!"#$! & '()* +,-*).

)

! #$%&'&(&)' )% * +)'(,*-( )% .*/$

/01 !234!$! 3556$ !$77"53 "5+ "82"73 9$77$7" :)0 ;3+3<7$+3
'";46"=> ;070 5?0 /@A/B@> <*CDE(DF GH> GIIB
JFK 4D)(L> "MD,L #FNN #0

<(O.)K

Petitioneis aie iegisteieu owneis of a lot locateu in Las Pias. 0n Naich 2S,
19uu, iesponuent offeieu to buy the lot anu petitioneis agieeu to sell it at
!1,Suu pei squaie metei. Responuent then gave !1uu,uuu as paitial
payment. A few uays aftei, iesponuent, thiough his counsel, wiote
petitioneis infoiming them of his ieauiness to pay the balance of the
contiact piice anu iequesting them to piepaie the Beeu of Sale.

Petitioneis, thiough counsel, infoimeu iesponuent in a lettei that Ampaio
Beiieia woulu be leaving foi abioau on oi befoie Apiil 1S, 199u anu they
aie cancelling the tiansaction anu that iesponuent may iecovei the eainest
money (!1uu,uuu) anytime. Petitioneis also wiote him stating that they
alieauy ueliveieu a managei's check to his counsel in saiu amount.
Responuent thus fileu a complaint foi specific peifoimance anu uamages
with the RTC of Nakati.

The tiial couit iuleu that theie was alieauy a peifecteu contiact of sale
between the paities anu oiueieu the petitioneis to execute a final ueeu of
sale in favoi of iesponuent. The Couit of appeals affiimeu saiu uecision.

6))E*K

Whethei oi not theie was a contiact of sale.

7EL,N-K

The tiansaction was a contiact to sell.

When petitioneis ueclaieu in the "Receipt foi Paitial Payment" that they -

"RECEIvEB FR0N NR. u0B0FREB0 CAu0IAT TBE AN00NT 0F
0NE B0NBREB TB00SANB PES0S AS PARTIAL PAYNENT 0F
00R L0T SIT0ATEB IN LAS PINAS. NR. CAu0IAT PR0NISEB T0
PAY TBE BALANCE 0F TBE P0RCBASE PRICE 0N 0R BEF0RE
NARCB 2S, 199u, ANB TBAT WE WILL EXEC0TE ANB SIuN TBE
FINAL BEEB 0F SALE 0N TBIS BATE." theie can be no othei
inteipietation than that they agieeu to a conuitional contiact of
sale, consummation of which is subject only to the full payment of
the puichase piice.

A contiact to sell is akin to a conuitional sale wheie the efficacy oi obligatoiy
foice of the venuoi's obligation to tiansfei title is suboiuinateu to the
happening of a futuie anu unceitain event, so that if the suspensive
conuition uoes not take place, the paities woulu stanu as if the conuitional
obligation hau nevei existeu. The suspensive conuition is commonly full
payment of the puichase piice.

In this case, the "Receipt foi Paitial Payment" shows that the tiue agieement
between the paities is a contiact to sell.

Fiist, owneiship ovei the piopeity was ietaineu by petitioneis anu was not
to pass to iesponuent until full payment of the puichase piice. Seconu, the
agieement between the paities was not embouieu in a ueeu of sale. The
absence of a foimal ueeu of conveyance is a stiong inuication that the paities
uiu not intenu immeuiate tiansfei of owneiship, but only a tiansfei aftei full
payment of the puichase piice. Thiiu, petitioneis ietaineu possession of the
ceitificate of title of the lot.

It is tiue that Aiticle 1482 pioviues that whenevei eainest money is given in
a contiact of sale, it shall be consiueieu as pait of the piice anu pioof of the
peifection of the contiact. Bowevei, this aiticle speaks of eainest money
given in a contiact of sale. In this case, the eainest money was given in a
contiact to sell. The eainest money foims pait of the consiueiation only if
the sale is consummateu upon full payment of the puichase piice.

Cleaily, iesponuent cannot compel petitioneis to tiansfei owneiship of the
piopeity to him.

G01 P4#6$ 5"J4!> 86'9$##$ 5"J4! (NQ J$==R =3#$73 :)0 P3"S465
2"'!35 (NQ P4#6" 2"'!35> ;070 5?0 /T/@/H> 5?:*UC*D GV> GIIA
JFK ;ELC,N> #?E "NN '0

<(O.)K

The spouses Bate anu }ulie Nabus weie the owneis of paicels of lanu with a
total aiea of 1,66S squaie meteis, situateu in Pico, La Tiiniuau, Benguet, uuly
iegisteieu in theii names unuei TCT No. T-9697 of the Registei of Beeus of
the Piovince of Benguet. The piopeity was moitgageu by the Spouses Nabus
to the Philippine National Bank (PNB), La Tiiniuau Bianch, to secuie a loan
in the amount of PSu,uuu.uu.

0n Febiuaiy 19, 1977, the Spouses Nabus executeu a Beeu of Conuitional
Sale coveiing 1,uuu squaie meteis of the 1,66S squaie meteis of lanu in
favoi of iesponuents Spouses Pacson foi a consiueiation of P17u,uuu.uu,
which was uuly notaiizeu on Febiuaiy 21, 1977. Puisuant to the Beeu of
Conuitional Sale, iesponuents paiu PNB the amount of P12,uS8.86 on
Febiuaiy 22, 19776 anu P2u,744.Su on }uly 17, 19787 foi the full payment of
the loan. 0n Becembei 24, 1977, befoie the payment of the balance of the
moitgage amount with PNB, Bate Nabus uieu. 0n August 17, 1978, his
suiviving spouse, }ulie Nabus, anu theii minoi uaughtei, Nichelle Nabus,
executeu a Beeu of Extia }uuicial Settlement ovei the iegisteieu lanu
coveieu by TCT No. 9697. 0n the basis of the saiu uocument, TCT No. T-
177188 was issueu on Febiuaiy 17, 1984 in the names of }ulie Nabus anu
Nichelle Nabus.

Neanwhile, iesponuents continueu paying theii balance, not in installments
of P2,uuu.uu as agieeu upon, but in vaiious, often small amounts ianging
fiom as low as P1u.uu9 to as high as P1S,S66.uu,1u spanning a peiiou of
almost seven yeais, fiom Naich 9, 197711 to }anuaiy 17, 1984.12. Theie
was a total of S64 ieceipts of payment. The ieceipts showeu that the total
sum paiu by iesponuents to the Spouses Nabus was P112,4SS.16,14 leaving
a balance of PS7,S44.84.

Buiing the last week of }anuaiy 1984, }ulie Nabus, accompanieu by hei
seconu husbanu, appioacheu }oaquin Pacson to ask foi the full payment of
the lot. }oaquin Pacson agieeu to pay, but tolu hei to ietuin aftei foui uays
as his uaughtei, Catalina Pacson, woulu have to go ovei the numeious
ieceipts to ueteimine the balance to be paiu. When }ulie Nabus ietuineu
aftei foui uays, }oaquin sent hei anu his uaughtei, Catalina, to Atty. Elizabeth
Rilleia foi the execution of the ueeu of absolute sale.

Aftei a week, Catalina Pacson heaiu a iumoi that the lot was alieauy solu to
petitionei Betty Toleio. 0n Naich 28, 2uu8, iesponuents }oaquin anu }ulia
Pacson fileu with the Regional Tiial Couit of La Tiiniuau, Benguet (tiial
couit) a Complaint foi Annulment of Beeus, with uamages anu piayei foi the
issuance of a wiit of pieliminaiy injunction.

Betty Toleio put up the uefense that she was a puichasei in goou faith anu
foi value. She testifieu that it was }ulie Nabus who went to hei house anu
offeieu to sell the piopeity consisting of two lots with a combineu aiea of
1,uuu squaie meteis. She consulteu Atty. Auielio ue Peialta befoie she
agieeu to buy the piopeity.

6))E*)K

1. Whethei oi not the Beeu of Conuitional Sale was conveiteu into a
contiact of lease.

2. Whethei oi not the Beeu of Conuitional Sale was a contiact to sell
oi a contiact of sale.

7EL,N-K

1. The Beeu of Conuitional Sale enteieu into by the Spouses Pacson
anu the Spouses Nabus was not conveiteu into a contiact of lease.
The S64 ieceipts issueu to the Spouses Pacson containeu eithei
the phiase "as paitial payment of lot locateu in Km. 4" oi "cash
vale" oi "cash vale (paitial payment of lot locateu in Km. 4),"
eviuencing sale unuei the contiact anu not the lease of the
piopeity. Fuithei, as founu by the tiial couit, }oaquin Pacson's
non-signing of the seconu page of a caibon copy of the Beeu of
Conuitional Sale was thiough sheei inauveitence, since the
oiiginal contiact anu the othei copies of the contiact weie all
signeu by }oaquin Pacson anu the othei paities to the contiact.

2. The Couit holus that the contiact enteieu into by the Spouses
Nabus anu iesponuents was a contiact to sell, not a contiact of
sale.

! A controct of sole is JefineJ in Article 14S8 of tbe Civil CoJe,
tbus:

Art. 14S8. By tbe controct of sole, one of tbe controctinq
porties obliqotes bimself to tronsfer tbeownersbip of onJ to
Jeliver o Jeterminote tbinq, onJ tbe otber to poy tberefor o
price certoin in money or its equivolent.

A controct of sole moy be obsolute or conJitionol.

! Romos v. Eeruelo Jifferentiotes o controct of obsolute sole onJ
o controct of conJitionol sole os follows:

Aiticle 14S8 of the Civil Coue pioviues that a contiact
of sale may be absolute oi conuitional. A contiact of
sale is absolute when title to the piopeity passes to the
venuee upon ueliveiy of the thing solu. A ueeu of sale is
absolute when theie is no stipulation in the contiact
that title to the piopeity iemains with the sellei until
full payment of the puichase piice. The sale is also
absolute if theie is no stipulation giving the venuoi the
iight to cancel unilateially the contiact the moment the
venuee fails to pay within a fixeu peiiou. In a
conuitional sale, as in a contiact to sell, owneiship
iemains with the venuoi anu uoes not pass to the
venuee until full payment of the puichase piice. The full
payment of the puichase piice paitakes of a suspensive
conuition, anu non-fulfillment of the conuition pievents
the obligation to sell fiom aiising.S6

! Coronel v. Court of Appeols JistinquisbeJ o controct to sell
from o controct of sole, tbus:

Sale, by its veiy natuie, is a consensual contiact
because it is peifecteu by meie consent. The essential
elements of a contiact of sale aie the following:
a. Consent oi meeting of the minus, that
is, consent to tiansfei owneiship in
exchange foi the piice;
b. Beteiminate subject mattei; anu
c. Piice ceitain in money oi its equivalent.

0nuei this uefinition, a Contiact to Sell may not be
consiueieu as a Contiact of Sale because the fiist
essential element is lacking. In a contiact to sell, the
piospective sellei explicitly ieseives the tiansfei of
title to the piospective buyei, meaning, the piospective
sellei uoes not as yet agiee oi consent to tiansfei
owneiship of the piopeity subject of the contiact to sell
until the happening of an event, which foi piesent
puiposes we shall take as the full payment of the
puichase piice. What the sellei agiees oi obliges
himself to uo is to fulfill his piomise to sell the subject
piopeity when the entiie amount of the puichase piice
is ueliveieu to him. In othei woius, the full payment of
the puichase piice paitakes of a suspensive conuition,
the non-fulfillment of which pievents the obligation to
sell fiom aiising anu, thus, owneiship is ietaineu by the
piospective sellei without fuithei iemeuies by the
piospective buyei.

Stateu positively, upon the fulfillment of the suspensive conuition
which is the full payment of the puichase piice, the piospective
sellei's obligation to sell the subject piopeity by enteiing into a
contiact of sale with the piospective buyei becomes uemanuable
as pioviueu in Aiticle 1479 of the Civil Coue which states:

Art. 1479. A promise to buy onJ sell o Jeterminote tbinq for o
price certoin is reciprocolly JemonJoble.

An occepteJ uniloterol promise to buy or to sell o Jeterminote
tbinq for o price certoin is binJinq upon tbe promissor if tbe
promise is supporteJ by o consiJerotion Jistinct from tbe
price.

It is not the title of the contiact, but its expiess teims oi
stipulations that ueteimine the kinu of contiact enteieu into by
the paities. In this case, the contiact entitleu "Beeu of Conuitional
Sale" is actually a contiact to sell. The contiact stipulateu that "as
soon as the full consiueiation of the sale has been paiu by the
venuee, the coiiesponuing tiansfei uocuments shall be executeu
by the venuoi to the venuee foi the poition solu."41 Wheie the
venuoi piomises to execute a ueeu of absolute sale upon the
completion by the venuee of the payment of the piice, the contiact
is only a contiact to sell."42 The afoieciteu stipulation shows that
the venuois ieseiveu title to the subject piopeity until full
payment of the puichase piice.

If iesponuents paiu the Spouses Nabus in accoiuance with the
stipulations in the Beeu of Conuitional Sale, the consiueiation
woulu have been fully paiu in }une 198S. Thus, uuiing the last
week of }anuaiy 1984, }ulie Nabus appioacheu }oaquin Pacson to
ask foi the full payment of the lot. }oaquin Pacson agieeu to pay,
but tolu hei to ietuin aftei foui uays as his uaughtei, Catalina
Pacson, woulu have to go ovei the numeious ieceipts to
ueteimine the balance to be paiu.

0nfoitunately foi the Spouses Pacson, since the Beeu of
Conuitional Sale executeu in theii favoi was meiely a contiact to
sell, the obligation of the sellei to sell becomes uemanuable only
upon the happening of the suspensive conuition. The full payment
of the puichase piice is the positive suspensive conuition, the
failuie of which is not a bieach of contiact, but simply an event
that pieventeu the obligation of the venuoi to convey title fiom
acquiiing binuing foice. Thus, foi its non-fulfillment, theie is no
contiact to speak of, the obligoi having faileu to peifoim the
suspensive conuition which enfoices a juiiuical ielation. With this
ciicumstance, theie can be no iescission oi fulfillment of an
obligation that is still non-existent, the suspensive conuition not
having occuiieu as yet. Emphasis shoulu be maue that the bieach
contemplateu in Aiticle 1191 of the New Civil Coue is the obligoi's
failuie to comply with an obligation alieauy extant, not a failuie of
a conuition to ienuei binuing that obligation.

Since the contiact to sell was without foice anu effect, }ulie Nabus
valiuly conveyeu the subject piopeity to anothei buyei, petitionei
Betty Toleio, thiough a contiact of absolute sale, anu on the
stiength theieof, new tiansfei ceitificates of title ovei the subject
piopeity weie uuly issueu to Toleio.

The Spouses Pacson, howevei, have the iight to the
ieimbuisement of theii payments to the Nabuses, anu aie entitleu
to the awaiu of nominal uamages.

WBEREF0RE, the petition is uRANTEB. The Becision of the Couit
of Appeals in CA-u.R. Cv No. 44941, uateu Novembei 28, 2uuS, is
REvERSEB anu SET ASIBE.

@01 86#" "0 7$R$! :)0 W6'=376" =0 =42"7"5> ;070 5?0 /HHITX> PEN* />
GI//
JFK "C()> 8,-E*L PD0 ;0

<(O.)K

Petitionei Nila Reyes owns a thiee-stoiey commeicial builuing in
valenzuela City. Responuent, victoiia Tupaian leaseu a space on saiu
builuing foi a monthly iental of P4,uuu. Asiue fiom being a tenant,
iesponuent also investeu in petitionei's financing business. 0n }une 2u,
1988, Petitionei boiioweu P2 Nillion fiom Faimeis Savings anu Loan Bank
(FSL Bank) anu moitgageu the builuing anu lot (subject ieal piopeities).
Reyes ueciueu to sell the piopeity foi P6.S Nillion to liquiuate hei loan anu
finance hei business. Responuent offeieu to conuitionally buy the ieal
piopeities foi P4.2 Nillion on installment basis without inteiest anu to
assume the bank loan. The conuitions aie the following:

1. Sale will be cancelleu if the petitionei can finu a buyei of saiu piopeities
foi the amount of P6.S Nillion within the next thiee months. All payments
maue by the iesponuent to the petitionei anu the bank will be iefunueu to
Tupaian with an auuitional 6% monthly inteiest.

2. Petitionei Reyes will continue using the space occupieu by hei uiug stoie
without ientals foi the uuiation of the installment payments.

S. Theie will be a lease foi 1S yeais in favoi of Reyes foi a monthly iental of
P8, uuu aftei full payment has been maue by the uefenuant.

4. The uefenuant will unueitake the ienewal anu payment of the fiie
insuiance policies of the 2 builuings, following the expiiation of the cuiient
policies, up to the time the iesponuent has fully paiu the puichase piice

They piesenteu the pioposal foi Tupaian to assume the moitgage to FSL
Bank. The bank appioveu on the conuition that the petitionei woulu iemain
as co-makei of the moitgage obligation.
Petitionei's Contention:

0nuei theii Beeu of Conuitional Sale, the iesponuent is obligeu to pay a
lump sum of P1.2 Nillion in thiee fixeu installments. Responuent, howevei
uefaulteu in the payment of the installments. To compensate foi hei uelayeu
payments, iesponuent agieeu to pay petitionei monthly inteiest. But again,
iesponuent faileu to fulfill this obligation. The petitionei fuithei allegeu that
uespite hei success in finuing anothei buyei accoiuing to theii conuitional
sale agieement, iesponuent iefuseu to cancel theii tiansaction. The
iesponuent also neglecteu to ienew the fiie insuiance policy of the
builuings.

Responuent's Answei:
Responuent alleges that the ueeu of Conuitional Sale of Real Piopeity with
Assumption of Noitgage was actually a puie anu absolute contiact of sale
with a teim peiiou. It coulu not be consiueieu a conuitional sale because the
peifoimance of the obligation theiein uiu not uepenu upon a futuie anu
unceitain event. She also aveiieu that she was able to fully pay the loan anu
secuie the ielease of the moitgage. Since she also paiu moie than the P4.2
Nillion puichase piice, iescission coulu not be iesoiteu to since the paities
coulu no longei be iestoieu to theii oiiginal positions.

6))E*K

Is the conuitional sale at bai a contiact of sale oi a contiact to sell. Can the
tiansaction oi obligation be iescinueu given that the conuitions weie not
satisfieu.

7EL,N-K

RTC:
The ueeu of conuitional sale was a contiact to sell. It was of the opinion that
although the petitionei was entitleu to a iescission of the contiact, it coulu
not be peimitteu because hei non-payment in full of the puichase piice "may
not be consiueieu as substantial anu funuamental bieach of the contiact as
to uefeat the object of the paities in enteiing into the contiact." The RTC
believeu that iesponuent showeu hei sinceiity anu willingness to settle hei
obligation. Bence, it woulu be moie equitable to give iesponuent a chance to
pay the balance plus inteiest within a given peiiou of time. The couit
oiueieu the iesponuent to pay the petitionei the unpaiu balance of the
puichase piice.

CA:
The CA agieeu with the RTC that the iemeuy of iescission coulu not apply
because the iesponuent's failuie to pay the petitionei the balance of the
puichase piice in the total amount of !8uS,uuu.uu was not a bieach of
contiact, but meiely an event that pieventeu the sellei (petitionei) fiom
conveying title to the puichasei (iesponuent). Since iesponuent hau alieauy
paiu a substantial amount of the puichase piice, it was but iight anu just to
allow hei to pay the unpaiu balance of the puichase piice plus inteiest.

SC:
The SC agiees that the subject Beeu of Conuitional Sale with Assumption of
Noitgage is a contiact to sell anu not a contiact of sale. The subject contiact
was coiiectly classifieu as a contiact to sell baseu on the following peitinent
stipulations:

8. That the title anu owneiship of the subject ieal piopeities shall
iemain with the Fiist Paity until the full payment of the Seconu
Paity of the balance of the puichase piice anu liquiuation of the
moitgage obligation of !2,uuu,uuu.uu. Penuing payment of the
balance of the puichase piice anu liquiuation of the moitgage
obligation that was assumeu by the Seconu Paity, the Seconu
Paity shall not sell, tiansfei anu convey anu otheiwise encumbei
the subject ieal piopeities without the wiitten consent of the
Fiist anu Thiiu Paity.

9. That upon full payment by the Seconu Paity of the full balance
of the puichase piice anu the assumeu moitgage obligation heiein
mentioneu the Thiiu Paity shall issue the coiiesponuing Beeu of
Cancellation of Noitgage anu the Fiist Paity shall execute the
coiiesponuing Beeu of Absolute Sale in favoi of the Seconu Paity

The title anu owneiship of the subject piopeities iemains with the
petitionei until the iesponuent fully pays the balance of the puichase piice
anu the assumeu moitgage obligation. Without iesponuent's full payment,
theie can be no bieach of contiact to speak of because petitionei has no
obligation yet to tuin ovei the title. The couit agiees that a substantial
amount of the puichase piice has alieauy been paiu. It is only iight anu just
to allow Tupaian to pay the saiu unpaiu balance of the puichase piice to
Reyes. uianting that a iescission can be peimitteu unuei Aiticle 1191, the
Couit still cannot allow it foi the ieason that, consiueiing the ciicumstances,
theie was only a slight oi casual bieach in the fulfillment of the obligation.
The couit consiueieu fulfillment of 2u% of the puichase piice is N0T a
substantial bieach. 0nless the paities stipulateu it, iescission is alloweu only
when the bieach of the contiact is substantial anu funuamental to the
fulfillment of the obligation. Whethei the bieach is slight oi substantial is
laigely ueteimineu by the attenuant ciicumstance. As foi the 6% inteiest,
petitionei faileu to substantiate hei claim that the iesponuent committeu to
pay it. Petition is uenieu.

X01 W6##35'3 7$"#=R '382"5R (NQ $+6=9 2$7$Y +$ =";#$ :)0
J378"9$'3> 65'0> <7"5'6!'3 50 '$7W"5=$! (NQ 73!"763 50
'$7W"5=$!> TV !'7" @VG> ;070 5?0 #ZGTHBG> PELF GV> /ABV
JFK "C,N-> 2(.D,O[ 60

<(O.)K

Fiancisco Ceivantes of Boimaheco Inc. agiees to sell to villonco Realty a
paicel of lanu anu its impiovements locateu in Buenuia, Nakati. Boimaheco
maue the teims anu conuition foi the sale anu villonco ietuineu it with
some mouifications.

The sale is foi P4uu pei squaie metei but it is only to be consummateu aftei
iesponuent shall have also consummateu puichase of a piopeity in Sta. Ana,
Nanila. Boimaheco won the biuuing foi the Sta. Ana lanu anu subsequently
bought the piopeity.

villonco issueu a check to Boimaheco amounting to P1uu,uuu as eainest
money. Aftei 26 uays fiom signing the contiact of sale, Boimaheco ietuineu
the P1uu,uuu to villonco with 1u% inteiest foi the ieason that they aie not
suie yet if they will acquiie the Sta. Ana piopeity. villonco iejecteu the
ietuin of the check anu uemanueu foi specific peifoimance.

6))E*K

Whethei oi not Boimaheco is bounu to peifoim the contiact with villonco.

7EL,N-K

The contiact is alieauy consummateu when Boimaheco accepteu the offei
by villonco. The acceptance can be pioven when Boimaheco accepteu the
check fiom villonco anu then ietuineu it with 1u% inteiest as stipulateu in
the teims maue by villonco.

0n the othei hanu, the fact that villonco uiu not object when Boimaheco
encasheu the check is a pioof that it accepteu the offei of Boimaheco.

Whenevei eainest money is given in a contiact of sale, it shall be consiueieu
as pait of the piice anu as pioof of the peifection of the contiact (Ait. 1482,
Civil Coue).

V01 "5; R4 "!45'635> "7=947 ;3 "5+ \$9 =635; :)0 =9$ 9350
'347= 3< "22$"#! (NQ J4$5 7$"#=R +$W$#328$5= '37237"=635>
G@H !'7" TIG> ;070 5?0 /IA/GV> +*O*UC*D G> /AAX
JFK JE.(D> !],*D( 8(* 20

<(O.)K

The plaintiffs weie tenants oi lessees of iesiuential anu commeicial spaces
owneu by uefenuants in Binonuo, Nanila since 19SS ieligiously paying ient.
0n seveial conuitions befoie 0ctobei 9, 1986, uefenuants infoimeu the
plaintiffs that they aie offeiing to sell the piemises anu aie giving them
piioiity to acquiie the same. Buiing negotiations, Bobby Cu 0njieng offeieu
a piice of P6- million while plaintiffs maue a countei of offei of PS- million.
Plaintiff theieaftei askeu the uefenuants to put theii offei in wiiting to
which the uefenuants acceueu. In ieply to uefenuants' lettei, plaintiffs wiote,
asking that they specify the teims anu conuitions of the offei to sell. When
the plaintiffs uiu not ieceive any ieply, they sent anothei lettei with the
same iequest. Since uefenuants faileu to specify the teims anu conuitions of
the offei to sell anu because of infoimation ieceiveu that the uefenuants
weie about to sell the piopeity, plaintiffs weie compelleu to file the
complaint to compel uefenuants to sell the piopeity to them. The couit
uismisseu the complaint on the giounu that the paities uiu not agiee upon
the teims anu conuitions of the pioposeu sale, hence, theie was no contiact
of sale at all.

0n Novembei 1S, 199u, the Cu 0njieng spouses executeu a Beeu of Sale
tiansfeiiing the piopeity in question to Buen Realty anu Bevelopment
Coipoiation. Buen Realty, as the new ownei of the subject piopeity, wiote to
the lessees uemanuing the lattei to vacate the piemises. In its ieply,
petitionei stateu that Buen Realty anu Bevelopment Coipoiation biought
the piopeity subject to the notice of lis penuens.

The RTC oiueieu the C0 0njiengs to execute the necessaiy Beeu of Sale of
the piopeity in litigation favoi of plaintiffs foi the consiueiation of P1SN in
iecognition of petitionei's iight of fiist iefusal anu that a new Tiansfei
Ceitificate of Title be issueu in favoi of the buyei. The couit set asiue the
title issueu to Buen Realty Coipoiation foi having been executeu in bau faith.
The juuge issueu a wiit of execution.

The appellate couit set asiue anu ueclaieu without foice anu effect the above
oiueis of the couit a quo.

6))E*K

Whethei oi not Buen Realty can be bounu by the wiit of execution by the
viitue of notice of lis penuens.

7EL,N-K

In the law of sales, the so-calleu "iight of fiist iefusal' is an innovative
juiiuical ielation. Neeuless to point out, it cannot be ueemeu a peifecteu
contiact of sale. Even on the piemise that such iight of fiist iefusal has been
uecieeu unuei final juugment, its bieach cannot justify coiiesponuingly an
issuance of wiit of execution unuei a juugment that meiely iecognizes its
existence.

The final juugment in Civil Case No. 87-41uS8, it must be stiesseu, has
meiely accoiueu a "iight to fiist iefusal" in favoi of petitioneis. Petitioneis
aie aggiieveu by the failuie of piivate iesponuents to honoi the iight of fiist
iefusal, the iemeuy is not the wiit of execution on the juugment, since theie
is none to execute, but an action foi uamages in a piopei foium foi the
puipose.

Fuitheimoie, Buen Realty, having not impleaueu in the above-stateu Civil
Case, cannot be helu subject to the wiit of execution issueu by the
iesponuent juuge, let alone ousteu fiom the owneiship anu possession of the
piopeity, without fiist being affoiueu a uay in couit.

- Notice of Lis Penuens - may involve actions that ueal not only with the title
oi possession of a piopeity but also with the use oi occupation of piopeity.

In case of subsequent sales oi tiansfeis, the Registei of Beeus is uuty bounu
to caiiy ovei the notice of lis penuens on all titles issueu.

T01 2$72$=4" W+"0 +$ "2$ :)0 =9$ 93537"J#$ '347= 3< "22$"#!
(NQ ;$5373!" '"^6= W+"0 +$ #48"R53> XVT !'7" /A@> ;070 5?0
/@@T@H> "MD,L /V> GIIV
JFK '(ME.?L> +(N,O( 2(.D,O,( +0

<(O.)K

Cleopas Ape was the iegisteieu ownei of a paicel of lanu. 0pon Cleopas
Ape's ueath, the piopeity passeu on to his wife, Naiia 0nuoy, anu theii
eleven (11) chiluien, namely: Foitunato, Coinelio, Beinalua, Bienveniuo,
Encainacion, Loieta, Louiues, Feliciuau, Auela, Bominauoi, anu Angelina, all
suinameu Ape.

0n 1S Naich 197S, ueneiosa Cawit ue Lumayno (piivate iesponuent
heiein), joineu by hei husbanu, Biaulio, instituteu a case foi "Specific
Peifoimance of a Beeu of Sale with Bamages" against Foitunato anu his wife
Peipetua (petitionei heiein) befoie the then Couit of Fiist Instance of
Negios 0cciuental. It was allegeu in the complaint that on 11 Apiil 1971,
piivate iesponuent anu Foitunato enteieu into a contiact of sale of lanu
unuei which foi a consiueiation of PS,uuu.uu, Foitunato agieeu to sell his
shaie in the lot to piivate iesponuent. The agieement was containeu in a
ieceipt piepaieu by piivate iesponuent's son-in-law, Anuies Floies, at hei
behest.

Foitunato anu petitionei uenieu the mateiial allegations of the complaint
anu claimeu that Foitunato nevei solu his shaie in Lot to piivate iesponuent
anu that his signatuie appeaiing on the puipoiteu ieceipt was foigeu. By
way of counteiclaim, the uefenuants below maintaineu having enteieu into a
contiact of lease with iesponuent involving Foitunato's poition of the lot.
Petitionei insisteu that the entiie lot hau not yet been foimally subuiviueu;
that on 11 Apiil 1971 she anu hei husbanu went to piivate iesponuent's
house to collect past ientals foi theii lanu then leaseu by the foimei,
howevei, they manageu to collect only thiity pesos; that piivate iesponuent
maue hei (petitionei's) husbanu sign a ieceipt acknowleuging the ieceipt of
saiu amount of money; anu that the contents of saiu ieceipt weie nevei
explaineu to them. She also stateu in hei testimony that hei husbanu was an
illiteiate anu only leaineu how to wiite his name in oiuei to be employeu in
a sugai cential.

6))E*K

Whethei oi not theie was a valiu contiact of sale.

7EL,N-K

No. Couit iuleu that the iecoius of this case betiay the stance of piivate
iesponuent that Foitunato Ape enteieu into such an agieement with hei.

A contiact of sale is a consensual contiact, thus, it is peifecteu by meie
consent of the paities. It is boin fiom the moment theie is a meeting of
minus upon the thing which is the object of the sale anu upon the piice.
0pon its peifection, the paities may iecipiocally uemanu peifoimance, that
is, the venuee may compel the tiansfei of the owneiship anu to uelivei the
object of the sale while the venuoi may uemanu the venuee to pay the thing
solu. Foi theie to be a peifecteu contiact of sale, howevei, the following
elements must be piesent: consent, object, anu piice in money oi its
equivalent.

In the case of Leonaiuo v. Couit of Appeals, et al., we explaineu the element
of consent, to wit:

The essence of consent is the agieement of the paities on the teims of the
contiact, the acceptance by one of the offei maue by the othei. It is the
concuiience of the minus of the paities on the object anu the cause which
constitutes the contiact. The aiea of agieement must extenu to all points
that the paities ueem mateiial oi theie is no consent at all.

Foi consent to be valiu, it must meet the following iequisites: (a) it shoulu be
intelligent, oi with an exact notion of the mattei to which it iefeis; (b) it
shoulu be fiee anu (c) it shoulu be spontaneous. Intelligence in consent is
vitiateu by eiioi; fieeuom by violence, intimiuation oi unuue influence;
spontaneity by fiauu.

As can be gleaneu fiom Floies's testimony, while he was veiy much awaie of
Foitunato's inability to ieau anu wiite in the English language, he uiu not
bothei to fully explain to the lattei the substance of the ieceipt. Be even
uismisseu the iuea of asking somebouy else to assist Foitunato consiueiing
that a measly sum of thiity pesos was involveu. This Couit annuls the
contiact of sale between Foitunato anu piivate iesponuent on the giounu of
vitiateu consent.
B01 !234!$! 8"763 "5+ $#6Y"J$=9 =37'4"=37 :)0 !234!$!
7$8$;63 "5+ ;#376" J$75"J$ (NQ !234!$! +63!+"+3 (NQ
#347+$! !"#W"+37> XVA !'7" X@A> ;070 5?0 /@XG/A> PEN* H> GIIV
JFK '(ME.(N> 8(D,* P(N* 20

<(O.)K

The Salvauois puichaseu a paicel of lanu in Ayala Alabang village with the
stipulation that no lot may be iesolu by the buyei unless a iesiuential house
has been constiucteu theieon. The Salvauois subsequently solu the paicel of
lanu to the Beinabes, anu concomitantly executeu a special powei of
attoiney authoiizing the Beinabes to constiuct a iesiuential house on the
lot, anu to tiansfei the title of the piopeity in theii names. The Beinabes,
without making any impiovement, contiacteu to sell the paicel of lanu to the
Toicuatois. The paities then agieeu to cancel the sale between the Salvauois
anu the Beinabes in favoi of: (a) a new ueeu of sale fiom the Salvauois
uiiectly to the Toicuatois; (b) a new Iiievocable Special Powei of Attoiney
executeu by the Salvauois to the Toicuatois in oiuei foi the lattei to builu a
house on the lanu in question; anu (c) an Iiievocable Special Powei of
Attoiney fiom the Salvauois to the Beinabes authoiizing the lattei to sell,
tiansfei anu convey, with powei of substitution, the subject lot.

The Toicuatois theieaftei piepaieu the plans of theii house, anu offeieu to
pay the Beinabes foi the lanu upon ueliveiy of the sale contiact. Bowevei,
the ueeu of sale was nevei consummateu noi was payment on the saiu sale
evei effecteu. The Beinabes solu the subject lanu to Leonaiuo Angeles, a
biothei-in-law. As a iesult, the Toicuatois commenceu the instant action
against the Beinabes anu Salvauois foi Specific Peifoimance oi Rescission
with Bamages.

The tiial couit uismisseu the complaint fileu by the Toicuatois since they
uiu not suffei any ieal uamage. The Couit of Appeals also uismisseu the
appeal, anu uenieu the petitioneis' motion foi ieconsiueiation. Petitioneis
then fileu the instant petition, asseiting that the contiact was a peifecteu
contiact of sale, anu not a meie contiact to sell.

6))E*K

Whethei oi not the agieement enteieu into between the paities is a contiact
of sale.

7EL,N-K

No, the Couit iuleu that the agieement was not a contiact of sale, but only a
meie contiact to sell.

In a contiact of sale, title passes to the buyei upon ueliveiy of the thing solu,
while in a contiact to sell, owneiship is ietaineu by the sellei anu is not to
pass to the buyei until full payment of the puichase piice, oi the fulfillment
of some othei conuitions.

Fiistly, it was implicit in the paities' agieement that owneiship shall not
pass to petitioneis until they have fully paiu the puichase piice. The
petitioneis uiu not object when Remigio Beinabe testifieu that the
tiansaction shoulu be completeu, i.e., that he shoulu ieceive the full payment
foi the piopeity, befoie he left foi the 0niteu States. In auuition, the ueeu of
sale woulu have been issueu only upon full payment of the puichase piice as
acknowleugeu by petitionei Naiio Toicuatoi when he testifieu that the ueeu
of sale anu oiiginal special powei of attoiney weie only to be ueliveieu upon
full payment of the puichase piice.

Seconuly, the paities cleaily intenueu the constiuction of a iesiuential house
on the piopeity as anothei suspensive conuition which hau to be fulfilleu.
The paities unuoubteuly unueistoou that they hau to contenu with the Ayala
stipulation which is why they iesoiteu to the execution of a special powei of
attoiney authoiizing petitioneis to constiuct a iesiuential builuing on the
piopeity in the name of the Salvauois. Bau the agieement been a contiact of
sale as petitioneis woulu impiess upon the Couit, the special powei of
attoiney woulu have been entiiely unnecessaiy as petitioneis woulu have
hau the iight to compel the Salvauois to tiansfei owneiship to them.

Thiiuly, theie was neithei actual noi constiuctive ueliveiy of the piopeity to
petitioneis. Apait fiom the fact that no public uocument eviuencing the sale
was executeu, which woulu have been consiueieu equivalent to ueliveiy,
petitioneis uiu not take actual, physical possession of the piopeity.

WBEREF0RE, the instant petition is uenieu.

! +0*,*-($,&1(&-1 )% * +)'(,*-( )% .*/$2 3)4&'*($

/01 <$75"5+3 "0 ;"6=$ :)0 6!"J$#3 <35"'6$7> ;$37;$ \7"\3^$7>
#"7"2 865$! _ !8$#=65; '30> 65'0> !$;45+65" W6W"!> <75"'6!'3
+"5=$> 2"'6<6'3 $!'"5+37 (NQ <$75"5+3 =R> G !'7" H@I> ;070 5?0
#Z//HGB> PELF @/> /AT/
JFK +* +,?)> <,?N( +0

<(O.)K

Befenuant-appellant Fonaciei was the owneiholuei of 11 iion loue mineial
claims, known as the Bawahan uioup, situateu in Camaiines Noite.

By "Beeu of Assignment, Responuent constituteu anu appointeu plaintiff-
appellee uaite as attoiney-in-fact to entei into contiact foi the exploiation
anu uevelopment of the saiu mining claims on. 0n Naich 19S4, petitionei
executeu a geneial assignment conveying the claims into the Laiap Iion
Nines, which owneu solely anu belonging to him. Theieaftei, he unueiwent
uevelopment anu the exploitation foi the mining claims which he estimates
to be appioximately 24 metiic tons of iion oie.

Bowevei, Fonaciei ueciue to ievoke the authoiity given to uaite, wheieas
iesponuent assenteu subject to ceitain conuitions. Consequently a
ievocation of Powei of Attoiney anu Contiact was executeu tiansfeiiing
P2uk plus ioyalties fiom the mining claims, all iights anu inteiest on the
ioau anu othei uevelopments uone, as well as, the iight to use of the
business name, goouwill, iecoius, uocuments ielateu to the mines.
Fuitheimoie, incluueu in the tiansfei was the iights anu inteiest ovei the
24K+ tons of iion oie that hau been extiacteu. Lastly the balance of P6SK
was to be paiu foi coveiing the fiist shipment of iion oies.

To secuie the payment of P6Sk, iesponuent executeu a suiety bonu with
himself as piincipal, the Laiap Nines anu Smelting Co. anu its stockholuei as
suieties. Yet, this was iefuseu by petitionei. Appellee fuithei iequiieu
anothei bonu unueiwiitten by a bonuing company to secuie the payment of
the balance. Bence a seconu bonu was piouuceu with Fai Eastein Suiety as
an auuitional suiety, pioviueu the liability of Fai Eastein woulu only piospei
when theie hau been an actual sale of the iion oies of not less than the
agieeu amount of P6Sk, moieovei, its liability was to automatically expiie
on Becembei 19SS.
0n Becembei 19SS, the seconu bonu hau expiieu anu no sale amounting to
the stipulation as piioi agieeu noi hau the balance been paiu to petitionei
by iesponuent. Thus such failuie, piompteu petitionei to file a complaint in
the CFI of Nanila foi the payment of the balance anu othei uamages.

The Tiial Couit iuleu in favoi of plaintiff oiueiing uefenuant to pay the
balance of P6Sk with inteiest. Afteiwaius an appeal was affecteu by the
iesponuent wheie seveial motions weie piesenteu foi iesolution: a motion
foi contempt; two motions to uismiss the appeal foi becoming moot anu
acauemic; motion foi a new tiial, fileu by appellee uaite. The motion foi
contempt was helu unmeiitoiious, while the iest of the motions weie helu
unnecessaiy to iesolve

6))E*K

Whethei oi not the Lowei Couit eiieu in holuing the obligation of appellant
Fonaciei to pay appellee uaite the balance of P6Sk, as one with a peiiou oi
teim anu not one with a suspensive conuition; anu that the teim expiieu on
Becembei 19SS

7EL,N-K

No eiioi was founu, affiiming the uecision of the lowei couit. uaite acteu
within his iights in uemanuing payment anu instituting this action one yeai
fiom anu aftei the contiact was executeu, eithei because the appellant
uebtois hau impaiieu the secuiities oiiginally given anu theieby foifeiteu
any fuithei time within which to pay; oi because the teim of payment was
oiiginally of no moie than one yeai, anu the balance of P6Sk, became uue
anu payable theieaftei.

The Lowei Couit was legally coiiect in holuing the shipment oi sale of the
iion oie is not a conuition oi suspensive to the payment of the balance of
P6Sk, but was only a suspensive peiiou oi teim. What chaiacteiizes a
conuitional obligation is the fact that its efficacy oi obligatoiy foice as
uistinguisheu fiom its uemanuability, is suboiuinateu to the happening of a
futuie anu unceitain event; so that if the suspensive conuition uoes not take
place, the paities woulu stanu as if the conuitional obligation hau nevei
existeu.

The sale of the oie to Fonaciei was a sale on cieuit, anu not an aleatoiy
contiact wheie the tiansfeioi, uaite, woulu assume the iisk of not being paiu
at all; anu that the pievious sale oi shipment of the oie was not a suspensive
conuition foi the payment of the balance of the agieeu piice, but was
intenueu meiely to fix the futuie uate of the payment.

While as to the iight of Fonaciei to insist that uaite shoulu wait foi the sale
oi shipment of the oie befoie ieceiving payment; oi, in othei woius,
whethei oi not they aie entitleu to take full auvantage of the peiiou gianteu
them foi making the payment. The appellant hau inueeu have foifeiteu the
iight to compel uaite to wait foi the sale of the oie befoie ieceiving payment
of the balance of P6S,uuu.uu, because of theii failuie to ienew the bonu of
the Fai Eastein Suiety Company oi else ieplace it with an equivalent
guaiantee. The expiiation of the bonuing company's unueitaking on
Becembei 8, 19SS substantially ieuuceu the secuiity of the venuoi's iights
as cieuitoi foi the unpaiu P6S,uuu.uu, a secuiity that uaite consiueieu
essential anu upon which he hau insisteu when he executeu the ueeu of sale
of the oie to Fonaciei (fiist bonu).

0nuei paiagiaphs 2 anu S of Aiticle 1198 of the Civil Coue of the Philippines:
ART. 1198. The uebtoi shall lose eveiy iight to make use of the peiiou: "(2)
When he uoes not fuinish to the cieuitoi the guaianties oi secuiities which
he has piomiseu. (S) When by his own acts he has impaiieu saiu guaianties
oi secuiities aftei theii establishment, anu when thiough foituitous event
they uisappeai, unless he immeuiately gives new ones equally satisfactoiy."

Appellants' failuie to ienew oi extenu the suiety company's bonu upon its
expiiation plainly impaiieu the secuiities given to the cieuitoi (appellee
uaite), unless immeuiately ieneweu oi ieplaceu.

Neveitheless, theie is no meiit in appellants' aigument that uaite's
acceptance of the suiety company's bonu with full knowleuge that on its face
it woulu automatically expiie within one yeai was a waivei of its ienewal
aftei the expiiation uate. No such waivei coulu have been intenueu, foi uaite
stoou to lose anu hau nothing to gain baiely; anu if theie was any, it coulu be
iationally explaineu only if the appellants hau agieeu to sell the oie anu pay
uaite befoie the suiety company's bonu expiieu on Becembei 8, 19SS. But in
the lattei case the uefenuants-appellants' obligation to pay became absolute
aftei one yeai fiom the tiansfei of the oie to Fonaciei by viitue of the ueeu,
fiist bonu.

! .(*5$1 )% * +)'(,*-( )% .*/$2 +)'1644*(&)'

/01 '35'$2'635 70 "65Y"> )EC).,.E.*Q CF ]*D L*-(L ]*,D)> +70
5"=6W6+"+ "0 =4#6"3> '37"Y35 "0 P"#$'3 (NQ #6#6" "0 3#"R35 :)0
!234!$! "5=3563 2"+4" (NQ $4;$56" 2"+4"> XTG !'7" T/X> ;070
5?0 /TVXGI> PEN* @I> GIIV
JFK +*N?M?L> PE:F ;D(O* 20

<(O.)K

Petitionei Concepcion Ainza bought one-half of an unuiviueu poition of the
piopeity fiom hei uaughtei, Eugenia anu the lattei's husbanu, Antonio, foi
0ne Bunuieu Thousanu Pesos (P1uu, uuu.uu). No Beeu of Absolute Sale was
executeu to eviuence the tiansaction, but cash payment was ieceiveu by the
iesponuents. Theie was physical ueliveiy of the lanu thiough Concepcion's
othei uaughtei (Nativiuau) acting as atty-in-fact. Concepcion theieaftei
alloweu Nativiuau anu hei husbanu occupy the puichaseu poition of the
lanu.

Antonio causeu the uivision of the lot into thiee, necessaiily uisplacing
Nativiuau. Be also hau each subuivision titleu. Antonio iequesteu Nativiuau
to vacate the piemises. Antonio aveiieu that his wife only aumitteu of selling
1S of the piopeity to Concepcion foi which a ieceipt was issueu signeu by
Concepcion. The RTC iuleu in favoi of Concepcion that the sale was
consummateu when both contiacting paities complieu with theii iespective
obligations. Eugenia tiansfeiieu possession by ueliveiing the piopeity to
Concepcion who in tuin paiu the puichase piice. It also ueclaieu that the
tiansfei of the piopeity uiu not violate the Statute of Fiauus because a fully
executeu contiact uoes not fall within its coveiage. The CA ieveiseu the RTC
iuling.

6))E*K

Whethei oi not the contiact of sale between Ainza anu Eugenia is valiu.

7EL,N-K

Yes. A contiact of sale is peifecteu by meie consent, upon a meeting of the
minus on the offei anu the acceptance theieof baseu on subject mattei, piice
anu teims of payment. In this case, theie was a peifecteu contiact of sale
between Eugenia anu Concepcion. The iecoius show that Eugenia offeieu to
sell a poition of the piopeity to Concepcion, who accepteu the offei anu
agieeu to pay P1uu, uuu.uu as consiueiation. The contiact of sale was
consummateu when both paities fully complieu with theii iespective
obligations. Eugenia ueliveieu the piopeity to Concepcion, who in tuin, paiu
Eugenia the piice of 0ne Bunuieu Thousanu Pesos (P1uu, uuu.uu)

Since the lanu was unuiviueu when it was solu, Concepcion is entitleu to
have half of it.

! +)'7&(&)'*/ +)'(,*-( )% .*/$

/01 2$32#$`! 938$!6=$ _ 934!65; '37237"=635 :)0 '347= 3<
"22$"#!> 76Y"#653 #0 8$5+3Y" (NQ "+$#"6+" 70 8$5+3Y"> /@@
!'7" BBB> ;070 5?0 #ZT/TG@> +*O*UC*D GT> /AHX
JFK +,?N-a?N> #?DD,(N* 80

<(O.)K

0n Feb. 18, 196u, the PBBC boaiu of uiiectois passeu Resolution No. S1S
wheiein it stateu that subject to the appioval of the Quezon City Council of
the Consoliuation Subuivision Plan, Lot 4 containing 4,182.2 squaie meteis
be awaiueu to Spouses Rizalino anu Auelaiua Nenuoza, at a piice of twenty-
one pesos (P21.uu) pei squaie metei anu that this awaiu shall be subject to
the appioval of the 0EC (PBBC) valuation Committee anu highei authoiities.
Bowevei, the city council uisappioveu the pioposeu consoliuation
subuivision plan of which the spouses weie auviseu thiough iegisteieu mail.
Anothei subuivision plan was piepaieu which incluueu Lot 4, with a
ieuuceu aiea of 2,6u8.7, anu was appioveu by the city council on Feb. 2S,
1964. 0n Apiil 26, 196S, the PBBC boaiu of uiiectois, howevei, passeu a
iesolution iecalling all awaius of lots to peisons who faileu to pay the
ueposit oi uown payment foi the lots awaiueu to them. The Nenuozas nevei
paiu the piice of the lot noi maue the 2u% initial ueposit. 0n 0ctobei 18,
19SS,the PBBC boaiu of uiiectois passeu Resolution No. 218, withuiawing
the tentative awaiu of Lot 4 to the Nenuoza spouses anu ie-awaiuing saiu
lot jointly anu in equal shaies to Niguela Sto. Bomingo, Eniique Esteban,
viigilio Pinzon, Leonaiuo Reuubloanu }ose Feinanuez who weie able to
make the iequiieu 2u% of the net selling piice as ueposit anu theieaftei, the
coiiesponuing ueeus of sale weie executeu in theii favoi. The subuivision of
Lot 4 into five lots was appioveu by the city council anu the Buieau of Lanus.
The Nenuoza spouses askeu foi ieconsiueiation of the withuiawal of the
pievious awaiu to them of Lot 4 anu foi the cancellation of the ie-awaiu of
saiu lot to Sto. Bomingo anu foui otheis. Befoie the iequest coulu be acteu
upon, the spouses fileu the instant action foi specific peifoimance anu
uamages. The tiial couit sustaineu the withuiawal of the awaiu which was
appealeu by the Nenuozas. The Appellate Couit ieveiseu that uecision anu
ueclaieu voiu the ie-awaiu of Lot 4 anu the ueeus of sale anu uiiecteu the
PBBC to sell to the Nenuozas Lot 4 with an aiea of 2,6uS.7 squaie meteis at
P21 a squaie metei anu pay to them P4,uuu as attoiney's fees anu litigation
expenses. The PBBC appealeu to this Couit.

6))E*K

Whethei oi not theie was a peifecteu sale of the Lot 4, with the ieuuceu
aiea, to the Nenuozas which they can enfoice against the PBBC by an action
foi specific peifoimance.

7EL,N-K

The SC holu that theie was no peitecteu sale of Lot 4. It was conuitionally oi
contingently awaiueu to the Nenuozas subject to the appioval by the city
council of the pioposeu consoliuation subuivision plan anu the appioval of
the awaiu by the valuation committee anu highei authoiities. When the city
council uisappioveu the subuivision plan, the Nenuozas weie auviseu
thiough iegisteieu mail. In 1964, when the ieviseu plan was appioveu, the
Nenuozas shoulu have manifesteu in wiiting theii acceptance of the awaiu
foi the puichase of Lot 4 just to show that they weie still inteiesteu in its
puichase although the aiea was ieuuceu anu to obviate ally uoubt on the
mattei. They uiu not uo so.The PBBC boaiu of uiiectois acteu within its
iights in withuiawing the tentative awaiu. The contiact of sale is peifect at
the moment theie is meeting of the minus upon the thing which is the object
of the contiact, anu upon the piice. Fiom that moment, the paities may
iecipiocally uemanu peifoimance, subject to the law goveining the foim of
contiacts (Ait. 147S, Civil). 0nuei the facts of this case, we cannot say theie
was a meeting of minus on the puichase of Lot 4 with an aiea of
2,6u8.7squaie meteis at P21 a squaie metei.

G01 !M)0 $576S4$ (NQ '35!4$#3 #68 :)0 =9$ 93537"J#$ '347= 3<
"22$"#!> !M)0 =$7$!6=" (NQ 3!'"7 ;4$W"77"> !M)0 8"7'3! (NQ
"56=" 37#653> !M)0 7384#3 (NQ '35!4$#3 37#653 (NQ !M)0 <$#6b
(NQ +3#37$! 37#653> /HG !'7" VTX> ;070 5?0 HVB@@> <*CDE(DF G@>
/AAI
JFK <(C,?)(> 9(a*L 5?D**N 80

<(O.)K

The subject of this contioveisy is a paicel of lanu oiiginally owneu by Felix,
Nanuel anu Naiia Concepcion 0ilino, who moitgageu it to the Piogiessive
Commeicial Bank as secuiity foi a P1uu,uuu.uu loan on }uly 1, 196S
consisting of 1,1u1 squaie meteis anu locateu in Biliman, Quezon City. The
loan not having been paiu, the moitgage was foiecloseu anu the bank
acquiieu the piopeity as the highest biuuei at the auction sale on Naich 28,
1969. The moitgagee theieaftei tiansfeiieu all its assets, incluuing the saiu
lanu, to the Pacific Banking Coipoiation (PBC).

0n Nay 22, 197S, the 0ilinos, anu theii iespective spouses, who hau
iemaineu in possession of the lanu, maue a wiitten offei to PBC to
iepuichase the piopeity. In iesponse, the bank, confiims the agieement
thiough a lettei uateu Novembei 9, 1977 unuei the following conuitions:

a) The cash consiueiation shall be P16u,uuu.uu payable in full upon signing
of the Beeu of Absolute Sale;
b) The auuitional consiueiation shall consist of youi client's conveyance to
us of theii shaie of 2,9u1.1S squaie meteis on the piopeity situateu at
Camaiin, Caloocan City.

0ne yeai latei, on Novembei 2, 1978, PBC auviseu the piivate iesponuents
that if the tiansaction was not finalizeu within Su uays, it woulu consiuei the
offei of othei buyeis. 2 The iecoiu uoes not show any fuithei uevelopment
until }une 8, 1979, when the piivate iesponuents iequesteu PBC to allow
them to secuie a ceitifieu tiue copy of its Toiiens ceitificate ovei the lanu
foi puiposes of its suivey anu paitition among them piepaiatoiy to the
actual tiansfei of title to them. S PBC gianteu the iequest subject to the
conuition that title woulu iemain with it until the execution of the necessaiy
ueeu of conveyance.

0n Apiil 8, 198u, oi two yeais latei, PBC ieminueu the piivate iesponuents
of its lettei of Novembei 2, 1978, but again no action was taken to uelivei to
it the stipulateu consiueiation foi the sale. Finally, on Nay 14, 198u, PBC
executeu a ueeu of sale ovei the lanu in favoi of the heiein petitioneis, the
spouses Eniique anu Consuelo Lim, foi the sum of PSuu,uuu.uu.

0n Septembei Su, 198u, the piivate iesponuents fileu a complaint in the
Regional Tiial Couit of Quezon City against the petitioneis anu PBC foi the
annulment of the ueeu of sale on the giounu that the subject lanu hau been
eailiei solu to them. In its juugment foi the plaintiffs, the couit helu that
both PBC anu the spouses Lim hau acteu in bau faith when they concluueu
the sale knowing that "theie was a clouu in the status of the piopeity in
question." 6 The uecision was affiimeu in toto by the iesponuent couit, 7
anu the petitioneis aie now befoie us, uiging ieveisal.

6))E*K

Whethei oi not the execution of the ueeu of sale in favoi of the petitioneis
aie valiu.

7EL,N-K

In the case at bai, the piivate iesponuents obligateu themselves to uelivei to
the bank the sum of P16u,uuu.uu anu theii shaie of 2,9u1.1S squaie meteis
on a piopeity situateu in Caloocan City. In the lettei of PBC uateu Novembei
9, 1977, they weie iequesteu to "expeuite the loan (they weie negotiating
foi this puipose) so we can consummate the tiansaction as soon as
possible". That was in 1977. In 1978, they weie ieminueu of theii obligation
anu askeu to comply within thiity uays. They uiu not. 0n Apiil 8, 198u, they
weie ieminueu of that lettei of Novembei 2, 1978, anu again askeu to
comply; but again they uiu not. Suiely, the bank coulu not be iequiieu to
wait foi them foievei, especially so since they iemaineu in possession of the
piopeity anu theie is no iecoiu that they weie paying ientals. 0nuei the
ciicumstances, PBC hau the iight to consiuei the contiact to sell between
them teiminateu foi non-payment of the stipulateu consiueiation. We
heieby confiim that iescission.

Baving aiiiveu at these conclusions, the Couit no longei finus it necessaiy to
ueteimine if the petitioneis acteu in bau faith when they puichaseu the
subject piopeity. The piivate iesponuents lost all legal inteiest in the lanu
when theii contiact to sell was iescinueu by PBC foi theii non-compliance
with its piovisions. As that contiact was no longei effective when the lanu
was solu by PBC to the petitioneis, the piivate iesponuents hau no legal
stanuing to assail that subsequent tiansaction. The ueeu of sale between PBC
anu the petitioneis must theiefoie be sustaineu.

@01 !234!$! W6'$5=$ (NQ #347+$! 265;3# :)0 9350 '347= 3<
"22$"#! (NQ 9$67! 3< <7"5'6!'3 50 +35"!'3> N(U*LFK 8$#65+" +0
2$#"R3> 8"76$==" +0 !65;!35> 8R75" +0 '4$W"!> 5"=6W6+"+ +0
2$#"R3> R3#"5+" +0 '"'$7$! (NQ 8"7R +35"!'3> GGT !'7" //H>
;070 5?0 /IGAIA> !*M.*UC*D T> /AA@
JFK ;,N-?F?N> \(.]FD,N* +0

A venuee in an oial contiact to convey lanu who hau maue pait payment
theieof, enteieu upon the lanu anu hau maue valuable impiovements
theieon is entitleu to biing suit to cleai his title against the venuoi who hau
iefuseu to tiansfei the title to him. It is not necessaiy that the venuee shoulu
have an absolute title, an equitable title being sufficient to clothe him with
peisonality to biing an action to quiet title.

<(O.)K

In 1969, Pingol, the ownei of a lot (Lot No. S22S) in Caloocan City, executeu
a BEEB 0F ABS0L0TE SALE 0F 0NE-BALF 0F AN 0NBIvIBEB P0RTI0N 0F
|hisj PARCEL 0F LANB in favoi of Bonasco (piivate iesponuent), payable in
6 yeais.

In 1984, Bonasco uieu anu was only able to pay P8,S69 plus P2,uuu
uownpayment, leaving a balance of P1u,161. The heiis of Bonasco iemaineu
in possession of such lot anu offeieu to settle the balance with Pingol.
Bowevei, Pingol iefuseu to accept the offei anu uemanueu a laigei amount.
Thus, the heiis of Bonasco fileu an action foi specific peifoimance (with
Piayei foi Wiit of Pieliminaiy Injunction, because Pingol weie encioaching
upon Bonasco's lot). Pingol aveiieu that the sale anu tiansfei of title was
conuitional upon the full payment of Bonasco (contiact to sell, not contiact
of sale). With Bonasco's bieach of the contiact in 1976 anu ueath in 1984,
the sale was ueemeu cancelleu, anu the heiis' continuous occupancy was
only being toleiateu by Pingol.

6))E*)K

(1) Whethei oi not Pingol can iefuse to tiansfei title to Bonasco.

(2) Whethei oi not Bonasco has the iight to quiet title.

7EL,N-K

(1) No. The contiact between Pingol anu Bonasco is a contiact of sale anu
not a contiact to sell. The acts of the paities, contempoianeous anu
subsequent to the contiact, cleaily show that the paities intenueu an
absolute ueeu of sale; the owneiship of the lot was tiansfeiieu to the
Bonasco upon its actual (upon Bonasco's possession anu constiuction of the
house) anu constiuctive ueliveiy (upon execution of the contiact). The
ueliveiy of the lot uivesteu Pingol of his owneiship anu he cannot iecovei
the title unless the contiact is iesolveu oi iescinueu unuei Ait. 1S92 of NCC.
It states that the venuee may pay even aftei the expiiation of the peiiou
stipulateu as long as no uemanu foi iescission has been maue upon him
eithei juuicially oi by notaiial act. Pingol neithei uiu so. Bence, Bonasco has
equitable title ovei the piopeity.

(2) Although the complaint fileu by the Bonascos was an action foi specific
peifoimance, it was actually an action to quiet title. A clouu has been cast on
the title, since uespite the fact that the title hau been tiansfeiieu to them by
the execution of the ueeu of sale anu the ueliveiy of the object of the
contiact, Pingol auamantly iefuseu to accept the payment by Bonascos anu
insisteu that they no longei hau the obligation to tiansfei the title.

Bonasco, who hau maue paitial payments anu impiovements upon the
piopeity, is entitleu to biing suit to cleai his title against Pingol who iefuseu
to tiansfei title to him. It is not necessaiy that Bonasco shoulu have an
absolute title, an equitable title being sufficient to clothe him with
peisonality to biing an action to quiet title.

Piesciiption cannot also be invokeu against the Bonascos because an action
to quiet title to piopeity in 0NE's P0SSESSI0N is impiesciiptible.

! +)'(,*-( () .$//

/01 $86#63 "0 !"#"Y"7 (NQ =$7$!6=" +6Y35 :)0 '347= 3< "22$"#!
(NQ P35$==$ J377$!> ;070 5?0 //HGI@> PELF V> /AAT
JFK ;E,LL*N> '](DUFL P(N* #0

<(O.)K

That uefenuant Bi. Salazai is the ownei of the two (2) paicels of lanu with
impiovements theieon locateu at 2914 Finlanuia Stieet, Nakati, Netio
Nanila anu coveieu by Tiansfei Ceitificate of Title Nos. S1uS8 anu S1uS9 of
the Registiy of Beeus of Nakati; that Bi. Salazai offeieu to sell his piopeities
to }onette Boiies foi 0ne Nillion pesos (P1,uuu,uuu.uu). The initial pioposal
took place at the Bimsum Restauiant, Nakati, wheieby it was pioposeu that
the payment of the consiueiation was to be maue within six (6) months but
was objecteu to by Bi. Salazai anu he ieuuceu it to a thiee (S) months peiiou
that sometime on |Nayj 28, 1989, }onette Boiies togethei with a ceitain
Emilio T. Salazai went to see Bi. Salazai at the lattei's iesiuence in Bataan
beaiing a copy of a Beeu of Absolute Sale anu Beeu of Waiianty but Bi.
Salazai iefuseu to sign because }onette Boiies uiu not have the money ieauy
then. In saiu occasion Bi. Salazai fuithei ieuuceu the peiiou within which
plaintiff may puichase the lots, to one (1) month oi up to }une Su, 1989.

}onette Boiies then met again Bi. Salazai on }une 2, 1989 at the Ninoy
Inteinational Aiipoit who was about to leave foi the 0niteu States of
Ameiica wheie he is a iesiuent. }onette Boiies hau with hei the Beeu of
Absolute Sale anu askeu Bi. Salazai to sign saiu uocument. Bi. Salazai
ieluctantly agieeu to sign the uocument pioviueu that }onette Boiies pays
one half (12) of the consiueiation oi PSuu,uuu.uu in "cash" by }une 1S,
1989 anu the balance was payable on }une Su, 1989. It was uuiing this
occasion that Bi. Salazai again emphasizeu to }onette Boiies that he neeueu
the money because he was then buying a piopeity in the 0niteu States.

Plaintiff agieeu to the above conuitions anu Bi. Salazai constituteu co-
uefenuant Teiesa Bizon as custouian at the Beeu of Absolute Sale togethei
with the Titles of the Lanu in question with the instiuction to Teiesa Bizon
not to suiienuei saiu uocuments to }onette Boiies until upon payment of the
full piice in "cash".

0n }une 14, 1989 }onette Boiies infoimeu uefenuant Bizon that she will be
able to pay the full amount of P1,uuu,uuu.uu on }une 1S, 1989 anu on the
next uay, she then went to the house of Teiesa Bizon to see anu get the
uocuments entiusteu to hei by Bi. Salazai. The uocuments not being in
Bizon's possession, they agieeu to meet at Netio Bank West Avenue Bianch
to get the uocuments anu then to pioceeu to Nakati to meet the plaintiff's
business paitnei a ceitain Balao who allegeuly gave plaintiff a Fai East Bank
anu Tiust Company check foi the amount of P1,Suu,uuu.uu with which to
buy the piopeity. Foi some ieason oi anothei }onette Boiies anu uefenuant
Bizon faileu to pioceeu to Nakati.

In the meantime oi on }une 16, 1992, Bi. Salazai maue an oveiseas call to co-
uefenuant Bizon to inquiie if }onette Boiies hau alieauy paiu the uown
payment of PSuu,uuu.uu anu Teiesa Bizon ieplieu to Bi. Salazai that }onette
Boiies hau not paiu the uown payment. Bi. Salazai then oiueieu Bizon to
stop the sale.

6))E*K

Whethei oi not the so-calleu Beeu of Absolute Sale executeu by petitionei
Emilio A. Salazai in favoi of piivate iesponuent }onette Boiies is a peifecteu
contiact of sale oi a meie contiact to sell.

7EL,N-K

It is a contiact to sell not contiact of sale. The withholuing by Salazai
thiough Bizon of the Beeu of Absolute Sale, the ceitificates of title, anu all
othei uocuments ielative to the lots is an auuitional inuubitable pioof that
Salazai uiu not tiansfei to Boiies eithei by actual oi constiuctive ueliveiy
the owneiship of the two lots. While geneially the execution of a ueeu of
absolute sale constitutes constiuctive ueliveiy of owneiship, the
withholuing by the venuoi of that ueeu unuei explicit agieement that it be
ueliveieu togethei with the ceitificates of titles to the venuee only upon the
lattei's full payment of the consiueiation amounts to a suspension of the
effectivity of the ueeu of sale as a binuing contiact.

0nuoubteuly, Salazai anu Boiies mutually agieeu that uespite the Beeu of
Absolute Sale title to the two lots in question was not to pass to the lattei
until full payment of the consiueiation of P1 million. The foim of the
instiument cannot pievail ovei the tiue intent of the paities as establisheu
by the eviuence.

Accoiuingly, since Boiies was unable to pay the consiueiation, which was a
suspensive conuition, Salazai cannot be compelleu to uelivei to hei the ueeu
of sale, ceitificates of title, anu othei uocuments conceining the two lots. In
othei woius, no iight in hei favoi anu no coiiesponuing obligation on the
pait of Salazai weie cieateu.

G01 !234!$! 5$!=37 '"!=6##3 (NQ 73!6$ 7$R$!Z'"!=6##3 :)0
!234!$! 74+R 7$R$! (NQ '35!3#"'635 7$R$!> V@A !'7" /A@> ;070
5?0 /BIA/B> 5?:*UC*D GH> GIIB
JFK ;E,N.?> 7?N(LQ J0

<(O.)K

0n Novembei 7, 1997, Emmaliza Bohlei anu iesponuents negotiateu foi the
sale of the foimei's house anu lot locateu at Poblacion, New Washington,
Aklan, to the lattei foi the consiueiation of P16S,uuu.uu. 0n the following
uay, Novembei 8, they signeu an Agieement which peitinently ieaus as
follows:

We, the unueisigneu, agiee to the following teims anu conuitions iegaiuing
the sale of the house anu lot locateu at Poblacion, New Washington, Aklan:

1. That the total amount to be paiu shall be 0ne Bunuieu Sixty-Five
Thousanu Pesos (P16S,uuu.uu) to be paiu in full on oi befoie the 1Sth of
Becembei 1997;
2. That a paitial payment (sic) a total amount of 0ne Bunuieu Thiity
Thousanu Pesos (P1Su,uuu.uu) shall be maue touay, the 8th of Novembei
1997;
S. That the iemaining balance in the amount (sic) of Thiity-Five Thousanu
Pesos (PSS,uuu.uu) shall be maue as pei #1 above;
4. That the buyeis, iepiesenteu by the Spouses Ruuy anu Consolacion Reyes
(sic) shall be iesponsible foi all the legal anu othei ielateu uocuments anu
pioceuuies iegaiuing this sale;
S. That the sellei, iepiesenteu by Ns. Emmaliza N. Bohlei, shall vacate the
saiu house anu lot on oi (sic) the S1st of }anuaiy, 1998;
6. That the tenants, iepiesenteu by the Spouses Romeo anu Epifania vicente,
shall vacate the same on oi befoie the Suth of Apiil, 1998; anu
7. That all paities conceineu shall agiee to all the teims anu conuitions
stipulateu heiein.S

0pon the signing of the saiu contiact, iesponuents hanueu to Bohlei
P2u,uuu.uu cash anu allegeuly a P11u,uuu.uu-check. Bohlei nonetheless
insisteu that the entiie paitial payment shoulu be in cash as she neeueu it to
ieueem the subject piopeity fiom the bank on the following Nonuay. She
hence uemanueu foi its payment up to miunight on that uay otheiwise she
woulu cancel the sale. Because the iesponuents faileu to make goou the
P11u,uuu.uu. Bohlei subsequently solu the piopeity to the petitioneis.

Baving leaineu of the subsequent sale, the iesponuents immeuiately
tenueieu the check, askeu the bank foi a ceitification that it was funueu anu
consulteu theii lawyei who sent a notice of lis penuens (oi notice of penuing
action) to the Registei of Beeus anu the Piovincial Assessoi. Civil Case No.
6u7u foi annulment of sale, specific peifoimance anu uamages was
subsequently fileu by the iesponuents with the Regional Tiial Couit (RTC) of
Kalibo, Aklan against Bohlei anu the petitioneis.

0n Febiuaiy 21, 2uuS, the RTC ienueieu its Becision ueclaiing the
Novembei 8, 1997 Agieement a contiact to sell. Consiueiing that no actual
sale happeneu between Bohlei anu the iesponuents, the foimei coulu
valiuly sell the piopeity to the petitioneis. Thus, the tiial couit uismisseu the
complaint.

Aggiieveu, iesponuents appealeu the case to the CA. In the challengeu
Becembei 6, 2uuS Becision, the appellate couit ieveiseu the tiial couit's
iuling, ueclaieu the Novembei 8, 1997 Agieement a contiact of sale, anu
annulleu the subsequent sale to the petitioneis. The CA iuleu, among otheis,
that the woiuings of the agieement anu the conuuct of the paities suggest
that they intenueu to entei into a contiact of sale.

0wneiship was not ieseiveu by the venuoi anu non-payment of the
puichase piice was not maue a conuition foi the contiact's effectivity.

Petitioneis, thus, fileu the instant petition foi ieview on ceitioiaii imputing
the following eiiois to the CA:
1. The appellate couit eiieu in ueclaiing the contiact styleu AuREENENT
uateu u8 Novembei 1997 as a "contiact of sale" anu not a contiact to sell.
2. The appellate couit eiieu in ueclaiing the petitioneis in bau faith when
they bought the subject mattei house anu lot on u2 Naich 1998 fiom
Emmaliza B. Bohlei.

6))E*K

Whethei oi not the tiansaction between Bohlei anu the iesponuents is a
peifecteu contiact of sale oi a meie contiact to sell.

7EL,N-K

Sale is a consensual contiact anu is peifecteu by meie consent, which is
manifesteu by a meeting of the minus as to the offei anu acceptance theieof
on the subject mattei, piice anu teims of payment of the piice.

In the instant case, the Novembei 8, 1997 Agieement cleaily inuicates that
Bohlei anu the Spouses Reyes hau a meeting of the minus on the subject
mattei of the contiact, the house anu lot; on the piice, P16S,uuu.uu; anu on
the teims of payment, an initial payment of P1Su,uuu.uu on the uate of
execution of the agieement anu the iemaining balance on oi befoie
Becembei 1S, 1997. At that piecise moment when the consent of both
paities was given, the contiact of sale was peifecteu.

The saiu agieement cannot be consiueieu a contiact to sell. In a contiact of
sale, the title to the piopeity passes to the venuee upon the ueliveiy of the
thing solu.

In a contiact to sell, owneiship is, by agieement, ieseiveu in the venuoi anu
is not to pass to the venuee until full payment of the puichase piice.
0theiwise stateu, in a contiact of sale, the venuoi loses owneiship ovei the
piopeity anu cannot iecovei it until anu unless the contiact is iesolveu oi
iescinueu; wheieas, in a contiact to sell, title is ietaineu by the venuoi until
full payment of the piice.

In the lattei contiact, payment of the piice is a positive suspensive conuition,
failuie of which is not a bieach but an event that pievents the obligation of
the venuoi to convey title fiom becoming effective.

The Novembei 8, 1997 Agieement heiein cannot be chaiacteiizeu as a
contiact to sell because the sellei maue no expiess ieseivation of owneiship
oi title to the subject house anu lot. Insteau, the Agieement contains all the
iequisites of a contiact of sale.

WBEREF0RE, piemises consiueieu, the petition foi ieview on ceitioiaii is
BENIEB B0E C00RSE.

@01 456=$+ 84!#68 "5+ '976!=6"5 47J"5 2337 "!!3'6"=635> 65'0
D*MD*)*N.*Q CF ,.) 2D*),Q*N.> 8"54$# W0 J4$5 :)0 J7R'ZW
+$W$#328$5= '37237"=635 D*MD*)*N.*Q CF ,.) 2D*),Q*N.> J$5P"865
S46+6##"c (NQ !$" <33+! '37237"=635> D*MD*)*N.*Q CF ,.) $d*OE.,:*
W,O* 2D*),Q*N.> W6'$5=$ =0 9$75"5+$Y> ;070 5?0 /BATV@> PELF @/> GIIA
JFK ;ELC,N> #?E "NN '0

<(O.)K

Responuent Sea Foous Coipoiation (SFC) is the iegisteieu ownei of Lot No.
Suu locateu in Lowei Calainan, Zamboanga City anu coveieu by Tiansfei
Ceitificate of Title (TCT) No. S182 (T-S76).

Petitionei 0niteu Nuslim anu Chiistian 0iban Pooi Association, Inc.
(0NC0PAI), an oiganization of squatteis occupying Lot No. Suu, thiough its
Piesiuent, Caimen T. Biola, initiateu negotiations with SFC foi the puichase
theieof. 0NC0PAI expiesseu its intention to buy the subject piopeity using
the pioceeus of its penuing loan application with National Bome Noitgage
Finance Coipoiation (NBNF). Theieaftei, the paities executeu a Lettei of
Intent to Sell by |SFCj anu Lettei of Intent to Puichase by 0NC0PAI.

Bowevei, the intenueu sale was ueiaileu uue to 0NC0PAI's inability to
secuie the loan fiom NBNF as not all its membeis occupying Lot No. Suu
weie willing to join the unueitaking. Intent on buying the subject piopeity,
0NC0PAI, in a seiies of confeiences with SFC, pioposeu the subuivision of
Lot No. Suu to allow the squattei-occupants to puichase a smallei poition
theieof.

Consequently, sometime in Becembei 1994, Lot No. Suu was subuiviueu into
thiee (S) paits coveieu by sepaiate titles: Lot Suu-A, Lot Suu-B, Lot Suu-C,
iespectively.

0n }anuaiy 11, 199S, 0NC0PAI puichaseu Lot No. Suu-A foi P4,SSu,8u1.S8.
In tuin, Lot No. Suu-B was constituteu as ioau iight of way anu uonateu by
SFC to the local goveinment.

0NC0PAI faileu to acquiie Lot No. Suu-C foi lack of funus. 0n Naich S, 199S,
0NC0PAI negotiateu anew with SFC anu was given by the lattei anothei
thiee months to puichase Lot No. Suu-C. Bowevei, uespite the extension, the
thiee-month peiiou lapseu with the sale not consummateu because
0NC0PAI still faileu to obtain a loan fiom NBNF. Thus, on }uly 2u, 199S, SFC
solu Lot No. Suu-C foi P2,S47,S8S.uu to iesponuent BRYC-v Bevelopment
Coipoiation (BRYC).

A yeai latei, 0NC0PAI fileu with the RTC a complaint against iesponuents
SFC anu BRYC seeking to annul the sale of Lot No. Suu-C, anu the
cancellation of TCT No. T-121,S2S. 0NC0PAI allegeu that the sale between
the iesponuents violateu its valiu anu subsisting agieement with SFC
embouieu in the Lettei of Intent. Accoiuing to 0NC0PAI, the Lettei of Intent
gianteu it a piioi, bettei, anu piefeiieu iight ovei BRYC in the puichase of
Lot No. Suu-C.

SFC counteieu that the Lettei of Intent uateu 0ctobei 4, 1991 is not, anu
cannot be consiueieu, a valiu anu subsisting contiact of sale. 0n the
contiaiy, SFC aveiieu that the uocument was uiawn anu executeu meiely to
accommouate 0NC0PAI anu enable it to comply with the loan
uocumentation iequiiements of NBNF. In all, SFC maintaineu that the Lettei
of Intent uateu 0ctobei 4, 1991 was subject to a conuition i.e., payment of
the acquisition piice, which 0NC0PAI faileu to uo when it uiu not obtain the
loan fiom NBNF.

Aftei tiial, the RTC uismisseu 0NC0PAI's complaint. The lowei couit founu
that the Lettei of Intent was executeu to facilitate the appioval of 0NC0PAI's
loan fiom NBNF foi its intenueu puichase of Lot No. Suu. Accoiuing to the
RTC, the Lettei of Intent was simply SFC's ueclaiation of intention to sell,
anu not a piomise to sell, the subject lot. 0n the whole, the RTC concluueu
that the Lettei of Intent was neithei a piomise, noi an option contiact, noi
an offei contemplateu unuei Aiticle 1S19 of the Civil Coue, oi a bilateial
contiact to sell anu buy.

6))E*K

Whethei oi not the Lettei of Intent to Sell anu Lettei of Intent to Buy is a
bilateial iecipiocal contiact within the meaning oi contemplation of Aiticle
1479 (1) of the Civil Coue of the Philippines.

7EL,N-K

The petition ueseives scant consiueiation.

0NC0PAI appeais to laboi unuei a clouu of confusion. The fiist paiagiaph of
Aiticle 1479 contemplates the bilateial ielationship of a contiact to sell as
uistinguisheu fiom a contiact of sale which may be absolute oi conuitional
unuei Aiticle 14S8 of the same coue. It ieaus:

Art. 1479. A promise to buy onJ sell o Jeterminote tbinq for o price
certoin is reciprocolly JemonJoble.

An occepteJ uniloterol promise to buy or to sell o Jeterminote tbinq
for o price certoin is binJinq upon tbe promissor if tbe promise is
supporteJ by o consiJerotion Jistinct from tbe price.

The case of Coionel v. Couit of Appeals is illuminating anu explains the
uistinction between a conuitional contiact of sale unuei Aiticle 14S8 of the
Civil Coue anu a bilateial contiact to sell unuei Aiticle 1479 of the same
coue:

A controct to sell moy tbus be JefineJ os o biloterol controct
wbereby tbe prospective seller, wbile expressly reservinq tbe
ownersbip of tbe subject property Jespite Jelivery tbereof to tbe
prospective buyer, binJs bimself to sell tbe soiJ property exclusively
to tbe prospective buyer upon fulfillment of tbe conJition oqreeJ
upon, tbot is, full poyment of tbe purcbose price.

A controct to sell os JefineJ bereinobove, moy not even be
consiJereJ os o conJitionol controct of sole wbere tbe seller moy
likewise reserve title to tbe property subject of tbe sole until tbe
fulfillment of o suspensive conJition, becouse in o conJitionol
controct of sole, tbe first element of consent is present, oltbouqb it is
conJitioneJ upon tbe boppeninq of o continqent event wbicb moy or
moy not occur. lf tbe suspensive conJition is not fulfilleJ, tbe
perfection of tbe controct of sole is completely oboteJ. Eowever, if
tbe suspensive conJition is fulfilleJ, tbe controct of sole is tbereby
perfecteJ, sucb tbot if tbere boJ olreoJy been previous Jelivery of
tbe property subject of tbe sole to tbe buyer, ownersbip tbereto
outomoticolly tronsfers to tbe buyer by operotion of low witbout
ony furtber oct bovinq to be performeJ by tbe seller.

ln o controct to sell, upon tbe fulfillment of tbe suspensive conJition
wbicb is tbe full poyment of tbe purcbose price, ownersbip will not
outomoticolly tronsfer to tbe buyer oltbouqb tbe property moy bove
been previously JelivereJ to bim. Tbe prospective seller still bos to
convey title to tbe prospective buyer by enterinq into o controct of
obsolute sole.

It is essential to uistinguish between a contiact to sell anu a conuitional
contiact of sale specially in cases wheie the subject piopeity is solu by the
ownei not to the paity the sellei contiacteu with, but to a thiiu peison, as in
the case at bench. In a contiact to sell, theie being no pievious sale of the
piopeity, a thiiu peison buying such piopeity uespite the fulfillment of the
suspensive conuition such as the full payment of the puichase piice, foi
instance, cannot be ueemeu a buyei in bau faith anu the piospective buyei
cannot seek the ielief of ieconveyance of the piopeity. Theie is no uouble
sale in such case. Title to the piopeity will tiansfei to the buyei aftei
iegistiation because theie is no uefect in the ownei-sellei's title pei se, but
the lattei, of couise, may be sueu foi uamages by the intenuing buyei.

In a conuitional contiact of sale, howevei, upon the fulfillment of the
suspensive conuition, the sale becomes absolute anu this will uefinitely
affect the sellei's title theieto. In fact, if theie hau been pievious ueliveiy of
the subject piopeity, the sellei's owneiship oi title to the piopeity is
automatically tiansfeiieu to the buyei such that, the sellei will no longei
have any title to tiansfei to any thiiu peison. Applying Aiticle 1S44 of the
Civil Coue, such seconu buyei of the piopeity who may have hau actual oi
constiuctive knowleuge of such uefect in the sellei's title, oi at least was
chaigeu with the obligation to uiscovei such uefect, cannot be a iegistiant in
goou faith. Such seconu buyei cannot uefeat the fiist buyei's title. In case a
title is issueu to the seconu buyei, the fiist buyei may seek ieconveyance of
the piopeity subject of the sale.

In the instant case, howevei, the paities executeu a Lettei of Intent, which is
neithei a contiact to sell noi a conuitional contiact of sale. As founu by the
RTC, anu uphelu by the CA, the Lettei of Intent was executeu to
accommouate 0NC0PAI anu facilitate its loan application with NBNF. The
Lettei of Intent to Buy anu Sell is just that - a manifestation of SFC's
intention to sell the piopeity anu 0NC0PAI's intention to acquiie the same.

The Lettei of IntentAgieement between SFC anu 0NC0PAI is meiely a
wiitten pieliminaiy unueistanuing of the paities wheiein they ueclaieu
theii intention to entei into a contiact of sale. It is subject to the conuition
that 0NC0PAI will "apply with the Bome Noitgage anu Finance Coipoiation
foi a loan to pay the acquisition piice of saiu lanu."

The Lettei of Intent to Sell fell shoit of an "offei" contemplateu in Aiticle
1S19 of the Civil Coue because it is not a ceitain anu uefinite pioposal to
make a contiact but meiely a ueclaiation of SFC's intention to entei into a
contiact. 0NC0PAI's ueclaiation of intention to buy is also not ceitain anu
uefinite as it is subject to the conuition that 0NC0PAI shall enueavoi to iaise
funus to acquiie subject lanu. The acceptance of the offei must be absolute;
it must be plain anu unconuitional. Noieovei, the Lettei of
IntentAgieement uoes not contain a piomise oi commitment to entei into a
contiact of sale as it meiely ueclaieu the intention of the paities to entei into
a contiact of sale upon fulfillment of a conuition that 0NC0PAI coulu secuie
a loan to pay foi the piice of a lanu.

The Lettei of IntentAgieement is not an "option contiact" because asiue
fiom the fact that it is meiely a ueclaiation of intention to sell anu to buy
subject to the conuition that 0NC0PAI shall iaise the necessaiy funus to pay
the piice of the lanu, anu uoes not contain a binuing piomise to sell anu buy,
it is not suppoiteu by a uistinct consiueiation uistinct fiom the piice of the
lanu intenueu to be solu anu to be bought x x x No option was gianteu to
0NC0PAI unuei the Lettei of IntentAgieement to buy subject lanu to the
exclusion of all otheis within a fixeu peiiou noi was SFC bounu unuei saiu
Agieement to Sell exclusively to 0NC0PAI only the saiu lanu within the fixeu
peiiou.

Neithei can the Lettei of IntentAgieement be consiueieu a bilateial
iecipiocal contiact to sell anu to buy contemplateu unuei Aiticle 1479 of the
Civil Coue which is iecipiocally uemanuable. The Lettei of
IntentAgieement uoes not contain a PR0NISE to sell anu to buy subject
piopeity. Theie was no piomise oi commitment on the pait of SFC to sell
subject lanu to 0NC0PAI, but meiely a ueclaiation of its intention to buy the
lanu, subject to the conuition that 0NC0PAI coulu iaise the necessaiy funus
to acquiie the same at the piice of P1uS.uu pei squaie metei x x x

WBEREF0RE, piemises consiueieu, the petition is heieby BENIEB. The
Becision of the Couit of Appeals in CA u.R. Cv No. 62SS7 anu the Regional
Tiial Couit in Civil Case No. 467(4S44) aie AFFIRNEB. Costs against the
petitionei.

X01 $0'0 8''4##34;9 _ '30 :)0 !0 80 J$7;$7> X@ 2],L0 HG@> ;070 5?0
/AIIA> !*M.*UC*D GT> /AGG
JFK 8(-Q?a(> JD*-*..* 40

<(O.)K

In the month of Febiuaiy, 1918, plaintiff anu uefenuant enteieu into an
agieement by which the uefenuant was to uelivei plaintiff Su1 bales of
tobacco to New Yoik City in goou conuition. That ueliveiy was maue anu the
plaintiff paiu the full puichase piice. That upon an examination latei the
tobacco was founu to be in a musty conuition, anu its value was $12,uuu less
than it woulu have been if the tobacco hau been in the conuition which
uefenuant agieeu that it shoulu be, as a iesult of which plaintiff claims
uamages foi $12,uuu, 0niteu States cuiiency, oi P24,uuu, Philippine
cuiiency. That when the conuition of the tobacco was uiscoveieu, plaintiff
piomptly notifieu the uefenuant, who ignoieu the piotest. Wheiefoie, the
plaintiff piays juugment foi the amount of P24,uuu, Philippine cuiiency, foi
costs anu geneial ielief.

The lowei couit ienueieu juugment against the uefenuant anu in favoi of the
plaintiff foi the sum of P11,867.98 oi P2S,7SS.96 with legal inteiest fiom
}anuaiy 6, 1922, anu costs, fiom which, aftei his motion foi a new tiial was
oveiiuleu, the uefenuant appeals, claiming that the couit eiieu: Fiist, in
finuing that the tobacco was not in goou conuition when it aiiiveu in New
Yoik; seconu, in holuing that the plaintiff is entitleu to maintain an action foi
bieach of contiact aftei having agieeu with the uefenuant to iescinu anu to
make iestitution of the subject-mattei anu the piice aftei a violation of the
agieement; thiiu in holuing that the plaintiff, having electeu to iescinu anu
notifieu the uefenuant of such an election, may now iefuseu it anu affiim the
same anu iecovei fiom the allegeu bieach of waiianty; fouith, in holuing
that this action shoulu be maintaineu, no claim having been maue foi the
allegeu bieach of waiianty of quality within the statutoiy peiiou; anu, fifth,
in oveiiuling the uefenuant's motion foi a new tiial.
6))E*K

Is the uefenuant liable foi bieach of contiact.

7EL,N-K

Affiimative. Befenuant shoulueis the loss.

The uefects in the tobacco weie inheient anu coulu not be asceitaineu
without opening the bales anu making a physical examination. When this
was uone, the plaintiff piomptly cableu the uefenuant that the tobacco was
not satisfactoiy. In the natuie of things, the plaintiff coulu not then ienuei
the uefenuant a statement of the amount of this claim. By the teims of the
contiact, the uefenuant guaianteeu the aiiival of the tobacco in New Yoik
"in goou conuition."

The Although the woiu "solu" is useu in the wiitten contiact, the tiansaction
shows that the sale was not complete until the aiiival of the goous in New
Yoik. The faii constiuction to be put upon the contiact is, that on the aiiival
of the ship containing the goous, the uefenuants shoulu uelivei them, anu the
plaintiffs shoulu pay the contiact piice. Anu the authoiities holu that the
aiiival of the goous, in such case, is a conuition pieceuent, which must be
shown to have taken place befoie eithei paity can biing suit.

V01 ^$#;3 +6'93!3> $= "#0 :)0 #"47" 73b"!> $= "#0> '$#!3 J37P" (NQ
5$#6" "#"5;46#"5> V !'7" BH/> ;070 5?0 #Z/BXX/> PELF @/> /ATG
JFK 8(-L()(N-> #((DN, '0

<(O.)K

0n Becembei 1S, 19S4, Lauia A. Roxas solu to Boija foi the sum of P8Su.uu a
paicel of uniegisteieu coconut lanu with an aiea of 16,96S squaie meteis
anu with S9S coconut tiees, situateu in Baiiio San Biego, San Pablo, Laguna,
subject to the conuition that the venuoi coulu iepuichase it foi the same
amount within five yeais, but not eailiei than thiee yeais, fiom the uate of
the sale which was eviuenceu by a public uocument.

Fiom Novembei 26, 19SS to }uly S, 19S7, Roxas hau ieceiveu fiom Bichoso
seveial sums of money amounting to P77u.uu, theii agieement being that
aftei Becembei 1S, 19S7, Roxas woulu sell the same piopeity, by absolute
sale, to Bichoso foi the total sum of P2,uuu.uu, the afoiesaiu sum of P77u.uu
to be consiueieu as initial oi auvance payment on the puichase piice.

0ut of the balance of P1,2Su.uu, Bichoso woulu use the sum of P8Su.uu to
iepuichase the piopeity fiom Roxas aftei Becembei 1S, 19S4 but within the
five yeais stipulateu foi the exeicise of Roxas' iight to iepuichase.

0n 0ctobei 22, 19S7, puisuant to Roxas' iequest maue on }uly 2S, 19S7,
Bichoso sent hei a check foi the sum of PS2u.uu "in full payment of the
P2,uuu.uu consiueiation foi the ueeu of absolute sale" anu theieaftei they
infoimeu Boija of theii ieauiness to iepuichase the piopeity.

0n Novembei 29, 19S7 Roxas sent them back the check just iefeiieu to with
the iequest that they enuoise the same to Boija when they maue the
iepuichase, because it appeaieu that, asiue fiom the P8Su.uu consiueiation
of the pacto ue ietio sale, Roxas hau ieceiveu auuitional sums fiom Boija.

Aftei Becembei 1S, 19S7, Bichoso maue iepiesentations to Boija that they
weie ieauy to make the iepuichase, as well as to Roxas foi the lattei to be
ieauy to execute the coiiesponuing ueeu of absolute sale in theii favoi aftei
they hau maue the iepuichase; that notwithstanuing these uemanu anu
iepiesentations, Roxas anu Boija hau uelibeiately faileu to execute the
coiiesponuing ueeu of absolute sale anu ueeu of iesale alieauy mentioneu.

0n }anuaiy 8, 19S8 Boija fileu a motion to uismiss the complaint upon the
giounu that Bichoso hau no cause of action against them because theii
contiact was not them but with Lauia A. Roxas. LC sustaineu the motion anu
uismisseu the complaint because, accoiuing to the same, "theie exists no
wiitten contiact of assignment of iights executeu by Lauia A. Roxas in favoi
of the heiein plaintiffs conceining piopeity which saiu Lauia A. Roxas solu
to hei co-uefenuants unuei a ueeu of pacto ue ietio sale, anu that the
puipose of the piesent action is piecisely to compel Lauia A. Roxas to
execute the coiiesponuing ueeu of assignment."

6))E*K

Whethei oi not Bichoso can iepuichase the coconut lanu which was solu to
Boija by Lauia Roxas.

7EL,N-K

No. It is obvious that in ueciuing the case, the lowei couit faileu to give uue
weight to the ueeu of absolute sale executeu by Lauia A. Roxas in favoi of
appellants on Becembei 8, 19S7 in effect supeiseuing the pacto ue ietio
sale mentioneu heietofoie foi a total consiueiation of P1,684.uu, of which
the amount of P8Su.uu paiu as consiueiation foi the pacto ue ietio sale was
consiueieu as a pait. Theie is no uispute at all as to the genuineness of this
piivate ueeu of absolute sale noi as to its execution on Becembei 8, 19S7.
that is, five uays piioi to Becembei 1S, 19S7, when accoiuing to appellees
themselves, they maue the fiist attempt to iepuichase the piopeity in
question, anu on which occasion appellants iefuseu to allow the iepuichase
"because Lauia A. Roxas was not with them", accoiuing to the lowei couit.
Aftei Becembei 8, 19S7,appellants' iights weie no longei baseu on the
supeiseueu pacto ue ietio sale but on the afoiesaiu ueeu of absolute sale
which was a peifectly valiu contiact as between the paities.

In plain woius, aftei that uate Lauia A. Roxas no longei hau any iight to
iepuichase the piopeity. Noieovei, Boija hau no knowleuge until Becembei
1S, 19S7 that Roxas hau assigneu hei iight to iepuichase to Bichoso.

Such being its conuition, it coulu not possibly give iise to the case of one anu
the same piopeity having been solu to two uiffeient puichaseis. The salt
in favoi of appellants was of the piopeity itself, while the one in favoi of
appellees, if not a meie piomise to assign, was at most an actual assignment
of the iight to iepuichase the same piopeity. The piovisions of paiagiaph S,
Aiticle 1S44 of the Civil Coue of the Philippines which ieau as follows: "If the
same thing shoulu have been solu to uiffeient venuees, the owneiship shall
be tiansfeiieu to the peison who may have fiist taken possession theieof in
goou faith, if it shoulu be movable piopeity. Shoulu theie be no insciiption,
the owneiship shall peitain to the peison who in goou faith was fiist in the
possession; anu, in the absence theieof, to the peison who piesents the
oluest title, pioviueu theie is goou faith. (Emphasis supplieu)" uo not,
theiefoie, apply.

Baving aiiiveu at the above conclusions, we aie constiaineu to holu that,
upon the facts of the case, appellees aie not entitleu to the ieliefs sought in
theii amenueu complaint anu that whatevei iemeuy they have is exclusively
against Lauia A. Roxas to iecovei fiom hei, among othei things, what they
paiu as consiueiation foi the execution of the piivate uocument Exhibit I.

WBEREF0RE, the uecision appealeu fiom is ieveiseu, with the iesult that
this case is uismisseu, with costs, ieseiving to appellees, howevei, the iight
to file a sepaiate action against Lauia A. Roxas to enfoice whatevei iights
they may have against hei in consonance with this uecision.

T01 #4Y35 J73\$7";$ '30> 65'0 :)0 8"76=68$ J46#+65; '30> 65'0> (NQ
8R$7! J46#+65; '30> 65'0> 8"76=68$ J46#+65; '30> 65'0> X@ !'7" A@>
;070 5?0 #ZGVHHV> P(NE(DF @/> /ABG
JFK 2*M,.?> ",L**N 80

<(O.)K

In the City of Nanila, Nyeis owneu S paicels of lanu with impiovements
theieon. Nyeis then enteieu into a contiact calleu a "Beeu of Conuitional
Sale" with Naiitime Builuing in which Nyeis solu the lanu foi P1million.
They have agieeu that PSu,uuu.uu was to paiu upon the execution of the
contiact anu the balance will be paiu in a monthly installments of P1u,uuu
with an inteiest iate of S% P.A. until fully paiu. In the contiact it was
stipulateu that in case of failuie of buyei to pay any of the installments, the
contiact will be annulleu at the option of the sellei anu all payments maue
by the buyei is foifeiteu. Latei on, the stipulateu installment of P1uk with
S% inteiest was amenueu to the PSuuu with S.S% pei annum.

Naiitime paiu the monthly installments but faileu to pay the monthly
installment of Naich. vice-Piesiuent of Naiitime wiote to Piesiuent of
Nyeis iequesting foi a moiatoiium on the monthly payment of the
installments because the company was unueigoing financial pioblems.
Bowevei, Nyeis iefuseu. Thus, foi the months of Naich, Apiil, anu Nay,
Naiitime faileu to pay anu uiu not heeu the uemanu of Nyeis.

In the meantime, Naiitime hau leaseu the builuing to Luzon Biokeiage, since
1949, anu Luzon paiu P1S, uuu monthly iental fiom Septembei 19S1-19S6,
until 1961, at P1u,uuu, which totaleu aiounu 1.S million. When Naiitime
uefaulteu in its payment to Nyeis, anu the lattei notifieu the foimei that it
was cancelling the contiact of conuitional sale, Nyeis also notifieu Luzon
Biokeiage of the cancellation of the sale anu uemanueu that Luzon shoulu
pay to Nyeis the ientals of the Builuing anu also uemanueu suiienuei of
piopeity.

While actions anu cioss claims between Nyeis anu Naiitime weie
happening, the contiact between Naiitime anu Luzon was extenueu foi 4
moie yeais. It tuineu out, Naiitime's suspension of its payments to Nyeis
aiose fiom a pievious event: An awaiu of back wages maue by the Couit of
Inuustiial Relations in favoi of Luzon Laboi 0nion (employees employeu by
Luzon) in which FB Nyeis was a majoi stockholuei of Luzon Biokeiage. FB
Nyeis piomiseu to inuemnify Scheulei (who contiolleu Naiitime) when
Scheulei puichaseu FB Nyeis's stock in Luzon Biokeiage company. Scheulei
claims that aftei FB Nyeis estates closeu, he was notifieu that the inuemnity
on the Laboi 0nion case will not be honoieu anymoie. Anu so, Scheulei
auviseu Nyeis that Naiitime is withholuing payments to Nyeis in oiuei to
offset the liability when Nyeis heiis faileu to honoi the inuemnity
agieement.

6))E*K

Whethei oi not theie was a bieach of contiact by Naiitime; assuming that
theie was one, that Nyeis was not entitleu to iescinu oi iesolve the contiact
without iecouising to juuicial piocess.

7EL,N-K

Yes, theie was a bieach of contiact tainteu with fiauu oi malice as
consciously anu intentionally uesigneu to evaue the noimal fulfillment of
existing obligations.

Nyeis is entitleu to iescinu the contiact without iecouising to juuicial
piocess. It is a well-settleu iule that a juuicial action foi the iescission of a
contiact is not necessaiy wheie the contiact pioviues that it may be ievokeu
anu cancelleu foi violations of any of its teim anu conuitions.

Beie, the contiact is one contiact to sell, thus, in the iepeateu uecisions of
this Couit upholuing the powei of piomissois unuei the contiact to sell in
case of failuie of the othei paity to complete payment, to extiajuuicially
teiminate the opeiation of the contiact, iefuse the conveyance anu ietain the
sums of installments alieauy ieceiveu, wheie such iights aie expiessly
pioviueu foi.

B01 !M?E)*) 76'"7+3 (NQ <$78" 237=6' :)0 "5"!="'6" '76!=3J"#>
XVT !'7" VBB> ;070 5?0 /VT/B/> "MD,L GG> GIIV
JFK 2*D*a> 7?C*D. P?eeD*F !0

<(O.)K

In 1968, spouses Poitic acquiieu a paicel of lanu with a S uooi apaitment
fiom Sps. Alcantaia even though they'ie awaie that the lanu was moitgageu
to the SSS. Poitic uefaulteu in paying SSS. The Poitics then executeu a
contiact with Ciistobal anu the lattei agieeu to buy the saiu piopeity foi
P2uuk. Ciistobal's uown payment was P4Sk anu she also agieeu to pay SSS.
The contiact between them states: That while the balance of P1SS, uuu.uu
has not yet been fully paiu the FIRST PARTY0WNERS shall ietain the
owneiship of the above uesciibeu paicel of lanu togethei with its
impiovements but the SEC0NB PARTY B0YER shall have the iight to collect
the monthly ientals uue on the fiist uooi (1S-A) of the saiu apaitment;
(payment is uue 22Nay 198S, if Ciistobal will not be able to pay Poitic will
ieimbuise) A tiansfei ceitificate was executeu in favoi of Ciistobal. Ciistobal
was not able to pay on the uue uate. A suit ensueu to lift the clouu on the
title.

6))E*K

Who is the iightful ownei of the paicel of lanu.

7EL,N-K

The Poitics insofai as theie was no contiact of sale. What tianspiieu
between the paities was a contiact to sell. The piovision of the contiact
chaiacteiizes the agieement between the paities as a contiact to sell, not a
contiact of sale. 0wneiship is ietaineu by the venuois, the Poitics; it will not
be passeu to the venuee, the Ciistobals, until the full payment of the
puichase piice. Such payment is a positive suspensive conuition, anu failuie
to comply with it is not a bieach of obligation; it is meiely an event that
pievents the effectivity of the obligation of the venuoi to convey the title. In
shoit, until the full piice is paiu, the venuoi ietains owneiship. The meie
issuance of the Ceitificate of Title in favoi of Ciistobal uiu not vest
owneiship in hei. Neithei uiu it valiuate the allegeu absolute puichase of the
lot. Registiation uoes not vest, but meiely seives as eviuence of, title. 0ui
lanu iegistiation laws uo not give the holueis any bettei title than that
which they actually have piioi to iegistiation. 0nuei Aiticle 1S44 of the Civil
Coue, meie iegistiation is not enough to acquiie a new title. uoou faith must
concui. Cleaily, Ciistobal has not yet fully paiu the puichase piice. Bence, as
long as it iemains unpaiu, she cannot feign goou faith. She is also piecluueu
fiom asseiting owneiship against the Poitics. The CA's finuing that she hau a
valiu title to the piopeity must be set asiue.

H01 9$67! 3< P$!4! 80 8"!'4f"5"> D*MD*)*N.*Q CF P3!$ 8"0 70
8"!'4f"5" :)0 '347= 3< "22$"#!> "S46#653 J"7=$> (NQ !234!$!
73+3#<3 (NQ '37"Y35 #"R48"!> XT/ !'7" /HT> ;070 5?0 /VHTXT>
PEN* G@> GIIV
JFK 2,L(M,L> <D(NO,)O( 20

<(O.)K

Nasunana bought a paicel of lanu fiom the Wuthiich siblings. Pait of which
Nascunana, he latei solu to Sumilhig. The contiact piice is 4,69u with S,69u
as uown payment. Theii agieement says: That the balance of 0NE
TB00SANB PES0S (P1,uuu.uu) shall be paiu by the vENBEE unto the
vENB0R as soon as the above-poitions of Lot 124 shall have been suiveyeu
in the name of the vENBEE anu all papeis peitinent anu necessaiy to the
issuance of a sepaiate Ceitificate of Title in the name of the vENBEE shall
have been piepaieu. Sumilhig latei solu the same lot to Layumas. Yeais aftei,
Layumas wiote to the heiis of Nascunana (since Nascunana uieu alieauy)
offeiing to pay the 1,uuu balance of the puichase piice of the piopeity. The
auuiessee, howevei, iefuseu to ieceive the mail mattei. Beiis Nascunana
then fileu a complaint foi iecoveiy of possession against Baite (an inuiviuual
whom Layumas alloweu to stay on the subject piopeity).

6))E*K

Whethei oi not the contiact of alienation of the subject lot in favoi of
Sumilhig was a contiact to sell oi a contiact of sale.

7EL,N-K

It was a contiact of sale.

Aiticle 14S8 of the New Civil Coue pioviues:

By tbe controct of sole, one of tbe controctinq porties obliqotes
bimself to tronsfer tbe ownersbip of onJ to Jeliver o Jeterminote
tbinq, onJ tbe otber to poy tberefor o price certoin in money or its
equivolent.

A contiact of sale may be absolute oi conuitional.

Thus, theie aie thiee essential elements of sale, to wit:
a) Consent oi meeting of the minus, that is, consent to tiansfei owneiship in
exchange foi the piice;
b) Beteiminate subject mattei; anu
c) Piice ceitain in money oi its equivalent.

In this case, theie was a meeting of the minus between the venuoi anu the
venuee, when the venuoi unueitook to uelivei anu tiansfei owneiship ovei
the piopeity coveieu by the ueeu of absolute sale to the venuee foi the piice
of P4,69u.uu of which PS,69u.uu was paiu by the venuee to the venuoi as
uown payment. The venuoi unueitook to have the piopeity solu, suiveyeu
anu segiegateu anu a sepaiate title theiefoi issueu in the name of the
venuee, upon which the lattei woulu be obligeu to pay the balance of
P1,uuu.uu. Theie was no stipulation in the ueeu that the title to the piopeity
iemaineu with the venuoi, oi that the iight to unilateially iesolve the
contiact upon the buyei's failuie to pay within a fixeu peiiou was given to
such venuoi. Patently, the contiact executeu by the paities is a ueeu of sale
anu not a contiact to sell. As the Couit iuleu in a iecent case: In Bignos v.
Couit of Appeals (1S8 SCRA S7S), we have saiu that, although uenominateu
a "Beeu of Conuitional Sale," a sale is still absolute wheie the contiact is
uevoiu of any pioviso that title is ieseiveu oi the iight to unilateially iescinu
is stipulateu, e.g., until oi unless the piice is paiu. 0wneiship will then be
tiansfeiieu to the buyei upon actual oi constiuctive ueliveiy (e.g. by the
execution of a public uocument) of the piopeity solu. Wheie the conuition is
imposeu upon the peifection of the contiact itself, the failuie of the
conuition woulu pievent such peifection. If the conuition is imposeu on the
obligation of a paity which is not fulfilleu, the othei paity may eithei waive
the conuition oi iefuse to pioceeu with the sale. (Ait. 1S4S, Civil Coue).
Thus, in one case, when the selleis ueclaieu in a "Receipt of Bown Payment"
that they ieceiveu an amount as puichase piice foi a house anu lot without
any ieseivation of title until full payment of the entiie puichase piice, the
implication was that they solu theii piopeity. In People's Inuustiial anu
Commeicial Coipoiation v. Couit of Appeals, it was stateu: A ueeu of sale is
consiueieu absolute in natuie wheie theie is neithei a stipulation in the
ueeu that title to the piopeity solu is ieseiveu in the sellei until full payment
of the piice, noi one giving the venuoi the iight to unilateially iesolve the
contiact the moment the buyei fails to pay within a fixeu peiiou. Applying
these piinciples to this case, it cannot be gainsaiu that the contiact of sale
between the paities is absolute, not conuitional. Theie is no ieseivation of
owneiship noi a stipulation pioviuing foi a unilateial iescission by eithei
paity. In fact, the sale was consummateu upon the ueliveiy of the lot to
iesponuent. Thus, Ait. 1477 pioviues that the owneiship of the thing solu
shall be tiansfeiieu to the venuee upon the actual oi constiuctive ueliveiy
theieof. The conuition in the ueeu that the balance of P1,uuu.uu shall be paiu
to the venuoi by the venuee as soon as the piopeity solu shall have been
suiveyeu in the name of the venuee anu all papeis peitinent anu necessaiy
to the issuance of a sepaiate ceitificate of title in the name of the venuee
shall have been piepaieu is not a conuition which pieventeu the efficacy of
the contiact of sale. It meiely pioviues the mannei by which the total
puichase piice of the piopeity is to be paiu. The conuition uiu not pievent
the contiact fiom being in full foice anu effect: The stipulation that the
"payment of the full consiueiation baseu on a suivey shall be uue anu
payable in five (S) yeais fiom the execution of a foimal ueeu of sale" is not a
conuition which affects the efficacy of the contiact of sale. It meiely pioviues
the mannei by which the full consiueiation is to be computeu anu the time
within which the same is to be paiu. But it uoes not affect in any mannei the
effectivity of the contiact. In a contiact to sell, owneiship is ietaineu by a
sellei anu is not to be tiansfeiieu to the venuee until full payment of the
piice. Such payment is a positive suspensive conuition, the failuie of which is
not a bieach of contiact but simply an event that pieventeu the obligation
fiom acquiiing binuing foice. It beais stiessing that in a contiact of sale, the
non-payment of the piice is a iesolutoiy conuition which extinguishes the
tiansaction that, foi a time, existeu anu uischaiges the obligation cieateu
unuei the tiansaction. A sellei cannot unilateially anu extiajuuicially iescinu
a contiact of sale unless theie is an expiess stipulation authoiizing it. In such
case, the venuoi may file an action foi specific peifoimance oi juuicial
iescission. Aiticle 1169 of the New Civil Coue pioviues that in iecipiocal
obligations, neithei paity incuis in uelay if the othei uoes not comply oi is
not ieauy to comply in a piopei mannei with what is incumbent upon him;
fiom the moment one of the paities fulfill his obligation, uelay by the othei
begins. In this case, the venuoi (}esus Nascuana) faileu to comply with his
obligation of segiegating Lot No. 124-B anu the issuance of a Toiiens title
ovei the piopeity in favoi of the venuee, oi the lattei's successois-in-
inteiest, the iesponuents heiein. Woise, petitionei }ose Nascuana was able
to secuie title ovei the piopeity unuei the name of his ueceaseu fathei.


A01 ^656<7$+" 47!"# :)0 '347= 3< "22$"#!> =9$ 747"# J"5\ 3<
#"7$5" g!6S46P371> 65'0 (NQ !234!$! P$!4! 835$!$= (NQ '76!=6="
835$!$=> XB@ !'7" VG> ;070 5?0 /XGX//> 3O.?C*D /X> GIIV
JFK 7?)?L(Q(> ;*?D,O] $0

<(O.)K

Nonesets enteieu into a contiact to sell with 0isal. 0isal stoppeu paying the
installment (as stateu in the contiact) because Noneset faileu to uelivei the
tiansfei ceitificate of title of the piopeity as pei theii agieement. Noneset
executeu an absolute ueeu of sale to Bi. Rafael Canoia, }i. Nonesets executeu
anothei sale, this time with pacto ue ietio with Restituto Bunualo. 0n the
same uay, Bunualo, as attoiney-in-fact of the Nonesets, executeu a ieal
estate moitgage ovei saiu piopeity with Ruial Bank of Laiena.

An action foi ueclaiation of non-effectivity of moitgage anu uamages against
the Nonesets, Bunualo anu the Bank by 0isal.

Petitionei claims that: the Bank faileu to look beyonu the tiansfei ceitificate
of title of the piopeity foi which it must be helu liable.

Responuent answeieu: its inteiest in the piopeity was only that of
moitgagee anu not a puichasei thus its inteiest is limiteu only to
asceitaining that the moitgagoi is the iegisteieu ownei;

6))E*K

The effectivity of the moitgage.

7EL,N-K

The couit agieeu that banks cannot meiely iely on ceitificates of title in
asceitaining the status of moitgageu piopeities; as theii business is
impiesseu with public inteiest, they aie expecteu to exeicise moie caie anu
piuuence in theii uealings than piivate inuiviuuals. Inueeu, the iule that
peisons uealing with iegisteieu lanus can iely solely on the ceitificate of
title uoes not apply to banks.

But, the contiact was a contiact to sell, 0isal nevei acquiieu owneiship ovei
the piopeity. Thus, the Nonesets has the iight to uispose the piopeity.

"In a contiact to sell, theie being no pievious sale of the piopeity, a thiiu
peison buying such piopeity uespite the fulfillment of the suspensive
conuition such as the full payment of the puichase piice, foi instance, cannot
be ueemeu a buyei in bau faith anu the piospective buyei cannot seek the
ielief of ieconveyance of the piopeity. "

Petitionei's iecouise shoulu be:

Petitionei's iights weie limiteu to asking foi specific peifoimance anu
uamages fiom the Nonesets.

AJJitionol Notes:

The case uiscusseu what the contiact to sell is about:
A contiact to sell is a bilateial contiact wheieby the piospective sellei, while
expiessly ieseiving the owneiship of the subject piopeity uespite ueliveiy
theieof to the piospective buyei, binus himself to sell the saiu piopeity
exclusively to the piospective buyei upon fulfillment of the conuition agieeu
upon, that is, full payment of the puichase piice.

/I01 <$75"5+3 '"77"!'3!3> P70 :)0 =9$ 93537"J#$ '347= 3<
"22$"#!> #"473 #$W6!=$> () +,D*O.?D (NQ 8,N?D,.F !.?O[]?LQ*D (NQ
3N J*](Le ?e 3.]*D !.?O[]?LQ*D) ?e $L +?D(Q? 2L(N.(.,?N> 6NO0 (NQ $#
+37"+3 2#"5="=635> 65'0> D*MD*)*N.*Q CF ?N* ?e ,.) U,N?D,.F
).?O[]?LQ*D)> #(ED? 20 #*:,).*> XBB !'7" TTT> ;070 5?0 /G@TBG>
+*O*UC*D /X> GIIV
JFK !(N.?)> ']D,).,N( 60

<(O.)K

0nce upon a sunny moining in Sablayan, 0cciuental Ninuoio, El Boiauo
Plantation Inc., thiough a boaiu membei Feliciano Leviste, then Piesiuent of
El Boiauo Inc., executeu a Beeu of Sale with Feinanuo 0. Caiiascoso }i. The
subject of the sale was a 1,82S hectaie of lanu.

It was stipulateu in the piovisions of the Beeu of Sale of Real Piopeity that
Caiiascoso is to pay the following:

(1) 0f the saiu sum of P1.8N constituting he full consiueiation of the sale,
P29uk woulu be paiu by Caiiascoso to PNB to settle the moitgage placeu on
the saiu lanu.
(2) P21uk woulu be paiu uiiectly to Leviste; anu
(S) The balance of P1.SN plus 1u% inteiest woulu be paiu ovei the next S-
yeais at PS19k eveiy 2Sth of Naich.

Leviste, on the othei hanu, gave Caiiascoso the assuiance that theie weie no
tenants on the subject lanu. Eigo, the lanu uoes not fall unuei the Lanu
Refoim Coue. Leviste alloweu Caiiascoso to moitgage the lanu, which the
lattei uiu.

Caiiascoso obtaineu a total of P1.u7N as moitgage anu useu the same to pay
the uown-payment as agieeu upon.

Caiiascoso uefaulteu fiom his obligation, which was supposeu to be settleu
on Naich 2S, 197S.

Leviste, then sent him letteis to Caiiascoso asking him to comply with his
obligation to pay, otheiwise the foimei will file a civil suit against the lattei.
But Caiiascoso maue no ieply. Bue to Caiiascoso's failuie to peifoim anu
ieply, El Boiauo Plantation Inc, puisueu to file a complaint to iescinu the
Beeu of Sale conveyeu to foimei.

In the meantime, Caiiascoso executeu a Buy anu Sell Contiact with PLBT on
the 1977. The subject of the sale was a 1uuu-hectaie poition of the lanu solu
to Caiiascoso by Leviste. The lanu is to be solu at PSN. Pait of the teims anu
conuitions agieeu upon was that Caiiascoso is to iemove all tenants fiom
the lanu within one yeai. PLBT, by a Beeu of Absolute Sale, conveyeu the
afoiesaiu 1,uuu-hectaie poition to its subsiuiaiy PLBTAC.

In the civil case pioceeuing against Caiiascoso, PLBT inteiveneu aveiiing
that it was a buyei in goou faith. The RTC iuleu in favoi of Caiiascoso. CA
ieveiseu the RTC iuling.


6))E*K

(1) What is the natuie of the contiact between Caiiascoso anu El Boiauo.

(2) What is the natuie of the contiact between Caiiascoso anu PLBT.

7EL,N-K

(1) The contiact executeu between El Boiauo anu Caiiascoso was a contiact
of sale. It was peifecteu by theii meeting of the minus anu was
consummateu by the ueliveiy of the piopeity to Caiiascoso. The failuie of
Caiiascoso to uelivei the amount agieeu upon on the stipulateu uate
violates such contiact of sale.

A contiact of sale is a iecipiocal obligation. The sellei obligates itself to
tiansfei the owneiship of anu uelivei a ueteiminate thing, anu the buyei
obligates itself to pay theiefoi a piice ceitain in money oi its equivalent. The
non-payment of the piice by the buyei is a iesolutoiy conuition which
extinguishes the tiansaction that foi a time existeu, anu uischaiges the
obligations cieateu theieunuei. Such failuie to pay the piice in the mannei
piesciibeu by the contiact of sale entitles the unpaiu sellei to sue foi
collection oi to iescinu the contiact.

(2) The contiact between Caiiascoso anu PLBT is a contiact to sell. This is
eviuenceu by the teims anu conuitions that they have agieeu upon that aftei
fulfillment of Caiiascoso's obligation PLBT has "to notify Caiiascoso of its
uecision whethei oi not to finalize the sale."

Being a contiact to sell, what was vesteu by the }uly 11, 197S Agieement to
Buy anu Sell to PLBT was meiely the beneficial title to the 1,uuu hectaie
poition of the piopeity.

*Notes: (Copy anu Pasteu fiom the Case's Becision)

In a contiact of sale, the title passes to the venuee upon the ueliveiy of the
thing solu; wheieas in a contiact to sell, owneiship is not tiansfeiieu upon
ueliveiy of the piopeity but upon full payment of the puichase piice. In the
foimei, the venuoi has lost anu cannot iecovei owneiship until anu unless
the contiact is iesolveu oi iescinueu; wheieas in the lattei, title is ietaineu
by the venuoi until the full payment of the piice, such payment being a
positive suspensive conuition anu failuie of which is not a bieach but an
event that pievents the obligation of the venuoi to convey title fiom
becoming effective.

Foi in a conuitional contiact of sale, if the suspensive conuition is fulfilleu,
the contiact of sale is theieby peifecteu, such that if theie hau alieauy been
pievious ueliveiy of the piopeity subject of the sale to the buyei, owneiship
theieto automatically tiansfeis to the buyei by opeiation of law without any
fuithei act having to be peifoimeu by the sellei. Wheieas in a contiact to
sell, upon fulfillment of the suspensive conuition, owneiship will not
automatically tiansfei to the buyei although the piopeity may have been
pieviously ueliveieu to him. The piospective sellei still has to convey title to
the piospective buyei by enteiing into a contiact of absolute sale.

A peiusal of the contiact auveiteu to in Coionel ieveals maikeu uiffeiences
fiom the Agieement to Buy anu Sell in the case at bai. In the Coionel
contiact, theie was a cleai intent on the pait of the theiein petitioneis-
selleis to tiansfei title to the theiein iesponuent-buyei. In the }uly 11, 197S
Agieement to Buy anu Sell, PLBT still hau to "uefinitely infoim Caiiascoso of
its uecision on whethei oi not to finalize the ueeu of absolute sale foi the
1,uuu hectaie poition of the piopeity," such that in the Apiil 6, 1977 Beeu of
Absolute Sale subsequently executeu, the paities ueclaieu that they "aie now
ueciueu to execute" such ueeu, inuicating that the Agieement to Buy anu Sell
was, as the appellate couit helu, meiely a piepaiatoiy contiact in the natuie
of a contiact to sell. In fact, the paities even hau to stipulate in the saiu
Agieement to Buy anu Sell that Caiiascoso, "uuiing the existence of the
Agieement, shall not sell, ceue, assign anuoi tiansfei the paicel of lanu,"
which piovision this Couit has helu to be a typical chaiacteiistic of a
contiact to sell.

//01 !"'3J6" 96##! +$W$#328$5= '37237"=635 (NQ P"68$ '0 \3"
:)0 "##"5 40 =R> XBI !'7" @AV> ;070 5?0 /TVHHA> !*M.*UC*D GI> GIIV
JFK =?U?N-L(F> 5?*L <0

<(O.)K

- Petitionei is the uevelopei of Tiue Noith uolu anu Countiy Club in
Pampanga. It assuieu its shaieholueis that the uevelopment was
pioceeuing on scheuule anu that the golf couise woulu be playable by
0ctobei 1999.
- Responuent wiote to petitionei a lettei expiessing his intention to
acquiie one (1) Class A shaie of Tiue Noith anu accoiuingly paiu the
ieseivation fee. Petitionei appioveu the puichase application foi
P6uu,uuu.uu subject to ceitain teims anu conuitions, intei alia:
o Appioval of an application to puichase golfcountiy club shaies is
subjecteu to the full payment of the total puichase piice. Shoulu
the buyei opt foi the uefeiieu payment scheme, appioval is
subject to oui ieceipt of a uown payment of at least Su% anu the
balance payable in installments ovei a maximum of eleven (11)
months fiom the uate of application, anu coveieu by postuateu
cheques.
o Youi ieseiveu shaie shall be consiueieu withuiawn anu may be
ueemeu cancelleu shoulu you fail to settle youi obligation within
fifteen (1S) uays fiom uue uate, oi failuie to covei the value of the
postuateu cheques upon theii matuiity, oi youi failuie to issue
the iequiieu postuateu cheques. In which case, we shall ieseive
the iight to offei the saiu shaies to othei inteiesteu paities. This
also means foifeituie of Su% of the total amount you have alieauy
paiu.
o S. We shall unueitake to execute the coiiesponuing sales
uocumentsBeeu of Absolute Sale coveiing the ieseiveu shaies
upon full payment of the total puichase piice. The Ceitificate of
Nembeiship shall be issueu theieaftei.
0ne }une 1999, iesponuent notifieu petitionei that he is iescinuing the
contiact uue to the lattei's failuie to complete the pioject on time anu
sought foi iefunu of his payment which amounteu to P4u9,u9u.u2. By
way of ieply, petitionei infoimeu iesponuent that it hau no-iefunu
policy.
Responuent fileu a complaint foi iescission anu uamages. RTC
ienueieu juugment in favoi of the petitionei. The tiial couit founu that
the contiact between the paities uiu not waiiant that the golf couise
anu clubhouse woulu be completeu within a ceitain peiiou of time to
entitle iesponuent to iescinu.
Couit of Appeals ieveiseu the uecision of RTC. It uiiecteu the
petitionei to iefunu the appellant, with legal inteiest of 12% pei
annum fiom the uate of the filing of the complaint. It stateu that
iesponuent coulu piopeily iescinu the contiact, oi uemanu specific
peifoimance with uamages uue to the petitionei's uelay in the
peifoimance of its obligations.
Petitionei fileu a petition foi ieview on ceitioiaii befoie the Supieme
Couit. Sacobia contenus that it was not in bieach of the contiact as the
Intent to Puichase, the Contiact of Puichase, anu the Notice of
Appioval to Puichase Shaies of Tiue Noith, uo not contain any specific
uate as to when the golf couise anu countiy club woulu be completeu.
It aigues that iesponuent shoulu have known the iisks involveu in this
kinu of pioject; the constiuction being contingent on the issuance of
the ECC by the BENR anu the payment of the buyeis of theii shaie. 0n
the othei hanu, iesponuent claims that Sacobia's aiguments iaise new
matteis which woulu waiiant the ieveisal of the uecision ienueieu by
the Couit of Appeals. Be insists that Sacobia faileu to complete the
pioject on time which entitles him to iescinu the contiact in
accoiuance with Aiticle 1191 of the Civil Coue. Be fuithei aigues that
the uelay in the completion of the pioject is cleaily establisheu by the
fact that theie has been no substantial woik uone on the site,
paiticulaily on the clubhouse, uespite the lapse of neaily 4-yeais fiom
the issuance of the ECC on Naich S, 1998.

6))E*K

Whethei oi not the contiact enteieu into by petitionei anu iesponuent a
contiact of sale oi a contiact to sell.

7EL,N-K

It was a contiact to sell. In the notice of appioval, which embouies the teims
anu conuitions of the agieement, petitionei signifieu its intent to ietain the
owneiship of the piopeity until such time that the iesponuent has fully paiu
the puichase piice. In a Contiact to Sell, the payment of the puichase piice is
a positive suspensive conuition, the failuie of which is not a bieach, casual oi
seiious, but a situation that pievents the obligation of the venuoi to convey
title fiom acquiiing an obligatoiy foice. As shown, iesponuent uiu not pay
the full puichase piice which is his obligation unuei the contiact to sell,
theiefoie, it cannot be saiu that petitionei bieacheu its obligation. No
obligations aiose on its pait because iesponuent's non-fulfillment of the
suspensive conuition ienueieu the contiact to sell ineffective anu
unpeifecteu.

Petition is uRANTEB. Becision of CA is REvERSEB anu SET ASIBE.
Responuent is 0RBEREB to PAY to Sacobia Bills Bevelopment Coipoiation
the amount of Pesos: 0ne Bunuieu Ninety Thousanu Nine Bunuieu Nine anu
Eight Centavos (P19u,9u9.u8) without inteiest within thiity (Su) uays fiom
finality of the uecision; otheiwise, fifty peicent (Su%) of his total payments
shall be foifeiteu.

/G01 \$22$# J"5\ 296#62265$!> 65'0 :)0 296#62 "+"3> XB@ !'7" @BG>
;070 5?0 /VHGGB> 3O.?C*D /A> GIIV
JFK =?DD*O(UM?> ;,DLFN 80

<(O.)K

Pioject Noveis Realty anu Bevelopment Coipoiation (PNRBC) owe P2uuN
to Keppel Banks. By way of uacion en pago, PNRBC tiansfeiieu anu
conveyeu to the bank 2S of its piopeities consisting of townhouses anu
conuominiums. 0ne of the units tiansfeiieu was occupieu by Auao. In Feb
2uuu, the Bank uemanueu Auao to vacate. Auao iefuseu. An ejectment case
was fileu. Auao aveiieu that he hau a Contiact to Sell with PNRBC. Be
piesenteu an affiuavit showing that he maue full payment theieof. The
NeTC, RTC anu CA iuleu in favoi of Auao. The lowei couits oiueieu Keppel
to iespect the contiact to sell between Auao anu PNRBC foi when the
piopeities weie tiansfeiieu by way of uacion en pago, the bank meiely
steppeu on the shoes of PNRBC.

6))E*K

Whethei oi not Keppel is bounu by the contiact to sell.

7EL,N-K

No. Though Keppel is not a puichasei in goou faith foi not looking into the
piopeity (checkingif it was infiim anu fiee fiom othei claims), the bank is
not bounu by it. The contiact to sell uoes not by itself give Auao the iight to
possess the piopeity. 0nlike in a contiact of sale, heie in a contiact to sell,
theie is yet no actual sale oi any tiansfei of title, until anu unless, full
payment is maue. The payment of the puichase piice is a positive suspensive
conuition, the failuie of which is not a bieach, casual oi seiious, but a
situation that pievents the obligation of the venuoi to convey title fiom
acquiiing an obligatoiy foice. Auao must have fully paiu the piice to acquiie
title ovei the piopeity anu the iight to ietain possession theieof. In cases of
non-payment, the unpaiu sellei can avail of the iemeuy of ejectment since he
ietains owneiship of the piopeity. Auao must also, asiue fiom showing an
affiuavit, show othei pioof of full payment maue to PNRBC. Consiueiing that
Auao faileu to uischaige the buiuen of pioving payment, he cannot claim
owneiship of the piopeity anu his possession theieof was by meie
toleiance. Bis continueu possession became unlawful upon the ownei's
uemanu to vacate the piopeity.

/@01 !2!0 "#<7$+3 70 $+7"+" (NQ 73!$##" #0 $+7"+" :)0
'"78$5'6=" 7"83!> !2!0 $+4"7+3 7"83!> XTH !'7" VAB> ;070 5?0
/VXX/@> "E-E). @/> GIIV
JFK 4D)(L> "MD,L #FNN #0

<(O.)K

Responuent spouses Euuaiuo anu Caimencita Ramos (iesponuents) aie the
owneis of 2 fishing vessels, the "Lauy Lalaine" anu the "Lauy Theiesa." 0n 1
Apiil 1996, iesponuents anu petitioneis executeu an untitleu hanuwiitten
uocument which lies at the centei of the piesent contioveisy. Its full text is
iepiouuceu below:

1st Apiil 1996

This is to acknowleuge that Fishing vessels 'Lauy Lalaine' anu 'Lauy
Theiesa' owneu by Euuaiuo 0. Ramos aie now in my possession anu
ieceiveu in goou iunning anu seiviceable oiuei. As such, the vessels aie
now my iesponsibility.

Bocuments peitaining to the sale anu agieement of payments between
me anu the ownei of the vessel to follow. The agieeu piice foi the vessel
is Nine Bunuieu Thousanu 0nly (P9uu,uuu.uu).

(SuB.) (SuB.)
EB0ARB0 0. RAN0S ALFREB0 R. EBRABA
(Sellei) (Puichasei)

C0NF0RNE: C0NF0RNE:

(SuB.) (SuB.)
CARNENCITA RAN0S R0SIE ENBRABA

0pon the signing of the uocument, petitioneis ueliveieu to iesponuents 4
postuateu Fai East Bank anu Tiust Company (FEBTC) checks payable to cash
uiawn by petitionei Rosella Euiaua, in vaiious amounts totaling
P14u,uuu.uu. The fiist S checks weie honoieu upon piesentment to the
uiawee bank while the fouith check foi P1uu,uuu.uu was uishonoieu
because of a "stop payment" oiuei.

0n S }une 1996, iesponuents fileu an action against petitioneis foi specific
peifoimance with uamages befoie the RTC, piaying that petitioneis be
obligeu to execute the necessaiy ueeu of sale of the two fishing vessels anu
to pay the balance of the puichase piice. In theii Complaint, iesponuents
allegeu that petitioneis contiacteu to buy the two fishing vessels foi the
agieeu puichase piice of P9uu,uuu.uu, as eviuenceu by the above-quoteu
uocument, which accoiuing to them evinceu a contiact to buy. Bowevei,
uespite ueliveiy of saiu vessels anu iepeateu oial uemanus, petitioneis faileu
to pay the balance, so iesponuents fuithei aveiieu.

Petitioneis aveiieu that the uocument sueu upon meiely embouies an
agieement biought about by the loans they extenueu to iesponuents.
Accoiuing to petitioneis, iesponuents alloweu them to manage oi
auministei the fishing vessels as a business on the unueistanuing that
shoulu they finu the business piofitable, the vessels woulu be solu to them
foi Nine Bunuieu Thousanu Pesos P9uu,uuu.uu. But petitioneis "ueciueu to
call it quits" aftei spenuing a hefty sum foi the iepaii anu maintenance of the
vessels which weie alieauy in uilapiuateu conuition.

The RTC iuleu in favoi of the plaintiffs (Euiaua) anu against the uefenuants
(Ramos) anu the lattei (Ramos) aie oiueieu to pay to the foimei (Euiaua)
the amount of P86u,uuu.uu with legal inteiests theieon fiom }une Su, 1996
until fully paiu; the amount of P2u,uuu.uu as attoiney's fees anu the cost of
suit. The counteiclaim of the uefenuants foi moial anu exemplaiy uamages
anu foi attoiney's fees is uismisseu foi lack of meiit.

The RTC tieateu the action as one foi collection of a sum of money anu foi
uamages anu consiueieu the uocument as a peifecteu contiact of sale.
Petitioneis fileu a Notion foi Reconsiueiation which the RTC uenieu.

Both paities appealeu the RTC Becision. The Couit of Appeals affiimeu the
RTC's uecision anu uismisseu both appeals. 0nly petitioneis elevateu the
contioveisy to this Couit.

6))E*K

Whethei oi not theie was a peifecteu contiact of sale.

7EL,N-K

We uisagiee with the RTC anu the Couit of Appeals that the uocument is a
peifecteu contiact of sale. A contiact of sale is uefineu as an agieement
wheieby one of the contiacting paities obligates himself to tiansfei the
owneiship of anu to uelivei a ueteiminate thing, anu the othei to pay
theiefoie a piice ceitain in money oi its equivalent. It must evince the
consent on the pait of the sellei to tiansfei anu uelivei anu on the pait of the
buyei to pay.

An examination of the uocument ieveals that theie is no peifecteu contiact
of sale. The agieement may confiim the ieceipt by iesponuents of the two
vessels anu theii puichase piice. Bowevei, theie is no equivocal agieement
to tiansfei owneiship of the vessel, but a meie commitment that
"uocuments peitaining to the sale anu agieement of payments.|aiej to
follow." Eviuently, the uocument oi uocuments which woulu foimalize the
tiansfei of owneiship anu contain the teims of payment of the puichase
piice, oi the peiiou when such woulu become uue anu uemanuable, have yet
to be executeu. But no such uocument was executeu anu no such teims weie
stipulateu upon.
The fact that theie is a stateu total puichase piice shoulu not leau to the
conclusion that a contiact of sale hau been peifecteu. In numeious cases, the
most iecent of which is Sweuish Natch, AB v. Couit of Appeals, we helu that
befoie a valiu anu binuing contiact of sale can exist, the mannei of payment
of the puichase piice must fiist be establisheu, as such stanus as essential to
the valiuity of the sale. Aftei all, such agieement on the teims of payment is
integial to the element of a piice ceitain, such that a uisagieement on the
mannei of payment is tantamount to a failuie to agiee on the piice.

Assuming aiguenuo that the uocument evinces a peifecteu contiact of sale,
the absence of uefinite teims of payment theiein woulu piecluue its
enfoicement by the iesponuents thiough the instant Complaint. A iequisite
foi the juuicial enfoicement of an obligation is that the same is uue anu
uemanuable. The absence of a stipulateu peiiou by which the puichase piice
shoulu be paiu inuicates that at the time of the filing of the complaint, the
obligation to pay was not yet uue anu uemanuable.

Responuents, uuiing tiial, uiu claim the existence of a peiiou. Responuent
Caimencita Ramos, uuiing cioss-examination, claimeu that the supposeu
balance shall be paiu on Su }une 1996. But how uo iesponuents explain why
the Complaint was fileu on S }une 1996. Assuming that the Su }une 1996
peiiou was uuly agieeu upon by the paities, the filing of the Complaint was
eviuently piematuie, as no cause of action hau acciueu yet. Theie coulu not
have been any bieach of obligation because on the uate the action was fileu,
the allegeu matuiity uate foi the payment of the balance hau not yet aiiiveu.

In oiuei that iesponuents coulu have a valiu cause of action, it is essential
that theie must have been a stipulateu peiiou within which the payment
woulu have become uue anu uemanuable. If the paities themselves coulu not
come into agieement, the couits may be askeu to fix the peiiou of the
obligation, unuei Aiticle 1197 of the Civil Coue. The iesponuents uiu not
avail of such ielief piioi to the filing of the instant Complaint; thus, the action
shoulu fail owing to its obvious piematuiity.

Retuining to the tiue natuie of the uocument, we neithei coulu concluue
that a "contiact to sell" hau been establisheu. A contiact to sell is uefineu as a
bilateial contiact wheieby the piospective sellei, while expiessly ieseiving
the owneiship of the subject piopeity uespite ueliveiy theieof to the
piospective buyei, binus himself to sell the saiu piopeity exclusively to the
piospective buyei upon fulfillment of the conuition agieeu upon, that is, full
payment of the puichase piice.

A contiact is peifecteu when theie is concuiience of the wills of the
contiacting paities with iespect to the object anu the cause of the contiact.
In this case, the agieement meiely acknowleuges that a puichase piice hau
been agieeu on by the paities. Theie was no mutual piomise to buy on the
pait of petitioneis anu to sell on the pait of iesponuents. Again, the
afoiestateu pioviso in the agieement that uocuments peitaining to the sale
anu agieement of payments between the paities will follow cleaily
manifests lack of agieement between the paities as to the teims of the
contiact to sell, paiticulaily the object anu cause of the contiact.

The agieement in question uoes not cieate any obligatoiy foice eithei foi
the tiansfei of title of the vessels, oi the ienuition of payments as pait of the
puichase piice. At most, this agieement baies only theii intention to entei
into eithei a contiact to sell oi a contiact of sale.

Consequently, the couits below eiieu in oiueiing the enfoicement of a
contiact of sale that hau yet to come into existence. Insteau, the instant
Complaint shoulu be uismisseu. It piays foi thiee ieliefs aiising fiom the
enfoicement of the uocument: execution by the petitioneis of the necessaiy
ueeu of sale ovei the vessels, the payment of the balance of the puichase
piice, anu uamages. The lowei couits have alieauy iuleu that uamages aie
unavailing. 0ui finuing that theie is no peifecteu contiact of sale piecluues
the finuing of any cause of action that woulu waiiant the gianting of the fiist
two ieliefs. No cause of action aiises until theie is a bieach oi violation
theieof by eithei paity.24 Consiueiing that the uocuments cieate no
obligation to execute oi even puisue a contiact of sale, but only manifest an
intention to eventually contiact one, we finu no iights bieacheu oi violateu
that woulu waiiant any of the ieliefs sought in the Complaint.

The petition is uRANTEB. The assaileu Becision anu Resolution of the Couit
of Appeals aie REvERSEB anu SET ASIBE. The case befoie the Regional Tiial
Couit is oiueieu uismisseu. No pionouncement as to costs. S0 0RBEREB.

! +)'(,*-( %), * 8&$-$ )% 9),:

/01 '$#$!=653 '3 _ '382"5R :)0 '3##$'=37 3< 65=$75"# 7$W$54$>
AA 2],L0 HX/> ;070 5?0 #ZHVIT> "E-E). @/> /AVT
JFK RN.,-> J*(U =D,-? +0

<(O.)K

Celestino Co & Company is a uuly iegisteieu geneial copaitneiship uoing
business unuei the tiaue name of "0iiental Sash Factoiy". Fiom 1946 to
19S1 it paiu peicentage taxes of 7 pei cent on the gioss ieceipts of its sash,
uooi anu winuow factoiy, in accoiuance with section one hunuieu eighty-six
of the National Revenue Coue imposing taxes on sale of manufactuieu
aiticles. Bowevei in 19S2 it began to claim liability only to the contiactoi's S
pei cent tax (insteau of 7 pei cent) unuei section 191 of the same Coue; anu
having faileu to convince the Buieau of Inteinal Revenue, it biought the
mattei to the Couit of Tax Appeals, wheie it also faileu.

6))E*K

Whethei oi not petitionei is covei unuei 186 of NRC national ievenue coue
oi unuei 191 of the same coue.

7EL,N-K

It is at once appaient that the 0iiental Sash Factoiy uiu not meiely sell its
seivices to Bon Toiibio Teouoio & Co. (To take one instance) because it also
solu the mateiials. The tiuth of the mattei is that it solu mateiials oiuinaiily
manufactuieu by it sash, panels, mouluings to Teouoio & Co., although
in such foim oi combination as suiteu the fancy of the puichasei. Such new
foim uoes not uivest the 0iiental Sash Factoiy of its chaiactei as
manufactuiei. Neithei uoes it take the tiansaction out of the categoiy of
sales unuei Aiticle 1467 above quoteu, because although the Factoiy uoes
not, in the oiuinaiy couise of its business, manufactuie anu keep on
stockuoois of the kinu solu to Teouoio, it coulu stock anuoi piobably hau
in stock the sash, mouluings anu panels it useu theiefoi (some of them at
least).

In oui opinion when this Factoiy accepts a job that iequiies the use of
extiaoiuinaiy oi auuitional equipment, oi involves seivices not geneially
peifoimeu by it-it theieby contiacts foi a piece of woik filing special
oiueis within the meaning of Aiticle 1467. The oiueis heiein exhibiteu weie
not shown to be special. They weie meiely oiueis foi woik nothing is
shown to call them special iequiiing extiaoiuinaiy seivice of the factoiy.

The thought occuis to us that if, as allegeu-all the woik of appellant is only to
fill oiueis pieviously maue, such oiueis shoulu not be calleu special woik,
but iegulai woik. Woulu a factoiy uo business peifoiming only special,
extiaoiuinaiy oi peculiai meichanuise.

Anyway, supposing foi the moment that the tiansactions weie not sales,
they weie neithei lease of seivices noi contiact jobs by a contiactoi. But as
the uoois anu winuows hau been aumitteuly "manufactuieu" by the 0iiental
Sash Factoiy, such tiansactions coulu be, anu shoulu be taxeu as "tiansfeis"
theieof unuei section 186 of the National Revenue Coue.

The appealeu uecision is consequently affiimeu. So oiueieu.

G01 '35'7$=$ ";;7$;"=$!> 65'0 :)0 '347= 3< ="b "22$"#! (NQ
'3886!!635$7 3< 65=0 7$W$54$> /HV !'7" GT/> ;070 5?0 VVBA@> 8(F
/H> /AAI
JFK "C()> 8,-E*L PD0 ;0

<(O.)K

Petitionei is a uomestic coipoiation, uuly oiganizeu anu existing unuei the
laws of the Philippines. It has an aggiegate plant at Nontalban, Rizal which
piocesses iock aggiegates mineu by it fiom piivate lanus. Petitionei also
maintains anu opeiates a plant at Longos, Quezon City foi the piouuction of
ieauy-mixeu conciete anu plant-mixeu hot asphalt.

Sometime in 1968, the agents of Commissionei 0F Inteinal Revenue
conuucteu an investigation of petitionei's tax liabilities. As a consequence
theieof, in a lettei uateu Becembei 14, 197u CIR assesseu anu uemanueu
payment fiom petitionei of the amount of P244,uu2,76 as sales anu au
valoiem taxes foi the fiist semestei of 1968, inclusive of suichaiges.
Petitionei uisputeu the saiu assessment in its lettei uateu Febiuaiy 2, 1971
without, howevei, contesting the poition peitaining to the au valoiem tax.
Consequently, the iesponuent uemanueu foi the payment of the saiu
amount. Insteau of paying, petitionei appealeu to iesponuent couit.

Petitionei uisclaims liability on the giounu that it is a contiactoi anu
auvances the theoiy that it piouuceu asphalt anu conciete mix only upon
pievious oiueis, which may be pioveu by its system of iequiiing the filling
of job oiueis wheie the customeis specify the constiuction iequiiements,
anu that without such oiuei, it woulu not uo so consiueiing the highly
peiishable natuie of the asphalt anu conciete mix.

6))E*K

Whethei oi not the contiact between the paities is a contiact foi a piece of
woik.

7EL,N-K

Yes. Petitionei insists that it woulu piouuce asphalt oi conciete mix only
upon pievious job oiueis otheiwise it woulu not uo so. It uoes not anu will
not caiiy in stock cement anu asphalt mix. But the ieason is obvious. What
piactically pievents the petitionei fiom mass piouuction anu stoiage is the
natuie of its piouucts, that is, they easily haiuen uue to tempeiatuie change
anu watei anu cement ieaction. It is self-eviuent that it is uue to the highly
peiishable natuie of asphalt anu conciete mix, as petitionei itself aigues that
makes impossible foi them to be caiiieu in stock because they cool anu
haiuen with time, anu once haiueneu, they become useless.

Bau it not been foi this fact, petitionei coulu easily mass piouuce the ieauy-
mixeu conciete oi asphalt uesiieu anu neeueu by its vaiious customeis foi
which it is mechanically equippeu to uo. It is cleai, howevei, that petitionei
uoes nothing moie than sell the aiticles that it habitually manufactuies. It
stocks iaw mateiials, ieauy at any time foi the manufactuie of asphalt
anuoi conciete mix. Its maiketing system woulu ieauily uisclose that its
piouucts aie available foi sale to anyone neeuing them. The habituality of
the piouuction of goous foi the geneial public chaiacteiizes the business of
petitionei.

@01 $5;65$$765; "5+ 8"'965$7R '37237"=635 :)0 '347= 3<
"22$"#!> GVG !'7" /VT> ;070 5?0 VGGTB> P(NE(DF GX> /AAT
JFK "C()> 8,-E*L PD0 ;0

<(O.)K

Almeua anu Engineeiing signeu a contiact, wheiein Engineeiing unueitook
to fabiicate, fuinish anu install the aii-conuitioning system in the lattei's
builuing along Buenuia Avenue, Nakati in consiueiation of P21u,uuu.uu.
Petitionei was to fuinish the mateiials, laboi, tools anu all seivices iequiieu
in oiuei to so fabiicate anu install saiu system. The system was completeu in
196S anu accepteu by piivate iesponuent, who paiu in full the contiact piice.

Almeua leaineu fiom the employees of NIBC of the uefects of the aii-
conuitioning system of the builuing. Almeua spent foi the iepaii of the aii
conuitioning system. Be now sues Engineeiing foi the iefunu of the iepaii.
Engineeiing contenus that the contiact was of sale anu the claim is baiieu by
piesciiption since the iesponsibility of a venuoi foi any hiuuen faults oi
uefects in the thing solu iuns only foi 6 months (Aits 1S66, 1S67, 1S71).
Almeua contenus that since it was a contiact foi a piece of woik, hence the
piesciiption peiiou was ten yeais (Bence Ait 1144 shoulu apply on wiitten
contiacts).

RTC founu that Engineeiing faileu to install ceitain paits anu accessoiies
calleu foi by the contiact, anu ueviateu fiom the plans of the system, thus
ieuucing its opeiational effectiveness to achieve a faiily uesiiable ioom
tempeiatuie.

6))E*K

Whethei oi not the contiact foi the fabiication anu installation of a cential
aii-conuitioning system in a builuing, one of "sale" oi "foi a piece of woik".

7EL,N-K

The contiact in question is one foi a piece of woik. A contiact foi a piece of
woik, laboi anu mateiials may be uistinguisheu fiom a contiact of sale by
the inquiiy as to whethei the thing tiansfeiieu is one not in existence anu
which woulu nevei have existeu but foi the oiuei, of the peison uesiiing it.
In such case, the contiact is one foi a piece of woik, not a sale. 0n the othei
hanu, if the thing subject of the contiact woulu have existeu anu been the
subject of a sale to some othei peison even if the oiuei hau not been given,
then the contiact is one of sale.

A contiact foi the ueliveiy at a ceitain piice of an aiticle which the venuoi in
the oiuinaiy couise of his business manufactuies oi piocuies foi the geneial
maiket, whethei the same is on hanu at the time oi not is a contiact of sale,
but if the goous aie to be manufactuieu specially foi the customei anu upon
his special oiuei, anu not foi the geneial maiket, it is a contiact foi a piece of
woik.
It is not petitionei's line of business to manufactuie aii-conuitioning systems
to be solu "off-the-shelf." Its business anu paiticulai fielu of expeitise is the
fabiication anu installation of such systems as oiueieu by customeis anu in
accoiuance with the paiticulai plans anu specifications pioviueu by the
customeis. Natuially, the piice oi compensation foi the system
manufactuieu anu installeu will uepenu gieatly on the paiticulai plans anu
specifications agieeu upon with the customeis.

! +)'(,*-( )% ;$*1$ <&(0 =>(&)' () ?6@

/01 =$3+376'" 70 W64+" +$ P3!$ :)0 P4#63 W$#3!3 J"774$'3> TB 2],L0
/A/> ;070 5?0 #ZXVAVV> "MD,L V> /A@A
JFK "C()> 8,-E*L PD0 ;0

<(O.)K

Naiy Anuo leaseu fiom }ulio Baiiueco a China cabinet valueu at P7u. She
unueitook, unuei the lease, to pay P14 upon signing the contiact anu PS
monthly theieaftei foi a peiiou not specifieu but extenuible at the ownei's
pleasuie. The contiact of lease fuithei pioviueu that upon lessee's uefault,
the contiact woulu be iescinueu; that the lessee was not libeity to iemove
saiu cabinet fiom house No.1uSu Niseiicoiuia Stieet wheie she liveu, anu
that upon failuie to comply with the teims of the lease, the ownei coulu
immeuiately take possession of the piopeity leaseu. 0nuei similai teims anu
conuitions, Naiy Anuo also leaseu fiom saiu stoie a naiia waiuiobe valueu
at P12u, paying P24 cash anu P1u monthly.

0nable to pay the ient of the house, Naiy Anuo attempteu to move
theiefiom, taking with hei the cabinet anu the waiuiobe. She was piesenteu
fiom uoing so by Teouoiica R. viuua ue }ose, the ownei of the house, who
claimeu to be entitleu to saiu peisonal piopeities in lieu of ients uue.

0pon a complaint fileu by }ulio veloso Baiiueco to iecovei the piopeities in
question fiom Teouoiica R. viuua ue }ose, the Couit of Fiist Instance of
Nanila helu that the contiacts of lease (Exhibits A anu B) weie fictitious, anu
that the ieal contiact between the plaintiff anu Naiy Anuo was one of sale
on the installment basis, wheiefoie, the complaint was uismisseu anu
uefenuant ueclaieu entitleu to the piopeities in litigation. Biought to the
Couit of Appeals, the juugment was ieveiseu, anu the contiacts between
plaintiff anu Naiy Anuo helu to be those of lease.

6))E*K

Whethei oi not the contiact is a lease with an option to buy.

7EL,N-K

Affiimative. A peiusal of the iecoiu of this case shows that in Exhibit A, the
amount of P7u was fixeu as the cost piice foi the cupboaiu, P14 as the uown
payment maue at the signing of the contiact anu PS as the monthly ientals of
saiu fuinituie. In Exhibit B the amount of P12u was also fixeu as the cost
piice of the mouein naiia waiuiobe, the uown payment maue as P24 anu
the monthly iental at P1u. These Exhibits A anu B aie uenominateu
C0NTRACTS 0F LEASE, the monthly payments foi both pieces of fuinituie
aie calleu ientals, anu Naiy Anuo is mentioneu as "leasee." What is the
natuie of these contiacts. The answei to this question is not to be founu in
any uenomination which the paities may have given to the instiuments, anu
not alone in any paiticulai piovision it contains, uisconnecteu fiom all
otheis, but in the iuling intention of the paities, gatheieu fiom the language
they have useu. It is the legal effect of the whole which is to be sought foi.
The foim of the instiument is of little account.

The Supieme Couit finu that the paities intenueu to have the owneiship of
the fuinituie tiansfeiieu to Naiy Anuo upon the lattei complying with the
conuitions of the contiact. Selleis uesiious of making conuitional sales of
theii goous, but who uo not wish openly to make a baigain in that foim, foi
one ieason oi anothei, have fiequently iesoiteu to the uevice of making
contiacts in the foim of leases eithei with options to the buyei to puichase
foi a small consiueiation at the enu of teim, pioviueu the so-calleu ient has
been uuly paiu, oi with stipulations that if the ient thioughout the teim is
paiu, title shall theieupon vest in the lessee. It is obvious that such
tiansactions aie leases only in name. The so-calleu ient must necessaiily be
iegaiueu as payment of the piice in installments since the uue payment of
the agieeu amount iesults, by the teims of the baigain, in the tiansfei of title
to the lessee.

G01 $#6!'3 =33# 8"54<"'=4765; '37237"=635 :)0 '347= 3<
"22$"#!> 73#"5+3 _ 765" #"5="5> @IB !'7" B@/> ;070 5?0 /IAATT>
8(F @/> /AAA
JFK "C()> 8,-E*L PD0 ;0

<(O.)K

Piivate iesponuent Rolanuo Lantan was employeu at the Elisco Tool
Nanufactuiing Coipoiation as heau of its cash uepaitment. 0n }anuaiy 9,
198u, he enteieu into an agieement with the company which pioviueu as
follows:

That, ENPL0YER is the ownei of a cai Colt Lancei 2 uooi, Nouel
1979, with Seiial No. S4uS unuei LTC Registiation Ceitificate No.
uS26SS8;
That, foi anu in consiueiation of a monthly iental of 0NE
TB00SANB TEN & 6S1uu 0NLY (P1,u1u.6S) Philippine
Cuiiency, ENPL0YER uesiie to lease anu ENPL0YEE accept in
lease the motoi vehicle afoiementioneu foi a peiiou of FIvE (S)
yeais;
That, the ENPL0YEE agiee as he heieby agieeu to pay the lease
iental thiu salaiy ueuuction fiom his monthly iemuneiation in
the amount as above specifieu foi a peiiou of FIvE (S) yeais;
That, foi the uuiation of the lease contiact, all expenses anu costs
of iegistiation, insuiance, iepaii anu maintenance, gasoline, oil,
pait ieplacement inclusive of all expenses necessaiy to maintain
the vehicle in top conuition shall be foi the account of the
ENPL0YEE;
That, at the enu of FIvE (S) yeai peiiou oi upon payment of the
6uth monthly iental, ENPL0YEE may exeicise the option to
puichase the motoi vehicle fiom the ENPL0YER anu all monthly
ientals shall be applieu to the payment of the full puichase piice
of the cai anu fuithei, shoulu ENPL0YEE uesiie to exeicise this
option befoie the S-yeai peiiou lapse, he may uo so upon
payment of the iemaining balance on the five yeai iental unto the
ENPL0YER, it being unueistoou howevei that the option is
limiteu to the ENPL0YEE;
That, upon failuie of the ENPL0YEE to pay TBREE (S)
accumulateu monthly ientals will vest upon the ENPL0YER the
full iight to lease the vehicle to anothei ENPL0YEE;
That, in the event of iesignation anu oi uismissal fiom the seivice,
the ENPL0YEE shall ietuin the subject motoi vehicle to the
ENPL0YER in its compounu at Kalawaan Sui, Pasig, Netio Nanila
in goou woiking anu bouy conuition.

0n the same uay, }anuaiy 9, 198u, piivate iesponuent executeu a piomissoiy
note. Aftei taking possession of the cai, piivate iesponuent installeu
accessoiies theiein woith P1S,uuu.uu.

In 1981, Elisco Tool ceaseu opeiations, as a iesult of which piivate
iesponuent Rolanuo Lantan was laiu off. Nonetheless, as of Becembei 4,
1984, piivate iesponuent was able to make payments foi the cai in the total
amount of P61,u7u.94.

0n }une 6, 1986, petitionei fileu a complaint, entitleu "ieplevin plus sum of
money," against piivate iesponuent Rolanuo Lantan, his wife Rina, befoie
the Regional Tiial Couit of Pasig, Netio Nanila. Petitionei allegeu that
piivate iesponuents faileu to pay the monthly ientals which, as of Nay 1986,
totalleu PS9,uS4.86; that uespite uemanus, piivate iesponuents faileu to
settle theii obligation theieby entitling petitionei to the possession of the
cai.

Piivate iesponuents fileu theii answei anu claimeu that theii tiue
agieement was "to buy anu sell anu not lease with option to buy" the cai in
question at a monthly amoitization of P1,uuu; anu that petitionei accepteu
the installment payments maue by them anu, in }anuaiy 1986, agieeu that
the balance of the puichase piice woulu be paiu on oi befoie Becembei S1,
1986. In its ieply, petitionei maintaineu that the contiact between the
paities was one of lease with option to puichase anu that the piomissoiy
note was meiely a "nominal secuiity" foi the agieement. It contenueu that
the meie acceptance of the amounts paiu by piivate iesponuents anu foi
inuefinite peiious of time was not eviuence that the paities' agieement was
one of puichase anu sale.

The tiial couit sustaineu piivate iesponuents' claim that the agieement in
question was one of sale anu helu that the lattei hau fully paiu the piice of
the cai having paiu the total amount of P61,u7u.94 asiue fiom installing
accessoiies in the cai woith P1S,uuu.uu. 0n August 26, 1992, the Couit of
Appeals ienueieu its uecision, affiiming in toto the uecision of the tiial couit.

6))E*K

Whethei oi not the agieement enteieu into by both paities was "to buy anu
sell anu not lease with option to buy" the subject cai.

7EL,N-K

Petitionei uoes not ueny that piivate iesponuent Rolanuo Lantan acquiieu
the vehicle in question unuei a cai plan foi executives of the Elizalue gioup
of companies. 0nuei a typical cai plan, the company auvances the puichase
piice of a cai to be paiu back by the employee thiough monthly ueuuctions
fiom his salaiy. The company ietains owneiship of the motoi vehicle until it
shall have been fully paiu foi. Bowevei, ietention of iegistiation of the cai in
the company's name is only a foim of a lien on the vehicle in the event that
the employee woulu absconu befoie he has fully paiu foi it. Theie aie also
stipulations in cai plan agieements to the effect that shoulu the employment
of the employee conceineu be teiminateu befoie all installments aie fully
paiu, the vehicle will be taken by the employei anu all installments paiu shall
be consiueieu ientals pei agieement.

The Supieme Couit has long been awaie of the piactice of venuois of
peisonal piopeity of uenominating a contiact of sale on installment as one
of lease to pievent the owneiship of the object of the sale fiom passing to the
venuee until anu unless the piice is fully paiu.

Being leases of peisonal piopeity with option to puichase as contemplateu
in the above aiticle, the contiacts in question aie subject to the piovision
that when the lessoi in such case "has chosen to uepiive the lessee of the
enjoyment of such peisonal piopeity," "he shall have no fuithei action"
against the lessee "foi the iecoveiy of any unpaiu balance" owing by the
lattei, "agieement to the contiaiy being null anu voiu."
It was helu that in choosing to uepiive the uefenuant of possession of the
leaseu vehicles, the plaintiff waiveu its iight to biing an action to iecovei
unpaiu ientals on the saiu vehicles.

In the case at bai, although the agieement pioviues foi the payment by
piivate iesponuents of "monthly ientals," the fifth paiagiaph theieof gives
them the option to puichase the motoi vehicle at the enu of the Sth yeai oi
upon payment of the 6uth monthly iental when "all monthly ientals shall be
applieu to the payment of the full puichase piice of the cai." It is cleai that
the tiansaction in this case is a lease in name only. The so-calleu monthly
ientals aie in tiuth monthly amoitizations on the piice of the cai.

@01 <6#65W$!= '7$+6= '37237"=635 :)0 '347= 3< "22$"#!> /BH
!'7" /HH> ;070 5?0 HGVIH !*M.*UC*D GA> /AHA
JFK "C,N-> 2(.D,O[ 60

<(O.)K

Spouses Sy Bang weie engageu in the sale of giavel piouuceu fiom ciusheu
iocks anu useu foi constiuction puiposes. In oiuei to inciease theii
piouuction, they lookeu foi a iock ciushei which Rizal Consoliuateu
Coipoiation then hau foi sale. A biothei of Sy Bang, went to inspect the
machine at the Rizal Consoliuateu's plant site. Appaiently satisfieu with the
machine, the piivate iesponuents signifieu theii intent to puichase the same.

Since he uoes not have the financing capability, Sy Bang applieu foi financial
assistance fiom Filinvest Cieuit Coipoiation. Filinvest agieeu to extenu
financial aiu on the following conuitions: (1) that the machineiy be
puichaseu in the petitionei's name; (2) that it be leaseu with option to
puichase upon the teimination of the lease peiiou; anu (S) that Sy Bang
execute a ieal estate moitgage as secuiity foi the amount auvanceu by
Filinvest. A contiact of lease of machineiy (with option to puichase) was
enteieu into by the paities wheieby they hau to lease fiom the petitionei the
iock ciushei foi two yeais. The contiact likewise stipulateu that at the enu
of the two-yeai peiiou, the machine woulu be owneu by Sy Bang.

At thiee months fiom the uate of ueliveiy, Sy Bang claiming that they hau
only testeu the machine that month, sent a lettei-complaint to the petitionei,
alleging that contiaiy to the 2u to 4u tons pei houi capacity of the machine
as stateu in the lease contiact, the machine coulu only piocess S tons of
iocks anu stones pei houi. They then uemanueu that the petitionei make
goou the stipulation in the lease contiact. Sy Bang stoppeu payment on the
iemaining checks they hau issueu to the petitionei.

As a consequence of the non-payment, Filinvest Cieuit Coipoiation extia-
juuicially foiecloseu the ieal estate moitgage.

6))E*K

Was the ieal tiansaction in the instant case, lease oi sale.

7EL,N-K

SALE 0N INSTALLNENTS.

The ieal intention of the paities shoulu pievail. The nomenclatuie of the
agieement cannot change its tiue essence, i.e., a sale on installments. It is
basic that a contiact is what the law uefines it anu the paities intenu it to be,
not what it is calleu by the paities. It is appaient heie that the intent of the
paities to the subject contiact is foi the so-calleu ientals to be the
installment payments. 0pon the completion of the payments, then the iock
ciushei, subject mattei of the contiact, woulu become the piopeity of the
piivate iesponuents. This foim of agieement has been ciiticizeu as a lease
only in name.

Selleis uesiious of making conuitional sales of theii goous, but who uo not
wish openly to make a baigain in that foim, foi one ieason oi anothei, have
fiequently iesoiteu to the uevice of making contiacts in the foim of leases
eithei with options to the buyei to puichase foi a small consiueiation at the
enu of teim, pioviueu the so-calleu ient has been uuly paiu, oi with
stipulations that if the ient thioughout the teim is paiu, title shall theieupon
vest in the lessee. It is obvious that such tiansactions aie leases only in
name. The so-calleu ient must necessaiily be iegaiueu as payment of the
piice in installments since the uue payment of the agieeu amount iesults, by
the teims of baigain, in the tiansfei of title to the lessee.

Inuubitably, the uevice contiact of lease with option to buy is at times
iesoiteu to as a means to ciicumvent Aiticle 1484, paiticulaily paiagiaph
(S) theieof. Thiough the set-up, the venuoi, by ietaining owneiship ovei the
piopeity in the guise of being the lessoi, ietains, likewise, the iight to
iepossess the same, without going thiough the piocess of foieclosuie, in the
event the venuee-lessee uefaults in the payment of the installments. Theie
aiises theiefoie no neeu to constitute a chattel moitgage ovei the movable
solu. Noie impoitant, the venuoi, aftei iepossessing the piopeity anu, in
effect, canceling the contiact of sale, gets to keep all the installments-cum-
ientals alieauy paiu.

Even if theie was a contiact of sale, Filinvest is still not liable because Sy
Bang is piesumeu to be moie knowleugeable, if not expeits, on the
machineiy subject of the contiact, they shoulu not theiefoie be heaiu now to
complain of any allegeu ueficiency of the saiu machineiy. It was Sy Bang who
was negligent, not Filinvest. Fuithei, Sy Bang is piecluueu to complain
because he signeu a Waivei of Waiianty.

! #*-&)' $' 8*5)

/01 8"7 R4!35 :)0 "==R0 P$7$86"! 70 W6="5> XAT !'7" VXI> "0'0 5?0
TAVV> PELF GB> GIIT
JFK "C,N-> 2(.D,O[ 60

<(O.)K

Nai Yuson, a cab uiivei with eight kius, inheiiteu some money. They useu
this money to buy a seconu-hanu cab with the help of Atty. }eiemias R. vitan.
The Yuson family's othei plans (iepaii house anu holu uebut foi uaughtei)
weie suspenueu because Atty. vitan boiioweu fiom them P1uuK. It was
gieeu that it woulu be paiu at the enu of the yeai in time foi the uebut anu as
a guaiantee, vitan issueu seveial PB Checks but the bank account of the
lawyei is closeu. To iecovei the uebt, Yuson sought the help of IBP National
Committee on Legal Aiu.

The lawyei uefaulteu so he gave a collateial foi the loan: a ueeu of sale of his
lanu in Bulacan. Yuson's intention was to eithei sell oi moitgage the lanu so
that the pioceeus woulu be useu as a payment foi vitan's loan.

Bowevei, a seconu ueeu of sale this time in favoi of vitan was executeu.
Complainant was able to moitgage the piopeity foi PSuk, but vitan uiu not
ieueem this amount but simply offeieu anothei piomise to pay to the
complainants. IBP took action anu infoimeu vitan that an auministiative
case woulu be fileu against him, but vitan uefenueu that he alieauy paiu the
loan by way of his B0AS in Bulacan. But vitan attacheu the seconu B0AS
wheie he was the venuee anu the complainant the venuoi. vitan calleu this a
countei B0AS. Be aumitteu having given seveial postuateu checks
amounting to P1uu,uuu, supposeuly to guaiantee the inuebteuness of his
liaison officei Evelyn Estui to complainant. Atty. vitan aigueu foi the fiist
time that it was she who hau incuiieu the uebts, anu that he hau acteu only
as a "chaiactei iefeience anuoi guaiantoi." Be maintaineu that he hau
given in to the one-siueu tiansactions, because he was "completely
spellbounu by complainant's seeming sinceiity anu kinuness." To
coiioboiate his statements, he attacheu Estui's Affiuavit.

6))E*K

Whethei oi not vitan's obligation is extinguisheu by the sale of his piopeity.

7EL,N-K

N0. The woiuings of these piomissoiy notes uisclose that he hau a peisonal
obligation to complainant, without any mention of Estui at all. If it weie tiue
that Atty. vitan hau executeu those notes foi the account of his liaison
officei, he shoulu have useu woius to that effect. Basically, iesponuent is
asseiting that what hau tianspiieu was a uation in payment. uoveineu by
the law on sales, it is a tiansaction that takes place when a piece of piopeity
is alienateu to the cieuitoi in satisfaction of a uebt in money. It involves
ueliveiy anu tiansmission of owneiship of a thing -- by the uebtoi to the
cieuitoi -- as an accepteu equivalent of the peifoimance of the obligation.
The iecoius ieveal that he uiu not ieally intenu to sell anu ielinquish
owneiship ovei his piopeity in Sta. Naiia, Bulacan, notwithstanuing the
execution of a Beeu of Absolute Sale in favoi of complainant. The seconu
Beeu of Absolute Sale, which ie-conveyeu the piopeity to iesponuent, is
pioof that he hau no such intention. This seconu Beeu, which he iefeiieu to
as his "safety net," betiays his intention to counteiact the effects of the fiist
one. The seconu Beeu of Absolute Sale ietuineu the paities iight back wheie
they staiteu, as if theie weie no sale in favoi of complainant to begin with. In
effect, on the basis of the seconu Beeu of Sale, iesponuent took back anu
asseiteu his owneiship ovei the piopeity uespite having allegeuly solu it.

Thus, he fails to convince us that theie was a bona fiue uation in payment oi
sale that took place between the paities; that is, that theie was an
extinguishment of obligation. It appeais that the tiue intention of the paities
was to use the Bulacan piopeity to facilitate payment. They only maue it
appeai that the title hau been tiansfeiieu to complainant to authoiize him to
sell oi moitgage the piopeity.

Atty. vitan himself aumitteu in his lettei uateu }uly Su, 2uu4, that theii
intention was to conveit the piopeity into cash, so that payment coulu be
obtaineu by complainant anu the excess ietuineu to iesponuent. The
iecoius, howevei, uo not show that the pioceeus ueiiveu weie sufficient to
uischaige the obligation of the lawyei fully; thus, vitan is still liable to the
extent of the ueficiency.

G01 !3'6"# !$'476=R !R!=$8 :)0 "=#"5=6' ;4#< "5+ 2"'6<6'
'382"5R 3< 8"56#"> 65'0 "5+ !$867"7" '3"# '37237"=635> VV@
!'7" TBB> ;070 5?0 /BVAVG> "MD,L @I> GIIH
JFK "C,N-> 2(.D,O[ 60

<(O.)K

Sometime in 2uuu, Atlantic uulf anu Pacific Company of Nanila, Inc. (Au&P)
infoimeu the SSS in wiiting of its piemiums anu loan amoitization
uelinquencies coveiing the peiiou fiom }anuaiy to Nay 2uuu amounting to
P7.S Nillion. Au&P pioposeu to pay its saiu aiieais by enu of 2uuu, but
iequesteu foi the conuonation of all penalties. In tuin, SSS suggesteu 2
options, eithei to pay by installment oi thiough "uacion en pago ".

Au&P chose to settle its obligation with the SSS thiough uacion en pago of its
S,999 sq. m. piopeity with an appiaiseu value of about P8u Nillion. SSS
pioposes to caive-out fiom the saiu piopeity an aiea sufficient to covei
plaintiffs' uelinquencies. Au&P, howevei, is not amenable to subuiviue its
Baguio piopeity; Au&P then maue anothei pioposal to SSS. This time,
offeiing as payment a poition of its lot in Batangas.

In auuition, SSS infoimeu Au&P of its uecision to incluue othei companies
within the umbiella of BNCI gioup with aiieaiages with the SSS. In the
piocess of elimination of the companies belonging to the BNCI gioup with
possible outstanuing obligation with the SSS, it was only Semiiaia Coal
Coipoiation (SENIRARA) which was left with outstanuing uelinquencies
with the SSS. Thus, SENIRARA's inclusion in the pioposeu settlement
thiough uacion en pago.

As a iesult of the appioval of the uacion en pago, posting of contiibutions
anu loan amoitization to inuiviuual membei accounts, both foi Au&P anu
SENIRARA employees, was effecteu immeuiately theieaftei. Thus, the
benefits of the membei-employees of both companies weie iestoieu. To
effect the piopeity tiansfei, a Beeu of Assignment has to be executeu
between the plaintiffs anu the uefenuant. Because of SSS failuie to come up
with the iequiieu Beeu of Assignment to effect saiu tiansfei, Au&P piepaieu
the uiaft anu submitteu it to the 0ffice of the vice-Piesiuent of SSS-NCR.

Fiom its oiiginal submission of the Beeu of Assignment in }uly 2uu1 to its ie-
submission in Becembei 2uu1, anu SSS ietuining of the ieviseu uiaft in
Febiuaiy 28, 2uuS Au&P was consistent in its iegulai follow ups with SSS as
to the status of its submitteu Beeu of Assignment.

0n Febiuaiy 28, 2uuS, oi moie than a yeai aftei the appioval of Au&P's
pioposal, uefenuant sent the ieviseu copy of the Beeu of Assignment to
Au&P. Bowevei, the amount of the plaintiffs' obligation appeaiing in the
appioveu Beeu of Assignment has ballooneu fiom P29,261,9u2 to
P4u,846,61u allegeuly because of the auuitional inteiests anu penalty
chaiges assesseu on plaintiffs' outstanuing obligation fiom Apiil 2uu1, the
uate of appioval of the pioposal, up to }anuaiy 2uuS; Au&P uemanueu foi
the waivei anu ueletion of the auuitional inteiests on the giounu that uelay
in the appioval of the ueeu anu the subsequent uelay in conveyance of the
piopeity in uefenuant's name was solely attiibutable to the SSS.


6))E*K

Whethei oi not uacion en pago can be enfoiceu in the instant case.

7EL,N-K

Fiom the aveiments in theii complaint, piivate iesponuents aie seeking to
implement the Beeu of Assignment which they hau uiafteu anu submitteu to
SSS sometime in }uly 2uu1, puisuant to SSS's lettei auuiesseu to Au& P
uateu 2S Apiil 2uu1 appioving Au&P anu SENIRARA'S uelinquencies
thiough uacion en pago, which as of S1 Naich 2uu1, amounteu to
P29,261,9u2. The subject of the complaint is no longei the payment of the
piemium anu loan amoitization uelinquencies, as well as the penalties
appuitenant theieto, but the enfoicement of the uacion en pago puisuant to
SSS Resolution No. 27u. The action then is one foi specific peifoimance
which case law holus is an action incapable of pecuniaiy estimation falling
unuei the juiisuiction of the Regional Tiial Couit.

@01 !234!$! 7"<"$# "5+ Y$5"6+" $!="56!#"3 :)0 $"!= ^$!=
J"5\65; '37237"=635> VXX !'7" @TA> ;070 5?0 /BHV@B> <*CDE(DF //>
GIIH
JFK "C,N-> 2(.D,O[ 60

<(O.)K

Spouses Rafael Estanilao anu Zenaiua Estanislao obtaineu a loan fiom the
East West Banking Coipoiation in the amount of PS,92S,uuu, eviuenceu by a
piomissoiy note anu secuieu by two ueeus of chattel moitgage uateu }uly
1u, 1997: one coveiing two uump tiucks anu a bulluozei to secuie the loan
amount of P2,S7S,uuu, anu anothei coveiing bulluozei anu a wheel loauei to
secuie the loan amount of P1,SSu,uuu. Petitioneis uefaulteu in the
amoitizations anu the entiie obligation became uue anu uemanuable.
Because of that, iesponuent bank fileu a suit foi ieplevin with uamages,
piaying that the equipment coveieu by the fiist ueeu of chattel moitgage be
seizeu anu ueliveieu to it. In the alteinative, iesponuent piayeu that
petitioneis be oiueieu to pay the outstanuing piincipal amount of
PS,846,127 with 19.S% inteiest pei annum ieckoneu fiom juuicial uemanu
until fully paiu, exemplaiy uamages of PSu,uuu, attoiney's fees equivalent to
2u% of the total amount uue, othei expenses anu costs of suit.

The case was fileu in the Regional Tiial Couit of Antipolo. Subsequently,
iesponuent moveu foi suspension of the pioceeuings on account of an
eainest attempt to aiiive at an amicable settlement of the case. The tiial
couit suspenueu the pioceeuings, anu uuiing the couise of negotiations, a
ueeu of assignment was uiafteu by the iesponuent. Petitioneis affixeu theii
signatuies on the ueeu of assignment. Bowevei, foi some unknown ieason,
iesponuent bank's uuly authoiizeu iepiesentative faileu to sign the ueeu.
Petitioneis completeu the ueliveiy of the heavy equipment mentioneu in the
ueeu of assignment - two uump tiucks anu a bulluozei - to iesponuent,
which accepteu the same without piotest oi objection. Bowevei, iesponuent
fileu a manifestation anu motion to aumit an amenueu complaint foi the
seizuie anu ueliveiy of two moie heavy equipment - the bulluozei anu
wheel loauei - which aie coveieu unuei the seconu ueeu of chattel
moitgage. Responuent claimeu that its iepiesentative inauveitently faileu to
incluue the seconu ueeu of chattel moitgage among the uocuments
foiwaiueu to its counsel when the oiiginal complaint was being uiafteu.
Responuent likewise claimeu that petitioneis weie given a chance to submit
a iefinancing scheme that woulu allow them to keep the iemaining two
heavy equipment, but they faileu to come up with such a scheme uespite
iepeateu piomises to uo so.

Petitioneis sought to uismiss the amenueu complaint. They allegeu that theii
pievious payments on loan amoitizations, the execution of the ueeu of
assignment anu iesponuent's acceptance of the thiee units of heavy
equipment, hau the effect of full payment oi satisfaction of theii total
outstanuing obligation which is a bai on iesponuent bank fiom iecoveiing
any moie amounts fiom them.

6))E*K

Whethei oi not East West Banking Coip is no longei alloweu to foieclose the
seconu Beeu of Chattel Noitgage.

7EL,N-K

Yes. Since the agieement was consummateu by the ueliveiy on Naich 8,
2uu1 of the last unit of heavy equipment unuei the ueeu, petitioneis aie
ueemeu to have been ieleaseu fiom all theii obligations to iesponuent. Since
theie is no moie cieuit to collect, no piincipal obligation to speak of, then
theie is no moie seconu ueeu of chattel moitgage that may subsist. A chattel
moitgage cannot exist as an inuepenuent contiact since its consiueiation is
the same as that of the piincipal contiact. Being a meie accessoiy contiact,
its valiuity woulu uepenu on the valiuity of the loan secuieu by it. This being
so, the amenueu complaint foi ieplevin shoulu be uismisseu, because the
chattel moitgage agieement upon which it is baseu hau been ienueieu
ineffectual.

The natuie of the assignment was a uation in payment, wheieby piopeity is
alienateu to the cieuitoi in satisfaction of a uebt in money. Such tiansaction
is goveineu by the law on sales. Even if we weie to consiuei the agieement
as a compiomise agieement, theie was no neeu foi iesponuent's signatuie
on the same, because with the ueliveiy of the heavy equipment which the
lattei accepteu, the agieement was consummateu. Responuent's appioval
may be infeiieu fiom its unqualifieu acceptance of the heavy equipment.

Consent to contiacts is manifesteu by the meeting of the offei anu the
acceptance of the thing anu the cause which aie to constitute the contiact;
the offei must be ceitain anu the acceptance absolute. The acceptance of an
offei must be maue known to the offeioi, anu unless the offeioi knows of
the acceptance, theie is no meeting of the minus of the paities, no ieal
concuiience of offei anu acceptance. 0pon uue acceptance, the contiact is
peifecteu, anu fiom that moment the paities aie bounu not only to the
fulfillment of what has been expiessly stipulateu but also to all the
consequences which, accoiuing to theii natuie, may be in keeping with goou
faith, usage anu law.

! ?*,($, ), AB-0*'5$

/01 ;7$;3763 <4#$ :)0 '347= 3< "22$"#!> 565$W$='9 '74Y (NQ
P4"5 J$#"78653> GHT !'7" TAH> ;070 5?0 //GG/G> 8(DO] G> /AAH
JFK JE.(D> !],*D( 8(* 20

<(O.)K

This petition foi ieview on certiorori questions the affiimance by the Couit
of Appeals of the uecision of the Regional Tiial Couit uismissing the
complaint that piayeu foi the nullification of a contiact of sale of a 1u-
hectaie piopeity in consiueiation of the amount of P4u,uuu.uu anu a 2.S
caiat emeialu-cut uiamonu.

Petitionei uiegoiio Fule, a bankei anu a jewellei, offeieu to sell his paicel of
lanu to Bi. Ciuz in exchange of a uiamonu iing woith Php16u,uuu.uu anu
cash amounting to Php4u,uuu.uu. Atty. Belaimino piepaieu a ueeu of
absolute sale.

Togethei with Bichoso anu Nenuoza, agents, the petitionei went to the bank
anu met Bi. Ciuz, who aiiiveu shoitly theieaftei. . Bi. Ciuz got the eaiiings
fiom hei safety ueposit box anu hanueu it to the petitionei. The lattei took it,
went neai the electiic light anu examineu it foi 1u to 1S minutes. When Bi.
Ciuz inquiieu if the jeweliy was aliight, Fule expiesseu his satisfaction by
nouuing his heau. Fule took the jeweliy. Two houis aftei, Fule complaineu
that the eaiiings weie fake. Be files a complaint to ueclaie the sale null anu
voiu on the giounu of fiauu anu ueceit. The tiial couit ienueieu uecision
against the petitionei which uecision was affiimeu in toto by the CA.

6))E*K

Whethei oi not the sale shoulu be nullifieu on the giounu of fiauu.

7EL,N-K

A contiact of sale is peifecteu at the moment theie is a meeting of the minus
upon the thing which is the object of the contiact anu upon the piice. It is
eviuent fiom the facts of the case that theie was a meeting of the minus
between petitionei anu Bi. Ciuz. As such, they aie bounu by the contiact
unless theie aie ieasons oi ciicumstances that waiiant its nullification.

Petitionei subsequently sought the nullification of saiu contiact on the
giounu that it was, in fact, "tainteu with fiauu" such that his consent was
vitiateu. Theie is fiauu when, thiough the insiuious woius oi machinations
of one of the contiacting paities, the othei is inuuceu to entei into a contiact
which, without them, he woulu not have agieeu to.

The iecoius, howevei, aie baie of any eviuence manifesting that piivate
iesponuents employeu such insiuious woius oi machinations to entice
petitionei into enteiing the contiact of baitei. Neithei is theie any eviuence
showing that Bi. Ciuz inuuceu petitionei to sell his piopeity oi that she
cajoleu him to take the eaiiings in exchange foi saiu piopeity.

Fuitheimoie, petitionei was affoiueu the ieasonable oppoitunity iequiieu
in Aiticle 1S84 of the Civil Coue within which to examine the jeweliy as he in
fact accepteu them when askeu by Bi. Ciuz if he was satisfieu with the
same. By taking the jeweliy outsiue the bank, petitionei executeu an act
which was moie consistent with his exeicise of owneiship ovei it.

Both the tiial anu appellate couits, theiefoie, coiiectly iuleu that theie weie
no legal bases foi the nullification of the contiact of sale. 0wneiship ovei the
paicel of lanu anu the paii of emeialu-cut uiamonu eaiiings hau been
tiansfeiieu to Bi. Ciuz anu petitionei, iespectively, upon the actual anu
constiuctive ueliveiy theieof

WBEREF0RE, the uecision of the Couit of Appeals is heieby AFFIRNEB in
toto. Bi. Ciuz, howevei, is oiueieu to pay petitionei the balance of the
puichase piice of P4u,uuu.uu within ten (1u) uays fiom the finality of this
uecision.




! C5$'-@ () ?6@ *'7 .$//

/01 90 $0 9$"'3'\ '382"5R :)0 J45="# 8"54<"'=4765; '382"5R>
;7$;3763 56$W" (NQ 8"76" "0 +$ 56$W"> TT 2],L0 GXV> ;070 5?0 XXXB/>
!*M.*UC*D GT> /A@H
JFK JE.(D> !],*D( 8(* 20

<(O.)K

Buntal, et al ienteu a machine fiom Beacock Company foi a teim of
2u calenuai months. Buntal, et al weien't able to ietuin the machine anu
faileu to pay the lease. The stipulation the contiact states;
6. In consiueiation of the sum of P16u to it in hanu paiu by the
hiiei, the ownei heieby giants to the hiiei the option to puichase,
while the piesent lease is in foice anu effect, the piopeity maue
the subject of this agieement, at the puichase piice of P86u. In the
event of the exeicise of saiu option, the hiiei shall be entitleu to a
cieuit on the puichase piice foi an amount equal to the ientals
actually paiu heieunuei anu the payment maue unuei this
paiagiaph; it being expiessly unueistoou anu agieeu, howevei,
that the saiu chattel shall iemain the piopeity of the ownei until
aftei the complete exeicise of such option, anu the payment in full
of the puichase piice agieeu upon, anu, until such time the hiiei
shall not have any piopeity iight in saiu chattel oi be ueemeu to
have puichaseu oi obligateu to puichase the same. Shoulu the
hiiei not exeicise the option heiein gianteu, the amount paiu by
him foi saiu option unuei this paiagiaph shall become foifeiteu to
the ownei.

Lowei couit helu that the contiact is a contiact of lease. It also ueciueu that
Beacock shoulu pay PSSS, the total amount they bounu themselves to pay.

6))E*K

Whethei oi not the contiact is a contiact of lease.

7EL,N-K

No. In the fiist clause above-quoteu it appeais that uefenuants paiu the
amount of P16u on account of the piice of the machine which was fixeu at
P86u. It is theiein stateu that saiu amount was ueliveieu to plaintiff as
"initial payment."

It is tiue that in the contiact it is often stateu that plaintiff leaseu the
machine to uefenuants, giving them the option to buy it upon theii paying it
the sum of P86u anu cieuiting them with so much as they might be able to
pay as ients at the above iate of PSS a month. It shoulu be noteu, howevei,
that in the clause afoiementioneu, it is cleaily stateu that uefenuant paiu the
sum of P16u on account of the piice of the machine. This payment shows
that the ieal contiact between the paities was that of puichase anu sale on
installments anu not a lease.

In conclusion we holu that the contiact Exhibit A is that of puichase anu sale
on installments; that saiu contiact was iescinueu without objection on the
pait of uefenuants; anu that the appeal of the lattei is well taken.

Wheiefoie, ueclaiing Exhibit A iescinueu, the juugment appealeu fiom is
ieveiseu, absolving uefenuants fiom the complaint anu sentencing plaintiff
to pay the costs in both instances. So oiueieu.

G01 "5+7$! S4673;" :)0 2"7!35! 9"7+^"7$ '3> @H 2],L0 VI/> ;070
5?0 #Z//XA> "E-E). G@> /A/H
JFK JE.(D> !],*D( 8(* 20

<(O.)K

Plaintiff enteieu into a contiact with the uefenuants gianting the exclusive
sale of his beus in the visayan aiea. Ni. Paisons binus himself to pay Ni.
Quiioga foi the beus ieceiveu, within a peiiou of sixty uays fiom the uate of
theii shipment. Plaintiff fileu a complaint against the uefenuant foi violation
of the following obligations: not to sell the beus at highei piices than those
of the invoices; to have an open establishment in Iloilo; itself to conuuct the
agency; to keep the beus on public exhibition, anu to pay foi the
auveitisement expenses foi the same; anu to oiuei the beus by the uozen
anu in no othei mannei. Plaintiff allegeu that the uefenuant was his agent.

6))E*K

Whethei oi not the uefenuant, by ieason of the contiact heieinbefoie
tiansciibeu, was a puichasei oi an agent of the plaintiff foi the sale of his
beus.

7EL,N-K

Theie was the obligation on the pait of the plaintiff to supply the beus, anu,
on the pait of the uefenuant, to pay theii piice. These featuies excluue the
legal conception of an agency oi oiuei to sell wheieby the manuatoiy oi
agent ieceiveu the thing to sell it, anu uoes not pay its piice, but ueliveis to
the piincipal the piice he obtains fiom the sale of the thing to a thiiu peison,
anu if he uoes not succeeu in selling it, he ietuins it. By viitue of the contiact
between the plaintiff anu the uefenuant, the lattei, on ieceiving the beus,
was necessaiily obligeu to pay theii piice within the teim fixeu, without any
othei consiueiation anu iegaiuless as to whethei he hau oi hau not solu the
beus. The woius commission on soles useu in clause (A) of aiticle 1 mean
nothing else, as stateu in the contiact itself, than a meie uiscount on the
invoice piice. The woiu oqency, also useu in aiticles 2 anu S, only expiesses
that the uefenuant was the only one that coulu sell the plaintiff's beus in the
visayan Islanus. With iegaiu to the iemaining clauses, the least that can be
saiu is that they aie not incompatible with the contiact of puichase anu sale.

Foi the foiegoing ieasons, we aie of opinion that the contiact by anu
between the plaintiff anu the uefenuant was one of puichase anu sale, anu
that the obligations the bieach of which is allegeu as a cause of action aie not
imposeu upon the uefenuant, eithei by agieement oi by law.

@01 \$7 _ '30> #=+0 :)0 P3!$ J0 #65;"+> () "O.,N- '?UU,)),?N*D ?e
6N.*DN(L 7*:*NE*> @H !'7" VGX> ;070 5?0 #ZGIHB/> "MD,L @I> /AB/
JFK JE.(D> !],*D( 8(* 20

<(O.)K

Petitionei was assesseu by the Commissionei of Inteinal Revenue the sum of
P2u,272.SS as the commeicial biokei's peicentage tax, suichaige, anu
compiomise penalty. Theie was a iequest on the pait of petitionei foi the
cancellation of such assessment, which iequest was tuineu uown. As a
iesult, it fileu a petition foi ieview with the Couit of Tax Appeals. CTA iuleu
that that Kei & Co is liable as a commeicial biokei unuei Section 194 (t) of
the National Inteinal Revenue Coue.

Kei & Co signeu a contiact with the 0niteu States Rubbei Inteinational, the
foimei being iefeiieu to as the Bistiibutoi anu the lattei specifically
uesignateu as the Company. The shipments woulu covei piouucts "foi
consumption in Cebu, Bohol, Leyte, Samai, }olo, Negios 0iiental, anu
Ninuanao except |thej piovince of Bavao". Kei & Co, as Bistiibutoi, was
piecluueu fiom uisposing such piouucts elsewheie than in the above places
unless wiitten consent woulu fiist be obtaineu fiom the Company. It was
iequiieu to exeit eveiy effoit to have the shipment of the piouucts in the
maximum quantity anu to piomote in eveiy way the sale theieof. The piices,
uiscounts, teims of payment, teims of ueliveiy anu othei conuitions of sale
weie subject to change in the uiscietion of the Company.

6))E*K

Whethei oi not the ielationship Kei & Co anu 0S Rubbei was that of a
venuoi-venuee oi piincipal-biokei.

7EL,N-K

The ielationship between the petitionei anu the iesponuent is one of
biokeiage oi agency. That the petitionei Kei & Co., Ltu. is, by contiactual
stipulation, an agent of 0.S. Rubbei Inteinational is boine out by the facts
that:

1. Petitionei can uispose of the piouucts of the Company only to
ceitain peisons oi entities anu within stipulateu limits, unless
excepteu by the contiact oi by the Rubbei Company;
2. It meiely ieceives, accepts anuoi holus upon consignment the
piouucts, which iemain piopeities of the lattei company;
S. Eveiy effoit shall be maue by petitionei to piomote in eveiy way
the sale of the piouucts (Pai. S); that sales maue by petitionei aie
subject to appioval by the company;
4. 0n uates ueteimineu by the iubbei company, petitionei shall
ienuei a uetaileu iepoit showing sales uuiing the month;
S. The iubbei company shall invoice the sales as of the uates of
inventoiy anu sales iepoit (Pai. 14); that the iubbei company
agiees to keep the consigneu goous fully insuieu unuei insuiance
policies payable to it in case of loss;
6. 0pon iequest of the iubbei company at any time, petitionei shall
ienuei an inventoiy of the existing stock which may be checkeu
by an authoiizeu iepiesentative of the foimei;
7. 0pon teimination oi cancellation of the Agieement, all goous helu
on consignment shall be helu by petitionei foi the account of the
iubbei company until theii uisposition is pioviueu foi by the
lattei.

WBEREF0RE, the Couit of Tax Appeals uecision of 0ctobei 19, 1962 is
affiimeu. With costs against petitionei.

X01 +$# 835=$ 296#62265$!> 65'0 :)0 5"23#$35 50 "7";35$!> XT/
!'7" /@A> ;070 5?0 /V@I@@> PEN* G@> GIIV
JFK '(ME.?L> +(N,O( 2(.D,O,( +0

<(O.)K

The uecision in the piesent Petition foi Review on Ceitioiaii hinges on the
natuie of the contiact uenominateu "Supply Agieement" which was foigeu
between Bynablock Enteipiises, iepiesenteu by its Nanagei heiein
iesponuent Napoleon N. Aiagones (Aiagones) anu Nega-Engineeiing
Seivices in joint ventuie with WAFF Constiuction System Coipoiation
(NEuA-WAFF) whethei it was one of sale oi foi a piece of woik.

Bel Nonte Philippines Inc. (BNPI) enteieu into an "Agieement" with NEuA-
WAFF, iepiesenteu by "Nanaging Piincipal" Euilbeito uaicia (uaicia),
wheieby the lattei unueitook "the supply anu installation of mouulai
pavement" at BNPI's conuiments waiehouse within 6u calenuai uays fiom
signing of the agieement.

To souice its supply of conciete blocks to be installeu on the pavement of the
BNPI waiehouse, NEuA-WAFF, as C0NTRACT0R iepiesenteu by uaicia,
enteieu into a "Supply Agieement" with Bynablock Enteipiises, iepiesenteu
by heiein iesponuent Aiagones, as S0PPLIER.

Aftei the installation of the pavement in the waiehouse, Aiagones latei on
uemanu fiom NEuA-WAFF the full payment of the conciete blocks, on which
he faileu to collect.

Aiagones latei faileu to collect fiom NEuA-WAFF the full payment of the
conciete blocks. Be thus sent BNPI a lettei uateu Naich 1u, 1989, ieceiveu
by the lattei on Naich 1S, 1989, auvising it of NEuA-WAFF's unpaiu
obligation anu iequesting it to eaimaik anu withholu the amount of
P188,6S2.6S "fiom |NEuA-WAFF'sj billing" to be paiu uiiectly to him "|ljest
uaicia collects anu fails to pay |himj."

6))E*K

Whethei oi not it was one of sale oi foi a piece of woik.

7EL,N-K

The contiact was one foi a piece of woik.

0nuei Ait. 1467 then of the Civil Coue which pioviues:

ART. 1467. A controct for tbe Jelivery ot o certoin price of on orticle wbicb tbe
venJor in tbe orJinory course of bis business monufoctures or procures for tbe
qenerol morket, wbetber tbe some is on bonJ ot tbe time or not, is o controct
of sole, but if tbe qooJs ore to be monufoctureJ speciolly for tbe customer onJ
upon bis speciol orJer, onJ not for tbe qenerol morket, it is o controct for o
piece of work.

The "Supply Agieement" was ueciueuly a contiact foi a piece of woik.

Following Ait. 1729 of the Civil Coue which pioviues:

ART. 1729. Tbose wbo put tbeir lobor upon or furnisb moteriols for o piece
ofwork unJertoken by tbe controctor bove on oction oqoinst tbe owner up to
tbe omount owinq from tbe lotter to tbe controctor ot tbe time tbe cloim is
moJe.

Aiagones having specially fabiicateu thiee casting machines anu fuinisheu
some mateiials foi the piouuction of the conciete blocks specially oiueieu
anu specifieu by NEuA-WAFF which weie to be anu inueeu they weie foi the
exclusive use of NEuA-WAFF, he has a cause of action upon petitionei up to
the amount it oweu NEuA-WAFF at the time Aiagones maue his claim to
petitionei.

V01 ;35Y"#3 24R"= _ !35!> 65'0 :)0 "7'3 "84!$8$5= '382"5R
ge?DU*DLF [N?hN () =*(.D? "DO?1> BG 2],L0 XIG> ;070 5?0 #ZXBV@H> PEN*
GI> /AX/
JFK '(ME.?L> +(N,O( 2(.D,O,( +0

<(O.)K

In 1929, Aico Amusement Company (foimeily known as Teatio Aico) was
engageu in the business of opeiating cinematogiaphs.

Aiounu 19Su, Aico Amusement appioacheu uonzalo Puyat & Sons, Inc., the
exclusive agents in the Phils of the Staii Piano Company (of Richmonu,
Inuiana, 0SA) to negotiate with them theii intent to buy sounu iepiouucing
equipment fiom Staii Piano thiough uonzalo Puyat & Sons.

Aftei some negotiations, the paities agieeu that uonzalo Puyat & Sons woulu
oiuei the equipment fiom Staii Piano anu Aico Amusement woulu pay
uonzalo Puyat, in auuition to the piice of the equipment, a 1u% commission,
plus expenses, such as fieight, insuiance, banking chaiges, cables etc.

In oiueiing the equipment, uonzalo Puyat & Sons was able to get a
uiscounteu piice fiom Staii Piano. Bowevei, uonzalo Puyat uiu not infoim
Aico Amusement of the uiscounteu piice, anu still billeu them the list piice
of $ 1,7uu plus the 1u% commission anu the expenses incuiieu in oiueiing
the equipment.

Aico Amusement paiu the bills anu then placeu anothei oiuei foi a seconu
sounu iepiouucing equipment, which was quoteu at $1,6uu plus commission
anu othei expenses. Aico paiu the amount assesseu by uonzalo Puyat.

Thiee yeais latei, Aico Amusement uiscoveieu that the piice quoteu to them
by uonzalo Puyat was not the net piice but was iathei the list piice anu that
uonzalo Puyat obtaineu a uiscount fiom Staii Piano.

They sought foi ieimbuisement of what they have paiu uonzalo Puyat by
filing a case foi ieimbuisement.CFI of Nanila helu that the contiact between
the petitionei anu the iesponuent was one of outiight puichase anu sale,
anu absolveu uonzalo Puyat fiom the complaint.

CA ieveiseu the uecision of the CFI, holuing that the ielation between
uonzalo Puyat anu Aico Amusement was that of an agent anu a piincipal,
anu sentenceu uonzalo Puyat to ieimbuise Aico Amusement of all the
allegeu oveipayments in the total sum of $1,SSS.S2 oi Php 2,671.u4

6))E*K

Whethei oi not the contiact between uonzalo Puyat anu Aico Amusement is
an Agency to meiit Aico Amusement a ieimbuisement oi is an 0utiight
Puichase anu Sale Contiact that woulu absolve uonzalo Puyat of the case.

7EL,N-K

The contiact between uonzalo Puyat anu Aico Amusement is an 0utiight
Puichase anu Sale Contiact.

The contiact is the law between the paities anu shoulu incluue all the things
they aie supposeu to have agieeu upon. The letteis, by which Aico accepteu
the piices of $1,7uu anu S1,6uu plus the commission anu othei expenses foi
the sounu iepiouucing equipment aie cleai in theii teims anu aumit of no
othei inteipietation than that Aico agieeu to puichase fiom uonzalo Puyat
the equipment in question at the piices inuicateu which aie fixeu anu
ueteiminate. Aico aumitteu in its complaint fileu with the CFI that uonzalo
Puyat agieeu to sell to it the fiist sounu iepiouucing equipment anu
machineiy.

Whatevei unfoieseen events might have taken place unfavoiable to Aico,
such as change in piices, mistake in theii quotation, oi failuie of Staii Piano
to piopeily fill the oiueis as pei specifications, uonzalo Puyat might still
legally holu Aico to the piices fixeu. This is incompatible with the pietenueu
ielation of agency between the petitionei anu the iesponuent, because in
agency, the agent is exempteu fiom all liability in the uischaige of his
commission pioviueu that he acts in accoiuance with the instiuctions
ieceiveu fiom his piincipal anu the piincipal must inuemnify the agent foi
all uamages which the lattei may incui in caiiying out the agency without
fault oi impiuuence on his pait.

To holu the petitionei an agent of the iesponuent in the puichase of the
equipment fiom Staii Piano is incompatible with the fact that the petitionei
is the exclusive agent of the same company in the Phils. It is out of the
oiuinaiy foi one to be the agent of both the venuoi anu the venuee.
It follows that uonzalo Puyat as a venuoi is not bounu to ieimbuise Aico as
venuee foi any uiffeience between the cost piice anu the sales piice which
iepiesents the piofit iealizeu by the venuoi out of the tiansaction. This is
the veiy essence of commeice without which meichants oi miuulemen
woulu not exist.

T01 "!J$!=3! 65=$;7"=$+ 8"54<"'=4765;> 65'0> g"6861 :)0 9350
$#W673 #0 2$7"#="> 2D*),Q,N- PEQ-*> JD(NO] bW660 8(N,L( '?ED. ?e <,D).
6N).(NO*> 8$=7323#6="5 ^"=$7^37\! (NQ !$^$7";$ !R!=$8
g8^!!1> $=$756= '37237"=635> /VV !'7" G/@> ;070 5?0 #ZXVV/V
3O.?C*D GA> /AHB
JFK '(ME.?L> +(N,O( 2(.D,O,( +0

<(O.)K

Petitionei Asbestos Integiateu Nanufactuiing, Inc. (AINI foi shoit) in the
maiketing of asbestos cement piessuie pipes manufactuieu by Asbestos
Cement Piouucts Philippines, Inc. (ACPPI foi shoit).

The iesponuent Eteinit Coipoiation (Eteinit, foi shoit) is a uomestic
coipoiation, incoipoiateu unuei Philippine laws, with 9u% of its capital
stock, owneu anu contiolleu by aliens.

The iesponuent Sanvai Bevelopment Coipoiation (Sanvai, foi shoit) is
engageu "to caiiy on anu unueitake any business unueitaking, tiansaction
oi opeiation commonly caiiieu on oi unueitaken by geneial contiactois,
sub-contiactois etc." anu whose seconuaiy puipose, among otheis, is "to
engage in, opeiate, conuuct anu maintain the business of tiauing (buy anu
sell), manufactuiing oi otheiwise uealing in any anu all kinus of
commouities, waies, supplies, meichanuise of whatevei uesciiption anu to
caiiy on such business as wholesalei, ietailei, impoitei, etc."

The iesponuent Netiopolitan Wateiwoiks anu Seweiage System (NWSS, foi
shoit) is a goveinment owneu anu contiolleu coipoiation.

The NWSS, conuucteu a public biuuing foi its asbestos cement pipe
iequiiements. In the public biuuing of 27 Septembei 1976, Sanvai submitteu
a total biu piice of P2,6SS,S6u.uu while AINI, submitteu a total biu piice of
PS,2S9,492.uu, which is 22.84% highei than the biu of Sanvai. As a iesult,
the contiact to supply the asbestos cement piessuie pipes was awaiueu to
Sanvai.

Wheieupon, AINI, claiming that Sanvai is but a meie uealei oi uistiibutoi oi
maiketing aim of the alien-owneu Eteinit, fileu a petition against the NWSS,
Eteinit anu Sanvai to nullify the awaiu anu to iestiain the iesponuents fiom
enfoicing the same. The Petitionei invokeu the Retail Tiaue Nationalization
Act (Rep. Act No. 118u), the Flag Law (Com. Act No. 1S8), the Anti-Bummy
Act (Com. Act No. 1u8), anu the law ieseiving to Filipinos anu Filipino-
owneu coipoiations the exclusive iight to entei into contiacts with any
goveinment owneu oi contiolleu coipoiation, company, agency oi
municipal coipoiation foi the supply of mateiials, equipment, goous, anu
commouities (Rep. Act No. S18S) in suppoit of its petition.

6))E*K

Whethei oi not Sanvai is a meie uealei oi uistiibutoi oi maiketing aim of
the alien-owneu Eteinit.

7EL,N-K

N0. In the inteipietation of a contiact the eviuent intention of the paities
pievails ovei the woius which appeai contiaiy to it (Aiticle 1S7u, Civil
Coue); as a geneial iule that essence of a contiact ueteimines what law
shoulu apply to the ielation between the paities anu not what they piefei to
call that ielationship.To asceitain the meaning oi impoit of a contiact the
whole of it, anu not meie poitions theieof, must be taken into account. (Ruiz
vs. Sheiiff of Nanila, S4 SCRA 6S).

What the woius "uealeiship" anu "uealei-owneu" ueiiveu fiom "ueal" which
means to uo a uistiibuting oi ietailing business oi to have inteicouise on
business ielations (Webstei's New Collegiate Bictionaiy). as appeaiing it is
cleai fiom many explicit anu unmistakable piovisions spieau ovei the entiie
agieement, viz: ... "the uealei shall RESELL Eteinit constiuction piouucts
P0RCBASEB fiom the company (Pai 1) ... the uealei shall P0RCBASE fiom
the company hisits iequiiement foi RESALE (Pai. S) ... all P0RCBASES
unuei this agieement shall be paiu in cash ... any loss oi uamage to, oi
ueteiioiation of, the piouucts uue to any cause whatsoevei occuiiing aftei
ueliveiy shall be boine by the uealei (Pai. S) ... ueliveiy shall be ueemeu
complete anu tiansfei of title to piouucts effecteu when the piouucts aie
ueliveieu to caiiiei... (Pai S)... nothing in this agieement shall be constiueu
as ieseiving to the company any iight to exeicise any contiol ovei, oi uiiect
in iespect the conuuct oi management of, the business oi opeiations of the
uealei ... the entiie contiol anu uiiection of such business anu opeiations
shall be anu iemains in the uealei .... the uealei shall not have any iight oi
authoiity to, anu shall not, incui any uebts oi liabilities oi entei into any
contiact oi tiansact any business whatsoevei in the name of, oi foi, oi on
behalf of the company". (Pai. 1u) "The foiegoing, cleai anu uistinct that they
aie, weie caiiieu out by the paities. Sanvai buying fiom Eteinit constiuction
mateiials, ieceiving them paying foi them anu, in tuin, selling them foi its
own account, anu not in behalf of Eteinit.

Sanvai, a uomestic coipoiation wholly owneu oi contiolleu by Filipino
citizens, is not an altei ego of Eteinit, it follows that Republic Act No. S18S,
which bais aliens anu alien owneu oi contiolleu coipoiations fiom
paiticipating in biuuings to supply the goveinment oi its instiumentalities
with mateiials, equipment, goous, anu commouities, as well as the Anti-
Bummy Act (Com. Act No. 1u8) anu the Retail Tiaue Nationalization Act
(Rep. Act No. 118u), cannot be invokeu against Sanvai.

Neithei can the petitionei finu suppoit in the Flag Law. 0nuei saiu law,
Commonwealth Act No. 1S8, piefeience is given (a) in favoi of
unmanufactuieu aiticles, mateiials oi supplies of the giowth oi piouuction
of the Philippines, anu manufactuieu aiticles, mateiials anu supplies,
piouuceu, maue anu manufactuieu in the Philippines substantially fiom
aiticles, mateiials oi supplies of the giowth, piouuction oi manufactuie of
the Philippines; anu (b) in favoi of uomestic entities.

The Flag Law may be invokeu only against a biuuei who is not a uomestic
entity, as uefineu in the law, oi against a uomestic entity who offeis
impoiteu aiticles, mateiials oi supplies oi those maue oi piouuceu in the
Philippines fiom impoiteu mateiials. But, wheie all the mateiials, goous oi
supplies offeieu in the bius submitteu aie piouuceu, maue anu
manufactuieu in the Philippines substantially fiom aiticles, mateiials oi
supplies of the giowth of the Philippines, anu the biuueis aie uomestic
entities, as in the instant case, the Flag Law finus no application.

! 8*,(&$1 () (0$ +)'(,*-(2 D$/*(&E$ F'-*>*-&(@2 ?$(<$$' .>)61$1

/01 "5=3563 8$+65" :)0 '3##$'=37 3< 65=$75"# 7$W$54$ (NQ =9$
'347= 3< ="b "22$"#!> / !'7" @IG> ;070 5?0 #Z/V//@> P(NE(DF GH>
/AT/
JFK '(ME.?L> +(N,O( 2(.D,O,( +0

<(O.)K

0n oi about Nay 2u, 1944, petitioning taxpayei Antonio Neuina maiiieu
Antonia Rouiiguez. Befoie 1946, the spouses hau neithei piopeity noi
business of theii own. Latei, howevei, petitionei acquiieu foiest,
concessions. Fiom 1946 to 1948, the logs cut anu iemoveu by the petitionei
fiom his concessions weie solu to uiffeient peisons in Nanila thiough his
agent, Naiiano 0soiio.

Some time in 1949, Antonia R. Neuina, petitionei's wife, staiteu to engage in
business as a lumbei uealei, anu up to aiounu 19S2, petitionei solu to hei
almost all the logs piouuceu in his concession. Nis. Neuina, In tuin, solu in
Nanila the logs bought fiom hei husbanu thiough the same agent, Naiiano
0soiio.

0n the thesis that the sales aie null anu voiu, CIR consiueieu the sales by
Nis. Neuina as the petitionei's oiiginal sales taxable unuei the NIRC.
Petitionei fileu a petition foi ieconsiueiation, ievealing foi the fiist time the
allegeu piemaiital agieement of complete sepaiation of piopeity.

6))E*K

Whethei oi not the sales maue by the petitionei to his wife coulu be
consiueieu as his oiiginal taxable sales.

7EL,N-K

It appeais that at the time of the maiiiage between petitionei anu his wife,
they neithei hau any piopeity noi business of theii own, as to have ieally
uigeu them to entei into the supposeu piopeity agieement. Seconuly, the
testimony that the sepaiation of piopeity agieement was iecoiueu in the
Registiy of Piopeity thiee months befoie the maiiiage, is patently absuiu,
since such a pienuptial agieement coulu not be effective befoie maiiiage is
celebiateu, anu woulu automatically be cancelleu if the union was calleu off.
In the thiiu place, uespite theii insistence on the existence of the ante
nuptial contiact, the couple, stiangely enough, uiu not act in accoiuance with
its allegeu covenants. It was not until }uly of 19S4 that he allegeu, foi the
fiist time, the existence of the supposeu piopeity sepaiation agieement.
Finally, the Bay Book of the Registei of Beeus on which the agieement woulu
have been enteieu, hau it ieally been iegisteieu as petitionei insists, anu
which book was among those saveu fiom the iavages of the wai, uiu not
show that the uocument in question was among those iecoiueu theiein.

The wife is authoiizeu to engage in business anu foi the inciuents that flow
theiefiom when she so engages theiein. But the tiansactions peimitteu aie
those enteieu into with stiangeis, anu uo not constitute exceptions to the
piohibitoiy piovisions of Aiticle 149u against sales between spouses.
Contiacts violative of the piovisions of Aiticle 149u of the Civil Coue aie null
anu voiu. Being voiu tiansactions, the sales maue by the petitionei to his
wife weie coiiectly uisiegaiueu by the Collectoi in his tax assessments that
consiueieu as the taxable sales those maue by the wife thiough the spouses'
common agent, Naiiano 0soiio. In upholuing that stanu, the Couit below
committeu no eiioi.

! 8*,(&$1 () (0$ +)'(,*-(2 D$/*(&E$ F'-*>*-&(@2 C>>/&-*G&/&(@ () +)44)'
;*< .>)61$1

/01 8$7'$+$! '"#68#68Z '"54##"! :)0 9350 ^6##$#83 <37=45>
PEQ-*> '?ED. ?e <,D). ,N).(NO* ?e 2(N-(),N(N> JD(NO] 6> (NQ '37"Y35
+";465$!> /GA !'7" TBV> ;070 5?0 #ZVBXAA> PEN* GG> /AHX
JFK +*N?M?L> PE:F ;D(O* 20

<(O.)K

Petitionei Neiceues Calimlim-Canullas anu Feinanuo Canullas weie maiiieu
in 1962, with S chiluien, anu weie living on a house situateu on a lanu
inheiiteu by the lattei. In 1978, Feinanuo abanuoneu his family anu liveu
with Coiazon Baguines. In 198u, Feinanuo solu the house anu lot to
Baguines, who initiateu a complaint foi quieting of title. Neiceues iesisteu,
claiming that the house anu lot weie conjugal piopeities, anu the sale was
null nau voiu foi she hau not consenteu theieto.

6))E*)K

(1) Whethei oi not the constiuction of a conjugal house on the exclusive
piopeity of the husbanu ipso focto gave the lanu the chaiactei of conjugal
piopeity.

2) Whethei oi not the sale of the lot togethei with the house anu
impiovements theieon was valiu unuei the ciicumstances suiiounuing the
tiansaction.

7EL,N-K

(1) Both the lanu anu the builuing belong to the conjugal paitneiship but the
conjugal paitneiship is inuebteu to the husbanu foi the value of the lanu.
The spouse owning the lot becomes a cieuitoi of the conjugal paitneiship
foi the value of the lot, which value woulu be ieimbuiseu at the liquiuation
of the conjugal paitneiship. FERNANB0 coulu not have alienateu the house
anu lot to BAu0INES since NERCEBES hau not given hei consent to saiu
sale.

(2) The contiact of sale was null anu voiu foi being contiaiy to moials anu
public policy. The sale was maue by a husbanu in favoi of a concubine aftei
he hau abanuoneu his family anu left the conjugal home wheie his wife anu
chiluien liveu anu fiom whence they ueiiveu theii suppoit. That sale was
subveisive of the stability of the family, a basic social institution which
public policy cheiishes anu piotects. The law emphatically piohibits the
spouses fiom selling piopeity to each othei subject to ceitain exceptions.
Similaily, uonations between spouses uuiing maiiiage aie piohibiteu. Anu
this is so because if tiansfeis oi con conveyances between spouses weie
alloweu uuiing maiiiage, that woulu uestioy the system of conjugal
paitneiship, a basic policy in civil law. It was also uesigneu to pievent the
exeicise of unuue influence by one spouse ovei the othei, as well as to
piotect the institution of maiiiage, which is the coineistone of family law.

The piohibitions apply to a couple living as husbanu anu wife without
benefit of maiiiage, otheiwise, "the conuition of those who incuiieu guilt
woulu tuin out to be bettei than those in legal union." Those piovisions aie
uictateu by public inteiest anu theii ciiteiion must be imposeu upon the wig
of the paities.

! 8*,(&$1 () (0$ +)'(,*-(2 .>$-&*/ #&1H6*/&%&-*(&)'12 I6*,7&*'1J C5$'(1
*'7 C74&'&1(,*(),1

/01 =9$ 296#62265$ =74!= '382"5R> () ;E(DQ,(N ?e .]* 2D?M*D.F ?e
.]* U,N?D> 8"76"53 #0 J$75"7+3 :)0 !3'3773 73#+"5> <7"5'6!'3
9$783!3> <6+$# '0 7"83! (NQ $86#63 '74Y> AA 2],L0 @AG> ;070 5?0 #Z
HXBB> 8(F @/> /AVT
JFK +*N?M?L> PE:F ;D(O* 20


<(O.)K

Naiiano Beinaiuo, a minoi, inheiiteu 17 paicels of lanu fiom his ueceaseu
fathei. Responuent, Naiiano's step-mothei, was appointeu his guaiuian. As
guaiuian, she solu the 17 paicels to Bi. Ramos, hei biothei-in-law, foi
P14,7uu. Aftei a week, Bi. Ramos solu the lanus to hei foi P1S,uuu.
Subsequently, she solu 4 out of 17 paicels to Emilio Ciuz. Petitionei ieplaceu
Roluan as guaiuian, anu two months theieaftei, this litigation sought to
ueclaie as null anu voiu the sale to Bi. Ramos, anu the sale to Emilio Ciuz.

6))E*K

Whethei oi not the sale of the lanu by the guaiuian is null anu voiu foi being
violative of the piohibition foi a guaiuian to puichase eithei in peison oi
thiough the meuiation of anothei the piopeity of hei waiu.

7EL,N-K

Remembeiing the geneial uoctiine that guaiuianship is a tiust of the highest
oiuei, anu the tiustee cannot be alloweu to have any inuucement to neglect
his waiu's inteiest, anu in line with the couit's suspicion whenevei the
guaiuian acquiies waiu's piopeity we have no hesitation to ueclaie that in
this case, in the eyes of the law, Socoiio Roluan took by puichase hei waiu's
paicels thiu Bi. Ramos, anu that Aiticle 14S9 of the Civil Coue applies.

G01 J$75"7+6=" 70 8"'"763#" :)0 93537"J#$ $#6"! J0 "!45'635>
PEQ-* ?e .]* '?ED. ?e <,D). 6N).(NO* ?e #*F.*> //X !'7" BB> "080 5?0 /@@Z
P> 8(F @/> /AHG
JFK +*N?M?L> PE:F ;D(O* 20

<(O.)K

When the uecision in Civil Case No. Su1u ienueieu by iesponuent Bon. }uuge
Elias B. Asuncion of Couit of Fiist Instance of Leyte became final on }une 8,
186S foi lack of an appeal, a pioject of paitition was submitteu to him which
he latei appioveu in an 0iuei uateu 0ctobei 2S, 196S. Among the paities
theieto was complainant Beinaiuita R. Nacaiiola.

0ne of the piopeities mentioneu in the pioject of paitition was Lot 1184.
This lot accoiuing to the uecision ienueieu by }uuge Asuncion was
aujuuicateu to the plaintiffs Reyes in equal shaies subuiviuing Lot 1184 into
five lots uenominateu as Lot 1184-A to 1184-E.

0n }uly S1, 1964 Lot 1184-E was solu to Bi. Aicauio ualapon who latei solu
a poition of Lot 1184-E to }uuge Asuncion anu his wife victoiia Asuncion.
Theieaftei spouses Asuncion anu spouses ualapon conveyeu theii
iespective shaies anu inteiests in Lot 1184-E to the Tiaueis Nanufactuiing
anu Fishing Inuustiies Inc. wheiein }uuge Asuncion was the piesiuent.

Nacaiiola then fileu an instant complaint on August 9, 1968 uocketeu as
Civil Case No. 42S4 in the CFI of Leyte against }uuge Asuncion with "acts
unbecoming a juuge" alleging that }uuge Asuncion in acquiiing by puichase a
poition of Lot 1184-E violateu Aiticle 1491 pai. S of the New Civil Coue, Ait.
14, pais. 1 anu S of the Coue of Commeice, Sec. S pai. B of R.A. Su19, Sec. 12
Rule XvIII of the Civil Seivice Rules anu Canon 2S of the Canons of }uuicial
Ethics.

0n Novembei 2, 197u, }uuge }ose Nepomuceno of the CFI of Leyte ienueieu
a uecision uismissing the complaints against }uuge Asuncion.

Aftei the investigation, iepoit anu iecommenuation conuucteu by }ustice
Cecilia Nunoz Palma of the Couit of Appeals, she iecommenueu on hei
uecision uateu Naich 27, 1971 that }uuge Asuncion be exoneiateu.

6))E*K

Whethei oi not }uuge Asuncion violateu any law in acquiiing by puichase a
paicel of Lot 1184-E which he pieviously ueciueu in a Civil Case No. Su1u
anu his engagement in business by joining a piivate coipoiation uuiing his
incumbency as a juuge of the CFI of Leyte constitute an "act unbecoming of a
juuge".

7EL,N-K

No. The iesponuent }uuge Asuncion's actuation uoes not constitute of an "act
unbecoming of a juuge." But he is ieminueu to be moie uiscieet in his
piivate anu business activities.

SC iuleu that the piohibition in Aiticle 1491 pai. S of the New Civil Coue
applies only to opeiate, the sale oi assignment of the piopeity uuiing the
penuency of the litigation involving the piopeity. Responuent juuge
puichaseu a poition of Lot 1184-E on Naich 6, 196S, the in Civil Case No.
Su1u which he ienueieu on }une 8, 196S was alieauy final because none of
the paities theiein fileu an appeal within the ieglementaiy peiiou. Bence,
the lot in question was no longei subject to litigation. Fuitheimoie, }uuge
Asuncion uiu not buy the lot in question uiiectly fiom the plaintiffs in Civil
Case No. Su1u but fiom Bi. Aicauio ualapon who eailiei puichaseu
Lot1184-E fiom the plaintiffs Reyes aftei the finality of the uecision in Civil
Case No. Su1u.

SC stateu that upon the tiansfei of soveieignty fiom Spain to the 0S anu
latei on fiom the 0S to the Republic of the Philippines, Aiticle 14 of Coue of
Commeice must be ueemeu to have been abiogateu because wheie theie is
change of soveieignty, the political laws of the foimei soveieign, whethei
compatible oi not with those of the new soveieign, aie automatically
abiogateu, unless they aie expiessly ie-enacteu by affiimative act of the new
soveieign. Theie appeais no enabling oi affiimative act that continueu the
effectivity of the afoiestateu piovision of the Coue of Commeice,
consequently, Ait. 14 of the Coue of Commeice has no legal anu binuing
effect anu cannot apply to the iesponuent }uuge Asuncion.

Responuent }uuge cannot also be helu liable to pai. B, Section S of R.A. Su19
because the business of the coipoiation in which iesponuent paiticipateu
hau obviously no ielation oi connection with his juuicial office.

SC stateu that iesponuent juuge anu his wife ueseive the commenuation foi
theii immeuiate withuiawal fiom the fiim 22 uays aftei its incoipoiation
iealizing that theii inteiest contiavenes the Canon 2S of the Canons of
}uuicial Ethics.

@01=9$ +67$'=37 3< #"5+! :)0 !6#W$7$=7" "J"J"> $= "#0> P4"5
#"77"Y"J"#> 8"7=" '0 +$ #"77"Y"J"#> 8"b683 "J"73S4$Y (NQ
"5"!="'6" '"J6;"!> "#J$7=3 <$75"5+$Y> HH !'7" V/@> ;070 5?0 #Z
GTIAT> <*CDE(DF GB> /ABA
JFK +*N?M?L> PE:F ;D(O* 20

<(O.)K

The Auveise claimant Atty. Feinanuez was ietaineu as counsel by petitionei
(Abaiquez) in a civil case foi the annulment of a contiact of sale with iight of
iepuichase anu foi the iecoveiy of the lanu which was the subject mattei
theieof. 0nable to compensate his lawyei whom he ietaineu foi his appeal,
the petitionei executeu a uocument wheieby he obligeu himself to give to
his lawyei V of whatevei he might iecovei fiom lots S6uu anu S6u2 shoulu
the appeal piospei.

The ieal piopeity sought to be iecoveieu was actually the heiitage shaie of
petitionei in Lots S6uu anu S6u2 pait of the estate of his ueceaseu paients
anu which weie paititioneu among the heiis, which incluueu petitionei anu
his sistei.

The case having been iesolveu anu titleu in favoi of the petitionei, the
auveise claimant waiteu foi petitionei to comply with his obligation unuei
the uocument executeu by him in ueliveiing V poition of the saiu paicels of
lanu. Petitionei iefuseu to comply with his obligation anu insteau offeieu to
sell the whole paicels of lanu to spouses Laiiazabal. Then, auveise claimant
immeuiately took steps to piotect his inteiest by filing a motion to annotate
his attoiney's lien anu by notifying the piospective buyeis of his claim ovei
the V poition of the paicels of lanu.

The motion was gianteu. The annotation of auveise claim appeaieu on the
new tiansfei ceitificate of title. This auveise claim became the subject of
cancellation pioceeuings fileu by petitionei-spouses. The tiial couit iesolveu
the case in favoi of the auveise claimant.

0n appeal, petitioneis contenueu that a contiact foi a contingent fee violates
Aiticle 1491 because it involves an assignment of a piopeity subject of
litigation.

6))E*K

Whethei oi not the contiact foi a contingent fee as basis of the inteiest of
atty. Feinanuez is piohibiteu by Aiticle 1491 of the Civil Coue.


7EL,N-K

No, the contention is without meiit. Aiticle 1491 piohibits only the sale oi
assignment between the lawyei anu his client of piopeity which is the
subject of litigation. Foi the piohibition to opeiate, the sale oi assignment of
the piopeity must take place uuiing the penuency of the litigation involving
the piopeity.

Likewise, unuei Ameiican Law, the piohibition uoes not apply to "cases
wheie aftei completion of litigation the lawyei accepts on account of his fee
anu inteiest in the assets iealizeu by the litigation. Theie is cleai uistinction
between such cases anu one in which the lawyei speculates on the outcome
of the mattei in which he is employeu.

Fuithei, a contiact foi a contingent fee is not coveieu by aiticle 1491
because the tiansfei oi assignment of the piopeity in litigation takes effect
only aftei finality of a favoiable juugment. In the instant case, the attoiney's
fees of atty. Feinanuez, consisting of V of whatevei the petitionei might
iecovei fiom his shaie in the lots in question is contingent upon the success
of the appeal.

Bence, the payment of the attoiney's fees, that is, the tiansfei oi assignment
of V of the piopeity in litigation will take place only if the appeal piospeis.
Theiefoie, the tiansfei actually takes effect aftei the finality of a favoiable
juugment ienueieu on appeal anu not uuiing the penuency of litigation
involving the piopeity in question. Consequently, the contiact foi a
contingent fee is not coveieu by Aiticle 1491 of the civil coue.

! 8*,(&$1 () (0$ +)'(,*-(2 .>$-&*/ #&1H6*/&%&-*(&)'12 K675$1 *'7 ;*<@$,1

/01 +3865;3 +0 74J6"! :)0 6!"6"! J"=6##$7> V/ !'7" /GI> ;070 5?0 #Z
@VBIG> 8(F GA> /AB@
JFK +,?N-a?N> #?DD(,N* 80

<(O.)K

0n August S1, 1964, Bomingo B. Rubias, a lawyei, fileu a suit to iecovei the
owneiship anu possession of a lot in Baiiio ueneial Luna, which he bought
fiom his fathei-in-law Fiancisco Nilitante in 19S6 against its piesent
occupant uefenuant, Isaias Batillei. Accoiuing to Batillei, he anu his
pieuecessois-in-inteiest have always been in actual, open anu continuous
possession since time immemoiial unuei claim of owneiship of the poitions
of the lot in question. Batillei claimeu the lot as his own when he hau it
suiveyeu on }une 6 anu 7, 19S6, anu hau the suivey anu plan appioveu by
the Biiectoi of Lanus on Novembei 1S, 19S6. 0n the othei hanu, Rubias
claimeu that he has the bettei iight to possess the lanu as Fiancisco
Nilitante, his fathei-in-law-, fiom whom he bought the lanu, applieu foi the
iegistiation of the lanu even befoie the wai with }apan (194u's). -Recoius
show that Bomingo Rubias was the lawyei of Fiancisco Nilitante in the
application foi the iegistiation of the lanu in question. Saiu application was
uismisseu by the Biiectoi of Lanus in 19S2, finuing that some pait of the
lanu belongeu to the Buieau of Public Woiks anu Buieau of Foiestiy, anu
some othei inuiviuuals. The saiu uismissal of the application was appealeu
by Nilitante in the Supieme Couit. Penuing the appeal, Fiancisco solu to
Rubias the lanu foi P2,uuu.uu. The sale was uuly iecoiueu in the 0ffice of the
Registei of Beeus as a sale of o porcel of untitleJ lonJ.. 0n Septembei 22,
19S8, CA affiimeu the uismissal of the iegistiation of the lanu fileu by
Nilitante. Bespite the uismissal, Rubias ueclaieu the lanu foi taxation
puiposes. Befenuant contenus, invoking "D.,OL*) /XIA (NQ /XA/, that
plaintiff uoes not have a cause of action against him because being the
lawyei of Fiancisco Nilitante in the application of the iegistiation of the
lanu, the saiu contiact of sale is inexistent anu voiu.

Art. 1409. Tbe followinq controcts ore inexistent onJ boiJ from tbe
beqinninq:
{1) Tbose expressly probibiteJ or JecloreJ voiJ by low.

Art. 1491. Tbe followinq persons connot ocquire ony purcbose, even ot o
public or juJiciol ouction, eitber in person or tbrouqb tbe meJiotion of
onotber:
{S) }ustices, juJqes, prosecutinq ottorneys, clerks of superior onJ inferior
courts, onJ otber officers onJ employees connecteJ witb tbe
oJministrotion of justice, tbe property onJ riqbts in litiqotion or levieJ
upon on execution before tbe court witbin wbose jurisJiction or territory
tbey exercise tbeir respective functions; tbis probibition incluJes tbe oct
of ocquirinq by ossiqnment onJ sboll opply to lowyers, witb respect to tbe
property onJ riqbts wbicb moy be tbe object of ony litiqotion in wbicb
tbey moy toke port by virtue of tbeir profession.

Rubias contenu that uefenuant cannot invoke Aits. 14u9 anu 1491 as Aiticle
1422 pioviues that "The uefense of illegality of contiacts is not available to
thiiu peisons whose inteiests aie not uiiectly affecteu."

Tiial Couit: Bismisseu the ieconveyance case.

Couit of Appeals: Affiimeu the uismissal.

6))E*K

Whethei oi not the contiact of sale between Rubias anu Fiancisco was voiu
because when the sale was maue, Rubias was the counsel of Fiancisco in a
lanu iegistiation case involving the piopeity in uispute.

7EL,N-K

Yes, contiact of sale was voiu.

Aiticle 1491 of the Civil Coue piohibits ceitain peisons, by ieason of ielation
of tiust oi theii peculiai contiol ovei the piopeity fiom acquiiing such
piopeity in theii tiust oi contiol uiiectly oi inuiiectly anu even at a public
oi juuicial auction as follows: a.) guaiuians, b.) agents, c.) auministiatois, u.)
public officeis anu employees, juuicial officeis anu employees, piosecuting
attoineys, anu lawyeis, anu e.) otheis specially uisqualifieu by law.

The puichase by a lawyei of the piopeity in litigation fiom his client is
categoiically piohibiteu by Aiticle 1491, anu that consequently, the
puichase of the piopeity in litigation fiom his client was voiu anu coulu
piouuce no legal effect, by viitue of Aiticle 14u9, pai. 7, which pioviues that
contiacts "expiessly piohibiteu oi ueclaieu voiu by law" aie "inexistent anu
voiu fiom the beginning" anu that "These contiacts cannot be iatifieu.
Neithei can the iight to set up the uefense of illegality be waiveu."

The funuamental consiueiations of public policy is what ienueis as voiu anu
inexistent such expiessly piohibiteu puichases in Aiticle 1491 since the Civil
Coue states the absolute nullity of contiacts "whose cause, object, oi puipose
is contiaiy to law, moials, goou customs, public oiuei oi public policy" oi
which aie "expiessly piohibiteu oi ueclaieu voiu by law." 0iuei of uismissal
is affiimeu.

! 8*,(&$1 () (0$ +)'(,*-(2 .>$-&*/ #&1H6*/&%&-*(&)'12 86G/&- =%%&-$,1

/01 8"9"7#6\" 24J#6!965; '37237"=635> "5;$#" '"#6'"> "+3#<3
'"#6'" (NQ .]* 9$67! 3< =9$ #"=$ 263 '"#6'" :)0 !234!$! #4Y 70
=";#$ (NQ $+6#J$7=3 =";#$ (NQ .]* ;3W$758$5= !$7W6'$
65!47"5'$ !R!=$8 (NQ .]* 93537"J#$ 65=$78$+6"=$ "22$##"=$
'347=> ;070 5?0 #ZTVVAX> PELF A> /AHT
JFK +,?N-a?N> #?DD(,N* 80

<(O.)K

uSIS owneu a paicel of lanu with a builuing anu piinting equipment in Paco,
Nanila. It was solu to Nahailika in a Conuitional Contiact of Sale with the
stipulation that if Nahailika faileu to pay monthly installments in 9u uays,
the uSIS woulu automatically cancel the contiact. Because Nahailika faileu
to pay seveial monthly installments, uSIS uemanueu that Nahailika vacate
the piemises. Even though Nahailika iefuseu to uo so, the uSIS publisheu an
auveitisement inviting the public to biu in a public auction. A uay befoie the
scheuuleu biuuing, Auolfo Calica, the Piesiuent of Nahailika, gave the uSIS
heau office 2 checks woith 11,uuu anu a pioposal foi a compiomise
agieement. The uSIS ueneial Nanagei Roman Ciuz gave a not to Nahailika
saying "Bolu Biuuing. Biscuss with me." Bowevei, the public biuuing took
place as scheuuleu anu the piopeity was subsequently awaiueu to Luz
Tagle, the wife of the uSIS Retiiement Bivision Chief. Nahailika uemanueu
that the sale be consiueieu null anu voiu, as Nis. Tagle shoulu have been
uisqualifieu fiom biuuing foi the uSIS piopeity.

RTC anu CA both iuleu that the Tagles weie entitleu to the piopeity anu
Nahailika shoulu vacate the piemises.

6))E*K

Whethei oi not Tagle is entitleu to the piopeity.

7EL,N-K

No. The sale to them was against public policy.

Fiist of all, the uSIS heau office was stoppeu fiom claiming that they uiu not
give the impiession to Nahailika that they weie accepting the pioposal foi a
compiomise agieement. The act of the geneial managei is binuing on uSIS.

Seconu, Aiticle 1491 (4) of the CC pioviues that public officeis anu
employees aie piohibiteu fiom puichasing the piopeity of the state oi any
u0CC oi institution, the auministiation of which has been entiusteu to them
cannot puichase, even at public oi juuicial auction, eithei in peison oi
thiough the meuiation of anothei.

The SC helu that as an employee of the uSIS, Euilbeito Tagle anu his wife aie
uisqualifieu fiom biuuing on the piopeity belonging to the uSIS because it
gives the impiession that theie was politics involveu in the sale. It is not
necessaiy that actual fiauu be shown, foi a contiact which tenus to injuie
the public seivice is voiu although the paities enteieu into it honestly anu
pioceeueu unuei it in goou faith.


! 8*,(&$1 () (0$ +)'(,*-(2 .>$-&*/ #&1H6*/&%&-*(&)'12 =(0$,
#&1H6*/&%&-*(&)'1

/01 =48624! 8"5;"R"3 "5+ ;468"5+" J4J45;"5 :)0 93537"J#$
+373=$3 +$ ;4Y8"5> !"5="R #"!4+> "5+ ;465="5" '6" #"!4+> VV
!'7" VXI> ;070 5?0 #ZGXBHB> <*CDE(DF GG> /ABX
JFK +,?N-a?N> #?DD(,N* 80

A simple anu baie iecital of the unuisputeu facts ieveals unmistakably the
juiisuictional infiimity of the challengeu actuation of iesponuent }uuge of
the Couit of Fiist Instance of Zamboanga uel Sui. 1 Petitioneis aftei
obtaining a juugment in theii favoi in a pievious case in a lowei couit anu
having such uecision affiimeu on appeal by this Couit weie sueu in the sala
of iesponuent }uuge on the veiy same mattei thus conclusively uisposeu of.
What is woise, iesponuent }uuge woulu iestiain the execution of a juugment
of this Couit no less alieauy final anu executoiy. Petitioneis hau no iecouise
but to institute this ceitioiaii pioceeuing.

<(O.)K

Petitioneis aie non-Chiistian Filipinos of the Subano tiibe who fileu on
Naich 21, 196u an action foi the iecoveiy of piopeity anu ueclaiation of
nullity of contiact against iesponuents, Santay Lasuu anu uuintana Cia
Lasuu, in the Couit of Fiist Instance of Zamboanga uel Sui wheie they
obtaineu a uecision in theii favoi, affiimeu on appeal by the Supieme Couit
on Nay 29, 1964. By viitue of such uecision which became final anu
executoiy on 0ctobei S, 1964, the petitioneis, on Apiil 1, 196S, placeu in
possession of the piopeity in question anu ieimbuiseu piivate iesponuents
the sum of five thousanu pesos. Theie was in the meanwhile an action by
piivate iesponuents foi the annulment of such juugment, notwithstanuing
its having been affiimeu by the Supieme Couit anu becoming final anu
executoiy. Responuent }uuge suipiisingly issueu an oiuei iestiaining
petitioneis, Tumipus Nangayao, anu uuimanua Bubungan, to uesist fiom
executing oi causing the execution of the uecision in Civil Case No. S7S.

The Supieme Couit immeuiately issueu a iesolution iequiiing iesponuents
to answei anu gianting the wiit of pieliminaiy injunction piayeu foi. As was
to be expecteu, no valiu issue coulu be iaiseu as to the legal question
involveu on the above facts. The situation piesenteu is that of a juugment
final anu executoiy, fiom this Couit no less, being sought to be thwaiteu by
piivate iesponuents. What was inueeu suipiising was the ieceptivity of
iesponuent }uuge to such an unwaiianteu move.

6))E*K

Whethei oi not the uecision affiimeu by the SC in Nangayao v. Lasuu may be
annulleu. W0N the sale is valiu.

7EL,N-K

In Nangayao v. Lasuu, a uecision was ienueieu ueclaiing the ueeu of sale
null anu voiu ab initio, ueclaiing plaintiffs the owneis of uisputeu lanu. The
SC citeu theii 1964 uecision in Nangayao v. Lasuu, which is the law of this
case. }ustice }.B.L. Reyes as ponente, aftei noting the plain anu explicit
piovision in the Auministiative Coue 14 anu the Public Lanu Act 1S
iequiiing the appioval of the authoiities conceineu to ueeus of sale by
illiteiate non-Chiistians, as petitioneis in this case, continueu in this wise:
"The plain text of both law cleaily impoits that non-appioveu conveyances
anu encumbiances of iealty by illiteiate non-Chiistians (which appellees aie
aumitteu to be) aie not valiu, i.e., not binuing oi obligatoiy; they aie ab initio
voiu, as coiiectly helu by the appealeu uecision. The appioval of the
executive authoiity is not in the natuie of a iatification of a uefective
conveyance; such appioval is an essential iequisite foi its valiuity, anu
without it the pioposeu contiact is absolutely voiu oi inexistent. To holu the
contiact as meiely voiuable, i.e., as opeiative anu binuing if not uisappioveu,
woulu not only uo violence to the text of the statutes that iequiies executive
appioval, anu not uisappioval, but woulu nullify the obvious intent of the
statute to guaiu the patiimony of illiteiate non-Chiistians fiom those who
aie inclineu to piey upon theii ignoiance oi uuctility (Poikan vs. Yatco, 7u
Phil. 161; Poikan vs. Navaiio, 7S Phil. 698; Nauale vs. Sa Raya, 49 0ff. uaz.
SS6), since it is not to be expecteu that the illiteiate non-Chiistian who signs
away his ieal piopeity foi lack of instiuctions anu uisciimination, woulu
theieaftei be shaip enough to ask the executive authoiity to iefuse appioval
of his contiact; noi woulu the liteiate buyei be at all likely to uo so. The net
iesult of appellants' 'voiuable conveyance' theoiy, theiefoie, woulu be that
the illiteiate non-Chiistian coulu be stiippeu of his immovable just as if the
piotective statutes heietofoie quoteu hau not been enacteu at all."

Responuent }uuge thus uiu manifest a failuie to abiue not only by a final
uecision of this Couit, but by the cleai policy of the law given expiession in
such vigoious anu foithiight language by }ustice }.B.L. Reyes. When it is
fuithei consiueieu that the uniest in that iegion of the Philippines is paitly
attiibuteu to the exploitation of the pooi anu the oppiesseu peipetiateu by
those with means, iiiespective of the faith that they piofess, it becomes even
moie manifest why iesponuent }uuge must be taken to task

The wiit of ceitioiaii is gianteu anu the oiuei of the lowei couit of Apiil 29,
196S foi the issuance of a pieliminaiy injunction is nullifieu anu set asiue.
Responuent }uuge, oi whoevei is acting in his place, is uiiecteu to uismiss
Civil Case No. 798 of the Couit of Fiist Instance of Zamboanga uel Sui
entitleu, "Santay Lasuu anu uuintana Cia Lasuu v. Nangayao, Bubungan, The
Bevelopment Bank of the Philippines anu the Piovince of Zamboanga uel
Sui" foi annulment of juugment with pieliminaiy injunction fileu by piivate
iesponuents Santay Lasuu anu uuintana Cia Lasuu. The wiit of pieliminaiy
injunction issueu by this Couit by viitue of its iesolution of Septembei 1u,
196S is maue peimanent. With costs against iesponuents.

G01 7$!=6=4=3 +$ #$35 :)0 '347= 3< "22$"#!> P4"56=" 7"83! (NQ
8"b683 2$7$Y> ;070 5?0 HHBHH> !*M.*UC*D X> /AAG
JFK +,?N-a?N> #?DD(,N* 80

<(O.)K

The petitionei is challenging the puipoiteu sale to the piivate iesponuents
of two paicels of lanu which he claims is his own by iight of inheiitance. The
saiu piopeities weie pait of the Buenavista Estate puichaseu by the
Republic of the Philippines foi uistiibution among lanuless tenants anu
faimeis. 0n Apiil 1, 19SS, Lot No. S-117 was solu to Nanuel ue Leon by the
Bepaitment of Agiicultuie on behalf of the Republic. 0n August S, 1969, Lot
4S theieof was also solu by the Republic, thiough the Lanu Authoiity, to the
heiis of Nanuel ue Leon, iepiesenteu by Restituto, his gianuson.

The fiist Beeu of Sale caiiies the limitation that it shall not be solu, assigneu,
encumbeieu, moitgageu oi tiansfeiieu, within the peiiou of five (S) yeais
fiom the uate heieof without fiist obtaining the wiitten consent of the
Secietaiy of Agiicultuie anu Natuial Resouices anu that except by
heieuitaiy succession, it shall not be conveyeu, tiansfeiieu oi assigneu in
favoi of any peison who is not lanuless anu uisqualifieu to acquiie oi own
lanu in the Philippines. The seconu sale was subject to a similai conuition
pioviueu that it shall not be subuiviueu, solu oi in any mannei tiansfeiieu
oi encumbeieu, within the peiiou of fifteen yeais fiom the uate of execution,
without fiist obtaining the wiitten consent of uoveinoi of the Lanu
Authoiity anu only to peisons who aie qualifieu to puichaseu saiu lanu
unuei CA SS9, RA 1162, as amenueu, RA 14uu as amenueu anuoi RA S844
oi to goveinment banking institutions oi agencies oi to any piivate banking
institutions.

0n }uly 24, 1969, the heiein piivate iesponuents fileu a complaint against
the petitionei foi paitition of the lanus anu accounting, alleging that they
hau bought 12 of the lanus fiom Naiia ue los Santos, the wiuow of Nanuel
ue Leon, by viitue of a "Tuluyang Bilihan" uateu Naich 18, 19S9.Bowevei,
ue los Santos faileu to uelivei possession to them until hei ueath on
Febiuaiy S, 196u. The petitionei, who hau succeeueu hei in the lanus, hau
iesisteu theii uemanus foi accounting of the income anu aveiieu that the
subject piopeities belongeu to him as the sole heii of Nanuel ue Leon. Be
allegeu that "Tuluyang Bilihan" was a nullity because Naiia ue los Santos
hau no authoiity to convey the piopeities uuiing the piohibiteu peiiou
without the wiitten consent of the appiopiiate authoiities.

Aftei tiial, }uuge Benigno N. Puno sustaineu the piivate iesponuents in a
uecision uateu Apiil 1S, 1977. This was affiimeu on appeal by the
iesponuent couit on Febiuaiy 16, 1989, anu ieconsiueiation was uenieu on
}une 1S, 1989.

The Couit of Appeals agieeu that the "Tuluyang Bilihan" was genuine anu
valiu anu that the allegeu lack of the stipulateu wiitten consent coulu be
invokeu only by the Republic of the Philippines anu not by the petitionei. Be
was not a paity to the "Tuluyang Bilihan." Besiues, the saiu stipulations weie
not applicable to cases of heieuitaiy succession, anu Be los Santos, who solu
the lanus, was the heii of hei husbanu.

The petitionei has seek foi ielief.

6))E*K

Whethei oi not the sale unuei "Tuluyang Bilihan" violateu the conuitions
anu theiefoie voiu.

7EL,N-K

The sale unuei "Tuluyang Bilihan" uateu Naich 18, 19S9, is null anu voiu ab
initio foi violation of the conuitions stipulateu in the Beeu of Sale uateu Apiil
1, 19SS, anu the Beeu of Sale uateu August S, 1969. The SC iequiies the
petitionei to iefunu to the piivate iesponuents the amount of P2,Suu.uu, the
consiueiation of the annulleu "Tuluyang Bilihan," with legal inteiest theieon
fiom Naich 18, 19S9, until it is fully paiu.

The stipulations in the fiist ueeu of sale in favoi of Nanuel ue Leon weie
binuing on his heiis, who weie also bounu uiiectly this time, by the similai
stipulations in the seconu ueeu of sale. The puipose of these stipulations was
to keep within the family the piopeity which the goveinment hau solu to the
tenant oi faimei foi a minimum cost to enable him to acquiie his own lanu.
Bence, it was necessaiy foi Naiia ue los Santos, befoie selling the subject
piopeities to the piivate iesponuents, to fiist secuie the wiitten consent to
such sale of the Secietaiy of Agiicultuie anu Natuial Resouices (in the case
of the fiist lot) anu of the uoveinoi of the Lanu Authoiity (in the case of the
seconu lot).

The only exception to the saiu conuitions is when the lanu is acquiieu by oi
tiansfeiieu to anothei peison by heieuitaiy succession. Thus, when the
lanus weie inheiiteu by Naiia ue los Santos as the suiviving spouse of
Nanuel ue Leon, theie was no neeu foi such wiitten consent but such
consent was still necessaiy when, as tiansfeiee of the piopeities, she latei
solu them to the piivate iesponuents. The lanus weie tiansfeiieu to the
piivate iesponuents by viitue of the "Tuluyang Bilihan" anu not by
heieuitaiy succession. To be valiu, theiefoie, the sale neeueu the wiitten
consent of the above-nameu officials.

In any event, as the "Tuluyang Bilihan" was null anu voiu ab initio,
owneiship of the uisputeu lanus was not tiansfeiieu to the piivate
iesponuents but iemaineu with Naiia ue los Santos. The Republic of the
Philippines, if not the petitionei, may still ask foi the ieveision of the
piopeities to the State foi violation of the conuitions in the ueeus of sale.
Neanwhile the petitionei woulu have piefeiential iights of possession
theieovei vis-a-vis the piivate iesponuents, who iely only on the voiu
"Tuluyang Bilihan."

@01 +35"=3 7$R$! R"2 (NQ 8$#6=35" 8"7"W6##"! :)0 9350 $Y$\6$#
!0 ;7";$+"> () PEQ-* ?e .]* '?ED. ?e <,D). 6N).(NO* ?e "LC(F (NQ P3!$ "0
76'3> ;70 5?0 #Z@/TIT> 8(DO] GH> /AH@
JFK <(C,?)(> 9(a*L 5?D**N 80

<(O.):

0n Apiil 12, 19S9, Naximino Rico, foi anu in his own behalf anu that of the
minois Naiia Rico, Filomeno Rico, Piisco Rico, anu Louiues' Rico, executeu a
Beeu of Absolute Sale ovei Lot SS9 anu a poition of Lot S27 in favoi of the
petitionei Bonato Reyes Yap who was then a Chinese national.

Subsequently, the petitionei as venuee causeu the iegistiation of the
instiument of sale anu the cancellation of 0CT Nos. 29SS2 anu 2941u anu
the consequent issuance in his favoi of TCT No. T-24SS coveiing the two lots
subject mattei of the Contiact of Sale.

Aftei the lapse of neaily fifteen yeais fiom anu aftei the execution of the
ueeu of absolute sale, Bonato Reyes Yap was aumitteu as a Filipino citizen
anu alloweu to take his oath of allegiance to the Republic of the Philippines.
Be was, theieaftei, issueu Ceitificate of Natuialization No. 7, File No. 19 of
the Couit of Fiist Instance of Albay.

0n Becembei 1, 1967, the petitionei ceueu the majoi poition of Lot No. S27
consisting of 1,u78 squaie meteis which he acquiieu by puichase unuei the
ueeu of sale in favoi of his engineei son, Felix Yap, who was also a Filipino
citizen because of the Filipino citizenship of his mothei anu the
natuialization of his fathei Bonato Reyes Yap.

Subsequently, Louiues Rico, aunt anu co-heii of iesponuent }ose A. Rico solu
the iemaining poition of Lot S27 to the petitionei who hau his iights
theieon uuly iegisteieu unuei Act 496. Petitionei, Bonato Reyes Yap, has
been in possession of the lots in question since 19S9, openly, publicly,
continuously, anu auveisely in the concept of ownei until the piesent time.

6))E*K

Whethei oi not the sale of lanu is valiu to a natuializeu Filipino.

7EL,N-K

Theie shoulu be no question that the sale of the lanu in question in 19S9 was
inexistent anu voiu fiom the beginning because it was a contiact executeu
against the manuatoiy piovision of the 19SS Constitution, which is an
expiession of public policy to conseive lanus foi the Filipinos. But the factual
set-up hau changeu. The litigateu piopeity is now in the hanus of a
natuializeu Filipino. It is no longei owneu by a uisqualifieu venuee.
Petitionei as a natuializeu citizen, was constitutionally qualifieu to own the
subject piopeity. Theie woulu be no moie public policy to be seiveu in
allowing iesponuent Rico to iecovei the lanu as it is alieauy in the hanus of a
qualifieu peison.

! A11$'(&*/ A/$4$'(1 )% * +)'(,*-( )% .*/$2 =(0$, +*1$1

/01 6N D* 6N.*).(.* ?e .]* Q*O*()*Q 8(ED,O,( Q* ;EaU(N> 2$+73
73+76;4$Y> $= "#0 :)0 =7656+"+ 8"'="#> TI 2],L0 /@> ;070 5?0 #Z
@ABGI> "MD,L X> /A@X
JFK <(C,?)(> 9(a*L 5?D**N 80

<(O.)K

This is an appeal fiom an oiuei of the Couit of Fiist Instance of Nueva
Ecija, issueu in the intestate pioceeuing of Nauiicia ue uuzman, ueceaseu,
uenying the motion of the appellants in which they sought to annul a sale,
executeu }anuaiy 2S, 1926, by the auministiatiix Tiiniuau Nactal, of a
paicel of lanu to Silveiio Choco anu a iesale of the same lanu on Naich 1u,
1928, to the auministiatiix Tiiniuau Nactal. The appellants Peuio,
Catalina anu Benigno Rouiiguez, anu the appellee Tiiniuau Nactal, aie all
heiis of Nauiicia ue uuzman whose estate is unuei auministiation in civil
case No. S1S2 of the Couit of Fiist Instance of Nueva Ecija. Nauiicia ue
uuzman uieu on Naich 22, 1922.

0n Naich 17, 192S, the appellee Tiiniuau Nactal was appointeu anu uuly
qualifieu as auministiatiix of the intestate estate of Nauiicia ue uuzman.
The couit authoiizeu the auministiatiix to sell the lanu foi the sum of
P9,uuu. Latei it was founu that no one woulu buy at that piice anu the
authoiizeu selling piice was ieuuceu to P7,uuu anu then, as the highest
offei was foi PS,8uu, the couit, upon motion of the auministiatiix, fixeu
the selling piice at no less than PS,8uu. Latei the lanu was solu to Silveiio
Choco foi the sum of P4,uuu on }anuaiy 2S, 1926. }uliana uel Rosaiio
ieceiveu a copy of all motions. 0n Febiuaiy 16, 1926, the auministiatiix
paiu the appioveu claim of Iiene ue uonzales anu Isiuoio uonzales of
PS,uSu, anu the claim of Espeianza Feinanuez anu Fiuto Aquino of P2uu.
The claim of the Philippine National Bank with inteiest theieon was also
paiu as weie the fees of the membeis of the committee of claims
amounting to P1u4, the suiveyoi's fee of P12u foi the segiegation of the
foui hectaies belonging to Teofilo Rouiiguez anu the oveiuue tax on the
lanu amounting to moie than PSuu.

These payments weie maue aftei the sale in favoi of Silveiio Choco. 0n
Naich 1u, 1928, moie than two yeais latei, Silveiio Choco solu the same
lanu to the spouses Pio villai anu Tiiniuau Nactal foi the sum of P4,Suu,
who in tuin moitgageu it to the Philippine National Bank foi the same
amount. The appellants also allege that this sale was fictitious, that theie
was collusion between Silveiio Choco anu Tiiniuau Nactal anu that the
foimei nevei paiu the lattei the sum of P4,uuu.

As we have seen, immeuiately aftei the sale to Choco,
Tiiniuau Nactal paiu out consiueiable sums of money, which unuoubteuly
came out of the P4,uuu Choco paiu hei foi the lanu.

6))E*K

Whethei oi not the auminstiatix bought the lanu inuiiectly thiough the
meuiation of S. Choco.

7EL,N-K

Aftei the amenument of section 714 of the Coue of Civil Pioceuuie by Act
No. S882, the couit, unuei the ciicumstances theiein mentioneu, on
application of the executoi oi auministiatoi, anu on wiitten notice to the
heiis, uevisees, anu othei peisons inteiesteu, may giant him a license to
sell, moitgage oi otheiwise encumbei ieal estate foi the payment of
uebts. The consent anu appiobation, in wiiting, of the heiis, uevisees, anu
legatees, aie no longei necessaiy.

The appealeu oiuei of the lowei couit is affiimeu with costs against the
appellants.

G01 !68$35 J0 86;4$#> $= "#0 :)0 <#37$5+3 '"="#653> GT !'7" G@X>
;070 5?0 #ZG@IBG> 5?:*UC*D GA> /ATH
JFK <(C,?)(> 9(a*L 5?D**N 80

<(O.)K

- The lanu in uispute is situateu in the Baiiio of San Pascual,
Nunicipality of Tuba, Benguet, Nountain Piovince with an aiea of
S9,446 squaie meteis, moie oi less. It is coveieu by 0iiginal
Ceitificate of Title No. S1, which was issueu on 28 Becembei 1927
in the name of Bacaquio.
- The plaintiff-appellant uiace ventuia is the only chilu of Bacaquio
by his fiist wife, Bebsay, anu the othei plaintiffs-appellants,
Simeon, Emilia anu Naicelina, all suinameu "Niguel", aie his
chiluien by his thiiu wife, Cosamang.
- Bacaquio, who uieu in 194S, acquiieu the lanu when his seconu
wife uieu anu solu it to Catalino Agyapao, fathei of the uefenuant
Floienuo Catalino, foi PSuu.uu in 1928. 0f the puichase piice,
P1uu.uu was paiu anu ieceipteu foi when the lanu was suiveyeu,
but the ieceipt was lost; the balance was paiu aftei the ceitificate
of title was issueu.
- No foimal ueeu of sale was executeu, but since the sale in 1928, oi
foi moie than Su yeais, venuee Catalino Agyapao anu his son,
uefenuant-appellee Floienuo Catalino, hau been in possession of
the lanu, in the concept of ownei, paying the taxes theieon anu
intiouucing impiovements.
- 0n 1 Febiuaiy 1949, uiace ventuia, by heiself alone, "solu" again
the same lanu foi PSuu.uu to uefenuant Floienuo Catalino.In
1961, Catalino Agyapao in tuin solu the lanu to his son, the
uefenuant Floienuo Catalino.
- 0n }anuaiy 22, 1962, appellants Simeon, Emilia anu Naicelina
Niguel, anu appellant uiace ventuia biought suit in the Couit
below against Floienuo Catalino foi the iecoveiy of the lanu
above-uesciibeu, plaintiffs claiming to be the chiluien anu heiis of
the oiiginal iegisteieu ownei, anu aveiieu that uefenuant,
without theii knowleuge oi consent, hau unlawfully taken
possession of the lanu, gatheieu its piouuce anu unlawfully
excluueu plaintiffs theiefiom.
- Befenuant answeieu pleauing owneiship anu auveise possession
foi Su yeais, anu counteiclaimeu foi attoiney's fees. Aftei tiial,
the TC uismisseu the complaint, ueclaieu uefenuant to be the
iightful ownei, anu oiueieu the Registei of Beeus to issue a
tiansfei ceitificate in lieu of the oiiginal. Plaintiffs appealeu
uiiectly to this Couit, assailing the tiial Couit's finuings of fact anu
law.

6))E*K

Whethei oi not the Tiial Couit eiieu in awaiuing the lanu in uispute to
Floienuo Catalino.

7EL,N-K

No.
- Notwithstanuing the eiiois afoiementioneu in the appealeu
uecision, Supieme Couit is of the opinion that the juugment in
favoi of uefenuant-appellee Floienuo Catalino must be sustaineu.
Foi uespite the invaliuity of his sale to Catalino Agyapao, fathei of
uefenuant-appellee, the venuoi Bacaquio suffeieutoleiateu the
lattei to entei, possess anu enjoy the lanu in question without
piotest, fiom 1928 to 194S, when the sellei uieu; anu the
appellants, in tuin, while succeeuing the ueceaseu, also iemaineu
inactive, without taking any step to ieivinuicate the lot fiom 1944
to 1962, when the piesent suit was commenceu in couit.
- Even gianting appellants' pioposition that no piesciiption lies
against theii fathei's iecoiueu title, theii passivity anu inaction
foi moie than S4 yeais (1928-1962) justifies the uefenuant-
appellee in setting up the equitable uefense of laches in his own
behalf. As a iesult, the action of plaintiffs-appellants must be
consiueieu baiieu anu the Couit below coiiectly so helu. Couits
cannot look with favoi at paities who, by theii silence, uelay anu
inaction, knowingly inuuce anothei to spenu time, effoit anu
expense in cultivating the lanu, paying taxes anu making
impiovements theieon foi Su long yeais, only to spiing fiom
ambush anu claim title when the possessoi's effoits anu the iise
of lanu values offei an oppoitunity to make easy piofit at his
expense.
- As in the uamponia case, the foui elements of laches aie piesent
in the case at bai, namely: (a) conuuct on the pait of the
uefenuant, oi of one unuei whom he claims, giving iise to the
situation of which complaint is maue anu foi which the complaint
seeks a iemeuy; (b) uelay in asseiting the complainant's iights,
the complainant having hau knowleuge oi notice, of the
uefenuant's conuuct anu having been affoiueu an oppoitunity to
institute a suit; (c) lack of knowleuge oi notice on the pait of the
uefenuant that the complainant woulu asseit the iight on which
he bases his suit; anu (u) injuiy oi piejuuice to the uefenuant in
the event ielief is accoiueu to the complainant, oi the suit is not
helu to be baiieu.
- In the case at bai, Bacaquio solu the lanu in 1928 but the sale is
voiu foi lack of the goveinoi's appioval. The venuoi, anu also his
heiis aftei him, coulu have instituteu an action to annul the sale
fiom that time, since they knew of the invaliuity of the sale, which
is a mattei of law; they uiu not have to wait foi S4 yeais to
institute suit. The uefenuant was maue to feel secuie in the belief
that no action woulu be fileu against him by such passivity, anu
also because he "bought" again the lanu in 1949 fiom uiace
ventuia who alone tiieu to question his owneiship; so that the
uefenuant will be plainly piejuuiceu in the event the piesent
action is not helu to be baiieu.
- The appealeu uecision is heieby affiimeu, with costs against the
plaintiffs-appellants.

@01 $!="=$ 3< !"#W"+37 !$77" !$77" :)0 9$67! 3< 27686=6W3
9$75"$Y> XTT !'7" /GI> ;070 5?0 /XGA/@0 "E-E). A> GIIV
JFK <(C,?)(> 9(a*L 5?D**N 80

<(O.)K

0n Becembei 27, 1967, a petition foi ieconstitution of allegeu lost
oiiginal ceitificates of title (0CT) anu ownei's uuplicate copies in
the name of Eleuteiio Beinaez coveiing Lot No. 1S16 of
Kabankalan Cauastie anu Lot Nos. 268S anu 717 of Ilog Cauastie,
in the Piovince of Negios 0cciuental, was fileu by his successois-
in-inteiest Piimitivo, Rogaciana anu Luisa, all suinameu Beinaez.
0n Apiil 6, 1968, the CFI (Couit of Fiist Instance of Bacolou City)
gianteu the petition anu oiueieu the ieconstitution of the subject
0CTs anu its uuplicate copies. Accoiuingly, the Registei of Beeus
of Negios 0cciuental issueu ieconstituteu 0CT Nos. R0-1u17S,
R0-1u174, anu R0-1u17S, foi Lot Nos. 1S16, 268S, anu 717,
iespectively. These ieconstituteu 0CTs weie cancelleu on Nay 29,
1969 upon piesentation by Beinaez of a "ueclaiation of heiiship"
anu in lieu theieof, Tiansfei Ceitificate of Title (TCT) Nos. T-
S1S46, T-S1S47, anu T-S1S48 weie issueu in theii names.
0pon leaining of the existence of the above TCTs, Salvauoi Seiia
Seiia, foi anu in behalf of his co-heiis, iegisteieu theii auveise
claim anu moveu foi the cancellation of the ieconstituteu titles.
They claimeu that they aie holueis of valiu anu existing
ceitificates of title ovei the subject piopeities anu have been in
continuous anu actual possession theieof.
The tiial couit uenieu petitioneis' motion to cancel the
ieconstituteu titles anu gianteu insteau Beinaez' piayei that they
be placeu in possession of the subject piopeities, which
petitioneis challengeu befoie the Couit of Appeals.
Without filing a motion foi ieconsiueiation, petitioneis assaileu
the lowei couit's uecision befoie the Couit of Appeals via a
petition foi certiorori.

6))E*K

Whethei oi not the CA eiieu in uenying the petitionei's motion (Seiia Seiia)
foi cancellation of ieconstituteu titles.

7EL,N-K

No.
In the case at bench, SC finus no cogent ieason to uistuib the
assaileu uecision uenying petitioneis' motion foi cancellation of
the ieconstituteu titles. A peiusal of the assaileu oiuei shows
that the tiial couit coiiectly applieu the establisheu legal
piinciple that in cases of annulment anuoi ieconveyance of title,
a paity seeking it shoulu establish not meiely by a pieponueiance
of eviuence but by cleai anu convincing eviuence that the lanu
sought to be ieconveyeu is his.
Petitioneis (Seiia Seiia), howevei, as noteu by the couit o quo in
its 0iuei uateu Novembei 2S, 1998, faileu to piesent in couit as
eviuence the oiiginal ceitificates of title of the afoiementioneu
lots, Lot No. 1S16, Lot No. 268S anu Lot No. 717. Petitioneis weie
also founu to be of Spanish citizenship anu, hence, as aliens,
uisqualifieu to acquiie lanus in the Philippines unuei the LMNO
+)'1(&(6(&)'.
Petitioneis assail the uismissal of theii petition on the giounu that
they faileu to file a motion foi ieconsiueiation with the lowei
couit befoie filing a petition foi certiorori befoie the Couit of
Appeals. The settleu iule is that a motion foi ieconsiueiation is
a sine quo non conuition foi the filing of a petition foi certiorori.
Petitioneis' failuie to file a motion foi ieconsiueiation uepiiveu
the tiial couit of the oppoitunity to iectify an eiioi unwittingly
committeu oi to vinuicate itself of an act unfaiily imputeu.
Besiues, a motion foi ieconsiueiation unuei the piesent
ciicumstances is the plain, speeuy anu auequate iemeuy to the
auveise juugment of the tiial couit.
Both the tiial couit anu the Couit of Appeals founu that
petitioneis aie Spanish citizens anu as such, uisqualifieu fiom
acquiiing lanus in the Philippines. As a iule, only a Filipino citizen
can acquiie piivate lanus in the Philippines anu the only instances
when a foieignei can own piivate lanus aie by heieuitaiy
succession anu if he was foimeily a natuial-boin Filipino citizen
who lost his Philippine citizenship.
Noieovei, well entiencheu is the pievailing juiispiuuence that
only errors of low onJ not of focts ore reviewoble by tbis Court in o
petition for review on certiorori unJer Rule 4S of tbe ReviseJ Rules
of Court, which applies with gieatei foice to the petition unuei
consiueiation because the factual finuings of the Couit of Appeals
aie in full agieement with what the tiial couit founu.

X01 86;4$# 8"2"#3> $= "#0 :)0 8"b683 8"2"#3> $= "#0> /B !'7" //X>
;070 5?0 #ZG/XHA (NQ #ZG/TGH> 8(F /A> /ATT
JFK ;,N-?F?N> \(.]FD,N* +0

<(O.)K

Niguel Napalo anu Canuiua Quiba, simple illiteiate faimeis, weie iegisteieu
owneis of a iesiuential lanu in Nanaoag, Pangasinan. 0ut of love anu
affection foi Naximo Napalo, Niguel's biothei who was about to get
maiiieu, they ueciueu to uonate the eastein half of the lanu. Bowevei, they
weie ueceiveu into signing a ueeu of absolute sale of the entiie lanu on
0ctobei 1S, 19S6. The uocument showeu a consiueiation of PSuu, but the
spouses actually uiu not ieceive anything. The spouses built a fence
segiegating the uonateu lanu. They continueu to possess the westein pait up
to the piesent. Not known to them, on Naich 1S, 19S8, Naximo iegisteieu
the ueeu of sale in his favoi anu was able to obtain a TCT. 0n 0ctobei 2u,
19S1, Naximo solu the entiie lanu to the Naicisos, anu a TCT was issueu.
The Naicisos took possession of the eastein pait anu fileu a suit against
Niguel anu Canuiua, as well as Floio uuieb anu Rosalia Napalo uuieb who
hau a house on the westein poition consenteu by the spouses. The spouses
fileu an answei with counteiclaim, seeking cancellation of the TCT of the
Naicisos on the giounu that theii consent to the ueeu of sale in favoi of
Naximo was obtaineu thiough fiauu. The spouses also instituteu a complaint
to nullify the ueeus of sale in 19S6 anu 19S1. The tiial couit tiieu the case
jointly. It iuleu in favoi of Niguel anu Canuiua. The appellate couit, howevei,
ieveiseu the juugment anu ienueieu the sale valiu on the giounu of
piesciiption. Accoiuing to the appellate couit, the sale is voiuable anu
subject to annulment only within 4 yeais aftei uiscoveiy of fiauu. It
ieckoneu Naich 1S, 19S8, the uate of iegistiation, to be the ieckoning
peiiou.

6))E*)K

1.) Whethei oi not unuei the olu civil coue which was in effect uuiing the
execution of the sale, the sale to Naximo is voiu oi meiely voiuable.

2.) Was theie a cause oi consiueiation to suppoit the existence of a contiaiy
of sale.

7EL,N-K

1.) Foi a contiact to exist at all, thiee essential iequisites must concui: (1)
consent, (2) object, anu (S) cause oi consiueiation. The Couit of Appeals is
iight in that the element of consent is piesent as to the ueeu of sale of
0ctobei 1S, 19S6. Foi consent was aumitteuly given, albeit obtaineu by
fiauu. Accoiuingly, saiu consent, although uefective, uiu exist. In such case,
the uefect in the consent woulu pioviue a giounu foi annulment of a
voiuable contiact, not a ieason foi nullity ab initio. The paities aie agieeu
that the seconu element of object is likewise piesent in the ueeu of 0ctobei
1S, 19S6, namely, the paicel of lanu subject mattei of the same. Not so,
bowever, os to tbe tbirJ element of couse or consiJerotion. As iegaius to the
eastein poition of the lanu, the Napalo spouses aie not claiming the same, it
being theii stanu that they have uonateu anu fieely given saiu half of theii
lanu to Naximo Napalo. Anu since they uiu not appeal fiom the uecision of
the tiial couit finuing that theie was a valiu anu effective uonation of the
eastein poition of theii lanu in favoi of Naximo Napalo, the same
pionouncement has become final as to them, ienueiing it no longei piopei
heiein to examine the existence, valiuity efficacy of saiu uonation as to saiu
eastein poition. Now, as to the westein poition, howevei, the fact not
uisputeu heiein is that no uonation by the Napalo spouses obtaineu as to
saiu poition. Accoiuingly, we stait with the fact that libeiality as a cause oi
consiueiation uoes not exist as iegaius the westein poition of the lanu in
ielation to the ueeu of 19S6; that theie was no uonation with iespect to the
same.

2.) Since the ueeu of sale of 19S6 is goveineu by the 0lu Civil Coue, it shoulu
be askeu whethei its case is one wheiein theie is no consiueiation, oi one
with a statement of a false consiueiation. If the foimei, it is voiu anu
inexistent; if the lattei, only voiuable, unuei the 0lu Civil Coue. As obseiveu
eailiei, the ueeu of sale of 19S6 stateu that it hau foi its consiueiation Five
Bunuieu (PSuu.uu) Pesos. In fact, howevei, saiu consiueiation was totally
absent. Accoiuing to Naniesa, what is meant by a contiact that states a false
consiueiation is one that has in fact a ieal consiueiation but the same is not
the one stateu in the uocument. A contiact of puichase anu sale is null anu
voiu anu piouuces no effect whatsoevei wheie the same is without cause oi
consiueiation in that the puichase piice which appeais theieon as paiu has
in fact nevei been paiu by the puichasei to the venuoi.

! D$H6&1&($1 )% * P*/&7 .6GQ$-( R*(($, )% (0$ .*/$2 R61( G$ AB&1(&'5J S6(6,$
), +)'(&'5$'(2 A4>(&) D$& .>$,*(*$TA4>(&) .>$&

/01 #46! 26'9$# :)0 274+$5'63 "#35Y3> /// !'7" @X> ;070 5?0 #Z
@TAIG> P(NE(DF @I> /AHG
JFK ;,N-?F?N> \(.]FD,N* +0

<(O.)K

Piuuencio Alonzo was awaiueu by the uoveinment that paicel of lanu
uesignateu as Lot 21 of Subuivision Plan Psu-S246S of Balactasan, Lamitan,
Basilan City in accoiuance with RA 477. The awaiu was cancelleu by the
Boaiu of Liquiuatois on 27}anuaiy 196S on the giounu that, pievious
theieto, Alonzo was pioveu to have alienateu the lanu to anothei, in
violation of law. In 1972, Alonzo's iights to the lanu weie ieinstateu. 0n 14
August 1968, Alonzo anu his wife solu to Pichel thiough a "ueeu of sale" all
the fiuits of the coconut tiees which may be haivesteu in the lanu foi the
peiiou, fiom 1S Septembei 1968 to 1 }anuaiy 1976, in consiueiation of
P4,2uu.uu. It was fuithei stipulateu that the venuoi's iight, title, inteiest anu
paiticipation heiein conveyeu is of his own exclusive anu absolute piopeity,
fiee fiom any liens anu encumbiances anu he waiiants to the venuee goou
title theieto anu to uefenu the same against any anu all claims of all peisons
whomsoevei. Even as of the uate of sale, howevei, the lanu was still unuei
lease to one Ramon Sua, anu it was the agieement that pait of the
consiueiation of the sale, in the sum of PS,6Su.uu, was to be paiu by Pichel
uiiectly to Ramon Sua so as to ielease the lanu fiom the clutches of the
lattei. Penuing saiu payment Alonzo iefuseu to allow the Pichel to make any
haivest. In }uly1972, Pichel foi the fiist time since the execution of the ueeu
of sale in his favoi, causeu the haivest of the fiuit of the coconut tiees in the
lanu. Alonzo fileu an action foi the annulment of a "Beeu of Sale" befoie the
CFI Basilan City. 0n S }anuaiy 197S, the lowei couit ienueieu its uecision
holuing that although the agieement in question is uenominateu by the
paities as a ueeu of sale of fiuits of the coconut tiees founu in the venuoi's
lanu, it actually is, foi all legal intents anu puiposes, a contiact of lease of the
lanu itself; an encumbiance piohibiteu unuei RA 477. The couit thus helu
that the ueeu of sale is null anu voiu, anu oiueieu Alonzo to pay back Pichel
the consiueiation of the sale in the sum of P4,2uu with inteiests fiom the
uate of the filing of the complaint until paiu, anu Pichel to pay the sum of
PSuu.uu as attoiney's fees; with costs against Pichel. Bence, the petition to
ieview on ceitioiaii was iaiseu befoie the Supieme Couit. The Supieme
Couit set asiue the juugment of the lowei couit anu enteieu anothei
uismissing the complaint; without costs.

6))E*K

Is the contiact of sale valiu.

7EL,N-K

Controct of sole voliJ, essentiol elements voliJ.

The uocument in question expiesses a valiu contiact of sale as it has the
essential elements of a contiact of sale as uefineu unuei Aiticle 14S8 of the
New Civil Coue. Aiticle14S8 pioviues that:
"by tbe controct of sole one of tbe controctinq porties obliqotes bimself to
tronsfer tbe ownersbip of onJ to Jeliver o Jeterminote tbinq, onJ tbe otber to
poy tberefore o price certoin in money or its equivolent," onJ tbot "o controct
of sole moybe obsolute or conJitionol."

The subject mattei of the contiact of sale aie the fiuits of the coconut tiees
on the lanu uuiing the yeais fiom 1S Septembei 1968 up to 1 }anuaiy1976,
which subject mattei is a ueteiminate thing.

Tbinqs bovinq potentiol existence moy be tbe object of tbe controct of sole.

0nuei Aiticle 1461 of the New Civil Coue, things having a potential existence
may be the object of the contiact of sale. A valiu sale may be maue of a thing,
which though not yet actually in existence, is ieasonably ceitain to come into
existence as the natuial inciement oi usual inciuent of something alieauy in
existence, anu then belonging to the venuoi, anu the title will vest in the
buyei the moment the thing comes into existence. A man may sell piopeity
of which he is potentially anu not actually possesseu.

! D$H6&1&($1 )% * P*/&7 .6GQ$-( R*(($, )% (0$ .*/$2 R61( G$ AB&1(&'5J S6(6,$
), +)'(&'5$'(2 .6GQ$-( () * D$1)/6(),@ +)'7&(&)'

/01 <7"5'6!'" "7!$5"# (NQ 7$8$+63 "7!$5"# :)0 =9$
65=$78$+6"=$ "22$##"=$ '347=> 9$67! 3< =37'4"=3 !47"#=">
(NQ !234!$! <6#38$53 2"#"3! (NQ 8"965" #";^"!> /X@ !'7" XI>
;070 5?0 #ZTTTAT> PELF /X> /AHT
JFK ;,N-?F?N> \(.]FD,N* +0

<(O.)K

0n }anuaiy 7, 19S4, the uefenuant Filomeno Palaos secuieu 0CT No. P-29u
fiom the Registei of Beeus of Bukiunon foi Lot 81 by viitue of Bomesteau
Patent gianteu to him.

0n Septembei 1u, 19S7, saiu Filomeno Palaos anu his wife Nahina Lagwas
executeu in favoi of the plaintiff, Toicuato Suialta, solu foui (4) hectaies of
the lanu foi the sum of P 89u.uu by means of a ueeu. Plaintiff Suialta
immeuiately took possession of the foui-hectaie poition of Lot 81 cultivateu
anu woikeu the same openly, continuously anu peacefully up to the piesent
time in concept of ownei theieof.

0n Naich 1967, Filomeno Palaos anu his wife executeu a notaiial Beeu of in
favoi of the uefenuant-spouses Fiancisca Aisenal anu Remeuio Aisenal in
consiueiation of the amount of P8uu.uu supposeuly foi the iemaining thiee
(S) hectaies of theii lanu without knowing that the uocument coveieu the
entiiety of Lot 81 incluuing the foui-hectaie poition pieviously ueeueu by
them to the plaintiff.

0n Naich 1967, Fiancisca Aisenal causeu the tax ueclaiation of the entiie lot
to be tiansfeiieu in hei name. The plaintiff leaineu of the tiansfei of the tax
ueclaiation to Fiancisca Aisenal anu because of theii goou ielations at the
time, he agieeu with Aisenal to contiibute in the payment of the lanu taxes
anu paiu yeaily fiom 1968 to 197S to Fiancisca Aisenal.

0n }uly 11, 197S, the plaintiff piesenteu his Sales Contiact in the 0ffice of the
Registei of Beeus but it was iefuseu iegistiation foi having been executeu
within the piohibitive peiiou of five yeais fiom the issuance of the patent. In
oiuei to cuie the uefect, he causeu Filomeno Palaos to sign a new Sales
Contiact in his favoi coveiing the same foui-hectaie poition of Lot 81. In
August 197S, the plaintiff causeu the segiegation of his poition fiom the iest
of the lanu by ueouetic Engineei Benito P. Balbuena, who conuucteu the
subuivision suivey without piotest fiom Fiancisca Aisenal who was notifieu
theieof.

In Becembei 197S, howevei, the plaintiff saw foi the fiist time the Beeu of
Sale embiacing the whole Lot 81 signeu by Filomeno Palaos in favoi of
Fiancisca Aisenal. Immeuiately he askeu Palaos foi explanation but the
lattei tolu him that he solu only thiee hectaies to Aisenal. Plaintiff
appioacheu Fiancisca Aisenal foi a satisfactoiy aiiangement but she
insisteu on abiuing by hei contiact. Because of theii uisagieement, Fiancisca
Aisenal iegisteieu hei Beeu of Sale on Becembei 6, 197S anu obtaineu
Tiansfei Ceitificate of Title No. T-7879 foi the entiie Lot 81 without the
knowleuge of the plaintiff.

0n Naich 6, 1974, Toicuato Suialta fileu a case against Filomeno Palaos,
Nahina Lagwas, Fiancisca Aisenal, Remeuio Aisenal anu the Registei of
Beeus of Bukiunon foi the annulment of Tiansfei Ceitificate of Title No. T-
7879 issueu to the Aisenals insofai as it coveis the foui-hectaie poition
pieviously solu to him.

0n Nay 4, 1976, the tiial couit ienueieu juugment in favoi of Suialta.
Spouses Aisenal appealeu to IAC but appeal was uismisseu foi lack of cause
of action. Bence, this petition foi ieview on ceitioiaii.

6))E*K

Whethei oi not the lanu in question was a valiu subject in the contiact of
sale between the paities.

7EL,N-K

The contiact of sale executeu between the iesponuents Palaos anu Suialta in
19S7 is voiu. It was enteieu into thiee (S) yeais anu eight (8) months aftei
the giant of the homesteau patent to the iesponuent Palaos in 19S4.

The law on the mattei which is the Public Lanu Act (Commonwealth Act No.
141, as amenueu) pioviues:

Sec. 118. Fxcept in fovor, of tbe 6overnment or ony of its broncbes, units or
institutions, lonJs ocquireJ unJer free potent or bomesteoJ provisions sboll
not be subject to encumbronce or olienotion from tbe Jote of tbe opprovol of
tbe opplicotion onJ for o term of five yeors from onJ ofter tbe Jote of issuonce
of tbe potent or qront nor sboll tbey become lioble to tbe sotisfoction of ony
Jebt controcteJ prior to tbe expirotion of soiJ perioJ, but tbe improvements or
crops on tbe lonJ moy be mortqoqeJ or pleJqeJ to quolifieJ persons,
ossociotions, or corporotions.

No olienotion, tronsfer, or conveyonce of ony bomesteoJ ofter five yeors onJ
before twenty-five yeors ofter issuonce of title sboll be voliJ witbout tbe
opprovol of tbe Secretory of Aqriculture onJ Noturol Resources, wbicb
opprovol sboll not be JenieJ except on constitutionol onJ leqol qrounJ {As
omenJeJ by Com. Act No. 4S6, opproveJ }une 8, 19S9).

Sec. 124. Any ocquisition, conveyonce, olienotion, tronsfer, or otber controct
moJe or executeJ in violotion of ony of tbe provisions of sections one bunJreJ
onJ eiqbteen, one bunJreJ onJ twenty, one bunJreJ onJ twenty-one, one
bunJreJ onJ twenty-two, onJ one bunJreJ twenty-tbree of tbis Act sboll be
unlowful onJ null onJ voiJ from its execution onJ sboll proJuce tbe effect of
onnullinq onJ concellinq tbe qront, title, potent, or permit oriqinolly issueJ,
recoqnizeJ or confirmeJ, octuolly or presumptively, onJ couse tbe reversion of
tbe property onJ its improvements to tbe Stote.

The above piovisions of law aie cleai anu explicit. A contiact which puipoits
of alienate, tiansfei, convey oi encumbei any homesteau within the
piohibitoiy peiiou of five yeais fiom the uate of the issuance of the patent is
voiu fiom its execution. In a numbei of cases, this Couit has helu that such
piovision is manuatoiy. 0nuei the piovisions of the Civil Coue, a voiu
contiact is inexistent fiom the beginning. It cannot be iatifieu neithei can
the iight to set up the uefense of its illegality be waiveu.

*** The couit also iuleu that the Spouses Aisenal aie not entitleu to the lanu
in question because of BAB FAITB. The petitioneis weie in bau faith in
incluuing the entiie aiea of the lanu in theii ueeu of sale. They cannot be
entitleu to the foui-hectaie poition of the lanu foi lack of consiueiation. To
upholu theii claim of owneiship ovei that poition of lanu woulu be contiaiy
to the well-entiencheu piinciple against unjust eniichment conseciateu in
oui Civil Coue to the enu that in cases not foieseen by the lawmakei, no one
may unjustly benefit himself to the piejuuice of anothei.

*** The lanu is given back to Filomeno Palaos. Any new tiansaction,
howevei, woulu be subject to whatevei steps the uoveinment may take foi
the ieveision of the piopeity to it.

! D$H6&1&($1 )% * P*/&7 .6GQ$-( R*(($, )% (0$ .*/$2 R61( G$ /&-&(

/01 738$3 8"7=65$Y (NQ #$3537 !4"7$Y> )M?E)*) :)0 9350 '347=
3< "22$"#!> !$'7$="7R (NQ 45+$7!$'7$="7R 3< 24J#6' ^37\! _
'388456'"=635!> VT !'7" TXB> ;070 5?0 #Z@/GB/> "MD,L GA> /ABX
JFK ;,N-?F?N> \(.]FD,N* +0

<(O.)K

The spouses Romeo Naitinez anu Leonoi Suaiez aie the iegisteieu owneis
of two paicels of lanu which aie fishponus. The piopeity involveu in the
instant case is the seconu paicel.

The uisputeu piopeity was oiiginally owneu by one Paulino Nontemayoi,
who secuieu a titulo ieal anu was then passeu on to Potenciano uaicia. 0n
}une 1916, Potenciano uaicia fileu Civil Case against the Nunicipal
Pieseiuent Peuio Beltian to iestiain the lattei in his official capacity fiom
molesting him in the possession of saiu seconu paicel. 0n Apiil 17, 192S.
Potenciano uaicia applieu foi the iegistiation of both paicels of lanu in his
name, anu was gianteu the same. Theieaftei, the owneiship of these
piopeities changeu hanus until eventually they weie acquiieu by the heiein
appellee spouses who holu them by viitue of tiansfei ceitificate of title No.
1S8S6.

0n }uly 19S4, the Committee on Riveis anu Stieams ueciueu that spouses
Romeo Naitinez anu Leonoi Suaiez shoulu be iestoieu to the exclusive
possession, use anu enjoyment of the cieek in question which foims pait of
theii iegisteieu piopeity. Foui yeais latei, anothei investigation of the saiu
paicel of lanu was oiueieu by BPWB Secietaiy Floiencio Noieno, uiiecting
the appellees heiein to iemove the uikes they hau constiucteu on the
stiength of the authoiity vesteu in him by Republic Act No. 2uS6. The
spouses fileu a case against the BPWB anu weie favoieu by the lowei couit.

0n appeal, BPWB officials contenueu that the spouses have no cause of
action because the piopeity in uispute is a public iivei anu in holuing that
the saiu claim has no basis in fact anu in law. The CA ieveiseu the juugment
of the lowei couit.

6))E*K

Whethei oi not the lanu in question is a valiu subject mattei in the contiact
of sale.

7EL,N-K

No, the lanu in question is not licit because the lanu is outsiue the commeice
of man being a piopeity of public uomain which is non-iegistiable. The
couit affiimeu the juugment of the Couit of Appeals.

Aiticle SS9 of the olu Civil Coue pioviues that Piopeity of public owneiship
is:

1. Tbot JestineJ to tbe public use, sucb os rooJs, conols, rivers,
torrents, ports, onJ briJqes constructeJ by tbe Stote, onJ bonks
sbores, rooJsteoJs, onJ tbot of o similor cborocter.

The above-mentioneu piopeities aie paits of the public uomain intenueu foi
public use, aie outsiue the commeice of men anu, theiefoie, not subject to
piivate appiopiiation.

The Lanu Registiation Couit has no juiisuiction ovei non-iegistiable
piopeities, such as public navigable iiveis which aie paits of the public
uomain, anu cannot valiuly aujuuge the iegistiation of title in favoi of a
piivate applicant. Bence, the juugment of the Couit of Fiist Instance of
Pampanga as iegaius the Lot No. 2 of Ceitificate of Title No. 1S8S6 in the
name of petitioneis-appellants may be attackeu at any time, eithei uiiectly
oi collateially, by the State which is not bounu by any piesciiptive peiiou
pioviueu foi by the Statute of Limitations (Aiticle 11u8, paiagiaph 4, new
Civil Coue).

The iuling that a puichasei of a iegisteieu piopeity cannot go beyonu the
iecoiu to make inquiiies as to the legality of the title of the iegisteieu ownei,
but may iely on the iegistiy to ueteimine if theie is no lien oi encumbiances
ovei the same, cannot be availeu of as against the law anu the accepteu
piinciple that iiveis aie paits of the public uomain foi public use anu not
capable of piivate appiopiiation oi acquisition by piesciiption.

F0R ALL TBE F0REu0INu, the juugment of the Couit of Appeals appealeu
fiom is in accoiuance with law, anu the same is heieby affiimeu with costs
against the petitioneis-appellants.

! D$H6&1&($1 )% * P*/&7 .6GQ$-( R*(($, )% (0$ .*/$2 R61( G$ #$($,4&'*($ ),
#$($,4&'*G/$

/01 263 !6"5 8$##6Y" :)0 '6=R 3< 6#36#3> 456W$7!6=R 3< =9$
296#62265$! (NQ =9$ '347= "22$"#!> G@ !'7" XBB> ;070 5?0 #ZGXB@G>
"MD,L @I> /ATH
JFK ;E,LL*N> '](DUFL P(N* #0

<(O.)K

}uliana Nelliza uuiing hei lifetime owneu, among othei piopeities, S paicels
of iesiuential lanu in Iloilo City (0CT No. S462).Saiu paicels of lanu weie
known as Lots Nos. 2, S anu1214. The total aiea of Lot 1214 was 29,u7S sq.
m. 0n 27Novembei 19S1she uonateu to the then Nunicipality of Iloilo,9,uuu
sq. m. of Lot 1214, to seive as site foi the municipal hall. The uonation was
howevei ievokeu by the paities foi the ieason that the aiea uonateu was
founu inauequate to meet the iequiiements of the uevelopment plan of the
municipality, the so-calleu "Aiellano Plan."

Subsequently, Lot 1214 was uiviueu by Ceiteza Suiveying Co. ,Inc. into Lots
1214-A anu 1214-B. Anu still latei, Lot 1214-Bwas fuithei uiviueu into Lots
1214-B-1, Lot 1214-B-2 anuLot1214-B-S. As appioveu by the Buieau of
Lanus, Lot 1214-B-1, with 4,S62 sq. m., became known as Lot 1214-B;
Lot1214-B-2,with 6,6SS sq. m., was uesignateu as Lot 1214-C;anu Lot 1214-
B-S, with 4,1SS sq. m., became Lot 1214-B. 0n1S Novembei19S2, }uliana
Nelliza executeu an instiument without any caption pioviuing foi the
absolute sale involving all of lot S, 7669 sq.m. of Lot 2 (sublots 2-B anu 2-C),
anu a poition of 1u,788 sq. m. of Lot 1214 (sublots 1214-B2 anu1214-BS) in
favoi of the Nunicipal uoveinment of Iloilo foi the sum of P6,422; these lots
anu poitions being the ones neeueu by the municipal goveinment foi the
constiuction of avenues, paiks anu City hall site accoiuing the "Aiellano
plan."

0n 14 }anuaiy 19S8, Nelliza solu hei iemaining inteiest in Lot1214 to
Remeuios Sian villanueva (theieaftei TCT 18178). Remeuios in tuin on 4
Novembei1946 tiansfeiieu hei iights to saiu poition of lanu to Pio Sian
Nelliza (theieaftei TCT2492). Annotateu at the back of Pio Sian Nelliza"s
title ceitificate was the following "that a poition of 1u,788 sq. m. of Lot 1214
now uesignateu as Lots 1412-B-2 anu1214-B-Sof the subuivision plan
belongs to the Nunicipality of Iloilo as pei instiument uateu 1S Novembei
19S2."

0n 24 August 1949 the City of Iloilo, which succeeueu to the Nunicipality of
Iloilo, uonateu the city hall site togethei with the builuing theieon, to the
0niveisity of the Philippines (Iloilo bianch). The site uonateu consisteu of
Lots 1214-B, 1214-C anu 1214-B, with a total aiea of 1S,SSu sq. m., moie oi
less. Sometime in 19S2, the 0niveisity of the Philippines encloseu the site
uonateu with a wiie fence. Pio Sian Nelliza theieupon maue iepiesentations,
thiu his lawyei, with the city authoiities foi payment of the value of the lot
(Lot 1214-B). No iecoveiy was obtaineu, because as allegeu by Pio Sian
Nelliza, the City uiu not have funus. The 0niveisity of the Philippines,
meanwhile, obtaineu Tiansfei Ceitificate of Title No. 71S2 coveiing the
thiee lots, Nos. 1214-B,1214-C anu 1214-B.0n 1u Becembei 19SS Pio Sian
Nelizza fileu an action in the CFI Iloilo against Iloilo City anu the 0niveisity
of the Philippines foi iecoveiy of Lot 1214-B oi of its value. Aftei stipulation
of facts anu tiial, the CFI ienueieu its uecision on 1S August 19S7,
uismissing the complaint. Saiu couit iuleu that the instiument executeu
by }uliana Nelliza in favoi of Iloilo municipality incluueu in the conveyance
Lot 1214-B, anu thus it helu that Iloilo City hau the iight to uonate Lot 1214-
B to 0P. Pio Sian Nelliza appealeu to the Couit of Appeals. 0n 19 Nay 196S,
the CA affiimeu the inteipietation of the CFI that the poition of Lot1214 solu
by }uliana Nelliza was not limiteu to the 1u,788squaie meteis specifically
mentioneu but incluueu whatevei was neeueu foi the constiuction of
avenues, paiks anu the cityhall site. Nonetheless, it oiueieu the iemanu of
the case foi ieception of eviuence to ueteimine the aiea actually taken by
Iloilo City foi the constiuction of avenues, paiks anu foi city hall site. Bence,
the appeal by Pio San Nelliza to the Supieme Couit. 0ne of his causes of
action was that the contiact of sale executeu between Nelliza anu the Nun.
iefeiieu only to lots1214-C anu 1214-B anu it is unwaiianteu to incluue
lot1214-B as being incluueu unuei the uesciiption theiein because that
woulu mean that the object of the contiact of sale woulu be inueteiminate.
0ne of the essential iequiiements foi a contiact of sale is that it shoulu have
foi its object a ueteiminate thing.

6))E*K

Whethei oi not the subject of the sale is a ueteiminate thing.

7EL,N-K

The paiamount intention of the paities was to pioviue Iloilo municipality
with lots sufficient oi auequate in aiea foi the constiuction of the Iloilo City
hall site, with its avenues anu paiks. Foi this mattei, a pievious uonation foi
this puipose between the same paities was ievokeu by them, because of
inauequacy of the aiea of the lot uonateu. Saiu instiument uesciibeu
4paicels of lanu by theii lot numbeis anu aiea; anu then it goes on to fuithei
uesciibe, not only those lots alieauy mentioneu, but the lots object of the
sale, by stating that saiu lots weie the ones neeueu foi the constiuction of
the city hall site, avenues anu paiks accoiuing to the Aiellano plan. If the
paities intenueu meiely to covei the specifieu lots (Lots 2, S, 1214-C anu
1214-B), theie woulu scaicely have been any neeu foi the next paiagiaph,
since these lots weie alieauy plainly anu veiy cleaily uesciibeu by theii
iespective lot numbei anu aieas. Saiu next paiagiaph uoes not ieally auu to
the cleai uesciiption that was alieauy given to them in the pievious one. It is
theiefoie the moie ieasonable inteipietation to view it as uesciibing those
othei poitions of lanu contiguous to the lots that, by iefeience to the
Aiellano plan, will be founu neeueu foi the puipose at hanu, the constiuction
of the city hall site. The iequiiement of the law that a sale must have foi its
object a ueteiminate thing, is fulfilleu as long as, at the time the contiact is
enteieu into, the object of the sale is capable of being maue ueteiminate
without the necessity of a new oi fuithei agieement between the paities
(Ait. 127S, olu Civil Coue; Ait. 146u, New Civil Coue). The specific mention
of some of the lots plus the statement that the lots object of the sale aie the
ones neeueu foi city hall site; avenues anu paiks, accoiuing to the Aiellano
plan, sufficiently pioviues a basis, as of the time of the execution of the
contiact, foi ienueiing ueteiminate saiu lots without the neeu of a new anu
fuithei agieement of the paities. The Supieme Couit affiimeu the uecision
appealeu fiom insofai as it affiims that of the CFI, anu uismisseu the
complaint; without costs.

G01 "!45'635 "=6#"53> '76!=65" "=6#"53> 73!"763 "=6#"53>
()),).*Q CF .]*,D D*)M*O.,:* ]E)C(NQ)> 96#"763 738"53> <$#62$
J$75"7+3> (NQ 8"b683 #"'"5+"#3> 6!"J$# "=6#"53 (NQ
;7$;3763 "=6#"53 :)0 #"+6!#"3 "=6#"53 (NQ ;7$;3763 80
"=6#"53> GH !'7" G@/> ;070 5?0 #ZGGXHB> 8(F G/> /ATA
JFK ;E,LL*N> '](DUFL P(N* #0

<(O.)K

In 1916, Atilano I acquiieu lot No. SSS by puichase. In 192u, he hau the lanu
subuiviueu into five paits, iuentifieu as lots Nos. SSS-A, SSS-B, SSS-C, SSS-B
anu SSS-E, iespectively. Aftei the subuivision hau been effecteu, Atilano I
executeu a ueeu of sale coveiing lot No. SSS-E in favoi of his biothei Atilano
II. Thiee othei poitions, namely, lots Nos. SSS-B, SSS-C, anu SSS-B, weie
likewise solu to othei peisons. Atilano I ietaineu foi himself the iemaining
poitions of the lanu, piesumably coveieu by the title to lot No. SSS-A. upon
his ueath, the title to this lot passeu to Lauislao, in whose name the
coiiesponuing ceitificate was issueu.

0n 19S9, Atilano II anu his chiluien hau the lanu iesuiveyeu so that it coulu
be piopeily subuiviueu. Bowevei, they uiscoveieu that the lanu they weie
actually occupying on the stiength of the ueeu of sale was lot No. SSS-A anu
not lot SSS-E, while the lanu which iemaineu in the possession of Atilano I,
anu which was passeu to Lauislao was lot No. SSS-E anu not lot No. SSS-A.

0n 196u, the heiis of Atilano II alleging, intei alia, that they offeieu to
suiienuei to the possession of lot No. SSS-A anu uemanueu in ietuin the
possession of lot No. SSS-E, but the uefenuants iefuseu to accept the
exchange. The plaintiffs' insistence is quite unueistanuable, since lot No.
SSS-E has an aiea of 2,612 squaie meteis as compaieu to the 1,8u8 squaie-
metei aiea of Lot No. SSS-A.

In theii answei to the complaint, the uefenuants allegeu that the iefeience to
lot No. SSS-E in the ueeu of sale was an involuntaiy eiioi; that the intention
of the paities to that sale was to convey the lot coiiectly iuentifieu as lot No.
SSS-A. 0n the basis of the foiegoing allegations the uefenuants inteiposeu a
counteiclaim, piaying that the plaintiffs be oiueieu to execute in theii favoi
the coiiesponuing ueeu of tiansfei with iespect to Lot No. SSS-E. The tiial
couit ienueieu juugment in favoi of the plaintiffs.

6))E*K

Whethei oi not theie has been a valiu sale in view of the ieal intention of the
paities.

7EL,N-K

Fiom the facts anu ciicumstances, the object is lot No. SSS-A anu its
uesignation as lot No. SSS-E in the ueeu of sale was a simple mistake in the
uiafting of the uocument. The mistake uiu not vitiate the consent of the
paities, oi affect the valiuity anu binuing effect of the contiact between
them. The new Civil Coue pioviues a iemeuy by means of iefoimation of the
instiument. This iemeuy is available when, theie having been a meeting of
the minus of the paities to a contiact, theii tiue intention is not expiesseu in
the instiument puipoiting to embouy the agieement by ieason of mistake,
fiauu, inequitable conuuct oi acciuent.

In this case, the ueeu of sale executeu in 192u neeu no longei be iefoimeu.
The paities have ietaineu possession of theii iespective piopeities
confoimably to the ieal intention of the paities to that sale, anu all they
shoulu uo is to execute mutual ueeu of conveyance. Theiefoie, the juugment
appealeu fiom is ieveiseu. The plaintiffs aie oiueieu to execute a ueeu of
conveyance of lot No. SSS-E in favoi of the uefenuants, anu the lattei, in tuin,
aie oiueieu to execute a similai uocument, coveiing lot No. SSS-A, in favoi
of the plaintiffs. Costs against the lattei.

! 8*,(&-6/*, U&'71 )% .6GQ$-( R*(($, )% (0$ .*/$2 I$'$,&- V0&'51

/01 R4 =$\ (NQ '30 :)0 J"!6#63 ;35Y"#$!> GA 2],L0 @HX> ;070 5?0 #ZAA@V>
<*CDE(DF /> /A/V
JFK ;E,LL*N> '](DUFL P(N* #0

<(O.)K

A wiitten contiact was executeu between Basilio uonzalez anu Yu Tek anu
Co., wheie uonzales was obligateu to uelivei 6uu piculs of sugai of the 1st
anu 2nu giaue to YuTek, within the peiiou of S months (1 }anuaiy-S1 Naich
1912) at any place within the municipality of Sta. Rosa, which Yu Tek & Co.
oi its iepiesentative may uesignate; anu in case, uonzales uoes not uelivei,
the contiact will be iescinueu anu uonzales shall be obligateu to ietuin the
PS,uuu ieceiveu anu also the sum of P1,2uuby way of inuemnity foi loss anu
uamages. No sugai hau been ueliveieu to Yu Tek & Co. unuei this contiact
noi hau it been able to iecovei the PS,uuu. YuTek & Co. fileu a complaint
against uonzales, anu piayeu foi juugment foi the PS,uuu anu the auuitional
P1,2uu. }uugment was ienueieu foi PS,uuu only, anu fiom this juugment
both paities appealeu. Befenuant alleges that the couit eiieu in iefusing to
peimit paiol eviuence showing that the paities intenueu that the sugai was
to be secuieu fiom the ciop which the uefenuant iaiseu on his plantation,
anu that he was unable to fulfill the contiact by ieason of the almost total
failuie of his ciop. The seconu contention of the uefenuant aiises fiom the
fiist. Be assumes that the contiact was limiteu to the sugai he might iaise
upon his own plantation; that the contiact iepiesenteu a peifecteu sale; anu
that by failuie of his ciop he was ielieveu fiom complying with his
unueitaking by loss of the thing uue. (Aits. 14S2, 1u96, anu 1182, Civil
Coue.)

6))E*)K

1) Whethei oi not compliance of the obligation to uelivei uepenus upon the
piouuction in uefenuant's plantation.

2) Whethei oi not theie is a peifecteu sale.

S) Whethei oi not liquiuateu uamages of P1,2uu shoulu be awaiueu to the
plaintiff.

7EL,N-K

The case appeais to be one to which the iule which excluues paiol eviuence
to auu to oi vaiy the teims of a wiitten contiact is ueciueuly applicable.
Theie is not the slightest intimation in the contiact that the sugai was to be
iaiseu by the uefenuant. Paities aie piesumeu to have ieuuceu to wiiting all
the essential conuitions of theii contiact. While paiol eviuence is aumissible
in a vaiiety of ways to explain the meaning of wiitten contiacts, it cannot
seive the puipose of incoipoiating into the contiact auuitional
contempoianeous conuitions which aie not mentioneu at all in the wiiting,
unless theie has been fiauu oi mistake. It may be tiue that uefenuant owneu
a plantation anu expecteu to iaise the sugai himself, but he uiu not limit his
obligation to his own ciop of sugai. 0ui conclusion is that the conuition
which the uefenuant seeks to auu to the contiact by paiol eviuence cannot
be consiueieu. The iights of the paities must be ueteimineu by the wiiting
itself.

Aiticle 14Su uefines a peifecteu sale as follows: "The sale shall be peifecteu
between venuoi anu venuee anu shall be binuing on both of them, if they
have agieeu upon the thing which is the object of the contiact anu upon the
piice, even when neithei has been ueliveieu." Aiticle 14S2 pioviues that
"the injuiy to oi the piofit of the thing solu shall, aftei the contiact has been
peifecteu, be goveineu by the piovisions of aiticles 1u96 anu 1182." Theie
is a peifecteu sale with iegaiu to the "thing" whenevei the aiticle of sale has
been physically segiegateu fiom all othei aiticles. In NcCullough vs. Aenlle &
Co. (S Phil 28S), a paiticulai tobacco factoiy with its contents was helu solu
unuei a contiact which uiu not pioviue foi eithei ueliveiy of the piice oi of
the thing until a futuie time. In Baiietto vs. Santa Naiina(26 Phil
2uu),specifieu shaies of stock in a tobacco factoiy weie helu solu by a
contiact which uefeiieu ueliveiy of both the piice anu the stock until the
lattei hau been appiaiseu by an inventoiy of the entiie assets of the
company. In Boiiomeovs. Fianco (S Phil.Rep., 49) a sale of a specific house
was helu peifecteu between the venuoi anu venuee, although the ueliveiy of
the piice was withhelu until the necessaiy uocuments of owneiship weie
piepaieu by the venuee. In Tan Leonco vs. uo Inqui (8 Phil. Rep.,SS1) the
plaintiff hau ueliveieu a quantity of hemp into the waiehouse of the
uefenuant.

The uefenuant uiew a bill of exchange in the sum of P8uu, iepiesenting the
piice which hau been agieeu upon foi the hemp thus ueliveieu. Piioi to the
piesentation of the bill foi payment, in saiu case, the hemp was uestioyeu.
Wheieupon, the uefenuant suspenueu payment of the bill. It was helu that
the hemp having been alieauy ueliveieu, the title hau passeu anu the loss
was the venuee's. It is oui puipose to uistinguish the case at bai fiom all
these cases. The contiact in the piesent case was meiely an executoi
agieement; a piomise of sale anu not a sale. As theie was no peifecteu sale, it
is cleai that aiticles 14S2, 1u96, anu 1182 aie not applicable. The agieement
upon the "thing" which was the object of the contiact was not within the
meaning of aiticle 14Su. Sugai is one of the staple commouities of this
countiy. Foi the puipose of sale its bulk is weigheu, the customaiy unit of
weight being uenominateu a ,"picul.'"

Theie was no ueliveiy unuei the contiact. If calleu upon to uesignate the
aiticle solu, it is cleai that uonzales coulu only say that it was "sugai." Be
coulu only use this geneiic name foi the thing solu. Theie was no
"appiopiiation" of any paiticulai lot of sugai. Neithei paity coulu point to
any specific quantity of sugai. The contiact in the piesent case is uiffeient
fiom the contiacts uiscusseu in the cases iefeiieu to. In the NcCullough case,
foi instance, the tobacco factoiy which the paities uealt with was specifically
pointeu out anu uistinguisheu fiom all othei tobacco factoiies. So, in the
Baiietto case, the paiticulai shaies of stock which the paities uesiieu to
tiansfei weie capable of uesignation. In the Tan Leonco case, wheie a
quantity of hemp was the subject of the contiact, it was shown that
quantity hau been uepositeu in a specific waiehouse, anu thus set apait anu
uistinguisheu fiom all othei hemp. The Supieme Couit affiimeu the
juugment appealeu fiom with the mouification allowing the iecoveiy of
P1,2uu unuei paiagiaph 4 of the contiact, without costs.

! 8*,(&-6/*, U&'71 )% .6GQ$-( R*(($, )% (0$ .*/$2 W'7&E&7$7 F'($,$1(T.0*,$

/01 $75$!=3> <37=45"="> 835="53> Y3!68"> 7"835> ;4"+"#42$>
#46!> P3!$<65" (NQ 73!"#6" (LL )EDN(U*Q R=477"#+$ :)0 =9$
93537"J#$ '347= 3< "22$"#!> 93537"J#$ W6'$5=$ ;0 $76'="> ,N
],) O(M(O,.F () PEQ-* ?e .]* '?ED. ?e <,D). 6N).(NO* ?e Y(UC?(N-( Q*L
!ED> (NQ 6!"J$#3 7$J3##3!> X@ !'7" @/@> ;070 5?0 #Z@/VHT> <*CDE(DF
GH> /ABG
JFK ;E,LL*N> '](DUFL P(N* #0

<(O.)K

The spouses Fiancisco Ytuiialue anu Naigaiita ue los Reyes, owneu a paicel
of agiicultuial lanu locateu in Zamboanga uel Sui, containing an aiea of
14.1u79 hectaies. Sometime in the yeai 1944, Fiancisco Ytuiialue uieu
intestate, suiviveu by his wife, Naigaiita ue los Reyes, anu theii chiluien. In
19Su, Naigaiita ue los Reyes contiacteu a seconu maiiiage with hei
biothei-in-law, Bamaso Ytuiialue

0n Nay Su, 19S2, Bamaso Ytuiialue anu Naigaiita ue los Reyes executeu a
ueeu of sale with iight of iepuichase in favoi of the iesponuent heiein,
Isabelo Rebollos, coveiing the above-mentioneu piopeity in consiueiation of
the sum of P1,71S.uu. The venuois o retro faileu to exeicise the iight to
iepuichase the piopeity within the thiee-yeai peiiou agieeu upon, which
expiieu on Nay Su, 19SS. In 1961, Naigaiita ue los Reyes uieu.

0n Nay S, 196S, the iesponuent, Isabelo Rebollos, fileu a petition foi
consoliuation of owneiship. 0n Novembei 2u, 196S, the Couit ienueieu a
uecision consoliuating the owneiship of the subject piopeity in favoi of
Rebollos, anu oiueiing the Registei of Beeus of Zamboanga uel Sui to cancel
0iiginal Ceitificate of Title No. 2SS6 coveiing saiu piopeity anu, in lieu
theieof, to issue a tiansfei ceitificate of title in the name of Rebollos

0n }une S, 1966, Rebollos fileu a motion to oiuei the petitionei Ytuiialue
heiein to suiienuei anu uelivei to the Registei of Beeus the ownei's
uuplicate of 0iiginal Ceitificate of Title No. 2SS6, which motion was gianteu
by the Couit. Ytuialue faileu to comply the oiuei.

0n petition fileu by Rebollos, the iesponuent }uuge, oiueieu the uemolition
of all builuings not belonging to saiu Rebollos founu on the piemises in
question .The petitioneis then fileu a motion foi ieconsiueiation of the oiuei
of uemolition, which was uenieu by the iesponuent }uuge, who, howevei, on
motion of saiu petitioneis, uiiecteu the iesponuent Sheiiff to uefei the
implementation of the wiit of execution anu the oiuei of uemolition until
aftei }une 2S, 1969..

The iesponuent, aveiieu that on }anuaiy S, 1968, he solu the piopeity in
question to Pilai N. vua. ue Reyes unuei a ueeu of absolute sale anu,
accoiuingly, a Tiansfei Ceitificate of Title was issueu in favoi of saiu venuee
coveiing the subject piopeity by the Registei of Beeus.

6))E*K

Whethei oi not theie was a consoliuation of owneiship of piopeity heiein
stateu.

7EL,N-K

Theie was no consoliuation of piopeity. Aiticle 16u7 of the new Civil Coue of
19Su pioviues that consoliuation of owneiship in the venuee o retro of ieal
piopeity by viitue of the failuie of the venuoi o retro "to comply with the
piovisions of Aiticle 1616 shall not be iecoiueu in the Registiy of Piopeity
without a juuicial oiuei, aftei the venuoi has been uuly heaiu." Such
consoliuation shall be effecteu thiough an oiuinaiy civil action, not by a
meie motion, anu that the venuoi o retro shoulu be maue a paity uefenuant,
who shoulu be seiveu with summons in accoiuance with Rule 14 of the
Reviseu Rules of Couit; anu that the failuie on the pait of the couit to cause
the seivice of summons as piesciibeu in Rule 14, is sufficient cause foi
attacking the valiuity of the juugment anu subsequent oiueis on
juiisuictional giounus. The action foi consoliuation shoulu be biought
against all the inuispensable paities, without whom no final ueteimination
can be hau of the action; anu such inuispensable paities who aie joineu as
paity uefenuants must be piopeily summoneu puisuant to Rule 14 of the
Reviseu Rules of Couit. If anyone of the paity uefenuants, who aie all
inuispensable paities is not piopeily summoneu, the couit acquiies no
juiisuiction ovei the entiie case anu its uecision anu oiueis theiein aie null
anu voiu.

! 8*,(&-6/*, U&'71 )% .6GQ$-( R*(($, )% (0$ .*/$2 V0&'51 &' ;&(&5*(&)'

/01 "=\65!> \73## _ '382"5R> 65'0> :)0 !"5=6";3 +3865;3> XT 2],L0
@TI> ;070 5?0 #ZG/AG/> 3O.?C*D X> /AGX
JFK ;E,N.?> 7?N(LQ J0

<(O.)K

0n }une 24, 1912, the Couit of Lanu Registiation, sitting in the Piovince of
Zamboanga, aujuuicateu the thiee lots Nos. S6, S8, anu SS, to Buenaventuia
Bomingo. No mention was maue in the uecision of the impiovements on saiu
lots, but when the coiiesponuing ueciees of iegistiation weie issueu the
woius "with all the impiovements existing theieon" weie inseiteu, as is the
common piactice in cases wheie the impiovements have not been expiessly
ueclaieu by the couit to belong to some othei peison than the ownei of the
lanu. The same phiase appeaieu in the iespective ceitificates of title
coveiing the lots, with the iesult that accoiuing to the Toiiens ceitificates
Buenaventuia Bomingo was the ownei not only of each of saiu lots but also
of the impiovements existing theieon
Buenaventuia Bomingo uieu intestate on 0ctobei 21, 1912, leaving a wiuow
anu a numbei of chiluien anu gianuchiluien as heiis.

0ne of his sons, namely, Santiago Bomingo, the uefenuant in this case,
qualifieu on 0ctobei 29, 1914, as auministiatoi of his estate. The uefenuant,
as auministiatoi, submitteu a pioject of paitition to the couit, in which lots
Nos. S6, S8 anu SS aie mentioneu as piopeities peitaining to the ueceuent.
In this pioject no mention was maue of impiovements on any of saiu lots. 0n
August 8, 1918, the couit uuly appioveu the pioject of paitition. No
objection to this action appeais to have been maue by any peison inteiesteu
in the estate.

The shaie of Santiago Bomingo in his fathei's estate, so fai as affects lots
Nos. S6 anu SS, has iemaineu unuistuibeu anu saiu inteiest is still vesteu in
him. It is uiffeient with lot No. S8, foi on Febiuaiy 17, 1922, the saiu
Santiago Bomingo solu his entiie inteiest in lot No. S8, "with all the
impiovements existing theieon," by contiact of sale with pocto Je retro to
one 0ng Kong. The inteiest thus solu was subject to iepuichase within the
peiiou of one yeai, but ieuemption was nevei effecteu; anu on Febiuaiy 17,
192S, the piopeity was uuly consoliuateu in 0ng Kong. 0n Febiuaiy 19,
192S, 0ng Kong solu his entiie inteiest in the lot anu impiovements theieon
to the piesent plaintiff, Atkins, Kioll & Co.

The shaies peitaining to the othei heiis in lots Nos. S6, S8, anu SS suffeieu a
numbei of mutations as to owneiship; but in the enu, thiough vaiious
tiansactions, the authenticity, legality, anu goou faith of which aie not
questioneu eithei in the pleauings oi in the pioof, all of saiu inteiests came
to iest in the plaintiff, Atkins, Kioll & Co. Each step in all of these mutations
of title was accompanieu by the coiiesponuing piopei changes in the
Toiiens ceitificates of title showing the piesent owneiship of the lots anu
impiovements. Fiom these ceitificates it appeais that the plaintiff, Atkins,
Kioll & Co. is the ownei of thiee-fouiths of lot No. S6, with the
impiovements theieon; of the whole of lot No. S8, with the impiovements
theieon; anu of thiee-fouiths of lot No. SS, excluuing the impiovements

It appeais that the uefenuant, Santiago Bomingo, is now in possession of saiu
piopeity anu has at all times been in possession since the plaintiff acquiieu
its inteiest theiein, anu he has uuiing the same peiiou exclusively enjoyeu
the use of all the lots, with the income ueiiveu fiom the builuings theieon.
This ciicumstance, coupleu with this iefusal to aumit the plaintiff's claim as
co-ownei, iesulteu, as alieauy stateu, in the institution of the piesent action
by the plaintiff, foi the puipose of iecoveiing possession of lot No. S8 anu to
secuie a paitition of lots Nos. S6 anu SS, with an accounting foi the plaintiff's
piopei piopoition of the piofits.

In this connection it appeais that the builuings iefeiieu to weie eiecteu in
the lattei months of the yeai 1912 anu fiist half of 191S, anu the uefenuant
asseits that they weie built by him with his own money anu with the
consent of his fathei. 0pon this ciicumstance the uefenuant bases his claim
to have the exclusive owneiship of saiu builuings.

In Febiuaiy 1, 1919 the uefenuant in wiiting an explanatoiy iepoit askeu
the couit that the builuings on lots Nos. S6 anu S8 be segiegateu fiom the
mass of the piopeity left by his fathei anu that he himself be ueclaieu to be
the exclusive ownei of the builuings. This move was opposeu by Zoila
Bomingo, a uaughtei anu sole heii of Leon Bomingo. In the enu the couit,
upon }uly 19, 1922, enteieu a iesolution ignoiing the uefenuant's claim anu
oiueiing that the pioject of paitition be caiiieu into effect. If it be tiue, as the
uefenuant claims, that the houses iefeiieu to weie built with his money, it
must stiike one as iemaikably stiange that he shoulu have waiteu foi neaily
seven yeais, oi until Febiuaiy 1, 1919, befoie foimulating his claim oi taking
any step whatevei to piotect his title to saiu builuings.

But assuming, as we may, that the builuings in question weie in fact
constiucteu by the uefenuant with his own money, anu with the consent of
his fathei as ownei of the lanu, it is cleai that the uefenuant's iight to the
builuings in contioveisy has been lost, except in so fai as he is ownei of an
unuiviueu one-fouith inteiest by inheiitance; anu the inteiests of the two
paities to this litigation in the piopeities in question must be taken to be
exactly as they aie stateu in the existing ceitificates of title. This iesults fiom
the fact that the plaintiff is a puichasei foi value who has acquiieu the
inteiests shown on the existing Toiiens ceitificates upon the faith of the
iegisteieu title, anu the uefenuant is in no position to aiiest the effect of
these uocuments.

But is it insisteu that the plaintiff has been affecteu with the notice of the
uefenuant's iight by the filing of a lis penJens (Penuing lawsuit). This
iequiies a few woius of explanation. uoing back to August 18, 192u, we finu
that on saiu uate the uefenuant fileu with the iegistei of ueeus a notice of lis
penJens, setting foith his claim of owneiship as to the impiovements in
question, anu iefeiiing to the contioveisy planteu in his explanatoiy iepoit
in the auministiation pioceeuings. Notice of saiu lis penJens was noteu on
the back of the coiiesponuing ceitificates of title. 0pon the uate stateu the
plaintiff hau alieauy acquiieu a moitgage upon the inteiest of Zoila Bomingo
in the estate of hei gianufathei, Buenaventuia Bomingo; anu by the
foieclosuie of that moitgage all of hei inteiest in lots Nos. S6 anu S8 became
vesteu in the plaintiff as puichasei. The iemaining inteiests acquiieu by the
plaintiff in the same piopeities appeai to have been acquiieu by it aftei the
notice of lis penJens was fileu.

An action was instituteu in the Couit of Fiist Instance of Zamboanga by
Atkins, Kioll & Company, Inc., against Santiago Bomingo, foi the puipose of
enfoicing iecognition of its allegeu iight of owneiship ovei lot No. S8 anu to
iecovei possession of the same fiom the uefenuant, anu at the same time to
secuie a paitition of lots Nos. S6 anu SS in the same plan, accoiuing to the
piopoitional inteiests peitaining to the plaintiff anu uefenuant as joint
owneis theieof.

0pon heaiing the cause the tiial couit enteieu a juugment iecognizing the
iights of the plaintiff as tenant in common with the uefenuant in iespect to
the lanu in all of saiu lots to the full extent claimeu by the plaintiff anu maue
an appiopiiate oiuei foi a uivision theieof, but the couit at the same time
helu that the builuings on lots Nos. S6 anu S8 aie of the exclusive owneiship
of the uefenuant, Santiago Bomingo, anu that befoie the plaintiff can obtain
possession of saiu builuings the uefenuant is entitleu to be ieimbuiseu foi
theii value, which the couit fixeu at P18,uuu, in accoiuance with aiticle S61
of the Civil Coue. At the same time the couit uenieu the iight of the plaintiff
to iecovei any pait of the ients ieceiveu by the uefenuant foi saiu houses,
though it iecognizeu the obligation of the uefenuant to ieimbuise the
plaintiff foi the uefenuant's shaie of the taxes paiu by the plaintiff on all of
the piopeities.

The plaintiff appealeu, anu unuei its assignment of eiioi so much of the
uecision is calleu in question as ielates to the title to the builuings on Lot No.
S6 anu Lot No. S8 anu to the iight of the plaintiff to an accounting foi ients
which have been collecteu exclusively by the uefenuant on all of the lots.

6))E*K

Who has the iight of the title anu the impiovements on Lots Nos. S6 anu S8.

7EL,N-K

It shoulu be noteu that the uefenuant, supposing his claim to have been
maue in goou faith, might have piotecteu it, at any time befoie the piopeity
hau passeu into the hanus of a thiiu peison, by a pioceeuing unuei section
112 of Act No. 496. Saiu section ueclaies that any peison may at any time
apply by petition to the couit, wheie "new inteiests have aiisen oi been
cieateu which uo not appeai upon the ceitificate," anu piocuie such
inteiests to be noteu. Such a petition must be fileu anu entitleu in the
oiiginal case in which the ueciee of iegistiation was enteieu.

The consiueiations so fai auuuceu apply alike to the impiovements on lots
Nos. S6 anu S8, but theie is anothei ciicumstance which is fatal to the
uefenuant's claim to any of the impiovements on lot No. S8. This is founu in
the fact that he solu his inteiest in saiu lot, incluuing the impiovements, to
0ng Kong, the plaintiff's pieuecessoi in inteiest. It is eviuent that the
uefenuant is estoppeu by his own ueeu fiom claiming any inteiest in the
builuings on this lot, whatevei might have been the law goveining his claim
to the builuings on the othei lot.

Fiom what has been saiu it is eviuence that the tiial couit was in eiioi in
ueclaiing the uefenuant to be the ownei of the builuings on lots Nos. S6 anu
S8 anu in failing to iequiie the uefenuant to account; anu in oiuei to claiify
the situation we ueclaie: (1) That the owneiship of the lots Nos. S6, S8, anu
SS, is as stateu in the Toiiens ceitificates of title (Exhibits A, B, anu C of the
plaintiff); (2) that the plaintiff is entitleu to possession of lot No. S8 anu that
paitition must be maue of lots Nos. S6 anu SS in the mannei pioviueu by
law; (S) the plaintiff is fuithei entitleu to iecovei of the uefenuant such
poition of the uefenuant anu which shall have been paiu by the plaintiff; (4)
the plaintiff shall also iecovei of the uefenuant such poition of the ients of
saiu piopeities as coiiesponu to the inteiests of the plaintiff since its
acquisition of the same.

G01 =683=$3 #"73Y" (NQ '35'96=" 476 :)0 +35"#+3 ;46"> ;070 5?0
#ZXVGVG> P(NE(DF @/> /AHV
JFK ;E,N.?> 7?N(LQ J0

Paicel of lanu
lsonq {1) loqoy no luponq tirikon ot niyuqon no nototoyo so Noyon nq Son
Ironcisco, lunsoJ nq Son Poblo; moy luwonq no 200 metronq porisukot
bumiqit kumulonq onq tirikon ot 2210 no metronq porisukot, bumiqit
kumulonq onq niyuqon. Hoy tonim no 46 puno nq niyoq ot 29 puno nq
lonzones no powonq nobunqo. Anq kobolontoy so SF-RemeJios Boutisto; so
SW Provinciol RooJ; so SW ot SF-Horio 0moli ot so NW Buenoventuro 6uio
lto oy binoboloqobon nq Pomoboloon nq P7S0.00 poro so toonq kosolukuyon
ot ito oy moyroonq Kotiboyon so poqmomoy-ori Blq. S1068. Anq mqo
bonqqonon nito oy moy polotonJoonq buboy no moJre-cocoo.

<(O.)K

Appellants, in theii complaint, allegeu that they bought a paicel of lanu in
goou faith anu foi valuable consiueiations fiom Fiancisco uuia on }une Su,
197S, aftei they hau seen the uocuments of owneiship of saiu Fiancisco uuia
which consisteu of the following:

(a) Beeu of Extia-}uuicial Paitition executeu befoie Notaiy Public Alfonso
Faicon of San Pablo City uateu August S, 1961. Copy of which is heieto
attacheu as Annex "B;"

(b) Beeu of Absolute Sale executeu by Nanuel uuia in favoi of Fiancisco
uuia, Buenaventuia uuia anu Felimon uuia, uateu Naich S, 194u executeu
befoie Notaiy Public Eniique Estiellauo of San Pablo City, anu uuly
iegisteieu with the Registei of Beeus of Sta. Ciuz, Laguna on Naich 8, 194u,
copy of which is heieto attacheu as Annex "C;"

(c) Beeu of Bonation Intei vivos executeu by Cayetana uaicia uateu Naich S,
194u executeu befoie Notaiy Public Eniique Estiellauo of San Pablo City,
copy of which is heieto attacheu as Annex "B;"

that they weie in continuous possession of the saiu piopeity fiom the time
they acquiieu the same fiom Fiancisco uuia until appellee, "thiough the
commissioneis appointeu by this Bonoiable Couit in Civil Case No. SP-488,
intiuueu upon the saiu peaceful possession by attempting to suivey the
above-uesciibeu piopeity anu to paitition the same by viitue of a uecision of
this Bonoiable Couit uateu Becembei 29, 1966 in Civil Case No. SP-488; that
the attempt of heiein uefenuant to suivey anu paitition the above-uesciibeu
piopeity beclouus the title of heiein plaintiffs foi which ieason, they weie
constiaineu to institute the piesent action with the assistance of counsel at
the agieeu amount of PS,uuu.uu anu weie compelleu to incui litigation
expenses of not less than PSuu.uu.

Appellee, thiough counsel, fileu a motion to uismiss the complaint alleging,
among otheis, "that the lanu subject mattei of the complaint has alieauy
been the subject of a final anu executoiy juugment in Civil Case No. SP-488,
hence, plaintiffs (appellants) have no cause of action, oi if theie be any, the
same is baiieu by a piioi juugment.

Appellants opposeu the motion to uismiss maintaining that the complaint
states a sufficient cause of action anu piayeu that the motion to uismiss be
uenieu.

The lowei couit, on 0ctobei Su, 1974, issueu an oiuei uismissing appellants'
complaint saying that:

The motion to uismiss is well taken. It is beyonu uebate oi
question that the lanu ovei which plaintiffs seek heiein to quiet
title has alieauy been ueclaieu the piopeity of uefenuant by the
final anu executoiy juugment of this Couit in SP-488, which was
affiimeu by the Couit of Appeals anu a fuithei attempt to
challenge the aujuuication by ceitioiaii was thiown out
peifunctoiily by the Supieme Couit. Theie is no ioom foi uoubt
oi foi contioveisy that all the iequisite elements of ies juuicata oi
bai by piioi juugment aie piesent heie xxx

Appellants went to the then Couit of Appeals alleging that the lowei couit
eiieu (1) in holuing that the instant case is alieauy baiieu by a pievious
juugment; (2) in uismissing the complaint without a heaiing which although
pieliminaiy shoulu be conuucteu as oiuinaiy heaiings; anu, (S) in holuing
that the giounu of ies juuicata iaiseu by appellee is inuubitable anu patent
fiom paiagiaphs 4 anu S of the complaint.

6))E*K

The appellate couit foiwaiueu the iecoius of the SC because "no factual
issue is involveu" anu "the issues iaiseu in the instant case aie puiely legal
questions which aie beyonu the juiisuiction of the Couit to ueteimine."

7EL,N-K

Theie is no meiit in this appeal.

Recoius show that long befoie appellants hau acquiieu subject piopeity, a
notice of lis penuens (Civil Case No. SP 488) hau alieauy been iegisteieu
with the 0ffice of the Registei of Beeus of San Pablo City affecting the
piopeity. Lis penuens is a notice of penuing litigation; a waining to the
whole woilu that one who buys the piopeity so annotateu uoes so at his
own iisk. Notwithstanuing, appellants bought the lanu fiom Fiancisco uuia,
uefenuant in Civil Case No. SP 488. Baving puichaseu the piopeity with
notice of lis penuens, appellants took the iisk of losing it in case the uecision
in the saiu civil case, as what actually happeneu, is auveise to theii
pieuecessoi-in-inteiest, Fiancisco uuia Time anu again, We have uecieeu
that the filing of a notice of lis penuens chaiges all stiangeis with a notice of
the paiticulai litigation iefeiieu to theiein anu, theiefoie, any iight they
may theieaftei acquiieu on the piopeity is subject to the eventuality of the
suit.

The uoctiine of lis penuens is founueu upon ieason of public policy anu
necessity, the puipose of which is to keep the subject mattei of the litigation
within the powei of the Couit until the juugment oi ueciee shall have been
enteieu; otheiwise, by successive alienation's penuing the litigation, its
juugment oi ueciee shall be ienueieu aboitive anu impossible of execution.
0n this scoie alone, appellants case woulu necessaiily fall.

In theii fiist assigneu eiioi appellants aigue that theie is no ies juuicata
because theie is no Iuentity of causes of action since the case at bai is an
action to quiet title, wheieas, Civil Case No. SP-488 is one of filiation anu
paitition. In National Bank vs. Baiieto, S2 Phil. 818, We helu that "a
juugment foi the plaintiff sweeps away eveiy uefense that shoulu have been
iaiseu against the action, anu this foi the puipose of eveiy subsequent suit,
whethei founueu upon the same oi a uiffeient cause." in Civil Case No. SP-
488, appellee Bonaluo uuia maintaineu that he is a co-ownei of that paicel
of lanu, incluuing the lanu in question, which was latei aujuuicateu to him as
his shaie in the inheiitance fiom the late Cayetana uaicia; wheieas,
Fiancisco uuia, appellants' pieuecessoi-in inteiest, allegeu that he is the sole
ownei of the piopeity.

Thus, both paities claim owneiship ovei the same piopeity appellee
Bonaluo uuia, by viitue of a final juugment ienueieu in Civil Case No. SP-
488, anu appellants Timoteo Laioza anu Conchita 0ii, by viitue of the sale
executeu by Fiancisco uuia, who lost in saiu civil case. In both cases, the
question boils uown to owneiship of the lanu. Thus, theie is Iuentity of
causes of action.

Anent the seconu assigneu eiioi, iecoius ieveal that a heaiing on appellee's
motion to uismiss appellants' complaint was conuucteu on August 12, 1974.
Theie is, theiefoie, no basis foi appellants to say that a heaiing was nevei
helu in the case.

Finally, appellants claim that the lowei couit eiieu in ueclaiing that ies
juuicata is inuubitable anu patent fiom the face of the complaint itself,
without the appellee pleauing the same as an affiimative uefense. Fiom a
cuisoiy ieauing of the pleauings, extant in the iecoius of the case, We finu
that in his motion to uismiss, appellee hau thoioughly uiscusseu the issue of
ies juuicata anu, coupleu by the fact that it was the same couit which heaiu
anu ueciueu Civil Case No. SP 488, the tiial couit can iightfully iule on saiu
issue.

ACC0RBINuLY, foi lack of meiit, the appeal is heieby BISNISSEB.


! 8*,(&-6/*, U&'71 )% .6GQ$-( R*(($, )% (0$ .*/$2 V0&'51 16GQ$-( ()
+)'7&(&)'1

/01 <7"5'6!'" "7!$5"# (NQ 7$8$+63 "7!$5"# :)0 =9$
65=$78$+6"=$ "22$##"=$ '347=> 9$67! 3< =37'4"=3 !47"#=">
(NQ !234!$! <6#38$53 2"#"3! (NQ 8"965" #";^"!> /X@ !'7" XI>
;070 5?0 #ZTTTAT> PELF /X> /AHT
JFK ;E,N.?> 7?N(LQ J0

<(O.)K

0n }anuaiy 7, 19S4, the uefenuant Filomeno Palaos secuieu 0CT No. P-29u
fiom the Registei of Beeus of Bukiunon foi Lot 81, Pls-112, consisting of
87,829 sq. m. moie oi less, situateu at Kitaotao now a municipality of
Bukiunon, by viitue of Bomesteau Patent No. v-2S6u2 gianteu to him.

0n Septembei 1u, 19S7, saiu Filomeno Palaos anu his wife Nahina Lagwas
executeu in favoi of the plaintiff, Toicuato Suialta, solu foui (4) hectaies of
the lanu embiaceu in his Toiiens Ceitificate foi the sum of P 89u.uu,
Philippine Cuiiency, by means of a ueeu of acknowleugeu befoie a Notaiy.
Plaintiff Suialta immeuiately took possession of the foui-hectaie poition of
Lot 81 above-mentioneu cultivateu anu woikeu the same openly,
continuously anu peacefully up to the piesent time in concept of ownei
theieof. Be built a house anu intiouuceu peimanent impiovements theieon
now valueu at no less than P2u,uuu.uu.

Sometime in 1964, the uefenuant-spouses Fiancisca Aisenal anu Remeuio
Aisenal became tenants of an aujoining lanu owneu by Eusebio Pabualan
that is sepaiateu fiom the lanu in question only by a public ioau. They also
came to know the plaintiff as theii neighboi who became theii compauie
latei, anu saw him veiy often woiking anu cultivating the lanu in question. In
the couise of theii ielationship the plaintiff came to know of theii intention
to buy the iemaining lanu of Filomeno Palaos.

0n Naich 14, 1967, saiu Filomeno Palaos anu his wife executeu a notaiial
Beeu of Sale in consiueiation of the amount of P8uu.uu, Philippine Cuiiency,
supposeuly foi the iemaining thiee (S) hectaies of theii lanu without
knowing that the uocument coveieu the entiiety of Lot 81 incluuing the
foui-hectaie poition pieviously ueeueu by them to the plaintiff. The ueeu of
sale was piesenteu to the 0ffice of the Commission on National Integiation
at Nalaybalay foi appioval because Palaos anu his wife belong to the
cultuial minoiities anu unletteieu. The fielu iepiesentative anu inspectoi of
that office subsequently appioveu the same without inspecting the lanu to
ueteimine the actual occupants theieon.

The uefenuants Aisenal took possession of the thiee-hectaie poition of Lot
81 aftei theii puichase anu have cultivateu the same up to the piesent time
but they nevei uistuibeu the plaintiff's possession ovei the foui-hectaie
poition that he hau puichaseu in 19S7. 0n Naich 28, 1967, Fiancisca
Aisenal causeu the tax ueclaiation of the entiie lot to be tiansfeiieu in hei
name. The plaintiff leaineu of the tiansfei of the tax ueclaiation to Fiancisca
Aisenal anu because of theii goou ielations at the time, he agieeu with
Aisenal to contiibute in the payment of the lanu taxes anu paiu yeaily fiom
1968 to 197S the amount of P1u.uu coiiesponuing to his foui-hectaie
poition to Fiancisca Aisenal.

0n }uly 11, 197S, the plaintiff piesenteu his Sales Contiact in the 0ffice of the
Registei of Beeus but it was iefuseu iegistiation foi having been executeu
within the piohibitive peiiou of five yeais fiom the issuance of the patent. In
oiuei to cuie the uefect, he causeu Filomeno Palaos to sign a new Sales
Contiact in his favoi befoie Beputy Cleik of Couit Floientina villanueva
coveiing the same foui-hectaie poition of Lot 81. In August 197S, the
plaintiff causeu the segiegation of his poition fiom the iest of the lanu by
ueouetic Engineei Benito P. Balbuena, who conuucteu the subuivision
suivey without piotest fiom Fiancisca Aisenal who was notifieu theieof.
The subuivision plan was appioveu by the Commissionei of Lanu
Registiation on Apiil 18, 1974.

In Becembei 197S, howevei, the plaintiff saw foi the fiist time the Beeu of
Sale embiacing the whole Lot 81 signeu by Filomeno Palaos in favoi of
Fiancisca Aisenal. Immeuiately he askeu Palaos foi explanation but the
lattei tolu him that he solu only thiee hectaies to Aisenal. Plaintiff
appioacheu Fiancisca Aisenal foi a satisfactoiy aiiangement but she
insisteu on abiuing by hei contiact. Because of theii uisagieement, Fiancisca
Aisenal iegisteieu hei Beeu of Sale on Becembei 6, 197S anu obtaineu
Tiansfei Ceitificate of Title No. T-7879 foi the entiie Lot 81 without the
knowleuge of the plaintiff.

0n }anuaiy 7, 1974, the plaintiff sent a telegiam to the Secietaiy of
Agiicultuie anu Natuial Resouices iequesting suspensions of the appioval of
the sale executeu by Filomeno Palaos in favoi of Fiancisca Aisenal, not
knowing that the lattei hau alieauy secuieu a tiansfei ceitificate of title
fiom the Registei of Beeus.

In the miuule pait of saiu month of }anuaiy 1974, plaintiff howevei leaineu
of the cancellation of the oiiginal ceitificate of title of Palaos anu the
issuance of the Tiansfei Ceitificate to Aisenal so he sought the help of the
municipal authoiities of Kitaotao to ieach an amicable settlement with
Fiancisca Aisenal who, on the othei hanu, iefuseu to enteitain all oveituie
to that effect.

0n Naich 6, 1974, Toicuato Suialta fileu a case against Filomeno Palaos,
Nahina Lagwas, Fiancisca Aisenal, Remeuio Aisenal anu the Registei of
Beeus of Bukiunon foi the annulment of Tiansfei Ceitificate of Title No. T-
7879 issueu to the Aisenals insofai as it coveis the foui-hectaie poition
pieviously solu to him.

In answei to the complaint, the Aisenals uenieu pievious knowleuge of the
sale to Suialta of the lanu in question. As a special uefense, they assaileu the
valiuity of the puichase by Suialta in 19S7, pointing to the piohibition
containeu in the Public Lanu Law against its uisposal within the peiiou of
five yeais fiom the issuance of the homesteau patent. They also questioneu
the legality of the sale maue to Suialta in 19S7 by Filomeno Palaos anu
Nahina Lagwas foi not having been appioveu by the Commission on
National Integiation uespite the fact that Palaos anu his wife belong to the
cultuial minoiities, aie illiteiates, anu uo not unueistanu the English
language in which the ueeu of sale in favoi of Suialta was wiitten.

In theii answei, the spouses Filomeno Palaos anu Nahina Lagwas sustaineu
the sale maue by them to Suialta. They allegeu that they veibally solu one
hectaie to one Tibuicio Tauena anu solu the iemaining S.7829 hectaies to
the Aisenals. They stateu that they infoimeu the Aisenals about the pievious
sale of foui hectaies to Suialta. They also claimeu that the Aisenals took
unuue auvantage of theii ignoiance anu illiteiacy anu causeu them to sign
the uocument of sale so as to incluue the entiie 87,829 sq. m. coveieu by
theii oiiginal title.

0n Nay 4, 1976, the tiial couit ienueieu juugment in favoi of Suialta. It
imputeu bau faith to the Aisenals anu ueclaieu them uisqualifieu to avail of
the piotection affoiueu by the piovisions of the Civil Coue to innocent
puichaseis although they iegisteieu theii puichase aheau of Suialta.
0n appeal the Inteimeuiate Appellate Couit affiimeu the tiial couit.

0n Naich 2u, 1984, the spouses Aisenal went to this Couit in a petition foi
ieview on ceitioiaii assigning the allegeu eiiois of the couit below:

6))E*K

The question to be iesolveu in this case is who among the two allegeu
puichaseis of a foui-hectaie poition of lanu gianteu in homesteau has
acquiieu a valiu title theieto.

7EL,N-K

The law on the mattei which is the Public Lanu Act pioviues that a contiact
which puipoits of alienate, tiansfei, convey oi encumbei any homesteau
within the piohibitoiy peiiou of five yeais fiom the uate of the issuance of
the patent is voiu fiom its execution. In a numbei of cases, this Couit has
helu that such piovision is manuatoiy.

0nuei the piovisions of the Civil Coue, a voiu contiact is inexistent fiom the
beginning. It cannot be iatifieu neithei can the iight to set up the uefense of
its illegality be waiveu.

The iight to set up the nullity of a voiu oi non-existent contiact is not limiteu
to the paities as in the case of annullable oi voiuable contiacts; it is extenueu
to thiiu peisons who aie uiiectly affecteu by the contiact.

Conceueuly, the contiact of sale executeu between the iesponuents Palaos
anu Suialta in 19S7 is voiu. It was enteieu into thiee (S) yeais anu eight (8)
months aftei the giant of the homesteau patent to the iesponuent Palaos in
19S4.

A thiiu peison who is uiiectly affecteu by a voiu contiact may set up its
nullity. In this case, it is piecisely the petitioneis' inteiest in the uisputeu
lanu which is in question.

As to whethei oi not the execution by the iesponuents Palaos anu Suialta of
anothei instiument in 197S cuieu the uefects in theii pievious contiact, we
ieiteiate the iule that an alienation oi sale of a homesteau executeu within
the five-yeai piohibitoiy peiiou is voiu anu cannot be confiimeu oi iatifieu.

The iesponuents Palaos anu Suialta aumitteu that they executeu the
subsequent contiact of sole in 197S in oiuei to cuie the uefects of theii
pievious contiact. The teims of the seconu contiact coiioboiate this fact as
it can easily be seen fiom its teims that no new consiueiation passeu
between them. The seconu contiact of sale being meiely confiimatoiy, it
piouuces no effect anu cannot be binuing

In this case, theie is substantial eviuence to sustain the veiuict of bau faith.

Fiist of all, we agiee with the lowei couit that it is unusual foi the
petitioneis, who have, been occupying the uisputeu lanu foi foui yeais with
iesponuent Suialta to believe, without fiist veiifying the fact, that the lattei
was a meie moitgagee of the poition of the lanu he occupies.

Seconu, it is unlikely that the entiie 8.7879 hectaies of lanu was solu to them
foi only P8uu,uu in 1967 consiueiing that in 19S7, a foui-hectaie poition of
the same was solu to the iesponuent Suialta foi P819.uu. The incieaseu
value of ieal piopeities thiough the yeais anu the uispaiity of the lanu aiea
show a piice foi the lanu too inauequate foi a sale allegeuly uone in goou
faith anu foi value.

Thiiu, contiaiy to the usual conuuct of goou faith puichaseis foi value, the
petitioneis actively encouiageu the iesponuent Suialta to believe that they
weie co-owneis of the lanu. Theie was no uispute that the petitioneis,
without infoiming the iesponuent Suialta of theii title to the lanu, kept the
lattei in peaceful possession of the lanu he occupies anu ieceiveu annual ieal
estate tax contiibutions fiom him. It was only in 197S when the iesponuent
Suialta uiscoveieu the petitioneis' title to the lanu anu insisteu on a
settlement of the auveise claim that the petitioneis iegisteieu theii ueeu of
sale anu secuieu a tiansfei ceitificate of title in theii favoi.

Cleaily, the petitioneis weie in bau faith in incluuing the entiie aiea of the
lanu in theii ueeu of sale. They cannot be entitleu to the foui-hectaie poition
of the lanu foi lack of consiueiation. To upholu theii claim of owneiship ovei
that poition of lanu woulu be contiaiy to the well-entiencheu piinciple
against unjust eniichment conseciateu in oui Civil Coue to the enu that in
cases not foieseen by the lawmakei, no one may unjustly benefit himself to
the piejuuice of anothei.

The equities of the case seem to lean in favoi of the iesponuent Suialta who,
since 19S7, has been in possession of the lanu which was almost acquiieu in
an unueihanueu mannei by the petitioneis. We cannot, howevei, gloss ovei
the fact that the iesponuent Suialta was himself guilty of tiansgiessing the
law by enteiing, in 19S7, into a tiansaction cleaily piohibiteu by law. It is a
long stanuing piinciple that equity follows the law. Couits exeicising equity
juiisuiction aie bounu by iules of law anu have no aibitiaiy uiscietion to
uisiegaiu them. Equitable ieasons will not contiol against any well-settleu
iule of law oi public policy. Thus, equity cannot give valiuity to a voiu
contiact. If, on the basis of equity, we upholu the iesponuent Suialta's claim
ovei the lanu which is anchoieu on the contiacts pieviously executeu we
woulu in effect be giving life to a voiu contiact.

In cases wheie the homesteau has been the subject of voiu conveyances, the
law still iegaius the oiiginal ownei as the iightful ownei subject to escheat
pioceeuings by the State. We shoulu stiess that the venuois of the
homesteau aie unletteieu membeis of a tiibe belonging to the cultuial
minoiities.

We see, howevei, a uistinguishing factoi in this case that sets it apait fiom
the above cases. The oiiginal owneis in this case, the iesponuent Palaos anu
his wife, have nevei uisaffiimeu the contiacts executeu between them anu
the iesponuent Suialta. Noie than that, they expiessly sustaineu the title of
the lattei in couit anu faileu to show any inteiest in iecoveiing the lanu.
Nonetheless, we apply oui eailiei iulings because we believe that as in pori
Jelicto may not be invokeu to uefeat the policy of the State neithei may the
uoctiine of estoppel give a valiuating effect to a voiu contiact. Inueeu, it is
geneially consiueieu that as between paities to a contiact, valiuity cannot be
given to it by estoppel if it is piohibiteu by law oi is against public policy.

The uecision of the Inteimeuiate Appellate Couit is REvERSEB anu SET
ASIBE. }uugment is heieby ienueieu:
(a) Beclaiing null anu voiu the sale of the foui-hectaie poition of the
homesteau to iesponuent Toicuato Suialta anu his heiis;
(b) Beclaiing null anu voiu the sale of the same poition of lanu to the
petitioneis Fiancisca Aisenal anu Remeuio Aisenal:
(c) 0iueiing the Registei of Beeus of Bukiunon to cancel Tiansfei Ceitificate
of Title No. T-7879 as to the uisputeu foui-hectaie poition anu to ieissue an
0iiginal Ceitificate of Title foi the poition uesignateu as Lot 81-A of the
Subuivision Plan LRC-PLB-1984S1 piepaieu by ueouetic Engineei Benito P.
Balbuena anu appioveu by the Commission on Lanu Registiation, in favoi of
the iesponuents Filomeno Palaos anu Nahina Lagwas;
(u) 0iueiing the iesponuents Filomeno Palaos anu Nahina Lagwas to
ieimbuise the heiis of the iesponuent Toicuato Suialta the sum of EIuBT
B0NBREB NINETY PES0S (P89u.uu), the piice of the sale. The value of any
impiovements maue on the lanu anu the inteiests on the puichase piice aie
compensateu by the fiuits the iesponuent Suialta anu his heiis ieceiveu
fiom theii long possession of the homesteau.

! C11&5'4$'( )% +,$7&( *'7 =(0$, F'-),>),$*/ D&50(1

/01 738$3 8"7=65$Y (NQ #$3537 !4"7$Y :)0 9350 '347= 3<
"22$"#!> !$'7$="7R (NQ 45+$7!$'7$="7R 3< 24J#6' ^37\! _
'388456'"=635!> VT !'7" TXB> ;070 5?0 #Z@/GB/> "MD,L GA> /ABX
JFK ;E,N.?> 7?N(LQ J0

<(O.)K

The spouses Romeo Naitinez anu Leonoi Suaiez, now petitioneis-appellees,
aie the iegisteieu owneis of two (2) paicels of lanu locateu in Lubao,
Pampanga, coveieu by tiansfei ceitificate of title No. 1S8S6 of the Registei
of Beeus of the saiu piovince. Both paicels of lanu aie fishponus. The
piopeity involveu in the instant case is the seconu paicel mentioneu in the
above-nameu tiansfei ceitificate of title.

The uisputeu piopeity was oiiginally owneu by one Paulino Nontemayoi,
who secuieu a "titulo ieal" ovei it way back in 188S. Aftei the ueath of
Paulino Nontemayoi the saiu piopeity passeu to his successois-in-inteiest,
Naiia Nontemayoi anu Bonata Nontemayoi, who in tuin, solu it, as well as
the fiist paicel, to a ceitain Potenciano uaicia.

Because Potenciano uaicia was pieventeu by the then municipal piesiuent
of Lubao, Peuio Beltian, fiom iestoiing the uikes constiucteu on the
contesteu piopeity, the foimei, on }une 22, 1914, fileu Civil Case No. 14u7
with the Couit of Fiist Instance against the saiu Peuio Beltian to iestiain the
lattei in his official capacity fiom molesting him in the possession of saiu
seconu paicel, anu on even uate, applieu foi a wiit of pieliminaiy injunction,
which was issueu against saiu municipal piesiuent. The Couit, by uecision
piomulgateu }une 12, 1916, ueclaieu peimanent the pieliminaiy injunction,
which, uecision, on appeal, was affiimeu by the Supieme Couit on August 21,
1918. Fiom }une 22, 1914, the uikes aiounu the piopeity in question
iemaineu closeu until a poition theieof was again openeu just befoie the
outbieak of the Pacific Wai.

0n Apiil 17, 192S. Potenciano uaicia applieu foi the iegistiation of both
paicels of lanu in his name, anu the Couit of Fiist Instance of Pampanga,
sitting as lanu iegistiation couit, gianteu the iegistiation ovei anu against
the opposition of the Attoiney-ueneial anu the Biiectoi of Foiestiy.
Puisuant to the Couit's uecision, oiiginal ceitificate of title No. 14S18,
coveiing saiu paicels 1 anu 2 was issueu to the spouses Potenciano uaicia
anu Loienza Sioson.

These paicels of lanu weie subsequently bought by Emilio Ciuz ue Bios in
whose name tiansfei ceitificate of title No. 1421 was fiist issueu on
Novembei 9, 192S.

Theieaftei, the owneiship of these piopeities changeu hanus until
eventually they weie acquiieu by the heiein appellee spouses who holu
them by viitue of tiansfei ceitificate of title No. 1S8S6.

To avoiu any untowaiu inciuent, the uisputants agieeu to iefei the mattei to
the Committee on Riveis anu Stieams. This committee theieaftei appointeu
a Sub-Committee to investigate the case anu to conuuct an oculai inspection
of the contesteu piopeity, anu on Naich 11, 19S4, saiu Sub-Committee
submitteu its iepoit to the Committee on Riveis anu Stieams to the effect
that Paicel No. 2 of tiansfei ceitificate of title No. 1S8S6 was not a public
iivei but a piivate fishponu owneu by the heiein spouses.

0n }uly 7, 19S4, the Committee on Riveis anu Stieams ienueieu its uecision
the uispositive pait of which ieaus:

"In view of the foiegoing consiueiations, the spouses Romeo
Naitinez anu Leonoi Suaiez shoulu be iestoieu to the exclusive
possession, use anu enjoyment of the cieek in question which
foims pait of theii iegisteieu piopeity anu the uecision of the
couits on the mattei be given full foice anu effect."

The municipal officials of Lubao, leu by Acting Nayoi Naiiano Zagau,
appaiently iefuseu to iecognize the above uecision, because on Septembei 1,
19S4, the spouses Romeo Naitinez anu Leonoi Suaiez instituteu Civil Case
No. 7S1 befoie the Couit of Fiist Instance of Pampanga against saiu Nayoi
Zagau, piaying that the lattei be enjoineu fiom molesting them in theii
possession of theii piopeity anu in the constiuction of the uikes theiein. The
wiit of pieliminaiy injunction applieu foi was issueu against the iesponuent
municipal Nayoi, who immeuiately elevateu the injunction suit foi ieview to
the Supieme Couit, which uismisseu Nayoi Zagau's petition on Septembei 7,
19SS. With this uismissal oiuei heiein appellee spouses pioceeueu to
constiuct the uikes in the uisputeu paicel of lanu.

Some foui (4) yeais latei, anu while Civil Case No. 7S1 was still penuing the
Bonoiable Floiencio Noieno, then Secietaiy of Public Woiks anu
Communications, oiueieu anothei investigation of the saiu paicel of lanu,
uiiecting the appellees heiein to iemove the uikes they hau constiucteu, on
the stiength of the authoiity vesteu in him by Republic Act No. 2uS6,
appioveu on }une 1S, 19S8, entitleu "An Act To Piohibit, Remove anuoi
Bemolish the Constiuction of Bams. Bikes, 0i Any 0thei Walls In Public
Navigable Wateis, 0i Wateiways anu In Communal Fishing uiounus, To
Regulate Woiks in Such Wateis oi Wateiways Anu In Communal Fishing
uiounus, Anu To Pioviue Penalties Foi Its violation, Anu Foi 0thei
Puiposes. 1 The saiu oiuei which gave iise to the instant pioceeuings,
embouieu a thieat that the uikes woulu be uemolisheu shoulu the heiein
appellees fail to comply theiewith within thiity (Su) uays.

The spouses Naitinez ieplieu to the oiuei by commencing on }anuaiy 2,
19S9 the piesent case, which was ueciueu in theii favoi by the lowei Couit
in a uecision uateu August 1u, 19S9.

As against this juugment iesponuent officials of the Bepaitment of Public
Woiks anu Communications took the instant appeal, contenuing that the
lowei Couit eiieu.

The Couit of Appeals sustaineu ieveiseu the juugment of the Couit of Fiist
Instance. Fiom this ieveisal this appeal by ceitioiaii was taken, anu befoie
this Couit, petitioneis-appellants assigneu the following eiiois allegeuly
committeu by the Couit of Appeals:

6))E*)K

1. TBE C00RT 0F APPEALS ERREB IN BECLARINu IN TBE INSTANT CASE
TBAT PARCEL N0. 2 0F TRANSFER CERTIFICATE 0F TITLE N0. 1S8S6 IS A
P0BLIC RIvER ANB 0RBERINu TBE CANCELLATI0N 0F ITS REuISTRATI0N
BECA0SE TBIS C0NSTIT0TES A C0LLATERAL ATTACK 0N A T0RRENS
TITLE IN vI0LATI0N 0F TBE LAW ANB TBE WELL-SETTLEB
}0RISPR0BENCE 0N TBE NATTER.

2. TBE C00RT 0F APPEALS ERREB IN RE0PENINu ANB RE-LITIuATINu
TBE ISS0E AS T0 WBETBER 0R N0T L0T N0. 2 0F TRANSFER
CERTIFICATE 0F TITLE N0. 1S8S6 REuISTER 0F BEEBS 0F PANPANuA, IS
A P0BLIC RIvER N0TWITBSTANBINu TBE FACT TBAT TBIS ISS0E BAS
BEEN L0Nu RES0LvEB ANB SETTLEB BY TBE LANB REuISTRATI0N
C00RT 0F PANPANuA IN LANB REuISTRATI0N PR0CEEBINu N0. 692 ANB
IS N0W RFS }0BlCATA.

S. TBE C00RT 0F APPEALS ERREB IN 0RBERINu TBE CANCELLATI0N 0F
TBE REuISTRATI0N 0F L0T N0. 2 0F TRANSFER CERTIFICATE 0F TITLE
N0. 1S8S6 N0TWITBSTANBINu TBE FACT TBAT TBE T0RRENS TITLE
C0vERINu IT BAS BEEN vESTEB IN TBE PETITI0NERS WB0 ARE TBE
SEvENTB 0F TBE S0CCESSIvE INN0CENT P0RCBASERS TBERE0F ANB
WB0 IN P0RCBASINu TBE SANE RELIEB 0N TBE PRINCIPLE TBAT TBE
PERS0NS BEALINu WITB REuISTEREB LANB NEEB N0T u0 BEBINB TBE
REuISTER T0 BETERNINE TBE C0NBITI0N 0F TBE PR0PERTY.

7EL,N-K

The 1st anu 2nu assignment of eiiois, being closely ielateu, will be taken up
togethei.

The iuling of the Couit of Appeals that Lot No. 2 coveieu by Tiansfei
Ceitificate of Title No. 1S8S6 of the petitioneis-appellants is a public stieam
anu that saiu title shoulu be cancelleu anu the iivei coveieu ieveiteu to
public uomain, is assaileu by the petitioneis-appellants as being a collateial
attack on the inuefeasibility of the toiiens title oiiginally issueu in 192S in
favoi of the petitioneis-appellants' pieuecessoi-in-inteiest, Potenciano
uaicia, which is violative of the iule of ies juuicata. It is aigueu that as the
ueciee of iegistiation issueu by the Lanu Registiation Couit was not ie-
openeu thiough a petition foi ieview fileu within one (1) yeai fiom the entiy
of the ueciee of title, the ceitificate of title issueu puisuant theieto in favoi
of the appellants foi the lanu coveieu theieby is no longei open to attack
unuei Section S8 of the Lanu Registiation Act (Act 496) anu the
juiispiuuence on the mattei establisheu by this Tiibunal. Section S8 of the
Lanu Registiation Act citeu by appellants expiessly makes a ueciee of
iegistiation, which oiuinaiily makes the title absolute anu inuefeasible,
subject to the exemption stateu in Section S9 of the saiu Act among which
aie: "liens, claims oi iights aiising oi existing unuei the laws oi Constitution
of the 0niteu States oi of the Philippine Islanus which the statute of the
Philippine Islanus cannot iequiie to appeai of iecoiu in the iegistiy."

At the time of the enactment of Section 496, one iight iecognizeu oi existing
unuei the law is that pioviueu foi in Aiticle SS9 of the olu Civil Coue which
ieaus as follows:
Piopeity of public owneiship is:

1. Tbot JestineJ to tbe public use, sucb os rooJs, conols, rivers, torrents, ports,
onJ briJqes constructeJ by tbe Stote, onJ bonks sbores, rooJsteoJs, onJ tbot of
o similor cborocter.

The above-mentioneu piopeities aie paits of the public uomain intenueu foi
public use, aie outsiue the commeice of men anu, theiefoie, not subject to
piivate appiopiiation.

It is, theiefoie, cleai that the authoiities citeu by the appellants as to the
conclusiveness anu incontestability of a Toiiens ceitificate of title uo not
apply heie. The Lanu Registiation Couit has no juiisuiction ovei non-
iegistiable piopeities, such as public navigable iiveis which aie paits of the
public uomain, anu cannot valiuly aujuuge the iegistiation of title in favoi of
a piivate applicant. Bence, the juugment of the Couit of Fiist Instance of
Pampanga as iegaius the Lot No. 2 of Ceitificate of Title No. 1S8S6 in the
name of petitioneis-appellants may be attackeu at any time, eithei uiiectly
oi collateially, by the State which is not bounu by any piesciiptive peiiou
pioviueu foi by the Statute of Limitations (Aiticle 11u8, pai. 4, new Civil
Coue). The iight of ieveision oi ieconveyance to the State of the public
piopeities fiauuulently iegisteieu anu which aie not capable of piivate
appiopiiation oi piivate acquisition uoes not piesciibe.

When it comes to iegisteieu piopeities, the juiisuiction of the Secietaiy of
Public Woiks & Communications unuei Republic Act 2uS6 to oiuei the
iemoval oi obstiuction to navigation along a public anu navigable cieek oi
iivei incluueu theiein, has been uefinitely settleu anu is no longei open to
question

As iegaius the Siu assignment of eiioi, theie is no weight in the appellants'
aigument that, being a puichasei foi value anu in goou faith of Lot No. 2, the
nullification of its iegistiation woulu be contiaiy to the law anu to the
applicable uecisions of the Supieme Couit as it woulu uestioy the stability of
the title which is the coie of the system of iegistiation. Appellants cannot be
ueemeu puichaseis foi value anu in goou faith as in the ueeu of absolute
conveyance executeu in theii favoi.
Befoie puichasing a paicel of lanu, it cannot be contenueu that the
appellants who weie the venuees uiu not know exactly the conuition of the
lanu that they weie buying anu the obstacles oi iestiictions theieon that
may be put up by the goveinment in connection with theii pioject of
conveiting Lot No. 2 in question into a fishponu. Neveitheless, they willfully
anu voluntaiily assumeu the iisks attenuant to the sale of saiu lot. 0ne who
buys something with knowleuge of uefect oi lack of title in his venuoi cannot
claim that he acquiieu it in goou faith.

The iuling that a puichasei of a iegisteieu piopeity cannot go beyonu the
iecoiu to make inquiiies as to the legality of the title of the iegisteieu ownei,
but may iely on the iegistiy to ueteimine if theie is no lien oi encumbiances
ovei the same, cannot be availeu of as against the law anu the accepteu
piinciple that iiveis aie paits of the public uomain foi public use anu not
capable of piivate appiopiiation oi acquisition by piesciiption.

F0R ALL TBE F0REu0INu, the juugment of the Couit of Appeals appealeu
fiom is in accoiuance with law, anu the same is heieby affiimeu with costs
against the petitioneis-appellants.

G01 263 !6"5 8$##6Y" :)0 '6=R 3< 6#36#3> 456W$7!6=R 3< =9$
296#62265$! (NQ =9$ '347= "22$"#!> G@ !'7" XBB> ;070 5?0 #ZGXB@G>
"MD,L @I> /ATH
JFK ;ELC,N> #?E "NN '0

<(O.)K

}uliana Nelliza uuiing hei lifetime owneu, among othei piopeities, thiee
paicels of iesiuential lanu in Iloilo City iegisteieu in hei name unuei
0iiginal Ceitificate of Title No. S462. Saiu paicels of lanu weie known as
Lots Nos. 2, S anu 1214. The total aiea of Lot No. 1214 was 29,u7S squaie
meteis. 0n Novembei 27, 19S1 she uonateu to the then Nunicipality of
Iloilo, 9,uuu squaie meteis of Lot 1214, to seive as site foi the municipal
hall.
1
The uonation was howevei ievokeu by the paities foi the ieason that
the aiea uonateu was founu inauequate to meet the iequiiements of the
uevelopment plan of the municipality, the so-calleu "Aiellano Plan".

Subsequently, Lot No. 1214 was uiviueu by Ceiteza Suiveying Co., Inc. into
Lots 1214-A anu 1214-B. Anu still latei, Lot 1214-B was fuithei uiviueu into
Lots 1214-B-1, Lot 1214-B-2 anu Lot 1214-B-S. As appioveu by the Buieau
of Lanus, Lot 1214-B-1 with 4,S62 squaie meteis, became known as Lot
1214-B; Lot 1214-B-2, with 6,6SS squaie meteis, was uesignateu as Lot
1214-C; anu Lot 1214-B-1S, with 4,1SS squaie meteis, became Lot 1214-B.

0n 1S Novembei 19S2, }uliana Nelliza executeu an instiument without any
caption pioviuing foi the absolute sale involving all of lot S, 7669 sq. m. of
Lot 2 (sublots 2-B anu 2-C), anu a poition of 1u,788 sq. m. of Lot 1214
(sublots 1214-B2 anu 1214-BS) in favoi of the Nunicipal uoveinment of
Iloilo foi the sum of P6,422; these lots anu poitions being the ones neeueu
by the municipal goveinment foi the constiuction of avenues, paiks anu City
hall site accoiuing the "Aiellano plan." 0n 14 }anuaiy 19S8, Nelliza solu hei
iemaining inteiest in Lot 1214 to Remeuios Sian villanueva (theieaftei TCT
18178). Remeuios in tuin on 4 Novembei 1946 tiansfeiieu hei iights to saiu
poition of lanu to Pio Sian Nelliza (theieaftei TCT 2492). Annotateu at the
back of Pio Sian Nelliza's title ceitificate was the following "that a poition of
1u,788 sq. m. of Lot 1214 now uesignateu as Lots 1412-B-2 anu 1214-B-S of
the subuivision plan belongs to the Nunicipality of Iloilo as pei instiument
uateu 1S Novembei 19S2.

0n 24 August 1949 the City of Iloilo, which succeeueu to the Nunicipality of
Iloilo, uonateu the city hall site togethei with the builuing theieon, to the
0niveisity of the Philippines (Iloilo bianch). The site uonateu consisteu of
Lots 1214-B, 1214-C anu 1214-B, with a total aiea of 1S,SSu sq. m., moie oi
less. Sometime in 19S2, the 0niveisity of the Philippines encloseu the site
uonateu with a wiie fence. Pio Sian Nelliza theieupon maue iepiesentations,
thiu his lawyei, with the city authoiities foi payment of the value of the lot
(Lot 1214-B). No iecoveiy was obtaineu, because as allegeu by Pio Sian
Nelliza, the City uiu not have funus. The 0niveisity of the Philippines,
meanwhile, obtaineu Tiansfei Ceitificate of Title No. 71S2 coveiing the
thiee lots, Nos. 1214-B, 1214-C anu 1214-B.

0n 1u Becembei 19SS Pio Sian Nelizza fileu an action in the CFI Iloilo
against Iloilo City anu the 0niveisity of the Philippines foi iecoveiy of Lot
1214-B oi of its value. Aftei stipulation of facts anu tiial, the CFI ienueieu its
uecision on 1S August 19S7, uismissing the complaint. Saiu couit iuleu that
the instiument executeu by }uliana Nelliza in favoi of Iloilo municipality
incluueu in the conveyance Lot 1214-B, anu thus it helu that Iloilo City hau
the iight to uonate Lot 1214-B to 0P. Pio Sian Nelliza appealeu to the Couit
of Appeals. 0n 19 Nay 196S, the CA affiimeu the inteipietation of the CFI
that the poition of Lot 1214 solu by }uliana Nelliza was not limiteu to the
1u,788 squaie meteis specifically mentioneu but incluueu whatevei was
neeueu foi the constiuction of avenues, paiks anu the city hall site.
Nonetheless, it oiueieu the iemanu of the case foi ieception of eviuence to
ueteimine the aiea actually taken by Iloilo City foi the constiuction of
avenues, paiks anu foi city hall site.

6))E*K

Whethei oi not the tiue intention of the paities as to the object of the public
instiument was intenueu meiely to fuithei uesciibe the lots alieauy
specifically mentioneu, oi it was intenueu to covei othei lots not yet
specifically mentioneu.

7EL,N-K

65=$727$="=635 3< '35=7"'= 65W3#W$! S4$!=635 3< #"^K The
inteipietation of the public instiument uateu 1S Novembei 19S2 involves a
question of law, since the contiact is in the natuie of law as between the
paities anu theii successois in inteiest.

65=$5= 3< =9$ 2"7=6$! "! =3 =9$ 3JP$'= 3< =9$ 24J#6'
65!=748$5=K The paiamount intention of the paities was to pioviue Iloilo
municipality with lots sufficient oi auequate in aiea foi the constiuction of
the Iloilo City hall site, with its avenues anu paiks. Foi this mattei, a
pievious uonation foi this puipose between the same paities was ievokeu
by them, because of inauequacy of the aiea of the lot uonateu. Saiu
instiument uesciibeu 4 paicels of lanu by theii lot numbeis anu aiea; anu
then it goes on to fuithei uesciibe, not only those lots alieauy mentioneu,
but the lots object of the sale, by stating that saiu lots weie the
ones neeueu foi the constiuction of the city hall site, avenues anu paiks
accoiuing to the Aiellano plan. If the paities intenueu meiely to covei the
specifieu lots (Lots 2, S, 1214-C anu 1214-B), theie woulu scaicely have
been any neeu foi the next paiagiaph, since these lots weie alieauy plainly
anu veiy cleaily uesciibeu by theii iespective lot numbei anu aieas. Saiu
next paiagiaph uoes not ieally auu to the cleai uesciiption that was alieauy
given to them in the pievious one. It is theiefoie the moie ieasonable
inteipietation to view it as uesciibing those othei poitions of lanu
contiguous to the lots that, by iefeience to the Aiellano plan, will be founu
neeueu foi the puipose at hanu, the constiuction of the city hall site.

7$S467$8$5=> =9"= !"#$ 84!= 9"W$ " +$=$7865"=$ =965; "!
3JP$'=> 6! <4#<6##$+ 6< 3JP$'= 3< !"#$ 6! '"2"J#$ 3< J$65; 8"+$
+$=$7865"=$ "= =9$ =68$ 3< =9$ '35=7"'=K The iequiiement of the
law that a sale must have foi its object a ueteiminate thing, is fulfilleu as long
as, at the time the contiact is enteieu into, the object of the sale is capable of
being maue ueteiminate without the necessity of a new oi fuithei
agieement between the paities (Ait. 127S, olu Civil Coue; Ait. 146u, New
Civil Coue). The specific mention of some of the lots plus the statement that
the lots object of the sale aie the ones neeueu foi city hall site; avenues anu
paiks, accoiuing to the Aiellano plan, sufficiently pioviues a basis, as of the
time of the execution of the contiact, foi ienueiing ueteiminate saiu lots
without the neeu of a new anu fuithei agieement of the paities.

"7$##"53 2#"5 65 $b6!=$5'$ !65'$ /AGHc "7$" 3< #"5+ 5$$+$+
<37 =9$ '6=R 9"## !6=$ \53^5K The Aiellano plan was in existence as
eaily as 1928. Tthe pievious uonation of lanu foi city hall site on 27
Novembei 19S1 was ievokeu on 6 Naich 19S2 foi being inauequate in aiea
unuei saiu Aiellano plan. The aiea neeueu unuei that plan foi city hall site
was then alieauy known; that the specific mention of some of the lots
coveieu by the sale in effect fixeu the coiiesponuing location of the city hall
site unuei the plan; that, theiefoie, consiueiing the saiu lots specifically
mentioneu in the public instiument, anu the piojecteu city hall site, with its
aiea, as then shown in the Aiellano plan (Exhibit 2), it coulu be ueteimineu
which, anu how much of the poitions of lanu contiguous to those specifically
nameu, weie neeueu foi the constiuction of the city hall site.

#3= /G/XZJ 6! '35=6;434! =3 #3= /G/XZ' "5+ /G/XZ+> "5+ 6! 65
=9$ 9$"7= 3< =9$ '6=R 9"## !6=$K Lot 1214-B is contiguous to Lots
1214-C anu 1214-B, aumitteuly coveieu by the public instiument. It is
stipulateu that, aftei execution of the contiact, the Nunicipality of Iloilo
possesseu it togethei with the othei lots solu. It sits piactically in the heait
of the city hall site.

263 !6"5 8$##6Y" " 53="7R 24J#6' "5+ =94! "^"7$ 3< =9$
=$78! 3< =9$ 24J#6' 65!=748$5=K Pio Sian Nelliza, fiom the
stipulation of facts, was the notaiy public of the public instiument. As such,
he was awaie of its teims. Saiu instiument was also iegisteieu with the
Registei of Beeus anu such iegistiation was annotateu at the back of the
coiiesponuing title ceitificate of }uliana Nelliza. Fiom these stipulateu facts,
it can be infeiieu that Pio Sian Nelliza knew of the afoiesaiu teims of the
instiument oi is chaigeable with knowleuge of them; that knowing so, he
shoulu have examineu the Aiellano plan in ielation to the public instiument;
that fuitheimoie, he shoulu have taken notice of the possession fiist by the
Nunicipality of Iloilo, then by the City of Iloilo anu latei by the 0niveisity of
the Philippines of Lot 1214-B as pait of the city hall site conveyeu unuei that
public instiument, anu iaiseu piopei objections theieto if it was his position
that the same was not incluueu in the same.

2765'62#$! 3< '6W6# #"^> "! ^$## "! #"'9$!> $!=322$# "5+
$S46=R "22#6$+c #3= 65'#4+$+ 65 '35W$R"5'$K Foi 2u long yeais, Pio
Sian Nelliza anu his pieuecessois-in-inteiest, uiu not object to saiu
possession, noi exeicise any act of possession ovei Lot 1214-B. Applying,
theiefoie, piinciples of civil law, as well as laches, estoppel, anu equity, saiu
lot must necessaiily be ueemeu incluueu in the conveyance in favoi of Iloilo
municipality, now Iloilo City.

WBEREF0RE, the uecision appealeu fiom is affiimeu insofai as it affiims
that of the Couit of Fiist Instance, anu the complaint in this case is
uismisseu. No costs. So oiueieu.

! 8,&-$T+)'1&7$,*(&)'2 S*/1$ -)'1&7$,*(&)'

/01 68$#+" 35;> $= "#0 :)0 "#<7$+3 35;> $= "#0> /@A !'7" /@@> ;070
5?0 #ZTBHHH> 3O.?C*D H> /AHV
JFK ;ELC,N> #?E "NN '0

<(O.)K

0n Febiuaiy 2S, 1976 Imelua 0ng, foi anu in consiueiation of 0ne (P1.uu)
Peso anu othei valuable consiueiations, executeu in favoi of piivate
iesponuent Sanuia Naiuzzo, then a minoi, a Quitclaim Beeu wheieby she
tiansfeiieu, ieleaseu, assigneu anu foievei quit-claimeu to Sanuia Naiuzzo,
hei heiis anu assigns, all hei iights, title, inteiest anu paiticipation in the V
unuiviueu poition of the paicel of lanu. But Imelua 0ng ievokeu the
afoiesaiu Beeu of Quitclaim anu, theieaftei, on }anuaiy 2u, 1982 uonateu the
whole piopeity uesciibeu above to hei son, Rex 0ng-}imenez.

0n }une 2u, 198S, Sanuia Naiuzzo, thiough hei guaiuian (oJ litem) Alfieuo
0ng, fileu with the Regional Tiial Couit of Nakati, Netio Nanila an action
against petitioneis, foi the iecoveiy of owneishippossession anu
nullification of the Beeu of Bonation ovei the poition belonging to hei anu
foi Accounting.

In theii iesponsive pleauing, petitioneis claimeu that the Quitclaim Beeu is
null anu voiu inasmuch as it is equivalent to a Beeu of Bonation, acceptance
of which by the uonee is necessaiy to give it valiuity. Fuithei, it is aveiieu
that the uonee, Sanuia Naiuzzo, being a minoi, hau no legal peisonality anu
theiefoie incapable of accepting the uonation.

The tiial couit ienueieu juugment in favoi of iesponuent Naiuzzo anu helu
that the Quitclaim Beeu is equivalent to a Beeu of Sale anu, hence, theie was
a valiu conveyance in favoi of the lattei. The Inteimeuiate Appellate Couit
affiimeu the appealeu juugment anu helu that the Quitclaim Beeu is a
conveyance of piopeity with a valiu cause oi consiueiation; that the
consiueiation is the 0ne (P1.uu) Peso which is cleaily stateu in the ueeu
itself; that the appaient inauequacy is of no moment since it is the usual
piactice in ueeus of conveyance to place a nominal amount although theie is
a moie valuable consiueiation given.

6))E*K

Whethei oi not the quitclaim is equivalent to a ueeu of sale oi to a ueeu of
uonation

7EL,N-K

The Quitclaim is equivalent to a Beeu of Sale.

A caieful peiusal of the subject ueeu ieveals that the conveyance of the one-
half (V) unuiviueu poition of the above-uesciibeu piopeity was foi anu in
consiueiation of the 0ne (P 1.uu) Peso anu the othei valuable consiueiations
(emphasis supplieu) paiu by piivate iesponuent Sanuia Naiuzzo thiough
hei iepiesentative, Alfieuo 0ng, to petitionei Imelua 0ng. Stateu uiffeiently,
the cause oi consiueiation is not the 0ne (P1.uu) Peso alone but also the
othei valuable consiueiations. As aptly stateu by the Appellate Couit-

... oltbouqb tbe couse is not stoteJ in tbe controct it is presumeJ
tbot it is existinq unless tbe Jebtor proves tbe controry {Article 1SS4
of tbe Civil CoJe). 0ne of tbe Jisputoble presumptions is tbot tbere is
o sufficient couse of tbe controct {Section S, {r), Rule 1S1, Rules of
Court). lt is o leqol presumption of sufficient couse or consiJerotion
supportinq o controct even if sucb couse is not stoteJ tberein
{Article 1SS4, New Civil CoJe of tbe Pbilippines.) Tbis presumption
connot be overcome by o simple ossertion of lock of consiJerotion
especiolly wben tbe controct itself stotes tbot consiJerotion wos
qiven, onJ tbe some bos been reJuceJ into o public instrument witb
oll Jue formolities onJ solemnities. To overcome tbe presumption of
consiJerotion tbe olleqeJ lock of consiJerotion must be sbown by
preponJeronce of eviJence in o proper oction. {Somonillo vs,
Cojucom, et ol., 107 Pbil. 4S2).

The execution of a ueeu puipoiting to convey owneiship of a iealty is in
itself piima facie eviuence of the existence of a valuable consiueiation, the
paity alleging lack of consiueiation has the buiuen of pioving such
allegation. {Cobollero, et ol. vs. Cobollero, et ol., {CA), 4S 0.6. 2SS6).

WBEREF0RE, the appealeu uecision of the Inteimeuiate Appellate Couit
shoulu be, as it is heieby AFFIRNEB, with costs against heiein petitioneis.

G01 !234!$! !"#W"'635 !$77"53 #"+"5;" (NQ ";4!=65 !0 #"+"5;"
:)0 '347= 3< "22$"#! (NQ J$75"7+3 !0 "!$5$="> () ;E(DQ,(N ?e .]*
6NO?UM*.*N. '#$8$5'6" "0 "!$5$="> /@/ !'7" @T/> ;070 5?0 #ZVVAAA>
"E-E). GX> /AHX
JFK ;ELC,N> #?E "NN '0

<(O.)K

Clemencia, a spinstei who ietiieu as uivision supeiintenuent of public
schools at 6S in 1961, hau a nephew nameu Beinaiuo S. Aseneta, the chilu of
hei sistei uloiia, anu a niece nameu Salvacion, the uaughtei of hei sistei
Floia. She legally auopteu Beinaiuo in 1961. When Clemencia was about 78
yeais olu, she signeu nine ueeus of sale in favoi of Salvacion foi vaiious ieal
piopeities. 0ne ueeu of sale conceineu the saiu Paco piopeity (auministeieu
by the Lauanga spouses) which puipoiteuly was solu to Salvacion foi
P26,uuu. The total piice involveu in the nine ueeus of sale anu in the tenth
sale executeu on Novembei 8, 1974 was P92,2uu.

0n the witness stanu, Clemencia uenieu having "ieceiveu even one centavo"
of the piice of P26,uuu much less the P92,uuu. This testimony was
coiioboiateu by Soleuau L. Naninang, 69, a uentist with whom Clemencia
hau liveu foi moie than thiity yeais in Kamuning, Quezon City. The notaiy
testifieu that the ueeu of sale foi the Paco piopeity was signeu in the office
of the Quezon City iegistiy of ueeus. Be uiu not see Salvacion giving any
money to Clemencia.

In Nay, 197S, Beinaiuo as guaiuian of Clemencia, fileu an action foi
ieconveyance of the Paco piopeity, accounting of the ientals anu uamages.
Clemencia was not mentally incompetent but she was placeu unuei
guaiuianship because she was an easy piey foi exploitation anu ueceit.

The tiial couit anu the Appellate Couit ueclaieu voiu the sale of the Paco
piopeity. The Lauanga spouses aigue that the Appellate Couit eiieu in not
consiueiing that inauequacy of piice may inuicate a uonation oi some othei
contiact; in uisiegaiuing the piesumption that the sale was faii anu iegulai
anu foi a sufficient consiueiation; in oveilooking impoitant facts anu in not
holuing that Beinaiuo hau no iight to file a complaint to annul the sale.

6))E*K

Whethei oi not the sale is voiu foi lack of consiueiation.

7EL,N-K

A contiact of sale is voiu anu piouuces no effect whatsoevei wheie the piice,
which appeais theiein as paiu, has in fact nevei been paiu by the puichasei
to the venuoi {Heneses vJo. Je CotinJiq vs. Eeirs of Cotolino Roque, l-2S777,
November 26, 1976, 74 SCRA 8S, 88; Hopolo vs. Hopolo, 12S Pbil. 979, 987;
Syllobus, 0cejo, Perez & Co. vs. Ilores onJ Bos, 40 Pbil. 921). Such a sale is
inexistent anu cannot be consiueieu consummateu {Borromeo vs. Borromeo,
98 Pbil. 4S2; CruzoJo vs. Bustos onJ Fscoler, S4 Pbil. 17; 6oroncionq vs.
6oroncionq, l-22SS1, Hoy 21, 1969, 28 SCRA 229).

It was not shown that Clemencia intenueu to uonate the Paco piopeity to the
Lauangas. Bei testimony anu the notaiy's testimony uestioyeu any
piesumption that the sale was faii anu iegulai anu foi a tiue consiueiation.
}uuge Colayco concluueu that the Lauangas abuseu Clemencia's confiuence
anu uefiauueu hei of piopeities with a maiket value of PS9S,SS9.2S when
she was alieauy 78 yeais olu. The contention that Beinaiuo hau no iight to
institute the instant action because he was not a compulsoiy heii of
Clemencia cannot be sustaineu. Beinaiuo was Clemencia's auopteu son.
Noieovei, Clemencia, by testifying in this case, tacitly appioveu the action
biought in hei behalf.

Noial uamages awaiueu by the tiial couit is not sanctioneu by Ait. 2217-
222u of the Civil Coue. Clemencia's own signatuie in the ueeu biought about
the mess within which she was entangleu.

WBEREF0RE, the juugment of the Appellate Couit is affiimeu with the
mouification that the aujuuication foi moial anu exemplaiy uamages is
uiscaiueu. No costs.

! 8,&-$T+)'1&7$,*(&)'2 R61( G$ &' R)'$@ ), &(1 AH6&E*/$'(

/01 7$24J#6' 3< =9$ 296#62265$! :)0 296#62265$ 7$!347'$!
+$W$#328$5= '37237"=635 (NQ .]* '347= 3< "22$"#!> /IG 2],L0
ATI> ;070 5?0 #Z/I/X/> P(NE(DF @/> /AVH
JFK 8(-Q?a(> JD*-*..* 40

<(O.)K

The Buieau of Piisons instituteu a complaint against Nacaiio Apostol foi the
lattei's failuie to pay the unpaiu balance foi logs puichaseu. Apostol, who
was then the piesiuent of the iesponuent coipoiation, ueliveieu goous
belonging to the coipoiation anu without the knowleuge oi consent of the
stockholueis theieof, to the Buieau of Piisons in an attempt to settle his
peisonal uebts with the lattei entity. The coipoiation uemanueu the Buieau
of Piisons foi the ietuin of the goous. 0pon the iefusal of the Buieau, the
coipoiation fileu a motion to inteivene.

6))E*K

Is the "piice" limiteu only to be paiu in money.

7EL,N-K

No. Aiticle 14S8 of the New Civil Coue pioviues that the puichasei may pay
"a piice ceitain in money oi its equivalent," which means that they meant of
the piice neeu not be in money. In this case, the mateiials have been
assesseu anu evaluateu anu theii piice equivalent in teims of money have
been ueteimineu anu that saiu mateiials foi whatevei piice they have been
assigneu weie consiueieu as tokens of payment.

! 8,&-$T+)'1&7$,*(&)'2 R61( G$ +$,(*&' ), C1-$,(*&'*G/$ *( (0$ V&4$ )%
8$,%$-(&)'

/01 #37$5Y3 W$#"!'3 "5+ !3'3773 P0 W$#"!'3 :)0 93537"J#$
'347= 3< "22$"#! (NQ 8";+"#$5" $!="=$> 65'0> V/ !'7" X@> ;070
5?0 #Z@/I/H> PEN* GA> /AB@
JFK 8(-Q?a(> JD*-*..* 40

<(O.)K

0n Novembei 29, 1962, the plaintiff anu the uefenuant hau enteieu into a
contiact of sale by viitue of which the uefenuant offeieu to sell the plaintiff
anu the plaintiff in tuin agieeu to buy a paicel of lanu with an aiea of 2,uS9
squaie foi the total puichase piice of P1uu,uuu.uu. Plaintiff anu uefenuant
agieeu that the total uown payment shall by PSu,uuu.uu, incluuing the
P1u,uuu.uu paitial payment, anu that upon completion of the saiu uown
payment of PSu,uuu.uu, the balance of P7u,uuu.uu shall be saiu by the
plaintiff to the uefenuant in 1u yeais fiom Novembei 29, 1962. The time
within the full uown payment of the PSu,uuu.uu was to be completeu was
not specifieu by the paities but the uefenuant was uuly compensateu uuiing
the saiu time piioi to completion of the uown payment of PSu,uuu.uu by way
of lease ientals on the house existing theieon which was eailiei leaseu by
uefenuant to the plaintiff's sistei-in-law, Socoiio }. velasco, anu which weie
uuly paiu to the uefenuant by checks uiawn by plaintiff.

6))E*K

Was theie a peifecteu contiact of sale.

7EL,N-K

No. The couit iuleu that theie was no contiact of sale that was peifecteu
because the minus of the paities uiu not meet "in iegaiu to the mannei of
payment." The mateiial aveiments containeu in the petitioneis' complaint
themselves uisclose a lack of complete "agieement in iegaiu to the mannei
of payment" of the lot in question. Inueeu, this Couit has alieauy iuleu
befoie that a uefinite agieement on the mannei of payment of the puichase
piice is an essential element in the foimation of a binuing anu enfoiceable
contiact of sale. The fact, theiefoie, that the petitioneis ueliveieu to the
iesponuent the sum of P1u,uuu as pait of the uown-payment that they hau
to pay cannot be consiueieu as sufficient pioof of the peifection of any
puichase anu sale agieement between the paities heiein unuei aiticle 1482
of the new Civil Coue, as the petitioneis themselves aumit that some
essential mattei the teims of payment still hau to be mutually
covenanteu.

G01 =3R3=" !9"^> 65'0 :)0 '347= 3< "22$"#! (NQ #45" #0 !3!"> GX
!'7" @GI> ;070 5?0 #Z//TTVI> 8(F G@> /AAV
JFK 8(-Q?a(> JD*-*..* 40

<(O.)K

Piivate iesponuent Luna L. Sosa wanteu to puichase a Toyota Lite Ace. With
his his son, uilbeit, he went to the Toyota office at Shaw Boulevaiu, Pasig
anu met Popong Beinaiuo, a sales iepiesentative of Toyota. Sosa
emphasizeu to Beinaiuo that he neeueu the Lite Ace not latei than 17 }une
1989. Beinaiuo assuieu him that a unit woulu be ieauy foi pick up at 1u:uu
a.m. on that uate. They contiacteu an agieement on the ueliveiy of the unit
anu that the balance of the puichase piice woulu be paiu by cieuit financing
thiough B.A. Finance. The next uay, Sosa anu uilbeit ueliveieu the
uownpayment anu met Beinaiuo who then accomplisheu a piinteu vehicle
Sales Pioposal (vSP) in which the amount was filleu-up but the spaces
pioviueu foi "Beliveiy Teims" weie not filleu-up. Bowevei, on 17 }une 1989,
at 9:Su am, Beinaiuo calleu uilbeit to infoim him that the cai coulu not be
ueliveieu because "nasulot ang unit ng ibang malakas."

Toyota contenus, on the othei hanu, that the Lite Ace was not ueliveieu to
Sosa because of the uisappioval by B.A. Finance of the cieuit financing
application of Sosa. Toyota then gave Sosa the option to puichase the unit by
paying the full puichase piice in cash but Sosa iefuseu. Sosa askeu that his
uown payment be iefunueu. Toyota uiu so on the veiy same uay by issuing a
Fai East Bank check foi the full amount, which Sosa signeu with the
ieseivation, "without piejuuice to oui futuie claims foi uamages."
Theieaftei, Sosa sent two letteis to Toyota. In the fiist lettei, he uemanueu
the iefunu of the uown payment plus inteiest fiom the time he paiu it. The
seconu, he uemanueu one million pesos iepiesenting inteiest anu uamages,
both with a waining that legal action woulu be taken if payment not paiu.
Toyota's iefuseu to acceue to the uemanus of Sosa. The lattei fileu with RTC
a complaint against Toyota foi uamages unuei Aiticles 19 anu 21 of the Civil
Coue. In its answei to the complaint, Toyota allegeu that no sale was enteieu
into between it anu Sosa, that Beinaiuo hau no authoiity to sign foi anu in
its behalf. It allegeu that the vSP uiu not state the uate of ueliveiy.

6))E*K

Was theie a peifecteu contiact of sale.

7EL,N-K

Theie was no peifecteu contiact of sale. What is cleai fiom the agieement
signeu by Sosa anu uilbeit is not a contiact of sale. No obligation on the pait
of Toyota to tiansfei owneiship of a ueteiminate thing to Sosa anu no
coiielative obligation on the pait of the lattei to pay theiefoie a piice ceitain
appeais theiein. The piovision on the uown payment of PI00,000.00 maue
no specific iefeience to a sale of a vehicle. If it was intenueu foi a contiact of
sale, it coulu only iefei to a sale on installment basis, as the vSP executeu the
following uay con finneu. Nothing was mentioneu about the full puichase
piice anu the mannei the installments weie to be paiu. A uefinite agieement
on the mannei of payment of the piice is an essential element in the
foimation of a binuing anu enfoiceable contiact of sale. This is so because
the agieement as to the mannei of payment goes, into the piice such that a
uisagieement on the mannei of payment is tantamount to a failuie to agiee
on the piice. Befiniteness as to the piice is an essential element of a binuing
agieement to sell peisonal piopeity.

! 8,&-$T+)'1&7$,*(&)'2 A*,'$1( R)'$@2 ;$1&)'

/01 !M?E)*) 7"835 +3738"#> !70> (NQ 73!"763 !"#"!> (NQ !M?E)*)
7"835 +3738"#> P70> (NQ ;"4+$#6" W$;" :)0 9350 '347= 3<
"22$"#! (NQ <6#38$5" P"W$##"5"> TT !'7" VBV> ;070 5?0 #Z@TIH@>
!*M.*UC*D V> /ABV
JFK 8(-Q?a(> JD*-*..* 40

<(O.)K

A paicel of lanu in Iloilo weie co-owneu by 7 siblings all suinameu Boiilleno.
S of the siblings gave a special powei of attoiney to theii niece Naiy
}imenez, who succeeueu hei fathei as a co-ownei, foi the sale of the lanu to
the Boiomals. 0ne of the co-ownei, heiein petitionei, Filomena }avellana
howevei uiu not gave hei consent to the sale even though hei siblings
executeu a special powei of attoiney foi hei signatuie. The co-owneis went
on with the sale of 67 pait of the lanu anu a new title foi the Boiomals weie
issueu. Responuent offeieu to iepuichase the lanu foi SuK as stateu in the
ueeu of sale but petitioneis ueclineu invoking lapse in time foi the iight of
iepuichase. Petitionei also contenu that the SuK piice was only placeu in the
ueeu of sale to minimize payment of fees anu taxes anu as such, iesponuent
shoulu pay the ieal piice paiu which was P11S, 2Su.

6))E*)K

1.) Was theie a piice agieeu upon.

2.) Was the money paiu in eainest.

S.) Bas Filomena }avellana's iight to ieueem expiieu.

7EL,N-K

No, theie was no uefinite piice. While the letteis ielieu upon by petitioneis
coulu convey the iuea that moie oi less some kinu of consensus hau been
aiiiveu at among the othei Bomeowneis to sell the piopeity in uispute to
petitioneis, it cannot be saiu uefinitely that such a sale hau even been
actually peifecteu. The fact alone that in the latei lettei of }anuaiy 18, 1968
the piice inuicateu was P4.uu pei squaie metei while in that of Novembei S,
1967, what was stateu was PS.uu pei squaie metei negatives the possibility
that a "piice uefinite" hau alieauy been agieeu upon.

No, it was not eainest money. While PS,uuu might have inueeu been paiu to
the co-owneis in 0ctobei, 1967, theie is nothing to show that the same was
in the concept of the eainest money contemplateu in Aiticle 1482 of the Civil
Coue, invokeu by petitionei, as signifying peifection of the sale. vieweu in
the backuiop of the factual milieu theieof extant in the iecoiu, We aie moie
inclineu to believe that the saiu PS,uuu weie paiu in the concept of eainest
money as the teim was unueistoou unuei the 0lu Civil Coue, that is, as a
guaiantee that the buyei woulu not back out, consiueiing that it is not cleai
that theie was alieauy a uefinite agieement as to the piice then anu that
petitioneis weie ueciueu to buy 67 only of the piopeity shoulu iesponuent
}avellana iefuse to agiee to pait with hei 17 shaie.

No. Theie is no showing that Filomena was notifieu. The law piefeis that all
the teims anu conuitions of the sale shoulu be uefinite anu in wiiting. As
aptly obseiveu by }ustice uatmaitan in the uecision unuei ieview, Aiticle
1619 of the Civil Coue bestows unto a co-ownei the iight to ieueem anu "to
be subiogateu unuei the same teims anu conuitions stipulateu in the
contiact", anu to avoiu any contioveisy as to the teims anu conuitions unuei
which the iight to ieueem may be exeiciseu, it is beat that the peiiou
theiefoi shoulu not be ueemeu to have commenceu unless the notice of the
uisposition is maue aftei the foimal ueeu of uisposal has been uuly executeu.
Anu it being beyonu uispute that iesponuent heiein has nevei been notifieu
in wiiting of the execution of the ueeu of sale by which petitioneis acquiieu
the subject piopeity, it necessaiily follows that hei tenuei to ieueem the
same maue on }une 1u, 1968 was well within the peiiou piesciibeu by law.
Inueeu, it is immateiial when she might have actually come to know about
saiu ueeu, it appeaiing she has nevei been shown a copy theieof thiough a
wiitten communication by eithei any of the petitioneis puichaseis oi any of
hei co-owneis-venuees.

G01 ;3#+$573+> 65'0 :)0 '347= 3< "22$"#!> 263 J"77$=3 _ !35!>
65'0> 263 J"77$=3 7$"#=R +$W$#328$5=> 65'0 (NQ "5=935R S4$>
GAA !'7" /X/> ;070 5?0 /GTH/G> 5?:*UC*D GX> /AAH
JFK 8(-L()(N-> #((DN, '0

<(O.)K

Pio Baiietto anu Sons, Inc. (BARRETT0 & S0NS) owneu foity-thiee (4S)
paicels of iegisteieu lanu with a total aiea of 18,Suu squaie meteis locateu
at Cailos Palanca St., Quiapo, Nanila, which weie moitgageu with the 0niteu
Coconut Planteis Bank (0CPB). The obligation of the coipoiation with
0CPB iemaineu unpaiu making foieclosuie of the moitgage imminent.
uolueniou, Inc. (u0LBENR0B), offeieu to buy the piopeity fiom BARRETT0
& S0NS. It paiu Baiietto 1 million pesos as pait of the puichase piice. The
iemaining balance woulu be paiu once Baiietto hau consoliuateu the titles.
0n the uate that uolueniou was supposeu to pay, uolueniou askeu foi an
extension. 0CPB agieeu. When the extension uate aiiiveu, uolueniou askeu
foi anothei extension. 0CPB iefuseu. Baiietto successfully consoliuateu the
titles. uolueniou infoimeu Baiietto that it woulu not be able to push thiough
with theii agieement. It askeu Baiietto to ietuin the 1 million pesos.
Baiietto uiu not give in to uolueniou's iescission. Insteau, it solu the
piopeity that was pait of theii agieement to Asiawoilu.

6))E*K

Whethei oi not uolueniou will be paiu back the 1 million pesos.

7EL,N-K

Yes, uolueniou will be paiu back the 1 million pesos. 0nuei Aiticle 1S8S of
the Civil Coue, iescission cieates the obligation to ietuin the things which
weie the object of the contiact togethei with theii fiuits anu inteiest. The
venuoi is theiefoie obligeu to ietuin the puichase piice paiu to him by the
buyei if the lattei iescinus the sale, oi when the tiansaction was calleu off
anu the subject piopeity hau alieauy been solu to a thiiu peison, as what
obtaineu in this case. Theiefoie, by viitue of the extiajuuicial iescission of
the contiact to sell by petitionei without opposition fiom piivate
iesponuents who, in tuin, solu the piopeity to othei peisons, piivate
iesponuent BARRETT0 REALTY, as the venuoi, hau the obligation to ietuin
the eainest money of P1, uuu,uuu.uu plus legal inteiest fiom the uate it
ieceiveu notice of iescission fiom petitionei, i.e., Su August 1988, up to the
uate of the ietuin oi payment.

It woulu be most inequitable if iesponuent BARRETT0 REALTY woulu be
alloweu to ietain petitionei's payment of P1, uuu,uuu.uu anu at the same
time appiopiiate the pioceeus of the seconu sale maue to anothei.

WBEREF0RE, the Petition is uRANTEB. The uecision of the Couit of Appeals
is REvERSEB anu SET ASIBE. Piivate iesponuent Pio Baiietto Realty
Bevelopment, Inc. (BARRETT0 REALTY), its successois anu assigns aie
oiueieu to ietuin to petitionei uolueniou, Inc. (u0LBENR0B), the amount
of P1,uuu,uuu.uu with legal inteiest theieon fiom Su August 1988, the
uate of notice of extiajuuicial iescission, until the amount is fully paiu, with
costs against piivate iesponuents.

@01 296#62265$ <7$$ 27$!!> 65'0 :)0 '347= 3< "22$"#! g/G.]
+,:,),?N1 (NQ #6^"R^"R 24J#6!965;> 65'0> XB@ !'7" T@A> ;070 5?0
/@GHTX> 3O.?C*D GX> GIIV
JFK 8(-L()(N-> #((DN, '0

<(O.)K

Petitionei is a uomestic coipoiation engageu in the publication of Philippine
Fiee Piess Nagazine, one of the wiuely ciiculateu political magazines in the
Philippines. Bue to its wiue ciiculation, the publication of the Fiee Piess
magazine enableu petitionei to attain consiueiable piestige piioi to the
ueclaiation of Naitial Law as well as to achieve a high piofit maigin.

Petitionei, thiu Teouoio Locsin, Si., fileu a case of Annulment of Sale of its
builuing, lot anu piinting machineiies uuiing the iegime of Naitial Law to
piivate iesponuent then iepiesenteu by late Buen. Nenzi on Febiuaiy 26,
1987. Petitionei contenus that theie was vitiateu consent anu gioss
inauequacy of puichase piice uuiing its sale on 0ctobei 2S, 197S. The tiial
couit uismisseu petitionei's complaint anu gianteu piivate iesponuent's
counteiclaim. It was elevateu to the Couit of Appeals but was also uismisseu
foi lack of meiit.

6))E*K

Whethei oi not the action foi annulment has alieauy piesciibeu.

7EL,N-K

Yes, it has alieauy piesciibeu. Aiticle S91 of the Civil Coue peitinently ieaus
"The action foi annulment shall be biought within foui yeais. This peiiou
shall begin: In cases of intimiuation, violence oi unuue influence, fiom the
time the uefect of consent ceases x x x".

The Supieme Couit cannot accept the petitioneis' contention that the peiiou
uuiing which authoiitaiian iule was in foice hau inteiiupteu piesciiption
anu that the same began to iun only on Febiuaiy 2S, 1986, when the Aquino
goveinment took powei. It is tiue that unuei Aiticle 11S4 |of the Civil Couej
xxx foituitous events have the effect of tolling the peiiou of piesciiption.
Bowevei, the Supieme Couit cannot say, as a univeisal iule, that the peiiou
fiom Septembei 21, 1972 thiough Febiuaiy 2S, 1986 involves a foice
majeuie. Plainly, the Supieme Couit cannot box in the "uictatoiial" peiiou
within the teim without uistinction, anu without, by necessity, suspenuing
all liabilities, howevei uemanuable, incuiieu uuiing that peiiou, incluuing
peihaps those oiueieu by this Couit to be paiu.

WBEREF0RE, the petition is BENIEB, anu the challengeu uecision of the
Couit of Appeals AFFIRNEB.

X01 !2!0 #46! W0 '74Y (NQ "6+" '74Y :)0 !2!0 "#$P"5+73 <$75"5+3>
!70 (NQ 76=" <$75"5+3> XBB !'7" /B@> ;070 5?0 /XVXBI> +*O*UC*D A>
GIIV
JFK 8(-L()(N-> #((DN, '0

<(O.)K

In 198S, Ciuz executeu a Kasunuuan with the uloiiosos foi the consiueiation
of the ieai poition of a 22S sq m lot. The Kasunuuan pioviues that the lot
will be solu at a P4u pei sq m. anu that the poition of the lot to be solu is the
ieai poition of it. Also, upon selling, the Ciuz will tiansfei theii house fiom
the fiont poition to the ieai poition of the lanu once it is bought anu that
they will have a iight of way fiom the fiont poition going to the back enu of
the lot. The Ciuz nevei gave anything to the uloiiosos foi theie was an
allegeu failuie to have the lanu suiveyeu. Bue to non payment, the uloiiosos
insteau solu the whole lot (back anu ieai poition) to the Feinanuos.

In 1994, aftei iepeateu uemanus, the Feinanuos fileu a case in couit foi
accion publiciana uemanuing the Ciuz to vacate the lot anu to pay a iental of
PSuu.uu. The RTC iuleu in favoi of the Feinanuos. The CA affiimeu the RTC
iuling.

6))E*K

Whethei oi not what tianspiieu between the Ciuzes anu the uloiiosos was a
contiact of sale.

7EL,N-K

No, because the absence of a specific mannei of payment in the teims anu
conuitions of the contiact makes it a contiact to sell. 0wneiship was nevei
tiansfeiieu to the Ciuzes. This is because the mannei of payment of the
puichase piice is an essential element befoie a valiu anu binuing contiact of
sale can exist. Although the Civil Coue uoes not expiessly state that the
minus of the paities must also meet on the teims oi mannei of payment of
the piice, the same is neeueu, otheiwise theie is no sale. Also, the Ciuzes
nevei tiansfeiieu theii house fiom the fiont poition to the ieai poition of
the lot. It was eviuent in the contiact that they will tiansfei the house to the
ieai poition once they weie able to buy it.

Supieme Couit also iuleu that the Feinanuos weie not buyeis in bau faith.
Theie was no consummateu sale between the Ciuzes anu the uloiiosos. In a
contiact to sell, theie being no pievious sale of the piopeity, a thiiu peison
buying such piopeity uespite the fulfilment of the suspensive conuition such
as the full payment of the puichase piice, foi instance, cannot be ueemeu a
buyei in bau faith anu the piospective buyei cannot seek the ielief of
ieconveyance of the piopeity. Theie is no uouble sale in such case. Title to
the piopeity will tiansfei to the buyei aftei iegistiation because theie is no
uefect in the ownei-sellei's title pei se, but the lattei, of couise, may be sueu
foi uamages by the intenuing buyei. A peison who occupies the lanu of
anothei at the lattei's foibeaiance oi peimission without any contiact
between them is necessaiily bounu by an implieu piomise that he will vacate
upon uemanu.

Consiueiing that petitioneis' continueu possession of the piopeity has
alieauy been ienueieu unlawful, they aie bounu to pay ieasonable iental foi
the use anu occupation theieof, which in this case was appiopiiately peggeu
by the RTC at PSuu.uu pei month beginning 0ctobei 21, 1994 when
iesponuents fileu the case against them until they vacate the piemises.

Finally, petitioneis seek compensation foi the value of the impiovements
intiouuceu on the piopeity. Again, this is the fiist time that they aie iaising
this point. As such, petitioneis aie now baiieu fiom seeking such ielief.

WBEREF0RE, the petition is BENIEB. The Becision of the Couit of Appeals
uateu 0ctobei S, 2uuu is AFFIRNEB.

V01 837"#$! +$W$#328$5= '382"5R> 65'0 :)0 '347= 3< "22$"#!
(NQ 9$78$5$;6#+3 +$!$3 (NQ !3'3773 +$!$3> GB !'7" XHX> ;070
5?0 #ZGTVBG> 8(DO] GH> /ATA
JFK 8(-L()(N-> #((DN, '0

<(O.)K

Beimenegiluo Beseo anu Socoiio Beseo, iesponuents heiein anu plaintiffs
below, biought this action to annul a sale to Noiales of lot No. 2488 of the
Cauastial Suivey of Catanauan, Piovince of Quezon, anu to secuie the
iegistiation of a ueeu of conveyance of saiu lot in theii (Beseos') favoi.

Lot No. 2488 useu to belong to Eniique P. Nontinola anu was coveieu by
Tiansfei Ceitificate of Title No. T-1S687 of the Registei of Beeus of saiu
piovince, in his name. Alleging that his ownei's uuplicate copy of saiu
ceitificate hau been lost, Nontinola succeeueu in secuiing, fiom the Couit
above mentioneu, an oiuei foi the issuance of a seconu ownei's uuplicate,
with which he manageu to sell the lot, on Septembei 24, 19S4, to Pio Reyes.
0pon iegistiation of the ueeu of sale to the lattei, saiu TCT was cancelleu
anu, in lieu theieof, TCT No. 21uS6, in the name of Reyes, was issueu on
Novembei 18, 19S4, Lupo Abella, maiiieu to Felisa Aguilai heieaftei
iefeiieu to as the Abellas puichaseu the lanu fiom Reyes, wheieupon the
ueeu of conveyance, executeu by Reyes, was iegisteieu anu the Abellas got
TCT No. 21uS7 in theii name, upon cancellation of saiu TCT No. 21uS6.
About seven (7) months latei, oi on }une 16, 19SS, the Abellas solu the lanu,
foi P7,uuu, of which P4,Suu was then paiu to the Beseos, who
immeuiately took possession of the piopeity.

It appeais, howevei, that the fiist ownei's uuplicate of TCT No. T-1S687 was
eithei nevei lost oi subsequently founu by Nontinola, who, making use of it,
moitgageu C, the lot in question, befoie Febiuaiy 21, 19S6, to the Philippine
National Bank, foi P7uu. Then, on the uate last mentioneu, Nontinola solu
the piopeity to Noiales, foi P2,uuu, fiom which the sum uue to the Bank
was ueuucteu. 0pon piesentation of the ueeu of sale in favoi of Noiales, the
lattei was auviseu by the office of the Registei of Beeus of Quezon that saiu
TCT No. T-1S687 hau alieauy been cancelleu anu the piopeity solu, fiist, to
Pio Reyes, anu, then, to the Abellas. Theieupon, Noiales fileu a petition foi
the annulment anu cancellation of the seconu ownei's copy of TCT No. T-
1S687. Aftei uue notice to Reyes anu the Abellas, but not to the Beseos, saiu
petition was gianteu on Naich 12, 19S6.

Baving been unable, in view of these uevelopments, to iegistei the ueeu of
conveyance executeu by the Abellas, the Beseos commenceu, in the couit
afoiementioneu, the piesent action against Noiales, foi the annulment of the
subsequent sale theieto by Nontinola, anu the iegistiation of saiu ueeu of
conveyance in theii (Beseos) favoi, alleging that the same enjoys piefeience
ovei the sale to Noiales, the Beseos having, piioi theieto, bought lot No.
2488 in goou faith anu foi value, anu having been fiist in possession of saiu
lot, likewise, in goou faith.

0pon the othei hanu, Noiales claimeu to have a bettei iight upon the giounu
that it (Noiales) hau bought the piopeity in goou faith anu foi value, ielying
upon the fiist ownei's uuplicate copy of TCT No. T-1S687, unlike the Beseos,
whose pieuecessoi in inteiest, Pio Reyes, hau ielieu upon the seconu
ownei's uuplicate, which Noiales allegeu hau been secuieu fiauuulently,
anu that the sale to Reyes anu that maue by the lattei to the Abellas aie null
anu voiu, because both sales took place unuei suspicious ciicumstances, so
that Noiales concluueu they (Reyes anu the Abellas) weie not
puichaseis in goou faith anu foi value.

6))E*K

Whethei oi not Couit of Appeals eiieu in not upholuing Noiales contention.

7EL,N-K

No, because accoiuing to Supieme Couit, since the object of this litigation is
a iegisteieu lanu anu the two (2) buyeis theieof have so fai been unable to
iegistei the ueeus of conveyance in theii iespective favoi, it follows that "the
owneiship" of saiu lot "peitain(s)" puisuant to Aiticle 1S44 of oui Civil
Coue S to the Beseos, as the only paity who took possession theieof in
goou faith.

Noiales aigues that it was not enough foi the Beseos to have gone to the
office of the Registei of Beeus anu founu theiein that theie weie no flaws in
the title of the Abellas, anu that the Beseos shoulu have, also, asceitaineu
why the Abellas hau paiu only P1.uu to Reyes, anu why the lattei hau paiu
the same amount to Nontinola. To begin with, the Beseos uiu not know that
saiu sum was the consiueiation paiu by the Abellas to Reyes anu by Reyes to
Nontinola. Seconuly, the Beseos weie not bounu to check the ueeus of
conveyance by Reyes to the Abellas, anu by Nontinola to Reyes. Baving
founu that the ownei's uuplicate copy of TCT No. 21uS7, in the name of the
Abellas, was a genuine copy of the oiiginal on file with the 0ffice of the
Registei of Beeus, the Beseos weie fully justifieu in ielying upon saiu TCT
No. 21uS7, anu hau no legal obligation to make faithei investigation. Thiiuly,
weie we to auopt the piocess of ieasoning auvocateu by Noiales, the iesult
woulu still be auveise theieto. Inueeu, if it weie not sufficient foi the Beseos
to veiify in saiu office the genuineness of the ownei's uuplicate of TCT No.
21uS7, much less woulu Noiales have been justifieu in ielying upon
Nontinola's copy of TCT No, T-1S687 in his name. In fact, hau Noiales, at
least gone to the 0ffice of the Registei of Beeus as the Beseos uiu befoie
puichasing the piopeity in uispute, Noiales woulu have founu out, not only
that TCT No. T-1S687 hau long been cancelleu, but, also, that the piopeity
hau been pieviously solu by Nontinola to Reyes anu by Reyes to the Abellas.
In shoit, the negligence of Noiales was the pioximate cause of the iesulting
wiong, anu, hence, Noiales shoulu be the paity to suffei its consequences.

WBEREF0RE, the appealeu uecision of the Couit of Appeals shoulu be, as it
is heieby affiimeu.

T01 73J$7=3 #"2$7"# :)0 9350 ^6##6"8 20 73;$7!> ,N ],) O(M(O,.F ()
"..?DN*F ;*N*D(L ?e .]* 4N,.*Q !.(.*)> Q*e*NQ(N.Z(MM*LL(N.> 7$24J#6'
3< =9$ 296#62265$!> /@ !'7" GT> ;070 5?0 #Z/TVAI> P(NE(DF @I> /ATV
JFK 2*M,.?> ",L**N 80

<(O.)K

Robeito Lapeial, a iegisteieu ownei of a iesiuential lot anu builuing situateu
at No. 1S7u Ailegui St., San Niguel, Nanila, coveieu by Tiansfei Ceitificate of
Title No. 41622 of the Registei of Beeus of Nanila. 0n Apiil 12, 1944, foi the
sum of PSuu,uuu.uu in }apanese Nilitaiy Wai Notes, he executeu a ueeu of
sale conveying saiu piopeity to the occupation Republic of the Philippines.
As a iesult, T.C.T. No. 41622 was cancelleu anu T.C.T. No. 7S1u2 was issueu
in the name of the venuee. Alien Piopeity Custouian of the 0niteu States
founu out that the occupation Republic was an instiumentality of the
}apanese Aimy of occupation uuiing the wai. Puisuant to Executive 0iuei
No. 9818 of the Piesiuent of the 0niteu States, the piopeity was tiansfeiieu
to the Philippine Alien Piopeity Auministiatoi, to be helu, useu,
auministeieu, liquiuateu, solu oi otheiwise uealt with by the lattei in
accoiuance with the piovisions of the Tiauing With the Enemy Act, as
amenueu, anu the Philippine Piopeity Act of 1946.

Lapeial fileu a claim foi the ietuin of the piopeity afoiesaiu with the vesteu
Piopeity Claims Committee of the Philippine Alien Piopeity Auministiatoi
foi the annulment of the abovementioneu ueeu of sale anu the issuance by
the lattei of the coiiesponuing ceitificate of title in his name contenuing that
he executeu the ueeu of sale in favoi of the occupation Republic of the
Philippines unuei uuiess anu uue to the thieats employeu by the
iepiesentatives of the }apanese Nilitaiy Auministiation, anu that the
consiueiation of PSuu,uuu.uu in }apanese Nilitaiy notes was giossly
inauequate.

Philippine Alien Piopeity Auministiatoi, with pievious leave of couit, fileu
an amenueu answei wheiein it allegeu that the claim fileu by Lapeial with
its vesteu Piopeity Claims Committee was uisalloweu by the lattei anu that
the plaintiff hau piofiteu fiom the use of the puichase piice anu is estoppeu
fiom questioning the valiuity of the sale.

The tiial couit ienueieu juugment in favoi of the plaintiff anu against
uefenuant anu inteivenoi oiueiing the cancellation of the Beeu of Sale anu
the ietuin. The juugment was contesteu by the appellant. Bence, this
petition.

6))E*K

Whethei oi not appellee executeu the Beeu of Sale of Apiil 12, 1944 unuei
uuiess anu uue to the thieats of the }apanese aimy.

7EL,N-K

Yes, because of the piesence of the following ciicumstances:

(1) It is of common knowleuge that, uuiing the seconu woilu wai, the
}apanese aimy of occupation in the Philippines, uiu occupy anu take piivate
piopeities in the City of Nanila anu elsewheie in the countiy without the
consent of theii iespective owneis, foi theii use in the piosecution of the
wai, iesoiting in some cases to the expeuient of making the owneis execute
ueeus of sale oi contiacts of lease.

(2) It is not uenieu that appellee, befoie the wai anu at the time of the
execution of the questioneu sale, was a veiy iich man with extensive ieal
estate holuings piincipally in Nanila. The iecoiu uiscloses in this connection,
that fiom 1914 up to the uate of the sale, he hau not uisposeu of a single
piopeity by sale.

(S) The consiueiation paiu foi the piopeity, namely the sum of PSuu,uuu.uu
in }apanese militaiy notes, was giossly inauequate.

B01 "4737" 20 +$ #$35 :)0 9350 !$7"<65 !"#W"+37> () PEQ-* ?e
JD(NO] b6W ?e .]* '?ED. ?e <,D). 6N).(NO* ?e 7,a(L '(L??O(N ',.F> (NQ
$4!6J63 J$75"J$> "#J$7=3 "0 W"#653> !M*O,(L +*ME.F !]*D,ee ?e .]*
3ee,O* ?e .]* 2D?:,NO,(L !]*D,ee> 2D?:,NO* ?e 7,a(L> (NQ .]* 7$;6!=$7 3<
+$$+! e?D '(L??O(N ',.F> @T !'7" VTT> ;070 5?0 #Z@IHB/> +*O*UC*D GH>
/ABI
JFK 2*M,.?> ",L**N 80

<(O.)K

This was a consoliuateu case since the two cases involves the same
piopeities. A juugment obtaineu by Be Leon against piivate iesponuent
Beinabe, having become final anu executoiy, a wiit of execution was issueu.
Puisuant theieto, the City Sheiiff levieu on execution on two paicels of lanu
of 682.S squaie meteis each iegisteieu in the name of Beinabe. The
piopeities was solu to Auioia Be Leon, sistei of the juugment cieuitoi, as
the highest biuuei foi the total sum of PSS, 194.uu (the piopeity then being
subject to an existing lien in the amount of P12u,uuu.uu). The ceitificate of
the sale was then issueu.

}ust about two weeks befoie the one-yeai ieuemption peiiou, Beinabe fileu
a sepaiate civil action against Eniique ue Leon, Auioia ue Leon as a
puichasei anu the Sheiiff as a uefenuants foi setting asiue oi annulment of
the execution sale foi being anomalous anu iiiegulai, anu foi oiueiing of a
new auction sale. This seconu case, insteau of being iefeiieu to }uuge Ciuz
piesiuing ovei Bianch 12 which has issueu the wiit of execution, was
assigneu to Bianch 14 piesiueu by }uuge Salvauoi.

Beinabe also allgeu gioss inauequacy of the piice of PSS, 194.uu paiu by
Auioia when accoiuing to him the piopeities coulu have easily solu foi a
total piice of PS8S, uuu.uu while aumitting that theie was an existing
moitgage lien on the piopeities in the amount of 12u,uuu.uu which
necessaiily affecteu theii value.

6))E*K

Whethei oi not the inauequacy of the piice uuiing the execution sale affects
the valiuity of the sale.

7EL,N-K

No. Bowevei, while in oiuinaiy sales foi ieasons of equity a tiansaction may
be invaliuateu in the giounu of inauequacy of piice, oi when such
inauequacy shocks one's conscience as to justify the couits to inteifeie, such
uoes not apply when the law gives to the ownei the iight to ieueem, as when
a sale is maue at public auction, upon the theoiy that the lessei the piice the
easiei it is foi the ownei to effect ieuemption. Anu it was aptly saiu: "When
theie is the iight to ieueem, inauequacy of piice shoulu not be mateiial
because the juugment uebtoi may ieacquiie the piopeity oi also sell his
iight to ieueem anu they iecovei the loss he claims to have suffeieu by
ieason of the piice obtaineu at the auction sale.

H01 #37$5Y3 W$#"!'3 "5+ !3'3773 P0 W$#"!'3 :)0 93537"J#$
'347= 3< "22$"#! (NQ 8";+"#$5" $!="=$> 65'0> V/ !'7" X@A> ;070
5?0 #Z@/I/H PEN* GA> /AB@
JFK 2*M,.?> ",L**N 80

<(O.)K

The Sps. velasco fileu a complaint foi specific peifoimance against
Nagualena Estates Inc. on the allegation that on Novembei 29, 1962 the
plaintiff anu the uefenuant hau enteieu into a contiact of sale by viitue of
which the uefenuant offeieu to sell the plaintiff anu the plaintiff in tuin
agieeu to buy a paicel of lanu with an aiea of 2,uS9 squaie meteis moie
paiticulaily uesciibeu as Lot 1S, Block 7, Psu-6129, locateu at No. S9 coinei
6th Stieet anu Pacific Avenue, New Nanila, this City, foi the total puichase
piice of P1uu,uuu.uu.

The fact of the mattei was that the lanu was being leaseu by a ceitain
Socoiio velasco who, on Novembei 29, 1962, went to the office of the
uefenuant inuicateu hei uesiie to puichase the lot. Sps. velasco inuicateu
theii willingness to sell the piopeity to hei at the piice of P1uu,uuu.uu
unuei the conuition that a uown payment of PSu,uuu.uu be maue,
P2u,uuu.uu of which was to be paiu on Novembei S1, 1962, anu that the
balance of P7u,uuu.uu incluuing inteiest a 9% pei annum was to be paiu on
installments foi a peiiou of ten yeais at the iate of PS,S81.S2 on }une Su anu
Becembei of eveiy yeai until the same shall have been fully paiu. Socoiio
velasco offeieu to pay P1u,uuu.uu as initial payment insteau of the agieeu
P2u,uuu.uu but because the amount was shoit of the allegeu P2u,uuu.uu the
same was accepteu meiely as uepositeu anu upon iequest of Socoiio
velasco the ieceipt was maue in the name of hei biothei-in-law, Loienzo
velasco. Bowevei, Socoiio velasco faileu to complete the uown payment of
PSu,uuu.uu anu neithei has she paiu any installments on the balance of
P7u,uuu.uu up to the piesent time anu it was only on }anuaiy 8, 1964 that
Socoiio velasco tenueieu payment of P2u,uuu.uu, which offei the uefenuant
iefuseu to accept because it hau consiueieu the offei to sell iescinueu on
account of hei failuie to complete the uown payment on oi befoie Becembei
S1, 1962.

6))E*K

Whethei oi not the talks between the Nagualena Estate, Inc. anu Loienzo
velasco eithei uiiectly oi thiu his sistei-in-law Socoiio velasco evei iipeneu
into a consummateu sale.

7EL,N-K

No contiact of sale was peifecteu because the minus of the paities uiu not
meet "in iegaiu to the mannei of payment. It cannot, theiefoie, be saiu that a
uefinite anu fiim sales agieement between the paities hau been peifecteu
ovei the lot in question. Inueeu, this Couit has alieauy iuleu befoie that a
uefinite agieement on the mannei of payment of the puichase piice is an
essential element in the foimation of a binuing anu enfoiceable contiact of
sale.

The fact, theiefoie, that the petitioneis ueliveieu to the iesponuent the
sum of P1u,uuu as pait of the uown-payment that they hau to pay cannot be
consiueieu as sufficient pioof of the peifection of any puichase anu sale
agieement between the paities heiein unuei aiticle 1482 of the new Civil
Coue, as the petitioneis themselves aumit that some essential mattei the
teims of payment still hau to be mutually covenanteu.

! S),4*(&)' )% +)'(,*-( )% .*/$2 8,$>*,*(),@2 =%%$,2 S),41 )% =%%$,

/01 #37$5Y3 Y"R'3> +6356!63 65Y"> (NQ !$W$7653 #6Y"77";" :)0
!"#W"+37 !$77"> W$5"5'63 '35'$2'635> (NQ 296#0 '0 ^96="\$7>
XX 2],L0 @GT> ;070 5?0 #Z/H@@V> P(NE(DF /I> /AG@
JFK 2*M,.?> ",L**N 80

<(O.)K

Zayco anu Seiia executeu a contiact foi an option to buy Palma Cential foi
1N but no stipulation was maue as to how much the fiist payment woulu be
anu when it shoulu be paiu. Zayco wiote to Seiia accepting the contiact
tenueiing P1uu,uuu as his fiist payment befoie the option peiiou expiieu.
Seiia wiote to Zayco stating that the option contiact of Novembei 7, 1918,
was cancelleu anu annulleu. 0n the same uay, Zayco biought suit against
Seiia to compel him to execute the ueeu of sale anu conveyance of the Palma
Cential anu Estate anu to pay, in auuition, PSuu,uuu as uamages. Seiia
uemuiieu on the giounu that the contiact uoes not specify the pait of the
piice that was to be paiu in cash anu the pait that was to be paiu within a
peiiou not exceeuing thiee yeais. Zayco latei leaineu that Seiia hau alieauy
solu the piopeity to Whitakei anu Concepcion foi 1.SN.

6))E*K

Whethei oi not theie was a peifecteu contiact of sale.

7EL,N-K

No. The couit below holus that this contiact has no consiueiation anu is, foi
this ieason, null anu voiu. This conclusion, howevei, is not suppoiteu by the
eviuence. It is tiue that the contiact uoes not state any consiueiation on the
pait of Seiia, but it is piesumeu that theie is a consiueiation in all contiacts.
Besiues, a consiueiation can be pioveu anu, in this case, theie is eviuence
showing its existence. The Palma Cential was in competition with the Beaiin
Cential, anu Zayco has been the subject of solicitations of both centials.
Seiia offeieu to give him 6u pei cent of the sugai of his cane milleu in the
Palma Cential. Zayco ueciueu to become a suppoitei of the Palma Cential.
Zayco's suppoit to the Palma Cential was a piestation of thing oi seivice,
which positively benefiteu Seiia. Zayco piays in this action that Seiia be
compelleu to sell to him the Palma Cential in accoiuance with the contiact to
sell. It having been ueteimineu that theie exists a consiueiation foi this
contiact, the same is binuing upon the paities. It was, at least, an offei to sell,
which was accepteu by lettei, anu of this acceptance the offeiei hau
knowleuge befoie saiu offei was withuiawn. The concuiience of both acts
coulu at all events have geneiateu a contiact, if none theie was befoie.
Bowevei, Zayco's acceptance inuicates, coulu not, in itself, conveit the offei
of sale maue by Seiia into a peifect contiact. In oiuei foi the acceptance to
have this effect, it must be plain anu unconuitional, anu it will not be so if it
involves any new pioposal, foi in that case it woulu not mean confoimity
with the offei, which is what gives iise to the geneiation of the contiact. The
lettei of acceptance of Zayco lacks these iequisites.

Theie was no concuiience of offei anu acceptance. Seiia's offei uiu not state
the amount of fiist payment. When Zayco accepteu the offei, tenueiing the
sum of P1uu,uuu as fiist payment, his acceptance involveu a pioposal, not
containeu in the offei, that this piecisely, anu not any othei, shoulu be the
amount of the fiist payment.

! S),4*(&)' )% +)'(,*-( )% .*/$2 8,$>*,*(),@2 P&-$1 )% +)'1$'(

/01 #46! "!6"65 :)0 J$5P"865 P"#"5+356> XV 2],L0 GAT> ;070 5?0 #Z
GIX@V> 3O.?C*D G@> /AG@
JFK 2*D*a> 7?C*D. P?eeD*F !0

<(O.)K

Luis Asiain, the plaintiff-appellant in this case, is the ownei of
the hacienua known as "Naiia" situateu in the municipality of La Cailota,
Piovince of 0cciuental Negios, containing about 1u6 hectaies. Benjamin
}alanuoni, the uefenuant-appellee, is the ownei of
anothei hacienua aujoining of Asiain.

Asiain anu }alanuoni happening to meet no one of the uays of Nay, 192u,
Asiain was willing to sell to }alanuoni a poition of his hacienua foi the sum of
PSS,uuu. Asiain inuicateu the tiact of lanu in question, affiiming that it
containeu between 2S anu Su hectaies, anu that the ciop of sugai cane then
planteu woulu piouuce not less than 2,uuu piculs of sugai. But }alanuoni,
iemaining uoubtful as to the extent of the lanu anu as to the amount of ciop
on it.

The memoianuum signeu by both paities is as follows:
Puichase of lanu of Ni. Luis Asiain anu his wife Naiia Cauenas, by
B. }alanuoni, containing 2S hectaies moie oi less of lanu bounueu
by piopeity of the puichasei, with its coiiesponuing ciop,
estimateu at 2,uuu piculs, the total value of which is SS thousanu.
The piice is to be paiu by paying Su thousanu at the signing of the
uocument, anu 2S thousanu within one yeai, with inteiest at the
iate of 1u pei cent.

0nce }alanuoni hau possession of the tiact of lanu, he hau it suiveyeu anu it
was founu out that the lanu was only 18 hectaies anu that the amount of
piculs of sugai piouuceu was only aiounu 8uu.

The piovision unuei the New Civil Coue in question heie is:
"ln tbe sole of reol estote, moJe for o lump sum onJ not ot tbe rote
of o certoin sum for o unit of meosure or number, tbere sboll be no
increose or Jecreose of tbe price, oltbouqb tbere be o qreoter or less
oreo or number tbon tbot stoteJ in tbe controct.

Tbe some rule sboll be opplieJ wben two or more immovobles os
solJ for o sinqle price; but if, besiJes mentioninq tbe bounJories,
wbicb is inJispensoble in every conveyonce of reol estote, its oreo or
number sboulJ be JesiqnoteJ in tbe controct, tbe venJor sboll be
bounJ to Jeliver oll tbot is incluJeJ witbin soiJ bounJories, even
wben it exceeJs tbe oreo or number specifieJ in tbe controct; onJ,
sboulJ be not be oble to Jo so, be sboll suffer o reJuction in tbe
price, in proportion to wbot is lockinq in tbe oreo or number, unless
tbe controct is rescinJeJ becouse tbe venJee Joes not occeJe to tbe
foilure to Jeliver wbot bos been stipuloteJ."

6))E*K

Whethei oi not the contiact of sale can be annulleu consiueiing the
uisciepancy of the sale in gioss.

7EL,N-K

Foi the puipose of ueteimining whethei ielief shall be gianteu the couits
have uiviueu the cases into two geneial classes: (1) Wheie the sale is of a
specific quantity which is usually uenominateu a sale by the acie; (2) wheie
the sale is usually calleu a sale in gioss.

Sales in gioss foi the puipose of equitable ielief may be uiviueu into vaiious
suboiuinate classifications: (1) Sales stiictly anu essentially by the tiact,
without iefeience in the negotiation oi in the consiueiation to any
uesignateu oi estimateu quantity of acies; (2) sales of the like kinu, in which,
though a supposeu quantity by estimation is mentioneu oi iefeiieu to in the
contiact, the iefeience was maue only foi the puipose of uesciiption, anu
unuei such ciicumstances oi in such a mannei as to show that the paities
intenueu to iisk the contingency of quantity, whatevei it might be, oi how
much so evei it might exceeu oi fall shoit of that which was mentioneu in
the contiact; (S) sales in which it is eviuent, fiom extianeous
ciicumstances of locality, value, piice, time, anu the conuuct anu
conveisations of the paities, that they uiu not contemplate oi intenu to iisk
moie than the usual iates of excess oi ueficit in similai cases, oi than such as
might ieasonably be calculateu on as within the iange of oiuinaiy
contingency; (4) sales which, though technically ueemeu anu uenominateu
sales in gioss, aie in fact sales by the acie, anu so unueistoou by the paities.

The sale heie was not a contiact of hazaiu. It was a sale in gioss in which
theie was a mutual mistake as to the quantity of lanu solu anu as to the
amount of the stanuing ciop. The mistake of fact as uiscloseu not alone by
the teims of the contiact but by the attenuant ciicumstances, it is only
piopei to look into the intentions of the paities. The mistake with iefeience
to the subject-mattei of the contiact is such that, at the option of the
puichasei, it is iescinuable. Without such mistake the agieement woulu not
have been maue anu since this is tiue, the agieement is inopeiative anu voiu.
Theie is no inuication of fiauu oi ueception on the pait of the venuoi but
only a mistake. Specific peifoimance of the contiact can theiefoie not be
alloweu at the instance of the venuoi.

The ultimate iesult is to put the paities back in exactly theii iespective
positions befoie they became involveu in the negotiations anu befoie
accomplishment of the agieement. This was the uecision of the tiial juuge
anu we think that uecision confoims to the facts, the law, anu the piinciples
of equity.

}uugment is affiimeu, without piejuuice to the iight of the plaintiff to
establish in this action in the lowei couit the amount of the ient of the lanu
puisuant to the teims of the complaint uuiing the time the lanu was in the
possession of the uefenuant, anu to obtain juugment against the uefenuant
foi that amount, with costs against the appellant. So oiueieu.

! S),4*(&)' )% +)'(,*-( )% .*/$2 8,$>*,*(),@2 =>(&)' +)'(,*-(

/01 "5=3563 $576S4$Y +$ #" '"W"+" :)0 "5=3563 +6"Y> @B 2],L0 ATG>
;070 5?0 #Z//TTH> "MD,L /> /A/H
JFK 2*D*a> 7?C*D. P?eeD*F !0

<(O.)K

This action was instituteu by the plaintiff foi the puipose of iequiiing the
uefenuant to comply with a ceitain "contiact of option" to puichase a ceitain
piece oi paicel of lanu uesciibeu in saiu contiact anu foi uamages foi a
noncompliance with saiu contiact. The uefenuant was oiueieu to convey the
title foi his hacienua to the appellee upon payment of P7u,uuu.

This is the contiact of option executeu by the uefenuant as well as the
plaintiff's ieply;

C0NTRACT 0F 0PTI0N.

I, the unueisigneu, Antonio Biaz, of legal age, with peisonal iegistiation
ceitificate Numbei F-8SS949, issueu at Pitogo, Tayabas, }anuaiy 16, 1912,
anu tempoiaiily iesiuing in Nanila, P. I., uo heieby giant an option to
Antonio Eniiquez to puichase my hacienua at Pitogo consisting of 1uu anu
ouu hectaies, within the peiiou necessaiy foi the appioval anu issuance of a
Toiiens title theieto by the uoveinment foi which he may pay me eithei the
sum of thiity thousanu pesos (PSu,uuu), Philippine cuiiency, in cash, oi
within the peiiou of six (6) yeais, beginning with the uate of the puichase,
the sum of foity thousanu pesos (P4u,uuu), Philippine cuiiency, at six pei
cent inteiest pei annum, with uue secuiity foi the payment of the saiu
P4u,uuu in consiueiation of the sale to him of my piopeity uesciibeu as
follows, to wit:

About one hunuieu hectaies of lanu in Pitogo, Tayabas, containing about
2u,uuu coconut tiees anu 1u,uuu nipa-palm tiees, all belonging to me, which
I heieby sell to Antonio Eniiquez ue la Cavaua foi seventy thousanu pesos,
unuei the conuitions heiein specifieu.

I ueclaie that Antonio Eniiquez is the sole peison who has, anu shall have,
uuiing the peiiou of this option, the iight to puichase the piopeity above-
mentioneu.

I likewise ueclaie that Antonio Eniiquez shall be fiee to iesell the saiu
piopeity at whatevei piice he may uesiie, pioviueu that he shoulu comply
with the stipulations covenanteu with me.

In witness of my entiie confoimity with the foiegoing, I heieunto affix my
signatuie, in Nanila, P. I., this 1Sth uay of Novembei, 1912.

(Sgu.) Antonio Biaz.

Signeu in the piesence of:
(Sgu.) }. vALBS BIAZ.

(EXBIBIT B.)

P. l., November 1S, 1912.

Si. Bon ANT0NI0 BIAZ,
Colle victorio, No. 12S, W. C., Honilo, P. l.

BEAR SIR: I have the honoi to infoim you that, in confoimity with the lettei
of option in my favoi of even uate, I will buy youi coconut plantation in
Pitogo, containing one hunuieu hectaies, togethei with all the coconut anu
nipa-palm tiees planteu theieon, unuei the following conuitions:

1. I shall senu a suiveyoi to suivey the saiu piopeity, anu to apply to the
uoveinment foi a Toiiens title theiefoie, anu, if the expenses incuiieu foi
the same shoulu not exceeu P1,uuu, I shall pay the PSuu anu you the othei
PSuu; ProviJeJ, bowever, that you shall give the suiveyoi all necessaiy
assistance uuiing his stay at the bocienJo.

2. I shall pay the puichase piice to you in confoimity with oui lettei of
option of this uate, anu aftei the Toiiens title shall have been officially
appioveu.

Youis iespectfully,
(Sgu.) A. ENRIQ0EZ

I acknowleuge ieceipt of, anu confoim with, the foiegoing.
(Sgu.) ANT0NI0 BIAZ

In confoimity with theii agieement, the plaintiff applieu anu was gianteu
the iegistiation of 2 paicels of lanu foi the hacienua but the uefenuant
woulu only tiansfei one of the 2 paicels of lanu. Contenuing that the
agieement only incluueu one paicel anu not the whole hacienua oi that the
1uu hectaies was only pait of the hacienua anu foi the uefenuant, that the
1uu hectaies alieauy coveieu the whole hacienua.

6))E*:

Whethei oi not the contiact maue was a contiact of option oi a contiact of
sale.

7EL,N-:

A piomise maue by one paity, if maue in accoiuance with the foims iequiieu
by the law, may be a goou consiueiation (couso) foi a piomise maue by
anothei paity. (Ait. 1274, Civil Coue.) In othei woius, the consiueiation
(couso) neeu not pass fiom one to the othei at the time the contiact is
enteieu into. Reauing the saiu contiact fiom its foui coineis it is cleaily as
absolute piomise to sell a uefinite paicel of lanu foi a fixeu piice upon
uefinite conuitions. The uefenuant piomiseu to convey to the plaintiff the
lanu in question as soon as the same was iegisteieu unuei the Toiiens
system, anu the plaintiff piomiseu to pay to the uefenuant the sum of
P7u,uuu, unuei the conuitions nameu, upon the happening of that event. The
contiact was not, in fact, what is geneially known as a "contiact of option." It
uiffeis veiy essentially fiom a contiact of option. An optional contiact is a
piivilege existing in one peison, foi which he hau paiu a consiueiation,
which gives him the iight to buy, foi example, ceitain meichanuise of ceitain
specifieu piopeity, fiom anothei peison, if he chooses, at any time within
the agieeu peiiou, at a fixeu piice. The contiact of option is a sepaiate anu
uistinct contiact fiom the contiact which the paities may entei into upon
the consummation of the option. A consiueiation foi an optional contiact is
just as impoitant as the consiueiation foi any othei kinu of contiact. If theie
was no consiueiation foi the contiact of option, then it cannot be enteieu
any moie than any othei contiact wheie no consiueiation exists. To
illustiate, A offeis B the sum of P1uu,uuu foi the option of buying his
piopeity within the peiiou of Su uays. While it is tiue that the conuitions
upon which A piomises to buy the piopeity at the enu of the peiiou
mentioneu aie usually fixeu in the option, the consiueiation foi the option is
an entiiely uiffeient consiueiation fiom the consiueiation of the contiact
with iefeience to which the option exists. A contiact of option is a contiact
by viitue of the teims of which the paities theieto piomise anu obligate
themselves to entei into contiact at a futuie time, upon the happening of
ceitain events, oi the fulfillment of ceitain conuitions.

In view of the foiegoing, anu aftei a consiueiation of the facts anu the law
applicable theieto, we aie peisuaueu that theie is no ieason given in the
iecoiu justifying a mouification oi ieveisal of the juugment of the lowei
couit. The same is, howevei, heieby affiimeu, with costs. So oiueieu.

G01 742$7=3 !376"53> $= "#0 :)0 J"!6#63 J"4=6!="> $= "#0> J"!6#63
J"4=6!=" (NQ !3<6" +$ 73!"!> T !'7" AXT> ;070 5?0 #Z/VBVG>
+*O*UC*D GA> /ATG
JFK 2*D*a> 7?C*D. P?eeD*F !0

<(O.)K

The juugment appealeu fiom, ienueieu on Naich 1u, 19S9 by the Couit of
Fiist Instance of Rizal, aftei a joint tiial of both cases mentioneu in the
caption, oiueis "the spouses Basilio Bautista anu Sofia ue Rosas to execute a
ueeu of sale coveiing the piopeity in question in favoi of Rupeito Soiiano
anu 0limpia ue }esus upon payment by the lattei of P1,6Su.uu which is the
balance of the piice agieeu upon, that is PS,9uu.uu, anu the amount
pieviously ieceiveu by way of loan by the saiu spouses fiom the saiu
Rupeito Soiiano anu 0limpia ue }esus, to pay the sum of PSuu.uu by way of
attoiney's fees, anu to pay the costs.

In this case, the uefenuants executeu a contiact of option in favoi of the
plaintiffs.

The contiact stipulateu that:

That, on Nay Su, 19S6, the saiu spouses foi anu in consiueiation
of the sum of P1,8uu, signeu a uocument entitleu "Kasulatan Ng
Sanglaan" in favoi of Rupeito Soiiano anu 0limpia ue }esus, unuei
the following teims anu conuitions:
1. Na ang sanglaang ito ay magpapatuloy lamang hanggang
ualawang (2) taon pasimula sa aiaw na laguaan ang kasunuuang
ito, at magpapalampas ng ualawang panahong ani o ani agiicola.
2. Na ang aanihin ng bukiu na isinangla ay mapupunta sa
pinagsanglaan bilang pakinabang ng nabanggit na halagang
inutang.
S. Na ang buwis sa pamahalaan ng lupang ito ay ang magbabayau
ay ang Nagsangla o mayaii.
4. Na ang lupang nasanglang ito ay hinui na maaaiing isangla pang
muli sa ibang tao ng walang pahintulot ang 0nang Pinagsanglaan.
S. Na pinagkasunuuan uin uinatnan na sakaling magkaioon ng
kakayahan ang Pinagsanglaan ay maaaiing bilhin ng patuluyan ng
lupang nasanglang ito kahit anong aiaw sa loob ng taning na
ualawang taon ng sanglaan sa halagang Tatlong Libo at Siam na
Raan Piso (PS,9uu.uu), salaping Pilipino na pinagkaisahan.
6. Na sakaling ang pagkakataon na ipinagkaloob ng Nagsangla sa
sinunuang talata ay hinui maisagawa ng Pinagsanglaan sa
Kawalan ng maibayau at gayon uin naman ang Nagsangla na hinui
magbalik ang halagang inutang sa taning na panahon, ang
sanglaan ito ay lulutasin alinsunou sa itinatagubilin ng batas sa
bagay-bagay ng sanglaan, na ito ay ang tinatawag na
(F0RECL0S0RE 0F N0RTuAuES, }0BICIAL 0R EXTRA }0BICIAL).
Naaiing makapili ng hakbang ang Pinagsanglaan, alinsunou sa
batas o kaya naman ay pagusapan ng ualawang paite ang
mabuting paiaan ng paglutas ng bagay na ito.

The uefenuants then ieceiveu a lettei fiom the attoiney of the plaintiffs that
they aie going to puichase the lot. Befenuants contenu that as moitgagois of
the lot, theii iight to iepuichase is inheient anu insepaiable fiom this kinu
of contiact.

6))E*K

Whethei oi not in the contiact of option, the iight of the moitgagoi to
iepuichase supeiseues the iight of the buyei in an option to buy.

7EL,N-K

In this case the moitgagoi's piomise to sell is suppoiteu by the same
consiueiation as that of the moitgage itself, which is uistinct fiom that which
woulu suppoit the sale, an auuitional amount having been agieeu upon to
make up the entiie piice of PS,9uu.uu, shoulu the option be exeiciseu. The
moitgagois' piomise was in the natuie of a continuing offei, non-
withuiawable uuiing a peiiou of two yeais, which upon acceptance by the
moitgagees gave iise to a peifecteu contiact of puichase anu sale.

Appellants cite the case of liqo vs. Court of Appeols, L-SS72, 0.u. No. 11,
S281, wheie we helu that a stipulation in a contiact of moitgage to sell the
piopeity to the moitgagee uoes not binu the same but cieates only a
peisonal obligation on the pait of the moitgagoi. The citation insteau of
sustaining appellant's position, confiims that of appellees, who aie not heie
enfoicing any ieal iight to the uisputeu lanu but aie iathei seeking to obtain
specific peifoimance of a peisonal obligation, namely, the execution of a
ueeu of sale foi the piice agieeu upon, the coiiesponuing amount to covei
which was uuly uepositeu in couit upon the filing of the complaint.

Refeience is maue in appellants' biief to the fact that they tenueieu the sum
of P1,8uu.uu to ieueem moitgage befoie they fileu theii complaint in civil
case No. 99 in the }ustice of the Peace Couit of Noiong, Rizal. That tenuei
was ineffective foi the puipose intenueu. In the fiist place it must have been
maue aftei the option to puichase hau been exeiciseu by appellees (Civil
Case No. 99 was fileu on }une 9, 19S8, only to be uismisseu foi lack of
juiisuiction); anu seconuly, appellants' to ieueem coulu be uefeateu by
appellees' pieemptive iight to puichase within the peiiou of two yeais fiom
Nay Su, 19S6. As alieauy noteu, such iight was availeu of appellants weie
accoiuingly notifieu by lettei uateu Nay 1S, 19S8, which was ieceiveu by
them on the following Nay 22. 0ffei anu acceptance conveigeu anu gave to a
peifecteu anu binuing contiact of puichase anu sale.

The juugment appealeu fiom is affiimeu, with costs.

@01 "S46#653 56$=$! :)0 9350 '347= 3< "22$"#! _ +70 2"J#3 '0
;"7'6"> XT !'7" TVX> ;070 5?0 #Z@GHB@ "E-E). /H> /ABG
JFK 2*D*a> 7?C*D. P?eeD*F !0

<(O.)K

Bi. uaicia executeu a contiact of lease with the option to buy in favoi of
Petitionei Nietes to lease the Angeles institute, foi five yeais at S,uuu pei
yeai oi 2S,uuu on oi befoie Naich Su, 196u anu that P1uu,uuu will be the
amount to puichase the school within the peiiou of the contiact of lease.

0n }uly 1964, Bi. uaicia notifieu the petitionei that the contiact woulu be
iescinueu because of failuie to maintain the school in goou conuition, that
the name of the school was not useu, no inventoiy was maue on the
piopeities of the school anu that theie was no help in the collection of the
back accounts of the stuuents. In iesponse to the lettei, The petitionei
iesponueu by saying that theie was no basis foi the iecission foi the
contiact anu that Nietes will also be exeicising his option to buy.

0n }uly 26, 196S, Nietes uepositeu with the bianch office of the Agio-
Inuustiial Bank in Angeles City checks amounting to P84,86u.Su, as balance
of the puichase piice of the piopeity, but he withuiew saiu sum of
P84,86u.Su on August 12, 196S, aftei the checks hau been cleaieu. 0n
August 2, 196S, he commenceu the piesent action, in the Couit of Fiist
Instance of Pampanga, foi specific peifoimance of Bi. uaicia's allegeu
obligation to execute in his (Nietes') favoi a ueeu of absolute sale of the
leaseu piopeity, fiee fiom any lien oi encumbiance whatsoevei, he having
meanwhile moitgageu it to the People's Bank anu Tiust Company, anu to
compel him (uaicia) to accept whatevei balance of the puichase piice is uue
him, as well as to iecovei fiom him the aggiegate sum of P9u,uuu by way of
uamages, apait fiom attoiney's fees anu the costs.

Bi. uaicia fileu an answei aumitting some allegations of the complaint anu
uenying othei allegations theieof, as well as setting up a counteiclaim foi
uamages in the sum of P1Su,uuu.

The case was ueciueu in favoi of Nietes. Bowevei, both paities appealeu to
the Couit of Appeals, Bi. uaicia insofai as the tiial couit hau neithei
uismisseu the complaint noi uphelu his counteiclaim anu faileu to oiuei
Nietes to vacate the piopeity in question, anu Nietes insofai as the tiial
couit hau gianteu him no moie than nominal uamages in the sum of P1,uuu,
as attoiney's fees.

6))E*K

Whethei oi not the option to buy can be exeiciseu by the Plaintiff befoie
paying foi the piice of the contiact of option to buy.

7EL,N-K

In the case of an option to buy, the cieuitoi may valiuly anu effectively
exeicise his iight by meiely auvising the uebtoi of the foimei's uecision to
buy anu expiessing his ieauiness to pay the stipulateu piice, pioviueu that
the same is available anu actually ueliveieu to the uebtoi upon execution
anu ueliveiy by him of the coiiesponuing ueeu of sale. 0nless anu until the
uebtoi shall have uone this the cieuitoi is not anu cannot be in uefault in the
uischaige of his obligation to pay.

It was shown in the pioceeuings that the plaintiff hau actually paiu moie
than the stipulateu amount foi the option to buy. Nietes hau valiuly anu
effectively exeiciseu his option to buy the piopeity of Bi. uaicia, at least, on
Becembei 1S, 1962, when he acknowleugeu ieceipt fiom Nis. Nietes of the
sum of P2,2uu then ueliveieu by hei "in paitial payment on the puichase of
the piopeity" uesciibeu in the "Contiact of Lease with 0ption to Buy"; that
fiom the aggiegate sum of P29,9S7.uu paiu to him up to that time, the sum of
P12,7u8.SS shoulu be ueuucteu as iental foi the peiiou fiom }une 196u to
Becembei 1S, 1962, oi ioughly thiity (Su) months anu a half, theieby
leaving a balance of P17,248.67, consisting of P12,291.67, iepiesenting the
ientals foi the unuseu peiiou of the lease, plus P4,9S7.uu paiu in excess of
saiu iental anu auvanceu solely on account of the puichase piice; that
ueuucting saiu sum of P17,248.67 fiom the agieeu piice of P1uu,uuu.uu,
theie iesults a balance of P82,7S1.SS which shoulu be paiu by Nietes to Bi.
uaicia, upon execution by the lattei of the coiiesponuing ueeu of absolute
sale of the piopeity in question, fiee fiom any lien oi encumbiance
whatsoevei, in favoi of Nietes, anu the ueliveiy to him of saiu ueeu of sale, as
well as of the ownei's uuplicate of the ceitificate of title to saiu piopeity; anu
that Bi. uaicia shoulu inuemnify Nietes in the sum of P2,Suu as anu foi
attoiney's fees.

Thus mouifieu, the uecision of the Couit of Fiist Instance of Pampanga is
heieby affiimeu in all othei iespects, anu that of the Couit of Appeals
ieveiseu, with costs against iesponuent heiein, Bi. Pablo C. uaicia. It is so
oiueieu.

X01 <#37$5'6" '7356'3> )EC).,.E.*Q CF #4'6##$ $0 W$5=47"5Y" :)0 P0
80 =4"!35 _ '30> 65'0 (NQ '#"4+63 70 7"867$Y> ;070 5?0 #Z@VGBG>
"E-E). GT> /ABB
JFK 2,L(M,L> <D(NO,)O( 20

<(O.)K

Appellant }. N. Tuason & Co. Inc. heieinaftei iefeiieu to as appellant
company was the iegisteieu ownei of Lot No. 22, Block 461, Sta. Nesa
Beights Subuivision, locateu at the Noithwestein coinei of Quezon
Boulevaiu anu uiegoiio Aianeta, Quezon City anu embiaceu by Tiansfei
Ceitificate of Title No. 492SS of the iegistiy of Beeus of saiu city. In Naich,
1962, plaintiff Floiencia Cionico offeieu to buy the lot fiom the appellant
company with the help of Naiy E. ventuianza. They peisonally talkeu to
Benjamin F. Bautista, Nanagei of the Real Estate Bepaitment of uiegoiio
Aianeta, Inc. the appellant company's attoiney-in-fact, pioposing to buy Lot
No. 22. She was iequiieu to piesent pioofs to show hei iights to the lot. 0n
Naich 8, 1962, Floiencia Cionico exhibiteu ceitain uocuments showing hei
piioiity iights to buy the lot.

In the fiist week of Naich, 1962, uefenuant-appellant Clauuio Ramiiez also
leaineu that the lot in question was being solu by the appellant company.
The occupants theieof who also hau piioiity iights to buy the lanu infoimeu
Clauuio Ramiiez, about the intenueu sale. }uanita Semilla anu Peuio
Feinanuez, who weie the occupants of the saiu Lot No. 22 expiesseu theii
willingness to waive theii iights although-Peuio Feinanuez ieseiveu a
conuition that a small poition of the lanu wheieon his house stanus be solu
to him. In the same month, Naich, 1962, plaintiff Cionico anu uefenuant-
appellant Ramiiez sent sepaiate inuiviuual letteis to appellant company
wheiein they expiesseu theii uesiie to puichase the lanu anu iequesteu
infoimation conceining the aiea, the piice anu othei teims anu conuitions of
the contiact to sell. Two otheis intimateu theii uesiie to buying the lot. They
weie Bonifacio Chung anu Angeles Benson. Both, howevei, subsequently lost
theii inteiest in saiu lot. 0n Naich 2u, 1962, the appellant company sent
sepaiate ieply letteis to piospective buyeis incluuing plaintiff Cionies anu
uefenuant-appellant Ramiiez. They weie uioppeu in the Nanila Post 0ffice
at 11:uu in the moining of Naich 21, 1962 by iegisteieu mail. It so happeneu
that plaintiff Cionico went to the appellant company's office on Naich 21,
1962, anu she was infoimeu that the ieply lettei of the appellant company to
piospective buyeis of the same lot hau been maileu. With this infoimation,
plaintiff Cionies anu Naiy E. ventuianza went to the post office in Nanila
anu she was able to get the lettei at about S:Su in the afteinoon of the same
uate. Aftei she got the lettei, plaintiff Cionies anu Naiy E. ventuianza went
uiiectly to the office of uiegoiio Aianeta Inc., Escolta, Nanila, anu piesenteu
the lettei to Benjamin Bautista, Beau of the Real Estate Bepaitment of saiu
company. Since she hau no money, plaintiff Cionies iequesteu Naiy E.
ventuianza to issue a check in the amount of PSS,S72.uu to covei the uown
payment foi the lot. Bowevei, Benjamin Bautista uiu not accept the cheek.
Be auviseu plaintiff Cionies that it is uiegoiio Aianeta II who woulu ueciue
whose offei to buy may be accepts aftei the appellant company ieceives the
iegistiy ietuin caius attacheu to the iegisteieu letteis sent to the offeiois.

0n Naich 22, 1962, between 1u:uu anu 11:uu a.m., appellant Ramiiez
ieceiveu fiom the post office at San Fiancisco uel Nonte, Quezon City, the
ieply lettei of the appellant company uateu Naich 2u, 1962, wheiein it
stateu that Lot 22, Block 461, Sta. Nesa Beights Subuivision, was available
foi sale unuei the conuitions theiein set foith anu that the saiu lot was being
offeieu foi sale on a fiist come fiist seive basis. Appellant Ramiiez
pioceeueu to the office of Benjamin Bautista in the same moining stating
that he accepteu the conuitions stateu in the appellant company's lettei.
Benjamin Bautista auviseu appellant Ramiiez to wait foi the uecision of
uiegoiio Aianeta II. The next uay, Naich 2S, 1962, appellant Ramiiez
piesenteu his lettei to the appellant company confiiming his veibal
acceptance of the teims anu conuitions in connection with the sale. 0n
Naich S1, 1962, Atty. }ose E. Patangco in behalf of appellant Ramiiez wiote
the appellant company iequesting the eaily execution of the piopei contiact
to sell ovei Lot No. 22. A check in the amount of PSS,S72 was encloseu in the
lettei to covei the uown payment foi saiu lot. The iequest was favoiably
consiueieu.

0n Apiil 2, 1962, the }. N. Tuason & Co. Inc., anu Clauuio R. Ramiiez executeu
a contiact to sell wheieby the appellant company agieeu to sell to appellant
Ramiiez the lot in question foi a total piice of P167,896.uu subject to the
teims anu conuitions theiein set foith.

Neanwhile, on Naich 27, 1962, the appellant company ieceiveu a lettei fiom
Atty. uouofieuo Asuncion in behalf of Floiencia Cionies iequesting that the
lot subject of litigation be 'solu to hei. She tenueieu a check to covei the
uown payment which was, howevei, ietuineu. 0n Apiil 4, 1962, the
appellant company sent a lettei to the plaintiff-appellee infoiming hei that it
hau ueciueu to sell the lot in question to appellant Ramiiez. This tiiggeieu
the instant suit.

0n Apiil 28,1962, plaintiff Floiencia Cionico lougeu in the Couit of Fiist
Instance of Rizal (Quezon City Bianch) a complaint against the uefenuants-
appellants }. N. Tuason & Co., Inc. anu Clauuio Ramiiez. The main puipose of
the saiu suit is to annul anu set asiue the contiact to sell executeu by anu
between appellant company anu appellant Ramiiez. 0n Nay Su, 1962,
uiegoiio Aianeta, iepiesenting }. N. Tuason & Co. Inc., fileu its answei to the
complaint with cioss claim against its co-uefenuant Clauuio Ramiiez anu
Luisa Patangco. 0n the pait of uefenuant Clauuio Ramiiez, he fileu a motion
to uismiss on the giounu that the complaint states no cause of action against
him. Be contenus that the action foi the annulment of contiact may only be
instituteu by those who aie paities theieto oi those who aie theieby obligeu
piincipally oi subsiuiaiily. Accoiuing to Clauuio Ramiiez such action to
annul a ueeu of sale cannot piospei against thiiu peisons as they aie not
piincipally oi subsiuiaiily obligateu theieby. The motion to uismiss was
uenieu. So Clauuio Ramiiez fileu his answei ieiteiating in his affiimative
uefenses that since the plaintiff-appellee is not a paity to the contiact to sell
executeu by him anu the uefenuant company, plaintiff Floiencia Cionico has
no iight whatsoevei to uemanu the annulment of saiu contiact.

0n Novembei 19, 1968, plaintiff togethei with Bi. Lucille E. ventuianza fileu
a motion foi substitution foi paity plaintiff wheieby plaintiff Floiencia
Cionico expiesseu hei willingness to be substituteu by Bi. Lucille E.
ventuianza as the foimei hau tiansfeiieu to the lattei whatevei iights anu
inteiests which she may have ovei Lot 22, Block 261, Sta. Nesa Beights
Subuivision by viitue of a ueeu of assignment she executeu on }uly S, 1968.
The couit gianteu the substitution of the paity plaintiff by Bi. Lucille E.
ventuianza.

6))E*K

Whethei oi not }N Tuason's piomise to sell the lot to Cionico has a
consiueiation sepaiate fiom the sellingpiice of saiu lot anu thus binuing
upon the piomissoiy to comply with such piomise.

7EL,N-K

The Couit of Appeals enteitaineu seiious uoubts as to the financial
capability of petitionei Floiencia Cionico to puichase the piopeity because
she was ieceiving only the amount of P1Su.uu a month as hei salaiy fiom
hei employment anu theie was no showing that she hau souices of income
othei than hei job. In fact, when petitionei Cionico tiieu to pay the uown
payment foi the puichase of the lanu, it was Naiy E. ventuianza who uiew
the check in the amount of PSS,S72.uu which was iejecteu by the
iesponuent company. It is also to be noteu that in the tiial couit, Floiencia
cionico was substituteu by hei assignee Lucille E. ventuianza, uaughtei of
Naiy E. ventuianza. It is appaient that petitionei, Floiencia Cionico, uiu not
have the capability to pay anu that she acteu only as a meie fiont of the
ventuianzas. As coiiectly pointeu out by the Couit of Appeals, iealtois aie
given the iight to choose theii buyeis so as to avoiu uelinquent payments of
monthly installments which may iesult in costly couit litigations.

The contention of petitionei. Floiencia Cionico that the piomise to sell is
suppoiteu by a consiueiation as to hei because she hau establisheu hei link
as successoi of uiegoiio ventuianza who bought the lot fiom }uan Ramos
who in tuin acquiieu saiu lot fiom Peuio Beuuoi. The petitionei then aigues
that since Clause Seventh of the Compiomise Agieement between the
iesponuent company anu the Beuuois, et al. obligateu the iesponuent
company to sell to the buyeis of the Beuuois 'listeu in Annex B theieof,
Exhibit R-1, anu }uan Ramos was the puichasei of the lot fiom Peuio Beuuoi
with such iight to buy fiom the uefenuant company unuei a new contiact
with the lattei, the saiu petitionei hau establisheu the oneious cause oi
consiueiation apait fiom the selling piice of the lot. uianting, aiguenuo, that
Clause Seventh of the Compiomise Agieement constitutes a valiu
consiueiation of the piomise to sell apait fiom the selling piice, it appeais
that the Compiomise Agieement upon which the petitionei Cionico
pieuicates hei iight to buy the lot in question has been iescinueu anu set
asiue. (Beuuoi vs. }.N. Tuason & Co., Inc., 2 SCRA 129 anu }. N. Tuason & Co.,
Inc. vs. Sanvictoies 4 SCRA 12S, 126) Bence, the piomise of the iesponuent
company to sell the lot in question to the petitionei, Floiencia Cionico has
no consiueiation sepaiate fiom the selling piice of saiu lot.

In oiuei that a unilateial piomise may be binuing upon the piomisoi, Aiticle
1479, Civil Coue of the Philippines, iequiies the concuiience of the conuition
that the piomise be "suppoiteu by a consiueiation uistinct fiom the piice.
Accoiuingly, the piomisee can not compel the piomisoi to comply with the
piomise, unless the foimei establishes the existence of saiu uistinct
consiueiation. The piomisee has the buiuen of pioving such consiueiation.
(Sanchez vs. Rigos, 4S SCRA S68, S72-S7S) The petitionei, Floiencia Cionies,
has not establisheu the existence of a consiueiation uistinct fiom the piice of
the lot in question.

The petitionei cannot claim that she hau accepteu the piomise befoie it was
withuiawn because, as stateu above, she hau violateu the conuition of "fiist,
come, fiist seiveu" Noieovei, it was only on Naich 27, 1962 that the
iesponuent company ieceiveu a lettei fiom counsel of the petitionei
iequesting that the lot subject of this litigation be solu to hei. The
iesponuent, Clauuio R. Ramiiez, hau on Naich 2S, 1962, confiimeu in
wiiting his veibal acceptance of the teims anu conuitions of the sale of the
lot in question.

The petitionei maintains that the contiact to sell (Exhibit S) executeu by the
iesponuent company in favoi of the iesponuent, Clauuio R. Ramiiez,
contains a stipulation foi hei benefit, which ieaus:

b) that the buyei Clauuio Ramiiez has been fully infoimeu by the
company of all the ciicumstances ielative to the offei of Floiencia
Cionico to buy saiu lot anu that he agiees anu binus himself to
holu the company absolutely fiee anu haimless fiom all claims
anu uamages to saiu Floiencia Cionico in connection with this
sale of the lot to him. (Rollo, p. 74, Petitionei's Biief, pp. S1-S2)

The foiegoing clause cannot by any stietch of the imagination be consiueieu
as a clause "poui autiui" oi foi the benefit of the petitionei. The stipulation
uoes not confei any iight aiising fiom the contiact that may be enfoiceu by
the petitionei against any of the paities theieto. Neithei uoes it impose any
obligation aiising fiom the contiact that may be enfoiceu by any of the
paities theieto against the petitionei. The petitionei is not "obligeu
piincipally oi subsiuiaiily" by the contiact to sell executeu between the
iesponuent company anu the iesponuent Clauuio R. Ramiiez. The saiu
stipulation is foi the benefit of the iesponuent company.

V01 P3!$ 7"835 '"7'$##$7 :)0 '347= 3< "22$"#! (NQ !="=$
65W$!=8$5= 934!$!> 65'0> @IG !'7" B/H> ;070 5?0 /GXBA/0 <*CDE(DF
/I> /AAA
JFK 2,L(M,L> <D(NO,)O( 20

<(O.)K

Piivate iesponuent State Investment Bouses, Inc. (SIBI) is the iegisteieu
ownei of two (2) paicels of lanu with a total aiea of 9,774 squaie meteis,
incluuing all the impiovements theieon, locateu at Bulacao, Cebu City,
coveieu by Tiansfei Ceitificate of Titles Nos. T-891S2 anu T-891SS of the
Registiy of Beeus of Cebu City.

0n }anuaiy 1u, 198S, petitionei anu SIBI enteieu into a lease contiact with
option to puichase ovei saiu two paicels of lanu, at a monthly iental of Ten
Thousanu (P1u,uuu.uu) pesos foi a peiiou of eighteen (18) months,
beginning on August 1, 1984 until }anuaiy Su, 1986. The peitinent poition
of the lease contiact subject of the uispute ieaus in pait:

. . As pait of the consiueiation of this agieement, the LESS0R
heieby giants unto the LESSEE the exclusive iight, option anu
piivilege to puichase, within the lease peiiou, the leaseu piemises
theieon foi the aggiegate amount of P1,8uu,uuu.uu payable as
follows:

a. 0pon the signing of the Beeu of Sale, the LESSEE shall
immeuiately pay PS6u,uuu.uu.
b. The balance of P1,44u,uuu.uu shall be paiu in equal installments
of P41,42S.87 ovei sixty (6u) consecutive months computeu with
inteiest at 24% pei annum on the uiminishing balance; Pioviueu,
that the LESSEE shall have the iight to acceleiate payments at
anytime in which event the stipulateu inteiest foi the iemaining
installments shall no longei be imposeu.

x . . The option shall be exeiciseu by a wiitten notice to the
LESS0R at anytime within the option peiiou anu the uocument of
sale ovei the afoie-uesciibeu piopeities has to be consummateu
within the month immeuiately following the month when the
LESSEE exeiciseu his option unuei this contiact."

0n }anuaiy 7, 1986, oi appioximately thiee (S) weeks befoie the expiiation
of the lease contiact, SIBI notifieu petitionei of the impenuing teimination of
the lease agieement, anu of the shoit peiiou of time left within which he
coulu still valiuly exeicise the option. It likewise iequesteu petitionei to
auvise them of his uecision on the option, on oi befoie }anuaiy 2u, 1986.

In a lettei uateu }anuaiy 1S, 1986, which was ieceiveu by SIBI on }anuaiy
29, 1986, petitionei iequesteu foi a six-month extension of the lease
contiact, alleging that he neeus ample time to iaise sufficient funus in oiuei
to exeicise the option. To suppoit his iequest, petitionei aveiieu that he
hau alieauy maue a substantial investment on the piopeity, anu hau been
punctual in paying his monthly ientals.

0n Febiuaiy 14, 1986, SIBI notifieu petitionei that his iequest was
uisappioveu. Neveitheless, it offeieu to lease the same piopeity to
petitionei at the iate of Thiity Thousanu (PSu,uuu.uu) pesos a month, foi a
peiiou of one (1) yeai. It fuithei infoimeu the petitionei of its uecision to
offei foi sale saiu leaseu piopeity to the geneial public.

0n Febiuaiy 18, 1986, petitionei notifieu SIBI of his uecision to exeicise the
option to puichase the piopeity anu at the same time he maue
aiiangements foi the payment of the uownpayment theieon in the amount
of Thiee Bunuieu Sixty Thousanu (PS6u,uuu.uu) pesos.

0n Febiuaiy 2u, 1986, SIBI sent anothei lettei to petitionei, ieiteiating its
pievious stanu on the lattei's offei, stiessing that the peiiou within which
the option shoulu have been exeiciseu hau alieauy lapseu. SIBI askeu
petitionei to vacate the piopeity within ten (1u) uays fiom notice, anu to
pay iental anu penalty uue.

Bence, on Febiuaiy 28, 1986, a complaint foi specific peifoimance anu
uamages was fileu by petitionei against SIBI befoie the Regional Tiial Couit
of Cebu City, to compel the lattei to honoi its commitment anu execute the
coiiesponuing ueeu of sale.

6))E*K

Whethei oi not petitionei can still exeicise his option of sale even aftei the
time to uo such has alieauy lapseu.

7EL,N-K

The contiact must be inteipieteu togethei with the intention of the paities.
The lettei of the plaintiff to the iesponuent iequesting foi an extension is
sufficient pioof of his intent to avail of the option of sale.

In contiactual ielations, the law allows the paities ieasonable leeway on the
teims of theii agieement, which is the law between them. When petitionei
maue his intention to buy known to the buyei one month aftei the
expiiation of contiact is within a ieasonable time- fiame.

Petitionei may buy the piopeity but not anymoie to the piice stateu in the
contiact. As such, iesponuent may inciease the piice of the lanu but only to a
ieasonable anu faii maiket value.

An option is a piepaiatoiy contiact in which one paity giants to the othei,
foi a fixeu peiiou anu unuei specifieu conuitions, the powei to ueciue,
whethei oi not to entei into a piincipal contiact. It binus the paity who has
given the option, not to entei into the piincipal contiact with any othei
peison uuiing the peiiou uesignateu, anu, within that peiiou, to entei into
such contiact with the one to whom the option was gianteu, if the lattei
shoulu ueciue to use the option. It is a sepaiate agieement uistinct fiom the
contiact which the paities may entei into upon the consummation of the
option.

! S),4*(&)' )% +)'(,*-( )% .*/$2 8,$>*,*(),@2 =>(&)' +)'(,*-(2 R$*'&'5
)% +)'1&7$,*(&)'

/01 56'3#"! !"5'9$Y :)0 !$W$765" 76;3!> XV !'7" @TH> ;070 5?0 #Z
GVXAX> PEN* /X> /ABG
JFK 2,L(M,L> <D(NO,)O( 20

<(O.)K

0n Apiil S, 1961, plaintiff Nicolas Sanchez anu uefenuant Seveiina Rigos
executeu an-instiument entitleu "0ption to Puichase," wheieby Rigos
"agieeu, piomiseu anu committeu to sell" to Sanchez at the sum P1,S1u.uu a
paicel of lanu situateu in San }ose, Nueva Ecija, uesciibeu in TCT No. NT-
12S28, within two (2) yeais fiom saiu uate with the unueistanuing that saiu
option shall be ueemeu "teiminateu anu elapseu," if "Sanchez shall fail to
exeicise his iight to buy the piopeity" within the stipulateu peiiou.
Inasmuch as seveial tenueis of payment of the sum of PI,S1u.uu, maue by
Sanchez within saiu peiiou, weie iejecteu by Nis. Rigos, on Naich 12, 196S,
the foimei uepositeu saiu amount with the CFI of Nueva Ecija anu
commenceu against the lattei the piesent action, foi specific peifoimance
anu uamages.

Aftei the filing of uefenuant's answei - aumitting some allegations of the
complaint, uenying othei allegations theieof, anu alleging, as special uefense,
that the contiact between the paities "is a unilateial piomise to sell, anu the
same being unsuppoiteu by any valuable consiueiation, by foice of the New
Civil Coue, is null anu voiu" - on Febiuaiy 11, 1964, both paities, assisteu by
theii iespective counsel, jointly moveu foi a juugment on the pleauings.
Accoiuingly, on Febiuaiy 28, 1964, the lowei couit ienueieu juugment foi
Sanchez, oiueiing Nis. Rigos to accept the sum juuicially consigneu by him
anu to execute, in his favoi, the iequisite ueeu of conveyance. Nis. Rigos
was, likewise, sentenceu to pay P2uu.uu, as attoiney's fees, anu othei costs.
Bence, this appeal by Nis. Rigos.

6))E*K

Was theie a contiact to buy anu sell between the paities oi only a unilateial
piomise to sell.

7EL,N-K

The SC affiimeu the uecision appealeu fiom, with costs against Seveiina
Rigos.

1. 0ption to puichase not a contiact to buy anu sell.

The option uiu not impose upon Sanchez the obligation to puichase Rigos'
piopeity. The contiact uenominateu as "0ption to Puichase" is not a
"contiact to buy anu sell," it meiely gianteu Sanchez an "option" to buy, anu
both paities so unueistoou it, as inuicateu by the caption given by them to
saiu instiument. 0nuei the piovisions theieof, Rigos "agieeu, piomiseu anu
committeu" heiself to sell the lanu theiein uesciibeu to Sanchez foi
P1,S1u.uu, but theie is nothing in the contiact to inuicate that hei
afoiementioneu agieement, piomise anu unueitaking is suppoiteu by a
consiueiation "uistinct fiom the piice" stipulateu foi the sale of the lanu.

2. Aiticle 1SS4 applicable to contiacts in geneial, Aiticle 1479 iefeis to sales
in paiticulai.

Relying upon Aiticle 1SS4 of the Civil Coue, which pioviues that "when the
offeiei has alloweu the offeiee a ceitain peiiou to accept, the offei may be
withuiawn at any time befoie acceptance by communicating such
withuiawal, except when the option is founueu upon consiueiation, as
something paiu oi piomiseu," the lowei couit piesumeu the existence of a
consiueiation uistinct fiom the piice. It must be noteu howevei that Aiticle
1SS4 applies to contiacts in geneial, wheieas the seconu paiagiaph of
Aiticle 1479 iefeis to "sales" in paiticulai, anu, moie specifically, to "an
accepteu unilateial piomise to buy oi to sell." In othei woius, Aiticle 1479 is
contiolling in the piesent case. Aiticle 1479 pioviues that "A piomise to buy
anu sell a ueteiminate thing foi a piice ceitain is iecipiocally uemanuable.
An accepteu unilateial piomise to buy oi to sell a ueteiminate thing foi a
piice ceitain is binuing upon the piomissoi if the piomise is suppoiteu by a
consiueiation uistinct fiom the piice."

S. Aiticle 1479 imposes conuition foi a unilateial piomise to be binuing;
Buiuen of pioof.

In oiuei that a unilateial piomise may be "binuing" upon the piomissoi,
Aiticle 1479 iequiies the concuiience of a conuition, namely, that the
piomise be "suppoiteu by a consiueiation uistinct fiom the piice."
Accoiuingly, the piomissee cannot compel the piomissoi to comply with the
piomise, unless the foimei establishes the existence of saiu uistinct
consiueiation. In othei woius, the piomissee has the buiuen of pioving such
consiueiation. In the piesent case, Sanchez has not even allegeu the
existence theieof in his complaint.

4. Implieu aumission of the tiuth of the othei paity's aveiment if paity joins
in the petition foi a juugment baseu on the pleauings without intiouucing
eviuence.

In the case of Baueimann v. Casas (14 Naich 19u8), it was helu that "one
who piays foi juugment on the pleauings without offeiing pioof as to the
tiuth of his own allegations, anu without giving the opposing paity an
oppoitunity to intiouuce eviuence, must be unueistoou to aumit the tiuth of
all the mateiial anu ielevant allegations of the opposing paity, anu to iest his
motion foi juugment on those allegations taken togethei with such of his
own as aie aumitteu in the pleauing. (La Yebana Company vs. Sevilla, 9 Phil.
21u)." This view was ieiteiateu in Evangelista v. Be la Rosa anu Neicy's
Incoipoiateu v. Beiminia veiue. In the piesent case, Rigos explicitly aveiieu
in hei answei, anu pleaueu as a special uefense, the absence of saiu
consiueiation foi hei piomise to sell anu, by joining in the petition foi a
juugment on the pleauings, Sanchez has implieuly aumitteu the tiuth of saiu
aveiment in Rigos' answei.

S. Southwestein Sugai & Nolasses Co. v. Atlantic uulf & Pacific Co.

The Couit in the Southwestein Sugai case helu that "unuei aiticle 1479 of
the new Civil Coue 'an option to sell,' oi 'a piomise to buy oi to sell,' as useu
in saiu aiticle, to be valiu must be 'suppoiteu by a consiueiation uistinct
fiom the piice.' This is cleaily infeiieu fiom the context of saiu aiticle that a
unilateial piomise to buy oi to sell, even if accepteu, is only binuing if
suppoiteu by a consiueiation. In othei woius, 'an accepteu unilateial
piomise' can only have a binuing effect if suppoiteu by a consiueiation,
which means that the option can still be withuiawn, even if accepteu, if the
same is not suppoiteu by any consiueiation. Beie it is not uisputeu that the
option is without consiueiation. It can theiefoie be withuiawn
notwithstanuing the acceptance maue of it by appellee. The Couit helu that
the geneial iule iegaiuing offei anu acceptance unuei Aiticle 1S24 must be
inteipieteu as mouifieu by the piovision of aiticle 1479, which applies to 'a
piomise to buy anu sell' specifically. In shoit, the iule iequiies that a
piomise to sell to be valiu must be suppoiteu by a consiueiation uistinct
fiom the piice.

6. Atkins, Kioll anu Co. v. Cua Bian Tek

In the case of Atkins, Kioll anu Co., Inc. v. Cua Bian Tek, ueciueu latei than
Southwestein Sugai & Nolasses Co. v. Atlantic uulf & Pacific Co., the Couit
saw no uistinction between Aiticles 1S24 anu 1479 of the Civil Coue anu
applieu the foimei wheie a unilateial piomise to sell similai to the one sueu
upon heie was involveu, tieating such piomise as an option which, although
not binuing as a contiact in itself foi lack of a sepaiate consiueiation,
neveitheless geneiateu a bilateial contiact of puichase anu sale upon
acceptance.

7. 0ption is unilateial.

Fuitheimoie, an option is unilateial: a piomise to sell at the piice fixeu
whenevei the offeiee shoulu ueciue to exeicise his option within the
specifieu time. Aftei accepting the piomise anu befoie he exeicises his
option, the holuei of the option is not bounu to buy. Be is fiee eithei to buy
oi not to buy latei. In the piesent case, howevei, upon accepting Rigos' offei
a bilateial piomise to sell anu to buy ensueu, anu Sanchez ipso facto
assumeu the obligation of a puichasei. Be uiu not just get the iight
subsequently to buy oi not to buy. It was not a meie option then; it was
bilateial contiact of sale.

8. 0ption without consiueiation is a meie offei of a contiact of sale, which is
not binuing until accepteu.

If the option is given without a consiueiation, it is a meie offei of a contiact
of sale, which is not binuing until accepteu. If, howevei, acceptance is maue
befoie a withuiawal, it constitutes a binuing contiact of sale, even though
the option was not suppoiteu by a sufficient consiueiation. . . . (77 Coipus
}uiis Secunuum p. 6S2. See also 27 Ruling Case Law SS9 anu cases citeu.) It
can be taken foi gianteu that the option contiact was not valiu foi lack of
consiueiation. But it was, at least, an offei to sell, which was accepteu by
lattei, anu of the acceptance the offeiei hau knowleuge befoie saiu offei was
withuiawn. The concuiience of both acts the offei anu the acceptance
coulu at all events have geneiateu a contiact, if none theie was befoie (aits.
12S4 anu 1262 of the Civil Coue; Zayco vs. Seiia, 44 Phil. SS1.) In othei
woius, since theie may be no valiu contiact without a cause oi
consiueiation, the piomissoi is not bounu by his piomise anu may,
accoiuingly, withuiaw it. Penuing notice of its withuiawal, his accepteu
piomise paitakes, howevei, of the natuie of an offei to sell which, if
accepteu, iesults in a peifecteu contiact of sale.

9. Piopei constiuction of conflicting piovisions of the same law; Baimonize
to implement the same piinciple iathei than to cieate exceptions.

In line with the caiuinal iule of statutoiy constiuction that, in constiuing
uiffeient piovisions of one anu the same law oi coue, such inteipietation
shoulu be favoieu as will ieconcile oi haimonize saiu piovisions anu avoiu a
conflict between the same. Inueeu, the piesumption is that, in the piocess of
uiafting the Coue, its authoi has maintaineu a consistent philosophy oi
position. Noieovei, the uecision in Southwestein Sugai & Nolasses Co. v.
Atlantic uulf & pacific Co., holuing that Ait. 1S24 (on the geneial piinciples
on contiacts) is mouifieu by Ait. 1479 (on sales) of the Civil Coue, in effect,
consiueis the lattei as an exception to the foimei, anu exceptions aie not
favoieu, unless the intention to the contiaiy is cleai, anu it is not so, insofai
as saiu 2 aiticles aie conceineu. What is moie, the iefeience, in both the
seconu paiagiaph of Ait. 1479 anu Ait. 1S24, to an option oi piomise
suppoiteu by oi founueu upon a consiueiation, stiongly suggests that the 2
piovisions intenueu to enfoice oi implement the same piinciple.

1u. Atkins, Kioll & Co. case mouifies oi abanuons Southwestein Sugai case
insofai as to inconsistencies.

0pon matuie uelibeiation, the Couit is of the consiueieu opinion that it
shoulu, as it heieby ieiteiates the uoctiine laiu uown in the Atkins, Kioll &
Co. case, anu that, insofai all inconsistent theiewith, the view auheieu to in
the South westein Sugai & Nolasses Co. case shoulu be ueemeu abanuoneu
oi mouifieu.

G01 !234!$! P4#63 +0 W6##"837 "5+ 8"765" W6##"837 :)0 =9$ 9350
'347= 3< "22$"#! "5+ !234!$! 8"'"76" #"J65;6!" 7$R$! "5+
73J$7=3 7$R$!> GIG !'7" TIB> ;070 5?0 AB@@G> 3O.?C*D /I> /AA/
JFK 2,L(M,L> <D(NO,)O( 20

<(O.)K

0n }uly 1971, Nacaiia Labingisa Reyes solu a poition of Suu squaie meteis
of the lot to the Spouses }ulio anu Naiina anu villamoi foi the total amount
of P21,uuu.uu. 0n Novembei 11, 1971, Nacaiia executeu a "Beeu of 0ption"
in favoi of villamoi in which the iemaining Suu squaie metei poition (TCT
No. S99S4) of the lot woulu be solu to villamoi unuei ceitain conuitions, one
of which: That the only ieason why the Spouses-venuees }ulio villamoi anu
Naiina v. villamoi, agieeu to buy the saiu one-half poition at the above-
stateu piice of about P7u.uu pei squaie metei, is because I, anu my husbanu
Robeito Reyes, have agieeu to sell anu convey to them the iemaining one-
half poition still owneu by me xxx , whenevei the neeu of such sale aiises,
eithei on oui pait oi on the pait of the spouses (}ulio) villamoi anu Naiina
v. villamoi, at the same piice of P7u.uu pei squaie metei, excluuing
whatevei impiovement may be founu the theieon.

Accoiuing to Nacaiia, when hei husbanu, Robeito Reyes, ietiieu in 1984,
they offeieu to iepuichase the lot solu by them to the villamoi spouses but
Naiina villamoi iefuseu anu ieminueu them insteau that the Beeu of 0ption
in fact gave them the option to puichase the iemaining poition of the lot.
The villamois, on the othei hanu, claimeu that they hau expiesseu theii
uesiie to puichase the iemaining Suusquaie metei poition of the lot but the
Reyeses hau been ignoiing them. Thus, on }uly 1S, 1987, aftei conciliation
pioceeuings in the baiangay level faileu, they fileu a complaint foi specific
peifoimance against the Reyeses.Tiial Couit ueciueu in favoui of the
villamois, but this was ieveiseu by the CA. Piesent case is a petition foi
ieview on ceitioiaii of the CA's uecision.

6))E*K

Whethei oi not theie was a vALIB Beeu of 0ption wheieby the piivate
iesponuents agieeu to sell theii lot to petitioneis "whenevei the neeu of
such sale aiises, eithei on oui pait (piivate iesponuents) oi on the pait of
}ulio villamoi anu Naiina villamoi.

7EL,N-K

While the Beeu of 0ption was valiu, it alieauy lapseu. It is of juuicial notice
that the piice of ieal estate in Netio Nanila is continuously on the iise. To
allow the petitionei to uemanu the ueliveiy of the piopeity subject of this
case thiiteen (1S) yeais oi seventeen (17) yeais aftei the execution of the
ueeu at the piice of only P7u.uu pei squaie metei is iniquitous. Foi ieasons
also of equity anu in consiueiation of the fact that the piivate iesponuents
have no othei uecent place to live, this Couit, in the exeicise of its equity
juiisuiction is not inclineu to giant petitioneis' piayei.

The Beeu of 0ption uiu not pioviue foi the peiiou within which the paities
may uemanu the peifoimance of theii iespective unueitakings in the
instiument. The paities coulu not have contemplateu that the ueliveiy of the
piopeity anu the payment theieof coulu be maue inuefinitely anu ienuei
unceitain the status of the lanu. The failuie of eithei paities to uemanu
peifoimance of the obligation of the othei foi an unieasonable length of
time ienueis the contiact ineffective. 0nuei Aiticle 1144 (1) of the Civil
Coue, actions upon wiitten contiact must be biought within ten (1u) yeais.
The Beeu of 0ption was executeu on Novembei 11, 1971. The acceptance, as
alieauy mentioneu, was also accepteu in the same instiument. The
complaint in this case was fileu by the petitioneis on }uly 1S, 1987,
seventeen (17) yeais fiom the time of the execution of the contiact. Bence,
the iight of action hau piesciibeu.

! S),4*(&)' )% +)'(,*-( )% .*/$2 D&50( )% S&,1( D$%61*/

/01 $S4"=376"# 7$"#=R +$W$#328$5=> 65'0 _ '"78$#3 _
J"4$78"55> 65'0 :)0 8"R<"67 =9$"=$7> 65'0> GTX !'7" XH@> ;070 5?0
/ITIT@> 5?:*UC*D G/> /AAT
JFK 7?C*L> 7,O](DQ J0

<(O.)K

Caimelo owneu a paicel of lanu, togethei with two 2-stoiey builuings
constiucteu theieon locateu at Claio N Recto Avenue, Nanila, anu coveieu
by TCT No. 18S29 issueu in its name by the Registei of Beeus of Nanila.

0n }une 1, 1967 Caimelo enteieu into a contiact of lease with Nayfaii foi the
lattei's lease of a poition of Caimelo's piopeity paiticulaily uesciibeu, to
wit:

A P0RTI0N 0F TBE SEC0NB FL00R of the two-stoiey builuing,
situateu at C.N. Recto Avenue, Nanila, with a flooi aiea of 1,61u
squaie meteis.

TBE SEC0NB FL00R ANB NEZZANINE of the two-stoiey builuing,
situateu at C.N. Recto Avenue, Nanila, with a flooi aiea of 1Su
squaie meteis,

foi use by Nayfaii as a motion pictuie theatei anu foi a teim of twenty (2u)
yeais. Nayfaii theieaftei constiucteu on the leaseu piopeity a movie house
known as "Naxim Theatie."

Two yeais latei, on Naich S1, 1969, Nayfaii enteieu into a seconu contiact
of lease with Caimelo foi the lease of anothei poition of Caimelo's piopeity,
to wit:

A P0RTI0N 0F TBE SEC0NB FL00R of the two-stoiey builuing,
situateu at C.N. Recto Avenue, Nanila, with a flooi aiea of 1,u64
squaie meteis.

TBE TW0 (2) ST0RE SPACES AT TBE uR00NB FL00R anu
NEZZANINE of the two-stoiey builuing situateu at C.N. Recto
Avenue, Nanila, with a flooi aiea of Suu squaie meteis anu
beaiing stieet numbeis 1871 anu 187S,

foi similai use as a movie theatei anu foi a similai teim of twenty (2u)
yeais. Nayfaii put up anothei movie house known as "Niiamai Theatie" on
this leaseu piopeity.

Both contiacts of lease pioviues (sic) iuentically woiueu paiagiaph 8, which
ieaus:

That if the LESS0R shoulu uesiie to sell the leaseu piemises, the
LESSEE shall be given Su-uays exclusive option to puichase the
same.

In the event, howevei, that the leaseu piemises is solu to someone
othei than the LESSEE, the LESS0R is bounu anu obligateu, as it
heieby binus anu obligates itself, to stipulate in the Beeu of Sale
heieof that the puichasei shall iecognize this lease anu be bounu
by all the teims anu conuitions theieof.

Sometime in August 1974, Ni. Beniy Pascal of Caimelo infoimeu Ni. Beniy
Yang, Piesiuent of Nayfaii, thiough a telephone conveisation that Caimelo
was uesiious of selling the entiie Claio N. Recto piopeity. Ni. Pascal tolu Ni.
Yang that a ceitain }ose Aianeta was offeiing to buy the whole piopeity foi
0S Bollais 1,2uu,uuu, anu Ni. Pascal askeu Ni. Yang if the lattei was willing
to buy the piopeity foi Six to Seven Nillion Pesos.

Ni. Yang ieplieu that he woulu let Ni. Pascal know of his uecision. 0n
August 2S, 1974, Nayfaii ieplieu thiough a lettei stating as follows:

It appeais that on August 19, 1974 youi Ni. Beniy Pascal
infoimeu oui client's Ni. Beniy Yang thiough the telephone that
youi company uesiies to sell youi above-mentioneu C.N. Recto
Avenue piopeity.

0nuei youi company's two lease contiacts with oui client, it is
unifoimly pioviueu:

8. That if the LESS0R shoulu uesiie to sell the leaseu piemises the
LESSEE shall be given Su-uays exclusive option to puichase the
same. In the event, howevei, that the leaseu piemises is solu to
someone othei than the LESSEE, the LESS0R is bounu anu
obligateu, as it is (sic) heiebinus (sic) anu obligates itself, to
stipulate in the Beeu of Sale theieof that the puichasei shall
iecognize this lease anu be bounu by all the teims anu conuitions
heieof (sic).

Caimelo uiu not ieply to this lettei.

0n Septembei 18, 1974, Nayfaii sent anothei lettei to Caimelo puipoiting
to expiess inteiest in acquiiing not only the leaseu piemises but "the entiie
builuing anu othei impiovements if the piice is ieasonable. Bowevei, both
Caimelo anu Equatoiial questioneu the authenticity of the seconu lettei.

Foui yeais latei, on }uly Su, 1978, Caimelo solu its entiie C.N. Recto Avenue
lanu anu builuing, which incluueu the leaseu piemises housing the "Naxim"
anu "Niiamai" theaties, to Equatoiial by viitue of a Beeu of Absolute Sale,
foi the total sum of P11,Suu,uuu.uu.

In Septembei 1978, Nayfaii instituteu the action o quo foi specific
peifoimance anu annulment of the sale of the leaseu piemises to Equatoiial.
In its Answei, Caimelo allegeu as special anu affiimative uefense (a) that it
hau infoimeu Nayfaii of its uesiie to sell the entiie C.N. Recto Avenue
piopeity anu offeieu the same to Nayfaii, but the lattei answeieu that it was
inteiesteu only in buying the aieas unuei lease, which was impossible since
the piopeity was not a conuominium; anu (b) that the option to puichase
invokeu by Nayfaii is null anu voiu foi lack of consiueiation. Equatoiial, in
its Answei, pleaueu as special anu affiimative uefense that the option is voiu
foi lack of consiueiation (sic) anu is unenfoiceable by ieason of its
impossibility of peifoimance because the leaseu piemises coulu not be solu
sepaiately fiom the othei poitions of the lanu anu builuing. It
counteiclaimeu foi cancellation of the contiacts of lease, anu foi inciease of
ientals in view of allegeu supeivening extiaoiuinaiy uevaluation of the
cuiiency. Equatoiial likewise cioss-claimeu against co-uefenuant Caimelo
foi inuemnification in iespect of Nayfaii's claims.

Buiing the pie-tiial confeience helu on }anuaiy 2S, 1979, the paities
stipulateu on the following:
1. That theie was a ueeu of sale of the contesteu piemises by the uefenuant
Caimelo . . . in favoi of uefenuant Equatoiial . . .;
2. That in both contiacts of lease theie appeai (sic) the stipulation gianting
the plaintiff exclusive option to puichase the leaseu piemises shoulu the
lessoi uesiie to sell the same (aumitteu subject to the contention that the
stipulation is null anu voiu);
S. That the two builuings eiecteu on this lanu aie not of the conuominium
plan;
4. That the amounts stipulateu anu mentioneu in paiagiaphs S (a) anu (b) of
the contiacts of lease constitute the consiueiation foi the plaintiff's
occupancy of the leaseu piemises, subject of the same contiacts of lease,
Exhibits A anu B;
xxx xxx xxx
6. That theie was no consiueiation specifieu in the option to buy embouieu
in the contiact;
7. That Caimelo & Baueimann owneu the lanu anu the two builuings eiecteu
theieon;
8. That the leaseu piemises constitute only the poitions actually occupieu by
the theateis; anu
9. That what was solu by Caimelo & Baueimann to uefenuant Equatoiial
Realty is the lanu anu the two builuings eiecteu theieon.
xxx xxx xxx

Aftei assessing the eviuence, the couit o quo ienueieu the appealeu uecision,
the uecietal poition of which ieaus as follows:

WBEREF0RE, juugment is heieby ienueieu:
(1) Bismissing the complaint with costs against the plaintiff;
(2) 0iueiing plaintiff to pay uefenuant Caimelo & Baueimann
P4u,uuu.uu by way of attoiney's fees on its counteiclaim;
(S) 0iueiing plaintiff to pay uefenuant Equatoiial Realty
PSS,uuu.uu pei month as ieasonable compensation foi the use of
aieas not coveieu by the contiact (sic) of lease fiom }uly S1, 1979
until plaintiff vacates saiu aiea (sic) plus legal inteiest fiom }uly
S1, 1978; P7u,uuu uu pei month as ieasonable compensation foi
the use of the piemises coveieu by the contiacts (sic) of lease
uateu (}une 1, 1967 fiom }une 1, 1987 until plaintiff vacates the
piemises plus legal inteiest fiom }une 1, 1987; PSS,uuu.uu pei
month as ieasonable compensation foi the use of the piemises
coveieu by the contiact of lease uateu Naich S1, 1969 fiom Naich
Su, 1989 until plaintiff vacates the piemises plus legal inteiest
fiom Naich Su, 1989; anu P4u,uuu.uu as attoiney's fees;
(4) Bismissing uefenuant Equatoiial's cioss claim against
uefenuant Caimelo & Baueimann.
The contiacts of lease uateu }une 1, 1967 anu Naich S1, 1969 aie
ueclaieu expiieu anu all peisons claiming iights unuei these
contiacts aie uiiecteu to vacate the piemises.

The tiial couit aujuugeu the iuentically woiueu paiagiaph 8 founu in both
afoieciteu lease contiacts to be an option clause which howevei cannot be
ueemeu to be binuing on Caimelo because of lack of uistinct consiueiation
theiefoi.

The couit o quo iatiocinateu:

Significantly, uuiing the pie-tiial, it was aumitteu by the paities that the
option in the contiact of lease is not suppoiteu by a sepaiate consiueiation.
Without a consiueiation, the option is theiefoie not binuing on uefenuant
Caimelo & Baueimann to sell the C.N. Recto piopeity to the foimei. The
option invokeu by the plaintiff appeais in the contiacts of lease . . . in effect
theie is no option, on the giounu that theie is no consiueiation. Aiticle 1SS2
of the Civil Coue, pioviues:

Controcts witbout couse or witb unlowful couse, proJuce no effect
wbotever. Tbe couse is unlowful if it is controry to low, morols, qooJ
custom, public orJer or public policy.

Contiacts theiefoie without consiueiation piouuce no effect whatsoevei.
Aiticle 1S24 pioviues:

Wben tbe offeror bos olloweJ tbe offeree o certoin perioJ to occept,
tbe offer moy be witbJrown ot ony time before occeptonce by
communicotinq sucb witbJrowol, except wben tbe option is founJeJ
upon consiJerotion, os sometbinq poiJ or promiseJ.

In ielation with Aiticle 1479 of the same Coue:

A promise to buy onJ sell o Jetermine tbinq for o price certoin is
reciprocolly JemonJoble.

An occepteJ uniloterol promise to buy or to sell o Jetermine tbinq
for o price certoin is binJinq upon tbe promissor if tbe promise is
supporteJ by o consiJerotion Jistinct from tbe price.

The plaintiff cannot compel uefenuant Caimelo to comply with the piomise
unless the foimei establishes the existence of a uistinct consiueiation. In
othei woius, the piomissee has the buiuen of pioving the consiueiation. The
consiueiation cannot be piesumeu as in Aiticle 1SS4:

Altbouqb tbe couse is not stoteJ in tbe controct, it is presumeJ tbot
it exists onJ is lowful unless tbe Jebtor proves tbe controry.

wheie consiueiation is legally piesumeu to exist. Aiticle 1SS4 applies to
contiacts in geneial, wheieas when it comes to an option it is goveineu
paiticulaily anu moie specifically by Aiticle 1479 wheieby the piomissee
has the buiuen of pioving the existence of consiueiation uistinct fiom the
piice.

Thus, in the case of Soncbez vs. Riqor, 4S SCRA S68, S72-S7S, the Couit saiu:
(1) Aiticle 1SS4 applies to contiacts in geneial, wheieas the
seconu paiagiaph of Aiticle 1479 iefeis to sales in paiticulai, anu,
moie specifically, to an accepteu unilateial piomise to buy oi to
sell. In othei woius, Aiticle 1479 is contiolling in the case at bai.
(2) In oiuei that saiu unilateial piomise may be binuing upon the
piomissoi, Aiticle 1479 iequiies the concuiience of a conuition,
namely, that the piomise be suppoiteu by a consiueiation uistinct
fiom the piice.

Accoiuingly, the piomissee cannot compel the piomissoi to comply with the
piomise, unless the foimei establishes the existence of saiu uistinct
consiueiation. In othei woius, the piomissee has the buiuen of pioving such
consiueiation. Plaintiff heiein has not even allegeu the existence theieof in
his complaint.

It follows that plaintiff cannot compel uefenuant Caimelo & Baueimann to
sell the C.N. Recto piopeity to the foimei.

Nayfaii taking exception to the uecision of the tiial couit, the battlegiounu
shifteu to the iesponuent Couit of Appeals. Responuent appellate couit
ieveiseu the couit o quo anu ienueieu juugment:
1. Reveising anu setting asiue the appealeu Becision;
2. Biiecting the plaintiff-appellant Nayfaii Theatei Inc. to pay anu
ietuin to Equatoiial the amount of P11,Suu,uuu.uu within fifteen
(1S) uays fiom notice of this Becision, anu oiueiing Equatoiial
Realty Bevelopment, Inc. to accept such payment;
S. 0pon payment of the sum of P11,Suu,uuu, uiiecting Equatoiial
Realty Bevelopment, Inc. to execute the ueeus anu uocuments
necessaiy foi the issuance anu tiansfei of owneiship to Nayfaii of
the lot iegisteieu unuei TCT Nos. 17SSu, 118612, 6u9S6, anu
S2S71; anu
4. Shoulu plaintiff-appellant Nayfaii Theatei, Inc. be unable to pay
the amount as aujuugeu, ueclaiing the Beeu of Absolute Sale
between the uefenuants-appellants Caimelo & Baueimann, Inc.
anu Equatoiial Realty Bevelopment, Inc. as valiu anu binuing upon
all the paities.

6))E*K

Whethei oi not paiagiaph 8 of 2 lease contiacts is a iight of fiist iefusal.

7EL,N-K

Reieauing the law on the mattei of sales anu option contiacts, iesponuent
Couit of Appeals uiffeientiateu between Aiticle 1S24 anu Aiticle 1479 of the
Civil Coue, analyzeu theii application to the facts of this case, anu concluueu
that since paiagiaph 8 of the two lease contiacts uoes not state a fixeu piice
foi the puichase of the leaseu piemises, which is an essential element foi a
contiact of sale to be peifecteu, what paiagiaph 8 is, must be a iight of fiist
iefusal anu not an option contiact. It explicateu:

Fiistly, the couit o quo misapplieu the piovisions of Aiticles 1S24 anu 1479,
seconu paiagiaph, of the Civil Coue.

Aiticle 1S24 speaks of an "offei" maue by an offeioi which the offeiee may
oi may not accept within a ceitain peiiou. 0nuei this aiticle, the offei may
be withuiawn by the offeioi befoie the expiiation of the peiiou anu while
the offeiee has not yet accepteu the offei. Bowevei, the offei cannot be
withuiawn by the offeioi within the peiiou if a consiueiation has been
piomiseu oi given by the offeiee in exchange foi the piivilege of being given
that peiiou within which to accept the offei. The consiueiation is uistinct
fiom the piice which is pait of the offei. The contiact that aiises is known as
option. In the case of Beoumont vs. Prieto, 41 Phil. 67u, the Supieme couit,
citing Bouviei, uefineu an option as follows: "A contiact by viitue of which A,
in consiueiation of the payment of a ceitain sum to B, acquiies the piivilege
of buying fiom oi selling to B, ceitain secuiities oi piopeities within a
limiteu time at a specifieu piice," (pp. 686-7).

Aiticle 1479, seconu paiagiaph, on the othei hanu, contemplates of an
"accepteu unilateial piomise to buy oi to sell a ueteiminate thing foi a piice
within (which) is binuing upon the piomisee if the piomise is suppoiteu by a
consiueiation uistinct fiom the piice." That "unilateial piomise to buy oi to
sell a ueteiminate thing foi a piice ceitain" is calleu an offei. An "offei", in
laws, is a pioposal to entei into a contiact (Rosenstock vs. Buike, 46 Phil.
217). To constitute a legal offei, the pioposal must be ceitain as to the
object, the piice anu othei essential teims of the contiact (Ait. 1S19, Civil
Coue).

Baseu on the foiegoing uiscussion, it is eviuent that the piovision gianting
Nayfaii "Su-uays exclusive option to puichase" the leaseu piemises is N0T
AN 0PTI0N in the context of Aits. 1S24 anu 1479, seconu paiagiaph of the
Civil Coue. Although the piovision is ceitain as to the object (the sale of the
leaseu piemises) the piice foi which the object is to be solu is not stateu in
the piovision 0theiwise stateu, the questioneu stipulation is not by itself, an
"option" oi the "offei to sell" because the clause uoes not specify the piice
foi the subject piopeity.

Although the piovision giving Nayfaii "Su-uays exclusive option to
puichase" cannot be legally categoiizeu as an option, it is, neveitheless, a
valiu anu binuing stipulation. What the tiial couit faileu to appieciate was
the intention of the paities behinu the questioneu pioviso.

xxx xxx xxx
The piovision in question is not of the pio-foima type customaiily founu in a
contiact of lease. Even appellees have iecognizeu that the stipulation was
incoipoiateu in the two Contiacts of Lease at the initiative anu behest of
Nayfaii. Eviuently, the stipulation was intenueu to benefit anu piotect
Nayfaii in its iights as lessee in case Caimelo shoulu ueciue, uuiing the teim
of the lease, to sell the leaseu piopeity. This intention of the paities is
achieveu in two ways in accoiuance with the stipulation. The fiist is by
giving Nayfaii "Su-uays exclusive option to puichase" the leaseu piopeity.
The seconu is, in case Nayfaii woulu opt not to puichase the leaseu
piopeity, "that the puichasei (the new ownei of the leaseu piopeity) shall
iecognize the lease anu be bounu by all the teims anu conuitions theieof."

In othei woius, paiagiaph 8 of the two Contiacts of lease, paiticulaily the
stipulation giving Nayfaii "Su-uays exclusive option to puichase the (leaseu
piemises)," was meant to pioviue Nayfaii the oppoitunity to puichase anu
acquiie the leaseu piopeity in the event that Caimelo shoulu ueciue to
uispose of the piopeity. In oiuei to iealize this intention, the implicit
obligation of Caimelo once it hau ueciueu to sell the leaseu piopeity, was not
only to notify Nayfaii of such uecision to sell the piopeity, but, moie
impoitantly, to make an offei to sell the leaseu piemises to Nayfaii, giving
the lattei a faii anu ieasonable oppoitunity to accept oi ieject the offei,
befoie offeiing to sell oi selling the leaseu piopeity to thiiu paities. The
iight vesteu in Nayfaii is analogous to the iight of fiist iefusal, which means
that Caimelo shoulu have offeieu the sale of the leaseu piemises to Nayfaii
befoie offeiing it to othei paities, oi, if Caimelo shoulu ieceive any offei
fiom thiiu paities to puichase the leaseu piemises, then Caimelo must fiist
give Nayfaii the oppoitunity to match that offei.

Art. 14S8. By tbe controct of sole one of tbe controctinq porties obliqotes
bimself to tronsfer tbe ownersbip of onJ to Jeliver o Jeterminote tbinq, onJ
tbe otber to poy tberefor o price certoin in money or its equivolent.

A controct of sole moy be obsolute or conJitionol.

Art. 1479:
An occepteJ uniloterol promise to buy or to sell o Jeterminote tbinq for o price
certoin is binJinq upon tbe promissor if tbe promise is supporteJ by o
consiJerotion Jistinct from tbe price. {14S1o).

WBEREF0RE, the petition foi ieview of the uecision of the Couit of Appeals,
uateu }une 2S, 1992, in CA-u.R. Cv No. S2918, is BEREBY BENIEB. The Beeu
of Absolute Sale between petitioneis Equatoiial Realty Bevelopment, Inc.
anu Caimelo & Baueimann, Inc. is heieby ueemeu iescinueu; petitionei
Caimelo & Baueimann is oiueieu to ietuin to petitionei Equatoiial Realty
Bevelopment the puichase piice. The lattei is uiiecteu to execute the ueeus
anu uocuments necessaiy to ietuin owneiship to Caimelo anu Baueimann
of the uisputeu lots. Caimelo & Baueimann is oiueieu to allow Nayfaii
Theatei, Inc. to buy the afoiesaiu lots foi P11,Suu,uuu.uu. S0 0RBEREB.

G01 2"7"f"S4$ \65;! $5=$7276!$!> 65'37237"=$+ :)0 '347= 3<
"22$"#!> '"="#65" #0 !"5=3!> D*MD*)*N.*Q CF ]*D (..?DN*FZ,NZe(O.>
#4Y J0 273="'63> (NQ +"W6+ "0 7"R845+3> GTH !'7" BGB> ;070 5?0
///V@H> <*CDE(DF GT> /AAB
JFK 7?C*L> 7,O](DQ J0

<(O.)K

Befenuant Catalina L. Santos is the ownei of eight (8) paicels of lanu locateu
at (sic) Paiaaque, Netio Nanila with tiansfei ceitificate of title nos. S-
196S7, S-196S8 anu S-1964S to S-19648.

0n Novembei 28, 1977, a ceitain Fieueiick Chua leaseu the above-uesciibeu
piopeity fiom uefenuant Catalina L. Santos, the saiu lease was iegisteieu in
the Registei of Beeus.

0n Febiuaiy 12, 1979, Fieueiick Chua assigneu all his iights anu inteiest
anu paiticipation in the leaseu piopeity to Lee Ching Bing, by viitue of a
ueeu of assignment anu with the confoimity of uefenuant Santos, the saiu
assignment was also iegisteieu.

0n August 6, 1979, Lee Ching Bing also assigneu all his iights anu inteiest in
the leaseu piopeity to Paiaaque Kings Enteipiises, Incoipoiateu by viitue
of a ueeu of assignment anu with the confoimity of uefenuant Santos, the
same was uuly iegisteieu.

Paiagiaph 9 of the assigneu leaseu (sic) contiact pioviues among otheis
that:
'9. That in case the piopeities subject of the lease agieement aie
solu oi encumbeieu, Lessois shall impose as a conuition that the
buyei oi moitgagee theieof shall iecognize anu be bounu by all
the teims anu conuitions of this lease agieement anu shall iespect
this Contiact of Lease as if they aie the LESS0RS theieof anu in
case of sale, LESSEE shall have the fiist option oi piioiity to buy
the piopeities subject of the lease;'

Bowevei, on Septembei 21, 1988, uefenuant Santos solu the eight paicels of
lanu subject of the lease to uefenuant Baviu Raymunuo foi a consiueiation of
FIvE NILLI0N (PS,uuu,uuu.uu) PES0S. The saiu sale was in contiavention of
the contiact of lease, foi the fiist option oi piioiity to buy was not offeieu by
uefenuant Santos to the plaintiff.

0pon leaining of this fact plaintiff's iepiesentative wiote a lettei to
uefenuant Santos, iequesting hei to iectify the eiioi anu consequently
iealizing the eiioi, she hau it ieconveyeu to hei foi the same consiueiation
of FIvE NILLI0N (PS,uuu,uuu.uu) PES0S.

Subsequently the piopeity was offeieu foi sale to plaintiff by the uefenuant
foi the sum of FIFTEEN NILLI0N (P1S,uuu,uuu.uu) PES0S. Plaintiff was
given ten (1u) uays to make goou of the offei, but theiefoie (sic) the saiu
peiiou expiieu anothei lettei came fiom the counsel of uefenuant Santos,
containing the same tenoi of (sic) the foimei lettei.

0n Nay 8, 1989, befoie the peiiou given in the lettei offeiing the piopeities
foi sale expiieu, plaintiff's counsel wiote counsel of uefenuant Santos
offeiing to buy the piopeities foi FIvE NILLI0N (PS,uuu,uuu.uu) PES0S.

0n Nay 1S, 1989, befoie they ieplieu to the offei to puichase, anothei ueeu
of sale was executeu by uefenuant Santos (in favoi of) uefenuant Raymunuo
foi a consiueiation of NINE NILLI0N (P9,uuu,uuu.uu) PES0S.

Plaintiff uemanueu fiom the uefenuants to iectify theii unlawful acts that
they committeu, but uefenuants iefuseu anu faileu to comply with plaintiffs
just anu valiu anu (sic) uemanus.

Bespite iepeateu uemanus, uefenuants faileu anu iefuseu without justifiable
cause to satisfy plaintiff's claim, anu was constiaineu to institute this action.

0n Septembei 2, 1991, the tiial couit issueu the oiuei uismissing the
complaint foi lack of a valiu cause of action.

Petitioneis appealeu to the Couit of Appeals which affiimeu in toto the
iuling of the tiial couit.
Petitionei moveu foi ieconsiueiation but was uenieu in an oiuei uateu
August 2u, 199S.

6))E*K

Whethei the afoiequoteu complaint alleging bieach of the contiactual iight
of "fiist option oi piioiity to buy" states a valiu cause of action.

7EL,N-K

Sec. 6 of P.B. No. 1S17 pioviues:
"SFCTl0N 6. lonJ Tenoncy in 0rbon lonJ Reform Areos.-- Witbin tbe 0rbon
Zones leqitimote tenonts wbo bove resiJeJ on tbe lonJ for ten yeors or more
wbo bove built tbeir bomes on tbe lonJs onJ resiJents wbo bove leqolly
occupieJ tbe lonJs by controct, continuously for tbe lost ten yeors sboll not be
JispossesseJ of tbe lonJ onJ sboll be olloweJ tbe riqbt of first refusol to
purcbose tbe some witbin o reosonoble time onJ ot reosonoble prices, unJer
terms onJ conJitions to be JetermineJ by tbe 0rbon Zone Fxpropriotion onJ
lonJ Honoqement Committee creoteJ by section 8 of tbis Becree."

WBEREF0RE, the petition is 6RANTFB. The assaileu uecisions of the tiial
couit anu Couit of Appeals aie heieby RFvFRSFB anu SFT ASlBF. The case
is RFHANBFB to the Regional Tiial Couit of Nakati foi fuithei pioceeuings.

@01 73!$5'37 +$W$#328$5= '37237"=635 (NQ 7$5$ P3"S465 :)0
2"=$753 65S465;> 67$5$ ;46##$783> <$+$76'3 J"5=4;"5>
<$75"5+3 8";J"54" (NQ #6YY" =6"5;'3> @VX !'7" //A> ;070 5?0
/XIXBA> 8(DO] H> GII/
JFK 7?C*L> 7,O](DQ J0

<(O.)K

This action was oiiginally foi the annulment of the Beeu of Absolute Sale
uateu Septembei 4, 199u between uefenuants Rosencoi anu Eufiocina ue
Leon but latei amenueu (sic) piaying foi the iescission of the ueeu of sale.

Plaintiffs anu plaintiffs-inteivenois aveiieu that they aie the lessees since
1971 of a two-stoiy iesiuential apaitment locateu at No. 1Su Tomas Noiato
Ave., Quezon City coveieu by TCT No. 96161 anu owneu by spouses Faustino
anu Ciesencia Tiangco. The lease was not coveieu by any contiact. The
lessees weie ienting the piemises then foi P1Su.uu a month anu weie
allegeuly veibally gianteu by the lessois the pie-emptive iight to puichase
the piopeity if evei they ueciue to sell the same.

0pon the ueath of the spouses Tiangcos in 197S, the management of the
piopeity was aujuuicateu to theii heiis who weie iepiesenteu by Eufiocina
ue Leon. The lessees weie allegeuly piomiseu the same pie-emptive iight by
the heiis of Tiangcos since the lattei hau knowleuge that this iight was
extenueu to the foimei by the late spouses Tiangcos. The lessees continueu
to stay in the piemises anu allegeuly spent theii own money amounting fiom
PSu,uuu.uu to P1uu,uuu.uu foi its upkeep.

In }une 199u, the lessees ieceiveu a lettei fiom Atty. Eilinua Aguila
uemanuing that they vacate the piemises so that the uemolition of the
builuing be unueitaken. They iefuseu to leave the piemises. In that same
month, ue Leon iefuseu to accept the lessees' iental payment claiming that
they have iun out of ieceipts anu that a new collectoi has been assigneu to
ieceive the payments. Theieaftei, they ieceiveu a lettei fiom Eufiocina ue
Leon offeiing to sell to them the piopeity they weie leasing foi
P2,uuu,uuu.uu.

The lessees offeieu to buy the piopeity fiom ue Leon foi the amount of
P1,uuu,uuu.uu. Be Leon tolu them that she will be submitting the offei to the
othei heiis. Since then, no answei was given by ue Leon as to theii offei to
buy the piopeity. Bowevei, in Novembei 199u, Rene }oaquin came to the
leaseu piemises intiouucing himself as its new ownei.

In }anuaiy 1991, the lessees again ieceiveu anothei lettei fiom Atty. Aguila
uemanuing that they vacate the piemises. A month theieaftei, the lessees
ieceiveu a lettei fiom ue Leon auvising them that the heiis of the late
spouses Tiangcos have alieauy solu the piopeity to Rosencoi. The following
month Atty. Aguila wiote them anothei lettei uemanuing the iental payment
anu intiouucing heiself as counsel foi RosencoiRene }oaquin, the new
owneis of the piemises.

The lessees iequesteu fiom ue Leon why she hau uisiegaiueu the pie-
emptive iight she anu the late Tiangcos have piomiseu them. They also
askeu foi a copy of the ueeu of sale between hei anu the new owneis theieof
but she iefuseu to heeu theii iequest. In the same mannei, when they askeu
Rene }oaquin a copy of the ueeu of sale, the lattei tuineu uown theii iequest
anu insteau Atty. Aguila wiote them seveial letteis uemanuing that they
vacate the piemises. The lessees offeieu to tenuei theii iental payment to
ue Leon but she iefuseu to accept the same.

In Apiil 1992 befoie the uemolition can be unueitaken by the Buiuing
0fficial, the baiangay inteiceueu between the paities heiein aftei which
Rosencoi iaiseu the issue as to the iental payment of the piemises. It was
also at this instance that the lessees weie fuinisheu with a copy of the Beeu
of Sale anu uiscoveieu that they weie ueceiveu by ue Leon since the sale
between hei anu Rene }oaquinRosencoi took place in Septembei 4, 199u
while ue Leon maue the offei to them only in 0ctobei 199u oi aftei the sale
with Rosencoi hau been consummateu. The lessees also noteu that the
piopeity was solu only foi P726,uuu.uu.

The lessees offeieu to ieimbuise ue Leon the selling piice of P726,uuu.uu
plus an auuitional P274,uuu.uu to complete theii P1,uuu.uuu.uu eailiei offei.
When theii offei was iefuseu, they fileu the piesent action piaying foi the
following: a) iescission of the Beeu of Absolute Sale between ue Leon anu
Rosencoi uateu Septembei 4, 199u; b) the uefenuants RosencoiRene
}oaquin be oiueieu to ieconvey the piopeity to ue Leon; anu c) ue Leon be
oiueieu to ieimbuise the plaintiffs foi the iepaiis of the piopeity, oi apply
the saiu amount as pait of the piice foi the puichase of the piopeity in the
sum of P1uu,uuu.uu."

Aftei tiial on the meiits, the Regional Tiial Couit ienueieu a Becision uateu
Nay 1S, 1996 uismissing the complaint. The tiial couit helu that the iight of
ieuemption on which the complaint was baseu was meiely an oial one anu
as such, is unenfoiceable unuei the law.

Not satisfieu with the uecision of the tiial couit, iesponuents heiein fileu a
Notice of Appeal uateu }une S, 1996. 0n the same uate, the tiial couit issueu
an 0iuei foi the elevation of the iecoius of the case to the Couit of Appeals.
0n August 8, 1997, iesponuents fileu theii appellate biief befoie the Couit of
Appeals. 0n }une 2S, 1999, the Couit of Appeals ienueieu its uecision
ieveising the uecision of the tiial couit.

Petitioneis heiein fileu a Notion foi Reconsiueiation of the uecision of the
Couit of Appeals but the same was uenieu in a Resolution uateu 0ctobei 1S,
1999.

6))E*)K

1.) Whethei oi not a iight of fiist iefusal is inueeu coveieu by the piovisions
of the New Civil Coue on the statute of fiauus.

2.) Whethei oi not iesponuents have satisfactoiily pioven theii iight of fiist
iefusal.

7EL,N-K

"Ait. 14uS. The following contiacts aie unenfoiceable, unless they aie
iatifieu:
x x x
{2) Tbose tbot Jo not comply witb tbe Stotute of IrouJs os set fortb
in tbis number. ln tbe followinq coses on oqreement bereofter moJe
sboll be unenforceoble by oction, unless tbe some, or some note or
memoronJum tbereof, be in writinq, onJ subscribeJ by tbe porty
cborqeJ, or by bis oqent; eviJence, tberefore, of tbe oqreement
connot be receiveJ witbout tbe writinq, or o seconJory eviJence of
its contents:
o) An oqreement tbot by its terms is not to be performeJ
witbin o yeor from tbe mokinq tbereof;
b) A speciol promise to onswer for tbe Jebt, Jefoult, or
miscorrioqe of onotber;
c) An oqreement moJe in consiJerotion of morrioqe,
otber tbon o mutuol promise to morry;
J) An oqreement for tbe sole of qooJs, cbottels or tbinqs
in oction, ot o price not less tbon five bunJreJ pesos,
unless tbe buyer occept onJ receive port of sucb qooJs
onJ cbottels, or tbe eviJences, or some of tbem, of sucb
tbinqs in oction, or poy ot tbe time some port of tbe
purcbose money; but wben o sole is moJe by ouction onJ
entry is moJe by tbe ouctioneer in bis soles book, ot tbe
time of tbe sole, of tbe omount onJ kinJ of property solJ,
terms of sole, price, nomes of purcbosers onJ person on
wbose occount tbe sole is moJe, it is o sufficient
memoronJum;
e) An oqreement for tbe leosinq of o lonqer perioJ tbon
one yeor, or for tbe sole of reol property or of on interest
tberein;
f) A representotion to tbe creJit of o tbirJ person."

0nuei Aiticle 1S8u to 1S81 (S) of the Civil Coue, a contiact otheiwise valiu
may nonetheless be subsequently iescinueu by ieason of injuiy to thiiu
peisons, like cieuitois.

0n the fiist issue: The Couit helu that not all agieements "affecting lanu"
must be put into wiiting to attain enfoiceability. A iight of fiist iefusal is not
among those listeu as unenfoiceable unuei the statute of fiauus anu neeu
not be wiitten to be enfoiceable anu may be pioven by oial eviuence.

0n the seconu issue: The Couit helu that iesponuents have auequately
pioven the existence of theii iight of fiist iefusal. Feueiico Bantugan, Iiene
uuilleimo, anu Pateino Inquing unifoimly testifieu that they weie piomiseu
by the late spouses Faustino anu Ciescencia Tiangco anu, latei on, by theii
heiis a iight of fiist iefusal ovei the piopeity they weie cuiiently leasing
shoulu they ueciue to sell the same. Consequently, Eufiocina ue Leon
iecognizeu the iesponuents by offeiing to sell the piopeity. The Couit also
noteu that petitioneis uiu not piesent eviuence befoie the tiial couit
contiauicting the existence of the iight of fiist iefusal of iesponuents ovei
the uisputeu piopeity.

WBEREF0RE, piemises consiueieu, the uecision of the Couit of Appeals
uateu }une 2S, 1999 is REvERSEB anu SET ASIBE. The Becision uateu Nay
1S, 1996 of the Quezon City Regional Tiial Couit, Bianch 217 is heieby
REINSTATEB insofai as it uismisses the action foi iescission of the Beeu of
Absolute Sale uateu Septembei 4, 199u anu oiueis the payment of monthly
ientals of P1,uuu.uu pei month ieckoneu fiom Nay 199u up to the time
iesponuents leave the piemises. S0 0RBEREB.

X01 ="5"R 7$'7$"=635 '$5=$7 "5+ +$W$#328$5= '3720 :)0
'"="#65" 8"=6$5Y3 <"4!=3i (NQ "545'6"'635 <"4!=3
2"'45"R$5> XVV !'7" X@T> ;070 5?0 /XI/HG> "MD,L /G> GIIV
JFK 7?C*L> 7,O](DQ J0

<(O.)K

Petitionei Tanay Recieation Centei anu Bevelopment Coip. (TRCBC) is the
lessee of a S,u9u-squaie metei piopeity locateu in Sitio uayas, Tanay, Rizal,
owneu by Catalina Natienzo Fausto, unuei a Contiact of Lease executeu on
August 1, 1971. 0n this piopeity stanus the Tanay Coliseum Cockpit
opeiateu by petitionei. The lease contiact pioviueu foi a 2u-yeai teim,
subject to ienewal within sixty uays piioi to its expiiation. The contiact also
pioviueu that shoulu Fausto ueciue to sell the piopeity, petitionei shall have
the "piioiity iight" to puichase the same.

0n }une 17, 1991, petitionei wiote Fausto infoiming hei of its intention to
ienew the lease. Bowevei, it was Fausto's uaughtei, iesponuent Anunciacion
F. Pacunayen, who ieplieu, asking that petitionei iemove the impiovements
built theieon, as she is now the absolute ownei of the piopeity.|4j It appeais
that Fausto hau eailiei solu the piopeity to Pacunayen on August 8, 199u,
foi the sum of P1u,uuu.uu unuei a "Kosuloton nq Bilibon Potuluyon nq lupo,"
anu title has alieauy been tiansfeiieu in hei name unuei Tiansfei Ceitificate
of Title (TCT) No. N-SS468.

Bespite effoits, the mattei was not iesolveu. Bence, on Septembei 4, 1991,
petitionei fileu an Amenueu Complaint foi Annulment of Beeu of Sale,
Specific Peifoimance with Bamages, anu Injunction, uocketeu as Civil Case
No. S72-N.

In hei Answei, iesponuent claimeu that petitionei is estoppeu fiom assailing
the valiuity of the ueeu of sale as the lattei acknowleugeu hei owneiship
when it meiely askeu foi a ienewal of the lease. Accoiuing to iesponuent,
when they met to uiscuss the mattei, petitionei uiu not uemanu foi the
exeicise of its option to puichase the piopeity, anu it even askeu foi giace
peiiou to vacate the piemises.

Aftei tiial on the meiits, the Regional Tiial Couit of Noiong, Rizal (Bianch
78), ienueieu juugment extenuing the peiiou of the lease foi anothei seven
yeais fiom August 1, 1991 at a monthly iental of P1u,uuu.uu, anu uismisseu
petitionei's claim foi uamages.

0n appeal, uocketeu as CA-u.R. Cv No. 4S77u, the Couit of Appeals (CA)
affiimeu with mouifications the tiial couit's juugment pei its Becision uateu
}une 14, 1999.

The CA also iesolveu that TRCBC vACATE the leaseu piemises immeuiately:

To uRANT the motion of Pacunayen to allow hei to withuiaw the
amount of PS2u,uuu.uu, uepositeu accoiuing to iecoius, with this
couit.
To oiuei TRCBC to NAKE TBE NECESSARY ACC00NTINu
iegaiuing the amounts it hau alieauy uepositeu (foi unpaiu
ientals foi the extenueu peiiou of seven |7j yeais of the contiact
of lease). In case it hau not yet completeu its ueposit, to
immeuiately pay the iemaining balance to Pacunayen.
To oiuei TRCBC to PAY the amount of P1u,uuu.uu as monthly
iental, with iegaiu to its continueu stay in the leaseu piemises
even aftei the expiiation of the extenueu peiiou of seven (7)
yeais, computeu fiom August 1, 1998, until it finally vacates
theiefiom.

Petitionei fileu a motion foi ieconsiueiation but it was uenieu pei
Resolution uateu Septembei 14, 1999.

Bissatisfieu, petitionei elevateu the case to this Couit on petition foi ieview
on certiorori.

6))E*K

Whethei oi not the iight to puichase expiessly pioviueu unuei a contiact of
lease only applies if the lessoi ueciues to sell his piopeity to stiangeis.

7EL,N-K

ART. 1S11. Controcts toke effect only between tbe porties, tbeir ossiqns onJ
beirs, except in cose wbere tbe riqbts onJ obliqotions orisinq from tbe controct
ore not tronsmissible by tbeir noture, or by stipulotion or by provision of low.
Tbe beir is not lioble beyonJ tbe volue of tbe property be receiveJ from tbe
JeceJent.

The geneial iule is that heiis aie bounu by contiacts enteieu into by theii
pieuecessois-in-inteiest.

Exception: When the iights anu obligations aiising theiefiom aie not
tiansmissible by -
(1) theii natuie,
(2) stipulation oi
(S) piovision of law.

The lease contiact between petitionei anu Fausto is a piopeity iight, which
is a iight that passeu on to iesponuent anu the othei heiis, if any, upon the
ueath of Fausto.

WBEREF0RE, the instant Petition foi Review is PARTIALLY uRANTEB. The
Couit of Appeals' Becision uateu }une 14, 1999 in CA-u.R. Cv No. 4S77u is
N0BIFIEB as follows:

(1) The "Kosuloton nq Bilibon Potuluyon nq lupo" uateu August 8, 199u
between Catalina Natienzo Fausto anu iesponuent Anunciacion Fausto
Pacunayen is heieby ueemeu iescinueu;

(2) The Beiis of the ueceaseu Catalina Natienzo Fausto who aie heieby
ueemeu substituteu as iesponuents, iepiesenteu by iesponuent Anunciacion
Fausto Pacunayen, aie 0RBEREB to iecognize the obligation of Catalina
Natienzo Fausto unuei the Contiact of Lease with iespect to the piioiity
iight of petitionei Tanay Recieation Centei anu Bevelopment Coip. to
puichase the subject piopeity unuei ieasonable teims anu conuitions;

(S) Tiansfei Ceitificate of Title No. N-SS468 shall iemain in the name of
iesponuent Anunciacion Fausto Pacunayen, which shall be cancelleu in the
event petitionei successfully puichases the subject piopeity;

(4) Responuent is 0RBEREB to pay petitionei Tanay Recieation Centei anu
Bevelopment Coipoiation the amount of Twenty Thousanu Pesos
(P2u,uuu.uu) as actual uamages, plus inteiest theieon at the legal iate of six
peicent (6%) pei annum fiom the filing of the Complaint until the finality of
this Becision. Aftei this Becision becomes final anu executoiy, the
applicable iate shall be twelve peicent (12%) pei annum until its
satisfaction; anu,

(S) Responuent is 0RBEREB to pay petitionei the amount of Ten Thousanu
Pesos (P1u,uuu.uu) as attoiney's fees, anu to pay the costs of suit.

(6) Let the case be iemanueu to the Regional Tiial Couit, Noiong, Rizal
(Bianch 78) foi fuithei pioceeuings on the ueteimination of the "ieasonable
teims anu conuitions" of the offei to sell by iesponuents to petitionei,
without piejuuice to possible meuiation between the paities.

The iest of the unaffecteu uispositive poition of the Couit of Appeals'
Becision is AFFIRNEB.

S0 0RBEREB.

! 8$,%$-(&)' )% (0$ +)'(,*-(2 90$' >$,%$-($7

/01 7384#3 "0 '3735$#> "#"76'3 "0 '3735$#> "55$==$ "0 '3735$#>
"55"J$##$ '0 ;35Y"#$! ge?D ]*D)*Le (NQ ?N C*](Le ?e <L?D(,Q( '0
=EMM*D> () (..?DN*FZ,NZe(O.1> '6$#6=3 "0 '3735$#> <#37"6+" "0
"#835=$> (NQ '"="#65" J"#"6! 8"J"5"; :)0 =9$ '347= 3<
"22$"#!> '35'$2'635 +0 "#'"7"Y (NQ 7"835" 2"=76'6" "#'"7"Y>
()),).*Q CF ;#376" <0 53$# () (..?DN*FZ,NZe(O.> ;070 5?0 /I@VBB>
3O.?C*D B> /AAT
JFK 7?C*L> 7,O](DQ J0

<(O.)K

0n }anuaiy 19, 198S, uefenuants-appellants Romulo Coionel, et. ol.
(heieinaftei iefeiieu to as Coionels) executeu a uocument entitleu "Receipt
of Bown Payment" (Exh. "A") in favoi of plaintiff Ramona Patiicia Alcaiaz.

ReceiveJ from Hiss Romono Potricio Alcoroz of 146 Timoq, uezon
City, tbe sum of Iifty TbousonJ Pesos purcbose price of our
inberiteJ bouse onJ lot, covereJ by TCT No. 119627 of tbe Reqistry
of BeeJs of uezon City, in tbe totol omount of P1,240,000.00.

We binJ ourselves to effect tbe tronsfer in our nomes from our
JeceoseJ fotber, Constoncio P. Coronel, tbe tronsfer certificote of
title immeJiotely upon receipt of tbe Jown poyment obove-stoteJ.

0n our presentotion of tbe TCT olreoJy in or nome, We will
immeJiotely execute tbe JeeJ of obsolute sole of soiJ property onJ
Hiss Romono Potricio Alcoroz sboll immeJiotely poy tbe bolonce of
tbe P1,190,000.00.

0n the same uate (}anuaiy 1S, 198S), plaintiff-appellee Concepcion B.
Alcaiaz (heieinaftei iefeiieu to as Concepcion), mothei of Ramona, paiu the
uown payment of Fifty Thousanu (PSu,uuu.uu) Pesos (Exh. "B", Exh. "2").

0n Febiuaiy 6, 198S, the piopeity oiiginally iegisteieu in the name of the
Coionel's fathei was tiansfeiieu in theii names unuei TCT No. S27u4S (Exh.
"B"; Exh "4").

Bowevei, on Febiuaiy 18, 198S, the Coionels solu the piopeity coveieu by
TCT No. S27u4S to inteivenoi-appellant Catalina B. Nabanag (heieinaftei
iefeiieu to as Catalina) foi 0ne Nillion Five Bunuieu Eighty Thousanu
(P1,S8u,uuu.uu) Pesos aftei the lattei has paiu Thiee Bunuieu Thousanu
(PSuu,uuu.uu) Pesos (Exhs. "F-S"; Exh. "6-C").

Foi this ieason, Coionels canceleu anu iescinueu the contiact (Exh. "A") with
Ramona by uepositing the uown payment paiu by Concepcion in the bank in
tiust foi Ramona Patiicia Alcaiaz.

0n Febiuaiy 22, 198S, Concepcion, et. ol., fileu a complaint foi a specific
peifoimance against the Coionels anu causeu the annotation of a notice of lis
penJens at the back of TCT No. S274uS (Exh. "E"; Exh. "S").

0n Apiil 2, 198S, Catalina causeu the annotation of a notice of auveise claim
coveiing the same piopeity with the Registiy of Beeus of Quezon City (Exh.
"F"; Exh. "6").

0n Apiil 2S, 198S, the Coionels executeu a Beeu of Absolute Sale ovei the
subject piopeity in favoi of Catalina (Exh. "u"; Exh. "7").

0n }une S, 198S, a new title ovei the subject piopeity was issueu in the
name of Catalina unuei TCT No. SS1S82 (Exh. "B"; Exh. "8").

In the couise of the pioceeuings befoie the tiial couit (Bianch 8S, RTC,
Quezon City) the paities agieeu to submit the case foi uecision solely on the
basis of uocumentaiy exhibits. Thus, plaintiffs theiein (now piivate
iesponuents) pioffeieu theii uocumentaiy eviuence accoiuingly maikeu as
Exhibits "A" thiough "}", inclusive of theii coiiesponuing submaikings.
Auopting these same exhibits as theii own, then uefenuants (now
petitioneis) accoiuingly offeieu anu maikeu them as Exhibits "1" thiough
"1u", likewise inclusive of theii coiiesponuing submaikings.

0pon motion of the paities, the tiial couit gave them thiity (Su) uays within
which to simultaneously submit theii iespective memoianua, anu an
auuitional 1S uays within which to submit theii coiiesponuing comment oi
ieply theieto, aftei which, the case woulu be ueemeu submitteu foi
iesolution.

0n Apiil 14, 1988, the case was submitteu foi iesolution befoie }uuge
Reynaluo Rouia, who was then tempoiaiily uetaileu to piesiue ovei Bianch
82 of the RTC of Quezon City. 0n Naich 1, 1989, juugment was hanueu
uown by }uuge Rouia fiom his iegulai bench at Nacabebe, Pampanga foi the
Quezon City bianch, uisposing as follows:

WBEREF0RE, juugment foi specific peifoimance is heieby
ienueieu oiueiing uefenuant to execute in favoi of plaintiffs a
ueeu of absolute sale coveiing that paicel of lanu embiaceu in anu
coveieu by Tiansfei Ceitificate of Title No. S274uS (now TCT No.
SS1S82) of the Registiy of Beeus foi Quezon City, togethei with
all the impiovements existing theieon fiee fiom all liens anu
encumbiances, anu once accomplisheu, to immeuiately uelivei the
saiu uocument of sale to plaintiffs anu upon ieceipt theieof, the
plaintiffs aie oiueieu to pay uefenuants the whole balance of the
puichase piice amounting to P1,19u,uuu.uu in cash. Tiansfei
Ceitificate of Title No. SS1S82 of the Registiy of Beeus foi Quezon
City in the name of inteivenoi is heieby canceleu anu ueclaieu to
be without foice anu effect. Befenuants anu inteivenoi anu all
othei peisons claiming unuei them aie heieby oiueieu to vacate
the subject piopeity anu uelivei possession theieof to plaintiffs.
Plaintiffs' claim foi uamages anu attoiney's fees, as well as the
counteiclaims of uefenuants anu inteivenois aie heieby
uismisseu.

A motion foi ieconsiueiation was fileu by petitioneis befoie the new
piesiuing juuge of the Quezon City RTC but the same was uenieu by }uuge
Estiella T. Estiaua.

Petitioneis theieupon inteiposeu an appeal, but on Becembei 16, 1991, the
Couit of Appeals (Buena, uonzaga-Reyes, Abau-Santos (P), }}.) ienueieu its
uecision fully agieeing with the tiial couit.

Bence, the instant petition which was fileu on Naich S, 1992.

6))E*K

Whethei oi not the ieceipt of the uownpayment peifecteu the contiact of
sale of the piopeity between Ramona Alcaiaz anu the heiis of Constancio
Colonel.

7EL,N-K

Art. 147S. Tbe controct of sole is perfecteJ ot tbe moment tbere is o meetinq of
minJs upon tbe tbinq wbicb is tbe object of tbe controct onJ upon tbe price.

Irom tbot moment, tbe porties moy reciprocolly JemonJ performonce, subject
to tbe provisions of tbe low qoverninq tbe form of controcts.

Art. 1181. ln conJitionol obliqotions, tbe ocquisition of riqbts, os well os tbe
extinquisbment or loss of tbose olreoJy ocquireJ, sboll JepenJ upon tbe
boppeninq of tbe event wbicb constitutes tbe conJition.

Since the conuition contemplateu by the paities which is the issuance of a
ceitificate of title in petitionei's names was fulfilleu on Febiuaiy 6, 198S, the
iespective obligations of the paities unuei the contiact of sale became
mutually uemanuable, that is, petitioneis, as selleis, weie obligeu to piesent
the tiansfei ceitificate of title alieauy in theii names to piivate iesponuent
Ramona P. Alcaiaz, the buyei, anu to immeuiately execute the ueeu of
absolute sale, while the buyei on hei pait, was obligeu to foithwith pay the
balance of the puichase piice amounting to P1,19u,uuu.uu.

Art. 1S0S. A controct is o meetinq of minJs between two persons wbereby one
binJs bimself, witb respect to tbe otber, to qive sometbinq or to renJer some
service.

The Civil Coue uefines a contiact of sale, thus:

Art. 14S8. By tbe controct of sole one of tbe controctinq porties obliqotes
bimself to tronsfer tbe ownersbip of onJ to Jeliver o Jeterminote tbinq, onJ
tbe otber to poy tberefor o price certoin in money or its equivolent.

Sale, by its veiy natuie, is a consensual contiact because it is peifecteu by
meie consent. The essential elements of a contiact of sale aie the following:
a) Consent oi meeting of the minus, that is, consent to tiansfei
owneiship in exchange foi the piice;
b) Beteiminate subject mattei; anu
c) Piice ceitain in money oi its equivalent.

0nuei this uefinition, a Contiact to Sell may not be consiueieu as a Contiact
of Sale because the fiist essential element is lacking. In a contiact to sell, the
piospective sellei explicitly ieseives the tiansfei of title to the piospective
buyei, meaning, the piospective sellei uoes not as yet agiee oi consent to
tiansfei owneiship of the piopeity subject of the contiact to sell until the
happening of an event, which foi piesent puiposes we shall take as the full
payment of the puichase piice. What the sellei agiees oi obliges himself to
uo is to fulfill his piomise to sell the subject piopeity when the entiie
amount of the puichase piice is ueliveieu to him. In othei woius the full
payment of the puichase piice paitakes of a suspensive conuition, the non-
fulfillment of which pievents the obligation to sell fiom aiising anu thus,
owneiship is ietaineu by the piospective sellei without fuithei iemeuies by
the piospective buyei.

Art. 1S44. lf tbe some tbinq sboulJ bove been solJ to Jifferent venJees, tbe
ownersbip sboll be tronsferreJ to tbe person wbo moy bove first token
possession tbereof in qooJ foitb, if it sboulJ be movoble property.

SboulJ it be immovoble property, tbe ownersbip sboll belonq to tbe person
ocquirinq it wbo in qooJ foitb first recorJeJ it in tbe Reqistry of Property.

SboulJ tbere be no inscription, tbe ownersbip sboll pertoin to tbe person wbo
in qooJ foitb wos first in tbe possession; onJ, in tbe obsence tbereof to tbe
person wbo presents tbe olJest title, proviJeJ tbere is qooJ foitb.

The iecoiu of the case shows that the Beeu of Absolute Sale uateu Apiil 2S,
198S as pioof of the seconu contiact of sale was iegisteieu with the Registiy
of Beeus of Quezon City giving iise to the issuance of a new ceitificate of title
in the name of Catalina B. Nabanag on }une S, 198S. Thus, the seconu
paiagiaph of Aiticle 1S44 shall apply.

The above-citeu piovision on uouble sale piesumes title oi owneiship to
pass to the buyei, the exceptions being: (a) when the seconu buyei, in goou
faith, iegisteis the sale aheau of the fiist buyei, anu (b) shoulu theie be no
insciiption by eithei of the two buyeis, when the seconu buyei, in goou faith,
acquiies possession of the piopeity aheau of the fiist buyei. 0nless, the
seconu buyei satisfies these iequiiements, title oi owneiship will not
tiansfei to him to the piejuuice of the fiist buyei.

WBEREF0RE, piemises consiueieu, the instant petition is heieby
BISNISSEB anu the appealeu juugment AFFIRNEB. S0 0RBEREB.

As cleaily boine out by the eviuence in this case, petitionei Nabanag coulu
not have in goou faith, iegisteieu the sale enteieu into on Febiuaiy 18, 198S
because as eaily as Febiuaiy 22, 198S, a notice of lis penJens hau been
annotateu on the tiansfei ceitificate of title in the names of petitioneis,
wheieas petitionei Nabanag iegisteieu the saiu sale sometime in Apiil,
198S. At the time of iegistiation, theiefoie, petitionei Nabanag knew that
the same piopeity hau alieauy been pieviously solu to piivate iesponuents,
oi, at least, she was chaigeu with knowleuge that a pievious buyei is
claiming title to the same piopeity. Petitionei Nabanag cannot close hei
eyes to the uefect in petitioneis' title to the piopeity at the time of the
iegistiation of the piopeity.

G01 !"5 #37$5Y3 +$W$#328$5= '37237"=635 :)0 '347= 3<
"22$"#!> 2"J#3 !0 J"J"!"5="> !2!0 86;4$# #4 (NQ 2"'6=" Y"W"##"
#4> ;070 5?0 /GXGXG> P(NE(DF G/> GIIV
JFK 7?)?L(Q(> ;*?D,O] $0

<(O.)K

0n 2u August 1986, the Spouses Lu puipoiteuly solu the two paicels of lanu
to iesponuent Pablo Babasanta, (heieinaftei, Babasanta)

Sometime in Nay 1989, Babasanta wiote a lettei to Pacita Lu to uemanu the
execution of a final ueeu of sale in his favoi so that he coulu effect full
payment of the puichase piice. In the same lettei, Babasanta notifieu the
spouses about having ieceiveu infoimation that the spouses solu the same
piopeity to anothei without his knowleuge anu consent. Be uemanueu that
the seconu sale be cancelleu anu that a final ueeu of sale be issueu in his
favoi.

The RTC ienueieu its Becision on Su }uly 199S upholuing the sale of the
piopeity to SLBC. The tiial couit iuleu that since both Babasanta anu SLBC
uiu not iegistei the iespective sales in theii favoi, owneiship of the piopeity
shoulu peitain to the buyei who fiist acquiieu possession of the piopeity.
The tiial couit equateu the execution of a public instiument in favoi of SLBC
as sufficient ueliveiy of the piopeity to the lattei. It concluueu that symbolic
possession coulu be consiueieu to have been fiist tiansfeiieu to SLBC anu
consequently owneiship of the piopeity peitaineu to SLBC who puichaseu
the piopeity in goou faith. 0n 4 0ctobei 199S, the Couit of Appeals ienueieu
its Becision
11
which set asiue the juugment of the tiial couit.

6))E*K

Who between SLBC anu Babasanta has a bettei iight ovei the two paicels of
lanu subject of the instant case in view of the successive tiansactions
executeu by the Spouses Lu.

7EL,N-K

The agieement between Babasanta anu the Spouses Lu is a contiact to sell
anu not a contiact of sale.

Contiacts, in geneial, aie peifecteu by meie consent, which is manifesteu by
the meeting of the offei anu the acceptance upon the thing which aie to
constitute the contiact. The offei must be ceitain anu the acceptance
absolute. Noieovei, contiacts shall be obligatoiy in whatevei foim they may
have been enteieu into, pioviueu all the essential iequisites foi theii valiuity
aie piesent.

The piinciple of primus tempore, potior jure (fiist in time, stiongei in iight)
gains gieatei significance in case of uouble sale of immovable piopeity.
When the thing solu twice is an immovable, the one who acquiies it anu fiist
iecoius it in the Registiy of Piopeity, both maue in goou faith, shall be
ueemeu the ownei.
S8
veiily, the act of iegistiation must be coupleu with
goou faith that is, the iegistiant must have no knowleuge of the uefect oi
lack of title of his venuoi oi must not have been awaie of facts which shoulu
have put him upon such inquiiy anu investigation as might be necessaiy to
acquaint him with the uefects in the title of his venuoi.

A puichasei in goou faith is one who buys piopeity of
anothei witbout notice that some othei peison has a iight to, oi inteiest in,
such piopeity anu pays a full anu faii piice foi the same at the time of such
puichase, oi before be bos notice of the claim oi inteiest of some othei
peison in the piopeity.

Since SLBC acquiieu possession of the piopeity in goou faith in contiast to
Babasanta, who neithei iegisteieu noi possesseu the piopeity at any time,
SLBC's iight is uefinitely supeiioi to that of Babasanta's.

WBEREF0RE, the instant petition is heieby uRANTEB.

@01 8"56#" 8$="# '35="65$7 '37237"=635> 7$R5"#+3 '0
=3#$5=653 :)0 296#62265$ 5"=635"# J"5\> +8'6Z273P$'=
+$W$#32$7!> 65'0> V// !'7" XXX> ;070 5?0 /TTHTG> +*O*UC*D GI> GIIT
JFK 7?)?L(Q(> ;*?D,O] $0

<(O.)K

Aftei uue notice anu publication, the piopeity was solu at public auction on
Septembei 28, 1982 wheie iesponuent PNB was ueclaieu the winning
biuuei

Petitionei sent a lettei uateu August 2S, 198S to iesponuent PNB, iequesting
that it be gianteu an extension of time to ieueemiepuichase the piopeity

0ffeis anu pioposals foi iepuichase weie maue.

Responuent PNB aveiieu, as a special anu affiimative uefense, that it hau
acquiieu owneiship ovei the piopeity aftei the peiiou to ieueem hau
elapseu. It claimeu that no contiact of sale was peifecteu between it anu
petitionei aftei the peiiou to ieueem the piopeity hau expiieu.

0n Nay S1, 1994, the tiial couit ienueieu juugment uismissing the amenueu
complaint anu iesponuent PNB's counteiclaim.

The CA ienueieu juugment on Nay 11, 2uuu affiiming the uecision of the
RTC. It ueclaieu that petitionei obviously nevei agieeu to the selling piice
pioposeu by iesponuent PNB since petitionei hau kept on insisting that the
selling piice shoulu be loweieu. Cleaily theiefoie, theie was no meeting of
the minus between the paities as to the piice oi consiueiation of the sale.

6))E*K

Whethei oi not petitionei anu iesponuent PNB hau enteieu into a peifecteu
contiact foi petitionei to iepuichase the piopeity fiom iesponuent.

7EL,N-K

The iuling of the appellate couit that theie was no peifecteu contiact of sale
between the paities on }une 4, 198S is coiiect.

A contiact of sale is consensual in natuie anu is peifecteu upon meie
meeting of the minus. When theie is meiely an offei by one paity without
acceptance of the othei, theie is no contiact.
47
When the contiact of sale is
not peifecteu, it cannot, as an inuepenuent souice of obligation, seive as a
binuing juiiuical ielation between the paities.

A negotiation is foimally initiateu by an offei, which, howevei, must be
ceitain. At any time piioi to the peifection of the contiact, eithei negotiating
paity may stop the negotiation. At this stage, the offei may be withuiawn;
the withuiawal is effective immeuiately aftei its manifestation. To conveit
the offei into a contiact, the acceptance must be absolute anu must not
qualify the teims of the offei; it must be plain, unequivocal, unconuitional
anu without vaiiance of any soit fiom the pioposal.

A qualifieu acceptance oi one that involves a new pioposal constitutes a
countei-offei anu a iejection of the oiiginal offei. A countei-offei is
consiueieu in law, a iejection of the oiiginal offei anu an attempt to enu the
negotiation between the paities on a uiffeient basis.
SS
Consequently, when
something is uesiieu which is not exactly what is pioposeu in the offei, such
acceptance is not sufficient to guaiantee consent because any mouification
oi vaiiation fiom the teims of the offei annuls the offei. The acceptance
must be iuentical in all iespects with that of the offei so as to piouuce
consent oi meeting of the minus.

IN LIuBT 0F ALL TBE F0REu0INu, the petition is BENIEB. The assaileu
uecision is AFFIRNEB. Costs against petitionei Nanila Netal Containei
Coipoiation. S0 0RBEREB.

X01 +$W$#328$5= J"5\ 3< =9$ 296#62265$! :)0 J$5 20 8$+7"53
(NQ 276W"=6Y"=635 8"5";$8$5= 3<<6'$ j283k> ;070 5?0 /TBIIX>
<*CDE(DF B> GI//
JFK 7?)?L(Q(> ;*?D,O] $0

<(O.)K

Sometime in 198u, petitionei BBP sought to consoliuate its owneiship in
Paiagon.
Neuiano testifieu that all, incluuing himself, agieeu to sell, anu all took steps
to have theii shaies suiienueieu to BBP foi payment

They maue pioposals to BBP anu the Boaiu of Biiectois of BBP appioveu
the sale unuei BBP Resolution No. 427u subject to the following teims anu
conuitions:

(1) that piioi to the implementation of the appioval, S7,S96
shaies of Paiagon's stock issueu to the stockholueis conceineu
shall fiist be suiienueieu to the BBP;
(2) that all the paities conceineu shall give theii wiitten
confoimity to the aiiangement; anu (S) that the tiansaction shall
be implementeu within foity-five (4S) uays fiom the uate of
appioval (Becembei 24, 198u); otheiwise, the same shall be
ueemeu canceleu.

Neuiano then inuoiseu anu ueliveieu to BBP all his shaies. BBP accepteu
saiu shaies anu took ovei Paiagon.

Neuiano uemanueu that BBP pay the value of his shaies, which he hau
alieauy tuineu ovei, anu his commission.

BBP fileu an Answei aiguing that theie was no peifecteu contiact of sale as
the thiee conuitions in BBP Resolution No. 427u weie not fulfilleu.

0n }anuaiy 26, 1999, the RTC iuleu in Neuiano's favoi anu uismisseu BBP's
cioss-claim against the APT (Asset Piivatization Tiust)

0n Becembei 14, 2uu4, the CA issueu the challengeu Becision
7
anu affiimeu
the uecision of the tiial couit.

The CA helu that theie existeu between BBP anu Neuiano a contiact of sale
anu the conuitions imposeu by Resolution No. 427u weie meiely conuitions
imposeu on the peifoimance of an obligation. Bence, while unuei Aiticle
1S4S
8
of the Civil Coue, BBP hau the iight not to pioceeu with the agieement
upon Neuiano's failuie to comply with the conuitions, BBP was ueemeu to
have waiveu the peifoimance of the conuitions when it chose to ietain
Neuiano's shaies anu latei tiansfei them to the APT. The CA noteu that the
ietention of the shaies was contiaiy to BBP's claim of iescission because if
inueeu BBP iescinueu the sale, then it shoulu have ietuineu to Neuiano his
shaies togethei with theii fiuits anu the piice with inteiests, as pioviueu by
Aiticle 1S8S
9
of the Civil Coue.

6))E*K

Whethei oi not the CA eiieu in applying Aiticle 1S4S of the Civil Coue anu
holuing that BBP exeiciseu the seconu option unuei the saiu aiticle to justify
the oiuei against BBP to pay the value of Neuiano's shaies of stock.

7EL,N-K

We sustain the CA. As a iule, a contiact is peifecteu upon the meeting of the
minus of the two paities. 0nuei Aiticle 147S of theCivil Coue, a contiact of
sale is peifecteu the moment theie is a meeting of the minus on the thing
which is the object of the contiact anu on the piice

ART. 1S4S. Wbere tbe obliqotion of eitber porty to o controct of sole is subject
to ony conJition wbicb is not performeJ, sucb porty moy refuse to proceeJ
witb tbe controct or be moy woive performonce of tbe conJition. lf tbe otber
porty bos promiseJ tbot tbe conJition sboulJ boppen or be performeJ, sucb
first mentioneJ porty moy olso treot tbe nonperformonce of tbe conJition os o
breocb of worronty.

It is cleai fiom a plain ieauing of this aiticle that it speaks of a paity to a
contiact of sale who fails in the peifoimance of hishei obligation. The
application of this aiticle piesupposes that theie is a peifecteu contiact
between the paities anu that one of them fails in the peifoimance of an
obligation unuei the contiact.

The piesent case uoes not fall unuei this aiticle because theie is no
peifecteu contiact of sale to speak of. Neuiano's failuie to comply with the
conuitions set foith by BBP pieventeu the peifection of the contiact of sale.
Bence, Neuiano anu BBP iemaineu as piospective-sellei anu piospective-
buyei anu not paities to a contiact of sale.

This notwithstanuing, howevei, we cannot simply agiee with BBP's
aigument that since theie is no peifecteu contiact of sale, BBP shoulu not be
oiueieu to pay Neuiano any amount.

We finu that equitable consiueiations militate against BBP's claimeu iight
ovei the subject shaies.

Fiist, it is cleai that BBP uiu not buy the shaies fiom Neuiano as it even
asseits theie was no peifecteu contiact of sale because of the failuie of the
lattei to comply with BBP's conuitions.

Seconu, it cannot be saiu that Neuiano voluntaiily uonateu his shaies of
stock as he is in fact still tiying to iecovei them Su yeais latei. Thiiu, it
cannot be saiu that BBP was meiely holuing the shaies of stock foi
safekeeping as BBP even claims that the shaies weie tiansfeiieu to the APT
(now PN0). In fine, theie is no ieason whatsoevei foi BBP to continue in the
possession of the shaies of stock against Neuiano. Foi neaily Su yeais,
Neuiano was uepiiveu of his shaies without any compensation at all fiom
BBP. To this Couit, such situation is tantamount to the loss of iesponuent's
shaies of stock, by ieason of BBP's unjustifieu ietention.

WBEREF0RE, the Becision uateu Becembei 14, 2uu4 anu Resolution uateu
Febiuaiy 8, 2uuS of the Couit of Appeals in CA-u.R. Cv No. 6S4S6 aie
heieby AFFIRNEB.

! 8$,%$-(&)' )% (0$ +)'(,*-(2 90$' >$,%$-($72 A*,'$1( R)'$@ E1X =>(&)'
R)'$@

/01 !234!$! #$35'63 ;0 '6<7" (NQ "4737" 70 P35;'3Z'6<7" :)0
'347= 3< "22$"#! (NQ 8"54$# ;0 R4 '94"> /AH !'7" A/> ;070 5?0
A/AI/ PEN* @> /AA/
JFK 7?)?L(Q(> ;*?D,O] $0

<(O.)K

0n Becembei 27, 198S, petitioneis spouses enteieu into an agieement with
piivate iesponuent uenominateu "Eainest Noney"

0n Nay 2S, 1986, Catalan infoimeu piivate iesponuent of the uesiie of
petitioneis to iescinu the contiact by a lettei

0n }uly S, 1986 piivate iesponuent fileu an action foi specific peifoimance

Petitioneis inteiposeu an appeal to the Couit of Appeals wheiein in uue
couise a uecision was ienueieu on Becembei 2u, 1989 which affiimeu the
appealeu juugment with the mouification ueleting the awaiu of moial
uamages.

6))E*K

B0ES CB0A, TBE RESP0NBENT B0YER, BAvE TBE RIuBT T0 BENANB
SPECIFIC PERF0RNANCE FR0N TBE PETITI0NERS T0 SELL TBE B00SE
ANB L0T T0 BIN BESPITE TBE FACT TBAT BE BAB AuREEB T0 A WAIvER
0F S0CB A RIuBT WBEN BE C0NSENTEB T0 TBE ABBENB0N
STIP0LATI0N REC0uNIZINu TBE RIuBT 0N TBE PART 0F TBE
PETITI0NERS T0 CANCEL 0R ABR0uATE TBE SALE F0R ANY REAS0N BY
PAYINu TBE LIQ0IBATEB BANAuES AuES STIP0LATEB TBEREIN.

7EL,N-K

A ieauing of the subject contiact which the paities labeleu as "Eainest
money" shows that it is an agieement to sell the ieal piopeity uesciibeu
theiein foi the amount of P1.1 N with assumption of the P4u,uuu.uu
moitgage, by which PS,uuu.uu was paiu upon signing of the agieement by
piivate iesponuent to petitionei as eainest money, which is pait of the
consiueiation. The balance of the consiueiation shall be paiu upon the
iemoval of the tenant oi occupant fiom the piemises anu upon the execution
of the ueeu of absolute sale.

In the auuenuum to the agieement it is stipulateu that in case the buyei fails
to puichase the piopeity aftei the sellei foimally notifieu him of the
suiienuei of the piemises by the tenant oi occupant, in auuition to the
foifeituie of the eainest money, the buyei must pay the sellei P2u,uuu.uu
plus attoiney's fees anu othei costs in case of litigation. 0n the othei hanu, if
the sellei uoes not make goou his piomise to sell the piopeity even aftei the
piesent tenant shall have suiienueieu the piemises, the sellei binus himself
to ietuin the eainest money anu in auuition pay the buyei P2u,uuu.uu plus
the attoiney's fees anu othei costs in case of litigation.

This is the liteial anu cleai agieement of the paities. Fiom theii
contempoianeous anu subsequent acts it also appeais that the pioceeus of
the sale of the piopeity by petitioneis weie intenueu to apply to a pioposeu
business ventuie of petitioneis abioau. As saiu pioposeu business uiu not
piospei anu the tenantsoccupants of the piemises have not yet vacateu the
piemises, petitioneis ueciueu to iescinu the contiact of sale in accoiuance
with the agieement.

0nuei the auuenuum to the same agieement, both paities aie given the
fieeuom to back out of the tiansaction pioviueu that, in tie case of the sellei,
he must ietuin the eainest money in auuition to being liable to the buyei foi
P2u,uuu.uu, plus attoiney's fees anu othei costs in case of litigation; anu in
case of the buyei, the eainest money is foifeiteu, anu he is liable to pay the
sellei P2u,uuu.uu in uamages plus attoineys fees anu othei costs in case of
litigation to the sellei. This iight which is affoiueu to both paities may be
availeu of by them, iiiespective of whethei oi not the occupant of the
piemises hau vacateu the same. This stipulation is the law between the
paities.

Consequently, the action foi specific peifoimance must fail. Foi the
iescission of the contiact, petitioneis must ietuin the PS,uuu.uu eainest
money anu pay P2u,uuu.uu to the piivate iesponuent. Bowevei, they aie not
liable foi attoineys fees, foi it was piivate iesponuent who biought the case
to couit as a iesult of which petitioneis unnecessaiily incuiieu expenses of
litigation.

WBEREF0RE, the petition is uRANTEB.

G01 73J$7=3 Y0 #"<37=$Y"> ;35Y"#3 Y0 #"<37=$Y"> 86'9"$# Y0
#"<37=$Y"> +$556! Y0 #"<37=$Y"> (NQ #$" Y0 #"<37=$Y" :)0 "#35Y3
8"'94'"> @@@ !'7" TX@> ;070 5?0 /@BVVG> PEN* /T> GIII
JFK !(N.?)> ']D,).,N( 60

A controct of sole is o consensuol controct onJ is perfecteJ ot tbe moment
tbere is o meetinq of tbe minJs upon tbe tbinq wbicb is tbe object of tbe
controct onJ upon tbe price.

Wbere tbe ownersbip in tbe tbinqs bos not posseJ, tbe buyer moy treot tbe
fulfillment by tbe seller of bis obliqotion to Jeliver tbe some os JescribeJ onJ
os worronteJ expressly or by implicotion in tbe controct of sole os o conJition
of tbe obliqotion of tbe buyer to perform bis promise to occept onJ poy for tbe
tbinq.

A seller connot uniloterolly onJ extrojuJiciolly rescinJ o controct or sole
wbere tbere is no express stipulotion outborizinq bim to extrojuJiciolly
rescinJ.

<(O.)K

The Lafoitezas enteieu into a Nemoianuum of Agieement (Contiact to Sell)
with the plaintiff ovei the subject piopeity foi the sum of P6Su,uuu. 0n
}anuaiy 2u, 1989, Nachuca paiu the eainest money of PSu,uuu.uu, plus
ientals foi the subject piopeity. 0n Septembei 18, 1998, Lafoitezas wiote a
lettei to the plaintiff auvising him that he hau Su uays to piouuce the
balance of P6uu,uuu unuei the Nemoianuum of Agieement which plaintiff
ieceiveu on the same uate.

A month latei plaintiff sent the Lafoitezas a lettei iequesting foi an
extension of the Su BAYS ueauline up to Novembei 1S, 1989. Befenuant
Robeito Z. Lafoiteza signeu his confoimity to the plaintiff's lettei iequest.
The extension, howevei, uoes not appeai to have been appioveu by uonzalo
Z. Lafoiteza, the seconu attoiney-in-fact as his confoimity uoes not appeai to
have been secuieu.

0n Novembei 1S, 1989, plaintiff infoimeu the uefenuant heiis, that he
alieauy hau the balance of P6uu,uuu coveieu by 0niteu Coconut Planteis
Bank Nanagei's Check No. uuu814 uateu Novembei 1S, 1989. Bowevei, the
uefenuants, iefuseu to accept the balance.

Befenuant Robeito Z. Lafoiteza hau tolu him that the subject piopeity was
no longei foi sale. 0n Novembei 2u, 1989 uefenuants infoimeu plaintiff that
they weie canceling the Nemoianuum of Agieement (Contiact to Sell) foi
the plaintiff's failuie to comply with his contiactual obligations.

Theieaftei, plaintiff ieiteiateu his iequest to tenuei payment of the balance
of P6uu,uuu. Befenuants insisteu on the iescission of the Nemoianuum of
Agieement. Theieaftei, plaintiff fileu the instant action foi specific
peifoimance. The lowei couit ienueieu juugment on }uly 6, 1994 in favoi of
the plaintiff, oiueiing the saiu uefenuants to accept the balance of
P6uu,uuu.uu as full payment, to execute a iegistiable ueeu of absolute sale
ovei the subject piopeity in favoi of the plaintiff anu jointly anu seveially to
pay the plaintiff the sum of P2u,uuu.uu as attoiney's fees plus cost of suit.

The Lafoitezas appealeu to the Couit of Appeals howevei, the Notion foi
Reconsiueiation was uenieu but the Becision was mouifieu so as to absolve
uonzalo Z. Lafoiteza, }i. fiom liability foi the payment of moial uamages.

Petitioneis appealeu to the Supieme Couit.

6))E* g/1K

Whethei oi not theie was a peifecteu contiact of sale.

7EL,N- g/1K

Yes. A contiact of sale is a consensual contiact anu is peifecteu at the
moment theie is a meeting of the minus upon the thing which is the object of
the contiact anu upon the piice. Fiom that moment the paities may
iecipiocally uemanu peifoimance subject to the piovisions of the law
goveining the foim of contiacts. The elements of a valiu contiact of sale
unuei Aiticle 14S8 of the Civil Coue aie (1) consent oi meeting of the minus;
(2) ueteiminate subject mattei anu (S) piice ceitain money oi its equivalent.

=]* '?ED. $dML(,N)K ln tbe cose ot bencb, tbere wos o perfecteJ
oqreement between tbe petitioners onJ tbe responJent wbereby tbe
petitioners obliqoteJ tbemselves to tronsfer tbe ownersbip of onJ
Jeliver tbe bouse onJ lot, onJ tbe responJent to poy tbe price
omountinq to six bunJreJ tbousonJ pesos P600,000. Eowever, tbe
bolonce of tbe purcbose price wos to be poiJ only upon tbe issuonce
of tbe new certificote of title in lieu of tbe one in tbe nome of tbe lote
Ironcisco lofortezo onJ upon tbe execution of on extrojuJiciol
settlement of bis estote. Prior to tbe issuonce of tbe "reconstituteJ"
title, tbe responJent wos olreoJy ploceJ in possession of tbe bouse
onJ lot os lessee tbereof for six montbs ot o montbly rote of tbree
tbousonJ five bunJreJ pesos {PS,S00.00). lt wos stipuloteJ tbot
sboulJ tbe issuonce of tbe new title onJ tbe execution of tbe
extrojuJiciol settlement be completeJ prior to expirotion of tbe six-
montb perioJ, tbe responJent woulJ be lioble only for tbe rentols
pertoininq to tbe perioJ commencinq from tbe Jote of tbe execution
of tbe oqreement up to tbe execution of tbe extrojuJiciol settlement.
lt wos olso expressly stipuloteJ tbot if ofter tbe expirotion of tbe six
montb perioJ, tbe lost title wos not yet reploceJ onJ tbe
extrojuJiciol portition wos not yet executeJ, tbe responJent woulJ
no lonqer be requireJ to poy rentols onJ woulJ continue to occupy
onJ use tbe premises until tbe subject conJition wos complieJ witb
tbe petitioners.

6))E* gG1K

Whethei oi not the N0A is meiely a least agieement with "option to
puichase".

7EL,N- gG1K

No. The Supieme Couit iuleu that the paities contemplateu a contiact of
sale. A ueeu of sale is absolute in natuie although uenominateu a conuitional
sale in the absence of a stipulation ieseiving title in the petitioneis until full
payment of the puichase piice. In such cases, ?hN*D)],M ?e .]* .],N- )?LQ
M())*) .? .]* :*NQ** EM?N (O.E(L ?D O?N).DEO.,:* Q*L,:*DF .]*D*?e. The
meie fact that the obligation of the iesponuent to pay the balance of the
puichase piice was maue subject to the conuition that the petitioneis fiist
uelivei the ieconstituteu title of the house anu lot uoes not make the
contiact a contiact to sell foi such conuition is not inconsistent with a
contiact of sale.

AB>/*&'$7: Tbe six-montb perioJ Jurinq wbicb tbe responJent
woulJ be in possession of tbe property os lessee, wos cleorly not o
perioJ witbin wbicb to exercise on optionX C' )>(&)' &1 * -)'(,*-(
5,*'(&'5 * >,&E&/$5$ () G6@ ), 1$// <&(0&' *' *5,$$7 (&4$ *'7 *(
* 7$($,4&'$7 >,&-$X C' )>(&)' -)'(,*-( &1 * 1$>*,*($ *'7
7&1(&'-( -)'(,*-( %,)4 (0*( <0&-0 (0$ >*,(&$1 4*@ $'($, &'()
6>)' (0$ -)'1644*(&)' )% (0$ )>(&)'X C' )>(&)' 461( G$
16>>),($7 G@ -)'1&7$,*(&)' An option controct is qoverneJ by tbe
seconJ poroqropb of Article 1479 of tbe Civil CoJe, wbicb reoJs:

Art. 1479. . . .An occepteJ uniloterol promise to buy or to
sell o Jeterminote tbinq for o price certoin is binJinq
upon tbe promissor if tbe promise is supporteJ by o
consiJerotion Jistinct from tbe price.

Tbe issuonce of tbe new certificote of title in tbe nome of tbe lote
Ironcisco lofortezo onJ tbe execution of on extrojuJiciol settlement
of bis estote wos ')( * -)'7&(&)' <0&-0 7$($,4&'$7 (0$
>$,%$-(&)' )% (0$ -)'(,*-( )% 1*/$X Petitioners' contention tbot
since tbe conJition wos not met, tbey no lonqer boJ on obliqotion to
proceeJ witb tbe sole of tbe bouse onJ lot is unconvincinq. Tbe
petitioners foil to Jistinquisb between o conJition imposeJ upon tbe
perfection of tbe controct onJ o conJition imposeJ on tbe
performonce of on obliqotion. S*&/6,$ () -)4>/@ <&(0 (0$ %&,1(
-)'7&(&)' ,$16/(1 &' (0$ %*&/6,$ )% * -)'(,*-(J <0&/$ (0$ %*&/6,$
() -)4>/@ <&(0 (0$ 1$-)'7 -)'7&(&)' )'/@ 5&E$1 (0$ )(0$, >*,(@
(0$ )>(&)' $&(0$, () ,$%61$ () >,)-$$7 <&(0 (0$ 1*/$ ), () <*&E$
(0$ -)'7&(&)'. Tbus, Art. 1S4S of tbe Civil CoJe stotes:
Art. 1S4S. Wbere tbe obliqotion of eitber porty to o
controct of sole is subject to ony conJition wbicb is not
performeJ, sucb porty moy refuse to proceeJ witb tbe
controct or be moy woive performonce of tbe conJition.
lf tbe otber porty bos promiseJ tbot tbe conJition sboulJ
boppen or be performeJ, sucb first mentioneJ porty moy
olso treot tbe nonperformonce of tbe conJition os o
breocb of worronty.

6))E* g@1K

Whethei oi not the petitioneis weie coiiect in iescinuing the N0A upon the
iesponuent's failuie to pay the balance of the puichase piice within the
peiiou alloweu.

7EL,N- g@1K

We finu that iescission of the contiact will still not piospei. The iescission of
a sale of an immovable piopeity is specifically goveineu by Aiticle 1S92 of
the New Civil Coue, which ieaus:

ln tbe sole of immovoble property, even tbouqb it moy bove been
stipuloteJ tbot upon foilure to poy tbe price ot tbe time oqreeJ
upon tbe rescission of tbe controct sboll of riqbt toke ploce, tbe
venJee moy poy, even ofter tbe expirotion of tbe perioJ, os lonq os
no JemonJ for rescission of tbe controct bos been moJe upon bim
eitber juJiciolly or by o notoriol oct. After tbe JemonJ, tbe court
moy not qront bim o new term.

It is not uisputeu that the petitioneis uiu not make a juuicial oi notaiial
uemanu foi iescission. The Novembei 2u, 1989 lettei of the petitioneis
infoiming the iesponuent of the automatic iescission of the agieement uiu
not amount to a uemanu foi iescission, as it was not notaiizeu.

Fuitheimoie, the Nemoianuum Agieement between the paities uiu not
contain a clause expiessly authoiizing the automatic cancellation of the
contiact without couit inteivention in the event that the teims theieof weie
violateu. A sellei cannot unilateially anu extiajuuicially iescinu a contiact oi
sale wheie theie is no expiess stipulation authoiizing him to extiajuuicially
iescinu. Neithei was theie a juuicial uemanu foi the iescission theieof. Thus,
when the iesponuent fileu his complaint foi specific peifoimance, the
agieement was still in foice inasmuch as the contiact was not yet iescinueu.

V0$ +)6,( AB>/*&'1Y Altbouqb, tbe foilure of tbe
responJent to poy tbe bolonce of tbe purcbose price wos o breocb of
tbe controct onJ wos o qrounJ for rescission tbereof. Tbe extension
of S0 Joys olleqeJly qronteJ to tbe responJent by Roberto Z.
lofortezo wos correctly founJ by tbe Court of Appeols to be
ineffective inosmucb os tbe siqnoture of 6onzolo Z. lofortezo JiJ
not oppeor tbereon os requireJ by tbe Speciol Powers of Attorney.
Eowever, tbe eviJence reveols tbot ofter tbe expirotion of tbe six-
montb perioJ proviJeJ for in tbe controct, tbe petitioners were not
reoJy to comply witb wbot wos incumbent upon tbem, i.e. tbe
Jelivery of tbe reconstituteJ title of tbe bouse onJ lot. lt wos only on
September 18, 1989 or neorly eiqbt montbs ofter tbe execution of
tbe HemoronJum of Aqreement wben tbe petitioners informeJ tbe
responJent tbot tbey olreoJy boJ o copy of tbe reconstituteJ title
onJ JemonJeJ tbe poyment of tbe bolonce of tbe purcbose price.
Tbe responJent coulJ not tberefore be consiJereJ in Jeloy for in
reciprocol obliqotions, neitber porty incurs in Jeloy if tbe otber
porty Joes not comply or is not reoJy to comply in o proper monner
witb wbot wos incumbent upon bim.

6))E* gX1K

Whethei oi not the six-month peiiou to ieconstitute the lost title was a
conuition imposeu on the peifection of the contiact.

7EL,N- gX1K

The six-month peiiou was meiely an appioximation of the time it woulu
take to ieconstitute the lost title anu was not a conuition imposeu on the
peifection of the contiact anu consiueiing fuithei that the uelay in payment
was only thiity uays which was causeu by the iesponuents justifieu but
mistaken belief that an extension to pay was gianteu to him, h* (-D** h,.]
.]* '?ED. ?e "MM*(L) .](. .]* Q*L(F ?e ?N* U?N.] ,N M(FU*N. h() (
U*D* O()E(L CD*(O] .](. h?ELQ N?. *N.,.L* .]* D*)M?NQ*N.) .? D*)O,NQ
.]* O?N.D(O.0 7*)O,)),?N ?e ( O?N.D(O. h,LL N?. C* M*DU,..*Q e?D ( )L,-].
?D O()E(L CD*(O]> CE. ?NLF )EO] )EC).(N.,(L (NQ eENQ(U*N.(L CD*(O] ()
h?ELQ Q*e*(. .]* :*DF ?Cl*O. ?e .]* M(D.,*) ,N U([,N- .]* (-D**U*N.0

6))E* gV1K

Whethei oi not the failuie to consignate the payment is tantamount to a
bieach of the contiact foi by the fact of tenueiing payment, he was willing
anu able to comply with his obligation.

7EL,N- gV1K

No. The failuie of the iesponuent to consignate the P6uu,uuu.uu is not
tantamount to a bieach of the contiact foi by the fact of tenueiing payment,
he was willing anu able to comply with his obligation. Petitioneis' insistence
that the iesponuent shoulu have consignateu the amount is not
ueteiminative of whethei iesponuent's action foi specific peifoimance will
lie. Petitioneis themselves point out that the effect of consignation is to
extinguish the obligation. It ieleases the uebtoi fiom iesponsibility
theiefoie.

@01 #347+$! 35; #68!35 :)0 '347= 3< "22$"#!> !234!$! #37$5Y3
+$ W$7" (NQ "!45'635 !"5=3!Z+$ W$7"> =38"! '4$5'"> P70 (NQ
!45W"7 7$"#=R +$W$#328$5= '37237"=635> @VB !'7" GIA> ;070
5?0 /@VAGA> "MD,L GI> GII/
JFK !(N.?)> ']D,).,N( 60

A controct to sell, involves tbe meetinq of minJs between two persons
wbereby one binJs bimself, witb respect to tbe otber, to qive sometbinq or to
renJer some service.

Controcts, in qenerol, ore perfecteJ by mere consent,
wbicb is monifesteJ by tbe meetinq of tbe offer onJ tbe occeptonce upon tbe
tbinq onJ tbe couse, wbicb ore to constitute tbe controct. Tbe offer must be
certoin onJ tbe occeptonce obsolute.

An option is not itself o purcbose, but merely secures tbe privileqe to buy. lt is
not o sole of property but o sole of riqbt to purcbose. lt is simply o controct by
wbicb tbe owner of property oqrees witb onotber person tbot be sboll bove
tbe riqbt to buy bis property ot o fixeJ price witbin o certoin time.

<(O.)K

Spouses Be veia offeieu to sell to Louiues Limson the subject lanu thiough
theii agent Naicosa Sanchez. 0n }uly S1, 1978 she agieeu to by the piopeity
anu gave them 2u,uuu Pesos as 'eainest money', iesponuent signeu anu gave
hei a 1u-uay option peiiou to by the piopeity.

Loienzo Beveia infoimeu heie that the piopeity was moitgageu to the
Ramoses anu askeu hei to pay the balance of the puichase piice to settle the
obligation with the lattei. 0n August S, 1978 Louiues Limson agieeu to meet
with the Ramoses to consummate the tiansaction but the Be veias anu the
Ramoses uiu not appeai. 0n august 11, 1978 Limson claimeu that she was
willing to pay but the tiansaction between them uiu not mateiialize because
of the unpaiu back taxes on the piopeity. Seveial uays latei Limson gave the
iesponuents checks to pay the saiu taxes, which was consiueieu as pait of
the puichase piice.

She latei leaineu that the piopeity was subject to negotiation between the
Be veias anu S0NvAR Realty Bevelopment Coipoiation. Thus, she fileu an
affiuavit of auveise claim, which was annotateu to the title. Bespite the
affiuavit fileu by Limson, a ueeu of sale was executeu between the Be veias
anu S0NvAR.

Limson piayeu foi the annulment of ueeu of sale anu the cancellation of the
title between the Spouses Be veia anu S0NvAR. Fuitheimoie, she askeu to
have the ueeu of sale between hei anu the Spouses Be veia be executeu.

The RTC of Pasay City ienueieu juugment in favoi of Limson. The case was
appealeu in the Couit of Appeals. The uecision of the RTC was completely
ieveiseu. Thus, this petition.

6))E* g/1K

What was the contiact enteieu into by Limson anu Spouses Be veia.

7EL,N- g/1K

An 0ption Contiact. A sciutiny of the facts as well as the eviuence of the
paities oveiwhelmingly leaus to the conclusion that the agieement between
the paities was a contiact of option anu not a contiact to sell. An option, as
useu in the law of sales, is a continuing offei oi contiact by which the ownei
sitpulates with anothei that the lattei shall have the iight to buy the
piopeity at a fixeu piice within a time ceitain, oi unuei, oi in compliance
with, ceitain teims anu conuitions, oi which gives to the ownei of the
piopeity the iight to sell oi uemanu a sale. It is also sometimes calleu an
"unaccepteu offei." An option is not itself a puichase, but meiely secuies the
piivilege to buy. It is not a sale of piopeity but a sale of iight to puichase. It
is simply a contiact by which the ownei of piopeity agiees with anothei
peison that he shall have the iight to buy his piopeity at a fixeu piice within
a ceitain time. Be uoes not sell his lanu; he uoes not then agiee to sell it; but
he uoes not sell something, i.e., the iight oi piivilege to buy at the election oi
option of the othei paity.

Its uistinguishing chaiacteiistic is that it imposes
no binuing obligation on the peison holuing the option, asiue fiom the
consiueiation foi the offei. 0ntil acceptance, it is not, piopeily speaking, a
contiact, anu uoes not vest, tiansfei, oi agiee to tiansfei, any title to, oi any
inteiest oi iight in the subject mattei, but is meiely a contiact by which the
ownei of the piopeity gives the optionee the iight oi piivilege of accepting
the offei anu buying the piopeity on ceitain teims.

AB>/*&'$7Y Boubtless, tbe oqreement between responJent spouses
onJ petitioner wos on "option controct" or wbot is sometimes colleJ
on "unoccepteJ offer." Burinq tbe option perioJ tbe oqreement wos
not converteJ into o biloterol promise to sell onJ to buy wbere botb
responJent spouses onJ petitioner were tben reciprocolly bounJ to
comply witb tbeir respective unJertokinqs os petitioner JiJ not
timely, offirmotively onJ cleorly occept tbe offer of responJent
spouses.

Iurtbermore, tbe receipt issueJ reoJily sbows tbot responJent
spouses onJ petitioner only entereJ into o controct of option; o
controct by wbicb responJent spouses oqreeJ witb petitioner tbot
tbe lotter sboll bove tbe riqbt to buy tbe former's property ot o fixeJ
price. ResponJent spouses JiJ not sell tbeir property; tbey JiJ not
olso oqree to sell it; but tbey solJ sometbinq, i.e., tbe privileqe to buy
ot tbe election or option of petitioner. Tbe oqreement imposeJ no
binJinq obliqotion on petitioner, osiJe from tbe consiJerotion for
tbe offer.

6))E* gG1K

Whethei oi not theie was a peifecteu contiact to sell between the petitionei
anu the spouses Be veia.

7EL,N- gG1K

No. Theie was no peifecteu contiact to sell between the petitionei anu the
spouses Be veia. A contiact to sell, involves the meeting of minus between
two peisons wheieby one binus himself, with iespect to the othei, to give
something oi to ienuei some seivice.

Contiacts, in geneial, aie peifecteu by
meie consent, which is manifesteu by the meeting of the offei anu the
acceptance upon the thing anu the cause, which aie to constitute the
contiact. The offei must be ceitain anu the acceptance absolute.

In the case
at bai, theie was no affiimative oi cleai manifestation was maue by
petitionei to accept the offei. Ceitainly, theie was no concuiience of piivate
iesponuent spouses' offei anu petitionei's acceptance theieof within the
option peiiou. Consequently, theie was no peifecteu contiact to sell between
the paities.

$dML(,N*Q:The iule is that except wheie a foimal acceptance is
not iequiieu, although the acceptance must be affiimatively anu
cleaily maue anu eviuenceu by some acts oi conuuct
communicateu to the offeioi, it may be maue eithei in a foimal oi
an infoimal mannei, anu may be shown by acts, conuuct oi woius
by the accepting paity that cleaily manifest a piesent intention oi
ueteimination to accept the offei to buy the piopeity of
iesponuent spouses within the 1u-uay option peiiou. The only
occasion within the option peiiou when petitionei coulu have
uemonstiateu hei acceptance was on S August 1978 when,
accoiuing to hei, she agieeu to meet iesponuent spouses anu the
Ramoses at the 0ffice of the Registiai of Beeus of Nakati.
Petitionei's agieement to meet with iesponuent spouses
piesupposes an invitation fiom the lattei, which only emphasizes
theii peisistence in offeiing the piopeity to the foimei. But
whethei that showeu acceptance by petitionei of the offei is hazy
anu uubious.

6))E* g@1K

Whethei oi not the the consiueiation of P2u,uuu.uu paiu by petitionei to
iesponuent spouses was iefeiieu to as "eainest money".

7EL,N- g@1K

It is an option money. Theie is nothing in the Receipt which inuicates that
the P2u,uuu.uu was pait of the puichase piice. Noieovei, it was not shown
that theie was a peifecteu sale between the paities wheie eainest money
was given. Finally, when petitionei gave the "eainest money" the Receipt uiu
not ieveal that she was bounu to pay the balance of the puichase piice. In
fact, she coulu even foifeit the money given if the teims of the option weie
not met. Thus, the P2u,uuu.uu coulu only be money given as consiueiation
foi the option contiact. That the contiact between the paities is one of
option is buttiesseu by the piovision theiein that shoulu the tiansaction of
the piovision theiein that shoulu the tiansaction of the piopeity not
mateiialize without fault of petitionei as buyei, iesponuent Loienzo ue veia
obligates himself to ietuin the full amount of P2u,uuu.uu "eainest money"
with option to buy oi foifeit the same on the fault of petitionei. It is fuithei
bolsteieu by the piovision theiein that guaiantees petitionei that she oi hei
iepiesentative woulu be notifieu in case the subject piopeity was solu oi
encumbeieu to a thiiu peison. Finally, the Receipt pioviueu foi a peiiou
within which the option to buy was to be exeiciseu, i.e., "within ten (1u)
uays" fiom S1 }uly 1978.

0ption Noney vs. Eainest Noney:

Bowevei, a caieful examination of the woius useu inuicateu that
the money is not eainest money but option money. "Eainest
money" anu "option money" aie not the same but uistinguisheu
thus:

(a) eainest money is pait of the puichase piice, while
option money is the money given as a uistinct consiueiation
foi an option contiact;
(b) eainest money given only wheie theie is alieauy a sale,
while option money applies to a sale not yet peifecteu; anu,
(c) when eainest money is given, the buyei is bounu to pay
the balance, while when the woulu-be buyei gives option
money, he is not iequiieu to buy, but may even foifeit it
uepenuing on the teims of the option.

X01 !"5 86;4$# 2732$7=6$! 296#62265$!> 65'0 :)0 !234!$! "#<7$+3
94"5; (NQ ;7"'$ 94"5;> @@T !'7" B@B> ;070 5?0 /@BGAI> PELF @/>
GIII
JFK !(N.?)> ']D,).,N( 60

<(O.)K

This is a petition foi ieview of the uecision, uateu Apiil 8, 1997, of the Couit
of Appeals which ieveiseu the uecision of the Regional Tiial Couit, Bianch
1SS, Pasig City uismissing the complaint biought by iesponuents against
petitionei foi enfoicement of a contiact of sale.

Petitionei San Niguel Piopeities Philippines, Inc. engageu in the puichase
anu sale of ieal piopeities. Paits of its inventoiy aie two paicels of lanu
totalling 1, 7S8 squaie meteis. 0n Febiuaiy 21, 1994, the piopeities weie
offeieu foi sale foi PS2,14u,uuu.uu in cash maue to Atty. Belena N. Bauz,
acting foi iesponuent spouses as unuiscloseu piincipals. In a lettei uateu
Naich 24, 1994, Atty. Bauz signifieu hei clients' inteiest in puichasing the
piopeities foi the saiu amount unuei the following teims: the sum of
PSuu,uuu.uu woulu be given as eainest money anu the balance woulu be
paiu in eight equal monthly installments fiom Nay to Becembei, 1994.
Bowevei, petitionei iefuseu the countei-offei.

0n Naich 29, 1994, Atty. Bauz wiote anothei lettei the following teims foi
the puichase of the piopeities:

Tbis is to express our interest to buy your-obove-mentioneJ property
witb on oreo of 1, 7S8 sq. meters. Ior tbis purpose, we ore enclosinq
berewitb tbe sum of P1,000,000.00 representinq eornest-Jeposit
money, subject to tbe followinq conJitions.

1. We will be qiven tbe exclusive option to purcbose tbe property
witbin tbe S0 Joys from Jote of your occeptonce of tbis offer.

2. Burinq soiJ perioJ, we will neqotiote on tbe terms onJ conJitions of
tbe purcbose; SHPPl will secure tbe necessory Honoqement onJ
BoorJ opprovols; onJ we initiote tbe Jocumentotion if tbere is mutuol
oqreement between us.

S. ln tbe event tbot we Jo not come to on oqreement on tbis
tronsoction, tbe soiJ omount of P1,000,000.00 sboll be refunJoble to
us in full upon JemonJ. . . .

Isiuio A. Sobiecaiey, petitionei's vice-piesiuent, inuicateu his confoimity to
the offei anu accepteu the "eainest-ueposit" of P1 million. 0pon iequest of
iesponuent spouses.
Atty. Bauz anu Sobiecaiey then commenceu negotiations. Sobiecaiey
infoimeu Atty. Bauz that petitionei was willing to sell the subject piopeities
on a 9u-uay teim. Atty. Bauz counteieu with an offei of six months within
which to pay. In anothei meeting the paities again met uuiing which
Sobiecaiey infoimeu Atty. Bauz that petitionei hau not yet acteu on hei
countei-offei. This piompteu Atty. Bauz to piopose a foui-month peiiou of
amoitization.

Atty. Bauz askeu foi an extension of 4S uays fiom Apiil 29, 1994 to }une 1S,
1994, within which to exeicise hei option to puichase the piopeity. 0n }uly
7, 1994, petitionei, wiote Atty. Bauz infoiming hei that because the paities
faileu to agiee on the teims anu conuitions of the sale uespite the extension
gianteu by petitionei, the lattei was ietuining the amount of P1 million
given as "eainest-ueposit."

0n }uly 2u, 1994, iesponuent spouses, wiote petitionei uemanuing the
execution within five uays of a ueeu of sale coveiing the piopeities.
Responuents attempteu to ietuin the "eainest-ueposit" but petitionei
iefuseu on the giounu that iesponuents' option to puichase hau alieauy
expiieu.

6))E*K

Whethei oi not the amount given constituteu a peifecteu contiact of sale.

7EL,N-K

No. The amount given was not a pait of the puichase piice anu pioof of the
peifection of the contiact of sale but only as a guaiantee that iesponuents
woulu not back out of the sale. With iegaiu to the allegeu payment anu
acceptance of eainest money, the Couit holus that iesponuents uiu not give
the P1 million as "eainest money" as pioviueu by Ait. 1482 of the Civil Coue.
They piesenteu the amount meiely as a ueposit of what woulu eventually
become the eainest money oi uown payment shoulu a contiact of sale be
maue by them. The amount was thus given not as a pait of the puichase
piice anu as pioof of the peifection of the contiact of sale but only as a
guaiantee that iesponuents woulu not back out of the sale. Responuents in
fact uesciibeu the amount as an "eainest-ueposit."

0ption qivinq responJents tbe exclusive riqbt to buy tbe properties witbin tbe
perioJ oqreeJ upon is seporote onJ Jistinct from tbe controct of sole wbicb tbe
porties moy enter. Tbe first conJition for on option perioJ of S0 Joys
sufficiently sbows tbot o sole wos never perfecteJ. As petitioner correctly
points out, occeptonce of tbis conJition JiJ not qive rise to o perfecteJ sole but
merely to on option or on occepteJ uniloterol promise on tbe port of
responJents to buy tbe subject properties witbin S0 Joys from tbe Jote of
occeptonce of tbe offer. Sucb option qivinq responJents tbe exclusive riqbt to
buy tbe properties witbin tbe perioJ oqreeJ upon is seporote onJ Jistinct from
tbe controct of sole wbicb tbe porties moy enter. All tbot responJents boJ wos
just tbe option to buy tbe properties wbicb privileqe wos not, bowever,
exerciseJ by tbem becouse tbere wos o foilure to oqree on tbe terms of
poyment. No controct of sole moy tbus be enforceJ by responJents.

0ption secureJ by responJents from petitioner wos fotolly Jefective;
ConsiJerotion in on option controct moy be onytbinq of volue, unlike in sole
wbere it must be tbe price certoin in money or its equivolent.Fven tbe option
secureJ by responJents from petitioner wos fotolly Jefective. 0nJer tbe seconJ
poroqropb of Art. 1479, on occepteJ uniloterol promise to buy or sell o
Jeterminote tbinq for o price certoin is binJinq upon tbe promisor only if tbe
promise is supporteJ by o Jistinct consiJerotion. ConsiJerotion in on option
controct moy be onytbinq of volue, unlike in sole wbere it must be tbe price
certoin in money or its equivolent. Tbere is no sbowinq bere of ony
consiJerotion for tbe option. lockinq ony proof of sucb consiJerotion, tbe
option is unenforceoble.

Tbe monner of poyment of tbe purcbose price is on essentiol element before o
voliJ onJ binJinq controct of sole con exist.Tbe oppellote court opineJ tbot
tbe foilure to oqree on tbe terms of poyment wos no bor to tbe perfection of tbe
sole becouse Art. 147S only requires oqreement by tbe porties os to tbe price of
tbe object. Tbis is error. ln Novorro v. Suqor ProJucers Cooperotive Horketinq
Associotion, lnc., we loiJ Jown tbe rule tbot tbe monner of poyment of tbe
purcbose price is on essentiol element before o voliJ onJ binJinq controct of
sole con exist. Altbouqb tbe Civil CoJe Joes not expressly stote tbot tbe minJs
of tbe porties must olso meet on tbe terms or monner of poyment of tbe price,
tbe some is neeJeJ, otberwise tbere is no sole. As belJ in Toyoto Sbow, lnc. v.
Court of Appeols, oqreement on tbe monner of poyment qoes into tbe price
sucb tbot o Jisoqreement on tbe monner of poyment is tontomount to o foilure
to oqree on tbe price.

lt is not tbe qivinq of eornest money, but tbe proof of tbe concurrence of oll tbe
essentiol elements of tbe controct of sole wbicb estoblisbes tbe existence of o
perfecteJ sole. lt is not tbe qivinq of eornest money, but tbe proof of tbe
concurrence of oll tbe essentiol elements of tbe controct of sole wbicb
estoblisbes tbe existence of o perfecteJ sole.

! 8$,%$-(&)' )% (0$ +)'(,*-(2 +)'(,*-( )% =>(&)'

/01 56'3#"! !"5'9$Y :)0 !$W$765" 76;3!> XV !'7" @TH> ;070 5?0 #Z
GVXAX> PEN* /X> /ABG
JFK !(N.?)> ']D,).,N( 60

<(O.)K

In an instiument entitleu "0ption to Puichase," executeu on Apiil S, 1961,
uefenuant-appellant Seveiina Rigos "agieeu, piomiseu anu committeu to
sell" to plaintiff-appellee Nicolas Sanchez foi the sum of P1,S1u.uu within
two (2) yeais fiom saiu uate, a paicel of lanu situateu in the baiiios of Abai
anu Sibot, San }ose, Nueva Ecija. It was agieeu that saiu option shall be
ueemeu "teiminateu anu elapseu," if "Sanchez shall fail to exeicise his iight
to buy the piopeity" within the stipulateu peiiou. 0n Naich 12, 196S,
Sanchez uepositeu the sum of Pl,S1u.uu with the CFI of Nueva Ecija anu fileu
an action foi specific peifoimance anu uamages against Rigos foi the lattei's
iefusal to accept seveial tenueis of payment that Sanchez maue to puichase
the subject lanu.

Befenuant Rigos contenueu that the contiact between them was only "a
unilateial piomise to sell, anu the same being unsuppoiteu by any valuable
consiueiation, by foice of the New Civil Coue, is null anu voiu." Plaintiff
Sanchez, on the othei hanu, allegeu in his compliant that, by viitue of the
option unuei consiueiation, "uefenuant agieeu anu committeu to sell" anu
"the plaintiff agieeu anu committeu to buy" the lanu uesciibeu in the option.
The lowei couit ienueieu juugment in favoi of Sanchez anu oiueieu Rigos to
accept the sum Sanchez juuicially consigneu, anu to execute in his favoi the
iequisite ueeu of conveyance. The Couit of Appeals ceitifieu the case at bai
to the Supieme Couit foi it involves a question puiely of law.

6))E* g/1K

Was theie a contiact to buy anu sell between the paities oi only a unilateial
piomise to sell.

7EL,N- g/1K

The Supieme Couit affiimeu the lowei couit's uecision. The instiument
executeu in 1961 is not a "contiact to buy anu sell," but meiely gianteu
plaintiff an "option" to buy, as inuicateu by its own title "0ption to
Puichase."

The option uiu not impose upon plaintiff Sanchez the obligation to puichase
uefenuant Rigos' piopeity. Rigos "agieeu, piomiseu anu committeu" heiself
to sell the lanu to Sanchez foi P1,S1u.uu, but theie is nothing in the contiact
to inuicate that hei afoiementioneu agieement, piomise anu unueitaking is
suppoiteu by a consiueiation "uistinct fiom the piice" stipulateu foi the sale
of the lanu. The lowei couit ielieu upon Aiticle 1SS4 of the Civil Coue when
it piesumeu the existence of saiu consiueiation, but the saiu Aiticle only
applies to contiacts in geneial.

Bowevei, it is not Aiticle 1SS4 but the Aiticle 1479 of the same Coue which
is contiolling in the case at bai because the lattei's 2nu paiagiaph iefeis to
"sales" in paiticulai, anu, moie specifically, to "an accepteu unilateial
piomise to buy oi to sell." Since theie may be no valiu contiact without a
cause oi consiueiation, the piomisoi is not bounu by his piomise anu may,
accoiuingly, withuiaw it. Penuing notice of its withuiawal, his accepteu
piomise paitakes, howevei, of the natuie of an offei to sell which, if
accepteu, iesults in a peifecteu contiact of sale. 0pon matuie uelibeiation,
the Couit ieiteiates the uoctiine laiu uown in the Atkins case anu ueemeu
abanuoneu oi mouifieu the view auheieu to in the Southwestein Company
case.

6))E* gG1K

Can an accepteu unilateial piomise to sell without consiueiation uistinct
fiom the piice be withuiawn aibitiaiily.

7EL,N- gG1K

No. An accepteu piomise to sell is an offei to sell when accepteu becomes a
contiact of sale.

$dML(,N*QK Since theie may be no valiu contiact without a cause
oi consiueiation, the piomisoi is not bounu by his piomise anu
may, accoiuingly, withuiaw it. Penuing notice of its withuiawal,
his accepteu piomise paitakes, howevei, of the natuie of an offei
to sell which, if accepteu, iesults in a peifecteu contiact of sale.

This view has the auvantage of avoiuing a conflict between Aiticles 1S24 -
on the geneial piinciples on contiacts - anu 1479 - on sales - of the Civil
Coue. Aiticle 1S24. When the offeioi has alloweu the offeiee a ceitain peiiou
to accept, the offei may be withuiawn at any time befoie acceptance by
communicating such withuiawal, except when the option is founueu upon
consiueiation, as something paiu oi piomiseu.

Article 1479. A promise to buy onJ sell o Jeterminote tbinq for o price certoin
is reciprocolly JemonJoble.

An occepteJ uniloterol promise to buy or to sell o Jeterminote tbinq for o price
certoin is binJinq upon tbe promissory if tbe promise is supporteJ by o
consiJerotion Jistinct from tbe price.

The Couit is of the consiueieu opinion that it shoulu, as it heieby ieiteiates
the uoctiine laiu uown in the Atkins, Kioll anu Co. case, anu that, insofai as
inconsistent theiewith, the view auheieu to in the Southwestein Sugai &
Nolasses Co. case shoulu be ueemeu abanuoneu oi mouifieu.

! 8$,%$-(&)' )% (0$ +)'(,*-(2 S),4*/&(&$1 )% +)'(,*-( )% .*/$2 I$'$,*/ D6/$Y
S),4 ')( &4>),(*'(

/01 !2!0 !$;45+3 +"#635 "5+ $26<"56" !"J$!"P$Z+"#635 :)0 =9$
93537"J#$ '347= 3< "22$"#! "5+ 742$7=3 !"J$!"P$> P70> /HG
!'7" HBG> ;070 5?0 BHAI@> <*CDE(DF GH> /AAI
JFK =?U?N-L(F> 5?*L <0

<(O.)K

0n 28 Nay 197S, Rupeito Sabesaje }i. sueu to iecovei owneiship of a paicel
of lanu baseu on a piivate uocument of absolute sale, allegeuly executeu by
Segunuo Balion, who, howevei uenieu the fact of sale, contenuing that the
uocument sueu upon is fictitious, his signatuie theieon, a foigeiy, anu that
subject lanu is conjugal piopeity, which he anu his wife acquiieu in 196u
fiom Satuinina Sabesaje as eviuenceu by the "Esciituia ue venta Absoluta."
The spouses uenieu claims of Sabesaje that aftei executing a ueeu of sale
ovei the paicel of lanu, they hau pleaueu with Sabesaje to be alloweu to
auministei the lanu because Balion uiu not have any means of livelihoou.
They aumitteu, howevei, auministeiing since 19S8, S paicels of lanu in
Sogou, Southein Leyte, which belongeu to Leonaiuo Sabesaje, gianufathei of
Sabesaje, who uieu in 19S6. They nevei ieceiveu theii agieeu 1u% anu 1S%
commission on the sales of copia anu abaca, iespectively. Sabesaje's suit,
they counteieu, was intenueu meiely to haiass, pieempt anu foiestall
Balion's thieat to sue foi these unpaiu commissions. The tiial couit
ienueieu its uecision on 17 }anuaiy 1984, oiueiing Balion to uelivei to
Sabesaje the paicel of lanu subject of the case anu to execute he
coiiesponuing foimal ueeu of conveyance in a public uocument in favoi of
Sabesaje (oi in case of uefault, the ueeu shall be executeu in theii behalf by
the Piovincial Sheiiff oi his ueputy), oiueiing Balion to pay Sabesaje the
amount of P2,uuu as attoiney fees anu PSuu as litigation fees, anu to pay the
costs.

Fiom the auveise uecision of the tiial couit, Balion appealeu, assigning
eiiois some of which, howevei, weie uisiegaiueu by the appellate couit, not
having been iaiseu in the tiial couit. 0n 26 Nay 1987, the Couit of Appeals
affiimeu in toto the iuling of the tiial couit, upholuing the valiuity of the sale
of a paicel of lanu by Segunuo Balion in favoi of Rupeito Sabesaje, }i. Bence,
the petition.

6))E*)K

1. Whethei oi not the contiact of sale of a paicel of lanu in a piivate
uocument is valiu; anu

2. Whethei oi not a public uocument is necessaiy foi the tiansfei of
owneiship ovei a paicel of lanu.

7EL,N-K

The piovision of Ait. 1SS8 on the necessity of a public uocument is only foi
convenience, not foi valiuity oi enfoiceability. It is not a iequiiement foi the
valiuity of a contiact of sale of a paicel of lanu that this be embouieu in a
public instiument.

The tiial couit thus iightly anu legally oiueieu Balion to uelivei to Sabesaje
the paicel of lanu anu to execute coiiesponuing foimal ueeu of conveyance
in a public uocument. 0nuei Ait. 1498, NCC, when the sale is maue thiough a
public instiument, the execution theieof is equivalent to the ueliveiy of the
thing. Beliveiy may eithei be actual (ieal) oi constiuctive. Thus ueliveiy of a
paicel of lanu may be uone by placing the venuee in contiol anu possession
of the lanu (ieal) oi by embouying the sale in a public instiument
(constiuctive).

Ait. 147S of the Civil Coue gives the paities to a peifecteu contiact of sale the
iight to iecipiocally uemanu peifoimance, anu to obseive a paiticulai foim,
if waiianteu, (Ait. 1SS7). The tiial couit, aptly obseiveu that Sabesaje's
complaint sufficiently allegeu a cause of action to compel Balion to execute a
foimal ueeu of sale, anu the suit foi iecoveiy of owneiship, which is
piemiseu on the binuing effect anu valiuity inter portes of the contiact of
sale, meiely seeks consummotion of saiu contiact.

... . A sale of a ieal piopeity may be in a piivate instiument but that
contiact is valiu anu binuing between the paities upon its peifection.
Anu a paity may compel the othei paity to execute a public
instiument embouying theii contiact affecting ieal iights once the
contiact appeaiing in a piivate instiument hag been peifecteu (Ait.
1SS7).

The Supieme Couit uenieu the petition, anu affiimeu the uecision of the
Couit of Appeals upholuing the iuling of the tiial couit; without costs.

G01 J$56;5" !$'4R"> 86;4$# !$'4R"> 8"7'$#653 !$'4R"> '37"Y35
!$'4R"> 74<65" !$'4R"> J$75"7+653 !$'4R"> 5"=6W6+"+ !$'4R">
;#6'$76" !$'4R" (NQ 2476=" !$'4R" :)0 ;$7"7+" 80 W+"0 +$
!$#8"> @GT !'7" GXX> ;070 5?0 /@TIG/> <*CDE(DF GG> GIII
JFK =?U?N-L(F> 5?*L <0

<(O.)K

Naxima paititioneu hei lanu anu solu it. Secuya eventually helu possession
of the lanu anu cultivateu it. When he uieu, his siblings inheiiteu it. A ceitain
Selma came along anu bought a paitition of the Naxima's lanu. In Selma's
title, the lanu in the possession of the Secuyas was within the bounuaiy
bought by Selma. Selma now asseits owneiship ovei the lanu anu files a case
of quieting of title.

RTC-Cebu ueciueu in favoi of Selma. CA affiimeu.

6))E*K

Boes the lanu belong to Selma.

7EL,N-K

Yes. Theie is stiength in his title. Since this is an action foi quieting of title, it
must fiist be establisheu if the Secuya's have the iequisite title that woulu
enable them to avail of the iemeuy of quieting of title.

The Secuya's contest theii claim on the basis of 2 uocuments:
1. The Agieement of Paitition executeu by Naxima Caballeio anu Paciencia
Sabellona, anu
2. The Beeu of Confiimation of Sale executeu by Ramon Sabellona.

Re: Paitition
0pon closei look, the SC says this Agieement is not one of paitition, because
theie was no piopeity to paitition, anu the paities in the contiact aie not co-
owneis.

This is one in the natuie of a tiust agieement.
1. Tiust is the iight to the beneficial enjoyment of piopeity, while the legal
title to lanu is vesteu in anothei.
2. Caballeio meiely entiusteu the poition specifieu to Sabellona.
S It theiefoie uoes not constitute a title.

Since this is a tiust agieement, it can be iepuuiateu.
This (iight to) iepuuiation uoes not expiie, anu was theiefoie exeiciseu by
the heiis of Caballeios, when they solu the lanu to a thiiu paity buyei (Selma).

Re: Sale
Secuya's contest that theie was a sale, but allege that the contiact hau been
lost. SC says that although theie is no foim iequiieu foi a sale to be valiu, a
sale such as this (one peitaining to lanu) must be iegisteieu in the Registiy
of Piopeity.

If it was not, anu that it was only a piivate uocument, then the sale is valiu as
to only the contiacting paities, but not to thiiu paities, like Selma in this
case. Becision affiimeu.

! 8$,%$-(&)' )% (0$ +)'(,*-(2 S),4*/&(&$1 )% +)'(,*-( )% .*/$2 AB-$>(&)'Y
90$' %),4 &1 &4>),(*'(2 S), A'%),-$*G&/&(@

/01 8"7=" '0 37=$;" :)0 +"56$# #$35"7+3> /I@ 2],L0 HBI> ;070 5?0 #Z
//@//> 8(F GH> /AVH
JFK =?U?N-L(F> 5?*L <0

<(O.)K

Long befoie anu until hei house hau been completely uestioyeu uuiing the
libeiation of the City of Nanila, plaintiff occupieu a paicel of lanu (Lot 1)
locateu at San Anuies Stieet, Nalate, Nanila; that aftei libeiation she ie-
occupieu it; that when the auministiation anu uisposition of the saiu lot
weie assigneu by the uoveinment to the Ruial Piogiess Auministiation
,

plaintiff asseiteu hei iight theieto (as occupant) foi puiposes of puichase;
that uefenuant also asseiteu a similai iight, alleging occupancy of a poition
of the lanu subsequent to plaintiff's; that uuiing the investigation of such
conflicting inteiests, uefenuant askeu plaintiff to uesist fiom piessing hei
claim anu uefinitely piomiseu that if anu when he succeeueu in getting title
to lot, he woulu sell to hei a poition theieof with an aiea of SS.6u squaie
meteis (paiticulaily uesciibeu) at the iate of P2S.uu pei squaie metei,
pioviueu she paiu foi the suiveying anu subuivision of the Lot 1 anu
pioviueu fuithei that aftei he acquiieu title, she coulu continue holuing the
lot as tenant by paying a monthly iental of P1u.uu until saiu poition shall
have been segiegateu anu the puichase piice fully paiu; that plaintiff
accepteu uefenuant's offei, anu uesisteu fiom fuithei claiming Lot I; that
uefenuant finally acquiieu title theieto; that ielying upon theii agieement,
plaintiff causeu the suivey anu segiegation of the poition which uefenuant
hau piomiseu to sell incuiiing expenses theiefoi, saiu poition being now
uesignateu as Lot I-B in a uuly piepaieu anu appioveu subuivision plan; that
in iemouelling hei son's house constiucteu on a lot aujoining Lot I she
extenueu it ovei saiu Lot I-B; that aftei uefenuant hau acquiieu Lot I plaintiff
iegulaily paiu him the monthly iental of P1u.uu; that in }uly 19S4, aftei the
plans of subuivision anu segiegation of the lot hau been appioveu by the
Buieau of Lanus, plaintiff tenueieu to uefenuant the puichase piice which
the lattei iefuseu to accept, without cause oi ieason.

Alleging paitial peifoimance, plaintiff sought to compel uefenuant to comply
with theii oial contiact of sale of a paicel of lanu. 0pon a motion to uismiss,
the Nanila couit of fiist instance oiueieu uismissal. The couit thinks that
even gianting that plaintiff ieally uesisteu to claim not on oial piomise to
sell maue by uefenuant, the oial piomise to sell cannot be enfoiceu. The
uesistance to claim is not a pait of the contiact of sale of the lanu. 0nly in
essential pait of the executoiy contiact will, if it has alieauy been peifoimeu,
make the veibal contiact enfoiceable, payment of piice being an essential
pait of the contiact of sale.

6))E*K
Whethei oi not the oial contiact enteieu into between the paities is
unenfoiceable.
7EL,N-K

No. Paitial peifoimance uoes not only occui when pait of the puichase piice
is paiu. Ameiican }uiispiuuence in its title "Statute of Fiauus" lists othei acts
of paitial peifoimance, such as possession, the making of impiovements,
ienuition of seivices, payment of taxes, ielinquishment of iights, etc.

Thus, it is stateu that "The continuance in possession may, in a piopei case,
be sufficiently iefeiable to the paiol contiact of sale to constitute a pait
peifoimance theieof. It is also stateu that "The making of valuable
peimanent impiovements on the lanu by the puichasei, in puisuance of the
agieement anu with the knowleuge of the venuoi, has been saiu to be the
stiongest anu the most unequivocal act of pait peifoimance by which a
veibal contiact to sell lanu is taken out of the statute of fiauus. Again, it is
stateu that "A tenuei oi offei of payment, ueclineu by the venuoi, has been
saiu to be equivalent to actual payment, foi the puiposes of ueteimining
whethei oi not theie has been a pait peifoimance of the contiact.

Bence, as theie was paitial peifoimance, the piinciple excluuing paiol
contiacts foi the sale of iealty, uoes not apply.

}uugment accoiuingly ieveiseu anu the iecoiu iemanueu foi fuithei
pioceeuings.

G01 '676#3 2"7$+$! :)0 P3!$ #0 $!2653> GG !'7" /III> ;070 5?0 #ZG@@V/>
8(DO] /@> /ATH
JFK =?DD*O(UM?> ;,DLFN 80

<(O.)K

Paieues was a piospective buyei. Espino owns a lanu in Palawan. Paieues is
fiom Noithein Luzon. Theii negotiation was thiu letteis anu telegiams.
Espino sent a lettei to Paieues stating that he anu his wife agieeu to sell the
lanu to Paieues, that the ueeu of sale will be executeu upon the aiiival of
Paieues in Palawan. When Paieues aiiiveu, Espino saiu he is no longei
inteiesteu in selling. Paieues fileu a case to compel Espino to sell the lanu.
Espino contenueu that the contiact is unenfoiceable because it is not in
wiiting. Be contenueu that unuei the statute of fiauus it is unenfoiceable.
Bis contention was sustaineu by the tiial couit.

6))E*K

Whethei oi not enfoicement pleaueu in the complaint is baiieu by the
Statute of Fiauus, theiefoie, unenfoiceable.

7EL,N-K

This contiact is no longei coveieu by the statute of fiauus because theie was
a lettei. Aiticle 14uS pioviues that a note oi memoianuum signeu by the
pait chaigeu woulu be sufficient to take that contiact out of the opeiation of
the statute of fiauus. In this case, the uefenuant wiote a lettei with his
signatuie on it. The lettei took that contiact out of the opeiation of the
statute of fiauus anu theiefoie he may be compelleu to execute the final
ueeu of sale.

WBEREF0RE, the appealeu oiuei is heieby set asiue, anu the case iemanueu
to the Couit of oiigin foi tiial anu uecision. Costs against uefenuant-appellee
}ose L. Espino. So oiueieu.

@01 9$67! 3< '$'6#63 g(L)? [N?hN () J"!6#631 '#"4+$#> N(U*LF>
83+$!=" '#"4+$#> #37$=" 9$77$7"> P3!$ '#"4+$#> J$5P"865
'#"4+$#> 2"'6=" '#"4+$#> '"78$#6=" '#"4+$#> 8"763 '#"4+$#>
73J$7=3 '#"4+$#> #$35"7+3 '#"4+$#> "7!$56" W6##"#35>
2$72$=4" '#"4+$# (NQ <$#6!" '#"4+$# :)0 9350 '347= 3<
"22$"#!> 9$67! 3< 8"'"763> $!2$76+635"> 7"R845+" (NQ
'$#$!=65"> (LL )EDN(U*Q '#"4+$#> /AA !'7" //@> ;070 5?0 HVGXI>
PELF /G> /AA/
JFK =?DD*O(UM?> ;,DLFN 80

<(O.)K

As eaily as Becembei 28, 1922, Basilio also known as "Cecilio" Clauuel,
acquiieu fiom the Buieau of Lanus, Lot No. 12Su of the Nuntinlupa Estate
Subuivision, locateu in the poblacion of Nuntinlupa, Rizal, with an aiea of
1u,1u7 squaie meteis, he secuieu Tiansfei Ceitificate of Title (TCT) No.
7471 issueu by the Registiy of Beeus foi the Piovince of Rizal in 192S, he
also ueclaieu the lot in his name, the latest Tax Beclaiation being No. S79S.
Be uutifully paiu the ieal estate taxes theieon until his ueath in 19S7.
Theieaftei, his wiuow "Basilia" anu latei, hei son }ose, one of the heiein
petitioneis, paiu the taxes. The same piece of lanu puichaseu by Cecilio
woulu, howevei, become the subject of piotiacteu litigation thiity-nine
yeais aftei his ueath. Two bianches of Cecilio's family contesteu the
owneiship ovei the lanu-on one hanu the chiluien of Cecilio, now the heiein
petitioneis (heieinaftei iefeiieu to as the BEIRS 0F CECILI0) anu the othei,
the biothei anu sisteis of Cecilio anu theii chiluien anu uescenuants, now
the heiein piivate iesponuents (heieinaftei iefeiieu to as SIBLINuS 0F
CECILI0). In 1972, the BEIRS 0F CECILI0 paititioneu this lot among them
anu obtaineu the coiiesponuing Tiansfei Ceitificates of Title on theii shaies.
Foui yeais latei, on Becembei 7, 1976, piivate iesponuents SIBLINuS 0F
CECILI0, fileu a complaint foi Cancellation of Titles anu Reconveyance with
Bamages," alleging that 46 yeais eailiei, oi sometime in 19Su, theii paients
hau puichaseu fiom the late Cecilio Clauuel seveial poitions of Lot No. 12Su
foi the sum of PSu.uu. They aumitteu that the tiansaction was veibal.
Bowevei, as pioof of the sale, the SIBLINuS 0F CECILI0 piesenteu a
subuivision plan of the saiu lanu, uateu Naich 2S, 19Su, inuicating the
poitions allegeuly solu to the SIBLINuS 0F CECILI0.

6))E*)K

1. Whethei oi not a contiact of sale of lanu may be pioven oially.

2. Whethei oi not the piesciiptive peiiou foi filing an action foi cancellation
of titles anu ieconveyance with uamages (the action fileu by the SIBLINuS
0F CECILI0) shoulu be counteu fiom the allegeu sale upon which they claim
theii owneiship (19Su) oi fiom the uate of the issuance of the titles sought
to be cancelleu in favoi of the BEIRS 0F CECILI0 (1976).

7EL,N-K

The iule of thumb is that a sale of lanu, once consummateu, is valiu
iegaiuless of the foim it may have been enteieu into. Foi nowheie uoes law
oi juiispiuuence piesciibe that the contiact of sale be put in wiiting befoie
such contiact can valiuly ceue oi tiansmit iights ovei a ceitain ieal piopeity
between the paities themselves.

Bowevei, in the event that a thiiu paity, as in this case, uisputes the
owneiship of the piopeity, the peison against whom the claim is biought
cannot piesent any pioof of such sale anu hence has no means to enfoice the
contiact. Thus the Statute of Fiauus was piecisely ueviseu to piotect the
paities in a contiact of sale of ieal piopeity so that no such contiact is
enfoiceable unless ceitain iequisites, foi puiposes of pioof, aie met.

The piovisions of the Statute of Fiauus peitinent to the piesent contioveisy,
state:

Art. 140S {Civil CoJe). Tbe followinq controcts ore unenforceoble,
unless tbey ore rotifieJ:
2) Tbose tbot Jo not comply witb tbe Stotute of IrouJs os set fortb
in tbis number. ln tbe followinq coses, on oqreement bereofter moJe
sboll be unenforceoble by oction unless tbe some, or some note or
memoronJum tbereof, be in writinq, onJ subscribeJ by tbe porty
cborqeJ, or by bis oqent, eviJence, tberefore, of tbe oqreement
connot be receiveJ witbout tbe writinq, or o seconJory eviJence of
its contents.
e) An oqreement for tbe leosinq for o lonqer perioJ tbon
one yeor, or for tbe sole of reol property or of on interest
tberein. Tbe purpose of tbe Stotute of IrouJs is to
prevent frouJ onJ perjury in tbe enforcement of
obliqotions JepenJinq for tbeir eviJence upon tbe
unossisteJ memory of witnesses by requirinq certoin
enumeroteJ controcts onJ tronsoctions to be eviJenceJ
in Writinq.

Theiefoie, except unuei the conuitions pioviueu by the Statute of Fiauus,
the existence of the contiact of sale maue by Cecilio with his siblings cannot
be pioveu.

0n the seconu issue, the belateu claim of the SIBLINuS 0F CECILI0 who fileu
a complaint in couit only in 1976 to enfoice a light acquiieu allegeuly as
eaily as 19Su, is uifficult to compiehenu. The Civil Coue states that the
following actions must be commenceu within six yeais. If the paities
SIBLINuS 0F CECILI0 hau allegeuly ueiiveu theii iight of action fiom the
oial puichase maue by theii paients in 19Su, then the action fileu in 1976
woulu have cleaily piesciibeu. Noie than six yeais hau lapseu.

! 8$,%$-(&)' )% (0$ +)'(,*-(2 S),4*/&(&$1 )% +)'(,*-( )% .*/$2 AB-$>(&)'Y
90$' %),4 &1 &4>),(*'(2 S), P*/&7&(@

/01 '6=RZ#6=$ 7$"#=R '37237"=635 :)0 '347= 3< "22$"#! (NQ <020
93#+65;! _ 7$"#=R '3720> 8$=73 +74; 65'0> 8$#+65 "# ;0 73R>
W6$^8"!=$7 '35!=74'=635 '3720> (NQ .]* 7$;6!=$7 3< +$$+! 3<
S4$Y35 '6=R> @GV !'7" @HV> ;070 5?0 /@HT@A> <*CDE(DF /I> GIII
JFK =?DD*O(UM?> ;,DLFN 80

<(O.)K

FP Boluings anu Realty Coip (iesponuent) was the iegisteieu ownei of a
717S4 squaie metei-paicel of lanu along E Rouiiguez Ave, QC known as the
"violago Piopeity" oi the "San Loienzo Ruiz Commeicial Centei". It was
offeieu foi sale to the geneial public thiough a sales biochuie:

A paicel of lanu incluuing builuings anu othei impiovements
theieon locateu along E. Rouiiguez Avenue, Quezon City, with a
total lot aiea of 71,7S4 squaie meteis - 9,192 squaie meteis in
fiont, 2S,SS2 squaie meteis in the miuule, anu S9,2Su squaie
meteis at the back. But the total aiea foi sale excluues S,uuu
squaie meteis coveiing the existing chapel anu aujoining aieas
which will be uonateu to the Aichuiocese of Nanila thus ieuucing
the total saleable aiea to 66,7S4 squaie meteis. Asking piice was
P6,2Su.uusquaie metei with teims of payment negotiable.
Biokei's commission was 2 % of selling piice, net of withholuing
taxes anu othei chaiges. As auveitiseu, contact peison was Neluin
Al u. Roy, Netio Biug Inc., with auuiess at SF Netio Bouse, S4S
Sen. uil Puyat Avenue, Nakati City.

The fiont poition consisting of 9,192 squaie meteis is the subject of this
litigation.

Neluin Roy sent a sales biochuie, location plane anu copy of the TCT to Atty.
uelacio Namaiil, a lawyei anu licenseu ieal estate biokei. Namaiil passeu
on the uocuments to City-Lite's Executive vP Antonio Teng anu Legal
Counsel Atty. victoi villanueva. City-Lite conveyeu its inteiest to puichase V
of the fiont poition in a lettei senu to Netio Biug (Attn: Neluin Roy). Roy
also infoimeu City- Lite's iepiesentative that it woulu take time to subuiviue
the lot anu FP Boluings wasn't ieceptive to a V puichase. Atty. Namaiil sent
a lettei to Netio Biug expiessing City-Lite's uesiie to buy the entiie fiont lot
so long as the P6,2Su.uusquaie metei asking piice was ieuuceu anu that
payment shall be maue in installments.

Roy maue a countei offei in anothei lettei:
1. The piice shallbeP6,2Su.uusquaie metei oi a total of PS7,4Su,uuu.uu;
2. The above puichase piice shall be paiu to the ownei as follows: (a) P1S.u
Nillion uown payment; (b) balance payable within six (6) months fiom uate
of uown payment without inteiest.

City-Lite anu Namaiil met with Roy to consummate the tiansaction; Roy
agieeu to sell the piopeity pioviueu City-Lite will submit its acceptance in
wiiting to the teims anu conuitions in Roy's lettei. Latei that afteinoon
Namaiil anu Teng conveyeu theii foimal acceptance of the teims. Bowevei,
FP Boluings iefuseu to execute the coiiesponuing ueeu of sale anu
iegisteieu an auveise claim to the title of the piopeity with the Registei of
Beeus of QC, annotateu in the memoianuum of encumbiance in the TCT.

FP Boluings fileu a petition foi the cancellation of the auveise claim against
City-Lite with the RTC QC; City-Lite causeu the annotation of the fiist notice
of lis penuens which was iecoiueu in the title of the piopeity. RTC uismisseu
FP Boluings' petition; FP Boluings causeu a iesuivey anu segiegation of the
piopeity, asking anu was gianteu sepaiate titles fiom the RB QC. City-Lite
instituteu a complaint against FP Boluings foi specific peifoimance anu
uamages anu causeu the annotation of the seconu notice of lis penuens. The
piopeity was tiansfeiieu to viewmastei Constiuction Co. foi which a TCT
was issueu; the lis penuens was caiiieu ovei to the new title. The RTC
ienueieu a uecision in favoi of City-Lite oiueiing FP Boluings to execute a
ueeu of sale of the piopeity anu oiueiing the RB QC to cancel viewmastei's
TCT. The CA ieveiseu anu set asiue the RTC juugment.

6))E*K

Whethei oi not a contiact of sale was peifecteu between City-Lite anu FP
Boluings thiough its agent Neluin Roy of Netio Biug.

7EL,N-K

Ait. 1874 of the Civil Coue pioviueu: "When the sale of a piece of lanu oi any
inteiest theiein is thiough an agent, the authoiity of the lattei shall be in
wiiting; otheiwise, the sale shall be voiu." Roy was FP Boluings' authoiizeu
agent to sell the piopeity, but the NCC iequiieu that the authoiity be in
wiiting. The absence of authoiity to sell coulu be ueteimineu fiom the
wiitten memo issueu by FP Boluings' piesiuent iequesting Netio Biug's
assistance in finuing buyeis. The memo stateu: We will appieciate Netio
Biug's assistance in iefeiiing to us buyeis foi the piopeity. Please pioceeu
to holu pieliminaiy negotiations with inteiesteu buyeis anu enuoise foimal
offeis to us foi oui final evaluation anu appiaisal. This meant that Roy
anuoi Netio Biug weie only to assist FP Boluings, anu FP Boluings weie
the only ones who coulu make the final evaluation, appiaisal anu acceptance
of any tiansaction. Roy anuoi Netio Biug weie only a contact peison with
no authoiity to concluue a sale of the piopeity. Consequently, the sale
shoulu be null anu voiu, anu not piouuce any legal effect to tiansfei the
piopeity fiom its lawful ownei, FP Boluings, to any inteiesteu paity.

! 8$,%$-(&)' )% (0$ +)'(,*-(2 S),4*/&(&$1 )% +)'(,*-( )% .*/$2 AB-$>(&)'Y
90$' %),4 &1 &4>),(*'(2 =(0$, +*1$1

/01 8"7;"76=" 6f6;3 :)0 $!="=$ 3< "+76"5" 8"#3=3> ;7$;3763 #0
#67"> !M*O,(L "QU,N,).D(.?D> G/ !'7" GXT> ;070 5?0 #ZGX@HX> !*M.*UC*D
GH> /ATB
JFK 4D)(L> "MD,L #FNN #0

<(O.)K

0n Naich 29, 196S, in puisuant of a pievious veibal unueistanuing plaintiff
paiu Auiiana Naloto P1u,uuu.uu as puichase piice foi the uisputeu house
anu lot of 4SS squaie meteis, locateu in Iloilo City. The ueeu of sale was to be
executeu latei on. Plaintiff uiu not piess Auiiana Naloto foi a ieceipt foi the
money paiu consiueiing the "almost filial ielationship" between the two
(plaintiff is a niece of Auiiana's ueceaseu husbanu), anu because plaintiff
was tolu by Auiiana that the mattei of the piepaiation of the saiu ieceipt
anu the ueeu of sale was to be iefeiieu to the lattei's lawyei, Atty. Sulpicio
Palma. Neanwhile, plaintiff "began to exeicise owneiship anu uominion ovei
the saiu piopeity by impioving the same anu constiucting a ietail stoie in
fiont theieof." 0n two occasions, in Septembei anu in 0ctobei, 196S, on
Auiiana's instiuctions, plaintiff went to see Atty. Palma foi the piepaiation
of a ueeu of sale. She was without success because Palma then was on the
campaign tiail as a canuiuate foi counciloi of Iloilo City. 0n 0ctobei 2u,
196S, Auiiana uieu. Theieaftei, the Toiiens title to the piopeity was
tiansfeiieu in the name of the piesent uefenuants, nephews anu niece of
Auiiana Naloto, aftei settlement of the lattei's estate. Foimal uemanu foi
the execution of a ueeu of sale by saiu uefenuants was iejecteu by them.

6))E*)K

1.) Whethei oi not Iigo's suit is unenfoiceable unuei the Statute of Fiauus.
(No.)

2.) Whethei oi not the piioi uecision on the ejectment suit bais anothei
action foi contesting owneiship of the saiu piopeity. (No.)

7EL,N-K

1. Iigo's suit is enfoiceable unuei the Statute of Fiauus.

Aiticle 14uS (2) (e) Civil Coue: A veibal contiact foi the sale of ieal piopeity
is unenfoiceable, unless iatifieu. Foi such contiact offenus the Statute of
Fiauus. But long accepteu anu well-settleu is the iule that the Statute of
Fiauus is applicable only to executoiy contiacts (not to contiacts eithei
totally oi paitially peifoimeu).

The facts allegeu aie constitutive of a consummateu contiact. It matteis not
that neithei the ieceipt foi the consiueiation noi the sale itself was in
wiiting. Because "oial eviuence of the allegeu consummateu sale of the lanu"
is not foibiuuen by the Statute of Fiauus anu may not be excluueu in couit.

2. The piioi uecision on the ejectment suit uoes not bai the action foi
contesting owneiship of the saiu piopeity.

The uecision in the ejectment case is not an obstacle to the piesent suit. The
simple ieason is that an action of ejectment is no bai to anothei contesting
owneiship. It woulu appeai fiom saiu uecision that the City Couit of Iloilo
ueclaieu that it is "of the opinion that the uefenuant Naigaiita Iigo is only a
lessee of the piopeities uesciibeu in this complaint." Implicit in this is that
the question of owneiship was in ieality seiiously piesenteu befoie the city
couit. So that, possession, the pioblem befoie the city couit, coulu not have
been piopeily iesolveu theie without fiist settling that of owneiship. Since
the issue of owneiship became appaient in the couise of the tiial of the
ejectment case afoiesaiu, the city couit lost juiisuiction to pioceeu fuithei
with the tiial theieof anu the juugment theieon. The uecision in the
ejectment case accoiuingly is not uecisive of the question of owneiship
iaiseu in the complaint befoie the CFI of Iloilo in the case on appeal befoie
the SC.

The oiuei of the Couit of Fiist Instance of Iloilo of }anuaiy 18, 196S
uismissing plaintiff's complaint is heieby set asiue, anu the case iemanueu
to the couit of oiigin foi fuithei pioceeuings. Costs against uefenuants. So
oiueieu.

G01 $4=6S46"53 '4R4;"5 :)0 6!6+373 !"5=3!> @X 2],L0 /II> ;070 5?0 #Z
/IGTV> 8(DO] @> /A/T
JFK 4D)(L> "MD,L #FNN #0

<(O.)K

The complaint in this case alleges that the plaintiff is the sole heii of his
mothei, uuilleima Cuyugan y Canuia, ueceaseu; that in the yeai 189S she
boiioweu the sum of PS,Suu fiom the uefenuant anu executeu, at the same
time, the uocument, Exhibit C, attacheu to the complaint, which puipoits on
its face to be a ueeu of sale of the lanu uesciibeu theiein, with a ieseivation
in favoi of the venuoi of the iight to iepuichase foi the sum of PS,Suu; that
although the instiument puipoits on its face to be a ueeu of sale, it was
intenueu by the paities meiely to eviuence the loan of the nominal puichase
piice anu to seive as a secuiity foi the iepayment of the amount of the loan;
that unuei the teims of the instiument plaintiff's mothei was left in
possession of the lanu as a nominal tenant of the uefenuant at an annual
iental of P42u, an amount equal to the agieeu upon annual inteiest on the
loan at the iate of 12 pei cent pei annum; that in the yeai 1897 the boiiowei
paiu P1,uuu on the loan, wheieupon the nominal ient on the lanu was
ieuuceu fiom P42u to PSuu pei annum, that being the amount of the inteiest
on the unpaiu balance of the loan at the iate of 12 pei cent pei annum; that
plaintiff anu his mothei continueu in the peaceable possession of the lanu
until the uefenuant, in the yeai piioi to the institution of this action, seiveu
notice on the plaintiff that an annual payment of P42u woulu be iequiieu of
him theieaftei, that is to say, the oiiginal amount of the annual payments as
agieeu upon piioi to the payment of P1,uuu on the uebt in the yeai 1897;
that upon plaintiff's iefusal to meet this uemanu, uefenuant set up a claim of
owneiship in himself anu thieateneu to eject the plaintiff fiom the lanu; that
theieupon plaintiff offeieu to pay, anu still stanus ieauy to pay the balance
uue on the oiiginal inuebteuness anu the unpaiu inteiest theieon foi one
yeai, but that uefenuant ueclineu anu continues to uecline to accept the
amount tenueieu anu to cancel the foimal ueeu of sale to the lanu.

The piayei of the complaint is that the uefenuant be iequiieu to accept the
amount thus tenueieu, anu to cancel the foimal ueeu of conveyance.

A uemuiiei to the complaint was sustaineu by the couit below on the
giounu that it uoes not set foith facts constituting a cause of action it
appeaiing on the face of the ueeu of conveyance attacheu to the complaint
that it was a ueeu of sale of lanu with a ieseiveu iight in the venuoi to
iepuichase; anu the allegations of the complaint uisclosing that the ueeu of
conveyance was executeu by plaintiff's mothei, that the stipulateu piice of
iepuichase has not been paiu in full, anu that the time alloweu in the ueeu
foi iepuichase has long since expiieu.

6))E*K

Whethei oi not the uemuiiei (pleoJinq in o lowsuit tbot objects to or
cbollenqes o pleoJinq fileJ by on opposinq porty) must be sustaineu.

7EL,N-K

We aie of opinion that the uemuiiei shoulu have been oveiiuleu on two
sepaiate anu uistinct giounus, eithei one of which is sufficient to sustain the
iuling.

1. Since the uemuiiei to the complaint aumits all the mateiial facts well
pleaueu theiein, it follows that, foi the puiposes of the uemuiiei, the
uefenuant aumits that the tiue natuie anu intent of the tiansaction
mentioneu in the complaint was a meie loan of money secuieu by a foimal
conveyance of the lanu of the venuoi; that the wiitten instiument,
puipoiting to be a ueeu of sale of the lanu, with a iight of iepuichase
ieseiveu by the venuoi, uiu not set foith the ieal natuie of the agieement
between the paities theieto; anu that the tiue intention anu unueistanuing
of the paities at the time when the ueeu was executeu anu ueliveieu was
that it shoulu be helu by the uefenuant, not as a ueeu of sale of the lanu, but
iathei as an instiument in the natuie of a moitgage, eviuencing a loan
secuieu by the lanus of the boiiowei. The uemuiiei fuithei aumits that the
boiiowei's successoi in inteiest hau tenueieu the full amount of the
inuebteuness togethei with the inteiest uue anu payable theieon at the time
of the tenuei, anu that he stanus ieauy at any time to pay the full amount
uue on the loan with inteiest, upon the cancellation by the uefenuant of the
foimal ueeu of conveyance of the lanu.

But pioof of these facts woulu cleaily entitle the plaintiff to the ielief piayeu
foi. The uemuiiei shoulu theiefoie have been oveiiuleu anu the plaintiff
shoulu have been given an oppoitunity to submit his eviuence in suppoit of
the allegation of his complaint.

2. The seconu giounu upon which the uemuiiei shoulu have been oveiiuleu
is that it aumits the tiuth of the allegation of the complaint that in the yeai
1897, two yeais aftei the uate of the execution of the instiument puipoiting
to be a ueeu of sale, the nominal venuoi paiu the nominal puichasei P1,uuu,
wheieupon the nominal ient of the lanu was ieuuceu fiom P42u to PSuu pei
annum, the ieal puipose anu object of this aiiangement being to ieuuce the
amount of the annual inteiest on the oiiginal loan maue to the nominal
venuoi of the lanu, piopoitionately to the ieuuction of the amount of the
loan itself by the payment of P1,uuu. If it be tiue that two yeais aftei the
tiansaction eviuenceu by the instiument attacheu to the complaint, the
uefenuant accepteu fiom the plaintiff's mothei the sum of P1,uuu, anu
theieaftei ieuuceu the amount of the annual payments to be maue by hei, it
cannot be uoubteu that the plaintiff has a goou cause of action against the
uefenuant.

The acceptance by the uefenuant of this laige sum of money, unuei the
ciicumstances as they appeai fiom the complaint, can only be accounteu foi
on one of two hypotheses. Eithei the oiiginal tiansaction was in tiuth anu in
fact an aiiangement oi agieement by viitue of which a loan of money was
maue anu secuieu by a foimal ueeu of sale of lanu with a ieseiveu iight of
iepuichase; oi, if the oiiginal tiansaction was in tiuth anu in fact one of
puichase anu sale of ieal estate, with a ieseiveu iight of iepuichase in the
venuoi, then the puichasei, by the acceptance fiom the venuoi of the sum of
P1,uuu, waiveu anu suiienueieu his iights unuei the oiiginal contiact, anu
enteieu into a new contiact with the venuoi, unuei which he obligateu
himself to cancel the ueeu, oi iesell the lanu to the oiiginal venuoi on the
payment of the balance of the oiiginal puichase piice, anu bounu himself not
to exeicise his iight, unuei the oiiginal ueeu of sale, to iefuse to allow the
oiiginal venuoi to iepuichase aftei the expiiation of the peiiou stipulateu in
the oiiginal contiact foi that puipose.

0pon eithei hypothesis, plaintiff woulu cleaily be entitleu to the ielief
piayeu foi in his complaint. 0f couise the uefenuant is not entitleu to keep
both the lanu anu the payment of a thousanu pesos. The acceptance anu
ietention of such a payment is wholly inconsistent with a claim of a iight of
absolute owneiship in the lanu, without any obligation to iesell it to the
oiiginal venuoi. Befenuant cannot eat his cake anu have it too.

The oiuei enteieu in the couit below, sustaining the uemuiiei to the
complaint must be ieveiseu, anu the iecoiu iemanueu foi fuithei
pioceeuings, without costs in this instance. Let juugment be enteieu in
accoiuance heiewith. So oiueieu.

@01 !4;" !3==3 R4W6$5'3> J76="56" !3==3> (NQ 8"7'$#653 !3==3
:)0 9350 "4b$5'63 '0 +"'4R'4R> PEQ-* ?e .]* '<6 ?e #*F.*> +$#R
73+76;4$Y> <$#62$ "5; '74Y> '35!="5'6" 53;"7> 8"54$# ;3>
653'$5=$! +68$> ^6##R P4#63> P"68$ R4> 3!'"7 +R> +R '964 !$5;>
J$56=3 R345;> <$75"5+3 R4> !$J"!=6"5 R4> '"7#3! 4R> 93'
'94"5 (NQ 8"54$# +R> /IX !'7" TTH> ;070 5?0 #ZVVIXH> 8(F GB> /AH/
JFK RN.,-> J*(U =D,-? +0

ART. 1S19. Consent is monifesteJ by tbe meetinq of tbe offer onJ tbe
occeptonce upon tbe tbinq onJ tbe couse wbicb ore constitute tbe controct.
Tbe offer must be certoin tbe occeptonce obsolute. A quolifieJ occeptonce
constitute o counter-offer. Acceptonce moJe by letter or teleqrom Joes not
binJ offerer except from tbe time it come to bis knowleJqe. Tbe controct, in o
cose, is presumeJ to bove been entereJ into in tbe ploce wbere tbe offer wos
moJe.

<(O.)K

In essence, the theoiy of petitioneis is that while it is tiue that they uiu
expiess willingness to sell to piivate iesponuents the subject piopeity (lanu
anu builuing) foi P6,Suu,uuu.uu pioviueu the lattei maue known theii own
uecision to buy it not latei than }uly S1, 1978, the iesponuents' ieply that
they weie agieeable was not absolute, so much so that when ultimately
petitioneis' iepiesentative went to Cebu City with a piepaieu anu uuly
signeu contiact foi the puipose of peifecting anu consummating the
tiansaction, iesponuents anu saiu iepiesentative founu vaiiance between
the teims of payment stipulateu in the piepaieu uocument anu what
iesponuents hau in minu, hence the bank uiaft which iesponuents weie
ueliveiing to the iepiesentative was ietuineu anu the uocument iemaineu
unsigneu by iesponuents.

The iesponuents, in theii complaint, contenueu "That on August 1, 1978
Peuio uamboa aiiiveu Tacloban City biinging with him the piepaieu
contiact to puichase anu to sell iefeiieu to in his telegiam uateu }uly 27,
1978 foi the puipose of closing the tiansactions iefeiieu to in paiagiaphs
8anu 9 heieof, howevei, to the complete suipiise of plaintiffs, the uefenuant
without giving notice to plaintiffs, changeu the moue of payment with
iespect to the balance of P4,Suu,uuu.uu by imposing upon plaintiffs to pay
same amount within thiity (Su) uays fiom execution of the contiact insteau
of the foimei teim of ninety (9u) uays."

6))E*)K

1.) Whethei oi not the complaint sufficiently states a cause of action.

2.) Whethei oi not the claim allegeu theiein is unenfoiceable unuei the
Statute of Fiauus.

7EL,N-K

1. The couit helu that although theie was no peifecteu contiact of sale in the
light of the lettei of Atty. uamboa of }uly 12, 1978 anu the lettei-ieply
theieto of Yao; it being uoubtful whethei oi not, unuei Aiticle 1S19 of the
Civil Coue, the saiu lettei may be ueemeu as an offei to sell that is "ceitain",
anu moie, the Yao telegiam is fai fiom being an "absolute" acceptance unuei
saiu aiticle, still theie appeais to be a cause of action allegeu in Paiagiaphs 8
to 12 of the iesponuents' complaint, consiueiing it is allegeu theiein that
subsequent to the telegiam of Yao, it was agieeu that the petitioneis woulu
sell the piopeity to iesponuents foi P6.S N, by paving P2 N uown anu the
balance in 9u uays anu which agieement was allegeuly violateu when in the
ueeus piepaieu by Atty. uamboa anu taken to Tacloban, only Su uays weie
given to iesponuents.

2. Fuithei, the couit iuleu that in any sale of ieal piopeity on installments,
the Statute of Fiauus ieau togethei with the peifection iequiiements of
Aiticle 147S of the Civil Coue must be unueistoou anu applieu in the sense
that the iuea of payment on installments must be in the iequisite of a note oi
memoianuum theiein contemplateu.

X01 8"76" 20 W+"0 +$ P383'> $= "#0 :)0 =9$ '347= 3< "22$"#!>
7$;635"# =76"# '347= 3< 86!"86! 376$5="#> /I.] PEQ,O,(L 7*-,?N>
JD0 GV> GII !'7" BX> ;070 5?0 AGHB/> "E-E). G> /AA/
JFK RN.,-> J*(U =D,-? +0

<(O.)K

A paicel of lanu in CB0 owneu by late Pantaleon }omoc was fictitiously solu
to thiiu peisons in which the last tiansfeiee aie the spouses Naiiano anu
Naiia So. Naiia vua ue }omoc fileu suit to iecovei the piopeity anu won.

While penuing appeal, vua ue }omoc executeu executeu a Beeu of
Extiajuuicial Settlement anu Sale of Lanu with piivate iesponuent foi
PSuu,uuu.uu. The uocument was not yet signeu by all the paities noi
notaiizeu but in the meantime, Nauia So hau maue paitial payments
amounting to P49,uuu.uu.

So uemanueu fiom the heiis of }omoc foi the execution of final ueeu of
conveyance but the lattei uiu not comply. As such, So fileu a civil case anu a
notice of lis penuens weie placeu in the title of the lanu.

0n the same uate, the heiis of }omoc executeu anothei extia-juuicial
settlement with absolute sale in favoi of inteivenois Lim Leong Kang anu
Lim Pue claiming that they believe that So alieauy backeu-out fiom the
agieement.

6))E*K

Whethei oi not the sale is enfoiceable.

7EL,N-K

Since petitioneis aumit the existence of the extia-juuicial settlement, the
couit finus that theie was meeting of the minus between the paities anu
hence, theie is a valiu contiact that has been paitly executeu.

The contiact of sale of ieal piopeity even if not complete in foim, so long as
the essential iequisites of consent of the contiacting paities, object, anu
cause of the obligation concui anu they weie cleaily establisheu to be
piesent, is valiu anu effective as between the paities. Public uocument is
only neeueu to binu thiiu peisons.

The payment maue by So is a cleai pioof of hei intention to acquiie the
piopeity anu the petitioneis cannot claim about the iesponuent backing out.
The sale to the inteivenois Lim cannot be iecognizeu because when they
bought the piopeity, theie was alieauy a notice of lis penuens anu the sale
cannot be saiu to be in goou faith.

V01 73+3#<3 !"5=3! :)0 735"#+ '0 8"5"#6#6 () 9*,D ?D
7*MD*)*N.(.,:* ?e +*O*()*Q +*e*NQ(N.) 53#6 J$#$5 '0 8"5"#6#6 (NQ
7$R5"#+3 8"5"#6#6 _ J3"7+ 3< #6S46+"=37!> XBV !'7" TBA> ;070
5?0 /VBH/G> 5?:*UC*D GG> GIIV
JFK RN.,-> J*(U =D,-? +0

<(O.)K

At the coie of the contioveisy is a 4,6u8 squaie-metei paicel of lanu which
oiiginally foimeu pait of the "Fuiukawa Plantation" owneu by a }apanese
national anu situateu in the Bistiict of Toiil, Bavao City. Aftei the wai, the
lanu was tuineu ovei to the Philippine goveinment anu auministeieu by the
National Abaca anu 0thei Fibeis Coipoiation, anu theieaftei by the
iesponuent Boaiu of Liquiuatois (B0L).

0n August 6, 197u, Reynaluo Nanalili, pieuecessoi-in-inteiest of iesponuent
Ronalu C. Nanalili, fileu with the B0L an application to puichase the subject
piopeity, attaching theiewith his 0ccupant's Affiuavit. The application was
favoiably acteu upon anu on Naich 27, 1972, the B0L iequiieu Nanalili to
pay the uownpayment of 1u% of the puichase piice oi P1,86S.28.
Theieaftei, Nanalili ueclaieu the lanu foi taxation puiposes.

0n Naich 2S, 1981, aftei the lapse of nine (9) yeais anu even as the B0L hau
alieauy issueu a Ceitification of Full Payment enuoising the appioval of the
sale of the lanu in question to applicant Reynaluo Nanalili, heiein petitionei
Rouolfo Santos wiote an unuateu lettei to the B0L piotesting Nanalili's
application. 0n account theieof, Lanu Examinei Iluefonso S. Caiiillo issueu a
Nemoianuum auuiesseu to the B0L Senioi Executive Assistant,
iecommenuing a foimal investigation.

0n 0ctobei 7, 1981, the B0L's Alien Piopeity 0nit came out with a iepoit
that petitionei "was not actually occupying the lot anu that he only hiieu
ceitain Abalahin anu Lumaau to plant bananas anu coconut tiees anu
maintain a vegetable gaiuen theieon piesumably to establish a bono-fiJe
occupancy ovei the lot", anu accoiuingly iecommenueu the uismissal of
petitionei's piotest anu the appioval of the sale to Nanalili.

Neanwhile, Nanalili, thiu counsel, maue known to the baiiio captain of the
place of petitionei's illegal entiy into the piemises.

0n Becembei 16, 1981, following Nanalili's compliance with othei
iequiiements, the B0L issueu to him the coiiesponuing Beeu of Absolute
Sale which was uuly appioveu by the 0ffice of the Piesiuent on Becembei
21, 1981. Anu, on }anuaiy 6, 1982, upon iequest of the B0L, the Registei of
Beeus, Bavao City, issueu TCT 86414 coveiing the lanu in question in the
name of Nanalili.

6))E*)K

I. TBE C00RT A Q00 ERREB IN 0PB0LBINu TBAT RESP0NBENT NANALILI
BAS TBE BETTER RIuBT 0F P0SSESSI0N 0vER TBE L0T IN Q0ESTI0N.

II. TBE C00RT A Q00 ERREB IN BECLARINu TBAT TBE SALE 0F TBE L0T
T0 TBE RESP0NBENT WAS N0T FRA0B0LENT ANB TBAT TBE
PETITI0NER'S PR0TEST WAS B0LY INvESTIuATEB.

7EL,N-K

The two (2) couits below, in unanimously upholuing the valiuity of the sale
of the lanu in question to the Nanalilis, likewise affiimeu the B0L's finuing
that the Nanalilis hau a bettei iight of possession theieto. Pieponueiant
eviuence of iesponuent have sufficiently establisheu that as eaily as 197u,
Reynaluo Nanalili, iesponuents' pieuecessoi-in-inteiest, hau alieauy fileu
an Affiuavit of 0ccupancy with the B0L, the goveinment agency taskeu to
auministei it; that the Nanalilis auministeieu the lanu befoie they left foi
Nanila in 1972; that aftei they moveu to Nanila they appointeu an
auministiatoi to oveisee the lanu anu the impiovements anu ciops they
have planteu theieon, such as bananas anu coconut tiees; anu that the
Nanalilis have been paying the ieal estate taxes foi the subject lanu even
befoie the sale theieof to them.

In contiast, petitionei's claim of having bought the lanu fiom a ceitain
Einesto Abalahin who, in tuin, bought it fiom one Col. Agsaluu, allegeuly a
gueiiilla veteian who occupieu the lot fiom 19S6 to 19S9, is without basis.
Foi one, no pioof has been piesenteu by petitionei as to the allegeu title of
Col. Agsaluu oi the tiansfei of any iights fiom the lattei to Einesto Abalahin,
petitionei's allegeu immeuiate tiansfeioi. Foi anothei, the supposeu Beeu of
Absolute Sale between petitionei anu Einesto Abalahin uoes not even
sufficiently iuentify the lot which was the subject of the sale. Woise, that
same ueeu is not notaiizeu anu is uniegisteieu. A sale of a piece of lanu
appeaiing in a piivate ueeu cannot be consiueieu binuing on thiiu peisons if
it is not embouieu in a public instiument anu iecoiueu in the Registiy of
Beeus.
7
veiily, it was only in 1981 that Abalahin enteieu the subject lanu
without peimission, anu that in 1982, petitionei, togethei with Abalahin anu
one Lumaau, illegally cut tiees on the lanu, theieby piompting the Nanalilis
to iepoit theii unlawful entiy to the local baiiio captain.