Quijada v CA and Regalado Mondejar; December 4, 1998 Issue: Whether or not there was a perfected contract of sale. Yes.

Facts Plaintiffs petitioners are the heirs of the late Trinidad Corvera Quijada. Trinidad inherited a 2-hectare parcel of land from a certain Pedro Corvera. On April 5, 1956, Trinidad, together with her siblings executed a Deed of DONATION over the 2-hectare lot in favor of the Municipality of Talacogon conditioned on the fact that the land shall be used solely and exclusively as part of a campus of a proposed provincial high school in Talacogon. She remained in possession of the land. On July 29, 1962, she SOLD 1 hectare of the subject parcel of land to one Regalado Mondejar. She subsequently sold the remaining 1 hectare to Mondejar verbally, without a written Deed of Sale, and evidenced solely by receipts of payment. In 1980, her heirs filed a complaint for forcible entry against Mondejar which was later dismissed for failure to prosecute. In 1987, since the proposed provincial high school failed to materialize, the Sangguniang Bayan of Talacogon enacted a resolution to REVERT the 2-hectare lot BACK to the donors. In the meantime, Mondejar SOLD portions of the contested land to co-respondents Goloran, Bautista and Guden. On July 5, 1988 petitioner heirs filed an action against Mondejar alleging that their mother never sold, conveyed, transferred or disposed of the property to any person or entity except the donation made to the municipality in 1956; that at the time of the alleged SALE, the land still belonged to the municipality and was thus null and void. Respondents claimed that the 1 hectare parcel of land was truly sold to Mondejar on 1962 while the remaining 1 hectare was sold in installments. They also claimed laches and prescription. The trial court held in favor of petitioner heirs on these grounds: Quijada had NO legal title to sell since the OWNERSHIP of the subject land already belonged to the municipality at the time of the sale and that the deed of sale of Trinidad did not carry with it the conformity and acquiescence of her children. The trial court ordered the return of the land to petitioner heirs. The Court of Appeals REVERSED the decision ruling that the sale made by Quijada to Mondejar was VALID as she retained an inchoate interest on the lots by virtue of the AUTOMATIC REVERSION clause in the deed of donation. The MFR of petitioners was denied. Hence, this petition.

Petitioners principally contend that the sale made was void considering that the ownership of the land was already transferred to the Municipality of Talacogon. Respondents maintain that the sale made was valid, made in good faith and that petitioners were barred by laches. Ruling CA decision affirmed. Sale was VALID; no laches or prescription; municipal properties are not outside the commerce of men. Ownership was immediately transferred to the municipality when its acceptance to the donation was made to the donors since donation is a mode of acquiring and transferring ownership notwithstanding the condition imposed by the donee. Ownership will only revert to the donor if the resolutory condition is not fulfilled. At the time the sale was made, Trinidad COULD NOT HAVE SOLD the lots since she has earlier transferred ownership thereof by way of donation to the municipality. So long as the resolutory condition subsists and is capable of fulfillment, the donation remains effective and the done continues to be the owner subject to the rights of the donor or his successors-in-interest under the deed of donation. Only when the resolutory condition is NOT fulfilled and when such is made known to the donors shall ownership revert to them. Thus, upon petitioner heirs knowledge of the Sangguniang Bayans resolution to revert the land to the donors, the property reverted to them by virtue of the automatic reversion clause in the deed of donation. HOWEVER, the one thing that militates against the claim of petitioners is the CONSENSUAL nature of a contract of saleit is perfected by mere consent which is manifested the moment there is a meeting of the minds as to the offer and acceptance thereof on these elements: subject matter, price and terms of payment of the price. Ownership by the seller on the thing sold at the time of the perfection of the contract of sale IS NOT an element for its PERFECTION. A perfected contract of sale CANNOT be challenged on the ground of non-ownership on part of the seller at the time of its perfection. Hence, the sale is still VALID. The consummation of the perfected contract is another matter. It occurs upon the actual of constructive delivery of the subject matter to the buyer when the seller or her successors in-interest acquires ownership thereof. Such circumstance happened in this case when petitioner heirs became the owners of the subject property upon reversion of the ownership of the land to them via the Sangguniang Bayans resolution. Consequently, OWNERSHIP WAS TRANSFERRED TO RESPONDENT Mondejar and those who claim their right from him. This is based on A. 1434 of the NCC which provides that title passes by operation of law to the buyer.

Agro Conglomerates and Mario Soriano v CA and Regent Bank ; December 18, 2000 Issue: Whether or not there was a substitution of debtors in the instant case which operated as a novation to the original payment scheme. No. Facts On July 17, 1982, Agro Conglomerates (seller) sold 2 parcels of land to Wonderland Food Industries for P5M. In their Memorandum of Agreement, they decided on this payment scheme: 1. The 1M to be paid in cash upon the signing of the agreement; 2. The P2M to be paid through Wonderlands shares of stock of equal value and 3. The remaining P2M to be paid on 4 equal annual installments, the first installment to fall due after 180 days after the signing of the agreement and every 6 months thereafter with interest of 18% per annum to be paid in advance. On July 19, 1982, Agro, Wonderland and Regent Bank executed an ADDENDUM to the provisions of the Memorandum of Agreement. They agreed that the initial payment of 1M and the 18% interest over the 2M (P360T) be in the form of a loan from Regent Bank, named after Agro Conglomerates and thereafter Wonderland will undertake to pay the full amount of the loan. Thus, while the loan is in the name of Agro, Wonderland will be liable to pay the entire loan including interest and other charges. Petitioner Mario Soriano (representative cguro sa Agro) signed as maker several promissory notes payable to the bank. The bank thereafter released the proceeds of the loan to Agro. Agro failed to meet its obligations when they fell due. The bank gave Agro the opportunity to settle its accounts by extending the payment due dates. They remained unpaid. Regent Bank filed 3 separate complaints before the RTC for collection of sums of money. Agro and Soriano interposed the defense of novation and insisted that there was a valid substitution of the debtor for the loan obligation. It also alleged that although the promissory notes were in their names, Wonderland should be held responsible for the payment thereof as provided for in their addendum to the Memorandum of Agreement.

The trial court ruled in favor of Regent Bank holding Agro liable for payment and since the sale did not materialize, Wonderland was not answerable. The CA affirmed this decision. Ruling The CAs decision is affirmed. A contract of sale is a reciprocal transaction. The obligation or promise of each party is the cause or consideration for the obligation or promise of the other. The buyer is obliged to pay the price while the seller must deliver the actual possession of the property. The parties thereafter amended their Memorandum of Agreement which gave birth to a subsidiary contract of suretyship since petitioners signed the promissory notes as maker and accommodation party for the benefit of Wonderland. Petitioners became liable as an accommodation partya person who lends his name to an accommodated party without receiving the value of the instrument thereof. He has the right to obtain reimbursement from the party accommodated since the relationship between them has in effect become one of principal and surety, the accommodation party being the surety. Suretyship is a relationship which exists where one person has undertaken an obligation and another person is also under the same obligation which is entitled to but one performance, and as between the two who are bound, one rather than the other should perform. The suretys liability to the creditor of the principal is direct, primary and absolute. He is equally bound with the principal. There was no substitution of a new debtor which was Wonderland. There was no novation. First, there was no prior obligation which was substituted by a new contract. The addendum modified the contract of sale, not the stipulations in the promissory notes which pertain to the surety contract. Only a contract of surety arose. It was wrong for petitioners to presume a novation had taken place. Novation is NEVER presumed. It must be clear and equivocally shown. The contract of surety between wonderland and Agro was EXTINGUISHED by the rescission of the contract of sale of the land. With the rescission, there was a merger in the person of the principal and suretyAgro. The contract of sale did not materialize but it was admitted that petitioners received the proceeds of the promissory notes obtained from respondent Regent Bank. Petitioners have no legal ground to retain the proceeds at the expense of Regent Bank. Neither could petitioner excuse themselves and hold Wonderland still liable for the loan upon rescission of their sales contract.

Equatorial Realty v Mayfair Theater; November 21, 2001 Issue: Whether or not petitioner is entitled to the rentals notwithstanding nontransfer of ownership over the property, as it was not delivered to petitioner and since petitioner itself failed to take possession of said property. No. Facts Carmelo and Bauermann used to own a parcel of land with 2 two-storey buildings constructed on it. It entered into a 20-year lease contract with Mayfair on June 1, 1967 covering a portion of the second storey of one of its buildings. Mayfair used it as a movie house (Maxim Theater). On March 31, 1969, Carmelo again entered into a 20-year lease agreement with Mayfair for another part of the 2-storey building which it used for a 2 nd movie house (Miramar Theater). Both leases contained a provision granting Mayfair a RIGHT of FIRST REFUSAL to purchase the properties. On July 30, 1978, Carmelo SOLD the properties to Equatorial for P11.3M without first being offered to Mayfair. Mayfair filed a complaint with the RTC for the annulment of the sale, specific performance and damages. The RTC ruled in favor of Carmelo and Equatorial. On appeal the CA REVERSED the decision. The SC denied the petition to review holding that the sale between Carmelo and Equatorial as rescinded, ordering that Equatorial return the purchase price and for it to execute the necessary deeds to return the

ownership to Carmelo. Carmelo is also ordered to allow Mayfair to buy the lots for P11.3M. Mayfair filed an action for execution on April 25, 1997 which was granted by the trial court. However, Carmelo could no longer be located. Mayfair deposited the P11.3M as payment to Carmelo. The trial court issued a Deed of Reconveyance in favor of Carmelo and a Deed of Sale in favor of Mayfair. The Registry of Deeds issued new certificates of title in the name of Mayfair. On September 18, 1997, Equatorial filed with the RTC an action for the collection of rentals against Mayfair claiming payment and reasonable compensation for its use of the subject properties after its lease contracts with Carmelo expired. The 1 st contract expired on May 31, 1987 and the 2 nd on March 31, 1989. Equatorial alleged that since it was the owner of the subject premises by reason of the contracts of sale on July 30, 1978 before it was rescinded, it has the right over the rentals on Mayfairs occupation of the properties. The RTC dismissed the complaint as well as the MFR holding that the rescission of the Deed of Absolute Sale did not confer on Equatorial any vested or residual proprietary rights even in expectancy. The RTC held that the critical issue was WON Equatorial was the owner of the subject properties and could then enjoy the rentals therefrom. Since the sale was rescinded, it was void at its inception as though it did not happen. The subject deed having been rescinded by the SC, Equatorial never became the owner and does not have the right to demand back rentals from the properties. Ruling RTC ruling affirmed. No right of ownership was transferred from Camello to Equatorial in view of a patent failure to deliver the property to the buyer. Rent is a civil fruit that belongs to the owner of the property producing it by right of accession. Consequently and ordinarily, the rentals that fell due from the time of perfection of the sale to Equatorial until its rescission should belong to he owner of the property during that period. Ownership of the thing sold is a real right, which the buyer acquires only upon delivery of the thing to him "in any of the ways specified in articles 1497 to 1501, or in any other manner signifying an agreement that the possession is transferred from the vendor to the vendee.This right is transferred, not by contract alone, but by tradition or delivery. And there is said to be delivery if and when the thing sold "is placed in the control and possession of the vendee."

Delivery has been described as an act by which one party parts with the title to and the possession of the property, and the other acquires the right to and the possession of the same. In its natural sense, delivery means something in addition to the delivery of property or title; it means transfer of possession. It contemplates "the absolute giving up of the control and custody of the property on the part of the vendor, and the assumption of the same by the vendee." Possession was NEVER acquired by petitioner. It is clear that petitioner never took actual control and possession of the property sold, in view of respondent's timely objection to the sale and the continued actual possession of the property. The objection took the form of a court action impugning the sale which, as we know, was rescinded by a judgment rendered by the SC in a previous case. Respondent's opposition to the transfer of the property by way of sale to Equatorial was a legally sufficient impediment that effectively prevented the passing of the property into the latter's hands. Equatorial will derive no benefits under A.1164 which it may argue that as buyer, it acquired a right to the fruits of the thing sold from the time the obligation to deliver the property to petitioner arose. This is negated by A.1385 which provides that because "[r]escission creates the obligation to return the things which were the object of the contract, together with their fruits, and the price with its interest; . . . ." not only the land and building sold, but also the rental payments paid, if any, had to be returned by the buyer. Furthermore, the fact that Mayfair paid rentals to Equatorial during the litigation should not be interpreted to mean either actual delivery or ipso facto recognition of Equatorial's title. In short, the sale to Equatorial may have been valid from inception, but it was judicially rescinded before it could be consummated. Petitioner never acquired ownership, not because the sale was void, as erroneously claimed by the trial court, but because the sale was not consummated by a legally effective delivery of the property sold.