MOLDEX REALTY, INC., -versus FLORA A.

SABERON,
1. Saberon asked Moldex, the developer, to reserve the lot for her. Flora opted

to pay on installment and began making a periodical payments from 1992 to

1996 in the total amount of P375,295.49.
2.

Moldex sent Flora notices reminding her to update her account. Upon inquiry,
however, Flora was shocked to find out that as of July 1996, she owed Moldex
P247,969.10 which was further increased.

3. Moldex thus suggested to Flora to execute a written authorization for the sale

of the subject lot to a new buyer and a written request for refund so that she
can get half of all payments she made. However, Flora never made a written
request for refund. Thereafter, Moldex sent Flora a Notarized Notice of
Cancellation of Reservation Application and/or Contract to Sell.
4.

Flora, on the other hand, filed before the Housing and Land Use Regulatory
Board (HLURB) a Complaint for the annulment of the contract to sell and
among others. Flora alleged that the contract to sell between her and Moldex
is void from its inception. In its defense, Moldex averred that Flora was
defaulted in her in payment from April 1994 to May 1997.

5. Hence, Floras subsequent payments were applied to her delinquencies. And

since Flora was not able to settle her account, Moldex exercised its right
under Republic Act (RA) No. 6552,14 or the Maceda Law, by cancelling the
reservation Agreement/Contract to Sell and forfeiting all payments made.
6. the HLURB Arbiter declared as void the Contract to Sell entered into by the

parties because Moldex lacked the required license to sell at the time of the
contracts perfection.
7. Rejecting Moldex contentions, the HLURB Board, in a Decision , dismissed the

petition and affirmed in toto the Arbiters Decision. the OP affirmed the
finding that the contract to sell was a nullity. CA agreed with the findings of
the tribunals below.
Is Moldex correct in exercising its rights under the Macela Law on
cancelling the reservation and forfeiting all payments?
The intrinsic validity of the contract to sell is not affected by the developers
violation of Section 5 of PD 957.
Respondent is nevertheless entitled to a 50% refund under the Maceda Law. Under
the Maceda Law, the defaulting buyer who has paid at least two years of
installments has the right of either to avail of the grace period to pay or, the cash
surrender value of the payments made.

It is on record that Flora had already paid more than two years of installments (from
March 11, 199~ to July 19, 199632) in the aggregate amount of P375,295.49. Her
last payment was made on July 19, 1996. It is also shown that Flora has defaulted in
her succeeding payments. Thereafter, Moldex sent notices to Flora to update her
account but to no avail. She could thus no longer avail of the option provided in
Section 3(a) of the Maceda Law which is to pay her unpaid installments within the
grace period. Besides, Moldex already sent Flora a Notarized Notice of Cancellation
of Reservation Application and/or Contract to Sell. Hence, the only option available
is Section 3(b) whereby the seller, in this . case, Moldex shall refund to the buyer,
Flora, the cash surrender value of the . payments on the property equivalent to 50%
of the total payments made, or 33 I Pl87,647.75.

G.R. No. 202358

November 27, 2013

GATCHALIAN REALTY, INC vs. EVELYN M. ANGELES

1. In 1994, [Angeles] purchased a house and lot from [GRI] to be paid by installment within a
period of ten years.
2. The house and lot were delivered to [Angeles] in 1995. Nonetheless, under the contracts to
sell executed between the parties, [GRI] retained ownership of the property until full payment
of the purchase price
3. After sometime, [Angeles] failed to satisfy her monthly installments with [GRI]. According to
[GRI], [Angeles] was given at least twelve (12) notices for payment in a span of three (3)
years but she still failed to settle her account despite receipt of said notices and without any
valid reason. After giving a total of fifty-one (51) months grace period for both contracts and
in consideration of the continued disregard of the demands of [GRI], [Angeles] was served
with a notice of notarial rescission
4. She was informed in letter that the fifty percent (50%) refundable amount that she is entitled
to has already been deducted with the reasonable value for the use of the properties or the
reasonable rentals she incurred during such period that she was not able to pay the
installments due her.
5.

[GRI] filed a complaint for unlawful detainer against [Angeles] .The MeTC ruled in favor of
GRI. Angeles appeal before RTC initially produced a result favorable to her.

6. The RTC pointed out there was no valid cancellation since it was not done in accordance
with Section 3 of R.A. 6552, which requires a notarial act of rescission and refund to the
buyer of the cash surrender value of the payments on the properties. Thus, GRI cannot insist
by applying Angeles cash surrender value to the rentals of the properties after Angeles failed
to pay the installments due.
7. GRI filed a Motion for Reconsideration. The RTC ruled that GRI had complied with the
provisions of R.A. 6552. The CA dismissed GRIs complaint for unlawful detainer, and
reversed and set aside the RTCs decision. It ruled that the actual cancellation of the contract
between the parties did not take place because GRI failed to refund to Angeles the cash
surrender value. GRI filed the present petition for review before this Court.
WON there was a refund of the cash surrender value in favor of [Angeles] pursuant to R.A.
No. 6552?
The Maceda Law, has the declared public policy of "protecting buyers of real estate on installment
payments against onerous and oppressive conditions." Section 3 of R.A. 6552 provides for the
rights of a buyer who has paid at least two years of installments but defaults in the payment of
succeeding installments.
Angeles thus made installment payments for less than three years on the lot, and exactly four years
on the house. For paying more than two years of installments on the lot, Angeles was entitled to
receive cash surrender value of her payments on the house and lot equivalent to fifty per cent of the
total payments made.

There was no actual cancellation of the contracts because of GRIs failure to actually refund the cash
surrender value to Angeles. We cannot subscribe to GRIs view that it merely followed our ruling in
Pilar Development Corporation v. Spouses Villar (Pilar) when it deducted the cash surrender value
from the rentals due. In Pilar, the developer also failed to refund the cash surrender value to the
defaulting buyer when it cancelled the Contract to Sell through a Notice of Cancellation. It was this
Court, and not the developer, that deducted the amount of the cash surrender value from the
accrued rentals. Moreover, the developer in Pilar did not unilaterally impose rentals. The cancellation
of the contract took effect only by virtue of this Courts judgment because of the developers failure to
return the cash surrender value.
37

This Court has been consistent in ruling that a valid and effective cancellation under R.A. 6552 must
comply with the mandatory twin requirements of a notarized notice of cancellation and a refund of
the cash surrender value. Hence, petitioner cannot insist on compliance with the requirement by
assuming that the cash surrender value payable to the buyer had been applied to rentals of the
property after respondent failed to pay the installments due. (Emphasis supplied)
In view of the absence of a valid cancellation, the Contract to Sell between GRI and Angeles
remains valid and subsisting. In Active, this Court held that the Contract to Sell between the parties
remained valid because of the developers failure to send a notarized notice of cancellation and to
refund the cash surrender value. The defaulting buyer thus had the right to offer to pay the balance
of the purchase price, and the developer had no choice but to accept payment. Considering that GRI
did not validly rescind Contracts to Sell Nos. 2271 and 2272, Angeles has two options:
determination of the unpaid balance whether she will pay the unpaid balance or accept the cash
surrender value.

G.R. No. 189145

December 4, 2013

OPTIMUM DEVELOPMENT BANK, vs. SPOUSES JOVELLANOS

1. Sps. Jovellanos entered into a Contract to Sell with Palmera Homes, Inc. (Palmera Homes)
for the purchase of a residential house and lot. Sps. Jovellanos took possession of the

subject property and that to pay the remaining balance of the contract price in equal monthly
installments for a period of 10 years.
2. Palmera Homes assigned all its rights, title and interest in the Contract to Sell in favor of
Optimum Development Bank through a Deed of Assignment.
3. Optimum issued a Notice of Delinquency and Cancellation of Contract to Sell for Sps.
Jovellanoss failure to pay their monthly installments despite several written and verbal
notices.
4. Optimum filed a complaint for unlawful detainer . The MeTC ruled in favor of Optimum. It
held that Sps. Jovellanoss possession of the said property was by virtue of a Contract to Sell
which had already been cancelled for non-payment of the stipulated monthly installment
payments.
5. The RTC affirmed the MeTCs judgment. The CA reversed and set aside the RTCs
decision.Hence, the instant petition
The Courts Ruling
Further, it is significant to note that given that the Contract to Sell in this case is one which has for its
object real property to be sold on an installment basis, the said contract is especially governed by
and thus, must be examined under the provisions of RA 6552, or the "Realty Installment Buyer
Protection Act", which provides for the rights of the buyer in case of his default in the payment of
succeeding installments.
Pertinently, since Sps. Jovellanos failed to pay their stipulated monthly installments as found by the
MeTC, the Court examines Optimums compliance with Section 4 of RA 6552, as above-quoted and
highlighted, which is the provision applicable to buyers who have paid less than two (2) years-worth
of installments. Essentially, the said provision provides for three (3) requisites before the seller may
actually cancel the subject contract: first, the seller shall give the buyer a 60-day grace period to be
reckoned from the date the installment became due; second, the seller must give the buyer a notice
of cancellation/demand for rescission by notarial act if the buyer fails to pay the installments due
at the expiration of the said grace period; and third, the seller may actually cancel the contract only
after thirty (30) days from the buyers receipt of the said notice of cancellation/demand for rescission
by notarial act.
In the present case, the 60-day grace period automatically operated in favor of the buyers, Sps.
Jovellanos, and took effect from the time that the maturity dates of the installment payments lapsed.
With the said grace period having expired bereft of any installment payment on the part of Sps.
Jovellanos, Optimum then issued a notarized Notice of Delinquency and Cancellation of Contract
on April 10, 2006. Finally, in proceeding with the actual cancellation of the contract to sell, Optimum
gave Sps. Jovellanos an additional thirty (30) days within which to settle their arrears and reinstate
the contract, or sell or assign their rights to another.
42

43

44

It was only after the expiration of the thirty day (30) period did Optimum treat the contract to sell as
effectively cancelled making as it did a final demand upon Sps. Jovellanos to vacate the subject
property only on May 25, 2006.
Thus, based on the foregoing, the Court finds that there was a valid and effective cancellation of the
Contract to Sell in accordance with Section 4 of RA 6552 and since Sps. Jovellanos had already lost
their right to retain possession of the subject property as a consequence of such cancellation, their
refusal to vacate and turn over possession to Optimum makes out a valid case for unlawful detainer
as properly adjudged by the MeTC.

G.R. No. 160107

October 22, 2014

SPOUSES SEBASTIAN vs. BPI FAMILY BANK, INC., CARMELITA ITAPO AND BENJAMIN HAO,
1. Spouses Sebastian used to work for BPI Family and they availed a housing loan from BPI
Family as one of the benefits extended to its employees. Their loan was covered by a Loan
Agreement, whereby they agreed that the loan would be payable in 108 equal monthly
amortizations and that the monthly amortizations would be deducted from his monthly salary.
2. To secure the payment of the loan, they executed a real estate mortgage in favor of BPI
Family over the property.
3. However, within a period of 2 years, the spouses Sebastian were terminated from
employment. The petitioners received a demand letter requiring them to pay their total
outstanding obligation and that their entire outstanding balance had become due and
demandable upon their separation from BPI Family.
4. In the meantime, BPI Family instituted a petition for the foreclosure of the real estate
mortgage.
5. The RTC dismissed the, the CA affirmed the judgment of the RTC in toto. The petitioners
then filed their motion for reconsideration, in which they contended for the first time that their
rights under Republic Act No. 6552 had been disregarded, considering that Section 3 of the
law entitled them to a grace period within which to settle their unpaid installments without
interest; and that the loan agreement was in the nature of a contract of adhesion that must
be construed strictly against the one who prepared it, that is, BPI Family itself.
6. The CA denied the petitioners motion for reconsideration.
Ruling
The CA confined its resolution to the limited issues raised by petitioners. Accordingly, the petitioners
could not raise the applicability of Republic Act No. 6552, or the strict construction of the loan
agreement for being a contract of adhesion as issues for the first time either in their motion for
reconsideration or in their petition filed in this Court. To allow them to do so would violate the
adverse parties right to fairness and due process.
Republic Act No. 6552 was enacted to protect buyers of real estate on installment payments against
onerous and oppressive conditions. The protections accorded to the buyers were embodied in
Sections 3, 4 and 5 of the law.
Having paid monthly amortizations for two years and four months, the petitioners now insist that they
were entitled to the grace period within which to settle the unpaid amortizations without interest

provided under Section 3, supra. Otherwise, the foreclosure of the mortgaged property should be
deemed premature inasmuch as their obligation was not yet due and demandable.
28

29

The petitioners insistence would have been correct if the monthly amortizations being paid to BPI
Family arose from a sale or financing of real estate. In their case, however, the monthly
amortizations represented the installment payments of a housing loan that BPI Family had extended
to them as an employees benefit. The monthly amortizations they were liable for was derived from a
loan transaction, not a sale transaction, thereby giving rise to a lender-borrower relationship between
BPI Family and the petitioners. It bears emphasizing that Republic Act No. 6552 aimed to protect
buyers of real estate on installment payments, not borrowers or mortgagors who obtained a housing
loan to pay the costs of their purchase of real estate and used the real estate assecurity for their
loan. The "financing of real estate in installment payments" referred to in Section 3, supra, should be
construed only as a mode of payment vis--vis the seller of the real estate, and excluded the
concept of bank financing that was a type of loan. Accordingly, Sections 3, 4 and 5, supra, must be
read as to grant certain rights only to defaulting buyers of real estate on installment, which rights are
properly demandable only against the seller of real estate.
The petitioners purchased the real estate from PHILVILLE Realty, not from BPI Family. Without the
buyer-seller relationship between them and BPI Family, the provisions of Republic Act No. 6552
were inapplicable and could not be invoked by them against BPI Family.
31

The petitioners arguments in relation to the contract of adhesion do not persuade. To reiterate, their
reliance on Republic Act No. 6552 was misplaced because its provisions could not extend to a
situation bereft of any seller-buyer relationship. Hence, they could not escape the consequences of
the maturity of their obligation by invoking the grace period provided in Section 3, supra.

G.R. No. L-57499 June 22, 1984

Mercedes CALIMLIM- CANULLAS, vs. FORTUN, and DAGUINES
Petition for Review on certiorari assailing the Decision of the then Court of First Instance upholding
the sale of a parcel of land in favor of DAGUINES but not of the conjugal house thereon.
1. MERCEDES and FERNANDO were married on 1962 and lived in a small house on the
residential land in question. After FERNANDO's father died in 1965, FERNANDO inherited
the land.
2. In 1978, FERNANDO abandoned his family and was living with DAGUINES. During the
pendency of this appeal, they were convicted of concubinage which judgment has become
final.
3. 1980, FERNANDO sold the subject property with the house thereon to DAGUINES for the
sum of P2,000.00. In the document of sale, FERNANDO described the house as "also
inherited by me from my deceased parents."
4. Unable to take possession of the lot and house, DAGUINES initiated a complaint for quieting
of title and damages against MERCEDES. The latter resisted and claimed that the house in
dispute where she and her children were residing, including the coconut trees on the land,
were built and planted with conjugal funds and through her industry; that the sale of the land
together with the house and improvements to DAGUINES was null and void because they
are conjugal properties and she had not given her consent to the sale.
5. The trial Court principally declared DAGUINES "as the lawful owner of the land in question
as well as the one-half () of the house erected on said land."

(1) whether or not the construction of a conjugal house on the exclusive property of the
husband ipso facto gave the land the character of conjugal property;
(2) whether or not the sale of the lot together with the house and improvements thereon was
valid under the circumstances surrounding the transaction.
We hold that pursuant to the foregoing provision both the land and the building belong to the
conjugal partnership but the conjugal partnership is indebted to the husband for the value of the
land. The spouse owning the lot becomes a creditor of the conjugal partnership for the value of the
lot, which value would be reimbursed at the liquidation of the conjugal partnership.

The foregoing premises considered, it follows that FERNANDO could not have alienated the house
and lot to DAGUINES since MERCEDES had not given her consent to said sale. 4
Anent the second issue, we find that the contract of sale was null and void for being contrary to
morals and public policy. The sale was made by a husband in favor of a concubine after he had
abandoned his family and left the conjugal home where his wife and children lived and from whence
they derived their support. That sale was subversive of the stability of the family, a basic social
institution which public policy cherishes and protects. 5
Article 1409 of the Civil Code states inter alia that: contracts whose cause, object, or purpose is
contrary to law, morals, good customs, public order, or public policy are void and inexistent from the
very beginning.
Article 1352 also provides that: "Contracts without cause, or with unlawful cause, produce no effect
whatsoever.
Additionally, the law emphatically prohibits the spouses from selling property to each other subject to
certain exceptions. It was also designed to prevent the exercise of undue influence by one spouse over
the other, 8 as well as to protect the institution of marriage, which is the cornerstone of family law. The
prohibitions apply to a couple living as husband and wife without benefit of marriage. Those provisions
are dictated by public interest and their criterion must be imposed upon the wig of the parties.
So long as marriage remains the cornerstone of our family law, reason and morality alike demand
that the disabilities attached to marriage should likewise attach to concubinage (Emphasis supplied),

G.R. No. 120122 November 6, 1997

GLORIA R. CRUZ, vs. COURT OF APPEALS, ROMY V. SUZARA and MANUEL R.
VIZCONDE, respondents.
1. Gloria was the owner of a lot and she and Romeo lived together as husband and wife
without benefit of marriage.
2. Solely out of love and affection for Suzara, she executed a deed of absolute sale over the lot
in favor of Suzara without any monetary consideration thereafter, Suzara registered the
document in his favor and used the property as collateral for a bank loan.
3. However Suzara failed to pay the loan so that after four (4) years the mortgage was
foreclosed. She paid the bank to restructure the loan resulting in the extension of the
redemption period to two (2) years. However, without her knowledge and before the
expiration of the extended period, Suzara redeemed the property. She tried to talk to him but
he avoided her.
4. She executed an Affidavit of Adverse Claim asserting that her sale in favor of Suzara was
null and void for lack of consideration and being contrary to law and public policy.
5. She filed a complaint with Regional Trial Court against respondent Suzara for quieting of title,
the trial court issued a temporary restraining order enjoining private respondent, his agents
and/or any person or persons acting in his behalf, from disposing and/or encumbering the
litigated property until further orders.
6. The trial court admitted her amended complaint and ordered the Register of Deeds to show
cause why it was refusing to annotate the notice of lis pendens filed by her.
7. the Register of Deeds filed a manifestation informing the trial court that the property had
been sold by respondent Suzara to his co-respondent Vizconde who was already the
registered owner thereof and since Vizconde was not impleaded in the case the notice of lis
pendens could not be annotated on his title until the requirements of law were met and the
annotation of the notice judicially ordered.
8. Vizconde answered that he (Vizconde) was a purchaser for value in good faith; the sale was
executed long before the execution of the Affidavit of Adverse Claim.
9. The trial court rendered a decision dismissing the complaint and the counterclaims as well as
the cross claim of respondent Vizconde. It ruled that the sale between petitioner and
respondent Suzara was valid with "love, affection and accommodation" being the
consideration for the sale. It also found Vizconde an innocent purchaser for value because at
the time he purchased the property he was unaware of the adverse claim of petitioner.

10. On appeal, the Court of Appeals affirmed the judgment of the court a quo.

She contends that the lower courts erred in holding that the sale between her and Suzara was
valid;
Petitioner insists that she and Suzara were common-law husband and wife, the sale between them
was void and inexistent, citing Art. 1490 of the Civil Code. She argues that the consideration of "love,
affection and accommodation" for the sale was not a valid cause for the conveyance of the property
as there was no price paid in money or its equivalent, and since her sale to Suzara was null and void
the issue of its illegality cannot be waived or ratified; resultantly, the sale by Suzara to his corespondent Vizconde must also be declared null and void the latter being a purchaser in bad faith.
Although under Art. 1490 the husband and wife cannot sell property to one another as a rule which,
for policy consideration and the dictates of morality require that the prohibition apply to common-law
relationships, petitioner can no longer seek reconveyance of the property to her as it has already been
acquired by respondent Vizconde in good faith and for value from her own transferee.
Based on this factual backdrop, which we consider binding upon this Court, there is no doubt that
Vizconde was a purchaser for value in good faith and that when he bought the property he had no
knowledge that some other person had a right to or an adverse interest in the property.
We cannot grant petitioner's prayer to have respondent Vizconde's certificate of title declared null
and void. Vizconde being a purchaser of registered land for value in good faith holds an indefeasible
title to the land.

[G.R. No. L-8477. May 31, 1956.]

THE PHILIPPINE TRUST COMPANY, as Guardian of the Property of the
minor, MARIANO L. BERNARDO, Petitioner, vs. SOCORRO ROLDAN,
FRANCISCO HERMOSO, FIDEL C. RAMOS and EMILIO CRUZ, Respondents.
1. Mariano inherited 17 parcels from his deceased father. In view of his minority,
Socorro was appointed his guardian. She was the surviving spouse of
Marianos father, and the stepmother of Mariano.
2. Socorro filed in said guardianship proceedings asking for authority to sell as
guardian the 17 parcels to Dr. Fidel, the purpose of the sale being allegedly to
invest the money in a residential house, which the minor desired to have. The
motion was granted.
3. Dr. Fidel executed in favor of Socorro Roldan, personally, a deed of
conveyance covering the same seventeen parcels. And Socorro sold four
parcels out of the seventeen to Emilio Cruz reserving to herself the right to
repurchase.
4. The Philippine Trust Company replaced Socorro as guardian which later filed a
complaint to annul the two contracts. The first two sales were in reality a sale
by the guardian to herself therefore, null and void under Article 1459 of the
Civil Code. Prohibiting the guardian from purchasing either in person or
through the mediation of another the property of her ward.
5. CFI, upholding the contracts but allowing the minor to repurchase all the
parcels within one year. The Court of Appeals affirmed the judgment, adding
that the minor knew the particulars of, and approved the transaction.
Remembering the general doctrine that guardianship is a trust of the highest order, and the
trustee cannot be allowed to have any inducement to neglect his wards interest and in line
with the courts suspicion whenever the guardian acquires the wards property. We have no
hesitation to declare that in this case, in the eyes of the law, Socorro took by purchase her
wards parcels thru Dr. Ramos, and that Article 1459 of the Civil Code applies.
She acted it may be true without malice; there may have been no previous agreement
between her and Dr. Ramos to the effect that the latter would buy the lands for her. But the
stubborn fact remains that she acquired her proteges properties, through her brother-in-law.
That she planned to get them for herself at the time of selling them to Dr. Ramos, may be
deduced from the very short time between the two sales (one week). The temptation which
naturally besets a guardian so circumstanced, necessitates the annulment of the
transaction, even if no actual collusion is proved (so hard to prove) between such guardian
and the intermediate purchaser. This would uphold a sound principle of equity and justice.
ary

The court then considered such proof necessary to establish that the two sales were actually
part of one scheme guardian getting the wards property through another person

because two years had elapsed between the sales. Such period of time was sufficient to
dispel the natural suspicion of the guardians motives or actions. In the case at bar,
however, only one week had elapsed. And if we were technical, we could say, only one day
had elapsed from the judicial approval of the sale (August 12), to the purchase by the
guardian (Aug. 13).
Hence, from both the legal and equitable standpoints these three sales should not be
sustained:
the first two for violation of article 1459 of the Civil Code;
and the third
because Socorro Roldan could pass no title to Emilio Cruz.
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A.M. No. 133-J May 31, 1982

BERNARDITA R. MACARIOLA, complainant,
vs.
HONORABLE ELIAS B. ASUNCION, Judge of the Court of First Instance of Leyte, respondent.

1. Bernardita R. Macariola charged respondent Judge Asuncion of the Court of First Instance of
with "acts unbecoming a judge."
2. Civil Case No. 3010 of the Court of First Instance of Leyte was a complaint for partition filed
by Bales et.al against Macariola, concerning the properties left by the deceased Francisco
Reyes, the common father of the plaintiff and defendant. a decision was rendered by
respondent Judge Asuncion which became final for lack of an appeal
3. A project of partition was submitted to Judge Asuncion notwithstanding the fact that the
project of partition was not signed by the parties themselves but only by the respective
counsel of plaintiffs and defendant, Judge Asuncion approved it .
4. One of the lots in the project of partition was Lot 1184, which was subdivided into 5 lots
denominated as Lot 1184 A E. Dr. Arcadio Galapon bought Lot 1184-E. Galapon sold a portion
of the lot to Judge Asuncion and his wife.
5. Spouses Asuncion and spouses Galapon conveyed their respective shares and interest in
Lot 1184-E to "The Traders Manufacturing and Fishing Industries Inc." (Exit 15 & 16). Judge
Asuncion was the President and his wife Victoria was the Secretary. The Asuncions and
Galapons were also the stockholder of the corporation
6. Macariola filed the instant complaint alleging Judge Asuncion violated Article 1491,
paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E
which was one of those properties involved in Civil Case No. 3010 decided by him; [2] that
he likewise violated Article 14, paragraphs I and 5 of the Code of Commerce, Section 3,
paragraph H, of R.A. 3019, otherwise known as the Anti-Graft and Corrupt Practices Act,
Section 12, Rule XVIII of the Civil Service Rules, and Canon 25 of the Canons of Judicial
Ethics, by associating himself with the Traders Manufacturing and Fishing Industries, Inc., as
a stockholder and a ranking officer while he was a judge of the Court of First Instance of
Leyte;
7. After hearing, the said Investigating Justice recommended that respondent Judge should be
reprimanded or warned in connection with the first cause of action alleged in the complaint,

8. Judge Jose D. Nepomuceno of the Court of First Instance of Leyte, rendered a decision IN
THE CASE AGAINST JUDGE ELIAS B. ASUNCION (2) dismissing the complaint against
Judge Elias B. Asuncion;
I
WE find that there is no merit in the contention of complainant Bernardita R. Macariola, under
her first cause of action, that respondent Judge Elias B. Asuncion violated Article 1491,
paragraph 5, of the New Civil Code in acquiring by purchase a portion of Lot No. 1184-E
which was one of those properties involved in Civil Case No. 3010.
The prohibition in the aforesaid Article applies only to the sale or assignment of the property which is
the subject of litigation to the persons disqualified therein. WE have already ruled that "... for the
prohibition to operate, the sale or assignment of the property must take place during the pendency of
the litigation involving the property"
In the case at bar, when the respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E,
the decision in Civil Case No. 3010 which he rendered on June 8, 1963 was already final because
none of the parties therein filed an appeal within the reglementary period; hence, the lot in question
was no longer subject of the litigation. Moreover, at the time of the sale on March 6, 1965,
respondent's order dated October 23, 1963 and the amended order dated November 11,
1963 approving the October 16, 1963 project of partition made pursuant to the June 8, 1963
decision, had long become final for there was no appeal from said orders.
Furthermore, respondent Judge did not buy the lot in question on March 6, 1965 directly from the
plaintiffs in Civil Case No. 3010 but from Dr. Arcadio Galapon who earlier purchased on July 31,
1964 Lot 1184-E from three of the plaintiffs after the finality of the decision in Civil Case No. 3010. It
may be recalled that Lot 1184 or more specifically one-half thereof was adjudicated in equal shares
to the other plaintiffs in the project of partition, and the same was subdivided into five lots
denominated as Lot 1184-A to 1184-E. As aforestated, Lot 1184-E was sold on July 31, 1964 to Dr.
Galapon for which he was issued TCT No. 2338 by the Register of Deeds of Tacloban City, and on
March 6, 1965 he sold a portion of said lot to respondent Judge and his wife who declared the same
for taxation purposes only. The subsequent sale on August 31, 1966 by spouses Asuncion and
spouses Galapon of their respective shares and interest in said Lot 1184-E to the Traders
Manufacturing and Fishing Industries, Inc., in which respondent was the president and his wife was
the secretary, took place long after the finality of the decision in Civil Case No. 3010 and of the
subsequent two aforesaid orders therein approving the project of partition.
While it appears that complainant herein filed on or about November 9 or 11, 1968 an action before
the Court of First Instance of Leyte docketed as Civil Case No. 4234, seeking to annul the project of
partition and the two orders approving the same, as well as the partition of the estate and the
subsequent conveyances, the same, however, is of no moment.
The fact remains that respondent Judge purchased on March 6, 1965 a portion of Lot 1184-E from
Dr. Arcadio Galapon; hence, after the finality of the decision which he rendered on June 8, 1963 in
Civil Case No. 3010 and his two questioned orders dated October 23, 1963 and November 11, 1963.
Therefore, the property was no longer subject of litigation.
The subsequent filing on November 9, or 11, 1968 of Civil Case No. 4234 can no longer alter,
change or affect the aforesaid facts that the questioned sale to respondent Judge, now Court of

Appeals Justice, was effected and consummated long after the finality of the aforesaid decision or
orders.
Consequently, the sale of a portion of Lot 1184-E to respondent Judge having taken place over one
year after the finality of the decision in Civil Case No. 3010 as well as the two orders approving the
project of partition, and not during the pendency of the litigation, there was no violation of paragraph
5, Article 1491 of the New Civil Code.
Finally, while it is true that respondent Judge did not violate paragraph 5, Article 1491 of the New
Civil Code in acquiring by purchase a portion of Lot 1184-E which was in litigation in his court, it was,
however, improper for him to have acquired the same. He should be reminded of Canon 3 of the
Canons of Judicial Ethics

GENEROSA AVILES and her husband RUFINO VILLAFUERTE, Plaintiffs-Appellants, v. SEGUNDA

ARCEGA and FORTUNATO DE LEON, Defendants-Appellees.

1.

The plaintiffs bring this action to recover title to a house of mixed materials erected on a leasehold
land of the Nagtahan estate, more particularly described in the complaint. While the plaintiffs claim
the ownership of said house, the defendants assert title in themselves.

2.

Spouses Alcantara and Capulong sold the house in dispute to the Generosa, it having been
stipulated that during four months from the 10th of October, 1917, the vendors would continue in
possession of the house the expenses for repair, land and other tax to be for their account, as well
as the payment of the rent for the lot on which it is erected.

3.

The same property was later sold by the same spouses Alcantara and Capulong for P500 to the
spouses Fortunato and Segunda, who took possession of the property while the Generosa never
having taken possession thereof.

4.

The trial court rendered judgment declaring the defendants to be the owners of the house and
absolving them from the complaint with costs.

"Under the foregoing facts the case is submitted to the consideration of the court for the determination of
the question of law as to which of the two purchasers acquired title to the property."
cralaw virtua1a w library

None of two sales appears to have been registered; therefore the question at issue is, which of
these purchaser was the first to take possession (art. 1473, Civil Code).
Under the Civil code, the conclusion is inevitable that the title to the house was transmitted not to the
plaintiff but to the defendants.
The Court ruled that the plaintiff cannot invoke symbolic delivery by the execution of the public document of
sale, inasmuch as there was not, nor could there have been, such delivery, the same being prevented by the
express stipulation contained in the deed of sale, to the effect that he vendors did not part with the
possession of the house but would continue therein for four months. Article 1462 of the Civil Code says:
jgc:chanroble s.com.ph

"If the sale should be made by means of a public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the subject-matter of the contrary unless the contrary appears or may by
clearly inferred from such instrument."
cralaw virtua1aw library

At the time, therefore, of the execution of the deed in the favor of the plaintiff, the first purchaser, there was
no symbolic delivery because there was an express stipulation to the contrary. It cannot be said that after

the lapse of the four months following, during which the vendors were to continue in possession of the
house, according to the stipulation, any symbolic delivery subsisted. Nothing can subsist that did not exist
before.
What the law simply says is that no such symbolic tradition can take place, can exist when there is a
stipulation to the contrary.
"This kind of tradition, however, is as to its efficaciousness, subject to the terms of the document, for if it
appears therein, or can be inferred therefrom, that it was not the intention of the parties to make delivery,
no tradition can be deemed to have taken place. Such would be the case, for instance, where a certain date
is fixed when the purchaser should take possession of the thing, or where in the case of last installment is
made, the title to the property should not be deemed to have been transmitted, or where the vendor
reserves the right to use and enjoy the property until the gathering of the pending crops." (10 Manresa,
Codigo Civil, p. 129)

G.R. No. L-6565

October 24, 1911

JOSE FLORENDO, plaintiff-appellee,

vs.
EUSTAQUIO P. FOZ, defendant-appellant.
Vicente Foz, for appellant.
Jose Ma. de Valle, for appellee.

ARELLANO, C.J.:
On May 11, 1909, Eustaquio P. Foz executed in Manila a contract, ratified before a notary, and
substantially of the following purport:
I, D. Eustaquio Foz . . ., in consideration of the sum of six thousand pesos (P6,000)
Philippine currency, hereby sell, cede, and convey forever and perpetually to Sr. Jose
Florendo, my house and camarin of strong materials, together with the lots on which they are
elected, the boundaries of which as follows: (and the boundaries are expressed).
Of the six thousand pesos, I have already received from the said Sr. Jose Florendo, two
thousand pesos (P2,000), and the said [party shall pay me the remaining four thousand in
Vigan when I go there at any time during month or next month.
In case of my beingunable go to Vigan, I authorize the said Jose Florendo to pay my debt to
the church at that place, as well also (that is, I authorize him) to obtain the title papers of the
house tat is the subject matter of this sale, and the said Florendo shall send the remainder to
me here in Manila.
Record is also made in this instrument that the rents of the said properties may be collected
by me only up to and including the month of June; after such period, I shall have no further
right to said rents and Seor Florendo may then begin to collect them.
This contract was signed by the party who executed it, by his wife and two witnesses, and was, by
the first mentioned, ratified before a notary.

Eustaquio Foz went to Vigan, and on June 23 of the same year, Jose Florendo, accompanied by a
notary, tendered to the former the P4,000, the rest of the price of the sale; but Foz refused to receive
them, saying that the true price of the sale, recorded in another instrument held by Florendo, was
P10,000, and that on the second or third day after the first instrument the contract. These facts were
recorded by the notary in a notarial certificate. (Exhibit C, of the plaintiff.)
For the foregoing reasons, Florendo instituted the present suit against Foz, wherein he asked that
the defendant be sentenced: (a) To comply with the contract of absolute purchase and sale, by
delivering to the plaintiff the property sold; (b) to pay to the plaintiff the rents of the entire realty from
July 1, 1909, until the judgment should be fulfilled, together with the legal interest on the amount of
such rents, and that the court fix sum which the defendant must pay for his use of a part of the
property; (c) that, out of the P4,000 deposited by the plaintiff in the municipal treasury of Vigan,
Ilocos Sur, payment be made to The Roman Catholic Apostolic Church, in the said pueblo of Vigan,
"Obispado de Nueva Segovia," of the mortgage credit due that it holds against the defendants, and
that the remainder left paying all the debts found to be owing by the judgment to be rendered, be
delivered, to the said defendant; and, (d) to pay the costs of the trial.
The defendant, in his answer to the complaint, alleged that it was false that he had sold his property
for the price of P6,000; that, if he signed the deed of sale, he was deceived in so doing, as he had
heard, or believed that he had heard, when it was previously read to him, that the amount stated
therein was P10,000, which was the true sum agreed upon between himself and the plaintiff as the
price of the property. The defendant therefore asked that the deed of sale be declared to be false,
null and void, and, in counter complaint, prayed that the plaintiff be compelled to return to him the
ownership title of the property, which was in the plaintiff's possession.
The Court of First Instance of Ilocos Sur, after hearing the evidence adduced by both sides,
rendered judgment in conformity with the plaintiff's petition, except with regard to fixing the amount
which the defendant should pay as rent for the personal use of a part of the house, and disallowed
the defendant's counter-complaint.
The latter appealed from that judgment, and the hearing on the appeal discloses the following facts:
1. That the evidence presented by the defendant was rather intended to prove that the year before
he had been offered the price of P8,000 for his property and that the latter was worth more than
P6,000, in rebuttal of which the plaintiff showed the price for which the property had been acquired
and its assessed valuation, neither of which exceeded P6,000.
2. That, as regards the defendant's special defense to the effect that the deed of sale was read to
him before he signed it and that he heard or believed that he heard that the price stipulated in the
deed was P10,000, not only was no evidence whatever presented, but also no offer nor attempt was
made to introduce any.
3. That the court ordered the deposit of the P4,000, as the remainder of the payment of the price and
which in the complaint was said to be deposited in the municipal treasury of Vigan, to be made in the
provincial treasury, from which ruling the defendant took an exception, alleging that it was another
defense of his, in support of his refusal to deliver the property sold, that the rest of the price thereof
had not been properly deposited, either in May or in June, 1909.
4. That the defendant ratified at the trial his answer in the notarial certificate of June 23, 1909
(Exhibit C of the plaintiff), that is, his avernment that another instrument had been executed in which
the true price of P10,000 was stipulated; but this averment was not repeat nor proved during the
whole trial.

5. That in the appellant's brief in this instance, on page 14 thereof, the following statements appear:
The plaintiff, on his reading this instrument to the defendant, made the latter believe that the
amount stipulated therein as the price of the contract was P10,000, and in this belief the
defendant signed that notarial document. That fact having proved by the defendant's
testimony, which was neither contradicted nor rebutted, is that document to prevail over all
the proofs adduced?
None of these statements can be accepted as correct. It was not proved, nor was it attempted to be
proved, that the instrument, before being signed by the appellant, was read to him by another
person; nor that such other person was the appellee himself; nor that any person read one thing for
another, as being what was stipulated in the instrument. For the se reasons it was the conclusion of
the trial court that neither the deceit alleged by the defendant to have been employed by the plaintiff
in the execution of the contract, nor the falsity of the instrument executed, was proved. (B. of e., p.
12.)
Consequently, the instrument of contract is valid and effective. From the validity and force of the
contract is derived the obligation of the part of the vendor to deliver the thing sold.
Pursuant to article 1466 of the Civil Code, the vendor shall not be bound to deliver the thing sold, if
the vendee should not have paid the price, or if a period for the payment has not been fixed in the
contract. If in the contract a period has been fixed for the payment, the vendor must deliver the thing
sold. In the contract in question, a period was fixed for the payment:
1awphil.net

The said party (the vendee) says the vendor shall pay me the remaining four thousand in
Vigan when I go there at any time during this month or next month. In case of my being unable to go
to Vigan, . . . the said Florendo shall send the remainder (after paying the vendor's debt to the
Church of Vigan) to mere here in Manila.
In accordance with the first of the said quoted clauses, the period for payment is when the vendor
shall have arrived at Vigan; and if he does not arrive at Vigan, such period is, according to the
second clause, indefinite, the vendee merely taking it upon himself to send the rest to Manila, after
the month of June, 1909, should the vendor not arrive at Vigan.
The provisions of the said article 1466, contain a rule and an exception: the rule is that the thing
shall not be delivered, unless the price be paid; and the exception is that the thing must be delivered,
though the price be not first paid, if a time for such payment has been fixed in the contract.
Hence, all the discussions between the contending parties, with respect to whether the deposit of the
P4,000, a part of the price, was or was not made, or was duly or unduly made, is entirely
impertinent: the conveyance of the thing sold does not depend on the payment of the price, in this
case of exception contained in article 1466 of the Civil Code.
If this period was fixed, the vendor, notwithstanding that such period has not terminated, nor,
consequently, that he has not collected the price, is obliged to deliver the thing sold. (10
Manresa, Commentaries on the Civil Code, 130.)
There was no need, therefore, of assent on the part of the plaintiff to pay the P4,000, the remainder
of the price, in order to oblige the defendant unconditionally to deliver the property sold. With still
more reason should the defendant be compelled to effect the material delivery of the property, since,
after the lapse of the period for the delivery of the price, the plaintiff hastened to pay it and, on

account of the defendant's refusal to receive it, duly deposited it, in order to avoid the consequences
that might issue from delinquency in the payment of a sum entrusted to him for a fixed period.
It is the material delivery of the property sold which the defendant must make in compliance with the
contract, inasmuch as the formal delivery de jure was made, according to the provisions of article
1462, 2nd paragraph, of the same code:
When the sale should be made by means of a public instrument, the execution thereof shall
be equivalent to the delivery of the thing which is the object of the contract, if in said
instrument the contrary does not appear or may be clearly inferred.
As the contrary does not appear nor is to be inferred from the public instrument executed by the
defendant, its execution was really a formal or symbolical delivery of the property sold and
authorized the plaintiff to use the tile of ownership as proof that he was thenceforth the owner of the
property.
The judgment appealed from is affirmed in all its parts, with the costs of this instance against the
appellant.
1
JOSE FLORENDO v. EUSTAQUIO P. FOZ
Facts
: Eustaquio P. Foz executed in Manila a contract, ratified before a notary, obligating himself to
deliver his house and lot for a consideration of P6,000 to Jose Florendo. The latter already paid
P2,000 of the purchase prize. In the contract, plaintiff fixed the period of the payment of the
prize wherein plaintiff has to pay the remainder of the prize when he goes to Vigan or if not to pay
to the Church wherein he has a debt and to obtain the title of the subject matter of the sale.
Defendant went to Vigan, plaintiff tendered payment of the remainder of the prize,however, the
former refused, saying that the true prize of the sale recorded in theother instrument was
P10,000. As defendant refused payment, plaintiff filed a suitto comply with the contract of
absolute purchase and sale, by delivering to theplaintiff the property sold.
Issue: WON the plaintiff can compel the defendant to deliver his propertypursuant to the
notarized contract.Held:
Yes. The contract is valid and effective. From the validity and force of thecontract is derived the
obligation on the part of the vendor to deliver the thingsold. Pursuant to the contract, it can
t
be found that the payment of the prize is aprecondition for the delivery of the thing. There was no
need, therefore, of assenton the part of the plaintiff to pay the P4,000, the remainder of the
price, in order tooblige the defendant unconditionally to deliver the property sold. With still
morereason should the defendant be compelled to effect the
material delivery
of theproperty, since, after the lapse of the period for the delivery of the price, theplaintiff
hastened to pay it and, on account of the defendant's refusal to receive it,duly deposited it, in
order to avoid the consequences that might issue fromdelinquency in the payment of a sum
entrusted to him for a fixed period.It is the
material

delivery
of the property sold which the defendant mustmake in compliance with the contract, inasmuch as
the
formal delivery
de jure
wasmade
, according to the provisions of article 1462, 2nd paragraph, of the samecode.