9. Regina Dizon et al v. CA and Overland Express Lines, Inc. G.R. No. 122544 January 28, 1999 Martinez, J.

FACTS: Overland Express Lines, Inc. entered into a Contract of Lease with Option to Buy with petitioners involving a 1,755.80 square meter parcel of land situated at corner MacArthur Highway and South H Street, Diliman, Quezon City. The term of the lease was fo r 1 year commencing from May 16, 1974 up to May 15, 1975. During this period, Overland Express Lines was granted an option to purchase for the amount of P3,000.00 per square meter. Thereafter, the lease shall be on a per month basis with a monthly rental of P3,000.00. For failure of Overland Express Lines to pay the increased rental of P8,000.00 per month effective June 1976, petitioners filed an action for ejectment against it. The lower court rendered judgment ordering Overland Express Lines to vacate the leased premises and to pay the sum of P624,000.00 representing rentals in arrears and/or as damages in the form of reasonable compensation for the use and occupation of the premises during the period of illegal detainer from June 1976 to November 1982 at the monthly rental of P8,000.00, less payments made, plus 12% interest per annum from November 18, 1976, the date of filing of the complaint, until fully paid, the sum of P8,000.00 a month starting December 1982, until Overland Express Lines fully vacates the premises, and to pay P20,000.00 as and by way of attorneys fees. ISSUE: WON Overland Express Lines actually paid the alleged P300,000.00 to Fidela Dizon, as representative (agent) of petitioners in consideration of the option HELD: No. CA opined that the payment by Overland Express Lines of P300,000.00 as partial payment for the leased property, which petitioners accepted (through Alice A. Dizon) and for which an official receipt was issued, was the operative act that gave rise to a perfected contract of sale, and that for failure of petitioners to deny receipt thereof, Overland Express Lines can therefore assume that Alice A. Dizon, acting as agent of petitioners, was authorized by them to receive the money in their behalf. CA went further by stating that in fact, what was entered into was a conditional contract of sale wherein ownership over the leased property shall not pass to the Overland Express Lines until it has fully paid the purchase price. Since Overland Express Lines did not consign to the court the balance of the purchase price and continued to occupy the subject premises, it had the obligation to pay the amount of P1,700.00 in monthly rentals until full payment of the purchase price. In an attempt to resurrect the lapsed option, Overland Express Lines gave P300,000.00 to petitioners (thru Alice A. Dizon) on the erroneous presumption that the said amount tendered would constitute a perfected contract of sale pursuant to the contract of lease with option to buy. There was no valid consent by the petitioners (as co-owners of the leased premises) on the supposed sale entered into by Alice A. Dizon, as petitioners alleged agent, and Overland Express Lines. The basis for agency is representation and a person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. As provided in Article 1868 of the New Civil Code, there was no showing that petitioners consented to the act of Alice A. Dizon nor authorized her to act on their behalf with regard to her transaction with private respondent. The most prudent thing private respondent should have done was to ascertain the extent of the authority of Alice A. Dizon. Being negligent in this regard, private respondent cannot seek relief on the basis of a supposed agency. Every person dealing with an agent is put upon inquiry and must discover upon his peril the authority of the agent. If he does not make such inquiry, he is chargeable with knowledge of the agents authority, and his ignorance of that authority wil l not be any excuse. Persons dealing with an assumed agency, whether the assumed agency be a general or special one, are bound at their peril, if they would hold the principal, to ascertain not only the fact of the agency but also the nature and extent of the authority, and in case either is controverted, the burden of proof is upon them to establish it.

10. Toyota Shaw, Inc. vs. CA Facts: Sosa wanted to purchase a Toyota Lite Ace. upon contacting Toyota Shaw, Inc., he was told that there was an available unit. Sosa and his son, Gilbert, went to the Toyota and met Bernardo, a sales representative of Toyota. The parties agreed that

the car shall be delivered on June 17, 1989 and that the balance of the purchase price would be paid by credit financing through B.A. Finance. They accomplished a printed Vehicle Sales Proposal (VSP) which shows that the customer's name, home address , the model series of the vehicle, the installment mode of payment with the initial cash outlay down. On the date of the delivery, the vehicle was not delivered. Toyota alleged that no sale was entered into between it and Sosa. Issue: WON the stnadard VSP woulfd represent a contract of sale between the parties. Ruling: Neither logic nor recourse to one's imagination can lead to the conclusion that VSP is a perfected contract of sale. It is not a contract of sale, thus no obligation on the part of Toyota to transfer ownership of a determinate thing to Sosa and no correlative obligation on the part of the latter to pay therefor a price certain appears therein. A definite agreement on the manner of payment of the price is an essential element in the formation of a binding and enforceable contract of sale. This is so because the agreement as to the manner of payment goes into the price such that a disagreement on the manner of payment is tantamount to a failure to agree on the price. Definiteness as to the price is an essential element of a binding agreement to sell personal property. The VSP was a mere proposal which was aborted in lieu of subsequent events. It follows that the VSP created no demandable right in favor of Sosa for the delivery of the vehicle to him, and its non-delivery did not cause any legally indemnifiable injury.

13. Peoples Homesite and Housing Corp. vs. CTA Facts: The PHHC board of directors passed Resolution No. 513 awarding to Spouses Mendoza the Consolidation Subdivision Plan on Lot 4 subject to the approval of the Quezon City Council. The city council disapproved the said proposed plan. However approval was made by the said council upon submission of a revised plan reducing the land area. Later on, PHHC board of directors passed another resolution withdrawing the tentative award to the Mendoza -spouses who never paid the price of the lot nor made the 20% initial deposit. The spouses contend that there was a perfected sale of Lot 4 thus they can enforce against the PHHC an action for specific performance. Issue: WON there was a perfected contract of sale. Ruling: There was no perfected contract of sale of Lot 4. It was conditionally or contingently awarded to the Mendozas subject to the approval by the city council of the proposed consolidation subdivision plan and the approval of the award by the valuation committee and higher authorities. When the plan with the area of Lot 4 reduced to 2,608.7 square meters was approved, the Mendozas should have manifested in writing their acceptance of the award for the purchase of Lot 4 just to show that they were still interested in its purchase although the area was reduced and to obviate ally doubt on the matter. They did not do so. The PHHC board of directors acted within its rights in withdrawing the tentative award. We cannot say there was a meeting of minds on the purchase of Lot 4. 14. Artates Pojas vs. Urbi, Et. Al. Facts: Spouses Artates and Pojas sought the annulment of the execution of a homestead issued and duly registered in their names. A public sale was made to satisfy a judgment against Artates, which amount was awarded to Urbi for physical injuries. Plaintiff spouses alleged that said sale violated the provision of the Public Land Law exempting said property from execution from any debt contracted within the five-year period from the date of the issuance of the patent. Issue: WON the execution sale is valid. Ruling: The execution sale is null and void. As thus prescribed by law, for a period of five years from the date of the government grant, lands acquired by free or homestead patent shall not only be incapable of being encumbered or alienated in favour of the government itself or any of its institutions or of duly constituted banking corporations, but also, they shall not be liable to the satisfaction of any debt contracted within the said period, whether or not the indebtedness shall mature during or after the prohibited time. This provision is mandatory and a sale made in violation thereof is null and void and produces no effect. Though it may be a limitation on the right of ownership of the grantee, the salutary purpose of the provision is to preserve and keep for the homesteader or his family the land given to him gratuitously by the State, so that being a property owner, he may become and remain a contented and useful member of the society. 15. Cavite Development Bank v. Lim

Date: Feb. 1, 2000 Ponente: Mendoza, J. Facts: June 15, 1983 Rodolfo Guansing obtained a loan from CDB, to secure which he mortgaged a parcel of land situated at La Loma and covered by TCT registered in his name. As Guansing defaulted in the payment of his loan, CDB foreclosed the mortgage. The mortgaged property was sold to CDB as the highest bidder at the foreclosure sale. Guansing failed to redeem, and CDB consolidated title to the property in its name. June 16, 1988 private respondent Lolita Chan Lim, assisted by a broker named Remedios Gatpandan, offered to purchase the property from CDB. Written Offer to Purchase: We hereby offer to purchase your property at #63 Calavite and Retiro Sts., La Loma, Quezon City for P300,000.00 under the following terms and conditions: (1) 10% Option Money; (2) Balance payable in cash; (3) Provided that the property shall be cleared of illegal occupants or tenants. Lim paid CDB P30,000 as Option Money. After some time following up the sale, Lim discovered that the subject property was originally registered in the name of Perfecto Guansing, father of mortgagor Rodolfo. Rodolfo succeeded in having the property registered in his name under TCT No. 300809, the same title he mortgaged to CDB. It appears, however, that the father, Perfecto, instituted a civil case for the cancellation of his sons title. The trial court rendered a decision restoring Perfectos previous title and cancelli ng TCT No. 300809 on the ground that the latter was fraudulently secured by Rodolfo. This decision has since become final and executory. Lim and her husband filed an action for specific performance and damages against CDB and its mother-company, Far East Bank and Trust Co. RTC in favor of Lim spouses: there was a perfected contract of sale; CDB and FEBTC liable for damages. CA affirmed.

Issue: W/N there was a VALID contract of sale between the parties.

Held: NO.

Ratio: There is a perfected contracted of sale Contracts are not defined by the parties thereto but by principles of law. In determining the nature of a contract, the courts are not bound by the name or title given to it by the contracting parties. In the case at bar, the sum of P30,000, although denominated in the offer to purchase as "option money," is actually in the nature of earnest money or down payment when considered with the other terms of the offer. Definition of option contract: It is a preparatory contract in which one party grants to the other, for a fixed period and under specified conditions, the power to decide, whether or not to enter into a principal contract, it binds the party who has given the option not to enter into the principal contract with any other person during the period designated, and within that period, to enter into such contract with the one to whom the option was granted, if the latter should decide to use the option. It is a separate agreement distinct from the contract to which the parties may enter upon the consummation of the option.

After the payment of the 10% option money, the Offer to Purchase provides for the payment only of the balance of the purchase price, implying that the "option money" forms part of the purchase price (i.e. earnest money). CDB has accepted Lims offer to purchase and considered it as good and no longer subject to a final approval.

16. CONCHITA NOOL and GAUDENCIO ALMOJERA vs.CA GR No. 116635 July 24, 1997 Facts: One lot formerly owned by Victorio Nool has an area of 1 hectare. Another lot previously owned by Francisco Nool has an area of 3.0880 hectares. Spouses (plaintiffs) Conchita Nool and Gaudencio Almojera alleged that they are the owners of the subject lands. They are in dire need of money, they obtained a loan DBP , secured by a real estate mortgage on said parcels of land, which were still registered in the names of Victorino and Francisco Nool, at the time, Since the plaintiffs failed to pay the said loan, the mortgage was foreclosed; that within the period of redemption, the plaintiffs contacted Anacleto Nool for the latter to redeem the foreclosed properties from DBP, which the latter did; and as a result, the titles of the 2 parcels of land in question were transferred to Anacleto; that as part of their arrangement or understanding, Anacleto agreed to buy from Conchita the 2 parcels of land , for a total price of P100,000.00, P30,000.00 of which price was paid to Conchita, and upon payment of the balance of P14,000.00, the plaintiffs were to regain possession of the 2 hectares of land, which amounts spouses Anacleto Nool and Emilia Nebre failed to pay. Anacleto Nool signed the private writing, agreeing to return subject lands when plaintiffs have the money to redeem the same; defendant Anacleto having been made to believe, then, that his sister, Conchita, still had the right to redeem the said properties. Issue: Is the purchase of the subject lands to Anacleto valid? Held: Nono dat quod non habet, No one can give what he does not have; Contract of repurchase inoperative thus void. Article 1505 of the Civil Code provides that where goods are sold by a person who is not the owner thereof, and who does not sell them under authority or with consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the sellers authority to sell. Jurisprudence, on the other hand, teaches us that a person can sell only what he owns or is authorized to sell; the buyer c an as a consequence acquire no more than what the seller can legally transfer. No one can give what he does not have nono dat quod non habet. In the present case, there is no allegation at all that petitioners were authorized by DBP to sell the property to the private respondents. Further, the contract of repurchase that the parties entered into presupposes that petitioners could repurchase the property that they sold to private respondents. As petitioners sold nothing, it follows that they can also repurchase nothing. In this light, the contract of repurchase is also inoperative and by the same analogy, void.

17. HEIRS OF SAN MIGUEL vs. COURT OF APPEALS G.R. No. 136054, September 5, 2001, J. Pardo In 1974, Respondent, Dominador San Miguel, filed a petition with the CFI to issue title over lots in dispute. However, it was declared null and void upon petition of Severina San Miguel (petitioner). In 1987, the TCT for the land was issued in the names of petitioner. From 1990-1991, several writs were returned unsatisfied. Hence, the heirs of Severina did not pursue the writs of possession and demolition, and instead entered into a compromise with Dominador. According to the compromise, the heirs were to sell the land for P1.5M with the TCT conditioned upon the purchase of another lot, which was not yet titled, at an additional sum of P300K. It was agreed that the 300K shall be fulfilled by Dominador (2) months from the date of the execution of sale, which is August 1993. 3 months after, Dominador filed a complaint with the trial court a motion to deliver the owners copy of TCT, and admitted that he did not pay the P300K for the reason that the petitioner failed to adduced proof of ownership. In time, petitioners opposed stressing the condition in the Kasunduan. The trial court and CA both ruled in favor of the respondent.

Whether or not respondent shall be compelled to pay the P300K despite the petitioners lack of evidence of ownership. No. Under Article 1306. The contracting parties may establish such stipulations, clauses, terms and conditions as they may deem convenient provided they are not contrary to law, morals, good customs, public order or public policy. To insist that Dominador pay the price of the untitled lot, would result in Severinas Heirs unjust enrichment. The essence of a sale is the transfer of title

or an agreement to transfer it for a price actually paid or promised. In Nool vs. CA, if the sellers cant deliver the object of the sale to the buyer, such contract may be deemed inoperative. [Art. 1405, void contracts par. (5)] Article 1183 also provides that, Impossible conditions, those contrary to good customs or public policy and those prohibited by law shall annul the obligation which depends upon them. If the obligation is divisible, that part thereof which is not affected by the impossible or unlawful condition shall be valid. Hence, the non-payment of the three hundred thousand pesos (P300,000.00) is not a valid justification for refusal to deliver the certificate of title. Besides, the P1.5M payment was for the land in dispute, not including the untitled one. Therefore, Severina's heirs are bound to deliver the certificate of title covering the lots.

18. Angel Clemens vs. Romeo Lobregat We find and so hold that the contract between the parties was a perfected verbal contract of sale, not a contract to sell over the subject property, with the petitioner as vendor and the respondent as vendee. Sale is a consensual contract and is perfected by mere consent, which is manifested by a meeting of the minds as to the offer and acceptance thereof on three elements: subject matter, price and terms of payment of the price.[37] The petitioners sold their property to the respondent for P270,000.00, payable on installments, and upon the payment of the purchase price thereof, the petitioners were bound to execute a deed of sale in favor of the respondent and deliver to him the certificate of title over the property in his name. The parties later agreed for the respondent to assume the payment of the petitioners loan amortization to the SSS, which payments formed part of the purchase price of the property. The evidence shows that upon the payment made by the respondent of the amount of P27,000.00 on June 4, 1987, the petitioners vacated their house and delivered possession thereof to the respondent. Conformably to Article 1477 of the New Civil Code, the ownership of the property was transferred to the respondent upon such delivery. The petitioners cannot re-acquire ownership and recover possession thereof unless the contract is rescinded in accordance with law.[38] The failure of the respondent to complete the payment of the purchase price of the property within the stipulated period merely accorded the petitioners the option to rescind the contract of sale as provided for in Article 1592 of the New Civil Code.[39] The contract entered into by the parties was not a contract to sell because there was no agreement for the petitioners to retain ownership over the property until after the respondent shall have paid the purchase price in full, nor an agreement reserving to the petitioners the right to unilaterally resolve the contract upon the buyers failure to pay within a fixed period.[40] Unlike in a contract of sale, the payment of the price is a positive suspensive condition in a contract to sell, failure of which is not a breach but an event that prevents the obligation of the vendor to convey the title from becoming effective.[ 41]

19. Atkins Kroll & Co. vs. Cu Hian Tek Facts: On September 13, 1951, Atkins Kroll & Co. (Atkins) sent a letter to Cu Hian Tek (Hian Tek) offering to sell sardines with corresponding quantity. Hian Tek unconditionally accepted the said offer through a letter, but Atkins failed to deliver the commodities due to the shortage of catch of sardines by the packers in California. Hian Tek, filed an action for damages in the CFI of Manila which granted the same in his favor. Upon Atkins appeal, the Cour t of Appeals affirmed said decision. Issue: WON there was a contract of sale between the parties or only a unilateral promise to buy Ruling: The Supreme Court held that there was a contract of sale between the parties. Petitioners argument assumed that only a unilateral promise arose when the respondent accepted the offer, which is incorrect because a bilateral contract to sell and to buy was created upon respondents acceptance. After accepting the promise and before he exercises his option, the holder of the option is not bound to buy. In this case at bar, however, upon respondents acceptance of herein petitioner's offer, a bilateral promise to sell and to buy ensued, and the respondent had immediately assumed the obligations of a purchaser.

20. PAMECA Wood Treatment Plant, Herminio Teves, Victoria Teves, and Hiram Pulido v. CA and DBP (1999)

Gonzaga-Reyes, J. Pameca loaned P2mil from DBP and executed a promissory note, secured by its inventory of furniture and equipment. A month before the mortgage contract, its supposed market value was P2.5mil. They defaulted so DBP extrajudicially foreclosed on the chattels. It was the only bidder so it was able to buy it for around P322,000. Then for the deficiency, it filed a complaint against Pameca and its solidary debtors (Teveses and Pulido) according to the promissory note it signed. promising to pay by installment.

P322,000. After which, DBP filed a complaint for collection of the balance of around P4mil. o Complaint filed against Pameca and Herminio Teves and Victoria Teves as solidary debtors with Pameca under the promissory note. -Makati: ordered Pameca to pay the P4mil. CA affirmed. o Disregarded documents (inventory dated March 1980) for failure to present them in evidence, or allude to them before the LC and said that it is not unlikely that the chattels deteriorated as thereby fetching a low price at the auction sale. o Did not find anything fraudulent in the circumstance that DBP was the sole bidder, as all legal procedures for the conduct of a foreclosure sale were complied with, thus giving rise to the presumption of regularity in the performance of public duties. Petition in SC, Pameca argues: t value, hence unconscionable and inequitable, and so it is null and void. (claims the market value was for more than P2mil) --evidenced from an inventory dated March 1980 (valued at around P2.5mil), in accordance with the terms of the chattel mortgage contract that required that the inventories "be maintained at a level no less than P2 mil". ct of loan was a contract of adhesion ention was that the loan is only for the Corps benefit Issues/Held: Can an action be instituted for deficiency of a debt after foreclosure of the chattel mortgage? --YES risdiction of the SC to preclude the recovery of the deficiency)-- NO -- NO YES

Ratio: First issue: NCC 2115 inrelation to the Chattel Mortgage Law: they are INCONSISTENT Ablaza vs. Ignacio: o LC dismissed the complaint for collection of deficiency in view of NCC 2141, which provides that the provisions of the Civil Code on pledge shall also apply to chattel mortgages, insofar as they are not in conflict with the Chattel Mortgage Law. It was the LCs opinion that, by virtue of NCC 2141, the provisions of NCC 2115 (which deny the creditor-pledgee the right to recover deficiency in case the proceeds of the foreclosure sale are less than the amount of the principal obligation) will apply o SC reversed LC and held that the provisions of the Chattel Mortgage Law regarding the effects of foreclosure of chattel mortgage, being contrary to the provisions of NCC 2115, 2115, in relation to 2141, may NOT be applied. Chattel Mortgage Law that the effects of foreclosure run inconsistent with those of pledge under NCC 2115. o In pledge, the sale of the thing pledged extinguishes the entire principal obligation, such that the pledgor may no longer recover proceeds of the sale in excess of the amount of the principal obligation o Sec 14 of the Chattel Mortgage Law expressly ENTITLES the mortgagor (debtor) to the balance of the proceeds, upon satisfaction of the principal obligation and costs. Since the Chattel Mortgage Law bars the creditor-mortgagee from retaining the excess of the sale proceeds there is a corollary obligation on the part of the debtor-mortgagee to pay the deficiency in case of a reduction in the price at public auction. Manila Trading v. Tamaraw Plantation cited in Ablaza v. Ignacio:

o Sec 3 provides that "a chattel mortgage is a conditional sale", it further provides that it "is a conditional sale of personal property as security for the payment of a debt, or for the performance of some other obligation." The LC overlooked that the chattels included in the mortgage are only given as security and not as a payment of the debt, in case of a failure.

o Theory of the LC would lead to the absurdity that if the chattels given as security should sell for more than the indebtedness, that the creditor would be entitled to the full amount for which it was sold, even though that amount was greatly in excess of the indebtedness. o Such a result was not contemplated by the legislature when it adopted the law. o The value of the chattels changes greatly from time to time, and sometimes very rapidly. If for example, the chattels should increase in value and a sale under that condition should result in largely overpaying the indebtedness, and if the creditor is not permitted to retain the excess, then the same would require the debtor to pay the deficiency in case of a reduction in the price of the chattels between the date of the contract and a breach of the condition. o Mr. Justice Kent, in the 12th Edition of his Commentaries, as well as other authors on the question of chattel mortgages, have said, that "in case of a sale under a foreclosure of a chattel mortgage, there is no question that the mortgagee or creditor may maintain an action for the deficiency, if any should occur." o And that the law permits a private sale, such sale is not a satisfaction of the debt, to any greater extent than the value of the property at the time of the sale. The amount received at the time of the sale, always requiring good faith, is only a payment, and an action may be maintained for a deficiency in the debt. NCC 1484 applies solely to the sale of personal property the price of which is payable in installments. Although NCC 1484, par (3) bars any action against the purchaser to recover an unpaid balance of the price, where the seller opts to foreclose the chattel mortgage, should the buyers failure to pay cover 2 or more installments, this provision is specifically applicable to a sale on installments. 1484 to situations beyond its specific purview, and ignore the language and intent of the Chattel Mortgage Law. f procedure. Second issue: SC unable to find merit that the public auction sale is void on grounds of fraud and inadequacy of price. Pameco never assailed the validity of the sale in the RTC, only in the CA. Basic is the rule that parties may not bring on appeal issues that were not raised on trial. least P2mil on Jan 1984, the date of the foreclosure sale. At best, the chattel mortgage contract only indicates the obligation of the mortgagor-debtor to maintain the inventory at a value of at least P2mil. is far from being an accurate estimate of the market value of the properties. The mere fact that DBP was the sole bidder does not warrant the conclusion that the transaction was attended with fraud. Fraud is a serious allegation that requires full and convincing evidence, and may not be inferred from the lone circumstance that it was only DBP that bid. The sparseness of evidence leaves the SC no discretion but to uphold the presumption of regularity in the conduct of the public sale. Third issue: Affirm the Teveses liability with Pameco in the loan. As found by the TC and CA, the terms of the promissory note unmistakably set forth the solidary nature of the Teveses commitment: o we hereby bind ourselves, jointly and severally, to make partial payments as follows o in case of default in the payment of any installment above, we bind ourselves to pay DBP for advances o bind ourselves to pay additional interest and penalty charges on loan amortizations or portion thereof in arrears as follows o bind ourselves to pay for bank advances for insurance premiums, taxes o bind ourselves to reimburse DBP on a pro-rata basis for all costs incurred by DBP on the foreign currency borrowings from where the loan shall be drawn o jointly and severally bind ourselves to pay for attorney's Clear that Teveses intended to bind themselves solidarily with Pameca in the loan.

-makers with Pameca under the promissory note. Petition denied.