SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
ALCANTARA-DAUS v. SPOUSES DE
LEON
G.R. No. 149750 June 16, 2003
FACTS:
Spouses De Leon are the owners of
a parcel of land situated in the Municipality
of San Manuel, Pangasinan with an area of
Four Thousand Two Hundred Twelve
square meters more or less. Respondent
Hermoso De Leon inherited the said lot from
his father Marcelino De Leon by virtue of a
Deed of Extra-Judicial Partition. Said lot is
covered by Original Certificate of Title No.
22134 of the Land Records of Pangasinan.
Sometime 1960s, Spouses De Leon
engaged the services of the late Atty.
Florencio Juan to take care of the
documents of their properties. They were
asked to sign voluminous documents by the
latter. After the death of Atty. Juan, some
documents surfaced and most revealed that
their properties had been conveyed by sale
or quitclaim to Hermoso’s brothers and
sisters, to Atty. Juan and his sisters, when in
truth and in fact, no such conveyances were
ever intended by them. Furthermore,
respondent found out that his signature in
the Deed of Extra-judicial Partition with
Quitclaim made in favor of Rodolfo de Leon
was forged. They discovered that the land in
question was sold by Rodolfo de Leon to
Aurora Alcantara
Spouses De Leon demanded the annulment
of the document and re-conveyance but
defendants refused. Petitioner, Aurora
Alcantara-Daus averred that she bought the
land in question in good faith and for value
on December 1975 and that she has been in
continuous, public, peaceful, open
possession over the same and has been
appropriating the produce thereof without
objection from anyone.
The RTC of Urdaneta, Pangasinan rendered
its Decision in favor of herein petitioner. It
ruled that respondents’ claim was barred by
laches, because more than 18 years had
passed since the land was sold. It further
ruled that since it was a notarial document,
the Deed of Extrajudicial Partition in favor of
Rodolfo de Leon was presumptively
authentic.
ISSUES:
Whether or not the Deed of Absolute
executed by Rodolfo De Leon over the land
in question in favor of petitioner was
perfected and binding upon the parties
therein?
Whether or not the evidentiary weight of the
Deed of Extrajudicial Partition with
Quitclaim, executed by respondent Hermoso
de Leon, Perlita de Leon and Carlota de
Leon in favor of Rodolfo de Leon was
overcome by more than a preponderance of
evidence of respondents?
HELD:
NO. It is during the delivery that the law
requires the seller to have the right to
transfer ownership of the thing sold. In
general, a perfected contract of sale cannot
be challenged on the ground of the seller’s
non-ownership of the thing sold at the time
of the perfection of the contract.
Further, even after the contract of sale has
been perfected between the parties, its
consummation by delivery is yet another
matter. It is through tradition or delivery that
the buyer acquires the real right of
ownership over the thing sold.
Undisputed is the fact that at the time of the
sale, Rodolfo De Leon was not the owner of
the land he delivered to petitioner. Thus, the
consummation of the contract and the
consequent transfer of ownership would
depend on whether he subsequently
acquired ownership of the land in
accordance with Article 1434 of the Civil
Code. Therefore, we need to resolve the
issue of the authenticity and the due
execution of the Extrajudicial Partition and
Quitclaim in his favor.
Sampaguita Pictures, Inc. vs. Jalwindor
Manufacturers, Inc.
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 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
93 SCRA 420
October 1979
FACTS:
Both the plaintiff-appellant Sampaguita
Pictures Inc. (Sampaguita) and defendant-
appellee Jalwindor Manufacturers Inc.
(Jalwindor) were domestic corporations duly
organized under the Philippine laws.
Sampaguita leased to Capitol “300” Inc.
(Capitol) the roof deck of its building with the
agreement that all permanent improvements
Capitol will make on said property shall
belong to Sampaguita without any part on
the latter to reimburse Capitol for the
expenses of said improvements. Shortly,
Capitol purchased on credit from Jalwindor
glass and wooden jalousies, which the latter
itself delivered and installed in the leased
premises, replacing the existing windows.
On June 1, 1964, Jalwindor filed with the
CFI of Rizal, Quezon City an action for
collection of a sum of money with a petition
for preliminary attachment against Capitol
for its failure to pay its purchases. Later,
Jalwindor and Capitol submitted to the trial
court a Compromised Agreement wherein
Capitol acknowledged its indebtedness of
P9,531.09, payable in monthly installments
of at least P300.00 a month beginning
December 15,1964 and that all the materials
that Capitol purchased will be considered as
security for such undertaking. Meanwhile,
Sampaguita filed a complaint for ejectment
and for collection of a sum of money against
Capitol for the latter’s failure to pay rentals
from March 1964 to April 1965, and the City
Court of Quezon City ordered Capitol on
June 8, 1965 to vacate the premises and to
pay Sampaguita.
On the other hand, Capitol likewise failed to
comply with the terms of the Compromise
Agreement, and on July 31, 1966, the
Sheriff of Quezon City made levy on the
glass and wooden jalousies. Sampaguita
filed a third-party claim alleging that it is the
owner of said materials and not Capitol, but
Jalwindor filed an idemnity bond in favor of
the Sheriff and the items were sold at public
auction on August 30, 1966, with Jalwindor
as the highest bidder for P6,000.00.
Sampaguita filed with the CFI of Rizal,
Quezon City an action to nullify the Sheriff's
sale and for an injunction to prevent
Jalwindor from detaching the glass and
wooden jalousies. Jalwindor was ordered to
maintain the status quo pending final
determination of the case, and on October
20, 1967, the lower court dismissed the
complaint and ordered Sampaguita to pay
Jalwindor the amount of P500.00 as
attorney's fees.
ISSUE:
Was there a delivery made and, therefore, a
transfer of ownership of the thing sold?
COURT RULING:
The Supreme Court reversed the decision of
the lower court declaring Sampaguita as
declared the lawful owner of the disputed
glass and wooden jalousies, permanently
enjoining Jalwindor from detaching said
items from the roof deck of the Sampaguita
Pictures Building, and ordered Jalwindor to
pay Sampaguita the sum of P1,000.00 for
and as attorney's fees.
When a property levied upon by the sheriff
pursuant to a writ of execution is claimed by
a third person in a sworn statement of
ownership thereof, as prescribed by the
rules, an entirely different matter calling for a
new adjudication arises. The items in
question were illegally levied upon since
they do not belong to the judgment debtor.
The power of the Court in execution of
judgment extends only to properties
unquestionably belonging to the judgment
debtor. The fact that Capitol failed to pay
Jalwindor the purchase price of the items
levied upon did not prevent the transfer of
ownership to Capitol and, later, to
Sampaguita by virtue of the agreement in
their lease contract. Therefore, the
complaint of Sampaguita to nullify the
Sheriff's sale is well founded, and should
prosper.
PNB v. LO
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 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
In September 1916, Severo Eugenio Lo and
Ling, together with Ping, Hun, Lam and
Peng formed a commercial partnership
under the name of “Tai Sing and Co.,” with a
capital of P40,000 contributed by said
partners. The firm name was registered in
the mercantile registrar in the Province of
Iloilo. Ping, in the articles of partnership, was
assigned as the general manager. However,
in 1917, he executed a special power of
attorney in favor of Lam to act in his behalf
as the manager of the firm. Subsequently,
Lam obtained a loan from PNB – the loan
was under the firm’s name. In the same
year, Ping died in China. From 1918 to
1920, the firm, via GM Lam, incurred other
loans from PNB. The loans were not
objected by any of the partners. Later, PNB
sued the firm for non-payment. Lo, in his
defense, argued that he cannot be liable as
a partner because the partnership,
according to him, is void; that it is void
because the firm’s name did not comply with
the requirement of the Code of Commerce
that a firm name should contain the “names
of all of the partners, of several of them, or
only one of them”. Lo also argued that the
acts of Lam after the death of Ping is not
binding upon the other partners because the
special power of attorney shall have already
ceased.
ISSUE:
Whether or not Lo is correct in both
arguments.
HELD:
No. The anomalous adoption of the firm
name above noted does not affect the
liability of the general partners to third
parties under Article 127 of the Code of
Commerce. The object of the Code of
Commerce in requiring a general
partnership to transact business under the
name of all its members, of several of them,
or of one only, is to protect the public from
imposition and fraud; it is for the protection
of the creditors rather than of the partners
themselves. It is unenforceable as between
the partners and at the instance of the
violating party, but not in the sense of
depriving innocent parties of their rights who
may have dealt with the offenders in
ignorance of the latter having violated the
law; and that contracts entered into by a
partnership firm defectively organized are
valid when voluntarily executed by the
parties, and the only question is whether or
not they complied with the agreement.
Therefore, Lo cannot invoke in his defense
the anomaly in the firm name which they
themselves adopted. Lo was not able to
prove his second argument. But even
assuming arguendo, his second contention
does not deserve merit because (a) Lam, in
acting as a GM, is also a partner and his
actions were never objected to by the
partners, and (b) it also appeared from the
evidence that Lo, Lam and the other
partners authorized some of the loans.
Norkis Distributor vs. CA G.R. No. 91029
February 7,1991; 193 SCRA 694
FACTS:
Petitioner Norkis Distributors, Inc. is the
distributor of Yamaha motorcycles in Negros
Occidental. On September 20, 1979, private
respondent Alberto Nepales bought from the
Norkis Bacolod branch a brand new
Yamaha Wonderbike motorcycle Model
YL2DX. The price of P7,500.00 was payable
by means of a Letter of Guaranty from the
DBP, which Norkis agreed to accept. Credit
was extended to Nepales for the price of the
motorcycle payable by DBP upon release of
his motorcycle loan. As security for the loan,
Nepales would execute a chattel mortgage
on the motorcycle in favor of DBP. Petitioner
issued a sales invoice which Nepales signed
in conformity with the terms of the sale. In
the meantime, however, the motorcycle
remained in Norkis’ possession. On January
22, 1980, the motorcycle was delivered ¬to
a certain Julian Nepales, allegedly the agent
of Alberto Nepales. The motorcycle met an
accident on February 3, 1980 at Binalbagan,
Negros Occidental. An investigation
conducted by the DBP revealed that the unit
was being driven by a certain Zacarias
Payba at the time of the accident. The unit
was a total wreck was returned. On March
20, 1980, DBP released the proceeds of
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 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
private respondent’s motorcycle loan to
Norkis in the total sum of P7,500. As the
price of the motorcycle later increased to
P7,828 in March, 1980, Nepales paid the
difference of P328 and demanded the
delivery of the motorcycle. When Norkis
could not deliver, he filed an action for
specific performance with damages against
Norkis in the RTC of Negros Occidental. He
alleged that Norkis failed to deliver the
motorcycle which he purchased, thereby
causing him damages. Norkis answered that
the motorcycle had already been delivered
to private respondent before the accident,
hence, the risk of loss or damage had to be
borne by him as owner of the unit.
ISSUE: Whether or not there has been a
transfer of ownership of the motorcycle to
Alberto Nepales.
HELD:
No.The issuance of a sales invoice does not
prove transfer of ownership of the thing sold
to the buyer. An invoice is nothing more than
a detailed statement of the nature, quantity
and cost of the thing sold and has been
considered not a bill of sale. In all forms of
delivery, it is necessary that the act of
delivery whether constructive or actual, be
coupled with the intention of delivering the
thing. The act, without the intention, is
insufficient. When the motorcycle was
registered by Norkis in the name of private
respondent, Norkis did not intend yet to
transfer the title or ownership to Nepales,
but only tofacilitate the execution of a chattel
mortgage in favor of the DBP for the release
of the buyer’s motorcycle loan.
Article 1496 of the Civil Code which provides
that “in the absence of an express
assumption of risk by the buyer, the things
sold remain at seller’s risk until the
ownership thereof is transferred to the
buyer,” is applicable to this case, for there
was neither an actual nor constructive
delivery of the thing sold, hence, the risk of
loss should be borne by the seller, Norkis,
which was still the owner and possessor of
the motorcycle when it was wrecked. This is
in accordance with the well known doctrine
of res perit domino.
PHILIPPINE SUBURBAN DEVELOPMENT
CORPORATION vs Auditor General
Facts:
On June 8, 1960, at a meeting with the
Cabinet, the President of the Philippines,
acting on the reports of theCommittee
created to survey suitable lots for relocating
squatters in Manila and suburbs, approved
in principle theacquisition by the People's
Homesite and Housing Corporation of the
unoccupied portion of the Sapang
PalayEstate in Sta. Maria, Bulacan and of
another area either in Las Piñas or
Parañaque, Rizal, or Bacoor, Cavite for
thosewho desire to settle south of Manila.
On June 10, 1960, the Board of Directors of
the PHHC passed Resolution No.700
(Annex "C") authorizing the purchase of the
unoccupied portion of the Sapang Palay
Estate at P0.45 per squaremeter "subject to
the following conditions precedent:3. That
the President of the Philippines shall first
provide the PHHC with the necessary funds
to effect thepurchase and development of
this property from the proposed P4.5 million
bond issue to be absorbed bythe GSIS.4.
That the contract of sale shall first be
approved by the Auditor General pursuant to
Executive Orderdated February 3, 1959.On
July 13, 1960, the President authorized the
floating of bonds under Republic Act Nos.
1000 and 1322 in theamount of
P7,500,000.00 to be absorbed by the GSIS,
in order to finance the acquisition by the
PHHC of the entireSapang Palay Estate at a
price not to exceed P0.45 per sq. meter.On
December 29,1960, Petitioner Philippine
Suburban Development Corporation, as
owner of the unoccupiedportion of the
Sapang Palay Estate and the People's
Homesite and Housing Corporation, entered
into a contractembodied in a public
instrument entitled "Deed of Absolute Sale"
whereby the former conveyed unto the
latterthe two parcels of land
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 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
abovementioned. This was not registered in
the Office of the Register of Deeds until
March14, 1961, due to the fact, petitioner
claims, that the PHHC could not at once
advance the money needed forregistration
expenses.In the meantime, the Auditor
General, to whom a copy of the contract had
been submitted for approval inconformity
with Executive Order No. 290, expressed
objections thereto and requested a re-
examination of thecontract, in view of the
fact that from 1948 to December 20, 1960,
the entire hacienda was assessed
atP131,590.00, and reassessed beginning
December 21, 1960 in the greatly increased
amount of P4,898,110.00.It appears that as
early as the first week of June, 1960, prior to
the signing of the deed by the parties, the
PHHCacquired possession of the property,
with the consent of petitioner, to enable the
said PHHC to proceedimmediately with the
construction of roads in the new settlement
and to resettle the squatters and flood
victims inManila who were rendered
homeless by the floods or ejected from the
lots which they were then occupying.On
April 12, 1961, the Provincial Treasurer of
Bulacan requested the PHHC to withhold
the amount of P30,099.79from the purchase
price to be paid by it to the Philippine
Suburban Development Corporation. Said
amountrepresented the realty tax due on the
property involved for the calendar year
1961. Petitioner, through the PHHC,paid
under protest the abovementioned amount
to the Provincial Treasurer of Bulacan and
thereafter, or on June13, 1961, by letter,
requested then Secretary of Finance
Dominador Aytona to order a refund of the
amount sopaid. Upon recommendation of
the Provincial Treasurer of Bulacan, said
request was denied by the Secretary of
Finance in a letter-decision dated August 22,
1961.**Petitioner claimed that it ceased to
be the owner of the land in question upon
the execution of the Deed of Absolute Sale
on December 29, 1960. It is now claimed in
this appeal that the Auditor General erred in
disallowingthe refund of the real estate tax in
the amount of P30,460.90 because aside
from the presumptive delivery of the
property by the execution of the deed of sale
on December 29, 1960, the possession of
the property was actually delivered to the
vendee prior to the sale, and, therefore, by
the transmission of ownership to the
vendee, petitioner has ceased to be the
owner of the property involved, and,
consequently, under no obligation to pay the
real property tax for the year 1961.
**Respondent, however, argues that the
presumptive delivery of the property under
Article 1498 of the Civil Code does not apply
because of the requirement in the contract
that the sale shall first be approved by the
Auditor General, pursuant to the Executive
Order.
ISSUE: WON there was already a valid
transfer of ownership between the parties.
HELD:
Considering the aforementioned approval
and authorization by the President of the
Philippines of the specific transaction in
question, the prior approval by the Auditor
General envisioned by Administrative Order
would therefore, not be necessary.
Under the civil law, delivery (tradition) as a
mode of transmission of ownership maybe
actual (real tradition) or constructive
(constructive tradition). 2 When the sale of
real property is made in a public instrument,
the execution thereof is equivalent to the
delivery of the thing object of the contract, if
from the deed the contrary does not appear
or cannot clearly be inferred. 3
In other words, there is symbolic delivery of
the property subject of the sale by the
execution of the public instrument, unless
from the express terms of the instrument, or
by clear inference therefrom, this was not
the intention of the parties. Such would be
the case, for instance, when a certain date is
fixed for the purchaser to take possession of
the property subject of the conveyance, or
where, in case of sale by installments, it is
stipulated that until the last installment is
made, the title to the property should remain
with the vendor, or when the vendor
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 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
reserves the right to use and enjoy the
properties until the gathering of the pending
crops, or where the vendor has no control
over the thing sold at the moment of the
sale, and, therefore, its material delivery
could not have been made.
In the case at bar, there is no question that
the vendor had actually placed the vendee
in possession and control over the thing
sold, even before the date of the sale. The
condition that petitioner should first register
the deed of sale and secure a new title in
the name of the vendee before the latter
shall pay the balance of the purchase price,
did not preclude the transmission of
ownership. In the absence of an express
stipulation to the contrary, the payment of
the purchase price of the good is not a
condition, precedent to the transfer of title to
the buyer, but title passes by the delivery of
the goods.
WHEREFORE, the appealed decision is
hereby reversed, and the real property tax
paid under protest to the Provincial
Treasurer of Bulacan by petitioner Philippine
Suburban Development Corporation, in the
amount of P30,460,90, is hereby ordered
refunded. Without any pronouncement as to
costs.
ADDISON V. FELIX (August 03, 1918)
FACTS:
Petitioner Addison sold four parcels of land
to Defendant spouses Felix and Tioco
located in Lucena City. Respondents paid
3K for the purchase price and promised to
pay the remaining by installment. The
contract provides that the purchasers may
rescind the contract within one year after the
issuance of title on their name.
The petitioner went to Lucena for the survey
designaton and delivery of the land but only
2 parcels were designated and 2/3 of it was
in possession of a Juan Villafuerte.
The other parcels were not surveyed and
designated by Addison.
Addison demanded from petitioner the
payment of the first installment but the latter
contends that there was no delivery and as
such, they are entitled to get back the 3K
purchase price they gave upon the
execution of the contract.
ISSUE:
WON there was a valid delivery.
HELD:
The record shows that the plaintiff did not
deliver the thing sold. With respect to two of
the parcels of land, he was not even able to
show them to the purchaser; and as regards
the other two, more than two-thirds of their
area was in the hostile and adverse
possession of a third person.
It is true that the same article declares that
the execution of a public instruments is
equivalent to the delivery of the thing which
is the object of the contract, but, in order that
this symbolic delivery may produce the
effect of tradition, it is necessary that the
vendor shall have had such control over the
thing sold that, at the moment of the sale, its
material delivery could have been made. It is
not enough to confer upon the purchaser the
ownership and the right of possession. The
thing sold must be placed in his control.
When there is no impediment whatever to
prevent the thing sold passing into the
tenancy of the purchaser by the sole will of
the vendor, symbolic delivery through the
execution of a public instrument is sufficient.
But if there is an impediment, delivery
cannot be deemed effected.
TEN FORTY REALTY V. CRUZ
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;
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 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
• 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 court’s 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
petitioner’s tolerance of respondent’s
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 former’s name
appeared on the tax 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 investigate petitioner’s 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.
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 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
HEIRS OF ARTURO REYES, represented
by Evelyn R. San Buenaventura,
Petitioners vs. ELENA SOCCO-
BELTRAN, Respondent.
Facts:
The subject property in this case is one
originally owned by spouses, Marcelo
Laquian and Constancia Socco, which they
bought with Japanese money. When
Marcelo died, the property was left to the
wife. Upon the death of Constancia, the
property was left to her heirs siblings.
Among them were Elena Socco-Beltran and
Miguel R. Socco. They executed an
unnotarized document entitled Extrajudicial
Settlement of Estate of the Deceased. The
parcel of land was divided into 3 not yet
having titles of its own (lot no. 6 A – C).
When Elena was about to file application for
purchase of Lot No. 6-B before the DAR
alleging that it was adjudicated to her in the
extra Judicial Settlement, Arturo Reyes
opposed the petition on the ground that such
land was sold to him by Miguel Socco that it
was evidence by Contract to Sell.
“That I am one of the co-heirs of the Estate
of the deceased Constancia Socco; and that
I am to inherit as such a portion of her lot
consisting of Four Hundred Square Meters
(400) more or less located on the (sic)
Zamora St., Municipality of Dinalupihan,
Province of Bataan, bounded as follows: x x
x x”
“ That for or in consideration of the sum of
FIVE PESOS (P5.00) per square meter,
hereby sell, convey and transfer by way of
this conditional sale the said 400 sq.m. more
or less unto Atty. Arturo C. Reyes, his heirs,
administrator and assigns x x x”
Issue: Whether or not petitioners have a
better right to the subject property over the
respondent?
Held: Elena was held to have a better right.
Petitioners cannot derive title to the subject
property by virtue of the Contract to Sell. It
was unmistakably stated in the Contract and
made clear to both parties thereto that the
vendor, Miguel R. Socco, was not yet the
owner of the subject property and was
merely expecting to inherit the same as his
share as a co-heir of Constancias estate. It
was also declared in the Contract itself that
Miguel R. Soccos conveyance of the subject
to the buyer, Arturo Reyes, was a
conditional sale. It is, therefore, apparent
that the sale of the subject property in favor
of Arturo Reyes was conditioned upon the
event that Miguel Socco would actually
inherit and become the owner of the said
property. Absent such occurrence, Miguel R.
Socco never acquired ownership of the
subject property which he could validly
transfer to Arturo Reyes.
Under Article 1459 of the Civil Code on
contracts of sale, The thing must be licit and
the vendor must have a right to transfer
ownership thereof at the time it is delivered.
The law specifically requires that the vendor
must have ownership of the property at the
time it is delivered. Petitioners claim that the
property was constructively delivered to
them in 1954 by virtue of the Contract to
Sell. However, as already pointed out by this
Court, it was explicit in the Contract itself
that, at the time it was executed, Miguel R.
Socco was not yet the owner of the property
and was only expecting to inherit it. Hence,
there was no valid sale from which
ownership of the subject property could
have transferred from Miguel Socco to
Arturo Reyes. Without acquiring ownership
of the subject property, Arturo Reyes also
could not have conveyed the same to his
heirs, herein petitioners.
RUDOLF LIETZ, INC., vs CA and
AGAPITO BURIOL
Facts: Respondent Agapito Buriol owned a
unregistered parcel of land in Palawan,
which he entered into a lease agreement
with Flavia Turatello and Sani, Italian
Citizen, that covered 1 hectare of Buriols
property for a period of 25 years and
renewable for the same. The lessees took
possession of the land after paying 10k. This
oral agreement was later reduced to writing.
A year before, respondent sold to petitopner
Rudolf Leitz the same land for 30k.
A parcel of land, consisting of FIVE (5)
hectares, more or less, a portion of that
parcel of land declared in the name of
Agapito Buriol, under Tax Declaration No.
0021, revised in the year 1985, together with
all improvements thereon, situated at the
Island of Capsalay, Barangay Port Barton,
municipality of San Vicente, province of
8
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
Palawan which segregated from the whole
parcel described in said tax declaration, has
the following superficial boundaries:
NORTH, Sec. 01-017; and remaining
property of the vendor; EAST, by Seashore;
SOUTH, 01-020; and WEST, by 01-018
(now Elizabeth Lietz)
Petitioner later discovered petitioner owned
only 4 hectares with one more hectare
covered by lease. 3 hectares delivered.
Petitioner filed a complaint for Annulment of
Lease with Recovery of Possession with
Injunction and Damages against
respondent.
Issue: Whether or not petitioner is entitled to
the delivery of the entire five hectares or its
equivalent?
Held: No, In the case where the area of the
immovable is stated in the contract based on
an estimate, the actual area delivered may
not measure up exactly with the area stated
in the contract. According to Article 1542 of
the Civil Code, in the sale of real estate,
made for a lump sum and not at the rate of a
certain sum for a unit of measure or number,
there shall be no increase or decrease of the
price although there be a greater or lesser
area or number than that stated in the
contract. However, the discrepancy must not
be substantial. A vendee of land, when sold
in gross or with the description more or less
with reference to its area, does not thereby
ipso facto take all risk of quantity in the land.
The use of more or less or similar words in
designating quantity covers only a
reasonable excess or deficiency.
Where both the area and the boundaries of
the immovable are declared, the area
covered within the boundaries of the
immovable prevails over the stated area. In
cases of conflict between areas and
boundaries, it is the latter which should
prevail. What really defines a piece of
ground is not the area, calculated with more
or less certainty, mentioned in its
description, but the boundaries therein laid
down, as enclosing the land and indicating
its limits. In a contract of sale of land in a
mass, it is well established that the specific
boundaries stated in the contract must
control over any statement with respect to
the area contained within its boundaries. It is
not of vital consequence that a deed or
contract of sale of land should disclose the
area with mathematical accuracy. It is
sufficient if its extent is objectively indicated
with sufficient precision to enable one to
identify it. An error as to the superficial area
is immaterial. Thus, the obligation of the
vendor is to deliver everything within the
boundaries, inasmuch as it is the entirety
thereof that distinguishes the determinate
object.
DOLORES SALINAS, assisted by her
husband, JUAN CASTILLO, vs
BIENVENIDO S. FAUSTINO and
ILUMINADA G. FAUSTINO,
Facts
Bienvenido S. Faustino, by deed of Absolute
Sale, purchase from his co-heirs and first
cousin Bejamin Salinas and Dolores Salinas
their shares to a parcel of land in the name
of their Grandmother Carmen Labitan with
300.375sq more or less and and with
boundaries described herein.
Respondent bought from the petitioner 1381
sqm of land evidence by tax declaration with
boundaries. They filed a complaint for
recovery of possession with damages
against petitioner because they would not
leave the land. Respondent alleges that they
allowed the petitioner to stay on the 628sqm
of land with tax declaration with boundaries
in the name of petitioner on the condition that
they would voluntarily and immediately
remove the house and vacate that portion of
the land should they (respondents) need the
land; and that when they asked petitioner
and her co-heir-occupants to remove the
house and restore the possession of the
immediately-described portion of the land.
The petitioner answered such land is hers
and that the signature on the deed was
forged. The forgery being unsupported, the
9
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
trial court looked into the property such
property though the parties know to be one
thing are described differently and that the
deed of sale only conveyed 300.375 sqm yet
the respondent claims 1381.
The trial court concluded that the respondent
owns only the land sold.
The respondent appealed to CA which
affirmed with modification that the
respondent owns the remaining of the whole
which 753n sqm.
Issue: Whether or not a description of a lot
area can be used as evidence for purchase
and ownership of the lot
HELD:
Indeed, in a contract of sale of land in a
mass, the specific boundaries stated in the
contract must control over any statement
with respect to the area contained within its
boundaries. Thus, it is the boundaries
indicated in a deed of absolute sale, and not
the area in sq. m. mentioned therein
300.375 sq. m. in the Deed of Sale in
respondents favor that control in the
determination of which portion of the land a
vendee acquires.
In concluding that Faustino acquired via the
June 27, 1962 Deed of Sale the total land
area of 753 sq. m., the Court of
Appeals subtracted from the total land area
of 1,381 sq. m. reflected in Exh. A, which is
Plan of Lot 3, Block 5-k, Psd-8268, as
prepared for Benjamin R. Salinas containing
an area of 1,381 sq. m. and which was
prepared on February 10, 1960 by a private
land surveyor, the 628 sq. m. area ofthe
lot claimed by Salinas as reflected in
Tax Declaration No. 1017 in her name. As
will be shown shortly, however, the basis of
the appellate court‘s conclusion is
erroneous.
As the immediately preceding paragraph
reflects, the Plan of Lot 3, Bk 5-K, Psd-82
was prepared forSpouses Faustino
and Salinas‘ first cousin co-heir
Benjamin Salinas on February 10, 1960.
Why the appellate court, after excluding the
628 sq. m. lot covered by a
Tax Declaration in the name of petitioner
from the 1,381 sq. m. lot surveyed for
Benjamin P. Salinas in 1960, concluded that
what was sold via the 1962 Deed of Sale to
respondent Faustino was the remaining 753
sq. m., despite the clear provision of said
Deed of Sale that what was conveyed was
300.375 sq. m., escapes comprehension. It
defies logic, given that respondents base
their claim of ownership of the questioned
628 sq. m. occupied by Salinas on that June
27, 1962 Deed of Sale covering a 300.375
sq. m. lot.
10
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
The Court of Appeals thus doubly erred in
concluding that 1) what was sold to
respondents via the June 27, 1962 Deed of
Sale was the 1,381 sq. m. parcel of land
reflected in the Plan-Exh. A prepared in
1960 for Benjamin Salinas, and
2) Salinas occupied 628 sq. m. portion
thereof, hence, Spouses Fausto own the
remaining 753 sq. m.
RAYMUNDO S. DE LEON, vs.BENITA T.
ONG
Facts: Petitioner sold to respondent 3
parcels of land with improvements, which
are mortaged to Real Savings and Loan
Association (RSLAI). Petitioner and
Respondent executed a notarized deed of
absolute sale with assumption of mortgage.
That for and in consideration of the sum of
ONE MILLION ONE HUNDRED
THOUSAND PESOS (P1.1 million),
Philippine
currency, the receipt whereof is hereby
acknowledged from [RESPONDENT] to the
entire satisfaction of [PETITIONER], said
[PETITIONER] does hereby sell, transfer
and convey in a manner absolute and
irrevocable, unto said [RESPONDENT],
his heirs and assigns that certain real estate
together with the buildings and other
improvements existing thereon, situated in
[Barrio] Mayamot, Antipolo, Rizal under the
following terms and conditions:
1. That upon full payment of [respondent] of
the amount of FOUR HUNDRED FIFTEEN
THOUSAND FIVE HUNDRED
(P415,000), [petitioner] shall execute and
sign a deed of assumption of mortgage in
favor of [respondent] without any further
cost whatsoever;
2. That [respondent] shall assume payment
of the outstanding loan of SIX HUNDRED
EIGHTY FOUR THOUSAND FIVE
HUNDRED PESOS (P684,500) with REAL
SAVINGS AND LOAN
Respondent paid the amount. Petitioner
handed the keys and informed mortgagor of
sale and authorize it to accept payment from
respondent and release certificate of title
and petitioner to assume payment of
outstanding loan. Respondent undergo
credit investigation.
Subsequently, respondent learned that
petitioner sold the same property to Leona
Viloria. The locks were changed making
keys useless. Respodent proceeded to
RSLAI, but said that petitioner already paid
due and taken back the certificate of title.
Issue: 1. whether the parties entered into a
contract of sale or a contract to sell?2.
Whether or not double sale.
Held: The deed executed by the parties (as
previously quoted) stated that petitioner sold
the properties to respondent "in a manner
absolute and irrevocable" for a sum of P1.1
million. With regard to the manner of
payment, it required respondent to pay
P415,500 in cash to petitioner upon the
execution of the deed, with the balance15
payable directly to RSLAI (on behalf of
petitioner) within a reasonable time.16
Nothing in said instrument implied that
petitioner reserved ownership of the
properties
until the full payment of the purchase
price.17 On the contrary, the terms and
conditions of the deed only affected the
manner of
payment, not the immediate transfer of
ownership (upon the execution of the
notarized contract) from petitioner as seller
to
respondent as buyer. Otherwise stated, the
said terms and conditions pertained to the
performance of the contract, not the
perfection thereof nor the transfer of
ownership.
Settled is the rule that the seller is obliged to
transfer title over the properties and deliver
the same to the buyer.18 In this regard,
Article 1498 of the Civil Code19 provides
that, as a rule, the execution of a notarized
deed of sale is equivalent to the delivery of
a thing sold.
11
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
In this instance, petitioner executed a
notarized deed of absolute sale in favor of
respondent. Moreover, not only did
petitioner
turn over the keys to the properties to
respondent, he also authorized RSLAI to
receive payment from respondent and
release
his certificates of title to her. The totality of
petitioner’s acts clearly indicates that he had
unqualifiedly delivered and transferred
ownership of the properties to respondent.
Clearly, it was a contract of sale the parties
entered into.
2. Double sale, yet the sale cannot be
perfected because the property was already
passed to the first buyer.
Asset Privatization Trust vs T.J.
Enterprises
Facts: Asset Privatization Trust was a
government entity created for the purpose to
conserve, to provisionally manage and to
disposed assets of the government
institutions. Petitioner acquired from
Development Bank of the Philippines
machinery and refrigeration equipment. It
was stored in a compound that is being
leased. Selling the items as is where is
basis.
Petitioner and respondent entered in
absolute deed of sale machinery and
refrigeration equips lot 2 3 5. Respondent
paid full amount. Respondent demanded
delivery of items. Respondent were able to
take lot 3 and 5, but the whole of lot 2. They
were barred from hauling by the employees
of the lessee.
Respondent filed a case, but was later able
to get the remaining materials. However, it
was found to be damage and have missing
materials.
Issue: whether there was a constructive
delivery of the machinery and equipment
upon the execution of the deed of absolute
sale between petitioner and respondent?
Held: The ownership of a thing sold shall be
transferred to the vendee upon the actual or
constructive delivery thereof. The thing sold
shall be understood as delivered when it is
placed in the control and possession of the
vendee.
As a general rule, when the sale is made
through a public instrument, the execution
thereof shall be equivalent to the delivery of
the thing which is the object of the contract,
if from the deed the contrary does not
appear or cannot clearly be inferred. And
with regard to movable property, its delivery
may also be made by the delivery of the
keys of the place or depository where it is
stored or kept. In order for the execution of a
public instrument to effect tradition, the
purchaser must be placed in control of the
thing sold.
However, the execution of a public
instrument only gives rise to a prima facie
presumption of delivery. Such presumption
is destroyed when the delivery is not
affected because of a legal impediment. It is
necessary that the vendor shall have control
over the thing sold that, at the moment of
sale, its material delivery could have been
made.]Thus, a person who does not have
actual possession of the thing sold cannot
transfer constructive possession by the
execution and delivery of a public
instrument.
In this case, there was no constructive
delivery of the machinery and equipment
upon the execution of the deed of absolute
sale or upon the issuance of the gate pass
since it was not petitioner but Creative Lines
which had actual possession of the property.
The presumption of constructive delivery is
not applicable as it has to yield to the reality
that the purchaser was not placed in
possession and control of the property.
Board of Liquidators vs Exequiel Floro
Facts: the Board of Liquidators is a
government agency who took over the
functions of the defunct Surplus Property
Liquidating Committee.
Melecio Malabanan entered into an
agreement with the board for the salvage of
surplus properties sunk in territorials waters
off the provinces of La Union and Batangas.
The agreement was for 1 year upon
execution and 6 months extension. The
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 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
contract was extended twice for 1year. 13k
steel matting salvaged.
Four months previously, Malabanan entered
into agreement with Exequiel Floro that
Floro would advance money, repayment,
thereof being secured by quantities of steel
mattings which Malabanan consign to Floro
upon default authorized to sell.
He defaulted. Floro sold 11k of steel matting
to recover advances. Malabanan filed for
insolvency and listed the Board and Floro as
creditors. 11k of steel matting and other
properties was presented to aggregate debt.
Board claimed ownership of steel matting.
Floro opposed because he sold it.
Issue: Whether or not Malabanan have
acquired the title to the steel matting?
Held: We are of the opinion, and so hold,
that the contract between Malabanan and
the Board had effect of vesting Malabanan
with title to, or ownership of the steel
mattings in question as soon as they were
brought up from the bottom of the sea.
10. For and in consideration of the
assignment by the BOARD OF
LIQUIDATORS to the CONTRACTOR
(Malabanan) of all right, title and interest in
and to all surplus properties salvaged by the
CONTRACTOR under this contract, the
CONTRACTOR shall pay to the
Government Ninety Pesos (P90.00) per long
ton(2,240 lbs.) of surplus properties
recovered.
11. Payment of the agreed price shall be
made monthly during the first ten (10) days
of every month on the basis of recovery
reports of sunken surplus properties
salvaged during the preceding month, duly
verified and audited by the authorized
representative of the BOARD OF
LIQUIDATORS.
That Malabanan was required under the
contract to post a bond of P10,000.00 to
guarantee compliance with the terms and
conditions of the contract; that the operation
for salvage were entirely at Malabanan's
expense and risks; that gold, silver, copper,
coins, currency, jewelry, precious stones,
etc. were excepted from the contract, and
were instead required to be turned over to
the Board for disposition; that the expenses
for storage, including guard service, were for
Malabanan's account — all these
circumstances indicated that ownership of
the goods passed to Malabanan as soon as
they were recovered or salvaged (i.e., as
soon as the salvor had gained effective
possession of the goods), and not only after
payment of the stipulated price. .
While there can be reservation of title in the
seller until full payment of the price (Article
1478, N.C.C.), or, until fulfillment of a
condition (Article 1505, N.C.C.); and while
execution of a public instrument amounts to
delivery only when from the deed the
contrary does not appear or cannot clearly
be inferred (Article 1498, supra), there is
nothing in the said contract which may be
deemed a reservation of title, or from which
it may clearly be inferred that delivery was
not intended.
The contention that there was no delivery is
incorrect. While there was no physical
tradition, there was one by agreement
(traditio longa manu) in conformity with
Article 1499 of the Civil Code
Art. 1499 — The delivery of movable
property may likewise be made by the mere
consent or agreement of the contracting
parties, if the thing sold cannot be
transferred to the possession of the vendee
at the time of the sale. . . .
SAN LORENZO DEVELOPMENT CORP vs
Court of Appeals and Pablo S. Babasanta,
sps. Lu.
Facts: Sps. Lu sold to Pablo Babasanta 2
parcels of land for 15 per sqm measuring
15,808sqm or 3.1616 hectares. Babasanta
paid downpayment of 50k and several other
payments worth 200k.
13
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
Babasanta wrote to Pacita to demand
execution of final deed of sale si he could
fully pay. He received information that the
same land was sold to another by the
spouses. Pacita replied that full payment
was due and that he backed out when he
asked for reduction in price. The sps also
returned the 50k through Eugenio Ova. The
property was sold to San Lorenzo
Development Corp.
Issue: who between SLDC and Babasanta
has a better right over the two parcels of
land subject of the instant case in view of
the successive transactions executed by the
Spouses Lu.
Held: An analysis of the facts obtaining in
this case, as well as the evidence presented
by the parties, irresistibly leads to the
conclusion that the agreement between
Babasanta and the Spouses Lu is a contract
to sell and not a contract of sale.
Babasantas letter dated 22 May 1989 was
quite telling. He stated therein that despite
his repeated requests for the execution of
the final deed of sale in his favor so that he
could effect full payment of the price, Pacita
Lu allegedly refused to do so. In effect,
Babasanta himself recognized that
ownership of the property would not be
transferred to him until such time as he shall
have effected full payment of the price.
Moreover, had the sellers intended to
transfer title, they could have easily
executed the document of sale in its
required form simultaneously with their
acceptance of the partial payment, but they
did not. Doubtlessly, the receipt signed by
Pacita Lu should legally be considered as a
perfected contract to sell.
Following the above disquisition, respondent
Babasanta did not acquire ownership by the
mere execution of the receipt by Pacita Lu
acknowledging receipt of partial payment for
the property. For one, the agreement
between Babasanta and the Spouses Lu,
though valid, was not embodied in a public
instrument. Hence, no constructive delivery
of the lands could have been effected. For
another, Babasanta had not taken
possession of the property at any time after
the perfection of the sale in his favor or
exercised acts of dominion over it despite
his assertions that he was the rightful owner
of the lands. Simply stated, there was no
delivery to Babasanta, whether actual or
constructive, which is essential to transfer
ownership of the property. Thus, even on
the assumption that the perfected contract
between the parties was a sale, ownership
could not have passed to Babasanta in the
absence of delivery, since in a contract of
sale ownership is transferred to the vendee
only upon the delivery of the thing sold.
Article 1544 will come into play on double
sale.
Art. 1544. If the same thing should have
been sold to different vendees, the
ownership shall be transferred to the person
who may have first taken possession thereof
in good faith, if it should be movable
property.
Should it be immovable property, the
ownership shall belong to the person
acquiring it who in good faith first recorded it
in the Registry of Property.
Should there be no inscription, the
ownership shall pertain to the person who in
good faith was first in the possession; and,
in the absence thereof, to the person who
presents the oldest title, provided there is
good faith.
The principle of primus tempore, potior
jure (first in time, stronger in right) gains
greater significance in case of double sale of
immovable property. When the thing sold
twice is an immovable, the one who
acquires it and first records it in the Registry
of Property, both made in good faith, shall
be deemed the owner.Verily, the act of
registration must be coupled with good faith
that is, the registrant must have no
knowledge of the defect or lack of title of his
vendor or must not have been aware of facts
which should have put him upon such
14
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
inquiry and investigation as might be
necessary to acquaint him with the defects
in the title of his vendor.
Admittedly, SLDC registered the sale
with the Registry of Deeds after it had
acquired knowledge of Babasantas claim.
Babasanta, however, strongly argues that
the registration of the sale by SLDC was not
sufficient to confer upon the latter any title to
the property since the registration was
attended by bad faith. Specifically, he points
out that at the time SLDC registered the sale
on 30 June 1990, there was already a notice
of lis pendens on the file with the Register of
Deeds, the same having been filed one year
before on 2 June 1989.
PERPETUA ABUAN, ET AL. v.
EUSTAQUIO S. GARCIA, ET AL.
FACTS:
• On August 7, 1953, petitioners Perpetua
Abuan et al. sold a parcel of rice land to
defendants
Eustaquio Garcia et al. through a Deed of
Absolute Sale. A TCT was issued to
defendants.
• Later, petitioners filed an action to recover
the land, alleging the sale was tainted with
fraud and
was without consideration. Reaching an
amicable settlement, the parties entered into
an
"Agreement" dated February 28, 1955,
under which defendants paid P500 as partial
payment of the purchase price of the land,
and promised to pay the balance of P1,500
on or before April 30,
1955, with a grace period of 30 days. The
Agreement also stated that it "shall
supersede all
previous agreements or contracts heretofore
entered into..."
• Plaintiffs instituted the present action on
March 4, 1960. Defendants moved to
dismiss, on the
ground that plaintiffs' right of action was
already barred, because the five-year
redemption period had already expired.
Section 119 of the Public Land Law
provides:
o Every conveyance of land
acquired under the free patient or
homestead provisions, when proper,
shall be subject to re-purchase by
the applicant, his widow, or legal
heirs, for a period of five years from
the date of conveyance.
• Plaintiffs argue that the period should be
counted from the date of full payment (May
1965) since it was on this date that the
contract was consummated.
• CFI Nueva Vizcaya dismissed the
complaint, fixing the starting date as
February 28, 1955, when the Agreement
was entered into. CA certified the case to
SC.
• SC: "Conveyance" means transfer of
ownership; it means the date when the title
to the land is transferred from one person to
another. The 5-year period should,
therefore, be reckoned with from the date
that defendants acquired ownership.
When did defendants legally acquire
ownership of the land?
⇒ Upon execution of the Deed of Absolute
Sale (August 7, 1953). Dismissal affirmed.
HELD:
Under Art. 1498, When the sale is made
through a public instrument, as in this case,
the execution thereof shall be equivalent to
the delivery of the thing which is the object
of the contract, if from the deed the contrary
does not appear or cannot be clearly
inferred. This manner of delivery is common
to personal as well as real property. It is
clear, therefore, that defendants acquired
ownership to the land in question upon the
execution of the Deed of Absolute on August
7, 1953. The Agreement of February 28,
1955, only superseded the deed as to the
terms and conditions of payment. The
Agreement did not operate to revest the
ownership of the land in the plaintiffs.
Assuming arguendo that the Deed is null
and void as petitioners allege, we can
15
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
consider the
date of the Agreement at the latest, as the
time within which ownership is vested in the
defendants. While it is a private instrument
the execution of which could not be
construed as constructive delivery under Art.
1498, Art. 1496 explicitly provides that
ownership of the thing sold is acquired by
the vendee from the moment it is delivered
to him "in any other manner signifying an
agreement that the possession is transferred
from the vendor to the vendee." The
intention to give possession (and ownership)
is manifest in the Agreement, especially
considering the following circumstances: (1)
the payment of part of the purchase price,
there being no stipulation in the agreement
that ownership will not vest in the vendees
until full payment of the price; and (2) the
fact that the agreement was entered into in
consideration of plaintiffs' desistance, as in
fact they did desist, in prosecuting their
reivindicatory action, thereby leaving the
property in the hands of the then and now
defendants — as owners thereof,
necessarily. This was delivery brevi manu
permissible under Articles 1499 and 1501 of
the New Civil Code. In the absence of an
express stipulation to the contrary, the
payment of the price is not a condition
precedent to the transfer of ownership,
which passes by delivery of the thing to the
buyer.
PERFECTO DY, JR vs. CA
FACTS:
Wilfredo Dy bought a truck and tractor from
Libra Finance Corporation. Both truck and
tractor was also mortgage to Libra as
security for a loan and as such, they took
possession of it. Brother of Wilfredo,
Perfecto Dy and sister Carol Dy-Seno
requested Libra that they be allowed to buy
the property and assume the mortgage debt.
Libra agreed to the request.
Meanwhile, a collection suit was filed
against Wilfredo Dy by Gelac Trading Inc.
On the strength of a writ of execution, the
sheriff was able to obtain the tractor on the
premises of Libra. It was sold in a public
auction in which Gelac Trading was the lone
bidder. Gelac subsequently sold it to one of
their stockholders.
The respondents claim that at the time of the
execution of the deed of sale, no
constructive delivery was effected since the
consummation of the sale depended upon
the clearance and encashment of the check
which was issued in payment of the subject
tractor
ISSUE:
WON the William Dy is still the owner of the
tractor when it was obtained through the writ
of execution.
HELD:
The tractor was not anymore in possession
of William Dy when it was obtained by the
sheriff because he already sold it to his
brother.
William Dy has the right to sell his property
even though it was mortgage because in a
mortgage, the mortgagor doesn’t part with
the ownership over the property. He is
allowed to sell the property as long as there
is consent from the mortgagee such as in
this case. But even if there is no consent
given, the sale would still be valid without
prejudice to the criminal action against the
mortgagor.
When William Dy sold the tractor, he
already transferred the ownership of it
because NCC states that the ownership of
the thing sold is acquired by the vendee
from the moment it is delivered to him or in
any other manner signing an agreement that
the possession is transferred from the
vendor to the vendee. In the instant case,
actual delivery of the subject tractor could
not be made but there was constructive
delivery already upon the execution of a
public instrument, which in this case is a
deed of sale.
The payment of the check was actually
intended to extinguish the mortgage
obligation.
16
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
INDUSTRIAL TEXTILE MANUFACTURING
COMPANY OF THE PHILIPPINES, INC.,
Petitioner, vs. LPJ ENTERPRISES, INC.,
Respondent.
FACTS: Respondent LPJ Enterprises, Inc.
had a contract to supply 300,000 bags of
cement per year to Atlas Consolidated
Mining and Development Corporation (Atlas
for short), a member of the Soriano Group of
Companies. The cement was delivered
packed in kraft paper bags. Sometime in
October, 1970, Cesar Campos, a Vice-
President of petitioner Industrial Textile
Manufacturing Company of the Philippines
(or Itemcop, for brevity), asked Lauro
Panganiban, Jr., President of respondent
corporation, if he would like to cooperate in
an experiment to develop plastic cement
bags. Panganiban agreed because Itemcop
is a sister corporation of Atlas, respondent's
major client. A few weeks later, Panganiban
accompanied Paulino Ugarte, another Vice-
President of Itemcop, to the factory of
respondent's supplier, Luzon Cement
Corporation in Norzagaray, Bulacan, to test
fifty (50) pieces of plastic cement bags. The
experiment, however, was unsuccessful.
Cement dust oozed out under pressure
through the small holes of the woven plastic
bags and the loading platform was filled with
dust. The second batch of plastic bags
subjected to trial was likewise a failure.
Although the weaving of the plastic bags
was already tightened, cement dust still
spilled through the gaps. Finally, with three
hundred (300) "improved bags", the
seepage was substantially reduced. Ugarte
then asked Panganiban to send 180 bags of
cement to Atlas via commercial shipping.
Campos, Ugarte, and two other officials of
petitioner company followed the 180 bags to
the plant of Atlas in Cebu where they
professed satisfaction at the performance of
their own plastic bags. Campos sent
Panganiban a letter proclaiming dramatic
results in the experiment. Consequently,
Panganiban agreed to use the plastic
cement bags. Four purchase orders were
thereafter issued.
Petitioner delivered the orders consecutively
on January 12, February 17, March 19, and
April 17, 1971. Respondent, on the other
hand, remitted the amounts of P1,640.00,
P2,480.00. and P13,230.00 on March 31,
April 31, and May 3, 1971 respectively,
thereby leaving a balance of P84,123.80. No
other payments were made, thus prompting
A. Soriano y Cia of petitioner's Legal
Department to send demand letters to
respondent corporation. Reiterations thereof
were later sent by petitioner's counsel. A
collection suit was filed on April 11, 1973
when the demands remained unheeded.
At the trial on the merits, respondent
admitted its liability for the 53,800
polypropylene lime bags covered by the first
purchase order. With respect to the second,
third, and fourth purchase orders,
respondent, however, denied full
responsibility therefor. Respondent said that
it will pay, as it did pay for, only the 15,000
plastic bags it actually used in packing
cement. As for the remaining 47,000 bags,
the workers of Luzon Cement strongly
objected to the use thereof due to the
serious health hazards posed by the
continued seepage of cement dust.
The trial court rendered its decision
sentencing the defendant to pay the sum of
P84,123.80 with l2% interest per annum
from May, 1971 plus 15% of the total
obligation as attorney's fees, and the costs.
Respondent corporation's appeal was
upheld by the appellate court when it
reversed the trial court's decision and
dismissed the case with costs against
petitioner.
ISSUE: whether or not respondent may be
held liable for the 47,000 plastic bags which
were not actually used for packing cement
as originally intended.
HELD: The conditions which allegedly
govern the transaction according to
respondent may not be considered. The trial
court correctly observed that such conditions
should have been distinctly specified in the
purchase orders and respondent's failure to
do so is fatal to its cause. The Court found
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
17
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus
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".
Parol or extrinsic testimony could not be
admitted for the purpose of showing that an
invoice or bill of sale that was complete in
every aspect and purporting to embody a
sale without condition or restriction
constituted a contract of sale or return. If the
purchaser desired to incorporate a
stipulation securing to him the right of return,
he should have done so at the time the
contract was made. On the other hand, the
buyer cannot accept part and reject the rest
of the goods since this falls outside the
normal intent of the parties in the "on
approval" situation.
Therefore, the transaction between
respondent and petitioner constituted an
absolute sale. Accordingly, respondent is
liable for the plastic bags delivered to it by
petitioner.
Jesus Teran v. Francisca Villanueva,
Viuda De Riosa, Et Al.
G.R. No. L-34697, March 26, 1932
Villamor, J.:
FACTS: On October 6, 1928, the parties in
this case executed the deed of sale,
whereby the defendants sold to the plaintiff
for P4,000 the parcel of land therein
described as containing an area of 34
hectares, 52 ares, and 43 centares.
The plaintiff brought this action for rescission
of the contract, with damages, upon
discovering that the parcel of land contained
only about then hectares.
The trial court found no evidence of bad faith
on the part of the defendants, and we agree
with this finding. This land, with the same
area stated in the contract, was inherited by
the defendants from their late father,
Mariano Villanueva; and the same area
appears in the tax declaration given to the
plaintiff by an agent of the defendants,
named Rafael Villanueva. The latter,
accompanied by the plaintiff, inspected the
land. Villanueva pointed out some of the
boundaries, as they did not go over all of
them. Without further investigating the area
of the land, the plaintiff agreed to purchase it
for the sum of four thousand pesos, paying
the amount and taking possession thereof.
The plaintiff alleges that after the 1928
harvest he discovered that the boundaries
pointed out to him by Rafael Villanueva were
not the real ones, and, in order to ascertain
the exact area of the land, he went to the
cadastral office in Malinao and got a sketch
of the property which shows that the land in
question contains only ten hectares, and not
thirty-four, as appears in the deed of sale.
In view of these facts, the plaintiff now seeks
to rescind the contract on the ground that
the property contains a smaller area than
that stated in the deed of sale. Evidently this
is a sale of real estate with area and
boundaries given, for a lump sum and not so
much per unit of measure, provided for in
article 1471 of the Civil Code.
ISSUE: Whether or not the contract may be
rescinded.
HELD: No. Whenever a certain real estate is
sold for a lump sum the rule in law is that
there shall be no increase or decrease in
price even if the area or extent is found to be
more or less than that stated in the contract;
but, if the vendor cannot deliver to the
vendee all that is included within the
boundaries stated in the contract the latter
has the option either to reduce the price in
proportion to the deficiency, or to set aside
the contract. In this case the Civil Code
presumes that the purchaser had in mind a
determined piece of land, and that he
ascertained its area and quality before the
contract was perfected. If he did not do so,
or it, having done so, he made no objection
and consented to the transaction, he can
blame no one but himself; and, because it is
presumed that he intended to buy a
determined object, any proof of
misrepresentation will not avail him, neither
will it vitiate the transaction.
Furthermore, in Azarraga v. Gay (52 Phil.,
599), it was held that “When the purchaser
18
 SALES AND LEASE CASES
From Alcantara v De Leon to Teran v Villanueva
Based on Atty. Senga’s Syllabus

proceeds to make investigations by himself,

and the vendor does nothing to prevent such
investigation from being as complete as the
former might made false representations to
him. One who contracts for the purchase of
real estate is reliance on the representations
and statements of the vendor as to its
character and value, but after he has visited
and examined it for himself, and has had the
means and opportunity of verifying such
statements, cannot avoid the contract on the
ground that they were false or exaggerate.”

The plaintiff had ample opportunity to

investigate the conditions of the land he was
purchasing, without the defendant's doing
anything to prevent him from making as
many inquiries as he deemed expedient, for
which reason he cannot now allege that the
vendors made false representations.

In the present case the parties did not

consider the area as an essential element of
the contract. There is no evidence of record
that the parties fixed the price at so much
per hectare. The contract is valid and
binding upon the parties.

19