Bar Questions regarding SALES

2000-2001

Submitted to: Atty. Voltaire Duano

Submitted by: Raymond Rogacion
Page 1 of 25

2000
Topic: Maceda Law
Question:
Priscilla purchased a condominium unit in Makati City from the Citiland Corporation for a price
of P10 Million, payable P3 Million down and the balance with interest thereon at 14% per annum
payable in sixty (60) equal monthly installments of P198,333.33. They executed a Deed of
Conditional Sale in which it is stipulated that should the vendee fail to pay three (3) successive
installments, the sale shall be deemed automatically rescinded without the necessity of judicial
action and all payments made by the vendee shall be forfeited in favor of the vendor by way of
rental for the use and occupancy of the unit and as liquidated damages. For 46 months, Priscilla
paid the monthly installments religiously, but on the 47th and 48th months, she failed to pay.
On the 49th month, she tried to pay the installments due but the vendor refused to receive the
payments tendered by her. The following month, the vendor sent her a notice that it was
rescinding the Deed of Conditional Sale pursuant to the stipulation for automatic rescission, and
demanded that she vacate the premises. She replied that the contract cannot be rescinded
without judicial demand or notarial act pursuant to Article 1592 of the Civil Code.
a) Is Article 1592 applicable? (3%)
b) Can the vendor rescind the contract? (2%)
Answer:
A)
No, Article 1592 of the Civil Code cannot be applied in the case at bar.
As provided in the case of Valarao v. CA, it was held that Art. 1592 applies only to a contract of
sale and not in in Deed of Conditional Sale. In the case at bar, the seller can be deemed to have
reserved title to the property until full payment of the purchase price, as such the full payment of
the price is positive suspensive condition, and the failure of which is not a breach, but simply an
event that prevents the obligation of the vendor to convey title from acquitting condition.
Therefore, in the given case, Art. 1592 is not applicable. What is applicable is the Maceda Law
or RA 6552, Realty Installment Buyer Protection Act.

Page 2 of 25

B)
No, the vendor cannot rescind the contract under the circumstances.
Under the Maceda Law, which is the law applicable, the seller on installment may not rescind
the contract till after the lapse of the mandatory grace period of 30 days for every one year of
installment payments, and only after 30 days from notice of cancellation or demand for
rescission by a notarial act.
In this case, the refusal of the seller to accept payment from the buyer on the 49th month was
not justified because the buyer was entitled to 60 days grace period and the payment was
tendered within that period. Moreover, the notice of rescission served by the seller on the buyer
was not effective because the notice was not by a notarial act. Besides, the seller may still pay
within 30 days from such notarial notice before rescission may be effected. All these
requirements for a valid rescission were not complied with by the seller. Hence, the rescission is
invalid.

Page 3 of 25

2001
Topic: Contract to Sell
Question:
Arturo gave Richard a receipt which states:
Receipt
Received from Richard as down payment
For my 1995 Toyota Corolla with plate
No. XYZ-1 23.............. P50.000.00
Balance payable: 12/30/01........ P50 000.00
September 15, 2001.
(Sgd.) Arturo
Does this receipt evidence a contract to sell? Why? (5%)

Answer:
No, the receipt does not evidence a contract to sell.
The primary difference between a contract of Sale and a contract to sell is that in the former,
ownership of the property is transferred to the vendee upon delivery and that non-payment of
the price is a resolutory condition, unlike in a contract to sell where ownership is reserved by the
vendor until full payment of the price, hence payment of the price is a positive suspensive
condition.
In the case at bar, the receipt does not evidence that Arturo reserved ownership of the car until
the full payment of the price by Richard. Therefore, the receipt evidence a contract of sale and
not of a contract to sell.

Page 4 of 25

Topic: Double Sales

Question:
On June 15, 1995, Jesus sold a parcel of registered land to Jaime. On June 30, 1995, he sold
the same land to Jose. Who has a better right if:
a) the first sale is registered ahead of the second sale, with knowledge of the latter. Why? (3%)
b) the second sale is registered ahead of the first sale, with knowledge of the latter? Why? (5%)

Answer:
A)
Jaime has a better right even if he knew of the second sale.
As provided under Art. 1544 par. 2 of the Civil Code, in case of immovable property, the
ownership shall belong to the person acquiring it who in good faith first recorded it in the
Registry of Property.
The fact that Jaime knew of the second sale at the time of his registration does not make him as
acting in bad faith because the sale to him was ahead in time, hence, Jaime has a priority in
right. What creates bad faith in the case of double sale of land is knowledge of a previous sale.

B)
Jaime still has the better right
The first buyer is still to be preferred, where the second sale is registered ahead of the first sale
but with knowledge of the latter. This is because the second buyer, who at the time he
registered his sale knew that the property had already been sold to someone else, acted in bad
faith.
Jose with the knowledge that the property was sold to Jaime immediately registered the sale,
made him a buyer in bad faith, therefore he has no better right than Jaime.

Page 5 of 25

Topic: Legal redemption

Question:
Betty and Lydia were co-owners of a parcel of land. Last January 31, 2001, when she paid her
real estate tax, Betty discovered that Lydia had sold her share to Emma on November 10, 2000.
The following day, Betty offered to redeem her share from Emma, but the latter replied that
Betty's right to redeem has already prescribed. Is Emma correct or not? Why? (5%)

Answer:
No, Emma is not correct. Betty can still enforce her right of legal redemption as a co-owner.
As provided under Article 1623 of the Civil Code, a co-owner has 30 days from written notice of
the sale by the vendor to exercise his right of legal redemption.
In the present problem, the 30-day period for the exercise by Betty of her right of redemption
had not even begun to run because no notice in writing of the sale appears to have been given
to her by Lydia.
And also as provided under the same article, 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 t all possible redemptioners.

Page 6 of 25

REPUBLIC ACT NO. 6552

REALTY INSTALLMENT BUYER PROTECTION ACT
AN ACT TO PROVIDE PROTECTION TO BUYERS OF REAL ESTATE ON
INSTALLMENT PAYMENTS
Section 1. This Act shall be known as the Realty Installment Buyer Act.
Sec. 2. It is hereby declared a public policy to protect buyers of real estate on installment
payments against onerous and oppressive conditions.
Sec. 3. In all transactions or contracts involving the sale or financing of real estate on
installment payments, including residential condominium apartments but excluding industrial
lots, commercial buildings and sales to tenants under Republic Act Numbered Thirty-eight
hundred forty-four, as amended by Republic Act Numbered Sixty-three hundred eighty-nine,
where the buyer has paid at least two years of installments, the buyer is entitled to the following
rights in case he defaults in the payment of succeeding installments:
(a) To pay, without additional interest, the unpaid installments due within the total grace period
earned by him which is hereby fixed at the rate of one month grace period for every one year of
installment payments made: Provided, That this right shall be exercised by the buyer only once
in every five years of the life of the contract and its extensions, if any.
(b) If the contract is cancelled, the seller shall refund to the buyer the cash surrender value of
the payments on the property equivalent to fifty per cent of the total payments made, and, after
five years of installments, an additional five per cent every year but not to exceed ninety per cent
of the total payments made: Provided, That the actual cancellation of the contract shall take
place after thirty days from receipt by the buyer of the notice of cancellation or the demand for
rescission of the contract by a notarial act and upon full payment of the cash surrender value to
the buyer.
Down payments, deposits or options on the contract shall be included in the computation of the
total number of installment payments made.
Sec. 4. In case where less than two years of installments were paid, the seller shall give the
buyer a grace period of not less than sixty days from the date the installment became due.
If the buyer fails to pay the installments due at the expiration of the grace period, the seller may
cancel the contract after thirty days from receipt by the buyer of the notice of cancellation or the
demand for rescission of the contract by a notarial act.
Sec. 5. Under Section 3 and 4, the buyer shall have the right to sell his rights or assign the same
to another person or to reinstate the contract by updating the account during the grace period

Page 7 of 25

and before actual cancellation of the contract. The deed of sale or assignment shall be done by
notarial act.
Sec. 6. The buyer shall have the right to pay in advance any installment or the full unpaid
balance of the purchase price any time without interest and to have such full payment of the
purchase price annotated in the certificate of title covering the property.
Sec. 7. Any stipulation in any contract hereafter entered into contrary to the provisions of
Sections 3, 4, 5 and 6, shall be null and void.
Sec. 8. If any provision of this Act is held invalid or unconstitutional, no other provision shall be
affected thereby.
Sec. 9. This Act shall take effect upon its approval.

Page 8 of 25

January
[G.R. No. 123655. January 19, 2000.]
ANGEL BAUTISTA, Petitioner, v. COURT OF APPEALS, PEDRO ATIENZA (for himself and
as Attorney-in-Fact of Julita Atienza, Benedicto De Leon and Rizalino Atienza), AMELIA
ATIENZA, GREGORIO ATIENZA, CONRADO ATIENZA and REALTY BARON
CORPORATION, Respondents.
Article involved: Art. 1544
Knowledge gained by the second buyer of the first sale defeats his rights even if he is first to
register the second sale, since such knowledge taints his prior registration with bad faith. This is
the price exacted by Article 1544 of the Civil Code for the second buyer being able to displace
the first buyer; that before the second buyer can obtain priority over the first, he must show that
he acted in good faith throughout (i.e., in ignorance of the first sale and of the first buyers
rights) from the time of acquisition until title is transferred to him by registration or failing
registration, by delivery of possession."

February
[G.R. No. 131679. February 1, 2000.]
CAVITE DEVELOPMENT BANK and FAR EAST BANK AND TRUST COMPANY, Petitioners,
v. SPOUSES CYRUS LIM and LOLITA CHAN LIM and COURT OF APPEALS,Respondents.
Article involed: Art. 1462 and Art. 1459
A contract of sale is perfected at the moment there is a meeting of minds upon the thing which is
the object of the contract and upon the price. It is, therefore, not required that, at the perfection
stage, the seller be the owner of the thing sold or even that such subject matter of the sale
exists at that point in time. Thus, under Art. 1434 of the Civil Code, when a person sells or
alienates a thing which, at that time, was not his, but later acquires title thereto, such title
passes by operation of law to the buyer or grantee. This is the same principle behind the sale of
"future goods" under Art. 1462 of the Civil Code. However, under Art. 1459, at the time of
delivery or consummation stage of the sale, it is required that the seller be the owner of the
thing sold. Otherwise, he will not be able to comply with his obligation to transfer ownership to
the buyer. It is at the consummation stage where the principle of nemo dat quod non habet
applies.

[G.R. No. 134117. February 9, 2000.]

SEN PO EK MARKETING CORPORATION, Petitioner, v. TEODORA PRICE MARTINEZ,
JUANITO TIU UYPING, JR., NELSON TIU UYPING and LEONCIO TIU UYPING,Respondents.
Article involved: Art. 1475
"But the letter of acceptance was too late since, as aforestated, on December 23, 1989, Teodora
already executed an option to purchase in favor of the Uypings upon her receipt of their initial
Page 9 of 25

payment of P400,000.00. It bears stressing in this connection that Teodoras notice of intention
to sell became an offer to sell to the Corporation only on December 15 or 16, 1989, (three or
four days after it received the notice on December 12, 1989) when Mrs. Remedios Petilla
quoted the price of P6,000.00 per square meter to Consorcio and Alfredo Yu Siong. However,
the latter did not then signify their acceptance and, instead, according to Consorcio himself, they
took their time to make up their minds. In the interim, Teodora committed to sell to the Uypings
on December 23, 1989. At that point in time, there could not have been any perfected contract
between Teodora and the Corporation since there was no meeting of the minds between them
on the consideration. As Article 1475 of the Civil Code provides:
ARTICLE 1475. The contract of sale is perfected at the moment there is a meeting of minds
upon the thing which is the object of the contract and upon the price.chanrobles virtual
lawlibrary
"At most, there was only an offer or promise to sell which was not binding on Teodora as it was
not then accepted, and even if accepted, the acceptance was not supported by a consideration
distinct from the promise. Teodora was, therefore, at complete liberty to convey the property to
the Uypings.

[G.R. No. 47013. February 17, 2000.]

ANDRES LAO, Petitioner, v. COURT OF APPEALS, THE ASSOCIATED ANGLO-AMERICAN
TOBACCO CORPORATION and ESTEBAN CO,
Article involved: Art. 1497
The Audit Committee correctly excluded the shipments not supported by delivery receipts, albeit
covered by bills of lading and factory consignment invoices. Under Article 1497 of the Civil
Code, a thing sold shall be understood as delivered when it is placed in the control or
possession of the vendee. Unless possession or control has been transferred to the vendee, the
thing or goods sold cannot be considered as delivered. Thus, in the present case, the Audit
Committee was correct when it adopted as guideline that accountability over the goods shipped
was transferred from the corporation to Andres Lao only upon actual delivery of the goods to
him. For it is only when the goods were actually delivered to and received by Lao, did Lao have
control and possession over subject goods, and only when he had control and possession over
said goods could he sell the same.

[G.R. No. 136021. February 22, 2000.]

BENIGNA SECUYA, MIGUEL SECUYA, MARCELINO SECUYA, CORAZON SECUYA,
RUFINA SECUYA, BERNARDINO SECUYA, NATIVIDAD SECUYA GLICERIA SECUYA and
PURITA SECUYA, Petitioners, v. GERARDA M. VDA. DE SELMA, Respondent.
Page 10 of 25

While a sale of a piece of land appearing in a private deed is binding between the parties, it
cannot be considered binding on third persons, if it is not embodied in a public instrument and
recorded in the Registry of Property.

March
[G.R. No. 128677, March 2, 2000]
SANTIAGO ABAPO (now deceased), Substituted by one of his heirs, NATIVIDAD ABAPOALMARIO,petitioner,
vs.
HONORABLE COURT OF APPEALS, (First Division-Manila); and HEIRS OF SPOUSES
PEDRO BACALSO AND CRISPULA ABAPO-BACALSO, respondents.
The price fixed in a sale with right to repurchase is not necessarily the true value of the land
sold. The rationale is that the vendor has the right to repurchase the land. It is the practice to fix
a relatively reduced price, although not a grossly inadequate one, in order to afford the vendor a
retro every facility to redeem the land.

[G.R. No. 104769, March 3, 2000]

AFP MUTUAL BENEFIT ASSOCIATION, INC., petitioner,
vs.
COURT OF APPEALS, SOLID HOMES, INC., INVESTCO, INC., and REGISTER OF DEEDS
OF MARIKINA,
In the absence of anything to excite suspicion, the buyer is not obligated to look beyond d the
certificate to investigate the titles of the seller appearing on the face of the certificate.

[G.R. No. 130722. March 27, 2000.]

SPS. REYNALDO K. LITONJUA and ERLINDA P. LITONJUA and PHIL. WHITE HOUSE
AUTO SUPPLY, INC., Petitioners, v. L & R CORPORATION, VICENTE M. COLOYAN in his

Page 11 of 25

capacity as Acting Registrar of the Register of Deeds of Quezon City thru Deputy Sheriff
ROBERTO R. GARCIA, Respondents.
Article involved: Art. 1479
To rule that a contractual stipulation such as that found in paragraph 8 of the contracts is
governed by Article 1324 on withdrawal of the offer or Article 1479 on promise to buy and sell
would render ineffectual or inutile the provisions on right of first refusal so commonly inserted in
leases of real estate nowadays. The Court of Appeals is correct in stating that Paragraph 8 was
incorporated into the contracts of lease for the benefit of Mayfair which wanted to be assured
that it shall be given the first crack or the first option to buy the property at the price which
Carmelo is willing to accept. It is not also correct to say that there is no consideration in an
agreement of right of first refusal. The stipulation is part and parcel of the entire contract of
lease. The consideration for the lease includes the consideration for the right of first refusal.
Thus, Mayfair is in effect stating that it consents to lease the premises and to pay the price
agreed upon provided the lessor also consents that, should it sell the leased property, then,
Mayfair shall be given the right to match the offered purchase price and to buy the property at
that price. As stated in Vda. De Quirino v. Palarca, in reciprocal contract the obligation or
promise of each party is the consideration for that of the other.

[G.R. No. 131074. March 27, 2000.]

CENTRAL BANK OF THE PHILIPPINES, Petitioner, v. SPOUSES ALFONSO and ANACLETA
BICHARA, Respondents.
Article involved: Art. 1590
Petitioner likewise insists that its delay in paying the purchase price was justified since squatters
occupied the premises, contravening the stipulation that the respondent vendors shall convey
the properties free from liens and encumbrances. Again, we cannot support petitioners view.
The squatters illegal occupation cannot be deemed a lien or encumbrance. By the express
terms of Article 1590 of the Civil Code, a mere act of trespass will not authorize the suspension
of payment of the price. Be that as it may, the usurpation became moot and academic when the
squatters left of their own volition in 1988 following a storm.

April
[G.R. No. 132269, April 27, 2000]

Page 12 of 25

HARRISON MOTORS CORPORATION, petitioner,

vs.
RACHEL A. NAVARRO, respondent.
Article involved: Art. 1546
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
seller's express 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.

[G.R. No. 135602. April 28, 2000.]

HEIRS OF QUIRICO SERASPI AND PURIFICACION R. SERASPI, Petitioners, v. COURT OF
APPEALS AND SIMEON RECASA, Respondents.
Article involved: Art. 1475 and Art. 1477
For while a contract of sale is perfected by the meeting of minds upon the thing which is the
object of the contract and upon the price, the ownership of the thing sold is not transferred to the
vendee until actual or constructive delivery of the property. 8 Hence, the maxim non nudis
pactis, sed traditione dominia dominica rerum transferuntur (not mere agreements but tradition
transfers the ownership of things).

May
[G.R. No. 137677. May 31, 2000.]
ADALIA B. FRANCISCO, Petitioner, v. ZENAIDA F. BOISER, Respondent.
Article involved: Art. 1623
It ruled that Art. 1623 does not prescribe any particular form of notifying co-owners about a sale
of property owned in common to enable them to exercise their right of legal redemption. 6 While
no written notice was given by the vendor, Adela Blas, to petitioner or the other owners,
petitioner herself admitted that she had received respondents letter of May 30, 1992 and was in
fact furnished a copy of the deed evidencing such sale. 7 The trial court considered the letter
sent by respondent to petitioner with a copy of the deed of sale as substantial compliance with
the required written notice under Art. 1623 of the New Civil Code. 8 Consequently, the 30-day
period of redemption should be counted not from August 5, 1992, when petitioner received
summons in Civil Case No. 15510, but at the latest, from June 8, 1992, the date petitioner wrote
the tenants of the building advising them to continue paying rentals in full to her. Petitioner failed
to redeem the property within that period.
[G.R. No. 135634, May 31, 2000]

Page 13 of 25

HEIRS OF JUAN SAN ANDRES (VICTOR S. ZIGA) and SALVACION S. TRIA, petitioners,
vs.
VICENTE RODRIGUEZ, respondent.
Article involved: Art. 1458, Art. 1475 and Art. 1477
First. Art. 1458 of the Civil Code provides:
By the contract of sale one of the contracting parties obligates himself to transfer
the ownership of and to deliver a determinate thing, and the other to pay therefor
a price certain in money or its equivalent.
A contract of sale may be absolute or conditional.
As thus defined, the essential elements of sale are the following:
a) Consent or meeting of the minds, that is, consent to transfer ownership in
exchange for the price;
b) Determinate subject matter; and,
c) Price certain in money or its equivalent.
Art. 1477 provides that the ownership of the thing sold shall be transferred to the vendee upon
the actual or constructive delivery thereof.
The stipulation that the "payment of the full consideration based on a survey shall be due and
payable in five (5) years from the execution of a formal deed of sale" is not a condition which
affects the efficacy of the contract of sale. It merely provides the manner by which the full
consideration is to be computed and the time within which the same is to be paid. But it does
not affect in any manner the effectivity of the contract. Consequently, the contention that the
absence of a formal deed of sale stipulated in the receipt prevents the happening of a sale has
no merit.

Page 14 of 25

June
[G.R. No. 115117, June 8, 2000]
INTEGRATED PACKAGING CORP., petitioner,
vs.
COURT OF APPEALS and FIL-ANCHOR PAPER CO., INC., respondents.
Article involved: Art. 1583
Accordingly, the private respondent's suspension of its deliveries to petitioner whenever the
latter failed to pay on time, as in this case, is legally justified under the second paragraph of
Article 1583 of the Civil Code which provides that:
When there is a contract of sale of goods to be delivered by stated installments, which
are to be separately paid for, and the seller makes defective deliveries in respect of one
or more installments, or the buyer neglects or refuses without just cause to take delivery
of or pay for one or more installments, it depends in each case on the terms of the
contract and the circumstances of the case, whether the breach of contract is so material
as to justify the injured party in refusing to proceed further and suing for damages for
breach of the entire contract, or whether the breach is severable, giving rise to a claim
for compensation but not to a right to treat the whole contract as broken.

[G.R. No. 137552, June 16, 2000]

ROBERTO Z. LAFORTEZA, GONZALO Z. LAFORTEZA, MICHAEL Z. LAFORTEZA, DENNIS
Z. LAFORTEZA, and LEA Z. LAFORTEZA, petitioners,
vs.
ALONZO MACHUCA, respondent.
Article involved: Art. 1458 and Art 1479
A contract of sale is a consensual contract and is perfected at the moment there is a meeting of
the minds upon the thing which is the object of the contract and upon the price. From that
moment the parties may reciprocally demand performance subject to the provisions of the law
governing the form of contracts. The elements of a valid contract of sale under Article 1458 of
the Civil Code are (1) consent or meeting of the minds; (2) determinate subject matter and (3)
price certain money or its equivalent. \
An option contract is governed by the second paragraph of Article 1479 of the Civil Code ,
which reads:

Page 15 of 25

Art. 1479. . . .
An accepted unilateral promise to buy or to sell a determinate thing for a price certain is
binding upon the promissor if the promise is supported by a consideration distinct from
the price.
In the present case, the six-month period merely delayed the demandability of the contract of
sale and did not determine its perfection for after the expiration of the six-month period, there
was an absolute obligation on the part of the petitioners and the respondent to comply with the
terms of the sale. The parties made a "reasonable estimate" that the reconstitution the lost title
of the house and lot would take approximately six months and thus presumed that after six
months, both parties would be able to comply with what was reciprocally incumbent upon them.
The fact that after the expiration of the six-month period, the respondent would retain
possession of the house and lot without need of paying rentals for the use therefor, clearly
indicated that the parties contemplated that ownership over the property would already be
transferred by that time.

[G.R. No. 137980, June 20, 2000]

TALA REALTY SERVICES CORP., petitioner,
vs.
BANCO FILIPINO SAVINGS AND MORTGAGE BANK, respondent.
It is not the eleven (11)-year lease contract but the twenty (20)-year lease contract which is the
real and genuine contract between petitioner Tala Realty and private respondent Banco Filipino.
Considering that the twenty (20)-year lease contract is still subsisting and will expire in 2001 yet,
Banco Filipino is entitled to the possession of the subject premises for as long as it pays the
agreed rental and does not violate the other terms and conditions thereof (Art. 1673, New Civil
Code).

July
[G.R. No. 116895. July 7, 2000.]
ARAMIS B. AGUILAR, Petitioner, v. COURT OF APPEALS, AURELIO T. JUGUILON and
PATRIA F. JUGUILON, Respondents.
Article involved: Art. 1498
We therefore find that the trial court correctly ruled that the leased premises were already
delivered to the lessee when the contract of lease was executed on July 6, 1982, pursuant to
Article 1498 of the New Civil Code. On sale which could be applied to the case at bar, providing
that when the sale is made through a public instrument, the execution thereof shall be
equivalent to the delivery of the thing which is the object of the contract. Applying the aforecited
provision of law to the contract of lease at bar, the leased premises were delivered to the lessee
Page 16 of 25

when the lease contract was executed on July 6, 1982. Moreover, the lease contract itself states
that the lessor, in consideration of the tenets, averments and conditions hereinafter stated and
agreed, hereby leases, lets, rents and delivers by way of lease unto the lessee two parcels of
land situated at Libertad St., Pasay City."
Hence, petitioner cannot be considered to have failed in his duties under Article 1654 of the Civil
Code "to deliver the thing which is the subject of the contract in such a condition as to render it
fit for the use intended" and "to maintain the lessee in the peaceful and adequate enjoyment of
the lease for the entire duration of the contract." (Pars.1 & 3, Art. 1654, Civil Code).
In the case at bar, petitioner entered into a lease agreement with the private respondents
involving two adjacent parcels of land on which he shall construct a commercial building of not
more than three storeys high. He bound himself to pay rentals at the rate specified and agreed
upon by the parties. The lease period was for 25 years and at the end of which, the commercial
building on said land shall be turned over to the lessors without any demand of reimbursement
for all the improvements done on said property.

[G.R. No. 137290. July 31, 2000.]

SAN MIGUEL PROPERTIES PHILIPPINES, INC., Petitioner, v. SPOUSES ALFREDO HUANG
and GRACE HUANG, Respondents.
Article involved: Art. 1482
The court cited Art. 1482 of the Civil Code which provides that" whenever earnest money is
given in a contract of sale, it shall be considered as part of the price and as proof of the
perfection of the contract. The fact the parties had not agreed on the mode of payment did not
affect the contract as such is not an essential element for its validity.
In the present case, the P1 million "earnest-deposit" could not have been given as earnest
money as contemplated in Art. 1482 because, at the time when petitioner accepted the terms of
respondents offer of March 29, 1994, their contract had not yet been perfected. This is evident
from the following conditions attached by respondents to their letter, to wit: (1) that they be given
the exclusive option to purchase the property within 30 days from acceptance of the offer; (2)
that during the option period, the parties would negotiate the terms and conditions of the
purchase; and (3) petitioner would secure the necessary approvals while respondents would
handle the documentation.

August
[G.R. No. 120820. August 1, 2000.]
SPS. FORTUNATO SANTOS and ROSALINDA R SANTOS, Petitioners, v. COURT OF
APPEALS, SPS. MARIANO R. CASEDA and CARMEN CASEDA, Respondents.
Art. 1458 and Contract to sell
It must be emphasized from the outset that a contract is what the law defines it to be, taking into
consideration its essential elements, and not what the contracting parties call it. Article 1458 of
Page 17 of 25

the Civil Code defines a contract of sale. Note that the said article expressly obliges the vendor
to transfer the ownership of the thing sold as an essential element of a contract of sale.
In contracts to sell, ownership is reserved the by the vendor and is not to pass until full payment
of the purchase price. This we find fully applicable and understandable in this case, given that
the property involved is a titled realty under mortgage to a bank and would require notarial and
other formalities of law before transfer thereof could be validly effected.
Thus, in contract to sell, the payment of the purchase price is a positive suspensive
condition. Failure to pay the price agreed upon is not a mere breach, casual or serious, but a
situation that prevents the obligation of the vendor to convey title from acquiring an obligatory
force. This is entirely different from the situation in a contract of sale, where non-payment of the
price is a negative resolutory condition. The effects in law are not identical. In a contract of sale,
the vendor has lost ownership of the thing sold and cannot recover it, unless the contract of sale
is rescinded and set aside. In a contract to sell, however, the vendor remains the owner for as
long as the vendee has not complied fully with the condition of paying the purchase. If the
vendor should eject the vendee for failure to meet the condition precedent, he is enforcing the
contract and not rescinding it.

[G.R. No. 134166. August 25, 2000.]

SPOUSES MARIO REYES and CONCEPCION DOMINGUEZ-REYES, and SPOUSES
DOMINADOR VICTA and ARACELI DOMINGUEZ-VICTA, Petitioners, v. COURT OF
APPEALS and SPOUSES JAIME RAMOS and NILDA ILANO-RAMOS, Respondents.
Article involved: Art. 1602
As already mentioned in the assailed decision, Art. 1602 of the Civil Code enumerates the
instances when a contract, regardless of its nomenclature, may be presumed to be an equitable
mortgage: (a) when the price of a sale with right to repurchase is unusually inadequate; (b)
when the vendor remains in possession as lessee or otherwise; (c) when upon or after the
expiration of the right to repurchase another instrument extending the period of redemption or
granting a new period is executed; (d) when the purchaser retains for himself a part of the
purchase price; (e) when the vendor binds himself to pay the taxes on the thing sold; and, (f) in
any other case where it may be fairly inferred that the real intention of the parties is that the
transaction shall secure the payment of a debt or the performance of any other
obligation.chanrob1es
virtua1
1aw
1ibrary
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. The existence of any
one of the circumstances defined in the foregoing provision, not the concurrence nor an
overwhelming number of such circumstances, is sufficient for a contract of sale to be presumed
an equitable mortgage. 11 The provision also applies even to a contract purporting to be an
absolute sale, as in this case,, if indeed the real intention of the parties is that the transaction
shall secure the payment of a debt or the performance of any other obligation.
[G.R. No. 112954, August 25, 2000]
Page 18 of 25

RICARDO DISTAJO, ERNESTO DISTAJO, RAUL DISTAJO, FEDERICO DISTAJO,

ZACARIAS A. DISTAJO, EDUARDO DISTAJO, and PILAR DISTAJO TAPAR, petitioners,
vs.
COURT OF APPEALS and LAGRIMAS SORIANO DISTAJO, respondents.
Article involved: Art. 1491
"Art. 1491. The following persons cannot acquire by purchase, even at a public or judicial
auction, either in person or through the mediation of another:
(1) The guardian, the property of the person or persons who may be under guardianship;
(2) Agents, the property whose administration or sale may have been entrusted to them,
unless the consent of the principal has been given;
(3) Executors and administrators, the property of the estate under administration;" x x x
Under paragraph (2) of the above article, the prohibition against agents purchasing property in
their hands for sale or management is not absolute. It does not apply if the principal consents to
the sale of the property in the hands of the agent or administrator. In this case, the deeds of sale
signed by Iluminada Abiertas shows that she gave consent to the sale of the properties in favor
of her son, Rufo, who was the administrator of the properties. Thus, the consent of the principal
Iluminada Abiertas removes the transaction out of the prohibition contained in Article 1491(2).

[G.R. No. 135442. August 31, 2000.]

MA. LOUISA T. QUE, Petitioner, v. COURT OF APPEALS, RTC-Br. 158, PASIG CITY, and
NICOLAAS J. KLAVER, Respondents.
Article involved: Art. 1530
Complainant (private respondent) has clearly failed to deliver or place under the control of Mrs.
Que the second parking lot mentioned in the Conditional Deed of Sale. As such, Mrs. Que has
the right to rescind the contract or demand a reduction of the price pursuant to Art. 1530 of the
Civil Code. When the purchase price in the Conditional Deed of Sale is accordingly reduced
through the subtraction of the value of the undelivered parking lot which has been estimated at
P350,000.00, Mrs. Que would even have overpaid the purchase price even without having to
pay the last amortization of P250,000.00, and would thus have acquired ownership of all rights
pertaining to condominium unit No. 1902-A, and thus, she should not be disturbed in her
possession of unit No. 1902-A

September
[G.R. No. 138201. September 12, 2000.]

Page 19 of 25

FRANCISCO BAYOCA, NONITO DICHOSO and SPOUSES PIO DICHOSO and DOLORES
DICHOSO and ERWIN BAYOCA, Petitioners, v. GAUDIOSO NOGALES represented by
HENRY NOGALES, Respondent.
Article involved: Art. 1544
"ARTICLE 1544. If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good faith, if it
should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.
Following the above-quoted law, in the double sales of immovables, ownership is transferred in
the order hereunder stated to
(a) the first registrant in good faith;
(b) the first in possession in good faith; and
(c) the buyer who presents the oldest title in good faith.
Based on the foregoing, to merit protection under Article 1544, second paragraph, of the Civil
Code, the second buyer must act in good faith in registering the deed. Thus, it has been held
that in cases of double sale of immovables, what finds relevance and materiality is not whether
or not the second buyer was a buyer in good faith but whether or not said second buyer
registers such second sale in good faith, that is, without knowledge of any defect in the title of
the property sold.

[G.R. No. 134651. September 18, 2000.]

SPOUSES VIRGILIO and JOSIE JIMENEZ, Petitioners, v. PATRICIA, INC., Respondent.
Article involved: Art. 1678
Art. 1678. If the lessee makes, in good faith, useful improvements which are suitable to the use
for which the lease is intended, without altering the form or substance of the property leased,
the lessor upon the termination of the lease shall pay the lessee one-half of the value of the
improvements at that time. Should the lessor refuse to reimburse said amount, the lessee may
remove the improvements, even though the principal thing may suffer damage thereby. He shall
not, however, cause any more impairment upon the property leased than is necessary . .
Thus, applying the above rule, petitioners cannot recover full reimbursement of the value spent
Page 20 of 25

for the construction of the house, but is limited only to one-half (1/2) of its value at the election of
the lessor. However, as PATRICIA has manifested its lack of intention to do so, the Jimenez
spouses have no recourse but to remove the house at their own expense.

[G.R. No. 120747. September 21, 2000.]

VICENTE GOMEZ, as successor-in-interest of awardee LUISA GOMEZ, Petitioner, v.
COURT OF APPEALS, City of MANILA acting thru the City Tenants Security Committee
now the Urban Settlement Office, Register of Deeds of Manila, Respondents.
Article involved: Art. 1486
Article 1486 of the Civil Code provides that a stipulation that the installments or rents paid shall
not be returned to the vendee or lessee shall be valid insofar as the same may not be
unconscionable under the circumstances.
Applying the foregoing, we are of the considered view that the payment of the purchase price of
P3,556.00, constitutes fair and reasonable rental for the period in which said property was under
the control of awardee Luisa Gomez, her heirs and successors-in-interest. Undeniably, the
awardee together with her heirs and successors-in-interest, have gained benefits, financial or
otherwise, for a period of eight years from the time of actual award of the lot to the time of
cancellation thereof (1978-1986).
Nonetheless, we ought to stress that in the present case, forfeiture of the installments paid as
rentals, only applies to the purchase price of P3,556.00 and not to the overpayment of the
amount of P8,244.00.

October
[G.R. No. 119794. October 3, 2000.]
TOMAS SEE TUAZON, Petitioner, v. COURT OF APPEALS and JOHN SIY
LIM, Respondents.
Article involved: 1604
Under Article 1604 of the New Civil Code, the provisions of Article 1602 shall also apply to a
contract purporting to be an absolute sale. 21 And for these provisions of law to apply, two
requisites must concur: 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.
While the existence of any of the circumstances in Article 1602, not a concurrence nor an
overwhelming number thereof, suffices to give rise to the presumption that the contract is an
equitable mortgage;

Page 21 of 25

[G.R. No. 122047. October 12, 2000.]

SPOUSES SERAFIN SI AND ANITA BONODE SI, Petitioners, v. COURT OF APPEALS,
SPOUSES JOSE ARMADA and REMEDIOS ALMANZOR (deceased, and substituted by
heirs: Cynthia Armada, Danilo Armada and Vicente Armada), Respondents.
Article involved: Art. 1623
"ARTICLE 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.
The right of redemption of co-owners excludes that of adjoining owners."cralaw virtua1aw library
Moreover, we note that private respondent Jose Armada was well informed of the impending
sale of Crisostomos share in the land. In a letter dated February 22, 1979, Jose told his brother
Crisostomo: "Well you are the king of yourselves, and you can sell your share of Leveriza." Coowners with actual notice of the sale are not entitled to written notice. A written notice is a formal
requisite to make certain that the co-owners have actual notice of the sale to enable them to
exercise their right of redemption within the limited period of thirty days. But where the coowners had actual notice of the sale at the time thereof and/or afterwards, a written notice of a
fact already known to them, would be superfluous. The statute does not demand what is
unnecessary.

[G.R. No. 132677. October 20, 2000.]

ISABELA COLLEGES, INC., Petitioner, v. THE HEIRS OF NIEVES TOLENTINO-RIVERA,
namely: PABLO T. RIVERA, FELICULA R. PEREZ, DOLORES R. QUERIDO, OLGA BUNAG,
LOLITA RIVERA, LUCIA FLORES, MANUEL RIVERA, ANDRES RIVERA, CAMILO RIVERA,
EMMA ALFONSO, ANTONIA PEREZ; and PROCESO CORTEZ, DANILO DE LA CRUZ,
ALEXANDER CORTEZ, CORAZON MENOR and CARLOS CALDERON, Respondents.
Article involved: Art. 1544
Even assuming that Cortez was not guilty of bad faith when he bought the land in question, the
fact remains that the Isabela Colleges was first in possession. Art. 1544 of the Civil Code on
double sales provides:
If the same thing should have been sold to different vendees, the ownership shall be transferred
to the person who may have first taken possession thereof in good faith, if it should be movable
Page 22 of 25

property.
Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in the possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.
Indeed, petitioner has been in possession of the land since 1949. Between petitioner and
Cortez, therefore, the former had a better right for the latter only bought the property in 1988
when it was already purchased by and titled under the name of petitioner.

[G.R. No. 136456. October 24, 2000.]

HEIRS OF RAMON DURANO, SR., RAMON DURANO III, AND ELIZABETH HOTCHKISS
DURANO, Petitioners, v. SPOUSES ANGELES SEPULVEDA UY AND EMIGDIO BING SING
UY, Respondents.
Possessor in Good Faith
A possessor is deemed to be "in good faith" when he is not aware of any flaw in his title or
mode of acquisition of the property. On the other hand, there is "just title" when the adverse
claimant came into possession of the property through one of the modes for acquiring
ownership recognized by law, but the grantor was not the owner or could not transmit any right.
The claimant by prescription may compute the ten-year period by tacking his possession to that
of his grantor or predecessor-in-interest.

[G.R. No. 143325. October 24, 2000.]

RAUL SANTOS by and through his attorneys-in-fact AMADO SANAO & ATTY. NESTOR
BARBOSA, Petitioner, v. HEIRS OF JOSE P. MARIANO & ERLINDA MARIANOVILLANUEVA; & the Law Firm of SAN BUENAVENTURA, MORALEDA OBIAS and
YAMBAO, Respondents.
Article involved: Art. 1475
"The contract of sale is perfected at the moment there is a meeting of minds upon the thing
which is the object of the contract and upon the price. From that moment, the parties may
reciprocally demand performance, subject to the provisions of the law governing the form of
contracts" (Article 1475, Civil Code). Even with a duly executed written document (which
apparently is the net result in Mariano v. Peas, supra) purporting to be a contract of sale, the
Court cannot rule that the subject contracts of sale are valid, when the evidence presented in
the courts below show that there had been no meeting of the minds between the supposed
seller and corresponding buyers of the parcels of land in this case. The case is replete with
evidence tending to show that there was really no intention to sell the subject properties, and we
Page 23 of 25

need not delve into these matters anew because such factual issues are beyond the scope of
our review. Suffice it to note that due execution of documents representing a contract is one
thing, but perfection of the contract is definitely another.

[G.R. No. 137557. October 30, 2000.]

DEVELOPMENT BANK OF THE PHILIPPINES, Petitioner, v. HON. COURT OF APPEALS
and SPOUSES NILO and ESPERANZA DE LA PEA, Respondents.
Article: Art. 1592
In the instant case, the sellers gave the buyers until May 1979 to pay the balance of the
purchase price. After the latter failed to pay installments due, the former made no judicial
demand for rescission of the contract nor did they execute any notarial act demanding the
same, as required under Article 1592. Consequently, the buyers could lawfully make payments
even after the May 1979 deadline, as in fact they paid several installments, an act which cannot
but be construed as a waiver of the right to rescind. When the sellers, instead of availing of their
right to rescind, accepted and received delayed payments of installments beyond the period
stipulated, and the buyers were in arrears, the sellers in effect waived and are now estopped
from exercising said right to rescind.

November
[G.R. No. 125497. November 20, 2000.]
UNICANE FOOD PRODUCTS MANUFACTURING, INC., Petitioner, v. HON. COURT OF
APPEALS, SPOUSES PABLO & FELISA MANESE, SPOUSES NICANOR & LUTGARDA
VELASQUEZ and CICERON MANESE, Respondents.
Article involved: Art. 1670
In Roman Catholic Archbishop of Manila v. Court of Appeals, we held that "from the language of
Article 1670 of the Civil Code, an implied new lease may be created only where (1) the
continued enjoyment of the thing by the lessee is with acquiescence of the lessor, and (2) no
notice to the contrary has been given by the lessor." 15 In the case at bar, both requisites are
wanting. As early as 1989, the sisters Lutgarda and Ciceron Manese told Unicane that they
were no longer extending the lease after 1990.

December
[G.R. No. 129189. December 5, 2000.]
DONATO C. CRUZ TRADING CORPORATION, Petitioner, v. COURT OF APPEALS AND
TERESA R. JALANDONI, Respondent.
business forms, e.g., order slip, delivery charge invoice and the like, which are issued by the
seller in the ordinary course of business are not always fully accomplished to contain all the
Page 24 of 25

necessary information describing in detail the whole business transaction. In most cases the
sales clerk merely indicates a description and the price of each item sold without bothering to fill
up all the available spaces in the receipt or invoice. More often than not they are accomplished
perfunctorily without proper regard to any legal repercussion for such neglect. Despite their
being often incomplete, said business forms are commonly recognized in ordinary commercial
transactions as valid between the parties and at the very least they serve as an
acknowledgment that a business transaction has in fact transpired.

[G.R. No. 116220. December 6, 2000.]

SPOUSES ROY PO LAM and JOSEFA ONG PO LAM, Petitioners, v. COURT OF APPEALS
and FELIX LIM now JOSE LEE, Respondents.
Possessor in Good Faith
A possessor in good faith has been defined as "one who is unaware that there exists a flaw
which invalidates his acquisition of the thing (See Article 526, Civil Code). Good faith consists in
the possessors belief that the person from whom he received the thing was the owner of the
same and could convey his title (Pio v. CA, 198 SCRA 434 [1991]). In this case, while
petitioners bought Lot No. 2581 from LAHCO while a notice of lis pendens was still annotated
thereon, there was also existing a court order canceling the same. Hence, petitioners cannot be
considered as being "aware of a flaw which invalidates their acquisition of the thing" since the
alleged flaw, the notice of lis pendens, was already being ordered cancelled at the time of the
purchase. On this ground alone, petitioners can already be considered buyers in good faith.

Page 25 of 25