DIMITIMAN, IRISH DALE LOUISE M.

MARCELO AGCAOILI, plaintiff-appellee

vs.

GOVERNMENT SERVICE INSURANCE SYSTEM, defendant-appellant.

G.R. No. L-30056 30 August 1988

Facts

The appellant Government Service Insurance System (GSIS) approved the application of the
appellee Marcelo Agcaoili for the purchase of the house and lot in the GSIS Housing Project
at Nangka, Marikina, Rizal, but said application was subject to the condition that the latter
should forthwith occupy the house. Agcaoili lost no time in occupying the house but he could
not stay in it and had to leave the very next day because the house was othing more than a shell,
in such a state that civilized occupation was not possible: ceiling, stairs, double walling,
lighting facilities, water connection, bathroom, toilet, kitchen, drainage, were inexistent.
Agcaoili did however asked a homeless friend, a certain Villaueva, to stay in the premises as
some sort of watchman, pending the completion of the construction of the house. He thereafter
complained to the GSIS but to no avail.

Subsequently, the GSIS asked Agcaoili to pay the monthly amortizations of P35.56 and other
fees. He paid the first monthly amortizations and incidental fees but refused to make further
payments until and unless the GSIS completed the housing unit. Thereafter, GSIS cancelled
the award and unless the GSIS completed the housing unit. Thereafter, was consequently
awarded to another applicant. Agcaoili reacted by instituting suit in the Court of First Instance
of Manila for specific performance and damages. The judgement was rendered in favor of
Agcaoili. GSIS then appealed from the judgment.
 Issue

Was the cancellation by GSIS of the award in favor of petitioner, Agcaoili, just and proper?

Ruling

No. It was the duty of the GSIS, as seller, to deliver the thing sold in a condition suitable for
its enjoyment by the buyer for the purpose contemplated. There would be o sense to require
the awardee to immediately occupy and live in a shell of a house, structure consisting oly of
four walls with openings, and a roof. GSIS had an obligation to deliver Agcaoili a reasonably
habitable dwelling in return for his undertaking to pay the stipulated price. Since GSIS did not
fulfill that obligation and was not will to put the house in habitable state, it cannot invoke
Agcaoili's suspension of payment of amortizations as cause to cancel the contract between
them. It is axiomatic that "In reciprocal obligations, neither party incurs in delay of the other
does not comply in a proper manner with what is incumbent upon him".
DIMITIMAN, IRISH DALE LOUISE M.

SPOUSES VICENTE AND LOURDES PINGOL

VS.

COURT OF APPEALS AND HEIRS OF FRANCISCO DONASCO (MELINDA D.

PELAYO, MARIETTA D. SINGSON, MYRNA D. CUEVAS, NATIVIDAD D.
PELAYO, YOLANDA D. CACERES, AND MARY DONASCO)

G.R. No. 102909 6 September 1993

Facts

The petitioners Vicente and Lourdes Pingol own Lot 3223 in J. De Jesus Street and Malolos
Avenue, Brgy. Bagong Barrio, Caloocan City with area of 549 sq.m. and registered under TCT
7435. On 17 February 1969, Vicente sold to Francisco Donasco through an absolute deed of
sale acknowledged before a notary public one-half (½) portion of that land. Donasco paid
PhP2,000 to Vicente in pursuance to the contract, thus the disputed one-half portion (designated
as Lot 3223-A, in J. De Jesus Street) was segregated from the mother lot. The Pingols retained
the portion fronting J. De Jesus and Malolos Avenue. Meanwhile, Donasco took possession of
the lot immediately and constructed a house in it. He started paying the monthly installments
from 1970 until 1972 only. Francisco Donasco died on 13 July 1984 where he left a balance of
PhP10,161 on the lot's contract price aside from the PhP2,000 advance payment and the PhP8,
369 monthly installment payments.

Lot 3223-A remained in possession of Francisco's heirs and they filed on 19 October 1988
before the RTC Caloocan (later raffled to RTC Br. 125) an action for specific performance
with damages and writ of preliminary injunction, asking the trial court to order the Pingols to
accept their offer for payment of the PhP10,161 balance plus the contract's stipulated legal
interest, execute the final deed of sale for Lot 3223-A, and prevent the Pingol spouses from
committing “acts of forcible entry and encroachment” on Donascos' land.
The Pingols countered in their answer that the sale was a conditional and not an absolute
contract of sale since the lot's price is to be paid on installment for a period of six (6) years
which began on January 1970. Second, they alleged that the sale was deemed canceled because
Francisco breached his (contractual) obligation way back in 1976 and the Donascos' continued
occupation of Lot 3223-A is due to mere tolerance. Lastly, the Donasco's action already
prescribed.

The heirs of Francisco specifically denied the Pingols' allegations, stating that there's no
provision for cancellation in the sale contract due to default of paying monthly payments. They
invoke the provisions of Art. 1592 in the New Civil Code.1

The RTC Caloocan rendered in its decision on 22 January 1990 dismissal of Donascos'
complaint and ordered them to pay PhP350 as reasonable monthly rental of the land from time
of complaint's filing, PhP10,000 attorney's fees and costs of suit. The trial court held that deed
signed by Francisco Donasco and Vicente Pingol is a contract to sell and not of an absolute
sale as Vicente Pingol had no intention to transfer the land's ownership until it is fully paid.
The said RTC also upheld the claims of the Pingols as to the contract's cancellation and status
of the Donasco's occupation of Lot 3223-A.

The Donascos appealed the trial court's judgment to the Court of Appeals (CA). It reversed the
RTC's judgment via its 12 November 1991 decision which said that Vicente Pingol cleared
intended to divest ownership of Lot 3223-A, that the failure to pay the land's agreed price is
not a ground for the sale contract's cancellation and lastly, that the action instituted by them is
akin to quieting of title which does not prescribe.

1 Article 1592 of RA 386 (The New Civil Code) states: “In sale of immovable
property, even though it may have been stipulated that upon 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.”
 Issues raised and the decision of the Supreme Court

On 9 January 1992, the Pingols filed petition for certiorari as they were dissatisfied with the
CA's decision.

1. Whether the contract was that of an absolute and not a conditional sale, despite
stipulations like payment via installment of the lot's price for a fixed period of time?
The Supreme Court held that the contract executed by Francisco Donasco and Vicente Pingol
was that of an absolute sale, which indicated Vicente's clear intention of transferring ownership
of the disputed property. The contract clearly stipulated that Vicente through a “DEED OF
ABSOLUTE SALE OF ONE-HALF (1/2) [OF] AN UNDIVIDED PORTION OF A PARCEL
OF LAND” sold and conveyed the said property to Francisco Donasco (VENDEE) as well as
to “his heirs, assigns and successors-in-interest”.

2. Whether the contract can be cancelled by Pingol spouses since the land's agreed price
was not paid by Francisco Donasco?
The Supreme Court used the provision of Article 1592 of the New Civil Code for the grounds
for rescission or cancellation of a sale contract involving an immovable property.2 Since there
was no judicial or notarial action for rescission done by Pingol as found by the trial court or
the Court of Appeals and that there was no demand for such recission, Pingol cannot recover
title to the land sold.

3. Whether the action instituted by the Donascos was quieting of title that does not
prescribe?
The Supreme Court held even if the case filed by the Donascos is for specific performance, it
the action is really for quieting of title. It held that the Pingols' refusal to honor the payment
made by the Donascos and that they are not to transfer the title and ownership of Lot 3223-A
despite the deed of absolute sale and delivery of the object, makes the action one for quieting
of title. Thus, an action to quiet title to property in one's possession (like that of heirs of
Francisco Donasco) is imprescriptible.

2 See Note 1 above.

The Court of Appeals' decision is AFFIRMED with modifications: The Donascos are to pay
the balance of PhP10, 161 and its interest computed from 6 January 1976 on the legal rate (of
interest). The Supreme Court also ordered the Pingols that upon full payment of the balance
and interest, deliver their land's TCT 7435 so Caloocan City's Registry of Deeds can cancel it
and issue two new titles – one for the Pingols and the other to the Donascos.

Doctrines

Commercial Law – Sales, Divestment of ownership by delivery of thing subject of the

contract: The delivery divests vendor of the ownership over the contract's object and he cannot
recover title unless the contract is resolved or rescinded pursuant to Article 1592 of the New
Civil Code.

Civil Law – Property, Exemption of Family Home from Execution: A family home
constituted after a debt had been incurred is not exempt from execution because it is to protect
the creditor against a debtor who may act in bad faith by resorting to such declaration just to
defeat the claim against him. If the purpose is to protect the creditor from fraud, it would be
immaterial if the debt incurred be undisputed or inchoate, for a debtor acting in good faith
would prefer to wait until his case is definitely decided before constituting the family home.

Civil Law – Property, Quieting of Title - A vendee in an oral contract to convey land who
had made part payment thereof, entered upon the land and had made valuable improvements
thereon, is entitled to bring suit to clear his title against the vendor who had refused to transfer
the title to him. It is not necessary that the vendee has an absolute title, an equitable title is
sufficient to clothe him with personality to bring an action to quiet title. An action to quiet title
to property in one's possession is imprescriptible.
DIMITIMAN, IRISH DALE LOUISE M.

q) On Sale On Trial/Satisfaction

VICTORIA R. VALLARTA, petitioner,

vs.

THE HONORABLE COURT OF APPEALS and THE HONORABLE JUDGE

FRANCISCO LLAMAS, Pasay City Court, respondents.

G.R. No. L-40195 29 May 1987

Facts

The petitioner seeks a reversal of the Court of Appeals decision dated December 13, 1974
affirming the Trial Court's judgment convicting her of estafa. We denied the petition initially
but granted a motion for reconsideration and gave the petition due course.

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

Whether or not Vallarta is guilty of the crime Estafa.

Ruling

Petitioner is charged under Art. 315 (2)(d) as amended by Rep. Act No. 4885, of the Revised
Penal Code, which penalizes any person who shall defraud another "(b)y postdating a check,
or issuing a check in payment of an obligation when the offender had no funds in the bank, or
his funds deposited therein were not sufficient to cover the amount of the check."

By virtue of Rep. Act No. 4885, "(t)he failure of the drawer of the check to deposit the amount
necessary to cover his check within three (3) days from receipt of notice from the bank and/or
the payee or holder that said check has been dishonored for lack or insufficiency of funds" is
deemed prima facie evidence of deceit constituting false pretense or fraudulent act.

To constitute estafa under this provision the act of postdating or issuing a check in payment of
an obligation must be the efficient cause of defraudation, and as such it should be either prior
to, or simultaneous with the act of fraud. The offender must be able to obtain money or property
from the offended party because of the issuance of a check whether postdated or not. That is,
the latter would not have parted with his money or other property were it not for the issuance
of the check. Likewise, the check should not be issued in payment of a pre-existing obligation
(People v. Lilius, 59 Phil. 339 [1933]).

In seeking acquittal, petitioner stresses that the transaction between her and Cruz was a "sale
or return," perfected and consummated on November 20, 1968 when the seven pieces of
jewelry were delivered. The check issued in December 1968 was therefore in payment of a pre-
existing obligation. Thus, even if it was dishonored, petitioner claims that she can only be held
civilly liable, but not criminally liable under Art. 315 (2) (d), Revised Penal Code. She also
argues that at any rate, what prompted Cruz to deliver the jewelry was the social standing of
petitioner Vallarta and not the postdated check.
She thus assigns as errors the finding of the Court a quo that the jewelries were entrusted on
November 20, 1968, but the sale was perfected in December 1968, and the finding that there
was deceit in the issuance of the postdated check.

In order to arrive at the proper characterization of the transaction between Vallarta and Cruz,
that is, whether it was a "sale or return" or some other transaction, it is necessary to determine
the intention of the parties.

Petitioner also assigns as error the denial by the trial court of her motion for reconsideration.
Her motion was directed at the finding of the trial court that no payments were made. Alleging
that a check drawn by one Sison was given by petitioner to Cruz in payment of the rubber
check, petitioner claims that had her motion for reconsideration been granted, she would have
called to the witness stand the Branch Manager of Security Bank and Trust Company, Pasay
City, where the check was allegedly deposited by Cruz, for said bank manager to identify the
owner-holder of the savings account to which the amount in Sison's check had been credited
(Brief for Petitioner, p. 46).

Granting that the bank manager's testimony would have been as alleged by petitioner. Our
decision would remain. As correctly observed by both the trial court and the Court of Appeals
(Court of Appeals Decision, pp. 2-3), the payments petitioner allegedly made were not shown
to have any relevance to the obligation in question.