1.

Leabres vs. CA 146 SCRA 158

FACTS: Tambunting de Legarda died testate, plaintiff Catalino Leabres bought on partial payment of 1000php a portion of a property from the husband of the deceased. In 1956, the property was sold to Manotok realty for Php840,000.00 by order of the probate court through the administrator Philippine Trust Co. which was judicially approved and recorded at the registry of deeds. In 1966, Plaintiff filed for a complaint which seeks for the quieting of title over the subject parcel of land. Issue: Whether there was a valid contract of sale? RULING: The Supreme Court held in the negative. Petitioners averred that the sale was valid, but the receipt reveals that the same can neither be regarded as a contract of sale or a promise to sell. There was merely an acknowledgement of Php 1000. There was no agreement as to the total purchase price of the land nor to the monthly installment to be paid by the petitioner. The requisites of a valid contract of sale namely: consent, subject matter and price were lacking. Thus, sale was not valid nor enforceable. 2. Celestino Co. & Co. vs. Collector of Internal Revenue, 99 PHIL 841

furniture, cabinets and other woodwork were sold locally and exported abroad. For this business venture, private respondent kept samples or models of its woodwork on display from where its customers may refer to when placing their orders. In March 1979, CIR conducted a investigation of the business tax liabilities of Arnoldus. It found out that it is a contractor and not a manufacturer. It was assessed of 3% contractors tax. Accdg to CIR, Arnoldus manufactures woodworks only upon previous order from supposed manufacturers and only in accordance with the latters own design, model number, color, etc. (The products are contracts for a piece of work.) Arnoldus opposed contending that it is a manufacturer, hence entitled to tax exemption on its gross export sales under Section 202 (e) of the National Internal Revenue Code. Issue: 1) WON Arnoldus is a manufacturer? YES 2) WON it is a contract of sale or contract for piece of work? Contract of SALE. Held: 1) Arnoldus is a manufacturer as defined in the Tax Code and not a contractor under Section 205(e) of the Tax Code. 2) Accdg to CIR: the true test of whether or not the contract is a piece of work (and thus classifying private respondent as a contractor) or a contract of sale (which would classify private respondent as a manufacturer) is the mere existence of the product at the time of the perfection of the contract such that if the thing already exists, the contract is of sale, if not, it is work. TRUE TEST whether or not it is contract of sale or for a piece of work: What determines whether the contract is one of work or of sale is whether the thing has been manufactured specially for the customer and upon his special order. Thus, if the thing is specially done at the order of another, this is a contract for a piece of work. If, on the other hand, the thing is manufactured or procured for the general market in the ordinary course of ones business, it is a contract of sale. The distinction between a contract of sale and one for work, labor and materials is tested by the inquiry whether the thing transferred is one not in existence and which never would have existed but for the order of the party desiring to acquire it, or a thing which would have existed and has been the subject of sale to some other persons even if the order had not been given. The mere fact that he did not have on hand a particular piece or pieces of furniture ordered does not make him a contractor only. A contract for the delivery at a certain price of an article Which the vendor in the ordinary course of his business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the general market, it is a contract for a piece of work. Arnoldus had a ready stock of its shop products for sale to its foreign and local buyers. As a matter of fact, the purchase orders from its foreign buyers showed that they ordered by referring to the models designed by petitioner. Even purchases by local buyers for television cabinets were by orders for existing models. Hence, it is a manufacturer. Furthermore, it is a contract of sale. These products were for sale to the general public and not for special orders. Hence, being a manufacturer, Arnoldus is entitled to tax exemption under Sec 202 (d) and Sec 167 (d) & (e) of the Tax Code. 4. Quiroga vs. Parsons Hardware Co., 28 PHIL 501

Facts: Celestino Co & Co. is a registered copartnership doing business under the trade name of Oriental Sash Factory, which makes sash, windows and doors. For years, they paid percentage taxes of 7% on gross receipts (for manufacturers), but in 1952 they began to claim that they should be paying only 3% under sec 191 of the National Revenue Code (for contractors). They contend that Oriental Sash Factory does not manufacture ready-made doors, sash and windows for the public but only upon special order of its select customers and That the things, had they not been ordered, would not have existed. They filed a petition w/ the Bureau of Internal Revenue and appealed to the CTA, which both held that they did not come under the purview of Sec. 191. Issue: whether Celestino Co & Co. is a manufacturer or a contractor? Held: Manufacturer, in the business of selling goods, not services. Celestino Co & Co. habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. The fact that windows and doors are made by it only when customers place their orders, does not alter the nature of the etablishment, for it only accepted such orders as called for the employment of such materials as it ordinarily manufactured or was in a position habitually to manufacture. They do not serve special customers only or confine its services to them alone. Anyone who has the ability to pay may have such things manufactured by them. That the doors and windows must meet desired specifications is neither here nor there. If the specifications do not happen to be of the kind they habitually manufacture, they would not accept the order and no sale is made. It is only when this factory accepts a job that requires the use of extraordinary or additional equipment, or involves services not generally performed by it---ir thereby contracts for a piece-of-work---filling special orders within the meaning of Art. 1467. The orders, however, were not shown to be special. 3. Commissioner of Internal Revenue vs. Arnoldus Carpentry Shop, 159 SCRA 199 Facts: Arnoldus Carpentry Shop, Inc. is engaged in the business of preparing, processing, buying, selling, exporting, importing, manufacturing, trading and dealing in cabinet shop products, wood and metal home and office furniture, cabinets, doors, windows, etc. These

Facts: A contract was entered into by and between Quiroga and Parsons for the exclusive sale of Quiroga beds in the Visayan Islands. The tenor of said contract provides that Quiroga shall furnish beds of his manufacture to Parsons for the latters establishment in Iloilo, and shall invoice them at the same price he fixed for sales in Manila, and in the invoices, shall make an

allowance of a discount as commission on the sales; and Parsons shall order the beds by the dozen, whether of the same or different styles. Parsons further binds himself to pay Quiroga for the beds received within 60 days from the date of their shipment, and binds himself not to sell any other kind except Quiroga beds. Quiroga contends that Parsons violated the following obligations: not to sell beds at higher prices than those of the invoices, to have an open establishment in Iloilo; to conduct the agency, to keep the beds on public exhibition, and to pay for the advertisement expenses for the same, and to order the beds by the dozen and in no other manner. He further alleged that Parsons was his agent for the sale in Iloilo, and said obligations are implied in a contract of commercial agency. Issue: WON Parsons, by reason of the contract, was a purchaser or an agent of Quiroga. Ruling: The contract entered into by the parties is one of a purchase and sale. In the contract in question, what was essential, as constituting the cause and subject matter, is that Quiroga was to furnish Parsons with beds which the latter might order, at the price stipulated, and that Parsons was to pay the price in the manner stipulated. These features exclude the legal conception of an Agency or Order to Sell, whereby the mandatory or agent received the thing to sell it, and does not pay its price, but delivers to the principal the price he obtains from the sale of the thing to a third person, and if he does not succeed in selling it, he returns it. 5. Gonzalo Puyat & Sons vs. Arco Amusement Company, 72 PHIL 402

cannot bind either party. Not every concealment is fraud, short of fraud, and such as that in this case, is considered as business acumen. 7. Rayos vs. CA, 434 SCRA 365 Construing the contracts together, it is evidence that the parties executed a contract to sell and not a contract of sale. The petitioner retained ownership without further remedies by the respondents until the payment of the purchase price of the property in full. Such payment is a positive suspensive condition, failure of which is not really a breach, serious or otherwise, but an event that prevents the obligations of the petitioner to convey title from arising, in accordance with Article 1184 of the Civil Code. x x x The non-fulfillment by the respondent of his obligation to pay, which is a suspensive condition to the obligation of the petitioners to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect. The parties stand as if the conditional obligation had never existed. Article 1191 of the New Civil Code will not apply because it presupposes an obligation already extant. There can be no rescission of an obligation that is still non-existing, the suspensive condition not having happened. The subject contract to sell clearly states that title will be transferred by the owner (petitioners) to the buyer (respondent) upon complete payment of the agreed purchase price. Since respondent failed to fully pay the purchase price, petitioners obligation to convey title to the properties did not arise. While rescission does not apply in this case, the seller may nevertheless cancel the contract to sell, their obligation not having arisen. 8. Clemeno Jr. vs. Lobregat, 438 SCRA 22

Facts: Gonzalo Puyat & Sons is the exclusive agent of Starr Piano Company of Richmond, Indiana USA, in the Philippines. Teatro Arco, or Arco Amusement Company, desiring to equip its cinematograph with sound reproducing devices, approached Puyat. It was agreed by the parties that Puyat would in behalf of Arco order equipment from Starr Piano and that Arco would pay Puyat in addition to price of the equipment, 10% commission plus all expenses such as freight, insurance, banking charges, cables, etc. Puyat informed Arco that the price of the equipment was $1,700, to which Arco agreed. Later, a similar arrangement was made by Arco for the purchase of similar equipment for $1,600 with 10% commission, with Puyat charging an additional flat charge of $160 for all expenses and charges. 3 years later, Arco learned that the price quoted by Puyat on the 2 orders were not the net price but the list price for the equipment. Arco filed a complaint with the trial court (CFI) demanding reimbursement from said overpriced sales. The trial court ruled in favor of Puyat, but the Court of Appeals reversed such decision and declared Puyat an agent of Arco Amusement in the purchase of said equipment. Issue: Whether the agreement made between Puyat and Arco Amusement is that of purchase and sale or that of agency. Held: Gonzalo Puyat & Sons cannot be the agent of Arco Amusement in the purchase of equipment from Starr Piano Company as Puyat & Sons is already the exclusive agent of Starr Piano in the Philippines. Puyat cannot be the agent of both vendor and purchaser. The fact that a commission was offered to the other does not necessarily mean that the latter has become the agent of the former, as this was only an additional price which Arco bound itself to pay and which is not incompatible with the contract of purchase and sale. Puyat is not bound to reimburse the profit acquired in the transaction, as this is the very essence of commerce involving middlemen and merchants. The contract is the law between the parties. What does not appear on the face of the contract should be regarded as dealers or traders talk which

Contract of Sale vs. Contract to Sell Facts: The Spouses Nilus and Teresita Sacramento were the owners of a parcel of land covered and the house constructed thereon located at No. 68 Madaling Araw Street, Teresa Heights Subdivision, Novaliches, Quezon City. The Spouses Sacramento mortgaged the property with the Social Security System (SSS) as security for their housing loan and, likewise, surrendered the owners and duplicate copies of the certificate of title. In 1980, the spouses executed a Deed of Sale with Assumption of Mortgage in favor of Maria Linda Clemeno and her husband Angel C. Clemeno, Jr., with the conformity of the SSS. In 1987, Clemeno and Romeo Lobregat entered into a verbal contract of sale over the property with the following conditions: (a) the respondent would pay the purchase price of the property in the amount of P270,000.00, inclusive of the balance of the loan of the Petitioners, the Spouses Clemeno with the SSS 6 within two years from June 4, 1987;(b) the respondent would pay the monthly amortizations of the vendors loan with the SSS; and (c) upon the payment of the purchase price of the property, the Spouses Clemeno would execute a deed of sale in favor of the respondent. Lobregat paid partial payments with receipts from Clemeno, paid realty taxes on the property, and made partial payment of the SSS loans. Significantly, upon his receipt of the advance payment, Clemeno delivered the possession of the premises to Lobregat who is now the present possessor thereof. The last SSS payment was paid by Clemeno without Lobregats knowledge. Thereafter SSS had executed a Release of Real Estate Mortgage in favor of petitioner Clemeno and released the owners duplicate of title. The respondent offered to pay the balance of the purchase price of the property to petitioner Clemeno and asked the latter to execute the deed of sale over the property and deliver the title over the property under his name, but petitioner Clemeno refused to do so unless the respondent agreed to buy the property at the price prevailing in 1992 (not in 1987 where the verbal contract of sale was perfected), which Lobregat refused. Clemeno interposed the following version: that he never

sold the property to the respondent; that he merely tolerated the respondents possession of the property for one year or until 1987, after which the latter offered to buy the property, which offer was rejected; and that he instead consented to lease the property to the respondent, that the respondent failed to exercise the option to buy the property by failure to pay the entire price, and that assuming there was a contract of sale, it would be unenforceable because it was only a verbal agreement. The trial court ruled that since both the sale and lease agreements were not reduced to writing, both contracts were unenforceable under Article 1403(2) of the New Civil Code, and had decided the case based on justice and equity. On appeal, the CA reversed the lower court decision. Hence, this case. Issues: 1. WON there was a contract of sale or contract to sell 2. WON statute of frauds apply to contracts partially performed Held: 1. We find and so hold that the contract between the parties was a perfected verbal contract of sale, not a contract to sell over the subject property. Sale is a consensual contract and is perfected by mere consent, which is manifested by a meeting of the minds as to the offer and acceptance thereof on three elements: subject matter, price and terms of payment of the price. The evidence shows that upon the payment made by the respondent of the amount of P27,000.00 on June 4, 1987, the petitioners vacated their house and delivered possession thereof to the respondent. Conformably to Article 1477 of the New Civil Code, the ownership of the property was transferred to the respondent upon such delivery. The petitioners cannot re-acquire ownership and recover possession thereof unless the contract is rescinded in accordance with law. The failure of the respondent to complete the payment of the purchase price of the property within the stipulated period merely accorded the petitioners the option to rescind the contract of sale as provided for in Article 1592 of the New Civil Code. Besides, the respondents failure to pay was not because he could not pay, but because petitioner Angel Clemeno told him not to do so. The contract entered into by the parties was not a contract to sell because there was no agreement for the petitioners to retain ownership over the property until after the respondent shall have paid the purchase price in full, nor an agreement reserving to the petitioners the right to unilaterally resolve the contract upon the buyers failure to pay within a fixed period. Unlike in a contract of sale, the payment of the price is a positive suspensive condition in a contract to sell, failure of which is not a breach but an event that prevents the obligation of the vendor to convey the title from becoming effective. 3. The provision on statue of frauds applies only to executory, and not to completed, executed or partially executed contracts. In this case, the contract of sale had been partially executed by the parties, with the transfer of the possession of the property to the respondent and the partial payments made by the latter of the purchase price thereof. 9. Melizza vs. City of Ilo Ilo, 23 SCRA 477 FACTS: Julian Melliza during her lifetime owned, 3 parcels or residential land in Iloilo City. (Lots 2, 5, and 1214). Total area of Lot 1214 was 29, 073 sq. meters. Julian Meliiza donated to the Municipality of Iloilo 9,000 sq. meters of Lot 1214 to serve as site for the municipal hall. The donation was however revoked because of inadequacy to meet the requirements of the Arellano Plan.Subsequently ,Lot 124 was divided to A and B. Still later, B was further

subdivided into 1, 2, 3. Lot 1214-B-1 (4,563 sq. m) became as Lot 1214-B; Lot 1214-B-2 (6,653 sq. m) became as Lot 1214-C; Lot 1214-B3 (4,135 sq. m) became Lot 1214-D. Julian Melliza sold her remaining interest to Remedios Villanueva who acquired title to the land. Villanueva transferred her rights to the portion of the land to Pio Sian Melliza who also obtained title. But there was annotation at the back of Pios certificate that: (a) that a portion of 10,788 square meters of Lot 1214 now designated as Lots Nos. 1214-B-2 and 1214-B-3 of the subdivision plan belongs to the Municipality of Iloilo as per instrument dated November 15, 1932. On August 24, 1949 the City of Iloilo, which succeeded to the Municipality of Iloilo, donated the city hall site together with the building thereon, to the University of the Philippines (Iloilo branch). The site donated consisted of Lots Nos. 1214-B, 1214-C and 1214D, with a total area of 15,350 square meters, more or less. Sometime in 1952, the University of the Philippines enclosed the site donated with a wire fence. Pio Sian Melliza thereupon made representations, thru his lawyer, with the city authorities for payment of the value of the lot (Lot 1214-B). No recovery was obtained, because as alleged by plaintiff, the City did not have funds. On December 10, 1955 Pio Sian Melliza filed an action in the Court of First Instance of Iloilo against Iloilo City and the University of the Philippines for recovery of Lot 1214-B or of its value. CFI: dismissed complaint of Pio Melliza; instrument already executed by Melliza included in the conveyance of Lot 1214-B. Ca: affirmed CFI decision Issue: whether or not the conveyance by Juliana Melliza to Iloilo municipality included that portion of Lot 1214 known as Lot 1214-B. HELD: It should be stressed, also, that the sale to Remedios Sian Villanueva from which Pio Sian Melliza derived title did not specifically designate Lot 1214-B, but only such portions of Lot 1214 as were not included in the previous sale to Iloilo municipality (Stipulation of Facts, par. 5, Record on Appeal, p. 23). And thus, if said Lot 1214-B had been included in the prior conveyance to Iloilo municipality, then it was excluded from the sale to Remedios Sian Villanueva and, later, to Pio Sian Melliza. Issue: true intention of the parties 1. First of all, there is no question that the paramount intention of the parties was to provide Iloilo municipality with lots sufficient or adequate in area for the construction of the Iloilo City hall site, with its avenues and parks. For this matter, a previous donation for this purpose between the same parties was revoked by them, because of inadequacy of the area of the lot donated. 2. Secondly, reading the public instrument in toto, with special reference to the paragraphs describing the lots included in the sale, shows that said instrument describes four parcels of land by their lot numbers and area; and then it goes on to further describe, not only those lots already mentioned, but the lots object of the sale, by stating that said lots are the ones needed for the construction of the city hall site, avenues and parks according to the Arellano plan. If the parties intended merely to cover the specified lots Lots 2, 5, 1214-C and 1214-D, there would scarcely have been any need for the next paragraph, since these lots are already plainly and very clearly described by their respective lot number and area. 3. The requirement of the law that a sale must have for its object a determinate thing, is fulfilled as long as, at the time the contract is entered into, the object of the sale is capable of being made determinate without the necessity of a new or further agreement between the parties (Art. 1273, old Civil Code; Art. 1460, New Civil Code). The specific mention of some of the lots plus the statement that the lots object of the sale are the ones needed for city hall site, avenues and parks, according to the Arellano plan, sufficiently provides a basis, as of the time of the execution of the contract, for rendering determinate said lots without the need of a new and further agreement of the parties.

4. Furthermore, Pio Sian Melliza, from the stipulation of facts, was the notary public of the public instrument. As such, he was aware of its terms. Said instrument was also registered with the Register of Deeds and such registration was annotated at the back of the corresponding title certificate of Juliana Melliza. From these stipulated facts, it can be inferred that Pio Sian Melliza knew of the aforesaid terms of the instrument or is chargeable with knowledge of them; that knowing so, he should have examined the Arellano plan in relation to the public instrument Exhibit "D"; that, furthermore, he should have taken notice of the possession first by the Municipality of Iloilo, then by the City of Iloilo and later by the University of the Philippines of Lot 1214-B as part of the city hall site conveyed under that public instrument, and raised proper objections thereto if it was his position that the same was not included in the same. 5. The fact remains that, instead, for twenty long years, Pio Sian Melliza and his predecessorsin-interest, did not object to said possession, nor exercise any act of possession over Lot 1214-B. Applying, therefore, principles of civil law, as well as laches, estoppel, and equity, said lot must necessarily be deemed included in the conveyance in favor of Iloilo municipality, now Iloilo City. 10. Almendra vs. Intermediate Appellate Court, 204 SCRA 143 Facts: During the two marriages of Aleja, she and her respective husbands acquired parcels of land. The lands from the first marriage were duly partitioned. After the death of her second husband, Aleja sold to her son Roman, and daughter Angeles, parcels of land. Afater Alejas death, her other children filed a complaint against Roman & Angeles for the annulment of the deeds of sale in their favor executed by Aleja; and to partition the properties. Among the questioned sales was the one executed in favor of Angeles which is a half portion of the conjugal property of Aleja and her 2nd husband, the hilly portion was specifically marked in a sketch. Issue: WON Aleja may validly sell a one half portion of a conjugal property, the hilly portion of which had been specifically marked in a sketch. Held: Yes, she may validly sell one-half portion of a lot, the hilly portion of which had been specifically identified/marked in a sketch, but there must be proof that the conjugal property had been partitioned after the death of the 2nd husband. Otherwise, the sale may be considered valid only as Alejas one half interesttherein. Aleja could not have sold particular hilly portion specified in the deed of sale in absence of proof that the conjugal partnership property had been partitioned after the death of Santiago. Before such partition, Aleja could not claim title to any definite portion of the property for all she had was an ideal or abstract quota or proportionate share in the entire property. 11. Payongayong vs. CA, 430 SCRA 210 FACTS: Eduardo Mendoza (Mendoza) was the registered owner of a parcel of land situated in Barrio San Bartolome, Caloocan. On April 18, 1985, Mendoza mortgaged the parcel of land to the Meralco Employees Savings and Loan Association (MESALA) to secure a loan in the amount of P81,700.00. On July 11, 1987, Mendoza executed a Deed of Sale with Assumption of Mortgage over the parcel of land together with all the improvements thereon in favor of petitioners in consideration of P50,000.00. Petitioners bound themselves to assume payment of the balance of the mortgage indebtedness of Mendoza to MESALA On December 7, 1987, Mendoza, without the knowledge of petitioners, mortgaged the same property to MESALA for the second time to secure a loan in the amount of P758,000.00. Both mortgages were duly annotated. On November 28, 1991, Mendoza executed a Deed of

Absolute Sale9 over still the same property in favor of respondents in consideration of P50,000.00. MESALA issued a cancellation of mortgage after receiving sufficient payment from Mendoza. The respondents then caused the cancellation of Mendoza's title and registration of the same under their name. Petitioners filed on July 16, 1993 a complaint for annulment of deed of absolute sale and transfer certificate of title with recovery of possession and damages against Mendoza, his wife Sally Mendoza, and respondents before the Quezon City RTC. Both RTC and CA found for the respondents. ISSUE: w/n respondents are entitled to the protection accorded to purchasers in good faith HELD: YES. It is a well-established principle that a person dealing with registered land may safely rely on the correctness of the certificate of title issued therefor and the law will in no way oblige him to go behind the certificate to determine the condition of the property.24 He is charged with notice only of such burdens and claims as are annotated on the title. 25 He is considered in law as an innocent purchaser for value or one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim of another person.26 That petitioners did not cause the cancellation of the certificate of title of Mendoza and procure one in their names is not disputed. Nor that they had their claims annotated on the same title. Thus, at the time of the sale of the property to respondents on November 28, 1991, only the mortgages in favor of MESALA appeared on the annotations of encumbrances on Mendozas title. he real purpose of the Torrens system of registration is to quiet title to land and to put a stop to any question of legality of the title except to claims which have been recorded in the certificate of title at the time of registration or which may arise subsequent thereto. Every registered owner and every subsequent purchaser for value in good faith holds the title to the property free from all encumbrances except those noted in the certificate. Hence, a purchaser is not required to explore further what the Torrens title on its face indicates in quest for any hidden defect or inchoate right that may subsequently defeat his right thereto. In respondents case, they did not only rely upon Mendozas title. Rosalia personally inspected the property and verified with the Registry of Deeds of Quezon City if Mendoza was indeed the registered owner. Given this factual backdrop, respondents did indeed purchase the property in good faith and accordingly acquired valid and indefeasible title thereto. Under Article 1544, preferential right was correctly given to the respondents who had the sale registered. 12. Mapalo vs. Mapalo, 17 SCRA 114 Facts: Miguel Mapalo and Candida Quiba, simple illiterate farmers, were registered owners, with Torrens title certificate O.C.T. No. 46503, of a 1,635-square-meter residential land in Manaoag, Pangasinan. Said spouses-owners, out of love and affection for Maximo Mapalo a brother of Miguel who was about to get married decided to donate the eastern half of the land to him. O.C.T. No. 46503 was delivered. As a result, however, they were deceived into signing, on October 15, 1936, a deed of absolute sale over the entire land in his favor. Not known to them, meanwhile, Maximo Mapalo, on March 15, 1938, registered the deed of sale in his favor and obtained in his name Transfer Certificate of Title No. 12829 over the entire land. Thirteen years later on October 20, 1951, he sold for P2,500.00 said entire land in favor of Evaristo, Petronila Pacifico and Miguel all surnamed Narciso. The sale to the Narcisos was in turn registered on November 5, 1951 and Transfer Certificate of Title No. 11350 was issued for the whole land in their names.

The Narcisos took possession only of the eastern portion of the land in 1951, after the sale in their favor was made. On February 7, 1952 they filed suit in the Court of First Instance of Pangasinan (Civil Case No. 1191) to be declared owners of the entire land, for possession of its western portion; for damages; and for rentals. It was brought against the Mapalo spouses as well as against Floro Guieb and Rosalia Mapalo Guieb who had a house on the western part of the land with the consent of the spouses Mapalo and Quiba. The Mapalos filed an answer with counterclaim seeking cancellation of the Transfer Certificate of Title of the Narcisos as to the western half of the land, on the grounds that their signatures to the deed of sale of 1936 was procured by fraud and that the Narcisos were buyers in bad faith. They asked for reconveyance to them of the western portion of the land and issuance of a Transfer Certificate of Title in their names as to said portion. they also filed their own complaint asking that the deeds be declared null and void. The CFI declared as donation only the eastern half portion of the land, and as null and void with respect to the western half portion thereof, null and void and without legal force and effect Transfer Certificate of Title No. 12829 issued in favor of Maximo Mapalo as regards the western half portion of the land covered therein. Court of Appeals reversed the judgment of the Court of First Instance, solely on the ground that the consent of the Mapalo spouses to the deed of sale of 1936 having been obtained by fraud, the same was voidable, not void ab initio, and, therefore, the action to annul the same, within four years from notice of the fraud, had long prescribed. It reckoned said notice of the fraud from the date of registration of the sale on March 15, 1938 ISSUE 1. whether a deed which states a consideration that in fact did not exist, is a contract without consideration, and therefore void ab initio, or a contract with a false consideration, and therefore, at least under the Old Civil Code, voidable. 2. whether or not Narcisos are purchasers in good faith HELD: 1. Where, as in this case, there was in fact no consideration, the statement of one in the deed will not suffice to bring it under the rule of Article 1276 of the Old Civil Code as stating a false consideration. Therefore, the ruling of this Court in Ocejo, Perez & Co. vs. Flores, 40 Phil. 921, is squarely applicable herein. In that case we ruled that a contract of purchase and sale is null and void and produces no effect whatsoever where the same is without cause or consideration in that the purchase price which appears thereon as paid has in fact never been paid by the purchaser to the vendor. The inexistence of a contract is permanent and incurable and cannot be the subject of prescription. 2. Firstly, it has been positively shown by the undisputed testimony of Candida Quiba that Pacifico Narciso and Evaristo Narciso stayed for some days on the western side (the portion in question) of the above-described land until their house was removed in 1940 by the spouses Mapalo and Quiba; secondly, Pacifica Narciso admitted in his testimony in chief that when they bought the property, Miguel Mapalo was still in the premises in question (western part) which he is occupying and his house is still standing thereon; and thirdly, said Pacifico Narciso when presented as a rebuttal and sub-rebuttal witness categorically declared that before buying the land in question he went to the house of Miguel Mapalo and Candida Quiba and asked them if they will permit their elder brother Maximo to sell the property. The foregoing facts are explicit enough and sufficiently reveal that the Narcisos were aware of the

nature and extent of the interest of Maximo Mapalo their vendor, over the above-described land before and at the time the deed of sale in their favor was executed. 13. Velasco vs. CA, 61 SCRA 439 FACTS: Magdalena Estate offered to sell a parcel of land which Lorenzo Velasco agreed to buy for 100,000. Velasco paid a downpayment of 10,000 and when he tendered to the payment of additional 20,000, Magdalena Estate refused to accept it and refused to execute a deed of sale agreed upon. Magdalena Estate contended that the alleged contract was unenforceable under the Statute of Frauds. Magdalena Estate stated that the property was leased to Socorro Velasco who indicated its desire to purchase the lot. ME indicated its willingness to sell the lot at 100k. Socorro offered to pay a downpayment of 10k but since it was short of the agreed upon 30k downpayment, it was accepted as a deposit. Socorro requested that the receipt be in the name of her brother-in-law Lorenzo. Socorro failed to complete the 30k donwpayment and the 70k balance. When she tendered payment of 20k, ME refused to accept because it had considered the offer to sell rescinded on account of failure to complete the downpayment of 30k on the agreed date. ISSUE: W/N there was a consummated sale? NO RULING: The minds of the parties did not meet in regard to the matter of payment. It is admitted that they still had to meet and agree on how & when the down payment & installments were to be paid. Therefore, it cannot be said that a definite & firm sales agreement between the parties had been perfected. The definite agreement on the manner of payment of the purchase price is an essential element in the formation of a binding & enforceable contract of sale. The fact that Velasco delivered to Magdalena the sum of 10K as part of the down payment that they had to be pay cannot be considered as sufficient proof of the perfection of any purchase & sale agreement between the parties under Art 1428, NCC. 14. Co vs. CA, 286 SCRA 76 Facts: Adoracion Custodio entered into a verbal contract with Spouses Co (COS) for her purchase of the latters house, for and in consideration of the sum of $100,000.00. One week thereafter, plaintiff paid to the defendants the amounts of $1,000.00 and P40,000.00 as earnest money to be deducted from the total purchase price. The purchase price of $100,000.00 is payable in two payments $40,000.00 on December 4, 1984 and the balance of $60,000.00 on January 5, 1985. On January 25, 1985, plaintiff paid 30,000.00, as partial payment of the purchase price. Defendants counsel wrote a letter to the plaintiff demanding that she pay the balance of $70,000.00 and not receiving any response thereto, said lawyer wrote another letter to plaintiff informing her that she has lost her option to purchase the property subject of this case and offered to sell her another property. Plaintiffs counsel, wrote a letter to defendants lawyer informing him that plaintiff is now ready to pay the remaining balance to complete the sum of $100,000.00, the agreed amount as selling price. The RTC ruled in favor of Custodio and ordered the spouses to refund the amount of $30,000.00 in Custodios favor. Issue: WON could still exercise her option to pay the balance of the purchase price of the property. Held: Yes. The Court held that the parties entered into a perfected contract of sale and not an option contract. All three elements of a contract of sale are present in the transaction between the petitioners and respondent. Custodios offer to purchase the property subject of

the sale at a price of $100,000.00 was accepted by the COS. Even the manner of payment of the price was set forth in the letter. Earnest money in the amounts of US$1,000.00 and P40,000.00 was already received by the COS. Under Article 1482 of the Civil Code, earnest money given in a sale transaction is considered part of the purchase price and proof of the perfection of the sale. Despite the fact that Custodios failure to pay the amounts of US$ 40,000.00 and US$ 60,000.00 on or before the agreed upon dates, the COS did not sue for either specific performance or rescission of the contract. The COS were of the mistaken belief that CUSTODIO had lost her option over the property when she failed to pay the remaining balance of $70,000.00. In the absence of an express stipulation authorizing the sellers to extrajudicially rescind the contract of sale, the COS cannot unilaterally and extrajudicially rescind the contract of sale. 15. Villanueva vs. CA, 267 SCRA 267 SCRA 89 FACTS: Gamaliel Villanueva (petitioner) has been a tenant-occupant of a unit in the 3-door apartment building erected on a parcel of land owned by Jose Dela Cruz and Leonila dela Cruz (private respondents). Villanueva succeeded the occupancy of the said unit from Lolita Santos in 1985. February 1986 Jose dela Cruz offered said parcel of land with the 3-door apartment building for sale. The Villanuevas showed interest in the property. Because said property was in arrears in the payment of the realty taxes, Jose dela Cruz approached Irene Villanueva and asked for a certain amount to pay for the taxes so that the property would be cleared of any encumbrance. Plaintiff Irene Villanueva gave P10,000.00 on two occasions. It was agreed by them that said P10,000.00 would form part of the sale price of P550,000.00. Jose dela Cruz went to Irene Villanueva bringing with him Mr. Ben Sabio, a tenant of one of the units in the 3-door apartment building located on the subject property, and requested her to allow said Ben Sabio to purchase one-half (1/2) of the property where the unit occupied by him pertained to which the plaintiffs consented, so that they would just purchase the other half portion and would be paying only P265,000.00. Accordingly the property was subdivided and two (2) separate titles were secured by defendants Dela Cruz. Mr. Ben Sabio immediately made payments by installments. March 1987 Dela Cruz executed in favor of the spouses Guido Pili and Felicitas Pili, a Deed of Assignment of the other one-half portion of the parcel of land wherein plaintiff Villanueva's apartment unit is situated. Thereafter, the Villanuevas came to know of such assignment and transfer and issuance of a new certificate of title in favor of defendants Pili so that plaintiff Villanueva complained to the barangay captain on the ground that there was already an agreement between defendants Dela Cruz and themselves that said portion of the parcel of land owned by defendants Dela Cruz would be sold to them. ISSUE: W/N there is a perfected contract between Villanueva and Dela Cruz. HELD: NO. The price of the leased land not having been fixed, the essential elements which give life to the contract were lacking. It follows that the lessee cannot compel the lessor to sell the leased land to him. The price must be certain, it must be real, not fictitious. It is not necessary that the certainty of the price be actual or determined at the time of executing the contract. The fact that the exact amount to be paid therefor is not precisely fixed, is no bar to an action to recover such compensation, provided the contract, by its terms, furnishes a basis or measure for ascertaining the amount agreed upon. The price could be made certain by the application of known factors. In the instant case, however, what is dramatically clear from the evidence is that there was no meeting of mind as to the price, expressly or impliedly, directly or indirectly. Sale is a consensual contract. He who alleges it must show its existence by competent proof. Here, the very essential element of price has not been proven.

Assuming arguendo that such draft deed of sale existed, it does not necessarily follow that there was already a definite agreement as to the price. If indeed the draft deed of sale was that important to petitioners' cause, they should have shown some effort to procure it. But petitioners made no such effort. Petitioners' claim that they are ready to pay private respondents is immaterial and irrelevant as the latter cannot be forced to accept such payment, there being no perfected contract of sale in the first place. *NOTE: What took place was only a prolonged negotiation to buy and to sell, and at most, an offer and a counter-offer but no definite agreement was reached by the parties. Hence, the rules on perfected contract of sale, statute of frauds and double sale find no relevance nor application. 16. Swedish Match AB vs. CA, 441 SCRA 1 FACTS: SMAB is a corporation organized under the laws of Sweden not doing business in the Philippines. Had three subsidiary corporations in the Philippines, all organized under Philippine laws, to wit: Phimco Industries, Inc. (Phimco), Provident Tree Farms, Inc., and OTT/Louie (Phils.), Inc. SMAB was then sold to Swedish Match NV of Netherlands (SMNV). Ed Enriquez was commissioned and granted full powers to negotiate by SMNV, with the resulting transaction, however, made subject to final approval by the board. Enriquez was held under strict instructions that the sale of Phimco shares should be executed on or before 30 June 1990, in view of the tight loan covenants of SMNV. Enriquez came to the Philippines in November 1989 and informed the Philippine financial and business circles that the Phimco shares were for sale. November 1989 Antonio Litonjua submitted his offer to buy the Phimco shares for P750,000,000 in the form of a letter. SMAB informed Litonjua that the offer was below their expectations but urged the latter to undertake a comprehensive review and analysis of the value and profit potentials of the Phimco shares. May 1990 Litonjua offered to buy the disputed shares, excluding the lighter division for US$30.6 million, which per another letter of the same date was increased to US$36 million. The SMAB informed Litonjua that the deadline of bidding is on June 30, 1990. Litonjua informed the SMAB that he could not submit his bid on the deadline due to some constraints. Two days prior to the deadline for submission of the final bid, Litonjua advised SMAB that he cant submit the bid on the deadline. SMAB informed Litonjua that on 2 July 1990, they signed a conditional contract with a local group for the disposal of Phimco. SMAB told Litonjua that his bid would no longer be considered unless the local group would fail to consummate the transaction on or before 15 September 1990. As a result, Litonjua finalized his bid to 36M dollars. More than two months from receipt of Litonjuas last letter, Enriquez sent a communication to the former, advising him that the proposed sale of SMABs shares in Phimco with local buyers did not materialize. Enriquez then invited Litonjua to resume negotiations with SMAB for the sale of Phimco shares. Enriquez clarified that if the sale would not be completed at the end of the fifteen (15)-day period, SMAB would enter into negotiations with other buyers. Litonjua objected. He emphasized that the new offer constituted an attempt to reopen the already perfected contract of sale of the shares in his favor. ISSUE: 1. W/N the alleged contract of sale is enforceable under the Statute of Frauds. 2. W/N there is a contract of sale between Litonjua and SMAB. HELD: 1. NO. For a note or memorandum to satisfy the Statute, it must be complete in itself and cannot rest partly in writing and partly in parol. The note or memorandum must

2.

contain the names of the parties, the terms and conditions of the contract, and a description of the property sufficient to render it capable of identification. 28 Such note or memorandum must contain the essential elements of the contract expressed with certainty that may be ascertained from the note or memorandum itself, or some other writing to which it refers or within which it is connected, without resorting to parol evidence. The exchange of correspondence between the parties hardly constitutes the note or memorandum within the context of Article 1403 of the Civil Code. Rossis letter dated 11 June 1990, heavily relied upon by respondents, is not complete in itself. First, it does not indicate at what price the shares were being sold. NO. In the case of a contract of sale, required is the concurrence of three elements, to wit: (a) consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) determinate subject matter, and (c) price certain in money or its equivalent.35 Such contract is born from the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price.

PR settle the case with their nephews and nieces. Respondent Salud Jimenez refused to heed the suggestion of petitioner and attributed the suspension of payment of the purchase price to "lack of word of honor." The RTC dismissed the civil case, and PR executed a Deed of Conditional Sale in favor of Emylene Chua over the same parcel of land. Thus, Adelfa demanded refund of the 50% dp it has paid, but PR demanded the return of the certificate of title. Adelfa failed to return the certificate, so PR filed for annulment of the contract. RTC: agreement was an option contract, suspension of payment was a counter-offer, which was rejected. Exclusive Option to Purchase contract was cancelled (basically ruled in favor of PR). CA: affirmed ISSUE: I. W/N the "Exclusive Option to Purchase" executed Adelfa Properties, Inc. and private respondents is an option contract. HELD: I. CONTRACT TO SELL, NOT OPTION CONTRACT NOR CONTRACT OF SALE 1. The distinction between the two is important for in contract of sale, the title passes to the vendee upon the delivery of the thing sold; whereas in a contract to sell, by agreement the ownership is reserved in the vendor and is not to pass until the full payment of the price. In a contract of sale, the vendor has lost and cannot recover ownership until and unless the contract is resolved or rescinded; whereas in a contract to sell, title is retained by the vendor until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach but an event that prevents the obligation of the vendor to convey title from becoming effective. 2. There are two features which convince us that the parties never intended to transfer ownership to petitioner except upon the full payment of the purchase price. Firstly, the exclusive option to purchase, although it provided for automatic rescission of the contract and partial forfeiture of the amount already paid in case of default, does not mention that petitioner is obliged to return possession or ownership of the property as a consequence of non-payment. 3. Secondly, it has not been shown there was delivery of the property, actual or constructive, made to herein petitioner. The exclusive option to purchase is not contained in a public instrument the execution of which would have been considered equivalent to delivery. 18. Atkins Kroll Co. vs. Cua Hian Tek, 102 PHIL 949 FACTS: On September 13, 1951, petitioner Atkins Kroll & Co. (Atkins) sent a letter to respondent B. Cu Hian Tek (Hian Tek) offering (a) 400 cartons of Luneta brand Sardines in Tomato Sauce 48 / 15-oz. Ovals at $8.25 per carton, (b) 300 cartons of Luneta brand Sardines Natural (c) 300 cartons of Luneta brand Sardines in Tomato Sauce 100/5-oz. talls at $7.48 per carton, with all of the offers subject to reply by September 23, 1951. Hian Tek unconditionally accepted the said offer through a letter delivered on September 21, 1951, but Atkins failed to deliver the commodities due to the shortage of catch of sardines by the packers in California. Hian Tek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor. Upon Atkins appeal, the Court of Appeals affirmed said decision but reduced the damages to P3,240.15 representing unrealized profits. Atkins herein contends that there was no such contract of sale but only an option to buy, which was not enforceable for lack of consideration because it is provided under the 2nd paragraph of Article 1479 of the New Civil Code that "an accepted unilatateral promise to buy or to sell a determinate thing for a price certain is binding upon the promisor if the promise is supported by a consideration distinct from the price. Atkins also insisted that the offer was a mere offer of option, because the

A negotiation is formally initiated by an offer. A perfected promise merely tends to insure and pave the way for the celebration of a future contract. An imperfect promise (policitacion), on the other hand, is a mere unaccepted offer.38 Public advertisements or solicitations and the like are ordinarily construed as mere invitations to make offers or only as proposals. At any time prior to the perfection of the contract, either negotiating party may stop the negotiation. 39 The offer, at this stage, may be withdrawn; the withdrawal is effective immediately after its manifestation, such as by its mailing and not necessarily when the offeree learns of the withdrawal. Litonjuas letter dated 21 May 1990, proposing the acquisition of the Phimco shares for US$36 million was merely an offer. This offer, however, in Litonjuas own words, "is understood to be subject to adjustment on the basis of an audit of the assets, liabilities and net worth of Phimco and its subsidiaries and on the final negotiation between ourselves. The manner of payment of the purchase price is an essential element before a valid and binding contract of sale can exist since the agreement on the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. It is dramatically clear that the US$36 million was not the actual price agreed upon but merely a preliminary offer which was subject to adjustment after the conclusion of the audit of the company finances. Respondents failure to submit their final bid on the deadline set by petitioners prevented the perfection of the contract of sale. It was not perfected due to the absence of one essential element which was the price certain in money or its equivalent. *NOTE: The Statute of Frauds is applicable only to contracts which are executory and not to those which have been consummated either totally or partially. 17. Adelfa Properties nc. Bs. CA, 240 SCRA 565 FACTS: Private respondents and their brothers, Jose and Dominador Jimenez, were the registered co-owners of a parcel of land. Jose and Dominador Jimenez sold their share consisting of one-half of said parcel of land to Adelfa Properties. Subsequently, a "Confirmatory Extrajudicial Partition Agreement" 4 was executed by the Jimenezes, wherein the eastern portion of the subject lot was adjudicated to Jose and Dominador Jimenez, while the western portion was allocated to herein private respondents. An "Exclusive Option to Purchase" 5 was executed between Adelfa Properties and private respondents, under certain conditions. Before petitioner could make payment it received summons for annulment of the deed of sale in favor of Household Corporation and recovery of ownership. As a consequence, Adelfa informed PR that it would hold payment of the full purchase price and suggested that

"firm offer" was a continuing offer to sell until September 23. ISSUE: Was there a contract of sale between the parties or only a unilateral promise to buy?

writ of execution on the judgment, since there is none to execute, but an action for damages in a proper forum for the purpose. 21. Abalos vs. Macatangay Jr.,439 SCRA 649

HELD: The Supreme Court held that there was a contract of sale between the parties. Petitioners argument assumed that only a unilateral promise arose when the respondent accepted the offer, which is incorrect because a bilateral contract to sell and to buy was created upon respondents acceptance. Had Cua Hian Tek backed out after accepting, by refusing to get the sardines and / or to pay for their price, he could also be sued. But his letter-reply to Atkins indicated that he accepted "the firm offer for the sale" and that "the undersigned buyer has immediately filed an application for import license. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In this case at bar, however, upon respondents acceptance of herein petitioner's offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the obligations of a purchaser. 20. Ang Yu Asuncion vs. CA, 238 SCRA 603 FACTS: Ang Yu Asuncion, et al., (plaintiffs) are tenants/lessees of residential and commercial spaces owned by the Cu Unjieng. The Cu Unjiengs informed the plaintiffs that they are offering to sell the said premises and are giving them priority. During the negotiations, the Cu Unjiengs offered a price of P6M, but the plaintiffs counter offered P5M. Plaintiffs then asked the Cu Unjiengs to put their offer in writing, which the latter agreed. Plaintiffs then asked that the terms and conditions of the offer to sell be specified, but the Cu Unjiengs did not reply. Thus, plaintiffs filed a complaint to compel the Cu Unjiengs to sell the property to them. RTC: offer to sell was never accepted, bec. parties never agreed on the terms and conditions of the proposed sale. However, the court held that the plaintiffs had a right of first refusal in case the property was to be sold at a price lower than P11M. CA: affirmed the decision of RTC, with modications on that, due to the economy today, right of first refusal should also be made available to plaintiffs if the price is in excess of P11M. Later, the Cu Unjiengs executed a Deed of Sale in favor of Buen Realty and Development Corporation (defendant), transferring the property to the latter for P15M. Plaintiffs filed a Motion of Execution praying that the CA ruling be implemented. RTC: granted the said motion, ordered defendant to execute the Deed of Sale in favor of plaintiffs, in recognition of their right of first refusal.CA: set aside the said order of the lower court. ISSUE: I. W/N plaintiffs right of first refusal be recognized and the property should be sold in their favor. HELD: I. NO. Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. A contract is perfected when a person (seller), obligates himself, for a price certain, to deliver and to transfer ownership of a thing or right to another (buyer). In the law on sales, the so-called right of first refusal is an innovative juridical relation. It cannot be deemed a perfected contract of sale under the NCC. An option or an offer would require, among other things, a clear certainty on both the object and the cause or consideration of the envisioned contract. In a right of first refusal, while the object might be made determinate, the exercise of right, however, would be dependent not only on the grantors eventual intention to enter into a binding juridical relation with another but also on terms, including the price, that obviously are yet to be later firmed up. It can be best so described as merely not by contracts buy by, among other laws of general application, the pertinent scattered provisions of the NCC on human conduct. The remedy of plaintiffs is not a

Facts: Spouses Arturo and Esther Abalos are the registered owners of a parcel of land with improvements located at Azucena St., Makati City consisting of about three hundred twentyseven (327) square meters, covered by Transfer Certificate of Title (TCT) No. 145316 of the Registry of Deeds of Makati. With a Special Power of Attorney, issued by his wife, Arturo executed a Receipt and Memorandum of Agreement (RMOA), in favor of respondent, binding himself to sell to respondent the subject property and not to offer the same to any other party within thirty (30) days from date. Arturo acknowledged receipt of a check from respondent in the amount of P5,000, representing earnest money for the subject property, the amount of which would be deducted from the purchase price. The RMOA stated that full payment would be effected as soon as possession of the property shall have been turned over to respondent. Subsequently, Esther, executed a Special Power of Attorney, appointing her sister, Bernadette, to act for and in her behalf relative to the transfer of the property to respondent. Respondent sent a letter to Arturo and Esther informing them of his readiness and willingness to pay the full amount of the purchase price which contained a demand upon the spouses to comply with their obligation to turn over possession of the property to him. On the same date, Esther, through her attorney-in-fact, executed in favor of respondent, a Contract to Sell the property to the extent of her conjugal interest. Esther also obligated herself to execute and deliver to respondent a deed of absolute sale upon full payment. Arturo and Esther failed to deliver the property; respondent filed a complaint for specific performance with damages against petitioners. Issue: Whether or not petitioner may be compelled to convey the property to respondent under the terms of the RMOA and the Contract to Sell. RULING: Contracts, in general, require the presence of three essential elements: (1) consent of the contracting parties; (2) object certain which is the subject matter of the contract; and (3) cause of the obligation which is established. Until the contract is perfected, it cannot, as an independent source of obligation, serve as a binding juridical relation. In a contract of sale, the seller must consent to transfer ownership in exchange for the price, the subject matter must be determinate, and the price must be certain in money or its equivalent. Being essentially consensual, a contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the contract and upon the price. However, ownership of the thing sold shall not be transferred to the vendee until actual or constructive delivery of the property. On the other hand, an accepted unilateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of option. An option merely grants a privilege to buy or sell within an agreed time and at a determined price. It is separate and distinct from that which the parties may enter into upon the consummation of the option. A perfected contract of option does not result in the perfection or consummation of the sale; only when the option is exercised may a sale be perfected. The option must, however, be supported by a consideration distinct from the price. Perusing the RMOA, it signifies a unilateral offer of Arturo to sell the property to respondent for a price certain within a period of thirty days. The RMOA does not impose upon respondent an obligation to buy petitioners property, as in fact it does not even bear his

signature thereon. It is quite clear that after the lapse of the thirty-day period, without respondent having exercised his option, Arturo is free to sell the property to another. This shows that the intent of Arturo is merely to grant respondent the privilege to buy the property within the period therein stated. There is nothing in the RMOA which indicates that Arturo agreed therein to transfer ownership of the land which is an essential element in a contract of sale. Unfortunately, the option is not binding upon the promissory since it is not supported by a consideration distinct from the price. As a rule, the holder of the option, after accepting the promise and before he exercises his option, is not bound to buy. He is free either to buy or not to buy later. In Sanchez v. Rigos we ruled that in an accepted unilateral promise to sell, the promissor is not bound by his promise and may, accordingly, withdraw it, since there may be no valid contract without a cause or consideration. *Isa pang issue, baka lang itanong ni Atty. Senga. Significantly, the Family Code has introduced some changes particularly on the aspect of the administration of the conjugal partnership. The new law provides that the administration of the conjugal partnership is now a joint undertaking of the husband and the wife. In the event that one spouse is incapacitated or otherwise unable to participate in the administration of the conjugal partnership, the other spouse may assume sole powers of administration. However, the power of administration does not include the power to dispose or encumber property belonging to the conjugal partnership. In all instances, the present law specifically requires the written consent of the other spouse, or authority of the court for the disposition or encumbrance of conjugal partnership property without which, the disposition or encumbrance shall be void. 22. Riviera Filipino, Inc. vs. CA, 380 SCRA 245 Facts: Respondent Reyes executed a Contract of Lease with Riviera. The ten-year renewable lease of Riviera involved a 1,018 square meter parcel of land located along Edsa, Quezon City. The said parcel of land was subject of a Real Estate Mortgage executed by Reyes in favor of Prudential Bank. Since the loan with Prudential Bank remained unpaid upon maturity, the mortgagee bank extrajudicially foreclosed the mortgage thereon. At the public auction sale, the mortgagee bank emerged as the highest bidder. Realizing that he could not possibly raise in time the money needed to redeem the subject property, Reyes decided to sell the same. Reyes offered to sell the subject property to Riviera. However, Angeles (Riviera President) bargained for P3,500 per square meter. Reyes did not agree to the said price and insisted on P5,000 per square meter, Angeles requested Reyes to allow him to consult the other members of the Board of Directors of Riviera. 7 months later, Angeles communicated with Reyes Rivieras offer to purchase the subject property for P4,000 per square meter. Reyes did not accept the offer. This time he asked for P6,000 per square meter since the value of the property in the area had appreciated in view of the plans of Araneta to develop the vicinity. In a letter dated November 2, 1988, Atty. Irineo S. Juan, acting as counsel for Reyes, informed Riviera that Reyes was selling the subject property for Six Thousand Pesos (P6,000.00) per square meter, net of capital gains and transfer taxes, registration fees, notarial fees and all other attendant charges. He further stated therein that: In this connection, conformably to the provisions of your CONTRACT OF LEASE, notice is served upon your good selves for you to exercise "the right of first refusal" in the sale of said property, for which purpose you are hereby given a period of ten (10) days from your receipt hereof within which to thus purchase the same under the terms and conditions aforestated, and failing which you shall be deemed to have thereby waived such pre-emptive right and my client shall thereafter be absolutely free to sell the subject property to interested buyers.

To answer the foregoing letter and Riviera sent a letter dated expressing Rivieras interest to purchase the subject property. Riviera increased its offer to P5,000 per square meter but Reyes did not accede to said price as it was still lower than his quoted price of P6,000 per square meter. Angeles asked Reyes to give him until the end of November 1988 for Rivieras final decision. In a letter dated December 2, 1988, Angeles wrote Reyes confirming Rivieras intent to purchase the subject property for the fixed and final price of P5,000 per square meter, complete payment within sixty (60) to ninety (90) days which "offer is what we feel should be the market price of your property." Angeles asked that the decision of Reyes and his written reply to the offer be given within fifteen (15) days since there are also other properties being offered to them at the moment. In response to the foregoing letter, Atty. Juan sent a letter to Riviera dated December 5, 1988 informing Riviera that Rivieras offer is not acceptable to his client. A Deed of Absolute Sale covering the subject property was executed by Reyes in favor of Cypress and on the same date, Cypress and Cornhill mortgaged the subject property to Urban Development Bank for. Thereafter, Riviera sought from Reyes, Cypress and Cornhill a resale of the subject property to it claiming that its right of first refusal under the lease contract was violated. Issue: Whether or not Rivieras right of first refusal was violated. Ruling: The concept and interpretation of the right of first refusal and the consequences of a breach thereof evolved in Philippine juristic sphere only within the last decade. It all started in 1992 with Guzman, Bocaling & Co. v. Bonnevie where the Court held that a lease with a proviso granting the lessee the right of first priority "all things and conditions being equal" meant that there should be identity of the terms and conditions to be offered to the lessee and all other prospective buyers, with the lessee to enjoy the right of first priority. A deed of sale executed in favor of a third party who cannot be deemed a purchaser in good faith, and which is in violation of a right of first refusal granted to the lessee is not voidable under the Statute of Frauds but rescissible under Articles 1380 to 1381 (3) of the New Civil Code. Subsequently in 1994, in the case of Ang Yu Asuncion v. Court of Appeals, the Court en banc departed from the doctrine laid down in Guzman, Bocaling & Co. v. Bonnevie and refused to rescind a contract of sale which violated the right of first refusal. The Court held that the socalled "right of first refusal" cannot be deemed a perfected contract of sale under Article 1458 of the New Civil Code and, as such, a breach thereof decreed under a final judgment does not entitle the aggrieved party to a writ of execution of the judgment but to an action for damages in a proper forum for the purpose. In the 1996 case of Equatorial Realty Development, Inc. v. Mayfair Theater, Inc., the Court en banc reverted back to the doctrine in Guzman Bocaling & Co. v. Bonnevie stating that rescission is a relief allowed for the protection of one of the contracting parties and even third persons from all injury and damage the contract may cause or to protect some incompatible and preferred right by the contract. In Paraaque Kings Enterprises, Inc. v. Court of Appeals, the Court affirmed the nature of and the concomitant rights and obligations of parties under a right of first refusal. The Court summarizing, held that in order to have full compliance with the contractual right granting petitioner the first option to purchase, the sale of the properties for the price for which they were finally sold to a third person should have likewise been first offered to the former. Further, there should be identity of terms and conditions to be offered to the buyer holding a right of first refusal if such right is not to be rendered illusory. Lastly, the basis of the right of

first refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer. Thus, the prevailing doctrine is that a right of first refusal means identity of terms and conditions to be offered to the lessee and all other prospective buyers and a contract of sale entered into in violation of a right of first refusal of another person, while valid, is rescissible. As clearly shown by the records and transcripts of the case, the actions of the parties to the contract of lease, Reyes and Riviera, shaped their understanding and interpretation of the lease provision "right of first refusal" to mean simply that should the lessor Reyes decide to sell the leased property during the term of the lease, such sale should first be offered to the lessee Riviera. And that is what exactly ensued between Reyes and Riviera, a series of negotiations on the price per square meter of the subject property with neither party, especially Riviera, unwilling to budge from his offer, as evidenced by the exchange of letters between the two contenders. Riviera was so intractable in its position and took obvious advantage of the knowledge of the time element in its negotiations with Reyes as the redemption period of the subject foreclosed property drew near. Riviera strongly exhibited a "take-it or leave-it" attitude in its negotiations with Reyes. It quoted its "fixed and final" price as P5,000 and not any peso more. In sum, the Court finds that in the interpretation of the right of first refusal as understood by the parties herein, the question as to what is to be included therein or what is meant by the same, as in all other provisions of the contract, is for the parties and not for the court to determine, and this question may not be resolved by what the parties might have provided had they thought about it, which is evident from Riviera claims, or by what the court might conclude regarding abstract fairness. 23. Equatorial Realty Development, Inc. vs. Mayfair Theater, Inc., 264 SCRA 483 FACTS: Carmelo owned a parcel of land in Manila. He leased it to Mayfair for a term of 20 years, for use as a motion picture theater. Two years later, Carmelo leased to Mayfair another portion of his property, also for 20 years. Both contracts have the stipulation: That if the lessor should desire to sell the leased premises, the lessee shall be given 30 days exclusive option to purchase the same. In the event, however, that the leased premises is sold to someone other than the lessee, the lessor is bound and obligated, as it hereby binds and obligates itself, to stipulate in the Deed of Sale thereof that the purchaser shall recognize this lease and be bound by all the terms and conditions thereof. Mr. Pascal (of Carmelo) informed Yang (Mayfairs president) that he wanted to sell the entire property, and that a certain Araneta was offering to buy the whole property for $1.2M. Pascal asked Yang if he was willing to buy the property for P6-7M. Mayfair informed Carmelo that they wanted to purchase the entire property and reminded them of the stipulation in the lease, but Carmelo ignored the letter. Carmelo then sold its entire property to Equatorial for P11.3M. Mayfair filed an action for specific performance and annulment of the leased premises to Equatorial. Carmelo and Equatorial claimed: that it had informed Mayfair of its desire but that Mayfair had said it was only interested in buying the area under lease, which was impossible since the property was not a condominium, and that the option to purchase invoked by Mayfair is null and void for lack of consideration. RTC: Dismissed Mayfairs complaint. It reasoned that the option in the contract of lease was not supported by a separate consideration, and without a consideration, the option is not binding on Carmelo to sell the property to Mayfair. Cited Art 1479. Mayfair cannot compel Carmelo to comply with the promise unless Mayfair establishes the existence of a distinct consideration. Also, Art 1354 (Although the cause is not stated in the contract, it is presumed that it exists and is lawful unless the debtor proves the contrary), and consideration cannot be presumed, because when it comes to an option it is governed particularly by Art 1479, whereby the promissee has the burden of proving the existence of consideration. (This was the doctrine in the case of Sanchez.) CA: The stipulation is a right of

first refusal and not an option contract, which was the real intention of the parties. The stipulation is certain as to the object (the sale of the leased premises) but the price for which the object is ot be sold is not stated, so it isnt an option contract. Also said that the right of first refusal was limited to the leased promises and not the entire property itself. Issue: Is the stipulation a right of first refusal or option contract? Held: Right of first refusal. The deed of option or the option clause in a contract, in order to be valid and enforceable, must, among other things, indicate the definite price at which the person granting the option is willing to sell. Cited case of Ang Yu Asuncion: An unconditional mutual promise to buy and sell, as long as the object is made determinate and the price is fixed, can be obligatory on the parties. An accepted unlitateral promise which specifies the thing to be sold and the price to be paid, when coupled with a valuable consideration distinct and separate from the price, is what may properly be termed a perfect contract of option, and this contract is legally binding. The provision is a right of first refusal, and as such, the requirement of a separate consideration has no applicability. An option is a contract granting a privilege to buy or sell within an agreed time and at a determined price, and it is a separate and distinct contract from that which the parties may enter into, and it must be supported by consideration. However, here the right of first refusal is an integral part of the contracts of lease. There was a consideration for that right of refusal. The consideration is built into the reciprocal obligations of the parties. The consideration for the lease includes the consideration for the right of first refusal. Mayfair is in effect stating that it consents to lease the premises and to pay the price agreed upon, provided that the lessor should give it the right of first refusal. Carmelo actually acknowledged that Mayfair had the right of first refusal, because it informed Mayfair that it intended to sell the properties. The contract between Carmelo and Equatorial was entered into in bad faith. Since Mayfair has a right of first refusal, it can exercise the right only if the fraudulent sale is first set aside or rescinded. Deed of sale between Carmelo and Equatorial is rescinded. Carmelo is to return the purchase price to Equatorial, and Equatorial is ordered to return ownership of the land to Carmelo. Carmelo is ordered to allow Mayfair to buy the lots for P11.3M. 24. Bible Baptist Church vs. CA, 444 SCRA 399 Facts: On June 7, 1985, the Bible Baptist Church (petitioner Baptist Church) entered into a contract of lease4 with Mr. & Mrs. Elmer Tito Medina Villanueva (respondent spouses Villanueva). The latter are the registered owners of a property located at No. 2436 (formerly 2424) Leon Guinto St., Malate, Manila. The pertinent stipulations in the lease contract were: 1. That the LESSOR lets and leases to the LESSEE a store space known as 2424 Leon Guinto Sr. St., Malate, Manila, of which property the LESSOR is the registered owner in accordance with the Land Registration Act; 2. That the lease shall take effect on June 7, 1985 and shall be for the period of Fifteen (15) years.; 3. That LESSEE shall pay the LESSOR within five (5) days of each calendar month, beginning Twelve (12) months from the date of this agreement, a monthly rental of Ten Thousand Pesos (P10,000.00) Philippine Currency, plus 10% escalation clause per year starting on June 7, 1988; 4. That upon signing of the LEASE AGREEMENT, the LESSEE shall pay the sum of Eighty Four Thousand Pesos (P84,000.00) Philippine Currency. Said sum is to be paid directly to the Rural Bank, Valenzuela, Bulacan for the purpose of redemption of said property which is mortgaged by the LESSOR; 5. That the title will remain in the safe keeping of the Bible Baptist Church, Malate, Metro Manila until the expiration of the lease agreement or the leased premises be purchased by the LESSEE, whichever comes first. In the event that the said title will be lost or destroyed while

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in the possession of the LESSEE, the LESSEE agrees to pay all costs involved for the reissuance of the title; 6. That the leased premises may be renovated by the LESSEE, to the satisfaction of the LESSEE to be fit and usable as a Church; 7. That the LESSOR will remove all other tenants from the leased premises no later than March 15, 1986. It is further agreed that if those tenants are not vacated by June 1, 1986, the rental will be lowered by the sum of Three Thousand Pesos (P3,000.00) per month until said tenants have left the leased premises; 8. That the LESSEE has the option to buy the leased premises during the Fifteen (15) years of the lease. If the LESSEE decides to purchase the premises the terms will be: A) A selling Price of One Million Eight Hundred Thousand Pesos (P1.8 million), Philippine Currency. B) A down payment agreed upon by both parties. C) The balance of the selling price may be paid at the rate of One Hundred Twenty Thousand Pesos (P120,000.00), Philippine Currency, per year. The foregoing stipulations of the lease contract are the subject of the present controversy. Although the same lease contract resulted in several cases6 filed between the same parties herein, petitioner submits, for this Court's review several errors. Issue: 1) Whether or not the option to buy given to the Baptist Church is founded upon a consideration; Held: Article 1479 (2) of the Civil Code provides: An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. The second paragraph of Article 1479 provides for the definition and consequent rights and obligations under an option contract. For an option contract to be valid and enforceable against the promissor, there must be a separate and distinct consideration that supports it. To summarize the rules, an option contract needs to be supported by a separate consideration. The consideration need not be monetary but could consist of other things or undertakings. However, if the consideration is not monetary, these must be things or undertakings of value, in view of the onerous nature of the contract of option. Furthermore, when a consideration for an option contract is not monetary, said consideration must be clearly specified as such in the option contract or clause. In the petition, the Baptist Church states that "[t]rue, the Baptist Church did not pay a separate and specific sum of money to cover the option alone. But the P84,000 it paid the Villanuevas in advance should be deemed consideration for the one contract they entered into the lease with option to buy."9 This Court finds no merit in these contentions. First, petitioners cannot insist that the P84,000 they paid in order to release the Villanuevas' property from the mortgage should be deemed the separate consideration to support the contract of option. It must be pointed out that said amount was in fact apportioned into monthly rentals spread over a period of one year, at P7,000 per month. Thus, for the entire period of June 1985 to May 1986, petitioner Baptist Church's monthly rent had already been paid for, such that it only again commenced paying the rentals in June 1986. This is shown by the testimony of petitioner Pastor Belmonte where he states that the P84,000 was advance rental equivalent to monthly rent of P7,000 for one year, such that for the entire year from 1985 to 1986 the Baptist Church did not pay monthly rent. This Court agrees with respondents that the amount of P84,000 has been fully exhausted and utilized by their occupation of the premises and there is no separate consideration to speak of which could support the option. This Court also notes that in the present case both the Regional Trial Court and the Court of Appeals agree that the option was not founded upon a separate and distinct consideration and that, hence, respondents Villanuevas cannot be compelled to sell their property to petitioner Baptist Church. Having found that the option to buy granted to the petitioner Baptist Church was not founded upon a separate consideration, and hence, not enforceable against respondents, this Court finds no need to discuss whether a price certain had been fixed as the purchase price.

25. Limson vs. CA, 357 SCRA 209 FACTS: Agreement between Limson and seller de Vera to buy parcel of land. Limson gave the sum of 20K to de Vera as earnest money and de Vera signed a receipt giving her a 10day period to purchase the property. She agreed to pay the balance of purchase price so mortgage may be released. They were not able to do so because of failure of de Vera to appear on meeting places. Limson later found out that de Vera sold to Sunvar the property. DOCTRINE: Earnest money and option money. Earnest money is part of the purchase price while option money is the money given as a distinct consideration for an option contract; Earnest money given only where there is already a sale, while option money applies to a sale not yet perfected and; when earnest money is given, the buyer is bound to pay the balance, while when the would-be buyer gived option money, he is not required to buy, but may even forfeit it depending on the terms of the option. Not earnest money! Nothing in the receipt which indicates that the 20K was part of the purchase price. It was not shown that there was a perfected sale between the parties where earnest money was given. Finally, when Limson gave the earnest money, the receipt did not reveal that she was bound to pay the balance of the purchase price. 26. San Miguel Properties Philippines Inc. vs. Huang. 336 SCRA 737 Facts: San Miguel Properties is engaged in the purchase and sale of real properties, of which include two parcels of land. These properties were offered for sale at P52,140,000.00. Such offer was made to Atty. Dauz on behalf of Sps. Huang. Atty. Dauz wrote San Miguel informing the respondents interest to buy the property and enclosed therein a check (P1,000,000.00) as earnest deposit subject to certain conditions, to wit: (1) that they be given the exclusive option to purchase the property within 30 days from acceptance of the offer; (2) that during the option period, the parties would negotiate the terms and conditions of the purchase; and (3) petitioner would secure the necessary approvals while respondents would handle the documentation. Sobrecarey, San Miguel Properties VP indicated his conformity to the offer; signed the letter; and accepted the earnest deposit. By agreement of the parties, they agreed that respondents will be given 6 months within which to pay. Upon failure of respondents to pay despite the extension of time given, petitioner through its Pres & CEO Gonzales, wrote Atty. Dauz, that they are returning the earnest deposit. Respondent spouses through counsel, wrote petitioner demanding the execution of a deed of conveyance in their favor. They attempted to return the earnest deposit but was refused by San Miguel. Respondent spouses filed a complaint for specific performance. Trial court, upon motion, dismissed the complaint, which was reversed by the CA. Arguments San Miguel: the Court of Appeals erred in finding that there was a perfected contract of sale between the parties because the letter of respondents, which petitioner accepted, merely resulted in an option contract, albeit it was unenforceable for lack of a distinct consideration. Petitioner argues that the absence of agreement as to the mode of payment was fatal to the perfection of the contract of sale. Petitioner also disputes the appellate courts ruling that Isidro A. Sobrecarey had authority to sell the subject real properties. Sps. Huang: As held by CA, there is a perfected contract of sale since the earnest money was allegedly given by respondents and accepted by petitioner through its vice-president and operations manager, Sobrecarey. The Court holds that respondents did not give the P1 million as "earnest money" as provided by Art. 1482 of the Civil Code. They presented the amount

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merely as a deposit of what would eventually become the earnest money or downpayment should a contract of sale be made by them. The amount was thus given not as a part of the purchase price and as proof of the perfection of the contract of sale but only as a guarantee that respondents would not back out of the sale. Respondents in fact described the amount as an "earnest-deposit. Issue: WON the earnest deposit could have been given as earnest money contemplated in Art. 1482, and thus there was a perfected contract of sale. Held: No, hence, there was no perfected contract of sale. In the present case, the P1 million "earnest-deposit" could not have been given as earnest money as contemplated in Art. 1482 because, at the time when petitioner accepted the terms of respondents offer, their contract had not yet been perfected. The first condition for an option period of 30 days sufficiently shows that a sale was never perfected. Such option giving respondents the exclusive right to buy the properties within the period agreed upon is separate and distinct from the contract of sale which the parties may enter. 27. Matabuena vs. Cervantes, 38 SCRA 284 FACTS: In 1956, herein appellants brother Felix Matabuena donated a piece of lot to his common-law spouse, herein appellee Petronila Cervantes. Felix and Petronila got married only in 1962 or six years after the deed of donation was executed. Five months later, or September 13, 1962, Felix died. Thereafter, appellant Cornelia Matabuena, by reason of being the only sister and nearest collateral relative of the deceased, filed a claim over the property, by virtue of a an affidavit of self-adjudication executed by her in 1962, had the land declared in her name and paid the estate and inheritance taxes thereon. The lower court of Sorsogon declared that the donation was valid inasmuch as it was made at the time when Felix and Petronila were not yet spouses, rendering Article 133 of the Civil Code inapplicable. ISSUE: Whether or not the ban on donation between spouses during a marriage applies to a common-law relationship. HELD: While Article 133 of the Civil Code considers as void a donation between the spouses during marriage, policy consideration of the most exigent character as well as the dictates of morality requires that the same prohibition should apply to a common-law relationship. As stated in Buenaventura vs. Bautista (50 OG 3679, 1954), if the policy of the law is to prohibit donations in favor of the other consort and his descendants because of fear of undue and improper pressure and influence upon the donor, then there is every reason to apply the same prohibitive policy to persons living together as husband and wife without the benefit of nuptials. The lack of validity of the donation by the deceased to appellee does not necessarily result in appellant having exclusive right to the disputed property. As a widow, Cervantes is entitled to one-half of the inheritance, and the surviving sister to the other half. Article 1001, Civil Code: Should brothers and sisters or their children survive with the widow or widower, the latter shall be entitled to one-half of the inheritance and the brothers and sisters or their children to the other half. 28. Rubias vs. Batiller, 51 SCRA 120 FACTS: Francisco Militante claimed ownership over land to which he filed an application for registration of title. The application was opposed by the Director of Lands. Pending litigation, Militante sold the land to Domingo Rubias, his son-in-law and a lawyer by

profession. Rubias declared the land for taxation purposes under various tax declarations and land taxes. Issue: Whether the sale of the lot by Francisco Militante to his son-in-law Domingo Rubias is valid for the latter to claim ownership over said lot Held: The purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491, paragraph (5) of the Civil Code, and that consequently, Rubias purchase of the property in litigation from his father-in-law was void and could produce no legal effect (Article 1409 [7] of the Civil Code). It is void and not voidable (as the 1929 case of Director of Lands v. Abagat which declared such purchase void superceded the 1911 case of Wolfson v. Estate of Martinez which declared such purchase mere voidable). The nullity of 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. However, when the causes of nullity which have ceased to exist, a second contract may be executed and would then be valid from its execution; however, it does not retroact to the date of the first contract. Still, Rubias complaint, to be declared absolute owner of the land and to be restored to possession thereof with damages, was bereft of any factual or legal basis. The CAs final judgment affirming the dismissal of Militantes application of registration made it conclusive that Militante lack rightful claim or title to the land. There was no right or title to the land that could be transferred or sold by Militantes purported sale in favor of Rubias in 1956. DOCTRINE:Aside from acquiring nothing from Francisco Militante, since his application for registration was denied by the land registration court as affirmed with finality by the CA. Assuming in arguendo that Militante had anything to sell, the deed of sale executed in 1956 by him in favor of plaintiff at a time when plaintiff was concededly his counsel of record in the land registration case involving the very land in dispute was void. The purchase by a lawyer of the property in litigation from his client is categorically prohibited by Article 1491, paragraph (5) of the Civil Code 29. Distajo vs. CA, 339 SCRA 52 FACTS: Iluminada Abiertas designated one of her sons, Rufo Distajo, to be the administrator of her parcels of land. Iluminada then sold portions of her lot to her children, a certain lot was sold to Rufo. Likewise, the heirs of Justo Abiertas (Iluminadas brother) also sold some lots to Rufo. When Iluminada died, Rufos brothers and sisters demanded possession of the lands owned by Rufo and her wife. Upon refusal, they filed with the RTC a complaint for recovery of possession and partition. The trial court dismissed the complaint. The CA reversed and ruled in favor of Rufo and his wife. Petitioners allege among others, that Rufo cannot acquire the parcels of land owned by Iluminada because the CC prohibits the administrator from acquiring properties under his administration. ISSUE: WON Rufo can acquire the parcels of land. RULING: Rufo CAN acquire the parcels of land. Under par. 2 of Art. 1491, the prohibition against agents, purchasing property in their hands for sale or management is not absolute. It does not apply if the principal consents to the sale of the property. In this case, the deed of sale signed by Iluminada shows that she gave consent to the sale of the properties in favor of her

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son, who was the admin of the properties. The consent of the principal Iluminada removes the transaction out of the prohibition in 1491. 30. Valencia vs. Cabantig, 196 SCRA 302 Facts: In 1933, petitioner Paulino Valencia and his wife Romana allegedly bout a parcel of land, where they built their residential house from a certain Serapia Raymundo, an heir of Pedro Raymundo, the original owner of the parcel of land. However, they failed to register the sale or secure a transfer certificate of title in their names. Then, a conference was held in the house of Atty. Jovellanos to settle the dispute between Serapia and the Sps. Valencia. As a result, Serapia was willing to relinquish her ownership if the Valencias could show documents evidencing ownership. Paulino presented a deed of sale written in Ilocano. Serapia claimed that the deed covered a different property. Thus, the parties were not able to settle their differences. Assisted by Atty. Cabanting, Serapia filed a complaint against Paulino for the recovery of possession with damages. The Valencias, on the other hand, engaged the services of Atty. Antiniw, who advised them to present a notarized deed of sale instead of the document in Ilocano. For the amount of P200 paid by Paulino to Atty. Antiniw, the latter paid a person who would forge the signature of the alleged vendor. The Pangasinan CFI favored Serapia. While the petition was of appeal, Serapia sold 40 sq. m. to Atty. Jovellanos and the remaining was also sold to her counsel, Atty. Cabanting. ISSUE: WON Atty. Cabanting purchased the subject property in violation of Art. 1491, NCC. HELD: YES! Art. 1491, NCC, prohibiting the sale to counsel concerned, applies only while the litigation is pending. A thing is said to be in litigation not only if it there is some contest or litigation over it in court, but also from the moment that it becomes to the judicial action of the judge. In the case at bar, while it is true that Atty. Cabanting purchased the lot after finality of judgment, there was still a certiorari proceeding. In certiorari proceedings, the appellate court may either grant or dismiss the petition. Thus, it is not safe to conclude, for purposes under Art. 1491, NCC, that litigation has terminated when the judgment of the trial court become final while certiorari connected therewith is still in progress. 31. Ramos vs. Ngaseo, 445 SCRA 529 32. Pabugais vs. Sahijwani, 423 SCRA 596 FACTS: - Pursuant to an "Agreement And Undertaking", petitioner Teddy G. Pabugais, in consideration of the amount of Fifteen Million Four Hundred Eighty Seven Thousand Five Hundred Pesos (P15,487,500.00), agreed to sell to respondent Dave P. Sahijwani a lot containing 1,239 square meters located at Jacaranda Street, North Forbes Park, Makati, Metro Manila. Respondent paid petitioner the amount of P600,000.00 as option/reservation fee and the balance of P14,887,500.00 to be paid within 60 days from the execution of the contract, simultaneous with delivery of the owner's duplicate Transfer Certificate of Title in respondent's name the Deed of Absolute Sale; the Certificate of Non-Tax Delinquency on real estate taxes and Clearance on Payment of Association Dues. The parties further agreed that failure on the part of respondent to pay the balance of the purchase price entitles petitioner to forfeit the P600,000.00 option/reservation fee; while non-delivery by the latter of the necessary documents obliges him to return to respondent the said option/reservation fee with interest at 18% per annum. - Petitioner failed to deliver the required documents. In compliance with their agreement, he returned to respondent the latter's P600,000.00 option/reservation fee by way of Far East Bank & Trust Company which was, however, dishonored.

Petitioner's Claims - He twice tendered to respondent, through his counsel, the amount of P672,900.00 (representing the P600,000.00 option/reservation fee plus 18% interest per annum computed from December 3, 1993 to August 3, 1994) in the form of a check but said counsel refused to accept the same (1st-via messenger; 2nd-via DHL) Because of these refusals, he wrote a letter saying saying that he is consigning the amount tendered with the RTC Makati City. Respondent's Claims - Admitted that his office received petitioner's letter but claimed that no check was appended thereto. He averred that there was no valid tender of payment because no check was tendered and the computation of the amount to be tendered was insufficient, because petitioner verbally promised to pay 3% monthly interest and 25% attorney's fees as penalty for default, in addition to the interest of 18% per annum on the P600,000.00 option/reservation fee. ISSUES: 1. WON there was a valid consignation 2. WON the petitioner can withdraw the amount consigned as a matter of right HELD 1. YES - If there is a valid tender of payment in an amount sufficient to extinguish the obligation, the consignation is valid. Reasoning a. The amount tendered is sufficient since it appears that only the interest of 18% per annum on the P600,000.00 option/reservation fee stated in the default clause of the "Agreement And Undertaking" was agreed upon by the parties. b. petitioner's tender of payment in the form of manager's check is valid even though it is not a legal tender since he did not object to the form. - Consignation is the act of depositing the thing due with the court or judicial authorities whenever the creditor cannot accept or refuses to accept payment and it generally requires a prior tender of payment. 2. NO. - Withdrawal of the money consigned would enrich petitioner and unjustly prejudice respondent. Reasoning a. Article 1260 is not applicable here. It provides that Once the consignation has been duly made, the debtor may ask the judge to order the cancellation of the obligation b. Respondent's prayer in his answer that the amount consigned be awarded to him is equivalent to an acceptance of the consignation, which has the effect of extinguishing petitioner's obligation. c. Petitioner failed to manifest his intention to comply with the "Agreement And Undertaking" by delivering the necessary documents and the lot subject of the sale to respondent in exchange for the amount deposited. Disposition The instant petition for review is DENIED and the petitioner's obligation to respondent under paragraph 5 of the "Agreement And Undertaking" as having been extinguished, is AFFIRMED.

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33. Sabio vs. International Corp. Bank Inc., 364 SCRA 385 Facts: On May 25, 1973, spouses Ledonio assigned to the spouses Sabio all their rights, interests, title and participation over a contiguous portion of the subject property measuring 119,429 square meters. For this purpose, a deed of assignment with assumption of mortgage was later executed by the Ledonio couple in favor of the Sabio couple. Similarly, while the subject property was still the object of several pending cases, the International Corporate Bank, Inc. (or Interbank) acquired from the Trans-Resource Management and Development Corporation all of the latters rights to the subject property by virtue of a deed of assignment executed between them. Sometime thereafter, the Sabios and Interbank settled their opposing claims by entering into a MOA whereby the Sabios assigned, conveyed and transferred all their rights over the parcel of land to Interbank, with the express exception of a 58,000 square meter contiguous portion of said lot. The MOA also granted Interbank the right to assign all its rights and interests, provided that all the obligations of Interbank specified shall also bind all of its assigns, heirs and successors. Subsequently, Interbank transferred all its rights and interests over the parcel of land, excluding the 58,000 square meter contiguous portion, to the Las Pias Ventures, Incorporated (or LPVI). Subsequently, the lots were acquired by the Ayala Group from the LPVI. Consequently, the land title was then transferred first to LPVI, then to the Ayala Group. Thereafter, the Sabios filed a complaint claiming that Interbank failed to comply with its obligation, which is to transfer ownership and title over the contiguous portion to the plaintiffs. In its answer, Interbank averred that fulfillment of its obligation under the MOA became impossible due to the plaintiff spouses own acts. Interbank posited that they were ready to deliver the title to the 58,000 square meter parcel and had, in fact, prepared the Deed of Conveyance required by the Register of Deeds, but the plaintiffs themselves refused to sign the said deed unless the subject property was cleared of all squatters and other illegal occupants. It nevertheless repudiated plaintiffs claim that they were obligated to clear the said property of all squatters and occupants, much less to fence the said property, arguing that no such obligation was imposed in the MOA. However, plaintiffs contended that the presence of illegal occupants and the existence of unauthorized improvements on the subject parcel negates respondents claim that it could have possibly completed and perfected their ownership and title over said property. The fact that the subject parcel is possessed and occupied by squatters is a clear indication that the respondents were never in possession, and any transfer and conveyance would be meaningless, illusory and impracticable. Plaintiffs claim that there must first be removal of the illegal occupants and unauthorized structures, and the subject parcel should be walled-in before said property could be transferred by Interbank to them by the execution of deed of conveyance. Issue: WON the mere execution of the deed of conveyance is sufficient to assign, convey and transfer ownership and title over the contiguous portion in favor of the plaintiffs. Held: The SC ruled in the affirmative and held that when the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the object of the contract, if from the deed the contrary does not appear or cannot be inferred (Art. 1498, CC). Possession is also transferred, along with ownership thereof, to the plaintiffs by virtue of the deed of conveyance. Plaintiffs contention that respondents "never acquired ownership over the subject property since the latter was never in possession of the subject property nor was the property ever delivered" is totally without merit. Under the aforementioned Article 1498, the mere execution of the deed of conveyance in a public document is equivalent to the delivery of the property. Since the execution of the deed of conveyance is deemed equivalent to delivery, prior physical delivery or possession is not legally required. It is well-established that ownership and possession are two entirely different legal concepts. Just as possession is not a

definite proof of ownership, neither is non-possession inconsistent with ownership. Thus, it is of no legal consequence that respondents were never in actual possession or occupation of the subject property. They, nevertheless, perfected and completed ownership and title to the subject property. Notwithstanding the presence of illegal occupants on the subject property, transfer of ownership by symbolic delivery under Article 1498 can still be effected through the execution of the deed of conveyance. The key word is control, not possession, of the subject property. Considering that the deed of conveyance proposed by respondents did not stipulate or infer that plaintiffs could not exercise control over said property, delivery can be effected through the mere execution of said deed. Plaintiffs, as owners, have several options. Among these, they could file ejectment suits against the occupants, or to amicably secure the latters evacuation of the premises. Whatever mode petitioners choose, it signifies their control and their intention as owners "to obtain for themselves and to terminate said occupants actual possession thereof." It is sufficient that there are no legal impediments to prevent petitioners from gaining physical possession of the subject property. As stated above, prior physical delivery or possession is not legally required and the execution of the deed of sale or conveyance is deemed equivalent to delivery. This deed operates as a formal or symbolic delivery of the property sold and authorizes the buyer or transferee to use the document as proof of ownership. Nothing more is required. Petitioners cannot deny that the deed of conveyance can effectively transfer ownership as it constitutes symbolic or constructive delivery of the subject property. Neither can they negate the fact that as owners, they can exercise control over the said property. Respondents are not obligated to remove the occupants before conveying the subject property to petitioners. There is also no truth to petitioners allegation that the deed of conveyance merely transferred to the Sabios all the rights and participation of respondents over the subject property. The Deed of Conveyance clearly states that "the FIRST PARTY (respondent Ayala Corporation) Transfers, Assigns, Cedes and Conveys unto the SECOND PARTY (Sabios) the said 58,000 squaremeter portion of Lot 6-B, Psd-13-008573, covered by TCT No. T-5331 of Las Pias Registry of Deeds and described in the above fourth WHEREAS clause." Thus, the deed of conveyance complied with par. 2.b of the MOA, which provided that the said property shall be assigned and conveyed after Interbank and its successors-in-interest shall complete and perfect ownership and title to said property. 34. Philippine Suburban Development Corporation vs. CA, 63 SCRA 397 Facts: On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines, acting on the reports of the Committee created to survey suitable lots for relocating squatters in Manila and suburbs, approved in principle the acquisition by the People's Homesite and Housing Corporation of the unoccupied portion of the Sapang Palay Estate in Sta. Maria, Bulacan and of another area either in Las Pias or Paraaque, Rizal, or Bacoor, Cavite for those who desire to settle south of Manila. On June 10, 1960, the Board of Directors of the PHHC passed Resolution No. 700 (Annex "C") authorizing the purchase of the unoccupied portion of the Sapang Palay Estate at P0.45 per square meter "subject to the following conditions precedent: 3. That the President of the Philippines shall first provide the PHHC with the necessary funds to effect the purchase and development of this property from the proposed P4.5 million bond issue to be absorbed by the GSIS. 4. That the contract of sale shall first be approved by the Auditor General pursuant to Executive Order dated February 3, 1959. On July 13, 1960, the President authorized the floating of bonds under Republic Act Nos. 1000 and 1322 in the amount of P7,500,000.00 to be absorbed by the GSIS, in order to finance the acquisition by the PHHC of the entire Sapang Palay Estate at a price not to exceed P0.45 per sq. meter.

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On December 29,1960, Petitioner Philippine Suburban Development Corporation, as owner of the unoccupied portion of the Sapang Palay Estate and the People's Homesite and Housing Corporation, entered into a contract embodied in a public instrument entitled "Deed of Absolute Sale" whereby the former conveyed unto the latter the two parcels of land abovementioned. This was not registered in the Office of the Register of Deeds until March 14, 1961, due to the fact, petitioner claims, that the PHHC could not at once advance the money needed for registration expenses. In the meantime, the Auditor General, to whom a copy of the contract had been submitted for approval in conformity with Executive Order No. 290, expressed objections thereto and requested a re-examination of the contract, in view of the fact that from 1948 to December 20, 1960, the entire hacienda was assessed at P131,590.00, and reassessed beginning December 21, 1960 in the greatly increased amount of P4,898,110.00. It appears that as early as the first week of June, 1960, prior to the signing of the deed by the parties, the PHHC acquired possession of the property, with the consent of petitioner, to enable the said PHHC to proceed immediately with the construction of roads in the new settlement and to resettle the squatters and flood victims in Manila who were rendered homeless by the floods or ejected from the lots which they were then occupying. On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold the amount of P30,099.79 from the purchase price to be paid by it to the Philippine Suburban Development Corporation. Said amount represented the realty tax due on the property involved for the calendar year 1961. Petitioner, through the PHHC, paid under protest the abovementioned amount to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter, requested then Secretary of Finance Dominador Aytona to order a refund of the amount so paid. Upon recommendation of the Provincial Treasurer of Bulacan, said request was denied by the Secretary of Finance in a letter-decision dated August 22, 1961. **Petitioner claimed that it ceased to be the owner of the land in question upon the execution of the Deed of Absolute Sale on December 29, 1960. It is now claimed in this appeal that the Auditor General erred in disallowing the refund of the real estate tax in the amount of P30,460.90 because aside from the presumptive delivery of the property by the execution of the deed of sale on December 29, 1960, the possession of the property was actually delivered to the vendee prior to the sale, and, therefore, by the transmission of ownership to the vendee, petitioner has ceased to be the owner of the property involved, and, consequently, under no obligation to pay the real property tax for the year 1961. **Respondent, however, argues that the presumptive delivery of the property under Article 1498 of the Civil Code does not apply because of the requirement in the contract that the sale shall first be approved by the Auditor General, pursuant to the Executive Order. ISSUE: WON there was already a valid transfer of ownership between the parties. HELD: Considering the aforementioned approval and authorization by the President of the Philippines of the specific transaction in question, the prior approval by the Auditor General envisioned by Administrative Order would therefore, not be necessary. Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe actual (real tradition) or constructive (constructive tradition). 2 When the sale of real property is made in a public instrument, the execution thereof is equivalent to the delivery of the thing object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred. 3 In other words, there is symbolic delivery of the property subject of the sale by the execution of the public instrument, unless from the express terms of the instrument, or by clear inference therefrom, this was not the intention of the parties. Such would be the case, for instance, when a certain date is fixed for the purchaser to take possession of the property subject of the conveyance, or where, in case of sale by installments, it is stipulated that until the last

installment is made, the title to the property should remain with the vendor, or when the vendor reserves the right to use and enjoy the properties until the gathering of the pending crops, or where the vendor has no control over the thing sold at the moment of the sale, and, therefore, its material delivery could not have been made. In the case at bar, there is no question that the vendor had actually placed the vendee in possession and control over the thing sold, even before the date of the sale. The condition that petitioner should first register the deed of sale and secure a new title in the name of the vendee before the latter shall pay the balance of the purchase price, did not preclude the transmission of ownership. In the absence of an express stipulation to the contrary, the payment of the purchase price of the good is not a condition, precedent to the transfer of title to the buyer, but title passes by the delivery of the goods. 35. Edu vs. Gomez, 129 SCRA 604 FACTS: The 1968 model Volkswagen, bantam car, allegedly owned by Lt. Walter A. Bala under whose name it was originally registered, was reported to the Office of the Commission on Land Transportation as stolen on June 29, 1970 from the residence of Lt. Bala. Upon receipt of such information the agents of Anti-Carnapping Unit (ANCAR) of the Philippine Constabulary, on detail with the Land Transportation Commission recognized subject car on 2 February 1971 in the possession of LUCILA ABELLO and immediately seized and impounded the car as stolen property. Romeo F. Edu, then Commissioner of Land Transportation, seized the car pursuant to Section 60 of Republic Act 4136 which empowers him to seize the motor vehicle for delinquent registration aside from his implicit power deducible from Sec. 4(5), Sec. 5 and 31 of said Code, "to seize motor vehicles fraudulently or otherwise not properly registered. Lucia Abello filed a complaint for replevin with damages in the Court of First Instance of Manila. CFI ruled in facor of ABELLO. Respondent Court of First Instance Judge found that the car in question was acquired by Lucila Abello by purchase from its registered owner, Marcelino Guansing, for the valuable consideration of P9,000.00, under the notarial deed of absolute sale, dated August 11, 1970; that she has been in possession thereof since then until February 3, 1971 when the car was seized from her by the petitioners who acted in the belief that it is the car which was originally registered in the name of Lt. Walter A. Bala and from whom it was allegedly stolen sometime in June 1970. ISSUE: Whether or not the seizure of the car by the officials are valid. RULING: NO. The acquirer or the purchaser in good faith of a chattel of movable property is entitled to be respected and protected in his possession as if he were the true owner thereof until a competent court rules otherwise. In the meantime, as the true owner, the possessor in good faith cannot be compelled to surrender possession nor to be required to institute an action for the recovery of the chattel, whether or not an indemnity bond is issued in his favor. The filing of an information charging that the chattel was illegally obtained through estafa from its true owner by the transferor of the bona fide possessor does not warrant disturbing the possession of the chattel against the will of the possessor. Finally, the claim of petitioners that the Commission has the right to seize and impound the car under Section 60 of Republic Act 4136 which reads: Sec. 60. The lien upon motor vehicles. Any balance of fees for registration, re-registration or delinquent registration of a motor vehicle, remaining unpaid and all fines imposed upon any vehicle owner, shall constitute a first lien upon the motor vehicle concerned.

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is untenable. it is clear from the provision of said Section 60 of Republic Act 4136 that the Commissioner's right to seize and impound subject property is only good for the proper enforcement of lien upon motor vehicles. The Land Transportation Commission may issue a warrant of constructive or actual distraint against motor vehicle for collection of unpaid fees for registration, re-registration or delinquent registration of vehicles. 36. Duran vs. Intermediate Appellate Court, 138 SCRA 489 FACTS: The antecedent facts showed that petitioner Circe S. Duran owned two (2) parcels of land (Lots 5 and 6, Block A, Psd 32780) covered by Transfer Certificate of Title No. 1647 of the Register of Deeds of Caloocan City which she had purchased from the Moja Estate. She left the Philippines in June 1954 and returned in May 1966. On May 13, 1963, a Deed of Sale of the two lots mentioned above was made in favor of Circe's mother, Fe S. Duran who, on December 3, 1965, mortgaged the same property to private respondent Erlinda B. Marcelo-Tiangco. When petitioner Circe S. Duran came to know about the mortgage made by her mother, she wrote the Register of Deeds of Caloocan City informing the latter that she had not given her mother any authority to sell or mortgage any of her properties in the Philippines. Failing to get an answer from the registrar, she returned to the Philippines. Meanwhile, when her mother, Fe S. Duran, failed to redeem the mortgage properties, foreclosure proceedings were initiated by private respondent Erlinda B. Marcelo Tiangco and, ultimately, the sale by the sheriff and the issuance of Certificate of Sale in favor of the latter. Petitioner Circe S. Duran claims that the Deed of Sale in favor of her mother Fe S. Duran is a forgery, saying that at the time of its execution in 1963 she was in the United States. On the other hand, the adverse party alleges that the signatures of Circe S. Duran in the said Deed are genuine and, consequently, the mortgage made by Fe S. Duran in favor of private respondent is valid. Respondent Court ruled that there is a presumption of regularity in the case of a public document. ISSUE: 1. Whether or not the mortgage is valid 2. Whether or not private respondent was a buyer in good faith and for value RULING: 1. It is valid. Even if the signatures were a forgery, and the sale would be regarded as void, still it is Our opinion that the Deed of Mortgage is VALID, with respect to the mortgagees, the defendants-appellants. It is essential that the mortgagor be the absolute owner of the property mortgaged, and while as between the daughter and the mother, it was the daughter who still owned the lots, STILL insofar as innocent third persons are concerned the owner was already the mother (Fe S. Duran) inasmuch as she had already become the registered owner). The mortgagee had the right to rely upon what appeared in the certificate of title, and did not have to inquire further. The rule is simple: the fraudulent and forged document of sale may become the root of a valid title if the certificate has already been transferred from the name of the true owner to the name indicated by the forger. 2. Good faith consists in the possessor's belief that the person from whom he received the thing was the owner of the same and could convey his title.Good faith, while it is always to be presumed in the absence of proof to the contrary, requires a well-founded belief that the person from whom title was received was himself the owner of the land, with the right to convey it. Private respondents, in good faith relied on the certificate of title in the

name of Fe S. Duran and as aptly stated by respondent appellate court "[e]ven on the supposition that the sale was void, the general rule that the direct result of a previous illegal contract cannot be valid (on the theory that the spring cannot rise higher than its source) cannot apply here for We are confronted with the functionings of the Torrens System of Registration. The doctrine to follow is simple enough: a fraudulent or forged document of sale may become the ROOT of a valid title if the certificate of title has already been transferred from the name of the true owner to the name of the forger or the name indicated by the forger. The fact that at the time of the foreclosure sale proceedings (1970-72) the mortgagees may have already known of the plaintiffs' claim is immaterial. What is important is that at the time the mortgage was executed, the mortgagees in good faith actually believed Fe S. Duran to be the owner, as evidenced by the registration of the property in the name of said Fe S. Duran. 37. Addisson vs. Felix & Tioco, 38 PHIL 404 FACTS: By a public instrument Addison sold to the Marciana Felix, with the consent of her husband, the Balbino Tioco, four parcels of land, described in the instrument. The defendant Felix paid, at the time of the execution of the deed, the sum of P3,000 on account of the purchase price, and bound herself to pay the remainder in installments. It was also covenanted that "within one year from the date of the certificate of title in favor of Marciana Felix, this latter may rescind the present contract of purchase and sale, in which case Marciana Felix shall be obliged to return to me, A. A. Addison, the net value of all the products of the four parcels sold, and I shall obliged to return to her, Marciana Felix, all the sums that she may have paid me, together with interest at the rate of 10 per cent per annum." Addison, filed suit to compel Marciana Felix to make payment of the first installment of P2,000. The defendant alleged that the plaintiff had absolutely failed to deliver to the defendant the lands that were the subject matter of the sale, notwithstanding the demands made. After the execution of the deed of the sale Addison, at the request of the Marciana Felix, went to Lucena, accompanied by a representative of the latter, for the purpose of designating and delivering the lands sold. He was able to designate only two of the four parcels, and more than two-thirds of these two were found to be in the possession of one Juan Villafuerte, who claimed to be the owner of the parts so occupied by him. The record shows that the plaintiff did not deliver the thing sold. With respect to two of the parcels of land, he was not even able to show them to the purchaser; and as regards the other two, more than two-thirds of their area was in the hostile and adverse possession of a third person. ISSUE: Whether there was delivery of the thing sold. HELD: The thing is considered to be delivered when it is placed "in the hands and possession of the vendee." It is true that the same article declares that the execution of a public instrument is equivalent to the delivery of the thing which is the object of the contract, but, in order that this symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have had such control over the thing sold that, at the moment of the sale, its material delivery could have been made. Symbolic delivery through the execution of a public instrument is sufficient when there is no impediment whatever to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor. But if, notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing and make use of it himself or through another in his name, because such are opposed by a third persons will, then the delivery has not been effected. In the case at bar, therefore, it is evident, that the mere execution of the instrument was not a fulfillment of the vendor's

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obligation to deliver the thing sold, and that from such non-fulfillment arises the purchaser's right to demand, as she has demanded, the rescission of the sale and the return of the price. 38. Pasagui vs. Villablanca, 68 SCRA 18 FACTS: Plaintiffs-appellants Calixto Pasagui and Fausta Mosar bought from defendants Eustaquia Bocar and Catalina Bocar the parcel of land in question for the amount of P2,800.00; that a deed of sale was executed, notarized and registered;that "during this first week of February, 1963, defendants Ester T. Villablanca and her husband, Zosimo Villablanca, illegally and without any right whatsoever, took possession of the above described property, harvesting coconuts from the coconut plantation therein, thus depriving of its possession herein plaintiffs, and causing them damages; that for the purpose of enforcing the vendors' warranty in case of eviction, Eustaquia Bocar and Catalina Bocar were also included as defendants; and, therefore, plaintiffs-appellants pray that a decision be rendered, ordering (a) defendants Ester T. Villablanca and her husband, Zosimo Villablanca, "to surrender the possession of the above described property to said plaintiffs"; (b) defendants Ester T. Villablanca and her husband, Zosimo Villablanca, "to pay to said plaintiffs the amount of EIGHT HUNDRED PESOS (P800.00) as damages for the usurpation by them of said property"; and (c) defendants Eustaquia Bocar and Catalina Bocar "to pay the plaintiffs the amount of P2,800.00, plus incidental expenses, as provided for by Art. 1555 of the Civil Code, in case of eviction or loss of ownership to said above described property on the part of plaintiffs." ISSUE: Whether there was delivery of the thing sold. HELD: It is true that the execution of the deed of absolute sale in a public instrument is equivalent to delivery of the land subject of the sale. 2 This presumptive delivery only holds true when there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. It can be negated by the reality that the vendees actually failed to obtain material possession of the land subject of the sale.. 3 It appears from the records of the case at bar that plaintiffs-appellants had not acquired physical possession of the land since its purchase on November 12, 1962. As a matter of fact, their purpose in filing the complaint in Civil Case No. 3285 is precisely to "get the possession of the property." 4 In order that an action may be considered as one for forcible entry, it is not only necessary that the plaintiff should allege his prior physical possession of the property but also that he was deprived of his possession by any of the means provided in section 1, Rule 70 of the Revised Rules of Court, namely: force, intimidation, threats, strategy and stealth. For, if the dispossession did not take place by any of these means, the courts of first instance, not the municipal courts, have jurisdictions.. 5 The bare allegation in the complaint that the plaintiff has been "deprived" of the land of which he is and has been the legal owner for a long period has been held to be insufficient. 6 It is true that the mere act of a trespasser in unlawfully entering the land, planting himself on the ground and excluding therefrom the prior possessor would imply the use of force. In the case at bar, no such inference could be made as plaintiffsappellants had not claimed that they were in actual physical possession of the property prior to the entry of the Villablancas. Moreover, it is evident that plaintiffs-appellants are not only seeking to get the possession of the property, but as an alternative cause of action, they seek the return of the price and payment of damages by the vendors "in case of eviction or loss of ownership" of the said property. It is, therefore, not the summary action of forcible entry within the context of the Rules.

39. Amigo vs. Teves, 96 PHIL 252 FACTS: On August 11, 1937, Macario Amigo and Anacleto Cagalitan executed in favor of their son, Marcelino Amigo, a power of attorney granting to the latter, among others, the power "to lease, let, bargain, transfer, convey and sell, remise, release, mortgage and hypothecate, part or any of the properties . . . upon such terms and conditions, and under such covenants as he shall think fit." On October 30, 1938, Marcelino Amigo, in his capacity as attorney-in-fact, executed a deed of sale of a parcel of land for a price of P3,000 in favor of Serafin Teves stipulating therein that the vendors could repurchase the land within a period of 18 months from the date of the sale. In the same document, it was also stipulated that vendors would remain in possession of the land as lessees for a period of 18 months subject to the following terms and conditions: (a) the lessees shall pay P180 as rent every six months from the date of the agreement; (b) the period of the lease shall terminate on April 30, 1940; (c) in case of litigation, the lessees shall pay P100 as attorney's fees; and (d) in case of failure to pay any rental as agreed upon, the lease shall automatically terminate and the right of ownership of vendee shall become absolute. On July 20, 1939, the spouses Macario Amigo and Anacleta Cagalitan donated to their sons Justino Amigo and Pastor Amigo several parcels of land including their right to repurchase the land in litigation. The deed of donation was made in a public instrument, was duly accepted by the donees, and was registered in the Office of the Register of Deeds. The vendors-lessees paid the rental corresponding to the first six months, but not the rental for the subsequent semester, and so on January 8, 1940, Serafin Teves, the vendee-lessor, executed an "Affidavit of Consolidation of Title" in view of the failure of the lessees to pay the rentals as agreed upon, and registered said affidavit in the Office of the Register of Deeds who issued to Serafin Teves the corresponding transfer of title over the land in question. On March 9, 1940, Justino Amigo and Pastor Amigo, as donees of the right to repurchase the land in question, offered to repurchase the land from Serafin Teves by tendering to him the payment of the redemption price but the latter refused on the ground that the ownership had already been consolidated in him as purchaser a retro. ISSUES: Whether or not the lease covenant contained in the deed of sale with pacto de retroexecuted by Marcelino Amigo as attorney-in-fact in favor of Serafin Teves is not germane to, nor within the purview of, the powers granted to said attorney-in-fact and, therefore, is ultra vires and null and void DECISION No. The lease covenant contained in the deed of sale with pacto de retroexecuted by Marcelino Amigo as attorney-in-fact in favor of Serafin Teves is not germane to, nor within the purview of, the powers granted to said attorney-in-fact and, therefore, is not ultra vires and is valid. RATIO: The power granted to the agent is so broad that it practically covers the celebration of any contract and the conclusion of any covenant or stipulation. Among the powers granted are: to bargain, contract, agree for, purchase, receive, and keep lands, tenements, hereditaments, and accept the seizing and possessing of all lands," or "to lease, let, bargain, transfer, convey and sell, remise, release, mortgage and hypothecate . . . upon such terms and conditions, and under such covenants as he shall think fit." When the power of attorney says that the agent can enter into any contract concerning the land, or can sell the land under any term or condition and covenant he may think fit, means that he can act in the same manner and with the same breath and latitude as the principal could concerning the property. The fact that the agent has acted in accordance with the wish of his principals can be inferred

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from their attitude in donating to the herein petitioners the right to redeem the land under the terms and conditions appearing in the deed of sale executed by their agent. The lease covenant embodied in the deed of sale is common in contracts involving sales of land with pacto de retro. The lease that a vendor executes on the property may be considered as a means of delivery or tradition by constitutum possessorium. Where the vendor a retro continues to occupy the land as lessee, by fiction of law, the possession is deemed to be constituted in the vendee by virtue of this mode of tradition. It can be said that the covenant regarding the lease of the land sold is germane to the contract of sale with pacto de retro. 40. Banzon vs. Cruz, 45 SCRA 275 Facts: Sometime in 1952, Maximo Sta. Maria (Sta. Maria) obtained a crop loan from the Philippine National Bank (PNB), with Associated Insurance & Surety Co., Inc., (Associated) acting as surety for Sta. Maria and Antonio Banzon (Banzon) and Emilio Naval (Naval) as inseminators for Associated. When Sta. Maria failed to pay PNB the amount of the loan , PNB demanded payment from Associated who, instead of paying PNB, filed a complaint against Sta.Maria, Banzon and Naval. In 1957, the Court of First Instance of Manila (CFI of Manila) granted the petition of Associated, and ordered therein defendants to pay Associated jointy and severally. Associated then levied Banzons two lots in Caloocan to satisfy the judgment of CFI Manila. As it was the highest bidder (P41,000.00) at the execution sale conducted by the Sheriff of Rizal, the latter issued a certificate of sale in favor of the former. Associated then demanded from Banzon the delivery of the latters owners duplicate of certificate of title, to which Banzon refused, prompting Associated to file a complaint with the Court of First Instance of Rizal (CFI of Rizal) for an order directing Banzon to present said certificated for cancellation and for another order directing the Register of Deeds of Rizal to cancel the certificated and to issue new transfer certificates in the name of Associated. The trial court ruled in favor of Associated. However, it was then discovered that Associated never discharged its liability with PNB. PNB then filed a complaint against Sta. Maria, his six brothers and sisters, and Associated. After the trial court ruled in favor of PNB, Sta. Maria began paying his outstanding loan with the former, which then amounted to only of the amount earlier awarded to Associated to be paid to PNB. In other words, PNB collected directly from its debtor Sta. Maria the amounts owing to it, with Associated never having to put in one centavo. After collecting from Sta. Maria, PNB released Associated from its obligation as surety. This should have put an end to the matter and Banzons two lots therefore restored fully to his ownership, but it was then discovered that Associated has allowed and permitted one Pedro Cardenas (Cardenas) to execute and levy one of Banzons two parcel of land being held by Associated as trustee, which then resulted to the issuance of a new title in the name of Cardenas. On March 13, 1970, having learned of PNBs release of Associated as of February 20, 1970, filed a complaint for reconveyance of their two parcels of land, one of which is under Cadenass name and the other, while still under Banzons name, was held by Associated. Issue: Whether or not Banzon has the right to ask for reconveyance of his two lots in question. Held: Yes, he has. When Associated nevertheless prematurely and contary to the intent and condition of the basic 1957 judgment levied in execution on the two Caloocan City lots of Banzon the interest it acquired was clearly impressed with a trust character. Such acquisition of Banzon's properties by Associated was effected, if not through fraud on Associated's part, certainly through mistake and there Associated was "by force of law, considered a trustee of implied trust for the benefit of the person from whom the property comes" by virtue of Article 1456 of the Code since Associated not having paid nor having been compelled to pay the bank had no right in law or equity to so execute the judgment against Banzon as indemnitor.

Had there been no fraudulent concealment or suppression of the fact of such non-payment by Associated or a mistaken notion just assumed without factual basis that Associted had paid the bank and was thus entitled to enforce its judgement against Banzon as indemnitor, the writ for execution of the judgment against Banzon's properties would not been issued. Associated therefore stands legally bound by force of law to now discharge its implied trust and return Banzon's properties to him as their true and rightful owner. As Cardenas in levying in turn for satisfaction of judgment against Associated on one of Banzon's lots acquired only whatever interest Associated had in the lot, and with the knowledge that Associated's basic 1957 judgment against Banzon was "for the benefit of the Philippine National Bank" and hence Associated's interest in the Banzon properties was impressed with a trust character, subject to the obligation of Associated as implied trustee to return the properties to Banzon, the trust character of the lot titled by Cardenas necessarily passed to him. Cardenas could not claim actual or absolute ownership of the lot so titled but could only hold the same as trustee, like Associated as his causante or predecessor. 41. EDCA Publishing and Distributing Corp. vs. Santos, 184 SCRA 614 FACTS: A person identifying himself as Prof. Jose Cruz placed an order by telephone w/ EDA for 406 books, payable on delivery. The invoice was prepared and the books were delivered, for which Cruz issued a personal check drawn against Phil. Amanah Bank amounting to 8,995. Cruz then sold 120 books to Santos, who after verifying the sellers ownership from the invoice he showed her, paid him 1,700. EDA became suspicious and made inquiries w/ De la Salle and found out that he had no more account w/ the bank. A trap was set and it was discovered that he was really Tomas de la Pena. EDCA, together w/ the police, then forced their way into Santos store and threatened Santos w/ prosecution for buying stolen property then seized the books w/o warrant. Issues & HELD: 1. Who is the lawful owner of the books? Santos. Art. 559: the possession of a movable property in good faith is equivalent to a title. EDCAs contentions: o that Santos has not established their ownership bec. they have not produced a receipt not required, as the provision itself dispenses w/ further proof. o That Santos was in bad faith Santos was in good faith. Santos first ascertained the ownership from the EDCA invoice showing that they have been sold to Cruz, who said he was selling them for a discount for he was in financial need. It is hardly bad faith for any one in the business of buying and selling books to buy them at a discount and resell them. Whether EDCA was unlawfully deprived of the books because the check in payment therefore was dishonored? NO EDCA: that because the impostor acquired no title to the books because of the failure of consideration that nullified the contract of sale, he could not have validly transferred them to Santos. Non-pmt. Only creates a right to demand pmt. Or to rescind the contract or to criminal prosecution, in the case of bouncing checks. But absent any stipulation, delivery will effectively transfer ownership to the buyer who can in turn transfer it to another. Actual delivery having been made, Cruz acquired ownership over the books which he could then validly transfer to Santos. The fact that he had not yet paid for them to EDCA was a matter b/w him and EDCA and did not impair the title acquired by Santos to the books. 42. Alliance Tobacco Corp. Inc. vs. Phil. Virginia Tobacco Assoc., 179 SCRA 336 2.

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43. Santa Ana, Jr. vs. Hernandez, 18 SCRA 973 FACTS: The Santa Ana spouses owned a 115k square meter parcel of land in Bulacan. They sold 2 separate portions for P11k to Rosa Hernandez. After the sale (there were two other previous sales to different vendees of other portions of the land) the spouses caused the preparation of a subdivision plan. Rosa Hernandez, however, did not conform to the plan and caused the preparation of a different one. The spouses filed a complaint, claiming that Hernandez was occupying an excess of 17k square meters. Hernandez claimed that the alleged excess was part of the areas that she bought. RTC: Ordered Hernandez to vacate the excess. CA: Reversed. Hernandez is the owner of the whole of the lots in her own subdivision plan. Also declared this was a sale of real estate for a lump sum. Applied Art 1542. Found as fact that the two parcels of land sold to Hernandez were identified by the conspicuous boundaries. This was a long and continuous dike on the property that separated the lands in question from the others. The spouses appealed, claiming that the recited area in the deed should be controlling and that the boundaries given in the deed are indefinite. They point out that in the deed, the southern boundary of one parcel is merely given as lupang kasanib and that the same concurs with the western boundary of the other parcel, which is recited as lupang kasanib. Issue: Does Art 1542 apply? Held: YES. CA decision affirmed. CAs findings of fact cannot be questioned at this stage. The sale was of a definite and identified tract, a corpus certum, that obligated the vendors to deliver all the land within the boundaries, irrespective of whether its real area should be greater or smaller than what is recited in the deed. To hold the buyer to no more than the area recited on the deed, it must be made clear therein that the sale was made by unit of measure at a definite price for each unit. If the buyer intended to buy by the meter, he should have so stated in the contract. The ruling of the SC of Spain in construing Art 1471 of the Spanish Civil Code (copied verbatim in our Art 1542) is highly persuasive: As between the absence of a recital of a given price per unit of measurement, and the specification of the total area sold, the former must prevail and determines the applicability of the norms concerning sales for a lump sum. 44. Semira vs. CA, 230 SCRA 577 FACTS: Gutierrez was the owner of a parcel of land. This parcel was sold to Buenaventura An. He entered the premises based on the boundaries stated in the deed of sale. He then bought two additional parcels of land. On a relevant date, he sold the first parcel to his nephew who also entered the premises based on the boundaries stated in the deed. The deed also stated the same boundaries and area of the lot, which was larger in actuality. This nephew then sold the land to petitioner. The deed this time reflected a different area, the actual area of the land. The land was found to be larger than what was stated in the previous documents. Semira entered then the premises based on the boundaries and began construction of a rice mill. Buenaventura then filed an action for forcible entry against Semira, alleging that latter illegally encroached on the other parcel of land previously bought by the former and that the land that was supposed to be occupied by the latter was smaller than the land he was actually occupying. HELD: In the case at bar, the issue of possession cannot be decided independently of the question of ownership. Private respondent claimed constructive possession of the parcel of land he alleged to be encroached by Semira. Likewise, Semira based his occupancy of the land by virtue of the Ramirezs sale of the land to him. The question of prior possession may

only be resolved in answering the question of who is the real owner of the disputed portion. Where land is sold for a lump sum and not so much per unit of measure, the boundaries of the land stated in the contract determines the effects and scope of the sale, not the area thereof. The vendor is thus obligated to deliver the land included within the boundaries regardless of whether the land is greater or lesser than the area stipulated in the sale. 45. Balantakbo vs.CA, 249 SCRA 323 46. Roble vs. Arbasa, 362 SCRA 69 47. Paylago vs. Jarabe, 22 SCRA 1247 Facts: Land involved in this suit was originally covered by Homestead Patent issued on June 7, 1920 under Act No. 926 and later under OCT No. 251 issued on June 22, 1920 in the name of Anselmo Lacatan. Anselmo Lacatan died on May 17, 1948. After Anselmos death, OCT No. 251 was cancelled and TCT No. T-728 was issued in the name of his two sons and heirs, Vidal and Florentino Lacatan.Vidal died leaving his 3 children as heirs. Vidals heirs then executed a deed of sale on March 23, 1953 in favor of plaintiffs- petitioners (Paylogo Spouses & Dimaandal) over a portion of lot under TCT No. T-728 containing an area of 3. 9500 hectares. Florentino also died leaving his widow and three children as heirs. Florentinos heirs executed a deed of sale on December 31, 1953 in favor of petitioners over another portion of lot under TCT No. T-728 with an area of 2.8408 hectares. By virtue of the registration of the two deeds of sale, TCT No. T-728 was cancelled and TCT No. T-4208 covering total area of 6.7908 hectares was issued in favor of plaintiff-petitioners, Paylogo Spouses. A subsequent subdivision survey for the purpose of segregating the two aforementioned portions of land described in the deeds as well as the new TCT No. T-728 disclosed that a portion (one half hectare) of the total area purchased by plaintiff-petitioners was being occupied by defendandant-respondent, Pastrana Jarabe. Hence an action to recover possession and ownership of the said portion. The trial court and court of appeals found that: on November 27, 1938, the said portion of land was purchased by Hilario Jarabe, late husband of defendant-respondent, from one Apolonio Lacatan, which sale is evidenced by an unregistered deed of sale (Exh. 6); that Apolonio Lacatan, in turn, bought the same in 1936 from Anselmo Lacatan, the original registered owner in whose favor OCT No. 251 and later TCT No. T-4208 were issued; that the first deed of sale, also unregistered, executed by Anselmo Lacatan in favor of Apolonio Lacatan was lost during the Japanese occupation; that the herein defendant-respondent has been in possession of the said portion continuously, publicly, peacefully and adversely as owner thereof from 1938 up to the present; and, that the herein plaintiffs-petitioners knew, nay, admitted in a deed of lease, paragraph 3 (Exh. 4), that defendant-respondent has been in possession of the premises since 1945. 8. Lower court upheld Jarabe and ruled that plaintiff-petitioners were not purchaser in good faith; Court of Appeals affirmed in toto. Issue: Who has a better right in case of double sale of real property, the registered buyer or the prior but unregistered purchaser? Held: The unregistered purchaser, Jarabe has a better right in the instant case. This Court has formulated in no uncertain terms the general principle governing the matter: as between two purchasers, the one who has registered the sale in his favor, in good faith, has a preferred right over the other who has not registered his title, even if the latter is in the actual possession of the immovable property (. Indeed, the foregoing principle finds concrete bases in the pertinent provisions of the New Civil Code, Article 1544, providing that if the same immovable property should have been sold to different vendees, "the ownership

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shall belong to the person acquiring it who in good faith first recorded it in the registry of property." But there is more than meets the eye in the case at bar. While plaintiffs-petitioners have a registered title, it cannot be denied that their acquisition and subsequent registration were tainted with the vitiating element of bad faith. Both Courts below found that petitioners knew beforehand that the parcel of land in question was owned by defendant-respondent. In its decision the Court of Appeals declared that "plaintiffs herein were aware of that peaceful, continuous and adverse possession of defendant since 1945, because this fact is admitted by said plaintiffs in a deed of lease, paragraph 3 (Exhibit 4) covering a portion of the entire lot, and situated just across the road from the land in question." Considering that the boundaries of the lands that the petitioners Paylago purchased in 1953 and 1954 were well defined, they must have known that the portion occupied by the defendant-respondent under claim of ownership and leased to them by the latter was included in the description. And coupled with their knowledge that defendant-respondent purchased the same from Apolonio Lacatan, plaintiffs-petitioners should have inquired and made an investigation as to the possible defects of the title of the Lacatan heirs over the entire lot sold to them, granting that the latter's certificate of title was clear. This, they failed to do. They cannot now claim complete ignorance of defendant-respondent's claim over the property. As was well stated in one case, "a purchaser who has knowledge of facts which should put him upon inquiry and investigation as to possible defects of the title of the vendor and fails to make such inquiry and investigation, cannot claim that he is a purchaser in good faith and has acquired a valid title thereto". The fundamental premise of the preferential rights established by Article 1544 of the New Civil Code is good faith. To be entitled to the priority, the second vendee must not only show prior recording of his deed of conveyance or possession of the property sold, but must, above all, have acted in good faith, that is to say, without knowledge of the existence of another alienation by his vendor to a stranger. Short of this qualifying circumstance, the mantle of legal protection and the consequential guarantee of indefeasibility of title to the registered property will not in any way shelter the recording purchaser against known and just claims of a prior though unregistered buyer. Verily, it is now settled jurisprudence that knowledge of a prior transfer of a registered property by a subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the later instrument of conveyance which was registered in the Registry of Deeds. The registration of the later instrument creates no right as against the first purchaser. For the rights secured under the provisions of Article 1544 of the New Civil Code to the one of the two purchasers of the same real estate, who has secured and inscribed his title thereto in the Registry of Deeds, do not accrue, as already mentioned, unless such inscription is done in good faith (Leung Yee v. F.L. Strong Machinery Co., et al., op. cit.). To hold otherwise would reduce the Torrens system to a shield for the commission of fraud 48. Hanapol vs. Pilapil, 7 SCRA 452 Facts: This is a case of double sale of the same unregistered land. Hanopol claims ownership of the land by virtue of a series of purchases effected in 1938 by means of a private instrument executed by the former owners (all surnamed Siapo). In addition, Hanopol invokes in his favor a decision render by the Court of First Instance of Leyte, on a complaint he filed on June 16, 1948 against the same vendors, who, according to him, took possession of the said property in December 1945 through fraud, threat and intimidation, pretending falsely to be the owners thereof and ejecting Hanopols tenants thereon, and since then had continued to possess the

land. On September 21, 1958 the CFI in the reivindicatory case declared him the exclusive owner of the land in question and ordering defendants (vendors) to deliver possession. On the other hand, appellee Pilapil asserts title to the property on the strength of a duly notarized deed of sale executed in his favor by the same owners on December 3, 1945, which deed of sale was registered in the Registry of Deeds of Leyte on August 20, 1948 under the provisions of Act No. 3344. Appellant Hanopol argues under the second issue raised by him that the registration of Pilapil's notarized deed of sale in 1948 under Act No. 3344 "shall be understood to be without prejudice to a third party with a better right". He contends that since at the time the Siapos sold the land in question in 1945 to Pilapil, the former were no longer the owners as they had already sold the same to appellant since 1938, the first sale to him is a better right which cannot be prejudiced by the registration of the second sale. Issue: Whether or not Hanopol can be considered as a third person with a better right under Act No 3344. Held: No. Hanopol cant be considered as a third person with a better right under Act No. 3344. The "better right" referred to in Act No. 3344 is much more than the mere prior deed of sale in favor of the first vendee. In the Lichauco case just mentioned, it was the prescriptive right that had supervened. Or, as also suggested in that case, other facts and circumstances exist which, in addition to his deed of sale, the first vendee can be said to have better right than the second purchaser. In the case at bar, there appears to be no clear evidence of Hanopol's possession of the land in controversy. In fact, in his complaint against the vendors, Hanopol alleged that the Siapos took possession of the same land under claim of ownership in 1945 and continued and were in such possession at the time of the filing of the complaint against them in 1948. Consequently, since the Siapos were in actual occupancy of the property under claim of ownership, when they sold the said land to appellee Pilapil on December 3, 1945, such possession was transmitted to the latter, at least constructively, with the execution of the notarial deed of sale, if not actually and physically as claimed by Pilapil in his answer filed in the present case. Thus, even on this score, Hanopol cannot have a better right than appellee Pilapil who, according to the trial court, "was not shown to be a purchaser in bad faith". Notes: An example of what could be a better right that is protected against the inscription of a subsequent sale is given in the case of Lichauco v. Berenguer (39 Phil. 643). The facts in that case are succinctly stated in the syllabus thereof as follows: .... In 1882 B sold to S a piece of land. After the sale B continued in the possession of the land in the capacity of lessee of S through payment of rent, and continued as such until his death when he was substituted by the administrator of his property. In 1889 B sold again the same piece of land to L who leased it to B himself under certain conditions. Both sales were executed in a public instrument, the one executed in favor of L being registered only in 1907. Thus, S and L acquired possession of the land through the same vendor upon the latter's ceasing to be the owner and becoming the lessee of said S and L, respectively. HELD: (1) That, with reference to the time prior to 1907, the preference should be in favor of the purchaser who first took possession of the land, because this possession, according to the law in force prior to the promulgation of the Civil Code, constituted the consummation of the contract, and also because afterwards the Civil Code expressly establishes that possession in such cases transfers the ownership of the thing sold. (2) That, when a person buys a piece of

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land and, instead of taking possession of it, leases it to the vendor, possession by the latter after the sale is possession by the vendee, and such possession, in case of a double sale, determines the preference in favor of the one who first took possession of it, in the absence of inscription, in accordance with the provision of article 1473 of the Civil Code, notwithstanding the material and personal possession by the second vendee. (Bautista vs. Sioson, 39 Phil. Rep., 615) .... Because L had to receive his possession from B who was a mere lessee of S and as such had no possession to give, inasmuch as his possession was not for himself but in representation of S, it follows that L never possessed the land.. .... The effect which the law gives to the inscription of a sale against the efficacy of the sale which was not registered is not extended to other titles which the other vendee was able to acquire independently as, in this case, the title by prescription. We do not think the quoted proviso in Act No. 3344 justifies appellant's contention. If his theory is correct, then the second paragraph of Article 1544 of the New Civil Code would have no application at all except to lands or real estate registered under the Spanish Mortgage Law or the Land Registration Act. Such a theory would thus limit the scope of that codal provision. But even if we adopt this latter view, that is, that Article 1544 (formerly Article 1473) only applies to registered land, still we cannot agree with the appellant that by the mere fact of his having a previous title or deed of sale, he has acquired thereby what is referred to in Act No. 3344 as the "better right" that would be unaffected by the registration of a second deed of sale under the same law. Under such theory, there would never be a case of double sale of the same unregistered property. 49. Agricultural and Home Extention Development Group vs. CA, 213 SCRA 563 FACTS: In 1972, Diaz and Mia sold a parcel of land to Gundran. The owners duplicate copy was given to Gundran but the sale was unregistered because of existing notices of lis pendens on the title. Gundran and AHDG entered into a joint venture agreement for the improvement & subdivision of the land. This agreement was also not annotated. In 1976, Diaz & Mia again sold the same property to Cabautan. By virtue of a court order, a new owners copy of the title was issued (they supposedly lost their copy). The notice of lis pendens was canceled and the deed of sale was recorded. A new TCT was issued in favor of Cabautan. In 1977, Gundran issued an action for reconveyance. ISSUE: Who has a better right to the property? Was Cabautan a purchaser in good faith? RULING: Since the 2nd sale was registered, the 2nd buyer has a better right to the property. Cabautan was not a purchaser in bad faith merely because of the notice of lis pendens. A purchaser in good faith is one who buys the property without notice that another person has an interest in the property and pays a full and fair price for the same at the time of the purchase or before he has notice of the claim or interest of some other person in the property. The TCT shows no annotation of any sale, lien, encumbrance or adverse claim on the property. When the property is registered under the Torrens system, registration is the operative act to convey or affect the land insofar as 3rrd persons are concerned. A person dealing with registered land is only charged with notice of the burdens on the property which are noted on the register or certificate of title. Even the annotation of lis pendens on the title to the property by 3 rd parties does not place the buyer thereof in bad faith since these did not have the effect of establishing a lien or encumbrance on the property affected. Their only purpose was to give notice to 3rrd persons and to the whole world that any interest they might acquire in the property pending litigation would be subject to the result of the suit.

PARANAQUE KINGS V CA FACTS: Santos and Paranaque Kings entered into a lease contract. Contract says in case of sale, LESSEE shall have the first option or priority to buy the properties subject of the lease. Santos sold the lots to Raymundo for 5M. It was also offered to Paranaque for P15M and given ten days to make good the offer which it rejected, calling the price ridiculous. Paranaque offered to buy the property for 5M. DOCTRINE: The basis of the right of refusal must be the current offer to sell of the seller or offer to purchase of any prospective buyer and only when the optionee fails to exercise his right can the same be sold to third persons under the same terms as offered the optionee. Paranaque has right of first refusal to the same price offered to Raymundo. Sales Lady says: There was bad faith in Raymundos part. The remedy is specific performance because all the elements of a valid contract of sale between Paranaque and Santos are already present the price was already determined to be 5K. The right of first refusal has already ripen into a contract

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