArt. 1305. A contract is a meeting of minds between two persons whereby one bindshimself, with respect to the other, to give something or to render someservice.chanroblesvirtualawlibraryWhile, it is the position of private respondents that the "Receipt of Down Payment"embodied a perfected contract of sale, which perforce, they seek to enforce by means

of an action for specific performance, petitioners on their part insist that what thdocument signified was a mere executory contract to sell, subject to certainsuspensive conditions, and because of the absence of Ramona P. Alcaraz, who for the United States of America, said contract could not possibly ripen into acontract of absolute sale.chanroblesvirtualawlibraryPlainly, such variance in the contending parties contention is brought about by way each interprets the terms and/or conditions set forth in said private instrumWithal, based on whatever relevant and admissible evidence may be available orecord, this Court, as were the courts below, is now called upon to adjudge wha

real intent of the parties was at the time the said document wasexecuted.chanroblesvirtualawlibraryThe Civil Code defines a contract of sale, thus:chanroblesvirtualawlibraryArt. 1458. By the contract of sale one of the contracting parties obligates himsetransfer the ownership of and to deliver a determinate thing, and the other to patherefor a price certain in money or its equivalent.chanroblesvirtualawlibrarySale, by its very nature, is a consensual contract because it is perfected by mereconsent. The essential elements of a contract of sale are thefollowing:chanroblesvirtualawlibrarya) Consent or meeting of the minds, that is, consent to transfer ownership inexchange for the price;chanroblesvirtualawlibraryb) Determinate subject matter; andchanroblesvirtualawlibrary

c) Price certain in money or its equivalent.chanroblesvirtualawlibraryUnder this definition, a Contract to Sell may not be considered as a Contract ofbecause the first essential element is lacking. In a contract to sell, the prospectivseller explicitly reserves the transfer of title to the prospective buyer, meaning, prospective seller does not as yet agree or consent to transfer ownership of theproperty subject of the contract to sell until the happening of an event, which fopresent purposes we shall take as the full payment of the purchase price. What tseller agrees or obliges himself to do is to fulfill his promise to sell the subjectproperty when the entire amount of the purchase price is delivered to him. In otwords the full payment of the purchase price partakes of a suspensive conditionnon-fulfillment of which prevents the obligation to sell from arising and thus,ownership is retained by the prospective seller without further remedies by the

prospective buyer. InRoque vs. Lapuz (96 SCRA 741 [1980]), this Court hadoccasion to rule:chanroblesvirtualawlibraryHence, We hold that the contract between the petitioner and the respondent wascontract to sell where the ownership or title is retained by the seller and is not tountil the full payment of the price, such payment being a positive suspensivecondition and failure of which is not a breach, casual or serious, but simply an e


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that prevented the obligation of the vendor to convey title from acquiring bindingforce.chanroblesvirtualawlibraryStated positively, upon the fulfillment of the suspensive condition which is the fullpayment of the purchase price, the prospective sellers obligation to sell the subjectproperty by entering into a contract of sale with the prospective buyer becomesdemandable as provided in Article 1479 of the Civil Code whichstates:chanroblesvirtualawlibraryArt. 1479. A promise to buy and sell a determinate thing for a price certain isreciprocally demandable.chanroblesvirtualawlibrary

An accepted unilateral promise to buy or to sell a determinate thing for a pricecertain is binding upon the promissor of the promise is supported by a considerationdistinct from the price.chanroblesvirtualawlibraryA contract to sell may thus be defined as a bilateral contract whereby the prospectiveseller, while expressly reserving the ownership of the subject property despitedelivery thereof to the prospective buyer, binds himself to sell the said propertyexclusively to the prospective buyer upon fulfillment of the condition agreed upon,that is, full payment of the purchase price.chanroblesvirtualawlibraryA contract to sell as defined hereinabove, may not even be considered as aconditional contract of sale where the seller may likewise reserve title to the propertysubject of the sale until the fulfillment of a suspensive condition, because in aconditional contract of sale, the first element of consent is present, although it is

conditioned upon the happening of a contingent event which may or may not occur.If the suspensive condition is not fulfilled, the perfection of the contract of sale iscompletely abated (cf.Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA777 [1984]). However, if the suspensive condition is fulfilled, the contract of sale isthereby perfected, such that if there had already been previous delivery of theproperty subject of the sale to the buyer, ownership thereto automatically transfers tothe buyer by operation of law without any further act having to be performed by theseller.chanroblesvirtualawlibraryIn a contract to sell, upon the fulfillment of the suspensive condition which is the fullpayment of the purchase price, ownership will not automatically transfer to the buyeralthough the property may have been previously delivered to him. The prospectiveseller still has to convey title to the prospective buyer by entering into a contract of

absolute sale.chanroblesvirtualawlibraryIt is essential to distinguish between a contract to sell and a conditional contract ofsale specially in cases where the subject property is sold by the owner not to theparty the seller contracted with, but to a third person, as in the case at bench. In acontract to sell, there being no previous sale of the property, a third person buyingsuch property despite the fulfillment of the suspensive condition such as the full

payment of the purchase price, for instance, cannot be deemed a buyer in bad faand the prospective buyer cannot seek the relief of reconveyance of the propertThere is no double sale in such case. Title to the property will transfer to the buafter registration because there is no defect in the owner-sellers titleper se, butlatter, of course, may be sued for damages by the intendingbuyer.chanroblesvirtualawlibraryIn a conditional contract of sale, however, upon the fulfillment of the suspensivcondition, the sale becomes absolute and this will definitely affect the sellers titthereto. In fact, if there had been previous delivery of the subject property, the s

ownership or title to the property is automatically transferred to the buyer such the seller will no longer have any title to transfer to any third person. ApplyingArticle 1544 of the Civil Code, such second buyer of the property who may havactual or constructive knowledge of such defect in the sellers title, or at least wcharged with the obligation to discover such defect, cannot be a registrant in gofaith. Such second buyer cannot defeat the first buyers title. In case a title is issuthe second buyer, the first buyer may seek reconveyance of the property subjecthe sale.chanroblesvirtualawlibraryWith the above postulates as guidelines, we now proceed to the task of deciphethe real nature of the contract en

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