G.R. No. L-23351 March 13, 1968

CIRILO PAREDES, plaintiff-appellant, vs. JOSE L. ESPINO, defendant-appellee.

Appellant Cirilo Parades had filed an action to compel defendant-appellee Jose L. Espino to execute a deed of sale and to pay damages. The complaint alleged that the defendant "had entered into the sale" to plaintiff of Lot No. 67 of the Puerto Princesa Cadastre at P4.00 a square meter; that the deal had been "closed by letter and telegram" but the actual execution of the deed of sale and payment of the price were deferred to the arrival of defendant at Puerto Princesa; that defendant upon arrival had refused to execute the deed of sale altho plaintiff was able and willing to pay the price, and continued to refuse despite written demands of plaintiff; that as a result, plaintiff had lost expected profits from a resale of the property, and caused plaintiff mental anguish and suffering, for which reason the complaint prayed for specific performance and damages.

Defendant filed a motion to dismiss upon the ground that the complaint stated no cause of action, and that the plaintiff's claim upon which the action was founded was unenforceable under the Statute of Frauds.

Plaintiff opposed in writing the motion to dismiss and annexed to his opposition a copy of a letter purportedly signed by defendant

Dear Mr. Paredes:

So far I received two letters from you, one dated April 17 and the other April 29, both 1964. In reply thereto, please be informed that after consulting with my wife, we both decided to accept your last offer of Four (P4.00) pesos per square meter of the lot which contains 1826 square meters and on cash basis.

In order that we can facilitate the transaction of the sale in question, we (Mrs. Espino and I), are going there (Puerto Princess, Pal.) to be there during the last week of the month, May. I will send you a telegram, as per your request, when I will reach Manila before taking the boat for Pto. Princess. As it is now, there is no schedule yet of the boats plying between Manila and Pto. Princess for next week.

Plaintiff also appended as Annex "A-1", a telegram apparently from defendant advising plaintiff of his arrival by boat about the last week of May 1964 (Annex "A-1" Record on Appeal, p. 21), as well as a previous letter of defendant (Appendix B, Record on Appeal, p. 35) referring to the lot as the one covered by Certificate of Title No. 62.

The sole issue here is whether enforcement of the contract pleaded in the complaint is barred by the Statute of Frauds; and the Court a quo plainly erred in holding that it was unenforceable.

In the case at bar, the complaint in its paragraph 3 pleads that the deal had been closed by letter and telegram" (Record on Appeal, p. 2), and the letter referred to was evidently the one copy of which was appended as Exhibit A to plaintiff's opposition to the motion dismiss. This letter, transcribed above in part, together with that one marked as Appendix B, constitute an adequate memorandum of the transaction. They are signed by the defendant-appellee; refer to the property sold as a lot in Puerto Princesa, Palawan, covered, by TCT No. 62; give its area as 1826 square meters and the purchase price of four (P4.00) pesos per square meter payable in cash. We have in them therefore, all the essential terms of the contract, and they satisfy the requirements of the Statute of Frauds. We have ruled in Berg vs. Magdalena Estate, Inc., 92 Phil. 110, 115, that a sufficient memorandum may be contained in two or more documents.

Defendant-appellee argues that the authenticity of the letters has not been established. That is not necessary for the purpose of showing prima facie that the contract is enforceable. For as ruled by us in Shaffer vs. Palma, L-24115, March 1, 1968, whether the agreement is in writing or not, is a question of evidence; and the authenticity of the writing need not be established until the trial is held. The plaintiff having alleged that the contract is backed by letter and telegram, and the same being a sufficient memorandum, his cause of action is thereby established, especially since the defendant has not denied the letters in question. At any rate, if the Court below entertained any doubts about the existence of the written memorandum, it should have called for a preliminary hearing on that point, and not dismissed the complaint.

Claudel v. CA

And the real issues are:

1.Whether or not a contract of sale of land may be proven orally:

2.Whether or not the prescriptive period for filing an action for cancellation of titles and reconveyance with damages (the action filed by the SIBLINGS OF CECILIO) should be counted from the alleged sale upon which they claim their ownership (1930) or from the date of the issuance of the titles sought to be cancelled in favor of the HEIRS OF CECILIO (1976).

The rule of thumb is that a sale of land, once consummated, is valid regardless of the form it may have been entered into. 11 For nowhere does law or jurisprudence prescribe that the contract of sale be put in writing before such contract can validly cede or transmit rights over a certain real property between the parties themselves.

However, in the event that a third party, as in this case, disputes the ownership of the property, the person against whom that claim is brought can not present any proof of such sale and hence has no means to enforce the contract. Thus the Statute of Frauds was precisely devised to protect the parties in a contract of sale of real property so that no such contract is enforceable unless certain requisites, for purposes of proof, are met.

Of the parties SIBLINGS OF CECILIO had allegedly derived their right of action from the oral purchase made by their parents in 1930, then the action filed in 1976 would have clearly prescribed. More than six years had lapsed.

We do not agree with the parties SIBLINGS OF CECILIO when they reason that an implied trust in favor of the SIBLINGS OF CECILIO was established in 1972, when the HEIRS OF CECILIO executed a contract of partition over the said properties.

But as we had pointed out, the law recognizes the superiority of the torrens title.

Above all, the torrens title in the possession of the HEIRS OF CECILIO carries more weight as proof of ownership than the survey or subdivision plan of a parcel of land in the name of SIBLINGS OF CECILIO.

The Court has invariably upheld the indefeasibility of the torrens title. No possession by any person of any portion of the land could defeat the title of the registered owners thereof.

For several years, when the SIBLINGS OF CECILIO, namely, Macario, Esperidiona Raymunda, and Celestina were living on the contested premises, they regularly paid a sum of money, designated as "taxes" at first, to the widow of Cecilio, and later, to his heirs. 21 Why their payments were never directly made to the Municipal Government of Muntinlupa when they were intended as payments for "taxes" is difficult to square with their claim of ownership. We are rather inclined to consider this fact as an admission of non-ownership. And when we consider also that the petitioners HEIRS OF CECILIO had individually paid to the municipal treasury the taxes corresponding to the particular portions they were occupying, 22 we can readily see the superiority of the petitioners' position.

In view of the foregoing, we find that the appellate court committed a reversible error in denigrating the transfer certificates of title of the petitioners to the survey or subdivision plan proffered by the private respondents. The Court generally recognizes the profundity of conclusions and findings of facts reached by the trial court and hence sustains them on appeal except for strong and cogent reasons inasmuch as the trial court is in a better position to examine real evidence and observe the demeanor of witnesses in a case.

City lite vs CA

FACTS:

FP Holdings and Realty Corp (respondent) was the registered owner of a 71754 sq m-parcel of land along E Rodriguez Ave, QC known as the Violago Property or the San Lorenzo Ruiz Commercial Center. It was offered for sale to the general public through a sales brochure:

A parcel of land including buildings and other improvements thereon located along E.Rodriguez Avenue, Quezon City, with a total lot area of 71,754 square meters - 9,192square meters in front, 23,332 square meters in the middle, and 39,230 square meters at the back. But the total area for sale excludes 5,000 square meters covering the existingchapel and adjoining areas which will be donated to the Archdiocese of Manila thusreducing the total saleable area to 66,754 square meters. Asking price was P6,250.00/square meter with terms of payment negotiable. Broker's commission was 2.0% of selling price, net of withholding taxes and other charges. As advertised, contact person was Meldin Al G. Roy, Metro Drug Inc., with address at 5/F Metro House, 345 Sen.Gil Puyat Avenue, Makati City

The 9192 sq m- front portion was the subject of litigation.

Meldin Roy (respondent) sent a sales brochure, location plane and copy of the TCT to AttyGelacio Mamaril, a lawyer and licensed real estate broker. Mamaril passed on the documents to City-Lites Executive VP Antonio Teng and Legal Counsel Atty Victor Villanueva. City-Lite conveyed its interest to purchase of the front portion in a letter send toMetro Drug (Attn: Meldin Roy). Roy also informed City- Lites representative that it would take time to subdivide the lot and FP Holdings wasnt receptive to a purchase. Atty Mamaril sent a letter to Metro Drug expressing City- Lites desire to buy the entire front lot so long as the P6250/sq m asking price was reduced and that payment be madein installments.

Roy made a counter offer in another letter: 1. The price shallbeP6,250.00/square meter or a total of P57,450,000.00; 2. The above purchase priceshall be paid to the owner as follows: (a) P15.0 Million downpayment; (b) balancepayable within six (6) months from date of downpayment without interest.

City-Lite and Mamaril met with Roy to consummate the transaction; Roy agreed to sell the property provided City- Lite submit its acceptance in writing to the terms and conditions in Roys letter. Later that afternoon Mamaril and Teng conveyed their formal acceptance of the terms.

However, FP Holdings refused to execute the corresponding deed of sale and registered anadverse claim to the title of the property with the Register of Deeds of QC, annotated in thememorandum of encumbrance in the TCT.

FP Holdings filed a petition for the cancellation of the adverse claim against City-Lite with theRTC QC;

City-Lite caused the annotation of the first notice of lis pendens which was recorded inthe title of the property.

RTC dismissed FP Holdings petition; FP Holdings caused a resurvey and segregation of the property, asking and was granted separate titles from the RD QC.

City-Lite instituted a complaint against FP Holdings for specific performance and damages and caused the annotation of the second notice of lis pendens The property was transferred to Viewmaster Construction Co (respondent) for which aTCT was issued; the lis pendens was carried over to the new title. The RTC rendered a decision in favor of City-Lite ordering FP Holdings to execute a deedof sale of the property and ordering the RD QC to cancel Viewmasters TCT. The CA reversed an set aside the RTC judgment.

ISSUE:Was there a contract of sale perfected between City-Lite and FP Holdings through its agent Meldin Roy of Metro Drug?

REASONING:

Art. 1874 of the Civil Code provided:

"When the sale of a piece of land or any interest therein is through an agent, the authority of the latter shall be in writing; otherwise, the sale shall be void. " Roy was FP Holdings authorized agent to sell the property, but the NCC required that the authority be in writing.

The absence of authority to sell could be determined from the written memo issued by FP Holdings president requesting Metro Drugs assistance in finding buyers. The memo stated: We will appreciate Metro Drug's assistance in referring to us buyers for the property. Please proceed to hold preliminary negotiations with interested buyers and endorse formal offers to us for our final evaluation and appraisal. This meant that Roy and/or Metro Drug were only to assist FP Holdings, and FPHoldings were the only ones who could make the final evaluation, appraisal and acceptance of any transaction. Roy and/or Metro Drug were only a contact person with no authority to conclude a saleof the property. Consequently, the sale should be null and void, and not produce any legal effect to transfer the property from FP Holdings to any interested party

G.R. No. L-15113 January 28, 1961

ANTONIO MEDINA, petitioner, vs. COLLECTOR OF INTERNAL REVENUE and THE COURT OF TAX APPEALS respondents.

The records show that on or about May 20, 1944, petitioning taxpayer Antonio Medina married Antonia Rodriguez. Before 1946, the spouses had neither property nor business of their own. Later, however, petitioner acquired forest, concessions in the municipalities of San Mariano and Palanan in the Province of Isabela. From 1946 to 1948, the logs cut and removed by the petitioner from his concessions were sold to different persons in Manila through his agent, Mariano Osorio.

Sometime in 1949, Antonia R. Medina, petitioner's wife, started to engage in business as a lumber dealer, and up to around 1952, petitioner sold to her almost all the logs produced in his San Mariano, concession. Mrs. Medina, In turn, sold in Manila the logs bought from her husband through the same agent, Mariano Osorio. The proceeds were, upon instructions from petitioner, either received by Osorio for petitioner or deposited by said agent in petitioner's current account with the Philippine National Bank.

On the thesis that the sales made by petitioner to his wife were null and void pursuant to the provisions of Article 1490 of the Civil Code of the Philippines (formerly, Art. 1458, Civil Code of 1889), the Collector considered the sales made by Mrs. Medina as the petitioner's original sales taxable under Section 186 of the National Internal Revenue Code and, therefore, imposed a tax assessment on petitioner, calling for the payment of P4,553.54 as deficiency sales taxes and surcharges from 1949 to 1952. This same assessment of September 26, 1953 sought also the collection of another sum of P643.94 as deficiency sales tax and surcharge based on petitioner's quarterly returns from 1946 to 1952.

On November 30, 1953, petitioner protested the assessment; however, respondent Collector insisted on his demand. On July 9, 1954, petitioner filed a petition for reconsideration revealing for the first time the existence of an alleged premarital agreement of complete separation of properties between him and his wife, and contending that the assessment for the years 1946 to 1952 had already prescribed. After one hearing, the Conference Staff of the Bureau of Internal Revenue eliminated the 50% fraud penalty and held that the taxes assessed against him before 1948 had already prescribed.

Petitioner again requested for reconsideration, but respondent Collector, in his letter of April 4, 1955, denied the same.

Petitioner appealed to the Court of Tax Appeals, which rendered judgment as aforesaid. The Court's decision was based on two main findings, namely, (a) that there was no premarital agreement of absolute separation of property between the Medina spouse; and (b) assuming that there was such an agreement, the sales in question made by petitioner to his wife were fictitious, simulated, and not bona fide.

Relying mainly on testimonial evidence that before their marriage, he and his wife executed and recorded a prenuptial agreement for a regime of complete separation of property, and that all trace of the document was lost on account of the war, petitioner imputes lack of basis for the tax court's factual finding that no agreement of complete separation of property was ever executed by and between the spouses before their marriage. We do not think so. Aside from the material inconsistencies in the testimony of petitioner's witnesses pointed out by the trial court, the circumstantial evidence is against petitioner's claim. Thus, it appears that at the time of the marriage between petitioner and his wife, they neither had any property nor business of their own, as to have really urged them to enter into the supposed property agreement. Secondly, the testimony that the separation of property agreement was recorded in the Registry of Property three months before the marriage, is patently absurd, since such a prenuptial agreement could not be effective before marriage is celebrated, and would automatically be cancelled if the union was called off. How then could it be accepted for recording prior to the marriage? In the third place, despite their insistence on the existence of the ante nuptial contract, the couple, strangely enough, did not act in accordance with its alleged covenants. Quite the contrary, it was proved that even during their taxable years, the ownership, usufruct, and administration of their properties and business were in the husband. And even when the wife was engaged in lumber dealing, and she and her husband contracted sales with each other as aforestated, the proceeds she derived from her alleged subsequent disposition of the logs incidentally, by and through the same agent of her husband, Mariano Osorio were either received by Osorio for the petitioner or deposited by said agent in petitioner's current account with the Philippine National Bank. Fourth, although petitioner, a lawyer by profession, already knew, after he was informed by the Collector on or about September of 1953, that the primary reason why the sales of logs to his wife could not be considered as the original taxable sales was because of the express prohibition found in Article 1490 of the Civil Code of sales between spouses married under a community system; yet it was not until July of 1954 that he alleged, for the first time, the existence of the supposed property separation agreement. Finally, the Day Book of the Register of Deeds on which the agreement would have been entered, had it really been registered as petitioner insists, and which book was among those saved from the ravages of the war, did not show that the document in question was among those recorded therein.

The foregoing findings notwithstanding, the petitioner argues that the prohibition to sell expressed under Article 1490 of the Civil Code has no application to the sales made by said petitioner to his wife, because said transactions are contemplated and allowed by the provisions of Articles 7 and 10 of the Code of Commerce. But said provisions merely state, under certain conditions, a presumption that the wife is authorized to engage in business and for the incidents that flow therefrom when she so engages therein. But the transactions permitted are those entered into with strangers, and do not constitute exceptions to the prohibitory provisions of Article 1490 against sales between spouses.

Petitioner's contention that the respondent Collector can not assail the questioned sales, he being a stranger to said transactions, is likewise untenable. The government, as correctly pointed out by the Tax Court, is always an interested party to all matters involving taxable transactions and, needless to say, qualified to question their validity or legitimacy whenever necessary to block tax evasion.

Contracts violative of the provisions of Article 1490 of the Civil Code are null and void (Uy Sui Pin vs. Cantollas, 70 Phil. 55; Uy Coque vs. Sioca 45 Phil. 43). Being void transactions, the sales made by the petitioner to his wife were correctly disregarded by the Collector in his tax assessments that considered as the taxable sales those made by the wife through the spouses' common agent, Mariano Osorio. In upholding that stand, the Court below committed no error.

G.R. No. L-57499June 22, 1984

MERCEDES CALIMLIM- CANULLAS, petitioner, vs.HON. WILLELMO FORTUN, Judge, Court of First instance of Pangasinan, Branch I, and CORAZON DAGUINES, respondents.

The background facts may be summarized as follows: Petitioner MERCEDES Calimlim-Canullas and FERNANDO Canullas were married on December 19, 1962. They begot five children. They lived in a small house on the residential land in question with an area of approximately 891 square meters, located at Bacabac, Bugallon, Pangasinan. After FERNANDO's father died in 1965, FERNANDO inherited the land.

In 1978, FERNANDO abandoned his family and was living with private respondent Corazon DAGUINES. During the pendency of this appeal, they were convicted of concubinage in a judgment rendered on October 27, 1981 by the then Court of First Instance of Pangasinan, Branch II, which judgment has become final.

On April 15, 1980, FERNANDO sold the subject property with the house thereon to DAGUINES for the sum of P2,000.00. In the document of sale, FERNANDO described the house as "also inherited by me from my deceased parents."

Unable to take possession of the lot and house, DAGUINES initiated a complaint on June 19, 1980 for quieting of title and damages against MERCEDES. The latter resisted and claimed that the house in dispute where she and her children were residing, including the coconut trees on the land, were built and planted with conjugal funds and through her industry; that the sale of the land together with the house and improvements to DAGUINES was null and void because they are conjugal properties and she had not given her consent to the sale,

In its original judgment, respondent Court principally declared DAGUINES "as the lawful owner of the land in question as well as the one-half () of the house erected on said land." Upon reconsideration prayed for by MERCEDES, however, respondent Court resolved:

WHEREFORE, the dispositive portion of the Decision of this Court, promulgated on October 6, 1980, is hereby amended to read as follows:

(1) Declaring plaintiff as the true and lawful owner of the land in question and the 10 coconut trees;

The issues posed for resolution are (1) whether or not the construction of a conjugal house on the exclusive property of the husband ipso facto gave the land the character of conjugal property; and (2) whether or not the sale of the lot together with the house and improvements thereon was valid under the circumstances surrounding the transaction.

We hold that pursuant to the foregoing provision both the land and the building belong to the conjugal partnership but the conjugal partnership is indebted to the husband for the value of the land. The spouse owning the lot becomes a creditor of the conjugal partnership for the value of the lot, 1 which value would be reimbursed at the liquidation of the conjugal partnership

The foregoing premises considered, it follows that FERNANDO could not have alienated the house and lot to DAGUINES since MERCEDES had not given her consent to said sale. 4

Anent the second issue, we find that the contract of sale was null and void for being contrary to morals and public policy. The sale was made by a husband in favor of a concubine after he had abandoned his family and left the conjugal home where his wife and children lived and from whence they derived their support. That sale was subversive of the stability of the family, a basic social institution which public policy cherishes and protects.

Additionally, the law emphatically prohibits the spouses from selling property to each other subject to certain exceptions. 6 Similarly, donations between spouses during marriage are prohibited. 7 And this is so because if transfers or con conveyances between spouses were allowed during marriage, that would destroy the system of conjugal partnership, a basic policy in civil law. It was also designed to prevent the exercise of undue influence by one spouse over the other, 8 as well as to protect the institution of marriage, which is the cornerstone of family law. The prohibitions apply to a couple living as husband and wife without benefit of marriage, otherwise, "the condition of those who incurred guilt would turn out to be better than those in legal union." Those provisions are dictated by public interest and their criterion must be imposed upon the wig of the parties.

Philippine Trust Co. v. Roldan

Mariano L Bernardo, a minor, inherited from his father, Marcelo Bernardo 17 parcels of land located in Guiguinto, Bulacan. In view of his minority, guardianship proceedings were instituted on July 27, 1947, where Socorro Roland, surviving spouse of Marcelo and step-mother of Mariano, was appointed as guardian of the latter. Also, Socorro filed a motion asking authority to sell as guardian the 17 parcels for the sum of P14,700 to his brother-in-law, Dr. Fidel C. Ramos, the purpose of the sale being allegedly to invest money in a residential house, which theminor desired to have on Tindalo St., Manila. The motion was granted. On August 5, 1947 Socorro, as guardian, then executed the proper deed of sale in favor of Fidel Ramos and on August 12, 1947, she asked for and obtained judicial confirmation of thesale. However, on August 13, 1947, Fidel Ramos executed in favor of Socorro personally, a deedof conveyance covering the same 17 parcels for the sum of P15,000. And on October 21, 1947 Socorro sold 4 out of the 17 parcels to Emilio Cruz for P3,000, reserving herself the right torepurchase.On August 10, 1948, petitioner Phil. Trust Co. replaced Socorro as guardian. Petitioner filed a complaint to annul two contracts regarding the 17 parcels of land: a) the sale thereof by Socorro, as guardian, to Fidel Ramos; and b) sale thereof by Fidel Ramos to Socorro personally.

Petitioner contends that the step-mother in effect, sold to herself, the properties of her ward thusshould be annulled as it violates Art. 1459 of the Civil Code prohibiting the guardian from purchasing either in person or through the mediation of another the property of her ward. As to the third conveyance, that Socorro had acquired no valid title to convey to Cruz.The trial court held that Art 1459 was not controlling as there was no proof that Ramoswas a mere intermediary or that the latter agreed with Socorro to but the parcels of land for her benefit. The Court of Appeals affirmed the judgment, adding that the minor new the particulars of,and approved the transactions, and that only clear and positive evidence of fraud and bad faith,and not mere insinuations and interferences will overcome the presumptions that a sale wasconcluded in all good faith for value. Hence, this petition.

ISSUE:Whether the two contracts of sale made by Socorro was valid.

HELD:To our minds the first two transactions herein described couldnt be in a better juridical situation than if this guardian had purchased the seventeen parcels on the day following the sale to Dr. Ramos. Now, if she was willing to pay P15,000 why did she sell the parcels for less? In one day (or actually one week) the price could not have risen so suddenly. Obviously when, seeking approval of the sale she represented the price to be the best obtainable in the market, she was not entirely truthful. This is one phase to consider.

Even without proof that she had connived with Dr. Ramos. Remembering the general doctrine that guardianship is a trust of the highest order, and the trustee cannot be allowed to have any inducement to neglect his wards interest and in line with the courts suspicion whenever the guardian acquires the wards property 1 we have no hesitation to declare that in this case, in the eyes of the law, Socorro Roldan took by purchase her wards parcels thru Dr. Ramos

She acted it may be true without malice; chan roblesvirtualawlibrarythere may have been no previous agreement between her and Dr. Ramos to the effect that the latter would buy the lands for her. But the stubborn fact remains that she acquired her proteges properties, through her brother-in-law

A ttempting to prove that the transaction was beneficial to the minor, Appellees attorney alleges that the money (P14,700) invested in the house on Tindalo Street produced for him rentals of P2,400 yearly; chan roblesvirtualawlibrarywhereas the parcels of land yielded to his step-mother only an average of P1,522 per year. 3 The argument would carry some weight if that house had been built out of the purchase price of P14,700 only. 4 One thing is certain: the calculation does not include the price of the lot on which the house was erected. Estimating such lot at P14,700 only, (ordinarily the city lot is more valuable than the building) the result is that the price paid for the seventeen parcels gave the minor an income of only P1,200 a year, whereas the harvest from the seventeen parcels netted his step-mother a yearly profit of P1,522.00. The minor was thus on the losing end

Hence, from both the legal and equitable standpoints these three sales should not be sustained:chanroblesvirtuallawlibrary the first two for violation of article 1459 of the Civil Code; chan roblesvirtualawlibraryand the third because Socorro Roldan could pass no title to Emilio Cruz. The annulment carries with is (Article 1303 Civil Code) the obligation of Socorro Roldan to return the 17 parcels together with their fruits and the duty of the minor, through his guardian to repay P14,700 with legal interest.

Rubias vs Batiller (1973)Facts:Francisco Militante claimed that he owned aparcel of land located in Iloilo. He filed with theCFI of Iloilo an application for the registrationof title of the land. This was opposed by theDirector of Lands, the Director of Forestry, andother oppositors. The case was docked as aland case, and after trial the court dismissedthe application for registration. Militante appealed to the Court of Appeals.-Pending that appeal, he sold to Rubias (hisson-in-law and a lawyer) the land.-The CA rendered a decision, dismissing the application for registration.-On August 31, 1964, plaintiff Domingo D. Rubias, a lawyer, filed a suit to recover the ownership and possession of certain portions of lot under Psu-99791 located in Barrio General Luna, Barotac Viejo, Iloilo which he bought from his father-in-law, Francisco Militante in 1956 against its present occupant defendant, Isaias Batiller, who illegally entered said portions of the lot on two occasion

Rubias filed a Forcible Entry and Detainer case against Batiller.-In that case, the court held that Rubias has nocause of action because the property in disputewhich Rubias allegedly bought from Militantewas the subject matter of a land case, in whichcase Rubias was the counsel on record of Militante himself. It thus falls under Article1491 of the Civil Code. (Hence, this appeal.)

Issue: Whether the sale of the land is prohibitedunder Article 1491.

Held: YES. Ar ticle 1491 says that The following persons cannot acquire any purchase, even at a public or judicial auction, either in person or through the mediation of another. (5) Justices, judges, prosecuting attorneys, clerks of superior and inferior courts, and other officers and employees connected with the administration of justice, the property and rights in litigation or levied upon an execution before the court within whose jurisdiction or territory theyexercise their respective functions; this prohibition includes the act of acquiring by assignment and shall apply to lawyer, with respect to the property andrights which may be the object of any litigation inwhich they may take part by virtue of their profession. The present case clearly falls under this,especially since the case was still pending appeal when the sale was made.

Issue: Legal effect of a sale falling under Article1491?

Held: NULL AND VOID.CANNOT BE RATIFIED.Manresa considered such prohibited acquisitions (which fell under the Spanish Civil Code) as merely voidable because the Spanish Code did not recognize nullity. But our Civil Code does recognize the absolute nullity of contracts whose cause, object or purpose is contract to law, morals, good customs, public order or public policy or which are expressly prohibited or declared void by law and declares such contracts inexistent and void from the beginning.

The nullity of such prohibited contracts is definite and permanent, and cannot be cured by ratification. The public interest and public policy remain paramount and do not permit of compromise or ratification. In this aspect, the permanent is qualification of public and judicial officers and lawyers grounded on public policy differs from the first three cases of guardians agents and administrators(under Art 1491). As to their transactions, it has been opined that they may be ratified by means of and in the form of a new contract, in which case its validity shall be determined only by the circumstances at the time of execution of s uch new contract. In thosecases, the object which was illegal at the time of the first contract may have already become lawful at thetime of the ratification or second contract, or theintent, or the service which was impossible. The ratification or second contract would then be valid fromits execution; however, it does not retroact to the dateof the first contract. Decision affirmed

The chain of Militante's alleged title and right to the land as supposedly traced back to Liberato Demontao was actually asserted by Militante (and his vendee, lawyer and son-in-law, herein plaintiff) in the land registration case and rejected by the Iloilo land registration court which dismissed Militante's application for registration of the land. Such dismissal, as already stated, was affirmed by the final judgment in 1958 of the Court of Appeals

Macariola Vs. Asuncion 114 SCRA 77

Facts: On June 8, 1963, respondent Judge Elias Asuncion rendered a decision in Civil Case 3010 final for lack of an appeal.

On October 16, 1963, a project of partition was submitted to Judge Asuncion. The project of partition of lots was not signed by the parties themselves but only by the respective counsel of plaintiffs and petitioner Bernardita R. Macariola. The Judge approved it in his order dated October 23, 1963.

One of the lots in the project of partition was Lot 1184, which was subdivided into 5 lots denominated as Lot 1184 A E. Dr. Arcadio Galapon bought Lot 1184-E on July 31, 1964, who was issued transfer of certificate of Title No, 2338 of the Register of Deeds of Tacloban City. On March 6, 1965, Galapon sold a portion of the lot to Judge Asuncion and his wife.

On August 31, 1966, spouses Asuncion and Galapon conveyed their respective shares and interest inn Lot 1184-E to the Traders Manufacturing & Fishing Industries Inc. Judge Asuncion was the President and his wife Victoria was the Secretary. The Asuncions and Galapons were also the stockholder of the corporation.

Respondent Macariola charged Judge Asuncion with "Acts unbecoming a Judge" for violating the following provisions: Article 1491, par. 5 of the New Civil Code, Article 14, par. 1 & 5 of the Code of Commerce, Sec. 3 par H of RA 3019 also known as the Anti-Graft & Corrupt Practice Act., Sec. 12, Rule XVIII of the Civil Service Rules and Canon 25 of the Canons of Judicial Ethics.

On November 2, 1970 a certain Judge Jose D. Nepomuceno dismissed the complaints filed against Asuncion.

Issue: Whether or Not the respondent Judge violated the mentioned provisions.

Ruling: No. Judge Asuncion did not violate the mentioned provisions constituting of "Acts unbecoming a Judge" but was reminded to be more discreet in his private and business activities.

Respondent Judge did not buy the lot 1184-E directly on the plaintiffs in Civil Case No. 3010 but from Dr. Galapon who earlier purchased the lot from 3 of the plaintiffs. When the Asuncion bought the lot on March 6, 1965 from Dr. Galapon after the finality of the decision which he rendered on June 8, 1963 in Civil Case No 3010 and his two orders dated October and November, 1963. The said property was no longer the subject of litigation.

In the case at bar, Article 14 of Code of Commerce has no legal and binding effect and cannot apply to the respondent. Upon the sovereignty from the Spain to the US and to the Republic of the Philippines, Art. 14 of this Code of Commerce, which sourced from the Spanish Code of Commerce, appears to have been abrogated because whenever there is a change in the sovereignty, political laws of the former sovereign are automatically abrogated, unless they are reenacted by Affirmative Act of the New Sovereign.

Asuncion cannot also be held liable under the par. H, Sec. 3 of RA 3019, citing that the public officers cannot partake in any business in connection with this office, or intervened or take part in his official capacity. The Judge and his wife had withdrawn on January 31, 1967 from the corporation and sold their respective shares to 3rd parties, and it appears that the corporation did not benefit in any case filed by or against it in court as there was no case filed in the different branches of the Court of First Instance from the time of the drafting of the Articles of Incorporation of the corporation on March 12, 1966 up to its incorporation on January 9, 1967. The Judge realized early that their interest in the corporation contravenes against Canon 25.

No. The prohibition only applies if the litigation is under pendency. The judge bought the property in 1965 2 years after his decision became final. Further, Asuncion did not buy the property directly from any of the parties since the property was directly bought by Galapon, who then sold the property to Asuncion. There was no showing that Galapon acted as a dummy of Asuncion.

Also, Macariola did not show proof that there was a gross inequality in the partition; or that what she got were insignificant portions of the land.

MAHARLIKA PUBLISHING CORP V TAGLE

FACTS

GSIS owned a parcel of land with a building and printing equipment in Paco, Manila. It was sold to Maharlika in a Conditional Contract of Sale with the stipulation that if Maharlika failed to pay monthly installments in 90 days, the GSIS would automatically cancel the contract. Because Maharlika failed to pay several monthly installments, GSIS demanded that Maharlika vacate the premises.

Because of Maharlika's failure to settle the unpaid accounts, the GSIS notified Maharlika in writing on June 26, 1967 that the conditional contract of sale was annulled and cancelled and required Maharlika to sign a lease contract. Maharlika refused to vacate the premises and to sign the lease contract.

Even though Maharlika refused to do so, the GSIS published an advertisement inviting the public to bid in a public auction. A day before the scheduled bidding, Adolfo Calica, the President of Maharlika, gave the GSIS head office 2 checks worth 11,000 and a proposal for a compromise agreement. The GSIS General Manager Roman Cruz gave a not to Maharlika saying Hold Bidding. Discuss with me.

On February 12, 1971, however, the public bidding of this particular property was held as scheduled prompting Adolfo Calica to submit his bid to the Bidding Committee with a deposit of P11,000.00 represented by the same two checks submitted to General Manager Cruz, Jr., together with his letter-proposal. His bid proposal reads: "I bid to match the highest bidder."

The bidding committee rejected Maharlika's bid as an imperfect bid and recommended acceptance of private respondent Luz Tagle's bid of P130,000.00 with a ten percent (10%) deposit of P13,000.00.

Due to the refusal of petitioners to surrender the possession of the property in question, respondent spouses Luz R. Tagle and Edilberto Tagle filed a case for Recovery of Possession with Damages with the Court of First Instance of Manila

Maharlika demanded that the sale be considered null and void, as Mrs. Tagle should have been disqualified from bidding for the GSIS property. RTC and CA both ruled that the Tagles were entitled to the property and Maharlika should vacate the premises.

ISSUE

Whether or not Tagle are entitled to the property ?

HELD NO. The sale to them was against public policy. First of all, the GSIS head office was stopped from claiming that they did not give the impression to Maharlika that they were accepting the proposal for a compromise agreement. The act of the general manager is binding on GSIS. Second, Article 1491 (4) of the CC provides that public officers and employees are prohibited from purchasing the property of the state or any GOCC or institution, the administration of which has been entrusted to them cannot purchase, even at public or judicial auction, either in person or through the mediation of another. The SC held that as an employee of the GSIS, Edilberto Tagle and his wife are disqualified from bidding on the property belonging to the GSIS because it gives the impression that there was politics involved in the sale. It is not necessary that actual fraud be shown, for a contract which tends to injure the public service is void although the parties entered into it honestly and proceeded under it in good faith

A Division Chief of the GSIS is not an ordinary employee without influence or authority. The mere fact that he exercises ample authority with respect to a particular activity, i.e., retirement, shows that his influence cannot be lightly regarded.

The point is that he is a public officer and his wife acts for and in his name in any transaction with the GSIS. If he is allowed to participate in the public bidding of properties foreclosed or confiscated by the GSIS, there will always be the suspicion among other bidders and the general public that the insider official had access to information and connections with his fellow GSIS officials as to allow him to eventually acquire the property.

There is no need, therefore, to pass upon the issue of irregularity in the appearance of the private respondents' bid and the alleged inference of fraud flowing therefrom.

We reiterate that assuming the transaction to be fair and not tainted with irregularity, it is still looked upon with disfavor because it places the officer in a position which might become antagonistic to his public duty.

RESTITUTO DE LEON, Petitioner, v. COURT OF APPEALS, JUANITA RAMOS and MAXIMO PEREZ, Respondents

The petitioner is challenging the purported sale to the private respondents of two parcels of land which he claims is his own by right of inheritance.

The said properties were part of the Buenavista Estate, which had been purchased by the Republic of the Philippines for distribution among landless tenants and farmers. On April 1, 1955, Lot No. S-117 thereof, covering over 14,200 square meters, was sold to Manuel de Leon by the Department of Agriculture on behalf of the Republic. On August 5, 1969, Lot 43 thereof, consisting of 11,847 square meters, was also sold by the Republic, through the Land Authority, to the heirs of annulled Leon, represented by the herein petitioner, his grandson.

The first Deed of Sale carried the following limitation on the disposition of the land:chanrob1es virtual 1aw library

1.That it shall not be sold, assigned, encumbered, mortgaged or transferred, within the period of five (5) years from the date hereof without first obtaining the written consent of the Secretary of Agriculture and Natural Resources.

2.That except by hereditary succession, it shall not be conveyed, transferred or assigned in favor of any person who is not landless and disqualified to acquire or own land in the Philippines.

The second sale was subject to a similar condition

On July 24, 1969, the herein private respondents filed a complaint against the petitioner for partition of the lands and accounting in the Court of First Instance of Bulacan. They alleged that they had bought 1/2 of the lands from Maria de los Santos, the widow of Manuel de Leon, by virtue of a "Tuluyang Bilihan" dated March 18, 1959. 1 She had filed to deliver possession to them until her death on February 5, 1960. The petitioner, who had succeeded her in the lands, had resisted their demands for accounting of the income from the said properties.

After trial, Judge Benigno M. Puno sustained the private respondents This was affirmed on appeal by the respondent court on February 16, 1989, and reconsideration was denied on June 15, 1989. 3

The Court of Appeals agreed that the "Tuluyang Bilihan" was genuine and valid and that the alleged lack of the stipulated written consent could be invoked only by the Republic of the Philippines and not by the petitioner. He was not a party to the "Tuluyang Bilihan." Besides, the said stipulations were not applicable to cases of hereditary succession, and De los Santos, who sold the lands, was the heir of her husband, Manuel de Leon.

We disagree with the respondent court that because Maria de los Santos acquired the subject lands by hereditary successions she was thereby released from the conditions of the sales made on April 1, 1955, and August 5, 1969. There is no reason why, as heir, she should be treated less strictly than her predecessor-in-interest in the disposition of the lands during the prohibited period.

In any event, as the "Tuluyang Bilihan" was null and void ab initio, ownership of the disputed lands was not transferred to the private respondents but remained with Maria de los Santos. The Republic of the Philippines, if not the petitioner, may still ask for the reversion of the properties to the State for violation of the conditions in the deeds of sale. Meanwhile the petitioner would have preferential rights of possession thereover vis-a-vis the private respondents, who rely only on the void "Tuluyang Bilihan."

It is only fair, however, that the private respondents be allowed to at least recover the purchase price of the land, with legal interest from the time of the execution of the Tuluyang Bilihan until the refund is actually made. This ruling is based on the findings of the lower court that the said instrument, although deficient for lack of the required consent, was validly executed.

We shall support this factual finding because the petitioner was rather ambivalent in assailing the authenticity of the "Tuluyang Bilihan." At first he doubted its genuineness because it was only thumbprinted and not signed by Maria de los Santos. On appeal, he alleged that the contents of the instruments should have been explained to her because she was illiterate.

G.R. No. L-31606March 28, 1983

DONATO REYES YAP and MELITONA MARAVILLAS, petitioners, vs.HON. EZEKIEL S. GRAGEDA, as Judge of the Court of First Instance of Albay and JOSE A. RICO,

On April 12, 1939, Maximino Rico, for and in his own behalf and that of the minors Maria Rico, Filomeno Rico, Prisco Rico, and Lourdes' Rico, executed a Deed of Absolute Sale (Annex 'A' to the complaint) over Lot 339 and a portion of Lot 327 in favor of the petitioner Donato Reyes Yap who was then a Chinese national. Respondent Jose A. Rico is the eldest son of Maximino Rico, one of the vendors in Annex 'A'.

Subsequently, the petitioner as vendee caused the registration of the instrument of sale and the cancellation of Original Certificates of Title Nos. 29332 and 29410 and the consequent issuance in his favor of Transfer Certificate of Title No. T-2433 covering the two lots subject matter of the Contract of Sale.

After the lapse of nearly fifteen years from and after the execution of the deed of absolute sale, Donato Reyes Yap was admitted as a Filipino citizen and allowed to take his oath of allegiance to the Republic of the Philippines. He was, thereafter, issued Certificate of Naturalization No. 7, File No. 19 of the Court of First Instance of Albay.

On December 1, 1967, the petitioner ceded the major portion of Lot No. 327 consisting of 1,078 square meters which he acquired by purchase under the deed of sale in favor of his engineer son, Felix Yap, who was also a Filipino citizen because of the Filipino citizenship of his mother and the naturalization of his father Donato Reyes Yap.

Subsequently, Lourdes Rico, aunt and co-heir of respondent Jose A. Rico. sold the remaining portion of Lot 327 to the petitioner who had his rights thereon duly registered under Act 496. Petitioner, Donato Reyes Yap, has been in possession of the lots in question since 1939, openly, publicly, continuously, and adversely in the concept of owner until the present time. The petitioner has one surviving son by his first marriage to a Filipino wife. He has five children by his second marriage also to a Filipina and has a total of 23 grandchildren all of whom are Filipino citizens.

The respondent court considered Section 5, Article XIII of the 1935 Constitution that "no private agricultural land shall be transferred or assigned except to individuals, corporations, or associations qualified to acquire or hold lands of the public domain in the Philippines" to be an absolute and unqualified prohibition and, therefore, ruled that a conveyance contrary to it would not be validated nor its void nature altered by the subsequent naturalization of the vendee.

The dispositive portion of the amended decision reads:

WHEREFORE, in view of all the foregoing, the Contract of Sale embodied in the 'Escritura de Compra Venta' which is attached to the Complaint as Annex 'A', is hereby declared null and void ab initio and without any legal force and effect.

The action to recover Lot 339 of the Cadastral Survey of Guinobatan, Albay, covered by Transfer Certificate of Title No. T2433. and Lot 327 covered by the same Transfer Certificate of Title, is hereby granted to plaintiff, upon payment of the consideration price of P150.00 and declaring plaintiff as the lawful owner and entitled to the possession thereof.

Defendant Donato Reyes Yap is hereby ordered to produce his Transfer Certificate of Title No. T-2433 to the Register of Deeds of Albay, so as to enable said office to make the due and proper annotations on said title as well as in the original of the declaration of nullity as herein adjudged. Let Transfer Certificate of Title issued to plaintiff, concerning said Lots 339 and 327 of the Cadastral Survey of Guinobatan, Albay.

But the factual set-up has changed. The litigated property is now in the hands of a naturalized Filipino. It is no longer owned by a disqualified vendee. Respondent, as a naturalized citizen, was constitutionally qualified to own the subject property. There would be no more public policy to be served in allowing petitioner Epifania to recover the land as it is already in the hands of a qualified person

G.R. No. L-5295December 16, 1909

KUENZLE & STREIFF, plaintiff-appellant, vs.MACKE & CHANDLER, ET AL., defendants-appellees.

This is an action brought by the plaintiff to recover of the defendants the sum of 1,000 pesos, the value of certain personal property, constituting a saloon bar, furniture, furnishings, and fixtures. The plaintiff alleges that on or about the month of January, 1907, it was the owner of the Oregon Saloon in Cavite, Province of Cavite, consisting of bar, furniture, furnishings, and fixtures, of the value of 1,000 pesos; that during the said month of January, 1907, the defendant Jose Desiderio, as sheriff, levied upon such property by virtue of an execution issued upon a judgment secured by the defendant Macke & Chandler, against Stanley & Krippendorf; that said plaintiff notified the sheriff, in the manner provided by law, that it was the owner of said goods and forbade the sale thereof under said execution; that, notwithstanding such claim upon the part of the plaintiff, the said sheriff sold said goods under said execution; that said firm of Macke & Chandler was the purchaser of said goods and the same were delivered to it; that the defendants Bachrach, Elser, and Gale, were the sureties upon the bond given to the sheriff by Macke & Chandler before said goods were sold. The defendants in this case allege that the property described by the plaintiff and sold at the execution sale referred to was not the property of the plaintiff at the time of said levy and sale, but was the property of Stanley & Krippendorf, who were in possession of the same at the time of such levy. They further allege that during the month of January, 1907, the said Stanley & Krippendorf, being indebted in a considerable sum to the plaintiff in this case, attempted to sell to the said plaintiff by an instrument in writing the property in question; that said instrument was never recorded; that said instrument was a private document; that the said property was not delivered to the plaintiff under said sale but that said property remained from the time of said sale forward in the exclusive possession and control of said Stanley & Krippendorf, and that they conducted the business subsequent to the execution of said instrument exactly as they had prior thereto in their own name purchasing goods and paying therefor without reference to the plaintiff in this case.

The facts in relation to the manner and method in an by which the plaintiff obtained its alleged title to the goods in question and the fact of continued possession by Stanley & Krippendorf, as set forth by the defendants, are substantially admitted in this case.

The question to be determined is the effect which the said instrument of sale had, if any, in transferring the property in question from Stanley & Krippendorf to the plaintiff.itc_alf

The case of the Fidelity and Deposit Company against Wilson (8 Phil. Rep., 51) lays down a doctrine which we think is decisive of this case. In that case it was held that the ownership of personal property can not be transferred to the prejudice of third persons except by delivery of the property itself; and that a sale without delivery gives the would-be purchaser no rights in said property except those of a creditor. The bill of sale in the case at bar, under the circumstances of this case, could have no effect against a person dealing with the property upon the faith of appearances. The case of Kuenzle & Streiff against A. S. Watson & Co. (7 Off Gaz., 425), 1 cited by the appellant in its brief, does not sustain its contention. That was a case of the sale of property upon the condition that the title thereto should remain in the vendor until the purchase price thereof should be fully paid, and that, in case of nonpayment of the debt or of any installment thereof when due, the vendor would have a right to take possession of the property and deal with it as provided for in the contract. In that case the court held that such a contract for the conditional sale of goods was valid in these Islands between the parties thereto, and was valid also as to third persons, provided possession of the property therein described was taken by the vendor before the rights of third persons intervened against the same. In the case at bar it is evident that the bill of sale, so called, was in no sense a conditional sale of property, such as is described in the case of Kuenzle & Streiff against A. S. Watson, & Co., and the principles applicable thereto are entirely inapplicable in the case at bar. Moreover, possession of the property in suit was not taken at any time by the plaintiff.

The defendant Macke & Chandlre, having purchased the property at an execution sale, property conducted, obtained a good title to the property in question as against the plaintiff in this case.

The judgment of the court below is, therefore, affirmed, with costs against the appellant. So ordered.

Ocejo, Perez & Co. v. International Banking Corporation[February 14, 1918]Ponente: Fisher, J

Appeal from the decision of the lower courtRATIO DECIDENDI:The fact that the price of the property has not yet been paid in full is not an obstacle to the acquisition of the ownership thereof by the plaintiff when such a condition is not stipulated in the contract and delivery will result in the conveyance of ownership.

QUICK FACTS:Petitioners delivered to Chua Teng Chong a shipmentof sugar. Chua Teng Chong did not pay petitioners and the sugar was seized by his creditor to settle a debt. The court held that delivery resulted in conveyance of the ownership over the sugar despite the fact that there was no full payment.FACTS:Buyer: Chua Teng Chong Seller: Ocejo, Perez and Co On March, 1914, Chua Teng Chong gave a promissory note toInternational Banking Corporation in exchange for Php 20k. 5000piculs of sugar, located in a warehouse in Calle Toneleros, was put upas security for the note.It seems that at the end of March, Ocejo, Perez and Co. entered intocontract with Chua Teng Chong for the sale of some sugar.

The sugar was brought to Manila in the month of April, and 5,000 piculs were delivered to Chua Teng Chong whereupon it was stored in the a warehouse at No. 119, Muelle de la Industria. The next day, petitioners attempted to collect the purchase price of the sugar, but the buyerrefused to make payment. In the written contract between them,nothing was said concerning the time and place for payment. When the promissory note executed had fallen due and was unpaid, the bank made the effort to exercise active ownership over the sugar(Coincidentally, on the same day it was delivered to Chua Teng Chongby March, Ocejo, Perez and Co), it discovered that the amount of sugarin his warehouse was less than the 5,000 piculs mentioned in thecontract. Chua Teng Chong said that the rest of the sugar was in awarehouse at No. 119, Muelle de la Industria. The banks representatives then went to this warehouse and upon arrival therefound some 3,200 piculs which they immediately seized, closing thewarehouse with the bank's padlocks.Ocejo demand the bank to return the sugar, which the latter refused.Petitioners filed a complaint, with the bank as defendant, alleging thatthe bank was unlawfully holding the property of the plaintiff firm. By agreement of the parties, the sugar was sold and the proceeds of thesale deposited in the bank, subject to the order of the court upon the final disposition. Chua Seco, the assignee of now insolvent Chua Teng Chong, asserts apreferential right proceeds of its sale, upon the ground that thedelivery of the sugar by plaintiff, by virtue of which it passed into thepossession and control of Chua Teng Chong, indicates that the sugar isthe property of the insolvent estate represented by him. The lower court rendered judgment in favor of Ocejo, Perez & Co and from this decision appeals have been taken by the bank and by the intervener.

ISSUES/DECISION:(a) Did title to the sugar pass to the buyer upon its delivery to him? Yes(b) Assuming to pay that the title passed to the buyer, did his failure to pay the purchase price authorize the seller to rescind the sale? Yes(c) Was the commencement of a replevin suit by the seller equivalent to the rescission of the sale? No

Seller argues:Despite the fact that no term was stipulated within which the payment should be made, he was entitled to demand payment at any time after delivery, and further that until such payment was in fact made, title to the sugar did not pass to the buyer.

HELDa) The obligation of the seller to make delivery of the thing sold was not subject to the condition that the buyer was to pay the price before delivery.

The sugar was delivered to the buyer on April 16, 1914. The seller delivered it into the buyer'swarehouse, leaving it entirely subject to his control. Article 1462 of theCivil Code provides that the thing sold is deemed to be delivered"when it passes into the possession and control of the buyer.According to Manresa, tradition is a true mode of acquiring ownership"which effects the passage of title and the birth of the right in rem.

Therefore, the delivery of the thing . . . signifies that title has passedfrom the seller to the buyer." The Transaction is not a like a cash sale in which delivery and paymentare to be made simultaneously. When no term for payment isstipulated, the seller is not bound to deliver the thing sold until thebuyer has paid the price; But if delivery is consummated, he in factgrants a term of credit to the buyer, however short and indeterminateit may be, and waives his right to insist upon payment in advance orsimultaneously with delivery. But he does become entitled to paymentupon demand made upon the buyer.In De la Rama vs. Sanchez: The fact that the price of the property hasnot yet been paid in full is not, nor can it be, an obstacle to theacquisition of the ownership thereof by the plaintiff, because as such acondition was not stipulated in the contract, the latter immediatelyproduced its natural effects in law, the principal and most important of which being the conveyance of the ownership by means of the deliveryof the thing old to the purchaser, without prejudice, of the course, tothe right of the vendor to claim payment of any sum still due.In Gonzalez vs. Rojas: . . . ownership of things is not transferred bymere contract but by delivery. Contracts only constitute titles or rightsto the transfer or acquisition of ownership, while delivery or tradition isthe method of accomplishing the same, the title and the method of acquiring it being different in our law." Therefore, the effect of the delivery was to transmit the title of thesugar to the buyer.b-c) Article 1124 of the Civil Code states that reciprocal obligations arerescindable when one of the parties bound should fail to perform thatwhich is incumbent upon him. In the contract of the sale the obligationto pay the price is correlative to the obligation to deliver the thing sold.Nonperformance by one of the parties authorizes the other to exercisethe right to demand the performance of the obligation or its rescission.But the right to rescind the sale for nonperformance on the part of thebuyer is not absolute; the law subordinates it to the rights of thirdpersons in good faith. The bank argues this principle, alleging that thesugar was pledged to it, after its delivery to the buyer. However, the sugar pledged is not the same as that here in dispute. The pledge was for the sugar in the Calle Toneleros warehouse, not theone inMuelle de la Industria. The sugar in question could not be possiblyhave been the subject matter of the contract of pledge which was formed in March as it was not the property of the defendant at thetime.Even if an attempt was made to pledge the sugar when it wasdelivered, it would be void as against third persons since it was notrecorded in a public instrument. Therefore, the pledge asserted by theInternational Bank is inefficacious. The mere will of the plaintiff will not produce the rescission of the sale.Although the right to rescind a sale, is established by article 1506 and1124and such right so conferred is not an absolute one. The samearticle provides that "the court shall decree the rescission demanded,unless there are causes which justify him in allowing a term."