RADIOWEALTH V.

PALILEO (May 20, 1991)

FACTS: Spouses Castro sold a parcel of unregistered coconut land in Surigao del Norte to Manuelito Palileo. The sale is evidenced by a notarized deed of sale and Palileo exercised acts of ownership through his mother and also paid real estate taxes. Meanwhile, a judgment over a civil case was rendered agains Enriqur Castro ordering him to pay 22K to Radiowealth Finance Co. Pursuant to this, the provincial sheriff levied upon and sold in public auction the subject land that was previously sold to Palileo. A certificate of sale was issued in favor of Radiowealth being the lone bidder and after the expiration of the period of redemption, a deed of final sale was also executed in their favor and both deeds was registered to the Registry of Deeds. ISSUE:

WON the sale in public auction is valid. HELD: Had Art.1544 been applied, the judgment should be rendered in favor of Radiowealth being the one who registered the land first. But since the subject land is an unregistered land, a different rule should apply. Under Act.3344 mere registration of a sale in one's favor does not give him any right over the land if the vendor was not anymore the owner of the land having previously sold the same to somebody else even if the earlier sale was unrecorded. Article 1544 of the Civil Code has no application to land not registered under the torrens system. It was explained that this is because the purchaser of unregistered land at a sheriffs execution sale only steps into the shoes of the judgment debtor, and merely acquires the latter's interest in the property sold as of the time the property was levied upon. As such, the execution sale of the unregistered land in

favor of petitioner is of no effect because the land no longer belonged to the judgment debtor as of the time of the said execution sale.

NAVERA V. CA (April 26, 1990)

FACTS: Leocadio Navera owns a parcel of land in Albay which was inherited by his 5 children. His 3 children already have their share of the inheritance from the other properties of Leocadio. The subject land was now owned by his 2 daughters. An OCT was issued in the name of Elena Navera et.al (et.al refers to his sister Eduarda Navera) When Elena died, his share of the land was inherited by her heirs Arsenio and Felix Narez. The other portion was owned by Eduarda. Eduarda sold her portion to her nephew Arsenio and then one year after to Mariano Navera. Both sales

were made in a public instrument but both sales were also not registered in the Registry of Property. ISSUE: WON the second sale of the property is valid. HELD: Since the records show that both sales were not recorded in the Registry of Property, the law clearly vests the ownership upon the person who in good faith was first in possession of the disputed lot. The possession viewed in the law includes not only the material but also the symbolic possession, which is acquired by the execution of a public instrument. This means that after the sale of a realty by means of a public instrument, the vendor, who resells it to another, does not transmit anything to the second vendee, and if the latter, by virtue of this second sale, takes material possession of the thing, he does it as mere detainer, and it would be unjust to protect this

detention against the rights of the thing lawfully acquired by the first vendee. In the case at bar, the prior sale of the land to respondent Arsenio Nares by means of a public instrument is clearly tantamount to a delivery of the land resulting in the material and symbolic possession thereof by the latter.

CRUZ V. CABANA (June 22, 1984)

FACTS: Leodegaria Cabana sold his real propery first to Teofilo Legaspi and Illuminada Cabana and then later to Abelardo Cruz. Legaspi and Cabana were able to take possession of the property but they were not able to register the deed of absolute sale because the property was still mortgaged to PNB. They however were able to register with the RD the sale with the right to repurchase.

On the other hand, Cruz succeeded to register the deed of absolute sale in his favor. HELD: Even though Cruz was the first to register the deed of absolute sale, he cannot be given a better right over the property because he was a buyer in bad faith. Cruz knew the prior sale of the property because he was informed by the RD that Legazpi and Cabana already registered the sale of the said property. Knowledge of a prior transfer of a registered property by a subsequent purchaser makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the latter instrument of conveyance which creates no right as against the first purchaser.

TAEDO V. CA (January 22, 1996)

FACTS: Lazaro Taedo executed a deed of absolute sale in favor of Ricardo Taedo and Teresita Barrera in which he conveyed a parcel of land which he will inherit. Upon the death of his father he executed an affidavit of conformity to reaffirm the said sale. He also executed another deed of sale in favor of the spouses covering the parcel of land he already inherited. Ricardo registered the last deed of sale in the registry of deeds in their favor. Ricardo later learned that Lazaro sold the same property to his children through a deed of sale. ISSUE: WON the Taedo spouses have a better right over the property against the children of Lazaro Taedo. HELD: Since a future inheritance generally cannot be a subject of a contract, the deed of sale and the affidavit of conformity made by Lazaro has no effect. The

subject of dispute therefore is the deed of sale made by him in favor of spouses Taedo and another to his children after he already legally acquired the property. Thus, although the deed of sale in favor of private respondents was later than the one in favor of petitioners, ownership would vest in the former because of the undisputed fact of registration. On the other hand, petitioners have not registered the sale to them at all. Petitioners contend that they were in possession of the property and that private respondents never took possession thereof. 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.

ESPIRITU V. VALERIO (December 23, 1976)

FACTS: Valerio filed a case to quiet title against mother and daughter Espiritu who were asserting their adversary rights over said land and disturbing his possession thereof. Valerio presented a deed of sale from which he acquired the property while the Espiritus allege that they acquire the same from their deceased father. The Espiritus also presented two deeds of sale to prove that their deceased father have a legal right over the property which they inherited. ISSUE: WON mother and daughter Espiritu have a better right over the property. HELD: Apparently, this case concerns the sales of one parcel of land by the same vendor but in favor of two different vendees.

If both allegations of the parties are valid, Espiritu's contention that they have a better right than that the claimed by Valerio would seem to be meritorious in the light of the facts of the case and the provisions of Article 1544 of the New Civil Code, it not being disputed that the Deed of Sale in favor of them was registered first. But since the deeds of sale presented by Esiritu are found to be falsified, they have no legal right to claim the disputed property.

ADALIN V. CA (October 10, 1997)

FACTS: Appellee-Vendors sold their 5-door commercial building to Appellants Yu and Lim located in front of Imperial Hotel in Cotabato City. Since there are lessees in the property, the vendors offered it first to them twice but they refused both

offers. As such, appellee-vendors and appellants executed a deed of conditional sale. The contract states that they appellants will pay the down payment of 300K first and the remaining balance after the appellee-vendors completely evicted the lessees occupying the property. After the vendors and the tenants made known their intention to buy the property for a higher price. As such, the vendors executed three deeds of sale of registered land in favor of the lessees. The vendors offered to return the downpayment paid by the appellants but the latter refused. The vendors contend that they can rescind the contract because the condition to evict the tenants was not completed. HELD: Although the contract was a conditional sale, what was subject to the condition is the payment of the balance. Both parties have their respective obligations yet to be fulfilled, the seller the eviction of the tenants

and the buyer, the payment of the balance of the purchase price. The choice of who to sell the property to, however, had already been made by the sellers and is thus no longer subject to any condition nor open to any change. In that sense, the sale to the appellants was definitive and absolute. A clear breach of contract was made by the vendors. A case double sale occurred when the vendors sold the property to the tenants. When the tenants bought the property, they are fully aware of its prior sale to the appellants. Though the second sale to the said tenants was registered, such prior registration cannot erase the gross bad faith that characterized such second sale, and as such, there is no legal basis to rule that such second sale prevails over the first sale of the said property.

MENDOZA V. KALAW (October 12, 1921)

FACTS: Federico Caet sold his land under a conditional sale to Primitivo Kalaw. Less than two months after, he sold it again to Agapito Mendoza under an absolute sale. Mendoza took possession of the land and enclosed it with fence. Kalaw attempted to claim possession but Mendoza refused. Kalaw attempted to have his title registered in the registry of deeds but was denied by for the reason that there existed some defect in the description of the property, and that the title of the vendor had not therefore been registered. The register of deeds, however, did make a preventive annotation. HELD:

The ruling should be in favor of Mendoza because even if he acquired the property subsequent to the conditional sale in favor of Kalaw, a conditional sale, before the performance of the condition, can hardly be said to be a sale of property, especially where the condition has not been performed or complied with.

CORONEL V. CA (October 07, 1996)

FACTS: Coronel et al. consummated the sale of his property located in Quezon City to respondent Alcaraz. Since the title of the property was still in the name of the deceased father of the Coronels, they agreed to transfer its title to their name upon payment of the down payment of 50K. and thereafter an absolute deed of sale will be executed. Alcarazs mother paid the down payment in behalf of her daughter and as such, Coronel made the transfer of title to their name. Notwithstanding this fact,

Coronel sold the property to petitioner Mabanag and rescinded its prior contract with Alcaraz. ISSUE: WON the rescission of the first contract between Coronel and Alcaraz is valid. HELD: The case is a contract of sale subject to a suspensive condition in which consummation is subject only to the successful transfer of the certificate of title from the name of petitioners' father, to their names. Thus, the contract of sale became obligatory. With regard to double sale, the rule that the first in time, stronger in right should apply. The contention of the petitioner that she was a buyer in good faith because the notice of lis pendens in the title was annotated after she bought the property is of no merit. In case of double sale, what finds relevance and materiality is not whether or not the second buyer was a buyer in good faith but whether or not said second

buyer registers such second sale in good faith, that is, without knowledge of any defect in the title of the property sold. The ruling should be in favor of Alcaraz because Mabanag registered the property two months after the notice of lis pendens was annotated in the title and hence, she cannot be a buyer in good faith.

CHENG V. GENATO (December 29, 1998)

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. HELD: 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.

STA.ANA V. HERNANDEZ (January 17, 1966)

FACTS: Spouses Jose Santa Ana, Jr. and Lourdes Sto. Domingo sold a land in Bulacan to respondent Rosa Hernandez for P11,000 lump sum. (there were two other previous sales to different vendees of other portions of the land)

The boundaries of the land were stated in the deed of sale and its approximate land area. Petitioners-spouses caused the preparation of the subdivision plan but Hernandez didnt agree to the partition. As such, petitioners-spouses filed a case alleging that Hernandez is occupying in excess of 17000 square meter of the land sold. Hernandez claims that the excess area is part of the land she bought. ISSUE: WON the excess area occupied by Hernandez is part of the land sold. HELD: The sale involves a definite and identified tract, a corpus certum, that obligated the vendors to deliver to the buyer all the land within the boundaries, irrespective of whether its real area should be greater or smaller than what is recited in the deed.

To hold the buyer to no more than the area recited on the deed, it must be made clear therein that the sale was made by unit of measure at a definite price for each unit. The sale in this case only involves the definite boundaries but only approximate land areas. As such, Art 1542 concerning the sale for lump sum must be considered.

VILLARTA V. CA (May 29, 1987)

FACTS: Respondent Rosalinda Cruz entrusted to petitioner Victoria Villarta seven pieces of jewelry on November 1968. On December of the same year, Villarta exchanges one jewelry to another and issued a postdated check in favor of Cruz. Cruz deposited the check but it was dishonored for lack of funds. An estafa case was filed against Villarta but she argued that she can only be civilly liable because

even though the check bounced, she only gave it for a pre-existing obligation. She contends a person cannot be imprisoned for non-payment of debt. ISSUE: WON the transaction is a sale or return HELD: The transaction is not a sale or return but a sale on approval or sale on acceptance. When Cruz gave the jewelry to Villarta on November, the clear intention is to make the latter choose which item she wanted to buy. There was no meeting of the minds yet at this point and hence, it cannot be considered as delivery. 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. It is still criminal fraud or deceit in the issuance of a check which is made punishable under the Revised Penal Code, and not the non-payment of the debt.

POWER COMMERCIAL V. CA (June 20, 1997)

FACTS: Petitioner asbestos manufacturer Power Commercial and industrial corporation bought the property of spouses Reynaldo and Angelita Quiambao located in Makati City. Since there are lessees occupying the subject land, part of the deed of sale is a warranty of respondents that will defend its title and peaceful possession in favor of the petitioners.

The property is mortgage to PNP and as such, petitioners filed a request to assume responsibility of the mortgage. Because of petitioners failure to produce the required papers, their petition was denied. Petitioners allege that the contract should be rescinded because of failure of delivery. ISSUE: WON the contract is recissible due to breach of contract. HELD: There is no breach of contact in this case since there is no provision in the contract that imposes the obligation to the respondents to eject the people occupying the property. There was also a constructive delivery because the deed of sale was made in a public document. The contention of the petitioners that there could be no

constructive delivery because the respondents is not in possession of the property is of no merit. What matters in a constructive delivery is control and not possession. Control was placed in the hands of the petitioners that is why they were able to file an ejectment case. Prior physical delivery or possession is not legally required and the execution of the deed of sale is deemed equivalent to delivery.

DY V. CA (July 08, 1991)

FACTS: Wilfredo Dy bought a truck and tractor from Libra Finance Corporation. Both truck and tractor was also mortgage to Libra as security for a loan and as such, they took possession of it. Brother of Wilfredo, Perfecto Dy and sister Carol Dy-Seno requested Libra that they be allowed to buy the property and assume the mortgage debt. Libra agreed to the request.

Meanwhile, a collection suit was filed against Wilfredo Dy by Gelac Trading Inc. On the strength of a writ of execution, the sheriff was able to obtain the tractor on the premises of Libra. It was sold in a public auction in which Gelac Trading was the lone bidder. Gelac subsequently sold it to one of their stockholders. The respondents claim that at the time of the execution of the deed of sale, no constructive delivery was effected since the consummation of the sale depended upon the clearance and encashment of the check which was issued in payment of the subject tractor ISSUE: WON the William Dy is still the owner of the tractor when it was obtained through the writ of execution. HELD: The tractor was not anymore in possession of William Dy when it was obtained by the sheriff because he already sold it to his brother.

William Dy has the right to sell his property even though it was mortgage because in a mortgage, the mortgagor doesnt part with the ownership over the property. He is allowed to sell the property as long as there is consent from the mortgagee such as in this case. But even if there is no consent given, the sale would still be valid without prejudice to the criminal action against the mortgagor. When William Dy sold the tractor, he already transferred the ownership of it because NCC states that the ownership of the thing sold is acquired by the vendee from the moment it is delivered to him or in any other manner signing an agreement that the possession is transferred from the vendor to the vendee. In the instant case, actual delivery of the subject tractor could not be made but there was constructive delivery already upon the execution of a public instrument which in this case is a deed of sale.

The payment of the check was actually intended to extinguish the mortgage obligation.

PASAGUI V. VILLABLANCA (November 10, 1975)

FACTS: Plaintiffs Calixto Pasagui and Fausta Mosar bought a property in Leyte from Estaquia and Catalina Bocar for P2,800. Before they could take possession of the property, defendant spouses Ester T. Villablanca and Zosimo Villablanca took possession of it and harvested from the coconut plantation thereon. Plaintiffs demanded the return of the property but the defendants refused. Plaintiffs filed a case in the CFI but respondents contend that the case is a forcible entry and as such, CFI has no jurisdiction.

ISSUE: WON the case is of forcible entry. HELD: In order that an action may be considered as one for forcible entry, it is not only necessary that the plaintiff should allege his prior physical possession of the property but also that he was deprived of his possession by any of the means provided in section 1, Rule 70 of the Revised Rules of Court. It is true that the execution of the deed of absolute sale in a public instrument is equivalent to delivery of the land subject of the sale. This presumptive delivery only holds true when there is no impediment that may prevent the passing of the property from the hands of the vendor into those of the vendee. It can be negated by the reality that the vendees actually failed to obtain material possession of the land subject of the sale.

DANGUILAN V. AIC (November 28, 1988)

FACTS: A residential and farm lot in Cagayan owned by Dominggo Melad were being claimed by petitioner Felix Danguilan and respondent Apolonia Melad. Apolonia contends that she acquired the property when Dominggo Melad sold it to her when she was just three years old in which her mother paid the consideration. She contends that she just moved out of the farm only when in 1946 Felix Danguilan approached her and asked permission to cultivate the land and to stay therein. Dangguilan presented for his part 2 documents to prove his claim that the properties were given to him by Dominggo Melad through an onerous donation. The onerous part of the donation includes the taking care of the farm and the arrangement of the burial of Dominggo.

HELD: The ruling should be in favor of Danguilan. The contention of Apolonia that the deed of donation is void because it was not made through a public document is of no merit. The deed was an onerous one and hence, it was not covered by the rule in Article 749 requiring donations of real properties to be effected through a public instrument. An onerous donation is effective and valid if it embraces the conditions that the law requires. Since it has been proven that Danguilan did the conditions in the onerous donation particularly the arrangement of Dominggos burial, the deed is deemed valid. On the other hand, the deed of sale made in favor of Apolonia is suspicious. 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 averment was also made that the contract was simulated and prepared after Domingo Melad's death in 1945.

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. 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. Ownership does not pass by mere stipulation but only by delivery.

ADDISON V. FELIX (August 03, 1918)

FACTS: Petitioner Addison sold four parcels of land to Defendant spouses Felix and Tioco located in LucenaCity. Respondents paid 3K for the purchase

price and promised to pay the remaining by installment. The contract provides that the purchasers may rescind the contract within one year after the issuance of title on their name. The petitioner went to Lucena for the survey designaton and delivery of the land but only 2 parcels were designated and 2/3 of it was in possession of a Juan Villafuerte. The other parcels were not surveyed and designated by Addison. Addison demanded from petitioner the payment of the first installment but the latter contends that there was no delivery and as such, they are entitled to get back the 3K purchase price they gave upon the execution of the contract. ISSUE: WON there was a valid delivery. HELD:

The record shows that the plaintiff did not deliver the thing sold. With respect to two of the parcels of land, he was not even able to show them to the purchaser; and as regards the other two, more than two-thirds of their area was in the hostile and adverse possession of a third person. It is true that the same article declares that the execution of a public instruments 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 there is an impediment, delivery cannot be deemed effected.

LACANILAO V. CA (September 26, 1996)

FACTS: Respondent Encarnacion owns a parcel of land in Quezon City where a certain Deogracia La Torre built a house. The house was bought by petitioner Lacanilao. Lacanilao and Encarnacion entered a contract of lease. Encarnacion also leased a portion of the land to another petitioner Cadurnigara. After some time, Encarnacion offered to sell his land to the petitioners for 120K. Since petitioners doesnt have the money yet, they requested for another month extension. When the designated time came, petitioners still was not able to produce the payment for the land and as such, Encarnacion sold his property to spouses

Acebo. Acebo demanded the petitioners to vacate the lot. ISSUE: WON the petitioners have the right to purchase the land over the Acebo spouses. HELD: It is well established that where the seller promised to execute a deed of absolute sale upon completion of payment of the purchase price by the buyer, the agreement is a contract to sell. In such a case, failure of payment failure is not really a breach but an event that prevents the obligation of the vendor to convey title. Petioners also failed to show any evidence to prove that they were ready to fulfill the condition (of full payment) imposed on the obligation to sell. The verbal offer of Encarnacion to petitioners is also unenforceable under the Stature of Frauds.

VDA. DE JOMOC V. CA (August 02, 1991)

FACTS: A parcel of land in CDO owned by late Pantaleon Jomoc was fictitiously sold to third persons in which the last transferee are the spouses Mariano and Maria So. Maria Vda de Jomoc filed suit to recover the property and won. While pending appeal, Vda de Jomoc executed executed a Deed of Extrajudicial Settlement and Sale of Land with private respondent for P300,000.00. The document was not yet signed by all the parties nor notarized but in the meantime, Maura So had made partial payments amounting to P49,000.00. So demanded from the heirs of Jomoc for the execution of final deed of conveyance but the latter did no comply. As such, So filed a civil case and a

notice of lis pendens were placed in the title of the land.

On the same date, the heirs of Jomoc executed another extra-judicial settlement with absolute sale in favor of intervenors Lim Leong Kang and Lim Pue claiming that they believe that So already backed-out from the agreement. ISSUE: WON the sale is enforceable. HELD: Since petitioners admit the existence of the extrajudicial settlement, the court finds that there was meeting of the minds between the parties and hence, there is a valid contract that has been partly executed. The contract of sale of real property even if not complete in form, so long as the essential requisites of consent of the contracting parties, object, and

cause of the obligation concur and they were clearly established to be present, is valid and effective as between the parties. Public document is only needed to bind third persons. The payment made by So is a clear proof of her intention to acquire the property and the petitioners cannot claim about the respondent backing out. The sale to the intervenors Lim cannot be recognized because when they bought the property, there was already a notice of lis pendens and the sale cannot be said to be in good faith.

DALLION V. CA (February 28, 2009)

FACTS: Petitioner Segundo Dalion allegedly sold his property in Southern Leyte to respondent Ruperto Sabesaje through a private deed of sale.

Dalion denies the sale and claims that his signature in the document was forged. ISSUE: WON there has been a contract of sale between the parties. HELD: The authenticity of the signature of Dallion was proven by the testimony of several witness including the person who made the deed of sale. Dalion never presented any evidence or witness to prove his claim of forgery. Dallions claim that the sale is invalid because it was not made in a public document is of no merit. This argument is misplaced. The provision of Art. 1358 on the necessity of a public document is only for convenience, not for validity or enforceability. It is not a requirement for the validity of a contract of sale of a parcel of land that this be embodied in a public

instrument. Sale is perfected upon meeting of the minds of both parties.

GOLDENROD INC. V. CA (November 04, 1998)

FACTS: Respondents Barreto realty owns 43 parcels of land in Quiapo Manila which they mortgaged in UCPB. Respondent sold the property to petitioner Goldenrod who In turn pays 1M earnest money and promise to pay respondents debt to UCPB. Respondent caused 2 land titles to the property. Petitioner was not able to pay UCPB and the latter did not agree for and extension. Hence, petitioner rescinded the contact and demands the return of the earnest money. Respondent did not oppose the recession but did not gave the earnest money. They even sold the first lot

to Asiaworld Trade Center and the other lot to UCPB for payment of their mortgage. ISSUE: WON respondent should return the earnest money of the petitioner. HELD: Earnest money is a part of payment of a sale. Art. 1385 of the Civil Code provides that rescission creates the obligation to return the things which were the object of the contract together with their fruits and interest. Since the respondent did not oppose the extra-judicial recission, they should return the earnest money of the petitioner. It would be most inequitable if resondent BARRETTO REALTY would be allowed to retain petitioner's payment of P1,000,000.00 and at the same time appropriate the proceeds of the second sale made to another.