Case Digests

SALES
Nicolas Sanchez vs. Severina Rigos, June 14, 197
!acts: Mrs. Rigos ofered to sell her land to Sanchez for a certain
price. Rigos gave Sanchez 2 years within which to decide. (Note:
The optionee or promisee or oferee is not o!nd to p!rchase !t
he has the option to !y or p!rchase". #n this case$ Sanchez has the
option. %efore the lapse of 2 years$ Sanchez told Rigos that he is
!ying and ofered the price agreed !pon !t Rigos ref!sed
claiming that she was not o!nd y the written option agreement
eca!se no option money (consideration" was given y Sanchez.
&ccording to Rigos$ the option contract is void.
"ssue# 'hether or not there was a valid option contract.
$el%: Since Sanchez accepted the ofer and decided to !y within
the period efore the ofer was withdrawn$ a perfected ()S was
created even witho!t option money. #n this case$ there was no
option contract eca!se it was merely an option agreement.
Therefore$ there was merely an ofer on the part of Rigos and once
the ofer was accepted efore it was withdrawn$ regardless of
whether option money was given and in this case no option money
was given$ a perfected ()S was created.
An%res &uiroga vs. 'arsons $ar%(are Co., August ), 191*
!acts# &ndres *!iroga and +arsons ,ardware entered into a
contract referring the former as the -#RST +&RT and the latter as
the S.()N/ +&RT therey oligating the -#RST +&RT to f!rnish the
S.()N/ +&RT with his *!iroga %eds y the dozen for the latter0s
estalishment in #loilo$ and the S.()N/ +&RT to pay the price after
invoicing the -#RST +&RT of the price for sales in Manila$ with the
allowance of disco!nt of 212 of the invoiced prices$ as commission
on the sale. The three ca!ses of action of herein *!iroga incl!de:
that the defendant violated his oligation not to sell the eds at
higher prices than those of the invoices3 to have an open
estalishment in #loilo3 itself to cond!ct the agency3 to 4eep the
eds on p!lic e5hiition$ and to pay for the advertisement
e5penses for the same3 and to order the eds y the dozen and in
no other manner.
"ssue# 'hether or not +arsons ,ardware$ y reason of the
contract$ was an agent of *!iroga for the sale of the latter0s eds.
$el%# No. #n the contract in 6!estion$ what was essential$ as
constit!ting its ca!se and s!7ect matter$ is that the plaintif was to
f!rnish the defendant with the eds which the latter might order$ at
the price stip!lated$ and that the defendant was to pay the price in
the manner stip!lated. The price agreed !pon was the one
determined y the plaintif for the sale of these eds in Manila$ with
a disco!nt of from 28 to 21 per cent$ according to their class.
+ayment was to e made at the end of si5ty days$ or efore$ at the
plaintif9s re6!est$ or in cash$ if the defendant so preferred$ and in
these last two cases an additional disco!nt was to e allowed for
prompt payment. These are precisely the essential features
of a contract of purchase and sale. There was the obligation
on the part of the plaintif to supply the beds, and, on the
part of the defendant, to pay their price. These features
exclude the legal conception of an agency or order to sell
whereby the mandatory or agent received the thing to sell
it, and does not pay its price, but delivers to the principal
the price he obtains from the sale of the thing to a third
person, and if he does not succeed in selling it, he returns
it. By virtue of the contract between the plaintif and the
defendant, the latter, on receiving the beds, was
necessarily obliged to pay their price within the term fxed,
without any other consideration and regardless as to
whether he had or had not sold the beds.
#t wo!ld e eno!gh to hold$ as we do$ that the contract y and
etween the defendant and the plaintif is one of p!rchase and
sale$ in order to show that it was not one made on the asis of a
commission on sales$ as the plaintif claims it was$ for these
contracts are incompatile with each other. %!t$ esides$ e5amining
the cla!ses of this contract$ none of them is fo!nd that
s!stantially s!pports the plaintif9s contention. Not a single one of
these cla!ses necessarily conveys the idea of an agency. The words
commission on sales !sed in cla!se (&" of article : mean nothing
else$ as stated in the contract itself$ than a mere disco!nt on the
invoice price. The word agency$ also !sed in articles 2 and ;$ only
e5presses that the defendant was the only one that co!ld sell the
plaintif9s eds in the <isayan #slands. 'ith regard to the remaining
cla!ses$ the least that can e said is that they are not incompatile
with the contract of p!rchase and sale.
Ro+eo ,artinez an% Leonor Suarez vs. CA an% Secretar-
an% .n%ersecretar- o/ 'u0lic 1or2s an% Co++unications,
A3ril 9, 1974
!acts# The disp!ted properties consisting of parcels of land are
=shponds which were originally owned y 1. 'aulino
,onte+a-or, who sec!red a >tit!lo real? over it way ac4 :@@;.
&fter his death$ the property passed to his heirs who in t!rn sold
the same to . 'otenciano 4arcia, which latter was prevented y
the then M!nicipal +resident of A!ao$ +ampanga$ +edro %eltran
from restoring the di4es constr!cted on the property$ which lead to
the former =ling a case to restrain the latter from molesting the
former with his possession and was granted permanent preliminary
in7!nction. +otenciano registered the same. Aater on$ these
properties were sold to ). E+ilio Cruz %e Dios. These properties
changed hands !ntil now owned y Spo!ses Martinez. -o!r years
later$ the then Secretary of +!lic 'or4s and (omm!nications
directed Martinez to remove the di4es they constr!cted y virt!e of
R& :81B3 hence$ the Spo!ses =led a case which was decided in
their favor !t later reversed y (&. ,ence$ this petition.
"ssue# 'hether or not herein Spo!ses Martinez are p!rchasers for
val!e and in good faith.
$el%# No. &ppellants cannot e deemed p!rchasers for val!e and
in good faith as in the deed of asol!te conveyance e5ec!ted in
their favor$ the following appears:
C!ne. That the second plot aove descried and
mentioned is c!rrently open$ witho!t piers and
e5cl!ded from the =rst plot !nder &dministrative
)rder No. :8;$ as amended$ of the past regime or
government.
C!ly. That those !yers Romeo Aeonor Martinez and
S!arez are responsile for managing the relevant
a!thorities to said second plot can e converted ac4
to =shery$ r!nning on acco!nt and charge all costs
thereof.
&!g!st. That in the event that the !yers co!ld not
get their p!rposes =shing t!rned ac4 into said
second plot$ the vendors here will not ret!rn any
money to the said p!rchasers$ this is not dismin!iriat
this sale price. (.5h. :;Da$ p. 12 Respondents record
of e5hiits"
These stip!lations were accepted y the petitionersDappellants in
the same conveyance in the following terms:
Romeo and Aeonor Martinez S!arez$ legal age$
-ilipinos and residents of the /istrict of C!lo
M!nicipality of Malaon$ Rizal +rovince$ herey$
declare that they are aware of the contents of this
doc!ment and accept it in precise terms in which !p
!edan forth. (.5h. :;Da$ iid"
%efore p!rchasing a parcel of land$ it cannot e contended that the
appellants who were the vendees did not 4now e5actly the
condition of the land that they were !ying and the ostacles or
restrictions thereon that may e p!t !p y the government in
connection with their pro7ect of converting Aot No. 2 in 6!estion
into a =shpond. Nevertheless, they willfully and voluntarily
assumed the risks attendant to the sale of said lot. ne
who buys something with knowledge of defect or lack of
title in his vendor cannot claim that he ac!uired it in good
faith (Ae!ng Aee v. Strong Machinery (o.$ et al.$ ;E +hil. BBF".
The r!ling that a p!rchaser of a registered property cannot go
eyond the record to ma4e in6!iries as to the legality of the title of
the registered owner$ !t may rely on the registry to determine if
there is no lien or enc!mrances over the same$ cannot 0e
availe% o/ as against the la( an% the acce3te% 3rinci3le
that rivers are 3arts o/ the 3u0lic %o+ain /or 3u0lic use an%
not ca3a0le o/ 3rivate a33ro3riation or ac5uisition 0-
3rescri3tion.
,iguel ,a3alo, et al. vs. ,a6i+o ,a3alo, ,a- 19, 1977
!acts: The elder rother$ Mig!el Mapalo$ donated half of his land to
his yo!nger rother$ Ma5imo Mapalo$ eca!se the latter will get
married. %!t instead of the yo!nger rother as4ing his elder rother
to sign a deed of donation over that land$ he as4ed his elder
rother and the latter0s spo!se to sign a /eed of Sale over the
entire parcel of land. ,e was ale to have the entire property
registered in his name. -ew years after$ he sold the land to the
Narcisos. )vio!sly$ he does not have the right to sell the other
half. The Narcisos claimed that they are !yers in good faith from
an apparent owner eca!se the entire property was in the name of
Ma5imo.
"ssue" #id the Narcisos ac!uire ownership$
$el%: S( Said G No$ eca!se the law re6!ires that the sale m!st
not only e a sale y an apparent owner !t the !yer m!st e a
!yer in good faith. The !yers here were in ad faith eca!se
efore they o!ght the land$ they went to the ho!se of Mig!el and
as4ed him whether he wo!ld allow Ma5imo to sell the entire land.
S( said they are in ad faith. &s regards the eastern portion of the
land$ the Mapalo spo!ses are not claiming the same$ it eing their
stand that they have donated and freely given said half of their
land to Ma5imo Mapalo. &nd since they did not appeal from the
decision of the trial co!rt =nding that there was a valid and
efective donation of the eastern portion of their land in favor of
Ma5imo Mapalo$ the same prono!ncement has ecome =nal as to
them$ rendering it no longer proper herein to e5amine the
e5istence$ validity eHcacy of said donation as to said eastern
portion.
Now$ as to the western portion$ however$ the fact not disp!ted
herein is that no donation y the Mapalo spo!ses otained as to
said portion. &ccordingly$ we start with the fact that lierality as a
ca!se or consideration does not e5ist as regards the western
portion of the land in relation to the deed of :I;B3 that there was
no donation with respect to the same.
#t is red!ced$ then$ to the 6!estion whether there was an
onero!s conveyance of ownership$ that is$ a sale$ y virt!e
of said deed of )ctoer :1$ :I;B$ with respect to said
western portion. This co!rt$ however$ cannot also give
weight and credit on this theory of the Narcisos on the
following reasons: -irstly$ it has een positively shown y
the !ndisp!ted testimony of (andida *!ia that +aci=co
Narciso and .varisto Narciso stayed for some days on the
western side (the portion in 6!estion" of the aoveD
descried land !ntil their ho!se was removed in :IF8 y the
spo!ses Mapalo and *!ia3 secondly$ +aci=ca Narciso
admitted in his testimony in chief that when they o!ght the
property$ Mig!el Mapalo was still in the premises in 6!estion
(western part" which he is occ!pying and his ho!se is still
standing thereon3 and thirdly$ said +aci=co Narciso when
presented as a re!ttal and s!Dre!ttal witness
categorically declared that efore !ying the land in
6!estion he went to the ho!se of Mig!el Mapalo and
(andida *!ia and as4ed them if they will permit their elder
rother Ma5imo to sell the property.
&side from the fact that all the parties in these cases are
neighors$ e5cept Ma5imo Mapalo the foregoing facts are
e5plicit eno!gh and s!Hciently reveal that the Narcisos
were aware of the nat!re and e5tent of the interest of
Ma5imo Mapalo their vendor$ over the aoveDdescried land
efore and at the time the deed of sale in their favor was
e5ec!ted.
Jpon the aforestated declaration of +aci=co Narciso the
following 6!estion arises: 'hat was the necessity$ p!rpose
and reason of +aci=co Narciso in still going to the spo!ses
Mapalo and as4ed them to permit their rother Ma5imo to
dispose of the aoveDdescried landK To this 6!estion it is
safe to state that this act of +aci=co Narciso is a concl!sive
manifestation that they (the Narcisos" did not only have
prior 4nowledge of the ownership of said spo!ses over the
western half portion in 6!estion !t that they also have
recognized said ownership. #t also concl!sively shows their
prior 4nowledge of the want of dominion on the part of their
vendor Ma5imo Mapalo over the whole land and also of the
Law of his title thereto. Jnder this sit!ation$ the Narcisos
may e considered p!rchasers in val!e !t certainly not as
p!rchasers in good faith. ... (pp. IEDI@$ Record on &ppeal."
Cirilo 'are%es vs. Jose Es3ino, ,arch 1), 197*
!acts: +aredes was a prospective !yer. .spino owns a land in
+alawan. +aredes is from Northern A!zon. Their negotiation was
thr! letters and telegrams. .spino sent a letter to +aredes stating
that he and his wife agreed to sell the land to +aredes$ that the
deed of sale will e e5ec!ted !pon the arrival of +aredes in
+alawan. 'hen +aredes arrived$ .spino said he is no longer
interested in selling. +aredes =led a case to compel .spino to sell
the land. .spino contended that the contract is !nenforceale
eca!se it is not in writing. ,e contended that !nder the stat!te of
fra!ds it is !nenforceale. ,is contention was s!stained y the trial
co!rt.
"ssue# 'hether or not the enforcement of the contract is arred y
the Stat!te of -ra!ds.
$el%: This contract is no longer covere% 0- the statute o/
/rau%s 0ecause there (as a letter. &rticle :F8; provides that a
note or +e+oran%u+ signe% 0- the 3art charge% (oul% 0e
su8cient to ta2e that contract out o/ the o3eration o/ the
statute o/ /rau%s. #n this case$ the defendant wrote a letter with
his signat!re on it. The letter too4 that contract o!t of the operation
of the stat!te of fra!ds and therefore he may e compelled to
e5ec!te the =nal deed of sale. #n the case at ar$ the complaint in
its paragraph ; pleads that the deal had een closed y letter and
telegramM (Record on &ppeal$ p. 2"$ and the letter referred to was
evidently the one copy of which was appended as .5hiit & to
plaintif9s opposition to the motion dismiss. This letter$ transcried
aove in part$ together with that one mar4ed as &ppendi5 %$
constit!te an ade6!ate memorand!m of the transaction. They are
signed y the defendantDappellee3 refer to the property sold as a lot
in +!erto +rincesa$ +alawan$ covered$ y T(T No. B23 give its area
as :@2B s6!are meters and the p!rchase price of fo!r (+F.88" pesos
per s6!are meter payale in cash. 'e have in them therefore$ all
the essential terms of the contract$ and they satisfy the
re6!irements of the Stat!te of -ra!ds. 'e have r!led in Berg vs.
Magdalena Estate, Inc.$ I2 +hil. ::8$ ::1$ that a s!Hcient
memorand!m may e contained in two or more doc!ments.
/efendantDappellee arg!es that the a!thenticity of the
letters has not een estalished. That is not necessary for the
p!rpose of showing prima facie that the contract is enforceale. -or
as r!led y !s in Shafer vs. Palma$ AD2F::1$ March :$ :IB@$
whether the agreement is in writing or not$ is a 6!estion of
evidence3 and the a!thenticity of the writing need not e
estalished !ntil the trial is held. The plaintif having alleged that
the contract is ac4ed y letter and telegram$ and the same eing
a s!Hcient memorand!m$ his ca!se of action is therey
estalished$ especially since the defendant has not denied the
letters in 6!estion. &t any rate$ if the (o!rt elow entertained any
do!ts ao!t the e5istence of the written memorand!m$ it sho!ld
have called for a preliminary hearing on that point$ and not
dismissed the complaint.
9uenzle : Strei; vs. ,ac2e : Chan%ler, et al., Dece+0er 17,
19<9
!acts: The original owner here Stanley and Nrippendorf and the
property involved here are a saloon ar$ f!rnit!re$ f!rnishings$ and
=5t!res$ all owned y the former eing the owner of )regon Saloon
in (avite. Mac4e and (handler are 7!dgment creditor of Stanley and
Nrippendorf. %eca!se of a 7!dgment in favor of Mac4e and
(handler$ the sherif levied !pon these properties which were still
in the possession of Stanley and Nrippendorf. The properties !nder
e5ec!tion were 6!estioned y N!enzle and Streif. N!enzle and
Streif claimed that these things were sold to them prior to the levy.
#f they claimed that the properties were sold to them$ the
properties sho!ld e in their possession. Ta4e note that Stanley and
Nrippendorf were still in possession of the goods physically. ,ence$
there was no act!al delivery.
"ssue# 'hether or not there was transfer of ownership of personal
properties despite the fact that those properties were still in the
possession of the 7!dgment detor.
$el%# #n order that ownership wo!ld pass$ it has to e in a p!lic
instr!ment if that wo!ld e y constr!ctive delivery. The case of
the -idelity and /eposit (ompany against 'ilson (@ +hil. Rep.$ 1:"
lays down a doctrine which we thin4 is decisive of this case. #n that
case it was held that the ownership of personal property can not e
transferred to the pre7!dice of third persons e5cept y delivery of
the property itself3 and that a sale witho!t delivery gives the wo!ldD
e p!rchaser no rights in said property e5cept those of a creditor.
The ill of sale in the case at ar$ !nder the circ!mstances of this
case$ co!ld have no efect against a person dealing with the
property !pon the faith of appearances. The case of N!enzle O
Streif against &. S. 'atson O (o. (E )f Paz.$ F21"$
:
cited y the
appellant in its rief$ does not s!stain its contention. That was a
case of the sale of property !pon the condition that the title thereto
sho!ld remain in the vendor !ntil the p!rchase price thereof sho!ld
e f!lly paid$ and that$ in case of nonpayment of the det or of any
installment thereof when d!e$ the vendor wo!ld have a right to
ta4e possession of the property and deal with it as provided for in
the contract. #n that case the co!rt held that s!ch a contract for the
conditional sale of goods was valid in these #slands etween the
parties thereto$ and was valid also as to third persons$ provided
possession of the property therein described was taken by the
vendor before the rights of third persons intervened against the
same. #n the case at ar it is evident that the ill of sale$ so called$
was in no sense a conditional sale of property$ s!ch as is descried
in the case of N!enzle O Streif against &. S. 'atson$ O (o.$ and the
principles applicale thereto are entirely inapplicale in the case at
ar. Moreover$ possession of the property in s!it was not ta4en at
any time y the plaintif.
The defendant Mac4e O (handlre$ having p!rchased the property at
an e5ec!tion sale$ property cond!cted$ otained a good title to the
property in 6!estion as against the plaintif in this case.
Note# The e5ec!tion of a p!lic instr!ment may e e6!ivalent to
act!al delivery if the contrary intention does not appear on the
deed of sale.
Sun =rothers Co. >S=C? vs. Jose @elasco : Co 9ang Chiu,
19A*
!acts: S%( delivered to -rancisco Aopez an &dmiral refrigerator.
The stip!lated price was +:$E88$ !t only the downpayment of
+188 was paid. Their contract stip!lated the following:
Aopez shall not remove the ref nor part possession witho!t
the e5press written consent of S%(.
#n the event of a violation of the agreement$ S%( may
rescind the contract of sale and recover possession of the
ref. #n addition$ any amo!nt previo!sly paid shall e
forfeited as li6!idated damages$ and the ref remains as
S%(0s asol!te property !ntil Aopez is ale to pay the f!ll
p!rchase price.
'itho!t S%(0s 4nowledge$ Aopez (who misrepresented himself as
Cose Aim" sold it to C< Trading (owned y Cose <elasco" for +@18$ and
Aopez e5ec!ted a doc!ment that stated that he is the asol!te
owner of the ref. 'itho!t S%(0s 4nowledge$ after displaying the ref
at his store$ C< Trading sold the ref to (o Nang (hi! for +I@1$ and it
was delivered to the latter0s ho!se.
S%( =led a complaint for replevin against Aopez and (o Nang (hi!
(later$ C< Trading Q Cose <elasco was incl!ded"$ and as4ed for a
preliminary writ of replevin for the recovery of the possession of the
ref$ and it was iss!ed. ,owever$ on (o Nang (hi!0s re6!est and
having =led a co!nterDond$ the ref was not ta4en o!t of his
residence.
(-# decided in favor of S%($ declaring it as the asol!te owner. (o
Nang (hi! sho!ld ret!rn ref$ or else$ Aopez shall pay f!ll amo!nt of
+:$E88 to S%($ and C< Trading sho!ld reim!rse (o Nang (hi! the
amo!nt of +I@1.
$el%# The lower co!rt erred in applying the =rst paragraph of N((
:181. #t is tr!e that Aopez never had title since it wo!ld only e
vested on him !pon f!ll payment of the p!rchase price. &s regards
C< Trading$ it did not ac6!ire any etter right than what Aopez had.
The (o!rt also fo!nd that he was not a p!rchaser in good faith.
Since he was p!rchasing a ref from a private person who is not
engaged in s!ch !siness$ he sho!ld have in6!ired ')N Aopez has
paid for the ref in f!ll.
+aragraph ; sho!ld e applied since (o Nang (hi! p!rchased the
ref from C< Trading$ which is a merchant store. (o Nang (hi! sho!ld
e declared to have ac6!ired a valid title$ altho!gh his
predecessorsDinDinterest did not have any right of ownership
thereto. ,ere is a case where an imperfect or void title ripens into a
valid one$ eca!se of some intervening ca!ses.
The rights and interests of an innocent !yer for val!e
sho!ld e protected when it comes into clash with the rights and
interests of a vendor. This is emodied in N(( :181 (;" to facilitate
commercial sales of movales and to give staility to !siness
transactions.
S%(0s reco!rse sho!ld e a claim for indemnity against
Aopez$ and not recovery !pon reim!rsement$ since S%( did not
lose ref nor was the company !nlawf!lly deprived of it.
"ssue" %ould &elasco ac!uire ownership$
$el%: No eca!se &rticle :181 provides that the !yer ac6!ired no
etter title than what the seller had. ,owever$ <elasco was the
owner of a store. )n the ne5t day$ <elasco sold the ref to No Nang
(h! who paid in f!ll. 'hen S!n %rothers learned this transaction$ it
=led an action to recover the ref from No Nang (h!.
"ssue" 'an (un Brothers recover the ref from )o )ang 'hu
by reimbursing the price$
$el%: S( Said no. &rticle :181 provides that the ownership of the
!yer who o!ght the thing from a merchant0s store and he o!ght
it in good faith is asol!te in character. &rticle 11I does not apply
eca!se S!n %rothers was not !nlawf!lly deprived of the ref and
the ref was neither lost. 11I will apply if the owner was !nlawf!lly
deprived (Eample! the thing was lost or stolen". Jnder 11I he can
recover y reim!rsing the !yer who o!ght the thing in good
faith. ,e has to reim!rse.
Rosalio =autista vs. !rancisco Sioson, et al. an% Ra-+un%o
De La Cruz, !e0. 11, 1919
!acts: -rom the instr!ment referred to in the preceding paragraphs
it is concl!ded that the original owner of the !ildings in disp!te$
-rancisco Sioson$ and his wife$ Aorenza de la (r!z$ sold$ on
Septemer F$ :I:2$ the ho!se and the camarin to the plaintif
Rosalio %a!tista for +F88$ !nder agreement of their resale within
the term of two years co!nted from said date3 and that$ on the
same date$ y means of a constit"t"m possessori"m agreement$
and in another new notarial instr!ment$ the p!rchaser %a!tista
leased the properties sold to the vendors -rancisco Sioson and
Aorenza de la (r!z at an ann!al rent of +:88$ for a period of two
years co!nted from the date aove mentioned.
&fter the lessee$ -rancisco Sioson$ had een in possession of the
properties leased for one year and eleven months$ he sold the
camarin$ one of them$ y virt!e of a notarial instr!ment to
Raym!ndo de la (r!z$ !nder the agreement that if he did not
redeem the camarin so sold within si5 months from the :st of
&!g!st$ :I:F$ and ret!rn the s!m of +F22$ s!ch sale !nder right of
rep!rchase sho!ld ecome asol!te$ the e5ec!tion of another
instr!ment eing !nnecessary.
"ssue# 1ho has 0etter right o/ the t(o 3urchasers, =autista
an% CruzB
$el%# %oth alienations$ efected s!ccessively y -rancisco Sioson in
favor of %a!tista and (r!z$ are recorded in notarial instr!ments$
tho!gh they were not entered in the registry of property. To
determine who is the lawf!l owner of the camarin sold$ if the
provisions of said article of the (ode are to e oserved$ we have
=rst to determine the contention in regard to which of the two
purchasers is in possession thereof, and if, on the execution
of the contract of lease by the frst purchaser in favor of
the vendor himself, the constitutum possessorium
agreement is to be considered to have been stipulated, the
conclusion must necessarily be reached as to which of the
two purchasers frst took possession of the camarin sold,
and also whether the material possession of the tenant is
of a precarious nature, en*oyed in the same and
representation of the owner Bautista.
&rticle :FB2 of the (ivil (ode reads:
& thing sold shall e considered as delivered$ when it is
placed in the hands and possession of the vendee.
'hen the sale sho!ld e made y means of a p!lic
instr!ment$ the e5ec!tion thereof shall e e6!ivalent to the
delivery of the thing which is the o7ect of the contract$ if in
said instr!ment the contrary does not appear or may e
clearly inferred.
-rom the contest of this article it is ded!ced that the delivery or
tradition of the thing sold may e real or act!al$ and feigned. The
e5ec!tion of a p!lic instr!ment constit!tes one of the 4inds of
symolic tradition$ !t$ in all the diferent manners y which the
thing sold may e delivered$ it is necessary that the record ear
proof and that it may e held that s!ch delivery or tradition was
determined y the will of the parties to deliver and receive$
respectively$ the thing that is the s!7ect of the contract.
#n the contract of lease (.5hiit /$ record$ p. :1" the lessor$ Rosalio
%a!tista$ states that in his capacity as owner he leased to the
spo!ses -rancisco Sioson and Aorenza de la (r!z$ among other
properties$ a camarin of strong material with an iron roof$ at an
ann!al rent of +:88$ the lessees inding themselves to report to
the lessor any act of dist!rance committed y any other person$
and all defects that might e occasioned to the !ilding. The
e5ec!tion of this instr!ment of lease shows that the camarin wo!ld
e contin!ed to e occ!pied y its previo!s owner and vendor after
it had een delivered$ symolically$ y means of the instr!ment
e5ec!ted for the p!rpose in favor of the p!rchaser$ in order that he
might hold it in the capacity of lessee$ it eing s!pposed$ y a legal
=ction$ that the p!rchaser entered into possession of the camarin
sold$ a form of possession !tilized y the p!rchaser y virt!e of the
cla!se 4nown in law as constit"t"m possessori"m$ stip!lated
etween the contracting parties.
So that 0- the e6ecution o/ the %ee% o/ sale o/ Se3te+0er
4, 191, Rosalio =autista entere% into the +aterial
3ossession un%er title o/ o(ner, o/ the camarin sol% to hi+
0- !rancisco Sioson, an%, 0- virtue o/ another instru+ent o/
lease, o/ the sa+e %ate, the 3urchaser an% o(ner o/ the
camarin conve-e% an% %elivere% this 0uil%ing to the lessee
in vie( o/ sai% contract. .n%er these 3er/ectl- legal
su33ositions it is un5uestiona0le that the 3urchaser Rosalio
=autista (as the Crst 3erson (ho entere% into the
3ossession o/ the camarin as soon as soon as he ac5uire% it
0- virtue o/ sai% sale.
The material possession which the other defendant,
+aymundo de la 'ru,, now en*oys, not only was subse!uent
by one year and eleven months, but also, on the other
hand, is an unlawful possession which was transmitted to
him by -rancisco (ioson, who held the camarin precariously
and in the capacity of tenant, and, conse!uently, without
any right whatever to convey to +aymundo de la 'ru, the
possession under title of owner referred to in article ./01,
aforementioned of the 'ivil 'ode.
This article says: M#f the same thing sho!ld have een sold to
diferent vendees. . .3M !t it m!st e !nderstood that said sale was
made y its original owner. #n the instant case -rancisco Sioson$ on
afecting the second sale in favor of Raym!ndo de la (r!z$ was in
possession of the camarin and occ!pied it$ not in the capacity of
owner$ !t in that of lessee or tenant$ and therefore asol!tely had
no right to dispose of the !ilding in the capacity of owner thereof3
conse6!ently Sioson co!ld not convey to the second p!rchaser the
lawf!l possession of the disp!ted camarin.
S( Said that % wo!ld have a etter right eca!se (hen he
e6ecute% a lease agree+ent (ith A, he is in conte+3lation
o/ la( in 3ossession (hich is legal 3ossession over the
thing an% thus +a2ing hi+ a 3ossessor in goo% /aith. Nay ($
physical possession nga pero pangalawang possession lang. R!ng
legal possession was with %.
Note# This decision was criticized eca!se some a!thors said that
it sho!ld e act!al possession !t the S( said that legal possession
wo!ld s!Hce.
La(-erDs Coo3erative 'u0lishing Co+3an- vs. 'er/ecto
Ea0ora, A3ril )<, 197A
!acts: This pertains to a sale of a complete set of &merican
C!rispr!dence to &tty. Taora from Aawyers (ooperative +!lishing
(ompany. #t was a sale on installment asis. Jpon delivery or on
the day the oo4s were delivered to the oHce of &tty. Taora$ the
entire loc4 where &tty. Taora0s oHce was located (in Naga (ity"
was !rned. The oHce incl!ding the oo4s was !rned. &tty. Taora
ref!sed to pay the alance. Aawyers0 (ooperative =led a case. Two
defenses were raised y &tty. Taora: (:" Res perit domino S there
was a stip!lation in the contract that Aawyers0 (ooperative will
retain ownership over the oo4s !ntil f!ll payment. 'hen the oo4s
were lost$ no f!ll payment so &tty. Taora was not yet the owner.
,ence$ Aawyers0 (ooperative sho!ld ear the loss.
"ssue" 2s this argument correct$
$el%: S( Said no. &ltho!gh there was a stip!lation that Aawyers0
(ooperative retains ownership over the oo4s !ntil f!ll payment$
there was another stip!lation in the contract which states that the
ris4 of loss shall pertain to the !yer from the time the oo4s are
delivered whatever may e the ca!se of the loss.
So with that stip!lation$ that is one of the e5ceptions.
This contention cannot e s!stained. 'hile as a r!le the loss of the
o7ect of the contract of sale is orne y the owner or in case of
force ma#e"re the one !nder oligation to deliver the o7ect is
e5empt from liaility$ the application of that r!le does not here
otain eca!se the law on the contract entered into on the matter
arg!es against it. #t is tr!e that in the contract entered into
etween the parties the seller agreed that the ownership of the
oo4s shall remain with it !ntil the p!rchase price shall have een
f!lly paid$ !t s!ch stip!lation cannot ma4e the seller liale in case
of loss not only eca!se s!ch was agreed merely to sec!re the
performance y the !yer of his oligation !t in the very contract
it was e5pressly agreed that the Mloss or damage to the oo4s after
delivery to the !yer shall e orne y the !yer.M &ny s!ch
stip!lation is sanctioned y &rticle :18F of o!r (ivil (ode$ which in
part provides:
(:" 'here delivery of the goods has een made to the !yer
or to a ailee for the !yer$ in p!rs!ance of the contract and
the ownership in the goods has een retained y the seller
merely to sec!re performance y the !yer of his
oligations !nder the contract$ the goods are at the !yer9s
ris4 from the time of s!ch delivery.
Neither can appellant =nd comfort in the claim that since the oo4s
were destroyed y =re witho!t any fa!lt on his part he sho!ld e
relieved from the res!ltant oligation !nder the r!le that an oligor
sho!ld e held e5empt from liaility when the loss occ!rs thr! a
fort!ito!s event. This is eca!se this r!le only holds tr!e when the
oligation consists in the delivery of a determinate thing and there
is no stip!lation holding him liale even in case of fort!ito!s event.
,ere these 6!ali=cations are not present. The oligation does not
refer to a determinate thing$ !t is pec!niary in nat!re$ and the
oligor o!nd himself to ass!me the loss after the delivery of the
goods to him. #n other words$ the oligor agreed to ass!me any ris4
concerning the goods from the time of their delivery$ which is an
e5ception to the r!le provided for in &rticle :2B2 of o!r (ivil (ode.
A+a%o Caru+0a vs. CA an% Santiago =al0uena an% Angeles
=oa5uiFa as De3ut- 'rovincial Sheri;, !e0. 1*, 197<
!acts# )n &pril :2$ :I11$ the spo!ses &mado (an!to and Nemesia
#asco$ y virt!e of a M/eed of Sale of Jnregistered Aand with
(ovenants of 'arrantyM (.5h. &"$ sold a parcel of land$ partly
residential and partly cocon!t land with a periphery (area" of
;1I.8I s6!are meters$ more or less$ located in the arrio of Santo
/omingo$ #riga$ (amarines S!r$ to the spo!ses &mado (ar!ma
and %enita (an!to$ for the s!m of +;18.88. The referred deed of
sale was never registered in the )Hce of the Register of /eeds of
(amarines S!r$ and the Notary$ Mr. <icente Malaya$ was not then
an a!thorized notary p!lic in the place$ as shown y .5h. 1. )n
Can!ary 2:$ :I1E$ a complaint (.5h. %" for a s!m or money was
=led y Santiago %al!ena against &mado (an!to and Nemesia
#asco efore the C!stice of the +eace (o!rt of #riga$ (amarines S!r$
4nown as (ivil (ase No. :;I and on &pril :1$ :IBE$ a decision (.5h.
(" was rendered in favor of the plaintif and against the defendants.
)n )ctoer :$ :IB@$ the e5DoHcio Sherif$ C!sto <. #mperial$ of
(amarines S!r$ iss!ed a M/e=nite /eed of Sale (.5h. /" of the
property now in 6!estion in favor of Santiago %al!ena$ which
instr!ment of sale was registered efore the )Hce of the Register
of /eeds of (amarines S!r$ on )ctoer ;$ :I1@. The (o!rt of -irst
instance$ =nding that after e5ec!tion of the doc!ment (ar!ma
had ta4en possession of the land$ planting ananas$ cofee and
other vegetales thereon$ declared him to e the owner of the
property !nder a cons!mmated sale3 held void the e5ec!tion levy
made y the sherif$ p!rs!ant to a 7!dgment against (ar!ma9s
vendor$ &mado (an!to3 and n!lli=ed the sale in favor of the
7!dgment creditor$ Santiago %al!ena. The (o!rt$ therefore$
declared (ar!ma the owner of the litigated property and ordered
%al!ena to pay +;8.88$ as damages$ pl!s the costs.
The (o!rt of &ppeals$ witho!t altering the =ndings of fact made y
the co!rt of origin$ declared that there having een a do!le sale of
the land s!7ect of the s!it %al!ena9s title was s!perior to that of
his adversary !nder &rticle :1FF of the (ivil (ode of the
+hilippines$ since the e5ec!tion sale had een properly registered
in good faith and the sale to (ar!ma was not recorded.
"ssue" 'hether or not there was do!le sale.
$el%: 'hile !nder the invo4ed &rticle :1FF registration in good
faith prevails over possession in the event of a do!le sale y the
vendor of the same piece of land to diferent vendees$ sai% article
is o/ no a33lication to the case at 0ar, even i/ =al0uena, the
later ven%ee, (as ignorant o/ the 3rior sale +a%e 0- his
Gu%g+ent %e0tor in /avor o/ 3etitioner Caru+0a. The reason
is that the p!rchaser of !nregistered land at a sherif9s e5ec!tion
sale only steps into the shoes of the 7!dgment detor$ and merely
ac6!ires the latter9s interest in the property sold as of the time the
property was levied !pon. This is speci=cally provided y section ;1
of R!le ;I of the Revised R!les of (o!rt$ the second paragraph of
said section speci=cally providing that:
Jpon the e5ec!tion and delivery of said (=nal" deed the p!rchaser$
redemptioner$ or his assignee shall e s!stit!ted to and ac6!ire all
the right$ title$ interest$ and claim of the 7!dgment detor to the
property as of the time of the levy$ e5cept as against the 7!dgment
detor in possession$ in which case the s!stit!tion shall e
efective as of the time of the deed ... (.mphasis s!pplied"
'hile the time of the levy does not clearly appear$ it co!ld not have
een made prior to :1 &pril :I1E$ when the decision against the
former owners of the land was rendered in favor of %al!ena. %!t
the deed of sale in favor of (an!to had een e5ec!ted two years
efore$ on :2 &pril :I11$ and while only emodied in a private
doc!ment$ the same$ co!pled with the fact that the !yer
(petitioner (ar!ma" had ta4en possession of the !nregistered land
sold$ s!Hced to vest ownership on the said !yer. 'hen the levy
was made y the Sherif$ therefore$ the 7!dgment detor no longer
had dominical interest nor any real right over the land that co!ld
pass to the p!rchaser at the e5ec!tion sale.: ,ence$ the latter
m!st yield the land to petitioner (ar!ma. The r!le is diferent in
case of lands covered y Torrens titles$ where the prior sale is
neither recorded nor 4nown to the e5ec!tion p!rchaser prior to the
levy32 !t the land here in 6!estion is admittedly not registered
!nder &ct No. FIB.
Arte+io 9atig0a2 vs. CA an% Daniel Evangelista an% @.9.
Lun%0erg, Jan. )1, 197
!acts# This case arose from an agreed p!rchase and sale of a
/o!le /r!m (arco Tractor 'inch. &rtemio Natiga4 !pon reading
an advertisement for the sale of the winch placed y <. N.
A!nderg$ owner and operator of the #nternational Tractor and
.6!ipment (o.$ Atd.$ went to see A!nderg and inspected the
e6!ipment. The price 6!oted was +:2$888.88. /esiring a red!ction
of the price$ Natiga4 was referred to /aniel .vangelista$ the owner.
&fter the meeting$ it was agreed that Natiga4 was to p!rchase the
winch for +:2$888.88$ payale at +1$888.88 !pon delivery and the
alance of +E$888.88 within B8 days. The condition of the sale was
that the winch wo!ld e delivered in good condition. Natiga4 was
apprised that the winch needed some repairs$ which co!ld e done
in the shop of A!nderg. #t was then stip!lated that the amo!nt
necessary for the repairs will e advanced y Natiga4 !t
ded!ctile from the initial payment of +1$888.88. The repairs were
!nderta4en and the total of +2$82I.@1 for spare parts was
advanced y Natiga4 for the p!rpose. -or one reason or another$
the sale was not cons!mmated and Natiga4 s!ed .vangelista$
A!nderg and the latter9s company$ for the ref!nd of s!ch amo!nt.
The trial co!rt r!led in favor of Natiga4. ,owever$ (& reversed.
"ssue# 'hether or not Natiga4 has the right to claim ref!nd.
$el%# No. +laintifDappellee Natiga4 ro!ght the matter to this
(o!rt on appeal y certiorari. #n his petition he claims that the
(o!rt of &ppeals erroneo!sly applied the doctrine en!nciated in the
$anlon v. $a"sserman case (F8 +hil. EIB$ @:1D@:B"$ and failed to
apply the law relative to rescission of contracts. )ther iss!es raised
are strictly fact!al and will only e mentioned here for reference.
'e 6!ote from the ,anlon case:
.... #n the present case the contract etween ,anlon and the
mining company was e5ec!tory as to oth parties$ and the
oligation of the company to deliver the shares co!ld not
arise !ntil ,anlon sho!ld pay or tender payment of the
money. The sit!ation is similar to that which arises every
day in !siness transactions in which the p!rchaser of goods
!pon an e5ec!tory contract fails to ta4e delivery and pay
the p!rchase price. The vendor in s!ch case is entitled to
resell the goods. #f he is oliged to sell for less than the
contract price$ he holds the !yer for the diference3 if he
sells for as m!ch as or more than the contract price$ the
reach of contract y the original !yer is damn!m as6!e
in7!ria. %!t it has never een held that there is any need of
an action of rescission to a!thorize the vendor$ who is still in
possession$ to dispose of the property where the !yer fails
to pay the price and ta4e delivery... (F8 +hil. @:1" .
The facts of the case !nder consideration are identical to those of
the ,anlon case. The herein petitioner failed to ta4e delivery of the
winch$ s!7ect matter of the contract and s!ch fail!re or reach
was$ according to the (o!rt of &ppeals$ attri!tale to him$ a fact
which 'e are o!nd to accept !nder e5isting 7!rispr!dence. The
right to resell the e6!ipment$ therefore$ cannot e disp!ted. #t was
also fo!nd y the (o!rt of &ppeals that in the s!se6!ent sale of
the winch to a third party$ the vendor thereof lost +2$888.88$ the
sale having een only for +:8$888.88$ instead of +:2$888.88 as
agreed !pon$ said diference to e orne y the s!pposed vendee
who failed to ta4e delivery andQor to pay the price.
)f co!rse$ petitioner tried to draw a distinction etween the ,anlon
case and his case. The slight diferences in the facts noted y
petitioner are not$ however$ to o!r mode of thin4ing$ s!Hcient to
ta4e away the case at ar from the application of the doctrine
en!nciated in the ,anlon case.
Song !o : Co+3an- vs. $a(aiian 'hil. Co., Se3t. 17, 19A
!acts# ,awaiin +hil. (o. agreed to deliver ;88$888 gallons of
molasses with some additional orders amo!nting all to F88$888
gallons of molasses which was con=rmed y Song -o. #n the co!rt
of -irst #nstance of #loilo$ Song -o O (ompany$ plaintif$ presented a
complaint with two ca!ses of action for reach of contract against
the ,awaiianD+hilippine (o.$ defendant$ in which 7!dgment was
as4ed for +E8$;BI.18$ with legal interest$ and costs. #n an amended
answer and crossDcomplaint$ the defendant set !p the special
defense that since the plaintif had defa!lted in the payment for
the molasses delivered to it y the defendant !nder the contract
etween the parties$ the latter was compelled to cancel and rescind
the said contract. Trial co!rt ordered ,awaiin to pay Song -o.
"ssue# 'hether or not Song -o had the right to rescind the contract
of sale.
$el%# No. The general r!le is that rescission will not e permitted
for a slight or cas!al reach of the contract$ !t only for s!ch
reaches as are so s!stantial and f!ndamental as to defeat the
o7ect of the parties in ma4ing the agreement. & delay in payment
for a small 6!antity of molasses for some twenty days is not s!ch a
violation of an essential condition of the contract was warrants
rescission for nonDperformance. Not only this$ !t the ,awaiianD
+hilippine (o. waived this condition when it arose y accepting
payment of the overd!e acco!nts and contin!ing with the contract.
Thereafter$ Song -o O (ompany was not in defa!lt in payment so
that the ,awaiianD+hilippine co. had in reality no e5c!se for writing
its letter of &pril 2$ :I2;$ cancelling the contract. ('arner$ %arnes O
(o. vs. #nza T:I22U$ F; +hil.$ 181."
1e rule that the a33ellant ha% no legal right to rescin% the
contract o/ sale 0ecause o/ the /ailure o/ Song !o :
Co+3an- to 3a- /or the +olasses (ithin the ti+e agree%
u3on 0- the 3arties. 'e s!stain the =nding of the trial 7!dge in
this respect.
;. )n the asis =rst$ of a contract for ;88$888 gallons of molasses$
and second$ of a contract impr!dently reached y the ,awaiianD
+hilippine (o.$ what is the meas!re of damagesK 'e again t!rn to
the facts as agreed !pon y the parties.
The =rst ca!se of action of the plaintif is ased on the greater
e5pense to which it was p!t in eing compelled to sec!re molasses
from other so!rces. Three h!ndred tho!sand gallons of molasses
was the total of the agreement$ as we have seen. &s conceded y
the plaintif$ 11$88B gallons of molasses were delivered y the
defendant to the plaintif efore the reach. This leaves 2FF$IIF
gallons of molasses !ndelivered which the plaintif had to p!rchase
in the open mar4et. &s e5pressly conceded y the plaintif at page
21 of its rief$ :88$888 gallons of molasses were sec!red from the
(entral North Negros S!gar (o.$ #nc.$ at two centavos a gallon. &s
this is the same price speci=ed in the contract etween the plaintif
and the defendant$ the plaintif accordingly s!fered no material
loss in having to ma4e this p!rchase. So 2FF$IIF gallons min!s the
:88$888 gallons 7!st mentioned leaves as a res!lt :FF$IIF gallons.
&s to this amo!nt$ the plaintif admits that it co!ld have sec!red it
and more from the (entral <ictorias Milling (ompany$ at three and
oneDhalf centavos per gallon. #n other words$ the plaintif had to pay
the (entral <ictorias Milling company one and oneDhalf centavos a
gallon more for the molasses than it wo!ld have had to pay the
,awaiianD+hilippine (o. Translated into pesos and centavos$ this
meant a loss to the plaintif of appro5imately +2$:EF.I:. &s the
conditions e5isting at the central of the ,awaiianD+hilippine (o.
may have een diferent than those fo!nd at the (entral North
Negros S!gar (o.$ #nc.$ and the (entral <ictorias Milling (ompany$
and as not alone thro!gh the delay !t thro!gh e5penses of
transportation and incidental e5penses$ the plaintif may have een
p!t to greater cost in ma4ing the p!rchase of the molasses in the
open mar4et$ we wo!ld concede !nder the =rst ca!se of action in
ro!nd =g!res +;$888.
Arsenio 4erar%ino Sr., @irginia 4erar%ino S-, et al. vs. C!"
Ca3iz an% Jovito 4loria, Dec. 9, 1977
!acts# The complaint stated that on )ctoer :8$ :IBF Rosario
&rt!z e5ec!ted in favor of Covito Ploria a deed of sale with right to
rep!rchase within a period of one (:" year of a parcel of residential
land located in +olacion$ Tapaz$ (apiz$ containing an area of E18
s6!are meters and emraced in Ta5 /eclaration No. ;1:B for a
consideration of +2$821.883 that the defendant allegedly failed to
e5ercise her right to rep!rchase within the stip!lated period3 that
the plaintif had een in possession of the property immediately
after the e5ec!tion of the doc!ment3 and that said plaintif had
een paying the ta5es thereon.
#n her answer the defendant Rosario &rt!z admitted the e5istence
of the deed of sale with right to rep!rchase !t denied the legality
and gen!ineness thereof and alleged as aHrmative defenses that
the doc!ment in 6!estion was an e6!itale mortgage$ the real
intention of the parties eing merely to sec!re the payment of a
loan in the amo!nt of +2.821.883 that the defendant$ who was then
deaf. totally lind and senile$ did not !nderstand .nglish and was
made to aH5 her th!mmar4 on the alleged deed of sale with right
to rep!rchase !pon representation of the plaintif that the same
was a mere e6!itale mortgage3 that the defendant had remained
in possession of the property in 6!estion and had een paying the
ta5es thereon that a tender of payment was made y defendant to
the plaintif on or efore )ctoer :8$ :IB1 to rep!rchase the
property !t plaintif ref!sed to accept the amo!nt of +2$821.88
eca!se he was as4ing for a m!ch igger amo!nt of +B$888.883
that y reason of s!ch ref!sal$ the defendant consigned the
amo!nt of +2$821.88 with the co!rt3 and that the act!al amo!nt of
the loan received y the defendant from the plaintif was only
+:$121.88 inasm!ch as the amo!nt of +188.88 was retained y
plaintif as interest on the transaction.
The original defendant Rosario &rt!z died. ,ence the complaint was
amended to s!stit!te the deceased defendant with her s!rviving
heirs$ namely$ &rsenio Perardino$ Sr.$ <irginia Perardino Sy.
&ngelina Perardino P!ma and (orazon Perardino Aegayada. The
lower co!rt ordered the consolidation of the title andQor ownership
over the property in the name of Covito Ploria.
"ssue# 'hether or not the contract in 6!estion is a tr!e sale with
right of rep!rchase and not an e6!itale mortgage.
$el%# No. 'hile the record discloses that the defendants and their
co!nsel have een lac4adaisical in attending to the case$
s!stantial 7!stice demands that petitioners e given their day in
co!rt. #t appears from the answer that the vendorDa%retro$ Rosario
&rt!z$ who died on -er!ary ::$ :IB@$ was deaf and lind and was
senile when she was made to th!mmar4 the alleged deed of sale
with right to rep!rchase. The doc!ment is written in .nglish which
was not !nderstood y Rosario &rt!z. The answer alleged that
the intention of the parties was only to execute a deed of
e!uitable mortgage to secure the loan of 34,546.557 and
that +osario 8rtu, actually received only the amount of
3.,646.55 because the private respondent retained the
amount of 3655.55 as interest. 2t is clear that the
defendants have a meritorious defense. Their motion for new
trial sho!ld have een granted.
The nat!re of the doc!ment in 6!estion was s6!arely placed in
iss!e. The defendants contend that the doc!ment was only an
e6!itale mortgage The third paragraph of &rticle :B8B of the (ivil
(ode of the +hilippines provides that Mthe vendor may still e5ercise
the right to rep!rchase within thirty days from the time =nal
7!dgment was rendered in a civil action on the asis that the
contract was a tr!e sale with right to rep!rchase.M ,ence even if
after a new trial it is fo!nd that the doc!ment in 6!estion is a tr!e
sale with right of rep!rchase$ the defendants may still e5ercise the
right to rep!rchase the land in 6!estion within thirty days from the
time =nal 7!dgment is rendered.
#n view of the foregoing$ it is no longer necessary to remand this
case to the lower co!rt for a new trial.
The lower co!rt erred in not allowing the defendants$ as
s!ccessorsDinDinterest of Rosario &rt!z$ to rep!rchase the land
within thirty days from the date the decision had ecome =nal.
Since the petitioners had d!ly consigned the rep!rchase price$ their
consignation of the amo!nt of +2$821.88 validly efected
redemption.
S3ouses Ra+on Doro+al Sr. An% Rosario Salas an% S3ouses
Ra+on Doro+al Jr. an% 4au%elia @ega vs. CA an% !ilo+ena
Javellana, Se3t. A, 197A
!acts# Aot ;18F was originally owned y C!stice ,orilleno in :I:B
!t efore the latter died$ in his will he stated that the same
property was coDowned y himself and his rothers and sisters.
,erein respondent$ -ilomena Cavellana coDowned :QE of the
property while the rest of the coDowners$ BQE
th
share. The coDowners
e5cept -ilomena agreed to sell their shares with (arlos as the one
to loo4 for !yer since all the coDowners lived in diferent places.
The possile !yer$ Spo!ses /oromal$ eing interested in !ying
s!ch property gave an earnest money worth 1$888. %!t -ilomena
was disagreeale of this sale. The said property was consolidated
into the ownership of the Spo!ses /oromal. ,owever$ one &tty.
<illan!eva came to the residence of the /oromals conveying for the
rep!rchase of the BQE
th
!ndivided share. /oromals ref!sed. ,ence$
-ilomena =led this instant case which was denied y the trial co!rt.
The (&$ however$ reversed stating that Cavellana was informed of
her coDowners0 proposal to sell !t never on the act!al e5ec!tion of
sale and registration.
"ssue# 'hether or not the N)T#(. #N 'R#T#NP )- T,. S&A.
contemplated in &rticle :B2; refers to a notice in writing &-T.R the
e5ec!tion and registration of the instr!ment of sale$ hence$ of the
doc!ment of sale.
$el%# No. #n the light of these considerations$ it cannot e said
that the (o!rt of &ppeals erred in holding that the letters
aforementioned s!Hced to comply with the re6!irement of notice
of a sale y coDowners !nder &rticle :B2; of the (ivil (ode. 'e are
of the considered opinion and so hold that for p!rposes of the coD
owner9s right of redemption granted y &rticle :B28 of the (ivil
(ode$ the notice in writing which &rticle :B2; re6!ires to e made
to the other coDowners and from receipt of which the ;8Dday period
to redeem sho!ld e co!nted is a notice not only of a perfected
sale !t of the act!al e5ec!tion and delivery of the deed of sale.
This is implied from the latter portion of &rticle :B2; which re6!ires
that efore a register of deeds can record a sale y a coDowner$
there m!st e presented to him$ an aHdavit to the efect that the
notice of the sale had een sent in writing to the other coDowners.
& sale may not e presented to the register of deeds for
registration !nless it e in the form of a d!ly e5ec!ted p!lic
instr!ment. Moreover$ the law prefers that all the terms and
conditions of the sale sho!ld e de=nite and in writing. &s aptly
oserved y C!stice Patmaitan in the decision !nder review$ &rticle
:B:I of the (ivil (ode estows !nto a coDowner the right to redeem
and Mto e s!rogated !nder the same terms and conditions
stip!lated in the contractM$ and to avoid any controversy as to the
terms and conditions !nder which the right to redeem may e
e5ercised$ it is est that the period therefor sho!ld not e deemed
to have commenced !nless the notice of the disposition is made
after the formal deed of disposal has een d!ly e5ec!ted. &nd it
eing eyond disp!te that respondent herein has never een
noti=ed in writing of the e5ec!tion of the deed of sale y which
petitioners ac6!ired the s!7ect property$ it necessarily follows that
her tender to redeem the same made on C!ne :8$ :IB@ was well
within the period prescried y law. #ndeed$ it is immaterial when
she might have act!ally come to 4now ao!t said deed$ it
appearing she has never een shown a copy thereof thro!gh a
written comm!nication y either any of the petitionersDp!rchasers
or any of her coDownersDvendees. ((orne7o et al. vs. (& et al.$ :B
S(R& EE1."
$eirs o/ Jose Re-es Jr. vs. A+an%a Re-es, et al., August 1),
<1<
!acts# The s!7ect property was originally owned y the Spo!ses
&ntonio and Aeoncia Reyes located in %!lacan. The co!ple had fo!r
children namely: Jose Re-es, Sr., EeoClo Re-es, Jose Re-es Jr.,
an% 'otenciana Re-esH@alenzuela. +otenciana predeceased her
father3 hence$ the moment &ntonio died intestate$ his wife$ Aeoncia
and ; children inherit from him. Cose Reyes Cr. resided in the ho!se
of his parents while Teo=lo constr!cted his own ho!se in s!ch land.
)n :I11$ Aeoncia and ; sons e5ec!ted a deed denominated as
&as"latan ng Biling Mabibiling M"li, wherey selling the said land to
Spo!ses -rancia for 188.88 s!7ect to vendors right to rep!rchase
sa oras na sila'y makinabang. ,owever$ the vendors never repay
the amo!nt. 'ith this$ &le7andro Reyes$ the son of Cose Reyes Sr.
paid to the Spo!ses -rancia the price agreed which lead to the
transfer of ownership of said land to the former. ,owever$ &le7andro
with Aeoncia and Cose Sr. e5ec!ted a Magkakalakip na Salaysay y
which &le7andro ac4nowledged the right of the two latter to
rep!rchase the property at any time for the same amo!nt. 'hen
&le7andro died$ his wife$ &manda Reyes and their children as4ed the
heirs of Cose Reyes Cr. and Teo=lo to vacate the property eca!se
they need the same. %!t the latter ref!sed. ,ence$ respondents
initiated a s!it for 6!ieting of tile and reconveyance in RT(. RT(
r!led in favor of respondents. (& r!led that the transaction covered
y the kas"latan was not a pacto de retro sale !t an e6!itale
mortgage !nder &rt. :B82 in favor of the petitioner3 !t eca!se
the latter failed to =le an action to reform the kas"latan, they are
already arred from claiming s!ch.
"ssue# 'hether or not the petitioners are already arred from
claiming s!ch transaction to e an e6!itale mortgage.
$el%# No. (onsidering that sa oras na sila'y makinabang, the
period of redemption stated in the &as"latan ng Biling Mabibiling
M"li, signi=ed that no de=nite period had een stated$ the period to
redeem sho!ld e ten years from the e5ec!tion of the contract$
p!rs!ant to &rticles ::F2 and ::FF of the (ivil (ode. Th!s$ the f!ll
redemption price sho!ld have een paid y C!ly I$ :I113 and !pon
the e5piration of said :8Dyear period$ mortgagees Spo!ses -rancia
or their heirs sho"ld have foreclosed the mortgage$ !t they did not
do so. #nstead$ they accepted &le7andro0s payments$ !ntil the det
was f!lly satis=ed y &!g!st ::$ :IE8.
The acceptance of the payments even eyond the :8Dyear period of
redemption estopped the mortgagees0 heirs from insisting that the
period to redeem the property had already e5pired. Their actions
impliedly recognized the contin!ed e5istence of the e6!itale
mortgage. The cond!ct of the original parties as well as of their
s!ccessorsDinDinterest manifested that the parties to the &as"latan
ng Biling Mabibiling M"li really intended their transaction to e an
e6!itale mortgage$ not a pacto de retro sale.
#n ("y"gan v. Santos, the p!rported !yer !nder a soDcalled
contract to sell with right to rep!rchase also accepted partial
payments from the p!rported seller. 'e held that the acceptance of
partial payments was asol!tely incompatile with the idea of
irrevocaility of the title of ownership of the p!rchaser !pon the
e5piration of the term stip!lated in the original contract for the
e5ercise of the right of redemption. Therey$ the cond!ct of the
parties manifested that they had intended the contract to e a
mortgage$ not a pacto de retro sale.
The respondents can only demand from the petitioners the
partition of the coDowned property and the reim!rsement from
their coDowners of the amo!nt advanced y &le7andro to repay the
oligation. They may also see4 from their coDowners the
proportional reim!rsement of the realty ta5es paid for the
property$ p!rs!ant to &rticle F@@ of the (ivil (ode. #n the
alternative$ they may opt to foreclose the e6!itale mortgage$
considering that the petitioners0 period to redeem the mortgaged
property$ which was ten years from the e5ec!tion on )ctoer :E$
:IE8 of the Magkakasanib na Salaysay$ had already long lapsed.
'e clarify$ however$ that the respondents may ta4e these
reco!rses only thro!gh the appropriate actions commenced in
co!rt.
1hat is AleGan%ro 0e a/ter re3urchasing the 3ro3ert- /ro+
S3ouses !ranciaB
'hen &le7andro redeemed the property on &!g!st ::$ :IE8$
he did not therey ecome a coDowner thereof$ eca!se his father
Cose$ Sr. was then still alive. &le7andro merely ecame the assignee
of the mortgage$ and the property contin!ed to e coDowned y
Aeoncia and her sons Cose$ Sr.$ Cose Cr.$ and Teo=lo. &s an assignee
of the mortgage and the mortgage credit$ &le7andro ac6!ired only
the rights of his assignors$ nothing more. ,e himself con=rmed so
in the Magkasanib na Salaysay, wherey he ac4nowledged the coD
owners0 right to redeem the property from him at any time (sa ano
mang oras" for the same redemption price of +188.88.

#t is worthy to note that &le7andro0s con=rmation in the
Magkasanib na Salaysay of the coDowners0 right to redeem was
made despite :1 years having meanwhile elapsed from the
e5ec!tion of the original &as"latan ng Biling Mabibiling M"li (C!ly I$
:I11" !ntil the e5ec!tion of the Magkasanib na Salaysay (&!g!st
2:$ :IE8".
1as AleGan%ro allo(e% to a33ro3riate such 3ro3ert- a/ter
re3urchasing through the )asulatan ng 3agmeme9ari$
No. The &as"latan ng Pagmeme%ari e5ec!ted y &le7andro on
&!g!st 2:$ :IE8 was inefect!al to predicate the e5cl!sion of the
petitioners and their predecessors in interest from insisting on their
claim to the property. &le7andro0s eing an assignee of the
mortgage did not a!thorize him or his heirs to appropriate the
mortgaged property for himself witho!t violating the prohiition
against pact"m commissori"m contained in &rticle 28@@ of the (ivil
(ode, to the efect that >TtUhe creditor cannot appropriate the
things given y way of pledge or mortgage$ or dispose of themT3U
TaUny stip!lation to the contrary is n!ll and void.? &ptly did the
(o!rt hold in Montevirgen v. (o"rt of )ppeals!

The declaration$ therefore$ in the decision of
C!ly :$ :IE: to the efect that asol!te ownership
over the s!7ect premises has ecome consolidated
in the respondents !pon fail!re of the petitioners to
pay their oligation within the speci=ed period$ is a
n!llity$ for consolidation of ownership is an improper
and inappropriate remedy to enforce a transaction
declared to e one of mortgage. #t is the d!ty of
respondents$ as mortgagees$ to foreclose the
mortgage if he wishes to sec!re a perfect title to the
mortgaged property if he !ys it in the foreclos!re
sale.

Moreover$ the respondents$ as &le7andro0s heirs$ were
entirely o!nd y his previo!s acts as their predecessorsDinD
interest. Th!s$ &le7andro0s ac4nowledgment of the efectivity of the
e6!itale mortgage agreement precl!ded the respondents from
claiming that the property had een sold to him with right to
rep!rchase.
1hat is the e;ect o/ the :agkasanib na (alaysay$
%oth the trial co!rt and the (& declared that the Magkasanib na
Salaysay, which e5tended the redemption period of the mortgaged
property$ was ineHcacio!s$ eca!se the period to redeem co!ld no
longer e e5tended after the original redemption period had
already e5pired.

#n contrast$ the petitioners s!mit that disregarding the
Magkasanib na Salaysay made no sense, considering that the
respondents0 predecessorsDinDinterest admitted therein that the
petitioners had a right to redeem the property.

The respondents co!nter$ however$ that the Magkasanib na
Salaysay$ which ac4nowledged the other coDowners0 right to
redeem the property$ was void3 that the petitioners co!ld no longer
claim to e coDowners entitled to redeem the property$ eca!se the
coDownership had come to an end y &le7andro having openly
rep!diated the coDownership3 that &le7andro0s acts of rep!diation
had consisted of: (a" redeeming the property from the Spo!ses
-rancia3 (b" ac6!iring the property from the heirs of Spo!ses
-rancia y virt!e of a deed of assignment denominated as Pag%
aayos ng Pag%aari at Pagsasalin* (c" e5ec!ting an aHdavit of
consolidation of ownership over the property (&as"latan ng
Pagmeme%ari+3 (d" applying for the cancellation of the ta5
declaration of property in the name of Aeoncia$ and the s!se6!ent
iss!ance of a new ta5 declaration in his name3 (e" his contin!o!s
possession of the property from :I11$ which possession the
respondents as his heirs had contin!ed !p to the present time$ or
for a period of almost 18 years already3 and (f" the payment of the
ta5es y &le7andro and the respondents for more than ;8 years
witho!t any contri!tion from the petitioners3 and that s!ch
rep!diation estalished that &le7andro and his s!ccessorsDinD
interest had already ac6!ired sole title over the property thro!gh
ac6!isitive prescription.

The respondents0 and the lower co!rts0 positions cannot e
s!stained.

The provisions of the (ivil (ode governing e6!itale
mortgages disg!ised as sale contracts$ li4e the one herein$ are
primarily designed to c!rtail the evils ro!ght ao!t y contracts of
sale with right to rep!rchase$ partic!larly the circ!mvention of the
!s!ry law and pact"m commissori"m.

(o!rts have ta4en 7!dicial
notice of the wellD4nown fact that contracts of sale with right to
rep!rchase have een fre6!ently resorted to in order to conceal the
tr!e nat!re of a contract$ that is$ a loan sec!red y a mortgage. #t
is a reality that grave =nancial distress renders persons hardD
pressed to meet even their asic needs or to respond to an
emergency$ leaving no choice to them !t to sign deeds of asol!te
sale of property or deeds of sale with pacto de retro if only to
otain the m!chDneeded loan from !nscr!p!lo!s money lenders.
This reality precisely e5plains why the pertinent provision of the
(ivil (ode incl!des a pec!liar r!le concerning the period of
redemption$ to wit:

&rt. :B82. The contract shall e pres!med to e
an e6!itale mortgage$ in any of the following cases:
5 5 5
(;"1hen u3on or a/ter the e63iration o/
the right to re3urchase another instru+ent
e6ten%ing the 3erio% o/ re%e+3tion or granting
a ne( 3erio% is e6ecute%I
5 5 5


)stensily$ the law allows a new period of redemption to e
agreed !pon or granted even after the e5piration of the e6!itale
mortgagor0s right to rep!rchase$ and treats s!ch e5tension as one
of the indicators that the tr!e agreement etween the parties is an
e6!itale mortgage$ not a sale with right to rep!rchase. #t was
ind!itale$ therefore$ that the Magkasanib na Salaysay efectively
aforded to Aeoncia$ Teo=lo$ Cose$ Sr. and Cose$ Cr. a fresh period
within which to pay to &le7andro the redemption price of +188.88.
Di% AleGan%ro an% his heirs ac5uire the +ortgage% 3ro3ert-
0- 3rescri3tionB
#n =ne$ the respondents did not present proof showing that
&le7andro had efectively rep!diated the coDownership. Their are
claim that &le7andro had made oral demands to vacate to his coD
owners was selfDserving and ins!Hcient. &le7andro0s e5ec!tion of
the aHdavit of consolidation of ownership on &!g!st 2:$ :IE8 and
his s!se6!ent e5ec!tion on )ctoer :E$ :IE8 of the 7oint aHdavit
were really e6!ivocal and amivalent acts that did not manifest his
desire to rep!diate the coDownership.

The only !ne6!ivocal act of rep!diation was done y the
respondents when they =led the instant action for 6!ieting of title
on Septemer 2@$ :IIF$ nearly a year after &le7andro0s death on
Septemer 2$ :II;. ,owever$ their possession co!ld not ripen into
ownership considering that their act of rep!diation was not co!pled
with their ecl"sive possession of the property.
=AREER JR EKC$AN4E
Ro0ert ,ur3h- vs. 1enceslao Erini%a% as Collector o/
"nternal Revenue, ,arch 1, 19)
!acts# &merican #mport (ompany$ of San -rancisco$ (alifornia$ is
e5tensively engaged in the e5portation of emroideries from the
+hilippine #slands for sale in the Jnited States3 and the plaintif$ R.
.. M!rphy$ d!ring the period covered y the transactions now in
6!estion$ was employed y said company as its s!pervising agent
in these #slands$ !pon a commission of three per cent!m of the
val!e of the laor e5pended in the emroidery wor4. #t f!rther
appears that the company has adopted the plan of ca!sing all its
prod!ct from the +hilippine #slands to e emroidery here y native
wor4ers !nder the s!pervision of the company9s agent$ and !pon
material s!pplied y the company for the Jnited States. -or the
p!rpose of sec!ring a !niform 6!ality of wor4$ even the thread !sed
in the emroidery is s!pplied y said company to the emroideries$
!t for this a charge is made at cost price. #n his capacity as agent$
the plaintif receives from San -rancisco the goods to e
emroidered$ s!pervise the man!fact!re of the emroidered
prod!ct$ and ret!rns the same from time to time in a =nished state
to the company in San -rancisco.
#n respect to the transaction th!s cond!cted y the plaintif for the
&merican #mport (ompany of San -rancisco d!ring the period of
=ve years from C!ly :$ :I:B$ to C!ly :$ :I2:$ the said plaintif made
ret!rns to the (ollector of #nternal Reven!e$ for the p!rposes of
ta5ation !nder section :F1I of the &dministrative (ode$ showing
ta5ale transaction to the val!e of +;;I$1FF.1I$ consisting$ =rst$ of
+;B$BI:.IF$ the val!e of thread and damaged materials sold y the
plaintif in the #slands3 and$ secondly$ of +;82$@12.B1 the val!e of
the laor e5pended !pon the emroidery wor4 prior to Septemer
of the year :I:I. Jpon these ret!rns he was ta5ed accordingly and
paid the ta5 witho!t protest. The (ollector of #nternal Reven!e
demanded payment of ta5 of :2 as evidenced y the
!nderassessment y the former to M!rphy. The latter paid !t$ in
this case$ wanted to recover the same.
"ssue# 'hether or not M!rphy is liale to pay ta5 commonly called
the >mechant0s ta5?.
$el%# Les. &nd now$ !pon the point of liaility for the ta5 that has
een collected$ we note the contention in the appellant9s rief that
the plaintif M!rphy himself is not a Mmerchant.M This contention is
!ndo!tedly correct if the plaintif is considered witho!t relation to
the master that stands ehind him. #ndivid!ally the plaintif is no
merchant. %!t he is the agent and representative in the +hilippine
#slands of the &merican #mport (ompany of San -rancisco3 and that
the latter is a merchant in the sense intended in section :F1I of
the &dministrator (ode is ovio!sly.
The term MmerchantM is there de=ned as a person engaged in the
sale$ arter$ or e5changed of personal property of whatever
character$ and it is declared that the term incl!des man!fact!rers
who sell articles of their own prod!ction. The &merican #mport
(ompany f!l=lls every re6!irement of this de=nition eca!se it is
engaged in the man!fact!re of +hilippine emroideries and e5ports
the =nished prod!ct for sale in the Jnited States. The fact that the
prod!ction and e5port of these emroideries is efect thro!gh the
agency of the plaintif M!rphy and that the operations of the
company in these #slands are cond!cted in his name in no wise
alters the case. Nor is the f!rther circ!mstance here material that
the consignor or shipper of the goods from these #slands is M!rphy
and the consignee in the Jnited States in the &merican #mport
(ompany. 'here a consignment of goods is otherwise ta5ale$ the
ta5 sho!ld e assessed and collected regardless of the personality
of the consignor or consignee. & shipment of goods aroad is no
less ta5ale !nder this section$ tho!gh consigned to the order of
the shipper himself.
Cos+e =iagtan vs. Conce3cion @iu%a De Jller, Car+en Jller
De Si3in an% Eeles/oro Si3in, et al., Jan. )<, 19)7
!acts# Rafael )ller was originally the owner of the two parcels of
land in +angasinan. ,e mortgage them to the +hilippine National
%an4 for the s!m of +:8$888$ on Novemer 2I$ :I:I and as he had
failed to pay his oligation to the an4$ the latter ro!ght civil case
to foreclose the mortgage in its favor. #nasm!ch as Rafael )ller was
!nale to pay his oligation within the period of three months
granted him in the co!rt9s decision and 7!dgment which$ y the
way$ was adverse to him$ the order of the co!rt in said 7!dgment
was e5ec!ted and the two parcels of land in 6!estion were sold at
p!lic a!ction to the +hilippine National %an4 as the highest idder.
The defendants alleged and attempted to prove that while Rafael
)ller9s right of rep!rchase was yet s!sisting$ he consented to the
p!rchase of the two properties in 6!estion from the +hilippine
National %an4 y the plaintif eca!se the two had agreed that the
plaintif sho!ld 4eep only in one of the properties$ that descried as
parcel No. : in transfer certi=cate of title No. ;F2I$ and that he
wo!ld t!rn over the other$ or that descried as parcel No. 2 in said
certi=cate$ to Rafael )ller.
They f!rthermore alleged and attempted to prove that when the
plaintif had already otained the complete transfer to him y the
two parcels of land in 6!estion thro!gh the e5ec!tion of the
necessary doc!ment in his favor y the +hilippine National %an4$ he
then not only ref!sed to ac4nowledge his veral contract with
Rafael )ller !t imposed the condition that in order that he might
transfer the second parcel to )ller it was necessary for the latter to
convey to him the other lands which )ller had in the arrio of San
Cose of the m!nicipality of San Cacinto$ +angasinan3 and that !nder
s!ch circ!mstances$ Rafael )ller was compelled to convey the
lands descried in .5hiits @$ I$ :8$ :: and :2 to the plaintif.
The plaintif$ in t!rn$ attempted to prove that the only contract
entered into y him and Rafael )ller was that wherey he o!nd
himself to convey to )ller parcel No. 2 of transfer of certi=cate of
title No. ;F2I$ provided )ller$ in the arrio of San Cose$ descried in
said doc!ments .5hiits @$ I$ :8$ ::$ and :23 and that he received
two of said =ve parcels of land those descried in .5hiits I and :8
V from Rafael )ller$ !t to date the remaining three V those
descried in .5hiits @. :: and :2 V have not yet een delivered to
him either y said Rafael )ller or his heirs.
"ssue# 'hether or not there was compliance of a contract of arter
in the case at ar.
$el%# No. %arter$ for s!ch is the contract lastly entered into
etween Rafael )ller$ predecessor in interest of the appellants$ and
the appellee$ is a contract conveying ownership for the
cons!mmation of which the m!t!al delivery y the contracting
parties of the things which they promised in arter is necessary.
'hen Rafael )ller entered into it$ he was not the owner of all the
land promised y him and$ if he were$ he wo!ld not have the free
disposal thereof. ,e owned only two of them which are those
act!ally in the possession of the appellee and descried in .5hiits
I and :8. Therefore$ the contract as to him co!ld not e efective
for lac4 of one of the re6!isites essential to its validity3 the !nder
ta4ing or promise to give entirely =ve parcels of land in the arrio
of San Cose$ which promise co!ld not e f!l=lled and in fact it was
not f!l=lled y him. Jnder s!ch circ!mstances$ the appellee can
not e compelled to f!l=ll his promise. )n the contrary he cannot
resolve his oligation created y his contract of arter with Rafael
)ller. The provisions of articles :1;I and :1F:$ in connection of
those of articles :18; and ::2F of the (ivil (ode$ s!pport the
appellee in all the improvements thereon. Said article read$
respectively$ as follows:
&RT. :1;I. #f one of the contracting parties sho!ld have
received the thing promised to him in arter$ and sho!ld
prove that it did not elong to the person who gave it$ he
cannot e compelled to deliver the thing he ofered in
e5change$ and shall e discharged of his oligation !pon
ret!rning the thing received y him.
&RT. :1F:. %arter shall e governed y the provisions
relating to sales as to all matters not specially provided for
in this title.
&RT. :18;. Sho!ld the vendee have reasonale gro!nds to
fear the loss of any real properties$ sold and of its price he
may immediately s!e for a rescission of the sale.
Sho!ld s!ch gro!nds not e5ist$ the provisions of article ::2F
shall e applicale.
&RT. ::2F. The right to resolve reciprocal oligations$ in the
case of the oligors sho!ld fail to comply with that which is
inc!ment !pon him is deemed to e implied.
The person pre7!diced may choose etween e5acting the
f!l=llment of the oligation or its resol!tion with indemnity
for damages and payment of interest in either the case. he
may also demand the resol!tion of the oligations even
after having re6!ested its f!l=llment$ sho!ld the latter e
fo!nd impossile. . . .
The co!rt shall decree the resol!tion demanded$ !nless
there sho!ld e gro!nds which 7!stify the allowance of a
term of the performance of the oligation. . . .
#nasm!ch as Rafael )ller has failed to comply with the terms of his
contract of arter$ and as the appellee has chosen to resolve his
oligation created y the contract in 6!estion$ it is !t 7!st that he
e granted the remedy correctly granted him y the lower co!rt.
The fact that Mig!el )ller$ one of the appellants$ has ofered to
convey to him the two parcels of land descried in said .5hiits ::
and :2$ or as parcels Nos. ; and F in transfer certi=cate of title No.
1@B8$ eca!se s!ch step is o!t of time and it is the appellee to
whom the law grants the right to choose. )n the other hand$ he has
not$ as already stated$ een given the =fth parcel of$ that is$ the
one descried in .5hiit @.
LEASE
S3ouses @ictoriano Chung an% De00ie Chung vs. .lan%a-
Construction, "nc., Jct. 1<, <1<
!acts# #n -er!ary :I@1$ the petitioners contracted with
respondent Jlanday (onstr!ction$ #nc. (respondent" to constr!ct$
within a :18Dday period$ the concrete str!ct!ral shell of the
former0s twoDstorey residential ho!se in Jrdaneta <illage$ Ma4ati
(ity at the contract price of +;$2I:$:F2.88. The contract provided
that$ 555 (e" the respondent cannot change or alter the plans$
speci=cations$ and wor4s witho!t the petitioners0 prior written
approval 555 /!ring the constr!ction$ the respondent also efected
:I change orders witho!t the petitioners0 prior written approval$
amo!nting to +I:2$@@1.I:. The petitioners$ however$ paid
+F2$2I@.B: for (hange )rder No. : and partially paid +:;8$888.88
for (hange )rder Nos. :B and :E. +etitioner /eie (h!ng
ac4nowledged in writing that the alance for (hange )rder Nos. :B
and :E wo!ld e paid !pon completion of the contract. The
o!tstanding alance on the change orders totaled +EF8$1@E.;8. #n
a letter dated &pril :B$ :IIB$ the petitioners denied liaility$
asserting that the respondent violated the contract provisions y$
among others$ failing to =nish the contract within the :18Dday
stip!lated period$ failing to comply with the provisions on change
orders$ and overstating its illings. )n May @$ :IIB$ the respondent
=led a complaint with the Regional Trial (o!rt (,-("$ %ranch :F1$
Ma4ati (ity$ for collection of the !npaid alance of the contract and
the !npaid change orders$ pl!s damages and attorney0s fees. RT(
fo!nd that oth parties have not complied strictly with the
re6!irements of the contract. #t oserved that change orders were
made witho!t the parties0 prescried written agreement$ and that
each party sho!ld ear their respective costs. #t noted that the
respondent co!ld not demand from the petitioners the payment for
change orders !nderta4en !pon instr!ction of the pro7ect architect
witho!t the petitioners0 written approval. &pplying &rticle :E2F of
the (ivil (ode$ the RT( fo!nd that when the respondent performed
the change orders witho!t the petitioners0 written agreement$ it did
so at its own ris4 and it co!ld not compel the petitioners to pay. The
(& aHrmed the RT( decision.
"ssue#
>1? 'hether or not &rticle :E2F of the (ivil (ode applies in the
case at ar.
>? 'hether or not estoppel in pais applies to the petitioner.
$el%#
>1? Les. The (& erred in r!ling that &rticle :E2F of the (ivil (ode
does not apply eca!se the provision pertains to disp!tes arising
from the higher cost of laor and materials and there was no
demand for increase in the costs of laor and materials. &rticle
:E2F governs the recovery of additional costs in contracts for a
stip!lated price (s!ch as =5ed l!mpDs!m contracts"$ and the
increase in price for additional wor4 d!e to change in plans and
speci=cations.

S!ch added cost can only e allowed !pon the: (a"
written a!thority from the developer or pro7ect owner ordering or
allowing the written changes in wor4$ and (" written agreement of
parties with regard to the increase in price or cost d!e to the
change in wor4 or design modi=cation. (ompliance with these two
re6!isites is a condition precedent for the recovery. The asence of
one or the other condition ars the recovery of additional costs.
Neither the a!thority for the changes made nor the additional price
to e paid therefor may e proved y any other evidence.

#n the
present case$ &rticle #$ paragraph B$ of the (ontract incorporates
this provision:

-he (./-,)(-., shall make no change or
alteration in the plans, and speci0cations as well as
in the works s"b#ect hereof witho"t the prior written
approval of the .1/E,. ) mere act of tolerance shall
not constit"te approval.

Signi=cantly$ the respondent did not sec!re the re6!ired written
approval of the petitioners efore ma4ing the changes in the plans$
speci=cations and wor4s. Th!s$ for !nderta4ing change orders
witho!t the stip!lated written approval of the petitioners$ the
respondent cannot claim the additional costs it inc!rred$ save for
the change orders the petitioners accepted and paid for as
disc!ssed elow.
>? No. The petitioners0 payment of (hange )rder Nos. :$ :B$ and
:E and their nonDo7ection to the other change orders efected y
the respondent cannot give rise to estoppel in pais that wo!ld
render the petitioners liale for the payment of all change orders.
;stoppel in pais, or e!uitable estoppel, arises when one, by
his acts, representations or admissions or by his silence
when he ought to speak out, intentionally or through
culpable negligence, induces another to believe certain
facts to exist and the other rightfully relies and acts on
such beliefs so that he will be pre*udiced if the former is
permitted to deny the existence of such facts. The real
o<ce of the e!uitable norm of estoppel is limited to
supplying defciency in the law, but it should not supplant
positive law.
#n this case$ the re6!irement for the petitioners0 written consent to
any change or alteration in the speci=cations$ plans and wor4s is
e5plicit in &rticle :E2F of the (ivil (ode and is deemed written in
the contract etween the parties. The contract also e5pressly
provides that a mere act of tolerance does not constit!te approval.
Th!s$ the petitioners did not$ y accepting and paying for (hange
)rder Nos. :$ :B$ and :E$ do away with the contract!al term on
change orders nor with the application of &rticle :E2F. The
payments for (hange )rder Nos. :$ :B$ and :E are$ at est$ acts of
tolerance on the petitioners0 part that co!ld not modify the
contract.
Ce0u =ionic =uil%ers Su33l-, "nc an% L-%ia Sia vs. D=', Jose
Eo Chi3, 'atricio La3 an% Roger =alila, Nove+0er 17, <1<
!acts# The Spo!ses Roles were the owner of the State
Theater %!ilding in Talisay (e!$ which they mortgaged to
/%+ in order to sec!re a loan from the said an4 worth
188$888. Months later$ the Spo!ses e5ec!ted a contract of
lease in favor of (e! %ionic %!ilders. S!se6!ently$ the
Spo!ses failed to settle their loan with /%+ therey
prompting the latter to efect e5tra7!dicial foreclos!re of the
property and right after consolidating ownership of the
same. The latter noti=ed the +resident of (e! %ionic of
s!ch ac6!isition and re6!ired (e! %ionic to remit rental to
them and with the following stip!lations: "/ -ou (ish to
continue on leasing the 3ro3ert-, (e re5uest -ou to
co+e to the =an2 /or the e6ecution o/ a Contract o/
Lease$ the salient conditions of which are as follows:
:. The lease will e on month to month asis$ for
a ma5im!m period of one (:" year3
2. /eposit e6!ivalent to two (2" months
rental and advance of one (:" month
rental$ and the remaining amo!nt for
one year period (e6!ivalent to I
months rental" shall e sec!red y
either s!rety ond$ cash ond or
assigned time deposit3
;. That in case there is a etter ofer or if
the property will e s!7ect of a
p!rchase ofer$ within the term$ the
lessor is given an option of =rst ref!sal$
otherwise he has to vacate the
premises within thirty (;8" days from
date of notice.
(e! %ionic e5pressed its conformance of the same. Thereafter$
/%+ ofered for the sale of the property thr! an Invitation on
/egotiated Sale2.fer within the >:1 dayDacceptance period? on a
=rst come =rst serve asis. /!ring the last day thereof$ petitioner
thr! representative s!mitted a letterDofer form ofering to
p!rchase the properties. ,owever$ herein respondents presented
letterDofer to p!rchase the properties on a cash asis. ,ence$
respondents informed (e! %ionic of s!ch ac6!isition. 'ith this$
co!nsel for (e! %ionic replied stating that it had preferential right
to p!rchase the same. 'hen respondents re6!ested the petitioner
to vacate the premises$ the latter never heeded. ,ence$
respondents =led a complaint for speci=c performance$ cancellation
of deed of sale with damages. ,owever$ (e! %ionic alleged that
the contract of sale m!st have een rescinded eca!se /%+ failed
to ofer =rst to them the right to p!rchase the property as lessee.
/%+ denied the e5istence of contract of lease stating that there
was no ass!mption of the lease contract etween R!dy Roles and
petitioners since it ac6!ired the s!7ect properties thro!gh the
invol!ntary mode of e5tra7!dicial foreclos!re and its re6!est to
petitioners to sign a new lease contract was simply ignored. RT(
=nds for the petitioner. (& reversed.
"ssues#
>1? 'hether or not there was a lease contract etween /%+ and
+etitioner.
>? 'hether or not there is a grant of right of =rst ref!sal in
favor of +etitioner.
$el%#
>1? No. #n 3y v. 4and Bank of the Philippines$ the (o!rt held that
>TiUn respect of the lease on the foreclosed property$ the !yer at
the foreclos!re sale merely s!cceeds to the rights and oligations
of the pledgorDmortgagor s!7ect to the provisions of &rticle :BEB
of the (ivil (ode on its possile termination. This article provides
that WTtUhe p!rchaser of a piece of land which is !nder a lease that
is not recorded in the Registry of +roperty may terminate the lease$
save when there is a stip!lation to the contrary in the contract of
sale$ or when the p!rchaser 4nows of the e5istence of the lease.0
#n short$ the !yer at the foreclos!re sale$ as a r!le$ may terminate
an !nregistered lease e5cept when it 4nows of the e5istence of the
lease.?

#n the instant case$ the lease contract etween petitioners
and R!dy Roles was not registered. /!ring trial$ /%+ denied
having any 4nowledge of the said lease contract. #t asserted that
the lease was merely pres!med in view of the e5istence of tenants
in the s!7ect property. Nevertheless$ /%+ recognized and
ac4nowledged this lease contract in its letter dated C!ne :@$ :I@E$
which was addressed to %onifacio Sia$ then +resident of (e!
%ionic. /%+ even re6!ired Sia to pay the monthly rental for the
month of C!ne :I@E$ therey e5ercising the right of the previo!s
lessor$ R!dy Roles$ to collect the rental payments from the lessee.
#n the same letter$ /%+ e5tended an ofer to (e! %ionic to
contin!e the lease on the s!7ect property$ o!tlining the provisions
of the proposed contract and speci=cally instr!cting the latter to
come to the an4 for the e5ec!tion of the same. /%+ li4ewise gave
(e! %ionic a ;8Dday period within which to act on the said
contract e5ec!tion. Sho!ld (e! %ionic fail to do so$ it wo!ld e
deemed !ninterested in contin!ing with the lease. #n that
event!ality$ the letter states that (e! %ionic sho!ld vacate the
premises within the said period.

#nstead of acceding to the terms of the aforementioned
letter$ the co!nsel of (e! %ionic sent a co!nterDofer to /%+ dated
C!ly E$ :I@E$ s!ggesting a diferent mode of payment for the rentals
and re6!esting for a B8Dday period within which time the parties
will e5ec!te a new contract of lease.

The parties$ however$ failed to e5ec!te a written contract of
lease. +etitioners p!t the lame on /%+$ asserting that no contract
was signed eca!se /%+ did not prepare it for them. /%+$ on the
other hand$ co!nters that it was petitioners who did not positively
act on the conditions for the e5ec!tion of the lease contract. #n
view of the co!nterDofer of petitioners$ /%+ and respondents To
(hip$ Rap and %alila arg!e that there was no meeting of minds
etween /%+ and petitioners$ which wo!ld have given rise to a new
contract of lease.

The (o!rt r!les that$ indeed$ no new contract of lease was
ever perfected etween petitioners and /%+.
>? No. Th!s$ having determined that the petitioners and /%+
neither e5ec!ted a new lease agreement$ nor entered into an
implied lease contract$ it follows that petitioners0 claim of
entitlement to a right of =rst ref!sal has no leg to stand on.
-!rthermore$ even if we were to grant$ for the sa4e of arg!ment$
that an implied lease was constit!ted etween petitioners and the
/%+$ the right of =rst ref!sal that was contained in the prior lease
contract with R!dy Roles was not renewed therewith. This is in
accordance with the r!ling in 5i6on v. Magsaysay$ which involved
the iss!e of whether a provision regarding a preferential right to
p!rchase is revived in an implied lease !nder &rticle :BE8$ to wit:

>TTUhe other terms of the original contract? which are
revived in the implied new lease !nder &rticle :BE8
are only those terms which are germane to the
lessee0s right of contin!ed en7oyment of the property
leased. This is a reasonale constr!ction of the
provision$ which is ased on the pres!mption that
when the lessor allows the lessee to contin!e
en7oying possession of the property for =fteen days
after the e5piration of the contract he is willing that
s!ch en7oyment shall e for the entire period
corresponding to the rent which is c!stomarily paid S
in this case !p to the end of the month eca!se the
rent was paid monthly. Necessarily$ if the pres!med
will of the parties refers to the en7oyment of
possession the pres!mption covers the other terms
of the contract related to s!ch possession$ s!ch as
the amo!nt of rental$ the date when it m!st e paid$
the care of the property$ the responsiility for repairs$
etc. %!t no s!ch pres!mption may e ind!lged in
with respect to special agreements which y nat!re
are foreign to the right of occ!pancy or en7oyment
inherent in a contract of lease.


/%+ cannot$ therefore$ e acc!sed of violating the rights of
petitioners when it ofered the s!7ect properties for sale$ and
event!ally sold the same to respondents To (hip$ Rap and %alila$
witho!t =rst notifying petitioners. Neither were the said
respondents o!nd y any right of =rst ref!sal in favor of
petitioners. (onse6!ently$ the sale of the s!7ect properties to
respondents was valid. +etitioners0 claim for rescission was
properly dismissed.
Ali%a ,ores vs. Shirle- LuHgo, ,a. @ictoria LuHLi+ an% ,a.
Estrella Lu., Jul- ), <1<
!acts# ,erein respondents alleged that they coDowned a parcel of
land in (amarines S!r on which a !ilding was !ilt while herein
+etitioner pleaded for the former to e allowed to stay in the
s!7ect property in the meantime that they did not own yet a
ho!se. Since &ntonio Mores !sed to e an errand oy of
respondents0 family$ they readily agreed to s!ch plea. )n :IEE$
respondents made 4nown to petitioner that they were already in
need of the property and that petitioner already had a ho!se of its
own in Naga (ity. Ret$ the latter egged that e given B months
e5tension to stay. )n :III$ respondents gave a =nal demand to
vacate the property against petitioner. #nstead of heeding to s!ch
demand$ petitioner even hired some laorers and started
demolishing the improvements on the property. ,ence$
respondents instit!ted an action for in7!nction with prayer of
reim!rsement of the val!e of the residential !ilding illegally
demolished. +etitioners$ however$ arg!ed that they were allowed to
occ!py the s!7ect property as their dwelling places and were the
ones who ca!sed the renovation consisting of a ;Dedroom anne5$
a covered veranda and with concrete fence and denied
respondents0 demand to vacate and that what they removed was
only the improvements witho!t s!stantially in7!ring the property.
The trial co!rt =nds for Spo!ses Mores. (& reversed.
"ssue# 'hether or not petitioners are !ilders in good faith as
lessees of the s!7ect property.
$el%# Les. TThe Spo!ses Mores0U good faith is !nderscored y the
fact that no one from appellants had o7ected or prevented
appellees from efecting said improvements which$ ovio!sly$ were
!nderta4en in 6!ite a span of time. .ven if we elieve appellant
<ictoria R!DAim0s testimony that they wo!ld only learn of the
introd!ction of s!ch improvements after each of s!ch
improvements had already een !ilt$ Tthe R! silingsU never made
4nown their o7ections thereto nor did they pose a warning against
f!t!re introd!ction of any improvement. &fter all$ the said
improvements were not introd!ced sim!ltaneo!sly. The good faith
referred to y &lida Mores was ao!t the !ilding of the
improvements on the leased s!7ect property. ,owever$ tenants
li4e the spo!ses Mores cannot e said to e !ilders in good faith
as they have no pretension to e owners of the property.U #ndeed$
f!ll reim!rsement of !sef!l improvements and retention of the
premises !ntil reim!rsement is made applies only to a possessor
in good faith$ i.e.$ one who !ilds on land with the elief that he is
the owner thereof. #t does not apply where one0s only interest is
that of a lessee !nder a rental contract3 otherwise$ it wo!ld always
e in the power of the tenant to >improve? his landlord o!t of his
property.
The appellate co!rt is correct in r!ling that &rticle :BE@ of the (ivil
(ode sho!ld apply in the present case. &rticle :BE@ reads:
2f the lessee makes, in good faith, useful improvements
which are suitable to the use for which the lease is
intended, without altering the form or substance of the
property leased, the lessor upon the termination of the
lease shall pay the lessee one9half of the value of the
improvements at that time. (hould the lessor refuse to
reimburse said amount, the lessee may remove the
improvements, even though the principal thing may sufer
damage thereby. =e shall not, however, cause any more
impairment upon the property leased than is necessary.
'ith regard to the ornamental e5penses$ the lessee shall not e
entitled to any reim!rsement$ !t he may remove the ornamental
o7ects$ provided no damage is ca!sed to the principal thing$ and
the lessor does not choose to retain them y paying their val!e at
the time the lease is e5ting!ished.
Donal% Dee vs. CA an% A+elito ,utuc, August 4, 19*9
!acts# /onald /ee and his father so!ght for the advice and
assistance of &melito M!t!c regarding the prolem of the alleged
indetedness of /ewey /ee (/onald0s rother" to (aesar0s +alace
which is a wellD4nown gamling casino at Aas <egas$ Nevada$ JS&$
since /ee0s father was apprehensive of the safety of his son$
having heard that there is a lin4 etween (aesar0s +alace and
ma=a. 'ith the services of M!t!c$ he ass!red to in6!ire into s!ch
prolem with a contracted price of :88$888. 'ith series of
comm!nications and visits to (aesar0s +alace$ the s!pposed
o!tstanding acco!nt of /ee totaling of X:$888$888 was made good
y Ramon Sy$ eing the one who really was indeted. Resolving the
matter$ M!t!c now is as4ing for the remaining 18$888 alance for
attorney0s fees against /ee. %!t /ee ignored the same leading to
the =ling of M!t!c of a collection case. /ee now claimed that there
was no professional relationship etween him and M!t!c in that$
the services rendered y the latter were only an accommodation
for the former as friend of /ee0s family and that the 18$888 already
paid was meant only as >poc4et money? for M!t!c in visiting and
comm!nication to (aesar0s +alace. Trial co!rt =nds in favor of
respondent. (& aHrmed.
"ssue# 'hether or not petitioner is indeed liale for the services
rendered y respondent.
$el%# Les. The asence of a written contract will not precl!de the
=nding that there was a professional relationship which merits
attorney9s fees for professional services rendered. /oc!mentary
formalism is not an essential element in the employment of an
attorney3 the contract may e e5press or implied. To estalish the
relation$ it is s!Hcient that the advice and assistance of an
attorney is so!ght and received in any matter pertinent to his
profession. &n acceptance of the relation is implied on the part of
the attorney from his acting on ehalf of his client in p!rs!ance of a
re6!est from the latter. Tr!e$ the casino was a creditor !t that fact
was not contested or opposed y /ewey /ee$ since the latter$ as
veri=cations revealed$ was not the detor. ,ence$ private
respondent9s representations in ehalf of petitioner were not in
resistance to the casino9s claim !t were act!ally geared toward
proving that fact y estalishing the liaility of the tr!e detor$
Ramon Sy$ from whom payment was !ltimately and correctly
e5acted.
1A

.ven ass!ming that the imp!ted conLict of interests otained$
private respondent9s role therein was not ethically or legally
indefensile. Penerally$ an attorney is prohiited from representing
parties with contending positions. ,owever$ at a certain stage of
the controversy efore it reaches the co!rt$ a lawyer may represent
conLicting interests with the consent of the parties.
17
& common
representation may wor4 to the advantage of said parties since a
m!t!al lawyer$ with honest motivations and impartially cognizant of
the parties9 disparate positions$ may well e etter sit!ated to wor4
o!t an acceptale settlement of their diferences$ eing free of
partisan inclinations and acting with the cooperation and
con=dence of said parties.
,ere$ even ind!lging petitioner in his theory that private
respondent was d!ring the period in 6!estion an agent of (aesar9s
+alace$ petitioner was not !naware thereof$ hence he act!ally
consented to and cannot now decry the d!al representation that he
post!lates. This 4nowledge he admits$ th!s:
#t is a fair 6!estion to as4 why$ of all the lawyers in
the land$ it was the private respondent who was
singled o!t y the petitioner9s father for cons!ltation
in regard to an apparent prolem$ then pending in
(aesar9s +alace. The testimony of &rth!r &le7andrino$
co!sin to private respondent$ and the admission of
the private respondent himself s!pply the answer.
&le7andrino testi=ed that private respondent was the
representative of (aesar7s Palace in the Philippines
8p. 9:, t.s.n., /ov. 9;, <;=:+.l>wph?<.@At Private
respondent testi0ed that he was s"ch representative
tasked by the casino to collect the gambling losses
inc"rred by Bilipinos in 4as Cegas. (p. 1$ t.s.n.$ Sept.
2:$ :I@;".
17
& lawyer is entitled to have and receive the 7!st and reasonale
compensation for services rendered at the special instance and
re6!est of his client and as long as he is honestly and in good faith
trying to serve and represent the interests of his client$ the latter is
o!nd to pay his 7!st fees.
Joa5uin ,a. $errer vs. Arsenio Cruz $errera, Januar- ,
19<7
!acts# This action was ro!ght to recover the price of two oil
paintings$ claimed to have een e5ec!ted y the plaintif !nder the
order of the defendant and accepted y him. #t is evident from the
testimony that there was a mis!nderstanding etween the parties
as to the charter of the order and as to the =nal efect of the
e5hiition of the paintings as the property of the plaintif$ and also
of their delivery to him at his ho!se.
"ssue# 'hether or not there was a perfected sale even if the price
of the wor4 was not =5ed.
$el%# Les. %y virt!e of the r!le in the 5e la ,ama case
.
'e are not
at lierty to enter into an e5amination of these 6!estions of fact
!pon which the trial co!rt has made e5press =ndings$ and which
are concl!sive !pon appeal.
The point of law is raised y the defendant that !nder article :1FF
of the (ivil (ode the contract was not perfect eca!se the price of
the wor4 was not =5ed. Jpon a li4e contention this co!rt has
already passed adversely in the case of Pere6 vs. Pomar (2 +hil.
Rep.$ B@2"$ a holding which is s!stained y the decision of the
s!preme co!rt of Spain of the :@th of )ctoer$ :@II.
&ccordingly there is no gro!nd 7!stifying the reversal of this
7!dgment$ which is aHrmed with the costs of oth instances.
,anuel Ernesto 4onzales vs. @icente ,ateo, et al., !e0. *,
1944
!acts# Respondents$ doing !siness as an !nregistered partnership
!nder the name and style MSamahang Sa!ngang Malaya$M leased
to the petitioner their coc4pit sit!ated in Malolos$ %!lacan$ !nder a
written contract entered into on Can!ary 1$ :I;E$ for the period of
si5 years ending /ecemer ;:$ :IF2$ at the agreed yearly rental of
+:88$ !pon the following conditions:
a. V &ng lahat ng 4ailangan na gagawin sa ahayDsa!ngan
ay ipagagawang lahat ni P. .rnesto Ponzales sa 4anyang
sariling g!gol na ang samahan ay walang sinasagot.
b. V N!ng ma4araan na ang anim (B" na taong
pag4a4a!wis or pag4a!pa$ ang lahat ng me7ora na
nailagay ni P. Ponzales ay maiiwan sa samahan na di
pagaayaran nito.
c. V &ng ahayDsa!ngan at and l!pang 4inatitiri4an nito$
ay ang samahan ang magaayad ng !wis$ at ang ayad
ng arrendamiento ng l!pa ang samahan din ang
magaayad.
%efore !sing said coc4pit the petitioner as lessee made some
improvements thereon. ,e placed the posts on slas of stone$
witho!t cementing them and witho!t !sing 7ointDpins to race them
!p in spite of respondent #sidro %a!tista9s advertence thereto.
)n Septemer :2$ :I;E$ a coc4=ght was held in said coc4pit with a
large attendance. The !ilding ro4e down and was thereafter
never !sed y the petitioner.
The respondent lessors demanded of the petitioner that he either
reconstr!ct the coc4pit or pay them the s!m of +;$888 as damages
in addition to the !npaid rentals. +etitioner ref!sed to comply with
s!ch demand$ alleging that !nder his contract he was not oligated
to ma4e repairs$ !t only improvements$ on the !ilding and that
its collapse was d!e to hidden defects which the lessors had
concealed from him. ,ence this s!it was ro!ght y the lessors
against the lessee$ which was s!stained y the (o!rt of -irst
#nstance of %!lacan$ y which the lessee was ordered to
reconstr!ct the coc4pit or pay to the lessors its val!e in the s!m of
+;$888 pl!s the rentals for the last =ve years amo!nting to +188
and the costs. Jpon appeal to the (o!rt of &ppeals the latter
modi=ed that 7!dgment y red!cing the damages from +;$888 to
+:$888.
"ssue# 'hether or not the lessor has the right to as4 the lessee
either to reconstr!ct the coc4pit or pay the s!m as damages
despite the fact that in the lease contract the lessee is only allowed
to ma4e an improvements and N)T repairs.
$el%# Les. #t is evident that petitioner accepted the coc4pit in
6!estion from respondents in the condition in which it was fo!nd at
the time !nder the e5press agreement that all that was necessary
to p!t it in !se had to e done y the petitioner at his own e5pense
witho!t any oligation on the part of the respondents to reim!rse
him or pay for the improvements th!s made !pon the e5piration of
the lease. 'hile it is tr!e that !nder the law (paragraph 2 article
:11F of the (ivil (ode" it is the d!ty of the lessor to ma4e on the
!ilding leased all repairs necessary in order to 4eep it in
serviceale condition for the p!rpose for which it was intended$ the
parties were at lierty to stip!late the contrary3 and in the instant
case it is ovio!s that the lessors were relieved of that d!ty and the
lessee ass!med it in their stead$ considering the very moderate$ if
not nominal$ rent he was to pay$ with the oligation on the part of
the lessors to pay the real estate ta5es$ and the relatively ig
pro=ts the lessee was to realize from the operation of the coc4pit$
netting +;8 to +F8 a wee4 and +@88 on days on pintakasi (special
holidays for coc4=ghts"$ according to the (o!rt of &ppeals. %e
cannot accept the interpretation urged by the petitioner,
that he was not obligated to make repairs, but only
improvements, on the building. =e was clearly obligated to
do all that was necessary to put the building in serviceable
condition, at his own expense. f course, any work done by
the lessee on the building for that purpose was necessarily
an improvement thereof7 and that was the reason why in
condition >b? above !uoted it was stated that all
improvements shall be for the beneft of the lessors
without any obligation on their part to pay therefor upon
the expiration of the lease.
The collapse of the !ilding in 6!estion on the occasion of the
heavily attended coc4=ght of Septemer :2$ :I;E$ was not d!e to
any hidden defect !t to the fact that thr! petitioner9s negligence
in ma4ing the repairs he failed to place the posts on =rm$ solid$ and
so!nd fo!ndation in spite of one of the lessors9 advertence to him
on the matter.
Jnder article :1B; of the (ivil (ode$ Mthe lessee is liale for any
deterioration or loss s!fered y the thing leased$ !nless he proves
that it too4 place witho!t his fa!lt.M &nd !nder article ::8: of the
same (ode$ any person g!ilty of negligence in the f!l=llment of his
oligations$ or who in any manner whatsoever shall fail to comply
with the terms thereof$ shall e liale for any damage ca!sed
therey.
,arietta Da2u%ao, et al. vs. $on. Consolacion, !rancisco
Ang Singco, et al., June 4, 19*)
!acts# +etitioners are coDowners of a parcel of land on which the
ho!se of -rancisco &nd Singco stood$ eing lessee of the
petitioners. )n :IEE$ witho!t the consent of petitioners$ &nd Singco
sold his ho!se to Aa!recios$ eing in arrears of his rentals for one
year and E months. ,ence$ Marietta /a4!dao demanded Aa!recios
to vacate the premises and for payment of !se and occ!pation of
the same for :88.88 a month. The Aa!recios arg!ed that there has
never een a contract of lease etween /a4!dao and Aa!recios
eca!se the same ho!se was o!ght y them from &ng Singco. The
trial co!rt dismissed the case for !nlawf!l detainer and instead the
co!rt r!led that the action against &ng Singco is converted into a
simple collection of ac4 rentals. The (-# aHrmed and state that
there was an implied contract of lease that was created when
/a4!dao demanded of the Aa!recios to pay rentals.
"ssue# 'hether or not there was a contract of lease which ens!ed.
$el%# No. The private respondents f!rther claim that they cannot
e considered privies or s!ccessorsDinDinterest of the former lessee$
-rancisco &ng Singco$ eca!se &rticle :BFI of the (ivil (ode
provides that Mthe lessee cannot assign the lease witho!t the
consent of the lessor$ !nless there is a stip!lation to the contrary.M
The respondents fail to state y what right they are occ!pying the
land. #f they have no contract$ e5press or implied with the owners
and they have no claim as s!ccessorsDinDinterest of the former
lessee$ they ecome mere !s!rpers or s6!atters thro!gh their own
admission. &rticle :BFI of the (ivil (ode is intended to protect the
owner of the leased property. #t was never intended to permit one
who claims no right to the premises to avoid e7ectment y the
d!io!s allegation that his occ!pation is not lawf!l as the (ivil
(ode prohiits it.
&s a matter of fact$ the respondents averred in their answer =led
with the (ity (o!rt of /avao (ity that the plaintifs$ now petitioners$
gave their consent when the Aa!recios p!rchased the ho!se from
&ng Singco Motherwise the defendants Aa!recio co!ld have desisted
from !ying the s!7ect ho!se.M The defendants averred that the
Aa!recios and the petitioners agreed to maintain the +21.88
monthly rentals at the time of the sale in C!ly$ :IEE !t a year
later$ the lot owners s!ddenly raised the rent to +18.88 monthly
and that Mif defendants Aa!recio have failed to pay their rental$ the
same is d!e to plaintifs9 !nreasonale and malicio!s ref!sal to
receive the payments.M The present claim of the respondents on
the asence of any contract or agreement is d!e to their ta4ing
advantage of the r!ling of the respondent co!rt that Msince no
contract had een e5ec!ted$ either e5press or implied$ an action for
!nlawf!l detainer will not lie against the Aa!recios.M #t was not an
original defense.
The (ity (o!rt fo!nd the averments of the private respondents in
their answer as contrary to the evidence. The facts are:
#t is estalished y the evidence that the plaintifs
have never consented or rati=ed the sale of the
ho!se in 6!estion y the defendant &ng Singco to
the Aa!recios. There has never een any de=nite
agreement etween the plaintif and the Aa!recios as
to the amo!nt of rentals the latter were going to pay.
#n fact the Aa!recios have not paid any amo!nt y
way of rentals to the plaintif e5cept that which they
deposited in (o!rt d!ring the pendency of this case
on -er!ary 2$ :IEI in the amo!nt of +F18.88 for the
period from &!g!st$ :IEE to Can!ary$ :IEI (.5hiit
9;9 and .5hiit 9F9".
Since there was no contract etween the lot owners and the
Aa!recios$ the latter9s occ!pation of the land is only as s!ccessors
of &ng Singco from whom they p!rchased the ho!se !ilt on the
lot. #f &rticle :BFI had een followed and the consent of the owners
to the sale sec!red$ the Aa!recios wo!ld e more than mere
s!ccessorsDinDinterest. They wo!ld have ecome the new lessees.
The !nlawf!l detainer case was proper.
E%uar%o ,anla3at vs. Si+eon Salazar, Jan. )1, 19A7
!acts# The =shpond in 6!estion formerly elonged to three coD
owners who had ta4en t!rns in leasing it to the same person$
%ernardo .nri6!ez. The last lease was signed in :I;: and was to
last >!ntil C!ne :$ :IBE.? &fter the death of %ernardo .nri6!ez$ his
widow$ .speranza P!illen$ s!leased the =shpond$ =rst$ to /r.
Macario (!erpo (r!z and thereafter to the present 5efendant
Simeon Salazar$ the s!lease to the latter to commence from May
;:$ :IFE and last !ntil May ;:$ :IBE. #n :I12$ with the coDowners
of the =shpond already dead$ their sole heir$ Plaintif .d!ardo
Manlapat$ ro!ght the present action in the (o!rt of -irst #nstance
of %!lacan against the s!leasee Simeon Salazar to recover
possession of the =shpond$ alleging that the s!lease to the
5efendant$ as well as the leases e5ec!ted y Plaintif0s
predecessors in interest$ was n!ll and void. %!t the co!rt decided
that those contracts were valid and dismissed Plaintif0s action with
costs. ,ence$ the present appeal$ which$ however$ involves only the
s!lease to the )ppellee$ the )ppellant contending that the lower
co!rt erred in declaring the same valid and inding.
"ssue# 'hether or not the s!lease was valid.
$el%# Les. To determine then whether a given contract
constitutes an assignment of lease and not a mere
sublease, the test is whether the lessee has by said
contract made an absolute transfer of his interest as such
lessee, thus dissociating himself from the original contract
of lease, so that, as :anresa would say, his personality
disappears and there remain only in the *uridical relation
two persons, the lessor and the assignee, who is converted
into a lessee.
The same test is applied$ at common law$ where the transfer of a
leasehold y the lessee is deemed an assignment of lease only if he
cedes his entire interest in the estate3 whereas$ if he retains a
reversionary interest$ however small$ the transfer is deemed a
mere s!lease. (;2 &m. C!r. 2I83 chan rolesvirt!alawlirary1: (.D.
S. 11;." So$ if the lessee !nderlets for a period less than the entire
term or reserves for himself a reversionary interest in the term$ the
transaction is a s!letting. (1: (.D. S. 111."
'ith the aove distinction in mind$ it seems ovio!s from an
e5amination of the terms of the doc!ment e5ec!ted y .speranza
P!illen in favor of the )ppellee V identi=ed in evidence as .5hiit
>1? V that the said doc!ment is one of s!lease. #n the =rst place$
the original lease is$ as already stated$ to last >!ntil C!ne :$ :IBE.?
)n the other hand$ the s!lease is to last only !ntil May ;: of that
year. The s!lease is th!s for a shorter period than the original
lease. & reservation of even so short a period as the last day of the
term is eno!gh to ma4e the transfer a s!lease. (;1 (.D. II83 /avis
vs. Morris$ ;B NR 1BI." #ndeed$ it is held that >the mere fact that
the lessor is to receive a s!rrender of the premises on the last day
of the term prevents the transfer from eing an assignment.?
(M!rdoc4 et al. vs. -ishel et al.$ :2: NRS B2F3 ;1 (.D. I@I." #t is tr!e
that the s!lessor states in .5hiit >1? that her possession !nder
the original lease wo!ld last !p to May ;:$ :IBE (>tatagal pa
hanggang sa Mayo ;:$ :IBE?"$ and from this )ppellant arg!es that
in =5ing the term of the s!lease so that it wo!ld e5pire on May ;:$
:IBE$ the s!lessor m!st have intended to transfer her entire
interest in the lease. The arg!ment$ however$ is ased !pon mere
con7ect!re. &ct!ally$ the s!lessor has not transferred her interest
for the entire period of the original lease$ and this may well e d!e
to a desire to repossess the =shpond earlier so that she co!ld
prepare it for delivery to the owner.
The terms of the s!lease .5hiit >1?$ also f!rnish f!rther proof
that the lessee$ now s!lessor$ has not dissociated herself from the
original lease and that$ as Manresa wo!ld say$ her personality has
not disappeared. (ondition No. 2$ which inds her to respect the
s!lease and to pay damages sho!ld she again s!lease the
=shpond to another person$ is inconsistent with the idea that she
had entirely given !p her interest in the estate. .6!ally inconsistent
with this idea are condition No. ;$ in which the s!lessor inds
herself to pay the land ta5es on the =shpond and s!ch other ta5es
as may e e5acted y the Povernment3 condition No. F$ which
forids the c!tting of any tree in the =shpond witho!t the
s!lessor0s written consent3 and lastly$ condition No. 1$ which
re6!ires the s!lessee to ret!rn the =shpond !pon the e5piration of
the s!lease in as good a condition as when he too4 possession of
it. 'ith regard to the condition last named$ )ppellant oserves that
it does not specify that it is to the s!lessor that the =shpond is to
e ret!rned y the s!lessee. =ut ho( coul% the su0lessor
%eter+ine the con%ition o/ the Csh3on% i/ the sa+e (ere
not to 0e returne% to herB :oreover, as the contract is
between sublessor and sublessee, the return of the
property ob*ect of the contract would naturally, in the
absence of a diferent stipulation, have to be made to the
sublessor.
Notice may also e ta4en of the fact that the s!lessor has$ in her
contract with the s!lessee$ !sed the Tagalog word pa!!wisan
(will lease". She says: > cralaw a4ing isasalin$ ililipat at
pa!!wisan ang a4ing posicion at pam!m!wisan sa naang!it na
palaisdaan cralaw > This cla!se clearly means that the lessee is
transferring possession of the =shpond !nder lease to her and
renting it (i.e. s!leasing it" to the transferee.
#t eing clear that the contract .5hiit >1? is a s!lease$ the trial
co!rt did not err in considering it as s!ch and in declaring it valid$
there eing nothing against it in the original contract of lease.
E5uatorial Realt- Dev. "nc, an% Car+elo : =auer+ann, "nc.
vs. ,a-/air Eheater "nc., Nov. 1, 1997
!acts# The property involving a two storey !ilding constr!cted on
a parcel of land located at (laro M. Recto &ven!e$ Manila was
s!7ected to a lease contracts with Mayfair for the latter0s !se as a
motion pict!re theater and for a term of 28 years. Mayfair
thereafter constr!cted a movie ho!se 4nown as >Ma5in Theater?
and another for >Miramar Theater?. (armelo then informed Mayfair
that it is desiro!s of selling the entire (laro M. Recto property.
Mayfair 7!st replied that it will let (armelo e informed of its
decision and stating that$ >@. That if the A.SS)R sho!ld desire to
sell the leased premises the A.SS.. shall e given ;8Ddays
e5cl!sive option to p!rchase the same. #n the event$ however$ that
the leased premises is sold to someone other than the A.SS..$ the
A.SS)R is o!nd and oligated$ as it is (sic" hereinds (sic" and
oligates itself$ to stip!late in the /eed of Sale thereof that the
p!rchaser shall recognize this lease and e o!nd y all the terms
and conditions hereof (sic".? ,owever$ fo!r years later$ (armelo
sold the entire property to .6!atorial. ,ence$ Mayfair instit!ted an
action for speci=c performance and ann!lment of sale of the leased
premised to .6!atorial. (armelo arg!ed in its defense that the
option to p!rchase invo4ed y Mayfair was n!ll and void eca!se it
lac4ed consideration. Trial co!rt =nds for (armelo. (& reversed.
"ssue# 'hether or not there was a valid option contract involved.
$el%# No. 'e agree with the respondent (o!rt of &ppeals that the
aforecited contract!al stip!lation provides for a right of =rst ref!sal
in favor of Mayfair. It is not an option cla"se or an option contract. #t
is a contract of a right of =rst ref!sal. &s early as :I:B$ in the case
of Bea"mont vs. Prieto$

!ne6!ivocal was o!r characterization of an
option contract as one necessarily involving the choice granted to
another for a distinct and separate consideration as to whether or
not to p!rchase a determinate thing at a predetermined =5ed price.
Notaly$ in one case we held that the lessee loses his right to !y
the leased property for a named price per s6!are meter !pon
fail!re to ma4e the p!rchase within the time speci=ed3
17
in one
other case we freed the landowner from her promise to sell her
land if the prospective !yer co!ld raise +F$188.88 in three wee4s
eca!se s!ch option was not s!pported y a distinct consideration3
1*
in the same vein in yet one other case$ we also invalidated an
instr!ment entitled$ M)ption to +!rchaseM a parcel of land for the
s!m of +:$1:8.88 eca!se of lac4 of consideration3
19
and as an
e5ception to the doctrine en!merated in the two preceding cases$
in another case$ we r!led that the option to !y the leased
premises for +:2$888.88 as stip!lated in the lease contract$ is not
witho!t consideration for in reciprocal contracts$ li4e lease$ the
oligation or promise of each party is the consideration for that of
the other.
<
#n all these cases$ the selling price of the o7ect thereof
is always predetermined and speci=ed in the option cla!se in the
contract or in the separate deed of option. 'e el!cidated$ th!s$ in
the very recent case of )ng E" )s"ncion vs. (o"rt of )ppeals
1
that:
. . . #n sales$ partic!larly$ to which the topic for
disc!ssion ao!t the case at ench elongs$ the
contract is perfected when a person$ called the
seller$ oligates himself$ for a price certain$ to deliver
and to transfer ownership of a thing or right to
another$ called the !yer$ over which the latter
agrees. &rticle :F1@ of the (ivil (ode provides:
&rt. :F1@. %y the contract of sale one
of the contracting parties oligates
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 e6!ivalent.
& contract of sale may e asol!te or
conditional.
'hen the sale is not asol!te !t conditional$ s!ch
as in a M(ontract to SellM where invarialy the
ownership of the thing sold in retained !ntil the
f!l=llment of a positive s!spensive condition
(normally$ the f!ll payment of the p!rchase price"$
the reach of the condition will prevent the oligation
to convey title from ac6!iring an oligatory force. . . .
&n !nconditional m!t!al promise to !y and sell$ as
long as the o7ect is made determinate and the price
is =5ed$ can e oligatory on the parties$ and
compliance therewith may accordingly e e5acted.
&n accepted !nilateral promise which speci=es the
thing to e sold and the price to e paid$ when
co!pled with a val!ale consideration distinct and
separate from the price$ is what may properly e
termed a perfected contract of option. This contract
is legally inding$ and in sales$ it conforms with the
second paragraph of &rticle :FEI of the (ivil (ode$
vi6:
&rt. :FEI. . . .
&n accepted !nilateral promise to !y
or to sell a determinate thing for a
price certain is inding !pon the
promisor if the promise is s!pported y
a consideration distinct from the price.
(:F1:a".
)serve$ however$ that the option is not the contract
of sale itself. The optionee has the right$ !t not the
oligation$ to !y. )nce the option is e5ercised
timely$ i.e.$ the ofer is accepted efore a reach of
the option$ a ilateral promise to sell and to !y
ens!es and oth parties are then reciprocally o!nd
to comply with their respective !nderta4ings.
Aet !s el!cidate a little. & negotiation is formally
initiated y an ofer. &n imperfect promise
(policitacion" is merely an ofer. +!lic
advertisements or solicitations and the li4e are
ordinarily constr!ed as mere invitations to ma4e
ofers or only as proposals. These relations$ !ntil a
contract is perfected$ are not considered inding
commitments. Th!s$ at any time prior to the
perfection of the contract$ either negotiating party
may stop the negotiation. The ofer$ at this stage$
may e withdrawn3 the withdrawal is efective
immediately after its manifestation$ s!ch as y its
mailing and not necessarily when the oferee learns
of the withdrawal (Aa!dico vs. &rias$ F; +hil. 2E8".
'here a period is given to the oferee within which to
accept the ofer$ the following r!les generally govern:
(:" #f the period is not itself fo!nded !pon or
s!pported y a consideration$ the oferor is still free
and has the right to withdraw the ofer efore its
acceptance$ or if an acceptance has een made$
efore the oferor9s coming to 4now of s!ch fact$ y
comm!nicating that withdrawal to the oferee (see
&rt. :;2F$ (ivil (ode3 see also &t4ins$ Nroll O (o. vs.
(!a$ :82 +hil. IF@$ holding that this r!le is applicale
to a !nilateral promise to sell !nder &rt. :FEI$
modifying the previo!s decision in So!th 'estern
S!gar vs. &tlantic P!lf$ IE +hil. 2FI3 see also &rt.
:;:I$ (ivil (ode3 R!ral %an4 of +araYa6!e$ #nc. vs.
Remolado$ :;1 S(R& F8I3 Sanchez vs. Rigos$ F1
S(R& ;B@". The right to withdraw$ however$ m!st not
e e5ercised whimsically or aritrarily3 otherwise$ it
co!ld give rise to a damage claim !nder &rticle :I of
the (ivil (ode which ordains that Mevery person
m!st$ in the e5ercise of his rights and in the
performance of his d!ties$ act with 7!stice$ give
everyone his d!e$ and oserve honesty and good
faith.M
(2" #f the period has a separate consideration$ a
contract of MoptionM deemed perfected$ and it wo!ld
e a reach of that contract to withdraw the ofer
d!ring the agreed period. The option$ however$ is an
independent contract y itself3 and it is to e
disting!ished from the pro7ected main agreement
(s!7ect matter of the option" which is ovio!sly yet
to e concl!ded. #f$ in fact$ the optionerDoferor
withdraws the ofer efore its acceptance (e5ercise of
the option" y the optioneeDoferee$ the latter may
not s!e for speci=c performance on the proposed
contract (Mo7ectM of the option" since it has failed to
reach its own stage of perfection. The optionerD
oferor$ however$ renders himself liale for damages
for reach of the opinion. . .
#n the light of the foregoing dis6!isition and in view of the
wording of the 6!estioned provision in the two lease
contracts involved in the instant case$ we so hold that no
option to p!rchase in contemplation of the second
paragraph of &rticle :FEI of the (ivil (ode$ has een
granted to Mayfair !nder the said lease contracts.
Respondent (o!rt of &ppeals correctly r!led that the said
paragraph @ grants the right of =rst ref!sal to Mayfair and is
not an option contract. #t also correctly reasoned that as
s!ch$ the re6!irement of a separate consideration for the
option$ has no applicaility in the instant case.
There is nothing in the identical +aragraphs M@M of the C!ne
:$ :IBE and March ;:$ :IBI contracts which wo!ld ring
them into the amit of the !s!al ofer or option re6!iring an
independent consideration.
&n option is a contract granting a privilege to !y or sell
within an agreed time and at a determined price. #t is a
separate and distinct contract from that which the parties
may enter into !pon the cons!mmation of the option. #t
m!st e s!pported y consideration.

#n the instant case$
the right of =rst ref!sal is an integral part of the contracts of
lease. The consideration is !ilt into the reciprocal
oligations of the parties.
To r!le that a contract!al stip!lation s!ch as that fo!nd in
paragraph @ of the contracts is governed y &rticle :;2F on
withdrawal of the ofer or &rticle :FEI on promise to !y
and sell wo!ld render in efect!al or Min!tileM the provisions
on right of =rst ref!sal so commonly inserted in leases of
real estate nowadays. The (o!rt of &ppeals is correct in
stating that +aragraph @ was incorporated into the contracts
of lease for the ene=t of Mayfair which wanted to e
ass!red that it shall e given the =rst crac4 or the =rst
option to !y the property at the price which (armelo is
willing to accept. #t is not also correct to say that there is no
consideration in an agreement of right of =rst ref!sal. The
stip!lation is part and parcel of the entire contract of lease.
The consideration for the lease incl!des the consideration
for the right of =rst ref!sal. Th!s$ Mayfair is in efect stating
that it consents to lease the premises and to pay the price
agreed !pon provided the lessor also consents that$ sho!ld
it sell the leased property$ then$ Mayfair shall e given the
right to match the ofered p!rchase price and to !y the
property at that price. &s stated in Cda. 5e F"irino vs.
Palarca$
)
in reciprocal contract$ the oligation or promise of
each party is the consideration for that of the other.
'e%ro 'a+intuan an% Ru3erto Ean vs. CA, Lorente
Larisantos an% Lour%es Larisantos, Nov. 9, 1971
!acts# The complaint for rescission was =led y private
respondents who s!cceeded to the rights of the previo!s lessor$
+atrocinio &. <da. de Paerlan from which the disp!ted two lots
sit!ated in Sampaloc$ Manila were$ p!rchased. The lease contract
in favor of private petitioners Tan and +amint!an provided for an
agreed monthly rental of +:1.88 payale promptly at the end of
every month for each lot or +;8.88 for the two$ the lease entered
into on )ctoer :8$ :I1: to e5pire at the discretion of the lessee
after twenty years. There was another provision that fail!re on the
part of the lessee to pay the rental for si5 consec!tive months
wo!ld a!tomatically ann!l the contract.

The complaint for
rescission =led y private respondents as plaintifs against
petitioners as defendants on Novemer :2$ :I1I alleged that with
respect to the =rst lot$ defendant$ now petitioner$ R!perto Tan$ was
in arrears for the period of twelve months and$ with respect to the
second lot$ for a period of eight months. The 7!dgment was in favor
of private respondents as plaintifs$ the contract of lease eing
rescinded y virt!e of the aove (ivil (ode provision.
"ssue# 'hether or not petitioners violated the provisions in the
contract of lease as to the monthly rental eing promptly paid at
the end of every month to private respondents therey granting
right of the latter to rescind the contract of lease.
$el%# Les. Th!s: M/efendants$ however ta4e e5ception to the said
remedy y rescission$ contending that there is paragraph ; of the
said lease contract providing 9That fail!re on the part of the TlesseeU
to pay rentals for si5 (B" consec!tive months shall a!tomatically
ann!l this contract.9 /efendants9 arg!ment at page 28 of their rief
r!ns th!s: 9'hat good is there to grant the lessees a si5Dmonth
period of grace if the lessor can rescind the lease contract anyway$
with !t a month9s fail!re pay the same rentalsK9 The afore6!oted
arg!ment was neatly answered y the lower co!rt as follows: 9The
right to rescind the contract p!rs!ant to &rticle :B1I of the (ode is
diferent from the a!tomatic ann!lment of same contract in
accordance with the provision of paragraph ; thereof. They arise
from diferent cases and are ased on diferent gro!nds. #n ma4ing
deposit rentals at si5Dmonth intervals$ the defendants prevent
a!tomatic cancellation of the contract !t did not depress the
owner to as4 for the rescission of the contract fail!re of the lessee
to pay the stip!lated rentals promptly at the end of every month. #t
was never contemplated that the rentals were to e payale every
si5 months$ otherwise$ there wo!ld have een no necessity for the
stip!lation in paragraph 2 of the contract. #ndeed$ the intention that
the lessee sho!ld pay rentals monthly is emphasized y the
provision that s!ch rentals sho!ld e paid 9promptly at the end of
every month9. #t wo!ld th!s appear clear that the =rst error
assigned to the efect that the contract of lease co!ld not e
rescinded is devoid of merit. &rticle :B1I spea4s in categorical
lang!age. +rivate respondents$ as the aggrieved parties$ had the
right to as4 for rescission$ there eing a fail!re on the part of
petitioners to comply with their oligations as lessee and s!lessee
respectively. 'ith the lessors having decided to avail themselves of
s!ch a right !nder the law$ no co!rt can validly stand in the way of
the enforcement thereof. That was what the lower co!rt presided
y the ,onorale C!dge (onrado <as6!ez$ and respondent (o!rt of
&ppeals did. To imp!te what was done y them as error wo!ld e to
disregard what the law so plainly commands.
&n e5cerpt from an opinion in Malicsi v. (arpi6o$
*
penned y C!stice
%arrera$ is relevant. Th!s: M&nd$ &rticle :B1I of the same (ode
e5pressly provides$ among others$ that if the lessee sho!ld not
comply with his oligation of paying the price (rental of the lease
according to the terms stip!lated"$ 9the aggrieved party may as4 for
the rescission of the contract and indemni=cation for damages$ or
only the latter$ allowing the contract to remain in force9. #n the
instant case$ appellant failed and ref!sed to pay the monthly
stip!lated rental of the property s!7ect matter of the
aforementioned lease contract for the months of Can!ary and
-er!ary$ :I1@. (onse6!ently$ appellee had the right !nder said
provision of the (ivil (ode to ring$ as he did$ the present action for
rescission of said (ontract of Aease$ and the trial co!rt correctly
declared the rescission thereof. &ppellant claims that she had not
defa!lted in the payment of said rental as no demand to ma4e
payment was made on her y appellee. This is a 6!estion of fact
which can not e raised here and the =nding of the lower co!rt to
this efect is inding on !s.9M
$eirs o/ !austa Di+aculangan vs. "AC an% !eli+on .-, !e0.
<, 19*9
!acts# -a!sta /imac!langan and her children$ petitioners herein$
occ!py y lease an apartment located at No. 2FI8 .. Zamora St.$
+asay (ity$ at a monthly rental of +2B8.88. They have een living in
said premises since :IB:. To a!gment its income$ the family
maintains therein a sariDsari store and a4es hot pan de sal to sell
to the general p!lic. The capital investment involved is claimed to
e +;$288.88 only.
)n C!ly 1$ :IE@$ private respondent -elimon Jy sent -a!sta
/imac!langan a registered letter informing her that the property
which she has een occ!pying has een sold to him and sho!ld she
desire to contin!e occ!pying the same$ she sho!ld sign a contract
of lease for a period of two (2" years at a monthly rental of
+:$188.88. Receiving no reply to his letter$ the private respondent
sent a second one$ demanding payment of +E18.88 covering
!npaid rentals for the months of &!g!st$ Septemer and )ctoer$
:IE@ !t still he received no answer to hisDdemand. Th!s$ he =led
with the (ity (o!rt of +asay (ity a complaint for e7ectment
1
praying$ among others$ that said co!rt render 7!dgment ordering
-a!sta /imac!langan and all persons claiming rights !nder her to
vacate the leased premises. The trial co!rt r!led in increasing the
rentals and =5ing a de=nite lease contract term. (& aHrmed. #&(
dismissed the case.
"ssue# 'hether or not the contract of lease is for an inde=nite
period applying +/ 28.
$el%# No. #t has een estalished that petitioners have een
occ!pying the leased premises on a veral contract since :IB: at a
monthly rent of +218.88$ and that altho!gh no =5ed period for the
d!ration of the lease has een agreed !pon the original lessor and
lessee$ the rentals were paid monthly.
Jnder the circ!mstances$ there appears to e no disp!te that
s!7ect contract of lease is covered y +./. 28 and later y %.+. No.
21.
The decisive iss!e therefore$ in this case$ is whether or not s!7ect
contract of lease is for an inde=nite period$ for the p!rpose of
applying +residential /ecree No. 28.
The pertinent provision of +./. No. 28 reads:
S.(. F. V .5cept when the lease is for a de=nite
period$ the provisions of paragraph (:" of &rticle
:BE; of the (ivil (ode of the +hilippines insofar as
they refer to dwelling !nit or land on which another9s
dwelling is located shall e s!spended !ntil
otherwise provided3 !t other provisions of the (ivil
(ode and the R!les of (o!rt of the +hilippines on
lease contracts$ insofar as they are not in conLict
with the provisions of this act$ shall apply.
To e5empt the lease from the application of +./. No. 28$ it m!st e
one with a de=nite period.
#t will e recalled that the agreement etween the original lessor
and lessee was !nwritten$ so that it is diHc!lt to determine with
certainty the terms and conditions agreed !pon.
%e that as it may$ it is !ndisp!ted that the rentals are paid monthly.
This (o!rt had already r!led that leases are deemed on a MmonthD
toDmonth asisM$ if rentals therefore are paid monthly.
7

Similarly$ it is well settled that a lease contract Mon a monthDto
month asisM provides for a de=nite period and may e terminated
at the end of any month.
*
%y e5press e5ception of +./. No. 28$
7!dicial e7ectment lies when the lease is for a de=nite period or
when the =5ed or de=nite period agreed !pon has e5pired.
9
.ven more recently$ this (o!rt clari=ed that M(#"n e5empting from
s!spension e7ectments on the gro!nd of the e5piration of the lease
period$ Section F of +residential /ecree No. 28 made no distinction
etween oral and written lease contracts and no distinction may$
therefore$ e inferred. (onse6!ently$ at the time of =ling her action
the private respondent had a clear and ind!itale right to e7ect
the petitioners$ the period of the latter9s lease e5piring at the end
of every monthly period ...
1<
The (o!rt f!rther pointed o!t that the
Rent (ontrol Aaw now in force$ %atas +amansa %lg. @EE$ has
erased the distinction etween oral and written leases insofar as
e5piration of the lease period as a gro!nd for 7!dicial e7ectment in
leases covered y said law$ is concerned.
(iting the case of Mabalot v. Madela Dr.
1
the (o!rt of &ppeals r!led
that the petition has een rendered moot and academic y the
death of the lessee -a!sta /imac!langan$ which terminated the
lease in her favor. #t will e noted however$ that in the aforecited
case$ those see4ing to contin!e in possession of the premises were
not the heirs of the lessee !t merely memers of the lessee9s
ho!sehold$ which does not apply in the case at ar$ where
petitioners are the lessee9s children. &!thorities are of the view that
lease is not essentially personal in character$ th!s the right is
transmissile to the heirs.
S3ouses Ro0erto !er+in an% ,a- Lin%a !erraren vs. CA an%
S3ouses ,eliton Al3as, Jr. an% Luc- Al3as, ,a- 7, 1991
!acts# & parcel of land owned y Spo!ses -ermin at Mandal!yong
(ity was leased to Spo!ses &lpas for a term of :8 years renewale
for another :8 years !pon MJTJ&A &PR..M.NT of the parties with
a rental =5ed at 1$888 yearly. Spo!ses &lpas !ilt on s!ch leased
premises a wareho!se str!ct!re of strong materials. ,owever$ while
the Spo!ses -ermin were in the Jnited States$ they appointed
.spinas as their attorneyDinDfact in entering into a +roperty
&dministration &greement with &PR& O (o. Before the epiration of
the <G year lease period, Spo"ses )lpas thr" a representative sent
a doc"ment to Spo"ses Bermin entitled H4ease of ,eal PropertyI
already signed by them which was not signed by the lessor.
&nother administrator (Ney Management (orp." of the lease
premises informed Spo!ses &lpas that they are !nilaterally
terminating the contract of lease. ,owever$ Spo!ses &lpas advised
the lessor that the lease contract had already een renewed for
another :8 years. ,ence$ petitioner =led an e7ectment s!it against
Spo!ses &lpas. Trial co!rt dismissed the complaint. RT( ordered
respondent to vacate the premises. (& reversed.
"ssue# 'hether or not there was a renewal of the contract of lease
in the case at ar.
$el%# No. & reading of the lease agreement shows that it is for a
term of ten (:8" years and that the lease shall e renewale for
another term of :8 years !pon m!t!al agreement of the parties.
A
The agreed rental is +1$888.88 per ann"m with the escalation
cla!se that the rental shall e increased y :82 at the end of each
=veDyear period co!nted from the efectivity of the lease
agreement.
7
&fter the :8Dyear term and d!ring the renewal period$
the lessee may$ at hisQtheir own option and discretion$ terminate
the lease$ after giving the lessors a previo!s written notice in
advance$ at least :@8 days from the efective date of termination.
7
Jpon termination of the lease after the =rst :8 years$ all
improvements which are permanent in nat!re that may have een
constr!cted y the lessee on the leased properties$ shall ecome
properties of the lessors$ their heirs or assigns$ witho!t any f!rther
oligation to reim!rse the lessees. The lessee has the priority to
p!rchase the property if the lessors decide to sell said property.
*
%efore the e5piration of the :8 year term of the lease$ private
respondents manifested their desire to renew the lease when they
sent petitioners9 representative a prepared lease agreement
already signed y them !t it was never signed nor ret!rned y
petitioners.
-rom the foregoing set of facts$ it cannot e said that the lease
agreement had een efectively renewed for another :8 years. The
stip!lation of the parties is clear in that s!ch a renewal is s!7ect to
the m!t!al agreement of the parties. 'hile there is no 6!estion
that private respondents e5pressed their desire to renew the lease
y another :8 years at the rate of the rental stip!lated in the lease
agreement$ apparently petitioners wo!ld e willing to renew said
lease if the rentals are increased to +2$888.88 monthly. )vio!sly$
there was no meeting of the minds as to the rate of the rental. &s
there was no agreement reached$ then the term of the lease may
not e considered to have een renewed for another :8 years.
,owever$ since after the e5piration of the lease agreement$ the
private respondents contin!ed to occ!py the premises for more
than :1 days with the ac6!iescence of petitioners$ then it is
!nderstood that there is an implied new lease$ not for the period of
the original contract$ !t from year to year. &rticle :BE8 of the (ivil
(ode so provides for this sit!ation.
&rt. :BE8. #f at the end of the contract the lessee
sho!ld contin!e en7oying the thing leased for =fteen
days with the ac6!iescence of the lessor$ and !nless
a notice to the contrary y either party has
previo!sly een given$ it is !nderstood that there is
an implied new lease$ not for the period of the
original contract$ !t for the time estalished in
articles :B@2 and :B@E. The other terms of the
original contract shall e revived.
There is th!s an implied renewal of the lease from year to year. The
e5tension of the lease for one year from March :B$ :I@B to March
:1$ :I@E shall e at the agreed monthly rental in the contract of
+B$:18.88 considering the escalation cla!se of :82 after every =ve
(1" years. ,owever$ from March :B$ :I@E$ the rate of monthly
rental sho!ld e +2$888.88 as demanded y petitioners !ntil
private respondents vacate the premises.