PALS Civil Law (Sales to Damages).pdf

8/9/2019 PALS Civil Law (Sales to Damages).pdf

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CIVIL LAWPART II

SALES

I. DEFINITION AND ESSENTIAL REQUISITES OF A CONTRACT OF SALE

A. DEFINITION

ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125 December2, 1994

A contract of sale is perfected when a person, called the seller, obligateshimself, for a price certain, to deliver and to transfer ownership of a thing orright 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. 109125 December2, 1994

Both the trial court and CA found that defendants' offer to sell was neveraccepted by the plaintiffs for the reason that the parties did not agree upon theterms 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 andthe price to be paid, when coupled with a valuable consideration distinct andseparate from the price, is what may properly be termed a perfected contract ofoption and not perfected contract of sale.

C. CONTRACT OF CONDITIONAL SALEART 1458TAN 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 theSELLERS shall execute and deliver to the BUYER the appropriate Deed ofAbsolute Sale". The very essence of a contract of sale is the transfer ofownership in exchange for a price paid or promised, but where the sellerpromises to execute a deed of absolute sale upon the completion by the buyerof the payment of the price, the contract is only a contract to sell, even if it isdenominated as a Deed of Conditional Sale.


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D. CONTRACT TO SELL

PADILLA vs. SPOUSES PAREDES, G.R. NO. 124874, March 17, 2000

Under the parties’ contract, the property will be transferred to petitioner onlyupon the latter's "complete compliance of his obligation provided in thecontract" but because of petitioner’s failure to fully pay the purchase price, theobligation of private respondents to convey title to the property did not arise.

Petitioner's reliance on Article 1592 of the Civil Code is misplaced becausewhat this provision contemplates is an absolute sale and not a contract to sellas 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 threedifferent parties, wherein only the first two contracts contained a stipulationthat "if the Vendee fails to pay the Vendor the sums stated within the periodstipulated and after the grace period for each payment, this contract shallautomatically be null and void and of no effect without the necessity of anydemand, 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 nottransfer ownership to either of the buyers for failure to comply with thecondition of full payment of the purchase price, hence, vendor can still validlyconvey the subject property to another buyer.

E. ELEMENTS OF A VALID CONTRACT OF SALEPEÑALOSA vs. SANTOS, G.R. NO. 133749, August 23, 2001

Respondent insist that the second deed is a complete nullity because a) theconsideration 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)realestate 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) pricecertain in money or its equivalent which are present in the second Deed of Salehence there is already a perfected contract of sale.


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ART 1475HEIRS 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, whilepetitioner as proof of the sale presented a receipt stating that Andres receivedfrom Rodriguez a sum representing an advance payment for a residential lotwith the agreed price of 15php per square meter and that the payment of thefull consideration after the survey shall be due and payable in 5 years from theexecution of the formal deed of sale. All of the essential elements of a contractof sale are present, i.e., that there was a meeting of the minds between theparties, by virtue of which the late Andres undertook to transfer ownership ofand to deliver a determinate thing for a price certain in money.

II. PARTIES TO A CONTRACT OF SALE

A. SELLER

ART 1459HEIRS OF ARTURO REYES vs SOCCO-BELTRAN, G.R. 176474November 27, 2008

It was unmistakably stated in the Contract to Sell and made clear to bothparties thereto that the vendor was not yet the owner of the subject propertyand was merely expecting to inherit the same. The law specifically requires

that the vendor must have ownership of the property at the time of deliveryhence, there was no valid sale from which ownership of the subject propertycould 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 theaction is based on an implied or a constructive trust. However, sincerespondents' action for reconveyance was based on fraud, the action must befiled 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 thatwas executed in favor of petitioners was null and void because the seller wasnot 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 becausean action to declare the inexistence of a void contract does not prescribe.

ART 1505NOOL vs. COURT OF APPEALS, G.R. NO. 116635 July 24, 1997


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Petitioners contend that they could repurchase the property that they "sold" toprivate respondents when they allowed the respondent to redeem the propertiesfor them from DBP but DBP certified that the mortgagors' right of redemptionwas 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 doesnot sell them under authority or with consent of the owner, the buyer acquiresno better title to the goods than the seller had, unless the owner of the goods isby 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 1491DAROY 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 asthe 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 incustodia 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 bypurchase described in Article 1491 of the New Civil code and is in fact, evenworse when she did not acquire the said vehicle from it's owner but insteadwhimsically spent for its repairs and automatically appropriated the jeep forher own use and benefit.

VALENCIA vs. ATTY. CABANTING, A.M. Nos. 1302, 1391 and 1543 April26, 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 trialcourt issued an order of execution stating that "the decision in this case hasalready become final and executory". While it is true that Atty. Cabantingpurchased the lot after finality of judgment, there was still a pending certiorariproceeding, and a thing is said to be in litigation not only if there is somecontest or litigation over it in court, but also from the moment that it becomessubject to the judicial action of the judge.


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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 implementthe contract of services between him and the petitioners by taking possessionand exercising rights of ownership over 40% of said properties which are thesubject of litigation. A contract between a lawyer and his client stipulating acontingent fee is not covered by said prohibition under Article 1491 (5) of theCivil Code because the payment of said fee is not made during the pendency ofthe litigation but only after judgment has been rendered in the case handled bythe lawyer.

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

Complainant alleges that for over a period of 20 years, respondent counselallowed lease contracts to be executed between his client and a partnership ofwhich 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 therespondent signed merely as an agent, the lease contracts are covered by theprohibition against any acquisition or lease by a lawyer of properties involvedin 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 himselfone-half of the properties of his clients during the pendency of the case wherethe properties were involved. Persons mentioned in Art. 1491 of the Civil Codeare prohibited from purchasing the property mentioned therein because of theexisting fiduciary relationship with such property and rights, as well as withthe client.

ART 1492IN RE: SUSPENSION FROM THE PRACTICE OF LAW IN THE TERRITORYOF 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, ashe acquired his client’s property by exercising the right of redemptionpreviously assigned to him by the client in payment of his legal services, thensold it and as a consequence obtained an unreasonably high fee for handlinghis client’s case. The prohibition extends to sales in legal redemption and suchprohibition is founded on public policy because, by virtue of his office, an


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attorney may easily take advantage of the credulity and ignorance of his clientand unduly enrich himself at the expense of his client.

ART 1493PROVINCE OF CEBU vs. HEIRS OF RUFINA MORALES, G.R. NO. 170115,

FEBRUARY 19, 2008

The City of Cebu was no longer the owner of the lot when it ceded the same topetitioner under the compromise agreement and at that time, the city merelyretained rights as an unpaid seller but had effectively transferred ownership ofthe lot to Morales. A successor-in-interest could only acquire rights that itspredecessor had over the lo which include the right to seek rescission orfulfillment of the terms of the contract and the right to damages in either case.

III. SUBJECT MATTER

A. SALE OF AN EXPECTED THING

ART 1461HEIRS OF AMPARO DEL ROSARIO vs. SANTOS, G.R. NO. L-46892September 30, 1981

By the terms of the Deed of Sale itself, appellants declared themselves to beowners of one-half (1,2) interest thereof and contend that the deed ofassignment of one-half (1,2) interest thereof executed by said Custodio in theirfavor is strictly personal between them. Notwithstanding the lack of any title tothe 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 anexpected 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 theapplication of private respondent for an additional area for forest concession beapproved by the Bureau of Forestry which was not obtained. The efficacy ofthe 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 agreementexecuted never became effective or enforceable.

C. BOUNDARIES OF THE SUBJECT MATTER

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


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The parties agreed on the purchase price of P40,000.00 for a predeterminedarea of 4,000 sq m, more or less, but when the OCT was issued, the area wasdeclared 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 thewhole area within the boundaries stated, without any corresponding increase

in the price. Article 1542 is not hard and fast and admits of an exception andthe use of “more or less” or similar words in designating quantity covers only areasonable excess or deficiency, and clearly, the discrepancy of 10,475 sq mcannot 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 ngBilihan ng Lupa" which incorporated both the area and the definite boundariesof the lot, the former transferred not merely the 822.5 square meters stated intheir document of sale but the entire area circumscribed within its boundaries.

If besides mentioning the boundaries, which is indispensable in everyconveyance of real estate, its area or number should be designated in thecontract, the vendor shall be bound to deliver all that is included within saidboundaries, 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, inproportion to what is lacking in the area or number, unless the contract isrescinded because the vendee does not accede to the failure to deliver what hasbeen stipulated.

IV. OBLIGATIONS OF A SELLER TO TRANSFER OWNERSHIP

ART 1462DANGUILAN vs. IAC, G.R. NO. L-69970 November 28, 1988

Respondent admits that she did not take physical possession of property butargues 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 andpossession of the vendee," and in order that this symbolic delivery may producethe effect of tradition, it is necessary that the vendor shall have had suchcontrol over the thing sold at the moment of the sale, but if there is noimpediment to prevent the thing sold passing into the tenancy of the purchaserby the sole will of the vendor, symbolic delivery through the execution of a

public instrument is sufficient.

ART 1495CHUA vs COURT OF APPEALS, G.R. NO. 119255, April 9, 2003

Petitioner insists that he was ready to pay the balance of the purchase pricebut withheld payment because he required that the property be registered firstin his name before he would turn over the check to the private respondent.


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The obligation of the seller is to transfer to the buyer ownership of the thingsold, but in the sale of a real property, the seller is not obligated to transfer inthe name of the buyer a new certificate of title, but rather to transfer ownershipof the real property, because as between the seller and buyer, ownership istransferred 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 1496VISAYAN 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 noobjection 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 andsuch action or real delivery (traditio) transfered ownership.

ART 1497MUNICIPALITY 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 byPetitioner, Municipality of Victorias, as a cemetery for 29 years and when theMayor replied that Petitioner bought the land from her grandmother, she askedto be shown the papers concerning the sale but petitioner refused to show thesame. 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 fromthe 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 abank, hence petitioner and respondent executed a notarized deed of absolutesale with assumption of mortgage, but petitioner some time thereafter paid themortgage and sold the properties to another person. Settled is the rule that theseller 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 tothe delivery of a thing sold.

ART 1523PUROMINES, INC., vs. COURT OF APPEAL, G.R. NO. 91228. March 22,1993.


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Petitioner argues that the sales contract does not include the contract ofcarriage which is a different contract entered into by the carrier with the cargoowners.

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, theseller has the obligation to transmit the goods to the buyer, and concomitantthereto, the contracting of a carrier to deliver the same. Art. 1523 of the CivilCode provides:

"Art. 1523. Where in pursuance of a contract of sale, the seller in authorized orrequired 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 thebuyer is deemed to be a delivery of the goods to the buyer, except in the casesprovided for in article 1503, first, second and third paragraphs, or unless acontrary intent appear.

"Unless otherwise authorized by the buyer, the seller must take such contractwith the carrier on behalf of the buyer as may be reasonable, having regard tothe nature of the goods and the other circumstances of the case. If the selleromit so to do, and the goods are lost or damaged in course of transit, the buyermay decline to treat the delivery to the carrier as a delivery to himself,, or mayhold 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 billof lading at load port.

ART 1477BOY vs. COURT OF APPEALS, G.R. NO. 125088, April 14, 2004

Petitioner sold the subject property to respondents as evidenced by a notarizedDeed of Absolute Sale, but contends that the respondents have no right to

material possession of the property since the respondents have not paid theproperty in full. Unless there is a stipulation to the contrary, when the sale ismade through a public instrument, the execution thereof is equivalent to thedelivery of the thing which is the object of the contract.

V. PRICE

A. G.R.OSS INADEQUACY OF THE PRICE


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condition. The vendee is bound to accept delivery and to pay the price of thething sold at the time and place stipulated in the contract.

D. INTERESTART 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 theconsideration was still payable to petitioner, its nonpayment by Dr. Cruz is nota sufficient cause to invalidate the contract or bar the transfer of ownershipand possession of the things exchanged considering the fact that their contractis silent as to when it becomes due and demandable.

Neither may such failure to pay the balance of the purchase price result in thepayment of interest thereon. Article 1589 of the Civil Code prescribes thepayment 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 forthe 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 inview of petitioner's failure to pay the purchase price when the same becamedue, while Petitioner claims that the respondent failed to comply with theircontractual obligations hence it was entitled to withhold payment of thepurchase price. Should the vendee be disturbed in the possession or ownershipof 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, theonly justified cause for retention or withholding the payment of the agreedprice, but also, if the vendor fails to perform any essential obligation of thecontract.

ART 1592SOLIVA vs. The INTESTATE ESTATE of MARCELO M.VILLALBA, G.R. NO.154017, December 8, 2003


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While petitioner is now barred from recovering the subject property due tolaches, all is not lost for her since by respondent's own admission, a balance ofP1,250 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 theprice 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 nodemand for rescission of the contract has been made upon him either judiciallyor 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 thequoted prices were merely tentative and still subject to further negotiationsbetween him and the seller, hence, there was no meeting of the minds on theessential terms and conditions of the sale because SMAB did not acceptrespondents’ offer that consideration would be paid in Philippine pesos. Ingeneral, contracts undergo three distinct stages, to wit: (1) Negotiation - beginsfrom the time the prospective contracting parties manifest their interest in thecontract and ends at the moment of agreement of the parties; (2) Perfection orbirth 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 fulfillor perform the terms agreed upon in the contract, culminating in theextinguishment 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 withina 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 acceptedunilateral promise can only have a binding effect if supported by aconsideration separate and distinct from the purchase price. Hence, the optioncan still be withdrawn, even if accepted, if the same is not supported by anyconsideration.


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ANG YU vs. THE HON. COURT OF APPEALS, G.R. NO. 109125, December2, 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 theterms and conditions of the proposed sale, hence, there was no contract of saleat 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 fulfillmentof a positive suspensive condition (normally, the full payment of the purchaseprice), the breach of the condition will prevent the obligation to convey titlefrom 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 itsmanifestation, such as by its mailing and not necessarily when the offereelearns 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 optionto buy is unenforceable because it lacked a consideration distinct from the

price and RCBC did not exercise its option within reasonable time. Article1324 of the Civil Code provides that when an offeror has allowed the offeree acertain period to accept, the offer maybe withdrawn at anytime beforeacceptance by communicating such withdrawal, except when the option isfounded upon consideration, as something paid or promised; on the otherhand, Article 1479 of the Code provides that an accepted unilateral promise tobuy and sell a determinate thing for a price certain is binding upon thepromisor if the promise is supported by a consideration distinct from the price.

C. EARNEST MONEY

ART 1482SPOUSES SERRANO vs. CAGUIAT, G.R. NO. 139173, February 28, 2007

The lower court ruled that the receipt stating that the respondent made apartial payment and that the execution and final deed of sale would be signedupon payment of the balance, is a Contract of Sale and considered the partial


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payment as earnest money, which prompted the respondent to demand specificperformance and damages when the herein petitioners cancelled thetransaction. Whenever earnest money is given in a contract of sale, it shall beconsidered as part of the price and proof of the perfection of the contract, butthe 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 salehad been complied with upon acceptance of the petitioner of the earnest moneytendered by respondents. It is not the giving of earnest money, but the proof ofthe concurrence of all the essential elements of the contract of sale whichestablishes the existence of a perfected sale.

VII. TRANSFER OF OWNERSHIP

A. DEED OF SALE

ART 1498DAILISAN vs. COURT OF APPEALS, G.R. NO. 176448, July 28, 2008

Respondents question the notarized deed of absolute sale presented by thepetitioner 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 publicinstrument, the execution thereof shall be equivalent to the delivery of thething which is the object of the contract, if from the deed the contrary does notappear or cannot be inferred.

LEONARDO vs MARAVILLA, G.R. NO. 143369, November 27, 2002

It is not disputed that petitioner neither had, nor demanded, materialpossession 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 therespondents who have been in control and possession thereof in the concept ofowners. The execution of the deed of sale is only a presumptive, not conclusivedelivery which can be rebutted by evidence to the contrary, as when there isfailure on the part of the vendee to take material possession of the land subjectof the sale in the concept of a purchaser-owner.


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

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

B. CONSTRUCTIVE DELIVERY

ART 1499DY, JR. vs. COURT OF APPEALS, G.R. NO. 92989, July 8, 1991

There is constructive delivery already upon the execution of the publicinstrument pursuant to Article 1498 and upon the consent or agreement of theparties when the thing sold cannot be immediately transferred to thepossession 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 absolutewhere the contract is devoid of any proviso that title is reserved or the right tounilaterally rescind is stipulated, e.g., until or unless the price is paid.Ownership will then be transferred to the buyer upon actual or constructivedelivery (e.g., by the execution of a public document) of the property sold.

C. POSSESSOR IN GOOD FAITHART 1544DE LEON vs. ONG, G.R. NO. 170405, February 2, 2010

Petitioner delivered the properties to respondent upon the execution of thenotarized deed and handed over to respondent the keys to the properties,hence respondent took actual possession and exercised control over theproperty 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.


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VIII. RISK OF LOSS

ART 1504 (2)AEROSPACE CHEMICAL INDUSTRIES, INC. vs. CA, G.R. NO. 108129September 23, 1999

The petitioner contends that rental expenses of storing sulfuric acid should beat private respondent's account, as a seller, until ownership is transferred. Thegeneral rule that before delivery, the risk of loss is borne by the seller who isstill the owner, is not applicable in this case because petitioner had incurreddelay 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 evenbefore 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 atthe time of sale, there was no title on file.

The fact that the certificate of title over the registered land is lost does notconvert it into unregistered land. After all, a certificate of title is merely anevidence of ownership or title over the particular property described therein. T

Act 3344 provides for the system of recording of transactions or claims overunregistered real estate without prejudice to a third party with a betterright. But if the land is registered under the Land Registration Act (andtherefore has a Torrens Title), and it is sold and the sale is registered notunder 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 NewCivil Code.

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


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Thus, to be able to enjoy priority status, the second purchaser must bein good faith, i.e., he must have no knowledge of the previous alienation of theproperty by the vendor to another. Notably, what is important for this purposeis 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 knowledgeof 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 ofthe Deeds. Petitioners, on the other hand, failed to cause the registration of thesale 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 rightover the other who has not registered his title, even if the latter is in actualpossession of the immovable property.

SPOUSES AVELINO vs. SPOUSES CELEDONIO, G.R. NO. 135900, August17, 2007

Article 1544 of the Civil Code contemplates a case of double sales or multiplesales by a single vendor. It cannot be invoked where the two different contractsof sale are made by two different persons, one of them not being the owner ofthe 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, butpetitioners registered their sale under Act 3344, while respondent registeredthe transaction under the Torrens system.

Between two buyers of the same immovable property, the law gives ownershippriority to (1) the first registrant in good faith; (2) then, the first possessor ingood 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 underthe Torrens system, petitioners’ registration of the sale under Act 3344 was not

effective for purposes of Article 1544 of the Civil Code.

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


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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 offacts and circumstances that would impel a reasonably cautious man to makesuch inquiry or when the purchaser has knowledge of a defect or the lack oftitle in his vendor or of sufficient facts to induce a reasonably prudent man toinquire into the status of the title of the property in litigation. One who fallswithin the exception can neither be denominated an innocent purchaser forvalue 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 ofland 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 landin 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 boughtthe property in 1988 when it was already purchased by and titled under thename 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 registeredthe 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 salecannot defeat the first buyer’s rights except when the second buyer firstregisters in good faith the second sale, conversely, knowledge gained by thesecond 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. 105902February 9, 2000


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Amores was in good faith when he bought the disputed lots. When heregistered his title, however, he already had knowledge of the previous sale ofthe disputed lots to petitioner. Such knowledge tainted his registration with

bad faith, and to merit protection under article 1544, the second buyer mustact in good faith from the time of the sale until the registration of the same

X. REMEDIES OF AN UNPAID SELLER

ART 1484 , 1485PCI 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. Inchoosing, through replevin, to deprive the respondent of possession of theleased equipment, the petitioner waived its right to bring an action to recoverunpaid rentals on the said leased items.

ART 1486PEOPLE'S INDUSTRIAL AND COMMERCIAL CORPORATION, vs. COURT OFAPPEALS, 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 contractautomatically took effect, which provides that "(I)f the buyer fails to pay theinstallments due at the expiration of the grace period, the seller may cancel thecontract and any and all sums of money paid under this contract shall beconsidered and become rentals on the property. A stipulation that theinstallments or rents paid shall not be returned to the vendee or lessee shall bevalid 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 thesaid deed of absolute sale.

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


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

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

Article 1592. In the sale of immovable property, even though it may have beenstipulated that upon failure to pay the price at the time agreed upon therescission of the contract shall of right take place, the vendee may pay, evenafter 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 thedemand, 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 thatthe law uses the phrase "even though" emphasizing that when no stipulation isfound 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 ofa contract but includes as well the performance or implementation oraccomplishment 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


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Respondent alleges that it cannot be held liable for the 47,000 plastic bagswhich were not used for packing cement as originally intended invoking it'sright of return. Article 1502 of the Civil Code, has no application at all to thiscase, since the provision in the Uniform Sales Act and the Uniform CommercialCode 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 onapproval", which is absent in this case.

Parol or extrinsic testimony could not be admitted for the purpose of showingthat an invoice or bill of sale that was complete in every aspect and purportingto embody a sale without condition or restriction constituted a contract of saleor return. If the purchaser desired to incorporate a stipulation securing to himthe 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 thegoods since this falls outside the normal intent of the parties in the "onapproval" situation.

B. IMPLIED WARRANTIESART 1628LO vs. KJS ECO-FORMWORK SYSTEM PHIL., INC., G.R. NO. 149420October 8, 2003

The vendor in good faith shall be responsible for the existence and legality ofthe 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 expresslystipulated or unless the insolvency was prior to the sale and of commonknowledge.

ART 1546ANG 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 thetime the Deed of Absolute Sale, is giving an implied warranty of title whichprescribes six months after the delivery of the vehicle.

ART 1547PNB 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 impliedwarranty on the part of the seller that he has a right to sell the thing at thetime when the ownership is to pass, and that the buyer shall have a peaceful


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possession of the thing and it shall be free from any hidden faults or defects, orany charge or encumbrance not declared or known to the buyer.

ART 1548ANG 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 anyclaim whatsoever [and] will save the vendee from any suit by the government ofthe Republic of the Philippines,” is giving a warranty against eviction. A breach

of this warranty requires the concurrence of these four requisites:(1) Thepurchaser has been deprived of the whole or part of the thing sold; (2) Thiseviction is by a final judgment; (3) The basis thereof is by virtue of a right priorto the sale made by the vendor; and (4) The vendor has been summoned andmade co-defendant in the suit for eviction at the instance of the vendee.

ART 1561DE YSASI vs. ARCEO, G.R. NO. 136586, November 22, 2001

Petitioner admitted that he inspected the premises three or four times beforesigning the lease contract and during his inspection, he noticed the rottenplywood 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. Thelessor is responsible for warranty against hidden defects, but he is notanswerable for patent defects or those which are visible.

C. REMEDIES AGAINST VIOLATIONS OF WARRANTIES

ART 1567ENGINEERING & 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 writtencontract - and not a suit to enforce warranties against hidden defects. Theremedy against violations of the warranty against hidden defects is either towithdraw from the contract (redhibitory action) or to demand a proportionate

reduction of the price (accion quanti minoris), with damages in either case.

ART 1571DINO vs COURT OF APPEALS, G.R. NO. 113564, June 20, 2001


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Respondent made the last delivery of the vinyl products to petitioners onSeptember 28, 1988 and the action to recover the purchase price of the goodspetitioners returned to the respondent was filed on July 24, 1989, more thannine months from the date of last delivery. Actions arising from breach ofwarranty against hidden defects shall be barred after six months from the

delivery of the thing sold.

XIII. BREACH OF CONTRACT

ART 1545LAFORTEZA vs. MACHUCA, G.R. NO. 137552, June 16, 2000

A MOA has this stipulation "....SELLER-LESSOR hereby agrees to sell untoBUYER-LESSEE the property described within six (6) months from theexecution 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 theestate of Francisco Laforteza, whichever is earlier;...". Petitioner contends thatsince the condition was not met, they no longer had an obligation to proceedwith the sale of the house and lot. The petitioners fail to distinguish between acondition imposed upon the perfection of the contract and a condition imposedon the performance of an obligation, failure to comply with the first conditionresults in the failure of a contract, while the failure to comply with the secondcondition only gives the other party the option either to refuse to proceed withthe 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 printingpaper on different dates and a separate price has been agreed upon for eachdelivery. When there is a contract of sale of goods to be delivered by statedinstallments, which are to be separately paid for, and the seller makes defectivedeliveries in respect of one or more installments, it depends in each case on theterms of the contract and the circumstances of the case, whether the breach ofcontract 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 thebreach is severable, giving rise to a claim for compensation but not to a right totreat the whole contract as broken.

ART 1597VISAYAN SAWMILL COMPANY, INC., vs. THE HONORABLE COURT OFAPPEALS, G.R. NO. 83851. March 3, 1993.


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The petitioner agreed to deliver the scrap iron only upon payment of thepurchase price by means of an irrevocable and unconditional letter of credit,which the respondent failed to obtain, thus, there was no actual sale. Wherethe 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 rescindthe 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 1601NOOL vs. COURT OF APPEALS, G.R. NO. 116635, July 24, 1997

Petitioners contend that they could repurchase the property that they "sold" toprivate respondents when they allowed the respondent to redeem the propertiesfor them from DBP. DBP, however, certified that the petitioner-mortgagors'right of redemption was not exercised within the period, hence DBP became theabsolute owner of said parcels of land when it entered into a Deed ofConditional Sale involving the same parcels of land with Private Respondent asvendee. One "repurchases" only what one has previously sold since the right torepurchase 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 differentfrom the original document of sale which caused the cancellation of the permitor lease by the Secretary of Fisheries. An agreement to repurchase becomes apromise to sell when made after the sale, because when the sale is madewithout such an agreement, the purchaser acquires the thing sold absolutely,and if he afterwards grants the vendor the right to repurchase, it is a newcontract 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 sameday 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


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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 thesame document of sale but in a separate document, and since such option isnot supported by a consideration distinct from the price, said deed for right torepurchase is not binding upon them.

ART 1603BAUTISTA vs UNANGST, G.R. NO. 173002, July 4, 2008

Where in a contract of sale with pacto de retro, the vendor remains inpossession, as a lessee or otherwise, the contract shall be presumed to be anequitable mortgage because in a contract of sale with pacto de retro, the legaltitle to the property is immediately transferred to the vendee, subject to thevendor’s right to redeem and retention by the vendor of the possession of the

property is inconsistent with the vendee’s acquisition of the right of ownership

under a true sale.

ART 1606ABILLA vs. ANG GOBONSENG, JR., G.R. NO. 146651, January 17, 2002

The legal question to be resolved is "May the vendors in a sale judiciallydeclared as a pacto de retro exercise the right of repurchase under Article1606, third paragraph, of the Civil Code, after they have taken the position thatthe same was an equitable mortgage?" No, where the proofs established thatthere 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 notentitled 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 stillexercise the right to repurchase said property within thirty (30) days fromreceipt of this decision pursuant to Article 1606 and 1607 of the New CivilCode." Article 1606 grants the vendor a retro thirty (30) days “from the timefinal judgment was rendered,” not from the defendant’s receipt of the judgment,

"final judgment” must be construed to mean one that has become final andexecutory.

ART 1607Spouses CRUZ vs. LEIS et al., G.R. NO. 125233, March 9, 2000


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The lower court rationalized that petitioners failed to comply with theprovisions of Article 1607 of the Civil Code requiring a judicial order for theconsolidation of the ownership in the vendee a retro to be recorded in theRegistry of Property. A judicial order is necessary in order to determine thetrue nature of the transaction and to prevent the interposition of buyers in

good faith while the determination is being made, however, notwithstandingArticle 1607, the recording in the Registry of Property of the consolidation ofownership of the vendee is not a condition sine qua non to the transfer ofownership for the method prescribed thereunder is merely for the purpose ofregistering the consolidated title.

ART 1616BPI FAMILY SAVINGS BANK, INC. vs. SPS. VELOSO, G.R. NO. 141974,August 9, 2004

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

ART 1619LEE 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 aprior tender or offer of redemption is a prerequisite or precondition to the filingof the action for legal redemption. To avail of the right of redemption what isessential is to make an offer to redeem within the prescribed period. There isactually no prescribed form for an offer to redeem to be properly effected. It caneither be through a formal tender with consignation, or by filing a complaint incourt coupled with consignation of the redemption price within the prescribedperiod.

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


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It is not disputed that co-ownership exists but the lower court disallowedredemption because it considered the vendee, Vallangca, a co-heir, beingmarried 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 1621PRIMARY 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 toan adjoining owner of the property conveyed may be defeated if it can be shownthat the buyer or grantee does not own any other rural land.

ART 1622G.R. NO. 134117. February 9, 2000SEN 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 theNew Civil Code only deals with small urban lands that are bought forspeculation 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 thatit was leasing, especially when such right was never stipulated in any of theseveral lease contracts.

ART 1623CABALES vs. COURT OF APPEALS, G.R. NO. 162421, August 31, 2007

Petitioners may redeem the subject property from respondents-spouses, butthey 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 theredemptioner 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 ofredemption.

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. Awritten notice is a formal requisite to make certain that the co-owners have


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actual notice of the sale to enable them to exercise their right of redemptionwithin the limited period of thirty days. But where the co-owners had actualnotice of the sale at the time thereof and/or afterwards, a written notice of afact already known to them, would be superfluous. The statute does notdemand 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 notificationshould 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 whoare his co-owners who under the law must be notified of the sale, and is in thebest position to confirm whether consent to the essential obligation of sellingthe 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 whichthe 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'sconsent, transfers that credit and its accessory rights to another (known as theassignee), who acquires the power to enforce it, to the same extent as theassignor 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 propertiesin question be precluded by the fact that the assignment of right of redemptionwas not contained in a public document? NO, the phrase "effect as againstthird person" in Article 1625 of the Civil Code is interpreted as to be damage orprejudice to such third person, hence if the third person would not beprejudiced then the assignment of right to redeem may not be in a publicinstrument.

B. EQUITABLE MORTGAGE

ART 1602HEIRS OF JOSE REYES, JR. vs. REYES, G.R. NO. 158377, August 13,2010


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The provisions of the Civil Code governing equitable mortgages disguised assale contracts, like the one herein, are primarily designed to curtail the evilsbrought about by contracts of sale with right to repurchase, particularly thecircumvention 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 natureof a contract, that is , a loan secured by a mortgage. It is a reality that gravefinancial distress renders persons hard-pressed to meet even their basic needsor to respond to an emergency, leaving no choice to them but to sign deeds ofabsolute sale of property or deeds of sale with pacto de retro if only to obtainthe much-needed loan from unscrupulous money lenders. This reality preciselyexplains why the pertinent provision of the Civil Code includes a peculiar ruleconcerning the period of redemption, to wit:

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

x x x

(3) When upon or after the expiration of the right torepurchase another instrument extending the period ofredemption 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 intowhat 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 thecircumstances enumerated in Article 1602.

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

Respondent alleged that the transaction was an equitable mortgage becauseafter the sale of the property respondent remained therein, and the priceaccording to respondent was grossly inadequate. The presumption of equitablemortgage created in Article 1602 of the Civil Code is not conclusive and may berebutted by competent and satisfactory proof of the contrary.

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


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Petitioner argues that Mercado’s delay in registering the Deed of Absolute Saleand transferring the land title shows that the real agreement was an equitablemortgage. Delay in transferring title is not one of the instances enumerated bylaw 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 possessionof the land and enjoyed its fruits. For the presumption of an equitablemortgage to arise, one must first satisfy the requirement that the partiesentered into a contract denominated as a contract of sale, and that theirintention 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 ofthe respondent to petitioner but the deed purports to be a sale with right topurchase. The rule is firmly settled that whenever it is clearly shown that adeed of sale with pacto de retro, regular on its face, is given as security for aloan, it must be regarded as an equitable mortgage.

ART 1604DEHEZA-INAMARGA vs ALANO, G.R. NO. 171321, December 18, 2008

The provisions of Article 1602 shall also apply to a contract purporting to be anabsolute sale, and in case of doubt, a contract purporting to be a sale withright to repurchase shall be construed as an equitable mortgage in consonancewith 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 thenon-payment of amortizations by a buyer on installment under land purchaseagreements entered into prior to the enactment of P.D. 957, "The Subdivisionand Condominium Buyers' Protective Decree"?

P.D. 957 is undeniably applicable to the contracts in question, it follows thatSection 23 thereof had been properly invoked by private respondent when he


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desisted from making further payment to petitioner due to petitioner's failure todevelop the subdivision project according to the approved plans and within thetime 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 purchaserson installment of individual lots therein, or compel them to pay again for thelots which they previously bought from the defaulting mortgagor-subdivisiondeveloper on the theory that P.D. 957, "The Subdivision and CondominiumBuyers' Protective Decree", is not applicable to the mortgage contract inquestion, 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 unpaidamortizations tendered by private respondents. Privity of contracts as a defensedoes not apply in this case for the law explicitly grants to the buyer the optionto pay the installment payment for his lot or unit directly to the mortgagee(petitioner), which is required to apply such payments to reduce thecorresponding portion of the mortgage indebtedness secured by the particularlot 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 respondentinvolved a condominium unit and did not violate the Constitutionalproscription against ownership of land by aliens. The law expressly allowsforeigners to acquire condominium units and shares in condominiumcorporations up to not more than 40% of the total and outstanding capitalstock of a Filipino-owned or controlled corporation, since under this set up, theownership of the land is legally separated from the unit itself.

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

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


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Sec. 20. An assessment upon any condominium made in accordance with aduly registered declaration of restrictions shall be an obligation of the ownerthereof at the time the assessment is made. The amount of any suchassessment plus any other charges thereon, such as interest, costs (includingattorney'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 whenthe management body causes a notice of assessment to be registered with theRegister of Deeds of the city or province where such condominium project islocated. The notice shall state the amount of such assessment and such othercharges thereon as may be authorized by the declaration of restrictions, adescription of the condominium unit against which the same has beenassessed, and the name of the registered owner thereof. Such notice shall besigned by an authorized representative of the management body or asotherwise provided in the declaration of restrictions. Upon payment of saidassessment and charges or other satisfaction thereof, the management bodyshall cause to be registered a release of the lien.

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

Records do not show that petitioner had its notice of assessment registeredwith the Registry of Deeds of Manila in order that the amount of suchassessment could be considered a lien upon Marual's two condominium units.Clearly, pursuant to the above provisions, petitioner's claim can not beconsidered superior to that of respondent. As mentioned earlier, the deed ofsale wherein Marual conveyed to respondent his two condominium units, wasregistered 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 aspecial power to sell from the registered owner. Under RA 4726 (theCondominium Act), when a unit owner fails to pay the association dues, thecondominium corporation can enforce a lien on the condominium unit byselling the unit in an extrajudicial foreclosure sale, and a special authorityfrom the condominium owner before a condominium corporation can initiate aforeclosure proceeding is not needed.


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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, 1963Whether or not, the intrinsic validity of the testamentary disposition should begoverned by Philippine Law, when the national law of the testator refers back tothe Philippine Law. Edward is domiciled in the Philippines hence, Philippinecourt must apply its own laws which makes natural children legallyacknowledge as forced heirs of the parent recognizing them.

Vitug vs. Court of Appeals, G.R.NO. 82027, Mar. 29, 1990 183 SCRA 755A will has been defined as "a personal, solemn, revocable and free act by whicha capacitated person disposes of his property and rights and declares orcomplies with duties to take effect after his death."

Cayatenao vs Leonidas, 129 SCRA 524

The law which governs Adoracion Campo’s will is the law of Pennsylvania, USAwhich is the national law of the decedent. It is settled that as regards to theintrinsic validity of the provisions of the wills as provided for by article 16 and1039 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 willshould include those who are born after the testator’s death. To construe it asreferring to the nearest male relative at any time after his death would render


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the provisions difficult to apply and create uncertainty as to the disposition ofthe 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 immediatelyafter such death, even if the actual extent of such share is not determined untilthe subsequent liquidation of the estate. The effect of such alienation is to bedeemed 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 beforethe 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 856was not extinguished by her death but was transmitted to her heirs upon herdeath.

Borromeo-Herrera vs Borromeo, 152 SCRA 171

The properties included in an existing inheritance cannot be the subject of acontract. The heirs acquire a right to succession from the moment of death ofthe decedent. In this case, the purported “waiver of hereditary rights” cannot beconsidered 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 becausethe attesting witnesses declare against its due execution; neither does it have

to be necessarily allowed just because all the attesting witnesses declare infavor of its legalization; what is decisive is that the court is convinced byevidence before it, not necessarily from the attesting witnesses, although theymust testify, that the will was or was not duly executed in the manner requiredby law."


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Echavez vs. Dozen Cons., G.R.NO. 192916, Oct. 11, 2010

An attestation must state all the details the third paragraph of Article 805requires. In the absence of the required avowal by the witnesses themselves,no attestation clause can be deemed embodied in the Acknowledgement of theDeed 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 uponwhich the will is written. The purpose of the law is to safeguard againstpossible interpolation or omission of one or some of its pages and prevent anyincrease or decrease in the pages.

Azuela v. CA, 487 SCRA 119

The signatures on the left-hand corner of every page signify, among others, thatthe 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 thewitnesses are referring to the statements contained in the attestation clauseitself.

Lee v. Tambago, 544 SCRA 393

An acknowledgment is the act of one who has executed a deed in going beforesome competent officer or court and declaring it to be his act or deed. Itinvolves an extra step undertaken whereby the signatory actually declares tothe notary public that the same is his or her own free act and deed. Theacknowledgment in a notarial will has a two-fold purpose: (1) to safeguard thetestator’s wishes long after his demise and (2) to assure that his estate isadministered 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 wasstated 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 notknown to the illiterate testatrix and, therefore, it is void because of themandatory provision of article 804 of the Civil Code that every will must beexecuted in a language or dialect known to the testator.


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Garcia vs. Vasquez, 32 SCRA 489

The rationale behind the requirement of reading the will to the testator if he isblind or incapable of reading the will himself (as when he is illiterate), is tomake the provisions thereof known to him, so that he may be able to object ifthey are not in accordance with his wishes. That the aim of the law is to insurethat the dispositions of the will are properly communicated to and understoodby the handicapped testator, thus making them truly reflective of his desire, isevidenced by the requirement that the will should be read to the latter, not onlyonce but twice, by two different persons, and that the witnesses have to actwithin 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 beingthat the solemnities surrounding the execution of wills are intended to protectthe testator from all kinds of fraud and trickery but are never intended to be sorigid and inflexible as to destroy the testamentary privilege.

In the case at bar, private respondent read the testator's will and codicil aloudin the presence of the testator, his three instrumental witnesses, and thenotary public. Prior and subsequent thereto, the testator affirmed, upon beingasked, that the contents read corresponded with his instructions. Only thendid the signing and acknowledgement take place. There is no evidence, andpetitioner 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 firsttime that Brigido had affirmed the truth and authenticity of the contents of thedraft. The uncontradicted testimony of Atty. Rino is that Brigido Alvaradoalready acknowledged that the will was drafted in accordance with hisexpressed wishes even prior to 5 November 1977 when Atty. Rino went to thetestator's residence precisely for the purpose of securing his conformity to thedraft.

Javellana vs. Ledesma GR. No. L-7179, 97 Phil 258

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


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

The notary public before whom the will was acknowledged cannot beconsidered as the third instrumental witness since he cannot acknowledgebefore himself his having signed the will. This cannot be done because hecannot split his personality into two so that one will appear before the other toacknowledge 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 reliedon by respondents since it presupposes that the defects in the attestationclause can be cured or supplied by the text of the will or a consideration ofmatters apparent therefrom which would provide the data not expressed in theattestation clause or from which it may necessarily be gleaned or clearly

inferred that the acts not stated in the omitted textual requirements wereactually complied within the execution of the will.

Lopez v. Lopez, 685 SCRA 209

The statement in the Acknowledgment portion of the subject last will andtestament that it "consists of 7 pages including the page on which theratification and acknowledgment are written" cannot be deemed substantialcompliance. The will actually consists of 8 pages including its acknowledgmentwhich discrepancy cannot be explained by mere examination of the will itself

but through the presentation of evidence aliunde.

Guerrero v. Bihis, 521 SCRA 394

The issue in this case whether the will “acknowledged” by the testatrix and theinstrumental witnesses before a notary public acting outside the place of hiscommission satisfies the requirement under Article 806 of the Civil Code?Outside the place of his commission, he is bereft of power to perform anynotarial 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 thenumber of pages of the will as stated in the attestation clause is not material toinvalidate the subject will. It must be noted that the subject instrument isconsecutively lettered with pages A, B, and C which is a sufficient safeguardfrom the possibility of an omission of some of the pages.


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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 beadmitted 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 astatute commonly denotes an imperative obligation and is inconsistent with theidea of discretion and that the presumption is that the word “shall,” when usedin a statute is mandatory."

Ajero vs. CA, 236 SCRA 488

Thus, unless the unauthenticated alterations, cancellations or insertions weremade on the date of the holographic will or on testator's signature, theirpresence does not invalidate the will itself. The lack of authentication will onlyresult 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 theseeming change of mind of the testatrix. But that change of mind can neitherbe given effect because she failed to authenticate it in the manner required bylaw 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 isno appearance of fraud, bad faith, undue influence and pressure and theauthenticity of the Will is established and the only issue is whether or not thedate "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 allowedunder the principle of substantial compliance.

Labrador vs. CA, 184 SCRA 170


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The law does not specify a particular location where the date should be placedin the will. The only requirements are that the date be in the will itself andexecuted 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 theones drawn by an expert, taking into account the circumstances surroundingthe 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 isdifferent from that probate where the will is presented for the first time before acompetent court.

Vda.De Perez vs. Tolete, 232 SCRA 722

What the law expressly prohibits is the making of joint wills either for thetestator’s reciprocal benefit or for the benefit of a third person (Civil Code of thePhilippines, Article 818). In the case at bench, the Cunanan spouses executedseparate wills. Since the two wills contain essentially the same provisions andpertain to property which in all probability are conjugal in nature, practicalconsiderations 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 thetwo requirements: the overt act as mentioned under the law; the intent torevoke on the part of the testator. The document or paper burned by one of thewitnesses was not satisfactorily established to be the will at all, much less thewill of Adriana.

Adriana Maloto vs. CA, 158 SCRA 451


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For one, the document or papers burned by Adriana's maid, Guadalupe, wasnot satisfactorily established to be a will at all, much less the will of AdrianaMaloto. For another, the burning was not proven to have been done under theexpress 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 ofthe testator, when last seen, the presumption is, in the absence of othercompetent evidence, that the same was cancelled or destroyed. The samepresumption arises where it is shown that the testator had ready access to thewill and it cannot be found after his death. It will not be presumed that suchwill has been destroyed by any other person without the knowledge orauthority of the testator.

Seangio v. Reyes, 2006 508 SCRA 172

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

Doctrine of dependent relative revocation

Molo vs. Molo NO. L- 2538, 90 Phil 37

The failure of a new testamentary disposition upon whose validity therevocation depends, is equivalent to the non-fulfillment of a suspensiveconditions, and hence prevents the revocation of the original will. But a mereintent to make at some time a will in the place of that destroyed will not renderthe 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; ifthe ordinary will is lost, the subscribing witnesses are available to


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authenticate. In case of holographic will if oral testimony were admissible onlyone 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 thehandwriting of the testator. But a photostatic copy or Xerox copy of theholographic will may be allowed because comparison can be made with thestandard writings of the testator.

Azaola vs Singson 109 Phil. 102

Since the authenticity of the will was not contested, the appellant is notrequired to produce more than one witness. Even if the genuiness of theholographic will were contested, article 811 cannot be interpreted as to requirethe 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 requiresthat three witnesses to declare that the will was in the handwriting of thedeceased. A visual examination of the holographic will convince us that thestrokes are different when compared with other documents written by thetestator.

Effect of allowance of WillsGallanosa vs Arcangel, 83 SCRA 676

After the finality of the allowance of a will, the issue as to the voluntariness ofits execution cannot be raised anymore. It is not only the 1939 probateproceeding that can be interposed as res judicata with respect to privaterespondents 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 consolidatedwith the testate proceeding and the judge assigned to the testate proceedingshould hearing the

Documents

PALS Civil Law (Sales to Damages).pdf