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Issues:
Issue 1: Whether respondents are entitled to the remedy of rescission despite of their non-compliance to their obligations to Central Bank.
Issue 2: Whether Central Bank is justified in withholding the payment of the purchase price.
Held:
Issue 1: Respondents should not be allowed to rescind the contract where they themselves did not perform their essential obligation thereunder which is to fill up the parcels of
land with escombro. It should be emphasized that a contract of sale involves reciprocity between the parties. Since respondents were in bad faith, they may not seek the
rescission of the agreement they themselves breached.
Issue 2: Aside from the instances mentioned under Article 1590 of the civil code, the vendee is likewise entitled to withhold payment of the purchase price if the vendor fails to
perform any essential obligation of the contract. Such right is premised not on the aforequoted article, but on general principles of reciprocal obligations. Since respondents
failed to comply with their obligation, Central Bank is justified in withholding its payment of the purchase price.
Conchita Nool and Gaudencio Almojera vs. Court of Appeals, Anacleto Nool and Emilia Nebre.
G.R. No.116635. July 24, 1997
PANGANIBAN, J.:
FACTS: Two parcels of land are the subject of dispute in this case. The first area was formerly owned by Victorino Nool and the other parcel of land previously owned by
Francisco Nool. Both parcels of land located in San Manuel, Isabela. Petitioner spouses Conchita and Gaudencio seek recovery of the parcel of land from defendant, Anacleto
Nool, younger brother of Conchita and Emilia, respondents in this case
Petitioners contend that they are the owners of subject of land and that it bought the same from Conchitas brothers, Francisco and Victorino. Because they are in need of
money, they applied and were granted of a loan by DBP, secured by real estate mortgage on the said parcels of land. The title of the lands then was still in the names of the
previous owners. Since the petitioners defaulted in paying the loan the mortgaged lands were foreclosed. The ownership of the lands was conveyed with DBP for being the
highest bidder in the auction sale. As requested by Conchita, Anacleto, brother of Conchita redeemed the foreclosed property with DBP; as a result, the titles of two parcels of
were transferred to Anacleto. That as part of their agreement (Conchita and Anacleto), Anacleto agreed to buy from the petitioners the parcels of land for 100,000, 30,000 of
which price is paid to Conchita and upon payment of 14, 000 petitioners were to regain possession of the two parcel of land. which defendants failed to pay. Because of this
another agreement was entered into by the parties, whereby respondents agreed to return the parcels of land at anytime when the petitioners have the necessary amount,
When petritioners asked to return the parcels of land, respondents refused to return the same. Hence, petitioners filed this complaint to seek recovery of the disputed land.
Lower court ruled in favor of the respondents. Court of Appeals affirmed Lower Court Decision. Hence this petition
ISSUES: Whether or not the agreement entered into by the parties (Petitioners and respondents) with respect to the sale and period of redemption of the parcels of land valid
and enforceable? Whether or not the Respondent is estopped in impugning the validity of the agreement with the petitioner?
RULING: Supreme Court ruled affirming the decision of the Court of Appeals and the Lower Court. The SC held that the sellers (petitioners) no longer had any title to the
parcels of land at the time of sale. And since delivery is not possible in this case without transferring ownership of such parcels of land, the contract of sale between petitioners
and respondent is void. Further since the right to redeem the property is dependent upon the validity of the sale of the parcels of land, such right to redeem is also void. The
petitioners in this case cannot assert the right to repurchase the property with the respondents, since respondent Anacleto redeemed the property after the period of
redemption given to the petitioners. Thus, the ownership of the parcels of land was transferred already to DBP and then conveyed to Respondent upon buying the said
property to DBP.
Moreover, respondent cannot be estopped from raising the defense of nullity of contract, since they acted in good faith, believing that petitioners are still the owners of the
parcels of land. Article 1410 of the Civil Code provides that the action or defense for the declaration of the inexistence of a contract does not prescribe. Thus, respondent
Anacleto can impugn the nullity of the agreement at anytime.
HELD: Yes. State Investment is a holder in due course as it met all the requirements to be one pursuant to Section 52 of the Negotiable Instruments Law. In particular, it is
clearly shown that: (a) on their faces the post-dated checks were complete and regular: (b) State Investment bought these checks from Victoriano, before their due dates; (c)
State Investment took these checks in good faith and for value, (d) State Investment was never informed nor made aware that these checks were merely issued to Victoriano
as security and not for value.
Further, there is no need to issue a notice of dishonor to Moulic. After Moulic withdrew her funds, she could not have expected her checks to be honored. It would only be futile
for State Investment to be sending her notices of dishonor for the two checks.
CASE TITLE :
MOLINA VS. COURT OF APPEALS
CITATION
:
398 SCRA 97 (2003)
TOPIC
:
EQUITABLE MORTGAGE (ART. 1602-1604)
FACTS:
Petitioner Pedro Molina and his siblings Felisa, Felix and Tomas Molina were co-owners of a parcel of land. Pedro, by Deed of Absolute Sale, conveyed to his sister
Felisa his share in the co-owned property. The sale was not, however, registered. A few years later Pedro executed another Deed of Sale over his share over the property
Felisas son and daughter-in-law, private respondents Margarito Flores and Nerisa Herrera. Pedro later filed an action before the RTC to reform or annul the Deed of Absolute
Sale he executed in favor of respondent spouses because allegedly it does express the true will and intention of the parties. Respondent spouses maintained that their
acquisition of petitioners share was valid, legal and binding. The trial court ruled in favour of Pedro and ordered the annulment of the Deed of Sale. On appeal the CA, the
appellate court reversed the trial courts decision.
ISSUE:
Whether the Deed of Sale executed by Pedro in favour of private respondents is an equitable mortgage.
HELD:
The Supreme Court says NO. Petition denied.
RATIO:
For the presumption of an equitable mortgage to arise under Art. 1602, two (2) requisites must concur: (a) that the parties entered into a contract denominated as a
contract of sale, and (b) that their intention was to secure an existing debt by way of a mortgage.
In the case at bar, the second requisite is conspicuously absent.
That the alleged loan was received in installments of P1,000.00 per month for ten months or a total of P10,000.00 in fact indicates that the transaction was not one of a
loan but of sale on installment.
The alleged inadequacy of the price harped upon by petitioner does not by itself support the conclusion that the property was not at all sold or that the contract was
one of a loan.
In any event, no proof was presented to show that the value of the 92 sq. m. property located in Naic, Cavite was, at the time the Deed was executed in 1988,
considerably higher than the therein stated purchase price P8,000.00.
As for petitioners continued receipt of rentals due on the property from its current lessee this Court finds the same as did the appellate court, to be a gesture of
generosity, kinship and leniency from his relatives, he being jobless and without visible means of support.
Third Division
PANGANIBAN, J.:
FACTS: A fishpond located in Arellano-Bani Dagupan City is co-owned by brothers Antonio, Santiago, Demetria and Angel Fernandez, together with their uncle Armando.
Antonio and Demetria sold their respective shares to Spouses Tarun. These sales were registered and annotated in the OCT. Later, the said co-owners executed a Deed of
st
nd
Extrajudicial Partition of two parcels of registered land with exchange of shares. This involved the fishpond (1 ) that was co-owned and another fishpond (2 ). It was also
nd
stipulated in the deed that the parties recognize and respect the sale earlier made. Angel B. Fernandez exchanged his share in the 2 fishpond to the shares of his co-owners
st
on the remaining portion of the 1 fishpond. From that time on, they had been paying the realty taxes thereon. However, it was Angel B. Fernandez and later on his heirs,
[petitioners], who remained in possession of the entire fishpond. The Spouses Tarun sought the partition of the property but Angel Fernandez refused. When he died, Spouses
Tarun again sought the partition of the property but Angel Fernandezs heirs [petitioner] again refused. Hence, this action for partition.
RTC: in favor of petitioners. They are entitled to redeem the property.
CA: REVERSED.
ISSUE: Whether or not the transaction is one of absolute sale or equitable mortgage.
HELD: AFFIRMED.
The transaction is an absolute sale.
On its face, a document is considered a contract of equitable mortgage when the circumstances enumerated in Article 1602 of the Civil Code are manifest, as follows: (a)
when the price of the sale with the right to repurchase is unusually inadequate, and (b) when the vendor remains in possession as lessee or otherwise. Although it is
undisputed that Angel Fernandez was in actual possession of the property, it is important to note that he did not sell it to respondents. The sellers were his co-owners -Antonio and Demetria Fernandez -- who, however, are not claiming that the sale between them was an equitable mortgage. For the presumption of an equitable mortgage to
arise, one must first satisfy the requirement that the parties entered into a contract denominated as a contract of sale, and that their intention was to secure an existing debt by
way of mortgage.
Furthermore, mere alleged inadequacy of the price does not necessarily void a contract of sale, although the inadequacy may indicate that there was a defect in the consent,
or that the parties really intended a donation, mortgage, or some other act or contract. Finally, unless the price is grossly inadequate or shocking to the conscience, a sale is
not set aside. In this case, petitioners failed to establish the fair market value of the property when it was sold in 1967. Hence, there is no basis to conclude that the price was
grossly inadequate or shocking to the conscience.
ISSUES:
1. WoN actual knowledge satisfied the requirement of Article 1088 of the Civil Code.
PROVISIONS:
Art. 1088. Should any of the heirs sell his hereditary rights to a stranger before the partition, any or all of the co-heirs may be subrogated to the rights of the purchaser by
reimbursing him for the price of the sale, provided they do so within the period of one month from the time they were notified in writing of the sale by the vendor.
RULING + RATIO:
1. Yes.
a. While we admittedly may not legislate, we nevertheless have the power to interpret the law in such a way as to reflect the will of the legislature. While we may not
read into the law a purpose that is not there, we nevertheless have the right to read out of it the reason for its enactment. In doing so, we defer not to "the letter that
killeth" but to "the spirit that vivifieth," to give effect to the law maker's will.
b. Was there a valid notice? Granting that the law requires the notice to be written, would such notice be necessary in this case? Assuming there was a valid notice
although it was not in writing. would there be any question that the 30-day period for redemption had expired long before the complaint was filed in 1977? In the
face of the established facts, we cannot accept the private respondents' pretense that they were unaware of the sales made by their brother and sister in 1963 and
1964. By requiring written proof of such notice, we would be closing our eyes to the obvious truth in favor of their palpably false claim of ignorance, thus exalting
the letter of the law over its purpose. The purpose is clear enough: to make sure that the redemptioners are duly notified. W e are satisfied that in this case the
other brothers and sisters were actually informed, although not in writing, of the sales made in 1963 and 1964, and that such notice was sufficient.
c. The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them. And there is no doubt either that the 30-day period
began and ended during the 14 years between the sales in question and the filing of the complaint for redemption in 1977, without the co-heirs exercising their
right of redemption. These are the justifications for this exception.
DISPOSITION
1. WHEREFORE, the petition is granted. The decision of the respondent court is REVERSED and that of the trial court is reinstated, without any pronouncement as to
costs. It is so ordered.
LEE CHUY REALTY CORPORATION vs. COURT OF APPEALS and MARC REALTY AND DEVELOPMENT CORPORATION
December 4, 1995
GR No. 104114
Bellosillo, J.:
FACTS:
A piece of land is disputed by Lee Chuy Corp. and Marc Realty. Originally the property was co-owned by Ruben Jacinto to the extent of one-sixth and the Bascaras and
Ernesto Jacinto who collectively owned the remaining five-sixths.
On April 30, 1981, sale bet. Ruben Jacinto, of his one-sixth pro-indiviso share, and Lee Chuy was duly registered. The Bascaras and E. Jacinto sold theirs to Marc Realty. The
same was registered on Oct. 16, 1989.
Lee Chuy claims it was never informed of the other sale. Marc Realty claims it was verbally informed and was given a copy of the deed of sale.
On 13 November 1989 LEE CHUY REALTY filed a complaint for legal redemption against MARC REALTY and consigned in court a manager's check for 614,400. In its
Amended Answer with Counterclaim with Motion to Dismiss, MARC REALTY insisted that the complaint be dismissed for failure to state a cause of action there being no
allegation of prior valid tender of payment nor a prior valid notice of consignation.
The trial court ruled in favour of Lee Chuy and decreed that neither a separate offer to redeem nor a formal notice of consignation are necessary for the reason that the filing of
the action itself, within the period of redemption, is equivalent to a formal offer to redeem.
In respondents appeal to CA, CA reversed trial courts judgment and decreed in contrary that a prior tender or offer of redemption is a prerequisite or precondition to the filing
of an action for legal redemption. Hence, the petition.
ISSUE: W/N THE FILING OF THE ACTION ITSELF IS EQUIVALENT TO A FORMAL OFFER TO REDEEM
RULING:
Petition Granted.
SC sustains LEE CHUY REALTY. Arts. 1620 and 1623 of the Civil Code on legal redemption provide:
Art. 1620. A co-owner of a thing may exercise the right of redemption in case the shares of all the other co-owners or of any of them are sold to a third person. If the
price of the alienation is grossly excessive, the redemptioner shall pay only a reasonable one.
Art. 1623. The right of legal pre-emption or redemption shall not be exercised except within thirty days from the notice in writing by the prospective vendor, or by the
vendor, as the case may be. The deed of sale shall not be recorded in the Registry of Property unless accompanied by an affidavit of the vendor that he has given
written notice thereof to all possible redemptioners.
There is actually no prescribed form for an offer to redeem to be properly effected. Hence, it can either be through a formal tender with consignation, or by filing a
complaint in court coupled with consignation of the redemption price within the prescribed period.
A co-owner desirous of exercising his right of legal redemption is given a period of thirty (30) days from notice of the sale within which to avail of the right to redeem.
Under the free patent or homestead provisions of the Public Land Act a period of five (5) years from the date of conveyance is provided, the five-year period to be
reckoned from the date of the sale and not from the date of registration in the office of the Register of Deeds.The redemption of extrajudicially foreclosed properties, on
the other hand, is exercisable within one (1) year from the date of the auction sale as provided for in Act No. 3135.
DOMINICO ETCUBAN v CA
148 SCRA 507, G.R. No. L-45164
March 16, 1987
FACTS:
Plaintiff Dominico Etcuban inherited a piece of land together with his co-heirs from their deceased father. Said piece of land was declared in their names as heirs of Eleuterio
Etcuban and was the subject matter in dispute in CFI of Cebu. In said case, Dominico Etcuban the spouse of the decease Demetria Initan and Pedro, Vicente,
Felicitas,Anastacio, Froilan, Alfonso, Advincula, Anunciaciori Jesus, Aguinaldo, surnamed Etcuban were declared as co-owners of the property in question. Thereafter the II
co-heirs executed in favor of herein private respondents Jesus and Guadalupe Songalia II deeds of sale of their respective shares in the co-ownership.
Plaintiff alleged that his co-owners leased and/or sold their respective shares without giving due notice to him as a co-owner notwithstanding his intimations to them that he
was willing to buy all their respective shares. He further maintained that even upon inquiry from his co-heirs/co-owners, and also from the alleged buyers (defendants) he
elicited nothing from them. Plaintiff discovered for the first time the existence of these II deeds of sale during the hearing on January 31, 1972 of Civil Case No. BN-87, entitled
Jesus C. Songalia vs. Dominico ETCUBAN in the CFI of Cebu, When he verified the supposed sales with his co-owners only 3 of them admitted their respective sales. Hence,
the filing of Civil Case No. BN-I09 by petitioner for legal redemption. Private respondents, on the other hand, allege that the provisions of the law pertaining to legal redemption
have been fully complied with in respect to the sale of the disputed land to them.
ISSUE:
Whether or not the plaintiff may exercise his right of redemption over the land in question.
HELD:
No. Article 1623 of the Civil Code provides that the right of legal pre-emption or redemption shall not be exercised except within thirty (30) days from the notice in writing by the
prospective vendor, or by the vendor, as the Ca5e may be. The deed of sale shall not be recorded in the Registry of Property, unless accompanied by an affidavit of the vendor
that he has given written notice thereof to all possible redemptioners. The right of redemption of co-owners excludes that of adjoining owners.
Written notice was given to plaintiff-appellee in the form of an answer with counterclaim to the complaint in Civil Case No. BN-109. This notice is sufficient to inform the plaintiff
about the sale and the reckoning date for the 30-day period commenced upon receipt thereof. No other notice is needed under the premises because it is the substance
conveyed rather than the form embodying it that counts. The records reveal that on May 27, 1974, plaintiff-appellee deposited with the lower court the amount of P26,340.00
the redemption price. Since the answer with counterclaim was filed on March 18, 1972, the deposit made on May 27, 1974 was clearly outside the 30..day period of legal
redemption. The period within which the right of legal redemption or preemption may be exercised is non-extendible.
While it is true that written notice is required by the law (Art. 1623), it is equally true that the same Art. 1623 does not prescribe any particular form of notice, nor any distinctive
method for notifying the redemptioner. So long, therefore, as the latter is informed in writing of the sale and the particulars thereof, the 30 days for redemption start running,
and the redemptioner has no real cause to complain. The furnishing of a copy of the disputed deed of sale to the redemptioner is equivalent to the giving of written notice
required by law in a more authentic manner than any other writing could have done.
Issue: Whether or not the sale of the two elf trucks to private respondent relieves/releases the petitioner from unpaid taxes and custom duties.
Held: It is true that the ownership of the trucks shifted to private respondent after the sale but petitioner must remember that prior to its consummation it expressly intimated to
her that it had already paid the taxes and customs duties. Such representation shall be considered as a sellersexpress warranty under Art. 1546 of the Civil Code which covers
any affirmation of fact or any promise by the seller which induces the buyer to purchase the thing and actually purchases it relying on such affirmation or promise. It includes all
warranties which are derived from express language, whether the language is in the form of a promise or representation Under Art. 1599 of the Civil Code, once an express
warranty is breached the buyer can accept or keep the goods and maintain an action against the seller for damages. This was what private respondent did. She opted to keep
the two (2) trucks which she apparently needed for her business and filed a complaint for damages, particularly seeking the reimbursement of the amount she paid to secure
the release of her vehicles.
ISSUE: whether the assignment of debt by Picache, the creditor, to another party such as the CDC, requires his consent being the debtor.
RULING: Petition is denied for lack of merit.
The transaction between Picache and CDC was an assignment of credit and does not require petitioners consent as debtor for its validity and enforceability.
An assignment of credit has been defined as an agreement by virtue of which the owner of a credit known as the assignor, by a legal cause - such as sale, dation in
payment or exchange or donation and without need of the debtors consent, transfers that credit and its accessory rights to another who is the assignee, who acquires the
power to enforce it, to the same extent as the assignor could have enforced it against the debtor.
The law does not require any formal notice to bind the debtor to the assignee, all that the law requires is knowledge of the assignment. Even if the debtor had not been
notified, but came to know of the assignment by whatever means, the debtor is bound by it.
CALTEX (PHILIPPINES), INC., petitioner, vs.COURT OF APPEALS and SECURITY BANK AND TRUST COMPANY, respondents.
REGALADO, J.:
Facts:
On various dates, defendant Security Bank and Trust Company issued 280 certificates of time deposit in favor of Angel dela Cruz who deposited of time deposit therein the
aggregate amount of P1,120,000.00. Angel dela Cruz delivered said certificate of time deposit to plaintiff-petitioner Caltex in connection with his purchase of fuel products from
the latter. Thereafter, dela Cruz informed defendant Bank that he lost all the certificates of deposit and ask for the replacement of said last CTP where it was granted by the
bank. Soon after said grants, dela Cruz negotiated and obtained a loan from defendant bank in the amount of Eight Hundred Seventy-Five Thousand Pesos (P875,000.00). On
the same date, said depositor executed a notarized Deed of Assignment of Time Deposit which stated, among others, that he surrendered to defendant bank full control of the
indicated time deposits from and after date of the assignment and further authorizes said bank to preterminate, set-off and apply the said time deposit to the payment of
whatever amounts may be due on the loan upon it maturity. the loan of Angel dela Cruz with the defendant bank matured and fell due and on August 5, 1983, the latter set-off
and applied the time deposits in question to the payment of the matured loan. Plaintiff filed the instant complaint, praying that defendant bank be ordered to pay it the
aggregate value of the certificates of time deposit of P1,120,000.00 plus accrued interest and compounded interest therein at 16% per annum
Issue:
whether or not Caltex Philippines has a better right over the Certificate of time deposits?
Held:
Security Bank has a better right because the assignment of the CTDs made by Angel de la Cruz in favor of respondent bank was embodied in a public instrument. Art. 1625.
An assignment of credit, right or action shall produce no effect as against third persons, unless it appears in a public instrument, or the instrument is recorded in the Registry of
Property in case the assignment involves real property.
Respondent bank duly complied with this statutory requirement. Contrarily, petitioner, whether as purchaser, assignee or lien holder of the CTDs, neither proved the amount of
its credit or the extent of its lien nor the execution of any public instrument which could affect or bind private respondent. Necessarily, therefore, as between petitioner and
respondent bank, the latter has definitely the better right over the CTDs in question.