3.

Heirs of Enrique Zambales v CA 128 SCRA

Facts: The Zambales spouses were the homestead patentees of a
parcel of land. Claiming that the Nin Bay Mining Corp. had
removed silica sand from their land and destroyed the plants and
other improvements therein, they instituted a case claiming for
damages. The Zambales spouses entered into a Compromise
Agreement with the Corporation; by virtue of which, the disputed
property was sold to one Preysley. Ten years after the Trial
Courts decision based on the Compromise Agreement and nine
years after the sale, the Zambales spouses filed a civil case for
annulment of the Deed of Sale with recovery of possession and
ownership with damages, contending that it was their lawyer who
prevailed upon them to sign the Compromise Agreement; that
they wer unschooled and did not understand the contents thereof.
Issue: WON the Compromise Agreement violates the alienation
and encumbrance of a homestead lot within five years from the
issuance of the patent.
Ruling: The sale is void. The law does not distinguish between
executor and consummated sales. The bilateral promise to buy
and sell the homestead lot at a price certain, which was
reciprocally demandable, was entered into within the five-year
prohibitory period and is therefore, illegal and void. To all
interests and purposes, therefore, there was an actual executory
sale perfected during the period of prohibition except that it was
reciprocally demandable thereafter and the agency to sell to any
third person was deferred until after the expiration of the
prohibitory period, and the agency to sell made effective only
after the lapse of the said period, was merely a devise to
circumvent the prohibition.
The bilateral promise to buy and sell and the agency to sell
entered into within five years from the date of the homestead
patent was in violation of the Public Land Law, although the
executed sale was deferred until after the expiration of the fiveyear prohibitory period.
Quiroga v Parsons 38 Phil 501
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, Page |
as constituting the cause and subject matter, is that Quiroga was 1
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. Concrete Aggregates Inc. v CTA

Facts: Concrete Aggregates Inc. is a domestic corporation which
processes rock aggregates mined by it from private lands and
produce ready-mixed concrete and plant-mixed hot asphalt. Upon
the investigation conducted by the CTA, the peitioner is liable to
pay taxes which the latter disputes. Petitioner contends that it is a
contractor subject only to the 3% contractor's tax under Section
191 of the 1968 National Internal Revenue Code and not a
manufacturer subject to the 7% sales tax under Section 186 of the
same Code.

Issue: WON the petitioner is a contractor or a manufacturer.

Ruling: Concrete Aggregates Inc. is a manufacturer. Petitioner's
raw materials are processed under a prescribed formula and
thereby changed by means of machinery into a finished product,
altering their quality, transforming them into marketable state or
preparing them for any of the specific uses of industry. A
contract to make is a contract of sale if the article is already
substantially in existence at the time of the order and merely
requires some alteration, modification or adaptation to the
buyer's wishes or purposes. A contract for the sale 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 for the sale
of goods.
6. Peoples Homesite and Housing Corp v CA
Facts: The PHHC board of directors passed Resolution No. 513
awarding to Spouses Mendoza the Consolidation Subdivision
Plan on Lot 4 subject to the approval of the Quezon City Council.
The city council disapproved the said proposed plan. However
approval was made by the said council upon submission of a
revised plan reducing the land area. Later on, PHHC board of
directors passed another resolution withdrawing the tentative
award to the Mendoza -spouses who never paid the price of the
lot nor made the 20% initial deposit. The spouses contend that
there was a perfected sale of Lot 4 thus they can enforce against
the PHHC an action for specific performance.

Issue: WON there was a perfected contract of sale.

Ruling: There was no perfected contract of sale of Lot 4. It was
conditionally or contingently awarded to the Mendozas subject to
the approval by the city council of the proposed consolidation
subdivision plan and the approval of the award by the valuation
committee and higher authorities. When the plan with the area of
Lot 4 reduced to 2,608.7 square meters was approved, the
Mendozas should have manifested in writing their acceptance of
the award for the purchase of Lot 4 just to show that they were
still interested in its purchase although the area was reduced and
to obviate ally doubt on the matter. They did not do so. The
PHHC board of directors acted within its rights in withdrawing
the tentative award. We cannot say there was a meeting of minds
on the purchase of Lot 4.
7. Toyota Shaw Inc. v CA 244 SCRA 320
Facts: Sosa wanted to purchase a Toyota Lite Ace. upon
contacting Toyota Shaw, Inc., he was told that there was an
available unit. Sosa and his son, Gilbert, went to the Toyota and
met Bernardo, a sales representative of Toyota. The parties agreed
that the car shall be delivered on June 17, 1989 and that the
balance of the purchase price would be paid by credit financing
through B.A. Finance. They accomplished a printed Vehicle Sales
Proposal (VSP) which shows that the customer's name, home
address , the model series of the vehicle, the installment mode of
payment with the initial cash outlay down. On the date of the
delivery, the vehicle was not delivered. Toyota alleged that no
sale was entered into between it and Sosa.
Issue: WON the stnadard VSP woulfd represent a contract of sale
between the parties.
Ruling: Neither logic nor recourse to one's imagination can lead
to the conclusion that VSP is a perfected contract of sale. It is not
a contract of sale, thus no obligation on the part of Toyota to
transfer ownership of a determinate thing to Sosa and no
correlative obligation on the part of the latter to pay therefor a
price certain appears therein.
A definite agreement on the manner of payment of the
price is an essential element in the formation of a binding and
enforceable contract of sale. This is so because the agreement
as to 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. Definiteness as to the price is an
essential element of a binding agreement to sell personal
property.
The VSP was a mere proposal which was aborted in lieu of
subsequent events. It follows that the VSP created no demandable
right in favor of Sosa for the delivery of the vehicle to him, and
its non-delivery did not cause any legally indemnifiable injury.
8. Addison v Felix 38 Phil 404
Facts: By a public instrument Addison sold to Marciana Felix,
four parcels of land, described in the instrument. 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 further stipulated that the purchaser was to deliver to the
vendor 25 per centum of the value of the products that she might
obtain from the four parcels "from the moment she takes

possession of them until the Torrens certificate of title be issued

in her favor."
It was also covenanted that "within one year from the date of the
certificate of title in favor of Marciana Felix, Addison may
rescind the present contract of purchase and sale. Later on,
Addison filed suit in Court of First Instance of Manila to compel
Marciana Felix to make payment of the first installment and of Page |
the interest in arrears.

The defendant answered the complaint and alleged by way of

special defense 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 upon him for this purpose.
The evidence adduced shows that after execution of the deed of
the sale Addison, at the request of 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.
Issue: WON there was delivery of the land sold.
Ruling: NO. 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.
The Code imposes upon the vendor the obligation to deliver the
thing sold. The thing is considered to be delivered when it is
placed "in the hands and possession of the vendee." (Civ. Code,
art. 1462.) It is true that the same article declares that the
execution of a public instruments 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. It is not enough to confer upon the
purchaser the ownership and the right of possession. The thing
sold must be placed in his control. 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, symbolic delivery
through the execution of a public instrument is sufficient. 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 tenancy and enjoyment are opposed by the interposition of
another will, then fiction yields to reality the delivery has not
been effected.

9. Sampaguita Pictures v Jalwindor Manufacturing Inc

Facts: Sampaguita leased to Capitol 300 Inc. the roof deck of
its building with the agreement that all permanent improvements
Capitol will make on said property shall belong to Sampaguita
without any part on the latter to reimburse Capitol for the
expenses of said improvements.
Shortly, Capitol purchased on credit from Jalwindor glass and
wooden jalousies, which the latter itself delivered and installed in
the leased premises, replacing the existing windows. Jalwindor
filed with the CFI of Rizal, Quezon City an action for collection
of a sum of money with a petition for preliminary attachment

against Capitol for its failure to pay its purchases. Later,

Jalwindor and Capitol submitted to the trial court a Compromised
Agreement wherein Capitol acknowledged its indebtedness and
that all the materials that Capitol purchased will be considered as
security for such undertaking. Meanwhile, Sampaguita filed a
complaint for ejectment and for collection of a sum of money
against Capitol for the latters failure to pay rentals and the City
Court of Quezon City ordered Capitol to vacate the premises and
to pay Sampaguita.
On the other hand, Capitol likewise failed to comply with the
terms of the Compromise Agreement, and a levy was made on the
glass and wooden jalousies. Sampaguita filed a third-party claim
alleging that it is the owner of said materials and not Capitol, but
Jalwindor filed an idemnity bond in favor of the Sheriff and the
items were sold at public auction, with Jalwindor as the highest
bidder . Sampaguita filed with the CFI of Rizal, Quezon City an
action to nullify the Sheriff's sale and for an injunction to prevent
Jalwindor from detaching the glass and wooden jalousies.
Issue: WON there was a delivery made and, therefore, a transfer
of ownership of the thing sold?
Ruling: YES. When the glass and wooden jealousies were
delivered and installed in the lease premises, Capitol became the
owner thereof. Ownership is not transferred by perfection of the
contract but by delivery, either actual or constructive. Capitol
entered into a lease contract with Sampaguita, and the latter
became the owner of the items mentioned by virtue of the
contract agreement. When levy was made on the items, Capitol (
the judgment debtor) was no longer the owner thereof.
10. Ten Forty Realty and Development Corp. V Cruz GR No.
919212 September 2003

FACTS:
Petitioner filed an ejectment complaint against Marina
Cruz(respondent) before the MTC. Petitioner alleges that the land
indispute was purchased from Barbara Galino on December 1996,
andthat said land was again sold to respondent on April 1998;
On the other hand, respondent answer with counterclaim that
never was there an occasion when petitioner occupied a portion of
the premises. In addition, respondent alleges that said land was a
public land (respondent filed a miscellaneous sales application
with the Community Environment and Natural Resources Office)
and the action for ejectment cannot succeed where it appears that
respondent had been in possession of the property prior to the
petitioner;
On October 2000, MTC ordered respondent to vacate the land
and surrender to petitioner possession thereof. On appeal, the
RTC reversed the decision. CA sustained the trial courts
decision.
ISSUE/S: Whether or not petitioner should be declared the
rightful owner of the property.
HELD:

No. Respondent is the true owner of the land.1) The action filed
by the petitioner, which was an action for unlawful detainer, is
improper. As the bare allegation of petitioners tolerance of
respondents occupation of the premises has not been proven, the
possession should be deemed illegal from the beginning. Thus,
the CA correctly ruled that the ejectment case should have been
for forcible entry. However, the action had already prescribed
Page |
because the complaint was filed on May 12, 1999 a month after
3
the last day forfiling;2) The subject property had not been
delivered to petitioner; hence, it did not acquire possession either
materially or symbolically. As between the two buyers, therefore,
respondent was first in actual possession of the property.
As regards the question of whether there was good faith in the
second buyer. Petitioner has not proven that respondent was
aware that her mode of acquiring the property was defective at the
time she acquired it from Galino. At the time, the property
which was public land had not been registered in the name of
Galino; thus, respondent relied on the tax declarations thereon. As
shown, the formers name appeared on the tax declarations for the
property until its sale to the latter in 1998. Galino was in fact
occupying the realty when respondent took over possession.
Thus, there was no circumstance that could have placed the latter
upon inquiry or required her to further investigate petitioners
right of ownership.
11. Southern Motors Inc. v Moscoso
Facts: On June 6, 1957, plaintiff-appellee Southern Motors, Inc.
sold to defendant-appellant Angel Moscoso one Chevrolet truck,
on installment basis, for P6,445.00. Upon making a down
payment, the defendant executed a promissory note for the sum of
P4,915.00, representing the unpaid balance of the purchase price),
to secure the payment of which, a chattel mortgage was
constituted on the truck in favor of the plaintif.
Of said account of P4,915.00, the defendant had paid a total of
P550.00, of which P110.00 was applied to the interest up to
August 15, 1957, and P400.00 to the principal, thus leaving an
unpaid balance of P4,475.00. The defendant failed to pay 3
installments on the balance of the purchase price.
On November 4, 1957, the plaintiff filed a complaint against the
defendant, to recover the unpaid balance of the promissory note.
Upon plaintiff's petition, embodied in the complaint, a writ of
attachment was issued by the lower court on the properties Of the
defendant.
Pursuant thereto, the said Chevrolet truck, and a house and lot
belonging to defendant, were attached by the Sheriff of San Jose,
Antique, where defendant was residing on November 25, 1957,
and said truck was brought to the plaintiff's compound in Iloilo
City, for safe keeping.
Issue: WON the remedy chosen by appellee is the foreclosure
of the truck or a specific performance of the defendants
obligation.
Ruling: Manifestly, the appellee had chosen the first remedy
(specific performance). The complaint is an ordinary civil action
for recovery of the remaining unpaid balance due on the

promissory note. The plaintiff had not adopted the procedure or

methods outlined by Sec. 14 of the Chattel Mortgage Law but
those prescribed for ordinary civil actions, under the Rules of
Court.
Had appellee elected the foreclosure, it would not have instituted
this case in court; it would not have caused the chattel to be
attached under Rule 59, and had it sold at public auction, in the
manner prescribed by Rule 39. That the herein appellee did not
intend to foreclose the mortgage truck, is further evinced by the
fact that it had also attached the house and lot of the appellant at
San Jose, Antique.
As the plaintiff has chosen to exact the fulfillment of the
defendant's obligation, the former may enforce execution of the
judgment rendered in its favor on the personal and real property
of the latter not exempt from execution sufficient to satisfy the
judgment. That part of the judgment against the properties of the
defendant except the mortgaged truck and discharging the writ of
attachment on his other properties is erroneous.
We perceive nothing unlawful or irregular in appellee's act of
attaching the mortgaged truck itself. Since herein appellee has
chosen to exact the fulfillment of the appellant's obligation, it
may enforce execution of the judgment that may be favorably
rendered hereon, on all personal and real properties of the latter
not exempt from execution sufficient to satisfy such judgment. It
should be noted that a house and lot at San Jose, Antique were
also attached. No one can successfully contest that the attachment
was merely an incident to an ordinary civil action. (Sections 1 &
11, Rule 59; Sec. 16, Rule 39).
The mortgage creditor may recover judgment on the mortgage
debt and cause an execution on the mortgaged property and may
cause an attachment to be issued and levied on such property,
upon beginning his civil action.
12. Pascual v Universal Motors Corp 61 SCRA 121
Facts: Spouses Torres executed a real estate mortgage on two
parcel of land to secure the payment of the indebtedness of PDP
Transit, Inc. for the purchase of five (5) Mercedes Benz trucks
from Universal Motors Corp.
Separate deeds of chattel mortgages on the Mercedez Benz units
were also executed by PDP Transit in favor of UMC
PDP Transit Inc. was able to pay a sum of P92,964.91, leaving
balance of P68,641.69 including interest due as of February 8,
1965
On March 19, 1965, Universal Motors Corporation filed a
complaint against PDP Transit, and it was able to repossess all
the units sold, including the five (5) units guaranteed by the
subject real estate mortgage, and to foreclose all the chattel
mortgages constituted thereon, resulting in the sale of the trucks
at public auction.
Spouses Lorenzo Pascual and Leonila Torres filed an action in the
CFI Quezon City for the cancellation of the mortgage. A
judgment was rendered in their favor.
UMC contends (on appeal) that what Article 1484 withholds from
the vendor is the right to recover any deficiency from the
purchaser after the foreclosure of the chattel mortgage and not a
recourse to the additional security put up by a third party to
guarantee the purchaser's performance of his obligation

Issue: WON UMC correct in its contentions?

Ruling: NO. if the guarantor should be compelled to pay the
balance of the purchase price, the guarantor will in turn be
entitled to recover what she has paid from the debtor vendee (Art.
2066, Civil Code); so that ultimately, it will be the vendee who
will be made to bear the payment of the balance of the price, Page |
despite the earlier foreclosure of the chattel mortgage given by
4
him.
Thus, the protection given by Article 1484 would be indirectly
subverted, and public policy overturned."

13. Filinvest Credit Corp v CA 178 SCRA 188

Issue: WON Filinvest is immuned from liability arising from the
defect of the machinery?
Ruling: YES. The spouses has independently inspected and
verified the leased property and has selected and received the
same from the Dealer of his own choosing in good order and
excellent running and operating condition and on the basis of
such verification, etc. the LESSEE has agreed to enter into this
Contract.
One of the stipulations in the contract they entered into with the
petitioner is an express waiver of warranties in favor of the latter.
By so signing the agreement, the private respondents absolved the
petitioner from any liability arising from any defect or deficiency
of the machinery they bought.
14. Layug v IAC 167 SCRA 627

15. Ridad v Filipinas Investment 120 SCRA 246

16. Sps. Delacruz v CA GR No. 94828
17. Leovillo Agustin v CA GR No. 107846
18. Fiestan v CA 185 SCRA 751
Facts: Spouses Fiestan mortgaged their land to DBP as security
for a loan. Upon failure to pay, the land was foreclosed an. DBP
acquired lot as highest bidder. One year redemption period having
expired, DBP title over the land was consolidated.
Issue: WON DBP is prohibited to acquire the property under Art.
1491(2)?
Ruling: NO. The prohibition does not apply in the instant case
where the sale in dispute was made pursuant to a special power
inserted in or attached to the real estate under Act No. 3135 as
amended. As special statute, Act 3135 prevails over provisions of
Civil Code as general statute. Moreover, even in the absence of
such provision, the mortgagee may still purchase the subject
property to protect his interest.
3rd Batch
19. Southern Sugar Molasses v Atlantic Gulf

20. Atkins Knoll and Co Inc. v Cua Hian Tek

Facts: On September 13, 1951, Atkins Kroll & Co. (Atkins) sent
a letter to Cu Hian Tek (Hian Tek) offering to sell sardines with
corresponding quantity. Hian Tek unconditionally accepted the
said offer through a letter, but Atkins failed to deliver the
commodities due to the shortage of catch of sardines by the
packers in California.
Hian Tek, 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.
Issue: WON there was a contract of sale between the parties or
only a unilateral promise to buy
Ruling: 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.
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.
21. Sanchez v Rigos
Facts: In an instrument entitled "Option to Purchase," executed
on April 3, 1961, Severina Rigos "agreed, promised and
committed ... to sell" to plaintiff-appellee Nicolas Sanchez for the
sum of P1,510.00 within two (2) years from said date, a parcel of
land situated in Nueva Ecija. It was agreed 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. On March 12, 1963, Sanchez deposited the sum of
P1,510.00 with the CFI of Nueva Ecija and filed an action for
specific performance and damages against Rigos for the latters
refusal to accept several tenders of payment that Sanchez made to
purchase the subject land.
Issue: WON there was a contract to buy and sell between the
parties or only a unilateral promise to sell
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 plaintiff an "option" to buy, as indicated
by its own title "Option to Purchase." The lower court relied upon
Article 1354 of the Civil Code when it presumed the existence of
said consideration, but the said Article only applies to contracts in
general.
However, it is not Article 1354 but the Article 1479 of the same
Code which is controlling in the case at bar because the latters
2nd paragraph refers to "sales" in particular, and, more
specifically, 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.

22. Natino v IAC

Page |
Facts: On 12 October 1970, petitioners executed a real estate
5
mortgage in favor of respondent bank. Petitioners failed to pay
the loan on due date. The bank applied for the extrajudicial
foreclosure of the mortgage. At the foreclosure sale, the
respondent bank was the highest and winning bidder. A certificate
of sale was executed in its favor by the sheriff and the same was
registered with the Office of the Register of Deeds. The certificate
of sale expressly provided that the redemption period shall be two
years from the registration thereof.
No redemption was made by petitioners within the two-year
period and the sheriff issued a Final Deed of Sale.
Issue: WON the petitioners were given an extension of the period
of redemption.
Ruling: We find the petition to be devoid of merit. The attempts
to redeem the property were done after the expiration of the
redemption period and that no extension of that period was
granted to petitioners.
Even if the President and Manager of the bank is to be understood
to have promised to allow the petitioners to buy the property at
any time they have the money, the Bank was not bound by the
promise not only because it was not approved or ratified by the
Board of Directors but also because, and more decisively, it was a
promise unsupported by a consideration distinct from the repurchase price.
The second paragraph of Article 1479 of the Civil Code expressly
provides:
An accepted unilateral promise to buy or to sell a determinate
thing for a price certain is binding upon the promissory if the
promise is supported by a consideration distinct from the price.
WHEREFORE, the instant petition is DISMISSED,
23. Serra v CA
Facts: Petitioner is the owner of a 374 square meter parcel of
land located at Quezon St., Masbate, Masbate. Sometime in 1975,
respondent bank, in its desire to put up a branch in Masbate,
Masbate, negotiated with petitioner for the purchase of the then
unregistered property. A contract of LEASE WITH OPTION TO
BUY was instead forged by the parties. The foregoing agreement
was subscribed before Notary Public Romeo F. Natividad.
Pursuant to said contract, a building and other improvements
were constructed on the land which housed the branch office of
RCBC in Masbate, Masbate. Within three years from the signing
of the contract, petitioner complied with his part of the agreement
by having the property registered and placed under the
TORRENS SYSTEM, for which Original Certificate of Title No.
0-232 was issued by the Register of Deeds of the Province of
Masbate.
Petitioner alleges that as soon as he had the property registered,
he kept on pursuing the manager of the branch to effect the sale of

the lot as per their agreement. It was not until September 4, 1984,
however, when the respondent bank decided to exercise its option
and informed petitioner, through a letter, of its intention to buy
the property at the agreed price of not greater than P210.00 per
square meter or a total of P78,430.00. But much to the surprise of
the respondent, petitioner replied that he is no longer selling the
property.
Issue: WON the contract lease with option to buy is valid.
Ruling: YES. The contract lease with option to buy is valid ,
effective and enforceable, the price being certain and that there
was consideration distinct from the price to support the option
given to lessee.
Article 1324 of the Civil Code provides that when an offeror has
allowed the offeree a certain period to accept, the offer maybe
withdrawn at anytime before acceptance by communicating such
withdrawal, except when the option is founded upon
consideration, as something paid or promised. On the other hand,
Article 1479 of the Code provides that an accepted unilateral
promise to buy and 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.
In a unilateral promise to sell, where the debtor fails to withdraw
the promise before the acceptance by the creditor, the transaction
becomes a bilateral contract to sell and to buy, because upon
acceptance by the creditor of the offer to sell by the debtor, there
is already a meeting of the minds of the parties as to the thing
which is determinate and the price which is certain. In which
case, the parties may then reciprocally demand performance.
Jurisprudence has taught us that an optional contract is a privilege
existing only in one party the buyer. For a separate
consideration paid, he is given the right to decide to purchase or
not, a certain merchandise or property, at any time within the
agreed period, at a fixed price. This being his prerogative, he may
not be compelled to exercise the option to buy before the time
expires.
In the present case, the consideration is even more onerous on the
part of the lessee since it entails transferring of the building
and/or improvements on the property to petitioner, should
respondent bank fail to exercise its option within the period
stipulated. The bugging question then is whether the price "not
greater than TWO HUNDRED PESOS" is certain or definite.
A price is considered certain if it is so with reference to another
thing certain or when the determination thereof is left to the
judgment of a specified person or persons. And generally, gross
inadequacy of price does not affect a contract of sale.
Contracts are to be construed according to the sense and meaning
of the terms which the parties themselves have used. In the
present dispute, there is evidence to show that the intention of the
parties is to peg the price at P210 per square meter.
Moreover, by his subsequent acts of having the land titled under
the Torrens System, and in pursuing the bank manager to effect
the sale immediately, means that he understood perfectly the
terms of the contract. He even had the same property mortgaged
to the respondent bank sometime in 1979, without the slightest
hint of wanting to abandon his offer to sell the property at the
agreed price of P210 per square meter.
24. Roman v Grimalt

Facts: In between the 13th to the 23d of June, 1904, petitioner

Pedro Roman, the owner, and respondent Andres Grimalt, the
purchaser, verbally agreed upon the sale of the schooner Santa
Marina. In his letter on June 23, Grimalt agreed to buy the vessel
and offered to pay in three installments of P500 each on July 15,
September 15, and November 15, provided the title papers to the
vessel were in proper form. The title of the vessel, however, was
in the name of one Paulina Giron and not in the name of Roman Page |
as the alleged owner. Roman promised to perfect his title to the
6
vessel, but failed so the papers he presented did not show that he
was the owner of the vessel. On June 25, 1904, the vessel sank in
the Manila harbor during a severe storm, even before Roman was
able to produce for Grimalt the proper papers showing that the
former was in fact the owner of the vessel in question and not
Paulina Giron. As a result, Grimalt refused to pay the purchase
price when Roman made a demand on June 30, 1904.
On July 2, 1904, Roman filed this complaint in the CFI of
Manila, which found that the parties had not arrived at a definite
understanding, and later dismissed said complaint.
Issue: Who should bear the risk of loss?
Ruling: The Supreme Court affirmed the decision of the lower
court and declared Roman as the one who should bear the risk of
lost because there was no actual contract of sale. If no contract of
sale was actually executed by the parties, the loss of the vessel
must be borne by its owner and not by a party who only intended
to purchase it and who was unable to do so on account of failure
on the part of the owner to show proper title to the vessel and thus
enable them to draw up the contract of sale. Grimalt was under no
obligation to pay the price of the vessel, the purchase of which
had not been concluded. The conversations between the parties
and the letter Grimalt had written to Roman did not establish a
contract sufficient in itself to create reciprocal rights between the
parties.

25. Equatorial Realty Devt v Mayfair Theatre

FACTS:
Carmelo & Bauermann, Inc. owned a land, together with two 2storey buildings at Claro M. Recto Avenue, Manila, and covered
by TCT No. 18529. On June 1, 1967, Carmelo entered into a
Contract of Lease with Mayfair Theater Inc. fpr 20 years. The
lease covered a portion of the second floor and mezzanine of a
two-storey building with about 1,610 square meters of floor area,
which respondent used as Maxim Theater.
Two years later, on March 31, 1969, Mayfair entered into a
second Lease with Carmelo for another portion of the latters
property this time, a part of the second floor of the two-storey
building, and two store spaces on the ground floor. In that space,
Mayfair put up another movie house known as Miramar Theater.
The Contract of Lease was likewise for a period of 20 years.

Both leases contained a clause giving Mayfair a right of first

refusal to purchase the subject properties. Sadly, on July 30, 1978
- within the 20-year-lease term -- the subject properties were sold
by Carmelo to Equatorial Realty Development, Inc. for eleven
million smackers, without their first being offered to Mayfair.

As a result of the sale of the subject properties to Equatorial,

Mayfair filed a Complaint before the Regional Trial Court of
Manila for the recission of the Deed of Absolute Sale between
Carmelo and Equatorial, specific performance, and damages.
RTC decided for Carmelo and Equatorial. Tsk tsk.
CA reversed and ruled for Mayfair. The SC denied a petition
questioning the CA decision. What happened is that the contract
did get rescinded, Equatorial got its money back and asserted that
Mayfair have the right to purchase the lots for 11 million bucks.
Decision became final and executory, so Mayfair deposited with
the clerk the 11M (less 847grand withholding) payment for the
properties (Carmelo somehow disappeared).
Meanwhile, on Sept 18, 1997, barely five months after Mayfair
submitted its Motion for Execution, Equatorial demanded from
Mayfair backrentals and reasonable compensation for the
Mayfairs continued use of the subject premises after its lease
contracts expired. Remember that Mayfair was still occupying the
premises during all this hullabaloo.
ISSUE: Whether or not Equatorial was the owner of the subject
property and could thus enjoy the fruits and rentals.

Facts: Petitioner Norkis Distributors, Inc. (Norkis for brevity), is

the distributor of Yamaha motorcycles in Negros Occidental with
office in Bacolod City with Avelino Labajo as its Branch
Manager. On September 20, 1979, private respondent Alberto
Nepales bought from the Norkis-Bacolod branch a brand new
Yamaha Wonderbike motorcycle Model YL2DX with Engine No.
L2-329401K Frame No. NL2-0329401, Color Maroon, then
displayed in the Norkis showroom. The price of P7,500.00 was Page |
payable by means of a Letter of Guaranty from the Development
7
Bank of the Philippines (DBP), Kabankalan Branch, which
Norkis' Branch Manager Labajo agreed to accept. Hence, credit
was extended to Nepales for the price of the motorcycle payable
by DBP upon release of his motorcycle loan. As security for the
loan, Nepales would execute a chattel mortgage on the
motorcycle in favor of DBP. Branch Manager Labajo issued
Norkis Sales Invoice No. 0120 (Exh.1) showing that the contract
of sale of the motorcycle had been perfected. Nepales signed the
sales invoice to signify his conformity with the terms of the sale.
In the meantime, however, the motorcycle remained in Norkis'
possession.On November 6, 1979, the motorcycle was registered
in the Land Transportation Commission in the name of Alberto
Nepales.
Issue: Who should bear the loss of the motorcycle?

HELD:NO.
Nor right of ownership was transferred from Carmelo to
Equatorial since there was failure to deliver the property to the
buyer. Compound this with the fact that the sale was even
rescinded. The court went on to assert that rent is a civil fruit that
belonged to the owner of the property producing it by right of
accession. Hence, the rentals that fell due from the time of the
perfection of the sale to petitioner until its rescission by final
judgment should belong to the owner of the property during that
period.
We remember from SALES that in a contract of sale, one of the
contracting parties obligates himself to transfer ownership of and
to deliver a determinate thing and the other to pay therefor a price
certain in money or its equivalent.
Ownership of the thing sold is a real right, which the buyer
acquires only upon delivery of the thing to him in any of the
ways specified in articles 1497 to 1501, or in any other manner
signifying an agreement that the possession is transferred from
the vendor to the vendee. This right is transferred, not by
contract alone, but by tradition or delivery. There is delivery if
and when the thing sold is placed in the control and possession
of the vendee.
While execution of a public instrument of sale is recognized by
law as equivalent to the delivery of the thing sold, such
constructive or symbolic delivery is merely presumptive. It is
nullified by the failure of the vendee to take actual possession of
the land sold.
For property to be delivered, we need two things. Delivery of
property or title, and transfer of control or custody to the buyer.
Possession was never acquired by the petitioner. It therefore had
no rights to rent.
26. Norkis Distributors v CA

Ruling: NORKIS, the seller. The issuance of a sales invoice does

not prove transfer of ownership of the thing sold to the buyer. An
invoice is nothing more than a detailed statement of the nature,
quantity and cost of the thing sold and has been considered not a
bill of sale. In all forms of delivery, it is necessary that the act of
delivery whether constructive or actual, be coupled with the
intention of delivering the thing. The act, without the intention, is
insufficient.
When the motorcycle was registered by Norkis in the name of
private respondent, Norkis did not intend yet to transfer the title
or ownership to Nepales, but only to facilitate the execution of a
chattel mortgage in favor of the DBP for the release of the buyer's
motorcycle loan. The Letter of Guarantee issued by the DBP,
reveals that the execution in its favor of a chattel mortgage over
the purchased vehicle is a pre-requisite for the approval of the
buyer's loan. If Norkis would not accede to that arrangement,
DBP would not approve private respondent's loan application
and, consequently, there would be no sale.
In other words, the critical factor in the different modes of
effecting delivery, which gives legal effect to the act, is the actual
intention of the vendor to deliver, and its acceptance by the
vendee. Without that intention, there is no tradition.
Article 1496 of the Civil Code which provides that "in the
absence of an express assumption of risk by the buyer, the things
sold remain at seller's risk until the ownership thereof is
transferred to the buyer," is applicable to this case, for there was
neither an actual nor constructive delivery of the thing sold,
hence, the risk of loss should be borne by the seller, Norkis,
which was still the owner and possessor of the motorcycle when it
was wrecked. This is in accordance with the well-known doctrine
of res perit domino.
4th
27. Dizon v Suntay
Facts: Respondent Suntay delivered a diamond ring to certain
Clarita Sison for the latter to sell it on commission. Time lapses
and there was no return of the ring nor the purchase price.

Demand was made and later Sison was found out to have pledged
it to petitioner Dizon. Suntay thereafter filed for the recovery of
the thing. Lower and appellate courts found in her favor under Art
559 as owner thereof. Hence this petition.
Issue: May Suntay still recover possession of the thing pledged?
Ruling: YES. Suntay may recover the diamond ring from the
pawnshop with which another person has pledged it without
authority to do so. Art 559 applies and the defense that the
pawnshop acquired possession of the ring without notice of any
defect in the title of the pledge is unavailing. Since the thing was
pledged by a pledgor having no authority to do so, the real owner
is not stopped from pursuing an action against the pawnshop for
the recovery of the possession of the thing. Petitioner is engaged
in the business where presumably ordinary prudence would
manifest itself to ascertain whether or not the individual offering
jewelry by way of pledge is entitled to do so. No such precaution
was exercised by petitioner. He, therefore, has only himself to
blame for the fix he is now.

1) Gabuya brought a suit against Layug for annulment of the

contract and for recovery of damages because Layug failed to pay
the rest of the instalments for the purchase of 12 lots in Iligan
City (agreed to cost P120,000 payable in three yearly
instalments). Layug only paid the first 2 installments (P80,000)
and failed to pay the last instalment of P40,000.

Page |

2) The TC ruled in favour of Gabuya. This was affirmed by the

8
CA.
3) Layug is relying on the stipulation in the contract a) granting
him, as vendee, a 30days grace period within which to pay any
yearly instalment not paid within the time fixed therefor, and b)
declaring him liable, in the event of his failure to pay within the
grace period, for interest at the legal rate. He argues that the
stipulation indicates that rescission was not envisioned as a
remedy against a failure to pay instalments and that such
failure was not a ground for abrogating the contract but
merely generated liability for interest at legal rate
ISSUE

28. EDCA Publishing v Santos

Facts: A person identifying himself as Joe Cruz placed an order
by telephone with EDCA Publishing & Distributing Co. for 406
books payable on delivery. Books were delivered for which Cruz
issued a personal check as payment. Cruz was later found out to
be an impostor and the check issued was dishonored after its
presentation for payment. EDCA, after knowing that the said
books were subsequently sold to Leonor Santos, asked help of the
police to seize the books without warrant claiming it was
unlawfully deprived of the books.
Issue: WON EDCA was unlawfully deprived of the books since
the check issued was dishonored?
Ruling: NO. Non-payment only creates a right to demand
payment or to rescind the contract, or to criminal prosecution in
case of bouncing checks. Unless otherwise stipulated, delivery of
the thing sold will effectively transfer ownership to the buyer who
can in turn transfer it to another. It would certainly be unfair now
to make private respondent bear the prejudice sustained by EDCA
as a result of its own negligence. The Court cannot see the justice
in transferring EDCAs loss to the Santoses who had acted in
good faith, and with proper case, when they bought the books
from Cruz.

29. Layug v IAC

DOCTRINE: Even in residential properties, RA 6552 recognizes
and reaffirms the vendors right to cancel the contract to sell
upon breach and non-payment of the stipulated instalments.
The one who fails to pay the rest of the instalments as agreed
upon is left only to a right to a refund of the cash surrender
value of the payments on the property equivalent to 50% of
the total payments already made.
FACTS

Whether or not Gabuya had the right to rescind the contract and
should this happen, whether Layug should be entitled to get back
the ENTIRE amount he already paid?
HELD
Yes Gabuya could rescind the contract. No, Layug should not be
entitled to the entire amount he already paid.
The SC: The grace period clause should be read conjointly with
the stipulation on rescission, and in such a manner as to give full
effect. The patent and logical import of both provisions, taken
together, is that when the vendee fails to pay any instalment on its
due date, he becomes entitled to a grace period of 30 days to cure
default by paying the amount of the instalment plus interest, but
that if he should still fail to pay within the grace period, then
rescission of the contract takes place.
Layug cannot be permitted to claim that all his payments
should be credited to him in their entirety without regard
whatever to the damages his default might have caused to
Gabuya.
R.A. 6552 governs sales of real estate on installments. It
recognizes the vendor's right to cancel such contracts upon failure
of the vendee to comply with the terms of the sale, but imposes,
chiefly for the latter's protection, certain conditions thereon. We
have had occasion to rule that "even in residential properties the
Act" recognizes and reaffirms the vendor's right to cancel the
contract to sell upon breach and nonpayment of the stipulated
installments. ..."
In the case at bar, Layug had paid two (2) annual installments of
P40,000.00 each. He is deemed therefore, in the words of the law,
to have "paid at least two years of installments." He therefore had
a grace period of "one month .. for every year of installment
payments made," or two (2) months (corresponding to the two

years of installments paid) within which to pay the final

installment. He has thus been left only with the right to a
refund of the "cash surrender value of the payments on the
property equivalent to fifty percent of the total payments made,"
or P40,000.00 (i.e., of the total payments of P80,000.00). Such
refund will be the operative act to make effective the cancellation
of the contract by Gabuya, conformably with the terms of the law.

30. Power Commercial v CA

5th
31. CARBONEL VS. CA, 69 SCRA 99
FACTS: Jose Poncio mortgaged his lot to Republic Savings
Bank for P1,500. Meanwhile, Poncio sold his mortgaged lot to
Rosario Carbonell in a Sale with Assumption of Mortgage- with
the purchase price would come the money to be paid to the bank.
both went to bank to pay the arrears on mortgage. Poncio was
allowed to live on the lot provided it will pay rents. Thereafter,
Poncio sold the lot to Emma Infante who immediately took
possession of the lot and built improvements thereon. Informed
that the sale to Infante was not registered, Carbonell registered
her adverse claim on Feb 8, 1955. Four days after, a deed of sale
in favor of Infante was registered.
Issue: Who has a better right on the question lot?
Ruling: CARBONELL. In case of double sale of immovable
property, art 1544, 2nd par directs that ownership should be
recognized in favor of one who in good faith first recorded his
right. Absent such inscription, what is decisive is prior possession
in good faith. When Carbonell bought the land, she was the only
buyer thereof and the title was still in Poncios name solely
encumbered by bank mortgage duly annotated thereon. Hence
Carbonells prior purchase of the land was made in good faith.
Such good faith did not cease after Poncio told her of the 2nd sale
since Carbonell attempted to talk to Infate but the latter did not
accommodate her. Carbonell then registered her adverse claim.
The recording of the adverse claim should be deemed to have
been done in good faith and should compromise Infantes bad
faith when she registered her deed of sale four days later.

32. DAGUPAN TRADING VS. MACAM, 14 SCRA 179

33. DAVID VS. BANDIN, 149 SCRA 140
34. OLIVARES VS. GONZALES, 159 SCRA 33
35. CARAM VS. LAURETA, 103 SCRA 7
36. CRUZ VS. CABANA, 129 SCRA 656
37. VALDEZ VS. CA, 194 SCRA 360
38. NUGUID VS. CA, 171 SCRA 213

39. RADIOWEALTH Finance vs. PALILEO, 197 SCRA 245

Facts: Spouses Castro sold a parcel of unregistered land
evidenced in a notarized deed of absolute sale to Palileo. Palielo
through his mother performed acts of ownership; appellee on the
other hand continuously paid the real estate taxes on said land. A
judgment in a civil case against Castro resulted to a sale of the

land at a public auction and Radiowealth bought it. The period of

redemption expired and the sale was later registered.
Issue: WON the rule in 1544 of the NCC is applicable to the
UNREGISTERED LAND.
Held: No. Apply Sec. 35, Rule 39 of the Revised Rules of Court
Page |
instead. The Court explained that the purchaser of an unregistered
9
land in a sheriffs execution sale only steps in the shoes of the
judgment debtor.
40. TANEDO VS. CA, G.R. No. 104482, January 22, 1996

FACTS:
Lazaro Taedo executed a deed of absolute sale in favor of
Ricardo Taedo and Teresita Barrera in which he conveyed a
parcel of land which he will inherit. Upon the death of his father
he executed an affidavit of conformity to reaffirm the said sale.
He also executed another deed of sale in favor of the spouses
covering the parcel of land he already inherited. Ricardo
registered the last deed of sale in the registry of deeds in their
favor.
Ricardo later learned that Lazaro sold the same property to his
children through a deed of sale.
ISSUE: WON the Taedo spouses have a better right over the
property against the children of Lazaro Taedo.
HELD:
Since a future inheritance generally cannot be a subject of a
contract, the deed of sale and the affidavit of conformity made by
Lazaro has no effect. The subject of dispute therefore is the deed
of sale made by him in favor of spouses Taedo and another to
his children after he already legally acquired the property.
Thus, although the deed of sale in favor of private respondents
was later than the one in favor of petitioners, ownership would
vest in the former because of the undisputed fact of registration.
On the other hand, petitioners have not registered the sale to them
at all.
Petitioners contend that they were in possession of the property
and that private respondents never took possession thereof. As
between two purchasers, the one who registered the sale in his
favor has a preferred right over the other who has not registered
his title, even if the latter is in actual possession of the immovable
property.
41. Spouses Tomas and Silvina Occena vs.Esponilla, GR No.
156973, 6-4,2004

42. Moles v IAC

43. Engineering and Machine Corp v CA GR No. 52267
44. Catungal v Rodriguez GR No. 146839

FACTS.

HELD.

AgapitaCatungal owned a parcel of land in Barrio Talamban,

Cebu City. On April 232, 1990, Agapita, with the consent of her
husband (Atty. Jose Catungal), entered a Contract to Sell with
respondent Angel Rodriguez. This Contract to Sell was further
upgraded into a Conditional Deed of Sale where it was stipulated
that the sum of P25 million will be payable as follows:

NO. the condition in their Conditional Deed of Sale stating that

respondent shall pay the balance of thepurchase price when he
has successfully negotiated and secured a road right of way, is not
a conditionon the perfection of the contract nor on the validity of
the entire contract or its compliance ascontemplated in Article
Page |
1308. It is a condition imposed only on respondent's obligation to
10
pay theremainder of the purchase price. In our view and applying
Article 1182, such a condition is not purely potestative as
petitioners contend. It is not dependent on the sole will of the
debtor but also on the willof third persons who own the adjacent
land and from whom the road right of way shall be negotiated. Ina
manner of speaking, such a condition is likewise dependent on
chance as there is no guarantee thatrespondent and the third partylandowners would come to an agreement regarding the road right
of way. This type of mixed condition is expressly allowed under
Article 1182 of the Civil Code.

a)
P500, 000 down payment upon signing of the
agreement;
b)
The balance of P24, 500, 000 will be payable in five
separate checks:
First check shall be for P4, 500, 000 while the remaining balance
to be paid in four checks in the amount of P5 million each will be
payable only after Rodriguez (Vendee) has successfully
negotiated, secured, and provided a Road Right of Way. If
however the Road Right of Way could not be negotiated,
Rodriguez shall notify the Catungals for them to reassess and
solve the problem by taking other options and should the situation
ultimately prove futile, he shall take steps to rescind or cancel the
herein Conditional Deed of Sale.
It was also stipulated that the access road or Road Right of Way
leading to the lot shall be the responsibility of the VENDEE to
secure and any or all cost relative to the acquisition thereof shall
be borne solely by the VENDEE. He shall, however, be accorded
with enough time necessary for the success of his endeavor,
granting him a free hand in negotiating for the passage.
Spouses Catungalrequested an advance of P5 millionon the
purchase price for personal reasons. However, Rodriguezrefused
on the ground that the amount was not due under the terms of
their agreement. Further, he learnedthat the Catungals were
offering the property for sale to third parties who are willing to
pay a higher amount of money for a Road Right of Way than
what Rodriguez has initially negotiated. In other words, instead
of assisting Rodriguez in successfully negotiating, the Catungals
allegedly maliciously defeated his efforts so to justify the
rescission.Rodriguez then received letterssigned by Atty. Jose
Catungal demanding him to make up his mind about buying the
land or exercising his option to buy because they needed money
to pay personal obligations or else the Catungalswarned that they
would consider the contract cancelled.
RTC ruled in favor of Rodriguez finding that his obligation to pay
the balance arises only after successfully negotiating a Road
Right of Way. CA affirmed the RTCs decision but the
defendants filed a motion for reconsideration and raised for the
first time the contention that the court erred in not finding their
stipulations null for violating the principle of mutuality of
contracts.
ISSUE.Whether or not the stipulations of their Conditional Deed
of Sale constitute a potestative condition (one that is subject to the
will of one of the parties either the debtor or creditor).

45. Tuazon v CA 94 SCRA 413

46. Sonny Lo v KJS
7th
47. Ramos v CA
48. Flores v So
49. De Leon v Salvador
50. Alonzo v IAC
51. Lao v CA
52. Lanuza v De Leon
53. Capulong v CA
54. Solid Homes v CA GR. No. GR No. 117501
55.Primary Structures v Valencia
Lease
56. GUZMAN, BOCALING AND CO. VS. BONNEVIE, 206
SCRA 668
57. YEK SENG CO VS. CA, 205 SCRA 305
58. CLUTARIO VS. CA, 216 SCRA 341
59. YAP VS, CRUZ, 208 SCRA 692
60. UNITED REALTY CORP. VS. CA, 183 SCRA 725
61. LEGAR MGNT AND REALTY CORP. VS. CA, G. R. NO.
117423, JAN. 24, 1996