G.R. No.

132709 September 4, 2001

SPOUSES CAMILO L. SABIO, and MA. MARLENE A. LEDONIO-SABIO, petitioners,

vs.
THE INTERNATIONAL CORPORATE BANK, INC. (now UNION BANK OF THE PHILIPPINES), GOLDENROD, INC., PAL
EMPLOYEES SAVINGS AND LOAN ASSOCIATION, INC., AYALA CORPORATION, LAS PIÑAS VENTURES, INC., FILIPINAS
LIFE ASSURANCE COMPANY (now AYALA LIFE ASSURANCE, INC.), AYALA PROPERTY VENTURES CORPORATION, and
AYALA LAND, INC., respondents.

YNARES-SANTIAGO, J.:

Before us is a petition for review on certiorari assailing the decision of the Court of Appeals in CA-G.R. CV No. 48870 which affirmed
and modified the judgment of the Regional Trial Court of Makati, Branch 65, in Civil Case No. 18540, an action for specific performance
and damages.

The object of the controversy is a portion of a vast tract of land measuring approximately 152,454 square meters, located at Tindig na
Manga, Almanza, Las Piñas City. Designated as Lots 2 and 3, and 6 (formerly covered by two Certificates of Title, namely: TCT Nos.
65161 and 65162), this vast estate was registered in the name of Las Piñas Ventures, Incorporated (or LPVI). 1 In the early 1970’s, the
said property was the subject of several land registration, as well as civil, cases.

On May 25, 1973, the spouses Gerardo and Emma Ledonio, one of the parties in LRC Case No. PN-107 affecting the land, assigned to
the spouses Camilo and Ma. Marlene Sabio (herein petitioners) all their rights, interests, title and participation over a contiguous portion
of the subject property measuring 119,429 square meters, particularly that which was covered by TCT No. 65162. 2 For this purpose, a
deed of assignment with assumption of mortgage was later executed by the Ledonio spouses in favor of the Sabio couple on November
23, 1981.3

Similarly, while the subject property was still the object of several pending cases, the International Corporate Bank, Inc. (or Interbank)
acquired from the Trans-Resource Management and Development Corporation all of the latter’s rights to the subject property by virtue
of a deed of assignment executed between them on July 12, 1984. 4

Sometime thereafter, or on March 6, 1985, the Sabios and Interbank settled their opposing claims by entering into a Memorandum of
Agreement (or MOA) whereby the Sabios assigned, conveyed and transferred all their rights over the parcel covered by TCT No. 65162
to Interbank, with the express exception of a 58,000 square meter contiguous portion of said lot. The MOA also provided, to wit:

xxx xxx xxx

2. That for and in consideration of the aforementioned assignment, conveyance and transfer by the FIRST PARTY (i.e., the Sabios), the
latter (SECOND PARTY, i.e., Interbank) shall:

a. PAY to the FIRST PARTY the sum of SEVEN HUNDRED FIFTY THOUSAND PESOS (P750,000.00), Philippine Currency, receipt of
which in full is hereby acknowledged by the FIRST PARTY from the SECOND PARTY;

b. Subject to the rights of the SECOND PARTY under the provisions of No. 4 hereunder, COMPLETE and PERFECT its ownership and
title to the afore-described three (3) parcels of land with all the improvements thereon, situated at Tindig Na Manga (Almanza), Las
Piñas, Rizal (now Metro Manila), covered by Transfer Certificate of Title No. S-65161-Metro Manila, Book T-328, Page 161 (formerly
No. 190713-Rizal, Book T-1227, Page 113) and Transfer Certificate of Title No. S-65162-Metro Manila, Book T-328, Page 162 (formerly
No. 190714-Rizal, Book T-1227, Page 114), AND, ASSIGN, CONVEY and TRANSFER unto and in favor of the FIRST PARTY a
CONTIGUOUS PORTION of the afore-described parcel of land, with all the improvements thereon, covered by the aforementioned
Transfer Certificate of Title No. S-65162-Metro Manila, Book T-328, Page 162 (formerly No. 190714-Rizal, Book T-1227, Page 114).
The aforementioned CONTIGUOUS PORTION referred to in paragraph 1 hereof with an area of FIFTY EIGHT THOUSAND (58,000)
SQUARE METERS, the exact location of which is, as far as practicable, as indicated in the sketch plan, which is hereto attached as
Annex "D" and made an integral part hereof, LOT 6-B;

c. Bear and defray all costs, fees and expenses incidental to and/or connected with the segregation, survey, registration and delivery to
the FIRST PARTY of a new transfer certificate of title in the name of the FIRST PARTY, free from all liens and encumbrances, over the
afore-described parcel of land herein assigned, conveyed and transferred by the SECOND PARTY;

d. Constitute and grant and by these presents has CONSTITUTED and GRANTED without indemnity whatsoever in favor of the FIRST
PARTY and of said parcel of land to be covered by a new transfer certificate of title in the name of the FIRST PARTY with an area of
FIFTY EIGHT THOUSAND (58,000) SQUARE METERS, a permanent and perpetual RIGHT OF WAY sufficient for all the needs of said
parcel of land through out the properties already owned and/or to be acquired by the SECOND PARTY, particularly the parcels of land
covered by Transfer Certificate of Title No. 85717, Transfer Certificate of Title No. S-65161-Metro Manila, Book T-328, Page 161
(formerly No. 190703-Rizal, Book T-127, Page 113) and Transfer Certificate of Title No. S-65162-Metro Manila, Book T-328, Page 162
(formerly No. 190714-Rizal, Book T-1227, Page 114), it being understood that the right of way herein contemplated shall not be less
than TEN (10) meters in WIDTH.5
The said MOA was annotated on TCT Nos. 65161 and 65162 on March 8, 1985 pursuant to paragraph 4 thereof. The same paragraph
also granted Interbank the right to assign all its rights and interests outlined in the MOA, provided that all the obligations of Interbank
specified in the aforequoted paragraphs 2.b, 2.c and 2.d shall also bind all of its assigns, heirs and successors. Subsequently,
Interbank transferred all its rights and interests to the Las Piñas Ventures, Incorporated (or LPVI). In turn, the portion covered by TCT
No. 65161 designated as Lot Nos. 2 and 3 were acquired from LPVI by the Ayala Group of Companies (herein respondents) through a
merger between LPVI and Ayala Land, Incorporated (or ALI), in whose favor TCT Nos. T-41263 and T-41262 were issued on April 25,
1994.

Lot No. 6, then covered by TCT No. S-65162, was also subsequently transferred first to LPVI, then to ALI, and a new title, TCT No. T-
41261, was issued also on April 25, 1994. Another contiguous parcel, then covered by TCT No. 85717, was acquired by the Ayala
Group sometime in 1993, which was eventually subdivided and retitled in favor of ALI. This entire property became the site of what was
known then as "Ayala Las Piñas Subdivision." Years later, this first class residential subdivision was renamed "Ayala Southvale."

Thereafter, a dispute arose concerning the 58,000 square meter contiguous portion subject of the MOA that was to be conveyed and
transferred back to the Sabios by Interbank. Also in controversy was the permanent and perpetual right of way that Interbank was
obligated to constitute in favor of the Sabios’ 58,000 square meter portion. The Sabios were thereby constrained to institute an action
for Specific Performance and Damages against Interbank, Goldenrod Incorporated, PAL Employees Savings and Loan Association,
Incorporated or (PESALA) and the Ayala Group of Companies comprised of the Ayala Corporation, LPVI, Insular Life Assurance
Company, Ltd., Filipinas Life Assurance Company, ALI, Ayala Property Ventures, Incorporated (or APVI), and the Bank of the
Philippine Islands (or BPI). BPI was later dropped as a party-defendant.

The Regional Trial Court of Makati, Branch 64, in Civil Case No. 1854, summarized the Sabios’ claims in their complaint, thus:

Plaintiffs claimed that defendant Interbank was obligated to complete and perfect its ownership and title to the parcels of land so that
Interbank could transfer to plaintiffs the absolute ownership and title over the contiguous portion.

They also claimed that one of the commitments of defendant Interbank which induced plaintiffs to execute the agreement without which
plaintiffs would not have executed was that defendant Interbank would clear the contiguous portion of all occupants and wall-in the
same, together with the parcels of land belonging to defendants. Allegedly, the property had already been cleared, by defendant Ayala
Group, of occupants except for the contiguous portion thereof.

Plaintiffs alleged that defendants, particularly Ayala Group, failed to comply with their commitments and obligations in the MOA
specifically those arising from the abovementioned provisions thereof. Hence, plaintiffs have been prevented from utilizing for
productive purposes the land.

They further alleged that they were constrained to obtain a loan from Interbank (Exhs. E, E-1, F, F-1, G and G-1) where the contiguous
portion of the property was used as collateral (Exhs. H, H-1, I, I-1, J and J-1) and this loan is now deemed paid (Exhs. K, L, M-2, N, O,
P to P-2) and plaintiffs are now considered released. Plaintiffs claimed Actual and Compensatory damages in the amount of
P500,000.00 and Exemplary Damages in the amount of P250,000.00. 6

The defendants’ answer was summed up by the trial court as follows:

Defendants disclaimed liability. Defendants Ayala Corp., Ayala Life, ALI, APVI (collectively referred to as Ayala Group), PESALA, and
LPVI, claimed that they were not privy to the MOA, the contract from which the alleged obligations arose. In the transactions they were
each involved in, subsequent to the MOA, pursuant to which they each acquired the property which was originally transferred by the
plaintiffs to defendant Interbank, said property acquired did not include the contiguous portion which plaintiffs claimed was the subject
of non-compliance of the obligations agreed upon. On the contrary, in each transaction, the contiguous portion was expressly excluded
in the corresponding contracts (Exhs. C-1, D-2, 2-Ayala, 5-6, 2-A-PESALA), hence, plaintiffs have no cause of action against them and
even assuming that defendants were privy to the MOA, they would still have no obligation to clear the contiguous portion of the property
as there was no express or implied provision in the MOA that the party to whom the property was transferred would clear the same.7

Sometime thereafter, the defendants submitted a Notice of Confession of Judgment and Motion for Partial Decision Against Answering
Defendant for the alleged purpose of securing an entry of judgment against them while avoiding the formality, time and expense of
ordinary proceedings. In particular, the defendants confessed judgment with regard to the plaintiff spouses’ prayer emanating from the
MOA, and asked that judgment be rendered directing the defendants to comply with their obligations as defined in the pertinent
provisions of the MOA. Moreover, the defendants signified willingness to abide by the MOA, and complete and perfect title to the parcel
of land, including that portion which was to be assigned to the plaintiff spouses. With regard to that 58,000 square meter parcel, the
defendants also acknowledged the obligation to segregate that contiguous portion and deliver title thereto to the plaintiff spouses free
from liens and encumbrances.

However, the defendants also averred that fulfillment of its obligation under the MOA became impossible due to the plaintiff spouses’
own acts. First, defendants posited that they were ready to deliver the title to the 58,000 square meter parcel and had, in fact, prepared
the Deed of Conveyance8 required by the Register of Deeds, but the plaintiffs themselves refused to sign the said deed unless the
subject property was cleared of all squatters and other illegal occupants. The defendants nevertheless repudiated plaintiffs’ claim that
they (defendants) were obligated to clear the said property of all squatters and occupants, much less to fence the said property, arguing
that no such obligation was imposed in the MOA. Secondly, the defendants noted that the property in question became the subject of
an action for recovery of ownership filed by the Ledonio spouses against the Sabios. Consequently, the annotation of the notice of lis
pendens caused to be registered by the Ledonios on the titles hampered the delivery of the title covering the 58,000 square meter
portion to the Sabios.

The defendants further admitted the obligation to grant an easement of right of way under the MOA, manifesting that not only did the
defendants constitute and grant such right of way, but that they were also willing and prepared to provide an alternative choice at the
pleasure of the plaintiff spouses.9 Moreover, the mortgage obligations of the plaintiff spouses annotated on the titles covering the
58,000 square meter portion had already been paid off by the defendants,10 prompting the latter to seek a court order cancelling the
Notice of Lis Pendens and annotation of the MOA on the titles covering the subject parcel of land.

The issues having been joined, the trial court focused on the primordial matter of contention, that is: Whether or not the defendants had
the obligation to clear the subject 58,000 square meter portion of all occupants and to fence the said premises, before conveyance of
the property can be considered as full compliance with the obligation imposed upon the defendants under the MOA. The trial court also
sought to address the preliminary issue of whether or not an order directing the cancellation of the annotation of the MOA and notices
of lis pendens on the titles covering the subject property was warranted.

The trial court ruled in favor of the defendants, finding that the MOA did not impose, whether expressly or impliedly, on Interbank and its
transferees the obligation to clear the subject 58,000 square meter portion of squatters and other illegal occupants. Be that as it may,
the trial court awarded actual and exemplary damages to the plaintiff spouses for losses they incurred due to the defendants’ delay in
complying with the MOA, considering that the defendants filed their confession of judgment only after the lapse of six (6) years from the
filing of the action. More particularly, the trial court disposed as follows:

In view of the foregoing, Defendant Ayala Group is ordered to pay plaintiffs Camilo and Marlene Sabio P500,000.00 in actual damages
and P250,000.00 in exemplary damages. Plaintiffs, however, are directed to specifically comply with the obligations under the MOA by
executing a Deed of Conveyance upon payment by the defendant of the foregoing amount. The Register of Deeds is directed to cancel
the notice of lis pendens as regards this case, and the annotation of the subject Memorandum of Agreement, both of which are
annotated on TCTs Nos. T-5331 to T-5334, the TCTs covering the contiguous portion of the property.

Costs against defendant Ayala Group.11

The opposing parties filed their respective motions for reconsideration, but both were denied by the trial court. Consequently, all the
parties filed separate appeals before the Court of Appeals. Nevertheless, the trial court issued an order granting the defendants’ motion
for partial immediate execution pending appeal by directing the Register of Deeds to "immediately cancel and/or cause the cancellation
of the notice of lis pendens and other annotations as regards this case and the annotation of the Memorandum of Agreement on TCT
Nos. T-5331 to T-5334 and titles derived therefrom."12

Meanwhile, in their appeal before the Court of Appeals, the Sabios (plaintiffs-appellants) ascribed the following errors to the trial court:

I. The trial court erroneously disregarded the other provisions and parts of the MOA which could have evinced the reasons for, and the
circumstances attendant to, the execution of the said MOA.

II. The trial court erred in not finding that the defendants-appellants (Ayala Group of Companies) are obligated to perfect and complete
ownership and title to the entire property covered by TCT No. T-5331, including that portion which the defendant-appellants must
assign, convey and transfer to the plaintiffs-appellants (Sabio spouses).

III. The trial court erred in failing to appreciate the testimony of plaintiff-appellant Camilo L. Sabio to the effect that Interbank and Ayala
Investment and Development Corporation would enter into a joint venture to develop the entire parcel, including the surrounding real
estate, into a first class residential subdivision, necessitating the removal of all illegal occupants and enclosing the perimeters of the
said property with a wall that would include the 58,000 square meter portion pertaining to the Sabio spouses.

IV. The trial court erred in its interpretation of the phrase "free from all liens and encumbrances" as appearing in the MOA, by invoking
inapplicable jurisprudence when it is the intention of the parties to the MOA, in using said phrase, that should prevail.

V. The trial court erred in not finding that all eighteen (18) parcels of land, comprising what was then known as the Ayala Las Piñas
Subdivision, covered by eighteen (18) titles in the name of LPVI, are all servient estates referred to in paragraph 2.d of the MOA.

VI. The trial court erred in not ordering the defendants-appellants to cause the annotation of the easement of right of way on all
eighteen (18) titles.

VII. The trial court erred in ordering the cancellation of the annotation of the MOA and Notices of Lis Pendens on LPVI’s TCT Nos. T-
5331 to 5334.

VIII. The trial court erred in compelling the plaintiffs-appellants Sabios to sign the draft deed of conveyance when said document was a
gross violation of paragraphs 2.b, 2.c, and 2.d of the MOA.

IX. While the trial court was right in concluding that the Sabio spouses suffered damages, their losses could not be compensated as
actual damages, the same being incapable of accurate pecuniary estimation.
X. The trial court committed grave abuse of discretion amounting to lack or excess of jurisdiction in issuing the order dated September
21, 1994 directing the cancellation of the annotation of the MOA and the Notices of Lis Pendens on LPVI’s titles. 13

In contrast, the defendants-appellants merely impugned the trial court’s judgment for having awarded actual and exemplary damages to
the plaintiffs-appellants Sabio spouses, while failing to award damages in their (defendants-appellants) favor.

On April 30, 1997, the Court of Appeals rendered the decision subject of the instant petition for review, affirming with modification the
trial court’s ruling. The Court of Appeals affirmed the trial court’s conclusion that under the MOA, the Interbank and the defendants-
appellants "did not assume the obligation to clear the subject contiguous portion of the land of occupants and to wall in the
same."14 The Court of Appeals further agreed with the trial court’s ruling that since the intentions of the parties to the MOA were clearly
worded in the provisions they expressly stipulated on, there was no reason to interpret the MOA differently. 15

The Court of Appeals also rejected the Sabios’ position that the purpose and spirit of the establishment of a right of way in their favor
under paragraph 2.d was to grant them the same rights as any homeowner would have to freely pass through all the roads in the
proposed subdivision. The Court of Appeals ruled that the phrase "permanent and perpetual right of way" must be construed in its
ordinary and accepted signification, that is, to provide ingress to, and egress from, the dominant estate, as well as to provide adequate
and convenient passage to and from the nearest highway. The defendants-appellants having complied with the obligation to establish
the right of way, the Court of Appeals determined that there was no need to annotate the easement on the titles not affected by said
road right of way. In fact, while the MOA mentioned only TCT Nos. 65161 and 65162, which were later replaced by TCT Nos. 5333 and
5331, no other titles were mentioned.

Finally, while the Court of Appeals ruled that the defendants-appellants are not entitled to damages, the said court reversed the trial
court’s award of damages to the Sabios, concluding that their claim for damages, whether actual or exemplary, was unsubstantiated
and devoid of legal basis.

Hence, the Court of Appeals rendered judgment decreeing:

WHEREFORE, the judgment appealed from is AFFIRMED with the MODIFICATION that the awards for actual and exemplary damages
in favor of the plaintiffs are hereby SET ASIDE.

SO ORDERED.16

After a careful and thorough disquisition of the facts of this case and the arguments raised in this petition, we find no reversible error on
the part of the Court of Appeals. In this petition for review before us, petitioner attributed to the Court of Appeals ten (10) alleged errors:

I. The Court of Appeals acted contrary to law and jurisprudence in affirming the decision of the trial court directing the petitioners to affix
their signatures to the draft deed of conveyance (Exhibits "CC" thru "CC-4", "EEEE" thru "EEEE-4" and "4-Ayala"), and in releasing
respondents from their obligations under paragraphs 2.b, 2.c, and 2.d of the MOA. Petitioners are justified in refusing to affix their
signatures to said draft.

II. The Court of Appeals acted contrary to law and jurisprudence in affirming the ruling of the trial court that the mere execution of the
draft deed of conveyance (Exhibits "CC" thru "CC-4", "EEEE" thru "EEEE-4" and "4-Ayala") prepared sometime in January 1990 by
respondents Ayala Group of Companies, successors-in-interest of respondent The International Corporate Bank, Inc. (now Union Bank
of the Philippines), pursuant to paragraph 4 of the MOA, as second party, for the signature of the petitioners as first party, constitutes
sufficient and valid compliance with the commitment and obligation of the second party to "assign, convey and transfer unto and in favor
of the first party" the aforementioned contiguous portion --- Lot 6-B, Psu-80886 (Exhibits "A-34", "II-1", "1-A-Ayala" and "6-A-Ayala") ---
"with all the improvements thereon" as mandated by the provisions of paragraph 2.b of the MOA, despite the fact that, admittedly, said
Lot 6-B, Psu 80886 (Exhibits "A-34", "II-1", "1-A-Ayala" and "6-A-Ayala") is still in the hostile and adverse actual occupation and
possession of third parties. More so, because paragraph 2.b of the MOA mandates that respondents Ayala Group of Companies shall
assign, convey and transfer unto and in favor of the petitioners not only the aforementioned Lot 6-B, Psu 80886 (Exhibits "A-34", "II-1",
"1-A-Ayala" and "6-A-Ayala") but also "all the improvements thereon."

III. The Court of Appeals acted contrary to law and jurisprudence in utterly disregarding the import and significance of the premises or
"Whereases" of the MOA and the various annexes thereto forming integral parts thereof (Exhibits "A-6" thru "A-9", "A-10" thru "A-15",
"A-16" thru "A-22", "A-23" thru "A-26", "A-27" thru "A-30", "A-31" thru "A-33", and, "A-35" thru "A-46"), evidencing the reasons behind
and the circumstances surrounding the execution thereof, so that the court may be placed in the position/situation of the parties thereto
at the time the agreement was executed.

IV. The Court of Appeals acted contrary to law and jurisprudence in not holding that --- as expressly agreed and stipulated in paragraph
2.b of the MOA (Exhibits "A" thru "A-5" and "1-Ayala") Psu-80886 (Exhibits "A-34", "II-1", "1-A-Ayala" and "6-A-Ayala") with all the
improvements thereon, respondents Ayala Group of Companies are mandated to first "complete and perfect" their "ownership and title"
to the entirety to the afore-described Lot 6, Psu 80886 with all the improvements thereon, earlier covered by T.C.T. No. S-65162-Metro
Manila, Book T-328, Page 162, in the name of CPJ Corporation, later by T.C.T. No. T-5331-Las Piñas, Metro Manila, Book 27, Page
131 in the name of respondent Las Piñas Ventures, Inc. (Exhibits "KK" thru "KK-3" and "3-Ayala") and now covered by T.C.T. No. T-
41261-Las Piñas, Metro Manila, Book 207, Page 61 in the name of respondent Ayala Land, Inc., including the aforementioned Lot 6-B,
Psu-80886 (Exhibits "A-34", "II-1", "1-A-Ayala" and "6-A-Ayala") which respondents Ayala Group of Companies are committed and
obligated to assign, convey and transfer unto and in favor of petitioners.
V. The Court of Appeals acted contrary to law and jurisprudence in disregarding the legal effect upon paragraph IV of the second
amended and supplemental complaint dated 23 April 1990 of the confession of judgment made on 18 June 1993 and the statement
made by respondents Ayala Group of Companies on 05 November 1993 --- the first day of the hearing of the above-entitled case ---
both of which constitute judicial admissions contemplated by Section 4, Rule 129, Part IV (New Rules of Evidence) of the Rules of
Court.

VI. The Court of Appeals acted contrary to law and jurisprudence in disregarding the following intention of the parties to the MOA as
evidenced by the annexes thereto (Exhibits "A-6" thru "A-9"; "A-10" thru "A-15"; "A-16" thru "A-22"; "A-23" thru "A-26"; and "A-35" thru
"A-46") in the use of the phrase "free from all liens and encumbrances" in paragraph 2.c thereof: --- free from any and all
liens/encumbrances and/or problems of whatever kind and nature, including adverse claims, notices of lis pendens, and/or claims of
occupants/possessors who were not parties to any of the cases mentioned in the aforementioned documents referred to in the
aforementioned annexes.

VII. The Court of Appeals acted contrary to law and jurisprudence in holding that the two "roads right of way" (Exhibits "6-B" and "6-C") -
-- confined and limited to Lot 10, Psu-80886 --- then covered by T.C.T. No. 85717 and later by T.C.T. No. T-5332-Las Piñas, Metro
Manila, Book 27, Page 132 (Exhibits "LL" thru "LL-2" and "3-Ayala") in the name of respondent Las Piñas Ventures, Inc., --- proposed
by respondents Ayala Group of Companies constitute sufficient and valid compliance with the mandate of paragraph 2.d of the MOA,
and, in releasing respondents Ayala Group of Companies from their commitment and obligation of complying therewith.

VIII. The Court of Appeals acted contrary to law and jurisprudence in affirming the decision of the trial court directing the cancellation of
the annotation of the MOA and of the notices of lis pendens on the following Transfer Certificates of Title: T.C.T. No. T-5331-Las Piñas,
Metro Manila, Book 27, Page 131 (Exhibits "KK" thru "KK-3" and "3-Ayala"); T.C.T. No. T-5332-Las Piñas, Metro Manila, Book 27, Page
132 (Exhibits "LL" thru "LL-2" and "3-A-Ayala"); T.C.T. No. T-5333 (Exhibits "MM" thru "MM-2" and "3-B-Ayala"); and T.C.T. No. T-
5334-Las Piñas, Metro Manila, Book 27, Page 134 (Exhibits "NN" thru "NN-2" and "3-C-Ayala"); and, in not directing that the judgment
in the above-entitled case be annotated on all the eighteen (18) Transfer Certificates of Title covering a total of eighteen (18) parcels of
land earlier known as the "Ayala Las Piñas Subdivision" and now as "Ayala Southvale."

IX. The Court of Appeals acted contrary to law and jurisprudence in disregarding the legal effect upon paragraphs IV, XII, XIII and XIV
of the second amended and supplemental complaint dated 23 April 1990 of the confession of judgment made on 18 June 1993 by
respondents Ayala Group of Companies and their statement made on 05 November 1993 --- the first hearing of the above-entitled case
--- both of which constitute judicial admissions contemplated by Section 4, Rule 129, Part IV (New Rules of Evidence) of the Rules of
Court.

X. In affirming the order issued by the trial court on 21 September 1994, acting with grave abuse of discretion amounting to lack or
excess of jurisdiction, the Court of Appeals likewise acted with grave abuse of discretion amounting to lack or excess of jurisdiction.

We shall deal with these alleged errors, not in numerical order, but by subject matter, for clarity and better articulation of the issues
involved.

The first matter of contention is the Memorandum of Agreement (MOA) between the petitioners (spouses Sabio) and Interbank. 17 The
petitioners posit that while the MOA is explicit in requiring Interbank, and the respondents as its transferees, to complete and perfect
ownership and title to the entire estate, including improvements thereon, the court a quo and the Court of Appeals failed to compel the
respondents to abide by their commitment to assign, convey and transfer the subject 58,000 square meter portion to the petitioners free
from all liens and encumbrances.

It is their contention that the presence of illegal occupants and the existence of unauthorized improvements on the subject parcel
negates the respondents’ claim that they have completed and perfected their ownership and title over said property. The fact that the
subject parcel is possessed and occupied by squatters is a clear indication that the respondents were never in possession. Before the
respondents can assign, convey and transfer title to the subject parcel, they must also be able to place the petitioners in possession
thereof since possession is a necessary attribute of ownership. 18 Thus, for the petitioners, there must first be removal of the illegal
occupants and unauthorized structures, and the subject parcel should be walled-in before said property is transferred by the
respondents to them. Otherwise, such transfer and conveyance would be meaningless, illusory and impracticable.

The petitioners also contend that under the circumstances, any conveyance of the subject parcel by the respondents would not be "free
from all liens and encumbrances" as stipulated in paragraph 2.c of said MOA. Their premise is that the presence of squatters and
unauthorized improvements should be considered a lien or encumbrance on the subject parcel, even including such other problems as
adverse claims, notices of lis pendens, and claims of other occupants and possessors who were not parties to the cases involving the
subject parcel.

Consequently, the petitioners assail the alleged failure of the court a quo and the Court of Appeals to: (1) consider the intention of the
parties as manifested in the annexes to the MOA; and (2) to give significance to the premises and "whereas" clauses of the MOA in the
interpretation of the phrase "free from all liens and encumbrances" in paragraph 2.c of the MOA.19 These related matters concerning
the intention of the parties to the MOA, the stipulations in the annexed documents, and the interpretation of the phrase "free from all
liens and encumbrances" were earlier raised by the petitioners in their appeal before the Court of Appeals,20 advancing the same
arguments and premises already discussed in the case below.

The trial court dealt exhaustively on these issues, finding that:

However, defendant Interbank has no obligation to clear the contiguous portion of the land of occupants and to wall-in the same for
nothing in the MOA obligates Interbank to do so. Plaintiffs alleged that the clearing and walling-in of occupants was a "principal
commitment" and "inducement" without which plaintiffs would not have executed the MOA. If such were the case, a provision to that
effect should have been expressly stipulated in the MOA or at least implied therein. Plaintiff Camilo Sabio is a member of the bar who
engaged in the practice of law for over twenty years and is currently holding public office. In drafting the MOA and/or agreeing to the
stipulations in the same, a person of his stature could have been more circumspect. The occupants were already in the contiguous
portion of the property when the MOA was executed and if plaintiffs had wanted to ensure that defendant Interbank would take
responsibility for clearing the property of occupants, they could have specifically provided for it.Plaintiffs claimed that the obligation to
clear and wall-in the occupants was implied in the provisions of the MOA, "to complete and perfect ownership and title to the land and
to (transfer) to plaintiffs the contiguous portion with all improvements" and "to deliver the new TCT free from all liens and
encumbrances." This court finds that there is no implication of that sort. "If the terms of a contract are clear and leave no doubt upon the
intention of the contracting parties, the literal meaning of the stipulations shall control. If the words appear contrary to the evident
intention of the parties, the latter shall prevail over the former." (Art. 1370, Civil Code of the Philippines). The evidence does not show
that the parties had intentions other than those commonly understood from the aforementioned terms in the MOA. The plaintiffs have
failed to prove that the intention of the parties was other than that expressed by the literal meaning of the terms of the MOA.

Plaintiffs further alleged that the obligations to clear and wall-in occupants and to secure the cancellation of the Notice of Lis Pendens
regarding the case of "Ledonio v. Sabio" annotated on the TCTs of the contiguous portion of the property are included in the obligation
"to deliver the new TCT free from all liens and encumbrances," and that the obligation to clear the occupants’ shanties is deemed
included in the obligation "to complete and perfect ownership and title to the land and to transfer to plaintiffs the contiguous portion with
all improvements," the shanties being deemed included in the term "improvements." This allegation is untenable. "Words which may
have different significations shall be understood in that which is most in keeping with the nature and object of the contract" (Art. 1375,
Civil Code of the Philippines), otherwise, it is presumed the words were used in their primary and general acceptation.

Occupation by the occupants of the contiguous portion of the property is not an encumbrance which defendant Interbank is obligated to
clear the property from. The meaning of the words, "free from all encumbrance" does not include adverse possession of a third person.
(Yuson and De Guzman v. Diaz, 42 Phil. 22 1921). An adverse possession by another is not an "encumbrance" in law and does not
contradict the condition that the property be free from encumbrances; nor is it a "lien" which connotes security for a claim. Likewise, a
Notice of Lis Pendens is not a lien or encumbrance. It is a mere cautional notice to a prospective buyer or mortgagee of a parcel of land
under litigation, and cannot conceivably be the lien or encumbrance contemplated by law. (Italics ours)21

On appeal, the Court of Appeals affirmed and quoted with approval the above-stated findings and conclusion of the trial court, while
adding that:

Indeed, an assiduous examination of the MOA and its WHEREAS clauses yields no basis for a necessary inference that the Interbank
undertook to clear the 58,000 sq. m. portion to be assigned to plaintiffs of occupants/squatters, and to "wall-in" the same before turning
over the title thereto. The MOA was negotiated for more than one year (see TSN, December 3, 1993, pp. 17-19), and during the
negotiations one hundred (100) to two hundred (200) squatter families were already occupying the 58,000 sq. m. portion (TSN,
December 10, 1993, p. 15). Plaintiffs assert that unless the squatters are removed from the contiguous portion and the area is properly
walled in to make their removal effective, the predominant purpose of paragraph 2-b to transfer ownership and title without plaintiffs
having to spend a single cent would be illusory and meaningless; thus the complaint alleges that the removal of the occupants and the
walling in of the 58,000 sq. m. portion was one of the principal commitments made by Interbank which induced plaintiffs to execute the
MOA.

In light of the above circumstances, it is highly inconceivable and illogical that the plaintiffs did not insist on expressly providing the
necessary stipulations and in words that leave nothing to further interpretation. Plaintiff Sabio, a lawyer, took part personally and with
the assistance of another lawyer, in the drafting of the MOA, and the negotiations took about a year, and no reason is suggested why
he refrained from including therein specific language containing what he considers the principal commitment of the second party to
remove the squatters and wall-in the 58,000 portion to be conveyed to him. That the commitment must be implied, or inferred by
interpretation or be shown by evidence outside of the document convinces us that the plaintiffs’ expectations were an afterthought.
(Italics ours)22

It is a long-held cardinal rule that when the terms of an agreement are reduced to writing, it is deemed to contain all the terms agreed
upon and no evidence of such terms can be admitted other than the contents of the agreement itself.23 Accordingly, the trial court and
the Court of Appeals referred to no other document but the MOA itself, the stipulations of which are deemed the law between the
contracting parties. The lower courts found that nowhere in the MOA did Interbank commit to clear the subject parcel of squatters or
illegal occupants. Neither was Interbank obliged to remove whatever unauthorized improvements were introduced in the said property.
Nor is there any stipulation that would constrain the respondents to fence or wall-in the subject parcel along its perimeters. There being
no such obligation on the part of the respondents, they cannot be compelled by the courts, even on the petitioners’ adamant insistence,
to first rid the subject parcel of squatters, remove all improvements and fence the perimeter thereof, before conveyance or transfer can
be effected.

Indeed, it is not the province of the courts to amend a contract by construction, or to make a new contract for the parties by interjecting
material stipulations, or even to read into the contract words which it does not contain. 24 Since the MOA of the parties was reduced to
writing, such agreement is deemed to contain all its terms and there cannot be, between the parties and their successors-in-interest,
any evidence of the terms of the written agreement other than the contents of the agreement itself. 25

Nevertheless, petitioners invoke the "whereas" clauses of the MOA, as well as the other documents that preceded the execution of the
MOA, arguing that these will provide proof of the real intention of the parties when they executed the MOA. They strongly contend that
these documents reflect their true intentions that Interbank, and its successors-in-interest, are obligated to clear the subject parcel of
illegal occupants and structures, then fence its boundaries. At the outset, however, we note that petitioners, in their pleadings, never put
in issue the allegation that the MOA failed to express the true intent of the parties thereto. Instead, they adopt inconsistent positions in
regard to the MOA, that by itself, it is valid and binding on the parties and their successors-in-interest on the one hand, while they also
seek the court’s cognizance of extraneous documents to radically modify or add to the terms of the written agreement on the other
hand.

We have uniformly held that it is only where a party puts in issue in the pleadings the failure of the written agreement to express the
true intent of the parties thereto that said party may present evidence to modify, explain or add to the terms of the written
agreement.26 The fact that the terms of the MOA are explicit and leave no doubt as to the intention of the parties, coupled with
petitioners’ failure to contest the contract for failing to express the true intention of the parties, behooves the courts not to read into the
MOA any other intention that would contradict its apparent import,27 such that the literal meaning of its stipulations must control. 28

Be that as it may, we shall, for the sake of discussion, peruse the documents referred to by petitioners as allegedly containing the
factual and legal bases for their claim that respondents are obligated to first clear the subject parcel of all illegal occupants and
structures, and then wall-in said property before there can be fulfillment of the stipulation to assign, transfer and convey the same to
petitioners.

Going by chronological order, the first document is a Deed of Assignment 29 dated May 25, 1973 between the Ledonio spouses and
petitioners, whereby the Ledonios absolutely assigned and transferred to the Sabios three (3) parcels of land for and in consideration of
services rendered. There is no reference therein to illegal occupants, structures, and other obligations such as fencing in these
properties.

The second document dated April 14, 1980 is an Agreement 30 between the CPJ Corporation, the spouses Epifanio and Cecilia Alano,
and Trans-Resource Management and Development Corporation (or TRMDC), whereby CPJ Corporation sold to the Alanos and
TRMDC, as financier of the Alanos, three (3) parcels of property, one of which later became the subject of the MOA between Interbank
and petitioners. In the said document, the Alanos and TRMDC agreed to buy the property on an "As Is" basis, without warranty of any
kind as to title and possession on the part of the seller, CPJ Corporation. The Alanos and TRMDC thereby admitted:

full knowledge of all the legal incidents and adverse claims affecting the said properties which have been and are being asserted by
opposing parties in the pending cases/litigations involving the subject properties, i.e., LRC Cases Nos. PN-107 (LRC Rec. No. N-
30603) and N-6336 (LRC Rec. No. N-34761), and Civil Case No. 187222, of the Court of First Instance of Rizal, as well as by other
third persons not parties in the said pending cases/litigations, in respect of which the SECOND PARTY hereby agree(s) to and will
assume full and sole responsibility for the settlement or removal thereof and save free and harmless the FIRST PARTY from any and
all liability resulting and arising therefrom; x x x." 31

A related document was the Contract to Buy and Sell32 between the Alano spouses and TRMDC arising from the agreement between
CPJ Corporation, the Alanos and TRMDC. Therein, the Alanos committed to free the titles from all liens and encumbrances on or
before a certain date, but with particular reference to the "litigation of any and all cases affecting the properties, x x x especially those
cases mentioned under the Deed of Cession and Assignment dated April 14, 1980" executed by the same parties. Contrary to
petitioners’ suppositions, there is no mention of the presence and clearing of squatters from the premises as a condition. In both
documents, instead, there are definite references to the pending cases/litigations as the source of the liens and encumbrances on the
subject property, not including therein any other extrajudicial claims of ownership or possession.

The fourth contract is a Deed of Assignment with Assumption of Mortgage 33 between Gerardo and Emma Ledonio as assignors, and
the Sabio couple as assignees, executed by said parties on November 23, 1981. By the very nature of the contract, the only obligation
that the Sabios assumed from the Ledonios were those under the mortgage in favor of the Philippine National Bank. Again, there was
no mention of illegal occupants and structures, and therefore, no imposition to rid the property subject of the said mortgage of such
persons and structures.

Then, there were executed on June 28, 1984, by and between TRMDC and Interbank, the Memorandum of Agreement 34 and the
Addendum thereto.35 In the former, the property subject of this petition was among those assigned, transferred and conveyed to
Interbank (covered by TCT Nos. S-65161 and 65162), on the condition that there be settlement within one (1) year of all the attending
liens and problems enumerated as follows:

LIENS

Entry No. 67527/L.P. No. 1753: NOTICE OF LIS PENDENS: By virtue of the notice of lis pendens presented and filed by Camilo L.
Sabio, counsel for the plaintiffs, notice is hereby given that an action/petition for review has been commenced and is now pending in the
Court of First Instance of Rizal in Civil/LRC Rec. No. 19722, entitled "Gerardo G. Ledonio, et al. versus Eduardo C. Guico," involving
the property described herein.

Entry No. 69433/L.P. No. 1763: NOTICE OF LIS PENDENS: By virtue of the notice of lis pendens presented and filed by Camilo L.
Sabio, counsel for the intervenor, notice is hereby given that an action/petition for intervention has been commenced and is now
pending in the Court of First Instance of Rizal in Civil/LRC Rec. No. 657, 758, 976 entitled "E. Mayuga, F. Baltazar, et al. vs. F.
Baltazar, S. Ledonio, et al.," involving the property described herein.
Entry No. 69434/L.P. No. 1762: NOTICE OF LIS PENDENS: By virtue of the notice of lis pendens presented and filed by Camilo L.
Sabio, counsel for the plaintiff/defendants, notice is hereby given that an action/petition for review has been commenced and is now
pending in the Court of First Instance of Rizal in Civil/LRC Rec. No. 657, 758, 976 entitled "E. Mayuga, F. Baltazar, et al. versus F.
Baltazar, G. Ledonio, et al.," involving the property described herein.

Entry No. 25081/T-190713: ADVERSE CLAIM - In an affidavit duly subscribed and sworn to, the spouses EPIFANIO J. ALANO and
CECILIA P. ALANO, claim among other things, that the property described in this certificate of title is the subject of a Letter-Agreement
executed by the herein owner and the adverse claimants.

Entry No. 65120/L.P. No. 1140: LIS PENDENS: By virtue of a notice of lis pendens, presented and filed by Camilo L. Sabio, counsel for
the Respondent-Counter-Petitioners, notice is hereby given that an action has been commenced and is now pending in the Court of
First Instance of Rizal in LRC Case No. P-107, LRC Rec. No. N-30603, entitled "GERARDO G. LEDONIO, et al. versus CPJ
CORPORATION, et al.," involving the land described in this certificate of title.

Entry No. 38000/S-65161: AGREEMENT - In favor of SPS. EPIFANIO J. ALANO, SR. and CECILIA P. ALANO and TRANS-
RESOURCE MANAGEMENT & DEVELOPMENT CORPORATION, in an instrument duly executed by the herein registered owner
agrees to sell, transfer and convey unto SPS. EPIFANIO J. ALANO, SR. and CECILIA P. ALANO and TRANS-RESOURCE
MANAGEMENT & DEVELOPMENT CORPORATION for the sum of P5,250,000.00 subject to the terms and conditions set forth in Doc.
No. 133, Page No. 28, Book No. II; Series of 1980 of Notary Public for Makati, Metro Manila, Ma. Cynthia Q. Halaqueña.

Entry No. 40608/S-65161: CONTRACT TO BUY AND SELL - By virtue of an instrument duly executed by and between EPIFANIO J.
ALANO and CECILIA P. ALANO and TRANS-RESOURCE MANAGEMENT & DEVELOPMENT CORPORATION, the former have
agreed to sell unto the latter the property described herein for a total consideration of FOURTEEN MILLION FOUR HUNDRED SIXTY
SEVEN THOUSAND SEVEN HUNDRED TEN PESOS (P14,467,710.00) subject to the terms and conditions set forth in Doc. No. 148,
Page 31, Book II; Series of 1980 of Notary Public for Makati, Metro Manila, Ma. Cynthia Q. Halaqueña.36

In paragraph 2.c of the MOA, the parties stipulated that Interbank shall render full and free assistance to TRMDC in "exploring,
negotiating and consummating appropriate settlement agreements with the parties/claimants concerned, including defraying the
required cost of such settlements with view to cleaning/settling all of said liens/problems within the prescribed period," but with specific
reference to the liens and problems enumerated in the preceding paragraph. Clearly, the claims of third parties such as squatters were
not among those enumerated as liens or problems affecting the subject property. Neither was Interbank obligated under the terms of
said agreement to clear the subject property of illegal occupants, there being no specific mention of their presence therein. On the other
hand, the Addendum to the MOA between TRMDC and Interbank is a mere amendment to the computations of the principal debt and
interests of TRMDC loan with Interbank. There is nothing in said document that even touches on the subject of claims, liens and
problems affecting the property.

In furtherance of their stipulations in the MOA and Addendum thereto, TRMDC executed a Deed of Assignment 37on July 12, 1984 in
favor of Interbank involving, among others, the parcel subject of this petition. Said documents cited the MOA entered into by the same
parties, reiterating TRMDC’s undertaking "to assign, transfer and convey absolute ownership and title in fee simple" over the properties
described therein "free from any and all liens/encumbrances and/or problems of whatever kind and nature" within a specified period of
time. While the phrase, "problems of whatever kind and nature" may be broadly construed, the succeeding paragraph stressed that
TRMDC is obligated to execute a Deed of Assignment pending its accomplishment and/or compliance with its obligations under the
MOA and Addendum to the MOA. Thus, the obligations of TRMDC were effectively limited to those specifically enumerated in the two
preceding documents which, as mentioned earlier, did not include clearing the property of squatters and unauthorized structures.

Finally, the MOA between petitioners and Interbank, as previously discussed, did not make mention of squatters and illegal structures.
Neither did they stipulate that Interbank was obligated to clear the subject property of such occupants and structures, and neither did
the said MOA impose on Interbank the obligation to wall-in the subject property.

In fine, there is no factual or legal basis for petitioners’ claim that the respondents are obligated to rid the subject property of squatters
and unauthorized structures. Neither is there any provision in the cited documents that sustains petitioners’ contention. Consequently,
the court a quo and the Court of Appeals did not err in finding that respondents were not under compulsion to clear the subject property
of squatters and unauthorized structures under the MOA, inasmuch as there was no obligation to fence the perimeter of the subject
property. The terms of the MOA and the preceding contracts are clear and leave no doubt as to their meaning; hence, they cannot be
interpreted in a way that would please the petitioners, but should rather be fulfilled according to the literal sense of their stipulations.38

However, petitioners would argue that there was no necessity to make specific provisions with respect to the removal of the occupants
and structures from, and walling-in of, the subject property. To them, it was sufficient that both parties knew the actual condition of the
property. Petitioner Camilo Sabio testified to that effect, stating that the real intention or agreement of the parties was that the obligation
to complete and perfect ownership and title included the removal of all squatters and unauthorized structures, and to fence the
perimeter of the subject property.

However, the Court of Appeals correctly concluded that petitioner Camilo Sabio’s testimony in this regard cannot be taken advantage of
"to inject into the agreement any understanding which is contradictory to or at variance with the terms thereof without violating the parol
evidence rule x x x." The rule is that "when the terms of an agreement have been reduced to writing, it is considered as containing all
the terms agreed upon and there can be between the parties and their successors-in-interest, no evidence of such terms other than the
contents of the written agreement."39
There are exceptions to said rule, however, such as when:

1. There is an intrinsic ambiguity, mistake or imperfection in the writing;

2. The written agreement fails to express the true agreement and intent of the parties thereto;

3. The validity of the written agreement is in question; and

4. There exists other terms agreed by the parties or their successors-in-interest after the execution of the written agreement. 40

In the instant case, the MOA between the Sabios and Interbank was never assailed for any intrinsic ambiguity, mistake or imperfection
in the writing by any of the parties. More importantly, petitioners never alleged in any of their pleadings that the MOA failed to express
the true agreement and intent of the parties thereto. In fact, petitioner Camilo Sabio would be hard put to question the very contents of
the MOA since he admittedly participated in the drafting of the MOA with the assistance of legal counsel. 41 Even if he would belatedly
complain that the MOA did not state the true intentions of the parties, he is estopped from doing so. Indeed, the Court of Appeals noted,
it is highly inconceivable and illogical that petitioner Camilo Sabio, an experienced lawyer who personally took part in the preparation of
the MOA with the assistance of another lawyer, in the course of negotiations that lasted about a year, "did not insist on expressly
providing the necessary stipulations and in words that leave nothing to further interpretation." 42

He cannot now insist that the court should accept his bare testimony that there was a verbal understanding between the parties to the
MOA, such that there was no necessity to make specific provisions concerning the removal of illegal occupants and structures, nor
even to fence the subject parcel of land. His testimony may have been unrebutted, but unsubstantiated testimony offered as proof of
verbal agreements which tend to vary the terms of a written agreement is inadmissible under the parol evidence rule. 43

Furthermore, the validity of the MOA was never questioned. In fact, the petitioners are vigorously pursuing its execution, albeit in a
manner that departs from the stipulations contained therein. Since no fraud or mistake that would vitiate the validity of the MOA has
been alleged, parol evidence cannot be admitted to incorporate additional contemporaneous conditions which are not mentioned at all
in the written agreement.44 Neither have petitioners shown that after the execution of the MOA, the parties and their successors-in-
interest agreed to terms other than those appearing in the MOA.

In sum, there is no justification in the instant case to admit parol evidence to support the petitioners’ claims. It is a cardinal rule of
evidence, not just one of technicality but of substance, that the written document is the best evidence of its own contents. It is also a
matter of both principle and policy that when the written contract, by agreement of the parties, is established as the repository of their
stipulations, any other evidence is excluded and the same cannot be used as a substitute for such contract, nor even to alter or
contradict them. Although the parol evidence rule is inflexible, it admits of four (4) exceptions, as earlier discussed. Since none of these
exceptions was ever put in issue in the pleadings, in accordance with Rule 130, Section 9 of the Rules of Court, the parol evidence rule
must be strictly adhered to in this instant case. Therefore, the stipulations of the contract being the law between the parties, the courts
have no recourse but to enforce them as they were agreed upon and written. 45

With more reason do we agree with the findings of the Court of Appeals that the existence of squatters and unauthorized structures in
the subject property is not covered by the phrase "liens and encumbrances." The word "lien," by common acceptation, refers to a legal
claim or charge on property to secure the payment of a debt or obligation, and which may often be used interchangeably with the word
"encumbrance." We adopt this Court’s definition of the words "lien" and "encumbrance" as set forth in People v. RTC,46 and quoted in
the impugned decision of the Court of Appeals, viz:47

In People v. RTC (178 SCRA 299), the Supreme Court held that not all claims against a property can be considered a lien within the
contemplation of law; it was held:

x x x. A "lien" is a qualified right or a propriety interest, which may be exercised over the property of another. It is a right which the law
gives to have a debt satisfied out of a particular thing. It signifies a legal claim or charge on property, either real or personal, as a
collateral or security for the payment of some debt or obligation.

Similarly, an encumbrance is a burden upon land, depreciative of its value, such as lien, easement, or servitude, which, though adverse
to (the) interest of (the) landowner, does not conflict with his conveyance of (the) land in fee.

The following are considered encumbrances: A claim, lien, charge, or liability attached to and binding real property; e.g., a mortgage,
judgment lien, lease, security interest, easement or right of way, accrued and unpaid taxes. A lien is already an existing burden or
charge on the property while a notice of lis pendens, as the very term connotes, is only a notice or warning that a claim or possible
charge on the property is pending determination by the court.48

Petitioners have failed to show how squatters and unauthorized structures can fall under the definition of "liens and encumbrances."
The documents relied upon by petitioners themselves enumerate the liens and encumbrances and other claims on the subject property.
However, no such burdens on the property concerning the squatters appear in said documents. The courts cannot supply or read into
these documents words which they clearly do not contain. All things considered, the Court of Appeals did not err in concluding that the
possession of squatters or any other persons occupying the subject property without any legal right whatsoever, cannot and should not
be considered a "lien or encumbrance" as commonly defined and accepted.
The second object of contention is the Deed of Conveyance proposed by respondents, but rejected by petitioners. 49In said document,
respondents Ayala Corporation, in accordance with the pertinent provisions of the MOA between Interbank and the Sabios, stipulated
that:

WHEREAS, the FIRST PARTY had already completed the segregation of the said 58,000-square meter portion of Lot 6 (Psd–80888) in
accordance with the Bureau of Land’s approved survey plan, a copy of which is hereto attached as Annex "C". As such, the FIRST
PARTY is now in a position to comply with its obligation under Section 5 of the said Deed of Sale (Annex "B") to convey the property to
the SECOND PARTY, now described as follows:

Lot 6-B, Psd-13-008573, TCT No. T-5331

of Las Piñas Registry of Deeds

"A PARCEL OF LAND (Lot 6-B of the subdivision plan Psd-13-008573, being a portion of Lot 6, Psu-80886, (Swo-20609), LRC Record
No. 43516), situated in Barrio Almanza Dos, Las Piñas, Metro Manila. Bounded on the NW., & NE., along lines 1 to 6 by Lot 8; on the
SE., along line 6-7 by Lot 10 both of plan Psu-80886); and on the S., & W., along lines 7-8-1 by Lot 6-A of the subdivision plan. x x x
containing an area of FIFTY EIGHT THOUSAND (58,000) SQ. METERS."

NOW, THEREFORE, for and in consideration of the foregoing, the FIRST PARTY Transfers, Assigns, Cedes and Conveys unto the
SECOND PARTY the said 58,000-square-meter portion of Lot 6-B, Psd-13-008573, covered by TCT No. T-5331 of Las Piñas Registry
of Deeds and described in the above fourth WHEREAS clause.

That as part of the consideration of this Conveyance, the SECOND PARTY binds himself to file a Notice of Withdrawal of the case
entitled "Sps. Camilo and Ma. Marlene A. Ledonio vs. The International Corporate Bank, et al., docketed as Civil Case No. 18540 of the
Regional Trial Court of Makati, Branch 145.50

The Sabios, however, refused to sign said deed of conveyance on the ground that it was grossly violative of the law and the
MOA,51 more particularly arguing that:

I. Mere execution of the deed of conveyance does not constitute sufficient and valid compliance with par. 2.b of the MOA;

II. Ayala Corporation failed to "complete and perfect ownership and title" to the subject property since it was never in actual occupation,
possession, control and enjoyment of said property;

III. Under the law, symbolic delivery by mere execution of the deed of conveyance is not sufficient since actual possession, control and
enjoyment is a main attribute to ownership.

We do not agree, for the law is clear on this matter. Under Article 1498 of the Civil Code, "when the sale is made through a public
instrument, the execution thereof shall be equivalent to the delivery of the object of the contract, if from the deed the contrary does not
appear or cannot be inferred." Possession is also transferred, along with ownership thereof, to the petitioners by virtue of the deed of
conveyance.52

Parallel to our ruling in Dulay Enterprises, Inc. v. Court of Appeals,53 we find that petitioners’ contention that respondents "never
acquired ownership over the subject property since the latter was never in possession of the subject property nor was the property ever
delivered" is totally without merit. Under the aforementioned Article 1498, the mere execution of the deed of conveyance in a public
document is equivalent to the delivery of the property. Since the execution of the deed of conveyance is deemed equivalent to delivery,
prior physical delivery or possession is not legally required.

It is well-established that ownership and possession are two entirely different legal concepts. 54 Just as possession is not a definite proof
of ownership, neither is non-possession inconsistent with ownership.55 Thus, it is of no legal consequence that respondents were never
in actual possession or occupation of the subject property. They, nevertheless, perfected and completed ownership and title to the
subject property.

Notwithstanding the presence of illegal occupants on the subject property, transfer of ownership by symbolic delivery under Article 1498
can still be effected through the execution of the deed of conveyance. As we held in Power Commercial and Industrial Corp. v. Court of
Appeals,56 the key word is control, not possession, of the subject property. Considering that the deed of conveyance proposed by
respondents did not stipulate or infer that petitioners could not exercise control over said property, delivery can be effected through the
mere execution of said deed.

Petitioners, as owners, have several options. Among these, they could file ejectment suits against the occupants, or to amicably secure
the latter’s evacuation of the premises. Whatever mode petitioners choose, it signifies their control and their intention as owners "to
obtain for themselves and to terminate said occupants’ actual possession thereof." 57 It is sufficient that there are no legal impediments
to prevent petitioners from gaining physical possession of the subject property. As stated above, prior physical delivery or possession is
not legally required and the execution of the deed of sale or conveyance is deemed equivalent to delivery. This deed operates as a
formal or symbolic delivery of the property sold and authorizes the buyer or transferee to use the document as proof of ownership.
Nothing more is required.
Petitioners cannot deny that the deed of conveyance can effectively transfer ownership as it constitutes symbolic or constructive
delivery of the subject property. Neither can they negate the fact that as owners, they can exercise control over the said property.
Respondents are not obligated to remove the occupants before conveying the subject property to petitioners.

Petitioners argue that for them to have to spend to clear the subject property of illegal occupants and structures would violate par. 2.c of
the MOA, which imposed on Interbank and its successors-in-interest the burden to bear all costs, fees and expenses incidental to
segregation, survey, registration and delivery of a new title to the petitioners. It is patently clear that expenses for removal of illegal
occupants and structures are not among those listed in said paragraph 2.c. The Court of Appeals noted that the obligation to defray all
the costs and fees was connected with the delivery to petitioners of a new certificate of title, free from all liens and encumbrances. Had
the parties to the MOA intended for Interbank and its successors-in-interest to be obligated to shoulder the expense of clearing the
subject property of squatters and illegal structures, language to that effect could have easily and logically have been employed. As it
happened, petitioners omitted to include this as a condition when they drafted the MOA. If the parties thereto really intended to impose
on Interbank and its successors-in-interest the obligation to eject the squatters from the subject property and defray the cost therefor, it
should have been stated in the MOA. The terms of the MOA are so clear as to leave no room for any other interpretation. 58

There is also no truth to petitioners’ allegation that the deed of conveyance merely transferred to the Sabios all the rights and
participation of respondents over the subject property. The Deed of Conveyance clearly states that "the FIRST PARTY (respondent
Ayala Corporation) Transfers, Assigns, Cedes and Conveys unto the SECOND PARTY (Sabios) the said 58,000 square-meter portion
of Lot 6-B, Psd-13-008573, covered by TCT No. T-5331 of Las Piñas Registry of Deeds and described in the above fourth WHEREAS
clause." Thus, the deed of conveyance complied with par. 2.b of the MOA, which provided that the said property shall be assigned and
conveyed after Interbank and its successors-in-interest shall complete and perfect ownership and title to said property.

Another object of contention is the stipulated permanent and perpetual right-of-way, which under par. 2.d of the MOA shall be "sufficient
for all the needs of said parcel of land throughout the properties already owned and/or to be acquired by the SECOND PARTY"
(Interbank) particularly the parcels of land covered by TCT No. 85717, TCT No. S-65161, and TCT No. S-65162, which right-of-way
shall not be less than ten (10) meters wide." Petitioners contend that "it is the purpose and spirit of the MOA that (they) shall have the
same right to pass through the Ayala Corporation’s proposed subdivision like any other homeowner therein." 59

Respondents counter that the right-of-way it has proposed is one with a definite lane and width and which is the most convenient route
to the main access road that connects Ayala-Las Piñas to the Ayala-Alabang Road. Moreover, at petitioners’ option, respondents were
willing to provide another access road to service the subject property. 60 The proposed right-of-way is particularly described in TCT No.
T-5332, containing an area of approximately 370,868 square meters. 61

We agree with the Court of Appeals that the phrase "permanent and perpetual right of way" should be construed in its ordinary and
accepted signification, i.e., to provide ingress to and egress from the dominant estate, or to provide passage in going to the highway
from the dominant estate and back. The MOA itself does not provide that petitioners shall have free access to all the roads within the
proposed subdivision that respondents would establish on the estate. Had the parties intended that petitioners be given such access,
the same should have been incorporated in the MOA. Once again, the courts cannot read into the MOA any other intention that would
contradict the apparent agreement. The courts cannot embellish the precise stipulations of the MOA just for the convenience of
petitioners.

An easement is an abnormal restriction on respondents’ property rights, and the imposition thereof must be tempered and limited to the
ordinary needs of petitioners’ property, not to satisfy their caprices. The law requires that the right-of-way must be at the point least
prejudicial to the servient estate, and when applicable, where the distance from the dominant estate to a public highway may be the
shortest.62

While the proposed right-of-way traversed respondents’ properties, the same should not encroach into the latter’s proposed subdivision
roads. Petitioners’ access to all the subdivision roads like any homeowner therein is not a necessity and goes beyond mere
convenience on their part. Otherwise, that would be stretching the purpose and meaning of a right-of-way beyond its legal and general
acceptation. The fact is that respondents did not lack in satisfying the requirements in par. 2.d of the MOA. Instead of the minimum
width of 10 meters, the proposed right-of-way is twenty-five (25) meters wide,63 more than double the stipulated minimum width. There
is really no reason for petitioners to complain and want for more.

While this may already be moot and academic, petitioners raise the issue that respondents’ confession of judgment 64 did not deny
certain allegations contained in paragraphs IV, XII, XIII, and XIV of the former’s second amended and supplemental complaint; 65 hence,
they constitute express judicial admissions which the courts should have considered. 66

While respondents denominated their pleading as a confession of judgment, it is more in the nature of a motion for partial judgment on
the pleadings or a summary judgment. Indeed, respondents asked the court a quo to render partial judgment based on their admission
of the genuineness and contents of certain documentary evidence offered by both parties. It is clear that respondents made no
admission that would support any of petitioners’ contentions that deviate from the very stipulations in the MOA. There can be no implied
admission of allegations which are extraneous to the contents of the documents expressly admitted by respondents. Their specific
denials of certain allegations in petitioners’ complaint still stand in their answer. In fact, respondents did not state anything that would
contradict their earlier defenses and arguments already on record. It was a mere reiteration of their stand that the MOA, as worded, be
implemented literally and without further delay.

It cannot also be said that respondents are deemed to have admitted the allegations in Camilo Sabio’s testimony as to the
circumstances surrounding the execution of the MOA. As petitioners themselves noted, respondents’ counsel declared in open court
that: (a) they were "ready to agree and admit all the documentary evidence that the counsel (Atty. Sabio) has anyway enumerated in his
pre-trial brief" x x x; (b) "it’s very clear that this case could be decided based on the pleadings and documentary evidence" x x x; and (c)
"it is admitted by the defendants and we are ready to admit the documentary evidence that they’ll be presenting."67 Clearly, respondents
only admitted all the documentary evidence, not the testimonial evidence offered by petitioners.

We stated earlier that this issue is already moot and academic for the supposed judicial admissions referred to by petitioners, had they
been considered by the lower court, would not alter the outcome of this case. The lower court’s conclusions, insofar as the
implementation of the MOA is concerned, are more than amply supported by documentary evidence. Apart from those matters
expressly admitted by respondents, there can be no implied admissions which the lower court could properly recognize. Besides, as
earlier discussed, the documents themselves are the best evidence of the agreements between the parties in the absence of
compelling evidence to the contrary.

Related to the issue of the confession of judgment is petitioners’ claim for damages. The trial court found that petitioners are entitled to
P500,000.00 in actual damages and P250,000.00 in exemplary damages. On appeal, however, the Court of Appeals reversed the trial
court’s ruling, finding the awards for actual and exemplary damages in favor of petitioners unwarranted, and setting the same aside.

Petitioners have failed, in this petition, to present any persuasive proof that they are entitled to the damages awarded by the trial court.
As found by the Court of Appeals, the claim for actual damages remained unsubstantiated and unproven. It is well-settled that actual or
compensatory damages must be duly proved and proved with reasonable degree of certainty. 68 It is the fundamental principle of the law
on damages that while one injured by a breach of contract shall be awarded fair and just compensation commensurate with the loss
sustained as a consequence of the defendant’s acts or omission, a party is entitled only to such compensation for the pecuniary loss
that he has duly proven. Actual damages cannot be presumed and cannot be based on just flimsy, remote, speculative and
nonsubstantial proof.69

Petitioners also failed to establish that the delay in the implementation of the MOA was the sole responsibility of respondents. In fact, no
factual basis was presented to support the claim for not only actual or compensatory damages, but also for exemplary damages.
Petitioners failed to show that respondents acted in a wanton, fraudulent, reckless or malevolent manner that would warrant the award
of exemplary damages.70

Anent the directive to cancel the annotation of the MOA and the Notices of Lis Pendens on TCT Nos. T-5331, T-5332, T-5333 and T-
5334,71petitioners argue that the maintenance of the annotation of the MOA and the notices of lis pendens is necessary to protect their
rights should the property be sold to third persons for value. They also stress that the MOA expressly mandates the annotation of the
MOA on TCT Nos. S-65161 and S-65162.72

The Court of Appeals found that:

With respect to the annotation of the MOA, paragraph 4 of the MOA itself expressly provides that the obligations assumed under
paragraphs 2.b, 2.c and 2.d thereof (par. 2.d contains the right of way provision) shall be binding upon all the assigns, heirs and
successors of the parties, and that the MOA shall be annotated on TCT No. 65161 and TCT No. 65162, which became eventually TCT
No. 5333 and TCT No. 5331. No mention is made of the other titles to be owned and/or acquired by defendant-appellant, and the
omission cannot be supplied by construction.73

We agree. Indeed, the MOA only require that it be annotated on TCT Nos. 65161 (now 5333) and 65162 (now 5331). Thus, there
should be no reason to extend this requirement to other titles not mentioned in the MOA.

Petitioners also take exception to the refusal of the lower court to annotate the judgment in the case below on all eighteen (18) titles
covering the parcels of land comprising Ayala Southvale Subdivision. The underlying intention of petitioners is to have the easement of
right-of-way annotated on all of the titles. Respondents counter that there is no such need because the right-of-way has been
delineated and segregated and, hence, there is no reason to annotate the same on the titles that are not affected thereby.

Again, we find no merit in petitioners’ contention, especially since the easement of right-of-way as offered by respondent is more than
adequate for the needs of the subject property, and that it was properly constituted without imposing unnecessary burden on the other
properties of respondents. There can really be no justification for annotation on the titles that are not subject to the easement.

Finally, we come to the tenth and last error assigned by petitioners, i.e., that the trial court erred in ordering the cancellation of the
notice of lis pendens on TCT Nos. T-5331 to T-5334 and all titles derived therefrom. In its Resolution,74 the Court of Appeals held that:

Nevertheless, the appellant’s argument that the trial court committed grave abuse of discretion in ordering the cancellation of the
notices of lis pendens before finality of the assailed judgment in the absence of "good reasons" to justify execution pending appeal is
untenable. The order of cancellation of the notices of lis pendens was not issued by the trial court under Section 2, Rule 38 of the Rules
of Court regarding execution pending appeal which requires the existence of "good reasons", but under Section 24 of Rule 14 and
Section 77 of PD 1529 which allow the trial court to cancel notice of lis pendens even before final resolution of the case on the merits
upon finding that the notice "is for the purpose of molesting the adverse party, or that it is not necessary to protect the rights of the party
who caused it to be registered." (Italics ours)

We find no cogent reason to disturb the ruling of the Court of Appeals in this regard. In light of the foregoing discussion, the trial court
did not abuse, gravely or otherwise, its discretion when it allowed the cancellation of the annotations. Accordingly, neither did the Court
of Appeals err when it affirmed the order of the trial court on the finding that there was no longer any necessity to protect the rights of
petitioners over the titles that were either not affected by the easement or not mentioned in the MOA.

WHEREFORE, in view of all the foregoing, the instant petition for review is DENIED and the Decision of the Court of Appeals dated
April 30, 1997 in CA-G.R. CV No. 48870 is AFFIRMED in toto. No pronouncement as to costs.

SO ORDERED.

Davide, Jr., C.J. (Chairman), Puno, and Pardo, JJ., concur.

Kapunan, J., took no part being related to one of the parties.

ESCRA

2.
Masiclat, et al vs. Centeno 99 Phil. 1043 , May 31, 1956
Case Title : LUCENA MASICLAT, ET AL., petitioner, vs. NATALIA CENTENO, respondent.Case Nature : Appeal by
certiorari from the decision of the Court of Appeals reversing the judgment of the Court of First Instance of Pampanga
and awarding the rice in question to the defendant.
Docket Number: No. L-8420
Appeal by certiorari from the decision of the Court of Appeals reversing the judgment of the Court of First Instance of Pampanga and awarding the
rice in question to the defendant.

The appealed decision is correct, first, because the evidence does not clearly show the identity of the pferson who tried to buy the rice from the
respondent, and neither does it show that the same person was the one who sold the commodity to Ramon Masiclat; and, second, although a
cojitraet of sale is perfected upon the parties having agreed as to the thing which is the subject matter of the contract and the price (Warner,
Barnes & Co. vs. Inza, 43 Phil., 505; Article 1475, Civil Code), ownership is not considered transmitted until the property is actually delivered and
the purchaser has taken possession thereof and has paid the price agreed upon (Roman vs. Grimalt, 6 Phil., 96; Article 1524, Civil Code).

Judgment appealed from affirmed, without pronouncement as to costs. Paras, C. J.y ponente. Masiclat, et al vs. Centeno, 99 Phil. 1043, No. L-8420
May 31, 1956

1.
Sabio vs. International Corporate Bank, Inc. 364 SCRA 385 , September 04, 2001
Case Title : SPOUSES CAMILO L. SABIO, and MA. MARLENE A. LEDONIOSABIO, petitioners, vs. THE INTERNATIONAL
CORPORATE BANK, INC. (now UNION BANK OF THE PHILIPPINES), GOLDENROD, INC., PAL EMPLOYEES SAVINGS
AND LOAN ASSOCIATION, INC., AYALA CORPORATION, LAS PINAS VENTURES, INC., FILIPINAS LIFE ASSURANCE
COMPANY (now AYALA LIFE ASSURANCE, INC.), AYALA PROPERTY VENTURES CORPORATION, and AYALA LAND, INC.,
respondents.Case Nature : PETITION for review on certiorari of a decision of the Court of Appeals.
Syllabi Class : Statutory Construction|Remedial Law|Civil Law|Evidence|Parol
Evidence|Property|Sale|Easement|Damages
Syllabi:
1. Statutory Construction; When the terms of an agreement are reduced to writing, it is deemed to contain all the
terms agreed upon and no evi-dence of such terms can be admitted other than the contents of the agreement itself.+
2. Statutory Construction; It is not the province of the courts to amend a contract by construction, or to make a
new contract for the parties by interjeting material stipulations, or even to read into the contract words which it does
not contain.+
3. Statutory Construction; It is only where a party puts in issue in the pleadings the failure of the written
agreement to express the true intent of the parties thereto that said party may present evidence to modify, explain or
add to the terms of the written agreement.+
4. Remedial Law; Evidence; Parol Evidence; It is a cardinal rule of evidence, not just one of technicality but of
substance, that the written document is the best evidence of its own contents.+
5. Civil Law; Property; Sale; Under Article 1498, the mere execution of the deed of conveyance in a public
document is equivalent to the delivery of the property.+
6. Civil Law; Property; Easement; The law requires that the right-of-way must be at the point least prejudicial to
the servient estate, and when applicable, where the distance from the dominant estate to a public highway may be
the shortest.+
7. Civil Law; Damages; It is well-settled that actual or compensatory damages must be duly proved and proved with
reasonable degree of certainty; A party is entitled only to such compensation for the pecuniary loss that he has duly
proven.+

Division: FIRST DIVISION

Docket Number: G.R. No. 132709

Counsel: Camilo L. Sabio, Macalino and Associates, Fernandez, Pacheco & Dizon Law Offices, Acosta & Corvera Law
Offices

Ponente: YNARES-SANTIAGO

Dispositive Portion:
WHEREFORE, in view of all the foregoing, the instant petition for review is DENIED and the Decision of the Court of
Appeals dated April 30, 1997 in CA-G.R. CV No. 48870 is AFFIRMED in toto. No pronouncement as to costs.

1.
Kuenzle & Streiff vs. Macke & Chandler. 14 Phil. 610 , December 16, 1909
Case Title : KUENZLE & STREIFF, plaintiff and appellant, vs. MACKE & CHANDLER ET AL., defendants and
appellees.Case Nature : APPEAL from a judgment of the Court of First Instance of Manila. Gilbert, J.
Syllabi Class : ID.|PRIVATE BILL OF SALE
Syllabi:
1. ID.; PRIVATE BILL OF SALE; THIRD PARTIES.+

Docket Number: No. 5295

Counsel: Hartigan & Rohde, O'Brien & De Witt

Ponente: MORELAND

1.
Addison vs. Felix and Tioco. 38 Phil. 404 , August 03, 1918
Case Title : A. A. ADDISON, plaintiff and appellant, vs. MARCIANA FELIX and BALBINO Tioco, defendants and
appellees.Case Nature : APPEAL from a judgment of the Court of First Instance of Manila. Ostrand, J.
Syllabi Class : VENDOR AND PURCHASER|DELIVERY
Syllabi:
1. VENDOR AND PURCHASER; DELIVERY; EXECUTION OF PUBLIC INSTRUMENT.+
2. VENDOR AND PURCHASER; DELIVERY; RESCISSION.+

Docket Number: No. 12342

Counsel: Thos. D. Aitken, Modesto Reyes, Eliseo Ymzon

Ponente: FISHER

Dispositive Portion:
It is therefore held that the contract of purchase and sale entered into by and between the plaintiff and the defendant
on June 11,1914, is rescinded, and the plaintiff is ordered to make restitution of the sum of P3,000 received by him
on account of the price of the sale, together with interest thereon at the legal rate of 6 per cent per annum from the
date of the filing of the complaint until payment, with the costs of both instances against the appellant. So ordered.

1.SALE OF PERSONAL PROPERTY WITHOUT DELIVERY.—The ownership of personal property can not be transferred to the prejudice of third persons
except by delivery of the property itself, and a sale without such delivery gives the would-be purchaser no rights in said property except those of a
creditor.
2.ID.; PRIVATE BILL OF SALE; THIRD PARTIES.—A bill of sale of personal property, executed as a private document and unrecorded, the property
described in said instrument not having been delivered but remaining exclusively in possession of the vendor, can have no effect against a person
dealing with the property upon the faith of appearances.

APPEAL from a judgment of the Court of First Instance of Manila. Gilbert, J.

The facts are stated in the opinion of the court.

This is an action brought by the plaintiff to recover of the defendants the sum of 1,000 pesos, the value of certain personal property, constituting a
saloon bar, furniture, furnishings, and fixtures. The plaintiff alleges that on or about the month of January, 1907, it was the owner of the Oregon
Saloon in Cavite, Province of Cavite, consisting of bar, furniture, furnishings, and fixtures, of the value of 1,000 pesos; that during the said month of
January, 1907, the defendant Jose Desiderio, as sheriff, levied upon such property by virtue of an execution issued upon a judgment secured by the
defendant Macke & Chandler, against Stanley & Krippendorf; that said plaintiff notified the sheriff, in the manner provided by law, that it was the
owner of said goods and forbade the sale thereof under said execution; that, notwithstanding such claim upon the part of the plaintiff, the said
sheriff sold said goods under said execution; that said firm of Macke & Chandler was the purchaser of said goods and the same were delivered to it;
that the defendants Bachrach, Elser, and Gale, were the sureties upon the bond given to the sheriff by Macke & Chandler before said goods were
sold. The defendants in this case allege that the property described by the plaintiff and sold at the execution sale referred to was not the property
of the plaintiff at the time of said levy and sale, but was the property of Stanley & Krippendorf, who were in possession of the same at the time of
such levy. They further allege that during the month of January, 1907, the said Stanley & Krippendorf, being indebted in a considerable sum to the
plaintiff in this case, attempted to sell to the said plaintiff by an instrument in writing the property in question; that said instrument was never
recorded; that said instrument was a private document; that the said property was not delivered to the plaintiff under said -sale but that said
property remained from the time of said sale forward in the exclusive possession and control of said Stanley & Krippendorf, and that they
conducted the business subsequent to the execution of said instrument exactly as they had prior thereto—in their own name—purchasing goods
and paying therefor without reference to the plaintiff in this case.

The facts in relation to the manner and method in and by which the plaintiff obtained its alleged title to the goods in question and the fact of
continued possession by Stanley & Krippendorf, as set forth by the defendants, are substantially admitted in this case.

The question to be determined is the effect which the said instrument of sale had, if any, in transferring the property in question from Stanley &
Krippendorf to the plaintiff.

The case of the Fidelity and Deposit Company against Wilson (8 Phil. Rep., 51) lays down a doctrine which we think is decisive of this case. In that
case it was held that the ownership of personal property can not be transferred to the prejudice of third persons except by delivery of the property
itself; and that a sale without delivery gives the would-be purchaser no rights in" said property except those of a creditor. The bill of sale in the case
at bar, under the circumstances of this case, could have no effect against a person dealing with the property upon the faith of appearances. The
case of Kuenzle & Streiff against A. S. Watson & Co. (7 Off. Gaz., 425),1 cited by the appellant in its brief, does not sustain its contention. That was a
case of the sale of property upon the condition that the title thereto should remain in the vendor until the purchase price thereof should be fully
paid, and that, in case of nonpayment of the debt or of any installment thereof when due, the vendor would have a right to take possession of the
property and deal with it as provided for in the contract. In that case the court held that such a contract for the conditional sale of goods was valid
in these Islands between the parties thereto, and was valid also as to third persons, provided possession of the property therein described was
taken by the vendor before the rights of third persons intervened against the same. In the case at bar it is evident that the bill of sale, so called, was
in no sense a conditional sale of property, such as is described in the case of Kuenzle & Streiff against A. S. Watson & Co., and the principles
applicable thereto are entirely inapplicable in the case at bar. Moreover, possession of the property in suit was not taken at any time by the
plaintiff.

The defendant Macke & Chandler, having purchased the property at an execution sale, properly conducted, obtained a good title to the property in
question as against the plaintiff in this case.

The judgment of the court below is, therefore, affirmed, with costs against the appellant. So ordered.

Arellano, C. J., Torres, Johnson, and Carson, JJ., concur.

Judgment affirmed.
2.
Marella vs. Reyes and Paterno. 12 Phil., 1 , November 10, 1908
Case Title : GLICERIA MARELLA, plaintiff and appellant, vs. VICENTE REYES, administrator of the intestate estate of
Filomeno Encarnación, and JOSE T. PATERNO, defendants and appellees.Case Nature : APPEAL from a judgment of
the Court of First Instance of Batangas. Powell, J.
Docket Number: No. 4389

Counsel: Vicente Ilustre, Grabriel & Borbon

Dispositive Portion:
The judgment of the Court of First Instance is hereby reversed without the costs of this instance. So ordered.

1.ESTATES, INTERVENTION ON MOTION.—Intervention, as a defendant, may be permitted in an action upon motion and without a cross-complaint,
following Behn, Meyer '& Co. vs. Banco Español-Filipino (11 Phil. Rep., 253)

2.ID. , ORAL CONTRACT FOR CONVEYANCE OF REALTY , CIVIL CODE.—A contract, made before the Code of Civil Procedure, between a deceased
person and his wife on the one part, and the plaintiff on the other, involving real estate and not in writing, held valid, and that the delivery of the
title deeds of the property was equivalent to the delivery of the property itself, which should therefore have been excluded from the inventory of
the estate. (Arts. 1280 and 1464, Civil Code; Soriano vs. Cortes, 8 Phil. Rep., 459; Guerrero vs. Miguel, 10 Phil. Rep., 52.)

3.PLEADING AND PRACTICE; INCOMPETENT WITNESS, OBJECTION, WAIVER.—The acceptance of an incompetent witness in a civil suit, as well as
the allowance of improper questions that may be put to him while on the stand, is a matter within the discretion of the opposing litigant, who may
assert his right by timely objection or he may waive it. Failure to object operates as a waiver. Once admitted, the testimony is in the case for what it
is worth, and the judge has no power to disregard it for the sole reason that it could have been excluded if objected to, nor can he strike it out on
his own motion.

APPEAL from a judgment of the Court of First Instance of Batangas. Powell, J.

The facts are stated in the opinion of the court.

TRACEY, J.:

In the inventory of the estate of Filomeno Encarnación there were included the four parcels of land which are the subject of this action, which is
brought against his administrator to have them excluded from the inventory as being the property of the plaintiff. The administrator did not
oppose the relief asked for, but Jose T. Paterno, who was a creditor of the deceased for a claim allowed by the commissioners in the amount of
P51,595.02, made two motions—one to be substituted in the administrator's place as defendant, and the other to be allowed to intervene as a
codefendant. The intervention was allowed and judgment was rendered in the Court of First Instance of Batangas adverse to the plaintiff.

The case presents two questions. First, was the intervention proper? Second, should the real property claimed by the plaintiff have been excluded
from the inventory?

The appellant attacks the procedure for intervention, which was merely upon motion and not by a cross-complaint, as apparently required by a
literal reading of section 121 of the Code of Civil Procedure.

Since the decision by this court of the case of Behn, Meyer & Co. vs. Banco Español-Filipino,1 on September 9,1908, where it appears from the
record, as it may be inferred from the decision a similar procedure was sustained, it must be understood that this court allows such an
intervention, accepting, in the case of a defendant who unites in the defense, an answer instead of a complaint in accordance with the nature of
the remedy, rather than with the literal wording of the section.

The intervener did not lose the benefit of the order of intervention by reason of his subsequent motion to be substituted, which was properly
denied.

In refusing to order the exclusion of this land from the inventory, the judge based his decision largely upon the rejection of what he considered
decisive testimony given by the plaintiff in person. She presented herself at the trial as a witness, was sworn, examined and cross-examined
without objection as to her competency, nor does that question appear to have been raised until stated by the judge in his decision. He says: "The
evidence given by the plaintiff in this suit can not be considered. (See subdivision 7 of section 383, Act No. 190.) All of the acts sworn to by her took
place before the death of Filomeno Encarnación, and the fact that his wife was present and is still living is not sufficient to render the plaintiff a
competent witness, because it has not been shown that the widow of the deceased herself took part in the liquidation of accounts or was a party
to the transaction, inasmuch as the money which the plaintiff lent she lent to the deceased and not his wife, Andrea Goco."

The section cited from the Code of Civil Procedure reads as follows:

"SEC. 383. * * *

"7. Parties or assignors of parties to an action or proceeding, or persons in whose behalf an action or proceeding is prosecuted, against an executor
or administrator or other representative of a deceased person, or against a person of unsound mind, upon a claim or demand against the estate of
such deceased person or against such person of unsound mind, can not testify as to any matter of fact occurring before the death of such deceased
person or before such person became of unsound mind."

Had the opposing party interposed an objection to this witness on the ground of incompetency, her testimony could not have been received. His
omission to object to her operated as a waiver. The acceptance of an incompetent witness to testify in a civil suit, as well as the allowance of
improper questions that may be put to him while on the stand is a matter resting in the discretion of the litigant. He may assert his right by timely
objection or he may waive it, either expressly or by silence. In any case the option rests with him. Once admitted, the testimony is in the case for
what it is worth and the judge has no power to disregard it for the sole reason that it could have been excluded, if it had been objected to, nor to
strike it out on his own motion. The disqualification of witnesses found in rules of evidence of this character, is one not founded on public policy
but for the protection and convenience of litigants, and which consequently lies within their control.

Filomeno Encarnación died in 1901. The plaintiff testified that on different occasions she lent him money and that in 1898 he and his wife, Andrea
Goco, stated their account with her, resulting in a balance in her favor, which they promised to pay and as a guaranty of payment to give her their
title papers consisting of a possessory information; that in 1899 they came to her house saying that as they had no money to pay their debt, it
would be better that she should take the land therefor, permitting them, however, to continue cultivating it, upon the condition that after
deducting the working expenses, one-half of the crop should go to her; that this was an oral agreement, not reduced to writing on account of the
confusion of the revolution and war with the United States; that thereafter on demanding her one-half of the product of the land, Andrea Goco
told her that there had been no crops owing to the impossibility of farming, on account of the death of their animals; and that, thereafter Andrea
Goco, then a widow, stated the case to the administrator, to whom and. to the commissioners, the plaintiff presented her claim, showing a balance
in her favor of P1,814. She also produced before them the possessory information in the name of the deceased. Her testimony is corroborated and,
indeed, her contention is substantially proved independently of what she said, by her brother, Juan Goco, and Aguedo Cebrera, and is confirmed by
Emiliano Encarnación, who stated that when as a creditor he demanded of the widow of the deceased the title papers of the land for use in court,
she replied that she did not have them for the reason that she had delivered them to the plaintiff as guaranty of a debt which she and her husband
had owed her and that she made no claim to this land.

Upon the authority of cases heretofore decided in this court, we hold that the contract made between the deceased and his wife, on one part, and
the plaintiff on the other, although not in writing, was valid, and that the delivery of the title deeds of the property was equivalent in its effect to a
delivery of the property itself. (Civil Code, arts. 1280 and 1464; Soriano vs. Cortes, 8 Phil. Rep., 459; Guerrero vs. Miguel, 10 Phil. Rep., 52.)

Consequently the land should have been excluded from the inventory and the plaintiff should have her relief.

The judgment of the Court of First Instance is hereby reversed without the costs of this instance. So ordered.

Arellano, C. J., Torres, Mapa, Carson, and Willard, JJ., concur.

Judgment reversed. Marella vs. Reyes and Paterno., 12 Phil., 1, No. 4389 November 10, 1908
1.
Tablante vs. Aquino. 28 Phil. 35 , September 18, 1914
Case Title : BARTOLOME TABLANTE, plaintiff and appellee, vs. JOSE AQUINO, defendant and appellant.Case
Nature : APPEAL from a judgment of the Court of First Instance of Nueva Ecija. Gale, J.
Syllabi Class : EJECTMENT|EVIDENCE|PROOF OF TITLE
Syllabi:
1. EJECTMENT; EVIDENCE; PROOF OF TITLE; DELIVERY OF DEED OF SALE.+

Docket Number: No. 8675

Counsel: Fermin Mariano, Monico R. Mercado

Ponente: ARELLANO

Dispositive Portion:
Therefore, after first declaring the sale made by the sheriff, together with the subsequent ones, to be null and void,
we declare Bartolome Tablante to be the owner of the lot and warehouse described in the complaint, and the
defendant, Jose Aquino, is sentenced to restore them to the plaintiff, without special finding as to costs of both
instances, affirming the judgment appealed from in so far as it is in agreement with this decision and reversing it in so
far as it is not.

EJECTMENT; EVIDENCE; PROOF OF TITLE; DELIVERY OF DEED OF SALE.—Failure to furnish proof of the consummation of a sale or of the delivery of
a thing sold, the origin of the transfer of "ownership, will not defeat an action for the recovery of possession in the form of intervention under
claim of ownership; the law prescribes that the placing of the titles of ownership in the possession of the vendee or the use which he may make of
his right with the consent of the vendor shall be considered as a delivery. (Art. 1464, Civil Code.)

APPEAL from a judgment of the Court of First Instance of Nueva Ecija. Gale, J.

The facts are stated in the opinion of the court.

This case involves a claim of intervention under title of ownership for the recovery of possession of a lot and a warehouse erected thereon which
were sold at public auction by the sheriff of Nueva Ecija as though they were the property of Paulino Mendiola, which, according to the
plaintiffintervener, they are not.

The facts that occurred are the following:

On May 9, 1904, the said sheriff publicly announced that on June 2 of the same year he would sell at public auction, pursuant to a judgment
rendered by the justice of the peace of Cabanatuan against Paulino Mendiola and his property, a lot and a warehouse situated in Sumacab of the
said municipality. The description of the property is given in the notice and corresponds with that contained in the complaint; it is therefore
regarded as correct and here reproduced, for there is no question as to the identity of the property then sold and now demanded (Exhibit 4). At the
auction Emilio Vergara was the highest bidder and the lot and warehouse were knocked down to him. This was on June 2, 1904, the date
announced for the sale (Exhibit 6). On February 10, 1906, Emilio Vergara sold the said lot and warehouse acquired at auction to Maria Romares
(Exhibit 5); and the latter, in turn, sold them, on December 29, 1910, to Jose Aquino, their present possessor (Exhibit 7). From Exhibits 1 and 2 it is
seen that in 1906 the lot was still assessed as being the property of Paulino Mendiola.

The record in this case shows the following evident facts; (1) That as far back as 1895 the said lot was recorded in the property registry of Nueva
Ecija in the name of the spouses Marcelino Gatchalian and Ciriaca Pascual, its owners, who, on December 18, 1894, had conferred upon Mateo del
Rosario power to administer their property and especially to sell it, and, in the exercise of this authority, Mateo del Rosario sold the lot and
warehouse in question to Paulino Mendiola who in turn sold them to Ciriaco Bautista on August 13, 1895, all of which sales were recorded in the
said property registry. (2) That Paulino Mendiola, notwithstanding the sale made to Ciriaco Bautista, continued in the possession of the lot and
warehouse. pursuant to a contract of lease executed between himself and the latter. Hence, in 1904, when the judgment of the justice of the
peace of Cabanatuan was rendered against Mendiola, the said property was attached as though it still at that time belonged to him.

However, it is not Ciriaco Bautista, the last owner recorded in the registry, but Bartolome Tablante who now intervenes for the recovery of the said
property. The latter averred in his complaint that he purchased it from the former and presented as the only proof of such purchase his Exhibit B,
which is a letter addressed to him by Ciriaco Bautista, couched in the following terms:
"CONCEPCION, July 6 , 1908.

"Mr. BARTOLOME TABLANTE.

"DEAR SIR: I have taken note of the contents of your letter to Captain Blas relative to the Sumacab warehouse. I would inform you that this
warehouse belongs exclusively to me, as you will see by the title deed that you already have. I have sold it to no one else but you, nor have I, as
regards this warehouse, any agent or authorized representative except Captain Blas, whom I have entrusted to deliver the title deed to you.
Paulino Mendiola begged me to lease to him only the said warehouse, at P100 per annum; but he has not fulfilled his promise and a long time has
elapsed since he gave up the warehouse. I hereby grant you full power to do whatever you please with the warehouse as well as with the land on
which it stands * * *.

(Signed) "CIRIACO BAUTISTA."

With this proof and the titles aforementioned presented by the plaintiff, Exhibit A, the Court of First Instance of Nueva Ecija rendered judgment in
the case "by sentencing Jose Aquino to deliver to the plaintiff, Bartolome Tablante, the property in litigation and to pay to the said plaintiff the sum
of P387.50 with interest thereon at the rate of 6 per cent per annum from this date, and to pay the costs of this suit."

The defendant appealed to this court and made the following assignments of error: (1) The trial court erred in finding that the plaintiff is the owner
of the real properties in question; (2) the court erred in finding that the defendant's possession was held in bad faith; and (3) the court erred in
holding that the latter was liable for losses and damages and in sentencing him to the payment of the sum aforesaid with interest at 6 per cent per
annum from the date of the sentence, and the costs.

The last two assignments of error must of course be sustained. The defendant was a possessor in good faith. "Any person who is not aware that
there is in his title or in the manner of acquiring it any flaw invalidating the same shall be considered a possessor in good faith." (Civil Code, art.
433.) "Good faith is always presumed, and any person alleging bad faith on the part of the possessor is obliged to prove it." (Civil Code, art 434.)
The plaintiff could not have averred, nor did he aver in his complaint that the defendant was a possessor in bad faith, and if he had made such a
claim he neither produced nor attempted to produce any proof whatever of possession in bad faith on the part of the defendant and his
predecessors. Consequently, the finding of possession in bad faith and the award of damages contained in the judgment appealed from are entirely
unfounded.

With respect to the first assignment of error, strictly speaking it also should be sustained, inasmuch as the recovery of possession was decreed in
the judgment without having first set aside the sales consecutively made by the sheriff to Emilio Vergara, by Vergara to Maria Romares, and by
Romares to Jose Aquino, and without any previous pronouncement, made upon petition of one of the parties, that such sales were null and void.
However, since an order to this effect may virtually be understood to be included in the recognition of ownership in the plaintiff, this first
assignment of error will be examined only in connection with the ground upon which it was specified by the appellant.

This ground is no other than the averment that it was not proved at the trial that the sale, though consented to by Ciriaco Bautista in favor of
Bartolome Tablante, was at any time consummated through the tradition or delivery of the thing sold. In fact, the ownership of things is not
transferred from one person to another by mere consent in the contract, but through the delivery of the thing that is the subject of the contract. In
the present case, it is admitted by the appellee that there was no material delivery of the lot and warehouse by Ciriaco Bautista to Bartolome
Tablante, as up to now no proof has been presented of a contract of sale made between Bautista and Tablante.

Nevertheless, the law prescribes that "the placing of the titles of ownership in the possession of the vendee or the use which he may make of his
right with the consent of the vendor shall be considered as a delivery." (Civil Code, art. 1464.) The title deeds form the plaintiff's Exhibit A, and the
use of his right by the purchaser who in his complaint lays claim to the lot and the warehouse, appear to have been consented to by the vendor, by
means of the afore-mentioned Exhibit B. It is the same as though Ciriaco Bautista were the intervener, and if he had been, there would have been
no cause for discussion.
Therefore, after first declaring the sale made by the sheriff, together with the subsequent ones, to be null and void, we declare Bartolome Tablante
to be the owner of the lot and warehouse described in the complaint, and the defendant, Jose Aquino, is sentenced to restore them to the plaintiff,
without special finding as to costs of both instances, affirming the judgment appealed from in so far as it is in agreement with this decision and
reversing it in so far as it is not.

Torres, Johnson, Carson, Moreland, and Araullo, JJ., concur.

Judgment modified. Tablante vs. Aquino., 28 Phil. 35, No. 8675 September 18, 1914

1.
Butuan Sawmill, Inc. vs. Court of Tax Appeals, et al. 16 SCRA 277 , February 28, 1966
Case Title : BUTUAN SAWMILL, INC., petitioner, vs. HON. COURT OF TAX APPEALS, ET AL., respondents.Case
Nature : PETITION for review by certiorari of a decision of the Court of Tax Appeals.
Syllabi Class : Taxation|Sales tax|Prescription
Syllabi:
1. Taxation; Sales tax; Sale of logs “F.O.B., Agusan”.+
2. Taxation; Title to goods deliverable to order of seller or his agent may pass upon delivery to the carrier.+
3. Taxation; Prescription; Income tax return is not deemed a return for sales tax purposes.+

Docket Number: No. L-20601

Counsel: David G. Nitafan, Solicitor General

Ponente: REYES

Dispositive Portion:
Wherefore, the decision appealed from should be, as it is hereby affirmed, with costs against petitioner.
Taxation; Sales tax; Sale of logs “F.O.B., Agusan”.—Petitioner sold logs to Japanese firms at prices FOB Agusan. The FOB feature of the sales
indicated that the parties intended the title to pass to the buyer upon delivery of the logs in Agusan on board the vessels that took the goods to
Japan. The sales being domestic or local, they are subject to sales tax under Section 186 of the Tax Code, as amended.

Same; Title to goods deliverable to order of seller or his agent may pass upon delivery to the carrier.—The specification in the bill of lading that the
goods are deliverable to the order of the seller or his agent does not necessarily negative the passing of title to the goods upon delivery to the
carrier. (Art. 1503, New Civil Code).

Same; Prescription; Income tax return is not deemed a return for sales tax purposes.—For purposes of computing the period of prescription under
Section 331 of the Tax Code, an income tax return cannot be considered as a return for compensating tax or sales tax purposes. The taxpayer must
file a return for the particular tax required by law in order to avail himself of the benefits of the law. If he does not file such a return, an assessment
may be made within ten (10) years from and after the discovery of the omission to file the return. (Section 332[a] of the Tax Code; Cf. Bisaya Land
Transportation Co., Inc. vs. Collector of Internal Revenue and Collector of Internal Revenue vs. Bisaya Land Transportation Co., Inc., G.R. Nos. L-
12100 & L-11812, May 29, 1959.)

Tax Court.—In petitions to review decisions of the Tax Court only legal questions may be raised and passed upon by the Supreme Court (Gutierrez
vs. Court of Tax Appeals, 101 Phil. 713; Sanchez vs. Commissioner of Customs, 102 Phil. 37).

PETITION for review by certiorari of a decision of the Court of Tax Appeals.

The facts are stated in the opinion of the Court.

David G. Nitafan for the petitioner.

 Solicitor General for the respondents.

REYES, J.B.L., J.:

Appeal from a decision of the Court of Tax Appeals, in its CTA Case No. 965, ordering petitioner herein, Bu-tuan Sawmill, Inc., to pay respondent
Commissioner of Internal Revenue the sum of P36,107.74 as deficiency sales tax and surcharge due on its sales of logs to buyers in Japan from
January 31, 1951 to June 8, 1953.

The facts, as found and stated by the lower court in its decision, are in full accord with the evidences presented therein; hence, we quote them
hereunder:

“x x x that during the period from January 31, 1951 to June 8, 1953, it sold logs to Japanese firms at prices FOB Vessel Magallanes, Agusan (in some
cases FOB Vessel, Nasipit, also in Agusan); that the FOB prices included costs of loading, wharfage stevedoring and other costs in the Philippines;
that the quality, quantity and measurement specifications of the logs were certified fry the Bureau of Forestry that the freight was paid by the
Japanese buyers; and the payments of the logs were effected by means of irrevocable letters of credit in favor of petitioner and payable through
the Philippine National Bank or any other bank named by it.

“Upon investigation by the Bureau of Internal Revenue, it was ascertained that no sales tax return was filed by the petitioner and neither did it pay
the corresponding tax on the sales. On the basis of agent Antonio Mole’s report dated September 17, 1957, respondent, on August 27, 1958,
determined against petitioner the sum of P40,004.01 representing sales tax, surcharge and compromise penalty on its sales [tax, surcharge and
compromise penalty on its sales] of logs from January 1951 to June 1953 pursuant to Sections 183, 186 and 209 of the National Internal Revenue
Code (Exhibit “E”, p. 14, CTA rec. & p. 14, BIR rec). And in consequence of a reinvestigation, respondent, on November 6, 1958, amended the
amount of the previous assessment to P38,917.74 (Exh. “F”, p. 52, BIR rec). Subsequent requests for reconsideration of the amended assessment
having been denied (Exh. “G”, p. 55, BIR rec; Exh. “H”, pp. 75-76, BIR rec: Exh. “I”, pp. 79-80, BIR rec; Exh. “J”, p. 81, BIR rec), petitioner filed the
instant petition for review on November 7, 1960.”

On the bases of the above-quoted findings and circumstances, the lower court upheld the legality and correctness of the amended assessment of
the sales tax and surcharge, ruling that the sales in question, in the light of our previous decisions1, were domestic or “local” sales, and, therefore,
subject to sales tax under the provision of section 186 of the Tax Code, as amended by Republic Acts Nos. 558 and 594; and that the assessment
thereof was made well within the ten-year period prescribed by Section 332 (a) of the same Code, since petitioner herein omitted to file its sales
tax returns for the years 1951, 1952 and 1953, and this omission was discovered only

________________

1 Taligaman Lumber Co., Inc vs. Collector of Internal Revenue, L-15716, March 31, 1962; Bislig Bay Lumber Co., Inc. vs. Collector of Internal
Revenue, L-13186, January 28, 1961; Western Mindanao Development Lumber Co., Inc. vs. CTA, et al., L-11710, June 30, 1958; and Misamis Lumber
Co., Inc. vs. Collector of Internal Revenue, L-10131, September 30, 1957; 56 O.G. 517. on September 17, 1957. The imposition of the compromise
penalty was, however, eliminated therefrom for want of agreement between the taxpayer and the Collector (now Commissioner) of Internal
Revenue. A motion to reconsider said decision having been denied, petitioner herein interposed the present appeal before this Court.

The issues presented in this appeal are: whether or not petitioner herein is liable to pay the 5% sales tax as then prescribed by Section 186 of the
Tax Code on its sales of logs to the Japanese buyers; and whether or not the assessment thereof was made within the prescriptive period provided
by law therefor.

On the first issue, petitioner herein insists that the circumstances enumerated in the above finding, which this Court had, in previous decisions (Cf.
footnote [1]), considered as determinative of the place of transfer of ownership of the logs sold, for purposes of taxation, are not in themselves
evidentiary indications to show that the parties intended the title of the logs to pass to the Jap-anese buyers in Japan. Thus, it points out that the
“FOB” feature of the sales contract was made only to fix its price and not to fix the place of delivery; that the requirement of certification of quality,
quantity, and measurement specifications of the logs by local authorities was done to comply with local laws, rules, and regulations, and was not a
part of the sales arrangement; that the payment of freight by the Japanese buyers is not an uncommon feature of “FOB” shipments; and that the
payment of prices by means of irrevocable letters of credit is but a common established business practice to secure payment of the price to the
seller. It also insists that, even assuming that the “FOB” feature of the disputed sales determines the situs of transfer of ownership, the same is
merely a prima facie presumption which yields to contrary proof such as that the logs were made deliverable to the “order of the shipper” and the
logs were shipped at the risk of the shipper, which circumstances, if considered, would negate the above implications. Hence, petitioner herein
contends that the disputed sales were consummated in Japan, and, therefore, not subject to the taxing jurisdiction of our Government.

The above contentions of petitioner are devoid of merit. In a decided case with practically identical set of facts obtaining in the case at bar, this
Court declared:

“x x x it is admitted that the agreed price was ‘F.O.B. Agusan’, thus indicating, although prima facie, that the parties intended the title to pass to the
buyer upon delivery of the logs in Agusan; on board the vessels that took the goods to Japan. Moreover, said prima facie proof was bolstered up by
the following circumstances, namely:

1. Irrevocable letters of credit were opened by the Japanese buyers in favor of the petitioners.

2. Payment of freight charges of every shipment by the Japanese buyers.

3. The Japanese buyers chartered the ships that carried the logs they purchased from the Philippines to Japan.

4. The Japanese buyers insured the shipment of logs and collected the insurance coverage in case of loss in transit.

5. The petitioner collected the purchase price of every shipment of logs by surrendering the covering letter of credit, bill of lading, which was
indorsed in blank, tally sheet, invoice and export entry, to the corresponding bank in Manila of the Japanese agent bank with whom the Japanese
buyers opened letters of credit.

6. In case of natural defects in logs shipped to the buyers discovered in Japan, instead of returning such defective logs, accepted them, but were
granted a corresponding credit based on the contract price.

7. The logs purchased by the Japanese buyers were measured by a representative of the Director of Forestry and such measurement was final,
thereby making the Government of the Philippines a sort of agent of the Japanese buyers.

“Upon the foregoing facts and authority of Bislig (Bay) Lumber Co., Inc. vs. Collector of Internal Revenue, G.R. No. L-13186 (January 28, 1961),
Misamis Lumber Co., Inc. vs. Collector of Internal Revenue (56 Off. Gaz. 517) and Western Mindanao Lumber Development Co., Inc. vs. Court of Tax
Appeals, et al. (G.R. No. L-11710, June 30, 1958), it is clear that said export sales had been consummated in the Philippines and were, accordingly,
subject to sales tax therein.” (Taligaman Lumber Co., Inc. vs. Collector of Internal Revenue, G.R. No. L-15716, March 31, 1962).

With respect to petitioner’s contention that there are proofs to rebut the prima facie finding and circumstances that the disputed sales were
consummated here in the Philippines, we find that the allegation is not borne out by the law or the evidence.

That the specification in the bill of lading to the effect that the goods are deliverable to the order of the seller or his agent does not necessarily
negate the passing of title to the goods upon delivery to the carrier is clear from the second part of paragraph 2 of Article 1503 of the Civil Code of
the Philippines (which appellant’s counsel improperly omits from his citation):

“Where goods are shipped, and by the bill of lading the goods are deliverable to the seller or his agent, or to the order of the seller or of his agent,
the seller thereby reserves the ownership in the goods. But, if except for the form of the bill of lading, the ownership would have passed to the
buyer on shipment of the goods, the sellers’s property in the goods shall be deemed to be only for the purpose of securing performance by the
buyer of his obligations under the contract.”

Moreover, it has been “a settled rule that in petitions to review decisions of the Court of Tax Appeals, only questions of law may be raised and may
be passed upon by this Court” (Gutierrez vs. Court of Tax Appeals & Collector of Internal Revenue vs. Gutierrez, G.R. Nos. L-7938 & L-9771, May 21,
1957, cited in Sanchez vs. Commissioner of Customs, G.R. No. L-8556, September 30, 1957); and it having been found that there is no proof to
substantiate the foregoing contention of petitioner, the same should also be ruled as devoid of merit.
On the second issue, petitioner avers that the filing of its income tax returns, wherein the proceeds of the disputed sales were declared, is
substantial compliance with the requirement of filing a sales tax return, and, if there should be deemed a return filed, Section 331, and not Section
332(a), of the Tax Code providing for a five-year prescriptive period within which to make an assessment and collection of the tax in question from
the time the return was deemed filed, should be applied to the case at bar. Since petitioner filed its income tax returns for the years 1951, 1952
and 1953, and the assessment was made in 1957 only, it further contends that the assessment of the sales tax corresponding to the years 1951 and
1952 has already prescribed for having been made outside the five-year period prescribed in Section 331 of the Tax Code and should, therefore, be
deducted from the assessment of the deficiency sales tax made by respondent.

The above contention has already been raised and rejected as not meritorious in a previous case decided by this Court. Thus, we held that an
income tax return cannot be considered as a return for compensating tax for purposes of computing the period of prescription under Section 331
of the Tax Code, and that the taxpayer must file a return for the particular tax required by law in order to avail himself of the benefits of Section
331 of the Tax Code; otherwise, if he does not file a return, an assessment may be made within tho time stated in Section 332 (a) of the same Code
(Bisaya Land Transportation Co., Inc. vs. Collector of Internal Revenue & Collector of Internal Revenue vs. Bisaya Land Transportation Co., Inc., G.R.
Nos. L-12100 & L-11812, May 29, 1959). The principle enunciated in this last cited case is applicable by analogy to the case at bar.

It being undisputed that petitioner failed to file a return for the disputed sales corresponding to the years 1951, 1952 and 1953, and this omission
was discovered only on September 17, 1957, and that under Section 332 (a) of the Tax Code assessment thereof may be made within ten (10) years
from and after the discovery of the omission to file the return, it is evident that the lower court correctly held that the assessment and collection of
the sales tax in question has not yet prescribed.

Wherefore, the decision appealed from should be, as it is hereby affirmed, with costs against petitioner.

Chief Justice Bengzon and Justices Bautista Angelo, Concepcion, Barrera, Dizon, Regala, Makalintal, J.P. Bengzon, Zaldivar and Sanchez, concur.

Decision affirmed.

Note.—As to finality of Tax Court’s factual findings, see Felipe Yupangco & Sons, Inc. vs. Commissioner of Customs, L-22259, Jan. 19, 1966, page 1,
ante. Butuan Sawmill, Inc. vs. Court of Tax Appeals, et al., 16 SCRA 277, No. L-20601 February 28, 1966

1.
J. M. Tuason & Co., Inc. vs. Cabildo 6 SCRA 477 , October 31, 1962
Case Title : J. M. Tuason & Co., Inc. vs. CabildoCase Nature : APPEAL from a decision of the Court of First
Instance of Rizal.
Syllabi Class : Ejectment|Trial|Sales|Constitutional Law|Reception of Evidence thru a Referee|Expropriation
Proceedings
Docket Number: No. L-17168

Counsel: Araneta & Araneta, Rosario A. de Leon

Ponente: BAUTISTA ANGELO

Dispositive Portion:
WHEREFORE, the decision appealed from is affirmed, with costs against appellant.
Ejectment; Possession of land by defendant without owner’s knowledge or consent.—It appearing that the parcel of land which is occupied by
defendant is covered by a torrens title issued in the name of plaintiff and that it was taken possession of by defendant without plaintiff’s no other
conclusion can be drawn than that defendant is a usurper and so he must vacate the land.

Trial; Reception of Evidence thru a Referee; What constitutes substantial compliance with Section 1, Rule 34, Rules of Court.—There is substantial
compliance with Section 1, Rule 34 of the Rules of Court if, although no agreement was made previous to the delegation of authority to the court
stenographer, a lawyer, to receive evidence, it appears that the trial court suggested to both parties the necessity of submitting their evidence to a
referee and both, thru their counsel, consented thereto and in fact appeared before the referee, submitted evidence to him and examined and
cross-examined the witness of both parties.
Sales; Purchase of property with knowledge of flaw in seller’s title; Purchaser in bad faith not entitled to damages for improvement.—One who
buys property knowing that there is a flaw in the title of the seller is not a purchaser in good faith and cannot claim for damages relative to the
improvements he may have introduced on the property.

Constitutional Law; Expropriation Proceedings; Indefinite suspension of ejectment proceedings under Republic Act 3453 unconstitutional.—If the
intendment of Congress in approving Republic Act 3453 is to allow the suspension of an ejectment proceeding indefinitely even if no expropriation
proceeding is started by the government, the same would be unconstitutional, for it would amount to confiscation of private property without due
process in violation of the Constitution.

APPEAL from a decision of the Court of First Instance of Rizal.

The facts are stated in the opinion of the Court.

Araneta & Araneta for plaintiff-appellee.

Rosario A. de Leon for defendant-appellant.

BAUTISTA ANGELO, J.:

J. M. Tuason & Co., Inc., a duly organized corporation, filed on June 8, 1959 before the Court of First Instance of Rizal an action seeking to eject
Ambrosio Cabildo from a parcel of land situated in Quezon City. It was claimed that Cabildo sometime in July, 1950, took possession thru force of
said property which is included in the certificate of title issued to plaintiff by the register of deeds of said city.

Defendant in his defense claims to be the owner of the land he is occupying having acquired it from spouses Eugenio Ealdama and Asuncion B.
Ealdama sometime in February, 1955; that said spouses in turn purchased the land from spouses Manuel Jacinto and Virginia L. Jacinto by virtue of
a document executed on July 29, 1954; that the spouses Jacinto in turn acquired the land from one Silvestra Galing by virtue of a document
executed on August 30, 1951; that Silvestra Galing in turn purchased the land from Pedro Deudor who claims to be the owner thereof by virtue of a
possessory information issued in 1893 in favor of Telesforo Deudor, his predecessor-in-interest; that in 1949, Silvestra Galing constructed in good
faith a house on the land which defendant has improved after he had acquired it. Defendant asked that he be paid damages in the amount of
P12,000.00 as value of the improvements he introduced on the land should the court find that the same belongs to the plaintiff.

After the reception of the evidence, the court a quo rendered decision finding that the land in question is covered by a certificate of title issued in
favor of plaintiff and so it ordered defendant to vacate the same by paying plaintiff a rental of P30.00 a month from July, 1950 until its possession is
restored to plaintiff.

Defendant took this case on appeal directly to this Court purely on questions of law.

The present being a direct appeal from the court a quo the facts found by it in its decision should be deemed uncontroverted. These facts are:
Plaintiff is the registered owner of a parcel of land located in Quezon City covered by Transfer Certificate of Title No. 1267. Sometime in July, 1950,
defendant, without plaintiff’s consent, entered into the possession of a portion of 100 sq. m. of the aforesaid parcel of land and constructed his
house thereon. And as a consequence, plaintiff suffered damages in the sum of P30.00 monthly rental which defendant has failed to pay. The court
also found that defendant purchased the land from one Asuncion Ealdama who in turn acquired it from Manuel Jacinto and his wife, the latter
having in turn acquired it from one Silvestra Galing. Defendant introduced improvements on the land consisting of a building assessed at P7,500.00.
And from the foregoing facts, the court a quo drew the conclusion that the land being covered by a certificate of title issued in the name of plaintiff
its title cannot be defeated by the purchase made thereof by defendant from plaintiff. The court concluded that said transfers can not defeat the
ownership of the plaintiff which is covered by a torrens title. It appearing that the parcel of land which is occupied by defendant is covered by a
torrens title issued in the name of plaintiff and that it was taken possession of by defendant without plaintiff’s knowledge or consent, no other
conclusion can be drawn than that defendant is a usurper and so he must vacate the land. In this respect, we do not find error in the finding of the
court a quo.

It is, however, contended that the decision of the court a quo is null and void for the reason that it was rendered not on the basis of the evidence
received by the court but by one Paulino Santillan who was appointed by the court as referee to receive the evidence. And the contention of
appellant is based on the plea that under Section 1 of Rule 34 the reception of the evidence by a commissioner or referee can only be delegated if
the parties should so agree and here there was no such agreement. The trial court merely made the designation motu proprio.

While there was no agreement made previous to the delegation of authority to receive evidence to Atty. Paulino Santillan, a court stenographer, it
appears however that the court a quo suggested to both parties the necessity of submitting their evidence to a referee and both, thru their
counsel, readily gave their conformity thereto. In fact, both appeared before the referee and examined and cross-examined the witnesses of both
parties. They submitted to him their evidence. There is, therefore, a substantial compliance with Section 1, Rule 34, and no harm was done to the
parties, including appellant. Moreover, this procedural question is being raised for the first time in this appeal and so the objection comes too late.

Appellant complains that the trial court has failed to entertain this claim for damages relative to the improvements he had introduced on the land
after having ordered his ejectment therefrom. In this we find also no error considering that appellant was found to have acted in bad faith in
acquiring the property (Article 449, new Civil Code). It is undeniable that when he acquired the land from the Ealdama spouses he was expressly
warned that there was a pending litigation on the property between J. M. Tuason & Co., Inc. and Pedro Deudor, who appellant well knew was the
predecessor-in-interest of the Ealdamas. This warning was expressed in the very deed of sale. When he acquired the property he, therefore, knew
that there was a flaw in the title of the spouses from whom he was purchasing the property. He is not, therefore, a purchaser in good faith.

We are aware of Republic Act No. 2616, as amended by Republic Act 3453, which provides that upon approval of the latter Act no ejectment
proceedings shall be instituted and if one has already been commenced, the same shall not be continued, in order to give time to the expropriation
of the property, but we are apprehensive as to its applicability to the present case considering that the government has not so far taken any action
relative to the expropriation of the Tatalon Estate. Moreover, if the intendment of Congress in approving said Republic Act 3453 is to allow the
suspension of an ejectment proceeding indefinitely even if no expropriation proceeding is started by the government, the same would be
unconstitutional, for it would amount to confiscation of private property without due process in violation of our Constitution. Thus, in a recent case
decided by this Court, we said:

“But the amendment wrought into Republic Act No. 2616 by Republic Act No. 3453 brushes aside all these requirements for the valid exercise of
the power of eminent domain contemplated in our Constitution. It in effect commands that no ejectment proceedings shall be instituted, or if one
shall have been commenced it shall be suspended, even if no expropriation proceedings shall have been filed by the government. This is indeed
confiscatory, for its necessary implication is that as long as the government refrains from filing an action for expropriation the owner cannot enjoy
its dominical rights over the property. And if the government chooses not to take any action for expropriation indefinitely the occupant would
remain in the illegal possession of the land also indefinitely. Such a situation cannot be sanctioned by this Court for it will result in a flagrant
confiscation of private property without due process in violation of our Constitution. It is, therefore, imperative that we declare, as we now do, that
Section 4 of Republic Act No. 3453 which prohibits the filing of an ejectment proceeding, or the continuance of one that has already been the
absence of expropriation proceedings, offends our Constitution and, hence, is unenforceable.” (Cuatico, et al. v. Court of Appeals, et al., G.R. Nos.
L-20141-42, October 31, 1962; See also J.M. Tuason & Co., Inc. v. Court of Appeals, et al., and Republic of the Philippines v. J. M. Tuason & Co., Inc.,
et al., G.R. Nos. L-18128 and L-18672, December 26, 1961; Teresa Realty, Inc. v. State Construction & Supply Co., et al., G.R. No L-10883, March 25,
1959; Teresa Realty, Inc. v. Maxima Blouse de Potenciano, G.R. No. L-17588, May 30, 1962.)

WHEREFORE, the decision appealed from is affirmed, with costs against appellant.

Bengzon, C.J., Padilla, Labrador, Concepcion, Reyes, J.B.L., Barrera, Paredes, Dizon, Regala and Makalintal, JJ., concur.

Decision affirmed.
Note.—Section 4 of Republic Act No. 2616 as amended by Republic Act No. 3453 is declared unconstitutional in Cuatico, et al. v. Court of Appeals,
et al., L-20141-42, Oct. 31, 1962, post. J. M. Tuason & Co., Inc. vs. Cabildo, 6 SCRA 477, No. L-17168 October 31, 1962

1.
Smith, Bell & Co. vs. Sotelo Matti 44 Phil. 874 , March 09, 1922
Case Title : SMITH, BELL & Co., LTD., plaintiff and appellant, vs. VICENTE SOTELO MATTI, defendant and
appellant.Case Nature : APPEAL from a judgment of the Court of First Instance of Manila. Del Rosario, J.
Syllabi Class : CONTRACTS|lD.|PRINCIPAL AND AGENT|PURCHASE AND SALE OF MERCHANDISE
Syllabi:
1. CONTRACTS; PURCHASE AND SALE OF MERCHANDISE; UNCERTAINTY OF TIME OF FULFILLMENT. OF
OBLIGATION.+
2. lD.; PURCHASE AND SALE OF MERCHANDISE; WHEN FULFILLMENT OF CONDITION NOT DEPENDENT ON THE
WILL OF OBLIGOR.+
3. lD.; PURCHASE AND SALE OF MERCHANDISE; WHEN TIME NOT ESSENTIAL.+
4. PRINCIPAL AND AGENT; THIRD PERSONS.+

Docket Number: No. 16570

Counsel: Ross & Lawrence, Ewald E. Selph, Ramon Sotelo

Ponente: ROMUALDEZ

Dispositive Portion:
Wherefore, the judgment appealed from is modified, and the defendant, Mr. Vicente Sotelo Matti, sentenced to accept
and receive from the plaintiff the tanks, the expellers and the motors in question, and to pay the plaintiff the sum of
ninety-six thousand pesos (P96,000), with legal interest thereon from July 17, 1919, the date of the filing of the
complaint, until fully paid, and the costs of both instances. So ordered.

1.CONTRACTS; PURCHASE AND SALE OF MERCHANDISE; UNCERTAINTY OF TIME OF FULFILLMENT. OF OBLIGATION.—As no definite date was fixed
for the delivery of the goods, which the plaintiff undertook to deliver, the term which the parties attempted to establish being so uncertain, that
one cannot tell whether, as a matter of fact, the aforesaid goods could, or could not, be imported into Manila, the obligation must be regarded as
conditional and not one with a term.

2.lD.; ID.; WHEN FULFILLMENT OF CONDITION NOT DEPENDENT ON THE WILL OF OBLIGOR.—Where the fulfillment of the condition does not
depend on the will of the obligor, but on that of a third person who can in no way be compelled to carry it out, the obligor's part of the contract is
complied with, if he does all that is in his power, and it then becomes incumbent upon the other contracting party to comply with the terms of the
contract.

3.ID.; ID.; WHEN TIME NOT ESSENTIAL.—Where no date is fixed in the contract for the delivery of the thing sold, time is considered unessential,
and delivery must be made within a reasonable time to be determined by the courts in accordance with the circumstances of the case.

4.PRINCIPAL AND AGENT; THIRD PERSONS.—When an agent acts in his own name, the principal has no right of action against the persons with
whom the agent has contracted, or such persons against the principal. In such case, the agent is directly liable to the person with whom he has
contracted, as if the transaction were his own. (Art. 1717, Civil Code.)

APPEAL from a judgment of the Court of First Instance of Manila. Del Rosario, J.

The facts are stated in the opinion of the court.

ROMUALDEZ, J.:

In August, 1918, the plaintiff corporation and the defendant, Mr. Vicente Sotelo, entered into contracts whereby the former obligated itself to sell,
and the latter to purchase from it, two steel tanks, for the total price of twenty-one thousand pesos (P21,000), the same to be shipped from New
York and delivered at Manila "within three or four months;" two expellers at the price of twentyfive thousand pesos (P25,000) each, which were to
be shipped from San Francisco in the month of September 1918 or as soon as possible; and two electric motors at the price of two thousand pesos
(P2,000) each, as to the delivery of which stipulation was made, couched in these words: "Approximate delivery within ninety days.—This is not
guaranteed."

The tanks arrived at Manila on the 27th of April, 1919; the expellers on the 26th of October, 1918; and the motors on the 27th of February, 1919.
The plaintiff corporation notified the defendant, Mr. Sotelo, of the arrival of these goods, but Mr. Sotelo refused to receive them and to pay the
prices stipulated.

The plaintiff brought suit against the defendant, based on four separate causes of action, alleging, among other facts, that it immediately notified
the defendant of the arrival of the goods, and asked instructions from him as to the delivery thereof, and that the defendant refused to receive any
of them and to pay their price. The plaintiff, further, alleged that the expellers and the motors were in good condition. (Amended complaint, pages
16-30, Bill of Exceptions.)

In their answer, the defendant, Mr. Sotelo, and the intervenor, the Manila Oil Refining and By-Products Co., Inc., denied the plaintiff's allegations as
to the shipment of these goods and their arrival at Manila, the notification to the defendant, Mr. Sotelo, the latter's refusal to receive them and
pay their price, and the good condition of the expellers and the motors, alleging as special defense that Mr. Sotelo had made the contracts in
question as manager of the intervenor, the Manila Oil Refining and ByProducts Co., Inc., which fact was known to the plaintiff, and that "it was only
in May, 1919, that it notified the intervenor that said tanks had arrived, the motors and the expellers having arrived incomplete and long after the
date stipulated." As a counterclaim or set-off, they also allege that, as a consequence of the plaintiff's delay in making delivery of the goods, which
the intervenor intended to use in the manufacture of cocoanut oil, the intervenor suff ered damages in the sums of one hundred sixteen thousand
seven hundred eighty-three pesos and ninety-one centavos (P116,783.91) for the nondelivery of the tanks, and twenty-one thousand two hundred
and fifty pesos (P21,250) on account of the expellers and the motors not having arrived in due time.

The case having been tried, the court below absolved the defendants from the complaint insofar as the tanks and the electric motors were
concerned, but rendered judgment against them, ordering them to "receive the aforesaid expellers and pay the plaintiff the sum of fifty thousand
pesos (P50,000), the price of the said goods, with legal interest thereon from July 26, 1919, and costs."

Both parties appeal from this judgment, each assigning several errors in the findings of the lower court.

The principal point at issue in this case is whether or not, under the contracts entered into and the circumstances established in the record, the
plaintiff has fulfilled, in due time, its obligation to bring the goods in question to Manila. If it has, then it is entitled to the relief prayed f or;
otherwise, it must be held guilty of delay and liable for the consequences thereof.

To solve this question, it is necessary to determine what period was fixed for the delivery of the goods.

As regards the tanks, the contracts A and B (pages 61 and 62 of the record) are similar, and in both of them we find this clause:

"To be delivered within 3 or 4 months—The promise or indication of shipment carries with it absolutely no obligation on our part—Government
regulations, railroad embargoes, lack of vessel space, the exigencies of the requirements of the United States Government, or a number of causes
may act to entirely vitiate the indication of shipment as stated. In other words, the order is accepted on the basis of shipment at Mill's
convenience, time of shipment being merely an indication of what we hope to accomplish."

In the contract Exhibit C (page 63 of the record), with reference to the expellers, the following stipulation appears:

"The following articles, hereinbelow more particularly described, to be shipped at San Francisco within the month of September /18, or as soon as
possible.—Two Anderson oil expellers * * *."

And in the contract relative to the motors (Exhibit D, page 64, rec.) the following appears:
"Approximate delivery within ninety days.—This is not guaranteed.—This sale is subject to our being able to obtain Priority Certificate, subject to
the United States Government requirements and also subject to confirmation of manufacturers."

In all these contracts, there is a final clause as follows:

"The sellers are not responsible for delays caused by fires, riots on land or on the sea, strikes or other causes known as 'Force Majeure' entirely
beyond the control of the sellers or their representatives."

Under these stipulations, it cannot be said that any definite date was fixed for the delivery of the goods. As to the tanks, the agreement was that
the delivery was to be made "within 3 or 4 months," but that period was subject to the contingencies referred to in a subsequent clause. With
regard to the expellers, the contract says "within the month of September, 1918," but to this is added "or as soon as possible." And with reference
to the motors, the contract contains this expression, "Approximate delivery within ninety days," but right after this, it is noted that "this is not
guaranteed."

The oral evidence falls short of fixing such period.

From the record it appears that these contracts were executed at the time of the world war when there existed rigid restrictions on the export
from the United States of articles like the machinery in question, and maritime, as well as railroad, transportation was difficult, which fact was
known to the parties; hence clauses were inserted in the contracts, regarding "Government regulations, railroad embargoes, lack of vessel space,
the exigencies of the requirements of the United States Government," in connection with the tanks and "Priority Certificate, subject to the United -
States Government requirements," with respect to the motors. At the time of the execution of the contracts, the parties were not unmindful of the
contingency of the United States Government not allowing the export of the goods, nor of the fact that the other foreseen circumstances therein
stated might prevent it.

Considering these contracts in the light of the civil law, we cannot but conclude that the term which the parties attempted to fix is so uncertain that
one cannot tell just whether, as a matter of fact, those articles could be brought to Manila or not. If that is the case, as we think it is, the obligation
must be regarded as conditional.

"Obligations for the performance of which a day certain has been fixed shall be demandable only when the day arrives.

- "A day certain is understood to be one which must necessarily arrive, even though its date be unknown. "// the uncertainty should consist in the
arrival or nonarrival of the day, the obligation is conditional and shall be governed by the rules of the next preceding section" (referring to pure and
conditional obligations). (Art. 1125, Civ. Code.)

And as the export of the machinery in question was, as stated in the contract, contingent upon the sellers obtaining certificate of priority and
permission of the United States Government, subject to the rules and regulations, as well as to railroad embargoes, then the delivery was subject
to a condition the fulfillment of which depended not only upon the effort of the herein plaintiff, but upon the will of third persons who could in no
way be compelled to fulfill .the condition. In cases like this, which are not expressly provided for, but impliedly covered, by the Civil Code, the
obligor will be deemed to have sufficiently performed his part of the obligation, if he has done all that was in his power, even if the condition has
not been fulfilled in reality.

"In such cases, the decisions prior to the Civil Code have held that the obligee having done all that was in his power, was entitled to enforce
performance of the obligation. This performance, which is fictitious—not real—is not expressly authorized by the Code, which limits itself only to
declare valid those conditions and the obligation thereby affected; but it is neither disallowed, and the Code being thus silent, the old view can be
maintained as a doctrine." (Manresa's commentaries on the Civil Code [1907], vol. 8, page 132.)

The decisions referred to by Mr. Manresa are those rendered by the supreme court of Spain on November 19, 1866, and February 23, 1871. In the
former it is held:
"First. That when the fulfillment of the condition does not depend on the will of the obligor, but on that of a third person who can in no way be
compelled to carry it out, and it is found by the lower court that the obligor has done all in his power to comply with the obligation, the judgment
of the said court, ordering the other party to comply with his part of the contract, is not contrary to the law of contracts, or to Law 1, Tit. I, Book 10,
of the 'Novísima Recopilación,' or Law 12, Tit. 11, of Partida 5, when in the said finding of the lower court, no law or precedent is ;alleged to have
been violated." (Jurisprudencia Civil published; by the directors of the Revista General de Legislación y Jurisprudencia [1866], vol. 14, page 656.)

In the second decision, the following doctrine is laid down:

"Second. That when the fulfillment of the condition does not depend on the will of the obligor, but on that of a third person, who can in no way be
compelled to carry it out, the obligor's part of the contract is complied with if he does all that is in his power, and has the right to demand
performance of the contract by the other party, which is the doctrine laid down also by the supreme court." (The same publication [1871], vol. 23,
page 492.)

It is sufficiently proven in the record that the plaintiff has made all the efforts it could possibly be expected to make under the circumstances, to
bring the goods in question to Manila, as soon as possible. And, as a matter of fact, through such efforts, it succeeded in importing them and
placing them at the disposal of the defendant, Mr. Sotelo, in April, 1919. Under the doctrine just cited, which, as we have seen, is of the same
juridical origin as our Civil Code, it is obvious that the plaintiff has complied with its obligation.

In connection with this obligation to deliver, occurring in a contract of sale like those in question, the rule in North America is that when the time of
delivery is not fixed in the contract, time is regarded unessential.

"When the time of delivery is not fixed or is stated in general and indefinite terms, time is not of the essence of the contract." (35 Cyc., 179. And
see Montgomery vs. Thompson, 152 Cal., 319; 92 Pac., 866; O'Brien vs. Higley, 162 Ind., 316; 70 N. E., 242; Pratt vs. Lincoln [Me. 1888], 13 Atl., 689;
White vs. McMillan, 114 N. C., 349; 19 S. E., 234; Ballantyne vs. Watson, 30 U. C. C. P., 529.)

In such cases, the delivery must be made within a reasonable time.

"The law implies, however, that if no time is fixed, delivery shall be made within a reasonable time, in the absence of anything to show that an
immediate delivery is intended." (35 Cyc., 179, 180.)

"When the contract provides for delivery 'as soon as possible' the seller is entitled to a reasonable time, in view of all the circumstances, such as
the necessities of manufacture, or of putting the goods in condition for delivery. The term does not mean immediately or that the seller must stop
all his other work and devote himself to that particular order. But the seller must nevertheless act with all reasonable diligence or without
unreasonable delay. It has been held that a requirement that the shipment of goods should be the 'earliest possible' must be construed as meaning
that the goods should be sent as soon as the seller could possibly send them, and that it signified rather more than that the goods should be sent
within a reasonable time.

"Delivery 'Shortly.'—In a contract for the sale of personal property to be delivered 'shortly,' it is the duty of the seller to tender delivery within a
reasonable time and if he tenders delivery after such time the buyer may reject.

"The question as to what is a reasonable time for the delivery of the goods by the seller is to be determined by the circumstances attending the
particular transaction, such as the character of the goods, and the purpose for which they are intended, the ability of the seller to produce the
goods if they are to be manufactured, the facilities available for transportation, and the distance the goods must be carried, and the usual course of
business in the particular trade." (35 Cyc., 181-184.)

Whether or not the delivery of the machinery in litigation was offered to the defendant within a reasonable time, is a question to be determined by
the court.
"Applications of rule.—A contract for delivery 'about Nov. 1' is complied with by delivery on November 10 (Whilte vs. McMillan, 114 N. C., 349; 19
S, E., 234. And see O'Brien vs. Higley, 162 Ind., 316; 70 N. E., 242); and a contract to deliver 'about the last of May or June' is complied with by
delivery on the last day of June (New Bedford Copper Co. vs. Southard, 95 Me., 209; 49 Atl., 1062, holding also that if the goods were to be used for
a ship to arrive 'about April' and the vessel was delayed, the seller might deliver within a reasonable time after her arrival, although such
reasonable time extended beyond the last of June); so under a contract to deliver goods sold 'about June, 1906,' delivery may be made during the
month of June, or in a reasonable time thereafter (Loomis vs. Norman Printers' Supply Co., 81 Conn., 343; 71 Atl., 358)." (35 Cyc., 180, note 16.)

The record shows, as we have stated, that the plaintiff did all within its power to have the machinery arrive at Manila as soon as possible, and
immediately upon its arrival it notified the purchaser of the fact and offered to deliver it to him. Taking these circumstances into account, we hold
that the said machinery was brought to Manila by the plaintiff within a reasonable time.

Therefore, the plaintiff has not been guilty of any delay in the fulfillment of its obligation, and, consequently, it could not have incurred any of the
liabilities mentioned by the intervenor in its counterclaim or set-off.

Besides, it does not appear that the intervenor, the Manila Oil Refining and By-Products Co., Inc., has in any way taken part in these contracts.
These contracts were signed by the defendant, Mr. Vicente Sotelo, in his individual capacity and own name. If he was then acting as agent of the
intervenor, the latter has no right of action against the herein plaintiff.

"When an agent acts in his own name, the principal shall have no right of action against the persons with whom the agent has contracted, or such
persons against the principal.

"In such case, the agent is directly liable to the person with whom he has contracted, as if the transaction were his own. Cases involving things
belonging to the principal are excepted.

"The provisions of this article shall be understood to be without prejudice to actions between principal and agent." (Civil Code, art. 1717.) "When
the agent transacts business in his own name, it shall not be necessary for him to state who is the principal and he shall be directly liable, as if the
business were for his own account, to the persons with whom he transacts the same, said persons not having any right of action against the
principal, nor the latter against the former, the liabilities of the principal and of the agent to each other always being reserved." (Code of Com., art.
246.)

"If the agent transacts business in the name of the principal, he must state that fact; and if the contract is in writing, he must state it therein or in
the subscribing clause, giving the name, surname, and domicile of said principal.

"In the case prescribed in the foregoing paragraph, the contract and the actions arising therefrom shall be effective between the principal and the
persons or person who may have transacted business with the agent; but the latter shall be liable to the persons with whom he transacted
business during the time he does not prove the commission, if the principal should deny it, without prejudice to the obligation and proper actions
between the principal and agent." (Code of Com., art. 247.)

The foregoing provisions lead us to the conclusion that the plaintiff is entitled to the relief prayed for in its complaint, and that the intervenor has
no right of action, the damages alleged to have been sustained by it not being imputable to the plaintiff.

Wherefore, the judgment appealed from is modified, and the defendant, Mr. Vicente Sotelo Matti, sentenced to accept and receive from the
plaintiff the tanks, the expellers and the motors in question, and to pay the plaintiff the sum of ninety-six thousand pesos (P96,000), with legal
interest thereon from July 17, 1919, the date of the filing of the complaint, until fully paid, and the costs of both instances. So ordered.

Araullo, C. J., Johnson, Street, Malcolm, Avanceña, Villamor, Ostrand, and Johns, JJ., concur.
Judgment modified. Smith, Bell & Co. vs. Sotelo Matti, 44 Phil. 874, No. 16570 March 9, 1922

1.
Behn, Meyer & Co. vs. Yangco. 38 Phil. 602 , September 18, 1918
Case Title : BEHN, MEYER & Co. (I/ro.), plaintiff and appellant, vs. TEODORO R. YANGCO, defendant and
appellee.Case Nature : APPEAL from a judgment of the Court of First Instance of Manila. Ostrand, J.
Syllabi Class : ID.
Docket Number: No. 13203

Counsel: Crossfield & O'Brien, Charles C. Cohn

Ponente: MALCOLM

1.CONTRACTS OF SALE; PLACE OF DELIVERY.—Determination of the place of delivery always resolves itself into a question of fact.

2.ID.; ID.—If the contract be silent as to the person or mode by which the goods are to be sent, delivery by the vendor to a common carrier in the
usual and ordinary course of business, tranfers the property to the vendee.

3.ID.; ID.; PAYMENT OF FREIGHT—A specification in a contract relative to the payment of freight can be taken to indicate the intention of the
parties in regard to the place of delivery. If the buyer is to pay the freight, it is reasonable to suppose that he does so because the goods become
his at the point of shipment. On the other hand, if the seller is to pay the freight, the inference is equally strong that the duty of the seller is to have
the goods transported to their ultimate destination and that title to property does not pass until the goods have reached their destination.

4.ID.; ID.; "C. I. F." CoNSTRUED.—The letters "c. i. f." found in British contracts stand for costs, insurance, and freight. They signify that the price
fixed covers not only the cost of the goods, but the expense of freight and insurance to be paid by the seller. (Ireland vs. Livingston, L. R., 5 EL L.,
395.)

5ID.; ID.; "F. O. B." CONSTRUED.—In mercantile contracts of American origin, the letters "F, O. B.," standing for the words "Free on Board," are
frequently used. The meaning is that the seller shall bear all expenses until the goods are delivered where they are to be "F. O. B." According as to
whether the goods are to be delivered "F. O. B." at the point of shipment or at the point of destination determines the time when property passes.

6.ID.; ID.—Both of the terms "C. I. F." and "F. 0. B." merely make rules of presumption which yield to proof of contrary intention. "The question, at
last, is one of intent, to be ascertained by a consideration of all the circumstances." ("Benjamin on Sales," par. 329.)

7.ID.; TIME OF DELIVERY.—The decision of the United States Supreme Court in Norrington vs. Wright ([1885], 115 U. S. 188) can be noted.

8.ID.; PERFORMANCE.—The contract between the parties was for 80 drums of caustic soda, 76 per cent "Carabao" brand, at the price of $9.75 per
one hundred pounds, cost, insurance, and freight included, to be shipped during March, 1916, to be delivered at Manila and paid for on delivery of
the documents. The soda which the plaintiff offered to defendant was not of the "Carabao" brand. The merchandise was not shipped in March,
1916, but in April, 1916. The plaintiff failed to deliver at Manila the goods contracted for. Held: That the buyer may rescind the contract of sale
because of a breach in substantial particulars going to the essence of the contract.

APPEAL from a judgment of the Court of First Instance of Manila. Ostrand, J.

The facts are stated in the opinion of the court.

MALCOLM, J.:

The first inquiry to be determined is what was the contract between the parties.

The memorandum agreement executed by the duly authorized representatives of the parties to this action reads:

"Contract No. 37.

MANILA, 7 de marzo, de 1916.

"Confirmamos haber vendido a Bazar Siglo XX, 80 drums Caustic Soda 76 per cent 'Carabao' brand al precio de Dollar Gold Nine and 75/100 per
100-lbs., c. i. f. Manila, pagadero against delivery of documents. Embarque March, 1916.

"Comprador Bazar Siglo XX

"de Teodoro R. Yangco

"J. Siquia

"Vendedores

"BEHN, MEYER & Co. (Ltd.)

"O. LOMBECX."

This contract of sale can be analyzed into three component parts.

1. SUBJECT MATTER AND CONSIDERATION.

Facts.—The contract provided for "80 drums Caustic Soda 76 per cent 'Carabao' brand al precio de Dollar Gold Nine and 75/100 per 100-lbs."

Resorting to the circumstances surrounding the agreement as we are permitted to do, in pursuance of this provision, the merchandise was shipped
from New York on the steamship Chinese Prince, The steamship was detained by the British authorities at Penang, and part of the cargo, including
seventy-one drums of caustic soda, was removed. Defendant refused to accept delivery of the remaining nine drums of soda on the ground that
the goods were in bad order. Defendant also refused the optional offer of the plaintiff, of waiting for the remainder of the shipment until its arrival,
or of accepting the substitution of seventy-one drums of caustic soda of similar grade from plaintifTs stock. The plaintiff thereupon sold, for the
account of the defendant, eighty drums of caustic soda from which there was realized the sum of f=6,352.89. Deducting this sum from the selling
price of P10,063.86, we have the amount claimed as damages for alleged breach of the contract.

Law.—It is sufficient to note that the specific merchandise was never tendered. The soda which the plaintiff offered to defendant was not of the
"Carabao" brand, and the off er of drums of soda of another kind was not made within the time that a March shipment, according to another
provision of the contract, would normally have been available.

2. PLACE OF DELIVERY.

Facts.—The contract provided for "c. i. f• Manila, pagadero against delivery of documents."

Law.—Determination of the place of delivery always resolves itself into a question of fact. If the contract be silent as to the person or mode by
which the goods are to be sent, delivery by the vendor to a common carrier, in the usual and ordinary course of business, transfers the property to
the vendee. A specification in a contract relative to the payment of f reight can be taken to indicate the intention of the parties in regard to the
place of delivery. If the buyer is to pay the freight, it is reasonable to suppose that he does so because the goods become his at the point of
shipment. On the other hand, if the seller is to pay the freight, the inference is equally strong that the duty of the seller is to have the goods
transported to their ultimate destination and that title to property does not pass until the goods have reached their destination. (See Williston on
Sales, pp. 406-408.)

The letters "c. i. f." found in British contracts stand for costs, insurance, and freight. They signify that the price fixed covers not only the cost of the
goods, but the expense of freight and insurance to be paid by the seller. (Ireland vs. Livingston, Lrifv 5 H. L., 395.) Our instant contract, in addition
to the letters "c. i. f.," has the word following, "Manila." Under such a contract, an Australian case is authority for the proposition that no inference
is permissible that a seller was bound to deliver at the point of destination. (Bowden-t's. Little, 4 Comm. [Australia], 1364.)
In mercantile contracts of American origin, the letters "F. 0. B." standing for the words "Free on Board," are frequently used. The meaning is that
the seller shall bear all expenses until the goods are delivered where they are to be "F. 0. B." According as to whether the goods are to be delivered
"F. 0. B." at the point of shipment or at the point of destination determines the time when property passes.

Both of the terms "c. i. f." and "F. 0. B." merely make rules of presumption which yield to proof of contrary intention. As Benjamin, in his work on
Sales, well says: "The question, at last, is one of intent, to be ascertained by a consideration of all the circumstances." ("Benjamin on Sales," par.
329.) For instance, in a case of Philippine origin, appealed to the United States Supreme Court, it was held that the sale was complete on shipment,
though the contract was for goods "F. O. B. Manila," the place of destination, the other terms of the contract showing the intention to transfer the
property. (United States vs. R. P. Andrews & Co. [1907], 207 U. S., 229.)

With all due deference to the decision of the High Court of Australia, we believe that the word "Manila" in conjunction with the letters "c. i. f."
must mean that the contract price, covering costs, insurance, and freight, signifies that delivery was to be made at Manila. lf the plaintiff company
had seriously thought that the place of delivery was New York and not Manila, it would, not have gone to the trouble of making fruitless attempts
to substitute goods for the merchandise named in the contract, but would have permitted the entire loss of the shipment to fall upon the
defendant. Under plaintiff's hypothesis, the defendant would have been the absolute owner of the specific soda confiscated at Penang and would
have been indebted for the contract price of the same.

This view is corroborated by the facts. The goods were not shipped nor consigned from New York to plaintiff. The bill of lading was for goods
received from Neuss Hesslein & Co. The documents evidencing said shipment and symbolizing the property were sent by Neuss Hesslein & Co. to
the Bank of the Philippine Islands with a draft upon Behn, Meyer & Co. and with instructions to deliver the same, and thus transfer the property to
Behn, Meyer & Co. when and if Behn Meyer & Co. should pay the draft.

The place of delivery was Manila and plaintiff has not legally excused default in delivery of the specified merchandise at that place.

3. TIME OP DELIVERY.

Facts.—The contract provided for: "Embarque: March, 1916." The merchandise was in fact shipped from New York on the Steamship Chinese
Prince on April 12, 1916.

Law.—The previous discussion makes a resolution of this point unprofitable, although the decision of the United States Supreme Court in
Norrington vs. Wright ([1885], 115 U. S., 188) can be read with profit. Appellant's second and third assignments of error could, if necessary, be
admitted, and still it could not recover.

THE CONTRACT.

To answer the inquiry with which we began this decision, the contract between the parties was for 80 drums of causticsoda, 76 per cent "Carabao"
brand, at the price of $9.75 per one hundred pounds, cost, insurance, and freight included, to be shipped during March, 1916, to be delivered at
Manila and paid for on delivery of the documents.

PERFORMANCE.

In résumé, we find that the plaintiff has not proved the performance on its part of the conditions precedent in the contract. The warranty—the
material promise—of the seller to the buyer has not been complied with. The buyer may therefore rescind the contract of sale because of a breach
in substantial particulars going to the essence of the contract. As contemplated by article 1451 of the Civil Code, the vendee can demand the
fulfilment of the contract, and this being shown to be impossible, is relieved of his obligation. There thus being sufficient ground for rescission, the
defendant is not liable.

The judgment of the trial court ordering that the plaintiff take nothing by its action, without special finding as to costs, is affirmed, with the costs of
this instance against the appellant. So ordered.
Arellano, C. J., Torres, Johnson, Street, and Avancena, JJ., concur.

Judgment affirmed. Behn, Meyer & Co. vs. Yangco., 38 Phil. 602, No. 13203 September 18, 1918

1.
Katigbak vs. Court of Appeals 4 SCRA 243 , January 31, 1962
Case Title : ARTEMIO KATIGBAK, petitioner, vs. COURT OF APPEALS, DANIEL EVANGELISTA and V. K. LUNDBERG,
respondents.Case Nature : APPEAL by certiorari from a decision of the Court of Appeals.
Syllabi Class : Sales|Executory contract of sale|Right of vendor to resell if vendee fails to take delivery and pay the
price
Docket Number: No. L-16480

Counsel: Benjamin J. Molina, Jesus B. Santos, Ledesma, Puno, Guytingco, Antonio & Associates

Ponente: PAREDES

Dispositive Portion:
WHEREFORE, the petition is dismissed, and the decision appealed from is affirmed in all respects, with costs against
petitioner.

Sales; Executory contract of sale; Right of vendor to resell if vendee fails to take delivery and pay the price; Rescission of contract not necessary.—
In a contract of sale which is executory as to both parties, the vendor is entitled to resell the goods if the purchaser fails to take delivery and pay
the purchase price. If he is obliged to sell for less than the contract price, he holds the buyer for the difference, if he sells for as much as or more
than the contract price, the breach of contract by the original buyer is damnum absque injuria. In either case there is no need of an action of
rescission to authorize the vendor, who is still in possession, to dispose of the property. (Hanlon vs. Hausserman, 40 Phil. 796, 815-816).

APPEAL by certiorari from a decision of the Court of Appeals.

The facts are stated in the opinion of the Court.

PAREDES, J.:

This case arose from an agreed purchase and sale of a Double Drum Carco Tractor Winch. Artemio Katigbak upon reading an advertisement for the
sale of the winch placed by V. K. Lundberg, owner and operator of the International Tractor and Equipment Co., Ltd., went to see Lundberg and
inspected the equipment. The price quoted was P12,000.00. Desiring a reduction of the price, Katigbak was referred to Daniel Evangelista, the
owner. After the meeting, it was agreed that Katigbak was to purchase the winch for P12,000.00, payable at P5,000.00 upon delivery and the
balance of P7,000.00 within 60 days. The condition of the sale was that the winch would be delivered in good condition. Katigbak was apprised that
the winch needed some repairs, which could be done in the shop of Lundberg. It was then stipulated that the amount necessary for the repairs will
be advanced by Katigbak but deductible from the initial payment of P5,000.00. The repairs were undertaken and the total of P2,029.85 for spare
parts was advanced by Katigbak for the purpose. For one reason or another, the sale was not consummated and Katigbak sued Evangelista,
Lundberg and the latter's company, for the refund of such amount.

Lundberg and Evangelista filed separate Answers to the complaint, the former alleging non-liability for the amount since the same (obligation for
refund) was purely a personal account between defendant Evangelista and plaintiff Katigbak. Lundberg asked P500.00 by way of actual and
compensatory damages and P5,000.00 as moral damages, claiming that the filing of the suit was malicious; that there is a misjoinder because he is
a stranger in the case, not being a party to the agreement between Evangelista and Katigbak.

Evangelista, on his part, claimed that while there was an agreement between him and Katigbak for the purchase and sale of the winch and that
Katigbak advanced the payment for the spare parts, he (Katigbak) refused to comply with his contract to purchase the same; that as a result of such
refusal he (Evangelista) was forced to sell the same to a third person for only P10,000.00 thus incurrin g a lo ss of P2,000. 00, w hich a mount Ka
should be ordered to pay, plus moral damages of P5 000 00 and P700.00 for attorney's fees.

The lower court rendered judgment, the dispositive portion of which reads—
WHEREFORE, judgment is hereby rendered ordering the defendants Daniel Evangelista and V. K. Lundberg to pay plaintiff the sum of P2,029.85,
with legal interest thereon from the filing of the complaint until fully paid plus the sum of P300.00 as attorney's fees, and the costs."

The Court of Appeals, on September 5, 1959, reversed the judgment in the following manner:—

"Notwithstanding the breach of contract committed by him, we may concede appellee's right to a refund of the sum of P2,029.85, but equally
undeniable is appellant Evangelista's right to recover from him his loss of F2,000.00, which is the difference between the contract price for the sale
of the winch between him and appellee and the actual price for which it was sold after the latter had refused to carry out his agreement. As held in
the above-cited case of Hanlon, if the purchaser fails to take delivery and pay the purchase price of the subject matter of the contract, the vendor,
without the need of first rescinding the contract judicially, is entitled to resell the same, and if he is obliged to sell it for less than the contract price,
the buyer is liable for the difference. This loss, which is the subject matter of Evangelista's main counterclaim, should therefore be set off against
the sum claimed by appellee, which would leave in favor of the latter a balance of P29.85.

Considering our finding that it was appellee who committed a breach of contract, it follows that the present action was unjustified and he must be
held liable to appellant Evangelista for attorney's fees in the sum of P700.00.

Lastly, inasmuch as, according to the evidence appellant Lundberg was merely an agent of his co-appellant, it is obvious that he cannot be held
liable to appellee in connection with the refund of the sum advanced by the latter.

WHEREFORE, the appealed judgment is hereby modified by dismissing the complaint as to V. K. Lundberg; by reducing the judgment in favor of
appellee to the sum of P29.85, and by sentencing him, in turn, to pay appellant Evangelista the sum of F700.00 as attorney's fees".

Plaintiff-appellee Katigbak brought the matter to this Court on appeal by certiorari. In his petition he claims that the Court of Appeals erroneously
applied the doctrine enunciated in the Hanlon v. Hausserman case (40 Phil. 796, 815-816), and failed to apply the law relative to rescission of
contracts. Other issues raised are strictly factual and will only be mentioned here for reference.

We quote from the Hanlon case:

"x x x. In the present case the contract between Hanlon and the mining company was executory as to both parties, and the obligation of the
company to deliver the shares could not arise until Hanlon should pay or tender payment of the money. The situation is similar to that which arises
every day in business transactions in which the purchaser of goods upon an executory contract fails to take delivery and pay the purchase price.
The vendor in such case is entitled to resell the goods. If he is obliged to sell for less than the contract price, he holds the buyer for the difference; if
he sells for as much as or more than the contract price, the breach ot contract by the original buyer is damnum absque injuria. But it has never
been held that there is any need of an action of rescission to authorize the vendor, who is still in possession, to dispose of the property where the
buyer fails to pay the price and take delivery, x x x" (40 Phil. 815)

The facts of the case under consideration are identical to those of the Hanlon case. The herein petitioner failed to take delivery of the winch,
subject matter of the contract and such failure or breach was, according to the Court of Appeals, attributable to him, a fact which We are bound to
accept under existing jurisprudence. The right to resell the equipment, therefore, cannot be disputed. It was also found by the Court of Appeals
that in the subsequent sale of the winch to a third party, the vendor thereof lost P2.000.00, the sale having been only for P10,000.00, instead of
P12.000.00 as agreed upon, said difference to be borne by the supposed vendee who failed to take delivery and/or to pay the price.

Of course, petitioner tried to draw a distinction between the Hanlon case and his case. The slight differences in the facts noted by petitioner are
not, however, to our mode of thinking, sufficient to take away the case at bar from the application of the doctrine enunciated in the Hanlon case.

WHEREFORE, the petition is dismissed, and the decision appealed from is affirmed in all respects, with costs against petitioner.
 Bengzon, C.J., Bautista Angelo, Labrador, Concepcion, Reyes, J.B.L., Barrera and De Leon, JJ., concur.

Padilla and Dizon, JJ., took no part.

Petition dismissed. Katigbak vs. Court of Appeals, 4 SCRA 243, No. L-16480 January 31, 1962

1.
Cebu United Enterprises vs. Gallofin 106 Phil. 491 , November 18, 1959
Case Title : CEBU UNITED ENTERPRISES, plaintiff and appellee, vs. JOSE GALLOFIN, Collector of Customs, Cebú Port,
defendant and appellant.Case Nature : APPEAL from a judgment of the Court of First Instance of Cebu. Piccio, J.
Syllabi Class : IMPORTS|WORDS AND PHRASES|MEANING OF TERM "SHIPPED"
Syllabi:
1. IMPORTS; WORDS AND PHRASES; MEANING OF TERM "SHIPPED"; GOODS DEEMED IN TRANSIT FROM
ISSUANCE OF BILL OF LADING.+

Docket Number: No. L-12859

Counsel: Manuel A. Zoza, First Assistant Solicitor General Guillermo E. Torres, Solicitors Frine C. Zaballero, Pedro
Ocampo

Ponente: REYES

Dispositive Portion:
Wherefore, the appeal should be dismissed and the judgment of the lower court affirmed. So ordered.
IMPORTS; WORDS AND PHRASES; MEANING OF TERM "SHIPPED"; GOODS DEEMED IN TRANSIT FROM ISSUANCE OF BILL OF LADING.—The date of
the shipment is not the date when the vessel leaves the port of embarkation but the date when the goods for dispatch are loaded on board the
vessel, where it does not appear that the bill of lading specified any designated day on which the vessels were to lift anchor, nor was it shown that
the shipper had any knowledge that the vessels were not to depart soon after he placed his cargo on board.

APPEAL from a judgment of the Court of First Instance of Cebu. Piccio, J.

The facts are stated in the opinion of the Court.

REYES, J. B. L., J.:

This suit for mandatory injunction was instituted in the Court of First Instance of Cebú by the Cebú United Enterprise to compel Jose Gallofin, as
Collector of Customs, Cebú Port, to release and deliver to the plaintiff two imported shipments of 7,834 bales of overissue newspapers purchased
by the latter from the United States. As ancillary relief during the pendency of the action, the plaintiff prayed for the issuance of a writ of
preliminary mandatory injunction, which was granted by the court after the plaintiff posted a bond in the amount of P60,000.00 in favor of the
defendant. Thereafter, the goods were released to the plaintiff, it appearing further that the advance sales tax due on the same had been duly paid
upon arrival of the merchandise at port.

The importation of the aforesaid shipments was made under and by virtue of an Import Control Commission License No. 1225 issued by the
defunct Import Control Commission. Under the terms of the license, the plaintiff could import, on a no-dollar remittance basis, overissue
newspapers up to the amount or value of $118,000.00.

The refusal of the defendant to deliver the imported items is premised on his contention that while the five bills of lading covering the two
shipments of the overissue newspapers were all dated at Los Angeles, U.S.A. December 17, 1953, or one day before the expiration of the import
license in question, the vessels M/S VENTURA and M/S BATAAN, carrying on board the said merchandise, actually left the ports of embarkation, Los
Angeles, and San Francisco, on January 12 and January 16, 1954 respectively. Hence, according to the defendant, the importation must be
considered as having been made without a valid import license, because under the regulations issued by the Central Bank and the Monetary Board,
"all shipments that left the port of origin after June 30, 1953, and are covered by ICC licenses, may be released by the Bureau of Customs without
the need of a Central Bank release certificate; provided they left the port of origin within the period of validity of the licenses". No Central Bank
certificate for the release of the goods having been shown or presented to the defendant, the latter refused to make the delivery.
The lower court was thus confronted with the issue of determining whether the valid period of the license in question should be counted up to the
time when the vessels carrying the imported items left the ports of origin on January 12 and January 16, 1954, or when the corresponding bills of
lading were dated, or December 17, 1953. The court chose the latter date, and held:

"IN VIEW THEREFORE, this Court pronounces judgment making the writ of preliminary mandatory injunction issued against defendant permanent,
with orders for the cancellation of plaintiff's bond, this after whatever advance sales tax or any taxes, surcharges and so forth might be due on the
goods shall have been paid, without costs."

The defendant appealed to the Court of Appeals. The question raised, however, being purely one of law, the appeal was certified to us pursuant to
a resolution of said court dated July 19, 1957. The appeal has no merit.

The authority of the appellee to import was contained in the Import Control Commission License No. 17225, validated on June 18, 1953, and under
Resolution 70 of the Commission (adopted March 27, 1952), the same had a six-month period of validity counted from the said date of June 18,
1953. This license states, among other conditions, that—"Commodities covered by this license must be shipped from the country of origin before
the expiry date of the license, and are subject to sec. 13 of Republic Act No. 650."

Although Republic Act No. 650, creating the Import Control Commission, expired on July 31, 1953, it is to be conceded that its duly executed acts
can have valid effects even beyond the life span of said governmental agency.

What is important to consider only is the legal connotation of the word "shipped" as the term was used in the license. Defendant maintains that it
is when the vessel leaves the port of embarkation, while plaintiff holds that it is the dates of the bills of lading, which are usually issued after the
cargo is placed on board the vessel. That the date of the shipment is the date when the goods for dispatch are loaded on board the vessel, and not
necessarily when the ship puts to sea, is clearly implied from our ruling in the case of U.S. Tobacco Corporation vs. Rufino Luna, et al., (87 Phil., 4),
wherein we said:

"By section 6 of Act No. 426, all goods including leaf tobacco have been placed under control. Petitioner's merchandise left the port of departure
before the passage of that Act but arrived in Manila after its approval. For the purpose of enforcing or applying said Section 6, there can only be
one date of importation. Which was the date? The date the goods were ordered, the date they were put on board vessel, or the date they reached
the port of destination? We are of the opinion that the date of importation is the date of shipment and not the date of arrival in Manila." (Italics
supplied)

The issuance of the bill of lading, furthermore, presupposes or carries the presumption that the goods were delivered to the carrier for immediate
shipment (13 C. J. S. sec. 123 (2),. p. 235, and cases cited therein). It does not appear here that the bill of lading specified any designated day on
which the vessels were to lift anchor, nor was it shown that plaintiff had any knowledge that the vessels M/S VENTURA and M/S BATAAN were not
to depart soon after he placed his cargo on board and the corresponding bills of lading issued to him. From this latter time, the goods, in
contemplation of law, are deemed already in transit (New Civil Code, Arts. 1531 and 1736).

It should also be considered that it is entirely outside the shipper's hands to fix the dates of departure, route or arrival of a vessel (unless he
charters the whole ship [see Art. 656, Code of Commerce].

Defendant's reliance upon Central Bank regulations that the shipment licensed must have "left the port of origin within the period of validity of the
license" is not maintainable in the present case, because the regulations came into effect only on July 1, 1953 already after issuance of the
appellee's license and can not be read into the same (see 49 Off. Gaz. No. 6, p. 2189).

The Solicitor General's contention that, assuming the six months are counted up to the date the imported goods were placed on board the vessels
for shipment the period of validity had likewise already elapsed because, legally, six months mean 180 days, which in this case expired on
December 15, cannot now be entertained because the defendant-appellant, under paragraph 3 of his Answer to the Complaint, expressly admitted
that the date appearing on the bills of lading (December 17, 1953) as the date of loading on board the vessels "is one day before the expiration of
the validity of the import license". What he only questioned in the court below is the legal connotation of the word "shipped" under the import
license.
In the light of the resolution we have taken on the main issue, it becomes unnecessary for us to dwell further upon the other questions raised by
the parties.

Wherefore, the appeal should be dismissed and the judgment of the lower court affirmed. So ordered.

Parás, C. J., Bengzon, Padilla, Montemayor, Bautista Angelo, Labrador, Endencia, Barrera, and Gutiérrez David, JJ., concur.

Judgment affirmed. Cebu United Enterprises vs. Gallofin, 106 Phil. 491, No. L-12859 November 18, 1959

1.
Ocejo, Perez & Co. vs. International Bank. 37 Phil. 631 , February 14, 1918
Case Title : OCEJO, PEREZ & Co., plaintiffs and appellees, vs. THE INTERNATIONAL BANKING CORPORATION,
defendant and appellant. FRANCISCO CHUA SECO, as assignee, intervener and appellant.Case Nature : APPEAL from
a judgment of the Court of First Instance of Manila. Harvey, J.
Syllabi Class : SALES|VENDOR AND PURCHASER|DELIVERY|RESCISSION OF SALE|REPLEVIN
Syllabi:
1. SALES; VENDOR AND PURCHASER; DELIVERY; PASSAGE OF TITLE.+
2. SALES; VENDOR AND PURCHASER; ID+
3. SALES; VENDOR AND PURCHASER; PAYMENT OF PRICE; PASSAGE OF TITLE.+
4. SALES; VENDOR AND PURCHASER; RESCISSION.+
5. SALES; VENDOR AND PURCHASER; RESCISSION OF SALE; JUDICIAL, DISCRETION.+
6. SALES; VENDOR AND PURCHASER; RESCISSION; REPLEVIN; PARTIES TO ACTIONS.+
7. SALES; VENDOR AND PURCHASER; PUBLIC INSTRUMENT; PLEDGE.+

Docket Number: No. 10658

Counsel: Lawrence, Ross & Block, Wolfson & Wolfson, William A. Kincaid, Thomas L. Hartigan

Ponente: FISHER

Dispositive Portion:
The decision of the court below is therefore reversed, and it is decided that the assignee of the bankruptcy of Chua
Teng Chong is entitled to the product of the sale of the sugar here in question, to wit, P10,826.76, together with the
interest accruing thereon, reserving to the seller the right to file his claim in the insolvency proceedings. So ordered.

OCEJO, PEREZ & Co., plaintiffs and appellees, vs. THE INTERNATIONAL BANKING CORPORATION, defendant and appellant. FRANCISCO CHUA SECO,
as assignee, intervener and appellant.

1.SALES; VENDOR AND PURCHASER; DELIVERY; PASSAGE OF TITLE.—Where the terms of the contract of sale of goods are that the purchase price is
payable upon demand after delivery, the title to the goods passes to the buyer as soon as delivery is made.

2.ID.; ID.; ID.—Merchandise is delivered when the possession and control thereof is given by the seller to the buyer.

3.ID.; ID.; ID.; PAYMENT OF PRICE; PASSAGE OF TITLE.—In the absence of an express stipulation to the contrary the payment of the purchase price
of goods is not a condition precedent to the transfer of title to the buyer, but title passes by the delivery of the goods.

4.ID.; ID.; RESCISSION.—Where the terms of the contract of sale of goods are that payment of the purchase price is to be made on demand after
delivery, in the event of the failure or refusal of the buyer to make payment on demand the seller may elect to demand the rescission of the sale,
subject to intervening rights of third persons.

5.ID.; ID.; RESCISSION OF SALE; JUDICIAL, DISCRETION.—The election of the seller to demand a rescission of a sale does not in itself operate to
revest the title in him, if it has passed to the seller, or produce the resolution of the contract, if still executory. The right to a rescission is not
absolute, but is subject to the power of the court, in its discretion, to allow the buyer to make payment, notwithstanding the election of the seller
to demand rescission. Where rescission is permitted the operative act which produces the resolution of the contract is the decree of the court.

6.ID.; ID.; RESCISSION; REPLEVIN; PARTIES TO ACTIONS.—In order to effect the rescission of a sale of merchandise on the ground of the
nonpayment of the purchase price, the vendee is a necessary party; and such right cannot be made effective in an action of replevin instituted by
the vendor to recover the possession of the property from a third person claiming under the vendee.

7.ID.; ID.; PUBLIC INSTRUMENT; PLEDGE.—A pledge, to be valid against third persons, must be evidenced by a public instrument.
APPEAL from a judgment of the Court of First Instance of Manila. Harvey, J.

The facts are stated in the opinion of the court.

FISHER, J.:

On the 7th day of March, 1914, Chua Teng Chong of Manila, executed and delivered to the International Banking Corporation, hereinafter referred
to as "the bank," a promissory note, payable one month after date, for the sum of P20,000. Attached to this note was another private document,
signed by Chua Teng Chong, in which it was stated that he had deposited with the bank, as security for the said note, 5,000 piculs of sugar, which in
said document were said to be stored in a warehouse situated at No. 1008, Calle Toneleros, Binondo, Manila. It appears from the evidence,
assuming that the sugar was in the warehouse on that date, that the bank did not take possession of it when the document was executed and
delivered, and that Chua Teng Chong continued to retain the sugar in his possession and control. The bank made no effort to exercise any active
ownership over said merchandise until the 16th of April, when it discovered that the amount of sugar stored in the said warehouse was much less
than the 5,000 piculs mentioned in the contract. The agreement between the bank and Chua Teng Chong with respect to the alleged pledge of the
sugar was never recorded in a public instrument. It does not appear from the evidence that the promissory note represents money delivered by the
bank on the date of its execution, although it is stated therein that it was executed for value received.

On the 24th day of March, 1914, the plaintiff partnership Ocejo, Perez & Co., entered into a contract with Chua Teng Chong for the sale to him of a
lot of sugar. It was agreed that delivery should be made in the month of April, the sugar to be weighed in the buyer's warehouse. It appears that
this sugar was brought to Manila by a steamer in the month of April, and 5,000 piculs were delivered by plaintiff to Chua Teng Chong. The delivery
was completed April 16, 1914, and the sugar was stored in the buyer's warehouse situated at No. 119, Muelle de la Industria. On April 17, 1914,
plaintiff partnership presented, for collection, its account for the purchase price of the sugar, but the buyer refused to make payment, and up to
the present time the sellers have been unable to collect the purchase price of the merchandise in question.

On the same date as that on which the 5,000 piculs of sugar were delivered into the warehouse on Muelle de la Industria, the bank sent an
employee to inspect the sugar described in the pledge agreement, and which, as therein stated, should have been stored in the Calle Toneleros
warehouse. The bank's representative then discovered that the amount of sugar in that warehouse did not exceed 1,800 piculs, whereas the
amount which should have been there, according to the contract, was 5,000 piculs. Upon making this discovery, the bank's representative,
accompanied by a lawyer, went immediately to see Chua Teng Chong, and the latter informed him that the rest of the sugar covered by the pledge
agreement was stored in the warehouse at No, 119, Muelle de la Industria. The bank's representative immediately went to this warehouse and
upon arrival there found some 3,200 piculs of sugar, of which he took immediate possession, closing the warehouse with the bank's padlocks. It is
admitted that the sugar seized by the bank in the Muelle de la Industria warehouse is the same sugar which the plaintiff firm delivered to Chua
Teng Chong. On the date on which the bank took possession of the sugar the promissory note executed March 17, 1914, had fallen due and was
unpaid.

In the written contract by which the plaintiff firm un"dertook to sell the sugar in question to Chua Teng Chong nothing was said concerning the
time and place for payment. The court below found that the delivery of the sugar by plaintiff to Chua Teng Chong was made upon the mutual
understanding that the price was to be paid in cash "upon the completion of delivery." The plaintiff firm proved that in sales of this kind it is the
custom among merchants in Manila for the seller to deliver the merchandise into the warehouse of the buyer, for inspection and verification of
weights, and that as soon as this operation is completed, the price is payable on demand. After Chua Teng Chong had refused to pay the bill for the
price of the sugar which the plaintiff firm presented to him, the day after its delivery, an attempt was made by plaintiff to recover possession of the
sugar, and to that end, on April 24, 1914, the plaintiff made a demand on the bank for the delivery of the sugar, to which demand the bank refused
to accede. On April 24, 1914, the buyer Chua Teng Chong was judicially declared to be insolvent, and Francisco Chua Seco was appointed as
assignee of the insolvency. On the- same date, and a few minutes after the insolvency proceedings were commenced, the plaintiff partnership filed
a complaint, upon which this action was commenced, naming the bank as defendant, alleging that said defendant was unlawfully holding some
4,711 pilones of sugar, the property of the plaintiff firm, which the bank had received from Chua Teng Chong, and prayed for judgment for the
possession of said sugar. A few days after, the plaintiff firm took advantage of those provisions of the procedural law which permit a plaintiff to
replevin personal property. Subsequently, by agreement of the parties, the sugar was sold and the proceeds of the sale deposited in bank, subject
to the order of the court upon the final disposition of the case. After the answer of the defendant bank was filed, a complaint in intervention was
filed by Chua Seco, in which he asserts a preferential right to the sugar, or to the proceeds of its sale, upon the ground that the delivery of the sugar
by plaintiff, by virtue of which it passed into the possession and control of Chua Teng Chong, had the effect of transmitting the title of the sugar to
the latter, and that, on the other hand, the pledge asserted by the bank was null and void. Upon these allegations the intervener contends that the
sugar is the property of the insolvent estate represented by him. The lower court rendered judgment in favor of the plaintiff and from this decision
appeals have been taken by the bank and by the intervener.
Upon these facts the following questions arise:

(a) Did title to the sugar pass to the buyer upon its delivery to him?

(b) Assuming that the title passed to the buyer, did his failure to pay the purchase price authorize the seller to rescind the sale?

(c) Was the commencement of a replevin suit by the seller equivalent to the rescission of the sale?

(d) Can the pledge of the sugar to the bank be sustained upon the evidence as to the circumstances under which it obtained physical possession
thereof ?

Clearly, there can be no doubt that from March 24, 1914, on which date the parties agreed in regard to the quantity and quality of the sugar which
the seller was to deliver and. the price which the buyer was to pay, the contract was perfected. (Civil Code, art. 1450.) It is also clear that the
obligation of the seller to make delivery of the thing sold was not subject to the condition that the buyer was to pay the price before delivery. The
witness Pomar, called on behalf of the seller, testified that the price was to be paid after the completion of delivery. (Stenographic notes, p. 4.)

The sugar was delivered to the buyer March 16, 1914. The seller delivered it into the buyer's warehouse, leaving it entirely subject to his control,
Article 1462 of the Civil Code provides that the thing sold is deemed to be delivered "when it passes into the possession and control of the buyer."
It is difficult to see how the seller could have divested himself more completely of the possession of the sugar, or how he could have placed it more
completely under the control of the buyer.

On the day following the delivery of the sugar the seller presented his bill to the buyer, but the latter failed and refused to make payment. We
agree with the seller's contention that he was entitled to demand payment of the sugar at any time after its delivery. No term having 'been
stipulated within which the payment should be made, payment was demandable at the time and place of the delivery of the thing sold. (Civil Code,
art. 1500.) The seller did not avail himself of his right to demand payment as soon as the right to such payment arose, but as no term for payment
was stipulated, he was entitled to require payment to be made at any time after delivery, and it was the duty of the buyer to pay the price
immediately upon demand. But the seller not only argues that he was entitled to demand payment at any time after delivery, but contends further
that until such payment was in fact made, title to the sugar did not pass to the buyer. We cannot agree with this contention.

As Manresa says (vol. 10, p. 120), tradition is a true mode of acquiring ownership "which effects the passage .of title and the birth of the right in
rem. Therefore, the delivery of the thing * * * signifies that title has passed from the seller to the buyer."

If we were to sustain the seller's contention, the consequences to the business community would, in our judgment, be most deplorable. If the seller
may make delivery of the thing sold and clothe the buyer with all the appearances of ownership but without the passage of title until the purchase
price is actually paid, it occurs to us to inquire how long this anomalous state of affairs may be permitted to continue? It is the buyer's duty, upon
the assumed facts, to pay the price on demand, but the seller is not bound to present his account immediately. In the present case the buyer was
not called upon to make payment until the following day. If the seller had allowed three, four, or five days to go by before presenting his account
for payment, would it be permitted him still to contend that title had not passed? If title did not pass, any sale which might in the meantime be
made by the buyer, would be void, as it is evident that no one can transfer a greater interest than that which he possesses. With even greater
reason, the destruction of the thing in the possession of the buyer, before demand upon him for payment, would relieve him from the obligation to
pay—the thing perishes for its owner. (Tan Leonco vs. Go Inqui, 8 Phil. Rep., 531.)

The seller calls this transaction a cash sale, but, strictly speaking, it is not a cash sale. It is not like a sale made in a retail store, in which delivery and
payment are to be made simultaneously. Of course, when no term for payment is stipulated the seller is not bound to deliver the thing sold until
the buyer has paid him the price; but if, notwithstanding this right, delivery is consummated without requiring payment to be made in advance or
simultaneously, in fact he grants a term of credit to the buyer, however short and indeterminate it may be, and waives his right to insist upon
payment in advance or simultaneously with delivery, but in lieu thereof he becomes entitled to payment upon demand therefor made upon the
buyer. As is correctly stated in Williston on Sales:

"Confusion especially may be caused by use of the words 'cash sale' or 'terms cash' by business men. In business dealings these words are
frequently used when in reality a short period of credit is contemplated. In such a case it is clear there is no cash sale in the legal sense; for, under
the circumstances suggested, it is not contemplated that the buyer shall refrain from dealing with the goods or even from reselling them, and if
such is the contemplation of the parties, it is impossible to say that the property was not to pass until the price was paid." (Williston, Sales, par.
343.)
It is not contended that there was an express agreement in this case that the passage of title should be subject to the payment of the price, as a
condition precedent, As was stated by Justice Mapa, the author of the decision in the case of De la Rama vs. Sanchez, (10 Phil. Rep., 432) :

"The fact that the price of the property has not yet been paid in full is not, nor can it be, an obstacle to the acquisition of the ownership thereof by
the plaintiff, because as such a condition was not stipulated in the contract, the latter immediately produced its natural effects in law, the principal
and most important of which being the conveyance of the ownership by means of the delivery of the thing sold to the purchaser, without
prejudice, of course, to the right of the vendor to claim payment of any sum still due."

The same fundamental doctrine was stated by Chief Justice Arellano in the case of Gonzalez vs. Rojas (16 Phil. Rep., 51) :

"* * * ownership of things is not transferred by contract merely but by delivery. Contracts only constitute titles or rights to the transfer or
acquisition of ownership, while delivery or tradition is the method of accomplishing the same, the title and the method of acquiring it being
different in our law."

In the case of Kuenzle & Streiff vs. Watson & Co. (13 Phil. Rep., 26), the court sustained the validity of a sale of personal property subject to the
stipulation that title should not pass until the payment of the purchase price. On the other hand, when there has been no such express agreement
and the thing sold has been delivered, title passes from the moment the thing sold is placed in the "possession and control of the buyer."

Having concluded that the effect of the delivery was to transmit the title of the sugar to the buyer, we will now consider the legal effect of the
failure on the part of the buyer to pay the price on demand.

Article 1506 of the Civil Code provides that the contract of sale may be rescinded for the same causes as all other obligations, in addition to the
special causes enumerated in the preceding articles. It is to be observed that the article does not distinguish the consummated sale from the
merely perfected sale, and we do not believe that there is any reason for making this distinction. Article 1124 of the Civil Code establishes the
principle that all reciprocal obligations are rescindible in the event that one of the parties bound should fail to perform that which is incumbent
upon him. In the contract of sale the obligation to pay the price is correlative to the obligation to deliver the thing sold. Nonperformance by one of
the parties authorizes the other to exercise the right, conferred upon him by the law, to elect to demand the performance of the obligation or its
rescission (Mateos vs. Lopez, 6 Phil. Rep., 206), together with damages in either event. But the right to rescind the sale for nonperformance on the
part of the buyer is not absolute. The law subordinates it to the rights of third persons to whom bad faith is not imputable (Civil Code, arts. 1124
and 1295), and the defendant bank seeks to invoke in its defense this principle, alleging that the sugar in question was pledged to it, after its
delivery to the buyer and before the latter was placed in default with respect to the payment of the price.

We believe that this contention of the defendant bank cannot be sustained. In the first place, even giving all possible effect to the contract
evidenced by the private document exhibited by the bank (Exhibit No. 1), it is evident that the sugar therein mentioned is not the same as that here
in dispute. By this document, which bears date March 4, 1919, an attempt was made to pledge the lot of sugar deposited in warehouse No. 1008,
Calle Toneleros, Manila. The sugar in dispute has never been in that warehouse, as the seller delivered it into the bodega at No. 119, Muelle de la
Industria. The sugar here in question could not possibly have been the subject matter of the contract of pledge which the parties undertook to
create by the private document dated March 7, 1914, inasmuch as it was not at that time the property of the defendant, and this constitutes an
indispensable requisite for the creation of a pledge. (Civil Code, art. 1857.) It does not appear from the record that any effort was made to pledge
the sugar which is the subject matter of this case. It is true that it appears that in the afternoon of the day the sugar was delivered, the buyer gave
the bank's representative the keys of the warehouse on the Muelle de la Industria in which the sugar was stored, but it also appears from the
testimony of the bank's witness, Grey, to whom the keys of the warehouse were delivered, that this was not done because of an agreement
concerning the pledge of the sugar now in dispute. Grey testified that on the afternoon of April 16, 1914, he ascertained, after an inspection of the
warehouse on Calle Toneleros, that the sugar therein stored was not more than 1,800 piculs, instead of five thousand, as stated in the document of
pledge; that upon observing this shortage he asked the debtor to account for it, whereupon the latter stated "that the rest was in the warehouse at
No. 119, Muelle de la Industria;" that upon receiving this reply the witness went to the warehouse at No. 119, Muelle de la Industria, demanded
the keys from the person in charge, and then closed the warehouse with the bank's own padlocks. From these statements it appears that no
attempt was made to enter into any agreement for the pledge of the sugar here in question. The bank took possession of that sugar under the
erroneous belief, based upon the false statement of Chua Teng Chong, that it was a part of the lot mentioned in the private document dated March
7, 1914. But even if it were assumed that on the afternoon of April 16, 1914, an attempt was made to pledge the sugar and that delivery was made
in accordance with the agreement, the pledge so established would be void as against third persons. Article 1865 of the Civil Code provides that a
pledge is without effect as against third persons '''if the certainty of the date does not appear by public instrument." In the case of Tec Bi & Co. vs.
Chartered Bank of India, Australia and China, 16 Off. Gaz., 908 decided February 5, 1916, this court held that when the contract of pledge is not
recorded in a public instrument, it is void as against third persons; that the seller of the thing pledged, seeking to recover the purchase price
thereof, is a third person within the meaning of the article cited; and that the fact that the person claiming as pledgee has taken actual physical
possession of the thing sold will not prevent the pledge from being declared void as against the seller. The court held that the principle established
by article 1865 of the Civil Code is not adjective in its character, but that "it prescribes a condition without which the contract of pledge cannot
adVersely affect third persons." Applying the doctrine of the decision cited, it is evident that the pledge asserted by the International Bank is
inefficacious.

In the brief filed on behalf of the bank it is argued that in no case may a revindicatory action be maintained when the plaintiff attempts to exercise
the right to rescind the sale for nonpayment of the purchase price and that therefore a replevin suit will not lie. But as it is held that the bank has
no interest in this matter, as its alleged contract of pledge is utterly unavailing, it is evident that the question of procedure does not affect it. It
appears that by reason of the insolvency of the buyer Chua Teng Chong an insolvency proceeding was commenced in a court of competent
jurisdiction and in that proceeding- Francisco Chua Seco. was appointed assignee of the property of the insolvent. As such assignee Chua Seco filed
a complaint in intervention in this suit, in which he contends that by reason of its sale and delivery by plaintiff to the insolvent, title to the sugar
passed to the latter and that the pledge set up by the bank is void as to third persons. Standing in the place of the insolvent buyer, the assignee
asks that he be recognized in his representative capacity as the owner of the sugar in question. The voluntary intervention of the assignee of the
insolvent buyer cures the defect of nonjoiner of the latter as a party defendant, and all parties in interest have been heard in this proceeding.

The judgment of the court below awards the plaintiff the product of the sale of the sugar, it having been- so disposed of by agreement by the
parties during the pendency of the suit. The intervener excepted to the decision and joined in the bank's appeal. In his brief in this court the
intervener raises a question as to the sufficiency of the complaint to support the decision of the court below, adopting the argument of the bank
upon this point. That is, assuming that by reason of the nonpayment of the purchase price, the seller is entitled to elect to rescind the sale, is the
rescission effected ipso facto by such election, or is it necessary for him to bring an action of rescission? The action of replevin, the intervener
contends, is based (Code of Civil Procedure, sec. 268) upon the assumption that the plaintiff at the time of bringing the action is either the owner of
the thing which is the subject matter of the suit or entitled to its possession. But the question presented is whether, in cases in which title has
passed by delivery and in which the buyer has failed to pay the purchase price on demand, title is revested in the seller by the mere fact that he has
mentally determined to elect to rescind? In its brief the plaintiff partnership contends for the affirmative, saying that the acts of the seller—the
filing of its complaint—imply that it has made the election. But the intervener, adopting the argument of the bank, contends that the party to
whom article 1124 of the Civil Code grants the right to rescind "must apply to the court for a decree for the rescission of the contract * * *"
(Scaevola, vol. 19, p. 673) ; and this conclusion is supported by the last paragraph of the article cited. Of course, if the action of the court is
necessary in order to effectuate the rescission of the sale, such rescission does not follow ipso jure by reason of nonpayment and the
determination of the seller to elect to rescind. Consequently, the action of replevin cannot be maintained. The right to rescind a sale, established
by article 1506, in no wise differs from that which is established, in general terms, with respect to reciprocal obligations, by article 1124 in "the
event that one of the obligors fails to perform the obligation incumbent upon him." But the right so conferred is not an absolute one. The same
article provides that "the court shall decree the rescission demanded, unless there are causes which justify him in allowing a term."

Therefore, it is the judgment of the court and not the mere will of the plaintiff which produces the rescission of the sale. This being so, the action of
replevin will not lie upon the theory that the rescission has already taken place and that the seller has recovered title to the thing sold.

If the buyer himself had intervened, instead of the assignee in the bankruptcy suit, we might perhaps have said that all the parties in interest
having been heard, we would overlook the matter of procedure and proceed to adjudicate the rights of the parties upon the evidence submitted.
But as the buyer has been declared insolvent, it is clear that his creditors have an interest in this question, and that if this interest is discussed in
the bankruptcy proceedings, they will have an opportunity to be heard. In the present condition of the case, the only thing we can do is to decide
that the title to the sugar having passed to the buyer and no action for rescission having been commenced against him before the declaration of
insolvency, the assignee, standing in the shoes of the buyer, has a better right to its possession or to the product of its sale during the pendency of
this action. We cannot apply section 126 of the Code of Civil Procedure, because one of the material averments of the complaint is that Chua Teng
Chong unlawfully took possession of the sugar. The evidence shows, on the contrary, that it was delivered to him by plaintiff. Strictly speaking the
mission of the court ends at this point, but following the practice adopted in other cases, for the purpose of avoiding an unnecessary multiplicity of
suits, and bearing in mind the fact that the assignee of the bankruptcy is a party to this proceedings, we deem it advisable to indicate that we are of
the opinion that the rights of the seller are protected by section 48 of Act No. 1956, inasmuch as the sugar in question had not passed by an
"irrevocable title" when the buyer was declared insolvent. Attention is also invited to the decision of the court overruling the motion for a
rehearing in the case of Tec Bi & Co. vs. Chartered Bank of India, Australia & China, cited above.1
The decision of the court below is therefore reversed, and it is decided that the assignee of the bankruptcy of Chua Teng Chong is entitled to the
product of the sale of the sugar here in question, to wit, P10,826.76, together with the interest accruing thereon, reserving to the seller the right to
file his claim in the insolvency proceedings. So ordered.

Arellano, C. J., Torres, Johnson, Carson, Araullo, Street, and Malcolm, JJ., concur.

Judgment reversed. Ocejo, Perez & Co. vs. International Bank., 37 Phil. 631, No. 10658 February 14, 1918

1.
García vs. Velasco 72 Phil. 248 , June 10, 1941
Case Title : EMILIANO E. GARCIA, as guardian of Elisa, Maria, Anita, Pastor, Gabino, Jose and Pacita, all surnamed
García, plaintiff and appellant, vs. PAZ E. VELASCO (alias PAZ VELASCO), defendant and appellee.Case Nature :
APPEAL from a judgment of the Court of First Instance of Manila. De la Costa, J.
Syllabi Class : PLEADING AND PRACTICE|SALE OF REAL ESTATE FOR A LUMP SUM|VENUE|ARTICLE 1471 OF THE
CIVIL CODE
Syllabi:
1. PLEADING AND PRACTICE; VENUE; PERSONAL ACTION.+
2. SALE OF REAL ESTATE FOR A LUMP SUM; ARTICLE 1471 OF THE CIVIL CODE; CASE AT BAR.+

Docket Number: No. 47519

Counsel: Manuel P. Suñga, Juan M. Ladaw

Ponente: MORAN

Dispositive Portion:
Judgment is reversed, and defendant is hereby ordered to pay plaintiff the sum of P3,824, with costs against her.
1.PLEADING AND PRACTICE; VENUE; PERSONAL ACTION.—True that the fish pond is situated in Bulacan and the authority for its sale emanated
from the Court of First Instance of the same province; but the action is for recovery of the purchase price and is not one against "executors,
administrators and guardians touching the performance of their official duties." It is, therefore, a personal action and its venue should be laid "in
any province where the defendant or any necessary defendant may reside or be found, or in any province where the plaintiff or one of the
plaintiffs resides, at the election of the plaintiff." As the plaintiff is a resident of the City of Manila, the filing of the complaint therein was an
exercise of his right of election in accordance with law.

2.SALE OF REAL ESTATE FOR A LUMP SUM; ARTICLE 1471 OF THE CIVIL CODE; CASE AT BAR.—Upon the question of law of whether upon a sale of
real property in gross and for a lump sum, the purchaser may be entitled to an equitable reduction in the price in proportion to what is lacking in
the area as designated in the contract, the trial court credited the defendant the sum of P3,824 upon the evidence that the fish pond purchased by
him was only eight (8) hectares when it was described in the contract to contain "una extension superficial de once (11) hectáreas, treinta y ocho
(38) areas, y setenta y siete (77) centiáreas, poco más o menos." The question is controlled by article 1471 of the Civil Code which provides that "in
case of the sale of real estate for a lump sum and not at the rate of a specified price for each unit of measure or number there shall be no increase
or decrease of the price even if the area or number be found to be more or less than that stated in the contract." The transaction here involved is,
according to paragraph 5 of the deed of sale (Exhibit D), one for a lump sum and not at a specified price for each unit of measure and, therefore, no
reduction can be authorized although the area was less than what was stated in the contract. There are instances in which equitable relief may be
granted to the purchaser, as where the deficiency is very great for, under such circumstance, gross mistake may be inferred. (Asiain vs. Jalandoni,
45 Phil., 296.) But, in the instant case, we are satisfied that, although the shortage amounts to practically one-fourth of the total area, the
purchaser clearly intended to take the risk of quaintity, and that the area has been mentioned in the contract merely for the purpose of
description. From the circumstance that the defendant, before her purchase of the fish pond, had been in possession and control thereof for two
years as a lessee, she can rightly be presumed to have acquired a good estimate of its value and area, and her subsequent purchase thereof must
have been premised on the knowledge of such value and area. Accordingly, she cannot now be heard to claim an equitable reduction in the
purchase price on the pretext that the property is much less than she thought it was.

APPEAL from a judgment of the Court of First Instance of Manila. De la Costa, J.

The facts are stated in the opinion of the court.

MORAN, J.:
On July 1, 1929, Florentino Garcia, as duly appointed guardian of the minors, Elisa, Maria, Anita, Pastor, Gabino, Jose and Pacita, all surnamed
Garcia, leased to defendant Paz E. Velasco, for a period of ten years at an annual rental of P750, a fish pond belonging to said minors, situated in
Paombong, Bulacan. On May 22, 1931, pursuant to authority granted him by the court, he sold the fish pond to said defendant for a lump sum of
P14,000. On October 29, 1935, Emiliano E. Garcia, who was appointed guardian in substitution of Florentino Garcia, was ordered by the court to
institute an appropriate action for the recovery from the defendant of the purchase price of the fish pond. The action was instituted 'in the Court of
First Instance of Manila where said guardian resides. Defendant, in a special appearance, objected to the court's jurisdiction over her person, and
on the overruling of the objection, a demurrer was interposed reasserting the original ground of objection and adding, as another ground, want of
the court's jurisdiction over the subject matter of the action. The demurrer having been overruled, defendant filed her answer in which she
renewed her objection to the court's jurisdiction over her person and the subject matter, pleads the special defense of payment, and sets up a
counterclaim for P249.57. On the issues thus joined, the trial court rendered judgment dismissing the action on the ground of lack of jurisdiction
and that the amount claimed has already been paid. Hence, this appeal.

Upon the question of jurisdiction raised, we are of the opinion that the trial court erred in sustaining defendant's objection. True that the fish pond
is situated in Bulacan and the authority for its sale emanated from the Court of First Instance of the same province; but the action is for recovery of
the purchase price and is not one against "executors, administrators and guardians touching the performance of their official duties." It is,
therefore, a personal action and its venue should be laid "in any province where the defendant or any necessary defendant may reside or be found,
or in any province where the plaintiff or one of the plaintiffs resides, at the election of the plaintiff." As the plaintiff is a resident of the City of
Manila, the filing of the complaint therein was an exercise of his right of election in accordance with law. Although, as a judicial policy, only
residents should be appointed as guardians (Guerrero vs. Teran, 13 Phil., 212), the fact that the plaintiff has been appointed as guardian by the
Court of First Instance of Bulacan does not necessarily exclude his residence in Manila as alleged in the complaint and not directly denied in the
answer.

On the issue of payment upon which defendant's claim was sustained, we find no ground for disturbing the findings of the trial court; but upon the
question of law of whether upon a sale of real property in gross and for a lump sum, the purchaser may be entitled to an equitable reduction in the
price in proportion to what is lacking in the area as designated in the contract, the trial court credited the defendant the sum of P3,824 upon the
evidence that the fish pond purchased by him was only eight (8) hectares when it was described in the contract to contain "una extension
superficial de once (11) hectáreas, treinta y ocho (38) areas, y setenta y siete (77) centiáreas, pocomás o menos." The question is controlled by
article 1471 of the Civil Code which provides that "in case of the sale of real estate for a lump sum and not at the rate of a specified price for each
unit of measure or number there shall be no increase or decrease of the price even if the area or number be found to be more or less than that
stated in the contract." The transaction here involved is, according to paragraph 5 of the deed of sale (Exhibit D), one for a lump sum and not at a
specified price for each unit of measure and, therefore, no reduction can be authorized although the area was less than what was stated in the
contract. There are instances in which equitable relief may be granted to the purchaser, as where the deficiency is very great for, under such
circumstance, gross mistake may be inferred. (Asiain vs. Jalandoni, 45 Phil., 296.) But, in the instant case, we are satisfied that, although the
shortage amounts to practically one-fourth of the total area, the purchaser clearly intended to take the risk of quantity, and that the area has been
mentioned in the contract merely for the purpose of description. From the circumstance that the defendant, before her purchase of the fish pond,
had been in possession and control thereof for two years as a lessee, she can rightly be presumed to have acquired a good estimate of its value and
area, and her subsequent purchase thereof must have been premised on the knowledge of such value and area. Accordingly, she cannot 'now be
heard to claim an equitable reduction in the purchase price on the pretext that the property is much less than she thought it was.

Judgment is reversed, and defendant is hereby ordered to pay plaintiff the sum of P3,824, with costs against her.

Avanceña, C. J., Diaz, Laurel, and Horrilleno, JJ., concur.

Judgment reversed. García vs. Velasco, 72 Phil. 248, No. 47519 June 10, 1941

1.
Balatbat vs. Court of Appeals 261 SCRA 128 , August 28, 1996
Case Title : CLARA M. BALATBAT, petitioner, vs. COURT OF APPEALS and Spouses JOSE REPUYAN and AURORA
REPUYAN, respondents.Case Nature : PETITION for review on certiorari of a decision of the Court of Appeals.
Syllabi Class : Civil Law|Sales|Double Sales
Syllabi:
1. Civil Law; Sales; The failure of the buyer to make good the price does not, in law, cause the ownership to revest
to the seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil
Code.+
2. Civil Law; Sales; When the sale is made through a public instrument, the execution thereof shall be equivalent to
the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot
be inferred.+
3. Civil Law; Sales; The provision of Article 1358 on the necessity of a public document is only for convenience, not
for validity or enforceability.+
4. Civil Law; Sales; A contract of sale being consensual, it is perfected by the mere consent of the parties.+
5. Civil Law; Sales; Double Sales; Persons to whom ownership of an immovable property shall be transferred in
case of double sale.+
6. Civil Law; Sales; Double Sales; The annotation of the adverse claim on TCT No. 135671 in the Registry of
Property is sufficient compliance as mandated by law and serves notice to the whole world.+
7. Civil Law; Sales; Double Sales; As between two purchasers, the one who has registered the sale in his favor, has
a preferred right over the other who has not registered his title even if the latter is in actual possession of the
immovable property.+
8. Civil Law; Sales; Double Sales; A purchaser of a valued piece of property cannot just close his eyes to facts
which should put a reasonable man upon his guard and then claim that he acted in good faith and under the belief
that there was no defect in the title of the vendor.+

Division: SECOND DIVISION

Docket Number: G.R. No. 109410

Counsel: Facundo T. Bautista, Federico R. Onandia

Ponente: TORRES, JR.

Dispositive Portion:
IN VIEW OF THE FOREGOING PREMISES, this petition for review is hereby DISMISSED for lack of merit. No
pronouncement as to costs.

Civil Law; Sales; The failure of the buyer to make good the price does not, in law, cause the ownership to revest to the seller unless the bilateral
contract of sale is first rescinded or resolved pursuant to Article 1191 of the New Civil Code.—Devoid of any stipulation that “ownership in the thing
shall not pass to the purchaser until he has fully paid the price,” ownership in the thing shall pass from the vendor to the vendee upon actual or
constructive delivery of the thing “sold even if the purchase price has not yet been fully paid. The failure of the buyer to make good the price does
not, in law, cause the ownership to revest to the seller unless the bilateral contract of sale is first rescinded or resolved pursuant to Article 1191 of
the New Civil Code. Non-payment only creates a right to demand the fulfillment of the obligation or to rescind the contract.

Same; Same; When the sale is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the
object of the contract, if from the deed the contrary does not appear or cannot be inferred.—With respect to the nondelivery of the possession of
the subject property to the private respondent, suffice it to say that ownership of the thing sold is acquired only from the time of delivery thereof,
either actual or constructive. Article 1498 of the Civil Code provides that—when the sale is made through a public instrument, the execution
thereof shall be equivalent to the delivery of the thing which is the object of the contract, if from the deed the contrary does not appear or cannot
be inferred. The execution of the public instrument, without actual delivery of the thing, transfers the ownership from the vendor to the vendee,
who may thereafter exercise the rights of an owner over the same.

Same; Same; The provision of Article 1358 on the necessity of a public document is only for convenience, not for validity or enforceability.—In the
instant case, vendor Roque delivered the owner’s certificate of title to herein private respondent. It is not necessary that vendee be physically
present at every square inch of the land bought by him, possession of the public instrument of the land is sufficient to accord him the rights of
ownership. Thus, delivery of a parcel of land may be done by placing the vendee in control and possession of the land (real) or by embodying the
sale in a public instrument (constructive). The provision of Article 1358 on the necessity of a public document is only for convenience, not for
validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument.

Same; Same; A contract of sale being consensual, it is perfected by the mere consent of the parties.—A contract of sale being consensual, it is
perfected by the mere consent of the parties. Delivery of “the thing bought or payment of the price is not necessary for the perfection of the
contract; and failure of the vendee to pay the price after the execution of the contract does not make the sale null and void for lack of
consideration but results at most in default on the part of the vendee, for which the vendor may exercise his legal remedies.

Same; Same; Double Sales; Persons to whom ownership of an immovable property shall be transferred in case of double sale.—Article 1544 of the
Civil Code provides that in case of double sale of an immovable property, ownership shall be transferred (1) to the person acquiring it who in good
faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in possession; and (3) in default
thereof, to the person who presents the oldest title, provided there is good faith.

Same; Same; Same; The annotation of the adverse claim on TCT No. 135671 in the Registry of Property is sufficient compliance as mandated by law
and serves notice to the whole world.—This is an instance of a double sale of an immovable property hence, the ownership shall vest in the person
acquiring it who in good faith first recorded it in the Registry of Property. Evidently, private respondents Repuyans caused the annotation of an
adverse claim on the title of the subject property denominated as Entry No. 5627/T135671 on July 21, 1980. The annotation of the adverse claim
on TCT No. 135671 in the Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world.

Same; Same; Same; As between two purchasers, the one who has registered the sale in his favor, has a preferred right over the other who has not
registered his title even if the latter is in actual possession of the immovable property.—As between two purchasers, the one who has registered
the sale in his favor, has a preferred right over the other who has not registered his title even if the latter is in actual possession of the immovable
property. Further, even in default of the first registrant or first in possession, private respondents have presented the oldest title. Thus, private
respondents who acquired the subject property in good faith and for valuable consideration established a superior right as against the petitioner.

Same; Same; Same; A purchaser of a valued piece of property cannot just close his eyes to facts which should put a reasonable man upon his guard
and then claim that he acted in good faith and under the belief that there was no defect in the title of the vendor.—It is incumbent upon the
vendee of the property to ask for the delivery of the owner’s duplicate copy of the title from the vendor. A purchaser of a valued piece of property
cannot just close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faith and under the
belief that there were no defect in the title of the vendor. One who purchases real estate with knowledge of a defect or lack of title in his vendor
cannot claim that he has acquired title thereto in good faith as against the true owner of the land or of an interest therein; and the same rule must
be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint
him with the defects in the title of his vendor. Good faith, or the want of it is not a visible, tangible fact that can be seen or touched, but rather a
state or condition of mind which can only be judged of by actual or fancied tokens or signs.

The facts are stated in the opinion of the Court.

TORRES, JR., J.:

Petitioner Clara M. Balatbat instituted this petition for review pursuant to Rule 45 of the Revised Rules of Court seeking to set aside the decision
dated August 12, 1992 of the respondent Court of Appeals in CA-G.R. CV No. 29994 entitled “Alejandro Balatbat and Clara Balatbat, plaintiffs-
appellants versus Jose Repuyan and Aurora Repuyan, defendantsappellees,” the dispositive portion of which reads:1

“WHEREFORE, the judgment appealed from is affirmed with the modification that the awards of P10,000.00 for attorney’s fees and P5,000.00 as
costs of litigation are deleted.

SO ORDERED."

The records show the following factual antecedents:

It appears that on June 15, 1977, Aurelio A. Roque filed a complaint for partition docketed as Civil Case No. 109032 against Corazon Roque, Alberto.
de los Santos, Feliciano Roque, Severa Roque and Osmundo Roque before the then Court of First Instance of Manila, Branch IX.2 Defendants
therein were declared in default and plaintiff presented evidence ex-parte. On March 29, 1979, the trial court rendered a decision in favor of
plaintiff Aurelio A. Roque, the pertinent portion of which reads:3

1 Decision, Rollo, pp. 47–58; Penned by Justice Minerva Gonzaga-Reyes, concurred by Justice Nathanael de Pano, Jr., Consuelo Ynares-Santiago.

2 Complaint, Original Records, pp. 14–18.

3 Decision, Original Records, pp. 19–22.

 “From the evidence, it has been clearly established that the lot in question covered by Transfer Certificate of Title No. 51330 was acquired by
plaintiff Aurelio Roque and Maria Mesina during their conjugal union and the house constructed thereon was likewise built during their marital
union, Out of their union, plaintiff and Maria Mesina had four children, who are the defendants in this case. When Maria Mesina died on August
28, 1966, the only conjugal properties left are the house and lot above stated of which plaintiff herein, as the legal spouse, is entitled to one-half
share pro-indiviso thereof. With respect to the one-half share pro-indiviso now forming the estate of Maria Mesina, plaintiff and the four children,
the defendants here, are each entitled to one-fifth (1/5) share pro-indiviso. The deceased wife left no debt.

Wherefore, judgment is hereby rendered ordering the partition of the properties, subject matter of this case consisting of the house and lot, in the
following manner:

1. Of the house and lot forming the conjugal properties, plaintiff is entitled to one-half share pro-indiviso thereof while the other half forms the
estate of the deceased Maria Mesina;

2. Of the Estate of deceased Maria Mesina, the same is to be divided into five (5) shares and plaintiff and his four children are entitled each to one-
fifth share thereof pro-indiviso.

Plaintiff claim for moral, exemplary and actual damages and attorney’s fees not having been established to the satisfaction of the Court, the same
is hereby denied.

Without pronouncement as to costs.

SO ORDERED."

On June 2, 1979, the decision became final and executory. The corresponding entry of judgment was made on March 29, 1979.4 On October 5,
1979, the Register of Deeds of Manila issued a Transfer Certificate of Title No. 135671 in the name of the following persons in the following
proportions:5

Osmundo M. Roque 1/10 share

Feliciano M. Roque 1/10 share

Corazon M. Roque 1/10 share

On April 1, 1980, Aurelio A. Roque sold his 6/10 share in T.C.T. No. 135671 to spouses Aurora Tuazon-Repuyan and Jose Repuyan as evidenced by a
“Deed of Absolute Sale."6

On July 21, 1980, Aurora Tuazon Repuyan caused the annotation of her affidavit of adverse claim7 on the Transfer Certificate of Title No. 135671,8
to wit:

“Entry No. 5627/T-135671—NOTICE OF ADVERSE CLAIM—Filed by Aurora Tuazon Repuyan, married, claiming among others that she bought 6/10
portion of the property herein described from Aurelio Roque for the amount of P50,000.00 with a down payment of P5,000.00 and the balance of
P45,000.00 to be paid after the partition and subdivision of the property herein described, other claims set forth in Doc. No. 954, page 18, Book 94
of ___________________ 64 ____________PEDRO DE CASTRO, Notary Public of Manila.

Date of instrument—July 21, 1980

Date of inscription—July 21, 1980 at 3:35 p.m.

TERESITA H. NOBLEJAS

Acting Register of Deeds

By:

RAMON D. MACARICAN

Acting Second Deputy”

On August 20, 1980, Aurelio A. Roque filed a complaint for “Rescission of Contract” docketed as Civil Case No. 134131 against spouses Aurora
Tuazon-Repuyan and Jose Repuyan before Branch IV of the then Court of First Instance of Manila. The complaint is grounded on spouses Repuyan’s
failure to pay the balance of P45,000.00 of the purchase price.9 On

September 5, 1980, spouses Repuyan filed their answer with counterclaim.10

In the meantime, the trial court issued an order in Civil Case No. 109032 (Partition case) dated February 2, 1982, to wit:11

“In view of all the foregoing and finding that the amount of P 100,000.00 as purchase price for the sale of the parcel of land covered by TCT No.
51330 of the Registry of Deeds of Manila consisting of 84 square meters situated in Callejo Sulu, District of Santa Cruz, Manila, to be reasonable and
fair, and considering the opportunities given defendants to sign the deed of absolute sale voluntarily, the Court has no alternative but to order, as it
hereby orders, the Deputy Clerk of this Court to sign the deed of absolute sale for and in behalf of defendants pursuant to Sec. 10, Rule 39 of the
Rules of Court, in order to effect the partition of the property involved in this case.

SO ORDERED."

A deed of absolute sale was executed on February 4, 1982 between Aurelio S. Roque, Corazon Roque, Feliciano Roque, Severa Roque and Osmundo
Roque and Clara Balatbat, married to Alejandro Balatbat.12 On April 14, 1982, Clara Balatbat filed a motion for the issuance of a writ of possession
which -was granted by the trial court on September 14, 1982 “subject, however, to valid rights and interest of third persons over the same portion
thereof, other than vendor or any other person or persons privy to or claiming any rights or interest under it.” The corresponding writ of possession
was issued on September 20, 1982.13

On May 20, 1982, petitioner Clara Balatbat filed a motion to intervene in Civil Case No. 13413114 which was granted as per court’s resolution of
October 21, 1982.15 However, Clara Balatbat failed to file her complaint in intervention.16 On April 15, 1986, the trial court rendered a decision
dismissing the complaint, the pertinent portion of which reads:17

The rescission of contracts are provided for in the laws and nowhere in the provision of the Civil Code under the title Rescissible Contracts does the
circumstances in the case at bar appear to have occurred, hence, the prayer for rescission is outside the ambit for which rescissible [sic] could be
granted.

“The Intervenor—Plaintiff, Clara Balatbat, although allowed to intervene, did not file her complaint in intervention.

“Consequently, the plaintiff having failed to prove with sufficient preponderance his action, the relief prayed for had to be denied. The contract of
sale denominated as “Deed of Absolute Sale” (Exh. 7 and sub-markings) being valid and enforceable, the same pursuant to the provisions of Art,
1159 of the Civil Code which says:

“Obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith.”
has the effect of being the law between the parties and should be complied with. The obligation of the plaintiff under the contract being to have
the land covered by TCT No. 135671 partitioned and subdivided, and title issued in the name of the defendant buyer (see page 2 par. C of Exh. 7-A)
plaintiff had to comply thereto to give effect to the contract.

“WHEREFORE, judgment is rendered against the plaintiff, Aurelio A. Roque, and the plaintiff in intervention, Clara Balatbat, and in favor of the
defendants, dismissing the complaint for lack of merit, and declaring the Deed of Absolute Sale dated April 1, 1980 as valid and enforceable and the
plaintiff is, as be is hereby ordered, to partition and subdivide the land covered by T.C.T. No. 135671, and to aggregate therefrom a portion
equivalent to 6/10 thereof, and cause the same to be titled in the name of the defendants, and after which, the defendants to pay the plaintiff the
sum of P45,000.00.

Considering further that the defendants suffered damages since they were forced to litigate unnecessarily, by way of their counter-claim, plaintiff is
hereby ordered to pay defendants the sum of P15,000.00 as moral damages, attorney’s fees in the amount of P5,000.00.

Costs against plaintiff.

SO ORDERED."

On March 3, 1987, petitioner Balatbat filed a notice of lis pendens in Civil Case No. 109032 before the Register of Deeds of Manila.18

On December 9, 1988, petitioner Clara Balatbat and her husband, Alejandro Balatbat filed the instant complaint for delivery of the owners
duplicate copy of T.C.T. No. 135671 docketed as Civil Case No. 88–47176 before Branch 24 of the Regional Trial Court of Manila against private
respondents Jose Repuyan and Aurora Repuyan.19

On January 27, 1989, private respondents filed their answer with affirmative defenses and compulsory counterclaim.20

On November 13, 1989, private respondents filed their memorandum21 while petitioners filed their memorandum on November 23, 1989.22

On August 2, 1990, the Regional Trial Court of Manila, Branch 24, rendered a decision dismissing the complaint, the dispositive portion of which
reads:23

“Considering all the foregoing, this Court finds that the plaintiffs have not been able to establish their cause of action against the defendants and
have no right to the reliefs demanded in the complaint and the complaint of the plaintiff against the defendants is hereby DISMISSED. On the
counterclaim, the plaintiff are ordered to pay defendants the amount of Ten Thousand Pesos by way of attorney’s fees, Five Thousand Pesos as
costs of litigation and further to pay the costs of the suit.

SO ORDERED."

Dissatisfied, petitioner Balatbat filed an appeal before the respondent Court of Appeals which rendered the assailed decision on August 12, 1992,
to wit:24

“WHEREFORE, the judgment appealed from is affirmed with the modification that the awards of P10,000.00 for attorney’s fees and P5,000.00 as
costs of litigation are deleted.

SO ORDERED."
On March 22, 1993, the respondent Court of Appeals denied petitioner’s motion for reconsideration.25

Hence, this petition for review.

Petitioner raised the following issues for this Court’s resolution:

WHETHER OR NOT THE ALLEGED SALE TO THE PRIVATE RESPONDENTS WAS MERELY EXECUTORY AND NOT A CONSUMMATED TRANSACTION?

II

WHETHER OR NOT THERE WAS A DOUBLE SALE AS CONTEMPLATED UNDER ART. 1544 OF THE CIVIL CODE?

III

WHETHER OR NOT PETITIONER WAS A BUYER IN GOOD FAITH AND FOR VALUE?

WHETHER OR NOT THE COURT OF APPEALS ERRED IN GIVING WEIGHT AND CONSIDERATION TO THE EVIDENCE OF THE PRIVATE RESPONDENTS
WHICH WERE NOT OFFERED?

Petitioner asseverates that the respondent Court of Appeals committed grave abuse of discretion tantamount to lack or excess of jurisdiction in
affirming the appealed judgment considering (1) that the alleged sale in favor of the private respondents Repuyan was merely executory; (2) that
there is no double sale; (3) that petitioner is a buyer in good faith and for value; and (4) that private respondents did not offer their evidence during
the trial.

Contrary to petitioner’s contention that the sale dated April 1, 1980 in favor of private respondents Repuyan was merely executory for the reason
that there was no delivery of the subject property and that consideration/price was not fully paid, we find the sale as consummated, hence, valid
and enforceable. In a decision dated April 15, 1986 of the Regional Trial Court of Manila, Branch IV in Civil Case No. 134131, the Court dismissed
vendor Aurelio Roque’s complaint for rescission of the deed of sale and declared that the sale dated April 1, 1980, as valid and enforceable. No
appeal having been made, the decision became final and executory. It must be noted that herein petitioner Balatbat filed a motion for intervention
in that case but did not file her complaint in intervention. In that case wherein Aurelio Roque sought to rescind the April 1, 1980 deed of sale in
favor of the private respondents for non-payment of the P45,000.00 balance, the trial court dismissed the complaint for rescission. Examining the
terms and conditions of the “Deed of Sale” dated April 1, 1980, the P45,000.00 balance is payable only “after the property covered by T.C.T. No.
135671 has been partitioned and subdivided, and title issued in the name of the BUYER" hence, vendor Roque cannot demand payment of the
balance unless and until the property has been subdivided and titled in the name of the private respondents. Devoid of any stipulation that
“ownership in the thing shall not pass to the purchaser until he has fully paid the price,"26 ownership in the thing shall pass from the vendor to the
vendee upon actual or constructive delivery of the thing sold even if the purchase price has not yet been fully paid. The failure of the buyer to make
good the price does not, in la, cause the ownership to revest to the seller unless the bilateral contract of sale is first rescinded or resolved pursuant
to Article 1191 of the New Civil Code.27 Non-payment only creates a right to demand the fulfillment of the obligation or to rescind the contract.

With respect to the non-delivery of the possession of the subject property to the private respondent, suffice it to say that ownership of the thing
sold is acquired only from the time of delivery thereof, either actual or constructive.28 Article 1498 of the Civil Code provides that—when the sale
is made through a public instrument, the execution thereof shall be equivalent to the delivery of the thing which is the object of the contract, if
from the deed the contrary does not appear or cannot be inferred.29 The execution of the public instrument, without actual delivery of the thing,
transfers the ownership from the vendor to the vendee, who may thereafter exercise the rights of an owner over the same.30 In the instant case,
vendor Roque delivered the owner’s certificate of title to herein private respondent. It is not necessary that vendee be physically present at every
square inch of the land bought by him, possession of the public instrument of the land is sufficient to accord him the rights of ownership. Thus,
delivery of a parcel of land may be done by placing the vendee in control and possession of the land (real) or by embodying the sale in a public
instrument (constructive). The provision of Article 1358 on the necessity of a public document is only for convenience, not for validity or
enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public instrument.31

A contract of sale being consensual, it is perfected by the mere consent of the parties.32 Delivery of the thing bought or payment of the price is not
necessary for the perfection of the contract; and failure of the vendee to pay the price after the execution of the contract does not make the sale
null and void for lack of consideration but results at most in default on the part of the vendee, for which the vendor may exercise his legal
remedies.33
Article 1544 of the New Civil Code 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 property.

“Should it be movable 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 present the oldest title, provided there is good faith.”

Article 1544 of the Civil Code provides that in case of double sale of an immovable property, ownership shall be transferred (1) to the person
acquiring it who in good faith first recorded it in the Registry of Property; (2) in default thereof, to the person who in good faith was first in
possession; and (3) in default thereof, to the person who presents the oldest title, provided there is good faith.34

In the case at bar, vendor Aurelio Roque sold 6/10 portion of his share in TCT No. 135671 to private respondents Repuyan on April 1, 1980.
Subsequently, the same lot was sold again by vendor Aurelio Roque (6/10) and his children (4/10), represented by the Clerk of Court pursuant to
Section 10, Rule 39 of the Rules of Court, on February 4, 1982. Undoubtedly, this is a case of double sale contemplated under Article 1544 of the
New Civil Code.

This is an instance of a double sale of an immovable property hence, the ownership shall vest in the person acquiring it who in good faith first
recorded it in the Registry of Property. Evidently, private respondents Repuyans caused the annotation of an adverse claim on the title of the
subject property denominated as Entry No. 5627/T-135671 on July 21, 1980.35 The annotation of the adverse claim on TCT No. 135671 in the
Registry of Property is sufficient compliance as mandated by law and serves notice to the whole world.

On the other hand, petitioner filed a notice of /is pendens only on February 2, 1982. Accordingly, private respondents who first caused the
annotation of the adverse claim in good faith shall have a better right over herein petitioner. Moreover, the physical possession of herein
petitioners by virtue of a writ of possession issued by the trial court on September 20, 1982 is “subject to the valid rights and interest of third
persons over the same portion thereof, other than vendor or any other person or persons privy to or claiming any rights to interest under it."36 As
between two purchasers, the one who has registered the sale in his favor, has a preferred right over the other who has not registered his title even
if the latter is in actual possession of the immovable property.37 Further, even in default of the first registrant or first in possession, private
respondents have presented the oldest title.38 Thus, private respondents who acquired the subject property in good faith and for valuable
consideration established a superior right as against the petitioner.

Evidently, petitioner cannot be considered as a buyer in good faith. In the complaint for rescission filed by vendor Aurelio Roque on August 20,
1980, herein petitioner filed a motion for intervention on May 20, 1982 but did not file her complaint in intervention, hence, the decision was
rendered adversely against her. If petitioner did investigate before buying the land on February 4, 1982, she should have known that there was a
pending case and an annotation of adverse claim was made in the title of the property before the Register of Deeds and she could have discovered
that the subject property was already sold to the private respondents. It is incum“bent upon the vendee of the property to ask for the delivery of
the owner’s duplicate copy of the title from the vendor. A purchaser of a valued piece of property cannot just close his eyes to facts which should
put a reasonable man upon his guard and then claim that he acted in good faith and under the belief that there were no defect in the title of the
vendor.39 One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in
good faith as against the true owner of the land or of an interest therein; and the same rule must be applied to one who has knowledge of facts
which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor.
Good faith, or the want of it is not a visible, tangible fact that can be seen or touched, but rather a state or condition of mind which can only be
judged of by actual or fancied tokens or signs.40

In fine, petitioner had nobody to blame but herself in dealing with the disputed property for failure to inquire or discover a flaw in the title to the
property, thus, it is axiomatic that—culpa lata dolo aequiparatur—gross negligence is equivalent to intentional wrong.

IN VIEW OF THE FOREGOING PREMISES, this petition for review is hereby DISMISSED for lack of merit. No pronouncement as to costs.

IT IS SO ORDERED.

Regalado (Chairman), Romero, Puno and Mendoza, JJ., concur.

Petition dismissed.

Note.—The rule caveat emptor requires the purchaser to be aware of the supposed title of the vendor and he who buys without checking the
vendor’s title takes all the risks and losses consequent to such failure. (Samson us. Court of Appeals, 238 SCRA 397 [1994])