Romulo Coronel vs Court of Appeals , Conception Alcaraz BY IAMFREAKGEEK ON DECEMBER 4, 2012 FACTS: This case is about a sale of land

in Roosevelt Avenue, Quezon City by the vendor Romulo Coronel to the vendees Conception Alcaraz and her daughter Ramona Patricia Alcaraz with the following conditions: The Coronels will immediately transfer the certificate of title in their name upon receipt of the downpayment which is 50,000. Upon the transfer in their names of the subject property, the Coronels will execute the deed of absolute sale in favor of Ramona and then Ramona shall immediately pay the Coronels the whole balance of 1,190,000. On January 15, 1985, Conception paid the downpayment of 50,000 and then on February 6, 1985, the property was now registered under the name of Coronels. By Feb. 18, 1985, the Coronels sold the property to Catalina B. Mabanag for 1,580,000 after she made a 300,000 downpayment. This is the reason why the Coronels cancelled and rescind the contract with the Alcaraz by depositing back the 50,000 to Ramonas bank account. On Feb. 22, Conception filed a complaint for specific performance against the Coronels. On April, the Coronels executed a deed of absolute sale over the subject property to Catalina after which on June Catalina was issued a new title over the subject property. ISSUE: Whether or not the Receipt of Down payment embodied a perfected contract of sale or just a mere contract to sell? HELD:

CONTRACT OF SALE- contracting parties obligates himself to transfer the ownership and to deliver a determinate thing and the other to pay a price certain in money or its equivalent. CONTRACT TO SELL- the prospective seller explicitly reserves the transfer of the title to the prospective buyer, meaning the seller does not yet agree or consent to transfer the ownership of the property until the happening of a contingent event like full payment of price.

SUPREME COURT RULING: When the Receipt of Down Payment document was prepared and signed by Romulo Coronel, the parties had agreed to a conditional contract of sale the consummation of the contract is subject only to the successful transfer of the certificate of Title. According to Supreme Court, the receipt of down payment document manifests a clear intent of the Coronels to transfer the title to the buyer, but since the title is still in the name effect the transfer even though the buyers are able and willing to immediately pay the purchase price. The agreement as well could not have been a contract to sell because the seller or the Coronels made no express reservation of ownership or the title of the land. On Feb. 6, 1985, the Contract of Sale between the Coronels and the Alcaraz became obligatory.

As the Dignos spouses refused to accept from plaintiff-appellant the balance of the purchase price of the land, and as plaintiff- appellant discovered the second sale made by defendants-appellants to the Cabigas spouses, plaintiff-appellant brought the present suit. ISSUE: 1 . Whether or not there was an absolute contract of sale. 2. Whether or not the contract of sale was already rescinded when the Dignos spouses sold the land to Cabigas HELD: I. Yes. That a deed of sale is absolute in nature although denominated as a Deed of Conditional Sale where nowhere in the contract in questio n is a proviso or stipulation to the effect that title to the property sold is reserved in the vendor until full payment of the purchase price, nor is there a stipulation giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay within a fixed period. A careful examination of the contract shows that there is no such stipulation reserving the title of the property on the vendors nor does it give them the right to unilaterally rescind the contract upon nonpayment of the balance thereof within a fixed period. On the contrary, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present. While it may be conceded that there was no constructive delivery of the land sold in the case at bar, as subject Deed of Sale is a private instrument, it is beyond question that there was actual delivery thereof. As found by the trial court, the Dignos spouses delivered the possession of the land in question to Jabil as early as March 27,1965 so that the latter constructed thereon Sallys Beach Resort also known as Jabils Beach Resort in March, 1965; Mactan White Beach Resort on January 15, J 966 and Bevirlyns Beach Resort on September 1, 1965. Such facts were admitted by petitioner spouses. 2. No. The contract of sale being absolute in nature is governed by Article 1592 of the Civil Code. It is undisputed that petitioners never notified private respondents Jabil by notarial act that they were rescinding the contract, and neither did they file a suit in court to rescind the sale. There is no showing that Amistad was properly authorized by Jabil to make such extra-judicial rescission for the latter who, on the contrary, vigorously denied having sent Amistad to tell petitioners that he was already waiving his rights to the land in question. Under Article 1358 of the Civil Code, it is required that acts and contracts which have for their object extinguishment of real rights over immovable property must appear in a public document. Petitioners laid considerable emphasis on the fact that private respondent Jabil had no money on the stipulated date of payment on September 15,1965 and was able to raise the necessary amount only by mid-October 1965. It has been ruled, however, that where time is not of the essence of the agreement, a slight delay on the part of one party in the performance of his obligation is not a sufficient ground for the rescission of the agreement. Considering that private respondent has only a balance of P4,OOO.00 and was delayed in payment only for one month, equity and justice mandate as in the aforecited case that Jabil be given an additional period within which to complete payment of the purchase price.

Dignos vs CA FACTS: The spouses Silvestre and Isabel Dignos were owners of a parcel of land in Opon, Lapu-Lapu City. On June 7, 1965, appellants, herein petitioners Dignos spouses sold the said parcel of land to respondent Atilano J. Jabil for the sum of P28,000.00, payable in two installments, with an assumption of indebtedness with the First Insular Bank of Cebu in the sum of P12,000.00, which was paid and acknowledged by the vendors in the deed of sale executed in favor of plaintiff-appellant, and the next installment in the sum of P4,000.00 to be paid on or before September 15, 1965. On November 25, 1965 the Dignos spouses sold the same land in favor of defendants spouses, Luciano Cabigas and Jovita L. De Cabigas, who were then U.S. citizens, for the price of P35,000.00. A deed of absolute sale was executed by the Dignos spouses in favor of the Cabigas spouses, and which was registered in the Office of the Register of Deeds pursuant to the provisions of Act No. 3344.

LUZON DEVELOPMENT BANK vs. ANGELES CATHERINE ENRIQUEZ, G.R. No. 168646, January 12, 2011; DELTA DEVELOPMENT and MANAGEMENT SERVICES, INC. vs. ANGELES CATHERINE ENRIQUEZ and LUZON DEVELOPMENT BANK, G.R. No. 168666, January 12, 2011.

DECISION DEL CASTILLO, J.:

x x x. Issues

The following are the issues raised by the two petitions: 1. Whether the Contract to Sell conveys ownership;

2. Whether the dacion en pago extinguished the loan obligation, such that DELTA has no more obligations to the BANK; 3. Whether the BANK is entitled to damages and attorneys fees for being compelled to litigate; and 4. What is the effect of Enriquezs failure to appeal the OPs Decision regarding her obligation to pay the balance on the purchase price.

contract should Enriquez fail to pay three successive monthly amortizations.

Our Ruling

Since the Contract to Sell did not transfer ownership of Lot 4 to Enriquez, said ownership remained with DELTA. DELTA could then validly transfer such ownership (as it did) to another person (the BANK). However, the transferee BANK is bound by the Contract to Sell and has to respect Enriquezs rights thereunder. This is because the Contract to Sell, involving a subdivision lot, is covered and protected by PD 957. One of the protections afforded by PD 957 to buyers such as Enriquez is the right to have her contract to sell registered with the Register of Deeds in order to make it binding on third parties. Thus, Section 17 of PD 957 provides:

Mortgage contract void Section 17. Registration. All contracts to sell, deeds of sale, and other similar instruments relative to the sale or conveyance of the subdivision lots and condominium units, whether or not the purchase price is paid in full, shall be registered by the seller in the Office of the Register of Deeds of the province or city where the property is situated.

As the HLURB Arbiter and Board of Commissioners both found, DELTA violated Section 18 of PD 957 in mortgaging the properties in Delta Homes I (including Lot 4) to the BANK without prior clearance from the HLURB. This point need not be belabored since the parties have chosen not to appeal the administrative fine imposed on DELTA for violation of Section 18.

x x x x (Emphasis supplied.)

This violation of Section 18 renders the mortgage executed by DELTA void. We have held before that a mortgage contract executed in breach of Section 18 of [PD 957] is null and void.[61] Considering that PD 957 aims to protect innocent subdivision lot and condominium unit buyers against fraudulent real estate practices, we have construed Section 18 thereof as prohibitory and acts committed contrary to it are void.[62]

Because of the nullity of the mortgage, neither DELTA nor the BANK could assert any right arising therefrom. The BANKs loan of P8 million to DELTA has effectively become unsecured due to the nullity of the mortgage. The said loan, however, was eventually settled by the two contracting parties via a dation in payment. In the appealed Decision, the CA invalidated this dation in payment on the ground that DELTA, by previously entering into a Contract to Sell, had already conveyed its ownership over Lot 4 to Enriquez and could no longer convey the same to the BANK. This is error, prescinding from a wrong understanding of the nature of a contract to sell.

The purpose of registration is to protect the buyers from any future unscrupulous transactions involving the object of the sale or contract to sell, whether the purchase price therefor has been fully paid or not. Registration of the sale or contract to sell makes it binding on third parties; it serves as a notice to the whole world that the property is subject to the prior right of the buyer of the property (under a contract to sell or an absolute sale), and anyone who wishes to deal with the said property will be held bound by such prior right.

Contract to sell does not transfer ownership

Both parties are correct in arguing that the Contract to Sell executed by DELTA in favor of Enriquez did not transfer ownership over Lot 4 to Enriquez. A contract to sell is one where the prospective seller reserves the transfer of title to the prospective buyer until the happening of an event, such as full payment of the purchase price. What the seller obliges himself to do is to sell the subject property only when the entire amount of the purchase price has already been delivered to him. In other words, the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.[63] It does not, by itself, transfer ownership to the buyer.[64]

While DELTA, in the instant case, failed to register Enriquezs Contract to Sell with the Register of Deeds, this failure will not prejudice Enriquez or relieve the BANK from its obligation to respect Enriquezs Contract to Sell. Despite the non-registration, the BANK cannot be considered, under the circumstances, an innocent purchaser for value of Lot 4 when it accepted the latter (together with other assigned properties) as payment for DELTAs obligation. The BANK was well aware that the assigned properties, including Lot 4, were subdivision lots and therefore within the purview of PD 957. It knew that the loaned amounts were to be used for the development of DELTAs subdivision project, for this was indicated in the corresponding promissory notes. The technical description of Lot 4 indicates its location, which can easily be determined as included within the subdivision development. Under these circumstances, the BANK knew or should have known of the possibility and risk that the assigned properties were already covered by existing contracts to sell in favor of subdivision lot buyers. As observed by the Court in another case involving a bank regarding a subdivision lot that was already subject of a contract to sell with a third party:

In the instant case, there is nothing in the provisions of the contract entered into by DELTA and Enriquez that would exempt it from the general definition of a contract to sell. The terms thereof provide for the reservation of DELTAs ownership until full payment of the purchase price; such that DELTA even reserved the right to unilaterally void the

[The Bank] should have considered that it was dealing with a property subject of a real estate development project. A reasonable person, particularly a financial institution x x x, should have been aware that, to finance the project, funds other than those obtained from the loan could have been used to serve the purpose, albeit partially. Hence, there was a need to verify whether any part of the property was already intended to be the subject of any other contract involving buyers or potential buyers. In granting the loan, [the Bank] should not have been content merely with a clean title, considering the presence of circumstances indicating the need for a thorough investigation of the existence of buyers x x x. Wanting in care and prudence, the [Bank] cannot be deemed to be an innocent mortgagee. x x x[65]

xxxx Further, as an entity engaged in the banking business, the BANK is required to observe more care and prudence when dealing with registered properties. The Court cannot accept that the BANK was unaware of the Contract to Sell existing in favor of Enriquez. In Keppel Bank Philippines, Inc. v. Adao,[66] we held that a bank dealing with a property that is already subject of a contract to sell and is protected by the provisions of PD 957, is bound by the contract to sell (even if the contract to sell in that case was not registered). In the Courts words:

THAT, the ASSIGNOR acknowledges to be justly indebted to the ASSIGNEE in the sum of ELEVEN MILLION EIGHT HUNDRED SEVENTY-EIGHT THOUSAND EIGHT HUNDRED PESOS (P11,878,800.00), Philippine Currency as of August 25, 1998. Therefore, by virtue of this instrument, ASSIGNOR hereby ASSIGNS, TRANSFERS, and CONVEYS AND SETS OVER [TO] the ASSIGNEE that real estate with the building and improvements existing thereon, more particularly described as follows:

It is true that persons dealing with registered property can rely solely on the certificate of title and need not go beyond it. However, x x x, this rule does not apply to banks. Banks are required to exercise more care and prudence than private individuals in dealing even with registered properties for their business is affected with public interest. As master of its business, petitioner should have sent its representatives to check the assigned properties before signing the compromise agreement and it would have discovered that respondent was already occupying one of the condominium units and that a contract to sell existed between [the vendee] and [the developer]. In our view, petitioner was not a purchaser in good faith and we are constrained to rule that petitioner is bound by the contract to sell.[67]

xxxx

of which the ASSIGNOR is the registered owner being evidenced by TCT No. x x x issued by the Registry of Deeds of Trece Martires City.

THAT, the ASSIGNEE does hereby accept this ASSIGNMENT IN PAYMENT OF THE TOTAL OBLIGATION owing to him by the ASSIGNOR as above-stated;[70]

Bound by the terms of the Contract to Sell, the BANK is obliged to respect the same and honor the payments already made by Enriquez for the purchase price of Lot 4. Thus, the BANK can only collect the balance of the purchase price from Enriquez and has the obligation, upon full payment, to deliver to Enriquez a clean title over the subject property.[68]

Dacion en pago extinguished the loan obligation

The BANK then posits that, if title to Lot 4 is ordered delivered to Enriquez, DELTA has the obligation to pay the BANK the corresponding value of Lot 4. According to the BANK, the dation in payment extinguished the loan only to the extent of the value of the thing delivered. Since Lot 4 would have no value to the BANK if it will be delivered to Enriquez, DELTA would remain indebted to that extent.

Without any reservation or condition, the Dacion stated that the assigned properties served as full payment of DELTAs total obligation to the BANK. The BANK accepted said properties as equivalent of the loaned amount and as full satisfaction of DELTAs debt. The BANK cannot complain if, as it turned out, some of those assigned properties (such as Lot 4) are covered by existing contracts to sell. As noted earlier, the BANK knew that the assigned properties were subdivision lots and covered by PD 957. It was aware of the nature of DELTAs business, of the location of the assigned properties within DELTAs subdivision development, and the possibility that some of the properties may be subjects of existing contracts to sell which enjoy protection under PD 957. Banks dealing with subdivision properties are expected to conduct a thorough due diligence review to discover the status of the properties they deal with. It may thus be said that the BANK, in accepting the assigned properties as full payment of DELTAs total obligation, has assumed the risk that some of the assigned properties (such as Lot 4) are covered by contracts to sell which it is bound to honor under PD 957.

We are not persuaded. Like in all contracts, the intention of the parties to the dation in payment is paramount and controlling. The contractual intention determines whether the property subject of the dation will be considered as the full equivalent of the debt and will therefore serve as full satisfaction for the debt. The dation in payment extinguishes the obligation to the extent of the value of the thing delivered, either as agreed upon by the parties or as may be proved, unless the parties by agreement, express or implied, or by their silence, consider the thing as equivalent to the obligation, in which case the obligation is totally extinguished.[69]

In the case at bar, the Dacion en Pago executed by DELTA and the BANK indicates a clear intention by the parties that the assigned properties would serve as full payment for DELTAs entire obligation:

A dacion en pago is governed by the law of sales.[71] Contracts of sale come with warranties, either express (if explicitly stipulated by the parties) or implied (under Article 1547 et seq. of the Civil Code). In this case, however, the BANK does not even point to any breach of warranty by DELTA in connection with the Dation in Payment. To be sure, the Dation in Payment has no express warranties relating to existing contracts to sell over the assigned properties. As to the implied warranty in case of eviction, it is waivable[72] and cannot be invoked if the buyer knew of the risks or danger of eviction and assumed its consequences.[73] As we have noted earlier, the BANK, in accepting the assigned properties as full payment of DELTAs total obligation, has assumed the risk that some of the assigned properties are covered by contracts to sell which must be honored under PD 957.

xxx KNOW ALL MEN BY THESE PRESENTS: Balance to be paid by Enriquez This instrument, made and executed by and between:

As already mentioned, the Contract to Sell in favor of Enriquez must be respected by the BANK. Upon Enriquezs full payment of the balance of the purchase price, the BANK is bound to deliver the title over Lot 4 to her. As to the amount of the balance which Enriquez must pay, we adopt the OPs ruling thereon which sustained the amount stipul ated in the Contract to Sell. We will not review Enriquezs initial claims about the supposed violation of the price ceiling in BP 220, since this issue was no longer pursued by the parties, not even by Enriquez, who chose not to file the required pleadings[76] before the Court. The parties were informed in the Courts September 5, 2007 Resolution that issues that are not included in their memoranda shall be deemed waived or abandoned. Since Enriquez did not file a memorandum in either petition, she is deemed to have waived the said issue.

4. on dates determined by the rubber company, petitioner shall render a detailed report showing sales during the month 5. the rubber company shall invoice the sales as of the dates of inventory and sales report (Par. 14); that the rubber company agrees to keep the consigned goods fully insured under insurance policies payable to it in case of loss 6. upon request of the rubber company at any time, petitioner shall render an inventory of the existing stock which may be checked by an authorized representative of the former 7. upon termination or cancellation of the Agreement, all goods held on consignment shall be held by petitioner for the account of the rubber company until their disposition is provided for by the latter. CONTROLLING TEST (cited CIR vs. Constantino): Since the company retained ownership of the goods, even as it delivered possession unto the dealer for resale to customers, the price and terms of which were subject to the companys control, the relationship between the company and the dealer is one of agency. Sale vs. Agency a. In sale, the essence is the transfer of title or agreement to transfer it for a price paid or promised. In agency, the essence is the delivery to an agent. b. In sale, the transfer puts the transferee in the attitude or position of an owner and makes him liable to the transferor as a debtor for the agreed price, and not merely as an agent who must account for the proceeds of a resale, the transaction is a sale. In agency, the transfer does not make the property as the agents own, but that of principal, who remains the owner and has the right to control sales, fix the price, and terms, demand and receive the proceeds less the agents commission upon sales made. Besides, The control by the United States Rubber International over the goods in question is pervasive.

WHEREFORE, premises considered, the appealed November 30, 2004 Decision of the Court of Appeals, as well as its June 22, 2005 Resolution in CA-G.R. SP No. 81280 are hereby AFFIRMED with the MODIFICATIONS that Delta Development and Management Services, Inc. is NOT LIABLE TO PAY Luzon Development Bank the value of the subject lot; and respondent Angeles Catherine Enriquez is ordered to PAY the balance of the purchase price and the interests accruing thereon, as decreed by the Court of Appeals, to the Luzon Development Bank, instead of Delta Development and Management Services, Inc., within thirty (30) days from finality of this Decision. The Luzon Development Bank is ordered to DELIVER a CLEAN TITLE to Angeles Catherine Enriquez upon the latters full payment of the balance of the purchase price and the accrued interests.

KER & CO., LTD. vs. LINGAD G.R. No. L-20871 April 30, 1971 Facts: CIR assessed the sum of P20,272.33 as the commercial brokers percentage tax, surcharge, and compromise penalty against Ker & Co. There was a request on the part of petitioner for the cancellation of such assessment, which request was turned down. As a result, it filed a petition for review with the Court of Tax Appeals. CTA ruled that that Ker & Co is liable as a commercial broker under Section 194 (t) of the National Internal Revenue Code. Ker & Co signed a contract with the United States Rubber International, the former being referred to as the Distributor and the latter specifically designated as the Company. The shipments would cover products for consumption in Cebu, Bohol, Leyte, Samar, Jolo, Negros Oriental, and Mindanao except [the] province of Davao. Ker & Co, as Distributor, was precluded from disposing such products elsewhere than in the above places unless written consent would first be obtained from the Company. It was required to exert every effort to have the shipment of the products in the maximum quantity and to promote in every way the sale thereof. The prices, discounts, terms of payment, terms of delivery and other conditions of sale were subject to change in the discretion of the Company. Issue: WON the relationship Ker & Co and US Rubber was that of a vendorvendee or principal-broker? PRINCIPAL- BROKER, hence liable under Section 194 (t) of the NIRC. Held: The relationship between them is one of brokerage or agency. That the petitioner Ker & Co., Ltd. is, by contractual stipulation, an agent of U.S. Rubber International is borne out by the facts that: 1. petitioner can dispose of the products of the Company only to certain persons or entities and within stipulated limits, unless excepted by the contract or by the Rubber Company; 2. it merely receives, accepts and/or holds upon consignment the products, which remain properties of the latter company 3. every effort shall be made by petitioner to promote in every way the sale of the products (Par. 3); that sales made by petitioner are subject to approval by the company

Co & Company vs. CIR 11 07 2010 CELESTINO CO & COMPANY vs. COLLECTOR OF INTERNAL REVENUE G.R. No. L-8506 August 31, 1956 Facts: Celestino Co & Company is a duly registered general copartnership doing business under the trade name of Oriental Sash Factory. From 1946 to 1951 it paid percentage taxes of 7% on the gross receipts of its sash, door and window factory. However in 1952 it began to claim liability only to the contractors 3 per cent tax (instead of 7 per cent) under section 191 of the same Code. It alleges primarily that it is an ordinary contractor, presenting as evidence letters, sketches and price quotations sent by the manager to four customers who allegedly made special orders to doors and window from the said factory. It contended that it does not manufacture ready-made doors, sash and windows for the public but only upon special order of its select customers. Issue: 1) WON Co & Co. is a manufacturer or contractor? MANUFACTURER, hence still liable for 7% tax. 2) WON Is Co & Co.s business a matter of contract of sale or contract of piece of work? SALE. Held: 1) The important thing to remember is that Celestino Co & Company habitually makes sash, windows and doors, as it has represented in its stationery and advertisements to the public. That it manufactures the same is practically admitted by appellant itself. The fact that windows and doors are made by it only when customers place their orders, does not alter the nature of the establishment, for it is obvious that it only

accepted such orders as called for the employment of such materialmoulding, frames, panels-as it ordinarily manufactured or was in a position habitually to manufacture. The Oriental Sash Factory does nothing more than sell the goods that it mass-produces or habitually makes; sash, panels, mouldings, frames, cutting them to such sizes and combining them in such forms as its customers may desire. 2) Art. 1467. 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 contract for a piece of work. When it accepts a job that requires the use of extraordinary or additional equipment, or involves services not generally performed by it-it thereby contracts for a piece of work filing special orders within the meaning of Article 1467. The orders herein exhibited were not shown to be special. They were merely orders for work nothing is shown to call them special requiring extraordinary service of the factory. Oriental Sash Factory did not merely sell its services to Teodoro & Co. It sold materials ordinarily manufactured by it sash, panels, mouldings to Teodoro & Co., although in such form or combination as suited the fancy of the purchaser. Such new form does not divest the Oriental Sash Factory of its character as manufacturer. Neither does it take the transaction out of the category of sales under Article 1467 above quoted, because although the Factory does not, in the ordinary course of its business, manufacture and keep on stock doors of the kind sold to Teodoro, it could stock and/or probably had in stock the sash, mouldings and panels it used therefor. Supposing for the moment that the transactions were not sales, they were neither lease of services nor contract jobs by a contractor. But as the doors and windows had been admittedly manufactured by the Oriental Sash Factory, such transactions could be, and should be taxed as transfers thereof under section 186 of the National Revenue Code.

ART. 1467. 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. the Supply Agreement was decidedly a contract for a piece of work. Following Art. 1729 of the Civil Code which provides: ART. 1729. Those who put their labor upon or furnish materials for a piece of work undertaken by the contractor have an action against the owner up to the amount owing from the latter to the contractor at the time the claim is made.

Nool vs. Court of Appeals Conchita Nool owned a lot which was mortgaged to DBP when she secured a loan. Upon non-payment of loan it was foreclosed by DBP. Within the time of redemption Conchita contacted Anacleto Nool to redeem the foreclosed property which the latter did. The titles were transferred to Anacleto but it was agreed that Conchita can get back the property soon when she has money. Conchita asked the Anacleto for the return of the property but the latter refused even after the intervention of the barangay. The case was filed. Anacleto theorized that the lands were acquired by them from DBP through negotiated sale. He argued that he was made to believe that the property was still owned by Conchita when they agreed of redemption. RTC said it was DBP who was the owner of the property when the sale to Anacleto was made. DBP became the absolute owner of the property after the redemption period of the foreclosed property had lapsed. RTC denied the action by Conchita. It was affirmed by CA. SC: The contract of repurchase entered by Conchita and Anacleto was void there being no subject to speak of. It is clear that Conchita was no longer the owner of the property when such agreement was made with Anacleto. It is likewise clear that the seller can no longer deliver the object of the sale to the buyer, as the buyer had already acquired the title from the rightful owner. Jurisprudence teaches us that a person can only sell what he owns or is authorized to sell ; the buyer can acquire no more that what the seller can legally transfer. The right to repurchase presupposes a valid contract of sale between the same parties. CA is decision AFFIRMED. Petition is DENIED.

DEL MONTE PHILIPPINES, INC. VS. NAPOLEON N. ARAGONES G.R. NO. 153033, June 23, 2005 FACTS: Del Monte Philippines Inc. (DMPI) entered into an Agreement with MEGA-WAFF, represented by Managing Principal Edilberto Garcia (Garcia), whereby the latter undertook the supply and installation of modular pavement at DMPIs condiments warehouse within 60 calendar days from signing of the agreement. To source its supply of concrete blocks to be installed on the pavement of the DMPI warehouse, MEGA-WAFF, as CONTRACTOR represented by Garcia, entered into a Supply Agreement with Dynablock Enterprises, represented by herein respondent Aragones, as SUPPLIER. After the installation of the pavement in the warehouse, Aragones later on demand from MEGA-WAFF the full payment of the concrete blocks, on which he failed to collect. Aragones later failed to collect from MEGA-WAFF the full payment of the concrete blocks. He thus sent DMPI a letter dated March 10, 1989, received by the latter on March 13, 1989, advising it of MEGA-WAFFs unpaid obligation and requesting it to earmark and withhold the amount of P188,652.65 from [MEGA-WAFFs] billing to be paid directly to him [l]est Garcia collects and fails to pay [him].

DEVELOPMENT BANK OF THE PHILIPPINES, petitioner, vs. COURT OF APPEALS and EMERALD RESORT HOTEL CORPORATION, respondents. Facts: Private respondent Emerald Resort Hotel Corporation (ERHC) obtained a loan from petitioner Development Bank of the Philippines (DBP). To secure the loan, ERHC mortgaged its personal and real properties to DBP. On 5 June 1986, alleging that ERHC failed to pay its loan, DBP filed with the Office of the Sheriff, Regional Trial Court of Iriga City, an Application for Extra-judicial Foreclosure of Real Estate and Chattel Mortgages. Sheriffs issued the required notices of public auction sale of the personal and real properties. However, they failed to execute the corresponding certificates of posting of the notices. The Office of the Sheriff scheduled on 12 August 1986 the public auction sale of the real properties. The first scheduled public auction was publish. However, the Office of the Sheriff postponed the auction sale on 12 August 1986 to 11 September 1986 at the request of ERHC. DBP did not republish the notice of the rescheduled auction sale because DBP and ERHC signed an agreement to postpone the 12 August 1986 auction sale.

ISSUE: Whether it was one of sale or for a piece of work. HELD: Under Art. 1467 then of the Civil Code which provides:

Issue: WON the extrajudicial foreclosre of real and chattel mortgage are valid. Held: Valid as to chattel mortgage. Void as to real estate mortgage. There is no question that DBP published the notice of auction sale scheduled on 12 August 1986. However, no auction sale took place on 12 August 1986 because DBP, at the instance of ERHC, agreed to postpone the same to 11 September 1986. Publication, therefore, is required to give the foreclosure sale a reasonably wide publicity such that those interested might attend the public sale. To allow the parties to waive this jurisdictional requirement would result in converting into a private sale what ought to be a public auction. DBP, however, complied with the mandatory posting of the notices of the auction sale of the personal properties. Under the Chattel Mortgage Law, the only requirement is posting of the notice of auction sale. There was no postponement of the auction sale of the personal properties and the foreclosure took place as scheduled. Thus, the extrajudicial foreclosure of the chattel mortgage in the instant case suffers from no procedural infirmity. WHEREFORE, the Joint Decision of the Court of Appeals in CA-G.R. CV Nos. 38569 and 38604 is AFFIRMED with MODIFICATION. The extrajudicial foreclosure of the chattel mortgage is valid whereas the extrajudicial foreclosure of the real estate mortgage is void. The award of moral damages is deleted for lack of basis. No costs.

deliver the commodities due to the shortage of catch of sardines by the packers in California. HianTek, therefore, filed an action for damages in the CFI of Manila which granted the same in his favor. 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 t he price. Atkins also insisted that the offer was a mere offer of option, because the "firm offer" was a continuing offer to sell until September 23. ISSUE: Whether a contract of sale was constituted between the parties or only a unilateral promise to buy. COURT RULING: SC held that there was a contract of sale between the parties. ATKINs argument assumed that only a unilateral promise arose when the respondent accepted the offer is incorrect because a bilateral contract to sell and to buy was created upon HIAN TEKs acceptance. B. CuaHianTeks letter-reply to Atkins indicated that he accepted "the firm offer for the sale. 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 TEKs acceptance of herein ATKIN's offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

Cherry Amor ChaoCase Digest Sales and Lease 2B Atty. Casino Beaumont v. Prieto41 Phil 670Araullo, J:Facts:Benito Legarda owns a parcel of land known as the Nagtajan Hacienda which he wantedto sell through his agent Benito Valdez; who is also his attorney in fact. Negotiations asto the purchase of land has been had between Benito Valdez and W. Borck. However, the parties eventually had a misunderstanding as to the three (3) month period which theagent Benito Valdez gave to Borck. It is an option period to buy the property.Issue:Whether the agreement between the parties constitutes a mere offer to sell or an actualcontract of option?Held:There was not contract because there was no concurrence of the offer and acceptance of the thing and the cause which are to constitute a contract.An option is an accepted offer. It states the terms and conditions on which the owner iswilling to sell or lease his land, if the holder elects to accept them within the time limited.As there can be no contract without the concurrence of the requisites of consent of the parties and cause of consideration of the obligation created, in order that a proposition or offer for sale may acquire the character of a contract it is necessary that there appear theexpression of the will of the offeror and that of the offeree and the consent of both as wellas the fact that there was a cause or consideration for the obligation which is the object of what was agreed upon.Promises being binding when and so long as they are accepted in the exact terms inwhich they are made it not being legally proper to modify the conditions imposed bythe promisor without his consent then in order that the acceptance of a proposition or offer may be efficacious and the option be perfect and binding upon the parties thereto, itis necessary that such acceptance should be unequivocal and unconditional and theacceptance and proposition shall be without any variation whatsoever, so that whatever modifications or deviation from the terms of the offer annuls the latter and frees theofferor

Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Company Southwestern Sugar & Molasses Co. vs. Atlantic Gulf & Pacific Company 97 Phil 247 June 1955 FACTS: On March 24, 1953, defendant-appellant Atlantic granted plaintiffappellee Southwestern an option period of ninety days to buy the formers barge No. 10 for the sum of P30,000. On May 11 of the same year, Southwestern Company communicated its acceptance of the option to Atlantic through a letter, to which the latter replied that their understanding was that the "offer of option" is to be a cash transaction and to be effected "at the time the lighter is available." On June 25, Atlantic advised the Southwestern Company that since there is still further work for it, the barge could not be turned over to the latter company. On June 27, 1953, the Southwestern Company filed this action to compel Atlantic to sell the barge in line with the option, depositing with the court a check covering the sum of P30,000, but said check was later withdrawn with the approval of the court. On June 29, the Atlantic withdrew its "offer of option" with due notices to Southwestern Company stating that the option was granted merely as a favor. The Atlantic contended that the option to sell it made to Southwestern Company is null and void because said option to sell is not supported by any consideration. The trial court granted herein plaintiff-appellee Southwestern Companys action for specific performance and ordered herein defendant-appellant Atlantic to pay damages equivalent to 6 per centum per annum on the sum of P30,000 from the date of the filing of the complaint. ISSUE: Is Atlantic liable for specific performance and to pay damages in favor of Southwestern Company? COURT RULING: The Supreme Court reversed the trial courts decision applying Article 1479 of the new Civil Code. The Court reiterated that "an accepted

G.R. No. L-9871 January 31, 1958 ATKINS, KROLL and CO., INC., vs. B. CUA HIAN TEK FACTS: Atkins Kroll & Co. sent a letter to B. Cu HianTek on September 13, 1951, offering cartons of Luneta brand Sardines subject to reply by September 23, 1951. HianTek unconditionally accepted the said offer through a letter delivered on September 21, 1951, but Atkins failed to

unilateral promise" can only have a binding effect if supported by a consideration, which means that the option can still be withdrawn, even if accepted, if said option is not supported by any consideration. The option that Atlantic had provided was without consideration, hence, can be withdrawn notwithstanding Southwestern Companys acceptance of said option.

HELD: Nietes can avail of the option to buy because he already express his intention to buy the property before the termination of the contract. The contention of the respondent that the full price of the property should first be paid before the option could be exercised is of no merit. The contract doesnt provide such stipulation and as such, the provision of reciprocal obligations in oblicon should prevail. Notice of the creditor's decision to exercise his option to buy need not be coupled with actual payment of the price, so long as this is delivered to the owner of the property upon performance of his part of the agreement. Nietes had validly and effectively exercised his option to buy the property of Dr. Garcia, at least, on December 13, 1962, when he acknowledged receipt from Mrs. Nietes of the sum of P2,200 then delivered by her "in partial payment on the purchase of the property" described in the "Contract of Lease with Option to Buy"

G.R. No. L-25494 June 14, 1972 NICOLAS SANCHEZ vs. SEVERINA RIGOS FACTS: Nicolas Sanchez and SeverinaRigos executed an instrument entitled "Option to Purchase," whereby Mrs. Rigos agreed, promised and committed to sell to Sanchez a parcel of land within two (2) years from said date with the understanding that said option shall be deemed terminated and elapsed if Sanchez shall fail to exercise his right to buy the property within the stipulated period. Inasmuch as several tenders of payment made by Sanchez within said period, were rejected by Mrs. Rigos, on March 12, 1963, the former deposited said amount with the Court of First Instance of Nueva Ecija and commenced against the latter the present action, for specific performance and damages. Rigos contended that the contract between them was only aunilateral promise to sell, and the same being unsupported by any valuable consideration, by force of the New Civil Code, is null and void. Sanchez alleged in his compliant that, by virtue of the option under consideration, "defendant agreed and committed to sell" and "the plaintiff agreed and committed to buy" the land described in the option. The lower court rendered judgment in favor of Sanchez and ordered Rigos to accept the sum Sanchez judicially consigned, and to execute in his favor the requisite deed of conveyance. ISSUE: Whether there was a contract to buy and sell between the parties or only a unilateral promise to sell. COURT RULING: The Supreme Court affirmed the lower courts decision. The instrument executed in 1961 is not a "contract to buy and sell," but merely granted SANCHEZ an option to buy, as indicated by its own title "Option to Purchase." The option did not impose upon Sanchez the obligation to purchase Rigos' property. Rigos "agreed, promised and committed" herself to sell the land to Sanchez, but there is nothing in the contract to indicate that her aforementioned agreement, promise and undertaking is supported by a consideration "distinct from the price" stipulated for the sale of the land. Article 1479 refers to "an accepted unilateral promise to buy or to sell." Since there may be no valid contract without a cause or consideration, the promisor is not bound by his promise and may, accordingly, withdraw it. Pending notice of its withdrawal, his accepted promise partakes, however, of the nature of an offer to sell which, if accepted, results in a perfected contract of sale.

University of the Philippines vs Philab Industries, Inc. Chester Cabalza recommends his visitors to please read the original & full text of the case cited. Xie xie! University of the Philippines vs Philab Industries, Inc. G.R. No. 152411 September 29, 2004 Facts: This case is a petition for review on certiorari of the Decision of the Court of Appeals. In 1979, the University of the Philippines (UP) decided to construct an integrated system of research organization known as the Research Complex. As part of the project, laboratory equipment and furniture were purchased for the National Institute of Biotechnology and Applied Microbiology (BIOTECH) at the UP Los Baos. Providentially, the Ferdinand E. Marcos Foundation (FEMF) came forward and agreed to fund the acquisition of the laboratory furniture, including the fabrication thereof. Renato E. Lirio, the Executive Assistant of the FEMF, gave the gosignal to BIOTECH to contact a corporation to accomplish the project. On July 23, 1982, Dr. William Padolina, the Executive Deputy Director of BIOTECH, arranged for Philippine Laboratory Industries, Inc. (PHILAB), to fabricate the laboratory furniture and deliver the same to BIOTECH for the BIOTECH Building Project, for the account of the FEMF. On July 13, 1982, Padolina wrote Lirio and requested for the issuance of the purchase order and downpayment for the office and laboratory furniture for the project, thus: 1) Supply and Installation of Laboratory furniture for the BIOTECH Building Project, and 2) Fabrication and Supply of office furniture for the BIOTECH Building Project, and paying the downpayment of 50% or P286,687.50 Ten days after, Padolina informed Hector Navasero, the President of PHILAB, to proceed with the fabrication of the laboratory furniture, per the directive of FEMF Executive Assistant Lirio. Subsequently, PHILAB made partial deliveries of office and laboratory furniture to BIOTECH after having been duly inspected by their representatives and FEMF Executive Assistant Lirio. On August 24, 1982, FEMF remitted P600,000 to PHILAB as downpayment for the laboratory furniture for the BIOTECH project, for which PHILAB issued Official Receipt No. 253 to FEMF. On October 22, 1982, FEMF made another partial payment of P800,000 to PHILAB, for which the latter issued Official Receipt No. 256 to FEMF. The remittances were in the form of checks drawn by FEMF and delivered to PHILAB, through Padolina. On October 16, 1982, UP, through Emil Q. Javier, the Chancellor of UP Los Baos and FEMF, represented by its Executive Officer, Rolando Gapud, executed a Memorandum of Agreement (MOA) in which FEMF agreed to grant financial support and donate sums of

NIETES V. CA (August 18, 1972) FACTS: Petitioner Aquilino Nietes and respondent Dr.Pablo Garcia entered a Contract of Lease and Option to Buy where the latter agreed to lease his Angeles Educational Institute to the former. The rent is set to P5000 per year up to 5 years and that the LESSOR agrees to give the LESSEE an option to buy the land and the school building, for P100,000 within the period of the Contract of Lease. Nietes paid Garcia P2200 on Dec.16, 1962 for partial payment on the purchase of the property. Through their lawyers, Garcia decided to rescind the contract while Nietes expresses his intention to buy the property. Nietes also deposited 84K to a bank corresponding to the balance for the purchase of the property. ISSUE: WON Nietes can aval of his option to buy the property.

money to UP for the construction of buildings, installation of laboratory and other capitalization for the project, not to exceed P29,000,000.00. The Board of Regents of the UP approved the MOA with Philab on November 25, 1982. Later, President Marcos was ousted from office during the February 1986 EDSA Revolution. On April 22, 1986, PHILAB wrote President Corazon C. Aquino asking her help to secure the payment of the amount due from the FEMF. In the meantime, the PCGG wrote UP requesting for a copy of the relevant contract and the MOA for its perusal. PHILAB filed a complaint for sum of money and damages against UP. In the complaint, PHILAB prayed that it be paid the following: (1) P702,939.40 plus an additional amount (as shall be determined during the hearing) to cover the actual cost of money which at the time of transaction the value of the peso was eleven to a dollar (P11.00:$1) and twenty seven (27%) percent interest on the total amount from August 1982 until fully paid; (2) P50,000.00 as and for attorneys fees; and (3) Cost of suit. In its answer, UP denied liability and alleged that PHILAB had no cause of action against it because it was merely the donee/beneficiary of the laboratory furniture in the BIOTECH; and that the FEMF, which funded the project, was liable to the PHILAB for the purchase price of the laboratory furniture. UP specifically denied obliging itself to pay for the laboratory furniture supplied by PHILAB. Issue: Whether or not the Court of Appeals erred in applying the legal principle of unjust enrichment when it held that UP and not FEMF, is liable to Philab? Held: There is no dispute that the respondent is not privy to the MOA executed by the petitioner and FEMF; hence, it is not bound by the said agreement. Contracts take effect only between the parties and their assigns. A contract cannot be binding upon and cannot be enforced against one who is not a party to it, even if he is aware of such contract and has acted with knowledge thereof. Likewise admitted by the parties, is the fact that there was no written contract executed by the petitioner, the respondent and FEMF relating to the fabrication and delivery of office and laboratory furniture to the BIOTECH. Even the CA failed to specifically declare that the petitioner and the respondent entered into a contract of sale over the said laboratory furniture. The Court of Appeals agreed with the petitioner that, based on the records, an implied-in-fact contract of sale was entered into between the Philab and FEMF. Unjust enrichment is a term used to depict result or effect of failure to make remuneration of or for property or benefits received under circumstances that give rise to legal or equitable obligation to account for them; to be entitled to remuneration, one must confer benefit by mistake, fraud, coercion, or request. Unjust enrichment is not itself a theory of reconvey. Rather, it is a prerequisite for the enforcement of the doctrine of restitution. The essential requisites for the application of Article 22 of the New Civil Code do not obtain in this case. The respondent had a remedy against the FEMF via an action based on an implied-in-fact contract with the FEMF for the payment of its claim. The petitioner legally acquired the laboratory furniture under the MOA with FEMF; hence, it is entitled to keep the laboratory furniture. The petition is granted. The assailed Decision of the Court of Appeals is reversed and set aside. The Decision of the Regional Trial Court, Makati City, Branch 150, is reinstated with no costs.

Spouses Doromal, Sr. and Salas vs. Court of Appeals, No. L-3608, 66 SCRA 575 , September 05, 1975 G.R. No. L-3608 August 7, 1907 THE UNITED STATES, plaintiff-appellee, vs.

ESTANISLAO FLOIRENDO, defendant-appellant. M. Barateta for appellant. Attorney-General Araneta for appellee. TORRES, J.: On June 13, 1906, the provincial fiscal of Ilocos Sur filed a complaint in the court, reading as follows: The undersigned accuses Estanislao Floirendo of the crime of falsification of marks, defined and punished in article 275 of the Penal Code, which crime was committed as follows: That the said Estanislao Floirendo, in or about the months of April and May of this year, in the barrio of Rugsuanan in the municipality of Vigan, Ilocos Sur, intentionally, criminally, and maliciously stamped a mark of this form on a calf under two years, simulating the mark used by the municipality of Vigan to indemnify large cattle, the said mark being forged all contrary to law. In the suit brought upon the above complaint, it appears that the accused sold a calf to Pantaleon Andallo in Vigan, Ilocos Sur, which calf bore on its body the mark of the municipality of Vigan as well as the owner's mark. According the former delivered to the latter the document exhibited (folio 18 of the record), which appears as issued on February 15, 1905, in favor of the accused, Floirendo, by Alfredo Eizmendi, municipal treasurer, and Mariano Arce, secretary of the same municipality. The document refers to a cow (calf), dark chestnut colored, with two locks of hair on its cervix and one on its back, showing the mark of the municipality of Vigan and that of the owner. In view of the fact that the mark stamped on the left side of the said animal is larger than the official mark of the municipality (the latter is 2 inches long, while the one printed on the cow is 6 or 7 inches, unequal and thick, whereas the mark of the municipality is uniform in its whole extent), it was inferred by the clerk, by the actual treasurer of the municipality, Pedro Alagar, and by Rafael Aurellado, an employee of the municipality, that it is impossible that the mark on the animal could be that of the municipality, the former being too large, and therefore that the said mark had been falsified and had not been impressed with the stamp of the municipality. Moreover the document exhibit shows some particulars which do not agree with those appearing on the animal. although, as stated by the said treasurer, the above document may be a legitimate one because it bears the mark of the alleged owner, Estanislao Floirendo, and it was therefore stated, upon the petition of the attorney for the defendant in agreement with the fiscal, that the accused is the true owner of the cow bought by Pantaleon Andallo. We conclude from the foregoing statement that the crime is alleged to be constituted by the fact that the accused, as owner of the calf sold to Pantaleon Andallo, placed and stamped on the same a mark different from the official mark of the municipality, although with some resemblance to the latter, not having complied with the regulations which provide that each head of cattle should bear the official mark of the municipality besides the owner's mark. Article 275 of the Penal Code says: The falsification of the seals, marks, and countersigns which are employed in the offices of the estate in order to identify some object or to insure the payment of taxes shall be punished with the penalties of presidio correccional in its minimum and medium degrees and a fine of from 375 to 3,750 pesetas. The legitimate mark of the municipality was presented at the trial, and from the confrontation made between the same and that which appears stamped on the animal, which was also shown, it was concluded that the mark is not that of the municipality but another falsified or simulated; but the truth is that this forged stamped has not been exhibited, nor could it be ascertained how and in what manner the branding or marking was simulated, or whether the apparatus used for the purpose by the accused is really difference from the legitimate one. Taking into account the fact that the said calf might have been marked while it was young in such a way that its growing up may have caused some enlargement or extensions of the mark legitimately stamped, and the fact that it has not been proved that the document delivered by the seller (reputed to have been the legitimate owner of the calf) was false not that the signatures of the secretary and treasurer authorizing such document were false or counterfeited (inasmuch as the provincial fiscal was satisfied with the exhibition of the said document by the attorney for the defendant in the trial, accepting the same as a genuine and legitimate document, which for the rest is reputed as the property of the accused, nobody having impugned its legitimate origin) all these facts and the other merits of the cause produce in the mind at least a reasonable doubt as to the guilt of the accused, against which the presumption of his innocence prevails. And this is true

notwithstanding the fact that in the other suit for theft he was sentenced to the penalty of six months of arresto mayor and the accessory penalties. Basing our decision upon the foregoing reasons, we are therefore of opinion that with the reversal of the judgment appealed from the defendant must be acquitted with the costs of both instance de oficio, and the calf must be returned to its present owner, who acquired the same from the accused, and the latter to be set at liberty. So ordered. Arellano, C.J., Johnson, Willard, and Tracey, JJ., concur.

P.J. SALAS RODRIGUEZ, plaintiff-appellant, vs. MARIANO P. LEUTERIO, defendant-appellee. The appellant in his own behalf. No appearance for appellee. , J.: On September 24, 1920, the parties to this action entered into a contract by which the defendant agreed to sell, and the plaintiff to buy, seven thousand square meters of land in the barrio of Tuliahan, municipality of Caloocan, Rizal, for the consideration of P5,600, which was paid by the plaintiff in the act of transfer. At the time of this sale the particular lots contemplated as the subject of the sale had not been segregated, but the seller agreed to establish the lots with a special frontage on a principal thoroughfare as soon as the streets should be laid out in a projected new subdivision of the city. As time passed the seller was unable to comply with this part of the agreement and was therefore unable to place the purchaser in possession. The present action was accordingly instituted by the purchaser in the Court of First Instance of the Province of Rizal for the resolution (in the complaint improperly denominated rescission) of the contract and a return of double the amount delivered to the defendant as the purchase price of the land. The trial court decreed a rescission (properly resolution) of the contract and ordered the defense to return to the plaintiff the amount received, or the sum of P5,600, with legal interest from the date of the filing of the complaint. From this judgment the plaintiff appealed. As no transcript of the evidence has been brought to this court, our revision of the case is confined to the questions of law involved, which are two in number, namely, first, whether the plaintiff is entitled to recover double the amount paid out by him as the purchase price of the land; and, secondly, whether he is entitled to interest from the date upon which the money was paid to the defendant, instead of from the date of the filing of the complaint only. As suggested by the trial judge in the appealed decision the provisions of the Civil Code applicable to the case are found in articles 1451 and 1124. By the latter of these articles a person prejudiced by the nonfulfillment of a contract may demand its resolution, with indemnity for damages and payment of interest. Article 1454 of the Civil Code is relied upon by plaintiff-appellant as authority for claiming double the amount paid out by him. In this article it is declared that when earnest money or pledge is given to bind a contract of purchase and sale, the contract may be rescinded if the vendee should be willing to forfeit the earnest money or pledge or the vendor to return double the amount. This provision is clearly not pertinent to the case, for the reason that where the purchase price is paid in whole or in part, the payment cannot be considered to be either earnest money or pledge. In this connection the commentator Manresa observes that the delivery of part of the purchase should not be understood as constituting earnest money unless it be shown that such was the intention of the parties. (Manresa, Commentaries on the Civ. Code, 2nd., vol. 10, p. 85.) In the case before us there is nothing to indicate that the parties intended that the cash price paid by the purchaser should be treated merely as earnest money; and such could not possibly have been their intention. The evident purpose was that said payment should be taken as a fulfillment of the contract on the part of the purchaser. The contention of the plaintiff-appellant with respect to interest is, we think, meritorious. In case of the resolution of a contract of sale under article 1124, the purchaser is declared to be entitled to indemnity for damages and payment of interest. As pointed out by Manresa interest

in here conceded in lieu of damages. (Manresa, Commentaries on the Spanish Civil Code, 3rd ed., vol. 8, p. 157); and it is familiar doctrine that interest at the legal rate is the accepted measure of damages for the detention of money. Moreover, as the resolution of a contract has the effect of dissolving the obligation ab initio, it follows that interest should be allowed on the purchase money during the entire period that the defendant has had it in his possession, that is, in this case from the date of the contract. If the plaintiff had had possession of the land during this period, he would be entitled to no damages, and hence to no interest. It will not escape notice that a similar provision with respect to interest is found in article 1295 of the Civil Code, which deals with rescission, properly so called, and in article 1303, which deals with annulment of contracts. The judgment appealed from will be modified by giving interest at the legal rate on the amount awarded by the trial court from September 24, 1920, until paid. As thus modified the judgment will be affirmed, and it is so ordered, without special pronouncement as to costs. Avancea, C.J., Malcolm, Villamor, Ostrand, Johns, Romualdez, and Villa-Real, JJ., concur. Johnson, J., dissents.

Mercado and Mercado vs Espiritu Facts: The plaintiffs alleged that as the sole heirs, along with their two sisters, to a 48 hectare tract of land which belonged to their mother the sister of the defendant. The defendant cajoled, induced, and fraudulently succeeded in getting the plaintiffs to sell their land for a sum of P400 as opposed to its original value. The plaintiffs demand the annulment of the sale, the return of the land, and the remuneration of the thing benefited by the defendant. According to the Defendant, the plaintiffs mother had sold a portion of the original land to the defendant for a sum. (instrument exhibit 1)The plaintiffs father subsequently, mortgaged the remaining parcel to the defendant for a sum to cover his childrens welfare after his wifes death. (Pacto de retro; instrument exhibit 2) The plaintiffs had alleged themselves of legal age and ratified the absolute and perpetual sale of the land in consideration of the P400 (instrument exhibit 3). Crosscomplaint filed for damages due to the malicious and unfounded complaint by the plaintiffs.

MERCADO v ESPIRITU FACTS: This case is about the signing of a deed of sale in which two of the four parties were minors with age 18, and 19. On the date of sale, these minors presented themselves that they were of legal age at the time they signed it, and they made the same manifestation before the notary public. ISSUE: Whether or not the deed of sale is valid when the minors presented themselves that they were of legal age. RATIO: The courts laid down that such sale of real estate was still valid since it was executed by minors, who have passed the ages of puberty and adolescence, and are near the adult age, and that the minors pretended that they had already reached their majority. Article 38. Minority, insanity or imbecility, the state of being a deafmute, prodigality and civil-interdiction are mere restrictions on the capacity to act, and do not exempt the incapacitated person from certain obligations, as when the latter arise from his acts or from property relations, such as easements. Also, these minors cannot be permitted afterwards to excuse themselves from compliance with the obligation assumed by them or

seek their annulment. This is in accordance with the provisions of the law on estoppels. This is in accordance with the provisions of the law on estoppel. Art 1431 of Civil Code. Through estoppel, an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. This is also in accordance with the provisions of Rule 123, Sec 68, Par. A Rule 123, sec 68, Par. A...Whenever a party has, by his own declaration, act or omission, intentionally and deliberately led another to believe a particular thing to be true, and to act upon such belief, he cannot, in any litigation arising out of such declaration, act or omission, cannot be permitted to falsify it.

Sia Suan and Gaw Chiao vs. Ramon Alcantara, March 4, 1950 Facts: On August 3, 1931, a deed of sale was executed by Rufino Alcantara and his sons Damaso Alcantara and Ramon Alcantara conveying to Sia Suan five parcels of land to petitioner Sia Suan On August 27, 1931, Gaw Chiao (husband of Sia Suan) received a letter from Francisco Alfonso, attorney of Ramon Alcantara, informing him that Ramon Alcantara was a minor and accordingly disavowing the contract. After Gaw Chiao responded to the letter, Ramon Alcantara went to the office of Gaw Chiaos counsel ratifying the sale. Ramon Alcantara received from Gaw Chiao the sum of P500 as payment for the sold parcels of land. On August 8, 1940, an action was instituted by Ramon Alcantara in the Court of First Instance of Laguna for the annulment of the deed of sale on the ground of his minority at the time of sale. Action was denied and Sia Suan, Gaw Chiao, Ramons father and brother, Nicolas and Antonio Azores were absolved Ramon brought the case to CA; CFI decision reversed. Sia Suan and Gaw Chiao filed a petition for certiorari to the Supreme Court. Issue: Whether or not Ramon Alcantaras execution of the deed of sale is valid despite being a minor at the time of its execution. Held: Ramon Alcantara in his minority may not be allowed to execute the deed of sale but his act of ratification, the contract was given a binding effect.

Conjugal partnership; presumption of conjugal nature; need for marital consent. The Civil Code of the Philippines, the law in force at the time of the celebration of the marriage between Martha and Manuel in 1957, provides all property of the marriage is presumed to belong to the conjugal partnership, unless it be proved that it pertains exclusively to the husband or to the wife. This includes property which is acquired by onerous title during the marriage at the expense of the common fund, whether the acquisition be for the partnership, or for only one of the spouses. The court is not persuaded by Titans arguments that the property was Marthas exclusive property because Manuel failed to present before the RTC any proof of his income in 1970, hence he could not have had the financial capacity to contribute to the purchase of the property in 1970; and that Manuel admitted that it was Martha who concluded the original purchase of the property. In consonance with its ruling in Spouses Castro v. Miat, Manuel was not required to prove that the property was acquired with funds of the partnership. Rather, the presumption applies even when the manner in which the property was acquired does not appear. Here, we find that Titan failed to overturn the presumption that the property, purchased during the spouses marriage, was part of the conjugal partnership. Since the property was undoubtedly part of the conjugal partnership, the sale to Titan required the consent of both spouses. Article 165 of the Civil Code expressly provides that the husband is the administrator of the conjugal partnership. Likewise, Article 172 of the Civil Code ordains that (t)he wife cannot bind the conjugal partnership without the husbands consent, except in cases provided by law. Titan Construction Corporation Vs. Manuel A. David, Sr. and Martha S. David, G.R. No. 169548, March 15, 2010.