ARTICLE 1502 INDUSTRIAL TEXTILE MANUFACTURING COMPANY OF THE PHILIPPINES V. LPJ ENTERPRISES INC.

FACTS: Campos is the vice president of petitioner Industrial Textile Manufacturing Company of the Philippines (Itemcop) asked Panganiban the president of the respondent corporation, if he would like to cooperate in an experiment to develop plastic bags in which Panganiban agreed. Panganiban was accompanied by Ugarte another vice president of Itemcop to the factory of respondents supplier to test 50 pieces of plastic cement bags. The experiment was unsuccessful. The test was followed by second batch of plastic bags, which was likewise a failure. Finally, with three hundred improved bags the see page was substantially reduced. Campos sent a letter proclaiming the dramatic results in the experiment. Consequently, Panganiban agreed to use the plastic cement bags. Four purchase orders were subsequently issued. Petitioner delivered the orders. Respondent remitted the amounts but leaving a balance. No other payments were made Thus, prompting petitioner to file a collection suit. Respondent admitted its liability covered by the first purchase order. For the consecutive purchase orders respondent said that the workers of Luzon Cement objected to the use of cement because of the serious hazards posed by cement dust. Thereafter, petitioner was asked to take back the unused bags however, this was not done hence, petitioner demanded for payment of the said bags. ISSUE: Whether or not respondent may be held liable for the bags of cement, which were not actually used for packing cement as originally intended. HELD: YES. 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. We find that Article 1502 of the Civil Code, invoked by both parties herein, has no application at all to this case. The provision in the Uniform Sales Act and the Uniform Commercial Code from which Article 1502 was taken, clearly requires an express written agreement to make a sales contract either a "sale or return" or a "sale on approval" Therefore, 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.

Bean Admr. vs The Cadwallader Co. GR No. 4175 March 26, 2008 FACTS: AW Bean is the administrator of George Case, deceased, plaintiffa nd appellee, vs The BW Cadwallader Company, defendant and appellant. 1. There was a verbal offer from Case to Cadwallader on January 3, 1905 to furnish assorted logs. The price for the logs included delivery alongside ship or barge at Basilan, and for Case to furnish the necessary men to load the logs. Cadwallader, as the purchaser, will furnish steam gear to assist in loading, and the cargo to be mixed. Delivery is to be made in 3 months. Cadwallader accepted the prices and conditions. 2. Cadwallader advanced P1,000.00 and P2,500 respectively to Case, which shall draw interest at the rate of 10 percent p.a. each from the date of payment until the sufficient timber has been delivered to them under their contract to cover the amount. The two payments are part paymets on the entire 30,000 English cubic feet more or less that the timber shall be subject to their order. Case accepted. 3. Case alleges that in accordance with the agreement, they did in fact delivered at the port of BAsilan withing 3 months form the said 6th day of Sept a cargo of logs as well as on January 3, 1905 and notified Cadwallader of the delivery. Case alleges that he was obliged to borrow money from third persons and incurred expenses in travelling amounting to the sum of P810 and that by reason of the defendant's violation of the contract, the sum was due and payable as damages to him. 4. Cadwallader answered the complaint of ad admitted that the execution and delivery of the said contracts, but alleged that Case made misrepresentations concerning the character and coast of the Isalnd of BAsilan, that the Cadwallader had represented that the harbor of Basilan was a safe harbor, whereas in fact the harbor was unsafe, and that it was impossible for Case to enter the said harbor with the boats to load the said logs. Cadwallader alleges that Case had not delivered the logs. ISSUE: WON there was actual delivery of the logs. HELD: The defendant and appellant argues that the contract between the parties was a contract de compraventa under the Civil Code, or an executory contract under the common law, and cites various provisions of the Civil Code as well as of the Commercial Code for the purpose of showing that, under a contract of this kind, an absolute and manual delivery of the property sold is necessary before the contract becomes an executed one upon which an action can be based. It will be remembered that, under the terms of the contract, the logs in question were only to be delivered by the plaintiff "alongside our (defendant's) vessel at Basilan, within three months from the date of this letter" (September 6, 1905). There is nothing in the contract which in any way required the plaintiff to do more than to place said logs alongside a vessel to be sent to the point of delivery by the defendant. To the above contention of the defendant and appellant the plaintiff and appellee contends that the following propositions are clearly established by the testimony. ( a) That the plaintiff cut the logs required by the contract.chanroblesvirtualawlibrary chanrobles virtual law library ( b) That plaintiff transported said logs to the beach.chanroblesvirtualawlibrary chanrobles virtual law library ( c) That plaintiff had said logs measured by the representative of the Forestry Bureau of Government of the Philippine Islands.chanroblesvirtualawlibrary chanrobles virtual law library ( d) That plaintiff placed said logs in rafts to be floated alongside a vessel to be sent to the point of delivery by the defendant.chanroblesvirtualawlibrary chanrobles virtual law library

( e) That plaintiff did actually place the said logs along-side the vessel known as the Juanita in the month of April, 1906.chanroblesvirtualawlibrary chanrobles virtual law library (f) That the crew of the Juanita did in fact actually proceed to place said logs on board said vessel, but failed because the anchor chain was not strong enough to sustain a 1 ton skid, which the crew were trying to pull in place.chanroblesvirtualawlibrary chanrobles virtual law library The plaintiff and appellee insists that he had done all that was required of him by the contract.chanroblesvirtualawlibrary chanrobles virtual law library The evidence shows that at least on one occasion, if not more, the plaintiff had about eighty men at the point of delivery of said logs, for the purpose of assisting the defendant and appellant in loading said logs.chanroblesvirtualawlibrary chanrobles virtual law library The evidence shows beyond peradventure of doubt that at the time the said Juanita, the vessel of the defendant, was at Basilan, some of the logs were placed alongside of the vessel, in accordance with the terms of the contract. It is denied that all of the logs to be furnished by the plaintiff under the terms of the contract were placed in rafts in the water at or near the point of delivery. Certainty the plaintiff can not be required to show that he placed each log alongside the vessel, after he has shown that he had all the logs rafted in the water at the point of delivery and had placed some of them alongside the vessel in accordance with the terms of the contract. He could not be required to place others alongside the vessel until after the first had been loaded. (Whitcomb vs. Whitney, 24 Mich., 485.) The fact is not disputed that the plaintiff duly notified the defendant, within the period prescribed in the contract, that the said logs were ready for delivery.chanroblesvirtualawlibrary chanrobles virtual law library Actual manual delivery of an article sold is not essential to the passing of the title thereto (art 1450, Civil Code) unless made so by the terms of the contract or by an understanding of the parties. The parties to the contract may agree when and on what conditions the property in the subject of the contract was passed to the prospective owner. (Andrews vs. Durant, 11 N.Y., 42.) In the present case the parties agreed that the delivery of the logs should be made alongside a vessel of the defendant. That was done by the plaintiff. The vessel of the defendant was sent to the point of delivery and the said defendant attempted to load on said vessel the logs delivered along its side by the plaintiff. It is a rule well established that a mere contract for the sale of goods, where nothing remains to be done by the seller before making delivery, transfers the right of property, although the price has not been paid, nor the thing sold actually delivered to the purchaser. (Olyphant vs. Baker, 5 Denio, N.Y., 379; art. 1450, Civil Code.)chanrobles virtual law library The evidence shows that, when the Juanita arrived at the point of delivery, the parties in charge of said boat placed or attempted to place skids on said boat for the purpose of loading the logs. Certainly they believed that the logs had been delivered, or else why would they have actually made preparation for the loading of the same? The logs were fully at the disposal of the defendant, and the latter thereby became liable for the price of the same under the contract. (Art. 339, Code of Commerce; Noyes vs. Marlott, 156 Fed. Rep., 753.chanroblesvirtualawlibrary chanrobl

BEHN, MEYER & CO. (LTD) vs. TEODORO R. YANCO FACTS: The plaintiff entered into a contract with defendant. It was agreed that the plaintiff will deliver 80 drums of caustic soda carabao brand to be shipped on March 1916 and shall be paid on its delivery. The contract provided for "c.i.f. Manila, pagadero against delivery of documents. ISSUE: Whether or not the place of delivery is in Manila. HELD: The place of delivery was Manila and plaintiff has not legally excused default in delivery of the specified merchandise at that place. The Court believes 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 in Manila. If the plaintiff company has 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 plaintiffs 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. Both the terms "c.i.f." and "F.O.B." merely make rules of presumption which yield to proof of contrary intention. As Benjamin, in his work on Sales, well says: "The question, at last, is one of intent, to be ascertained by a consideration of all the circumstances." JOSE FLORENDO v. EUSTAQUIO P. FOZ Facts: Eustaquio P. Foz executed in Manila a contract, ratified before a notary, obligating himself to deliver his house and lot for a consideration of P6,000 to Jose Florendo. The latter already paid P2,000 of the purchase prize. In the contract, plaintiff fixed the period of the payment of the prize wherein plaintiff has to pay the remainder of the prize when he goes to Vigan or if not to pay to the Church wherein he has a debt and to obtain the title of the subject matter of the sale. Defendant went to Vigan, plaintiff tendered payment of the remainder of the prize, however, the former refused, saying that the true prize of the sale recorded in the other instrument was P10,000. As defendant refused payment, plaintiff filed a suit to comply with the contract of absolute purchase and sale, by delivering to the plaintiff the property sold. Issue: WON the plaintiff can compel the defendant to deliver his property pursuant to the notarized contract. Held: Yes. The contract is valid and effective. From the validity and force of the contract is derived the obligation on the part of the vendor to deliver the thing sold. Pursuant to the contract, it cant be found that the payment of the prize is a precondition for the delivery of the thing. There was no need, therefore, of assent on the part of the plaintiff to pay the P4,000, the remainder of the price, in order to oblige the defendant unconditionally to deliver the property sold. With still more reason should the defendant be compelled to effect the material delivery of the property, since, after the lapse of the period for the delivery of the price, the plaintiff hastened to pay it and, on account of the defendant's refusal to receive it, duly deposited it, in order to avoid the consequences that might issue from delinquency in the payment of a sum entrusted to him for a fixed period. It is the material delivery of the property sold which the defendant must make in compliance with the contract, inasmuch as the formal delivery de jure was made, according to the provisions of article 1462, 2nd paragraph, of the same code.

RICARDO CHENG VS RAMON GENATO, ERNESTO R. DA JOSE & SOCORRO B. DA JOSE, G.R. No. 129760 29 December 1998 Martinez, J.: FACTS: Respondent Ramon B. Genato is the owner of two parcels of land located at Paradise Farms, San Jose Del Monte, Bulacan who entered into a Contract to Sell with respondent-spouses Ernesto R. Da Jose and Socorro B. Da Jose for which the purchase price was P80.00 per square; P50,000.00 shall be paid as partial down payment at the time of execution of this Contract to Sell; and that P950,000 as full payment shall be paid 30 days after the execution of the contract to sell after the buyer has satisfactorily verified the authenticity of the documents. The contract was in a public instrument and was duly annotated at the back of the two certificates of title. Sps Da Jose asked for and was granted by respondent Genato an extension of another 30 days - until November 5, 1989. Without due notice to the Da Jose spouses, Genato executed an Affidavit to Annul the Contract to Sell. Ricardo Cheng expressed his d esire to buy Genatos property. Genato showed him the TCT with annotation of the contract with Sps Da Jose and the affidavit of cancelling such contract. Cheng paid him P50,000 upon the assurance that the previous contract will be annulled. When Genato was in Registry of Deeds in Meycauayan, Bulacan to register the annulment of the contract with the Sps Da Jose, by coincidence, the two parties met and later on in the day, Genato decided to continue the Contract he had with them. Genato returned the P50,000 to Cheng. Da Jose spouses paid Genato the complete down payment of P950,000.00. Cheng instituted a complaint for specific performance to compel Genato to execute a deed of sale for check he gave was a partial payment to the total agreed purchase price of the subject properties and considered as an earnest money for which Genato acceded. RTC ruled in favor of Cheng which was reversed by the CA. ISSUE: 1. WON Article 1544 is applicable 2. Who has a better right to the land, Cheng or Da Jose spouses? HELD: 1. YES Although generally, rule on Double Sales does not apply in Contract to Sell, the governing principle of Article 1544: PRIMUS TEMPORE, PORTIOR JURE (first in time, stronger in right) should apply. For not only was the contract between herein respondents first in time; it was also registered long before petitioners intrusion as a second buyer. This principle only applies when the special rules provided in the aforcited article of Civil Code do not apply or fit the specific circumstances mandated under said law or by jurisprudence interpreting the article. 2. SPS DA JOSE -- The rule exacted by Article 1544 of the Civil Code for the second buyer to be able to displace the first buyer are: (1) that the second buyer must show that he acted in good faith (i.e. in ignorance of the first sale and of the first buyer's rights) from the time of acquisition until title is transferred to him by registration or failing registration, by delivery of possession; (2) the second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law. Although the Da Jose spouses, as first buyers, knew of the second transaction it will not bar them from availing of their rights granted by law, among them, to register first their agreement as against the second buyer. In contrast, knowledge gained by Cheng of the first transaction between the Da Jose spouses and Genato defeats his rights even if he is first to register the second transaction, since such knowledge taints his prior registration with bad faith.

Carbonell vs. Court of Appeals, and Poncio FACTS: On January 27, 1955, respondent Jose Poncio executed a private memorandum of sale of his parcel of land with improvements situated in San Juan, Rizal in favor of petitioner Rosario Carbonell who 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 courts decision. ISSUE: Who has the superior right over the subject property? HELD: The first buyer Carbonell to have the superior right over the subject property, relying on Article 1544 of the Civil Code. 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 Carbonells 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. CAs decision is reversed.

Dichoso v. Roxas GR No. L-17441 July 31, 1962 5 SCRA 781 FACTS: Roxas sold to Dichoso and Hernandez a parcel of unregistered coconut land, subject to the condition that the vendor could repurchase the land within 5 years from the date of sale. Roxas received from Dichoso several sums of money as initial or advance payments, with the agreement that Roxas would sell the same property, by absolute sale, to Dichoso. Out of their remaining balance, they would use P850 to repurchase the property from Borja and Alanguilan within the same period of 5 years. Dichoso informed Borja of their readiness to repurchase and sent Roxas a check. Roxas returned the check with the request that they indorsed it to Borja and Alanguilan when they make the repurchase. Despite the repeated demands and representations, Roxas and Borja had deliberately failed to execute the corresponding deed of absolute sale and deed of resale. ISSUE: Whether or not there was a double sale. HELD: No. The contract between the petitioners and Roxas was a mere promise to sell because Roxas merely promised to execute a deed of absolute sale upon Dichosos completion of payment. On the date that Roxas could possibly sell or convey in relation to the property in question was her right to repurchase the same from Borja. The private document executed between Roxas and Dichoso can be considered as an assignment by Roxas to Dischoso of her right to repurchase which Roxas only had knowledge thereof when Dichoso attempted to make the repurchase. Such being its condition, it could not possibly give rise to the case of one and the same property having been sold to two different purchasers. The sale in favor of Borja was of the property itself, while the one in favor of Dichoso, if not a mere promise to assign, was at most an actual assignment of the right to repurchase the same property. Art. 1544, par. 3 of the CC do not apply.

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. TEN FORTY REALTY V. CRUZ| PanganibanG.R. No. 151212 | September 10, 2003 FACTS: Petitioner filed an ejectment complaint against Marina Cruz(respondent) before the MTC. Petitioner alleges that the land indispute was purchased from Barbara Galino on December 1996, andthat said land was again sold to respondent on April 1998; On the other hand, respondent answer with counterclaim that never was there an occasion when petitioner occupied a portion of the premises. In addition, respondent alleges that said land was a public land (respondent filed a miscellaneous sales application with the Community Environment and Natural Resources Office) and the action for ejectment cannot succeed where it appears that respondent had been in possession of the property prior to the petitioner; On October 2000, MTC ordered respondent to vacate the land and surrender to petitioner possession thereof. On appeal, the RTC reversed the decision. CA sustained the trial courts decision. ISSUE/S: Whether or not petitioner should be declared the rightful owner of the property. HELD: No. Respondent is the true owner of the land.1) The action filed by the petitioner, which was an action for unlawful detainer, is improper. As the bare allegation of petitioners tolerance of respondents occupation of the premises has not been proven, the possession should be deemed illegal from the beginning. Thus, the CA correctly ruled that the ejectment case should have been for forcible entry. However, the action had already prescribed because the complaint was filed on May 12, 1999 a month after the last day forfiling;2) The subject property had not been delivered to petitioner; hence, it did not acquire possession either materially or symbolically. As between the two buyers, therefore, respondent was first in actual possession of the property.

As regards the question of whether there was good faith in the second buyer. Petitioner has not proven that respondent was aware that her mode of acquiring the property was defective at the time she acquired it from Galino. At the time, the property which was public land had not been registered in the name of Galino; thus, respondent relied on the tax declarations thereon. As shown, the formers name appeared on the ta x declarations for the property until its sale to the latter in 1998. Galino was in fact occupying the realty when respondent took over possession. Thus, there was no circumstance that could have placed the latter upon inquiry or required her to further in vestigate petitioners right of ownership. DOCTRINE/S: Execution of Deed of Sale; Not sufficient as delivery. Ownership is transferred not by contract but by tradition or delivery. Nowhere in the Civil Code is it provided that the execution of a Deed of Sale is a conclusive presumption of delivery of possession of a piece of real estate. The execution of a public instrument gives rise only to a prima facie presumption of delivery. Such presumption is destroyed when the delivery is not effected, because of a legal impediment. Such constructive or symbolic delivery, being merely presumptive, was deemed negated by the failure of the vendee to take actual possession of the land sold. Disqualification from Ownership of Alienable Public Land. Private corporations are disqualified from acquiring lands of the public domain, as provided under Section 3 of Article XII of the Constitution. While corporations cannot acquire land of the public domain, they can however acquire private land. However, petitioner has not presented proof that, at the time it purchased the property from Galino, the property had ceased to be of the public domain and was already private land. The established rule is that alienable and disposable land of the public domain held and occupied by a possessor personally or through predecessors-in-interest, openly, continuously, and exclusively for 30 years is ipso jure converted to private property by the mere lapse of time. RULING: The Supreme Court DENIED the petition. 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. FACTS: On October 20, 1962, Lazardo Taedo executed a notarized deed of absolute sale in favor of his eldest brother, Ricardo Taedo, and the latter's wife, Teresita Barera, private respondents herein, whereby he conveyed to the latter in consideration of P1,500.00, "one hectare of whatever share I shall have over Lot No. 191", the said property being his "future inheritance" from his parents. Upon the death of his father, Lazaro executed an "Affidavit of Conformity" to "re-affirm, respect, acknowledge and validate the sale I made in 1962." On January 13, 1981, Lazaro executed another notarized deed of sale in favor of Ricardo and Teresita, covering his "undivided ONE TWELVE (1/12) of a parcel of land known as Lot 191 ". He acknowledged his receipt of P10,000 as consideration. Ricardo learned that Lazaro sold the same property to his children, petitioners herein, through another deed of sale. On June 7, 1982, private respondents recorded the Deed of Sale in their favor in the Registry of Deeds and entry was made in the TCT. Petitioners on July 16, 1982 filed a complaint for rescission (plus damages) of the deeds of sale executed by Lazaro in favor of private respondents. Petitioners claimed that their father, Lazaro, executed an "Absolute Deed of Sale" conveying to his ten children his allotted portion from the extrajudicial partition executed by the heirs of Matias. Petitioners also presented in evidence: (1) a private writing purportedly prepared and signed by Matias, stating that it was his desire that whatever inheritance Lazaro would receive from him should be given to his (Lazaro's) children; (2) a typewritten document signed by Lazaro wherein he confirmed that he would voluntarily abide by the wishes of his father; and (3) a letter of Lazaro to his daughter, Carmela, stating that his share in the extrajudicial settlement of the estate of his father was intended for his children, petitioners herein. Private respondents, however presented in evidence a "Deed of Revocation of a Deed of Sale", wherein Lazaro revoked the sale in favor of petitioners for the reason that it was "simulated or fictitious without any consideration whatsoever". Shortly after the case a quo was filed, Lazaro executed a sworn statement which virtually repudiated the contents of the Deed of Revocation of a Deed of Sale and the Deed of Sale in favor of private respondents. However, Lazaro testified that he sold the property to Ricardo, and that it was a lawyer who induced him to execute a deed of sale in favor of his children after giving him five pesos (P5.00) to buy a "drink". TC: decided in favor of private respondents, holding that petitioners failed "to adduce a proponderance of evidence to support (their) claim. CA: affirmed the decision of the TC, ruling that the Deed of Sale dated January 13, 1981 was valid and that its registration in good faith vested title in said respondents.

ISSUES: I. Is the sale of a future inheritance valid? II. Was the subsequent execution on January 13, 1981 (and registration with the Registry of Property) of a deed of sale covering the same property to the same buyers valid?

HELD: I The sale made in 1962 involving future inheritance is not really at issue here. In context, the assailed Decision conceded "it may be legally correct that a contract of sale of anticipated future inheritance is null and void." But to remove all doubts, we hereby categorically rule that, pursuant to Article 1347 of the Civil Code, "(n)o contract may be entered into upon a future inheritance except in cases expressly authorized by law." Consequently, said contract made in 1962 is not valid and cannot be the source of any right nor the creator of any obligation between the parties. Hence, the "affidavit of conformity" dated February 28, 1980, insofar as it sought to validate or ratify the 1962 sale, is also useless and, in the words of the respondent Court, "suffers from the same infirmity." Even private respondents in their memorandum4 concede this. II However, the documents that are critical to the resolution of this case are: (a) the deed of sale of January 13, 1981 in favor of private respondents covering Lazaro's undivided inheritance of one-twelfth (1/12) share in Lot No. 191, which was subsequently registered on June 7, 1982; and (b) the deed of sale dated December 29, 1980 in favor of petitioners covering the same property. These two documents were executed after the death of Matias (and his spouse) and after a deed of extra-judicial settlement of his estate was executed, thus vesting in Lazaro actual title over said property. In other words, these dispositions, though conflicting, were no longer infected with the infirmities of the 1962 sale. The CA correctly identified the subject matter of the January 13, 1981 sale to be the entire undivided 1/12 share of Lazaro in Lot No. 191 and which is the same property disposed of on December 29, 1980 in favor of petitioners. Critical in determining which of these two deeds should be given effect is the registration of the sale in favor of private respondents with the register of deeds on June 7, 1982. Article 1544 of the Civil Code governs the preferential rights of vendees in cases of multiple sales. The property in question is land, an immovable, and following the above-quoted law, ownership shall belong to the buyer who in good faith registers it first in the registry of 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. DIZON v SUNTAY

47 SCRA 160, G.R. No. L-30817 September 29,1972 FACTS: Plaintiff is the owner of a three-carat diamond. ring valued at P5,500.00. On June 13, 1962, the plaintiff and Clarita R. Sison entered into a transaction wherein the plaintiffs ring was delivered to Clarita R. Sison for sale on commission. Upon receiving the ring, Clarita R. Sison executed and delivered to the plaintiff the receipt.

After the lapse of a considerable time without Clarita R. Sison having returned to the plaintiff the latters ring, the plaintiff made demands on Clarita R. Sison for the return of her ring but the latter could not comply with the demands because, without the knowledge of the plaintiff, on June 15, 1962 or three days after the ring abovementioned was received by Clarita R. Sison from the plaintiff, said ring was pledged by Melia Sison, niece of the husband of Clarita R. Sison, evidently in connivance with the latter, with the defendants pawnshop for P2,600.00. Since the plaintiff insistently demanded from Clarita R. Sison the return of her ring, the latter finally delivered to the former the pawnshop ticket, which is the receipt of the pledge with the defendants pawnshop of the plaintiffs ring. When the plaintiff found out that Clarita R. Sison pledged, she took steps to file a case of estafa against the latter with the fiscals office. Subsequently thereafter, the plaintiff, wrote a letter to the defendant asking for the delivery to the plaintiff of her rin g pledged with defendants pawnshop. Since the defendant refused to return the ring, the plaintiff filed the present action with the CFI for the recovery of said ring. The plaintiff asked for the provisional remedy writ of replevin by the delivery of the ring to her, upon her filing the requisite bond, pending the final determination of the action. The lower court issued the writ of replevin prayed for by plaintiff and the latter was able to take possession of the ring during the pendency of the action upon her filing the requisite bond. The lower cOUl1 rendered judgment declaring that Suntay had the right to the possession of the ring in question. Petitioner Dizon, as defendant, sought to have the judgment reversed by the CA, which ruled in favor of Suntay. ISSUE: Whether or not Suntay had the right to the possession of the ring. HELD: Yes.The controlling provision is Article 559 of the Civil Code. It reads thus: The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has/acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefore. The only exception the law allows is when there is acquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without reimbursing the price. FACTS: Respondent Lourdes G. Suntay and one Clarita R. Sison entered into a transaction wherein the Suntays three carat diamond ring, valued at P5,500.00, was delivered to Sison for sale on commission. Upon receiving the ring, Sison executed and delivered to the receipt to Suntay. After the lapse of a considerable time without Clarita R. Sison having returned to the ring to her, Suntay made demands on Clarita R. Sison for the return of said jewelry. Clarita R. Sison, however, could not comply with Suntays demands because on June 15, 1962, Melia Sison, niece of the husband of Clarita R. Sison, evidently in connivance with the latter, pledged the ring with the petitioner Dominador Dizon's pawnshop for P2,600.00 without Suntays knowle dge. When Suntay found out that Clarita R. Sison pledged the ring, she filed a case of estafa against the latter with the fiscal's office. Subsequently, Suntay wrote a letter to Dizon on September 22, 1962 asking for the return of her ring which was pledged with the latters pawnshop under its Pawnshop Receipt serial B No. 65606, dated June 15, 1962. Dizon refused to return the ring, so Suntay filed an action for its recovery with the CFI of Manila, which declared that she had the right to its possession. The Court of Appeals likewise affirmed said decision. ISSUE: Who has the right title over the subject property?

COURT

RULING:

The Supreme Court affirmed the decision of the lower courts. The controlling provision is Article 559 of the Civil Code which provides that [T]he possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor. The only exception the law allows is when there is a cquisition in good faith of the possessor at a public sale, in which case the owner cannot obtain its return without, reimbursing the price. Hanging on to said exception as his basis, Dizon insisted that the principle of estoppel should apply in this case but the Supreme Court ruled otherwise. In the present case not only has the ownership and the origin of the jewels misappropriated been unquestionably proven but also that Clarita R. Sison, acting fraudulently and in bad faith, disposed of them and pledged them contrary to agreement with no right of ownership, and to the prejudice of Suntay, who was illegally deprived of said jewels and who, as the owner, has an absolute right to recover the jewels from the possession of whosoever holds them, which in this case is Dizons pawnshop. Dizon ought to have been on his guard before accepting the pledge in question, but evidently there was no such precaution availed of and he has no one to blame but himself. While the activity he is engaged in is no doubt legal, it is not to be lost sight of that it thrives on taking advantage of the necessities precisely of that element of our population whose lives are blighted by extreme poverty. From whatever angle the question is viewed then, estoppel certainly cannot be justly invoked.

29 September 1972 l Property Article 559 Right to Recover Personal Property- Estoppel Suntay was the owner of a 3 carat diamond ring valued at P5.5k (in 1962). In June 1962, Suntay entered into an agency to sell with Clarita Sison. Unknown to Suntay, Sison pawned the ring to Dizon who owns a pawnshop. Time passed, and Sison failed to sell the ring nor was she able to return the ring to Suntay. Suntay later discovered that the ring was actually pawned. She demanded Dizon to return the ring. Dizon refused. Suntay filed for a replevin suit which she won. Dizon appealed and he lost. He claims that estoppels should be used against Dizon as she left the ring under the custody of Sison who then pawned it to her. ISSUE: Whether or not Suntay can still claim the ring. HELD: Yes. Suntay can under Article 559 of the Civil Code which provides: The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof may recover it from the person in possession of the same. If the possessor of a movable lost of which the owner has been unlawfully deprived, has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the pric e paid therefor. Dizon must bear the burden due to his misplaced confidence. Suntays right over the ring is superior to that of Dizon. Estoppel may not be used against Suntay. She is the rightful owner merely exercising her right to recover. Neither the promptings of equity nor the mandates of moral right and natural justice come to Dizons rescue. He is engaged in a business where presumably ordinary prudence would manifest itself to ascertain whether or not an individual who is offering jewelry by way of a pledge is entitled to do so. If no such care be taken, perhaps because of the difficulty of resisting opportunity for profit, he should be the last to complain if thereafter the right of the true owner of such jewelry should be recognized.

EDCA Publishing vs. Santos [G.R. No. 80298. April 26, 1990.] First Division, Cruz (J): 4 concur Facts: On 5 October 1981, a person identifying himself as Professor Jose Cruz placed an order by telephone with EDCA Publishing and Distributing Corp. for 406 books, payable on delivery. EDCA prepared the corresponding invoice and delivered the books as ordered, for which Cruz issued a personal check covering the purchase price of P8,995.65. On 7 October 1981, Cruz sold 120 of the books to Leonor Santos who, after verifying the sellers ownership from the invoice he showed her, paid him P1,700.00. Meanwhile, EDCA having become suspicious over a second order placed by Cruz even before clearing of his first check, made inquiries with the De la Salle College where he had claimed to be a dean and was informed that there was no such person in its employ. Further verification revealed that Cruz had no more account or deposit with the Philippine Amanah Bank, against which he had drawn the payment check. EDCA then went to the police, which set a trap and arrested Cruz on 7 October 1981. Investigation disclosed his real name as Tomas de la Pea and his sale of 120 of the books he had ordered from EDCA to Leonor Santos (and Gerardo Santos, doing business as Santos Bookstore). On the night of said date 7 October 1981, EDCA sought the assistance of the police in Precinct 5 at the UN Avenue, which forced their way into Santos Bookstore and threatened Leonor Santos with prosecution for buying stolen property. They seized the 120 books without warrant, loading them in a van belonging to EDCA, and thereafter turned them over to EDCA. Protesting this high- handed action, the Santos spouses sued for recovery of the books after demand for their return was rejected by EDCA. A writ of preliminary attachment was issued and EDCA, after initial refusal, finally surrendered the books to the Santos spouses. Ownership of the books was recognized in the Santos spouses by the Municipal Trial Court, which was sustained by the Regional Trial Court, which was in turn sustained by the Court of Appeals. EDCA appealed to the Supreme Court. The Supreme Court affirmed the challenged decision and denied the petition, with costs against EDCA Publishing. 1. Article 559 of the Civil Code Article 559 provides that The possession of movable property acquired in good faith is equivalent to a title. Nevertheless, one who has lost any movable or has been unlawfully deprived thereof, may recover it from the person in possession of the same. If the possessor of a movable lost or of which the owner has been unlawfully deprived has acquired it in good faith at a public sale, the owner cannot obtain its return without reimbursing the price paid therefor.

2. Arbitrary action, act of taking the law on own hands, condemned The Court expresses its disapproval of the arbitrary action of EDCA Publishing in taking the law into its own hands and forcibly recovering the disputed books from the Santos spouses. The circumstance that it did so with the assistance of the police, which should have been the first to uphold legal and peaceful processes, has compounded the wrong even more deplorably. Questions, such as the ownership of the books, are decided not by policemen but by judges and with the use not of brute force but of lawful writs. 3. Possession of movable property acquired in good faith equivalent to title The first sentence of Article 559 provides that the possession of movable property acquired in good faith is equivalent to a title, thus dispensing with further proof. It cannot be said that the spouses cannot establish their ownership of the disputed books because they have not even produced a receipt to prove they had bought the stock. 4. Santos a purchaser in good faith, even if books were bought at discount Leonor Santos first ascertained the ownership of the books from the EDCA invoice showing that they had been sold to Cruz, who said he was selling them for a discount because he was in financial need. The Santos spouses are in the business of buying and selling books and often deal with hard-up sellers who urgently have to part with their books at reduced prices. To Leonor Santos, Cruz must have been only one of the many such sellers she was accustomed to dealing with. It is hardly bad faith for any one in the business of buying and selling books to buy them at a discount and resell them for a profit. 5. Contract of sale consensual and is perfected upon agreement The contract of sale is consensual and is perfected once agreement is reached between the parties on the subject matter and the consideration. According to Article 1475 of the Civil Code, The contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Article 1477, on the other hand, provides that The ownership of the thing sold shall be transferred to the vendee upon the actual or constructive delivery thereof. Article 1478 provides that The parties may stipulate that ownership in the thing shall not pass to the purchaser until he has fully paid the price. 6. Rule in the transfer of ownership Ownership in the thing sold shall not pass to the buyer until full payment of the purchase price only if there is a stipulation to that effect. Otherwise, the rule is that such ownership shall pass from the vendor to the vendee upon the actual or constructive delivery of the thing sold even if the purchase price has not yet been paid. Absent the stipulation, delivery of the thing sold will effectively transfer ownership to the buyer who can

in turn transfer it to another. 7. Effect of non-payment; Relief Non-payment only creates a right to demand payment or to rescind the contract, or to criminal prosecution in the case of bouncing checks. 8. Asiatic Commercial Corporation vs. Ang; Company not unlawfully deprived of property, sale valid In Asiatic Commercial Corporation v. Ang, the company sold some cosmetics to Francisco Ang, who in turn sold them to Tan Sit Bin. Asiatic not having been paid by Ang, it sued for the recovery of the articles from Tan, who claimed he had validly bought them from Ang, paying for the same in cash. Finding that there was no conspiracy between Tan and Ang to deceive Asiatic, the Court of Appeals declared that the company was not unlawfully deprived of the cartons of Gloco Tonic within the scope of this legal provision. It has voluntarily parted with them pursuant to a contract of purchase and sale. The circumstance that the price was not subsequently paid did not render illegal a transaction which was valid and legal at the beginning. 9. Tagatac vs. Jimenez; Sale voidable due to fraud but subsists as valid until annulled In Tagatac v. Jimenez, Trinidad C. Tagatac sold her car to Warner Feist, who sold it to Sanchez, who sold it to Jimenez. When the payment check issued to Tagatac by Feist was dishonored, Tagatac sued to recover the vehicle from Jimenez on the ground that she had been unlawfully deprived of it by reason of Feists deception. In ruling for Jimenez, the Court of Appeals held that the fraud and deceit practiced by Feist earmarks this sale as a voidable contract (Article 1390). Being a voidable contract, it is susceptible of either ratification or annulment. If the contract is ratified, the action to annul it is extinguished (Article 1392) and the contract is cleansed from all its defects (Article 1396); if the contract is annulled, the contracting parties are restored to their respective situations before the contract and mutual restitution follows as a consequence (Article 1398). However, as long as no action is taken by the party entitled, either that of annulment or of ratification, the contract of sale remains valid and binding. When Tagatac delivered the car to Feist by virtue of said voidable contract of sale, the title to the car passed to Feist (the title was defective and voidable). Nevertheless, at the time he sold the car to Felix Sanchez, his title thereto had not been avoided and he therefore conferred a good title on the latter, provided he bought the car in good faith, for value and without notice of the defect in Feists title (Article 1506). There being no proof on record that Felix Sanchez acted in bad faith, it is safe to assume that he acted in good faith. 10. Ownership validly transferred to the Santos spouses

Actual delivery of the books having been made, Cruz acquired ownership over the books which he could then validly transfer to the Santos spouses. The fact that he had not yet paid for them to EDCA was a matter between him and EDCA and did not impair the title acquired by the spouses to the books. 11. Injustice will arise if unlawfully deprived would be interpreted in a different manner One may well imagine the adverse consequences if the phrase unlawfully deprived were to be interpreted in the manner premised on the argument that the impostor acquired no title to the books that he could have validly transferred to the spouses. A person relying on the sellers title who buys a movable property from him would have to surrender it to another person claiming to be the original owner who had not yet been paid the purchase price therefor. The buyer in the second sale would be left holding the bag, so to speak, and would be compelled to return the thing bought by him in good faith without even the right to reimbursement of the amount he had paid for it. 12. Diligence exercised by Santos, but not by EDCA Leonor Santos took care to ascertain first that the books belonged to Cruz before she agreed to purchase them. The EDCA invoice Cruz showed her assured her that the books had been paid for on delivery. Santos did not have to go beyond that invoice to satisfy herself that the books being offered for sale by Cruz belonged to him; yet she did. Although the title of Cruz was presumed under Article 559 by his mere possession of the books, these being movable property, Leonor Santos nevertheless demanded more proof before deciding to buy them. By contrast, EDCA was less than cautious in fact, too trusting in dealing with the impostor. Although it had never transacted with him before, it readily delivered the books he had ordered (by telephone) and as readily accepted his personal check in payment. It did not verify his identity although it was easy enough to do this. It did not wait to clear the check of this unknown drawer. Worse, it indicated in the sales invoice issued to him, by the printed terms thereon, that the books had been paid for on delivery, thereby vesting ownership in the buyer. 13. Santos spouses cannot be made to suffer It would certainly be unfair to make the spouses bear the prejudice sustained by EDCA as a result of its own negligence. There is no justice in transferring EDCAs loss to the S antoses who had acted in good faith, and with proper care, when they bought the books from Cruz. While the Court sympathized with EDCA for its plight, it is clear that its remedy is not against the spouses but against Tomas de la Pea, who has apparently caused all this trouble. 14. Santos have the right to complain The spouses have themselves been unduly inconvenienced, and for merely transacting a customary

deal not really unusual in their kind of business. It is they and not EDCA who have a right to complain Villa Rey Transit vs. Ferrer [GR L-23893, 29 October 1968] Facts: [preceding case] Prior to 1959, Jose M. Villarama was an operator of a bus transportation, under the business name of Villa Rey Transit, pursuant to certificates of public convenience granted him by the Public Service Commission (PSC) in Cases 44213 and 104651, which authorized him to operate a total of 32 units on various routes or lines from Pangasinan to Manila, and vice-versa. On 8 January 1959, he sold the two certificates of public convenience to the Pangasinan Transportation Company, Inc. (Pantranco), for P350,000.00 with the condition, among others, that the seller (Villarama) "shall not for a period of 10 years from the date of this sale, apply for any TPU service identical or competing with the buyer." Barely 3 months thereafter, or on 6 March 1959: a corporation called Villa Rey Transit, Inc. (the Corporation) was organized with a capital stock of P500,000.00 divided into 5,000 shares of the par value of P100.00 each; P200,000.00 was the subscribed stock; Natividad R. Villarama (wife of Jose M. Villarama) was one of the incorporators, and she subscribed for P1,000.00; the balance of P199,000.00 was subscribed by the brother and sister-in-law of Jose M. Villarama; of the subscribed capital stock, P105,000.00 was paid to the treasurer of the corporation, who was Natividad R. Villarama. In less than a month after its registration with the Securities and Exchange Commission (10 March 1959), the Corporation, on 7 April 1959, bought 5 certificates of public convenience, 49 buses, tools and equipment from one Valentin Fernando, for the sum of P249,000.00, of which P100,000.00 was paid upon the signing of the contract; P50,000.00 was payable upon the final approval of the sale by the PSC; P49,500.00 one year after the final approval of the sale; and the balance of P50,000.00 "shall be paid by the BUYER to the different suppliers of the SELLER." The very same day that the contract of sale was executed, the parties thereto immediately applied with the PSC for its approval, with a prayer for the issuance of a provisional authority in favor of the vendee Corporation to operate the service therein involved. On 19 May 1959, the PSC granted the provisional permit prayed for, upon the condition that "it may be modified or revoked by the Commission at any time, shall be subject to whatever action that may be taken on the basic application and shall be valid only during the pendency of said application." Before the PSC could take final action on said application for approval of sale, however, the Sheriff of Manila, on 7 July 1959, levied on 2 of the five certificates of public convenience involved therein, namely, those issued under PSC cases 59494 and 63780, pursuant to a writ of execution issued by the Court of First Instance of Pangasinan in Civil Case 13798, in favor of Eusebio E. Ferrer against Valentin Fernando. The Sheriff made and entered the levy in the records of the PSC. On 16 July 1959, a public sale was conducted by the Sheriff of the said two certificates of public convenience. Ferrer was the highest bidder, and a certificate of sale was issued in his name. Thereafter, Ferrer sold the two certificates of public convenience to Pantranco, and jointly submitted for approval their corresponding contract of sale to the PSC. Pantranco therein prayed that it be authorized provisionally to operate the service involved in the said two certificates. The applications for approval of sale, filed before the PSC, by Fernando and the Corporation, Case 124057, and that of Ferrer and Pantranco, Case 126278, were scheduled for a joint hearing. In the meantime, to wit, on 22 July 1959, the PSC issued an order disposing that during the pendency of the cases and before a final resolution on the aforesaid applications, the Pantranco shall be the one to operate provisionally the service under the two certificates embraced in the contract between Ferrer and Pantranco. The Corporation took issue with this particular ruling of the PSC and elevated the matter to the Supreme Court, which decreed, after deliberation, that until the issue on the ownership

of the disputed certificates shall have been finally settled by the proper court, the Corporation should be the one to operate the lines provisionally. [present case] On 4 November 1959, the Corporation filed in the Court of First Instance of Manila, a complaint for the annulment of the sheriff's sale of the aforesaid two certificates of public convenience (PSC Cases 59494 and 63780) in favor of Ferrer, and the subsequent sale thereof by the latter to Pantranco, against Ferrer, Pantranco and the PSC. The Corporation prayed therein that all the orders of the PSC relative to the parties' dispute over the said certificates be annulled. The CFI of Manila declared the sheriff's sale of two certificates of public convenience in favor of Ferrer and the subsequent sale thereof by the latter to Pantranco null and void; declared the Corporation to be the lawful owner of the said certificates of public convenience; and ordered Ferrer and Pantranco, jointly and severally, to pay the Corporation, the sum of P5,000.00 as and for attorney's fees. The case against the PSC was dismissed. All parties appealed. Issue: Whether the stipulation, "SHALL NOT FOR A PERIOD OF 10 YEARS FROM THE DATE OF THIS SALE, APPLY FOR ANY TPU SERVICE IDENTICAL OR COMPETING WITH THE BUYER" in the contract between Villarama and Pantranco, binds the Corporation (the Villa Rey Transit, Inc.). Held: Villarama supplied the organization expenses and the assets of the Corporation, such as trucks and equipment; there was no actual payment by the original subscribers of the amounts of P95,000.00 and P100,000.00 as appearing in the books; Villarama made use of the money of the Corporation and deposited them to his private accounts; and the Corporation paid his personal accounts. Villarama himself admitted that he mingled the corporate funds with his own money. These circumstances are strong persuasive evidence showing that Villarama has been too much involved in the affairs of the Corporation to altogether negative the claim that he was only a part-time general manager. They show beyond doubt that the Corporation is his alter ego. The interference of Villarama in the complex affairs of the corporation, and particularly its finances, are much too inconsistent with the ends and purposes of the Corporation law, which, precisely, seeks to separate personal responsibilities from corporate undertakings. It is the very essence of incorporation that the acts and conduct of the corporation be carried out in its own corporate name because it has its own personality. The doctrine that a corporation is a legal entity distinct and separate from the members and stockholders who compose it is recognized and respected in all cases which are within reason and the law. When the fiction is urged as a means of perpetrating a fraud or an illegal act or as a vehicle for the evasion of an existing obligation, the circumvention of statutes, the achievement or perfection of a monopoly or generally the perpetration of knavery or crime, the veil with which the law covers and isolates the corporation from the members or stockholders who compose it will be lifted to allow for its consideration merely as an aggregation of individuals. Hence, the Villa Rey Transit, Inc. is an alter ego of Jose M. Villarama, and that the restrictive clause in the contract entered into by the latter and Pantranco is also enforceable and binding against the said Corporation. For the rule is that a seller or promisor may not make use of a corporate entity as a means of evading the obligation of his covenant. Where the Corporation is substantially the alter ego of the covenantor to the restrictive agreement, it can be enjoined from competing with the covenantee Quimson v. Rosete [G.R. No. L-2397. August 9, 1950.] En Banc, Tuason (J): 5 concur Facts: The property, i.e. the land, originally belonged to the late Dionisio Quimson, who, on 7 June 1932, executed a deed Exhibit A transferring the same in favor of his daughter Tomasa Quimson, but remaining in continuous possession and enjoyment. It was sold to the spouses Magno Agustin and Paulina Manzano on 3 May 1935, with right to repurchase within the term of six years; and two years after, on 5 April 1937, again was sold to Francisco Rosete, also with pacto de retro within five years, thereafter having verified its repurchase of Agustin and Manzano, with money furnished to him by Rosete, executing in the end the deed Exhibit 1. Since then, Rosete was the one in possession and

who enjoys, in a peaceful manner even after the death of Dionisio Quimson, which occurred on 6 June 1939, until January 1943, when Tomasa Quimson filed with the Justice of Peace of San Marcelino, Zambales, intervening in the agreement with Rosete over the said property, whose failure was the reason for the race toward Iba, the capital of Zambales, to acquire priority in the registration and inscription of the deeds of sale Exhibits A and 1 which Dionisio Quimson executed in favor of Tomasa Quimson and Francisco Rosete, respectively, the former arriving one hour earlier, at 9:30 a.m. of 17 February 1943, whereas the latter arrived at 10:30 a.m. of the same day. The Court of First instance of Zambales ruled in favor of Tomasa Quimson and Marcos Santos; the decision being reversed later by the Court of Appeals. Hence, the appeal by certiorari. The Supreme Court set aside the decision of the Court of Appeals, and accepted the trial courts appraisal of the damages (assessed damages of P180 for the occupation of the land for the agricultural years 1943-44, 1944-45 and 1945-46, and P60 a year thereafter until the possession of the property was restituted); with costs against Rosete. 1. Article 1462 and 1473 of the Civil Code Articles 1462 of the Civil Code provides that The thing sold shall be deemed delivered, when it is placed in the control and possession of the vendee. When the sale is made by means of 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 said instrument the contrary does not appear or may not be clearly inferred. Article 1473 provides, on the other hand, 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 first recorded it in the registry. Should there be no inscription, the ownership shall belong to the person who in good faith was first in the possession; and, in the absence of this, to the person who presents the oldest title, provided there is good faith. 2. Buencamino vs. Viceo; Execution of notarial document of sale sufficient delivery In the case of Buencamino vs. Viceo (13 Phil., 97), Article 1462 was cited. The provision provides that Upon a sale of real estate the execution of a notarial document of sale is a sufficient delivery of the property sold. 3. Florendo vs. Foz: Execution of sale thru public instrument tantamount to conveyance In the case of Florendo vs. Foz (20 Phil., 388), it was ruled that When the sale is made by means of a public instrument, the execution thereof is tantamount to conveyance of the subject matter, unless the contrary clearly follows or be deduced from such instrument itself, and in the absence of this condition such execution by the vendor is per se a formal or symbolical conveyance of the property sold, that is, the vendor in the instrument itself authorizes the purchaser to use the title of ownership as proof that the latter is thenceforth the owner of the property. 4. Sanchez vs. Ramos almost on all fours In the case of Sanchez vs. Ramos (40 Phil., 614), it appeared that one Fernandez sold a piece of land to Marcelino Gomez and Narcisa Sanchez under pacto de retro in a public instrument. The purchasers neither recorded their deed in the registry of property nor ever took material possession of the land. Later, Fernandez sold the same property by means of a private document to Ramos who immediately entered upon the possession of it. It was held that, according to article 1473 of the Civil Code, Gomez and Sanchez were the first in possession and, consequently, that the sale in their favor was superior. 5. Interpretation of Article 1473; Material and symbolic possession Possession is acquired by the material occupancy of the thing or right possessed, or by the fact that

the latter is subjected to the action of our will, or by the appropriate acts and legal formalities established for acquiring possession (art. 438, Civil Code). By a simple reasoning, it appears that, because the law does not mention to which of these kinds of possession the article (1473) refers, it must be understood that it refers to all of these kinds. The possession mentioned in article 1473 (for determining who has better right when the same piece of land has been sold several times by the vendor) includes not only the material but also the symbolic possession, which is acquired by the execution of a public instrument. 6. Interpretation of Article 1473: in consonance with the principles of justice The Courts interpretation of article 1473 is more in consonance with the principles of justice. The execution of a public instrument is equivalent to the delivery of the realty sold (art.1462, Civil Code) and its possession by the vendee (art. 438). Under these conditions the sale is considered consummated and completely transfers to the vendee all of the vendors rights of ownership including his real right over the thing. The vendee by virtue of this sale has acquired everything and nothing, absolutely nothing, is left to the vendor. From this moment the vendor is a stranger to the thing sold like any other who has never been its owner. As the thing is considered delivered, the vendor has no longer the obligation of even delivering it. If he continues taking material possession of it, is simply on account of vendees tolerance and, in this sense, his possession is vendors possession. And if the latter should have to ask him for the delivery of this material possession, it would not be by virtue of the sale, because this has been already consummated and has produced all its effects, but by virtue of the vendees ownership, in the same way as said vendee could require of another person although same were not the vendor. 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 to the thing lawfully acquired by the first vendee. 7. Spirit or intent of law prevails over its letter The statement of Sr. Manresa (pp. 157, 158, Vol. X, of his treatise on the Spanish Civil Code) expresses the literal meaning of article 1473, for the decision of 24 November 1894 reflects, according to the learned author, the intention of the lawmaker and is in conformity with the principles of justice. Now, under both the Spanish and the Philippine rules of interpretation, the spirit, the intent, of the law prevails over its letter. 8. Deed of conveyance means land was sold, in absence of any qualifying statement The finding that a deed of conveyance was made by Dionisio Quimson in favor of his daughter could have no other meaning, in the absence of any qualifying statement, than that the land was sold by the father to his daughter. The trial courts explicit finding which was not reversed by the Court of Appeals and stands as the fact of the case. Looking into the document itself, Exhibit A states categorically that the vendor received from the vendee the consideration of sale, P250, and acknowledged before the notary public having executedthe instrument of his own free will. 9. Cruzado vs. Escaler, obiter dictum; Prescription The expression in thedecision in the case of Cruzado vs. Escaler (34 Phil., 17), apparently to the effect that physical possession by the purchaser is essential to the consummation of a sale of real estate, is at best obiter dictum; for the court distinctly found that the sale to Cruzados father was a sham, executed with the sole purpose of enabling the senior Cruzado to mortgage the property and become procurador. And with reference to the failure of the second vendee, Escaler, to register his purchase, the court disregarded the omission as well as the entry of the first sale in the registry because that entry was made by the son and heir of the first supposed vendee, more than a score years after the alleged transaction, when Cruzado was no longer or had any right therein (in the land), because it already belonged to the Escaler, its lawful owner.

When Escaler, the second purchaser was sued, he had become the owner of the land by prescription. In the present case, Rosetes possession fell far short of having ripened into title by prescription when the Quimson commenced her action. Coronel v. CA [G.R. No. 103577. October 7, 1996.] Third division, Melo (J): 3 concurring, 1 took no part Facts: On 19 January 1985, Romulo Coronel, et al. executed a document entitled Receipt of Down Payment in favor of Ramona Patricia Alcaraz for P50,0 00 downpayment of the total amount of P1.24M as purchase price for an inherited house and lot (TCT 119627, Registry of Deeds of Quezon City), promising to execute a deed of absolute sale of said property as soon as such has been transferred in their name. The balance of P1.19M is due upon the execution of said deed. On the same date, Concepcion D. Alcaraz, mother of Ramona, paid the down payment of P50,000.00. On 6 February 1985, the property originally registered in the name of the Coronels father was transferred in their names (TCT 327043). However, on 18 February 1985, the Coronels sold the property to Catalina B. Mabanag for P1,580,000.00 after the latter has paid P300,000.00. For this reason, Coronels canceled and rescinded the contract with Alcaraz by depositing the down payment in the bank in trust for Alcaraz. On 22 February 1985, Alcaraz filed a complaint for specific performance against the Coronels and caused the annotation of a notice of lis pendens at the back of TCT 327403. On 2 April 1985, Mabanag caused the annotation of a notice of adverse claim covering the same property with the Registry of Deeds of Quezon City. On 25 April 1985, the Coronels executed a Deed of Absolute Sale over the subject property in favor of Mabanag. On 5 June 1985, a new title over the subject property was issued in the name of Mabanag under TCT 351582. In the course of the proceedings, the parties agreed to submit the case for decision solely on the basis of documentary exhibits. Upon submission of their respective memoranda and the corresponding comment or reply thereto, and on 1 March 1989, judgment was handed down in favor of the plaintiffs, ordering the defendant to execute a deed of absolute sale of the land covered by TCT 327403 and canceling TCT 331582 and declaring the latter without force and effect. Claims for damages by plaintiffs and counterclaims by the defendants and intervenors were dismissed. A motion for reconsideration was thereafter filed, which was denied. Petitioners interposed an appeal, but on 16 December 1991, the CA rendered its decision fully agreeing with the trial court. Hence, the instant petition. The Supreme Court dismissed the petition and affirmed the appealed judgment. 1. Receipt of downpayment a binding contract; Meeting of the minds The document embodied the binding contract between Ramona Patricia Alcaraz and the heirs of Constancio P. Coronel, pertaining to a particular house and lot covered by TCT 119627, as defined in Article 1305 of the Civil Code of the Philippines. 2. Definition of contract of sale The Civil Code defines a contract of sale, in Article 1458, as one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefor a price certain in money or its equivalent. Sale, thus, by its very nature a consensual contract because it is perfected by mere consent. 3. Elements of contract of sale; Contract to sell not contract of sale due to the lack of first element; Distinction necessary when property is sold to a third person The essential elements of a contract of sale are (a) Consent or meeting of the minds, that is, consent to transfer ownership in exchange for the price; (b) Determinate subject matter; and (c) Price certain

in money or its equivalent. A Contract to Sell may not be considered as a Contract of Sale because the first essential element is lacking. It is essential to distinguish between a contract to sell and a conditional contract of sale specially in cases where the subject property is sold by the owner not to the party the seller contracted with, but to a third person. 4. Contract to sell: Seller agrees to sell property when purchase price is delivered to him; seller reserves transfer of title until fulfillment of suspensive condition (payment) In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes taken to be the full payment of the purchase price. What the seller agrees or obliges himself to do is to fulfill his promise to sell the subject property when the entire amount of the purchase price is delivered to him. In other words the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and thus, ownership is retained by the prospective seller without further remedies by the prospective buyer. 5. Contract to sell: failure to deliver payment is not a breach but event preventing vendor to convey title; obligation demandable upon full payment of price; promise binding if supported by payment distinct from the price When a contract is a contract to sell where the ownership or title is retained by the seller and is not to pass until the full payment of the price, such payment being a positive suspensive condition and failure of which is not a breach, casual or serious, but simply an event that prevented the obligation of the vendor to convey title from acquiring binding force (Roque v. Lapuz). Upon the fulfillment of the suspensive condition which is the full payment of the purchase price, the prospective se llers obligation to sell the subject property by entering into a contract of sale with the prospective buyer becomes demandable as provided in Article 1479 of the Civil Code (A promise to buy and sell a determinate thing for a price certain is reciprocally demandable.) An accepted unilateral promise to buy or to sell a determinate thing for a price certain is binding upon the promissor if the promise is supported by a consideration distinct from the price. 6. Contract to sell defined A contract to sell be defined as a bilateral contract whereby the prospective seller, while expressly reserving the ownership of the subject property despite delivery thereof to the prospective buyer, binds himself to sell the said property exclusively to the prospective buyer upon fulfillment of the condition agreed upon, that is, full payment of the purchase price. 7. Contract to sell not a conditional contract of sale (existence of first element) A contract to sell may not even be considered as a conditional contract of sale where the seller may likewise reserve title to the property subject of the sale until the fulfillment of a suspensive condition, because in a conditional contract of sale, the first element of consent is present, although it is conditioned upon the happening of a contingent event which may or may not occur. 8. Conditional contract of sale: if suspensive condition not fulfilled, pefection abated; if fulfilled, contract of sale perfected and ownership automatically transfers to buyer If the suspensive condition is not fulfilled, the perfection of the contract of sale is completely abated (cf. Homesite and Housing Corp. vs. Court of Appeals, 133 SCRA 777 [1984]) . However, if the suspensive condition is fulfilled, the contract of sale is thereby perfected, such that if there had already been previous delivery of the property subject of the sale to the buyer, ownership thereto automatically transfers to the buyer by operation of law without any further act having to be performed by the seller.

9. Contract to sell: if suspensive condition fulfilled, seller has still to convey title even if property is previously delivered In a contract to sell, upon the fulfillment of the suspensive condition which is the full payment of the purchase price, ownership will not automatically transfer to the buyer although the property may have been previously delivered to him. The prospective seller still has to convey title to the prospective buyer by entering into a contract of absolute sale. 10. Contract to sell: there is no double sale; if property sold to another, the seller may be sued for damages In a contract to sell, there being no previous sale of the property, a third person buying such property despite the fulfillment of the suspensive condition such as the full payment of the purchase price, for instance, cannot be deemed a buyer in bad faith and the prospective buyer cannot seek the relief of reconveyance of the property. There is no double sale in such case. Title to the property will transfer to the buyer after registration because there is no defect in the owner-sellers title per se, but the latter, of course, may be sued for damages by the intending buyer. 11. Conditional contract of sale: sale becomes absolute upon fulfillment of condition; if property sold to another, first buyer may seek reconveyance In a conditional contract of sale, upon the fulfillment of the suspensive condition, the sale becomes absolute and this will definitely affect the sellers title thereto. In fact, if there had been previous delivery of the subject property, the sellers ownership or title to the property is automatically transferred to the buyer such that, the seller will no longer have any title to transfer to any third person. Applying Article 1544 of the Civil Code, such second buyer of the property who may have had actual or constructive knowledge of such defect in the sellers title, or at least was charged with the obligation to discover such defect, cannot be a registrant in good faith. Such second buyer cannot defeat the first buyers title. In case a title is issued to the second buyer, the first buyer may seek reconveyance of the property subject of the sale. 12. Interpretation of contracts, natural and meaning of words unless technical meaning was intended It is a canon in the interpretation of contracts that the words used therein should be given their natural and ordinary meaning unless a technical meaning was intended (Tan vs. Court of Appeals, 212 SCRA 586 [1992]). 13. Document entitled Receipt of Down Payment indicat es Conditional Contract of Sale and not contract to sell The agreement could not have been a contract to sell because the sellers made no express reservation of ownership or title to the subject parcel of land. Furthermore, the circumstance which prevented the parties from entering into an absolute contract of sale pertained to the sellers themselves (the certificate of title was not in their names) and not the full payment of the purchase price. Under the established facts and circumstances of the case, had the certificate of title been in the names of petitioners-sellers at that time, there would have been no reason why an absolute contract of sale could not have been executed and consummated right there and then. Moreover, unlike in a contract to sell, petitioners did not merely promise to sell the property to private respondent upon the fulfillment of the suspensive condition. On the contrary, having already agreed to sell the subject property, they undertook to have the certificate of title changed to their names and immediately thereafter, to execute the written deed of absolute sale. What is clearly established by the plain language of the subject document is that when the said Receipt of Down Payment was prepared and signed by petitioners, the parties had agreed to a conditional contract of sale, consummation of which is subject only to the successful transfer of the certificate of title from the name of petitioners father to their names. The suspensive condition was fulfilled on 6 February 1985 and thus, the conditional contract of sale between the parties became obligatory, the only act required for the consummation thereof being the delivery of the property by means of the execution of the deed of absolute sale in a public

instrument, which petitioners unequivocally committed themselves to do as evidenced by the Receipt of Down Payment. 14. Article 1475 and 1181 applies to present case; Perfection of a contract of sale and Conditional obligation based on the happening of the event Article 1475 of the New Civil Code provides that the contract of sale is perfected at the moment there is a meeting of minds upon the thing which is the object of the contract and upon the price. From that moment, the parties may reciprocally demand performance, subject to the provisions of the law governing the form of contracts. Article 1181 of the same code provides that in conditional obligations, the acquisition of rights, as well as the extinguishment or loss of those already acquired, shall depend upon the happening of the event which constitutes the condition. In the present case, since the condition contemplated by the parties which is the issuance of a certificate of title in petitioners names was fulfilled on 6 February 1985, the respective obligations of the parties under the contract of sale became mutually demandable, i.e. the sellers were obliged to present the TCT already in their names to he buyer, and to immediately execute the deed of absolute sale, while the buyer on her part, was obliged to forthwith pay the balance of the purchase price amounting to P1,190,000.00. 15. Condition deemed fulfilled when obligor voluntary prevents its fulfillment; Condition fulfilled,such fact controlling over hypothetical arguments Article 1186 provides that the condition shall be deemed fulfilled when the obligor voluntarily prevents its fulfillment. Thus, in the present case, the petitioners having recognized that they entered into a contract of sale subject to a suspensive condition, as evidenced in the first paragraph in page 9 of their petition, cannot now contend that there could have been no perfected contract of sale had the petitioners not complied with the condition of first transferring the title of the property under their names. It should be stressed and emphasized that the condition was fulfilled on 6 February 1985, when TCT 327403 was issued in petitioners name, and such fact is more controlling than mere hypothetical arguments. 16. Retroactivity of conditional obligation to day of constitution of obligation Article 1187 provides that the effects of conditional obligation to give, once the condition has been fulfilled, shall retroact to the day of the constitution of the obligation. In obligations to do or not to do, the courts shall determine, in each case, the retroactive effect of the condition that has been complied with. In the present case, the rights and obligations of the parties with respect to the perfected contract of sale became mutually due and demandable as of the time of fulfillment or occurrence of the suspensive condition on 6 February 1985. As of that point in time, reciprocal obligations of both seller and buyer arose. 17. Succession as a mode of transferring ownership Article 774 of the Civil Code defines Succession as a mode of transferring ownership, providing succession is a mode of acquisition by virtue of which the property, rights and obligations to the extent and value of the inheritance of a person are transmitted through his death to another or others by his will or by operation of law. In the present case, petitioners-sellers being the sons and daughters of the decedent Constancio P. Coronel are compulsory heirs who were called to succession by operation of law. Thus, at the instance of their fathers death, petitioners st epped into his shoes insofar as the subject property is concerned, such that any rights or obligations pertaining thereto became binding and enforceable upon them. It is expressly provided that rights to the succession are transmitted from the moment of death of the decedent (Article 777, Civil Code; Cuison vs. Villanueva, 90 Phil. 850 [1952]). 18. Estoppel, as to lack of capacity

Article 1431 provides that through estoppel an admission or representation is rendered conclusive upon the person making it, and cannot be denied or disproved as against the person relying thereon. In the present case, the petitioners, having represented themselves as the true owners of the subject property at the time of sale, cannot claim now that they were not yet the absolute owners thereof at the time they entered into agreement. 19. Mere allegation is not evidence The supposed grounds for petitioners rescission, are mere allegations found only in their responsive pleadings, which by express provision of the rules, are deemed controverted even if no reply is filed by the plaintiffs (Sec. 11, Rule 6, Revised Rules of Court). The records are absolutely bereft of any supporting evidence to substantiate petitioners allegations. We have stressed time and again that allegations must be proven by sufficient evidence (Ng Cho Cio vs. Ng Diong, 110 Phil. 882 [1961]; Recaro vs. Embisan, 2 SCRA 598 [1961]). Mere allegation is not an evidence (Lagasca vs. De Vera, 79 Phil. 376 [1947]). 20. No stipulation to authorize extrajudicial rescission of contract of sale Even assuming arguendo that Ramona P. Alcaraz was in the United States of America on 6 February 1985, petitioners-sellers act of unilaterally and extrajudicially rescinding the contract of sale cannot be justified as there was no express stipulation authorizing the sellers to extrajudicially rescind the contract of sale. (cf Dignos vs. CA, 158 SCRA 375 [1988]; Taguba vs. Vda. de Leon, 132 SCRA 722 [1984]) 21. Estoppel, acceptance of check from buyers mother; buyers absence not a ground for rescission Petitioners are estopped from raising the alleged absence of Ramona P. Alcaraz because although the evidence on record shows that the sale was in the name of Ramona P. Alcaraz as the buyer, the sellers had been dealing with Concepcion D. Alcaraz, Ramonas mother, who had acted for and in behalf of her daughter, if not also in her own behalf. Indeed, the down payment was made by Concepcion D. Alcaraz with her own personal check (Exh. B; Exh. 2) for and in behalf of Ramona P. Alcaraz. There is no evidence showing that petitioners ever questioned Concepcions authority to represent Ramona P. Alcaraz when they accepted her personal check. Neither did they raise any objection as regards payment being effected by a third person. Accordingly, as far as petitioners are concerned, the physical absence of Ramona P. Alcaraz is not a ground to rescind the contract of sale. 22. Buyer not in default as there is no proof that seller presented the TCT and signify their readiness to execute the deed of absolute sale Article 1169 of the Civil Code defines when a party in a contract involving reciprocal obligations may be considered in default. Said article provides that those obliged to deliver or to do something, incur in delay from the time the obligee judicially or extrajudicially demands from them the fulfillment of their obligation. xxx In reciprocal obligations, neither party incurs in delay if the other does not comply or is not ready to comply in a proper manner with what is incumbent upon him. From the moment one of the parties fulfill his obligation, delay by the other begins. In the present case, there is no proof offered whatsoever to show that the seller actually presented the new transfer certificate of title in their names and signified their willingness and readiness to execute the deed of absolute sale in accordance with their agreement. Ramonas

corresponding obligation to pay the balance of the purchase price in the amount of P1,190,000.00 (as buyer) never became due and demandable and, therefore, she cannot be deemed to have been in default. 23. Double sale; Article 1544, paragraph 2 applies in the present case Article 1544 of the Civil Code provides 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 if 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. In the present case, the record of the case shows that the Deed of Absolute Sale dated 25 April 1985 as proof of the second contract of sale was registered with the Registry of Deeds of Quezon City giving rise to the issuance of a new certificate of title in the name of Catalina B. Mabanag on 5 June 1985. Thus, the second paragraph of Article 1544 shall apply. 24. Double sale presumes title to pass to first buyer, exceptions Article 1544, the provision on double sale, presumes title or ownership to pass to the first buyer, the exceptions being: (a) when the second buyer, in good faith, registers the sale ahead of the first buyer, and (b) should there be no inscription by either of the two buyers, when the second buyer, in good faith, acquires possession of the property ahead of the first buyer. Unless, the second buyer satisfies these requirements, title or ownership will not transfer to him to the prejudice of the first buyer. 25. Prius tempore, potior jure (first in time, stronger in right); First to register in good faith The governing principle is prius tempore, potior jure (first in time, stronger in right). Knowledge by the first buyer of the second sale cannot defeat the first buyers rights except when the second buyer first registers in good faith the second sale (Olivares vs. Gonzales, 159 SCRA 33). Conversely, knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register, since knowledge taints his registration with bad faith (see also Astorga vs. Court of Appeals, G.R. No. 58530, 26 December 1984). It was further held that it is essential, to merit the protection of Article 1544, second paragraph, that the second realty buyer must act in good faith in registering his deed of sale (Cruz v. Cabana, 129 SCRA 656, citing Carbonell vs. Court of Appeals, 69 SCRA 99, Crisostomo vs. CA, G.R. No. 95843, 02 September 1992). 26. Double sale; good faith in recording of second sale, not in buying In a 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. In the present case, Mabanag could not

have in good faith registered the sale entered into on 18 February 1985 because as early as 22 February 1985, a notice of lis pendens had been annotated on the TCT in the names of petitioners, whereas Mabanag registered the said sale sometime in April 1985. At the time of registration, therefore, petitioner knew that the same property had already been previously sold to Coronel, or, at least, she was charged with knowledge that a previous buyer is claiming title to the same property. Mabanag thus cannot close her eyes to the defect in petitioners title to the property at the time of the registration of the property. 27. Double sale; Bad faith in registration does not confer registrant any right If a vendee in a double sale registers the sale after he has acquired knowledge that there was a previous sale of the same property to a third party or that another person claims said property in a previous sale, the registration will constitute a registration in bad faith and will not confer upon him any right. (Salvoro vs. Tanega, 87 SCRA 349 [1981];citing Palarca vs. Director of Land, 43 Phil. 146; Cagaoan vs. Cagaoan, 43 Phil. 554; Fernandez vs. Mercader, 43 Phil. 581.) 28. Agency; The issue whether Concepcion, mother of Ramona, is an agent or a co-buyer is undisturbed Although there may be ample indications that there was in fact an agency between Ramona as principal and Concepcion, her mother, as agent insofar as the subject contract of sale is concerned, the issue of whether or not Concepcion was also acting in her own behalf as a co-buyer is not squarely raised in the instant petition, nor in such assumption disputed between mother and daughter. The Court did not touch this issue and did not disturb the lower courts ruling on this point. 1546

GOCHANGCO V DEAN 47 Phil 687 ROMUALDEZ; March 20, 1925 NATURE A petition to recover a sum of 17,655 for coconut trees and attys fees. Counterclaim for P1,914 paid by the defendants and which must be paid by the plaintiffs FACTS - The plaintiffs had purchased a land of the Pasay Estate by installments. The defendant was the owner of two parcels of land situated in Masbate. Both parites agreed to exchange their respective properties, but before the final execution of the contract of exchange, the plaintiff Gochangco went to Masbate to make an examination of the parcels of land offered for exchange by the defendant. - The contract of exchange was later executed. In the deed, the defendant stated, among other things:

"It is also declared that the said described property is sold with all coconut trees growing on it, and I declared that I believe there are more than 6,000 coconut trees so growing, together with any and all improvements of any kind whatsoever existing on the said land including all movable goods, chattel, etc., found thereof." - The plaintiffs allege that defendant made them false and fraudulent representations as to the existence of 6,000 coconut trees on his lands. ISSUE WON the plaintiff may recover the value of the coconut trees stipulated in the contract HELD - Misrepresentation of the number of the trees on the said lot was not proven. It does not appear in the record that the defendant deliberately violated the truth in stating his belief that there were such a number of coconut trees on said lands. Furthermore, it was shown that the plaintiff viewed the lands and he estimated that there were there more than six thousand coconut trees. - The facts considered in the light of the provisions contained in Art 1484 CC, made applicable to this case by Art1541 CC, prevent us from holding the action brought by the plaintiffs to be of any merit. They have not established their alleged right to the judgment prayed for in their complaint. - As to the cross-complaint and counterclaim of the defendant, we find that in the deed executed by the plaintiffs in favor of the defendant, the former agreed to reimburse the latter what he might pay in connection with perfecting his title to the property in Pasay, exchanged for that of the defendant in Masbate, provided that the sum thus spent should exceed P1,500.The plaintiffs also admitted the fact that for perfecting his title to the property, the defendant had spent the total sum of P1,914; there being, therefore, an excess of P414 which the plaintiffs are under obligation to pay unto the defendant. Disposition Wherefore the judgment appealed from is affirmed so far as it absolves the defendant from the complaint, but reversed so far as it dismisses the cross-complaint and counterclaim, and it is ordered that the plaintiffs pay the defendant the sum of P414, without special finding as to costs. SONGCO V SELLNER 37 PHIL 254 STREET; December 4, 1917 FACTS - In Dec. 1915, the defendant George Sellner, was the owner of a sugar farm at FloridaBlanca, Pampanga adjacent to another sugar farm owned by plaintiff Lamberto Songco. Sellner wished to mill his cane at a sugar central in nearby Dinalupijan but the owners of the mill would not promise to take it. Sellner found out that the central was going to mill Songcos cane and decided to buy it and run his own cane at the same time the latters cane was to be milled. Sellner also desired to get a right of way over Songcos land for converting his own cane to the central. He bought the cane for an agreed sum of P12,000 and executed 3 promissory notes of P4,000, paying for two; an action was instituted to recover the 3rd for which a judgment was rendered in favor of the plaintiff and to which defendant has appealed. - The defendant denied all allegations of the complaint, further asserting by way of special defense that the defendant obtained the note by means of fraudulent representations. The note, on which the action was brought, was admitted in court as evidence. ISSUES 1. WON the court erred in admitting the note as evidence even though its genuineness and due execution were not proven 2. WON plaintiff is guilty of false representation

HELD 1. NO - Under Sec 103 of the Code of Civil Procedure, it is necessary that the genuineness and due execution of a written instrument be specifically denied by the defendant under oath before such an issue is raised. The answer to the effect that the note was procured by fraudulent representation is actually an admission of its genuineness and due execution since it seeks to avoid the instrument on a ground not affecting either. Furthermore, the defendant admits the notes execution in his answer. 2. NO - Songco estimated that his cane would produce 3,000 piculs of sugar but instead produced 2,017. Although Songco had grossly exaggerated his estimate, the court finds that Sellner is still bound to pay the price stipulated. Matters of opinion, judgment, probability or expectation are not actionable deceits and cannot void a contract. Jurisprudence dictates that one may not rely on a vendors misrepresentations as to the value of his goods if that person is given an ample opportunity to investigate/examine the goods. Using expert knowledge to take advantage of the ignorance of another may be grounds for relief; however, the court finds Sellners relative inexperience lacking. - An incident to the action was that the plaintiffs sued out an attachment against the defendant on the ground that he was disposing of his property in fraud of his creditors. This was refuted upon a showing that defendant had not attempted to convey away his property, and thus damages were awarded to him equal to the cost of procuring the dissolution of the attachment. The defendant assigns error to the courts refusal to award further damages, claiming that the attachment caused a creditor to withhold credit, forcing him to sell sugar at lower prices and losing money. The damages were remote and speculative; the plaintiff cannot be held accountable for such complications leading to said damages. Disposition From what has been said it follows that the judgment of the court below must be affirmed, with costs against the appellant. LUZON BROKERAGE CO INC V MARITIME BUILDING CO INC 43 SCRA 93 REYES; August 18, 1972 FACTS - On 24 March 1961, Maritime had requested a "suspension" or "moratorium" in its monthly payments until the close of 1961, allegedly because "we are encountering some unusual expenses with the warehouses, but this request was turned down on 29 March 1961 by the Myers Corporation advising George Schedler, the son of Edmund Schedler, main stockholder of Maritime, that his request "can not be granted as I have specific instructions from the Board (of Myers Co.) not to agree to any suspension of payments under any condition". - Schedler, on behalf of Maritime, insisted on suspending its payments alleging for the first time that the late F. H. Myers had "agreed to indemnify and hold me harmless from the Luzon Labor Union claims which are in litigation" and giving notice that "my wife and I intend to withhold any further payments to the Myers Building Co. or Estate ...". This intention was reiterated in a letter wherein it was added that "if the Myers people will deposit in trust with Mr. C. Parsons 25,000 pesos to cover my costs to date, I will then deposit with Mr. Parsons in trust 15,000 pesos for March, April and May ...". ISSUES 1. WON Maritimes obligation had been substantially performed in good faith 2. WON Art1191 can be applied to the case 3. WON the stipulated forfeiture of the monthly payments already made is a penalty, and the same should be equitably reduced 4. WON rescission of the contract of sale is proper

HELD 1. NO - Maritime was obligated to make monthly payments to Myers Building Co. under its contract, until the price of the building was paid in full and yet it repeatedly refused to do so, on the pretext that the late F. H. Myers had obligated himself to indemnify Edmund Schedler from the labor claims against the Luzon Stevedoring Co., that Myers had sold to Schedler in a totally separate contract. - F. H. Myers was not the vendor Myers Building corporation; moreover, he had already died and his estate had been closed without Schedler or Maritime having filed any contingent claim before closure of the estate proceedings, as required by Revised Rule 88, The claims of Schedler or Maritime were, therefore, already barred, even assuming that there was any truth to the alleged promise of the late Myers, which is not supported by any reliable evidence. And even then, the claim was at the most payable by the heirs of F. H. Myers, but not by the Myers corporation, which had no duty to assume the guarantee. - The non-payment for March, April and May, 1961, due to the corporation, was intentional and deliberate non-performance, designed to extrajudicially force Myers corporation to grant the moratorium originally solicited and rejected, thus constituting, as held in the main decision, dolo (in the performance, in solvendo) and not mere culpa or negligence. - Nor is it admissible that there had been substantial performance by it or that the offer to deposit in trust the missing amounts were equivalent to payment. When Maritime suspended its payments for March-May, 1961, there was a balance of P319,300.65 on the principal of its obligation, plus interest, i.e., nearly 1/3 of the original indebtedness. And as to the offer to deposit the payments due in trust or in escrow, it can not be considered payment since it was a conditional tender, and would have left the creditor (Myers corporation) unable to make use of the money rightfully due to it. - A tender to be valid must be unconditional; and even then, a tender alone is not a mode of extinguishing obligations, unless followed by consignation. - For Myers to accept the proposed deposit of the monthly payments in trust or escrow would be equivalent to an admission on its part of the validity or truthfulness of Maritime's claim and of Myers Corporation's liability for an obligation of an individual stockholder. Nor is there any justification on record to warrant the disregard of the corporate personality of Myers Building Corporation in the present case. 2. NO - Myers obligation to convey the property was expressly made subject to a suspensive (precedent) condition of the punctual and full payment of the balance of the purchase price. This is apparent from clauses (d) and (i) of the contract of sale which make it crystal clear that the full payment of the price (through the punctual performance of the monthly payments) was a condition precedent to the execution of the final sale and to the transfer of the property from Myers to Maritime; so that there was to be no actual sale until and unless full payment was made. - The upshot of all these stipulations is that in seeking the ouster of Maritime for failure to pay the price as agreed upon, Myers was not rescinding (or more properly, resolving) the contract, but precisely enforcing it according to its express terms. In its suit Myers was not seeking restitution to it of the ownership of the thing sold (since it was never disposed of), such restoration being the logical consequence of the fulfillment of a resolutory condition, express or implied (article 1190); neither was it seeking a declaration that its obligation to sell was extinguished. What it sought was a judicial declaration that because the suspensive condition (full and punctual payment) had not been fulfilled, its obligation to sell to Maritime never arose or never became effective and, therefore, it (Myers) was entitled to repossess the property object of the contract, possession being a mere incident to its right of ownership. 3. NO - Maritime intentionally risked the penalty by deliberately refusing to make the monthly payments for March to May 1961, and trying to inject into its contract with Myers corporation the totally unconnected personal promise of F. H. Myers to indemnify it for eventual liability to the Luzon Labor Union, allegedly made on the occasion of the sale of the Luzon

Brokerage to E. Schedler by F. H. Myers, and trying to extrajudicially force Myers corporation to assume responsibility for such liability; - Under Article 1234 of the present Civil Code, an obligation must be substantially performed in good faith, for such performance to stand in lieu of payment; Maritime, on the contrary, acted with dolo or bad faith, and is not in a position to invoke the benefits of the article. - Maritime's loss of the forfeited payments was more than balanced by the rentals it received from the Luzon Brokerage as lessee of the building for the corresponding periods, at a rate double the monthly payments required of Maritime under its contract with Myers. 4. YES - Even granting that the contract is a plain sale of real property with deferred payment of the price, as contended by Maritime, its position will not be imposed. By Article 1592 of the Civil Code of the Philippines, though it may have been stipulated that upon the failure to pay the price at the time agreed upon, the rescission of the contract shall of right take place, the vendee may pay, even after the expiration of the period, as long as no demand for rescission of the contract has been made upon him either judicially or by a notarial act. After the demand, the Court may not grant him a new term. - The answer filed by Myers in the court below to the Luzon Brokerage's complaint for interpleader constituted in effect a judicial demand for rescission of the contract of sale, and for repossession of the real estate sold. Hence, Maritime can not demand further time to pay, and must conform to the rescission of the contract and the surrender of the premises, with all the consequences stipulated in the original contract. Being an article specifically applicable to sales of real property, this Article 1592 controls the general principles expressed by Article 1198 on reciprocal obligations. SEPARATE OPINION BARREDO [dissent] - Maritime's failure to pay the March, April and May, 1961 installments did not constitute default in the absence of a demand in accordance with Article 1100 of the Old Civil Code. (found in modified form in Art. 1169 of the New Civil Code) - The sole and only demand made upon Maritime by Myers for the payment of the March, April and May, 1961 installments was contained in the latter's letter of May 16, 1961, Myers, and importantly, for reasons which Myers evidently considered irrelevant because it has not shown in the record any that may adversely affect Maritime's position, this communication was not received by Maritime or returned unclaimed. The subsequent letter of Myers to Maritime of June 5, 1961, Myers, was no longer a demand; it was already a notification that Myers had unilaterally cancelled the Deed in controversy. - Assuming there was no need for demand, Maritime's failure to actually pay the installments in question cannot be considered asa breach in bad faith (dolo). - From the point of view of Myers, Schedler's and Senator Padilla's letters to Parsons were not addressed to Myers, since it does not appear that Parsons was not authorized to act for and on its behalf. Worse, they referred to matters with which Myers professed not to have anything to do. Consequently, on the other hand, whatever Parsons said in them for Myers should also not have any color of authority. In this sense, it would appear that Myers had no knowledge whatsoever why Maritime did not pay. How could it charge Maritime with bad faith? - There has been substantial compliance and Article 1234 may be applied. - There is no clear basis in the evidence for comparing how much Maritime had paid as rentals with how much it had paid as installments as of June, 1961. In any event, for purposes of equity, I do not believe We should disregard the property itself in this comparison, hence We should not overlook that Maritime stands to lose not only the P973,000 it had paid, but the property itself and the future rentals it is supposed to earn therefrom, which after all, constituted part of its consideration in entering into the contract and acquiring the property in question. - Assuming otherwise than as above discussed, Article 1504 of the Old Civil Code is applicable to this case.

- When Myers filed its cross-claim against Maritime in its answer to Luzon's interpleader complaint, that in a sense Myers made a judicial demand, Maritime's offers of payment thru Schedler made to Parsons should be considered as a substantial compliance with its obligation to pay the installments for March, April and May, under Article 1504 of the Old Civil Code; hence it cannot be held to have lost its right to pay subsequent installments which reason, the cancellation of the contract by Myers on June 8, 1961 was uncalled for, unjustified and without legal basis. - The "Deed" in question is not a promise to sell it is a sale. - According to Justice Laurel, in as much as the parties in such sale on installment of real proper or immovable had provided in their agreement for an option in favor of the vendor that in case the vendee should fail to pay any installment, the former may either recover in action at law the whole balance unpaid which shall be considered immediately due and demandable or recover possession of the subject property and considering all installments already paid as rentals, these stipulations may legally be enforced according to their terms, considering that such stipulations are not contrary to law, morals or public policy. Stated differently the Court held that such stipulations are comprehended within the freedom of contract. - Justice Laurel's opinion is at variance with Spanish authorities who appear to be more logical. - We all know that automatic cancellation of a contract of sale resulting in the forfeiture of all moneys already paid just because of one default in the payment of the balance is a harsh and oppressive condition, precisely because it is tantamount to the obnoxious pactum commissorium. For this reason, the law explicitly gives the buyer in Article 1504 an opportunity to pay even after default so long as the seller has not made a formal demand for cancellation thru a notary public or in court. The very wording of the provision negates the freedom of the parties to stipulate otherwise, since it already clearly says, "even though it may have been stipulated that default of the payment of the price within the time agreed upon etc." It is to me absurd to contend that not withstanding this express mandate of the law, the partes are still free to stipulate otherwise. Indeed, from this point of view, and independent of my discussion above of the applicability to the case of the Bayla ruling by Justice Ozaeta, it is my position that the intended waiver of formal demand, if any such intention can be inferred, in the provision of Paragraph (d) of the "Deed" in question that "this deed ... shall automatically and without any further formality, become null and void," is contrary to the letter and intent of Article 1504 as well as public policy. It being obvious as already shown above that no demand of whatever kind for resolution had been made upon Maritime before the letter of cancellation of June 5, 1961, it follows necessarily that said cancellation was unwarranted and contrary to rather than an implementation of the terms of the "Deed" in controversy. - The stipulation providing for transfer of title only after full payment did not stamp the transaction with the character of a mere promise to sell full payment was a suspensive condition for the execution of the final deed as the form of tradition of title it while non-payment was a resolutory condition with confiscation as to penalty clause. - What renders the idea of a promise to sell with reservation more perplexing to me is that in the Spanish law on sales, as contradistinguished from the concept of sales American law, a contract of sale is purely consensual and does not necessarily involve the transfer of title except when it is so stipulated or when the sale is made in a public instrument, since the latter is in itself a form of delivery or tradition of title over immovable property. - It was only in Manuel v Rodriguez, 109 Phil. 1, that this Court "created" the concept of a "a contract to sell or promise to sell", where title remains with the vendor until fulfillment to a positive suspensive condition, such as full payment of the price. - I insist that the so-called suspensive condition affecting the transfer of title only after full payment of the price, an admittedly licit one, does not detract from the character of the contract here in question as a perfected contract of sale indeed, partially consummated by the delivery of possession of "the thing" (per Manresa). For that matter, neither does the condition that upon failure of Maritime to pay any installment, the contract would be cancelled, all past payments forfeited and Myers would be entitled to recover possession vary a bit the real nature of the contract. - I would, therefore, separate the so-called suspensive condition regarding the delivery of title as affecting solely the obligation to deliver title which is not of immediate juridical essence in a perfected contract of sale from the breach, allegedly

committed by Maritime, of the terms of payment which is the one that would justify the cancellation made by Myers, if such breach did occur in legal contemplation. - The promise to sell has a distinct connotation in Spanish, law which I feel cannot square with the contract here in controversy. - At the risk of stating the obvious, the concept of a sale or purchase and sale in Spanish law is defined in Article 1445 and the moment of the perfection of such a contract is fixed in Article 1450. On the other hand, precisely to avoid confusion of concepts, since commercial usages resort to varied forms of transactions revolving around the juridical idea of exchanging things for money, and it is not unusual for merchants to enter into preparatory agreements for business and other reasons before finalizing their deals, Article 1451 lays down specific rules regarding promises in regard to sales. - For the purposes of Article 1504, and under the circumstances of this case, may the cross-claim interposed by Myers in its answer to the interpleader complaint of Luzon be deemed as the judicial demand that should foreclose any right on the part of Maritime to continue paying under the "Deed in question?" My answer is no. - I reiterate that the proviso of Article 1504 (1592) allowing payment by the vendee even after he has undisputably defaulted in his obligation stipulated in the terms of the agreement is a legislative remedy intended to temper a la Portia the harshness of the enforcement of the condition of the parties amount to a pactum commissorium which is generally frowned upon. Accordingly, it is my understanding that in the application of this proviso, We should not be restricted to a literal interpretation thereof.