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G.R. No.

111952 October 26, 1994


JULIO TAPEC and PRISCA GALANO, petitioner,
vs.
COURT OF APPEALS and LORETO RAGUIRAG, respondents.
Evangelista & Evangelista for petitioners.
Sylvia R.T. Rubio for private respondent.

DAVIDE, JR., J.:


In resolving the issue of which document should be given more weight in deciding ownership, the trial court and the
Court of Appeals arrived at irreconcilably conflicting judgments. The former held that the deeds of sale in favor of the
petitioners, being duly acknowledged before a notary public and registered under Act No. 3344, although executed
much later, should prevail over a prior conveyance in a private document in favor of the private respondent's
predecessor-in-interest. On appeal by the private respondent, the Court of Appeals held otherwise on the ground that
the private document is an ancient document under the rules of evidence and overturned the decision of the trial court.
Hence this petition for review under Rule 45 of the Rules of Court.
There can be no question that the determination of which of the two documents should prevail, in the manner it was
done by the courts below, is a question of law. At its heart, however, is a question of fact which, under the general rule
that only questions of law may be raised in a petition for review, should not be entertained by this Court. The instant
case, however, falls within one of the exceptions to such rule: that the findings of fact of the Court of Appeals are
contrary to those of the trial court. 1 Accordingly, we gave due course to this petition.
The procedural and factual antecedents are disclosed by the pleadings.
On 4 December 1994, the petitioners, who are husband and wife, filed a complaint for recovery of ownership with the
Regional Trial Court at Batac, Ilocos Norte, against David Cabuyadao and herein private respondent Loreto Raguirag.
The petitioners alleged in their complaint that they are the owners of a parcel of land with an area of 11,850 square
meters, located at Barangay
No. 26, Oaiag-Upay, Paoay, Ilocos Norte, more specifically described as follows:
RURAL, part of which is riceland and the rest a pasture, bounded on the North by the Heirs of Oligario Cabuyadao and
others; on the East, by Tony Cac (formerly Luis Bacud); on the South, by Rufino Macoco et al.; and, on the West by
the successors of Eusebio Agdeppa and Luis Cueva, with an area of 11,850 square meters more or less.
They further averred that during the cadastral survey of Paoay, Ilocos Norte, unknown to them and without their
consent, the above-described property was surveyed and subdivided into Lot Nos. 7452, 7444, and 7450, and that
under baseless claims of ownership, David Cabuyadao and Loreto Raguirag threatened to enter Lot No. 7452 and Lot
No. 7444, respectively. The petitioners then prayed that they be declared the owners of Lot Nos. 7452 and 7444 and
that a writ of preliminary injunction be issued ordering the defendants and their agents and representatives to desist
from entering the lots.
David Cabuyadao was declared in default 2 for failure to file his answer.
In his answer with counterclaim, 3 private respondent (defendant) Loreto Raguirag denied having knowledge of the
property claimed by the petitioners but by way of special defense asserted that he is the absolute owner of the parcel of
land described as follows:

UNCULTIVATED LAND situated at Dumalaoaig, # 19, Paoay, Ilocos Norte, with an area of 3,487 sq. meters, more
or less, designated as Lot No. 7444, Cad. 445D of Paoay, Ilocos Norte. Bounded on the north by Benigno Raguirag; on
the East by Manuel Raguirag; on the South by Felipe Cueva, and on the West by Gregorio Agdeppa.
The petitioners' claim of ownership is based on two deeds of absolute sale, one executed on 2 January 1950 by Trinidad
Gonzales in favor of petitioner Julio Tapec, 4 and the other executed on 28 May 1949 by Rosario Gonzales in favor of
the petitioners, 5 both acknowledged before the same notary public and duly registered with the Office of the Register
of Deeds under Act No. 3344 on 8 March 1950 and 29 July 1949, respectively.
The property subject of the sale by Trinidad Gonzales is described as follows:
A parcel of an unirrigated riceland measuring 4832 sq. m. andpasto 6 measuring 2380 sq. m. and both bounded on the
North by Aquilino Oamil and others, East Rufino Diaz and others, South Leocadio Macoco and others and West Felipe
Cueva and others and that said land is valued at P180.00 for this current year as per Tax No. 016399 (previously under
Tax No. 68663) in the name of Miguel Gonzales. . . .while the parcel sold by Rosario Gonzales is described thus:
A parcel of unirrigated riceland measuring 4832 sq. m. and bounded on the North by Oligario Cabuyadao, Manuel
Raguirag and Aquilino Oamil, East by Luis Bacud and Rufino Diaz, South by Leocadio Macoco and Ariston Cueva,
and West by Eusebio Agdeppa and Felipe Cueva. It is valued at P180 for this current year as per Tax No. 016399 under
the name of the late Miguel Gonzales. . . .
Respondent Loreto Raguirag, on the other hand, anchored his defense on a document, dated 15 May 1931 7 and
handwritten in Ilocano, wherein the brothers Victoriano, Gregorio, Matias, and Alejandro, all surnamed Gonzales, 8
sold to the spouses Manuel Raguirag and Clara Tapec, grandparents of respondent Raguirag, for a consideration of
P150.00 a pasture situated in Dumalaoing, Paoay, Ilocos Norte, with an area of 3,450 sq. meters and bounded:
. . . as follows, North Victoriano Gonzalis I, East Alejandro Gonzalis, Miguel Gonzalis and others, South Pelipi Cuyba
West Grigorio Agdippa. 9
Witnesses to the said handwritten document were Manuel Raguirag, Cornelio Cabuyao, and Miguel Gonzales.
At the trial, petitioner Julio Tapec identified the deeds of sale executed by Trinidad and Rosario Gonzales and the
sketch plan of Lot Nos. 7444, 7450, and 7452 of the Paoay Cadastre 10 and declared that the area sold by Trinidad
corresponds to Lot Nos. 7450 and 7452 while the parcel sold by Rosario corresponds to Lot No. 7444. 11 He further
alleged that he has been in possession of the lots since he purchased them and had them declared for taxation purposes
in his name in 1950 12 and that before he bought the property of Trinidad Gonzales, he had to first redeem it from
Ireneo Raguirag to whom it was mortgaged by Trinidad for P100.00 on 10 November 1947 and who (Trinidad) was in
possession thereof. 13
On the other hand, private respondent Raguirag presented the 1931 private writing which, according to him, was shown
to him when he was a boy by his grandfather, Manuel Raguirag, who said, "all of these are our properties of which I
bought from Alejandro Gonzales." 14 He claimed that his grandfather was in possession of the property until his death
during the Japanese occupation. Then his father, Ireneo Raguirag, continued such possession until he died in 1967. 15
Ireneo had the property declared for taxation purposes in 1962. 16 After his father's death, Loreto took over the
possession of the property and during the cadastral survey of Paoay, it was claimed by Leoncia Raguirag, a sister of
Ireneo. The private respondent is merely possessing it as tenant-administrator. Thus:
ATTY. LUMBO
q I understand that the land in suit has already a lot number, do you know who is the survey claimant of the lot in suit?
a Leoncia Raguirag, sir.
q Who is this Leoncia Raguirag?
a A sister of my father, sir.
q You said that from the death of your late father up to the present you are the one possessing this land in suit, my
question is, why are you in possession of this property?
a Yes, sir, because my father is no longer living.
q And since according to you this survey claimant is Leoncia Raguirag, a sister of your late father, in what capacity are
you possessing the land in suit?
a As a tenant-administrator, sir.
q Tiller-administrator of what?
a That pastureland in the land of my father, sir.
q What is that pastureland you are referring to in the name of your father?
a That is the pastureland that is being claimed by Julio Tapec, sir. 17
On 31 October 1989, the trial court rendered a decision, 18 the dispositive portion of which reads as follows:
In view of all the foregoing, it is hereby ordered:
1. That the plaintiffs are absolute owners of Lot Nos. 7942 19 and 7444.
2. That the defendants pay the costs.
In support thereof, it made the following findings and conclusion:
That an impartial assessment of the evidence adduced disclosed that the deed of sale executed in favor of the plaintiffs
by the vendees Trinidad Gonzales and Rosario Gonzales marked as Exh. "A" and "B" respectively are public
documents registered in the Office of the Register of Deeds of Ilocos Norte while that of the defendant is in a private
document.
That between a deed of sale in a public document and a deed of sale in private document, the former must prevail;
That a contract may be entered into in whatever form except where the law requires a document or other special form.
"When the law requires that a contract be in a public document in order that it may be valid or enforceable, such as
contracts which have for their object the creation or transmission of rights over immovable property, that requirement
is absolute and indispensable." (Manotok Realty, Inc. vs. Court of Appeals, et al., G.R. No. 35365, 9 April '87, Second
Division).
Art. 1358 N.C.C. (No. 1). Acts and contracts which have for their object the creation, transmission, modification or
extinguishment of real rights over immovable property must appear in a public document (Gallardo vs. Intermediate
Appellate Court, G.R. No. 67742, 21 Oct. '87, First Division).
Loreto Raguirag appealed from the decision to the Court of Appeals which docketed the appeal as CA-G.R. CV No.
26093.
In its decision 20 of 20 September 1993, the Court of Appeals reversed the appealed decision. It declared:
The plaintiffs-appellee raise for the first time, on appeal, the question of the genuineness of the Deed of Sale offered as
documentary evidence by the defendants-appellants. It has been decided by the Supreme Court that objection to the
admission of evidence must be made seasonably, at the time it is introduced or offered, otherwise they are deemed
waived and will not be entertained for the first time on appeal. (People of the Philippines vs. Benjamin Baares, G.R.
No. 68298, November 25, 1986, 145 SCRA 680) The rule is that evidence not objected to is deemed admitted and may
be validly considered by the court in arriving at its judgment. This is true even if by its nature the evidence is
inadmissible and would have surely been rejected if it had been challenged at the proper time. (Interpacific Transit, Inc.
vs. Rufo Aviles and Josephine Aviles, G.R. No. 86062, June 6, 1990, 186 SCRA 385).
Aside from that, a private document may be exempted from proof of due execution and authenticity under the "ancient
document rule."
Section 22, Rule 132 of the Rules of Court provides that:
Sec. 22. Evidence of execution not necessary. Where a private writing is more than thirty years old, is produced
from a custody in which it would naturally be found if genuine, and is unblemished by any alterations or circumstances
of suspicion, no other evidence of its execution and authenticity need be given.
In this case, the Deed of Sale dated 15 May 1931 complies with the first requirement of Section 22 since it was offered
in evidence in 1986. It was presented in court by the proper custodian thereof who is an heir of the person who would
naturally keep it complying with the requirement that it be produced from a custody in which it would naturally be
found if genuine. (Resurreccion Bartolome, et al., vs. The Intermediate Appellate Court, et al., G.R. No. 76792, March
12, 1990, 183 SCRA 102) Neither is there any evidence of alterations or any circumstances that would cause a doubt
on the genuineness of the document.
Thus, all the elements of a valid contract of sale under Article 1458 of the Civil Code, are present, such as: (1) consent
or meeting of the minds; (2) determinate subject matter; and (3) price certain in money or its equivalent. In addition,
Article 1477 of the same Code provides that "the ownership of the thing sold shall be transferred to the vendee upon
actual or constructive delivery thereof." The plaintiff-appellee Julio Tapec himself, testified during cross-examination
that Ireneo Raguirag (father of defendants-appellants) was already in possession of the parcel of land when the subject
land was offered to him by the vendor, Rosario Gonzales. (Original Records, TSN, June 26, 1986, p. 8) Moreover,
Constancia Gonzales, a sister of the vendor of the plaintiffs-appellees, and a witness for the defendants-appellants,
testified that the subject pastureland was sold to the grandfather of the defendants-appellants as told to her by her
parents; and that the predecessors-in-interest of the defendants-appellants have been in possession of the property since
they bought it. (Original Records, TSN, November 23, 1988, pp. 2-3).
The validity of the sale of the subject pastureland to the predecessors-in-interest of the defendants-appellants cannot be
disputed. Contracts shall be obligatory, in whatever form they may have been entered into, provided all the essential
requisites for their validity are present. (Article 1356, New Civil Code) We do not agree with the ruling of the trial
judge that under Article 1358 of the New Civil Code, a contract which have for their object the creation, transmission,
modification or extinguishment of real rights over immovable property, must appear in a public document to be valid
and enforceable.
Article 1358 of the New Civil Code enumerates certain contracts that must appear in public or private documents. This
provision does not require such form in order to validate the act or contract but to insure its efficacy. Contracts
enumerated by this article are, therefore, valid as between the contracting parties, even when they have not been
reduced to public or private writings. (Tolentino, Arturo M., Commentaries and Jurisprudence on the Civil Code of the
Philippines, Volume Four, 1985 ed., pp. 549-550) Therefore, the Deed of Sale in favor of the predecessor-in-interest of
the defendants-appellants is considered valid and enforceable, even if it was only embodied in a private writing.
In upholding the validity of the 1931 sale of the subject pastureland, we can only conclude that when the land was sold
to the plaintiffs-appellees in 1950, the vendor had no right to sell the subject property since at that time her family no
longer owned the land and thus no legal right was transferred by the vendor to the plaintiffs-appellees. Article 1459 of
the New Civil Code requires that the vendor must have a right to transfer the ownership thereof at the time it is
delivered, otherwise the contract of sale is void.
Article 1544 of the New Civil Code on double sales does not apply in this case. The article provides that if an
immovable property should have been sold to different vendees, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry Property. In order that the abovementioned provision may be
invoked, it is necessary that the conveyance must have been made by a party who has an existing right in the thing, and
the power to dispose of it. It cannot, therefore, be invoked in a case where the two different contracts of sale are made
by two different persons, one of them not being the owner of the property sold. (Tolentino, Arturo M., Commentaries
and Jurisprudence on the Civil Code of the Philippines, Volume Five, 1959, pp. 83-84). 21
Before us, the petitioners raise the sole issue of whether the deeds of sale to them, which were embodied in public
instruments and registered under Act No. 3344, 22 should prevail over the alleged sale to the ancestors of respondent
Raguirag executed much earlier in a private instrument.
It appears that the petitioners no longer question the validity and due execution of the 1931 deed of conveyance.
Nevertheless, they stand firm on their argument that such instrument is valid and enforceable only as to the parties
thereto and cannot bind third persons and innocent purchasers. 23
We agree with the Court of Appeals that Exhibit "1" for the private respondent, the deed of sale in a private writing
executed on 15 May 1931 in favor of Manuel Raguirag and Clara Tapec, private respondent's grandparents, is an
ancient document whose proof of authenticity was no longer necessary because of the concurrence of the requisites in
Section 21, 24 Rule 132 of the Rules of Court. 25 It was already more than thirty years old at the time it was offered in
evidence in 1986. 26 It was produced from the custody of respondent Raguirag, an heir of the vendees in the said
instrument. And it is unblemished by any alteration or circumstances of suspicion.
As correctly ruled by the Court of Appeals, the said private instrument is a deed of sale in which all the requisites of a
valid contract are present and which is binding upon the parties. The trial court erroneously held that it is invalid
because it is not in a public document as required by Article 1358 of the Civil Code and pursuant to Manotok Realty,
Inc. vs. Court of Appeals. 27 Article 1358 does not invalidate the acts or contracts enumerated therein if they are not
embodied in public documents. As one noted civilian has said:
This Article enumerates certain contracts that must appear in public or private documents. This provision does not
require such form in order to validate the act or contract but to insure its efficacy. It is limited to an enumeration of the
acts and contracts which should be reduced to writing in a public or private instrument. The reduction to writing in a
public or private document, required in this article, is not an essential requisite for the existence of the contract, but is
simply a coercive power granted to the contracting parties by which they can reciprocally compel the observance of
these formal requisites. Contracts enumerated by this article are, therefore, valid as between the contracting parties,
even when they have not been reduced to public or private writings. Except in certain cases where public instruments
and registration are required for the validity of the contract itself, the legalization of a contract by means of a public
writing and its entry in the register are not essential solemnities or requisites for the validity of the contract as between
the contracting parties, but are required for the purpose of making it effective as against third person. 28
What the trial court referred to in Manotok is not the ruling of this Court but the claim of the petitioner therein, What
this Court stated was that "the sale made by Legarda to Lucero should have been embodied in a public instrument in
accordance with Article 1358 of the Civil Code and should have been duly registered with the Register of Deeds to
make it binding against third persons." (emphasis supplied).

While we uphold the ruling of the Court of Appeals that the 15 May 1931 sale in favor of the private respondent's
grandparents was valid and enforceable, we cannot, however, accept its findings that:
In upholding the validity of the 1931 sale of the subject pastureland, We can only conclude that when the land was sold
to the plaintiffs-appellees [petitioners herein] in 1950, the vendor had no right to sell the subject property since at the
time her family no longer owned the land and thus no legal right was transferred by the vendor to the plaintiffs-
appellees.

Firstly, it should be remembered that per the testimony of petitioner Julio Tapec, the sale in 1950 was that executed on
2 January 1950 by Trinidad Gonzales and the property subject thereof corresponds to Lot Nos. 7450 and 7452, 29 while
the sale executed on 28 May 1949 by Rosario Gonzales 30 corresponds to Lot No. 7444. It is the latter lot which is
claimed by the private respondent. 31 The original owner of the property sold by Trinidad and Rosario was their father,
Miguel Gonzales, 32 and as indicated in the deeds of sale they executed, the portion each sold was declared for taxation
purposes in the name of their father. 33 With respect to the 1931 sale, Miguel Gonzales was not a vendor therein but a
mere witness thereto. The vendors were Victoriano, Matias, Alejandro, and Gregorio, all surnamed Gonzales.
Obviously, the Court of Appeals erred in finding that Trinidad had no more right to sell the property.

Secondly, while the petitioners sufficiently established the identity of the property claimed by them, the private
respondent failed to prove the identity of the property covered by Exhibit "1." Since he specified in his special defenses
the property he claimed and asked the court in his prayer that he be declared "the lawful owner and possessor" thereof,
the burden was on him to prove its identity. 34
Thirdly, it was established that Trinidad Gonzales had mortgaged her property to the private respondent's father, Ireneo
Raguirag, on 10 November 1947. 35 The mortgage was redeemed only shortly before its sale to the petitioners in 1950.
If Ireneo were its owner as heir of Manuel Raguirag, there was no reason for Ireneo to have accepted the mortgage
thereof.

Finally, the private respondent categorically admitted that he is only a tenant-administrator of Lot No. 7444. This
admission belies any claim of ownership. It was his aunt, Leoncia Raguirag, who claimed ownership over it during the
cadastral survey. 36

IN VIEW OF THE FOREGOING, the instant petition is GRANTED. The decision of the Court of Appeals in CA-G.R.
CV No. 26093 is hereby REVISED, and the dispositive portion of the decision of Branch 17 of the Regional Trial
Court at Batac, Ilocos Norte, in Civil Case No. 1669-17 is REINSTATED, subject to the correction of the portion
therein which reads "Lot Nos. 7942" to "Lot Nos. 7452."
SO ORDERED.
Cavite Development Bank vs. Lim
Tuesday, April 8, 2014

Facts:
Petitioners Cavite Development Bank (CDB) and Far East Bank and Trust Company (FEBTC) are banking institutions
duly organized and existing under Philippine laws. On or about June 15, 1983, a certain Rodolfo Guansing obtained a
loan in the amount of P90,000.00 from CDB, to secure which he mortgaged a parcel of land situated at No. 63 Calavite
Street, La Loma, Quezon City and covered by TCT No. 300809 registered in his name. As Guansing defaulted in the
payment of his loan, CDB foreclosed the mortgage.

At the foreclosure sale held on March 15, 1984, the mortgaged property was sold to CDB as the highest bidder.
Guansing failed to redeem, and on March 2, 1987, CDB consolidated title to the property in its name. TCT No. 300809
in the name of Guansing was cancelled and, in lieu thereof, TCT No. 355588 was issued in the name of
CDB.1wphi1.nt

On June 16, 1988, private respondent Lolita Chan Lim, assisted by a broker named Remedios Gatpandan, offered to
purchase the property from CDB.

Pursuant to the foregoing terms and conditions of the offer, Lim paid CDB P30,000.00 as Option Money, for which she
was issued Official Receipt No. 3160, dated June 17, 1988, by CDB. However, after some time following up the sale,
Lim discovered that the subject property was originally registered in the name of Perfecto Guansing, father of
mortgagor Rodolfo Guansing, under TCT No. 91148.

Aggrieved by what she considered a serious misrepresentation by CDB and its mother-company, FEBTC, on their
ability to sell the subject property, Lim, joined by her husband, filed on August 29, 1989 an action for specific
performance and damages against petitioners in the Regional Trial Court.

On March 10, 1993, the trial court rendered a decision in favor of the Lim spouses. Petitioners brought the matter to the
Court of Appeals, which, on October 14, 1997, affirmed in toto the decision of the Regional Trial Court.

Issue: WON there was a valid sale.

Held: NO.

In this case, the sale by CDB to Lim of the property mortgaged in 1983 by Rodolfo Guansing must, therefore, be
deemed a nullity for CDB did not have a valid title to the said property. To be sure, CDB never acquired a valid title to
the property because the foreclosure sale, by virtue of which, the property had been awarded to CDB as highest bidder,
is likewise void since the mortgagor was not the owner of the property foreclosed.

A foreclosure sale, though essentially a "forced sale," is still a sale in accordance with Art. 1458 of the Civil Code,
under which the mortgagor in default, the forced seller, becomes obliged to transfer the ownership of the thing sold to
the highest bidder who, in turn, is obliged to pay therefor the bid price in money or its equivalent. Being a sale, the rule
that the seller must be the owner of the thing sold also applies in a foreclosure sale. This is the reason Art. 2085 of the
Civil Code, in providing for the essential requisites of the contract of mortgage and pledge, requires, among other
things, that the mortgagor or pledgor be the absolute owner of the thing pledged or mortgaged, in anticipation of a
possible foreclosure sale should the mortgagor default in the payment of the loan.

There is, however, a situation where, despite the fact that the mortgagor is not the owner of the mortgaged property, his
title being fraudulent, the mortgage contract and any foreclosure sale arising therefrom are given effect by reason of
public policy. This is the doctrine of "the mortgagee in good faith" based on the rule that all persons dealing with
property covered by a Torrens Certificate of Title, as buyers or mortgagees, are not required to go beyond what appears
on the face of the title. The public interest in upholding the indefeasibility of a certificate of title, as evidence of the
lawful ownership of the land or of any encumbrance thereon, protects a buyer or mortgagee who, in good faith, relied
upon what appears on the face of the certificate of title.

This principle is cited by petitioners in claiming that, as a mortgagee bank, it is not required to make a detailed
investigation of the history of the title of the property given as security before accepting a mortgage.

We are not convinced, however, that under the circumstances of this case, CDB can be considered a mortgagee in good
faith. While petitioners are not expected to conduct an exhaustive investigation on the history of the mortgagor's title,
they cannot be excused from the duty of exercising the due diligence required of banking institutions. In Tomas v.
Tomas, we noted that it is standard practice for banks, before approving a loan, to send representatives to the premises
of the land offered as collateral and to investigate who are real owners thereof, noting that banks are expected to
exercise more care and prudence than private individuals in their dealings, even those involving registered lands, for
their business is affected with public interest.
CONCHITA NOOL and GAUDENCIO ALMOJERA vs.CA
GR No. 116635
July 24, 1997

Facts:
One lot formerly owned by Victorio Nool has an area of 1 hectare. Another lot previously owned by Francisco Nool
has an area of 3.0880 hectares. Spouses (plaintiffs) Conchita Nool and Gaudencio Almojera alleged that they are the
owners of the subject lands. They are in dire need of money, they obtained a loan DBP , secured by a real estate
mortgage on said parcels of land, which were still registered in the names of Victorino and Francisco Nool, at the time,
Since the plaintiffs failed to pay the said loan, the mortgage was foreclosed; that within the period of redemption, the
plaintiffs contacted Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the latter did; and
as a result, the titles of the 2 parcels of land in question were transferred to Anacleto; that as part of their arrangement
or understanding, Anacleto agreed to buy from Conchita the 2 parcels of land , for a total price of P100,000.00,
P30,000.00 of which price was paid to Conchita, and upon payment of the balance of P14,000.00, the plaintiffs were to
regain possession of the 2 hectares of land, which amounts spouses Anacleto Nool and Emilia Nebre failed to pay.
Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to redeem
the same; defendant Anacleto having been made to believe, then, that his sister, Conchita, still had the right to redeem
the said properties.

Issue: Is the purchase of the subject lands to Anacleto valid?

Held:
Nono dat quod non habet, No one can give what he does not have; Contract of repurchase inoperative thus void.

Article 1505 of the Civil Code provides that where goods are sold by a person who is not the owner thereof, and who
does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the
seller had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell.
Jurisprudence, on the other hand, teaches us that a person can sell only what he owns or is authorized to sell; the buyer
can as a consequence acquire no more than what the seller can legally transfer. No one can give what he does not have
nono dat quod non habet. In the present case, there is no allegation at all that petitioners were authorized by DBP to
sell the property to the private respondents. Further, the contract of repurchase that the parties entered into presupposes
that petitioners could repurchase the property that they sold to private respondents. As petitioners sold nothing, it
follows that they can also repurchase nothing. In this light, the contract of repurchase is also inoperative and by the
same analogy, void.
Heirs of Arturo Reyes v. Socco-Beltran, G.R. No. 176474

Facts: Elena Socco-Beltran (Socco) filed an application for Lot No. 6-B, alleging that it was adjudicated in her favor in
the extra-judicial settlement of Constancia Soccos estate, before the Department of Agrarian Reform (DAR). The heirs
of Arturo Reyes opposed the application on the ground that Lot No. 6-B was sold by Miguel R. Socco, brother of
Socco, in favor of their father, Atty. Arturo Reyes, as evidenced by the Contract to Sell.

Issue: Whether or not petitioners have a better right to the subject property over the respondents?

Ruling: The Court ruled that the petitioners could not derive title of Lot No. 6-B because Miguel R. Socco was not yet
the owner of the said lot and was only expecting to inherit the same. The contract was a conditional sale, conditioned
upon the event Miguel Socco would actually inherit and become the owner of the said property. The Court, relying on
Article 1459 of the Civil Code on contracts of sale, said that, The thing must be licit and the vendor must have the
right to transfer the ownership thereof at the time it is delivered. The law specifically requires that the vendor must
have ownership of the property at the time of it is delivered. Hence, there was no valid sale from which ownership of
the property could have transferred from Miguel Socco to Arturo Reyes, since, at the time of the execution, the former
was not yet the owner of the same and was only expecting to inherit it. Furthermore, Arturo Reyes, not having acquired
ownership of the property, could not have conveyed the same to his heirs.
HEIRS OF AMPARO DEL ROSARIO,
AURORA O. SANTOS, JOVITA SANTOS GONZALES, ARNULFO O. SANTOS,
ARCHIMEDES O. SANTOS, ERMELINA SANTOS RAVIDA, and ANDRES O. SANTOS,
JR.,
G.R. No. L-46892 September 30, 1981

FACTS:

ISSUE: WON THE SALE IS VALID AS TO THE CAUSE OR OBJECT OF THE CONTRACT.

HELD:
Pichel v. Alonzo
GR No. L-30692

Facts:
Respondent Prudencio Alonzo was awarded by the Government that parcel of land in Basilan City in accordance with
Republic Act No. 477. The award was cancelled by the Board of Liquidators on January 27, 1965 on the ground that,
previous thereto, plaintiff was proved to have alienated the land to another, in violation of law. In 1972, plaintiff's
rights to the land were reinstated.

On August 14, 1968, plaintiff and his wife sold to defendant Luis Pichel all the fruits of the coconut trees which may
be harvested in the land in question for the period, September 15, 1968 to January 1, 1976, in consideration of
P4,200.00. Even as of the date of sale, however, the land was still under lease to one, Ramon Sua, and it was the
agreement that part of the consideration of the sale, in the sum of P3,650.00, was to be paid by defendant directly to
Ramon Sua so as to release the land from the clutches of the latter. Pending said payment plaintiff refused to allow the
defendant to make any harvest. In July 1972, defendant for the first time since the execution of the deed of sale in his
favor, caused the harvest of the fruit of the coconut trees in the land.

Alonzo filed for the annulment of the contract on the ground that it violated the provisions of R.A. 477, which states
that lands awarded under the said law shall not be subject to encumbrance or alienation, otherwise the awardee shall no
longer be entitled to apply for another piece of land. The lower court ruled that the contract, which it held as a contract
of lease, is null and void.

Issues:
(1) Whether the respondent had the right or authority to execute the "Deed of Sale" in 1968, his award having been
cancelled previously by the Board of Liquidators on January 27, 1965
(2) Whether the contract is one for lease of the land, or for sale of coconut fruits
(3) Whether the contract is an encumbrance as contemplated by R.A. 477

Held:
(1) Until and unless an appropriate proceeding for reversion is instituted by the State, and its reacquisition of the
ownership and possession of the land decreed by a competent court, the grantee cannot be said to have been divested of
whatever right that he may have over the same property. Herein respondent is not deemed to have lost any of his rights
as grantee during the period material to the case at bar, i.e., from the cancellation of the award in 1965 to its
reinstatement in 1972. Within said period, respondent could exercise all the rights pertaining to a grantee.

(2) A perusal of the deed fails to disclose any ambiguity or obscurity in its provisions, nor is there doubt as to the real
intention of the contracting parties. The terms of the agreement are clear and unequivocal, hence the literal and plain
meaning thereof should be observed. The document in question expresses a valid contract of sale. It has the essential
elements of a contract of sale. The subject matter of the contract of sale in question are the fruits of the coconut trees on
the land during the years from September 15, 1968 up to January 1, 1976, which subject matter is a determinate thing.
Under Article 1461 of the New Civil Code, things having a potential existence may be the object of the contract of sale.
Pending crops which have potential existence may be the subject matter of sale. The essential difference between a
contract of sale and a lease of things is that the delivery of the thing sold transfers ownership, while in lease no such
transfer of ownership results as the rights of the lessee are limited to the use and enjoyment of the thing leased.

The contract was clearly a "sale of the coconut fruits." The vendor sold, transferred and conveyed "by way of absolute
sale, all the coconut fruits of his land," thereby divesting himself of all ownership or dominion over the fruits during
the seven-year period. The possession and enjoyment of the coconut trees cannot be said to be the possession and
enjoyment of the land itself because these rights are distinct and separate from each other, the first pertaining to the
accessory or improvements (coconut trees) while the second, to the principal (the land). A transfer of the accessory or
improvement is not a transfer of the principal. It is the other way around, the accessory follows the principal. Hence,
the sale of the nuts cannot be interpreted nor construed to be a lease of the trees, much less extended further to include
the lease of the land itself.

The grantee of a parcel of land under R.A. No. 477 is not prohibited from alienating or disposing of the natural and/or
industrial fruits of the land awarded to him. What the law expressly disallows is the encumbrance or alienation of the
land itself or any of the permanent improvements thereon. Permanent improvements on a parcel of land are things
incorporated or attached to the property in a fixed manner, naturally or artificially. They include whatever is built,
planted or sown on the land which is characterized by fixity, immutability or immovability. Houses, buildings,
machinery, animal houses, trees and plants would fall under the category of permanent improvements, the alienation or
encumbrance of which is prohibited. The purpose of the law is not violated when a grantee sells the produce or fruits of
his land. On the contrary, the aim of the law is thereby achieved, for the grantee is encouraged and induced to be more
industrious and productive, thus making it possible for him and his family to be economically self-sufficient and to
lead a respectable life. At the same time, the Government is assured of payment on the annual installments on the land.
We agree with herein petitioner that it could not have been the intention of the legislature to prohibit the grantee from
selling the natural and industrial fruits of his land, for otherwise, it would lead to an absurd situation wherein the
grantee would not be able to receive and enjoy the fruits of the property in the real and complete sense.
Heirs of Juan San Andres vs. Rodriguez
GR No. 135634

Facts:
Juan San Andres sold a portion of his property to Rodriguez as evidenced by a Deed of Sale. Upon his death Ramon
San Andres was appointed as administrator of the property. He hired a land surveyor and found that Rodriguez enlarged
the property he bought from late Juan. Ramon demanded form the Rodriguez to vacate the portion allegedly occupied
but the latter refused hence the present action.

Rodriguez said that the excess portion was also sold to him by late Juan the following day after the first sale. He argued
that the full payment of the whole sold lot would be effected within five years from the execution of the formal deed of
sale after a survey of the property is conducted, as evidenced by a receipt of sale. The balance of the purchase price
was consigned.

RTC ruled in favor of petitioner while CA reversed the ruling. In SC petitioner argued that there is no certain object of
the contract of sale as the lot was not described with sufficiency that there should be another contract to finally
ascertain the identity.

Issue:
Whether or not there is a certain object of the contract of sale.

SC: Petition has no merit. The contract of sale has the following elements: 1. consent or meeting of the minds, 2.
determinate subject matter, 3. price certain in money.

There is no dispute that Rodriguez purchased a potion of Lot 1914-B consisting of 345 square meters. The said portion
is located at the middle of the lot. Since the lot subsequently sold is said to adjoined the previously paid lot, the subject
is capable of being determined without the need of another contract.

However, there is a need to clarify what CA said is a conditional sale. CA considered as a condition the stipulation of
the parties that the full consideration, based on a survey of the lot, would be due and payable within 5 years from the
execution of the formal deed of sale.

It is evident in the stipulation in the receipt that the vendor late Juan sold the lot to Rodriguez and undertook the
transfer of ownership without any qualification, reservation or condition.

In can be gainsaid from the facts that the contract of sale is absolute, and not conditional. There is no reservation of
ownership nor stipulation providing for a unilateral rescission by either party. In fact the sale was consummated upon
the delivery of the lot to Rodriguez. Art.1477 provides that the ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive deliver thereof.

The stipulation that the payment of the full consideration based on a survey shall be due and payable in 5 years from
the execution of the formal deed of sale is not a condition which affects the efficacy of contract.

CA decision is AFFIIRMED.
VILLARANDA vs SPOUSES VILLARANDA
GR No. 153774

DOCTRINE:
Under the Civil Code 166 and 173, the husband cant alienate or encumber any real property of the conjugal partnership
without the wifes consent. This is voidable, not void. An action to annul such alienation may be instituted by the wife
during the marriage and within 10 years from the transaction.

FACTS:
Petitioner Vicente and respondent Honorio Villaranda are brothers who inherited land from their parents. In 1976, they
executed a Deed of Exchange, wherein Vicente agreed to convey his portion to Honorio in exchange for property in
Macasandig. Honorio and his wife, Ana, brought an action for specific performance to compel Vicente to fulfill his
obligations under the Deed. Vicente never identified or delineated his undivided portion of the property. Vicente claims
the Deed was revoked by both parties. RTC ruled in favor of Honorio and Ana.

On appeal, the CA held that the Civil Code was applicable since the Deed was entered into in 1976. The absence of the
wifes signature made it voidable, not void. Also, Ana was aware of the Deed but never brought action for its
annulment within 10years from its execution. The prescriptive period for the cause of action ran not from the execution
of the Deed but from when Vicente refused to transfer his title to Honorio, some 2 months before the filing of the case.
CA again ruled in favor of Honorio and Ana.

ISSUES:
WON the Deed is valid without the signature of Ana.

HELD:
YES. The Deed was entered into on 1976, before the Family Code. The Civil Code applies. The Macasandig lot was
part of Honorio and Anas conjugal property. Under the Civil Code 166 and 173, the husband cant alienate or encumber
any real property of the conjugal partnership without the wifes consent. This is voidable, not void. An action to annul
such alienation may be instituted by the wife during the marriage and within 10 years from the transaction. The Deed is
valid until annulled. There is no evidence that any action to annul the transfer was brought by Ana within 10 years from
the transaction. Her right to bring an action has prescribed. The Deed is still valid and enforceable.
[G.R. NO. 127520 : February 9, 2007]
AURORA FE B. CAMACHO, Petitioner, v. COURT OF APPEALS and ANGELINO BANZON, Respondents.

DECISION
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 41268
affirming with modification the Decision2 of the Regional Trial Court (RTC) of Balanga, Bataan, Branch 1.

The Antecedents
Camacho was the owner of Lot 261, a 7.5-hectare parcel of land situated in Balanga, Bataan and covered by Transfer
Certificate of Title No. T-10,185.
On July 14, 1968, Camacho and respondent Atty. Angelino Banzon entered into a contract for legal services
denominated as a "Contract of Attorney's Fee."3 The agreement is worded as follows:

KNOW ALL MEN BY THESE PRESENTS:


That we, Aurora B. Camacho, widow, of legal age and resident of Balanga, Bataan, and Angelino M. Banzon, have
agreed on the following:
That I, Aurora B. Camacho is the registered owner of Lot No. 261 Balanga Cadastre, has secured the legal services of
Atty. Angelino M. Banzon to perform the following:
1. To negotiate with the Municipal Government of Balanga so that the above-mentioned lot shall be the site of the
proposed Balanga Public Market;
2. To sell 1200 sq. m. for the sum of TWENTY - FOUR THOUSAND PESOS (P24,000.00) right at the Market Site;
3. And to perform all the legal phase incidental to this work.
That for and in consideration of this undertaking, I bind myself to pay Atty. Angelino M. Banzon FIVE THOUSAND
SQUARE METERS (5000) of the said lot, for which in no case I shall not be responsible for payment of income taxes
in relation hereto, this area located also at market site.
That I, Angelino M. Banzon, is willing to undertake the above-enumerated undertaking.
WITNESS our hands this 14 of July, 1968, in Balanga, Bataan.

(Signed)
ANGELINO M. BANZON (Signed)
AURORA B. CAMACHO

Pursuant to the agreement, Atty. Banzon, on even date, sent a letter-proposal4 to the municipal council offering three
sites for the proposed public market which included Lot 261. Still on the same date, Camacho executed a Special
Power of Attorney5 giving Atty. Banzon the authority to execute and sign for her behalf a Deed of Donation
transferring a 17,000-sq-m portion of Lot 261 to the municipal government of Balanga, Bataan. The Deed of Donation
was executed, which was later accepted by the local government unit in Municipal Resolution No. 127.6
Silvestre Tuazon had been an agricultural tenant in Lot 261 since World War II. On August 22, 1968, Tuazon and
Camacho entered into an "Agreement with Voluntary Surrender"7 where Tuazon voluntarily surrendered his right as a
tenant of the landholding. Despite the agreement, however, Tuazon plowed a portion of the lot and planted palay
without Camacho's consent. Since Tuazon refused to vacate the premises, Camacho and the Municipality of Balanga,
through then Acting Mayor Victor Y. Baluyot, filed a complaint8 for forcible entry on November 18, 1969 before the
Municipal Trial Court (MTC) of Balanga, Bataan. The complaint was docketed as Civil Case No. 424. The case was
eventually decided in favor of the plaintiffs and Tuazon was ordered to vacate the lot. On appeal to the RTC, trial de
novo ensued, in view of the absence of the transcript of stenographic notes of the proceedings before the MTC. The
RTC issued a preliminary mandatory injunction ordering Tuazon to "discontinue entering the subject premises until
further orders of the court."9
On September 1, 1973, the plaintiffs, through Atty. Banzon, and Tuazon entered into an "Agreement to Stay Court
Order."10 Under the agreement, Tuazon was allowed to cultivate specific portions of the property as indicated in a
sketch plan which the parties prepared, and to use the market's water supply to irrigate his plants within the lot subject
to the market's preferential rights. The parties also contracted that "the agreement shall in no way affect the merits of
Civil Case No. 3512 and CAR Case No. 520-B 73; and that no part shall be construed as impliedly creating new
tenancy relationship."
On December 6, 1973, Camacho filed a Manifestation11 in Civil Case No. 3512 declaring that she had terminated the
services of Atty. Banzon and had retained the services of new counsel, Atty. Victor De La Serna.
On December 17, 1973, Atty. Banzon filed a Complaint-in-Intervention12 in Civil Case No. 3512. He alleged that
Camacho had engaged his services as counsel in CAR Case No. 59 B 65 (where a favorable decision was rendered)
and in Civil Case No. 3512. Under the Contract of Attorney's Fee which they had both signed, Camacho would
compensate him with a 5,000-sq-m portion of Lot 261 in case he succeeds in negotiating with the Municipality of
Balanga in transferring the projected new public market which had been set for construction at the Doa Francisca
Subdivision, all legal requirements having been approved by a municipal resolution, the Development Bank of the
Philippines, and the National Urban Planning Commission. Atty. Banzon further claimed that as a consequence of the
seven cases filed by/against Camacho, she further bound herself orally to give him a 1,000-sq-m portion of Lot 261 as
attorney's fee. He had also acquired from Camacho by purchase an 80-sq-m portion of the subject lot as evidenced by a
Provisional Deed of Sale13 and from third parties an 800-sq-m portion. He further declared that his requests for
Camacho to deliver the portions of the subject lot remained unheeded, and that of the seven cases14 he had handled for
Camacho, four had been decided in her favor while three are pending. Atty. Banzon thus prayed for the following
relief:
1. Ordering the ejectment of Defendant Silvestre Tuazon, in so far as (6880) square meters is concerned,
INTERVENOR'S claim over Lot 261;
2. The First Cause of Action, ordering the Plaintiff Aurora B. Camacho to deliver (5000) square meters as per Annex
"A"; EIGHTY square meters as per Annex "C"; EIGHT HUNDRED (800) square meters which the INTERVENOR
purchased from third parties;
3. On the Second Cause of Action, ordering the Plaintiff Aurora B. Camacho to pay the sum of P8,820.00,
corresponding to the lease rental of (5880) square meters a month, counted from July, 1973, until the same is delivered
to the INTERVENOR;
4. On the Third Cause of Action, ordering the Plaintiff Aurora B. Camacho to deliver (1000) square meters, as
attorney's fee in handling seven (7) cases;
5. Ordering the Plaintiff Aurora B. Camacho and Defendant Silvestre Tuazon to pay jointly and severally, the sum of
P5,000.00 for attorney's fee for legal services to the INTERVENOR; cost and litigation expenses of P1,000. until the
case is terminated.
6. To grant such relief, just and equitable in the premises.15
Camacho opposed16 Atty. Banzon's motion on the ground that the admission of the complaint-in-intervention would
merely serve to delay the case. She also claimed that his interest could be fully ventilated in a separate case for
recovery of property or for damages.
On April 5, 1974, the RTC granted17 the motion and subsequently admitted the complaint-in-intervention.
On December 31, 1973, Atty. Banzon and Tuazon entered into the following amicable settlement:
1. That for and in consideration of the sum of TWO THOUSAND PESOS (P2,000.00), Philippine currency, which
have been received from the INTERVENOR and acknowledged to have been received by the Defendant Silvestre
Tuazon, the latter hereby acknowledges, waives his defenses against the claim of the INTERVENOR ANGELINO M.
BANZON over a portion of Lot No. 261, portion of the lot in question, to the extent of SIX THOUSAND EIGHT
HUNDRED EIGHTY (6880) SQUARE METERS as claimed and contained in the COMPLAINT IN
INTERVENTION and to give effect to this AMICABLE SETTLEMENT hereby surrenders the actual possession of
the said portion, subject to the approval of this Hon. Court, in favor of the INTERVENOR;
2. That the herein parties to this AMICABLE SETTLEMENT waive and renounce whatever rights or claims, including
future claims that each may have against each other;
3. That the parties herein bind themselves to comply with the conditions of the foregoing settlement;
4. That the foregoing AMICABLE SETTLEMENT was realized and achieved between the herein parties, thru the prior
intercession of the Defendant's counsel Atty. Narciso V. Cruz, Jr.
WHEREFORE, it is respectfully prayed that the foregoing AMICABLE SETTLEMENT be approved and made as the
basis of this Hon. Court's decision between the herein INTERVENOR and DEFENDANT Silvestre Tuazon.18
In Answer19 to the complaint-in-intervention, Camacho denied that she solicited the services of Atty. Banzon to
facilitate the transfer of the site of the proposed public market; in fact, it was Atty. Banzon who approached and
convinced her to donate a portion of the lot to the municipality of Balanga. He assured her that the municipality of
Balanga planned to relocate the public market and was scouting for a new location. He also told her that her lot
appeared to be the most ideal location, and that he would take care of all the legal problems.
Camacho admitted, however, that she signed the Contract of Attorney's Fee but only upon the request of Atty. Banzon.
He told her that the document would be shown to the municipal councilors "for formality's sake" to prove his authority
to act for and in behalf of Camacho. It was never intended to bind her to pay attorney's fees.20 She further denied that
she agreed to give to Atty. Banzon 1,000 sq m for handling the seven cases; they never discussed attorney's fees. The
cases stemmed from his assurance that he would take care of any legal problem resulting from the donation of her
property. She was not even a party in some of the cases cited by Atty. Banzon.21 Lastly, she denied that he had made
demands to deliver the mentioned portions of the property.22
In his Reply,23 Atty. Banzon countered that the Balanga Municipal Council Resolution No. 128 transferring the market
site to Camacho's property was enacted precisely because of his letter-proposal24 to the municipal council.
On August 14, 1977, Camacho and Tuazon entered into a Compromise Agreement,25 whereby Camacho agreed to
transfer a 1,000-sq-m portion of Lot 261-B in favor of Tuazon; for his part, Tuazon moved to dismiss Civil Case No.
3805 and to remove all the improvements outside the portion of the property which Camacho had agreed to convey to
him. Thus, the RTC rendered a partial decision26 approving the compromise agreement.
On September 12, 1978, Camacho filed a Motion to Dismiss27 the Complaint-in-Intervention filed by Atty. Banzon on
the ground that the jurisdiction of the court to try the case ceased to exist because the principal action had been
terminated. The RTC denied the motion in its Order28 dated March 16, 1979. It held that Atty. Banzon had an interest
over the subject property which he had to protect and that the compromise agreement between Camacho and Tuazon
did not include him. Moreover, the dismissal of the intervention would not achieve its purpose of avoiding multiplicity
of suits. The propriety of the denial of Camacho's motion to dismiss was finally settled by this Court in Camacho v.
Court of Appeals29 where this Court affirmed the denial of the motion.

After trial on the merits, the RTC rendered a Decision30 on September 1, 1992 in favor of Atty. Banzon. The fallo
reads:
ACCORDINGLY, judgment is hereby rendered:
1. Ordering plaintiff Aurora B. Camacho under the Contract of Attorney's Fees, [to deliver] 5000 square meters of the
subject landholding, Lot 261-B-1, covered by Transfer Certificate of Title No. T-76357, or any other derivative sublots
of the original Lot 261-B;
2. Declaring the dismissal of said intervenor from the case at bar as unjustified;
3. Ordering said plaintiff to pay and deliver to said intervenor 1000 square meters of the property in question, Lot 261-
B-1 or any other derivative sublots of the original Lot 261-B in case of deficiency, for legal services rendered in seven
(7) cases;
4. Directing said plaintiff to deliver to said intervenor, under a Provisional Deed of Sale, 80 square meters of the
subject property, Lot 261-B-1 or any other derivative sublots of the original Lot 261 in case of deficiency, after
payment of the balance of the purchase price;
5. Ordering said plaintiff to execute the corresponding Deed of Sale in favor of said intervenor for the aforesaid 80
square meters;
6. Condemning said plaintiff to pay moral damages to said intervenor in the amount of P100,000.00; attorney's fees in
the sum of P30,000.00; and the costs of the suit.
SO ORDERED.
According to the RTC, Camacho had indeed read the contract and freely affixed her signature thereon. Applying the
provisions of Section 7 (now section 9), Rule 13032 of the Rules of Court, it concluded that the terms of the contract
were embodied in the document itself. Moreover, Camacho did not bother to pay for all the other cases being handled
by Atty. Banzon because she knew that she had agreed already to pay attorney's fees. The court likewise found that
applying the provisions of Sections 2433 and 26,34 Rule 138 of the Rules of Court, the area of the lot agreed upon as
attorney's fees appears to be a reasonable compensation for his services. Since Atty. Banzon handled other cases
subsequent to the execution of the contract of attorney's fees, the additional 1,000-sq-m lot which the parties had orally
agreed upon is proper. The RTC declared that Atty. Banzon was entitled to be compensated based on quantum meruit
since his dismissal from the present case was unjustified. It also held that Camacho was obliged to execute the
necessary public instrument covering the 80-sq-m portion of the lot which she had sold to Atty. Banzon. It went further
and awarded moral damages to Atty. Banzon on account of the mental anguish and besmirched reputation he had
suffered.
On October 8, 1992, Atty. Banzon filed a Motion for Execution Pending Appeal.35 Camacho, on the other hand, filed a
Notice of Appeal. Atty. Banzon filed a motion to dismiss on the ground that since the case originated from the
municipal court, it should be assailed via Petition for Review . On November 20, 1992, the court issued an Order36
denying the motion for execution pending appeal for failure to state good reasons therefor. It likewise granted the
notice of appeal on the ground that the complaint-in-intervention originated from the RTC and not from the MTC;
under the factual backdrop of the case, ordinary appeal is proper.
On appeal to the CA, Camacho raised the following errors:
I. THE LOWER COURT ERRED IN ALLOWING JUDGE ABRAHAM VERA TO SIGN THE DECISION IN THE
INSTANT CASE, CONSIDERING THAT JUDGE VERA HAD LONG CEASED TO BE THE JUDGE OF THAT COURT
AND WAS THE PRESIDING JUDGE OF BRANCH 90 OF THE REGIONAL TRIAL COURT OF QUEZON CITY WHEN
THE INSTANT DECISION WAS SIGNED ON SEPTEMBER 1, 1992.
II. THE LOWER COURT ERRED IN UPHOLDING THE VALIDITY AND DUE EXECUTION OF CONTRACT EXH.
"C" AND IN ORDERING PLAINTIFF TO DELIVER TO INTERVENOR 5,000 SQUARE METERS OF LOT 261-B-1,
T.C.T. T-76357, CONSIDERING THAT THIS LOT IS NOT SPECIFIED IN EXH. "C".
III. THE LOWER COURT ERRED IN DECLARING THAT INTERVENOR'S DISCHARGE AS PLAINTIFF'S COUNSEL
IN THE CASE AT BAR WAS UNJUSTIFIED, IN AWARDING INTERVENOR MORAL DAMAGES, AND IN
DISMISSING PLAINTIFFS' COUNTERCLAIMS.
IV. THE LOWER COURT ERRED IN AWARDING INTERVENOR 1,000 SQUARE METERS OF PLAINTIFF'S LAND
FOR HIS HANDLING OF ALLEGED SEVEN CASES.
V. THE LOWER COURT ERRED IN ORDERING PLAINTIFF TO EXECUTE A FINAL DEED OF SALE FOR 80
SQUARE METERS OUT OF LOT 261-B-1, CONSIDERING THAT LOT 261-B-1 IS NOT SPECIFIED IN THE
PROVISIONAL DEED OF SALE.37
On October 29, 1996, the CA rendered a decision38 affirming with modification the RTC ruling. The fallo reads:
WHEREFORE, foregoing considered, the appealed decision is hereby AFFIRMED with modification requiring
plaintiff Camacho to DELIVER 5,000 sq.m. and 1,000 sq. m. of Lot 261-B-1 to Intervenor as his attorney's fee and 80
sq. m. also from Lot 261 subject to the conditions embodied under no. 4 of the dispositive portion of the assailed
decision all within thirty (30) days from the finality of this decision.
SO ORDERED.
The CA held that all the elements of a valid contract were present: Camacho (a dentistry graduate and an experienced
businesswoman conversant in English) cannot plead that she did not understand the undertaking she had entered into;
the object of the contract is certain since the genus of the object was expressed although there was no determination of
the individual specie; and the cause of the obligation - to negotiate and offer a site where the public market will be
constructed - is not unlawful and cannot be considered as influence peddling. As to the alleged violation of the terms of
the special power of attorney, the court held that Camacho was estopped from claiming damages by reason thereof.
The CA likewise found the award of moral damages to be in order; that the discharge of Atty. Banzon as counsel for
Camacho was not justified and his discharge does not in any way deprive him of his right to attorney's fees. Lastly, the
CA held that the RTC erred in requiring Camacho to deliver Lot 261-B-1, since Atty. Banzon cannot demand a portion
of superior quality in the same way that appellant cannot transfer an inferior quality.
On December 3, 1996, the CA issued a Resolution40 instituting petitioner Aurora Fe Camacho as substitute for the
deceased Aurora B. Camacho.
Atty. Banzon filed a Motion for Partial Reconsideration of the CA Decision, as well as a Motion to Declare Decision
Final insofar as Camacho was concerned. On the other hand, Camacho moved to cancel the notice of lis pendens. In
the meantime, petitioner had filed the petition before this Court. Thus, the CA no longer acted on the motions on the
ground that it had already lost jurisdiction over the case.41
In the present petition, petitioner raises the following issues:
1. WHETHER OR NOT INTERVENOR CAN BE AWARDED A FAVORABLE JUDGMENT DESPITE ABSENCE OF
ANY FINDINGS OF FACT IN THE DECISION WHICH SHOW THAT HE WAS ABLE TO PROVE THE (SIC) HIS
MATERIAL ALLEGATIONS UPON WHICH HE BASIS (SIC) HIS CLAIM UNDER CONTRACT OF ATTORNEY'S
FEE, EXH. "C," ESPECIALLY PAR. 7 OF THE COMPLAINT-IN-INTERVENTION.
CAN THE BURDEN OF PROVING THE AND (SIC) DUE EXECUTION OF CONTRACT EXH. "C" BE SHIFTED TO
PLAINTIFF CAMACHO WITHOUT VIOLATING SECT. 1, RULE 131, OF THE RULES OF COURT?cralaw library
2. DID THE COURT OF APPEALS CORRECTLY APPLY THE PROVISION OF ART. 1246 OF THE CIVIL CODE TO
THE INSTANT CASE IN RULING THAT CONTRACT EXH. "C" IS VALID AS TO OBJECT?cralaw library
WILL THE DECISION REQUIRING THE DELIVERY OF 5,000 SQUARE METERS OF LOT 261 BASED ON THE
SAID ART. 1246, IN WHICH INTERVENOR CANNOT DEMAND A THING OF SUPERIOR QUALITY AND NEITHER
CAN PLAINTIFF CAMACHO DELIVER A THING OF INFERIOR QUALITY, BE SUSCEPTIBLE OF
IMPLEMENTATION WITHOUT NEED OF A NEW CONTRACT OR AGREEMENT BETWEEN THE PARTIES?cralaw
library
IF SO, WILL THAT NOT ALL THE MORE PROVE THAT TE OBJECT OF CONTRACT EXH. "C" IS
INDETERMINATE PURSUANT [TO] ART. 1349 OF THE CIVIL CODE?cralaw library
3. WHETHER OR NOT THE COURT OF APPEALS WAS IN A POSITION TO PROCLAIM THE LEGALITY OR
ILLEGALITY OF THE ALLEGED CONTRACT WITHOUT FIRST REVEALING OR SETTING FORTH THE REAL
NATURE OF THIS OR THESE UNDERTAKINGS BASED ON THE ALLEGATIONS AND TESTIMONIES OF
INTERVENOR. HENCE, WHETHER OR NOT THE TWO UNDERTAKINGS IN CONTRACT EXH. "C" ARE LAWFUL.
4. WHETHER OR NOT THE COURT OF APPEALS COMMIT A GRAVE ABUSE OF DISCRETION BY TREATING
LIKE A MATTER OUT OF RECORD THE ALLEGED REASONS OF PLAINTIFF CAMACHO FOR DISMISSING
INTERVENOR AS HER COUNSEL IN THE CASE AT BAR, WHICH WERE ENUMERATED AND DISCUSSED ON
PAGES 42-60 OF HER APPELLANT'S BRIEF, ANNEX "B," AND WHICH WERE PRINCIPALLY AND SPECIFICALLY
COVERED IN HER THIRD ASSIGNMENT OF ERRORS AND CONSIDERING THAT ONE OF THESE ALLEGED
REASONS ALSO CONSTITUTE PLAINTIFF CAMACHO'S COUNTERCLAIM FOR WHICH SHE IS SEEKING
MORAL DAMAGES OF P100,000.
DID NOT THE COURT OF APPEALS COMMIT GRAVE ABUSE OF DISCRETION IN REPRESENTING PLAINTIFF
CAMACHO'S THIRD ASSIGNED ERROR AS REFERRING MERELY TO THE ISSUE OF WHETHER OR NOT THE
AWARD OF MORAL DAMAGES TO INTERVENOR IS JUSTIFIED.
WAS NOT PLAINTIFF CAMACHO THEREBY DEPRIVED OF HER CONSTITUTIONAL RIGHT TO DUE PROCESS
OF LAW?
5. WHETHER OR NOT THE AWARD OF 1,000 SQ. M. OF LOT 261 ATTORNEY'S FEE FOR ALLEGED HANDLING
OF SEVEN CASES HAS ANY LEGAL BASIS CONSIDERING THAT THERE IS NO SHOWING IN THE DECISION
THAT THE ORAL CONTRACT ALLEGED BY INTERVENOR TO BE THE BASIS OF THE SAID ATTORNEY'S FEE
WAS DULY POROVEN (SIC).42
Petitioner argues that the findings of facts in the assailed decision are mere conclusions, without citation of evidence to
support them. She likewise avers that consent was not clearly proven; the conclusion of the CA was based on the
presumption that the document was read prior to being signed. Petitioner insists that there is no "object certain" to
speak of since the exact location of the subject property cannot be determined; in short, the issue is not the quality of
the property but its identity. Petitioner further asserts that the cause of the contract - pirating of the municipality's
market project and ejecting the tenant to convert the property into a commercial establishment - is illegal. She further
insists that respondent failed to accomplish the twin objective of ejecting Silvestre Tuazon and converting the
remaining land into a commercial area; thus, he is not entitled to the 5,000-sq-m lot. She further contends that the CA
erred in awarding moral damages because respondent did not ask for it in his complaint-in-intervention. Lastly, she
asserts that the CA erred in affirming the award of the 1,000-sq-m lot pursuant to a verbal contract between Camacho
and respondent, especially considering the prevailing jurisprudence against a lawyer's acquisition of a client's lot in
litigation without the latter's consent.
In his Comment,43 respondent counters that the elements of a valid contract are present: Camacho's consent to the
contract is evidenced by her signature which was in fact admitted by the latter; that while it is true that the identity of
the 5,000-sq-m portion of Lot 261 has not been specified due to the absence of the necessary technical descriptions, it
is capable of being made determinate without the need of a new agreement between the parties; as to the validity of the
cause of the contract, the general principle of estoppel applies.

The Ruling of the Court:


Article 1305 of the New Civil Code defines a contract as a "meeting of minds between two persons whereby one binds
himself, with respect to the other, to give something or to render some service." Contracts shall be obligatory in
whatever form they may have been entered into, provided all the essential requisites for their validity are present.44
In general, there are three (3) essential requisites for a valid contract: (1) consent of the contracting parties; (2) an
object certain which is the subject of the contract; and (3) the cause of the obligation which is established.45
The first element'
Consent of the contracting parties'
Is shown by their signatures on the Contract
Consent is manifested by the meeting of the offer and the acceptance upon the thing and the cause which are to
constitute the agreement.46 In this case, Camacho admitted the existence of the contract as well as the genuineness of
her signature. However, she claimed that she signed only upon the request of Atty. Banzon, who told her that the
document would only be shown to the municipal councilors ("for formality's sake") to prove his authority in her behalf.
It was never intended to bind her to pay him attorney's fees;47 in short, petitioner insists that Camacho had not given
her consent to the contract.
We, however, do not agree. The contract between Camacho and respondent is evidenced by a written document signed
by both parties denominated as Contract of Attorney's Fee. It is an established rule that written evidence is so much
more certain and accurate than that which rests in fleeting memory only; that it would be unsafe, when parties have
expressed the terms of their contract in writing, to admit weaker evidence to control and vary the stronger, and to show
that the parties intended a different contract from that expressed in the writing signed by them.48 Moreover, the
moment a party affixes her signature thereon, he or she is bound by all the terms stipulated therein and is open to all the
legal obligations that may arise from their breach.49
In the instant case, Camacho voluntarily signed the document evidencing the contract. Camacho's claim that the
document was intended only to show respondent's authority to represent her with respect to the transaction is flimsy,
since a special power of attorney could just as easily have accomplished that purpose. In fact, Camacho did execute a
Special Power of Attorney50 after the Contract of Attorney's Fee was executed, and if Camacho were to be believed,
the Contract of Attorney's Fee should have been immediately canceled thereafter since it was no longer needed. As
correctly held by the CA, Camacho was an experienced businesswoman, a dentistry graduate and is conversant in the
English language. We note that the words and phrases used in the Contract of Attorney's Fee are very simple and clear;
thus, she cannot plead that she did not understand the undertaking she had entered into.51 Considering that her
undertaking was to part with a 5,000-sq-m portion of her property, she should have been more vigilant in protecting her
rights.
Even assuming that the contract did not reflect the true intention of the parties as to their respective obligations, it is
nevertheless binding. The existence of the written contract, coupled with Camacho's admission that the signature appearing
thereon was hers, constitute ineluctable evidence of her consent to the agreement. It cannot be overcome by mere denial and
allegations that they did not intend to be bound thereby. We also note that Camacho did not avail of the remedy of
reformation of the instrument in order to reflect what, according to her, was the true agreement.
Camacho's consent to the contract was further manifested in the following events that transpired after the contract was
executed: the execution of the agreement with voluntary surrender signed by Tuazon; the execution of the Deed of
Donation where Atty. Banzon was authorized to sign the same on behalf of Camacho; and the sale of 1200 sq. m.
portion of the property right at the market site. In all these transactions, Atty. Banzon represented Camacho pursuant to
the Contract of Attorney's Fee.
The object of the contract is still certain despite the parties' failure to indicate the specific portion of the property to be
given as compensation for services
Articles 1349 and 1460 of the Civil Code provide the guidelines in determining whether or not the object of the
contract is certain:
Article 1349. The object of every contract must be determinate as to its kind. The fact that the quantity is not determinate
shall not be an obstacle to the existence of the contract, provided it is possible to determine the same, without the need of a
new contract between the parties.
x x x
Article 1460. A thing is determinate when it is particularly designated and/or physically segregated from all others of
the same class.
The requisite that a thing be determinate is satisfied if at the time the contract is entered into, the thing is capable of
being made determinate without the necessity of a new or further agreement between the parties.
In this case, the object of the contract is the 5,000-sq-m portion of Lot 261, Balanga Cadastre. The failure of the parties
to state its exact location in the contract is of no moment; this is a mere error occasioned by the parties' failure to
describe with particularity the subject property, which does not indicate the absence of the principal object as to render
the contract void.52 Since Camacho bound herself to deliver a portion of Lot 261 to Atty. Banzon, the description of
the property subject of the contract is sufficient to validate the same.
The Cause or Consideration of the contract is not illegal
In general, the cause is the why of the contract or the essential reason which moves the contracting parties to enter into
the contract.53 For the cause to be valid, it must be lawful such that it is not contrary to law, morals, good customs,
public order or public policy.54 Petitioner insists that the cause of the subject contract is illegal. However, under the
terms of the contract, Atty. Banzon was obliged to negotiate with the municipal government of Balanga for the transfer
of the proposed new public market to Camacho's property (Lot 261); to sell 1,200 square meters right at the market
site; and to take charge of the legal phases incidental to the transaction which include the ejectment of persons
unlawfully occupying the property (whether through amicable settlement or court action), and the execution of the
Deed of Donation and other papers necessary to consummate the transaction. There was thus nothing wrong with the
services which respondent undertook to perform under the contract. They are not contrary to law, morals, good
customs, public order or public policy.
Petitioner argues that the cause of the contract is the "pirating" of the municipality's market project and ejecting the
tenant to convert the property into a commercial establishment. This is premised on the fact that the construction of the
new public market at Doa Francisca Subdivision had originally been approved by the municipal council of Balanga,
the Development Bank of the Philippines, and the National Urban Planning Commission; and at the time the contract
was executed, Tuazon occupied the property. The records show, however, that the municipal council was scouting for a
new location because it had reservations regarding the site of the proposed project. And while Lot 261 was considered
to be the most ideal (because it stands on higher ground and is not susceptible to flooding) it does not follow that
respondent no longer negotiated for and in Camacho's behalf. There were other terms to be negotiated, such as the
mode of transfer (whether sale or donation); the titling of the property in the name of the municipality; the terms of
payment, if any; and such other legalities necessary to consummate the transaction.
It must be stressed that Camacho was not deprived of any property right. The portions of her property which she parted
with (the 17,000-sq-m portion donated to the municipality; the 5,000-sq-m portion given to respondent as attorney's
fees; and the 1,200-sq-m portion which was sold) were either in exchange for services rendered or for monetary
consideration. In fact, all these transactions resulted in the increase in the economic value of her remaining properties.
Thus, the defense of the illegality of respondent's undertaking is baseless. The municipal council had the authority to
choose the best site for its project. We also note that the market site was transferred with the active participation of
Camacho, who agreed to donate the 17,000-sq-m portion of her property; the new public market was constructed and
became operational; and the sale of the 1,200-sq-m lot was consummated when Camacho executed the deeds herself.
Thus, petitioner cannot be allowed to evade the payment of Camacho's liabilities under the contract with respondent; a
contrary conclusion would negate the rule of estoppel and unjust enrichment.
As to the additional 1,000-sq-m-portion of Lot 261, however, we find and so hold that respondent is not entitled
thereto.
Indeed, it was sufficiently established that an attorney-client relationship existed between Camacho and respondent and
that the latter handled several other cases for his client. The records show that the parties had agreed upon specific
sums of money as attorney's fees for the other cases:
Civil Case No. C-1773 P10,000.0055 CAR Case No. 520-B 73 P5,000.0058
Civil Case No. 424 P1,000.0056 Civil Case No. 3281 P5,000.0059
CAR Case No. 278-B 70 P2,000.0057
This clearly negates respondent's claim of an additional 1,000-sq-m share as compensation for services rendered.
Likewise, there being no evidence on respondent's right over the 800-sq-m allegedly purchased from third persons, he
is likewise not entitled to this portion of the property.
On the other hand, Camacho admitted in her Answer60 to the Complaint-in-Intervention that respondent had purchased
from her an 80-sq-m portion of the property. Since she had merely executed a Provisional Deed of Sale,61 we agree
with the RTC that respondent has the right to require the execution of a public instrument evidencing the sale.
It must be understood that a retainer contract is the law that governs the relationship between a client and a lawyer.62
Unless expressly stipulated, rendition of professional services by a lawyer is for a fee or compensation and is not
gratuitous.63 Whether the lawyer's services were solicited or they were offered to the client for his assistance,
inasmuch as these services were accepted and made use of by the latter, we must consider that there was a tacit and
mutual consent as to the rendition of the services, and thus gives rise to the obligation upon the person benefited by the
services to make compensation therefor.64 Lawyers are thus as much entitled to judicial protection against injustice on
the part of their clients as the clients are against abuses on the part of the counsel. The duty of the court is not only to
see that lawyers act in a proper and lawful manner, but also to see that lawyers are paid their just and lawful fees.65 If
lawyers are entitled to fees even if there is no written contract, with more reason that they are entitled thereto if their
relationship is governed by a written contract of attorney's fee.
In her fourth assigned error, petitioner claims that the CA failed to rule on the propriety of the dismissal of respondent
as Camacho's counsel.
We do not agree. We uphold the following pronouncement of the CA on the matter:
In this case, the grounds relied upon by plaintiff Camacho as justifications for the discharge of Intervenor are not
sufficient to deprive the latter of his attorney's fees.
Intervenor may see the case in an angle different from that seen by plaintiff Camacho. The procedures adopted by
Intervenor may not be what plaintiff Camacho believes to be the best. But these do not in any way prove that
Intervenor was working to the prejudice of plaintiff Camacho.
Failure of plaintiff Camacho to prove that Intervenor intended to damage her, We consider the charges of plaintiff
Camacho as mere honest difference of opinions.

As to the charge that Intervenor failed to account the money he collected in behalf of plaintiff Camacho, the same is
not supported by any evidence. Suffice it to say that mere allegations cannot prove a claim.66

The ruling of the CA on the award of moral damages is likewise in accordance with the facts and established
jurisprudence:
The act of plaintiff Camacho is a clear case of breach of contract.rbl rl l lbrr

Worst, when Intervenor demanded payment, plaintiff Camacho adopted all sorts of strategies to delay payment. This
case dragged on for twenty (20) years. And until this time, plaintiff Camacho continues to unjustifiably refuse the
payment of the attorney's fees due to intervenor.

For these, one can readily imagine the worries and anxiety gone through by Intervenor. Award of moral damages is but
proper.

Moral damages may be granted if the party had proven that he suffered mental anguish, serious anxiety and moral
shock as a consequence of the act of the other party. Moral damages can be awarded when a party acted in bad faith as
in this case by Camacho.67

IN LIGHT OF ALL THE FOREGOING, the appealed decision is AFFIRMED with the MODIFICATION that the
award of a 1,000-square-meter portion of Lot 261 to respondent Atty. Angelito Banzon as attorney's fees is DELETED.

SO ORDERED.
LABAGALA vs. SANTIAGO
G.R. No. 132305

FACTS: Jose T. Santiago owned a parcel of land in Manila. However, his sisters sued him for recovery of 2/3 share of
the land alleging that he had fraudulently registered it in his name. The trial court decided in favor of his sisters. Jose
died intestate. His sisters then filed a complaint before the RTC for recovery of the 1/3 portion of said property which
was in the possession of Ida C. Labagala (who claimed to be Ida C. Santiago, the daughter of Jose). The trial court
ruled in favor of Labagala. According to the trial court, the said deed constitutes a valid donation. Even if it were not,
petitioner would still be entitled to Jose's 1/3 portion of the property as Jose's daughter. When appealed, the Court of
Appeals (CA) reversed the decision of the trial court. It took into account that Ida was born of different parents, as
indicated her birth certificate.

ISSUES: 1. WON respondents may impugn petitioner's filiation in this action for recovery of title and possession. 2.
WON petitioner is entitled to Jose's 1/3 portion of the property he co-owned with respondents, through succession,
sale, or donation.

HELD: The Court AFFIRMED the decision of the CA. On Issue No. 1 Yes. Article 263 refers to an action to impugn
the legitimacy of a child, to assert and prove that a person is not a man's child by his wife. However, the present
respondents are asserting not merely that petitioner is not a legitimate child of Jose, but that she is not a child of Jose at
all. A baptismal certificate, a private document, is not conclusive proof of filiation. Use of a family name certainly does
not establish pedigree. Thus, she cannot inherit from him through intestate succession. On Issue No. 2 No. The Court
ruled that there is no valid sale in this case. Jose did not have the right to transfer ownership of the entire property to
petitioner since 2/3 thereof belonged to his sisters. Petitioner could not have given her consent to the contract, being a
minor at the time. Consent of the contracting parties is among the essential requisites of a contract, including one of
sale, absent which there can be no valid contract. Moreover, petitioner admittedly did not pay any centavo for the
property which makes the sale void. Article 1471 of the Civil Code provides that if the price is simulated, the sale is
void, but the act may be shown to have been in reality a donation, or some other act or contract. Neither may the
purported deed of sale be a valid deed of donation. Even assuming that the deed is genuine, it cannot be a valid
donation. It lacks the acceptance of the donee required by Art. 725 of the Civil Code. Being a minor, the acceptance of
the donation should have been made by her father or mother or her legal representative pursuant to Art. 741 of the same
Code. No one of those mentioned in the law accepted the donation for Ida.
Concrete Aggregates vs. CTA and CIR
185 SCRA 416
May 1990

FACTS:
Petitioner, a domestic corporation duly existing under the laws of the Philippines, has an aggregate plant at Montalban,
Rizal which processes rock aggregates mined by it from private lands, and maintains and operates a plant at Longos,
Quezon City for the production of ready-mixed concrete and plant-mixed hot asphalt. Sometime in 1968, the agents of
respondent Commission on Internal Revenue (CIR) conducted an investigation of petitioner's tax liabilities, and
assessed and demanded payment from petitioner the amount of P244,002.76 as sales and ad valorem taxes for the first
semester of 1968, inclusive of surcharges.

Instead of paying, the petitioner appealed to respondent CTA. The said Court concluded that petitioner is a
manufacturer subject to the 7% sales tax under the Section Section 186 of the 1968 National Internal Revenue Code,
and ordered it to pay what the respondent CIR demands, plus interest at the rate of 14% per centum from January 1,
1973 up to the date of full payment thereof pursuant to Section 183 (now 193) of the same Code. Petitioner contends,
however, that it is a contractor within the meaning of Section 191 under the same Code, that its business falls under
"other construction work contractors" or "other independent contractors", and that it produced asphalt and concrete mix
only upon previous orders.

ISSUE:
Is the petitioner a contractor subject to the 3% contractor's tax under Section 191 or a manufacturer subject to the 7%
sales tax under Section 186?

COURT RULING:
The Supreme Court affirmed respondent CTAs decision and declared that petitioner is a manufacturer as defined by
Section 194(x), now Section 187(x), of the Tax Code. It reiterated the respondent CTAs finding that petitioner was
formed and organized primarily as a manufacturer; that it has an aggregate plant at Montalban, Rizal, which processes
rock aggregates mined by it from private lands; it operates a concrete batching plant at Longos, Quezon City where the
specified aggregates from its plant at Montalban are mixed with sand and cement, after which water is added and the
concrete mixture is sold and delivered to customers; and at its plant site at Longos, Quezon City, petitioner has also an
asphalt mixing machinery where bituminous asphalt mix is manufactured.
KILOSBAYAN VS GUINGONA
232 SCRA 110 Business Organization Corporation Law PCSOs Charter

In 1993, the Philippine Charity Sweepstakes Office decided to put up an on-line lottery system which will establish a
national network system that will in turn expand PCSOs source of income.

A bidding was made. Philippine Gaming Management Corporation (PGMC) won it. A contract of lease was awarded in
favor of PGMC.

Kilosbayan opposed the said agreement between PCSO and PGMC as it alleged that:
1 PGMC does not meet the nationality requirement because it is 75% foreign owned (owned by a Malaysian firm
Berjaya Group Berhad);
2 PCSO, under Section 1 of its charter (RA 1169), is prohibited from holding and conducting lotteries in collaboration,
association or joint venture with any person, association, company or entity;
3 The network system sought to be built by PGMC for PCSO is a telecommunications network. Under the law (Act No.
3846), a franchise is needed to be granted by the Congress before any person may be allowed to set up such;
4 PGMCs articles of incorporation, as well as the Foreign Investments Act (R.A. No. 7042) does not allow it to install,
establish and operate the on-line lotto and telecommunications systems.

PGMC and PCSO, through Teofisto Guingona, Jr. and Renato Corona, Executive Secretary and Asst. Executive
Secretary respectively, alleged that PGMC is not a collaborator but merely a contractor for a piece of work, i.e., the
building of the network; that PGMC is a mere lessor of the network it will build as evidenced by the nature of the
contract agreed upon, i.e., Contract of Lease.

ISSUE: Whether or not Kilosbayan is correct.

HELD: Yes, but only on issues 2, 3, and 4.


1 On the issue of nationality, it seems that PGMCs foreign ownership was reduced to 40% though.
On issues 2, 3, and 4, Section 1 of R.A. No. 1169, as amended by B.P. Blg. 42, prohibits the PCSO from holding and
conducting lotteries in collaboration, association or joint venture with any person, association, company or entity,
whether domestic or foreign. There is undoubtedly a collaboration between PCSO and PGMC and not merely a
contract of lease. The relations between PCSO and PGMC cannot be defined simply by the designation they used, i.e.,
a contract of lease. Pursuant to the wordings of their agreement, PGMC at its own expense shall build, operate, and
manage the network system including its facilities needed to operate a nationwide online lottery system. PCSO bears
no risk and all it does is to provide its franchise in violation of its charter. Necessarily, the use of such franchise by
PGMC is a violation of Act No. 3846.
INOCENCIA YU DINO and her HUSBAND doing business under the trade name "CANDY CLAIRE FASHION
GARMENTS", petitioners, vs. COURT OF APPEALS and ROMAN SIO, doing business under the name "UNIVERSAL
TOY MASTER MANUFACTURING", respondents.

D E C I S I O N*
PUNO, J.:
Though people say, "better late than never", the law frowns upon those who assert their rights past the eleventh
hour. For failing to timely institute their action, the petitioners are forever barred from claiming a sum of money from
the respondent.
This is a petition for review on certiorari to annul and set aside the amended decision of the respondent court
dated January 24, 1994 reversing its April 30, 1993 decision and dismissing the plaintiff-petitioners' Complaint on the
ground of prescription.
The following undisputed facts gave rise to the case at bar:
Petitioners spouses Dino, doing business under the trade name "Candy Claire Fashion Garment" are engaged in
the business of manufacturing and selling shirts. Respondent Sio is part owner and general manager of a manufacturing
corporation doing business under the trade name "Universal Toy Master Manufacturing."
Petitioners and respondent Sio entered into a contract whereby the latter would manufacture for the petitioners
20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads at P7.00 per piece in accordance with the sample
approved by the petitioners. These frogs and mooseheads were to be attached to the shirts petitioners would
manufacture and sell.
Respondent Sio delivered in several installments the 40,000 pieces of frogs and mooseheads. The last delivery
was made on September 28, 1988. Petitioner fully paid the agreed price. Subsequently, petitioners returned to
respondent 29,772 pieces of frogs and mooseheads for failing to comply with the approved sample. The return was
made on different dates: the initial one on December 12, 1988 consisting of 1,720 pieces, the second on January 11,
1989, and the last on January 17, 1989.
Petitioners then demanded from the respondent a refund of the purchase price of the returned goods in the
amount of P208,404.00. As respondent Sio refused to pay, petitioners filed on July 24, 1989 an action for collection of
a sum of money in the Regional Trial Court of Manila, Branch 38.
The trial court ruled in favor of the petitioners, viz:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs Vicente and Inocencia Dino and against
defendant Toy Master Manufacturing, Inc. ordering the latter to pay the former:
1. The amount of Two Hundred Eight Thousand Four Hundred Four (P208,404.00) Pesos with legal interest thereon
from July 5, 1989, until fully paid; and
2. The amount of Twenty Thousand (P20,000.00) Pesos as attorney's fees and the costs of this suit.
The counterclaim on the other hand is hereby dismissed for lack of merit.
Respondent Sio sought recourse in the Court of Appeals. In its April 30, 1993 decision, the appellate court
affirmed the trial court decision. Respondent then filed a Motion for Reconsideration and a Supplemental Motion for
Reconsideration alleging therein that the petitioners' action for collection of sum of money based on a breach of
warranty had already prescribed. On January 24, 1994, the respondent court reversed its decision and dismissed
petitioners' Complaint for having been filed beyond the prescriptive period. The amended decision read in part, viz:
"Even if there is failure to raise the affirmative defense of prescription in a motion to dismiss or in an appropriate
pleading (answer, amended or supplemental answer) and an amendment would no longer be feasible, still prescription,
if apparent on the face of the complaint may be favorably considered (Spouses Matias B. Aznar, III, et al. vs. Hon.
Juanito A. Bernad, etc., supra, G.R. 81190, May 9, 1988). The rule in Gicano vs. Gegato (supra) was reiterated in
Severo v. Court of Appeals, (G.R. No. 84051, May 19, 1989).
WHEREFORE the Motion For Reconsideration is granted. The judgment of this Court is set aside and judgment is
hereby rendered REVERSING the judgment of the trial court and dismissing plaintiff's complaint."

Hence, this petition with the following assignment of errors:


I. The respondent Court of Appeals seriously erred in dismissing the complaint of the Petitioners on the ground that the
action had prescribed.
II. The respondent Court of Appeals seriously erred in holding that the defense of prescription would still be
considered despite the fact that it was not raised in the answer, if apparent on the face of the complaint.
We first determine the nature of the action filed in the trial court to resolve the issue of prescription. Petitioners
claim that the Complaint they filed in the trial court on July 24, 1989 was one for the collection of a sum of money.
Respondent contends that it was an action for breach of warranty as the sum of money petitioners sought to collect was
actually a refund of the purchase price they paid for the alleged defective goods they bought from the respondent.
We uphold the respondent's contention.
The following provisions of the New Civil Code are apropos:
"Art. 1467. A contract for the delivery at a certain price of an article which the vendor in the ordinary course of his
business manufactures or procures for the general market, whether the same is on hand at the time or not, is a contract
of sale, but if the goods are to be manufactured specially for the customer and upon his special order, and not for the
general market, it is a contract for a piece of work."
"Art. 1713. By the contract for a piece of work the contractor binds himself to execute a piece of work for the
employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill,
or also furnish the material."
As this Court ruled in Engineering & Machinery Corporation v. Court of Appeals, et al.,"a contract for a
piece of work, labor and materials may be distinguished from a contract of sale by the inquiry as to whether the thing
transferred is one not in existence and which would never have existed but for the order of the person desiring it. In
such case, the contract is one for a piece of work, not a sale. On the other hand, if the thing subject of the contract
would have existed and been the subject of a sale to some other person even if the order had not been given then the
contract is one of sale. The contract between the petitioners and respondent stipulated that respondent would
manufacture upon order of the petitioners 20,000 pieces of vinyl frogs and 20,000 pieces of vinyl mooseheads
according to the samples specified and approved by the petitioners. Respondent Sio did not ordinarily manufacture
these products, but only upon order of the petitioners and at the price agreed upon. Clearly, the contract executed by
and between the petitioners and the respondent was a contract for a piece of work. At any rate, whether the agreement
between the parties was one of a contract of sale or a piece of work, the provisions on warranty of title against hidden
defects in a contract of sale apply to the case at bar, viz:
"Art. 1714. If the contractor agrees to produce the work from material furnished by him, he shall deliver the thing
produced to the employer and transfer dominion over the thing. This contract shall be governed by the following
articles as well as by the pertinent provisions on warranty of title and against hidden defects and the payment of price
in a contract of sale."
"Art. 1561. The vendor shall be responsible for warranty against the hidden defects which the thing sold may have,
should they render it unfit for the use for which it is intended, or should they diminish its fitness for such use to such an
extent that, had the vendee been aware thereof, he would not have acquired it or would have given a lower price for it;
but said vendor shall not be answerable for patent defects or those which may be visible, or for those which are not
visible if the vendee is an expert who, by reason of his trade or profession, should have known them."

Petitioners aver that they discovered the defects in respondent's products when customers in their (petitioners')
shirt business came back to them complaining that the frog and moosehead figures attached to the shirts they bought
were torn. Petitioners allege that they did not readily see these hidden defects upon their acceptance. A hidden defect is
one which is unknown or could not have been known to the vendee. [if !supportFootnotes][15][endif] Petitioners then returned to the
respondent 29,772 defective pieces of vinyl products and demanded a refund of their purchase price in the amount of
P208,404.00. Having failed to collect this amount, they filed an action for collection of a sum of money.
Article 1567 provides for the remedies available to the vendee in case of hidden defects, viz:
"Art. 1567. In the cases of Articles 1561, 1562, 1564, 1565 and 1566, the vendee may elect between withdrawing from
the contract and demanding a proportionate reduction of the price, with damages in either case."
By returning the 29,772 pieces of vinyl products to respondent and asking for a return of their purchase price,
petitioners were in effect "withdrawing from the contract" as provided in Art. 1567. The prescriptive period for this
kind of action is provided in Art. 1571 of the New Civil Code, viz:
"Art. 1571. Actions arising from the provisions of the preceding ten articles shall be barred after six months from the
delivery of the thing sold." (Emphasis supplied)
There is no dispute that respondent made the last delivery of the vinyl products to petitioners on September 28,
1988. It is also settled that the action to recover the purchase price of the goods petitioners returned to the respondent
was filed on July 24, 1989, more than nine months from the date of last delivery. Petitioners having filed the action
three months after the six-month period for filing actions for breach of warranty against hidden defects stated in Art.
1571, the appellate court dismissed the action.
Petitioners fault the ruling on the ground that it was too late in the day for respondent to raise the defense of
prescription. The law then applicable to the case at bar, Rule 9, Sec. 2 of the Rules of Court, provides:
"Defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived; except the
failure to state a cause of action . . . "
Thus, they claim that since the respondent failed to raise the defense of prescription in a motion to dismiss or in its
answer, it is deemed waived and cannot be raised for the first time on appeal in a motion for reconsideration of the
appellate court's decision.
As a rule, the defense of prescription cannot be raised for the first time on appeal. Thus, we held in Ramos v.
Osorio, viz:
"It is settled law in this jurisdiction that the defense of prescription is waivable, and that if it was not raised as a
defense in the trial court, it cannot be considered on appeal, the general rule being that the appellate court is not
authorized to consider and resolve any question not properly raised in the lower court (Subido vs. Lacson, 55 O.G.
8281, 8285; Moran, Comments on the Rules of Court, Vol. I, p. 784, 1947 Edition)."
However, this is not a hard and fast rule. In Gicano v. Gegato, we held:
". . .(T)rial courts have authority and discretion to dimiss an action on the ground of prescription when the parties'
pleadings or other facts on record show it to be indeed time-barred; (Francisco v. Robles, Feb, 15, 1954; Sison v.
McQuaid, 50 O.G. 97; Bambao v. Lednicky, Jan. 28, 1961; Cordova v. Cordova, Jan. 14, 1958; Convets, Inc. v. NDC,
Feb. 28, 1958; 32 SCRA 529; Sinaon v. Sorongan, 136 SCRA 408); and it may do so on the basis of a motion to
dismiss (Sec. 1,f, Rule 16, Rules of Court), or an answer which sets up such ground as an affirmative defense (Sec. 5,
Rule 16), or even if the ground is alleged after judgment on the merits, as in a motion for reconsideration (Ferrer
v. Ericta, 84 SCRA 705); or even if the defense has not been asserted at all, as where no statement thereof is
found in the pleadings (Garcia v. Mathis, 100 SCRA 250; PNB v. Pacific Commission House, 27 SCRA 766;
Chua Lamco v. Dioso, et al., 97 Phil. 821); or where a defendant has been declared in default (PNB v. Perez, 16
SCRA 270). What is essential only, to repeat, is that the facts demonstrating the lapse of the prescriptive period
be otherwise sufficiently and satisfactorily apparent on the record; either in the averments of the plaintiff's
complaint, or otherwise established by the evidence." (emphasis supplied)
In Aldovino, et al. v. Alunan, et al., the Court en banc reiterated the Garcia v. Mathis doctrine cited in the
Gicano case that when the plaintiff's own complaint shows clearly that the action has prescribed, the action may be
dismissed even if the defense of prescription was not invoked by the defendant.

It is apparent in the records that respondent made the last delivery of vinyl products to the petitioners on
September 28, 1988. Petitioners admit this in their Memorandum submitted to the trial court and reiterate it in their
Petition for Review.[if !supportFootnotes][21][endif] It is also apparent in the Complaint that petitioners instituted their action on
July 24, 1989. The issue for resolution is whether or not the respondent Court of Appeals could dismiss the petitioners'
action if the defense of prescription was raised for the first time on appeal but is apparent in the records.

Following the Gicano doctrine that allows dismissal of an action on the ground of prescription even after
judgment on the merits, or even if the defense was not raised at all so long as the relevant dates are clear on the record,
we rule that the action filed by the petitioners has prescribed. The dates of delivery and institution of the action are
undisputed. There are no new issues of fact arising in connection with the question of prescription, thus carving out the
case at bar as an exception from the general rule that prescription if not impleaded in the answer is deemed waived.

Even if the defense of prescription was raised for the first time on appeal in respondent's Supplemental Motion
for Reconsideration of the appellate court's decision, this does not militate against the due process right of the
petitioners. On appeal, there was no new issue of fact that arose in connection with the question of prescription, thus it
cannot be said that petitioners were not given the opportunity to present evidence in the trial court to meet a factual
issue. Equally important, petitioners had the opportunity to oppose the defense of prescription in their Opposition to the
Supplemental Motion for Reconsideration filed in the appellate court and in their Petition for Review in this Court.

This Court's application of the Osorio and Gicano doctrines to the case at bar is confirmed and now enshrined in
Rule 9, Sec. 1 of the 1997 Rules of Civil Procedure, viz:
"Section 1. Defense and objections not pleaded. - Defenses and objections not pleaded whether in a motion to dismiss
or in the answer are deemed waived. However, when it appears from the pleadings that the court has no jurisdiction
over the subject matter, that there is another action pending between the same parties for the same cause, or that the
action is barred by a prior judgment or by statute of limitations, the court shall dismiss the claim." (Emphasis
supplied)

WHEREFORE, the petition is DENIED and the impugned decision of the Court of Appeals dated January 24, 1994 is
AFFIRMED. No costs.

SO ORDERED.
G.R. No. L-56960 January 28, 1988
ELISEA G. ROXAS, petitioner, vs.
COURT OF APPEALS, and CLARENCE PIMENTEL, respondents.

NARVASA, J.:
Presented for resolution in this petition for review on certiorari of a decision of the Court of Appeals, which set aside a Trial
Court's order of execution pending appeal is the question of whether or not good reasons exist to justify that particular order,
in accordance with Section 2, Rule 39 of the Rules of Court.
What gave rise to this litigation was a general power of attorney made on October 28, 1973 by Elisea G. Roxas
authorizing Edgardo Jose, among other things, "(t)o buy or sell, hire or lease, mortgage or otherwise hypothecate
lands, tenements, and hereditaments and other forms of real property, upon such terms and conditions and under
covenant as said attorney shall deem fit and proper." 1
On the strength of this general power, Edgardo Jose sold to Clarence Pimentel on May 30, 1975, Roxas' house and lot
at No. 11 President Avenue, BF Homes, Paranaque, Metro Manila. The deed of sale stated the consideration to be
P380,000.00 plus Pimentel's assumption of the mortgage constituted on the property in favor of Banco Filipino
(securing an obligation in the sum of P83,000.00). The consideration was payable by Pimentel partly in money
P180,000.00 in cash and partly in property Pimentel's own house and lot, valued at P200,000.00, which was
transferred to Roxas, Jose's principal, together with the mortgage obligation burdening said property in the amount of
P50,000.00. 2 The agreement was consummated. Pimentel obtained title to the property in his name, took possession
thereof, and introduced improvements thereon. 3
The transaction took place while Roxas was in the United States. On July 26, 1975, shortly upon her return to the
Philippines, she revoked Jose's general power of attorney and then, by her attorney's letter dated November 28, 1975,
demanded from Jose the delivery of the cash proceeds of the sale, as well as the chattels and effects she had left in her
house. 4 But Jose evidently failed to comply with Roxas' demand.
On March 29, 1976, Roxas instituted suit to annul the sale, founded on Jose's alleged lack of authority to sell. 5 Her
complaint was originally against Jose and Pimentel, but was subsequently amended to implead Banco Filipino and the
Register of Deeds of Rizal as additional defendants: Banco Filipino for releasing the owner's duplicate certificate of title to
Clarence Pimentel; and the Register of Deeds, for having allowed registration of the deed of sale and the issuance of title to
Pimentel. 6 Answer was in due course filed by the defendants, affirming the validity of the transaction. 7
The defendants asserted, and Pimentel testified at the trial, among other things, that prior to the execution of the deed
of sale, Roxas had been informed while in America of the terms thereof and had approved them; that on her return to
this country she had confirmed the sale through two documents: one entitled "Acknowledgement and/or Confirmation"
dated July 29, 1975 and the other, "Receipt Confirmation and/or Acknowledgment" dated August 17, 1975; and that her
ratification had been made indubitable by her counsel's aforementioned letter of November 28, 1975 demanding from
Jose delivery or accounting of the proceeds of the sale. 8
The Trial Court's verdict went against the defendants. 9 It annulled the deed of sale, decreed cancellation of Pimentel's
title and the issuance of a new one in Roxas' favor, ordered Pimentel to vacate the property and pay damages, and
directed Banco Filipino to grant Roxas a period of 6 months from finality of the decision to update her accounts. These
dispositions were predicated on the Court's findings that: (1) the transaction was not a sale but a barter, 10 hence not
covered by Jose's general power, which speaks only of the authority to sell; (2) there was so great a disparity in the
values of the properties exchanged that, even with the additional cash payment by Pimentel of P180,000.00, the barter
was unconscionable in contemplation of Articles 1887 11 and 1888 12 of the Civil Code; 13 and (3) there had actually
been no confirmation or ratification of the sale by Roxas.
Pimentel appealed to the Court of appeals. For her part, Roxas filed a motion for partial execution pending appeal. This
the Trial Court granted over Pimentel's opposition, by Order dated January 2, 1980 (and amended, January 11, 1980). 14
It ordered execution specifically with respect to that portion of the judgment which (1) annulled the deed of sale, (2)
ordered cancellation of Pimentel's title and the issuance of a new one in Roxas' favor, and (3) directed Pimentel to
vacate the property. In justification of the order for immediate execution, the Court said:
The plaintiff has no house to live on at present and that she takes temporary shelter in the houses of her relatives
causing much humiliation to her and much inconvenience to her relatives, the appeal being interposed by defendants
would be, at best, pro-forma and its purpose is merely to delay the case inasmuch as the rights of plaintiff are clear as
adjudicated in the decision; and that to answer for whatever damages may accrue to defendant by reason of the
immediate execution of the decision, the plaintiff is hereby required to post a bond of P100,000.00.
Pimentel promptly filed in the Court of Appeals a petition for certiorari with application for preliminary injunction, seeking
nullification of said order and writ of execution, and their provisional inhibition pending judgment. 15
On March 27, 1981 the Court of Appeals rendered judgment setting aside the challenged order and writ of immediate
execution because issued in grave abuse of discretion. 16 The Appellate Court declared as gravely in error the Trial Court's
holding that Pimentel's appeal was "at best, pro-forma." It moreover said that:
It should be stressed here that petitioner is the present registered owner and possessor of the subject properties and in fact
admittedly had introduced substantial improvements therein, and for the respondent court now to order the transfer of
ownership and possession of the same in favor of the private respondent during the pendency of the appeal, seasonably taken
by the petitioner, and while said properties legally remain in the petitioner's name, would in effect pre-judge or pre-empt the
merits of the appeal, the determination of which resides in this Court. And until such title or registration in the name of the
petitioner or this sale is declared null and void by final judgment, the same is presumed to be valid and should be
protected and upheld by the courts; and neither is the filing of a bond by private respondent enough to compensate for
the harm or injury done to the petitioner with the untimely transfer of the ownership and possession of the subject
properties to herein private respondent.
Roxas now asks this Court to reverse the Appellate Court's decision. In the petition for review on certiorari filed by
Roxas with this Court, she takes issue with the Appellate Court's findings that (1) it was grave abuse of discretion for
the Trial Court to have adjudged Pimentel's appeal as being "at best pro-forma;" (2) in declaring that the validity of the
deed of sale was a proper issue in Pimentel's appeal; (3) in according full faith and credit to Pimentel's title until set
aside by final judgment; (4) in not acknowledging the urgency of her need for a residential house; and (5) in not
considering the posting of a bond as sufficient reason to warrant execution pending appeal, invoking City of Manila vs.
CA., 72 SCRA 98. Roxas argues that Pimentel's appeal had been correctly characterized as "pro-forma" since his own
admissions were the bases of the Trial Court's conclusions (as to the precise amount and nature of the consideration),
and he could not disclaim those admissions on appeal; and success of his appeal was also precluded by the further fact
that there was no specific and convincing evidence demonstrating the validity of the transaction. Pimentel's title, she
adds, should not have been accorded any credit because obtained in bad faith, with awareness by Pimentel of her
objections; and her need for a residential house should have been deemed akin to a need for support or for education,
which have been considered as adequate ground for immediate execution in De Leon v. Soriano, 95 Phil. 806 and
People's Bank v. San Jose, 96 Phil. 895.
The errors ascribed to the Court of Appeals are inexistent. The petition for review lacks merit. It will be denied.
The rule set forth in Section 2, Rule 39 of the Rules is that immediate execution may be ordered by the trial court even
before the expiration of the time to appeal, upon good reasons to be stated in a special order. And while determination
of the existence of good reasons lies in the court's discretion, that determination may be nullified upon a showing that it
was made with grave abuse of discretion.
Now, in the case at bar, the Court a quo opined that good reasons did exist to justify immediate execution, namely: (1)
the losing party's appeal was pro-forma and dilatory; (2) the prevailing party had no house to live in; and (3) a
sufficient bond had been posted to answer for such damages as might be caused by the execution of the judgment in the
event of its subsequent reversal on appeal.
The Trial Court was convinced of the lack of merit of Pimentel's appeal because of its perception that "the rights of
plaintiff are clear as adjudicated in the decision," that adjudication being based on the admissions of Pimentel himself.
It is quite true that Pimentel did admit ceding his house and lot to Roxas as part of the consideration of P380,000.00 for
the sale. But it is also true, and this has apparently escaped the Trial Court's attention completely, that evidence had
been presented by the defendants tending to establish that Roxas had ratified the transaction. There are no admissions
anent this issue of ratification; it is an issue legitimately arising from the pleadings and the evidence; it is, obviously, an
issue that may properly be raised and ventilated on appeal, involving the examination and evaluation of the testimonial
and documentary proofs relevant thereto; and it is one that Pimentel evidently intends to so set up on appeal. That the
Trial Court has rejected the defendants' asserted theory of ratification choosing to accord superior credit to Roxas'
oral disclaimer as against Pimentel's documentary evidence does not import that the issue has been irreversibly
resolved. That resolution is not at all conclusive, and is reviewable upon timely appeal which, it should be stressed,
may be taken by the aggrieved party as a matter of right. 17 It is therefore incorrect to brand Pimentel's appeal as
dilatory or "pro-forma." In doing so, the Trial Court ignored quite without cause and in derogation of Pimentel's right
of appeal, the existence of a substantial issue litigable in appellate proceedings, and hence acted with grave abuse of
discretion.
There is, moreover, the matter of the liability of Roxas' attorney-in-fact, Edgardo Jose, particularly as regards the cash
payments delivered to and received by him, and in relation to his co-party, Pimentel, which the Trial Court has
apparently overlooked, but which, clearly, calls for adjudication and may therefore, properly be raised and resolved on
appeal.
Also quote capricious was the Trial Court's acceptance of Roxas' purported need for shelter as a good ground for
immediate execution. She had undeniably put up for sale or lease the house which she now claims to urgently need for
shelter. She is far from being a pauper; on the contrary, all indications are that she is a person of not inconsiderable
means. Her situation cannot in any sense be regarded as analogous to that of a person in need of support. Her plea for
shelter is in the premises an exaggeration, exposed as such by the circumstances on record, and thus should not have
been taken as a reason for immediate execution.
The last question that has to be addressed in the instant appeal is whether or not the filing of a bond, without more, can
be considered a good reason to justify immediate execution under Section 2 of Rule 39.
Execution pending appeal in accordance with Section 2 of Rule 39 is, of course, the exception. 18 Normally, execution
of a judgment should not be had until and unless it has become final and executory i.e., the right of appeal has been
renounced or waived, the period for appeal has lapsed without an appeal having been taken, or appeal having been
taken, the appeal has been resolved and the records of the case have been returned to the court of origin in which
case, execution "shall issue as a matter of right." 19
On the other hand, when the period of appeal has not expired, execution of the judgment should not be allowed, save
only if there be good reasons therefor, in the court's discretion. "As provided in Section 2, Rule 39 of the ... Rules ...,
the existence of good reasons is what confers discretionary power on a Court ... to issue a writ of execution pending
appeal. The reasons allowing execution must constitute superior circumstances demanding urgency which will
outweigh the injury or damages should the losing party secure a reversal of the judgment. 20
It is not intended obviously that execution pending appeal shall issue as a matter of course, "Good reasons, special,
important, pressing reasons must exist to justify it; otherwise, instead of an instrument of solicitude and justice, it may
well become a tool of oppression and inequity. But to consider the mere posting of a bond a "good reason" would
precisely make immediate execution of a judgment pending appeal routinary, the rule rather than the exception.
Judgments would be executed immediately, as a matter of course, once rendered, if all that the prevailing party needed
to do was to post a bond to answer for damages that might result therefrom. This is a situation, to repeat, neither
contemplated nor intended by law.
There are, to be sure, statements in some of this Court's decisions which do generate the perception that "the filing of
the bond by the successful party is a good reason for ordering execution.: 21 Petitioner Roxas herself cites City of
Manila v. C.A. 22 to support her postulation to this effect. From that case which adverts to Hacienda Navarra, Inc. v.
Labrador and People's Bank etc. v. San Jose 23 she quotes the following:
From what has been said it is thus clear that the Court of Appeals erred in not considering the city's posting to a bond
as e heirs of the estate of a deceased person under administration good and special reason to justify execution pending
appeal.

But sight should not be lost of the factual context in which the quoted statement was made. In that case, the City of
Manila had succeeded in obtaining judgment for the recovery of a piece of land it had lent to the Metropolitan Theater,
and immediate execution became imperative because the theater was insolvent and there was imminent danger of its
creditor's foreclosing a mortgage on the property. This combination of circumstances was the dominant consideration
which impelled the grant of immediate execution, the requirement of a bond having been imposed merely as an
additional factor, no doubt for the protection of the defendant's creditor. In Hacienda Navarra, there was a special
reason for immediate execution, in addition to the posting of a bond. There, the Court said that 'Inasmuch as the
purpose in depositing the money is to insure its receipts by the party obtaining a favorable judgment in the above cited
civil case, the filing of a sufficient bond for the delivery of said proceeds secures said receipt."And in People's Bank,
the order involved in the case decreed payment of allowances for the support of one of the heirs of the estate of a
deceased person under administration, and the urgent need of the party entitled thereto was the paramount
consideration for immediate execution, not the filing of a bond.

Upon the foregoing considerations, and without need of dealing with the Appellate Court's opinion respecting the
presumptive validity and efficacy of Pimentel's title to the property, which in any case appears upon its face to be
correct, petitioner's appeal cannot succeed.

WHEREFORE, the petition for review on certiorari is dismissed, and the judgment subject thereof is affirmed, with
costs against petitioner. This judgment is immediately executory, and no motion for extension of time to file motion for
reconsideration will be entertained.
FULE VS CA
GR No. 112212

Facts:
Gregorio Fule, a banker and a jeweller, offered to sell his parcel of land to Dr. Cruz in exchange for P40,000 and a
diamond earring owned by the latter. A deed of absolute sale was prepared by Atty. Belarmino, and on the same day
Fule went to the bank with Dichoso and Mendoza, and Dr. Cruz arrived shortly thereafter. Dr. Cruz got the earrings
from her safety deposit box and handed it to Fule who, when asked if those were alright, nodded and took the earrings.
Two hours after, Fule complained that the earrings were fake. He files a complaint to declare the sale null and void on
the ground of fraud and deceit.

Issue:
Whether the sale should be nullified on the ground of fraud

Held:
A contract of sale is perfected at the moment there is a meeting of the minds upon the thing which is the object of the
contract and upon the price. Being consensual, a contract of sale has the force of law between the contracting parties
and they are expected to abide in good faith by their respective contractual commitments. It is evident from the facts of
the case that there was a meeting of the minds between petitioner and Dr. Cruz. As such, they are bound by the contract
unless there are reasons or circumstances that warrant its nullification.

Contracts that are voidable or annullable, even though there may have been no damage to the contracting parties are:
(1) those where one of the parties is incapable of giving consent to a contract; and (2) those where the consent is
vitiated by mistake, violence, intimidation, undue influence or fraud. The records, however, are bare of any evidence
manifesting that private respondents employed such insidious words or machinations to entice petitioner into entering
the contract of barter. It was in fact petitioner who resorted to machinations to convince Dr. Cruz to exchange her
jewelry for the Tanay property.
Furthermore, petitioner was afforded the reasonable opportunity required in Article 1584 of the Civil Code within
which to examine the jewelry as he in fact accepted them when asked by Dr. Cruz if he was satisfied with the same. By
taking the jewelry outside the bank, petitioner executed an act which was more consistent with his exercise of
ownership over it. This gains credence when it is borne in mind that he himself had earlier delivered the Tanay property
to Dr. Cruz by affixing his signature to the contract of sale. That after two hours he later claimed that the jewelry was
not the one he intended in exchange for his Tanay property, could not sever the juridical tie that now bound him and Dr.
Cruz. The nature and value of the thing he had taken preclude its return after that supervening period within which
anything could have happened, not excluding the alteration of the jewelry or its being switched with an inferior kind.
Ownership over the parcel of land and the pair of emerald-cut diamond earrings had been transferred to Dr. Cruz and
petitioner, respectively, upon the actual and constructive delivery thereof. Said contract of sale being absolute in nature,
title passed to the vendee upon delivery of the thing sold since there was no stipulation in the contract that title to the
property sold has been reserved in the seller until full payment of the price or that the vendor has the right to
unilaterally resolve the contract the moment the buyer fails to pay within a fixed period.

While it is true that the amount of P40,000.00 forming part of the consideration was still payable to petitioner, its
nonpayment by Dr. Cruz is not a sufficient cause to invalidate the contract or bar the transfer of ownership and
possession of the things exchanged considering the fact that their contract is silent as to when it becomes due and
demandable.
DALLION V. CA (February 28, 2009)

FACTS:
Petitioner Segundo Dalion allegedly sold his property in Southern Leyte to respondent Ruperto Sabesaje through a
private deed of sale.

Dalion denies the sale and claims that his signature in the document was forged.

ISSUE:
WON there has been a contract of sale between the parties.

HELD:
The authenticity of the signature of Dallion was proven by the testimony of several witness including the person who
made the deed of sale. Dalion never presented any evidence or witness to prove his claim of forgery.

Dallions claim that the sale is invalid because it was not made in a public document is of no merit. This argument is
misplaced. The provision of Art. 1358 on the necessity of a public document is only for convenience, not for validity or
enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a
public instrument. Sale is perfected upon meeting of the minds of both
Ang Yu Asuncion et al. vs. Court of Appeals and Buen Realty Corp.
(G.R. No. 109125, December 2, 1994)

Topic: Sales; Contract of sale v. Contract to sell; remedies for violation of right of first refusal

Facts:
Petitioners Ang Yu Asuncion et. al. are lessees of residential and commercial spaces owned by the Unjiengs. They have
been leasing the property and possessing it since 1935 and have been paying rentals.

In 1986, the Unjiengs informed Petitioners Ang Yu Asuncion that the property was being sold and that Petitioners were
being given priority to acquire them (Right of First Refusal). They agreed on a price of P5M but they had not yet
agreed on the terms and conditions. Petitioners wrote to the Unjiengs twice, asking them to specify the terms and
conditions for the sale but received no reply. Later, the petitioners found out that the property was already about to be
sold, thus they instituted this case for Specific Performance [of the right of first refusal].

The Trial Court dismissed the case. The trial court also held that the Unjiengs offer to sell was never accepted by the
Petitioners for the reason that they did not agree upon the terms and conditions of the proposed sale, hence, there was
no contract of sale at all. Nonetheless, the lower court ruled that should the defendants subsequently offer their
property for sale at a price of P11-million or below, plaintiffs will have the right of first refusal.

The Court of Appeals affirmed the decision of the Trial Court.

In the meantime, in 1990, the property was sold to De Buen Realty, Private Respondent in this case. The title to the
property was transferred into the name of De Buen and demanded that the Petitioners vacate the premises.

Because of this, Petitioners filed a motion for execution of the CA judgement. At first, CA directed the Sheriff to
execute an order directing the Unjiengs to issue a Deed of Sale in the Petitioners favour and nullified the sale to De
Buen Realty. But then, the CA reversed itself when the Private Respondents Appealed.

Issues:
5 Whether or not the Contract of Sale is perfected by the grant of a Right of First Refusal.
6 Whether or not a Right of First Refusal may be enforced in an action for Specific Performance.
Held:
2 No. A Right of First Refusal is not a Perfected Contract of Sale under Art. 1458 or an option under Par. 2 Art 1479 or
an offer under Art. 1319. In a Right of First Refusal, only the object of the contract is determinate. This means that no
vinculum juris is created between the seller-offeror and the buyer-offeree.
3 No. Since a contractual relationship does not exist between the parties, a Right of First Refusal may not be enforced
through an action for specific performance. Its conduct is governed by the law on human relations under Art. 19-21 of
the Civil Code and not by contract law.

Therefore, the Supreme Court held that the CA could not have decreed at the time the execution of any deed of sale
between the Unjiengs and Petitioners.

Other Rules, Comments and Discussion:


This case is notable because it lays down the rules on options contracts and right of first refusal as well as promises to
buy and sell. First, the Supreme Court discussed the stages of the formation of a sales contract, these are:
1 Negotiation covers the period from the time the prospective contracting parties indicate interest in the contract to the
time the contract is concluded (perfected).
2 Perfection takes place upon the concurrence of the essential elements thereof. In a sales contract this is governed by
Art. 1458
3 Consummation begins when the parties perform their respective undertakings under the contract culminating in the
extinguishment thereof
Until the contract is perfected (No. 2), it cannot, as an independent source of obligation, serve as a binding juridical
relation. A sales contract is perfected when a person, called the seller, obligates himself, for a price certain, to deliver
and to transfer ownership of a thing or right to another, called the buyer, over which the latter agrees (Art 1458).
Under Art. 1458, there is no perfection of a sale under a Contract to Sell. A Contract to Sell is characterized as a
conditional sale and the breach of the suspensive condition will prevent the obligation to transfer title from acquiring
obligatory force.
Promises to Buy and Sell
Unconditional mutual promise to buy and sell As long as the object is made determinate and the price is fixed, can be
obligatory on the parties, and compliance therewith may accordingly be exacted. The Right of First Refusal falls under
this classification.

Accepted unilateral promise If it specifies the thing to be sold and the price to be paid and when coupled with a
valuable consideration distinct and separate from the price, is what may properly be termed a perfected contract of
option. This contract is legally binding. (Par. 2 Art. 1458) Note however, that the option is a contract separate and
distinct from the contract of sale. Once the option is exercised before it is withdrawn, a bilateral promise to sell and to
buy ensues and both parties are then reciprocally bound to comply with their respective undertakings.

Offers with a Period


Where a period is given to the offeree within which to accept the offer, the following rules generally govern:
1 If the period is not itself founded upon or supported by a consideration Offeror may withdraw offer at any time
before its acceptance (or knowledge of its acceptance). However, the right to withdraw must not be exercised
whimsically or arbitrarily otherwise it can give rise to damages under Art. 19 of the New Civil Code
2 If period is founded on a separate consideration This is a perfected contract of option. Withdrawal of the offer within
the period of the option is deemed a breach of the contract of option (not the sale). If, in fact, the optioner-offeror
withdraws the offer before its acceptance (exercise of the option) by the optionee-offeree, the latter may not sue for
specific performance on the proposed contract (object of the option) since it has failed to reach its own stage of
perfection. The optioner-offeror, however, renders himself liable for damages for breach of the option.
3 Earnest money This is not an offer with a period. Earnest money is distinguished from the option contract if the
consideration given will be considered as a part of the purchase price of the object of the sale. Earnest money is
evidence of a perfected contract of sale. (Art. 1482)
Right of First Refusal
This is an innovative juridical relation because it is neither a perfected contract of sale under Art. 1458 nor an option
contract under par. 2 Art 1479. The object might be made determinate, the exercise of the right, however, is dependent
on the offerors eventual intention to enter into a binding juridical relation with another but also on terms and
conditions such as price. There is no juridical tie or vinculum juris.
Breach of the right cannot justify correspondingly an issuance of a writ of execution under a court judgement that
recognizes its existence, such as in Ang Yu Asuncion. An action for Specific Performance is not allowed under a Right
of First Refusal because doing so would negate the indispensable element of consensuality in the perfection of
contracts.
This right is not inconsequential because it gives right to an action for damages under Art. 19.

Other Acts that Wont Bind


Public advertisements or solicitations Construed as mere invitations to make offers and/or proposals.

Related Cases
The cases of Equatorial v. Mayfair and Paraaque Kings v. Court of Appeals held that if a sale happens in violation of
a Right of First Refusal where the buyer is aware of the existence of that right in favor of another (such as when it is
written in a lease contract), the sale may be rescinded and the seller may be forced to offer the property to the party
with the Right of First Refusal.

However, the case of Ang Yu Asuncion may still be good law for cases not involving a third party buyer in bad fait
SERRANO VS CAGUIAT
GR No. 188661

DECISION
SANDOVAL-GUTIERREZ, J.:
Before us is a petition for review on certiorari under Rule 45 of the 1997 Rules of Civil Procedure, as amended,
assailing the Decision[if !supportFootnotes][1][endif] of the Court of Appeals dated January 29, 1999 and its Resolution dated July
14, 1999 in CA-G.R. CV No. 48824.
Spouses Onnie and Amparo Herrera, petitioners, are the registered owners of a lot located in Las Pias, Metro Manila
covered by Transfer Certificate of Title No. T-9905.
Sometime in March 1990, Godofredo Caguiat, respondent, offered to buy the lot. Petitioners agreed to sell it at
P1,500.00 per square meter. Respondent then gave petitioners P100,000.00 as partial payment. In turn, petitioners
gave respondent the corresponding receipt stating that respondent promised to pay the balance of the purchase price on
or before March 23, 1990, thus:

Las Pias, Metro Manila


March 19, 1990
RECEIPT FOR PARTIAL PAYMENT OF LOT NO. 23 COVERED BY TCT NO. T-9905, LAS PIAS, METRO MANILA
RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED THOUSAND PESOS (P100,000.00)
AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIAS, M.M. COVERED BY TCT NO. T-9905 AND WITH AN
AREA OF 439 SQUARE METERS.
MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON OR BEFORE MARCH 23, 1990, AND
THAT WE WILL EXECUTE AND SIGN THE FINAL DEED OF SALE ON THIS DATE.
SIGNED THIS 19TH DAY OF MARCH, 1990 AT LAS PIAS, M.M.
(SGD) AMPARO HERRERA (SGD) ONNIE SERRANO

On March 28, 1990, respondent, through his counsel Atty. Ponciano Espiritu, wrote petitioners informing them of his
readiness to pay the balance of the contract price and requesting them to prepare the final deed of sale.
On April 4, 1990, petitioners, through Atty. Ruben V. Lopez, sent a letter [if !supportFootnotes][4][endif] to respondent stating that
petitioner Amparo Herrera is leaving for abroad on or before April 15, 1990 and that they are canceling the transaction.
Petitioners also informed respondent that he can recover the earnest money of P100,000.00 anytime.
Again, on April 6, 1990, petitioners wrote respondent stating that they delivered to his counsel Philippine National
Bank Managers Check No. 790537 dated April 6, 1990 in the amount of P100,000.00 payable to him.
In view of the cancellation of the contract by petitioners, respondent filed with the Regional Trial Court, Branch 63,
Makati City a complaint against them for specific performance and damages, docketed as Civil Case No. 90-1067.
On June 27, 1994, after hearing, the trial court rendered its Decision finding there was a perfected contract of sale
between the parties and ordering petitioners to execute a final deed of sale in favor of respondent. The trial court held:
xxx

In the evaluation of the evidence presented by the parties as to the issue as to who was ready to comply with his
obligation on the verbal agreement to sell on March 23, 1990, shows that plaintiffs position deserves more weight and
credibility. First, the P100,000.00 that plaintiff paid whether as downpayment or earnest money showed that there was
already a perfected contract. Art. 1482 of the Civil Code of the Philippines, reads as follows, to wit:
Art. 1482. Whenever earnest money is given in a contract of sale, it shall be considered as part of the price and as proof
of the perfection of the contract.
Second, plaintiff was the first to react to show his eagerness to push through with the sale by sending defendants the
letter dated March 25, 1990. (Exh. D) and reiterated the same intent to pursue the sale in a letter dated April 6, 1990.
Third, plaintiff had the balance of the purchase price ready for payment (Exh. C). Defendants mere allegation that it
was plaintiff who did not appear on March 23, 1990 is unavailing. Defendants letters (Exhs. 2 and 5) appear to be
mere afterthought.
On appeal, the Court of Appeals, in its assailed Decision of January 29, 1999, affirmed the trial courts judgment.
Forthwith, petitioners filed their motion for reconsideration but it was denied by the appellate court in its Resolution
dated July 14, 1999.
Hence, the present recourse.
The basic issue to be resolved is whether the document entitled Receipt for Partial Payment signed by both parties
earlier mentioned is a contract to sell or a contract of sale.
Petitioners contend that the Receipt is not a perfected contract of sale as provided for in Article 1458 relation to Article
1475 of the Civil Code. The delivery to them of P100,000.00 as down payment cannot be considered as proof of the
perfection of a contract of sale under Article 1482 of the same Code since there was no clear agreement between the
parties as to the amount of consideration.
Generally, the findings of fact of the lower courts are entitled to great weight and should not be disturbed except for
cogent reasons.14 Indeed, they should not be changed on appeal in the absence of a clear showing that the trial court
overlooked, disregarded, or misinterpreted some facts of weight and significance, which if considered would
have altered the result of the case. [if !supportFootnotes][12][endif] In the present case, we find that both the trial court and the
Court of Appeals interpreted some significant facts resulting in an erroneous resolution of the issue involved.
In holding that there is a perfected contract of sale, both courts mainly relied on the earnest money given by
respondent to petitioners. They invoked Article 1482 of the Civil Code which provides that "Whenever earnest money
is given in a contract of sale, it shall be considered as part of the price and as proof of the perfection of the contract."
We are not convinced.
In San Miguel Properties Philippines, Inc. v. Spouses Huang, [if !supportFootnotes][13][endif] we held that the stages of a contract
of sale are: (1) negotiation, covering the period from the time the prospective contracting parties indicate interest in the
contract to the time the contract is perfected; (2) perfection, which takes place upon the concurrence of the essential
elements of the sale, which is the meeting of the minds of the parties as to the object of the contract and upon the price;
and (3) consummation, which begins when the parties perform their respective undertakings under the contract of sale,
culminating in the extinguishment thereof.
With the above postulates as guidelines, we now proceed to determine the real nature of the contract entered into by the
parties.
It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary
meaning unless a technical meaning was intended. [if !supportFootnotes][14][endif] Thus, when petitioners declared in the said
Receipt for Partial Payment that they
RECEIVED FROM MR. GODOFREDO CAGUIAT THE AMOUNT OF ONE HUNDRED THOUSAND PESOS
(P100,000.00) AS PARTIAL PAYMENT OF OUR LOT SITUATED IN LAS PIAS, M.M. COVERED BY TCT NO.
T-9905 AND WITH AN AREA OF 439 SQUARE METERS.
MR. CAGUIAT PROMISED TO PAY THE BALANCE OF THE PURCHASE PRICE ON OR BEFORE MARCH 23,
1990, AND THAT WE WILL EXECUTE AND SIGN THE FINAL DEED OF SALE ON THIS DATE.
there can be no other interpretation than that they agreed to a conditional contract of sale, consummation of which is
subject only to the full payment of the purchase price.
A contract to sell is akin to a conditional sale where the efficacy or obligatory force of the vendor's obligation to
transfer title is subordinated to the happening of a future and uncertain event, so that if the suspensive condition does
not take place, the parties would stand as if the conditional obligation had never existed. The suspensive condition is
commonly full payment of the purchase price.[if !supportFootnotes][15][endif]
The differences between a contract to sell and a contract of sale are well-settled in jurisprudence. As early as 1951, in
Sing Yee v. Santos,[if !supportFootnotes][16][endif] we held that:
x x x [a] distinction must be made between a contract of sale in which title passes to the buyer upon delivery of the
thing sold and a contract to sell x x x where by agreement the ownership is reserved in the seller and is not to pass until
the full payment, of the purchase price is made. In the first case, non-payment of the price is a negative resolutory
condition; in the second case, full payment is a positive suspensive condition. Being contraries, their effect in law
cannot be identical. In the first case, the vendor has lost and cannot recover the ownership of the land sold until and
unless the contract of sale is itself resolved and set aside. In the second case, however, the title remains in the vendor if
the vendee does not comply with the condition precedent of making payment at the time specified in the contract.
In other words, in a contract to sell, ownership is retained by the seller and is not to pass to the buyer until full payment
of the price.[if !supportFootnotes][17][endif]
In this case, the Receipt for Partial Payment shows that the true agreement between the parties is a contract to sell.
First, ownership over the property was retained by petitioners and was not to pass to respondent until full payment of
the purchase price. Thus, petitioners need not push through with the sale should respondent fail to remit the balance of
the purchase price before the deadline on March 23, 1990. In effect, petitioners have the right to rescind unilaterally the
contract the moment respondent fails to pay within the fixed period. [if !supportFootnotes][18][endif]
Second, the agreement between the parties was not embodied in a deed of sale. The absence of a formal deed of
conveyance is a strong indication that the parties did not intend immediate transfer of ownership, but only a transfer
after full payment of the purchase price.[if !supportFootnotes][19][endif]
Third, petitioners retained possession of the certificate of title of the lot. This is an additional indication that the
agreement did not transfer to respondent, either by actual or constructive delivery, ownership of the property. [if !
supportFootnotes][20][endif]

It is true that Article 1482 of the Civil Code provides that Whenever earnest money is given in a contract of sale, it
shall be considered as part of the price and proof of the perfection of the contract. However, this article speaks of
earnest money given in a contract of sale. In this case, the earnest money was given in a contract to sell. The
earnest money forms part of the consideration only if the sale is consummated upon full payment of the purchase price.
[if !supportFootnotes][21][endif]
Now, since the earnest money was given in a contract to sell, Article 1482, which speaks of a
contract of sale, does not apply.

As previously discussed, the suspensive condition (payment of the balance by respondent) did not take place. Clearly,
respondent cannot compel petitioners to transfer ownership of the property to him.

WHEREFORE, we GRANT the instant Petition for Review. The challenged Decision of the Court of Appeals is
REVERSED and respondents complaint is DISMISSED.
ESTELITA VILLAMAR vs BALBINO MANGAOIL

DECISION
REYES, J.:
The Case
Before us is a petition for review on certiorari under Rule 45 of the Rules of Court filed by Estelita Villamar (Villamar)
to assail the Decision rendered by the Court of Appeals (CA) on February 20, 2009 in CA-G.R. CV No. 86286, the
dispositive portion of which reads:
WHEREFORE, the instant appeal is DISMISSED. The assailed decision is AFFIRMED in toto.
SO ORDERED.[if !supportFootnotes][3][endif]
The resolution issued by the CA on July 8, 2009 denied the petitioner's motion for reconsideration to the foregoing.
The ruling of Branch 23, Regional Trial Court (RTC) of Roxas, Isabela, which was affirmed by the CA in the herein
assailed decision and resolution, ordered the (1) rescission of the contract of sale of real property entered into by
Villamar and Balbino Mangaoil (Mangaoil); and (2) return of the down payment made relative to the said contract.

Antecedents Facts
The CA aptly summarized as follows the facts of the case prior to the filing by Mangaoil of the complaint for rescission
of contract before the RTC:
Villamar is the registered owner of a 3.6080 hectares parcel of land [hereinafter referred as the subject property] in San
Francisco, Manuel, Isabela covered by Transfer Certificate of Title (TCT) No. T-92958-A. On March 30, 1998, she
entered into an Agreement with Mangaoil for the purchase and sale of said parcel of land, under the following terms
and conditions:
1. The price of the land is ONE HUNDRED AND EIGHTY THOUSAND (180,000.00) PESOS per hectare but only
the 3.5000 hec. shall be paid and the rest shall be given free, so that the total purchase or selling price shall be
[P]630,000.00 only;
2. ONE HUNDRED EIGHTY FIVE THOUSAND (185,000.00) PESOS of the total price was already received on
March 27, 1998 for payment of the loan secured by the certificate of title covering the land in favor of the Rural Bank
of Cauayan, San Manuel Branch, San Manuel, Isabela [Rural Bank of Cauayan], in order that the certificate of title
thereof be withdrawn and released from the said bank, and the rest shall be for the payment of the mortgag[e]s in favor
of Romeo Lacaden and Florante Parangan;
3. After the release of the certificate of title covering the land subject-matter of this agreement, the necessary deed of
absolute sale in favor of the PARTY OF THE SECOND PART shall be executed and the transfer be immediately
effected so that the latter can apply for a loan from any lending institution using the corresponding certificate of title as
collateral therefor, and the proceeds of the loan, whatever be the amount, be given to the PARTY OF THE FIRST
PART;
4. Whatever balance left from the agreed purchase price of the land subject matter hereof after deducting the proceed of
the loan and the [P]185,000.00 already received as above-mentioned, the PARTY OF THE SECOND PART shall pay
unto the PARTY OF THE FIRST PART not later than June 30, 1998 and thereafter the parties shall be released of any
obligations for and against each other; xxx
On April 1, 1998, the parties executed a Deed of Absolute Sale whereby Villamar (then Estelita Bernabe) transferred
the subject parcel of land to Mangaoil for and in consideration of [P]150,000.00.
In a letter dated September 18, 1998, Mangaoil informed Villamar that he was backing out from the sale agreed upon
giving as one of the reasons therefor:
3. That the area is not yet fully cleared by incumbrances as there are tenants who are not willing to vacate the land
without giving them back the amount that they mortgaged the land.
Mangaoil demanded refund of his [P]185,000.00 down payment. Reiterating said demand in another letter dated April
29, 1999, the same, however, was unheeded. x x x (Citations omitted)
On January 28, 2002, the respondent filed before the RTC a complaint [if !supportFootnotes][8][endif] for rescission of contract
against the petitioner. In the said complaint, the respondent sought the return of P185,000.00 which he paid to the
petitioner, payment of interests thereon to be computed from March 27, 1998 until the suit's termination, and the award
of damages, costs and P20,000.00 attorney's fees. The respondent's factual allegations were as follows:
5. That as could be gleaned the Agreement (Annex A), the plaintiff [Mangaoil] handed to the defendant [Villamar] the
sum of [P]185,000.00 to be applied as follows; [P]80,000 was for the redemption of the land which was mortgaged to
the Rural Bank of Cauayan, San Manuel Branch, San Manuel, Isabela, to enable the plaintiff to get hold of the title and
register the sale x x x and [P]105,000.00 was for the redemption of the said land from private mortgages to enable
plaintiff to posses[s] and cultivate the same;
6. That although the defendant had already long redeemed the said land from the said bank and withdrawn TCT No. T-
92958-A, she has failed and refused, despite repeated demands, to hand over the said title to the plaintiff and still
refuses and fails to do so;
7. That, also, the plaintiff could not physically, actually and materially posses[s] and cultivate the said land because the
private mortgage[e]s and/or present possessors refuse to vacate the same;

xxxx

11. That on September 18, 1998, the plaintiff sent a letter to the defendant demanding a return of the amount so
advanced by him, but the latter ignored the same, x x x;
12. That, again, on April 29, 1999, the plaintiff sent to the defendant another demand letter but the latter likewise
ignored the same, x x x;
13. That, finally, the plaintiff notified the defendant by a notarial act of his desire and intention to rescind the said
contract of sale, xxx;
x x x x.[if !supportFootnotes][9][endif] (Citations omitted)
In the respondents answer to the complaint, she averred that she had complied with her obligations to the respondent.
Specifically, she claimed having caused the release of TCT No. T-92958-A by the Rural Bank of Cauayan and its
delivery to a certain Atty. Pedro C. Antonio (Atty. Antonio). The petitioner alleged that Atty. Antonio was
commissioned to facilitate the transfer of the said title in the respondent's name. The petitioner likewise insisted that it
was the respondent who unceremoniously withdrew from their agreement for reasons only the latter knew.
The Ruling of the RTC
On September 9, 2005, the RTC ordered the rescission of the agreement and the deed of absolute sale executed
between the respondent and the petitioner. The petitioner was, thus directed to return to the respondent the sum of
P185,000.00 which the latter tendered as initial payment for the purchase of the subject property. The RTC ratiocinated
that:
There is no dispute that the defendant sold the LAND to the plaintiff for [P]630,000.00 with down payment of
[P]185,000.00. There is no evidence presented if there were any other partial payments made after the perfection of the
contract of sale.
Article 1458 of the Civil Code provides:
Art. 1458. By the contract of sale[,] one of the contracting parties obligates himself to transfer the ownership of and to
deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.
As such, in a contract of sale, the obligation of the vendee to pay the price is correlative of the obligation of the vendor
to deliver the thing sold. It created or established at the same time, out of the same course, and which result in mutual
relations of creditor and debtor between the parties.
The claim of the plaintiff that the LAND has not been delivered to him was not refuted by the defendant. Considering
that defendant failed to deliver to him the certificate of title and of the possession over the LAND to the plaintiff, the
contract must be rescinded pursuant to Article 1191 of the Civil Code which, in part, provides:
Art. 1191. The power of rescind obligations is implied in reciprocal ones in case one of the obligors should not comply
with what is incumbent upon him.
The petitioner filed before the CA an appeal to challenge the foregoing. She ascribed error on the part of the RTC when
the latter ruled that the agreement and deed of sale executed by and between the parties can be rescinded as she failed
to deliver to the respondent both the subject property and the certificate of title covering the same.

The Ruling of the CA


On February 20, 2009, the CA rendered the now assailed decision dismissing the petitioners appeal based on the
following grounds:
Burden of proof is the duty of a party to prove the truth of his claim or defense, or any fact in issue necessary to
establish his claim or defense by the amount of evidence required by law. In civil cases, the burden of proof is on the
defendant if he alleges, in his answer, an affirmative defense, which is not a denial of an essential ingredient in the
plaintiff's cause of action, but is one which, if established, will be a good defense i.e., an avoidance of the claim, which
prima facie, the plaintiff already has because of the defendant's own admissions in the pleadings.
Defendant-appellant Villamar's defense in this case was an affirmative defense. She did not deny plaintiff-appellees
allegation that she had an agreement with plaintiff-appellee for the sale of the subject parcel of land. Neither did she
deny that she was obliged under the contract to deliver the certificate of title to plaintiff-appellee immediately after said
title/property was redeemed from the bank. What she rather claims is that she already complied with her obligation to
deliver the title to plaintiff-appellee when she delivered the same to Atty. Antonio as it was plaintiff-appellee himself
who engaged the services of said lawyer to precisely work for the immediate transfer of said title in his name. Since,
however, this affirmative defense as alleged in defendant-appellant's answer was not admitted by plaintiff-appellee, it
then follows that it behooved the defendant-appellant to prove her averments by preponderance of evidence.
Yet, a careful perusal of the record shows that the defendant-appellant failed to sufficiently prove said affirmative
defense. She failed to prove that in the first place, Atty. Antonio existed to receive the title for and in behalf of plaintiff-
appellee. Worse, the defendant-appellant failed to prove that Atty. Antonio received said title as allegedly agreed upon.
We likewise sustain the RTC's finding that defendant-appellant V[i]llamar failed to deliver possession of the subject
property to plaintiff-appellee Mangaoil. As correctly observed by the RTC - [t]he claim of the plaintiff that the land has
not been delivered to him was not refuted by the defendant. Not only that. On cross-examination, the defendant-
appellant gave Us insight on why no such delivery could be made, viz.:
xxxx
Q: So, you were not able to deliver this property to Mr. Mangaoil just after you redeem the property because of the
presence of these two (2) persons, is it not?
xxx
A: Yes, sir.
Q: Forcing you to file the case against them and which according to you, you have won, is it not?
A: Yes, sir.
Q: And now at present[,] you are in actual possession of the land?
A: Yes, sir. x x x
With the foregoing judicial admission, the RTC could not have erred in finding that defendant-[appellant] failed to
deliver the possession of the property sold, to plaintiff-appellee.
Neither can We agree with defendant-appellant in her argument that the execution of the Deed of Absolute Sale by the
parties is already equivalent to a valid and constructive delivery of the property to plaintiff-appellee. Not only is it
doctrinally settled that in a contract of sale, the vendor is bound to transfer the ownership of, and to deliver the thing
that is the object of the sale, the way Article 1547 of the Civil Code is worded, viz.:
Art. 1547. In a contract of sale, unless a contrary intention appears, there is:
(1) An implied warranty on the part of the seller that he has a right to sell the thing at the time when the ownership is to
pass, and that the buyer shall from that time have and enjoy the legal and peaceful possession of the thing;
(2) An implied warranty that the thing shall be free from any hidden defaults or defects, or any change or encumbrance
not declared or known to the buyer.
x x x.
shows that actual, and not mere constructive delivery is warrantied by the seller to the buyer. (P)eaceful possession of
the thing sold can hardly be enjoyed in a mere constructive delivery.
The obligation of defendant-appellant Villamar to transfer ownership and deliver possession of the subject parcel of
land was her correlative obligation to plaintiff-appellee in exchange for the latter's purchase price thereof. Thus, if she
fails to comply with what is incumbent upon her, a correlative right to rescind such contract from plaintiff-appellee
arises, pursuant to Article 1191 of the Civil Code.[if !supportFootnotes][11][endif] x x x (Citations omitted)

The Issues
Aggrieved, the petitioner filed before us the instant petition and submits the following issues for resolution:
I. WHETHER THE FAILURE OF PETITIONER-SELLER TO DELIVER THE CERTIFICATE OF TITLE OVER
THE PROPERTY TO RESPONDENT-BUYER IS A BREACH OF OBLIGATION IN A CONTRACT OF SALE OF
REAL PROPERTY THAT WOULD WARRANT RESCISSION OF THE CONTRACT;
II. WHETHER PETITIONER IS LIABLE FOR BREACH OF OBLIGATION IN A CONTRACT OF SALE FOR
FAILURE OF RESPONDENT[-]BUYER TO IMMEDIATELY TAKE ACTUAL POSSESSION OF THE PROPERTY
NOTWITHSTANDING THE ABSENCE OF ANY STIPULATION IN THE CONTRACT PROVIDING FOR THE
SAME;
III. WHETHER THE EXECUTION OF A DEED OF SALE OF REAL PROPERTY IN THE PRESENT CASE IS
ALREADY EQUIVALENT TO A VALID AND CONSTRUCTIVE DELIVERY OF THE PROPERTY TO THE
BUYER;
IV. WHETHER OR NOT THE CONTRACT OF SALE SUBJECT MATTER OF THIS CASE SHOULD BE
RESCINDED ON SLIGHT OR CASUAL BREACH;
V. WHETHER OR NOT THE COURT OF APPEALS ERRED IN AFFIRMING THE DECISION OF THE RTC
ORDERING THE RESCISSION OF THE CONTRACT OF SALE[.][if !supportFootnotes][12][endif]

The Petitioner's Arguments


The petitioner avers that the CA, in ordering the rescission of the agreement and deed of sale, which she entered into
with the respondent, on the basis of her alleged failure to deliver the certificate of title, effectively imposed upon her an
extra duty which was neither stipulated in the contract nor required by law. She argues that under Articles 1495 [if !
supportFootnotes][13][endif]
and 1496[if !supportFootnotes][14][endif] of the New Civil Code (NCC), the obligation to deliver the thing sold is
complied with by a seller who executes in favor of a buyer an instrument of sale in a public document. Citing Chua v.
Court of Appeals,[if !supportFootnotes][15][endif] she claims that there is a distinction between transferring a certificate of title in
the buyer's name, on one hand, and transferring ownership over the property sold, on the other. The latter can be
accomplished by the seller's execution of an instrument of sale in a public document. The recording of the sale with the
Registry of Deeds and the transfer of the certificate of title in the buyer's name are necessary only to bind third parties
to the transfer of ownership.[if !supportFootnotes][16][endif]
The petitioner contends that in her case, she had already complied with her obligations under the agreement and the
law when she had caused the release of TCT No. T-92958-A from the Rural Bank of Cauayan, paid individual
mortgagees Romeo Lacaden (Lacaden) and Florante Parangan (Paranga), and executed an absolute deed of sale in the
respondent's favor. She adds that before T-92958-A can be cancelled and a new one be issued in the respondent's favor,
the latter decided to withdraw from their agreement. She also points out that in the letters seeking for an outright
rescission of their agreement sent to her by the respondent, not once did he demand for the delivery of TCT.
The petitioner insists that the respondent's change of heart was due to (1) the latter's realization of the difficulty in
determining the subject property's perimeter boundary; (2) his doubt that the property he purchased would yield
harvests in the amount he expected; and (3) the presence of mortgagees who were not willing to give up possession
without first being paid the amounts due to them. The petitioner contends that the actual reasons for the respondent's
intent to rescind their agreement did not at all constitute a substantial breach of her obligations.
The petitioner stresses that under Article 1498 of the NCC, when a sale is made through a public instrument, its
execution is equivalent to the delivery of the thing which is the contract's object, unless in the deed, the contrary
appears or can be inferred. Further, in Power Commercial and Industrial Corporation v. CA,[if !supportFootnotes][17][endif] it was
ruled that the failure of a seller to eject lessees from the property he sold and to deliver actual and physical possession,
cannot be considered a substantial breach, when such failure was not stipulated as a resolutory or suspensive condition
in the contract and when the effects and consequences of the said failure were not specified as well. The execution of a
deed of sale operates as a formal or symbolic delivery of the property sold and it already authorizes the buyer to use the
instrument as proof of ownership.[if !supportFootnotes][18][endif]
The petitioner argues that in the case at bar, the agreement and the absolute deed of sale contains no stipulation that she
was obliged to actually and physically deliver the subject property to the respondent. The respondent fully knew
Lacaden's and Parangan's possession of the subject property. When they agreed on the sale of the property, the
respondent consciously assumed the risk of not being able to take immediate physical possession on account of
Lacaden's and Parangan's presence therein.
The petitioner likewise laments that the CA allegedly misappreciated the evidence offered before it when it declared
that she failed to prove the existence of Atty. Antonio. For the record, she emphasizes that the said lawyer prepared and
notarized the agreement and deed of absolute sale which were executed between the parties. He was also the petitioners
counsel in the proceedings before the RTC. Atty. Antonio was also the one asked by the respondent to cease the transfer
of the title over the subject property in the latter's name and to return the money he paid in advance.
The Respondent's Contentions
In the respondent's comment,[if !supportFootnotes][19][endif] he seeks the dismissal of the instant petition. He invokes Articles 1191
and 1458 to argue that when a seller fails to transfer the ownership and possession of a property sold, the buyer is
entitled to rescind the contract of sale. Further, he contends that the execution of a deed of absolute sale does not
necessarily amount to a valid and constructive delivery. In Masallo v. Cesar,[if !supportFootnotes][20][endif] it was ruled that a
person who does not have actual possession of real property cannot transfer constructive possession by the execution
and delivery of a public document by which the title to the land is transferred. In Addison v. Felix and Tioco,[if !
supportFootnotes][21][endif]
the Court was emphatic that symbolic delivery by the execution of a public instrument is equivalent
to actual delivery only when the thing sold is subject to the control of the vendor.

Our Ruling
The instant petition is bereft of merit.
There is only a single issue for resolution in the instant petition, to wit, whether or not the failure of the petitioner to deliver to the
respondent both the physical possession of the subject property and the certificate of title covering the same amount to a substantial
breach of the former's obligations to the latter constituting a valid cause to rescind the agreement and deed of sale entered into by
the parties.
We rule in the affirmative.
The RTC and the CA both found that the petitioner failed to comply with her obligations to deliver to the respondent
both the possession of the subject property and the certificate of title covering the same.
Although Articles 1458, 1495 and 1498 of the NCC and case law do not generally require the seller to deliver to the
buyer the physical possession of the property subject of a contract of sale and the certificate of title covering the same,
the agreement entered into by the petitioner and the respondent provides otherwise. However, the terms of the
agreement cannot be considered as violative of law, morals, good customs, public order, or public policy, hence, valid.
Article 1458 of the NCC obliges the seller to transfer the ownership of and to deliver a determinate thing to the buyer,
who shall in turn pay therefor a price certain in money or its equivalent. In addition thereto, Article 1495 of the NCC
binds the seller to warrant the thing which is the object of the sale. On the other hand, Article 1498 of the same code
provides that when the sale is made through a public instrument, the execution thereof 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.
In the case of Chua v. Court of Appeals, which was cited by the petitioner, it was ruled that when the deed of absolute
sale is signed by the parties and notarized, then delivery of the real property is deemed made by the seller to the buyer.
The transfer of the certificate of title in the name of the buyer is not necessary to confer ownership upon him.
In the case now under our consideration, item nos. 2 and 3 of the agreement entered into by the petitioner and the
respondent explicitly provide:
2. ONE HUNDRED EIGHTY FIVE THOUSAND (P185,000.00) PESOS of the total price was already received on March 27,
1998 for payment of the loan secured by the certificate of title covering the land in favor of the Rural Bank of Cauayan, San
Manuel Branch, San Manuel, Isabela, in order that the certificate of title thereof be withdrawn and released from the said bank, and
the rest shall be for the payment of the mortgages in favor of Romeo Lacaden and Florante Parangan;
3. After the release of the certificate of title covering the land subject-matter of this agreement, the necessary deed of absolute sale
in favor of the PARTY OF THE SECOND PART shall be executed and the transfer be immediately effected so that the latter can
apply for a loan from any lending institution using the corresponding certificate of title as collateral therefor, and the proceeds of
the loan, whatever be the amount, be given to the PARTY OF THE FIRST PART;[if !supportFootnotes][24][endif] (underlining supplied)
As can be gleaned from the agreement of the contending parties, the respondent initially paid the petitioner
P185,000.00 for the latter to pay the loan obtained from the Rural Bank of Cauayan and to cause the release from the
said bank of the certificate of title covering the subject property. The rest of the amount shall be used to pay the
mortgages over the subject property which was executed in favor of Lacaden and Parangan. After the release of the
TCT, a deed of sale shall be executed and transfer shall be immediately effected so that the title covering the subject
property can be used as a collateral for a loan the respondent will apply for, the proceeds of which shall be given to the
petitioner.
Under Article 1306 of the NCC, the contracting parties may establish such stipulations, clauses, terms and conditions
as they may deem convenient, provided they are not contrary to law, morals, good customs, public order or public
policy.
While Articles 1458 and 1495 of the NCC and the doctrine enunciated in the case of Chua do not impose upon the
petitioner the obligation to physically deliver to the respondent the certificate of title covering the subject property or
cause the transfer in the latter's name of the said title, a stipulation requiring otherwise is not prohibited by law and
cannot be regarded as violative of morals, good customs, public order or public policy. Item no. 3 of the agreement
executed by the parties expressly states that transfer [shall] be immediately effected so that the latter can apply for a
loan from any lending institution using the corresponding certificate of title as collateral therefore. Item no. 3 is literal
enough to mean that there should be physical delivery of the TCT for how else can the respondent use it as a collateral
to obtain a loan if the title remains in the petitioners possession. We agree with the RTC and the CA that the petitioner
failed to prove that she delivered the TCT covering the subject property to the respondent. What the petitioner
attempted to establish was that she gave the TCT to Atty. Antonio whom she alleged was commissioned to effect the
transfer of the title in the respondent's name. Although Atty. Antonio's existence is certain as he was the petitioners
counsel in the proceedings before the RTC, there was no proof that the former indeed received the TCT or that he was
commissioned to process the transfer of the title in the respondent's name.
It is likewise the petitioners contention that pursuant to Article 1498 of the NCC, she had already complied with her obligation to
deliver the subject property upon her execution of an absolute deed of sale in the respondents favor. The petitioner avers that she
did not undertake to eject the mortgagors Parangan and Lacaden, whose presence in the premises of the subject property was
known to the respondent.
We are not persuaded.
In the case of Power Commercial and Industrial Corporation[if !supportFootnotes][25][endif] cited by the petitioner, the Court ruled
that the failure of the seller to eject the squatters from the property sold cannot be made a ground for rescission if the
said ejectment was not stipulated as a condition in the contract of sale, and when in the negotiation stage, the buyer's
counsel himself undertook to eject the illegal settlers.
The circumstances surrounding the case now under our consideration are different. In item no. 2 of the agreement, it is
stated that part of the P185,000.00 initially paid to the petitioner shall be used to pay the mortgagors, Parangan and
Lacaden. While the provision does not expressly impose upon the petitioner the obligation to eject the said mortgagors, the
undertaking is necessarily implied. Cessation of occupancy of the subject property is logically expected from the mortgagors upon
payment by the petitioner of the amounts due to them.
We note that in the demand letter [if !supportFootnotes][26][endif] dated September 18, 1998, which was sent by the respondent to
the petitioner, the former lamented that the area is not yet fully cleared of incumbrances as there are tenants who are
not willing to vacate the land without giving them back the amount that they mortgaged the land. Further, in the
proceedings before the RTC conducted after the complaint for rescission was filed, the petitioner herself testified that
she won the ejectment suit against the mortgagors only last year. The complaint was filed on September 8, 2002 or
more than four years from the execution of the parties' agreement. This means that after the lapse of a considerable
period of time from the agreement's execution, the mortgagors remained in possession of the subject property.
Notwithstanding the absence of stipulations in the agreement and absolute deed of sale entered into by Villamar and
Mangaoil expressly indicating the consequences of the former's failure to deliver the physical possession of the subject
property and the certificate of title covering the same, the latter is entitled to demand for the rescission of their contract
pursuant to Article 1191 of the NCC.
We note that the agreement entered into by the petitioner and the respondent only contains three items specifying the parties'
undertakings. In item no. 5, the parties consented to abide with all the terms and conditions set forth in this agreement and never
violate the same
Article 1191 of the NCC is clear that the power to rescind obligations is implied in reciprocal ones, in case one of the obligors
should not comply with what is incumbent upon him. The respondent cannot be deprived of his right to demand for rescission in
view of the petitioners failure to abide with item nos. 2 and 3 of the agreement. This remains true notwithstanding the absence of
express stipulations in the agreement indicating the consequences of breaches which the parties may commit. To hold otherwise
would render Article 1191 of the NCC as useless.
Article 1498 of the NCC generally considers the execution of a public instrument as constructive delivery by the seller
to the buyer of the property subject of a contract of sale. The case at bar, however, falls among the exceptions to the
foregoing rule since a mere presumptive and not conclusive delivery is created as the respondent failed to take material
possession of the subject property.
Further, even if we were to assume for argument's sake that the agreement entered into by the contending parties does not require
the delivery of the physical possession of the subject property from the mortgagors to the respondent, still, the petitioner's claim
that her execution of an absolute deed of sale was already sufficient as it already amounted to a constructive delivery of the thing
sold which Article 1498 of the NCC allows, cannot stand.
In Philippine Suburban Development Corporation v. The Auditor General,[if !supportFootnotes][29][endif] we held:
When the sale of real property is made in a public instrument, the execution thereof is equivalent to the delivery of the
thing object of the contract, if from the deed the contrary does not appear or cannot clearly be inferred.
In other words, there is symbolic delivery of the property subject of the sale by the execution of the public instrument,
unless from the express terms of the instrument, or by clear inference therefrom, this was not the intention of the
parties. Such would be the case, for instance, x x x where the vendor has no control over the thing sold at the moment
of the sale, and, therefore, its material delivery could not have been made. (Underlining supplied and citations omitted)
Stated differently, as a general rule, the execution of a public instrument amounts to a constructive delivery of the thing subject of a
contract of sale. However, exceptions exist, among which is when mere presumptive and not conclusive delivery is created in cases
where the buyer fails to take material possession of the subject of sale. 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 the case at bar, the RTC and the CA found that the petitioner failed to deliver to the respondent the possession of the
subject property due to the continued presence and occupation of Parangan and Lacaden. We find no ample reason to
reverse the said findings. Considered in the light of either the agreement entered into by the parties or the pertinent
provisions of law, the petitioner failed in her undertaking to deliver the subject property to the respondent.
IN VIEW OF THE FOREGOING, the instant petition is DENIED. The February 20, 2009 Decision and July 8, 2009
Resolution of the Court of Appeals, directing the rescission of the agreement and absolute deed of sale entered into by
Estelita Villamar and Balbino Mangaoil and the return of the down payment made for the purchase of the subject
property, are AFFIRMED. However, pursuant to our ruling in Eastern Shipping Lines, Inc. v. CA,[if !supportFootnotes][31][endif] an
interest of 12% per annum is imposed on the sum of P185,000.00 to be returned to Mangaoil to be computed from the
date of finality of this Decision until full satisfaction thereof.

SO ORDERED.
ACE FOODS, INC., Petitioner, vs.
MICRO PACIFIC TECHNOLOGIES CO., LTD.1, Respondent.

DECISION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari2are the Decision3 dated October 21, 2011 and Resolution4 dated
February 8, 2012 of the Court of Appeals (CA) in CA-G.R. CV No. 89426 which reversed and set aside the Decision 5
dated February 28, 2007 of the Regional Trial Court of Makati, Branch 148 (RTC) in Civil Case No. 02-1248, holding
petitioner ACE Foods, Inc. (ACE Foods) liable to respondent Micro Pacific Technologies Co., Ltd. (MTCL) for the
payment of Cisco Routers and Frame Relay Products (subject products) amounting to P646,464.00 pursuant to a
perfected contract of sale.

The Facts
ACE Foods is a domestic corporation engaged in the trading and distribution of consumer goods in wholesale and retail
On September 26, 2001, MTCL sent a letter-proposal 8 for the delivery and sale of the subject products to be installed at
various offices of ACE Foods. Aside from the itemization of the products offered for sale, the said proposal further
provides for the following terms, viz.:9
TERMS : Thirty (30) days upon delivery
VALIDITY : Prices are based on current dollar rate and subject to changes without prior notice.
DELIVERY : Immediate delivery for items on stock, otherwise thirty (30) to forty-five days upon receipt of [Purchase Order]
WARRANTY : One (1) year on parts and services. Accessories not included in warranty.
On October 29, 2001, ACE Foods accepted MTCLs proposal and accordingly issued Purchase Order No. 100023 10
(Purchase Order) for the subject products amounting to P646,464.00 (purchase price). Thereafter, or on March 4, 2002,
MTCL delivered the said products to ACE Foods as reflected in Invoice No. 7733 11 (Invoice Receipt). The fine print of
the invoice states, inter alia, that "[t]itle to sold property is reserved in MICROPACIFIC TECHNOLOGIES CO., LTD.
until full compliance of the terms and conditions of above and payment of the price" 12 (title reservation stipulation).
After delivery, the subject products were then installed and configured in ACE Foodss premises. MTCLs demands
against ACE Foods to pay the purchase price, however, remained unheeded. 13 Instead of paying the purchase price,
ACE Foods sent MTCL a Letter 14 dated September 19, 2002, stating that it "ha[s] been returning the [subject products]
to [MTCL] thru [its] sales representative Mr. Mark Anteola who has agreed to pull out the said [products] but had
failed to do so up to now."
Eventually, or on October 16, 2002, ACE Foods lodged a Complaint 15 against MTCL before the RTC, praying that the
latter pull out from its premises the subject products since MTCL breached its "after delivery services" obligations to it,
particularly, to: (a) install and configure the subject products; (b) submit a cost benefit study to justify the purchase of
the subject products; and (c) train ACE Foodss technicians on how to use and maintain the subject products. 16 ACE
Foods likewise claimed that the subject products MTCL delivered are defective and not working. 17
For its part, MTCL, in its Answer with Counterclaim, 18 maintained that it had duly complied with its obligations to
ACE Foods and that the subject products were in good working condition when they were delivered, installed and
configured in ACE Foodss premises. Thereafter, MTCL even conducted a training course for ACE Foodss
representatives/employees; MTCL, however, alleged that there was actually no agreement as to the purported "after
delivery services." Further, MTCL posited that ACE Foods refused and failed to pay the purchase price for the subject
products despite the latters use of the same for a period of nine (9) months. As such, MTCL prayed that ACE Foods be
compelled to pay the purchase price, as well as damages related to the transaction. 19

The RTC Ruling


On February 28, 2007, the RTC rendered a Decision, 20 directing MTCL to remove the subject products from ACE
Foodss premises and pay actual damages and attorney fees in the amounts of P200,000.00 and P100,000.00,
respectively.21
At the outset, it observed that the agreement between ACE Foods and MTCL is in the nature of a contract to sell. Its
conclusion was based on the fine print of the Invoice Receipt which expressly indicated that "title to sold property is
reserved in MICROPACIFIC TECHNOLOGIES CO., LTD. until full compliance of the terms and conditions of above
and payment of the price," noting further that in a contract to sell, the prospective seller explicitly reserves the transfer
of title to the prospective buyer, and said transfer is conditioned upon the full payment of the purchase price. 22 Thus,
notwithstanding the execution of the Purchase Order and the delivery and installation of the subject products at the
offices of ACE Foods, by express stipulation stated in the Invoice Receipt issued by MTCL and signed by ACE Foods,
i.e., the title reservation stipulation, it is still the former who holds title to the products until full payment of the
purchase price therefor. In this relation, it noted that the full payment of the price is a positive suspensive condition, the
non-payment of which prevents the obligation to sell on the part of the seller/vendor from materializing at all. 23 Since
title remained with MTCL, the RTC therefore directed it to withdraw the subject products from ACE Foodss premises.
Also, in view of the foregoing, the RTC found it unnecessary to delve into the allegations of breach since the non-
happening of the aforesaid suspensive condition ipso jure prevented the obligation to sell from arising.24
Dissatisfied, MTCL elevated the matter on appeal. 25

The CA Ruling
In a Decision26 dated October 21, 2011, the CA reversed and set aside the RTCs ruling, ordering ACE Foods to pay
MTCL the amount of P646,464.00, plus legal interest at the rate of 6% per annum to be computed from April 4, 2002,
and attorneys fees amounting to P50,000.00.27

It found that the agreement between the parties is in the nature of a contract of sale, observing that the said contract had
been perfected from the time ACE Foods sent the Purchase Order to MTCL which, in turn, delivered the subject
products covered by the Invoice Receipt and subsequently installed and configured them in ACE Foodss premises. 28
Thus, considering that MTCL had already complied with its obligation, ACE Foodss corresponding obligation arose
and was then duty bound to pay the agreed purchase price within thirty (30) days from March 5, 2002. 29 In this light,
the CA concluded that it was erroneous for ACE Foods not to pay the purchase price therefor, despite its receipt of the
subject products, because its refusal to pay disregards the very essence of reciprocity in a contract of sale. 30 The CA
also dismissed ACE Foodss claim regarding MTCLs failure to perform its "after delivery services" obligations since
the letter-proposal, Purchase Order and Invoice Receipt do not reflect any agreement to that effect. 31
32
Aggrieved, ACE Foods moved for reconsideration which was, however, denied in a Resolution dated February 8,
2012, hence, this petition.

The Issue Before the Court


The essential issue in this case is whether ACE Foods should pay MTCL the purchase price for the subject products.

The Courts Ruling


The petition lacks merit.
A contract is what the law defines it to be, taking into consideration its essential elements, and not what the contracting
parties call it.33 The real nature of a contract may be determined from the express terms of the written agreement and
from the contemporaneous and subsequent acts of the contracting parties. However, in the construction or
interpretation of an instrument, the intention of the parties is primordial and is to be pursued. The denomination or
title given by the parties in their contract is not conclusive of the nature of its contents. 34
The very essence of a contract of sale is the transfer of ownership in exchange for a price paid or promised. 35 This
may be gleaned from Article 1458 of the Civil Code which defines a contract of sale as follows:
Art. 1458. By the contract of sale one of the contracting parties obligates himself to transfer the ownership and to
deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent.
A contract of sale may be absolute or conditional. (Emphasis supplied)
Corollary thereto, a contract of sale is classified as a consensual contract, which means that the sale is perfected by
mere consent. No particular form is required for its validity. Upon perfection of the contract, the parties may
reciprocally demand performance, i.e., the vendee may compel transfer of ownership of the object of the sale, and the
vendor may require the vendee to pay the thing sold.36
In contrast, a contract to sell is defined as a bilateral contract whereby the prospective seller, while expressly reserving
the ownership of the property despite delivery thereof to the prospective buyer, binds himself to sell the property
exclusively to the prospective buyer upon fulfillment of the condition agreed upon, i.e., the full payment of the
purchase price. A contract to sell may not even be considered as a conditional contract of sale where the seller may
likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a
conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a
contingent event which may or may not occur.37
In this case, the Court concurs with the CA that the parties have agreed to a contract of sale and not to a contract to sell
as adjudged by the RTC. Bearing in mind its consensual nature, a contract of sale had been perfected at the precise
moment ACE Foods, as evinced by its act of sending MTCL the Purchase Order, accepted the latters proposal to sell
the subject products in consideration of the purchase price of P646,464.00. From that point in time, the reciprocal
obligations of the parties i.e., on the one hand, of MTCL to deliver the said products to ACE Foods, and, on the other
hand, of ACE Foods to pay the purchase price therefor within thirty (30) days from delivery already arose and
consequently may be demanded. Article 1475 of the Civil Code makes this clear:
Art. 1475. The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the
object of the contract and upon the price.
From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing
the form of contracts.
At this juncture, the Court must dispel the notion that the stipulation anent MTCLs reservation of ownership of the
subject products as reflected in the Invoice Receipt, i.e., the title reservation stipulation, changed the complexion of the
transaction from a contract of sale into a contract to sell. Records are bereft of any showing that the said stipulation
novated the contract of sale between the parties which, to repeat, already existed at the precise moment ACE Foods
accepted MTCLs proposal. To be sure, novation, in its broad concept, may either be extinctive or modificatory. It is
extinctive when an old obligation is terminated by the creation of a new obligation that takes the place of the former; it
is merely modificatory when the old obligation subsists to the extent it remains compatible with the amendatory
agreement. In either case, however, novation is never presumed, and the animus novandi, whether totally or partially,
must appear by express agreement of the parties, or by their acts that are too clear and unequivocal to be mistaken. 38
In the present case, it has not been shown that the title reservation stipulation appearing in the Invoice Receipt had been
included or had subsequently modified or superseded the original agreement of the parties. The fact that the Invoice
Receipt was signed by a representative of ACE Foods does not, by and of itself, prove animus novandi since: (a) it was
not shown that the signatory was authorized by ACE Foods (the actual party to the transaction) to novate the original
agreement; (b) the signature only proves that the Invoice Receipt was received by a representative of ACE Foods to
show the fact of delivery; and (c) as matter of judicial notice, invoices are generally issued at the consummation stage
of the contract and not its perfection, and have been even treated as documents which are not actionable per se,
although they may prove sufficient delivery. 39 Thus, absent any clear indication that the title reservation stipulation
was actually agreed upon, the Court must deem the same to be a mere unilateral imposition on the part of MTCL which
has no effect on the nature of the parties original agreement as a contract of sale. Perforce, the obligations arising
thereto, among others, ACE Foodss obligation to pay the purchase price as well as to accept the delivery of the
goods,40 remain enforceable and subsisting.

As a final point, it may not be amiss to state that the return of the subject products pursuant to a rescissory action 41 is
neither warranted by ACE Foodss claims of breach either with respect to MTCLs breach of its purported "after
delivery services" obligations or the defective condition of the products - since such claims were not adequately proven
in this case. The rule is clear: each party must prove his own affirmative allegation; one who asserts the affirmative of
the issue has the burden of presenting at the trial such amount of evidence required by law to obtain a favorable
judgment, which in civil cases, is by preponderance of evidence. 42 This, however, ACE Foods failed to observe as
regards its allegations of breach. Hence, the same cannot be sustained.

WHEREFORE, the petition is DENIED. Accordingly, the Decision dated October 21, 2011 and Resolution dated
February 8, 2012 of the Court of Appeals in CA-G.R. CV No. 89426 are hereby AFFIRMED.
SO ORDERED.