Dy, Jr. v. CA, Gelac Trading Inc., and Antonio V.

Gonzales
FACTS: Wilfredo Dy purchased a truck and a farm tractor through LIBRA which was also mortgaged with
the latter, as a security to the loan.
Petitioner, expresses his desire to purchase his brothers tractor in a letter to LIBRA which also includes
his intention to shoulder its mortgaged. LIBRA approved the request. At the time that Wilfredo Dy
executed a deed of absolute sale in favor of petitioner, the tractor and truck were in the possession of
LIBRA for his failure to pay the amortization.
When petitioner finally fulfilled its obligation to pay the tractor, LIBRA would only release the same only if
he would also pay for the truck. In order to fulfill LIBRAs condition, petitioner convinced his sister to pay
for the remaining truck, to which she released a check amounting to P22, 000. LIBRA however, insisted
that the check must be first cleared before it delivers the truck and tractor.
Meanwhile, another case penned Gelac Trading Inc vs. Wilfredo Dy was pending in Cebu as a case to
recover for a sum of money (P12, 269.80). By a writ of execution the court in Cebu ordered to seize and
levy the tractor which was in the premise of LIBRA, it was sold in a public auction to which it was
purchased by GELAC. The latter then sold the tractor to Antonio Gonzales.
RTC rendered in favor of petitioner.
CA dismissed the case, alleging that it still belongs to Wilfredo Dy.
ISSUE: Whether or not there was a consummated sale between Petitioner and LIBRA?
HELD: NO.
The payment of the check was actually intended to extinguish the mortgage obligation so that the tractor
could be released to the petitioner. It was never intended nor could it be considered as payment of the
purchase price because the relationship between Libra and the petitioner is not one of sale but still a
mortgage. The clearing or encashment of the check which produced the effect of payment determined the
full payment of the money obligation and the release of the chattel mortgage. It was not determinative of
the consummation of the sale. The transaction between the brothers is distinct and apart from the
transaction between Libra and the petitioner. The contention, therefore, that the consummation of the sale
depended upon the encashment of the check is untenable.
Addison v. Felix
FACTS: The defendants-appellees spouses Maciana Felix and Balbino Tioco purchased from plaintiffappellant A.A. Addison four parcels of land to which Felix paid, at the time of the execution of the deed,
the sum of P3,000 on account of the purchase price. She likewise bound herself to the remainder in
installments, the first of P,2000 on July 15, 1914, the second of P5,000 thirty days after the issuance to
her of a certificate of title under the Land Registration Act, and further, within ten years from the date of
such title, P10 for each cocoanut tree in bearing and P5 for each such tree not in bearing that might be
growing on said parcels of land on the date of the issuance of title to her, with the condition that the total
price should not exceed P85,000. It was further stipulated that Felix was to deliver to the Addison 25% 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," and that within 1 year from
the date of the certificate of title in her favor, Marciana Felix may rescind the contract of purchase and
sale.
In January 1915, Addison , filed suit in the CFI of Manila to compel Felix to pay the first installment of
P2,000, demandable, in accordance with the terms of the contract of sale. The defendants Felix and her
husband Tioco contended that Addison had absolutely failed to deliver the lands that were the subject

matter of the sale, notwithstanding the demands they made upon him for this purpose. The evidence
adduced shows Addison 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 he so occupied. The trial court held the contract of sale to be rescinded and ordered Addison to
return to Felix the P3,000 paid on account of the price, together with interest thereon at the rate of 10%
per annum.
ISSUE: Was there a delivery made and, therefore, a transfer of ownership of the thing sold?
HELD: The Supreme Court affirmed the decision of the lower court, with modification that the interest
thereon will be at the rate of 6% (instead of 10%) per annum from the date of the filing of the complaint
until payment.
The thing is considered to be delivered when it is placed "in the hands and possession of the vendee." It
is true that the same article declares that the execution of a public instrument is equivalent to the delivery
of the thing which is the object of the contract, but, in order that this symbolic delivery may produce the
effect of tradition, it is necessary that the vendor shall have had such control over the thing sold that, at
the moment of the sale, its material delivery could have been made. Symbolic delivery through the
execution of a public instrument is sufficient when there is no impediment whatever to prevent the thing
sold passing into the tenancy of the purchaser by the sole will of the vendor. But if, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the thing
and make use of it himself or through another in his name, because such are opposed by a third persons
will, then the delivery has not been effected. In the case at bar, therefore, it is evident, that the mere
execution of the instrument was not a fulfillment of the vendor's obligation to deliver the thing sold, and
that from such non-fulfillment arises the purchaser's right to demand, as she has demanded, the
rescission of the sale and the return of the price.
Spouses Santos v. CA

FACTS: Spouses Santos owned the house and lot in Better Living Subdivision, Paranaque, Metro Manila.
The land together with the house, was mortgaged with the Rural Bank of Salinas, Inc., to secure a loan of
P150K. The bank sent Rosalinda Santos a letter demanding payment of P16K in unpaid interest and
other charges. Since the Santos couple had no funds, Rosalinda offered to sell the house and lot to
Carmen Caseda. After inspecting the real property, Carmen and her husband agreed.

Carmen and Rosalinda signed a document, involving the sale of the house P350K as full amount, P54K
as downpayment. Among other condition set is that Caseda will pay the balance of the mortgage in the
bank, real estate taxes and the electric and water bills.

The Casedas complied with the bank mortgage and the bills. The Santoses, seeing that the Casedas
lacked the means to pay the remaining installments and/or amortization of the loan, repossessed the
property. The Santoses then collected the rentals from the tenants. Carmen approached petitioners and
offered to pay the balance of the purchase price for the house and lot. The parties, however, could not
agree, and the deal could not push through because the Santoses wanted a higher price.

Carmen is now praying that the Santoses execute the final deed of conveyance over the property.

ISSUE: WON there was a perfected contract of sale? NO

HELD: A contract is what the law defines it to be, taking into consideration its essential elements, and not
what the contracting parties call it. Article 1458 expressly obliges the vendor to transfer ownership of the
thing sold as an essential element of a contract of sale. This is because the transfer of ownership in
exchange for a price paid or promised is the very essence of a contract of sale.

There was no transfer of ownership simultaneously with the delivery of the property purportedly sold. The
records clearly show that, notwithstanding the fact that the Casedas first took then lost possession of the
disputed house and lot, the title to the property has remained always in the name of Rosalinda Santos.
Although the parties had agreed that the Casedas would assume the mortgage, all amortization payments
made by Carmen Caseda to the bank were in the name of Rosalinda Santos. The foregoing
circumstances categorically and clearly show that no valid transfer of ownership was made by the
Santoses to the Casedas. Absent this essential element, their agreement cannot be deemed a contract of
sale.

It was a contract to sell. Ownership is reserved by the vendor and is not to pass until full payment of the
purchase price. This we find fully applicable and understandable in this case, given that the property
involved is a titled realty under mortgage to a bank and would require notarial and other formalities of law
before transfer thereof could be validly effected.

The CA cannot order rescission. If the vendor should eject the vendee for failure to meet the condition
precedent, he is enforcing the contract and not rescinding it. When the petitioners in the instant case
repossessed the disputed house and lot for failure of private respondents to pay the purchase price in full,
they were merely enforcing the contract and not rescinding it.

Spouses Santiago v. Villamor

FACTS: Spouses Domingo Villamor, Sr. and Trinidad Villamor (spouses Villamor, Sr.) executed a deed of
sale covering a parcel of land in favor of petitioners Spouses Erosto and Nelsie Santiago (spouses
Santiago). The land in dispute was occupied by spouses Villamor, Sr.s children, herein respondents
Mancer Villamor, Carlos Villamor, and Domingo Villamor, Jr. (Villamor children)
Spouses Santiago demanded the Villamor children to vacate the property but the latter refused to do so.
Villamor children argued that they are the lawful owners of the land since they acquired the same from
San Jacinto Bank. Thus, spouses Santiago filed an action for quieting of title before the RTC. The RTC
ruled in favor of spouses Santiago. On appeal, the CA reversed the RTCs decision on the ground that
spouses Santiago failed to prove their legal or equitable title to the land.
ISSUE: Whether or not the action to quiet title filed by Spouses Santiago should prosper?
HELD: The petition lacks merit.

CIVIL LAW: quieting of title; constructive delivery; buyer in good faith

Quieting of title is a common law remedy for the removal of any cloud, doubt or uncertainty affecting title
to real property. The plaintiffs must show not only that there is a cloud or contrary interest over the subject
real property, but that they have a valid title to it.
Article 1477 of the Civil Code recognizes that the "ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof." Related to this article is Article 1497 which
provides that "the thing sold shall be understood as delivered, when it is placed in the control and
possession of the vendee."
With respect to incorporeal property, Article 1498 of the Civil Code lays down the general rule: the
execution of a public instrument "shall be equivalent to the delivery of the thing which is the object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred." However, the
execution of a public instrument gives rise only to a prima facie presumption of delivery, which is negated
by the failure of the vendee to take actual possession of the land sold. A person who does not have actual
possession of the thing sold cannot transfer constructive possession by the execution and delivery of a
public instrument.
In this case, no constructive delivery of the land transpired upon the execution of the deed of sale since it
was not the spouses Villamor, Sr. but the respondents who had actual possession of the land. The
presumption of constructive delivery is inapplicable and must yield to the reality that the petitioners were
not placed in possession and control of the land.
A purchaser in good faith is one who buys property without notice that some other person has a right to or
interest in such property and pays its fair price before he has notice of the adverse claims and interest of
another person in the same property. However, where the land sold is in the possession of a person other
than the vendor, the purchaser must be wary and must investigate the rights of the actual possessor;
without such inquiry, the buyer cannot be said to be in good faith and cannot have any right over the
property