CASE NO.

31 – HEIRS OF ARTURO REYES vs SOCCO BELTRAN

PRINCIPLE:
Article 1459 on contracts of sale “specifically requires that the vendor must have
ownership of the property at the time it is delivered;” ownership need not be with the seller at
the time of perfection.
A contract to sell, or a conditional contract of sale where the suspensive condition has not
happened, even when found in a public document, cannot be treated as constituting constructive
delivery, especially when from the face of the instrument it is shown that the seller “was not yet
the owner of the property and was only expecting to inherit it.

FACTS:
The subject property in this case is a parcel of land allocated to the Spouses Laquian, who
paid for the same with Japanese money. When the husband died, the property was left to his wife
Constancia. Upon her death, the original parcel of land was left with her heirs – her siblings. The
subject property, Lot No. 6-B, was adjudicated to respondent, but no title had been issued in her
name.
On 25 June 1998, respondent Elena Socco-Beltran filed an application for the purchase of
Lot No. 6-B before the Department of Agrarian Reform (DAR), alleging that it was adjudicated
in her favour in the extra-judicial settlement of Constancia Socco’s estate. Petitioners herein, the
heirs of the late Arturo Reyes, filed their protest to respondent’s petition before the DAR on the
ground that the subject property was sold by respondent’s brother, Miguel R. Socco, in favour of
their father, Arturo Reyes, as evidenced by a Contract to Sell.

ISSUE: Whether or not petitioners acquired ownership over the disputed property by the virtue
of the contract to sell.

HELD: NO

RULING:
Petitioners cannot derive title to the subject property by virtue of the Contract to Sell. It
was unmistakably stated in the Contract and made clear to both parties thereto that the vendor,
Miguel R. Socco, was not yet the owner of the subject property and was merely expecting to
inherit the same as his share as a co-heir of Constancia’s estate. 
 It was also declared in the Contract itself that Miguel R. Socco’s conveyance of the
subject to the buyer, Arturo Reyes, was a conditional sale. It is, therefore, apparent that the sale
of the subject property in favor of Arturo Reyes was conditioned upon the event that Miguel
Socco would actually inherit and become the owner of the said property. Absent such
occurrence, Miguel R. Socco never acquired ownership of the subject property which he could
validly transfer to Arturo Reyes.
Under Article 1459 of the Civil Code on contracts of sale, "The thing must be licit and
the vendor must have a right to transfer ownership thereof at the time it is delivered." The law
specifically requires that the vendor must have ownership of the property at the time it is
delivered. Petitioners claim that the property was constructively delivered to them in 1954 by
virtue of the Contract to Sell. However, as already pointed out by this Court, it was explicit in the
Contract itself that, at the time it was executed, Miguel R. Socco was not yet the owner of the
property and was only expecting to inherit it.
Hence, there was no valid sale from which ownership of the subject property could have
transferred from Miguel Socco to Arturo Reyes. Without acquiring ownership of the subject
property, Arturo Reyes also could not have conveyed the same to his heirs, herein petitioners.

CASE NO.32 - ROYAL BANK VS. CA 269 SCRA 15 (1997)

PRINCIPLE:
Where the sale from one person to another was fictitious, as there was no consideration,
and therefore void and inexistent, the latter has no title to convey to third persons.

FACTS:
Filriters through a Detached Agreement transferred ownership to Philfinance a Central
Bank Certificate of Indebtedness.  It was only through one of its officers by which the CBCI was
conveyed without authorization from the company. Petitioner and Philfinance later entered into a
Repurchase   agreement, on which petitioner bought the CBCI from Philfinance. 
The latter agreed to repurchase the CBCI but failed to do so. When the petitioner tried to
have it registered in its name in the CB, the latter didn't want to recognize the transfer. 
 
ESSUE:
Whether or not the assignment of registered certificate is valid
Whether or not the Doctrine of piercing the veil of corporate fiction is applicable

HELD: NO

RULLING:

The assignment was null and void. It was done without the knowledge and consent of the
Directors of Filriters. Under 1409 of the Civil Cod, those contracts which are absolutely
simulated or fictitious are considered void and inexistent from the beginning.

Also, there was no consideration involved. Although the deed of assignment stated that
the transfer was for "value received", there was really no consideration involved. What happened
was Philfinance merely borrowed CBCI No. D891 from Filriters, a sister corporation. Thus, for
lack of any consideration, the assignment made is a complete nullity.

The detached assignment is patently void and inoperative because the assignment is
without the knowledge and consent of directors of Filriters, and not duly authorized in writing by
the Board, as requiring by Article V, Section 3 of CB Circular No. 769.

The assignment of the CBCI to Philfinance is a personal act of Alfredo Banaria and not
the corporate act of Filriters and such null and void. Hence, the Philfinance never acquired title
or rights under CBCI No. D891.

The Doctrine of Piercing the Veil of Corporate Friction is not applicable. Petitioner
cannot put up the excuse of piercing the veil of corporate entity, as this merely an equitable
remedy, and may be awarded only in cases when the corporate fiction is used to defeat public
convenience, justify wrong, protect fraud or defend crime or where a corporation is a mere alter
ego or business conduit of a person. 18

Piercing the veil of corporate entity requires the court to see through the protective
shroud which exempts its stockholders from liabilities that ordinarily, they could be subject to, or
distinguished one corporation from a seemingly separate one, were it not for the existing
corporate fiction. But to do this, the court must be sure that the corporate fiction was misused, to
such an extent that injustice, fraud, or crime was committed upon another, disregarding, thus, his,
her, or its rights. It is the protection of the interests of innocent third persons dealing with the
corporate entity which the law aims to protect by this doctrine.

The fact that Filfinance owns majority shares in Filriters is not by itself a ground to
disregard the independent corporate status of Filriters.

In the case at bar, there is sufficient showing that the petitioner was not defrauded at all
when it acquired the subject certificate of indebtedness from Philfinance.

On its face the subject certificates states that it is registered in the name of Filriters. This
should have put the petitioner on notice, and prompted it to inquire from Filriters as to
Philfinance's title over the same or its authority to assign the certificate. As it is, there is no
showing to the effect that petitioner had any dealings whatsoever with Filriters, nor did it make
inquiries as to the ownership of the certificate. Petitioner, being a commercial bank, cannot feign
ignorance of Central Bank Circular 769, and its requirements.

CASE NO.33 - CEBU WINLAND DEVT. CORP. VS. ONG SIAO HUA 588 SCRA 120
(2009)

PRINCIPLE:

If the vendee is placed in actual possession of the property, but by agreement of the
parties ownership of the same is retained by the vendor until the vendee has fully paid the price,
the mere transfer of the possession of the property subject of the sale is not the "delivery"
contemplated in the Law on Sales or as used in Article 1543 of the Civil Code.

FACTS:

Cebu Winland Development Corporation, is the owner and developer of a condominium

project called the Cebu Winland Tower Condominium. Respondent, Ong Siao Hua, is a buyer of
two condominium units and four parking slots from petitioner.

While the Cebu Winland Tower Condominium was under construction, petitioner offered
to sell to respondent condominium units at promotional prices. As an added incentive, petitioner
offered a 3% discount provided 30% of the purchase price is paid as down payment and the
balance paid in 24 equal monthly installments. Respondent accepted the offer of petitioner and
bought two condominium units. Respondent, therefore, paid ₱2,298,655.08 as down payment
and issued 24 postdated checks in the amount of ₱223,430.70 per check for the balance of the
purchase price in the total amount of ₱5,362,385.19
 The parties did not execute any written document setting forth the said transaction. On
October 10, 1996, possession of the subject properties was turned over to respondent. After the
purchase price was fully paid, respondent requested petitioner for the condominium certificates
of title evidencing ownership of the 2 155 sq.m units. Petitioner then sent to respondent, for the
latter’s signature, documents denominated as Deeds of Absolute Sale for the two condominium
units.

Upon examination of the deed of absolute sale of Unit No. 2405 and the identical
document for Unit No. 2406, respondent was distressed to find that the stated floor area is only
127 square meters contrary to the area indicated in the price list which was 155 square meters.
Respondent caused a verification survey of the said condominium units and discovered that the
actual area is only 110 square meters per unit. Respondent demanded from petitioner to refund
the amount of ₱2,014,105.50 representing excess payments for the difference in the area.
Petitioner refused to refund the said amount to respondent.

ISSUE: Whether or not respondent’s action has prescribed

HELD: NO
RULING:
Article 1497 contemplates what is known as real or actual delivery, when the thing sold is
placed in the control and possession of the vendee. Article 1498, on the one hand, refers to
symbolic delivery by the execution of a public instrument.
In light of the foregoing, "delivery" as used in the Law on Sales refers to the concurrent
transfer of two things: (1) possession and (2) ownership. This is the rationale behind the
jurisprudential doctrine that presumptive delivery via execution of a public instrument is negated
by the reality that the vendee actually failed to obtain material possession of the land subject of
the sale. In the same vein, if the vendee is placed in actual possession of the property, but by
agreement of the parties ownership of the same is retained by the vendor until the vendee has
fully paid the price, the mere transfer of the possession of the property subject of the sale is not
the "delivery" contemplated in the Law on Sales or as used in Article 1543 of the Civil Code.
In the case at bar, it appears that respondent was already placed in possession of the
subject properties. However, it is crystal clear that the deeds of absolute sale were still to be
executed by the parties upon payment of the last installment. This fact shows that ownership of
the said properties was withheld by petitioner. Following case law, it is evident that the parties
did not intend to immediately transfer ownership of the subject properties until full payment and
the execution of the deeds of absolute sale.28 Consequently, there is no "delivery" to speak of in
this case since what was transferred was possession only and not ownership of the subject
properties.
We, therefore, hold that the transfer of possession of the subject properties on October
10, 1996 to respondent cannot be considered as "delivery" within the purview of Article 1543 of
the Civil Code. It follows that since there has been no transfer of ownership of the subject
properties since the deeds of absolute sale have not yet been executed by the parties, the action
filed by respondent has not prescribed.

CASE NO.34 - PHIL. SUBURBAN DEVT. CORP. VS. AUDITOR GENERAL

63 SCRA 397 (1975)

PRINCIPLE:
When the sale of real property is made in a public instrument, the execution thereof is
equivalent to the delivery of the thing object of the contract, if from the deed the contrary does
not appear or cannot clearly be inferred.
FACTS:
On June 8, 1960, at a meeting with the Cabinet, the President of the Philippines approved
in principle the acquisition by the People's Homesite and Housing Corporation of the unoccupied
portion of the Sapang Palay Estate in Sta. Maria, Bulacan for relocating the squatters who desire
to settle north of Manila, and of another area either in Las Piñas or Parañaque, Rizal, or Bacoor,
Cavite for those who desire to settle south of Manila.
On June 10, 1960, the Board of Directors of the PHHC passed Resolution No. 700
(Annex "C") authorizing the purchase of the unoccupied portion of the Sapang Palay Estate at
P0.45 per square meter. On December 29,1960, after an exchange of communications, Petitioner
Philippine Suburban Development Corporation, and the People's Homesite and Housing
Corporation, entered into a contract embodied in a public instrument entitled "Deed of Absolute
Sale" whereby the former conveyed unto the latter the two parcels of land.
The above document was not registered in the Office of the Register of Deeds until
March 14, 1961, due to the fact, petitioner claims, that the PHHC could not at once advance the
money needed for registration expenses. It appears that as early as the first week of June, 1960,
prior to the signing of the deed by the parties, the PHHC acquired possession of the property,
with the consent of petitioner, to enable the said PHHC to proceed immediately with the
construction of roads in the new settlement and to resettle the squatters and flood victims in
Manila who were rendered homeless by the floods or ejected from the lots which they were then
occupying.
On April 12, 1961, the Provincial Treasurer of Bulacan requested the PHHC to withhold
the amount of P30,099.79 from the purchase price to be paid by it to the Philippine Suburban
Development Corporation. Said amount represented the realty tax due on the property involved
for the calendar year 1961. Petitioner, through the PHHC, paid under protest the abovementioned
amount to the Provincial Treasurer of Bulacan and thereafter, or on June 13, 1961, by letter,
requested then Secretary of Finance Dominador Aytona to order a refund of the amount so paid.
Petitioner claimed that it ceased to be the owner of the land in question upon the execution of the
Deed of Absolute Sale on December 29, 1960. Upon recommendation of the Provincial
Treasurer of Bulacan, said request was denied by the Secretary of Finance in a letter-decision
dated August 22, 1961.
Corporation, as vendor, maintains that in view of the execution of the deed of sale on
December 29, 1960 it ceased to be the owner of the property involved and that consequently it
was under no obligation to pay the real property tax thereon effective January 1, 1961. On the
other hand, Provincial Treasurer contends that, as under the Land Registration Act (Act No. 496)
the Philippine Suburban Development Corporation is still the owner of the property until the
deed of sale covering the same has been actually registered, the vendor is still liable to the
payment of real property tax for the calendar year 1961.
It is now claimed in this appeal that the Auditor General erred in disallowing the refund
of the real estate tax in the amount of P30,460.90 because aside from the presumptive delivery of
the property by the execution of the deed of sale on December 29, 1960, the possession of the
property was actually delivered to the vendee prior to the sale, and, therefore, by the transmission
of ownership to the vendee, petitioner has ceased to be the owner of the property involved, and,
consequently, under no obligation to pay the real property tax for the year 1961.

ISSUE: Whether or not vendor remains as the owner of the lands, hence, obliged to pay the real
property taxes.

HELD: NO

RULING:
No, the vendor did not remain as the owner of the lands due to the delayed registration in
the Register of Deeds.
Under the civil law, delivery (tradition) as a mode of transmission of ownership maybe
actual or constructive (real or constructive tradition). When the sale of real property is made in a
public instrument, the execution thereof is equivalent to the delivery of the thing object of the
contract, if from the deed the contrary does not appear or cannot clearly be inferred. In other
words, there is symbolic delivery of the property subject of the sale by the execution of the
public instrument, unless from the express terms of the instrument, or by clear inference
therefrom, this was not the intention of the parties.
In the case at bar, there is no question that the vendor had actually placed the vendee in
possession and control over the thing sold, even before the date of the sale. The condition that
petitioner should first register the deed of sale and secure a new title in the name of the vendee
before the latter shall pay the balance of the purchase price, did not preclude the transmission of
ownership. In the absence of an express stipulation to the contrary, the payment of the purchase
price of the good is not a condition, precedent to the transfer of title to the buyer, but title passes
by the delivery of the goods.
 CASE NO.35 - DAVID VS. MISAMIS OCCIDENTAL ELECTRIC COOPERATIVE,
INC. 676 SCRA 367 (2012)

PRINCIPLE:
ART. 1523: Where, in pursuance of a contract of sale, the seller is authorized or required
to send the goods to the buyer delivery of the goods to a carrier, whether named by the buyer or
not, for the purpose of transmission to the buyer is deemed to be a delivery of the goods to the
buyer, except in the cases provided for in Article 1503, first, second and third paragraphs, or
unless a contrary intent appears.

FACTS:
Petitioner Virgilio S. David (David) was the owner or proprietor of VSD Electric Sales, a
company engaged in the business of supplying electrical hardware including transformers for
rural electric cooperatives like respondent Misamis Occidental II Electric Cooperative, Inc.
(MOELCI), with principal office located in Ozamis City. To solve its problem of power shortage
affecting some areas within its coverage, MOELCI expressed its intention to purchase a 10 MVA
power transformer from David. For this reason, its General Manager, Engr. Reynaldo Rada
(Engr. Rada), went to meet David in the latter s office in Quezon City. David agreed to supply
the power transformer provided that MOELCI would secure a board resolution because the item
would still have to be imported.
On June 8, 1992, Engr. Rada and Jimenez, who was in-charge of procurement, returned
to Manila and presented to David the requested board resolution which authorized the purchase
of one 10 MVA power transformer. In turn, David presented his proposal for the acquisition of
said transformer.  As stated in the proposal, the subject transformer, together with the basic
accessories, was valued at P5,200,000.00. It was also stipulated therein that 50% of the purchase
price should be paid as downpayment and the remaining balance to be paid upon delivery.
Freight handling, insurance, customs duties, and incidental expenses were for the account of the
buyer.
The Board Resolution, on the other hand, stated that the purchase of the said transformer
was to be financed through a loan from the National Electrification Administration (NEA). As
there was no immediate action on the loan application, Engr. Rada returned to Manila in early
December 1992 and requested David to deliver the transformer to them even without the
required downpayment. David granted the request provided that MOELCI would pay interest at
24% per annum. Engr. Rada acquiesced to the condition. On December 17, 1992, the goods were
shipped to Ozamiz City via William Lines. In the Bill of Lading, a sales invoice was included
which stated the agreed interest rate of 24% per annum.
When nothing was heard from MOELCI for sometime after the shipment, Emanuel
Medina (Medina), David s Marketing Manager, went to Ozamiz City to check on the shipment.
Medina was able to confer with Engr. Rada who told him that the loan was not yet released and
asked if it was possible to withdraw the shipped items. Medina agreed.
When no payment was made after several months, Medina was constrained to send a
demand letter, dated September 15, 1993, which MOELCI duly received. Engr. Rada replied in
writing that the goods were still in the warehouse of William Lines again reiterating that the loan
had not been approved by NEA. This prompted Medina to head back to Ozamiz City where he
found out that the goods had already been released to MOELCI evidenced by the shipping
company s copy of the Bill of Lading which was stamped "Released," and with the notation that
the arrastre charges in the amount of P5,095.60 had been paid. This was supported by a receipt of
payment with the corresponding cargo delivery receipt issued by the Integrated Port Services of
Ozamiz, Inc.
Subsequently, demand letters were sent to MOELCI demanding the payment of the
whole amount plus the balance of previous purchases of other electrical hardware. Aside from
the formal demand letters, David added that several statements of accounts were regularly sent
through the mails by the company and these were never disputed by MOELCI.
On February 17, 1994, David filed a complaint for specific performance with damages
with the RTC. In response, MOECLI moved for its dismissal on the ground that there was lack
of cause of action as there was no contract of sale, to begin with, or in the alternative, the said
contract was unenforceable under the Statute of Frauds. MOELCI argued that the quotation letter
could not be considered a binding contract because there was nothing in the said document from
which consent, on its part, to the terms and conditions proposed by David could be inferred.
David knew that MOELCI s assent could only be obtained upon the issuance of a purchase order
in favor of the bidder chosen by the Canvass and Awards Committee.
 In its July 17, 2008 Decision, the RTC dismissed the complaint. It found that although a
contract of sale was perfected, it was not consummated because David failed to prove that there
was indeed a delivery of the subject item and that MOELCI received it Aggrieved, David
appealed his case to the CA. The CA affirmed the ruling of the RTC. In the assailed decision, A
motion for reconsideration was filed by David but it was denied. Hence, this petition.

ISSUE: Whether or not there was a perfected contract of sale.

HELD: YES

RULING:
An examination of the alleged contract to sell, "Exhibit A," despite its unconventional
form, would show that said document, with all the stipulations therein and with the attendant
circumstances surrounding it, was actually a Contract of Sale. The rule is that it is not the title of
the contract, but its express terms or stipulations that determine the kind of contract entered into
by the [Link], there was meeting of minds as to the transfer of ownership of the subject
matter. The letter (Exhibit A), though appearing to be a mere price quotation/proposal, was not
what it seemed. It contained terms and conditions, so that, by the fact that Jimenez, Chairman of
the Committee on Management, and Engr. Rada, General Manager of MOELCI, had signed their
names under the word "CONFORME," they, in effect, agreed with the terms and conditions with
respect to the purchase of the subject 10 MVA Power Transformer. As correctly argued by
David, if their purpose was merely to acknowledge the receipt of the proposal, they would not
have signed their name under the word "CONFORME."
Besides, the uncontroverted attending circumstances bolster the fact that there was
consent or meeting of minds in the transfer of ownership. To begin with, a board resolution was
issued authorizing the purchase of the subject power transformer. Next, armed with the said
resolution, top officials of MOELCI visited David s office in Quezon City three times to discuss
the terms of the purchase. Then, when the loan that MOELCI was relying upon to finance the
purchase was not forthcoming, MOELCI, through Engr. Rada, convinced David to do away with
the 50% downpayment and deliver the unit so that it could already address its acute power
shortage predicament, to which David acceded when it made the delivery, through the carrier
William Lines, as evidenced by a bill of lading.
Second, the document specified a determinate subject matter which was one (1) Unit of
10 MVA Power Transformer with corresponding KV Line Accessories. And third, the document
stated categorically the price certain in money which was P5,200,000.00 for one (1) unit of 10
MVA Power Transformer and P2,169,500.00 for the KV Line Accessories.
In sum, since there was a meeting of the minds, there was consent on the part of David to
transfer ownership of the power transformer to MOELCI in exchange for the price, thereby
complying with the first element. Thus, the said document cannot just be considered a contract to
sell but rather a perfected contract of sale.
Article 1523 of the Civil Code becomes applicable. It provides: Where, in pursuance of a
contract of sale, the seller is authorized or required to send the goods to the buyer delivery of the
goods to a carrier, whether named by the buyer or not, for the purpose of transmission to the
buyer is deemed to be a delivery of the goods to the buyer, except in the cases provided for in
Article 1503, first, second and third paragraphs, or unless a contrary intent appears. (Emphasis
supplied) Thus, the delivery made by David to William Lines, Inc., as evidenced by the Bill of
Lading, was deemed to be a delivery to MOELCI. David was authorized to send the power
transformer to the buyer pursuant to their agreement. When David sent the item through the
carrier, it amounted to a delivery to MOELCI.
Furthermore, in the case of Behn, Meyer & Co. (Ltd.) v. Yangco,14 it was pointed out
that a specification in a contract relative to the payment of freight can be taken to indicate the
intention of the parties with regard to the place of delivery. So that, if the buyer is to pay the
freight, as in this case, it is reasonable to suppose that the subject of the sale is transferred to the
buyer at the point of shipment. In other words, the title to the goods transfers to the buyer upon
shipment or delivery to the carrier.
 CASE NO.36 - SANTIAGO VS. VILLAMOR 686 SCRA 313 (2012)

PRINCIPLE:
Execution of the deed of sale is only a prima facie presumption of delivery. Article 1477
of the Civil Code recognizes that the “ownership of the thing sold shall be transferred to the
vendee upon the actual or constructive delivery thereof.” Related to this article is Article 1497
which provides that “the thing sold shall be understood as delivered, when it is placed in the
control and possession of the vendee.”

FACTS:

The Villamors mortgaged their 4.5-hectare coconut land in Sta. Rosa known as Lot No.
1814, to the Rural Bank of San Jacinto (San Jacinto Bank) as security for a P10,000.00 loan. For
non-payment of the loan, the San Jacinto Bank extrajudicially foreclosed the mortgage and
bought the land, being the highest bidder at the public auction. The latter obtained a final deed of
sale in its favor when the spouses Villamor failed to redeem the property within the prescribed
period.

The respondents and San Jacinto Bank agreed to a 65,000.00 sale, payable in
installments. The respondents, together with their sister Catalina, made four (4) installment
payments of P28,000.00, P5,500.00, P7,000.00 and P24,500.00 on November 1991, November
1992, April 1993 and June 1994, respectively. Despite full payment, San Jacinto Bank refused to
issue a deed of conveyance claiming that it already issued a deed of repurchase in favor of the
spouses Villamor, Sr.; that the payments made were credited to the account of Domingo, Sr.
since the real buyers of the land were the spouses Villamor, Sr.

RTC dismissed the specific performance case. However, the CA, on appeal, set aside the
RTC’s decision. Further, prior to the filing of the respondents and Catalina’s complaint for
specific performance, the San Jacinto Bank issued a deed of sale in favor of Domingo, Sr. On
July 1994, the spouses Villamor, Sr. Sold the land to the petitioners for P150,000.00.

Petitioners filed on October 1994 a complaint for quieting of title and recovery of
possession against the respondents after having refused to vacate the subject land. The former
anchor their claim over the disputed land on the notarized deed of sale executed in their favor by
the spouses Villamor, Sr. Who in turn obtained a notarized deed of sale from the San Jacinto
Bank. On the other hand, the respondents claim title by virtue of their installment payments to
the San Jacinto Bank and their actual possession of the disputed land.
ISSUE: Whether there was an actual or constructive delivery between the petitioners and
spouses Villamor, Sr.?

HELD: NO

RULING:
Quieting of title is a common law remedy for the removal of any cloud, doubt or
uncertainty affecting title to real property. The plaintiffs must show not only that there is a cloud
or contrary interest over the subject real property, but that they have a valid title to it.
Execution of the deed of sale only a prima facie presumption of delivery. Article 1477 of
the Civil Code recognizes that the “ownership of the thing sold shall be transferred to the vendee
upon the actual or constructive delivery thereof.” Related to this article is Article 1497 which
provides that “the thing sold shall be understood as delivered, when it is placed in the control and
possession of the vendee.”
With respect to incorporeal property, Article 1498 of the Civil Code lays down the
general rule: the execution of a public instrument “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
clearly be inferred.” However, the execution of a public instrument gives rise only to a prima
facie presumption of delivery, which is negated by the failure of the vendee to take actual
possession of the land sold.
In this case, no constructive delivery of the land transpired upon the execution of the deed
of sale since it was not the spouses Villamor, Sr. But the respondents who had actual possession
of the land. The presumption of constructive delivery is inapplicable and must yield to the reality
that the petitioners were not placed in possession and control of the land.

CASE NO.37 - CAOIBES, JR. VS. CAOIBES-PANTOJA 496 SCRA 273 (2006)

PRINCIPLE:
 Art. 1489. 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 clearly be inferred.

FACTS:
An agreement entitled “Renunciation and Transfer of Claims, Rights and Interests” was
forged between petitioners and respondents on May 10, 1982, covering a parcel of land situated
in Calaca, Batangas containing an area of 54, 665 sq.m. In the aforesaid document, it provides
that the petitioners are to renounce, relinquish and abandon whatever rights, interests or claims
they may have over the real property and hereby transfer, cede and convey said rights in favor of
the respondents.
14 years after the execution of the parties’ above-said agreement (1996), respondent filed
a motion to intervene and be substituted as applicant in the said LRC case. The motion was
opposed by the petitioners who denied the authenticity and due execution of the agreement. The
LRC denied respondent’s motion. The RTC granted their motion; however, the CA reversed said
decision of the lower court.

ISSUE: Whether or not the action for prescription on Pantoja started from the time of the
agreement of the parties?

HELD: YES

RULING:

The agreement of the parties is analogous to a deed of sale in favor of respondent, it

having transferred ownership for and in consideration of her payment of the load in the principal
amount of P19,000 outstanding in the name of one Javier. The agreement having been made
through a public instrument; the execution was equivalent to the delivery of the property to
respondent.

In respondent’s complaint for specific performance, she seeks to enforce the agreement
for her to be subrogated and/or substituted as applicant in the land registration proceeding over
subject lot. The agreement is of course in consonance with Sec. 22 of PD 1529:

SEC. 22. Dealings with land pending original registration – After the filing of the
application and before the issuance of the decree of registration, the land therein described may
still be the subject of dealings in whole or in part, in which case the interested party shall present
to the court the pertinent instruments together with the subdivision plan approved by the Director
of Lands in case of transfer of portions thereof, and the court, after notice to the parties, shall
order such land registered subject to the conveyance or encumbrance created by said instruments,
or order that the decree of registration be issued in the name of the person to whom the property
has been conveyed by said instruments.

The subsitution by respondent of petitioners as applicant in the land registration case over
sbject lot is not even necessary. All respondent has to do is to comply with the requirements
under Sec. 22 of the Property Registration Decree. Ergo, it was unnecessary for respondent to
file the case of specific performance subject of the present petition against petitioners to honor
their agreement allowing her to be subsituted in their stead as applicant in the land registration
proceeding.

CASE NO.38 - DY, JR. VS. CA 198 SCRA 826

PRINCIPLE:
ART 1499: The delivery of movable property may likewise be made by the mere consent
or agreement of the contracting parties, if the thing sold cannot be transferred to the possession
of the vendee at the time of the sale, or if the latter already had it in his possession for any other
reason. 
FACTS:

Petitioners Perfecto Dy and Wilfredo Dy are brothers. On sometime in 1979, Wilfredo

Dy purchased a truck and a farm tractor through financing extended by Libra Finance and
Investment Corporation (Libra). Both were mortgaged by the latter a security for the loan.

Perfecto Dy wanted to buy the tractor from his brother so he wrote a letter to Libra
requesting that he be allowed to purchase from Wilfredo the said tractor and assume the
mortgage debt of the latter. Consequently, the request was approved.

Thus, Wilfredo executed a deed of absolute sale in favor of his brother over the tractor in
question. However, at this time, the subject tractor was in the possession of Libra due to
Wilfredo’s failure to pay the amortizations. Despite the offer of full payment, the immediate
release could not be affected because Wilfredo had obtained financing not only for said tractor
but also for a truck and Libra insisted full payment for both.

The petitioner’s sister was convinced to purchase the truck; a PNB check was issued in
favor of Libra, thus settling in full the indebtedness of Wilfredo with the financing firm. Payment
having been effected through an out-of-town check, Libra insisted that it be cleared first before
they could release the chattels in question.

However, the provincial sheriff was able to seize and levy on the tractor which was in the
premises of Libra in Cebu, on the strength of an alias writ of execution against Wilfredo. The
tractor was subsequently sold at a public auction where Gelac Trading was the lone bidder and
thereafter sold the tractor to one of its stockholders, Gonzales.

The petitioner filed an action to recover the subject tractor against Gelac Trading with the
RTC, which rendered a decision in favor of the petitioner. However, the CA reversed the
decision of the RTC and dismissed said complaint.

ISSUE: Whether or not the tractor in question still belonged to Wilfredo when it was seized and
levied by the sheriff by virtue of the alias writ of execution? No.

HELD: YES

RULING:
The mortgagor who gave the property as security under a chattel mortgage did not part
with the ownership over the same. He had the right to sell it although he was under the obligation
to secure the written consent of the mortgagee or he lays himself upon criminal prosecution
under the provision of Art. 319 par 2 of the RPC. And even no consent was obtained from the
mortgagee, the validity of the sale would still not be affected.
 Actual delivery of the subject tractor could not be made. However, there was constructive
delivery upon the execution of the public instrument pursuant to Art. 1498 and upon the consent
or agreement of the parties when the thing sold cannot be immediately transferred to the
possession of the vendee.

Where a third person purchases the mortgaged property, he automatically steps into the
shoes of the original mortgager. His right of ownership shall be subject to the mortgage of the
thing sold to him. The payment of the check was actually intended to extinguish the mortgage
obligation so that the tractor could be released to the petitioner. It was never intended nor could it
be considered as payment of the purchase price because the relationship between Libra and
petitioner is not one of sale but still a mortgage.

The clearing or encashment of the check which produced the effect of payment
determined the full payment of the money obligation and the release of the chattel mortgage. It
was not determinative of the consummation of the sale. The transaction between the brothers is
distinct and apart from the transaction between Libra and the petitioner.

The sale of the subject tractor was consummated upon the execution of the public
instrument. Hence, the subject tractor was no longer owned by Wilfredo Dy when it was levied
upon by the sheriff. Well settled is the rule that only properties unquestionably owned by the
judgment debtor and which are not exempt by law from execution should be levied upon or
sought to be levied upon. For the power of the court in the execution of its judgment extends
only over properties belonging to the judgment debtor. (Consolidated Bank and Trust Corp. v.
Court of Appeals).

We agree with the trial court's findings that the actuations of GELAC Trading were
indeed violative of the provisions on human relations. As found by the trial court, GELAC knew
very well of the transfer of the property to the petitioners on July 14, 1980 when it received
summons based on the complaint for replevin filed with the RTC by the petitioner.
Notwithstanding said summons, it continued to sell the subject tractor to one of its stockholders.
Petition GRANTED.
 CASE NO.39 - MUNICIPALITY OF VICTORIAS VS. CA
149 SCRA 31 (1987)

PRINCIPLE:

As to Immovables (Art. 1498) – In case of immovables, when sale is made through a

public instrument, execution thereof shall be equivalent to delivery of the thing object of the sale,
if from the deed the contrary does not appear or cannot clearly be inferred. 

FACTS:

Lot No. 76 containing an area of 208,157 sq. meters forms a part of Cadastral Lot No.
140 which has sugar land located in Madanlog, Victorias, Negros Occidental, in the name of the
deceased Gonzalo Ditching. He was survived by his widow Simeona Jingco Vda. de Ditching
and a daughter, Isabel, who died in 1928, leaving one offspring, respondent Norma Leuenberger.

Respondent Norma Leuenberger, married to Francisco Soliva, inherited the whole of Lot.

She donated a portion of her Lot to the municipality for the ground of a certain high school. She
discovered that the parcel of land, more or less 4 hectares, was used by
Petitioner Municipality of Victorias, as a cemetery from 1934, is within her property.
Respondent wrote the Mayor of Victorias regarding her discovery, demanding
payment of past rentals and requesting delivery of the area allegedly illegally occupied by
Petitioner. When the Mayor replied that Petitioner bought the land she asked to be shown the
papers concerning the sale but was referred by the Mayor to the municipal treasurer who refused
to show the same.
Respondents filed a complaint in the Court of First Instance of Negros Occidental,for
recovery of possession of the parcel of land occupied by the municipal cemetery. In its answer,
petitioner Municipality, by way of special defense, alleged ownership of the lot, subject of the
complaint, having bought it from Simeona Jingco Vda. de Ditching sometime in 1934. The
lower court decided in favor of the Municipality. On appeal, Respondent appellate Court set
aside the decision of the lower court

ISSUE: Whether or not the secondary evidence presented by the petitioner municipality is

sufficient to substantiate its claim that it acquired the disputed land by means of a Deed of Sale?

Held: YES

RULING:
When a sale is made through a public instrument, the execution thereof is equivalent to
the delivery of the thing object of the contract; Execution of the public instrument operates as a
formal or symbolic delivery of the property sold.— Similarly, 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 clearly inferred (Civil Code Art. 1498). The execution of the public instrument operates as a
formal or symbolic delivery of the property sold and authorizes the buyer to use the document as
proof of ownership. (Florendo v. Foz, 20 Phil. 388 [1911]
A thing sold is understood as delivered when it is placed in the control and possession of
the vendee; Delivery produces its natural effects in law one of which being the conveyance of
ownership.—Moreover, it is expressly provided by law that the thing sold shall be
understood as delivered, when it is placed in the control and possession of the vendee. (Civil
Code Art. 1497).
Where there is no express provision that title shall not pass until payment of the price,
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. (Kuenzle & Streiff vs. Watson & Co., 13 Phil. 26 [19091).
Delivery produces its natural effects in law, the principal and most important of which being the
conveyance of ownership, without prejudice to the right of the vendor to claim payment of the
price. (Ocejo, Perez & Co. vs. International Banking Corp., 37 Phil. 631 1918).
 CASE NO.40 - ADDISON VS. FELIX 38 PHIL 404 (1918)

PRINCIPLE:
It is the duty of the vendor to deliver the thing sold. Symbolic delivery by the execution of
a public instrument is equivalent to actual delivery only when the thing sold is subject to the
control of the vendor.

FACTS:
Addison sold to Felix with the consent of her husband Balbino Tioco four parcels of land.
It was agreed upon that Felix will pay at the execution of the deed the sum of P3k and bound
herself to pay the remainder in installments, P2k on July 15, 1914 and P5k 30 days after the
issuance of a certificate of title in her name. It was also agreed upon that within 10 year after the
issuance of title in Felix’s name, Felix will pay P10 for each coconut tree in bearing and P5 for
each tree not bearing that might be growing in the parcels of land sold. It was also stipulated that
Felix will deliver to Addison 25% of the value of the products she might obtain from the parcels
of land from the time she takes possession until the Torrens title be issued in Felix’s favor.
It was also stipulated that Felix may rescind the contract, in which case Felix would be
obliged to return to Addison the net value of all the products of the products sold and Addison
would be obliged to return to Felix the sums the latter paid at 10% interest per annum.
Addison then filed a suit to compel Felix to pay the first installment of P2k. Felix and her
husband alleged that Addison failed to deliver to them the said land notwithstanding their
demands to make such delivery. Felix then asked to be absolved from the complaint and to
rescind the contract and for Addison to return the P3k they paid to the latter.
Evidence adduced during trial showed that only two out of four parcels of lands were
available for immediate possession. The other two parcels, 2/3 of which were found to be in the
possession of Juan Villafuerte who claimed to be the owner of the parcels of land occupied by
him. They found that they would have to file a suit to be able to possess such land.
 The RTC rendered judgment in favor of Felix and ordered the contract rescinded on the
ground that the land sold was not registered in accordance with the Torrens system and on the
stipulation of the contract that “within one year from the date of the certificate of title in favor of
Felix, the latter may rescind the present contract of purchase and sale”

ISSUE: Whether or not Addison made effective delivery to Felix?

Held: NO

RULING:
The record shows that Addison did not deliver the thing sold because with respect to the
two parcels of land, Addison was not able to show them to the purchaser and as regards to the
other two, more than 2/3 of its area was in the hostile and adverse possession of a third person.
It is true that the execution of a public instrument is equivalent to the delivery of the thing
sold, but in order to produce the legal effect of delivery, it is NECESSARY that the vendor shall
have control over the thing sold that, at the moment of the sale, its material delivery could be
made.
Even though a public instrument may have been executed, the purchaser cannot make use
of the thing sold because of the interposition of another will, then fiction will yield to reality and
therefore, no effective delivery has been made.
It is evident in the case at bar, that mere execution of a public instrument did not
constitute as fulfillment of the obligation of the seller to deliver the thing sold and from such
non-fulfillment the buyer can demand rescission.

CASE NO.41 - DANGUILAN VS. IAC 168 SCRA 22 (1988)

PRINCIPLE:
Such Control Should Remain within a Reasonable Period after Execution of the
instrument,
In order that symbolic delivery may produce the effect of tradition, it is necessary that
the vendor shall have control over the thing sold that, at the moment of the sale, its material
delivery could have been made.
FACTS:
On January 29, 1962, private respondent Apolonia filed a complaint against Felix
Danguilan for recovery of a farm lot and a residential lot which she claimed she had purchased
from Domingo Melad in 1943 and were now being unlawfully withheld by the defendant. In his
answer, Felix denied the allegation and averred that he was the owner of the said lots of which he
had been in open, continuous and adverse possession, having acquired them from Domingo
Melad in 1941 and 1943. 

At the trial, Apolonia presented a deed of sale dated December 4, 1943, purportedly
signed by Domingo Melad and duly notarized, which conveyed the said properties to her for the
sum of P80.00. She said the amount was earned by her mother as a worker at the Tabacalera
factory. She claimed to be the illegitimate daughter of Domingo Melad, with whom she and her
mother were living when he died in 1945. She moved out of the farm only when in 1946 Felix
approached her and asked permission to cultivate the land and to stay therein. She had agreed on
condition that he would deliver part of the harvest from the farm to her, which he did from that
year to 1958. When the deliveries stopped, she then filed the complaint against Felix. 

For his part, Felix testified that he was the husband of Isidra Melad, Domingo's niece,
whom he and his wife Juana Malupang had taken into their home as their ward as they had no
children of their own. He and his wife lived with the couple in their house on the residential lot
and helped Domingo with the cultivation of the farm. Domingo Melad signed in 1941 a private
instrument in which he gave him the farm and in 1943 another private instrument in which he
also gave him the residential lot, on the understanding that the latter would take care of the
grantor and would bury him upon his death. 

The trial court held that Apolonia’s own declaration that she moved out of the property in
1946 and left it in the possession of Felix was contradictory to her claim of ownership. She was
also inconsistent when she testified first that Felix was her tenant and later in rebuttal that he was
her administrator. The decision concluded that where there was doubt as to the ownership of the
property, the presumption was in favor of the one actually occupying the same, which in this
case was Felix. 

The respondent court held that the donation of the two parcels of land made my Domingo
Melad in favor of petitioner is null and void. The reason was that they were donations of real
property and as such should have been effected through a public instrument. It then set aside the
appealed decision and declared the respondents the true and lawful owners of the disputed
property.
ISSUE: Whether or not the sale of the subject properties between Domingo and Apolonia was
consummated.

HELD: NO

RULING:
The sale of the subject properties between Domingo and Apolonia was not consummated.
The deed of sale between Apolonia and Domingo was allegedly executed when the
respondent was only three years old and the consideration was supposedly paid by her mother,
Maria Yedan from her earnings as a wage worker in a factory. This was itself a suspicious
circumstance, one may well wonder why the transfer was not made to the mother herself, who
was after all the one paying for the lands. The sale was made out in favor of Apolonia Melad
although she had been using the surname Yedan her mother's surname, before that instrument
was signed and in fact even after she got married. The averment was also made that the contract
was simulated and prepared after Domingo Melad's death in 1945. It was also alleged that even
after the supposed execution of the said contract, the respondent considered Domingo Melad the
owner of the properties and that she had never occupied the same. 
Even assuming the validity of the deed of sale, the record shows that the private
respondent did not take possession of the disputed properties and indeed waited until 1962 to file
this action for recovery of the lands from the petitioner. If she did have possession, she
transferred the same to the petitioner in 1946, by her own sworn admission, and moved out to
another lot belonging to her step-brother. Her claim that the petitioner was her tenant (later
changed to administrator) was disbelieved by the trial court, and properly so, for its
inconsistency. In short, she failed to show that she consummated the contract of sale by actual
delivery of the properties to her and her actual possession thereof in concept of purchaser-owner.
The Code imposes upon the vendor the obligation to deliver the thing sold. The thing is
considered to be delivered when it is placed "in the hands and possession of the vendee." (Civil
Code, art. 1462). It is true that the same article declares that the execution of a public instrument
is equivalent to the delivery of the thing which is the object of the contract, but, in order that this
symbolic delivery may produce the effect of tradition, it is necessary that the vendor shall have
had such control over the thing sold that, at the moment of the sale, its material delivery could
have been made. It is not enough to confer upon the purchaser the ownership and the right of
possession. The thing sold must be placed in his control. When there is no impediment whatever
to prevent the thing sold passing into the tenancy of the purchaser by the sole will of the vendor,
symbolic delivery through the execution of a public instrument is sufficient. But if,
notwithstanding the execution of the instrument, the purchaser cannot have the enjoyment and
material tenancy of the thing and make use of it himself or through another in his name, because
such tenancy and enjoyment are opposed by the interposition of another will, then fiction yields
to reality—the delivery has not been affected. 
 There is no dispute that it is the petitioner and not the private respondent who is in actual
possession of the litigated properties. Even if the respective claims of the parties were both to be
discarded as being inherently weak, the decision should still incline in favor of the petitioner
pursuant to the doctrine announced in Santos & Espinosa v. Estejada where the Court
announced:
If the claim of both the plaintiff and the defendant are weak, judgment must be for the
defendant, for the latter being in possession is presumed to be the owner, and cannot be obliged
to show or prove a better right.

CASE NO.42 - POWER COMMERCIAL & INDUSTRIAL CORP. VS. CA. 274 SCRA 597
(1997)

PRINCIPLE:
Such Control Should Remain within a Reasonable Period after Execution of the
instrument, Danguilan v. IAC, 168 SCRA 22 (1988).
Except: When Buyer Assumes Risks of Ownership and Possession.
The General rule is, therefore, in order that this symbolic delivery may produce the effect
of tradition, it is necessary that the vendor shall have had such control over the thing sold.
However, in the case at bar lies the exception wherein Control need not to Remain within a
Reasonable Period after Execution of the instrument when Buyer Assumes Risks of Ownership
and Possession. In this case, since PCIC was aware that tenants did occupy the said lot and
“failure to eject” was NOT STIPULATED as a condition, hence, it is evident that the buyer
assumed risks of ownership and possession.

FACTS:
Petitioner Power Commercial and Industrial Corp (PCIC) needed a bigger office space
and warehouse for its products. For this purpose it entered into a contract of sale with the
respondent spouses Quiambao for a parcel of land located in San Antonio Village, Makati City.
The parties agreed that PCIC would pay the Quiambaos P108k as downpayment and the balance
of P295k would be paid once the deed of transfer of the title has been executed. It was also
agreed upon that, PCIC would assume the mortgage of the Quiambaos with PNB amounting to
around P80k.
The Quiambaos however, mortgaged the said land again to guarantee a loan of P145k, P80k of
which was already paid to the spouses. PCIC also agreed to assume the second mortgage. On
June 26, 1979 the PCIC and the Quiambaos executed a Deed of Absolute Sale with Assumption
of Mortgage which stipulated the following:
Price = P295K to be paid in cash
Said land is not covered by the Land Reform Code
Warrants that the Quiambaos are the lawful owners of the land described, free from any
lien/encumbrance
Warrants peaceful possession of the land to PCIC
States that the property is mortgaged to PNB for P145k which PCIC would assume to pay
Constantino, the General Manager of PCIC, submitted to the PNB the deed of sale along
with the formal application for assumption of mortgage. PNB however, informed the Quiambaos
that PCIC failed to submit the papers necessary for the assumption of mortgage. PNB also told
the Quiambaos that the application was deemed withdrawn and that the mortgage of P145k was
deemed fully due and demandable and be paid within 15 days from notice.
It turns out however, that PCIC paid PNB P41k and P20k on various dates which were to
be applied to the outstanding loan. It was also found that, PCIC sent letters to PNB requesting
that, “PCIC’s application for assumption of mortgage be approved and that the title be
transferred to PCIC’s name because it was found that tenants occupied the land.” PNB however
replied saying that PCIC needs to pay the remaining balance plus interest. This led PCIC to file a
case against the Quiambaos for recission plus damages before the RTC of Pasig. PCIC then
replied to PNB demanding the return of the payments they made since the application for
mortgage was never approved.
 During the pendency of the trial, the property was foreclosed upon and was bought by
PNB at the public auction. The RTC ruled in favor of PCIC on the ground that the Quiambaos
failed to deliver actual possession of the land to PCIC, entitling the latter to for rescission and
ordering PNB to return to PCIC the payments made by the latter. This was however reversed by
the CA, on the ground that the deed of sale did not obligate the Quiambaos to eject the lessees
from the land as a pre-condition of the sale nor was the lessee’s occupation a breach of warranty.
Hence, there was no substantial breach that would justify recission.

ISSUE: Whether or Not there was substantial breach to justify rescission, because of non-
ejectment of the tenants and failure to deliver the lot sold?

HELD: NO

RULING:
The “alleged” failure of the Quiambaos to eject the lessees and to deliver actual physical
possession of the land did not constitute substantial breach to justify rescission, because:
(1) such “failure to eject” was NOT STIPULATED as a condition; AND
(2) its effects and consequences were also not specified.
The stipulations found in the deed of sale that “…warrants the land is free from any
lien/encumbrance, warrants peaceful possession in favor of PCIC etc ” pertains to the usual
warranty against eviction and NOT TO A CONDITION that was not met.
Powers, the General Manager of PCIC, admitted to the fact that he did not ask PCIC’s
lawyers to stipulate in the contract the guarantee to eject tenants, this proved to be fatal since it
caused obscurity and therefore must be taken against PCIC. If the parties intended to impose
upon the Quiambaos the obligations to ejects the tenants from the lot sold, they should have
included a provision saying so. Absent a stipulation therefor, the non-fulfillment of ejectment
cannot be a ground for rescission.
Furthermore, it was found that PCIC was aware that tenants did occupy the said lot, and
even tasked its lawyers to eject such tenants. On the issue of delivery, the SC held that there was
indeed delivery through the execution of the deed of sale. The lot in question was placed in the
control of PCIC which enabled them to file the ejectment suit. Considering that deed of sale did
not stipulate ejectment as a pre-condition, the SC held that execution of the deed of sale was
sufficient delivery. Prior physical delivery is not legally required and the execution of the deed of
sale is deemed equivalent to delivery
The court held that there was no breach of warranty against eviction can be appreciated
because the facts of the case do not show that the requirements for breach was satisfied. The
presence of lessees did not constitute as an encumbrance nor does it deprive PCIC from control
over the lot. PCIC’s deprivation of the lot was due to its own fault, by its failure to pay the
amortizations causing the lot to be foreclosed
The General rule is, therefore, in order that this symbolic delivery may produce the effect
of tradition, it is necessary that the vendor shall have had such control over the thing sold. The
key word is control, not possession, of the land as petitioner would like us to believe. The Court
has consistently held that: “xxx (I)n order that this symbolic delivery may produce the effect of
tradition, it is necessary that the vendor shall have had such control over the thing sold that xxx
its material delivery could have been made.
It is not enough to confer upon the purchaser the ownership and the right of possession.
The thing sold must be placed in his control. When there is no impediment whatever to prevent
the thing sold passing into the tenancy of the purchaser by the sole will of the vendor, symbolic
delivery through the execution of a public instrument is sufficient. But if, notwithstanding the
execution of the instrument, the purchaser cannot have the enjoyment and material tenancy of the
thing and make use of it himself or through another in his name, because such tenancy and
enjoyment are opposed by the interposition of another will, then fiction yields to reality—the
delivery has not been effected.”
However, in the case at bar lies the exception wherein Control need not to Remain within
a Reasonable Period after Execution of the instrument when Buyer Assumes Risks of Ownership
and Possession. In this case, since PCIC was aware that tenants did occupy the said lot and
“failure to eject” was NOT STIPULATED as a condition, hence, it is evident that the buyer
assumed risks of ownership and possession.
 CASE NO.43 - CHUA VS. CA 401 SCRA 54 (2003)

PRINCIPLE:
Registration of Title Is Separate Mode from Execution of Public Instrument – Recording
of the sale with the proper Registry of Deeds and transfer of the TCT in the name of the buyer
are necessary only to bind third parties. As between the seller and the buyer, transfer of
ownership takes effect upon the execution of a public instrument conveying the real estate.

FACTS:
Valdes-Choy advertised for sale her paraphernal house and lot located in San Lorenzo
Village, Makati City. Petitioner Chua responded to the ad and they two agreed on a purchase
price of P10.8M payable in cash. Chua then paid Valdes-Choy P100k in earnest money
stipulating that failure to pay the remaining balance of P10.7M would result to forfeiture of the
earnest money.
Chua then secured from PBCom a manager checks worth P480k. However, Chua
immediately issued a stop-payment order on the managers check claiming that it was
lost/misplaced. On the same day, PBCom Asst. VP Pe, notified the PBCom Operation group of
Chua’s stop-payment order. On the same day, Chua and Valdes-Choy met with their respective
counsels to execute the necessary documents and to arrange the payments. The first Deed of Sale
covered the house and lot at the purchase price of P8M. The second Deed of Sale covered the
movable properties in the house at the price of P2.8M. The capital gains tax was pegged at
P485k.
The next day, Chua handed to Valdes-Choy the alleged “lost” PBCom check for P480k
so Valdes-Choy could pay the capital gains tax since the latter did not have enough funds to pay
such taxes. On the same day, Chua accompanied Valdes-Choy to Traders Royal Bank where she
deposited the manager’s check and subsequently purchased a Trader’s Royal Bank check
payable to the Commissioner of Internal Revenue for the capital gains tax.
ValdesChoy gave the TRB check to her counsel who undertook to pay the CGT. It was at
this moment that Chua showed to Valdes-Choy a PBCom check for P10.215M representing the
remaining balance of the purchase price. However, Chua refused to give it Valdes-Choy since
the former required that the property be registered first in his name before he would turn the
check over. This caused Valdes-Choy to rage on Chua tearing up the deeds of sale in the process
claiming that it wasn’t part of their agreement.
The transaction was at an impasse and neither side were budging until Valdes-Choy
suggested to her counsel that Chua should place the check in escrow and then she would cause
the issuance of the TCT in Chua’s name. However, this fell on deaf ears. Chua then filed with
the RTC a complaint for specific performance against Valdes-Choy but which was subsequently
dismissed. Chua however, re-filed the case for specific performance plus damages and the trial
court gave due course to the complaint.
The RTC ruled in favor of Chua, however the CA reversed and set aside the RTC
decision dismissing the complaint
ISSUE: Whether or Not Chua can compel Valdes-Choy to cause the issuance of a new TCT in
Chua’s name before payment of the full price?

HELD: YES

RULING:
Registration of Title Is Separate Mode from Execution of Public Instrument – Recording
of the sale with the proper Registry of Deeds and transfer of the TCT in the name of the buyer
are necessary only to bind third parties. As between the seller and the buyer, transfer of
ownership takes effect upon the execution of a public instrument conveying the real estate.
It is only once the buyer pays the full purchase price would the seller be obligated to
transfer ownership to the buyer. In the sale of real property, the seller is not obligated to transfer
in the name of a new certificate of title but rather to transfer ownership of the real property.
There is a difference because a buyer may become the owner of the real property even
though the title is still registered in the name of the seller. As between the seller and buyer,
ownership is transferred not by issuance of a new certificate of title, but by the execution of the
instrument of sale in a public document. When the deed of absolute sale is signed by the parties
and notarized then the delivery is deemed made by the seller to the buyer. In the case at bar it
was found that Valdes-Choy was in a position to comply with her obligations as a seller as:
She signed the deeds of sale in the presence of Chua
 She was prepared to turn over the owner’s duplicate of the TCT, along with the tax
declarations and latest realty tax receipt to Chua
Chua’s refusal to pay the balance price put himself in default and has only himself to
blame for the rescission by Valdes-Choy.
Delivery is not only a necessary condition for the enjoyment of the thing, but is a mode of
acquiring dominion and determines the transmission of ownership, the birth of the real right. The
delivery, therefore, made in any of the forms provided in articles 1497 to 1505 signifies that the
transmission of ownership from vendor to vendee has taken place. The delivery of the thing
constitutes an indispensable requisite for the purpose of acquiring ownership. Our law does not
admit the doctrine of transfer of property by mere consent; the ownership, the property right, is
derived only from delivery of the thing.
 CASE NO.44 - RAQUEL-SANTOS VS. CA 582 SCRA 169 (2009)

PRINCIPLE:
As to Incorporeal Property  (Arts. 1498 and 1501) – In the sale of shares of stock,
delivery of a stock certificate is one of the essential requisites for the transfer of ownership of the
stocks purchased. Seller’s failure to delivery the stock certificates representing the shares of
stock amounted to a substantial breach which gave rise to a right to rescind the sale.

FACTS:
Finvest incurred liabilities to PSE representing fines and penalties for non-payment of its
clearing house obligations. PSE also received reports that Finvest. was not meeting its
obligations to its clients. PSE suspended Finvest from trading. Finvest’s total obligation to PSE
totaled to P5,990,839.99. Finvest promised to settle all obligations to its clients and to PSE
subject to verification of the amount due, but PSE granted Finvest’s request, with the warning
that, should Finvest fail to meet the deadline, PSE might exercise its right to sell Finvest’s
membership seat and use the proceeds thereof to settle its obligations to the PSE, its member-
brokers and its clients. Finvest protested the imposition of the deadline for being arbitrary on the
ground that the claims against it had not yet been [Link] this juncture, Finvest filed a
Complaint with the SEC for accounting and damages with prayer for a temporary restraining
order and/or preliminary injunction and [Link], notices of garnishment and
sale were issued against Raquel-Santos’ (FINVEST president) Manila Golf Shares and Sta.
Elena Golf Shares.

ISSUE: Whether Finvest committed breach of contract.

HELD: YES

RULING:
Article 1191 of the Civil Code, which indicates the remedies of the injured party in case
there is a breach of contract, provides:
ART. 1191. The power to rescind obligations is implied in reciprocal ones, in case one of
the obligors should not comply with what is incumbent upon him.
The injured party may choose between the fulfillment and the rescission of the obligation,
with the payment of damages in either case. He may also seek rescission, even after he has
chosen fulfillment, if the latter should become impossible.
 In some contracts of sale, such as the sale of real property, prior physical delivery of the
thing sold or its representation is not legally required, as the execution of the Deed of Sale
effectively transfers ownership of the property to the buyer through constructive delivery. Hence,
delivery of the certificate of title covering the real property is not necessary to transfer
ownership.
In the sale of shares of stock, physical delivery of a stock certificate is one of the essential
requisites for the transfer of ownership of the stocks purchased.
Clearly, Finvest’s failure to deliver the stock certificates representing the shares of stock
purchased by TMEI and Garcia amounted to a substantial breach of their contract which gave
rise to a right to rescind the sale.

CASE NO.45 - AMIGO VS. TEVES 96 PHIL 252 (1954)

PRINCIPLE:
 Where the vendor retrocontinues to occupy the land as lessee, by fiction of law, the
possession is deemed to be constituted in the vendee by virtue of this mode of tradition (10
Manresa, 4th ed. p.124)

FACTS:
On August 11, 1937, Macario Amigo and Anacleto Cagalitan executed in favor of their
son, Marcelino Amigo, a power of attorney granting to the latter, among others, the power "to
lease, let, bargain, transfer, convey and sell, remise, release, mortgage and hypothecate, part or
any of their properties…” Marcelino Amigo, in his capacity as attorney-in-fact, executed a deed
of sale of a parcel of land for a price of P3,000 in favor of Serafin Teves stipulating therein that
the vendors could repurchase the land within a period of 18 months from the date of the sale. In
the same document, it was also stipulated that vendors would remain in possession of the land as
lessees for a period of 18 months subject to terms and conditions. In case of failure by vendors to
pay any rental as agreed upon, the lease shall automatically terminate and the right of ownership
of vendee shall become absolute.
On July 20, 1939, the spouses Macario Amigo and Anacleta Cagalitan donated to their
sons Justino Amigo and Pastor Amigo several parcels of land including their right to repurchase
the land in litigation.
The vendors-lessees paid the rental corresponding to the first six months, but not the
rental for the subsequent semester, and so on January 8, 1940, Serafin Teves, the vendee-lessor,
executed an "Affidavit of Consolidation of Title" in view of the failure of the lessees to pay the
rentals as agreed upon, and registered said affidavit in the Office of the Register of Deeds of
Negros Oriental, who, on January 28, 1940, issued to Serafin Teves the corresponding transfer of
title over the land in question.
On March 9, 1940, Justino Amigo and Pastor Amigo, as donees of the right to repurchase
the land in question, offered to repurchase the land from Serafin Teves by tendering to him the
payment of the redemption price but the latter refused on the ground that the ownership had
already been consolidated in him as purchaser a retro. Hence, on April 26, 1940, before the
expiration of the 18th-month period stipulated for the redemption of the land, the donees
instituted the present action.

ISSUE: Whether or not the petitioners should be allowed to repurchase the properties?

HELD: NO

RULING:
 The lease that a vendor executes on the property may be considered as a means of
delivery or tradition by constitutum possessorium. Where the vendor retrocontinues to occupy
the land as lessee, by fiction of law, the possession is deemed to be constituted in the vendee by
virtue of this mode of tradition (10 Manresa, 4th ed. p.124). We may say therefore that this
covenant regarding the lease of the land sold is germane to the contract of sale with pacto de
retro.
It is undeniable that the clause in the contract of sale with pacto de retro, providing for
extinction of the right of the plaintiff to repurchase in case he should default in the payment of
the rent for any year was lawful. The parties to a contract of this character may legitimately fix
any period to please, not in excess of ten years, for the redemption of the property by the vendor;
and no sufficient reason occurs to us why the determination of the right of redemption may not
be made to depend upon the delinquency of the vendor — now become lessee-in the payment of
the stipulated rent.
While this contention may have some basis when considered with reference to an absolute
contract of sale, it loses weight when applied to a contract of sale with pacto de retro, where the
price is usually less than in absolute sale for the reason that in a sale with pacto de retro, the
vendor expects to re-acquire or redeem the property sold.

CASE NO.46 - HEIRS OF PEDRO ESCANLAR VS. CA 281 SCRA 176 (1997)

PRINCIPLE:
ART. 1477: The ownership of the thing sold is acquired by the vendee upon actual or
constructive delivery thereof.

FACTS:
 Spouses Nombre and Cari-an died without a child. Nombre’s heirs include his nephews
and grandnephews. Two parcels of land formed part of the estate of Nombre and Cari-an.
The Private Respondents, heirs of Cari-an executed a Deed of Sale in favor of petitioners
Escanlar and Holgado. Petitioners paid P50,000.00 as a form of downpayment, but was unable to
pay the remaining balance (paid only 12 installments). Being former lessees, petitioners
continued in possession of the said lots, and continued to pay rent. Private Respondent later sold
the said lots to the Chua spouses.
Private Respondent then filed an action for cancellation of sale against petitioners, for
failure to pay the balance. Petitioners however, sold their rights and interests over the said lots to
Jayme, and turned over possession.
The Regional Trial Court ruled that the Sale to petitioners was nullified since all the
properties of the estate had been transferred and titled to in the name of the Chua spouses. On
appeal, the Court of Appeals affirmed, questioned deed of sale (one with petitioners) is a contract
to sell because it shall become effective only upon approval by the probate court and upon full
payment of the purchase price.

ISSUE: Whether or not the sale was a contract to sell and therefore, private respondents may
rescind the contract the moment the buyer fails to pay.

HELD: NO

RULING:
The sale of rights, interests and participation as to 1/2 portion pro indiviso of the two
subject lots is a contract of sale for the following reasons:
First, private respondents as sellers did not reserve unto themselves the ownership of the
property until full payment of the unpaid balance of P225,000.00.
Second, there is no stipulation giving the sellers the right to unilaterally rescind the
contract the moment the buyer fails to pay within the fixed period. Prior to the sale, petitioners
were already in possession of the subject property as lessees. Upon sale to them of the rights,
interests and participation as to the 1/2 portion pro indiviso, they remained in possession, not in
concept of lessees anymore but as owners through symbolic delivery known as traditio brevi
manu.
Under Article 1477 of the Civil Code, the ownership of the thing sold is acquired by the
vendee upon actual or constructive delivery thereof. In a contract of sale, the non-payment of the
price is a resolutory condition which extinguishes the transaction that, for a time, existed and
discharges the obligations created thereunder. The remedy of an unpaid seller in a contract of
sale is to seek either specific performance or rescission. In contracts to sell, ownership is retained
by the seller and is not to pass until the full payment of the price. Such payment is a positive
suspensive condition, the failure of which is not a breach of contract but simply an event that
prevented the obligation of the vendor to convey title from acquiring binding force. To illustrate,
although a deed of conditional sale is denominated as such, absent a proviso that title to the
property sold is reserved in the vendor until full payment of the purchase price nor a stipulation
giving the vendor the right to unilaterally rescind the contract the moment the vendee fails to pay
within a fixed period, by its nature, it shall be declared a deed of absolute sale.
CASE NO.47 - GAITE VS. FONACIER 2 SCRA 831 (1961)

PRINCIPLE:
Art. 1480. Any injury to or benefit from the thing sold, after the contract has been
perfected, from the moment of the perfection of the contract to the time of delivery, shall be
governed by Articles 1163 to 1165, and 1262.
This rule shall apply to the sale of fungible things, made independently and for a single
price, or without consideration of their weight, number, or measure.
Should fungible things be sold for a price fixed according to weight, number, or measure,
the risk shall not be imputed to the vendee until they have been weighed, counted, or measured
and delivered, unless the latter has incurred in delay.

FACTS:
Fonacier was the owner and or/holder either by himself or in a representative capacity, of
a 11-iron lode mineral claims, known as the Dawahan Group situated in the province of
Camarines Norte.
By a DEED OF ASSIGNMENT, Fonacier constituted and appointed plaintiff-appellee
Gaite as his true and lawful attorney-in-fact to enter into a contract with any individual or
juridical person for the exploration and development of the mining claims on a royalty basis or
not less then 0.50 per ton or ore that might be extracted therefrom.
Gaite in turn execute a general assignment conveying the development and exploration of
said mining claims in the Larap Iron Mines, a single proprietorship owned solely by and
belonging to him, on the same royalty basis.
For some reason, Fonacier decided to revoke the authority granted by him to Gaite to
exploit and develop the mining claims in question, and Gaite assented thereto subject to certain
conditions. As a result, a document entitled “REVOCATION FO POWER OF ATTORNEY
AND CONTRACT” was executed wherein Gaite transferred to Fonacier, for the consideration of
20,000, plus 10% of the royalties that Fonacier would receive from the mining claims, all his
rights and interests on all the roads, imporvements and facilities in or outside said claims, the
right to use the business name “Larap Iron Mines” and its goodwill, and all the records and
documents relative to the mines. In the same document, Gaite transferred to Fonacier all his
rights and interests that the former had extracted from the mineral claims.

ISSUE: Whether or not there had been a short-delivery as claimed by appellants and thus they
are entitled to the payment of damages?

HELD: NO

RULING:
Neither of the parties had actually measured or weighed the whole mass of ore cubic
meter by cubic meter, or ton by ton. Both parties predicate their respective claims only upon an
estimated number of cubic meters of ore multiplied by the average tonnage factor per cubic
meter.
The sale between the parties is a sale of a specific mass or iron ore because no provision
was made in their contract for the measuring or weighing of the ore sold in order to complete or
perfect the sale, nor was the price of P75,000,00 agreed upon by the parties based upon any such
measurement.(see Art. 1480, second par., New Civil Code).
The subject matter of the sale is, therefore, a determinate object, the mass, and not the
actual number of units or tons contained therein, so that all that was required of the seller Gaite
was to deliver in good faith to his buyer all of the ore found in the mass, notwithstanding that the
quantity delivered is less than the amount estimated by them (Mobile Machinery & Supply Co.,
Inc. vs. York Oilfield Salvage Co., Inc. 171 So. 872, applying art. 2459 of the Louisiana Civil
Code). There is no charge in this case that Gaite did not deliver to appellants all the ore found in
the stockpiles in the mining claims in questions; Gaite had, therefore, complied with his promise
to deliver, and appellants in turn are bound to pay the lump price.
 CASE NO.48 - A. SORIANO Y. CIA VS. COLLECTOR 97 PHIL 505 (1955)

PRINCIPLE:
The rule is that where the contract is to deliver goods f.a.s, the property passes on
delivery at the wharf or the dock (II Williston on Sales, pp. 120-121; 46 Am. Jur. 608-609).
Otherwise stated, delivery to the carrier is delivery to the buyer, (Behn, Meyer & Co., Ltd. vs.
Yangco, 38 Phil., 602; 46 Am. Jur. 605).

FACTS:
In 1947, petitioner was engaged in the business of selling surplus goods acquired from
the Foreign Liquidation Commission. Part of the surplus goods consisted of tractors which were
then in the various U. S. military bases or depots in the Philippines. 

On the same year, the United Africa Co., Ltd. contracted to buy tractors from petitioner,
to be delivered f.a.s. (free alongside ship), Manila, in good working condition and capable of
running off lighters under their own power. A tractor expert, Mr. Tex Taylor, was employed by
the foreign company to select, inspect and test the tractors before delivery. 

Upon approval of each invoice, the same was presented by petitioner to the Philippine
Refining Company, Inc., an affiliate of the foreign buyer, for payment of the purchase price. The
tractors were delivered by petitioner to the pier in Manila by means of barges as soon as notice
was received from the representative of its foreign buyer that a carrying vessel was ready. The
Philippine Refining Co., Inc. shipped the 57 tractors acquired from petitioner from the port of
Manila to United Africa Co., Ltd. at Dares Salaem, East Africa. The total value of the tractors
was P757,000. However, due to certain defects of some of them upon reaching Africa, the sum
of P4,959.19 was reimbursed by petitioner to its foreign buyer. 

The theory of the Bureau of Internal Revenue, affirmed by the defunct Board of Tax
Appeals, is that petitioner imported the tractors from the army bases; that they were subsequently
sold to its foreign buyer within the Philippines; and that title passed upon delivery to the carrier
f.a.s. Manila. 

Petitioner insists, however, that it did not import the 57 tractors in question for the
Foreign Liquidation Commission because title to the same passed to its foreign buyer while the
goods were still at the foreign bases, and that they passed Philippine territory merely in transit to
pier, Manila, where they were delivered f.a.s.; hence its sale of the tractors was not domestic and
therefore not liable for the payment of sales tax.

ISSUE: Whether the title to the tractors passed to petitioner’s buyer at the bases.

HELD: NO

RULING:
It was only at the pier in Manila that the title passed to the buyer.
Petitioner’s theory is not supported by the records. It admits that delivery of the tractors
was made by it to the carrier f.a.s. Manila. The rule is that where the contract is to deliver goods
f.a.s, the property passes on delivery at the wharf or the dock. Otherwise stated, delivery to the
carrier is delivery to the buyer. True that this rule yields to evidence of a contrary intent between
the parties, but there is here no proof to show that petitioner and its foreign buyer intended
otherwise, that is, that delivery and the passing of title to its buyer should take place right in the
army bases where the tractors were located. On the contrary, petitioner itself has admitted that
Tex Taylor (who is alleged to have accepted delivery of the tractors in behalf of the United
Africa Co., Ltd.) has no power or authority whatever to do so. 
Tex Taylor had no authority to accept delivery of the tractors for the buyer United Africa
Co., Ltd., his duty being merely to inspect and approve their condition. The designation by
Taylor of the tractors he selected at the bases, therefore, was merely a preliminary step for their
removal from the bases to petitioner’s service and storage yards in Manila, where Taylor actually
inspected and tested them, and those found defective (23 tractors) were brought to the Sta. Mesa
Yard where they were reconditioned. Then, petitioner made delivery of the tractors at the pier in
Manila whenever there was an available boat for transportation to Africa, and it was so informed
by the representatives of the United Africa Co. Hence, it was only at Manila that the goods were
delivered, and title passed to the buyer; and from their removal from the bases until their delivery
at shipside, title to the tractors was in the seller. 
Other undisputed facts in the record also force the conclusion that title to the tractors in
question passed to petitioner’s buyer not at the bases, but only at pier, Manila. First, it was
petitioner who paid for the delivery charges from the different bases to the pier, pursuant to the
tax in "fob" or "f.a.s." sales that "the seller pays all charges and is subject to risk until the goods
are placed alongside the ’vessel’. Second, the tractors were described in petitioner’s invoices as
bearing certain numbers followed by the phrase "Our Unit Sta. Mesa" or "Our Unit Pieco",
showing that the tractors were first brought to petitioner’s yards and numbered accordingly, in
the same way that all goods found and stored in these yards were numbered, and it was only after
they had passed petitioner’s yards that they were delivered to the buyer. Third, two of
petitioner’s invoices state that the tractors were inspected and accepted at Pieco Yard and/or Sta.
Mesa Yard, which disproves petitioner’s contention that Tex Taylor tested and approved of them
right in the bases. Fourth, petitioner’s own witness Epimaco Gonzales admitted that it was only
at Pieco Yard that Taylor inspected and tested the tractors.
 CASE NO.49 - BEHN MEYER & CO. VS. YANGCO 38 PHIL 602, 606 (1918)

PRINCIPLE:
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.
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. O. B."

FACTS:
A sale of 80 drums of caustic soda was agreed between Behn, Meyer & Co. and Teodoro
Yanco. The merchandise was shipped from New York to Manila. However, the ship carrying the
cargo was detained at Penang and the 71 of the 80 drums were removed.
Respondent Yangco also refused to accept the 9 remaining and also refused to accept the
offer of Behn Meyer to have the products substituted with other merchandise, which however
were different from what was ordered.
It must be noted that the contract provided for "c.i.f. Manila, pagadero against delivery of
documents."Yanco filed an action seeking for damages for alleged breach of contract.

RULING:
Place of Delivery:
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 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.
 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 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 vs. 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. 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.
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. If 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.
The place of delivery was Manila and plaintiff has not legally excused default in delivery
of the specified merchandise at that place.

CASE NO.50 - VALLARTA VS. CA 150 SCRA 336 (1987)

FACTS:
Rosalinda Cruz, the private offended party, and accused Victoria Vallarta are longtime
friends and business acquaintances. On November 20, 1968, Cruz entrusted to Victoria Vallarta
seven pieces of jewelry. In December of the same year, Vallarta decided to buy some items,
exchanged one item with another, and issued a post-dated check in the amount of P5,000 dated
January 30, 1969. Rosalinda Cruz deposited said check with the bank.
However, upon presentment, the check was dishonored and Cruz was informed that
Vallarta's account had been closed. Cruz apprised Vallarta of the dishonor and the latter
promised to give another check. Later, Vallarta pleaded for more time. Still later, she started
avoiding Cruz. Hence, this criminal action was instituted.
Based on the foregoing facts, both the trial court and the Court of Appeals found Vallarta
guilty beyond reasonable doubt of the crime of estafa.

ISSUE: Whether or not there was a perfected sale.

HELD: NO

RULING:
The price to be paid for the jewelry was finally agreed upon only in December 1968.
Thus, there was a meeting of the minds between the parties as to the object of the contract and
the consideration therefore only in December 1968, the same time that the check was issued. The
delivery made on November 20, 1968 was only for the purpose of enabling Vallarta to select
what jewelry she wanted.
If there was no meeting of the minds on November 20, 1968, then, as of that date, there
was yet no contract of sale which could be the basis of delivery or tradition. Thus, the delivery
made on November 20, 1968 was not a delivery for purposes of transferring ownership — the
prestation incumbent on the vendor. If ownership over the jewelry was not transmitted on that
date, then it could have been transmitted only in December 1968, the date when the check was
issued. In which case, it was a "sale on approval" since ownership passed to the buyer. Vallarta,
only when she signified her approval or acceptance to the seller, Cruz, and the price was agreed
upon.
Thus, when the check which later bounced was issued, it was not in payment of a pre-
existing obligation. Instead the issuance of the check was simultaneous with the transfer of
ownership over the jewelry.
 CASE NO.51 – INDUSTRIAL TEXTILE MANUFACTURING CO. VS. LPJ
ENTERPRISES, INC. 217 SCRA 322 (1993)

FACTS:
Respondent LPJ Enterprises, Inc. had a contract to supply 300,000 bags of cement per
year to Atlas Consolidated Mining and Development Corporation, a member of the Soriano
Group of Companies. The cement was delivered packed in kraft paper bags, then as now, in
common use.
Sometime in October, 1970, Cesar Campos, a Vice-President of petitioner Industrial
Textile Manufacturing Company of the Philippines, asked Lauro Panganiban, Jr., President of
respondent corporation, if he would like to cooperate in an experiment to develop plastic cement
bags. Panganiban acquiesced, principally because Itemcop is a sister corporation of Atlas,
respondent's major client. A few weeks later, Panganiban accompanied Paulino Ugarte, another
Vice-President of Itemcop, to the factory of respondent's supplier, Luzon Cement Corporation in
Norzagaray, Bulacan, to test fifty (50) pieces of plastic cement bags. The experiment, however,
was unsuccessful. Cement dust oozed out under pressure through the small holes of the woven
plastic bags and the loading platform was filled with dust. The second batch of plastic bags
subjected to trial was likewise a failure. Although the weaving of the plastic bags was already
tightened, cement dust still spilled through the gaps. Finally, with three hundred (300) "improved
bags", the seepage was substantially reduced. Ugarte then asked Panganiban to send 180 bags of
cement to Atlas via commercial shipping. Campos, Ugarte, and two other officials of petitioner
company followed the 180 bags to the plant of Atlas in Sangi, Toledo, Cebu where they
professed satisfaction at the performance of their own plastic bags. On December 29, 1970,
Campos sent Panganiban a letter proclaiming dramatic results in the experiment. Consequently,
Panganiban agreed to use the plastic cement bags.
Petitioner delivered the above orders consecutively on January 12, February 17, March
19, and April 17, 1971. Respondent, on the other hand, remitted the amounts of P1,640.00,
P2,480.00. and P13,230.00 on March 31, April 31, and May 3, 1971 respectively, thereby
leaving a balance of P84,123.80. No other payments were made, thus prompting A. Soriano y
Cia of petitioner's Legal Department to send demand letters to respondent corporation.
Reiterations thereof were later sent by petitioner's counsel. A collection suit was filed on April
11, 1973 when the demands remained unheeded.
On May 25, 1981, the trial court rendered its decision hereby sentencing the defendant to
pay the sum of P84,123.80 with l2% interest per annum from May, 1971 plus 15% of the total
obligation as attorney's fees, and the costs. Respondent corporation's appeal was upheld by the
appellate court when it reversed the trial court's decision and dismissed the case with costs
against petitioner. Hence, the present recourse.

ISSUE: Whether or not respondent may be held liable for the 47,000 plastic bags which were
not actually used for packing cement as originally intended.

HELD: YES

RULING:
 It is beyond dispute that prior to respondent's transaction with petitioner, the bags were
already tested and the results thereof, albeit initially unsuccessful, were nevertheless favorably
considered after due alterations were made. Verily, it is on the basis of such experimental
findings that respondent agreed to use the plastic cement bags and thereafter issued the purchase
orders heretofore mentioned.
Significantly, the quantity of bags ordered by respondent also negates its position that the
bags were still under experimentation. Indeed, if it were so, the bags ordered should have been
considerably lesser in number and would normally increase as the suitability of the plastic bags
became more definite. Likewise, it is worthy to note that as of the date of petitioner's third
delivery on March 19, 1971, respondent has received a total of 52,000 bags. By then, it was very
probable that the problems alluded to by respondent could no longer be resolved, thus, only
15,000 bags were actually used and 37,000 bags were already considered unfit for packing
cement. Under such predicament, it was but logical for respondent to cancel then the fourth
purchase order for another 10,000 bags.
Surprisingly, respondent still accepted the same upon delivery on April 17, 1971 and
remitted its payments until May 3, 1971. When petitioner sent letters demanding the full
payment of the bags, respondent simply declared that it did not receive any because it transferred
its offices to another place. In the meantime, the bags remained in the custody of Luzon Cement,
respondent's supplier and virtually a stranger as far as petitioner is concerned. It is for this reason
that petitioner may not be expected to just pull out its bags from Luzon Cement.
In the light of these principles, we hold that the transaction between respondent and petitioner
constituted an absolute sale. Accordingly, respondent is liable for the plastic bags delivered to it
by petitioner.

CASE NO.52 - RUDOLF LIETZ, INC. VS. CA 478 SCRA 451 (2005)

PRINCIPLE:
In the case where the area of the immovable is stated in the contract based on an
estimate, the actual area delivered may not measure up exactly with the area stated in the
contract.

FACTS:
Respondent Agapito Buriol previously owned a parcel of unregistered land situated at
Capsalay Island, Port Barton, San Vicente, Palawan. On August 15, 1986, respondent Buriol
entered into a lease agreement with Flavia Turatello and respondents Turatello and Sani, all
Italian citizens, involving one (1) hectare of respondent Buriol’s property. The lease agreement
was for a period of 25 years, renewable for another 25 years. The lessees took possession of the
land after paying respondent Buriol a down payment of ₱10,000.00.5 The lease agreement,
however, was reduced into writing only in January 1987.
On November 17, 1986, respondent Buriol sold to petitioner Rudolf Lietz, Inc. the same
parcel of land for the amount of ₱30,000.00. The Deed of Absolute Sale embodied the agreement
of the sale of a parcel of land, consisting of FIVE (5) hectares, more or less.
Petitioner later discovered that respondent Buriol owned only four (4) hectares, and with
one more hectare covered by lease, only three (3) hectares were actually delivered to petitioner.
Thus, petitioner instituted on April 3, 1989 a complaint for Annulment of Lease with Recovery
of Possession with Injunction and Damages against respondents and Flavia Turatello before the
RTC. The complaint alleged that with evident bad faith and malice, respondent Buriol sold to
petitioner five (5) hectares of land when respondent Buriol knew for a fact that he owned only
four (4) hectares and managed to lease one more hectare to Flavia Turatello and respondents
Tiziana Turatello and Paola Sani. 
ISSUE: Whether or not petitioner is entitled to the delivery of the entire five hectares or its
equivalent.

HELD: NO

RULING:
In the case where the area of the immovable is stated in the contract based on an estimate,
the actual area delivered may not measure up exactly with the area stated in the contract.
According to Article 1542 of the Civil Code, in the sale of real estate, made for a lump
sum and not at the rate of a certain sum for a unit of measure or number, there shall be no
increase or decrease of the price although there be a greater or lesser area or number than that
stated in the contract.
However, the discrepancy must not be substantial. A vendee of land, when sold in gross
or with the description "more or less" with reference to its area, does not thereby ipso facto take
all risk of quantity in the land. The use of "more or less" or similar words in designating quantity
covers only a reasonable excess or deficiency.
Where both the area and the boundaries of the immovable are declared, the area covered
within the boundaries of the immovable prevails over the stated area. In cases of conflict
between areas and boundaries, it is the latter which should prevail. What really defines a piece of
ground is not the area, calculated with more or less certainty, mentioned in its description, but
the boundaries therein laid down, as enclosing the land and indicating its limits. In a contract of
sale of land in a mass, it is well established that the specific boundaries stated in the contract
must control over any statement with respect to the area contained within its boundaries. It is not
of vital consequence that a deed or contract of sale of land should disclose the area with
mathematical accuracy. It is sufficient if its extent is objectively indicated with sufficient
precision to enable one to identify it. An error as to the superficial area is immaterial. Thus, the
obligation of the vendor is to deliver everything within the boundaries, inasmuch as it is the
entirety thereof that distinguishes the determinate object.
The Court rejects petitioner’s contention that the property’s boundaries as stated in
the Deed of Absolute Sale are superficial and unintelligible and, therefore, cannot prevail over
the area stated in the contract. First, as pointed out by the Court of Appeals, at an ocular
inspection prior to the perfection of the contract of sale, respondent Buriol pointed to petitioner
the boundaries of the property.
Hence, petitioner gained a fair estimate of the area of the property sold to him. Second,
petitioner cannot now assail the contents of the Deed of Absolute Sale, particularly the
description of the boundaries of the property, because petitioner’s subscription to the Deed of
Absolute Sale indicates his assent to the correct description of the boundaries of the property.

CASE NO.53 - SALINAS VS. FAUSTINO 566 SCRA 18 (2008)

PRINCIPLE:
In a contract of sale of land in a mass, the specific boundaries stated in the contract must
control over any statement with respect to the area contained within its boundaries.

FACTS:
Respondent Bienvenido S. Faustino by a Deed of Absolute Sale dated June 27, 1962,
purchased from his several co-heirs, including his first cousins Benjamin Salinas and herein
petitioner Dolores Salinas, their respective shares to a parcel of land covered by Tax Declaration
No. 14687, in the name of their grandmother Carmen Labitan, located in Subic, Zambales, with a
"superficial area of 300.375 square meters [sq. m.] more or less," and with boundaries "in the
North: Carmen Labitan; in the South: Calle, in the East: Callejon and in the West: Roque
Demetrio."
On March 15, 1982, respondent Faustino, joined by his wife, filed before the then Court
of First Instance of Zambales a complaint for recovery of possession with damages against
petitioner alleging that the parcel of land he bought via the June 27, 1962 Deed of Sale from his
co-heirs consisted of 1,381 sq. m. and is described as follows:
“A residential land located at Barrio Matain, Subic, Zambales now known as Lot 3,
Block 5-K, Psd-8268 bounded on the NORTH by Road Lot 1, Block 5-1, PSD-8268 containing
an area of ONE THOSUAND THREE HUNDRED EIGHTY-ONE (1,381) SQUARE METERS,
more or less. Declared for taxation purposes under Tax Declaration No. 1896 in the name of
Spouses Bienvenido S. Faustino and Iluminada G. Faustino.”
Respondent spouses further alleged that they allowed petitioner and co-heirs to occupy
and build a house on a 627 sq. m. portion of the land on the condition that they would voluntarily
and immediately remove the house and vacate that portion of the land should the respondents
need the land and that when they asked petitioner and her co-heir-occupants to remove the house
and restore the possession of the immediately-described portion of the land, they refused, hence,
the filing of the complaint.
In her Answer, petitioner claimed that she is the owner of a 628 sq. m. lot covered by Tax
Declaration No. 1017 and that if respondents refer to the immediately described lot, then they
have no right or interest thereon. The petitioner also alleged that her signature in the June 27,
1962 Deed of Sale is forged.
The RTC dismissed the complaint and held that they found petitioner's claim of forgery
unsupported. It nevertheless dismissed the complaint, it holding that, inter alia, the Deed of Sale
indicated that only 300.375 sq. m. was sold to petitioner. On appeal, the Court of Appeals (CA)
modified the RTC decision and concluded that Faustino owned only 753 sq. m. of the land.

ISSUE: Whether or not a description of a lot area can be used as evidence

for purchase and ownership of the lot.

HELD: YES

RULING:
Indeed, in a contract of sale of land in a mass, the specific boundaries stated in the
contract must control over any statement with respect to the area contained within its boundaries.
Thus, it is the boundaries indicated in a deed of absolute sale, and not the area in sq. m.
mentioned therein 300.375 sq. m. in the Deed of Sale in respondents favor that control in the
determination of which portion of the land a vendee acquires.
In concluding that Faustino acquired via the June 27, 1962 Deed of Sale the
total land area of 753 sq. m., the Court of Appeals subtracted from the total land area of 1,381 sq.
m. reflected in Exh. A, which is Plan of Lot 3, Block 5-k, Psd-8268, as prepared for Benjamin R.
Salinas containing an area of 1,381 sq. m. and which was prepared on February 10, 1960 by a
private land surveyor, the 628 sq. m. area of the lot claimed by Salinas as reflected in Tax
Declaration No. 1017 in her name. As will be shown shortly, however, the basis of the
appellate court‘s conclusion is erroneous.
As the immediately preceding paragraph reflects, the Plan of Lot 3, Bk 5-K, Psd-82 was prepared
for Spouses Faustino and Salinas‘ first cousin co-heir Benjamin Salinas on February 10, 1960.
Why the appellate court, after excluding the 628 sq. m. lot covered by a Tax Declaration in the
name of petitioner from the 1,381 sq. m. lot surveyed for Benjamin P. Salinas in 1960, concluded
that what was sold via the 1962 Deed of Sale to respondent Faustino was the remaining 753 sq.
m., despite the clear provision of said Deed of Sale that what was conveyed was 300.375 sq.
m., escapes comprehension. It defies logic, given that respondents base their claim
of ownership of the questioned 628 sq. m. occupied by Salinas on that June 27, 1962 Deed of
Sale covering a 300.375 sq. m. lot.
The Court of Appeals thus doubly erred in concluding that 1) what was sold to
respondents via the June 27, 1962 Deed of Sale was the 1,381 sq. m. parcel of land reflected in
the Plan-Exh. A prepared in 1960 for Benjamin Salinas, and 2) Salinas occupied 628 sq. m.
portion thereof, hence, Spouses Fausto own the remaining 753 sq. m.
 CASE 54. LIAO VS. CA 323 SCRA 430 (2000)

PRINCIPLE:
When two certificates of title are issued to different persons covering the same land in
whole or in part, the earlier in date must prevail, and, in case of successive registrations where
more than one certificate is issued over the same land, the person holding a prior certificate is
entitled to the land as against a person who relies on a subsequent certificate.

FACTS:
Petitioner Jesus P. Liao seeks to annul the decisions of the Court of Appeals which
annulled an order of the Regional Trial Court to issue transfer titles to Estrella Mapa over certain
lots in Piedad Estate, Quezon City. This involves the issuance to different persons of several
torrens titles covering the same property.
On March 5, 1986, Estrella Mapa filed with the Regional Trial Court, Quezon City,
Branch 99 a petition for reconstitution of documents and issuance of certificates of title over
certain parcels of land covered by OCT 614, Decree No. 6667, GLRO Rec. No. 5975.
Estrella Mapa claimed that on June 16, 1913, the Director of Lands issued certificates of
sales to Vicente Salgado over the parcels of land covered by OCT 614, Decree No. 6667, GLRO
Rec. No. 5975 in accordance with Act. No. 1120, otherwise known as the Friar Lands Act. The
sale involves four (4) parcels of land (Lot Nos. 755, 777, 778 and 783) located at Bgy. Payatas,
Quezon City. Lot No. 755 has an area of 3.691 hectares, Lot No. 777 has 25.0155 hectares, Lot
No. 778 has 24.5091 hectares, and Lot No. 783 has 25.0363 hectares. The four lots form part of
the Piedad Estate.
On April 12, 1930, Vicente Salgado assigned the property to Estrella Mapa. After
hearing, the trial court issued an order for the Register of Deeds to issue a Transfer Certificate of
Title in the name of Petitioner Estrella Mapa for Lot No. 778.
Unfortunately, the above titles were in conflict with several existing certificates of title, resulting
in the filing of several actions with the Regional Trial Court, Quezon City for quieting, and an
investigation into the matter by the National Bureau of Investigation.

ISSUE: Whether or not he Court of Appeals erred in upholding the annulment of the order of the
trial court in LRC Case No. 3369 (86) authorizing issuance of titles on the basis of sales
certificates and technical descriptions as reconstituted by the Land Registration Commission.
Held: NO

RULING:
The Piedad Estate has been titled in the name of the Government under Original
Certificate of Title No. 614. By virtue of Act No. 1120, the Piedad Estate was placed under the
administration of the Director of Lands. The subject lots are part of the Piedad Estate, Quezon
City.
The Petitioner is not the owner of the land. Petitioner Liao claims that his predecessor in
interest acquired the property through sale certificates Nos. 780, 781, 783, issued by the Director
of Lands in 1913. It is shown, however, that the sale certificates were signed by the Director of
Lands and approved by the Secretary of the Interior. These sales were void. This is because the
sales were not approved by the Secretary of Agriculture and Natural Resources.
In the case of Solid-State Multi-Products Corp. vs. Court of Appeals, the court held that
approval by the Secretary of Agriculture and Commerce is indispensable for the validity of the
sale of friar lands. In the absence of such approval, the sales were void.  In view of the invalidity
of the sales, there can be no valid titles issued on the basis of such sales.
The rule entrenched on public policy denies relief to a claimant whose right has become
"stale" by reason of negligence or inattention for a long period of time. In these cases, Estrella
Mapas inaction for a period of about fifty-six (56) years, counted from the time of the sale to her
in 1930 up to the filing of the petition for the issuance of title in 1986, bars petitioner from
whatever rights he could have acquired thereunder. If petitioner’s predecessor was indeed the
owner, she should have taken steps to have the land properly titled long ago.
These Cases involve a classic issue of double sale. Faced with a situation where both
parties claim to have acquired the subject property, the law provides that as between two
purchasers, the one who 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.
The court have consistently ruled that "when two certificates of title are issued to
different persons covering the same land in whole or in part, the earlier in date must prevail, and,
in case of successive registrations where more than one certificate is issued over the same land,
the person holding a prior certificate is entitled to the land as against a person who relies on a
subsequent certificate." A certificate is not conclusive evidence of title if the same land had been
registered and an earlier certificate for the same is in existence.
Title not tantamount to ownership. Consequently, private respondents title must be
respected. They have in their favor the law that protects holders of title under the torrens system
of land registration.
 Although title does not vest ownership, time and again we have ruled that a torrens
certificate is evidence of an indefeasible title to property in favor of the person whose name
appears thereon. Thus, the Court of Appeals correctly annulled the trial courts order allowing
registration of the subject property in the name of Estrella Mapa and her successors in interest.

CASE NO.55 - NAAWAN COMMUNITY RURAL BANK VS. CA 395 SCRA 43 (2003)

PRINCIPLE:
A person dealing with registered land may generally rely on the correctness of a
certificate of title and the law will in no way oblige him to go beyond it to determine the legal
status of the property. Double Sale of Immovable Property, ".Should it be immovable property,
the ownership shall belong to the person acquiring it who in good faith first recorded it in the
Registry of Property."
FACTS:
On April 30, 1988, a certain Guillermo Comayas offered to sell to private respondent-
spouses Alfredo and Annabelle Lumo, a house and lot measuring 340 square meters located at
Pinikitan, Camaman-an, Cagayan de Oro City. Private respondents wanted to buy a house and lot
and thus made queries at the Office of the Register of Deeds in Cagayan de Oro City where the
property is located. They found out that the property as mortgaged for P8, 000 to a certain Mrs.
Galupo and that the owner’s copy of the Title was in her possession.
Private respondents directed Guillermo Comayas to redeem the property from Galupo at
their expense, giving the amount of P10,000 to Comayas for that purpose. On May 30, 1988, a
release of the adverse claim of Galupo was annotated on TCT No. T-41499 which covered the
subject property.
Before the release of Galupo's adverse claim, private respondents and Guillermo
Comayas, executed a deed of absolute sale. The subject property was allegedly sold for P125,000
but the deed of sale reflected the amount of only P30,000 which was the amount private
respondents were ready to pay at the time of the execution of said deed, the balance payable by
installment. On July 9, 1988, a deed of absolute sale was then registered and inscribed on TCT
No. T-41499, on even date, TCT No. T-50134, in favor of private respondents.
After obtaining their TCT, respondents requested the issuance of a new tax declaration.
However, they later learned that the property was also declared for tax purposes in the name of
petitioner Naawan Community Rural Bank Inc. Apparently, on February 7, 1983, Guillermo
Comayas obtained a P15, 000 loan from petitioner Bank using the subject property as security
for failure of Comayas to pay, the real estate mortgage was foreclosed and the subject property
sold at a public auction to the mortgagee Naawan Community Rural Bank as the highest bidder
in the amount of P16,031.35.
On April 17, 1984, the subject property was registered in original proceedings under the
Land Registration Act. On July 23, 1984, Transfer Certificate of Title No. T-41499 in the name
of Guillermo P. Comayas was entered in the Register of Deeds of Cagayan de Oro City.
Meanwhile, on September 5, 1986, the period for redemption of the foreclosed subject property
lapsed and the MTCC Deputy Sheriff of Cagayan de Oro City issued and delivered to petitioner
bank the sheriff's deed of final conveyance. 
By virtue of said deed, petitioner Bank obtained a tax declaration for the subject house
and [Link], petitioner Bank instituted an action for ejectment against Comayas before the
MTCC which decided in its favor. However, when the writ was served, the property was no
longer occupied by Comayas but herein private respondents, the spouses Lumo who had, as
earlier mentioned, bought it from Comayas on May 17, 1988.
Hence, this petition.
ISSUE: Whether or not the registration of sheriff’s deed of final conveyance in the proper
registry of deeds is more superior than the Torrens title?
Whether or not private respondents could be considered as buyers in good faith?

Held: YES

RULING:
The court held in the negative. Under the law, where a person claims to have superior
proprietary rights over another on the ground that he derived his title from a sheriff’s sale
registered in the Registry of Property, Article 1473 (now Article 1544) of the Civil Code will
apply only if said execution sale of real estate isregistered under Act 496.
  Unfortunately, the subject property was still untitled when it was acquired by petitioner
bank by virtue of a final deed of conveyance. On the other hand, when private respondents
purchased thesame property, it was already covered by the Torrens System.
Moreover, the issuance of a certificate of title had the effect of relieving the land of all
claims except those noted thereon. Accordingly, private respondents, in dealing with the subject
registered land, were not required by law to go beyond the register to determine the legal
condition of the property. They were only charged with notice of such burdens on the property as
were noted on the register or the certificate of title. To have required them to do more would
have been to defeat the primary object of the Torrens System which is to make the Torrens Title
indefeasible and valid against the whole world.
Considering therefore that private respondents exercised the diligence required by law in
ascertaining the legal status of the Torrens title of Guillermo Comayas over the subject property
and found no flaws therein, they should be considered as innocent purchasers for value and in
good faith.
Before private respondents bought the subject property from Guillermo Comayas,
inquirieswere made with the Registry of Deeds and the Bureau of Lands regarding the status of
the vendor’s title. No liens or encumbrances were found to have been annotated on the
certificateof title. Neither were private respondents aware of any adverse claim or lien on the
propertyother than the adverse claim of a certain Geneva Galupo to whom Guillermo Comayas
hadmortgaged the subject property.
The rights created by the above-stated statute of course do not and cannot accrue under
an inscription in bad faith. Mere registration of title in case of double sale is not enough; good
faith must concur with the registration.
 CASE NO.56 - GOPIAO VS. METROBANK 731 SCRA 131 (2014)

PRINCIPLE:
PARAGRAPH 2, ART. 1544: Should it be immovable property, the ownership shall
belong to the person acquiring it who in good faith first recorded it in the Registry of Property.
(If the same thing should have been sold to different vendees.

FACTS:
The RTC of San Fernando, Pampanga issued, on November 5, 2007, a writ of possession
in favor of respondent Bank when it purchased the subject properties at a public auction and
registered the same in its name on October 1, 1998. Consequently, on January 4, 2008, a Notice
to Vacate was served on Green Asia Construction and Development Corporation, represented by
the spouses Renato and Delia Legaspi (the Spouse Legaspi).
Upon learning of the notice to vacate, petitioner filed an Affidavit of Third-Party Claim on
January 8, 2008. In said actions, petitioner alleged to be in actual occupation of the subject
properties and claimed ownership thereof by virtue of a Deed of Sale dated May 20, 1995
executed by the Spouses Legaspi in his favor.

On September 18, 2008, the trial court denied petitioner’s claims in its Order, the pertinent
portions of which read:
 Juanito M. Gopiao’s motion for intervention is too late in the day to entertain. His
resurfacing now puts his action in doubt. It has been twenty-three (23) long years ago since the
alleged Deed of Absolute Sale was executed and yet he has not registered the properties in his
name. His motion tries to resurrect a dead horse. This is a ruse to disallow the taking over the
properties by Metropolitan Bank and Trust Company. This alone militates against this motion of
intervention. Juanito M. Gopiao’s legal interest in these properties is, thus, beclouded.
Petitioner elevated his complaint to the Court of Appeals. On March 10, 2009, however,
the CA dismissed said petition in the following wise:
In this case, the trial court committed no grave abuse of discretion in denying petitioner’s
motion. To substantiate his claim of ownership over the subject properties, petitioner offered in
evidence an un-notarized and unregistered deed of sale. As pointed out by the private respondent
bank in its Comment, petitioner even failed to prove the due execution and authenticity of the
said deed of absolute sale.
On the other hand, the respondent bank was a mortgagee in good faith. It has shown that
prior to the approval of the loan application of the borrowers, it checked the records of the
properties offered as collaterals at the Registry of Deeds and verified that the titles were clean.
Moreover, it inspected the premises and found no occupants.

ISSUE: Whether or not petitioner was the owner of subject properties, and thus there was a
double sale?

HELD: NO

RULING:
Article 1544 of the Civil Code states that: If the same thing should have been sold to
different vendees, the ownership shall be transferred to the person who may have first taken
possession thereof in good faith, if it should be movable property.
Should it be immovable property, the ownership shall belong to the person acquiring it
who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in good
faith was first in possession; and, in the absence thereof, to the person who presents the oldest
title, provided there is good faith.
The Second paragraph of Art 1544 applies to this case.
There are a few exceptions to this rule, one of which is when a third party in possession
of the property claims a right adverse to that of the debtor-mortgagor, as this Court has time and
again upheld in numerous cases, consistent with Section 33 of Rule 39 of the Rules of Court.  As
such, petitioner claims that since the following rulings squarely apply to the instant case, the writ
of possession should not be enforced against him.
Petitioner is mistaken. Petitioner’s possession of the subject properties in this case is
questionable.  As correctly observed by the courts below, petitioner failed to substantiate his
possession with sufficient evidence.  On its face, the Deed of Absolute Sale relied upon by
petitioner is neither complete nor in due form. Certain essential details are missing therein, such
as the tax account numbers of the interested parties and the names of the witnesses. More
importantly, the same was not notarized.  As pointed out by the CA, petitioner even failed to
prove the due execution and authenticity of the document.28 Apart from the unnotarized and
unrecorded Deed of Absolute Sale, petitioner did not present other convincing evidence to
bolster his claim of ownership and/or possession.
Thus, respondent Metropolitan Bank and Trust Co. has the right of ownership over
subject properties.
 CASE NO.57 - CARBONELL VS. CA 69 SCRA 99 (1976)

PRINCIPLE:
ART. 1544: If the same thing should have been sold to different vendees, the ownership
shall be transferred to the person who may have first taken possession thereof in good faith, if it
should be movable property.

Should it be immovable property, the ownership shall belong to the person acquiring it who in
good faith first recorded it in the Registry of Property.

Should there be no inscription, the ownership shall pertain to the person who in good faith was
first in possession; and, in the absence thereof, to the person who presents the oldest title,
provided there is good faith.

FACTS:
Prior to January 27, 1955, respondent Jose Poncio’s parcel of land with improvements
situated in 179 V. Agan St., San Juan, Rizal was mortgaged to Republic Savings Bank.
Unable to keep up with the installments due on the mortgage, Poncio executed a private
memorandum of sale of his land in favor of his cousin Rosario Carbonell (Petitioner). Carbonell
knew that the said property was at that time subject to a mortgage in favor of the Republic
Savings Bank (RSB) for the sum of P1,500.00.
Four days later, Poncio, in another private memorandum, bound himself to sell the same
property for an improved price to one Emma Infante for the sum of P2,357.52, with the latter still
assuming the existing mortgage debt in favor of the RSB in the amount of P1,177.48. Thus, in
February 2, Poncio executed a formal registerable deed of sale in her (Infante's) favor. So, when
the first buyer Carbonell saw the seller Poncio a few days afterwards, bringing the formal deed
of sale for the latter's signature and the balance of the agreed cash payment, she was told that he
could no longer proceed with formalizing the contract with her (Carbonell) because he had
already formalized a sales contract in favor of Infante.
To protect her legal rights as the first buyer, Carbonell registered on February 8, 1955
with the Register of Deeds her adverse claim as first buyer entitled to the property. Meanwhile,
Infante, the second buyer, was able to register the sale in her favor only on February 12, 1955, so
that the transfer certificate of title issued in her name carried the duly annotated adverse claim of
Carbonell as the first buyer. The trial court declared the claim of the second buyer Infante to be
superior to that of the first buyer Carbonell, a decision which the Court of Appeals reversed.
Upon motion for reconsideration, however, Court of Appeals annulled and set aside its first
decision and affirmed the trial court’s decision.

ISSUE: Whether or not petitioner has the superior right over the subject property?

HELD: YES

RULING:
The Supreme Court reversed the appellate court’s decision and declared the first buyer
Carbonell to have the superior right over the subject property, relying on Article 1544 of the
Civil Code:
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 movable property.
Should it be immovable property, the ownership shall belong to the person acquiring
it who in good faith first recorded it in the Registry of Property.
Should there be no inscription, the ownership shall pertain to the person who in
good faith was first in the possession; and, in the absence thereof, to the person who presents the
oldest title, provided there is good faith (emphasis supplied).
Unlike the first and third paragraphs of said Article 1544, which accord preference to the
one who first takes possession in good faith of personal or real property, the second paragraph
directs that ownership of immovable property should be recognized in favor of one "who in good
faith first recorded" his right. Under the first and third paragraphs, good faith must characterize
the prior possession, while under the second paragraph, good faith must characterize the act of
anterior registration.
When Carbonell bought the lot from Poncio on January 27, 1955, she was the only buyer
thereof and the title of Poncio was still in his name solely encumbered by bank mortgage duly
annotated thereon. Carbonell was not aware - and she could not have been aware - of any sale to
Infante as there was no such sale to Infante then. Hence, Carbonell's prior purchase of the land
was made in good faith which did not cease after Poncio told her on January 31, 1955 of his
second sale of the same lot to Infante. Carbonell wanted to meet Infante but the latter refused so
to protect her legal rights, Carbonell registered her adverse claim on February 8, 1955. Under the
circumstances, this recording of Carbonell’s adverse claim should be deemed to have been done
in good faith and should emphasize Infante's bad faith when the latter registered her deed of sale
4 days later.

CASE NO.58 - CHENG VS. GENATO 300 SCRA 722 (1998)

PRINCIPLE:
Art. 1544 should apply because for not only was the contract between herein respondents
first in time; it was also registered long before petitioner's intrusion as a second buyer (PRIMUS
TEMPORE, PORTIOR JURE).

FACTS:
Respondent Genato entered a contract to sell to spouses Da Jose pertaining to his
property in Bulacan. The contract made in public document states that the spouses shall pay the
down payment and 30 days after verifying the authenticity of the documents, they shall pay the
remaining purchase price.
Da Jose spouses was not able to finish verifying the documents and as such asked for a
30-day extension. Pending the extension and without notice to the spouses, Genato made a
document for the annulment of the contract.
Petitioner Cheng expressed interest over the property and paid 50K check with the
assurance that the contract between Genato and the spouses Da Jose will be annulled. Da Jose
spouses protested with the annulment and persuaded Genato to continue the contract. Genato
returned the check to Cheng and hence, this petition.

ISSUE: Whether or not the contract between petitioner and respondent was a contract to sell?

HELD: YES

RULING:
The contract between Genato and spouses Da Jose was a contract to sell which is subject
to a suspensive condition. Thus, there will be no contract to speak of, if the obligor failed to
perform the suspensive condition which enforces a juridical relation. Obviously, the foregoing
jurisprudence cannot be made to apply to the situation in the instant case because no default can
be ascribed to the Da Jose spouses since the 30-day extension period has not yet expired.

Even assuming that the spouses defaulted, the contract also cannot be validly rescinded
because no notice was given to them. Thus, Cheng's contention that the Contract to Sell between
Genato and the Da Jose spouses was rescinded or resolved due to Genato's unilateral rescission
finds no support in this case.
 The contract between Genato and Cheng is a contract to sell not a contract of sale. But
But even assuming that it should be treated as a conditional contract of sale, it did not acquire
any obligatory force since it was subject to a suspensive condition that the earlier contract to sell
between Genato and the Da Jose spouses should first be cancelled or rescinded.
Art.1544 should apply because for not only was the contract between herein respondents
first in time; it was also registered long before petitioner's intrusion as a second buyer (PRIMUS
TEMPORE, PORTIOR JURE). (Spouses made annotation on the title of Genato). Since Cheng
was fully aware, or could have been if he had chosen to inquire, of the rights of the Da Jose
spouses under the Contract to Sell duly annotated on the transfer certificates of titles of Genato,
it now becomes unnecessary to further elaborate in detail the fact that he is indeed in bad faith in
entering into such agreement.

CASE NO.59 - HEIRS OF SEVERINA SAN MIGUEL VS. CA 364 SCRA 523 (2001)

PRINCIPLE:
ART. 1306: The contracting parties may establish such stipulations, clauses, terms and
conditions as they may deem convenient provided, they are not contrary to law, morals, good
customs, public order or public policy.
ART. 1183: "Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. If the obligation is
divisible, that part thereof which is not affected by the impossible or unlawful condition shall be
valid".

FACTS:
This case involves a parcel of land originally claimed by Severina San Miguel. The land
is situated in Panapan, Bacoor, Cavite with an area of 632 sq. m., more or less.
Without Severina's knowledge, Dominador managed to cause the subdivision of the land
into three (3) lots.
On September 25, 1974, Dominador, et al. filed a petition with the Court of First
Instance, Cavite, as a land registration court, to issue title over Lots 1 and 2 of LRC Psu-1313, in
their names. On July 19, 1977, the Land Registration Commission rendered a decision directing
the issuance of Original Certificate of Title No. 0-1816 in the names of Dominador, et al. On or
about August 22, 1978, Severina filed with the Court of First Instance of Cavite a petition for
review of the decision alleging that the land registration proceedings were fraudulently concealed
by Dominador from her.
On December 27, 1982, the court resolved to set aside the decision of July 19, 1977, and
declared Original Certificate of Title No. 0-1816 as null and void. On July 13, 1987, the Register
of Deeds of Cavite issued Transfer Certificate of Title No. T-223511 in the names of Severina
and her heirs. On February 15, 1990, the trial court issued an order in favor of Severina's heirs
On August 6, 1993, Severina's heirs, decided not to pursue the writs of possession and
demolition and entered into a compromise with Dominador, et al. According to the compromise,
Severina's heirs were to sell the subject lots to Dominador, et al. for P1.5 M with the delivery of
Transfer Certificate of Title No. T-2235 conditioned upon the purchase of another lot 11 which
was not yet titled at an additional sum of P300,000.00. 
On the same day, on August 6, 1993, pursuant to the kasunduan, Severina's heirs and
Dominador, et al. executed a deed of sale designated as "kasulatan sa bilihan ng lupa."
On November 16, 1993, Dominador, et al. filed with the trial court, Branch 19, Bacoor,
Cavite, a motion praying that Severina's heirs deliver the owner's copy of the certificate of title to
them.
In time, Severina's heirs opposed the motion stressing that under the kasunduan, the
certificate of title would only be surrendered upon Dominador, et al.'s payment of the amount of
three hundred thousand pesos (P300,000.00) within two months from August 6, 1993, which was
not complied with.
Dominador, et al. admitted non-payment of three hundred thousand pesos (P300,000.00)
for the reason that Severina's heirs have not presented any proof of ownership over the untitled
parcel of land covered by LRC-Psu-1312. Apparently, the parcel of land is declared in the name
of a third party, a certain Emiliano Eugenio.
Dominador, et al. prayed that compliance with the kasunduan be deferred until such time
that Severina's heirs could produce proof of ownership over the parcel of land.

ISSUE: Whether or not Dominador, et al. may be compelled to pay the P300,000.00 as agreed
upon in the kasunduan (as a pre-requisite for the release of the certificate of title), despite
Severina's heirs' lack of evidence of ownership over the parcel of land covered by LRC Psu-
1312.

HELD: NO

RULING:
Severina's heirs anchor their claim on the kasunduan, stressing on their freedom to
stipulate and the binding effect of contracts. This argument is misplaced. The Civil Code
provides:
ARTICLE 1306. The contracting parties may establish such stipulations, clauses, terms
and conditions as they may deem convenient provided they are not contrary to law, morals, good
customs, public order or public policy.
In contracts of sale, the vendor need not possess title to the thing sold at the perfection of
the [Link], the vendor must possess title and must be able to transfer title at the time
of delivery. In a contract of sale, title only passes to the vendee upon full payment of the
stipulated consideration, or upon delivery of the thing sold.
Under the facts of the case, Severina's heirs are not in a position to transfer title. Without
passing on the question of who actually owned the land covered by LRC Psu -1312, we note that
there is no proof of ownership in favor of Severina's heirs. In fact, it is a certain Emiliano
Eugenio, who holds a tax declaration over the said land in his name. Though tax declarations do
not prove ownership of the property of the declarant, tax declarations and receipts can be strong
evidence of ownership of land when accompanied by possession for a period sufficient for
prescription. Severina's heirs have nothing to counter this document.
Therefore, to insist that Dominador, et al. pay the price under such circumstances would
result in Severina's heirs' unjust enrichment. The essence of a sale is the transfer of title or an
agreement to transfer it for a price actually paid or promised.
Severina's heirs insist that delivery of the certificate of title is predicated on a condition
— payment of three hundred thousand pesos (P300,000.00) to cover the sale of Lot 3 of LRO
Psu 1312. We find this argument not meritorious. The condition cannot be honored for reasons
afore-discussed. Article 1183 of the Civil Code provides that,
"Impossible conditions, those contrary to good customs or public policy and those
prohibited by law shall annul the obligation which depends upon them. If the obligation is
divisible, that part thereof which is not affected by the impossible or unlawful condition shall be
valid, x x x"
Hence, the non-payment of the three hundred thousand pesos (P300,000.00) is not a valid
justification for refusal to deliver the certificate of title.
Besides, we note that the certificate of title covers Lots 1 and 2 of LRC Psu-1313, which were
fully paid for by Dominador, et al. Therefore, Severina's heirs are bound to deliver the certificate
of title covering the lots.

CASE NO.60 - MONTECILLO VS. REYNES 385 SCRA 244 (2002)

PRINCIPLE:
The manner of payment of the purchase price is an essential element before a valid and
binding contract of sale can exist – agreement on the manner of payment goes into the price
such that a disagreement on the manner of payment is tantamount to a failure to agree on the
price.
In a contract of sale, the parties must agree not only on the price, but also on the manner
of payment of the price.
Unless the parties have agreed otherwise, then its payment to be effective must be made
to the seller in accordance with Article 1240 which provides that “Payment shall be made to the
person in whose favor the obligation has been constituted, or his successor in interest, or any
person authorized to receive it.”

FACTS:
 Respondents Ignacia Reynes and Spouses Abucay filed a complaint for Declaration of
Nullity and Quieting of Title against petitioner Rido Montecillo.
Reynes signed a Deed of Sale in favor to Montecillo in consideration for P47,000.00
purchase price payable within one month from the signing of the Deed of Sale.
Reynes further alleged that Montecillo failed to pay the purchase price after the lapse of
the one-month period, prompting Reynes to demand from Montecillo the return of the Deed of
Sale. Since Montecillo refused to return the Deed of Sale, Reynes executed a document
unilaterally revoking the sale and gave a copy of the document to Montecillo.
Subsequently, Reynes signed a Deed of Sale transferring to the Abucay Spouses the
entire Mabolo Lot, at the same time confirming the previous sale of a 185-square meter portion
of the lot.
Respondents, receiving information that the Register of Deeds of Cebu City issued
Certificate of Title No. 90805 in the name of Montecillo for the Mabolo Lot, argued that “for
lack of consideration there was no meeting of the minds” between Reynes and Montecillo. Thus,
the trial court should declare null and void ab initio Montecillo’s Deed of Sale, and order the
cancellation of Certificate of Title in the name of Montecillo.

ISSUE: Whether or not the Deed of Sale is void from the beginning?

HELD: NO

RULING:
The petition is devoid of merit. Montecillo argues there is only a breach of his obligation
to pay the full purchase price on time. Such breach merely gives Reynes a right to ask for
specific performance, or for annulment of the obligation to sell the Mabolo Lot. These arguments
are not persuasive.
On its face, Montecillo’s Deed of Absolute Sale22 appears supported by a valuable
consideration. However, based on the evidence presented by both Reynes and Montecillo, the
trial court found that Montecillo never paid to Reynes, and Reynes never received from
Montecillo, the P47,000.00 purchase price. There was indisputably a total absence of
consideration contrary to what is stated in Montecillo’s Deed of Sale.
Thus, we find no reason to deviate from the findings of both the trial and appellate courts
that no valid consideration supported Montecillo’s Deed of Sale.
Failure to pay the consideration is different from lack of consideration. The former results
in a right to demand the fulfillment or cancellation of the obligation under an existing valid
contract while the latter prevents the existence of a valid contract.
 Where the deed of sale states that the purchase price has been paid but in fact has never
been paid, the deed of sale is null and void ab initio for lack of consideration.
In summary, Montecillo’s Deed of Sale is null and void ab initio not only for lack of
consideration, but also for lack of consent. The cancellation of TCT No. 90805 in the name of
Montecillo is in order as there was no valid contract transferring ownership of the Mabolo Lot
from Reynes to Montecillo.