SALES 1. Lorbes v. CA Facts: Petitioners (P) were the registered owner of a parcel of land mortgaged to the Carloses.

. When the mortgage obligation had increased & fearing foreclosure of the property, (P) asked helped from their son-in-law (private-respondent Delos Reyes). Delos Reyes solicited assistance from private responded Cruz (an employee of the Land Bank of the Philippines). It was agreed that petitioners will sign a deed of sale conveying the mortgaged property in favor of private respondent Cruz and thereafter, Cruz will apply for a housing loan with Land Bank, using the subject property as collateral. Further, the Carloses as mortgagees will paid out of the proceeds of the loan and any such balance will be applied by petitioners for capital gains tax, expenses for the cancellation of the mortgage to the Carloses, transfer of title to Josefina Cruz, and registration of a mortgage in favor of Land Bank. Moreover, the monthly amortization on the housing loan which was supposed to be deducted from the salary of private respondent Cruz will be reimbursed by private respondent delos Reyes. Land Bank then issued a letter of guarantee in favor of the Carloses, informing them that Cruzs loan had been approved. TCT in the name of Cruz was issued in lieu thereof &, the mortgage was discharged. Later, petitioners notified private respondent delos Reyes that they were ready to redeem the property but the offer was refused. Issue: Did the parties intent for the contested Deed of Absolute sale to be a bona fide and absolute conveyance of the property or merely an equitable mortgage? Ruling:

2.

Rosencor v. Inquing

Facts:

Respondents are tenants of a two-storey residential apartment in Tomas Morato QC. The lease was not covered by any contract. Lessees were verbally given by the lessors the pre-emptive right to purchase the property in case of sale. The original lessors died and their heir also promised the lessees the same pre-emptive right to purchase. The new lessors represented by Eufrocina de Leon demanded the lessees to vacate the property because the building will allegedly be demolished but after the lessees declined, she sent them a letter offering to sell the property for 2M. Lessees made a counter offer of 1M but no reply was made by the lessors. De leon subsequently informed the lessees that the property was already sold to Rosencor. Lessees claimed that they were deceived because the property was already sold to Rosencor before it was offered to them. They offered to reimburse the payment to the lessors but the offer was declined as hence, this petition. W/N the lessors should recognize the pre-emptive right of the lessees even if it was only given verbally.

Issue: Ruling: Yes. The right of first refusal is not covered by the Statute of Frauds. The application of such statute presupposes the existence of a perfected contact which is no applicable in this case. As such, a right of first refusal need not be written to be enforceable and can be proved by oral evidence. Lessees have proven that the lessors admit the right of first refusal given to them when the property was offered to them by 2M. The prevailing doctrine is that a contract of sale entered in violation of right of first refusal is rescissible. However, this doctrine cannot be applied here because the vendees (Rosencor) is in good faith. Under Art.1358, recission cannot take place when things which are the object of sale is legally in possession of third person who did not act in bad faith. Rosencor could not have acted in bad faith because they are not aware of the right of first refusal given verbally. Respondents should instead file for damages.

3. Talusan v. Tayag Facts: [Herein petitioners] filed a complaint wherein they alleged, inter alia, that: They bought the subject property covered by Condominium Certificate of Title No. 651, from its former owner, Elias Imperial, as evidenced by a Deed of Absolute Sale. Later, *herein Respondent+ Juan D. Hernandez, x x x sued x x x in his capacity as City Treasurer of Baguio City, wrote a letter to the former owner Elias Imperial informing him that the above described property would be sold at public auction on December 9, 1985, x x x to satisfy the delinquent real estate taxes, penalties and cost of sale, and demanded payment of the sum of P4,039.80, representing total taxes due and penalties thereon. Elias Imperial and his entire family emigrated to Australia in 1974. Elias Imperial never authorized a certain Dante Origan x x x to receive any letter or mail matter for and on his behalf; [Respondent] Hernandez sold the above-described property to *Respondent+ Tayag for P4,400.00 without any notice to the former owner thereof, [or] to [petitioners], and without compliance with the provisions of PD No. 464, as evidenced by the Certificate of Sale; A final bill of sale was later issued in favor of the *Respondent+ Hermenegildo Tayag. The assessed value alone of the said property is P37,310.00 and the fair market value of the same is more than P300,000.00 and both [respondents] knew these; The bid price of P4,400 is so unconscionably low and shocking to the conscience, thus, the sale for the alleged unpaid taxes in the sum of P4,039.79, including penalties is null and void ab initio; [Petitioners] have been in actual possession of the Unit in question, since they bought the same from its former owners, and their possession is open, public, continuous, adverse and in the concept of owners, while [Respondent] Hermegildo Tayag has never been in possession of the said property; [Petitioners] through intermediaries offered to pay to the *respondents+ the sum of P4,400 plus all interests and expenses which [they] might have incurred x x x but said offer was rejected without any just *or+ lawful cause. There is a need to issue a writ of preliminary injunction to preserve the status quo. They asked for: moral damages of not less than P50,000.00; exemplary damages of not less than P20,000.00; attorneys fee of P30,000.00, plus appearance fee of P2,000.00 for every appearance; and litigation expenses of not less than P5,000.00 to prosecute the case. Issue: W/N there petitioners prayer may be granted. Ruling: No. As correctly pointed out by respondents, equitable considerations will not find application, if the statutes or rules of procedure explicitly provide for the requisites and standards by which the matters at bench can be resolved. While it may be assumed that both petitioners and Respondent Tayag are innocent purchasers of the subject property, it is a well-settled principle that between two purchasers, the one who has registered the sale in ones favor has a preferred right over the other whose title has not been registered, even if the latter is in actual possession of the subject property. Likewise, we cannot help but point out the fact that petitioners brought this misfortune upon themselves. They neither registered the Deed of Sale after its execution nor moved for the consolidation of ownership of title to the property in their name. Worse, they failed to pay the real property taxes due. Although they had been in possession of the property since 1981, they did not take the necessary steps to protect and legitimize their interest. The law helps the vigilant, but not those who sleep on their rights, for time is a means of obliterating actions. Verily, time runs against the slothful and the contemners of their own rights.

4.

Limson v. CA

Spouses de Vera offered to sell the property to Limson. She agreed to buy and paid 20k earnest money, the receipt issued for the said payment states that she has the option to buy within 10 days. The spouses executed a Deed of Sale over said property to SUNVAR. Limson assails the sale as violative of her right to purchase. Court said that there was only an option contract and not contract to sell between Limson and spouses de Vera. DOCTRINE: "Earnest money" and "option money" are not the same but distinguished thus:

a) b) c)

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 is 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 gives option money, he is not required to buy but may even forfeit it depending on the terms of the option.

5. Buot v. CA Facts: Encarnacion Diaz vda. De Reston is the original owner of the land in question, found at Tulay, Minglanilla, Cebu. On December 6, 1974, Encarnacion allegedly sold to the Buot spouses the eastern part of the parcel of land for an amount of P18K. The MOA states that P1K shall be pain in earnest as downpayment, and the remaining amount to shall be delivered by the Buot spouses when Encarnacion shall notify them that the title shall be ready for the transfer of their names. It was also agreed that title to, ownership, possession and enjoyment of the portion sold shall remain with the vendor until the full consideration of the sale shall have been received by her and acknowledged in a document duly executed for said purpose. Thereafter, Encarnacion mortgaged the whole parcel of land to the del Rosario spouses. As mortgagee, he was given the power to buy the property. After three months, he bought it for P100K, P20k as the downpayment. The del Rosario spouses filed for a free patent of the land and was consequently approved. The Buot spouses are now seeking for the reconveyance of the land, as they were the rightful owners. The del Rosario spouses contend that they bought the said property in good faith. Encarnacion, deceased, is now represented by her heirs. The Buot spouses contend that the sale was perfected from the moment the parties agreed on the object of the contract and the price. They also contend that the del Rosario spouses defrauded them. Issue: 1. W/N the Memorandum of Agreement the Buot spouses entered into with Encarnacion is a contract of sale? No. 2. W/N the Buot spouses are entitled to recover the property in question? NO 3. W/N the Buot spouses may recover the partial payments they made to Encarnacion? Yes. Held: 1. THERE WAS NO ACTUAL SALE UNTIL FULL PAYMENT was made by the vendees, and that on the part of the vendees, no full payment would be made until a certificate of title was ready for transfer in their names. The MOA is neither a contract of sale nor an option to purchase, but it is a contract to sell. An option is a contract granting a privilege to buy or sell at a determined price within an agreed time, the specific length or duration of which is not present in the Memorandum of Agreement. In a contract to sell, the title over the subject property is transferred to the vendee only upon the full payment of the stipulated consideration. Unlike in a contract of sale, the title in a contract to sell does not pass to the vendee upon the execution of the agreement or the Delivery of the thing sold. Encarnacion clearly reserved to herself ownership and possession of the property until full payment of the purchase price by the vendees, such payment being a positive suspensive condition, the failure of which is not considered a breach, casual or serious, but simply an event which prevented the obligation from acquiring obligatory force. 2. Petitioners clearly had no right to ask for reconveyance of the property on the ground of fraud as there was no perfected contract of sale between them and Encarnacion. Only the person who has been deprived of his property through fraud, either actual or constructive and who was not at fault may file a personal action for reconveyance. The pretension that there was fraud when Mariano was able to obtain a Free Patent Title, is not supported by evidence. On the contrary, fraud cannot be presumed and must be established by clear and sufficient evidence. 3. Even if the Buot spouses did not mistakenly make partial payments, inasmuch as the suspensive condition was not fulfilled, it is only fair and just that the Buot spouses be allowed to recover what they had paid in expectancy that the condition would happen; otherwise, there would be unjust enrichment on the part of Encarnacion.

6. 7. 8.

Martinez v. CA Castro v. Bague Uy v. CA

Facts: Private respondents (Sps. de Guzman) owned (3) lots [covered by TCTs] in a Metro Manila subdivision. They had a residential house constructed on it. In 1987, these properties were worth more than Php 10M. Later, de Guzman was compelled to borrow Php 2.5M from a certain Mario Siochi. The de Guzman spouses were required to sign, as a sort of collateral, a deed of sale (dated April 10, 1987) whereby they purportedly sold the lots along with the improvements thereon, to Siochi. After the execution of the deed of sale, de Guzman was able to obtain (2) more loans *of half million each from Siochi+ with no additional collateral. However, despite the deed of sale, the de Guzmans remain ed in possession of the property. De Guzman also owed Siochi several loans. To repay these loans, the de Guzmans agreed with Siochi to have one of the lots (which had been sold to Siochi under the April 10, 1987 deed of sale), sold. The sale of the same amounted to Php 4.8 M, the proceeds of which were all retained by Siochi. In the meantime, and without the knowledge of the de Guzman spouses, Siochi had the (2) TCTs cancelled [on the basis of the April 10, 1987 deed of sale+ and had new Torrens titles issued in his name. Siochi then sold the (2) lots *& the improvements thereon+ for Php 2.75 M to herein petitioners Sps. Uy. Thereafter, petitioners had Siochis titles over the lots cancelled and had new titles issued over the property. Later, petitioners entered into a contract of lease with option to buy with a certain Roberto Salapantan. Salapantan was, however, unable to obtain possession of the lots since the premises were occupied by the de Guzman spouses. Consequently, Salapantan filed a complaint for ejectment against the de Guzman spouses. It was only at this time that the de Guzmans discovered the sale of their house and lot by Mario Siochi to petitioners and the lease executed by petitioners to Salapantan. The de Guzman then filed a complaint seeking for the reformation of the April 10, 1987 deed of absolute sale to the end that the true intention of the parties therein be expressed and to remove the cloud cast over the (2) TCTs caused by the deed of sale between Mario Siochi and petitioners and by the issuance of TCTs obtained by petitioners by virtue of said deed of sale. Issue: Ruling: Issue: Ruling: Whether or not de Guzmans complaint is meritorious? Yes. Whether or not there was an absolute sale between the de Guzmans and Siochi.

No. As found by both trial court and the appellate court, the disputed sale by the de Guzmans to Siochi is an equitable mortgage 1. The consideration of the sale of Php 2.5 M is grossly and usually inadequate. 2. Despite the alleged deed of sale, the de Guzmans have remained in actual and physical possession of the property. 3. The uncontradicted evidence is that the de Guzmans were driven to obtain emergency loan and they signed the deed of sale knowing that it did not express their real intention 4. The de Guzmans had obtained a series of loans from Siochi which is likewise a badge of equitable mortgage. 5. Uncontradicted evidence that Siochi had sought the permission of the De Guzmans to sell a lot notwithstanding the questioned deed of sale. 6. The admission of Siochi in having granted a series of loan to the de Guzmans before and after the execution of the questioned deed of sale

Petitioners claim that they are purchasers in good faith who had the right to rely on the Torrens titles issued in Siochis name must necessarily fail. [Technicalities] With the conclusion that petitioners are not innocent purchasers in good faith and for value, they could not have acquired ownership over the property in question. As found by both trial court and the appellate court, the disputed sale by the de Guzmans to Siochi is an equitable mortgage, hence, the titles to the house and lots which were sold by Siochi to petitioners actually remained with the mortgagors (the de Guzmans).

Civil Law; Land Titles; Purchaser in Good Faith; While it is true that a person dealing with registered lands need not go beyond the certificate of title, it is likewise a well-settle rule that a purchaser or mortgagee cannot close his eyes to facts which should put a reasonable man on his guard, and then claim that he acted in good faith under the belief that there was no defect in the title of the vendor or mortgagor. Same; Same; Same; The burden of proving the status of a purchaser in good faith and for value lies upon him who asserts that standing. The Court finds it unusual that the property was sold to petitioners for only P2.75 Million when, as averted to earlier, the house alone was already worth P10 Million at that time. This circumstance also militates against petitioners c laim that they are innocent purchasers. Lastly, the burden of proving the status of a purchaser in good faith and for value lies upon him who asserts that standing. In discharging the burden, it is not enough to invoke the ordinary presumption of good faith that everyone is presumed to act in good faith. The good faith that is here essential is integral with the very status that must be proved. Petitioners have failed to discharge that burden. Same; Property; Mortgages; The mortgagee does not become the owner of the mortgaged property because the ownership remains with the mortgagor. The circumstance that the original transaction was subsequently declared to be an equitable mortgage must mean that the title to the subject land which had been transferred to private respondents actually remained or is transferred back to petitioners herein as owners-mortgagors, conformably with the well-established doctrine that the mortgagee does not become the owner of the mortgaged property because the ownership remains with the mortgagor. The issuance of a certificate of title in Siochis favor did not vest upon him ownership of the property. Neither did it val idate the sale made by Siochi to petitioners, which is null and void. Article 2088 of the Civil Code pro vides that the creditor cannot appropriate the things given by way of pledge or mortgage, or dispose of them. Being null and void, the sale by Siochi of the questioned property to petitioners, who are not innocent purchasers, produced no legal effects whatsoever. Quod nullum est, nullum producit effectum.

9. Samonte v. CA 10. Abesamis v. CA 11. Union Motor Corp. vs. CA 12. Manzano v. Perez, Sr. Commodatum (The Bailor) Facts: Petitioner Emilia Manzano alleged that she is the owner of a residential house and lot situated at General Luna St. Laguna. In 1979, Nieves Manzano, sister of the petitioner borrowed the aforementioned property as collateral for a projected loan. Pursuant to their understanding, the petitioner executed two deeds of conveyance for the sale of the residential

lot and the house erected, both for a consideration of P1.00 plus other valuables allegedly received by her from Nieves Manzano. Nieves Manzano, together with her husband, respondent Miguel Perez, Sr. obtained a loan from the Rural Bank of Infanta, Inc. in the sum of P30,000. To secure payment of their indebtedness, they executed a Real Estate Mortgage over the subject property in favor of the bank. Nieves Manzano died on 18 December 1979 leaving her husband and children as heirs. These heirs refused to return the subject property to the petitioner even after the payment of their loan with the Rural Bank. The petitioner sought the annulment of the deeds of sale and execution of a deed of transfer or reconveyance of the subject property in her favor, and award of damages. The Court of Appeals ruled that it was not convinced by petitioner's claim that there was a supposed oral agreement of commodatum over the disputed house and lot. Hence, this petition.

Contention of petitioner: The petitioner alleged that properties in question after they have been transferred to Nieves Manzano, were mortgaged in favor of the Rural Bank of Infante, Inc to secure payment of the loan. The documents covering said properties which were given to the bank as collateral of said loan, upon payment and release to the private respondents, were returned to petitioner by Florencio Perez. These are a clear recognition by respondents that petitioner is the owner of the properties in question. Contention of respondents: the respondents countered that they are the owners of the property in question being the legal heirs of Nieves Manzano who purchased the same from the petitioner for value and in good faith, as shown by the deeds of sale which contain the true agreements between the parties therein that except for the petitioner's bare allegations, she failed to show any proof that the transaction she entered into with her sister was a loan and not a sale. Resolution: The court ruled that petitioner has presented no convincing proof of her continued ownership of the subject property. In addition to her own oral testimony, she submitted proof of payment of real property taxes, but such payment was made only after her Complaint had already been lodged before the trial court. Neither can the court give weight to her allegation that respondent's possession of the subject property was merely by virtue of her tolerance. Oral testimony cannot, as a rule, prevail over a written agreement of the parties. In order to contradict the facts contained in a notarial document, as well as the presumption of regularity in the execution thereof, there must be a clear and convincing evidence that is more than merely preponderant. 13. Sabio v. International Corporate Bank

14. Tsai v. CA