SALES NOTES By: Allana Nacino
CHAPTER 1. NATURE AND FORM OF THE
CONTRACT
CONTRACT OF SALE CONCEPTS
Dignos vs. CA
158 SCRA 378, February 1988
Facts: Spouses Silvestre and Isabela Dignos sold
their parcel of land in Opon, Lapu-Lapu to Antonio
Jabil for the sum of P28,000 payable for two
installments. Subsequently, the spouses Dignos
sold the same parcel of land for P35,000 to spouses
Luciano and Jovita Cabigas, who were US citizens.
CFI of Cebu declared the second sale to the
spouses Cabigas null and void ab initio and the first
sale to Jabil not rescinded, which was affirmed by
the CA.
Issue: Whether or not there was an absolute
contract of sale.
Held: Yes. Although denominated as a "Deed of
Conditional Sale”, a careful examination of the
contract shows that there is no stipulation reserving
the title of the property on the vendors nor does it
give them the right to unilaterally rescind the
contract upon non-payment of the balance thereof
within a fixed period.
On the contrary, 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,
Regarding ownership, as found by the trial court, the
Dignos spouses delivered the possession of the
land in question to Jabil as early as March 27,1965
so that the latter constructed thereon Sally's Beach
Resort also known as Jabil's Beach Resort in
March, 1965; Mactan White Beach Resorton
January 15, J 966 and Bevirlyn's Beach Resort on
September 1, 1965. Such facts were admitted by
petitioner spouses.
Issue: Whether or not the contract of sale was
already rescinded when the Dignos spouses sold
the land to Cabigas
Held: No. The contract of sale being absolute in nature
is governed by Article 1592 of the Civil Code. It is
undisputed that petitioners never notified private
respondents Jabil by notarial act that they were
rescinding the contract, and neither did they file a suit in
court to rescind the sale. There is no showing that
Amistad was properly authorized by Jabil to make such
extra-judicial rescission for the latter that, on the
contrary, vigorously denied having sent Amistad to tell
petitioners that he was already waiving his rights to the
land in question.
1
Hulst vs. PR Builders
G.R. No. 156364; September 3, 2007
Facts: Spouses Hulst, Dutch nationals entered into
a Contract to Sell with PR Builders, Inc. to purchase
a 210-sq m residential unit in the respondent's
townhouse project in Batanagas. The PR Builder's
failed to comply with their verbal promise to
complete the project, thus, the spouses Hulst filed a
complaint for recession of contract with interest,
damages and attorney's fees before the HLURB.
The Sheriff set a public auction of the said levied
properties, however, the respondent filed a motion
to quash Writ of levy on the ground that the sheriff
made an over levy since the aggregate appraised
value of the properties at P6,500 per sq m is
P83,616,000. Instead of resolving the objection of
the respondent's regarding the auction, the Sheriff
proceeded with the auction since there was no
restraining order from the HLURB. The 15 parcels
of land was then awarded to Holly Properties Realty
at a bid of P5,450,653.
Issue: Whether or not ownership of the townhouse
has been transferred to Hulst
Held: Yes. In a contract of sale, the title passes to
the buyer upon the delivery of the thing sold. The
vendor has lost and cannot recover the ownership
of the property until and unless the contract of sale
is itself resolved and set aside.
On the other hand, 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. In other
words, in a contract to sell, the prospective seller
agrees to transfer ownership of the property to the
buyer upon the happening of an event, which
normally is the full payment of the purchase price.
But even upon the fulfillment of the suspensive
condition, ownership does not automatically transfer
to the buyer. The prospective seller still has to
convey title to the prospective buyer by executing a
contract of absolute sale.
Since the contract involved here is a Contract to
Sell, ownership has not yet transferred to the
petitioner when he filed the suit for rescission. While
the intent to circumvent the constitutional
proscription on aliens owning real property was
evident by virtue of the execution of the Contract to
Sell, such violation of the law did not materialize
because petitioner caused the rescission of the
contract before the execution of the final deed
transferring ownership.
SALES NOTES By: Allana Nacino
OBJECT OF SALE
Toyota Shaw, Inc. v. CA
GR No. L-116650, May 23, 1995
Facts: Sosa and his son, Gilbert, transacted with
Popong Bernardo, Toyota sales representative to
buy a Toyota Lite Ace which they will use in their
provincial visit in Marinduque.
The parties signed the so-called “Agreements
between Mr. Sosa and Popong Bernardio of Toyota
Shaw, Inc” (VSP), where the ff. were agreed: (1)
P100K downpayment; the date (June 17, 10am) for
the pick up of the car; (3) payment would be by
installment; and (4) such would be financed by BA
Finance.
Come the agreed date and time of pick up, Toyota
was not able to deliver the said car. Sosa asked for
a refund, but was not heed. Thus he filed a
Issue: Whether the “Agreements between Mr. Sosa
and Popong Bernardio of Toyota Shaw, Inc” is a
perfected contract of sale.
Held: No. Article 1475 of the Civil Code specifically
provides that 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.
In this case, however, the provision on the
downpayment of P100,000.00 made no specific
reference to a sale, and it could only refer to a sale
on installment basis, as the VSP executed the
following day confirmed. Nothing was mentioned
about the full purchase price and the manner the
installments were to be paid. Neither logic nor
recourse to one’s imagination can lead to the
conclusion that such agreement is a perfected
contract of sale.
A definite agreement on the manner of payment of
the price is an essential element in the formation of
a binding and enforceable contract of sale. This is
so because the agreement as to the manner of
payment goes into the price such that a
disagreement on the manner of payment is
tantamount to a failure to agree on the price.
Definiteness as to the price is an essential element
of a binding agreement to sell personal property.
Sps. Edrada v. Sps. Ramos
G.R. No. 154413, August 31, 2005
Facts: Sps. Ramos owned 2 fishing vessels, Ladies
Lalaine and Theresa, which they gave to Sps.
Edrada via an untitled handwritten document which
provides that the 2 vessels owned by respondents
2
are now in the possession and received in good
running and serviceable order by petitioners; that
the documents pertaining to the sale and agreement
of payments between them are to follow; and that
the agreed price for the vessel is P900,000.
The sps. Edrada only having been able to pay
P40,000 via three postdated checks, and the last
check of P100,000 having been subject to stop
order payment, Sps. Ramos filed an action against
Sps. Edrada for specific performance with damages
before the RTC. The RTC granted said petition, wich
was affirmed by the CA.
Issue: Whether or not the RTC and the CA were
correct in ruling that the document is a perfected
contract of sale
Held: No. The agreement may confirm the receipt
by respondents of the two vessels and their
purchase price. However, there is no equivocal
agreement to transfer ownership of the vessel, but
a mere commitment that "documents pertaining to
the sale and agreement of payments [are] to follow."
Evidently, the document or documents which would
formalize the transfer of ownership and contain the
terms of payment of the purchase price, or the
period when such would become due and
demandable, have yet to be executed. But no such
document was executed and no such terms were
stipulated upon.
The fact that there is a stated total purchase price
should not lead to the conclusion that a contract of
sale had been perfected. We held that before a valid
and binding contract of sale can exist, the manner
of payment of the purchase price must first be
established, as such stands as essential to the
validity of the sale.
After all, such agreement on the terms of payment
is integral to the element of a price certain, such that
a disagreement on the manner of payment is
tantamount to a failure to agree on the price.
___________________________________________
PERFECTION OF CONTRACT OF SALE
Lloyd’s Enterprises and Credit Corp. vs.
Dolleton 555 SCRA 143
Facts: Spouses Dolleton, owned a parcel of land
containing a four door apartment in Brgy. Putatan,
Muntinglupa, which they mortgaged to Santos to
loan P100,000.
Upon payment of the loan, Santos executed a
release and cancellation of the mortgage. The same
was annotated on the TCT.
SALES NOTES By: Allana Nacino
Subsequently, Gagan cancelled said TCT and
applied for a new one, claiming that the said land
was sold to her by the sps. Dolleton for P120,000.
Thereafter, Gagan executed two subsequent loans
with LECC, P390,000 and P500,000, respectively,
with the said property as mortgaged.
Failing to pay the second loan, LECC foreclosed the
said lot.
Respondents denied having executed the Deed of
Absolute Sale and alleged that they had merely
offered to sell to Gagan the subject property for
P900,000.00 on installment basis so that they could
pay their loan obligation to Santos. After Gagan had
initially paid P200,000.00, they entrusted the
owner's copy of TCT No. 153554 to him. Gagan was
unable to pay the balance of the purchase price,
rather she caused the fraudulent cancellation of
TCT No. 153554 and the issuance of TCT No.
197220 in her name.
RTC ruled in favor of Sps. Dolleton, which the CA
affirmed.
Issue: Whether or not petitioner is a Mortgagee and
Buyer in Good Faith
Held: No. Petitioner failed to verify the actual
condition of the property, particularly as to who is in
actual possession and if the premises are leased to
third persons, who is receiving the rental payments
therefore. LECC merely submitted in evidence
forms for credit investigation on the borrower's
capacity to pay, there is no showing that they
actually inspected the property offered as collateral.
Had precautionary measure been taken, the lending
company's representatives would have easily
discovered that the four (4)-door apartment in the
premises being mortgaged is rented by tenants and
they could have been provided with information that
Spouses Dolleton are still the present
lessors/owners thereof.
Heirs of Mascunana vs. CA
461 SCRA 186
Facts: Masunana bought a parcel of land from the
Wuthrich siblings, a Part of which he, later sold to
Sumilhig for 4,690.
Sumihilig paid 3,690 as down payment, on the
agreement that the remaining 1,000 shall be paid
after the lot has been surveyed and the documents
needed for a certificate of title were already
prepared.
Years after, Sumilhig sold the same lot to Layumas,
who wrote to the heirs of Mascunana (since
Mascunana died already) offering to pay the 1,000
balance of the purchase price of the property.
3
The addressee, however, refused to receive the
mail matter. Heirs Mascunana then filed a complaint
for recovery of possession against Barte (an
individual whom Layumas allowed to stay on the
subject property).
Issue: Whether or not the contract of sale was
perfected.
Held: Yes. A deed of sale is considered absolute in
nature where there is neither a stipulation in the
deed that title to the property sold is reserved in the
seller until full payment of the price, nor one giving
the vendor the right to unilaterally resolve the
contract the moment the buyer fails to pay within a
fixed period.
The condition in the deed that the balance of
P1,000.00 shall be paid to the vendor by the vendee
as soon as the property sold shall have been
surveyed in the name of the vendee and all papers
pertinent and necessary to the issuance of a
separate certificate of title in the name of the vendee
shall have been prepared is not a condition which
prevented the efficacy of the contract of sale. It
merely provides the manner by which the total
purchase price of the property is to be paid. The
condition did not prevent the contract from being in
full force and effect.
Sanchez vs. Rigos
G.R. No. L-25494, June 14, 1972
Facts: Nicolas Sanchez and Severina Rigos
executed an instrument, entitled "Option to
Purchase” where Rigos "agreed, promised and
committed . . . to sell" to Sanchez a parcel of land
situated in the barrios of Abar and Sibot,
municipality of San Jose, province of Nueva Ecija
for the sum of P1,510.00 within two (2) years from
said date.
Such agreement was executed with the
understanding that the said option shall be deemed
"terminated and elapsed," if Sanchez shall fail to
exercise his right to buy the property within the
stipulated period.
Several tenders of payment of sum of P1,510.00
was made by Sanchez within the said period but
these were rejected by Mrs. Rigos. Hence, Sanchez
deposited the sum to with the CFI of Nueva Ecija
and instituted the action.
Rigos alleged that the contract between the parties
"is a unilateral promise to sell, and the same being
unsupported by any valuable consideration, by force
of the New Civil Code, is null and void."
Lower court ruled in favor of Sanchez presuming the
existence of the consideration under Article 1354.
SALES NOTES By: Allana Nacino
Sanchez maintains that the promise contained in
the contract is "reciprocally demandable," pursuant
to the first paragraph of said Article 1479.
Issue: WON the promisor can withdraw an option
to sell, after acceptance, if the option is not
supported by any consideration.
Held: No. An accepted promise to sell is an offer to
sell when accepted becomes a contract of sale.
Since there may be no valid contract without a
cause or consideration, the promisor is not bound
by his promise and may, accordingly, withdraw it.
Pending notice of its withdrawal, his accepted
promise partakes, however, of the nature of an offer
to sell which, if accepted, results in a perfected
contract of sale.
This view has the advantage of avoiding a conflict
between Articles 1324 – on the general principles on
contracts – and 1479 – on sales – of the Civil Code.
Article 1324. When the offeror has allowed
the offeree a certain period to accept, the
offer may be withdrawn at any time before
acceptance by communicating such
withdrawal, except when the option is
founded upon consideration, as something
paid or promised.
Article 1479. A promise to buy and sell a
determinate thing for a price certain is
reciprocally demandable.
An accepted unilateral promise to buy or to
sell a determinate thing for a price certain
is binding upon the promissory if the
promise is supported by a consideration
distinct from the price.
Riviera Filipina, Inc. v. CA et. al.
GR No. 117355, April 5, 2002
Facts: Respondent Reyes executed a ten year
renewable Contract of Lease with Riviera involving
a 1,018 square meter parcel of land which was a
subject of a Real Estate Mortgage executed by
Reyes in favor of Prudential Bank. But the loan with
Prudential Bank remained unpaid upon maturity so
the bank foreclosed the mortgage thereon and
emerged as the highest bidder at the public auction
sale. Reyes decided to sell the property offered it to
Reviera. After seven months, Riviera offered to buy
the property but Reyes denied it and increased the
price of the property. Reyes’ counsel informed
Riviera that he is selling the property for P6,000 per
square meter and to confirm their conversation,
Riviera sent a letter stating his interest in buying the
property for the fixed and final price of P5,000 per
square meters but Reyes did not accede to said
price.
4
Then Reyes confided to Traballo and the latter
expressed interest in buying the said property for
P5,300 per square meter but he did not have
enough amount so he looked for a partner. Despite
of the impending expiration of the redemption period
of the foreclosed mortgaged property and the deal
between Reyes and Traballo was not yet formally
concluded, Reyes decided to approach Riviera and
requested Atty. Alinea to approach Angeles and find
out if the latter was still interested in buying the
subject property and ask him to raise his offer for the
purchase of the said property a little higher but
Riviera said that his offer is P5,000 per square meter
so Reyes did not agree.
Cypress and Trading Corporation, were able to
come up with the amount sufficient to cover the
redemption money, with which Reyes paid to the
Prudential Bank to redeem the subject property and
Reyes executed a Deed of Absolute Sale covering
the subject property. Cypress and Cornhill
mortgaged the subject property to Urban
Development Bank. Riviera sought from Reyes,
Cypress and Cornhill a resale of the subject property
to it claiming that its right of first refusal under the
lease contract was violated but his attempts were
unsuccessful. Riviera filed the suit to compel Reyes,
Cypress, Cornhill and Urban Development Bank to
transfer the disputed title to the land in favor of
Riviera upon its payment of the price paid by
Cypress and Cornhill.
Issue: Whether or not petitioner can still exercise
his “right of first refusal”.
Held: No. The held that in order to have full
compliance with the contractual right granting
petitioner the first option to purchase, the sale of the
properties for the price for which they were finally
sold to a third person should have likewise been first
offered to the former. Further, there should be
identity of terms and conditions to be offered to the
buyer holding a right of first refusal if such right is
not to be rendered illusory. Lastly, the basis of the
right of first refusal must be the current offer to sell
of the seller or offer to purchase of any prospective
buyer. Thus, the prevailing doctrine is that a right of
first refusal means identity of terms and conditions
to be offered to the lessee and all other prospective
buyers and a contract of sale entered into in
violation of a right of first refusal of another person,
while valid, is rescissible.
Paranaque Kings Enterprises, Inc. v. CA.
GR No. 111538, February 26, 1997
Facts: Catalina L. Santos owns 8 parcels of land
which she leased to Frederick Chua who then later
assigned all his rights and interest and participation
in the leased property to Lee Ching Bing with the
conformity of Santos. Lee Ching Bing also assigned
SALES NOTES By: Allana Nacino
all his rights and interest in the leased property to
Paranaque Kings Enterprises, Inc. On September
21, 1988, Santos sold the property to defendant
David Raymundo which was opposed by Paranque
King since the said sale is in contravention of the
lease contract, for the first option or priority to buy
was not offered to them. Subsequently, the property
was offered to them for 15M which was way higher
than the 5M selling price with Raymundo. Santos, in
a second deed of sale, finally sold the property to
Raymundo for 9M, thus petitioner filed a complaint.
Instead of filing their respective answers,
respondents filed motions to dismiss which the trial
court had granted.
Issue: Whether or not the complaint filed by
Paranaque Kings states a valid cause of action
Held: Yes. The basis of the right of the first
refusal* must be the current offer to sell of the seller
or offer to purchase of any prospective buyer. Only
after the grantee * fails to exercise its right of first
priority under the same terms and within the period
contemplated, could the owner validly offer to sell
the property to a third person, again, under the same
terms as offered to the grantee***. Under paragraph
9 of the contract of lease between respondent
Santos and petitioner, the latter was granted the
"first option or priority" to purchase the leased
properties in case Santos decided to sell. If Santos
never decided to sell at all, there can never be a
breach, much less an enforcement of such "right."
But on September 21, 1988, Santos sold said
properties to Respondent Raymundo without first
offering these to petitioner. Santos indeed realized
her error, since she repurchased the properties after
petitioner complained. Thereafter, she offered to sell
the properties to petitioner for P15 million, which
petitioner, however, rejected because of the
"ridiculous" price. But Santos again appeared to
have violated the same provision of the lease
contract when she finally resold the properties to
respondent Raymundo for only P9 million without
first offering them to petitioner at such price.
Whether there was actual breach which entitled
petitioner to damages and/or other just or equitable
relief, is a question which can better be resolved
after trial on the merits where each party can
present evidence to prove their respective
allegations and defenses.
___________________________________________
PARTIES TO A CONTRACT OF SALE
Lao vs. Genato
137 SCRA 85-86
Facts: On June 25, 1980, Sotero Jr., with due notice
to all his co-heirs, moved to sell certain properties of
the deceased to pay off certain debts. The motion
5
was granted. So, Sotero Jr. sold to his son, Sotero
III, the subject property which the latter sold to
William Go. Respondent-heir Florida Nuqui, moved
to annul the sale on the ground that it was made in
violation of the court's order and that the
consideration of the two sales were grossly
inadequate. Sotero Jr. opposed Nuqui’s motion
alleging that the actual consideration of the sale was
P200,000.00 and they agreed that preference will
be given to close family members to keep the
property within the family. Nuqui filed a Reply,
stating that the two sales were but a single
transaction simultaneously hatched and
consummated in one occasion. The other heirs
joined Nuqui’s motion. Go moved to intervene and
manifested that he paid Sotero III P225,000.00 and
being a purchaser in good faith and for value, his
title to the property is indefeasible pursuant to law.
On February 6, 1981, petitioner spouses moved to
intervene and alleged that Sotero Jr, without
revealing that the property had already been sold to
William Go, entered into a Mutual Agreement of
Promise to Sell to them for P270,000 which was
reduced to P220,000.00; that they paid earnest
money of P70,000; that the balance of P150,000
was to be paid upon the production of the TCT and
the execution of the final Deed of Sale; that Sotero
III the was merely a nominal party because the
negotiation and transactions were between the
Sotero Jr. and petitioners; that the contract of sale
has been perfected because earnest money was
already paid; that the sale in favor of Go was made
to defraud the estate and the other heirs; At the
hearing, petitioners submitted a copy of the Contract
of mortgage executed by Sotero Jr in favor of Juan
Lao, one of the petitioners, whereby the former
mortgaged "all his undivided interest in the estate of
his deceased mother”. After several days of hearing,
respondent Judge allowed all the interested parties
to bid for the property. Go bid P280,000.00.
Petitioners bid P282,000.00, spot cash. All the heirs,
except the administrator (Sotero Jr.), filed a Motion
Ex Parte stated that the offer of William Go appears
the highest obtainable price and that of the
petitioners was not been made within a reasonable
period. So, they submitted an amicable settlement
to which the petitioners opposed because they
offered to buy the property for 300,000. Despite said
opposition, respondent Judge approved the
Amicable Settlement.
Issue: Whether or not the amicable settlement be
annulled
Held: Yes. Sotero Dionisio, Jr. is the Administrator
of the estate of his deceased mother Rosenda
Abuton. As such Administrator, he occupies a
position of the highest trust and confidence, He is
required to exercise reasonable diligence and act in
entire good faith in the performance of that trust. The
sale was made. But of all people, to his very son
SALES NOTES By: Allana Nacino
Sotero Dionisio III and for the grossly low price of
only P75,000,00, That sale was indubitably shown
to be fictitious, it clearly appearing that Dionisio III
has no income whatsoever. In fact, he is still a
dependent of his father, administrator Dionisio, Jr.
On top of that, not a single centavo, of the
P75,000.00 stated consideration was ever
accounted for nor reported by Dionisio, Jr. to the
probate court. This sale is one of the illegal and
irregular transactions that was confirmed and
legalized by Judge Genato’s approval of the
assailed Amicable Settlement. His order to approve
the amicable settlement violates Article 1409 of the
New Civil Code and cannot work to confirm nor
serve to ratify a fictitious contract which is non-
existent and void from the very beginning.
Therefore, the amicable settlement was declared
null and void by the Supreme Court.
Fronilda vs. RTC
G.R. No. 72306 October 6, 1988
Facts: Julio M. Catolos, deceased, formerly owned
6 parcels of land located in Tanay, Rizal. His estate
was the subject of settlement in CFI Rizal.
Francesca Catolos Agnes Catolos Alfonso I.
ForniIda and Asuncion M. Pasamba were some of
the legal heirs and were represented in the case by
Atty. Amonoy. A Project of Partition was filed
whereby the Controverted Parcels were adjudicated
to Fornilda and Pasamba, which was approved.
Fornilda and Pasamba executed a Contract of
Mortgage wherein they mortgaged the Controverted
Parcels to Respondent Amonoy as security for the
payment of his attorney's fees. Pasamba and
Fornilda died. Since the mortgage was not paid,
respondent Amonoy instituted foreclosure
proceedings. The Trial Court ordered the Pasamba
and Fornilda heirs to pay Respondent Amonoy.
Subsequently, the controverted parcels were
foreclosed and an auction sale was held with
Respondent Amonoy as the sole bidder for
P23,760.0, which was confirmed by the court. To
satisfy the deficiency, another execution sale was
conducted with Respondent Amonoy as the sole
bidder for P12,137.50.
A year after the judgment in the Foreclosure Case,
an action for Annulment of Judgment was filed
before the then CFI Rizal and petitioners were also
included as plaintiffs. They allege that the sales
were null and void as being violative of Art. 1491(5)
of the Civil Code, which prohibits attorneys from
purchasing, even at a public or judicial auction,
properties and rights in litigation, and that the Trial
Court, in the Foreclosure Case, had never acquired
jurisdiction over the subject matter of the action, i.e.,
the Controverted Parcels. The Trial Court dismissed
the Annulment Case holding that the particular
disqualification in Article 1491 of the Civil Code is
not of general application nor of universal effect but
must be reconciled with the rule that permits
6
judgment creditors to be bidders at sheriffs sales, so
that Respondent Amonoy was "clearly not
prohibited from bidding his judgment and his
acquisitions therefore are sanctioned by law. Upon
remand of the Foreclusure Case to respondent
RTC, respondent Sheriff notified petitioners to
vacate the premises.
Issue: Whether or not the mortgage constituted on
the Controverted Parcels in favor of Respondent
Amonoy comes within the scope of the prohibition in
Article 1491 of the Civil Code.
Held: YES. Under Article 1491(5), a lawyer is
prohibited from acquiring either by purchase or
assignment the property or rights involved which are
the object of the litigation in which they intervene by
virtue of their profession. The prohibition on
purchase is all embracing to include not only sales
to private individuals but also public or judicial sales.
The rationale advanced for the prohibition is that
public policy disallows the transactions in view of the
fiduciary relationship involved. The transaction
involved falls squarely within the prohibition against
any acquisition by a lawyer of properties belonging
to parties they represent which are still in suit. For,
while the Project of Partition was approved, it was
not until 4 years later that the estate was declared
closed and terminated. At the time the mortgage
was executed, therefore, the relationship of lawyer
and client still existed, the very relation of trust and
confidence sought to be protected by the
prohibition, when a lawyer occupies a vantage
position to press upon or dictate terms to an
harassed client. What is more, the mortgage was
executed only eight (8) days after approval of the
Project of Partition thereby evincing a clear intention
on Respondent Amonoy's part to protect his own
interests and ride roughshod over that of his clients.
From the time of the execution of the mortgage in
his favor, Respondent Amonoy had already
asserted a title adverse to his clients' interests at a
time when the relationship of lawyer and client had
not yet been severed.
Director of Lands vs. Ababa
G.R. No. L-26096 February 27, 1979
Facts: This is an appeal from the order of the Court
of First Instance of Cebu dated March 19, 1966
denying the petition for the cancellation of an
adverse claim registered by the adverse claimant on
the transfer certificate of title of the petitioners. The
adverse claimant, Atty. Alberto B. Fernandez was
the counsel of petitioner, Maximo Abarquez, in Civil
Case No. R-6573 of the Court of First Instance of
Cebu, entitled "Maximo Abarquez vs. Agripina
Abarquez", for the annulment of a contract of sale
with right of repurchase and for the recovery of the
land, which was the subject matter thereof.
SALES NOTES By: Allana Nacino
Litigating as a pauper in the lower court and
engaging the services of his lawyer on a contingent
basis, petitioner, unable to compensate his lawyer
whom he also retained for his appeal, executed a
document on June 10, 1961 in the Cebuano-
Visayan dialect whereby he obliged himself to give
to his lawyer or one-half (1/2) of whatever he might
recover from Lots 5600 and 5602 should the appeal
prosper. The real property sought to be recovered
was actually the share of the petitioner in the estate
of his deceased parents and which were partitioned
among the heirs.
The case having been resolved and title having
been issued to petitioner, adverse claimant waited
for petitioner to comply with his obligation under the
document which is delivering the one-half (1/2)
portion of the said parcels of land.
Petitioner refused to comply with his obligation and
instead offered to sell the whole parcels of land
covered by TCT No. 31841 to petitioner-spouses
Juan Larrazabal and Marta C. de Larrazabal. Upon
being informed of the intention of the petitioner,
adverse claimant immediately took steps to protect
his interest by filing with the trial court a motion to
annotate his attorney's lien on TCT No. 31841 on
June 10, 1965 and by notifying the prospective
buyers of his claim over the one-half portion of the
parcels of land. Realizing later that the motion to
annotate attorney's lien was a wrong remedy, as it
was not within the purview of Section 37, rule 138 of
the Revised Rules of Court, but before the same
was denied by the trial court, adverse claimant filed
an affidavit of adverse claim on July 19, 1966 with
the Register of Deeds of Cebu.
Notwithstanding the annotation of the adverse
claim, petitioner-spouses Maximo Abarquez and
Anastacia Cabigas conveyed by deed of absolute
sale on July 29, 1965 two thirds (2/3 of the lands
covered by TCT No. 31841 to petitioner-spouses
Juan Larrazabal and Marta C. de Larrazabal. When
the new transfer certificate of title No. 32996 was
issued, the annotation of adverse claim on TCT No.
31841 necessarily had to appear on the new
transfer certificate of title. This adverse claim on
TCT No. 32996 became the subject of cancellation
proceedings filed by herein petitioner spouses on
March 7, 1966 with the Court of First Instance of
Cebu.
Issue: Whether or not contract for a contingent fee,
basis of the interest of Atty Fernandez, is prohibited
by Article 1491 of the New Civil Code.
Held: No. Article 1491 prohibits only the sale or
assignment between the lawyer and his client, of
property which is the subject of litigation. As have
been already stated, "The prohibition in said article
applies only to a sale or assignment to the lawyer by
his client of the property which is the subject of
7
litigation. In other words, for the prohibition to
operate, the sale or assignment of the property must
take place during the pendency of the litigation
involving the property." A contract for a contingent
fee is not covered by Article 1491 because the
transfer or assignment of the property in litigation
takes effect only after the finality of a favorable
judgment. In the instant case, the attorney's fees of
Atty. Fernandez, consisting of one-half (1/2) of
whatever Maximo Abarquez might recover from his
share in the lots in question, is contingent upon the
success of the appeal.
SARSOSA VDA. DE BARSOBIA and PACITA W.
VALLAR v VICTORIANO T. CUENCO
Facts: For review is the decision of CA declaring
Victoriano T. Cuenco (now the respondent) as the
absolute owner of a coconut land in question. The
lot in controversy is a one-half portion (on the
northern side) of two adjoining parcels of coconut
land located at Barrio Mancapagao, Sagay,
Camiguin, Misamis Oriental (now Camiguin
province), with an area of 29,150 square meters,
more or less. The entire land was owned previously
by a certain Leocadia Balisado, who had sold it to
the spouses Patricio Barsobia (now deceased) and
Epifania Sarsosa, Filipino citizens. On September 5,
1936, Epifania Sarsosa then a widow, sold the land
in controversy to a Chinese, Ong King Po, for the
sum of P1,050.00 .Ong King Po took actual
possession and enjoyed the fruits thereof. On
August 5, 1961, Ong King Po sold the litigated
property to Victoriano T. Cuenco (respondent
herein), a naturalized Filipino, for the sum of
P5,000.00. On March 6, 1962, Epifania "usurped"
the controverted property, and on July 26, 1962,
Epifania (through her only daughter and child,
Emeteria Barsobia), sold a one-half (1/2) portion of
the land in question to Pacita W. Vallar, the other
petitioner herein .On September 19, 1962,
respondent filed a Forcible Entry case against
Epifania before the Municipal Court of Sagay,
Camiguin. The case was dismissed for lack of
jurisdiction since, as the laws then stood, the
question of possession could not be properly
determined without first settling that of ownership.
On December 27, 1966, respondent instituted
before the Court of First Instance of Misamis
Oriental a Complaint for recovery of possession and
ownership of the litigated land, against Epifania and
Pacita Vallar.
Issue: Whether or not Victoriano Cuenco, a
naturalized Filipino is the rightful owner of the land
after buying it from Ong King Po, a Chinese.
Held: Yes. The SC declared that the sale by
Epifania to Ong King Po was void as it is against
public policy under the 1935 Constitution and that
Cuenco was the rightful owner as Epifania is also
SALES NOTES By: Allana Nacino
barred by laches. Had this been a suit between
Epifania and Ong King Po, she could have been
declared entitled to the litigated land. But the factual
set-up has changed. The litigated property is now in
the hands of a naturalized Filipino. It is no longer
owned by a disqualified vendee. Respondent, as a
naturalized citizen, was constitutionally qualified to
own the subject property. There would be no more
public policy to be served in allowing petitioner
Epifania to recover the land as it is already in the
hands of a qualified person. While, strictly speaking,
Ong King Po, private respondent's vendor, had no
rights of ownership to transmit, it is likewise
inescapable that petitioner Epifania had slept on her
rights for 26 years from 1936 to 1962. By her long
inaction or inexcusable neglect, she should be held
barred from asserting her claim to the litigated
property. Respondent, therefore, must be declared
to be the rightful owner of the property.
Herrera VS. Luy Kim Guan
1 SCRA 106 (1961)
Facts:
 Natividad Herrera is a legitimate daughter of
Luis Herrera
 Luis Herrera owned three (3) parcels of land
and before leaving for China, he executed a
Deed of General Power of Attorney in favor Luy
Kim Guan authorizing him to administer and
sell the properties of the latter.
 Luy Kim Guan, in his capacity as an attorney-
in-fact for Luis Herrera sold the lot 1740 to Luy
chay
 Luy Chay then executed a deed of sale in favor
of one Lino Bangayan
 Luy Kim Guan, acting again as an attorney-in-
fact for Luis Herrera sold to Nicomedes Salazar
½ of the two lots.
 Luy Kim Guan Nicomedes Salazar executed a
deed of mortgage in favor of Bank of the
Philippines Islands.
 Luy Kim Guan and Salazar sold part of the
remaining lot to Carlos Cizantos.
 Salazar then sold his remaining interest to Lino
Bangayan and Luy Kim Guan, both are as
coowners.
 Both Natividad Herrera and Luy Kim Guan
admitted that Luis Herrera is now deceased.
 The appellants contend that the
abovementioned transactions were fraudulent
and were executed after the death of Luis
Herrera (principal) when the power of attorney
was no longer operative.
Issue: WON The transactions were null and void
because they are executed after the death of the
principal.
Held: No, The transactions are not null and void and
of no effect. Coming now to the contention that
8
these transactions are null and void and of no effect
because they were executed by the attorney-in-fact
after the death of his Principal, suffice it to say that
as found by the lower court, the date of death of Luis
Herrera has not been satisfactorily proven. The only
evidence presented by the Plaintiff-appellant in this
respect is a supposed letter received from a certain
"Candi", dated at Amoy in November, 1936,
purporting to give information that Luis Herrera
(without mentioning his name) had died in August of
that year. This piece of evidence was properly
rejected by the lower court for lack of identification.
the other hand, we have the testimony of the witness
Chung Lian to the effect that when he was in Amoy
the year 1940, Luis Herrera visited him and had a
conversation with him, showing that the latter was
still alive at the time. Since the documents had been
executed the attorney-in-fact one in 1937 and the
other in 1939, it is evident, if we are to believe this
testimony, that the documents were executed
during the lifetime of the principal. Be that as it may,
even granting arguendo that Luis Herrera did die in
1936, plaintiffs presented no proof and there is no
indication in the record, that the age Luy Kim Guan
was aware of the death of his prince at the time he
sold the property. The death of the principal does
not render the act of an agent unenforceable, where
the latter had no knowledge of such extinguishment
the agency.
Godinez v. Luen
Facts: The plaintiffs filed a case to recover a parcel
of land sold by their father Jose Godinez to
defendant Fong Pak Luen. Said defendant executed
a power of attorney in favour of his codefendant
Kwan Pun Ming, who conveyed and sold the above
described parcel of land to codefendant Trinidad S.
Navata. The latter is aware of and with full
knowledge that Fong Pak Luen is a Chinese citizen
as well as Kwan Pun Ming, who under the law are
prohibited and disqualified to acquire real property;
that Fong Pak Luen has not acquired any title or
interest in said parcel of land as purported contract
of sale executed by Jose Godinez alone was
contrary to law and considered non-existent. The
defendant filed her answer that the complaint does
not state a cause of action since it appears from the
allegation that the property is registered in the name
of Jose Godinez so that as his sole property he may
dispose of the same; that the cause of action has
been barred by the statute of limitations as the
alleged document of sale executed by Jose Godinez
on November 27, 1941, conveyed the property to
defendant Fong Pak Luen as a result of which a title
was issued to said defendant; that under Article
1144(1) of the Civil Code, an action based upon a
written contract must be brought within 10 years
from the time the right of action accrues; that the
right of action accrued on November 27, 1941 but
the complaint was filed only on September 30, 1966,
beyond the 10-year period provided by law. The trial
SALES NOTES By: Allana Nacino

court issued an order dismissing the complaint. A While an inadequacy in price is not a ground to
motion for reconsideration was filed by plaintiffs but annul such sale, the court is justified to such
was denied. intervention where the price shocks the conscience.
The case was then decided by the Supreme Court.
Issue: Whether or not the sale was null and void ab It ruled that the contract was a Contract to Sell (see
initio since it violates applicable provisions of the earlier digest). On the dispositive portion, Court
Constitution and the Civil Code. ordered petitioners to return the Php2, 125, 540 in
excess of the proceeds of the auction sale.
Held: No. Prescription may never be invoked to Petitioner now files a Motion for Partial
defend that which the Constitution prohibits. Reconsideration contending that the Contract to Sell
However, we see no necessity from the facts of this involved a condominium unit and did not violate the
case to pass upon the nature of the contract of sale proscription against ownership of lands by aliens.
executed by Jose Godinez and Fong Pak Luen
whether void ab initio, illegal per se, or merely Issue: Whether or not the Contract to Sell involving
prohibited. It is enough to stress that insofar as the a condominium unit does not violate the
vendee is concerned, prescription is unavailing. But constitutional proscription on ownership of lands by
neither can the vendor or his heirs rely on an aliens?
argument based on imprescriptibility because the
land sold in 1941 is now in the hands of a Filipino Held: YES. Under RA 4726, the Condominium Act,
citizen against whom the constitutional prescription foreign nationals can own real estate through the
was never intended to apply. As earlier mentioned, purchase of condominium units or townhouses
Fong Pak Luen, the disqualified alien vendee later constituted under the Condominium principle with
sold the same property to Navata, a Filipino citizen Condominium Certificates of Title. The said law, in
qualified to acquire real property. Navata, as a its Section 5, expressly allows foreigners to acquire
naturalized citizen, was constitutionally qualified to condominium units and shares in condominium
own the subject property. corporations up to not more than 40% of the total
and outstanding capital stock of a Filipino-owned
Jacobus Bernhard Hulst vs. PR builders and controlled corporation. Hence, the constitutional
prohibition does not apply in this case. Accordingly,
Facts: The Petitioner and his spouse, both Dutch pronouncements on the invalidity of the Contract to
Nationals, entered into a Contract to Sell with PR Sell is set aside and the order to return the excess
Builders, Inc. to purchase a 210-sq m residential unit of the proceeds of the auction sale is deleted.
in the respondent's townhouse project in Batangas.
When PR Builder's failed to comply with their verbal
promise to complete the project, the spouses Hulst
filed a complaint for rescission of contract with
interest, damages and attorney's fees before the
Housing and Land Regulatory Board (HLURB),
which then was granted. A Writ of Execution was
then addressed to the Ex-Officio Sheriff of the RTC
of Tanauan, Batangas, but upon the complaint of the
respondent, the levy was set aside, leaving only the
respondent's personal properties to be levied first.
The Sheriff set a public auction of the said levied
properties, meanwhile, the respondent filed a
motion to quash Writ of levy on the ground that the
sheriff made an over levy since the aggregate
appraised value of the properties at P6,500 per sq
m is P83,616,000. Instead of resolving the objection
of the respondent's regarding the auction, the
Sheriff proceeded with the auction since there was
no restraining order from the HLURB. The 15
parcels of land were then awarded to Holly
Properties Realty at a bid of P5,450,653. On the
same day, the Sheriff remitted the legal fees and
submitted to contracts of sale to HLURB, however,
he then received orders to suspend proceedings on
the auction for the reason that the market value of
the properties was not fair. There was disparity
between the appraised value and the value made by
the petitioner and the Sheriff, which should've been
looked into by the Sheriff before making the sale.